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It definitely seems like BS to me. At 3% it's 258% over 32 years (1.03^32). Most people are barely getting 1% annual raises which means income increases by 13

It definitely seems like BS to me. At 3% it's 258% over 32 years (1.03^32). Most people are barely getting 1% annual raises which means income increases by 138% over the same period. From 1984 to 2016 housing prices in the Greater Vancouver area have gone up 800% [1]. Assuming I got the math right, it doesn't take much to see current young people are getting screwed. In the last 4 decades wages have barely increased, but major assets like cars and houses are 8-10x what they used to be. Add in the cost of schooling for 2 people, which in my mind roughly translates to the cost of 2 brand new cars for my parent's generation, and it's easy to see why young people can't afford anything. Then consider that "household" income is coming from 2 income earners now vs 1 income earner 40 years ago and you really start to get a picture of how tough it is. How is anyone supposed to start a family when they can't afford to start thinking about buying a house until they're 35. Frugal people from my parent's generation could have their house paid off by the time they were 35. 1. https://www.huffingtonpost.ca/ypnexthome/canadas-housing-performance_b_9266608.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAANvVCZvx9fgRgx1AGvmavlU0NjRdAt0TQBlCpmu79odBxO7CebVqMp0Eoe1AUD0OkNqVKd9O6HIzmE5UsXxVm_VMmWh4-E5ipEA-yfnMKyMBHUX9ZwYKHjM2oY-Bep1a4h9iQRtH8qc--vdLW4zJf_FhUxDtO4MI21W-uskyrhPc https://www.huffingtonpost.ca/ypnexthome/canadas-housing-per...

beamatronic 6y ago
You can escape from this trap by learning in-demand tech skills at a community college.
- burlesona 6y ago
  It is not that simple. I crashed out of my first career (with student loans in a STEM field), then learned to program at age 27. I’ve been tremendously lucky and successful in the decade since then, lived in a tiny place in SF for years (with a growing family) while working big tech, and I’m only just now at a point I can get my family into a house. I’m one of the lucky ones. Learning the skills is not enough, you have to get a very good job and work your ass off for a decade for it to amount to enough to comfortably afford the housing, education, and healthcare for a family. A generation ago getting that kind of quality job was much easier and just having the job put you in the family-supporting income range.
- jopsen 6y ago
  haha, typical HN sentiment. Don't me wrong, studying in-demand tech skills is great, but it's hardly a scalable solution.
  - JumpCrisscross 6y ago
    > it's hardly a scalable solution Isn't enabling and educating the population the original scalable solution to low growth?
    - TheOtherHobbes 6y ago
      No. The original scalable solution to low growth is government R&D seed funding spreading out into innovation in the consumer economy. You're not going to get much growth if all you do is educate people. You also need to give them something to do, and that requires a national investment strategy. This is exactly the difference between the insanely productive post-war economy, which developed and then commoditised electronics and computing, and the modern lazy bullshit job economy which is built on financialised gambling-at-scale and ad tech rather than game-changing creative invention.
    - jopsen 6y ago
      True, well, probably in combination with other aspects.. But getting everyone into tech is a classic non-solution :) (It's kind of funny)
Galanwe 6y ago
> Most people are barely getting 1% annual raises which means income increases by 138% over the same period. Where is that 1% coming from? It seems to me US salaries growth pretty much followed 3/5% average for the last 50 years, with some obvious drawdowns during crises. Source: https://tradingeconomics.com/united-states/wage-growth https://tradingeconomics.com/united-states/wage-growth > In the last 4 decades wages have barely increased, but major assets like cars and houses are 8-10x what they used to be. That doesn't make any sense. The price of a good should roughly follow an optimum of supply and demand. There is of course a spectrum in which it can oscillate, but your "barely increased" versus "8-10x" comparison is ridiculous. Things are evolving inside a pretty much closed system. Of course that's not exactly true, especially with capital movements, and mondialisation, but the ballpark should be there. You cannot take conclusions if you don't study the full picture. Take housing prices for instance. The main driver for real estate is not some conspiracy of evil super wealthy people. It's just the interest rates. If interest rates lower, then borrowing money is cheaper, people get bigger mortgages, which in turn inflates real estate prices. > From 1984 to 2016 housing prices in the Greater Vancouver area have gone up 800% [1]. Real estate cannot be studied in geographical isolation. There are way too much factors that can cause local inflation. In the case of Vancouver's real estate, it is notoriously the flow target of a lot of Asian capital. I don't think that should be taken as an example.
- TheOtherHobbes 6y ago
  Your points actually contradict each other. Do interest rates trump supply and demand and global capital movements, or not? Here's a graph of median personal income: https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N And here's a graph of median house prices: https://fred.stlouisfed.org/graph/fredgraph.png?id=MSPUS&nsh=1&type=image/png&width=600&height=400 https://fred.stlouisfed.org/graph/fredgraph.png?id=MSPUS&nsh... That is almost exactly an increase of 8X, compared to roughly 1.5X for personal income. Do you think an increase of 1.5X over forty years or so counts as "barely increased"? Of course household income is higher because most households have two wage earners instead of one. But that's still around 3X to around 8X. And the standard deviation for property prices has increased hugely. This has nothing to do with supply and demand and everything to do with the difference between an unproductive rent seeking economy which sweats static assets - including the workforce - and a productive creative economy driven by innovation and invention. For all the rhetoric, the current economy has a lot more of the former than the latter. And this is only good for a small number of incredibly rich individuals - at the expense (literally) of almost everyone else.
treis 6y ago
>From 1984 to 2016 housing prices in the Greater Vancouver area have gone up 800% [1]. Foreign buyers laundering money isn't inflation.
- baq 6y ago
  why does it matter? if you want to buy a home you have to pay up regardless of where your money comes from.
  - treis 6y ago
    Because foriegn money driving up prices is a different problem and requires a different solution.
rayiner 6y ago
You're perspective is skewed by living in one of the craziest housing markets in the world. Here in exurban Maryland (not to mention say Kansas City or Iowa) young people are buying homes and having kids. Millenials earn more than their parents did: https://www.pewresearch.org/wp-content/uploads/2018/12/FT_18.12.04_IncomeGenerations1.png?w=420 https://www.pewresearch.org/wp-content/uploads/2018/12/FT_18... They pay less on a monthly mortgage payment than their parents did: https://www.motherjones.com/wp-content/uploads/2017/10/blog_monthly_payment_30_year_1975_2017.gif https://www.motherjones.com/wp-content/uploads/2017/10/blog_... Also, two-earner households were already the majority since the late 1960s: https://files.taxfoundation.org/legacy/docs/22.jpg https://files.taxfoundation.org/legacy/docs/22.jpg. The percentage of households where only the husband works dropped a bit from 1980-1990, but has been basically unchanged in the last 3 decades. The thing you're overlooking is that the median young person lives in Kansas City (or whatever the equivalent is for Canada), not Vancouver. Those young people living in Vancouver are getting screwed for sure. They should vote out the liberal governments causing housing prices to skyrocket through overregulation, causing credential inflation by throwing money at universities, etc. Or they can move to Kansas!
- TuringNYC 6y ago
  >>> They pay less on a monthly mortgage payment than their parents did The reference you gave for "They pay less on a monthly mortgage payment" is itself adjusted for inflation as noted on the chart. So using the questionable inflation figure itself to refute inflation isn't persuasive. Intuitively also, I'm not sure I buy the argument that the median young person lives in Kansas City. I grew up with dozens of family members who actually did live in middle america (most of them as engineers at car plants.) Many of those jobs are not as cushy as they once were. Some are gone. From my own experience as an engineer, the weighted centroids of the job market are in SF or NY or DC, not in Ohio. Of course, that is an engineering viewpoint, what about overall across professions? I dont quite understand this and i'd love to be educated. From everything I read, the traditional jobs in middle america have left and these towns struggle. My own experience is only anecdotal (e.g., upstate NY, western pennsylvania)
  - rayiner 6y ago
ivanche 6y ago
How much has average home area increased from 1984 to 2016?

beamatronic 6y ago

You can escape from this trap by learning in-demand tech skills at a community college.

burlesona 6y ago
It is not that simple. I crashed out of my first career (with student loans in a STEM field), then learned to program at age 27. I’ve been tremendously lucky and successful in the decade since then, lived in a tiny place in SF for years (with a growing family) while working big tech, and I’m only just now at a point I can get my family into a house. I’m one of the lucky ones. Learning the skills is not enough, you have to get a very good job and work your ass off for a decade for it to amount to enough to comfortably afford the housing, education, and healthcare for a family. A generation ago getting that kind of quality job was much easier and just having the job put you in the family-supporting income range.
jopsen 6y ago
haha, typical HN sentiment. Don't me wrong, studying in-demand tech skills is great, but it's hardly a scalable solution.
- JumpCrisscross 6y ago
  > it's hardly a scalable solution Isn't enabling and educating the population the original scalable solution to low growth?
  - TheOtherHobbes 6y ago
    No. The original scalable solution to low growth is government R&D seed funding spreading out into innovation in the consumer economy. You're not going to get much growth if all you do is educate people. You also need to give them something to do, and that requires a national investment strategy. This is exactly the difference between the insanely productive post-war economy, which developed and then commoditised electronics and computing, and the modern lazy bullshit job economy which is built on financialised gambling-at-scale and ad tech rather than game-changing creative invention.
  - jopsen 6y ago
    True, well, probably in combination with other aspects.. But getting everyone into tech is a classic non-solution :) (It's kind of funny)

Galanwe 6y ago

> Most people are barely getting 1% annual raises which means income increases by 138% over the same period. Where is that 1% coming from? It seems to me US salaries growth pretty much followed 3/5% average for the last 50 years, with some obvious drawdowns during crises. Source: https://tradingeconomics.com/united-states/wage-growth https://tradingeconomics.com/united-states/wage-growth > In the last 4 decades wages have barely increased, but major assets like cars and houses are 8-10x what they used to be. That doesn't make any sense. The price of a good should roughly follow an optimum of supply and demand. There is of course a spectrum in which it can oscillate, but your "barely increased" versus "8-10x" comparison is ridiculous. Things are evolving inside a pretty much closed system. Of course that's not exactly true, especially with capital movements, and mondialisation, but the ballpark should be there. You cannot take conclusions if you don't study the full picture. Take housing prices for instance. The main driver for real estate is not some conspiracy of evil super wealthy people. It's just the interest rates. If interest rates lower, then borrowing money is cheaper, people get bigger mortgages, which in turn inflates real estate prices. > From 1984 to 2016 housing prices in the Greater Vancouver area have gone up 800% [1]. Real estate cannot be studied in geographical isolation. There are way too much factors that can cause local inflation. In the case of Vancouver's real estate, it is notoriously the flow target of a lot of Asian capital. I don't think that should be taken as an example.

TheOtherHobbes 6y ago
Your points actually contradict each other. Do interest rates trump supply and demand and global capital movements, or not? Here's a graph of median personal income: https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N And here's a graph of median house prices: https://fred.stlouisfed.org/graph/fredgraph.png?id=MSPUS&nsh=1&type=image/png&width=600&height=400 https://fred.stlouisfed.org/graph/fredgraph.png?id=MSPUS&nsh... That is almost exactly an increase of 8X, compared to roughly 1.5X for personal income. Do you think an increase of 1.5X over forty years or so counts as "barely increased"? Of course household income is higher because most households have two wage earners instead of one. But that's still around 3X to around 8X. And the standard deviation for property prices has increased hugely. This has nothing to do with supply and demand and everything to do with the difference between an unproductive rent seeking economy which sweats static assets - including the workforce - and a productive creative economy driven by innovation and invention. For all the rhetoric, the current economy has a lot more of the former than the latter. And this is only good for a small number of incredibly rich individuals - at the expense (literally) of almost everyone else.

treis 6y ago

>From 1984 to 2016 housing prices in the Greater Vancouver area have gone up 800% [1]. Foreign buyers laundering money isn't inflation.

baq 6y ago
why does it matter? if you want to buy a home you have to pay up regardless of where your money comes from.
- treis 6y ago
  Because foriegn money driving up prices is a different problem and requires a different solution.

rayiner 6y ago

You're perspective is skewed by living in one of the craziest housing markets in the world. Here in exurban Maryland (not to mention say Kansas City or Iowa) young people are buying homes and having kids. Millenials earn more than their parents did: https://www.pewresearch.org/wp-content/uploads/2018/12/FT_18.12.04_IncomeGenerations1.png?w=420 https://www.pewresearch.org/wp-content/uploads/2018/12/FT_18... They pay less on a monthly mortgage payment than their parents did: https://www.motherjones.com/wp-content/uploads/2017/10/blog_monthly_payment_30_year_1975_2017.gif https://www.motherjones.com/wp-content/uploads/2017/10/blog_... Also, two-earner households were already the majority since the late 1960s: https://files.taxfoundation.org/legacy/docs/22.jpg https://files.taxfoundation.org/legacy/docs/22.jpg. The percentage of households where only the husband works dropped a bit from 1980-1990, but has been basically unchanged in the last 3 decades. The thing you're overlooking is that the median young person lives in Kansas City (or whatever the equivalent is for Canada), not Vancouver. Those young people living in Vancouver are getting screwed for sure. They should vote out the liberal governments causing housing prices to skyrocket through overregulation, causing credential inflation by throwing money at universities, etc. Or they can move to Kansas!

TuringNYC 6y ago
>>> They pay less on a monthly mortgage payment than their parents did The reference you gave for "They pay less on a monthly mortgage payment" is itself adjusted for inflation as noted on the chart. So using the questionable inflation figure itself to refute inflation isn't persuasive. Intuitively also, I'm not sure I buy the argument that the median young person lives in Kansas City. I grew up with dozens of family members who actually did live in middle america (most of them as engineers at car plants.) Many of those jobs are not as cushy as they once were. Some are gone. From my own experience as an engineer, the weighted centroids of the job market are in SF or NY or DC, not in Ohio. Of course, that is an engineering viewpoint, what about overall across professions? I dont quite understand this and i'd love to be educated. From everything I read, the traditional jobs in middle america have left and these towns struggle. My own experience is only anecdotal (e.g., upstate NY, western pennsylvania)
- rayiner 6y ago

ivanche 6y ago

How much has average home area increased from 1984 to 2016?