7 ms·

These calculators don't reflect the reality/absurdity of the current economy. Anecdotal, but I bought a house in eastern California last year for $600k, now Zil

These calculators don't reflect the reality/absurdity of the current economy. Anecdotal, but I bought a house in eastern California last year for $600k, now Zillow says it's worth $835k. Also, I'll unlikely ever be able to afford a house in the Bay Area, even though I make $220k/year at a company there. Still don't know what I'll do if my employer makes us return to the SF office in a few months. Relatedly, a ~70 year old woman bagged my groceries today and I doubt she's doing it for fun. Seems the accelerating wealth inequality is destroying our society/communities if it hasn't already.

anonAndOn 5y ago
I submit the housing market of Phoenix, Arizona as an example of peak bubble. There are numerous houses on the market today that were previously sold... ~30 days ago. This feels more ludicrous than the speculative housing bubble of '07.
- throwaway0a5e 5y ago
  Yeah, pretty much anywhere California money is cashing out and fleeing too is way more insane than California itself.
  - sidlls 5y ago
    Meanwhile for half the sale price of one 1200 sq. ft. 3/2 townhome on the Peninsula I could purchase 3 4-unit multifamilies on mortgage, each grossing about $50k/year in rents. Will the appreciation of these properties be the same as that townhome? Almost certainly not. But money has time value, and the ancillary costs of ownership in CA are far greater.
  - NegativeLatency 5y ago
    Traveled though Missoula this summer and the housing market is absolutely wild.
- jb775 5y ago
  The fact that you and everyone else claim we're in a peak bubble is evidence to me that we're not in a peak bubble.
  - handmodel 5y ago
    not a bubble in the sense that building new housing in most of California is practically illegal given the amount of local points of veto and existing zoning
- Element_ 5y ago
  A co-worker from southern California just went to Arizona and purchased 4 homes as investments. He deemed them good value compared to current California market and was basically able to buy 4 units vs 1 around LA for the same price.
- jkestner 5y ago
  One was even sold twice in one day: https://www.azcentral.com/story/money/real-estate/done-deals/2021/07/12/luxury-home-sales-scottsdale-mansion-sells-twice-one-day/7894062002/ https://www.azcentral.com/story/money/real-estate/done-deals...
- deleted 5y ago
  [deleted]
o8r3oFTZPE 5y ago
[deleted]
- bigyikes 5y ago
  The parent comment made no complaints and their salary offers no implications on the greater health of the economy.
hnhousingthrow 5y ago
Just to follow up on a deleted comment that thought I was complaining, I guess my point is that decent housing (both renting and owning) has become unaffordable for most people. High-income earners like myself will be okay, if okay means spending half of my salary on rent where I literally step over homeless people as part of an hourlong commute. My greater fear is what happens to the "essential workers", the heroes making $15/hr? What happens when the firefighters, EMTs, teachers, grocery store workers etc have been priced out of the state?
- swiley 5y ago
  We're about to find out aren't we? I'm glad to not be part of that experiment.
- sjg007 5y ago
  Firefighters make 100k, some teachers do too. Depends where you live. More over you need someone to buy your 800k house you spent 600k on. It’ll be a remote worker who buys it if the local economy can’t support that so…… hopefully remote work is here to stay.
  - BTCOG 5y ago
    The average salary of a firefighter in the United States is $52k. Teachers average $15/hour. No clue where you're getting these outrageous figures other than if you're a Californian and think anything about California is "normal" in the sense of the rest of the United States. If 30+ states pay firefighters $50k, and teachers make $15/hr in 40 states... actually makes California look like what it is, a massive bubble.
JMTQp8lwXL 5y ago
If you had a significant other with a similar upper middle class wage, e.g., $220k * 2 = $440k you could probably swing it with more breathing room. You are wise to avoid the burden, in the chance you technically qualify for the mortgage but barely so in the Bay Area (e.g., leaving you house poor). The fact that home affordability requires a HH income in the top 2-3% is, to put it mildly, highly concerning. It makes the trend of many millennials not trying (a bit of nihilism) seem reasonable. Why aspire for great career success and an above median income, when you can't get much for it? A better life, at that point, is likely to optimize for cheap hobbies and leave the high-pay work stress behind. Honestly, it sounds like a fairly rational decision.
- nwatson 5y ago
  Or work remotely. One can make way above prevailing local salaries working remotely for SF Bay Area companies.
  - jameshush 5y ago
    I'll echo this. The 6-7 years of "California" tech experience pays dividends in other countries. Ended up moving to Taipei so my example is a bit extreme, but I have quite a few friends making "low end" California $100k-120k USD/year wages while living in the middle of nowhere Canada. I still wanted to live in a city, and Taipei has all the amenities Los Angeles or San Francisco had (nice bars, hipster coffee shops, great out doors areas). My friends wanted big wide open space and being close to family in Canada. I was being paid on the "low end" for an engineering manager in California but in the top 1% in Taiwan. For anyone considering trying "location arbitrage", whether that be in a "normal" city in a middle state of the USA, or a more extreme example like myself, I high recommend giving it a shot. You can _always_ move back to SF, LA, NYC, London, Hong Kong etc. The only risk you're making is the slope of your savings account decreasing slightly. Remember, you'll never have _more_ time and _less_ responsibility then right at this moment. You'll only get less time and more responsibility as time passes on.
    - deleted 5y ago
      [deleted]
nodesocket 5y ago
Similarly, I bought last Sept in Nashville, TN and Zillow says my house is up 13.5% already. The Nashville housing market is especially ridiculous, it's one of the hottest in the US. > Relatedly, a ~70 year old woman bagged my groceries today and I doubt she's doing it for fun. Seems the accelerating wealth inequality is destroying our society/communities if it hasn't already. Let's not forget about the error in extending unemployment and benefits that the current administration passed. We should all hope and petition that a 4th stimulus check does NOT go out (inflation). The fact of the matter is, these policies are keeping a lot of the lower income workers out of the job market because they are still making more off unemployment than going back to the workforce. I estimate, this imbalance in the market will correct in September when these benefits end.
- cammikebrown 5y ago
  A bunch of states have ended the benefits, and it turns out the free market didn’t magically correct itself. https://www.google.com/amp/s/www.cnbc.com/amp/2021/06/23/ending-unemployment-benefits-early-may-not-be-having-desired-effect.html https://www.google.com/amp/s/www.cnbc.com/amp/2021/06/23/end...
- dlivingston 5y ago
  In contrast, those companies that are offering $15+/hour wages are seeing applications through the roof. [0] I don’t mean to discount inflation, as it will likely be an increasing issue in the immediate future [1]. But it’s very clear that the issue isn’t unemployment stipends: it’s the low wages of working class jobs that are the issue. Unemployment and the pandemic seemed to just be the push for many people to realize their worth as human beings is more than $7.50/hour. [0]: https://www.washingtonpost.com/business/2021/06/10/worker-shortage-raising-wages/ https://www.washingtonpost.com/business/2021/06/10/worker-sh... [1]: https://www.axios.com/ceos-warn-inflation-alarm-sound-da5e2dcf-af16-4ca4-a1de-bdd03fbbe775.html https://www.axios.com/ceos-warn-inflation-alarm-sound-da5e2d...
- _nothing 5y ago
  I'm confused at your invocation of that quote. Are you saying the solution to this woman having to work a job she doesn't like is to force low income workers to work jobs they don't like? And the flood of low income workers who have no choice but to work these jobs will alleviate wealth inequality?
iancmceachern 5y ago
This is our exact challenge. I do well, work in the bay area, but the down payment, not the monthly, is the main hurdle to homeownership.
- sjg007 5y ago
  You have to do the IPO stock option dance.
- mateo411 5y ago
  I used to think that, but really the monthly income is the harder and more important hurdle. It's not how much you put down, it's how much you can finance.
deleted 5y ago
[deleted]
handrous 5y ago
> Relatedly, a ~70 year old woman bagged my groceries today and I doubt she's doing it for fun. Seems the accelerating wealth inequality is destroying our society/communities if it hasn't already. Savings and share-of-total-wealth rates (measured at same-age) are incredibly bad past the Boomer generation, dropping off with each generation. There's going to be a whole lot more of this starting in about 10 years, when Gen X hits retirement age but can't retire at anywhere near the same rate their predecessors did. I wouldn't count on inheritance to solve the problem, either. That's all gonna go to hospitals and nursing homes.
lumost 5y ago
At the current rate of price increases it pays more to be a property owner than a top 3% income. There will clearly be no future implications to this /s
adrianN 5y ago
Sell the house, and together with the savings you might already have you can do the FIRE thing somewhere where living is cheap.
bradknowles 5y ago
I did a six month consulting gig in Cupertino a few years ago. I lived right at the edge of Cupertino and San Jose. I was paying well over $2k per month for a 1BR apartment — much more than my 4BR house payment here in Austin, where my wife stayed while I was in Cupertino. I saw a house for sale there not far from my apartment complex. Literally a shack that was not fit for human habitation. It was selling for over $600k, and the land value alone was closer to $700k — yes, the “house” really was that bad. I was a consultant, so I was barely within my “spend 1/3 of your income on housing” rule. I calculated that to be converted to an employee, they’d have to pay me north of $250k per year in order to be able to afford that same apartment. I was not at all unhappy when they told me that my consulting contract was up earlier than expected, and I got to go back home to Austin just before Christmas of that year. And housing prices in Cupertino has risen steadily by 20% year-over-year, and have done for at least a decade or two. Where else in the world can you get a guaranteed 20% annual increase on your investment? California can keep their damn sky-high housing prices. I just wish they wouldn’t bring that shit with them when they move from California to Austin.

anonAndOn 5y ago

I submit the housing market of Phoenix, Arizona as an example of peak bubble. There are numerous houses on the market today that were previously sold... ~30 days ago. This feels more ludicrous than the speculative housing bubble of '07.

throwaway0a5e 5y ago
Yeah, pretty much anywhere California money is cashing out and fleeing too is way more insane than California itself.
- sidlls 5y ago
  Meanwhile for half the sale price of one 1200 sq. ft. 3/2 townhome on the Peninsula I could purchase 3 4-unit multifamilies on mortgage, each grossing about $50k/year in rents. Will the appreciation of these properties be the same as that townhome? Almost certainly not. But money has time value, and the ancillary costs of ownership in CA are far greater.
- NegativeLatency 5y ago
  Traveled though Missoula this summer and the housing market is absolutely wild.
jb775 5y ago
The fact that you and everyone else claim we're in a peak bubble is evidence to me that we're not in a peak bubble.
- handmodel 5y ago
  not a bubble in the sense that building new housing in most of California is practically illegal given the amount of local points of veto and existing zoning
Element_ 5y ago
A co-worker from southern California just went to Arizona and purchased 4 homes as investments. He deemed them good value compared to current California market and was basically able to buy 4 units vs 1 around LA for the same price.
jkestner 5y ago
One was even sold twice in one day: https://www.azcentral.com/story/money/real-estate/done-deals/2021/07/12/luxury-home-sales-scottsdale-mansion-sells-twice-one-day/7894062002/ https://www.azcentral.com/story/money/real-estate/done-deals...
deleted 5y ago
[deleted]

o8r3oFTZPE 5y ago

[deleted]

bigyikes 5y ago
The parent comment made no complaints and their salary offers no implications on the greater health of the economy.

hnhousingthrow 5y ago

Just to follow up on a deleted comment that thought I was complaining, I guess my point is that decent housing (both renting and owning) has become unaffordable for most people. High-income earners like myself will be okay, if okay means spending half of my salary on rent where I literally step over homeless people as part of an hourlong commute. My greater fear is what happens to the "essential workers", the heroes making $15/hr? What happens when the firefighters, EMTs, teachers, grocery store workers etc have been priced out of the state?

swiley 5y ago
We're about to find out aren't we? I'm glad to not be part of that experiment.
sjg007 5y ago
Firefighters make 100k, some teachers do too. Depends where you live. More over you need someone to buy your 800k house you spent 600k on. It’ll be a remote worker who buys it if the local economy can’t support that so…… hopefully remote work is here to stay.
- BTCOG 5y ago
  The average salary of a firefighter in the United States is $52k. Teachers average $15/hour. No clue where you're getting these outrageous figures other than if you're a Californian and think anything about California is "normal" in the sense of the rest of the United States. If 30+ states pay firefighters $50k, and teachers make $15/hr in 40 states... actually makes California look like what it is, a massive bubble.

JMTQp8lwXL 5y ago

If you had a significant other with a similar upper middle class wage, e.g., $220k * 2 = $440k you could probably swing it with more breathing room. You are wise to avoid the burden, in the chance you technically qualify for the mortgage but barely so in the Bay Area (e.g., leaving you house poor). The fact that home affordability requires a HH income in the top 2-3% is, to put it mildly, highly concerning. It makes the trend of many millennials not trying (a bit of nihilism) seem reasonable. Why aspire for great career success and an above median income, when you can't get much for it? A better life, at that point, is likely to optimize for cheap hobbies and leave the high-pay work stress behind. Honestly, it sounds like a fairly rational decision.

nwatson 5y ago
Or work remotely. One can make way above prevailing local salaries working remotely for SF Bay Area companies.
- jameshush 5y ago
  I'll echo this. The 6-7 years of "California" tech experience pays dividends in other countries. Ended up moving to Taipei so my example is a bit extreme, but I have quite a few friends making "low end" California $100k-120k USD/year wages while living in the middle of nowhere Canada. I still wanted to live in a city, and Taipei has all the amenities Los Angeles or San Francisco had (nice bars, hipster coffee shops, great out doors areas). My friends wanted big wide open space and being close to family in Canada. I was being paid on the "low end" for an engineering manager in California but in the top 1% in Taiwan. For anyone considering trying "location arbitrage", whether that be in a "normal" city in a middle state of the USA, or a more extreme example like myself, I high recommend giving it a shot. You can _always_ move back to SF, LA, NYC, London, Hong Kong etc. The only risk you're making is the slope of your savings account decreasing slightly. Remember, you'll never have _more_ time and _less_ responsibility then right at this moment. You'll only get less time and more responsibility as time passes on.
  - deleted 5y ago
    [deleted]

nodesocket 5y ago

Similarly, I bought last Sept in Nashville, TN and Zillow says my house is up 13.5% already. The Nashville housing market is especially ridiculous, it's one of the hottest in the US. > Relatedly, a ~70 year old woman bagged my groceries today and I doubt she's doing it for fun. Seems the accelerating wealth inequality is destroying our society/communities if it hasn't already. Let's not forget about the error in extending unemployment and benefits that the current administration passed. We should all hope and petition that a 4th stimulus check does NOT go out (inflation). The fact of the matter is, these policies are keeping a lot of the lower income workers out of the job market because they are still making more off unemployment than going back to the workforce. I estimate, this imbalance in the market will correct in September when these benefits end.

cammikebrown 5y ago
A bunch of states have ended the benefits, and it turns out the free market didn’t magically correct itself. https://www.google.com/amp/s/www.cnbc.com/amp/2021/06/23/ending-unemployment-benefits-early-may-not-be-having-desired-effect.html https://www.google.com/amp/s/www.cnbc.com/amp/2021/06/23/end...
dlivingston 5y ago
In contrast, those companies that are offering $15+/hour wages are seeing applications through the roof. [0] I don’t mean to discount inflation, as it will likely be an increasing issue in the immediate future [1]. But it’s very clear that the issue isn’t unemployment stipends: it’s the low wages of working class jobs that are the issue. Unemployment and the pandemic seemed to just be the push for many people to realize their worth as human beings is more than $7.50/hour. [0]: https://www.washingtonpost.com/business/2021/06/10/worker-shortage-raising-wages/ https://www.washingtonpost.com/business/2021/06/10/worker-sh... [1]: https://www.axios.com/ceos-warn-inflation-alarm-sound-da5e2dcf-af16-4ca4-a1de-bdd03fbbe775.html https://www.axios.com/ceos-warn-inflation-alarm-sound-da5e2d...
_nothing 5y ago
I'm confused at your invocation of that quote. Are you saying the solution to this woman having to work a job she doesn't like is to force low income workers to work jobs they don't like? And the flood of low income workers who have no choice but to work these jobs will alleviate wealth inequality?

iancmceachern 5y ago

This is our exact challenge. I do well, work in the bay area, but the down payment, not the monthly, is the main hurdle to homeownership.

sjg007 5y ago
You have to do the IPO stock option dance.
mateo411 5y ago
I used to think that, but really the monthly income is the harder and more important hurdle. It's not how much you put down, it's how much you can finance.

deleted 5y ago

[deleted]

handrous 5y ago

> Relatedly, a ~70 year old woman bagged my groceries today and I doubt she's doing it for fun. Seems the accelerating wealth inequality is destroying our society/communities if it hasn't already. Savings and share-of-total-wealth rates (measured at same-age) are incredibly bad past the Boomer generation, dropping off with each generation. There's going to be a whole lot more of this starting in about 10 years, when Gen X hits retirement age but can't retire at anywhere near the same rate their predecessors did. I wouldn't count on inheritance to solve the problem, either. That's all gonna go to hospitals and nursing homes.

lumost 5y ago

At the current rate of price increases it pays more to be a property owner than a top 3% income. There will clearly be no future implications to this /s

adrianN 5y ago

Sell the house, and together with the savings you might already have you can do the FIRE thing somewhere where living is cheap.

bradknowles 5y ago

I did a six month consulting gig in Cupertino a few years ago. I lived right at the edge of Cupertino and San Jose. I was paying well over $2k per month for a 1BR apartment — much more than my 4BR house payment here in Austin, where my wife stayed while I was in Cupertino. I saw a house for sale there not far from my apartment complex. Literally a shack that was not fit for human habitation. It was selling for over $600k, and the land value alone was closer to $700k — yes, the “house” really was that bad. I was a consultant, so I was barely within my “spend 1/3 of your income on housing” rule. I calculated that to be converted to an employee, they’d have to pay me north of $250k per year in order to be able to afford that same apartment. I was not at all unhappy when they told me that my consulting contract was up earlier than expected, and I got to go back home to Austin just before Christmas of that year. And housing prices in Cupertino has risen steadily by 20% year-over-year, and have done for at least a decade or two. Where else in the world can you get a guaranteed 20% annual increase on your investment? California can keep their damn sky-high housing prices. I just wish they wouldn’t bring that shit with them when they move from California to Austin.