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The reason people want the $1.5M houses rather than the $300k houses is likely because they're nicer places to live (ameneties, greenspaces, schools). If you bu

The reason people want the $1.5M houses rather than the $300k houses is likely because they're nicer places to live (ameneties, greenspaces, schools). If you build a new nice city 30 minutes from San Jose (apologies but I don't know how far you need to go out of SJ to have more space to build) you don't inteoduxe 300k housing, you just introduce more $1.5m housing.

refurb 5y ago
It’s $1.5M because of limited supply, not because it has to be that expensive. You’re ignoring two things: 1) many people don’t care about city living just access to jobs, thus a cheaper city with jobs is a good substitute and 2) sure there is a price premium, but $600k seems more reasonable than $1.5M.
- maccard 5y ago
  And you're ignoring that many people _do_ care about city living. > sure there is a price premium, but $600k seems more reasonable than $1.5M. So now you've built $600k houses, not $300k houses. And if there are desireable jobs in the area, that pushes the demand for thouse $600k houses up to the amount that is paid in the area.
  - danaris 5y ago
    And you also need to bear in mind that a 2x increase in house price means much more than a 2x decrease in the number of people who can afford it.
noduerme 5y ago
I think it's more a lack of imagination. I gave up renting in LA and moved to a place where I could afford a great house with great local amenities for under $400k. I tried to convince my brother and his wife to move here but, although they can barely afford their condo fees, they're stuck in the mindset that anywhere outside LA is the "sticks". So it would mean losing their big shot at bigger career opportunities... even though they really only want to raise their kids and have no serious ambitions about that. Meanwhile they're in a tiny place while everything around them falls apart. It's frankly incomprehensible to me that people can't adjust to changing circumstances and re-evaluate their situation, and tack a different course. But my point is, you have to credit a lot of inertia to the reasons why people continue to live in places that are not affordable. Given the choice and if they knew they had job security elsewhere, I think most people would spread out to smaller towns, $300k houses and build the communities they want. They're just paralyzed by having to break with familiarity.
- sjg007 5y ago
  LA is, however, building more condos than most other areas. They tear down an old 1950s or early single family and put in four ~$1m units... that's better than the Bay area that refuses to do that. This is of course neighborhood by neighborhood so it may not be at the necessary scale to provide relief. I love LA though but the housing situation really does suck.
lodovic 5y ago
No teacher can afford to live in the neighborhood if the house prices are that high. Why would the schools be better?
- nemo44x 5y ago
  I don’t understand the logic here. Schools are funded primarily through local property taxes. The town with the higher priced houses collects more property tax and can therefore allocate more funding to their school. This means they can pay higher salaries to teachers which means they can select for the best teachers. This attracts teachers that can’t afford to live in the town they teach in.
- klipt 5y ago
  All else being equal, if you have two neighboring school districts, one with good schools and one with bad schools, people will be willing to pay more for houses in the good school district. So higher house prices will tend to correlate with better schools.
  - lotsofpulp 5y ago
    The causation will be more like if you have two neighboring school districts, the one with higher house prices will tend to be the good school district because the kids’ will be coming from houses with educated and financially successful parents like doctors, engineers, lawyers, business owners, etc.
- maccard 5y ago
  People often don't live in the neighborhoods they work in, and people often can't afford to own in the neighborhoods they live in. A teacher who bought a house 20 years ago might still be able to live there, for example.
- novok 5y ago
  The secret about good school districts is it's mostly about good student & parent populations. It makes people angry when you say that out loud.
city41 5y ago
I lived in San Jose from 2015 to 2020 and I can't possibly fathom how anyone would consider it "nice". It's extremely crowded, traffic is a nightmare. You can't actually enjoy any of the amenities because they are always jam packed. I think the real reason someone buys a $1.5m house in the San Jose area is because it enables them to take a very high paying job.

refurb 5y ago

It’s $1.5M because of limited supply, not because it has to be that expensive. You’re ignoring two things: 1) many people don’t care about city living just access to jobs, thus a cheaper city with jobs is a good substitute and 2) sure there is a price premium, but $600k seems more reasonable than $1.5M.

maccard 5y ago
And you're ignoring that many people _do_ care about city living. > sure there is a price premium, but $600k seems more reasonable than $1.5M. So now you've built $600k houses, not $300k houses. And if there are desireable jobs in the area, that pushes the demand for thouse $600k houses up to the amount that is paid in the area.
- danaris 5y ago
  And you also need to bear in mind that a 2x increase in house price means much more than a 2x decrease in the number of people who can afford it.

noduerme 5y ago

I think it's more a lack of imagination. I gave up renting in LA and moved to a place where I could afford a great house with great local amenities for under $400k. I tried to convince my brother and his wife to move here but, although they can barely afford their condo fees, they're stuck in the mindset that anywhere outside LA is the "sticks". So it would mean losing their big shot at bigger career opportunities... even though they really only want to raise their kids and have no serious ambitions about that. Meanwhile they're in a tiny place while everything around them falls apart. It's frankly incomprehensible to me that people can't adjust to changing circumstances and re-evaluate their situation, and tack a different course. But my point is, you have to credit a lot of inertia to the reasons why people continue to live in places that are not affordable. Given the choice and if they knew they had job security elsewhere, I think most people would spread out to smaller towns, $300k houses and build the communities they want. They're just paralyzed by having to break with familiarity.

sjg007 5y ago
LA is, however, building more condos than most other areas. They tear down an old 1950s or early single family and put in four ~$1m units... that's better than the Bay area that refuses to do that. This is of course neighborhood by neighborhood so it may not be at the necessary scale to provide relief. I love LA though but the housing situation really does suck.

lodovic 5y ago

No teacher can afford to live in the neighborhood if the house prices are that high. Why would the schools be better?

nemo44x 5y ago
I don’t understand the logic here. Schools are funded primarily through local property taxes. The town with the higher priced houses collects more property tax and can therefore allocate more funding to their school. This means they can pay higher salaries to teachers which means they can select for the best teachers. This attracts teachers that can’t afford to live in the town they teach in.
klipt 5y ago
All else being equal, if you have two neighboring school districts, one with good schools and one with bad schools, people will be willing to pay more for houses in the good school district. So higher house prices will tend to correlate with better schools.
- lotsofpulp 5y ago
  The causation will be more like if you have two neighboring school districts, the one with higher house prices will tend to be the good school district because the kids’ will be coming from houses with educated and financially successful parents like doctors, engineers, lawyers, business owners, etc.
maccard 5y ago
People often don't live in the neighborhoods they work in, and people often can't afford to own in the neighborhoods they live in. A teacher who bought a house 20 years ago might still be able to live there, for example.
novok 5y ago
The secret about good school districts is it's mostly about good student & parent populations. It makes people angry when you say that out loud.

city41 5y ago

I lived in San Jose from 2015 to 2020 and I can't possibly fathom how anyone would consider it "nice". It's extremely crowded, traffic is a nightmare. You can't actually enjoy any of the amenities because they are always jam packed. I think the real reason someone buys a $1.5m house in the San Jose area is because it enables them to take a very high paying job.