3 ms·
Houses are positional goods. If you earn five times as much, your colleagues will too, and there will be a bidding war until the price matches your earning powe
by ralfd 5y ago
Houses are positional goods. If you earn five times as much, your colleagues will too, and there will be a bidding war until the price matches your earning power again. See also: The absurd real estate prices in the Bay area.
Elizabeth Warren made that argument in her book "The Two-Income Trap". The economic gains from switching from the traditional bread-winner/house-wife household to double-income-households were eaten up to buy the "family home down the street where the best school is".
https://slatestarcodex.com/2014/06/28/book-review-the-two-income-trap/ https://slatestarcodex.com/2014/06/28/book-review-the-two-in...
- thaumasiotes 5y ago> Houses are positional goods. If you earn five times as much, your colleagues will too, and there will be a bidding war until the price matches your earning power again. This requires the assumption that additional houses can't be constructed. > See also: The absurd real estate prices in the Bay area. See also: the Bay area.
- ejb999 5y ago>>This requires the assumption that additional houses can't be constructed. In a lot of places near expensive cities, that assumption is pretty valid.
- eru 5y agoWell, a big problem for the US is that building most types of new housing is illegal. See eg https://en.wikipedia.org/wiki/Missing_middle_housing https://en.wikipedia.org/wiki/Missing_middle_housing or your favourite articles on the evils of Euclidean zoning and minimum parking requirements.