10 ms·

The house I was born in sold for $4000

115 points by cmbaus 13y ago

yekko 13y ago
More startup needs to move to low cost areas.
- cmbaus 13y ago
  I agree. The other option is to lower the costs of areas where startups operate by increasing construction.
- yen223 13y ago
  Especially with remote jobs becoming more popular.
  - outworlder 13y ago
    That house looks big enough for a very spacious office. Google says it's a 6:30 drive to NY, which is no Valley, but should present enough opportunities. One could get up early and be there by noon, for meetings or whatever. What kind of maintenance fees would one be looking at, with a house that size?
    - Spooky23 13y ago
      Taxes in Upstate NY are going to be high. But keep in mind that central and western NY are depressing places. The place peakedin the 50's with industrial, rilroad and defense industries that are long gone. The city of Buffalo demolishes 2 houses a day. It was a city of 600,000, now down to 250,000. A nice $50k house in Schenectady, NY (former industrial city 3 hours from NYC) has $5000/year taxes. The house is worth 10x the Jamestown house because of the proximity to state government (150k jobs). If you want to live in the country, lots of cheap houses in rural towns <2 hours from NYC.
- mrbaxter 13y ago
  While of course supporting those areas, wary of the longer term gentrification they may bring.
  - chad_oliver 13y ago
    I believe you mean 'wary'?
    - mrbaxter 13y ago
      Thank you.
- w1ntermute 13y ago
  And you don't even have to go to such extremes as to move to the small town where the OP is from. Chicago, for example, is the 3rd largest city in the country and can be relatively affordable. Although it's not huge, there is an existing entrepreneurial ecosystem that allowed the likes of Groupon to rise.
- general_failure 13y ago
  It's better for well established players to move to low cost areas. Startups need to be in places where there is abundance of talent. Engineering salary are extremely high as-is, it would be nigh impossible to make them move to the middle of nowhere.
  - michaelochurch 13y ago
    Engineer salaries are not "extremely high". Compared to cost-of-living, they're more than adequate and on the high side by historical standards, but not "extremely high". In fact, most engineers make less than all those supernumerary non-technical VPs and product managers for nonexistent products that plague VC-funded companies. "Extremely" high starts around $350k per year for a mid-career (10 years) engineer and things aren't at that point right now.
  - bdcravens 13y ago
    In a world of PaaS and the cloud, and amazing communication capabilities like Skype and Google Hangout, why? What about CA or NY makes them more talented? They're there because the work is there, not vice versa. Also, you don't have to be in the middle of nowhere. There's plenty of large American cities where you can buy a nice house for less than $150K. I realize that the SF reality distortion field would suggest that everywhere else is powered by oil lamps, but I figure as long as you have high speed Internet and are within an hour of an Apple store, then you are quite capable to getting the work done from your home.
    - general_failure 13y ago
      What you are saying makes total sense as a founder. But for an engineer there us no motivation to move to an area where there are not many opportunities.
      - bdcravens 13y ago
        I say that as someone who has remained gainfully employed for several companies, only one of which was local, over the past several years.
- michaelochurch 13y ago
  I think we'll see this. I don't think anyone knows for sure where the future is, but it's not in New York or the Bay Area. High housing costs mean that the wrong kinds of people are winning to have innovation or to build the future. I still have faith that Real Technology will make a comeback when this social media bubble blows up and, after that happens, we're going to start to see an outline of the future emerging. I hope there won't be a single "winning" location. I don't think that's a good thing for society.
ultrab 13y ago
WTF? If an house can be built for $12000, why are flats selling for $100k+ routinely?!?!? If it's just due to land value, then why not build ultra-tall skyscrapers to amortize it?
- cmbaus 13y ago
  I don't think a house can be built for $12k. Houses in the rust belt routinely sell below replacement cost because demand is so low.
  - yyqux 13y ago
    Right, and a house is a liability as well as an asset: at that sort of price, the main cost of owning the house is the ongoing maintenance, utilities, etc.
    - mikestew 13y ago
      In NY state, I think the main cost of the house is going to be property taxes. I don't recall the rates, and don't care to look them up. But I do recall (when the subject has come up) that my sister-in-law in Alden, NY (small town 30 miles east of Buffalo) pays ridiculously high property taxes in comparison to what we pay here in Redmond, WA.
- saucetenuto 13y ago
  Because you'd need lots of upfront capital, you're gambling that the land will still be valuable 2 years later when you've finished and there's probably a local regulation against buildings above a certain height.
- jpatokal 13y ago
  Inflation, my friend: $12,000 in 1970 == $71,917 in 2013. And adding more floors to buildings suffers from diminishing returns pretty fast.
- nknighthb 13y ago
  What makes you think a house can be built for $12,000? That's not what the post said at all. It said the house was sold for $12,000 in the 1970s. Depending on exactly when it was sold, that could be the equivalent of almost $70k today.
jluxenberg 13y ago
Homeowners of HN: how do you justify tying up a large percentage of your net worth in a home?
- wtvanhest 13y ago
  I don't own a house, but here is how I would justify it: I assume (and you are free to disagree with my assumptions): - Inflation will exist like it has over the long term - I need to save for retirement --- With these two assumptions, a home allows you to take a leverage position against the area in which you live in's rate of inflation (hedge against rent increases with 4x leverage). Additionally, if you commit to paying down your home, you are deleveraging over a long period of time. If you stay there for 30 years, you can live almost rent free. (you will still need to pay expenses), and will increase your buying power dramatically. If inflation doesn't exist, or doesn't exist in your market, i.e. Buffalo, you are screwed. But, if you use an expected value, and a long-term history of what has happened, you are making a logical investment. *additionally, in the US you get a nice tax savings from the interest which ends up having a pretty good value in and of itself. Obviously, you can alter the assumptions and come up with different investment ideas, but in general, housing is at least logical.
  - bradleyjg 13y ago
    The 30 year fixed mortgage, with a low interest rate and high leverage, is also the product of government subsidies. The reason it makes sense for a lot of Americans to buy a house is because the government spends an awful lot of money making sure it makes sense. Otherwise economies of scale, differential costs of capital, and risk-free returns from diversification would lead to a very different picture.
- chad_oliver 13y ago
  This largely depends on the relative price of rent vs. mortgage repayments. If they're roughly similar, then it makes a lot of sense to buy a house because after 30 years you own a house. 30 years of renting doesn't leave you with a house.
- nknighthb 13y ago
blazespin 13y ago
OP neglects to mention if there were any back taxes or water liens owed. Or if the house had been condemned. All I could find was one lot (not house) under 8K. http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/5317_rid/0-8000_price/0-29_mp/days_sort/42.180451,-79.108257,42.002366,-79.376736_rect/11_zm/ http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/...
- cmbaus 13y ago
  The point is that the house isn't worth even the back taxes on it. That is hard to imagine from a west coast perspective. Even after the bust in 2009, I don't think it got that extreme in too many places.
  - outworlder 13y ago
    Not sure if it was 2009, unless the effects in that region were felt only years later. I was having a look at another cheap house from around the area. Just check out the graph: http://www.zillow.com/homedetails/23-Barrett-Ave-Jamestown-NY-14701/29894630_zpid/ http://www.zillow.com/homedetails/23-Barrett-Ave-Jamestown-N...
  - blazespin 13y ago
    Fair point! However, if it was a foreclosure it could have been sold at 4K + buyer pays owed taxes / liens. I'll agree though - the main thrust that Jamestown, NY RE is surprisingly low compared to elsewhere is an interesting one.
  - nitrogen 13y ago
    Would it make sense for cities to forgive the back taxes and liens to encourage new growth, or have they borrowed against the money owed to the point that forgiving it would bankrupt the city?
- dennisgorelik 13y ago
  http://www.zillow.com/homedetails/35-Barrows-St-Jamestown-NY-14701/29895379_zpid/ http://www.zillow.com/homedetails/35-Barrows-St-Jamestown-NY... Sold on 8/16/11: $3,955 There are multiple houses that were sold below $4K there. You probably forgot to turn on "recently sold" filter on Zillow. http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/5317_rid/0-8000_price/0-29_mp/days_sort/42.102434,-79.208379,42.088677,-79.236081_rect/15_zm/1_rs/ http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/...
ccleve 13y ago
I left Western NY decades ago, a small town 60 miles from Buffalo, because there was nothing there for me. It's not a place for software entrepreneurs. But now, as I struggle with costs in downtown Chicago, I wonder if there's some way to make something of the old place. The answer is no, unless you can attract the right people there, and for that there has to be a good job and at least few amenities. Both can be created, but only if lightning strikes. It's a tough situation.
- joonix 13y ago
  a) Chicago is pretty cheap. b) Why do you have to be downtown? There are lots of suburbs and regional towns connected with good rail.
Jun8 13y ago
In his much-quoted column, Friedman says(http://www.nytimes.com/2013/03/31/opinion/sunday/friedman-need-a-job-invent-it.html?hp&_r=0 http://www.nytimes.com/2013/03/31/opinion/sunday/friedman-ne...): "Every middle-class job today is being pulled up, out or down faster than ever." Middle income families who rely on manufacturing has been hit hard, with no prospects of an exit.
- gridmaths 13y ago
  yeah, well maybe all manufacturing will be superseded by 3D printing.. in which case you'd want to move into design rather than assembly. I think eg. Foxcon is going to be a very temporary thing. I always thought that at some point a robot arm will be cheaper than a human to assemble electronics.. but we may skip that stage altogether. Pretty soon you'll just print your iPhone, bypassing assembly completely.
  - nitrogen 13y ago
    3D printing electronics from the transistor (or even IC) up is a very long way away. Centralized manufacturing will exist for a long time. ICs are significantly cheaper in quantities of 10k+, and there's no way a 3D printer could generate a silicon wafer and etch a working circuit onto it, at least not economically. Chip fabs still cost 10 figures.
boticus_prime 13y ago
I'm from the same town, and now live in the Bay Area. I still can not get used to the housing prices here...which have been increasing recently: http://www.mercurynews.com/portlet/article/html/imageDisplay.jsp?contentItemRelationshipId=5138973 http://www.mercurynews.com/portlet/article/html/imageDisplay... When I visit my hometown, I feel like all the prices are in a different currency.
- cmbaus 13y ago
  I didn't think there were many other people from Chautauqua county here.
  - boticus_prime 13y ago
    I think the only time I have met anyone from Chautauqua county out here was when I went to see a Bills games at the Northstar Cafe in SF. When I was reading your blog post, I actually jumped a bit, because I thought I recognized the house (the red-brick street combined with the Bills banner is a familiar sight).
    - cmbaus 13y ago
      Contact me. Let's get a beer. I went to the Bills game in SF this year. We got killed, but it was still a lot of fun.
rdl 13y ago
I'd really like to see a low-tax, low regulation part of the US (WA, NV, TX, or TN) where someone buys a few thousand acres and lets people build "temporary" structures (with power/fiber/wifi/etc.) for living and solo-working, combined with some more permanent structures for offices, meetings, socialization, etc. Essentially like a 2-5 year Burning Man encampment campus for various startup projects. If someone's "personal burn rate", while living comfortably and efficiently, were $10-15k/yr (while still eating great food, socializing, medical care, etc.), it would make mostly-equity compensation as part of a founding team really viable. The point would be to get the benefits of density without the costs of luxury.
- Wingman4l7 13y ago
  I think you forgot a crucial bit of infrastructure that's a lot harder to slap together than power or internet: plumbing.
  - rdl 13y ago
    Septic tanks and water tanks work pretty well in semi-ruralish areas; you could either have a couple of trucks, or lay pipe. Or, have no plumbing in the temporary structures themselves, but have shower/bathroom trailers (which, admittedly, would suck a bit) separate from the temporary structures. I assume you'd build more infrastructure with time; putting in a real sewage plant would be expensive up-front and not really worth it for ~50 people on 2000 acres, but maybe in time. (You could even probably do zero-grid, with wifi/wimax/4g coverage to a couple of hard points with fiber, and decentralized electrical generation on each structure using solar/wind + batteries, at least to start.)
    - redblacktree 13y ago
      Real-life SimCity?
      - rdl 13y ago
        I may be influenced by living from 2004-2010 in either bombed out wrecks or "camps" in warzones, where this kind of stuff is routine.
cmbaus 13y ago
Couple comments. I didn't research the exact numbers in the post. I heard the house was sold for $4k, and the point wasn't about the exact price, but my perception of life after growing up in an area of constant economic decline. Also one of my goals for 2013 was to hit the home page of HN. I didn't think my first attempt would do it. Thanks!
- nutate 13y ago
  I grew up there from 79 to 97. My mom was mayor and a ton of my friends live there. I've since gone to school and lived in NYC, LA and now DC. Jamestown is still one of my favorite places on the planet. Cheap housing is just a bonus. It's incredible how far your money will go there: http://www.realtor.com/realestateandhomes-detail/2055-Willard-Street-Ext_Jamestown_NY_14701_M44508-69809?row=1 http://www.realtor.com/realestateandhomes-detail/2055-Willar... The question is how to get the money... :) probably contribute to your community. Err I mean contribute a new app idea to the community of angel investors. Whatever. ;)
simonsarris 13y ago
(This is more of a response to several of the comments posted so far.) I'd like to come to the defense of low-cost living but also acknowledge that (expensive) city living has its obvious pluses that people already in SV might be taking for granted. I created a low-cost living situation while living in a big (old/pretty) house in New Hampshire by renting out all of the rooms to friends. My rent is "free" and utilities are split 5 ways ($50 per person in summer, $150 in winter. Heating the house is expensive). If you can stand living with other people, I think this is one of the better ways to bootstrap "new job out of college" money instead of putting a down-payment on a smaller home that might not bring in any cash. The house just so happens to be the house I grew up in, which my father sold in 2005 and foreclosed on in 2010 (ultra-conveniently, the year I graduated from college). It needed lots of work, so instead of trying to (re)sell it for cheap I made a deal to fix it up while living in it for reduced rent. Three friends living there cover the rent. The house may be worth more in the future than current rates, and certainly has its share of things-needing-fixing, and my friends pay below-market rent rates, so it seems like a good deal for everyone involved. If I did not have such a house, I think I'd try to buy one and do the same thing. It's nice to have some communal society around after college. (I've planned other things in my life to try to re-create that, too, because I think its important and under-acknowledged.) ~~~ It's worth noting that there are downsides to living in a lower-cost-than-SV/Major City area. I don't have any programmer friends in real life outside of the people at my work (a very tiny company, and no one is remotely near my age (24)). That becomes a little problematic. I'm reminded of a quote from John le Carre: > Coming home from very lonely places, all of us go a little mad: whether from great personal success, or just an all-night drive, we are the sole survivors of a world no one else has ever seen. It's hard to talk about programming things and I think that's bad. I'm not around as many career-driven people as I'd like to be either and I think that's bad too. I end up spending a lot of time on the internet to talk about those areas of my interest. (And especially HN: I have a lot of affection for the repeated names in this place, even if we all tend to be a tad too negative. Consistent commentors still make a community and I'm thankful for that. Really.) So it's a good setup. And while my salary isn't amazing it's more than enough for my area, and I love my walkable, lovable hometown in New Hampshire. But there's certainly something to be said for cities and high cost areas. I miss being around as many smart people as there were in college. ~~~ On a note actually related to the article, when I drove around western NY - went to college at RPI, near Albany and headed west for Craigslist ventures - the places I saw just seemed surreal. Some parts of western NY, if you were just dropped there with no context, you'd think to yourself "A war must have happened here maybe 30 years ago". Strange levels of decay and halted-/de- construction
danteembermage 13y ago
Worth pointing out is that even $40,000 houses appear to have $1,800 a year tax bills. Treating that tax as a perpetuity you would need to invest 1800/.0357 = $50139 at mortgage rates to break even. It's still surprisingly inexpensive, but property taxes tell at least some of the story. A $4000 sedan that obligates you to $2000 in annual license fees is not a particularly good deal, even if it will run for another ten years.
cletus 13y ago
This is going to be an increasing issue and it's something that Western nations in particular just haven't had to deal with until now. The West came out of Europe. Europe is small. To put it in perspective, the distance from SF to NYC is ~2900 miles. The distance from London to Baghdad is ~3100 miles. So abundance of land is not a problem the West has traditionally had (not until colonization anyway). Added to this, mortality has been high but population growth has been higher. The last century saw a dramatic rise in life expectancy (primarily due to a drop in infant mortality). The last 50 years has seen a dramatic drop in population growth (the lesson seems to be that the natural reaction to uncertain times by people is to breed more). So the West is being crushed by the weight of supporting an ageing population from a system established at a time retirement was a rarity. Add to this to overall trend of the last century has been one of urbanization. And just to put the nail in the coffin, low-tech manufacturing has largely fled the West for the developing world where labour is cheap. Our entire society seems premised on both population and economic growth. What exactly do we do when the population starts shrinking? This is a bridge we haven't crossed yet. The experience in parts of the US seem to indicate the transition won't be an easy one. Cities with negative population growth have suffered from appalling crime and poverty that seems much harder to flush out in a city full of vacant buildings. The ongoing story of Detroit is nothing short of surreal. That's a city that is slowly being reclaimed by nature, which is really what should happen. Half-empty cities are not healthy cities. Now add to this the whole concept of home ownership. Home ownership is aspirational. It's political goal. Home ownership comes with a huge cost however. - The unlucky who buy in declining cities have a huge part of their wealth eroded leading to virtually impoverished retirement. - It leads to an inflexible labour market (people are unwilling or unable to move to where the jobs are). - It has a snowball effect, particularly in the US, where much of the funding for local infrastructure comes from property taxes. I haven't been to upstate New York. I'm one of those living in NYC where half a million dollars for a studio doesn't seem that outrageous. If there's one lesson from this is that everything is transitory. I believe one of the largest fallacies of the Twentieth Century was that the idea set in that everything was going to keep growing and keep getting better forever. The institutions you grew up with would last a life time. Hell, this even applies to climate where we base our views on a ridiculously narrow band of Earth's or even human history. Cities come. Cities go. Nations come. Nations go. To think that the USA or Europe will exist as they do today a thousand years from now is the height of hubris and/or naivete.
cperciva 13y ago
The population of California has a perception of growth, while the Rust Belt has a perception of decline. This must effect the collective psyche to point where taking risk becomes less socially acceptable. Taking entrepreneurial or financial risk when you are gainfully employed is less tolerated when many people around you (and in fact entire industries) are struggling to get by. I think there's something more subtle going on here. If the economy as a whole is doing well, risks tend to pay off; if the economy as a whole is not doing well, risks tend to not pay off. You don't even need any social pressure to make people in the rust belt take fewer risks than people in silicon valley; you just need people who use past performance as an indicator of future returns.
rjdagost 13y ago
This post struck a chord with me as I'm from the central NY region, not too far from the OP. I get back to my hometown every year or two and the decline is more apparent every trip. Everything from my youth- the places I worked part-time, the schools I went to, the places I used to hang out at, the major local employers, they're all gone or in major decline. Many houses are boarded up, abandoned, and are being slowly reclaimed by nature. Most of my school friends have moved away, and most of those that have stayed around have basically wasted away. In my own lifetime I have seen long-term economic decline happen and it has scarred me in a way that is difficult to articulate.
- cmbaus 13y ago
  I'm glad you liked it. I believe I (and other people from the area) look at the world differently than those from more prosperous regions. There is a constant thought in the back of my head that this could all be temporary. Boom towns go bust. Industries go bust. But I also think I've left opportunity on the table because of my fear. I've come to realize that the difficult part of life is balancing the upside with the downside -- knowing when to be conservative and when to be risky. If I could give advice to anyone leaving school or home for the first time it would be: remain cognizant of the downside, but don't let it prevent you from taking advantage of the upside if it presents itself to you.
- userulluipeste 13y ago
  I grow up in a place that went through a steep decline (after the collapse of USSR). The good thing is that in any decline there is allays a bottom line (although I suppose that most people aren't prepared to acknowledge this idea, especially when it's personal in some way). Things adjust a bit, that's all.
smartician 13y ago
This is why I'm very reluctant to buy a million dollar shack here in Silicon Valley. What if the tech industry goes on the same trajectory as the automobile industry, and San Francisco ends up being the Detroit of the 2020's? Is there something intrinsically "magic" about the Bay Area, or is it just the coincidental clustering of tech companies that makes this place special?
michaelochurch 13y ago
Location is basically an extortion racket enabled by the economic collapse of the U.S. outside of a handful of star cities. With NIMBY policies, people in economically vibrant locations keep supply artificially low. This way, a class of people who've ceased providing value can still enrich themselves on a self-sustaining pattern of clueless talent rushing in for the gold rush. What we see is that most of the country is dying-- that's why the real estate is so cheap in places like Jamestown-- but that's driving the costs in the few not-dying stretches to obscene levels.
- waps 13y ago
  The problem is that this is happening everywhere, not just the US. Everything outside the main cities is becoming more and more worthless. That will switch when oil becomes cheap again. Of course, that may never happen.
- waps 13y ago
  The problem is that this is happening everywhere, not just the US. Everything outside the main cities is becoming more and more worthless. That will switch when oil becomes cheap again. Of course, that may never happen.
gridmaths 13y ago
I zoomed in on google map, was hoping for streetview [ in which I fantasized seeing Jack Reacher walk past for some reason ] From the OP, I assumed this would be literally 100 miles from the nearest drugstore/711.. but its bang in the urban grid of a small town. Shouldn't some of the bailout money be towards loans for people to do up cheap homes like this? It would seem a good investment for the future at low cost to enable more people to pick up these low end deals. Are the banks now so stupid they cant get people into homes and paying interest.. instead of this foreclosure fire-sale nonsense ? Assuming this place can get internet installed, it would make some family a great home which they could gradually renovate, after which they would look after the place and contribute to the town.
- rseymour 13y ago
  Plenty of CDBG money has gone into Jamestown. Mostly in different parts of town. At its peak the city was 50k people. Now more like <30k. That house is shot. If you go west a bit you can find the worst off housing in the city (right next to a park oddly enough). That part of the north side of town also has really nice old houses east of the cemetery. Imagine manhattan before Central Park.
- userulluipeste 13y ago
  Such bailouts and programs for average Joe don't really work. When real estate price is in decline, housing becomes in time more affordable. In this conditions you may actually get a chance to buy a house without a loan. It's a natural evolution. Now suppose the government steps in, throwing easy money - what do you think will happen next? I don't live in USA, I live in Romania, EU. Here the real estate prices jumped threefold after the government started „the first home” (literal translation) - a program that wanted to support young families in getting a home. I don't say there weren't any benefits for involved parties - the program actually spurred a lot of construction around, the banks made a lot of profits, and some young selected couples had in the end the privilege to be supported in buying overpriced living places. For everyone else (most of us) the entire thing made the housing more expensive. I don't want to see such things happen again.
nutate 13y ago
My mom was mayor of Jamestown for a couple years. Most houses that were maintained have kept their value. We just have a twisted sense of how housing value should work. Even around Chautauqua lake, where the best real estate is in that county, the max is probably around $3mil for houses that would make an $3mil house around here (DC) look like a cottage. Location, location, location. I can drive there in under seven hours these days. Straight through central PA which makes central Jamestown look like London.
napolux 13y ago
Maybe it's just a stupid statement made out of tv shows like 'extreme makeover home edition', correct me please if I'm wrong.... In US most of the houses seems to be made over a wooden structure, making them more fragile, easy to be renovated / customized / moved / rebuilt and, most important, cheaper. Here in Italy (and AFAIK in the whole Europe) there's nothing like that: full concrete and a proper basement, basically no wood (except from roof). I just bought my first flat and I've spent 168k euros for a 85 square meters flat 25 km from Milan. Despite the crisis, prices are stable and/or are decreasing very slowly. You will never find, even in the worst zones of the cheapest cities an house at 10k euros here, neither a bunch of bricks will be sold for that. :)
- waps 13y ago
  Well you can find houses like that : the ones that have to be demolished (often in relatively nice locations too), and rebuilt. Of course, buying the property means that after that there's still 300k to be paid to build a new house.

115 points by cmbaus 13y ago

yekko 13y ago

More startup needs to move to low cost areas.

cmbaus 13y ago
I agree. The other option is to lower the costs of areas where startups operate by increasing construction.
yen223 13y ago
Especially with remote jobs becoming more popular.
- outworlder 13y ago
  That house looks big enough for a very spacious office. Google says it's a 6:30 drive to NY, which is no Valley, but should present enough opportunities. One could get up early and be there by noon, for meetings or whatever. What kind of maintenance fees would one be looking at, with a house that size?
  - Spooky23 13y ago
    Taxes in Upstate NY are going to be high. But keep in mind that central and western NY are depressing places. The place peakedin the 50's with industrial, rilroad and defense industries that are long gone. The city of Buffalo demolishes 2 houses a day. It was a city of 600,000, now down to 250,000. A nice $50k house in Schenectady, NY (former industrial city 3 hours from NYC) has $5000/year taxes. The house is worth 10x the Jamestown house because of the proximity to state government (150k jobs). If you want to live in the country, lots of cheap houses in rural towns <2 hours from NYC.
mrbaxter 13y ago
While of course supporting those areas, wary of the longer term gentrification they may bring.
- chad_oliver 13y ago
  I believe you mean 'wary'?
  - mrbaxter 13y ago
    Thank you.
w1ntermute 13y ago
And you don't even have to go to such extremes as to move to the small town where the OP is from. Chicago, for example, is the 3rd largest city in the country and can be relatively affordable. Although it's not huge, there is an existing entrepreneurial ecosystem that allowed the likes of Groupon to rise.
general_failure 13y ago
It's better for well established players to move to low cost areas. Startups need to be in places where there is abundance of talent. Engineering salary are extremely high as-is, it would be nigh impossible to make them move to the middle of nowhere.
- michaelochurch 13y ago
  Engineer salaries are not "extremely high". Compared to cost-of-living, they're more than adequate and on the high side by historical standards, but not "extremely high". In fact, most engineers make less than all those supernumerary non-technical VPs and product managers for nonexistent products that plague VC-funded companies. "Extremely" high starts around $350k per year for a mid-career (10 years) engineer and things aren't at that point right now.
- bdcravens 13y ago
  In a world of PaaS and the cloud, and amazing communication capabilities like Skype and Google Hangout, why? What about CA or NY makes them more talented? They're there because the work is there, not vice versa. Also, you don't have to be in the middle of nowhere. There's plenty of large American cities where you can buy a nice house for less than $150K. I realize that the SF reality distortion field would suggest that everywhere else is powered by oil lamps, but I figure as long as you have high speed Internet and are within an hour of an Apple store, then you are quite capable to getting the work done from your home.
  - general_failure 13y ago
    What you are saying makes total sense as a founder. But for an engineer there us no motivation to move to an area where there are not many opportunities.
    - bdcravens 13y ago
      I say that as someone who has remained gainfully employed for several companies, only one of which was local, over the past several years.
michaelochurch 13y ago
I think we'll see this. I don't think anyone knows for sure where the future is, but it's not in New York or the Bay Area. High housing costs mean that the wrong kinds of people are winning to have innovation or to build the future. I still have faith that Real Technology will make a comeback when this social media bubble blows up and, after that happens, we're going to start to see an outline of the future emerging. I hope there won't be a single "winning" location. I don't think that's a good thing for society.

ultrab 13y ago

WTF? If an house can be built for $12000, why are flats selling for $100k+ routinely?!?!? If it's just due to land value, then why not build ultra-tall skyscrapers to amortize it?

cmbaus 13y ago
I don't think a house can be built for $12k. Houses in the rust belt routinely sell below replacement cost because demand is so low.
- yyqux 13y ago
  Right, and a house is a liability as well as an asset: at that sort of price, the main cost of owning the house is the ongoing maintenance, utilities, etc.
  - mikestew 13y ago
    In NY state, I think the main cost of the house is going to be property taxes. I don't recall the rates, and don't care to look them up. But I do recall (when the subject has come up) that my sister-in-law in Alden, NY (small town 30 miles east of Buffalo) pays ridiculously high property taxes in comparison to what we pay here in Redmond, WA.
saucetenuto 13y ago
Because you'd need lots of upfront capital, you're gambling that the land will still be valuable 2 years later when you've finished and there's probably a local regulation against buildings above a certain height.
jpatokal 13y ago
Inflation, my friend: $12,000 in 1970 == $71,917 in 2013. And adding more floors to buildings suffers from diminishing returns pretty fast.
nknighthb 13y ago
What makes you think a house can be built for $12,000? That's not what the post said at all. It said the house was sold for $12,000 in the 1970s. Depending on exactly when it was sold, that could be the equivalent of almost $70k today.

jluxenberg 13y ago

Homeowners of HN: how do you justify tying up a large percentage of your net worth in a home?

wtvanhest 13y ago
I don't own a house, but here is how I would justify it: I assume (and you are free to disagree with my assumptions): - Inflation will exist like it has over the long term - I need to save for retirement --- With these two assumptions, a home allows you to take a leverage position against the area in which you live in's rate of inflation (hedge against rent increases with 4x leverage). Additionally, if you commit to paying down your home, you are deleveraging over a long period of time. If you stay there for 30 years, you can live almost rent free. (you will still need to pay expenses), and will increase your buying power dramatically. If inflation doesn't exist, or doesn't exist in your market, i.e. Buffalo, you are screwed. But, if you use an expected value, and a long-term history of what has happened, you are making a logical investment. *additionally, in the US you get a nice tax savings from the interest which ends up having a pretty good value in and of itself. Obviously, you can alter the assumptions and come up with different investment ideas, but in general, housing is at least logical.
- bradleyjg 13y ago
  The 30 year fixed mortgage, with a low interest rate and high leverage, is also the product of government subsidies. The reason it makes sense for a lot of Americans to buy a house is because the government spends an awful lot of money making sure it makes sense. Otherwise economies of scale, differential costs of capital, and risk-free returns from diversification would lead to a very different picture.
chad_oliver 13y ago
This largely depends on the relative price of rent vs. mortgage repayments. If they're roughly similar, then it makes a lot of sense to buy a house because after 30 years you own a house. 30 years of renting doesn't leave you with a house.
nknighthb 13y ago

blazespin 13y ago

OP neglects to mention if there were any back taxes or water liens owed. Or if the house had been condemned. All I could find was one lot (not house) under 8K. http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/5317_rid/0-8000_price/0-29_mp/days_sort/42.180451,-79.108257,42.002366,-79.376736_rect/11_zm/ http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/...

cmbaus 13y ago
The point is that the house isn't worth even the back taxes on it. That is hard to imagine from a west coast perspective. Even after the bust in 2009, I don't think it got that extreme in too many places.
- outworlder 13y ago
  Not sure if it was 2009, unless the effects in that region were felt only years later. I was having a look at another cheap house from around the area. Just check out the graph: http://www.zillow.com/homedetails/23-Barrett-Ave-Jamestown-NY-14701/29894630_zpid/ http://www.zillow.com/homedetails/23-Barrett-Ave-Jamestown-N...
- blazespin 13y ago
  Fair point! However, if it was a foreclosure it could have been sold at 4K + buyer pays owed taxes / liens. I'll agree though - the main thrust that Jamestown, NY RE is surprisingly low compared to elsewhere is an interesting one.
- nitrogen 13y ago
  Would it make sense for cities to forgive the back taxes and liens to encourage new growth, or have they borrowed against the money owed to the point that forgiving it would bankrupt the city?
dennisgorelik 13y ago
http://www.zillow.com/homedetails/35-Barrows-St-Jamestown-NY-14701/29895379_zpid/ http://www.zillow.com/homedetails/35-Barrows-St-Jamestown-NY... Sold on 8/16/11: $3,955 There are multiple houses that were sold below $4K there. You probably forgot to turn on "recently sold" filter on Zillow. http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/5317_rid/0-8000_price/0-29_mp/days_sort/42.102434,-79.208379,42.088677,-79.236081_rect/15_zm/1_rs/ http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/...

ccleve 13y ago

I left Western NY decades ago, a small town 60 miles from Buffalo, because there was nothing there for me. It's not a place for software entrepreneurs. But now, as I struggle with costs in downtown Chicago, I wonder if there's some way to make something of the old place. The answer is no, unless you can attract the right people there, and for that there has to be a good job and at least few amenities. Both can be created, but only if lightning strikes. It's a tough situation.

joonix 13y ago
a) Chicago is pretty cheap. b) Why do you have to be downtown? There are lots of suburbs and regional towns connected with good rail.

Jun8 13y ago

In his much-quoted column, Friedman says(http://www.nytimes.com/2013/03/31/opinion/sunday/friedman-need-a-job-invent-it.html?hp&_r=0 http://www.nytimes.com/2013/03/31/opinion/sunday/friedman-ne...): "Every middle-class job today is being pulled up, out or down faster than ever." Middle income families who rely on manufacturing has been hit hard, with no prospects of an exit.

gridmaths 13y ago
yeah, well maybe all manufacturing will be superseded by 3D printing.. in which case you'd want to move into design rather than assembly. I think eg. Foxcon is going to be a very temporary thing. I always thought that at some point a robot arm will be cheaper than a human to assemble electronics.. but we may skip that stage altogether. Pretty soon you'll just print your iPhone, bypassing assembly completely.
- nitrogen 13y ago
  3D printing electronics from the transistor (or even IC) up is a very long way away. Centralized manufacturing will exist for a long time. ICs are significantly cheaper in quantities of 10k+, and there's no way a 3D printer could generate a silicon wafer and etch a working circuit onto it, at least not economically. Chip fabs still cost 10 figures.

boticus_prime 13y ago

I'm from the same town, and now live in the Bay Area. I still can not get used to the housing prices here...which have been increasing recently: http://www.mercurynews.com/portlet/article/html/imageDisplay.jsp?contentItemRelationshipId=5138973 http://www.mercurynews.com/portlet/article/html/imageDisplay... When I visit my hometown, I feel like all the prices are in a different currency.

cmbaus 13y ago
I didn't think there were many other people from Chautauqua county here.
- boticus_prime 13y ago
  I think the only time I have met anyone from Chautauqua county out here was when I went to see a Bills games at the Northstar Cafe in SF. When I was reading your blog post, I actually jumped a bit, because I thought I recognized the house (the red-brick street combined with the Bills banner is a familiar sight).
  - cmbaus 13y ago
    Contact me. Let's get a beer. I went to the Bills game in SF this year. We got killed, but it was still a lot of fun.

rdl 13y ago

I'd really like to see a low-tax, low regulation part of the US (WA, NV, TX, or TN) where someone buys a few thousand acres and lets people build "temporary" structures (with power/fiber/wifi/etc.) for living and solo-working, combined with some more permanent structures for offices, meetings, socialization, etc. Essentially like a 2-5 year Burning Man encampment campus for various startup projects. If someone's "personal burn rate", while living comfortably and efficiently, were $10-15k/yr (while still eating great food, socializing, medical care, etc.), it would make mostly-equity compensation as part of a founding team really viable. The point would be to get the benefits of density without the costs of luxury.

Wingman4l7 13y ago
I think you forgot a crucial bit of infrastructure that's a lot harder to slap together than power or internet: plumbing.
- rdl 13y ago
  Septic tanks and water tanks work pretty well in semi-ruralish areas; you could either have a couple of trucks, or lay pipe. Or, have no plumbing in the temporary structures themselves, but have shower/bathroom trailers (which, admittedly, would suck a bit) separate from the temporary structures. I assume you'd build more infrastructure with time; putting in a real sewage plant would be expensive up-front and not really worth it for ~50 people on 2000 acres, but maybe in time. (You could even probably do zero-grid, with wifi/wimax/4g coverage to a couple of hard points with fiber, and decentralized electrical generation on each structure using solar/wind + batteries, at least to start.)
  - redblacktree 13y ago
    Real-life SimCity?
    - rdl 13y ago
      I may be influenced by living from 2004-2010 in either bombed out wrecks or "camps" in warzones, where this kind of stuff is routine.

cmbaus 13y ago

Couple comments. I didn't research the exact numbers in the post. I heard the house was sold for $4k, and the point wasn't about the exact price, but my perception of life after growing up in an area of constant economic decline. Also one of my goals for 2013 was to hit the home page of HN. I didn't think my first attempt would do it. Thanks!

nutate 13y ago
I grew up there from 79 to 97. My mom was mayor and a ton of my friends live there. I've since gone to school and lived in NYC, LA and now DC. Jamestown is still one of my favorite places on the planet. Cheap housing is just a bonus. It's incredible how far your money will go there: http://www.realtor.com/realestateandhomes-detail/2055-Willard-Street-Ext_Jamestown_NY_14701_M44508-69809?row=1 http://www.realtor.com/realestateandhomes-detail/2055-Willar... The question is how to get the money... :) probably contribute to your community. Err I mean contribute a new app idea to the community of angel investors. Whatever. ;)

simonsarris 13y ago

(This is more of a response to several of the comments posted so far.) I'd like to come to the defense of low-cost living but also acknowledge that (expensive) city living has its obvious pluses that people already in SV might be taking for granted. I created a low-cost living situation while living in a big (old/pretty) house in New Hampshire by renting out all of the rooms to friends. My rent is "free" and utilities are split 5 ways ($50 per person in summer, $150 in winter. Heating the house is expensive). If you can stand living with other people, I think this is one of the better ways to bootstrap "new job out of college" money instead of putting a down-payment on a smaller home that might not bring in any cash. The house just so happens to be the house I grew up in, which my father sold in 2005 and foreclosed on in 2010 (ultra-conveniently, the year I graduated from college). It needed lots of work, so instead of trying to (re)sell it for cheap I made a deal to fix it up while living in it for reduced rent. Three friends living there cover the rent. The house may be worth more in the future than current rates, and certainly has its share of things-needing-fixing, and my friends pay below-market rent rates, so it seems like a good deal for everyone involved. If I did not have such a house, I think I'd try to buy one and do the same thing. It's nice to have some communal society around after college. (I've planned other things in my life to try to re-create that, too, because I think its important and under-acknowledged.) ~~~ It's worth noting that there are downsides to living in a lower-cost-than-SV/Major City area. I don't have any programmer friends in real life outside of the people at my work (a very tiny company, and no one is remotely near my age (24)). That becomes a little problematic. I'm reminded of a quote from John le Carre: > Coming home from very lonely places, all of us go a little mad: whether from great personal success, or just an all-night drive, we are the sole survivors of a world no one else has ever seen. It's hard to talk about programming things and I think that's bad. I'm not around as many career-driven people as I'd like to be either and I think that's bad too. I end up spending a lot of time on the internet to talk about those areas of my interest. (And especially HN: I have a lot of affection for the repeated names in this place, even if we all tend to be a tad too negative. Consistent commentors still make a community and I'm thankful for that. Really.) So it's a good setup. And while my salary isn't amazing it's more than enough for my area, and I love my walkable, lovable hometown in New Hampshire. But there's certainly something to be said for cities and high cost areas. I miss being around as many smart people as there were in college. ~~~ On a note actually related to the article, when I drove around western NY - went to college at RPI, near Albany and headed west for Craigslist ventures - the places I saw just seemed surreal. Some parts of western NY, if you were just dropped there with no context, you'd think to yourself "A war must have happened here maybe 30 years ago". Strange levels of decay and halted-/de- construction

danteembermage 13y ago

Worth pointing out is that even $40,000 houses appear to have $1,800 a year tax bills. Treating that tax as a perpetuity you would need to invest 1800/.0357 = $50139 at mortgage rates to break even. It's still surprisingly inexpensive, but property taxes tell at least some of the story. A $4000 sedan that obligates you to $2000 in annual license fees is not a particularly good deal, even if it will run for another ten years.

cletus 13y ago

This is going to be an increasing issue and it's something that Western nations in particular just haven't had to deal with until now. The West came out of Europe. Europe is small. To put it in perspective, the distance from SF to NYC is ~2900 miles. The distance from London to Baghdad is ~3100 miles. So abundance of land is not a problem the West has traditionally had (not until colonization anyway). Added to this, mortality has been high but population growth has been higher. The last century saw a dramatic rise in life expectancy (primarily due to a drop in infant mortality). The last 50 years has seen a dramatic drop in population growth (the lesson seems to be that the natural reaction to uncertain times by people is to breed more). So the West is being crushed by the weight of supporting an ageing population from a system established at a time retirement was a rarity. Add to this to overall trend of the last century has been one of urbanization. And just to put the nail in the coffin, low-tech manufacturing has largely fled the West for the developing world where labour is cheap. Our entire society seems premised on both population and economic growth. What exactly do we do when the population starts shrinking? This is a bridge we haven't crossed yet. The experience in parts of the US seem to indicate the transition won't be an easy one. Cities with negative population growth have suffered from appalling crime and poverty that seems much harder to flush out in a city full of vacant buildings. The ongoing story of Detroit is nothing short of surreal. That's a city that is slowly being reclaimed by nature, which is really what should happen. Half-empty cities are not healthy cities. Now add to this the whole concept of home ownership. Home ownership is aspirational. It's political goal. Home ownership comes with a huge cost however. - The unlucky who buy in declining cities have a huge part of their wealth eroded leading to virtually impoverished retirement. - It leads to an inflexible labour market (people are unwilling or unable to move to where the jobs are). - It has a snowball effect, particularly in the US, where much of the funding for local infrastructure comes from property taxes. I haven't been to upstate New York. I'm one of those living in NYC where half a million dollars for a studio doesn't seem that outrageous. If there's one lesson from this is that everything is transitory. I believe one of the largest fallacies of the Twentieth Century was that the idea set in that everything was going to keep growing and keep getting better forever. The institutions you grew up with would last a life time. Hell, this even applies to climate where we base our views on a ridiculously narrow band of Earth's or even human history. Cities come. Cities go. Nations come. Nations go. To think that the USA or Europe will exist as they do today a thousand years from now is the height of hubris and/or naivete.

cperciva 13y ago

The population of California has a perception of growth, while the Rust Belt has a perception of decline. This must effect the collective psyche to point where taking risk becomes less socially acceptable. Taking entrepreneurial or financial risk when you are gainfully employed is less tolerated when many people around you (and in fact entire industries) are struggling to get by. I think there's something more subtle going on here. If the economy as a whole is doing well, risks tend to pay off; if the economy as a whole is not doing well, risks tend to not pay off. You don't even need any social pressure to make people in the rust belt take fewer risks than people in silicon valley; you just need people who use past performance as an indicator of future returns.

rjdagost 13y ago

This post struck a chord with me as I'm from the central NY region, not too far from the OP. I get back to my hometown every year or two and the decline is more apparent every trip. Everything from my youth- the places I worked part-time, the schools I went to, the places I used to hang out at, the major local employers, they're all gone or in major decline. Many houses are boarded up, abandoned, and are being slowly reclaimed by nature. Most of my school friends have moved away, and most of those that have stayed around have basically wasted away. In my own lifetime I have seen long-term economic decline happen and it has scarred me in a way that is difficult to articulate.

cmbaus 13y ago
I'm glad you liked it. I believe I (and other people from the area) look at the world differently than those from more prosperous regions. There is a constant thought in the back of my head that this could all be temporary. Boom towns go bust. Industries go bust. But I also think I've left opportunity on the table because of my fear. I've come to realize that the difficult part of life is balancing the upside with the downside -- knowing when to be conservative and when to be risky. If I could give advice to anyone leaving school or home for the first time it would be: remain cognizant of the downside, but don't let it prevent you from taking advantage of the upside if it presents itself to you.
userulluipeste 13y ago
I grow up in a place that went through a steep decline (after the collapse of USSR). The good thing is that in any decline there is allays a bottom line (although I suppose that most people aren't prepared to acknowledge this idea, especially when it's personal in some way). Things adjust a bit, that's all.

smartician 13y ago

This is why I'm very reluctant to buy a million dollar shack here in Silicon Valley. What if the tech industry goes on the same trajectory as the automobile industry, and San Francisco ends up being the Detroit of the 2020's? Is there something intrinsically "magic" about the Bay Area, or is it just the coincidental clustering of tech companies that makes this place special?

michaelochurch 13y ago

Location is basically an extortion racket enabled by the economic collapse of the U.S. outside of a handful of star cities. With NIMBY policies, people in economically vibrant locations keep supply artificially low. This way, a class of people who've ceased providing value can still enrich themselves on a self-sustaining pattern of clueless talent rushing in for the gold rush. What we see is that most of the country is dying-- that's why the real estate is so cheap in places like Jamestown-- but that's driving the costs in the few not-dying stretches to obscene levels.

waps 13y ago
The problem is that this is happening everywhere, not just the US. Everything outside the main cities is becoming more and more worthless. That will switch when oil becomes cheap again. Of course, that may never happen.
waps 13y ago
The problem is that this is happening everywhere, not just the US. Everything outside the main cities is becoming more and more worthless. That will switch when oil becomes cheap again. Of course, that may never happen.

gridmaths 13y ago

I zoomed in on google map, was hoping for streetview [ in which I fantasized seeing Jack Reacher walk past for some reason ] From the OP, I assumed this would be literally 100 miles from the nearest drugstore/711.. but its bang in the urban grid of a small town. Shouldn't some of the bailout money be towards loans for people to do up cheap homes like this? It would seem a good investment for the future at low cost to enable more people to pick up these low end deals. Are the banks now so stupid they cant get people into homes and paying interest.. instead of this foreclosure fire-sale nonsense ? Assuming this place can get internet installed, it would make some family a great home which they could gradually renovate, after which they would look after the place and contribute to the town.

rseymour 13y ago
Plenty of CDBG money has gone into Jamestown. Mostly in different parts of town. At its peak the city was 50k people. Now more like <30k. That house is shot. If you go west a bit you can find the worst off housing in the city (right next to a park oddly enough). That part of the north side of town also has really nice old houses east of the cemetery. Imagine manhattan before Central Park.
userulluipeste 13y ago
Such bailouts and programs for average Joe don't really work. When real estate price is in decline, housing becomes in time more affordable. In this conditions you may actually get a chance to buy a house without a loan. It's a natural evolution. Now suppose the government steps in, throwing easy money - what do you think will happen next? I don't live in USA, I live in Romania, EU. Here the real estate prices jumped threefold after the government started „the first home” (literal translation) - a program that wanted to support young families in getting a home. I don't say there weren't any benefits for involved parties - the program actually spurred a lot of construction around, the banks made a lot of profits, and some young selected couples had in the end the privilege to be supported in buying overpriced living places. For everyone else (most of us) the entire thing made the housing more expensive. I don't want to see such things happen again.

nutate 13y ago

My mom was mayor of Jamestown for a couple years. Most houses that were maintained have kept their value. We just have a twisted sense of how housing value should work. Even around Chautauqua lake, where the best real estate is in that county, the max is probably around $3mil for houses that would make an $3mil house around here (DC) look like a cottage. Location, location, location. I can drive there in under seven hours these days. Straight through central PA which makes central Jamestown look like London.

napolux 13y ago

Maybe it's just a stupid statement made out of tv shows like 'extreme makeover home edition', correct me please if I'm wrong.... In US most of the houses seems to be made over a wooden structure, making them more fragile, easy to be renovated / customized / moved / rebuilt and, most important, cheaper. Here in Italy (and AFAIK in the whole Europe) there's nothing like that: full concrete and a proper basement, basically no wood (except from roof). I just bought my first flat and I've spent 168k euros for a 85 square meters flat 25 km from Milan. Despite the crisis, prices are stable and/or are decreasing very slowly. You will never find, even in the worst zones of the cheapest cities an house at 10k euros here, neither a bunch of bricks will be sold for that. :)

waps 13y ago
Well you can find houses like that : the ones that have to be demolished (often in relatively nice locations too), and rebuilt. Of course, buying the property means that after that there's still 300k to be paid to build a new house.