
In the 1950s, a California teacher's annual mortgage payments were 14% of salary - DoreenMichele
https://twitter.com/ByRosenberg/status/983797630386892806?s=20
======
korethr
As commented in the thread attached to that tweet, the comparison of statewide
numbers in the 50s to just San Francisco today is an apples-to-oranges
comparison. It honestly comes across as a bit disingenuous.

I'd be more interested in the comparison of just San Francisco numbers from
the 50s to now. Or statewide 50s to statewide now. Or how much an effect the
San Francisco numbers are having on the statewide numbers, in either time
period. But all that probably doesn't fit into a tweet.

~~~
vladich
It's even worse, it compares wages for "Pacific region" of 50th, whatever it
is, with current San Francisco. Its not even apples to oranges comparison,
more like apples to stones or something like that. I'm pretty sure it was more
affordable back then before the tech boom, but the numbers provided don't make
sense.

------
skookumchuck
If everyones' salary was raised so they could buy a house at today's prices,
the housing prices would rise until they couldn't.

The laws of supply & demand cannot be repealed. When you've got 100 people and
30 houses, 70 are not going to get a house one way or another.

~~~
hollandheese
More like we've got 100 people and 80 houses, but somehow 70 people aren't
going to get a house one way or another.

One of the large problems is people buying up second+ homes to rent out or
AirBnB.

~~~
epistasis
I don't think San Francisco has a bit problem here, all Airbnb units are
registered with the city [1], and even before registration requirements, there
were only ~11,000 units listed [2] in all of San Francisco, which is a tiny
fraction.

Vacancy rates are _also_ extremely low in San Francisco:

[http://www.deptofnumbers.com/rent/california/san-
francisco/](http://www.deptofnumbers.com/rent/california/san-francisco/)

so investment properties being idle is also not a problem.

The real problem is lack of supply to meet demand. A state law from the 1970s
forces municipalities to produce Regional Housing Needs Assessments (RHNA),
and _nobody_ in the Bay Area is close to meeting their planned housing needs
([3] Table 4.1) for moderate or lower incomes. Overall in California, 97% of
cities failed to meet their own housing goals [4] (Please note that this
source is _highly_ pro-housing, so take it with a grain of salt. I am also
very pro-housing but want to be open kimono about it).

[1] [http://money.cnn.com/2017/05/01/technology/airbnb-san-
franci...](http://money.cnn.com/2017/05/01/technology/airbnb-san-francisco-
settlement-agreement/index.html)

[2] [https://www.sfchronicle.com/business/article/Airbnb-loses-
th...](https://www.sfchronicle.com/business/article/Airbnb-loses-thousands-of-
hosts-in-SF-as-12496624.php)

[3] [http://reports.abag.ca.gov/sotr/2015/section4-housing-
goals-...](http://reports.abag.ca.gov/sotr/2015/section4-housing-goals-
progress.php)

[4] [https://www.thebaycitybeacon.com/politics/of-california-
citi...](https://www.thebaycitybeacon.com/politics/of-california-cities-
failed-to-meet-state-housing-goals-
and/article_a609ae5e-09d7-11e8-a94e-3b67baeaae8b.html)

~~~
hollandheese
Of course more housing needs to be build. In a sane manner, though, that
focuses on the actual needs of the community rather than building more and
more expensive condos than only the rich can afford.

I wasn't talking about investment properties being idle. I was talking about
them existing. They drive the rates up just by existing, since the owner wants
to make more per month than they paid on it. If people weren't allowed to own
more than one home, then all prices for housing would drop.

Also 11,000 units is a good bit. Could house probably at least 10,000-20,000
more people if Airbnb was banned.

------
ucaetano
And the blame lays on the teachers of the 50's (and other people), now retired
homeowners artificially restricting housing supply for their own personal
gain.

~~~
xster
Made possible by California's plutocracy, uhhh I mean plebiscites.

TL;DR, a democracy does what a democracy does

------
tomohawk
In the early 60s, a relative of mine was a new engineer with a $12K salary. A
new car was around $3K and the house he bought was around $24K.

How many people have starting salaries these days that are 50% of a typical
suburban home in an area they can find work in?

~~~
Spooky23
In the early 2000s I was making $55k and bought my first home for $130k. It
was possible, although harder now as money is too easy to get.

You have three problems... over consolidation of industry, over consolidation
of capital and inflationary pressure via easy credit.

Bay Area real estate is a shitshow in many perspectives. The root problem is
that the money people are all there, and would rather not travel. It’s dumb
for all stakeholders, corporate, capital and working that such an important
and large component of the US economy is dependent on the Bay Area. It’s
doubly stupid as the whole region could be leveled by an earthquake at any
time.

I’ve worked on projects where significant numbers of people contributing to
the project have been on other continent. It defies all reason that we don’t
have the ability to finance business in Omaha, Buffalo, or Nashville.

~~~
vfulco2
Easy credit was one of the primary drivers of the death of the America dream.
All anchoring to intrinsic value was lost when people could pay the markup on
the product and carry the debt burden on top.

------
IronWolve
And what percentage is it for a single google/apple/facebook employee? If they
make 250k a year, and the mortgage is 10k a month, thats almost 50% of net.

Sounds like its extremely bad for everyone.

~~~
thedirt0115
How is that bad for the single Google et al. employee? That still leaves 10k+
a month for everything not housing-related, which is _plenty_. Outside of
housing, SF isn't that expensive (groceries, for example, aren't ~7 times more
expensive than the national median like houses are). I have a friend living in
SF, making about that amount of money, with a stay-at-home wife and a kid, and
they're quite comfortable despite a 7k+ monthly mortgage. This is bad for
people who make <100k a year who may never be able to afford a home in San
Francisco, especially as the prices keep rising.

~~~
wetpaws
In Bay Area 250K will get you around 155K post-tax. It means you would have
about 2K/month after morgage which is insane.

~~~
pxeboot
Insane, yes, but 2k/month is still a lot more then most American families live
on after paying their rent/mortgage.

~~~
lorenzq
Lets not forget property taxes, which would wipe out again half of that if not
almost all of that.

------
asdsa5325
This says more about California's very high cost of living than teacher's
salaries.

~~~
avs733
Given that teaching, almost by rule, occurs locally this says something about
the relationship between those two things.

~~~
randyrand
Despite this, the student to teacher ratio in the bay area is still 19:1 -
23:1. Hardly a change. So clearly teacher pay is not a big issue.

~~~
germinalphrase
How does student:teacher ratio impact whether or not a teacher can afford to
live in/near a community - which, presumably, they need to do to teach there?

~~~
randyrand
> which, presumably, they need to do to teach there

Clearly they still can. They can afford to live there or commute. If they
couldn't the teacher-student ratio would go down.

------
delbel
And in the 50s people bought land and order house kits from Sears. You can
google image search "Sears house kit" and see hundreds of designs that might
remind you of the houses in your own neighborhood that you grew up in.

[https://insme.info/wp-content/uploads/2018/01/sears-house-
pl...](https://insme.info/wp-content/uploads/2018/01/sears-house-plans-
luxury-1923-sears-modern-home-kit-house-sunbeam-craftsman-bungalow-of-sears-
house-plans.jpg)

~~~
efa
Exactly. In the 50s the average home size was 950 sq ft. In the 2000s 2,320 sq
ft.

------
rdlecler1
We need an Elon Musk for housing. If Donald Trump could solve this problem
he’d win 80% of the popular vote in 2020. Housing cost is a huge tax on
propsperity for the next generation.

------
dfsegoat
I understand the article is about the fact that teachers salaries have not
scaled over time.

I wondered whether Housing inventory vs Price (homes available for sale) by
decade might shed some light on the authors conclusions, and found the
following Forbes article, with data from Trulia (in 2013) showing Homes built
vs Asking Price, by Decade [0]:

To me, it looks like Asking price increases semi-linearly starting in the 40s

[https://b-i.forbesimg.com/trulia/files/2013/05/Chart_Templat...](https://b-i.forbesimg.com/trulia/files/2013/05/Chart_Template2.png)

[0] - [https://www.forbes.com/sites/trulia/2013/05/02/american-
home...](https://www.forbes.com/sites/trulia/2013/05/02/american-homes-by-
decade/#7764d2f01045)

------
jjtheblunt
Because the planet was effectively larger (i.e., less developed) and the
population was MUCH smaller: supply and demand, no?

------
thirduncle
_It honestly comes across as a bit disingenuous._

It was definitely careless in regard to accuracy. But the original Trulia
article it misread from comes a lot closer to making the comparisons you're
after.

------
SlowBro
So what's the solution?

~~~
petra
Germany. Appartment prices are very stable - risen only 0.05% per year,
1970-2003.

And it starts with politics,law I think: there are strong rights in the German
constitution for people who want to build on their land - which can override
zoning.

And the salary of leading local officials is tied to their city's revenue ,and
the only way to increase that, is to increase the number of local citizens.

And that creates competition between localities.

~~~
monocasa
I also like Japan's zoning scheme which is based on maximum allowable
nuisance. With the exception of some extremely heavy industrial zones, there
really aren't places where you can't build housing due to zoning laws.

[http://urbankchoze.blogspot.com/2014/04/japanese-
zoning.html...](http://urbankchoze.blogspot.com/2014/04/japanese-
zoning.html?m=1)

~~~
rcpt
Such a great write up. Could that ever happen here with our hypermicrolocal
zoning boards everywhere? Short of Donald Trump vengefully smiting NIMBYs
because they blocked his condos in the past I don't see how it's possible.

------
maerF0x0
I see no problem with home ownership being out of reach, so long as housing is
affordable.

IMO all asset classes are at risk of exuberance and thus we cannot stop
investors from over pricing them. However, their underlying value (rent price)
should remain sustainable for those who need somewhere to live. How is this
possible? Simple, someone who has capitalized in the past is free to rent for
far lower than someone who has purchased in the present. Someone who bought in
1970 likely has extremely low operating costs and thus is free to lower rents
to meet market demands, some asset owners may go bankrupt in falling
rents/asset prices... Thats just how capitalism works.

IMO we should be building far more supply to cause an eventual shock and real
drop in housing value. Make those who are doing idiotic things like paying
more than asking price for a home learn the lessons of capitalism .

~~~
nopriorarrests
>home ownership being out of reach, so long as housing is affordable.

But it does not work this way, if we actually talking about capitalism. House
ownership is having an asset (stock or house) and affordable housing is a
cashflow (rent + house deprecation, or dividend) which this asset generates.

These two are interconnected, always. If your house provides you with 2% rent
and your S&P500 portfolio gives you 0.02% dididend yield, it means that house
is overvalued or portfolio is undervalued.

So, point being, you can't have 3M houses ("home ownership being out of
reach") AND 24k/year rent ("affordable housing"). House prices should fall or
rents should rise.

~~~
maerF0x0
>So, point being, you can't have 3M houses ("home ownership being out of
reach") AND 24k/year rent

Sure you can. Because previous investors capitalized at the old market rates
(ie, what they really have is a $300k house investment w/ $24k annual
cashflow). The main issue I see with that is competing uses of the capital,
ie, if they can sell the $300k house investment for a $2.7M Profit and
reinvest it at something > 1-2% w/ similar risk profile.

But if we can put a lot more housing stock on the market the prices will
decline and money will go elsewhere looking for returns.

~~~
nopriorarrests
But why should anyone buy a house for 3M, if you can rent it for 24k/year? 3M
gives you 125 years of renting.

In fact, you can set aside 100K for 4 years of rent, and allocate the rest -
2.9M - into working somewhere else, like bonds.

Look, you put 2.9M into bonds yielding very conservative 3% per year (say, a
mix of AAPL bonds and US treasuries), and you have 87K per year. 24K covers
your rent, you have 63K to spend on drinks, you are not tapping your main
capital, _and you live in 3M house for free_. Buying the same house commiting
all your capital into it is very definition of insanity.

Obviously it's too good to be true, so rents should rise.

------
aaron_m04
As @gracels pointed out, the title is misleading.

> You switched from “in California” to “in San Francisco.”

