The cities that have had less crushing affordability problems are the ones that have been able to continue expanding outward - the outskirts land that used to be empty now has housing (and got more valuable as a result of this development) and the inner areas (slowly) has been getting denser, especially as old industrial property gets redeveloped and such. But many of those cities have just as much zoning and restrictions around density as NY or SF (usually more!). The difference is that they were able to go outward to better keep up with demand increases. I don't think any US city has been able to address rapidly rising demand through upzoning and density alone - redevelopment of existing residential will always be much harder and slower than of empty perimeter land. Density, on the other hand, has seemed to ultimately cause demand increases in NYC and SF greater than the supply increases it has provided.
If population growth stops, though... all this changes. Or even if just the net migration to various cities shifts around!
Listening to people that have owned land you hear things like:
- A creek was at one edge of our property right outside of it, and the state required us to build a bridge, getting the license for the bridge was costly and time consuming
- The creek changed course and cut across our property, the federal government had new requirements that had costs and approvals necessary
- We lost money on the property, despite land being a finite resource and all the dreamers being perma-bulls on land ownership, there was no way we could turn this into an income generating property that would be profitable.
That's why there are big development companies. The advantages of scale apply here as much as anywhere. Lose money on one, make money on others to offset the risk. What you call a "simplistic fantasy" is a century-long phenomenon in the US at this point of increased population in major urban areas leading to rising land values and the conversion of empty fields into developed areas.
There's no guarantee that population growth will continue to increase demand, or even that demand in developed areas will stay high - there have been a lot of cycles in that time as well, with extreme examples like Detroit to balance out the SFs of the world - but that's a very different argument than "we need to increase development so that we make housing less of a good investment," which I'm claiming is a blatant contradiction when it comes to the value of the land that is being developed. A shitty house in NYC is worth more than a nice house in Austin not for the building, but for the value of the slice of land it sits on, because the area has been developed more which has resulted in more demand.
You really don't. Dirt lots coated in rusty chainlink, gang tags, weeds, and tents are traded hands all the time, even in Downtown Los Angeles, for top dollar. Maybe you hire a crew to weed wack once a month if that. Even land zoned for a single bedroom bungalow goes for a lot of bread, because one day in the future that zoning can change and there is always demand in a big city with a lot of jobs near a major harbor and airport for more units, and parcels in big cities are finite.
The point is that you have to be as discerning as a homeowner or even more, and this can limit the supply of decent land to own or highlight how impractical it is or how it isnt a solution to anything
Even the other sister replies shifted the goal post, this is a thread about housing supply and people talk about squatting on land in urban environments as a rebuttal to just owning land in the vast expanse of space available, which further reduces the possibility of alleviating the housing supply
A portion of a constructed apartment building on your lot may be more valuable than your current house is there, but...
A) There's no guarantee that the value of your land to the apartment developer exceeds the value of your current use... after all, they have to pay to demolish and then improve it, and...
B) You and your neighbors may have put down roots, that have a substantial value, if difficult to directly economically measure.
C) Moving, itself, has substantial economic costs.
D) If an apartment building built next-door decreases the value of your single family home by 20%... there's no guarantee that there's demand or the possibility to build another one on your lot... and even if there is, the apartment-builder's estimate of your land value will be 20% less. You'll meet in the middle between (0.8 x your previous home value) and (the apartment-builder's estimate of the value of your land to him before improvement).
For (D), though, I think this is generally overblown. There are no guarantees, and situations vary, of course, but trend-wise, I don't believe "partial" in-transition up-zoning has been a value-killer overall. In parts of the US that are densifying, these sorts of things are generally radiate outward from high-demand areas. But the single family homes in the high-demand city core areas still have more value than the ones further away, and if you look at the appraisal reports, it's because of the land value, not the structure. In the long run, that development cycle creates the demand that pushes up your own land value even if yesterday vs today, it was more attractive in isolation as a single family home next to another single family home. "Location, location, location" is a cliche but a valid one.
As long as your location stays in demand - and in our current city planning paradigm that's not been something that's been threatened before potential post-COVID reorganization - you're more likely to hit a virtuous cycle for property value here than a vicious one. The types of developments/apartments that are gonna be put up are gonna be determined in part by how much it cost to get the land, so if it was already valuable land, building a slum next door won't make any sense to the developer.
So unless land is generating revenue to offsets the ongoing costs like taxes and operating/maintenance costs, it's a loser, operationally speaking: it has a negative cash flow.
If the asset doesn't generate revenue, it has to go up in value to offset costs, as well as to account for inflation, in order to just break even for its owner.
Land is a great cash cow for the state. People are permitted to "own" a parcel of land, but they are really just renting it from the state. Secondary, it's great for landlords.
People have to live somewhere, so if they don't pay for their own maintenance costs and state rent, they have to pay some landlord. Thus they mentally discount those things in order to justify the buying of land. When their property goes up a little bit, they think only of the difference between the new value and original principal, forgetting to looking at how much they sunk into the property, because all that time they had to live somewhere, and they take it for granted that you always have to pay people and cover costs in order to live somewhere.
The only owners who unconditionally profit from landlords. If you own just one property that you live in, that's good for you only in a climate in which properties are appreciating. If you own multiple residential or commercial properties that generate rent, then you're laughing to the bank; you generally don't have to care about whether they go up, or not nearly as much. You are more affected by vacancies, during which you have to cover maintenance, taxes and other costs like mortgage, without any revenue. That's particularly true about commercial properties in a recession.
To be a "good investment" owning housing doesn't have to have a better ROI than the S&P 500, bonds or the interest in a savings account. It just has to burn money more slowly than renting which is the alternative you'd be forced to spend that money on. That's a really low bar. One's primary residence can both be a good investment and affordable.
With that said, there seem to be pretty significant stability and psychological gains to owning a house that may outweigh financial considerations of this kind. That is doubly true if the investment + renting option is within the same ballpark as the ownership option.
Say your home is $100,000(i know, i know lol). Your 20% down payment is $20,000.
You have to factor in the interest that $20,000 would generate in say index funds or whatever you would do with it, when comparing buying to renting--along with all of the other stuff people usually factor like taxes & upkeep.
In some areas this can make renting actually the cheaper option.
Unless you have enough cash to pay for a house, you are either renting money or renting a place to live.
You also need to take into account the opportunity cost of owning land. You can rent and invest the difference in other assets like stocks.
If an asset class has much lower risk-adjusted returns than easily available alternative asset classes, I think it is fair to call it a poor investment.
I don’t disagree with what you say. But affordability can only be solved by increasing supply. Everything else is just shuffling the deck.
2. There’s plenty of reasons land can lose value: people moving away, economic, environmental (climate change), cultural changes. Population growth is projected to peak in 2070.
3. (Land appreciation - inflation) has to be higher then property taxes at least. There’s also opportunity cost of not using that money to buy another investment instead.
I know it’s not super common in the US for various reasons, but it’s certainly possible to build a house that will outlast you, your children, and their children.
A lot of homes and construction in the New England area is brick and I bet it will last quite a long time.
Another interesting tid-bit is that while older houses are much draftier and usually less energy efficient, this "airiness" of the house allows them to dry out and avoid rotting. There have been countless class action lawsuits in the US because builders in the 80s and 90s created situations where exterior wall assemblies trapped water against the studs and didn't allow them to dry out in an effort to make the "air tight" and energy efficient.
The brick cladding on old New England style homes either have an air barrier between the brick and wood framing or weeps holes in the mortar to allow water out from behind the brick. This allows them to last much longer.
And of course, there are a lots of factors which are totally outside of the individual's control— a falling aquifer could make digging a usable well prohibitive, for example, or maybe your land is on the coast of Florida and will be underwater at high tide in another few decades.
While you might be correct looking at other markets, you would be surprised how average it is for Canadian Housing prices across Canada. It is impossible to not to earn a minimum of 20 % on any Real Estate transaction withing a year. It is very possible with a little luck to almost double your money on certain purchases in a very short time. I understand how difficult this is for people outside of Canada to understand but I'm not making shit up, it is reality and there is no limit to what the Gov will do to make sure it continues.
I'm pretty sure you can find well over 11.5 million peoples'-worth of regions to pile up into a counterexample for what the post was saying. I think the point is that "across canada" is a broad brush to use for this.
There is no reason to think he isn't talking about Toronto. Two years ago the average price in Toronto was around $800,000. The assertion was that they are increasing in price by $30-50,000 every 10 weeks for the last two years. That would be an increase of $330,000 over those two years. The actual increase, as of the latest figures, is only $245,000. And the latest figure shows up as an extreme outlier. One month earlier the two year growth would have only been around $160,000.
Perhaps most important is to understand that zoning and open ended environmental review has added huge costs and risks to building and has effectively slowed construction. This is the primary reason that there are not enough units and most other problems we see emerge from this. There are important other factors such as the financialization of housing creating a situation where demand is essentially infinite and relates only to investors and not to families or income from labor.
As far as affordable housing goes, the majority of affordable housing is in older buildings. As buildings mature they tend to get paid off and reach a point where operating costs remain low until the structure needs to be rebuilt or replaced. This may be awkward to model, but realistic observation of markets shows that affordability is something that more or less inevitably happens to a property unless it gets removed or rebuilt relatively early in its lifetime because of a hot market.
Property values are traditionally supported by incomes. The current environment where property values grow well beyond incomes has little precedent and there is little reason to think this situation is stable. When people in the past talked about their property not losing value what they meant that there would be both income opportunities and reason to live in the area. When opportunities dried up or communities became undesirable then the housing values would crash. That is entirely different from expecting housing values should increase beyond incomes or inflation.
Yes, homeowners collude to restrict housing supply via regional politics. But the real problem is the centralization of jobs within big cities. This is bound up in the history of manufacturing in the west and the forces of globalization.
Remote work has the chance to reverse or at least slow this trend. In the short term it may lead to an explosion in real estate prices in areas within commuting distance of the big cities. In the long term I hope it leads to people spreading out a lot more and making housing affordable again.
The claim that a house doesn't produce anything seems incorrect to me.
In the same way that a house is often the majority of the network of Americans, a job is often the majority of the income. This fact does not cause most of them to advocate for enforcing immigration laws, even though this choice reduces payrates for all Americans.
But it is true that politicians don't like increasing property taxes and other policies that could draw down the housing market.
Overcoming the psychology of that is politically hard.
Housing is by definition in these circumstances a poor long term infrastructure investment.
The same issue persists irrespective of supposed NIMBYISM.
The primary, most obvious driver is historically low interest rates. How much we can attribute to that is hard to say but it's #1 for sure.
During the 2008 crises, the Fed took toxic housing loans off their books, which 'saved the banks' but it also 'saved millions' from foreclosure i.e. creating a moral dilemma there as well and signalling the Fed won't let home prices crash.
Of course since demand outpaced supply the added funding just caused even more inflation. (Sure, it caused some new entrants to the housing market, but since the place where people want to live is still constrained due to zoning and NIMBYism, the prices literally skyrocketed in those areas.)
That is literally the cause.
NIMBYISM cannot be a 'cause' of anything - there is always more demand than supply in SF and in many places (also - people have a right to manage their own communities as they see fit.)
If a million people try move to a village, the price of the houses goes up - the cause is 'zoning'? Or is the 'cause' the the people trying to move into the village? (Propped up with huge leverage due to ever decreasing interest rates?)
Since 1938 US government is backing housing via guaranteed mortgages. These are "money supply-side" policies that boost demand.
I'm saying that just like with healthcare and higher education, since supply is fairly limited dumping more money into those markets just raises the price.
> there is always more demand than supply in SF and in many places
That doesn't mean much. The equilibrium point is what matters. If there were more supply prices would be a lot lower. Of course desirable lots/houses/apartments will be priced higher. The problem is that house prices are going up too much, the barrier to entry (to join the community) is going up, also rents are going up (the price to stay part of the community is going up).
Plus, it's not like the demand is infinite. Let's say 10 million people want to move to SF. That's a very finite number.
And I'm not saying sure, let's build HongKong2.0.
> (also - people have a right to manage their own communities as they see fit.)
I agree with the spirit of self-determination, but alas I'm not well versed enough in the ethical problems with determining which group's interest have primacy when groups' interests overlap. After all if someone commutes every day to SF they are just as part of the community, and they might like to move closer. They want density. But this obviously quickly leads to the tragedy of the anti-commons. Everybody in that "SF community" has a vested interest in living in a nice and healthy city, but they would have to agree on how to manage housing. Usually nobody wants to voluntarily give up their advantageous spot. Nobody wants a big construction and high-rise as their neighbor. The common resource (land) gets under utilized. (NIMBYism. Plus gentrification as people who want money sell their houses to exploit this situation, which then pushes up prices of local services, which puts even more people into financial peril, who then increasingly feel that selling their property and moving is their only option.)
(You might have read this recent story about newcomers and old timers in Austin: https://news.ycombinator.com/item?id=26567350 )
> If a million people try move to a village
That sounds like a disaster or a gold-rush. What's the fair way to manage this? A quota system? First-come first-serve? The current system is rich people only.
Yes you are.
If they removed controls and zoning, SF would go radically vertical, and over 30-50 years, it would be NYC/Hong Kong like.
There is no 'ethical' problem here - there is plenty of land, people can move towards Sac. and other places. Those other places could feasibly chose to build taller builddings and more density as well.
Far away plentiful land is irrelevant. People want to be close to where people want to be. Close to work and amenities. Close to SF proper.
> There is no 'ethical' problem here
Oh, ok. Great. Then maybe I'll just copy-paste my previous comment here to kind of try to indicate my disagreement? :D
I don't think the problem is low interest writ large, but specifically attempts to prop up the homeownership market with debt.
There's a reason that post-2008 private lenders have basically backed out of the mortgage market and let Fannie Mae & Mac hold the bag, even in the context of so much more money chasing yields.
The notion is ridiculous - housing is extremely affordable in the US.
There absolutely is no affordability crisis.
There is merely 'a lot of people who want to live in SF and NYC'.
You don't have a right to move to a place and demand they tear down their homes so you can jam yourself in with others in a flat.
What is causing prices to increase is either:
a) more people b) interest rates or c) higher wages.
a - isn't happening rapidly (though partly)
c - isn't really happening
it's b, consistently over time causing greater and greater leverage.
Even with a very generous look at the general price index for homes, it is going up at a much higher rate than inflation. There's a reason that younger generations are buying homes at a much lower rate. The idea that there is no affordability issue just isn't rooted in reality.
> You don't have a right to move to a place and demand they tear down their homes so you can jam yourself in with others in a flat.
I'm not demanding that anyone tear down their homes. I think that if someone voluntarily sells their property to someone new, and that new person wishes to build a new construction on that property, they should be able to. It is a very new historical phenomenon that doing so (voluntarily building on your own land, not demanding that others tear down their homes) is difficult in major urban areas - that has not historically been the case.
It's pretty ridiculous to demand that people who "got there first" get to demand restrictions on how the "newcomers" get to use their legally acquired property.
Now go try and get that to happen in San Francisco in less than a decade.
The cost to take 4 single family lots and build a 12 story building to fit maybe 100 units.
The actual per unit construction cost is like $100k ($10M for the building), but that is because they are all custom.
Mass producing housing would easily drop prices 50%.
Let's say these 4 lots with houses on them are worth $1M each.
In the mass produced housing model, the price per unit including land is $140k.
This is ballpark a 10x difference. Why is the spread so high? It's not interest rates.
(FYI the cost of the building it not hugely relevant, it's the land.)
Imagine that you can afford some kind of monthly payment for your mortgage - as interest rates go down, the larger the loan you can afford i.e. 'leverage'.
The longer people believe that interest rates will 'stay low', the more confidence they have in taking large loans. The longer the process goes on for, the longer people believe we are in a 'new normal' and feel confident in their purchases.
Ironically, the big swings in prices in real estate are a function of leverage (i.e. low interest rates): if an economic crash hits, fear causes a crash and then upswing commensurate with the leverage in the system.
NIMBYISM does not cause an increase in demand. Only 'more potential buyers' with 'more income' and 'more leverage' can do that. Since cities are not rapidly expanding in size with NIMBYISM, and wages are not radically increasing, it's likely a function of continuing high leverage.
This doesn't align with the last 20 years of housing prices, which have dramatically risen/fallen/risen while the interest rate has barely budged.
2000 interest rate - ~8.5%
2020 interest rate - ~2.8%
By December rates were under 4%, setting the stage for all the years that followed.
Is that not when housing prices started continuously increasing?
There are some nuances that supersede this point but I've run out of steam and lost the thread I was following.
As interest rates stay low - the amount of leverage in housing increases, which creates more volatility.
The economic crises is obviously the primary forcing function during the crises and subsequent recovery. This will cause pressure one way, and then the other.
The amplitude of the swing is a function of the fact interest rates are so low, and leverage is so high.
They have been really low for a long time relative to the return on other assets, ergo, the leverage maintains and increases.
Obviously this is amplified by other aspects of easy monetary policy.
Put inversely: if rates were up 3 or 4 points, I don't think we'd see this kind of bubble in housing, not remotely.
We are living in weird credit bubble, and thanks to COVID it may never let up - i.e. this could be 'the new normal'. It's like Earth's gravity has shifted for good and we're all having to adjust to a new reality. Part of that new reality is crazy home prices.
The average 30-year mortgage rate in 2020 was 3.11%. The same $2500/month payment with 20% down buys a $730,892 house.
Ignoring down payments (which differ greatly between the two examples) and other expenses like property taxes, the 2020 mortgage rate allows someone to buy 172% as much house as they could in 2000. This doesn't translate perfectly to rental prices, but property affordability via low mortgage rates is heavily correlated with increasing rent prices.
Not a perfect comparison, but it shows how much mortgage rates are driving the housing price boom. Scary to think what's going to happen when (if?) rates start going back up.
Source for historic numbers: http://www.freddiemac.com/pmms/pmms30.html
For those who bought when rates were high and sticker prices were low, declining rates brought higher valuations. Additionally, the ability to refinance at lower rates meant that monthly payments were able to decrease along with total interest paid out on the loan.
For those who bought now (me!) at high sticker prices and low interest rates, the mechanics don’t work in our favor. Interest rates are only likely to go up, which doesn’t allow refinancing at a cheaper rate. At the same time, (inflation-adjusted) sticker prices will go down.
So while renting gotten ridiculously more expensive, home ownership also looks like an increasingly worse deal.
Who cares about inflation adjusted price when you have a mortgage ? Your rate will be X for Y years, as long as your income keeps up with inflation you'll get a net discount. Buying a property with loans is a good way of betting on inflation - I don't know if it will happen but if it does you'll win.
Worst case scenario is recession, you have reduced income and housing prices plummet - I don't see this playing out, running low interest rates to high inflation seems likely to me.
And the standard case scenario is rising interest rates, where your highly-leveraged asset drastically underperforms the market (and may even produce negative real returns, if it doesn't keep up with inflation).
Low interest rates and high perceived inflation causes people to take on increasingly higher amounts of debt. In some cases, it makes sense to borrow at 3-8% interest if you expect an ROI of 12-20% and you set aside 1/3rd of your gross return for taxes.
However this system has some positive effects. If you go out and build 3 homes and people buy them, you’ve effectively created 3 homes worth of wealth.
I don't see realestate underperforming inflation without some massive changes either.
And in case of rising interest rates, the first thing I expect to pop is overvalued stocks and money parking commodities.
Home ownership is still probably a decent deal overall (I bought two years ago). But home ownership was an incredible deal for boomers who have been able to refinance at progressively lower rates while seeing a disproportionate rise in home value.
Millennials now are stuck buying those homes with highly-inflated prices with not nearly as rosy a probable future. While it's certainly possible that housing prices continue to rise drastically, my own read of the available information shows that this was chiefly a side-effect of declining interest rates, which frankly can't get that much lower.
The reason this rate cannot be negative is that demand will immediately fill it up and use it for arbitrage (shove the money under a mattress and pay back the loan later) before it can become negative.
This ignores the fact that, in some countries at least (e.g. Denmark), you reduce your debt if you refinance at a higher interest rate.
For example, if you financed your house with a $200,000 2% fixed-rate 30 year Realkredit loan, and the rate of interest increases to 4%, then you can refinance you existing mortgage at 4% but now you only owe $100,000.
This is how bonds work in general: a doubling of the rate of interest halves the bond price, and a halving of the rate of interest doubles the bond price.
You got in at low interest rates. Why would you have to refinance? Why is not being able to refinance an issue?
In nominal dollars this is correct, but the $423,870 2020-dollars is equivalent to $660,449 2021-dollars, or only 11% more house in "real" terms, not 72%.
>>[...] it shows how much mortgage rates are driving the housing price boom
I think the dual combination of mortgage rates and inflation-adjusted real value caused the increase in nominal housing prices.
>>Scary to think what's going to happen when (if?) rates start going back up.
Given that lower mortgage rates were essential to keep affordability barely within reach, we are in complete agreement here that higher rates will be really ugly, even if they might be necessary/inevitable.
It’s not a perfect relationship between the two—affordability does fluctuate, and the movements have a lot of latency between them—but on a societal scale the relationship holds.
Except what's happening I live is that now the $423,870 house costs $730,829. As well, for someone who doesn't already have a house, the down payment isn't something you can just handwave away.
You'd think so until you factored in vastly higher insurance costs - between 2000 and now.
source: five years of insurance increases more than doubled our 2000's monthly home payment
The funny thing is, all the rich people living in these cities would never be able to survive without all the poor people commuting into the city to support them. The more expensive the city gets, the longer those commutes get. It's a horribly regressive system because now the poor people are spending multiple hours a day commuting, which is a huge opportunity cost of time that they could have spent advancing their social mobility.
At some point something has to give. You can't just keep filling cities with rich people if nobody is there to keep them running.
The solution is to remove control from local groups. That also would address a huge part of the many committees you need approval from to build something which is another massive driver of costs and deterrent to build especially cheaper units.
I think the other thing that's not talked about enough is that building more housing has benefits for incumbents. If more housing is built in my neighborhood, my neighborhood will support more local businesses and other amenities which I can enjoy. It also means there are more social connections available. Additionally, population growth drives economic growth, which ensures that their locality remains vibrant. The ideology where we view more humans as strictly a cost, and never a benefit drives a lot of problems in our society IMO.
- Great Britain, to the colonies
You'd better have a really, really darn good reason for throwing out democracy. Otherwise this is basically calling for taking away what someone else has just because we want it.
Rental prices are to the point where even apartments are out of range for the average person who lives here. If you rent they want your income to be 3x your rent price. So currently if you are a single individual looking to rent that means you need to earn ~$36k/year to be eligible (also, a clean criminal and financial record as well). Issue is the minimum wage is $7.25/hr still...and if you work foodservice they can pay you ~$3.50/hr because your tips offset it.
We have a steady influx of people buying houses at over the already inflated asking cost because it "seems cheap" to them compared to where they live. What they do not realize is that if they lose their remote job (or if their pay is scaled to the region) they will have little/no chance of finding employment locally which will pay the amount they need to simply "live".
About 4 years ago University of Idaho released a study saying that 22% of the people living in this town cannot afford to do so...I wonder what that rate is now. I am starting so see more and more people sleeping in cars parked near the recreational areas and parking lots. Tons of multi family houses. Things are going to get bad really soon.
I can't speak for every area of the country...but in our case I suspect a large part of this is the waves of real estate investors who came through in the last couple years to buy up homes and are leaving them vacant (or vacation rentals). It seems like inventory is being artificially limited. To the people investing it is a win-win...either the house is vacant and you make a ton of money...or it gets rented as an airbnb for $3k/mo and they make even more.
I suspect if they were to impose a 2x property tax on any property vacant for more than 6mos or vacation rentals it would very quickly effect the issues we are facing...but being as this town was structured by the tourism/real estate industry I do not see much hope.
The housing pinch has already hit Twin Falls if you can believe that. One would have to move all the way to Idaho falls to know what it was like in the Boise area 10 years ago.
I wonder how many people would move to Coeur d'Alene if they would have made the lake a superfund site...like they did the Silver Valley which drains into it. The whole bottom of the lake is heavy metal contaminated...but they don't show you that in the real estate ads. :)
I make a lot of money as a software engineer and I don't think I'll get a home until I'm 45.
There is a large portion of the population in jobs like nursing, banking, tourism or real estate but they are not the ones who are doing the jobs we are talking about.
Who is going to serve/cook the food? Where will they live?
Teachers make $29-49k in my area. Nurses $39-68k. (based on glassdoor).
Average hourly rate is $17.39 (payscale.com)
If you work 2000hrs/year your pre tax income is ~$35k. Right now there are 1bd apartments going for $1100/mo (albeit brand new with amenities such as pool/weight room).
So if you are lucky enough to make the "average" pay in the area that means you can get a 1bd apt...assuming you qualify. A very low end house you need to make $75k/year to purchase...again assuming you qualify.
I think in many parts of western Europe average earners can’t even afford a 1bd apt.
Extreme inequality combined with familial support. It's not uncommon now to have one or more kids living with the parents into their 20s while they go to college and build up their career, right as the homemaker enters the workforce with limited professional experience so you get 2+ minimum wage earners and one established professional bringing in support. Throw in the gig economy, which hoists capital and operational risk onto the employees (sorry, "contractors"), and you've got a majority of the working population making minimum wage.
It's even worse in university towns, where the college kids are almost guaranteed to be working for minimum wage while receiving external funding from loans or parents which can skew the numbers even more.
But it is a right to work state. I suspect that is part of the issue. There is very much a "Good ol' boys club" in town which has a tendency to employ people due to favors or connections (regardless of qualifications).
Even in the 90s when we had Agilent, Itron, and several other large companies in Spokane the area directly across state line was significantly cheaper to operate in. So we ended up with a few electronics contract manufacturers who got their start being basically sweatshops (yes...solderers get started out at minimum wage or barely above it).
I know a person who in the 90s was making $50/hr as an EE...last I heard he was making $25/hr to do the same job now. (When Agilent shut down it flooded the local market with engineers and techs).
edit: Adding this link for more data. Look at the percentage of renters below poverty level http://www.city-data.com/poverty/poverty-Coeur-d-Alene-Idaho...
Here is a recent BLS study called "Characteristics of minimum wage workers"
"In 2019, 82.3 million workers age 16 and older in the United States were paid at hourly rates, representing 58.1 percent of all wage and salary workers. Among those paid by the hour, 392,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.2 million had wages below the federal minimum. Together, these 1.6 million workers with wages at or below the federal minimum made up 1.9 percent of all hourly paid workers."
So I'd guess closer to 10% of people make the minimum wage in their jurisdiction (1.9% x 4 + I assume more people make min wage when it's higher)
Very interesting though that 3x as many people make below the min wage as actually earn the "minimum" wage.
More generally, I'd encourage you to question the mental model that made this sound like a potentially true claim in the first case. An economy where most people are paid minimum wage would be incredibly different than the one we actually have.
It is kind of fascinating that people have such wildly different ideas about what the objective facts are, and how that must flow downstream into their worldviews and politics. Between 51.6% and 2.3% is not a small difference! Those are very different worlds we could be living in!
San Francisco publishes its Housing Development Pipeline here https://sfplanning.org/project/pipeline-report#current-dashb...
They may not be adding capacity at a sufficient rate, but they have tens of thousands of units in the pipeline in every quarter.
I don’t understand why so many HN commenters seem to think it could magically become a dense metropolis like Manhattan or Chicago.
Even in the Gold Rush in the 1800s SF was unscalable the rent was unaffordable. It was always a high crime city. Just read about the history of the barbary coast.
Everybody who comes here purely for money wants this city to be something it just isn’t.
It’s 2021 and Covid-19 has shown that remote work is viable.
Back in the day large tech companies like Sun, Peoplesoft and Cisco built offices all over the bay so that people had the option to work at facilities close to their home.
SF wasn’t even a significant tech destination before 2007.
My wife and I are actually moving to Barcelona when Covid is over, under the Non-Lucrative residency permit. If you think San Franciscans have a Nimby attitude and hate outsiders then you should go visit Barcelona.
“Unremarkabe single family housing”. So what, you want to take peoples’ housing via eminent domain and build more of the hideously dugly condo boxes they’ve stuffed all over SOMA and the Missiom?
I happen to love my unremarkable home in the Sunset in which my family has lived for 55 years.
It’s quite rude to refer to housing for people as “droid housing.” What makes you any better than them?
“Droid housing” is san francisco slang for the soulless eyesore boxes containing cramped, slapshodnfaux “lofts”, usually painted a bluish slate grey or salmon pink on the outside, entirely devoid of character or quality.
Thankfully San Francisco’s direct democracy works well to keep this city small. There are many soulless sprawling cities which are seismically stable, devoid of character, flat and inhabited by people who don’t care enough to resist.
You seriously think San Francisco would be livable at 51,000 pe m^2? It would literally cost $500bn in infrastructure investment to make that possible just inside the city.
101 and 280 would need to be 15 lames wide each, bulldozing 1/8 of the peninsula. We would need a half a dozen new transbay bridges and tunnels.
SFO would probably need another couple of runways and terminals.
You’re talking trillions of dollars in investment because tech companies prefer open office spaces to Zoom.
Why would we need more freeways if amenities are local? In fact, we could probably demolish freeways if more people who worked in San Francisco could afford to live here.
People don’t disappear if you don’t have housing for them. Why is building infrastructure in Phoenix preferable to growing it here? There are returns to scale with all of this. OAK is underutilized as an airport as well.
Have you considered that San Francisco is a pleasant place to live, and people want to live here independently of their employment situation? Prices were high before technology employment.
The past 20 years is the lowest population growth the metro area has ever experienced. What it has experienced is growth in the wealth of the wealthiest part of that population, along with increased demand for office space, which competes for housing as a possible use of land.
The actual fast growing metro areas of the past several decades, i.e. San Antonio, DFW, Phoenix, Las Vegas, have also seen tremendous booms in housing construction.
The homelessness problem in San Francisco is not new, either. You can read about the history here: https://www.kqed.org/news/11765010/timeline-the-frustrating-...
It stands out to me in particular that the number of homeless people is about the same as it was in the 80s, but the public complaints being received have skyrocketed. What seems to have actually increased is the number of people either living or working in the city who aren't used to seeing homeless everywhere, presumably people from elsewhere displacing native San Franciscans. But both the absolute number of people in the city and the absolute number of homeless people in the city are not growing at any abnormal rate.
This is why San Francisco doesn't work anymore and isn't equitable until the electorate decides to build new housing. We shouldn't downplay a move to cities like Austin, Charlotte, and Atlanta that have no qualms with building lots of housing and affordable housing.
Why have a non-trivial percent of funding go to rent seekers, anyway?
Those other 3 cities have significantly more capacity both to build up and out. Blame the electorate all you want but geography is geography.
SF's infrastructure doesn't seem that it can handle more people. traffic is bad. Restaurants are full (have you been to a brunch?). Buses are full. More homeless than ever.
Letting the price rise, so people/companies will go elsewhere seems like an okay strategy.
Well, it's pretty clear from the explosion in housing prices that it's not growing nearly fast enough. I'd love to see some citation as to what "too fast" is and why you think SF is at risk of hitting that number.
> SF's infrastructure doesn't seem that it can handle more people. traffic is bad. Restaurants are full (have you been to a brunch?). Buses are full. More homeless than ever.
More housing = more people = more revenue. That revenue turns into more infrastructure, more restaurants, etc. In fact more density makes infrastructure more economical to operate on a per capita basis. Think Hong Kong.
Part of the reason there's more homeless people is they can't afford houses, which building units would help alleviate.
> Letting the price rise, so people/companies will go elsewhere seems like an okay strategy.
That's not a very free-market attitude!
The cost of upgrading infrastructure in a busy city is enormously expensive. San Francisco is on a peninsula with no room at all to expand outward. The only solution is to build up and that’s a real problem in an area prone to earthquakes.
Plus there are a lot of people that like the character of their neighbourhood and don’t want to live in an apartment building. It isn’t their fault that SF became the global tech capital.
So having more people to split that cost with would help! To be clear Hong Kong island is far harder to build on.
> Plus there are a lot of people that like the character of their neighbourhood and don’t want to live in an apartment building. It isn’t their fault that SF became the global tech capital.
They’re also not entitled to that. In a democracy the many decide.
Actually, yes they are. San Francisco is a participatory democracy. Between a large # of ballots voted for each November, we elect our board of supervisors and attend supervisor meetings to tell them how to vote.
If people don't vote, well, that's their fault.
I say that as someone who owns property in San Francisco.
In a democracy the people who inhabit a place decide. Not the people who want to inhabit it. That's not democracy, it's colonialism.
Colonialism: the policy or practice of acquiring full or partial political control over another country, occupying it with settlers, and exploiting it economically.
We did decide, and continue to do so in supervisor meetings and in the ballot box. You might want to read up on federalism.
People always ignore this fact. Infrastructure isn’t free. When all is said and done the Central Subway extension will likely have cost over $2bn for 1.7 miles of subway.  The new transit center cost $2.2bn . Rebuilding 1/2 of the bay bridge cost $6.5bn. 
Consider that money for all of this is artificially restricted by Prop 13, and by California being a net-giver state, paying about $40bn per year more to the fed than we receive back, effectively being a piggy bank for poorer states.
> Plus there are a lot of people that like the character of their neighbourhood and don’t want to live in an apartment building.
Many commenters with a lot of hatred for San Francisco’s unique brand of dirext democracy are sadly OK with overruling the expressed will of the people not to turn our home into New York just so some tech billionaires can sell more banner ads.
> Many commenters with a lot of hatred for San Francisco’s unique brand of dirext democracy are sadly OK with overruling the expressed will of the people not to turn our home into New York just so some tech billionaires can sell more banner ads.
Who's our? Generally voters tend to be older, wealthier and landowners. The large pile of younger, less wealthy, more transient renters isn't represented well. I don't think the outcome means the system works.
> Who's our? Generally voters tend to be older, wealthier and landowners. The large pile of younger, less wealthy, more transient renters isn't represented well. I don't think the outcome means the system works.
That’s how democracy works. If you don’t vote, you don’t have a voice.
All costs below are in $USD nominal per mile of fully-underground subway system.
NYC subway extension, east side: $3.7B per mile.
SF Central subway: $928M per mile.
This is backed up by a Citylab analysis:
Alon Levy at Citylab shows approximate range of underground rail construction costs in continental Europe and Japan is between $100 million per mile and $1 billion. Most subway lines cluster in the range of $200 million to $500 million per mile.
The US has a range of subway construction costs of $600 million to $2.6 billion per mile. The US median price cluster is $800 million to $1 billion per mile.
> That’s how democracy works. If you don’t vote, you don’t have a voice.
In an optimistic world, sure.
It can also be that you build a bunch of building. Then, there's an economic downturn, and SF is fucked and left with abandoned buildings.
There are cities that fell into this trap.
I'm not saying it will happen, but it can happen.
Growing slowly is a good way not to push yourself into that corner.
How slow? I dunno. I hope there's an expert that can evaluate it.
Homeless is a tough one. I'd say that reduced housing prices would help, but I think that will just reduce the rate of new homeless. I personally thing that we need to aggressively force them to seek help or get out of the most expensive city in the world. Saving up enough to find a place in SF in near impossible, and hacks like homeless shelters are often full of crime and reduce the housing supply for low income families.
We already fucked up the housing market with prop 13 throwing off the supply, we need to build a huge supply to counter that (unfortunately repealing prop 13 remains the 3rd rail in CA politics).
Maybe SF could credibly commit to adding more density in the near future, but not immediately? That way speculators open brunch places before the customers arise, and there isn't a brunch shortage?
I agree with your point, but you will often find the plight of the poor is.. low on the priority list. It should be higher based on the average presence of guillotines on various message boards I frequent, but I assume the well-off have some sort of survival plan.
In the U.S.A if you took EVERYTHING from all of the billionaires, there are ~700 of them you would net under $5T in total . The existing debt of the USA today stands at a hair under $28T . The estimated budget deficit for the next 10 years is $1.2T a year ! You do realize you can lop off all the heads you want, take all the money you want, and you will not have solved anything! You would still be a debt slave :( Raising taxes by itself will not solve anything you ALSO need to decrease spending, but no one wants to hear about fiscal responsibility.
The heads that need to go are those of corrupt politicians.
The goal of threatening to kill someone isn't to murder them for the sake of murder, it's to negotiate with them from the fairly sensible starting point of "give me what you want or I'll kill you". If what they want is "fair wages and a decent life," that seems reasonable enough.
edit: Come to think of it. You cannot ignore it precisely, because it is not rational. Rational people you can bargain with.
Demographics-wise, I assume people younger than me, but I may be oversimplifying it. In practical sense, the more you earn, the less likely you are to support tax increase on yourself so maybe it is more tied to socio-economic status. Sadly, I have no data to back this up.
Rich people will just have people they need to keep things running live on their own now-very-large properties; and arrangements where your workplace also provides your housing might start to gain traction.
All of these ideas to make workers more dependent on their benevolent overlords is basically creating a subservient population.
If company X is offering you a job, and you really need a job, and it's not enough to pay market rent, but X has company dorms available and it will be paid via a line item off of your paycheck, you might take it.
Anyone who needs this type of arrangement is likely going to get a refund at the end of the year anyway and doesn't care about the tax implications.
Amazon could start doing something like this to have labor for its warehouses if the housing market keeps pricing everyone out, for example. Maybe also office maintenance, food prep/delivery, etc. Didn't Foxconn house its workers at one point?
These could be the housing projects of the future if done at a big enough corporate scale. Would they decay into crime-ridden slums or would corporate housing police keep things in order, but in a dystopian manner?
1) I kind of despise the housing market, but you do at least earn equity instead of throwing money away to a landlord.
2) If the company owns the place, your rent goes right back to your employer, making them an even stronger entity.
3) If you are at risk of losing your house by pissing off your boss, it means you'll usually adapt your behavior in a variety of ways dramatic and subtle to fit in.
4) Switching employers means you definitely need to move instead of just probably.
5) It's just a weird vibe when you live in a hive that isn't yours and is owned by the same entity that controls everything else in your life even if they were benevolent. They're daddy and you're baby, except they have little interest in you beyond pure self-interest.
Comparing that scenario to serfdom is amusing. If the property is sold, you could say that the people "come with", though they needn't get permission from their Lord to travel or move (barring any legal contracts like leases).
I've lived in SF for over 15 years -- this is obviously false. You could argue "not enough" units, but if you haven't seen new construction of multiple large buildings in multiple neighborhoods (Hayes Valley, Mission, SOMA, Market st., Potrero Hill, Mission Bay), then you haven't been in SF.
Literally walking around on the street, you can see thousands of new units. There was a pretty big uptick sometime around 2014 or 2016 as well. That said, prices are still the about highest in in the nation from what I can see.
>Even with the leverage that comes from getting all the value increases for only a fraction of the initial cost, it is a pretty rare market where the average homeowner will be better off by raising home values.
>Frankly the only time this sort of argument makes any sense is if people are planning on moving to far less expensive areas (e.g. retiring to the country) or if they plan to never purchase a home again.
In your same example:
I have $10k, and buy that $100k house with a $90k mortgage. For simplicity let's forget mortgage repayments
After 10 years I sell for $163000, leaving me $73k for my next down payment
I can now "afford" a $700000 house assuming banks are willing to lend 90% LTV
> It's not for no reason that it's prohibited in Islam, Christianity, and Judaism.
And it isn't (in most Christianity, and I think at least some Judaism). That's all.
Moreover, that assumes that the restrictions you put in place will impact everywhere that people want to move. It seems to me like it's more of a commons problem - people want to add restrictive zoning where they currently live because it benefits their net worth but they are harmed when others do it in places they might want to move.
Suppose it doesn't. It's been years since we able to count on decades of unbroken, steady home value inflation.
It’s weird how so many things seem to be geared to help people who don’t need the most help (although I appreciate it). Locking in a mortgage and not having to move is one of the best things to square up a financial situation.
Especially hard on friends who rented for 20 years who have been saving to buy but hurt by increasing rents over and over.
If you are doing rent to buy but living in frothy areas where rents are always rising and apartments rent for 4k then obviously it's not going to be a winning strategy for you.
IKR? What is it with leaving reality out of these equations?
The world-record sprawl (and commute times) of Houston are how the housing prices have historically been kept in check.
As someone who is actively working to find a home in this market, I can say for certain that these measures are no longer sufficient. Houston has a few unique hedges to the scalability problem, but it won't hold up to larger forces such as mass migration from other states.
Prices in the Houston market are still not within a range that would concern a Google employee, but for everyone who lives in the state and is receiving Texas-style wages, these prices might as well be as unattainable as housing in Manhattan or Silicon Valley.
Yes if you wait for others to gentrify a neighborhood you'll pay the price. The third option is to take a risk and be an early adopter in an inner city neighborhood. Midtown used to be shotgun shacks that dated back to late 1800s. Now it's a sea of condominiums. East of Downtown (aka EaDo) was post-wwii starter homes and industrial, it too is now townhomes and condos. Third Ward (my neighborhood) was a mix of rental property and retirees and now has high and medium density housing mixed with condos and townhomes which are slowly pressing East towards TSU and U of H. The same happened to Moody Park area and Acres Homes is next.
I'm not quite sure what you mean: Houston's city limits span 667 square miles! That's not a very small portion in the urban center. It's true that there are a few pocket cities embedded in the city that may have different zoning laws: Piney Point, Bellaire and West University, but Houston relentlessly grew through annexation until it was slowed by lawsuits. It still continues to grow though annexations... see 
I also disagree about home prices being unattainable; I think implicit in your statement are assumptions about schools, neighborhood walkability and the like. There are plenty of places that aren't yet ideal but are far cheaper. In my zip code there are plenty of listings for houses and lots in the $100k range but at the top of the market there's a mansion for $2.1 million. Best of luck in your search for something with your criteria.
I would be interested in knowing this zip code.
1. While it's important to have private investment in property because this literally creates the housing units people rent, there's simply too much speculation here. I like the Swiss model that is way more restrictive of who can invest (as in, someone can't come in and buy up all the land in Switzerland) and punishing to short term speculation;
2. Foreign "investment". Investment here is a euphemism. "Money laundering" is probably closer to the truth. Example: every US tax resident is required to declare all foreign assets (including being a signatory in a foreign company or trust) but... real estate is specifically excluded. Why? It's well known that in places like London, property is used to hide and park money by, for example, Russian oligarchs;
3. Property owners who are non-residents where they own property should be taxed at a much higher rate. Places are simply way better off if the people who live there own the property there;
4. Incumbents vote themselves massive tax breaks. This applies to both property owners and renters. Case in point: Prop 13 in California (eg Disney still pays 1970s tax rates on Disney Land, for example). Oh and rent control;
5. NIMBYism. People on HN like to paint this as the boogeyman. I think this is somewhat overblown;
6. Subsidies for car ownership. Building out requires more infrastructure (eg roads, schools, utilities). Suburbs are subsidized by the taxpayer;
7. Attacks on public transportation. For example, Santa Monica trying to fight the LA rail extension into Santa Monica (because, you know, that'll bring undesirables into the area). Sometimes this is done for pseudo-political but self-serving reasons ("it'll raise taxes!"). This exacerbates other problems;
8. General opposition to allow and opposition to living in higher density housing.
That all being said, I see the pandemic as helping to reverse the trend towards the move to a few urban centers. This is a boon for medium-sized regional centers and ultimately a good thing for a couple of reasons: it increases choices and cities beyond a certain size just... stop working. More cities under 2M people would be better than more cities of 20M people.
We are basically a fence for the plunder of the developing world.
As foreigners drive up asset prices it becomes more expensive to acquire equity in your society as the rich get richer.
Additionally, my understanding is that median income in Switzerland is like ~70% of what it is in Los Angeles.
Is this not correct? This seems far from ideal.