Palo Alto considers subsidized housing for salary up to $250K
reuters.com
reuters.com
I've been trying for years to understand the concept of "everyone should be able to live everywhere" but I just cannot wrap my head around it, or it's cousin, "I shouldn't ever have to move, regardless of geopolitical changes".
Why are people so attached to any particular place that they'll suffer immensely to keep that particular place theirs?
That said, the GP didn't say that owning the house was the problem, but rather the regulation that makes that the only legal choice.
I agree that it sucks, but I'm not sure if it's unsustainable. There are plenty of worse situations in the world that pretty long-lasting.
If the police and teachers left, salaries would rise to correct the imbalance. Right now salaries are such that people are willing to work in those areas so the market is working.
New York is also crazy expensive yet there's actually a shortage. People are willing to pay those high prices.
so they don't owe the society anything, the society owes them
My parents did. They left the Bay Area when I was 9, never to return. They went to Texas, then Massachusetts. (thousands of kilometers) We left behind a large family on my mother's side and my dad's brother. I miss them, but one must do what is required. You move to where you can find a job and a home that work together.
I did it. I moved to Florida. My brother did it. He moved to Texas, then Maryland, then Ohio. (again, thousands of kilometers)
You do what is needed to provide for your family. If you can't afford the local area, based on available jobs and house prices, then you move. Often it is painful, but you must do it.
From that, even if you believe that property is necessary you may believe that efficiency of land use is an ethical issue where regulation to increase efficiency of use would be the ethical thing to do.
One might also simply believe in a "lighter" version of this and believe that the ability to own your own dwelling should be right, and that high prices and scarcity created by large estates exist "at the expense" of others for that reason.
"Land could not, in Polanyi's view, be allowed to be the plaything of the self-regulating market for essentially sociological reasons: where people lived determined who they were, and a self-regulating market that told people they could no longer afford to live in the community where they thought they belonged would trigger such a strong sense of communal injustice to spark the chaos of revolution:
Commercialization of the soil was only another name for the liquidation of feudalism which started in Western urban centers as well as in England in the fourteenth century and was concluded some five hundred years later in the course of the European revolutions, when the remnants of villeinage were abolished. To detach man from the soil meant the dissolution of the body economic into its elements so that each element could fit into that part of the system where it was most useful....
Some of this was achieved by individual force and violence, some by revolution from above or below, some by war and conquest, some by legislative action, some by administrative pressure, some by spontaneous small-scale action of private persons over long stretches of time. Whether the dislocation was swiftly healed or whether it caused an open wound in the body social depended primarily on the measures taken to regulate the process....
The inertia of the common law was now deliberately enhanced by statutes expressly passed in order to protect the habitations and occupations of the rural classes against the effects of freedom of contract. A comprehensive effort was launched to ensure some degree of health and salubrity in the housing of the poor, providing them with allotments, giving them a chance to escape from the slums and to breathe the fresh air of nature, the “gentleman’s park.” Wretched Irish tenants and London slum-dwellers were rescued from the grip of the laws of the market by legislative acts designed to protect their habitation against the juggernaut, improvement. On the Continent it was mainly statute law and administrative action that saved the tenant, the peasant, the agricultural laborer from the most violent effects of urbanization."
http://www.bradford-delong.com/2016/05/highlighted-for-march...
Different values.
That's precisely why land should be left to the market. Because the alternative is not some egalitarian decision making with perfect information. The alternative is allocation of land through the political process, which has historically been used to encourage less than noble ideals like racial segregation and overuse of eminent domain.
Property taxes help pay for streets, police, ambulatory services, schools and maintaining parks. These essential services are paid for "at the expense of" renters and new homeowners. Of course, this deeply vested interest group also manifests itself in roadblocks for new developments that would mitigate the drastic increases in housing costs.
[1] http://www.zillow.com/homedetails/1536-Bryant-St-Palo-Alto-C...
- Apply market-rate taxation only for values over a certain threshold, say $1m+ and non-owner occupied
- Defer tax payments until the property changes hands (aka they sell the property or pass it on)
- Reverse mortgagesWow. We really have become a horrible society.
We fight this in a stupid way. We limit tax increases for a property, with a reset upon sale. This discourages people from moving closer to work, causing our roads to be clogged with commuters.
The right way is to say that assessed home value relates to the total portion of the city budget that your taxes must support. Your tax bill then wouldn't change unless the city budget changes or the relative value of your property changes. Subjecting the total city budget to voter approval is OK.
Basically the problem is millage rate. The dollar value of your property should not directly (by simple multiplication or division) translate into a tax amount. It should instead translate into a portion of the total. That is, it should represent your share.
"2. The Development and Rehabilitation of Affordable Housing Provides Immediate Fiscal Benefits for States and Localities SUMMARY: Cities and states benefit financially from the development or substantial rehabilitation of affordable housing. Some of the most significant sources of revenue during the construction or rehabil- itation phase are sales taxes on building materials, corporate taxes on builders’ profits, income taxes on construction workers, and fees for zoning, inspections, and the like.
Modeling one-time fiscal benefits: The fiscal effects of the construction of affordable housing vary from place to place depending on local tax structures, construction costs, development fees, and whether the local mix of industries is conducive to capturing construction-related activity. As with the economic impact estimates discussed above, the fiscal effects discussed in this section are largely derived from one of the input/output models, which are based on actual, industry-specific purchasing and production activities and adjusted to account for local variations. The National Association of Home Builders (2010) uses national averages to estimate that local jurisdictions stand to gain roughly $827,000 in immediate revenue from the construction of 100 LIHTC family units and roughly $768,000 when 100 LIHTC senior units are built.8 As Figure 2 shows, permitting/impact fees and utility user fees represent more than half of all local government revenues associated with the construction of a 100-unit LIHTC property for families.9 These estimates provide an important national baseline for the country’s most prolific affordable housing production program but, given local economic and project nuances, cannot be directly applied to any specific housing market or project.
The input/output models discussed above have also been applied by researchers to produce more localized information on the fiscal effects of specific affordable housing programs and developments. The following are examples:
Hangen and Northrup (2010) analyze the effects of developing and rehabilitating 582 affordable homes in Rhode Island in 2007 and 2008 using $25 million in housing bond funds and conclude that the activity had a significant impact on the income, corporate, and sales taxes collected by the state. The authors estimate that the $25 million in state funding leveraged an additional $231 million in investments, and the subsequent income, corporate, and sales taxes and fees associated with the total economic activity increased state revenues by roughly $16.7 million during the development period (excluding local taxes and fees).
A study conducted by the Minnesota Housing Finance Agency (2009) provides further evidence that a public investment in affordable housing can leverage significant capital and generate real revenue for state and local governments. Over two years (2006-08), an investment of $260.1 million in affordable housing leveraged roughly $470 million in additional public and private funds and resulted in nearly $1.4 billion in direct, indirect, and induced economic activity. This level of activity generated roughly $62.5 million in state and local tax revenue.
In an analysis of a proposed Pennsylvania state housing trust fund, Econsult (2009) focuses on state-level impacts and finds that for every $1 million in proposed spending, the state stands to gain $82,000 in revenue from the construction of new affordable single-family homes; one-time state revenues would be even higher if the $1 million were spent on the construction of affordable multifamily housing ($86,000) or on remodeling or rehabilitating existing homes ($116,000). These estimates exclude taxes and fees that local jurisdictions may impose. Making these estimates even more conservative, they do not include the impact of the construction spending generated by any public or private funds that would be leveraged by housing trust fund dollars.
Zielenbach et al. (2010) conduct a fiscal analysis of nine HOPE VI projects and find that the development of affordable housing can represent a significant source of revenue for local jurisdictions. One-time fiscal impacts based solely on sales taxes related to the redevelopment activity (and income taxes in the District of Columbia) range from $38,000 for a 120-unit property to $612,000 for a project with more than 700 units.11 While substantial, these estimates are significantly lower than those reported for tax credit properties above because they exclude fees collected by jurisdictions (e.g., impact and permit fees), corporate taxes on builders, and revenues related to indirect and induced spending.
Wood (2004) provides a straightforward calculation of one-time fiscal benefits for states and localities in Utah. The author estimates that more than 7,300 jobs — and $200.1 million in subsequent earnings — are supported annually by housing construction subsidies, rental subsidies to landlords, and down payment assistance provided to low- and moderate-income households. Applying the average state and local tax rate of 10.2 percent to these estimated earnings, Wood pegs the resulting fiscal impact at $20.4 million, which is likely conservative because it ignores other sources of state revenue such as sales taxes on construction materials and corporate taxes on builders’ profits.
3. Homebuyers Who Participate in Affordable Homeownership Programs Are Less Likely to Experience Foreclosure Than Buyers Who Do Not Participate in Such Programs, Thereby Reducing Sometimes Significant Foreclosure- Related Costs for Municipalities
SUMMARY: Multiple studies demonstrate that low- and moderate-income homeowners who purchase homes they can afford have a lower likelihood of mortgage delinquency and foreclosure than market- rate borrowers with subprime — and even prime — mortgage products. Given the substantial costs that local governments incur for each foreclosure, programs — whether subsidized or unsubsidized – that create opportunities for sustainable homeownership represent a smart, fiscally sound mechanism for promoting housing stability.
The reduced foreclosure risk of affordable and sustainable homeownership programs: Research into the housing market downturn has consistently demonstrated the high rate of foreclosure associated with subprime loans made during the housing boom in the early 2000s (HUD 2010; Immer- gluck 2008; Kaplan and Sommers 2009; Immergluck and Smith 2006a). By contrast, low- and moderate- income borrowers participating in both subsidized and unsubsidized programs designed to help them succeed over the long-term are substantially less likely than similar subprime borrowers to experience problems with their mortgages.
Ding et al. (2010) find that among low- and moderate-income borrowers with similar profiles, subprime borrowers were three to five times more likely to default on their mortgage than those who received prime loans through an affordable lending program that provided sound mortgage products with more flexible lending standards.
A 2007 study finds that the default rate among participants in the Dallas (TX) Mortgage Assistance Program, which provides zero-interest second loans for down payment assistance and closing costs, was only 4.8 percent, compared to the 9.6 percent average for conventional subprime loans (Federal Reserve Bank of Dallas 2007).
Some studies have found that purchasers of affordable homes participating in a variety of programs are less likely to experience defaults or foreclosure than prime borrowers or average borrowers more generally. For instance: A 2009 study of city-based affordable homeownership programs in Boston, Chicago, Los Angeles, New York, and San Francisco finds that all five programs have default rates below the average for their city, and that out of nearly 9,000 low-income families served by all the programs combined, the overall default rate was below 1 percent (Reid 2009).
New York City has partnered with nonprofit organizations to build or rehabilitate homes at prices affordable to low- and moderate-income households. Of the 20,614 such homes sold between 2004 and March 2010, only 13 have completed the foreclosure process (Powell 2010) — a rate of only 0.063 percent.
The SoftSecond Loan Program in Massachusetts has provided soft second mortgage loans14 to more than 13,700 low- and moderate-income borrowers. In the third quarter of 2009, only 0.75 percent of SoftSecond borrowers were in the process of foreclosure, compared to 1.39 percent of prime, fixed-rate loans in Massachusetts (Campen 2010), and the delinquency rate among SoftSecond borrowers was 5.7 percent, as compared to 9.3 percent for all mortgages in Massachusetts (Massachusetts Community and Banking Council).
A national survey finds that homeowners in community land trusts15 are eight times less likely to be in the process of foreclosure than owners of market-rate homes (0.56 percent compared to 4.58 percent at the close of 2009) (Thaden 2010).
One modest exception in the literature is the case of the Dallas Mortgage Assistance Program, whose participants had a default rate slightly higher than the state as a whole (4.8 percent compared with 4 percent) between 1997 and 2005. However, the default rate of participants in this mortgage assistance program was 3.6 percent lower than the average for all FHA loans over the same period (Federal Reserve Bank of Dallas 2007), which may be a more representative comparison group. "
[The Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development: A Review of the Literature](http://www2.nhc.org/media/files/Housing-and-Economic-Develop...)
This industry is totally relocatable. It's not like mining, shipping, petroleum, or even farming. Computers are available everywhere. Cramming everybody into a little spit of land is crazy.
If you really like Palo Alto, you can vacation there. It's not a good budget choice to actually live there.
The literature I just posted wasn't from the point-of-view of the people who would benefit from affordable housing, it was from the point of view of municipalities and states self-interested in seeing returns on investments in affordable housing.
Moreover, how does your logic make any sense at all? If you work in Palo Alto and don't need to travel far, you can be said to have a 'short' commute. If you live further away, then the commute is necessarily 'longer'. If you change jobs -> then the job you left will probably be replaced -> if the job is replaced at the same wages, the person being hired either has to live in an area their wages can't afford or they'll have to commute into it, a 'long' commute and the cycle continues. Your logic really only works if you are only worried about _your_ interests, not the interests of the town itself.
"This industry is totally relocatable. It's not like mining, shipping, petroleum, or even farming. Computers are available everywhere."
Isn't this arguing my point for me? Unless Palo Alto was incorporated solely for the benefit of computer programmers, there are other people who have lived there and are afforded the right to vote on it's future - teachers, cops, firemen, postal workers, janitors or other professions, and these programmers surely don't operate in a bubble but utilize some type of support staff? Governments shouldn't base policy on the singular peculiarities of one profession.
"Cramming everybody into a little spit of land is crazy."
I'd argue encouraging urban sprawl ('drive till you qualify') is less sustainable (i.e., more crazy) than encouraging more densely concentrated living/working areas - but that's not research talking, only my intuition.
The opportunity the government has is to step in and buy housing now, while prices are what they are, and then allocate them while ignoring the capitalist desire to sell/rent to the highest bidder. Their shareholders do not expect 10% YoY growth, after all.
Why not simply allow to increase the density (say skyscrapers) by chaning the zoning regulations to solve the obvious issues?
I mean: If you can pass a law for subsidiaries one can also pass a law to change the zoning regulations.
But yes, that's the real solution: and it's not happening at all in the Bay Area.
The Bay is 40,000 units under what it would take to level prices (not reduce, level) and people are still protesting "ruining the character of neighborhoods" by building.
I get wanting character or style... but legislate that, not less density.
But yeah, this is where regulation is needed, because the financial incentives are to let the market saturate like it is now. If you own property and rent it out, you certainly don't have to keep it well-maintained. What is your tennant going to do, move out? To where?
I'm almost tired enough of this situation to move away from New York. (I say after installing my window A/C units this morning. What year is it!?)
It's great when large building projects take style and such into account as it makes the neighborhood nicer AND the new building nicer, usually. I'm in that situation with a new shopping center just a few blocks from me: it's going to be really nice and add to the area while still being a massive new set of buildings and stores.
However people are dumb and selfish so often have a kneejerk reaction and try to block any development for arbitrary reasons (like height)
By increasing people's wages...demand goes up (more people can afford it). Housing prices go up because there's no increase in supply, and someone gets squeezed out.
There are thousands of shuttered towns and cities around the country because they failed.
For example, the firemen can be based out of the Central Valley. You'd better build with concrete and steel, because the service will be slow.
That works for school too. Put the kids on a bus. Perhaps people with kids should leave the area.
See? There are options. Pay more, or get bad service. You can totally have a city with pure technology companies, just as you can have one with only retired rich people.
I suggest a mix: pay more for some things, and run other things from far away.
All economic transactions hurt someone's value, but they create more value than they destroy. It's a net good.
http://www.economist.com/blogs/freeexchange/2015/03/wealth-i...
As a point of reference, starting salary for a teacher in the Palo Alto Unified School District is $57.5k. Someone who has taught in the district for 30 years with significant post-credential grad school makes double that.
I don't know what the solution is long term but I have a feeling someday this experiment in free market capitalism is going to be considered in similar ways to the USSR's experiment in communism a few decades from now.
IMO the fifties in the US were a total anomaly and they're not coming back ever. It was a time where (more than?) half of the world was taken out of competition due to idiotic economic system of communism, and Europe, the only potential competitor to the US, was still in shambles after the war. The US were a sole economic superpower, no wonder people had it great back then.
Citation needed.
It really depends on how you view the world. If that view is all about money and consumption, then, yeah, you probably won't leave money on the table. There are, however, competing worldviews that offer different versions of the good life, and in my experience, there are plenty of willing to leave money on the table because of it.
The skyrocketing housing prices are caused by strict zoning regulations, and there is absolutely nothing about free market capitalism in strict zoning regulations.
One worked for Google, and lived in a shared house in Sunnyvale because it was the only way to save towards something
The other was a teacher at a fancy school up in SF that will remain un-named. She literally lived in a kitchen pantry in the tenderloin. (Deep pantry - deep enough to fit a bed).
Google in particular has expressed interest in developing high-density housing (by south bay area standards) in Mountain View now that the area around its campus has been rezoned to allow housing.
I live in London. My road here has much smaller plots than a typical Palo Alto street. Yet the my road with 660 houses, takes up ~40,000 square meters of land (including the road and gardens). Near our local rail station they're building a few developments that will include at least one 55 story tower. Combined they will house about as many people as our road on maybe about 1,000 square meters of land. High density can solve a lot of problems if done right.
(Of course, because these two sensible policies would not be in favour of landowners. Subsidies demand is.)
Two solutions: either rely on the private sector to provide `reverse mortgages'. Or let the government offer the same product, ie allow people on low income but with lots of land value to defer payment until death or sale.
In addition, phase in land tax over a decade so that people have time to adapt. If you phase out other taxes at a similar rate, you will even get a great increase in land values.
(Basically, land in a jurisdiction that charges less eg income taxes or sales taxes is great for doing business on. So people will bid up its price.)
Property isn't just a market - its peoples homes and communities too - thats the other gaping hole. Why should Grandma need to move away so some Unicorn startup can move in?
Anyway, grandma is a red herring.
> "phase out other taxes" is the gaping hole in that argument.
See eg http://www.georgistjournal.org/2012/10/16/the-unplumbed-reve...
When taxes fall, real estate prices rise by enough to make up for it. Capturing that rise is simple with a land tax. (See https://en.wikipedia.org/wiki/Henry_George_theorem for how that's a rather orthodex statement. Nothing outside the mainstream of economics here.)
The whole process is very economically efficient. Swap taxes on elastic economic activity like work or investing for taxes on inelastic land.
She's a nice little old lady. Well, maybe she isn't nice by modern San Francisco standards; she is strictly Catholic and rather unhappy with the sexual behavior of most residents. Other than possibly that though, you'd probably like her. She keeps busy with plants, lots of noisy clocks, and a bird. Unlike a herring, she does not eat copepods and doesn't swim. She only managed to spawn 7 times, 1 or 2 at a time. She is mostly beige colored, not red. She is several times longer than the largest known herring.
All things considered, I'm certain she isn't a red herring.
Look, if she were a red herring, how could she even sign the paperwork to buy a house in the first place? Why would a herring even want a house, especially one that isn't flooded?
0 - http://kaalvtn.blogspot.co.uk/2013/01/a-poor-widow-bogey.htm...
if this is done on land that people live in, it will still penalizes landowners unfairly. If your land was bought when it was cheap, and the value appreciated, you end up paying tax money that you didn't really "earn" - in other words, it's only fair if you get reimbursed when land value depreciates. Deferring it till death is just delaying the unfair value exchange.
Payment on sale is similar, but slightly less unfair than an annual tax.
This is not about penalizing. This is about two things: first, shift taxation from where it hurts the economy (income tax etc) to where it doesn't do any damage to incentives (land supply is perfectly fixed). Second, making housing more affordable for eg young people.
(There's also effect on NIMBYism etc.)
The actual tax is supposed to be on the annual land rent. We'd only tax the value of the land as an easy and reliable proxy. (And yes, we'd also tax the imputed rent, ie the virtual rent that is short-cut for an owner-occupier. Not just the rent that accrues to someone who rents to other people.)
Switzerland already taxed imputed rent. (Look up Eigenmietwert.)
The main thing that differentiates different ways to tax is: - what does it do for (or against) income equality? - what does it do to economic incentives?
For things like sin taxes (like on alcohol, CO2, etc) you want to muck around with economic incentives.
In general, when you just want to raise revenue, changing economic incentives as little as possible is good. Hence, inelastic things should be taxed.
Land in all its forms, eg mineral resources, or straight up parcels of real estate to build houses on is perfectly inelastic, because the supply is fixed.
Taxing land does well on the equality score as well: richer people tend to own more land; so it's a progressive tax.
that's not true if you count the thing the tax is paying for - social services, or medicare, etc. There's economies of scale that you cannot easily achieve. A high LVT might encourage better land use, and thus, spur an economy to newer hights, which could vastly offset the individual "loss" on that tax (despite the fact that said individual may not feel like they've gained anything).
> The overall benefit to society is good, but to the individual, a LVT is going to (at least, in the short term) be a loss.
The nice thing about investing land tax value well is that this increases land value. (Eg a train station increases property values nearby.) Thus public infrastructure investment can pay for itself in terms of new taxes---without blunting any economic incentives.
(Things the landowner does, like putting a nice house on top of the land are explicitly excluded from a land tax.)
The idea is that you can tax that (imputed) rent without any economic loss---since the landowner doesn't do anything for it, there's nothing to discourage with a high tax.
In principle, one could try to tax 100% of the rent. In practice figuring out the exact rent that accrues due to the land is hard---especially for owner occupied places.
But, we have a good proxy: the value of the land is (the market's best guess of) the net present value of all future income from the land.
So as a proxy, you tax x% of the value of the land every year.
If land appreciates in value over time, the tax rises proportionally. But unlike a capital gains tax, one pays the tax on the entire value of the land, not just the gains since the time you bought.
Of course, a tax on the land changes the sum of the future income streams. And thus changes the value of the land, which changes the absolute value of the tax payment. Fortunately, solving that equation isn't too hard.
In the case of constant interest rates, constant tax rates, constant annual rent:
a: annual rent V: value of the property i: interest rate (per year) r: land tax rate (per year)
a = i * V + r * V
Reordering gives us the impact of land tax rates on price:
V = a / (r + i)
effective tax rate on the annual rent:
(r*V) / a = r / (r + i)
That's an increasing function of r, but it never reaches 100% (unless mortgage interest rates drop to 0%)
So for your example, people buying a house and later just flipping it, would accrue land tax while holding the property, and would be able to pocket any difference in price tax free. (Ie if one could buy and sell on the same day, there would be almost no tax to pay on any gain.) Of course, the land tax itself would blunt a sharp appreciation of the property somewhat.
Not a lot of the above description of the impact of taxes on land prices was specific to a land tax.
A property tax has similar effects. A land tax just excludes houses and other things on top of the property from taxation.
This in nothing even specific to a tax directly on the property. If for some reason you had a property where any shop on top of it would be excluded from VAT, the value of the property would go up. And if for some reason VAT would be doubled on retail in that area, the value of the property would drop.
Because any drop in taxation on other economic activity will lead to higher land prices, people have high hopes that if the government can tap into land prices as a source of revenue, they will be able to reduce these other taxes without loss of revenue (but gains in economic efficiency).
Palo Alto: Averages roughly $4,000,000.
http://www.zillow.com/homes/for_sale/Palo-Alto-CA/fsba,fsbo_...
Austin, Texas: Averages roughly $400,000 (10x less)
http://www.zillow.com/homes/for_sale/Austin-TX/fsba,fsbo_lt/...
Orlando, Florida: Averages roughly $400,000 (10x less)
http://www.zillow.com/homes/for_sale/Orlando-FL/fsba,fsbo_lt...
Chicago, Illinois: Averages roughly $800,000 (5x less)
http://www.zillow.com/homes/for_sale/Chicago-IL/fsba,fsbo_lt...
Philadelphia, Pennsylvania: Averages roughly $400,000 (10x less)
http://www.zillow.com/homes/for_sale/Philadelphia-PA/fsba,fs...
Seattle, Washington: Averages roughly $1,000,000 (4x less)
http://www.zillow.com/homes/for_sale/Seattle-WA/fsba,fsbo_lt...
Palo Alto is definitely _much_ more expensive.
So make that a factor of 30, without even looking at bad places.
Glassdoor says that Harris pays $113,051 for a "Software Engineer IV". Most Harris jobs are in that area.
Payscale says $96,955 for a "Senior Software Engineer" in Melbourne, the next town over. Hmmm, Palo Alto is only $135,305 for this. That's less than 40% extra, but you're paying 3000% extra for the house.
Note that overtime is not normal for the area. You work 40 hours. Spend the rest of the time with your family.
Also note that everything else is cheaper too. There is no state income tax. The sales tax is 6.5%. Power is about $96 per month for those using 1000 kWh per month, and $137 for those using 1400 kWh per month. You'd pay 20% more in Palo Alto. Gasoline is dirt cheap: it's only $2.14 in Palm Bay, but about $3.05 (large variation) in Palo Alto. I could go on forever really, but it gets silly comparing everything from nail polish to turnips.
And yes, we have a tech industry.
Saying that middle class in PA starts at $250K sounds about right. It is very difficult to have a family in the area for less than that.
Source: I recently moved from Mountain View to the Midwest (family of 4). My wife and I have talked a lot about moving back, but we decided that a minimum salary level would likely need to be above $250K for us to even consider it.
I'd much prefer deliberate and well-planned interactions, with plenty of distraction-free time in between to actually get some work done.
Everything I see seems to indicate that the price of housing expands to fill the amount of money available.
Cheap interest rates managed to change the base price of homes such that the mortgage payment is roughly the same. Now it is individuals & condo developers collecting that difference rather than banks.
Or am I totally off base here?
Increasing property taxes shifts the burden of ownership to the people who have money... though suppose that would get passed through to renters as well.
This applies to many many other areas too. The price of anything in short supply expands as far as possible to change consumer surplus into producer surplus.
If it were apple juice in short supply more people would start selling apple juice and eventually the price would fall. Presumably in Palo Alto you can't just throw up more flats/houses in 6 months and put them up for sale though
If you have a million dollars to spend, though, you may be able to get a pretty nice studio or a pretty crap 1 bedroom, though.
(I'm sure Staten Island and the Bronx are relatively cheaper though. Ultimately the neighborhoods I want to live in are neighborhoods that most other people in my income group want to live in. Thus prices go up.)