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> a market failure or market inefficiency caused by an politically induced scarcity of housing through zoning density restrictions.

This is true, but it's also a failure of policies that have led to the majority of job growth being in the biggest cities in the country. If we could spread things out a bit and keep smaller cities a viable place to create jobs, the bigger cities wouldn't be impacted nearly as hard.

I think it has less to do with viable job creation than wider political issues. It's cheap to open an office in Iowa, but talent/upper middle class people don't want to move there.

Not simply because of social issues, but because companies don't pay enough. IE if I can save 20% of 150k moving to a cheap location is only viable if I can save 30k not just 20% of a lower salary.

The reason people don't want to move there is because that's not where the money is, which makes sense. But when everyone thinks like that, it causes most of the wealth to concentrate to a handful of areas across the nation while the rest suffers from lack of development. It's not even. There used to be a lot of legislation that prevented that and led to development across the nation, but most of that legislation was overturned by the 90's[1].

[1] http://washingtonmonthly.com/magazine/novdec-2015/bloom-and-...

I'm honestly curious -- could you elaborate and perhaps cite some examples of such legislation?

Sorry, I should have added it to my post. I edited in the site that I got my info from.

$100k in Iowa will go a lot farther than $200k in San Francisco, and if you can get $200k in SF you can almost certainly get a similar job making $100k (or more) in rural Iowa.

Now, if you don't want to do that because "gross, it's Iowa" and NYC or SF is objectively a more enjoyable environment for a 20-something single software developer, that's fine. But that's a choice and at that point you're simply deciding to live in a more expensive location because it's more fun.

Source: I live in rural Pennsylvania, and used to work for a company in rural Iowa (remotely).

I can get a job paying >250k in Seattle, but am unable to find six figures back home in the Midwest. There's not enough remote work yet, most companies hiring won't do it :/. Maybe this will change in the relatively near future, but when I look at my in-laws in northern China who have CS degrees and work for like $10k USD a year, I'm thinking maybe remote work will not be upwards lifting to US salaries...

I'm not going back now because I realized that -20F ~ 95F annual temperature swings really suck (I did not realize this until I left).

If I can save X dollars per year in San Francisco then I need to be able to save X dollars per year in Iowa not just live similar lifestyles on less money. Because savings has ZERO cost of living adjustments. Further, Social Security has zero cost of living adjustments so if your making less than the cap that has long term consequences. If your saving 15% at 200k that's 30% at 100k for the same net savings. While a 100k lifestyle in Pennsylvania may be like a 200k lifestyle in SF a 70k lifestyle in Pennsylvania is probably not like a 170k lifestyle in SF.

This is most apparent when you travel as a hotel in Europe does not give a discount because your living in the Midwest. Further, someone may be willing to live in an efficiency when that's saving 10k/year, but not when it's saving 3k/year.

>If I can save X dollars per year in San Francisco then I need to be able to save X dollars per year in Iowa not just live similar lifestyles on less money.

Agreed, and I think that is what people are saying. Also, do make sure you do an apples to apples comparison. In the Midwest, I may pay $1500/mo to live in a 2500 sq ft house (and less with all the tax credits related to interest/real estate). Compare the same cost for a 2500 sq ft house you are buying in SF. I generally see people comparing the 2500 sq ft house in Iowa with the 1300 sq ft apartment in SF, which is not a fair comparison.

Also, consider the age of the house.

How much per month would a 2500 sq ft house built after 2000 in the Bay Area cost you in mortgage + taxes?

Even that's not really a fair comparison. I would be willing to live in an efficiency to save an extra 10k / year because a 1000 sq ft apartment is not inherently worth that much to me. I have a 1br apartment because the cost difference is tiny, and efficiency's are hard to find. Further, I flat out don't want a 2500 sq ft house, but for those people who want that much space sure it's a different cost / benefit comparison.

A fair comparison is based on similar levels of someones personal utility function. If they like green carpets slightly more and they own their house they might get green carpets, but it's not really a large benefit to home ownership for them.

In the end of the day more people live in NYC metro area than live in New Mexico, Nebraska, West Virginia, Idaho, Hawaii, New Hampshire, Maine, Rhode Island, Montana, Delaware, South Dakota, North Dakota, Alaska, District of Columbia, Vermont, and Wyoming combined. Largely because they think it's a better tradeoff.

>I would be willing to live in an efficiency to save an extra 10k / year because a 1000 sq ft apartment is not inherently worth that much to me. I have a 1br apartment because the cost difference is tiny, and efficiency's are hard to find. Further, I flat out don't want a 2500 sq ft house, but for those people who want that much space sure it's a different cost / benefit comparison.

Sure, but then compare the cost with the same efficiency in the Midwest. When I lived there, you could get decent efficiencies for under $400/mo.

I am trying to do an neutral analysis not just favor one side.

Importantly, the gap between an efficiency in Midwest vs. SF is much less money than a 2500 sf house which favors SF. But, people would likely not get an efficiency in the Midwest on a 100k salary because the gap between an efficiency is also small. Or as a young friend of mine said, not being in WV is worth having a roommate in Northern Virginia.

Up-sizing lifestyle to compensate for downsizing culture seems very appealing when you have kids. Further, the closer you get to retirement the less important that years savings become. But, at that point you have already got a social circle in _ which biases as does even higher salaries you can get at 40+.

Still, I think based on behavior companies need to offer higher salaries outside of major metro areas before people stop concentrating in those areas. Yokyo Japan and many other major city's show the same trends suggesting it's not just US government policies responsible.

Cities such as NYC, SF, LA, DC, Boston, London, (and region of SV)....are very special cities that are magnets of creativity and wealth creation marrying engineering and other creativity with finance. In pre-WWII, Budapest and Vienna were among these cities and outside of US & London, Tel Aviv is also one of these cities. Not only engineers and software and finance professionals but other professionals such as doctors love living in these cities for their cultural amenities. NYC is a center of Judaism and for many Jews, this is where they want to live with all of the specific Jewish cultural amenities.

This is unlikely to change. Author Richard Florida among others writes about the develop of cities.

" it's also a failure of policies that have led to the majority of job growth being in the biggest cities in the country"

do you have ideas as to policies that would spread growth around the county?

I heard the idea of decentralizing government bureaucracies out of DC, and around the country, do you have other ideas?

For a company it seems beneficial to draw from a bigger pool of potential workers by having their headquarters in a big city.

I mean, obviously there are tradeoffs here

your office RE costs are more

your talent costs are more

seems like a function of how price sensitive you are about the talent that exists at your headquarter, and the degree to which the headquarters are the profit generator

For a society, it seems beneficial to spread the wealth out a bit so there's development throughout the country. IMO, our government should be focusing on improving society instead of corporations.

Why is that beneficial for the society? I don't think that's as clear cut as you make it to be. Cities are pretty efficient things.

Wealth concentration to cities has lots of drawbacks. Housing can get incredibly expensive, mental illness rates go up, local government reflects the people less because of the larger population, and people feel like they need to upend their entire family just to live a quality life. There are tons of places in SF, NYC and others where there are 6 men in a 2 bedroom apartment. All that just so that corporations can reap the benefits of a higher worker density. That's no way to structure a society.

The reason that housing is expensive and perhaps that mental illness rates go up is because of politically induced market failure in the form of zoning density restrictions. It is an artificial constraint that is readily fixed. See my post higher up in this chain.

    in 2014 Tokyo built 140,000 homes

This isn't a net gain of 140k homes, but instead 140k "housing starts". In the US this would translate into about 140k new homes, because we normally reuse houses, but in Japan the culture is generally when you buy a house you tear it down and build a new one. So this 140k is a mixture of building new units and replacing old ones.

Re: Japan, I'd be curious how apples-to-apples that comparison is; I read the linked article, but it wasn't entirely clear. At any rate, it seems like NIMBYism would be relatively easier to combat in Japan given that it's generally accepted that houses will just get demoed and rebuilt, period; average house life expectancy, depending on how you calculate it, can be said to be under 30 years.

Looking around my neighborhood here in Portland, OR, though, the number of "no demo" and "stop infill" signs is a little maddening. I have empathy for difficulties caused by rapid development, but the "I don't ever want the neighborhood to change" mentality is horribly lacking in pragmatism. It's a bit difficult to imagine optimally practical political solutions for denser housing in this climate.

Tokyo is a pretty distinct place

while turning our largest cities into Tokyo would have some advantages

I'm a little hesitant to want all cities to resemble it