Why Don’t People Who Can’t Afford Housing Just Move Where It’s Cheaper?
nytimes.com
nytimes.com
Not only does it strengthen your friendship, but it takes the profit margin of a moving company out of the equation - that's the economic gain your group gains (even after you buy your friends beer and lunches - you should still be in the plus)
The vast majority of people I talk to piling out west have no connections here whatsoever.
I could move to rural Texas and live like ... well, better, maybe ... but there's no opportunity there, I'd make about a quarter of what I do now, if I could even find a job I wasn't overqualified for and not know anyone.
If I moved to the West Coast, I could up my pay, maybe, but that's about it. I'd still not know anyone.
All that stuff plays a part the older you get.
But for anyone who has looked into it, you learn the visa situation is a nuisance. They don't want foreigners longer than a vacation.
Based off this article about hookworm being alive and well in Southern Alabama. https://www.theguardian.com/us-news/2017/sep/05/hookworm-low...
In the article, there is a woman without a sewage hookup paying $611 for her mortgage, and $300 for electricity.
In the city of Atlanta, and much less, some of the suburbs, paying $900 for a single wide's square footage for a house or apartment is entirely possible. This woman doesn't have much family that's not staying with her, etc.
The other logical frustration from this is that density solves a lot of problems. From cheaper insurance, heating/cooling up to 5 fewer walls, to shared sewer connections - an apartment solves a lot of problems compared to a trailer home.
> Maybe people want to live in their own place, not an apartment.
isn't that the point of the article? people living in high cost cities cannot afford their own place?
I've been to a lot of areas in the country, and I simply don't want to live in them, regardless of price. I can walk outside in a t-shirt 365 days a year where I live and not die from exposure in a few minutes. I have no need to shovel snow. I am surrounded by mountains, the ocean, forests and desert are a few minute drives away.
Plus friends. And family. It's also nice living in a place that people want to visit, old friends pop in all the time simply because we live where people want to vacation.
But you hit the nail on the head: most people like to live in a place with temparate weather, scenery, and things that only come with population density. So most people want to live in the same place, despite (or even indirectly because of) other people wanting to live in the same place too.
I know many Californians would shudder at the prospect of moving to Houston, but it's actually a progressive, vibrant place with lots of cool stuff to do. Don't like Houston? That's fine. There's a hundred other cities to choose from.
What's that fallacy where you overestimate something's value because you paid a lot for it?
There is tough a certain point where things become vastly more difficult.
Here in Poland it is below 200k people of working age apparently in roughly 50km radius. Less than that, bigger business doesn't want to invest, educational opportunities, work opportunities, transit suffers etc.
But it's much much much easier to do from the middle than from the bottom.
A lot of managers aren't comfortable with that notion, and basically ignore you when you make the case that a position is essentially impossible to fill when just letting it up to local market for labor.
If you're going to be depriving yourself, you may as well do it where people are getting paid the most, and just live like an itinerant/vagabond while there. It's the high salaries and abundant opportunity that attracts all the well-paid housing seekers. Join them, just don't bother with the housing, and watch your savings blow up.
You'll probably learn a bunch about yourself and how to live simply in the process as well.
Indeed, if I were to make a good salary in Silicon Valley and move to another metropolis, the math would work in my favor. But what if I found a partner? What about my friends and networks over there?
Retiring to a city where I didn't know anyone would suck.
The unit of supply is not the house itself, but everything that's included within a city - opportunity, lifestyle, family, friends, food, etc. These things are subjective to each individual, but have some universal similarities (ie: people generally prefer more opportunity to less).
The population of demand is theoretically the entire world, and more practically, the body of people that wants to live in that city due to opportunities and lifestyle. Just speculating, I'd estimate demand to live in a nice city is much greater than the population by 10 or 100x.
When supply is short and demand is not, you reach equilibrium at the point where only the people who can afford to live there do. "Afford" is subjective too, as some people are willing to pay much more in terms of rent and lifestyle sacrifices. In the case of SV, since wages are still extremely high, I think the cost of housing will still increase. It will squeeze the middle class lifestyle heavily (if its not doing so already).
If you want to look at a mature housing market in the dystopian sense of the word, visit Hong Kong. An abundance of high paying finance jobs, low income taxes, and a crazy amount of powerful real estate investors made HK some of the most expensive housing in the world. But finance is no longer growing, real estate is squeezed of its profits, and the affordability of housing in HK is in serious crisis. Haven't lived here for too long, but it seems that lifestyle has been constantly compromised (small houses, live with your parents forever) by the expensiveness of housing. Or that affording your own house is actually a luxury, not a basic human right (depends on your perspective).
Is there a long term solution? Quite simply, not unless we dramatically think of cities differently than we do currently. Fixed housing costs doesn't solve the basic situation that a city is a very attractive place to live, and that many people would like to move there if they could.
Housing cost is currently the way of deciding who gets to live there, and what they're willing to give up for it.
Sure, why not move all the time?
The cost of moving is never trivial, and it requires you to be prepared with sufficient money in your savings account. If you don't have that savings and you don't have a support net to catch you, you're not going to be able to move and remain off the street.
My grandmother just moved here after living 80 years in CA. The family next door is 4 generations, each gradually moving up from CA.
The reason is the same: Family. But once someone made the leap, the others followed.
It continues to amaze me how the (policy) talk is pro-affordable housing, but the walk is more wealth - of which property ownership is a great conduit - in few hands.
Economists can and should debate and quantitatively measure varying aspects of and reasons for the phenomenon. But from a high-level public policy perspective the reasons are largely irrelevant; there's simply no denying that on the whole most people by their nature are extremely averse to moving, even in the face of impending death. Any public policy predicated on intragenerational migration in response to run-of-the-mill structural economic dislocation is doomed to fail. Many people will follow straight-forward economic incentives. But a very large number won't, even to their extreme and readily foreseeable detriment. That makes failure inevitable.
[1] See "We Wish to Inform You That Tomorrow We Will Be Killed with Our Families" (https://en.wikipedia.org/wiki/We_Wish_to_Inform_You_That_Tom...)
I personally would like to live in a remote area in Tennessee or something where I can get 10, 20, 100 acres and just remote to work, but corporate America hasn't quite caught on to that yet.
So while I might make a little more than half what typical FAANG engineers do, I get to work on IMO more exciting greenfield projects and live within minutes of the beach and 2 blocks from a river.
"And low-skilled jobs in a city like San Francisco pay some of the highest wages in the country; the minimum wage here is twice what it is in much of America, a real benefit that weighs against the high housing costs."
There is one other thing these communities lack - educational opportunities. Especially universities...
It would be impossible for me to replicate this on the coasts.
There are jobs available which provide folks with a sustainable life and the ability to thrive. To me, having the job you want, in the location you want, near friends you want to be near, with the pay you want, with housing you can afford, is a luxury.
If you want a life that ticks all the boxes, you have to make yourself more competitive. But I don't believe anyone is entitled to getting the exact job or conditions they want, and they shouldn't expect cities to change to accommodate their list of demands.
And plenty more.. https://angel.co/jacksonville
Just because you can’t name one doesn’t mean there aren’t any.
Sometimes we have to recognize the power we wield and use it to perform selfless acts.
Not saying you should move there and do that, but just that you're wrong in saying that you'd have no job.
no job, no connection
The issue with housing prices is that there are a lot of government policies that have the (intentional or unintentional) effect of increasing housing prices. Some of them are as follows:
- Making mortgage interest tax deductible
- Special tax treatment for the sale of a primary residence
- Laws limiting how many people can cohabitate in one building, or similar laws that enforce this more softly through limits on street parking.
- Rent control laws which suppress the price of rental units, limiting the incentive for landlords to build new units.
- Laws that limit the construction (or add extra costs/requirements) to projects that would add more residential units.
- The utter failure of highway infrastructure during rush hour, which adds hours of commute time for short distance travel, drastically increasing the price of residences that do not require a highway commute.
- The failure of municipalities to provide adequate and affordable parking and public transit, adding inconvenience to many neighborhoods which drives up prices in others.
- The failure of law enforcement to create a safe environment in many neighborhoods that offer more affordable housing, leading to increased crime and under-investment in improving and expanding areas that would otherwise be highly desirable for residences.
- Laws that create building code requirements that are not based on sound engineering or safety principles but which create lucrative contracts for certain professions in the building trade... These increase the cost of new construction and make many retrofitting/repurposing projects impossible.
There are many, many more.
Also rent control in SF caps rent price increases to 2%, which is the same rate that a building increases in market value. That’s courtesy of prop 13 that says (in effect) that for tax purposes building valuation cannot be assessed at greater than 2% increase a year. Given a large part of income is determined by cost of living, wages have to increase at the same rate as property value.
If the taxable value of property increases at a lower rate than the actual market value of that property then all services that are functionally paid by tax dollars start consuming a greater portion of total tax revenue.
That means a landlord who is increasing their rent/lease by more than 2% is getting a tax payer subsidy as they are using services (roads, utilities, etc) which have costs that increase at market rates, but the landlords aren’t paying taxes at market rates.
Another fun one in the Bay Area at least is people preventing new construction because the will reduce the value of their property. Literally that’s the argument used in Palo Alto and Mountain View - I can’t imagine it being different elsewhere.
What's odd when seeing my comment get down-voted to oblivion is that I am not making a value judgment about the laws/policies, simply mentioning that many of the ones listed have unintended consequences when it comes to housing affordability.
As usual, downvotes are used instead of a counter-argument because whoever does it lacks the sophistication required to offer one :)
If I say "Wow, the price of a Tesla Model S is too high", I am implicitly saying either "I wish demand for the Model S suddenly fell, leading to a large price drop on existing units" or "I wish a lot more Model S sedans magically got manufactured so that the profit margin available to Tesla on the units sold would be reduced to the point where I could afford one".
Both of those sentiments are fairly silly wishthink. Similarly, so is the sentiment that "Regulators should pass a law requiring all new Model S vehicles to be sold for $20K".
I could define myself as being a victim of the over priced Model S, or I could define myself as being the victim of insufficient wages to afford one at the actual retail price.
I'm not sure why in the case of housing it seems logical to blame the price of the housing instead of blaming the wages that make some standard of living difficult to afford.
For some people, even "affordable" things like community college or McDonalds food is expensive and out of reach. So why not focus on how McDonalds is not "affordable".
One reason why McDonalds is affordable to many is because of the existence of other competitors. My comment above meant to point out that there are many, many ways in which the regulatory landscape limits the number of competitors each landlord faces, driving up prices.