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Comment by vertexFarm | Hacker News Reader

Housing costs in places with good economies and lots of jobs are getting absolutely ridiculous compared to the median wage.

I guess people are supposed to look at less glamorous cities, but if everyone affected by this did that then they would probably run out of opportunities, fill up, and have housing prices shoot up as well. Something's gotta give here. There's a real disconnect between the prices and the ability to pay. Who is paying for these things? People with lots of generational wealth? People with upper-middle class jobs yet no savings and razor-thin margins due to living expenses? That's so shitty.

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Perhaps the official policy of the FED for the last 11 years shouldn't have been to artificially drive up home values? This has been the explicitly stated policy ever since Tim Geitner suspended mark-to-market prices on MBS securities. The plan was to lower interest rates and subsidize the housing and debt markets until these worthless derivatives held by banks and wealth managers (and pension funds who foolishly took risky gambles with retirement money) were in the green, so they could be offloaded. In that sense, the plan has been a success - the banks and the wealthy derivative owners made out like bandits. Home prices have rebounded. This is all great for the owners and the wealthy and terrible for renters, young people, and the less-well off who still need a place to live but have been priced out of the housing market by a Federal Reserve that threw them under the bus for their true constituents.

It has to do with artificially low interest rates.

The Fed should have been bumping them up years ago, forcing liquidity into other parts of the system.

It would be better if there was a more natural way to set rates.

Also - it has to do with perpetually extending our visibility into our economic future, i.e. as loan times get longer and longer - the lenders win as housing prices go up.

If everyone had the same term mortgage, and it was fixed - this issue would not cause problems for for housing inflation.

But as we go collectively from 25 years to 50 years to 75 years ... well, housing prices go up.

> It has to do with artificially low interest rates

It's predominantly a supply problem. Interest rates are low across the country, yet San Francisco is in a unique situation.

Out of control real estate prices are a problem across most of the usa, although particularly accute in SF.

>people are supposed to look at less glamorous cities, but if everyone affected by this did that then they would probably run out of opportunities, fill up, and have housing prices shoot up as well

That already happened in Austin, Denver, Nashville and Portland, and is now underway in Detroit, Cleveland, Atlanta, Pittsburgh and elsewhere.

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