Homes 'Earn' Minimum Wage or More in Almost Half the Nation's Largest Cities | Hacker News Reader

Homes 'Earn' Minimum Wage or More in Almost Half the Nation's Largest Cities

zillow.com

84 pointsCharlesDodgson106 comments

I don’t understand how affordable housing isn’t a huge political issue. It’s missing on the left and the right. Housing is way more important, most people would think, than say, free college tuition (left) or reducing immigration (right) — two issues that get tons of coverage by politicians.

Where is the outrage? Where are the action plans and policy proposals? It bothers me.

It isn’t a problem in much of the United States.

What? How is that even possible?

Look at this map that shows what a household needs to earn to buy an average (not low-cost) home by state. Most places do not have California’s problem. https://www.google.com/amp/s/www.fatherly.com/news/map-avera...

Ah, the old "if it's happening here, it must be happening everywhere".

The thing I like most about the US, is it's diversity across all fronts.

If you look at local city politics, it is a huge political issue, but one that's an extremely divisive issue between the left and the left, between "affordable housing" and "affordable housing". This is the NIMBY vs YIMBY issue.

"Where is the outrage?", you ask. The outrage is on the other side. Homeowners don't want their own homes to be affordable. When property values go down, the people who live on those properties get outraged, and those people are overrepresented among voters. When property taxes go up to redistribute even some of this unearned housing wealth, that leads to "constitutional amendment" levels of outrage.

I'd bet the typical mortgage interest is also above minimum wage. Google says San Francisco's median house price is 1.61M. If 80% of that is a mortgage and it's at 4.25%, that comes out to about $55k in interest alone during year 1.

Zillow wants you to buy houses, so it'll make it look like you make money out of nothing. I

In other news, most workers can't afford the median-priced home:

https://www.attomdata.com/news/market-trends/home-sales-pric...

Would it be expected for the median worker to be able to afford a median priced home? Most people buy homes these days with 2 incomes and therefore homes are priced (square footage, amenities, land value) for such income levels.

Of course, then you have a societal problem in that you’re tying people’s ability to keep a roof over their head to their ability to correctly find a partner they can be with for multiple decades.

There are a slew of people out there who can keep a healthy relationship with someone much easier than keep a job. I'd venture to say that most people find benefit in finding a life partner. Hence why they keep doing it (even multiple times).

Of course, once someone finds someone else I suppose one should ceremoniously back down and stay home in order to conform to other norms.

You aren't though. The majority of people do, so the median household (by definition in the majority group) fits that group of people.

There's plenty of 1 or 2 bedrooms for those who don't find a life partner, end their relationship, etc.

Is this really surprising? Large amounts of capital give sizable returns. Even with a 2.5% return (inflation) on $1M, you'll earn $12/hr at a 40 hour workweek.

Next up in not surprising news, people with $500k stock portfolios likely earn more in appreciation & dividends than the median US worker.

https://en.wikipedia.org/wiki/Land_value_tax

When you artificially limit the amount of housing via the government (zoning, height maximums, lot size requirements, etc.) you make housing worth more than it would in a free market. This is not surprising and is exactly the outcome desired by home owners in elite cities.

Let's be real- maybe there's a cabal of homeowners trying to jack up the value of their house with government policy for their own gain. Or, maybe the homeowners don't like skyscrapers and do like seeing the mountains, in fact perhaps that's why they moved there in the first place pre-boom.

Increasing density is the natural impulse when an area becomes more desirable. So much of our society is tied to the area you live - jobs, public schools, access to services. It’s immoral to kick the ladder down behind you and make entry into the area impossible, not because the market decides it, but because existing inhabitants have co-opted the government through NIMBY policies.

I can think of many pro-market initiatives that would alleviate society’s ailments. But allowing more, denser housing to be built is one of the easiest, least burdensome solutions placed on the taxpayer. The damage caused by more housing is to delicate sensibilities as a homeowner’s “view” is blocked by new towers and the “character” of a neighborhood is ruined by lower income newcomers.

If you don't build more schools, hospitals etc. (essentially everything) along with allowing more housing - then you shift problem down the line.

Your argument - that increased population causes the support infrastructure to buckle - is 100% false. If supporting a growing population was an insurmountable obstacle, then no city would ever grow. We know how to handle growth, this is a solved problem.

  Your argument - that increased population causes the support infrastructure to buckle - is 100% false.

It was certainly true in SV as it grew. For example, my high school had to go on double session as it had to handle more than double the number of students it was designed for. In wintertime, upperclassmen went to school in pitch dark, and freshmen walked home in pitch dark.

Could they not erect schools fast enough? Surely the funding was there?

A high school takes a large plot of vacant land as well as a lot of development.

The eventual solution was the building of a huge new high school complex known as Ed Park, eventually renamed Independence High School, on much cheaper land well to the south.

I remember attending most of my middle school (6th & 7th grade) in "modules". Which is really just a fancy term for a trailer. There were probably 5-10 of them adjacent to the parking lot. It's how they handled the fact that our town was growing too fast. Still use that method today in between builds.

But that's "wide open spaces" kinda land.

Solved problem? Doesn't look like one:

https://www.theguardian.com/cities/2018/jul/03/all-humanity-...

>But allowing more, denser housing to be built is one of the easiest, least burdensome solutions placed on the taxpayer.

I hear this argument many times but what I don't hear is how the city will get the additional revenue needed to service this new density? An increase in the population requires more fire, police, swerer, water, roads, public transportation and schools. But a city can tax companies and collect sales tax.

Property tax.

...property tax?

On a per capita basis, an increase in density requires less sewer, water, roads, fire and police (shorter response times). Schooling needs are the same, and there's only "more" public transportation because it's actually possible.

And what pays for it is … the property tax.

ADUs (accessory dwelling units) are smaller than neighboring buildings, so they don't impact views at all. However, many California cities still banned or severely restricted them, until they were forced to stop by last year's state legislation.

I think that this is the first real plan. After 20 years of in laws / granny flats the market will move to condos as the increased local density shifts things. Major roads and transit will see taller buildings with a gradual expansion of skyscrapers in downtown areas.

Don't worry, the NIMBY's will move the goalpost and start complaining about street parking and traffic. That's all my neighbors on Nextdoor complain about.

Yeah I think a lot of city dwellers would be fine with new building if it looked like building more of Paris, instead of building High Rise Home Depot Clearance Bin or commie block housing.

Most new stuff, at least in New Hampshire and Mass, is just SO UGLY inside and out. The people complaining about new construction do have legitimate grievances here.

(I say all this as a huge walkable towns, new urbanist-ish advocate)

I think requirements on the architecture of new construction, the materials, the look, etc. is less burdensome than limiting the key features of the new development (number of units, floorplans).

Placing some restrictions to ensure you don’t make cookie-cutter concrete boxes is not so bad. Banning new, denser construction entirely is the true problem.

One big problem with high density affordable housing in CA is that the building codes for apartments are substantially weaker than for condos.

In particular, apartments have much lower sound proofing standards.

I guess the local politicians don’t realize that poor people (and millennial engineers) also need to sleep.

If you think that’s bad, look at building concessions to special-use buildings, like elder care facilities.

Though I did not have a hand in this, as I don’t live there anymore, my old neighborhood successfully blocked the city from allowing developers to build a building that would allocate less than 100sqft of total (not living!) space per the elder person being cared at the facility. Bunk beds and all. Essentially a distopian hellhole.

Now, 3 story townhomes with reasonable sqft going up. Smaller spacing than I would personally want, but it’s A) housing and B) livable for a family, so it’s a win in my book.

If only Santa Monica would average 3 stories...

Efficiency studios are drastically more livable than roommate situations. I hope the activists who “protect” me from having an apartment too small are not under the illusion that they’re helping.

Are Paris-style 6-story buildings allowed by the laws of your local area?

Who cares how "ugly" these structures are when we desperately need housing stock? Are you seriously suggesting we should be okay with delaying/blocking construction based on aesthetics when things are so clearly fucked up?

I've heard the same argument in Seattle, home owners who are "fine" with Parisian-style buildings, however they only came around long after the point where demand started replacing lower-income people enmasse.

When we wait too long, the market demands cheaper housing ASAP - style goes out the window.

I want to agree with you, but I don't think this is true. The average building height in Paris is 6 stories. People in my SF neighborhood cause a ruckus over 3 story buildings because they're too tall.

I love looking at the mountains from the SV flatlands so much that I’m happy to spend an extra 8 hours in traffic a week.

I’m also happy to pay the current market value of the (nicer) house I grew up in to my landlord every four years, all for that mountain view that’s occluded by the neighbors’ single story houses anyway.

Ditto for not having workable public transit, no decent restaurants walkable from the house, etc, etc.

If you want that view you should go buy up all the land between you and that view.

Frederick Olmsted would like to have a word with you. ;)

Lets balance the societal gains. Homeowners don't like skyscrapers vs. a generation of people paying ridiculous sums to live in substandard conditions.

There’s absolutely a cabal. It’s just homeowners who think that their aesthetic sense is more important than an entire generation behind them being screwed.

I suppose we could say the same about comfort of living and the environment.

We are in a housing crisis. Rich homeowners' desire for a "view" means little when the cost for our society is so great.

Homeowners bought the land, not the view.

The view was probably part of why they bought there, though

Certainly, no one gets a view by accident - that real estate is expensive.

However, it's still selfish to restrict development in high-demand areas on the grounds of losing a view. The view is of or over other people's property, and density restrictions hurt the general public by forcing people to relocate or make financial sacrifices to stay in the area.

It isn't a cabal, more of an emergent property of people who don't like change and political process that is effectively only open to citizens who are retired. Which ends up being dominated by old people.

You'll see political change as specific demographic cohorts enter the political process and others die out. I feel like we are at the start of that shift as boomer politicians are starting to die and millenial/gen x politicians are starting to come to prominence. Since millennials are an echo of the boomers population wise, they will probably dominate over the gen x generation.

What's old is new again.

When the next demographic buys their first homes, they, too, are likely to want to live in the neighborhood into which they bought, and not into one with an increasing population density.

Not necessarily. Other cities build more than others. It's a function of built in incentives and legal laws the enable the bad behavior, and california has a particularly bad case of it.

For a quick comparison, look at seattle vs sf. Seattle had similar issues and dealt with it in a far better manner, not wanting to become another SF. They still have issues, true, but the price increase hasn't been as dramatic, and highrises were allowed to be built.

Humanity’s got a lot of problems to face and overcome before packing more of them per city block.

Chief among those problems is having not nearly enough stuff per city block, isolating us from each other and forcing us to drive everywhere.

Not sure why you snuck the word elite in there.

It's the banks and the toxic crap on their balance sheet, that is really being protected. By avoiding true mark-to-market they have pulled literally the scam of the century on the USA...

Housing prices in Flint Michigan are also rising, a town not only free of zoning problems but also a shrinking population (among other issues).

And flint is not the only city like this with shrinking population yet rising housing values. A quick google shows me also Rockford, IL, Decatur, IL. Youngstown OH. Saginaw, MI. Binghamton, NY with no apparent end to the list

While it's true that zoning worsens the problem, cities with essentially no zoning rules also have have rising housing prices.

The crux of this universal problem is that housing has been turned into an international investment class rather than being housing.

That and that retirement support is so dismal, individuals must have large returns on home purchase to avoid life threatening poverty in old age.

So of course change zoning rules, it's bound to help some but it's not the core problem.

[1] for the curious, start here https://en.wikipedia.org/wiki/List_of_shrinking_cities_in_th...

Flint Michigan is emerging from one of the greatest catastrophes in modern times - their entire water supply poisoned by lead.

This is not the city to use in any argument, unless it involves EPA super sites.

I think that's his point. If the city is a disaster, with a shrinking population, and lax zoning laws -- why are prices continuing to rise?

My point is that this is not a city to use in any argument. Their situation is so unique as to be irrelevant to any aggregate statistic.

It’s a worst case scenario for property values and they’re still going up. That’s a perfectly valid example.

Maybe they went to zero during the crisis and then went up? If they went down, perfectly valid to ignore them, no? I think we should exclude extreme examples in these debates. The data backing the arguments up are random at best

They did not go to zero. They did not even go as low as 2009. The water crises started in Apr 2014 resulting in a brief drop of typical sized followed immediately next quarter by a record breaking rise to record high prices even though sales were low before it.

http://www.city-data.com/housing/houses-Flint-Michigan.html

Well sure, it makes it easier to ignore depending on the point you are trying to make.

> cities with essentially no zoning rules also have have rising housing prices.

those cities may have laxer zoning/land-use laws than other US cities but they're still very strict compared to cities outside US.

You’re listing cities that had low home prices, then dropped even further from 2008-2012. A home that sold for $120k in 2008 dropped to 60-70 and may be worth 70-100 today. (I live in Rockford.)

Yes, something other than population, jobs and zoning are determining housing prices. Even a $70k price is twice national average of a generation ago adjusted for inflation.

I’ve read that’s caused by one-income households giving way to two-income. It’s a long-term trend separate from changes in the last ten years.

Interesting idea but dual income household numbers have been flat at about 65% since about 1990.

Oh, imagine that! Keeping the paper mill far away from your house makes your house more valuable!

You can't have your cake and eat it too: either prices represent the value people give to things (a commitment held by free-marketeers) or they're "artificial". And there's no reason to believe that freedom automatically creates happy outcomes, especially because inertia can leave inequities (e.g. redlining still affecting both familial wealth and [/therefore] segregation) or undesirable externalities (e.g. formerly livable land polluted by industry dumping, or disused commercial/industrial buildings that are now rotting hulks) still in place for loooong after the capital that created the problem has left the community.

But in many of the areas with soaring home prices (for example, SF and Seattle), renters outnumber homeowners. A renter doesn't care about preserving the value of his landlord's property.

De-commodify housing.

Wouldn't that make housing more expensive, rather than less?

No, since it would reduce demand from investors.

Look at Japan- their housing is surprisingly affordable in Tokyo despite being in a major city. Due to flexible zoning laws, houses can be built almost anywhere. Houses are deprecating assets, like cars, rather than investments, like houses in America/Canada/etc.

So, if I understand you correctly, we need to make houses not "commodities" in an investment sense. But doing so requires producing a lot more housing. That may mean making them "commodities" in a colloquial sense - that they're ordinary, pretty much interchangeable. (Most people, most of the time, don't care very much which brand of potato chips someone brought to the party...)

The easiest way to do that is to make prop 13 for primary residences only.

This is a good idea. How can we get it done?

Amend the California state constitution.

I love this phease. It’s so brilliantly cheap, edgy, holier-than-thou without bothering to actually suggest anything of substance or make any kind of proposal that could be subject to scrutiny.

An active market for mostly-interchangeable housing units is a great thing. No one wants to see a world where housing isn’t a commodity, unless they already live in their ideal home. We want to see a world where it’s cheaper.

yeah what does 'de-commodify' even mean?

Until you 'earn' -$500,000 in six months during the next real estate crash.

Shhh. Let them pretend economic history only goes back 10 years. Stop spoiling the party!

Here’s a longer look at the economic history: https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-...

I know you guys are downvoting me but I don't give a shit. I used to see similar graphs for Incline Village (in Tahoe). But suddenly after 2008, the party stopped. The reason was that prices finally got to a level where people honestly just couldn't afford to bid higher.

For prices to double again in the Bay Area, you need to start seeing engineers earning $400k per year. It isn't going to happen.

Oh and by the way I have a house in Oakland that I bought in 2000 that has like quadrupled so I already won the lottery. I'm just trying to help others out here.

Thats pretty funny, because sr engineers at big tech are making close to $400k!

Rents and prices have disconnected about 2 years ago. Rents are flat or slightly down while housing prices have kept on going up.

I do work in tech, and while that kind of comp exists, it's the exception and not the rule. There was a posting today here on HN about a database of salaries that more or less directly contradicts your assertion here.

Oh and your entire comment is based on the premise that tech isn't in a bubble (hint: it is).

A small fraction of engineers have compensation that high, certainly not enough to really impact house prices that dramatically.

It might be surprising given how hot the market is, but the # of homes actually changing hands is pretty small. Prop 13 provides a strong financial incentive for homeowners not to sell. With relativey few homes going on the market compared to the area’s population, the salaries of an unusually small slice of the income distribution can affect the average home price.

Agreed that lack of selling is a huge issue. That said prop 13 isn't the only disincentive (and a relatively weak one - homeowners older than 55 can transfer their basis to a cheaper property). The other issues are:

1. (older residents) Capital gain taxes. If your house is up by $1.5M, selling incurs capital gains on $1M ($500k excluded). That's nearly $300k (20% of value) in capital gains taxes owed -- a huge hit to move to a cheaper place. And if you stay in place and die? Your heirs don't have to pay cap gains at all.

2. (newer) Mortgage tax deductability grandfathering. New buyers have $750k mortgage interest be deductible; old buyers get $1M. Guess you aren't moving until you bought recently!

How many dual income families make that much?

Looking at the sold houses in my neighborhood and the families that move in: a lot.

> Rents and prices have disconnected about 2 years ago. Rents are flat or slightly down while housing prices have kept on going up.

And therefore one would think prospective buyers would look at this and conclude buying doesn't make economic sense. (I did at least: https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-t...)

Oakland is still full of gangsters and crime, everyone stay away for your own safety.

yes, please stay away. Do not come to Oakland it sucks and you shouldn't move there.

Thats a problem for the greater fool down the line. Not me though i'm too smart for that.

Pretty much the general attitude. But the scary part is that most are basing their retirement on this one-asset strategy end-all investment approach.

the rate of capital growth is intended to outpace the rate of labor

this isn't news, this is the design: make enough money fast enough that you can live off it forever. if you do it too slow, you have to live off the principle and it is more likely that a large cost destroys your principle.

Even better than a wage, since the eventual cashout gets way nicer tax treatment.

Strong indicator of a real estate bubble 2.0.

I think loans without income to back them up is an indicator of a bubble, but that's not what we have. But new jobs, esp. higher paying jobs are concentrated into narrow areas, like Seattle, SF, Austin. There are only so many houses, they are building more but except for apartments in Seattle there's no evidence of enough housing to meet demand. So I think housing prices should keep going up.

If housing prices were going up in towns without people moving there, that would be a different issue, but that's the opposite of what is happening. Interest rates are going up slowly, that should slow housing price gains.

If salaries were rising enough to justify the increase in house prices, then we’d also see rents going up at the same rate.

That’s not happening. Also, back when houses were $200K cheaper, and interest rates were almost 1% lower, you needed exotic mortgages (like adjustable rate) to make the cash flow associated with buying make sense (assuming you make apples to apples comparisons between owning and buying).

They were until about 2 years ago in SF.

You can chart the price / rental increases based on the marginal high earner. You have 1 'tech' salary rent levels and 2 'tech' salary rent levels.

There are probably a lot of young, childless professionals who can afford it now (with little additional savings) and plan to eventually sell and buy a home elsewhere. They may not be adequately diversified or prepared to stay in their home once they have the added costs of family, child care, aging parents, etc. though.

"They may not be adequately diversified or prepared to stay in their home once they have the added costs of family, child care, aging parents, etc. though."

But that's said like any generation is ready for that. I certainly wasn't. But it really provided enough drive for me to attain a higher status (Not status for status sake, just financial comfort).

There will be those that make it, and those that break it.

As said elsewhere in the thread, some towns that are losing people have their house prices going up.

Speculation is a substantial part of it. Especially as some places are in economies at the end of a very long expansion cycle.

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