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Comment by rukittenme | Hacker News Reader

Trying to prove your theory. Help me out.

The Houston metro area:

  * Population: 6.3 million
  * Land Area: 10,000 sq. miles
  * Average wage: $25.87/hr
  * Average 1 bed rental rate: $967/mo
  * Wage/rent ratio: 22% monthly income.

The Bay Area:

  * Population: 8 million
  * Land Area: 7000 sq. miles
  * Average wage: $37.19/hr
  * Average 1 bed rental rate: $2500/mo
  * Wage/rent ratio: 39% monthly income.

Why is Houston so much more livable than the Bay Area? If income inequality were the driver you would think a low-tax, pro-business, anti-regulation state like Texas would be very attractive to the elites of the world.

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The thing is despite the very loud whining about it they don't really need low taxes or loose regulations. That is the pony for a little girl essentially. It might make them happier but it isn't what they need at all. If that was really true then we would see corporations setting up in unincorporated areas. Instead basically nobody does that now.

What they really need are good services, an educated workforce and a place their workforce wants to live.

Elites need the high end of resources for the winner to take the lions share - otherwise they would be one among many and not elite because many can do it. In this case talent is the resource they must seek.

They tend to want to live in an area with plenty of alternative jobs and like minded people. Those two tend to self perpetuate. Since demand is high and working in a hot area is good for advancement, makes them look good and helps boost salary expectations combined with a desireable place to live the demand stays high unless it is a bubble and it bursts.

A few points. First, the Houston metro is actually 10000 sq. miles. And very little of that is green space, unlike the Bay Area, which is filled with large strips of mountains / state parks.

Additionally, I don't have numbers but Houston does seem to have much lower income inequality for the bulk of the population. The SF Bay Area is really good at churning a lot of moderately wealthy people through the tech industry, who far outearn anyone else, and end up bidding against each other for the available housing. I imagine Houston's energy industry creates far fewer moderately wealthy people who outstrip everyone else in income to this extent.

Finally, one big thing that Texas does very right is having strong property taxes instead of state income taxes. You don't have early homeowners holding on to their feudal properties while new workers struggle to make ends meet, as you do in California.

Tax and land use policies. Who would have thought...

Median salary for Houston: $61,708. Median salary for SF: $77,734. Does a 26% increase in salary explain a 250% increase in rents?

Market-rate rents are driven by young, above-median workers - a young software engineer in SF probably earns significantly more than a young professional in the energy industry in Houston.

You have the causal chain backwards. Market rate rents are driven by high demand low supply. If you add 30,000 people to an area and only 7,000 new units, the price of existing units rise. The employers hiring new workers have to pay higher wages due to higher cost of living. Normal people like cashiers and teachers can’t afford it and have to commute from cheaper areas. It’s supply and demand.

Yes, I was specifically talking about the kind of demand that can result in such high rents (if supply gets constrained).

Part of the problem is that while Houston is more "livable" by the metrics you quote, it is much less so by other measures. The climate isn't good. The gulf coast isn't appealing the same way the cali coast is. If you really are in the "global elite", you can choose to live a ton of places with more natural beauty, better climate, more significant cultural and art events, etc. - basically by definition. So why wouldn't you?

I like the city, lots of good stuff there. It has essentially nothing bounding growth, and that helps keep real estate and rent down I suspect.

The "elites" like demonstrating that fact by collecting scarcity. There really isn't much to be had in Houston from a real estate point of view; there isn't even much in the way of fancy neighborhoods. I mean, they exist but they aren't anything special. Partially perhaps because the whole area is pretty homogeneous, there isn't a part of it that is clearly advantageous in the same way, say, NYC, SF, LA, Chicago has. I suspect this is self fulfilling .

It's worth noting that NYC, SF,LA, Chicago are the cities that were always the ones doing the most fighting against inequality. Their policies of rent control, demands for "affordable" housing from developers, neighborhood preservation, etc, was questioned for decades by others. These others were laughed at and called racists, and still are.

The Bay Area is perfectly livable—much more so than Houston—if you’re rich.

Why would wealthy people want to move to a place like Houston? They are already rich. They don’t care about low taxes and regulation.

It’s like somehow you missed the whole point. Houston is very attractive to people who aren’t wealthy.

Shouldn't you make the comparison with Dallas instead of Houston?

If you move to Texas they take away your "elite" status.

If we're going to do this, let's do it right: Where did these numbers come from, what are the sources? What is "Land area" defined as, and what does it include relating to uninhabitable/unusable space? What about zoning laws (in order to affect things like housing density)? Is average a mean or median wage? What are the rates of poverty in both regions? What the hell is an "elite of the world" defined as?

Start defining your perimeters and we might be able to get an answer to your first question.

Wages:

  Houston wages [1].
  SF wages [2].

Rents:

  Houston rents [3].
  SF rents [4].
  San Jose rents [5].

Land Area:

  Houston wiki [6].
  Bay Area wiki [7].

> What is "Land area" defined as

The total geographic area as defined by the city or region's CSA.

> what does it include relating to uninhabitable/unusable space?

Examines land area without regard for zoning or habitability.

> Is average a mean or median wage?

Average means average. Mean.

> What are the rates of poverty in both regions?

Irrelevant.

> What the hell is an "elite of the world" defined as?

Don't know that's why I requested more information from the OP.

  1. https://www.bls.gov/regions/southwest/news-release/occupationalemploymentandwages_houston.htm
  2. https://www.bls.gov/regions/west/news-release/occupationalemploymentandwages_sanfrancisco.htm
  3. https://www.rentcafe.com/average-rent-market-trends/us/tx/houston/
  4. https://www.rentcafe.com/average-rent-market-trends/us/ca/san-francisco/
  5. https://www.rentcafe.com/average-rent-market-trends/us/ca/santa-clara-county/san-jose/
  6. https://en.wikipedia.org/wiki/Greater_Houston#Metropolitan_Statistical_Area
  7. https://en.wikipedia.org/wiki/San_Francisco_Bay_Area

Comparing "Houston" to "the Bay Area" is really not a useful exercise.

The Bay Area has a number of different independent cities that are geographically isolated, and connected by limited infrastructure (e.g. the bay bridges and a few congested highways). You can debate the latter point, but realistically, large parts of the Bay Area are impractical commutes from the major tech centers. Even getting between SF and silicon valley is a miserable daily commute -- I wouldn't want to do it from Berkeley.

A more realistic comparison would be Houston vs. San Francisco County, or Houston vs. Silicon Valley.

That's the entire point of using a CSA (https://en.wikipedia.org/wiki/Combined_statistical_area) as GP did.

No, that's not "the point" of a CSA. CSAs use a fairly liberal definition of economic linkage to define regions, and it's transitive. Just because you live in the bay area CSA doesn't mean you'd be able to reasonably commute from Oakland to San Jose for work.

The New York CSA spans into upstate New York and Pennsylvania. It isn't reasonable for normal people to make a daily commute from upstate New York.

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