Comment by seem_2211 | Hacker News Reader

Comment by seem_2211 | Hacker News Reader

Reading this as someone who has moved from New Zealand to San Francisco, the parallels are depressing.

In New Zealand the price of housing has skyrocketed, and exists in a similar plane to Canada's housing market. We have the same issues of low productivity and relatively low wages as well.

There's a toxic cycle that's created. Boomers made all of their money in housing appreciation, and heavily encourage millennials to continue the cycle (which, taking the most optimistic view of it all, makes sense). But a house doesn't cost 2.5x your income now - it costs 8-10x. So you're married to a mortgage (which unlike America has its interest rate fixed for <5 years), have probably got a lot of your parents money invested as well (because you aren't earning enough to come up with a $200k down payment on your own).

Because real estate has 'proven' results, and the media make a lot of money advertising houses for sale, that's a lot of what you get told to do. As an individual you're so heavily indebted you can't afford to take risks, but at the same time, companies aren't trying to improve their productivity - because the best ROI has been in the property market. So wages suck too.

New Zealand is a bad place to be a young person. That's why I don't live there anymore. And I don't think I'll move back anytime soon unfortunately.

This generational change in house price to income ratios is also apparent in Britain and supply constrained US cities. It can be largely explained by the fall in mortgage interest rates from the 12-15% in the 80's to the 3-5% we see in the 2010's.

This windfall provided a massive generational wealth transfer from young to old, and with interest rates near the zero lower bound cannot be replicated. This makes housing a far worse bet for our generation, even for those of us earning sufficiently more than our parents to be able to take a shot at home ownership.

100% agreed. It won't end well, and politicians being politicians (and voters being voters), we're going to continue this mad show as long as possible, ensuing we get the worst possible outcome here.

The weird bit is that San Francisco prices make more sense than where I grew up (suburban New Zealand). Sure a house in SF might cost $1.2m but two people working in tech can expect to make $250-300k all in by their early thirties. That's only $200k more than a house in New Zealand, but you're working with an income that's easily 2x the size.

A $250K household income is on the 96 percentile for San Francisco. Working in tech gives us a slightly warped perspective.

Moving from Britain to the US I've seen the income of my profession as a software engineer move from the 75th to 90th percentile and the variance of the income distribution widen so an income of the 90th percentile earns 2.6x rather than 2.0x the median. We're far richer here than we were at home.

In Britain the concentration of wealth and opportunity in London and the SE is a fundamental driver. If Government were to focus on creating alternative centres of wealth generation the vast stock of infrastructure that surround some of the urban centres in England could be unlocked. For example within 40km of Manchester there is Bolton, Preston, Blackburn, St Helens, Wigan, Halifax, Warrington, Macclesfield. All of these are substantial urban centres in their own right with working infrastructures including schools, hospitals, parks, leisure centres, shopping, residential districts and so on. None of them are economically exploited at this time. Similar pictures exist for the northeast.

> because the best ROI has been in the property market.

That is not true. It seems like it is true because we can look at our parents and grandparents and see that the house they bought in 1980 for $300,000 is worth a million dollars now, but that's not a great return. It seems like it because they are millionaires, but you'd have been better off in bonds with a better return and a whole lot less risk.

While you are technically correct, the common man on the street so to say would say that property is where the returns would be (even if the returns have technically been 0% once property taxes, mortgage interest, insurance and repairs are taken into account).

Perhaps I should have been more precise: the perception is that the best ROI has been in the property market.

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