Americans Are Moving at the Lowest Rate on Record
nytimes.com
nytimes.com
Over time, two incomes went from providing far more than a family needed to being a practical necessity in many markets. I can't imagine buying the type of home I'd like to live in on even my relatively high (by national standards) Bay Area salary alone, and yet many families still choose to live here.
Once a family relies on two incomes just to pay the rent, it becomes harder to pick up and move to a different part of the country unless both partners can do it at the same time. Even intra-county moves are more difficult when two partners are working full-time and don't want to deal with the stresses of moving on top of their regular jobs.
Maybe the pendulum will swing back as a result of changing expectations (about where to live, how much home to buy, what kind of job you need to have), or maybe remote work will save us all and let us move out of the expensive areas where our jobs are. But for now, I think the rise of the dual-income household is among the biggest factors keeping us in place.
This isn’t a normative statement, but two income families are inherently less mobile (absent one spouse working remotely). It’s a world of trade offs...
The number of single/no earner households has actually increased since 1980.
If you look at Table H-12. Household by Number of Earners by Median and Mean Income [0], you'll see in 1980 the percentage of households that have 2+ earners was ~44%, and now its ~40% and has steadily decreased over that time.
I made it into a google sheet:
https://docs.google.com/spreadsheets/d/1Vm8d-XTuGu_ilbK0xn_r...
[0] https://www.census.gov/data/tables/time-series/demo/income-p...
I'm no demographer, but my intuition is that the shift from 44% to 40% is not likely due to an increase in single-income households that are also buying homes. I think over the last 30 years that number would get squeezed a bit on both ends:
* Boomers are retiring causing some dual-income households to become 0-income households. Indeed, the proportion of 0-income households has gone up about 4% over the same period.
* Millenials are marrying later, causing them to be reported as "single income households" far later in life than in previous generations. For instance, I'm still single at an age when my father owned a home and had 3 kids (on a single income). As mentioned previously, I'm in no position to buy a home right now.
While I constitute a "household" under the census designation, my original comment was more referring to a traditional marriage or domestic partnership that would be in the market to buy a home. If we could normalize the data to such couples (say working-age partners in a relationship) I think we'd see the trend of dual-income households that matches my anecdotal observations.
Double income: Stay put, even if the jobs change. There are 2 long commutes per day. In order to find 2 suitable jobs, urban life is required. The commute burns lots of fuel, even if by bus. Childcare is expensive, especially if not of dreadful quality, and the apartment is tiny. Having a family is not really practical.
I recently decided to move to a new state on the other side of the country, purely because of the low cost of real estate there. It feels like the tipping point was recently reached, and having zero opportunity to have the place I wanted in Utah or California, pushed me to look elsewhere. Elsewhere being Arkansas.
Utah has remained a hidden gem for years, but external market pressures are driving up prices, and supply is surprisingly constrained by the local geography (mountains and bodies of water constricting available land in the SLC metro.) Utah doesn't enjoy the same wide open space of many inland states, at least in the developed areas where people want to live.
https://www.zillow.com/homedetails/14455-S-Muirwood-Cir-Herr...
I need that much space for prototyping some of my inventions and intend to open the worlds largest Makerspace, hackerspace, and artist commune.
I'm not against profit, but with something like housing which is a fundamental need, it seems like some effort must be made to build a system which makes it attainable for average people.
Not everyone can live in NYC or SF.
Saying that, people need to consider the low interest world we live in. When their parents bought their home years ago, the interest rate was very likely 10% or higher. Today it’s 3.5% and even lower. This drives prices up. The biggest issue is getting a down payment.
I believe a combination of lower standard down payments and new mortgage terms of 40-50 years would make housing more attainable for a lot of people. I also agree, more development is needed.
To be sure, the down payment doesn't protect the buyer at all. It simply exists to protect the lender in the case of an early default. They can still sell the foreclosed home, possibly under market or in a depressed market, and be made whole since they only lent 80% of the original price.
In fact, the average Joe would be better off in today's climate by putting 0 down and using what they would have put down into different financial instruments that will likely out perform the 3.x% interest rate they are likely receiving, considering they wouldn't have other penalties like PMI.
The financial crisis had a lot of inputs and bad banking was a part. That is, banks giving loans to those who were not financially able. However, a big part of this was due to government interference in the free market pushing President Bush's "ownership economy" policy which forced banks to give loans to people they probably wouldn't have otherwise. And then the whole thing went to hell.
A 0% down loan to a vetted individual with sufficient net worth wouldn't be a bad thing. I do believe there is a calculus we are missing between interest rates, inflation rates, and what a viable down payment should be.
The first part would not be an issue except in the short term without the second.
Reads more like "naturally the poor should be displaced from wherever the rich choose to live" considering that both cities have been heavily gentrified. There's a lot more than just higher income couples putting pressure on the market, there is a lot of distortion coming from developers seeking to squeeze every penny of margin from the jump in prices
This is an example of the issue I was talking about: it functions as an inequality accelerator. People who are already "in" have the power to set the rules of the game to be even more advantageous to themselves.
In cities surrounded by cheap farmland waiting to be developed, this money can be funneled into housing development. In the modern city that's already at "peak suburb", homeowner subsidies just contribute to bidding wars, driving up prices.
What we need is better utilization of land in desirable location.
Also, we need transit to connect neighborhoods to city centers. Hellish driving commutes could be pleasant train commutes with modern infrastructure.
The options have always been build up, build closer together, or build further out. The first two have been illegal in most places for decades, and at peak suburb we've reached the limits of the third one in terms of car infrastructure
Cheap living is thus prohibited, though some large California cities look the other way sometimes when the homeless build homes of that nature.
You can't even build a new home without arc fault interrupters and centrally wired fire alarms. In some places, you'll even need to install solar. Of course this isn't cheap! We have simply banned cheap construction.
Areas of CA and UT have appreciated faster than other locations mainly due to the popularity of living there for professionals. But a big part of the real estate price boom has been declining interest rates.
When you’re looking at property that costs many hundreds of thousands and into the 1m range, even a single interest point can have a dramatic effect. Because interest rates have fallen so much, value has moved into the cost of the real estate.
If interest rates were to rise to 8% for example, you’d see the pricing of these homes cut in half. It’s what the market can afford monthly that sets the price.
Of course if interest rates were to rise like that, an all cash purchase begins to make sense.
This was the model that led me to believe there were problems in the housing market in ~2005. Well, technically, it was the concrete evidence that this model was being violated. House prices in South Florida, where I lived at the time, tripled in ~5 years, but incomes did not. Robert Shiller had a graph of housing prices normalized to income from 1890-2005 in the NYT in 2005. Price-Income generally stayed flat, with the exception of a bump after WW2, the S&L crisis in the late 80's, and an enormous launch in the early 2000's.
As I see it, current housing prices are being forced out of the traditional model by the effects of the Fed's QE efforts.
Very likely true. The financial crisis messed everything up. Driving interest rates down and QE stemmed the bleeding but it is only prolonging the pain. Possibly we are in a new normal of low-to-negative interest rates for the extended future. If this is the case, expect homes to continue to rise in value and for people with access to cheap capital to continue to pull away from everyone else.
I'm not optimistic interest rates will rise as inflation stays low. They tried raising rates last year and it shook the markets and there just doesn't seem to be a stomach for a prolonged reckoning.
I agree that interest rates are likely to stay low.
I find it ironic to think of as inflation as low, given that housing is way out of its historical pricing band relative to the model factors.
But house prices have more to do with interest rates than inflation currently I suspect.
I remember when interest rates fell from 9% to 7% (early 90s). We had just bought a house for about $60K. Then interest rates fell, and house prices jumped, and suddenly our house was worth 90K. But if we had bought the same house at 90K at 7%, our monthly payments would have been the same.
I took a generic mortgage calculator and ran the numbers (30 year mortgage) on your house (first two rows), and on a South Florida townhouse that used to be mine (second two rows), to illustrate:
Price Rate Monthly Lifetime
60000 9 483 173798
90000 7 599 215558
142000 7 945 340000
309000 3 1303 468992
Note that the monthly payments are 24-37% higher in their after scenarios, even with a low, low interest rate for my townhouse. I see this scenario playing out over and over again and people assign the difference to interest rates when crunching the numbers suggests there's more to it.
In addition you have 6% Realtors fees to sell plus staging and being out of the house for open houses etc. the math just doesn’t add up.
I have a feeling that will get automated away in the next 5-10 years something fierce. More than it already is being by Redfin, etc.
Realtors don’t deserve more than $25-40/hr in most cases, let alone 6% of my home value.
Aligning the incentives etc.
If you flatrate it, they don't have an incentive to find you a big buyer.
https://www.bls.gov/ooh/sales/real-estate-brokers-and-sales-...
As a result a few favorite agents made a ton of money, drove luxury cars never more then 2 years old, and worked minimal hours.
The large majority of the agents made minimal money and had to fight of the scraps.
> The large majority of the agents made minimal money and had to fight of the scraps.
This mirrors the structure of the broader economy so in a perverse way, it makes sense.
Seems whacky that two neighbors with identically valued homes could easily pay different property taxes by 10x. That seems to be the real problem, nobody wants to move and get nailed by the increased taxes.
Do Californians move less than people from other states? If not, Prop 13 isn't an explanation.
But on the other hand, you are more likely to be able to keep in touch with people. You are more likely to have some entertainment without leaving the house. You are more likely to be able to fix the loose table leg with the basic, cheap tools that you have or mend your clothes if you need really need to. When I was poorer, I would eat cheaper food to be able to afford internet just because it could distract me from my life. If you are lucky enough to have some weed as well, it makes for a much more comfortable life, even if imperfect. (Weed/hash makes me more OK with what I have and I can generally afford it before I could afford a monthly, steady rise in general household bills).
In other words: Only if you have a certain life satisfaction in the beginning.
I think the quote about mars is more indicative of the entertainment and communication that the internet brings and its innate ability to help time pass more quickly.
IIRC, poor folks do drugs at the same rate as better off folks, though. Sometimes you are more likely to get caught because of the situations you use them in... plus the businessman has more to lose so tends to be more secluded unless you are trusted.
As far as worse, I don't know, man. The depression was pretty bad. The 1800's were pretty bad. The US is worse than Norway, just because of the lack of safety net, and both of these places are better than anywhere facing near-famine or actual active war. And so on. It is really hard to say, "worse".
Are you sure? In my experience, a tab of acid costs $5-10, and the effects last about 5 hours. That's way cheaper than alcohol. [1] shows a breakdown of cost per hour for a bunch of drugs I've never touched, and most of them look to be pretty cheap under this metric. Compared to movies, sitting around in coffee shops, etc., they're remarkably cheaper than a lot of legal forms of entertainment.
[1] https://www.addictionresource.net/blog/cost-of-illegal-drugs...
There is also difference between that sort of recreational use and addiction, though. Even if you do acid as much as possible for it to really be effective, you aren't doing it that much. Heroin? Sure. Alcohol? Definitely.
And it depends on, say, the type of alcohol you buy. When I lived in the states, I worked at a pharmacy for years. We regularly sold a half gallon of vodka (and whiskey, gin, etc) for $10 or less. now, I don't know about you, but I could get me and a few friends pretty drunk from that one bottle. Heck, we could get fairly drunk on less than that - a 750ml bottle would do pretty well with 2-4 of us. Plus, alcohol is readily available. Not everyone knows where to get illicit substances, nor is everyone willing to risk losing their children over it. Acid carries a fairly tough penalty and your price is per person. Per experience. Isn't always available, even to those that use lots, unless you are in the right part of the world in a large enough city. There is a liquor store in most towns.
I have severe seasonal affective disorder and pretty bad driving anxiety. I've seen mental health professionals for both of these and everyone's just said I should move. I have cognitive techniques for both of these that help a little, and been recommended medications to help, but really the solution is to move and be car-free. On days where I don't have to drive and it's above 65F outside, I genuinely feel like a totally different person.
The only place in the US where you can be a first-class citizen without a car and feel the sun every day is San Francisco. It's a nice bonus that SF is a fantastic place to be a hardware engineer too. I've been on a plan of sending out 10-15 applications every week for about a year and have at least 1 phone interview each week. I've been in the interview pipeline with around 60 companies over the past year, and so far received zero offers. Usually it's "we're looking for someone already local".
If it ever happens, getting a job in SF and moving there will have been the hardest thing I've ever done. My bank account is at $13k now, so once it hits $20k I'm just going to risk it and move without a job.
You should for sure consider other places in Cali. like San Diego, which has perfectly good public transit, but I would also consider the DC area, Austin, Chapel Hill (free and frequent bus service), etc.
You're already getting (and doing well with) interviews. Negotiate yourself an offer (maybe even with relocation expenses) with one of these companies and then move.
Understand that time is a much more scarce resource than money.
This isn't true. Where do you live?
San Francisco is cold and foggy. A day warmer than 65F and brightly sunny is the exception. Also, hardware companies are generally not in San Francisco.
Silicon Valley proper (about an hour south of San Francisco) is generally sunny and often warmer than 65F, so can work for you. Still chilly in the winter though.
Consider that noise, impersonalization, aggressive people, and a certain amount of urban squalor will likely weight on your mood and cause some degree of anxiety if those things bother you. It will take time to adjust your expectations and habits to avoid the worst of that. I slipped into the habit of wearing headphones and sunglasses when I'm out walking to dull the noise, and make it harder to for people to hassle me (I used to find this mildly anti-social; now I'm one of them). There are plenty of natural green places you can go on public transport to unwind from the city, but you have to go through it to get there. I suggest finding an apartment building with a gym in it, or nearby if you can.
Also, moving here without a job is a risky proposition. 20k$ sounds like about 4-6 months runway at best, if you live by yourself, with no car, and _very_ modestly. OTOH, it seems like employers were suddenly more willing to talk me when I got here just because I had an SF address. Good luck, I hope it works out.
Nowadays you go online and can research local economies, local hiring, local real estate, local churches, etc. You're more likely to move fewer times.
On the opposite side, if you've got a contractor / gig job, other than the weather during the commute, it doesn't really matter if you move to a new city. You might have to move inside a city for demographic socioeconomic change reasons. Outside very few fields temporarily, the job market is efficient and being a car salesman in kentucky isn't any better than being a car salesman in rhode island, other than very general stuff like weather and quality of life and affordability is somewhat better away from the coasts and similar things probably not worth moving for.
Have you worked as a car salesman in either of those places?
There aren't enough jobs for all the degree-holders out there. That's why higher education gets hit with the "scam" allegations. They're selling a vision of higher lifetime incomes that was true 25 years ago.
I have an opportunity to move "back home" where my family and my lifelong friends are. The job would be good enough, though certainly not as great as my current one. Wife works remotely so it doesn't matter for her. That's a major bonus as I make this consideration.
This is a tough one, moving for personal/family desires vs. a better work environment. I'd actually be downgrading my work life. And we're not unhappy where we live, just not thriving and it isn't long term for us.
Rural Alberta is far cheaper than, say, Vancouver, but it also means I'm married to the remote gig. Freelancing is an option, but that's very hard remotely -- in-person networking is effective, as is word of mouth, and that's hard to get a timezone away -- and it leaves me beholden to my current job.