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Comment by shados | Hacker News Reader

This is really important.

30% of someone making minimum wage isn't the same thing as 30% of someone making 500k/year.

I'm fairly well off. If housing took 70% of my after-tax income, I'd still be able to live reasonably well (and would have one hell of a badass home to go with it).

My food, my phone, my electricity bill, my insurance, my transportation, they cost me the same as they cost someone else living in the same city making 1/4th of the money. Since real estate is wealth storage at worse and an investment at best, I can pour everything else I make it into it. It's not particularly optimal, but I -can- do it if I so choose.

The end result is that money available for housing goes up in a curve as you go up the income bracket. People below the threshold get screwed.

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The problem there is that ratios are still important. If you are using 70% of your income on housing, you will lose your house as soon as you lose your job. Unless you spend less than 10% of your remaining income, you can’t really save for retirement or a rainy day. The ratios still matter unless you assume people never lose work (which isn’t realistic).

That is the reality for virtually everybody I know - university educated folks in Canada with white collar jobs. job gone - house gone within a year, and probably not saving much for retirement. We live in an area with a bubbly real estate market and a place to live in now and have a family home is more important than saving for 'retirement'. As we have all seen over the last 15 years the real estate market only goes up and savings in secure low return investments is is not a winning strategy, so you have to get in as early as you can or move away and say 'see ya' to your friends and family. The thinner you can stretch it when you enter the market, the higher you can lever yourself out, the better off you become in the long run! it is sick but that is reality.

I honestly don't know any of my peers to be without work, ever.

The mothers are taking less than a year off work per child and then they are back to work too. I think dual income families are another reason house prices have skyrocketed, get two YUPPIE 'DINKS' saving for their downpayment and 1% interest rates and yeah they can afford to bid up the price of a house.

Carpenters are getting $75/hr CAD around here in house construction, and a plumber is $125/hr, so per my grand parent commment people are also simply earning a lot of money so they can afford a $5k monthly payment.

edit: grammar

This all points to a huge undersupply of housing.

If prices are set by the maximum that people can pay, rather than what the costs are to provide housing, then there's an easy solution: allow more housing to be built.

Nearly everybody can afford to pay for the costs of providing housing: the maintenance, the amortized cost of construction over the lifetime of the house.

What people can't afford to pay for are the increases in land prices due to the housing shortage. This sets up a two class system: those that own the land and see benefit from appreciating land prices, and continue to have the flexibility to move and own land becuase they bought early, and the unlanded, who are doomed to pay ever increasing land costs in their monthly rents, with all the benefit going to landlords and homeowners who reap the land rents.

It's a gigantic unproductive transfer of wealth from those with less to those with more. In addition to the human misery and poverty that this causes among working people, this also greatly increases inequality, which further reduced economic output of society.

And there's a simple solution to it all: allow people to pay to build housing rather than forcing them to bid up limited supply and pass off their stored labor to idle land owners.

However, the homeowners who benefit from this system are the ones with the political power to keep their rentierism enforced by law...

Building housing is starting to get really high. I don't know if its because the margin is so high that workers can be paid that much (I'd be skeptical), but the average price to build in the expensive cities is pretty high. Not as high as what it sells for, but definitely higher than a lot of people can afford.

Add that right now there's a timber shortage (insurance costs are spiking recently for that reason), and it's probably not helping.

The land value is the most actionable problem, but it doesn't solve everything.

Timber shortage is kind of the wrong way to put it. We have a lack of redundancy in sawmills. We actually have a lot of timber - just not enough sawmills to process the timber and turn it into wood products that people can use in construction. Just like the CPU shortage - no one wants to build new fabs/sawmills because everyone assumes demand is just high for now and won't stay high forever... So, for now, they all get to raise their prices and rain in the profit.

mills have been going out of business for decades since we are shipping whole logs overseas to be processed there.

Local small players, boutique mills if you will, can't even buy logs because the lots of logs that are put up for sale are so big only container-ship scale buyers are in the game.

I am 100% against exporting whole logs, we have lost so many jobs in the mills and supporting the mills.

I don't know if that's the sole reason that smaller mills have been going out of business... As far as I know - we've had a massive amount of consolidation in mills under a few major corporations. (Same as anything, really) I agree with exporting whole logs as that seems very wasteful.

But I wouldn't be surprised if the reason boutique mills can't buy logs as easily is because there are contractual agreements with larger suppliers. That isn't really anything new in any industry... guess you need the government to step in to prevent that.

there is no housing or land shortage - simply desirable houses in desirable locations are expensive.

Check out this website: https://www.cheapoldhouses.com/ there are many houses on there for not much money but they are obviously not in desirable locations. Some need some repairs but that is just time & materials not buying expensive land. So there is lots of cheap land and cheap houses.

Increasing density by tearing down some single family homes and replacing with townhomes is probably a workable compromise - now there are three dwellings where before there was 1, and everybody still gets a garage and a yard, but each of those townhomes will still be priced up to what the market will bear because there will not be an infinite supply of them.

In my town of 20,000 about 1000 dwellings are coming online significantly increasing the supply - potentially increasing the populatiog by 2000-4000 people, (up to 20%!) but they were all snapped up for $800-900k and now there is only one available for $1.2M.

People want to live in desirable places, and will pay more to do so. Nice places are always going to be expensive.

If you don't have a house you can hack the system by moving to a place with cheap dwellings and making it desirable, which is a normal pattern: Artists and musicians move to cheap neighborhood, it becomes cool & desirable

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