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Comment by hnhousingthrow | Hacker News Reader

These calculators don't reflect the reality/absurdity of the current economy. Anecdotal, but I bought a house in eastern California last year for $600k, now Zillow says it's worth $835k. Also, I'll unlikely ever be able to afford a house in the Bay Area, even though I make $220k/year at a company there. Still don't know what I'll do if my employer makes us return to the SF office in a few months. Relatedly, a ~70 year old woman bagged my groceries today and I doubt she's doing it for fun. Seems the accelerating wealth inequality is destroying our society/communities if it hasn't already.

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If you had a significant other with a similar upper middle class wage, e.g., $220k * 2 = $440k you could probably swing it with more breathing room. You are wise to avoid the burden, in the chance you technically qualify for the mortgage but barely so in the Bay Area (e.g., leaving you house poor). The fact that home affordability requires a HH income in the top 2-3% is, to put it mildly, highly concerning.

It makes the trend of many millennials not trying (a bit of nihilism) seem reasonable. Why aspire for great career success and an above median income, when you can't get much for it? A better life, at that point, is likely to optimize for cheap hobbies and leave the high-pay work stress behind. Honestly, it sounds like a fairly rational decision.

Or work remotely. One can make way above prevailing local salaries working remotely for SF Bay Area companies.

I'll echo this. The 6-7 years of "California" tech experience pays dividends in other countries. Ended up moving to Taipei so my example is a bit extreme, but I have quite a few friends making "low end" California $100k-120k USD/year wages while living in the middle of nowhere Canada.

I still wanted to live in a city, and Taipei has all the amenities Los Angeles or San Francisco had (nice bars, hipster coffee shops, great out doors areas). My friends wanted big wide open space and being close to family in Canada.

I was being paid on the "low end" for an engineering manager in California but in the top 1% in Taiwan.

For anyone considering trying "location arbitrage", whether that be in a "normal" city in a middle state of the USA, or a more extreme example like myself, I high recommend giving it a shot. You can _always_ move back to SF, LA, NYC, London, Hong Kong etc. The only risk you're making is the slope of your savings account decreasing slightly.

Remember, you'll never have _more_ time and _less_ responsibility then right at this moment. You'll only get less time and more responsibility as time passes on.

I think this cannot last for long - supply and demand would push wages down as more people are available for the position.

May be not this year, or next, but the long term trend of work-from-home will make this true.

I’ve been seeing this sentiment since the late 90’s. All signs point to the market staying irrational longer than I stay on the market.

> upper middle class wage, e.g., $220k

Oh, so you live on one of the coasts, then.

It would be helpful if you would post a comparison of income vs housing cost in your area. They're replying to someone posting about San Francisco.

The US: Highest inequality in the Western world.

Also the US: Everyone is middle class.

Nothing says you have to buy a house and settle long term in the Bay Area.

I’ve know people who get a rent controlled place, work 10 years, sock away $1M+ in savings, then go somewhere cheaper with good schools to have a family.

Being able to put away $1M+ in savings by the time your in your early 30’s is huge.

220 is a wage at the upper end of what can be typically made by the time your 30 if you’ve chosen the right careers. There are notable exceptions with recent top tech offers - but I work for a fang as a software engineer and didn’t break 200 take home until I turned 32.

If you need 2x those incomes to afford A basic necessity such as housing than we’re likely to have a problem.

> break 200 take home

Does take home mean excluding equity grants? a lot of the compensation from tech firms these days would be some form of equity.

it does not :shrug:

EDIT: For more detail, many of the higher comps you hear about for junior engineers come from stock that appreciated much faster than the company intended when they decided your comp. The more Senior roles at most big tech companies also tend to require ~8-10 years of professional experience to be hired externally.

> 220 is a wage at the upper end of what can be typically made by the time your 30 if you’ve chosen the right careers.

This is typically true if you work for a fang. These insane salaries rarely exist anywhere else.

I’ll offer a slight disagreement. They are more common than you think, and you don’t need to be exceptional to receive such a package. Positioning your strengths during negotiation is helpful. Knowing the market and laying out what you (presumably a developer) bring to the table goes a long way.

It is more common than you might expect across industries if you are good at what you do. I know a biz dev person at a mediocre book publisher that earns that much and they’ve worked remote much of their career.

It's not an uncommon salary - but its not typical as of 2021. The individuals with this compensation are typically either experienced, or educated in a remunerative field (including comp sci grads).

A society that sets the bar for home ownership at this level is going to have trouble, in an inflationary environment home ownership completely changes the savings rate for an individual as inflation eats away at the mortgage payment. By the time 30 years is up and the individual owns the home, they benefit from massively reduced housing costs into their retirement.

If instead these individuals are renting into their 30s/40s/50s they won't have the cash flow to backstop their retirement, fund college, create businesses, or other activities that result from capital accumulation.

What's worse is that a larger fraction of the eventual benefits that these individuals require will be paid into rent on properties that are likely owned by investment banks and others whose borrowing power is unconstrained.

The nihilism doesn't make sense from someone making $200k/yr though. If you're in a career with little advancement and making minimum wage then yeah sure, but if you write software at a FAANG, then lets back of the envelope for a second.

$200k is like 130k take home pay after taxes, (which is just shy of $11k/month). 20% down on a million dollar house is 200k. If you're able to put $4k/month towards a future down payment, that's 50 months, or just over 4 years. If you were making that when you are 30 years old, if nothing changes from then (which it won't), you can buy a million dollar house before you're 35.

If you put it into stocks instead of holding it liquid for those 4 years, then before long term cap gains tax (California and Federal), then you'll need closer to $300k. Which still seems like it should be doable before you're 40. (If you bought AAPL at the height of the 2008 bubble, you'd be doing quite well today.)

Does it seem reasonable to me that housing is this expensive in the Bay area? No! Does it seem feasible for someone who's software development career is going well, to be able to afford a house, eventually, if they make that a priority? Quite.

There are many directions someone making $200k/yr at 30 can choose to go with their money, and I don't begrudge anyone the agency to make their own decisions. But let's not say that someone making those kinds of wages can't afford a house. They may prefer to use DoorDash for every meal and extravagant vacations instead of buying a home, but people who make less money are forced to make much tougher, more existential choices on how to spend their money.

$200k+ yearly salary is in no way at all, middle-class.

Do you mean to say they are > or < than middle-class?

It's 4x the median per capita income in San Fransisco, and double the median household.

Just to follow up on a deleted comment that thought I was complaining, I guess my point is that decent housing (both renting and owning) has become unaffordable for most people. High-income earners like myself will be okay, if okay means spending half of my salary on rent where I literally step over homeless people as part of an hourlong commute. My greater fear is what happens to the "essential workers", the heroes making $15/hr? What happens when the firefighters, EMTs, teachers, grocery store workers etc have been priced out of the state?

We're about to find out aren't we? I'm glad to not be part of that experiment.

Firefighters make 100k, some teachers do too. Depends where you live.

More over you need someone to buy your 800k house you spent 600k on. It’ll be a remote worker who buys it if the local economy can’t support that so…… hopefully remote work is here to stay.

The average salary of a firefighter in the United States is $52k. Teachers average $15/hour. No clue where you're getting these outrageous figures other than if you're a Californian and think anything about California is "normal" in the sense of the rest of the United States. If 30+ states pay firefighters $50k, and teachers make $15/hr in 40 states... actually makes California look like what it is, a massive bubble.

I submit the housing market of Phoenix, Arizona as an example of peak bubble. There are numerous houses on the market today that were previously sold... ~30 days ago. This feels more ludicrous than the speculative housing bubble of '07.

Yeah, pretty much anywhere California money is cashing out and fleeing too is way more insane than California itself.

Meanwhile for half the sale price of one 1200 sq. ft. 3/2 townhome on the Peninsula I could purchase 3 4-unit multifamilies on mortgage, each grossing about $50k/year in rents.

Will the appreciation of these properties be the same as that townhome? Almost certainly not. But money has time value, and the ancillary costs of ownership in CA are far greater.

Traveled though Missoula this summer and the housing market is absolutely wild.

The fact that you and everyone else claim we're in a peak bubble is evidence to me that we're not in a peak bubble.

not a bubble in the sense that building new housing in most of California is practically illegal given the amount of local points of veto and existing zoning

A co-worker from southern California just went to Arizona and purchased 4 homes as investments. He deemed them good value compared to current California market and was basically able to buy 4 units vs 1 around LA for the same price.

One was even sold twice in one day: https://www.azcentral.com/story/money/real-estate/done-deals...

I did a six month consulting gig in Cupertino a few years ago. I lived right at the edge of Cupertino and San Jose. I was paying well over $2k per month for a 1BR apartment — much more than my 4BR house payment here in Austin, where my wife stayed while I was in Cupertino.

I saw a house for sale there not far from my apartment complex. Literally a shack that was not fit for human habitation. It was selling for over $600k, and the land value alone was closer to $700k — yes, the “house” really was that bad.

I was a consultant, so I was barely within my “spend 1/3 of your income on housing” rule. I calculated that to be converted to an employee, they’d have to pay me north of $250k per year in order to be able to afford that same apartment.

I was not at all unhappy when they told me that my consulting contract was up earlier than expected, and I got to go back home to Austin just before Christmas of that year.

And housing prices in Cupertino has risen steadily by 20% year-over-year, and have done for at least a decade or two. Where else in the world can you get a guaranteed 20% annual increase on your investment?

California can keep their damn sky-high housing prices. I just wish they wouldn’t bring that shit with them when they move from California to Austin.

At the current rate of price increases it pays more to be a property owner than a top 3% income. There will clearly be no future implications to this /s

This is our exact challenge. I do well, work in the bay area, but the down payment, not the monthly, is the main hurdle to homeownership.

You have to do the IPO stock option dance.

I used to think that, but really the monthly income is the harder and more important hurdle. It's not how much you put down, it's how much you can finance.

> Relatedly, a ~70 year old woman bagged my groceries today and I doubt she's doing it for fun. Seems the accelerating wealth inequality is destroying our society/communities if it hasn't already.

Savings and share-of-total-wealth rates (measured at same-age) are incredibly bad past the Boomer generation, dropping off with each generation.

There's going to be a whole lot more of this starting in about 10 years, when Gen X hits retirement age but can't retire at anywhere near the same rate their predecessors did.

I wouldn't count on inheritance to solve the problem, either. That's all gonna go to hospitals and nursing homes.

Sell the house, and together with the savings you might already have you can do the FIRE thing somewhere where living is cheap.

[deleted]

The parent comment made no complaints and their salary offers no implications on the greater health of the economy.

Similarly, I bought last Sept in Nashville, TN and Zillow says my house is up 13.5% already. The Nashville housing market is especially ridiculous, it's one of the hottest in the US.

> Relatedly, a ~70 year old woman bagged my groceries today and I doubt she's doing it for fun. Seems the accelerating wealth inequality is destroying our society/communities if it hasn't already.

Let's not forget about the error in extending unemployment and benefits that the current administration passed. We should all hope and petition that a 4th stimulus check does NOT go out (inflation). The fact of the matter is, these policies are keeping a lot of the lower income workers out of the job market because they are still making more off unemployment than going back to the workforce. I estimate, this imbalance in the market will correct in September when these benefits end.

A bunch of states have ended the benefits, and it turns out the free market didn’t magically correct itself.

https://www.google.com/amp/s/www.cnbc.com/amp/2021/06/23/end...

In contrast, those companies that are offering $15+/hour wages are seeing applications through the roof. [0]

I don’t mean to discount inflation, as it will likely be an increasing issue in the immediate future [1].

But it’s very clear that the issue isn’t unemployment stipends: it’s the low wages of working class jobs that are the issue. Unemployment and the pandemic seemed to just be the push for many people to realize their worth as human beings is more than $7.50/hour.

[0]: https://www.washingtonpost.com/business/2021/06/10/worker-sh...

[1]: https://www.axios.com/ceos-warn-inflation-alarm-sound-da5e2d...

I'm confused at your invocation of that quote. Are you saying the solution to this woman having to work a job she doesn't like is to force low income workers to work jobs they don't like? And the flood of low income workers who have no choice but to work these jobs will alleviate wealth inequality?

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