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Comment by brailsafe | Hacker News Reader

must be nice to have made a 30x return on your house in 30 years

The real winners are the boomer generation. When they graduated college in the mid 60's wages were enormous relative to the cost of property. Property in all the now hotly competitive areas was dirt cheap too. If you bought in SF back then you've probably made 100x or more on the property value.

There's an interesting theory I came across that a lot of the cheap housing of that era was due to the interstate highway system, built partly during WWII. A lot of land that before was too far from cities for people to commute suddenly became in reach of people with decent cars. So that meant there was a whole lot of usable real-estate that hadn't already been built on, and that meant cheap land for about a generation.

If that's true, maybe we're approaching another phase of that, where people move away from cities because they can work remote. And things like Starlink might make some places tolerable to work from that wouldn't be before. On the other hand, even rural property is expensive in a lot of places now. Nowhere is immune to real estate speculation.

> On the other hand, even rural property is expensive in a lot of places now. Nowhere is immune to real estate speculation.

That's it, location is becoming less of a factor to determine housing prices. That said, besides internet you still need good access to things like plumbing and electricity, social aspects, and of course the climate has to be liveable; I can't imagine what it's like since I live in a very moderate climate country (western Europe), but stuff is a lot more extreme in the US, and the actual amount of liveable space is limited.

Access to services is probably the main thing: schools, hospitals, grocery stores. Plumbing and electricity is a pretty low bar since wells and septic fields are a thing, and even electricity can be generated on site these days if it's not available. But most people wouldn't want to live three hours from the nearest grocery store. That rules out some areas that would otherwise be pretty reasonable.

I drove through central British Columbia once on a road trip. There's probably enough reasonably flat land to fit the population of California with room to spare, but it'd be a pretty hard sell to get many people to move there now. Prince George has about 74,000 people but it's the only moderately large city/town for hundreds of miles in any direction.

Lots of California is this way also. People focus on the SF and LA areas but there is so much empty land in thr rest of the state. Much of the hurdle to living there, as previously noted, is access to services. Mainly medical and grocery for me. Having to drove 2-3+ hours to get to a decent medical facility isn't in the cards for us.

The biggest hurdle to living in those places is actually access to jobs. I guess it works if you can WFH, but if you don't have that option, you want a vibrant job market. With jobs comes wealth and then services like retail and medical care.

Prisons work well for these cases: Susanville is fairly rural (1.5 hours away from Reno?), it is the kind of place where if you drive north you get the dreaded "No services for 130 miles" sign. But they have a prison so they have jobs and services that come with the money those jobs bring (although you are still stuck heading to Reno if you need a real hospital or speciality care).

> Property in all the now hotly competitive areas was dirt cheap too.

Yeah, but you're ignoring all the losing bets. How have property prices in Detroit and West Virginia held up? Industry there was booming at the time, who was to know that it would change?

Meanwhile, California and Arizona were practically empty...

Not sure why you are downvoted. Prices in certain places like the rust belt have been frozen in time for the most part, and even recent surges have only sent them up so much. I just decided to take a peek at a wealthy neighborhood in Cleveland for an example of a not so hot market. Here a 5 bedroom mansion on an acre lot goes for $520k. 22 years ago that home sold for $450k (1). I bet when you factor inflation that gain of $70k over 22 years was actually a loss. This is just one example but it goes to show that even recent surges have only done so much to spike prices from what was honestly decades of stagnation in real estate across much of the country.

1. https://www.zillow.com/homedetails/2758-Claythorne-Rd-Beachw...

In the central valley of California, a house cost $130k in 1993 and today sells for $400k. In those 30 years you probably painted it a few times, changed the roof just recently, changed the kitchen, and so forth. Plus 30 years of property tax. So you're probably in for $200k on that $130k house. And that's not even counting interest on mortgages that most buyers had in 1993.

Doubling your money in 30 years isn't great at all. And this is within about 50 miles of tech jobs, although the drive will take 90 minutes in the morning and 60 minutes at night.

You also get to live in the house which is a pretty good return.

Houses do have utility. Doubling your money in an asset that provided living space for 30 years instead of paying rent is pretty great.

Ok yes but even if this was a rental home and the renters basically paid the mortgage.. so you didn't get any utility out of it. 30 years later you made $200k, even if you put basically nothing down. As a return it's a lot percentage wise. Overall though, it's not life changing for most people. It only gets crazy money in the most desirable of areas. And that desire circle is basically described as driving range from the highest paying jobs.

But they don't have so much utility that they should offer such returns on top of depreciation. The market is broken.

It's not the house that appreciates much in value, its the land the house sits on.

I'm aware. But the land mainly has so much value because cities refuse to expand despite the demand.

Expanding horizontally doesn't solve land price values -- prices will still be higher in the dense centre

The solution is to make better use of valuable land by encouraging (or enforcing) high density

>In the central valley of California, a house cost $130k in 1993 and today sells for $400k

Holy shiz, is California real estate really that cheap?

400K is a very basic house in the outskirts of a city in Austria(Europe), and tech jobs here pay 1/4 of what you can make in California. I feel we're being scammed over here with housing and wages.

The central valley isn't really "on the outskirts of the city" in the American sense. It's a lot of farmland.

If houses are so expensive vs labor, you could always buy some land and have one built? The central valley city I was talking about is Tracy, CA. Without traffic, it's takes 1 hour driving to get to the tech companies. Monday to Friday at rush hour it would take 2 hours. 90 minutes offpeak at 9am instead of 7am. Virtually zero tech workers are willing to make that drive.

Also, quality of life in Tracy is pretty poor. Property crime is pretty big. Virtually nothing for children to do. Young adults go to the same 5-6 average restaurants and that's it. I'd much prefer to live in a town near a nice city in Austria.

Labor is expensive though. It's just that your income in relation to labor cost is relatively low due to high taxes, health insurance, pension fund and so on. Including your employers payments you go home with maybe 40% of what the company pays for your work.

Building even a simple new home will set you back at least 300k.

I guess quit your job for a year and build your own home! Maybe get into the home building business altogether.

>I guess quit your job for a year and build your own home!

Who can build a house in a year by himself? Even with a group of skilled professionals it can take longer. Plus you'll be on zero income for a whole year.

>Maybe get into the home building business altogether.

Easier said than done. In Europe this is a credentialized profession so for insurance purposes not everyone can just roll up their sleeves anymore and just start building houses like it's 1886.

Building houses in Germany (and Austria should be the same) is pretty expensive. Houses here are built to last 100+ years out of mostly stone-based materials with expensive wiring, insulation and heating. Wooden houses with electrical HVAC taking care of cooling and heating is basically non existant here. Most houses don't even have an HVAC system, but just a heating system (i.e. no ventilation, no cooling).

The sturdy way to build immensely drives up costs for material and labor.

The high real estate prices Germany have more to do with the price of land/area, bureaucracy around building and nimbyism rather than material costs and labor.

I wasn't talking about real estate prices. I was literally talking about construction costs. Having just been involved in building a small/medium 3 story + basement house for over 1 million Euros (we already owned the land), I agree about the bureaucracy driving costs (mostly through mandated actions adding high labor costs), but your other points were irrelevant. Construction prices are crazy when compared to the wood construction often found in the US.

If you're willing to basically live in the boonies, yes. But you're not finding housing in or around the cities for less than a million in california. the median house in my area (after a skim on Zillow) is 800k and I'm a good hour north of downtown Los Angeles. Move another 30 minutes north (pretty much in literal desert) and housing is more around these numbers of 400-500k.

But who knows? With WFH being more accepted I can see some less city oriented folk moving out to those areas and gentrifying it. It may be desert, but it still has everything you'd want out of a neighborhood outside of entertainment.

You do not want to live in the central valley - that is why it is so cheap

The central valley isn't where the tech jobs are, unless you're working remote. In actual tech cities a basic house would be a million or more USD.

> is California real estate really that cheap?

California is bigger than most European countries... As with them, some remote areas are much cheaper than others. The Central Valley is the most remote and depressed part of the state, used overwhelmingly for farming.

If you think that's a good deal you should see what $500k buys you in the rust belt:

https://www.zillow.com/homedetails/14412-Larchmere-Blvd-Shak...

Seems like that's just standard appreciation. You replace the bits that deteriorate and conceptually lose value, so by replacing it, you just bring it up to par with what it would ideally be worth since buying it. Although my father did buy his house in 96 for $80k in Canada, hasn't replaced fuck all, and it's now worth hypothetically $250k just because that's what houses are going for in the neighbourhood

how about 50x return? Home that cost $100,000 CAD is now well past $5,000,000 where I live. If someone hodl'd their property in Vancouver even longer than that they would be seeing 100x return.

Hey, I live there too, I feel ya. Though you have to go pretty far back for that difference. I don't know that you'd have found what is currently a $5m property in Van that was $100k sometime in the last 30 years.

It'd be real swell if the residents of easy van stopped trying to block new ownable properties from being built so they can keep banking off their control over the housing and rental market.

Must be nice to be able to afford a house.

Indeed. Sucks to be one of those devs that just hasn't seen the same luck as a lot of ppl on here :(

It’s not luck ask them who their families are. Laughs in too much knowledge

Unfortunately, that's kind of often the case. If you have access to millions in capital for a home early enough in life where banks will give you the mortage, you're probably coming from intense wealth already, you inherited it, or you were dealt a lucky hand early on by making a lot of cash and not losing the job for the first decade of your adult life.

That's not as true for smaller properties

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