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Comment by namecheapTA | Hacker News Reader

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.

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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

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

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