Also the real wages have not increased much but all the expenses have, it's just demoralizing
Either way its a pay drop.
Source? Even the famously wrong[1] productivity/wage gap graph from epi.org admits that wage has at least been growing in real terms.
[1] https://old.reddit.com/r/badeconomics/comments/6rtoh4/produc...
Then there is some reference to Mankiw making some assumption about labor supply and demand being infinitely differentiable and continuous, as well as violating "Rule V" in the adjacent sidebar. Meanwhile the newly-constructed local Taco Bell has two employees, a closed dining room, and the drive-in queue starts on the road before the entrance to the parking lot. This is my shocked face, at Mankiw doing something dumb.
Essentially, we should not see 40 year runs of compensation lagging productivity due to some outsized returns to shareholders. That would likely reveal a structural problem in the labor market, at least by my understanding. "This would be a bad thing and our system is perfect so this accusation of badness must be wrong!" OK, Pollyanna. It would be inconvenient if the increased market concentration we see in every industry has given the remaining firms greater pricing power both as buyers of labor and inputs and sellers of products, so let's assume that didn't happen even though this graph clearly shows it.
Truth in advertising for this subreddit, it seems. Psychological commitment to the status quo yields unconvincing arguments plainly contradicted by public experience.
[0] https://research.stlouisfed.org/publications/economic-synops...
Your expense is someone else's wage + a capitalist's profit margin.
Expenses across the entire economy can only outgrow wages if someone's taking a bigger slice of profit off the top.
When we talk about inflation, we always conflate the two, as if they are the same thing. They are not.
Have you paid attention to the Delta between executive pay and that of general labor over the past 4 decades? This is exactly what has been happening.
What about waste on MBAs?
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I have MILLIONS of square feet of FAANG builds under my belt (including healthcare, which is never included in FAANG (but now that one of the hospitals I was designer of was purchased under the Zuck's name...)) should be included.
I've made so many people more rich.
Building a bunch of housing in the middle of nowhere for unhoused people isn't going to work unless you also provide them heating, utilities, transportation, etc. The least expensive way of doing that is to make it dense like a city. At which point you're just building a planned city for indigent people, which is not particularly in the purview of the US on a few axes.
Another contributor to the problem was outside speculators buying residential properties. Specifically Berkshire Hathaway and Zillow come to mind. But I'm sure others were doing it too. It should be illegal.
Unfortunately we have bad incentives aligned here versus stated goals.
Manhattan and San Francisco are like Japan and Argentina in economics. They're just not the same market as most places. In Manhattan in particular the value really is the land.
There are lots of levers that determine if a person can afford a home. income, interest rates, % income that goes towards housing, etc. But its obvious cost of building the home plays a factor.
Go compare the costs of identical pieces of plywood from the Home Depot on West 23rd Street in Manhattan and the Home Depot in Jersey City, directly across the river.
Manhattan: $76; Jersey City: $37
Is that the cost of shipping a piece of plywood an additional 3-10 miles? Is it taxes?
It's the rent.
Even if you build a "cheap" single family house that's still going to be more expensive than some equally cheaply built townhomes, or apartments because of stuff like parking requirements and minimum setbacks.
Stop blaming everything on immigrants, pls. You have your own agency, dont play a victim and get your destiny in your own hands.
Immigrant labor is what keeps this country together, all those back breaking jobs that Americans consider themselves too good for and prefer sitting on the welfare/unemployment/etc - these jobs are done by immigrants while being paid peanuts.
Without immigrants the housing would be even more expensive and unaffordable, as well as all other services like plumbing, electricians, fast food/dining, hospitality, etc
And wages would be commensurately higher. The greatest real income increase in America happened between 1940 and 1970 when there was virtually ZERO immigration.
How many houses did you build, $username?
Touche?
The cake you can't have and eat at the same time is: "I want affordable housing" and "I want my house to be a good investment."
No it is not. Construction costs (material, labor) are sky high even if property costs are as well. Building high-end housing has always been more profitable than otherwise, low-end housing is simply high-end housing 20 or 30 years in the future.
That was maybe true in the past, but todays exurban sheetrock palaces are impossible to be turned into low-income/entry-level housing. It starts with the zoning requirements - are you really going to divide a 2500 sqft McMansion into a duplex without an epic zoning fight? And then there's the transportation/parking issue.
The real problem is that 1200 sqft entry level housing like it was built in the decade after WW2 isn't made any longer but is urgently needed.
It is my understanding that builders are responding to the demand from home buyers, and people that can afford a (starter) home want 2000sf at minimum.
Also the costs of a house dont scale linearly[1]. A small home costs almost as much as a 2000sf home.
[1]https://www.togal.ai/blog/the-average-cost-to-build-a-house-...
Even in cities with little zoning requirements (like Houston, and heck, even Tokyo), you still see McMansions being built rather than low income housing. Low income housing is still old housing from the 80s/70s, and the problem you are referring to (that housing built today is not very convertible) is one for a sadder future.
> The real problem is that 1200 sqft entry level housing like it was built in the decade after WW2 isn't made any longer but is urgently needed.
Having shopped for homes in the last few years, there were plenty of 1200 SQFT options in the places I looked at, they were just $700-$800k rather than $900k-$1.1m. Condos are the more realistic options in that case (I saw one I liked for $700k with a reasonable HOA, my wife wasn't having it, however). She preferred a 900 SQF SFH over that, for reasons I couldn't figure out. All were still considered luxury however since they were almost brand new.
Note that yes, I live in an expensive area, but usually when we talk about affordable housing, we are talking about places where people want to live (vs. say Detroit).
This is the highest in the world. [1, 2]
That's got nothing on San Mateo's $1264 average sale price and $160-350 per square foot in construction costs. [2]
Outside of major metros zoning rules make houses massive, twice as big as in the 70s. While the inflation-adjusted per square foot cost has remained roughly constant since the 70s, the much bigger size makes each house far less affordable.
It really is zoning.
[1] https://cbreemail.com/rv/ff019c9050e5e959ddee96391147a04f828...
[2] https://www.statista.com/statistics/1234783/average-sales-pr...
Isn't much of the listing price related to land costs (and then of course profit)? To say that construction costs are only 50% of the sold to cost doesn't tell me much, how much did they pay for the land on a SQFT basis?
This myth of zoning being the only factor is maddening. It's almost like the California folks think their housing market is the only one. Plenty of jurisdictions have loose zoning laws and we still see skyrocketing property values. There's interest rates and inflation to consider.
The cold hard truth is: when a bunch of people all want to live in the same areas, housing is going to be expensive. There's no way around it.
I expect it to drop to below $200k here once they finish rebuilding the thousand or so homes one of our recent wildfires took out.
Sure it wouldn't go for closer to $1.5M?
How long does it take to raise a house?
Sounds like southern california done fucked themselves with over-regulating that stuff.
A single Ritcher 5.8 quake in Virginia in 2011 caused $300 million in damage and disrupted utilities for days in 12 states. A series of earthquakes in 2019 (6.4, 5.4, and 7.1) in California caused so little damage that it's hard to find a tally. Power was knocked in some cities and restored within hours.
Yes, CA construction is more expensive. But it's also stronger and more resilient than the cheap crap in the county next to you.
For 580k I could hire 2 skilled men and 3 undocumented immigrants for a year.
Something isn't right.
Outside of major metros, zoning makes houses much bigger, twice as big on average as the 70s.