Buying a big TV or a new iphone would be a lower % of total salary since those wouldn't scale w/ the location. And then you'd turn around and pay $20 for a cocktail. But what do I know, I live middle of the country :)
I’ve lived in very expensive cities (Boston, Los Angeles) and now live in a moderately priced one (Cincinnati) and most things cost about the same except real estate. Gas (which I don’t use as I have an EV) is a bit more in California due to taxes but food, clothing, services, gadgets, utilities, etc are almost the same.
If I were a 20-something today I’d stay away from high cost cities. Real estate eats everything. I might consider living in such places for a little while to build network but would bug out after maybe two years. For example I’d say if you live in SF/SV and are approaching 30 and making under 300k you should leave.
It’s just such a bummer that the absolute worst financial decision of my life is to live in my favorite place in the world.
I get it, it’s how the world works, but it sucks to choose between daily happiness and financial security.
Unfortunately with the exception of Sacramento (which is getting pricey as of late) California doesn't have a lot of middle ground between its really desirable yet expensive places and places that are affordable but less desirable. The Sacramento area seems like a reasonable compromise for me. I can comfortably afford Fresno's and Bakersfield's nicest suburbs, but I don't know if I'd be happy in those cities. Much of the rest of the state is quite isolated from major metro areas; this has implications regarding educational opportunities for children and health care quality and availability. I don't see myself settling down and raising a family in many of California's more isolated areas due to this, though it may be a nice adventure visiting these isolated areas for recreation.
I don't know what I'm going to end up doing....maybe I'll end up marrying a woman from Vermont and end up moving there in a few years XD. But I completely sympathize with you and the crazy housing market we're contending with.
One of the big benefits is that there are so many options for day trips. Visiting Lake Tahoe and the surrounding mountains is an easy day trip. Visiting SF or the beaches is doable in a day. Napa is close. For hikers, runners, and bikers there are tons of bikes paths and hiking trails all over the Sacramento region. And there are a lot of neat places in the nearby Sierra foothills.
To summarize: If you prioritize nightlife, music, and food, Sacramento might not be the best fit, but if you prioritize affordability (relatively speaking) and getting outside, it's hard to beat the Sacramento area.
Disagree. Saving X% of one's early career salary goes a lot further when the salary goes up near a city.
I live in the midwest and invest over 50% of my salary.
I'm in my mid 30s and have almost a million in investments already.
Meanwhile I have friends from college, same major etc, who live in expensive cities and work in the same industry and they barely have anything to save after the high costs of living there.
Seems like a waste of effort dick measuring contest to me.
And even if you check that box when you do decide to cash out and move to Cincinnati or whatever nobody around you from that point forward will place any positive value upon the fact that you have checked that box.
I live in NYC because it’s densely populated, diverse, with access to world class most things (museums, restaurants, theater, music, …). I get to experience and do interesting things.
That’s why people should consider moving to these cities. No one gives a shit what Joe from Cincinnati thinks or will think in some hypothetical future.
This mindset is the problem. If the plan after 30 is to move and live next to Joe from Cincinnati, then like the parent comment says: this flippant attitude will not garner any positive value.
That's not the point of living in a city like NYC for many of the residents here. No one here I know is planning on leveraging "10 years in NYC" to impress their neighbors in Cincinnati.
I still think you can get a lot of benefit living for a while in a "center" like Silicon Valley, but a few years might be enough to absorb a lot.
Cost of living calculators assume you're trying to live in the same kind of housing in HCOL-city-A as you would have in LCOL-city-B, but there's no reason to accept this assumption.
I rationalized it this way: there is no amount of money in LCOL-city-B that could buy me the feeling of living in HCOL-city-A, so I'm going to treat the housing in HCOL-city-A the same way (i.e. mentally assume it's not available and consider that the tradeoff for getting the thing that isn't available in the lower-cost-of-living city).
This is the flipside of living in a tiny studio in Hell's Kitchen and pretending nicer apts don't exist. It's just a matter of making the most of it, in either case.
Amazon and Walmart online, Whole Foods and Trader Joes in person. Doctors and drugs who are in-network for insurance would be the same cost anywhere in the US
It really is mostly childcare and housing that really kills you in the expensive cities
Cost of influence, too. Granted, it’s not something most in tech think about.
Every political system has patrician and plebeian tracks. In America, the former can be bought (versus solely inherited). Being a politically-active patrician in New York involves an expensive list of patronage. That’s where the power players are, and that’s where you’ll cut casual deals.
It’s optional. And it’s different from civic responsibility. But unless you think the status quo is hunky dory, you’re going to want to change things, and the cost of access varies geographically.
> Doctors and drugs who are in-network for insurance would be the same cost anywhere in the US
I don't believe this to be true. For example for dental here is a price scaling chart based on where you live: https://www.opm.gov/healthcare-insurance/dental-vision/plan-...
I don't think people are spending upwards of $2,500 per month on impulse purchases on Amazon, groceries, or whatever, and blaming it on 'cost of living'
In Ohio I got twice the house for half the price compared to Austin. The cost of milk and eggs are way down there
If housing was not connected to fundamentals, home sale prices would have been exposed and taken a nose dive with the movement in interest rates. People aren't getting any easy money. They are still buying.
But prices have fallen (and even more, volume, has fallen, whether because there are fewer buyers are because sellers are deferring because of the fall in prices). This is clear in national figures, and hot metros that at some other times have defied downward real estate trends also show it.
Prices are still, on median, 100k higher NOW over pre-pandemic. That's 33% more in just a few years. Sale to list prices is still at 98.9%. Off the peak of 103.1% but money was WAY cheaper then.
March 2020 median home price was $300k. March 2023.... $400k. [1]
March 2020 loans were about 3.5%. March 2023.... 6.5%.
It costs a shit ton more to service a loan now, inventory is down, yet prices are only 30k off the peak.
Is everyone buying a house with these interest rates a moron? No they aren't. Are banks approving risky loans now? No they aren't.
Volume is irrelevant when we are talking about fundamentals. Sellers are a key part of that. If they pull inventory due to the numerous factors in the housing market and the economy, then the prices are what they are. There is no shadowy hand now keeping home prices higher over their fundamentals, nor a shadowy hand telling the homeowners to not list their home. This is the market at work; and its been resilient with what is going on.
And to my point, if you couple supply and demand with the state of affairs and you look at build cost you'll see that current inventory is priced at or better than any fundamental analysis would suggest. And not overpriced.
I ONLY buy on build/replacement cost. Sure some areas went crazy, but if you are disconnected from build costs, you are rolling the dice and I highly recommend you don't do that unless you love the house so much you don't care what happens. But by and large, housing prices are NOT disconnected from replacement costs. They are still cheaper.
If you can buy a "used" house for 300k. Or build a new house for 350k (+6-12 months of your time and carrying costs on the housing you are currently at and potential unexpected costs), then where is the disconnect? I don't see it.
If housing WAS disconnected from the fundamentals, then you'd simply see a shit ton more building going on and with more inventory and less buyers and affordability due to interest rate hikes, price would drop a lot. That's not the case. There has not been a meaningful price drop with the interest rate hikes, we just have less buyers on average, and about 4% less on the sales price to list.
People waiting on the sidelines in most markets aren't going to be happy as inflation keeps on trucking, build costs are out of control, and inventory is low. Rent will go up.
"Year-over-year rental price growth will rise from 5.8%, as of June 2022, to 8.4% as of May 2023, according to a Federal Reserve Bank of Dallas forecast that uses data from the federal government’s consumer price index"
You used to be able to just stash cash and then when interest rates jack up you could get a real deal. No more. Housing is an inflation hedge and the market has been pumped up.
When the pivot occurs and cheaper money returns because the asset owners would rather have inflation than deflation, the housing market will go even higher IMO. 30T debt and 180+T in unfunded liabilities along with a pissed off world that has gotten drunk off cheap USD leaves no choice but to print in overdrive. I won't be holding USD or more than retirement money in the stock market. I'll be primarily in RE and private companies. If you are big on stocks, you may still do ok - we've seen that we can print and not cause extreme inflation, by pushing dollars into equities. But I think that game will end as it's further exposed and money rotates out.
Not true in most markets. Compare to build/replacement costs.
In a high inflation environment with 30+ trillion in national debt and 186 trillion in unfunded liabilities, I'll take my chances with hard assets that are connected to fundamentals like housing.
They WILL pivot and print in overdrive. There is no way out at this point. And not just the US, the world cannot handle higher interest rates which causes more demand for the dollar. The entire world is jacked up on eurodollar debt that is not sustainable. And those with the assets will gladly choose inflation over deflation.
"Inflation is transitory". "Banks are fine"
We're led by morons, shills and thieves.
10 years ago this was a far bigger deal as the western game was the only one in town. Nowadays nonaligned countries can pivot to the Russia/China axis and still get resources and manufactured goods.
Getting resources and manufactured goods has nothing to do with my statement about sustainability.
Debt to GDP of 338% is not sustainable [1]. It doesn't matter if countries can get resources and manufactured goods. That's like saying - well I have 3X my salary in debt but it's ok... I can buy goods on Amazon.... on more credit, with a higher rate... and still be fine. No you can't.
There's about 20 trillion in US denominated debt / eurodollar debt [2] and 65 trillion in unrecorded debt overseas [2].
In order to service US denominated debt, you have to swap your currency to get USD. This is a major problem when you already need to keep printing to service your own unsustainable debt (> 300% debt to gdp), inflation rips on goods and materials you need and tax revenues drop in an economic downturn.
When interest rates go up, it squeezes you. Everyone kept rolling debt over in a debt drunk binge fest for decades as it kept getting cheaper and they have been feeling major pain from it going the other way.
[1] https://www.weforum.org/agenda/2023/02/global-debt-2022-and-....
[2] https://www.bruegel.org/comment/euro-dollar-parity-beyond-sy...
[3] https://www.weforum.org/agenda/2023/01/65-trillion-debt-bank...
Most of the voters are morons, and are voting for these leaders.
Yes, you could say - well they don't vote in the primaries so it's their fault. But the same systems at play in the general elections are the same ones that drive the primaries. If primary voting was 1:1 with general election voting, the system would just adjust to influence accordingly.
Who exactly was going to do anything meaningful to save the finances of the US? The best options we've seen have been Ron Paul and Bernie and we saw what happened there. Funding and media are able to influence who wins. If someone says logical things and is anti Fed or even a little anti Wall Street establishment, they are painted out as nut jobs. And it's effective to the public who generally, has no savings and has little time to research like those that live more comfortably.
All candidates are all co-opted by special interests. And almost all by the financial system which is the biggest risk. It's not an accident that both red and blue appoint the same people to the Fed, despite fighting aggressive over almost every other nomination and appointment.
We also have a huge wealth gap and media divisiveness giving rise to populist candidates.
They make it one side versus the other meanwhile they both fleece the financials and economic prosperity that could occur if managed well.
We've gone past the point of no return, led by both parties at different times and here we are. Overextended. Huge wealth gap. Ripping inflation. Interest rate hikes that, in my opinion, are just theater as we can't afford to keep hiking them. And as we hike them, the world gets pissed off and moves quicker to a new world currency reserve.
No idea when that will happen, could be 10/20/30/40 years. But trade has already started to shift to other currencies. CBDCs are also underway and for everyone's sake, hopefully they don't get adopted.
https://www.zumper.com/rent-research/cincinnati-oh
I really like zumper for digestible rent data over time for a given city
As of April 2023, the average rent for a 1-bedroom apartment in Cleveland, OH is $1,136. This is a 7% decrease compared to the previous year.This is because most goods are manufactured in Asia and imported. They differ in online retail price due to local/import taxes and in offline price due to labor/rent costs. Hence, if you purchase goods online, the price remains mostly the same within the same country.
It's an important exercise to consider whether globalised cheap labor is fair to the laborers, given that the profits of their labor are absorbed by the destination high-CoL market.
Sigh…
Nice meaning trendy and cute and hipster. Maybe other person “nice” as in a meal costs $200