The house I was born in sold for $4000
baus.net
baus.net
In US most of the houses seems to be made over a wooden structure, making them more fragile, easy to be renovated / customized / moved / rebuilt and, most important, cheaper.
Here in Italy (and AFAIK in the whole Europe) there's nothing like that: full concrete and a proper basement, basically no wood (except from roof).
I just bought my first flat and I've spent 168k euros for a 85 square meters flat 25 km from Milan. Despite the crisis, prices are stable and/or are decreasing very slowly.
You will never find, even in the worst zones of the cheapest cities an house at 10k euros here, neither a bunch of bricks will be sold for that. :)
If someone's "personal burn rate", while living comfortably and efficiently, were $10-15k/yr (while still eating great food, socializing, medical care, etc.), it would make mostly-equity compensation as part of a founding team really viable.
The point would be to get the benefits of density without the costs of luxury.
Anyway, my point is that the problem isn't one of infrastructure. It's a chicken and egg problem in meatspace: if there were huge startups hubs in cheaper cities then it would be an easy decision for many to move to lower cost of living cities, but it's hard to start a movement. Silicon Valley's present success is the result of decades of tradition. What makes the small towns in the South Bay interesting places to live isn't the infrastructure but the density of interesting people.
Edit: I should add that the cost of living in the Midwest for a decently frugal, childless hacker willing to live with roommates is indeed $15,000 or less.
I should have you over to my house sometime. I completely tore out the downstairs of my house. The guy that's helping me with the kitchen cabinets is an old cobol programmer. I think your experience with carpentry and people that enjoy carpentry might leave a little to be desired. (I don't mean any disrespect by this) and I'm not saying that just because you chose "saws and sandpaper" for what is needed to build a structure.
I am curious why do you think tech people would not be interested in building things using lumber? If you are looking for a book to read pickup "Shopclass as Soulcraft." I don't think its going to make you want to pick up a trade but I think it might give you a different perspective.
IMO this falls into the ol' boat of engineers thinking they can do everything just as well as people who were professionally trained. "Drilling for oil? How hard can it be!"
P.S. Unless frames come precut or premade these days, how exactly do you plan to build a house without some form of saw?
Speaking of framing, you know that aisle of 2x4x8s you walk past at home despot? They are not all 96 inches long. If you look close some are labeled "framing studs." They are precut to 92 5/8 precisely so that you don't need to cut down every stud when you are framing a wall.
That's not much of a contribution to the discussion.
Why not? Building physical things for yourself can be just as satisfying as building virtual things for others.
I mean, I like building things, yes. I make small tables, I replace parts on my car. But I can't really hope to raise a decent house, even if I had 20 of me.
Ok, so you managed to put up a house? Wait, there's more! Did you build it to code for fire, sanitation, earthquakes...? Of course, some of the codes are overly pedantic and there is some baggage there, but frankly I don't expect IT professionals moonlighting as completely untrained architects will build houses that aren't going to crush hundreds of people in earthquakes or start fires.
I can certainly build a shed, even from lumber, and pretty much anyone moderately competent could.
Well, I'm here to tell you that you're wrong. He won't have to inhabit a shantytown. He'll have a nice storage cell to live in.
I assume you'd build more infrastructure with time; putting in a real sewage plant would be expensive up-front and not really worth it for ~50 people on 2000 acres, but maybe in time.
(You could even probably do zero-grid, with wifi/wimax/4g coverage to a couple of hard points with fiber, and decentralized electrical generation on each structure using solar/wind + batteries, at least to start.)
My ideal home is something that is less than 10% of my net worth.
Steel span structures are fairly cheap, but I suspect I could buy an old factory (ideally something fairly clean) for less than construction cost somewhere. A shotcrete shell with steel mesh would be fine too.
We all work out of an incubator that provides us with free office space (wouldn't significantly affect our numbers if we had to pay).
Bootstrapping in the midwest has worked quite well for me, but there's certainly disadvantages. For one, a lot of the local investment capital is old money. Old money that is extremely conservative with their investments. If we ended up receiving capital, we'd likely be forced to move to a more expensive city largely because of proximity to the investor and more importantly for skilled labor. The good developers all tend to flock to SF or NYC where the pay is high. They still exist in the midwest, but you really need to hunt to find them.
I'm an advocate for the midwest, there's challenges, some of which your concept may alleviate, but IMO it's perfect for bootstrapping a small team.
Do you think the burning man-esque campus would work over a 2-5 year time period with burning man level of sewage treatment facilities?
I don't see why people assume "can have your own housing in a high density area" is inherently shoddy construction; 4 x 20' containers and about $20k in work could build something quite nice.
"Writer's cabins" are exactly this model (although you don't get the option of building your own workspace; maybe something where you get space, or a shell, or a furnished cottage). I'd trust an engineer to build something a hell of a lot more than a YA fiction writer or particularly a postmodernist. :)
I dont hate the idea. I actually think it would be cool if you changed the "DIY/bring your own shelter" to a rehab existing structure and used the program as part of a city program to clean up decrepit neighborhoods.
I have no faith Oakland or Detroit would leave a high-net-worth enclave alone.
Also one of my goals for 2013 was to hit the home page of HN. I didn't think my first attempt would do it. Thanks!
It's incredible how far your money will go there: http://www.realtor.com/realestateandhomes-detail/2055-Willar...
The question is how to get the money... :) probably contribute to your community. Err I mean contribute a new app idea to the community of angel investors. Whatever. ;)
There is a constant thought in the back of my head that this could all be temporary. Boom towns go bust. Industries go bust. But I also think I've left opportunity on the table because of my fear.
I've come to realize that the difficult part of life is balancing the upside with the downside -- knowing when to be conservative and when to be risky.
If I could give advice to anyone leaving school or home for the first time it would be: remain cognizant of the downside, but don't let it prevent you from taking advantage of the upside if it presents itself to you.
1. Why do you choose to live in a house rather than an apartment?
2. Why do you choose to own that house, rather than rent it?
To the first question, a house often provides a much higher quality of life than an apartment. You might get a backyard garden, or a workbench, a guest room, an office, a full kitchen, etc... and, you can drill all the holes you want, paint it your favorite color, and so on.
To the second question, buying a house rather than renting it generally increases your options by about a hundredfold -- many, many more houses are available for sale than for rent. And while property tax can be painful, it's generally substantially cheaper than what you'd pay in rent on the equivalent property. So you get to save a lot more of your income, or at least apply it to paying down your mortgage.
It also reduces your options, in the sense that your mobility may be drastically reduced.
To me, though, the main advantage of home ownership is the promise of one day not having a rent or mortgage payment at all. That's one of the main steps towards retirement.
Most calculations I see suggest it's pretty much a toss up at that point, and which you choose should depend on factors like preference for mobility or stability.
So in Bay Area it's generally better to rent, while in mid-America it's better to own.
Basically almost anything in the bay area is not going to be profitable, in the south bay for sure.
I assume (and you are free to disagree with my assumptions):
- Inflation will exist like it has over the long term
- I need to save for retirement
--- With these two assumptions, a home allows you to take a leverage position against the area in which you live in's rate of inflation (hedge against rent increases with 4x leverage). Additionally, if you commit to paying down your home, you are deleveraging over a long period of time.
If you stay there for 30 years, you can live almost rent free. (you will still need to pay expenses), and will increase your buying power dramatically.
If inflation doesn't exist, or doesn't exist in your market, i.e. Buffalo, you are screwed. But, if you use an expected value, and a long-term history of what has happened, you are making a logical investment.
*additionally, in the US you get a nice tax savings from the interest which ends up having a pretty good value in and of itself.
Obviously, you can alter the assumptions and come up with different investment ideas, but in general, housing is at least logical.
The reason it makes sense for a lot of Americans to buy a house is because the government spends an awful lot of money making sure it makes sense. Otherwise economies of scale, differential costs of capital, and risk-free returns from diversification would lead to a very different picture.
Second, market forces keep the cost of owning a home below the cost of renting a home (in most markets).
Third, there are substantial legal and financial benefits to owning at least your primary residence. Home sales are usually free of all capital gains tax; mortgage interest and property tax are tax deductible; and homestead exemptions exist in many states in the case of bankruptcy.
Finally, there are only so many other places to put your money. It is difficult for an employee of a corporation making in the low six figures (i.e. for a typical reader of this website) to shelter more than around $30,000 of earnings a year from taxation. Because of the advantages listed above, once you max out your retirement accounts and have an emergency fund set up, there is often no better investment than the purchase of a primary home. Also note that paying down your mortgage early is equivalent to investing your money in a savings account that earns a rate of interest equal to the rate of interest on the note (at this point, this rate is much higher than the rate you can earn in a savings account). This is on top of all of the other benefits.
That's not even counting all the risk you expose yourself to by being locked into a particular house in a particular neighborhood, such as not being able to switch jobs due to the expense of relocation.
By paying for it with a mortgage, you get shelter and a valuable asset at a set cost, and, once the mortgage is paid off, that cost drops to taxes, maintenance, and insurance.
Paying rent, you get only temporary shelter, for which you must pay whatever the market price is, forever. Your rent is unlikely to fall, can rise dramatically, and you don't come out the other end with an asset, that money is just gone. You didn't put it in a diverse portfolio.
I just bought a house outside the bay area last year, and tacked on a partial remodel with new wiring, heat pump, water heater, and bathroom.
My required payment -- including escrow for taxes, insurance, and (for now) PMI -- is comparable to the rent for a mediocre single-bedroom apartment in a sketchy area of the south bay. I'll be adding enough each month to have it paid off in 10-15 years.
For that, between the main level and the basement, I have around 2300 square feet that I can use as I wish, and I can modify it freely to suit my needs and wants.
But I would never buy a house in the bay area, at least not unless I had $20m+ in the bank.
What others have said elsewhere in this thread is true: owning a home limits your flexibility in terms of moving for another job. It ties up a lot of your assets, for most people, in a decaying pile of lumber that needs maintenance and upkeep and furnace replacements and driveway repaving and so on. Patrick.net, run by a SF bay area programmer-renter, is an able representation of this point of view.
For me, the benefits outweigh the costs. I'm in the mid-peninsula off the 280, so if necessary I can work at any job between and including San Francisco and San Jose and closer portions of the east bay. I was tired of renting and wanted a place that I could customize and run multiple Cat6 and RG-6 cables to each room, install a home automation system, etc. Plus single-family homes available for rental aren't as nice as the ones available for purchase. Finally it's a hedge against inflation.
Those are reasons why, to a first approximation, anyone in the SF bay area who plans to stay here long enough and can afford to buy a home does.
As bradleyjg said further down, the relative desirability of home ownership is also due in part to government subsidies. The first $250,000-$500,000 of appreciation in home value is not taxed when you sell. And mortgage interest is tax deductible.
The cost of housing is one of my major deterrents to moving to the Bay Area. Otherwise I'd be there in a heartbeat if I could bring my SO along.
I just feel like with the typical developer wages quoted on Hacker News for the Bay Area I really don't see how I could afford a $1M home, which seems to be the going rate there. I'm in Houston and could get a $100k-$150k house here if I were willing to commute. Even if my salary doubled going to SF, it'd be hard to swallow the fact that housing would go up to nearly seven figures.
In some jurisdictions. Not Canada.
I think the prices must adjust in this way since the supply of housing close to the supply of paid work is limited.
If anyone can point me to a decent analysis of this, I'd be grateful. But this is my pet theory.
I know Switzerland does.
Also having crunched the numbers for our particular scenario, buying made financial sense. There is also a perceived feeling of security and stability that comes from owning. But really all of this is very much secondary to my first point.
Of course you should do asset allocation to balance out the risk involved with each asset class, housing being one of the classes.
- A big piggybank.
- A safe, stable living environment for your family.
- A way to get a quality education for your children at a bargain price.
- Tweakable in a way no rental can ever be.
Home ownership isn't necessarily a burden. It can be a liberating experience in many ways.
When I visit my hometown, I feel like all the prices are in a different currency.
http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/...
I was having a look at another cheap house from around the area. Just check out the graph: http://www.zillow.com/homedetails/23-Barrett-Ave-Jamestown-N...
I'll agree though - the main thrust that Jamestown, NY RE is surprisingly low compared to elsewhere is an interesting one.
Sold on 8/16/11: $3,955
There are multiple houses that were sold below $4K there.
You probably forgot to turn on "recently sold" filter on Zillow.
http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/...
I think there's something more subtle going on here. If the economy as a whole is doing well, risks tend to pay off; if the economy as a whole is not doing well, risks tend to not pay off. You don't even need any social pressure to make people in the rust belt take fewer risks than people in silicon valley; you just need people who use past performance as an indicator of future returns.
Even around Chautauqua lake, where the best real estate is in that county, the max is probably around $3mil for houses that would make an $3mil house around here (DC) look like a cottage.
Location, location, location. I can drive there in under seven hours these days. Straight through central PA which makes central Jamestown look like London.
"Extremely" high starts around $350k per year for a mid-career (10 years) engineer and things aren't at that point right now.
Google says it's a 6:30 drive to NY, which is no Valley, but should present enough opportunities. One could get up early and be there by noon, for meetings or whatever.
What kind of maintenance fees would one be looking at, with a house that size?
A nice $50k house in Schenectady, NY (former industrial city 3 hours from NYC) has $5000/year taxes. The house is worth 10x the Jamestown house because of the proximity to state government (150k jobs).
If you want to live in the country, lots of cheap houses in rural towns <2 hours from NYC.
I still have faith that Real Technology will make a comeback when this social media bubble blows up and, after that happens, we're going to start to see an outline of the future emerging.
I hope there won't be a single "winning" location. I don't think that's a good thing for society.
If an house can be built for $12000, why are flats selling for $100k+ routinely?!?!?
If it's just due to land value, then why not build ultra-tall skyscrapers to amortize it?
And adding more floors to buildings suffers from diminishing returns pretty fast.
(Sorry for the plug, but it's for a noble cause I think)
http://www.indiegogo.com/projects/ewb-lets-build-a-school-in...
Awesome project, though.
Middle income families who rely on manufacturing has been hit hard, with no prospects of an exit.
I think eg. Foxcon is going to be a very temporary thing.
I always thought that at some point a robot arm will be cheaper than a human to assemble electronics.. but we may skip that stage altogether. Pretty soon you'll just print your iPhone, bypassing assembly completely.
The West came out of Europe. Europe is small. To put it in perspective, the distance from SF to NYC is ~2900 miles. The distance from London to Baghdad is ~3100 miles. So abundance of land is not a problem the West has traditionally had (not until colonization anyway).
Added to this, mortality has been high but population growth has been higher. The last century saw a dramatic rise in life expectancy (primarily due to a drop in infant mortality). The last 50 years has seen a dramatic drop in population growth (the lesson seems to be that the natural reaction to uncertain times by people is to breed more).
So the West is being crushed by the weight of supporting an ageing population from a system established at a time retirement was a rarity.
Add to this to overall trend of the last century has been one of urbanization.
And just to put the nail in the coffin, low-tech manufacturing has largely fled the West for the developing world where labour is cheap.
Our entire society seems premised on both population and economic growth. What exactly do we do when the population starts shrinking? This is a bridge we haven't crossed yet.
The experience in parts of the US seem to indicate the transition won't be an easy one. Cities with negative population growth have suffered from appalling crime and poverty that seems much harder to flush out in a city full of vacant buildings.
The ongoing story of Detroit is nothing short of surreal. That's a city that is slowly being reclaimed by nature, which is really what should happen. Half-empty cities are not healthy cities.
Now add to this the whole concept of home ownership. Home ownership is aspirational. It's political goal. Home ownership comes with a huge cost however.
- The unlucky who buy in declining cities have a huge part of their wealth eroded leading to virtually impoverished retirement.
- It leads to an inflexible labour market (people are unwilling or unable to move to where the jobs are).
- It has a snowball effect, particularly in the US, where much of the funding for local infrastructure comes from property taxes.
I haven't been to upstate New York. I'm one of those living in NYC where half a million dollars for a studio doesn't seem that outrageous.
If there's one lesson from this is that everything is transitory. I believe one of the largest fallacies of the Twentieth Century was that the idea set in that everything was going to keep growing and keep getting better forever. The institutions you grew up with would last a life time.
Hell, this even applies to climate where we base our views on a ridiculously narrow band of Earth's or even human history.
Cities come. Cities go. Nations come. Nations go. To think that the USA or Europe will exist as they do today a thousand years from now is the height of hubris and/or naivete.
This is where my fear of the downside comes from. My parents actually met in the 60s in LA, but decided to move back to WNY. I don't regret the fact that they did, but they had much different economic experience than they would have if they remained in California.
They now live on a property on about 5 acres. My Dad did much of the work on it, and it is beautiful place, but they will probably never get the money the put into out of it -- especially inflation adjusted.
If you end up on the downside of one of these economic decisions, it can really change your financial outlook for potentially the rest of your life.
Also, just because the U.S birth rate is declining doesn't mean that it will eventually have a negative growth rate. The U.S population is still growing, but just not as rapidly.
There are countries that are experiencing negative growth rates right now; Russia is one of them.
2900 miles = 4667km
3100 miles = 4988km
In the original comment, the point was that Europe was small but the USA is big. To rephrase what was written, the distance between the two American cities is 1.07 times the distance from the UK to the Middle East. The actual measurement, whether expressed in planck lengths or lightyears, is entirely irrelevant.
Our population is shrinking because it's what happens when the education level (specifically of women) gets high enough. So we use those smart people and build high-tech manufacturing facilities, etc.
Low-tech is fleeing our shores because nobody wants to do it and it doesn't pay well. If you want it to stay here, import foreigners from poor countries but instead of keeping them foreign, make them citizens and keep their wages here.
This stuff is trivial. It's only made hard because we don't want to share. If we try for a team victory it's almost inevitable.
> I believe one of the largest fallacies of the Twentieth Century was that the idea set in that everything was going to keep growing
Yes. Not that we shouldn't expect progress, which comes from increased understanding, but expecting unlimited growth is crazy.
> [The idea that the] institutions you grew up with would last a life time. [...] Cities come. Cities go. Nations come. Nations go. To think that the USA or Europe will exist as they do today a thousand years from now is the height of hubris and/or naivete.
Can you imagine thinking, after a thousand years(!!) of history and conquest, that Rome would fall? Madness!
I'd like to come to the defense of low-cost living but also acknowledge that (expensive) city living has its obvious pluses that people already in SV might be taking for granted.
I created a low-cost living situation while living in a big (old/pretty) house in New Hampshire by renting out all of the rooms to friends. My rent is "free" and utilities are split 5 ways ($50 per person in summer, $150 in winter. Heating the house is expensive). If you can stand living with other people, I think this is one of the better ways to bootstrap "new job out of college" money instead of putting a down-payment on a smaller home that might not bring in any cash.
The house just so happens to be the house I grew up in, which my father sold in 2005 and foreclosed on in 2010 (ultra-conveniently, the year I graduated from college). It needed lots of work, so instead of trying to (re)sell it for cheap I made a deal to fix it up while living in it for reduced rent. Three friends living there cover the rent.
The house may be worth more in the future than current rates, and certainly has its share of things-needing-fixing, and my friends pay below-market rent rates, so it seems like a good deal for everyone involved.
If I did not have such a house, I think I'd try to buy one and do the same thing. It's nice to have some communal society around after college. (I've planned other things in my life to try to re-create that, too, because I think its important and under-acknowledged.)
~~~
It's worth noting that there are downsides to living in a lower-cost-than-SV/Major City area. I don't have any programmer friends in real life outside of the people at my work (a very tiny company, and no one is remotely near my age (24)). That becomes a little problematic. I'm reminded of a quote from John le Carre:
> Coming home from very lonely places, all of us go a little mad: whether from great personal success, or just an all-night drive, we are the sole survivors of a world no one else has ever seen.
It's hard to talk about programming things and I think that's bad. I'm not around as many career-driven people as I'd like to be either and I think that's bad too. I end up spending a lot of time on the internet to talk about those areas of my interest. (And especially HN: I have a lot of affection for the repeated names in this place, even if we all tend to be a tad too negative. Consistent commentors still make a community and I'm thankful for that. Really.)
So it's a good setup. And while my salary isn't amazing it's more than enough for my area, and I love my walkable, lovable hometown in New Hampshire. But there's certainly something to be said for cities and high cost areas. I miss being around as many smart people as there were in college.
~~~
On a note actually related to the article, when I drove around western NY - went to college at RPI, near Albany and headed west for Craigslist ventures - the places I saw just seemed surreal. Some parts of western NY, if you were just dropped there with no context, you'd think to yourself "A war must have happened here maybe 30 years ago". Strange levels of decay and halted-/de- construction
If I was in my 20s and working in an area as engineer with a reasonable cost of living, I would seriously consider this exact thing. When you are just out of school it is actually nice to be able to share a living space and it makes economic sense.
Almost everybody lives in flats for at least the first few years after leaving home, and often much longer.
I posted down a bit re: flatting, but in NZ it's a very common living arrangement for people in their 20s. The standard progression is:
parents -> flatting -> house
The way it goes is, first ask all your friends if they knew of a room going, failing that, see if you can find some friends to organise a lease with ("founding" a flat).
As a last resort, you crack open the newspaper to the "flatmates wanted" section and troop around houses. This has been replaced by various web sites but they're not really social - they just replaced the newspaper.
I think this is where you might have room to innovate - even in established markets like the NZ, the UK and Australia. Being able to cyberstalk your prospective flatmates a little would be really handy and could save a lot of unneccesary travel.
Usually there's a mini interview where the flatmates figure out if they can live with you, and you see if you could live with them. This can lead to some hilarious situations which serve to underline how utterly different people can be.
One sticking point is that the most successful flats never have to advertise rooms. There will always be a friend of a friend who is willing to move in.
Among my non-programmer friends and family, the standard after college is (and has been since my parents' time) to live with a close friend or two until someone gets married.
From the OP, I assumed this would be literally 100 miles from the nearest drugstore/711.. but its bang in the urban grid of a small town.
Shouldn't some of the bailout money be towards loans for people to do up cheap homes like this? It would seem a good investment for the future at low cost to enable more people to pick up these low end deals. Are the banks now so stupid they cant get people into homes and paying interest.. instead of this foreclosure fire-sale nonsense ?
Assuming this place can get internet installed, it would make some family a great home which they could gradually renovate, after which they would look after the place and contribute to the town.
Imagine manhattan before Central Park.
The answer is no, unless you can attract the right people there, and for that there has to be a good job and at least few amenities. Both can be created, but only if lightning strikes. It's a tough situation.
b) Why do you have to be downtown? There are lots of suburbs and regional towns connected with good rail.
What we see is that most of the country is dying-- that's why the real estate is so cheap in places like Jamestown-- but that's driving the costs in the few not-dying stretches to obscene levels.
That will switch when oil becomes cheap again. Of course, that may never happen.