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Comment by aliston | Hacker News Reader

It's interesting that the affordability is calculated relative to median income. If SF is the most expensive, relative to household income, doesn't that imply that either San Franciscans are living above their means, or there are more renters in SF than any other city in the country? Is there another possible explanation?

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It implies that there's a housing shortage, and that housing is purchased by the rich and those willing to live above their means (or willing to skimp in non-housing areas of their budget) bidding up the small quantity of available housing, and everyone else moving away. A similar thing happens in most expensive housing markets, driving the population growth in low-wage, easy-to-build areas of the Sunbelt like Texas, Arizona, and Nevada.

Or alternatively, that everybody else doubles up and lives the bachelor lifestyle for a long time. Roommates are very common in the Bay Area, as is youth. The large number of 20-somethings just starting out in their careers skews median incomes downwards, and many of them don't have the same housing needs as someone with a family.

> Is there another possible explanation?

Other elements in the cost of living do not scale the same as housing, so you can expend more of your median salary bidding up the real estate.

Another possibility is that people bought their houses before the prices rose.

As an extreme case of this, my girlfriend's house in Denver could sell for $850-900k. But, it's been in her family for years, and the original price when her grandparents bought it in the 1910s was <$10k.

That was $230k in today's dollars. Also, incomes were generally lower then, even accounting for inflation, your girlfriend's grandparents (who must be 60 or 70 to have grandparents from that era) were pretty well off. Her family most also still be well off to pay the property taxes on such an appreciation.

Tons of reasons for the price difference:

* Land was less scarce.

* Different amenities - doubt you saw many granite countertops or stainless steel appliances in the 1910s

* Sparse (or no) plumbing/electricity

* Fewer building codes/regulations

* no insurance

Now every single developer, contractor, sub-contractor, general contractor, professional engineer, material supplier, home owner, renter, insurance agency .... must have insurance.

> Land was less scarce.

True, but this is also Denver. It depends on the location.

> Different amenities - doubt you saw many granite countertops or stainless steel appliances in the 1910s

Pretty sure your fancy 1910 house has been renovated more than a few times. Homes actually require maintenance and upgrades to be livable.

> Sparse (or no) plumbing/electricity

In 1910 I'm sure they had something. But see the previous point.

> Fewer building codes/regulations

Again, the home should have been upgraded unless the codes/regulations were superfluous; grandfather clauses only take one so far.

As an investment, a 3X appreciation over 100 years sans property taxes is still a quite crappy return, but at least you (and your progeny) get to live in it.

Of course it's been renovated, but the GP was talking about the original purchase price.

After 100 years of renovation and property taxes, how much of the original house's purchase value is even left? I guess an argument can be made that all of the latter costs are incremental and therefore easier to afford.

A fine point, but not really relevant as the discussion was about the cost of acquisition.

I thought that that the original discussion was about how the house increased in value, not about costs of acquisitions. My mistake!

nah, just look to laws that are not friendly to building. Most in the name of protecting something or someone popular to disguise the fact those making the laws don't want others there.

It is possible that the homes were bought at lower prices in the past, and are now 'worth' more than the owners could afford to buy with thier current income.

People who have lived in rent controlled apartments for many years skew the stats, as they're paying much below market rate (not saying this is a bad thing).

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