Well, San Francisco's right out...
March 13, 2015 9:03 AM Subscribe
It also assumes paying 28% of gross monthly income on housing costs, I thought the average person spent a lot more than that.
posted by fullerine at 9:11 AM on March 13, 2015 [1 favorite]
posted by fullerine at 9:11 AM on March 13, 2015 [1 favorite]
Data from two years ago on average down payment % by state- about what I'd expect.
posted by ThePinkSuperhero at 9:11 AM on March 13, 2015 [2 favorites]
posted by ThePinkSuperhero at 9:11 AM on March 13, 2015 [2 favorites]
Does San Francisco mean "Actually San Francisco" or "The San Francisco MSA"?
Because that salary seems awfully low considering some of the house prices I've heard about on here and other places.
posted by madajb at 9:12 AM on March 13, 2015 [2 favorites]
Because that salary seems awfully low considering some of the house prices I've heard about on here and other places.
posted by madajb at 9:12 AM on March 13, 2015 [2 favorites]
I was wondering that about 20% down too... I don't see myself able to save $40,000 on a salary that would buy a house in Dallas ($48K) anytime soon.
posted by OnTheLastCastle at 9:12 AM on March 13, 2015
posted by OnTheLastCastle at 9:12 AM on March 13, 2015
Interesting that the formula assumes buyers put down 20 percent. How many people actually do that these days[…]?
We're in the process of buying a house in Portland…and every house we've put an offer down on, the buyer has had either cash, or they've had 20% down. So, its not a zero number. We've got 10% down, and we're getting outbid by insane amounts. There are fewer people with 20% down, but they do exist…and they're getting houses much easier than everyone else.
I am going to call a hefty level of bullshit on the Portland figure. We're well within that bracket, with nice middle-class paying jobs….There's very little stock here, which is driving prices to bananas levels (for Portland, historically…still cheap as far as west coast prices go). The houses are selling for much, much more than their listed at. Houses are seriously going for $10-20k above their list price. Relators that historically price their stuff too high are still entertaining bidding war shit. Its insane.
We're trying not to get discouraged, but we might have to look at the burbs (shitty ones, not the good ones) to even find a house that we can actually purchase. Its really, really shitty being priced out of the city you grew up in.
Articles like this are sort of useless, because there is a significant lag in the information-to-reality. Last year, we could have probably found something….this year, stocks are low and prices are insane. Everyone's trying to get in before interest rates go back up, so things are artificially inflated.
I've never hated a process more than buying a house. Its really fucking stupid (but less frustrating than renting…sweet jesus).
posted by furnace.heart at 9:15 AM on March 13, 2015 [17 favorites]
We're in the process of buying a house in Portland…and every house we've put an offer down on, the buyer has had either cash, or they've had 20% down. So, its not a zero number. We've got 10% down, and we're getting outbid by insane amounts. There are fewer people with 20% down, but they do exist…and they're getting houses much easier than everyone else.
I am going to call a hefty level of bullshit on the Portland figure. We're well within that bracket, with nice middle-class paying jobs….There's very little stock here, which is driving prices to bananas levels (for Portland, historically…still cheap as far as west coast prices go). The houses are selling for much, much more than their listed at. Houses are seriously going for $10-20k above their list price. Relators that historically price their stuff too high are still entertaining bidding war shit. Its insane.
We're trying not to get discouraged, but we might have to look at the burbs (shitty ones, not the good ones) to even find a house that we can actually purchase. Its really, really shitty being priced out of the city you grew up in.
Articles like this are sort of useless, because there is a significant lag in the information-to-reality. Last year, we could have probably found something….this year, stocks are low and prices are insane. Everyone's trying to get in before interest rates go back up, so things are artificially inflated.
I've never hated a process more than buying a house. Its really fucking stupid (but less frustrating than renting…sweet jesus).
posted by furnace.heart at 9:15 AM on March 13, 2015 [17 favorites]
madajb, I live 45 minute drive out of San Francisco with no traffic, about a 1:20 bus commute in. I've been reluctant to chat up companies in SF because I don't want to be doing that every day, although I probably should, but...
There's a ton of the Bay Area that's quicker to the Financial District or South of Market than some of the outer western reaches of SF. Even though SF isn't very big. So it's quite possible that some of the SF numbers are skewed because you're hearing things that are close to SOMA/downtown, and adjusting by Berkeley or Oakland near BART, and that if you get to the southern Outer Sunset housing prices are closer to what we see up here in Petaluma, because commute times are similar.
posted by straw at 9:17 AM on March 13, 2015 [2 favorites]
There's a ton of the Bay Area that's quicker to the Financial District or South of Market than some of the outer western reaches of SF. Even though SF isn't very big. So it's quite possible that some of the SF numbers are skewed because you're hearing things that are close to SOMA/downtown, and adjusting by Berkeley or Oakland near BART, and that if you get to the southern Outer Sunset housing prices are closer to what we see up here in Petaluma, because commute times are similar.
posted by straw at 9:17 AM on March 13, 2015 [2 favorites]
NYC's number seems really low to me.
posted by millipede at 9:23 AM on March 13, 2015 [15 favorites]
posted by millipede at 9:23 AM on March 13, 2015 [15 favorites]
And that's part of why I love living in Ohio! I felt so gleeful driving down the street in San Diego pointing at houses and seeing my SIL's face fall when I mentioned how much they would cost in Columbus - and we don't have to worry about the entire city going up in flames because of irreversible drought, either!
posted by ChuraChura at 9:23 AM on March 13, 2015 [4 favorites]
posted by ChuraChura at 9:23 AM on March 13, 2015 [4 favorites]
NYC is a $390k house, which seems reasonable for the suburbs or outer boroughs.
San Fran is a $742k house. Amazing.
Portland is a $289k house.
posted by smackfu at 9:25 AM on March 13, 2015
San Fran is a $742k house. Amazing.
Portland is a $289k house.
posted by smackfu at 9:25 AM on March 13, 2015
Houses are seriously going for $10-20k above their list price
In Silicon Valley south of San Francisco, houses routinely sell for $100-$200K over list price. It's truly insane.
posted by Mallenroh at 9:27 AM on March 13, 2015 [3 favorites]
In Silicon Valley south of San Francisco, houses routinely sell for $100-$200K over list price. It's truly insane.
posted by Mallenroh at 9:27 AM on March 13, 2015 [3 favorites]
These all seem low to me, honestly. I've owned houses in two of these cities, and seriously shopped for them in another two. And I wouldn't have bought a house in any of those places without a (household) income FAR larger than they're listing here (plus a significant down payment). Maybe it's just because the median price is lower than I think...
I'm also super conservative with my budgeting, so I when I'm calculating how much house we can afford, I leave a lot of buffer. You have to have money left over for maintenance and repairs, property tax increases, temporary (hopefully) unemployment, vacations, etc. I know we could get loans for far more house than we actually have, but that's a dangerous way to live.
posted by primethyme at 9:30 AM on March 13, 2015 [5 favorites]
I'm also super conservative with my budgeting, so I when I'm calculating how much house we can afford, I leave a lot of buffer. You have to have money left over for maintenance and repairs, property tax increases, temporary (hopefully) unemployment, vacations, etc. I know we could get loans for far more house than we actually have, but that's a dangerous way to live.
posted by primethyme at 9:30 AM on March 13, 2015 [5 favorites]
Don't move here, our river catches on fire. And it gets cold in winter. And the largest body of fresh water in the world cause lake effect snow. Brrr. And we're all fat and pale and boring and not creatives. Did I mention that our river catches on fire?
When I retire, I think I'll use all the money saved from a lifetime of living and working in the flyover to buy one of those townhouses that appear in every stock photo of San Francisco.
posted by Herodios at 9:30 AM on March 13, 2015 [13 favorites]
When I retire, I think I'll use all the money saved from a lifetime of living and working in the flyover to buy one of those townhouses that appear in every stock photo of San Francisco.
posted by Herodios at 9:30 AM on March 13, 2015 [13 favorites]
Yeah, for the parts of SF that I pay attention, I see sales of 10-20% over asking about (pulls number out of ass) 80% of the time. Sometimes at or below asking, but I always assume those involve stuff found in disclosure and inspection. There are also places priced around the median that have been on and off the market for years.
posted by rhizome at 9:31 AM on March 13, 2015
posted by rhizome at 9:31 AM on March 13, 2015
This is why I'm never leaving Pittsburgh. My $200K 2500 s.f. 1869 Italianate townhouse with a nine car garage that's a twenty minute walk to downtown would cost millions in SF and my wife and I would only be making marginally better salaries. For the price of putting up with the shitty weather here, I get to dump 30% of my gross salary into my 401K and not into rent.
posted by octothorpe at 9:31 AM on March 13, 2015 [13 favorites]
posted by octothorpe at 9:31 AM on March 13, 2015 [13 favorites]
Interesting that the formula assumes buyers put down 20 percent. How many people actually do that these days (other than people who can afford to pay all in cash)?
*raises hand meekly*
But in the interest of full disclosure, the only reason we could afford to put that 20% down was because we socked away the money we made off of selling our old house with an eye to using it as a down payment on our new house in a new city.
posted by Kitteh at 9:35 AM on March 13, 2015
*raises hand meekly*
But in the interest of full disclosure, the only reason we could afford to put that 20% down was because we socked away the money we made off of selling our old house with an eye to using it as a down payment on our new house in a new city.
posted by Kitteh at 9:35 AM on March 13, 2015
Yeah. At least for DC, they're assuming that you can put down an entire year's worth of pretax income for your down payment, which I suppose is possible, but it takes quite a while to save up that kind of cash (especially when you consider what rent costs around here).
Also, I'm not sure they're doing any analysis of the *kind* of house being rented. I suspect that DC's prices are being driven down by the number of 1-bedroom units in the city. Also, whomever is saying that "DC's affordability is way up" is taking crazy pills... definitely hasn't been my experience.
tl;dr; Owning a home is affordable if you have enough cash to pay for most of it up-front!
posted by schmod at 9:35 AM on March 13, 2015 [1 favorite]
Also, I'm not sure they're doing any analysis of the *kind* of house being rented. I suspect that DC's prices are being driven down by the number of 1-bedroom units in the city. Also, whomever is saying that "DC's affordability is way up" is taking crazy pills... definitely hasn't been my experience.
tl;dr; Owning a home is affordable if you have enough cash to pay for most of it up-front!
posted by schmod at 9:35 AM on March 13, 2015 [1 favorite]
This topic is a source of endless frustration for me (as a person who lives in the county between Los Angeles and San Diego and for whom "just move" is not a simple option). I am a remote employee of a company whose corporate headquarters is a few states over where the cost of living is considerably cheaper. The joke I always tell my co-workers is that if any of them saw where I lived they would assume I was has hiding some sort of major drug habit, since I imagine the person who answers the phones at my company may very well live in a much nicer, bigger, more impressive home than me.
posted by The Gooch at 9:36 AM on March 13, 2015 [4 favorites]
posted by The Gooch at 9:36 AM on March 13, 2015 [4 favorites]
I bought with 20% down a few years ago in California. I did the same way everyone I know who has bought a house in the last five years here has: got money from a parent. I had saved up 70% of what I needed so it wasn't too dear, but the money I got was the difference between getting a tiny condo and my unattached townhouse. Recently I checked what places around me are going for and realized I am completely priced out of my neighborhood. Not by a little, I couldn't even consider buying where I did today. It's been three years.
posted by lepus at 9:37 AM on March 13, 2015 [8 favorites]
posted by lepus at 9:37 AM on March 13, 2015 [8 favorites]
One other thought. A few times in the past several years, we've considered moving to places that happened to have much lower housing costs than the places we were living at the time. Middle of the country type places. And the housing prices were truly amazing to us, coming from the west coast. But the problem we ran into was that the salaries were also hugely lower. As in, the salary decrease was proportional to the housing price decrease, or even worse. Some stuff like food and entertainment is slightly cheaper in these places, but generally not in proportion to housing and salaries. And big ticket stuff like cars, vacations, and electronic gadgets cost exactly the same. Yet with the drastically lower salary, our left over money for these things is also much lower, despite the reduced housing costs. And that's not to mention how much less we'd be able to save for retirement.
So I'm not convinced that these cheaper locales are actually such a good deal unless you can find a way to make a similar salary as you would in a more expensive location.
posted by primethyme at 9:40 AM on March 13, 2015 [12 favorites]
So I'm not convinced that these cheaper locales are actually such a good deal unless you can find a way to make a similar salary as you would in a more expensive location.
posted by primethyme at 9:40 AM on March 13, 2015 [12 favorites]
Something I'll be reading this weekend about the causes behind astronomical North American housing costs: Greg Morrow's mammoth UCLA dissertation about urban planning in Los Angeles and the mid-century shift from top-down urban planning to community-driven planning (which happened in most NA cities, not just LA).
It's been going around on urbanist Twitter recently, and this graph (p. 3) showing how much less as-of-right housing development is allowed these days really caught my eye.
posted by ripley_ at 9:40 AM on March 13, 2015 [4 favorites]
It's been going around on urbanist Twitter recently, and this graph (p. 3) showing how much less as-of-right housing development is allowed these days really caught my eye.
posted by ripley_ at 9:40 AM on March 13, 2015 [4 favorites]
How many people actually do that these days (other than people who can afford to pay all in cash)?
Pretty common in Canada (which, I know), for a couple of reasons. There's a biiiiig break on mortgage insurance if you have more than 20% equity. Also, you can borrow from your RRSP retirement funds (401k essentially) for your first property purchase, which counts as your own cash.
On the other hand, we don't get a tax break on payments, and we do have to repay our RRSPs, so there are balances.
posted by bonehead at 9:40 AM on March 13, 2015 [2 favorites]
Pretty common in Canada (which, I know), for a couple of reasons. There's a biiiiig break on mortgage insurance if you have more than 20% equity. Also, you can borrow from your RRSP retirement funds (401k essentially) for your first property purchase, which counts as your own cash.
On the other hand, we don't get a tax break on payments, and we do have to repay our RRSPs, so there are balances.
posted by bonehead at 9:40 AM on March 13, 2015 [2 favorites]
Oh great, I could afford even more houses in Arizona which is a terrible shithole. Joy.
posted by Squeak Attack at 9:41 AM on March 13, 2015 [2 favorites]
posted by Squeak Attack at 9:41 AM on March 13, 2015 [2 favorites]
So I'm not convinced that these cheaper locales are actually such a good deal unless you can find a way to make a similar salary as you would in a more expensive location.
Done.
posted by Herodios at 9:41 AM on March 13, 2015
Done.
posted by Herodios at 9:41 AM on March 13, 2015
So I'm not convinced that these cheaper locales are actually such a good deal unless you can find a way to make a similar salary as you would in a more expensive location.
That is me right now but I'm not confident that it is going to work in the long run, nor is it a viable piece of advice to suggest because there are very few well-paid jobs in cheap places.
posted by Dip Flash at 9:47 AM on March 13, 2015
That is me right now but I'm not confident that it is going to work in the long run, nor is it a viable piece of advice to suggest because there are very few well-paid jobs in cheap places.
posted by Dip Flash at 9:47 AM on March 13, 2015
A San Francisco house is literally five times the cost of houses in less expensive areas. Do they really pay five times the salary for the same job?
posted by smackfu at 9:49 AM on March 13, 2015 [2 favorites]
posted by smackfu at 9:49 AM on March 13, 2015 [2 favorites]
The other thing about cheaper locations, and part of why I live in the Bay Area, is that to keep your career current you have to go to a lot more conferences (which costs money), rather than just hang out at cool venues in the evenings.
posted by straw at 9:49 AM on March 13, 2015
posted by straw at 9:49 AM on March 13, 2015
5 Castles That Are Cheaper Than An Apartment In San Francisco
posted by rhizome at 9:51 AM on March 13, 2015 [15 favorites]
posted by rhizome at 9:51 AM on March 13, 2015 [15 favorites]
Man, I will be honest, I think the Minneapolis number is high. Homes in St. Paul are not expensive either. You can still get multi-room duplexes near some prime area for less thank 200K and I am looking at a 2 bedroom house for 100K. If you are willing to look in the Como area of St. Paul housing is also cheap there too. You only get expensive if you want a loft downtown or even very fancy neighborhoods but plenty of neighborhoods like NE that are a happening can be priced pretty reasonable. The salary around the Twin Cities is not too bad either.
posted by jadepearl at 9:55 AM on March 13, 2015 [4 favorites]
posted by jadepearl at 9:55 AM on March 13, 2015 [4 favorites]
I should have added -- and I just checked -- the organization I'm with now does pay a 20% salary premium for jobs located LA, SF, and the NYC area, including N.NJ and a 10% premium for Seattle, Portland, Denver and a few other western cities, DC, Phil, S.NJ, CT, RI, and MA, and most of CA.
Interestingly, there's also a 10% salary premium for jobs located in Detroit and Chicago.
posted by Herodios at 9:55 AM on March 13, 2015
Interestingly, there's also a 10% salary premium for jobs located in Detroit and Chicago.
posted by Herodios at 9:55 AM on March 13, 2015
Philly's median home price is just flat-out wrong. It's $131,300, not $213,300. (According to the National Association of Realtors, where the WP got its info.)
posted by desuetude at 9:57 AM on March 13, 2015
posted by desuetude at 9:57 AM on March 13, 2015
Don't move here, our river catches on fire. And it gets cold in winter. And the largest body of fresh water in the world cause lake effect snow. Brrr. And we're all fat and pale and boring and not creatives. Did I mention that our river catches on fire?
River, schmiver. In Buffalo we get way worse snow, and our sports teams are sucktastical, and even more people will pity you when you move here.
You can play with some of this at trulia to get more even comparisons if you don't mind whatever weird biases their data have. Just eyeballing, the median price for 3 or 4 bedroom places here is about $100K. In PGH, about $120K for 3br and $250K for 4. In Cleveland, about $60K for either...
In DC, median 3br is about $550K and 4br $750K. San Diego, $500K and $650K. San Francisco, $1.2M and $1.4M.
posted by ROU_Xenophobe at 9:57 AM on March 13, 2015 [1 favorite]
River, schmiver. In Buffalo we get way worse snow, and our sports teams are sucktastical, and even more people will pity you when you move here.
You can play with some of this at trulia to get more even comparisons if you don't mind whatever weird biases their data have. Just eyeballing, the median price for 3 or 4 bedroom places here is about $100K. In PGH, about $120K for 3br and $250K for 4. In Cleveland, about $60K for either...
In DC, median 3br is about $550K and 4br $750K. San Diego, $500K and $650K. San Francisco, $1.2M and $1.4M.
posted by ROU_Xenophobe at 9:57 AM on March 13, 2015 [1 favorite]
This is why I'm never leaving Pittsburgh.
Did you know, Octothorpe, that San Francisco is sometimes referred to as "the Pittsburgh of the west coast?"
posted by Herodios at 10:01 AM on March 13, 2015
Did you know, Octothorpe, that San Francisco is sometimes referred to as "the Pittsburgh of the west coast?"
posted by Herodios at 10:01 AM on March 13, 2015
A San Francisco house is literally five times the cost of houses in less expensive areas. Do they really pay five times the salary for the same job?
That would only make sense of housing was literally the only thing you spent money on. If housing is 25% of your income and you're spending 5 times as much on it in location A as in location B then you would only need to double your income to be at parity.
But there are also complications there in figuring out what you mean by "parity." I mean, sure, you ended up spending a lot more on housing than the lucky son of a gun in Location B. But then it comes time to retire, and you have a hugely valuable asset on your hands. If both you and the "lucky son of a gun" sell your houses and retire to Florida, suddenly you're sitting pretty and the son of a gun doesn't seem so "lucky" anymore.
posted by yoink at 10:08 AM on March 13, 2015 [1 favorite]
That would only make sense of housing was literally the only thing you spent money on. If housing is 25% of your income and you're spending 5 times as much on it in location A as in location B then you would only need to double your income to be at parity.
But there are also complications there in figuring out what you mean by "parity." I mean, sure, you ended up spending a lot more on housing than the lucky son of a gun in Location B. But then it comes time to retire, and you have a hugely valuable asset on your hands. If both you and the "lucky son of a gun" sell your houses and retire to Florida, suddenly you're sitting pretty and the son of a gun doesn't seem so "lucky" anymore.
posted by yoink at 10:08 AM on March 13, 2015 [1 favorite]
A San Francisco house is literally five times the cost of houses in less expensive areas. Do they really pay five times the salary?
posted by smackfu at 9:49 AM on March 13 [+] [!]
There are at least two economies in the Bay Area. Money is literally no object for people in the Other Economy, and so they bid up everything into the stratosphere. Think of it in binary terms; here you either have Money, with a capital M like that, or you don't, and if you don't, you're not buying anything. Basically, it's less that workers here make five times the money that people elsewhere make, and more that there's a few people (hyper-wealthy finance people, international mafioso who use American real estate as a way to store wealth rather than as a thing to live in, and a few of the very luckiest techies) who have infinite money and who are using little drabs of their infinite money to buy whatever they want, while people whose bank accounts can be written without alephs are all stuck hanging on to our overpriced rentals by the skin of our teeth.
posted by You Can't Tip a Buick at 10:11 AM on March 13, 2015 [16 favorites]
posted by smackfu at 9:49 AM on March 13 [+] [!]
There are at least two economies in the Bay Area. Money is literally no object for people in the Other Economy, and so they bid up everything into the stratosphere. Think of it in binary terms; here you either have Money, with a capital M like that, or you don't, and if you don't, you're not buying anything. Basically, it's less that workers here make five times the money that people elsewhere make, and more that there's a few people (hyper-wealthy finance people, international mafioso who use American real estate as a way to store wealth rather than as a thing to live in, and a few of the very luckiest techies) who have infinite money and who are using little drabs of their infinite money to buy whatever they want, while people whose bank accounts can be written without alephs are all stuck hanging on to our overpriced rentals by the skin of our teeth.
posted by You Can't Tip a Buick at 10:11 AM on March 13, 2015 [16 favorites]
Interesting that the formula assumes buyers put down 20 percent. How many people actually do that these days (other than people who can afford to pay all in cash)?
We did. But we drained our savings to do it AND we used up a small inheritance. So my household is basically an illustration of the premise that you have to have money to make money, because in about ten years, we'll own our property free and clear and then we'll have a lot more liquid capital to invest in passive income generators.
(As a data point: I live 12 miles east of San Francisco. And we were very lucky to find the fixer-upper we did at the moment we did. We'll be done making the house fully habitable right around the time we pay it off.)
ETA:
Did you know, Octothorpe, that San Francisco is sometimes referred to as "the Pittsburgh of the west coast?"
My brother went to college near Pittsburgh, and the first time I flew him out for a visit, when I was living in Cole Valley in San Francisco, he took in the rolling hills, the fog coming in off the ocean, the orange towers of the Golden Gate Bridge rising out of the redwoods ...
... and he said, "It's nice, but it's no Pittsburgh."
(My husband and I have given serious thought to relocating to Pittsburgh if the right circumstances/opportunity availed themselves.)
posted by sobell at 10:11 AM on March 13, 2015 [3 favorites]
We did. But we drained our savings to do it AND we used up a small inheritance. So my household is basically an illustration of the premise that you have to have money to make money, because in about ten years, we'll own our property free and clear and then we'll have a lot more liquid capital to invest in passive income generators.
(As a data point: I live 12 miles east of San Francisco. And we were very lucky to find the fixer-upper we did at the moment we did. We'll be done making the house fully habitable right around the time we pay it off.)
ETA:
Did you know, Octothorpe, that San Francisco is sometimes referred to as "the Pittsburgh of the west coast?"
My brother went to college near Pittsburgh, and the first time I flew him out for a visit, when I was living in Cole Valley in San Francisco, he took in the rolling hills, the fog coming in off the ocean, the orange towers of the Golden Gate Bridge rising out of the redwoods ...
... and he said, "It's nice, but it's no Pittsburgh."
(My husband and I have given serious thought to relocating to Pittsburgh if the right circumstances/opportunity availed themselves.)
posted by sobell at 10:11 AM on March 13, 2015 [3 favorites]
Did I mention that our river catches on fire?
River, schmiver. In Buffalo we get way worse snow, and our sports teams are sucktastical, and even more people will pity you when you move here.
Even I wouldn't move to Buffalo, tho' it'd be nice to be closer to the Falls.
You can play with some of this at trulia to get more even comparisons if you don't mind whatever weird biases their data have. Just eyeballing, the median price for 3 or 4 bedroom places here is about $100K. In PGH, about $120K for 3br and $250K for 4. In Cleveland, about $60K for either...
Yeah, something to consider here is that cities evolve differently. Some went in for heavy duty annexation in the 20th c and others are surrounded by "inner ring suburbs" that count as separate municipalities.Some really go in for regionalism and others are quite balkanized. It can be difficult to tell whether this survey or that study is truly doing apples to apples comparisons.
My house is a hundred years old, but it's not in the city of Cleveland. In Chi, this neighborhood would have been folded into the parent city decades ago. Did the calculations that came up with that "$60k for a 3br house" figure include my neighborhood, I wonder.
posted by Herodios at 10:12 AM on March 13, 2015 [1 favorite]
River, schmiver. In Buffalo we get way worse snow, and our sports teams are sucktastical, and even more people will pity you when you move here.
Even I wouldn't move to Buffalo, tho' it'd be nice to be closer to the Falls.
You can play with some of this at trulia to get more even comparisons if you don't mind whatever weird biases their data have. Just eyeballing, the median price for 3 or 4 bedroom places here is about $100K. In PGH, about $120K for 3br and $250K for 4. In Cleveland, about $60K for either...
Yeah, something to consider here is that cities evolve differently. Some went in for heavy duty annexation in the 20th c and others are surrounded by "inner ring suburbs" that count as separate municipalities.Some really go in for regionalism and others are quite balkanized. It can be difficult to tell whether this survey or that study is truly doing apples to apples comparisons.
My house is a hundred years old, but it's not in the city of Cleveland. In Chi, this neighborhood would have been folded into the parent city decades ago. Did the calculations that came up with that "$60k for a 3br house" figure include my neighborhood, I wonder.
posted by Herodios at 10:12 AM on March 13, 2015 [1 favorite]
First off, owning a house is completely overrated, and not really that great of an investment.
Interesting that the formula assumes buyers put down 20 percent. How many people actually do that these days (other than people who can afford to pay all in cash)?
We were trying to buy a house in Berkeley from 2011-2014. We were $5K away on one (after bidding $115K more than asking), but regardless, loan contingencies were mostly unheard of. It seems like everyone had cash, but I don't know how that is possible (our bids were all hurt badly by the loan contingency.)
Now we've been priced out completely. I believe prices went up 33% in 2013.
That bubble will burst
I don't think it's really a bubble. There is a finite supply of housing in highly desired markets (SF, NYC, etc.). You can add skyscrapers (like SF's two big middle fingers), but those get bought up by rich foreigners.
From talking to a parent who is a real estate agent, my guess is that along with the Facebook/Google/Twitter upswing, there is a massive transfer of wealth going on from aging baby boomers to their children, meaning, of course, that my wife and I, and most of America is going to continue getting screwed.
I've never hated a process more than buying a house. Its really fucking stupid (but less frustrating than renting…sweet jesus).
I dunno. Renting is pretty sweet, and if I were a heartless investor, I'd be making a lot more return on my money than in a house. (I realize rents have gone insane in recent years too.)
My2c: rent somewhere you want to live, rather than buy someplace where you will feel trapped. California is a remarkable wonderful place to live, from a naturalist's perspective. That's why it's so expensive--everyone wants to live here.
posted by mrgrimm at 10:13 AM on March 13, 2015 [3 favorites]
Interesting that the formula assumes buyers put down 20 percent. How many people actually do that these days (other than people who can afford to pay all in cash)?
We were trying to buy a house in Berkeley from 2011-2014. We were $5K away on one (after bidding $115K more than asking), but regardless, loan contingencies were mostly unheard of. It seems like everyone had cash, but I don't know how that is possible (our bids were all hurt badly by the loan contingency.)
Now we've been priced out completely. I believe prices went up 33% in 2013.
That bubble will burst
I don't think it's really a bubble. There is a finite supply of housing in highly desired markets (SF, NYC, etc.). You can add skyscrapers (like SF's two big middle fingers), but those get bought up by rich foreigners.
From talking to a parent who is a real estate agent, my guess is that along with the Facebook/Google/Twitter upswing, there is a massive transfer of wealth going on from aging baby boomers to their children, meaning, of course, that my wife and I, and most of America is going to continue getting screwed.
I've never hated a process more than buying a house. Its really fucking stupid (but less frustrating than renting…sweet jesus).
I dunno. Renting is pretty sweet, and if I were a heartless investor, I'd be making a lot more return on my money than in a house. (I realize rents have gone insane in recent years too.)
My2c: rent somewhere you want to live, rather than buy someplace where you will feel trapped. California is a remarkable wonderful place to live, from a naturalist's perspective. That's why it's so expensive--everyone wants to live here.
posted by mrgrimm at 10:13 AM on March 13, 2015 [3 favorites]
Interestingly, there's also a 10% salary premium for jobs located in Detroit and Chicago.
Chicago and Detroit have slowly, quietly been becoming less affordable over the years--we look cheap in median terms because we have huge swaths of abject irrevocable poverty, but there's less and less available between the poverty and the outrageous wealth.
I'm not sure there's a house on my block that would go for under $500K. And I do not live on a particularly nice block, just an OK one.
posted by We put our faith in Blast Hardcheese at 10:14 AM on March 13, 2015 [3 favorites]
Chicago and Detroit have slowly, quietly been becoming less affordable over the years--we look cheap in median terms because we have huge swaths of abject irrevocable poverty, but there's less and less available between the poverty and the outrageous wealth.
I'm not sure there's a house on my block that would go for under $500K. And I do not live on a particularly nice block, just an OK one.
posted by We put our faith in Blast Hardcheese at 10:14 AM on March 13, 2015 [3 favorites]
When I retire, I think I'll use all the money saved from a lifetime of living and working in the flyover to buy one of those townhouses that appear in every stock photo of San Francisco.
The Painted Ladies occasionally come up for sale, asking price between $2.3 and $4 million. But those are 2010-12 prices. Expect to pay more. Far more. Like maybe somewhere around $7 million.
posted by charlie don't surf at 10:16 AM on March 13, 2015 [1 favorite]
The Painted Ladies occasionally come up for sale, asking price between $2.3 and $4 million. But those are 2010-12 prices. Expect to pay more. Far more. Like maybe somewhere around $7 million.
posted by charlie don't surf at 10:16 AM on March 13, 2015 [1 favorite]
I live in a ~ $110k house in the St. Louis area. 3br, 2ba, big kitchen, 1450 square feet. (We bought it for $98k a few years ago and we put about 7% down; there was no competition for it.) Mortgage is less than I was paying for rent on a one-bedroom apartment, and my daily commute is a relaxed 10 minutes.
I'm quite happy with this.
posted by Foosnark at 10:16 AM on March 13, 2015 [6 favorites]
I'm quite happy with this.
posted by Foosnark at 10:16 AM on March 13, 2015 [6 favorites]
yoink: But there are also complications there in figuring out what you mean by "parity." I mean, sure, you ended up spending a lot more on housing than the lucky son of a gun in Location B. But then it comes time to retire, and you have a hugely valuable asset on your hands.
Maybe, maybe not. I mean yes, at the end you probably have something worth a lot of money, even if the real estate market in that area cools off, but do you have more than if you'd stuck the difference in an index fund or even in your mattress? That's not as clear-cut. Perhaps you'd have been better off buying in the cheaper but up-and-coming city. Your house might be worth less, but you also paid less for it to begin with.
posted by tonycpsu at 10:20 AM on March 13, 2015
Maybe, maybe not. I mean yes, at the end you probably have something worth a lot of money, even if the real estate market in that area cools off, but do you have more than if you'd stuck the difference in an index fund or even in your mattress? That's not as clear-cut. Perhaps you'd have been better off buying in the cheaper but up-and-coming city. Your house might be worth less, but you also paid less for it to begin with.
posted by tonycpsu at 10:20 AM on March 13, 2015
If housing is 25% of your income and you're spending 5 times as much on it in location A as in location B then you would only need to double your income to be at parity.
That's a fair point. And I think people in expensive areas tend to spend more than 25% of their income on housing.
posted by smackfu at 10:21 AM on March 13, 2015
That's a fair point. And I think people in expensive areas tend to spend more than 25% of their income on housing.
posted by smackfu at 10:21 AM on March 13, 2015
and then we'll have a lot more liquid capital to invest in passive income generators.
Is "passive income generators" a term people actually use? Because it's so evocatively dodgy. I mean, that money doesn't fall from the trees — it does in fact come from the activity of work, but it's "passive" rather than "active" because the money is accruing to people who aren't actually doing that activity.
Living in Oakland during patrilineal capital's assault on it, and during the rise of the new black liberation movement, has kind of turned me from a nice polite social democrat who fantasizes about getting into a position where I too can benefit from passive income into a crazy-eyed socialist desperately looking for ways to walk away from Omelas altogether.
posted by You Can't Tip a Buick at 10:22 AM on March 13, 2015 [16 favorites]
Is "passive income generators" a term people actually use? Because it's so evocatively dodgy. I mean, that money doesn't fall from the trees — it does in fact come from the activity of work, but it's "passive" rather than "active" because the money is accruing to people who aren't actually doing that activity.
Living in Oakland during patrilineal capital's assault on it, and during the rise of the new black liberation movement, has kind of turned me from a nice polite social democrat who fantasizes about getting into a position where I too can benefit from passive income into a crazy-eyed socialist desperately looking for ways to walk away from Omelas altogether.
posted by You Can't Tip a Buick at 10:22 AM on March 13, 2015 [16 favorites]
There is a finite supply of housing in highly desired markets (SF, NYC, etc.). You can add skyscrapers
Skyscrapers usually aren't necessary, and I say that as someone who likes them. Vast swathes of the Bay Area and NYC are zoned for either single-family homes or (at best) townhomes - just allowing midrise apartments would do a world of good.
posted by ripley_ at 10:23 AM on March 13, 2015 [7 favorites]
Skyscrapers usually aren't necessary, and I say that as someone who likes them. Vast swathes of the Bay Area and NYC are zoned for either single-family homes or (at best) townhomes - just allowing midrise apartments would do a world of good.
posted by ripley_ at 10:23 AM on March 13, 2015 [7 favorites]
So that's why so many young bright things are flocking here to Philly. It's one of the few cultural centers in the NE/Midatlantic I-95 megalopolis where someone screwed by the recession can still buy a house:
posted by The White Hat at 10:24 AM on March 13, 2015 [2 favorites]NYC: $87k
Boston: $80k
DC: $77k
Baltimore: $52k
Philadelphia: $51k
In Houston the house prices have been shooting up for the last several years. My neighbor sold his house last year for $20K more than he expected, on the morning of the first day he listed it. Then he received four additional offers for more money than the offer they accepted. It seemed nuts.
Now the prices are starting to fall.
posted by Midnight Skulker at 10:26 AM on March 13, 2015
Now the prices are starting to fall.
posted by Midnight Skulker at 10:26 AM on March 13, 2015
So if you want to spend money, here's one of the more expensive houses for sale in Pittsburgh (or actually just next door in Bellevue). $450K gets you an actual mansion with fifteen rooms, stained glass domed skylight in the bathroom and a marble staircase. Bellevue is a safe but somewhat boring neighborhood about fifteen minute drive to downtown, its only real drawback is that it's a dry town so you have to go into the city for a drink.
posted by octothorpe at 10:28 AM on March 13, 2015 [5 favorites]
posted by octothorpe at 10:28 AM on March 13, 2015 [5 favorites]
Owning a house sucks. But we just bought our third house, and put 20% down because we were lucky enough to buy our last house near the bottom in 2011 so we sold it for twice what we paid for it. I think a lot of people that put 20% down are in a similar situation.
On the other hand, we are accidental landlords because we bought the house before the last one during the bubble in 2008 and we haven't been able to sell it without losing money (though the market has finally recovered to the point we could sell and break even, the rental market has also exploded so we can easily get enough rent to completely cover the mortgage so selling at this point would probably be a bad idea).
We live in the Portland metro area and make slightly above household median.
posted by rabbitrabbit at 10:28 AM on March 13, 2015
On the other hand, we are accidental landlords because we bought the house before the last one during the bubble in 2008 and we haven't been able to sell it without losing money (though the market has finally recovered to the point we could sell and break even, the rental market has also exploded so we can easily get enough rent to completely cover the mortgage so selling at this point would probably be a bad idea).
We live in the Portland metro area and make slightly above household median.
posted by rabbitrabbit at 10:28 AM on March 13, 2015
Is "passive income generators" a term people actually use? Because it's so evocatively dodgy. I mean, that money doesn't fall from the trees — it does in fact come from the activity of work, but it's "passive" rather than "active" because the money is accruing to people who aren't actually doing that activity.
I've heard it a lot, but I should add that I work around a lot of business reporters and a close relative is a retirement planner. The perspective among the folks I know who use is is that it's considered "passive income" because you're not actively doing the work/chasing the profits yourself, you're just walking to a mailbox every quarter for your balance statement.
Basically, I was looking for a pithy way of saying, "I plan on putting more money into investment funds, REITs or other places where it's other people's problems to figure out how to meet profitability goals."
posted by sobell at 10:30 AM on March 13, 2015
I've heard it a lot, but I should add that I work around a lot of business reporters and a close relative is a retirement planner. The perspective among the folks I know who use is is that it's considered "passive income" because you're not actively doing the work/chasing the profits yourself, you're just walking to a mailbox every quarter for your balance statement.
Basically, I was looking for a pithy way of saying, "I plan on putting more money into investment funds, REITs or other places where it's other people's problems to figure out how to meet profitability goals."
posted by sobell at 10:30 AM on March 13, 2015
Here is an article with incomes required to buy houses in some Canadian cities. Highlights:
Halifax $68,448
Montreal $85,012
Edmonton $89,972
Calgary $111,679
Toronto $143,182
Vancouver $190,581
Oh man am I ever glad we're moving to Halifax!
posted by kitcat at 10:31 AM on March 13, 2015 [2 favorites]
Halifax $68,448
Montreal $85,012
Edmonton $89,972
Calgary $111,679
Toronto $143,182
Vancouver $190,581
Oh man am I ever glad we're moving to Halifax!
posted by kitcat at 10:31 AM on March 13, 2015 [2 favorites]
So if you want to spend money, here's one of the more expensive houses for sale in Pittsburgh
Based on the photographs, I'm fairly convinced that it's also haunted.
posted by schmod at 10:31 AM on March 13, 2015 [3 favorites]
Based on the photographs, I'm fairly convinced that it's also haunted.
posted by schmod at 10:31 AM on March 13, 2015 [3 favorites]
On the "who pays 20% down?" question... Probably a lot of people on their second house. It's fairly common around here for people to buy a two-bedroom condo for their first place, since it's not much more expensive than renting and gets you a lot of benefits. Then when you get married or want kids, you sell the condo and have cash on hand to pay the down payment on the house.
posted by smackfu at 10:37 AM on March 13, 2015 [1 favorite]
posted by smackfu at 10:37 AM on March 13, 2015 [1 favorite]
Here is an article with incomes required to buy houses in some Canadian cities. Highlights:
Shoot, I copied the income values that would be needed if interest rates went back to 2005 levels. Sorry! Let me fix that. At current rates:
Halifax $56,929
Montreal $68,884
Edmonton $72,617
Calgary $88,578
Toronto $113,009
Vancouver $147,023
It's very frightening to see what interest rates can do to the amount of money you need to be a homeowner...
posted by kitcat at 10:38 AM on March 13, 2015
Shoot, I copied the income values that would be needed if interest rates went back to 2005 levels. Sorry! Let me fix that. At current rates:
Halifax $56,929
Montreal $68,884
Edmonton $72,617
Calgary $88,578
Toronto $113,009
Vancouver $147,023
It's very frightening to see what interest rates can do to the amount of money you need to be a homeowner...
posted by kitcat at 10:38 AM on March 13, 2015
Canada tends to have different mortgages too, right? Like you can't get a 25-year fixed rate mortgage at all, IIRC.
posted by smackfu at 10:42 AM on March 13, 2015
posted by smackfu at 10:42 AM on March 13, 2015
I would love to see those $390k NYC places, because most places I've seen have the average sale around $1m for the 5 boroughs.
posted by rmless at 10:44 AM on March 13, 2015 [1 favorite]
posted by rmless at 10:44 AM on March 13, 2015 [1 favorite]
I'm in the Detroit area. I bought a house two years ago. It was my second time around and I was in a much better financial place than I had been the first time. But the whole process was a nightmare. There were only two kinds of listings:
1. Houses that were already under contract to some other buyer.
2. Houses that were listed but for some reason the sellers couldn't/wouldn't move forward on the sale. Usually there was a bank somewhere in the mix that would simply not respond, or would respond only in nonsensical ways.
I quickly discovered that the thing to look at was the number of days on the market. If it was in the double digits and the house looked good, just move along. There's no point in going to see it and getting all excited, because no one can buy that house and you just end up frustrated. The trick was to check the new listings every day, see the house immediately, and bid well over the asking price right away. If you happened to win the bidding war, and the seller was able to, you know, sell, then maybe it would go through.
When I bought my first house, back in the 90s, it was harder to find the money but much easier to find a listing where the house could actually be bought.
posted by elizilla at 10:44 AM on March 13, 2015 [1 favorite]
1. Houses that were already under contract to some other buyer.
2. Houses that were listed but for some reason the sellers couldn't/wouldn't move forward on the sale. Usually there was a bank somewhere in the mix that would simply not respond, or would respond only in nonsensical ways.
I quickly discovered that the thing to look at was the number of days on the market. If it was in the double digits and the house looked good, just move along. There's no point in going to see it and getting all excited, because no one can buy that house and you just end up frustrated. The trick was to check the new listings every day, see the house immediately, and bid well over the asking price right away. If you happened to win the bidding war, and the seller was able to, you know, sell, then maybe it would go through.
When I bought my first house, back in the 90s, it was harder to find the money but much easier to find a listing where the house could actually be bought.
posted by elizilla at 10:44 AM on March 13, 2015 [1 favorite]
Man, I don't know if home ownership is a good financial decision but good lord do I love it. One constant monthly price, none of the "well how much is rent going up this year? is it $50 or $500?" horsecrap. Stable low-interest loan means I actually get to have savings. SAVINGS! And I can use that money to paint the walls whatever color I want, or to put nails into walls to hang whatever I want, or yes, to go into the house emergency fund. Home ownership is absolutely one of my favorite things I've ever done.
And on that note: fuck yes, Pittsburgh. Even with PMI, I'm in a white-picket-fence suburb and paying $200 less than my rent was (and ~$600 less than rent was in DC).
posted by specialagentwebb at 10:46 AM on March 13, 2015 [5 favorites]
And on that note: fuck yes, Pittsburgh. Even with PMI, I'm in a white-picket-fence suburb and paying $200 less than my rent was (and ~$600 less than rent was in DC).
posted by specialagentwebb at 10:46 AM on March 13, 2015 [5 favorites]
Pretty common in Canada
The average down payment in Canada seems to be about 16%. Definitely not 20%. Not terribly surprising, since we're still in the throes of a massive bubble, so the average homebuyer just can't come up with the money because the house costs 75% more than it should.
posted by one more dead town's last parade at 10:46 AM on March 13, 2015
The average down payment in Canada seems to be about 16%. Definitely not 20%. Not terribly surprising, since we're still in the throes of a massive bubble, so the average homebuyer just can't come up with the money because the house costs 75% more than it should.
posted by one more dead town's last parade at 10:46 AM on March 13, 2015
I have no ambition whatsoever of owning a house. I mean, it would be nice, obviously, but short of winning the crowdfunding lottery or turning to crime, I see literally no avenue that would lead me to that kind of income.
It's ok though. I don't have kids or dependents, my job lends itself well to constant travel, and I have a good tent. I can hang on until the whole damn thing hyperinflates and the rich collect houses like pogs while everyone else squats in the woods.
posted by mrjohnmuller at 10:47 AM on March 13, 2015 [5 favorites]
It's ok though. I don't have kids or dependents, my job lends itself well to constant travel, and I have a good tent. I can hang on until the whole damn thing hyperinflates and the rich collect houses like pogs while everyone else squats in the woods.
posted by mrjohnmuller at 10:47 AM on March 13, 2015 [5 favorites]
I would love to see those $390k NYC places, because most places I've seen have the average sale around $1m for the 5 boroughs.
Zillow has median price of homes that sold in the five boroughs as $480k.
Since the original link is metro areas, it probably also includes Northern NJ and Westchester in NYC prices, which would drag the median down too.
posted by smackfu at 10:54 AM on March 13, 2015
Zillow has median price of homes that sold in the five boroughs as $480k.
Since the original link is metro areas, it probably also includes Northern NJ and Westchester in NYC prices, which would drag the median down too.
posted by smackfu at 10:54 AM on March 13, 2015
A San Francisco house is literally five times the cost of houses in less expensive areas. Do they really pay five times the salary?
In the desirable parts of SF, salary is mostly irrelevant now. You need to have a) inherited money or b) cashed out your options or been aqui-hired, and you're competing with people who are going to hit up their contacts, get in early, and dump a sack of cash on the table. Getting a mortgage vs paying cash becomes a question of tax planning. I've heard similar accounts to furnace.heart's about Portland, and that potential buyers are now encouraged to send personal portfolios to sellers along with their offers, as if they're applying for a modelling job.
The raw numbers don't make sense for crazy markets, because people with those salaries and 20% to put down are being outbid again and again and again, making that median price a rapidly-moving target.
posted by holgate at 10:58 AM on March 13, 2015 [6 favorites]
In the desirable parts of SF, salary is mostly irrelevant now. You need to have a) inherited money or b) cashed out your options or been aqui-hired, and you're competing with people who are going to hit up their contacts, get in early, and dump a sack of cash on the table. Getting a mortgage vs paying cash becomes a question of tax planning. I've heard similar accounts to furnace.heart's about Portland, and that potential buyers are now encouraged to send personal portfolios to sellers along with their offers, as if they're applying for a modelling job.
The raw numbers don't make sense for crazy markets, because people with those salaries and 20% to put down are being outbid again and again and again, making that median price a rapidly-moving target.
posted by holgate at 10:58 AM on March 13, 2015 [6 favorites]
Moving to Pittsburgh, BRB.
posted by Cool Papa Bell at 11:01 AM on March 13, 2015 [6 favorites]
posted by Cool Papa Bell at 11:01 AM on March 13, 2015 [6 favorites]
Even though SF isn't very big. So it's quite possible that some of the SF numbers are skewed because you're hearing things that are close to SOMA/downtown
Straw,
I think you're right and that's the thing, the MSA includes Hayward, which has a bunch of houses in the 300s (at least on Zillow) but also Menlo Park, where sorting by cheapest starts in the 700s.
One is affordable on $140k, one really isn't, even with 20% down.
San Francisco (the city) seems to start in the 500s, on paper.
Which would be a stretch on 140k, but doable.
Which is why I'm wondering what the National Association of Realtors definition of "San Francisco" would be.
posted by madajb at 11:07 AM on March 13, 2015
Straw,
I think you're right and that's the thing, the MSA includes Hayward, which has a bunch of houses in the 300s (at least on Zillow) but also Menlo Park, where sorting by cheapest starts in the 700s.
One is affordable on $140k, one really isn't, even with 20% down.
San Francisco (the city) seems to start in the 500s, on paper.
Which would be a stretch on 140k, but doable.
Which is why I'm wondering what the National Association of Realtors definition of "San Francisco" would be.
posted by madajb at 11:07 AM on March 13, 2015
but do you have more than if you'd stuck the difference in an index fund or even in your mattress?
You're missing the crucial salient point in my example, though, that you were being paid double the salary of the person in Location B. So you both had exactly the same opportunity to sock any additional money over and above the money you put into your house into an index fund or mattress. (That is, both the people in my example are homeowners--one owns in a cheap market, the other in an expensive market, but gets additional pay to cover the cost; my point is that while that additional pay might seem to put you at parity in terms of day to day living expenses, so long as you're willing to move on retirement it actually gives you a considerable financial advantage).
The comparison between two people in Location A, one of whom buys and the other of whom rents and puts the unspent difference into an index fund is, as you say, more debatable.
posted by yoink at 11:08 AM on March 13, 2015 [1 favorite]
You're missing the crucial salient point in my example, though, that you were being paid double the salary of the person in Location B. So you both had exactly the same opportunity to sock any additional money over and above the money you put into your house into an index fund or mattress. (That is, both the people in my example are homeowners--one owns in a cheap market, the other in an expensive market, but gets additional pay to cover the cost; my point is that while that additional pay might seem to put you at parity in terms of day to day living expenses, so long as you're willing to move on retirement it actually gives you a considerable financial advantage).
The comparison between two people in Location A, one of whom buys and the other of whom rents and puts the unspent difference into an index fund is, as you say, more debatable.
posted by yoink at 11:08 AM on March 13, 2015 [1 favorite]
You're missing the crucial salient point in my example, though, that you were being paid double the salary of the person in Location B.
Sure, but does that hypothetical hold for most people? I'm a software engineer, but my cursory glances at jobs in the bay area over the years haven't left me with the impression that I could double my current salary if I moved there, at least not for a job with the same work/life balance or benefits package. Glassdoor suggests the average software engineer salary in Mountain View is $145k, while it's $115k at their Pittsburgh location, which certainly isn't anything near doubling salary.
posted by tonycpsu at 11:20 AM on March 13, 2015 [2 favorites]
Sure, but does that hypothetical hold for most people? I'm a software engineer, but my cursory glances at jobs in the bay area over the years haven't left me with the impression that I could double my current salary if I moved there, at least not for a job with the same work/life balance or benefits package. Glassdoor suggests the average software engineer salary in Mountain View is $145k, while it's $115k at their Pittsburgh location, which certainly isn't anything near doubling salary.
posted by tonycpsu at 11:20 AM on March 13, 2015 [2 favorites]
We paid 20%, also helped out by parents. We went into the house hunting with 20% in mind, but looking at much older and lower priced homes. From what I recall, and I'm sure someone will correct me, but putting down 20% helps considerably on the actual mortgage rate and when we bought just under two years ago, a lot of lenders were requiring 20% to get the loan.
Contrary to everyone else, we love owning our home. There's definitely a greater sense of peace having your own little plot of land and being in a house where you don't have to consider a safety deposit of some sort when moving around inside it. You get to have an awesome yard that you can devote time and sweat to with beautiful results. The only thing we regret is not having a house on more land with the neighbors farther away. So long as the house doesn't lose value, we will get some of our money back which would be lost on rent, which is a nice bonus. It's definitely a risk a renter doesn't have to worry about, and it's one I've seen first hand with my parents who got caught underwater on one mortgage and on another property, barely were able to sell it to pay off another.
Incidentally, for new house construction in our area, the contractors and developers are building new homes which are definitely out of the reach of the middle class, targeted more at the upper middle class. I suppose it's great news for contractors who do renovation jobs, but those who want a home that's affordable will end up with much older homes (decades old) if only because the newer houses simply are quickly being priced out of the regular joe's capability to buy. (Part of it, I think, is land speculation, driving up the price of the lots, too).
posted by Atreides at 11:23 AM on March 13, 2015 [1 favorite]
Contrary to everyone else, we love owning our home. There's definitely a greater sense of peace having your own little plot of land and being in a house where you don't have to consider a safety deposit of some sort when moving around inside it. You get to have an awesome yard that you can devote time and sweat to with beautiful results. The only thing we regret is not having a house on more land with the neighbors farther away. So long as the house doesn't lose value, we will get some of our money back which would be lost on rent, which is a nice bonus. It's definitely a risk a renter doesn't have to worry about, and it's one I've seen first hand with my parents who got caught underwater on one mortgage and on another property, barely were able to sell it to pay off another.
Incidentally, for new house construction in our area, the contractors and developers are building new homes which are definitely out of the reach of the middle class, targeted more at the upper middle class. I suppose it's great news for contractors who do renovation jobs, but those who want a home that's affordable will end up with much older homes (decades old) if only because the newer houses simply are quickly being priced out of the regular joe's capability to buy. (Part of it, I think, is land speculation, driving up the price of the lots, too).
posted by Atreides at 11:23 AM on March 13, 2015 [1 favorite]
Glassdoor suggests the average software engineer salary in Mountain View is $145k, while it's $115k at their Pittsburgh location, which certainly isn't anything near doubling salary.
I worked for a startup that was split between Pittsburgh and Sunnyvale (right next to Mountain View) and my counterparts on the west coast made 10 to 20 percent more than I did at the most. And not only did they have to spend huge amounts on housing, they mostly had ridiculous driving commutes whereas many of the Pittsburgh crew walked or biked to work.
posted by octothorpe at 11:31 AM on March 13, 2015 [4 favorites]
I worked for a startup that was split between Pittsburgh and Sunnyvale (right next to Mountain View) and my counterparts on the west coast made 10 to 20 percent more than I did at the most. And not only did they have to spend huge amounts on housing, they mostly had ridiculous driving commutes whereas many of the Pittsburgh crew walked or biked to work.
posted by octothorpe at 11:31 AM on March 13, 2015 [4 favorites]
Interesting that the formula assumes buyers put down 20 percent. How many people actually do that these days (other than people who can afford to pay all in cash)?
Coincidentally, my daughter and her husband, married all of two years now, just closed on their first house today. They actually had saved-up the 20% down-payment. In Noblesville. Which is priced wayyyy above the Indianapolis median (assuming Indy is pretty much the same as Cincinnati and St. Louis) They did not pay for the whole house in cash. They have a mortgage.
I have no idea where she got that sort of fiscal discipline.
Well...she is a CPA, so...
posted by Thorzdad at 11:31 AM on March 13, 2015 [1 favorite]
Coincidentally, my daughter and her husband, married all of two years now, just closed on their first house today. They actually had saved-up the 20% down-payment. In Noblesville. Which is priced wayyyy above the Indianapolis median (assuming Indy is pretty much the same as Cincinnati and St. Louis) They did not pay for the whole house in cash. They have a mortgage.
I have no idea where she got that sort of fiscal discipline.
Well...she is a CPA, so...
posted by Thorzdad at 11:31 AM on March 13, 2015 [1 favorite]
There are a lot of things I don't like about living in Texas, but I can't complain about housing prices. San Antonio is one of my favorite cities and I could by a decent live-here-forever-and-raise-kids house there. I just need to get a job and move there first.
posted by Pater Aletheias at 11:35 AM on March 13, 2015
posted by Pater Aletheias at 11:35 AM on March 13, 2015
Houses that were listed but for some reason the sellers couldn't/wouldn't move forward on the sale. Usually there was a bank somewhere in the mix that would simply not respond, or would respond only in nonsensical ways
A few years back (before the Great Watsits) I was walking the dog early one morning and 'caught' a neighoring family abandoning house -- mattresses on the roof, grandma up on the top, The Full Joad.
That house sat vacant for at least two years. Turns out they had taken out loans -- reverse mortgages or something -- from four different banks at the same time. The banks couldn't agree which would be paid first, so no sale. The house finally moved after it had dropped to essentially $0 value without a $100k rehab investment.
Somebody did just that, and fortunately they are still there. Still, my neighborhood lost (that is, had razed) an average of about one or two houses per street during the past ten or so years. But just a couple miles away, there are blocks and blocks where the numbers are reversed.
contractors and developers are building new homes which are definitely out of the reach of the middle class . . . those who want a home that's affordable will end up with much older homes (decades old)
We are in some kind of sweet spot there. Everyone hates the local schools here. But the street's very attractive to first-time buyers. Affordable, architecturally interesting but still sound, nice street association, handy shopping and international eats nearby. So what happens is, young couples buy in, raise a few, and depending on various factors, about the time their oldest is ready for a) kindergarten, b) first grade or c) high school they move further out "for better schools". Which is fanastic, because every five to ten years, at least half the houses on the street change hands. This churn means better upkeep and property values are buffered.
posted by Herodios at 11:38 AM on March 13, 2015 [4 favorites]
A few years back (before the Great Watsits) I was walking the dog early one morning and 'caught' a neighoring family abandoning house -- mattresses on the roof, grandma up on the top, The Full Joad.
That house sat vacant for at least two years. Turns out they had taken out loans -- reverse mortgages or something -- from four different banks at the same time. The banks couldn't agree which would be paid first, so no sale. The house finally moved after it had dropped to essentially $0 value without a $100k rehab investment.
Somebody did just that, and fortunately they are still there. Still, my neighborhood lost (that is, had razed) an average of about one or two houses per street during the past ten or so years. But just a couple miles away, there are blocks and blocks where the numbers are reversed.
contractors and developers are building new homes which are definitely out of the reach of the middle class . . . those who want a home that's affordable will end up with much older homes (decades old)
We are in some kind of sweet spot there. Everyone hates the local schools here. But the street's very attractive to first-time buyers. Affordable, architecturally interesting but still sound, nice street association, handy shopping and international eats nearby. So what happens is, young couples buy in, raise a few, and depending on various factors, about the time their oldest is ready for a) kindergarten, b) first grade or c) high school they move further out "for better schools". Which is fanastic, because every five to ten years, at least half the houses on the street change hands. This churn means better upkeep and property values are buffered.
posted by Herodios at 11:38 AM on March 13, 2015 [4 favorites]
"The Full Joad" is funny and surprising...and sadly inevitable and makes me a little upset.
posted by wenestvedt at 11:46 AM on March 13, 2015 [3 favorites]
posted by wenestvedt at 11:46 AM on March 13, 2015 [3 favorites]
Do they really pay five times the salary for the same job?
No, but there are far more than five times as many of those jobs available in the hot locations than the not so hot ones, which is part of what makes them hot.
posted by Mars Saxman at 11:47 AM on March 13, 2015 [1 favorite]
No, but there are far more than five times as many of those jobs available in the hot locations than the not so hot ones, which is part of what makes them hot.
posted by Mars Saxman at 11:47 AM on March 13, 2015 [1 favorite]
Salaries are based on supply and demand, not on cost of living. It doesn't surprise me that salaries in SF aren't commensurate with the COL there. But that's because there's hordes of people who want to live there for the sake of living there, even if it means a pay cut when measured in buying-power or after-residence-expense take home.
I've had enough friends that have heard the siren song of "move to SF", and now seem to be, while not poor by any means, but living on what appears to me to be an uncomfortable sort of low-savings cashflow basis given what they make in salary, and what they could be socking away elsewhere. It doesn't hold much appeal, but presumably they find it worthwhile or one assumes they'd have moved somewhere else by now. To each their own.
Interesting that the formula assumes buyers put down 20 percent. How many people actually do that these days
20% down is the typical minimum necessary to avoid PMI, so it's what most people I know who've bought houses have put down. (As in: you take the amount of money you can scrape together for a down payment, multiply it by five, and that's what you type into Zillow when you start looking for a place.) I would expect that in super-expensive areas people can't swing that, and therefore have to just suck it up and deal with PMI, but in other areas I think that 20% down / 30-year-fixed loans are still largely the norm. And certainly people who are not purchasing their first house, and are upgrading and using the sale price from the first house as a down payment on the next, will almost always target 20+% down in order to avoid PMI (and probably also as a way of managing the monthly payment down to some reasonable increase over the old mortgage).
posted by Kadin2048 at 11:54 AM on March 13, 2015 [2 favorites]
I've had enough friends that have heard the siren song of "move to SF", and now seem to be, while not poor by any means, but living on what appears to me to be an uncomfortable sort of low-savings cashflow basis given what they make in salary, and what they could be socking away elsewhere. It doesn't hold much appeal, but presumably they find it worthwhile or one assumes they'd have moved somewhere else by now. To each their own.
Interesting that the formula assumes buyers put down 20 percent. How many people actually do that these days
20% down is the typical minimum necessary to avoid PMI, so it's what most people I know who've bought houses have put down. (As in: you take the amount of money you can scrape together for a down payment, multiply it by five, and that's what you type into Zillow when you start looking for a place.) I would expect that in super-expensive areas people can't swing that, and therefore have to just suck it up and deal with PMI, but in other areas I think that 20% down / 30-year-fixed loans are still largely the norm. And certainly people who are not purchasing their first house, and are upgrading and using the sale price from the first house as a down payment on the next, will almost always target 20+% down in order to avoid PMI (and probably also as a way of managing the monthly payment down to some reasonable increase over the old mortgage).
posted by Kadin2048 at 11:54 AM on March 13, 2015 [2 favorites]
Glassdoor suggests the average software engineer salary in Mountain View is $145k, while it's $115k at their Pittsburgh location, which certainly isn't anything near doubling salary.
The distributed offices of the major tech companies are, in my experience, a big exception to the "drastically lower salary" rule. Indeed, the best way to take advantage of these lower housing prices (at least if you're in tech) is to get a job at one of those offices. But I've done pretty extensive job searching in several of those cities (admittedly not Pittsburgh), and I found that outside of those big name companies, the salaries are MUCH lower. And Pittsburgh et al. have both a much smaller selection of such companies, as well as much smaller outposts of them. So if you're lucky enough to get a job at one of them, you're in great shape. But it's much, much harder, and I think the experience of the average techie will be that getting remotely comparable pay in one of those cities is a major challenge. And if you ever want to change jobs without moving, good luck finding something that pays the same.
When I talk about the salaries vs. housing prices, I'm not speaking in hypotheticals. I'm someone who works in tech, with a stellar resume (if I do say so myself), made up of major names you've all heard of. And, being dissatisfied with where I lived, I spent several years researching and exploring options all across the US, to the extent of spending several days in a number of cities driving around looking at neighborhoods, doing interviews with companies, and so on. I have a number of job offers I declined because of salary, and dozens of other companies I chose not to move forward with interviewing at after discussing compensation. This issue was magnified by the fact that my wife isn’t in tech, and the pay she was looking at for her field was even lower than what I was seeing.
While it is POSSIBLE to get a high paying job in a low cost of living city, it's much harder than it is in the more expensive cities. I'm incredibly detail-oriented about my finances (dozens of spreadsheets were involved in this), and I came to the conclusion that I come out ahead by living in a more expensive place and taking the higher salary, and it wasn’t even close.
I’m genuinely happy for people who are able to find “big city” salaries in places with “small city” housing prices. My point is that people need to look at the entire picture, and really run numbers before getting excited about moving somewhere with cheap houses. It isn’t a foregone conclusion that lower housing prices will actually cause you to come out ahead financially.
posted by primethyme at 11:58 AM on March 13, 2015 [11 favorites]
The distributed offices of the major tech companies are, in my experience, a big exception to the "drastically lower salary" rule. Indeed, the best way to take advantage of these lower housing prices (at least if you're in tech) is to get a job at one of those offices. But I've done pretty extensive job searching in several of those cities (admittedly not Pittsburgh), and I found that outside of those big name companies, the salaries are MUCH lower. And Pittsburgh et al. have both a much smaller selection of such companies, as well as much smaller outposts of them. So if you're lucky enough to get a job at one of them, you're in great shape. But it's much, much harder, and I think the experience of the average techie will be that getting remotely comparable pay in one of those cities is a major challenge. And if you ever want to change jobs without moving, good luck finding something that pays the same.
When I talk about the salaries vs. housing prices, I'm not speaking in hypotheticals. I'm someone who works in tech, with a stellar resume (if I do say so myself), made up of major names you've all heard of. And, being dissatisfied with where I lived, I spent several years researching and exploring options all across the US, to the extent of spending several days in a number of cities driving around looking at neighborhoods, doing interviews with companies, and so on. I have a number of job offers I declined because of salary, and dozens of other companies I chose not to move forward with interviewing at after discussing compensation. This issue was magnified by the fact that my wife isn’t in tech, and the pay she was looking at for her field was even lower than what I was seeing.
While it is POSSIBLE to get a high paying job in a low cost of living city, it's much harder than it is in the more expensive cities. I'm incredibly detail-oriented about my finances (dozens of spreadsheets were involved in this), and I came to the conclusion that I come out ahead by living in a more expensive place and taking the higher salary, and it wasn’t even close.
I’m genuinely happy for people who are able to find “big city” salaries in places with “small city” housing prices. My point is that people need to look at the entire picture, and really run numbers before getting excited about moving somewhere with cheap houses. It isn’t a foregone conclusion that lower housing prices will actually cause you to come out ahead financially.
posted by primethyme at 11:58 AM on March 13, 2015 [11 favorites]
The actual answer to the down-payment question though is that although most buyers don't put down 20% -- the average down payment is somewhere around 16-17% (N.B.: that article is basically a puff piece for low-down-payment lenders, beware) -- it's likely that most buyers who are not eligible for FHA or VA loans are. FHA/VA loans can require as little as 3.5% down without triggering PMI requirements, so they likely drive down the average down payment substantially: as they should, because that's exactly what those programs are designed to do.
posted by Kadin2048 at 12:02 PM on March 13, 2015
posted by Kadin2048 at 12:02 PM on March 13, 2015
primethyme: And Pittsburgh et al. have both a much smaller selection of such companies, as well as much smaller outposts of them. So if you're lucky enough to get a job at one of them, you're in great shape. But it's much, much harder, and I think the experience of the average techie will be that getting remotely comparable pay in one of those cities is a major challenge.
I guess it depends on your definition of "comparable", but, using Glassdoor data again (not that it's perfect, but it's available) the average for all software engineers in Pittsburgh is ~$75k, while it's $103k in San Francisco. That's a significant bump, of course, but if housing is many times more expensive, I don't see how you come out ahead. I know for me personally I'm above the average of all software engineers here but below what I could apparently get if I worked at Google here, and I can't see how the numbers would work out better in my favor if I was making $145k but paying 2.5-3x times what I pay for housing now.
posted by tonycpsu at 12:07 PM on March 13, 2015
I guess it depends on your definition of "comparable", but, using Glassdoor data again (not that it's perfect, but it's available) the average for all software engineers in Pittsburgh is ~$75k, while it's $103k in San Francisco. That's a significant bump, of course, but if housing is many times more expensive, I don't see how you come out ahead. I know for me personally I'm above the average of all software engineers here but below what I could apparently get if I worked at Google here, and I can't see how the numbers would work out better in my favor if I was making $145k but paying 2.5-3x times what I pay for housing now.
posted by tonycpsu at 12:07 PM on March 13, 2015
. And if you ever want to change jobs without moving, good luck finding something that pays the same.
At least in the tech world, it's not hard to find a job in Pittsburgh that pays decently. In the almost twenty years that I've been in software QA, I've never really had to search hard for a job. Mostly it's been "hey, I heard you got laid off from your last gig, why don't you interview here?".
posted by octothorpe at 12:08 PM on March 13, 2015 [2 favorites]
At least in the tech world, it's not hard to find a job in Pittsburgh that pays decently. In the almost twenty years that I've been in software QA, I've never really had to search hard for a job. Mostly it's been "hey, I heard you got laid off from your last gig, why don't you interview here?".
posted by octothorpe at 12:08 PM on March 13, 2015 [2 favorites]
Salaries are based on supply and demand, not on cost of living
If you're making a salary, you can't afford to buy a house in the Bay Area. The salaries-are-higher thing is a distraction; San Francisco belongs to owners, not workers.
posted by You Can't Tip a Buick at 12:11 PM on March 13, 2015 [9 favorites]
If you're making a salary, you can't afford to buy a house in the Bay Area. The salaries-are-higher thing is a distraction; San Francisco belongs to owners, not workers.
posted by You Can't Tip a Buick at 12:11 PM on March 13, 2015 [9 favorites]
Herodios, I looked at several houses that were at varying points on that vacant-too-long spectrum. Two years later, some have people, some are still empty, and a few have been razed.
With the banks sitting on so much of the housing stock, holding it empty, it's been like musical chairs around here. And all those people who lost their chairs went into the rental market, making it even worse than the buying market. All these people talking about how home ownership is a bad investment? I don't think I could get enough for my house equity in the stock market, to not lose ground every month if I were paying the ridiculous musical-chairs rents.
posted by elizilla at 12:19 PM on March 13, 2015
With the banks sitting on so much of the housing stock, holding it empty, it's been like musical chairs around here. And all those people who lost their chairs went into the rental market, making it even worse than the buying market. All these people talking about how home ownership is a bad investment? I don't think I could get enough for my house equity in the stock market, to not lose ground every month if I were paying the ridiculous musical-chairs rents.
posted by elizilla at 12:19 PM on March 13, 2015
It seems weird to me that it costs more monthly in SF to buy than it does to rent. You'd think that rents would be the landlord's mortgage + maintenance + profit which would be more than just your mortgage + maintenance if you owned the same place. Somehow I'm missing something or math is different out there.
posted by octothorpe at 12:22 PM on March 13, 2015
posted by octothorpe at 12:22 PM on March 13, 2015
I moved from San Diego to Wisconsin (about an hour east of the Twin Cities) in August. We're renting a place for around $800 that would go for at least $2400 in San Diego, and the 3BR house next door is up for sale for about 90K. People at my work talk about how houses here in Eau Claire are WAY more expensive than in some neighboring towns (like Chippewa Falls, about 10 minutes north), and its all I can do to not fall out of my chair laughing. If I sold my parent's homes back in SD, I could buy up my whole damn block here. Heck, I could buy one of the monster lumber baron mansions dowtown and STILL have money left over to buy the house next door twice, along with a cabin up north with some serious acreage. And I make more than I did at my last job in SD, although about 20% less than at my pre-recession peak.
posted by LionIndex at 12:26 PM on March 13, 2015 [2 favorites]
posted by LionIndex at 12:26 PM on March 13, 2015 [2 favorites]
It seems weird to me that it costs more monthly in SF to buy than it does to rent. You'd think that rents would be the landlord's mortgage + maintenance + profit which would be more than just your mortgage + maintenance if you owned the same place. Somehow I'm missing something or math is different out there.
Likely the landlord bought at a lower price than you can currently, or with more favorable financing, etc. Or if the place is paid for, then any rent he collects is cream.
posted by RustyBrooks at 12:30 PM on March 13, 2015 [1 favorite]
Likely the landlord bought at a lower price than you can currently, or with more favorable financing, etc. Or if the place is paid for, then any rent he collects is cream.
posted by RustyBrooks at 12:30 PM on March 13, 2015 [1 favorite]
I've lived in the Bay Area since the late 90s, raised a family here, and know a bunch of people in my cohort - dot com and not.
Of all the families I know, which I'd guess would be twenty to thirty, three own their own homes. Two of these come from the city I live in and inherited their homes. The other family is headed by two professionals who together pull down I'd guess $350k/year.
Me, I rent. I've hit a couple of dot com payoffs, not Google level but still unexpected money, I've saved, I'm employed at a good wage, yet with kids nearing college age, short of teaming up with another white collar well paid professional or inheriting money, there's little chance I could afford a 2 - 3 bedroom home in a low crime, easy commute neighborhood in the Bay Area.
What sucks is, my kids grew up here, I've spent my entire career here, and when my career is up, I'll likely have to uproot. I'm part of the community, but I'm always aware that I'm not secure in my part.
At work, the topic of housing comes up frequently. None of us have bad salaries, but my god, housing in the Bay Area, for families where 2–3 bedrooms is more than just nice to have? You need a lot of luck (in the market, in being born to money, in falling in love with a partner with six figure earning potential) to make that work without a cloud of worry over you.
posted by zippy at 12:40 PM on March 13, 2015 [5 favorites]
Of all the families I know, which I'd guess would be twenty to thirty, three own their own homes. Two of these come from the city I live in and inherited their homes. The other family is headed by two professionals who together pull down I'd guess $350k/year.
Me, I rent. I've hit a couple of dot com payoffs, not Google level but still unexpected money, I've saved, I'm employed at a good wage, yet with kids nearing college age, short of teaming up with another white collar well paid professional or inheriting money, there's little chance I could afford a 2 - 3 bedroom home in a low crime, easy commute neighborhood in the Bay Area.
What sucks is, my kids grew up here, I've spent my entire career here, and when my career is up, I'll likely have to uproot. I'm part of the community, but I'm always aware that I'm not secure in my part.
At work, the topic of housing comes up frequently. None of us have bad salaries, but my god, housing in the Bay Area, for families where 2–3 bedrooms is more than just nice to have? You need a lot of luck (in the market, in being born to money, in falling in love with a partner with six figure earning potential) to make that work without a cloud of worry over you.
posted by zippy at 12:40 PM on March 13, 2015 [5 favorites]
Incidentally, for new house construction in our area, the contractors and developers are building new homes which are definitely out of the reach of the middle class, targeted more at the upper middle class. I suppose it's great news for contractors who do renovation jobs, but those who want a home that's affordable will end up with much older homes (decades old) if only because the newer houses simply are quickly being priced out of the regular joe's capability to buy.
Around here is completely the opposite.
The higher income buyers are bidding up the older homes on mature lots for rehab/rebuild while the middle class buyers are buying the tossed up overnight, too much house on too little lot developer specials.
Then again, all the schools suck, so there aren't any "starter neighborhoods" as such.
posted by madajb at 12:46 PM on March 13, 2015
Around here is completely the opposite.
The higher income buyers are bidding up the older homes on mature lots for rehab/rebuild while the middle class buyers are buying the tossed up overnight, too much house on too little lot developer specials.
Then again, all the schools suck, so there aren't any "starter neighborhoods" as such.
posted by madajb at 12:46 PM on March 13, 2015
There's no way $80,050 works for Boston. It must include a lot of the places surrounding the city.
Even here in Portland, ME, $80,050 is tight if you have children/student loans/other expenses, especially because the salaries are comparably low.
posted by miss tea at 12:51 PM on March 13, 2015
Even here in Portland, ME, $80,050 is tight if you have children/student loans/other expenses, especially because the salaries are comparably low.
posted by miss tea at 12:51 PM on March 13, 2015
Although my feelings on tech industry sleazebags are clear - and don't pretend it's not a sleazebag industry; one of my techiest friends just left the Bay Area to go manage his parents' hotel, because the only workplaces interested in hiring programmers in their 30s make things like data mining tools to sell to insurance agents so that they know exactly when to hit up their Facebook friends - ahem, as I was saying, despite my feelings on tech industry sleazebags, the thing that I find especially galling about the housing disaster of the Bay Area is that so much of the money that cycles through the area ends up in the hands of extraordinarily criminal landlords, people who have no particular talent other than their fantastic willingness to gouge people for housing that doesn't even pretend to adhere to code.
My favorite moment from my housing search last year was walking into an open house at studio in Berkeley advertised for 1400, and seeing, as the first line of the rental application, the question "how much is this place worth to you?"
Frankly, it's so bad that it's making me sort of an accelerationist; like, if it gets bad enough fast enough, and if it hits enough born-rich people who aren't accustomed to getting illegally shit upon, maybe it'll feed some sort of overtly revolutionary movement here.
posted by You Can't Tip a Buick at 1:07 PM on March 13, 2015 [3 favorites]
My favorite moment from my housing search last year was walking into an open house at studio in Berkeley advertised for 1400, and seeing, as the first line of the rental application, the question "how much is this place worth to you?"
Frankly, it's so bad that it's making me sort of an accelerationist; like, if it gets bad enough fast enough, and if it hits enough born-rich people who aren't accustomed to getting illegally shit upon, maybe it'll feed some sort of overtly revolutionary movement here.
posted by You Can't Tip a Buick at 1:07 PM on March 13, 2015 [3 favorites]
Salary is a red herring. I have been looking to buy for the last 4 years in SF, and I've seen things you people would not believe (attack ships, c-beams, yadda yadda). The last round, before I took a year off of searching, I would routinely be one of 30+ offers, and the winning bids were coming in at 15-25% over list, and they were all cash offers from people who did not intend on living in those homes themselves. I was competing against foreign capital, not other salaried workers. It is primarily Chinese money, and to a much lesser degree (up until recently) Russian money.
The one place I did win (but didn't close on for complicated reasons), I was NOT the highest offer, but I had written a personal letter to the seller.
Tech workers are driving up rents because SF refuses to build new housing, but short of a very few people who maybe had great exit events, they're all renting, not buying.
posted by danny the boy at 1:12 PM on March 13, 2015 [3 favorites]
The one place I did win (but didn't close on for complicated reasons), I was NOT the highest offer, but I had written a personal letter to the seller.
Tech workers are driving up rents because SF refuses to build new housing, but short of a very few people who maybe had great exit events, they're all renting, not buying.
posted by danny the boy at 1:12 PM on March 13, 2015 [3 favorites]
Why is Atlanta the only Southern city shown here? Hold the hate jokes, please.
posted by mmiddle at 1:14 PM on March 13, 2015
posted by mmiddle at 1:14 PM on March 13, 2015
Mod note: One comment removed; grumping about rent is fine, but "fuck you all" isn't, so please dial it down a little.
posted by cortex (staff) at 1:15 PM on March 13, 2015
posted by cortex (staff) at 1:15 PM on March 13, 2015
elizilla, I hope you haven't been house shopping down the road in Ann Arbor*. That -- suburb of the U of M-- is the worst example of these forces imaginable. Chronic artificially high rents and house prices coupled with chronic artificially low wages. I never could stomach the prices there and when I moved back to Ohio**, between the higher salary and lower rent I got the equivalent of a 40% pay rise.
Portland at least has an ocean nearby.
*I used to live on Miller Road and stop in at the Dexter A&W on cycling trips.
**bum bum ba-da-da-dum skank skank skank skank-skank skank-skank . . .
posted by Herodios at 1:18 PM on March 13, 2015
Portland at least has an ocean nearby.
*I used to live on Miller Road and stop in at the Dexter A&W on cycling trips.
**bum bum ba-da-da-dum skank skank skank skank-skank skank-skank . . .
posted by Herodios at 1:18 PM on March 13, 2015
NYC number is way off. WAY off. But most people rent here anyway, or buy in very far out corners of the Metro area.
posted by roomthreeseventeen at 1:33 PM on March 13, 2015
posted by roomthreeseventeen at 1:33 PM on March 13, 2015
Here's a little more color on the Chinese connection. It's not data, but it does have a few figures in it. Anecdotally, I spoke to the top producer of a major relator in SF, and all her clients last year were Chinese. It's not just SF, or California. I know the same thing is happening in Taiwan, though less intensely.
posted by danny the boy at 1:35 PM on March 13, 2015
posted by danny the boy at 1:35 PM on March 13, 2015
From that article Danny the Boy posted: "Olson said the one who bought the East Bay property was from China."
Motherfucker, international bigmoney's invading the east bay, too? Let's all go squat their empty useless houses.
posted by You Can't Tip a Buick at 1:41 PM on March 13, 2015
Motherfucker, international bigmoney's invading the east bay, too? Let's all go squat their empty useless houses.
posted by You Can't Tip a Buick at 1:41 PM on March 13, 2015
I came to the conclusion that I come out ahead by living in a more expensive place and taking the higher salary, and it wasn’t even close
I think you're right. Mortgage on a $200k house in Minneapolis is around $1100/month; mortgage on an $800k house in the Bay Area is around $4400/month. So you need to make $40k more per year the Bay Area -- actually less, since the mortgage interest deduction works in your favor. If you make $80k in Minneapolis and $120k in the Bay Area, you've completely covered the differential. If your spouse makes that much too, you're making $40k additional in the Bay Area.
Later in your career it makes an even bigger difference -- the salary difference grows as you rise the ranks, but the real estate difference stays roughly the same.
I think this is a really pernicious effect -- real estate ends up dominating your financial life, rather than how successful you are at whatever it is that you actually want to be doing. But there's a reason people pay those insane prices for housing, and it's not that they're stupid.
posted by miyabo at 1:45 PM on March 13, 2015 [3 favorites]
I think you're right. Mortgage on a $200k house in Minneapolis is around $1100/month; mortgage on an $800k house in the Bay Area is around $4400/month. So you need to make $40k more per year the Bay Area -- actually less, since the mortgage interest deduction works in your favor. If you make $80k in Minneapolis and $120k in the Bay Area, you've completely covered the differential. If your spouse makes that much too, you're making $40k additional in the Bay Area.
Later in your career it makes an even bigger difference -- the salary difference grows as you rise the ranks, but the real estate difference stays roughly the same.
I think this is a really pernicious effect -- real estate ends up dominating your financial life, rather than how successful you are at whatever it is that you actually want to be doing. But there's a reason people pay those insane prices for housing, and it's not that they're stupid.
posted by miyabo at 1:45 PM on March 13, 2015 [3 favorites]
Herodios, don't you know that "Ypsilanti" is an ancient Native American word that means "Can't afford to live in Ann Arbor"?
posted by elizilla at 2:02 PM on March 13, 2015 [1 favorite]
posted by elizilla at 2:02 PM on March 13, 2015 [1 favorite]
If I'm reading this (.pdf) correctly, purchases by non-resident internationals were only around 4% of the US market last year.
posted by ghharr at 2:02 PM on March 13, 2015
posted by ghharr at 2:02 PM on March 13, 2015
If I'm reading this (.pdf) correctly, purchases by non-resident internationals were only around 4% of the US market last year.
Given that they're almost certainly highly concentrated in a small number of areas, that can be a huge chunk of the local market. Non-resident international purchases are going to be a much bigger chunk of the market in San Francisco or Manhattan than the suburbs of Cleveland.
posted by Tomorrowful at 2:07 PM on March 13, 2015 [2 favorites]
Given that they're almost certainly highly concentrated in a small number of areas, that can be a huge chunk of the local market. Non-resident international purchases are going to be a much bigger chunk of the market in San Francisco or Manhattan than the suburbs of Cleveland.
posted by Tomorrowful at 2:07 PM on March 13, 2015 [2 favorites]
(Not Cleveland-ist)
posted by Tomorrowful at 2:07 PM on March 13, 2015 [1 favorite]
posted by Tomorrowful at 2:07 PM on March 13, 2015 [1 favorite]
the only workplaces interested in hiring programmers in their 30s make things like data mining tools to sell to insurance agents
Um, what? I'm sure that plenty of those jobs exist, but that's true no matter what age you are. I'm 38, I have tech industry friends in their mid to late 40s, and none of us are having any particular problems finding interesting work to do that would suggest any sort of age cutoff like you describe. It could be that this is a difference between Seattle and the SF Bay, but I doubt it - I'm actually working for a California-based company now, even, though I'm in the Seattle branch office.
posted by Mars Saxman at 2:13 PM on March 13, 2015 [4 favorites]
Um, what? I'm sure that plenty of those jobs exist, but that's true no matter what age you are. I'm 38, I have tech industry friends in their mid to late 40s, and none of us are having any particular problems finding interesting work to do that would suggest any sort of age cutoff like you describe. It could be that this is a difference between Seattle and the SF Bay, but I doubt it - I'm actually working for a California-based company now, even, though I'm in the Seattle branch office.
posted by Mars Saxman at 2:13 PM on March 13, 2015 [4 favorites]
Yeah there's a lot of angst aimed at tech and tech workers in the bay area, but I think they're just really visible right now, in a way that over-exaggerates their impact. SF has always been about tech, and any attempts to rewrite history to cast them as a newly invasive species is... too simplistic of a narrative.
Like, I'm also not mad at the international buyers. They are rational actors responding to policies in their home countries. Same with the people who rent their apartments out for market rate, and for all the homeowners blocking the city from building more housing. Being mad at individuals acting in their own best interests is a waste of energy. Work to change the larger policies, or act in your own best interest. If you care about value, find value (probably, in a different market).
posted by danny the boy at 2:31 PM on March 13, 2015 [4 favorites]
Like, I'm also not mad at the international buyers. They are rational actors responding to policies in their home countries. Same with the people who rent their apartments out for market rate, and for all the homeowners blocking the city from building more housing. Being mad at individuals acting in their own best interests is a waste of energy. Work to change the larger policies, or act in your own best interest. If you care about value, find value (probably, in a different market).
posted by danny the boy at 2:31 PM on March 13, 2015 [4 favorites]
This article has been making the rounds on my fb feed:
Berkshire Group — a Boston-based real estate investment firm that reported $5.7 billion in assets last fall — purchased 901 Jefferson [Oakland, CA] from Oakland-based company Madison Park Financial Corporation for $24.7 million. In a first meeting with residents in January, representatives of Berkshire Communities, the property management arm of the company, told tenants that they would be raising rents anywhere from 10 to 50 percent, according to residents Andrea Frainier and Lena Setzermann. Those two tenants, who are roommates, helped form a tenants' association last week.posted by rtha at 3:39 PM on March 13, 2015
At the January meeting, Berkshire also reportedly told tenants that apartments with lower rents — meaning residents who have been in the building the longest — would be seeing the highest increases and would be getting notices in a first round of hikes. Records, however, show that some increases have been higher than 50 percent, even without factoring in the new service fees.
In addition to Zhang's notice, documents residents provided to me showed one tenant's rent jumping from $2,200 to $3,515 and another from $1,950 to $3,075. In both those cases of nearly 60 percent increases (before utility fees), the company offered somewhat reduced increases if those tenants, who are currently on month-to-month leases, signed one-year leases. But they only had thirty days to decide. Activists said this was a clearly unethical way to work around state law that requires sixty days' notice for rent increases greater than 10 percent.
Like, I'm also not mad at the international buyers. They are rational actors responding to policies in their home countries. Same with the people who rent their apartments out for market rate, and for all the homeowners blocking the city from building more housing. Being mad at individuals acting in their own best interests is a waste of energy. Work to change the larger policies, or act in your own best interest. If you care about value, find value (probably, in a different market).
You're leaving out methods predicated on making these rational actors' rational plays less rational; finding ways that we're more powerful than people with money power, and exercising that power to, insofar as we can, bust up their strategies. Attempting to change policy at the municipal level (I've given up on state and federal politics) is certainly one aspect of this, but it's foolish to rule out other sorts of action that could make bay area real estate less attractive to rational players from the investor class.
idea: app to display the locations of known unoccupied houses. Call it "Squattr."
posted by You Can't Tip a Buick at 4:19 PM on March 13, 2015 [2 favorites]
You're leaving out methods predicated on making these rational actors' rational plays less rational; finding ways that we're more powerful than people with money power, and exercising that power to, insofar as we can, bust up their strategies. Attempting to change policy at the municipal level (I've given up on state and federal politics) is certainly one aspect of this, but it's foolish to rule out other sorts of action that could make bay area real estate less attractive to rational players from the investor class.
idea: app to display the locations of known unoccupied houses. Call it "Squattr."
posted by You Can't Tip a Buick at 4:19 PM on March 13, 2015 [2 favorites]
I'm 38, I have tech industry friends in their mid to late 40s, and none of us are having any particular problems finding interesting work to do that would suggest any sort of age cutoff like you describe.
You're right, I shouldn't generalize from that anecdote. Likely the guy in question's inability to give a decent interview (he's known among my group as being likely the tersest person in the world) was as much of a liability to him as his age...
posted by You Can't Tip a Buick at 4:21 PM on March 13, 2015
You're right, I shouldn't generalize from that anecdote. Likely the guy in question's inability to give a decent interview (he's known among my group as being likely the tersest person in the world) was as much of a liability to him as his age...
posted by You Can't Tip a Buick at 4:21 PM on March 13, 2015
Tech workers are driving up rents because SF refuses to build new housing
it's not so much San Francisco proper as Mountain View and Sunnyvale and Milpitas, which have the jobs but no units. It's certainly hard to get permits in SF, but SF also has a lot of housing. In Mountain View, it's not just hard to build housing, it's impossible, yet Mountain View allows expansion after expansion for employers.
See the SF Examiner's SF: Stop being bullied, let's sue Mountain View for some details.
"late last year, Mountain View approved plans to add 3.4 million square feet of office space around the Google and LinkedIn fortresses, adding 20,000 jobs. No new housing. Supposedly the newly elected City Council eventually will vote to allow 1,500 to 5,000 units in the area, but the other 15,000 are San Francisco's problem by default."
posted by zippy at 4:22 PM on March 13, 2015
it's not so much San Francisco proper as Mountain View and Sunnyvale and Milpitas, which have the jobs but no units. It's certainly hard to get permits in SF, but SF also has a lot of housing. In Mountain View, it's not just hard to build housing, it's impossible, yet Mountain View allows expansion after expansion for employers.
See the SF Examiner's SF: Stop being bullied, let's sue Mountain View for some details.
"late last year, Mountain View approved plans to add 3.4 million square feet of office space around the Google and LinkedIn fortresses, adding 20,000 jobs. No new housing. Supposedly the newly elected City Council eventually will vote to allow 1,500 to 5,000 units in the area, but the other 15,000 are San Francisco's problem by default."
posted by zippy at 4:22 PM on March 13, 2015
it's not so much San Francisco proper as Mountain View and Sunnyvale and Milpitas, which have the jobs but no units. It's certainly hard to get permits in SF, but SF also has a lot of housing. In Mountain View, it's impossible, yet Mountain View is a huge tech employer.
This argument needs to die. Also, you example article is written by someone who describes himself as a comedian.
People are not thinking: Gee, I wish I could live in Mountain View. But since there are no apartments, I am going to move 40 fucking miles way and spend twice as much money and deal with crack addicts shitting on the sidewalks to live in San Franscisco.
No one who says "Rent is high in SF because MV doesn't have enough units" has ever been to Mountain View or San Francisco.
posted by sideshow at 4:29 PM on March 13, 2015 [4 favorites]
This argument needs to die. Also, you example article is written by someone who describes himself as a comedian.
People are not thinking: Gee, I wish I could live in Mountain View. But since there are no apartments, I am going to move 40 fucking miles way and spend twice as much money and deal with crack addicts shitting on the sidewalks to live in San Franscisco.
No one who says "Rent is high in SF because MV doesn't have enough units" has ever been to Mountain View or San Francisco.
posted by sideshow at 4:29 PM on March 13, 2015 [4 favorites]
Well, it's ok if you don't like that writer, but there are others who make the same point. For example, here's a NYT piece (picked up by the Seattle Times) that covers the same issues.
posted by zippy at 4:36 PM on March 13, 2015
posted by zippy at 4:36 PM on March 13, 2015
sobell: "My brother went to college near Pittsburgh, and the first time I flew him out for a visit, when I was living in Cole Valley in San Francisco, he took in the rolling hills, the fog coming in off the ocean, the orange towers of the Golden Gate Bridge rising out of the redwoods ...
... and he said, "It's nice, but it's no Pittsburgh.""
Boy, is that Pittsburgh people in a nutshell.
posted by Chrysostom at 4:37 PM on March 13, 2015 [4 favorites]
... and he said, "It's nice, but it's no Pittsburgh.""
Boy, is that Pittsburgh people in a nutshell.
posted by Chrysostom at 4:37 PM on March 13, 2015 [4 favorites]
People are not thinking: Gee, I wish I could live in Mountain View.
I certainly wish I could live in Mountain View. You prefer Antioch? Castro Valley? Hayward? Fremont?
MV fucking kills those places.
posted by mrgrimm at 4:44 PM on March 13, 2015 [2 favorites]
I certainly wish I could live in Mountain View. You prefer Antioch? Castro Valley? Hayward? Fremont?
MV fucking kills those places.
posted by mrgrimm at 4:44 PM on March 13, 2015 [2 favorites]
LIVERMORE?!?!?!
posted by mrgrimm at 4:44 PM on March 13, 2015 [2 favorites]
posted by mrgrimm at 4:44 PM on March 13, 2015 [2 favorites]
The median home price in Livermore is $634,500 ... ... !!!!!
posted by mrgrimm at 4:45 PM on March 13, 2015 [3 favorites]
posted by mrgrimm at 4:45 PM on March 13, 2015 [3 favorites]
>You're leaving out methods predicated on making these rational actors' rational plays less rational; finding ways that we're more powerful than people with money power, and exercising that power to, insofar as we can, bust up their strategies.
But what does that mean, exactly? What action do you propose that wouldn't be a policy change? Like, yes we could impose a higher tax rate for non-resident purchases. That would be a policy change. Encouraging people to squat in someone else's home... that's illegal and unethical and also probably not going to actually impact long term demand for houses?
Ultimately, my perspective (which seems to be a minority one in SF) is that this is fundamentally a supply/demand problem and the only real solution is to increase supply. Re: rtha's link, that is super shitty, and I sympathize because my unit is also not rent controlled and my landlord can (and does) arbitrarily raise my rent whenever he feels like it. But rent control is even worse for everyone in the long run. It handcuffs people to one place, even though their lives might necessitate change. Turnover that would keep units well maintained doesn't happen. Landlords end up not getting what they otherwise could, giving them incentive to do unethical things to their tenants. No one wins.
Same with real estate. No one wins in a market that sees 15% yoy growth, except people who are looking to cash out and leave town, or who were never residents in the first place. As long as more people want to live here than can, things are going to be painful. We have to build.
I feel like a lot of people's solutions ultimately boil down to pushing the other lever, which is to decrease demand by making SF a much shittier place to live.
posted by danny the boy at 4:50 PM on March 13, 2015 [1 favorite]
But what does that mean, exactly? What action do you propose that wouldn't be a policy change? Like, yes we could impose a higher tax rate for non-resident purchases. That would be a policy change. Encouraging people to squat in someone else's home... that's illegal and unethical and also probably not going to actually impact long term demand for houses?
Ultimately, my perspective (which seems to be a minority one in SF) is that this is fundamentally a supply/demand problem and the only real solution is to increase supply. Re: rtha's link, that is super shitty, and I sympathize because my unit is also not rent controlled and my landlord can (and does) arbitrarily raise my rent whenever he feels like it. But rent control is even worse for everyone in the long run. It handcuffs people to one place, even though their lives might necessitate change. Turnover that would keep units well maintained doesn't happen. Landlords end up not getting what they otherwise could, giving them incentive to do unethical things to their tenants. No one wins.
Same with real estate. No one wins in a market that sees 15% yoy growth, except people who are looking to cash out and leave town, or who were never residents in the first place. As long as more people want to live here than can, things are going to be painful. We have to build.
I feel like a lot of people's solutions ultimately boil down to pushing the other lever, which is to decrease demand by making SF a much shittier place to live.
posted by danny the boy at 4:50 PM on March 13, 2015 [1 favorite]
Ultimately, my perspective (which seems to be a minority one in SF) is that this is fundamentally a supply/demand problem and the only real solution is to increase supply.
I used to be big on the "let the market build as many units as it wants until we're out of this mess" side, until I realized that 1) the ruling class's effective demand is more or less infinite — no amount of new luxury housing will ever result in costs of new construction going down or even in older housing getting freed up for mortals, and 2) the market is not incentivized to provide housing for mortals, because, due to point 1, it will always be more profitable to build mostly empty pyramids for the rich.
A while back in a thread about airlines (not housing), four panels posted this quote from a French civil engineer from the 19th century, who explained that rail lines there had intolerable conditions in their third-class cars not because they couldn't afford to provide better service, but because making an example of the poor was a great way to extract more money from the middle classes and the rich. This is the dynamic at play in the SF real estate market. Because the optimum strategy for developers is to provide as many houses as possible for the people who can pay for them in cash while tightly limiting the supply of housing for everyone else, it's foolish to believe that all we need to do is unleash market forces. Market forces prefer the current situation. In order to build our way out of this mess, we'll have to either radically redistribute wealth or just build by non-market means.
But rent control is even worse for everyone in the long run. It handcuffs people to one place, even though their lives might necessitate change. Turnover that would keep units well maintained doesn't happen. Landlords end up not getting what they otherwise could, giving them incentive to do unethical things to their tenants. No one wins.
The only problem with rent control is that it's not transferrable. If it operated as an ownership stake in property held by renters of that property, to be bought and sold as those renters please, it would be just fine. IMO this would be the most elegant way to end speculation in rental property: by assigning the benefits that can accrue from increases in property value to the people who live in the property rather than to the people who own it.
posted by You Can't Tip a Buick at 5:31 PM on March 13, 2015 [10 favorites]
I used to be big on the "let the market build as many units as it wants until we're out of this mess" side, until I realized that 1) the ruling class's effective demand is more or less infinite — no amount of new luxury housing will ever result in costs of new construction going down or even in older housing getting freed up for mortals, and 2) the market is not incentivized to provide housing for mortals, because, due to point 1, it will always be more profitable to build mostly empty pyramids for the rich.
A while back in a thread about airlines (not housing), four panels posted this quote from a French civil engineer from the 19th century, who explained that rail lines there had intolerable conditions in their third-class cars not because they couldn't afford to provide better service, but because making an example of the poor was a great way to extract more money from the middle classes and the rich. This is the dynamic at play in the SF real estate market. Because the optimum strategy for developers is to provide as many houses as possible for the people who can pay for them in cash while tightly limiting the supply of housing for everyone else, it's foolish to believe that all we need to do is unleash market forces. Market forces prefer the current situation. In order to build our way out of this mess, we'll have to either radically redistribute wealth or just build by non-market means.
But rent control is even worse for everyone in the long run. It handcuffs people to one place, even though their lives might necessitate change. Turnover that would keep units well maintained doesn't happen. Landlords end up not getting what they otherwise could, giving them incentive to do unethical things to their tenants. No one wins.
The only problem with rent control is that it's not transferrable. If it operated as an ownership stake in property held by renters of that property, to be bought and sold as those renters please, it would be just fine. IMO this would be the most elegant way to end speculation in rental property: by assigning the benefits that can accrue from increases in property value to the people who live in the property rather than to the people who own it.
posted by You Can't Tip a Buick at 5:31 PM on March 13, 2015 [10 favorites]
People are not thinking: Gee, I wish I could live in Mountain View. But since there are no apartments, I am going to move 40 fucking miles way and spend twice as much money and deal with crack addicts shitting on the sidewalks to live in San Franscisco.A house in Mountain View is more expensive than a house in San Francisco. You bet your buns people want to live in MV and settle for SF. Because if you've got to commute to work, you might as well live in the city.
No one who says "Rent is high in SF because MV doesn't have enough units" has ever been to Mountain View or San Francisco.
posted by sideshow
posted by TheNewWazoo at 6:06 PM on March 13, 2015 [3 favorites]
A house in Mountain View is more expensive than a house in San Francisco. You bet your buns people want to live in MV and settle for SF. Because if you've got to commute to work, you might as well live in the city.
Your examples show that SF is $100 more expensive per sq ft than MV.
posted by sideshow at 6:25 PM on March 13, 2015
Your examples show that SF is $100 more expensive per sq ft than MV.
posted by sideshow at 6:25 PM on March 13, 2015
until I realized that 1) the ruling class's effective demand is more or less infinite
As I understand it, though, it isn't infinite, all other things being equal, because you can only live in one place at a time and after some point the costs of owning an nth vacation property exceed its marginal utility, even for the incredibly wealthy. But for the last 1.5-2 decades this demand has been effectively infinite because so many of them see it as either a safe store for capital / as a hedge, or, in the case of markets like SF, NYC, London, as providing more returns in capital gains than any other asset. You only get capital gain if somebody else is willing to buy your thing for more than you paid for it, and this in turn is due to the working / middle class holding residential real estate as their only substantial asset and being willing to take on massive amounts of debt to "get into the market". This is why we saw basically no lending requirements in the first part of the 2000s and are seeing them easing again now. There are only so many people in the world who can afford a $10,000,000 apartment, though, and at some point the working / middle classes won't be able to take on more debt to support the lower parts of the market, and then what happens? Especially since, for most people, the only substantial savings they have are in the value of their primary residence. I expect that it'll be the relatively poorer that are left holding the bag again, like in 2008.
posted by junco at 6:31 PM on March 13, 2015 [1 favorite]
As I understand it, though, it isn't infinite, all other things being equal, because you can only live in one place at a time and after some point the costs of owning an nth vacation property exceed its marginal utility, even for the incredibly wealthy. But for the last 1.5-2 decades this demand has been effectively infinite because so many of them see it as either a safe store for capital / as a hedge, or, in the case of markets like SF, NYC, London, as providing more returns in capital gains than any other asset. You only get capital gain if somebody else is willing to buy your thing for more than you paid for it, and this in turn is due to the working / middle class holding residential real estate as their only substantial asset and being willing to take on massive amounts of debt to "get into the market". This is why we saw basically no lending requirements in the first part of the 2000s and are seeing them easing again now. There are only so many people in the world who can afford a $10,000,000 apartment, though, and at some point the working / middle classes won't be able to take on more debt to support the lower parts of the market, and then what happens? Especially since, for most people, the only substantial savings they have are in the value of their primary residence. I expect that it'll be the relatively poorer that are left holding the bag again, like in 2008.
posted by junco at 6:31 PM on March 13, 2015 [1 favorite]
If you make $80k in Minneapolis and $120k in the Bay Area, you've completely covered the differential
So you've covered the cost of the mortgage.
Now you just need to cover the cost of gas being 50% more expensive, food being 20% more expensive, coffee costing a dollar more, etc.
When I lived in an expensive part of California, it wasn't the up front costs that mattered, it was the daily nickel and dimes that added up to the feeling that you don't quite make enough to live here.
posted by madajb at 6:42 PM on March 13, 2015 [5 favorites]
So you've covered the cost of the mortgage.
Now you just need to cover the cost of gas being 50% more expensive, food being 20% more expensive, coffee costing a dollar more, etc.
When I lived in an expensive part of California, it wasn't the up front costs that mattered, it was the daily nickel and dimes that added up to the feeling that you don't quite make enough to live here.
posted by madajb at 6:42 PM on March 13, 2015 [5 favorites]
25 years ago, there was a 12 acre property going for $20k in my hometown. Checking Zillow, it's now about $2 million.
Yesterday, I watched literally the last house available get bought in the town I'm trying to move to. For $100k more than I can afford.
Twenty five years of frustration. Welcome to Colorado.
posted by underflow at 7:24 PM on March 13, 2015 [1 favorite]
Yesterday, I watched literally the last house available get bought in the town I'm trying to move to. For $100k more than I can afford.
Twenty five years of frustration. Welcome to Colorado.
posted by underflow at 7:24 PM on March 13, 2015 [1 favorite]
The basic point about Mountain View (and Sunnyvale and Cupertino and Menlo Park) is that they have a lot of residential tract housing dating back to the days of Xerox PARC and HP -- little homes, little gardens, little pools, the odd pomelo tree -- owned by people who have got very house-rich from Prop 13 and multiple tech booms, aren't going anywhere, and don't want any dense residential building. That won't last -- eventually, the inheritors of that property will cash out to developers block by block -- but for now, they're axolotl cities, preserved in a state of urban immaturity, and so you get commuting from the big city to the strip-mall suburbs with their 2x2 block "downtowns".
(There are, of course, thousands of salaried tech people living in the Peninsula. A lot of them are from south and east Asia, many have families, and they don't give a toss about what SF has to offer after hours.)
posted by holgate at 8:30 PM on March 13, 2015 [7 favorites]
(There are, of course, thousands of salaried tech people living in the Peninsula. A lot of them are from south and east Asia, many have families, and they don't give a toss about what SF has to offer after hours.)
posted by holgate at 8:30 PM on March 13, 2015 [7 favorites]
Yesterday, I watched literally the last house available get bought
What?
I came to the conclusion that I come out ahead by living in a more expensive place and taking the higher salary, and it wasn’t even close.
Well, yeah. I know Economics is a fun discipline to lampoon (especially my engineer and CS friends feel this way), but it really does have predictable claims to make about our world. One of them is that agglomeration creates value. This is why cities have always, you know, city'd.
posted by Reasonably Everything Happens at 8:38 PM on March 13, 2015 [1 favorite]
What?
I came to the conclusion that I come out ahead by living in a more expensive place and taking the higher salary, and it wasn’t even close.
Well, yeah. I know Economics is a fun discipline to lampoon (especially my engineer and CS friends feel this way), but it really does have predictable claims to make about our world. One of them is that agglomeration creates value. This is why cities have always, you know, city'd.
posted by Reasonably Everything Happens at 8:38 PM on March 13, 2015 [1 favorite]
Interesting reading... but most of those prices sure look attractive to someone living in London.
Average price for a 3-bed house in the outer suburbs where I live, about 12 miles from central London, is about $US750k, with one bedroom averaging around $US350k. Go for a more desirable suburb, say Battersea or Clapham, and you can easily be talking between 1 and 2 million for 3 beds.
There's no way I could afford to buy the place I've been living in for the past 20 years, and I have*no* idea at all how my children are going to be able to live anywhere in the South East UK...
posted by 43rdAnd9th at 9:23 PM on March 13, 2015
Average price for a 3-bed house in the outer suburbs where I live, about 12 miles from central London, is about $US750k, with one bedroom averaging around $US350k. Go for a more desirable suburb, say Battersea or Clapham, and you can easily be talking between 1 and 2 million for 3 beds.
There's no way I could afford to buy the place I've been living in for the past 20 years, and I have*no* idea at all how my children are going to be able to live anywhere in the South East UK...
posted by 43rdAnd9th at 9:23 PM on March 13, 2015
What?
Sorry, I'm being melodramatic. The place I'd like to live is a relatively small town in the mountains. It's about the only place in the mountains within commuting distance to my job. Last year, the inventory was pretty good, but I couldn't buy. This year, everything in my range is off the market.
It's frustrating, chasing a dream my entire adult life and having the goalpost keep moving. It's also a source of continuing tension among those who have been here a long time, but increasingly can't afford it, as others flood in with money from more inflated markets.
And the wife *still* won't let me live out of the back of the truck. Spoiled, she is.
posted by underflow at 9:31 PM on March 13, 2015
Sorry, I'm being melodramatic. The place I'd like to live is a relatively small town in the mountains. It's about the only place in the mountains within commuting distance to my job. Last year, the inventory was pretty good, but I couldn't buy. This year, everything in my range is off the market.
It's frustrating, chasing a dream my entire adult life and having the goalpost keep moving. It's also a source of continuing tension among those who have been here a long time, but increasingly can't afford it, as others flood in with money from more inflated markets.
And the wife *still* won't let me live out of the back of the truck. Spoiled, she is.
posted by underflow at 9:31 PM on March 13, 2015
Of course, when you've done your 30 year tour of duty in SF and paid off that mortgage, you have an asset you can sell and use the proceeds to buy like a city block in St Louis.
posted by pwnguin at 11:55 PM on March 13, 2015 [2 favorites]
posted by pwnguin at 11:55 PM on March 13, 2015 [2 favorites]
As I understand it, though, it isn't infinite, all other things being equal, because you can only live in one place at a time and after some point the costs of owning an nth vacation property exceed its marginal utility, even for the incredibly wealthy.
That is true for places you plan to vacation at. If the goal is wealth management or climate change protection, though, there is no diminishing return; it's just a service you need until your wealth is sufficiently buffered or whatever it is that this kind of investing does.
posted by Dip Flash at 12:32 AM on March 14, 2015 [1 favorite]
That is true for places you plan to vacation at. If the goal is wealth management or climate change protection, though, there is no diminishing return; it's just a service you need until your wealth is sufficiently buffered or whatever it is that this kind of investing does.
posted by Dip Flash at 12:32 AM on March 14, 2015 [1 favorite]
you have an asset you can sell and use the proceeds to buy like a city block in St Louis.
Or a small city in Nebraska. But you'd probably prefer to treat it like an annuity and rent it for $10,000/mo or whatever the going rate would be then.
posted by holgate at 8:15 AM on March 14, 2015 [1 favorite]
Or a small city in Nebraska. But you'd probably prefer to treat it like an annuity and rent it for $10,000/mo or whatever the going rate would be then.
posted by holgate at 8:15 AM on March 14, 2015 [1 favorite]
When I moved to Pittsburgh for grad school 10 years ago I assumed that I would immediately move back to DC as soon as I graduated. But then I realized that I could afford a house on a Research Assistant's tiny salary. So, I bought one as a 24th birthday gift to myself, one with three bedrooms, a porch, in a safe neighborhood with a good public school.
I married later (joking that my house was my dowry) and had a kid. I'm now raising my daughter in a place where one day she will be able to walk to the library, a movie theater, the Carnegie Art Museum, or the grocery store if she feels like it. I would have killed for that as a teenager trapped in a remote, unwalkable suburb.
While I work in the tech sector and could make a little more money elsewhere, the cost of living math for what I get here never even remotely works out.
I am not moving back to DC ever.
posted by Alison at 7:08 PM on March 14, 2015 [8 favorites]
I married later (joking that my house was my dowry) and had a kid. I'm now raising my daughter in a place where one day she will be able to walk to the library, a movie theater, the Carnegie Art Museum, or the grocery store if she feels like it. I would have killed for that as a teenager trapped in a remote, unwalkable suburb.
While I work in the tech sector and could make a little more money elsewhere, the cost of living math for what I get here never even remotely works out.
I am not moving back to DC ever.
posted by Alison at 7:08 PM on March 14, 2015 [8 favorites]
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