well as a 30 year old looking for my first home who grew up in the bay area... yeah that's exactly what I feel.
That's one of the reasons why there was a big migration to places like LA. Lots of jobs and cheap land to build on.
To me, SF is like NYC. Unless you got in early or are one of the 1%, it's not a great place to try and build a life in (if you're looking to own a home).
My entire extended family struggled a lot when growing up in the 50-70s.
It’s easy to look back at those that lucked out and bought a house in a prime location in CA (before it was prime) and say how easy they had it. You’re just ignoring all those people who did the same in Ohio and Michigan and lost their jobs and have houses worth about the same as when they bought it (adjusting for inflation).
You're right to point out that there isn't one narrative that defines the prior generation. Some people lucked out, others didn't, but the reality is that on average (both median and mean) home prices have drastically outpaced wage growth for the past few decades, which is obviously unsustainable.
The best the younger generations can hope for is to eventually have enough wage growth to afford a home that hopefully holds its value.
Even if someone is willing to move to a cheaper place, they find that relative to the employment available, it isn't much better.
In the end, they realize that no matter what they choose, they need to struggle incredibly hard just to get a similar quality of life to what a baby boomer was able to achieve with a high school diploma and a manual labor job.
However, 90 minutes away in the largest city in the state, you have people making $75k to reset passwords or change backup tapes.
You could take the arbitrage further by increasing upfront and post move earnings and decreasing future expenses: - Save up "no thanks" money at the high cost of living place. Not "f* y" money, but a significant sum. - Ideally, find a remote job at the hight cost of living place. - Relocate to a low cost of living place with decent socialised medicine. This can lower provisions for future expenses _a lot_.
At least in the EU, there are nice and safe places with very low real estate prices, quite decent socialised medicine, very low taxes and easy cheap transportation links around the continent.
Oh? Like where?
- The socialised medicine is not as bad as one would think. If that doesn't suffice, additional private medicine is affordable.
- The tax regime is simple. Rates are relatively low.
- Transport. Within the city, public transport is not too bad and taxis are very very affordable. In non-covid19 times, all of Europe is one cheap flight away.
Oh, the irony of writing this from overpriced Leuven, Belgium :-)
In western europe: Real estate is more expensive than the US, public health care is a bad joke at the expense of the taxpayers and whenever you need something more than "I have a stomach ache", you go private. The main difference with the US is that our government doesn't intervene in the health care market (too much) which means our private health care is quite affordable.
Taxes are generally on par with the USA in most countries. Fuel costs more but few over-expensive cities (eg London, Paris) have barely decent public transport (not that cheap though).
Some countries have it better than the US but the jobs pay significantly less. I would say the UK is a good compromise in terms of costs of living, low taxes, high salary and weather. Even though tax-wise things may change for the worse, given the cost of covid's lockdown.
Another approach would be to look into some poor islands or places with special tax regimen and being able to command a high salary remotely because of your experience. I'm not sure how much more this strategy is going to work in the future, though: if everyone is remote, wages should go down / be linked to where you live.
Overall, I'd say a few countries are better than the USA, but most of Europe has several disadvantages.
I have some friends who found happiness in South Asia, but that's a completely different mentality.
I mean, actual honest comparisons of health care systems, police, judicial system, politics, and so on.
For example, most Americans who don't have friends from other countries might not be aware how absolutely insane the prices for cars are in some countries.
Meanwhile, my landlord bragged about buying the house I live in with no money down and no income check during the subprime mortgage era, and has been renting it out since. Now he is selling it during a pandemic and I’m about to become a vagabond.
I do think the vacuuming up of affordable housing by real estate investors (perhaps many of whom accumulated wealth via the surging stock market) is at least part of the problem. Landowners have strong incentives to keep the housing stock low (and the rents high), or they get washed.
[0]: https://www.kiplinger.com/article/real-estate/t010-c000-s002...
[1]: https://en.wikipedia.org/wiki/List_of_metropolitan_statistic...
The cost of construction has risen such that I can't find a new construction house in my area for under $400,000 with the median on Zillow being $495,000. And this is for an area in the midwest that those reports you link report "median home price" of well under $200,000. If you can't build cheap houses, then soon there won't be cheap houses.
A lot of cities on that first list are reporting 10%+ YoY changes. That's significant. Those used to be numbers you'd see in Seattle Washington, not fucking Allentown Pennsylvania...
Chicago isn't nearly as great a deal as it's made out to be.
However, you can look at the tax rates within Cook County and even compare them to the suburban counties [1]. The composite property tax rate is as low as it gets around here. Most cities are double or triple the Chicago rate.
It isn't as good of a deal as when I moved here, but if you've got a tech or other white-collar salary, Chicago is still a really good deal. It's your responsibility to consider cost when choosing a location within the metro area. If you ignore it, you shouldn't be surprised that you pay more.
[1] https://www.cookcountyclerk.com/service/tax-extension-and-ra...
EDIT - Illinois and Texas heavily depend on property taxes for local funding. The actual rates you pay have an insanely high variance from city to city. Some taxing districts don't align with city boundaries either, so one neighborhood may pay more than another. You can use it as a proxy for how well-run a city is, but on the other hand Chicago isn't a particularly well-run city - it just has a huge amount of high-value commercial and industrial property (which is taxed at double the rate of residential property). If you're going to live in either state, you really need to look at the hyper-local tax rates and put that into your decision matrix. The data isn't even hard to find.
Can you recommend other neighborhoods besides Lakeview/Lincoln Park? Those are the only areas I’ve spent significant time in aside from downtown.
FYI, brick and timber loft condos are super cool, but they usually have strange layouts and the buildings tend to require a lot of maintenance. Don't let me scare you off, but you're going to want to rent one for a year before buying one, just to make sure.
If I worked in the city I would have at least an hour commute each day, though, but it only takes me 30 minutes to get to the city outside of normal commuting hours.
Property taxes are kind of high around here though. I think I'm paying about what you're saying, and some of the homes I looked at (but decided against) were over $6000 a year in property taxes. Those were in areas with really good schools though.
Also Illinois as a whole as a state has one of the highest overall tax burdens in the country, because the state is pretty much broke, so that might be enough to stay out of Illinois.
You could actually find a place just over the border in Indiana, though, and have the same commute to downtown Chicago as I would have (about an hour) but suddenly have a much lower tax burden. I've worked with several coworkers in the past that commuted to the suburbs of Chicago for work every day from Indiana, it's doable.
[0]: https://www.redfin.com/blog/data-center/
[1]: https://www.zillow.com/research/zillow-weekly-market-report-...
I haven’t looked at that, but I have wondered how universal satellite internet coverage and the more permanent (?) move towards remote work will affect rural areas. It is an interesting trend to keep an eye on.
Grand Rapids? Unaffordable? Are you looking at condos downtown? Here's[0] a 3bd/2br with 1800 sq ft that admittedly is outside of downtown a bit, but is under $1000 a month. This condo [1] is more expensive, but would be totally affordable if 2 people were able to pay $1250 in rent by themselves. Both of these were on the first page of Trulia results when I searched for Grand Rapids.
[0] https://www.trulia.com/p/mi/grand-rapids/1546-escott-ave-nw-...
[1] https://www.trulia.com/p/mi/grand-rapids/60-monroe-center-st...
Is $1250/mo a realistic amount to charge a roommate in GR?
For example: https://www.realtor.com/realestateandhomes-search/Rochester_...
Now I don't really know anything about Rochester. But you would be hard pressed to find anything in a city for ~50-60k in Australia. Not comparing Apples to Apples, but the 1 bedroom apartment I bought in Melbourne suburbs in 2016 was AU$265k
If I look at somewhere like Bendigo (about 2 hours from Melbourne). The cheapest houses are about 250k.
https://www.domain.com.au/sale/bendigo-vic-3550/?ptype=apart...
Does Australia have housing problems as well? Possibly.
It's hard to move somewhere for cheap housing where you literally wouldn't know a single person, though. Social life is important.
Also, there's the winter weather. I hope you like cold and snow.
And this is fine, but it seems very disingenuous to say that it's a crime that you can't afford to buy a home when you refuse to move out of arguably one of the most expensive cities in the country. It's equivalent to crying about not being in the 1% when you're in the top 1.5%, and you could move if you wanted to.
There's nothing wrong with wanting to live in San Francisco, but expecting to buy a home a few years after graduating from college is ridiculous in my opinion.
It's also very disingenuous to misrepresent other people's statements like this. Literally no one is saying it's a crime.
When I moved here, I was blown away that house prices where I live, about 30 minutes from downtown, are on average $150k, or less than 3x median yearly income here. This isn't actually drastically different from a semi-rural Missouri town I lived in for a bit.
My wife is from Prague. A gem of a city, but unaffordable. Too much speculative capital from Russia, China etc. Being a slave of a mortgage until 70 is a ghastly prospect.
I am from Ostrava, a post-industrial city where property prices are about a third of Prague level. Incomes are lower, but not that much lower. For an accountant (my wife is), the difference is about 10 per cent. Overall, much easier to sustain middle class life standard.
She does not like the idea of leaving her native city, but if we manage to have a child (still a very open question), we will have to, at least for a few years.
It might be a good bet, especially if speculation in housing is slowing down compared to the last 20-30 years.
If capital dominates, you're going to run into scenarios where it's fundamentally impossible to ever afford scarce goods that generate returns, because someone who started with more capital will now have an even larger delta with you, and is therefore able to outbid you.
How much of salary - CoL can an average person dedicate to building capital?
I'm not saying it's hopeless, only that there are systemic factors fighting against home ownership in extremely supply-limited cities.
It's rare for folks to immediately dump their investment properties because the housing market has cooled off.
I don't ascribe to everything, but it's a thought provoking perspective.
If that cost becomes too high relative to the income increase gained by living in, say, SF, people will certainly move elsewhere. But they'll still largely move to cities, and the cycle will just repeat there.
The demand driven forcing is miniscule compared to artificial scarcity due to zoning permits or bad infrastructure. (Typically slow transportation.)
In Seattle, basically every building built is built to the maximum zoning allows. And it’s all arbitrary - purely about the whims of the local homeowners.
It may not be perfect, but it's seriously beautiful and developed nicely in the last 20 years.
I've lived in Toronto for a long time, and after pockets of th city got rezoned and high-rise construction was allowed, it created a situation where it was not possible to get onto public transit during peak hours, and people resorted to walking to work for 45 min instead of their planned 15 min commute when they brought their condos pre-construction. Similarly the growth of immediate Toronto suburbs has been so immense, that it is not possible to get a seat on the subway if you don't board at the terminus station (as suburbanites fill them). The city is addressing these problems through transit expansion, but it is taking decades for each project to complete (example https://en.m.wikipedia.org/wiki/Line_5_Eglinton).
The main point is, zoning in a vacuum is not evil, or if more palatable, a necessary evil.
I mean, even if you got in early, you're still locking up lots of wealth in housing, an opportunity cost that could be differently spent.
For example, suppose you bought a place in NY in the 80s for 200k that's now $3m. Sure, you got in early and your mortgage has been paid off and you live without any housing expenses (outside of taxes, hoa etc, let's for the sake of argument ignore those). Let's assume we consider this to be living in 'free housing'.
But the S&P500 does 10% a year on long-term averages. It is still fully up to you to say, I like living in NY so much, that I want to forgo selling my home for $3m, putting it in the stock-market, and earning a passive average $300k a year (which compounds if left (partially) unspent, for example it'd turn into $770k a year after 10 years if not spent).
That $3m property, then, is at times a greater portion of someone's income than their own salary. I know some old people (50-60) who have nice careers, make $150-200k, yet live in a property in which $200-300k of annual investment income is locked-up. In a way, these people are 'spending' $200-300k a year on housing, while an alternative housing choice (e.g. renting a place for $3k somewhere else and selling their home and investing it long-term) would cost maybe $30-40k.
You can argue the details like whether the $3m or 10% stock return is accurate, they're just examples. But the point still stands, even those who got in early and continue choosing to live there, are continuously forgoing a lot of money (which can translate into a very high quality of life elsewhere).
I live in the capital of a EU country and own a home outright. In terms of monthly cashflow, housing is not a big deal as I just pay some taxes. Yet it's starting to weigh more heavily on me whether to stay here, or whether to sell my home, take all that money and enjoy a much higher income/consumption level elsewhere.
I used to really enjoy the city and all that it had to offer, but sometimes I now find myself just working all the time, with barely any energy, time or motivation to make use of it to its fullest.
I don't think enough people consider that you can be so called 'house poor', while owning an expensive home without a mortgage.