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Comment by photon12 | Hacker News Reader

> Meanwhile, renters are desperate. They’re begging for housing prices not just to slow, but to fall.

I have a friend who is a head chef at a decently popular bar and restaurant on Broadway in Capitol Hill, Seattle (very trendy part of town if you aren't familiar, steep commercial rent). He lives in a 400 sq ft studio and is barely, barely making it from one paycheck to the next. I am sitting on a 2.6% interest rate mortgage and my prices are set for the next 30 years. I probably work half as hard as he does, if not even less than half. I have a lot of cognitive dissonance associated with that.

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I'm a new immigrant to the US, and housing is my single biggest worry together with my work visa.

Our household income is north of 300k, but housing still seems unaffordable. It might sound like whining, but we only achieve this level of income recently, so our lifelong savings are in the low 6 figures. We got no assets or property abroad, and no family that can help us to get in the property ladder.

Even old, basic houses in our suburbs outside town go for ~$1M. I spend an inordinate amount of mental energy calculating how we can jump into the property ladder as quickly and safely as possible. My current plan involves saving for a few years and dump a good chunk of cash into a down payment; it doesn't seem we could ever afford a property otherwise.

I wonder how property prices affect "the american dream". It's baffling to me that I'm so worried about housing while making a top ~5% income.

I don't mean to be blunt, but if modest homes in your area are $1m, then you are in a VERY high-cost-of-living area and what you see here is not at all typical of the rest of the country. Where I live, a charming 1200sqft starter home in a blue collar neighborhood goes for $150-$200k.

A lot of jobs are in high cost of living areas. The reason they're high cost of living is because there are jobs there, the demand to live there is high, and they haven't built nearly enough housing. Some bay area municipalities have essentially not added any housing in the last 50 years. They made it illegal, because incumbent property owners don't want more people to be allowed to live there.

And it's not just the bay area. The populations of Cambridge and Boston have gone down since 1950, because a series of laws were passed that put tight restrictions on residential construction that reduced the allowed density and effectively made almost all of the existing housing stock illegal (but it was grandfathered in) and anything more dense than that, like even building a 5 story residential building in a lot zoned for 4 stories, when that lot is surrounded by 4 and 5 story buildings, is an expensive, long process of arguing with the zoning board and going through arbitrarily subjective design review processes.

I would rather Google and Facebook and the other mega-hire companies would build up outside the bay area, rather than continuing to pack more people in.

Great, if only there were adequate jobs in those places, so we could all own homes without needing $300K annual family income.

The dissonance comes from the fact that a lot of hackernews readers make apparently high incomes, but the cost of living in their areas keeps them squarely working class.

The best example I can give is in the Bay Area. I lucked out with $2850/month to rent a 1400 square foot house in San Leandro. Except that I worked in South San Francisco, and my commute was 45 minutes to 90 minutes each way, every day. I looked into it, even did the math with average commute times and Health and Human Services housing cost data, and found that if I wanted to cut 15 minutes off of that commute would cost me an extra $1000 a month, or I'd lose the yard and the other bedroom. With a kid, a stay-at-home spouse (a lot cheaper than child care given wages for my wife's field in the bay area) and a dog, that was just a non-starter. I knew people who drove in from Vacaville or Tracey, every day, just to keep the housing prices within their means.

Prior to that experience, I honestly thought $140K a year was the best I could ever hope for. I was top 15% of individual wage earners in the country but I was considerably more stressed out than when I was making minimum wage at an office supply store in suburban Oregon.

In effect, your example demonstrates that a key effect of USA tech industry is taking vast amounts of customers' and tech investors' money and handing it over to California landlords / real estate investors.

Ever thought about maybe not living in California?

You don't need to be on the West Coast to have a tech job.

If any industry is poised well to make relatively high pay anywhere, it’s tech. It’s speculation on my part, but I assume tech has one of the highest remote work percentages.

This is a phenomenon that is prevalent in other industries, without that remote work luxury. Oil and gas workers get paid handsomely but often have to live near the worksite. Even then, rent is astronomical without all the luxuries that SV offers.

Don’t you think the amount of remote work has changed that?

I think part of the problem is the presumed loss aversion of moving from a $300k salary to, say, a $175k one that is remote but allows for a better standard of living (particularly for families).

Well, the jobs that pay the high incomes are in the very high-cost-of-living areas.

This is a huge problem for economic growth. If housing costs in the Bay Area were at US average, easily 10M more people could live here and get high paying jobs. But that path to a better life is very constrained.

Back in the day, many of my friends and I lived a cool city life before we had kids. After kids we couldn't afford the city any more, and moved out to the boondocks with daily 3-4 hour round trip commutes that included cars, trains and subways. I know the problem is worse now, but city life being more expensive has always been a thing.

Alternatively, those jobs are only high paying because the red are very people who can fill them solely because of housing and far less so about skill. If 10M people could move to the Bay Area tomorrow, those jobs would pay a lot less.

Also why people insisting on teleworking as a permanent option haven't really thought it through.

Indeed. If your complaint is that you need to be a millionaire to get basic housing, it's because you live with other rich people. Since the overwhelming majority of humanity lives in houses with value far below 1M$, we can conclude that no-one really has to live in a place with only 1M$ houses, but you, for some reason, want to do so.

Living in a posh neighbourhood is a luxury, like Ferrari (which, by the way, costs much less) or a golden watch. If you want rich people lifestyle, then you should be prepared to pay rich people money for it.

Dude, this guy isn't talking about some posh high end part of Seattle. I just sold my "quaint 1200sqft starter house" in a remote South Seattle neighborhood for $675,000. It's 45+ minutes by transit to downtown. You know what I paid for that just 5 years earlier? $350,000.

This is the part of town where the grocery store has security guards all over the place, and the bank has thick bulletproof glass between you and the teller, and the transit options such big time. If you want to live anywhere remotely near where the jobs are, every house is near $1m+ now.

Conclude what you want, you're completely wrong and out of touch with current housing prices in a lot cities.

I don't think you are in touch with the reality of the housing market right now. That "posh" neighbourhood that you're referring to is most likely where people were born and raised and the first place you want to buy a home. I live in Etobicoke, Canada. My neighbour across the street growing up recalled a time they built the houses in the neighbourhood and it was previously farm fields. My parents bought their house, a cottage, and paid both off quickly. Property is now selling for almost $2 million. In 2 generations it went from field to affordable to completely unaffordable, and Etobicoke is far from any kind of "rich people lifestyle".

Here's a fun game you can play: https://www.crackshackormansion.com/part2.html

> If your complaint is that you need to be a millionaire to get basic housing, it's because you live with other rich people.

Hawaii would like to have a word with you, unless you suggest every single non-rich local would just have to move to the mainland. I believe the cheapest home I've seen available, where the neighbors aren't cooking meth, is probably in the $500-600k range and going up.

The sad reality of it is such expensive neighborhoods as we see on east and west coasts, don't actually _feel_ luxurious - there's barely enough infrastructure and convenience associated with them, compared to living far away. The standard of living just isn't as high as the price.

Yes, but unless you have a job that's open to fully remote work, you probably aren't going make 95-percentile household income in that city.

> My current plan involves saving for a few years and dump a good chunk of cash into a down payment

That's exactly the on-paper ideal for how one comes to buy a home here. With rents soaking available income, and a high average debt load because of education costs, most young American's now struggle to see any non-negligible growth in their savings until later in life (if then). If you have substantial savings and anticipate growing it further in the near future, you're already winning the game. You're fine.

What exactly seems to be the problem or concern?

With 300k income you should be able to save a 200k/20% down payment in a year, especially if you have 6 figures already. With todays rates you looking at 70k/year mortgage and <25% of your income.

What…?

300K post taxes is basically 150K, the are probably paying 60K+ in rent and another 30+ in other basic cost of living expenses.

If you take your numbers at face value and don't try to cut costs, that is still 60k savings per year and would take 2 years instead of 1 to hit a down payment.

If you take the mortgage interest tax deduction, you will be spending about 35k/yr less on taxes and have more disposable income relative than renting at 60k/yr rent VS (70k mortgage - 35k less taxes).

If two years is too long for the road map, you can rent a room in Palo Alto for 15k/yr or a 1Br apartment for 30k/yr.

If you are paying a 50% tax rate, I would also look at tax avoidance strategies. Maxing out the 401k and HSAs to get that down. Each person can always borrow 50k back from the 401 account to put toward the down payment.

People with a $300k/year income don't face a 50% tax rate all in.

No, it is basically 215K post taxes. Taxes are marginal. 300K couple faces ~28% _effective_ tax rate in California. Even marginal tax rate is far from the 50% you claim - it is ~36%. They will have to be making 2M or higher in order to be paying 50% effective rate.

300k isn't 300k, as we all know. Probably want to drop 40k in 401k, maybe some in an HSA, probably paying for health insurance. Then the Fed and potentially state/city want their share, which is about a third if you're lucky, closer to half if you're not. Then you're paying outrageous rents, transportation/parking costs, etc.

It's easy for me to believe that a family making 300k in Seattle could be living paycheck to paycheck without being extravagant. Definitely not frugal, though, either.

>It's easy for me to believe that a family making 300k in Seattle could be living paycheck to paycheck without being extravagant

This is incredibly out of touch with what it means to actually live paycheck to paycheck. 300k is at a minimum 160k post tax which is a little over 13k a month

I believe that anyone at any income can be living paycheck to paycheck or even growing their debt.

However, having lived through it, I think more of the challenge is prioritization and sticker shock for high earners, opposed to financial impossibility. For example, you are allowed to take a year off contributing to your 401k to buy a house if it is a higher priority to you, or simply borrow the down payment from the 401k. Smart people often get bogged down in opportunity costs and wanting it all.

> With 300k income you should be able to save a 200k/20% down payment in a year

A 300K income is well below 200K net, so even if they could live with zero expenses, they can't save 200k in a year. But of course they do have expenses, so it'd be a lot less than that.

So don't buy. $300K is enough to easily afford rent. And if you compare what you pay to rent vs cost to own equivalent in the Bay Area, in most places renting is actually cheaper.

https://www.nytimes.com/2022/06/23/realestate/owning-renting...

$300k is a very very good family income and is in the top 90% if not more. Even if you just got the job you should be able to afford a house. $1m for an old suburban house is very high for most places in the US.

Are you in the Bay Area? If so I saw an ad in SF for condos/1 bed flats starting at high $300k on the weekend. With recent zoning changes it might get easier for you soon.

Those condos are likely to be reserved as Below Market Rate housing stock for households making somewhere around the area median income (who, honestly, still can't afford them). You get the same incentive structure that the medicaid gap created.

It's very frustrating to be /in/ the gap. Bay Area homeowners act like the apocalypse is coming if increased supply means poors who /only/ make 100k are allowed to buy next to them. The horror. The humanity.

Nope, Greater Seattle Area.

Still, we are a couple nearing our 40s, it seems insane to me that we need to "settle down" for a 1 bedroom flat while making ~3x the median local income.

There are a few areas where housing values are massively higher than the rest of the country. You are in one of them.

Have you looked at how many people need to commute there to work because they can’t afford to live there

Oh I agree! But better to avoid renting in general imo, if it’s a possibility.

It might be good investment when you sell it in a few years. But lets leave the specifics...

To live (with long term attachment and commitment) at a place, people want something that is decent and new-ish and much bigger than a 1B condo. Especially given how laborious and costly the buying and selling process.

Most working class people die with savings below five figures. You should re-evaluate how good you're doing.

Of course, if you live in California or New York, you're basically broke, since the cost of living in those states is designed to keep people poor. But that's why people left those two states in droves over the last few years.

I don't think the parent post was punching down on working class people, but rather making the point that if housing is unaffordable for even someone with a 300k household income, it is truly catastrophic for people on the average wage.

Thank you for this comment, in case someone misunderstood my original post.

I'm from a working class family myself. My parents were factory workers, and they managed to buy a new 4 bed apartment in a new part of town and raise 3 children.

And yet I don't feel I'm doing materially better than my parents at my age. I definitely don't feel upper middle class even if my income suggest so. As you point out I can't imagine how people with more average incomes get by.

New York City. New York State, once you get outside the city, is a fairly average state with a lot of rural area that has moderate-to-low cost of living.

I would venture to say that more land area of California is in the "unaffordable to average people" range than that in New York, either as an absolute or as a percentage of the state.

>I'm a new immigrant to the US

In your position, I would recommend renting as long as possible until house price correct in maybe 2-5 years.

There is no reason to feed the bubble on already massively inflated properties with your hard earned money.

Agree, but with the caveat that the prices might not come down at all. But still I think that's ok. What will come down are the interest rates, and right now you can make 5+% risk-free on savings, so it makes sense to keep renting and saving.

The worry is understandable. As someone who's been in a similar situation before, the worry with a work visa and housing tends to go away one way or another. Either you get out of a work visa at some point, or you accept that you will never receive a green card in your productive years and you jump into the property market with that risk anyway.

> I spend an inordinate amount of mental energy calculating how we can jump into the property ladder as quickly and safely as possible

You buy a cheap house far away from where you work, and rent it to someone. Let them pay your mortgage and before you know it, you've got enough equity to put towards another house. Rinse and repeat.

This sounds like the kind of high risk gamble that relies on prices continuously going up to work out. It might work out for some and hit it big, or the market can go belly up and leave you in ruin.

I'm also a bit weary of having to manage properties in far flung locations. I rather use a property manager, who would eat into the profits.

> It might work out for some and hit it big, or the market can go belly up and leave you in ruin

No different from living in a house you buy. Except what I recommended is a little safer. If you lose your local job because the local economy collapses, you're now stuck with a house you cannot sell, cannot rent, and that ties you to the area. Ouch!

With a rental far away, if that economy collapses it's already a small mortgage so no big deal. If your local economy collapses, you can move out of your local expensive rental and look for work elsewhere. Or even move into the cheap rental investment you just bought if that economy is doing well. Buying far away spreads your risk and is safer than buying to live in near your work.

It's not high risk. It does not depend on prices going up. It depends on renters paying most or all of your mortgage.

It just runs itself if you get good renters. That's where you put all the time and effort upfront.

Yes it has some risk. All investments do. I answered the question about how you get on the property ladder if you can't afford local prices. There might be other ways too.

Is this path still actually viable for HCOL areas?

I remember having a conversation with a real estate developer in SF in 2021. They said that this used to be the path to owning in places like SF, but that it’s no longer a viable option.

I'd say not right this instant, given interest rates. But if you really want to, look for condos out by, like, American Canyon or Vallejo or similarly far out locations. 20% down for a $300k place is $60k. Which, while being a good chunk of change, isn't as far out of reach as the $200k down payment for a million dollar condo in SF.

Before you do the investment property thing though, make sure being a property manager is truely how you want to spend your life. Investing money into financial instruments is a lot less work these days, what with robo advisors platforms (eg wealthfront, betterment) providing easy places to invest from.

I doubt it. I said "far away" meaning buy in a low cost of living area. Especially one that is popular and growing. Although it's convenient to live in your first property investment, it's not a requirement. Rent near work as cheaply as possible but very likely in a neighborhood where you can't afford to buy. And buy somewhere else.

If you're renting out the house, does it need to be in a HCOL area and does it need to be just one house? It goes against the idea of 'housing as investment being a negative thing' though.

You can get cheaper housing further east from Seattle, past Issaquah (Preston, Snoqualmie, North Bend, Fall City, Carnation etc) if 40-50 minute commute is acceptable. Snoqualmie in particular is seeing a lot of new development in the past few years because of this.

I'm not sure if I believe this. The places you "want" to live may cost 1M+, but I refuse to believe that if you just go another 15 minutes out (or add 15 mins to your commute), you can't get something for 2/3 of the price.

In the greater Seattle area you need to travel quite far out to cut the price by any significant amount. There are some very basic suburban houses in Bellevue, Kirkland and Issaquah selling for upwards of $2 million, and those are a good 15-20 miles away from the city itself.

If you don’t believe it, pull up Zillow or Redfin and set a price threshold under $1M and see how many listings instantly disappear. If you want a good laugh, take a look at what’s left.

The irony is that the influx of millions of foreigners to urban areas increases the demand for existing housing stock whilst the same people who are for millions of immigrants are against new housing built. The price pressure will only be upwards and benefits the existing landlords (and the big funds who own property like Carlyle and BlackRock and are big political donors).

I think the positive net affect of immigration on the economy far outweighs any negatives associated with it.

The response was specifically about housing costs. Nothing at all to do with other negative or positive externalities.

Dude, italian SWE, you are already much richer than I will ever hope to bw.

Sorry but you are whining.

What sucks is a lot of young renters with steady jobs can afford to pay off a mortgage month to month, but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance)! I was in that position for a while. Every time it seemed like I could afford to put that money down, the housing prices went up! It took a handful of years of renting cheap places (with roommates), living with my parents when I could and getting a few raises at work that I could finally save up enough for a down payment.

And here at the bottom of the see, there is no down payment (financing up to 100%), but young renters still can't get the a mortage of the same monthly amount as they pay rent, because of regulatory reasons -- mortage ceiling is defined as something like 5x gross yearly salary.

Somehow it's fine to pay half the salary in rent, but not fine if it's financing the mortage.

That sort of makes sense. When you own a property, you have to maintain it and pay property taxes. When you add all that up, you either need a lot more than rent, or you need the mortgage to be lower than rent so you can afford those other expenses.

> Somehow it's fine to pay half the salary in rent, but not fine if it's financing the mortage.

50% of income as mortgage payments are extremely risky mortgages. We've just had the entire financial system collapse not so long ago because of such shenanigans.

Don't people remember the 2008 mortgage crisis?

If you can't pay the rent, you rent something cheaper. It is not nearly that easy when you have a mortgage.

>Somehow it's fine to pay half the salary in rent, but not fine if it's financing the mortage.

Where is it fine to rent for half of the salary? Last time I rented a couple years ago, the corporate landlord wanted to see either a paystub exceeding 4x rent for the same period or a bank statement for the funds exceeding 3x total rent. This varies, of course, but the standard used to be the 40x rule (rent not exceeding 30% of income before tax).

> Somehow it's fine to pay half the salary in rent, but not fine if it's financing the mortage.

Because eviction is easier than foreclosure (and, actually, a lot of big property management companies look at similar affordability criteria as lending banks, but you can find mom & pop landlords; mom & pop mortgage lenders, unless they are literally rich family members making an informal loan, probably not.)

> mortage ceiling is defined as something like 5x gross yearly salary.

No -- mortgages are limited to 50% debt-to-income. The exact principal that relates to income depends on prevailing interest rates.

You can see this fairly easily by using any mortgage calculator, e.g., Google's (in the "Purchase budget" tab).

Keeping fixed: $100k household income, 0% down, California, Google's tax and fees estimates, 800+ credit score (just to eliminate that as a factor).

At 2% interest, Google thinks you can get a $512k (~5.1x income) mortgage (at 50% DTI).

At 6% interest, that falls to $368k (~3.7x income).

At 10%, $274k. You get the idea.

(For all of these loans, your annual payments would be about $50k/year.)

> especially the 20% needed so as to not need to get mortgage insurance

The mortgage insurance isn't nothing, but it's not a big enough cost to warrant waiting until you have 20% down if that's still a long way off. You can also very easily remove the mortgage insurance once you get to 20% equity, so it's not like it sticks around throughout the entire mortgage if you can't scrape enough together at the beginning.

This! I strongly advise anyone stuck thinking they can't do a thing till they hit 20% to talk to a professional, there are options, especially if you have a reasonable tech income and good credit scores.

Granted, this advice was a lot easier to consume when interest rates were at record lows...

If all you care about is the monthly payment then sure but got damn it adds up now that money isn't free anymore. Even with the the projected rent increases it's significantly cheaper over my lifetime to just rent until I can basically buy a house in cash.

In NYC, a lot of the affordable housing stock are part of co-ops, where the board has to approve your finances before you can move forward with a purchase. If your monthly income is less than a certain multiple (you would think 3x, but it's usually 5x - 10x depending on the co-op) of your monthly payments ie maintenance + mortgage + insurance, they can reject your application.

And even if you found a condo (usually 2x as expensive as a co-op for same QoL) without a board to reject you or just lived in a city without co-ops holding a lot of housing stock, banks have similar requirements in co-op applications as well. So you really need to have a massive income to go in without a >20% down.

Among the young people who may like to buy a house, this probably applies to a few rare folks working for a bay area tech company salary but are allowed to live in any other city where the home prices are more affordable.

"A lot"? I've been researching this earlier in another place and didn't come up with much, do you have a link on how to list them?

The problem appears when you try to buy a home from a seller entertaining 10 other offers, most of which are cash offers for 10-20% over listing price with escalation clauses. It can be really hard to buy a home, especially in markets like Seattle, because the seller chooses which offer to accept and, all else being equal, will accept the offer with the fewest conditions (no financing required, inspection waived, etc).

Yes, this can be a real problem.

The mortgage company that we chose had a program where they did all of the underwriting before we even started making offers, and part of our offer was a certificate entitling the seller to $5000 at the mortgage company's expense if we couldn't get financing. Kind of like extra earnest money from the mortgage company offered as a guarantee that there wouldn't be any problems in closing.

We ended up getting the first house we made an offer on in spite of an insane market, so I guess it worked!

Yep. This. I'm living in a much lower COL area, but it's still crazy. I've been hunting for a house for the past ~6 months. And have been outbid in every offer by someone else waiving inspection, waiving appraisal, and/or paying all-cash. It's wild how many people are apparently able to / willing to behave that way.

That was 6 months ago offer asking now and you will get it

I scraped together 10% and various fees brought it down to 8%. Still closed on a house(2019) and now dog-friendly rentals in my area have passed my monthly mortgage. Math changes away from my favor if I didn't choose to have dogs.

For me it was like $80 a month for a couple years until I refi-ed and it saved me a couple hundred thousand. I wouldn’t do it now, though.

With the exception of FHA (life for < 10% down, otherwise 11 years prior to ability to request MIP removal).

That only applies within the original loan.

You can just refinance out of it (when the numbers are right), and it’s often easy since you now have equity, a proven payment history, and are presumably looking at even lower payments on the new loan.

Wasn't that a part of the problem with the real estate meltdown back in 2008? We had people getting into loans with either zero down or far less than 20% paying only the interest and not the principal for the first 5 years. They were told that real estate value only ever increases and they'll be able to refinance the loan and put the new equity into a standard loan. That worked fine until it didn't and the whole thing came crashing down. I thought I saw that 10% down mortgages are more common now, except you will have to pay for PMI until you have enough equity to cover a certain amount of the loan.

You're missing a major factor.

Those loans had variable interest rates and balloon payments.

They were told they could refinance before the balloon payments came due into conventional loans but when housing prices drop, you can't refinance because you owe more than it's worth. Combined with "no document" loans (aka, people lying about their income), people were buying houses that they very literally couldn't afford, not just in the "that's too much of your income" way, actually in the, "that's more than your income" way. Those were the subprime loans you hear about.

2008 would have been very different if everyone was on a conventional 30yr fixed loan.

It was even worse than that at the bottom of the market. There were people getting 'nodoc' loans where they did not prove their income. People were inclined to mark their income down as the presumed appreciation of the home value, like some sort of financial Ouroboros.

Maybe wallstreet is trying their luck again

Buy a "starter house" and begin to build equity. It's how people have always done it. You buy a really small house that isn't in the most desirable location and start making payments into it. Down the road you have built equity and you can sell your starter home and buy a nicer, larger house. You maybe have some family to support then and need more room.

But you see young people renting for 15 years in expensive places of cities because they want to be close to nightlife/etc. and then trying to figure out how to come up with a 15%-20% down payment on a dream house when they're nearing 40 and wondering how anyone does it and complain the system is broken.

They do it by buying a small house in an expensive location and building equity and then upgrading.

This is also, IMO, part of the problem. As you “move up” more and more undiversified wealth is tied up in your illiquid “investment” leading to overly protectionist policies.

Imagine if 70% of Americans invested their wealth in, I dunno, IBM. Don’t you think that’s going to incentivize some crony policies?

A house/property isn't as illiquid as you think. You can take out loans against it and invest those, often at below or near inflation rates and very often below average market returns. The equity in a home is collateral for more property, investments, etc. I can't sell it on the stock market in an instant, but I can use the equity in my properties for a ton of things.

This is completely ignoring the increase in house prices, unless by "not the most desirable location" you mean "move to the middle of Kansas."

The fact is, in many areas, buying any house at all is not feasible for the vast majority of young adults.

> This is completely ignoring the increase in house prices

Guess what, the small and lower cost place you bought 10 years ago went up in price too. So you have equity and you've been in the rising market.

> The fact is, in many areas, buying any house at all is not feasible for the vast majority of young adults.

100% untrue. Buying a house in the place they feel they deserve to live is. You can buy a home that is a 30m commute by train or bus to NYC for <= $400k.

Have you tried buying a "starter house" around Western MA recently? Builder specials start around 200 kUSD, something that is actually move-in ready is at least 50 kUSD more. (Yes, you can try gentrifying McKnight or Upper Hill in Springfield, MA if you want to pay less, lovely Victorians, free bullet holes from the regular shootings included. You go first!)

The advice is completely out of touch because there is a generic undersupply of housing in the US, especially of entry-level housing in areas where the jobs are. What starter houses exist have reached the end of their serviceable lifespan. My starter house in the Midwest (affordable because construction is happening around town, would have preferred staying in MA) has a roof issue and in the medium term 80 feet of sewage pipe will have to be replaced. I was discussing these issues with a builder, and at some point it stops being economical. But meanwhile you need a roof over the head, especially when you own a large dog.

I'm actually angry at the unserviceable advice from people. Please field-test first before opening mouth.

I did what you're saying can't be done.

It's fucking great. The occasional late night poppity pop, the nip bottles in the street, the un-mowed lawns gaurded by un-trained dogs, they all serve as amazingly effective repellent for the types of people who think they know how I or anybody else ought to live.

A lot of this work you can diy it just seems intimidating. You can absolutely rent a digger and do your own pipe. You can also to your own roof. It’s not really worth it if you make 200k a year but if you make 50 it is.

In a reasonable market where house values just track inflation, you don’t build much equity though.

e.g. If you buy a $200k house with 20% down at 2% on a 25-year amort, over five years you accumulate about $26k in equity not counting your down-payment. In my jurisdiction, standard realtor fees on that would be about $10k, going with the 1% rule of thumb for maintenance would run you another $10k, and property taxes would be another $6k. You’re already at zero net profit before you even have to pay insurance or utilities. (All that isn’t to say that you wouldn’t have lost more money renting.)

I don't know why you are being downvoted. Buying small, building equity, and trading up has always been a thing in home ownership.

"Buying small" is often no longer possible due to the insane increase in housing cost relative to wages, making that advice out of touch. Going on to blame this on the youth and their nightlives doesn't exactly reverse this impression.

Because this assumes that the value of the property increases more than inflation. And this assumption means that you see and treat the place where you live as an investment.

It's the same people who voluntarily choose to pay top dollar to go to an out of state university when their local university is just as good and then find themselves 100k in debt and with an unemployable degree and complain the system is broken.

The new play may be buying big and buying the building not the land. Inflation on goods and services is having trouble keeping up with rates

This implies that you can buy a starter house. The problem is that they stopped building them, so it’s a decreasing proportion of the houses built. And that’s largely because of increased regulation making it unprofitable to build small instead of large.

> It took a handful of years of renting cheap places (with roommates)

Is this now considered unusual? I didn't purchase my own home for almost 12 years after graduation from college. I lived at home, then with roommates, which was a completely normal thing to do at the time (1987 college graduation).

It's more usual than ever, but living at home or with roommates still makes it very difficult to ever afford a home. Let's take a look:

1999 median home cost: $165,000; 1999 median household annual income: $42,000; 1999 home cost / annual income: 3.9

2022 median home cost: $468,000; 2022 median household annual income: $71,000; 2022 home cost / annual income: 6.6

You can't mention home prices without the interest rate as well.

1999 interest rate: 4.74% 2022 interest rate: 0.08%

Source: https://www.statista.com/statistics/187616/effective-rate-of...

I wonder what the square footage of those median homes were in 1999 vs 2022.

> especially the 20% needed so as to not need to get mortgage insurance

PMI affects the affordability but not by much - maybe $300-400/mo or so, and if you can get a conventional loan with a 3-4% down payment (which do exist) then it'll drop off once you've paid off 20% of the principal.

For conventional mortgages, the max DTI most lenders will be fine with is 45%, but let's be safe and go 40%. Let's take a household income of 150k, that's $12,500 a month, so you can have up to $5000 in monthly debts (DTI is based on GROSS income). If you have, say $1000 in monthly debts (eg. minimum student loan payments, minimum CC payments, and cars), you'd likely be approved for up to $4000 in housing expenses, which with 3.5% down and a worst case scenario interest rate of 7.3%, means a maximum home price of about $500,000. But when you factor in PMI, you'd only qualify for $450,000 since PMI is about $358 a month.

That's not all that much of an affordability drop - the difference is that you're basically forced to fall in line with urban sprawl by buying a smaller house further out, maybe even to the point where you're driving 40+ miles to work.

> maybe $300-400

If you're paying this in PMI; while your monthly principle payment is also less than $300-$400; you're renting from the bank -- ignoring outlier home price increases.

And you are so over levered the only way you can get out of pmi is if the house market goes up 25-30% (re appraisal Usally comes in low)

I did an FHA loan on my first house 15 years ago, and the down payment was peanuts. Unless you have a poor FICO or your debt ratio is high, you probably qualify. https://www.fha.com/fha_loan_requirements

How much was your total mortgage? Because housing prices have gone up dramatically in the last 15 years, and the math that worked back then (in terms of total mortgage amount, monthly payments, etc) doesn't work anymore today for a lot of people.

You may still need 3.5% down, and there are income limits on the FHA program. It doesn't fix the problems with high housing prices, either.

I don't think you got the point of this article. Maybe read it again?

Dirty secret: many people get help from their parents to get over the hump of the initial down payment.

IMO, that is the best use of an inheritance: helping kids secure assets earlier rather than later, which sets up the rest of their life.

When my wife and I bought our first house we made significantly less money but were in this situation. We worked with a local bank that would do downpayment assistance where you'd have 2 mortgages, but your primary mortgage would get a 20% downpayment that would prevent having to carry mortgage insurance for the life of the loan. It worked our pretty well for us. I dunno how common this is or available it is to people.

Even if they can FHA with much less down, they're stuck with PMI which is the biggest bank grift in the history of America. I'm extremely fortunate to have a VA loan. We need more loan programs that are like the VA but don't require people to give up 5 years of their life or being forced to fight in wars.

The bottomline is being less fortunate shouldn't cost you more.

I don't think that necessarily is a a bad thing. Just because someone can theoretically afford a mortgage payment now its pretty difficult to predict say 5+ years out whether or not that steady job will hold, especially if they're young and have a short credit history. The down payment adds a cushion for that risk. There's less inherent risk to renting, you're looking at a commitment of 6 months to a max of maybe 2 years for most least terms.

Being too risky with handing out mortgages is partly what lead to the housing bubble in 2008 afterall.

If they're really certain their job will be stable long term PMIs shouldn't really be a deterrent, most PMI can be terminated after meeting 20% in equity.

> Being too risky with handing out mortgages is partly what lead to the housing bubble in 2008 afterall.

Being aggressively risky with little downside was a bigger root.

I worked in a mortgage comp for a bit before the big crash. "You want a 150% loan-to-value loan, no money down, no intention of proving income or ability to repay... sure, that'll be 7% instead of 5%. Sign on the dotted line..."

I was blown away when I learned about 'no down, no doc' loans, which... yes, it's another variation, but... the interest rate was all of ~2% higher, which seemed in no way to cover the risk. But no one cared, because everything was just sold to someone else, and packaged up in to CDOs, and resold again.

Someone who has 'only' 18% of a purchase price down, good credit, and steady income... to be charged extra PMI - possibly for years, because "we need to re-valuate the property 3 more times".... seems to be just more price gouging, not actually addressing real risk.

My rent for a 1 bed, 1 bath apartment is higher than the mortgage on a family member's 4 bed, 3 bath. _That's_ the issue: homeowners are putting less money into an investment vehicle while renters are burning even more money.

If rent actually reflected the value received versus owning a home I'd be less opposed to it.

*In some places.

You don't need 20% down. This is a lie that keeps getting perpetuated.

I put 3.5% down on my first house and even with PMI the mortgage payment is less than rent.

To add insult to injury, the massive housing inflation of the past 2 years got the LTV well above 20% which then allowed me to remove PMI lowering my payments even further.

The real risk with renting to a person is if they refuse to pay and refuse to leave. Most places you still have to let them live there for several months while you go through the eviction process. And in retaliation they can destroy your house.

Depending on the jurisdiction, the taxes are what get you. The mortgage looks cheap but pile on another 3.5% of the assessed house value per year and it’s not fun.

That being said - I think it’s good to get a property of your own as soon as possible. The rent situation is only getting worse.

That’s normal. I bought my first house in the early 1990s. Saving the down payment was tough. I lived in a real shithole apartment, anything nice and the rent ate up too much of my cash flow. And I I had to pay PMI, but the monthly payment was still cheaper than rent.

> I bought my first house in the early 1990s. Saving the down payment was tough.

Compare housing prices since 1990 vs. wage growth over the same period. For the overwhelming majority of people entering the workforce today, there is no way to realistically save for a down payment unless you forego saving for anything else - no 401k, no IRA, no emergency fund, no car, no family.

Don't forget that the interest rate was around 10% in the early 1990ies

With a Roth IRA, you can withdraw the principle penalty free, while the earnings stay in the account. Also, you can withdraw 10k for buying a house from either IRA type, penalty free. You lose out on the future earnings from that withdrawal, but you can use it.

I think a more apt comparison would be monthly mortgage + interest payment divided by price per square ft over time. I suspect it just barely tracks inflation.

Houses have gotten bigger and interest rates have fallen since then.

I too went for a down payment below 20% (somewhere closer to 5%) because saving up a full 20% would've been daunting to say the least, and as such pay PMI. Still a better deal than renting by a large margin, and the feeling that the cash being put into payments is going towards owning something rather than being set aflame is nice.

That said I agree with the sibling comments that 20% down payments shouldn't be as out of reach to as many people as they are. Housing prices are ridiculous.

We can take a look at the St. Louis Fed "Fred" database take a look at historical affordability of 20 % down payment. Let's divide two numbers, a and b to get a ratio of yearly median wage divided by median house price, from 1980 to 2023. [1]

a) Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over

b) Median Sales Price of Houses Sold for the United States

We see that the a/b ratio was 0.25 in 1980, and has declined to 0.05 today.

Therefore, a 20 % down payment in 1980 would equal to a 4 % down payment today. Conversely, a 20 % down payment on a house in 2023 (median wage, median house) is equal to a (25/5)*20 % = 100 % down payment in 1980!

[1] https://fred.stlouisfed.org/series/LES1252881600Q#0

Normative statements don't hold much weight for justifying why things are the way they are.

Downpayments need to be substantial because the owner needs to have skin in the game. Otherwise the borrower could walk away from the house and the mortgage with very little downside.

Thank God things were done terribly back then too, or else you'd agree with progress!

The mortage payment isn't less than rent, at least for me. IF I got a "3.5% FHA loan" it'd be.. more. I don't know how to check how much mortage insurance would add at the moment.

I'm glad everyone was able to make it work 15 years ago though!

I bought a house in 2021 and not only was the mortgage rate 2.75, they also waived PMI for 10% down. I don't think we would've gotten this same house without that combination. Feels like it will be a while before it's that low again

> but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance)

Mortgage insurance is not a bad thing. But the FHA loans in the US solves the 20% issue by only requiring 3.5% down.

I think their point was that the additional cost of insurance may skew the affordability

The mortage payment isn't less than rent, at least for me. IF I got a "3.5% FHA loan" it'd be.. more. I don't know how to check how much mortage insurance would add at the moment.

OK I found a calculator and it'd be 5k instead of 3k per month.

20% is a huge requirement. The following can help anyone who's a veteran and reading this, regarding the downpayment:

https://www.benefits.va.gov/homeloans/

There is a huge opportunity for a DAO to buy, fractionalize, insure, and create a rent-to-own program. Real estate investors can be disintermediated.

Mortgage insurance isn’t much. It’s really just the difference in extra interest on the larger balance that gets you. You also get worse rates in general for under 20%.

do you know why they can't afford a down payment? dave ramsey has some ideas, maybe related to the boom in the luxury industry?

https://finance.yahoo.com/news/momma-cant-protect-dave-ramse...

People aren't paid by how hard they work, they're paid by how much money they generate and how hard they are to replace. A head chef might be hard to replace but popular bars and restaurants are not, as we saw during Covid. They have often been replaced by people deciding to save money and eat at home.

Your cognitive dissonance isn't unusual but I think it does a disservice to our ability to have productive discussions on any number of issues. Whenever issues come up of who deserves to make more or less, they get bogged down with who works harder and who's work is more meaningful.

It's economics and it starts and ends with raw numbers. Acknowledge that first, then move on to how to make it better.

You ignored the information about the restaurant's popularity, which indicates that the gp took demand for teh chef's services into account.

it starts and ends with raw numbers

No it doesn't. If that were true markets would be reliably self-correcting and market failures would never occur, rent seeking wouldn't be profitable and so on. In reality there are variations in elasticity of demand and supply, regulatory issues, and economic network phenomena like preferential attachment, all of which substantially complicate the picture.

While you’re right that how hard someone works doesn’t determine their pay, how much money someone brings in at best loosely correlates to their pay as well. I think a lot of people have dissonance there as well, thinking “well surely if it’s not how hard the work is, it’s how much value they bring in!” But no, all that matters from a business perspective is that the sum of all paychecks is less than is needed to make a profit. It’s all about the cost of replacement, or how much money it would take to hire the next best chef you can find. It’s the supply demand curve of “how many chefs are looking for work” vs “how many people want to hire them”. If there are many more people who want to be chefs than there are slots for chefs, they can easily end up working for many times less than they bring in to the business.

How much you bring in makes an upper bound on comp. How much you can be replaced for makes a lower bound.

There's no reason to want to make it better (or understand it at all) unless you're also thinking about something besides the raw numbers.

There's no way to make it better if you don't start with the root cause.

> People aren't paid by how hard they work, they're paid by how much money they generate and how hard they are to replace.

On average, this may be true, although "how hard they are to replace" is difficult to quantify and most of the scarcity is artificial. But there is enormous variability in the relationship between pay and revenue/profits provided and opportunities for replacement. I am certainly paid much more than I should be, since I work in a cost center and in that group I am definitely not the one bringing in work or revenue, and I suspect I would be very easy to replace. But at the time the contract was signed, I had the right certifications (e.g., PhD) and the right resume. Like many others, though.

They’re talking about how it is ridiculous that nothing but pure luck and circumstance of a screwed up housing market/system means they ended up with a sweet deal with affordable quality housing while their friend is forced to deal with living in a closet for much higher prices despite working hard.

I get that but

> despite working hard

that's a non-sequitur. Migrant laborers on farms work absurdly hard. "Work hard and get more" is practically a boomerism at this point. There are many reasons to work hard, but none of them have to do with guaranteed home ownership

Generous of you to explain.

> It's economics and it starts and ends with raw numbers.

No, it starts and ends with peoples' lives and how much of it they must expend to keep it going. There are no such thing as "raw numbers".

also, economics isn't a hard science.

We as a society can define how our economy looks like, it is not some hard defined concept like the speed of light or the very basic principles of mathematics.

Economics is a soft science, and we should treat it is suchs.

The raw numbers don't say much, expect the result of how we have shaped our economy. There is very little preventing us from changing the way the housing market is structured in a real, hard fact kind of sense.

Firstly, cognitive dissonance is not really being used well here and I don't like it being so trivialized. What OP feels is more guilt and confusion that his friend is worse paid than him and yet has to work harder. Cognitive dissonance is holding two conflicting beliefs at the same time in a way that creates a mental toll. What happens in abusive relationships or example when a person is told "i love you" while being hurt. Or when your gut feeling tells you something wrong is happening, but you're told everything is right. Cognitive dissonance feels almost like physical pain.

And about your comment:

SW aren't well paid because of how much money they generate or how hard they are to replace.

1- I'm not sure why you say this but SW are not that difficult to replace. There's plenty of SW around for everyone.

2- What actually determines the fact that SW are so well paid is just luck and time. What do I mean by this?

2.1 The profit margins in software services are the biggest. An easy example is Amazon. Initially a simple bookstore. Then a e-commerce shop. This is what Amazon is. And yet their margins for this is about 1% and for their cloud services is about 40%. Amazon CAN afford to pay SW well not because it generates more money, but because it has huge profit margins. And why is that?

2.2 Because it just so happens tech is VERY NEW and has changed everything far too fast for the market to adapt. Consumer physical products have been manufactured and sold for decades. Agriculture is a much more essential service than SW and it's some of the worst paid industry. Their profit margins are close to zero. All the money that could be extract has been, capitalism has done a good job of making it cheap for consumers. But tech? The world of mega corporations, monopolies and duopolies, there is often no such thing.

It's not about value to the world SW provide, money SW generate or hard to replace. If you really want to talk about value to the world there are many other careers that do. SW isn't one of them. SW are just well paid, due to luck, timing of being born right now, and the fact market is very new and hasn't adapted yet, that's it. Enjoy.

this is true, but it doesn't make it right.

this is not even true. i've witnessed plenty of very highly paid people who actively undermine the organizations paying them

I know this is anecdotal, but whenever I hear these stories, I'm curious about the details. A quick search leads me to believe that head chef pay in Seattle typically ranges from about 90k-110k per year. Finding apartments off Broadway in Cap Hill, I can see that studios, though relatively expensive, range around $1.5-2k a month.

An income tax calculator estimates about a 22% total tax bracket and a monthly adjusted income of just over 6k. To me, that means that this person is falling right around 33% of their income devoted towards housing, which seems typical. What am I missing?

In a well-functioning city, a head chef should be able to comfortably afford to rent a 2-3 bedroom apartment within walking distance of their restaurant. They should not be spending 1/3rd of their income and only getting a studio out of it.

You can, just move out of Capitol Hill in Seattle which is one of the most desirable areas in one of the most desirable cities located in one of the most desirable geographies in the wealthiest country on earth.

This place looks nice! https://www.zillow.com/homedetails/2742-Lincoln-St-NE-Minnea...

When, and in what city, has that ever been the case?

I haven't been to Seattle, but in major cities space is at a major premium and many dwellings are tiny. This is offset by the amenities living in a prominent city have to offer.

I just pulled up plenty of 2bd rentals on zillow for under $2,500 with a short commute. Am I missing something here? Or does being a head chef mean you should be able to afford rent on top of the restaurant you serve?

That sounds more of a problem of low wages than housing affordability. Also, in these times of title inflation, "head chef" could apply to many positions depending on the size of the restaurant.

  * They're a head-chef, that seems like a high-ranking position.
  * That used to feed and house a whole family, easily.
  * They can now **only afford a studio**

I have absolutely no knowledge of how well chefs in Seattle are paid, but I've heard from elsewhere that operating a high-end restaurant is far from a money machine.

Head chef, unlike senior software developer or something, is a job that doesn't scale much. A rock star chef in a posh neighbourhood is only so much more productive than a mediocre chef in cheaper neighbourhood so, economically speaking, the salaries are not expected to scale all that much.

I used to know a chef who worked at michelin star restaurant and he had to move to a flat share because he found himself not being able to afford much after paying rent in London.

That sent him to a severe depression and later on an unsuccessful suicide attempt that rendered him unable to work and he became homeless.

Parents generation:

* father worked in a factory, mom stayed at home * owned a house, 4 kids * 2 cars, annual vacation

The family life of a single factory worker after the war.

“House poor” was typically having to pay at least 25% of your take-home income on housing.

Sure but obviously that number needs some common sense, right. To make a clearly ridiculous example - if you were making 100k a month and paying 25k for rent you wouldn't be poor in any possible meaning of that word.

If you bring home 6k a month after taxes, and after rent you're left with 4.5k, I'd also argue that's not "barely making ends meet". That leaves a very comfortable breathing room that is unimaginable luxury for most of the world.

"was"? When?

Federal DTI maximum for mortgages is 45% with a good credit score and/or cash reserves. For apartment complexes, they typically won't lease, or will require a bigger deposit, if your gross monthly income isn't 3x the rent (which typically means it's 40%+ of your net income).

If 25% 'was' house poor, then at least 90% of today's mortgage-holding and rent-paying Americans are house poor.

I think 33% is very high. Also converting the value to % erases the fact that this is still a very high price for what you get in return. Perhaps it’s time to reevaluate the economics around housing - maybe betting against human lives doesn’t feel right. Also, with overpopulation and climate changes, access to housing and the need for relocation will drastically change the landscape of what one needs to do to put a proper roof over their head.

>>I think 33% is very high. Also converting the value to % erases the fact that this is still a very high price for what you get in return.

Guess it depends on how each person defines 'what you get in return'. It seems this chef values living in a particular expensive neighborhood in Seattle, presumably close to where s/he works - and s/he values that. The smallish apartment size is the tradeoff they make.

>maybe betting against human lives doesn’t feel right

This is an inappropriate emotional appeal. Real estate is dependent upon the price/value of labor. It's betting for/against labor prices.

Labor is not your life. You are more than your job.

> I can see that studios, though relatively expensive, range around $1.5-2k a month.

Is that all? That's crazy cheap by the standards of my area. Where I live (a smallish city in western US), the cheapest housing you can find, in the least desirable part of town, starts at $1200/mo.

And its crazy expensive by the standards of my area where you can find a nice 2bed with laundry in the unit for under 1k

I would argue that the salary of 110k/yr isn't accurate. That is still entry - mid level tech in Seattle. Granted it has changed recently to be 125-135k, but I do find it hard that a head chef in Seattle would make 110k. 65-85K I can.

Capitol Hill (no one calls it Cap Hill.) is pricy, though $2,000 should find a studio easily, and no car is needed, it's a close knit enough neighborhood.

> A quick search leads me to believe that head chef pay in Seattle typically ranges from about 90k-110k per year.

This doesn't sound right to me. Maybe it's true for the very fancy quasi-Michelin places like Canlis or Shiro's, but for a nice-but-average gastropub in Cap Hill it's probably much less.

if its Coastal Kitchen I could see and would hope the chef is making a grownup amount of money

It also matters where and how far you are from things. Walkability is a big draw, so if you're within a mile of a major district with tons of food, entertainment, and culture, chances are any well-kept apartment building will raise their prices to account for that (and account for you not having a monthly car payment or auto insurance payment), and if this chef is within a few blocks of their work, it's not hard to believe their rent could be over 3,000 a month or 50%+ of their income (although, typically, management companies want to see your gross income be 3x or more of the rent).

> if you're within a mile of a major district with tons of food, entertainment, and culture

If you're within a mile of _that_, it seems reasonable to define the housing in that area as "prime" and expect it to cost a lot more than further away. The fact that rents for that housing has a cost that is prohibitive for the vast majority of people doesn't seem odd to me.

I feel similar cognitive dissonance every time I compare myself to people I know outside of tech. Pretty much without exception, they work harder jobs than me or my colleagues with worse hours and for a fraction of the income. I don't think my observation is tied to the housing market, other than it being a vehicle to expedite the wealth gap.

>they work harder jobs than me

What makes it harder? Could they do your job? Or do they miss the bar for doing the level of knowledge work that you do?

This "they work harder" cliche is really tired. They might work hard but they're easily replaced. You are likely not, and even more likely, they wouldn't be able to do your job. If you really feel so bad, donate some of your money to them, otherwise it's just empty virtue signaling.

idk why this position is so offensive.

yes i think most of the population can sub into most tech work. honestly a bootcamp will make most people ready to perform at an acceptable level for your average FAANG swe role. admittedly the interview process is a tougher experience and keeps many people out but does not reflect the actual work.

your being tired of this "cliche" does not make it untrue and this response is as lazy as "if you have any criticism of the current climate why don't you just leave". wah.

there are other ways to help people than just giving them money, like by getting them into tech. i have done this for a number of friends and they're thriving, despite initial reservations.

I am completely with you on this. We were able to buy a house years ago at %3.75 rate and our mortgage is less than most people's rent now. I hear a lot of laments from other parent friends about how they are 'wasting' their money on rent. And these people aren't usually in tech.

The self comparison is supposed to make me feel grateful and happy about my situation, and yet I feel guilty for having the freedom and flexibility of my tech job with it's pay and all other benefits. Doubly so when I look at my son's kindergarten teacher and everything she deals with. I volunteer at the classroom to help as much as I can, which helps both me feel better about what I have, and helps the teacher and the kids.

But that cognitive dissonance / guilt is always there in the back.

what are you doing to deal with this?

Do you believe your income is unearned? Or are you just virtue signaling about what the labor market values?

Bah, "virtue signaling" accusations are such a toxic thought-terminating cliche :/

That's quite the either/or.

I'm with them. "Earned" is really the big question. If I feel I earned my pay, and then I see someone else who's working harder and getting paid much less, it follows that I must also feel that they are receiving less than they have earned.

well, this is sort of the point of the cognitive dissonance isn't it?

clearly my labor is valued at the value it produces, and i will continue to maximize the income and comfort of my family. is it virtue signaling to notice that my siblings literally work more hours than me and tolerate conditions i would not tolerate?

i don't know. i continue to push them towards tech jobs. they continue to think they are "not smart enough for it", which is an insane position.

The solution in the past was for people to move to a different city. Migration is way down compared to generations past and continues to fall:

https://www.pewresearch.org/fact-tank/2021/12/16/in-2020-few...

The change in city living is also a big difference. Cities used to have parts of the city with the lowest cost of living in the metro area. Things like boarding houses and single room apartments w/ shared bathrooms & kitchens. That's no longer the case in a lot of cities. Places like Seattle and SF are comprised of pretty much all expensive places to live. That squeezes poor people more since they often have to rely on public transportation and can't take advantage of cheaper suburban living.

It’s worth noting that these stats don’t show a difference in moving between cities, but between residences. And if you do look at stats showing moves between counties, those have been fairly flat going back to at least 2005 (I couldn’t find data going back farther).

Which is to say that it seems people find less reason to move from one house to another where they already live than they used to. I expect this is because the difference between your current house and a better house has become substantially more expensive than it used to be, making it harder for people to improve their standard of living over time.

I haven't been able to find great statistics, but you can look at state populations to get an idea. California, as an example, went from ~5 million to ~30 million in a few decades post WWII.

It is strange that it is easier than ever to move and stay connected yet most people don't.

It is not strange: moving is more expensive than it used to be, and the odds of being able to move somewhere that's cheaper to live without taking a proportional or greater hit to your income are low. Staying connected with other people is hardly the only determining factor. Lots of people traditionally moved because they didn't want to stay connected with a place, and figured thre would be better opportunities elsewhere.

SF dropped from ~75K SROs 50 years ago to maybe 20K now. Even if you were an addict or going to jail occasionally, there was enough turnover to get back in.

All those big cities are probably similar.

But the problem of your friend is not that you treat your house as an investment.

By definition, if people "invest" in goods that can be produced at a certain price, then production should kick in and restore balance. In a functional housing market you shouldn't be able to get a better appreciation of housing than the inflation rate, except for perhaps some very limited and irreplaceble houses in the Hamptons or designed by famous architects.

Housing should behave much like the painting market: a few are worth millions, but everybody can get a cheap painting for their living room because more painters are born every day.

So the actual problem that enables this housing pyramid scheme is the lack of production and the entrenched policies of class and race discrimination in real estate development. Existing homeowners rationally want to exclude builders away from their neighborhoods to keep supply limited, so they are politically fighting for restrictive legislation. This problem can only be solved politically, with the state taking a major role in the supply of housing.

> This problem can only be solved politically, with the state taking a major role in the supply of housing

The state already takes a major role in the supply of housing, as you yourself acknowledge. That's the problem, not the solution.

The upper levels of government can and should correct the failures of the lower levels which are captive to local homeowner interests.

The ideea that you can eject the state from regulating the use of a resource with so many externalities is a pipe dream, you either get some sort of favela or the residents re-invent a much more exclusionary and bigoted version of the state, for example the HOA.

> The upper levels of government can and should correct the failures of the lower levels which are captive to local homeowner interests.

They have been, for decades. That's where things like the Community Reinvestment Act, which played a significant role in causing the crash of 2008, came from. Not to mention the decades-old policy of encouraging mortgages by funding them with money printed by the Fed's printing press.

> The ideea that you can eject the state from regulating the use of a resource with so many externalities is a pipe dream

No, what is a pipe dream is the idea that governments can somehow fix problems with externalities or market failures. They can't; they make them worse. That's because governments are not magical entities that somehow always do what is best. They are organizations run by human beings, and their incentive structure is even worse than that of free markets.

> the residents re-invent a much more exclusionary and bigoted version of the state, for example the HOA

While I'm no fan of HOAs, at least the people in them have skin in the game, being members of the community themselves. However flawed this model is, it's still preferable to having unelected bureaucrats in a city a thousand miles away micromanaging people's lives.

Aren't condos basically illegal in many places? That's at least part of the problem, since obviously single family homes can't sprawl forever

My rent for my cockroach invested, 150 sq ft apartment is larger than my parent's mortgage for their suburban McMansion about 45m-1h away, and my rent is absolutely on the cheap side for a 1bd room in the area.

> cockroach invested

Appropriate typo.

In Seattle, 45 minutes away is still within the city limits, unless you're right on the edge of the city limits to start with. And if it's toward Everett even that doesn't save you.

In traffic I often thought about how when I was a kid we got uprooted to a new school at a bad time to save my dad 45 minutes of commute each way, and how 2 hours a day doesn't sound that awful.

Yeah, its 45 without traffic, 1h-1:10 on a normal day, 1.5h during the morning and evening commutes. So they're solidly outside the city radius.

The thing is, before I moved in, I did research on 1bdroom apartments within a large radius of the city.

And basically, unless I was willing to move to a very unsafe area or very unsafe or clearly problematic apartment, rents simply do not go beneath my current rent price.

There seems to be an agreed upon price floor from all landlords, and the only thing that changes as you get further from the city center is the size and quality of the apartment.

But that means literally every apartment in about an hour circle of my location is more than my parent's mortgage. At least the roaches and I don't have major commuting costs as well.

If this is not worth it for you (maybe it is because of amenities), couldn’t you just buy a place closer to where your parents live?

I majored in economics and it still boggles my mind what we make as software engineers versus the guy who unclogged my sewer drain allowing me to use the toilet.

You will be surprised how much good plumbers make in the USA. You probably used a bad example.

Source: I know my trusted plumber makes well over six figures a year and he cannot take all calls. I asked him once if he has problems generating leads and he smiled saying "I have too much business that I turn people away". He is a "master plumber" which these days is not easy to get certified for in many states. He told me he cannot find enough skilled master plumbers to help him (state of NJ).

This is always the same logic, where a plumber makes a ton of money. The reality is that your trusted plumber is actually a business owner. If you start out as a plumber, you need a ton of work to get to this spot by working for someone else for a bad wage. Meanwhile as a dev, I can comfortably work for someone else and don't have all the risk.

The thing is that top-end software engineers in a FAANG company (the equivalent of a master-plumber / master-electriction / etc.) are either pushing towards 7 figures or have already got there - in total comp, not in wages, but still.

I'm an ICT5 at Apple (not the best-paying, but hey, less layoffs) and I reported ~$750k last year. There are ICT levels going up to 9...

You will be surprised how much good software engineers make in the USA -- still many multiples of most successful plumbers, and without the long-term physical consequences of that type of labor. Yes, there's still going to be better examples to highlight the disparity.

Yes I have family who make ~100k in chicago.

Your job is incredibly tedious and boring dealing as it does with human-constructed Kafka-esque instructional systems. You're effectively psychiatrists for machines. Having taken a couple of introductory programming courses, and thrown together some VBScript and some R markdown, I'm fine with you making the big bucks.

Will GPT-6 replace a plumber? I think not.

Will GPT-6 replace some subset 10..80% of engineering, law, medical hours? absolutely

I'm not so sure. There is a Planet Money episode that talks about the effect the digital spreadsheet had on accounting employment:

> Thanks to spreadsheets, there are 400,000 fewer accounting clerks than in 1980, but 600,000 more regular accountants.

Might something like GPT-6 cause employment to shift to higher value job responsibilities?

https://www.npr.org/sections/money/2015/02/25/389027988/epis...

Wait, why 6?

The fruits of your labour can be sold continuously at low marginal cost. His cannot.

I don't know. An unclogged pipe is used multiple times per day.

Yeah, man. My friend lived in Capital Hill back in the early 2000s and was able to keep ahead of the rent on his comically small apartment just working part time

Nowadays, though, Seattle residents not making obscene tech money have to either live in a submarine-esque cramped environment or spend 2-4 hours commuting every day

This astonishes me about the US real estate market and is something I was only educated to on HN in the last week or so.

I had absolutely no idea that 30 year fixed mortgages were not only widely available but the common standard there.

It’s because our federal government purchases the majority of residential mortgages, and therefore indirectly sets the standard for the entire market. It’s a major reason why real estate is such an attractive investment.

Yes. The problem with the article is that it focuses on the value of the asset but forgets the costs. The entire system is stacked in favor of home-ownership by means of tax and bank subsidies.

I can't think of another country that has anything like it, and it's largely because of the government market interference (via Fannie/Freddy especially)

It's going to continue to have some weird knock on effects.

Too lazy to do the legwork for the actual information, but Japan has, or had, similar mortgages to the US -- even 100-year intergenerational mortgages. An anecdote related to this: when I worked at a Japanese company, one of my coworkers' parents had gone underwater on some commercial real estate in Tokyo after the bubble burst there in the 90s. They had taken out such a mortgage and now the adult children were all working day and night jobs to pay it off.

France has fixed rate mortgages

I'm an economist, yet I only recently realized that adjustable-rate mortgages are economists' consensus best choice for consumers. Based on the expectation that personal economics are well-correlated with broad market economics, and that interest rates will decline when the economy struggles.

I have a hard time squaring that with 15 year fixed rate mortgages being under 3% for several years in the very recent past and 30 year fixed mortgages being at/under 3% for part of that time.

How would an adjustable rate mortgage be the best choice for consumers in that situation?

I got an initial mortgage at 5.625%, refi’d to 3.875%, then again to some ~3% 15-year. I never seriously considered an ARM (and now wish I'd refi'd a third time back to a fresh 30-year fixed just to keep using that cheap money for longer).

That math is my favorite example of economists not living in the real world. It doesn’t account for the ability to refinance.

Why don't you get fixed rate so that the rate never goes up. When the background rate goes down you refinance for another lower fixed rate.

Yep, just need work history and you're set. Lot of people don't want to own because it's a maintenance nightmare and they're not work. I'm out about 60k not including refinancing due to maintenance and I'm handy.

What are the mortgage terms where you're from? In always curious to understand how other countries and systems deal with this but I'm largely ignorant to it outside of anecdotes like this.

The standard in Canada, for example, is a 25 year mortgage which you renew every 5 years (fixed or variable, your choice).

In Germany, standard terms are to have the interest rate fixed for 10, 15 or 20 years, independant of how long it takes to pay off. Additionally, the customer has the right to refinance at current rates after 10 years. So a longer fixed rate is always an advantage to the customer, and thus more expensive.

I just love this quote from Sid Verma:

"A lot of Americans are bragging that in their country they can get a fixed mortgage for 30 years. But it's worth remembering that for cultural and historic reasons, a lot of Europeans choose to reject socialism."

https://twitter.com/_SidVerma/status/1575185906218442752?s=2...

Note that the mortgages aren't even fixed rate, since you can replace them with a lower rate mortgage if rates drop, with insignificant penalty. Nobody will sell a mortgage like that if their goal is profit (other than to hand off to the US government).

> Nobody will sell a mortgage like that if their goal is profit (other than to hand off to the US government).

Almost one third of the MBS outstanding are held by the Fed - but that means that more than two thirds are held by someone else.

Insignificant penalty?! Maybe if all you think about is your monthly payment and not the total payment amount over time.

You should check the amortization schedule of a typical 30 year fixed rate loan. You are paying nearly nothing but interest for about 10 years, THEN you start paying down the principal balance significantly more. The first ten years you are basically renting your property from the bank. When you refinance the property the amortization schedule starts all over again where you are barely paying down your principal balance. The banks always need their cut before you are allowed to build equity.

~15% of the mortgage market is ARM in the US

In Germany, 5 - 20 years seems to be pretty common. I haven't seen 30 years, but I wouldn't say it was impossible.

In general, chefs, and anyone who works in the kitchen, are severally underpaid for the skill and amount of work the job takes. It's long hours in a hot, cramped, very high stress environment for peanuts. Not to mention the terrible hours. I have a very brief stint in the food industry when I was a kid and it was enough for me to say I would never do it as a career.

Is them being underpaid not a function of buyers not willing to pay more for the goods?

I'm not under the impression that most restaurateurs are "raking it in" staff be damned. Sure, at the ultra high end, yes, but for most restaurants a chef pay is function of the market, right?

The restaurateurs might be raking it if they own the real estate. If you pay rent for your location you are probably scraping by, and whipping your staff to bring in the money for your landlord.

A chef's pay is a function of the market, and that's why everybody is exiting the industry right now. Head chefs and restaurant owners are used to decades of low wages and think it's quite insulting that anybody would dare ask for a better wage. Then they wonder why "nobody wants to work anymore". At the same time, chances of advancing your career are very limited. If you manage to stick around for a few years as a chef, you will already be able to manage your own restaurant, but the salary for that will be just marginally higher. Unless you want to strike it out on your own, and take on massive debt for a business with low margins.

Working in a kitchen is the worst career choice a young person can make. If you have that skill, ambition, passion and drive, you will be much better rewarded in any other sector.

It is a combination of people willing to work for low pay, and buyers not willing to pay more.

The easy money is sucked out through real estate, not management.

I agree. It's already $60 minimum for two people to eat out in the US. What's it going to be in order for everyone to have "fair" wages? $50 a plate for hamburgers?

Meanwhile some mainland Chinese 18yo drops in with a bag full of cash to buy a place outright. Something is very wrong with that picture for Americans.

Yeah, my mortgage is $800 for a 2,000 sq ft house and my son's rent for 1/2 of a 1 bdrm apt is $1700. The situation is completely out of control. (We're both in CA.)

For comparison, in northern Germany one can rent a 1000 sq ft house + 1000 sq ft garden in walking distance from offices, supermarkets, restaurants, etc. for about $1000 cold per month.

Sounds like CA is 5x more expensive for young people. But salaries are "only" 2x to 3x those of Germany.

I'm not saying there isn't a disparity but a comparison like this would need to include taxes, maintenance, and utilities on top of the mortgage to be comparable to a rent (well utilities may or may not be included).

And at the end of 3 years the homeowner will have 3 years of equity and the renter will have nothing.

Cognitive dissonance means harboring contradicting thoughts. The difference in you and your friend’s situation is caused by the fact that they are selling labor which has a much lower price than the labor you are selling. This is not contradictory, just a consequence of supply and demand.

Yes, there is an inconsistency in the amount of effort expended to survive versus the outcomes of that effort. I can't reconcile them in my head. I'm watching my friend trying not to physically deteriorate and have some modicum of comfort while I sit here on my couch living off savings from the job I recently quit. Nothing I do can be so much more valuable than what he does.

One can define effort in that way, and arrive at the conclusion you did, but it is not what cognitive dissonance is typically used to mean.

But that definition of effort as it relates to the ability to “survive” does not seem useful to me. It takes a lot of effort to manually dig a ditch compared to using an excavator, but you would not pay the person that shows up with a shovel more than the person that shows up with an excavator.

Edit: this is not intended to say your friend does not deserve a better pay to quality of life (QoL) ratio. However, the fact that you have a comparably favorable pay to QoL and they have an undesirable pay to QoL ratio means society does not want more people to be selling that labor, but rather more people to be selling your labor.

Everyone trying to convince you to be ok with this but no, you have seen it correctly and it is wrong. People can work themselves to death doing jobs that benefit us, and what they receive for it is misery and precarity. Trust your own judgement and don't accept this as a natural, inevitable, or just state.

The correlation between effort expended and outcome is misguided. The plow takes more effort than the tractor and produces a worse outcome.

Any job where the amount of labor has a fixed proportion to the possible economic output will at best track inflation.

Software can pay well because the code you write can service 100, 1K, 1M, or 1B customers.. with some time spent on scaling.

There's not much a single chef can do such that their labor which serves 100 tables/night can suddenly scale to serve 1000 tables/night.

The only way the replicate that kind of outcome in restaurant trade is to for example, open multiple restaurants with investor capital, hire cheaper chefs as your understudy to run each location, while you set menus, standards, and find efficiency on things like procurement, accounting, lease deals, etc.

Other options are to move more aggressively into some sort of profitable takeaway menu, selling food kids, branded merchandise, etc.

I mean... that's life. What schools should teach is not just "here is a career that matches you're skills" - but more so, "if you choose this career, these are the most probable outcomes and life paths you'll end up in"

If AI takes engineering, medical, and law work away from those professionals - they too could have spent many hours to learn, to then earn little.

Every human has worth, but we all value the type of work differently.

Supply and demand is created by the rulers when they create the money supply. Their decision for the past decades has been that money should be created by real estate mortgages and thus there has been an immense shift of wealth to the elderly and real estate owners. Being head chef in a successful restaurant is an incredibly hard skill, but with financial consequences such as the poster you're replying to. Borrowing money at the right time and doing absolutely nothing or the bare minimum has had a much better return than working hard and becoming the best of your trade. That's why so many are dropping out of the regular work force and entire industries are collapsing right now. Is that sustainable in the long run? Are we all to sit on our asses, borrow more money and wait for inflation of real estate value to pay for us? Because, that has clearly been the most successful career as long as I remember.

>> The difference in you and your friend’s situation is caused by the fact that they are selling labor which has a much lower price than the labor you are selling. This is not contradictory, just a consequence of supply and demand.

I think the difference between labor and engineering is that most engineering (and software development) is a precursor to charging rent. Lets look a bit closer:

The marginal cost of software is zero. Therefore, every commercial software package is collecting rent for its use - SaaS being the most blatant (but honest) form. They will ostensibly be using the money to fund future versions of the software, but the efficiency of that effort is not terribly relevant - profits can be had, and high pay to developers.

In product design and manufacturing, the engineering effort goes into designing a product and plant to produce it. The key thing the business looks at is something like ROI (return on investment). Since the lifetime of a product isn't certain, anything that goes beyond the planned lifespan is pure profit. One could view the business as collecting rent on the equipment/process that makes the product.

At the highest level, investors are looking for a return on their investment. The investors don't actually have any part in the transaction between the company and its customers. Only when raising funds do investors bring anything to the table. After that, people trading stocks bring nothing and are looking for ROI. It's probably not correct to call ROI rent, but it's got some similarities.

So the low-end labor guy is getting paid to do work. All our fancy office jobs are building systems to generate revenue for someone. That may be the primary reason those jobs pay so much better. One is labor to an end customer, the other is labor to the money-making machine that is a large company ;-)

On a related tangent, perhaps engineering should not be considered a cost center but an investment.

The contradictory part is likely that they were raised, like most, on the idea of this being a meritocracy. The harder you work and the better you are at something the more you should get paid. But of course that's not how the world works.

> The difference in you and your friend’s situation is caused by the fact that they are selling labor which has a much lower price than the labor you are selling.

and multiplied by fiscal and other policies: those who couldn't afford buying now need to pay 5-10 times more compared to wealthy who could afford buying house 10 years ago and another 5 years ago and lock loan interest.

"It is the way it is" is technically true and profoundly uninsightful.

My comment was about incorrect use of the term “cognitive dissonance”.

https://en.wikipedia.org/wiki/Cognitive_dissonance

> Capitol Hill, Seattle

My cousin owns a mansion in Capitol Hill. Because she was a broke-ass student at UW and couldn't afford rent. Back in the 1980s, buying a house there was seen as a crazy, insanely risky thing to do and likely to end up in death.

The modern equivalent is the area around 105th and Euclid in Cleveland, near Case Western and the Cleveland Clinic. 150 years ago, that was the wealthiest neighborhood in the entire United States, now you are though to be insane to want to buy a house there. But if you did, would you end up with Capitol-Hill like appreciation in 40 years???

> But if you did, would you end up with Capitol-Hill like appreciation in 40 years???

My friend recently applied this same concept in a very rough area of South Bend, Indiana buying a house with bullet holes in the side using the same general logic ("it'll get gentrified someday").

The issue he's running into is that it turns out a city doesn't have to charge you property taxes on the actual sale price (which was only $3k) but can charge you property taxes on a higher amount of their choosing ($40k I think he said) in order to encourage revitalization and not just hoarding of slum houses, probably.

He's trying to fight that property tax assessment, but I'm not a lawyer and neither is he and he'll probably lose. In which case the holding costs defeat his whole plan.

> can charge you property taxes on a higher amount of their choosing

i think it should be that if they choose the price, then they must also be obliged buy at that price, in lieu of having the tax paid.

I know people who made good investments in the stock market/crypto that sold at the right time. They are set for life. I also know people who are founders of startups and they grind day in day out but haven't gotten traction (yet?).

Luck. Choices. Right time, right place. Such is life.

To be fair, being a chef has never been a well paying role. Read Bourdain's writing on the NYC restaurant scene in the 90s. Hard work, hard drugs and hard life.

>Hard work, hard drugs and hard life.

Not having read the book I must admit my kneejerk response is to wonder if the latter part could have been avoided by not indulging in the middle part? Not to say that hard work always pays off or anything but drugs are expensive are they not?

A lot of restaurant workers I've known in Seattle make like $30K. And no they aren't drug users.

First let me say that rent and real estate should go way down and Seattle should make it easier for people like your friend to live there.

Second, there is no direct connection between work done, value added + money earned. The connection is a loose correlation at best.

As an example, you can do back-breaking labour painstakingly paving roads with one cobblestone at a time, 16 hours a day, for decades. Or you can write a dozen lines of code that speeds up a critical business process. One is super hard and makes little difference in the world, and thus pays almost nothing. The other is easy if you know how and adds enough value that there's scope for lots of money to be involved.

I dunno, if that paver got a royalty for ever car that used his road then he would be very rich!

Yep. My rent is 1200 a month more than 4 years ago. 1500 to 2700. Which is on par with entire region.

With inflation my budget is drastically tighter than just a few years ago.

> I am sitting on a 2.6% interest rate mortgage and my prices are set for the next 30 years. I probably work half as hard as he does, if not even less than half.

If i follow this correctly. you will work half as hard because your housing costs are set while his will keep increasing ?

I don't think it's "they will work half as hard" but "working a tech desk job is easier". The two thoughts are separate as I read it.

Locking in 2.6% for 30 years, from an outsider (Aus) perspective, seems insane. That must inflate prices like no one's business.

Here, the longest easily available fixed term is 5 years, and you usually pay a decent rate premium (maybe ~2% above the current variable rate).

This is an absurd statement.

Median rent in Seattle for a 1 bedroom is $2k. Using the 40x rule someone who makes $80k could easily afford this, which is a low bar for someone with a moderately decent job.

Locking in a low rate alone has nothing to do with whether owning is more affordable than renting. The rate could be 0% but with a sales price high ala 2021-2022 buying mania and then adding property taxes, insurance, maintenance, and HOA the vast majority of "high" cost metros have and will continue to be much more expensive to buy in than rent in whether rates go up or down.

> $80k could easily afford this, which is a low bar for someone with a moderately decent job.

$80k is not a low bar, and this is insulting to really talented people I know stuck in below $40k jobs.

so rent is now considered a massive burden on everyone because someone making the minimum wage cannot easily afford the median rent in the city they live in?

that’s not how it works at all

80K is a lot for restaurant work. While $40 an hour is not unheard of in the seattle restaurant area, I would not consider this a low bar to reach in that industry (or many others outside of tech tbh).

The median annual salary in Seattle is around $60K. So $80K is, based on the actual data, a high bar.

This take is an example of a phenomenon I've come to describe as "stat-rot".

Completely missing the point about how people live because of a hyper-focus on median statistics. By definition, the median describes exactly one person to perfect resolution, and the rest of the population only in a binary higher/lower relation. The explanatory power of median statistics is marginally better than mean statistics, but it is not a substitute for and cannot serve to explain outcomes that do not fit the restrictive mold of the "median" person.

it's interesting that so many here are quick to jump to the generalization that there's some sort of national problem here, when it's really just the big urban centers (and some other outliers) that have the problem. I just bought a three-bedroom house for $300k here in the Black Hills of South Dakota, where housing prices are (relatively) skyrocketing due to the local Air Force base expanding, yet this was entirely achievable with my modest <$70k salary working as a programmer for the local public school district. the United States is a huge country with tons of options for places to live, and I've never understood the apparent need to live in big population centers, even after trying it out myself for some years.

if the big cities are making it miserable to live there if your income isn't ridiculously massive, then why stay? why not give one of the other bazillion places to live in the US a try? sure, you may have to deal with less-than-optimally-temperate weather. sure, you may not have access to a rich variety of ethnic dining options. sure, you may not have access to all sorts of trendy places to shop/dine/be entertained.

but why is trading all of that away to have a decent place to live so unthinkable for so many? I've rented for the past 13 years, and now I finally have a home to call my own, and I wouldn't trade that for anything.

Supply and demand is a big issue too. Take Bay Area as an example. The number of newly minted millionaire families every year on average exceeds the number of newly added houses around those job centers. In the meantime, we've been having an asset inflation in the past 10+ years. As a result, the housing cost in the bay area just keeps climbing up. This has serious consequences too, as such ridiculous housing cost drives away excellent teachers, cops, and etc.

I had a coworker whose previous career had been as a pastry chef. She worked at a hotel and told me that she'd topped out for income and it was somewhere around $50k/year. After learning to program (and I think she did a boot camp in the earlier days) she started programming. She now programs (not, I think in the finance part of the company though) for an investment firm you've heard of. She is easily past 6 figures.

People don't seem to understand supply vs. demand. More people are moving to cities. Cities have onerous zoning laws. The construction industry is still skittish after 2008's meltdown. Enormous demand && limited supply in cities == high prices. My hometown in the midwest is selling homes for $100/sqft. Dallas suburbs are $150/sqft. Manhattan is over $2000/sqft.

Your property taxes and homeowner's insurance costs are not 'set'.

It sounds like you are experiencing some guilt about the differences in your financial stability compared to your friend who is working hard as a head chef. It's important to recognize that the way our society values certain jobs and industries is not always fair or reflective of the hard work and dedication that individuals put into their work. One way to alleviate some of that guilt might be to give back to your community in ways that help support those who are not as fortunate.

> I have a lot of cognitive dissonance associated with that.

Play the cards you're dealt.

Rate of capital is intended to exceed rate of labor. If you're from a working class background, its common to think more labor = more rate of labor .... and that's it. Not how the higher rate transitions into more capital earning more than the labor.

My daughter recently moved from Vancouver BC (which sucks for housing) to Seattle, which sucks for housing.

Despite having a good university degree and a decent-paying white-collar job, she gets by in Seattle thanks to couch surfing and pet-sitting. It beats the alternative -- sharing with numerous flaky/crazy roommates.

My dad worked 33 years as a bridge builder. I would meet random people who would tell me they were in awe of his skill. It took me 3 years or so out of a community college with an IT degree to match his pay.

Pay is not exclusively a function of how hard you work.

this is a good example of the myth of bootstraps.

i bet you can find a response to this comment that says, "well your friend should find another job or move to a city with a lower cost of living."

Totally relate with this feeling.

This means nothing to me without having data on your life choices

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