Comment by epistasis | Hacker News Reader

Comment by epistasis | Hacker News Reader

The class divide is indeed huge, but I'm having trouble following some of the article's logic. The article seems to be saying that the upper class are the capitalists that have founded successful companies, and the middle class are all the engineers, and the lower class are the rest of society. A lot of the class divide seems to be most evident in housing costs.

Where do these $1 million tract house valuations come from, if the middle class engineers can't afford to buy them? It would appear that they're mostly owned by people that have been living in the area for the past 20 years? And because people have not moved, even though they are apparently no longer in the middle class, the supply has been constrained and the few houses that do go on the market go for extremely large amounts of money.

Anyway, I'm not sure what to make of the article. There are troubling comparisons, and glimpses at incredible wealth, but the parts of the article don't seem to fit together very well into a picture of what's going on.

The article seems to be saying that the upper class are the capitalists that have founded successful companies, and the middle class are all the engineers, and the lower class are the rest of society.

This view of class division in an industrialized society is not particularly new. Kurt Vonnegut's novel Player Piano presents this exact scenario (upper class of managers, middle class of engineers, unemployed masses), and it was published in 1952.

I agree that the class division is fairly standard (though the middle class also includes the lawyers, doctors, and other professionals that earn as much or more than engineers), but I guess I don't understand the connection to real estate prices. Who owns all these homes, and buys all these homes? It seems as though it's a bubble that's almost ready to burst, the way that it's been laid out in the article. Or that the wealthy have been buying up huge proportions of properties to turn them into rentals. But there should be numbers that would back up that latter case.

It's both: property prices have bubbled up to the point where many real buyers are investors looking to rent the houses out rather than residential owners.

It's a mix. I know a lot of families in SV that have lived there for a long time and have somehow managed to hold on to their houses, working two jobs and just making it. Also, there seem to be quite a few immigrant families from Asia that cram extended families into relatively small homes and get a foothold. There are also plenty of young tech workers that can afford a small house or condo as long as they are willing to take on a lot of debt.

Whenever I visit my in-laws in Palo Alto I enjoy it but I'm always glad to leave it behind again. Every year they add a lane to 101 but they never make it any wider.

> It seems as though it's a bubble that's almost ready to burst

It's not a bubble if you already own and keep owning - California Prop 13 prevents the tax man from raising property taxes more than 2% a year.

It's not a bubble if you paid cash, which is majority of real estate purchases in Santa Clara County - unless you choose to go the HELOC route.

It's only a bubble if the buyer is taking out a mortgage to buy the piece of real estate, has very little as far as rainy fund, and needs to have a job to continue making payments.

I don't think Valley real estate prices are that reasonable (and have voted myself out of the market by selling last month), but it's not truly a bubble where you hope the greater fool will come around and buy the stuff from you.

I believe the author would argue that these 'middle class' Valley engineers really aren't middle class at all, but rather upper class. They're likely up in the 95th percentile of earners. Though I struggle to come to terms with how to control for living costs and geographic inflationary trends. I would like to see an accounting of how wages across the employment spectrum are adjusted, as well.

In my mind, if wages for other forms of employment aren't similarly inflated, it makes a much stronger argument for a further bifurcated society.

> They're likely up in the 95th percentile of earners.

For 95% of people in the Valley to earn less than average software engineering salary, 95% of people would have to be employed outside of tech specialties outside of tech companies. And that's not the case.

I read that as meaning "95th percentile nationwide" in which case no such conclusion can be drawn.

And FYI, what you are saying could happen with 90% of people employed outside of tech companies. (Because half of engineers earn below the median software engineering salary.)

Oh, right you are.

Yeah, nationwide percentiles make as much sense as nationwide cost of living.

Reply on news.ycombinator.com