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Ridiculous housing costs in California

Michele Zone

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7,657
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In the 1950s, a teacher in California could get a house where the annual payments were 14% of their salary.

Now the annual payments on a house in San Francisco is more than what a teacher makes all year.
 

Maister

Chairman of the bored
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25,988
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48
Moderator note:
split from RTDNTOTO. Might want to check the link/url too
 

Michele Zone

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If y'all are going to discuss this, it is a tweet and a link to an article. However, the statement in the tweet is inaccurate. It is an apples to oranges comparison. I didn't know that when I posted it. The statement about the 1950s is about all of California. The statement about housing costs today is for San Francisco.

It does have some good info in the article. I kind of skimmed it. I didn't read the whole thing.

From what I gather, the person who made the statement apparently has a history of playing fast and loose with statistics like that.

Here is the url to the tweet: https://twitter.com/ByRosenberg/status/983797630386892806?s=20

And this is the article it links to: https://www.curbed.com/2018/4/10/17219786/buying-a-house-mortgage-government-gi-bill which is called Why buying a house today is so much harder than in 1950
 

Richmond Jake

Cyburbian
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18,171
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41
Here's another example.

A burned-out home selling for $799,000 in San Jose's Willow Glen neighborhood is quickly becoming a symbol of Silicon Valley's insane real estate market.

Barr says it's the 5,800-square-foot lot that she's selling, and its prime location near a commercial strip lined with trees, cafes and boutiques. The home is adjacent to downtown San Jose, where Google plans to build a new campus.

"Houses nearby have sold for $1.6 million," Barr says. "This is land value at half of that."

The burned-out home on the property isn't scaring buyers away. Barr says she already has 10 people interested and the home hasn't even officially gone on the MLS.
https://www.sfgate.com/realestate/article/San-Jose-real-estate-1375-Bird-Ave-Willow-Glen-12825454.php#photo-15375553
 

Michele Zone

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I saw a comment somewhere online yesterday that San Francisco housing is supposedly appreciating at $60/hour, more than four times the local minimum wage of $14/hour.
 

WSU MUP Student

Cyburbian
Messages
9,251
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28
I saw a comment somewhere online yesterday that San Francisco housing is supposedly appreciating at $60/hour, more than four times the local minimum wage of $14/hour.
Here's the research that that comment comes from: Homes 'Earn' Minimum Wage or More in Almost Half the Nation's Largest Cities

The data in that is reported at the MSA level. It would be interesting to see it at the local level within particular MSAs. It shows Detroit's prices rising at $2.97 an hour but I know there are certain pockets here where the prices have just exploded in the past year or so (including in Detroit's CBD and Midtown areas) but there are many areas in the city and suburbs that are still probably dragging down that $2.97 figure.

I have to imagine that holds true in places like the San Jose and San Fran metros as well. I'd be interested to see where the pockets of decline or lagging growth are in those areas - or how much higher certain "hot" localities within those areas are than what the average for the metro would otherwise indicate.
 

mercdude

Cyburbian
Messages
233
Points
7
I live near the SF Bay Area and have friends that live there - the BA is very expensive yes, but average starting wage for professional jobs are six figure. Basically, it's expensive but employees are also well-compensated. If employers didn't compensate accordingly, no one could live there except CEOs and millionaire playboys. Yet, millions live there. TBH, I'm not sure why (good weather?) but they do and they can't build houses fast enough to keep up with the demand.
 

Dan

Dear Leader
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I live near the SF Bay Area and have friends that live there - the BA is very expensive yes, but average starting wage for professional jobs are six figure. Basically, it's expensive but employees are also well-compensated. If employers didn't compensate accordingly, no one could live there except CEOs and millionaire playboys. Yet, millions live there. TBH, I'm not sure why (good weather?) but they do and they can't build houses fast enough to keep up with the demand.
I live in a high CoL area of New York, but the salaries don't reflect it. Planning salaries in upstate New York tend to be below the national average -- mine included. Housing costs may seem low by California standards, but non-academia salaries in the region aren't commensurate with housing costs, and property taxes are very high. (About 40% of our mortgage payment!) My wife and I manage to do okay -- own a normal house, go out to dinner, pay for entertainment, etc -- because there's two incomes from professional jobs, and no children. It was really difficult when I was single, though.

My wife is from Los Angeles proper. One time, we ran the numbers -- salaries, expenses, housing and taxes here, versus equivalent jobs and housing in Southern California. It turned out the LA area was more affordable, This also includes housing -- not in Goleta, Fontana, or Palmdale, but Thousand Oaks, decent parts of the San Fernando Valley, Eagle Rock, etc. It also considers we wouldn't be paying the same low Prop 13-adjusted property taxes as long-time residents.

TL/DR - an $800K house in LA is more affordable than a $300K house in Ithaca.
 

mercdude

Cyburbian
Messages
233
Points
7
Suppression of wages comes when there's an imbalance between worker Supply/Demand. On the west coast, San Diego is a prime example. Everyone from around the world wants to live and work there, so not only can you NOT get a decent job with a college education, but when you do, it won't pay very much. Why? Competition. Literally, people are moving there from the Philippines, India, Europe, etc. and they are competing with you: employers don't care if you're American or local, they only care about bottom-line.

Anyways, that's my pitch for why America's "finest city" is really a city of smoke and mirrors. As far as the bay area is concerned, much of the talent in software, etc. can work from anywhere so in order for employers to attract them to the region, they have to offer them good living wages. That said, if you're not in the tech industry or somehow connected to it, you can barely make your mortgage (if that). That's why a lot of people are moving out of the bay area and that's also why there's a huge push in CA to streamline affordable housing developments - as if no one learned from the housing crisis of '08 *eye roll*
 

Dan

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17,051
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Suppression of wages comes when there's an imbalance between worker Supply/Demand. On the west coast, San Diego is a prime example. Everyone from around the world wants to live and work there, so not only can you NOT get a decent job with a college education, but when you do, it won't pay very much. Why? Competition. Literally, people are moving there from the Philippines, India, Europe, etc. and they are competing with you: employers don't care if you're American or local, they only care about bottom-line.
I live in what I call a "lifestyle city" -- people move here not necessarily for work, but because they find something about the lifestyle here appealing. The county is semi-rural, but voting maps color most precincts deep blue. The area is surrounded by large swarths of state parks and forests. It's one of the nation's leaders for the locavore, farm-to-table, and slow food movements. There's a large population of older original hippies, new agers, and back-to-the-land/permaculture types, many of whom moved here in the 1960s and 1970s. The surrounding county has the highest percentage of lesbian residents in the United States -- higher than Hampshire County, Massachusetts or Windham County, Vermont. (Source: How Places Make Us: Novel LBQ Identities in Four Small Cities, Japonica Brown-Saracino.) Many of the people that move here are highly educated, but they're not here to work in academia. Many in this group don't mind housing that's fairly rustic, even considering the high price tag. Some seek it out intentionally.

It's a college town, but the two universities here are among the best in the world, so they don't have to resort to above-average salaries to attract potential faculty. They'll pay a premium to hire superstars in their field, though -- the professors who have the choice of teaching at any school in the world. Housing costs are still an issue among the majority of the academic crowd, though. From the link:

When Spitzer began looking for a house, she realized that the market was lacking in middle-class housing.

“There is a real deficit in medium-priced housing here. There’s a collect of poor quality, older and small homes that sell for maybe $100,000, and then there’s a lot of really expensive houses that are [in the] $500,000 range,” Spitzer said.
...

Truame said she thinks the housing market isn’t a deterrent to professors because they can afford it. The average professor at the college makes about $100,000 a year, and associate professors make about $80,000, according to data from The Chronicle of Higher Education. Her concern lies with the people at the lower end of the income spectrum who can no longer afford to live in Ithaca because of rising market prices.

“People who have been here, with service industry jobs, are getting pushed out of the market,” Truame said.

She said the prices are rising simply because of supply and demand. She said the school districts and appeal of the culture and job market makes many people want to move to Ithaca.

Chris Holmes, assistant professor in the Department of English, moved to Ithaca in 2012. He said many people who wanted to live in downtown Ithaca either thought apartments were too expensive or very run-down. According to Zillow, an online real estate marketplace and database, the median rental estimate for all housing in Ithaca is $1,771 a month as of September 2015.
One quirk of the housing market that I haven't seen elsewhere, even in other college towns -- a uniform moving day. Almost all rental leases are tied to the academic calendar, August to July, regardless of whether the intended tenants are townies or students. Deposits are high, and renters have to pay first and last month rent before moving in. Move-in specials are nonexistent. Many potential homebuyers rush to buy a house at the end of summer. We found our ideal house in September, and I had to pay a fortune to break the lease -- didn't get my damage or pet deposit back, nor last months rent, and the best I could negotiate was a two month penalty. Of all the expenses involved in homebuying, about $5,000 went to break a lease.
 

Doohickie

Cyburbian
Messages
1,232
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21
There is an area here in Fort Worth, around TCU, where all the apartments turn over with the school year, and it ripples into the community, but it's not so extreme that it would drive non-TCU rentals very much.
 

arcplans

As Featured in "High Times"
Messages
6,335
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24
Side note, I live in the farm-to-fork capital of America. Shameless plug for my hometown: https://www.farmtofork.com/
The only time i miss my hometown is when i see my high school friend's selling real estate and the housing costs are half of what mine are. Other than that, I rarely go back since my mother sold her house in Roseville and moved, however I will be in town for my HS Reunion this year (20 years) :cheers:
 
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