> Housing is more expensive for them than prior generations
I harp on this constantly. But housing is not more expensive in the majority of American metros. Adjusted for inflation the median cost per square foot of new housing is almost exactly the same as it was in 1990. (This doesn't even take into account that mortgage rates are drastically lower since then.)
We get skewed on this for two reasons. One is because homes today are substantially larger and have more amenities than they did in previous generations. We take for granted better fire safety, higher ceilings, central A/C, higher load electrical circuits, attached garages, better lighting, and swimming pools that are much more common in new construction.
Two is that we're highly skewed to a handful of elite metros, whose housing markets are not representative of the country as a whole. Housing is expensive in San Francisco, New York, LA, and DC. But in places like Tampa, Omaha, Cincinnati, and Phoenix the cost of housing (per square foot) has barely gone up at all.
The demand for ultra-expensive housing in places like the Bay Area is driven by the huge earning potential of the high-skilled labor market. (Of course the supply side of the equation is driven by NIMBY zealotry.) If you're talented enough to make it as an L8 at Google, then it probably does make sense to buy a house in Palo Alto. You'll earn far more money than you would in the St Louis tech scene. more than enough to make up for the living costs.
But unless you have the potential to become an L8 at Google (or equivalent), it makes no financial sense to choose to live in the Bay Area instead of Raleigh. It's like somebody who works as a back office bookkeeper insisting on buying custom tailored Seville Row suits for his work attire, then complaining that the costs of clothes has gotten out of hand.
> Two is that we're highly skewed to a handful of elite metros, whose housing markets are not representative of the country as a whole
Right, but what matters is the housing price where people are. It doesn't matter what the housing market looks like in South Dakota if I don't want to live there. While houses in South Dakota may be 1/10 the price of houses in NYC (likely cheaper, honestly), they also have 1/10 the population. The notion that the quantity of land somewhere (in this case, quantity for sale) should somehow equate to importance more than the quantity of people is ridiculous.
> It's like somebody who works as a back office bookkeeper insisting on buying custom tailored Seville Row suits for his work attire, then complaining that the costs of clothes has gotten out of hand.
No, it's like someone who works as a back office bookkeeper in New York City being forced to pay insane amounts in rent while seeing thousands of empty AirBNBs, hotel rooms, etc. and complaining that the cost of living has gotten out of hand. Housing is a necessity, "custom tailored Seville Row suits" are not. And it's simply not feasible for the vast majority of people living paycheck to paycheck to just up and leave to Raleigh like you imply.
> Right, but what matters is the housing price where people are.
We're not talking about houses in the middle of nowhere. These are major urban population centers.
The Houston metro area has 7 million people. The Phoenix metro area has 4.9 million people. Tampa metro has 3.1 million people. Houston and Phoenix are both larger than the Bay Area metro is currently. Tampa's just shy of the size of Seattle.
Nor is it the case that these are depressed areas with hollowed out job markets and no opportunity. They all have substantially lower unemployment rates than the national average. Well below the Bay Area in fact. All three of these metros have large-scale employers with plenty of high-skilled jobs. All three have economic growth rates and business formation rates far above the national average.
Sure, when you look at the whole metro area, you can get good prices. Most people don't consider the whole metro area. There is usually a specific area they want to live in, to be closer to family, to get better schools, to be closer to work, etc.
I'm in Indianapolis and just look at the difference across this one affordable metro area.
https://www.neighborhoodscout.com/in/indianapolis/real-estat...
Your other point about houses being "better" is also false. When you compare to economic items, you don't compare against something you can buy and something you can't buy anymore. The houses for sale are the "better" houses. That's the simple fact for Americans. It's because our culture only builds for the wealthy. The poorer get their hand me down houses.
Pretty much everyone I know is being priced out of market in the tampa bay area. Rent under $1k/mo means looking on the extreme periphery and suffering a long commute.
> Pretty much everyone I know is being priced out of market in the Tampa bay area.
Rents in the neighboring counties have been climbing steeply for years. If you were looking at an $850/mo property in 2012, expect to pay about $1500/mo for the same place now.
>And it's simply not feasible for the vast majority of people living paycheck to paycheck to just up and leave to Raleigh like you imply.
There was a time where people would move countries with nothing but what they can carry at a chance of improving their life. At a time where the only way to travel was by boat for weeks and the only way to communicate to relatives was by mail.
Now we balk at the idea of moving cities when it's easier than ever before, and we can communicate instantly across the world.
To be clear, it's not just "Raleigh" or "South Dakota", it's really any city outside of California + New York. I live in Richmond, an hour and a half from DC, and you can buy 2000 sqft homes for 200k.
>There was a time where people would move countries with nothing but what they can carry at a chance of improving their life. At a time where the only way to travel was by boat for weeks and the only way to communicate to relatives was by mail.
They went to a place that is better than their hometown. What you are suggesting is that people should leave their hometown for a place that is worse at everything except housing.
And they could set up in single room boarding houses or camp outside town when they reached their destination. Those boarding houses have been mostly regulated out of existence, and people camping within reach of most cities risk arrest.
But clearly not if you can’t even afford a place to live. Richmond and plenty other cities have TONS of economic opportunities, but not as many as NYC or SF - they’re also much cheaper. Clearly there’s a balance here so the answer isn’t so obviously “there’s a housing crisis because I can’t afford to live in SF”
Hmm - I think you're misunderstanding (or maybe I am too). There aren't really that many opportunities (AKA - jobs) in Raleigh as in DC. Certain professions are not as common in Raleigh as they are in DC. If you're looking to be a lawyer, DC probably gonna be better.
So, it doesn't matter if X region is cheaper if there aren't any jobs there...
I mean - I moved to the bay area because that's where so many software engineering jobs are. I didn't move here because I loved the high cost of living. I moved here because there were a lot of jobs and I had an easier time getting a job here than almost anywhere else (ironic - I know). The places that were hiring in "anywhere else" were paying $50k/yr and still not easy to get into.
Ok so the change from a decade or two ago is that young people want to live in places they can't afford. In the past they were evidently more content to live in places they could afford.
Doesn't really feel like cost of housing is what's changed.
I grew up in a small rust belt city. 40 years ago there were reasons to live there: factories with union jobs and an entire local economy built upon them (financial services, a hospital, bustling main street, etc). All that's gone now. It's not that I wouldn't be content like my parents were, it's that it's fundamentally not the same city it was back then.
It’s not like the dichotomy is so stark. Like the parent comment said: Raleigh is cheap but still bustling with plenty to do, Richmond, Baltimore, Atlanta, and so on are bustling but not stupid expensive. It’s not just “ghosts town” vs “expensive modern city”
I don't know whether it accounts for the entire "housing's more expensive everywhere" perception, but it sure seems like the only houses that exist near good schools and are cheap on a per-square-foot basis are giant, so still not cheap, thanks to a combination of zoning and developer incentives. It's not like we could live in a significantly smaller house if we wanted to.
Another change is that smaller houses have giant rooms. If you want a 4-bedroom in a decent school district (so, around here it'll be 80s construction at the very earliest, probably late-90s or later, or else in one of a couple very rich and expensive areas that have older houses) you're in for a giant house. A 1960s middle-class 4-bedroom probably has about the square footage of a modern 2-bedroom. Sqft./room is way up across the board. Further, floorplans that look nice in a walk-through or in photos but are incredibly wasteful of all that "cheap" square footage are the norm.
> what matters is the housing price where people are
What matters is where HN commenters are, because they are controlling this discussion. Let's not pretend that upvotes here are representative of the wider population, or that the average populations' opinions are well represented here. No, you did not imply that, I'm not attacking you or anything, but I figured it should be said lest we delude ourselves.
> I don't want to live there
Isn't it great that the increasing wealth in society gives us the idea that we can pick and choose anywhere in the country to live and then expect to buy a house there? This was not exactly the case for my (grand)parents. My family came from Buffalo, moved to Phoenix, and settled in the Seattle area(long before there were Amazon jobs, when the PNW was a refuge for weirdos). Imagine how silly it would be if the majority of the US population thought they were entitled to a house in a "tier 1" city.
That's ridiculous. The expectation of affordable housing, and being unable to move to some random town in South Dakota, comes down to the personal responsibility of "choosing to be poorer"?
> But in places like Tampa, Omaha, Cincinnati, and Phoenix the cost of housing (per square foot) has barely gone up at all.
Maybe if you stop looking at like 2018. But my on-the-ground analysis living on one of these cities is cost of housing has fucking exploooded. I built a house just two years ago, which I thought was incredibly expensive at 2 times the median home price in the area. I had it in the back of my head that I was insane to pay so much for a house, but since I could easily afford it, I went ahead with it.
Now, the median price has shot up by 25% and there are literally no new houses available for what I paid. My neighbors are relocating after only a year in their house and sold their house for 20% over what they paid new. The new construction 3 miles down the street from me starts at 30% more than what I paid, and a few are double or more. Meaning, 3-5x the median for the area.
All of this is trickling down to the rest of the area. Houses that went for $130k in 2015 have sale prices in the $200k range. We're talking 60s era ranch houses that haven't been updated since the 90s.
Olympia WA, 60 miles from Seattle, 100 miles from Portland:
A recognition (debate, but at least some recognition) of what is called "The Missing Middle" (medium density housing, alternative options, not just SFHs and "high rise").
A proposal is put forth, and there are screams from homeowners, because the study shows that the Average Property Value in the urban growth area will _slow_. Not decrease. But instead go from 12% YoY growth (which is insane) over the past 10 years to, if all measures are put into effect, an estimated 7% YoY growth.
Somehow these homeowners have got it into their head that they "have a right to" property value growth which, at its worst, will outpace inflation _by a factor of TEN_.
I agree with you in principle. Since the 2008 crisis, previously developer-friendly mid-sized Sunbelt metros have adopted some NIMBY building restriction policies that would make even coastal California blush.
But so far, that hasn't really created a housing affordability crisis... yet. A lot of the impact has been mitigated by falling mortgage rates and rising wages. Let's just take Tampa, as one of the hotter housing markets. Since 2014, median listing prices have gone up 57%.[1] Adjusted for inflation[2], that's 49% real price growth.
But over the same period, average mortgage rates have fallen from 4.49% to 2.95%[3]. Meaning for the same house cost, the monthly payment on a 30-year fixed mortgage has fallen by 18%. In addition national median incomes have gone up over the period by 10.5%[4]. (And almost certainly more in Tampa specifically.)
Therefore housing affordability has only declined by about 14% for the median household in Tampa. All during an extremely hot housing market. Again, that's still indicative of some recent bad NIMBY policies. If housing supply was perfectly elastic, things like lower mortgage rates and higher wages would benefit consumers instead of inflating property prices.
But there's no indication that housing has become drastically more expensive in "flyover country". This conclusion can be spot checked by comparing national consumer expenditure surveys over time. The percent of after-tax income spent on shelter has actually slightly declined from 17.8% to 17.0% during the 2013-2019 period.[5]
Economic opportunity is a big part of deciding where to live. Just like people migrate to America because there is a higher probability of securing security and economic advancement for their descendants, people do the same within the US.
In decades past, this might not have been so evident because the entire US was growing and opportunities were available everywhere, but as the disparity of economic growth between regions of the US diverges, it makes sense for people to value real estate in those regions more. And if you think the disparity is going to grow in the future, then you might be willing to risk even more to buy in.
Really cost of housing alone doesn't tell the full story without considering the jobs/income sources in the area.
I have noticed an irony that if housing in an area is really cheap you probably won't be able to afford to live there unless you are already a retiree who doesn't care about long emergency response time - because the highest paying job in the area is say a resturant manager at the local diner.
Before the pandemic economic growth was very urban concentrated - remote working normalizing might reverse the trend but there are still some service and infastructure demand constraints - chances are they need reliable high speed internet.
Can you name some? I would gladly leave my HoL city for a cheaper one with great job opportunities in technology (not necessarily at a tech company) and cheap housing. The only city that seems to have all those things is Minneapolis. Even Atlanta is fairly expensive at this point.
I work at Aberdeen, MD making 141k. I got an offer once for 155k from a nearby military base not long ago. I've seen houses nearby for 180k. Pretty easy to save here if you're ok with Gov beurocrac. Easy to get a new job, too.
The mortgage isn't the only cost. Interest is tax deductible. If you make decent money, you're better off with higher interest, lower house prices, lower insurance prices, and lower property tax. Let's not forget that debt does need to be repaid. Interest rates will likely never normalize, but anyone taking out 4-5x their income in debt, should at least be a little worried if they do...
Take Dallas Texas as an example. It wasn't affected very much by the 2008 bubble (probably because of high property taxes). The median price in 2000 was ~$100k and is now ~$240k [1]
Interest rates in 2000 were 8% [2]. They're currently 2.94%.
WOW! House prices are cheaper today! Not really. Let's take taxes into account.
Property taxes:
=240000 * 0.0208/12 # TODAY
$416
=100000 * 1.025^20 * 0.0208/12 # 2000
$284
Insurance is about $30 a month more today. And since the mortgage interest today is less than the $12k standard deduction, it probably won't get any tax benefit today. In 2000, it'd be about $100 a month.
But then there's the opportunity cost, too. Today your down payment is ~50% larger. The opportunity cost is about $100 more per month.
$1,004 + $416 + $30 + $100 = $1550 # TODAY
$1,202 + $284 - $100 = $1386 # 2000
It's only a ~12% difference. If you're in a more pricier market, the tax deduction was much juicier. Real monthly payments are ~50%+ more expensive. If you're an investor, cap rates are trash. Plus you're taking out debt to income that at any other point in history would seem insane.
The monthly payments aren't the big issue. The real trick is that by lowering interest rates from ~8% to ~3%, the Fed created $14T in real estate wealth out of thin air. That's where most of the inequality really stems from. For most people, their house represents the majority of their life's savings. If you're older and own a home, the Fed doubled your wealth. If you're younger and don't own a home, the Fed make increased your housing price by 5-20%, devalued whatever savings you had, and forced you to take on extreme levels of debt for a similar monthly payment on a house (which you probably don't have, because in real terms you need a ~50% bigger down payment).
YoY median home prices were up 13% nationally in August. That's largely driven by the diaspora we're seeing with WFH/COVID, with people pushing into more affordable communities and driving up prices. Until now we were all competing in major metros pushing up only the top end of the curve but now there's a push towards the median priced areas.
The media talk of diaspora, which is based on narrative and anecdote, needs to be measured and quantified before we can treat it as something that drives housing prices.
>YoY median home prices were up 13% nationally in August.
That's a misleading statistic. It simply means that the houses getting sold has shifted towards the higher end of the market. If you look at the price for the same house it's gone up somewhere around 3% YoY.
And sorry, but in markets like mine, over the last year the average house has spent about 72 hours on the market and "the same house" has been sold multiple times in the last decade each time for approximately a 20% increase.
I think the low end of the market isn't selling due to economic insecurity. Also being pushed up by well off city folk moving to the burbs due to Covid.
It doesn't help as much as you've implied since 1) you need 20% of the sticker price for the down payment, and 20% of $200k is more than 20% of $130k, and 2) in many jurisdictions you pay tax on the market value, so your taxes go up whenever mortgage rates fall and prices rise.
FHA mortgage down payment is 3-5%. There’s frontloaded mortgage insurance as well as ongoing monthly mortgage insurance, but the credit score and down payment requirements are very low. Most people with a pulse qualify.
If you come with enough money down, you can get a hard money loan with 70% loan to value (30% down) 1 day after bankruptcy or foreclosure.
I'm not sure what you're arguing here. The simple fact is the amount people pay for housing is up since the 1990s. You can find this data on the BLS web site:
https://www.bls.gov/cex/csxmulti.htm
Here is the data adjusted for constant 2020 dollars:
But given the choice between smaller and cheaper houses and larger and more expensive ones, they almost always choose the larger, more expensive ones.
The university in town is over a hundred years old, and many of the dorms are that old too. Most have no air conditioning, and have insufficient power for a resident to add a window air conditioner without special approval.
And the parents and students describe them as, "practically unlivable", "bad for the students' education, and all of that. There are numerous schemes around to get that special permission. And many scheme to move out ASAP. These are folks borrowing tens-of-thousands of dollars to go to school, and yet still go even deeper into debt for better housing, when the cheap option is right in front of them.
100 years ago no one would have thought twice about the exact same conditions. I doubt anyone would have thought twice about it even 50 years ago.
People just expect a certain level of amenities, and are willing to pay to get them.
I worked in office without AC under roof in summer and it was not just less comfortable, but productivity really went down measurably. I dont know how hot it gets there, but it can be so hot they are at disadvantage against students who dont live there.
I also stayed in house with bad insulation and it affected my health. 100 years ago, my health would be affected the same way whether better house would be available or not.
Maybe they are all irrational. Or maybe those dorms are really in bad shape.
50 years ago it was cooler and everyone grew up without AC, they were used to it. That's not the case today. It's hotter and people grow up with AC and are not accustomed to living without it. The bar has moved.
It looks like this is counting the average rather than median, so it's going to be skewed by the top earners. Here is per capita income during the same time period using 2019 dollars:
It has increased even faster than average housing costs. To be fair, that's is expected because rich people don't spend the same percentage their income on housing as most other people.
Good point. The data I reported is for "shelter" only, excluding utilities, furniture, etc., so I'm not sure how that looks on the income curve. You're also reporting average income, not median. Median income is much stabler, having climbed about $6000 since 1990.
My main point is, people are spending more on housing. It's not a mirage. It is highly concentrated where there are jobs, but of course people move to where the jobs are. It's facile to say they should move somewhere else, or that they are getting "more" for their housing.
>My main point is, people are spending more on housing. It's not a mirage.
House sizes have grown a lot too. When you factor that in, you get to what the OP stated: per square foot, housing prices have been remarkably constant (and for much longer than his 1990 to 2020 window).
When you factor in that houses are now vastly more energy efficient, safe, with niceties like central air, then modern home buyers are likely getting the best deals in history.
Interesting, I've never seen that stat before. one problem is that inflation is a lot lower than before. If you borrowed a house in the 70s/80s you'd pay less each month but after 10 years that payment would be negligible, where now it still takes a big chunk out of your pay.
I have actually wondered if this is where a big chunk of our parents perceived security came from- if I buy a house, but in 4 years I am making 20-30% more, and in 20 years I am making twice what I paid for the house, life feels pretty comfortable.
We have low interest rates today, but we aren't inflating out of our debt like generations past did.
Inflation adjusted housing cost per square foot has remained remarkably constant for decades. Thus, given higher interest rates over the same fixed timeframe, relative payments were higher.
> Inflation adjusted housing cost per square foot has remained remarkably constant for decades
I think you mean for the first year. With higher inflation everyone got big wage rises each year which quickly made mortgages more affordable. Now wages are stagnating so even 10 years later most people dont earn much more than when they first took out the mortgage.
I spend much more on food now than I had when I had been a student, but it's not because the food is much more expensive, but rather I am much wealthier now.
Grows in expenditures does not immediately imply growth in costs.
Historically a house in the US cost around 3 times the median annual income. During the housing bubble of 2006 the ratio reached 4.5 - in other words, the median price for a single family home in the United States cost 4.5 times the US median annual household income
> Two is that we're highly skewed to a handful of elite metros, whose housing markets are not representative of the country as a whole. Housing is expensive in San Francisco, New York, LA, and DC. But in places like Tampa, Omaha, Cincinnati, and Phoenix the cost of housing (per square foot) has barely gone up at all.
I think cities are fundamentally the wrong unit to look at when thinking about housing prices.
What we really want to know is "how much does it cost to live some place where I can get a job". Knowing that Tampa is just as cheap today as it was 40 years ago means little if Tampa today has, say, only 70% of the jobs that it did back then.
What we really need is some sort of normalized "job availability unit" like "per capita" but "per employment opportunity" and then try to calculate current and historical housing costs relative to that.
> "how much does it cost to live some place where I can get a job"
And we'd do well to price that in hours of work per week after taxes, including commute.
That is, making $30 an hour where a house is $300k can be better than making $60 an hour where a house is $600k . Think about progressive tax rates, CoL, commute time et al.
No, you have the option of buying a condominium apartment in most cases.
Here in the Philadelphia urban real estate market —- which has no shortage of reclaimable housing —- the break-even point for builders is about triple the value of the existing homes. No current resident can afford to buy one, so single family homes get converted into tiny “luxury” condos.
[Edit: there are city subsidized ‘tiny-housing’ developments but these are more for welfare recipients than regular buyers.]
The same thing is happening here in Austin. Developers are buying up older properties, demolishing them, and then splitting the lot into 2 or 3 sections and building smaller "modern" homes/condos.
This is one of the perverse effects of limits on new construction. Since builders can only build so much, they naturally focus on the high-end where profits are fattest. In a well-functioning market there is only so much demand for luxury housing so they would also build smaller, less expensive stuff as well, but they can't
>One is because homes today are substantially larger and have more amenities than they did in previous generations.
I have noticed that most of my fellow millennials seem to have completely forgotten the concept of "starter home" and assume that as soon as you turn 25 you should be entitled to a 4 bedroom house with a pool, huge yard, wonderful neighborhood, three-car garage, etc.
Among my friends that have bought houses, many of them have gone into significant debt just to buy a 3-4 bedroom house, even though they have no kids and only use one of the bedrooms, because they think that at some point in their life they will put them to use. The extra rooms go completely unused (other than the extra furniture which they also went into debt for). It's like they see the house that their parents own and assume that their house also needs to be that, and ignore the fact that their parents probably started out in a much smaller home and then moved into a big one once necessary.
>Two is that we're highly skewed to a handful of elite metros
I contend that it's not even just this, but also that within metros millenials are highly skewed to a handful of elite neighborhoods.
I live in a medium COL metro, and all of my friends constantly lament the "high" cost of houses and how they will never be able to afford a house. But when I ask what houses they are looking at, it's always the nicest, premiere neighborhoods that have McMansions with huge yards, white picket fences, hip restaurants within walking distance, etc. Not a single one of them even considers living in the many much cheaper neighborhoods.
There certainly are issues with prices in some areas (cough SF cough) but at least in my metro and in my friend group, the "houses cost too much" meme seems to be a scapegoat for what is really just an inflated sense of what housing they are entitled to.
> I have noticed that most millenials seem to have completely forgotten the concept of "starter home" and assume that as soon as you turn 25 you should be entitled to a 4 bedroom house with a pool, huge yard, wonderful neighborhood, three-car garage, etc
I don't know where you live but I almost find this insulting.
I'm from Amsterdam my self and friends of my are being forced out the city because of the high rent prices.
I'm 32 year now and because of some shitty new rent laws that says every tenant needs to have an individual rent contract which our landlord refuses to give I'm also being pushed out of my home. I tried to find something for my self just anything would do, but I'm kinda skewed because I just earn above social housing and here in Amsterdam there is not really a market anymore for middle incomes. So yeah I'm being pushed to either live in a room or move out of the city. But I also couldn't find a room in time so now I'm going back to my parent. So yeah your comment kinda hits a nerve for me.
As I mentioned in my comment, there clearly are actual real estate issues in some metros, and Amsterdam may be one of them. But your situation is often conflated with the issue I am describing in my comment.
I live in DFW, and there is an abundance of middle income places to rent and even buy. The problem, as described in my previous comment, is that those middle income places are in older buildings, or have older appliances, or aren't within walking distance to the hip nightclub area, or have a 10 minute longer commute, and thus my fellow millennials seem to deem them unacceptable places to live. These are the same people who have complained to me that their high-rise condo downtown across the street from the nicest steakhouse in the city is driving them into debt, or have complained that they're depressed that they will never be able to afford a home while linking me a Zillow page of a $1.5m newly renovated house in the premiere neighborhood in Dallas.
Housing in the Netherlands is really awful, in the '90 the boomers have build smaller apartments for their parents to move in and actually profit in an illicit way 2x of their real estate gains of sometimes 6x. No boomer is living smaller to make room for the next generation. I think the best way to combat current shortage in housing is putting up a limit on m2 that an individual could claim. 300m2 for a single person in a metro area while being on a pension is not sustainable in current conditions.
Not sustainable for whom? If their pension covers the taxes and they can support themselves so they are not a burden on social services or something else what do you care?
No country for old men indeed.
BTW, I'm mentioning social services because here we do have some complain how hard life is with their meagre pension... all the while living in a 3 room flat in the middle of the city. I find those people unreasonable and I believe if they would sell / rent that property and downsize they would have a much better quality of living.
So, someone who worked their entire life and paid off their house should be forced out of that house and made to move in retirement because...you'd rather be able to live there with a roommate?
They did that to their parents, and on top of that advantage they systematically didn't build enough houses for the projected population growth.
I think it is reasonable to ask if you set up a whole generation for failure yourself. Millennial choices are severely handicapt considering how we inherit the world versus how the boomer in the 90ties got it.
> I have noticed that most millenials seem to have completely forgotten the concept of "starter home" and assume that as soon as you turn 25 you should be entitled to a 4 bedroom house with a pool, huge yard, wonderful neighborhood, three-car garage, etc.
"Starter homes" for young people is the stuff that was built 30-40 years ago that hasn't been updated. So they are buying those mcmansions because that's what was built in the 80s-90s-00s. The really nice, older urban areas with housing built before that is way more expensive in absolute dollars.
Smaller is not cheaper in most cases. Smaller is "established" and everyone with money wants to live in those established neighborhoods, not the suburban sprawl 50m from the city center.
This is a solid point; my house seems like a classic starter home physically: a 1930's brick duplex with less than 1,000 square feet. But it's in 1930s neighborhood close to the city... so my "starter home" has a market price well over half a million dollars!
Price correlates more with location than size, at least around here. "Starter home" prices don't start to show up until you get to the wrong end of a 1-hour commute. And most of those less-expensive houses are physically larger than mine, because no one has built houses under 1,000 square feet for decades.
>"Starter homes" for young people is the stuff that was built 30-40 years ago that hasn't been updated. So they are buying those mcmansions because that's what was built in the 80s-90s-00s. The really nice, older urban areas with housing built before that is way more expensive in absolute dollars.
In my metro (DFW), the neighborhoods of houses built in the 60s/70s/80s are dwindling because nobody will buy them. There are neighborhoods of perfectly fine ~200k houses just sitting on the market for months because "ewww, I don't want to live in Grand Prairie/Garland/Irving". Then those same people pine over the newly built $500k mcmansions in Frisco or the $2m mansions in Highland Park and lament about how they'll never be able to afford being a homeowner. Do you see the disconnect?
>Smaller is "established" and everyone with money wants to live in those established neighborhoods, not the suburban sprawl 50m from the city center.
It's not some secret that desirable location is a huge driver of property prices, and being closer to a city center is more desirable. My parents knew this 50 years ago, which is why even though they loved living downtown in an apartment, when it came time to buy a house they moved out to the suburbs because that's where the affordable starter homes are. Then, when they became more established in their career and built up some wealth, we moved a little bit closer to the urban center. That's just how it works. But these days, millennials seem to think that they are automatically entitled to live downtown in a 4 bedroom, newly renovated/constructed house with full amenities next to the main park and hip shopping center and zero crime while on an entry level salary. I understand that, and I wish I could have that too, but that's just not how the world works (nor how it has ever worked).
Sounds like the 200k houses need to come down in price.
This is another reason people are burned on "starter homes". You can't get your money out if you need to move. Cheap houses are in undesirable areas and you can't sell them, better to rent.
> In my metro (DFW), the neighborhoods of houses built in the 60s/70s/80s are dwindling because nobody will buy them. There are neighborhoods of perfectly fine ~200k houses just sitting on the market for months because "ewww, I don't want to live in Grand Prairie/Garland/Irving". Then those same people pine over the newly built $500k mcmansions in Frisco or the $2m mansions in Highland Park and lament about how they'll never be able to afford being a homeowner. Do you see the disconnect?
An alternative hypothesis would be that suburban development patterns don't work generally. I don't know anything about the DFW area specifically, but it's possible people don't want to live in those cheaper areas because they are poorly laid out and the infrastructure maintenance is higher than the revenue the area can generate. This may manifest itself in different ways (poorer schools, sidewalks, amenities), but one way or another, these neighborhoods are signaling decline.
Many first and second generation suburbs are in death spirals because of this problem. Buyers who can afford it chase newer development because the areas have an optimistic future and no obvious maintenance problem. Unfortunately, many of those areas will be in the same spot 30 years down the line.
> But these days, millennials seem to think that they are automatically entitled to live downtown in a 4 bedroom, newly renovated/constructed house with full amenities next to the main park and hip shopping center and zero crime while on an entry level salary.
I'm not saying there aren't some entitled people, but I haven't encountered this attitude very often - it seems like there are plenty of other reasonable explanations for what is driving consumer choices without stereotyping.
I live in DFW as well (Oak Cliff), one thing to keep in mind about home prices are schools. In East Dallas, on the border of Lakewood schools, there's literally a $100k difference between one side of the street and the other. A good public school in DISD is rare and so home prices around it are very high.
I think the quality of the local school drive home prices considerably.
I notice and acknowledge this as well, but it's the same conversation about starter homes: if you are currently childless and you were to become pregnant today, you would not start using or benefiting from a school district at all for another 5-6 years. Why pay the premium for a nicer school district that you aren't even using? You're essentially just throwing away that money for half a decade, and who's to say if that school district will still even be a good one 5 years from now.
Why not move into a cheaper starter home now, and then once your child is about to start school (and you presumably have gotten some raises and built up some wealth), move into a more expensive house in the better school district? That's what the entire concept of "starter home" is about.
So now the conversation becomes: it's not that this person can't afford housing, it's that they can't afford housing that has an amenity they won't even use... which makes the entire situation seem even more silly.
It's not a single point. Builders are cutting corners any way they can. Interior trim is expensive to install so they just declare that the modern trend is bare walls, floor to ceiling that you can bang up easily. Tract home inspectors will skip over most units so you can leave out flashing around windows and doors. This is their mentality.
On top of this, if you buy a house that is 40 years old, it's more likely to have problems and deteriorate in the future. Housing is, frankly, terrifying as a financial asset. If it goes up, great! If it goes down, you can easily lose YEARS worth of wages when sold at a loss, if you're able to sell it at all.
I would have not much of a problem living in an old place. I'd have a lot of skepticism to conquer about purchasing one.
Have you ever actually look for small living spaces in the US? I would be perfectly fine with a 450sf apartment in northern VA, but their almost impossible to find in desirable locations. A large reason for this is the actual cost to construct a building doesn’t increase linearly with apartment square footage. Simply having a smaller apartment doesn’t reduce the amount of space needed for hallways, elevators, or parking spaces. Kitchen’s and bathrooms similarly cost a lot more than large carpeted areas.
This ends up being reflected in renal prices. My building has a 578 sf studio @ 1515$/month where a 751 sf 1br is running $1,625/month. Add in parking and your talking 30% more space for 7% more rent.
It’s not that the actual cost per SF is equivalent, it’s that housing got upsized without much input from consumers.
Maybe people in middle America already have enough space to not feel pinched so that extra space is viewed as an amenity not a huge factor that they demand? In my experience in denser high COL areas space is priced basically linearly on the margin. In NYC going from 1 br to 2 br can significantly affect your quality of life so people are willing to pay an extra $1000.
> Among my friends that have bought houses, many of them have gone into significant debt just to buy a 3-4 bedroom house, even though they have no kids and only use one of the bedrooms, because they think that at some point in their life they will put them to use.
Are you sure your friends aren't just being rational? I thought about the rent vs buy thing pretty constantly in my 20s and always came down on the rent side. Not because renting Dwelling A would be cheaper than buying Dwelling A, but because I was happy living in Dwelling A (a nice-ish 1-bedroom apartment) but if I were to commit to ownership I'd want Dwelling B (at least 3 bedrooms). Life can change fast - you're not sure which fling will turn into a spouse or when a little one will come along or when you'll really need a home office. Selling a one-bedroom condo is obviously doable, but transaction costs are fairly insane on real estate, and it seems like low-end places (like 1-bed condos) haven't historically experienced the same appreciation as standard houses.
It sounds like your friends could get by with a Smart car but bought a Toyota RAV4 instead. And when they decide to trade up to a Tesla in a few years, they might find that the RAV4 retained value better than the Smart car, because that's what "everyone" wants!
Sure. If you're being rational, it would possibly make sense to buy a 2 bedroom house or even a 3 bedroom if you think you might need an extra room for a kid plus a home office.
But it's not as rational to insist that you need 4 bedroom house with a three car garage inside a top school district when you aren't even married/pregnant yet. Yes, life can change fast, but paying a premium mortgage for a top school district that you won't even use for 6 years minimum (if you suddenly got pregnant today) and an extra bedroom that is going to go unused for at least several years (second pregnancy, perhaps)? I can't see how that's rational.
With real estate prices in some of those areas going up %10+ per year, and the 6-8% transaction cost of selling a property, buying something that you may not need for 10 years starts seeming more rational.
It's a risk, because things change, but if you know you're going to be somewhere long-term, it's a rational decision in a irrational game.
It might end up cheaper overall then buying twice or renting and moving. Especially with prices rising every year. If you know you want kids one day and want to live in that area and paying that mortage still leaves you enough money to live, it easily ends up better deal.
> Among my friends that have bought houses, many of them have gone into significant debt just to buy a 3-4 bedroom house, even though they have no kids and only use one of the bedrooms, because they think that at some point in their life they will put them to use.
I was one of these people who was conservative and bought a small cheap apt starter home instead of a 3-4 bedroom house. 10 years later I can't afford a 3-4 bedroom house because they've gone up in value so much so I'm still in my apt and its crowded.
Looking back and what would have been optimal I should have bought a huge house as soon as possible, probably a couple of them. That way I could retire by now.
I did the "starter home" thing in 2006 and then the market crashed and I was under water until 2019...
I would never recommend the idea of a "starter home" to anyone, ever. It only works when housing prices are on the rise and continue that way the entire time you live there.
is there such a thing as non-survivor bias? You perfectly timed the most dramatic fall in home prices in maybe a 100 years. The subprime collapse aside, a home purchase is usually a safe investment.
It should be noted, they don't build 2 bedroom homes anymore. I was talking to a real estate developer in Sacramento about this. New 3 bedrooms do exist, however, they would rather cram out the lot with a 5 bedroom since the cost to add on another few hundred square feet is nothing if you have the equipment and material right there. PLUS! People will go ahead and take on huge loans with that low interest rate. It is win win (unless you don't want huge crushing loans).
>It should be noted, they don't build 2 bedroom homes anymore
I don't know if this is what you meant by this, but I do see this same argument come up a lot, and it's a great example of the "entitlement" I'm referring to.
The only reason it would be relevant that they don't build 2 bedroom houses anymore is if you for some reason think you must have a newly built houses. The old 2 bedroom houses didn't suddenly disappear. They are there in abundance for great prices (at least in my metro), but my extended circle (close friends plus people I know from childhood/high school/etc) won't buy them because they insist on new builds or new renovations.
"The only reason it would be relevant that they don't build 2 bedroom houses anymore is if you for some reason think you must have a newly built houses."
Yep. Hence "they don't build 2 bedroom homes anymore"
"The old 2 bedroom houses didn't suddenly disappear."
The population of Americans in their 20s/30s (typically the age of first time home buyers) has remained mostly static since 2000.
But hell, let's go ahead and assume that the population has grown in some unknown way. Why is my metro awash with perfectly fine $200k 2bedroom homes? The supply is there. It's the demand that has dwindled.
"Starter homes" were bought up by wealthier older people or businesses to turn into AirBnBs or rentals.
https://www.bobvila.com/slideshow/7-signs-starter-homes-may-...
I don't know if you talk to any "millenials" but most of them are _extremely pragmatic_ by necessity.
Fact is though, it doesn’t matter much where in the world you’re looking to buy. If it’s a capital you’re expected to pay close to $1m or more for a house, even in places like Beirut where the houses don’t have central water, electricity/internet infrastructure is extremely poor. Prices are the same. This in a moment in time when the majority of people barely can afford food due to the pandemic and financial meltdown that has occurred.
The main reason behind it all is the low costs of taking on debt, which in some scenarios is totally insane. Italy for example that has been bailed out several times can get rates around 1%. What kind of entity would accept the risk of default when the profit is close to none after inflation?
The world is obviously in a debt bubble - the question is only when it will pop & how dramatically it will happen.
It's essentially a distillation of underwriting standards, low/zero central bank interest rates, and consumer behavior.
Underwriting standards for mortgages are typically based on loan to value (LTV) and debt to income. In that calculating, value is traditionally defined as "what the market currently values comparable assets at" (aka comps). For debt, providers of credit (banks and the central mortgage agencies) are more concerned with ability to repay, rather than absolute debt. Consequently, monthly payment >> total price.
Therefore, in business as usual (moderate to high interest rates), there are caps on how much individuals can leverage with mortgages (i.e. eventually their LTV or debt to income will exceed standard limits and they'll be denied a mortgage).
Unfortunately, both of those key components are heavily influenced by central bank interest rates. If the Fed decides to plunk the rate at 0%, mortgage rates decrease as well.
Because mortgage rates have decreased, my resulting monthly payment for the same total loan value decreases. Or, conversely, the total loan value I can assume for a given monthly payment increases.
Because it increases, I can pay more for a house. And either I, or someone else does!
Now, a few months later, someone else wants to buy the 2nd house on the block. They call out an appraiser, who turns the crank on their standard process, looks at comps in the neighborhood, and values the 2nd house in light of the 1st home sale. Because that 1st sale was inflated (inasmuch as we can judge), the valuation on the 2nd house is likewise inflated.
Ultimately, both of these have the end result of raising the cap on how much borrowers can "afford" to pay (assuming static income) for the same asset. Whereby the financial system previously capped their effective leverage at one level, now it's allowing greater leverage (albeit greater leverage that "looks" like the same value, because the underlying inputs have changed).
Tl;dr - The financial system used to impose a cap on how much I could pay and qualify for a standard mortgage. Because of actions taken by central banks and consumer behavior, that financial system-imposed cap has effectively been lifted. Now, the consumer themselves is the primary brake on overpaying. And average consumers? They don't math too good.
It's been a few years since we left, but those prices are generally for Vancouver specials because the land is more valuable than the old frame. I know PoCo has risen in price, but not near $1.5M-$2M CAD for a starter. Many friends bit the bullet and struck outward in the quest for affordability (Langley, Abbortsford) while still being within the Vancouver area.
> I contend that it's not even just this, but also that within metros millenials are highly skewed to a handful of elite neighborhoods.
In St. Louis there's a small but frothy back-to-the-city movement that's driving prices up to new highs in a handful of trendy neighborhoods. And it's all anybody can talk about. It's a kind of synecdoche for "the housing market" to reference these tiny neighborhoods while using cargo-cult language about "gentrification" that people learned on twitter.
Make no mistake: prices are way up in those neighborhoods. But they're walking distance to far more affordable housing. It's really bizarre.
There was gorgeous old architecture to be had on the cheap, if you were okay with a couple crumbling vacants on the block, trash everywhere, poorly rated public schools, overflowing weeds, and frustratingly difficult access to the ostensibly adjoining trendy neighborhood (the ones I was looking at were separated by a half mile with a single cross street, where blocks in each of the neighborhoods are probably 4-500 feet long).
When you're shopping for ten years (and not just yourself) you get gun shy about stuff like that
> There was gorgeous old architecture to be had on the cheap, if...
St. Louis really punches above its weight in gorgeous old architecture, so there are well-maintained, affordable neighborhoods with pretty old red-brick houses, too, but the real value is to be found in plain working-class neighborhoods where the houses never show up on Instagram. That housing for actual working-class people is unsurprisingly where most working-class St. Louisans live.
Of course, nobody who has ever used the word "gentrification" on twitter has any interest in living in any of those neighborhoods, so their existence is rounded down to zero in the discourse.
It wasn't that long ago that even the coolest neighborhoods with the best housing stock were wildly undervalued against their fundamentals. And hipster St. Louis isn't thrilled that the secret is out.
I have noticed that most of my fellow millennials seem to have completely forgotten the concept of "starter home"
I've noticed this too, but obviously it's not universal (lest someone accuse me of bashing millennials).
And with regards to houses getting bigger, I keep hearing about the "golden years" when you could buy a home on a single income. Sure, but those homes were similar to what my parents starter home was - 1000 sq ft, 2 bed, 1 bath with a family of 5 living in them (siblings sharing rooms).
> I have noticed that most of my fellow millennials seem to have completely forgotten the concept of "starter home"
"Starter homes" tend to be fewer these days, especially in desirable areas. Much of the old "starter home" inventory has been upgraded and made much larger over the years, making them not really starter homes anymore, and very few builders build small houses these days, since profits for building larger homes are higher. The closest thing to starter homes being built today are condos, but those are usually in high cost areas, so again not terribly accessible.
This is why it would be good to change zoning to allow existing single family zoned lots to be subdivided or turned into multi-dwelling lots, which can accommodate a main home and a separate "starter home". This is starting to be done in places like Toronto with "Laneway houses"
> McMansions with huge yards, white picket fences, hip restaurants within walking distance, etc.
Huge yards, white picket fences, absolutely, but where are you finding "McMansions" with hip restaurants within walking distance? Usually "McMansions" are synonymous with totally un-walkable and car-bound developments.
People I know buy smaller flats if childless, rent with roommates and have three kids in one room.
And cant afford large houses, not even with debt. Cause no bank will borrow them. If your friends could get that much money, they are likely well off and see the house as investnent.
Which is how we bought put flat - rent was only slightly cheaper then mortgage.
> Among my friends that have bought houses, many of them have gone into significant debt just to buy a 3-4 bedroom house, even though they have no kids and only use one of the bedrooms, because they think that at some point in their life they will put them to use.
The problem is they think they might not be able to afford it once they have enough kids to need it. Ironically lots of people thinking that way reinforces the problem.
> I have noticed that most of my fellow millennials seem to have completely forgotten the concept of "starter home" and assume that as soon as you turn 25 you should be entitled to a 4 bedroom house with a pool, huge yard, wonderful neighborhood, three-car garage, etc.
Then you've got a non representative sample. This claim is outrageous, and it's not true. Honestly it pisses me off how casually you just assert that most millenials think this way. A very simple search for millenial home buyers surveys will show this is not the case.
> Honestly it pisses me off how casually you just assert that most millenials think this way.
He never asserted anything about "most millenials" and specifically talked about his friends. If someone talking about their personal experience with their owns friends pisses you off, then you're reacting to something else.
I've got 500k in liquid assets, a respectable salary and no debts. I'm looking at the housing market and see two options: a junk house in a sketchy area for 600k or a decent house for 1.2M, but I'd have to give up financial security and live pay check to pay check.
If there was a smallish decent condo for 200k, I'd write a check today.
it isn't just homes. there is no starter car, no starter tv, no started anything. I regularly work with tech support persons who are spending more than I am on a wide range of goods and services. It is mind boggling to me.
Yes some have trade offs but that seems to be either they are house poor or car poor but mostly the latter. What catches them as with those who do have the money is all those monthly bills can add up really quickly. Adding twenty to thirty to your monthly phone bill for a new phone doesn't sound bad until they add in other similar arrangements.
Sadly far too many seem to think they are just free this or free that away from having it all. (as in if healthcare were only free or college was only free they would not have such problems - welcome to the poison of politicians and mass merchandise marketing combined)
I don't think anyone that says it intends it this way, but this is how I read 'generation rent'.
Not 'forced into renting instead of buying property' but 'subscription over ownership for everything'. No money left, lots of stuff, as little of it as possible actually bought and owned. Lease car, rented flat, rented furniture, takeaways and meal box kits, craft beer / organic veg boxes, etc.
In many cases it's a reversion rather than a new idea, and fine, it's not wrong, just different. Very different though, and largely not for me (though I fall in the generation described).
"Starter TVs" are certainly still a thing. And it's not just inflation-adjusted; you can get a 24" LED for about the same dollar price that a 15" B&W CRT TV would have been when I left high school. And there are used units out there as well.
Local control over zoning is a massive problem. Most people agree that building more homes would bring housing prices down. However, most cities have more than half of the land exclusively reserved for single family homes and have rules that prevent any creativity or density. They want other places to add the housing. I can't see the problems going away unless entire states reform zoning.
Akron, Ohio is up 7%. So is Cleveland, Madison, and Toledo. Cincinnati, Milwaukee, and Scranton are up even higher. [1] These are figures from before the pandemic.
The idea that the rust belt has lots of cheap housing is outdated. That was true in five to ten years ago. It is not true today. You can expect to pay around $200k for a house in any given rust belt city with decent jobs -- and quite a bit more if you want to live in a nicer neighborhood or a nicer home.
And can you get the same services, community (people of similar circumstances/values as you moving there), opportunities, schools, safety that these in demand areas provide? Travelling around only reinforces my desire to buy in an in demand area. I cant just shop at panera, five guys, and walmart for the rest of my life.
I dont think this is a regional problem -- it is a problem of income/price and income/rent ratios off the historical chart almost regardless of where you live. It is a worse problem in SF, NY, LA, and DC but still a universal problem.
I’ll ding you on the financial sense of not living in Bay Area vs living there even if you’re just a new grad (or just below L8). I live in a very low cost of living area with salary nearly twice the median software engineer and I’d still be able to save 40% more on a google paycheck even adjusting for the rent 5 times my current for the same amenities.
We don't even need to be that frugal! 100% of the net increase to VHCOL compensation can go into VHCOL housing expense increases with plenty of room to spare.
If we would pay 33% of your income in LCOL housing, and move to someplace that pays us (net) 100% more, we can afford 4x(!) the rent we did previously.
We're bidding against everyone else who wants what we want, so it's no wonder housing is insane in the Bay Area, since household incomes are so much higher.
Uh my Zillowing suggests that you’re wrong. At least in WI - and what’s more middle American than WI. I’m talking even bumfuck, wi, where a hunting lodge with no plumbing and a woodfire oven for heating will set you back 100k. In Madison WI you are wrong nearly on an order of 10 (Comparing w 1990 prices).
> But unless you have the potential to become an L8 at Google (or equivalent), it makes no financial sense to choose to live in the Bay Area instead of Raleigh. It's like somebody who works as a back office bookkeeper insisting on buying custom tailored Seville Row suits for his work attire, then complaining that the costs of clothes has gotten out of hand.
Buying a custom tailored suit requires extra/better labour and materials, so it makes sense that the costs associated with it would be higher.
For this analogy to apply to housing, the cost of constructing and maintaining housing should be higher in the Bay Area too. However, almost all the increases to rent in urban areas has come from increased land values. This isn't a result of the landowner putting in "extra work" to make it better; they get to extract the added land value that the community created while putting in no extra labour or capital.
The fact that private landowners capture all this extra value the community created is not inevitable! It's entirely a result of the economic system we've chosen to stick with. There are solutions that are both more fair, and economically efficient [0].
Not sure that's true. L8 at Google is a total compensation of >$500k. You can afford to live on that in the Bay Area.
If you leave Google for a job in Raleigh, you're probably going to take a massive pay cut. Remember, the average SWE makes like ~$100k. It's not nothing but it's not that great either after you factor in a mortgage, car insurance, gas, utilities, food, retirement, and increased healthcare costs due to being on an inferior health insurance plan. At a certain point, you're better off at Google.
It seems to me that the places where cost of living is still low is places that people don't want to actually live. Whereas in previous generations regular people could afford to live in interesting parts of the country.
I tried to confirm this for Cincinnati. Zillow reports that the median list price/square foot in Cincinnati was $131 in March 2019. In March 2011, it was $82 (roughly $93.20, adjusted for inflation). That is a huge increase proportionally, and that's only going back 8 years. I would be shocked if the increase isn't more severe going back to 1990.
Cost per sq. Ft. may not have gone up significantly (adjusting for inflation) but if all you can get are larger houses (i.e., builders are not making 1300 sq. Ft. houses like they used to) then it really doesn't matter. See https://www.manhattan-institute.org/reevaluating-prosperity-...
You are so, so close to understanding the problem, and then stopped at the last minute. Are you arguing that SF should be only populated by L8s at Google? Surely not. It should make financial sense for teachers and cooks and Uber drivers to live in SF, because that's how cities work. L8s are great at writing design docs for obscure CI systems but what if I want a burrito?
> The demand for ultra-expensive housing in places like the Bay Area is driven by the huge earning potential of the high-skilled labor market.
Maybe the Bay area, but that's (sadly) not the case in places like Vancouver and Victoria. Sky high property prices, but no corresponding earning potential.
I've never quite been able to figure out what happened in Vancouver. It's a great city with a tech scene but salaries there seem very low (by American tech worker standards). Who is actually buying all these multi-million dollar bungalow? None of the senior-level engineers I've worked with from the area would ever be able to even sniff being able to afford that.
Chinese bureaucrats looking to park some money outside china's financial system. Some west coast cities even instituted special taxes to try to prevent this.
> But housing is not more expensive in the majority American metros
My parents bought their NYC home in 1976 for $76,000. Adjusted for inflation brings that to around $350,000 in 2020 dollars. The house is currently valued at $800,000.
Sure, but post-WWII the federal government injected billions (in 2020 dollars) into the pockets of mostly white veterans to build millions of homes. The federal government also provided generous home loans and unemployment insurance. Today, these policies would be viewed as socialist by the very people who benefited from it the most.
USA in 1945 was 91% white so it kinda makes sense that government did it. Homogeneous countries have no political issues with welfare because everyone is alike.
People find differences. Back then the places that didn't have a ready supply of colored folks (might as well use the adjective of the day) were treating the Irish and Italians and eastern Europeans like crap in their place.
1945 is kind of different because by then it was pretty clear we were all in it together but in 1940 or so there was still plenty of "white on white" bigotry targeted floating around. 20+yr later it was considered novel that JFK was Catholic.
Unfortunately this is also where all the tech jobs are located.
And the reason most people live here is that it's extremely easy to move jobs. Yeah, Austin and Seattle have become the next locations, but we need more. Hopefully the remote work options because of Covid become more permanent.
I believe that, while still low relative to SF or NYC, home prices in Tampa and Phoenix have risen rapidly in recent years. As for Cincinnati, not exactly a thriving job market.
> I harp on this constantly. But housing is not more expensive in the majority of American metros. Adjusted for inflation the median cost per square foot of new housing is almost exactly the same as it was in 1990. (This doesn't even take into account that mortgage rates are drastically lower since then.)
It doesn't matter that real estate on the Moon is free. There aren't any jobs on the Moon, or in third-tier cities.
I harp on this constantly. But housing is not more expensive in the majority of American metros. Adjusted for inflation the median cost per square foot of new housing is almost exactly the same as it was in 1990. (This doesn't even take into account that mortgage rates are drastically lower since then.)
We get skewed on this for two reasons. One is because homes today are substantially larger and have more amenities than they did in previous generations. We take for granted better fire safety, higher ceilings, central A/C, higher load electrical circuits, attached garages, better lighting, and swimming pools that are much more common in new construction.
Two is that we're highly skewed to a handful of elite metros, whose housing markets are not representative of the country as a whole. Housing is expensive in San Francisco, New York, LA, and DC. But in places like Tampa, Omaha, Cincinnati, and Phoenix the cost of housing (per square foot) has barely gone up at all.
The demand for ultra-expensive housing in places like the Bay Area is driven by the huge earning potential of the high-skilled labor market. (Of course the supply side of the equation is driven by NIMBY zealotry.) If you're talented enough to make it as an L8 at Google, then it probably does make sense to buy a house in Palo Alto. You'll earn far more money than you would in the St Louis tech scene. more than enough to make up for the living costs.
But unless you have the potential to become an L8 at Google (or equivalent), it makes no financial sense to choose to live in the Bay Area instead of Raleigh. It's like somebody who works as a back office bookkeeper insisting on buying custom tailored Seville Row suits for his work attire, then complaining that the costs of clothes has gotten out of hand.