This article reflects my wife and my experience: just a month ago we left San Diego for a small town north of Salt Lake City. We make over six-figures and San Diego held only poor economic prospects for us. We'd have a very difficult time buying a decent home (2000 sq ft, good neighborhood, reasonable commute) for a price which wouldn't jeopardize other essentials like retirement savings, kids college savings, savings in general, and debt payoff and avoidance. When a small box in Clairemont (neighborhood of San Diego) cost $500-600K you know things are out-of-wack.
Things are more reasonably priced here, but probably still higher than their intrinsic value. However, at least we can afford them without mortgaging our (and our kids') future.
The truth is that this isn't a situation the government has shown any ability to solve for. There are a myriad of reasons, but ultimately my feeling is that federal housing policy is deeply flawed.
Inevitably, by necessity, the solution to this mess will come from all those in the middle class who've been forced to find another way. Our voting with our feet will shape the next ten to twenty years in ways which are hard to predict. One likely outcome is that big cities will not be able to maintain their current housing price structures. A tipping point will come. You can't build a viable local economy only on the top and bottom of the income spectrum. You need a robust middle class. Otherwise the absence of the middle class creates a vacuum, and conditions for an implosion into that vacuum.
It's not just housing policy that's gone wrong, it's transit policy. We haven't built good public transit in our cities, and now that cars are filling all available roads, even houses far away from cities are too expensive for how long commutes are.
We wish we had a train system in many cities that allowed the middle class to live 40-60 minutes away from their jobs.
Ultimately however the main problem is wealth inequality. If median income had increased with GDP since 1980, instead of all gains going to the 0.01%, you would be able to afford to live in the suburbs of San Diego.
It ultimately boils down to simple supply and demand. Want to live in a nice, walkable medium density neighbourhood with good amenities? Sorry, America stopped building those 60 years ago. Why did we stop building them, and why can't we build more now? The answer to that is long, convoluted and tragic.
Do you have an article or other links from which we can learn more about the reasons? A summary of the long answer would be helpful too.
Since the demand for such cities is quite high--a large number of middle class voters would like to live in one--would a mobilization of political will enable us to change to situation somewhat, at least over the medium to long term?
London, cities in Europe in general have good transport but not great housing options. London just overtook the pre war population (within a green belt set just after the war). Nearly everywhere is within a mile of a station, only one tiny spot is four miles away. It's all about affordable housing. We as a country are building half of what we need.
London as more than decent public transportation indeed, plus it has this rather extreme car policy we all know about (which by the way I am sure the super rich actually love!). The thing is, I've always wondered why public transportation is so outrageously expensive there. Actually, even with the Oyster card, the rates strike me as rather extreme. I'd love to hear a Londonese on this.
It's partly because the underground is 154 years old, which carries with it its own set of maintenance headaches, partly because of the "public private partnership" programs from 2000s onwards that were set up as a means to extract money from the system and partly because they pay reasonably good wages.
The parts run by the local government (Transport for London) are cheaper than or required to be the same as the private franchises organised by the national government. The TfL parts are far better, I think that even if they were the same price the vast majority would say TfL do better.
The other places I've been were not qualified of "expensive" because they had dramatic discounts for the privileged ones. e.g. student 18-25 age 10€ - worker 25-65 age 50€ - no work 25-65 free pass if you send a paper to request it.
> Ultimately however the main problem is wealth inequality. If median income had increased with GDP since 1980, instead of all gains going to the 0.01%, you would be able to afford to live in the suburbs of San Diego.
The problem of income inequality is one and the same as the housing crisis - ie, the wealth gap is nearly entirely explained by real estate.
No, the wealth gap is not explained by real estate.
The problem is that the 0.01% -- households worth more than ~$100M -- have received almost all the wealth gains since 1980. That's not just real estate -- it has to do with globalization as well as tax and policy decision.
So the very rich have gotten much richer, while median incomes (I.e. middle class incomes) have not increased.
Can you give a cite to any statistics or resources that suggest that real estate fully explains the wealth gap? The ultra-wealthy tend to have much higher percentage of their assets in securities than real estate. So that real estate explains the entire wealth gap sounds curious, although perhaps not impossible. I just have no idea how that could be.
4) And all that accumulated wealth ended up being lent back in the form of loans (e.g. student loans), mortgages as well as bidding up the price of real estate which your grandma - a 'boomer' profited a small amount from - which is why this is actually all her fault.
Inequality is not the problem. The problem is there are more people who want to live somewhere than there are houses. With perfect equality there would still be more people than houses.
The one and only fix is more houses. That's it. Any other solution is just picking winners and losers different ways. But no matter which way you pick the same number of people win and the same number lose.
Unfortunately, it's not that simple. The heart of the problem in many parts of the country is that we fund our schools with property taxes.
Hence, a cycle of better schools and increased demand in concentrated areas, which causes the supply-demand imbalance and price increases. Compounding this is the fact that people in such areas actively block "higher density" housing, which naturally means fewer houses per acre.
Building more houses would help to a limited extent, but the shortage would still exist and resistance is stout.
Hence, the shortage of housing is just a symptom of how we fund education, which is the real problem.
>Inequality is not the problem
Inequality absolutely enters here because if wealth/income were more evenly distributed, then funding for schools would be more evenly distributed, thus alleviating concentrated housing demand in small areas with better schools and driving up prices.
I'm not sure I understand your comment. Public schools in dense cities tend to be almost universally bad--in spite of often being funded at significantly higher per-student levels than even relatively tony suburbs that have high-performing schools. If you look at Massachusetts public high schools for example, the one public high school in Cambridge (where housing has gotten very expensive) has some of the highest per-pupil spending and is in the bottom tier of test results.
Unlike the suburbs you valorize, Cambridge hasn't shut out the poor, makes large investments in public housing. 45% of Cambridge students take free or subsided lunches. What the MCAS results actually show is when we take kids of out wealth segregated neighborhood elementary and middle schools, and put them into a single, unified high school, test score rise dramatically.
If Concord schools had to take any number of first generation impoverished immigrants with poor English language skills, their test scores would implode. That doesn't happen, because working class immigrants don't buy the $800K homes in Concord.
You might try reading sometime. It's a useful skill. I wasn't valorizing anything. I was responding to a comment that didn't understand why denser city schools could cost more per pupil than suburban schools.
Hmm. It's a little hard to imagine that per-student funding in high-density city schools outstrips that for truly wealthier and presumably sparser suburbs with any significant consistency. I'd want to see the actual numbers. For instance, where is this funding coming from for the cities? And, where is the suburban tax money going?
And, what's the history? Were these schools neglected for years, then the state recently started pouring in money?
I mean, maybe there are some exceptions (perhaps partially gentrified cities where some tax base is moving back into cities at inflated prices?), but these would generally be outliers. Since wealthier people have fled most major cities for the burbs, the tax base and educational investments have generally followed them. You see this over and over again in communities throughout the country.
A lot of the difference is that cities, even expensive ones, are cities. A lot more diverse student body. A lot more students with problems at home. More disruption, etc. You can spend more money but the average student in the city school almost certainly has less parental involvement and less of a home environment that's conducive to learning than in the tony suburb.
The linked article (and decades of debate) notwithstanding, it's also hard to really correlate spending per pupil with educational outcomes past a certain point--especially as measured on standardized tests.
Poorer cities do spend less. Two Lawrence high schools have the worst test results in Massachusetts. But its spending, $14,475 per pupil, is still only a bit less than Concord.
> Hmm. It's a little hard to imagine that per-student funding in high-density city schools outstrips that for truly wealthier and presumably sparser suburbs with any significant consistency.
Definitely does in my city. Teacher pay's also substantially higher in the inner city schools. Most teachers still don't want to work there because they're stuck in a seemingly-inescapable poverty-and-culture-driven "bad homes -> bad students -> burnt-out and bitter faculty" rut, which makes them a discouraging, abusive, and dangerous hell for faculty and students alike.
Source: my wife and probably half my circle of friends are teachers.
[EDIT] in fact, some of the better suburban schools pay worse than the so-so suburban schools, let alone the high-paying inner city ones, because they can. Good teachers will still work there because the environment is nicer and more rewarding (that is, the students are way easier to teach, and the community tends to be supportive)
The fix is to make more areas desirable to live in by reducing income inequality and stimulating local economies (which in turn creates more desirable locations). Simply saying build "more houses" in clustered cities along the coasts doesn't solve anything in the long run. Cities are in it for the long run.
San Francisco is not nearly dense enough. It can support a lot more housing. Easily. It's just NIMBYs and cronies in the way.
Despite having significant growth opportunity San Fran is already twice as dense as Seattle. Therefore Seattle has room for explosive housing growth. It would need more changes than just housing of course. But that's to be expected and totally doable.
Cities are huge economic multipliers. We don't need more cities yet. The ones we have are perfectly great! We need to more efficiently use what we already have.
This housing crisis isn't affecting just "top tier" cities.
It's not just New York and San Fran. It's Seattle. It's Denver, Austin, and Portland. It's even Nashville!
Every city, top to bottom, needs to be doing more. And they need to start now as the longer they wait the more expensive the infrastructure adjustments become.
All the city needs to do is literally nothing. Just stand back and stay out of the way. Sadly this is one of the hardest things for a bureaucracy to do.
Public transportation is a 20th century solution. If cities do nothing autonomous vehicles will revolutionize transportation wants within 20 years. Which is as fast or faster than major public transportation projects would take.
Additional housing will result in a larger tax base which will automatically cover additional schooling needs.
It's not a guarantee that self-drive for cars will not lead to more use and more congestion in cities which are not upgrading their transit.
I am hopeful for autonomous app hailed buses, but there's definitely a big chance it doesn't all work out that way, and even then there is clearly still a physical limit on how much existing road infrastructure can handle.
More desirable areas means more areas for developers to build housing. Cities cannot do more with a citizenry that is unable to keep the local economy and government institutions afloat. These cities are in a horrendous feedback loop that is seeing their economies and tax bases decimated. It all begins and ends with income inequality.
> that is seeing their economies and tax bases decimated
Wat? That is literally the opposite of reality.
The problem is cities are TOO POPULAR. Cities so successful that only the rich can afford to live in them! Increased property values, more property tax revenue, higher resident earnings and spendings. Cities aren't being decimated. Cities are so economically successful that poor people are being forced out so more rich people can move in!
The article, titled "The Middle Class Can't Afford to Live in Cities Anymore" is about people earning $50,000 to $125,000 who can't afford housing in cities. It's not about rural or rust belt communities with no jobs. Housing is plenty cheap in those areas. They just lack the jobs to go with it. A very real but very different problem.
I believe there's another option; make the cities more attractive (and affordable) to live in for the middle class. You can see this across European cities, which is explained really well in this video: https://www.youtube.com/watch?v=aQSxPzafO_k
It's easy to say and hard to do, but concerns like a good neighborhood or decent commute when looking for living arrangements in the cities is definitely not as common in Europe as it is in the US.
I'd say that every major city across the continents have a supply shortage, that's the nature of cities, but I haven't heard of any city in Europe not affordable to live in for the middle class. Surely the good 'ol supply & demand are influencing the pricing, but I believe there must be something external that has caused this.
You will find that European cities are very expensive to buy in and equally bad to rent in. Paris, Geneva, London, Helsinki, Stockholm, etc... all suffer from the exact same issues we're now seeing in American cities.
You could argue that the make-up of those cities are superior, as their suburbs are much more compact and urban connected with much better public transportation. This coupled with a culture that is much more ok with living in small spaces helps the middle class immensely.
In terms of a priced out middle class, however, the United States is really just catching up to the rest of the world.
Yes - that's because they don't have a supply problem; they don't do stupid things like zone their cities to prioritize single family detached homes. European cities are dense and if we want North American cities to be similarly liveable, we need to rezone to allow greater density and increased supply.
Can Americans stop with the "surely it's better elsewhere" crap ? No it's not better in Europe. Either you go to a capital or second tier city with jobs, and pay ridiculous rates. Buy, rent, doesn't matter. Or you go to a normal city and commute in. That adds 2-4 hours to your working day and 50-150 euros to your (effective) monthly rent, but provides you with a much better place to live.
Or of course you go to rust belt equivalent communities. Northern Spain. Southern Italy. Very cheap, beautiful even, housing for no money whatsoever. And not a chance in hell of finding a job there.
There are two fixes, which must be done simultaneously: more housing and more transportation infrastructure.
Our modern economy wants to centralize in cities, and not doing so is leaving free lunch on the table. Also keep in mind that more people in cities = cheaper suburbs for those who prefer it.
Improved transportation infrastructure is a valid way of increases the number of homes available to job centers.
Increased centralization in cities is a bit of a problem. But cities are such an economic multiplier that it's difficult not to. That's a tougher nut to crack.
Yes but there is also the issue of unoccupied or semi occupied properties which needs to be addressed. When an owner can make more money airbnbning a property to visitors than fulltime local tenants this hurts the city.
The dearth of quality education drives the housing inequality significantly. Funding schools adequately would have a profound effect on property values.
"...cities are increasingly home to high-rollers who can pay the high rents or down payments and lower income people who qualify for subsidized housing."
If you're not rich you might as well say fuck it, relax, and be poor. The middle class has to pay for _both_ the profits of the rich and the welfare of the poor, while not being able to afford a decent life for a family despite working hard and doing everything right. It is a totally exploited class.
a decent home (2000 sq ft, good neighborhood, reasonable commute)
We have lived for more than a decade with four children in a house with fewer finished square feet of floor space. I'm curious about what "good neighborhood" means here, because my children can walk or bicycle all over the place, without fear of mishap, and the local public schools here draw people from all over the country. "Reasonable commute" is also a term I'd like to understand better in this context. How tied to location is the employment you each have, if you are able to move out of state?
I have to think that it's possible for middle-class people like my family (at a lower income level, currently, than what you self-report) to live in cities, because we do. Most of our work happens to be in outer-ring suburbs, so "reasonable commute" puts us there, but other people with work nearer into the center of the metropolitan area can live affordably further in.
Disclosure: we live in an other ring suburb of Minneapolis, just outside the beltway freeway around the Twin Cities, and barely within reach of the bus system. My wife and my third son bike-commute often, year-round.
I don't understand the way of thinking that you need a middle class?There is no need for middle class. What speaks against a giant gated community in the cities?
Just a minor nitpick. If you are buying a home, and are also fortunate enough to be able to manage "retirement savings, kids college savings, savings in general, and debt payoff and avoidance", you are likely not strictly middle class. Most people who are classified as middle class can't afford any one of those, let alone the entire set.
You don't come across as negatively "privileged", but perhaps if you can afford to send your kids to college, and plan for retirement, and have a rainy day fund to boot, you might consider yourself blessed compared to the situation many people find themselves in. I'm well enough off, but I'd give an arm to be in your position. :)
Definitions of class boundaries vary slightly depending on who you're talking to, but in general, "upper class" means you do not have to work for a living, plus you are plugged into the social network of upper-class people.
This is true for a very small percentage of the population.
I live in SF, and am flabbergasted at the number of 1- or 2- floor single-family homes. A city the size of SF (46 sq mi) and population (850K+ and growing) simply can't afford so many SFHs.
I was in Barcelona recently (yay NIPS!) and Barcelona is smaller than SF (36 sq mi) and has nearly twice the population! Everywhere you see are 6-floor buildings, with the bottom reserved for shops and people living above them. It is so walkable, with great (and reliable) public transportation. We kept thinking: why can't SF be more like BCN?
Oddly enough, SF is among the best cities in America for density.
I wish more of America were like Barcelona, including SF. Regulations tend to prohibit dense walkable construction though. I don't mean NIMBY protests per se. Existing city regulations tend to require more parking spaces and setbacks than old cities provided.
Not to mention prohibitions on having shops and housing in the same zones that most modern cities now have.
Because you'd have to demolish acres and acres of 100+ year-old architecture (generally considered to be among the planet's most distinctive) to make it that way.
And even if we did -- it wouldn't look anything like Barcelona (and its fabulously integrated 100 year-old architecture and street grid), either. Most likely, I betcha, it would end up looking like a pepped up, West Coast version of this place:
Which I'm sure would suit many of the "Who cares about historic architecture, as long as I can get a shot at a $2400 studio!" advocates here just fine.
> Which I'm sure would suit many of the "Who cares about historic architecture, as long as I can get a shot at a $2400 studio!" advocates here just fine.
As opposed to the status quo, which suits many of the "Who cares about the middle class, as long as we can preserve all of the 100+ year old architecture" advocates just fine.
You can't touch such historic buildings, that house is 100 years old! We have to preserve the character of our city! I've lived here 3 years and really treasure it.
Let's just continue the wholesale replacement of the people and culture that gave rise to it in the first place.
The people and culture that gave rise to it have already been replaced, actually. Did you know that the Mission used to be an Irish neighborhood, for instance?
Did you know that the Mission used to be an Irish neighborhood, for instance?
The point is that it used to be an affordable neighborhood. And the city in general used to be more or less affordable for the middle class, also -- independent of the ethnic background of its inhabitants. And that changes (including full-scale transformations of neighborhoods) which used to take generations to transpire now happen in the course of 10 years or so.
Just because change has happened before doesn't mean that all "change" is equivalent (or even "natural").
> Because you'd have to demolish acres and acres of 100+ year-old architecture (generally considered to be among the planet's most distinctive) to make it that way.
SF's architecture is nice for being in the US. And the interesting parts are actually quite limited. The Sunset and the Richmond have pretty much zero architectural value, for instance.
> I live in SF, and am flabbergasted at the number of 1- or 2- floor single-family homes. A city the size of SF (46 sq mi) and population (850K+ and growing) simply can't afford so many SFHs.
I feel the same. I grew up in Europe and I'll add to that that generally speaking, apartment sizes are much bigger in SF (and, basically, western US) than anywhere I've lived before. I was recently in NY and apt sizes there remind me Hong Kong actually (well, I exaggerate a bit). Funny thing too is that when you cross the border into Vancouver from Seattle, you immediately revert back to Europe size apts!
I have too many hobbies that take space to live in a place like Barcelona. Where do people work on their hobby car or motorcycle? Where do you do woodworking? Where do you keep your boat or paddle board? Do they have gardens? What about an outdoor kitchen for grilling and smoking? Do their kids have bicycles and scooters and skateboards and baseball gear?
Join a club for the sports stuff. There's a few nice sailing clubs in the Bay Area where they keep the boats and the gear there (some have lockers). There are motorcycle garages and storage units for race vehicles, parks, vacation homes, and get-togethers with opportunities to cook outside. Skateboards fit in closets. For wood/metalworking, there's stuff like TechShop.
It's not practical to live in a city and have a pole barn with a station for each different hobby, but you can still do a lot and make it work. Sometimes it ends up being pretty expensive, e.g. Keeping an extra car in the city could be ~$300/mo in the case of SF, but car storage around say Laguna Seca can be quite a bit cheaper.
I've started watching An Idiot Abroad and I think I share a lot with Pilkington (or at least the character he plays on that show) when it comes to travel. I don't really like to travel. Twenty years ago, I was in to it but now it feels like a phase I grew out of.
San Francisco really doesn't have Earthquake safe housing. It's been over 100 years (1906) since the last major earthquake (7.0+), which ended up destroying most of the city.
A large portion of the housing in San Francisco dates to that era. However, rather than learn from the mistakes made pre-1906, San Francisco just rebuilt things exactly the way they were before. Look how much damage the 1989 earthquake caused, and that was a sub 7.0 earthquake. Another major earthquake would result in similar devastation to the 1906 earthquake.
The best part is the NIMBYs who refuse to allow earthquake deathtraps to be destroyed for more modern buildings. They've become so complacent and ignorant to the reality of a major earthquake, that they feel the character of the city is more important than the lives of the people in it.
We know how to safe six-story buildings in SF are a solved prblem, and developers have no problem following building codes when zoning allows them to build 6 stories.
The problem is that most of the inhabitable stuff in SF is being rented out at >$2500 per studio in those old Victorian homes, and it's not exactly easy to just evict everyone for a few years to build higher density housing. A lot of stuff is also under rent control, and since no new buildings are under RC (and all the new construction I've seen is explicitly luxury), tearing old things down to build means tearing down "affordable" (relatively) housing to build luxury junk.
It'd sure be nice to be able to clear a few blocks at a time and start over with fresh buildings, but it's more a matter of changing wheels on a bus while it's full of people driving down the street.
This article mentions "hot cities" including Austin, which not too long ago was just another small eclectic city with steady growth. Once it grew large enough and provided the ingredients to hold it's own, industry wise, against other "hot cities" it became what it is today. Austin was just a little weird city in Texas when I grew up in Dallas, but now it's up there with the big boys. What this tells me is there are many Austin like cities out there waiting to be discovered and grow in a similar way. I believe, in large part, Austin's recent growth and success is attributed to the very problems presented in this article. As long as the economy keeps pushing in this direction, the more of these smaller cities will grow to compete.
Until those cities inevitably become too expensive, too, just like Austin did. (I desperately hope I'm eventually proved wrong)
"I asked a passing teamster, for want of something better to say, what land was worth there. He pointed to some cows grazing so far off that they looked like mice, and said, 'I don't know exactly, but there is a man over there who will sell some land for a thousand dollars an acre.' Like a flash it came over me that there was the reason of advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege." -- Henry George
This article fails to mention that the middle class can't afford to live in the "nicest parts" of cities, but many cities have other areas as well. Take NYC for example. Sure, if you want to live in the Chelsea or West Village neighborhoods in Manhattan, it's going to cost you. But there are tons of available houses in Queens, Brooklyn, and the Bronx that are plenty affordable. The other day I saw a house for sale in a decent part of Queens for $240k - definitely affordable for middle class. Unfortunately, though, the most desirable areas of the densest part of the city is being reserved for poor and upper class, which I think is the point of the article.
> But there are tons of available houses in Queens, Brooklyn, and the Bronx that are plenty affordable. The other day I saw a house for sale in a decent part of Queens for $240k - definitely affordable for middle class.
Do you have kids? Because this glib reaction signals that you don't, or you'd be aware that the areas you are touting as affordable have terrible public schools. That's why they're relatively cheap. That, and the hour-plus commutes (each way) to where most middle-class jobs are.
There are affordable parts of Long Island and Connecticut with great public public schools less than an hour from Manhattan by train.
We've grown accustomed to overporting our post-war suburban archetype of what a "middle class" family "deserves," i.e. lots of bedrooms, garages and lawn space, while diminishing previously (and still!) common practices like having roommates when young, not owning a car, et cetera.
> There are affordable parts of Long Island and Connecticut with great public public schools less than an hour from Manhattan by train.
Nonsense. I'm a New Yorker. You literally CAN'T get to DOWNTOWN Manhattan from any part of Connecticut in under an hour. The first metro-north stop in CT (Greenwich, which, BTW, is NOT affordable to live near) is over 40 minutes from Grand Central at the best of times. And then you have to change to the subway to get downtown. Nuh-uh. An hour each way is not happening.
I'm not sure what your point was about suburban deserts (in the sense of things deserved,) but the point of the article is that even with things like not owning a car priced in, housing (in cities with jobs) is still unobtanium for people in the hole between section 8 and tech salaries, who didn't already buy their homes when they were cheaper. Editorializing a bit, this sucks in the long-term. The upper east side of manhattan west of park, which was expensive before "gentrification" was a word, shows what this leads to: a limestone-clad desert made of vertical money and not much else.
> You literally CAN'T get to DOWNTOWN Manhattan from any part of Connecticut in under an hour
I live in Midtown. This time of year, I can't get downtown in less than an hour :).
It's reasonable for a productive person to demand any two of: space, a great location and disposable income.
My household of two chooses to enjoy our neck of Manhattan. We make do with like 400 square feet. If we had kids we would need to live in a city we get to enjoy less frequently or commute from the suburbs. Neither is particularly appealing to me, but I've heard kids are nice.
> "gentrification"...leads to a limestone-clad desert made of vertical money and not much else
Gentrification can lead to density in addition to urban deserts. Ironically, activists seem to prefer restricting housing supply. That means the latter.
Trying not to be uncharitable here, but, if you live in Midtown, then why are you making assertions about Connecticut?
Apparently you know your comment wasn't too truthful which is why you backed off with "I live in Midtown [..even so..] I can't get downtown in less than an hour". So, what exactly was the point of your comment?
Also note: household of 2 is not a household when talking about middle-class income. Why? Well, household of 2 adults is basically the best case scenario financially (both have jobs without additional dependents).
As a anecdote/data point: even making >300+k with both parents working still is a drag in NYC when you have 2 kids, regardless of what BS you hear online.
> if you live in Midtown, then why are you making assertions about Connecticut?
I've lived in Stamford. I would not want to live there again. Between ample space, proximity and disposable cash, I chose the latter two. If I wanted more space, Connecticut offers a fair deal for saving money or being close to the train station.
> you know your comment wasn't too truthful
Not sure why you went straight for the deep end. It's the holidays. I'm budgeting 45 minutes to the Upper West Side. The smiley implied facetiousness.
It's 50 minutes from Grand Central to Stamford [1]. That's comparable to the average American's 25-minute commute [2]. My core and recurring point is simply that cities are defined by density. If you want lots of space, you're fighting the current.
tbh, I went for the "deep end" because your formula that one needs to "choose 2" as a fact of life is weird to me.
Your point of "choose 2" isn't anything more than a compromise you've made. That is, not something that is "correct" but a compromise you've settled on. I'm happy for you to settle on that as a baseline for your life, but it irks me to hear you spout it as a "truth".
Cities are defined by density. What makes them valuable is density. Density is people per unit of space. You can do some things going vertically, but there are costs and limits associated with that, both practical and political.
Lots of people in high density means low average space per person. If you want more space it will be expensive and eat into your cash. If you want to keep that cash, you don't have options in a high-density city.
Yes, you can have all three with lots of cash. But you can't have a city with most having lots of space, because that means they live in low density and are no longer in a city.
>We've grown accustomed to overporting our post-war suburban archetype of what a "middle class" family "deserves," i.e. lots of bedrooms, garages and lawn space, while diminishing previously (and still!) common practices like having roommates when young, not owning a car, et cetera.
"People's lives are too good, we need to make them worse."
What's your angle? What do you gain from advocating against mobility and personal space? Are you upset because you didn't have these things, and don't want "undeserving" people to have them? Or do you just want us all to live in worse conditions for the fun of it? I genuinely can't understand what moves someone to push for "people should not have their own bedrooms or time-efficient commutes."
> What do you gain from advocating against mobility and personal space?
What works in the suburbs isn't sustainable in cities. Suburbia is built for personal spaces. It's terrible, however, at supporting the rich social fabrics densely-packed humans spontaneously weave. (There's also the problems of commute and it's environmental impact.)
City-centre richness is a direct product of density. If everyone gets large, personal spaces you're back to suburbia and all its disadvantages.
Living in a city means accepting less personal space in exchange for the benefits of density. The only alternative is to have fewer people with more personal space, which means rationing or auctioning off that limited housing as well as a less "city-like" urban core.
>If everyone gets large, personal spaces you're back to suburbia and all it's disadvantages.
This is true on the x-y plane but not the z-axis. We can have substantially more sqft available per sqft desired in the same land footprint by building up, which is currently heavily regulated or outright illegal.
I support more density, but the relationship between density and personal space isn't side-stepped by building up. You're just adding a vertical commute component.
It's better than yards and boulevards, but a building of three-bedroom apartments to the edge of space will have a different human dynamic from one with mostly one-bedrooms.
Well first, a 1-bedroom is the most expensive way to live, at the rate we're going we'll have 3-bedroom apartments with 3 families per bedroom instead of 3 bedrooms per family :). Back to the Industrial Revolution tenements.
You can get your human dynamic just fine on sidewalks, cafes, parks, etc. It doesn't need to be in-building. And even ~70 stories by elevator is still only a few minutes, nothing like the hour-plus train rides middle-class people in cities currently need to endure.
> You can get your human dynamic just fine on sidewalks, cafes, parks, etc.
More density means fewer [EDIT: more] people within walking distance of each café, park and restaurant. That, in turn, affects how many of them there are and how eclectic they can be.
Density is people over space. If you give each person more space, you reduce density. This can't be avoided.
> nothing like the hour-plus train rides middle-class people in cities currently need to endure
They don't need to endure it. Stamford, CT and Rochester or Port Jefferson, NY are nice cities with middling densities.
But many people don't want that. They want restaurants and nightclubs and parks with rotating art installations that only emerge and make sense when you pack people together.
Sure, you can put one or two large units in the mix without screwing things up. But not a lot, not for everyone. Else you end up with urban deserts.
>Some people don't want that--they want the restaurants and nightclubs and parks with rotating art installations that only emerge and make sense when you pack people together.
You really think a neighborhood of 70-story buildings can sustain these things as long as people share bedrooms, but can't the instant that children and young adults have their own doors to close?
>More density means fewer people within walking distance of each café, park and restaurant.
Vertical distance costs almost nothing in terms of time, given modern elevators and scheduling. I'll skip the cafe because it's a 40 minute walk instead of 10. You'd really skip the cafe because it's 20 floors down instead of 5? That's, like, one minute on a really bad day.
>If you give each person more space, you reduce density.
Well sure, but the advantages of density really come from compactness in time/ease of transportation rather than space. It doesn't matter that the restaurant is far away from its customers on the vertical axis, because elevators are fast.
Manhattan contained 854,000 housing units in 2014 [1] and 1.6 million residents between 2010 [2] and 2013 [3]. The average Manhattan unit has 1.2 to 1.3 bedrooms [4]. (For Core Manhattan, that average falls to 1.0 to 1.2.) So 1 to 1.1 million bedrooms.
If you mandated one bedroom per person you'd have to expel 31 to 38% of the population or increase the number of bedrooms by 45 to 60%.
Manhattan's 33.6 square miles [5] are populated with 70,826 people per square mile. If we go the culling-people route, that drops to 44,000 to 49,000 people per square mile. That's the population density of West New York, in New Jersey [6]. Manhattan and West New York are radically different places.
If we go the building-units route, consider that Manhattan gained 13,189 units between 2011 and 2014, i.e. 4,400 a year [1; Table 2]. To build the 500,000 to 600,000 bedrooms we need you'd need to make 415,000 to 500,000 units, i.e. a century of construction. (If you built only three bedrooms, you'd cut that time down to 167,000 to 200,000 units, i.e. a mere 38 to 45 years.) To build them in 20 years, you'd need to increase construction by 4.7 to 5.7x (90% to 2.3x if only 3BR), and that's ignoring any additional infrastructure that new population may need as well as population growth.
Cities are a product of density. If you try to make a city with suburban-sized personal spaces, you end up with neither city nor suburbia. Building up is better than sideways, always, but we shouldn't delude ourselves regarding realistic sets of trade-offs.
43% of the New York metro area is married, presumably many more are cohabiting. So, if we relax that constraint to "don't have to share a bedroom except with a romantic partner" then we are potentially already there.
Of course, the proportion of married couples could be much lower in Manhattan, and it's not necessarily the same 43%, but you get the idea.
More to the point I'm very interested what tradeoffs you think are worth literally never having the chance to be alone in a room. Without a shadow of a doubt I'd kill myself, and I'd never dream of brining a child into that miserable existence.
> if we relax that constraint to "don't have to share a bedroom except with a romantic partner" then we are potentially already there
50% of the Manhattan population lives alone, the same as the fraction that has never married [1]. So yes, what you outlined is approximately what's going on. (Just 12% of New Yorkers in rent-regulated apartments had more than 1 person per room; 4.4% more than 1.5 [2].)
The status quo isn't crowded per se. It's just crowded relative to suburbia. The point of my illustration was that small tweaks to density, e.g. one instead of one and a half bedrooms per person, quickly spiral at the scales and within the constraints of a city.
Right. People expect to skip straight from 22 or even 18 to a late-20s or early-30s level of "stuff" and general lifestyle, without paying their dues in the middle. It's called a "property ladder" for a reason.
It's less of a ladder than a Ponzi scheme. In SF housing prices have grown at a compound growth rate of 6% for over 50 years. Older generation squats on property paid for by debt, low taxes, and then retires at 60 -- all paid for by a younger generation that doesn't have jobs and can't afford housing.
Don't forget that Prop 13 disproportionately favors buyers who bought closer to when it was rolled out. Their rates were locked in a long time ago. I'm not sure how repeatable this will be for new buyers.
> In SF housing prices have grown at a compound growth rate of 6% for over 50 years.
When a good chunk of those years had interest rates in the 10%+ range, and when the years that were lower than 10% ended with "The Housing Bubble Pop" and "Great Recession", that 6% compounded growth is actually kinda awful.
In any case, compound growth is the center of most economies. Being the owner of things entitles you to profits, be it in stocks, bonds, or real estate.
The "buying on debt" depends on the rate that you got in at. If you're complaining that people in the 1970s were able to get 15% mortgages to earn lol 6% on Real Estate, then I don't think you fully appreciate the history of Stagflation and the 80s bond market.
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All in all, housing prices have rose because interest rates have fallen. More people can afford a house when mortgages are at 4% instead of at 15%, and the price of homes go up to compensate.
Housing is only a good financial investment if supply outstrips demand. The high cost of housing is less a function of low interest rates than zoning laws that restrict new development.
Yeah, go spend 3% of the loan amount to purchase a new 30-year loan, instead of paying off the house you already have... stay on debt perpetually.
Unless rates drop dramatically in a short-period of time (like in 2012), refinancing opportunities are rare. From the 1980s, you wouldn't have had a refinance opportunity until the mid 90s.
This is either some thinly veiled Millennial shaming or just pure ignorance. After you read the other replies to your comment, read this one: https://news.ycombinator.com/item?id=13292046
That's true in my area. While there is plenty of construction, the land is too valuable for entry-level homes. If it's zoned for SFHs, the market will tolerate a 3000sqft+ mini-mansion with a high level of finish. If it's zoned for THs, they'll be 4 stories with an elevator. Condo development caters more to rich retirees than young professionals. The underground parking at the nearest high-rise is full of $100 cars.
What are the affordable parts of Long Island or Connecticut that are affordable and close to Manhattan? The parts of Connecticut that are suburbs close to NYC are known for being where the rich people live. [1]
> the areas you are touting as affordable have terrible public schools.
The K-12 school situation doesn't make them not affordable. It makes them less desirable, but cddotdotslash already pointed out that it's the desirable parts of the city that are unaffordable.
Sooner or later, society will have to realize that white/middle class flight is a direct cause of terrible public schools; and that by reversing the trend these schools will become less terrible.
By and large Manhattan public schools are nothing to write home about either. The same is true of someplace like Cambridge where the high school is ranked pretty far down in state rankings. Public schools in cities are mostly fairly poor by objective measurements, even when they serve very high cost neighborhoods.
I went to terrible public schools in a very poor neighborhood yet I came out just fine. I really think people put much too much emphasis on "good schools" as if they are magic, I think home environment matters much much more.
I think I know this area you are talking of. And if there is a house there for 240k then it is definitely not a decent neighborhood. There are areas of Queens which are very industrial and you can get a house for cheap, next to a superfund site.
If we bring manufacturing back to America, we can build more factories by cities and create more superfund sites, which will employ even MORE people (assuming the EPA isn't dissolved) AND create more affordable housing!
Right. It also seems like school districts in these high priced cities are either really, really good, or really, really bad. It is harder to find a "middle" of the road school district.
Exactly. There's also plenty of affordable housing stock in Chicago and LA, as long as you don't expect to live on the lake/ocean, don't expect a big suburban house, etc.
That's the thing about big cities, there's usually a huge variety of housing at all price points - with a variety of pros and cons for sure, but the lack of housing at a variety of prices is typically not an issue.
Amusing comment. Not quite that dire, but the most affordable SFRs do tend to be in neighborhoods that either have few amenities, or are right on the edge of (or in) neighborhoods where you don't want to lounge outside at night.
Otherwise, there is a glut of condos almost anywhere you look, if you're okay with living in a condo and paying HOA dues every month - which is the problem with condos, the HOA dues can easily take something affordable and push it to the edge of affordability or beyond.
I've been looking recently, speaking from current experience.
That's entirely untrue - you can find plenty of decent affordable neighborhoods in LA that have nothing in common with skid row. What you have to compromise on is traffic/long commute.
Neighborhoods in LA vary greatly and depend on what you value. For example, if you want good schools, yard and say house under 700k, and want to commute to Santa Monica. Your best bet is West San Fernando Valley, such as Woodland Hills and parts of Calabasas.
Thousand Oaks would reduce house costs to 400-600k, but add 20-30 mins to an already hour-long drive. Forget public transit.
If you don't need to go to SM/Venice/West LA, then going south might be better. Orange County has a lot to offer and probably a bit cheaper.
If you are ok with Condos/Townhomes, either direction, 2-3 br condo can be had for less than 400k, sometimes less than 300k.
Most condos on the west side are more like 600-900k and above, so the drive can save you 50%, but it really sucks. (Did the drive for 6 years.)
Hmm, a few of these are not even in the same county, 700k too rich. Middle-class is more like 300k. Most choices around say, 300k are around Downtown or South Central and have bars on the windows, which is what I was slightly exaggerating by calling them "near skid-row." I'm guessing nearby schools are in similar condition.
Greater LA area covers at least 3 counties. How's that a problem?
If you want sub 300k in a safe area with shorter commute, then you have to stick to condos. If you have to have a house, commute is required. Valencia, Santa Clarita, Sylmar, all have houses in $300k or less.
Homeless explosion has as much to do with inadequate mental health care as any economic situation. Homelessness is such a complex topic that no comment on a thread could ever do it justice. Try talking a chronically homeless person into accepting a free apartment - you'd be surprised at the answer and concerns.
There's no reason to disbelieve him when you can disbelieve the price. It's probably some agent pricing the listing below the seller's floor with the hope of generating lots of interest and a bidding war.
Listing prices are pretty useless. Better to look at the prices homes actually sell for.
I've lived in Queens for 25 years. A house is minimum 400k, more often 500k in the towns furthest from Manhattan (Floral Park, Douglaston, Far Rockaway). Anything closer is 600-1 mil.
Living in the nice part of big cities is a positional good. It's going to get more expensive as society gets more expensive, because you are trying to buy your way on top of a ladder.
Fort Hill, the neighborhood the article starts with and returns to repeatedly, is a lot more like Queens than like Chelsea -- and that's where people are getting priced out of now in Boston.
In L.A. there is no place with housing at that price, even dangerous neighborhoods with horrible schools. Even the "good" neighborhoods have pretty bad schools.
The people who write these articles almost always live in California or New York City. I just have to laugh.
Move to any major Texan city, any major Floridian city -- really any city in "The South" -- and the situation is much different. There are tons of great properties for unsubsidized, lower class purchasers. Seriously, zillow downtown Nashville TN. You can find great deals for the poorest amongst us.
People in (sorry to say) liberal cities have such warped, contradictory views of housing that it blows my mind. "We need more transport, we need more subsidies, we need X!" No, what you need to do is to let go. Let housing take care of itself. All of these schemes have contributed and will continue to contribute to the eviction of the middle and working class tenants.
That may be, but first-class cities concentrate a lot more of the most desirable economic opportunities. Living in the Silicon Valley and SF area would be completely irrational on all grounds, except for the fact that you're within driving distance of 900 of the world's top 1000 technology employers (figurative example, I wouldn't have an exact count). Similar arguments can be made for entertainment, music and film in LA, and for finance, fashion and media in NYC.
Yeah, Charlotte, Tampa, Atlanta, Indianapolis, Salt Lake City, and Phoenix are a lot cheaper. But that's in large part because they're not SF or NYC. :) First-class cities can literally provide 10x-20x the value for a lot of folks.
I have no dog in this fight; I lived in Atlanta for ten years and now live in a small-medium college town. Being self-employed for a long time now, I have no intention of moving to SF or NYC. But I can certainly see why someone would.
That said, the US has a unique advantage here compared to most of the world, "developed" and otherwise; it is very decentralised economically. In the grand scheme of things here, life in Charlotte just isn't _that_ different from NYC. In many other economies, a sizable chunk of the GDP is parked in the capital and maybe one or two other top-tier cities, and the difference between life there and life anywhere else—anywhere else at all, even another fairly large city—is considerable. In my native USSR—and as I understand it, its descendant Russia—there a huge chasm between "Moscow" and "not Moscow", even though there are dozens of other sizable cities in Russia. The Soviet economy was exceptionally geographically centralised, so makes for a very extreme example, but I think you get my point.
I always say that Canada is just the U.S. put through a low-pass filter. In this case, it feels very true too. Toronto and Vancouver are like our NYC and SF, to a somewhat more toned down extent. But then there are countless other cities where living in them yields the same overall quality of life at a considerably lower price tag.
As a southerner who's moved to a northern city that expanded before cars blew up in the 50s, I gotta say, I can't ever see myself going back until you can feasibly live without a car.
My homecity is now over 600k people, but it's really just a network of highways and avenues/parkways connecting them all. Public transit is underfunded, and only the poorest of the poor use it until they can buy a car. Buying a car is simply a necessity, like a roof over your head.
Maybe the freedom of not being trapped in a car to get anywhere interesting costs more. ¯\_(ツ)_/¯
Housing doesn't take care of itself. Cities built on the American car-centric model work fine until they reach a certain size and then traffic chokes them and quality of life for everyone goes down. Atlanta, a southern city, is a good example of a city whose economic growth is limited by traffic.
Society and government exist to help us citizens coordinate our efforts to solve problems bigger than any of us. Building public transit and forming density-friendly zoning rules are what we should all be doing together.
Public transit won't reduce the cost of housing in cities. The opposite has been shown.
Zoning protects incumbents -- always. Incumbents are the reason more density is not being built in places like SF.
Every solution you've presented has been done, is being done, and will always be done until it becomes politically unpopular to do so. I don't see how doing it again will solve anything.
The reasons behind the housing supply crisis are many, and the situation can seem intractable.
I have been assisting architect Eugene Lew with a comprehensive and audacious solution to this problem. If you are interested in reading a draft version of his white paper, DM me on https://twitter.com/jamiepitts.
The concept is tailor-made for the west districts of SF but can be applied to any city.
It combines finance, architecture, land-creation, community involvement, and propagation, and the output is a nonsubsidized 3BDR, 2BA home for households with incomes between $100,000 and $150,000. There are 15 homes in a six story elevator building, and the goal is to build hundreds of them across SF.
If 300 units are built it will help 4500 middle-income households. That's great, but how many middle-income households will still be unable to find affordable housing, therefore keeping market-rate rents sky-high?
I think the solution is not trying to cram more units into a small area. Manhattan has done that for decades, and it's still not enough to balance supply and demand. Rather, it's to encourage business development and residential living elsewhere, either nearby or far away. We're seeing that with Oakland and northern NJ but there are many more opportunities to expand this to other areas of the country. A lot of credit goes to southern states which encouraged (through tax breaks and other incentives) heavy industry to set up shop in smaller cities and rural areas. What will it take Google, GE, or Microsoft to move a big chunk of their respective operations away from San Francisco, Boston, and Seattle?
> What will it take Google, GE, or Microsoft to move a big chunk of their respective operations away from San Francisco, Boston, and Seattle?
It's a chicken and egg problem: companies don't want to invest in cities where there aren't a lot of qualified workers, and workers don't want to move to cities where there aren't a lot of jobs. Furthermore, the most competitive workers tend to move to the cities you mentioned, so companies located in those cities can stay where they are and enjoy having the best workers come to them.
Consider the Sacramento area: it's about 2 hours from Silicon Valley by car, with significantly cheaper housing, and plenty of well-connected people because Sacramento is the state capital. Why doesn't that area have a booming tech economy? Because the most competitive tech workers from Sacramento have already moved to the Bay Area. Bay Area companies don't need to open offices in Sacramento to attract those workers.
I don't think it's illegal to collude to improve a second tier city's economic prospects. Large tech cos have proven their inclination and ability to cooperate to influence markets before, why not put that collaborative spirit to work for good and profit?
If tech companies would benefit from doing that, why haven't they done it already?
The simple answer is that they would not benefit by doing that. They can just sit tight in Silicon Valley, Seattle, and New York while the best talent comes to them.
The problem could be lessened if NIMBY's would stop trying to dictate how property they don't own should be used (that is, we allow construction) and if we'd stop subsidizing people who can't even marginally afford to live there.
I figure if we'd eliminate the latter, we'd take care of a lot of the former.
In NYC, we have recently seen rents reduce due to new housing supply coming on the market.
In Beijing they dealt with this problem by disallowing foreign investment in real estate except for personal use. Seems like a huge chunk of properties in L.A. are being purchased as investments by Chinese and other foreign entities, without ever physically visiting the house, which is at least as much of a problem as those you list.
The problem could be lessened if NIMBY's would stop trying to dictate how property they don't own should be used (that is, we allow construction).
"Howdy, neighbor! I'm gonna build 70'-high sludge containment tower on these vacant lots I just bought next to your property. Got a problem with that?"
Of course you would. Everyone is a NIMBYist, to dome degree or another. It's just a question of degree.
I'm not so sure. In London there's a lot of construction going around, but at the same time a lot of buying for investment purposes, properties which are not even rented afterwards.
I live nearish to Salt Lake City (whose metro pop. is less than a quarter of Boston's), have tons of software job opportunities, have a 17-20 min commute, and bought a 2k sqft house on 0.19 acres for less than 200k.
Big cities are crowded. They have their advantages, but even if they weren't overpriced, I'd probably still prefer my elbow room.
Utah's always had a strong software industry, dating back to WordPerfect and Novell. Lots of jobs are in SLC of course, but the rest of Utah Valley has even more, e.g. Lehi and Thanksgiving Point. Known as "Silicon Slopes" (https://en.wikipedia.org/wiki/Silicon_Slopes)
I think this article is coastal centric. If you don't want to live on either coast the cities are affordable by the middle class. Certain neighborhoods might not be.
I see millennials just a few years out of college buying houses in Detroit for example. Just not downtown or in Corktown. Similarly I've got friends with houses in Chicago, Cleveland and Minneapolis. I've got upper middle class friends who can't afford to buy a house anywhere in Silicon Valley.
Yes yes yes. I seemed to me that the article defined "hot" cities as ones with expensive housing, which prevented it from looking at hot cities with less housing problems. Pittsburgh and Columbus come to mind as two cities with growing creative/professional industries where the middle class can afford to live.
(Although housing in the epicenter of these cities' tech boomlets can be absurd compared to the rest of the city. This new construction in Pittsburgh's East End - http://www.zillow.com/b/bakery-living-pittsburgh-pa-63CwP3/ - charges the same for 1 bed that I paid for a 3-bedroom townhouse in a solid neighborhood ~1 mile away 2 years ago.)
It all depends on what exactly you mean by the word "city". A lot of the US population is in rural areas or small towns. Their idea of a city is definitely going to be very different from the idea of someone who grew up in NYC, Chicago or San Francisco. Even within those metropolitan areas, ideas may differ between those from the suburbs and those from the city proper.
Personally, I think that a metro/subway system is a good marker of whether or not a place is dense enough to be considered a city. By that metric, the US only has a handful of cities: Atlanta, Baltimore, Boston, Chicago, Cleveland (?!), DC, Los Angeles, Miami, NYC, Philadelphia, San Francisco, and San Juan Puerto Rico (?!).
If you look at a pure density metric of 10k people per square mile at the center of a metro area you end up with a subset: Boston, Chicago, DC, Los Angeles, Miami, NYC, Philadelphia, San Francisco. The City of LA itself has a density of only 8k per square mile but 27 of the surrounding municipalities have a density above the threshold so I included it in the list. Providence, RI happens to also be particularly dense although just below my arbitrary cut-off. There are a few incorporated places throughout the US which are small enough to meet the density threshold but are part of a larger metropolitan area which do not.
Arguments could be made for Atlanta, Baltimore, Cleveland, or San Juan based on the first criterion. Places like Houston, Austin, Seattle, Dallas, Lousiville, Salt Lake City, etc. might be considered by some to be cities. Based on my time there, I would say that Seattle is on the cusp of becoming a city and that this may apply to a lot of other places throughout the US. If the US was a lot less car-centric it might have a lot more cities (based on both criteria).
Fair enough, but mid sized cities have jobs for plumbers, electricians, government employees, secretaries, marketing people, accountants, college professors, construction, biologists, vetrenarians, etc.
The title, "The Middle Class Can't Afford to Live in Cities Anymore" is absurd.
But a lot of those professions can't afford rent inside the city and are forced into unwieldly commutes and lose out on the benefits of being in a city
Sure they can, have you never lived in a mid sized city? Those horrendous commutes are more common to large cities that can't support the population demand. Mid sized cities don't have that problem as much.
There are plenty of suburbs within a 10-20 minute driving distance from the city. Also, businesses operate in those surrounding suburbs.
I like mid sized cities. Not too large, not too small, but just right.
The average rent for a two-bedroom apartment in San Antonio is $1200 (the seventh largest city in the nation). The median home price is $228k, so with a median income of $51k that means the average person would be paying 21% of their gross income towards housing costs, well within the range of "affordable."
It seems very strange to compare gross income to housing costs and deem a situation 'affordable'. When FICA and Federal income tax is subtracted from that $51k ($9,800)[0], we're left with $41,000 of net income.
I pay around $1600 monthly for a $227,000 house in Austin, so the housing cost would be $19,200 / $41,000 or _46%_ which is absolutely not 'affordable.'
A rule of thumb (admittedly arbitrary) for housing is to keep costs below 30% of gross income. That is why I compared median housing prices against median gross income.
If someone making the median income in a city can afford a median house with 21% of their gross income, yes, I deem that "affordable."
To go back to my example, the family making $41k net annually is paying $10,800 (ish) annually in mortgage costs. They pay an additional $4,781 in property tax annually. That leaves $25,419 annually or $2,100 monthly for other costs and savings.
My example makes plenty of assumptions that won't necessarily hold (after all, I'm assuming averages here). Notably, I'm assuming a 20% down payment and excellent credit. And no, that's not a lavish lifestyle. But it's well within the realm of "affordable" for an average person.
I'll also note that $228,000 is the median price, but a search on Zillow shows >1500 listings for less than $150,000. I saw one listing for 3bd/2ba at $135k within the loop. near decent schools and within 20 minutes driving distance of downtown, the USAA and Valero corporate campuses and the UTHSCA medical center, all major employers.
I don't really see what your example has to do with my point. Yes, Austin is more expensive than SATX. Yes, someone making $51k should not pay $1600 a month in housing cost. But you're making my point for me—housing costs in medium-large cities are not necessarily out of whack average incomes in all such cities, just some markets (like Austin).
Honest question... where does the 30% income/housing ratio come from? I always assumed it was pushed by the housing industry to "con" us into more housing than we need.
I tend to agree. The bottom line (and very obvious) is that the more spent in any one budget category, the less available for all other categories--housing included. My wife and I shoot for no more than 20% in order to ensure we can meet our other financial goals. We have paid as high as 46% (in San Diego), which simply wasn't workable.
A lot of it is enforced by landlords. Go apartment hunting, and they'll all tell you they'll only lease to you if the rent on the unit is less than 1/3 your gross income.
I think there's a tradeoff. Smaller cities should be more affordable, but there is less labor mobility, leading to higher economic risk. If a person finds themselves in even a moderately specialized occupation, and loses their job, there might not be another job for them unless they move to another city.
Thus they either have to deal with periodic un- or under-employment, or manage the risk by building a cash cushion, either of which means a less affluent lifestyle.
It's less about specific skills (e.g. writing or accounting) being in demand in those places and nowhere else, and more about what kinds of companies are demanding those skills and how much they're willing to pay. Like legodt mentioned in a sibling comment, the most influential and prestigious companies in a lot of industries are pretty concentrated in a handful of big cities.
It's not just that different industries have their hubs - media, design, finance in NYC, entertainment in LA, tech in SF. A whole ecosystem of supporting firms grows around these companies. So the most influential and prestigious law, accounting, and consulting firms tend to cluster in these cities too.
There also are a lot of people who don't necessarily want to spend their entire lives in, say, NYC but think it will be a good career move to get a prestigious name on their resume before going somewhere else.
At this point I think there's kind of a chicken and egg situation where a lot of ambitious, talented people flock to major cities because firms are there, and firms stay planted in these cities because so many talented, ambitious people are flocking there.
Anything in fashion, design, media, etc. Fields that have global distribution for creative work at large scale is what I'm familiar with and unless you are willing to work for a smaller company (I.e. not large consultancy or high profile work), you have to be in a major urban center.
Not sure why people disagree with this answer. There are clearly creative fields where the top jobs and opportunities are indeed concentrated in a specific set of large cities. Probably more so than most other types of fields. More so than tech, for example, web/social/mobile in Silicon Valley notwithstanding.
That said, other industries are geographically concentrated as well. If you have your heart set on working in the oil business, you probably shouldn't set your sights on living in Boston.
LA homeowner here. Short answer is: not entirely true, as written.
The situation is that a vast expanse of the (very large) city of LA, and key enclaves like West Hollywood and Santa Monica (not formally part of LA, but surrounded by it) has had large and steady price increases for the past ~60 months straight. Renters have been priced out of one neighborhood after another.
It has caused a huge upheaval as people who had not noticed the pace of change have had to move to distant neighborhoods, or out of the area entirely. You see a lot more homeless, and there is a political struggle about people living in mobile homes parked at the edges of parks, etc. This upheaval is a hot issue.
But (coming to the point) it is still, barely, possible for middle class people to find homes in LA city. But you have to pay a lot more (say, 400k), and/or accept some living conditions that are marginal. When middle class Anglo families are seriously considering moving to Boyle Heights condos...it's a new thing.
I don't have time just now, but looking at real estate listings for Cypress Park might be informative. This is a tough neighborhood with significant long standing gang activity. Not South LA (aka "south central"), but close.
Example: https://www.redfin.com/CA/Los-Angeles/3608-Arroyo-Seco-Ave-9... (sold for 360k last year).
Much of the city of Los Angeles is rent-stabilized, meaning rent can only increase up to 3.5% a year as long as the tenant stays there. But when the move out, the rent can reset to market rates.
I just moved out of a place in Studio City, paying $1200 for a small one-bedroom apartment. It's listed now for $1600, and I'd bet on it filling within 10 days.
So that's a 1/3 increase in rent I was able to avoid by staying in one place for a long while, but if I'd been moving around it would have cost much more over the years.
In the far (semi-rural) reaches of Sacramento now, and happier for it!
Right, I get that. But that's true of every real estate market. The problem in San Francisco is that middle class families are priced out of every neighborhood in the city; their only cost effective options might be in another city.
Is that true of LA? It's only the case if there's no reasonable neighborhood within the boundaries of LA you could move to after an untenable rent increase in your current neighborhood.
For instance: it's obviously not the case that middle class families are priced out of the Chicago market. Chicago is full of neighborhoods full of hours and townhomes and three-flats that span pretty much the whole price spectrum. On the other hand: some neighborhoods that were pretty reasonable 10 years ago (Roscoe Village, or Bucktown) are now so expensive that their demography is changing. That doesn't mean Chicago is pricing out middle class families; it means Bucktown is.
LA is a MUCH bigger city than San Francisco, especially in terms of geography. I'm not sure an meaningful comparison can be made as a result.
There are certainly areas of LA at least as big as the total area of SF where middle class families can not afford to live. There are also areas at least as big as the total area of SF where lower-middle class families are the vast majority of residents.
The cities are just too different to make a meaningful comparison in my opinion.
I think the answer is yes, but depends on your definition of affordability.
Median household income for city of LA is ~$60k. Without detailing the numbers, maybe if you're really liberal with mortgage qualification you get a $450k home at that income (house or condo). In a broad Redfin search of the Valley/LA Basin and a bit beyond to the east/south (this includes many cities outside of LA), you have:
Total homes for sale: 4,720
<$450k: 873 (18%)
In Safe Neighborhoods: 294 (6%) (I used my own definition of safe, but it's very liberal and includes many places where walking around after dark alone would not be advised, but it's an urban area after all so that's understandable)
Btw, and this is where people say you're not entitled to something, but if you are just talking about single family homes (LA is very single family home-focused) in a safe hood for <450k the number of availabilities drops to 51 homes (that's 1% of inventory).
Lots of other nuances here, but just a broad brushstroke look at the market.
I live in L.A. and as far as I'm concerned, yes they (we) are being priced out. You can live an hour away from your job or in a dangerous neighborhood, but that doesn't really mean the city is affordable.
It's just a pointless question to ask if middle class families can live in the city limits (an arbitrary border) in my opinion.
The better question is do middle class families have to live as far away from their jobs in LA as they do in SF, and the answer to that question is increasingly "yes."
What about places like Canada? Where your only real options are Toronto and Vancouver. Other places are lonely and small.
Personally I'm into music. Composing, playing shows, going to the symphony, the opera, the ballet. Sure, I could leave Toronto, except now I'm in the middle of nowhere where there are no jobs and no culture. Now what?
Montreal? Very cheap to live, probably the most cultured city in Canada. I'll admit the job situation isn't great there but that's why it's cheap. Calgary and Edmonton both have top notch symphonies, the world class Alberta Ballet, and burgeoning music scenes. Much cheaper than Vancouver or Toronto.
There are huge, huge affordability problems with Vancouver and Toronto, but they're hardly your only choices.
Exactly. Canada is very diverse and there are plenty of music scenes, symphonies, and other culture centers outside of Vancouver and Toronto. It's like saying the only good places to enjoy culture in the US are New York and LA.
The only time I imagine myself living in a big city again (I'm originally from Queens, NYC) is when I visit Montreal. Beautiful city, efficient immaculately clean subways compared to any city I've been in. If I weren't comfortable in the relatively rural part of the Hudson Valley I'm in, I'd seriously consider it.
Ottawa? More of a town with lots of suburbs than a real city but dirt cheap compared to Toronto or Vancouver. I would say that it is even cheaper than Montreal.
I'm not sure about the music scene but there are a wide variety of both English and French language theatre companies. NAC, GCTC, La Nouvelle Scene, etc. I'm sure the situation is similar for Opera and Ballet.
I dislike density and can't stand not having lots and lots of space. I love the look and feel of sprawl, and I want more of it... you couldn't pay me to live in an urban environment.
Crowded cities feel like something out of the past to me. Like, my great-grandparents lived in a crowded city when they first came to this country, and every subsequent generation has moved farther and farther out into the burbs. Moving to a city would feel like moving to 1901 to me.
I really think a big part of this is the QE/low interest rates the Fed used to dig us out of the hole. Everything seems inflated, from stocks to housing prices, because borrowing is so cheap and you can over-leverage yourself quite easily.
Anecdotal story: I live in a decent but not super nice part of Seattle and we had a house a few blocks away sell for 750k, which seems insane as everything else in the area goes for 400-500k and historically has basically been the ghetto. I could not imagine trying to get into this market, I would be living 6 miles down the road.
Will be interesting to see how prices are impacted once the fed raises rates. Borrowing will be more expensive and should have a depressing effect on home prices.
In order to afford a decent newer house in the suburban beltway (DC) you need to spend 500k+. That's $2200 a month. Personal property tax on a 3 year old SUV and a new sports car is $2700 yearly. Car insurance is > $300 monthly. Car payments >= $1900 month. (college + personal) Loan repayment = $400 monthly. Food and gas + energy >= $600 monthly. State and federal tax + ss take about 45% of gross.
Upper middle class == ~ 170k a year. Welcome to northern virginia.
The car numbers jump out at me. The rest sounds familiar but you must have some nice cars to run up those car tax, loan, and insurance bills.
For comparison, a couple of 5 year old Japanese cars run me less than $100/month insurance and around $600/year in property tax in NoVA. No payments because we saved up and paid cash, but if there were, they'd be well under $1,900/month.
> State and federal tax + ss take about 45% of gross.
Even after the mortgage deduction? Have you calculated your effective tax rate? Mine is around 30%, including sales taxes.
I was in Somerville MA, with street parking as the only option. My car had a blue book value of 800 and Geico was charging me 2000/year for bare bones coverage
My situation is extraordinary regarding the mortgage since I can't deduct it: so tax rate is pretty accurate. The sports car is nicer than the average (approaching supercar) and the SUV is categorized as luxury. Not out of the ordinary in this area.
I'm curious why you can't deduct the mortgage payments. Just so far down the amortization curve that it's mostly principle now? Or you're talking about an investment property?
We live in Silver Spring, and between our two kids, we pay ~$2,000/month for private middle school and preschool. Our older one has one more year at his middle school (started there when we lived in an area with pretty crappy public schools), and the younger one finishes preschool this summer. We moved and now pay ~$1,000/month more for a roughly equal house, but better public schools and a better neighborhood. A shorter commute (40 minutes on a good day, but usually 50-60) is a minor side benefit.
I'm really looking forward to the end of paying for school because we can finally get a much-needed new car. Once they're both done, it'll be the equivalent of getting a pretty decent raise.
D.C. is definitely a very expensive area. But luxury cars aren't dramatically more expensive here. It is a poor example to cite when discussing the cost of living. On the other hand, It's possible they could be normal cars and very short loans.
While pricing people out of "hot cities" sucks, there is an upside to up and coming cities being built up. Even Austin and Denver mentioned in the story were not on par with 'out of reach' cities a decade ago.
There will continue to be waves of this as we see places like Nashville, NC cities, SLC, Charleston etc building up now.
This relocation is a form of spreading the wealth and based on geography the optimistic view is some of the benefit will go to areas we saw most left behind and divided this election (south, midwest).
In the long term that could be a boon to middle class outside megacities and more opportunity to escape the mega city bubbles/echo chambers
The first sentence is obviously false -- the well-known landscape architect Frederick Olmsted was born in 1822, so he could not have designed Highland Park in the 1700s. Not a good way to start the article.
I'm a founder bootstrapping a startup, so at the moment both my income and my assets are very well short of middle class. Nonetheless, I can afford to live in London Zone 2 -- a ten-minute walk away from Tower Bridge -- because I'm happy to live communally with a handful of excellent flatmates. There's nothing wrong with this arrangement, and I think it's an arrangement that will only grow in the future. I'm seeing the property development and and rental industries evolve to accommodate it. This is good.
That's not to defend the way that most of the property industry has become simply a vehicle for financial speculation, which is to the benefit of nobody who isn't at the apex of the financial services industry.
> because I'm happy to live communally with a handful of excellent flatmates.
Television. In a small apartment, if one person is watching TV, the rest of us are locked into it too. Any hope of reading, programming, or any other focused activity goes out the window. After long days in a noisy open-plan office, coming home to other people's blaring TV show wore down my sanity very quickly. No job could possibly be good enough to justify that life.
In college, you could at least escape it in any of the multitude of secure 24x7 spaces with tables, power, WiFi, etc. But the libraries around here close at the end of the workday, and that's about the only quiet public space we have in this country.
I'd kill for a "media only with headphones" communal apartment.
The poor and unemployed are also being priced out of London with the rise in rent and gentrification. It's a bit sad when people are priced out of the area that they grew up in. I do appreciate that this problem is not confined to London, but in some ways London is a more extreme city than anywhere else in the UK (extreme wealth and poverty side by side).
This rise in rents has also made it difficult for generation/s to ever consider buying while living in London. Young people typically move to London and then when they want to settle down, they leave. As you get older the idea of communal living soon loses its appeal.
>Young people typically move to London and then when they want to settle down, they leave.
This has long been a dynamic in many large cities though and only in part because of housing costs. Of the significant number of classmates in my MBA program who moved to Manhattan for jobs after graduation, only a handful remained in the city once they got married and had children. Many of those could have remained in Manhattan if they made the inevitable compromises--and there will always be trade-offs city vs. suburbs--but didn't choose to do so.
(1) Do not such articles sound like "not everyone can afford a holiday in Hawai"? Or "all my friends have a Mercedes AMG but I don't"? What is the difference? *
(2) In Bay Area, the daily commute itself is an obvious sign of overpopulation. How does more housing not make it even worse?
* I exclude the gentrification problem which is really affecting the lives of poor and old people as their mobility is far worse than middle class, and most of the time they won't be able to buy the new houses and apartments anyway.
>(1) Do not such articles sound like "not everyone can afford a holiday in Hawai"? Or "all my friends have a Mercedes AMG but I don't"? What is the difference? *
It would be useful, for many reasons, to have a greater proportion of people living in cities. So, it's useful to challenge your implicit assumption that doing so ought to be a luxury.
(2) In Bay Area, the daily commute itself is an obvious sign of overpopulation. How does more housing not make it even worse?
a) The commute is awful because the Bay Area is overpopulated relative to its transit infrastructure, not some natural limit. Or, conversely, the Bay Area's transit infrastructure is under-provisioned relative to its population. Faster, more extensive transit infrastructure can drastically improve the commute at both current and higher population levels.
b) We also underutilize the land close to commute destinations, so everyone (but the residents of single-family homes near downtown) has to travel further than they should. Pedestrians don't need much in the way of infrastructure (just sidewalks, which most of SF already has). Building more residential skyscrapers in the midst of business districts lets more people walk to work in a short time. Building more mid-rises (~6 stories) where there are currently single-family homes gets more people into commute distances that are reasonably quick on a bicycle, motor scooter, or public transit. Density of residents also promotes density of stores, so that i.e. everyone can be a short walk from their grocery store, rather than needing a car to shop, and the reclaimed land previously dedicated to parking can house more people.
(1) For the sake of extending the same analogy, the question is not whether people should have vacations and cars or not, it is about everybody asking for luxury vacations or cars.
(2) IMHO, housing may for sure move some people closer to their work but it also means more service workers and other jobs to move to the same spot; this sounds to me like a vicious circle. At the end isn't it this vicious circle that drives city growth? Even if the commute problem is solved, which I doubt looking all the cities I lived or know a little bit, how are we going to prevent the classic environmental challenges: clean water, or effects on natural habitat?
It might be better as a matter of policy for more people to live in cities. I get the arguments even if I might not personally care to follow that path. However, that doesn't make it better as a matter of policy to cram people into as few different cities as possible. There's plenty of housing to be had at reasonable prices in Detroit, for example.
In general, city living is not a luxury. Living in what are generally viewed as desirable neighborhoods of certain cities is.
Cities are expensive for a reason - they are not just a Veblen good like a Mercedes AMG, mainly valuable due to scarcity. Cities are more like doctors - they are extremely useful, and we would all be better off if there were enough to go around.
Throughout US history there have been economically booming areas where people could move to become more prosperous. The majority of good new jobs are in cities. The fact that we are not building enough housing and transit infrastructure so people can actually live somewhere while working those jobs is a problem for national employment and economic growth. The landlords end up taking home a great share of the economic benefit instead of the workers as the price for scarce housing is bid up. This is also the root cause of gentrification.
This leads to megacommutes as people occupy housing further and further from the booming economy. That's clearly the case in the Bay Area, where many cities have built more units of office space than housing, guaranteeing a rough commute for the people who work in those buildings.
Just read this article, "The retirement wave changing Sydney" about the effects of boomers retiring in Sydney and ^holding the crease^ in the housing market. [0] Interesting effects (economy slows as displaced younger workers have to travel further).
> Landlords are able to charge more, and long-time rental residents get displaced when they can’t afford the new prices.
So just because you rent a place somewhere for a couple of years you are entitled to be able to stay there forever? even if everything around you changes?
What if I have more money, and I want to move in as well, but can't because you are still renting the place you are entitled to for cheap?
> That’s what’s happening in Fort Hill, a traditionally African American neighborhood that is whitening every year as black residents who’ve rented there for decades are replaced by high-turnover college students willing to pay the ever-higher market rates for apartments.
I find it disturbing that this article throws in race despite this being a purely economic situation.
>In Fort Hill in 2016, meanwhile, initiatives to build new affordable housing to keep those long-time residents in the neighborhood were met with resistance by some homeowners fearing an influx of low-cost housing would negatively affect their home values.
Someone enlighten me, why does the government have to listen to the wealthy NIMBY's over the longtime residents? Are certain voices more important than others? We live in a egalitarian democracy, no?
The article talks about "the middle class", but the people it talks about (teachers, etc.) are wage laborers with respectable pay, not independent business owners deriving income by applying labor to their own capital -- that is, they are middle income working class, not middle class.
Worth pointing out that the article defines middle class as an annual household income of $50-125K. That's higher than I would've expected on the high end. Also, they rightfully call out too-restrictive zoning as being responsible for a lot of the shortage.
If you ever want to see evidence of just how thick of a bubble the tech world lives in, and how disconnected it is from the rest of the population and economy, read comments on any article with "middle class" in the title.
The cities skew Democratic, but I wonder if increasing urban migration will create more Democrats. Then the Democratic Party has more of an incentive to build more nice-city.
This is absolutely the case, there are loads of books about the phenomenon. And every mid-sized city has some chamber of commerce that is trying to crack the code on how to be "the next Austin/Portland/whichever-hip-city". Hell, I've got friends in Virginia and Maine who are working on this.
They're doing it for fiscal/influential reasons, not political, but yes, this trend would benefit the Democrats, except that you can't attract hipsters with policy.
I live in such a city. We are trying to make the city more desirable to economic growth. One factor is that people will tend to locate their businesses where they want to live, so it makes sense to add amenities associated with upper middle class lifestyle, such as good public schools and bike infrastructure.
But there are some things that we don't control. Probably the most important engine of growth in the entire state is located in our city -- the university -- but the city doesn't operate it, and we have no voice in state government thanks to partisan gerrymandering.
Speaking of housing in the city, an amazing display of the situation, in SF at least, is the number of people who share housing. I'd actually love to have stats!
The middle class can afford to live in cities, just not in a 3500 sqft house with a 2 car garage and a boat, and with the best school district and certainly not in NYC, SF, Boston, DC, etc.
There are plenty of places to live in America. You have to adjust your standard of living and your expectations according to your income and desires.
This is a view that will lead to a highly dysfunctional society.
First off, you are dismissive of the issue with that bit of exaggeration. It is not as if this group wants all the good things in life that only a tech salary afford. Perhaps a dignified life would be sufficient.
You also place NYC, SF, Boston, DC, etc. into a category of city that is naturally not available to the middle class. Is NYC a luxury like a 3500 sq ft house and boat? Housing scarcity and the resulting price inflation is actually a situation that residents of cities accidentally created, something highly unnatural.
Working class and middle class people are critical to the economy and wider culture of cities. Teachers. Police officers. Artists. The guy who makes your coffee. The gal not from a wealthy family who wants to start a business.
It is not enough that a certain group can just live somewhere in America. Critical workers must live within a reasonable commute to their jobs.
There should be plenty of places in each city for them to live in, and there should plenty of infrastructure in place to move them about.
Is NYC a luxury? Absolutely. The access to institutions, the culture, the people, the shops, the history... all of that is a luxury. That's why people want to live there versus somewhere like Cleveland I guess.
Once those cities are unaffordable for the very people you mention, they will just move to more affordable places where they have a better cost of living, and then they will bring ideas, creativity, and resurgence to these areas and make them better.
If you're a critical worker, then surely you can demand a pay raise. If not, move. If somebody can replace you, you're not critical. If somebody can't replace you, they'll have to pay more.
I'm not dismissive of the cost of these cities at all, nor the plight of those living there, but you get what you pay for. If you're a teacher in New York and you can't afford rent, move somewhere else instead. What else are you going to do? Rent control? Then you just have people who can never afford to build lasting wealth because they will just rent for life.
There isn't a 'solution' to this 'problem' because it's just a basic fact of human organization. I'd love to live in Colorado, maybe Breckinridge, but I can't afford that. So I live somewhere else and visit. Does that suck? Yeah sure, it also sucks I can't buy a Ferrari.
Ideally we want mixed-use development neighborhoods with differently priced homes for people with different income levels to live in. But it looks like without the government enforcing it, that isn't going to happen.
I do not think that big city life should be a luxury, any more than the internet or computing should be a luxuries.
While it is beneficial to improve districts, the migratory upgrading of urban areas is an economic model that may be problematic for the population. People need to get work done and take care of their families, not constantly deal with a series of dismal choices and life-uprooting changes.
Instead of waiting for price bubbles, wage bubbles, hostile populations causing problems due to inadequate conditions, perhaps cities should work on the infrastructure of growth.
There are many necessary conditions for civilization that governments enforce or produce. I argue that generating NYC conditions for the general population is one of them.
Whatever the category of neighborhood -- big city or small town or even country -- there are minimum requirements for a decent life that IMO the community is morally obligated to create.
> I do not think that big city life should be a luxury, any more than the internet or computing should be a luxuries.
The difference is scarcity.
Computers and internet are can be produced at very cheap costs. Whereas, almost by definition, urban real estate is scare and in high demand. If it weren't, it wouldn't be crowded.
Well, big cities (using this term very generally) don't have to be. All you have to do, as you pointed out, is to improve the infrastructure of growth. Oh and recreate the unique cultural and economic conditions. Oh and you also have to do that for every city in the world.
It's just unrealistic. The pragmatic thing to do is just make one move and move out of the big city. You can lead a nice life in many places. Move to Alabama or something.
I can't afford a big city and I have a great life where I live. I visit those big cities when I want instead of dealing with the hour commute and sky-high prices.
> Is NYC a luxury? Absolutely. The access to institutions, the culture, the people, the shops, the history... all of that is a luxury. That's why people want to live there versus somewhere like Cleveland I guess.
That's what I keep saying about Paris. One should put down the Eiffel Tower, it will make rent and buying cheaper for everyone. Don't care about that big building.
Didn't choose the shop, the people, the luxury... Just forced to be in the capital to have a job.
I live in NYC. I live a reasonably fancy pants lifestyle—have an apartment in a nice neighborhood with a doorman, eat out a few times a week, go to bars a few times a month, etc. I spent under $34,000 in 2016. $24,000 of that was for my rent, which is admittedly ridiculous. But I think with a little financial awareness, NYC can be affordable to the middle class.
It is true that people can squeeze by in a place like NYC with the right moves (as you have), but a configuration like this one may not be sustainable for those who want to raise a family.
I don't think I'm "squeezing by". There's a lot of fat I'd need to trim for there to be any "squeezing".
A family is definitely more costly than a single person, and may be more difficult. But the article defines middle class as $50-$125k / year. With a $125k salary, you could afford 3 people living like me (including each having their own apartment). So I think the article is a bit extreme. On $50k, it'd be harder, but definitely do-able with some effort.
New York City is not a place to raise a family. Move somewhere else. Period. You can raise a family and go to some of the best schools in the country in places like Wisconsin, Minnesota, Ohio, etc....
This isn't remotely true. The NYC metro area is massive, with plenty of family friendly neighborhoods with good commute times to midtown. Plenty of places in northern NJ and elsewhere with good schools.
You are describing the condition but not addressing why it should be that way. IMO it is a basic human right to be able to live and thrive in our community. Of course I am not suggesting we all go live in the Hamptons and live it up.
But it seems to me that each of us is born in a place, and that place, having a government and resources, is obligated to foster a decent and productive existence for that person as they pass through life.
If you're going to make a statement like that I'm going to need an example of what you consider middle class, what you consider affordable and what a reasonable square footage is for a family of 4.
Middle class in a small to mid size city is $200k in annual household income. A family of three should have no problem in 1200sqft. Two kids is excessive, but if you do have two kids you'd be fine in 1500sqft.
Throwing out $200k as a typical middle-class income just demonstrates the bubble the OP lives in. I live in one of the wealthiest counties in the nation (Fairfax) and we don't come anywhere close to a $200k median household income.
Okay, but the submission says the middle class can't afford to live in cities anymore. You're saying, "Of course they can! Otherwise they wouldn't be middle class."
Could you elaborate (honest question)? My point of reference is The Netherlands, so I have very little context for that figure, as it would be ludicrously high for middle class over here (in part for very understandable reasons, welfare state and whatnot). I'm mostly curious about your views of the middle class and what they should be.
I agree with you, unfortunately people can't buy property based on what we believe middle class should be. The reality is property is cities is not affordable for the middle class. How to solve that is another problem.
Not in the US. We're facing a huge impending labor shortage. (And immigration just externalizes the problem of accommodating raising children from US policy to India or China policy.)
The trend in US wages/employment for youths doesn't seem to signal that. The trend in wages/employment for youths in nations with even lower fertility rates (Spain, Italy, Portugal...) doesn't seem to signal that. Even Japan, where absolute population decline is already underway, has good-but-not-amazing trends in wages and unemployment for youths. Where's the race to bid up the prices for young workers, and buy all their labor that's for sale, if an aging work force really is leading to crisis-level worker shortages? If the market expects a huge impending shortage of (e.g.) coking coal, you don't see the same lackluster demand for the output that's currently available.
Maybe you meant that the shortage isn't coming in the next couple of months or years, but in a generation or so, so the market reaction isn't there yet. The view that I subscribe to, which seems common here on HN, is that technological change is going to significantly reduce the market demand for human labor in a generation or so. I expect that automation will generally deflate the market price of human labor faster than an aging work force can inflate it.
Social Security solvency currently depends on lots of middle class workers earning wages, because its funding is structured that way. But that's a policy choice that is more easily reversed than fertility rates or technical progress in automation. If the problem is more about paying for retirees than lacking warm bodies to do work, higher fertility just makes government funding problems more severe: you end up with more people who need non-market support mechanisms if the market demand for additional human labor isn't there.
Does it? Your real wage is your wage adjusted for purchasing power. A labor shortage drives up the cost of production and of services, which increases prices for everything, and also makes it uneconomical for people to hire others for services (like taking care of elderly parents), then the math teachers and so on in that fashion until everyone is eaten.
That was slightly tounge-in-cheek :). I suppose it would be bad for most people. Personally, I spend:
- 15% on "luxury" goods and services such as travel, coffee shops, restaurants, event tickets, and my car, all of which I can do without at slight to moderate annoyance.
- 5% on necessary goods and services such as groceries, household supplies, and transit across the Bay.
- 80% on rent, including parking.
The cost of production isn't entirely absent from my true expenses; I do need groceries, and some tiny proportion of my rent pays for the actual materials, construction, and maintenance on the structure and associated infrastructure. But my dirt parking space next to BART certainly didn't need producing (the most produced thing in that lot is the fee collection machine), and I spend as much on that as I do on food.
So, I would not mind even a massive increase in the cost of goods and services, if it came with more money overall (which I can also use for space) and/or a decrease in the cost of space (i.e. fewer people contending for it).
OTOH, all Bay Area tech jobs ultimately rely on consumer spending, so if there is not enough of that going around, probably no paycheck.
It's not entirely inconceivable that the middle class is 6% of the population, or less.
Perhaps another way of thinking about the situation, is not that the middle class can't afford traditional middle class amenities, but that the proportion of people who can afford those amenities is shrinking.
It's not entirely inconceivable that the middle class is 6% of the population, or less.
<pedant>That's not how this works. Middle-class, is by definition, somewhere in the middle of the household income range. Exact position is open to debate, but you can't just declare "only the top 6% are middle class!"</pedant>
That's perfectly fair, and I don't think it's pedandic at all. Maybe we just need to re-think the traditional notion of the US as a "middle class society," and what that means. It conjures up expectations in my mind (house, car, kids, etc.) that might not be realistic any more.
Absolutely true. But with other posts throwing out $200k as a normal middle-class income, we probably need to define what we're actually talking about. The income range, or the lifestyle expectations. The whole point of the article (and others like it) is that the two things are moving in opposite directions.
This is entirely my point and it seems I've done a bad job at explaining it. If a house, car, kids, etc is middle class then you need the salary to match it. What people are calling a middle class lifestyle doesn't match up with their definition of middle class income.
I'd imagine that's less so when you look at popular cities. The parent post wanted an opinion on middle class. My opinion is that middle class incomes in cities is around $200k (or should be if you want to be somewhat comfortable). I see houses all around me in Portland going for $800k, $900k, and $1mm plus. That's certainly much more than what a middle class income could afford. So considering those prices are fairly standard, the middle class income has to be at $200k. Whether that's reality or not the math just doesn't work any other way.
> So considering those prices are fairly standard, the middle class income has to be at $200k
I think there is a reason why everyone is railing/downvoting on Ryan here, and it's because of a difference in definition. There's two ways to define "middle class". One is by what you can afford: house, car, but not stuff like a private boat, etc. The other way is just by taking some middle percentage of the income brackets (middle 60% or whatever).
Historically[1], Ryan is actually right here. For the baby boomers, both groups are right because they overlap.
Much of the societal issues were seeing and will continue to see for the near future are because those groups are once again starting to not overlap (in certain areas, as highlighted by the original article).
[1] Right by historically, I mean that centuries ago the lower class was like 90% of the population or something... Middle Class was mostly not a thing.
In order to live in those cities you do need a household income of $200K+. But that is not middle class. In such cities the statistical middle class would be $50-75K, but as a percentage of the population it would be a small (and increasingly smaller) group... Which is the crux of the problem.
Nationwide the middle class is more like $40-50K (household income).
If your household (how many earners it is comprised of) is over $100K in annual earnings then you're in the top quartile (25%!) of the entire country in income, and decidedly not "middle class" (though, depending on where you live, you may or may not have enough to afford a home, much less a boat, a beach bungalow, eating out, going to the bars, etc.). Keep in mind that a lot of these cities are okay for singles, but once those singles get married and have kids they rapidly discover they can't afford the big city anymore and have to leave.
The argument was that middle class could afford a decent place in cities with lowered standards -- but you define middle class as "people who can afford a decent place in cities?" Surely you see the circularity here.
Those prices are not standard for Portland. There are tons of houses to be had in Portland for $300k-$500k. And many of those are in neighborhoods that most of America would consider insufferably hip.
We have a lot more space in the US. A typical 4-bedroom suburban home is somewhere around 1800sq/ft and, anecdotally, that number has been creeping up.
Of course, all the space also has massive drawbacks... car-centric culture, sprawl, long commutes, harder to implement public transit, etc.
Other drawbacks to house size inflation: more space that needs cleaning/maintaining/heating/cooling, higher costs for buyers who want to own a house in a neighborhood but don't need or want to pay for extra space.
In the area I live in -- not even a big city -- you're basically forced to choose house size and house age at the same time. If you want only 1400 SF you're buying an old house with old quirks (asbestos, a history of lead paint, old wiring...) If you want a new house you're buying more square feet and the additional burdens thereof (more space to heat and cool, more space to clean). There's practically no such thing as a new well built small house, or at least none that I could find when I was buying. I ended up in a 1940s house because all the newly built houses were too large for my tastes. And those huge new houses often had huge lawns that needed a riding lawnmower and ridiculous amounts of water (why is everyone landscaping a desert climate like we live in rainy England, argh...)
Is there some weird feedback loop going on? "Our sales indicators show that buyers preferred even-larger new houses this year than last! (Because we didn't give buyers any options to buy smaller new ones.)"
The size vs age problem exists in DC as well. And it's exacerbated by the land value - many of the older, smaller homes are torn down to build mansions, even if the original house is perfectly livable. And it's even worse because the older house frequently has "better bones".
Me too. Sounds like the typically short-sighted drivel heard from those who think a smaller, or declining, population is a good thing. Usually it comes from a "look at how bad the humans are for our beloved Earth" point of view. But such individuals usually aren't particularly studied in demography or human geography. They don't realize the catastrophic effects of a sub 2.1 (US) population growth rate. I.e., the so called "replacement rate." Currently it stands at 1.9. As this trend accelerates it could theoretically result in massive social fall out. One of the obvious possible by-products is not enough workers to support an aging population: either in providing necessary services, or tax revenue to support things like Medicare and Social Security. Usually, from what I've read, what matters is how stable and gradual the trend is. If it's a slow increase or decline then it's potentially okay. If there are rapid changes, or shocks, it is likely to be much worse because it doesn't allow time for society to adjust to the new reality of things.
Glibly saying that having fewer kids on average is better is awfully bold, verging on ignorant (as would the opposite argument).
It is true that in order to make ends meet in a big city, many families have many fewer kids (one or two, from what I saw in San Diego).
It's fundamental: any culture which doesn't have a place for families with 3+ children is unsustainable. You can hope to make up the shortfall with immigration, but that's just kicking the can down the road. At some point your have to depend on your own harvest, not the surplus of your neighbors.
I'd tweak your statement to be "Those of the middle class who were not lucky enough to have purchased an affordable home yet." There are many who lucked out on timing and now have a nice house at a more previously affordable price. As usual, it is the younger generation that gets left holding the bag.
Unfortunately for many, the risk of slow job markets where homes are affordable pushes many away from where they are and towards the cities with more opportunity (and higher prices as a result).
What about those who provide social services to city-dwellers? Teachers, firefighters? It can be problematic to have the police tasked with protecting a city they don't even live in. Next time you see an SFPD officer with a free moment ask him/her what they think of the explosive growth in SoMa.
Lol sfpd with a free moment. The sfpd and sffd are some of the most busy. I remember reading last year that one sf fire truck rolled more than a thousand times over the previous twelve months.
But it would be pretty sad to grow up in a working class family and then be forced to move away from your hometown at the age of 30 because rent had grown faster than your ability to generate income.
Of the various promises society has made to various people, when did "you always get to live in the city you were born in" end up on the list?
There are trade-offs everywhere. The reason these crazy cycles continue is because people refuse to accept alternatives. If more people said "screw you guys, I'm leaving" to expensive cities, the cities would start to become cheaper.
There are also cities that die off because the industry in them goes away. Are we going to force them to stay where they are so that they don't end up bidding up prices, driving kids born in Oakland out of Oakland?
Many, many jobs may be in urban areas but aren't actually in cities/urban cores. In fact, the movement of many professional jobs into cities is a relatively recent phenomenon.
And while Silicon Valley and the greater NYC area are something of exceptions, you get out of the urban cores of somewhere like Boston/Cambridge and housing prices go down fairly quickly except for some particularly upscale towns.
Well, I certainly consider Somerville part of the urban cores of Boston being on the T (sort of) etc. And it's expensive as a result. But get out beyond 128 and, with the exception of some specific communities like Concord, housing prices drop considerably.
I think they're counting Somerville and similar locales as part of the urban core. By that metric though places like Mattapan should also be part of the urban core and are a lot more affordable.
Somerville is more accessible to both Cambridge and downtownish Boston where a lot of the professional jobs are than somewhere like Mattapan. But to your broader point, yes, there are certainly parts of the City of Boston that are considerably cheaper albeit less desirable from housing stock, safety, environment, etc. perspectives.
THe problem is we still believe america has a middle class. It really doesn't. Even the people I know with household incomes in the bay exceeding 250k a year aren't really saving any money. Easy access to debt has confused access to capital with savings in america. I'm just glad I'm rich
I grew up in a suburb outside of Manchester, New Hampshire. You can get a pretty sizable house there for $300k, rent a nice apartment for $700/month. I'd consider my upbringing middle class. It was cheap but wholesome, with access to an excellent New England education, mountains, the ocean, Boston, and enough social connections that I've never ever felt isolated. I think living in the Bay Area heavily distorts your view of what things are like in the rest of the country. Some people insist on living near Silicon Valley as if everywhere else is filled with bumpkins and barbarians, the uncool, but then can't make the connection that they must pay dearly for that inflexibility. I say, if you are poor in San Francisco, there are plenty of beautiful, cool, places to live that are much cheaper and culturally interesting.
Bullshit. There is no place in the United States where $250K means you're living paycheck to paycheck. You know people who don't know how to manage their money.
On this forum, there are plenty of people who are totally out of touch with reality when it comes to salaries, doubled by the fact they they believe they are so above everyone else that they should earn 10 times average Joe's salary and live like kings, hence everything else is a failure.
Very recently, there were the 'unworthy' Japanese salaries. They were 50%-80% higher that what I am used to see around me for equivalent qualifications, but no, the general opinion here was that they were outrageously low (without consideration for any other factor).
I also remember one guy saying he was earning 150k$/year and that leaving in France was with that salary OK but barely so. Truth is that's 3 to 4 times what most mid-career engineer earn, and their salary allows them to have an easy life. That's 6 times the median salary, which means that half of the population can live 6 years or more with a single year of his salary. That's 8 times the minimum wage, and lots of people live with it, some without any problem, some with difficulties, depending on the family situation, the location and the spending habits, but they all make do. Finally that's 20 times the amount of welfare, which is enough to live a poor and simple life. So the guy could have lived, say 10 years with a single year of his income, and yet he was whining.
My jaw regularly falls when I read money/salary related posts on this forum.
People are just spending too much of their money and lack fiscal disaplin. 250k/year is more than enough for the bay area. But you'll not be able to live like a king.
I agree with the article. However, people should be able and willing to make the appropriate sacrifices commensurate with their future expectations.
If someone is 22 and is making 35k a year, and can keep all of their expenses at 15k per year (it's easy to find places in Dorchester 850 rent all inclusive for a room plus 150 food and 3k year entertainment), save 5k per year for retirement and emergencies and finally save 10k for a house they'll be have 100k when they're 32. With 100k in boston that's 25 percent on a 400k house in a suburb or parts of Dorchester. Worst case, move somewhere cheaper and that can be as much as 50% down.
Keep in mind this assumes no salary increases and no spouse. It's very doable, but people want to live a lavish life. Can you live a lavish life in Boston for 35k? Nope.
Your numbers are entirely unreasonable unless they're after tax. Maybe in Arizona and not saving 5k for retirement. But even there $150/week for food is like Ramen, Beans, and Rice, you're not accounting for transportation or medical costs, etc. You can live on 35k for sure, but saving 10k of it every year is pretty optimistic.
35k after tax is about 28k [1]. What's wrong with rice and beans and occasional meat? An average 22 year old doesn't need medical insurance. Given that many people don't save at all this would be pretty good.
Also the plan I described already had leeway for unexpected expenses.
12k housing and food
3k entertainment
10k house
5k saving
I agree that it would be a boring life. That being said, this is using 35k and not the 50k minimum being defined as middle class, per the article.
I know plenty of people in their 20s that thought they were too healthy to need medical insurance, until something happened and they had to have their appendix taken out and now have $50k plus in medical debt.
As on otherwise healthy person who had to go to urgent care/ER twice this year (nothing that serious, ultimately)... not having health care is something that you'll really regret. Almost anything that puts you in the hospital for any amount of time will cost thousands of dollars. If you need anything major it will be tens of thousands of dollars. Unlucky enough to get cancer or something similarly bad and you could be out more than your lifetime earnings. And you have almost zero control over if/when something happens.
Things are more reasonably priced here, but probably still higher than their intrinsic value. However, at least we can afford them without mortgaging our (and our kids') future.
The truth is that this isn't a situation the government has shown any ability to solve for. There are a myriad of reasons, but ultimately my feeling is that federal housing policy is deeply flawed.
Inevitably, by necessity, the solution to this mess will come from all those in the middle class who've been forced to find another way. Our voting with our feet will shape the next ten to twenty years in ways which are hard to predict. One likely outcome is that big cities will not be able to maintain their current housing price structures. A tipping point will come. You can't build a viable local economy only on the top and bottom of the income spectrum. You need a robust middle class. Otherwise the absence of the middle class creates a vacuum, and conditions for an implosion into that vacuum.