A $300k Salary Feels Like $100k in the Priciest US Cities(bloomberg.com)
bloomberg.com
A $300k Salary Feels Like $100k in the Priciest US Cities
https://www.bloomberg.com/news/articles/2023-04-15/making-300-000-a-year-feels-more-like-100-000-salary-in-these-three-cities
159 comments
It’s almost all real estate cost.
I’ve lived in very expensive cities (Boston, Los Angeles) and now live in a moderately priced one (Cincinnati) and most things cost about the same except real estate. Gas (which I don’t use as I have an EV) is a bit more in California due to taxes but food, clothing, services, gadgets, utilities, etc are almost the same.
If I were a 20-something today I’d stay away from high cost cities. Real estate eats everything. I might consider living in such places for a little while to build network but would bug out after maybe two years. For example I’d say if you live in SF/SV and are approaching 30 and making under 300k you should leave.
I’ve lived in very expensive cities (Boston, Los Angeles) and now live in a moderately priced one (Cincinnati) and most things cost about the same except real estate. Gas (which I don’t use as I have an EV) is a bit more in California due to taxes but food, clothing, services, gadgets, utilities, etc are almost the same.
If I were a 20-something today I’d stay away from high cost cities. Real estate eats everything. I might consider living in such places for a little while to build network but would bug out after maybe two years. For example I’d say if you live in SF/SV and are approaching 30 and making under 300k you should leave.
If you insist on like-for-like, yes, so when I lived in NYC I just completely punted this question and didn't even try to live in anything like the kind of apartment I would have rented in basically any other city. I took a tiny, shitty studio in Hell's Kitchen for far less than I could afford and never worried about it.
Cost of living calculators assume you're trying to live in the same kind of housing in HCOL-city-A as you would have in LCOL-city-B, but there's no reason to accept this assumption.
I rationalized it this way: there is no amount of money in LCOL-city-B that could buy me the feeling of living in HCOL-city-A, so I'm going to treat the housing in HCOL-city-A the same way (i.e. mentally assume it's not available and consider that the tradeoff for getting the thing that isn't available in the lower-cost-of-living city).
Cost of living calculators assume you're trying to live in the same kind of housing in HCOL-city-A as you would have in LCOL-city-B, but there's no reason to accept this assumption.
I rationalized it this way: there is no amount of money in LCOL-city-B that could buy me the feeling of living in HCOL-city-A, so I'm going to treat the housing in HCOL-city-A the same way (i.e. mentally assume it's not available and consider that the tradeoff for getting the thing that isn't available in the lower-cost-of-living city).
This is a great mindset. I was forced to move from NYC to the bumfuck Midwest because of my girlfriend’s job, and I hate it here. Yes I own a house with a yard, but I’d trade it for my apartment in Manhattan any day of the week. Density makes life worth living
A lot of advice basically takes the form, "people should be more like me," but at risk of that in this case: I'd just try to find ways to maximize the benefits of homeownership. Try to take advantage of the things you can't do (easily) in NYC. I'm in Providence now and I miss NYC all the time, but I also have a garden and I put a little workshop in my garage and I'm trying to learn woodworking and I like to take on DIY projects and I play my guitar louder than I would in an apartment etc, etc.
This is the flipside of living in a tiny studio in Hell's Kitchen and pretending nicer apts don't exist. It's just a matter of making the most of it, in either case.
This is the flipside of living in a tiny studio in Hell's Kitchen and pretending nicer apts don't exist. It's just a matter of making the most of it, in either case.
Price of gasoline in California has a lot of factors… like because of mountains, there are no pipelines from Texas. CA uses Middle East oil. Also, due to the way the wind and mountains block in the air, the smog is worse than areas where the wind blows it out to sea (indeed, the opposite can happen when china’s smog blows in). The clean air act has the fed gov force California to lower smog, which is does by changing the gasoline formation during the summer, which is more expensive. Plus taxes! But it is far more complicated than “CA is high tax”.
Oh, one other thing. I think if you are young you should definitely live in an expensive locale. After 30 years you can stay and be done. Or sell and move. You will be able to afford the entire country. If you stay in Ohio for 30 years, you will never be able to move to NYC or Los Angeles. You are forced to 2nd tier or 3rd tier cities.
That was true. I wonder if it will keep being so true as information is available everywhere and remote work takes hold.
I still think you can get a lot of benefit living for a while in a "center" like Silicon Valley, but a few years might be enough to absorb a lot.
I still think you can get a lot of benefit living for a while in a "center" like Silicon Valley, but a few years might be enough to absorb a lot.
Why is "moving to NYC or LA" a thing people should aspire to do?
Seems like a waste of effort dick measuring contest to me.
And even if you check that box when you do decide to cash out and move to Cincinnati or whatever nobody around you from that point forward will place any positive value upon the fact that you have checked that box.
Seems like a waste of effort dick measuring contest to me.
And even if you check that box when you do decide to cash out and move to Cincinnati or whatever nobody around you from that point forward will place any positive value upon the fact that you have checked that box.
The point is that decisions you made in your 20's will unfortunately lock you out of potential options 30 years later (without making major sacrifices). So they're saying the best move for someone in their 20's is the move that gives the most number of options for the rest of their life.
There's two sides to that coin. If you pop out some kids in NYC and spend the first 10yr of their lives raising them among the rat race you can't go back and re-raise them when you do finally decide to cash out and move to some suburb of Buffalo. Those years spent riding the subway are years not spent building your personal and professional network wherever you do wind up settling down.
You seem very fixated on what people think of you.
I live in NYC because it’s densely populated, diverse, with access to world class most things (museums, restaurants, theater, music, …). I get to experience and do interesting things.
That’s why people should consider moving to these cities. No one gives a shit what Joe from Cincinnati thinks or will think in some hypothetical future.
I live in NYC because it’s densely populated, diverse, with access to world class most things (museums, restaurants, theater, music, …). I get to experience and do interesting things.
That’s why people should consider moving to these cities. No one gives a shit what Joe from Cincinnati thinks or will think in some hypothetical future.
> No one gives a shit what Joe from Cincinnati thinks or will think in some hypothetical future.
This mindset is the problem. If the plan after 30 is to move and live next to Joe from Cincinnati, then like the parent comment says: this flippant attitude will not garner any positive value.
This mindset is the problem. If the plan after 30 is to move and live next to Joe from Cincinnati, then like the parent comment says: this flippant attitude will not garner any positive value.
No, the parent comment says that living in NYC won't be important to the people in Cincinnati, and it provides little value as a bullet point in the resume of your life because of that reasoning.
That's not the point of living in a city like NYC for many of the residents here. No one here I know is planning on leveraging "10 years in NYC" to impress their neighbors in Cincinnati.
That's not the point of living in a city like NYC for many of the residents here. No one here I know is planning on leveraging "10 years in NYC" to impress their neighbors in Cincinnati.
[deleted]
But… what if you really like living in SF/SV? :(
It’s just such a bummer that the absolute worst financial decision of my life is to live in my favorite place in the world.
I get it, it’s how the world works, but it sucks to choose between daily happiness and financial security.
It’s just such a bummer that the absolute worst financial decision of my life is to live in my favorite place in the world.
I get it, it’s how the world works, but it sucks to choose between daily happiness and financial security.
I sympathize with you as a lifelong Californian (grew up in Sacramento, educated in San Luis Obispo and Santa Cruz, working in Silicon Valley). I love the desirable coastal parts of California (basically anything from Sonoma County all the way down to San Diego). If money weren't an object, I'd own a home in either Aptos or Pacific Grove. I currently rent in Capitola, and it's the best place I've lived in California. I love the tranquility of the town while having somewhat easy access to Silicon Valley and its amenities and opportunities. However, I simply don't make enough money to purchase a home near the coast unless I move to Humboldt or Del Norte counties, which are far from any urban centers.
Unfortunately with the exception of Sacramento (which is getting pricey as of late) California doesn't have a lot of middle ground between its really desirable yet expensive places and places that are affordable but less desirable. The Sacramento area seems like a reasonable compromise for me. I can comfortably afford Fresno's and Bakersfield's nicest suburbs, but I don't know if I'd be happy in those cities. Much of the rest of the state is quite isolated from major metro areas; this has implications regarding educational opportunities for children and health care quality and availability. I don't see myself settling down and raising a family in many of California's more isolated areas due to this, though it may be a nice adventure visiting these isolated areas for recreation.
I don't know what I'm going to end up doing....maybe I'll end up marrying a woman from Vermont and end up moving there in a few years XD. But I completely sympathize with you and the crazy housing market we're contending with.
Unfortunately with the exception of Sacramento (which is getting pricey as of late) California doesn't have a lot of middle ground between its really desirable yet expensive places and places that are affordable but less desirable. The Sacramento area seems like a reasonable compromise for me. I can comfortably afford Fresno's and Bakersfield's nicest suburbs, but I don't know if I'd be happy in those cities. Much of the rest of the state is quite isolated from major metro areas; this has implications regarding educational opportunities for children and health care quality and availability. I don't see myself settling down and raising a family in many of California's more isolated areas due to this, though it may be a nice adventure visiting these isolated areas for recreation.
I don't know what I'm going to end up doing....maybe I'll end up marrying a woman from Vermont and end up moving there in a few years XD. But I completely sympathize with you and the crazy housing market we're contending with.
One of my good friends lives in Sacramento and he hates it. It has none of what makes California amazing.. the weather is too hot, there’s no beaches, no mountains, not really a good urban center either. And crime.
I lived in SoCal for 30+ year and now live in a Sacramento suburb. I previously had a pretty snobby view of Sacramento, but after living here for nine years I think it's the most underrated city in California. The restaurants aren't up to par with the bigger CA cities and it does get hot in the summer, but overall it's a great location.
One of the big benefits is that there are so many options for day trips. Visiting Lake Tahoe and the surrounding mountains is an easy day trip. Visiting SF or the beaches is doable in a day. Napa is close. For hikers, runners, and bikers there are tons of bikes paths and hiking trails all over the Sacramento region. And there are a lot of neat places in the nearby Sierra foothills.
To summarize: If you prioritize nightlife, music, and food, Sacramento might not be the best fit, but if you prioritize affordability (relatively speaking) and getting outside, it's hard to beat the Sacramento area.
One of the big benefits is that there are so many options for day trips. Visiting Lake Tahoe and the surrounding mountains is an easy day trip. Visiting SF or the beaches is doable in a day. Napa is close. For hikers, runners, and bikers there are tons of bikes paths and hiking trails all over the Sacramento region. And there are a lot of neat places in the nearby Sierra foothills.
To summarize: If you prioritize nightlife, music, and food, Sacramento might not be the best fit, but if you prioritize affordability (relatively speaking) and getting outside, it's hard to beat the Sacramento area.
That reminds me of Connecticut: there’s a little cool stuff in it, but the big thing people love to tell you is how close it is to other, better places like New York, Boston, and Vermont.
I've lived there and it's amazing, so many cool things, it's right on one of the largest navigable river deltas in the world, the farm fresh food is amazing, the art and music scenes are pretty great, on and on....
Don't tell people about it here!
> If I were a 20-something today I’d stay away from high cost cities.
Disagree. Saving X% of one's early career salary goes a lot further when the salary goes up near a city.
Disagree. Saving X% of one's early career salary goes a lot further when the salary goes up near a city.
I don't know.
I live in the midwest and invest over 50% of my salary.
I'm in my mid 30s and have almost a million in investments already.
Meanwhile I have friends from college, same major etc, who live in expensive cities and work in the same industry and they barely have anything to save after the high costs of living there.
I live in the midwest and invest over 50% of my salary.
I'm in my mid 30s and have almost a million in investments already.
Meanwhile I have friends from college, same major etc, who live in expensive cities and work in the same industry and they barely have anything to save after the high costs of living there.
One of the biggest factor in gas prices in CA and the rest of the west coast is that much the oil comes from Alaska which is a more expensive source and then is refined in smaller west coast refineries that cost more to run. The result is an overall higher baseline cost for gasoline all along the US West coast.
Taxes in larger cities tend to be higher as well. With the exception of Seattle, Miami, and any of the large Texas cities. The removal of the SALT deduction amplified the issue no doubt.
There are "tricks" in expensive cities to look for as much nation-wide pricing as possible
Amazon and Walmart online, Whole Foods and Trader Joes in person. Doctors and drugs who are in-network for insurance would be the same cost anywhere in the US
It really is mostly childcare and housing that really kills you in the expensive cities
Amazon and Walmart online, Whole Foods and Trader Joes in person. Doctors and drugs who are in-network for insurance would be the same cost anywhere in the US
It really is mostly childcare and housing that really kills you in the expensive cities
Target has different prices for shipping based on your selected store! This despite shipping from a warehouse, not the store. It would surprise me if the WalMart instore prices don't vary by location (I have not checked).
> Doctors and drugs who are in-network for insurance would be the same cost anywhere in the US
I don't believe this to be true. For example for dental here is a price scaling chart based on where you live: https://www.opm.gov/healthcare-insurance/dental-vision/plan-...
> Doctors and drugs who are in-network for insurance would be the same cost anywhere in the US
I don't believe this to be true. For example for dental here is a price scaling chart based on where you live: https://www.opm.gov/healthcare-insurance/dental-vision/plan-...
> childcare and housing that really kills you in the expensive cities
Cost of influence, too. Granted, it’s not something most in tech think about.
Cost of influence, too. Granted, it’s not something most in tech think about.
What do you mean by 'cost of influence'? If I don't want influence, is it optional?
> What do you mean by 'cost of influence'? If I don't want influence, is it optional?
Every political system has patrician and plebeian tracks. In America, the former can be bought (versus solely inherited). Being a politically-active patrician in New York involves an expensive list of patronage. That’s where the power players are, and that’s where you’ll cut casual deals.
It’s optional. And it’s different from civic responsibility. But unless you think the status quo is hunky dory, you’re going to want to change things, and the cost of access varies geographically.
Every political system has patrician and plebeian tracks. In America, the former can be bought (versus solely inherited). Being a politically-active patrician in New York involves an expensive list of patronage. That’s where the power players are, and that’s where you’ll cut casual deals.
It’s optional. And it’s different from civic responsibility. But unless you think the status quo is hunky dory, you’re going to want to change things, and the cost of access varies geographically.
The people who can influence aren't making merely 300k, and they certainly aren't caring much about the cost of their influence.
[deleted]
What sort of power plays are we meant to be doing? Is this like 'The Alpha does x y z' type stuff?
Think of an example such as you'd like a better public school system in your district. If you live in a rural county in Oklahoma of 20k people, you could likely get on the school board without any opposition and start making changes. Vs trying to change anything about the public school system in San Francisco.
I'm not sure I would include that in "cost of living."
I find this whole discourse strange/obvious: mostly childcare/housing
I don't think people are spending upwards of $2,500 per month on impulse purchases on Amazon, groceries, or whatever, and blaming it on 'cost of living'
In Ohio I got twice the house for half the price compared to Austin. The cost of milk and eggs are way down there
I don't think people are spending upwards of $2,500 per month on impulse purchases on Amazon, groceries, or whatever, and blaming it on 'cost of living'
In Ohio I got twice the house for half the price compared to Austin. The cost of milk and eggs are way down there
I think this is exactly right, and explains why staunchly middle-income suburbs around San Francisco are filled with luxury cars. An $80k car feels relatively cheap when your mortgage is $1.5mm.
I spend most of my salary (130k$) on rent, food and daycare for my kid, not Amazon purchases. And 130k doesn't feel like a lot anymore even though I live in Ohio in order to reduce my expenses.
All around the western world, money printing to prop up the house price bubble is finally reaching breaking point, with housing costs completely decoupling from fundamentals, and inflation breaching the banks and flooding into consumer pricing.
> housing costs completely decoupling from fundamentals,
Not true in most markets. Compare to build/replacement costs.
In a high inflation environment with 30+ trillion in national debt and 186 trillion in unfunded liabilities, I'll take my chances with hard assets that are connected to fundamentals like housing.
They WILL pivot and print in overdrive. There is no way out at this point. And not just the US, the world cannot handle higher interest rates which causes more demand for the dollar. The entire world is jacked up on eurodollar debt that is not sustainable. And those with the assets will gladly choose inflation over deflation.
"Inflation is transitory". "Banks are fine"
We're led by morons, shills and thieves.
Not true in most markets. Compare to build/replacement costs.
In a high inflation environment with 30+ trillion in national debt and 186 trillion in unfunded liabilities, I'll take my chances with hard assets that are connected to fundamentals like housing.
They WILL pivot and print in overdrive. There is no way out at this point. And not just the US, the world cannot handle higher interest rates which causes more demand for the dollar. The entire world is jacked up on eurodollar debt that is not sustainable. And those with the assets will gladly choose inflation over deflation.
"Inflation is transitory". "Banks are fine"
We're led by morons, shills and thieves.
>The entire world is jacked up on eurodollar debt that is not sustainable
10 years ago this was a far bigger deal as the western game was the only one in town. Nowadays nonaligned countries can pivot to the Russia/China axis and still get resources and manufactured goods.
10 years ago this was a far bigger deal as the western game was the only one in town. Nowadays nonaligned countries can pivot to the Russia/China axis and still get resources and manufactured goods.
Very few countries want to trade in the currencies of Russia or China. But that's besides my point.
Getting resources and manufactured goods has nothing to do with my statement about sustainability.
Debt to GDP of 338% is not sustainable [1]. It doesn't matter if countries can get resources and manufactured goods. That's like saying - well I have 3X my salary in debt but it's ok... I can buy goods on Amazon.... on more credit, with a higher rate... and still be fine. No you can't.
There's about 20 trillion in US denominated debt / eurodollar debt [2] and 65 trillion in unrecorded debt overseas [2].
In order to service US denominated debt, you have to swap your currency to get USD. This is a major problem when you already need to keep printing to service your own unsustainable debt (> 300% debt to gdp), inflation rips on goods and materials you need and tax revenues drop in an economic downturn.
When interest rates go up, it squeezes you. Everyone kept rolling debt over in a debt drunk binge fest for decades as it kept getting cheaper and they have been feeling major pain from it going the other way.
[1] https://www.weforum.org/agenda/2023/02/global-debt-2022-and-....
[2] https://www.bruegel.org/comment/euro-dollar-parity-beyond-sy...
[3] https://www.weforum.org/agenda/2023/01/65-trillion-debt-bank...
Getting resources and manufactured goods has nothing to do with my statement about sustainability.
Debt to GDP of 338% is not sustainable [1]. It doesn't matter if countries can get resources and manufactured goods. That's like saying - well I have 3X my salary in debt but it's ok... I can buy goods on Amazon.... on more credit, with a higher rate... and still be fine. No you can't.
There's about 20 trillion in US denominated debt / eurodollar debt [2] and 65 trillion in unrecorded debt overseas [2].
In order to service US denominated debt, you have to swap your currency to get USD. This is a major problem when you already need to keep printing to service your own unsustainable debt (> 300% debt to gdp), inflation rips on goods and materials you need and tax revenues drop in an economic downturn.
When interest rates go up, it squeezes you. Everyone kept rolling debt over in a debt drunk binge fest for decades as it kept getting cheaper and they have been feeling major pain from it going the other way.
[1] https://www.weforum.org/agenda/2023/02/global-debt-2022-and-....
[2] https://www.bruegel.org/comment/euro-dollar-parity-beyond-sy...
[3] https://www.weforum.org/agenda/2023/01/65-trillion-debt-bank...
>We're led by morons, shills and thieves.
Most of the voters are morons, and are voting for these leaders.
Most of the voters are morons, and are voting for these leaders.
I don't think that's fair. For example - we have a 2 party system that is designed so only one of them will win. And most people want to vote for someone that has a shot at winning. That doesn't make them morons. They're just picking the least dirty shirt in their minds.
Yes, you could say - well they don't vote in the primaries so it's their fault. But the same systems at play in the general elections are the same ones that drive the primaries. If primary voting was 1:1 with general election voting, the system would just adjust to influence accordingly.
Who exactly was going to do anything meaningful to save the finances of the US? The best options we've seen have been Ron Paul and Bernie and we saw what happened there. Funding and media are able to influence who wins. If someone says logical things and is anti Fed or even a little anti Wall Street establishment, they are painted out as nut jobs. And it's effective to the public who generally, has no savings and has little time to research like those that live more comfortably.
All candidates are all co-opted by special interests. And almost all by the financial system which is the biggest risk. It's not an accident that both red and blue appoint the same people to the Fed, despite fighting aggressive over almost every other nomination and appointment.
We also have a huge wealth gap and media divisiveness giving rise to populist candidates.
They make it one side versus the other meanwhile they both fleece the financials and economic prosperity that could occur if managed well.
We've gone past the point of no return, led by both parties at different times and here we are. Overextended. Huge wealth gap. Ripping inflation. Interest rate hikes that, in my opinion, are just theater as we can't afford to keep hiking them. And as we hike them, the world gets pissed off and moves quicker to a new world currency reserve.
No idea when that will happen, could be 10/20/30/40 years. But trade has already started to shift to other currencies. CBDCs are also underway and for everyone's sake, hopefully they don't get adopted.
Yes, you could say - well they don't vote in the primaries so it's their fault. But the same systems at play in the general elections are the same ones that drive the primaries. If primary voting was 1:1 with general election voting, the system would just adjust to influence accordingly.
Who exactly was going to do anything meaningful to save the finances of the US? The best options we've seen have been Ron Paul and Bernie and we saw what happened there. Funding and media are able to influence who wins. If someone says logical things and is anti Fed or even a little anti Wall Street establishment, they are painted out as nut jobs. And it's effective to the public who generally, has no savings and has little time to research like those that live more comfortably.
All candidates are all co-opted by special interests. And almost all by the financial system which is the biggest risk. It's not an accident that both red and blue appoint the same people to the Fed, despite fighting aggressive over almost every other nomination and appointment.
We also have a huge wealth gap and media divisiveness giving rise to populist candidates.
They make it one side versus the other meanwhile they both fleece the financials and economic prosperity that could occur if managed well.
We've gone past the point of no return, led by both parties at different times and here we are. Overextended. Huge wealth gap. Ripping inflation. Interest rate hikes that, in my opinion, are just theater as we can't afford to keep hiking them. And as we hike them, the world gets pissed off and moves quicker to a new world currency reserve.
No idea when that will happen, could be 10/20/30/40 years. But trade has already started to shift to other currencies. CBDCs are also underway and for everyone's sake, hopefully they don't get adopted.
What? No, there simply isn't enough housing. Prices don't always go up simply because of an increase in the money supply (which is also something you can measure).
Exactly. Not enough supply. Build costs exorbitant. There will not be some magical supply out of nowhere nor a big drop in build costs. So thus prices, IMO, in most major metros are connected to fundamentals.
If housing was not connected to fundamentals, home sale prices would have been exposed and taken a nose dive with the movement in interest rates. People aren't getting any easy money. They are still buying.
If housing was not connected to fundamentals, home sale prices would have been exposed and taken a nose dive with the movement in interest rates. People aren't getting any easy money. They are still buying.
> If housing was not connected to fundamentals, home sale prices would have been exposed and taken a nose dive with the movement in interest rates.
But prices have fallen (and even more, volume, has fallen, whether because there are fewer buyers are because sellers are deferring because of the fall in prices). This is clear in national figures, and hot metros that at some other times have defied downward real estate trends also show it.
But prices have fallen (and even more, volume, has fallen, whether because there are fewer buyers are because sellers are deferring because of the fall in prices). This is clear in national figures, and hot metros that at some other times have defied downward real estate trends also show it.
If you mean they have fallen from the peak of May 2022 you would be right. But that's not the story. And that has no bearing on fundamentals. Just because there has been a price movement doesn't mean it got disconnected from fundamentals. Price came off peak? Ok. Well cost of money also ramped up disproportionately to that. Prices have been resilient and when rates go the other way, they will go even higher IMO.
Prices are still, on median, 100k higher NOW over pre-pandemic. That's 33% more in just a few years. Sale to list prices is still at 98.9%. Off the peak of 103.1% but money was WAY cheaper then.
March 2020 median home price was $300k. March 2023.... $400k. [1]
March 2020 loans were about 3.5%. March 2023.... 6.5%.
It costs a shit ton more to service a loan now, inventory is down, yet prices are only 30k off the peak.
Is everyone buying a house with these interest rates a moron? No they aren't. Are banks approving risky loans now? No they aren't.
Volume is irrelevant when we are talking about fundamentals. Sellers are a key part of that. If they pull inventory due to the numerous factors in the housing market and the economy, then the prices are what they are. There is no shadowy hand now keeping home prices higher over their fundamentals, nor a shadowy hand telling the homeowners to not list their home. This is the market at work; and its been resilient with what is going on.
And to my point, if you couple supply and demand with the state of affairs and you look at build cost you'll see that current inventory is priced at or better than any fundamental analysis would suggest. And not overpriced.
I ONLY buy on build/replacement cost. Sure some areas went crazy, but if you are disconnected from build costs, you are rolling the dice and I highly recommend you don't do that unless you love the house so much you don't care what happens. But by and large, housing prices are NOT disconnected from replacement costs. They are still cheaper.
If you can buy a "used" house for 300k. Or build a new house for 350k (+6-12 months of your time and carrying costs on the housing you are currently at and potential unexpected costs), then where is the disconnect? I don't see it.
If housing WAS disconnected from the fundamentals, then you'd simply see a shit ton more building going on and with more inventory and less buyers and affordability due to interest rate hikes, price would drop a lot. That's not the case. There has not been a meaningful price drop with the interest rate hikes, we just have less buyers on average, and about 4% less on the sales price to list.
People waiting on the sidelines in most markets aren't going to be happy as inflation keeps on trucking, build costs are out of control, and inventory is low. Rent will go up.
"Year-over-year rental price growth will rise from 5.8%, as of June 2022, to 8.4% as of May 2023, according to a Federal Reserve Bank of Dallas forecast that uses data from the federal government’s consumer price index"
You used to be able to just stash cash and then when interest rates jack up you could get a real deal. No more. Housing is an inflation hedge and the market has been pumped up.
When the pivot occurs and cheaper money returns because the asset owners would rather have inflation than deflation, the housing market will go even higher IMO. 30T debt and 180+T in unfunded liabilities along with a pissed off world that has gotten drunk off cheap USD leaves no choice but to print in overdrive. I won't be holding USD or more than retirement money in the stock market. I'll be primarily in RE and private companies. If you are big on stocks, you may still do ok - we've seen that we can print and not cause extreme inflation, by pushing dollars into equities. But I think that game will end as it's further exposed and money rotates out.
[1] https://www.redfin.com/us-housing-market
Prices are still, on median, 100k higher NOW over pre-pandemic. That's 33% more in just a few years. Sale to list prices is still at 98.9%. Off the peak of 103.1% but money was WAY cheaper then.
March 2020 median home price was $300k. March 2023.... $400k. [1]
March 2020 loans were about 3.5%. March 2023.... 6.5%.
It costs a shit ton more to service a loan now, inventory is down, yet prices are only 30k off the peak.
Is everyone buying a house with these interest rates a moron? No they aren't. Are banks approving risky loans now? No they aren't.
Volume is irrelevant when we are talking about fundamentals. Sellers are a key part of that. If they pull inventory due to the numerous factors in the housing market and the economy, then the prices are what they are. There is no shadowy hand now keeping home prices higher over their fundamentals, nor a shadowy hand telling the homeowners to not list their home. This is the market at work; and its been resilient with what is going on.
And to my point, if you couple supply and demand with the state of affairs and you look at build cost you'll see that current inventory is priced at or better than any fundamental analysis would suggest. And not overpriced.
I ONLY buy on build/replacement cost. Sure some areas went crazy, but if you are disconnected from build costs, you are rolling the dice and I highly recommend you don't do that unless you love the house so much you don't care what happens. But by and large, housing prices are NOT disconnected from replacement costs. They are still cheaper.
If you can buy a "used" house for 300k. Or build a new house for 350k (+6-12 months of your time and carrying costs on the housing you are currently at and potential unexpected costs), then where is the disconnect? I don't see it.
If housing WAS disconnected from the fundamentals, then you'd simply see a shit ton more building going on and with more inventory and less buyers and affordability due to interest rate hikes, price would drop a lot. That's not the case. There has not been a meaningful price drop with the interest rate hikes, we just have less buyers on average, and about 4% less on the sales price to list.
People waiting on the sidelines in most markets aren't going to be happy as inflation keeps on trucking, build costs are out of control, and inventory is low. Rent will go up.
"Year-over-year rental price growth will rise from 5.8%, as of June 2022, to 8.4% as of May 2023, according to a Federal Reserve Bank of Dallas forecast that uses data from the federal government’s consumer price index"
You used to be able to just stash cash and then when interest rates jack up you could get a real deal. No more. Housing is an inflation hedge and the market has been pumped up.
When the pivot occurs and cheaper money returns because the asset owners would rather have inflation than deflation, the housing market will go even higher IMO. 30T debt and 180+T in unfunded liabilities along with a pissed off world that has gotten drunk off cheap USD leaves no choice but to print in overdrive. I won't be holding USD or more than retirement money in the stock market. I'll be primarily in RE and private companies. If you are big on stocks, you may still do ok - we've seen that we can print and not cause extreme inflation, by pushing dollars into equities. But I think that game will end as it's further exposed and money rotates out.
[1] https://www.redfin.com/us-housing-market
How? Does that include high retirement account savings or something else?
What’s rent in Ohio
https://www.zumper.com/rent-research/cleveland-oh
https://www.zumper.com/rent-research/cincinnati-oh
I really like zumper for digestible rent data over time for a given city
https://www.zumper.com/rent-research/cincinnati-oh
I really like zumper for digestible rent data over time for a given city
From the given link:
As of April 2023, the average rent for a 1-bedroom apartment in Cleveland, OH is $1,136. This is a 7% decrease compared to the previous year.What's that as a fraction of median income? A brief search seems to suggest it's on the high side, over 40% at any rate.
And secondly is Cleveland a city that has absorbed its suburbs over the past century or is Cleveland basically just "downtown" as that will affect the average.
$1,136 for Cleveland ?!
I pay $1,600 for a 3bd house in Lakewood
> Cost of living is weird, since it ignores the fact that shopping on Amazon costs the same everywhere
This is because most goods are manufactured in Asia and imported. They differ in online retail price due to local/import taxes and in offline price due to labor/rent costs. Hence, if you purchase goods online, the price remains mostly the same within the same country.
It's an important exercise to consider whether globalised cheap labor is fair to the laborers, given that the profits of their labor are absorbed by the destination high-CoL market.
This is because most goods are manufactured in Asia and imported. They differ in online retail price due to local/import taxes and in offline price due to labor/rent costs. Hence, if you purchase goods online, the price remains mostly the same within the same country.
It's an important exercise to consider whether globalised cheap labor is fair to the laborers, given that the profits of their labor are absorbed by the destination high-CoL market.
[deleted]
Labor is a huge expense. it explains why technology has not put a dent in tuition, plumbing, hvac, dental implants costs, etc. Even cars are so expensive even though they are mass produced. The assembly line at best only applies to relatively small part of economy, and non-manufacturing costs like advertising are major contributors to inflation even for non-labor intensive things.
Obviously in the middle of the country if you think high end cocktails only cost $20!
Sigh…
Sigh…
OK, how much are they? Honest question, I want (and afraid) to be enlightened.
25-29. Not that much more. But the $20 price has been crossed by a large group in the last year.
In Seattle a cocktail at nice place is about $20. But add “living wage” surcharge and tax and tip and it’s basically $30
Nice meaning trendy and cute and hipster. Maybe other person “nice” as in a meal costs $200
Nice meaning trendy and cute and hipster. Maybe other person “nice” as in a meal costs $200
A year ago after seeing a claim that $250k in San Francisco is like $100k in most of the rest of the country, due to rent, taxes, and food, I tried to check if that was true and it didn't seem to be. What have I missed?
For rent, a median one bedroom apartment in SF would be $14-18k/year more than a median one bedroom apartment in Seattle, Chicago, Nashville, Orlando, Sacramento, Austin, or Fresno.
Average monthly spending on food in SF is about $150 above the national average, so that's another $1800/year you need. But that probably includes a lot of people who do their own cooking. Maybe tech workers need to buy all their meals. I found a tourist planning site that said the average tourist in SF spends $32/day on meals, so let's use that instead of $150/month above national food average. That would mean we need $12k/year extra for SF for food.
So someone coming to SF from one of those other places needs an after tax income that is equal to their after tax from their $100k in their old city, plus $30k after tax for rent and food.
That requires a salary of $148k.
That's a long way from $300k, so what other costs are missing?
For rent, a median one bedroom apartment in SF would be $14-18k/year more than a median one bedroom apartment in Seattle, Chicago, Nashville, Orlando, Sacramento, Austin, or Fresno.
Average monthly spending on food in SF is about $150 above the national average, so that's another $1800/year you need. But that probably includes a lot of people who do their own cooking. Maybe tech workers need to buy all their meals. I found a tourist planning site that said the average tourist in SF spends $32/day on meals, so let's use that instead of $150/month above national food average. That would mean we need $12k/year extra for SF for food.
So someone coming to SF from one of those other places needs an after tax income that is equal to their after tax from their $100k in their old city, plus $30k after tax for rent and food.
That requires a salary of $148k.
That's a long way from $300k, so what other costs are missing?
For starters, someone making $100k in the mid west probably isn't going to be renting a median 1 bedroom apartment. They probably own a 3+ bedroom house. I bet there aren't many people in San Francisco with 3+ bedroom houses that don't make $300k+ (excluding people that bought in a really long time ago).
That being said, I think it's a bit disingenuous to compare cost of living like that. If you enjoy living in a large city, you probably have a lifestyle that isn't possible in small town America and you're probably willing to have a smaller living space in order to have that lifestyle. For me, living in a city means there is so much to do that I can pretty much just use my apartment as a place to sleep and spend most my waking hours somewhere else. That's not for everyone but if it is you, you'd probably be way better off making 300k in sf than 100k in the middle of Kansas.
On the other hand, if you don't go out much and spend most your time at home and want a large house to entertain guests and raise a bunch of kids and have 100 acres of land to ride your dirt bikes. You're probably better off trying to do that with 100k in Kansas.
That being said, I think it's a bit disingenuous to compare cost of living like that. If you enjoy living in a large city, you probably have a lifestyle that isn't possible in small town America and you're probably willing to have a smaller living space in order to have that lifestyle. For me, living in a city means there is so much to do that I can pretty much just use my apartment as a place to sleep and spend most my waking hours somewhere else. That's not for everyone but if it is you, you'd probably be way better off making 300k in sf than 100k in the middle of Kansas.
On the other hand, if you don't go out much and spend most your time at home and want a large house to entertain guests and raise a bunch of kids and have 100 acres of land to ride your dirt bikes. You're probably better off trying to do that with 100k in Kansas.
The article isnt comparing SF to places like Seattle or Chicago (Seattle is actually in their 10 most expensive). They are comparing to places like El Paso or Oklahoma City, which are much less expensive.
> I found a tourist planning site that said the average tourist in SF spends $32/day on meals
That can’t be right. A burrito or sandwich costs $18-$20 after tax, health mandate etc, and that’s at a walk up and buy kind of place.
If you get fries with that, it’s another $6-$8.
A sit down meal? Probably 50% more. I don’t see how $32 is a reasonable estimate.
I’d guess closer to $50
That can’t be right. A burrito or sandwich costs $18-$20 after tax, health mandate etc, and that’s at a walk up and buy kind of place.
If you get fries with that, it’s another $6-$8.
A sit down meal? Probably 50% more. I don’t see how $32 is a reasonable estimate.
I’d guess closer to $50
Avocado toast.
Are you Australian? Apparently this is what is stopping us from affording a house
Wait, you eat them without salmon? =O
Not sure who is paying $18k/year for rent in SF. I live in Oakland and pay almost $28k/year, not including utilities.
14-18k more than it would be in another city.
Yet, millions of people in every one of these cities manage to live there, often even in the central urban districts, without making anywhere near $100K, let alone $300K. Yes, some of those complaining about the cost of living at these salaries are self absorbed to the point of absurdity and could really just stop spending so much on so many luxurious things, or if they can't forego those, there's the option of, you know, just moving to a cheaper place.
“Manage to live”? Is that the standard for the richest country in the history of humanity? That’s some short sighted thinking. Are those “managing to live” saving for retirement? Can they see a doctor? Can they afford to have children?
As for moving to a cheaper place… their jobs are in the city. That’s why they live there to begin with.
Have you missed the inflation crises? Have you missed the absolute fleecing of the middle class due to stagnant wages? Have you missed the student debt crisis? Have you missed the disinvestment in black and brown communities? Have you missed the ramshackle, near collapse of public transit and other infrastructure? Have you missed the teacher/police/fire/EMT/911 operator shortage? Have you missed the homelessnesss/housing crises?
What city have you been living in?
As for moving to a cheaper place… their jobs are in the city. That’s why they live there to begin with.
Have you missed the inflation crises? Have you missed the absolute fleecing of the middle class due to stagnant wages? Have you missed the student debt crisis? Have you missed the disinvestment in black and brown communities? Have you missed the ramshackle, near collapse of public transit and other infrastructure? Have you missed the teacher/police/fire/EMT/911 operator shortage? Have you missed the homelessnesss/housing crises?
What city have you been living in?
There are so many built-in assumptions under your comment that I don't even know where to begin unpackaging what parts of it. Briefly though, I live in Vancouver, a city that's Canada's version of say, San Francisco, and yes, many people find ways to get ahead without being rich or falling into the degrading traps you seem to think apply much more broadly than they do.
"Manage" to live there, but not well. Maybe they pile 4 people intona four bedroom apartment and work 2 jobs to do it.
No, a lot of people have rent controlled apartments. This article says more than 60% of SF rental units are rent controlled...https://bungalow.com/articles/rent-control-in-san-francisco-...
A key thing to note is that rent control in SF isn't quite what most people think of. The apartment itself is not locked to a specific price (which is how NYC rent control works, for example) but rather the lease between the landlord and master tenants can only increase so much per year.
For example you can have a rent controlled apartment renting for $500 a month, that tenant leaves, and the new tenants would sign for $3000 a month. There's no requirement the new master tenants would get the $500 a month. Whereas I believe in NYC's rent control the apartment itself is set at $500 a month, and anyone who moves in, that's what they pay.
For example you can have a rent controlled apartment renting for $500 a month, that tenant leaves, and the new tenants would sign for $3000 a month. There's no requirement the new master tenants would get the $500 a month. Whereas I believe in NYC's rent control the apartment itself is set at $500 a month, and anyone who moves in, that's what they pay.
Not quite. Your conflating several things. Rent control is different from rent stabilization is yet different from rent increase laws. Often cities have all 3.
In SF the rent controlled properties, both for rent and for sale (yes you can buy super affordable apartments in SF if you don't exceed certain income) folks just have to make less than a certain amount a year. The income tiers are listed here, and are higher than I expect some would expect. https://sf.gov/reports/may-2022/income-and-rent-limits-inclu...
There is also a citywide rent increase cap of 3.6% currently (its calculated based off inflation and other factors) on any and all rental units, regardless of income or rent control status : https://sf.gov/information/learn-about-rent-increases#:~:tex....
In SF the rent controlled properties, both for rent and for sale (yes you can buy super affordable apartments in SF if you don't exceed certain income) folks just have to make less than a certain amount a year. The income tiers are listed here, and are higher than I expect some would expect. https://sf.gov/reports/may-2022/income-and-rent-limits-inclu...
There is also a citywide rent increase cap of 3.6% currently (its calculated based off inflation and other factors) on any and all rental units, regardless of income or rent control status : https://sf.gov/information/learn-about-rent-increases#:~:tex....
Correct, but the "more than 60%" is including all forms of rent control. My main point is someone can be paying $3500 a month for a one bedroom apartment and it be considered a rent controlled unit.
Edit - put another way, there's a sort of implication that if a unit is "rent controlled" then it is cheap, and this is not necessarily the case in the SF rental market.
Edit - put another way, there's a sort of implication that if a unit is "rent controlled" then it is cheap, and this is not necessarily the case in the SF rental market.
True, and that same apartment would be $4500 without rent control
This fails to take into account many mitigating factors and is too pessimistic:
1. For a person living alone modestly, $300k even in the Bay Area is more than enough to put away a decent chunk of money for retirement. Just run the numbers.
2. Pundits also vastly overestimate taxes, which are low in the US. The top tax rate is for anything above 400k, so the amount you pay is way lower if you make $300k/year.
3. High cost of living areas have more amenities overall which may not be factored into calculations. Things like walkability, so you don't have to pay for car, car insurance, gas, etc.
4. More public services, another amenity . more convinence. like better schools, better public transportation, nicer neighborhoods (this may be subjective).
5. Expensive mortgage is not like pissing the money away--you are building home equity.
1. For a person living alone modestly, $300k even in the Bay Area is more than enough to put away a decent chunk of money for retirement. Just run the numbers.
2. Pundits also vastly overestimate taxes, which are low in the US. The top tax rate is for anything above 400k, so the amount you pay is way lower if you make $300k/year.
3. High cost of living areas have more amenities overall which may not be factored into calculations. Things like walkability, so you don't have to pay for car, car insurance, gas, etc.
4. More public services, another amenity . more convinence. like better schools, better public transportation, nicer neighborhoods (this may be subjective).
5. Expensive mortgage is not like pissing the money away--you are building home equity.
300k puts in near the 1% for one of the richest countriesin the world, I would certainly hope it could afford a single person modest life including retirement anywhere
> you are building home equity.
The interest portion is the price you pay to be able to purchase that equity. Compare how much does get thrown away, and the value of that tiny slice of equity relative to other investments. Maybe Big city real estate is really that good (it seems better to me than anywhere else).
Furthermore a 30 year mortgage in the Bay Area locks you into a high earning life style These are somewhat stressful jobs with market ups and downs. It almost becomes impossible to pursue an alternative, like a career change.
What about selling and moving out? You can, but if you're forced to that situation is also where you incur the most real estate risk (high transaction costs, forced to sell underwater, etc).
The interest portion is the price you pay to be able to purchase that equity. Compare how much does get thrown away, and the value of that tiny slice of equity relative to other investments. Maybe Big city real estate is really that good (it seems better to me than anywhere else).
Furthermore a 30 year mortgage in the Bay Area locks you into a high earning life style These are somewhat stressful jobs with market ups and downs. It almost becomes impossible to pursue an alternative, like a career change.
What about selling and moving out? You can, but if you're forced to that situation is also where you incur the most real estate risk (high transaction costs, forced to sell underwater, etc).
This. Live in the Bay Area on 300k, pay off your mortgage, save a little bit on top of that and you’ve got enough to retire early and live like royalty somewhere cheaper.
It's primarily housing costs, which are driven by
* Expensive, scarce land
* High construction costs
* Rampant NIMBYism
To some degree, we dug ourselves into that mess, and can dig ourselves out if we work at it.
* Expensive, scarce land
* High construction costs
* Rampant NIMBYism
To some degree, we dug ourselves into that mess, and can dig ourselves out if we work at it.
Don't forget property taxes partially driven by political choices.
Those are just 'messed up' in California. For some people they're quite low. For the house next door, maybe they are 10 times as much. Property taxes are actually higher in many states because they're not capped. Which in many ways is as it should be so that homeowners share in a bit of the pain from rising prices.
And it causes weird incentives, like keeping land empty and undeveloped, etc.
Property taxes also help keep a lid on rising prices.
In 2000 the starting engineer salaries at Intel were 55k a year.
I am sure others could provide reference salaries. It seems like in 20 years salaries have more than doubled.
Cost of living has gone up quite a bit. Most meats are double per pound compared to pre-covid.
I am sure others could provide reference salaries. It seems like in 20 years salaries have more than doubled.
Cost of living has gone up quite a bit. Most meats are double per pound compared to pre-covid.
Adjusted by inflation, a $55k salary in January 2000 is $98,347.04 right now.
https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=55000&year1=20...
https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=55000&year1=20...
Yup, I remember my freshman year at Cal Poly San Luis Obispo in 2005. The computer science department boasted that its graduates had the second-highest starting salaries of Cal Poly alums: $50,000. The department with the highest average starting salary was aerospace engineering: $55,000. I remember being blown away around 2007 when I heard of a master's student making the equivalent of $70,000/yr during a summer internship. Those were the days.
I started at Intel in 1994, Electrical Engineer from Purdue, 44K.
My salary as a first-year analyst at Goldman Sachs in 1999 was $40K. In 2000, to compete with dotcom companies, salaries rose to $55/65/75K for first/second/third-year analysts.[1] The compensation scale remained despite the dotcom bubble bursting.
[1] All figures exclude bonus, which is a huge part of compensation on Wall Street.
[1] All figures exclude bonus, which is a huge part of compensation on Wall Street.
It makes sense though. Huge, competing tech companies means higher stakes due to winner-take-all markets, moats, and network effects, hence paying top dollar for talent to get products out fast and prevent competitors from hiring said talent or getting products out sooner. Given how profitable at least some of these companies are, paying top dollar is not a problem.
In 1998, fresh out of school, I was making 50K a year. A few years later, late 2001, at a dot-bomb, middle of nowhere east coast, I was making 75K a year.
Looking back, those early career gains were huge. And yeah, inflation is painful.
Looking back, those early career gains were huge. And yeah, inflation is painful.
To me, this is kind of like saying "this $5000 Armani suit feels the same as a $500 suit from Men's Warehouse". They're only the same if you ignore the details, like living in one of the areas of the country with the nicest weather and best access to nature (California) or having access to the best culture, best food and most opportunity to make it big (New York).
Like fashion, those "benefits" are highly subjective.
True, but nevertheless the objective prices are only rising.
The fact is that enough people enjoy those benefits to maintain the trend.
The fact is that enough people enjoy those benefits to maintain the trend.
>>the best culture, best food and most opportunity to make it big (New York).
You should get out more. None of those things are true anymore, if they ever were.
You should get out more. None of those things are true anymore, if they ever were.
If you're putting a huge chunk of that money into equity, like paying down a mortgage, at least you'll get that money back (with a decent likelihood), and probably with a decent return.
This is just residual due to pre-covid working trends inflating prices in city centers over decades. Pretty clear the trend going forward is for deflation in the previously dense/working urban areas relative to areas such as the Sunbelt.
Either policy adapts in these areas to be accommodative for general living, and not simply a hub and spoke office commuting model, or the people leave and area fails to prosper.
Hawaii, NYC and some others likely to stay supported due to already being great places to live for other reasons beyond work.
Either policy adapts in these areas to be accommodative for general living, and not simply a hub and spoke office commuting model, or the people leave and area fails to prosper.
Hawaii, NYC and some others likely to stay supported due to already being great places to live for other reasons beyond work.
> Meanwhile, in Houston, an employee only needs to gross about $125,000 to achieve the same purchasing power as someone making $312,000 in New York. A six-figure paycheck is much easier to achieve in Texas, according to SmartAsset’s analysis, since the cost of living in many Lone Star State cities is lower than the national average and residents don’t pay a state income tax. In cities like El Paso, Corpus Christi and Lubbock, salaries can be as low as $122,000 and still feel like a true $100,000.
The real reason people have been moving to these places.
There's no way to solve the problem. Unless you love living in those places, you can do much better for your future by leaving ,especially in this era of more acceptance of remote work.
The real reason people have been moving to these places.
There's no way to solve the problem. Unless you love living in those places, you can do much better for your future by leaving ,especially in this era of more acceptance of remote work.
Living in Texas to achieve the nerd symbols of success is quite the Hobsin's Choice. Florida too. Feel sorry for those kids wrestling with gender issues
What is better for kids, living in a cramped apartment attending NYC public schools or a larger single family home in a good school district in Texas?
Having been, myself, relentlessly bullied by closed-minded bigots, I can confidently say that getting away from environments like that is priceless.
Looks like there is a price - otherwise people wouldn't be moving here in droves. Also Houston being full of close minded bigots is hilarious to me, it's far more racially integrated than NYC. You seem to be the one that's a bigot
I expect better from Hacker News. Oh well.
Do you think bullying doesn't exist in New York City?
Big difference between kid bullies and government bullies. You're almost guaranteed to be a school bully victim when your governor is going after Mini Mouse for wearing a rainbow skirt.
[deleted]
And yet, real people, with a wide variety of views, still live in these places. They can't just hop off to <insert favorable political city here> whenever they want and virtue signal like rich SWEs on here. There are plenty of people in Texas that believe the same thing about those kids, and they are there, fighting for them.
> The real reason people have been moving to these places
Most of the people I know moving to those places are doing it mainly to escape cities run by politicians who care more about what people on Twitter think of them than actually helping their citizens. High crime, apathetic city councils, and poor schools are the cited reasons.
Most of the people I know moving to those places are doing it mainly to escape cities run by politicians who care more about what people on Twitter think of them than actually helping their citizens. High crime, apathetic city councils, and poor schools are the cited reasons.
Yes, and certain media narratives reinforce that in people, I'm sure. But the statistics don't always track. Houston has a far worse violent crime rate than these cities (if we say, NY). A city like Tampa, crime wise, is comparable. And fantastic schools are available in every suburb outside all of these major cities - you'll find amazing school districts in the NE, Virginia, etc, so that can't be it. These places are very pricy too.
Most people I know who have moved have all said a similar thing: cost of living is a fraction and taxes are lower. It's not just politics - people aren't moving to Louisiana. Texas and Florida offer economic opportunity.
Most people I know who have moved have all said a similar thing: cost of living is a fraction and taxes are lower. It's not just politics - people aren't moving to Louisiana. Texas and Florida offer economic opportunity.
> real reason people have been moving to these places
There are unique factors that can make this person in New York more valuable than in Houston. Chiefly: once their function is in Houston, why not Honduras?
There are unique factors that can make this person in New York more valuable than in Houston. Chiefly: once their function is in Houston, why not Honduras?
Maybe chose a different example. Houston has a real economy. It is the global hub for petroleum engineering. This is a global industry that is highly competitive and it has been for quite a while. And yet Houston is consistently able to attract top tier talent and thrive. Personally I’m not a fan of Houston but I think it has a much more impressive economy than New York.
> Houston has a real economy. It is the global hub for petroleum engineering
The example sustains itself. If petroleum engineering could be done remotely, there is no chance it would continue to pay a premium for Houston-based talent.
> I’m not a fan of Houston but I think it has a much more impressive economy than New York
New York's economy is that of control and administration. Houston is to it as Baton Rouge is to Houston.
The example sustains itself. If petroleum engineering could be done remotely, there is no chance it would continue to pay a premium for Houston-based talent.
> I’m not a fan of Houston but I think it has a much more impressive economy than New York
New York's economy is that of control and administration. Houston is to it as Baton Rouge is to Houston.
> once their function is in Houston, why not Honduras?
Because Houston is a large, relatively rich city with a well-educated workforce within a short drive of other large, rich cities and a short flight of others, whose citizens understand the unique problems that face American citizens and therefore can serve as excellent early adopters for consumer solutions for the American market?
Because Houston is a large, relatively rich city with a well-educated workforce within a short drive of other large, rich cities and a short flight of others, whose citizens understand the unique problems that face American citizens and therefore can serve as excellent early adopters for consumer solutions for the American market?
> within a short drive of other large, rich cities and a short flight of others
Agreed. But if one's job and life go remote only, this ceases to be a differentiator. My entire argument is geography is far from becoming irrelevant. But if someone in Houston takes no advantage of their proximity to said "rich city with a well-educated workforce," they're competing against anyone with internet.
Agreed. But if one's job and life go remote only, this ceases to be a differentiator. My entire argument is geography is far from becoming irrelevant. But if someone in Houston takes no advantage of their proximity to said "rich city with a well-educated workforce," they're competing against anyone with internet.
>once their function is in Houston, why not Honduras?
I agree, and it's something that I'd like to get ahead of if it's the world we're approaching.
In a world where high-skill-non-managerial jobs can be outsourced easier, wages will become depressed. Would you rather take what you have saved and try to get something in Houston now, or watch from New York as your income stagnates but your expenses grow with inflation?
Nobody knows the future, and remote work could very easily be phased out. Or we lean in and US companies draw from a pool of tens of millions of talented international software engineers.
It's a hell of a situation.
EDIT: lots of tweaks here and there.
I agree, and it's something that I'd like to get ahead of if it's the world we're approaching.
In a world where high-skill-non-managerial jobs can be outsourced easier, wages will become depressed. Would you rather take what you have saved and try to get something in Houston now, or watch from New York as your income stagnates but your expenses grow with inflation?
Nobody knows the future, and remote work could very easily be phased out. Or we lean in and US companies draw from a pool of tens of millions of talented international software engineers.
It's a hell of a situation.
EDIT: lots of tweaks here and there.
> Would you rather take what you have saved and try to get something in Houston now, or watch from New York as your income falls but your expenses stay flat?
Depends on if you’re learning and growing or coasting. Truth be told, I’m presently the latter, which is partly why I moved to Wyoming. That is not an option if you’re starting out. And it won’t be when I shift back into first gear.
Depends on if you’re learning and growing or coasting. Truth be told, I’m presently the latter, which is partly why I moved to Wyoming. That is not an option if you’re starting out. And it won’t be when I shift back into first gear.
I'm a mid-level engineer working from Kentucky - trying to learn and grow remotely because after living in SF and other large west coast cities, I don't see how anyone builds much of a life there before they're 35 anyway.
I also fear remote is here to stay, with all of the wage changes that will create for skilled American labor (it'll do lots of good too, don't get me wrong!)
EDIT: >I don't see how anyone builds much of a life there before they're 35 anyway.
By this I suppose I meant that I don't see how I could build much of a life out there before I'm 35. I know a few people who pulled it off, but I'm under the impression it is an outlier outcome in a city of outliers.
I also fear remote is here to stay, with all of the wage changes that will create for skilled American labor (it'll do lots of good too, don't get me wrong!)
EDIT: >I don't see how anyone builds much of a life there before they're 35 anyway.
By this I suppose I meant that I don't see how I could build much of a life out there before I'm 35. I know a few people who pulled it off, but I'm under the impression it is an outlier outcome in a city of outliers.
> fear remote is here to stay, with all of the wage changes that will create for skilled American labor
I do too. And it means a return of apprenticeship. Nothing more, nothing less.
I do too. And it means a return of apprenticeship. Nothing more, nothing less.
What does $100k feel like?
As someone who works in tech in Silicon Valley but who doesn't make FAANG-level salaries and who doesn't earn RSUs, it's enough for a single person with no dependents to live a comfortable upper-middle class lifestyle provided that the person doesn't have significant amounts of debt. I'm able to afford a one-bedroom apartment in the Santa Cruz area without roommates, make student loan payments, drive a new car, go to Japan once or twice per year, buy a new computer once every other year, make a few domestic trips on the West Coast annually to see friends, eat out occasionally, and still have enough money leftover for savings, both for immediate needs (six-month emergency fund, down payment on a house) and for retirement. It's not bad, though the pandemic-era inflation is quite noticeable and it hurts to see my paycheck not grow as fast as the price of food, services, and housing.
However, I'm 34 years old and I'd like to get married and have children one day. Having grown up in a low-income household, I want to be able to provide a middle-class standard of living for my future family. I want my children to have good educational opportunities and live in a safe neighborhood. However, these things are not cheap in America, and in Silicon Valley these things are very expensive, generally requiring the income level of two highly-paid professionals in order to afford purchasing a home in a safe neighborhood with good public schools. Private schools are also very expensive. I don't see a path toward home ownership in Silicon Valley unless I win the lottery (either something like the Powerball or I win "the startup lottery"), and so I see two potential alternatives: (1) continue to rent in/near Silicon Valley while exploring homeownership opportunities elsewhere (which is still expensive, but renting in Silicon Valley is much cheaper than paying mortgages on comparable properties), or (2) leave Silicon Valley and base my career somewhere else where home prices are cheaper, either taking advantage of remote work opportunities or starting my own business.
However, I'm 34 years old and I'd like to get married and have children one day. Having grown up in a low-income household, I want to be able to provide a middle-class standard of living for my future family. I want my children to have good educational opportunities and live in a safe neighborhood. However, these things are not cheap in America, and in Silicon Valley these things are very expensive, generally requiring the income level of two highly-paid professionals in order to afford purchasing a home in a safe neighborhood with good public schools. Private schools are also very expensive. I don't see a path toward home ownership in Silicon Valley unless I win the lottery (either something like the Powerball or I win "the startup lottery"), and so I see two potential alternatives: (1) continue to rent in/near Silicon Valley while exploring homeownership opportunities elsewhere (which is still expensive, but renting in Silicon Valley is much cheaper than paying mortgages on comparable properties), or (2) leave Silicon Valley and base my career somewhere else where home prices are cheaper, either taking advantage of remote work opportunities or starting my own business.
Feel that. Get married and had kids and suddenly 100k is diddly squat
It would feel pretty damn good for most people.
Yes. HN will try to tell you otherwise.
100K is considered low income for a family of four in San Francisco. If you're on your own, it might not be so bad.
And for others?
A reminder that they’re likely to never find happiness or meaning.
*until you have a serious medical expense
At those salaries you definitely either have work-provided healthcare or can afford Kaiser platinum
Feels good if you live within your means
Feels like what I make in 5 years
Debt is the real killer. I will clear 200k TC this year but I live like a broke person. I'm talking ramen noodles and busted ass apartment broke. After housing, debt payments, bills, 401k, taxes, and daily living expenses, I really can't afford anything. Saving for a modest house is a huge goal for me, and I'm in the 90th percentile of incomes. I can't even imagine how the other half is living right now.
Is this satire? You'd end up with 130-140k post-tax. Are you single? How much are you spending on rent, food and transportation? Genuinely curious. I know it's not an absurd amount of money in cities like San Francisco, it wasn't when I was living in Sydney, but broke?
Why are you contributing to a 401K but have significant debt payments? See Dave Ramesy for a start, then Bogleheads as you climb out of debt and start to save and invest. Best of luck.
>Why are you contributing to a 401K but have significant debt payments? See Dave Ramesy for a start, then Bogleheads as you climb out of debt and start to save and invest.
I have a different philosophy on this. A 401k is basically your life raft of last resort. And it's so tax advantaged that you're throwing away money not to use it. I'd rather pay to hold debt while maintaining and growing my assets, and rely on inflation + asset growth + wage growth chipping away at the debt. If the economy crashes and credit freezes up, a good credit score from paying down my debt won't mean anything. But a bank balance still will.
I have a different philosophy on this. A 401k is basically your life raft of last resort. And it's so tax advantaged that you're throwing away money not to use it. I'd rather pay to hold debt while maintaining and growing my assets, and rely on inflation + asset growth + wage growth chipping away at the debt. If the economy crashes and credit freezes up, a good credit score from paying down my debt won't mean anything. But a bank balance still will.
HSAs and Roth IRAs would like a word with you. Both can be preferred to 401ks in some situations, but the point is take care of debt first.
Is a lot of your comp in equity?
How bad are your debt payments?
Not trying to shame or anything. That just sounds insane that you could be barely making ends meet on 200k
How bad are your debt payments?
Not trying to shame or anything. That just sounds insane that you could be barely making ends meet on 200k
I advise anyone making $300k to give half of it to me. Then you will end up at $150k, which is $50k ahead of where you started.
ok, now do saving/investing 5% of your salary over 10 years with those 2 numbers....
Buying a big TV or a new iphone would be a lower % of total salary since those wouldn't scale w/ the location. And then you'd turn around and pay $20 for a cocktail. But what do I know, I live middle of the country :)