I think this highlights how expensive living is and how little income is. If we're going to have a "free economy" without an end of life safety net (i.e. Social security) then it has to be possible to work a lifetime and retire on savings made. But most indicators show little to no saving for most people. It sure seems something is deeply wrong.
I know a dude who makes $800k/yr and still lives paycheck to paycheck. Lack of savings is not necessarily caused by lower income. People tend to shovel money out the door as quickly as it comes in.
Wow, I wouldn't even know how to spend that much. If I made that much I'd retire after two or three years.
Citations for that number? Why don’t they save for retirement? Can someone on minimum wage with a family save for retirement? Does someone who makes bad choices deserve to be homeless and destitute later in life?
>Does someone who makes bad choices deserve to be homeless and destitute later in life? The rest of us don't deserve to pay for their bad choices.
I agree, but I think it's more expensive to figure out who has brought their fate upon themselves and doesn't really deserve the money and who genuinely just had bad luck. That's why I'm in favor of a universal social safety net, for example via a basic income.
You also have to factor in the opportunity cost of what you could've done with that down payment (e.g. What would a $100k downpayment invested for 30 years in the stock market be worth vs how much is that worth in your home in 30 years?) The NYT has a buy vs rent calculator that helps make some of these decisions: https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
Everyone I know in my age group with a house got help with their down payment from parents. Either in the form of low/no interest casual loans or just substantial gifts. It's possible this money wouldn't have been available to them for speculation in the stock market.
I liked the visualization and data, but I don't think it makes sense to compare home prices to wages w/o considering alternatives to home ownership. Home prices don't exit in a vacuum. That is, if a home is 10x the median salary, you can't really say "well, if I didn't buy a home I could work 10 years less." That's because the alternative to buying is renting, which is also expensive. So sure, a mortgage in SF is $6k…
Often missing from discussions of lower CoL areas is risk from different job markets. This is harder to factor in, but since not everyone can work remotely, you need to consider job market liquidity. If there is a recession can you easily find another job? Do you have a decent selection of local employers to ensure sufficient competition in terms of wages and benefits? Etc. Living in a high CoL area seems to correlat…
I'm not sure how true this is. My coworkers mention that during the 2007/2008 recession in SF they saw all of their coworkers/friends laid off and leave the Bay Area.
It took one of my coworkers a whole year to find another job during that period, even though he was in a high CoL area and initially had a "great selection" of jobs.
There are most certainly many things deeply wrong. Most people have negative savings every year. They have more debt. If one has bought a house, then it is very easy to go into more debt every year, when house prices are rising. Then they fall. Since the beginning of written history (the first written records are records of debts) there are stories and parables about the evil of debt and the need for debt jubilees. A…
Easy access to credit is an important component to a free market. Making borrowing illegal just leads to all sorts of inefficient contortions to do it another way. For example, businesses often need to borrow money in order to get started. For another, "bridge" loans and "revolving lines of credit" allow a business to operate when the timing of receiving payments does not line up with the timing of when bills are due…
I agree credit can be very useful and good, but most people are not using debt to try an investment that allows them to pay back the debt and make some profit. They are buying consumables: dinners out, clothing, gadgets, vacations, cars, even housing is really a cost of something you are using. A depreciating asset and not an investment. I think it would be really good to use some of this education everyone gets to get across the fact that consuming using debt with is very bad. Some counter to all the other marketing in the world that says, "Buy, buy, buy". Not immune to it myself.
Seems like solid evidence that you can't simply "densify" your way out of high prices? Bloomberg says the reason is developers trying to cover the cost of land. Something doesn't add up...
Actually HK has plenty of buildable land in the New Territories and elsewhere, but the real estate tycoons that run the whole show obviously aren't going to allow competition without first getting their cut.
Also, doesn't HK have a policy against tearing down green spaces? Astonishingly, 70% of the dragon islands is forest, the last I read.
The real opportunity cost is not living somewhere else. Run the math and SF is best avoided.
That's true in the US. In other areas, leaving the city might not be a realistic option. Consider Hong Kong as an (extreme) example, where leaving the city means emigrating to another country with another language etc. (yes, HK is technically a Special Administrative Region of China, but can be considered standalone in this respect). The median apartment price/income ratio here is 18, compared to a US average of 3.9…
Which means that probably ordinary people left Hong Kong and commute to work there each day right? It became like Paris where mostly only upper class lives. Definitely a rent on a minimal $500,000 apartment will also be above median household income.
Reverse mortgages are an option too, especially around retirement. I didn't do too much research and I'm sure on paper it's a scam, but with no kids and no one to really give the house to beyond charity when my wife and I kick the bucket, I am considering making my place part of my retirement plan. Or just sell it to pay rent for the rest of your life. Either way it's a pretty big boon.
There's something called Bare Ownership sale that's popular among widows with no children here in Uruguay, that retain the right to use the property until death : bare-ownership is a right of virtual ownership. For example, the bare owner of a property has no right to occupy it or rent it out. On the other hand, when the usufruct holder dies, full ownership of the property is carried over to the bare owner without an…
PARIS, Dec. 28— Andre-Francois Raffray thought he had a great deal 30 years ago: He would pay a 90-year-old woman 2,500 francs (about $500) a month until she died, then move into her grand apartment in a town Vincent van Gogh once roamed.
But this Christmas, Mr. Raffray died at age 77, having laid out the equivalent of more than $184,000 for an apartment he never got to live in.
I know a dude who makes $800k/yr and still lives paycheck to paycheck. Lack of savings is not necessarily caused by lower income. People tend to shovel money out the door as quickly as it comes in.
Wow, I wouldn't even know how to spend that much. If I made that much I'd retire after two or three years.
Lots of travel to exotic destinations, huge house in an expensive neighborhood, fancy car upgrade every couple of years, huge tax bill. All gone.