Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most • Hacker News Board

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#191

Post by usrusr » Tue, Jun 12, 2018, 7:52 AM UTC

baddox wrote: post #37

lkrubner wrote: post #20

From previous: " In nations in the West, an important limiting factor is the ability to get one’s own apartment. That is, the ratio of average male wage to average rent. In the USA, the happiest year for this ratio was 1958, when people were spending 22% of their income on rent, on average. Not by coincidence, this was the peak year of the Baby Boom. In some sense, it was the best year in history to be a young white…

In pretty much every analysis involving housing costs, I try to mention that percentage of income spent on housing is not a great metric. A better metric is absolute income minus housing costs. All else being equal, I would gladly earn $1 million per year and spend 75% of it on rent, because that remaining 25% would be a heck of a lot of money. I doubt this metric would significantly change the conclusions of this ar…

Because the ratio is what makes people aim low or high. If it takes 75% to have a house, is very attractive to live in something smaller and pocket the delta for fun and games (and/or stash it away for a downpayment later in life). High wage/rent areas will only exaggerate this, since many of the luxuries in question are not coupled to local markets (gadgets, vacations, stressing away for living in a cheaper place)

If shelter is cheap, skimping there won't be worth it.

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#192

Post by TangoTrotFox » Tue, Jun 12, 2018, 7:52 AM UTC

someguydave wrote: post #137

ekianjo wrote: post #12

Earlier quoted context omitted.

They are expensive because we want them to be. We have never had so much disposable income and so few children in History.

That's because the disposable income is mainly going to bid up the price of real estate. Nobody is making more real estate and the existing owners patronize the government to lock out competition. The federal government then pours gas on the fire by subsidizing demand through housing loan guarantees. Meanwhile, as the young prospective parents work harder than ever to save for children, the government claims that the…

One issue here is that, taken as a whole, the vast majority of real estate in the US is incredibly cheap. In some places you can get land literally for free, generally with the condition that you build (or park - some even allow mobile homes) a home on that land. But as education has increased so has the desire of people to live and work in the most desirable areas in the US where the highest paying jobs are. It's not hard to see what happens there. A huge and never-ending increase in demand paired with wages way above the national norm for those who do establish themselves successfully. You're going to naturally send the price of housing skyrocketing.

The push for immigration is, in my opinion, coming primarily from the private sector who then "donates" to government to do their bidding. The reason is, as you mention, to drive down wages. This is likely even the reason for the push of trying to get more women into computer science. There's no shortage of developers, but there's also not an extreme surplus as there is for many other jobs. Getting more women in the field would stand to potentially near double the labor force which would enable companies to sharply cut wages. And conveniently it also sounds like a socially progressive movement and so companies work to undermine a labor force while getting cheered on by that same labor force for doing so.

Anyhow, these problems will ultimately only be solved when we stop pretending that 95% of this country doesn't exist. That goes for employee, entrepreneur, and venture capitalist alike.

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#193

Post by adrianN » Tue, Jun 12, 2018, 7:55 AM UTC

arendtio wrote: post #182

anoncoward111 wrote: post #90

There's correlation here, but likely not causation. The real underlying cause in the drop in birth rates is an increase in working hours, an increase in commuting times, an increase in college tuition and health care costs, and also an increase in divorce rates. These days, even getting married is an expensive financial arrangement. Having kids is just another layer on that. Housing prices have increased because of c…

Since when you need to be married to have kids? Sounds like correlation, but likely not causation.

The better question is since when can you have kids without being married? Until quite recently you were ostracized if you had kids out of wedlock and illegitimate children had fewer rights.

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#194

Post by WalterBright » Tue, Jun 12, 2018, 8:09 AM UTC

4ad wrote: post #148

WalterBright wrote: post #142

Earlier quoted context omitted.

It's actually not that expensive to commute by air to SF. There are 261 working days in a year, and say $200 air fair per day, that's $55,200 in air fair. It'll cost more than that with to/from the airport, so say a hundred grand. This becomes doable at far less than $1m. I've made many day trips to SF from Seattle, and the plane was usually full of such day trippers. Of course, if your employer is flexible, it can c…

Better donate that $100k/year to scientology, or spend it in Las Vegas, it will have a more positive effect on your life than commuting to work by plane every day.

My comment was merely about the finances. One may also find such an arrangement more workable with working 2 days a week at home, or stay overnight frequently in SF.

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#195

Post by gsich » Tue, Jun 12, 2018, 8:09 AM UTC

Swizec wrote: post #138

kevin_thibedeau wrote: post #124

Earlier quoted context omitted.

If you were smarter you'd have commuted in from the suburbs and banked the money for retirement.

That’s 2+ hours per day of your life that you’re never getting back. You can always make more money, but time lost is gone forever. How much is 2x5x52 = 520 hours worth to you? If you’re selling your time for even just $100/hour that’s $52,000/year right there. With a 300k salary your hour is worth way more than $100. For your family, it’s priceless.

It's essentially unpaid work. So you "upgrade" your 40 hour week to a 50 hour week.

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#196

Post by jychien » Tue, Jun 12, 2018, 8:10 AM UTC

baddox wrote: post #37

lkrubner wrote: post #20

From previous: " In nations in the West, an important limiting factor is the ability to get one’s own apartment. That is, the ratio of average male wage to average rent. In the USA, the happiest year for this ratio was 1958, when people were spending 22% of their income on rent, on average. Not by coincidence, this was the peak year of the Baby Boom. In some sense, it was the best year in history to be a young white…

In pretty much every analysis involving housing costs, I try to mention that percentage of income spent on housing is not a great metric. A better metric is absolute income minus housing costs. All else being equal, I would gladly earn $1 million per year and spend 75% of it on rent, because that remaining 25% would be a heck of a lot of money. I doubt this metric would significantly change the conclusions of this ar…

The ratio of income is important in another way. Many apartments (in the Los Angeles area at least) want or require tenants to only spend X% of their gross income on rent. Places with $750k/year rent probably don't care, but for the median working American it matters a lot.

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#197

Post by mseebach » Tue, Jun 12, 2018, 8:11 AM UTC

kgwgk wrote: post #180

baddox wrote: post #37

Earlier quoted context omitted.

In pretty much every analysis involving housing costs, I try to mention that percentage of income spent on housing is not a great metric. A better metric is absolute income minus housing costs. All else being equal, I would gladly earn $1 million per year and spend 75% of it on rent, because that remaining 25% would be a heck of a lot of money. I doubt this metric would significantly change the conclusions of this ar…

It’s not about you , it’s about aggregate housing costs. If everyone was earning $1mn and spending $750k on rent, the remaining $250k may not be a lot of money. But of course you’re right, everything else being equal I would also be happy to earn $1bn and spend 99% on rent.

No, the aggregate isn't important: the thought experiment is the same as if everybody earned $251k and spend $1k on rent -- but the percentage of income spend on rent would be radically different. But yes, if everybody suddenly had $250k disposable income, prices would be higher.

I think the point GP is trying to make, is that it matters more if you can afford in absolute dollars to have a family on whatever is left when you're done paying rent, not what the percentage is.

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#198

Post by s_kilk » Tue, Jun 12, 2018, 8:14 AM UTC

labster wrote: post #73

toasterlovin wrote: post #49

Earlier quoted context omitted.

This stage of the demographic transition is a huge problem, IMO. The more I think about it, the more it seems like a ratchet (as in, it only moves in one direction): Basically, two incomes are useful, so both people in a relationship pursue careers. Now they have more money to compete on the housing market. This seems like a good move, so others follow suit. At first this is largely a win for people who pursue this r…

Immigration will offset the demographic implosion, at least if current trends continue. But speaking as someone who studied climate science, a temporary population reduction can only be a good thing for long-term human survival. We're above the carrying capacity of Earth for humans, and though we've done a lot of tricks to expand capacity, we're currently putting a large swath of the biosphere in danger. If there are…

> We're above the carrying capacity of Earth for humans, and though we've done a lot of tricks to expand capacity, we're currently putting a large swath of the biosphere in danger.

Given the vast differences in climate impact between different populations and consumption habits, this doesn't seem to be the case.

Perhaps a better way of phrasing it would be "We're above the carrying capacity of Earth for Rich Americans".

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#199

Post by kgwgk » Tue, Jun 12, 2018, 8:16 AM UTC

mseebach wrote: post #197

kgwgk wrote: post #180

Earlier quoted context omitted.

It’s not about you , it’s about aggregate housing costs. If everyone was earning $1mn and spending $750k on rent, the remaining $250k may not be a lot of money. But of course you’re right, everything else being equal I would also be happy to earn $1bn and spend 99% on rent.

No, the aggregate isn't important: the thought experiment is the same as if everybody earned $251k and spend $1k on rent -- but the percentage of income spend on rent would be radically different. But yes, if everybody suddenly had $250k disposable income, prices would be higher. I think the point GP is trying to make, is that it matters more if you can afford in absolute dollars to have a family on whatever is left…

And my point is that an “everything else being equal” argument about the income and spending of an individual is not particularly useful when discussing demographic issues.

Re: Birth Rates Dropped Most in U.S. Counties Where Home Prices Grew Most

#200

Post by a008t » Tue, Jun 12, 2018, 8:19 AM UTC

TeMPOraL wrote: post #125

hshehehjdjdjd wrote: post #108

Earlier quoted context omitted.

You won’t, because you were smart and rented instead. :)

Woah, when did renting became the smart choice?

As a thought experiment, imagine that you could rent a million dollar house for 1$/year. Then renting is obviously the smart thing to do. So rental yields are an important factor, as are your expectations of house price growth, opportunity costs etc.

But if rental yields are low (as they are now) and you do not expect house prices to rise at a fast rate in the future, renting can easily be the smart choice.

Regarding future house price increases. It seems to me that house prices can be approximated as a function of rents, interest rates (determining required return on owning a house), and anticipated growth in house prices (which again can be decomposed into growth in rents, reduction in interest rates and 'irrational' growth). Using London as an example. Rental yields appear to be around 3.5% in London at the moment, which suggests to me that a good deal of anticipated growth is priced in. But where can that growth come from? Rents are a function of incomes and are unlikely to outpace inflation. Interest rates seem to be more likely to go up than down. So it seems that house prices are unlikely to rise, and once that is realized by the market, prices may even come down as participants stop anticipating growth just because "London house prices always go up".

House prices going up faster than rents in recent decades can probably be explained by interest rates being in a downward trend over the same decades. Now we seem to be in at least somewhat of a bubble due to irrational future growth expectations.