Earlier quoted context omitted.
Houses are positional goods. If you earn five times as much, your colleagues will too, and there will be a bidding war until the price matches your earning power again. See also: The absurd real estate prices in the Bay area. Elizabeth Warren made that argument in her book "The Two-Income Trap". The economic gains from switching from the traditional bread-winner/house-wife household to double-income-households were e…
> Houses are positional goods. If you earn five times as much, your colleagues will too, and there will be a bidding war until the price matches your earning power again. This requires the assumption that additional houses can't be constructed. > See also: The absurd real estate prices in the Bay area. See also: the Bay area.
In a lot of places near expensive cities, that assumption is pretty valid.