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Going by the old rule of thumb that you shouldn't buy a home more than thrice your annual gross income, then you'd need to be making a $285,000 annual salary to afford the typical home in the Bay Area. That's ludicrous! How are firefighters, police officers, teachers, sanitation workers, and all of the other necessary workers who make sub-$100,000 salaries managing to afford to buy their first homes in that area unless their parents are buying houses for them? Insanity!
Is the quality-of-life in the Bay Area truly high enough to justify working multiple jobs to afford a home there unless you're a doctor, attorney, executive, or tech guru?!
That's totally correct. That's why most people ignore buying power (income vs. COL). To me, the QOL of an area goes way down when I'm having to work myself into oblivion and still can't afford home ownership. Sorry, but no place is worth that.
These numbers can distort the picture of housing in an area. For example, St Louis is supposedly very cheap at $170k, but in any area that I would consider living, a home will cost me 2-3x that. In St Louis there is a large discrepancy between the desirable parts of town and the less fortunate areas. I suppose that is true for many cities.
This law, signed by Reagan in 1986, is the root cause of the cost of living spike we are seeing today. This law gutted most of the subsidies granted to builders to build non-luxury housing. This is why most apartment building in the post 1986 US has been in luxury condos/apartments and a much higher percentage of single family home construction has taken place in sub-divisions with HOAs.
Following the signing of this law, multi-family (apartment) construction tanked, as you can see below. Affordable apartment construction tanked the most and today more than 75% of apartments being built are luxury only. Luxury condos/apartments are still heavily subsidized by local and federal government.
With our population growing 2-3 million a year and affordable house construction in the gutter for three decades, our nation is now facing a chronic supply of affordable apartments and homes. This of course puts immense pressure upwards on home and apartment price.
The prices listed in the OP will only keep going up until something is done.
Greed Plain and simple. Apartments are equally rough. Denver and Austin are a prime example of in just a few years prices have gone bonkers. It's tough out there folks.
I wish there was a way to make (marginal) profits by building low-income housing. As the country continues to become more and more wealthy/poor and less and less middle-class, this is going to be a compounding issue.
The constant overdrive in prices by themselves have served as an impetus for several American boomtowns.
For example, the reason Boise, Colorado Springs, Reno, and Spokane are successfully growing at a rapid rate today is because of how overpriced and perhaps over-regulated that the larger metropolitan areas in the Western United States have become (i.e. Los Angeles, San Francisco Bay Area, Seattle, Phoenix, Denver, San Diego, Portland, and even Salt Lake City and Las Vegas).
Reno, for one example, views itself as an ideal location for Bay Area companies to expand to and put back-offices in:
If the San Francisco Bay Area, for example, ever figured out how to put up more housing units on the market with a mixed income to more affordable housing, it would actually hurt boomtowns like Reno, Colorado Springs, Spokane, or Boise because their marketshare and allure would diminish as a result of that.
Market economics, though, means that wont be the case. The San Francisco Bay Area must overcome major mental hurdles presented by NIMBYism, land constraints and availability of developable land (solving the issue means going vertical - again, that NIMBY problem), and labor shortages to fix its housing market. I expect home prices and rental prices to continue skyrocketing in the San Francisco Bay Area for the foreseeable future. It says something when you're already the most expensive rental and housing market in America and your price appreciation on homes is still in the double-digits (which is enormous for an area where the median home costs $1 million) and escalation in rental rates still leads the country. This, by the way, is accounting for the San Francisco Bay Area actually building more housing in the most recent two years than traditionally in the past 5-6 years overall. Imagine the price appreciation if it didn't build all the extra housing? Through the roof.
I hope all the surplus demand and population growth driven by the economic boom in the region puts pressure on local area leaders to build far more housing at a far faster clip than in the past. It is very much needed in the San Francisco Bay Area, the housing situation there is a critical impediment on the market as it stands today.
The constant overdrive in prices by themselves have served as an impetus for several American boomtowns.
For example, the reason Boise, Colorado Springs, Reno, and Spokane are successfully growing at a rapid rate today is because of how overpriced and perhaps over-regulated that the larger metropolitan areas in the Western United States have become (i.e. Los Angeles, San Francisco Bay Area, Seattle, Phoenix, Denver, San Diego, Portland, and even Salt Lake City and Las Vegas).
I hope all the surplus demand and population growth driven by the economic boom in the region puts pressure on local area leaders to build far more housing at a far faster clip than in the past. It is very much needed in the San Francisco Bay Area, the housing situation there is a critical impediment on the market as it stands today.
Colorado Springs and Boise already have similar housing prices to Las Vegas and Phoenix.
The only affordable regional middle-tier western metropolitan areas left are Tucson, Ogden and Albuquerque.
It only took about a year for apartments rents to skyrocket in Colorado Springs because it's a smaller metropolitan area and trends change quickly. Reno is similar, went from affordable to very expensive over the course of two years.
Metro Phoenix is an extremely sprawled metropolitan with a massive difference in housing prices from one end of the metro to another. There are areas like North Scottsdale and Paradise Valley where prices are $300 per square foot or more and then areas like San Tan Valley and Eloy which are commutable to major job centers for $60 or less per square foot.
I don't think there is a major metropolitan area in the West except for Phoenix that still has $60 per square foot home prices in some of the suburbs.
Reno is very expensive actually for the housing prices. It might be a bargain compared to San Francisco but is certainly very expensive by national standards.
The west in general is extremely expensive. I look at the median income numbers from the government agencies such the Bureau of Labor Statistics and Census and I wonder how people do it. I know that household debt burden is very, very high in the West compared to other parts of the country.
The west also has a very high birth rate and number of families compared to many other parts of the country.
Property taxes are also going to have to go way up with all this growth in the West. Its a married area and I am sure as the millenial cohort ages there will be the need for huge property taxes increases for the schools.
I don't know how they can build housing any faster in the West. There is already a huge labor shortage with high lead times and delays for projects.
I was having a cup of coffee a few weeks ago and this newspaper interviewer actually was interviewing these construction managers at the coffee shop. I sat right by them so I could listen in.
I guess they have increased the wages but commercial construction pays much better then residential. They used to be able to get good workers but now many workers stay a few days and either can't do the job, show up late or work a day or two and never show up again.
Many of the workers who were seasoned in construction in 2004-2006 have also aged to the point where they found different fields of work or in many cases physically can't handle it anymore.
In the West in general there is a huge stigma revolving around construction and manufacturing jobs that does not seem to exist in the middle of the country.
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