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I think the tax climate needs to be part of the discussion as well since that factors into a mortgage. I have friends in a so so suburb of Chicago that purchased a 300k home with 10k/yr property taxes. That ends up being over 800 a month alone in taxes. Plus you have a high sales tax, income taxes, etc. That all chips away at purchasing power and puts downward pressure on home values. I live in Seattle where we have zero state income tax and much lower property taxes. While housing is expensive here I could probably purchase at least a 450k home here and between the property and income tax savings, not have that much more taken out of my discretionary income for housing. So the value itself is somewhat misleading.
Now I know it's not applicable across the board because NYC is also heavily taxed and also has much higher home values. But it does help explain some of the differences with other metros I think.
I think the tax climate needs to be part of the discussion as well since that factors into a mortgage. I have friends in a so so suburb of Chicago that purchased a 300k home with 10k/yr property taxes. That ends up being over 800 a month alone in taxes. Plus you have a high sales tax, income taxes, etc. That all chips away at purchasing power and puts downward pressure on home values. I live in Seattle where we have zero state income tax and much lower property taxes. While housing is expensive here I could probably purchase at least a 450k home here and between the property and income tax savings, not have that much more taken out of my discretionary income for housing. So the value itself is somewhat misleading.
Now I know it's not applicable across the board because NYC is also heavily taxed and also has much higher home values. But it does help explain some of the differences with other metros I think.
Which suburb? I ask, because my wife and I are considering moving back to Chicago or its burbs (don't want to pay 40k for each kid in private school) and we're seeing outrageous taxes in Oak Park. I'm talking 15k taxes on 500-600k houses.
I think some people want an answer that is black and white, because that way things in life become easier to sort out.
This is an example of something that isn't black and white. It's probably a number of reasons and not just "because it's close to the coast" or "crime", etc.
There is certainly a number of things that play a role, including geography, salaries, NIMBYism, foreign investment, etc.
What irks me is sometimes I feel like some people are trying to imply some hidden agenda like Chicago or Philadelphia are lesser cities because they're not expensive. The guy who said they're not desirable. Yes, Chicago and Philadelphia aren't desirable cities. You completely nailed it. Nobody wants to live there. In fact, there's no museums. No top universities or colleges. No airports. No food. No professional sports teams. No jobs. No roads even. In fact, there isn't even trees in those places. It's just barren. Vast nothingness. It's worse than AIDS.
Which suburb? I ask, because my wife and I are considering moving back to Chicago or its burbs (don't want to pay 40k for each kid in private school) and we're seeing outrageous taxes in Oak Park. I'm talking 15k taxes on 500-600k houses.
Wauconda. They were initially looking at Lake Zurich which IMO is nicer but were drawn to the lower home values in Wauconda because their budget was sub 300k. The thing is LZ does have higher home values but also lower property taxes so I think if they upped their budget to 325-350 in LZ they wouldn't have paid that much more on their mortgage.
There is absolutely nothing stopping NYC, Boston and DC from sprawling to infinity, yet prices are much higher than in Philly or Chicago.
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There's also more housing production in NYC, Boston and DC than in Philly and Chicago, so it isn't NIMBYism either. It's supply and demand. More people want to be in the NYC area than, say, the Philly area.
You're conflating a few issues here. Not to mention, this conversation has become so warped.
The fact of the matter is, zoning restrictions are among the strongest in the US in both the Northeast and Coastal West. You can 100000% guarantee that NONE of the cities mentioned in the upper echelon tier of prices are producing anywhere near the amount of housing that would meet current demand, especially SF and NYC.
You haven't considered that as very large metropoli, ALL of these metro areas, including Philly and Chicago are absolutely maxed out in terms of 1) distances people are actually willing to travel to get to these urban cores, and 2) willingness of residents on the outskirts of each metro to accept further sprawl on a large scale. The appetite just isn't there at all to commute from suburban Poughkeepsie to Manhattan.
Combining the two-fold issues of zoning restrictions and suburban NIMBYism, this world that you describe of these metros continuing to grow outward if they wanted is the furthest thing from reality.
So, yes, let's not pretend that there are no land limitations in these areas, because there are plenty.
You're conflating a few issues here. Not to mention, this conversation has become so warped.
The fact of the matter is, zoning restrictions are among the strongest in the US in both the Northeast and Coastal West. You can 100000% guarantee that NONE of the cities mentioned in the upper echelon tier of prices are producing anywhere near the amount of housing that would meet current demand, especially SF and NYC.
Agreed, but there are no more geographic constraints in NYC than in Philly or Chicago.
Manhattan is a small island of 1.7 million people. The NYC CSA has 24 million people, with few geographic constraints, and the median home prices are overall much higher than in Philly or Chicago.
I live in Brooklyn, which can sprawl all the way out to Montauk, and home prices are basically as high as Manhattan. There are towns 50 miles from Manhattan where home prices are crazy (say Westport, CT). It isn't geographic limitations.
And these cities build tons of housing. Not nearly enough, but more than Philly and Chicago. NYC builds far more urban multifamily than any other U.S. metro.
Supply and demand. Nobody has to live in SF or NYC or DC etc.. There's too much demand and not enough supply.
Anyone can choose to live where it's more affordable but again it's affordable because there's less demand and an abundance of supply.
Nobody has to live by the ocean but it's desirable, nobody needs to live in a very urban environment but again its desirable.... see how it goes? Luxury cars wouldn't sell if there was no demand. People can buy a $300 phone instead of a $1000 Samsung or IPhone but again, it's desirable.
Supply and demand. Nobody has to live in SF or NYC or DC etc.. There's too much demand and not enough supply.
Anyone can choose to live where it's more affordable but again it's affordable because there's less demand and an abundance of supply.
Nobody has to live by the ocean but it's desirable, nobody needs to live in a very urban environment but again its desirable.... see how it goes? Luxury cars wouldn't sell if there was no demand. People can buy a $300 phone instead of a $1000 Samsung or IPhone but again, it's desirable.
Here's the thing: for some (particularly high-paying) careers, you kinda DO have to live in NY, DC or the Bay Area.
Philly and DC live close enough to the ocean to be considered coastal, IMO. I would actually prefer someplace a bit inland to live, and have the ocean very closeby like in Philly's case. You can get to the ocean in an hour roughly. Being literally on the coast is not a dealbreaker for me personally. Portland and Seattle aren't technically coastal but many view them as such.
When you think about it, there aren't many truly coastal cities in the US actually. San Diego, Miami, Boston, San Francisco, Los Angeles pretty much fills them out, with Miami having the best oceanfront setting of them all.
Location: That star on your map in the middle of the East Coast, DMV
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Originally Posted by NOLA101
But that doesn't make much sense, because prices don't drop when you leave SF. If you head down the Peninsula, prices are the same, or higher. Even crappy, borderline slum suburbs with bad schools like Daly City are full of 900k+ tiny bungalows.
If you tripled the size of SF to get at roughly Chicago size, you could maintain roughly the same median home price, as long as you expanded southward, towards (and including) Silicon Valley. Places like Palo Alto make SF look cheap.
But my point is that if the municipal city of SF starting from scratch were drawn to be 300 sq mi going down the coast line to begin with, I'm certain that development patterns would have been forced to be different within the city. In turn this would have affected how real estate patterns developed there over time. Who knows if half the extra 250 sq miles would have been filled with upscale real estate.
SF is an extremely special case because of its topography btw.
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