Housing price growth is finally slowing down

[jtr1962]

This article states that the rate of housing price growth is likely to reach the lowest level seen in three decades, and that in terms of inflation housing prices may actually decline over the next few years.

I'd say this is long overdue. The rapid rise of housing prices was driven in part by interest rates and in part by speculators. The speculators are the biggest problem since they buy homes, rent them (this causes many problems), and then cash in on the profits as prices go up. This has had the unfortunate tendency of artificially inflating housing prices due to a much higher turnover rate, as well as causing a lot with a single family home to be replaced with two three family homes (and all the attendant parking and congestion problems that brings). As it is housing prices are out of reach for the middle class in many places. The house where I live cost my parents $52,000 in 1978. Allowing for inflation the same house should be maybe $175,000 today. Last I heard houses around here were going from $500,000 to $900,000. I don't see how even a working couple can afford those prices. At 6% the monthly payments on the mortgage alone are over $3000. Add in other expenses and you're probably well over $4000 per month just for housing. Most couples don't even make that kind of money before taxes, let alone after. The rental situation is no better. Even a small apartment in the outer boroughs runs at least $1200 a month, and in Manhattan you're probably looking a $3000 a month for a studio. I have no idea how people can afford these prices when the only available jobs pay from $3 to $10 per hour.

I read that situations like this can't continue indefinitely. In Hong Kong housing prices reached ridiculous levels but the bubble burst and prices declined by 70% over a very short time span. A similar 70% decline in the US in housing prices would put home ownership within reach of many who currently can't afford it. The only places where homes are currently affordable are where there are few jobs and even fewer amenities (like sidewalks and subways).

For its part local governments should have made renting single family homes illegal long ago, and required the owner to live in one of the units of a two or three family home. They also should have prohibited the same person from owning more than one home, and prohibited ownership of private homes by corporations completely. This would have ended the obnoxious practice of speculating which really benefits nobody but the speculators. The purpose of private homes is to allow a person to own the place where they live, not to help greedy profiteers get richer.

 

[Will Rickards WT]

I'll believe it when I see it.

I'll agree house prices are insane.

 

[Buck]

I hope home prices level off or drop a bit. I also hope that interest rates go up, I would like to earn some decent interest on my money market accounts. Remember when those rates were at 11% and higher? Those were the good old days (unless, of course, you were buying a house ).

 

[mubs]

I've heard it both ways; some saying it's a bubble that will implode like the dot-com boom, some saying that careful analysis shows that it's not a bubble, but a sustained growth in demand. I've heard this from people in the industry - mortgage brokers, builders, real-estate analysts (on radio, in the newspaper, etc.)

The truth is probably somewhere in between. One thing is for sure; when interest rates go up (and they surely will) demand will soften a bit, easing pressure on pricing.

 

[Howell]

jtr, I don't have time to correct everything that needs correcting in your rant above but suffice to say that while you may be correct about the details in the cost of living in NY; your basic premise that it should be artificially controlled is incorrect. It is the opportunities and services that NY provides that drive people to live there. If the people didn't want to live there the prices would go down.

Furthermore, expect it to get worse (from your perspective). In a time of low interest rates, the number of housing purchases and new builds goes up. This naturally results in an average increase in land/housing prices as more people compete for the same properties. Even so, now is the time for a landlord to increase his holdings. This has the opposite effect on rental prospects.

Who is not buying/building a house right now? Those with poor credit or low income. You will always have a certain percentage of the population who will be lifetime renters just because they prefer it but by and large today's renter is near the bottom of the barrel both from the landlord's rental income and risk perspective.

Soon, the interest rates will climb and the pool of renters will increase as more and more people will not be able to buy a house for the same reasons outlined above. The larger the rental applicant pool the higher the rental rates will be and you also start to see lower risk tenants.

Now, for rental property sale puposes the value of the property is pretty well tied to the income generating ability of the property and a good rule of thumb is 80x the monthly rental rate. As the rental rates increase so does the property value.

In conclusion, NY housing prices will continue to increase until demand is reduced. My advice to you is to find some place to live that has the things you want and none of the things that you don't want. In effect, you and many of your fellow residents are paying for services and amenities that you never use.

As loathe as you are to move, I don't think you are not going to be able to have your cake and eat it too. On the positive side, now is a great time to sell.

 

[jtr1962]

My point is that housing prices are ridiculous even outside of big cities. It used to be that you could move to the suburbs in order to save money on housing. Not so any more. A house in Long Island or New Jersey runs at least $300,000. Add in the much higher real estate taxes and the need to own a car and your total cost of ownership is as much or more than owning a house in the city. The only places where housing is affordable are places where there are no or few jobs like upstate New York. For a retired person who wants to cash in on the equity in their home, and who can stand to live in such a dull place, relocation is fine. For anyone who needs to earn a living it isn't an option. I've heard the situation is even worse in California. No affordable housing exists close to areas with jobs so it's not uncommon for people to travel 100 miles each way to work. This is completely insane.

I don't expect rental housing prices to be artificially controlled but there should be regulation against things that artificially inflate prices (and also destroy the character of neighborhoods) such as speculation. Until the last decade or two, most private homes were owned by the people who lived in them. That's what they were meant for rather than as a vehicle for the rich to get richer. As for rentals, I'll admit rent regulation in NYC has been a disaster. If you're lucky enough to get into a rent-controlled or rent-stabilized apartment then it's wonderful but because of this unregulated rents are higher than they would be otherwise, and all that's being built now is luxury housing. Thanks to rent regulation, anyone building middle-class housing would lose money.

In conclusion, NY housing prices will continue to increase until demand is reduced. My advice to you is to find some place to live that has the things you want and none of the things that you don't want. In effect, you and many of your fellow residents are paying for services and amenities that you never use.

And I'll add to that by saying that demand will be reduced as more people lose their jobs and cannot afford to pay ridiculous rents, or if there's another big terrorist attack (please, please hit the City Council building and not another skyscraper :diablo. There's only one reason why people can afford to pay the rents that exist today, and that is because many of them live like shit. A $1500 per month rent is unaffordable for a person making $6 per hour but if you have ten people sharing the same apartment then they can get by. Same thing for houses. The majority of single family homes around here that were purchased in the last few years house several families. There's just no other way for people to do it.

As for "amenities" I'll never use I'd be more than happy if NYC eliminated its cradle to grave welfare system but for me and many other subways are a necessity. Owning a vehicle is a big, expensive headache that I want no part of, and given the number of people who drive like idiots I'd end up being psychotic in short order driving every day. Except in very rural areas car travel is very unreliable travel time-wise. My sister can take 35 minutes to get to work or two hours. There's no way to know which from one day to the next, and car traffic is only going to get worse across most of the country. At least with the subway I know I'll be in Manhattan between 30 and 40 minutes after I leave 99% of the time (yes, it's that reliable).

As loathe as you are to move, I don't think you are not going to be able to have your cake and eat it too. On the positive side, now is a great time to sell.

Moving for me would be a huge headache given the amount of stuff I have. Since I'm living in my parents' house and they have no plans to sell it I don't need to move, and I'd go crazy living anywhere ouside of a big city. I'll readily admit I can't support myself almost anywhere in the country but I'm not alone. I suppose the only way to support myself at this point would be to take my savings and relocate someplace very cheap like China, or hope that my returns outpace housing prices for the next decade or two so I can buy a house with cash. In another thread I mentioned that my brother (who has a full-time job) moved back in with us for the same reasons. He couldn't afford to pay the $1300 per month that his rent was raised to. Either housing needs to go down in price or salaries need to go up. Since the latter doesn't look like it's happening any time soon with outsourcing then the former needs to occur. As an aside, while I make a good rate per hour (usually $40 to $60) freelancing I don't get anywhere near enough work to support myself. The only available full-time jobs for which I'd qualify pay from $3 to maybe $15 per hour. About the only people making good money here are lawyers, doctors, stock brokers, and real-estate speculators. A person who formerly made $100K worked with me at $9/hour in the taximeter place. If you have no college degree you probably can't make over $6 per hour here, and many immigrants are forced to work for $1 or $2 per hour "off the books". Living ten or twenty to an apartment is the only way these people make it.

Sadly, it's an employer's market and its mostly been that way for the last decade. I've heard it's only going to get worse as more professional jobs are moved overseas. Lately, I've been telling young people I know not to bother going to college unless it's on a full scholarship. It's pointless to go into debt when jobs in what you might study are inevitably being moved overseas. Add to that fundamental structural problems with the economy here in the US like the national debt, the growing ratio of elderly to young, and the lack of vision on the part of leaders. Taken as a whole, it's going to get worse before or if it gets better. As I said earlier, I think China or anywhere in Asia is the place to be, at least for the next few decades.

 

[Howell]

As for "amenities" I'll never use I'd be more than happy if NYC eliminated its cradle to grave welfare system but for me and many other subways are a necessity....

I was actually thinking of the arts in particular. You seem to me to have an attitude similar to mine in this regard. I'll partake maybe once a year. And I'll go to Atlanta. Were the infrastructure in place to support a thiving arts community here the cost of living would increase. From successful artists making a good wage and competing for house purchases to the sheer number of starving artists driving up the rental rates and living four to an apt to be able to afford it. My cousin moved to Queens and lives with 3 people sharing a $1200/month place.

My point is that housing prices are ridiculous even outside of big cities. It used to be that you could move to the suburbs in order to save money on housing. Not so any more. A house in Long Island or New Jersey runs at least $300,000.
...
The only places where housing is affordable are places where there are no or few jobs like upstate New York.

When you improve the transportation system such that high wage earners can live so far out of town then whereever they live the cost of living will be higher. How much more attractive would living out there be if the subway system ran out that far?! And surely its not just the higher wages that keep them working in NYC because wages v. cost of living is just a ratio. It has to be something that they would not be able to get elsewhere.

PS. I just returned from 10 days in London. The surface transportation situation there makes having a car in NYC a necessity.

 

[jtr1962]

I rarely partake of the arts but I do like the cuisine here. My aunt upstate can't even find a Chinese takeout while I must have about a dozen within a mile of me.

The way your cousin is living basically proves my point. A single person on an average salary can't afford to live alone. Unless it's with some friends I know well I'm not sure if sharing an apartment is my thing which is why I'd rather stay with my family. Of course not everyone has that option.

Yes, it's true good transportation makes housing prices go up. For example, housing prices in Princeton, NJ are very high even though it's 52 miles from Manhattan mainly because it's right on a high-speed rail line. Some expresses make the trip in less than 40 minutes. It usually takes me around that long to do the 11 miles into Manhattan. Of course the railroad is way more expensive than the subway but still less than driving (and way less aggravation).

How much more attractive would living out there be if the subway system ran out that far?!

If you mean upstate NY it still wouldn't be attractive to me. For one thing, the subway would take hours to get to Manhattan even if the fare was the same from upstate. That would mean I wouldn't ride into the city very often. The only way I might consider it would be if Manhattan was less than an hour away and the round trip cost a couple of dollars. That's obviously unrealistic for a distance of 250 miles.

And surely its not just the higher wages that keep them working in NYC because wages v. cost of living is just a ratio. It has to be something that they would not be able to get elsewhere.

That's my point exactly. When the NYC branch of Argo Taximeters was closed in 1990 I was offered a position in Virginia at the same wage. I remember that housing costs were less there but not proportionately less than wages. Of course it made absolutely no sense to take the position since I was making an average wage even by Virginia standards. I simply could not have afforded the costs of housing combined with the need to own a car. This wasn't even getting into the intangibles like culture, transportation, convenience offered by a large city. There's many reasons NYC has added over a million people during the last decade. I think a good part of it stems from disgruntled former suburbanites sick of spending hours on traffic-clogged roads.

BTW, I'm sure London and most of Europe have much better public transport than even NYC mainly because of the gas prices. At $5 and up per gallon many can't afford to drive.

 

[Howell]

I think you have unreasonable expectations.

 

[jtr1962]

I think you have unreasonable expectations.

In regards to housing prices or other areas??? I'm not alone in thinking that housing shouldn't cost and arm and a leg. A standard benchmark used for years was that you can't afford a home costing more than 2.5 times your annual income and/or that rent should be 25% of your income. With today's prices those benchmarks are impossible to meet except for couples making $100K each. As I'm sure you know, $100K jobs aren't exactly plentiful. Nowadays if you're making $30K to $40K consider it good money. Being in business for yourself and/or astute investing are about the only ways to potentially make more, but most people who try it are out of business (or broke) within five years.

 

[jtr1962]

I'll also add that there is a significant minority of the population that expects essentials like food, shelter, and transportation to be free. While I don't fall into that line of thought, I do expect governments to take some measures to keep housing (and also food and transportation) affordable for the working class. Limiting speculation in real estate and restricting private homes to their intended use (i.e. prohibiting rentals) are two good ways to start. I'm pretty much against subsidies, at least for housing, since they don't address the problem of high costs, but merely shift the burden to the government. For transportation, however, subsidizing more efficient modes while taxing less efficient ones makes some sense.

 

[DrunkenBastard]

Upstate NY already subsidises NYC. Take for example the transfer of debt from NYC on to the whole of NY State for recent example. And let's not talk about the cost of Medicaid.

 

[Platform]

Upstate NY already subsidises NYC...

You are quite right, oh drunken one. If it weren't for Gotham, the state of NY would be one of the most prosperous around.

Every once in a while that pesky upstate movement comes back to life -- the movement where the upstate minority wants to chop off its own appendage, thus creating the USA's 51st state of Long Island.

There have been other similar movements: Upper Michigan / Lower Michigan; North California / South California.

On a related note, I always thought it would be beneficial for Maine, Massacheusetts, Rhode Island, and Connecticut to merge into the new state of New England. As for Delaware, I don't know of any takers, but they should at least consider merging with Maryland.

If you know yer US history, due to the War Between The States, there was almost an East Tennessee for the same reasons there is a West Virginia.

 

[jtr1962]

Upstate NY already subsidises NYC. Take for example the transfer of debt from NYC on to the whole of NY State for recent example. And let's not talk about the cost of Medicaid.

Actually, that's not true. To quote the exact part of the article that's relevant here:

As Mayor Bloomberg testified earlier this year in Albany, New York City annually sends $2.7billion more in taxes to Albany than it gets back in aid. Albany's latest tax scheme, first outlined by the Daily News on Wednesday, would appear only to widen that gap.

And to add to that, New York State as a whole sends $15 billion more annually to the Federal government than it gets back in aid and spending. Despite the enormous Medicaid load in the city, NYC and NYS have been getting the shaft for years. This skewed aid formula is one reason why we recently had to raise the subway fare from $1.50 to $2 despite the enormous hardship this created on the working poor. Only about 30% of the cost of a subway ride is subsidized versus about 60% for the LIRR, and auto travel is subsidized by the government at all levels to the tune of something like 75%. Many other large cities with subways have a fare of around $1. I've said many times NYC would be better off as its own city-state along the lines of Hong Kong. No more federal or state taxes, and even though the city taxes would go up, as a whole we would be paying way less than now. And as a bonus we can send all our welfare and Medicaid cases across the border, and let the US government take care of them, saving even more money. :mrgrn:

 

[timwhit]

It costs $1.75 to ride the El in Chicago.

Boston - $1

Philadelphia $2

Atlanta $1.75

San Francisco bus/train - $1.25

So there is one city where it costs $1. JTR you really need to check your facts before spouting things off.

 

[jtr1962]

Well, except for Philadelphia all of those places cost less, and all of those systems are much more heavily subsized on a percentage basis due to the low ridership. According to this, riders pay 29% of the cost of a ride in Los Angeles, 42% in Atlanta, 47% in Washington, 50% in Philadelphia, 52% in Chicago, and 58% in New York. Also note that the per rider subsidy in terms of dollars per rider in US cities is the least in New York by far due to the number of people who ride here and the economies of scale that brings. We should have the cheapest fare around, not the most expensive. In fact, if I were in charge I'd probably go to 100% subsidy and get rid of the fare entirely in the interests of fairness. Even with no fare the per rider subsidy in actual dollars would still be less than every other city you mentioned. This is yet another way NYC gets screwed over in addition to the way school aid is doled out (the formula favors the suburbs on a per pupil basis). The benefits of a zero fare in terms of reduced congestion and pollution would far outweigh the costs. You'll also save money on token clerks, money pickups, and police to catch fare beaters. I'd rather have tax dollars fund something most people here actually use than welfare or Medicaid programs that most people (myself included) will never qualify for.

As an aside, for autos things are even more skewed. I've heard from various sources that drivers only pay anywhere from 10% to 25% of the actual costs associated with driving. I'm personally sick and tired of hearing politicians complain about how much money they're sending to NYC for mass transit, welfare, and Medicaid when those same politicians conveniently choose to ignore the extent to which automobiles are subsidized in this country.

 

[Pradeep]

I'd like to see the figures regarding subsidising drivers.

We pay:

registration fee every two years, based on weight usually. More road wear, more fee.
annual inspection fee, protecting the environment in a feeble way.
sales tax upon initial purchase
tax on petrol which goes to god knows where
insurance, including the costs of coverage for those who drive without insurance.

Then depending on your route of choice you may pay tolls on the Thruway/bridges/tunnels etc. Even tho the system has been already paid for by tolls from the past, we continue to pay more for what can only be described as pathetic maintenance. 10 workers standing around a small pothole doesn't inspire visions of efficiency.

Now you may argue that the costs in terms of health care etc from the annual carnage on the roads is also high. That is certainly true. But given that the vast majority of Americans own and use vehicles (far far more in terms of population than those that use subsidised mass transport), I don't see this changing anytime soon.

 

[Fushigi]

Here, the registration fee varies by state. Illinois is flate-rate ($78/year; more for vanity plates), but Indiana still does it as an excise tax based on the theoretical value of the car (when new, plates can be over $300/yr but will drop to like $40ish over time). I think some states do it based on GVW as you mentioned you put up with.

No inspection fee, at least not in Illinois.

There are other sources of funding, too. A portion of federal taxes and state taxes (in states with an income tax) will also go to support the roads.

Otherwise, the taxes and fees you mention, from gas to tolls, all apply to various degrees.

Do parking meters count? And revenue from traffic tickets/moving violations?

 

[jtr1962]

I'm not talking about direct costs like tolls, fuel, fines, and insurance which drivers currently pay but indirect costs which they don't. Roads and parking lots occupy an enormous amount of land which can best be used for other purposes. Less available land drives up the costs of housing for everyone, even non-drivers. The costs of commercial real estate are higher as well which is passed on to consumers in the form of higher prices. Sure, roads can and should all be put underground but this would cost more even though it is a much better alternative. Traffic accidents and traffic enforcement both cost money, not all of which is paid for by the drivers. The fifty thousand killed and two million injured annually represents a huge loss in worker productivity which is not borne by drivers.

In addition to these fairly obvious costs there is two huge byproducts of driving for which drivers pay nothing-pollution and noise. This pollution causes acid rain which in turn causes infrastructure to decay faster. The dirt from pollution increases cleaning costs. Air pollution causes health problems such as asthma and all sorts of cancers which easily kill hundreds of thousands if not millions annually. It also creates enormous quality of life problems for anyone living where there are large numbers of cars in terms of foul-smelling air. Noisy internal combustion engines create further quality of life problems.

While exact figures are by definition difficult to come by, I've heard a gas tax of maybe $10 per gallon coupled with another tax based on number of miles traveled would serve to make drivers pay what their driving actually costs. It would also serve to make long commutes to work and driving in general less attractive. One of the problems besides the mode of transport most Americans chose to use is the simple fact that as a whole Americans travel too much. Regardless of mode, if more people worked closer to home and consolidated trips so as to reduce mileage we would all be better off.

I don't have time right now to dig up studies but I'm sure they're out there.

 

[Pradeep]

I should have been clearer. A car is a fixed rate in NY, around $70-80 something for two years IIRC. A pickup truck would normally be given commercial plates, and there you decide how much gross weight you would be maxing out on and pay the appropriate fee. So if you want to carry 1 full ton in the bed you would pay more than a 1/2 ton. I guess this includes tow weight on the truck. For SUVs etc I think they have car plates.

 

[Pradeep]

One of the problems besides the mode of transport most Americans chose to use is the simple fact that as a whole Americans travel too much. Regardless of mode, if more people worked closer to home and consolidated trips so as to reduce mileage we would all be better off.

jtr, you may be happy to live the rest of your life in the boroughs of NYC, but I and certainly most others would not be happy being cooped up like that. The US is a huge country, with tremendous variations in climate, geography, and culture. Not to mention the world beyond the borders of the USA. I guess you won't be exploring it anytime soon given your aversion to the car and plane. The train is not a replacement for a car in a broad, sparsely populated country. Pehaps a cruise to Alaska?

 

[Pradeep]

You mention having people living closer to work. In a city of 8 million like NYC this then causes havoc with housing prices as you have noted. Perhaps one day we can all work from home, in our 1000 apartment condos. Long live the concrete jungle. Me, I like the greenery and air of the countryside. And yes, currently if I step outside and listen hard I can hear the Thruway traffic. Given that I also ride on it daily to work, it's an acceptable trade-off for me.

 

[jtr1962]

I see nothing wrong with taking a big trip every couple of years if I could afford it (which I can't right now). It is the daily 60 mile commutes to work which many Americans take that waste the most energy, and which concern me the most. People should live near where they work, and for many who sit at a terminal all day working at home is an even better option. If jobs were spread out among more communities rather than concentrated in populated areas then living near work wouldn't drive up housing prices. I think it's ridiculous, even criminal, that people in LI, NJ, CT can't work jobs closer to where they live but instead commute all the way into Manhattan.

Funny, I see greenery right outside my window. You don't need 29 acres or the country to enjoy that, and the air might smell better here if suburbanites didn't pollute commuting to work. If these suburban communities aren't able to create enough jobs for their residents then maybe they aren't viable and shouldn't exist. I'm tired of NYC being the toilet bowl for the surrounding suburbs. People driving through here to get to work doesn't benefit me at all, and these people don't even pay any city income taxes to make up for the havoc they wreak.

No, I won't personally travel extensively until better modes exist than the plane and car. The hassle isn't worth it to me, and there's a lot within the five boroughs worth seeing anyway (it isn't all a concrete jungle). I get car sick on any trip longer than ten minutes. The consequences of a plane accident are too high even if the probability is low (to say nothing of highly invasive security procedures). I really can't take either mode seriously as a means of long-distance travel. Despite my love of rail, train travel in most of the US sucks. The trains here run at a snail's pace compared to close to 200 mph in most other developed countries, don't serve too many destinations, and can't even run on time despite heavily padded schedules. Maybe when fossil fuels run low (I read today that this may start to happen by 2010) we'll finally have a nice worldwide grid of maglevs running at hundreds or even thousands of mph. Until something like that exists, I won't travel extensively, although I'll consider traveling overseas by renting a cabin on a freighter, and then using mostly trains once there. I think travel, at least to most tourist traps, is highly overrated anyway. I might like to see Antarctica or the Grand Canyon or some other natural wonders one day. I just hope they'll still be there when I'm ready.

It might be interesting to note that it was once possible to travel almost anywhere, even small towns, by rail combined with local trolley and interurban surface. Cars aren't the panacea they seem to be but most Americans are made to believe otherwise. In the 1950s auto makers and oil companies bought many trolley lines and allowed them to deteriorate so as to replace them with roads, buses, and ultimately cars. It was probably the single worst policy decision on the part of the US government to allow this to happen. Had this system been kept in place, we would now have a national grid of 200 mph rail links served by comprehensive local transportation systems rather than the disorganized, traffic-clogged mess that passes for a transportation grid today.

And to add my lists of costs not borne by drivers, add in wars to protect oil supplies. The Iraq war, which serves no other real purpose, has cost $122 billion and thousands of lives of all nationalities so far. The gas Joe Sixpack puts in his SUV has a higher price than he'll ever know.

 

[Tannin]

Gahhhh.... You are trying to treat symptoms and ignoring the disease, JTR. (Well, probably everyone, not just JTR.) Complaining about housing prices and trying to deal with them by buggerising about with transport systems or building regulations is like trying to treat dysentry by sewing your arse shut.

The cause of the problem is too many people.

Stop having so many babies.

In a sensibly populated country, you can have as much land as you like. You could buy the whole area of New York for a few handfuls of shiny coin, or Alaska for a few million dollars. (People did exactly that.)

Doesn't anyone even understand supply and demand any more? Real estate, as Mark Twain observed 150-odd years ago, goes up as the population increases — and they stopped making more land a long, long time ago.

You cannot increase the supply of habitable land short of it-will-never-happen lunatic schemes like shipping the entire population of India, Italy and Indiana to Mars.

You cannot increase the supply, so even an economic moron should be able to figure out that the only alternative is to reduce the demand.

Stop having so many babies.

 

[Howell]

It costs $1.75 to ride the El in Chicago.

Boston - $1

Philadelphia $2

Atlanta $1.75

San Francisco bus/train - $1.25

So there is one city where it costs $1. JTR you really need to check your facts before spouting things off.

Can you dig up what it costs to ride the subway in London? I think an all-day pass purchased after 9:30 was $2.50US.

 

[Howell]

Stop having so many babies.

Most residents of NYC migrated there, either from out -of-state or out-of-country.

The only solution is to reduce the attractivness of living there and thus reduce demand. Influence people to move away. If housing prices are so far out of whack with income that would do it.

 

[Tannin]

Nonsense, Howell. NYC isn't the problem. Land for housing is expensive everywhere. For me to buy an ordinary, average house here in Ballarat — a very ordinary, average town, in an ordinary, average state of an ordinary, average country — I'd have to spend roughly 20 years worth of my (ordinary, average) income.

That's 20 years worth of my entire income. 20 years of not eating, paying tax, or buying clothes. As for buying a house in Melbourne or Sydney, forget it.

In fact, I was astonished at how cheap housing in NYC is.

(Luckily, I already have the house.)

 

[Howell]

Nonsense, Howell. NYC isn't the problem. Land for housing is expensive everywhere. For me to buy an ordinary, average house here in Ballarat — a very ordinary, average town, in an ordinary, average state of an ordinary, average country — I'd have to spend roughly 20 years worth of my (ordinary, average) income.

That's 20 years worth of my entire income. 20 years of not eating, paying tax, or buying clothes. As for buying a house in Melbourne or Sydney, forget it.

In fact, I was astonished at how cheap housing in NYC is.

(Luckily, I already have the house.)

When is the last time housing wsa affordable in Ballarat?

 

[Howell]

The median income around here is 30-$35K. I could buy a nice brand new 3 BR home for $140K.

Are you sure you aren't exagerating a little bit?

 

[Tannin]

Nope. $250k is bottom dollar: that's more than ten year's wages for the average guy. Realistically, you are looking at $300k to $600k. It's a joke.

 

[jtr1962]

To put things into perspective, when my parents purchased their house for $52K in 1978 combined their income was around $26K. This was more or less an average income for a couple back then so the house cost about twice their annual pre-tax earnings. Even so, things were tight because they had three children to feed and help put through college soon after (I started college in 1980), as well as the usual expenses associated with owning a home such as taxes, fuel, electricity, etc.

Fast forward to 2004. The market value for the same house is ~$550K but average income for a couple in NYC is maybe only $70K to $80K. Thus, a house like this represents at least seven years of pre-tax income. Many better homes in the area are going for $600K, $700K, even $900K, or well over ten years average pre-tax income. While this may seem like a relative bargain compared to Ballarat it still means the majority of middle class cannot afford to buy a new home. Even with a mortgage of 5% the monthly payments on a $600K house would be $3,000, or about 75% of what an average couple takes home after taxes. In short, homes are unaffordable for the majority of couples, let alone a single person like myself. There are a few places where a home can be had for under $300K, but this is in mostly rundown areas where no sane person would want to live. Figure on spending $500K in any place worth living in. For what it's worth, once the house is paid for, as ours is, living is relatively cheap. Total annual expenses for the house are roughly $3,500 (real estate and water taxes), $2,500 (electricity), $1,500 (heating oil), $500 (home insurance), for a total of maybe $7500. I could support myself here (barely) on a $15K wage if I owned the house free and clear, and the electric, oil, and water bills could certainly be cut quite a bit if need be. It's getting the house which is the initial hurdle.

P.S. Homes in Ballarat are only going to go up once the new high-speed rail link is complete. As I recall Tannin mentioned there would be a stop in Ballarat, and it would be a fairly quick trip to Melbourne from there. This is only going to make living in Ballarat that much more attractive.

P.P.S. I agree the real solution is to get people to stop having babies but in the US if not for immigration there would already be negative population growth. Between my brother, me, and my sister we have exactly one child, my niece by my sister. My brother and me will likely never marry, and if we do neither of us care to have children. Perhaps one solution, at least in the US, is to discourage immigration.

 

[Mercutio]

That's Aussie dollars, right?

Anyway, I agree that there are WAY too many people. And WAY WAY too many of the wrong KINDS of people.
In fact, the people who run the Darwin awards (google if you've never heard of 'em), even have a name for the human population dynamic: They refer to the ordinary, stupid people - the ones who get Darwin Awards, as "rabbits", while the smart folks - the ones who understand that for example, using more of the Earth's resources than it can generate in a year is, over time, a bad thing - those people are called "Pandas".

Basically, we have too damn many rabbits in the world, and a lot of social structures that promote and encourage rabbits to breed (e.g. religions that prohibit birth control).

I've said it before and I'll say it again: People should need to have a license, or pass a difficult test, in order to have kids. If we did that in the western world for a couple generations, it would solve a great many problems we now face.

 

[Pradeep]

It costs $1.75 to ride the El in Chicago.

Boston - $1

Philadelphia $2

Atlanta $1.75

San Francisco bus/train - $1.25

So there is one city where it costs $1. JTR you really need to check your facts before spouting things off.

Can you dig up what it costs to ride the subway in London? I think an all-day pass purchased after 9:30 was $2.50US.

The cheapest off-peak Travelcard costs 4.30 pounds. Which is close to 10 bucks or beyond. That's just for Zone 1 and 2, and after 9.30am. Which means it's pretty much useless to get to work. But you do get to ride buses/trains within the zones as well. You can get it cheaper by getting weekly/monthly/yearly. But it makes the cost of public transport in other cities of the world seem free by comparison. Japan is pretty expensive too IIRC.

 

[Buck]

Not that I know where this is, but here is a four-bedroom for $360,000.00 AUD ($264,190.00 USD) in Ballarat.

 

[Howell]

The cheapest off-peak Travelcard costs 4.30 pounds. Which is close to 10 bucks or beyond. That's just for Zone 1 and 2, and after 9.30am. Which means it's pretty much useless to get to work. But you do get to ride buses/trains within the zones as well. You can get it cheaper by getting weekly/monthly/yearly. But it makes the cost of public transport in other cities of the world seem free by comparison. Japan is pretty expensive too IIRC.

To top it off, cars are everywhere. Even it the imigrant areas of town. In nicer areas toward the end of the Metroplitan line houses had two cars and one of them was BMW, RangeRover, Audi,...

 

[Pradeep]

I know what you mean. When I'm in London I stay with some friends, they live in Elstree (train from Kings Cross). It's like a freaking car show, Bentleys, etc in every drive. I'd hate to think how much the houses cost there (and tiny bloody backyards too).

 

[Tannin]

I haven't tracked housing prices in any detail, Howell, as I'm not in the market myself. (Not interested in buying or selling.) But the biggest rise seems to have come along quite recently. Two main factors seem to be at work: (1) very low interest rates for the last five years or so, and (2) increasing demand as Ballarat starts soaking up more than its fair share of the state population increase.

The sad part is that living outside ther big cities used to mean a considerable drop in income (wages are lower in the bush) but at least you could afford a house (land was really really cheap). Not any more. Now you just have the low wages.

 

[Tannin]

Your example house is pretty typical, Buck.

 

[Buck]

Your example house is pretty typical, Buck.

SOLD! Oh yeah, I forgot to check for a job first.

 

[Tannin]

Be here 9:00AM Monday and sober.