US real estate

Salary with no dependents, for sure.

I can’t believe prices are that cheap.

R

FluffyData’s chart looks pretty accurate. Yes Richard, its pretty inexpensive, the homes are selling quickly. The home link I posted is already pending…

I think I know why it is off…they are using median, not mean. There is no way SF is twice the price of NYC and NYC average home price is $388k. So since I would assume there would be very little salary differences for the same job in different countries/states I’m guess this is why everyone lives in a McMansion in the US? Seems odd that you can buy a median value home on the salary of a McDonalds job…

R

That is what I was thinking as well.

I meant to paste in some context and source article- Laziness and haste on my part- Apologies.

HSH: The salary you must earn to buy a home in the 50 largest metros

Zillow Price-to-Income Ratios: Comparing Price-to-Income Ratios to Affordability Across Markets - Zillow Research

San Francisco is a bit of a shocker…

$434K in LA would get you a small 2 bed 1 bath. If you want 3 bed 2 bath and/or a nicer area then you’ll be in the 550K-750K range easily.
The RE market is insane. We bought a house about 2 years ago and it already went up $150K, not counting improvements we have already made. Back then houses were getting multiple offers (10+) and a lot of them were being bought cash. Before we bought we kept seeing home prices rising every month because of all the quick flipping going on.

That’s the most misleading chart I’ve ever seen.

Take Minneapolis for example (just because I live here).

A salary of $47105 for the year, filing married with 3 exemptions (which means you count your spouse and probably a child), nets you $818.93/ pay check. That’s WITHOUT any additional deductions like 401K, Insurance, etc.

Let’s also assume a 4% Interest rate financing just under 80% of the purchase price of 209400. Your payments with tax, insurance, etc. would be about $1100/month. That’s 67% of your TAKE HOME PAY. Putting food on the table, keeping the lights on, and clothes on the kid become a pretty tough ask at that point.

“Ok, your spouse should work, too.”

Awesome. But if he/she is also making 47105/year, he/she is probably working full time, which means the kid has to go to day care. And there goes another $1100/month. So you’re right back where you started.

The American Dream of investing in a home in order to make money is a sham.

And all those “salary amounts” listed, are based on the GROSS monthly you need to have to hit that house amount. They’re “allowed” to use 41% (!) of your GROSS, in order to qualify you. Which is absurd. That sort of thinking (among other things) got us into the mess in 2008.

Ok, but still, how is it that prices are so cheap in one place, yet so much in another with all else being relatively equal (Not talking about foreign countries with vastly different taxes structures or public services).

The same job would be relatively the same pay across the country I would think, adjusted slightly for cost of living (ie. a Jr. Designer in Miami might make $30K, while in SF maybe $35 - just as made up numbers).

How can there be such a variance in price to income?

Here in Toronto average sale prices are easily above $500K. In Vancouver I think even more. You could probably find a double underground parking spot for the price listed for some of those median homes here.

R

'merica dude.

Take Cincinnati. I know some guys who work for large corporations based there (you can figure it out) who roll deep, huge house (because they cost a dollar), fast cars, big vacations… but the rub is you are living in Cincinnati where the thing people brag about is watery chili (skyline chili, everyone from Cincinnati will try to convince you it is good, and maybe it is compared to the rest of Cincinnati). Basically supply outstrips demand, so prices are low.

Now go to SF where consignment of your first born is required for a one bedroom. Demand far outstrips supply and there is all that Google money and 50 year mortgages… but you get to live in one of the top 3 cities in the United States (NY, LA, SF in case that was was in question BTW)

:slight_smile:

Mechanical Engineer III (taken from Salary.com… I know, it’s not perfect, but its a quick resource for a comparison).


Designs, develops, and tests all aspects of mechanical components, equipment, and machinery. Applies knowledge of engineering principles to design products such as engines, instruments, controls, robots, machines, etc. May be involved in fabrication, operation, application, installation, and/or repair of mechanical products. Requires a bachelor’s degree in engineering and 4-6 years of experience in the field or in a related area. Familiar with a variety of the field’s concepts, practices, and procedures. Relies on experience and judgment to plan and accomplish goals. Performs a variety of complicated tasks. May report to an executive or a manager. A wide degree of creativity and latitude is expected.

Salary from San Francisco, CA
Screen Shot 2015-08-05 at 8.33.12 PM.png
Salary from Iowa City, IA
Screen Shot 2015-08-05 at 8.31.19 PM.png
Salary from Miami, FL
Screen Shot 2015-08-05 at 8.13.11 PM.png
Compared to Consumer Price Index:




About the ratings here: About Cost of Living Indices At This Website
These are all relative to New York (value of 100 on all categories)

Cincinnati, since it was mentioned.
Screen Shot 2015-08-05 at 8.28.03 PM.png

Ok. So not far off from my made up example. Difference of +25% or so. House price show up to 3-4x more. I get that it’s better to live in SF or NYC than Ohio or Iowa but the general prices across the board seem low. I guess I’m just biased living in Toronto.

I’ll have do some real estate comparables to see the real picture. Boston, Portland, etc sure ain’t NYC but not a bad place to live if you could get a house at half price. Not that I’m looking at moving.

R

  1. For more on Vancouver read Ian Young’s Hongcouver articles in the South China Morning Post.

The US and Canada have a plentiful supply of land that could be developed. However, it is in homeowners interest to believe that we have an increasingly scarce resource that is becoming more valuable. Long-term, this will likely correct.

  1. This over-evaluation has been greatly distorted in some markets by international buying. Vancouver and London are the top two that I know of. Local’s salaries have not budged, but property values have skyrocketed as foreign money has come in. In both places, existing owners fight any regulations or policies that would contribute to reducing prices because they view this as winning the lottery.

  2. It’s scary when large amounts of the economy have suddenly become about rising asset values (ie real estate, art, classic cars) versus value creating enterprises.

Personally I’d rather live in Portland as well, but just general supply and demand. Of course home prices there have shot up over the last 10 years at a very high rate because people are gravitating toward it, but still low compared to SF.

Here’s another less than cheerful perspective:

“IN THE 1950s, the average New York City apartment rented for $60 a month — around $530 in today’s money. With the US median wage at $5,000 a year, New Yorkers spent 1/10 of their salaries on rent. After World War II, apartments were so cheap and available that Manhattanites would regularly move every September just to get the landlord to repaint their new home. In those days, an apartment was a place to live. Now it is as much an investment as shelter.”

We can thank Reagan and Thatcher apparently.

8 years later, what’s up?

Was just having this same conversation with someone recently and I always find it fascinating to hear about the RE market in other areas.

Toronto has been on crazy +15-20% year/year growth the last few years, dipped a bit last year but looks to be heating up again.

What’s an “average” house price? How long on market?

Just curious. Not moving (especially to the US) anytime soon!

R

FWIW average sale price here (Toronto) now is $1,108,606 CAD. That’s probably a 2 bed condo or a tiny fixer upper in a weird area in the city BTW.

1 Like