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December 14, 2005
Housing Costs
Something to think about (pdf):
The Center’s analysis shows that despite the “new economy,” high-tech jobs are not eliminating traditional occupations that pay traditional wages. Retail sales workers, teachers, food preparation workers, cashiers, and janitors are all on the U.S. Department of Labor’s list of 10 occupations with the largest projected job growth for 2002–2012. The point is large numbers of working families will continue to earn their incomes from these and other traditional occupations with similar earnings.
Meanwhile, housing costs, both rental and homeownership, are beyond comfortable reach for many working families. Nationally in 2003, in order to afford a two-bedroom
apartment (using the not more than the 30 percent of income rule of thumb), a worker would have had to earn $15.21 per hour. But the national median wages of a retail sales worker and a janitor were $8.82 and $8.98, respectively. In some local markets the gap is much larger.
I'll have much more to say on this type of thing soon, but for now, that says a whole helluva lot about our economy's direction, not to mention the sustainability of the housing market. Workers in many of the country's fastest growing sectors will not be able to afford decent housing. Wage subsidies like the EITC might help them over the hump, but the promise of a middle class lifestyle will remain, save for some radical legislative changes, an empty dream.
December 14, 2005 | Permalink
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Comments
The "30 percent of income rule of thumb" is cute. Here in San Francisco we've solved the housing problem by cramming four people in a three-person place. Works great. Maybe Congress can pass the "Everyone Find A Roommate" bill when they get done doing whatever it is they do.
Posted by: brad plumer | Dec 14, 2005 5:36:49 PM
The "30 percent of income rule of thumb" is cute.
This guideline is decades old, but not well observed. I'd bet more households (apts, condos and houses) are closer to 50% of income than 30% (before the tax deduction for mortgage interest - just wait until the GOD tries to eliminate that tax break).
As Brad indicates, the 'roommate' solution works for younger folks and increasingly is creaping up the age scale - retired single seniors seem to be moving in this direction too. This doesn't work so well for single-earner married/partnered couples, so the solutions are two incomes or smaller, older, more remote quarters.
Next step: barracks living? If 'shelters' are the available solution for the homeless, maybe the GOP can spread this benefit up the income scale.
Sometimes its seems like the GOP inclination is to make the 21st century more like the 16th to 18th in terms of income distribution across the society.
Posted by: JimPortandOR | Dec 15, 2005 3:13:16 AM
Here in San Francisco we've solved the housing problem by cramming four people in a three-person place.
One of the major reasons why housing is high in San Francisco, New York, etc. is the restrictions by government. Developers are prohibited from building inexpensive housing. The building codes in San Francisco, for instance, are are extremely restrictive.
Here's another question:
Is affordable housing a "Right"?
Posted by: Fred Jones | Dec 15, 2005 8:22:42 AM
Yet housing ownership and minority housing ownership are at all time highs.
I also don't think you can use the statistic you quoted to infer a direction that the economy is going. Unless we know the relationship between average apartment rental prices in the past and median wages for retail sales and janitors in the past, we can hardly infer from this that things are getting worse.
I don't recall janitors ever being considered economically well off.
Posted by: Dave Justus | Dec 15, 2005 8:43:55 AM
That's funny because I was about to make almost the same comment Brad did.
Ten years ago in San Francisco the gap was much worse than this. Granted, SF is one of the more extreme cases but I can cite others from personal experience, throughout California, that bolster this case.
I got sick of it, moved to Pennsylvania where I could afford to buy a home.
At some point there is going to be a very large group of very disaffected and dare I suggest, probably pretty pissed off people that won't really buy into the bullshit reasons we seem to now, about sending more and more of our national wealth to a smaller and smaller group of people.
It's dangerous from a social perspective, not just an economic one.
Posted by: ice weasel | Dec 15, 2005 9:40:54 AM
"Retail sales workers, teachers, food preparation workers, cashiers, and janitors are all on the U.S. Department of Labor’s list of 10 occupations with the largest projected job growth for 2002–2012."
These are some of the few tasks that cannot be outsourced overseas. There still actually needs to be a person in the place of work to do the job.
Posted by: CParis | Dec 15, 2005 9:52:52 AM
but the promise of a middle class lifestyle will remain, save for some radical legislative changes, an empty dream.
Does a middle class lifestyle include only homes, or apartments? There will always be a lower class, a class that can't afford a home. There will always be a need fonr people to rent for their etire lives. Home ownership can't be a right. A roof over ones head, however, ought to be. Obviously I'm not talking about a shelter or anything. But in some markets, Boston for example, renting will always be the only choice.
Far be it for me to agree with our conservative commenters of course, as I will have no problem with government programs that help and encourage home ownership and/or low-income housing. Still, is it really intellectually sound for us to be say we wish to guarantee a middle class lifestyle for all?
Posted by: Adrock | Dec 15, 2005 10:06:45 AM
I've been priced out of the Southern California market-by the the cost of housing and, despite Ahnold's reforms, the cost of Workman's Comp-I'm moving to Oregon, leaving behind my small business that employed 3-5 people.....no point working hard to line insurance and property owner's pockets.
Posted by: Steve Mudge | Dec 15, 2005 10:11:37 AM
iceweasel, part of the issue is that those who do own a home in an area-- no matter how expensive-- will be disinclined to support policies that would make it easier for other people to own homes. Opposition to new construction almost invariably comes from existing residents over concerns related to traffic, open space, and what they claim are "quality of life" issues. People like their communities to be exactly the way that are, right at this moment. Construction of new housing stock in existing neighborhoods changes the environment (and perhaps even demographics) of an existing neighborhood, raising the ire of current residents (and voters).
For this reason, there aren't going to be any social pressures to threaten the housing squeeze, since those who manage to get housing will subsequently oppose housing for others, creating an incentive for the disenfranchised to move, find housing, and oppose housing in their new neighborhoods.
Posted by: Constantine | Dec 15, 2005 10:49:40 AM
Still, is it really intellectually sound for us to be say we wish to guarantee a middle class lifestyle for all?
Adrock,
This is one of those 'possible' questions. Sure, we would like to guarantee a middle-class lifestyle to everyone, but is that really possible? The "Living Wage" is really the same question, isn't it?
Posted by: Fred Jones | Dec 15, 2005 10:58:03 AM
Housing costs in California are artificially increased by prop. 13. Prop. 13 radically lowered taxes for everyone who already owned a home. Buy a new house, and you pay a higher property tax rate. Talk about a huge disincentive to sell your house, which reduces the amount of houses on the market, which drives up prices.
Since I have actually been to San Francisco, I wonder where the magnanimous developers of Fred's imagination would like to put their affordable housing developments. In terms of the actual city of San Francisco, where could these wonderful, low-priced houses be built? On platforms over the bay? Never mind the fact that the idea of developers chomping at the bit to build houses that will sell significantly below prevailing market prices is delusional at best.
In the East Bay, there are some areas that have been designated as "green spaces," and new development cannot happen within them. However, these green spaces were voted into existence not by liberal city councils, but by the voters themselves. Anyway, the new development happening in the East Bay doesn't seem to be slowing down. Nor is it "affordable" in terms of being below prevailing housing costs. Maybe the city councils of Concord, Walnut Creek and Pittsburgh have all passed ordinances that require all new homes to be worth $600,000 or more. Or it could be that developers are in business to make money and don't give a rat's ass about people who can't afford a home to live in.
It is also possible that building codes are restrictive in San Francisco because of earthquakes. Maybe.
I am not one to see owning a home as a "right." However, it should be assumed that this nation's residents will have places to live. The problem we are facing right not is not providing a house/mortgage to every person in the country, but the fact that there are policies put in place that make it artificially hard for peope at the middle-to-lower-ends of the economic spectrum to have affordable housing of any kind, whether owned or rented.
Posted by: Stephen | Dec 15, 2005 11:55:33 AM
Since I have actually been to San Francisco...
Yeah, me too...so what?
Never mind the fact that the idea of developers chomping at the bit to build houses that will sell significantly below prevailing market prices is delusional at best.
Houses sell at market. However, expensive houses have a higher market than less expensive houses, don't they Einstein?
...these green spaces were voted into existence not by liberal city councils, but by the voters themselves.
Who are.....LIBERAL?? Ya' think? Another interference by government in the marketplace. Stephen would have you think that expensive housing has nothing to do with the politics of an area.....and he is wrong.
Posted by: Fred Jones | Dec 15, 2005 2:24:15 PM
Preview is my friend....preview is my friend....preview is my friend....preview is my friend....
Posted by: Fred Jones | Dec 15, 2005 2:37:49 PM
Who are.....LIBERAL?? Ya' think? Another interference by government in the marketplace. Stephen would have you think that expensive housing has nothing to do with the politics of an area.....and he is wrong.
So the creation of green spaces is wrong because of the politics of the people who voted them into existence? When the citizens of an area decide, through a democratic process, to create zones of undeveloped land for the sake of preserving green space, that is not "another interference by government in the marketplace." That is the properly expressed and enforced will of the people, upon which this nation is founded. If you don't like it, then go live somewhere else where citizens don't get a say in the way things are run.*
I do recognize that the politics of an area can affect many things, including housing costs. However, there's always many other factors influencing these costs. It just doesn't work to blame liberals and their supposed love of regulation for every problem in the world.
*Fred, I don't really mean this. Nor have you, to my memory, suggested this to me. I just think it's funny to say this to a conservative. Ah, good times, good times.
Posted by: Stephen | Dec 15, 2005 2:50:52 PM
Preview is your friend.....preview is your friend.........preview is your friend.....preview is your friend.....preview is your friend
Posted by: Fred Jones | Dec 15, 2005 2:56:33 PM
Hey, I closed my HTML tag, dang it!
Posted by: Stephen | Dec 15, 2005 2:57:33 PM
When the citizens of an area decide, through a democratic process, to create zones of undeveloped land for the sake of preserving green space, that is not "another interference by government in the marketplace."
Yes, it is. They used government to accomplish this.
That is the properly expressed and enforced will of the people, upon which this nation is founded.
Do not misunderstand. They have this right. Just know that their restrictions are a factor in the housing market.
Now, tell us which face you are talking with because earlier, the will of the people didn't mean anything to your other face when discussing the marriage amendments so popular in many various states.
Posted by: Fred Jones | Dec 15, 2005 3:06:16 PM
Software problem....
Posted by: Fred Jones | Dec 15, 2005 3:07:30 PM
The building codes in San Francisco, for instance, are are extremely restrictive.
Which is why S.F. doesn't look like Qom, or Kashmir, every time there's an earthquake.
Posted by: TJ | Dec 15, 2005 3:20:23 PM
Which is why S.F. doesn't look like Qom, or Kashmir...
Yeah, who needs a bunch of poor people hanging around dropping your property values....right? I really like the correlation of restrictive building codes, expensive housing, always in a very liberal area. They talk a good game, but "not in *MY* backyard!!!!
Posted by: Fred Jones | Dec 15, 2005 5:44:13 PM
Yes, please disregard the notion that rigorous building codes have something to do with safe houses.
Posted by: TJ | Dec 15, 2005 6:00:24 PM
What sort of zoning restrictions do they have in SF about building UP? I used to live in San Jose, and saw very few residential buildings over 4 stories. I know they're in an earthquake zone, but you can build to the right specs to deal with that.
Look at Manhattan. They couldn't build out due to geographic issues. So they built up. If San Francisco allowed that sort of thing, they'd probably have a lot more "affordable housing".
But I joined the growing trend among Californians, and skedaddled. I moved to Atlanta, where my taxes are lower, my schools are better, and I can afford a nice big house.
Posted by: Brad Warbiany | Dec 15, 2005 10:21:59 PM
But I joined the growing trend among Californians, and skedaddled. I moved to Atlanta, where my taxes are lower, my schools are better, and I can afford a nice big house.
Welcome to the South. Low taxes better schools and more affordable housing.
Posted by: Fred Jones | Dec 15, 2005 11:33:52 PM
Yes, please disregard the notion that rigorous building codes have something to do with safe houses...
Bullshit. No one is talking safety issue, moron. We are talking codes that prohibit multifamily housing and houses that are safe and cheap to buile. They have no granite countertops, slate roofs and are not more than 1200 sq. ft.
Posted by: Fred Jones | Dec 17, 2005 1:07:42 PM
No, Fred- YOU weren't talking about safety issues, YET. I brought them up; see, we're talking about them, now.
Posted by: TJ | Dec 17, 2005 8:50:18 PM
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