It used to be that there were two ways to make more money: invest in your human capital (education) or move to a richer state. WSJ article on how housing has reduced the profitability of the second mechanism:
Moving to a wealthier area in search of job opportunities has historically been a way to promote economic equality, allowing workers to pursue higher-paying jobs elsewhere. But those wage gains lose their appeal if they are eaten up by higher housing costs. The result: More people stay put and lose out on potential higher incomes.Land use restrictions are behind the increase in price
The developed residential area in Atlanta, for example, grew by 208% from 1980 to 2010 and real home values grew by 14%. In contrast, in the San Francisco-San Jose area, developed residential land grew by just 30%, while homes values grew by 188%.
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ReplyDeleteAs a native New Yorker I used to believe that the more affluent families moved to or lived on Long Island. They were stereotyped as families who earned incomes which afforded their children an education that acted as a foundation to allow them to continue the family’s status quo. It used to be that moving to an affluent area almost guaranteed a better future for one’s family. Today, it seems that that assertion has been reversed. Investing in human capital is so expensive that families are moving to stereotypical urban areas in hopes of being able to afford better educations for their children.
ReplyDeleteLast week I attending a community board meeting to discuss development plans in connection the armory at Bedford and Union streets in Brooklyn https://www.dnainfo.com/new-york/20161018/crown-heights/affordable-housing-at-bedford-union-armory. The armory was to be developed into housing and a recreational facility. Unfortunately, as the project is currently tailored only 50% of the housing is slated as affordable housing. Most of the current residents in the neighborhood would not be able to afford the “affordable” housing. When I first moved into the neighborhood about 13 years ago homes were priced at or around $500,000. Today, a home across the street from me recently sold for $1.4M. Needless to say, incomes have not grown as quickly as home prices have appreciated. Housing costs have skyrocketed so much that even those who purposely live in less affluent neighborhoods can’t afford the lifestyle they thought they’d be able to afford there.