Bay area is infamous for many housing supply constraints in regulations. As far as loans increasing the demand side, banks can be pretty strict with %20 down payment restrictions. Which is why once houses go out of the dual income high earner price range ($1-1.5 million), you start seeing it overflow to other less desirable regions in the bay area.
it has not happened yet but it is certainly pricing many out at lower ends of the income scale.
Because supply and demand. High salaries attract a lot of people to the bay and communities systematically refuse to build new housing to meet the demand so the price goes up.
You can do whatever you want to the banks but that won't change the fundamental of 2X people trying to live in X houses.
Credit also typically increases ahead of wages which squeezes people further.
This isn't supply of people vs supply of homes, this is supply of credit. If you neutralise this you will see prices fall and be paying less of your labour to banks.
2008 - the credit taps ran dry => huge crash. Before that near unlimited credit saw land prices increase hugely. Neither on the up or the down did we see wages have such volatility.
We shouldn't worry about "squeezing" people out. Ours is a HUGE nation. We have A LOT of natural resources and there is no reason why we can't let people build more (outside of protected areas, of course).
People who are "priced out" should move to places where rent costs less. I keep hearing about property owners having enough political clout to block further development, depressing supply. They placate existing residents with tiny portions of rent-controlled apartments.
I fail to see how "gentrification" is a problem at all in the bigger scheme of things.
I don't think people renting out more places is a problem. If landlords hold supply out of the market to prop up prices, we can discourage such actions with a more dynamic property tax that places a realistic tax burden on under occupied or unoccupied property.
All that being said, we definitely need to figure out some way to peoperly educate people about personal finance.
https://www.amazon.com/Progress-Poverty-Industrial-Depressio...
I agree to some extent. Property (land) taxes have to be high enough to discourage people from leaving it unused. I have no problems with fully replacing personal income tax but I'm not an expert and I have no idea if we can realistically raise the same tax revenue from land tax alone.
It is a huge nation, but one where 70% of the tech jobs are stuck in SF/SV. I can move to Lincoln Nebraska and pay $400/mo in rent, but I sure as heck wont find an employer seeking a python job.
[1] http://python.jobs.net/jobs/lincoln,nebraska.aspx
[2] https://www.linkedin.com/jobs/python-jobs-lincoln-ne
[3] http://www.indeed.com/q-Python-Developer-l-Nebraska-jobs.htm...
Software gets written in a lot of places.
1. banks creating near unlimited credit against land which at best eclipses productivity gains leaving workers no better off and rentiers collecting all the gains
2. the rest of the population working out that the game is rigged and piling into real-estate speculation as the only game in town.
I'd have expected someone in a country with a crippling house price bubble in many cities to get this.
It's very naive to think that this is simply any one factor, especially supply and demand alone.
Why are economics conversations so limited?
The best way to avoid speculative run ups in prices (and subsequent crashes) is effective taxation. Of course taxation of land is not popular with the rich and powerful as it can’t be avoid.
It amazes me on HN where on most other complex behavioural problems if someone came along and shouted "it's because of X" they would be laughed out to cries of "it's more complicated than just one thing".
Yet when it comes to millions of people with varying priorities interacting with government and the banks anyone who comes up with anything more complex than "it's supply and demand" is told "no, I've done econ 101 thank you".
Hacker news can't be bothered with Georgism, they've done econ 101 syllabus (provided by their establishment).
https://www.amazon.com/Progress-Poverty-Industrial-Depressio...
Personally I do think it is a good idea to try and avoid speculative bubbles in assets and the best way to do this is via taxation.
Credit however is not constrained except by a willingness to borrow and on the up this is near-unlimited. Fortunes are made not by doing but by speculating and then at the end the workers pick up the tab.
Come on, let's hear how rents are not tied to wages in a thread about remote working providing higher wages than the local area but lower wages than the hot-spot.
Let's hear it HN.
Why is silicon valley more expensive to rent in? Because people came with money and the banks agreed to loan at a multiple of the new wage ceiling.
If wages increase x4 guess what will happen?
We need to stop banks creating debt to issue against land otherwise it will always absorb all income. And therefore all productivity gains flow to the land owner.