No it doesn’t, especially if you want to buy a house.

It isn’t just inflation that is the issue, it’s interest rates.

If you make $200k gross and put money into a 401k, you’ll net about $120k or $10k a month depending on state income taxes.

at 7.5% mortgage rates, a $1M house somewhere like Chicago would be $8k a month assuming 20% down. Obviously you cannot afford that on your own.

The average Chicago house price is like, a quarter or a third of that. And, uh, $2-6k a month for non-mortgage expenses goes a long way?

3+ bedroom, detached houses are not $300k-$400k in a good area of Chicago no

Sure they are. Pop open Redfin in Portage Park. Hell, you can get a detached 3bdr in Lincoln Square for under $400k. (Don't; buy one in Portage or Jefferson Park).

This weird argument seems to come up every 3 months or so on HN; I've only started noticing recently because we spent this year buying a new house, so incongruity of the argument ("you can't get a 3bdr for $400k") leaps out at me.

I’m not familiar with Chicago, but the only 3br showing up for me in Lincoln Square is $835k.

I get 3, one of them on the corner of Lincoln and Foster.

(For the record: $400k isn't the budget I'd go into Lincoln Square with, and if I was buying in Lincoln Square I probably wouldn't be thinking about a detached house in the first place. But it seems you can definitely do it.)

500k gets you a very nice house in Chicago. If you were to rent instead, 5k/month would get you a luxury 2 bed room apartment close to the Magnificent mile.

Why in the world would you buy a $1M house in Chicago? $500k would get you a decent house in a decent neighborhood that would be more than big enough for even a four-person family.

A $1mm house is an absolute luxury house almost everywhere in the US.

No it doesn’t. Feel free to look at new listings for detached houses in central Chicago right now with 3+ bedrooms and tell me there’s more $500k listings than >$1M ones

> central Chicago

Well sure, limit yourself to a tiny area filled with high-priced housing and nobody should be surprised that you find mostly high-priced housing. That doesn't mean that there's not tons of reasonably-priced housing in the area.

No family moves into a detached house in "central Chicago".

I find it amusing that people talked about low interest rates making housing more expensive and now people say high interest rates make housing more expensive.

The thing is, I don't think there is a "money" problem when it comes to housing. More or less money won't change a thing. The problem is on the physical side. One house can only house one family. If there are too few houses and too many families, houses will be expensive no matter the interest rate. The interest rate is just an additional expense on top that determines the bankers' share in the deal.

More people live alone now than ever, which has actually drastically reduced supply.

Any interesting consequence of all the boomer divorces is the square footage required for their lives almost doubled.

Low interest rates helped drive prices higher, but high interest rates help drive monthly costs higher even without higher nominal prices. You’re right that it’s ultimately a supply and demand problem.

You ought to tell that to all the homeowners in Jefferson Park, whose average household income is half that.