[isostatic]

> But who wants to pay a million dollars, which you either have to pay interest on (if borrowed) or can't collect interest on (if not), when it's only going to be worth the same amount of money in 30 years?

People who want to live somewhere?

House prices tend to be what people can afford to live. People tend to budget x% of their household income on housing. With lower interest rates, it means houses are more expensive. With two full time workers it means houses are more expensive. With higher wages it means houses are more expensive.

Since 1990 house prices (in real terms) in the US have increased about 15%, but disposable household income has increased nearer 80%. Even in SF from 1990 to 2016 house prices only increased about 80% in real terms, and I suspect that average household income has increased far more

[nly]

Are you comparing inflation adjusted house prices against unadjusted income?

The % of take home pay people are putting, on average, in to housing here in the UK (ok, different economy) has gone from something like 20-25% in the 1950s to something like 40-50% now.

I myself live in London and put 47% of my take home pay in to rent. That's without property related tax. I'm in the top 5% of earners in the land and can only afford a modest ~45sqm apartment. If my rent goes up next year and my income stays the same, I will have to consider a longer commute.

[isostatic]

Nope. But these are averages, London is extreme. My mortgage in Cheshire costs 25% of my takehome pay (not the household takehome pay) - and half of that is paying off the capital. That's on a 4 bed semi.

Two earners on median £27k take home about £44k. 25% would be £900 a month, which is more than enough to rent a house.

This house is half an hour out of Manchester, 40 minutes out of Leeds: https://www.rightmove.co.uk/property-to-rent/property-372566...

£625pcm rent.

[nly]

Regional house prices are correlated with regional demand which correlate with regional job opportunities. I could go live in the sticks but then I'd struggle to find work. I moved to London because I couldn't find satisfying opportunities in the South East, 25 miles outside of London, let alone in the suburbs of Leeds. If I hadn't moved to London my 10 hour work day would have become 12-13 hours, including a nasty rush hour commute, and I would still have been paying £500/month in transport for the privilege and a high rent.

The problem here is that salaries don't scale in a linear fashion with regional property prices. In places like London, where quality property supply is low, rents are set to the absolute maximum, while still filling tenancies, and salaries, just as else where, are set to the bare minimum to fulfill demand. The result is rent as a % of take-home is maximized.

There are only three solutions. Lower property prices and rents (more housing supply), higher salaries and/or a more regionally distributed job market.

Don't get me wrong, i'm not bitching. I'm comfortable. But when people hear what you earn, and you can see by the way they react that they think you're a rich git, they just don't see these realities.

[TheOtherHobbes]

How is that disposable income distributed?

[isostatic]

That's the median income. At the top 10% incomes have increased dramatically more.