Have we reached a financial tipping point in the US?

[caracarn]

So this thread starts with something I saw in my church parking lot this weekend.  A Class A motorhome.  A nice one, a Tiffin Phaeton, a brand I was not familiar with.   As a kid we had a Class C Sprinter for a while.  I loved climbing up in the overhead bed ad my Dad drove and just watching us move down the road.  Probably not allowed to do that anymore with seat belt laws but it was a memory that is still with me.  We eventually went to a 30 foot trailer for many years and then I was out on my own and for a short time owned a trailer of my own before deciding that driving the tow vehicle and getting 8 mpg 50 weeks to use it for it's real purpose the other 2 was a financial sinkhole (early Mustachianism before MMM was even born?)  At that time Class A vehicles were $300K.

So seeing this beauty and getting closer to FIRE I thought, "Wonder what those cost now?  Maybe this is a route to our retirement I should look at?"   That lasted to the first search for this vehicle and seeing used models of it selling for $500-600K.  New Class A units were $800K and I saw one that was at $1.2M.   

So this got me thinking more broadly.  With homes now crazy expensive (we may not be able to relocate to TN near the Smokies as we had hoped because we are getting priced out of the market ourselves) and literally everything else as well (saw a story the other day about how soon they will no longer manufacture anything other than a small SUV, sedans and cars will just vanish as not enough buyers want them to sustain a market, and the typical vehicle now if $40-$50K) when does the world become sensible and realize that eventually it becomes mathematically impossible to have customers?   I mean when we first enter the working world we all start at $0.  Our whole journey begins the same way.  I had to get to $13K to afford my first new car in 1991.  I had to get to $98K to buy my first home in 1992.  I bought my travel trailer for $7K new in 1993.  Sure incomes have gone up some, but getting from $0 to x is still a slog if the X has 6 to 7 zeroes after it as a house or a Class A motorhome does.  As our last child recently officially aged into adulthood we see them starting out through college working for $10-$15 an hour and then graduating and getting a $40K a year job after paying over $100K for the privilege of getting a piece of paper saying they can be hired (the college degree required to get past the first elimination point for the vast majority of HR departments even if what you do could be done without a degree), I'm starting to contemplate how I'd feel if I had the million dollar mountain in front of me to afford a middle class life instead of the $100K mountain I did.  It's daunting.  I'm not suggesting they need to buy things new, but try to find a used car for $5K these days.   It's damn near impossible unless you want to play Russian roulette, believe me we've tried for years.  800 square foot homes in out area (LCOL by the way) still sell for over $150K now and those are typically the severe fixers uppers that have been neglected for many years and would need another $50K to get them to be livable. 

So the question is, have we gotten to the point where when you are starting from $0, the climb just becomes nearly impossible?   In an era when try as I might I've had to expand out grocery budget by hundreds a month, as I struggle I cannot even imagine being a 18 year old kid leaving high school and thinking I have a shot.   What's the societal repercussions when you have millions of young adults thinking why even bother to try they could never save enough for a good home in a safe neighborhood, they'll be renting forever?  I'm the guy who typically thinks anything can be done if you work hard enough, but when even I am starting to wonder if we've priced things so astronomically that the math to get there is just so depressing is it tipping into a dangerous point?

[GuitarStv]

No.

[Morning Glory]

This is an interesting question in that there really should be more civil unrest in the US given the shrinking middle class and rapidly increasing levels of inequality and exploitation, so what's preventing it? Is it just manifesting itself as political polarization and demagoguery? Does the widespread social isolation and mistrust propagated by social media make it more difficult to organize? Are those affected really internalizing the "personal responsibility " narrative enough that they don't even ask for a fair share? Do they think it's pointless to ask? Why aren't there more riots?

[GuitarStv]

This is an interesting question in that there really should be more civil unrest in the US given the shrinking middle class and rapidly increasing levels of inequality and exploitation, so what's preventing it? Is it just manifesting itself as political polarization and demagoguery? Does the widespread social isolation and mistrust propagated by social media make it more difficult to organize? Are those affected really internalizing the "personal responsibility " narrative enough that they don't even ask for a fair share? Do they think it's pointless to ask? Why aren't there more riots?

The ability to put aside differences and come together as a collective is what made America a powerful country.  The intense feelings of individualism that have been advocated over the past 40 years or so seem to be having the opposite effect.

One of the knock-ons of the individualism though, is that while it's hard to motivate a sufficient group of people to do something good for the country it's also difficult to motivate a sufficient group of people to do something truly terrible.

[iris lily]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

Anyways—

As for cars. Yes, I am pretty horrified at how much used cars cost these days. While I can afford any car I want, I know how difficult it is to afford a functioning auto, not even one that looks good, just reliable transportation. And the kicker is that regular folks can’t work on their cars any more. Used to be poor folks could pop a hood in their driveway and figure out stuff. No longer. Not only do we have to pay for all of the unnecessary digital bullshit, we can’t even fix it when it goes bad.

The terrible buyer’s market for used cars started when our President Obama handed out Cash for Clunkers and I am not sure that market got much better until Covid hit which of course dried up supply further. During the Cash for Clunkers period we would normally have purchased used cars, but said FkIt and just paid cash for 2 new vehicles one summer. One of those still going strong.

But housing, I will argue a point on that.

Flyover country has lots of affordable choices in perfectly acceptable places. I would only ask that, when you find them, please keep them secret from the Californians.

[scantee]

This is an interesting question in that there really should be more civil unrest in the US given the shrinking middle class and rapidly increasing levels of inequality and exploitation, so what's preventing it? Is it just manifesting itself as political polarization and demagoguery? Does the widespread social isolation and mistrust propagated by social media make it more difficult to organize? Are those affected really internalizing the "personal responsibility " narrative enough that they don't even ask for a fair share? Do they think it's pointless to ask? Why aren't there more riots?

I agree and I think the reason why Americans are so hesitant to organize is multi-factoral, so it’s hard to pinpoint which of many factors are dominant and how we should go about influencing change. From a policy perspective, people (conservatives, usually) who want to uphold the status quo have a vested interest in demonizing very poor people so that the larger group of people who are not quite as poor don’t empathize with their plight. Part of what allows the not quite as poor to distance themselves from the very poor is the availability of easy debt. Debt allows them to uphold the appearance of being middle-class even if their underlying financials are much closer to the very-poor. I don’t know what the answer to this is, because restricting debt would immiserate many while torpedoing the economy in the near-term at least.

Going back to the original post, I would love to know the underlying financials of the Tiffin Phaeton owners. Are they genuinely well-off or in massive debt or somewhere in between?

[Michael in ABQ]

This is an interesting question in that there really should be more civil unrest in the US given the shrinking middle class and rapidly increasing levels of inequality and exploitation, so what's preventing it? Is it just manifesting itself as political polarization and demagoguery? Does the widespread social isolation and mistrust propagated by social media make it more difficult to organize? Are those affected really internalizing the "personal responsibility " narrative enough that they don't even ask for a fair share? Do they think it's pointless to ask? Why aren't there more riots?

Inflation in Argentina is over 100%, Turkey is over 50%,  and lots of other countries are in the double-digits as well. I'm surprised there hasn't been more civil unrest globally. At the current level of 5-10% in the US we've still got it pretty good. We also have relatively cheap food and most households spend a far lower percentage of their spending on food than other countries.

As expensive as everything has become, especially large assets like vehicles and homes, the market has reacted by offering financing options. The typical 3-5-year car loan has now become 7 years. On the other hand, getting a car to reach 150k miles a few decades ago was quite the feat whereas now it's common to reach 200k+ miles with only relatively minor repairs (i.e. not completely replacing an engine). Will we see a 40-year mortgage? Maybe not, but the expectation has become you need two full-time incomes to even think of buying a house in most places.

[ChpBstrd]

I've wondered about this too. I tend to think these thoughts when I see someone who has spent $80k for a custom pretty truck, and realize they earn maybe half that per year! I also don't know how people are paying 10x their annual earnings for a house, spending >50% of their income on payments and housing bills.

One issue is there's an outbreak of luxury. You can't buy a basic no-frills car like you could in the 1950's to 1990s because none are made. Similarly, builders are not building any 1,000sf 2BR houses like they were in the 40s or 50s. Yet these are exactly the sort of things people need to be buying, rather than feature-loaded SUVs with $2k infotainment systems and $2k fancy wheels, or 3,500sf McMansions. At least part of the root cause is that only luxury products are available in many categories, and it is considered highly abnormal to do things like biking to work or using a dumb phone.

People's concept of normal is $60k car, $500k house, vacations twice a year, multiple walk-in closets, restaurants every other day, $8 coffees, meat every day, etc. but they are not producing that much more than people were producing in an era when only basic things were ever purchased. This is what is meant by "what it takes to get by these days."

The retirees with half-million dollar rock star tour busses on payment plans are the ultimate expression of unrestrained consumerism, and the next generation will suffer for them.

What's the societal repercussions when you have millions of young adults thinking why even bother to try they could never save enough for a good home in a safe neighborhood, they'll be renting forever?  I'm the guy who typically thinks anything can be done if you work hard enough, but when even I am starting to wonder if we've priced things so astronomically that the math to get there is just so depressing is it tipping into a dangerous point?

When people feel like the rules are rigged, they tend to rebel against the existing rule and authority structure. This is what drew a lot of frustrated working class people to the MAGA movement, which involves blaming other categories of people for the problems. In other corners of the internet, people apply Marxist thinking to explain why they can't get ahead, which is also a blame ideology.

Of course, blaming others is just a deflection of blame from oneself, which is satisfying but ultimately counterproductive. When enough people behave counter-productively like this, you could see a tipping point where poverty is the next thing to come.

The MMM philosophy is unique (and perhaps most accurate) by turning the focus onto our our behavior, decisions, and hacks - but it would reach a limit when the external world gets too ridiculous. E.g. Coupon clipping and DIY home remods only get one so far when the fixer uppers are a half-million dollars and mortgage rates are >6%. 100% stock market allocations look a lot better when the CAPE is <35, a condition that has never historically been associated with 10 year annualized returns over 5%.

[sixwings]

Here's a crosspost from a different thread I posted recently:

I think it's really important to also understand the impact of marketing and culture on why millenials feel/are poorer than previous generations. Our entire culture is far more geared toward consumerism now than ever before, marketing things that you need to buy to live a happy life are constantly in everyones face all the time. The economy relies on perpetual growth and the purchase of new stuff, things have now have planned obsolence to force you to buy more and repairing something yourself voids any kind of warrenty you ever had. This kind of aggressive consumerism was not something boomers or any previous generation were ever subject to. Sure, it is possible to cast off the shackles of consumerism, but in a society where everything is focused around consumerism, this is very difficult to do. It's much easier to do if you're healthy and well educated, and even then it's very hard to do and it's almost impossible to do if you're not.

The rise of consumerism and the data analytics that companies have about you basically makes it impossible for most people to cast off the shackles of consumerism. I think the USA and Canada have passed that tipping point. Companies are too big, too powerful and with too much specific targeted data to really be able to do that anymore.

[caracarn]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

We were looking over in the Sevierville area as we'd like to be close to the Smokies buy Gatlinburg and Pigeon Forge tend to be priced assuming everyone buying is doing so as a rental rather than some of us who'd just like to live there.

Pre-COVID I was able to find many nice ranch homes that would work for us in the $150-200K range.  Those same homes now in the same area cannot be touched for less than $600K.   Are they actually selling for that?  Not sure.  But yes, saw a report on that market a month ago and it was the largest real estate increase in the country by far surpassing all the usual suspects out west.   Reporter was speculating that in a couple years it will settle back down and since we would not be moving before then, hoping so, but those prices have been up there for 18-24 months.  We've had our home in OH appreciate (according to Zillow at least) but only up about 20% not 300-400% so yes not maintaining enough parity as when we move we are looking to be mortgage free and that could not happen at that price point.  Anything around $200K in that area is falling apart or under 800 square feet and not very liveable.

[caracarn]

I've wondered about this too. I tend to think these thoughts when I see someone who has spent $80k for a custom pretty truck, and realize they earn maybe half that per year! I also don't know how people are paying 10x their annual earnings for a house, spending >50% of their income on payments and housing bills.

One issue is there's an outbreak of luxury. You can't buy a basic no-frills car like you could in the 1950's to 1990s because none are made. Similarly, builders are not building any 1,000sf 2BR houses like they were in the 40s or 50s. Yet these are exactly the sort of things people need to be buying, rather than feature-loaded SUVs with $2k infotainment systems and $2k fancy wheels, or 3,500sf McMansions. At least part of the root cause is that only luxury products are available in many categories, and it is considered highly abnormal to do things like biking to work or using a dumb phone.

People's concept of normal is $60k car, $500k house, vacations twice a year, multiple walk-in closets, restaurants every other day, $8 coffees, meat every day, etc. but they are not producing that much more than people were producing in an era when only basic things were ever purchased. This is what is meant by "what it takes to get by these days."

The retirees with half-million dollar rock star tour busses on payment plans are the ultimate expression of unrestrained consumerism, and the next generation will suffer for them.

What's the societal repercussions when you have millions of young adults thinking why even bother to try they could never save enough for a good home in a safe neighborhood, they'll be renting forever?  I'm the guy who typically thinks anything can be done if you work hard enough, but when even I am starting to wonder if we've priced things so astronomically that the math to get there is just so depressing is it tipping into a dangerous point?

When people feel like the rules are rigged, they tend to rebel against the existing rule and authority structure. This is what drew a lot of frustrated working class people to the MAGA movement, which involves blaming other categories of people for the problems. In other corners of the internet, people apply Marxist thinking to explain why they can't get ahead, which is also a blame ideology.

Of course, blaming others is just a deflection of blame from oneself, which is satisfying but ultimately counterproductive. When enough people behave counter-productively like this, you could see a tipping point where poverty is the next thing to come.

The MMM philosophy is unique (and perhaps most accurate) by turning the focus onto our our behavior, decisions, and hacks - but it would reach a limit when the external world gets too ridiculous. E.g. Coupon clipping and DIY home remods only get one so far when the fixer uppers are a half-million dollars and mortgage rates are >6%. 100% stock market allocations look a lot better when the CAPE is <35, a condition that has never historically been associated with 10 year annualized returns over 5%.

I think most people are pretty practical on this site, and that's the challenge I'd pose for anyone, and what got me here.  If you run a model of the typical income level a person could get at say 50-60K income and then line up trying to get a home and a decent, reliable car, none of these things being fancy or consumerist in any way the timeline to get there is just not even reasonable for even the most stoic.  I saw an resent 60 Minutes Australia report about "Lazy" millennials and one person being interviewed summed it up pretty well.   "Why would you trade away time with your family and other things is your younger years for a promise that is being shown to be more and more of a myth?"  I have thought through this exercise of how I'd make the case to one of my kids just entering the workforce and cannot really convince myself of anything I'd say.   So when I, a rational frugal person who got myself here could not see how I would do it if I started at $0 today over the next 40-50 years that's what got me to the original post.  I mean our one child who got her first home and did get 20% saved for it, found a nice $180K smaller home but was only able to do it by saving about 80% of her income and living at home.  Had she been out renting any type of apartment, paying for utilities, etc it would have taken her 10-15 if she did not give up before that.   She still has no degree, typically makes under $20/hour and is now looking to become a Wilson certified reading specialist and try the self employed route.   She has tried accounting, HR and customer service jobs and has had a slew of terrible employers who did take advantage.  I do not say this lightly as I tend to plays devil's advocate pretty hard when the kids complain, but recently she took a accounting job for a large nursery in a new "facility" they were opening to house their corporate staff.   When she arrived she was working in a trailer on the nursery grounds with a port-a-poddy for a restroom (they had one locked for use of the office staff that was segregated from the field hands).   I'm not sure that I would have asked in an interview for a white collar role that she interviewed for in one of their main stores if the place she'd be at would have indoor plumbing.  She chose to leave most for the fact that they kept pressuring her to work weekends even though she had been up front in the interview and told them she had a part time job as the receptionist for a nursing home on weekends and would only be available during standard weekdays except in rare circumstances.   

Having overall high costs of everything impacts savings rates.  I get the inflation rates other posters put up of other countries but as I learned in my "Lying with Statistics" course the most common way to do that is with percentages.   COVID hospitalization is up 25%!  It's a crisis!   It might be if it went from 40,000 to 50,000 but is less so if it went from 4 to 5.  Similarly Turkish inflation at 50% is just a statistic.  Without context it means little.   Are home prices in Turkey $500K?   I'm actually sure they are not.   What are incomes compared to housing costs?   I was not raising a what-about-ism conversation to compare with other places.  I get we enjoy better situations than 95% of the world and these are first world problems, but the nice thing with math is it works the same everywhere.   The point is still the same.  It is steps of magnitude harder to go from $0 to $750K than it is to go from $0 to $150K.   That's my experience of the difference between the same basket of good that I had to what it would take for my kids to have them, and their starting incomes (real not hypothetical) are $40K compare to $30K.  So they make $10K more a year than what I did out of college, but they need to accumulate $600K more than I did for the same thing (house, car and living expenses).  That's the dilemma I'm not finding a path for them other than "do the best you can and stay optimistic".   Easier said than done they tell me.  The housing bubble popped to get that insanity a bit under control but until I saw the RV cost it had not really hit me in the face how many other things have gotten unaffordable for those just starting out.  Two full time incomes should not be required.   The tipping point I'm contemplating is a bit of what some raised.   When will it be enough that we have builders that say "I'm doing affordable starter homes in the model of the 50s" or "There is still a market for a solid car at $20K"? 

[iris lily]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

We were looking over in the Sevierville area as we'd like to be close to the Smokies buy Gatlinburg and Pigeon Forge tend to be priced assuming everyone buying is doing so as a rental rather than some of us who'd just like to live there.

Pre-COVID I was able to find many nice ranch homes that would work for us in the $150-200K range.  Those same homes now in the same area cannot be touched for less than $600K.   Are they actually selling for that?  Not sure.  But yes, saw a report on that market a month ago and it was the largest real estate increase in the country by far surpassing all the usual suspects out west.   Reporter was speculating that in a couple years it will settle back down and since we would not be moving before then, hoping so, but those prices have been up there for 18-24 months.  We've had our home in OH appreciate (according to Zillow at least) but only up about 20% not 300-400% so yes not maintaining enough parity as when we move we are looking to be mortgage free and that could not happen at that price point.  Anything around $200K in that area is falling apart or under 800 square feet and not very liveable.

I just looked into Gatlinburg and you are right that is expensive! I had no idea. I also checked in with Franklin where I’ve heard is nice place in Tennessee and that’s super expensive as well.

[Morning Glory]

Have you visited Chattanooga? That was super nice and affordable when we looked a couple years ago, but we ultimately avoided living in TN because of schools.  I really liked the older parts of Knoxville as well.

Gatlinburg has all the tourist things like Wisconsin Dells or Myrtle Beach so I'm sure the vacation rentals have driven up housing prices.  My parents had talked about moving there but chose to stay put in IL because of cost.

[caracarn]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

We were looking over in the Sevierville area as we'd like to be close to the Smokies buy Gatlinburg and Pigeon Forge tend to be priced assuming everyone buying is doing so as a rental rather than some of us who'd just like to live there.

Pre-COVID I was able to find many nice ranch homes that would work for us in the $150-200K range.  Those same homes now in the same area cannot be touched for less than $600K.   Are they actually selling for that?  Not sure.  But yes, saw a report on that market a month ago and it was the largest real estate increase in the country by far surpassing all the usual suspects out west.   Reporter was speculating that in a couple years it will settle back down and since we would not be moving before then, hoping so, but those prices have been up there for 18-24 months.  We've had our home in OH appreciate (according to Zillow at least) but only up about 20% not 300-400% so yes not maintaining enough parity as when we move we are looking to be mortgage free and that could not happen at that price point.  Anything around $200K in that area is falling apart or under 800 square feet and not very liveable.

I just looked into Gatlinburg and you are right that is expensive! I had no idea. I also checked in with Franklin where I’ve heard is nice place in Tennessee and that’s super expensive as well.

I lived in the Nashville area and know Franklin well.  Interesting fact, that blew my mind.  Williamson County (the county Franklin is in.  Nashville is Davidson County) is the 10th richest county in the US.   So yeah, it is not where low income folks live.

Pigeon Forge had some affordability when we looked and they have a good parallel run along the tourist strip that I think locals use to not be stuck in traffic all day.  Gatlinburg due to the geography does not have that so no desire to be there as daily living.   If we got up to Knoxville we could find a few things but it's really a bit further than we'd like and you really do not even get mountain views in the distance from 40-60 miles away.   Sigh.  It's a few years so will just keep praying things change.

The goal is not just anywhere in TN, it's close enough to the Smokies that we could go hiking in and around the park whenever the mood struck us.   If it was just when I wanted to travel there as a vacationer I could just stay here in Ohio, to Chattanooga is too far away for that.   Really cool aquarium there, one of the best I've seen.  Also not a great place to live.  I dabble with the idea of taking a job in Chattanooga before I moved up to Ohio from Nashville.  Not the safest place and just never drew me in like the Smokies pull on my wife and I.  We love it there.   We pick TN over the NC side because of the state income taxes and cheap electricity because of the TVA. 

[Just Joe]

One issue is there's an outbreak of luxury. You can't buy a basic no-frills car like you could in the 1950's to 1990s because none are made. Similarly, builders are not building any 1,000sf 2BR houses like they were in the 40s or 50s. Yet these are exactly the sort of things people need to be buying, rather than feature-loaded SUVs with $2k infotainment systems and $2k fancy wheels, or 3,500sf McMansions. At least part of the root cause is that only luxury products are available in many categories, and it is considered highly abnormal to do things like biking to work or using a dumb phone.

Actually in my part of flyover country you can buy these small houses new. The problem is that they are now $190K+ and feature 10 ft of separation from the neighbor's house. And people are buying them - for some reason.

Not sure why people do that when for similar money they could buy an older home with more space inside and out.

Those cheap cars are now decade old plus used cars. Hard to buy new and basic anymore. Go buy a car formerly owned by an elderly person who gave up driving. Usually clean and well cared for, low mileage, and comfortable. And often unappealing to anyone not retired. However if the price is right, and it is reliable - who cares about the aesthetics if shopping for value is the real goal?

[Just Joe]

Have you visited Chattanooga? That was super nice and affordable when we looked a couple years ago, but we ultimately avoided living in TN because of schools.  I really liked the older parts of Knoxville as well.

Gatlinburg has all the tourist things like Wisconsin Dells or Myrtle Beach so I'm sure the vacation rentals have driven up housing prices.  My parents had talked about moving there but chose to stay put in IL because of cost.

Go a little further up I-81 to the "tri-cities" and look at real estate. Morristown, Johnson City, Kingsport, etc. The challenge with the tourist portions of the Smokies is the ever lasting traffic.

[farmecologist]

I've wondered about this too. I tend to think these thoughts when I see someone who has spent $80k for a custom pretty truck, and realize they earn maybe half that per year! I also don't know how people are paying 10x their annual earnings for a house, spending >50% of their income on payments and housing bills.

One issue is there's an outbreak of luxury. You can't buy a basic no-frills car like you could in the 1950's to 1990s because none are made. Similarly, builders are not building any 1,000sf 2BR houses like they were in the 40s or 50s. Yet these are exactly the sort of things people need to be buying, rather than feature-loaded SUVs with $2k infotainment systems and $2k fancy wheels, or 3,500sf McMansions. At least part of the root cause is that only luxury products are available in many categories, and it is considered highly abnormal to do things like biking to work or using a dumb phone.

People's concept of normal is $60k car, $500k house, vacations twice a year, multiple walk-in closets, restaurants every other day, $8 coffees, meat every day, etc. but they are not producing that much more than people were producing in an era when only basic things were ever purchased. This is what is meant by "what it takes to get by these days."

The retirees with half-million dollar rock star tour busses on payment plans are the ultimate expression of unrestrained consumerism, and the next generation will suffer for them.

What's the societal repercussions when you have millions of young adults thinking why even bother to try they could never save enough for a good home in a safe neighborhood, they'll be renting forever?  I'm the guy who typically thinks anything can be done if you work hard enough, but when even I am starting to wonder if we've priced things so astronomically that the math to get there is just so depressing is it tipping into a dangerous point?

When people feel like the rules are rigged, they tend to rebel against the existing rule and authority structure. This is what drew a lot of frustrated working class people to the MAGA movement, which involves blaming other categories of people for the problems. In other corners of the internet, people apply Marxist thinking to explain why they can't get ahead, which is also a blame ideology.

Of course, blaming others is just a deflection of blame from oneself, which is satisfying but ultimately counterproductive. When enough people behave counter-productively like this, you could see a tipping point where poverty is the next thing to come.

The MMM philosophy is unique (and perhaps most accurate) by turning the focus onto our our behavior, decisions, and hacks - but it would reach a limit when the external world gets too ridiculous. E.g. Coupon clipping and DIY home remods only get one so far when the fixer uppers are a half-million dollars and mortgage rates are >6%. 100% stock market allocations look a lot better when the CAPE is <35, a condition that has never historically been associated with 10 year annualized returns over 5%.

I think most people are pretty practical on this site, and that's the challenge I'd pose for anyone, and what got me here.  If you run a model of the typical income level a person could get at say 50-60K income and then line up trying to get a home and a decent, reliable car, none of these things being fancy or consumerist in any way the timeline to get there is just not even reasonable for even the most stoic.  I saw an resent 60 Minutes Australia report about "Lazy" millennials and one person being interviewed summed it up pretty well.   "Why would you trade away time with your family and other things is your younger years for a promise that is being shown to be more and more of a myth?"  I have thought through this exercise of how I'd make the case to one of my kids just entering the workforce and cannot really convince myself of anything I'd say.   So when I, a rational frugal person who got myself here could not see how I would do it if I started at $0 today over the next 40-50 years that's what got me to the original post.  I mean our one child who got her first home and did get 20% saved for it, found a nice $180K smaller home but was only able to do it by saving about 80% of her income and living at home.  Had she been out renting any type of apartment, paying for utilities, etc it would have taken her 10-15 if she did not give up before that.   She still has no degree, typically makes under $20/hour and is now looking to become a Wilson certified reading specialist and try the self employed route.   She has tried accounting, HR and customer service jobs and has had a slew of terrible employers who did take advantage.  I do not say this lightly as I tend to plays devil's advocate pretty hard when the kids complain, but recently she took a accounting job for a large nursery in a new "facility" they were opening to house their corporate staff.   When she arrived she was working in a trailer on the nursery grounds with a port-a-poddy for a restroom (they had one locked for use of the office staff that was segregated from the field hands).   I'm not sure that I would have asked in an interview for a white collar role that she interviewed for in one of their main stores if the place she'd be at would have indoor plumbing.  She chose to leave most for the fact that they kept pressuring her to work weekends even though she had been up front in the interview and told them she had a part time job as the receptionist for a nursing home on weekends and would only be available during standard weekdays except in rare circumstances.   

Having overall high costs of everything impacts savings rates.  I get the inflation rates other posters put up of other countries but as I learned in my "Lying with Statistics" course the most common way to do that is with percentages.   COVID hospitalization is up 25%!  It's a crisis!   It might be if it went from 40,000 to 50,000 but is less so if it went from 4 to 5.  Similarly Turkish inflation at 50% is just a statistic.  Without context it means little.   Are home prices in Turkey $500K?   I'm actually sure they are not.   What are incomes compared to housing costs?   I was not raising a what-about-ism conversation to compare with other places.  I get we enjoy better situations than 95% of the world and these are first world problems, but the nice thing with math is it works the same everywhere.   The point is still the same.  It is steps of magnitude harder to go from $0 to $750K than it is to go from $0 to $150K.   That's my experience of the difference between the same basket of good that I had to what it would take for my kids to have them, and their starting incomes (real not hypothetical) are $40K compare to $30K.  So they make $10K more a year than what I did out of college, but they need to accumulate $600K more than I did for the same thing (house, car and living expenses).  That's the dilemma I'm not finding a path for them other than "do the best you can and stay optimistic".   Easier said than done they tell me.  The housing bubble popped to get that insanity a bit under control but until I saw the RV cost it had not really hit me in the face how many other things have gotten unaffordable for those just starting out.  Two full time incomes should not be required.   The tipping point I'm contemplating is a bit of what some raised.   When will it be enough that we have builders that say "I'm doing affordable starter homes in the model of the 50s" or "There is still a market for a solid car at $20K"?

Great points....and I agree to a certain extent that the younger generations overall are feeling massively discouraged...and I don't blame them.  I'm sure many of us would be feeling the same way if we had to deal with what they are dealing with.  Unfortunately, it seems like many are falling into the "spend now, ask questions later" debt trap...and that is extremely concerning to me.

With that said, we have to kids that are about to enter the "real world"....as both are graduating from college this year ( one undergrad, one master's degree ).  I take pride in the fact that they are both very frugal, and are both quite driven to be able to succeed on their own.  We are helping them out as much as we can, and will be able to get them both out of college debt free.  Hopefully this will be enough of a kickstart to help them beat the odds.  I believe being debt free when starting out is a huge help in the mental health department, among other things.   We will see how it goes.

[Just Joe]

Is this the result of coastal money being spent in flyover country or boomer inheritances started to affect the larger economy?

[farmecologist]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

We were looking over in the Sevierville area as we'd like to be close to the Smokies buy Gatlinburg and Pigeon Forge tend to be priced assuming everyone buying is doing so as a rental rather than some of us who'd just like to live there.

Pre-COVID I was able to find many nice ranch homes that would work for us in the $150-200K range.  Those same homes now in the same area cannot be touched for less than $600K.   Are they actually selling for that?  Not sure.  But yes, saw a report on that market a month ago and it was the largest real estate increase in the country by far surpassing all the usual suspects out west.   Reporter was speculating that in a couple years it will settle back down and since we would not be moving before then, hoping so, but those prices have been up there for 18-24 months.  We've had our home in OH appreciate (according to Zillow at least) but only up about 20% not 300-400% so yes not maintaining enough parity as when we move we are looking to be mortgage free and that could not happen at that price point.  Anything around $200K in that area is falling apart or under 800 square feet and not very liveable.

I just looked into Gatlinburg and you are right that is expensive! I had no idea. I also checked in with Franklin where I’ve heard is nice place in Tennessee and that’s super expensive as well.

I lived in the Nashville area and know Franklin well.  Interesting fact, that blew my mind.  Williamson County (the county Franklin is in.  Nashville is Davidson County) is the 10th richest county in the US.   So yeah, it is not where low income folks live.

Pigeon Forge had some affordability when we looked and they have a good parallel run along the tourist strip that I think locals use to not be stuck in traffic all day.  Gatlinburg due to the geography does not have that so no desire to be there as daily living.   If we got up to Knoxville we could find a few things but it's really a bit further than we'd like and you really do not even get mountain views in the distance from 40-60 miles away.   Sigh.  It's a few years so will just keep praying things change.

The goal is not just anywhere in TN, it's close enough to the Smokies that we could go hiking in and around the park whenever the mood struck us.   If it was just when I wanted to travel there as a vacationer I could just stay here in Ohio, to Chattanooga is too far away for that.   Really cool aquarium there, one of the best I've seen.  Also not a great place to live.  I dabble with the idea of taking a job in Chattanooga before I moved up to Ohio from Nashville.  Not the safest place and just never drew me in like the Smokies pull on my wife and I.  We love it there.   We pick TN over the NC side because of the state income taxes and cheap electricity because of the TVA.

Daughter lives in NC attending grad school at Chapel Hill, and we have visited Great Smoky NP a couple times, and (unfortunately) visited the Gatlinburg/Pigeon forge area.

Note to sound like an ass, but Gatlinburg/Pigeon Forge is absolutely horrible.  I'm sure it was much better a few decades back, but it was just a horrible, tourist-trap and traffic laden mess when we were there.  Not sure I could ever live in that area, even if it was "Affordable".   

[simonsez]

This is an interesting question in that there really should be more civil unrest in the US given the shrinking middle class and rapidly increasing levels of inequality and exploitation, so what's preventing it? Is it just manifesting itself as political polarization and demagoguery? Does the widespread social isolation and mistrust propagated by social media make it more difficult to organize? Are those affected really internalizing the "personal responsibility " narrative enough that they don't even ask for a fair share? Do they think it's pointless to ask? Why aren't there more riots?

I almost feel like the opposite.  I won't argue the semantics about various SES classes but the reason OP is getting priced out of the home they would want in the Smokies is because of the large (upper?) middle class.  There is a lot of demand from people with money to burn.  That drives the prices up.  People just starting out in adult life or on the lower end of the middle class can feel disillusioned, no doubt.  But historically not everyone got to have their dream home setup or even to live in the wealthy/safe parts, that was reserved for the upper class (as was international and even most domestic travel, etc.).

The access to luxuries we couldn't even dream of 50/100+ years ago for a majority of people is astonishing.

Sad thing is a major recession/depression will show who was living beyond their means via credit and who has DIY and grow-your-own food skills and LBYM lifestyle.  Mustachians are in the latter group and will be better than average in the long run.  Just grrr, I get it, it can be super frustrating in the short term when your well-crafted plans (usually involving luxuries that 99% of the world will not have) seem to be getting more out of reach.

I want a pool.  The plans for said pool keep being this nebulous "5 years away" or possibly even more since it wouldn't even work at my current house.  It's an irrational luxury, I'm aware of it.  I would lose dollars on this but it's still a goal for myriad non-pecuniary reasons.  My life will be just fine if I don't end up getting what I want.

[ChpBstrd]

This is an interesting question in that there really should be more civil unrest in the US given the shrinking middle class and rapidly increasing levels of inequality and exploitation, so what's preventing it? Is it just manifesting itself as political polarization and demagoguery? Does the widespread social isolation and mistrust propagated by social media make it more difficult to organize? Are those affected really internalizing the "personal responsibility " narrative enough that they don't even ask for a fair share? Do they think it's pointless to ask? Why aren't there more riots?

Perhaps the same thing which contributed to households' declining financial strength over the past two generations is the thing pacifying people today. Look how much fun we're having on our computers/phones!

In Djibouti, the half the population is addicted to khat, a stimulant drug. It has been noted that they're too stoned to raise a ruckus about their dictatorship, or the fact that the regime has a monopoly on the khat business. I.e. the regime obtains money by selling the drug which keeps the masses too intoxicated to care or organize to improve their part of the world.

Perhaps something similar is happening with the internet, smartphones, etc. or consumerism in general? I.e. how much time do you spend shopping for stuff or entertaining yourself versus how much time do you spend on making the world a better place?

[FINate]

I purchased my first econo car in the mid 1990s. For a little less than $10k I got a manual transmission, manual locks/windows, no A/C, and an AM/FM radio (no CD player or tape deck).

A base model econo car can be purchased today for around $20k, and these come standard with A/C, infotainment systems, power windows/locks, safety features, and so on. So a better car for about 2x the price.

However, the median hourly wage in 1995 was around $8 whereas today it's $17 (https://www.statista.com/statistics/185335/median-hourly-earnings-of-wage-and-salary-workers/). So someone buying a today gets a better car for the same number of work hours.

Housing is a different, with prices far outpacing wages in most areas. The median home price in California is around $800k (crazy, right?) That's for the entire state and in many cases this means track homes in urban sprawl on cramped lots. So a $600k home in TN in/near mountains with low wildfire danger a big yard and privacy is very attractive. It's a bummer when a place you like gets "discovered" but that's something we on the West Coast have been living with for decades.

[Morning Glory]

This is an interesting question in that there really should be more civil unrest in the US given the shrinking middle class and rapidly increasing levels of inequality and exploitation, so what's preventing it? Is it just manifesting itself as political polarization and demagoguery? Does the widespread social isolation and mistrust propagated by social media make it more difficult to organize? Are those affected really internalizing the "personal responsibility " narrative enough that they don't even ask for a fair share? Do they think it's pointless to ask? Why aren't there more riots?

Perhaps the same thing which contributed to households' declining financial strength over the past two generations is the thing pacifying people today. Look how much fun we're having on our computers/phones!

In Djibouti, the half the population is addicted to khat, a stimulant drug. It has been noted that they're too stoned to raise a ruckus about their dictatorship, or the fact that the regime has a monopoly on the khat business. I.e. the regime obtains money by selling the drug which keeps the masses too intoxicated to care or organize to improve their part of the world.

Perhaps something similar is happening with the internet, smartphones, etc. or consumerism in general? I.e. how much time do you spend shopping for stuff or entertaining yourself versus how much time do you spend on making the world a better place?

Huh, I always thought of khat as being a milder stimulant, similar to chewing the coca leaves that cocaine comes from. Perhaps there is a stronger form now? I've only even heard about it because we had a big immigrant community from various parts of Africa where i used to live.

You are probably right about the easy cheap entertainment being part of the general apathy. I think technology also creates legit fear of reprisals for actions like trying to join/start a union, going to a protest, or even participating in local politics, as the ubiquity of cameras and smart phones makes it more likely that the employer will know who attended. 

When I made my comment I was thinking more of the people working multiple minimum wage jobs just to afford rent, rather than the middle class overspenders we like to lampoon here.

[Cranky]

This is an interesting question in that there really should be more civil unrest in the US given the shrinking middle class and rapidly increasing levels of inequality and exploitation, so what's preventing it? Is it just manifesting itself as political polarization and demagoguery? Does the widespread social isolation and mistrust propagated by social media make it more difficult to organize? Are those affected really internalizing the "personal responsibility " narrative enough that they don't even ask for a fair share? Do they think it's pointless to ask? Why aren't there more riots?

Perhaps the same thing which contributed to households' declining financial strength over the past two generations is the thing pacifying people today. Look how much fun we're having on our computers/phones!

In Djibouti, the half the population is addicted to khat, a stimulant drug. It has been noted that they're too stoned to raise a ruckus about their dictatorship, or the fact that the regime has a monopoly on the khat business. I.e. the regime obtains money by selling the drug which keeps the masses too intoxicated to care or organize to improve their part of the world.

Perhaps something similar is happening with the internet, smartphones, etc. or consumerism in general? I.e. how much time do you spend shopping for stuff or entertaining yourself versus how much time do you spend on making the world a better place?

Historically, revolutions are made be fairly small groups of activists and a larger population that is fairly indifferent.

[ATtiny85]

…
So the question is, have we gotten to the point where when you are starting from $0, the climb just becomes nearly impossible?   In an era when try as I might I've had to expand out grocery budget by hundreds a month, as I struggle I cannot even imagine being a 18 year old kid leaving high school and thinking I have a shot.   What's the societal repercussions when you have millions of young adults thinking why even bother to try they could never save enough for a good home in a safe neighborhood, they'll be renting forever?  I'm the guy who typically thinks anything can be done if you work hard enough, but when even I am starting to wonder if we've priced things so astronomically that the math to get there is just so depressing is it tipping into a dangerous point?

I don’t think things are anywhere close to being bad for anyone compared to any other time in my history, or the history I heard from my parents. I do think people more easily hear from the squeaky wheels these days, so it’s perhaps tougher to be blissfully ignorant. That could cause someone to be concerned, but that should motivate them to get an education, get a job, and run a budget. There are tons of success stories out there, but those don’t seem to make it on InstaTwit-SnapFace.

Some things are expensive sure, but a lot still comes down to choices in my opinion. If someone wants to play woah-is-me, that’s fine, but don’t expect me to care (which I know goes without saying.)

Starting out was hard for me, hard for a majority of people I would think. Being accountable for one’s life is normally not an easy transition. Don’t let the next generation off the hook simply because of a grocery bill.

[Log]

It’s the housing. Economists and urban planners have been telling us how to make housing cheaper for decades. Some influential policy journalists and pundits caught on a decade ago. Activist movements started taking off before COVID. Policy reform has been accelerating since COVID in many municipalities and state legislatures. Housing will get cheaper when we build more of it. Building more of it in dense, walkable areas around transit will make it feasible for a lot more people to cut out the cost of car ownership.

Meanwhile, wages have been going up for the lower quintiles of income distribution. Income inequality has finally actually been declining recently. There’s a lot to be optimistic about economically. As other commenters have pointed out, I’m more concerned with the effects of social media on consumerism, social isolation, and doomerism/nihilism. .

[ChpBstrd]

It’s the housing. Economists and urban planners have been telling us how to make housing cheaper for decades. Some influential policy journalists and pundits caught on a decade ago. Activist movements started taking off before COVID. Policy reform has been accelerating since COVID in many municipalities and state legislatures. Housing will get cheaper when we build more of it. Building more of it in dense, walkable areas around transit will make it feasible for a lot more people to cut out the cost of car ownership.

The problem is policies would have to change if we wanted to make housing cheaper, more plentiful, or more dense. There are a lot of people - suburban/exurban homeowners in particular - who have an interest in that not happening.

What do you say to the person in a California tract home who stretched to buy their modest house for $750k and it is now worth twice that amount? How would they feel about policies designed to cut the cost of housing in half? Well, that's the end of their nest egg you're talking about!

When enough people have bought into the scheme like this, there is a critical mass who will oppose zoning/code reform, transit, or anything else out of what they view as their self-interest. That's why all we'll see from political leaders is hand-waving about the free market or perhaps some narrowly focused subsidies that target key constituencies and actually raise housing demand even further.

[Sugaree]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

We were looking over in the Sevierville area as we'd like to be close to the Smokies buy Gatlinburg and Pigeon Forge tend to be priced assuming everyone buying is doing so as a rental rather than some of us who'd just like to live there.

Pre-COVID I was able to find many nice ranch homes that would work for us in the $150-200K range.  Those same homes now in the same area cannot be touched for less than $600K.   Are they actually selling for that?  Not sure.  But yes, saw a report on that market a month ago and it was the largest real estate increase in the country by far surpassing all the usual suspects out west.   Reporter was speculating that in a couple years it will settle back down and since we would not be moving before then, hoping so, but those prices have been up there for 18-24 months.  We've had our home in OH appreciate (according to Zillow at least) but only up about 20% not 300-400% so yes not maintaining enough parity as when we move we are looking to be mortgage free and that could not happen at that price point.  Anything around $200K in that area is falling apart or under 800 square feet and not very liveable.

I just looked into Gatlinburg and you are right that is expensive! I had no idea. I also checked in with Franklin where I’ve heard is nice place in Tennessee and that’s super expensive as well.

I lived in the Nashville area and know Franklin well.  Interesting fact, that blew my mind.  Williamson County (the county Franklin is in.  Nashville is Davidson County) is the 10th richest county in the US.   So yeah, it is not where low income folks live.

Pigeon Forge had some affordability when we looked and they have a good parallel run along the tourist strip that I think locals use to not be stuck in traffic all day.  Gatlinburg due to the geography does not have that so no desire to be there as daily living.   If we got up to Knoxville we could find a few things but it's really a bit further than we'd like and you really do not even get mountain views in the distance from 40-60 miles away.   Sigh.  It's a few years so will just keep praying things change.

The goal is not just anywhere in TN, it's close enough to the Smokies that we could go hiking in and around the park whenever the mood struck us.   If it was just when I wanted to travel there as a vacationer I could just stay here in Ohio, to Chattanooga is too far away for that.   Really cool aquarium there, one of the best I've seen.  Also not a great place to live.  I dabble with the idea of taking a job in Chattanooga before I moved up to Ohio from Nashville.  Not the safest place and just never drew me in like the Smokies pull on my wife and I.  We love it there.   We pick TN over the NC side because of the state income taxes and cheap electricity because of the TVA.

Daughter lives in NC attending grad school at Chapel Hill, and we have visited Great Smoky NP a couple times, and (unfortunately) visited the Gatlinburg/Pigeon forge area.

Note to sound like an ass, but Gatlinburg/Pigeon Forge is absolutely horrible.  I'm sure it was much better a few decades back, but it was just a horrible, tourist-trap and traffic laden mess when we were there.  Not sure I could ever live in that area, even if it was "Affordable".

Yeah, I grew up going to Gatlinburg, and it has never seemed like somewhere I'd want to live.  Nantahala wouldn't be a bad option for someone looking for outdoors/hiking. 

[Just Joe]

Note to sound like an ass, but Gatlinburg/Pigeon Forge is absolutely horrible.  I'm sure it was much better a few decades back, but it was just a horrible, tourist-trap and traffic laden mess when we were there.  Not sure I could ever live in that area, even if it was "Affordable".

When I was growing up in the 70s and 80s Gatlinburg was an affordable touristy place to get away to for the weekend. Walk the strip, poke around in the shops, have a couple of nice meals in the restaurants. Plenty of souvenir shops and carnival type businesses too (Ripley's Believe it or Not!)...

Pigeon Forge was always another level up on the touristy stuff. And they planned better for the traffic with much larger stroads and parking lots. 30-40 years ago the traffic was quite manageable. Both towns are a good example of induced demand. And I feel like the city planners/business owners know that.

DW and I used to go often. We've been there dozens of times. Stay in Gatlinburg, go into the mtns. We honeymooned there 25+ years ago. So did my parents I think. Maybe my sibling too.

We don't go anymore. Once upon a time there felt like a connection between the town, the mountains and the mountain history. It is all completely (for us) overshadowed by the traffic. We miss the old Gatlinburg. Return from a hike, have a meal, go for a walk, visit the candy store with our kids before retiring to the rental condo or hotel.

The thing is there are tons of other outdoorsy places in that region to go hiking. Big South Fork is a favorite of our's. Like the Smokies without the crowds. Western North Carolina is nice too. KY and WV are good too. Always a danger of traffic and crowds but not on the same magnitude as the Smokies. 

[Fireball]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

We were looking over in the Sevierville area as we'd like to be close to the Smokies buy Gatlinburg and Pigeon Forge tend to be priced assuming everyone buying is doing so as a rental rather than some of us who'd just like to live there.

Pre-COVID I was able to find many nice ranch homes that would work for us in the $150-200K range.  Those same homes now in the same area cannot be touched for less than $600K.   Are they actually selling for that?  Not sure.  But yes, saw a report on that market a month ago and it was the largest real estate increase in the country by far surpassing all the usual suspects out west.   Reporter was speculating that in a couple years it will settle back down and since we would not be moving before then, hoping so, but those prices have been up there for 18-24 months.  We've had our home in OH appreciate (according to Zillow at least) but only up about 20% not 300-400% so yes not maintaining enough parity as when we move we are looking to be mortgage free and that could not happen at that price point.  Anything around $200K in that area is falling apart or under 800 square feet and not very liveable.

I just looked into Gatlinburg and you are right that is expensive! I had no idea. I also checked in with Franklin where I’ve heard is nice place in Tennessee and that’s super expensive as well.

I live in Knoxville and real estate prices have increased ~80% in the past three years.  We're being flooded with work-from-home folks from high cost of living areas in CA, NY and TX.  On top of that, now ~40% of all newly listed residential homes are purchased by corporations.  It's getting brutal here.

[LaineyAZ]

@Morning Glory,
I agree that fear of reprisals is a huge issue.  If companies today even catch a whiff of unionizing there will be immediate reprisals. (See:  Starbucks)
And how many can afford to walk the picket lines, like the Writers Guild or SAG-AFTRA, for months on end? 
Sadly, protesting has become a luxury and most people have decided they can't afford it.

Some good news:  Phoenix City Council has just approved the building of casitas in residential neighborhoods.  There are parameters and not all details have been ironed out (e.g., can the HOA over-ride some of this?) but I thought it's a great step in the right direction.

[GilesMM]

Motorhome sales went nuts during COVID, and prices with them. They are falling back to earth rapidly now.

[Log]

It’s the housing. Economists and urban planners have been telling us how to make housing cheaper for decades. Some influential policy journalists and pundits caught on a decade ago. Activist movements started taking off before COVID. Policy reform has been accelerating since COVID in many municipalities and state legislatures. Housing will get cheaper when we build more of it. Building more of it in dense, walkable areas around transit will make it feasible for a lot more people to cut out the cost of car ownership.

The problem is policies would have to change if we wanted to make housing cheaper, more plentiful, or more dense. There are a lot of people - suburban/exurban homeowners in particular - who have an interest in that not happening.

What do you say to the person in a California tract home who stretched to buy their modest house for $750k and it is now worth twice that amount? How would they feel about policies designed to cut the cost of housing in half? Well, that's the end of their nest egg you're talking about!

When enough people have bought into the scheme like this, there is a critical mass who will oppose zoning/code reform, transit, or anything else out of what they view as their self-interest. That's why all we'll see from political leaders is hand-waving about the free market or perhaps some narrowly focused subsidies that target key constituencies and actually raise housing demand even further.

Believe me, I am intimately aware of the political challenges. Nonetheless, policies are already passing.

One of the most extreme barriers to gentle infill is excessive parking requirements, which have already been repealed in tons of cities across the country, including ones you wouldn’t expect.

Zoning reform has seen less progress at the local level, but it seems the solution there is to implement reforms state-wide. I think a lot of people will vote in a contradictory manner—they’ll vote NIMBY locally, but vote for people who will get shit done on housing at the state level. California, Connecticut, Montana, and Oregon have all passed laws that override local zoning. Massachusetts and Utah have passed laws that withhold state funding from cities that don’t reform their own zoning. This is just the beginning—that’s an incredible amount of progress for a movement that started, what, 5 years ago?

Montana and Utah show this has bipartisan potential, too. The messaging in Montana for their reform was about preserving rural land and avoiding “California-style sprawl.” Anything that lets Republicans dunk on California will get some people on board. Meanwhile, blue states take the massive reforms California has already implemented as them leading the way. If you want to appeal to educated, blue-state, home-owners, talking about the climate and racial equity benefits is kind of a slam dunk.

Going to the state level over-rides a lot of NIMBY impulses. Sure, some deeply committed NIMBYs will be dragged kicking and screaming into the realities of the 21st century, but I believe they’re a minority. A lot of other people with NIMBY sympathies probably hold concerns about their town declining relative to the next town over. If everyone shares in the reforms equally, it’s not like one bougie suburb has to self-sacrificially die on the cross for the sins of suburbia. It’s just everyone chipping in and doing their part. You’re right, passing meaningful zoning reform suburb-by-suburb was never going to happen, but the statewide approach hits all the suburbs and the big cities and the college towns and everything in between all at once.

[ChpBstrd]

It’s the housing. Economists and urban planners have been telling us how to make housing cheaper for decades. Some influential policy journalists and pundits caught on a decade ago. Activist movements started taking off before COVID. Policy reform has been accelerating since COVID in many municipalities and state legislatures. Housing will get cheaper when we build more of it. Building more of it in dense, walkable areas around transit will make it feasible for a lot more people to cut out the cost of car ownership.

The problem is policies would have to change if we wanted to make housing cheaper, more plentiful, or more dense. There are a lot of people - suburban/exurban homeowners in particular - who have an interest in that not happening.

What do you say to the person in a California tract home who stretched to buy their modest house for $750k and it is now worth twice that amount? How would they feel about policies designed to cut the cost of housing in half? Well, that's the end of their nest egg you're talking about!

When enough people have bought into the scheme like this, there is a critical mass who will oppose zoning/code reform, transit, or anything else out of what they view as their self-interest. That's why all we'll see from political leaders is hand-waving about the free market or perhaps some narrowly focused subsidies that target key constituencies and actually raise housing demand even further.

Believe me, I am intimately aware of the political challenges. Nonetheless, policies are already passing.

One of the most extreme barriers to gentle infill is excessive parking requirements, which have already been repealed in tons of cities across the country, including ones you wouldn’t expect.

Zoning reform has seen less progress at the local level, but it seems the solution there is to implement reforms state-wide. I think a lot of people will vote in a contradictory manner—they’ll vote NIMBY locally, but vote for people who will get shit done on housing at the state level. California, Connecticut, Montana, and Oregon have all passed laws that override local zoning. Massachusetts and Utah have passed laws that withhold state funding from cities that don’t reform their own zoning. This is just the beginning—that’s an incredible amount of progress for a movement that started, what, 5 years ago?

Montana and Utah show this has bipartisan potential, too. The messaging in Montana for their reform was about preserving rural land and avoiding “California-style sprawl.” Anything that lets Republicans dunk on California will get some people on board. Meanwhile, blue states take the massive reforms California has already implemented as them leading the way. If you want to appeal to educated, blue-state, home-owners, talking about the climate and racial equity benefits is kind of a slam dunk.

Going to the state level over-rides a lot of NIMBY impulses. Sure, some deeply committed NIMBYs will be dragged kicking and screaming into the realities of the 21st century, but I believe they’re a minority. A lot of other people with NIMBY sympathies probably hold concerns about their town declining relative to the next town over. If everyone shares in the reforms equally, it’s not like one bougie suburb has to self-sacrificially die on the cross for the sins of suburbia. It’s just everyone chipping in and doing their part. You’re right, passing meaningful zoning reform suburb-by-suburb was never going to happen, but the statewide approach hits all the suburbs and the big cities and the college towns and everything in between all at once.

Interesting points @Log. It makes me wonder if state and federal initiatives could possibly survive a downturn in housing prices, or if the NIMBY's would riot when Zillow said their house lost six figures? Some politicians would certainly take advantage of such a situation and blame the reform initiatives. It would fit well with a "heavy hand of government" theme used elsewhere by Republicans (despite how it's actually de-regulation we're talking about).

[Michael in ABQ]

Even if these zoning changes are made, it's not like 10,000 ADUs are going to start construction the next day. It will take a while for the market to react. The low-hanging fruit of a small house on a large lot in an area where it makes economic sense will get built first while typical suburban homes in newer subdivisions on 6,000 SF lots probably won't see any construction even if the zoning change allows for it.

There are four tests of highest and best use and zoning only addresses the first two which are somewhat interchangeable.

Physically Possible
Legally Permissible
Financial Feasible
Maximally Productive

It may be legally permissible to build a second unit on a lot, but it may not be physically possible if the setbacks or access don't allow enough room to build. Even if there is enough room it may be that construction costs vs the anticipated risk-adjusted return doesn't provide a large enough return. For instance spending $200k to build an ADU that rents for $1,000/month provides about a 6% return. But once you include the cost of borrowing $200k and then all the expenses, vacancy allowance, etc. (not to mention the risk) it wouldn't even provide a positive return.

[ChpBstrd]

@Michael in ABQ for the reasons you outlined and a number of other reasons, I think the solution to the "housing crisis" is more people working from home and physically redistributing themselves.

Central Tennessee, Wyoming, or Idaho were never hot destinations until WFH opened up the possibility that information economy workers could earn a coastal salary from a cheap home in the wilderness. Every person who relocates in this way reduces demand for housing in higher-cost regions.

The unfortunate thing is most housing being built in these boomtowns is not dense, walkable, bikeable, or sustainable. It is more of the same suburban sprawl that destroyed the American Dream in HCOL markets. Removing the commute only reduces the cost of living in sprawl-land. 

[Cranky]

The trouble with affordable housing (and vehicles) is that there is not much reason for the people who make those things to make cheap versions - as long as people are lining up to buy $750k houses, why waste your time and workers building $100k houses which have a much smaller profit margin? Why build small cars when customers want much larger cars?

Capitalism isn’t responding well to this because the profit is in making the big, expensive version.

[FINate]

The trouble with affordable housing (and vehicles) is that there is not much reason for the people who make those things to make cheap versions - as long as people are lining up to buy $750k houses, why waste your time and workers building $100k houses which have a much smaller profit margin? Why build small cars when customers want much larger cars?

Capitalism isn’t responding well to this because the profit is in making the big, expensive version.

That's why density is important. If a developer can build 6 $200k units where one $750k SFH would otherwise be built, then this is what they'll do. But this only works if developers are allowed to and the process doesn't grind to a halt in reviews. Restrictive zoning, parking minimums, lengthy unpredictable permitting/approval, height maximums, density maximums, onerous fees... these have all been weaponized by NIMBYs to prevent high density while shifting blame to "greedy" developers. Keep the focus on developers and the real issues are never addressed, while still allowing NIMBYs to feel good about supporting affordable housing in the abstract.

[PathtoFIRE]

I think there are several issues contributing to what I see as primarily a housing issue. These are my opinions, and not necessarily well-informed, but it's where I would start looking for answers to what feels like (and I think you would agree with me) a fundamental change in this past decade compared to the previous 6 or so.

-Modern suburbia is maturing, and I think there are a lot of deferred costs to this type of societal arrangement that didn't need to be borne in the first few decades but now place a serious financial burden on maintaining at least the more established areas at least, possibly with more realistic cost assumptions going forwards to newer areas that results in higher upfront costs and taxes.

-Supply/demand issues at the top-end of the market trickle down to the rest of the housing market. Every year there are more people and corporations (both domestic and global) competing for housing markets that cannot expand as fast to meet that demand. In terms of wealth or income, the bottom 80% are increasingly competing with (and losing to) to the top 20% in more and more markets. I would bet that in markets that haven't seen dramatic price increases, the number of buyers at the upper most income/wealth levels are dramatically fewer compared those markets that have seen increases.

-Commodification of housing lags behind other parts of the economy. Even tract homes are hand-crafted to a certain extent. Baumol's cost disease in essence; housing is not a service in the same way as education and medicine, but I think it's also not entirely similar to manufactured goods or consumer electronics. It's not the only sector of the economy that has this attribute, but since housing has always represented such a large chunk of most people's monthly spend, small incremental changes can have outsized effects.

-Overarching trends also play into the problem, including concentration of wealth in the upper 20%. Some of this is more regional, but I bet that if you could survey homeowners today versus 30 years ago (and maybe someone does have this data), there are places where far larger numbers of still working-age homeowners could no longer afford their current house based on income alone, even if they had the down payment. This is a stabilizing force in the current data that will probably diminish, meaning that I think the problem is worse than it seems. Or maybe the recent years are directly due to noticeable diminishment of this force.

-Points already raised, including house bloat (size, finishes, appliances, etc.), rising expectations, comparison with the Jones' where the Jones' are not just the family next door but also social media contacts and the lives of the rich and famous, and just the general rising widespread prosperity compared to previous generations all play their parts too.

[sixwings]

The trouble with affordable housing (and vehicles) is that there is not much reason for the people who make those things to make cheap versions - as long as people are lining up to buy $750k houses, why waste your time and workers building $100k houses which have a much smaller profit margin? Why build small cars when customers want much larger cars?

Capitalism isn’t responding well to this because the profit is in making the big, expensive version.

That's why density is important. If a developer can build 6 $200k units where one $750k SFH would otherwise be built, then this is what they'll do. But this only works if developers are allowed to and the process doesn't grind to a halt in reviews. Restrictive zoning, parking minimums, lengthy unpredictable permitting/approval, height maximums, density maximums, onerous fees... these have all been weaponized by NIMBYs to prevent high density while shifting blame to "greedy" developers. Keep the focus on developers and the real issues are never addressed, while still allowing NIMBYs to feel good about supporting affordable housing in the abstract.

This isnt necessarily true. 6 200K units will likely cost more than one 750K unit and potentially lower margins, take longer to sell, etc. While zoning, nimbys, etc. are a problem let's not pretend developer incentives arent also a problem. It depends on the project, cost, area, etc.

Zoning though is bad. The default should be all lots are zoned for a duplex/triplex and if you want a SFH you gotta go through the zoning process. My city recently made it so that zoning includes duplex and triplexes, but thats so new there's been no change in builds yet.

[FINate]

The trouble with affordable housing (and vehicles) is that there is not much reason for the people who make those things to make cheap versions - as long as people are lining up to buy $750k houses, why waste your time and workers building $100k houses which have a much smaller profit margin? Why build small cars when customers want much larger cars?

Capitalism isn’t responding well to this because the profit is in making the big, expensive version.

That's why density is important. If a developer can build 6 $200k units where one $750k SFH would otherwise be built, then this is what they'll do. But this only works if developers are allowed to and the process doesn't grind to a halt in reviews. Restrictive zoning, parking minimums, lengthy unpredictable permitting/approval, height maximums, density maximums, onerous fees... these have all been weaponized by NIMBYs to prevent high density while shifting blame to "greedy" developers. Keep the focus on developers and the real issues are never addressed, while still allowing NIMBYs to feel good about supporting affordable housing in the abstract.

This isnt necessarily true. 6 200K units will likely cost more than one 750K unit and potentially lower margins, take longer to sell, etc. While zoning, nimbys, etc. are a problem let's not pretend developer incentives arent also a problem. It depends on the project, cost, area, etc.

Zoning though is bad. The default should be all lots are zoned for a duplex/triplex and if you want a SFH you gotta go through the zoning process. My city recently made it so that zoning includes duplex and triplexes, but thats so new there's been no change in builds yet.

Yes, of course numbers for specific projects matter. No one's going to build $200k units at a loss unless there are government subsidies. To be clear, I'm a fan of subsidies for affordable housing even though realistically governments don't have the budget to really move the needle in this regard.

So while incentives matter, I'm unconvinced this is the primary reason less expensive housing isn't produced.

Places do exist where it's possible to build multi-family more profitably than SFH. I live in Boise with lots of dense multi-family buildings going in downtown. Without question, these are more economical than a single house in the same location. Most of these projects don't really have incentives other than getting out of the way.

And then we have issues like this, where NIMBYs are fighting against affordable housing projects. The main incentive for this project is a density bonus and exceptions to zoning regulations. I.e. the kinds of things I mentioned up thread.

Sorry, I've seen this NIMBY playbook my entire adult life. Make housing difficult to build. Drag out the process until projects are unprofitable and thus die. The goal is always to make housing much more expensive to build.

[PathtoFIRE]

I think we have to accept the idea that affordable housing will generally be older housing. We fret about how uneconomical it is to build affordable housing, and how much government subsidy it takes. I think it makes sense that new builds will necessarily target higher income people, and as that housing ages, it should become more economical for those with lower means. But if building over the decades hasn't kept up with demand and appropriate density, then there's not enough turnover to flow over into the reach of those with lower income. And of course it's important that zoning allow density in diverse areas so that there's always a good mix of all ages and prices within each neighborhood.

[Villanelle]

I have a hard time believing that some anti-NIMBY laws would cause people's housing values to drop by 50%.  Or even 25%.  It's not like it will be viable to double density in most areas, even if it is suddenly allowed.  I still own the land my property sits on, as does everyone else in the neighborhood.  So even if everything allowed for it, how many people in the neighborhood are actually going to raze their home and build a 3-4 unit structure? 

And if ADUs are allowed, how many people will actually want to lose the privacy that goes with having a tenant in the backyard?  And for those, for how many would it make financial sense to do so? And of those where it does make financial sense, how many have the funds to make it happen?

Don't get me wrong, I'm in favor of loosening up zoning to allow for more housing.  But I just don't see it leading to a massive building boom that craters housing prices.  Maybe each year we have a few % more houses/units.  While that won't lead to a sudden turn-around in the housing shortage, it will help.  But it will also be incremental enough that it seems unlikely to have a huge effect on housing prices. 

I'd like to see allowing ADUs where reasonable (I know, that's up for interpretation), and disincentivizing building single homes on large lots.  Make density cheaper to build by making those types of homes far more expensive to permit, and perhaps slap them with higher property taxes than denser homes. Or allow cheaper permits for less dense homes only if most of the building is dense and perhaps some is even lower-income accessible. (So in addition to being smaller and not SFHs, perhaps they have laminate counters and linoleum floors, and that makes them more affordable.)  Again, we don't need to make this so extreme that suddenly *only* dense homes make sense to build. If it's a smaller, slower progress, it will get less push back from the NIMBYs, but still make a difference.   If one in every 100 SFHomes puts in an ADU, that's 1% more homes (well, probably closer to .5%, since not all homes are SF and would be ADU-eligible).  A few smaller changes like that will add up to meaningful changes, without creating so much new supply that prices plummet. 

[Cranky]

The trouble with affordable housing (and vehicles) is that there is not much reason for the people who make those things to make cheap versions - as long as people are lining up to buy $750k houses, why waste your time and workers building $100k houses which have a much smaller profit margin? Why build small cars when customers want much larger cars?

Capitalism isn’t responding well to this because the profit is in making the big, expensive version.

That's why density is important. If a developer can build 6 $200k units where one $750k SFH would otherwise be built, then this is what they'll do. But this only works if developers are allowed to and the process doesn't grind to a halt in reviews. Restrictive zoning, parking minimums, lengthy unpredictable permitting/approval, height maximums, density maximums, onerous fees... these have all been weaponized by NIMBYs to prevent high density while shifting blame to "greedy" developers. Keep the focus on developers and the real issues are never addressed, while still allowing NIMBYs to feel good about supporting affordable housing in the abstract.

But again, if enough people want to buy the $750k SFH, who wants to build condos?  Or buy them? Enough people are lining up for big houses that small ones are socially undesirable.

Because we’ve left housing to private developers, including low income housing, we’ve got a system with no incentives for either building modest housing or buying it.

[FINate]

The trouble with affordable housing (and vehicles) is that there is not much reason for the people who make those things to make cheap versions - as long as people are lining up to buy $750k houses, why waste your time and workers building $100k houses which have a much smaller profit margin? Why build small cars when customers want much larger cars?

Capitalism isn’t responding well to this because the profit is in making the big, expensive version.

That's why density is important. If a developer can build 6 $200k units where one $750k SFH would otherwise be built, then this is what they'll do. But this only works if developers are allowed to and the process doesn't grind to a halt in reviews. Restrictive zoning, parking minimums, lengthy unpredictable permitting/approval, height maximums, density maximums, onerous fees... these have all been weaponized by NIMBYs to prevent high density while shifting blame to "greedy" developers. Keep the focus on developers and the real issues are never addressed, while still allowing NIMBYs to feel good about supporting affordable housing in the abstract.

But again, if enough people want to buy the $750k SFH, who wants to build condos?  Or buy them? Enough people are lining up for big houses that small ones are socially undesirable.

Because we’ve left housing to private developers, including low income housing, we’ve got a system with no incentives for either building modest housing or buying it.

Maybe. And I'm fine with incentives for less expensive housing. But up-zoning and making the permitting/approval process less onerous is essentially free. Why not do that first, and if developers don't respond then start adding incentives?

[Morning Glory]

The trouble with affordable housing (and vehicles) is that there is not much reason for the people who make those things to make cheap versions - as long as people are lining up to buy $750k houses, why waste your time and workers building $100k houses which have a much smaller profit margin? Why build small cars when customers want much larger cars?

Capitalism isn’t responding well to this because the profit is in making the big, expensive version.

That's why density is important. If a developer can build 6 $200k units where one $750k SFH would otherwise be built, then this is what they'll do. But this only works if developers are allowed to and the process doesn't grind to a halt in reviews. Restrictive zoning, parking minimums, lengthy unpredictable permitting/approval, height maximums, density maximums, onerous fees... these have all been weaponized by NIMBYs to prevent high density while shifting blame to "greedy" developers. Keep the focus on developers and the real issues are never addressed, while still allowing NIMBYs to feel good about supporting affordable housing in the abstract.

But again, if enough people want to buy the $750k SFH, who wants to build condos?  Or buy them? Enough people are lining up for big houses that small ones are socially undesirable.

Because we’ve left housing to private developers, including low income housing, we’ve got a system with no incentives for either building modest housing or buying it.

Maybe. And I'm fine with incentives for less expensive housing. But up-zoning and making the permitting/approval process less onerous is essentially free. Why not do that first, and if developers don't respond then start adding incentives?

Agreed. If we could get all places to eliminate parking minimums and require sidewalk connections to and in front of new development that would be a good start. Basic pedestrian safety improvements would turn car ownership from a need back to a want for many people, decreasing the overall cost of living.

[caracarn]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

We were looking over in the Sevierville area as we'd like to be close to the Smokies buy Gatlinburg and Pigeon Forge tend to be priced assuming everyone buying is doing so as a rental rather than some of us who'd just like to live there.

Pre-COVID I was able to find many nice ranch homes that would work for us in the $150-200K range.  Those same homes now in the same area cannot be touched for less than $600K.   Are they actually selling for that?  Not sure.  But yes, saw a report on that market a month ago and it was the largest real estate increase in the country by far surpassing all the usual suspects out west.   Reporter was speculating that in a couple years it will settle back down and since we would not be moving before then, hoping so, but those prices have been up there for 18-24 months.  We've had our home in OH appreciate (according to Zillow at least) but only up about 20% not 300-400% so yes not maintaining enough parity as when we move we are looking to be mortgage free and that could not happen at that price point.  Anything around $200K in that area is falling apart or under 800 square feet and not very liveable.

I just looked into Gatlinburg and you are right that is expensive! I had no idea. I also checked in with Franklin where I’ve heard is nice place in Tennessee and that’s super expensive as well.

I lived in the Nashville area and know Franklin well.  Interesting fact, that blew my mind.  Williamson County (the county Franklin is in.  Nashville is Davidson County) is the 10th richest county in the US.   So yeah, it is not where low income folks live.

Pigeon Forge had some affordability when we looked and they have a good parallel run along the tourist strip that I think locals use to not be stuck in traffic all day.  Gatlinburg due to the geography does not have that so no desire to be there as daily living.   If we got up to Knoxville we could find a few things but it's really a bit further than we'd like and you really do not even get mountain views in the distance from 40-60 miles away.   Sigh.  It's a few years so will just keep praying things change.

The goal is not just anywhere in TN, it's close enough to the Smokies that we could go hiking in and around the park whenever the mood struck us.   If it was just when I wanted to travel there as a vacationer I could just stay here in Ohio, to Chattanooga is too far away for that.   Really cool aquarium there, one of the best I've seen.  Also not a great place to live.  I dabble with the idea of taking a job in Chattanooga before I moved up to Ohio from Nashville.  Not the safest place and just never drew me in like the Smokies pull on my wife and I.  We love it there.   We pick TN over the NC side because of the state income taxes and cheap electricity because of the TVA.

Daughter lives in NC attending grad school at Chapel Hill, and we have visited Great Smoky NP a couple times, and (unfortunately) visited the Gatlinburg/Pigeon forge area.

Note to sound like an ass, but Gatlinburg/Pigeon Forge is absolutely horrible.  I'm sure it was much better a few decades back, but it was just a horrible, tourist-trap and traffic laden mess when we were there.  Not sure I could ever live in that area, even if it was "Affordable".

Yeah, I grew up going to Gatlinburg, and it has never seemed like somewhere I'd want to live.  Nantahala wouldn't be a bad option for someone looking for outdoors/hiking.

Never heard of that.  Is close enough to Smokies for sure, but seems the same as the area we're looking at for housing.  Still way overpriced. 

[caracarn]

I live in Knoxville and real estate prices have increased ~80% in the past three years.  We're being flooded with work-from-home folks from high cost of living areas in CA, NY and TX.  On top of that, now ~40% of all newly listed residential homes are purchased by corporations.  It's getting brutal here.

This is probably it.  I'm WFH but know that can evaporate in an instant and if you've moved to a job desert based on your skills then what?  I'm in the tech sector and seeing things like the Amazon CEO last week telling those who will not return to the office that "your says are numbered at Amazon" makes me think this is a fool's errand to pick up your life and move based on this being a forever change.   That's why we are not looking to make a move until we are done needing to rely on work for income. 

And maybe that what will happen over the next 3-5 years in places around the Smokies (Sevierville Nantahala etc.) is those folks doing this now will lose their job because they can't work remote any more and have to move back to CA, NY and TX and the housing prices will stop going nuts.  I mean I'd like to be there enough that I've not ruled out being up in Knoxville, so it's sad to hear that it's already bled up that far from Gatlinburg.  We have slowly been starting to resign ourselves to having to stay put here which is not ideal but not catastrophic.  We have the oldest continually operating hiking club in the country here in Cleveland (since 1919) with 25-30 hikes a day in the MetroParks which are beautiful, they are just not mountains and not nearly as big. 

So like anything we'll just sit and wait and see what things look like when the time comes and decide.  We know for certain that the house we are in is not conducive.  Lots of stairs, steep driveway which we've fallen on multiple times in the ice and snow when we were in our spry 40s let alone how it would be in our unbalanced 60s 70s and beyond.  We could find a nice ranch locally and be fine, but our hearts would keep being pulled to Appalachia which we just love.  Time will tell.

[mizzourah2006]

OP you mention housing and cars as your price points. I am surprised that budget friendly TN is now outta scope but I would have to poke around real estate sites to confirm.

We were looking over in the Sevierville area as we'd like to be close to the Smokies buy Gatlinburg and Pigeon Forge tend to be priced assuming everyone buying is doing so as a rental rather than some of us who'd just like to live there.

Pre-COVID I was able to find many nice ranch homes that would work for us in the $150-200K range.  Those same homes now in the same area cannot be touched for less than $600K.   Are they actually selling for that?  Not sure.  But yes, saw a report on that market a month ago and it was the largest real estate increase in the country by far surpassing all the usual suspects out west.   Reporter was speculating that in a couple years it will settle back down and since we would not be moving before then, hoping so, but those prices have been up there for 18-24 months.  We've had our home in OH appreciate (according to Zillow at least) but only up about 20% not 300-400% so yes not maintaining enough parity as when we move we are looking to be mortgage free and that could not happen at that price point.  Anything around $200K in that area is falling apart or under 800 square feet and not very liveable.

I just looked into Gatlinburg and you are right that is expensive! I had no idea. I also checked in with Franklin where I’ve heard is nice place in Tennessee and that’s super expensive as well.

I live in Knoxville and real estate prices have increased ~80% in the past three years.  We're being flooded with work-from-home folks from high cost of living areas in CA, NY and TX.  On top of that, now ~40% of all newly listed residential homes are purchased by corporations.  It's getting brutal here.

This is the same thing we are seeing in Northwest Arkansas. A lot of people from California, Colorado, and Texas. My brother actually just moved here with his wife from Fort Lauderdale because they knew they'd likely never be able to not be "house poor" there. 4 years ago they could have gotten a beautiful house for $300-$350k. Now they could really only afford about 1500 sq ft a bit outside of Fayetteville.

https://www.zillow.com/homedetails/1111-NW-K-St-Bentonville-AR-72712/70694156_zpid/

Here's an example of a home that sold for $230k just 2 years ago that is now listed at $575k. Obviously the new owners put some work into it, but this has been pretty typical for our area in the past 3 years. Roughly 100% increases in home prices in the past 5ish years.

Here's another one. Sold for $390k in Aug. of 2018, now selling for $850k.


https://www.zillow.com/homedetails/4-Canterbury-Park-Bentonville-AR-72712/79521315_zpid/

[ChpBstrd]

I'm WFH but know that can evaporate in an instant and if you've moved to a job desert based on your skills then what?  I'm in the tech sector and seeing things like the Amazon CEO last week telling those who will not return to the office that "your says are numbered at Amazon" makes me think this is a fool's errand to pick up your life and move based on this being a forever change.   That's why we are not looking to make a move until we are done needing to rely on work for income. 

IDK... there's obviously a lot of debate here but the financial reality of WFH is that corporations can pay their people 10-20% less to do it while also saving tens of thousands per year per employee by not maintaining an office in an expensive location. Plus, all sorts of nightmare liabilities go away such as sexual harassment claims, liabilities related to the building, lease escalations, workplace violence, localized outages, outbreaks of disease, etc...

Even if WFH employees' productivity is lower - which is hotly debated - employers have to ask themselves "would I rather have one butt in a seat or two WFH employees for the same cost?" I think the latter wins even if they are half as productive (which nobody is claiming). It's a no-brainer if the productivity loss is less than, say, 25%. More likely there is no productivity loss. It's also a no-brainer if you can find a remote employee with a rare skill within a couple of weeks versus having a position open six months for an in-office job.

I think we're seeing the dying gasps of a generation of managers whose concept of what they do is walking around with a cup of coffee Office-Space-style visually watching what everyone is doing and going to eight meetings a day. Some of us are old enough to remember managers who resisted email and expected employees to physically walk to their corner office and poke their head in with each bit of new information!

Anyway, more modern managers are using their software tools and frequent 1x1 calls and messages to track employee workloads, collaborate on designs, and keep communication lines open. And it's working. Most people are figuring it out - just not the billionaire tech/financial CEOs who are stuck in their ways, and who have multi-billion dollar office building investments to justify.

Amazon is still building office buildings, presumably so the ghost of Jack Welch can haunt the hallways at night. When someone burns the coffee to the bottom of the kettle or overflows the toilet the managers can run around, schedule meetings, and feel like they're doing something. Maybe laminate a sign saying don't do that!