THE SOLUTION WAS RIGHT THERE ALL ALONG

If it's not too early in the morning for you to handle some rage-bait, check out this Gothamist article about (warning: low hanging fruit) a Brooklyn millennial buying an apartment. Make sure your reading area is clear of potential projectiles.

To summarize, if you don't feel like subjecting yourself to it, Kendall (a "design assistant") is paying $1800 for half the rent in a seedy East Village apartment she shares with a roommate. Certainly we can sympathize without sarcasm with anyone earning a normal or even below-average income trying to make the NYC rental market work. If splitting $3600 for a flophouse was the best I could do, I'd be upset too. But Kendall is quite resourceful, so she solves the problem by having her parents make a down payment on a $400,000 studio apartment for her. Why doesn't everyone in NYC think of that! It's so obvious.

But wait! Not all is well. Kendall soon discovers that even $400,000 won't buy her a studio in Williamsburg anymore (Again, this is legitimately horrible. How can any normal person living paycheck to paycheck live anywhere near a place with $400,000 studio apartments.) but she is, and I quote, "a person who can make a lot out of nothing." Nothing is $400,000. A lot of which is being given to her by someone else.

After finding several in her price range, another tragedy befalls her: they're not in Cool neighborhoods! They're so far away from her friends, she might as well be living on the Azores! But fear not. As the author puts it, the Government is here to save her from this series of tragedies. Taking advantage of a housing assistance program called the NYC Housing Development Fund, Kendall receives tax subsidies and price breaks that allow her to find a place in Williamsburg for $400,000. Mind you, it's a sixth-floor unit (which, I kid you not, she actually bitches about in the original article) but

She concludes, "It's great to own. It feels kind of adultish and comforting and stabilizing." I bet it does, Kendall. I bet it does. Despite being gainfully employed with an advanced degree, I will never, ever be able to afford to buy a home unless it's a trailer unit in Pigsknuckle County, Indiana, so I'll have to take your word for it. You really have to marvel at the lack of self-awareness that allows someone to agree to have such an incredibly unflattering portrait of her printed in a major newspaper. Rich girl gets parents to buy her a home, pisses and moans that she can't find one she wants, abuses government program intended to provide assistance to low-income people who can't afford anything, and then gets (sort of) what she wants but not really because she still has to point out the things wrong with it.

That this is presented originally in the NY Times as some kind of light-hearted tale rather than a sickening indictment of everything that is wrong with the positively criminal real estate market in New York City almost defies belief. Change the tone and the headline and this is a muckraking piece worth of Lincoln Steffens. Instead, we just gloss over the fact that everyone in the city essentially admits that home ownership without inherited wealth (and not a small amount of it) is all but impossible, with prices that put even one-room studios well beyond the reach of anyone earning less than a quarter of a million dollars.

Welcome to day one of this week's theme: Your life will suck if you're not born into money, and there's nothing you can do about it.

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78 Responses to “THE SOLUTION WAS RIGHT THERE ALL ALONG”

  1. Isaac Says:

    Open a print edition of the New York Times and you'll understand why this is the sort of “human interest” story they run. All the ads are for luxury goods, European vacations, and frighteningly expensive real estate. Mumble mumble “let them eat cake” mumble mumble “first against the wall.”

  2. Douglasaurus Says:

    A graduate degree from Parsons. One credit costs $1,400.
    I'm sure that's paid off too. I wonder how much she earns at her design job.

  3. lofgren Says:

    It sounds like she got a mortgage. Her father didn't actually give her the $400,000, but apparently he either made the actual purchase or co-signed, so the point still stands. Still, I feel like this is a relevant distinction.

  4. Emerson Dameron Says:

    @Douglasaurus:

    Design *assistant* job. To make ends meet, I assume she has to moonlight as a Social Media Influencer.

  5. Skwerlhugger Says:

    I know nothing about NYC geography so can't see the details, but isn't this pretty much how big cities have always been? Seems like it could have been pulled out of anything from Victorian novel to Orwellian snark. Condos are a modern concept, aren't they?

  6. Sarah Says:

    Thanks for writing about this — typical Times bullshit. Also when I posted this article a few days ago, I asked friends for recs of books to read re: NYC housing crisis — anyone have ideas?!

    She's also full of shit. We live in a nice, convenient place in Harlem that's significantly cheaper than her place was in the Village. But [gasp] there are nice folks around who are darker than this lily white UWS princess. God people are such assholes.

  7. Talisker Says:

    @lofgren:

    Yes, the article says her parents "gave her the down payment", so it was probably more like $40,000. Still a lot of money; without generous and (at least) comfortably off parents, that represents about 8 years of saving $400 a month, while paying $1800 to rent half a rathole. I doubt she'd be able to do that on a design assistant's salary.

    @Skwerlhugger:

    Buying property in NYC has always been expensive, but it really has become less affordable in recent years. Ratio of house price to median income was 3.4 in 1980, peaked at 7.8 in 2005-06, and now is 5.6. http://www.economist.com/blogs/graphicdetail/2015/11/daily-chart-0

    It's not quite true that you need rich parents and/or an obscenely well paid Wall Street job to buy a home in NYC, but doing it without them is harder than it used to be.

  8. Talisker Says:

    Incidentally, New York looks positively reasonable compared to London, where price/income ratio is now an eye-watering 9.2. The housing market in London is well and truly FUBAR'ed.

    http://www.economicshelp.org/blog/5709/housing/market/

  9. HoosierPoli Says:

    "It's great to own" says Hunter.

    Now she gets her next lesson in adultishness – she doesn't own SHIT. She owns a mortage, not an apartment.

  10. Katydid Says:

    @Talisker; when I lived in England back in the 1990s, I would look into real estate for fun. London was always eye-poppingly expensive, and thanks to you, now I know it's gotten worse.

    All 4 of my grandparents' families immigrated to the USA between 1905 and 1912. They all went through Ellis Island (except the branch that came to America in first class cabins–apparently even then, if you were rich, the rules didn't apply to you and you could go directly to America). While all 4 branches stayed in New York City, they all fled Manhattan for Staten Island (then "the boonies"), Queens, the Bronx, and Brooklyn because even in the nineteen-teens, real estate in NYC was way too expensive. After WWII, one branch moved to Levittown on Long Island–yes, THE Levittown, those "mean streets" where Bill O'Reilly grew up.

    As late as the 1980s, you could buy a reasonable home on Staten Island for about $30,000 (price my cousin paid for his first house) but now the cost is out-of-reach.

    But isn't that the case just about anywhere? When I was in college, a developer put up 5-bedroom, 3-car-garage homes on a half-acre apiece down the road from my parents (not in New York–a different state). The homes were going for about $100,000 and my parents laughed themselves silly–what moron would pay $100,000 for a house? A decade later, I returned home from England and paid $100,000 for a crappy 2-story townhouse with about 10 feet of property in front and behind the house, about five miles from those formerly-$100,000 houses (which were now selling for $300,000).

  11. Talisker Says:

    @Katydid:

    London was always eye-poppingly expensive, and thanks to you, now I know it's gotten worse.

    Yes. The reasons are many and complex, but include a favourable tax/legal climate for overseas investors; a broken pension system which encourages Brits to invest in residential property; and an even more broken planning system which has slowed new building to a crawl.

    As for affordability of US homes, I was surprised to find that on average it has barely shifted in 25 years. Price/earnings ratio for the USA as a whole was 3.0 in 1980, now it is 3.3.

    http://www.economist.com/blogs/graphicdetail/2015/11/daily-chart-0

    But that masks a lot of regional variation. Prices in San Francisco are approaching London levels of silliness; houses in Florida built at the height of the property bubble can't be given away.

  12. anon Says:

    My math is probably a bit off, but to get the numbers in the NYTimes article to work out (which reports that "her monthly outlay is around $1,200," presumably the mortgage plus the $300 monthly maintenance), I believe her downpayment would have had to have been much closer to $200,000 than $40,000.

  13. Katydid Says:

    @Talisker; variability is huge. I read something awhile back about towns in the plains states ("the Hearland" aka Rill Murkkuh) that are giving away houses to anyone willing to move there.

  14. Talisker Says:

    @anon: Fair enough — I only bothered with the Gothamist article, not the NYT one. If we plug some numbers into Google's mortgage calculator, borrowing $180,000 at 4% for 25 years gives a monthly repayment of $950. So the deposit was probably over $200,000.

  15. Khaled Says:

    @anon

    I didn't read the article, but yeah, a $1200 monthly cost means a very large down payment. Consider not only the mortgage payment, but also HOA fees plus taxes plus insurance. I glanced at Zillow while making my tea this morning and saw the estimate for a 429k apartment in Brooklyn mortgage would be about 2.3k, so her "downpayment" on that 400k apartment would have been very large or she has a very interesting loan arrangement. I've heard of graduated mortgages on the market now, which means that the payment starts out small and gets larger as time goes on. It's usually used for student loans (i.e., you pay smaller amounts when you start out and have no money and goes up as your income goes up) but I can't imagine it would be a good idea for a mortgage.

    Real estate in large metro centers also have foreign influence on prices. There is currently a crisis in affordability in Vancouver because, as it's thought, foreign (i.e., Chinese) money is driving up the market by people looking to stash their gains (ill-gotten and legally acquired) in property in Canada. A person listed as a "student" is the owner of a 10 mil plus house that has a payment of 10k a month. I've read of other places like NYC, Toronto, and London having similar problems, where entire new "luxury" condo buildings have almost no one actually living in them but the units have been purchased by foreign money with murky sources. One of my wife's friends moved to New Zealand, and her and her husband were originally looking at moving to Sydney first, but ran into the problem that Australia doesn't allow foreign ownership of homes. Sydney is still insanely expensive, so that's not all of the problem.

    Speculation on the property also drives up prices in the large metro areas. People buying properties in hot markets and flipping them later after the price has gone up is a huge influence on the market. Condos are ideal for this (you don't have to maintain them the same way you do a house) and in Canada, at least, the low down payment helps people flip. In Canada it is between 5 and 10 percent depending on the price of the home. Yes Americans, you read that right.

    @Talisker
    One of the reasons for the price differences also has to do with location and rules of metro areas. For example, the Rust Belt has reasonable prices. I live in a 4 bedroom house in one of the more expensive suburbs of Harrisburg, PA, and we didn't pay more than 250k for our house. If we had looked in suburban Philadelphia, we would have paid 400k for a comparable home. In DC? 900k to 1 million plus.

    You also have to consider geography and development rules. Texas is cheaper than the Northeast because there is a lot more land in Texas, plenty of room to build new homes. Some places have more aggressive planning commissions. Again, Texas pretty much lets anything go, but other places are dominated by planning commissions that don't allow sprawl or limit growth. Minneapolis and Portland have planning commissions that limit haphazard growth which ends up driving up prices because you can't just put up developments to keep costs down.

  16. Heisenberg Says:

    @lofgren: Perhaps a fine distinction, but still not terribly relevant to Ed's point. Even if her parents didn't straight up give her $400k, the fact remains that she still needed someone else to co-sign the loan for her. Which means she doesn't have sufficient credit and income on her own. If she could afford the place independently, she wouldn't have needed a co-signer. So no matter how you slice it, it's a huge gift of money.

  17. Emerson Dameron Says:

    For those who insist on talking about this like adults, I'll plug an Affordable Housing group I am part of. There is a rough argument going on about this in major cities, and it is worth joining.

    http://twitter.com/abundanthousing

  18. Safety Man! Says:

    @katydid

    If I'm thinking of the same ones, you have to agree to homestead/ start a farm for those neighborhoods.

    @Ed,

    Do you think we can leave instructions that our life insurance payout be put directly towards a house? I like the idea of the bank having to go through the extra hassle to repossess it to pay off my student loan debit. A man can dream.

  19. carrstone Says:

    Don't be depressed by Ed's, "Your life will suck if you're not born into money, and there's nothing you can do about it."

    Of course there's something you can do, set the right priorities and roll up your sleeves. Don't do a Masters in "Classical Life and Dancing" or social studies, study something with 'Applied' in it and get on with it.

    All those 400K apartments in NY, are they all owned by the children of rich parents and drug dealers?

    Did you want some cheese and biscuits with that, Ed?

  20. Brutus Says:

    The amount of suckage of one's life is not in fact inversely proportional to one's inherited wealth. I never had monetary advantages I've witnessed others enjoying, but as a result, my sense of value and self-worth are not skewed and warped toward the size of my holdings. Nor do I suffer undue envy.

    Some of you might be aware of this passage from John Ruskin: "There is no wealth but life. Life, including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest numbers of noble and happy human beings; that man is richest, who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personal, and by means of his possessions, over the lives of others. (Essay IV: "Ad Valorem," section 77.)

  21. Major Kong Says:

    Median home price here in Columbus OH is $142K (I looked it up).

    I'm sure you could find cheaper housing in say, Cleveland, but you probably wouldn't have a job in Cleveland.

  22. Major Kong Says:

    @carrstone

    Any time you want to compare W-2s be my guest.

    I realize this is anecdotal, but I have a friend who actually owns a structural engineering firm in Manhattan. Hardly a "Classical Life and Dancing" major.

    He lives, by his own description, in a "crappy 1970s apartment on the lower west side".

  23. Safety Man! Says:

    @ major kong

    I've been through Columbus, OH twice in the past year on business for two weeks total, I'll also say that the homes there were nicer than other cities I've been. I'd put Columbus pretty high up on a cost/ benefit ratio.

    @ carrstone

    It is cognitive dissonance to assume that the only people suffering from un/ underemployment or housing problems studied basket weaving or whatever the favorite punching bag is now. I live in DC and know quite a few teachers, IT folks, cops, and even an engineer who split rent on crappy apartments/ commute long distances/ both because housing is unaffordable here.

  24. Brian M Says:

    Those cheap houses in Texas? Suburbia is a gigantic Ponzi Scheme…low density sprawl will never pay for itself in wealth generation and property taxes. Cheap now…abandoned (or turned into urban prairie subsistence farming later).

    The whole concept of auto-centric, drive everywhere suburbia (the American Dream) is unsustainable.

    http://www.strongtowns.org/journal/2016/8/18/the-geography-of-disadvantage

    As for Florida, the plywood ranchers in the swamp towns have no tax base, no public transit, not way to pay for basic street maintenance. As these towns are pretty much "undesirable" for people who have choices, they have poverty rates equal to inner city neighborhoods.

    http://www.strongtowns.org/journal/2016/8/17/suburban-poverty-boomtown-lehigh-acres-florida

  25. Brian M Says:

    Safety Man: Well, obviously, if one is not a Hedge Fund Manager whose seed money came from Daddy's friends, one has made incorrect life choices!

  26. Kaleberg Says:

    I grew up in New York City in a, maybe, 1000 square foot two bedroom co-op about 3/4 mile from the subway and with a choice of buses within a block or two. You can buy a unit for about $250K there now. The neighborhood has fewer Jews and more Hispanics than way back when, but it was always international with Peruvian-Chinese restaurants, Argentinian steakhouses, Irish bars and a White Castle. In other words, there are cheaper housing options in the city, but the neighborhood won't be as cool and the commute will be longer. That, however, has always been the case. Rents in the area were on the order of $100 a month, but they were $300 and up in Murray Hill.

    This sounds like a pretty standard New York Times whine, but it also says something about downward social mobility. A lot of well off professionals and high powered business people in NYC have children with lesser talent and lesser motivation. They are never going to be able to afford their parents' life style even with a fair bit of help. You can say what you will about the various characters in this tale which is why it is fun reading, but it is not all that uncommon a situation. It might help if you think of the Trump campaign as a tale of the extremely talented Donald Trump trying to help secure the fortunes of his relatively less talented and less motivated children.

  27. Gerald McGrew Says:

    I get how we should be upset at this woman misusing/abusing a government program. But other than that, this post and many of the comments kinda look to me like "let's dump on rich kids". I mean….

    "Wealthy parents give daughter down payment"…..um…so? Isn't that typical in wealthy families? Was that wrong of the parents?

    "Wealthy woman is picky about where she lives"…..um….so? Isn't that typical of people who have money? What was she supposed to do, "I'll live in a place I don't really like, just so people won't think badly of me"?

    I dunno, other than her exploiting the subsidy program, I can't find too much in this story to get upset about. Maybe if I was a person who "will never, ever be able to afford to buy a home unless it's a trailer unit in Pigsknuckle County, Indiana", I'd feel more resentment.

  28. cackalacka Says:

    This situation reminds me of a famous Hall and Oates song I kinda dig.

  29. Sarah Says:

    @Gerald McGrew, think you missed the point. She's bragging about how she can make "something out of nothing" at the age of 26 for a mere 400,000$ and how she feels "adultish" because she owns even though her parents basically bought her the place.

    Her parents helping her out is not atypical of rich families, but a little self-awareness that you're one of the privileged can go a long way towards people not hating you.

  30. Kovpakistan Says:

    You know I was looking at this comment thread and thinking, "This is nice, but where are all the dumbass comments full of hackneyed cliches they tell you as a kid but which don't actually work in real life?" But then…BAM! Carrstone for the save!

  31. The Jack of Hearts Says:

    Tangentially related…this awful couple only lasted one day in Chicago's Edgewater neighborhood. He's a house flipper, she's a YouTube beauty vlogger, from Arizona. Good luck on making it all the way through this video where they tell their harrowing story (spoiler: at least he was already punched in the face).
    https://youtu.be/7RAZF4kJIh4

  32. gromet Says:

    I live in Los Angeles, and real estate here is bananas too. Twelve years ago, I moved into a very small, rent-stabilized apartment that cost under $1,000, with a goal of improving my salary so I could move into a bigger place. Well, I have increased my income by 70%, but I'm still trapped in this apartment. Why? Because it's now the only one I can afford.

    Twelve years ago and struggling, I had several choices and "almost" choices — the building on the corner, for example. Units there are larger and come with parking, but in 2004 they cost an impossible $200 more than the place I took. Today, I can afford that $200 — heck, I'll go $600 more (a 70% increase over my 2004 rent). But obviously, those apartments aren't $200 more now, or even $600 more. They are $1,700 more. How the hell did that happen?

    There oughta be a law…

  33. anotherbozo Says:

    In my neighborhood, near NYU, touted as "the most expensive university in the coutnry," which I assume includes housing, the new pattern is for Mommy and Daddy to buy a co-op or condo so Muffy can live near campus. Then, when she graduates, they can sell the place (probably at a profit). This is especially popular, I've read, among Russian oligarchs who want to send Olga abroad to study and socialize.

  34. Gerald McGrew Says:

    @Sarah,

    True the "make something out of nothing" comment comes across poorly, but we really don't know the context in which she made it. In the NYT article the quote is given without any mention of if she was answering a question or anything else. And having had my own experiences with newspaper reporters, I'm willing to give the benefit of the doubt for such a snippet of a quote.

    As far as the "adultish" thing, isn't that accurate? Note she didn't say "adult", but said "adultISH", as in "kind of adult, but not really", which seems about right to me. She's out on her own, with $$ from her parents. "Adultish".

    Finally, if what's in that article makes you hate this woman, well….I'd suggest maybe taking a bit of time for self-reflection on that.

  35. Gerald McGrew Says:

    So I went and read the original NYT article and this is the context of the "a lot out of nothing" quote….

    "Many studios in the area, however, were in large condominiums, far above her price range. She decided to find out what $400,000 would buy elsewhere in Brooklyn. “I am a person who can make a lot out of nothing,” she said, though she hoped to avoid the expense of renovating."

    So the quote was specifically about her saying she could take a lesser place than what she wanted and turn it into a better place. Being a designer, that makes sense. It could have just as easily been "Being a designer, I feel comfortable renovating a place". *shrug*

  36. Katydid Says:

    @BrianM, thanks for the link to Strong Towns; that's a really interesting blog.

  37. Nunya Says:

    This is worth a view if you want to be depressed:

    http://www.crackshackormansion.com/

  38. Land_Planarian Says:

    Soooo…what's up with that housing subsidy? It sounds like her fancy-sounding-but-mediocre-paying-compared-to-real-estate-costs job leaves her under their income limit fair and square, as their rules are written.

    What I'm wondering is, who is this program *supposed* to be for? In my expensive-as-fuck real estate market, rent is also super high, so the big barrier to buying a place is needing a huge downpayment–your monthly payment is pretty ugly either way.

    If the program provided her with downpayment assistance despite her having access to a huge gift, that's BS. If they're providing slightly lower purchase prices to people with moderate salaries but *don't* help with the downpayment, that's…also BS.

    To me the rage-inducing story here is not 'Girl with rich parents considers several apartments before picking one she liked best' so much as 'even *with* housing subsidies, you still need someone to give you a crapton of money to buy a studio apartment in New York'

  39. Heisenberg Says:

    @Brian M: "The whole concept of auto-centric, drive everywhere suburbia (the American Dream) is unsustainable."

    I hear this argument a lot and I don't think it's quite correct, as least not fiscally. Suburbia isn't unsustainable *per se.* The problem is that the governments who enable it just aren't willing to set tax rates high enough to cover its actual costs. Instead they make unwise, risky bets that future growth will pay for everything (hence the Ponzi element).

    But there's no rule that says that suburban development must be under-financed. We just need to start paying the real costs. Then the market will mostly sort things out.

  40. Greg Says:

    I had a coworker in 2008 whose household income, with his partner's, and no kids, was about $100,000. They qualified for a city-subsidized apartment in a new building, under a program designed to grow middle class home ownership. Because $100,000 in NYC is still barely middle class.
    The rise in luxury construction with almost no affordable housing set asides is my main reason for irrationally loathing Bloomberg.
    Bear in mind also that for co-ops in NYC the down payment is typically 35%, not 10 or 20. So $140,000 from her parents is what we're talking about. In one sense, bfd she's rich and of course her parents made her awful by buying it for her. But on the other, Jesus Christ who would WANT to live in Billburg, except the trustafarian hipoisie? Of course she doesn't want another neighborhood, because none other can offer her so many people so similar to herself.

  41. Rico Boccia Says:

    I'm with Gerald: If you get bent out of shape every time a 20-something demonstrates cluelessness about his/her privilege, you won't have time for much else in life.

    Major Kong: Compare W-2s? Successful people don't get W-2s. They get dividends, interest payments, and stock-sale proceeds.

    I'm also with carrstone. My parents came from very humble circumstances and despite being educators their whole careers, managed to save a little, invest wisely, and live comfortably. Maybe it was because they told me that they'd pay for undergraduate, but once I was 22, bachelor's or not, I was on my own that I knew even as a teenager that Follow Your Bliss and Do What You Love were less important than Make Some Fucking Money. People keep telling me I'm lucky, to which I say yes, lucky enough to be able to see how working non-stop and being willing to take crap from jerks in a "non-nurturing" work environment was going to pay off. You may hate "hackneyed cliches," but they can make you rich (if that matters to you).

    grommet: 70% over 12 years is about 4.4%/year, which is 2.4%/year more than inflation. Are you sure you want to blame your circumstances on a cruel world?

  42. Gerald McGrew Says:

    @Land Planarian,

    Here's the page on the HDFC co-op subsidy she qualified for….

    http://www1.nyc.gov/site/hpd/owners/homeowner-hdfc.page

    From that you can see that her annual income must be less than $72,600. And from what I can tell, it looks like it's a property tax subsidy/break.

    So basically you have a woman from a wealthy family who has a relatively low-paying job (for NYC standards). She gets money from her parents for a down payment, but even with that she doesn't find a place she likes. Then her real estate agent tells her that because her income is low enough, she likely qualifies for this subsidy program, and that could be enough to put her in a place she likes.

    Now I put myself in her shoes. What am I going to do? Say no to the subsidy and live in a place I don't necessarily like because……some bloggers and people in the comment section might not like it? Not bloody likely! I'll take the subsidy and get a place I like in a location I like.

    I mean….isn't getting a place you like in a location you like what a lot of us strive for? I know it was important to me when we looked for a place.

    So I guess people can feel resentful towards me because…..gasp…..I bought a house I liked in a location I liked.

  43. Leading Edge Boomer Says:

    I guess "adultish" is the new "truthy."

    Housing in London, NYC, and elsewhere is inflated at the top, so the whole market moves to be more expensive. That top inflation is fired by Russian oligarchs who have found ways to export rubles into other currencies outside of Russia. These mirror transactions
    https://www.bloomberg.com/news/articles/2016-04-14/deutsche-bank-found-systemic-failure-behind-russia-cash-flight
    have caught HSBC, Deutsche Bank, and others in trouble. But they are not exactly illegal in all cases.

    (Aside: American employees were pronouncing their employer's name as "Douche Bank" until the bank put up corrective signs for them.)

    With money sitting in uber-banks in these cities, they can buy anything with no financing.

  44. Brian M Says:

    Heisenberg: I think if you read Strong Towns you are making their very point.

    Where they go further is serious doubt that low density suburbia CAN EVER pay for itself. the development pattern doesn't generate enough taxes, and the reliance on ever larger generic retail big box is also inefficient from a land use and economic development standpoint. The essay on Florida swamp towns….how will this population pay the taxes needed to maintain these miles and miles of roads and sewer pipes and water pipes and police services. Strong Towns doubts this is fiscally possible.

    As almost all of the post-war development pattern is unsustainable, we are facing a serious problem. Especially given how POORLY the suburban boom has been built. There are tract homes from the 1960s in my town that are decaying rapidly. And I doubt anyone will find a historic preservation movement centered on the 1975 L-shaped rancher snout house.

  45. Brian M Says:

    This has been an interesting debate. I still disagree with carrstone's implications (and Rico may be partly correct, but it is getting harder and harder to do well in some markets. More critically, screw up, and the data panopticon makes it harder and harder to recover.)

    But yes…we are probably being too harsh. At least she is not buying a 3,000 square foot house in the exurbs and driving a monster SUV 50 miles per day. Living an urban lifestyle is admirable. :)

  46. Major Kong Says:

    @Rico Boccia

    Airline pilots are arguably very well paid blue-collar workers. As the saying goes: "Lebron James is wealthy. The person who signs his paycheck is rich."

    I made that comment to carrstone because I have a sneaking suspicion that he is in IT or engineering. Those career fields seem to have a disproportionate number of libertarians.

    I know this because I used to work in IT. I put in a lot more hours to make a lot less money than I do now.

  47. democommie Says:

    I don't know if Crapstain works in, IT, Major Kong. I'm still leaning toward 15 you pretending to be an adult.

    I take the part about his being a 15 you back; he demonstrates considerably less maturity than most 12 you I've met.

  48. schmitt trigger Says:

    There is similar to this famous Creedence Clearwater song: "Fortunate Son".

  49. Sour Kraut Says:

    @Major Kong

    I think you have that wealthy/rich backwards, but the point stands.

    And I wouldn't take that bet on carrstone. I'm an engineer and quite of few of my fellows are rightists or Randians who seem to think they'd be masters of the universe if not for the government–even when they work for said gov't, of course.

  50. N__B Says:

    'He lives, by his own description, in a "crappy 1970s apartment on the lower west side".'

    Actually, it's a crappy 1970s apartment complex on the lower west side. Fortunately our windows face away from the other buildings in the complex.

  51. Sarah Says:

    @Gerald McGrew yeah I read the original NYT article days ago. Agreed re: reporters, but come on, even if it's about the design and she's implying that she can take a "nothing" place for 400K$ and make it "nice" — she's standing in the kitchen of a really nice apartment. If that's "nothing," sign the rest of us up for nothing. It's just a lack of awareness of what most people can afford, especially in New York.

    I said, people, not me. Don't have to make things personal, brah. I couldn't care less about this woman, but I'm also one of the privileged ones who is aware of my privilege. But you're right re: "hating" might be too strong of a word, maybe "strongly disliking because people have real problems paying rent in NYC and many people will never be able to afford to buy a house, ever" might be more appropriate.

  52. Sarah Says:

    I have a friend who does real estate in NYC and she commented on this article when I posted it a few days ago. She basically said that this income does not count "my rich parents bankroll me" income. So those who receive money from parents can discreetly save for a down payment, but no one else can. TL;DR, the game is rigged for the rich.

  53. BruceJ Says:

    I do believe that we've found someone who will beat the Sirius Cybernetics Executives to the wall once the revolution comes…

  54. Berkeley '74 Says:

    Was recently reading "West from Home" by Laura Ingalls Wilder which is a collection of letters of hers to her husband back home on a trip to visit San Francisco in 1915. The economy she describes is very similar to that today in California, jobs are booming, pay is good, but the cost of living is through the roof and no one can get ahead. The Steady State Theory continues to remain in effect here.

  55. HoosierPoli Says:

    Following Sour Kraut and Major Kong,

    Engineers spend so much time learning rules by rote and applying them that they never have the chance to develop the skills of critical awareness that would, for example, allow them to realize that, if everybody studied engineering, the market for engineers would be saturated with mediocre engineers and their salaries would be bid down to zero.

    Engineers sneer at liberal arts types who earn less than they do, in ignorance of the fact that they NEED a world where almost nobody is an engineer if they want to continue to live the lifestyle they're accustomed to.

    Give every person in America a six-month coding boot camp and working for Google will be like working for Arby's: anyone can do it, and so "anyone" does.

  56. carrstone Says:

    @ HoosierPoli
    Dream on!

    Bastiat could teach you: "if everybody studied engineering," the market will still only employ as many as it needs, there's no pressure on employers to engage more engineers, or to absorb the yield graduating from university.

    Additionally, the numbers of students actually qualifying echoing market demand suggests an exponential course failure rate for your scenario.

    As for 'critical awareness', I suspect that this topic is not taught at American universities much, not when I read the comments in columns like this one.

  57. carrstone Says:

    @Major Kong

    You guys make me smile.

    You quote a friend as saying how "He lives, by his own description, in a "crappy 1970s apartment on the lower west side".

    I tell friends I drive a Rolls Royce but always hasten to add that it's the entry level Ghost; god forbid that they get the wrong impression of me.

  58. Kevin Dowd Says:

    Let's not forget.. We are talking about a six floor walk-up. To a studio.. That is one room with the bed in the short side of the L. For $410,000. It sucks to live in any kind of walk-up. She will go to a bar after work to eat and drink and go home only to sleep.

  59. Greg Says:

    No, stupid, they're not *obligated* to absorb, that's why wages go down. This is the situation for lawyers.
    Critical thinking is a nice thing, and the truth is that although it *can* be taught in any context, and should be in the sciences and engineering, traditionally the humanities are where it is most consistently done because the humanities focus on ethics and meaning and neither can exist without judgment. Your limited grasp of every field you bring up on these threads is a sign that you lack judgment as to how to critically evaluate competing notions of truth and value, so you have chosen to focus on the most easily accessible, like most of your mouth breathing amerikkkan brethren. The quest for Prestige or actual power is just a public admission that you think your only hope for mating is to intimidate someone into breeding with you. Apparently you have yet to succeed. Hopefully that doesn't change.

  60. Townsend Harris Says:

    anotherbozo wrote "send Olga abroad"

    Manhattan long-ago accommodated the adult children of first-world kleptocrats. By the mid-1990s select Manhattan neighborhoods were crawling with the adult children of second- and third-world kleptocrats, a kind of US foreign policy blowback pre-dating 9/11. The Little Italy of Martin Scorsese's "Mean Street" evaporated under an onslaught of young Russian adults.

  61. carrstone Says:

    @Safety Man!

    So you 'know quite a few teachers, IT folks, cops, and even an engineer who split rent on crappy apartments/ commute long distances/ both because housing is unaffordable'.

    So? What're their options? Suck it up; hold out their hand palm up and wait for a benefit/assistance payment; ask for a raise; find another, better paying job; re-educate your skills to suit market demand; or, as Norman Tebbitt once famously had it – 'get on your bike'. Any options I've forgotten?

    Working hours are just working hours, the worker's skills are fitted to the available working hours, not the other way around.

    You're not doing yourself any favors by hanging out with the losers you mention, you might learn unrealistic expectations from them

  62. carrstone Says:

    @Greg

    What 'nice'? Like a bacon sandwich? I'm sorry, I don't get, from what you've written, where you think I have offended.

    The sad part of contributing to this thread is that I often get disillusioned by the doom-laden 'it's somebody else's fault' shtick. You guys, in your exchanging of mundane anecdotes, fail to make any sort of argument yet happily attack me personally in the deluded assumption that you know more than me. Who knows, who cares?

    Make an argument, not calumny.

  63. Khaled Says:

    @carrstone

    Your theory regarding engineers in the workforce falls flat on actual evidence from the real world. I don't care what Basitat has to say, every economist from Adam Smith to Milton Friedman to Paul Krugman to your local econ professor would tell you that the law of supply and demand set prices and also set wages.

    I can name examples of this theory in action off the top of my head. First, at Large Chain Drug Store we employed pharmacists, right? The wages of the pharmacist, in part, was determined by the demand and supply of them in the market. LCDS in Youngstown, OH, paid higher wages for pharmacists than in Pittsburgh because Pittsburgh had two pharmacy schools (increased supply) and because there were more open pharmacist jobs in the Youngstown area than registered pharmacists. Once the chain drug stores stopped rapidly expanding about five years ago, students graduating from pharmacy schools stopped getting "signing bonuses" and high wages. In fact many places, due to the large number of pharmacists graduating from pharmacy schools, graduates were taking jobs that only guaranteed 30 hours a week pay because it was better than unemployment. Oh, and the wages (including the bonus for "OT" work) started to go down for those currently employed as pharmacists.

    2nd example. Actuaries in Canada get paid less, and have a weaker job market, than actuaries in the US because the colleges there turn out more actuary graduates than the colleges do in America relative to the number of jobs.

    3rd example. Doctors and lawyers. There was a time that lawyers were paid quite a lot of money for their services, but starting lawyer pay has gone down over time because of the growth of law schools and the number of law graduates. I looked into going to law school about 15 years ago, but decided that the return on investment of law school (100k+ in loans) for a starting average wage of 40k (I made about the same as an assistant manager at LCDS) was poor, at best. Yes, some lawyers make more out of law school, but those law schools are very difficult to get into. Supply and Demand.

    Doctors have remained high wage workers because of the small number of people who become doctors. By keeping the supply down, medical schools preserve the high pay of doctors.

    4th example. Tech companies in Silicon Valley were sued because they colluded to keep wages down by agreeing to not "poach" each other's employees. The high demand of experienced people in those fields meant that wages kept going up, and the allegation that they illegally reduced demand kept down some of the top wages.

    I could go on with some simple research, but if anyone tells you that supply and demand doesn't govern wages of individuals, they are lying to you or don't know what they are talking about.

    @Rico

    I dunno, man. Unlike most of the people here, I've actually gotten stock and dividends as compensation in the past, and my W-2 was still pretty good. And unless you own a crap ton of stock (like tens-to-hundreds of thousands of shares), the dividend income on a W-1099-DIV isn't going to be as large as your W-2, since most dividends one individual share of stock are usually a few dollars at best. Most income from stocks are realized when the stock is sold and taxed as capital gains.

    Also, to the people wondering about the woman's mortgage payment, the 35% down payment someone listed above on the 400k apartment would give a monthly mortgage payment of about $1,200 with a 30 year fixed mortgage at a 3.5% interest rate. I did some quick math on my phone.

  64. Gromet Says:

    @Rico Boccia: I'm trying to ignore what comes across as an unnecessary personal attack in your reply to me. I'll stick with pointing out that you missed my point: A small apartment that went for ~$1,000 in 2004 goes for ~$2,700 now. That is a faster increase than salaries have seen across the board, and it changes the affordability of the area dramatically; while you could live here in 2004 taking home (after taxes) $30-40,000, you now should be taking home $120,000+, which is simply not possible for most people (it moves you from median income to the top 2%, I believe?). And that's to get yourself 500 sq ft. It is not confined to this neighborhood, either; I lived a 15-minute bike ride from work until I got priced out there and had to move here; there is now nothing reasonable within an hour's drive of where I work, in a city where I make above the median. That's not only a problem for me, it's a problem for the city that has to deal with traffic and transit issues, and a bigger problem still for all the people working here who make below the median (which is to say, half of us).

  65. Major Kong Says:

    So carrstone, why aren't you as rich as Bill Gates? Does he work harder than you?

    What about Oprah? Does she work harder than you?

    If hard work is all it takes, coal miners would all be retiring as billionaires.

  66. carrstone Says:

    @Khaled
    Had you exercised a little of the much vaunted 'critical awareness', you'd have noticed that I wasn't talking about wage levels.

    I was talking about the fact that, in none of your anecdotal examples, did the number of graduates determine the numbers employed; there's no causal relationship between graduates and jobs.

    It stands to reason that employers will pay salaries at the lowest possible level, supply and demand determines that; there's nothing wrong with that.

    Your thought process in deciding not to go into law, however, is a salutary lesson. You did all the necessary work, including opportunity costing, to come to the decision that the effort wasn't worth the candle.

    But I'll bet you made that decision less on the basis of the information gathered from the due diligence work but rather on the basis that you suspected or recognized that, as you weren't going to be the 'best', the top of the tree, the Big Kahuna among lawyers, your assessment of likely success made the option unattractive.

    That's the way the cookie crumbles, bro.

  67. carrstone Says:

    @ Major Kong
    Now, if you insist on becoming silly, I'll have to ask you to go back to your sandbox to play.

    Bill Gates is richer than me because he's smarter than me. Oprah is likely smarter than me as well. I don't know the woman, certainly don't watch anything she does but I think her being black and a woman helped her to succeed in her chosen niche.

    If you look at my other comments in this thread, you'll see that's what I've been talking about: being the best you can be. And please don't worry about me, I've spent a life-time raping and pillaging with the best of 'em and now I've got my ducks in a row.

    And coal miners will never, ever be rich. Their niche does not, as do electronics and entertainment, spew millionaires at regular intervals.

    Jeeze …

  68. Khaled Says:

    @carrstone

    For someone who whines about people insulting him, you certainly go quick to the insult when your point is refuted. I notice that you haven't made a single response to any of the arguments that wage levels would go down because of increased supply of labor. Your original point was that all us losers should have just worked harder and gone into STEM careers (your "study something Applied") that we'd all be successful, to which the response was that if everyone was an engineer, engineers wouldn't make as much money, to which you then quoted Bastiat (You could have quoted JS Mill or Foucault instead, since what you wrote was meaningless) and then completely missed the point about the labor market, instead to worship at the altar of "success means you're smart".

    "Effort wasn't worth the candle". What does that even mean? And insulting me that I didn't believe I was going to be "the best" at being a lawyer (whatever that means) but rather believing that I could "be the best" in my current field AND earn just as much money as I could graduating from law school. As it turns out, I have an MBA and will make plenty of money once my kids go to school in a couple years.

    Here's a thought for the "success means you're smart" school of thought. Dumb rich kids (sorry, low academic achieving children from high incomes) graduate with four-year degrees at higher rates that smart (high academic achieving) poor kids. The rich kids also graduate from 4 year degrees at almost the same rate as middle-income smart kids. Why is this important? Because a four-year degree is often a huge barrier to increased income. Plenty of "smart" kids don't "make it" if they are poor. Bill Gates is smart, but he also had a leg up on other kids because his parents had access to computing technology that almost none of his peers had.

    In other words carrstone, get bent. You don't know me or anyone else here, and I am not going to bother responding to anything else you write, because you're either a troll or an clueless asshole or both. I'm willing to bet that if you do make as much money as say you do, it's either because of family connections or (since it appears that you didn't get your education in the US, or speak English as a first language) you're bitter because everyone thinks you're a "diversity" hire who always has to prove to everyone else how smart you are to a bunch of people who hate you.

  69. carrstone Says:

    @Khaled
    Whining? Does 'You guys…. happily attack me personally in the deluded assumption that you know more than me. Who knows, who cares?' sound like whining to you? The reverse rather, I think.

    Let me repeat, my issue was not wage levels but jobs – why don't you read again what I said, not what you would like to think I said.

    And if you had thought that you have the cajones to out-Jamail Jamail, are you telling me you wouldn't have become a lawyer?

    It wasn't an insult, it's a good thing to be able to recognize your weaknesses and helps you make better decisions.

    The important thing Gates's parents did for him was not the spurious leg-up with computing technology but the instilling in him a will to win.

    As far as this blog is concerned, I probably am a troll. But trolls are good for you, who else is going to challenge some of the regressive nonsense I read here?

  70. Katydid Says:

    Bill Gates may indeed be smarter than carrstone, but that's not why he got rich. Guys like Gates and Jobs came up in a perfect storm for their particular hobby of computer-building; they attended well-funded public schools, Gates had parents with connections to get him free lab time at the local college to indulge his high-school hobby, and his parents paid for his college (what he did of it). At the same time, the federal gov't was funding research into computers and the developing ARPAnet, which perfectly timed with Gates' little hobby and when it all came together in the late 1970s when the middle class still had money to spend, BOOM! Personal Computers for everyone and Gates became rich.

  71. Major Kong Says:

    Bill Gates also had parents with enough money to support him while he was getting his business off tbe ground.

    He wasn't slinging burgers to pay the rent while he was getting Microsoft started.

  72. lofgren Says:

    @Heisenberg

    I feel like it is relevant because even this person with parents comfortable enough to cosign or give her the downpayment on a $410,000 6th floor walk up – which makes them very comfortable indeed in my book, whether it was $200,000 or $144,000 – still had to get a mortgage to do it. It just illustrates how unattainable these places really are.

    As for those saying that it's not worth getting bent out of shape when a 20-something is oblivious of their privilege, that's true. But what's the New York Times' excuse?

  73. greg Says:

    Some interesting reading in light of carrstone's sycophancy: https://lareviewofbooks.org/article/phd-students-irrational/

  74. BruceJ Says:

    @lofgren Those parents are the Times' target demographic. It's validation that their 'troubles' are real so they don't have to feel guilty about screwing over the help "Times are tough for everyone, Manuelita!"

  75. carrstone Says:

    @Katydid
    So, Bill Gates, the poster-boy for Obama's 'You didn't build that'? Better go impound his money then.

    @greg
    Thanks for providing support for my point. The jobs market is just that, a market in which supply and demand rule the roost. Disappointment is caused by the assumption that, because you have a shiny, newly minted PhD, no employer will be able to resist you.

    Mostly, these days, a degree, besides a hug from a proud Mom, may only get you an interview. Should have studied air-control, instead.

    What did you mean by 'sycophantic', do you even know what it means?

  76. April Says:

    @Kevin Dowd That's exactly what most Chinese people do. They live in one room hovels – most in up-to-6th-floor walk-ups, so spend as much time as possible out doors in the public spaces the Chinese government provides.

    Also, can we please not forget the Bill Gates ALSO cheated a lot of people on the way up? He did NOT make his billions honestly. The fact that he's giving a lot away NOW helps, but this wasn't a poor boy does well in a moral fashion.

  77. Greg Says:

    Oh so today the market is ruled by supply and demand yet yesterday was TOTALLY different when Khaled was arguing the supply and demand cycle? Are you stupid or simply indifferent to logical argument?

  78. greg Says:

    And PLEASE tell me what you think sycophantic means, I can't WAIT to hear!