I've generally loved this site. Wondering what other distributions could be made so visual, where people near the top complain about the people just above them.
I promise you not. Houses here cost $2M+ for something livable and $1M for something with mold and other safety issues.
When half that $50K gets taxed, half of what's remaining has to be saved up for retirement in a place that deeply discriminates against age, you don't have much left to save up for buying a $2M house.
> half of what's remaining has to be saved up for retirement in a place that deeply discriminates against age, you don't have much left to save up for buying a $2M house.
Buying a $2M house is saving for retirement. Owning your own home in retirement is a massive financial win. And if you own a home in an expensive market, you can sell it, buy one in a more affordable market, and then the difference is unlocked retirement savings.
Man, that's nicer than houses in Redmond for the same money (though the SF one is a touch smaller), and you won't get that view. Bay Area house prices are insane, ya say?
The housing market is highly dependent on the job market so no, it’s not “being fussy”, it’s “I need to live here so I can have a job and income”. Unless you’re suggesting that people should quit their jobs and go get that cheap house in the middle of nowhere?
Depressingly, they bought a house in 1995 before the prices exploded. You need a 94th percentile income in Toronto to barely qualify for the average house.
I'm not familiar with the situation in San Francisco. But in Santa Cruz, the cost to own with a 20% down payment is ~50% higher than the rent for the same unit. If you can't afford a substantially higher down payment, you're not really in the market for a home.
With $7k/month after tax, you would probably be renting an 1br, or maybe a cheap 2br. But your income is not high enough to buy anything, unless you start looking for homes well outside the town.
You have it backwards. Housing is astronomically expensive in San Francisco precisely because there are so many people with high incomes bidding against each other.
When you have a highly inelastic supply (constrained by zoning laws, density limits, and geographical boundaries), prices rise to the maximum margin of what the highest-income buyers are capable of paying.
Regarding taxes: Since taxes apply to all local high-earners equally, it doesn't change their relative purchasing power against one another in the local housing market. If taxes were suddenly halved, that extra liquidity would be priced into the next bidding war, driving home prices even higher.
Note that some of the entries here are clearly outdated. I've cycled through some "global south" countries that I'm familiar with and what's shown may have been true maybe 15-20 years ago. GDP has 4x since then and at the same salary level the lifestyle is either equivalent or better than the richer countries.
I observed the same. There are "poor" countries listed here that would make large swaths of Americans look like they still lived pre-WWII, and were destitute.
Edit: Sorry, to be more explicit: by global standards large swaths of Americans DO live pre-WWII lives and have poorly constructed homes and lifestyles.
Typically in developing economies, economic growth is very unevenly distributed. I would expect that in an economy that has grown 4x, many people would not experience any economic growth at all. I would be very surprised if that didn't happen - if rapid economic growth was that evenly distributed. And governments, especially in developing countries with little accumulated wealth and little credit, cannot afford to raise the standard of living of large numbers of people through welfare programs.
To give context on my other comments, where I live in Scotland, median full time wage is around $55k.
You can live a perfectly comfortable life on that, you don't have to worry about bills or medical expenses, and you can afford to get a mortgage and buy a house (probably costing around $300k or so)
> That's why I'm surprised about people from a richer nation saying they can't afford things
If you had the same salary in Switzerland or Luxembourg which, believe it or not, is not impossible, there would be a lot of items that you can't afford. Salary is important but cost of living matters as well. Granted, inside the same country, figures could change drastically but people tend to live where there are lots of job opportunities where it's more expensive.
Long mortgages are a really really bad idea with high interest percentages. Unless you've locked in a low percentage from before corona you're going to pay almost as much in interest as you'd be paying for the house...
To pay off 300k within 30 years at current mortgage interest of 4% you'll have to pay 1432/month (215k of interest will be necessary)
Depending on the amount of taxes you have to pay, thats likely > 50% of netto wage
The median income in Southern England is comparable, but house prices are 2-3x higher. Not surprising that we moan about tax subsidies getting paid to folk with a better lifestyle.
It depends. In a ridiculously cheap country like India where food prices are hilariously low you can get quite far on $200/month. Fresh vegetables (tomatoes, potatoes, onion, garlic, spinach, squashes, gourds, eggplants etc) are literally an order of magnitude cheaper than what you would find in a cheap American grocery store. You can also get full meals from restaurants for about 30-40c. Medical care is also dirt cheap with most regular doctor visits costing between $1-$2. High end medical care and surgeries for less than $1000 for the whole procedure and stay. The PPP multiplier is something like 6-7x.
In developed countries, people buy (or rent) the things they need. Most financial transactions are recorded, taxed, regulated, and with 3rd parties involved at every step (who also expect to get payed). Car insurance, home insurance, electrical bill, etc etc. Grocery prices go up, you pay more. Renting, and rents are raised? Tough.
But in less-developed countries it's not rare for people to grow their own food. They could be living on 0 income & still have food on the table. Swap produce & services with other people in town. No 3rd parties, no taxes (see: informal economy). Build their own home on family-owned land. Insurance? What insurance?
TLDR; there's many flavours & angles on what "poor" or "rich" means in practice.
33 comments
[ 2.7 ms ] story [ 24.8 ms ] threadMeanwhile people making $50K/month in San Francisco can't afford a house because it's all taxed away and housing is astronomically expensive.
When half that $50K gets taxed, half of what's remaining has to be saved up for retirement in a place that deeply discriminates against age, you don't have much left to save up for buying a $2M house.
Buying a $2M house is saving for retirement. Owning your own home in retirement is a massive financial win. And if you own a home in an expensive market, you can sell it, buy one in a more affordable market, and then the difference is unlocked retirement savings.
https://www.zillow.com/homedetails/80-Prentiss-St-San-Franci...
check this out.
I'm not familiar with the situation in San Francisco. But in Santa Cruz, the cost to own with a 20% down payment is ~50% higher than the rent for the same unit. If you can't afford a substantially higher down payment, you're not really in the market for a home.
With $7k/month after tax, you would probably be renting an 1br, or maybe a cheap 2br. But your income is not high enough to buy anything, unless you start looking for homes well outside the town.
When you have a highly inelastic supply (constrained by zoning laws, density limits, and geographical boundaries), prices rise to the maximum margin of what the highest-income buyers are capable of paying.
Regarding taxes: Since taxes apply to all local high-earners equally, it doesn't change their relative purchasing power against one another in the local housing market. If taxes were suddenly halved, that extra liquidity would be priced into the next bidding war, driving home prices even higher.
Edit: Sorry, to be more explicit: by global standards large swaths of Americans DO live pre-WWII lives and have poorly constructed homes and lifestyles.
You can live a perfectly comfortable life on that, you don't have to worry about bills or medical expenses, and you can afford to get a mortgage and buy a house (probably costing around $300k or so)
If you had the same salary in Switzerland or Luxembourg which, believe it or not, is not impossible, there would be a lot of items that you can't afford. Salary is important but cost of living matters as well. Granted, inside the same country, figures could change drastically but people tend to live where there are lots of job opportunities where it's more expensive.
To pay off 300k within 30 years at current mortgage interest of 4% you'll have to pay 1432/month (215k of interest will be necessary)
Depending on the amount of taxes you have to pay, thats likely > 50% of netto wage
In developed countries, people buy (or rent) the things they need. Most financial transactions are recorded, taxed, regulated, and with 3rd parties involved at every step (who also expect to get payed). Car insurance, home insurance, electrical bill, etc etc. Grocery prices go up, you pay more. Renting, and rents are raised? Tough.
But in less-developed countries it's not rare for people to grow their own food. They could be living on 0 income & still have food on the table. Swap produce & services with other people in town. No 3rd parties, no taxes (see: informal economy). Build their own home on family-owned land. Insurance? What insurance?
TLDR; there's many flavours & angles on what "poor" or "rich" means in practice.