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Monday, June 17, 2019

The old rules don't apply

Yet another reason to ignore Boomer advice, particularly as it regards the housing market:
Recently, however, we’ve lost the plot on the classic life arc of yesteryear. Places where real estate is cheap don’t have many good jobs. Places with lots of jobs, primarily coastal cities, have seen their real-estate markets go absolutely haywire. The most recent evidence of this remarkable change comes in a new report by the real-estate firm Unison. The company, which provides financing to homebuyers by “co-investing” with them, calculated how long it would take to save up a 20 percent down payment on the median home in a given city by squirreling away 5 percent of the city’s gross median income per year.

Nationally, the gap between income and home value has been rising. Using Unison’s methodology, it took nine years to save up a down payment in 1975. Now it takes 14.

But the aggregate numbers make the decrease in access to the real-estate market seem gradual, albeit troubling, and underplay the spikiness of the country. In Los Angeles, it would take 43 years to save up for a down payment. In San Francisco, 40. In San Jose and San Diego, 31. In Seattle and Portland, 27 and 23, respectively. In the east, New York and Miami topped the list, requiring 36 years to save up that down payment. Only Detroit, at seven years, was under the national average from 1975.

For young people in high-opportunity metro areas, the route to home ownership is basically blocked without the help of a wealthy family member or some stock options. Meanwhile, older people who bought under much more favorable circumstances have seen their equity stakes grow and grow and grow.
It's really astonishing to review how many markets are fundamentally broken. I finally understand why some consider my 2033 timeframe to be optimistic. From my Gen-X perspective, the housing market was fairly reasonable until about 1997. That's when everything took off like a rocket and essentially locked first-time buyers out.

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92 Comments:

Blogger Wraithburn June 17, 2019 9:09 AM  

Do you mean the standard Boomer buy a house and settle down line? I knew the housing market was rough, but I didn't realize it was that rough. There are a lot of modern parallels here to the history in And Forgive Them Their Debts. With people locked out of owning, the usufruct of their labor is eaten away whether buying or renting.

Blogger Sylvester Corleone June 17, 2019 9:10 AM  

Hi Vox, you mention here again, what you already mentioned on several occasions, that the United States is probably going to fall apart in the 2033 time frame, based on the average currency life span of 70 years, which began in 1973 as you said. I'm confused. 1973+70=2043, not 2033. Did I get something wrong here?

Blogger Stilicho June 17, 2019 9:11 AM  

The trend away from cubicle farms towards working remotely will help somewhat, but I doubt it will be anywhere near enough to stem the tide. Most jobs will still require some degree of proximity to a workplace. When communication infrastructure starts breaking down, remote work will dry up.

Blogger JC Skinner June 17, 2019 9:15 AM  

It's generational warfare, basically. The Booming generation got high on the '40/50/60/70 is the new 20/30/40' nonsense, and by appealing to their inherent selfishness (which we're all at risk of), vertical atomisation of the family unit was placed alongside horizontal atomisation (via globalisation, imports, moving away for education, etc).
You can live in a box in NYC for your best years if you wish. You probably shouldn't wish, though. It won't end well, or likely even begin well nowadays. For NYC, read London, Paris, any of the formerly great world cities.
But it's probably better to find a decent job, ideally as your own boss, in a much smaller town which is somewhat homogenous, and embed into the community. The cultural and spiritual capital of that is worth infinitely more than any possible pay-check. And you'll afford your own home.
The boomers are on their last ride now, whether on the Harley whose purchase keeps their distant grandchildren in poverty, or on the mobility scooter they need to get out of the house. I pay them no mind. They're already part of the past.

Blogger Matt June 17, 2019 9:23 AM  

There are deals. There are steals. You just have to know what to look for. Do your research. My mother, at 53, living on social security and disability due to cancer, managed to find a foreclosure short sale with an FHA loan. 1600 a month mortgage, the house was worth 300k, short sale was for 220.

Blogger Mr.MantraMan June 17, 2019 9:30 AM  

Hey Boomers to make you feel better in the second season of the Danish TV series "The Rain" it is a set of Gen X parents who take the shot to the face instead of the Boomers in America.

Obviously we of the gray haired set could give better advice to our children of the American Nation on how to navigate the collapse of the American Empire. For example, at Sailer's my fav posts basically come down on how to live in LA and not die in LA. Steve will post and the natives will fill in the details of where to be and how to navigate that particular shithole.

Blogger Jack (LJCSOGHMOMAS) June 17, 2019 9:32 AM  

In b4 boomer: "You kids are just lazy. I worked a part-time job all summer to save up for the down payment on my first house and nobody heard me complaining about it."

Blogger JD Curtis June 17, 2019 9:34 AM  

My credit union has an offer to bundle all costs (no downpayment) in to a mortgage, however it's of the variable rate type

Blogger Damelon Brinn June 17, 2019 9:35 AM  

"high-opportunity metro areas"

This is one of those ideas they repeat without thinking. Yes, there are more jobs in the cities, but there are also more people competing for them. Whether they are really high-opportunity depends on both those numbers, but people continue to assume that you must go to the city and put up with crime and high cost of living for the sake of a decent job.

Blogger Zaklog the Great June 17, 2019 9:48 AM  

In light of the recent discussions here about student loan forgiveness & usury in general, the Ilk might find this interesting. Yes, it’s fairly basic, but for people who’ve never thought this through before, it might be a useful perspective. Debt is slavery.

Blogger binks webelf June 17, 2019 10:00 AM  

OT:

The FBI is trying to false flag 8chan. Get VPN cover if you go to interesting places like that.

https://www.neonrevolt.com/2019/06/16/deep-state-attack-on-8chan-fbi-special-agent-caught-manipulating-the-boards-qanon-greatawakening-neonrevolt/
Deep State Attack on 8Chan! @FBI Special Agent Caught Manipulating the Boards! #QAnon #GreatAwakening #NEONREVOLT

Blogger swiftfoxmark2 June 17, 2019 10:18 AM  

Simple math is all that was required:

-Median household income is $57,652 in 2017.
-Median home prices are $199,200 in 2017.

A down payment on the average house with average income is $39,840 in 2017. That is 69% of your average annual income.

There is no way most Americans can afford housing without having to submit to questionable mortgage practices. Combine that with the average student loan debt, which comes to $32,731 and the average new car loan is $29,921.27.

This is insane. Of course younger Americans cannot afford to buy their first home or condo. They are deeply in debt, most of which cannot be bankrupted, and are somehow expected to buy a house.

Usury has killed the American dream.

Blogger Murray June 17, 2019 10:29 AM  

Are there any reliable analyses of the effect of immigration on housing prices? It's got to be huge. Non-homeowners get it from both ends: on one, the government manipulates the financial system to provide existing homeowners with (the illusion of) wealth; on the other, millions of newcomers end up in large cities, reducing the availability of housing stock for the existing population.

Blogger binks webelf June 17, 2019 10:31 AM  

@12 "This is insane. Of course younger Americans cannot afford to buy their first home or condo."

What is the real decline in spending-power of a dollar since, say, 1960? My wife stayed home for the first 5 years of our kid's life, but it was a tight budget. The death of the idea of a living wage (one parent can support a family, usually the Dad) has meant debt, hardship, living on credit, and a decline in parenting-time. This cannot be for the good.

Why, it's almost as if the elites don't want anybody getting ahead, or even staying in place, and economic disruption of family-life!

Blogger Stg58/Animal Mother June 17, 2019 10:34 AM  

If you drive through places like Houston, you can imagine who is sucking up all yjr affordable housing that college students and low income Americans could afford. Especially with Section 8 vouchers. Immmigration, like politics is war by other means, but it's even worse than that, since immigration is really the elite making war on its own people. Immigration on this scale dowsmt happen without the elite allowing it to happen. This is why every president for decades except Trunp has been an absolute fucking traitor. Any of them at any time could have picked up the phone and shut it down with one phone call.

Blogger Patrick Kelly June 17, 2019 10:34 AM  

At this rate I need to sell my house and one kidney while they are still valuable in order to retire in a home abused by some diverse old woman until I die.

Think I'll just keep working as hard as I can until I can't breathe and move any more.

Blogger binks webelf June 17, 2019 10:44 AM  

@7 In b4 boomer: "You kids are just lazy. I worked a part-time job all summer to save up for the down payment on my first house and nobody heard me complaining about it."

I'm Gen-X, and my first year of college was $916 tuition, and $100 books. I could make enough in the Summer ($2300) to pay that, and then some.

Current local Canadian college prices are $3-4K for tuition. Local minimum wage is $11.50. 13 weeks of Summer x 40 hours per week = 520 hours. That's $5,980. I.E., doable, but not for the whole load ($8-10K per term for full package, meals, residence)... guaranteed you'll be leaving college with $20-30K loans.

My offspring have both opted for community college. With education savings from us, they leave their programs with an 85%+ chance of being hired, and no debt. 100% chance of not being brainwashed by tenured Marxists. No massive debt = an easier time starting families. No 10-15 years of grinding out those miserable college loans, or leaving the country to dodge them.

Blogger NateM June 17, 2019 10:44 AM  

Just refuse to buy, let the boomers die sitting on their oh so valuable investment

Blogger James Dixon June 17, 2019 10:47 AM  

> Places where real estate is cheap don’t have many good jobs. Places with lots of jobs, primarily coastal cities, have seen their real-estate markets go absolutely haywire.

The eternal conundrum: You have to move to the city to get a good paying job, but you can't afford to live there, even on the good paying job.

When I was working in the DC metro area I knew I'd never be able to afford a house there. It was always a matter of renting until I had made enough money to move back to a rural area or found an equivalent job there.

> What is the real decline in spending-power of a dollar since, say, 1960

https://www.saving.org/inflation/ will give you the accepted answer. I suspect it understates inflation considerably.

Blogger kurt9 June 17, 2019 10:56 AM  

1997 was when the Federal Reserve asset inflation bubble really took off. Greenspen pushed the BMI, who really defines CPI, to change the definition of inflation three times during 1993 to 1998. These were 1) indexing, 2) substitution effect, and 3) hedonic factors. It is the fire hydrant of cheap money resulting from this and, later, ZIRP, that has driven the asset inflation bubbles ever since.

Blogger Snidely Whiplash June 17, 2019 10:57 AM  

In Seattle at least, it's a flood of Chinese money. Something like 25% of home sales are to foreign investors, most of whom will not rent out or even maintain the property.

Blogger swiftfoxmark2 June 17, 2019 10:58 AM  

It isn't just inflation that is the issue.

Mortgage-backed securities were created in the late 1970s. In the early 1980s, the 30 year mortgage suddenly became the norm. That isn't a coincidence, that is the natural flow of events when people get extremely greedy with other people's assets. They needed more people to create assets and they needed the value of housing to go up in order to make more and more money.

Combine that with the increased inflation due to abandoning the gold standard, the increased immigration, etc. and you can only begin to understand the scope of the issue.

Either the boomers and gen-Xers need to suck it up and let their property values drop drastically due to deflation or they need to be ready for a serious time of unrest in this country.

Blogger CarpeOro June 17, 2019 10:59 AM  

You can throw out the Detroit number, as it is nearly meaningless. Sure, you can get a home cheap in the shell of what was once the city and go out from there to where most jobs are located. But the level of services, a city income tax, and crime don't make it preferable. People still tend to look for homes near work, entertainment and shopping which reside in the suburbs of metro Detroit. Which means that home costs go up to match the value of the location. I see a market that is more expensive than what I think the employment value/market can bear long term (that is with the latest socialist administration voted in at the state level).

Blogger Beardy Bear June 17, 2019 11:00 AM  

That monthly payment is insane.

Blogger Robert What? June 17, 2019 11:02 AM  

@Patrick Kelly,

Personally I have the Smith & Wesson Retirement Policy in reserve.

Blogger CM June 17, 2019 11:04 AM  

The eternal conundrum: You have to move to the city to get a good paying job, but you can't afford to live there, even on the good paying job.

I expected a rise in tech would spread love away from port-cities.

Transportation in trade is important with tangible product, but when the product is pixels, I figured you don't need the same access to traditional trade routes.

That hasn't really been the case.

Blogger Calvin809 June 17, 2019 11:09 AM  

This is why one income families are almost an impossibility. Some people who bought low a decade ago can still do it and homeschool their kids but most people will need both parents working to afford anything. Buying a new car isn't really a good idea unless you can afford to throw away $20-30k. My wife and I have bought cheap used cars for cash for way less than thenew andy work just fine. Also no credit card debt helps.

Blogger KirkTownzen June 17, 2019 11:16 AM  

@26 "I expected a rise in tech would spread love away from port-cities."

I'm not sure why, but the big-tech masters do not want their minions to be free. I know some people who work for them, and they have tried and failed to acquire remote positions.

I'd recommend working for smaller companies that don't have the power to force your hand. Be so good they can't control you. I get paid very well and live in possibly the cheapest housing market in the USA (in an actual city, not the forest). Forget about saving for a down payment for 14 years, my house will take 2 years to buy outright.

Blogger Ska_Boss June 17, 2019 11:32 AM  

I work in the business. The real estate market, if left alone in a free market, will stabilize itself given time. However, there are certain societal, economic and most importantly governmental factors that are impeding this stabilization (too many to list here). It's a great time to be an investor in new housing developments if you have a lot of money but for the common folk it is definitely getting more and more difficult. As they say, it takes money to make money.

Blogger Azimus June 17, 2019 11:32 AM  

My sister and her husband are the perfect model: they bought a tiny home in a desirable part of LA metro area - paod whatever it took to get into that town. Lived in the house and worked their hipster jobs til the house got too small for their family, then sold the tiny home (at a decent profit becasue everyone wanted into that town), and moved to northern WI and bought a house 2x the size for cash. They had a nice house totally paid off by age 34. Their income is 30% less where they live now but who cares - they are debt free.

Blogger Azimus June 17, 2019 11:43 AM  

swiftfoxmark2:
"Usury has killed the American dream"


True. Almost every website or article that includes the words "Can I afford" only consider monthly income and outflows, they don't consider the total cost of ownership at all.

I got terrible advice from my boomer parents and boomer realtor and boomer mortgage officer, and ended up buying a starter home in poor shape at the peak of the last housing boom w/3% down. Now that I'm within a year of paying it off, I 1) won't be selling it but renting and 2) I will be socking away those mortgage payments into savings waiting for the next downturn which feels like its coming.

Blogger Amy June 17, 2019 11:50 AM  

If not for the VA Home Loan program, we would not have a mortgage. Zero down, low fixed rate, and we were still underwater when we signed the mortgage papers. Taxes are increasing again. After eight years we have no equity.

It’s not a pretty picture, especially since Murphy wants sanctuary state status for NJ, and my down has a lot of foreclosures, bank owned, and sheriff sale properties, making it ripe for relocation of incoming biological weapons via section 8.

I love my little house and my little town now, but if it becomes unsafe we cannot afford to leave. What was Admiral Akbar’s famous line, again?

Blogger RC June 17, 2019 11:52 AM  

I concur that 2033 is starting to look optimistic.

To my fellow Ilk entrepreneurs: Find some young bucks and show them how to navigate this thorny path by helping them start and build an SJW-resistant business. Walking with a young man until that magic day when his business covers his family's living expenses, allowing his wife to stay home and educate his offspring changes eternity and NEVER gets old.

Such a plan can also avoids the credentialism trap that leaves so many broke, indebted, and intellectually disabled.

You'll also be slowly assembling a group of young men who'll always have your back, your very own VFM.

Blogger OneWingedShark June 17, 2019 11:58 AM  

Wraithburn wrote:Do you mean the standard Boomer buy a house and settle down line? I knew the housing market was rough, but I didn't realize it was that rough.
Even renting can be rough — I've seen places with "low" cost of living have rent at the better part of $1k/mo (≈$12k/yr) which under a $37k/yr median income would be about 1/3 of the paycheck… and that's without utilities, food, vehicle, and fuel.

I used to be disdainful of my peergroup that was stuck w/ parents about a decade ago — that all changed when I was unemployed/underemployed for ≈6yrs — having experienced how rough it is, even with a degree [Computer Science] (and security clearance) and the invasion of H1B labor [+ its devaluation of all resume-centric metrics], I've become much more aware of the realities of the situation.

KirkTownzen wrote:@26 "I expected a rise in tech would spread love away from port-cities."

I'm not sure why, but the big-tech masters do not want their minions to be free. I know some people who work for them, and they have tried and failed to acquire remote positions.

There's a very real bias against remote work in a lot of techie jobs — I suspect this is because managers can't "pop in" and "make sure they're working".

Blogger David son of Mark June 17, 2019 12:07 PM  

Do not despair. It is possible. I'm 32 and my wife and I bought a home 3 years ago in the San Francisco bay area. We are a single income household with a modest salary (I work for the State of California), no stock options, and both of our sets of parents are poor enough to not help us with the downpayment. I credit this uncommon feat to the fact that both me and my wife went to a state college with low tuition and worked during college so neither of us had students loans a year after graduation. These times are tough, but sound financial practices still make a world of difference.

Blogger James Dixon June 17, 2019 12:09 PM  

> It's a great time to be an investor in new housing developments if you have a lot of money but for the common folk it is definitely getting more and more difficult.

If there's an investment opportunity, there's probably a way to take advantage of it: https://www.kiplinger.com/slideshow/investing/T044-S001-10-housing-reits-to-buy-for-the-rise-of-renters/index.html

The one real exception I've found is horse racing. Everything there seems to be limited partnerships with fairly onerous requirements. But it is a very niche market.

Blogger James Dixon June 17, 2019 12:13 PM  

> Even renting can be rough — I've seen places with "low" cost of living have rent at the better part of $1k/mo

That's what I'm seeing also.

Blogger Noah B. June 17, 2019 12:17 PM  

@11 Looks like the real deal - FBI agent spends 7 hours shitposting on pol while watching synagogue shooting plot unfold, then unwittingly records it all in a federal search warrant affidavit. Priceless.

Blogger Aeroschmidt June 17, 2019 12:19 PM  

That's why the market has created 0-3% down loans. Coming up with 3% was about as much as all the fees and taxes.

The silver lining from an asset protection perspective is you have no equity and won't loose your house to forced sale.

Blogger L June 17, 2019 12:21 PM  

Paraphrasing I forget who, there are no longer markets, just interventions.

Blogger P Glenrothes June 17, 2019 12:23 PM  

The deep state bankers love it when the fingers of blame are pointed away from them.

Blogger Damelon Brinn June 17, 2019 12:30 PM  

I expected a rise in tech would spread love away from port-cities.

It should have, but old assumptions die hard. Even a smart guy like Paul Graham wrote that you need to be in Silicon Valley if you want to do anything special in tech, because you need to be rubbing elbows with tech people all day. I don't know if he still argues that now that you'll also be dogding their feces in the street.

Blogger Doktor Jeep June 17, 2019 12:43 PM  

I'm sure if these kids picked themselves up by the bootstraps and applied themselves harder they could shorten that down-payment savings time by at least 4 years.

Blogger Wraithburn June 17, 2019 12:54 PM  

OneWingedShark wrote:I used to be disdainful of my peergroup that was stuck w/ parents about a decade ago — that all changed when I was unemployed/underemployed for ≈6yrs — having experienced how rough it is, even with a degree [Computer Science] (and security clearance) and the invasion of H1B labor [+ its devaluation of all resume-centric metrics], I've become much more aware of the realities of the situation.

Ouch, and I thought the six months I spent unemployed as a software engineer was bad! Were you not willing to move elsewhere? That was part of what I ran into. I could go for much more junior positions locally and take a big pay cut, or I could uproot and move to a tech hub. Stuck it out till I got remote work, but I was antsy enough to interview for an Amazon job in Seattle at that point.

Blogger LZ June 17, 2019 12:57 PM  

Wait for the foreclosures.

Blogger Wraithburn June 17, 2019 1:02 PM  

Damelon Brinn wrote:It should have, but old assumptions die hard. Even a smart guy like Paul Graham wrote that you need to be in Silicon Valley if you want to do anything special in tech, because you need to be rubbing elbows with tech people all day. I don't know if he still argues that now that you'll also be dogding their feces in the street.

Well startups are a weird case. Michael Church wrote extensively on that topic before he took down his blog. The upshot is that most startups are a realization that the company does not matter. It is a vehicle for extracting value, not a business.

If it doesn't matter whether you succeed or fail, make money or not, then you have far more flexibility in what you do. All you need is to plug into the money faucet, and strip as much out of the stream as possible. Thus, the startup community is primarily politics. Who you know, getting an "in" to the clubhouse no matter the cost.

Then, just pitch your useless app idea to the investors and they throw money at you. Squeeze the employees to get even more out personally, and if it fails, just roll a new idea and respawn.

The average person thinks of business as being serious, trying to succeed and make it go. They don't consider how much personal profit you can make while burning other people's cash.

Blogger OneWingedShark June 17, 2019 1:24 PM  

Wraithburn wrote:OneWingedShark wrote:I used to be disdainful of my peergroup that was stuck w/ parents about a decade ago — that all changed when I was unemployed/underemployed for ≈6yrs — having experienced how rough it is, even with a degree [Computer Science] (and security clearance) and the invasion of H1B labor [+ its devaluation of all resume-centric metrics], I've become much more aware of the realities of the situation.
Ouch, and I thought the six months I spent unemployed as a software engineer was bad! Were you not willing to move elsewhere? That was part of what I ran into. I could go for much more junior positions locally and take a big pay cut, or I could uproot and move to a tech hub. Stuck it out till I got remote work, but I was antsy enough to interview for an Amazon job in Seattle at that point.

It was more complicated than that. I lost my job, and was looking for work but not finding anything, except for a single remote-position that was somewhat intermittent maintenance (ie sometimes 40hrs a week, sometimes 0) — then I found out that my grandpa was dying of cancer, so I moved out there to help my grandparents, and after dealing with that + taking care of my grandma for a ear, I basically went to live with a sibling and their spouse where I was dealing with severe depression for a couple of years.

After that I tried getting work, but with the caveat that I wouldn't go anywhere that would cause me to go into debt, and so that meant no Seattle/LA/etc because at that point I had only a few thousand to my name (which moving + first-month's-rent would consume) and so I put out applications everywhere it was feasible — I kept running into things like "entry level position, requires 20 years experience, pay $20/hr" — and usually would get nothing in response to applications. The few responses I did get were usually automated "ATS-SW REJECTION TEMPLATE letters" and the really rare interview opportunities were usually "We'll get back to you, Thursday" but they never do.

When I finally got a new job, it was after rewriting my resume several times, making an additional "here's why I'm good/my qualifications for this particular program" document; only to be stuck in a quality-assurance position and then fired on 90-days "because I wasn't writing code" — though the 'writing code' was essentially an "if you get time"-style task — I suspect the reason they "let me go" was because I didn't answer their mandatory open-ended "where do you see yourself in five years"-style professional goals in the manner they wanted. (I said I wanted to join the standards committee for the Ada and VHDL languages, which weren't used in any of the company's projects; so I wonder if they would have fired me if I had said "I want to start my own [small-]business.")

In hindsight, I think God was using me to take care of my grandparents, and I wouldn't have been able to do that if I had gotten a full-time job elsewhere… so, even though it was tough getting all those rejections and "hiring manager fell off the face of the earth"-style stories during my job-hunting, I can thank God for the overall experience.

Blogger Zaklog the Great June 17, 2019 1:25 PM  

@Wraithburn

So if I’m hearing you right, much of the tech sector of the economy these days is just the plot of The Producers. Lovely.

Blogger Wraithburn June 17, 2019 1:37 PM  

OneWingedShark wrote:In hindsight, I think God was using me to take care of my grandparents, and I wouldn't have been able to do that if I had gotten a full-time job elsewhere… so, even though it was tough getting all those rejections and "hiring manager fell off the face of the earth"-style stories during my job-hunting, I can thank God for the overall experience.

I believe God blesses us in many ways like this. Not what we think we "should" have happen, but it all works out for the best.

@Zaklog

Not the whole tech sector, it is specific to the startup industry. Most software is bread and butter internal business stuff, the nervous system of a corporation. It gets written in house or by consultants. Then you've got lots of maintenance work for everything already written and software for sale in various capacities.

The segment grifting around in San Francisco, New York, Chicago, Houston, and so on is not somewhere you want to get into.

Blogger Brick Hardslab June 17, 2019 1:56 PM  

Won't work. They'll just import third worlders to buy up the place piecemeal.

Blogger VD June 17, 2019 2:02 PM  

Tell others what to do here again and you'll be permanently banned, Birdman.

Blogger Snidely Whiplash June 17, 2019 2:06 PM  

Zaklog the Great wrote:So if I’m hearing you right, much of the tech sector of the economy these days is just the plot of The Producers. Lovely.
A typical Silicon Valley startup is a stock scan that takes 4-7 years to pull off. They don't make money because they are never intended to make money. VC funded startups are intended to hook in a lot of investors, so you can spend their money. In fact, when they start making money it confuses the plot and makes it more difficult to execute the scam. The goal is to either get bought out at bizarrely exaggerated price, or make it to the initial public offering, where the entire clusterfuck can be dumped on anonymous investors who then have the bag full of cats and can attempt to make money out it.

Twitter is a good example. Twitter not only made it all the way through IPO (The holy grail of VC funding), they made it to a level of revenue that most startups only dream of. Yet, they continue to lose money. Whenever they start to get revenue ahead of expenses, they hire a raft of employees or overpay for some useless tech startup, just to make sure they lose money. Why? Because @Jack is in control, and as long as you're osing money, nobody else expects a cut. As someone up above noted, it's an extended version of the plot from The Producers.

Blogger Snidely Whiplash June 17, 2019 2:11 PM  

Housing prices are one of the big reasons for importing the world. If you were to remove the 40-50 million illegal aliens in the US right now, you'd see demand collapse.

Blogger RandyB June 17, 2019 2:11 PM  

Right. Ignore the Gen X that are also still struggling, and worship the youth of the Millennials.

Blogger Damelon Brinn June 17, 2019 2:20 PM  

The upshot is that most startups are a realization that the company does not matter. It is a vehicle for extracting value, not a business.

True. One of my clients has been trying to get me involved in a startup for the last month, as the guy who makes the system work. He calls and spouts acronyms and talks about teams and IPOs, and I wait for him to take a breath and then say, "Okay, but what do I have to DO, and when do I get PAID?" The call usually ends pretty quickly after that, and then the next week he's back with more flowery talk about how big things are underway, until I say, "Okay, so back to getting PAID..." They seem to live in a world where people make deals and checks come from somewhere and everyone prospers even if nothing ever gets produced, but I figure someone has to be getting it in the shorts, and it's not going to be me.

Blogger CarpeOro June 17, 2019 2:27 PM  

The problem with remote work, unless of a sufficiently high level or niche area, larger corporations start thinking "why not India and pocket the savings in salary?". Happened twice to me at around 6 figure salary even when I had moved for the positions - and my skills were only partly covered by the replacements in India (they got less than what they paid for). I hope to avoid big corporations from now on and retire from my current work place that has less than 2,000 employees worldwide.

Blogger weka June 17, 2019 2:32 PM  

Try 800 000 house price with household income 100 K. That's Auckland, Sydney, Vancouver after the current correction. I am telling my kids to not go there.

Blogger VFM #7634 June 17, 2019 2:47 PM  

In Seattle at least, it's a flood of Chinese money.

@21 Snidely Whiplash
And how did the Chinese get all that money in the first place? But yeah... decades of multi-billion-dollar trade deficits don't matter to the economy.

Blogger Iron Spartan June 17, 2019 2:57 PM  

Plenty of homes and good paying jobs out in the hinterlands. The problem is that those jobs require technical skills that few people possess.

I have $30-$40/hr jobs that we can't find people who have the intelligence and education to start the training for them. In areas where the median income is under $50K.

Blogger OneWingedShark June 17, 2019 3:00 PM  

Zaklog the Great wrote:@Wraithburn
So if I’m hearing you right, much of the tech sector of the economy these days is just the plot of The Producers. Lovely.

Ouch, but yes.
From my understanding, at least — what's worse is that it's become standard to put "everything you ever make belongs to us"-style clauses in contracts — so the scam is two-ways: on the investors, for their money, and on the employees for their intellectual property… so if you're one of the competent employees who makes something addressing the problem, chances are you couldn't use that solution even if you got out, started your own company, and ran with it.


Blogger Ominous Cowherd June 17, 2019 3:23 PM  

Iron Spartan wrote:Plenty of homes and good paying jobs out in the hinterlands. The problem is that those jobs require technical skills that few people possess.

What sort of skills? I have a soon-to-be son in law who is looking for a direction.

Blogger Ann June 17, 2019 3:29 PM  

@Iron Soartan: Could you tell me in what line of work? 20 year old son intelligent, industrious, seeks direction.

Blogger Snidely Whiplash June 17, 2019 4:23 PM  

Iron Spartan wrote:I have $30-$40/hr jobs that we can't find people who have the intelligence and education to start the training for them. In areas where the median income is under $50K.
You're almost certainly putting a false barrier in front of the available talent. What sort of education do you require?

Blogger Noah B. June 17, 2019 4:33 PM  

If I were looking for a place to relocate I would seriously consider Kansas City. The housing prices are reasonable by comparison, the political climate in the state is good, and the economy is decent. Even if you could afford a home in San Francisco or Chicago, why do that to yourself?

Blogger justaguy June 17, 2019 4:43 PM  

Working for a tech start-up is like gambling in Vegas with a slot machine. You can't tell going in which start-up is going to make it. Only after putting in several years of grinding work at low pay, do you realize that most are left without much except experience/line on resume but a few lucky one get rich. It has been this way since the early 1990s when these tech bubbles started. Lots of stories from both rich and not rich engineers/programmers show this.

Blogger JAG June 17, 2019 4:58 PM  

Snidely Whiplash wrote:Iron Spartan wrote:I have $30-$40/hr jobs that we can't find people who have the intelligence and education to start the training for them. In areas where the median income is under $50K.

You're almost certainly putting a false barrier in front of the available talent. What sort of education do you require?



It used to astonish me the kinds of ridiculous requirements I would see for mundane jobs in the want ads when I was job hunting in my younger days.

This is hyperbole, but not that far off of the impossible to meet requirements that I saw listed:

"Wanted: One cow milker. Must have Ph.D, 20 years experience, and must provide your own cow. 8 dollars per hour to start. EOE!"

I used to think these ads were placed there as a joke.

Blogger Wraithburn June 17, 2019 5:22 PM  

JAG wrote:"Wanted: One cow milker. Must have Ph.D, 20 years experience, and must provide your own cow. 8 dollars per hour to start. EOE!"



I learned quick that you have to mostly ignore the requirements as idiot fluff. It's static on the signal. You demonstrate "go-getter" attitude to get your foot in the door with a vague resume that if you squint will kind of fit the bill, then sell your product in the calls and interviews. Tedious and salesy, but there it is.

Blogger James Pyrich June 17, 2019 5:28 PM  

I graduated high school in '97 in north NJ. I remember looking around at house prices and gaping at $200k for rather modest abodes thirty minutes from everything. And, yes, thirty minutes is a long drive in New Jersey, though I shudder to think how that's changed over the past two decades.

Now, of course, that's chump change for a house, even in more rural areas.

Blogger Snidely Whiplash June 17, 2019 6:24 PM  

JAG wrote:It used to astonish me the kinds of ridiculous requirements I would see for mundane jobs in the want ads when I was job hunting in my younger days.
My favorite was "Put your Unix administration and secretarial skills to work! Generous $15/hr!"
You will frequently see IT jobs, which don't require college training AT ALL, demand a bachelor's or even master's degree. What's really sad is that the hiring manager knows that no degree is required, but the corporation demands it, or HR adds the requirement on the basis that "all professional jobs require a college education."

Blogger LP916 June 17, 2019 6:32 PM  

64 can you imagine the mental and emotional gymnastics someone has to do buy a home in a sanctuary city where every election is a taxpayer rape, the stress, the dense populace, expensive grocery stores, hiked car insurance -

The old rules do work...against the under 50 crowd: the boomer become horrendous landlords, slum lords and those boomers whom pay thousands of dollars in sometimes terrible additions to upgrade their main residence, fall ill, sadly, leave it somewhat rigged up or 1/2 done and throw it on the market as your new blackhole benjamins 'fixer upper'.

Boomers did ruin housing at least on the local level here. Or the boomers created a ultra lucrative appraisal racket.

Housing like college around here equate to scams or win-lose games.

Blogger teslawasframed June 17, 2019 6:38 PM  

"WraithburnJune 17, 2019 1:37 PM
OneWingedShark wrote:In hindsight, I think God was using me to take care of my grandparents, and I wouldn't have been able to do that if I had gotten a full-time job elsewhere… so, even though it was tough getting all those rejections and "hiring manager fell off the face of the earth"-style stories during my job-hunting, I can thank God for the overall experience.

I believe God blesses us in many ways like this. Not what we think we "should" have happen, but it all works out for the best."

He does, indeed.

I washed out of a state police academy a few years ago. I was blindsided, really down on myself, etc. A few weeks after I moved in with my parents (I had given up my apartment before leaving) I was in the house late at night with three younger siblings, and someone broke in. I armed myself and the oldest of the three, told her to stay put and shoot anyone who came through the door that wasn't family, and chased the home invader outside.

Long story short, the kid had just murdered 3 of his family members, and was extending his crime spree to "throw the police off his trail." He had a grudge against my family (he stalked two of my sisters, and was rebuked in public by my parents), and I'm certain he would have hurt anyone he could to get revenge.

After that incident, I haven't questioned God's wisdom, will, or plan for my life. It still irritates me that he doesn't share the plan with me (wrong, I know), but I can't ever doubt the fact that he put me there that night for the good of my family. My family lives and grows (I'm married and have my first son on the way), the murderer is in prison, and I've been a patrol officer with the local police department for six months now.

God has blessed me, and continues to do so...even through misfortune.

Blogger Lovekraft June 17, 2019 7:01 PM  

The common theme among complaints about boomers was how they failed to nurture strong connections in their children to their community and nation. Their cosmopolitanism was vulgar back in the seventies. Today it's on a whole other level.

Blogger Saxon June 17, 2019 7:39 PM  

Immigration pushes prices up by providing more competitors for homes. If immigration was pre-1965 levels, house prices would have dropped due to the smaller family sizes of Boomers and Gen X (houses built to accommodate larger Boomer generation, add in a smaller Millenial generation and suddenly supply outpaces demand).

Blogger OneWingedShark June 17, 2019 7:40 PM  

Wraithburn wrote:I believe God blesses us in many ways like this. Not what we think we "should" have happen, but it all works out for the best.teslawasframed wrote:
God has blessed me, and continues to do so...even through misfortune.

Amen — God is good.

Blogger Brett baker June 17, 2019 8:06 PM  

Last year the regional (NE Ohio) talk stations had a bunch of programs on about investing in real estate before it skyrockets. The county that has Youngstown in it has sent property tax notices to "New Zealand, Canada, China..."

Blogger Brett baker June 17, 2019 8:12 PM  

Except"Springtime For Hitler" was a hit.

Blogger Jack (LJCSOGHMOMAS) June 17, 2019 9:08 PM  

"In Seattle at least, it's a flood of Chinese money. Something like 25% of home sales are to foreign investors, most of whom will not rent out or even maintain the property."

This is a big issue worldwide. There are 1.4 billion Chinese. Many of those who are wealthy enough to buy property, which is a considerable number these days, are keen to buy property OUTSIDE of China because they don't trust China to remain stable. (This is their curse as a people - they are incapable of trusting each other.) Outside real estate is seen as a good investment, and the Chinese seem to have an inherent love of owning property. So they look to Hong Kong, New Zealand, Australia, Vancouver, Europe, and America. The Hong Kong housing market is fucked because so many mainland investors have bought properties there and left them unoccupied. So there's a housing shortage and skyrocketing prices at the same time.

This is a double edged sword for the Chinese leadership. On the one hand, it's capital flight that reflects a distrust in China. On the other hand, if they can promote Chinese racial nationalism, which they are doing, then all this diaspora investment becomes a kind of Han colonization.

Blogger wreckage June 17, 2019 9:25 PM  

The aim was always to jam urban centers full of disconnected people who could be kept fragmented and managed via identity groups, while stripping everyone else of opportunity and hope.

Blogger Seth S June 17, 2019 10:00 PM  

It likely has property tax built in

Blogger The Pitchfork Rebel June 17, 2019 10:08 PM  

@14

"Why, it's almost as if the elites don't want anybody getting ahead, or even staying in place, and economic disruption of family-life!"

The entire strategy of the left (ruling class) is to diminish, debase and demolish any institution that mediates between the individual and society at large. That's why they've attacked the family, churches and voluntary associations/fraternal organizations.

The individual, exposed to society at large will sooner or later encounter a vicissitude of fortune that will cause him or her to scream save me without regard to the means or methods.

Blogger Vlad Z. June 17, 2019 10:21 PM  

So the shootings in New Zealand and Pittsburg are all designed to stop Q.

Q who told us Hillary had been arrested in October of 2017.

Why would the government want to stop Q. The boomers are crazy about Q. Lots of people believed the elections in 2018 were safe because Q said so.

Blogger marco moltisanti June 18, 2019 12:14 AM  

I'm in my late forties and I've been viciously attacked as a boomer online a few times. When I point out to the youngins' that I'm actually solid gen x the response is basically "same difference."

Blogger Vulgar_Display June 18, 2019 1:58 AM  

Most illegals are renting houses boomers have bought up and are sitting on like Smaug with a pile of gold.

Blogger Brutus June 18, 2019 2:41 AM  

As one poster above said, there are plenty of jobs, houses, etc, outside of all these cities so many of you seem to be hung up on. Do you ever consider getting out of the belly of the beast?

But on a serious note, it is absolutely true. I live in southeast Indiana and the housing market is on fire here. And has been for years. There are many young people buying homes each day. (The down payment is NOWHERE near what an above poster mentioned. These are very good houses--brick, two stories, many with swimming pools, garages, etc--and many with large acreages. Two or three acres here is considered small. 15, 20 and more are common, and can be had, with the type of homes described above, for well under 180 grand. Many nice homes with a few acres of nice property can be bought for under 120 grand. The least of any of these I am talking about would go for several hundred thousand in the areas you all speak of.)

Also, as I can tell from years of reading from people like populate this blog and other type forums, It is obvious I myself have far more buying power and live far better than at least 90 percent of Google and Microsoft engineers and other software developers, etc. This on a literal fraction of the salaries I hear of from those type jobs.

I am an industrial electrician who also has many industrial, trade skills. I weld, fabricate, and perform industrial mechanics. In fact, I hold an electrical engineering degree from Purdue University, but most engineering positions in industry are actually only glorified management. I didn't like that. And I actually make more money and have far more degree of freedom at work in the maintenance departments of plants. I work in my own--fairly good--electronics lab in my home basement after work.

But there are many opportunities for tradesmen, electrical, welding, HVAC, construction, etc., for a man with drive and work ethic. There are many men in this area, and many other similar areas of the country, with fantastic homes and properties. 50 or 100 or more acres, wooded, large lakes and creaks on their properties, inground swimming pools with large concrete patios, and very nice, well landscaped homes. And of course, the nicest full size, four wheel drive trucks and SUV's. Also most have motorcycles, Fifth wheel campers, Razors, quads, tractors, the nicest lawn mowers. There is a fair number of young men well on their way in developing this type of life for themselves.

Blogger Matrick June 18, 2019 6:41 AM  

I would say that 1997 was about the same year that house prices in the UK soared out of control too.

Blogger judgeholdem1848 June 18, 2019 7:45 AM  

As with Sailer, I respect VD's ability to sludge through these articles. The quota-mandated Semite shows up halfway through and pozzes the rest into fork-tongued drek.

Still, the early points resonate. Another mine lurking just below the waterline for places like Needles n Poop is that they are reliant on industries that simply don't need centralized locations or even real estate at all. A huge number of San Francisco employees could theoretically be just as productive, if not moreso, from an Indonesian beach.

What exactly is the argument for businesses collectively keeping millions of employees in a town where they must be paid $300k/yr to make rent? Monopolies and startups that are mainlined into VC cash spigots may be able to afford that. But you could easily mistake such decisions for the excess that precedes every bubble's popping.

In general, location independence could cause major corrections in many urban markets when their current residents finally realize living the hipster dream isn't remotely worth running a life-draining 70-hour-per-week rat race.

Blogger Azure Amaranthine June 18, 2019 8:19 AM  

"I learned quick that you have to mostly ignore the requirements as idiot fluff."

While it is probably not the only cause, credentialism is likely a primary cause of this. If the credentials are going to be bullshit anyway, might as well post impossible requirements so that the inflated credentials are insufficient, and everyone has to jump through the same hoops of being "not good enough until proven otherwise".

The other major cause is fraud. Many business majors have no intention of hiring homegrown that will demand more pay for higher quality. Quality be damned, it's all a scheme to siphon fake money out of the usury/govdaddy coffers anyway. Might as well hire foreigners to fill those seats, since they suck up less of your graft. The circus must go on!

Blogger Damelon Brinn June 18, 2019 10:21 AM  

I have $30-$40/hr jobs that we can't find people who have the intelligence and education to start the training for them.

The globalists managed to break the job market from both ends. On one end, they killed wages by importing cheap labor and exporting jobs. On the other end, the stagnant wages and classrooms filling up with aliens convinced young poeple a lot of areas of study weren't for Americans anymore. And they turned the schools into indoctrination centers at all levels so a lot of graduates don't even have a basic education to start training from. So now we have workers who can't find jobs and employers who can't find people, even in the same industry, and they're both telling the truth.

You might have to pay more. You might already be offering more than the competition, and it might seem like a very good wage. But what feels like a correct wage for a particular job largely comes from perception based on decades of stagnant wages. If you take the amount that a similar job paid in 1970 and adjust it for inflation to today, it might seem like a crazy amount, but it's also likely to be in line with what a young man would need to make to start a family. I realize there's a cop somewhere on how much a job can afford to pay, of course.

This one sounds silly, but: make sure you advertise what you're paying. One employer I talked to complained they'd raised their pay rates and still weren't getting any takers, and they didn't have the rates in their want-ads. They told them in interviews, but weren't using the pay to bring people in in the first place. Put the pay and benefits right there in whatever ads you do, and emphasize it.

Businesses are going to have to get creative if they want good people. That's not their fault, it's just how it is.

Blogger rumpole5 June 18, 2019 12:18 PM  

The down payment is more formidable now than it was in the 80s, but the mortgage interest rates now are much lower. When my wife and I sold our little "starter" condominium in 1992, we offered as an inducement to the buyer to take back a mortgage at the "low" rate of 9%. I don't recall what the rate was for us when we bought it in '79, but it must have been higher.

Blogger Ominous Cowherd June 18, 2019 1:59 PM  

Damelon Brinn wrote:This one sounds silly, but: make sure you advertise what you're paying.

If you don't advertise a pay rate, I assume you're planning a low-ball offer to me, or you are underpaying your current employees and don't want them to know you're going to pay me more. Either way, I'm less interested in working for you.

Damelon Brinn wrote:If you take the amount that a similar job paid in 1970 and adjust it for inflation to today, it might seem like a crazy amount, but it's also likely to be in line with what a young man would need to make to start a family.

If you want get and keep a stable, reliable man, you have to pay enough for him to support his family. Pay less than that, and you won't have stable, reliable men working for you.

Blogger Dirk Manly June 18, 2019 3:42 PM  

@66

""Wanted: One cow milker. Must have Ph.D, 20 years experience, and must provide your own cow. 8 dollars per hour to start. EOE!"

I used to think these ads were placed there as a joke."

No... they are placed there to make absolutely certain that NO AMERICAN will even send an application in -- then they can run to the State Department and claim that they need an H1-B visa to fill the slot in their org chart.

Blogger RobertDWood June 18, 2019 4:17 PM  

Still insane

Boomers excel at convincing themselves the bad deal was a good deal.

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