Housing bubble

April 25, 2004

I’ve been bitching about housing prices in the Bay Area, but it irks me to read pieces that make things out to be even worse than they are. A recent article in Washington Monthly — a periodical I’d never heard of until they got Calpundit to blog for them — particularly raised my suspicions. It claimed that the average ratio of home prices to annual income in California has risen to a whopping 8.3. The money quote was: “In California, a middle-class family with two earners each making $50,000 a year now owns, on average, an $830,000 home.” The author of the article makes no statements about where he got these numbers, nor does he use his terms particularly carefully. So I set out to fact-check his astonishing claim.

California absolutely does suffer from a housing affordability crisis. The California Association of Realtors keeps tabs on the percentage of households that enjoy an income high enough to purchase a median-priced home, and that number is now at only 24% statewide. However, note that this crisis is not about spendthrifty Californians wildly outspending their means to live in McMansions — it’s about middle-class purchasers being entirely priced out of the market. The CAR money quote: “The minimum household income needed to purchase a median-priced home at $394,300 in California in February was $91,690”. Since the statewide median income for a 4-person family is now $63,761 (according to the Census Bureau), that yields a ratio of 6.2 statewide for a median home — pretty awful, but still not 8.3 times income.

If you look at the numbers from Santa Clara county, the heart of Silicon Valley, you see again that this 8.3 ratio is unlikely to be the average even here in the epicenter of the bubble. The county’s annual youth-issues report from 2003 [PDF], which somewhat unaccountably uses statistics from 1999, gives the median household income as $81,717. HUD’s Median Income Survey, which is widely used by government and nonprofit agencies, gives a figure of $105,500. The Santa Clara County Real Estate Report’s annual report claims that the median price of a single-family home in 2003 was $550K (that’s leaving out condo sales, for which the median was $350K). That gives us a house price to income ratio of 5.2 for a median-income family buying a median-priced single-family home. And believe me, there are lots of people making $105,500 in the Bay Area who aren’t even THINKING about buying a house much less overspending wildly on one — in fact, California has one of the lowest home-ownership percentages in the country.

So there you go — the real facts, live from the epicenter of the housing bubble. Yes, housing prices are out of pocket in the Bay Area. Yes, it sucks to be poor or even middle-class here. Yes, I even know at least one person who did buy a house for something like 8.3 times annual income. But is the housing bubble going to suddenly burst and take down the entire national economy with it? Even Calpundit pointed out recently that housing bubbles are usually not that disastrous. So maybe we could lose the FUD disguised as concern, Washington Monthly — there’s plenty of stuff going wrong with the world today without making any up.

Footers suck

April 21, 2004

I’m so out of love with footers. It’s ridiculously hard to get a nice CSS layout (meaning two or three columns, the main one of which is floating-width) if you have to hang a footer off the bottom and you can’t guarantee that one column will always be longer than the other.

There are ways to do it, but none of them are all that obvious even to people who understand the box model pretty well. Also, a lot of them have subtle drawbacks — like the columns are in a different order in the code than they appear to be on the screen, or the column widths can’t be fixed, or you can’t put a border around the whole thing, etc. You can’t necessarily tell just from looking at a sample that a particular CSS layout will work for you.

The problem is, it’s pretty easy to get rid of footers on personal sites… but every commercial website uses them like crazy. Including my employer. Sigh.

It’s hard to get over the sticker shock of buying a house in the Bay Area. America’s median home price of $205,500 will not quite get you a mobile home. $500K buys you (literally) a shack with a dirt yard in a semi-crummy neighborhood. You barely reach the comforts enjoyed by most of America’s middle class (small yard, 2 bathtubs, family room, dining room) at $700K. And this is at the end of a recession when a lot of people have moved away!

There are really only two ways to buy a house here. You can work as an engineer for like 10 years, saving diligently and never getting laid off; or you can win the lottery. This can be the genetic lottery of having rich parents, the stock option lottery, or an actual lottery. Almost all the people I know who own houses took the lottery approach. In fact, when you start a job with a startup, lots of people calibrate their potential option grants in terms like, “If we get sold, I’ll have a down payment; if we IPO, I’ll have a house.”

We’ve now looked at a bewildering array of houses, after which we settled on pretty much what we thought we wanted in the first place: a 40-year old ranch house in Sunnyvale with 3 bedrooms and 2 bathrooms. Last month we made an offer on a house, but at the last minute someone outbid us by $50K. We almost made an offer on a different place, but the subfloor there turned out to be almost entirely eaten by termites. In a Valley full of ranch houses, you wouldn’t think it’d be so tough to find a decent one.

So I was telling my witty coworker John the anecdote mentioned in my previous blog post. I finished up by cheerily pointing out, “Unix is the gift that keeps on giving!”

He replied: “No, Joyce, Love is the gift that keeps on giving. Unix is an operating system. :-)”