Houses are positional goods. If you earn five times as much, your colleagues will too, and there will be a bidding war until the price matches your earning power again. See also: The absurd real estate prices in the Bay area.
Elizabeth Warren made that argument in her book "The Two-Income Trap". The economic gains from switching from the traditional bread-winner/house-wife household to double-income-households were eaten up to buy the "family home down the street where the best school is".
> Houses are positional goods. If you earn five times as much, your colleagues will too, and there will be a bidding war until the price matches your earning power again.
This requires the assumption that additional houses can't be constructed.
> See also: The absurd real estate prices in the Bay area.
Elizabeth Warren made that argument in her book "The Two-Income Trap". The economic gains from switching from the traditional bread-winner/house-wife household to double-income-households were eaten up to buy the "family home down the street where the best school is".
https://slatestarcodex.com/2014/06/28/book-review-the-two-in...