Zillow house price latte conversion

Good evening all. Apologies for the late email today, had a bit of a chaotic week and missed scheduling this email (tomorrow’s will go out as regularly scheduled).

It’s no secret that houses are expensive. Combined with skyrocketing interest rates, fewer and fewer Americans are likely to afford a home. It’s unfortunate and feels unsustainable given that home prices are propped up by institutional buyers and people who were locked in when interest rates were much lower. However, I am not an economics expert, and this is not an economics newsletter.

A few years ago, personal finance bloggers began perpetuating the idea that is now a meme: skipping your expensive morning coffee will help you afford a house. As someone with a crippling Starbucks addiction, I asked myself, “Is this really the case?”

According to some rough, likely outdated Googling, a latte costs ~$3.65. If you’ve been to Starbucks recently you know that number is closer to 5 or 6, but whatever. Let’s set the baseline.

If that is our baseline, a modest home in Culver City, CA (part of west LA) costs almost 500,000 lattes. I guess if you hold off on ordering coffee for a thousand years you too could be a homeowner in LA.

This is depressing, but I could actually see people using a tool like this to decide whether or not they want to sacrifice basic quality-of-life things (like a latte) for a home.

Have a friend who loves lattes? Send them this newsletter.

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