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Rents are plunging in the most expensive U.S. markets

businessinsider.com

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Re: Rents are plunging in the most expensive U.S. markets

#51

Post by rahrahrah »

twelvechairs wrote: post #32
incompatible wrote: post #9

Apartments have been the last frontier of expensive mass-produced products. Hopefully this is the end, and not just a temporary blip.

Its the land not the apartment which is expensive. Land, especially in cities, is finite. This makes it different to other mass produced products

So build up. Here in London people don't build up, for some reason (I mean other than office spaces, obviously). I think it's this nefarious british mentality that old is good. So you never demolish any 2 story buildings, you just build more outwards. Then you complain that the prices are insane.

Re: Rents are plunging in the most expensive U.S. markets

#52

Post by hkmurakami »

conanbatt wrote: post #5

The past 2 years for me have been about the enormous exposure of how rent has been going up and house affordability has become a real problem world-wide. As legislation started to get promoted in different countries (Vancouver's foreign tax, Berlin's Airbnb ban, Argentina rent-caps) I always thought that the origin of this entire problem is the low rates for lending, and that these laws would only be a hinderance to…

>a real problem world-wide

Not everywhere though -- Tokyo rents are stable (if not decreasing, for older units) due to their decades long building spree. If this building boom had ceased, they would have been supply crimped just like many countries in the developed world, since there's an ongoing migration of rural youth into Tokyo for employment and education.

Re: Rents are plunging in the most expensive U.S. markets

#53

Post by BurningFrog »

zazen wrote: post #17

I know nothing about the San Francisco housing market apart from what I've heard in discussions here on HN. The received wisdom here seemed to be that powerful NIMBY lobbies in SF were preventing needed development and causing the sky-high rent. But this article is talking about an "historic construction boom". Did something change regarding development in SF? Or was the NIMBY effect always a bit over-stated? Anyone…

The "historic boom" is big compared to the very low rate of new construction of the last few decades, but still small compared to the need and potential. There is a fair amount of construction downtown, but most of the city remains frozen in time.

That said, I wouldn't blame it all on NIMBYs. Few changes of any kind get done in this town.

Re: Rents are plunging in the most expensive U.S. markets

#54

Post by mschuster91 »

soVeryTired wrote: post #22
tankenmate wrote: post #3

Can this please be re-titled as a US study? First blush of the article title made me go "What? Seriously?"; the two markets I look at first are London and Sydney.

I've heard similar reports about the London rental market, but then again when it comes to the housing market, the UK press report on every scrap of noisy data they can get their hands on. London has also seen a huge glut of (supposedly) high-end property come online. Builders are struggling to sell, so they're now starting to offer discounts on the new housing stock [1]. If what the article says is true, I would be…

London, I believe, has a big problem with the Brexit because many banks plan on or are already leaving the country. No banksters, no tenants for outrageously expensive properties.

Re: Rents are plunging in the most expensive U.S. markets

#55

Post by coolsunglasses »

matt_wulfeck wrote: post #50
morgante wrote: post #45

Amazing, supply and demand actually works! Someone should tell all the protestors who opposed construction of new luxury condos because they thought it would somehow increase rents.

It's unlikely to slow down San Francisco's unstoppable march towards the most legislated society in America.

March? They're Kings & Queens atop a pile of the bones of the impoverished, trying to find more skeletons to add to the pile.

Re: Rents are plunging in the most expensive U.S. markets

#56

Post by [deleted] »

zazen wrote: post #43
SomeStupidPoint wrote: post #36

Earlier quoted context omitted.

Speculation that this is the case in SF, but is an effect I've seen: You can get a dip in average rent without (sufficiently) dropping bottom quartile rents, which is what NIMBYism tends to block, by having a lot of nice condos built. The top quartile of rents dips heavily as places jockey for condo buyers, everyone moves in to a nicer place as the wave spreads, but the price at the bottom remains (mostly) the same (…

This sounds plausible, and it chimes with the article's statement that the new supply is at the high end. Thanks! If people were only blocking certain kinds of development, that would explain why low-end prices stay high even while there's a lot of construction causing the median price to drop.

[deleted]

Re: Rents are plunging in the most expensive U.S. markets

#57

Post by SomeStupidPoint »

zazen wrote: post #43
SomeStupidPoint wrote: post #36

Earlier quoted context omitted.

Speculation that this is the case in SF, but is an effect I've seen: You can get a dip in average rent without (sufficiently) dropping bottom quartile rents, which is what NIMBYism tends to block, by having a lot of nice condos built. The top quartile of rents dips heavily as places jockey for condo buyers, everyone moves in to a nicer place as the wave spreads, but the price at the bottom remains (mostly) the same (…

This sounds plausible, and it chimes with the article's statement that the new supply is at the high end. Thanks! If people were only blocking certain kinds of development, that would explain why low-end prices stay high even while there's a lot of construction causing the median price to drop.

I think of it as: NIMBYism keeps high-density zoned land high value, so the floor never comes out of the market, even if you squish the top down.

Houses don't belong in (the core of) major metros anymore, but there are a lot of wealthy home owners who live there, and have built up political networks over decades or centuries.

It's a tragedy of our system that we let 20 residents keep out 200.

Re: Rents are plunging in the most expensive U.S. markets

#58

Post by didibus »

spikels wrote: post #14
conanbatt wrote: post #5

The past 2 years for me have been about the enormous exposure of how rent has been going up and house affordability has become a real problem world-wide. As legislation started to get promoted in different countries (Vancouver's foreign tax, Berlin's Airbnb ban, Argentina rent-caps) I always thought that the origin of this entire problem is the low rates for lending, and that these laws would only be a hinderance to…

I agree that laws passed to deal with high housing costs are often counterproductive in the long run. The classic example is rent control. Can you explain your theory that low rates drive high rent inflation? Seems like it would be the opposite for several reasons: low rates are associated with low inflation, low rates make it much cheaper to build and operate apartment buildings, etc.

Counter productive in what ways? Rent control works great for Montreal and has for years. That city is very affordable to live in, because of it.

Re: Rents are plunging in the most expensive U.S. markets

#59

Post by didibus »

spikels wrote: post #47
pmoriarty wrote: post #13

Have there been any experiments in legislating ceilings for housing prices? If so, what has been the effect?

There are two kinds of real estate "prices": rental rates and property sales prices. Ceilings on property sales prices are very rare. Probably the most common example is resale price caps on government sponsored housing for lower income buyers. Price ceilings on rent are more common but still rare. This is commonly known as rent control. Like all price caps the result is shortages in varying degrees depending on how…

Hum, interesting. I think of rent control differently, but maybe the way you describe it is what is normally meant.

When I hear rent control, I hear controlled increase in rent over time for existing rental units. You make sure all rental units are profitable, but you protect existing tenants from being able to afford their rent to not being able to in a year, simply because a neighborhood has increased in desirability. So you force the market to either build new construction to profit from the boom, or to make remodeling to old buildings to justify rent increase.

Re: Rents are plunging in the most expensive U.S. markets

#60

Post by czep »

Strange concluding sentence about the prospect of an influx of Chinese investors to rekindle rising rents. Is there evidence that such a trend is likely in the near future? I have seen reports that a lot of money is expatriated from China into real estate because it's easy to launder that way. In general is it expected to increase so much that it would have a noticeable impact on rents in the major markets?
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