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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

#61
post #58
post #14

Earlier quoted context omitted.

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.

Rent control still leaves people who want apartments without them, it simply changes the allocation strategy from "willing to pay market price" to "was here first" or, in the case of designated affordable housing, lottery.

Increasing density limits, or improving transportation to allow wider sprawl, actually add housing supply in a way that might keep up with demand.

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

#63
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…

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 is not entirely accurate. If the median rent drops, this means necessarily that the rent for at least some portion of the renters below the 50th percentile has dropped. So while it is possible that the very bottom hasn't changed much, the middle/top of bottom necessarily has.

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

#64
post #7

A friend used to rent out a spare room in SF on a regular basis. Two years ago, he could get $1850 for a single room with it's own bath room, furnished. We're talking 6-10 replies from a Craiglist post within 24 hours. Stopped renting it out about a year ago. He just posted it again. Zero takers at $1850. Finally got someone for $1600 (-13% decrease in rent) after a month. A dramatic change. The rental market in SF i…

Yet $1600 is still absurdly high for such a simple living space.

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

#65
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…

San Francisco is building, like they always have. They are building luxury condos. Condos that only the wealthy can afford. An outside econonomist, would claim the supply is widening.

As someone who works on these luxury condos, as a union electrician, these condos are only bought by the very rich. Many units are second, third, tenth homes the 1 percent buy, and many times left vacant. San Francisco can be a charming city if you have money. I arrive at the job site at 8 a.m. I gaze into units I once worked on, and so many are vacant. Yes, there's always a naked woman putting on a show. It's San Fransisco. Not a lot of straight single guys. Women don't realize just how invisible they will be when they move here. It's hard not to notice the attractive woman in the buff, putting on a show, but honestly; the empty units bother me.

I haven't worked on a reasonably priced apartment complex-- ever.

I have no idea why the market in San Francisco is "softening".

I have a feeling tech workers are being let go? That gold rush feeling is dying. I don't have numbers-- just have a hunch. It almost feels like a lot of start-ups are spending their last bit of money; hoping for a hail marry?

I don't blame developers for building these luxury condos. There's just no way to make a healthy ROI in San Francisco. It's just too small. The workers who put up these buildings are paid $100/hr, in most cases. It's all Union work. San Francisco is a union city. Tech workers should take notice. You guys are expendable, exotically once you hit your Kate thirties. Even though a local 6 Union electrician makes over $100/hr; there's no way I could buy in SF.

And after all; we all love Capitalism? Let them build their cocoons. Let them build to the stars. Let them build into the sand with friction piles.(Millenial sink hole). Build out into the bay--who cares?

It's all working out so great for service workers; and 95% of tech workers are basically service workers. Some of you like to think otherwise, but when the boom slows, I see you guys going home real fast. The only guys I see sticking around are usually founders(they always seem to have a rich relative though), or guys who met a woman with rent controlled housing. Just don't piss her off.

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

#66
post #58
post #14

Earlier quoted context omitted.

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.

The issue being that renting in the city effectively becomes a lottery, because not everyone can live there that wants to.

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

#67

Do we know what policies are genuinely effective at improving housing affordability? This is the one biggest thing the (proverbial?) middle class have been struggling to make gains on over the last generation in a lot of otherwise successful places.

Yeah. Build more housing.

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

#69
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…

Luxury highrise condos and apartments have been showing weakness all year due to oversupply. Deeded land single detached homes (where the strongest coalitions of SF NIMBY lobbies reside) are still very supply constrained and are still very strong wrt price. This is the source of the discrepancy you're talking about. Source: friend who's been in Bay Area real estate for over a decade.

"Oversupply" at $3000+/mo, haha.

We can start talking about oversupply when they're more like $700.

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