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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

#191

Post by stale2002 »

mrcactu5 wrote: post #174

everyone I know in New York City is complain about rent INCREASES and GENTRIFICATION Article: "East Harlem rents are among Manhattan's fastest-rising this fall" http://ny.curbed.com/2016/11/21/13703220/fall-market-report-... so I have no idea where business insider is getting it's data from. Also here is a lovely map of the subway stations and the median rents near by. Notice that Bronx hardly exceeds $2000 (compared…

That's because those are low rent areas that are still playing catch up to the extremely high rent central city.

The article is most talking about the high rent areas that are now less extremely high.

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

#192

Post by stale2002 »

fram wrote: post #161
gragas wrote: post #126

Earlier quoted context omitted.

So you're arguing that demand increased more than supply in the same period? By your logic, that's the only way that prices could fall while the new housing was built.

I'm not sure what you mean, but I'll try to express myself more clearly. In the most basic sense of economics for prices to fall supply has to increase more than demand. If demand increases more than supply the opposite is true. There's nothing saying that a more supply can't also increase demand or even increase demand more than supply. When more wealthy (or ambitious) people move into an area it often leads to that…

That's a fairly unique and interesting argument that I've never heard before.

I usually just dismiss these types of arguments as "this person doesn't understand economics".

But your argument essentially is that housing has a Network Effect that increases in value as more people join the market. (or perhaps can be described as some sort of two-sided market?)

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

#193

Post by rsync »

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…

"Did something change regarding development in SF? Or was the NIMBY effect always a bit over-stated? Anyone care to speculate?"

No, not much at all has changed and the "building boom" consists of 5 or 6 high rises and a small handful of quarter-block sized rental apartment complexes.

Think of the normal background level development that is always occurring in Denver/Minneapolis/Portland ... that suddenly happened here for a few years. "Boom".

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

#194

Post by tormeh »

chongli wrote: post #156
oneplane wrote: post #136

Earlier quoted context omitted.

Woah, I knew about things being bad in the USA, but I didn't know living conditions are going towards third-world standards :/ Where I live (The Netherlands) there are laws that even protect foreign workers (i.e. from Poland) from all being stuffed in a single room. At this point it's starting to look like even jail cells have more room and privacy.

Where I live (The Netherlands) there are laws that even protect foreign workers (i.e. from Poland) from all being stuffed in a single room. How do those laws work in practice? Everything I've seen about these sorts of tenant protection regulations make them infeasible to enforce in the case where the tenants are migrant workers who might even be working illegally. The idea is that if a person is already running afoul…

Poland and The Netherlands are both members of the EU, so immigrant workers from Poland are legal by definition. As for illegal migrant workers I suspect that it's just not that big of a problem, quantitatively speaking.

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

#195

Post by chimeracoder »

davidgay wrote: post #137
fennecfoxen wrote: post #83

Earlier quoted context omitted.

> Have there been any experiments in legislating ceilings for housing prices? If so, what has been the effect? As Assar Lindbeck put it, "next to bombing, rent control seems in many cases to be the most efficient technique so far known for destroying cities." For instance, in 1970s when the Bronx was burning, a major contributing factor was New York City rent control. In some neighborhoods of the Bronx and in Harlem,…

> As Assar Lindbeck put it, "next to bombing, rent control seems in many cases to be the most efficient technique so far known for destroying cities." Doesn't seem to have had much success in destroying Swiss cities. Maybe the neutrality helps prevent bombing-like effects? https://sites.tufts.edu/uep284chsustainabilities/files/2015/... for some discussion...

> Doesn't seem to have had much success in destroying Swiss cities. Maybe the neutrality helps prevent bombing-like effects?

When talking about policies like price floors and ceilings (ie, rent control), scale is critical.

The city of New York has a population roughly equal to the entire country of Switzerland. The largest Swiss city (Zurich) is smaller than the smallest borough of New York City (Staten Island), and about one-fifth the size of the Bronx (the borough mentioned in fennecfoxen's comment).

So comparing the effect of rent regulation in New York City to the effect of rent regulation in various cities in Switzerland isn't really meaningful, because the economies of cities in a country whose total population is roughly 8 million can't be compared with the economy of a city whose metropolitan region is two and a half times that size (20 million).

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

#198

Post by eli_gottlieb »

taxicabjesus wrote: post #172
Spooky23 wrote: post #86

Earlier quoted context omitted.

HN will make this a SFO story because it's HN. The reality is, rental housing is a canary and shifts quickly based on market conditions. The market is flooded nationwide, and if you look closely at newer projects, the better banks have slowed down investment.

> The market is flooded nationwide It was the best of times, it was the worst of times... I like the idea of 'economic canaries'. There has been a bipartisan effort to ignore fundamentals for the past 36 +/- years [1]... [1] https://dontsuemebro.com/story/2016/11/10/191217/82

>I like the idea of 'economic canaries'. There has been a bipartisan effort to ignore fundamentals for the past 36 +/- years [1]...

I can only pray the new administration manages to at least get something right with their supposed dedication to the Rust Belt.

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

#199

Post by partiallypro »

Studio "luxury" apartments here in Nashville have long term leases at $1200/mo for a studio. I was not impressed when I did a tour across the city; I asked the occupancy rate at a few places, and was floored when they told me it was only ~25%; these were 1yr+ old developments, which is apparently common place. I've been telling people the city is in a bubble, but no one believes me. Everyone says now is the time to buy, I think they're insane.

A lot of people from out of state that had higher real estate values could sell their $400K-$500K home in California and come to Nashville and live like a king. Now they are just poaching people knowing they'll pay up. Our hotel rates are higher than New York City's on average. It's insane, and everything thinks this will last. We'll see. Nashville wasn't mentioned in the article, but I have a very hard time believing the city will sustain its current rent levels, with such low occupancy rates.

It's actually cheaper to just buy a condo outright (which I think is still too expensive $300K for a studio,) than to rent.

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

#200

Post by pfarnsworth »

ericd wrote: post #188
pfarnsworth wrote: post #171

The best cure for high prices is high prices. Very few trust that supply vs demand doesn't work, but it absolutely does. Sure there will be temporary spikes in price, but as rents go to ridiculous heights (I think $5000 for a 2 br condo is utterly ridiculous, and that prices is about 5 years old in SOMA), it will abate at some point. As long as there isn't a monopoly, or people aren't manipulating the markets, fair a…

It's very debatable whether the SF property market could be considered a fair and properly functioning market, given the massive impediments to new construction, legislative rent controls, and crazy tax breaks for longtime residents.

Of course it's properly functioning. There is a ton of demand and a lack of supply. Of course prices are going to rise and that's perfectly okay. But they can't rise ad infinitum. I think we're seeing the limits of how high prices people are willing to spend, and rising interest rates are going to limit that even further. I'm expecting a precipitous plunge in >$2M houses and the sweet spot will be houses in the $750k range after interest rates limited the crazy market.
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