> Rents in Megacities Can't Go Up Forever
Yes it can, College Tuition is a great example. Instead of finding the cause and treating it, we just increase the amount of aid people have access to.
Rents in Megacities Can't Go Up Forever
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Re: Rents in Megacities Can't Go Up Forever
#22To put it another way, the cost of real estate in a given area is proportional to the rate of money flowing through that area. Will ever larger flows go through New York and San Francisco, increasing without end? History suggests that is unlikely.
Well the frothiness of the tech bubbles are purely a factor of a lack of liquidity of meaningful services to create.
VC capital focused on tech is a tiny sliver of available capital given the sources VCs get their funding from, and an entire order of magnitude of greater flows could come through.
So if you were using that as an excuse not to buy that costly condo on the island or peninsula, its not a great excuse.
Re: Rents in Megacities Can't Go Up Forever
#23What does it look like if a rent bubble pops? Can such a thing even happen? Rents tend to be difficult to change without moving. I guess rents can fall if demand considerably outstrips supply and the landlords get desperate, but most landlords I've seen are pretty stubborn and will hold out until the last second before they lower the rent a single penny.
In 2008 rents didn't drop much. I think landlords will leave places empty before they will drop rents too much.
I wouldn't expect rent to have fallen in 2008. Thousands of people were losing the homes they owned and becoming renters, sky-rocketing the demand for rental property.
Re: Rents in Megacities Can't Go Up Forever
#24Earlier quoted context omitted.
> Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. Startups are built on young talent. Young people are obsessed with living in "the big city" and to hear them tell it, living in a suburb and driving a car is about the worst thing imaginable. So if you want young talent, you better set up shop in SF.
That's a bit silly to say, considering SF and SV are about as suburbanized as can be. If you wanted "the big city", you'd go to New York, London, Paris, Tokyo, or some other place with actual urban density.
SV is very suburban, yes, but SF is densely-populated. "Big city" in this case doesn't necessarily imply that the city proper is 10M+ in population.
And the lengths to which this insanity will go is that (e.g.) Google workers will live in SF and commute into SV. Talk about turning the "live in the suburbs, work in the city" paradigm on its head!
Re: Rents in Megacities Can't Go Up Forever
#25Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. As long as there is a good net connection, it could be anywhere in the world. Let's concentrate on the US for a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines? Talented people already move from one coast to the other, so they could as well move to any other p…
There are certainly a lot of factors. People want to live in trendy cities. There's a lot to consider besides rent - culture, nightlife, etc. San Francisco sure does have some of the best food in the country (and with tech consuming most of spare time the way it is, eating out is really a huge part of culture). Rent definitely ends up being the deal breaker for many, but for others isn't. It's a lot harder for a comp…
See, here's the thing about coastal types: they are obsessed with getting the "top" talent, as if every project or startup requires it.
What if most startups only need "good" developers to develop their mostly CRUD apps and don't need "the best" developers?
Re: Rents in Megacities Can't Go Up Forever
#26Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. As long as there is a good net connection, it could be anywhere in the world. Let's concentrate on the US for a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines? Talented people already move from one coast to the other, so they could as well move to any other p…
This book does a good job of explaining why: https://www.amazon.com/New-Geography-Jobs-Enrico-Moretti/dp/...
Pretty much it is a networking effect issue. The same reason why you are posting this on hackernews instead of reddit. Physical proximity matters a lot, even when work is digital.
Re: Rents in Megacities Can't Go Up Forever
#27Earlier quoted context omitted.
There are certainly a lot of factors. People want to live in trendy cities. There's a lot to consider besides rent - culture, nightlife, etc. San Francisco sure does have some of the best food in the country (and with tech consuming most of spare time the way it is, eating out is really a huge part of culture). Rent definitely ends up being the deal breaker for many, but for others isn't. It's a lot harder for a comp…
See, here's the thing about coastal types: they are obsessed with getting the "top" talent, as if every project or startup requires it. What if most startups only need "good" developers to develop their mostly CRUD apps and don't need "the best" developers?
It's true that not everybody needs it, that's a separate argument probably. Companies that feel they don't are often outsourcing though, no? There's definitely the argument of "talent pays for itself (in multiples)" to think about.
Re: Rents in Megacities Can't Go Up Forever
#28Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. As long as there is a good net connection, it could be anywhere in the world. Let's concentrate on the US for a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines? Talented people already move from one coast to the other, so they could as well move to any other p…
My understanding is it's largely demands of VC. They want to be able to check in on their investments, and having to hop on a plane to do that isn't convenient. That has always struck me as odd, since the invested money would go further in a cheaper market, but that's the explanation I've heard many times.
Re: Rents in Megacities Can't Go Up Forever
#29Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. As long as there is a good net connection, it could be anywhere in the world. Let's concentrate on the US for a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines? Talented people already move from one coast to the other, so they could as well move to any other p…
> Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. Startups are built on young talent. Young people are obsessed with living in "the big city" and to hear them tell it, living in a suburb and driving a car is about the worst thing imaginable. So if you want young talent, you better set up shop in SF.
> and to hear them tell it, living in a suburb and driving a car is about the worst thing imaginable
Motor vehicle accidents are the largest cause of death for people in the US under the age of 24 so it is, arguably, the worst thing imaginable ;)
Re: Rents in Megacities Can't Go Up Forever
#30Earlier quoted context omitted.
Technology has a long way to go before it completely disrupts human evolution and the desire to be close to people with similar values.
You are right. But still I don't quite understand why there are not more smaller dynamic centers popping up. Of course it is NOT only SV and NYC any more. But there would be many other places that are nice enough to attract IT in a substantial way.
I think there are some popping up. Austin comes to mind. Takes time for cities to grow, though.
Hipsters, microbreweries, and fancy lattes will continue to spread I am sure!