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Rents in Megacities Can't Go Up Forever

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Re: Rents in Megacities Can't Go Up Forever

#91

Post by matt_wulfeck »

davidf18 wrote: post #77

The author of the article is a professor of economics but doesn't state the true cause of rising housing costs: Market inefficiencies (or market failures) caused by politically induced market scarcity restrictions called "rent-seeking" which benefits landowners such as President Trump over people who rent or are purchasing housing. Rent-seeking was first illustrated by David Ricardo in the mid-19th century (IIRC) and…

You call them rent seekers, but the vast majority of the anti-builders I see around the Bay Area are home owners who worry about traffic or some such. It's not some big conspiracy to increase profits. It's incumbent nimbyism.

Attend a town hall meeting where they're discussing a new apartment building and you'll meet them.

Re: Rents in Megacities Can't Go Up Forever

#92

Post by nojvek »

geff82 wrote: post #4

Especially 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…

Talent attracts talent. Wealth attracts wealth.

This cities work because there is a high concentration of wealth, talent and resources for them to produce big wins over and over.

Google and Facebook couldn't have been this successful anywhere else.

Pg had a nice article on how other places can become sv like hubs.

Re: Rents in Megacities Can't Go Up Forever

#94

Post by glibgil »

startupdiscuss wrote: post #62
CPLX wrote: post #47

Earlier quoted context omitted.

I don't mean to have this come across as snarky, at all, but really the reference for this is the whole of human history. Wealth is basically self-concentrating. Our political systems tend to end up with a few capital (and often Capitol) cities where the spoils from the plundering, both metaphorical and literal, end up. The original article does present some interesting and relevant examples of countervailing forces…

That's not snarky, and you have a point. But even if things seem "really obvious" and we can tell "just by looking at the facts", I feel better if someone has looked at the data and shown that to be the case. We aren't living in the feudal era, and a lot of people like to think that the reason people move to the cities is because of (for instance) bars and restaurants, museums and the opera, high-paying jobs and so o…

> bars and restaurants, museums and the opera, high-paying jobs

And these would actually be rent seeking activities? Is that the idea?

Re: Rents in Megacities Can't Go Up Forever

#95

Post by laughingman2 »

geff82 wrote: post #4

Especially 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…

Rational behind Zoho's new office in rural Tamil Nadu (their engineering base is primarily in city Chennai) is to reduce clustering in mega cities.

https://www.youtube.com/watch?v=lyHgMNuftL0

Zoho's CEO feels that good software products can be developed not only in silicon valley or even big cities like Chennai and Bangalore, it can be developed in non-descript towns like Tenkasi too.

I think with more accessibility to digital media, and expansion of skills through internet education, skills can be diffused across geography, atleast in our field.

Re: Rents in Megacities Can't Go Up Forever

#96

Post by dmitri1981 »

acchow wrote: post #89
supergeek133 wrote: post #21

> 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.

No, college tuition will rise with middle-class incomes. This is a cultural phenomenon. We're "supposed" to get our children the best education we can possibly afford, otherwise we are bad parents. Since colleges don't have price discrimination, this essentially means tuition is set at the absolute maximum that the middle class can afford - squeeze every penny out of them. This is why aid won't reduce the burden of t…

Or rather it will rise with availability of debt. Tuition is not paid cash and incomes have been barely going up by a couple of percent per year

Re: Rents in Megacities Can't Go Up Forever

#97

Post by [deleted] »

robterrin wrote: post #60
reverend_gonzo wrote: post #33

Earlier quoted context omitted.

I live in Chicago. I love it here because of everything else it has to offer. I have everything almost everything I need available to me within walking distance from home. That includes grocery store, dive bars, cheap restaurants, high end restaurants, clubs. For anything else I may want to do (concerts, sports games, plays, comedy), there are dozens of world class options within a ten minute cab drive / 30 minutes o…

I've heard this pitch for Chicago many times, and it seems reasonable if you are in the one of the industries, Tyler mentions, that are more diffuse. The main problem with Chicago is it lacks an anchor industry. Is it the best place to be for finance? No, that's NYC. Is it healthcare? Boston, Baltimore, Cleveland or Rochester. Energy? Houston. Technology? SF. Entertainment? LA or NYC. Politics? DC. What exactly is Ch…

[deleted]

Re: Rents in Megacities Can't Go Up Forever

#98

Post by trapperkeeper79 »

This article crystalizes a point that was vague in my mind: "megacities have a problem making it affordable to raise large or even medium-size families. How many of us could live in San Francisco, London or New York City and bring up three children in a decent neighborhood with good schools? Only the already well-to-do can manage such a feat.".

As a mid-30s person with a new baby, I don't see how the numbers work for new entrants to the housing market - unless you were a gambler. Your gamble would be that (a) you don't ever take a hit on your income, and (b) property prices continue to rise. We've been unable to take that gamble .. and homes have increase 40% in the blink of an eye.

In Canada, we have a lot of family in the GTA. We're basically priced out of areas as far away as Mississauga and Milton (Milton went up 20% since Nov 2016). An option we are considering is to move to BC and just rent for a few years in Vancouver. At least we get a better city out of it. For any Canucks, are there any other decent places with tech jobs, and somewhat affordable housing?

Re: Rents in Megacities Can't Go Up Forever

#99

Post by ryandrake »

kbenson wrote: post #78
vonmoltke wrote: post #51

Earlier quoted context omitted.

Why does every company in this industry need to be either a "lifestyle business" or a Google wannabe? What ever happened to growing a business organically over time, or with non-VC investments?

Because if you're growing organically some VC funded competitor is going to try to grow exponentially, and swallow you up or put you out of business. There's no middle ground because all that looks like to people trying to get a return on their investment is that you aren't trying hard enough. That either means they push you harder, or they fund a competitor if you aren't beholden to them.

Not all niches will attract VC funded competitors. There are plenty tech companies that are profitable, well-capitalized, have moderate organic growth, and compete with similarly sized companies. There certainly is a middle ground.

Re: Rents in Megacities Can't Go Up Forever

#100

Post by trapperkeeper79 »

AlexB138 wrote: post #23
maxxxxx wrote: post #5

Earlier quoted context omitted.

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.

That's right. At the start of the crisis, I had landlords offer crazy incentives - 2 months rent free on a 13 month lease. They just wanted to lock people in. In a few months, when it was clear that people abandoning houses were moving into apartments, these deals disappeared and rents actually started to increase!
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