Rents in Megacities Can't Go Up Forever • Hacker News Board

Re: Rents in Megacities Can't Go Up Forever

#141

Post by davidf18 » Thu, Mar 23, 2017, 3:53 PM UTC

friedman23 wrote: post #88

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…

It isn't a market failure if it is a result of regulation

There are laws and regulation that protect people from harm, e.g. product safety, physician licensing, FDA drug approvals, food inspections, etc.

Then there are regulations that help special interests get an unearned portion of wealth. That would include these landowners benefiting from zoning density restrictions or in NYC before Uber/Lyft came along, the artificial restriction of 13,000 taxi medallions for a population of 8.5 million.

Re: Rents in Megacities Can't Go Up Forever

#142

Post by stale2002 » Thu, Mar 23, 2017, 3:54 PM UTC

Bartweiss wrote: post #67

orangecat wrote: post #41

Earlier quoted context omitted.

I'm not seeing what mechanism is assumed to counter that. Increasing supply. Which in this case is difficult due to the alliance of existing property owners and useful idiot "anti-gentrification" protestors.

It's also difficult for the more fundamental reason that space is one of the harder goods to 'manufacture'. We're not running out of land, obviously, but for standards like "land within 3 miles of the city center and -100 to 500 feet of the surface", that's much tougher. Not full, but crowded and with exponentially-rising development costs (since construction gets more difficult and annoys more people). Of course, th…

There is lots of free space within 3 miles of these cities. It is just in the air.

Re: Rents in Megacities Can't Go Up Forever

#143

Post by davidf18 » Thu, Mar 23, 2017, 3:55 PM UTC

Arizhel wrote: post #117

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…

>Remember, rising prices come from scarcity. Eliminate the scarcity and your eliminate the high prices. Reverse the zoning density restrictions and you get lower prices. Yes, but why would you want to do this? Or more accurately, why would the powers-that-be in a given area want to do this? They already have their real estate, and they're profiting by the rising prices. Why would they want to bring prices down?

> Or more accurately, why would the powers-that-be in a given area want to do this?

Well, they generally would not. Except there are firms that must pay salaries that are not in real estate that have to pay their employees higher salaries in order to pay for the "rent-seeking" of landowners. It would benefit them to lobby and influence city council.

Also, powers that be love monopoly pricing but there are laws to stop monopolies.

Still, author Cowen is an Economist, yet doesn't state the true reason for rising housing prices, a discovery made two centuries ago by an extremely famous economist, David Ricardo.

Re: Rents in Megacities Can't Go Up Forever

#144

Post by ctdonath » Thu, Mar 23, 2017, 3:56 PM UTC

Supply and demand. So long as people want a limited resource enough to pay $X+1 for it, prices will rise. There's a limit to the inherent value of living in a megacity (adjusting for floorspace, quality, etc), so once insufficient customers are found, prices will flatten or drop.

Being able to work from anywhere, there's no reason for me to stay anywhere near a megacity (which I find expensive and distasteful). As employers discover the cost savings of telecommuting, employees will discover the cost savings of moving out of megacities ... and prices will slow, flatten, and perhaps even drop.

Re: Rents in Megacities Can't Go Up Forever

#145

Post by mcguire » Thu, Mar 23, 2017, 3:57 PM UTC

jandrese wrote: post #2

What 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.

http://www.austinchronicle.com/news/2007-03-02/451609/

Re: Rents in Megacities Can't Go Up Forever

#146

Post by eumoria » Thu, Mar 23, 2017, 4:01 PM UTC

eli_gottlieb wrote: post #13

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…

>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? Because the real commodity being sold with the apartments and offices isn't net access or even lan…

In my field we service the financial industry and this couldn't be more true. It's a requirement to be in physical proximity to midtown and Wall Street. However phrasing it like you do doesn't make me feel all that good :(

Re: Rents in Megacities Can't Go Up Forever

#147

Post by davidf18 » Thu, Mar 23, 2017, 4:02 PM UTC

matt_wulfeck wrote: post #91

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.

> "You call them rent seekers, but the vast majority of the anti-builders"

Many people have the vast majority of their wealth in their homes and as such want laws that increase the value and not laws that decrease the value by increasing supply. Regardless of the stated reason, the scarcity and rising prices thus market inefficiency are politically induced.

Many people have advocated for "Green Belts" parks with the true intent of decreasing available land to increase scarcity.

Re: Rents in Megacities Can't Go Up Forever

#148

Post by diogenescynic » Thu, Mar 23, 2017, 4:02 PM UTC

I work for a tech company in San Francisco and would gladly relocate to a cheaper city if the company allowed us to work remotely or had other satellite offices. Unfortunately, the satellite offices we do have seem to be dedicated towards specific departments, which doesn't help me.

Re: Rents in Megacities Can't Go Up Forever

#149

Post by jamiek88 » Thu, Mar 23, 2017, 4:02 PM UTC

mcguire wrote: post #84

crispyambulance wrote: post #32

Earlier quoted context omitted.

What they say they're getting ("the top talent") and what they actually get are two separate things.

Hey, the worst graduate from Stanford is better than the best graduate of Ohio State, right?

Sarcasm?

Re: Rents in Megacities Can't Go Up Forever

#150

Post by gabbo » Thu, Mar 23, 2017, 4:03 PM UTC

trapperkeeper79 wrote: post #98

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…

Toronto housing has to come back to reality at some point. Rent and ride it out if you can, consider Montreal if you can find a good job and are OK with French, otherwise if you can stomach being away from home you're much better off financially as a dev in the US.