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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

#231

Post by olivermarks »

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…

you could argue it is a form of apartheid: manhattan and the san francisco peninsula are classic constrained square miles with limited access points.

The walled City of London, a separate sovereign maritime nation situated within London is another historic example...

https://www.ft.com/content/7c8f24fa-3aa5-11e4-bd08-00144feab...

Re: Rents in Megacities Can't Go Up Forever

#233

Post by amyjess »

lordCarbonFiber wrote: post #221
xienze wrote: post #11

Earlier 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.

As a young person that grew up in the suburbs and deeply influenced by the "automobile life"; can confirm you'd have to quadruple my salary before I even considered moving back to the suburbs and sitting through a driving commute. The false American dream of the oversized house, piles of kids, and picket fence just isn't appealing anymore to a growing population of young people. Life is too short to spend your prime…

As a young-ish person (technically a Millennial, born in 1984) who also grew up in the suburbs, you literally couldn't pay me enough to leave the suburbs. I don't care if you're offering me seven figures; I won't live in the city.

I detest noise, grime, and crowds. I like having lots and lots of space all to myself. I worked in the city once; I got sick to death of hobos on the streets shouting at me and demanding I give them money (and then having to listen to them calling me a liar when I say I don't carry cash, which is 100% true), and I got sick to death of working in a tall building where the elevators would break down all the time. Working in the city also had me constantly on edge and worrying that I was going to get gang-raped, and I'm glad I don't have to deal with that anymore.

It's not just me, either. Most of the people I went to college with and still keep in touch with now have houses in the suburbs, and those who don't have houses per se live in two-story suburban apartment complexes. I only know one guy who lives in a more urbanized area (and even then, he's in a mixed-use master-planned development in a suburb), and that's only because he's legally blind and can't drive. A good way to make him angry is to say "you're so lucky you don't have to deal with the hassle of driving"; he will remind people at the top of his lungs that he would love to drive everywhere if he had fully-functional retinas.

My friends and I are the kind of people who make fun of hipsters and mock people who are pro-homeopathy, anti-vaccine, anti-GMO, anti-gluten, vegan, Bernie bros, etc. Trust me when I say that an urban lifestyle isn't for us.

I think there are a lot more culturally conservative young people than you think. Not conservative in the political sense ("liberal but not leftist" and "Clinton Democrats" apply to me and most of my friends), but conservative in the sense that they want to live a traditional lifestyle.

Re: Rents in Megacities Can't Go Up Forever

#235

Post by acchow »

mcguire wrote: post #134
acchow wrote: post #89

Earlier quoted context omitted.

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…

College tuition has been going up much faster than incomes. When I went, the only people I knew getting student loans were those getting professional degrees: medical doctors and lawyers.

Tuition used to be very low. When we adopted a culture of "college is everything" that's when tuitions rose rapidly to meet what could be maximally extracted from the middle class. We've now reached that point so they will rise slowly now - only to meet increases in government aid (direct and indirect aid) and increases in middle class incomes.

Re: Rents in Megacities Can't Go Up Forever

#236

Post by klenwell »

tsunamifury wrote: post #140
klenwell wrote: post #105

Earlier quoted context omitted.

I remember hearing a variation of this claim by rationalizers for the dot-com stock market bubble in the 90's and the housing bubble in the 00's. I recognize you're not trying to rationalize this, but you've identified the common factor to each bubble: a new and unsophisticated source of investors being aided by the financial industry. With the dot-com bubble, it was daytraders and online traders generally (including…

Thats not the case here. The financial industry is not driving up rents and costs in San Francisco. The pure amount of private wealth pouring into the area is. Thats the dramatic shift this time around -- this isn't a bubble propped up by lending -- this is a bubble due to the fact that we are living in a time where the rich _have so much money they dont know what to do with it._

Well, true, I suppose. Demand directly is driving up rents. And San Francisco is a special case because of its geographic constraints. It is almost like a literal geographic bubble that formed on the bay there. My conclusions reflect more generally I'm seeing and experience in Southern California, which isn't quite so geographically constrained.

I agree it's not the same kind of bubble we saw when strippers (to borrow the example from The Big Short) were carrying 5 mortgages in Florida. And it explains why housing prices never fell there or really here in Southern California to the extent I was expecting (and really hoping) back after the crash.

Still, I imagine most of that private wealth that is pouring in there and here is either connected with the financial industry directly or indirectly. At one end, you've got the financial industry financing everything, from mattresses to cars to college education, which spurs demand and price inflation.

On the other end, you've got a global wealthy elite for whom all real estate is local. They are small proportionally but still large enough in aggregate to quickly exhaust limited edition luxury items like residential property offerings in San Francisco, Vancouver, London, etc.

Anyway, that's the simplified model I've been operating on for the last few years. A weird combination of the super rich shopping where they please and local middle class Americans, hopped up on credit, trying to compete with them in select desirable areas.

Re: Rents in Megacities Can't Go Up Forever

#237

Post by Arizhel »

amyjess wrote: post #210
Arizhel wrote: post #112

Earlier quoted context omitted.

>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? The simple solution is to not have any children. Leave that to extremely rich people and very poor people. Society obviously does not support child-rearing, given the cost of housing and the lack of support from employers, so why fight it?

Or you move out to the suburbs when you have kids. It's not uncommon for young 20-somethings to live in the city and then move out when they start having children. Case in point, my cousin in NYC just had her third kid. She'd been considering moving to the suburbs for a while, because there was barely any room in their tiny apartment in Battery Park City for her, her husband, and the twins. Now that they've got anoth…

Right, but now you're forced to get a new job in a new place, or at the very least have a very lengthy commute. What's the point of having a family and kids if you're spending 3-4 hours a day just commuting to work? Or worse, having to live in Texas? This of course assumes that there's even jobs for you in TX or other low-cost locations.

Basically, if you want to be a decently-paid professional and have a rewarding career, location is going to be very important to you, and you're not going to have time or money for kids. If you really want kids, you should make that your priority, and forget about education and career, and just work on having a stable job in a low-cost place, perhaps working in fast food and trying to work your way into managing a McDonald's where you might be able to get $40k. With kids and working at McD's as a cook in your younger years, you should qualify for tax benefits and probably some social programs like SNAP to help make ends meet.

Re: Rents in Megacities Can't Go Up Forever

#238

Post by jes5199 »

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…

> City centers simply get voided of average earning people and replaced by high earning ones. As soon as they are the average earners, even more wealthy people move

okay but how do you run a city like San Francisco once all of the service industry workers get priced out? Do you start paying people 6 figures to clerk a convenience store?

Re: Rents in Megacities Can't Go Up Forever

#239

Post by acchow »

DaiPlusPlus wrote: post #161
nosuchthing wrote: post #155

Earlier quoted context omitted.

The fallacy of rent control, which only treats the symptom and fails to address the root problem of inadequate supply and restrictions to adding additional supply to the market.

I'm genuinely curious how the supply of housing in Manhattan could be increased.

Grow vertically. I saw this regularly when I was living in Hong Kong - 50 year old 5-15 story apartment buildings being bought out by developers, demolished, and replaced with something 30-40 stories tall.

High speed rail into the city (see tokyo). You can travel enormous distances in 40 minutes on HSR.

Re: Rents in Megacities Can't Go Up Forever

#240

Post by dllthomas »

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…

> Talented people already move from one coast to the other, so they could as well move to any other place.

There is less risk in moving to a place with more options when the current one falls through.

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