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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

#291

Post by visarga »

zanny wrote: post #109
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 have to imagine I'm somewhere on the opposite end of the spectrum. I could care less about attractions, since even when I lived in the city I was spending a lot of evenings just playing video games anyway. I think the broad adoption of mobile gaming and the Millennial adoption rate on video games and the successor generation (whatever we are calling them now) basically being raised on them will break down the relia…

> I could care less about attractions

That means you still care.

I'll show myself out.

Re: Rents in Megacities Can't Go Up Forever

#292

Post by randyrand »

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

Gotta agree with you there. Market failures refer to failure in a free market, or some problem caused by some market being too free.

Regulation failures are problems caused by bad/too much/too little regulation. In this sense, regulation failure can sometimes overlap with market failures.

Re: Rents in Megacities Can't Go Up Forever

#293

Post by _delirium »

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…

I don't think the U.S. has quite the same problem Canada (or the U.K.) does of people/jobs concentrating in only a handful of mega-expensive cities. It may seem on a forum like this one that "everybody" is moving to NYC or SF, but If you look at the population change statistics from the census, the NYC and SF metro areas are growing relatively slowly. People are mostly moving elsewhere, for a variety of reasons, but cost of living probably being a factor.

These are the the 10 fastest-growing large (>1m population) metropolitan areas in the U.S. in the period 2010-2015:

1. Austin, 2. Raleigh, 3. Houston, 4. Orlando, 5. San Antonio, 6. Denver, 7. Dallas, 8. Nashville, 9. Charlotte, 10. Phoenix.

Plenty of pretty affordable options in there.

Re: Rents in Megacities Can't Go Up Forever

#294

Post by Mtinie »

jethro_tell wrote: post #224
closeparen wrote: post #191

Earlier quoted context omitted.

It takes relatively wealthy people (or at least big spenders) to make trendy upscale bars and restaurants work. Museums, opera, symphony, most theater, etc. are kept alive by the philanthropy of the local rich. High salaries are paid by rich VCs looking for return, or companies with more cash than they know how to handle commissioning prestige projects. (How many people at Google actually work on revenue generation?…

It should be noted that the vast majority of the IT industry isn't startups. Lots of the drive of rent is not funded by VCs.

I'd argue that what you're identifying as those businesses in the majority were at one time, startups themselves. Without the previous generation of concentrated wealth those businesses would not be in the position they are.

I do, however, also agree with your counter-point to the previous comment.

Re: Rents in Megacities Can't Go Up Forever

#295

Post by ghaff »

startupdiscuss wrote: post #38
eli_gottlieb wrote: post #13

Earlier quoted context omitted.

>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…

That's a very interesting and original way of looking at it. It would also explain clustering in other areas (finance in NYC, Oil and gas in Houston etc). Do you have any links or references exploring that idea in greater detail?

In industrial industries like Oil & Gas, there are also a lot of advantages to having clusters of suppliers and service industries together. When I worked in the drilling business (not in Houston but in another city fairly nearby), pretty much all the overhaul, fabrication, part suppliers, etc. were all in the general area and we could visit them to review plans, oversee tests, etc.

Re: Rents in Megacities Can't Go Up Forever

#296

Post by davidf18 »

nwah1 wrote: post #246
davidf18 wrote: post #220

Earlier quoted context omitted.

> "Ricardo's law of rent shows that indeed, even without artificial scarcities imposed by regulation, rent can go up forever as long as productivity is rising." The rent-seeking that he established states that political regulation can artificially create a situation of scarcity thus resulting in high lands costs that benefit landowners. Specifically, he illustrated this regarding the "Corn Laws" of Britain which were…

The price of gold has risen considerably over the years. There's no particular reason to suspect that this trend will stop, since it is tied in with rising levels of production. It is quite possible to create an artificial scarcity of gold, and thus gold would be higher than it should be. But it would be ridiculous to claim "gold can't go up forever" and that to achieve affordable gold we only need to remove the arti…

> "It may be desirable that we remove the artificial scarcity, but it is also a distraction from the core question at hand."

I respectfully disagree and so does Harvard Economist Edward Glaeser who has written extensively about this as does FT columnist and economist Tim Harford (as explained in his book, "The Undercover Economist" as does Steve Beyer who has written about this in the NYT and Forbes as well as other places.

Japan passed a federal law that overruled local restrictions and in 2014 Tokyo built 140,000 residences compared with a total of 20,000 in NYC and about 90,000 in the entire state of California.

I'm speaking pragmatically.

> "A port, for instance..."

A port is a much greater and natural scarcity compared with, say Manhattan which is huge as well as London which is not an island, but made "an artificial one" because of the Green Belt that circles London.

Re: Rents in Megacities Can't Go Up Forever

#298

Post by Futurebot »

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…

Clustering effects are real, even for software. The ability to meet with clients by taking a (relatively) quick trip from SOHO to Chelsea (to initiate, pitch, or close deals) or the ability to meet with the developers of company that created a service with an API you're going to integrate with is actually helpful ( "warm currents" of communication).

Software technology ecosystems could certainly succeed in other places if one could bootstrap them in the first place; the clustering (and self-reinforcing network) effects mean that people gravitate to where the action is already happening. Getting started in a new location is challenging, so only those willing to shoulder additional risk (beyond the often-high risk of starting and running a startup) are going to try.

Re: Rents in Megacities Can't Go Up Forever

#299

Post by davidf18 »

Arizhel wrote: post #171
davidf18 wrote: post #143

Earlier quoted context omitted.

> 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 sto…

>It would benefit them to lobby and influence city council. Why would city council want to bring down rents? They and their cronies are profiting off the high real estate prices. The city council is, after all, composed of wealthy people who own land in the city. You can't have a city council composed of people who don't even live in the city. >Also, powers that be love monopoly pricing but there are laws to stop mon…

> "The city council is, after all, composed of wealthy people who own land in the city."

I can't speak for your city but in NYC, I'm not certain if any member of the city council is wealthy. I know my representative is not.

My point regarding anti-trust busting of monopolies is that federal legislation has been enacted before to combat deliberate attempts at market inefficiency and it could be done in the case of zoning density restrictions. In 2002, Japan enacted a federal law that overruled local land-use restrictions and as a result in 2014, Tokyo built 7 times the number of housing units as NYC (140,000 vs. 20,000).

We should do the same in the US as they did in Japan and you'll see more affordable housing.

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