That title reads super awkwardly. Anyway, on the flip side, the trend seems real from my observations. I live in a mountain town in North Central Washington. The real estate market has seen around a 35% price increase, homes are selling in hours all cash and almost every builder is already booked through 2021. It's almost exclusively people bailing from Seattle.
San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
111–120 of 640 posts
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#112Earlier quoted context omitted.
yep - rent is the quintessential example of inelastic supply. A tiny shortage of housing can cause a huge jump in price.
Sounds like for things that are inelastic, we should find ways (on both sides) to maintain a buffer if we want to have stable systems.
This is what leases are for, they fix prices for a year or so by adding cost friction to moving (usually a few months of rent). Which, in theory, act as a buffer to stabilize prices.
The problem is that the cost savings of moving is so great that it was cheaper to pay to break the lease than it would be to stay. We saw the reverse of this before: when landlords were paying people $8,000 to move early because rent inflation meant they could charge much more than that to the next tenant.
SF is an outlier because of the income disparity, relatively low housing density, and unique climate & economic opportunity available there.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#113I would say the city being “closed” is the major driver. Among my group of ~40 coworkers, about 30 (including me) have left the city. As far as I know all but one were renting. Everyone who left gave the following rationale: - we can work remotely so move wherever or nomad now - SF is not very fun during the pandemic - WFH in my tiny apartment is much less enjoyable than when I was working in the office and didn’t sp…
I disagree that it's a demand problem alone. There was tons of new construction. If I wanted to, I could have moved to any neighborhood in the city on a whim... As long as I was willing to move into a brand new luxury apartment $4k studio. The demand was high for reasonably priced older units. "Just add new construction" doesn't work if all that gets built is luxury apartments.
I'd argue that new construction is inherently a luxury just because people are willing to pay so much more for it. You can't just directly build reasonably priced older units, any more than you can directly build beater cars.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#114Earlier quoted context omitted.
"I am skeptical. Yes a lot of Bay Area companies are allowing work from home for now, but are people really weighing that so heavily that they’re moving?" It is the marginal buyer, not the entire population, that swings the price. It's the last few properties for sale that swing the price. Someone downthread explained it very nicely: "Rent is like a traffic jam. The market collapses on the margin. You don't need to r…
yep - rent is the quintessential example of inelastic supply. A tiny shortage of housing can cause a huge jump in price.
> rent is the quintessential example of inelastic supply. A tiny shortage of housing can cause a huge jump in price.
You'd need inelastic demand for this, not inelastic supply.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#115I would say the city being “closed” is the major driver. Among my group of ~40 coworkers, about 30 (including me) have left the city. As far as I know all but one were renting. Everyone who left gave the following rationale: - we can work remotely so move wherever or nomad now - SF is not very fun during the pandemic - WFH in my tiny apartment is much less enjoyable than when I was working in the office and didn’t sp…
As a counter anecdote, I know three people from the bay area who moved out during covidtide, but had already planned the move beforehand. (This is a very high percentage of people I know from the bay area, hence the anecdote). All had the same rationale: taxes and housing were simply far too high when they could work remotely and live anywhere else. Sure, you don't get the same outdoors, food or retail scene, but ple…
This is the mindset I really don’t understand though. Sure your company can say “we’re all remote” today, but they can just as easily say “everyone has to come back” in six months. Or “everyone doesn’t have to, but those who don’t are the first laid off next time”. I’ve been fully remote since March, so I’ve been weighing this for awhile”
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#116Earlier quoted context omitted.
I hadn't heard "You don't need to remove 30% of the cars to reduce freeway congestion by 30%" before, any chance you could elaborate?
e.g., slowing cars can increase average throughput. https://en.wikipedia.org/wiki/Queueing_theory
Or making the slow cars faster. It's the interaction between the traffic of varying speeds that causes the problems (this goes for all sorts of queuing, not just vehicle traffic)
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#117Earlier quoted context omitted.
Historical norms included much higher interest rates and women not participating in the labour force.
Indeed, but that's why the state needs policy for this. It's should not be true that landlords capture all of the marginal productivity of 2-income households.
They wouldn’t if building housing was legal.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#118Is there any data on rent changes in Texas? A Bay Area school district employee told me that she has noticed a big increase in requests to transfer student records to Texas districts. But I don't know how widespread that is.
There's been a few articles lately about the number of west coast people moving to Texas to the point that Texas will be considered a purple state after the upcoming election. I'm from Texas, moved to CA for a number of years, and have since returned to TX. Things like no state income tax and lower sales tax are major attractions, add to that the dirt cheap prices of property in comparison to CA. There are other thin…
I think it's worth keeping in mind that this is not a reflection of low prices in TX but of insane prices in CA. Tons of states have costs on the order of TX.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#119Earlier quoted context omitted.
As a counter anecdote, I know three people from the bay area who moved out during covidtide, but had already planned the move beforehand. (This is a very high percentage of people I know from the bay area, hence the anecdote). All had the same rationale: taxes and housing were simply far too high when they could work remotely and live anywhere else. Sure, you don't get the same outdoors, food or retail scene, but ple…
This is the mindset I really don’t understand though. Sure your company can say “we’re all remote” today, but they can just as easily say “everyone has to come back” in six months. Or “everyone doesn’t have to, but those who don’t are the first laid off next time”. I’ve been fully remote since March, so I’ve been weighing this for awhile”
Realistically, the vast majority of companies aren't going to issue an edict like that. They're going to find a way to work with their employees.
If you have employees who have been working productively remotely for a year, it's probably better to find a way to keep them happy and working than to have to find a new employee.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#120Earlier quoted context omitted.
That makes no sense. Rent controls don't specify a minimum rent, all your reasons apply equally to rent controlled and uncontrolled rentals.
Rent controls do sometimes specify how much rent can be raised year over year. Drop it too low one year, be stuck with relatively low prices in the short term.
They regulate rent increases in Oakland at least. Of course our landlord took the maximum allowed rent increase each time, as if it were the required increase rather than the maximum.
I don't live in the bay area and pay half the rent for three times the space in Boston... not exactly a small town... the Bay Area was already unattractive for me financially and I have an advanced degree in an engineering field.