Manhattan rents cross $5k threshold for first time • Hacker News Board

Re: Manhattan rents cross $5k threshold for first time

#131

Post by Spooky23 » Thu, Jul 14, 2022, 1:24 PM UTC

spaniard89277 wrote: post #36

Housing and land is a non-transable good, and therefore there should be heavy state intervention on it, preferably by doing the same as Vienna, which is holding >40% of the renting stock and charging according to income, and renting to a representative distribution of tenants so to prevent guettos. Rent is the main detractor of disposable income which hurts the rest of the economy, and property owners provide almost…

New York City already has like 150k+ income based public housing units.

It’s not ideal.

Re: Manhattan rents cross $5k threshold for first time

#132

Post by oezi » Thu, Jul 14, 2022, 1:24 PM UTC

nickles wrote: post #77

madsbuch wrote: post #69

Earlier quoted context omitted.

> Those price increases incentivize builders to increase the housing stock Ahh yes, walking around in NY seeing building projects to increase the supply of housing in the 4th dimension where land is plentiful and the rivers are clean /s

> Ahh yes, walking around in NY seeing building projects to increase the supply of housing in the 4th dimension where land is plentiful and the rivers are clean /s Have you tried obtaining building permits in NYC? My understanding is that it’s not easy. If you don’t allow builders to construct new housing then you won’t get new housing, regardless of price level.

Free market advocates always find the next culprit why the market can't deliver.

I can only speak of Berlin where land prices and construction prices have increased by demand so much, that new construction is coming in at 4x than 10 years ago (from 2k per sqm to 8k). I don't see how the market is really solving anything here.

Re: Manhattan rents cross $5k threshold for first time

#133

Post by ChuckNorris89 » Thu, Jul 14, 2022, 1:27 PM UTC

ricardobeat wrote: post #59

This is why you need rent control. 100% of this price hike is going into landlord's pockets, it's not a result of inflation.

How did that work for Berlin? Try moving there today and tell me how affordable it is for newcomers.

Rent control is basically subsidizing existing grandfathered tenants by fleecing those new wishing to move in, without fixing the underlying housing shortage in any way.

The solution is always, always, having (building) more supply than the demand, yet nobody seems to get it.

Re: Manhattan rents cross $5k threshold for first time

#134

Post by golergka » Thu, Jul 14, 2022, 1:27 PM UTC

jerojero wrote: post #49

bigyikes wrote: post #23

I’ve had this thought floating around in my head for a while, and it seems wrong, but I’m not completely sure why. I’m hoping someone more knowledgeable might be able to set me straight. Prices on the coasts — like 5k rent — are astronomically high compared to prices in, say, the midwest. This shocks many people. You could easily make the same comparison between the midwest and some non-developed nation. The differen…

Short answer: No. The problem with these insane prices isn't really that you have disparity within the same country, but that a significant amount of people in these places cannot afford to live in there. You can't have a restaurant because you need to hire waiters but you can't pay waiters enough for them to pay the rent. So your service industry is disrupted or alternatively: people need to commute 1 or 2 hours to…

> The problem with these insane prices isn't really that you have disparity within the same country, but that a significant amount of people in these places cannot afford to live in there. You can't have a restaurant because you need to hire waiters but you can't pay waiters enough for them to pay the rent. So your service industry is disrupted or alternatively: people need to commute 1 or 2 hours to get to these jobs.

Haven't you described a problem that fixes itself through market forces? Restaurant waiters move to other cities, restaurants (and millions of other businesses) close, city becomes less desirable, rents go down.

Re: Manhattan rents cross $5k threshold for first time

#135

Post by f17 » Thu, Jul 14, 2022, 1:27 PM UTC

nickles wrote: post #51

spaniard89277 wrote: post #36

Housing and land is a non-transable good, and therefore there should be heavy state intervention on it, preferably by doing the same as Vienna, which is holding >40% of the renting stock and charging according to income, and renting to a representative distribution of tenants so to prevent guettos. Rent is the main detractor of disposable income which hurts the rest of the economy, and property owners provide almost…

> should be heavy state intervention on it, preferably by doing the same as Vienna, which is holding >40% of the renting stock and charging according to income This is great policy if you want to make housing unaffordable. When supply is less than demand, prices go up. Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechani…

> Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechanism from working, leaving a shortage of housing.

The issue, empirically, is that (a) we don't see the right housing being built, and (b) we don't see quality housing being built. We see a lot of high-end luxury units being built, but what we need are more 1- and 2-bedroom units within 20 minutes (preferably, by affordable public transit) of where people work. We also see a lot of large (and therefore expensive) but cheaply built McMansions that'll be falling down in 20-40 years, so the long-term picture of the housing stock is not improved.

What we need is for the government to step in and build affordable housing as a floor at a controlled price ("commie blocks"). No one will be forced to live in one, of course, but they'll be an option; the rich can still buy property on the market if they're so inclined.

> My landlord takes all the risk of owning the property (prices don’t always go up after all).

If you own your house and control your geography (i.e., you'll never be forced to move due to economic inopportunity) then you have the truly risk-free position. Renters are at much higher risk (log transform, Kelly Criterion) than landlords, because real estate costs are such a high percentage of their budgets.

The problem, of course, is that owning a house, while it gives you a zero beta to the housing market in theory, still does have the risks you described. For one thing, other people can do things that damage your house's value--both its subjective value as a place to live, and its objective market price--such as building highways and obstructing sun/view. The other issue is that, in today's hypercompetitive world where in decent employment every job search is national (and possibly international) it's impossible to control your geography... you could be laid off and forced to relocate to get your next position.

So, you're not wrong in general. I think it's a wise financial decision for a young person to keep renting one's place--as opposed to renting money to buy a place--but I also think it's inaccurate to imply that landlords are taking more risks than they really are. It really gets on my nerves when rich people and employers talk about how they're "taking all the risk" and therefore deserve more, when the truth is that the poor (involuntarily) take all the risk, because each $100 means so much more to them.

Re: Manhattan rents cross $5k threshold for first time

#136

Post by nickles » Thu, Jul 14, 2022, 1:34 PM UTC

oezi wrote: post #132

nickles wrote: post #77

Earlier quoted context omitted.

> Ahh yes, walking around in NY seeing building projects to increase the supply of housing in the 4th dimension where land is plentiful and the rivers are clean /s Have you tried obtaining building permits in NYC? My understanding is that it’s not easy. If you don’t allow builders to construct new housing then you won’t get new housing, regardless of price level.

Free market advocates always find the next culprit why the market can't deliver. I can only speak of Berlin where land prices and construction prices have increased by demand so much, that new construction is coming in at 4x than 10 years ago (from 2k per sqm to 8k). I don't see how the market is really solving anything here.

> Free market advocates always find the next culprit why the market can't deliver.

I advocate for the free market because it's been the most reliable way of elevating humans from subsistence levels of consumption and improving their quality of life. It's been the driving force in elevating billions of people from poverty over recent decades. I'd wager that most people, free market advocates or otherwise, would consider that a good thing.

To be clear, there are cases where markets fail. In those cases, government intervention can actually produce more efficient outcomes. Consider the case of basic research. Private enterprises would have be foolish to pay for glowing worms and shrimp treadmills; there's just no clear payoff. But this seemingly silly research is critical to progress. For example, the research on glowing worms (GFP added to C. Elegans) ended up winning the Nobel Prize and is crucial for observing biological processes in living organisms.

> new construction is coming in at 4x than 10 years ago... I don't see how the market is really solving anything here.

It sounds like high prices incentivized builders to increase construction by 400% over 10 years? That seems like the price mechanism is driving an increase in housing supply, exactly as one would want when there's a shortage of housing.

Re: Manhattan rents cross $5k threshold for first time

#137

Post by [deleted] » Thu, Jul 14, 2022, 1:39 PM UTC

mattzito wrote: post #95

afavour wrote: post #43

As a New Yorker myself I do wonder where this ends up. Me and my relatively well paid friends can afford to live here but we depend on a lot of lower paid folks for the city to function. Grocery store clerks, delivery drivers, coffee baristas, all that sort of thing. Maybe right now they have a half hour subway ride to work and that’s acceptable. But as they get pushed further and further out it’s going to break down…

Also as a New Yorker, worth noting that many of the lowest paid workers are undocumented, and their flexibility to pursue higher paying work is limited. Sadly, this means that 60-90 minute commutes are not out of the ordinary.

[deleted]

Re: Manhattan rents cross $5k threshold for first time

#138

Post by danaris » Thu, Jul 14, 2022, 1:40 PM UTC

afavour wrote: post #43

As a New Yorker myself I do wonder where this ends up. Me and my relatively well paid friends can afford to live here but we depend on a lot of lower paid folks for the city to function. Grocery store clerks, delivery drivers, coffee baristas, all that sort of thing. Maybe right now they have a half hour subway ride to work and that’s acceptable. But as they get pushed further and further out it’s going to break down…

Do the costs of goods and services need to go up?

Or do the places paying low wages now just need to accept a smaller profit margin or lower executive pay?

It's unquestionably true that there are some places that pay low wages that cannot afford to pay better wages without increasing prices; however, we seem to have collectively decided that that's the only way wages can increase. But that ignores the fact that corporations in all (or at least many) sectors have been enjoying record profits recently, and executive-to-worker pay ratios are absurdly high.

Remember that next time you see someone claiming that raising wages necessarily means that prices will need to rise.

Re: Manhattan rents cross $5k threshold for first time

#139

Post by afavour » Thu, Jul 14, 2022, 1:42 PM UTC

wil421 wrote: post #92

afavour wrote: post #44

Earlier quoted context omitted.

NYC has technically outlawed Airbnb rentals of less than 30 days already. They just need a lot better enforcement of that law.

Yet I can still find rooms for this weekend in Manhattan ranging from sub $100 to about $250 a night.

> they just need a lot better enforcement of that law.

Perhaps also worth asking why Airbnb continues to host listings it knows are in violation of the law.

Re: Manhattan rents cross $5k threshold for first time

#140

Post by afavour » Thu, Jul 14, 2022, 1:44 PM UTC

danaris wrote: post #138

afavour wrote: post #43

As a New Yorker myself I do wonder where this ends up. Me and my relatively well paid friends can afford to live here but we depend on a lot of lower paid folks for the city to function. Grocery store clerks, delivery drivers, coffee baristas, all that sort of thing. Maybe right now they have a half hour subway ride to work and that’s acceptable. But as they get pushed further and further out it’s going to break down…

Do the costs of goods and services need to go up? Or do the places paying low wages now just need to accept a smaller profit margin or lower executive pay? It's unquestionably true that there are some places that pay low wages that cannot afford to pay better wages without increasing prices; however, we seem to have collectively decided that that's the only way wages can increase. But that ignores the fact that corpo…

Ehhhh.

I don't disagree for a second that, say, Starbucks could take a hit, reduce profits and still be able to operate successfully in New York. But I'd argue a lot of what makes New York the city it is is things like small independent restaurants that already operate on very thin margins. They also have no fat cat executives pocketing the spoils.

So, perhaps, yes, the city could survive without increasing wages but I worry it would result in a very faceless city filled with nothing other than big corporate entities that are able to swallow the cost.