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

Re: Rents in Megacities Can't Go Up Forever

#201

Post by savanaly » Thu, Mar 23, 2017, 5:03 PM UTC

davidf18 wrote: post #143

Arizhel wrote: post #117

Earlier quoted context omitted.

>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 sto…

Tyler Cowen knows about rent seeking and Ricardo. He's not writing an encyclopedia article on the topic of rising housing costs though, he's writing a short piece for a broad audience about the demand side factors that might stabilize the price of housing in the long run, given (what we all take for granted) a more or less fixed supply.

Re: Rents in Megacities Can't Go Up Forever

#202

Post by thenomad » Thu, Mar 23, 2017, 5:06 PM UTC

jimlawruk wrote: post #55

bpicolo wrote: post #8

Earlier quoted context omitted.

There are certainly a lot of factors. People want to live in trendy cities. There's a lot to consider besides rent - culture, nightlife, etc. San Francisco sure does have some of the best food in the country (and with tech consuming most of spare time the way it is, eating out is really a huge part of culture). Rent definitely ends up being the deal breaker for many, but for others isn't. It's a lot harder for a comp…

Exactly right. Young people today would rather be poor in a "trendy" city, than rich in a not so trendy one. It has almost become a badge of honor of how much you can rough it to stay afloat in X trendy city. I am guessing it was not like this for previous generations, and I think it leads to too much homogeneity of culture. I think we should start to encouraging people to go to a uncool city and help build it up and…

It was definitely like this for previous generations. Young people have been moving to big cities they could barely afford for at least 100 years, and probably since Roman times.

Re: Rents in Megacities Can't Go Up Forever

#203

Post by davidf18 » Thu, Mar 23, 2017, 5:06 PM UTC

sf_rob wrote: post #151

matt_wulfeck wrote: post #91

Earlier quoted context omitted.

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.

Even a lot of bay area renters are anti-development. "They're just going to build luxury condos and destroy the neighborhood character" is the go-to phrase.

> "Even a lot of bay area renters are anti-development."

They might be receiving some sort of rent control so that their rent is far below the market price. I know there are a number of people in NYC that live in rent-controlled, rent-regulated apartments.

Re: Rents in Megacities Can't Go Up Forever

#204

Post by ghaff » Thu, Mar 23, 2017, 5:06 PM UTC

vonmoltke wrote: post #54

startupdiscuss wrote: post #42

Earlier quoted context omitted.

Every large city has some schools. Why is it that Austin is a tech hub (UT) but Houston is not (U of H, Rice)? One theory: it is not the school, but the kinds of jobs people get after. Austinites went to work for Dell, and Houstonians went to work for Exxon.

Houston is, for some definition of "tech". It's just more focused on petroleum and ocean engineering, which don't get a lot of play I'm these circles.

Exactly, people in certain circles have this somewhat self-referential definition of tech that means "what they do a lot of in Silicon Valley." And ignore things like the oil industry or pharma/biotech which are very much tech but just don't happen to have much presence in SV.

Re: Rents in Megacities Can't Go Up Forever

#205

Post by figers » Thu, Mar 23, 2017, 5:07 PM UTC

startupdiscuss wrote: post #62

CPLX wrote: post #47

Earlier quoted context omitted.

I don't mean to have this come across as snarky, at all, but really the reference for this is the whole of human history. Wealth is basically self-concentrating. Our political systems tend to end up with a few capital (and often Capitol) cities where the spoils from the plundering, both metaphorical and literal, end up. The original article does present some interesting and relevant examples of countervailing forces…

That's not snarky, and you have a point. But even if things seem "really obvious" and we can tell "just by looking at the facts", I feel better if someone has looked at the data and shown that to be the case. We aren't living in the feudal era, and a lot of people like to think that the reason people move to the cities is because of (for instance) bars and restaurants, museums and the opera, high-paying jobs and so o…

A large share of units in Boston rent to mostly college students who's parents pay the ever increasing rent. Harvard, MIT, BU, etc aren't going anywhere...

Re: Rents in Megacities Can't Go Up Forever

#206

Post by nwah1 » Thu, Mar 23, 2017, 5:08 PM UTC

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…

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.

While we want housing to be affordable, arbitrarily trying to reduce rental costs is futile. Rent exists. It is a reflection of the intrinsic desirability of the location. The only way to reduce the rent is if the location becomes less desirable and less productive.

So, really, it is a question of political economy... of who should own the rising value of land, since that value is not a return for the effort of the owners.

Re: Rents in Megacities Can't Go Up Forever

#207

Post by kingnothing » Thu, Mar 23, 2017, 5:09 PM UTC

JimboOmega wrote: post #80

robterrin wrote: post #60

Earlier quoted context omitted.

I've heard this pitch for Chicago many times, and it seems reasonable if you are in the one of the industries, Tyler mentions, that are more diffuse. The main problem with Chicago is it lacks an anchor industry. Is it the best place to be for finance? No, that's NYC. Is it healthcare? Boston, Baltimore, Cleveland or Rochester. Energy? Houston. Technology? SF. Entertainment? LA or NYC. Politics? DC. What exactly is Ch…

I don't know the city well enough to be sure, but traditionally it's transportation - back in the day as a link between the Mississippi and Great Lakes systems, then as a huge rail hub (cattle from the west would get repackaged and shipped on to the East), and most recently O'Hare (busiest airport in the world).

Atlanta is the busiest airport in the world and has been for almost 20 years.

Re: Rents in Megacities Can't Go Up Forever

#208

Post by ghaff » Thu, Mar 23, 2017, 5:10 PM UTC

xienze wrote: post #24

eli_gottlieb wrote: post #15

Earlier quoted context omitted.

That's a bit silly to say, considering SF and SV are about as suburbanized as can be. If you wanted "the big city", you'd go to New York, London, Paris, Tokyo, or some other place with actual urban density.

SV is very suburban, yes, but SF is densely-populated. "Big city" in this case doesn't necessarily imply that the city proper is 10M+ in population. And the lengths to which this insanity will go is that (e.g.) Google workers will live in SF and commute into SV. Talk about turning the "live in the suburbs, work in the city" paradigm on its head!

I also think it's something of a SV/SF anomaly. I've lived and worked mostly west of Boston/Cambridge (which until quite recently is where basically all the tech was located) for a very long time and I've known relatively few people who commuted out from the the city.

Re: Rents in Megacities Can't Go Up Forever

#209

Post by humanrebar » Thu, Mar 23, 2017, 5:17 PM UTC

tsunamifury wrote: post #136

zanny wrote: post #109

Earlier quoted context omitted.

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 pretty much think the expansion of drugs and crime due to boredom in rural America proves you wrong. On top of the fact that many people are different than you (in fact the 100s of millions who live in cities) are not satisfied just playing video games all day long.

Or maybe logistics are so much better now that even illegal drugs are more accessible and cheaper than before.

Re: Rents in Megacities Can't Go Up Forever

#210

Post by amyjess » Thu, Mar 23, 2017, 5:18 PM UTC

Arizhel wrote: post #112

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…

>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 another kid and the twins aren't babies anymore, they've gone from simply considering moving to the suburbs to actively house-hunting (and they're putting such a priority on it that she had her parents go house-hunting for them while she was in labor). I'd be surprised if they were still living in the city by the beginning of the second half of this year.

Another example: my parents. Both of them lived in Manhattan when they were in their 20s, and immediately after they got married, they moved to Texas and bought a nice cheap house in a suburb that had just been developed.