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It's a downer to me, that despite the stated aim of "keeping housing affordable", prices of such apartments will usually default to "still eating most of the ho

It's a downer to me, that despite the stated aim of "keeping housing affordable", prices of such apartments will usually default to "still eating most of the household's income". Is this proof for too much or too less government intervention? Or is the usual increase in price caused by the new micro-renters themselves, in that they are increasing attractiveness of the area? I think it's most likely just that: We're bad savers and not being in the red at the end of the month will turn off the biggest behavioral signal for switching expenditure habits.

eru 10y ago
New York still has plenty of underdeveloped areas, ever in and really close to the centre of town. (Rent control is partially to blame here, I think. Zoning, too. But locals might be able to tell you more.) Overall, even with all of the city centre built up to 40 stories, you'll still see relatively high rent---the location is just too good to do business in; so people will bid it up. The Economist had a whole section about cities a while ago. It was in the issue that also had http://www.economist.com/blogs/freeexchange/2015/04/land-value-tax http://www.economist.com/blogs/freeexchange/2015/04/land-val...
redwood 10y ago
I think when folks focus on the price point of new construction being high, they're missing the bigger picture: These kinds of new units put downward price pressure on whatever was previously "lower on the totem pole". In other words, those studios in Murray Hill without a door man / elevator which were already priced below this price point will become even less luxurious looking as these are built.. that means that "regular folks" who don't care to live in these shiny shoe boxes prosper!
- dsfyu404ed 10y ago
  What your describing happened in the used car market c4c caused a panic that put the price floor of the bottom of the used car market in a place it couldn't have naturally got itself to. This put upward pressure on the entire market. It became much more profitable to have a bunch of higher end used (CPO, certified pre owned) cars lying around to sell. To churn those out better leases became more available. At the same time it became harder to write a housing loan that would obviously flop. Banks started writing more bad new car loans. The incentive to do so being that if it defaults soon enough the car will get repo'd, auctioned and bought by a dealer to be sold as certified pre owned and the loan is in the black at the end of it all. Go look at the average prices for various new/used vehicle categories and you'll see an upward trend everywhere. Allowing any part of the market to go upward in price puts upward pressure on the rest of the market because there's now more competition for whatever hasn't become out of reach. Housing, transportation, education and a few others are necessities that pretty much everyone needs the same amount of. Until you saturate the entire market in an area with high end stuff to the point where the price of the high end stuff decreases dramatically the price of low end stuff will rise. It's really hard to saturate the housing market with expensive and new because no developer will build more nice expensive stuff when there's a larger profit margin building cheaper low end stuff that's been driven up in price by all the high end stuff.

eru 10y ago

New York still has plenty of underdeveloped areas, ever in and really close to the centre of town. (Rent control is partially to blame here, I think. Zoning, too. But locals might be able to tell you more.) Overall, even with all of the city centre built up to 40 stories, you'll still see relatively high rent---the location is just too good to do business in; so people will bid it up. The Economist had a whole section about cities a while ago. It was in the issue that also had http://www.economist.com/blogs/freeexchange/2015/04/land-value-tax http://www.economist.com/blogs/freeexchange/2015/04/land-val...

redwood 10y ago

I think when folks focus on the price point of new construction being high, they're missing the bigger picture: These kinds of new units put downward price pressure on whatever was previously "lower on the totem pole". In other words, those studios in Murray Hill without a door man / elevator which were already priced below this price point will become even less luxurious looking as these are built.. that means that "regular folks" who don't care to live in these shiny shoe boxes prosper!

dsfyu404ed 10y ago
What your describing happened in the used car market c4c caused a panic that put the price floor of the bottom of the used car market in a place it couldn't have naturally got itself to. This put upward pressure on the entire market. It became much more profitable to have a bunch of higher end used (CPO, certified pre owned) cars lying around to sell. To churn those out better leases became more available. At the same time it became harder to write a housing loan that would obviously flop. Banks started writing more bad new car loans. The incentive to do so being that if it defaults soon enough the car will get repo'd, auctioned and bought by a dealer to be sold as certified pre owned and the loan is in the black at the end of it all. Go look at the average prices for various new/used vehicle categories and you'll see an upward trend everywhere. Allowing any part of the market to go upward in price puts upward pressure on the rest of the market because there's now more competition for whatever hasn't become out of reach. Housing, transportation, education and a few others are necessities that pretty much everyone needs the same amount of. Until you saturate the entire market in an area with high end stuff to the point where the price of the high end stuff decreases dramatically the price of low end stuff will rise. It's really hard to saturate the housing market with expensive and new because no developer will build more nice expensive stuff when there's a larger profit margin building cheaper low end stuff that's been driven up in price by all the high end stuff.