4 ms·

I've never heard of an example of a city that died from high real estate prices. Do you know of any? New York in the '70s. I wouldn't call this "death" since t

I've never heard of an example of a city that died from high real estate prices. Do you know of any? New York in the '70s. I wouldn't call this "death" since the city came back, but I wouldn't want to repeat that debacle. It's not high real estate prices per se that kills a city per se, but real estate volatility. When real estate prices are high, repairs aren't made because there's no need to-- apartments sell themselves. When they're low and vacancy rates are high, repairs aren't made because there is no point. High real estate prices and rents also impoverish a city; they draw money out of it, since most of the ownership is outside of it (cf. New York, where absentee assholes own most of the rental property). Some people in the city benefit, but the net effect is negative, especially since the young and talented are invariably on the butt-end of property prices/rents. During the boom, this isn't a problem, but after the boom ends, prices and rents remain high ("sticky" is the economic term) and this drains the city like a vampire. Ten years later, due to disrepair, poverty, and exodus of talent, you have a shell of a city. Then the crime starts, and the city falls into an arrangement like New York in the 1970s nightmare. What's difficult, if not impossible, to predict is when this transition will take place. It's likely to hit New York, but I have no idea if that will happen in 2011 or 2030. The tricky problem with bubbles (and New York real estate is still in a bubble, despite the semi-collapse of the national property bubble) is that it's very difficult to predict when they pop, although inevitable that they will.

pg 17y ago
What happened to NYC in the 1970s was the same thing that happened to most other US cities at the same time. It wasn't caused by the high cost of living there. And in fact NYC has bounced back better than almost any of the others.
byrneseyeview 17y ago
When real estate prices are high, repairs aren't made because there's no need to-- apartments sell themselves. When they're low and vacancy rates are high, repairs aren't made because there is no point. How does that make sense? You're arguing that repairs are not worth it if it's easy to sell apartments (what does that mean? That the new tenants do repairs, or that everyone is willing to live with a leaky sink as long as they pay for it?). Or that repairs only happen when apartments can sell (so you'll only let the sink leak if you're going to live with it for a long time). The utility of repairs can be positively or negatively correlated with real estate prices, but it's ridiculously unlikely for it to be both. For what it's worth, I've lived in cheap and expensive parts of New York, and, miracle of miracles, people took better care of apartments they paid more for. As it turns out, it really stings if you'd be able to rent someone a loft for $8,000 a month, but you can't because they saw that that ceiling was cracked. People paying $400/month for a room aren't nearly as picky.
- api 17y ago
  Have you ever lived in a city like New York, San Francisco, Boston, etc? You could list a catbox on Craigslist and get over $1000/month for it. You wouldn't even have to empty the dirty litter first. What he's saying really is that cities are subject to boom/bust cycles like sectors of the economy, stock markets, etc.

pg 17y ago

What happened to NYC in the 1970s was the same thing that happened to most other US cities at the same time. It wasn't caused by the high cost of living there. And in fact NYC has bounced back better than almost any of the others.

byrneseyeview 17y ago

When real estate prices are high, repairs aren't made because there's no need to-- apartments sell themselves. When they're low and vacancy rates are high, repairs aren't made because there is no point. How does that make sense? You're arguing that repairs are not worth it if it's easy to sell apartments (what does that mean? That the new tenants do repairs, or that everyone is willing to live with a leaky sink as long as they pay for it?). Or that repairs only happen when apartments can sell (so you'll only let the sink leak if you're going to live with it for a long time). The utility of repairs can be positively or negatively correlated with real estate prices, but it's ridiculously unlikely for it to be both. For what it's worth, I've lived in cheap and expensive parts of New York, and, miracle of miracles, people took better care of apartments they paid more for. As it turns out, it really stings if you'd be able to rent someone a loft for $8,000 a month, but you can't because they saw that that ceiling was cracked. People paying $400/month for a room aren't nearly as picky.

api 17y ago
Have you ever lived in a city like New York, San Francisco, Boston, etc? You could list a catbox on Craigslist and get over $1000/month for it. You wouldn't even have to empty the dirty litter first. What he's saying really is that cities are subject to boom/bust cycles like sectors of the economy, stock markets, etc.