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> Rents in Megacities Can't Go Up Forever Yes it can, College Tuition is a great example. Instead of finding the cause and treating it, we just increase the am

> Rents in Megacities Can't Go Up Forever Yes it can, College Tuition is a great example. Instead of finding the cause and treating it, we just increase the amount of aid people have access to.

yladiz 10y ago
But college is not a necessity, whereas living somewhere is, and you can somewhat easily get money from the government (at least in the US) to support your degree, whereas you can't really get that for your housing.
- PlaceFan 10y ago
  > But college is not a necessity Ehhh, that isn't the narrative we've been pushing for the last 20+ years. > whereas living somewhere is I think the fact that it's a necessity only benefits the idea of providing people aid for housing. > you can't really get that for your housing. I mean, you absolutely can depending on your level of income. It won't make up for being poor, but that's what section 8 housing is. Even on the more middle-class scale, the government provides tax breaks for home owners (and especially for first-time home buyers) which is basically money from the government.
  - supergeek133 10y ago
    Exactly, from the point we think a child can understand it, society pushes a narrative that you need college to succeed.
ceejayoz 10y ago
The rise in college tuition likely can't continue forever, either.
startupdiscuss 10y ago
Thank goodness we are too smart to try that with Healthcare.
- ceejayoz 10y ago
  Compare the statements "not everyone needs to live in an expensive city" and "not everyone needs to go to a private out-of-state college" to "not everyone needs to be able to live" to see the silliness of that comparison.
  - startupdiscuss 10y ago
    I think one of us has misunderstood something in this thread. I assume that everyone wants healthcare for everyone. I mean, who would want even a stranger to suffer from disease? The question is what is the best mechanism to make it affordable for everyone. One answer is: give everyone more money to spend on it. The problem with that is that it drives up the cost for everyone and you may be no better off. You might be worse off. Another solution might be to spend money on the supply (build more hospitals and train more doctors). I pick this example because it doesn't imply things like lowering taxes or spending less, so it doesn't get caught up in the budget discussion. The criticism here is just in regards to the first solution, not in regards to providing healthcare.
rpazyaquian 10y ago
...and then pass bills and laws to strip them of that aid.
acchow 10y ago
No, college tuition will rise with middle-class incomes. This is a cultural phenomenon. We're "supposed" to get our children the best education we can possibly afford, otherwise we are bad parents. Since colleges don't have price discrimination, this essentially means tuition is set at the absolute maximum that the middle class can afford - squeeze every penny out of them. This is why aid won't reduce the burden of tuition on the middle class (tuition will just rise to meet the aid amount). It's also why tax breaks won't help the middle class either (same idea), although the tax breaks can help those above the middle class (since they have a higher tax rate, and the tuition rises to match exactly the effective aid for the middle class).
- dmitri1981 10y ago
  Or rather it will rise with availability of debt. Tuition is not paid cash and incomes have been barely going up by a couple of percent per year
  - acchow 10y ago
    Ah, sorry. You're right. Income is a bad proxy for the real source of the funding and availability of debt is far more precise.
- mcguire 10y ago
  College tuition has been going up much faster than incomes. When I went, the only people I knew getting student loans were those getting professional degrees: medical doctors and lawyers.
  - acchow 10y ago
    Tuition used to be very low. When we adopted a culture of "college is everything" that's when tuitions rose rapidly to meet what could be maximally extracted from the middle class. We've now reached that point so they will rise slowly now - only to meet increases in government aid (direct and indirect aid) and increases in middle class incomes.
klenwell 10y ago
I remember hearing a variation of this claim by rationalizers for the dot-com stock market bubble in the 90's and the housing bubble in the 00's. I recognize you're not trying to rationalize this, but you've identified the common factor to each bubble: a new and unsophisticated source of investors being aided by the financial industry. With the dot-com bubble, it was daytraders and online traders generally (including me). With housing bubble, new untraditional homebuyers who bought homes with exotic mortgages. With education, student who traditionally would not have gone to college going to college. These could have all been positive examples of American upward mobility at work. But as was especially evident with the housing bubble, the financial industry turned people looking to improve their lives into consumers and, in many cases, exploited them. With rents in metropolitan areas, it seems to be driven by wealthy investors (institutional investors and wealthy foreigners) pricing marginal middle class homebuyers (e.g. yuppie millennials) out of the market and then turning around to rent to them. Renters, like tech workers and young white-collar professionals generally, can stretch to afford these rents. But they definitely have a ceiling and all of this has been fueled by a growing economy. As soon as the economy falters, aid will dry up and the roof will cave in.
- tsunamifury 10y ago
  Thats not the case here. The financial industry is not driving up rents and costs in San Francisco. The pure amount of private wealth pouring into the area is. Thats the dramatic shift this time around -- this isn't a bubble propped up by lending -- this is a bubble due to the fact that we are living in a time where the rich _have so much money they dont know what to do with it._
  - klenwell 10y ago
    Well, true, I suppose. Demand directly is driving up rents. And San Francisco is a special case because of its geographic constraints. It is almost like a literal geographic bubble that formed on the bay there. My conclusions reflect more generally I'm seeing and experience in Southern California, which isn't quite so geographically constrained. I agree it's not the same kind of bubble we saw when strippers (to borrow the example from The Big Short) were carrying 5 mortgages in Florida. And it explains why housing prices never fell there or really here in Southern California to the extent I was expecting (and really hoping) back after the crash. Still, I imagine most of that private wealth that is pouring in there and here is either connected with the financial industry directly or indirectly. At one end, you've got the financial industry financing everything, from mattresses to cars to college education, which spurs demand and price inflation. On the other end, you've got a global wealthy elite for whom all real estate is local. They are small proportionally but still large enough in aggregate to quickly exhaust limited edition luxury items like residential property offerings in San Francisco, Vancouver, London, etc. Anyway, that's the simplified model I've been operating on for the last few years. A weird combination of the super rich shopping where they please and local middle class Americans, hopped up on credit, trying to compete with them in select desirable areas.
nosuchthing 10y ago
The fallacy of rent control, which only treats the symptom and fails to address the root problem of inadequate supply and restrictions to adding additional supply to the market.
- DaiPlusPlus 10y ago
  I'm genuinely curious how the supply of housing in Manhattan could be increased.
  - pavel_lishin 10y ago
    The standard way is to build more. Another option is improving commutes from the outer boroughs and New Jersey - the Bronx has many affordable areas, but the 456 is a shitshow, and I'd rather move back to Texas than put up with the slow peristalsis that would become my commute. Buses aren't great, either, and suffer from a lot of the same problems that regular street traffic does. My coworkers who come from Jersey typically have a bus ride of an hour, assuming there aren't any traffic problems.
  - acchow 10y ago
    Grow vertically. I saw this regularly when I was living in Hong Kong - 50 year old 5-15 story apartment buildings being bought out by developers, demolished, and replaced with something 30-40 stories tall. High speed rail into the city (see tokyo). You can travel enormous distances in 40 minutes on HSR.
  - davidf18 10y ago
    Replacing 4 story Brownstones with high-rise apartments. Simply removing the politically induced scarcity of zoning density restrictions would achieve that or something similar. See my earlier comment to this post: https://news.ycombinator.com/item?id=13940272 https://news.ycombinator.com/item?id=13940272

> Rents in Megacities Can't Go Up Forever Yes it can, College Tuition is a great example. Instead of finding the cause and treating it, we just increase the amount of aid people have access to.

yladiz 10y ago

But college is not a necessity, whereas living somewhere is, and you can somewhat easily get money from the government (at least in the US) to support your degree, whereas you can't really get that for your housing.

PlaceFan 10y ago
> But college is not a necessity Ehhh, that isn't the narrative we've been pushing for the last 20+ years. > whereas living somewhere is I think the fact that it's a necessity only benefits the idea of providing people aid for housing. > you can't really get that for your housing. I mean, you absolutely can depending on your level of income. It won't make up for being poor, but that's what section 8 housing is. Even on the more middle-class scale, the government provides tax breaks for home owners (and especially for first-time home buyers) which is basically money from the government.
- supergeek133 10y ago
  Exactly, from the point we think a child can understand it, society pushes a narrative that you need college to succeed.

ceejayoz 10y ago

The rise in college tuition likely can't continue forever, either.

startupdiscuss 10y ago

Thank goodness we are too smart to try that with Healthcare.

ceejayoz 10y ago
Compare the statements "not everyone needs to live in an expensive city" and "not everyone needs to go to a private out-of-state college" to "not everyone needs to be able to live" to see the silliness of that comparison.
- startupdiscuss 10y ago
  I think one of us has misunderstood something in this thread. I assume that everyone wants healthcare for everyone. I mean, who would want even a stranger to suffer from disease? The question is what is the best mechanism to make it affordable for everyone. One answer is: give everyone more money to spend on it. The problem with that is that it drives up the cost for everyone and you may be no better off. You might be worse off. Another solution might be to spend money on the supply (build more hospitals and train more doctors). I pick this example because it doesn't imply things like lowering taxes or spending less, so it doesn't get caught up in the budget discussion. The criticism here is just in regards to the first solution, not in regards to providing healthcare.

rpazyaquian 10y ago

...and then pass bills and laws to strip them of that aid.

acchow 10y ago

No, college tuition will rise with middle-class incomes. This is a cultural phenomenon. We're "supposed" to get our children the best education we can possibly afford, otherwise we are bad parents. Since colleges don't have price discrimination, this essentially means tuition is set at the absolute maximum that the middle class can afford - squeeze every penny out of them. This is why aid won't reduce the burden of tuition on the middle class (tuition will just rise to meet the aid amount). It's also why tax breaks won't help the middle class either (same idea), although the tax breaks can help those above the middle class (since they have a higher tax rate, and the tuition rises to match exactly the effective aid for the middle class).

dmitri1981 10y ago
Or rather it will rise with availability of debt. Tuition is not paid cash and incomes have been barely going up by a couple of percent per year
- acchow 10y ago
  Ah, sorry. You're right. Income is a bad proxy for the real source of the funding and availability of debt is far more precise.
mcguire 10y ago
College tuition has been going up much faster than incomes. When I went, the only people I knew getting student loans were those getting professional degrees: medical doctors and lawyers.
- acchow 10y ago
  Tuition used to be very low. When we adopted a culture of "college is everything" that's when tuitions rose rapidly to meet what could be maximally extracted from the middle class. We've now reached that point so they will rise slowly now - only to meet increases in government aid (direct and indirect aid) and increases in middle class incomes.

klenwell 10y ago

I remember hearing a variation of this claim by rationalizers for the dot-com stock market bubble in the 90's and the housing bubble in the 00's. I recognize you're not trying to rationalize this, but you've identified the common factor to each bubble: a new and unsophisticated source of investors being aided by the financial industry. With the dot-com bubble, it was daytraders and online traders generally (including me). With housing bubble, new untraditional homebuyers who bought homes with exotic mortgages. With education, student who traditionally would not have gone to college going to college. These could have all been positive examples of American upward mobility at work. But as was especially evident with the housing bubble, the financial industry turned people looking to improve their lives into consumers and, in many cases, exploited them. With rents in metropolitan areas, it seems to be driven by wealthy investors (institutional investors and wealthy foreigners) pricing marginal middle class homebuyers (e.g. yuppie millennials) out of the market and then turning around to rent to them. Renters, like tech workers and young white-collar professionals generally, can stretch to afford these rents. But they definitely have a ceiling and all of this has been fueled by a growing economy. As soon as the economy falters, aid will dry up and the roof will cave in.

tsunamifury 10y ago
Thats not the case here. The financial industry is not driving up rents and costs in San Francisco. The pure amount of private wealth pouring into the area is. Thats the dramatic shift this time around -- this isn't a bubble propped up by lending -- this is a bubble due to the fact that we are living in a time where the rich _have so much money they dont know what to do with it._
- klenwell 10y ago
  Well, true, I suppose. Demand directly is driving up rents. And San Francisco is a special case because of its geographic constraints. It is almost like a literal geographic bubble that formed on the bay there. My conclusions reflect more generally I'm seeing and experience in Southern California, which isn't quite so geographically constrained. I agree it's not the same kind of bubble we saw when strippers (to borrow the example from The Big Short) were carrying 5 mortgages in Florida. And it explains why housing prices never fell there or really here in Southern California to the extent I was expecting (and really hoping) back after the crash. Still, I imagine most of that private wealth that is pouring in there and here is either connected with the financial industry directly or indirectly. At one end, you've got the financial industry financing everything, from mattresses to cars to college education, which spurs demand and price inflation. On the other end, you've got a global wealthy elite for whom all real estate is local. They are small proportionally but still large enough in aggregate to quickly exhaust limited edition luxury items like residential property offerings in San Francisco, Vancouver, London, etc. Anyway, that's the simplified model I've been operating on for the last few years. A weird combination of the super rich shopping where they please and local middle class Americans, hopped up on credit, trying to compete with them in select desirable areas.

nosuchthing 10y ago

The fallacy of rent control, which only treats the symptom and fails to address the root problem of inadequate supply and restrictions to adding additional supply to the market.

DaiPlusPlus 10y ago
I'm genuinely curious how the supply of housing in Manhattan could be increased.
- pavel_lishin 10y ago
  The standard way is to build more. Another option is improving commutes from the outer boroughs and New Jersey - the Bronx has many affordable areas, but the 456 is a shitshow, and I'd rather move back to Texas than put up with the slow peristalsis that would become my commute. Buses aren't great, either, and suffer from a lot of the same problems that regular street traffic does. My coworkers who come from Jersey typically have a bus ride of an hour, assuming there aren't any traffic problems.
- acchow 10y ago
  Grow vertically. I saw this regularly when I was living in Hong Kong - 50 year old 5-15 story apartment buildings being bought out by developers, demolished, and replaced with something 30-40 stories tall. High speed rail into the city (see tokyo). You can travel enormous distances in 40 minutes on HSR.
- davidf18 10y ago
  Replacing 4 story Brownstones with high-rise apartments. Simply removing the politically induced scarcity of zoning density restrictions would achieve that or something similar. See my earlier comment to this post: https://news.ycombinator.com/item?id=13940272 https://news.ycombinator.com/item?id=13940272