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Yes, SF is a perfect example where demand so wildly outstrips supply that the dominating driver of cost is space. Whether it is nice space or a total dump is on

Yes, SF is a perfect example where demand so wildly outstrips supply that the dominating driver of cost is space. Whether it is nice space or a total dump is only a small percentage of what dictates the over all price. Look at it this way, say a small apartment has 12 Square feet of counter space in the kitchen laminate counters cost $25 per square foot and granite costs $50. the relative cost difference between luxury and cheapo now is almost nothing once amortized and compared to the total rent.

fierro 8y ago
This is a really interesting theory. Initially I read this and nodded in agreement. But now I question, if demand in SF is truly so high, wouldn't those renting out nicer places be able to charge more? An increase in overall demand means some portion of that is an increase in demand for "luxury" housing, so wouldn't the rent for those units rise accordingly?
- dmoy 8y ago
  Because the prices are already super high for both? The primary utility there is close proximity to extremely high paying jobs.
  - stephengillie 8y ago
    Both examples are within a mile of Amazon's offices, and one bus away from Redmond.
- YokoZar 8y ago
  It is illegal to charge more for a lot of the places that could be made nicer. Demand remains, quality suffers.
- pmorici 8y ago
  Nicer places can charge more. It's just what when push comes to shove people aren't going to move 5 hours away for nice finishes. They will how ever put up with cheap counter tops if it means being 1 block from the metro. The over riding factor as other have pointed out is space and location. everything else doesn't really move the needle when you are looking at markets with very high prices.
thatfrenchguy 8y ago
It’s fake luxury though :-/
- stephengillie 8y ago
  "Luxury" is a normative term, a qualifier. Utility - how useful it is, it how many problems it solves - gives a more positive, quantative measure.

fierro 8y ago

This is a really interesting theory. Initially I read this and nodded in agreement. But now I question, if demand in SF is truly so high, wouldn't those renting out nicer places be able to charge more? An increase in overall demand means some portion of that is an increase in demand for "luxury" housing, so wouldn't the rent for those units rise accordingly?

dmoy 8y ago
Because the prices are already super high for both? The primary utility there is close proximity to extremely high paying jobs.
- stephengillie 8y ago
  Both examples are within a mile of Amazon's offices, and one bus away from Redmond.
YokoZar 8y ago
It is illegal to charge more for a lot of the places that could be made nicer. Demand remains, quality suffers.
pmorici 8y ago
Nicer places can charge more. It's just what when push comes to shove people aren't going to move 5 hours away for nice finishes. They will how ever put up with cheap counter tops if it means being 1 block from the metro. The over riding factor as other have pointed out is space and location. everything else doesn't really move the needle when you are looking at markets with very high prices.

thatfrenchguy 8y ago

It’s fake luxury though :-/

stephengillie 8y ago
"Luxury" is a normative term, a qualifier. Utility - how useful it is, it how many problems it solves - gives a more positive, quantative measure.