5 ms·

Does anyone know why is it that seemingly every major city is having an affordability crisis at the same time?

by pbiggar 8y ago

wmf 8y ago
Because capital is global and it's flowing into all major cities at the same time?
- refurb 8y ago
  Add in expansionist monetary policy and you get asset inflation.
CydeWeys 8y ago
Is this new? Was the same thing not happening in, say, any other urban boom time, like the mid 1920s? I think there's always going to be a flux of people who aren't "keeping up" with the increase in costs as much as others are, and having to drop out of the most expensive areas as a result. and likewise, there's people from the rest of the country who are improving their situation and can move up to the "big time".
- repsilat 8y ago
  Price to income ratios have indeed gotten worse in many places. I don't know how widespread that effect is, though. I put it down to a combination of consistently low interest rates (both in the short term and in the long-term trend), coupled with cumulatively worsening construction deficits. Wouldn't be surprised if not all of that withstood comparison with actual data, though.
  - CydeWeys 8y ago
    But surely this isn't the first time they've gotten worse, right? They've increased many previous times in many previous places throughout history, right? I really don't think there's anything that special about what we're going through right now. I'm sure the Romans were complaining about rising prices in Rome as the city filled up and real estate became scarce.
    - user5994461 8y ago
      >>> But surely this isn't the first time they've gotten worse, right? They've increased many previous times in many previous places throughout history, right? Truth be told. This is the first time in history this happens. There has never been as long a period without war or calamity. Properties were never inflated to the point of being not affordable within multiple decades of income. You were trying to give the 20's as an example. 1920 is just after the war, property had zero value after most of them were destroyed and most tenants are dead. Fast forward less than 20 years and it's world war two, it's all reset again.
elihu 8y ago
My take on it is that there aren't enough desirable cities available to employ and house all the people who want to live in them. This can be addressed by either increasing the capacity of those cities, by making existing undesirable cities more desirable, or just creating new desirable cities where no city currently exists.
- graeme 8y ago
  Spot on. I think zoning is a big part of it. It would be illegal to build most of the world’s desirable cities now. Local zoning requires less mixed use, wider streets, more mandatory parking, etc My dense, desirable neighbourhood in montreal couldn’t be build elsewhere in north america. But itnisn’t a safety ir code thing. The local zoning is actually reasonable: it’s just the laws are more anti-urbanist elsewhere.
- bobthepanda 8y ago
  Creating new cities out of scratch rarely works. Cities need a reason to exist, and newly planned cities tend to fall apart from a lack of jobs. Example: https://www.citylab.com/life/2018/06/sleepy-in-songdo-koreas-smartest-city/561374/ https://www.citylab.com/life/2018/06/sleepy-in-songdo-koreas...
NTDF9 8y ago
The rich got richer after the financial crisis and have nowhere else to invest. Classic example of massive misallocation of resources.
- richjdsmith 8y ago
  Not sure why you're getting downvoted. This is absolutely a cause. Anecdotally, my parents did well during the recession using it as a time to purchase assets "on sale" as my dad put it. Now, 10 years later they've done well on everything they bought, and are seeking new places to put their money. They've had success with real estate their whole lives and see no reason to change what works. As a result they are buying anything they can collect rents from. The cycle continues.
pier25 8y ago
In Spain at least a lot of it is attributed to AirBNB.
- parthdesai 8y ago
  While Airbnb is not the sole reason, it definitely is one of the factors if not a major factor for the steep rents here in Toronto. Just to give you an example, when i moved in my current condo back in 2017 my rent was $1700/month. 2 years in and my landlord wants to suddenly "move back in" and now the rental price for similar units are around $2200/month. I find it hilarious top brass of Y Combinator talk about things like UBI and rest and meanwhile Airbnb actively tries to screw over the locals when it comes to renting a place and won't even assist local government in enforcing the rules.
  - l4yao 8y ago
    I find this argument a lot whenever Airbnb is mentioned. Do you have a source available? Rent has increased significantly in Toronto recently. How do you know Airbnb is a significant factor?
    - parthdesai 8y ago
      Here, according this[0] report Toronto has around 6200 entire units as airbnb units. That's at the very least 6200 less rental units in the market. And you know very well how supply and demand works. Anecdotal, but the couple in my neighbouring unit recently bought a condo and moved out. Guess what happened to that unit. It's a full time airbnb unit now. My floor has 12 units, and out of it 3 are full time airbnb units. And this is just 1 floor out of ~45 floors. And mind you, I still haven't started to list all the problems that airbnb tenants bring to the building. [0] http://fairbnb.ca/wp-content/uploads/2019/01/Final_Fairbnb-Update-Report_Jan_9_2019.pdf http://fairbnb.ca/wp-content/uploads/2019/01/Final_Fairbnb-U... Yes i know fairbnb is backed by a hotel lobby but that doesn't mean the reports are inaccurate.
      - bloomca 8y ago
sorryforthethro 8y ago
I can't actually validate your claim, but the Federal reserve increased their rates by 0.25% in December, which translates to some % increase in prime mortgage rates, which ends up restricting the average home buyer's price window by some %, some other things I don't understand, and uh, prices drop?
bloomca 8y ago
I think it is a consequence of globalization. I don't have any statistics to prove it, but I think that people in general are not very keen to dig very deep, therefore everybody knows about certain number of "cool" cities, which everybody travels to and tries to move. So, all popular big cities experience this influx of people moving there; expats have more and more options nowadays, so they also move to only cool places, therefore, it creates this problem. Not only it raises rents, expats can bump them a lot! They earn a lot of money, so for them extra $100 is not a big problem. And urbanism – I guess more and more people move to cities nowadays, so it brings even more people who want to live there. Nobody really wants to live in the outskirts (unless it is USA), so major hubs, subway stations, downtown gets huge demand.
- collyw 8y ago
  Its where most of the jobs are.
bdcravens 8y ago
Confirmation bias. Many cities that are larger than Barcelona don't have that problem.

Does anyone know why is it that seemingly every major city is having an affordability crisis at the same time?

wmf 8y ago

Because capital is global and it's flowing into all major cities at the same time?

refurb 8y ago
Add in expansionist monetary policy and you get asset inflation.

CydeWeys 8y ago

Is this new? Was the same thing not happening in, say, any other urban boom time, like the mid 1920s? I think there's always going to be a flux of people who aren't "keeping up" with the increase in costs as much as others are, and having to drop out of the most expensive areas as a result. and likewise, there's people from the rest of the country who are improving their situation and can move up to the "big time".

repsilat 8y ago
Price to income ratios have indeed gotten worse in many places. I don't know how widespread that effect is, though. I put it down to a combination of consistently low interest rates (both in the short term and in the long-term trend), coupled with cumulatively worsening construction deficits. Wouldn't be surprised if not all of that withstood comparison with actual data, though.
- CydeWeys 8y ago
  But surely this isn't the first time they've gotten worse, right? They've increased many previous times in many previous places throughout history, right? I really don't think there's anything that special about what we're going through right now. I'm sure the Romans were complaining about rising prices in Rome as the city filled up and real estate became scarce.
  - user5994461 8y ago
    >>> But surely this isn't the first time they've gotten worse, right? They've increased many previous times in many previous places throughout history, right? Truth be told. This is the first time in history this happens. There has never been as long a period without war or calamity. Properties were never inflated to the point of being not affordable within multiple decades of income. You were trying to give the 20's as an example. 1920 is just after the war, property had zero value after most of them were destroyed and most tenants are dead. Fast forward less than 20 years and it's world war two, it's all reset again.

elihu 8y ago

My take on it is that there aren't enough desirable cities available to employ and house all the people who want to live in them. This can be addressed by either increasing the capacity of those cities, by making existing undesirable cities more desirable, or just creating new desirable cities where no city currently exists.

graeme 8y ago
Spot on. I think zoning is a big part of it. It would be illegal to build most of the world’s desirable cities now. Local zoning requires less mixed use, wider streets, more mandatory parking, etc My dense, desirable neighbourhood in montreal couldn’t be build elsewhere in north america. But itnisn’t a safety ir code thing. The local zoning is actually reasonable: it’s just the laws are more anti-urbanist elsewhere.
bobthepanda 8y ago
Creating new cities out of scratch rarely works. Cities need a reason to exist, and newly planned cities tend to fall apart from a lack of jobs. Example: https://www.citylab.com/life/2018/06/sleepy-in-songdo-koreas-smartest-city/561374/ https://www.citylab.com/life/2018/06/sleepy-in-songdo-koreas...

NTDF9 8y ago

The rich got richer after the financial crisis and have nowhere else to invest. Classic example of massive misallocation of resources.

richjdsmith 8y ago
Not sure why you're getting downvoted. This is absolutely a cause. Anecdotally, my parents did well during the recession using it as a time to purchase assets "on sale" as my dad put it. Now, 10 years later they've done well on everything they bought, and are seeking new places to put their money. They've had success with real estate their whole lives and see no reason to change what works. As a result they are buying anything they can collect rents from. The cycle continues.

pier25 8y ago

In Spain at least a lot of it is attributed to AirBNB.

parthdesai 8y ago
While Airbnb is not the sole reason, it definitely is one of the factors if not a major factor for the steep rents here in Toronto. Just to give you an example, when i moved in my current condo back in 2017 my rent was $1700/month. 2 years in and my landlord wants to suddenly "move back in" and now the rental price for similar units are around $2200/month. I find it hilarious top brass of Y Combinator talk about things like UBI and rest and meanwhile Airbnb actively tries to screw over the locals when it comes to renting a place and won't even assist local government in enforcing the rules.
- l4yao 8y ago
  I find this argument a lot whenever Airbnb is mentioned. Do you have a source available? Rent has increased significantly in Toronto recently. How do you know Airbnb is a significant factor?
  - parthdesai 8y ago
    Here, according this[0] report Toronto has around 6200 entire units as airbnb units. That's at the very least 6200 less rental units in the market. And you know very well how supply and demand works. Anecdotal, but the couple in my neighbouring unit recently bought a condo and moved out. Guess what happened to that unit. It's a full time airbnb unit now. My floor has 12 units, and out of it 3 are full time airbnb units. And this is just 1 floor out of ~45 floors. And mind you, I still haven't started to list all the problems that airbnb tenants bring to the building. [0] http://fairbnb.ca/wp-content/uploads/2019/01/Final_Fairbnb-Update-Report_Jan_9_2019.pdf http://fairbnb.ca/wp-content/uploads/2019/01/Final_Fairbnb-U... Yes i know fairbnb is backed by a hotel lobby but that doesn't mean the reports are inaccurate.
    - bloomca 8y ago

sorryforthethro 8y ago

I can't actually validate your claim, but the Federal reserve increased their rates by 0.25% in December, which translates to some % increase in prime mortgage rates, which ends up restricting the average home buyer's price window by some %, some other things I don't understand, and uh, prices drop?

bloomca 8y ago

I think it is a consequence of globalization. I don't have any statistics to prove it, but I think that people in general are not very keen to dig very deep, therefore everybody knows about certain number of "cool" cities, which everybody travels to and tries to move. So, all popular big cities experience this influx of people moving there; expats have more and more options nowadays, so they also move to only cool places, therefore, it creates this problem. Not only it raises rents, expats can bump them a lot! They earn a lot of money, so for them extra $100 is not a big problem. And urbanism – I guess more and more people move to cities nowadays, so it brings even more people who want to live there. Nobody really wants to live in the outskirts (unless it is USA), so major hubs, subway stations, downtown gets huge demand.

collyw 8y ago
Its where most of the jobs are.

bdcravens 8y ago

Confirmation bias. Many cities that are larger than Barcelona don't have that problem.