4 ms·

Rents are super high in New York and Hong Kong and they are high density.

hn_throwaway_99 8y ago
That's an interesting point. For example, whenever people talk about increasing road building to alleviate traffic these days on places like Reddit, they are immediately lectured to about how more roads just cause induced demand and they don't actually cause traffic to go down. For highly desirable cities I have to wonder if the same thing is true for housing. I mean, it feels like even if you doubled the amount of housing in SF that you would just cause more people to want to congregate in SF while 3rd tier cities and rural areas would empty out even faster.
- wbl 8y ago
  And that makes all the new people better off. But we can measure this effect and I recall the city economist found every 3٪ increase in housing stock dropped rents 1%.
- AnthonyMouse 8y ago
  > For example, whenever people talk about increasing road building to alleviate traffic these days on places like Reddit, they are immediately lectured to about how more roads just cause induced demand and they don't actually cause traffic to go down. People misunderstand how that works. If you have a road which is excessively congested, the congestion suppresses demand. Nobody wants to sit in traffic for two hours, so people stay home or make use of flexible hours to commute at what would otherwise be less convenient times etc. If you add capacity to the road then the congestion gets better, but not by as much as you would have expected if you looked at the existing traffic, because the fact that it got better caused some of the congestion-suppressed demand to return, which made it less better. So the net result is that it got a little better when you expected it to get a lot better. But that doesn't mean you can't fix it by adding supply, it just means you need enough supply to satisfy the whole demand, including the demand that was suppressed by the high congestion (or in the housing case by the high prices). Of course, in the road case there are also alternative ways to satisfy demand, like building more housing so that people can live closer to where they work and don't have to drive as many miles.
- troydavis 8y ago
  https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/ https://shelterforce.org/2019/02/19/why-voters-havent-been-b... has a detailed examination of what happens after supply in one sub-market (say, mid-priced townhouses) increases. While I don’t agree with all of it, he brings up a key metric: “cross-price elasticity of demand” between sub-markets.
- raldi 8y ago
  See page 28 of http://openbook.sfgov.org/webreports/details3.aspx?id=2199 http://openbook.sfgov.org/webreports/details3.aspx?id=2199 — when a new apartment building opens in SF, 84% of occupants move in from elsewhere within the city.
AnthonyMouse 8y ago
Rents are higher in San Francisco than they are in New York City. Moreover, most of the density in NYC is historical and it currently has a lot of the same zoning restrictions that prevent new high density housing from being built, hence rents have been on the rise. (It also has a lot of ridiculous nonsense like rent control which reduces rents for historical tenants but raises it significantly for the new ones we get our numbers from.)
- xfitm3 8y ago
  Rent control is great for people who will never own. It helps keep housing costs fixed, which is really the only reason to buy.
  - AnthonyMouse 8y ago
    Rent control is incredibly dumb. It requires the landlord to set the initial rent at a level that accounts for the fact that it can't be adjusted while the tenant is in the apartment, when tenants in rent controlled apartments will stay for decades. So you're still paying the same total amount, but now you're paying more of it up front. And really you're paying more than that, because the landlord is taking a risk in not being able to adjust the rent -- what if taxes go up or some other cost, or the tenant stays longer than estimated? So now you're not just paying the same amount, you're paying it plus a risk premium for the landlord. Then, once you've been there long enough for your rent to be lower than the market rate (which itself is more expensive due to rent control), the landlord loses any incentive to maintain your apartment. Certainly you can expect to never see any improvements, and you'll be lucky if they even do what they're required by law rather than hoping that the insufferable conditions will cause you to move out. Then you can never leave. Apartment is now too small? Too big? Too far from your new job? Bad luck, you're stuck. So you get widows and widowers living in three bedroom apartments they don't need because it's cheaper to stay there than move to a one bedroom down the street (which could otherwise have actually saved them money), meanwhile a family of five is living in the one bedroom because the upgrade to three bedrooms is a rent increase of 700% rather than 70%. And better hope you don't get a new obnoxious neighbor, because you'll be together forever since neither of you can leave. Rent control isn't great for anyone. If you want to hedge against rents increasing by paying a bunch of money up front, maybe invest in a local REIT.
cletus 8y ago
Years ago I argued the cost of living in NYC was significantly lower than living in the Bay Area and that gap has only widened. For one, prices haven't really risen in NYC in several years (renting or buying) and in some cases have declined. For another, you can typically avoid owning at least one car in most parts of the city.
- xfitm3 8y ago
  Yes, living in NYC is generally cheaper than SF. I think the quality of life in NYC is l better too, but I appreciate that is subjective.
  - narrator 8y ago
    "More than a third of New Yorkers say they can’t afford to live here" [1] [1] https://nypost.com/2019/03/20/more-than-a-third-of-new-yorkers-say-they-cant-afford-to-live-here/ https://nypost.com/2019/03/20/more-than-a-third-of-new-yorke...
    - Ericson2314 8y ago
      Let's not trust that trash tabloid for any thing nuanced. NYC is expensive in rent but not bad in every other category. Honestly if they kept on building subways like they used to, plus didn't funnel all of them into Manhattan (grid routes), rent would be mostly fine too. The culture and classist issues of gentrification have more to do with inequality than cost of living.
    - Redoubts 8y ago
      https://www.cnbc.com/2019/03/08/43-percent-of-california-residents-say-they-cant-afford-to-live-there.html https://www.cnbc.com/2019/03/08/43-percent-of-california-res... “43% of Californians say they can’t afford to live there” Also, what’s the point of your footnote formatting when your link immediately follows?
Nasrudith 8y ago
The etiology is a bit backwards - high rents leads to higher density if allowed and it would be worse if not allowed. Everything is relative to the impact on the rest of the economy of course. It is possible that prices could be kept down if the demand collapses because of not having enough to justify the expenses.
raldi 8y ago
"People are starving and they're eating food. Let's try something else."
rcpt 8y ago
NYC is far better for housing than California. In New York you can get an apartment in Jackson Heights for $200k and take the F train to work. https://www.redfin.com/NY/Corona/112-50-Northern-Blvd-11368/unit-6B/home/113180232 https://www.redfin.com/NY/Corona/112-50-Northern-Blvd-11368/... In the Bay Area it's expensive near job centers but it's still expensive 40 miles away. California's problem is property taxes. Tax people fairly - not based on the time they joined the class of property owners - and our problems go away.

That's an interesting point. For example, whenever people talk about increasing road building to alleviate traffic these days on places like Reddit, they are immediately lectured to about how more roads just cause induced demand and they don't actually cause traffic to go down. For highly desirable cities I have to wonder if the same thing is true for housing. I mean, it feels like even if you doubled the amount of housing in SF that you would just cause more people to want to congregate in SF while 3rd tier cities and rural areas would empty out even faster.

wbl 8y ago
And that makes all the new people better off. But we can measure this effect and I recall the city economist found every 3٪ increase in housing stock dropped rents 1%.
AnthonyMouse 8y ago
> For example, whenever people talk about increasing road building to alleviate traffic these days on places like Reddit, they are immediately lectured to about how more roads just cause induced demand and they don't actually cause traffic to go down. People misunderstand how that works. If you have a road which is excessively congested, the congestion suppresses demand. Nobody wants to sit in traffic for two hours, so people stay home or make use of flexible hours to commute at what would otherwise be less convenient times etc. If you add capacity to the road then the congestion gets better, but not by as much as you would have expected if you looked at the existing traffic, because the fact that it got better caused some of the congestion-suppressed demand to return, which made it less better. So the net result is that it got a little better when you expected it to get a lot better. But that doesn't mean you can't fix it by adding supply, it just means you need enough supply to satisfy the whole demand, including the demand that was suppressed by the high congestion (or in the housing case by the high prices). Of course, in the road case there are also alternative ways to satisfy demand, like building more housing so that people can live closer to where they work and don't have to drive as many miles.
troydavis 8y ago
https://shelterforce.org/2019/02/19/why-voters-havent-been-buying-the-case-for-building/ https://shelterforce.org/2019/02/19/why-voters-havent-been-b... has a detailed examination of what happens after supply in one sub-market (say, mid-priced townhouses) increases. While I don’t agree with all of it, he brings up a key metric: “cross-price elasticity of demand” between sub-markets.
raldi 8y ago
See page 28 of http://openbook.sfgov.org/webreports/details3.aspx?id=2199 http://openbook.sfgov.org/webreports/details3.aspx?id=2199 — when a new apartment building opens in SF, 84% of occupants move in from elsewhere within the city.

AnthonyMouse 8y ago

Rents are higher in San Francisco than they are in New York City. Moreover, most of the density in NYC is historical and it currently has a lot of the same zoning restrictions that prevent new high density housing from being built, hence rents have been on the rise. (It also has a lot of ridiculous nonsense like rent control which reduces rents for historical tenants but raises it significantly for the new ones we get our numbers from.)

xfitm3 8y ago
Rent control is great for people who will never own. It helps keep housing costs fixed, which is really the only reason to buy.
- AnthonyMouse 8y ago
  Rent control is incredibly dumb. It requires the landlord to set the initial rent at a level that accounts for the fact that it can't be adjusted while the tenant is in the apartment, when tenants in rent controlled apartments will stay for decades. So you're still paying the same total amount, but now you're paying more of it up front. And really you're paying more than that, because the landlord is taking a risk in not being able to adjust the rent -- what if taxes go up or some other cost, or the tenant stays longer than estimated? So now you're not just paying the same amount, you're paying it plus a risk premium for the landlord. Then, once you've been there long enough for your rent to be lower than the market rate (which itself is more expensive due to rent control), the landlord loses any incentive to maintain your apartment. Certainly you can expect to never see any improvements, and you'll be lucky if they even do what they're required by law rather than hoping that the insufferable conditions will cause you to move out. Then you can never leave. Apartment is now too small? Too big? Too far from your new job? Bad luck, you're stuck. So you get widows and widowers living in three bedroom apartments they don't need because it's cheaper to stay there than move to a one bedroom down the street (which could otherwise have actually saved them money), meanwhile a family of five is living in the one bedroom because the upgrade to three bedrooms is a rent increase of 700% rather than 70%. And better hope you don't get a new obnoxious neighbor, because you'll be together forever since neither of you can leave. Rent control isn't great for anyone. If you want to hedge against rents increasing by paying a bunch of money up front, maybe invest in a local REIT.

cletus 8y ago

Years ago I argued the cost of living in NYC was significantly lower than living in the Bay Area and that gap has only widened. For one, prices haven't really risen in NYC in several years (renting or buying) and in some cases have declined. For another, you can typically avoid owning at least one car in most parts of the city.

xfitm3 8y ago
Yes, living in NYC is generally cheaper than SF. I think the quality of life in NYC is l better too, but I appreciate that is subjective.
- narrator 8y ago
  "More than a third of New Yorkers say they can’t afford to live here" [1] [1] https://nypost.com/2019/03/20/more-than-a-third-of-new-yorkers-say-they-cant-afford-to-live-here/ https://nypost.com/2019/03/20/more-than-a-third-of-new-yorke...
  - Ericson2314 8y ago
    Let's not trust that trash tabloid for any thing nuanced. NYC is expensive in rent but not bad in every other category. Honestly if they kept on building subways like they used to, plus didn't funnel all of them into Manhattan (grid routes), rent would be mostly fine too. The culture and classist issues of gentrification have more to do with inequality than cost of living.
  - Redoubts 8y ago
    https://www.cnbc.com/2019/03/08/43-percent-of-california-residents-say-they-cant-afford-to-live-there.html https://www.cnbc.com/2019/03/08/43-percent-of-california-res... “43% of Californians say they can’t afford to live there” Also, what’s the point of your footnote formatting when your link immediately follows?

Nasrudith 8y ago

The etiology is a bit backwards - high rents leads to higher density if allowed and it would be worse if not allowed. Everything is relative to the impact on the rest of the economy of course. It is possible that prices could be kept down if the demand collapses because of not having enough to justify the expenses.

raldi 8y ago

"People are starving and they're eating food. Let's try something else."

rcpt 8y ago

NYC is far better for housing than California. In New York you can get an apartment in Jackson Heights for $200k and take the F train to work. https://www.redfin.com/NY/Corona/112-50-Northern-Blvd-11368/unit-6B/home/113180232 https://www.redfin.com/NY/Corona/112-50-Northern-Blvd-11368/... In the Bay Area it's expensive near job centers but it's still expensive 40 miles away. California's problem is property taxes. Tax people fairly - not based on the time they joined the class of property owners - and our problems go away.