2 ms·

It is a basic necessity to have physical space in which to exist. Property ownership of course isn't strictly necessary; renting is a fine way to satisfy this n

by arebop 7y ago

It is a basic necessity to have physical space in which to exist. Property ownership of course isn't strictly necessary; renting is a fine way to satisfy this need. But how can rent prices remain very far below the price to own? In prior generations, rent was a way to express a preference about longterm vs. short term occupation of a given space, or it was a way for people with relatively little credit or capital to get access to space. But it seems impossible for purchase prices to perpetually outpace rent prices, and it is unsettling to imagine the fraction of the economy dedicated to land ownership growing perpetually.

leetcrew 7y ago
> But how can rent prices remain very far below the price to own? I'm guessing you meant this rhetorically, but it relates to something I've been wondering for a while. in very expensive areas, you tend to see a very high price-to-rent ratio. even if you could afford to buy, it might not make sense economically unless you plan to hold on to that house for a pretty long time. I've been trying to learn more about why high price-to-rent seems correlated with expensive areas, but it's kinda tough to google for when all the hits are just practical guides to help you decide between renting or buying. if there's some deeper connection, it may that rent stays well below the price to own for a long time.
- arebop 7y ago
  In my locality, I believe the difference is explained in part by local policies that severely restrict new building and renovation of old buildings. You might not expect such housing supply restrictions to cause land prices and rent prices to rise at different rates. But you would expect them both to rise. There may be real estate speculators investing on a momentum theory, but renters aren't willing to pay a premium based on the past trend in rental prices. This theory wouldn't support unbounded divergence between land and rent prices, but it would support some divergence consistent with what I've seen over the past few years.

by arebop 7y ago

leetcrew 7y ago

> But how can rent prices remain very far below the price to own? I'm guessing you meant this rhetorically, but it relates to something I've been wondering for a while. in very expensive areas, you tend to see a very high price-to-rent ratio. even if you could afford to buy, it might not make sense economically unless you plan to hold on to that house for a pretty long time. I've been trying to learn more about why high price-to-rent seems correlated with expensive areas, but it's kinda tough to google for when all the hits are just practical guides to help you decide between renting or buying. if there's some deeper connection, it may that rent stays well below the price to own for a long time.

arebop 7y ago
In my locality, I believe the difference is explained in part by local policies that severely restrict new building and renovation of old buildings. You might not expect such housing supply restrictions to cause land prices and rent prices to rise at different rates. But you would expect them both to rise. There may be real estate speculators investing on a momentum theory, but renters aren't willing to pay a premium based on the past trend in rental prices. This theory wouldn't support unbounded divergence between land and rent prices, but it would support some divergence consistent with what I've seen over the past few years.