5 ms·

It's not just "big" cities, it's all cities at least according to this source [1]. I grew up in RI but I moved to Seattle after graduating college because I did

It's not just "big" cities, it's all cities at least according to this source [1]. I grew up in RI but I moved to Seattle after graduating college because I didn't want to live in RI anymore but job prospects for tech increase when you're in a city. I wonder what the cycle to expensive rents is? Wages from jobs start to increase in an area, some housing development happens, rents go up on those new developments to cover costs but also because their renters can afford it, repeat? 1: https://www.zumper.com/blog/rental-price-data/ https://www.zumper.com/blog/rental-price-data/

TulliusCicero 6y ago
> Wages from jobs start to increase in an area, some housing development happens, rents go up on those new developments to cover costs but also because their renters can afford it, repeat? The increased wages (more jobs + better jobs) leads directly to both new housing development AND increased demand for whatever housing currently exists. The latter is more impactful for higher prices than the former. > but also because their renters can afford it, repeat? This isn't quite how things work. Most landlords are always going to raise the rent to whatever the market can bear. Of course, how much people can afford does factor into that, but it's not everything. I can afford to buy milk that costs 10x as it does right now, but I wouldn't actually pay that because I have no reason to when cheap milk still exists. Landlords are able to raise rents when the demand for housing goes up faster than the supply, such that renters don't have better options available.
- user5994461 6y ago
  >>> I can afford to buy milk that costs 10x as it does right now, but I wouldn't actually pay that because I have no reason to when cheap milk still exists. You can afford to not drink milk but you can't afford to not have a roof over your head. Becoming homeless is not an option so people get pushed to living in older smaller flat away from the city or sharing with strangers.
  - TulliusCicero 6y ago
    Okay fine, I could say, "I could afford to pay 2x for groceries in general, but I won't, because why would I when I don't have to?" Same principle for rent. It's not quite about what people can afford, it's about what they feel they have to pay (and how much they can reasonably afford is one factor in that).
    - user5994461 6y ago
      Rent is precisely about what people can afford. It's no accident that rent is around 50% of local income, in all cities across the developed world.
      - TulliusCicero 6y ago
        No, rent is about supply and demand. What people can afford -- how much money they have -- is a component of demand, but supply also matters. If you look at countries that restrict supply less than the US, you'll notice that rent doesn't go to such high extremes in booming cities. For example, in Germany, the most expensive cities, the ones that have been booming, have average rents that are around 40-50% higher than the national average. In contrast, in the US, the most expensive cities have average rents easily double or more the national average. Sometimes even getting close to 3x. You could also look at NYC vs Tokyo. Japan has much looser restrictions on housing supply and it shows here. NYC has 50% higher salaries, but rent isn't 50% higher, instead it's nearly 3x as high: https://versus.com/en/new-york-vs-tokyo https://versus.com/en/new-york-vs-tokyo
        user5994461 6y ago
        Agreed on supply. Might want to look at the 75% of household disposable income or exclude non-workers. Only the best earners get to live in the city. Germany is a relatively equal country. A worker in the capital doesn't get double salary as the same position in the countryside. In fact there is hardly anybody who earns triple as of anybody else in the country. The US is extremely unequal. A position in NYC can pay numerous times than a similar position in the countryside, then even for a given position in NYC two companies across the same street can vary from simple to double. Rent in NYC is naturally triple to reflect the triple in income.

TulliusCicero 6y ago

> Wages from jobs start to increase in an area, some housing development happens, rents go up on those new developments to cover costs but also because their renters can afford it, repeat? The increased wages (more jobs + better jobs) leads directly to both new housing development AND increased demand for whatever housing currently exists. The latter is more impactful for higher prices than the former. > but also because their renters can afford it, repeat? This isn't quite how things work. Most landlords are always going to raise the rent to whatever the market can bear. Of course, how much people can afford does factor into that, but it's not everything. I can afford to buy milk that costs 10x as it does right now, but I wouldn't actually pay that because I have no reason to when cheap milk still exists. Landlords are able to raise rents when the demand for housing goes up faster than the supply, such that renters don't have better options available.

user5994461 6y ago
>>> I can afford to buy milk that costs 10x as it does right now, but I wouldn't actually pay that because I have no reason to when cheap milk still exists. You can afford to not drink milk but you can't afford to not have a roof over your head. Becoming homeless is not an option so people get pushed to living in older smaller flat away from the city or sharing with strangers.
- TulliusCicero 6y ago
  Okay fine, I could say, "I could afford to pay 2x for groceries in general, but I won't, because why would I when I don't have to?" Same principle for rent. It's not quite about what people can afford, it's about what they feel they have to pay (and how much they can reasonably afford is one factor in that).
  - user5994461 6y ago
    Rent is precisely about what people can afford. It's no accident that rent is around 50% of local income, in all cities across the developed world.
    - TulliusCicero 6y ago
      No, rent is about supply and demand. What people can afford -- how much money they have -- is a component of demand, but supply also matters. If you look at countries that restrict supply less than the US, you'll notice that rent doesn't go to such high extremes in booming cities. For example, in Germany, the most expensive cities, the ones that have been booming, have average rents that are around 40-50% higher than the national average. In contrast, in the US, the most expensive cities have average rents easily double or more the national average. Sometimes even getting close to 3x. You could also look at NYC vs Tokyo. Japan has much looser restrictions on housing supply and it shows here. NYC has 50% higher salaries, but rent isn't 50% higher, instead it's nearly 3x as high: https://versus.com/en/new-york-vs-tokyo https://versus.com/en/new-york-vs-tokyo
      - user5994461 6y ago
        Agreed on supply. Might want to look at the 75% of household disposable income or exclude non-workers. Only the best earners get to live in the city. Germany is a relatively equal country. A worker in the capital doesn't get double salary as the same position in the countryside. In fact there is hardly anybody who earns triple as of anybody else in the country. The US is extremely unequal. A position in NYC can pay numerous times than a similar position in the countryside, then even for a given position in NYC two companies across the same street can vary from simple to double. Rent in NYC is naturally triple to reflect the triple in income.