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> Usually, if housing prices rise, so do rents, pretty much in accord While this would theoretically make sense, it's not actually very true in the United Stat
by rory 6y ago
> Usually, if housing prices rise, so do rents, pretty much in accord
While this would theoretically make sense, it's not actually very true in the United States. There's a significant speculative aspect to housing in some markets that results in price increases far higher than rents would sustain (this effect is actually more prominent in other markets, e.g. Canada).
Here: https://smartasset.com/mortgage/price-to-rent-ratio-in-us-cities https://smartasset.com/mortgage/price-to-rent-ratio-in-us-ci... you can see that San Francisco prices are 50x rent, while Plano TX, which also has a high per capita income and low eviction rate, sits at 20x rent.
- xyzzyz 6y agoI think it actually is very true in the United States, outliers like SF notwithstanding. US as a whole is significantly more like Plano than like SF. Sure, that does little to make Bay Area residents feel better about crazy housing prices they deal with, but theirs is by far not a typical American experience.
- rory 6y agoYou're right that we should probably ignore San Francisco and a few others to portray the typical American experience. But it's still not obvious why for example Atlanta (22.6x) has almost double the price-to-rent ratio of Milwaukee (12.4x) if not due to speculation. Those both seem like fairly "typical America" cities to me. Would you expect Rent in Atlanta to spike heavily in the coming years? Or is the distinction you're making more about urban vs. suburban? (Since my link is just a mediocre blog, it's not clear if those numbers refer to city or metro area.)