21 ms·
Rents for the rich are going down, rents for the poor are going up. Why?
- jokethrowaway 6y ago> Rents for the poor are rising Because of the economical impact of locking down the economy and giving money to everyone. > Rents for the rich are plummeting Because they don't need to live in expensive central hubs to get their high wages and there is less demand for their luxury flats. Also, this lax definition of rich people is exactly how the richest 1% can stay hidden.
- sombremesa 6y ago> get their high wages Wages? What are you talking about, the working class?
- Railsify 6y agoMany rich people still earn a paycheck. YOu can be on payroll making 500k and have a stock portfolio worth 10mill, this is common for boomers who started investing in the 70s and 80s. A portfolio of that size will easily throw off 500k in dividends a year. My point is that a large paycheck does not mean you are not paid wages. I get your point though, billionaires probably are not taking a salary.
- lotsofpulp 6y ago>You can be on payroll making 500k and have a stock portfolio worth 10mill, this is common for boomers who started investing in the 70s and 80s. A portfolio of that size will easily throw off 500k in dividends a year. What is your definition of "common"? Less than 1% of people have savings of $10M at retirement age, surely more than 1% of people started investing in the 70s and 80s. https://dqydj.com/retirement-savings-by-age/ https://dqydj.com/retirement-savings-by-age/
- ab_testing 6y ago> YOu can be on payroll making 500k and have a stock portfolio worth 10mill Or working on FAANGMULAT type of companies for the past many years.
- scottm01 6y ago>A portfolio of that size will easily throw off 500k in dividends a year. Where are you "easily" getting 5% dividends? Are those mythical W2 boomers suddenly into sketchy crypto "funds"? Vanguards "Dividend Growth" fund is yielding 1.71%. Total stock 1.33%
- tolbish 6y agoTheir money is also, ironically enough, invested in real estate.
- colinmhayes 6y agoATT 7% yield raised every year for the past 50 years.
- Railsify 5y agoThanks! I was imagining an actively managed portfolio. There are very few set it and forget it hole in one investments.
- MisterBastahrd 6y agoThis is not common for anyone, not even in SV.
- Railsify 6y agocommon among the rich people whose mansions are not selling well or have taken price cuts to get them sold.
- colinmhayes 6y agoMost of the people renting the expensive places talked about in this article are white collar workers.
- outside1234 6y agoIt is a huge risk right now to take on someone that is poor as a renter because of the moratorium. It is completely unsurprising to me that landlords have priced this risk factor in.
- baron816 6y agoThere was an article a saw a few weeks ago about some guys based out of Oakland (maybe someone else can find it) who has accumulated 5 figures worth of rental debt. It talks about how he had just moved into an expensive place at the beginning of the pandemic, got laid off, then couldn’t pay for the whole year. IIRC, he eventually moved, but still couldn’t pay rent and started accumulating even more rent debt there. I can’t imagine who would rent an apartment to that guy.
- stevula 6y agoFive figures is $10,000. It only takes 2-3 months of rent to reach that in an expensive Oakland apartment.
- darth_avocado 6y agoI know the exact article you mentioned. The real story is actually more nuanced. The guy off course got laid off and could no longer afford the rent. But he racked up rent also because even if he moved earlier, his contract would have made him pay a ton of fines to even get out of it. So he decided to stay.
- baron816 6y agoYeah it’s not like it was really that much of his fault or anything (though I found it a bit fishy why he couldn’t get another job). Everyone’s mentality up until ~September was “oh just another month or two then everything will be back to normal”. But my point is how could you expect landlords to rent to anyone without a very stable income? They could be out tens of thousands of dollars.
- 6y ago
- m463 6y agoI think affordable-level housing will always be competitive, and super-luxury stuff will be white elephant stuff that's subject to compromises. It's kind of amazing that they raised the rent. Is it because people stopped paying rent and they tried to get it from other renters?
- aeternum 6y agoOften this is due to laws that limit annual rent increases. If landlords don't increase the rent by the allowed amount each year, it greatly increases the risk they will be unable to 'catch up' to market rates in the future. Luxury housing is often not subject to these limitations, so landlords are forced to compete and respond to market dynamics.
- asdff 6y agoLandlords in big cities always raise rent because they can. They'd rather push a current tenant out than work with them, because with the high turnover they are sure to get a new tenant pretty soon at the higher price anyway. Its this sort of unscrupulous taking, of maximizing profit because its 'leaving money on the table' to not do so, is why we have rent control ordinances which work by capping the maximum yearly % increase in many of our big cities (although this cap is typically higher than the median wage increase so landlords still beat the economy with their investment and with rent control ordinances applied, despite some sentiments online about rent control).
- lotsofpulp 6y ago>because with the high turnover they are sure to get a new tenant pretty soon at the higher price anyway Only if coupled with insufficient construction of new housing.
- ARandumGuy 6y agoWhich is pretty inevitable with our system of housing development. If you're a large property owner and you want to make more money, you have two options: A) Build more housing, to create more units you can rent out. B) Don't build more housing, and use the reduced supply to raise the rent on your existing properties. Since option B has a lower risk and a higher return on investment, is it really surprising that most metro areas have a big housing shortage?
- wideareanetwork 6y agoBecause by definition rich means “can buy house”, and poor means “no choice but to rent”. What sort of rich person rents a house, except whilst between selling old and new? It’s a strange question to ask .... who doesn’t see this as self evident?
- Mc_Big_G 6y agoThere's a high percentage of "rich" people in the Bay Area who rent because even a run-down, small, shitty house is $1mm+.
- nostrademons 6y ago"What sort of rich person rents a house, except whilst between selling old and new?" There are quite a few techies who move to SF, work for the hot unicorn for 4 years, and live extremely cheaply. They don't buy housing because they don't intend to stay in SF (and besides, who wants to buy a house in SF?), but when they "retire" they've got a few million in stock options. They can buy a house, they just don't want to, because their living situation is temporary. I suspect that a lot of the housing boom going on around the country now is because the rich techies in SF no longer have to stay in SF.
- endisneigh 6y agoI don't really buy this. if you're going to be at a hot startup for 4 years and can easily afford a house the way the SF bay market has been for the past 2 decades is such that you would've made money in any 4 year period just buying and selling. covid might be the single exception. I think the issue is more that sf people are rich for the country but not rich for the bay area so they just rent.
- rainyMammoth 6y agoOr as explained above it doesn't make sense to buy since it is cheaper to rent.
- 6y ago
- numpad0 6y agoShrinking market means prices move towards average
- rogerdickey 6y agoIt's not "rents for the rich" it's "rents for higher priced apartments" and it's basic supply & demand. This headline stokes unnecessary class conflict. WaPo should be ashamed.
- jakelazaroff 6y agoWho is renting higher priced apartments if not the rich?
- deleted 6y ago[deleted]
- powersnail 6y agoAren't most rich people living in their own houses? I'd imagine most higher priced apartment renters are middle class.
- warent 6y agoI think these days high priced apartments are only affordable by the wealthy, unless people are grouping together with multiple roommates, at which point it means they can't actually afford the apartment, so is it really middle class anymore?
- trillic 6y agoIf 4 22 year olds making 50k each share a $3,000 4bd 2ba rental "for the rich" I'd say they're middle class and can afford it.
- deleted 6y ago[deleted]
- ArchOversight 6y ago4bd 2ba for $3k ain't happening in SF ;-)
- roguecoder 6y agoWhile the article is interesting, there is one dynamic it missed: tech debt. Starting around 1975, housing supply stopped keeping up with the growth of housing demand. It picked back up fifteen years later, around 1990: https://www.brookings.edu/research/the-goldilocks-problem-of-housing-supply-too-little-too-much-or-just-right/ https://www.brookings.edu/research/the-goldilocks-problem-of... (But that is on a national level: in the West, in comparison, housing growth hasn't been sufficient to house the new households formed at any time in the last 70 years and so the problems run deeper.) Normally, cheap housing is housing that was expensive housing 30-100 years ago. Think of all of the post-war apartments in NYC, or the Boston multi-family houses built around the previous turn of the century. Since many cities currently lack the recently-aging housing that would normally be filtering down market right now, the elasticity at the top is affecting housing too new for developers to be out of debt on, and thus we are unlikely to see it translate into lower prices on the low end until another 20-25 years pass and we get out of this housing doldrum. (Not the West, though. Sorry San Francisco: you just have to build more places where people can live.)
- legerdemain 6y agoIf cheap housing is expensive housing built 30-100 years ago, we should have had decades and decades of delapidating housing stock left to go before hitting a shortage. Not to mention your example of housing in Boston built at the turn of the 20th century. A laissez faire policy that makes the poor wait 120 years for housing is hardly any policy at all.
- kelp 6y agoAt least for San Francisco, the seeds of the current shortage started as early as 1912 with the establishment of the planning commission. See this amazing twitter thread with images of historical news paper clippings. https://twitter.com/enf/status/753435745272995840 https://twitter.com/enf/status/753435745272995840 Later on, in 1978, most of the city was down-zoned, and in the EIR (Environmental Impact Report) written at the time, it was clearly predicted that this would result in a supply shortage and increased prices. Unless the city made a point to increase density and development in the industrial parts of the city. That didn't really happy to the scale the EIR said was needed. See: https://twitter.com/enf/status/775185946941591553?s=20 https://twitter.com/enf/status/775185946941591553?s=20 So here we are.
- endisneigh 6y agothis kind of thing will never end until there's national zoning laws that override local ones. however something like that would be challenged probably up to the supreme court. it's a tough hill to die on. it's a never ending cycle -> if you're poor you're more likely to rent -> if you rent you're more likely to be affected by a recession -> if you're laid off others are also laid off -> landlord risk increases so rent increases commensurately -> repeat. the only way to end this vicious cycle is to just buy your house as you're more insulated from rent increases and moratoriums are a bit more generous, but zoning laws...
- lalaithion 6y agoBecause it's easier to build housing for the rich than for the poor, due to things like zoning, building regulations, density regulations.
- adolph 6y agoOne likely explanation, Schuetz and others say, is that when the economic crisis hit, more people decided to move down the housing ladder to save money. There was already a shortage of affordable units, though. So, this surge in demand for lower-price-point homes ended up bidding those rents higher. Housing experts say other factors may be at play, too. Some lower-income areas were gentrifying even before the pandemic, leading to higher rents.
- airhead969 6y agoAs a point of reference: where I'm at is rapidly gentrifying with phony, corporate clone office workers while hundreds of homeless people are living in tents visible outside next to the highway. There isn't enough affordable housing and the % set-asides are a joke because they're so few and far between.
- Shadonototro 6y agowhy? why make things cheaper, it makes no sense, how can i make profit if everything is cheap? that's a capitalism for you, fuck people, welcome money even if it's rising, people will be forced to pay, people are slaves, specially in America, never seen such obeisant slaves
- dang 6y agoPlease don't use HN for ideological or nationalistic flamewar. We ban accounts that post like this, or https://news.ycombinator.com/item?id=26544826 https://news.ycombinator.com/item?id=26544826, because it's not what this site is for and destroys what it is for. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
- neonate 6y agohttps://archive.is/GrJPP https://archive.is/GrJPP
- max-ibel 6y agoI believe this is almost deliberate misdirection of the authors, but maybe they believe what they write. I'm fairly sure if you looked at a slightly longer timeframe, you'd see prices for all go up, and even more for the expensive units. Just looking at the latest 12 months really does not paint a useful picture. I expected the WaPo to do a better job, esp since I believe their point that low income renters are being unfairly squeezed is probably a valid one.
- perl4ever 6y agoBefore reading the article, I would say because obviously the rich can, and are, fleeing population centers because of covid, while the poor mostly can't and aren't? <skims the article> "With covid-19 largely shutting down the perks of city life, many tenants who had the means to leave did so. Higher-wage workers who were juggling remote work and virtual school sought out more space, often purchasing a house in the ’burbs." Exactly.
- gonational 6y agoWell let's see; let's dump multiple trillions of dollars into the economy and give everyone who had no job, BEFORE the Rona, thousands of dollars for free, and then let's see what happens. I wonder what could possibly happen.
- haspoken 6y agohttp://archive.is/GrJPP http://archive.is/GrJPP
- WentFullRetard 6y agoPretty obvious here people. Supply and demand. There's more poor people looking for affordable housing than there is rich paying for extravagant rentals.