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Suppose a square city has 100000 rental houses, and they all rent for $1000. The city triples in each direction, causing area to increase by a factor of 9. The
by souprock 6y ago
Suppose a square city has 100000 rental houses, and they all rent for $1000. The city triples in each direction, causing area to increase by a factor of 9. The original houses now rent for $4000, but there are 800000 new houses that rent for $1000.
Is that an increase of 0%, 33%, 300%, or something else?
Suppose the original homes then increase to $5000, while the newer homes drop down to $500. Is that an increase or decrease?
- simonh 6y agoWhy don’t you just calculate the medians and find out?
- souprock 6y agoThe median of what? Do we count the new construction, or do we just look at the rising rent in the original city? We can have a situation in which rent for every home doubles in price, yet the median rent goes down. Do we care about the rent being demanded, including for vacant homes, or just the rent being paid? There are lots of ways to make a "correct" conclusion that is highly misleading. Apparently the study looks only at the 50 largest cities. That would ignore any rent decrease in small cities. One would expect exactly that if people are moving toward the largest cities.
- letsgoyeti 6y agoIn your first scenario, the average rent has gone from $1000 -> $1333, so I'd say a 33% increase. In your second scenario, the average rent has not changed. If this supply change happened over a century, a 33% increase would probably be very reasonable, and means the price went down in real terms.