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Another article blaming speculators instead of central banking policy. The author never bothers to ask, why has every asset class, from residential real estate

Another article blaming speculators instead of central banking policy. The author never bothers to ask, why has every asset class, from residential real estate and RVs to penny stocks and junk bonds, dramatically increased in value since March of 2020?

canadianfella 5y ago
That’s a great question. Do you know what the answer is?
boondaburrah 5y ago
This has definitely been a problem long before last year. Heck, in 2018 Harvard Square lost a great cafe everyone liked that had been there for years because a landlord firm off in North Carolina figured they could charge triple the rent if they brought a VC-backed NYC chain restaurant in.
- freddie_mercury 5y ago
  If a new tenant can afford triple the rent then they are (at least) 3x as productive. Why do you want to reward less productive businesses? Do you also enjoy working with coworkers who are have 1/3rd the productivity you?
  - dan_mctree 5y ago
    Many of the common reasons that make companies able to pay more rent do not align well with preferences of locals. They could have higher prices, pay employees less, use lower quality ingredients, give less personal attention or externalize costs through say noise pollution. They also often have competitive advantages through brand recognition or company support, that don't actually increase quality
  - jdavis703 5y ago
    Because lots of less productive businesses still provide excellent products or services. I can think of lots of local restaurants, bookstores and cafes near me that are less productive than McDonalds, Barnes & Noble and Starbucks, but non the less have better food, curation or coffee than their competitors.
  - boondaburrah 5y ago
    That's simply not true. VC funding distorts this, since at that point what you can afford is no longer based on productivity, but how good you are at convincing investors. As a customer of the cafe, you're no longer serving my interests at that point since that has nothing to do with my experience. Also, I would like to reward the service-oriented business that provide me the most enjoyment regardless of their 'productivity,' or, to put it another way, my (as a customer) enjoyment is exactly the 'productivity' that should be measured, not how much rent they pay.
- cbm-vic-20 5y ago
  All the while the long standing institutions that make Harvard Square what it is continue to shut down, only to be replaced by bank branches and national chains. This isn't really a new development, it's been happening since at least the 1980s, but has become much more apparent in the last 15 years.
  - delfinom 5y ago
    The joke is several bank branches are starting to close in NYC because rent is too high. Hah.
rcpt 5y ago
A lot of this is property taxes which has nothing to do with the banks
asah 5y ago
+1 to this - it's fruitless to build public policy on businesspeople behaving economically irrationally, and worse can you imagine if they did? It is reasonable and useful to pitch businesspeople on sacrificing short term gains for clear, low risk, long term benefits - and proof lies all around us from empty storefronts that could be leased at lower rates, to homeowners locking in 30 year mortgages. Greater time horizons require much greater stability to control risk.
swiley 5y ago
Theres definitely an inflation problem but in addition US realestate has had issues for most of the 21st century.

canadianfella 5y ago

That’s a great question. Do you know what the answer is?

boondaburrah 5y ago

This has definitely been a problem long before last year. Heck, in 2018 Harvard Square lost a great cafe everyone liked that had been there for years because a landlord firm off in North Carolina figured they could charge triple the rent if they brought a VC-backed NYC chain restaurant in.

freddie_mercury 5y ago
If a new tenant can afford triple the rent then they are (at least) 3x as productive. Why do you want to reward less productive businesses? Do you also enjoy working with coworkers who are have 1/3rd the productivity you?
- dan_mctree 5y ago
  Many of the common reasons that make companies able to pay more rent do not align well with preferences of locals. They could have higher prices, pay employees less, use lower quality ingredients, give less personal attention or externalize costs through say noise pollution. They also often have competitive advantages through brand recognition or company support, that don't actually increase quality
- jdavis703 5y ago
  Because lots of less productive businesses still provide excellent products or services. I can think of lots of local restaurants, bookstores and cafes near me that are less productive than McDonalds, Barnes & Noble and Starbucks, but non the less have better food, curation or coffee than their competitors.
- boondaburrah 5y ago
  That's simply not true. VC funding distorts this, since at that point what you can afford is no longer based on productivity, but how good you are at convincing investors. As a customer of the cafe, you're no longer serving my interests at that point since that has nothing to do with my experience. Also, I would like to reward the service-oriented business that provide me the most enjoyment regardless of their 'productivity,' or, to put it another way, my (as a customer) enjoyment is exactly the 'productivity' that should be measured, not how much rent they pay.
cbm-vic-20 5y ago
All the while the long standing institutions that make Harvard Square what it is continue to shut down, only to be replaced by bank branches and national chains. This isn't really a new development, it's been happening since at least the 1980s, but has become much more apparent in the last 15 years.
- delfinom 5y ago
  The joke is several bank branches are starting to close in NYC because rent is too high. Hah.

rcpt 5y ago

A lot of this is property taxes which has nothing to do with the banks

asah 5y ago

+1 to this - it's fruitless to build public policy on businesspeople behaving economically irrationally, and worse can you imagine if they did? It is reasonable and useful to pitch businesspeople on sacrificing short term gains for clear, low risk, long term benefits - and proof lies all around us from empty storefronts that could be leased at lower rates, to homeowners locking in 30 year mortgages. Greater time horizons require much greater stability to control risk.

swiley 5y ago

Theres definitely an inflation problem but in addition US realestate has had issues for most of the 21st century.