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I think this is an effect of near zero interest rates from central banks. With near zero interest rate loans will rice real estate price go higher and thus rent
by acd 5y ago
I think this is an effect of near zero interest rates from central banks. With near zero interest rate loans will rice real estate price go higher and thus rent increase
- jdavis703 5y agoThere’s also the fact that we had a pandemic. Some cities had an empty storefront problem before the pandemic, sure. But a lot of places just gave up.
- rcpt 5y agoPrices can go up but rent doesn't have to. Price to rent ratios are huge in California because speculative demand far outstrips actual demand. Most landlords are cash flow negative and own only so they can bet on equity wins.
- rufus_foreman 5y ago>> Most landlords are cash flow negative and own only so they can bet on equity wins That's the "Ponzi financing" phase of Minsky's financial instability cycle. It typically does not end well.
- rcpt 5y agoInteresting. What's a good source on this? California really does feel like 80s Japan sometimes but I can't say exactly why
- rufus_foreman 5y agoThere's an Economist summary from 2016 at https://www.economist.com/schools-brief/2016/07/30/minskys-moment https://www.economist.com/schools-brief/2016/07/30/minskys-m.... The depressing part of his theory is that in his view, stability causes instability. If something is growing predictably, people start increasing their use of leverage until even a decline in the rate of growth will cause a crash.
- rcpt 5y agoHey thanks
- adflux 5y agoYup... Wonder what will happen when the bond yields and interest rates go up