4 ms·

What prevents landlords from simply soaking up the wage increases then?

by aaaaaaaaaaab 5y ago

quickthrower2 5y ago
They might but it may not push up house prices
- adrianb 5y ago
  How so? If these days a house listed for x gets offers at x+10%, after average wages increase it will receive offers at x+20%. Is there any historical precedent of house prices not rising faster than inflation, absent external factors? I think a major correction of house prices can happen in two ways: - economic catastrophe (everyone's unemployed) / war / natural disaster / ... - we wouldn't want to buy a house anyway in that case; - major increase of interest rates or minimum deposit required - we wouldn't be able to afford the mortgage in that case.
  - quickthrower2 5y ago
    High inflation -> higher internet rates -> lower income multiples for loans + higher rental yields to support interest rates.
Levitz 5y ago
What prevents landlords from getting any arbitrary amount of money from their tenants? I think this is a different problem regarding housing.
eli_gottlieb 5y ago
Build more housing. A lot more housing. A good portion of it should be publicly owned.
- aaaaaaaaaaab 5y ago
  Existing owners won't let you do that, as it would depreciate their real estate portfolio.
  - api 5y ago
    They won't in major cities which are all basically real estate cartels, which is why I am bearish on major cities as anything other than office parks for rich people and young professionals without families. Most other things like art, actual innovation, and child rearing are going to migrate to medium sized cities, towns, and the countryside for basic economic reasons. It's already slowly happening.
    - ghaff 5y ago
      > It's already slowly happening. You're basically describing the norm in the US from post-WWII until about 20 years ago. Many large cities that many think of as desirable elite cities today (with real estate prices to match) were losing population into the 1990s. The attractiveness of living in downtowns to mostly college educated young people is mostly a fairly recent phenomenon and there's no guarantees it won't reverse.
      - api 5y ago
        I already see it reversing among everyone but those in high income industries. I'm seeing a ton of artists settling in small towns these days. The cost of living is low, allowing you to live on things like Patreon and Etsy and make your art. This kind of radical decentralization is something the original boosters of the Internet in the 90s predicted, but then the great urbanism wave of 2000-2020 happened. But... remember that we tend to over-estimate the effect of technology in the short term and under-estimate it in the long term. The true decentralizing effect of the Internet might just not have been felt yet.
        ghaff 5y ago
        I'm not sure I've ever heard a good explanation for why the urbanism wave (among a fairly specific demographic) happened. As far as I can tell, it was mostly led by people and employers increased their urban presence in response to better educated/better off young people wanting to live in cities--not the other way around. (There are some exceptions I can think of like pharma in Kendall Square Cambridge. But I assume Google, VMware, and Facebook would be just as happy if not happier establishing offices in Metro West--where most of the computer tech has historically been--rather than Cambridge. Manhattan is somewhat of an outlier but Manhattan has long been an outlier in lots of ways.

What prevents landlords from simply soaking up the wage increases then?

quickthrower2 5y ago

They might but it may not push up house prices

adrianb 5y ago
How so? If these days a house listed for x gets offers at x+10%, after average wages increase it will receive offers at x+20%. Is there any historical precedent of house prices not rising faster than inflation, absent external factors? I think a major correction of house prices can happen in two ways: - economic catastrophe (everyone's unemployed) / war / natural disaster / ... - we wouldn't want to buy a house anyway in that case; - major increase of interest rates or minimum deposit required - we wouldn't be able to afford the mortgage in that case.
- quickthrower2 5y ago
  High inflation -> higher internet rates -> lower income multiples for loans + higher rental yields to support interest rates.

Levitz 5y ago

What prevents landlords from getting any arbitrary amount of money from their tenants? I think this is a different problem regarding housing.

eli_gottlieb 5y ago

Build more housing. A lot more housing. A good portion of it should be publicly owned.

aaaaaaaaaaab 5y ago
Existing owners won't let you do that, as it would depreciate their real estate portfolio.
- api 5y ago
  They won't in major cities which are all basically real estate cartels, which is why I am bearish on major cities as anything other than office parks for rich people and young professionals without families. Most other things like art, actual innovation, and child rearing are going to migrate to medium sized cities, towns, and the countryside for basic economic reasons. It's already slowly happening.
  - ghaff 5y ago
    > It's already slowly happening. You're basically describing the norm in the US from post-WWII until about 20 years ago. Many large cities that many think of as desirable elite cities today (with real estate prices to match) were losing population into the 1990s. The attractiveness of living in downtowns to mostly college educated young people is mostly a fairly recent phenomenon and there's no guarantees it won't reverse.
    - api 5y ago
      I already see it reversing among everyone but those in high income industries. I'm seeing a ton of artists settling in small towns these days. The cost of living is low, allowing you to live on things like Patreon and Etsy and make your art. This kind of radical decentralization is something the original boosters of the Internet in the 90s predicted, but then the great urbanism wave of 2000-2020 happened. But... remember that we tend to over-estimate the effect of technology in the short term and under-estimate it in the long term. The true decentralizing effect of the Internet might just not have been felt yet.
      - ghaff 5y ago
        I'm not sure I've ever heard a good explanation for why the urbanism wave (among a fairly specific demographic) happened. As far as I can tell, it was mostly led by people and employers increased their urban presence in response to better educated/better off young people wanting to live in cities--not the other way around. (There are some exceptions I can think of like pharma in Kendall Square Cambridge. But I assume Google, VMware, and Facebook would be just as happy if not happier establishing offices in Metro West--where most of the computer tech has historically been--rather than Cambridge. Manhattan is somewhat of an outlier but Manhattan has long been an outlier in lots of ways.