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Manhattan rents cross $5k threshold for first time
- vondur 4y agoAs someone from California, I've always assumed that Manhattan was sort of comparable to something live Beverly Hills/Century City here in Los Angeles. Basically, you had to be fairly wealthy to live there.
- asdff 4y agoIt's more like Hollywood as a whole. You have wealthy areas where the landed gentry live, and you have extremely impoverished areas where multiple working class families share a bedroom in a run down apartment and can't save enough to leave and find better prospects.
- ahthat 4y ago"The big picture: This points to a conundrum. The Fed is raising rates to cool inflation. But rate hikes are driving higher rents, which are fueling inflation." Methinks this... might not end well.
- anovikov 4y agoIs this an average for newly signed rent, or for the average one already paid now? If former, it looks incredibly low. I mean, this is what you pay for an above-average (but not posh) place in East Europe capitals, and for pretty much average ones in old European cities like Paris or Munich.
- FartyMcFarter 4y agoWhat is an average place that costs $5k a month in Paris? That sounds like way too much.
- jpdpeters 4y agoThat sounds waaay too expensive. GDP per capita is 39K USD and 18% of the population lives in Paris. How would that work?
- anovikov 4y ago"Paris" is only the small place within the old walls. It's population is under 2M, most of them owners, with ownership lasting since before WWI, who could never afford to buy (or rent) now. Rest are suburbs and don't have Paris on it's address. And sure, rents there are a lot lot cheaper.
- ctvo 4y agoYou continue to reply to defend your position that 5k euros is below average rent per month for Eastern European capitals in their most attractive locations. Do you actually have data? It's such an extraordinary claim people are using Paris (not an Eastern European capital) as a counter example, but let's not move the goal post.
- anovikov 4y agoJust for the record, i agree that i was wrong, i checked prices, indeed they are about 2x smaller than i assumed (not in Paris but in East Europe capitals). Looks like i need to get out of my social bubble more frequently. That doesn't affect my initial claim though: indeed, the quoted Manhattan rents in the original article include existing contracts, including decades-old regulated rental contracts, and do not represent average prices of new rentals signed now.
- throwawayben 4y agoPer month?
- anovikov 4y agoObviously. But because price change is so small over so many years, i am inclined to think it's average of existing contracts, not of newly signed ones, and vast majority are regulated rentals signed 30-50 years ago, that are super low maybe 1000-2000 per month, and drive down the average.
- moonchrome 4y agoWhat ? Your numbers sound 2x above what I'm seeing casually browsing ads. Or you have super inflated expectations of what's "above average but not posh" - like penthouses with views and things.
- vultour 4y agoOne of his comments from 2016 says he spends all of his 100k/year living in Vilnius. I don't know what kind of mansion he is living in but this guy is clearly completely detached from reality. Most people in eastern Europe barely break 2k a month, in many countries less than half that. No chance average rent is anywhere close to 5k.
- rguillebert 4y agoThis is monthly rent, not yearly...
- laszlojamf 4y agoIt's $5k a month, i.e. the same as five thousand euros a month. In rent. Now, I haven't rented in Paris, but in Munich, that would be a castle.
- asciiresort 4y agoFor a 1-2 bedroom apartment ? Those prices would mean a software engineer in Europe would not even have money for rent after paying taxes, much less anything else.
- shankr 4y ago> Those prices would mea a software engineer in Europe would not even have money for rent after paying taxes, much less anything else. Very much the story of lot of South European engineers. I used to pay 800 euros as rent when I was earning 1200 euros/month fresh out of university in Madrid.
- Varqu 4y agoYou probably are talking about yearly amount, not monthly. In Warsaw you would get top tier places with private pool and cleaning service for no more than 2500 USD per month.
- endless1234 4y agoWhat? $5k a month is absolutely not something you pay for an above average place in east European capitals, nor in old European cities. Check e.g. https://www.expats.cz/praguerealestate/apartments/for-rent https://www.expats.cz/praguerealestate/apartments/for-rent for a pretty expensive central european capital - around 20k CZK for studios, or 800 euros/usd. There are only 16 out of 1042 properties at over 120k CZK (~5k eur/usd), and they're huge (around 200m^2 and central).
- II2II 4y agoFrom the article: > If those numbers seem low — after all there are headlines about 40% rent increases — it's because the CPI measure includes renewal rents, the price you pay when you renew your lease.
- anovikov 4y agoSo right, just as i have expected. And vast majority of these renewed leases are regulated ones, being renewed from the Carter era if not before.
- samsonradu 4y agoMaybe we have different definitions of posh, but 5k gets you very far in East Europe capitals. That’s a lot of money that can get you 6+ bedroom villas in downtown Bucharest.
- rpadovani 4y agoWhat are you talking about? 5k in Munich, you can rent a 200mq apartment in Maxvorstadt
- deanmoriarty 4y agoI really wish you took the time, after what appears to be a rather inflammatory comment, to reply to the folks who are very specifically questioning your argument.
- Victerius 4y agoAverages are skewed. Still. To meet the requirement of many landlords to earn in excess of 3x rent, one would have to earn 15k a month after tax, or 180k a year after tax. To earn 180k after tax in NY, you need to earn 300k pre tax. Your Income Taxes Breakdown Tax / Marginal Tax Rate / Effective Tax Rate / 2021 Taxes* / Federal 35.00% / 25.05% / $75,152 FICA / 2.35% / 4.70% / $14,104 State / 6.85% / 6.12% / $18,356 Local./ 3.88% / 3.73% / $11,193 Total Income Taxes / 39.60% / $118,804 Income After Taxes: $181,196 Retirement Contributions: $0 Take-Home Pay: $181,196 In investment banking, only VPs, SVPs, and directors start earning salaries of that magnitude: https://mergersandinquisitions.com/investment-banker-salary/ https://mergersandinquisitions.com/investment-banker-salary/ The average annual household income in Manhattan is $143,680, while the median household income sits at $117,926 per year. Residents aged 25 to 44 earn $144,670, while those between 45 and 64 years old have a median wage of $126,981. In contrast, people younger than 25 and those older than 65 earn less, at $57,813 and $47,547, respectively: https://www.point2homes.com/US/Neighborhood/NY/Manhattan-Demographics.html https://www.point2homes.com/US/Neighborhood/NY/Manhattan-Dem...
- sokoloff 4y agoThese ratios are generally applied against gross (pre-tax) income.
- Victerius 4y agoThat's the point? That's what I did using a calculator: https://smartasset.com/taxes/new-york-tax-calculator https://smartasset.com/taxes/new-york-tax-calculator
- sokoloff 4y agoNo. The ratio is pre-tax, not post-tax. > To meet the requirement of many landlords to earn in excess of 3x rent, one would have to earn 15k a month after tax, or 180k a year after tax. To earn 180k after tax in NY, you need to earn 300k pre tax. The ratio is on pre-tax income. To pay $60K/yr in rent, you need 3x that in pre-tax income, or $180K/yr pre-tax. To earn $180K/yr pre-tax, you have to earn $180K/yr pre-tax, no calculator needed.
- zabzonk 4y agoPresumably "per month"? Still cheaper than central London though.
- FartyMcFarter 4y agoNot according to this: https://www.rightmove.co.uk/property-to-rent/find.html?locationIdentifier=REGION%5E92824&insId=1&minBedrooms=2&maxBedrooms=2&primaryDisplayPropertyType=flats&googleAnalyticsChannel=renting https://www.rightmove.co.uk/property-to-rent/find.html?locat... I guess it depends on your definition of central London.
- zabzonk 4y agoNot that I want to get into an argument on this (both cities are fantastically expensive), but the first property on your link when I accessed it (so basically at random) - GBP 5590.00 pcm.
- deleted 4y ago[deleted]
- rxdazn 4y agothe average londoner doesn't pay 5600 GBP a month for their flat. same goes for 5k USD ~= 4200. for a one bedroom if your rent is above 2000 GBP you're living in a luxury apartment
- yaseer 4y ago
- slaw 4y ago> The big picture: This points to a conundrum. The Fed is raising rates to cool inflation. But rate hikes are driving higher rents, which are fueling inflation. Why everyone and their dog says Fed is raising rates, when Fed just barely raised rates. Year over year inflation is 9.3% and Fed interest rate is only 1.5%, while it should be 2% points over inflation.
- JumpCrisscross 4y ago> while it should be 2% points over inflation Do you really think we solved central banking in 1992 [1], and if only you were one of the central bank chiefs we would be fine? [1] https://en.m.wikipedia.org/wiki/Taylor_rule https://en.m.wikipedia.org/wiki/Taylor_rule
- SilasX 4y agoI don’t follow. The link supports the claim that interest rates should be above inflation when the latter is above target.
- slaw 4y agoI understood it as rhetorical question.
- SilasX 4y agoThen it's a poor use of the technique, since the parent of that comment never implied otherwise, and doesn't provide enough to extract what the argument actually is. However much or little we have or haven't "solved central banking", the comment I replied to was linking textbook knowledge that agreed with its parent. So any substantive disagreement there is unclear -- hence my comment.
- jdoliner 4y agoThe implication is that because this rule is from 1992 (which I guess is considered ancient history), arguing that it should be implied here is essentially saying that central banking was solved in 1992. It's a bad argument.
- ezequiel-garzon 4y agoI thought the median had to be significantly lower with those ultra luxurious rentals distorting the average, but I was wrong. The median is $4000 as of a few months ago: https://www.elliman.com/corporate-resources/market-reports https://www.elliman.com/corporate-resources/market-reports
- xhrpost 4y agoI was wondering this too, I know plenty of people who live alone in Manhattan and don't pay anywhere near $5k. Some renewed recently even but I don't know who had stabilization and who didn't. Where did you see the $4k number? This looks like condo and co-op numbers mostly?
- ezequiel-garzon 4y agoIt is highlighted in the reference I gave (which I found in a NY Times article). Look for “view report” after “The median rent in Manhattan reached the $4,000 threshold for the first time as lease signings continue to rise.”
- usrn 4y agoIf the median is higher than the mean that probably means the distribution is heavier on the positive side. Cheap apartments are illegal and the legal ones don't get financed/constructed. There's a cutoff much higher than zero for housing costs everywhere in the US and I'd imagine it's pretty high in NYC.
- IceHegel 4y agoThis is the per apartment rate, so anyone with roommates is paying a fraction of the listed rent.
- AlwaysRock 4y agoAh. The age old solution. Having 4 roommates in a two bedroom.
- bigyikes 4y agoI’ve had this thought floating around in my head for a while, and it seems wrong, but I’m not completely sure why. I’m hoping someone more knowledgeable might be able to set me straight. Prices on the coasts — like 5k rent — are astronomically high compared to prices in, say, the midwest. This shocks many people. You could easily make the same comparison between the midwest and some non-developed nation. The difference is, nobody is shocked about how prices are higher in the USA midwest compared to an arbitrary less-developed country. Why is that exactly? I loathe these insane prices, but my question is: could it be reasonable to view these high prices as a /good/ thing, as a sign of development?
- bglazer 4y agoI think the best comparison would be to other developed countries with strong economic growth
- lordnacho 4y ago> You could easily make the same comparison between the midwest and some non-developed nation. The difference is, nobody is shocked about how prices are higher in the USA midwest compared to an arbitrary less-developed country. Why is that exactly? Because there's no freedom of movement, legal or cultural, between the midwest and the large coastal US cities.
- deleted 4y ago[deleted]
- lordnacho 4y agoTypo, of course I meant there IS freedom of movement within the US but not across borders.
- 101008 4y agoI think the comparison with other places makes no sense if you compare nominal prices. What I think you have to compare is (among other things) how much of your salary you spend on rent. Yeah, a non-developed nation you may get a 3 room apartment for 400 USD - but your salary may be not higher than 1k USD per month. If the average salary in Manhattan would be 300k per year I think no one would care. But it is not.
- dokein 4y agoIt's not clear that the data shows an increase in rent with interest rates (https://qph.cf2.quoracdn.net/main-qimg-4f3dc7c9b86908d1c41fb85dd6d2b58f https://qph.cf2.quoracdn.net/main-qimg-4f3dc7c9b86908d1c41fb...)
- ourmandave 4y agoThe headline made the Friends theme song pop in my head. But their huge apartment would have been over $5K back in 1994.
- washadjeffmad 4y agoThis is average apartment rent. In the mid-2000s, that was our rent for a five bedroom house in Sugar Hill.
- wil421 4y agoYou could rent a 5,600 sq foot house with a 3 car garage and a full basement in a top 10 high school area for $5k down the street from me in Metro Atlanta.
- rendang 4y agoFunny seeing this! In 2010 I lived with a group in a five bedroom house in Sugar Hill on St Nicholas Pl for about $6000
- washadjeffmad 4y agoOff W 145th?
- rendang 4y ago152nd or so
- spaniard89277 4y agoHousing and land is a non-transable good, and therefore there should be heavy state intervention on it, preferably by doing the same as Vienna, which is holding >40% of the renting stock and charging according to income, and renting to a representative distribution of tenants so to prevent guettos. Rent is the main detractor of disposable income which hurts the rest of the economy, and property owners provide almost no value, but to provide access to housing for people who has no capital for it, which is service that could be perfectly provided by a state entity. The current setup creates guettos by default, by siloing people with different monetary and social capital into different building and areas, hurting social mobility, which could be improved by the setup described above. Many attempts at public housing failed because they just tried to provide housing for low-income people in separated and/or undesirable areas, with a predictable outcome. CMV
- nickles 4y ago> should be heavy state intervention on it, preferably by doing the same as Vienna, which is holding >40% of the renting stock and charging according to income This is great policy if you want to make housing unaffordable. When supply is less than demand, prices go up. Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). Capping prices prevents the price mechanism from working, leaving a shortage of housing. > Rent is the main detractor of disposable income which hurts the rest of the economy I’m happy (perhaps not quite the right word…) to pay rent. I don’t want to own property. It’s a large, illiquid investment with high transaction fees, carry costs, and concentration risk. My landlord takes all the risk of owning the property (prices don’t always go up after all).
- sokoloff 4y agoIs housing unaffordable in Vienna? If so, your mechanism might explain it. If housing is not unaffordable in Vienna, your explanation seems likely to be missing something.
- spaniard89277 4y ago
- elzbardico 4y agoThere is an elephant in the room that people refuse to look at when it comes to rents: Airbnb.
- afavour 4y agoNYC has technically outlawed Airbnb rentals of less than 30 days already. They just need a lot better enforcement of that law.
- wil421 4y agoYet I can still find rooms for this weekend in Manhattan ranging from sub $100 to about $250 a night.
- afavour 4y ago> they just need a lot better enforcement of that law. Perhaps also worth asking why Airbnb continues to host listings it knows are in violation of the law.
- cpascal 4y agoSeems pretty easy to enforce. Fine Airbnb for each listing in violation of the law.
- wollsmoth 4y agothey need to start implementing and enforcing extremely high fines on illegal listings and then actually go out and try to enforce it. That's the only way it ends imo.
- throwaway889900 4y agoVery simply, the income they generate from violating the law is more than the fines they will receive if those violations are brought up.
- michaelchisari 4y ago
- afavour 4y agoAs a New Yorker myself I do wonder where this ends up. Me and my relatively well paid friends can afford to live here but we depend on a lot of lower paid folks for the city to function. Grocery store clerks, delivery drivers, coffee baristas, all that sort of thing. Maybe right now they have a half hour subway ride to work and that’s acceptable. But as they get pushed further and further out it’s going to break down somewhere, no one is going to commute 90 minutes for a minimum wage job when there are plenty of jobs available elsewhere. Wages will need to go up, which means the costs of goods and services will need to go up, and the city will get even less affordable.
- danjac 4y agoMoreover artist communities flourish in urban spaces with cheap rent, like New York in the 1970s, Paris in the 1920s, Berlin in the 1990s and so on. Without that you just end up with Dubai or Monaco with shittier weather.
- cies 4y ago> Without that you just end up with Dubai or Monaco with shittier weather. Well put, had to laugh.
- v7p1Qbt1im 4y agoExactly. Wealthy residents should at some point realize that culture and entertainment venues/options are (often) created by lower income residents. If that disappears you get soulless places which are dramatically less fun to live in. Not to mention the service industry workers, who also need to come from somewhere.
- freebee56 4y agoThese numbers are wildly inflated. the official corporate rental sector in NYC s actually very small (most properties are condos/coops) owned by small scale landlords. That 5k number is the price that a (often foreign) company would pay to keep an executive for a temporary assignment in NYC. Then you have the students who are burning thier parents money anyways. Anecdotally the landlords are looking to recoup their COVID losses and a lot of these units are not renting.
- vitno 4y agoBut they aren't. I just did an apartment search after living in Manhattan for years and 5k was the number my partner and I wanted to be under. It was basically impossible and I'm now leaving my neighborhood.
- ricardobeat 4y agoThis is why you need rent control. 100% of this price hike is going into landlord's pockets, it's not a result of inflation.
- settrans 4y agoIndeed! What we need is a wealth transfer from new residents paying _even higher_ market prices to legacy tenants grandfathered in to apartments that landlords have no incentive to maintain.
- asciiresort 4y agoHow has that worked out for San Francisco ?
- wil421 4y agoRent control doesn’t work. Sane zoning laws and higher density housing should help.
- ChuckNorris89 4y agoHow did that work for Berlin? Try moving there today and tell me how affordable it is for newcomers. Rent control is basically subsidizing existing grandfathered tenants by fleecing those new wishing to move in, without fixing the underlying housing shortage in any way. The solution is always, always, having (building) more supply than the demand, yet nobody seems to get it.
- teakettle42 4y agoWhat if you literally cannot build more supply than the demand? What if there’s a feedback loop between building more supply and increased (induced) demand?
- ChuckNorris89 4y agoI don't think this applies to Berlin yet, it's not an island or locked by mountains. You can also build up. Let's not kid ourselves, real estate prices there are insane due to monetary policies, bureaucracy and NIMBYism restricting building/supply for a million reasons, and not due to the lack of real estate in that area.
- jononomo 4y agoI decided about four years ago that it just doesn’t make sense to live in NYC if you’re not making $200k/year consistently. Also, I was surprised at how many people without an original thought in their head earn $200k/year in NYC —- the city rewards a sort of dull ambition. Do you want to hang out with people who are intelligent and ambitious yet somehow fail to be interesting? If so, then NYC is for you!
- disantlor 4y agoi’d say there is a pretty big difference between Manhattan and the other boroughs in this regard though it’s still too expensive. i’ve found reason to go to Manhattan only a couple times in the past few years.
- knowledge-clay 4y agoThe median individual income in NYC is $34k. In Manhattan, it's $52k. Making 200k puts you in the top 5% of earners in New York City.
- deleted 4y ago[deleted]
- bobbylcraig 4y agoThat actually blows my mind when I think about the lifestyles I see walking around the West Village every day.
- rffn 4y agoWouldn't it be better to use the median and not the average?
- gcr 4y agoAnother commenter in this thread mentioned the median is $4000 as of a few months ago.
- rffn 4y agoYes. This was posted after I wrote mine. I am a bit surprised that the median is so high. I would have expected a bigger difference, i.e. a few high value outliers pulling the median up further up.
- ubermonkey 4y agoI keep hearing the notion that we should prohibit corporations from owning residential property, and I kind of like the idea.
- joshlemer 4y agoEh, I think the ability to internalize the costs and profits of an apartment building allows for a more efficient and incentive aligned situation than a bunch of condo owners with a condo board where there's a kind of tragedy of the commons to look after the building.
- asdff 4y agoI can tell you've never lived in a corporate owned mega apartment complex and had a maintenance issue
- AlwaysRock 4y agoThis is a great idea that would never be allowed to made into legislation because of corporate lobbyist.
- antiverse 4y agoThis boils down to greed and selfishness, but people even on HN don't want to call spade a spade so they dance around it and give complex somersault answers because they are afraid/too socially conscious to speak the truth.
- vorpalhex 4y ago"We clearly just need more Jesus" With the right moralizing as your hammer, every problem becomes a convenient supportive nail for your story.
- fny 4y agoThis is a price signal. Anyone who's calling for intervention needs to wake up. The proper response is for people to leave. If you drive across America, you'll find economically, depressed areas which have suffered from brain drain. Many aspire to attend an out of state college, go work in the Valley, join some VC-funded startup, megacorp, consulting firm, and strike it rich. In all likelihood, you will (1) not strike it rich (2) have a worse quality of life on a cost adjusted basis (3) forgo developing a local community. Perhaps you'll enjoy more culture, but that might have been something that have developed in a smaller community had you not run off to a megacity. Developing local communities is what America needs today. Just drive across this country and you'll find a tremendous amount of land coupled with tremendous economic depression. It's high time that price signals like rent drive people out of high cost of living areas into more depressed areas to promote broader-based growth.
- voidhorse 4y agoSure, but this is totally antithetical to american culture which is extremely selfish, entirely oriented around acquiring money, and obsessed with pop culture which generally leads people to pursue positions that are high paying and locales that are “the place to be”. When the only values that remain are the acquisition of capital, self-love, and fame, the majority of the population will elect to be in the places that present those possibilities to them, even if it requires making short-term decisions that harm them (absurd renting costs), because they believe they might make it work given time.
- jeffbee 4y agoMaybe, but you are also advocating for climate arson. Every person who leaves NYC for any other American city other than Berkeley is raising their carbon footprint, dramatically in the case of most cities. So that isn't great. The other perspective that you need to consider is there are huge populations who simply will not consider living in the cities you mentioned. Women, for example, do not want to move to Ohio. Homosexuals would rather not live in Oklahoma. People who are not white can rule out a happy existence in 90% of American cities. It's true that a single, straight, white male with no children can pick up and move anywhere, but that's a relatively small fraction of the people.
- 5350-uiop-1130 4y agoi think remote work goes a long way in resolving this problem. governments are not interested in building new affordable property (at least in the UK). so those of us who can afford to rent in these cities, but not buy, we should all leave these places...let the landlords default on their speculative house of cards.
- mym1990 4y agoRemote work is essentially what created a large housing cost increase in other cities. Also for cities like NYC, reducing demand will be difficult. NYC has always been a city where lots of people want to live(maybe not you or me, but it does attract a lot of attention). It is historically significant, vibrant, and many parts are beautiful. People will flock there, even as others are leaving.
- 5350-uiop-1130 4y agothere is a demographic issue for sure, one which is global, and driven by huge wealth inequality. i see remote working as the default option being a step in the right direction.
- mym1990 4y agoI think the widespread option of remote work is a good step forward. The fact that it came about in such a quick fashion was not ideal for the re-shuffling of the real estate market, but hopefully it will even out in the coming years!
- mwt 4y agoIt's just diffusing the problem from urban centers to mid-sized cities elsewhere in the united states. Say for simplicity that the core result of the problem is that people not making astronomical tech/finance/etc. salaries can't live in NYC because people making those salaries are scooping up supply and driving up rent ($5,000/month and higher). Then say the solution is to let some amount of people move to smaller cities and work remotely, enough that NYC prices somehow magically drop 20%. Well, where are those jobs going to go / how much of a salary penalty are people going to take to move from NYC to STL, Austin, Nashville, Columbus, Denver, Ann Arbor, and Raleigh? Because they're not going to suddenly be making the same salaries that engineers already in those cities make, they're going to want more. And they're going to scoop up housing supply and put pressure on those housing markets. The same forces keeping NYC rent at $5,000 have caused places like Nashville to become unlivable for the lifers; your grocery store workers and baristas can't get by with $3,000/month rent there either. It would be lovely if the solution for skyrocketing rents in the big 2-3 urban centers didn't simply shift the problem to every other city, but there's no indication at all that will happen.
- DeathArrow 4y agoHigher interest rates should lower the prices of homes in the long run, which should translate into lower rents.
- nickv 4y agoActually, that's not true in a strange perverse way. Higher interest rates = higher mortgage rates = higher monthly costs to own = More people being stuck in the rental market = more demand in an already over-heated rental market. Remember housing prices going down doesn't turn to a lower monthly cost (it keeps at pace typically). This is pure wealth loss (which is the point so we can cut inflation). This is already happening in NYC (and this article is the outcome of that). More details: https://www.nytimes.com/2022/07/11/business/economy/rent-inflation-interest-rates.html https://www.nytimes.com/2022/07/11/business/economy/rent-inf...
- tmnvix 4y agoThis is not how it's working out right now in NZ. Interest rates up. House prices down (-20% in my city). Number of available rentals up (almost doubled in some markets). Rental prices down (looks like around -10%). It looks like underutilised housing is being flushed out due to high servicing costs. The jig is up.
- nickv 4y agoInteresting, where are those rentals coming from? Is it just an overall drop in demand for any housing? Intuitively to me, if you make one thing harder to do (buy a house), unless people disappear or you suddenly build more rentals, they go in the other direction and create more strain there (renting). Where are these people living if they can't buy but are renting less? Are both demands are dropping?
- tmnvix 4y agoI think that it's a case of underutilised properties being flushed out. No one really considers it, but in a booming market you might be more likely to have a higher percentage of underutilised properties. When the market turns, those properties that were making money just by virtue of existing now lose money. A second home or a holiday home is one example. A house being slowly renovated is another. Plain old land-banked properties, etc. Put it this way. As the property market has boomed, the proportion of properties owned by investors has increased. Because only investors will underutilise a property (homeowners occupy it by definition), the proportion of underutilised properties increased. When the market turns, capital gains look less certain, and holding costs increase, investors try to get out. The underutilised properties get flushed out.
- TomGullen 4y agoOne piece of the puzzle I'm struggling with in all of this is why if housing is so expensive and rents so high are more houses not being built? Surely the incentive is there, what's going wrong?
- notRobot 4y agoMy understanding is that houses are being built, but they're not affordable. This Last Week Tonight segment from a few weeks ago covers this topic: https://www.youtube.com/watch?v=L4qmDnYli2E&t=676s https://www.youtube.com/watch?v=L4qmDnYli2E&t=676s
- juve1996 4y agoThe amount of homes being built in areas where people want them built aren't enough to offset demand. In areas where denser housing is required (coastal cities), zoning and NIMBYism prevents it.
- bradlys 4y agoNIMBYism. The incentive is definitely there but the issue is that existing landowners don’t want any more buildings. After all - more supply while keeping demand fixed hurts their profitability. You need eminent domain from the government to fix this. At this point - it’s complete class warfare and landowners are fucking over many generations.
- harryh 4y agoYou don't need eminent domain. There are plenty of landowners that want to build. The issue is that NIMBYs have largely captured the city government and zoning restrictions have made new building mostly illegal. We jut need a government that legalizes new construction.
- harryh 4y agoIt's mostly illegal to build new housing in Manhattan.
- ianbutler 4y agoI went to view an apartment in Prospect Park SW recently and the line wrapped around the block. When I went to apply I was told most people had offered over the asking for rent and how much I'd like to offer over the amount. We're blind bidding on rent in NY now. I wish this was an isolated incident but most apartments I'm looking for the amount of people applying is in the 50s low 100s I decided to just stay put and not look for bigger space. I'll either try again next year or leave the city. No rent is really worth 5k/mo at that money you can buy a palace an hour or two out of the city.
- _fat_santa 4y agoWhenever I hear about the rental market in NYC I always ask myself: why do people want to live there? In a way it's a rhetorical question but in another way it's not. Sure some will move there for a job but I'm sure not everyone is there just for work. Why do people put up with all that? Is it just the dream of living in NYC.
- hmillison 4y agoNYC is one of the only cities in the US with quality transit and really the main one where it's easy to live car free in many areas of the city.
- usrn 4y agoThe metro in DC is pretty underrated and you can live car free pretty far out into its suburbs even.
- lotsofpulp 4y agoThe problem with almost all public transit is that it converges on a center and branches out into legs that do not connect with each other. This is the DC map: https://www.wmata.com/schedules/maps/upload/2019-System-Map.pdf https://www.wmata.com/schedules/maps/upload/2019-System-Map.... If two friends move to the outer edges of different legs of the system, then your travel time and inconvenience multiplies a lot. It is the same reason Manhattan is so popular compared to the outer boroughs: https://new.mta.info/map/5256 https://new.mta.info/map/5256 People in manhattan can go west, south, east, north anytime anyhow with few or no connections. People in the outer boroughs have to many times go via Manhattan to get where they are going. Now take a look at a map of a good subway system: https://www.tokyometro.jp/en/subwaymap/ https://www.tokyometro.jp/en/subwaymap/ Paris is another good one: https://www.ratp.fr/en/plan-metro https://www.ratp.fr/en/plan-metro You can get from anywhere to almost anywhere without having to go to the middle of Tokyo. The Tube is okay, but still has the problem of the lines not connecting once you get out of a certain radius: https://content.tfl.gov.uk/standard-tube-map.pdf https://content.tfl.gov.uk/standard-tube-map.pdf
- pphysch 4y ago"Housing is for living, not speculation" -- good quote from a good leader
- jsiaajdsdaa 4y agoAnyone who wants to live in NYC at this point is a masochist. Tax, safety, cost of living, dirtiness, noise... left after 27 years to the Cascades. Never been better.
- deleted 4y ago[deleted]
- gregors 4y agoBerlin seems to have some solutions https://thespinoff.co.nz/society/23-05-2022/why-berlin-voted-to-seize-thousands-of-apartments-from-corporate-landlords https://thespinoff.co.nz/society/23-05-2022/why-berlin-voted...
- 71a54xd 4y agoThis is why I left Manhattan - especially in a new world where remote work is the new norm. I miss it, but I don't miss literally living in a box or the noise. Fortunately, I got to live in an insanely nice luxury apt (30% under market rent) for a year in 2019 while construction was being finished on an adjacent high rise. Even though I had an incredible view of the Hudson from the 26th floor on W57th street tbh that kind of luxury is overrated in my opinion. Finance people are also generally pretty boring and / or degenerate. That said - I'll always miss pre-covid New York. Granted, every single person I know in finance got a huge raise / bonus last year so this increase isn't exactly surprising. Looks like Louis Rossman was right with his prediction of New York becoming a city where "only rich finance and tech workers can afford to exist".
- rayiner 4y agoI wonder how much of contemporary Democratic politics is driven by insane rents in NYC and SF. The party has seen an influx of core Reagan voters—everyone from Wall Street bankers to Silicon Valley engineers (Reagan won Santa Clara County by 17 points in 1984). These affluent, highly educated folks have adopted the narratives and politics of the working class, juxtaposed against a ever-more-narrowly-defined “elite.” And it’s not the Kennedy-esque “noblesse oblige” that’s been a historical pattern. These folks don’t just express concern for the working class, but identify with them and are angry about the economic system. And I have no idea how to explain that, except they’re paying $5,000 a month for a cramped little apartment in NYC or SF, and feel like victims of the economic system rather than the winners.
- throwaway23234 4y agoIt's a really really weird space that didn't really exist in 1984. I would say that today's "engineers" below the 80% salary threshold for this space are today's "construction workers" and heavily democratic voters (There are also of course "construction workers" too, of course). Maybe about 5 years ago I would have said that people making 200k are wealthy. Today I would say that they are a lot of people that have been duped into a lifestyle where they "think" they are wealthy but are not. They spend MOST of their salary on non-essential and non-asset building things. So in a sense they are people that should be rich, but are not. Instead they don't own property (renters) buy lattes, restaurant food (for every meal) and the rest of that income is just going to payments - the tesla, rv/campers/boats, storage facilities for the stuff that doesn't fit in the apartment. Those people certainly could become winners of the economic system if they stopped paying everyone else - but they identify with wealthy people making 400k but have absolutely no appreciating assets (ok except for their self driving module that Elon duped them into - which it turns out isn't actually "sellable" to the next owner anyway!). I don't think these people identify with working class - instead they are pushing a narrative for themselves as poor to feel less guilty about that large salary and how poorly it's being pissed away. That's the closest I can "explain" that from my personal perspective at least.
- bradlys 4y ago$200k isn’t enough to buy anything in SF though. Also - I know a lot of people making $200k/yr and they spend relatively little. Honestly - you sound really out of touch and like you know no one who makes $200k/yr in SF. Where would you put your boat if you even could afford one? Where would you put a camper? Do you think people at 200k in sf are renting houses often? Houses with space for boats and campers?! Sounds a lot like someone who likes to bitch about avocado toast. I wish people like this didn’t even post on HN - because it’s clear they don’t live in SF and don’t have a clue.
- ComputerCat 4y agoWith rent prices like this it's impossible to save money for a down payment in the future and then you're trapped in a cycle of renting unless you can increase your income, which let's be honest, easier said than done!
- ctvo 4y agoThe problem for me, as a long time NYC resident, is that there's no other place in America I want to live even with work from home as a possibility. I like mass transit. I like not owning a car. I like that the city is generally safer than the rest of America. I like that it's the center for tech on the east coast, the arts for the entire country, and finance for most of the world. I like that we generally get along in the city, across many cultures and backgrounds. I like it has some of the best food in the world. I think a lot of people are like me. No, we don't want to live in Boston, Chicago, or Washington DC (similar cities with mass transit). Unfortunately demand will continue to outpace supply greatly. The only alternative I have is moving further out in Brooklyn or Queens. Unfortunately the subway has decent coverage, but moves at a snail's pace, and I'm looking at 50+ minutes for 6 miles into the city.
- EricDeb 4y agoI feel like the main deterrent for boston and chicago is the weather but I could be wrong.
- yieldcrv 4y agoYou and everyone else buddy, that's why you're going to be priced out just like the people before you. It's nice you enjoyed your ride from $2,000/month to $5,000/month. That range was absurd to the people that went through an earlier range, and so on and so forth.
- weeksie 4y agoMy partner and I have been agonizing over this exact dilemma. We have an income number and an expenses number and when those cross a certain point, we've gotta go somewhere else. So there's a very good chance that we'll immigrate somewhere in a few years. But yeah, try as we might, we couldn't come up with another US city that either of us would want to live in.
- greggsy 4y agoTo me, only other places that compare to NYC are Singapore and Sydney. Great food in Singapore, great weather (usually) in Sydney. The people can be a bit busy in Singapore though. Certainly no NYC, but they ticked all my recreation, arts, food, people and transport boxes. Unfortunately, they’re all so goddamn expensive to live in.
- chiefalchemist 4y ago> The average price of a rental apartment in Manhattan surged above $5,000 in June for the first time, hitting $5,058, Key word: average. Always a dangerous - and clickbait friendly - metric. Keep in mind... This does not mean the top went up. Let's not be naive, the further you move up the financial / wealth food chain the less price sensitive you are. An increase on the upper end has few consequences. On the other hand, you can move the bottom up and the average will also increase as increase. This is typically not the first thing that comes to mind but it's a reasonable idea. Unlike the high-end, the low end of the market is very price sensitive. People "living paycheck to paycheck" are far less likely to brush off increases. What happens when they can't make rent? That is The Question. As things get uglier, those with not much will have nothing to lose. If we don't see voters react this November, they'll be primed for future Novembers. They also might decide that voting isn't going to make a difference. The number of people in this situation is significant. The math is simple. The rest will be history.
- champagnepapi 4y agoRENT IS TOO DAMN HIGH!!
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- bern4444 4y agoThe primary driver of my view on real estate is that it should not be treated as an investment grade security. Attempts to leverage real estate as an investment grade security should be outlawed by the government. Owners of rental units should be limited to a maximum number of units at any given time. For an individual I would say 5 to 10 units. For a corporation, I would want it limited to something like 50. The goal being to enforce more competition and avoiding consolidation. A terrible practice owners of rental units use is to keep available units off market in hopes of getting a better price in the short term future (typically 3-12 months). This practice should be made illegal. If you own rental units, you should be forced to list them when vacant. Foreign ownership should also be seriously curtailed. Taxes should be extreme for units that aren't used except for 2 weeks a year. NYC should be for New Yorkers, Americans, immigrants, and people who choose to come to this city and create their life here, not for those who fly in on a private jet to stay 3 of the year. They can stay in a hotel. I also don't believe owners of rental units should be able to own them indefinitely. Owners of rental units should be forced to sell to after they have recouped their investment and I'd say 3 times their investment cost. This creates enough upside (300% return) to incentivize purchasing of units to rent which thus incentivizes building. After that point, the owner should be compelled to offer to renters the ability to buy their apartment or sell to another owner. Similar to how the velocity of money helps encourage economic activitiy, this is creating a velocity of housing. I have no problem with individuals looking to create a passive income stream, and this should be allowed but up to a point. Similarly we need a system that will incentivize development of new buildings and construction, so there has to be enough upside opportunity down the stack from the owner to the builder to the banks financing it all. But it should be limited and real estate should not be treated as an investment grade security.
- esoterica 4y agoYou are confused about the economic dynamics behind high rents. There are already tens (hundreds?) of thousands of landlords around New York City and no single landlord controls more than a tiny fraction of the housing stock or has even the tiniest bit of price setting power. The problem isn’t cartels keeping prices artificially high, it’s immense demand running up against zero new supply.
- 4y ago
- jmyeet 4y agoProperty is a tough nut to crack because there are a bunch of different issues creating this problem and some of them are local. NIMBYism is a big one obviously but so many are inveted in the value of their house that increasing property prices becomes a political goal. Worse, property becomes a tool for the ultra-rich to park money in a way that is hedged against inflation. Rents tend to follow property prices but they lag. Manhattan also has a big problem with the type of property that gets built, being ultra-luxury property (that sells for >$5k/sq ft). Part of the demand for this is parking money but there are other reasons. Insurance is a big one thanks to the infamous "scaffolding law". But the main point I want to raise here is that politicians, regardless of party (in the US at least), have zero interest in fixing this problem. Why? Because they're all bought and paid for by the capital-owning class. NYC politics in particular serves property developers first, police unions second and whatever third is nobody cares. A budget shortfall is built into your existence. This keeps you showing up to work and diminishes your ability to negotiate (since walking away isn't an option). This creates a compliant workforce that doesn't hurt profits by, say, wages going up even with just inflation. This is what neofeudalism looks like.
- harryh 4y agoIf NYC politics serves property developers first, then it probably wouldn't be illegal for property developers to develop new property in the vast majority of the city. I think you've misdiagnosed the problem.
- tmnvix 4y ago"The rent is too damn high!" A lot of talk of supply side issues, economics 101, etc in these threads. Greetings from New Zealand, where just like so many other anglosphere economies we've been playing the low interest property speculation game for decades now. We got really, really good at it. The last couple of years saw 50% increases in property prices. Madness. A funny thing's been happening in just the last six months though. Interest rates have gone up. 2.5% to 6% roughly. In the capital the number of homes for sale doubled compared with the year before. Prices are down 20% since the November peak. Here's the interesting thing. While this crash is happening the number of rentals available has almost almost doubled and rents are going down. This is after tenants experienced the tightest rental market in decades just a year ago. Where did all those new rentals come from? Hint: there are two sides to supply and demand (no one really looks at the demand side too closely but that's where the real policy failures are).
- rcpt 4y agoPrior to the NZ Land Tax Abolition Act it was pretty good there no?
- tmnvix 4y agoI put it down to the double whammy of banking deregulation and ripping into social housing. From the 90s on property speculation has been the name of the game. It does seem like this year could bring a paradigm shift. We might have come to the end of the road with lowering interest rates and the social housing system appears to have totally fallen apart and been overwhelmed at the same time. A decent property market correction will be good for everyone in the long run, but it's going to be difficult for a lot of people. It'll be interesting to see how middle New Zealand handles it when the crisis is at their door and not just 'out there' for more unfortunate people to worry about.
- acchow 4y agoMany cities are experiencing asset price bubbles far beyond the rental price increases (driven by central banks). But NYC rental prices are actually rising rapidly. It’s quite a different situation
- nathanvanfleet 4y agoWe're all grist for the mill now baby
- pyrophane 4y agoIt used to be the case that NYC was expensive, but most of the rest of the country was cheap. If you didn't want to pay the ridiculous rent in New York, you could always move to a "second tier" US city like Seattle, Austin, or Denver, and enjoy a cool urban environment at a comparatively very reasonable price. That no longer seems to be the case. Yeah, it is expensive here, but when I talk to my friends living in those other cities, they aren't paying that much less! Their rent is cheaper or they get more for the money, but it isn't a whole different ball game like it used to be.
- acchow 4y agoThis is temporary, right? Those tier 2 cities will feel much cheaper once NYC rents rise another 30%.
- asdff 4y agoAnd then the tier 2 cities rents will also be legging up because they also aren't adding enough housing for the job infux they are seeing
- colinmhayes 4y agoI’m paying $1600 for a 3 bed in one of chicagos hottest neighborhoods. The trick is density, Chicago is made up of 3/4 flats and apartment blocks with solid public transport, so supply meets demand at a reasonable price. Of course the shitty weather and corruption helps lower demand too, but I’d say $600 a month housing cost is worth it.
- samstave 4y agoAnd you have a yard? A parking spot? A walkable food thing? A friend networks whereby you loan tools? Rent Tools? A network of people who will help you when down/sick/hurt/displaced? You're paying for an accentuated CELL in urban hell. Just because you have a "dope spot to show how urban your display is" You dont have shit. Cut off all your power, access to food stuffs, equipment, necessities (pwr, wtr, fd, transport) Yeah, you have a death-trap.
- H8crilA 4y agoI am only commenting to further demote the already terrible upvote/comment ratio.
- spoonjim 4y agoI can see why this is happening. For a certain kind of person, New York City is the most desirable place in the world to live. With work from home becoming possible, all the people across the country with the desire and money to do so will want to move to NYC, where they might have been in Omaha or Cleveland or Dallas for work.
- godelmachine 4y agoToronto is just a puddle jump away and rents are hoevering at 2k-3k CAD/ month. Hope this inflation doesn't reach Toronto.
- analyst74 4y agoToronto builds ~3x new units per capita every year compared to NY, let's hope they don't slow down.
- godelmachine 4y agoYep, new projects are fast upcoming in GTA's as well and newcomer immigrants prefer buying their own homes within 5 years of arrival. In Toronto they lease their basements too which is not seen much in NYC.
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- arbuge 4y agoThis might turn out to be the saving grace of the distressed office market. Office landlords have a lot of empty or almost empty buildings in areas like downtown NYC. I'm thinking they can be profitably repurposed as apartments at these rental rates.
- throw93232 4y agoI visited Manhattan once, what I noticed was how run down metro (underground) was. I would compare it with Kiev metro around 2016, and that country was already at war. I have no idea how city hall can get away with doing so little!
- csomar 4y agoBe careful. It seems from the comments here that NYC transit is one of the attraction factors.
- cghendrix 4y agoBoth can be true.
- AlwaysRock 4y agoHaha. No one loves it. Everyone wishes it was better. But no one wants delays or more crowded trains for 1-? years while it gets fixed/updated.
- deleted 4y ago[deleted]
- jessaustin 4y agoThe cause is not mysterious. Residential rental property is the newest private equity scam. [0] When the capitalist who has inserted himself into your life wants more money, your life becomes more expensive. This is called "inflation". Fools and charlatans claim the Fed can control this. [0] https://www.propublica.org/article/when-private-equity-becomes-your-landlord https://www.propublica.org/article/when-private-equity-becom...
- stomczyk09 4y agoIt's so upsetting to hear my friend's stories on apartment hunting recently. I had someone raise their expectations by 1k in their budget where they would barely break even financially, and still couldn't find a 2 bedroom apartment in the Williamsburg area. I got very lucky getting a "Covid Deal" in the summer of 2020, because anyone who moved here/moved around since the fall of last year I've heard nothing but chaos :(
- t_mann 4y agoHaha, anyone remember last year, when we thought big city apartment dwelling was going to go out of fashion?
- throwawaymanbot 4y ago
- jmartin2683 4y ago...and in return you have the privilege of stumbling over garbage on your way to wait inline for an $8 coffee like you're at an amusement park or something.
- purplepatrick 4y agoYes, the rent here in NYC is too damn high. No, these stupid media reports say nothing about a normal renter’s experience. Averages aren’t a good indicator if the underlying distribution is not normal. As construction in NYC disproportionally focuses on new luxury buildings for both owning and renting, averages are overly skewed.
- throwawayarnty 4y agoThe desire to live in NYC is mostly for the hype and story you can tell yourself. The reality is that the daily commute, expenses, and crowds is worse than other places. Your daily life matters much more than the few weeks of the year that you can take your visitors around the city. The fuel that drives people to live in NYC is propaganda from TV, films, and books. It might be fun to live for a few years, but imagine raising a family with multiple kids in a tiny apartment. There are better ways to live than that.
- DEveritt 4y agoThe rent prices are atrocious and I'm paying through the nose to live walking-distance to my office. I don't understand why so many people are back living in the city when office occupancy rates are much lower than pre-pandemic.