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It's shocking how often the answer to "How come X changed?" is either the creation of the internet or the cost of real estate. Surprisingly often, it's both.
by jamestimmins 2y ago
It's shocking how often the answer to "How come X changed?" is either the creation of the internet or the cost of real estate.
Surprisingly often, it's both.
- dnissley 2y agoThis is the housing theory of everything
- KeplerBoy 2y agoIt's interesting how the creation of the internet still hasn't caused real estate prices to plummet. Even two years of covid couldn't do it.
- aylmao 2y agoIt did affect housing. I remember the great deals one could find when remote work was in full swing, and all that was said about vacant office, or smaller cities growing at the expense of bigger ones. It was only two years though. An industry can hold off and fight back in that time.
- wpm 2y agoSupply is artificially limited.
- vidanay 2y agoNot commercial RE
- graeme 2y agoYes it is. There's no zoning law that says "You can only build houses here, no apartment, unless you build commercial real estate" Commercial real estate is generally illegal anywhere dense housing is also illegal.
- darth_avocado 2y agoCommercial RE too. When you say supply is constrained, they don’t mean there’s no RE available, they mean RE isn’t available at a lower price. Most cities in the US right now have a huge commercial RE vacancy rate, yet if you try to lease it, you’re not getting rates that a free market low demand situation is going to get you.
- Tade0 2y agoSupply can't possibly keep up when real estate is used as an investment. As an analogy to the dead internet hypothesis I present the dead real estate market hypothesis. Increasingly it's just investors buying and selling properties from each other. And it's not just a hypothesis. China built enough homes to house its population twice over, yet it's not reflected in the prices. All because everyone and their grandma is investing in real estate.
- WorldMaker 2y agoThis is the lesson the board game Monopoly was originally intended to teach. The Georgism side of "The Landlord's Game" sometimes feels as relevant as ever, and as obvious as ever why those rules not packed into the game by Hasbro. (They aren't fun and we don't actually want to question what real estate ownership should mean.)
- UltraSane 2y agoIt isn't a hypothesis. It is a well known fact. The more expensive a property is the more time it will be spent vacant because a lot of the very expensive properties are just uses as investments.
- apwell23 2y agowhy doesn't someone introduce a legislation to tax vacant second homes at astronomical rates
- throw5959 2y agoDo you know who owns most real estate either directly or indirectly? Pension funds. And who wants to shake up their pension? Nobody. It's the most democratized form of asset ownership, literally everybody is going to get angry. And secondly... Are the second vacation homes really the problem? I'd guess the problem begins around 3rd or 5th, not the second one, which is a fairly common and usually also a good thing to have - for both the owner and the society.
- cyberax 2y agoNo, it's not. Supply of housing is not in any way limited. Cities are desperately fighting a rearguard action against greedy developers plopping multi-story monstrosities in former SFH areas. All in the name of "affordable housing". While the supply of house units per capita is at the record-high levels. Reality: housing is cheap, abundant, and high quality. Just not near the downtown cores of large cities.
- clmay 2y agoMaybe Ricardo was onto something.
- smt88 2y agoThat's because most people live in cities because they prefer it, not because their office was there.
- aprilthird2021 2y agoI think the opposite is true. It's easier to find a job in a city other than your own with the internet, and big cities pay the most
- bobthepanda 2y agoThat ignores that plenty of people are in cities because of the amenities that concentration allows. If you want niche/specialty restaurants, grocery options, entertainment, medical care etc. you will have to be in a large metropolitan area
- ghaff 2y agoYou can be in a broader metropolitan area without actually living in a city.
- s1artibartfast 2y agoThat means you have to be in driving distance of a metro with several hundred thousand. That is very different than a Tier 1 city.
- bluGill 2y agoThe opportunities you get in a city of 3million is different from 600k is different from 250k. I've lived in all of the above over my life. You can find niches in each. However the larger the city the more options. The smallest city had great Thai food - some family from Thailand moved there and opened a restaurant, but there was no Vietnamese, the next largest city has both, and the 3 million city more options than I was ever able to check out. (there are cities > 10 million around with even more options).
- 2y ago
- aprilthird2021 2y agoIt has caused the prices to plummet in small towns and lowest tier cities. It's big cities that saw the internet grow their real estate prices because the Internet made it easier to research large cities before moving there
- Scoundreller 2y ago> Even two years of covid couldn't do it. My jurisdiction gave free money to everyone that lost their job/income, with far more liberal eligibility criteria than unemployment insurance had, at fixed amounts conveniently we’ll above the monthly rental costs for most. Kept the rental market propped up.
- Der_Einzige 2y agoWhat's interesting is how high interest rates couldn't do it.
- dist-epoch 2y agoThe internet facilitates people moving to the big cities in various ways.
- ipaddr 2y agoCompanies came together to demand everyone back into work at physical locations in part to keep real estate pricing high.
- lolinder 2y agoI'm as anti-RTO as anyone, but I've seen this asserted over and over but have never seen anyone give evidence in favor. As I understand it the claim is something about cities giving tax breaks to companies for having offices? Or is the idea that CEOs have investments in real estate? Does anyone have a source that actually shows that this was a factor?
- majormajor 2y agoThe internet doesn't change "location location location" that much. It doesn't change weather, or scenery, physical entertainment options, in-person social opportunities, or backyards and amenities. It's also created big windfalls - due to easy distribution/sales for online stuff - for more than enough people to drive up prices in many of the most-already-in-demand regions. Ye olde rich person historically has traditionally addressed the "there are different pros/cons to the city than rurally" dilemma by having multiple properties. Which of course only eats into supply more. Is the percentage of people able to do that now higher or lower than it was when a country home required full-time live-in staff?
- ghaff 2y agoI know people with an urban condo and a country house. At one point, I did think about it but decided I didn't want the hassle and, anyway, preferred to have my choice of cities during a given year. I'm sure there are circumstances where a second home makes sense especially for people who want to migrate summer/winter or heavily use a ski condo.
- daedrdev 2y agoMany cities effectively ban or heavily restrict new housing developments that increase density. I'm really not surprised real estate prices continue to rise when building new units is often an extremely expensive, risky process that in some areas can be stopped at any time with literally no reason required
- geodel 2y agoHuh, why is college getting expensive, healthcare getting expensive, day care getting expensive, hell even streaming services getting expensive, none of these are heavily restricted that no development is happening there. And in many cities breakneck construction activity is happening still real estate is getting very expensive. This seems rather simplistic reason to me.
- drdec 2y ago> why is college getting expensive Because of government subsidies. (If you were willing to pay $100k for college and the government will give you $50k, now the college can charge $150k. Yes that's simplistic but it's the crux.) > healthcare getting expensive Healthcare is doubly removed from price feedbacks - patients don't pay for doctors, insurance companies do. Patients don't even pay for insurance, employers do. Not too mention that the number of new doctors in the US is artificially constrained. > day care getting expensive can't help you on this one > streaming services getting expensive Streaming services started out undercutting cable prices. That's no longer necessary so the price is stabilizing. Plus now they are expected to produce their own content. Expecting everything to have the same root cause is unrealistic.
- wisty 2y agohttps://en.wikipedia.org/wiki/Baumol_effect https://en.wikipedia.org/wiki/Baumol_effect > In economics, the Baumol effect, also known as Baumol's cost disease, first described by William J. Baumol and William G. Bowen in the 1960s, is the tendency for wages in jobs that have experienced little or no increase in labor productivity to rise in response to rising wages in other jobs that did experience high productivity growth. Stuff that's made in China gets relatively cheap, so stuff that's not made in China gets relatively more expensive.
- 9rx 2y agoThat is because the internet is what largely has made real estate more valuable. In pre-internet times, people shared real estate. Bars, restaurants, church, etc. Their discretionary income went into the fees, offerings, etc. to make these places comfortable. With the rise of the internet, people started preferring to stay home to use the internet. All that discretionary income once spent on fuelling those third places is now competing for each own's individual domain, thus driving up the price where individuals are found. Two years of COVID exacerbated things because even those who still got out of the house from time to time were forced to stay home, so what remaining money was still funnelling out to activities outside of the home was entirely redirected into individual real estate.
- hug 2y agoThe pin that pokes a hole in this theory is that commercial rents, at least in my part of the world in an expensive city, have risen faster than residential. Presumably this wouldn’t be the case if those third places were in such rapid decline. Also, I’m pretty tightly involved in the local bar and hospitality scene, and most places are doing just fine — not quite pre-COVID levels at a number of places, but some are busier than ever.
- 9rx 2y ago> not quite pre-COVID levels at a number of places, but some are busier than ever. The real estate bubble, if we are to call it that, goes back to the early 2000s at least. Pre-COVID, implying somewhere around 2019, isn't telling. For what it is worth, the housing price data I have in front of me shows that prices have come back down to nearly pre-COVID levels as well, so that more or less tracks anyway. How does it compare to the 1990s? The landscape has definitely changed here. A couple of decades ago there were three busy bars mere steps from my place. Now, there isn't a single bar in town. Those closures brought consolidation to bars found in the next town over, which saw them thrive there, but now the decline is staring to become visible there too. The next, next town over is probably busier than ever as a result with even more consolidation slowly starting to take place, I can believe you there, but that doesn't imply general strength of the industry. The media regularly reports on the dying death of the third place. Your local experience may not be providing an accurate picture.
- neutronicus 2y agoIMO, the internet and residential real estate are complements, not substitutes. The less people leave their homes, the more they're inclined to pay for bigger, nicer ones.
- listenallyall 2y agoThe internet has actively _boosted_ real-estate prices. Real estate prices were suppressed pre-internet because transaction costs were high and there was nearly zero utility of an unoccupied space. Airbnb, easy and cheap travel, remote work, property management firms, remote surveillance and access control, etc. And also declining household sizes (many more people living alone) which is seemingly a result of internet/social media/mobile devices.
- znpy 2y agoCovid did that, just not in the way we thought. The thing is, the managerial class is pushing for a return to the office, trying to reinstate the former balance.
- bratwurst3000 2y agoyeah i think the internet is helping speculators to increase prices. I think they manipulate prices by using their market power to increase prices by asking high price for example online for 1/3 of their houses so price inflates. in my opinion is the same with every price augmentation in the last 20 years. The Internet helped make fake offers that drove price high. snd yes blablabla the invisible hand of the market… the invisible hand of the markt is if all speculators work for the same goal on a market with scarcity they dont compete. See prices of Art. its all fake
- adverbly 2y agoIt's shocking how often the answer to real estate issues is "land value tax would fix this!"
- deleted 2y ago[deleted]
- some_random 2y agoI'll bite, how would land value tax fix raves not being profitable enough to afford their venues? It seems to me like it make things worse.
- owisd 2y agoThe theory is that (a) the tax would be paid by the property owner and not the venue (it is assumed rent follows an econ 102 inelastic supply model) and (b) property would be less attractive as a store of wealth so prices would drop.
- CamperBob2 2y agoSeems like that would guarantee that only the most profitable uses of a given property would be contemplated by the owner.
- permo-w 2y agoexactly, so those people who own an old empty warehouse, a large basement, or whatever, now have a huge incentive to find uses for them. or they have to sell them which pushes prices down for everything
- CamperBob2 2y agoBut what good does it do to push prices down, if even more money has to be paid in taxes for as long as they own the property?
- 2y ago
- mrguyorama 2y agoMore like "How come the younger generations aren't doing <Fun thing>?" Because they can't afford it. Also my belief is that people don't do anything anymore because nobody gets really bored anymore. Boredom is a powerful motivator to make plans, set up clubs, find interests, meet people etc. Now you just swipe through instagram for a few minutes and boom, no more boredom.
- epolanski 2y agoI don't buy it. Going to a club is cheap, in most you only pay for drinks which a bit more expensive than in a pub, but it's not breaking the bank. Here in Italy you can go to a club and spend less than 10€s for the night if you don't have to eat. I'll say what the issue with clubs are: plenty of people never got there to have fun but to meet people and get laid. Now dating apps have removed the need for youth to go to clubs.
- BigGreenJorts 2y agoObviously we live in different places, but I finished uni in Canada not too long ago and going to the club during uni was expensive. There was often a cover, if you want drinks at the bar, they'll be like 10-15$ each, if you drink at home, it's much cheaper. So usually we'd pre and then make our way to the club. But often , we'd get a little too drunk/high at home or enjoy one another's company enough that we never made it to the bar! Or if the idea was to meet new people there were often house parties where they played music, people were dancing etc anyway, they were free, didn't require lining up/id checks and often enough we're close enough to where we lived that walking home would've been easy.
- SamBam 2y agoRight, but rave culture used to be the antithesis of cover prices and fancy drinks. Rave culture was very much the domain of the transient, the semi-homeless, the youth that had left their parents houses without much money. (Plus some trust-fund kids of course, but they really weren't the majority.) So "can't afford it" isn't an explanation for the decline in rave culture, even if it might be a reason kids don't go out to clubs today.
- tbrownaw 2y ago> It's shocking how often the answer to "How come X changed?" is either the creation of the internet or the cost of real estate. Why is it shocking? The Internet is the current Big Thing that's upending everything the way previous Big Things (steam engine, movable type, etc) did. And real estate prices are one of the central coordination mechanisms for arranging things in the physical world.
- brabel 2y agoWhen my mom was teen, she says the way they had the most fun was to go to dancing parties in people's houses and sometimes in some special venue for younger people. That was in the 60's. As I grew up in the 80's we had nothing like that, we just went to night clubs or some street full of bars/restaurants. Dancing was mostly a thing you did by yourself, like in most night clubs still these days, not like she describes, with "their faces touching" :D. It seems to me that every single generation changed and there needs not be an external reason for that other than young people wanting to do things the way they see fit, which normally is anything different from what their parents see as ideal.
- AtlasBarfed 2y agoBoomers basically pulled up the social ladder of fun when it wasn't convenient to them anymore. Technology combined with oligarchy is really leading to a demographic and social disaster. I think the iron placenta and designer babies are the only things that will prevent population collapse. Well, age extension will probably kick in too. It's a race between us killing the worlds biosphere and us fading away to nothingness right now. I think there's plenty of population momentum to kill off the planet
- ethbr1 2y agoImho, the internet / mobile apps have drastically atrophied younger generations' face-to-face social interaction skills. And specifically their appetite for the risk/discomfort that goes along with living in realtime physical moments with other people. Human beings are awkward as hell, but that's what laughter and tolerance are the bridges for.
- sitharus 2y agoThere’s an unspoken phrase here, it’s “in the way I think it should be done”. Just because the younger generation are doing things differently it doesn’t make them wrong, in my generation it was sending text messages that was wrong because we weren’t talking on the phone. Before that it was talking on the phone rather than going to people’s houses. I’ll also add what my psychologist told me. Social skills aren’t innate in humans, we have to be taught them. Smaller family sizes and greater distances from extended family mean these aren’t taught by older siblings/cousins/etc like the used to and parents aren’t filling the gap, which means standards of social interaction are changing much more rapidly.
- BriggyDwiggs42 2y agoSince people keep trying to draw the connection, I’ll try my hand. The Internet is the most recent technology that is enabled a small number of individuals to become vastly wealthy alongside, of course, a certain lax style of government. As wealth inequality increases, more of the money in the economy becomes tied up in wealthy people’s investments and savings, which inflates asset prices.