5 ms·

It's amazing to me how much expense comes out of fear. For example, one of the reasons why Manhattan real estate is so expensive is that people feel a need to

It's amazing to me how much expense comes out of fear. For example, one of the reasons why Manhattan real estate is so expensive is that people feel a need to live here in order to keep up their professional status. Not to limit their commutes, but because the really evil law and financial firms stop promoting you as soon as you move off the island. So they spend $5 million on a house, as opposed to, for example, not working for douchebags. Where this is worst in New York is in the private school industry. $40,000 per year is market now, and it starts in nursery school. On no data whatsoever, parents now spend half a million out of fear that if their kids go to public schools, they won't be able to get into the top colleges and get good jobs. New Yorkers, take note that people in the rest of the country think you're a giant douchebag if you spend $40,000 on a nursery school. The Bush years were awful for political reasons-- curtailment of civil liberties, illegal wars, disastrous morale-- but, economically, this past decade would actually be a fairly good time for the U.S. if the Satanic Trinity-- healthcare, housing, and tuition-- of costs were better controlled.

grecy 14y ago
> It's amazing to me how much expense comes out of fear. If you are amazed by that, I suggest you spend a chunk of time outside America. The rest of the world is not run by fear. I spent last week in America, and was amazed by how pervasive that culture is there.
- tlb 14y ago
  The distinction is unclear to me. What test can I apply when observing someone taking an action to determine whether or not they did it out of fear?
  - grecy 14y ago
    You can monitor the inputs to their decision making to see if fear is a factor. In the rest of the developed world the news, TV, radio and media in general do not talk of things that create fear. Advertising is not based on fear. People do not talk of losing their job. People do not talk of going bankrupt (or financial trouble) because of health care/university loans. People do not talk about home invasions or terrorist attacks like they are a real thing. In short, fear is not an input to the decision making process in developed countries. It is an extremely strong input in America.
    - dinkumthinkum 14y ago
      So people in France, Israel, UK do not talk about terrorism as if it's a real thing? Wow, interesting, did not know that. So, people in Greece don't ever have economic stresses? Interesting. There are some really great points here that have no basis in reality. :) This is just ridiculous. The vast majority of Americans do not live in Glenn Beck level paranoia but Europe is not immune to the same stress producers that exist in the U.S.
      - grecy 14y ago
        > The vast majority of Americans do not live in Glenn Beck level paranoia but Europe is not immune to the same stress producers that exist in the U.S. Are you speaking from your own experience, or just guessing? I just spent a week in America, and I was dumbfounded by the amount of fear the media generates, daily.
- webXL 14y ago
  It's a survival mechanism. The rest of the world is in denial.
  - grecy 14y ago
    survival from what?
rayiner 14y ago
I'm not sure that's the whole story. There are lots of reasons to live in Manhattan. Being able to walk or take a quick bus to work is one. Wanting to live in a modern building is another (although there are finally some coming up in Brooklyn). By far the overriding thing keeping Manhattan real estate prices high is housing regulation. Given the density of Manhattan, it should look like Hong Kong in terms of high rise construction. But instead, there are vast tracts of land below 96th street wasted on low-rise, pre-war apartments that have zero historical value (former tenement housing). As for schooling, I think it's about fear but I think you're incorrect about the subject of the fear. These days, basically the only kids left in public schools are the kids whose parents can't afford to send them somewhere else. High-income city dwellers do not want their kids going to school with recent immigrants, poor minorities, etc. It's ugly tribalism, but when it comes to housing and schooling choices it's a driving force.
- 001sky 14y ago
  By far the overriding thing keeping Manhattan real estate prices high is housing regulation. I'd argue it's actualy the proximity to wealth. Hamptons is not regulated, and look at their prices. Finance, Law, medicine, and Media are all either pyramid pay or actual legal monopoly businesses. The rest is made on inside information, that stems from access that wealth brings to political, academic, and philanthropic circles. Not that there is anything wrong with that, its just how the 'world works' in many ways. In any event, real estate is the ante to play the game. The proximity to power breeds value for two reasons: lust (in those who lack power) and practicalities (for those who have power, and want to keep it). Its worth noting that owning real-estate is about excluding other people from using it. High real estate prices force out competitors that migh otherwise use the assets to create a competing culture.
  - rayiner 14y ago
    That's a plausible explanation, but I'm not sure I totally buy it. Chicago is the #2 financial center in the country, arguably the #2 legal center, home to major pharma companies, and just chock full of old industrial money. Yet, real estate in the Northside is a lot cheaper than many cities that are far less dominated by finance/law/medicine money. Houston is full of oil and CEO money and is also quite cheap. What's the difference between Chicago/Houston and say Seattle? Wealth? Or housing regulation?
jupiterjaz 14y ago
The Satanic Trinity-- healthcare, housing, and tuition. 3 markets that are subject to massive government intervention and subsidization. Just saying.
plastic_tumblr 14y ago
Utter nonsense. I used to work for an "evil" financial firm in Manhattan and almost every executive I knew that had a family lived outside the city.
- michaelochurch 14y ago
  Not all financial firms are evil. Not all evil firms have that prejudice. However, there are evil firms that do.
melling 14y ago
Are you just making this up as you go? You're completely wrong. Getting in/out of Manhattan is painful from just about anywhere. It's usually a minimum of hour door to door. If you're working 10-12hr days, you'll pay for the easy subway commute. However, there are plenty of very successful people that do commute from NJ, CT, and Westchester. The solution to expensive Manhattan real estate is better mass transit. Imagine getting on a train 30 miles from the island and arriving at your office 30 minutes later. What kind or a miracle would this take?
- michaelochurch 14y ago
  There's no doubt that the commute is hellish, but the people who can afford to buy housing in Manhattan are not working 10+ hour days. The IBD analysts and associates are bidding up rents, for sure, but price-rent ratios are ridiculous (35+ years) and they have no part in that. The solution to expensive Manhattan real estate is better mass transit. That would be a huge win.

grecy 14y ago

> It's amazing to me how much expense comes out of fear. If you are amazed by that, I suggest you spend a chunk of time outside America. The rest of the world is not run by fear. I spent last week in America, and was amazed by how pervasive that culture is there.

tlb 14y ago
The distinction is unclear to me. What test can I apply when observing someone taking an action to determine whether or not they did it out of fear?
- grecy 14y ago
  You can monitor the inputs to their decision making to see if fear is a factor. In the rest of the developed world the news, TV, radio and media in general do not talk of things that create fear. Advertising is not based on fear. People do not talk of losing their job. People do not talk of going bankrupt (or financial trouble) because of health care/university loans. People do not talk about home invasions or terrorist attacks like they are a real thing. In short, fear is not an input to the decision making process in developed countries. It is an extremely strong input in America.
  - dinkumthinkum 14y ago
    So people in France, Israel, UK do not talk about terrorism as if it's a real thing? Wow, interesting, did not know that. So, people in Greece don't ever have economic stresses? Interesting. There are some really great points here that have no basis in reality. :) This is just ridiculous. The vast majority of Americans do not live in Glenn Beck level paranoia but Europe is not immune to the same stress producers that exist in the U.S.
    - grecy 14y ago
      > The vast majority of Americans do not live in Glenn Beck level paranoia but Europe is not immune to the same stress producers that exist in the U.S. Are you speaking from your own experience, or just guessing? I just spent a week in America, and I was dumbfounded by the amount of fear the media generates, daily.
webXL 14y ago
It's a survival mechanism. The rest of the world is in denial.
- grecy 14y ago
  survival from what?

rayiner 14y ago

I'm not sure that's the whole story. There are lots of reasons to live in Manhattan. Being able to walk or take a quick bus to work is one. Wanting to live in a modern building is another (although there are finally some coming up in Brooklyn). By far the overriding thing keeping Manhattan real estate prices high is housing regulation. Given the density of Manhattan, it should look like Hong Kong in terms of high rise construction. But instead, there are vast tracts of land below 96th street wasted on low-rise, pre-war apartments that have zero historical value (former tenement housing). As for schooling, I think it's about fear but I think you're incorrect about the subject of the fear. These days, basically the only kids left in public schools are the kids whose parents can't afford to send them somewhere else. High-income city dwellers do not want their kids going to school with recent immigrants, poor minorities, etc. It's ugly tribalism, but when it comes to housing and schooling choices it's a driving force.

001sky 14y ago
By far the overriding thing keeping Manhattan real estate prices high is housing regulation. I'd argue it's actualy the proximity to wealth. Hamptons is not regulated, and look at their prices. Finance, Law, medicine, and Media are all either pyramid pay or actual legal monopoly businesses. The rest is made on inside information, that stems from access that wealth brings to political, academic, and philanthropic circles. Not that there is anything wrong with that, its just how the 'world works' in many ways. In any event, real estate is the ante to play the game. The proximity to power breeds value for two reasons: lust (in those who lack power) and practicalities (for those who have power, and want to keep it). Its worth noting that owning real-estate is about excluding other people from using it. High real estate prices force out competitors that migh otherwise use the assets to create a competing culture.
- rayiner 14y ago
  That's a plausible explanation, but I'm not sure I totally buy it. Chicago is the #2 financial center in the country, arguably the #2 legal center, home to major pharma companies, and just chock full of old industrial money. Yet, real estate in the Northside is a lot cheaper than many cities that are far less dominated by finance/law/medicine money. Houston is full of oil and CEO money and is also quite cheap. What's the difference between Chicago/Houston and say Seattle? Wealth? Or housing regulation?

jupiterjaz 14y ago

The Satanic Trinity-- healthcare, housing, and tuition. 3 markets that are subject to massive government intervention and subsidization. Just saying.

plastic_tumblr 14y ago

Utter nonsense. I used to work for an "evil" financial firm in Manhattan and almost every executive I knew that had a family lived outside the city.

michaelochurch 14y ago
Not all financial firms are evil. Not all evil firms have that prejudice. However, there are evil firms that do.

melling 14y ago

Are you just making this up as you go? You're completely wrong. Getting in/out of Manhattan is painful from just about anywhere. It's usually a minimum of hour door to door. If you're working 10-12hr days, you'll pay for the easy subway commute. However, there are plenty of very successful people that do commute from NJ, CT, and Westchester. The solution to expensive Manhattan real estate is better mass transit. Imagine getting on a train 30 miles from the island and arriving at your office 30 minutes later. What kind or a miracle would this take?

michaelochurch 14y ago
There's no doubt that the commute is hellish, but the people who can afford to buy housing in Manhattan are not working 10+ hour days. The IBD analysts and associates are bidding up rents, for sure, but price-rent ratios are ridiculous (35+ years) and they have no part in that. The solution to expensive Manhattan real estate is better mass transit. That would be a huge win.