4 ms·

Fluctuations in property values, and thus rents, are driven by Federal Reserve policy. These problems are created in Washington and real estate lobbying is mo

Fluctuations in property values, and thus rents, are driven by Federal Reserve policy. These problems are created in Washington and real estate lobbying is more to blame. That lobby has promoted, and our leaders have accepted, the notion that recoveries are led by the housing market. They believe consumption, not production, is the source of prosperity. Its all designed, they say, to help the little people. But its the little people that are abused the most by these policies. Yes, asset prices and thus rents ought to be stable and increase in a predictable way. These rapid rent increases compel people to buy (assuming they can), only to set them up for the next crash in real estate prices. Overall, we don't benefit from these bubbles. Some get lucky for owning when they start and others get unlucky for owning when they collapse. But those charging 6% on every transaction profit more when people buy and sell more. And bubbles are great for causing lots of transactions.

dragontamer 13y ago
What the hell does Washington have to do with local zoning laws? San Francisco is a densely populated city with very little land. However, buildings taller than 4-stories are outlawed. If a couple of 20+ floor apartment complexes are built, you can be rest assured that the more typical / mundane housing will become available for the rest of the citizens. SF needs more housing, period. Local laws are what is screwing the pooch on this one.
- stretchwithme 13y ago
  Its things like QE2 that are creating demand for real estate. The tech boom is driven by venture capital, which is driven by cheap money. And real estate is financed by it as well. Making it easier to build would help too, of course. But building HAS been going on. Isn't Rincon Hill 50 stories tall? Did zoning prevent it?
  - cromwellian 13y ago
    The techboom was happening long before QE2, QE1, or the 2008 crisis. In case you haven't noticed, Google's been around since 1998, founded near the tail end of the previous tech boom. They didn't suddenly hire all of these Googlers in 2008, Twitter, Apple, Facebook, Amazon, etc have been hiring like crazy for a long time. I dunno, call me crazy, but maybe this time, it's time to let go of the libertarian 'gubmint did it' angle and admit that natural booms exist.
    - stretchwithme 13y ago
      Natural booms do exist. Technology booms do occur. I'm not arguing that they don't. What I argue is that expansion of the money supply exaggerates unnecessarily and causes other damaging distortions. Government is the use of force. It makes sense that it is sometimes damaging to distort economic choices. Moreover, there is little proof that all the interference has any benefit. Usually, they benefit a tiny group of well-connected individuals, with the rest of us paying the costs.
      - cromwellian 13y ago
        Well, another way of looking at the excesses of the market is that the rest of the world had a glut of savings, while America had a huge trade deficit and a lack of saving, so this naturally dictates a capital account surplus/net capital inflow. People in Europe and Asia have to put their money somewhere, and if the US is generating higher returns for less risk, they're going to go there, for either safety or opportunity. So if you have a huge influx of funds hungry for American assets, it is no surprise you see asset price inflation, as well as cheap, easy money. You could argue that perhaps, if it weren't for the fact that the US dollar is the world's reserve currency, we wouldn't be able to print dollars and run a trade deficit, and foreigners would never be storing up huge amounts of dollars to reinvest or loan to the US, but you could just as easily argue that raising taxes would increase national savings and reduce the trade deficit.
        stretchwithme 13y ago
        Yes, there is a net capital inflow. If you're building a lot of oversized houses and financing a trillion dollar annual budget, you need to import everybody else's savings. I don't think financing these unsustainable things will be a good investment in the long run.
  - dragontamer 13y ago
    Zoning is preventing any tall buildings from getting built wherever this map is yellow. http://i.imgur.com/Tn7CSTX.jpg http://i.imgur.com/Tn7CSTX.jpg So yeah... methinks the problem here is the local government's poor zoning laws.
Bluestrike2 13y ago
I see that all you have is a hammer (re: Federal Reserve paranoia), and every problem looks awfully like a nail. There are legitimate, well-developed arguments against specific Fed policies that can, and are, debated in economic circles. This mismatch of paranoid delusion isn't one of them. Even if I were to charitably grant your thesis for the sake of debate, the effects of Fed policy on rent wouldn't be isolated to just one city in one state. San Francisco's rents have seen a roughly three-fold increase over the national average the past this last December alone. Were the problem "Washington," this wouldn't be the case.
- stretchwithme 13y ago
  Whatever is already rising when the Fed is inflating gets the most bubbly. Sectors that have been dropping don't attract speculators as readily. Tech has been rising and is dominate in this area of the country. Its also a good place to buy if your trying to move wealth out of China. A lot of other places in the US are less appealing to both tech and to Asia. The activities of the Fed are not the only relevant factor. San Francisco is a tight space and its a great place to be. These are pre-existing conditions that make it more susceptible to the effects of asset inflation.

dragontamer 13y ago

What the hell does Washington have to do with local zoning laws? San Francisco is a densely populated city with very little land. However, buildings taller than 4-stories are outlawed. If a couple of 20+ floor apartment complexes are built, you can be rest assured that the more typical / mundane housing will become available for the rest of the citizens. SF needs more housing, period. Local laws are what is screwing the pooch on this one.

stretchwithme 13y ago
Its things like QE2 that are creating demand for real estate. The tech boom is driven by venture capital, which is driven by cheap money. And real estate is financed by it as well. Making it easier to build would help too, of course. But building HAS been going on. Isn't Rincon Hill 50 stories tall? Did zoning prevent it?
- cromwellian 13y ago
  The techboom was happening long before QE2, QE1, or the 2008 crisis. In case you haven't noticed, Google's been around since 1998, founded near the tail end of the previous tech boom. They didn't suddenly hire all of these Googlers in 2008, Twitter, Apple, Facebook, Amazon, etc have been hiring like crazy for a long time. I dunno, call me crazy, but maybe this time, it's time to let go of the libertarian 'gubmint did it' angle and admit that natural booms exist.
  - stretchwithme 13y ago
    Natural booms do exist. Technology booms do occur. I'm not arguing that they don't. What I argue is that expansion of the money supply exaggerates unnecessarily and causes other damaging distortions. Government is the use of force. It makes sense that it is sometimes damaging to distort economic choices. Moreover, there is little proof that all the interference has any benefit. Usually, they benefit a tiny group of well-connected individuals, with the rest of us paying the costs.
    - cromwellian 13y ago
      Well, another way of looking at the excesses of the market is that the rest of the world had a glut of savings, while America had a huge trade deficit and a lack of saving, so this naturally dictates a capital account surplus/net capital inflow. People in Europe and Asia have to put their money somewhere, and if the US is generating higher returns for less risk, they're going to go there, for either safety or opportunity. So if you have a huge influx of funds hungry for American assets, it is no surprise you see asset price inflation, as well as cheap, easy money. You could argue that perhaps, if it weren't for the fact that the US dollar is the world's reserve currency, we wouldn't be able to print dollars and run a trade deficit, and foreigners would never be storing up huge amounts of dollars to reinvest or loan to the US, but you could just as easily argue that raising taxes would increase national savings and reduce the trade deficit.
      - stretchwithme 13y ago
        Yes, there is a net capital inflow. If you're building a lot of oversized houses and financing a trillion dollar annual budget, you need to import everybody else's savings. I don't think financing these unsustainable things will be a good investment in the long run.
- dragontamer 13y ago
  Zoning is preventing any tall buildings from getting built wherever this map is yellow. http://i.imgur.com/Tn7CSTX.jpg http://i.imgur.com/Tn7CSTX.jpg So yeah... methinks the problem here is the local government's poor zoning laws.

Bluestrike2 13y ago

I see that all you have is a hammer (re: Federal Reserve paranoia), and every problem looks awfully like a nail. There are legitimate, well-developed arguments against specific Fed policies that can, and are, debated in economic circles. This mismatch of paranoid delusion isn't one of them. Even if I were to charitably grant your thesis for the sake of debate, the effects of Fed policy on rent wouldn't be isolated to just one city in one state. San Francisco's rents have seen a roughly three-fold increase over the national average the past this last December alone. Were the problem "Washington," this wouldn't be the case.

stretchwithme 13y ago
Whatever is already rising when the Fed is inflating gets the most bubbly. Sectors that have been dropping don't attract speculators as readily. Tech has been rising and is dominate in this area of the country. Its also a good place to buy if your trying to move wealth out of China. A lot of other places in the US are less appealing to both tech and to Asia. The activities of the Fed are not the only relevant factor. San Francisco is a tight space and its a great place to be. These are pre-existing conditions that make it more susceptible to the effects of asset inflation.