Desperate NYC Tenants Are Waging Bidding Wars, As Rental Demand Surges
October 15, 2021 10:17 AM Subscribe
“There's a sense of urgency and desperation that I’ve never seen before." At least 70 prospective tenants wrapped around an Upper East Side building earlier this month, financial documents in hand, shouting numbers at a real estate agent as if at an auction. A few blocks uptown, another broker fielded close to a dozen offers above asking price on a fourth floor walk-up. In Prospect Heights, a two-bedroom, originally listed for $3,750 per month, leased for $4,500.
Janna Raskopf, a rental agent at Douglas Elliman, said she’d never rented an apartment to a tenant for more than it was listed. Since Labor Day, she said, more than half of the units she’d leased were being bid up, often as much as 20% more than their asking price.
People, stop bidding up. Stop it! Staaaaaaaaaaahp!
seriously why stop it
posted by OnTheLastCastle at 10:33 AM on October 15, 2021 [7 favorites]
seriously why stop it
posted by OnTheLastCastle at 10:33 AM on October 15, 2021 [7 favorites]
Yup, this happened to us multiple times during our apartment search in Brooklyn this spring. Absolutely bananas.
posted by thejoshu at 10:39 AM on October 15, 2021 [1 favorite]
posted by thejoshu at 10:39 AM on October 15, 2021 [1 favorite]
I know salaries are higher in major cities, but I can’t imagine rents like this . You’d have to make like $300,000 a year to afford it!
posted by freecellwizard at 10:44 AM on October 15, 2021 [5 favorites]
posted by freecellwizard at 10:44 AM on October 15, 2021 [5 favorites]
Something that was eye-opening for me was when someone pointed out that landlords don't exist to provide housing, they exist to limit it (same is true for health insurance/healthcare). I understand why in this shitty situation individuals would bid up apartments because they need/want somewhere to live, but it fucking sucks and the way we handle housing is a travesty. The article says that "Many of those offers came from people who had lost out on other apartments" which makes perfect sense, of course that means you're desperate, and it's gross to see how landlords are preying on that desperation. Yes, I know that's what landlords do and that's how the system works*, which is why I think it's a bullshit system.
*Not necessarily on Metafilter but I feel like whenever I see people on Twitter and similar talking about how stuff like this is shitty you get responses that are effectively "that's capitalism, landlords gonna landlord, if you don't like it sucks for you" and yet these are often the same people who get mad when you suggest that the system is flawed and perhaps we should replace it.
posted by an octopus IRL at 10:46 AM on October 15, 2021 [28 favorites]
*Not necessarily on Metafilter but I feel like whenever I see people on Twitter and similar talking about how stuff like this is shitty you get responses that are effectively "that's capitalism, landlords gonna landlord, if you don't like it sucks for you" and yet these are often the same people who get mad when you suggest that the system is flawed and perhaps we should replace it.
posted by an octopus IRL at 10:46 AM on October 15, 2021 [28 favorites]
And all of this for what is essentially no better than snagging a spot to park your shit at at the airport. For the amount ive paid in rent I should own this place by now but I'm not allowed to own because I have no money because I paid it all in rent which makes me unworthy to own. It's no good.
posted by bleep at 10:51 AM on October 15, 2021 [31 favorites]
posted by bleep at 10:51 AM on October 15, 2021 [31 favorites]
So the reason I moved in July was because I had to - my original landlord of 15 years sold his building, and the new landlord told us all 2 weeks later that he was not renewing our leases. Instead we could "start over" with a new lease with him, with the rent at "something closer to market value". He didn't say anything about whether we would be getting any kind of capital improvements as part of the deal, and my roommate and I couldn't afford the new rent he quoted anyway, so we bailed, for a space that is technically smaller, but not by as much as I'd thought on first blush. It's technically cheaper than the last place was, but I think my just having gotten a raise had something to do with the landlord accepting that (plus a realtor who took the thing off the market 20 minutes after we looked at it and expressed our interest).
I think both of these things had something to do with the rental market right now, and I'm not sure whether this makes us lucky or unlucky.
posted by EmpressCallipygos at 10:53 AM on October 15, 2021 [3 favorites]
I think both of these things had something to do with the rental market right now, and I'm not sure whether this makes us lucky or unlucky.
posted by EmpressCallipygos at 10:53 AM on October 15, 2021 [3 favorites]
"The Real Estate Board of New York defended landlords and brokers who encouraged bidding wars, which they blamed on the city’s failure to add more housing." haha such bullshit. Like if the city, or any city, started building a ton of slightly-below market-rate housing they wouldn't be bellowing in protest.
posted by Maude_the_destroyer at 10:55 AM on October 15, 2021 [24 favorites]
posted by Maude_the_destroyer at 10:55 AM on October 15, 2021 [24 favorites]
Why is my BS Meter reading so high on this and other property issues? But a short while ago there were landlords desperate to rent out the glut of apartments available due to the high number of people leaving NYC. A look at the classifieds from many of the papers going back only a very short period of time shows the numbers of rentals available. The number of people returning is nowhere near that of pre-Covid occupancy - witnessed by desperate small business owners of bodegas/coffee shops and so on having low/no income. I suspect large numbers of buy-to-rent owners are seriously in the hole with their mortgages and need a quick injection of income to recoup their losses. A story such as this is prime bait for panic inducing bidding. The cynic in me has taken on a new approach to many of these tales. Retailers sounding alarm bells re Christmas deliveries etc are equally to blame for people becoming 'alarmed', rushing out and buying up ridiculous amounts of [insert product here] in the fear they may miss out. Are we to believe that such a large number of truck drivers quick their jobs in such great numbers that there is a critical shortage of drivers? I am not buying it.
It is equally sad that the frailties of the 'supply chain' appear to be such that a dependency upon JIT (just in time) delivery by manufacturers and retailers has no Plan B... apparently.
posted by IndelibleUnderpants at 11:03 AM on October 15, 2021 [23 favorites]
It is equally sad that the frailties of the 'supply chain' appear to be such that a dependency upon JIT (just in time) delivery by manufacturers and retailers has no Plan B... apparently.
posted by IndelibleUnderpants at 11:03 AM on October 15, 2021 [23 favorites]
I'm about to get plunged into this right now
It's insane, I moved the sliders $500 above budget on Streeteasy just to see what was available and there's nothing
It's worse than 2019, which makes no sense
posted by airmail at 11:04 AM on October 15, 2021 [3 favorites]
It's insane, I moved the sliders $500 above budget on Streeteasy just to see what was available and there's nothing
It's worse than 2019, which makes no sense
posted by airmail at 11:04 AM on October 15, 2021 [3 favorites]
Just another reminder that rents are not driven by landlords' cost + "reasonable" profit, but whatever they can extract from you.
posted by praemunire at 11:16 AM on October 15, 2021 [20 favorites]
posted by praemunire at 11:16 AM on October 15, 2021 [20 favorites]
(Which, btw, poses a big problem for any UBI scheme.)
posted by praemunire at 11:16 AM on October 15, 2021 [21 favorites]
posted by praemunire at 11:16 AM on October 15, 2021 [21 favorites]
Yeah, UBI needs to be accompanied by massive nationalization of large-format rental properties or it's just pouring buckets of money into the pockets of the REITs.
posted by seanmpuckett at 11:25 AM on October 15, 2021 [14 favorites]
posted by seanmpuckett at 11:25 AM on October 15, 2021 [14 favorites]
My "something terrible has been developed" sense is tingling. Anyone heard anything about a Blackrock-like entity snatching up rentals?
posted by Slackermagee at 11:25 AM on October 15, 2021 [3 favorites]
posted by Slackermagee at 11:25 AM on October 15, 2021 [3 favorites]
This is what inflation looks like. We talk about it as percents, how it's been 2% for so long and 5% suddenly. But in practice it's random big jumps in prices of things, particularly things with scarcity like real estate in a desirable location.
The US has had 30 years of low inflation. 40 since the big inflation shock around 1980. More than a generation has no experience of things costing significantly more every year.
The experts are all saying this inflationary shock is temporary, a combination of monetary stimulus and (for most goods and services) a temporarily limited supply. I sure hope so.
Modern monetary theory may start looking real dated in a few years.
posted by Nelson at 11:25 AM on October 15, 2021 [6 favorites]
The US has had 30 years of low inflation. 40 since the big inflation shock around 1980. More than a generation has no experience of things costing significantly more every year.
The experts are all saying this inflationary shock is temporary, a combination of monetary stimulus and (for most goods and services) a temporarily limited supply. I sure hope so.
Modern monetary theory may start looking real dated in a few years.
posted by Nelson at 11:25 AM on October 15, 2021 [6 favorites]
I've decided that owning residential property and not living in it should be illegal. If you want to rent out a room in your house, that's fine. If you want to buy a whole apartment building, live in one apartment, and collect money from other residents in exchange for your services as superintendent, that's okay too. But what we've got now? It's theft, plain and simple.
posted by Faint of Butt at 11:33 AM on October 15, 2021 [24 favorites]
posted by Faint of Butt at 11:33 AM on October 15, 2021 [24 favorites]
"Theft" is a strange word for "how property ownership has worked in most of the world for centuries".
posted by Nelson at 11:36 AM on October 15, 2021 [11 favorites]
posted by Nelson at 11:36 AM on October 15, 2021 [11 favorites]
You’d have to make like $300,000 a year to afford it!
Sharing a $4000/mo two-bedroom means each person pays $24,000/year. If you're a single, childless professional, it's completely feasible, though it reduces the amount you have to spend on all the other expensive stuff available in NYC. (It's a lot harder if you have student loans or kids; a lot easier if you are being subsidized by the bank of mom and dad.)
posted by Mr.Know-it-some at 11:37 AM on October 15, 2021 [3 favorites]
Sharing a $4000/mo two-bedroom means each person pays $24,000/year. If you're a single, childless professional, it's completely feasible, though it reduces the amount you have to spend on all the other expensive stuff available in NYC. (It's a lot harder if you have student loans or kids; a lot easier if you are being subsidized by the bank of mom and dad.)
posted by Mr.Know-it-some at 11:37 AM on October 15, 2021 [3 favorites]
Anyone heard anything about a Blackrock-like entity snatching up rentals?
I don't know about Blackrock exactly, but I know someone who just this summer offered much, much more for a house than the seller was asking, only to be out-bid by an out-of-state investor.
And the rise in rental costs proportional to local cost-of-living is happening in my much smaller city, too. It's ridiculous out there.
posted by a Rrose by any other name at 11:41 AM on October 15, 2021
I don't know about Blackrock exactly, but I know someone who just this summer offered much, much more for a house than the seller was asking, only to be out-bid by an out-of-state investor.
And the rise in rental costs proportional to local cost-of-living is happening in my much smaller city, too. It's ridiculous out there.
posted by a Rrose by any other name at 11:41 AM on October 15, 2021
"Theft" is a strange word for "how property ownership has worked in most of the world for centuries".
and yet if the shoe fits....
posted by We put our faith in Blast Hardcheese at 11:47 AM on October 15, 2021 [15 favorites]
and yet if the shoe fits....
posted by We put our faith in Blast Hardcheese at 11:47 AM on October 15, 2021 [15 favorites]
Just another reminder that rents are not driven by landlords' cost + "reasonable" profit, but whatever they can extract from you.
If rents exceeds costs plus a reasonable profit, someone will come in and build more housing to make a profit. That doesn't work so well if there are limits to building, such as on a crowded island with laws and other practical limitations that make it expensive to build new housing.
posted by Mr.Know-it-some at 11:49 AM on October 15, 2021
If rents exceeds costs plus a reasonable profit, someone will come in and build more housing to make a profit. That doesn't work so well if there are limits to building, such as on a crowded island with laws and other practical limitations that make it expensive to build new housing.
posted by Mr.Know-it-some at 11:49 AM on October 15, 2021
> I know salaries are higher in major cities, but I can’t imagine rents like this . You’d have to make like $300,000 a year to afford it!
It boggles my mind that someone would pay that much in rent. You can get a (nearly) $1,000,000 mortgage for a similar monthly payment!
posted by TurnKey at 11:55 AM on October 15, 2021
It boggles my mind that someone would pay that much in rent. You can get a (nearly) $1,000,000 mortgage for a similar monthly payment!
posted by TurnKey at 11:55 AM on October 15, 2021
It boggles my mind that someone would pay that much in rent. You can get a (nearly) $1,000,000 mortgage for a similar monthly payment!
IF you have a 20% downpayment for the thing you're trying to buy. Many people don't. (The people in my old building also looked into buying it from our old landlord instead - and while I could easily have afforded the mortgage payment, I would have had to take out a personal loan for the downpayment, and the repayment for that would have cost me MORE than the mortgage.)
posted by EmpressCallipygos at 12:00 PM on October 15, 2021 [16 favorites]
IF you have a 20% downpayment for the thing you're trying to buy. Many people don't. (The people in my old building also looked into buying it from our old landlord instead - and while I could easily have afforded the mortgage payment, I would have had to take out a personal loan for the downpayment, and the repayment for that would have cost me MORE than the mortgage.)
posted by EmpressCallipygos at 12:00 PM on October 15, 2021 [16 favorites]
"Theft" is a strange word for "how property ownership has worked in most of the world for centuries".
Ya sure that's right, for centuries, theft - why hard to wrap your head around
posted by windbox at 12:01 PM on October 15, 2021 [8 favorites]
Ya sure that's right, for centuries, theft - why hard to wrap your head around
posted by windbox at 12:01 PM on October 15, 2021 [8 favorites]
It boggles my mind that someone would pay that much in rent. You can get a (nearly) $1,000,000 mortgage for a similar monthly payment!
Sure if somehow you can save up the ENORMOUS down payment needed to get that monthly payment on a 1,000,000 mortgage, so either you can:
-Make a TON more than 300K per year
-Live for free for ???? years?
-Get a big old present from the bank of Mom & Dad
-Get "lucky" when a well-insured or wealthy relative dies?? or
Just keep renting forever.
posted by We put our faith in Blast Hardcheese at 12:03 PM on October 15, 2021 [8 favorites]
Sure if somehow you can save up the ENORMOUS down payment needed to get that monthly payment on a 1,000,000 mortgage, so either you can:
-Make a TON more than 300K per year
-Live for free for ???? years?
-Get a big old present from the bank of Mom & Dad
-Get "lucky" when a well-insured or wealthy relative dies?? or
Just keep renting forever.
posted by We put our faith in Blast Hardcheese at 12:03 PM on October 15, 2021 [8 favorites]
News like this makes me ever more glad that I was able to buy a place at the bottom of the market.
I do think the points are well made that these absurd rental rates seem to be for the most desirable neighborhoods. I'm still seeing places for rent in Yorkville and Manhattan Valley below $2,000, Inwood and Bay Ridge below $1,500, and so on. You just can't expect those prices in Park Slope and Chelsea. So many of these stories have the nature of, "I came to New York City with my heart set on some of the most desirable neighborhoods in the City and can't believe the prices are so high!" No kidding. I get that, but there are plenty of affordable rentals in, say, East Harlem. When I first moved to NYC many years ago, I got a place in Manhattan Valley directly across the street from a project. Because that's the kind of block I could afford to live on. And I continued to live there for many, many, many years.
posted by slkinsey at 12:06 PM on October 15, 2021 [5 favorites]
I do think the points are well made that these absurd rental rates seem to be for the most desirable neighborhoods. I'm still seeing places for rent in Yorkville and Manhattan Valley below $2,000, Inwood and Bay Ridge below $1,500, and so on. You just can't expect those prices in Park Slope and Chelsea. So many of these stories have the nature of, "I came to New York City with my heart set on some of the most desirable neighborhoods in the City and can't believe the prices are so high!" No kidding. I get that, but there are plenty of affordable rentals in, say, East Harlem. When I first moved to NYC many years ago, I got a place in Manhattan Valley directly across the street from a project. Because that's the kind of block I could afford to live on. And I continued to live there for many, many, many years.
posted by slkinsey at 12:06 PM on October 15, 2021 [5 favorites]
Modern monetary theory may start looking real dated in a few years.
Modern Monetary Theory is actually a great framework for understanding the current system.
The core prediction of Modern Monetary Theory is that you can pump money into the economy until you max out your production capacity and then you cause inflation.
As a number of news articles on the current shortages have pointed out, our present situation is one where a lot of people cut production capacity bracing for a pandemic induced recession that never really came.
All these captains of industry, after buying into neoliberalism and supply demand-side economics for many years have forgotten that demand-side economics - i.e. giving a bunch of money to broke people who are liable to spend it - works really, really well at stimulating the economy. And so we have inflation because people chose to reduce production capacity at a time government stimulus was increasing money supply.
Of course, the prescribed remedy for this is to remove money from the parts of the economy where it's doing the least good, likely via taxation. Now would be a very great time to, say, start taxing real estate speculators who aren't offering low cost housing and are probably making bank right now. Not that I have much faith our politicians would take such a step.
posted by Zalzidrax at 12:09 PM on October 15, 2021 [29 favorites]
Modern Monetary Theory is actually a great framework for understanding the current system.
The core prediction of Modern Monetary Theory is that you can pump money into the economy until you max out your production capacity and then you cause inflation.
As a number of news articles on the current shortages have pointed out, our present situation is one where a lot of people cut production capacity bracing for a pandemic induced recession that never really came.
All these captains of industry, after buying into neoliberalism and supply demand-side economics for many years have forgotten that demand-side economics - i.e. giving a bunch of money to broke people who are liable to spend it - works really, really well at stimulating the economy. And so we have inflation because people chose to reduce production capacity at a time government stimulus was increasing money supply.
Of course, the prescribed remedy for this is to remove money from the parts of the economy where it's doing the least good, likely via taxation. Now would be a very great time to, say, start taxing real estate speculators who aren't offering low cost housing and are probably making bank right now. Not that I have much faith our politicians would take such a step.
posted by Zalzidrax at 12:09 PM on October 15, 2021 [29 favorites]
Airmail, check your memail!
posted by EmpressCallipygos at 12:11 PM on October 15, 2021
posted by EmpressCallipygos at 12:11 PM on October 15, 2021
Yeah, buried deep in the article is one key line: "We're seeing very specific types of apartments that consumers are fighting over.” This is coverage of a small segment of the market presented as if it represents the whole.
posted by anhedonic at 12:12 PM on October 15, 2021 [9 favorites]
posted by anhedonic at 12:12 PM on October 15, 2021 [9 favorites]
You can get a (nearly) $1,000,000 mortgage for a similar monthly payment!
You'd need to put down probably $200,000 and you'd have around $40,000 in closing costs. Then figure the interest + principal payment on the mortgage will be around $3,400 a month, plus let's say $1,000 in common charges, plus around $600 for tax and $60 for insurance. You're staring down the barrel of $240,000 lighter in the pockets and a monthly nut of over $5,000. And we haven't even mentioned whether you might get assessed for Local Law 11 work, etc.
posted by slkinsey at 12:20 PM on October 15, 2021 [6 favorites]
You'd need to put down probably $200,000 and you'd have around $40,000 in closing costs. Then figure the interest + principal payment on the mortgage will be around $3,400 a month, plus let's say $1,000 in common charges, plus around $600 for tax and $60 for insurance. You're staring down the barrel of $240,000 lighter in the pockets and a monthly nut of over $5,000. And we haven't even mentioned whether you might get assessed for Local Law 11 work, etc.
posted by slkinsey at 12:20 PM on October 15, 2021 [6 favorites]
The experts are all saying this inflationary shock is temporary
That's what they said during the OPEC energy crisis of 1979, 'temporary' might be five years.
posted by Lanark at 12:22 PM on October 15, 2021 [1 favorite]
That's what they said during the OPEC energy crisis of 1979, 'temporary' might be five years.
posted by Lanark at 12:22 PM on October 15, 2021 [1 favorite]
Exactly. The tax breaks you get for owning a place and renting it out make going that avenue hilariously low-cost and low-tax to the point that I've occasionally considered buying something and renting it out as a lower-tax investment alternative to e.g. an IRA. It's bizarre, it's almost money laundering and it's perfectly legal.
As someone who has so much money locked up in a single condo in the Bay Area (not entirely by choice, we kept our old condo so we would have exposure to the CA property market when we came back) I would advise against this. REITs have all sorts of tricks to lower their burdens and get treated as companies or partnerships. Upper middle class petty bourgeoise like us get to pay our marginal income tax rates on rental income, pay both halves of the social security if you're not at cap which further screws middle income people, and we can only carry losses forward at $3,000/year.
This, FYI, is why Warren Buffet pays half our actual tax rate and it's fucking infuriating.
posted by Your Childhood Pet Rock at 12:24 PM on October 15, 2021 [5 favorites]
As someone who has so much money locked up in a single condo in the Bay Area (not entirely by choice, we kept our old condo so we would have exposure to the CA property market when we came back) I would advise against this. REITs have all sorts of tricks to lower their burdens and get treated as companies or partnerships. Upper middle class petty bourgeoise like us get to pay our marginal income tax rates on rental income, pay both halves of the social security if you're not at cap which further screws middle income people, and we can only carry losses forward at $3,000/year.
This, FYI, is why Warren Buffet pays half our actual tax rate and it's fucking infuriating.
posted by Your Childhood Pet Rock at 12:24 PM on October 15, 2021 [5 favorites]
I feel like those that stayed here for the entire pandemic should get some sort of coupon good for a permanent discount on rent or at the very least allows you to bypass all of the chaos described above -- as someone considering moving now after staying put the entire pandemic (the idea of touring places and moving at that time did not sound wise despite the incentives), it is pretty disheartening to see this sort of thing going on. I looked at a place this past weekend where the owner's broker sent out an email saying people could offer more in rent or to pay the owner's broker fee if they wanted or both (AHHH!!!) -- so it is definitely happening.
(...and if anyone knows of any affordable 2BRs without the insanity please let me know!)
posted by This_Will_Be_Good at 12:32 PM on October 15, 2021 [5 favorites]
(...and if anyone knows of any affordable 2BRs without the insanity please let me know!)
posted by This_Will_Be_Good at 12:32 PM on October 15, 2021 [5 favorites]
For renting, or buying, housing or - anything - if you list it at a particular price, you should be obliged to accept an offer at that price (or lower), or not accept an offer at all. If a grocery store tried to operate like this - "yeah we know we the sticker says $3.99 but now you're at the register, the price has gone up" - it would be a crime, at least in some countries. Why is housing any different?
posted by buxtonbluecat at 12:50 PM on October 15, 2021 [5 favorites]
posted by buxtonbluecat at 12:50 PM on October 15, 2021 [5 favorites]
I feel like those that stayed here for the entire pandemic should get some sort of coupon good for a permanent discount on rent or at the very least allows you to bypass all of the chaos described above -
Or a stipend. Or at least a tiara!
(Joking, but not really...)
If rents exceeds costs plus a reasonable profit, someone will come in and build more housing to make a profit. That doesn't work so well if there are limits to building, such as on a crowded island with laws and other practical limitations that make it expensive to build new housing.
At some point, a grown person has to accept that an "Econ 101" model of the world verges on the useless for predicting almost any real-world scenario.
posted by praemunire at 1:16 PM on October 15, 2021 [8 favorites]
Or a stipend. Or at least a tiara!
(Joking, but not really...)
If rents exceeds costs plus a reasonable profit, someone will come in and build more housing to make a profit. That doesn't work so well if there are limits to building, such as on a crowded island with laws and other practical limitations that make it expensive to build new housing.
At some point, a grown person has to accept that an "Econ 101" model of the world verges on the useless for predicting almost any real-world scenario.
posted by praemunire at 1:16 PM on October 15, 2021 [8 favorites]
You'd need to put down probably $200,000 and you'd have around $40,000 in closing costs. Then figure the interest + principal payment on the mortgage will be around $3,400 a month, plus let's say $1,000 in common charges, plus around $600 for tax and $60 for insurance. You're staring down the barrel of $240,000 lighter in the pockets and a monthly nut of over $5,000. And we haven't even mentioned whether you might get assessed for Local Law 11 work, etc.
Or to put it another way, to buy a $600K one-bedroom, which is about the lowest you can hope for in Manhattan south of Harlem, no bells and whistles, you need to have:
$120K in down payment
$30K in closing costs
~$25K in liquid assets after closing (and this number could be 2x-4x that, depending on building) (this doesn't get "spent" but you will have to demonstrate you have it)
So...somewhere around $175K, nearly 30% of purchase price, cold hard cash up front. And that's assuming no renovation required, which rarely happens, and certainly not at this price level. All in, with moving costs, you're probably going to need near $200K.
Then you're paying around $3000/mo. when you factor in maintenance (could be a bit less or a bit more). If you're a sensible person with no other debts and a firm commitment to no more than a 30% DTI, you'd have to have a $120K income to manage it.
So...for an entry-level Manhattan apartment, just save ~150% of a year's salary outside of your retirement savings, no problem!
posted by praemunire at 1:28 PM on October 15, 2021 [11 favorites]
Or to put it another way, to buy a $600K one-bedroom, which is about the lowest you can hope for in Manhattan south of Harlem, no bells and whistles, you need to have:
$120K in down payment
$30K in closing costs
~$25K in liquid assets after closing (and this number could be 2x-4x that, depending on building) (this doesn't get "spent" but you will have to demonstrate you have it)
So...somewhere around $175K, nearly 30% of purchase price, cold hard cash up front. And that's assuming no renovation required, which rarely happens, and certainly not at this price level. All in, with moving costs, you're probably going to need near $200K.
Then you're paying around $3000/mo. when you factor in maintenance (could be a bit less or a bit more). If you're a sensible person with no other debts and a firm commitment to no more than a 30% DTI, you'd have to have a $120K income to manage it.
So...for an entry-level Manhattan apartment, just save ~150% of a year's salary outside of your retirement savings, no problem!
posted by praemunire at 1:28 PM on October 15, 2021 [11 favorites]
At some point, a grown person has to accept that an "Econ 101" model of the world verges on the useless for predicting almost any real-world scenario.
Yeah, so long as developers can make huge bucks throwing up Hudson Yards-style monstrosities that are nothing more than super-luxury floor-throughs owned by sheiks, Russian gangsters and Chinses oligarchs who never live there and instead use them to store/launder wealth, there won't be much incentive for them to build reasonably affordable rental properties. That incentive has to be created by government regulation creating disincentives to do the former and incentives to do the latter. A good first step in that direction would be a fairly hefty pied-à-terre tax on any properties valued above, say, $1.5MM that aren't the owner's official address of primary residence.
posted by slkinsey at 1:29 PM on October 15, 2021 [14 favorites]
Yeah, so long as developers can make huge bucks throwing up Hudson Yards-style monstrosities that are nothing more than super-luxury floor-throughs owned by sheiks, Russian gangsters and Chinses oligarchs who never live there and instead use them to store/launder wealth, there won't be much incentive for them to build reasonably affordable rental properties. That incentive has to be created by government regulation creating disincentives to do the former and incentives to do the latter. A good first step in that direction would be a fairly hefty pied-à-terre tax on any properties valued above, say, $1.5MM that aren't the owner's official address of primary residence.
posted by slkinsey at 1:29 PM on October 15, 2021 [14 favorites]
It’s not just NYC. There have been many stories in the last year about house prices, and here in coastal FL, they have increased about 20% in the last year (more in some areas). Bidding wars are commonly reported. There was already a shortage of affordable housing. There is little new construction and that’s unlikely to change what with plywood tripling in price, similar costs and reduced availability of other building materials, and so on. New construction cost, excluding land costs, impact fees, etc, is also up similarly such that it is much more cost-effective to buy and update old stock. There are two large projects in town which will add about 400 rental units each but developers also have tended to focus on the upscale market. There units are not going to be particularly affordable.
Meanwhile, homeowners have been forced to sell or move - and there is a wave of others following - due to job loss and inability to pay mortgages. Many of those homes sold in the last year were bought and turned into rentals, some by individuals but a lot by investment/real estate interests. The net result is few affordable homes and rents increasing in the same 20-30% range. Even long-time renters are getting squeezed.
posted by sudogeek at 1:31 PM on October 15, 2021 [1 favorite]
Meanwhile, homeowners have been forced to sell or move - and there is a wave of others following - due to job loss and inability to pay mortgages. Many of those homes sold in the last year were bought and turned into rentals, some by individuals but a lot by investment/real estate interests. The net result is few affordable homes and rents increasing in the same 20-30% range. Even long-time renters are getting squeezed.
posted by sudogeek at 1:31 PM on October 15, 2021 [1 favorite]
Zillow has also been inserting themselves as a middle man by buying up homes, pushing up appraisal numbers of the last few, then reselling them to people using what's basically a "buy now" button for houses.
No doubt that's been pushing up prices in middle to upper middle class neighbourhoods.
posted by Your Childhood Pet Rock at 1:39 PM on October 15, 2021 [4 favorites]
No doubt that's been pushing up prices in middle to upper middle class neighbourhoods.
posted by Your Childhood Pet Rock at 1:39 PM on October 15, 2021 [4 favorites]
Welcome to Miami, where this is happening all over, even way out in the suburbs and has been for the past year since everyone realized remote work means they can move to "paradise." Even prying the empty condos out of foreign investors' hands and killing Airbnb wouldn't be enough to make a dent at this point.
posted by wierdo at 1:41 PM on October 15, 2021 [2 favorites]
posted by wierdo at 1:41 PM on October 15, 2021 [2 favorites]
This is happening in Austin TX too, where people are bidding up rentals by hundreds of dollars over the listed rent. And where the average selling price of a house went up $100K in one year.
posted by adamrice at 1:45 PM on October 15, 2021
posted by adamrice at 1:45 PM on October 15, 2021
Check in from Phoenix Metro Area where this is indeed happening as well. Our house has appreciated almost $150K in the past year. We are in one of the nicest zip codes and best High School catchments in our city, but quite frankly that is still a bananas number.
Our neighbors across the street just sold their home for $682,000 after having it on the market for like...4 days, I think. I KNOW the owner paid barely over $320K for it about 7 years ago brand new. I'm pretty sure house prices aren't supposed to more than double in less than a decade!
I mean at this point, Mr. Objects and I couldn't even move if we wanted to. If we sold we'd have to use the whole amount of the sales proceeds as a down payment on the next place unless we decided to downsize drastically. And we both have very well paid jobs. I spend time every day thinking about this situation and basically wondering when all the people who didn't get as lucky as we did, who are still living below the poverty line and can't even afford rents in what used to be the biggest lowest-rent city in country are going to wise up and come out with torches and pitchforks. Why hasn't it happened yet? How far can the bread and circuses stretch?
posted by sharp pointy objects at 1:55 PM on October 15, 2021 [7 favorites]
Our neighbors across the street just sold their home for $682,000 after having it on the market for like...4 days, I think. I KNOW the owner paid barely over $320K for it about 7 years ago brand new. I'm pretty sure house prices aren't supposed to more than double in less than a decade!
I mean at this point, Mr. Objects and I couldn't even move if we wanted to. If we sold we'd have to use the whole amount of the sales proceeds as a down payment on the next place unless we decided to downsize drastically. And we both have very well paid jobs. I spend time every day thinking about this situation and basically wondering when all the people who didn't get as lucky as we did, who are still living below the poverty line and can't even afford rents in what used to be the biggest lowest-rent city in country are going to wise up and come out with torches and pitchforks. Why hasn't it happened yet? How far can the bread and circuses stretch?
posted by sharp pointy objects at 1:55 PM on October 15, 2021 [7 favorites]
"Theft" is a strange word for "how property ownership has worked in most of the world for centuries".
I mean, counter-ideas have also been present in various intellectual traditions for centuries, so...
I mean, counter-ideas have also been present in various intellectual traditions for centuries, so...
"Similar phrases also appear in the works of Saint Ambrose, who taught that superfluum quod tenes tu furaris[8] (the superfluous property which you hold you have stolen) and Basil of Caesarea (Ascetics, 34, 1–2)."posted by advil at 2:01 PM on October 15, 2021 [6 favorites]
Disincentives to give a damn about tenants is to the point.
As of 2019, New York Now Requires Names of All Members of LLCs Selling or Buying Residential Property. That's a big deal because NYC's developers have long incorporated every individual building they own as an independent LLC, which means, for example, it's not that hard to exceed the legal limit on political donations if no one can trace how many LLCs you own. The New York laws may have followed in the footsteps of the Feds who also recently changed the law to, above all, prevent money laundering. Anyway, the LLC practice, at least in 2019 when I was searching for the number of developers who owned property in NYC — All basic questions: How many landlords? And who? — meant there was no answer to be found.
It's also worth remembering that developers are trained to manage risk. I've heard several tales now, through first-hand sources, of developers who went on property buying sprees during the pandemic. Nationally, interest rates are near zero, so the money to pay for a property is all but free. And with people panic-leaving U.S. cities, the price of property, of course, went way down. This, of course, wasn't the rhetoric at all. If you read the papers, many of the headlines were about small property owners suffering because their renters were not paying them. I'm sure that's true in many places in this country, and in up-state New York, but I highly doubt that's true in the vast majority of cases in NYC where there are very few independent (e.g. single building) landlords anymore.
The City itself wants to keep the rich happy, especially after the loss of revenue from corporate taxes in 2020, which is why even outlets like Bloomberg reported two days ago on How a $2 Million Condo in Brooklyn Ends Up With a $157 Tax Bill
If you also take into account that way before the pandemic, way back in 2019, outlets like the New York Times were reporting that One in Four of New York’s New Luxury Apartments Is Unsold this new-found "shortage" suggests that countless property lawyers and various members of the New York Real Estate Board got together to ensure the market wasn't "flooded" with apartments — though even if it were, I'm sure there would be some way to write off empty apartments as a loss.
All that said, I do hold onto a few rays of hope: We've got a democratic supermajority in the Assembly these days, with a nice sprinkling of democratic socialists who tend to feel strongly about housing. There's already been talk about converting some of those empty office buildings in midtown to affordable (and other kinds) of housing. And Alvin Bragg, Manhattan's new D.A., seems like a very good guy with a strong conscience when it comes to things like housing.
All that said: There's a reason Trump came from New York.
posted by Violet Blue at 2:04 PM on October 15, 2021 [13 favorites]
As of 2019, New York Now Requires Names of All Members of LLCs Selling or Buying Residential Property. That's a big deal because NYC's developers have long incorporated every individual building they own as an independent LLC, which means, for example, it's not that hard to exceed the legal limit on political donations if no one can trace how many LLCs you own. The New York laws may have followed in the footsteps of the Feds who also recently changed the law to, above all, prevent money laundering. Anyway, the LLC practice, at least in 2019 when I was searching for the number of developers who owned property in NYC — All basic questions: How many landlords? And who? — meant there was no answer to be found.
It's also worth remembering that developers are trained to manage risk. I've heard several tales now, through first-hand sources, of developers who went on property buying sprees during the pandemic. Nationally, interest rates are near zero, so the money to pay for a property is all but free. And with people panic-leaving U.S. cities, the price of property, of course, went way down. This, of course, wasn't the rhetoric at all. If you read the papers, many of the headlines were about small property owners suffering because their renters were not paying them. I'm sure that's true in many places in this country, and in up-state New York, but I highly doubt that's true in the vast majority of cases in NYC where there are very few independent (e.g. single building) landlords anymore.
The City itself wants to keep the rich happy, especially after the loss of revenue from corporate taxes in 2020, which is why even outlets like Bloomberg reported two days ago on How a $2 Million Condo in Brooklyn Ends Up With a $157 Tax Bill
If you also take into account that way before the pandemic, way back in 2019, outlets like the New York Times were reporting that One in Four of New York’s New Luxury Apartments Is Unsold this new-found "shortage" suggests that countless property lawyers and various members of the New York Real Estate Board got together to ensure the market wasn't "flooded" with apartments — though even if it were, I'm sure there would be some way to write off empty apartments as a loss.
All that said, I do hold onto a few rays of hope: We've got a democratic supermajority in the Assembly these days, with a nice sprinkling of democratic socialists who tend to feel strongly about housing. There's already been talk about converting some of those empty office buildings in midtown to affordable (and other kinds) of housing. And Alvin Bragg, Manhattan's new D.A., seems like a very good guy with a strong conscience when it comes to things like housing.
All that said: There's a reason Trump came from New York.
posted by Violet Blue at 2:04 PM on October 15, 2021 [13 favorites]
Violet Blue,
Wow, thanks for that article about office buildings in midtown that's really neat! Although I'm sure that's still one of the better plans for carving out the thousands and thousands of new housings the city needs ASAP, I still note that the plans call for a lot more studio and one bedrooms than 2-3 bedrooms. The vibe I get from so much of New York (and if I'm wrong please correct me!) is that the city is really hard (like harder than even other large cities) to raise more than one child in. I would love to see some realistic projections on how much this project would cost and how many apts could be offered for low-income renters or buyers and what does that even really mean in New York?
posted by sharp pointy objects at 2:30 PM on October 15, 2021
Wow, thanks for that article about office buildings in midtown that's really neat! Although I'm sure that's still one of the better plans for carving out the thousands and thousands of new housings the city needs ASAP, I still note that the plans call for a lot more studio and one bedrooms than 2-3 bedrooms. The vibe I get from so much of New York (and if I'm wrong please correct me!) is that the city is really hard (like harder than even other large cities) to raise more than one child in. I would love to see some realistic projections on how much this project would cost and how many apts could be offered for low-income renters or buyers and what does that even really mean in New York?
posted by sharp pointy objects at 2:30 PM on October 15, 2021
Part of the problem with having so little affordable housing is that 2-3 unrelated/not-in-a-relationship working age people crowd together into the 2-3 bedroom apartments that exist because if a 1br costs $2000 and a 3br costs $2400, you can make the 3 br work with 2 roommates on a much lower income. Building more affordable studios and 1brs will hopefully decrease the pressure on the larger apartments. (The city should still build more affordable 2-3 bedroom units as well.)
posted by threementholsandafuneral at 2:49 PM on October 15, 2021 [1 favorite]
posted by threementholsandafuneral at 2:49 PM on October 15, 2021 [1 favorite]
As someone who recently moved, it is even wilder out there than the article describes. I was looking for studios in Brooklyn under $2000 along the [redacted] bus line and almost every open house had over 20 people at the start time and some had lines going around the block. Can we talk about the real estate agent with the basement apartment who told me it never floods in an area that was underwater during Sandy? Guess what I saw on the news a couple of days later. And then there's the white people who nearly rioted during an open house in Park Slope. I don't even like Park Slope and wasn't enthused about living there anyway. (No offense, Park Slope Mefites. I'm sure you're all lovely people who would never throw envelopes of cash at each other while a real estate agent hides in the bathroom.)
posted by betweenthebars at 3:24 PM on October 15, 2021 [2 favorites]
posted by betweenthebars at 3:24 PM on October 15, 2021 [2 favorites]
"Theft" is a strange word for "how property ownership has worked in most of the world for centuries".
I mean, counter-ideas have also been present in various intellectual traditions for centuries, so...
The Book of Leviticus prescribes a society where all the land is evenly divided among families (each getting a parcel of land chosen by drawing lots). You could sell your land if you needed to or wanted to, but every fifty years (the Year of Jubilee) ownership would revert back to the original family. So you might temporarily have situations where one guy buys up a bunch of land and then does no work other than collecting rent, but not a generational society where a few people own everything and everyone else pays them rent.
(But of course this utopian evenly-divided land was also supposed to have been seized by genocide of the previous inhabitants...)
posted by straight at 5:39 PM on October 15, 2021 [5 favorites]
I mean, counter-ideas have also been present in various intellectual traditions for centuries, so...
The Book of Leviticus prescribes a society where all the land is evenly divided among families (each getting a parcel of land chosen by drawing lots). You could sell your land if you needed to or wanted to, but every fifty years (the Year of Jubilee) ownership would revert back to the original family. So you might temporarily have situations where one guy buys up a bunch of land and then does no work other than collecting rent, but not a generational society where a few people own everything and everyone else pays them rent.
(But of course this utopian evenly-divided land was also supposed to have been seized by genocide of the previous inhabitants...)
posted by straight at 5:39 PM on October 15, 2021 [5 favorites]
Mr.Know-it-some: If rents exceeds costs plus a reasonable profit, someone will come in and build more housing to make a profit. That doesn't work so well if there are limits to building, such as on a crowded island with laws and other practical limitations that make it expensive to build new housing.
My impression of various times in history when there was less control on building was not that more housing got built until housing got cheaper, but that existing housing got divided into ever-smaller units costing ever-more money. It is almost always smarter for the savvy investor to avoid long-term capital-intensive investments with narrow margins, whether they be airlines or apartment blocks, unless some government guarantee on the investment can be procured.
Putting large amounts of capital into buildings which will charge reasonable rents may be good social policy, but it's a stupid investment decision.
posted by clawsoon at 5:49 PM on October 15, 2021 [5 favorites]
My impression of various times in history when there was less control on building was not that more housing got built until housing got cheaper, but that existing housing got divided into ever-smaller units costing ever-more money. It is almost always smarter for the savvy investor to avoid long-term capital-intensive investments with narrow margins, whether they be airlines or apartment blocks, unless some government guarantee on the investment can be procured.
Putting large amounts of capital into buildings which will charge reasonable rents may be good social policy, but it's a stupid investment decision.
posted by clawsoon at 5:49 PM on October 15, 2021 [5 favorites]
San Francisco in 1999 was the first time I ever heard the term "rental resume." That shit is bananas.
posted by bendy at 6:40 PM on October 15, 2021
posted by bendy at 6:40 PM on October 15, 2021
I bought three homes from 1995-2011 priced at $15K, $80K, and $200K and now I'm back to renting. Prices are rising at an alarming rate and this is the first time since then that I'm scared I won't be able to be a homeowner again even though thousands of new homes are being built every where in the US every year.
posted by bendy at 6:50 PM on October 15, 2021
posted by bendy at 6:50 PM on October 15, 2021
Diverting from the main topic, but:
clawsoon: My impression of various times in history when there was less control on building was not that more housing got built until housing got cheaper, but that existing housing got divided into ever-smaller units costing ever-more money.
I read an academic paper a little while ago, by Edward Glaeser and Joseph Gyourko, that digs into this subject. The Economic Implications of Housing Supply, 2018. Basically, where land is readily available, builders buy land, build housing, sell it, and move on to the next project.
In a city like Atlanta, where housing supply is pretty responsive, you see housing starts vary a lot (sometimes up, sometimes down), while house prices are stable. In a city like San Francisco, where housing supply is inelastic, what you see is that housing starts are stuck at a low level, while house prices can rise (and fall) rapidly. See Figure 2 on page 17.
In Atlanta and similar cities, house prices reflect the "minimum profitable production cost": land is about 20% of the cost, construction cost (which doesn't vary that much from one location to the next) is about 80%, and there's a 17% gross margin. "This suggests that an efficient housing market should be able to supply economy-quality single-family housing with 2,000 sq ft of living space for around US$200,000 in low-construction-cost markets and for little more than US$265,000 in the highest-construction-cost markets." (p. 10)
As of 2013, only 16% of metro areas in the US had median price-to-cost ratios of over 1.25. So in most metro areas, prices were reasonable. But the high-cost areas include some of the most productive labour markets (like New York, San Francisco, and San Jose), so they have an outsize impact on the economy. (p. 14)
"This gap between price and cost seems to reflect the influence of regulation, not the scarcity value arising from a purely physical or geographic limitation on the supply of land. For example, in Glaeser, Gyourko, and Saks (2005), we show that the cost of Manhattan apartments are far higher than marginal construction costs, and more apartments could readily be delivered by building up without using more land. This and other research we have done (Glaeser and Gyourko 2003) also finds that land is worth far more when it sits under a new home than when it extends the lot of an existing home, which is also most compatible with a view that the limitation is related to permits, not acreage per se." (p. 14)
posted by russilwvong at 8:16 PM on October 15, 2021 [3 favorites]
clawsoon: My impression of various times in history when there was less control on building was not that more housing got built until housing got cheaper, but that existing housing got divided into ever-smaller units costing ever-more money.
I read an academic paper a little while ago, by Edward Glaeser and Joseph Gyourko, that digs into this subject. The Economic Implications of Housing Supply, 2018. Basically, where land is readily available, builders buy land, build housing, sell it, and move on to the next project.
In a city like Atlanta, where housing supply is pretty responsive, you see housing starts vary a lot (sometimes up, sometimes down), while house prices are stable. In a city like San Francisco, where housing supply is inelastic, what you see is that housing starts are stuck at a low level, while house prices can rise (and fall) rapidly. See Figure 2 on page 17.
In Atlanta and similar cities, house prices reflect the "minimum profitable production cost": land is about 20% of the cost, construction cost (which doesn't vary that much from one location to the next) is about 80%, and there's a 17% gross margin. "This suggests that an efficient housing market should be able to supply economy-quality single-family housing with 2,000 sq ft of living space for around US$200,000 in low-construction-cost markets and for little more than US$265,000 in the highest-construction-cost markets." (p. 10)
As of 2013, only 16% of metro areas in the US had median price-to-cost ratios of over 1.25. So in most metro areas, prices were reasonable. But the high-cost areas include some of the most productive labour markets (like New York, San Francisco, and San Jose), so they have an outsize impact on the economy. (p. 14)
"This gap between price and cost seems to reflect the influence of regulation, not the scarcity value arising from a purely physical or geographic limitation on the supply of land. For example, in Glaeser, Gyourko, and Saks (2005), we show that the cost of Manhattan apartments are far higher than marginal construction costs, and more apartments could readily be delivered by building up without using more land. This and other research we have done (Glaeser and Gyourko 2003) also finds that land is worth far more when it sits under a new home than when it extends the lot of an existing home, which is also most compatible with a view that the limitation is related to permits, not acreage per se." (p. 14)
posted by russilwvong at 8:16 PM on October 15, 2021 [3 favorites]
Japan seems to have figured this out - they passed an Urban Renaissance Law back in 2002 which basically set national standards for zoning. Tokyo is a large and growing city (population 14 million), but housing costs have been flat compared to New York and London. There's an 11% vacancy rate.
Market Urbanism:
posted by russilwvong at 8:29 PM on October 15, 2021 [2 favorites]
Market Urbanism:
... many U.S. cities force every development proposal to go through a long and costly discretionary review process. This is often done by making land-use regulations so restrictive that any development must pursue a discretionary action like a rezoning or a special permit. In practice, this submits all proposed development to months of negotiating and public review, in which locals can shout a project down to their preferred size (which is often a vacant lot) or extract large concessions from the developer.A video showing what this looks like. Why Japan Looks the Way it Does: Zoning.
Japan bypasses these problems completely through a large national role in land-use planning and an as-of-right system of development. On the first score, the national government sets out 12 zones, which are clear, liberal, and generally focused on actual nuisances. This places a lower bound on how strict a local land-use regulation can be, with even the most strict zone allowing for multifamily, home-based businesses, and small local retailers. This national zoning system takes away the power of local municipalities to develop complicated and exclusionary local land-use regulations.
On the second score, Japan combines these liberal use and design guidelines with an “as-of-right” system of permitting, meaning that if a project complies with the zoning, it doesn’t need to go through a discretionary review process. In this sense, Japanese zoning gets close to proper planning: policymakers consider upfront what type of development they would like to permit and where, and when developers come up with a conforming proposal, they hand over the needed permits. This provides developers and local residents with a high degree of certainty about what can and cannot be built.
posted by russilwvong at 8:29 PM on October 15, 2021 [2 favorites]
As of 2013, only 16% of metro areas in the US had median price-to-cost ratios of over 1.25. So in most metro areas, prices were reasonable. But the high-cost areas include some of the most productive labour markets (like New York, San Francisco, and San Jose), so they have an outsize impact on the economy. (p. 14)
Speaking of San Jose, yesterday I drove by this affordable apartment building that is under construction. It's intended for artists, families and those making 30-60% of the area's adjusted minimum income. The projected cost for building the 87-unit tower? $55 million. Any recent lottery winners want to help SAHA build more of these in the Bay Area?
posted by JDC8 at 9:36 AM on October 16, 2021
Speaking of San Jose, yesterday I drove by this affordable apartment building that is under construction. It's intended for artists, families and those making 30-60% of the area's adjusted minimum income. The projected cost for building the 87-unit tower? $55 million. Any recent lottery winners want to help SAHA build more of these in the Bay Area?
posted by JDC8 at 9:36 AM on October 16, 2021
The projected cost for building the 87-unit tower? $55 million. Any recent lottery winners want to help SAHA build more of these in the Bay Area?
Sorry if I'm misreading you, but this sounds like you don't understand how development financing works. The developer is not slapping down $55m out of their own pocket to get it done.
posted by praemunire at 10:04 AM on October 16, 2021
Sorry if I'm misreading you, but this sounds like you don't understand how development financing works. The developer is not slapping down $55m out of their own pocket to get it done.
posted by praemunire at 10:04 AM on October 16, 2021
russilwvong: I read an academic paper a little while ago, by Edward Glaeser and Joseph Gyourko, that digs into this subject. The Economic Implications of Housing Supply, 2018. Basically, where land is readily available, builders buy land, build housing, sell it, and move on to the next project.
I watched this very interesting video about that pattern of growth, which argues that it's essentially a Ponzi scheme of debt and subsidy financing that hasn't been sustainable. I'll admit that I haven't read the underlying studies from Strong Towns that are linked in the video description.
posted by clawsoon at 11:09 AM on October 16, 2021 [2 favorites]
I watched this very interesting video about that pattern of growth, which argues that it's essentially a Ponzi scheme of debt and subsidy financing that hasn't been sustainable. I'll admit that I haven't read the underlying studies from Strong Towns that are linked in the video description.
American-style suburbia is dependent on growth to stay financially solvent. The moment these cities stop growing - because of a financial crisis, a radical change in the job market, or any one of a number of other factors - everything starts to fall apart.I'm not educated enough in this stuff to know how true it all is, but it's an interesting take that I hadn't heard before.
...
Part of the problem is how suburban growth is financed. When the suburbs began, huge amounts of money from federal and state governments were given to cities to build out their suburbs. This still goes on today. For example, when a city wants to build a new road or freeway usually less than a quarter of the funding comes from the city itself. The overwhelming majority comes from the department of transportation and other higher levels of government.
So cities don't have to pay very much to build new infrastructure, but they do get a big influx of tax revenue from the new developments that spring up. This brings us to the first problem: It encourages cities to build lots of new developments even if they don't make any financial sense.
Of course all this new cheap infrastructure comes with a very important catch. The city may get it built for cheap but the city is ultimately responsible for paying to maintain that infrastructure forever.
On the surface this is fine. Governments want to invest in their cities because they are the engines of economic growth. And for the city this should be fine, too: They collect taxes from the new developments that spring up around that infrastructure and those taxes go towards future maintenance.
The big problem begins if there isn't enough tax revenue collected to cover the replacement cost of the infrastructure, and that is exactly what has happened with car dependent suburbia because car-centric sprawl is horrendously expensive.
...
Many americans like to brush this off by claiming that cities do actually collect enough tax revenue but it's all lost to corruption or inefficiencies or unions or whatever, but the reality is that most american suburbs collect only a fraction of the tax revenue required to actually finance their sprawling infrastructure.
posted by clawsoon at 11:09 AM on October 16, 2021 [2 favorites]
Call me crazy, but what if, instead of waiting for lottery winners to fund things individually, we could create some kind of pool of funds that we each contribute just a little bit of money to and then we use that money to build affordable housing?
Pre-pandemic, NYC’s partially-vacant Billionaires’ row condo towers were a pretty good example of why things are a bit more complicated than straight-up supply and demand of housing units. Left to their own devices, market forces can create a ton of vacant units that are not and will not become accessible to the average person. All housing is not equal and what we need to do is increase the supply of housing that most people can actually afford to access and live in. Oh, and to get people into existing units that have been warehoused and fixed at unreasonable rates. And to make it easier for people to stay in their homes so they aren’t having to scramble to find new housing year after year.
Mid-pandemic, a better example of market irrationality would be the fact that there was an intense upward pressure on housing prices in surrounding areas as people fled the city, but now that people are returning, there’s an intense upward pressure on housing prices within the city but without a significant drop in prices in the surrounding areas. NYC’s real estate market is a casino in which house always wins.
Also, who needs a BlackRock-like entity when BlackRock is, itself, involved?
posted by evidenceofabsence at 11:19 AM on October 16, 2021 [3 favorites]
Pre-pandemic, NYC’s partially-vacant Billionaires’ row condo towers were a pretty good example of why things are a bit more complicated than straight-up supply and demand of housing units. Left to their own devices, market forces can create a ton of vacant units that are not and will not become accessible to the average person. All housing is not equal and what we need to do is increase the supply of housing that most people can actually afford to access and live in. Oh, and to get people into existing units that have been warehoused and fixed at unreasonable rates. And to make it easier for people to stay in their homes so they aren’t having to scramble to find new housing year after year.
Mid-pandemic, a better example of market irrationality would be the fact that there was an intense upward pressure on housing prices in surrounding areas as people fled the city, but now that people are returning, there’s an intense upward pressure on housing prices within the city but without a significant drop in prices in the surrounding areas. NYC’s real estate market is a casino in which house always wins.
Also, who needs a BlackRock-like entity when BlackRock is, itself, involved?
posted by evidenceofabsence at 11:19 AM on October 16, 2021 [3 favorites]
So wild. I was in Brooklyn during the pandemic, and rental prices completely plummeted. There were 2-bedroom apartments in Little Italy for $1800. I guess 40% of Manhattan residents fled around March 2020. Horrible to see the prices have shot back up. There was such a nice albeit brief advantage for renters.
posted by writinginmontana at 12:06 PM on October 16, 2021
posted by writinginmontana at 12:06 PM on October 16, 2021
But a short while ago there were landlords desperate to rent out the glut of apartments available due to the high number of people leaving NYC.
That seems to be the pattern here, too: people fleeing apartments to buy single family houses, or losing their jobs and deciding to move in with family or whatever, meant that the rental market cratered at the same time that housing prices went nuts, but now housing prices are still nuts and rents are going way back up.
The wage increases many people were able to get haven't come close to keeping up.
posted by Dip Flash at 4:15 PM on October 17, 2021
That seems to be the pattern here, too: people fleeing apartments to buy single family houses, or losing their jobs and deciding to move in with family or whatever, meant that the rental market cratered at the same time that housing prices went nuts, but now housing prices are still nuts and rents are going way back up.
The wage increases many people were able to get haven't come close to keeping up.
posted by Dip Flash at 4:15 PM on October 17, 2021
I'm also having a hard time squaring this with how many people moved out and how few jobs I've seen have moved to full time on-site, requiring people to live in the city. Is there really an influx that matches the number of people who left? Agree that this feels somehow landlord based, not scarcity.
If it helps any, at least one building built for the super-rich is delivering some lovely schadenfreude: The Downside to Living in a Supertall Tower.
posted by Mchelly at 9:00 AM on October 18, 2021 [1 favorite]
If it helps any, at least one building built for the super-rich is delivering some lovely schadenfreude: The Downside to Living in a Supertall Tower.
posted by Mchelly at 9:00 AM on October 18, 2021 [1 favorite]
I guess 40% of Manhattan residents fled around March 2020.
Do you really think 40% of the population left? Seriously? Have you been to St Louis, or Cincinnatti? Those are places where 40% of the population left. Huge blocks of the city are empty. In actuality, something like a max of 1.1% of the Manhattan's population temporarily left during the pandemic.
Is there really an influx that matches the number of people who left?
NYC gained 600k people in the last decade. 1.1% left, 6% moved in. That 1% left in a rush, so that created an extremely temporary glut of availability.
posted by The_Vegetables at 1:13 PM on October 18, 2021
Do you really think 40% of the population left? Seriously? Have you been to St Louis, or Cincinnatti? Those are places where 40% of the population left. Huge blocks of the city are empty. In actuality, something like a max of 1.1% of the Manhattan's population temporarily left during the pandemic.
Is there really an influx that matches the number of people who left?
NYC gained 600k people in the last decade. 1.1% left, 6% moved in. That 1% left in a rush, so that created an extremely temporary glut of availability.
posted by The_Vegetables at 1:13 PM on October 18, 2021
The 40% figure is based on cellphone data, which is imperfect, but considerably more than 1.1% of city residents fled during the pandemic and the departures were definitely concentrated in particular areas.
For what it's worth, the number of NYC residents who filed USPS change of address forms for places outside of the city before January 2021 is larger than the entire population of either St. Louis or Cincinnati.
posted by evidenceofabsence at 8:16 PM on October 18, 2021 [2 favorites]
For what it's worth, the number of NYC residents who filed USPS change of address forms for places outside of the city before January 2021 is larger than the entire population of either St. Louis or Cincinnati.
posted by evidenceofabsence at 8:16 PM on October 18, 2021 [2 favorites]
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