Rents increasing: Let the Good Times Roll

[DanS]

Originally posted by Spiffor
Are you going to tell me that private investors are currently building a large supply of cheap housing in the US?

Some places yes. Some places no. It's a mixed bag. For about half the country (Walmart country), cheap housing is the norm. For the other half, you've got vastly undervalued city land that is only being built upon sporadically. Quite the opposite of the situation you describe.

When you say "the price of land being what it is", I have to wonder what you think it is in various locations.

[Zkribbler]

Originally posted by MRT144
what would be the effect of a cap on housing prices, for the sake of arguement...

Ah, the People's Republic of Santa Monica

In the late 60's or early 70's, the City of Santa Monica instituted one of the strongest rent control statutes in America. Landlords couldn't even raise rents if someone moved out.

What happened was that (1) no more rental units were built; and (2) there was a crush of people wanting to move in. Since the landlords could pick and choose among them, they chose the weathiest (to ensure they could pay the rent). As a result, lawyers and doctors were living in the cheap rental units while poor people had to move into more expensive neighborhoods.

Messing with the free enterprise system is almost counter productive.

[Dinner]

Originally posted by DanS
Some places yes. Some places no. It's a mixed bag. For about half the country (Walmart country), cheap housing is the norm. For the other half, you've got vastly undervalued city land that is only being built upon sporadically. Quite the opposite of the situation you describe.

When you say "the price of land being what it is", I have to wonder what you think it is in various locations.

On the west coast there isn't really the "vastly underdeveloped city land" as what little of that there was out here was redeveloped in the 80's and 90's. You still have the inner cities of Oakland and South-Central LA but even in Compton, that paragon of gang banging and drive by shootings, the price of a house is approaching $400,000.

[DanS]

I didn't say "vastly underdeveloped city land." Rather, I said "vastly undervalued city land." In most countries, and in France, inner-cities would be the most valuable property. Spiffor's post appears to assume this is the case in the US too.

[MRT144]

Originally posted by Zkribbler


Ah, the People's Republic of Santa Monica

In the late 60's or early 70's, the City of Santa Monica instituted one of the strongest rent control statutes in America. Landlords couldn't even raise rents if someone moved out.

What happened was that (1) no more rental units were built; and (2) there was a crush of people wanting to move in. Since the landlords could pick and choose among them, they chose the weathiest (to ensure they could pay the rent). As a result, lawyers and doctors were living in the cheap rental units while poor people had to move into more expensive neighborhoods.

Messing with the free enterprise system is almost counter productive.

interesting

[Dinner]

Originally posted by DanS
I didn't say "vastly underdeveloped city land." Rather, I said "vastly undervalued city land." In most countries, and in France, inner-cities would be the most valuable property. Spiffor's post appears to assume this is the case in the US too.

I'm saying that in much of the west that is the case. More often then not for the big western cities of the US downtown is the hip place to live.

[DanS]

Parts of DC surprisingly close to downtown are still very rough. Downtown is hip, but go two blocks north in some areas... Three or four blocks north and 5 blocks south from the capitol building and you're looking at slums.

[Dinner]

I guess since the west bought into the dream of suburbia more completely then the east and because there was less of an old downtown to rot away things turned out differently out west. Now we have a few generations who grew up in suburbia and who want to experience life in a real city so they're flocking to the downtown areas and new highrises go up every day.

Even downtown LA has bounced back and it was the western inner city which fell hardest. 15 years ago downtown LA's population consisted of bums, pimps, hookers, drug addicts, and run aways. Now it has shiny new high rise apartments, old factories have been converted to new uses, and new attractions (like the huge theater and the stadium) have been built downtown to bring people to this part of the city. Restaurants, shops, and clubs have followed the movement of the people and have sprung up all over downtown LA. It really is a different place then it was 15 years ago.

Dowtown San Francisco, Seattle, and Portland never went into decline or at least not very badly while San Diego started their redevelopment in the late 70's with the construction of the convention center, expanded in the 80's with the building of Horton Plaza, and the place just went bonkers in the 90's and the 2000's. Now you're lucky if you can find a one bedroom under $700,000 in the desirable parts of downtown and even the less desirable parts start at arounf $400,000 for a one bedroom apartment. A parking spot will often cost extra.

[Spiffor]

Originally posted by DanS
I didn't say "vastly underdeveloped city land." Rather, I said "vastly undervalued city land." In most countries, and in France, inner-cities would be the most valuable property. Spiffor's post appears to assume this is the case in the US too.

The only reason why many American city-centre areas are undervalues is because they're crap neighbourhoods, full of crime. It's not because of geographic proximity with the centre that they're undervalued, but because of soft variables (such as crime) that aren't set in stone. This oddity is in the process of changing btw.

Among the nice neighbourhoods (those where you can expect not to have your children shot or addicted), those in close range to downtown are more expansive than those 2 hours away. If you want to build your house in some deserted area, 4 hours away from the centre, the land price will be a real bargain. The question is whether you really want to spend 8 hours a day on your commute.

[Spiffor]

Originally posted by DanS
Not much of what you say relates to the US, I'm afraid.

So, the main reason why "not much of what I say doen't relate to the US" is because some central neighbourhoods are currently undervalued because of specific historical reasons, which are now going away as gentrification progresses.

It's really not a refutation.

Could you please explain the actual reasons why my posts can be so easily dismissed then? Is there no demand-pressure on major cities, as population increases and social trends lead to that more housing-units per person being required?

Is the suburbia still spreading as wild as it used to, now that the major cities have suburbs more than two hours away?

Aren't land-prices skyrocketing in the vicitnity of major cities?

Aren't privately-built condos much more aimed at the upper class than at the lower class?

Aren't rents and mortgages becoming increasingly crippling for the lower class and even for the middle class?

[Jaguar]

WRT Spiffor's points:


One solution that some cities are approaching is to make the suburbs themselves commuter destinations.

I live in Bethesda close to the DC border. I commute away from DC towards the area of Bethesda closer to Rockville, where I work at NIH.

[chequita guevara]

Originally posted by DanS


Not much of what you say relates to the US, I'm afraid.

It relates to parts, especially the commute time. There's very limited land here in SoFla, so it's especially applicapable here.

[chequita guevara]

And condo/apartment builders would rather let units sit empty than lower their prices.

[DanS]

Specifically...

Is the suburbia still spreading as wild as it used to, now that the major cities have suburbs more than two hours away?

Suburbia is still spreading wildly. It is growing much quicker than the city centers. Driving 2 hours takes in a vast area in most American cities.

Aren't land-prices skyrocketing in the vicitnity of major cities?

Yes, but land still isn't anywhere near as expensive as you're used to in Europe. Also, much of the recent spike in prices is due to interest rates at historic lows. Certainly, those prices will moderate, now that interest rates are at a more normal level.

Aren't privately-built condos much more aimed at the upper class than at the lower class?

Downtown condos are. But Oerdin's protestations to the contrary, that's not where the main of the housing growth lies. For instance, 10,000 condo units have been built in DC lately. That's a lot for downtown DC and represents something of a rennaisance. I see the changes everyday. But compared to the growth in the suburbs, it's nothing. It's not pushing out the slums in the city center very quickly, that's for sure.

Also keep in mind that the governments of these cities have been hostile to capital for decades and therefore capital has gone to where it's most welcome -- the suburbs. That's changing in some places, including DC. There's a history here with regard to race relations and the like that the cities are working through.

Aren't rents and mortgages becoming increasingly crippling for the lower class and even for the middle class?

It's a mixed bag. 70% own their own place. I don't think many or most could be described as crippled financially. The areas with low ownership rates such as DC (the city, not the suburbs), New York, and California are more exposed to rent increases.

[DanS]

Originally posted by Spiffor
Among the nice neighbourhoods (those where you can expect not to have your children shot or addicted), those in close range to downtown are more expansive than those 2 hours away.

It's much more of a mixed bag than you imagine.