Manhattan (and parts of Brooklyn) != NY. I wouldn't call it "cheap", but there are plenty of places in NYC where one can rent a bedroom for under $1,000 a month easily (and maybe closer to $500/m in some places). That, coupled with not having a car, actually makes quality of life very good if you're someone who seeks out city living.
I know plenty of people that make $30k-$40k/y in NYC and can afford to live in Bushwick with a few roommates and live nice lives. Single train commute into Manhattan, plenty of things to do that don't cost a lot of money, no need to worry about a car, etc.
Edit: a lot of people are replying that having roommates isn't tenable for $x or long-term. I agree, and I don't think we disagree.
Solving a housing affordability problem for people making $15/h starting their careers is part of the overall picture - housing available for people at every income level. An experienced worker with a family won't be looking to live in a 3br apartment with two roommates, but that same 3br apartment that was affordable can also house a family of 4 with two wage-earning parents.
NYC is _filled_ with people in all sorts of jobs who, because there is housing stock available in many levels, can afford to live alone, with a family in an apartment in Queens, or in a house in NJ.
It's not panacea - transit is not as reliable as I wish it was, goods are expensive, but it works for a lot of people
> live with (...) a few roommates and live nice lives
Those two together don't compute for most people. I'd say only a minority of people are fine with living permanently in a dorm-like environment. Historically, having to share a house/flat with strangers has always been a sign of poverty.
> I know plenty of people that make $30k-$40k/y in NYC and can afford to live in Bushwick with a few roommates
This sounds fun for a bit and then you grow up. If the Bay Area wants experienced workers filling non-tech/finance/medical jobs, they’ll need to better than this.
Your point is valid and you shouldn't be downvoted. Empirically, we know that high density of residential units is correlated with high rent.
Why is this? It ultimately comes back to the Law of Rent. The amount that landlords are able to charge directly corresponds to the produce obtainable at that location over their next best alternative... and that alternative is likewise set that way up until you reach the "margin" which is the best available rent-free location.
Since all land has been homesteaded, there's not much of a ceiling on rents... they tend towards the entire nominal productivity of the site. And the more desirable that site is, the more astronomical the rent.
We want locations to be desirable, so in effect we actually do want rent to be high. It's just important that everyone share in that rising wealth. In other words, we need to create a high demand for labor, by shifting taxes from labor onto idle landlords. Land speculators are like patent trolls atop the surface of the planet.
I do believe that the thing that would change the housing stock situation for SF is to remove sales taxes and add land value taxes. Just that change alone will make workers and renters richer overnight, and would change the anti-development mindset of owners quite a bit, considering that low-dense units will pay the highest amount.
No, because the supply of land is perfectly inelastic, and it already commands the highest price that can be obtained.
"A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground."
- Adam Smith, Wealth of Nations
"It is in vain in a Country whose great Fund is Land, to hope to lay the publick charge of the Government on any thing else; there at last it will terminate. The Merchant (do what you can) will not bear it, the Labourer cannot, and therefore the Landholder must: And whether he were best do it, by laying it directly, where it will at last settle, or by letting it come to him by the sinking of his Rents, which when they are once fallen every one knows are not easily raised again, let him consider."
- John Locke, "Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money"
Actually they will be able to ask for higher rents, as with lower sales and income taxes, the renters suddenly have extra cash that will eventually trickle towards rent.
That's if there are actually reductions in income/sales taxes. If the LVT money is instead invested in say mass transit, the population as a whole benefits, but rents don't increase, because money supply doesn't increase.
This is subtly wrong. Taxing rents instead of labor and consumer goods makes leasing less profitable (assuming government expenditures don't favor landlords) and creates opportunities in labor and consumer goods, in which erstwhile landlords can engage.
Milton friedman was an advocate of LVT, and I think stiglitz or krugman as well. There is economic consensus on LVT being good, although how good it is is hard to know, as LVT is a very hard tax to politically pass.
One way of thinking about why this won't happen is that most landlords charge the highest rent they think they can get. They don't just think, "I'll set the rent at my costs and a little profit. I'm not interested in making even more money." Some smaller owners might have personal relationships with their renters and not charge market rates, but I think more and more these days those landlords are rare. Maybe landlords will be able to up the rents because the reduction of other taxes will give people who pay rents more money, but that would be a small secondary effect I would guess.
The landlord can try. But when you introduce land tax and all those vacant apartments and lots come to market suddenly, I'd wish him luck with succeeding to shift the tax burden onto renters.
It's known that land tax together with similar antimonopoly taxes can't be shifted. What's nice is that not only this type of tax doesn't slow down the market, but on the contrary makes it more effective. Essentially without rent capture (antimonopoly tax) there is an open sink in the economy, so no matter how hard people work, all this value exits out of the economy, mostly in form of parked money in real estate.
As George predicted, all technological progress will just yield higher real estate prices and everybody will be working even harder than before.
Thank you for the explanation! I am still not sure I believe that what you predict would happen to a large degree in the Bay Area.
I agree a land tax would push the owners of vacant lots to develop them. But, the NIBMY owners of single family homes will still fight against the building of new apartment complexes and try to constrain housing supply (to prop up their property values). I certainly would hope that more apartments would be built though!
I didn't mean to validate that there was a causal connection, I was just agreeing with the general claim that yes, indeed, dense places (cities)... whether in terms of supply or demand are generally more expensive than other places.
Knowing why is important, though, and the law of rent explains the mechanics.
I'm in agreement with the idea that more building should occur. I'm just cautioning that even if someone destroyed every housing regulation in existence, or even if lots of public housing were built, we shouldn't be surprised if rents remain super high.
In the technology space we're used to seeing costs plummet from year to year. A land title system, by contrast, will predictably see increasing prices over time, while simultaneously extracting a flow of rent.
NYC was quite affordable when nobody wanted to live there (like the 1970's). Once the city was 'cleaned up', demand for housing has increased and, as much as people bemoan all of the construction, housing units haven't matched pace.
The result has been predictable and inevitable when supply is growing slowly and demand is growing rapidly: increased prices.
I have a friend who recently bought a house with his fiancee in a decent neighborhood for 250k, which for more rent-minded folk corresponds to monthly payments of 1180. Add in maintenance and the monthly payments increase to about 1600 a month, or 800 a person. Using a standard affordability modifier of 40, and a single person could afford the house on a 64k income, or two people with 32k each. Given the median income in the US is 59k thats very affordable.
The commute into Manhattan is about an hour, while not ideal its not that bad considering you're sitting on a train for that time, and its more of a self-inflicted wound given if NYC got its act together we could have much better public transportation. On top of that if you can afford it you can move closer by for a faster commute, and most people on hacker news are probably at least decently paid tech professionals.
Personally I have about a 20 minute commute and can easily afford the place I'm staying at. Generally if you're not dating/married you live with roommates, and if you are married then you have two incomes. I know other tech professionals in NYC that can afford their own place as well.
>Add in maintenance and the monthly payments increase to about 1600 a month
$400ish a month in maintenance seems very optimistic in my personal experience. There's always little bits of work to be done in a residence, and will be compounded when something major inevitably ends up going tits-up and needs replaced or serviced. Then on top of all of that, you have to have insurances and whatnot. Owning a house is great, but there's a fair bit more to it than just swapping the phrase "rent" for "mortgage payment" in regards to expenses.
>Given the median income in the US is 59k
For clarity, this is the median household income rather than individual.
I live in NYC, you can find cheap places if you look around Queens, Brooklyn, or Jersey City. None of them have the troubles of Oakland (crime).
Eg, Queens is very safe, but kinda "boring", hence the cheap prices.
Is $1800 really "cheap"? That might be cheap to people who are making close to 6-figures, but that isn't remotely affordable for a large percentage of the population.
Life-long Brooklyn resident here. Not it isnt cheap...i dont think anyone claimed it was cheap -- they just claimed that high-density housing (like Manhattan and northern Brooklyn) is more effective on a relative scale as compared to the Bay Area.
I've tried to make the math work every which way - the Bay Are is just out of control, even compared to NYC prices. NYC compensates quite well by building upwards rather than outwards, this has a second benefit of reducing commutes (again, on a relative scale compared to the Bay Area.)
Yes, very. NYC isn't just Manhattan, it also includes the other boroughs like queens, brooklyn, and the bronx. Areas that are within commuting distance by public transport of basically anywhere else in the entire city. This is light years different from the situation in SF.
