keep adding homes. Keep adding homes so things don’t get any worse
A guy just transcribed 30 years of for-rent ads. Here’s what it taught us about housing prices
Michael Andersen
3.3K222

Preface: I really liked this article and how you presented it. (and I agree that Eric Fischer rocks for having done this research)

I don’t think this particular advice is very good, though — it’s certainly not sustainable. Area will be a limiting factor, and after that, vertical expansion will become prohibitively expensive.

That said, I’m not sure what the solution is. Part of the problem is that real estate, especially rental property, can become a bit of a gouging market where owners will try to maximize their profits. While I suppose an economist might think “so what? That’s their right.” I would argue that it’s that mentality that leads to shit like this.

I live in Ithaca, NY. When you consider the 2012(I think it was 2012) Census data on poverty, unemployment, median incomes and median rents, the city of Ithaca is more expensive than San Francisco, comparatively. (This is mainly because the delta between median rents is smaller than the delta between the median incomes; or rather: there are more better-paying jobs in SF to defray the insane rent prices).

We have a 95+% occupancy rate. There isn’t a lot of room for expansion, and the new housing that has been added has been higher rent. The Downtown development steering group has said (paraphrased) “If a developer is going to build an apartment, the cost of building a unit that rents for $800 is close enough to the cost of building one that rents for $2000, so there is an obvious incentive to do the latter”.

Perhaps what we need is a shift in perspective: Real Estate prospecting / investment properties seems as innocuous as stock investment or commodities trading: you’ve got ups and downs, your money can grow or shrink (you want it to grow, obviously) and it’s very easy to just see this in black and white terms of profits & losses… but this completely ignores the fact that housing is a human need for survival. This is not a luxury good — or at least it shouldn’t be viewed that way.

I would be interested to see how housing prices correlate with the number of real estate licenses granted over time, or better yet, how housing prices correlate with the proportion of owned-and-occupied properties vs rental properties. Best yet: correlate rental prices over time against tax filings that include 1040 Schedule E (used for rental income / losses): I have suspicions that the demand for living off of passive income from rents has pushed up these rents higher than they should be, if left to adjusting for inflation alone.

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