7 ms·

Housing is pretty inelastic. I think people are just willing to suffer financially to avoid the fate of homelessness. Just because there aren't vacancies anywhe

Housing is pretty inelastic. I think people are just willing to suffer financially to avoid the fate of homelessness. Just because there aren't vacancies anywhere doesn't mean that the price is fully justified, because housing will take priority over groceries for a lot of people.

RhodesianHunter 2y ago
Housing supply is inelastic due to the time it takes to permit and built. Housing demand is more elastic than you suspect. People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely.
- WarOnPrivacy 2y ago
  > People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely. This doesn't describe the major renter class who has few workable options to choose from. They take whatever they can get. Once they manage a place to live, they're likely trapped there because they don't have a wad of cash on hand (required to move). That's average renter difficulty. It can get far worse. In 2021, the few rentals available here got 400 applications/day. We beat out 50 applicants for one that was advertised for 2 hours (offered 6mos up front). We beat long odds and barely avoided homelessness (even tho we had good employment history + money in the bank). Many, many others were less lucky. Every rent-by-the-week hotel filled up, typically with people exhausting their savings.
  - bluGill 2y ago
    People also start to take on roommates or become roommates. People in general want a place of their own. However as rent goes up they will start to be willing to rent the upper bunk in a bedroom, and people who do have a place to live start to become willing to rent out part of their bedroom just to afford the rent. For most this is the last option they will take (homeless might be better if they can find a place to sleep the night outside)
  - gen220 2y ago
    In NYC, the typical non-negotiable broker's fee for a not-disintegrating apartment ranges from 10-15%. That's on top of a security deposit and all the other costs associated with moving. It's a cartel that can only be broken by collective political action. Things are slowly moving in that direction, only because the pressure has been so high for so long. It almost boiled over during COVID in some neighborhoods. There are still works of "Abolish Rent" graffiti left over from that time.
- gen220 2y ago
  Meanwhile, I know many people in NYC who spend ~60% of their post-tax income on rented housing. Nobody is happy about it or thinks it's a good idea, but living further out is not perceived as a legitimate option because of the fear of being severed either socially or career-wise. Whether that's a rational fear or not, it's a reality that allows housing prices to outpace wage gains every year. As somebody who used to think housing demand is fairly elastic: housing demand is much less elastic than you'd suspect.
  - RhodesianHunter 2y ago
    Yes, living in one of the, if not the, most desirable cities on the planet comes with additional costs.
    - rangestransform 2y ago
      NYC has incredibly incredibly low permitted additional housing per capita last year
      - RhodesianHunter 2y ago
        Hard to get much denser than NYC without massive capital expenditure.
    - gen220 2y ago
      NYC has been in that category for a long time. The 60% of income on rented housing for people whose income would make them otherwise solidly middle class (to me, this definition includes ownership of real estate) is new. Something else that's new: the prevalence of managing NYC properties through family trusts from a great distance while its members are domiciled and functionally unemployed in tax-shelter states. Hmm, I wonder if there's any explanatory power to that correlation?
    - WarOnPrivacy 2y ago
      > Yes, living in one of the, if not the, most desirable cities on the planet comes with additional costs. Being housed is highly desirable and has sharply driven up the cost in places where people are housed.
- bobthepanda 2y ago
  The NYT recently did a piece on how the tendrils of the housing crisis have made it out to places like Kalamazoo, MI that are not really traditionally high COL cities with booming economies. https://www.nytimes.com/2024/08/22/business/economy/housing-crisis-kalamazoo-michigan.html https://www.nytimes.com/2024/08/22/business/economy/housing-... We are running out of cheap places to live in. Remote work has mostly pushed the crisis to other places without a corresponding pressure release in the high COL areas.
  - bick_nyers 2y ago
    I can't read the article because of the paywall, but Kalamazoo is unique due to the Kalamazoo Promise, where college tuition (in the state of MI) is paid for if you attend Kalamazoo Public Schools. For me that was $60k of tuition I didn't have to take out loans for. Housing/grocery prices have gone up there but not nearly as dramatically as other places.
    - WarOnPrivacy 2y ago
      > Kalamazoo is unique Our rents in Florida have doubled for unique reasons. My loved ones in VA, DE, MD, KY, NC and MI are seeing rents over 50% higher for reasons unique to each area. It kind of feels like a pattern.
      - RhodesianHunter 2y ago
        Half of builders went out of business in 2008 and 1/3 left the trades. We only just recently reached the level of new home starts we were hitting pre great-recession. We have a decade's worth of supply deficit and in most locale's aren't doing much to overcome this.
    - reciprocity 2y ago
      Wow, the Kalamazoo Promise has been going on since 2005. I wasn't aware of this program; that's very cool.
legitster 2y ago
Housing can be very elastic. Humans can be very adaptive to compromises in living space requirements to fulfill the basic needs. Part of the problem is that the lower end of potential inventory (pod apartments/SRO/etc) are essentially illegal in this country. So the barriers to entry make it seem much more inelastic.
- WarOnPrivacy 2y ago
  > Part of the problem is that the lower end of potential inventory (pod apartments/SRO/etc) are essentially illegal in this country. So the barriers to entry make it seem much more inelastic. This is true. A decade ago this area was among the cheapest in the nation but now is solidly in the expensive category. In between were moratorium on apartment construction (the last non-premium housing still being built) and a sudden influx of CA & NY sized dollars. The never-stopping, double digit, yearly insurance increases - that just levels it all up.

RhodesianHunter 2y ago

Housing supply is inelastic due to the time it takes to permit and built. Housing demand is more elastic than you suspect. People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely.

WarOnPrivacy 2y ago
> People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely. This doesn't describe the major renter class who has few workable options to choose from. They take whatever they can get. Once they manage a place to live, they're likely trapped there because they don't have a wad of cash on hand (required to move). That's average renter difficulty. It can get far worse. In 2021, the few rentals available here got 400 applications/day. We beat out 50 applicants for one that was advertised for 2 hours (offered 6mos up front). We beat long odds and barely avoided homelessness (even tho we had good employment history + money in the bank). Many, many others were less lucky. Every rent-by-the-week hotel filled up, typically with people exhausting their savings.
- bluGill 2y ago
  People also start to take on roommates or become roommates. People in general want a place of their own. However as rent goes up they will start to be willing to rent the upper bunk in a bedroom, and people who do have a place to live start to become willing to rent out part of their bedroom just to afford the rent. For most this is the last option they will take (homeless might be better if they can find a place to sleep the night outside)
- gen220 2y ago
  In NYC, the typical non-negotiable broker's fee for a not-disintegrating apartment ranges from 10-15%. That's on top of a security deposit and all the other costs associated with moving. It's a cartel that can only be broken by collective political action. Things are slowly moving in that direction, only because the pressure has been so high for so long. It almost boiled over during COVID in some neighborhoods. There are still works of "Abolish Rent" graffiti left over from that time.
gen220 2y ago
Meanwhile, I know many people in NYC who spend ~60% of their post-tax income on rented housing. Nobody is happy about it or thinks it's a good idea, but living further out is not perceived as a legitimate option because of the fear of being severed either socially or career-wise. Whether that's a rational fear or not, it's a reality that allows housing prices to outpace wage gains every year. As somebody who used to think housing demand is fairly elastic: housing demand is much less elastic than you'd suspect.
- RhodesianHunter 2y ago
  Yes, living in one of the, if not the, most desirable cities on the planet comes with additional costs.
  - rangestransform 2y ago
    NYC has incredibly incredibly low permitted additional housing per capita last year
    - RhodesianHunter 2y ago
      Hard to get much denser than NYC without massive capital expenditure.
  - gen220 2y ago
    NYC has been in that category for a long time. The 60% of income on rented housing for people whose income would make them otherwise solidly middle class (to me, this definition includes ownership of real estate) is new. Something else that's new: the prevalence of managing NYC properties through family trusts from a great distance while its members are domiciled and functionally unemployed in tax-shelter states. Hmm, I wonder if there's any explanatory power to that correlation?
  - WarOnPrivacy 2y ago
    > Yes, living in one of the, if not the, most desirable cities on the planet comes with additional costs. Being housed is highly desirable and has sharply driven up the cost in places where people are housed.
bobthepanda 2y ago
The NYT recently did a piece on how the tendrils of the housing crisis have made it out to places like Kalamazoo, MI that are not really traditionally high COL cities with booming economies. https://www.nytimes.com/2024/08/22/business/economy/housing-crisis-kalamazoo-michigan.html https://www.nytimes.com/2024/08/22/business/economy/housing-... We are running out of cheap places to live in. Remote work has mostly pushed the crisis to other places without a corresponding pressure release in the high COL areas.
- bick_nyers 2y ago
  I can't read the article because of the paywall, but Kalamazoo is unique due to the Kalamazoo Promise, where college tuition (in the state of MI) is paid for if you attend Kalamazoo Public Schools. For me that was $60k of tuition I didn't have to take out loans for. Housing/grocery prices have gone up there but not nearly as dramatically as other places.
  - WarOnPrivacy 2y ago
    > Kalamazoo is unique Our rents in Florida have doubled for unique reasons. My loved ones in VA, DE, MD, KY, NC and MI are seeing rents over 50% higher for reasons unique to each area. It kind of feels like a pattern.
    - RhodesianHunter 2y ago
      Half of builders went out of business in 2008 and 1/3 left the trades. We only just recently reached the level of new home starts we were hitting pre great-recession. We have a decade's worth of supply deficit and in most locale's aren't doing much to overcome this.
  - reciprocity 2y ago
    Wow, the Kalamazoo Promise has been going on since 2005. I wasn't aware of this program; that's very cool.

legitster 2y ago

Housing can be very elastic. Humans can be very adaptive to compromises in living space requirements to fulfill the basic needs. Part of the problem is that the lower end of potential inventory (pod apartments/SRO/etc) are essentially illegal in this country. So the barriers to entry make it seem much more inelastic.

WarOnPrivacy 2y ago
> Part of the problem is that the lower end of potential inventory (pod apartments/SRO/etc) are essentially illegal in this country. So the barriers to entry make it seem much more inelastic. This is true. A decade ago this area was among the cheapest in the nation but now is solidly in the expensive category. In between were moratorium on apartment construction (the last non-premium housing still being built) and a sudden influx of CA & NY sized dollars. The never-stopping, double digit, yearly insurance increases - that just levels it all up.