Why are rents skyrocketing if wages have been stagnant for decades?

This is a weird one I hear a lot. How true is it?

Rents have exceeded inflation for several years now, both in US and Europe. It's simple creeping, everyone's used to it rising by a couple % every year, and an increase that small makes few people switch.

No, building costs have nothing to do with it, they have been almost stagnant for a decade. The only increase in them has come from more regulation, and it's far below the rise in rents.

There is a lot of capital flight by smart money in China right now. There are restrictions that prevent Chinese citizens from moving more than 50k USD out of the country annually at the moment, and they use any opportunity that they can to get around it.

because the cost of servicing debt to build apartments is so low. there are tons of apartments in my city sitting empty, waiting for suckers to pay high rent

Because "investors" corner the market by buying all up homes intended for single families and convert them into "multi-unit" rentals. Thus no one can afford homes (in cities) anymore and a demand for rentals go up.

It is certainly true in central london. Rich Chinese and Russians buy houses in expensive boroughs such as chelsea and knightsbridge. There are literally homes worth £30 million and they are just buying them up as a solid investment as property is one of the best assets to have. There are literally thousands of multi million pound homes left empty in central london. They dont even use them. This boosts up the prices of all the places around london as the houses are getting bought up and renovated really quickly. Also what has been happening is that russians build these two storey mega basements which have theatres in them and swimming pools and shit. madness.

the Chinese are using shell companies to purchase real estate all over the States. the NYTimes wrote an excellent article on it a while back

Is this going to continue until we see an exodus to far-out suburbs/exurbs or cheaper states entirely?

We have three classes of people
>people that can't afford the rent
>people that pay a lot for rent
>people that get rent money

Yes, I am aware of that. Except to get money into the shell companies they have to bypass currency controls. We're not disagreeing at all, don't know why you linked me there...

Already happening. Long commutes are very common.

Those who don't end up living with 3-5 roommates.

Why are the rich buying so much real-estate when they could be investing in stocks?

The return on a mortgaged rental property is much better than index funds.

You forgot people who own a single residence and neither pay rent or collect rent.

So what really happened (for no special markets like NY or SF) is that from around 2002-2010 basically no apartments were being built. Once the mass waves of foreclosures happened and lending freed up, the brave few started building places starting in 2010, being active in 2012 or so. Then the less brave started showing up in 2013 with the places being active in 2015. Now the "me too" retards are starting to get in on it so expect a crash in like 3 years.

Does that mean rents will stop rising then?

It should, depending on the area. By that time, a lot of these places are 5-6 years old and can no longer command the premium.

inflation and building regulation

the chinese crash should be evident as to why the chinese wouldn't want to keep their money in the chinese markets (ie: not being able to sell legally when shit's hitting the fan)

Because we have a rentier economy where extracting rent is valued above and beyond doing anything productive.

I sold my flat in London last year for 4 times as much as it cost to a russkie. Hopefully brexit will go forward and the UK will become ruined and prices will drop to my original buy price.

I think so. At least where I live, renting a house is only a little more than renting an apartment. Lots of new apartment complexes are going-up, but there are so many empty complexes that at some point they'll need to start lowering prices to compete and stop hemmorhaging cash via loan interest on the initial investment.

Too many monkeys, not enough trees.

It's literally just the cost of building in big government states. In California to build anywhere near a redwood tree in many counties, you must post a $100,000 bond in case the tree is damaged during construction. Mind you, this is even if you planted the tree yourself. A house with 5 redwoods surrounding it requires a half million in tree bonds before the city will even look at issuing permits. So nothing gets built and populations continue to rise, resulting in simple supply and demand economics

Homes and rental properties have gained and held value, as opposed to other investments.

Mortgage foreclosure rates have also dropped. While speculation is still rampant, many markets feature a majority of homes with prices which more closely reflect their actual value.

Banks don't want to own residential real estate. Even though banks lose money on short sales of homes, investors who buy those homes can quickly restore and raise property values.

The answer is simple: stable or increasing yields with ever increasing property and especially land value. Global capitalism has allowed cross-border investment and money "herding" at an unprecedented scale.
Consider the UK, which until the 90s was not a particularly attractive place to be. Its biggest competitive advantage is its ties to the world's largest offshore network: all facilitated by professionals speaking the most accessible language in the world and within a few hours' flight distance from most places that matter. At the same time, it has historically the strongest property rights, but lax enough rules to allow all kinds of shady people to park their money without hassle. So what happened in the 90s? These advantages get in the spotlight and attract tons of interest from the former socialist zone of influence; at the same time, rapprochement with the EU increases. London becomes literally inundated with money, as global wealth invariably passes through the city, increasingly taking the form of land and buildings - arguably the most secure physical asset, even though it has a comparatively low yield. Values skyrocket in the South East, and rents simply tag along. And now with the Chinese becoming the most prosperous nation, it is their money that flows through the capital now...

Stop paying your taxes and you'll see that you truly are leasing that improved land from the gov.