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

TreeEater
TreeEater

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

I literally don't understand how young people can afford to live in places like NYC or Los Angeles or Seattle anymore. They can't all be trust fund kids.

Emberburn
Emberburn

Well, it's a good question. I think not all wages have been stagnant. I know tech salaries have gone way up since even 5 years ago, especially in the tech hubs in the US.

Rents in these areas are just following what the market can support.

Plus, I think we're also seeing consequences of inflation. As we know, rents generally track inflation, so an increase there will put upward pressure on rents.

LuckyDusty
LuckyDusty

Because it cost dickloads to build new apartment buildings, and idiot wannabe kikes speculate on real estate and drive the cost up to 1000% what it's really worth.

VisualMaster
VisualMaster

Average wage is stagnant but that doesn't mean people on the higher end of the scale can't afford nice things. You're pointing out the fact that average people can't afford above average housing

BinaryMan
BinaryMan

Because the market will bear it.

FastChef
FastChef

Are there enough of those people to fill entire major cities? Is New York nothing but high-earners nowadays, or is it a mess of richfags, people splitting a 2-bedroom between 6 people, and rent-control nigs?

GoogleCat
GoogleCat

Be real estate heir or entrepreneur who had the cash to break into the market
Rent out residential apartments for 35k annually on the middle end
Sit back and wait

**********************

Be some kid wanting to "make it" from a small town
Assume that NY is great
Dazzled by all of the high salaries
Go there, rent a place
If college educated discover that cost of living and housing leaves me with less money than I would have had with a job in a smaller town or city
If not college educated work 3 part-time jobs to barely get by
Eventually leave or just accept the dicking

************************

Back to being real estate owner
Collect my money from the above dumbass
Roll it over into more shit

Stupidasole
Stupidasole

Wages are not stagnant

Stop going to Bernie rallies

Fried_Sushi
Fried_Sushi

Wages ARE stagnant against inflation.

Nude_Bikergirl
Nude_Bikergirl

properties being propped up by the chinese

Lunatick
Lunatick

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

Booteefool
Booteefool

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.

Harmless_Venom
Harmless_Venom

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.

Lord_Tryzalot
Lord_Tryzalot

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

King_Martha
King_Martha

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.

girlDog
girlDog

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.

farquit
farquit

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

viagrandad
viagrandad

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

happy_sad
happy_sad

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

w8t4u
w8t4u

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...

idontknow
idontknow

Already happening. Long commutes are very common.

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

hairygrape
hairygrape

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

Playboyize
Playboyize

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

GoogleCat
GoogleCat

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

King_Martha
King_Martha

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.

Soft_member
Soft_member

Does that mean rents will stop rising then?

hairygrape
hairygrape

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.

Techpill
Techpill

inflation and building regulation

TechHater
TechHater

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)

5mileys
5mileys

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

w8t4u
w8t4u

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.

Nude_Bikergirl
Nude_Bikergirl

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.

cum2soon
cum2soon

Too many monkeys, not enough trees.

Burnblaze
Burnblaze

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

StonedTime
StonedTime

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.

Boy_vs_Girl
Boy_vs_Girl

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...

hairygrape
hairygrape

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

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