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Comment by jjice | Hacker News Reader

> She and her roommate signed a lease on a two-bedroom apartment in the West Village for $4,995 a month

Holy cow, I knew NY rent way expensive, but wow I didn't know it was that bad. Growing up in upstate NY, you could be a nice family ready home in my suburban home town for ~100K. Of course there were houses that went up to ~150K or even 200K, but 100K was standard for purchasing a home. I even though that that was a lot.

I'm working in RI right now, renting a room outside the city, and I pay ~$500 a month for a room and all utilities. Have I just lived in very cheap places and the rest of this country is very expensive, or is it really just the big cities that have extremely expensive housing?

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To be fair, if I had to pick a neighborhood in NYC in terms of "how expensive it is to get a two bedroom apartment" then the West Village would be at or near the top of the list.

Don't get me wrong, NYC is expensive, but its very difficult to think of a more expensive area of the city to live in.

I pay $2,000 less per month for a two bedroom and a parking spot, in Manhattan. So I would say that $4,995 example is on the extreme end of expensive. Not rent controlled, not rent stabilized. Upper west side.

It's not just "big" cities, it's all cities at least according to this source [1]. I grew up in RI but I moved to Seattle after graduating college because I didn't want to live in RI anymore but job prospects for tech increase when you're in a city.

I wonder what the cycle to expensive rents is? Wages from jobs start to increase in an area, some housing development happens, rents go up on those new developments to cover costs but also because their renters can afford it, repeat?

1: https://www.zumper.com/blog/rental-price-data/

> Wages from jobs start to increase in an area, some housing development happens, rents go up on those new developments to cover costs but also because their renters can afford it, repeat?

The increased wages (more jobs + better jobs) leads directly to both new housing development AND increased demand for whatever housing currently exists. The latter is more impactful for higher prices than the former.

> but also because their renters can afford it, repeat?

This isn't quite how things work. Most landlords are always going to raise the rent to whatever the market can bear. Of course, how much people can afford does factor into that, but it's not everything.

I can afford to buy milk that costs 10x as it does right now, but I wouldn't actually pay that because I have no reason to when cheap milk still exists. Landlords are able to raise rents when the demand for housing goes up faster than the supply, such that renters don't have better options available.

>>> I can afford to buy milk that costs 10x as it does right now, but I wouldn't actually pay that because I have no reason to when cheap milk still exists.

You can afford to not drink milk but you can't afford to not have a roof over your head.

Becoming homeless is not an option so people get pushed to living in older smaller flat away from the city or sharing with strangers.

Okay fine, I could say, "I could afford to pay 2x for groceries in general, but I won't, because why would I when I don't have to?"

Same principle for rent. It's not quite about what people can afford, it's about what they feel they have to pay (and how much they can reasonably afford is one factor in that).

Rent is precisely about what people can afford. It's no accident that rent is around 50% of local income, in all cities across the developed world.

No, rent is about supply and demand. What people can afford -- how much money they have -- is a component of demand, but supply also matters.

If you look at countries that restrict supply less than the US, you'll notice that rent doesn't go to such high extremes in booming cities. For example, in Germany, the most expensive cities, the ones that have been booming, have average rents that are around 40-50% higher than the national average. In contrast, in the US, the most expensive cities have average rents easily double or more the national average. Sometimes even getting close to 3x.

You could also look at NYC vs Tokyo. Japan has much looser restrictions on housing supply and it shows here. NYC has 50% higher salaries, but rent isn't 50% higher, instead it's nearly 3x as high: https://versus.com/en/new-york-vs-tokyo

Agreed on supply. Might want to look at the 75% of household disposable income or exclude non-workers. Only the best earners get to live in the city.

Germany is a relatively equal country. A worker in the capital doesn't get double salary as the same position in the countryside. In fact there is hardly anybody who earns triple as of anybody else in the country.

The US is extremely unequal. A position in NYC can pay numerous times than a similar position in the countryside, then even for a given position in NYC two companies across the same street can vary from simple to double. Rent in NYC is naturally triple to reflect the triple in income.

> In fact there is hardly anybody who earns triple as of anybody else in the country.

Bullshit. I live in Germany, there's somewhat less income inequality than the US, but this is a gross exaggeration. A programmer in Munich easily earns triple or more than what someone gets at a random McJob like at Starbucks, also in Munich.

The bigger reason for why German rents are lower is simply that they allow for way more housing supply. In the US, even in major cities it's common to have wide swathes of land zoned for mandatory single family homes on large lots. In contrast, Germany doesn't have any such zoning in the entire country. You're always allowed to make at least some level of multi-family housing.

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