9 years ago
4
The absolute worst advice we give to Americans struggling to pay rent
High rents are a national, not just an urban problem. Real estate company Zillow noted this year that in 2015, rents increased nationally by more than 3 percent. Meanwhile, personal incomes are creeping along; in May of 2015, disposable personal income grew just .5 percent. The average national rent, according to ApartmentGuide, is close to $800, while working full-time for the federal minimum wage nets you just under $1,000.
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This article doesn't propose a meaningful solution. If a shortage of rental properties is driving up the cost of rent, wouldn't moving more people into the city make demand and therefore rent even higher?
One could argue that this imbalance between wages and rent cost will ultimately be self-stabilizing. Take a city with an acute shortage of rental properties. Rents will spike, which will make apartment buildings an attractive investment. There will be a boom in building construction, and after a few years rent rates will stabilize as more rental properties come online. Wages should also gradually adjust to reflect the local cost of living. The problem is that it will take time. For building construction the process of design, land procurement, permitting, not to mention the actual construction takes years. Wage adjustments also takes time as we all know. I don't think rent control is a viable answer as it would kill private investment in the construction of rental properties and exacerbate the shortage. Subsidies for the construction of affordable housing would help spur investment but again, construction takes years.
I don't know if moving out of the city in the short term is as bad as advertised. Yes, there are major costs in relocating but its not insurmountable. Why not move out of the city if the reduced cost of rent and the cost of living more than offsets the cost of commuting?
I agree. The article's premise seems to suggest that if we just pray to the Free Market Fairy that increased demand will ultimately lower costs instead of allowing owners of finite resources to jack up the prices even more. Yes, more renters will increase the need to build more housing but the last ten years should have demonstrated to anyone paying attention that this is no guarantee of lower costs. If they can build more and jack up the prices because of high demand then they win in both directions.
However, the article serves to highlight a significant problem to wealth disparity that people seem content to ignore: the cost of living is skyrocketing in ways that we can't or sometimes won't track and housing costs is one of them. Moving to more affordable areas typically means accepting huge cuts in pay, negating the reason why you moved in the first place. I hear housing prices in Detroit are really cheap, but I wouldn't hold out hope of finding much work there. Long commutes aren't very healthy or feasible either if you're struggling for money, especially with the way public transportation is starved for funds and resources.
I think ultimately the problem is that in society the middle and working class do not have a powerful voice representing their interests. In the old times they had unions. The threat of work stoppage was enough to guarantee that wages would keep pace with the cost of living. Now unions are marginalized and the middle class is fighting among themselves for table scraps. If wages had kept pace with productivity gains the high cost of rent wouldn't be nearly as acute as it is now.
I've said it millions of times but in order for a city to stay the same, the city needs to grow. San Francisco is a great example of what happens when you fight growth under the delusional idea that by doing so, nothing will ever change. Their rents skyrocketed and the original culture that has thrived for decades is almost completely gone.
As the industry changes, higher pay jobs will be more focused in the city center which means the only way to keep the original tenants there is to build more housing to accommodate the new. The higher paid skilled workers will be coming to the city no matter what and rent control will have little to no effect in preventing that.