Monday, August 6, 2018

Who is lying when it comes to supply & demand?

From Crains:

New York City and the surrounding area, including northern New Jersey, the Hudson Valley and southwest Connecticut, is home to 22.8 million people working at 10.4 million jobs, the Metro Economic Snapshot released Tuesday by the Department of City Planning found. Since the last recession, the region has added around 708,000 new jobs—much more than anywhere else in the country in terms of raw numbers—but at a growth rate of just .9%, which is about half that of other metros and roughly on par with the country as a whole.

Over the same time period, the New York area added just 378,000 new housing units, far fewer than the number of jobs created and not nearly enough to meet demand. The mismatch was centered in the five boroughs and helped drive around 100,000 people to the suburbs each year between 2012 and 2016.

The metro area also lost a significant number of recent college graduates to lower-cost cities elsewhere in the country—something Glen has experienced personally.

"I just moved my daughter to Minneapolis," she said. "It was great, but it was also really sad."


From Forbes:

Researchers at the Fed found there were no "direct estimates of the rent elasticity with respect to new housing supply in the literature." No one knows how much housing you'd have to add to have any significant impact on costs. So, the researchers built a simulation to estimate, directly from data, the elasticity of rent with respect to housing supply.

They wanted to know how much rents might change if there was an influx of new housing. Given metropolitan housing crises and a lack of other data, it was an important study.

However, elasticity isn't a simple phenomenon. There are products where changing the price doesn't necessarily result in big shifts of demand. Look at the Apple iPhone X: $1,000 for the device and tens of millions purchased it.

The Fed report suggests that housing will be much the same:

The implication of this finding is that even if a city were able to ease some supply constraints to achieve a marginal increase in its housing stock, the city will not experience a meaningful reduction in rental burdens.

Add 5% more housing to the most expensive neighborhoods and the rents would drop only by 0.5%.

The reason is that people like the amenities in given neighborhoods and want to live there, so will continue to pay higher prices. Amenities can include shopping, schools, and ease of access to public transportation.

18 comments:

Tony Notaro said...

You know what's not an amenity? Third worlders.

Anonymous said...

I fail to see the problem. 378K/708K is 53%. It seems perfectly reasonable to expect that in the New York metro area, you need a dual income household.

Anonymous said...

Keep reading that more and more educated young people are leaving NYC. Decrepit infrastructure, no housing, horrible commutes, and shitty job opportunities...nothing but minimum wage service jobs!

JQ LLC said...

I couldn't read this entire Crain's article because I don't have an account with that site but Is the Glen in that post Deputy Mayor in charge of housing and development Alicia Glen? Because if it is, then the machinations she utilized in her position to benefit the real estate division gentrification industrial complex even drove her daughter out of town.

Queens Crapper said...

Yup! One and the same.

John said...


Anonymous I don't think that is true.

There are a LOT of high paying jobs for educated people. The finance sector in particular is flooded with AI jobs well over six figures.

Manhattan is/is becoming exclusively a playground for rich, educated people.
You can't be uneducated and afford to live here anymore.



>> Anonymous said...
Keep reading that more and more educated young people are leaving NYC
...nothing but minimum wage service jobs!

Anonymous said...

REBNY runs NYC.
Its L elected officials are their puppets... starting with De Blasio at the top.

Anonymous said...

This is the way it's done in a "democracy". Ethnic cleansing American style. Upzone.. Build higher density. Thereby increasing real estate taxes for remaining low density housing. Drive 'em out!
Who are we diving out? Poorer folk AND the middle class!
In 1978 my real estate taxes were about $3,000 for a one family home. NOW have reached $6,000 for a measly 40'x100' lot!
Will I be taxed out of my home? It looks like it if I live so long. The middle class is the meat in the sandwich....devoured from both sides....the poor (on gov't assistance) and the rich! We middle classes are fighting a two front war. Soon we will be driven into the poor class and EASILY dispatched by the REBNY crew! THROW OUT ALL INCUMBENT POLS! It's a start....to protect all underclasses. Yes! That's the way developers and the dept of city plotting sees us. They plan for the rich. They plot to destroy us! All else is just sugar sprinkled BS! Wise up you dumb voters! The polling place is your ONLY effective defense weapon!

Anonymous said...

So much new housing but no one there votes. Spleen it to me Lousie.

Jo said...


I agree with you that people are getting squeezed but having more taxable properties does not make your property taxes increase. Having many tax exempt properties does...like churches. Because the other properties have to makeup the difference.


Your property taxes went up $3000 in 40 years.
That is not a lot at all. Way lower than inflation.


There's no plot to destroy you. The land is expensive so developers want to make their money back so they develop luxury properties.

>> In 1978 my real estate taxes were about $3,000 for a one family home.
>>NOW have reached $6,000 for a measly 40'x100' lot!

Anonymous said...

"The polling place is your ONLY effective defense weapon!"

Bwahahaha... if voting chnaged anything, it would be made illegal.

Leaving is your one and only defense weapon.

Anonymous said...

As I see it, the only reasons for anyone to live in the absurdly expensive, crowded and congested NYC metro area as follows: 1. One has family here and one happens to like them. 2. One is making a shitload of money, so one lives in the "bubble of affluence," though one still has to put up with hairpulling traffic and congestion, and waiting lists for $50k a year private schools and $1k a week summer camps. 3. One is addicted to the arts and therefore will put up with being poor and living in a utility closet.

Anonymous said...

John said...

Anonymous I don't think that is true.

There are a LOT of high paying jobs for educated people. The finance sector in particular is flooded with AI jobs well over six figures.

Manhattan is/is becoming exclusively a playground for rich, educated people.
You can't be uneducated and afford to live here anymore.

UNTRUE....have you ever heard of roommates? They live in apartments with 2 or 3 roommates, hence they push the rents up. Families dont live in NYC much anymore, in Manhattan, it's basically single people who all live in the most apartments or people who are wealthy or people who were lucky enough to get an house or apartment handed down to them or rent subsidized apartments. The ones that do have families in nice areas of Manhattan are usually wealthy. Then you have Harlem and inwood where most people have rent subsidized apartments or live with roommates. In Brooklyn, most people who own houses there were lucky enough to inherit the house or they also have many roommates or some people just owned their houses for years. Queens is just all third worlders who pushed the rents up because they dont mind living 4 grown men in a one or two bedroom apartment or live two families in a 2 or 3 bedroom apartment. So they have more people splitting rent. There are alot of people who live in queens who are renters too and the homeowner lives out of state. Or two or three people will buy a zoned one family house and have it torn down and put all their families in the new so called "two family house".

Henry22 said...

@ Anonymous - if you were paying $3k in 1978, that's about $12,000 in today's money. And to say you're only paying $6k now?
Me thinks you're the one who's on the winning side of the equation.

Anonymous said...

Jo....you're an asshole!
I'm getting less for my $6,000 real estate taxes than I got for $3,000 in 1978. That's my gripe. Capeesh?

Anonymous said...

Henry 22? Might that be Henry Huang....Tommy Huangs son?

Anonymous said...

THEN LEAVE! But make sure that where you flee to has culture and real long term job opportunities. Know plenty who moved to Bum Fuck Texas and sorry they did. As the song says "once you leave New York , you ain't going nowhere". Look before you leap into an empty pool. You can't afford to come back once you leave. All those "sweet spots".... the Carolinas...etc. have become laden with big problems.

Anonymous said...

Then leave rather than vote! Cut and run! The lazy cowards choice....always! Who RU kidding? You'll just curl up in Archie Bunkers chair with a cool brew and vent your spleen on a blog site. About all folks like you are good for.