Comment by humanrebar | Hacker News Reader

Comment by humanrebar | Hacker News Reader

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I think they buried the most rational conclusion. After complaining about expensive cheese (really? someone lives in a hipster bubble) and awkward sorry-didn't-invite-you situations (which always existed), the NYT gets to the point:

"More financially injurious, however, is the exorbitant rents that millennials often pay..."

House parties take space. Space costs money, especially in and near Manhattan. They also require either lots of room between homes (to keep noise down) or amazing soundproofing. Neither of which is common in Manhattan.

And everyone pays crazy rent. Remember when housing prices crashed in 2007-2008 and the government was brainstorming ways to keep them up? This isn't a force of nature, and it's not extra hard on millenials. It's policy. If anything, it's harder on families, since they need more space for kids (who don't pay rent) and have less tolerance for walkups (strollers) or rough neighborhoods.

Besides, there are plenty of house parties across the country. They call them BBQs or pool parties, and they have them during the day in places where people with steady jobs can afford to own or rent a home with a yard or pool. You know, flyover country. The places that don't read the Style section of the NYT.

> This isn't a force of nature, and it's not extra hard on millenials.

Older people are more likely to own their homes (even in expensive cities like SF), so higher rent absolutely hits millenials harder.

Increased land prices mean higher taxes for homeowners too.

> Increased land prices mean higher taxes for homeowners too.

Not in California:

https://en.wikipedia.org/wiki/California_Proposition_13_%281...

And if property taxes go up on my landlord, my rent goes up to cover it.

Why would this have any more impact on your rent than if your landlord's car payments were to go up?

Taxes affect the whole market; the landlord's car payments just affect that landlord.

Similar apartments in your area are similarly priced. That's because they're obeying supply and demand. If your landlord's car payments go up and she raises the rent to make up the difference, the similar apartment down the street--owned by someone who's car payments haven't changed--suddenly looks more attractive so you move. So she can't raise the rents like that because the market has no reason to move as a whole. Her car payments don't alter the supply or demand for apartments in your area.

But if the taxes she has to pay go up, they go up for all the landlords in your area. That impacts the cost of providing an apartment and removes apartments that are marginally profitable from the market; in economic terms it's an inward shift in the supply curve. So the price for apartments in your area goes up.

"That impacts the cost of providing an apartment and removes apartments that are marginally profitable from the market"

It doesn't remove them from the market, because the new (higher) property tax must be paid whether the landlord continues to let the property, lives there herself, or sells the property to a new owner.

If we were talking about an increase in the income taxes levied on rental income, then your thesis would hold. In this case, as taxes on rental income were to rise, so would the additional benefit of renting vs. living in the property myself. At some point, it flips, and it becomes better for me to just live there. The post-tax rent just isn't worth it compared to the benefit of me (the landlord) living there.

However, a property tax which is fixed with respect to the use of the property (rented or owner-occupied) and, if applicable, rental income, would not have the same effect. The annual property tax must be paid whatever happens, and it is a sunk cost that everybody must pay. It does not affect marginal decisions (buy vs. keep; rent vs. owner-occupy).

> It does not affect marginal decisions (buy vs. keep; rent vs. owner-occupy).

Hmm, I don't see how increasing the price of an input fails to increase its price. The "somebody's gotta own it" argument isn't convincing.

Not that confident in this, but here's my take: it does affect keep vs sell: if you can't afford to to keep it (because your rent income no longer justifies your costs) then you have to sell it. To whom do you sell it? Not other people who wish to be landlords, presumably, because they'd in the same bind as you. But the housing price sinks until someone buys it to live in (their property taxes sink too!). Perhaps you even sell to yourself by refinancing and then move in.

Because the cost of the good that you are renting has gone up? I don't rent my landlord's car, I rent the space in his building.

Either the landlord has to eat that increase in price out of their profit margin, or it gets passed on to the customer.

Landlord's car payments go up and he raises the rent? Suddenly he has to pay more in taxes because his rental income increased.

Sewage/water costs of apartment go up and he raises the rent to compensate? Net zero increase in his taxes because the sewer/water cost is deductible against the rental income.

Guess which one he's more likely to do?

Because taxes affect an entire market. It's not like there's other properties you can rent next door that aren't subject to rising property taxes.

However, a stupid landlord buying a Ferrari and raising your rent to cover it doesn't affect an entire market. You just move someplace else with a less stupid landlord and lower rent.

It only wouldn't in an absurd rationalist homo economicus wet dream fantasy universe, where the current price is at a perfect equilibrium and costs have no impact.

So, we agree that basic microeconomic theory would suggest that property taxes which are independent of {actual usage, actual rents received} for a particular property. Right?

You think the assumptions of the model don't hold, which is a reasonable belief. Can you point to any empirical evidence that might help us disprove the theory?

Move to a country with better laws. That wouldn't fly in much of Europe.

Or just different state. Texas has much more relaxed legislature around real estate, which makes it more attractive to emigrants from other states.

If you really think taxes increase at the same rate as rent, you've clearly never looked at SF.

What I think is interesting is that in Asia, where property prices are also sky-high...this is dealt with via a large network of public and semi-public spaces for rent.

-Want to smooch on the couch with your significant other but neither of your family apartments are large enough to do so in private? Rent a movie room!

-Want to have a party with half a dozen of your best friends? Rent a music room!

-Need a quiet place to study away from your noisy household? Rent a study room!

-Need a quiet place to have sex away from your nosy families? Rent a love hotel!

-Want to take a quiet day and pamper yourself, with meal service?

and so on. Even better the places offer extra amenities -- you don't have to clean up afterwards, there's usually drink and light snack service (and tech support), and so on.

So it's curious that this kind of business hasn't really sprung up (outside of Asian enclaves) in highly dense cities.

I think in general in most parts of the world people find these types of rooms for hire to have a yuk factor. Possibly because people don't trust the cleaning standards?

Maybe that's why so many millennials are living at home, or why the stigma of not leaving the nest is gone

http://greyenlightenment.com/why-millennials-are-still-livin...

why make the landlord rich when you can use the saved money by living at home to build your own financial future

Yeah, the only reason I moved out is because the only work I could get was in another city. If it didn't mean a 4 hour daily commute, I'd definitely still be hanging with my parents.

Hell you don't even have to live in flyover country. We pay $2,300 in Baltimore for a 2BR and the building has huge community areas and a pool. We get building residents together regularly for bbq, pizza, and pool parties.

I love NYC, but as the rents become more stratospheric and economic competition goes up, there is this odd effect where the people who can afford to live in a place big enough to host others are working way to much to actually host parties.

$2300 for a 2BR is still pretty nuts. My mortgage on a building with 2 2BR units is only $1800, and that's with FHA PMI and escrow for hefty NH property taxes. This is about 45 minutes from Boston.

Although I look with envy at my parents, who pay about $1000 in property taxes a year, and a mortgage that was about $600 before they paid it off, on a house with 50+ acres of land. With that much land (and with only a single neighboring house in sight), you can do pretty much do what you damned well please. This is about 4 hours away from Boston.

I could make quite a bit more money than I do now if I moved to NY, Boston, Seattle, California, or wherever, but if I'm increasing my salary by 50%, while doubling or tripling my cost of living expenses, and I have to live crammed into an urban area with people everywhere, that seems like a shitty deal. I'm hoping I can stick it out long enough for most people to realize that you can be just as effective as a software engineer when you're not breathing the same stale oxygen as your coworkers.

> I have to live crammed into an urban area with people everywhere

Some people prefer city living, some people don't. You say you have to live in crammed in an urban area with people everywhere: I say I get to.

We're talking about parties. In those cramped urban areas, it's way easier to get people together on a Wednesday night when they live in the same building.

Also, mortgages in most places are cheaper than rents. We could get a 4 BR townhouse in the middle of Baltimore for $1800.

I'm paying $1475 per month for a 2 br with a garage in Chicago right outside of Wicker Park. (The garage represents $100 built in)

Is that typical for Chicago?

Depends on the neighborhood. It's high to average for my area. Chicago varies from 400-3.5k. (It can go higher than 3.5k but thats incredibly unusual) I think I have something like 800 square feet.

Most of the units are 2br, as that most of the buildings are built for families.

Check out padmapper.

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