Whenever thinking about density and prices, a worthwhile example to consider is Tokyo. Very dense, but housing prices are very affordable. Part of the reason, as I understand, is that Tokyo allows people to keep building (compare to San Francisco).
Graph of Japanese Stock Market: https://www.macrotrends.net/2593/nikkei-225-index-historical...
Graph of Japan's Population: https://tradingeconomics.com/japan/population
Graph of Tokyo's Population: https://www.macrotrends.net/cities/21671/tokyo/population
Average Salary in Tokyo: https://www.timedoctor.com/blog/average-salary-in-japan/ (outdated exchange rate, yen has been collapsing)
In a nutshell: The Japanese economy was larger 33 years ago than it is today, the Japanese population is declining by the millions with even Tokyo now also seeing increasingly declining population, and the average salary in Tokyo is about $45,000. This can absolutely lead to low housing costs, but is probably not a model you want to emulate.
And that money has to come from somewhere. So either your population grows, so the more work is distributed better on more shoulders or you try to educate them better to increase the quality of the corporations etc.
But the fact that our economies expect constant growth has consequences for everything else
The important issue is that fertility is an exponential function. When one group has a low fertility rate they have fewer children, and those children have fewer children so onward. And so the rate of decline never changes unless the fertility rate does. But these numbers are also staggered out by the life expectancy of the first generation to have lower fertility.
So when going from high to low fertility society you will see a period of increase, stabilization, and then exponential decline. With Japan we're just about to head into the exponential decline phase. I expect the reason the UN expects a fertility rate change is that if you don't increase it, you go extinct. So it'll probably become the next big issue relatively soon - across the entire developed world.
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Also in terms of things like an 'aging population.' This does not change when the older group dies off. In fact if the aging population had a higher fertility rate than their children, then it will only become worse. It's the exact same issue in play. When you have lots of children, you end up with a high youth to elderly population. When you don't have many children, you end up with a high elderly to youth population. And that poses immense practical, social, and economic problems.
[1] - https://population.un.org/wpp/Graphs/Probabilistic/POP/TOT/3...
Social security would be insolvent if not enough people paid in to fund those being paid out. Stock prices and home prices would decrease as well. Debt would become more expensive since there would be fewer people to pay it back.
Because assets are priced based on their future value, growth is a huge component of the prices assets. The value of most everything in our society is predicated on that rate of growth.
What happens when this infinite growth starts to run up against finite planetary boundaries?
A lot of the foundations of economics fall apart once you assume logistic growth.
it's not, though. Tokyo is substantially more expensive than other cities in Japan. Tokyo is also more expensive than American cities when adjusted to per sq/ft rent and PPP.
"Tokyo is so cheap" is a meme at this point. Tokyo is cheap the same way having roommates is cheap (roommates are much, much rarer in Tokyo compared to NYC).
funny how no one can cite any other city. if the theory was true there should be dozens of examples.
Building more reduces prices below what they would have been if that building didn't happen.
seems like moving the goal posts. it's only expensive to begin with due to the density and subsequent amenities enabled by such.
why is for example Manhattan more expensive than Brooklyn? it's more dense, should be cheaper accordingly to the density makes cheaper logic.
people keep moving the goal posts, but anyone can go on Redfin and figure this out themselves. look at the median rent, find the median wage, find the median sq footage. calculate the adjusted wage by sq/ft. it's not higher in dense areas.
It's more expensive because many more people want to live there than want to live in Brooklyn, outstripping the available housing to a greater degree. It's basic supply and demand.
Isn't Tokyo famous for stuff like tiny, tiny microapartments? Are the rent increases comparisons you allude to measured per apartment or per square foot?
truth looks to be somewhere in the middle, but interesting how the polar opposites can exist so close to each other.
Even at that higher end of the Tokyo price range, there’s nothing like that for solo renters in SF or Oakland. You’ll have to go a one hour drive out of either city. Even then, there’s a good chance you’d end up in a room with shared amenities rather than a full apartment.
And let’s not forget that Tokyo actually has real transit. My first rental there was a luxury 4 bedroom home about 45 minutes from my office by train - I paid $1200 a month. It’d be even less today.
It only seems cheaper because rich Americans keep using their income and comparing it to the adjusted USD:YEN price. The Yen is trash compared to the dollar, so it seems affordable to an American. But it's not America.
I feel like many commenters have not been to Tokyo. Some of the apartments are literally the size of a single bedroom in an average New York City apartment.
Median household in New York is 120k; it’s 87k in Japan. Rent is over 200% higher than in Japan. Even adjusting for square footage and the earning differential, I assure you it is much easier to get an affordable place (and pay less per square foot accounting for income differentials) in Japan than in New York. Because of the Japanese transit system and the lack of household appreciation, there is a much broader range of rental prices and that range increases the further outside the city center you go.
Wanted to mention though that your sentence "the total cost of living in Tokyo blows NYC and the Bay out of the water" risks being interpreted with two very different meanings.
I've lived in 3 separate places in Tokyo (and currently own an apartment), and everything I've lived in has been bigger and cheaper than my apartment in San Francisco. I currently live in Sangenjaya (central Tokyo, a couple stops from Shibuya) and my mortgage, insurance, HOA, and total expenses are cheaper than my rent alone in SF.
My income is lower, but not in a way that I actually feel, because the overall cost of living is considerably lower in Tokyo. The conversion rate only really matters if you're going out of the country. There's been barely any inflation, so if anything, as the rate eventually goes back to normal, things will still be considerably cheaper here.
Yes, a lot of people live in tiny apartments here, but the cost of those units can be really cheap. You can pay ~$400 a month for a tiny unit here, which you simply can't get in NYC.
1 I’m limiting this to America because it’s approximately a self-contained housing market; I don’t think there are enough immigrants to really affect things. Thinking at a country level does make a difference - for example, I worry someone will bring up Tokyo as a counterexample. But I think Tokyo managed to build its way to low housing prices in the context of the rest of Japan also having good housing policy. Even if that isn’t true, Tokyo on its own is a quarter of the Japanese market, so it might be able to exhaust the entire pool of Japanese house-seekers by itself!