The Exact Moment Big Cities Got Too Expensive for Millennials
Joyce Park stashed this in Economics
I didn't realize that young people in LA spend so much of their income on rent -- because the income is lower, even though the rent is also lower. Note that NYC's recovery from the recession seemed to come quite a bit before San Francisco's.
I lived in LA in the 1990s and everyone then felt the pain of rent, so yes it's been there for a generation.
SF declined a lot in the 1990s but it has been on an upward tear since 2000.
For the cities above, I don't see how things get better unless more people leave.
So when did Washington become a city?To address your comment, Adam, on SF. I think we may be able to devalue SF again by developing a remake of Full House. It correlates to the pricing changes quite well.
By Washington they mean Washington DC.
Even a remake of Full House won't drive the rich people in SF away.
What has the been the catalyst that changed the way rents grow from the 2000's to now? I mean, the GFC is now just a small dip in this massive rent growth trend from 2000 onwards.
A couple of forces are making major cities increasingly unaffordable for millennials at the outset of their working lives.
Stagnant wages in many cities have made rental and for-sale housing harder for workers to afford.
Demand for leases has also outweighed supply in many places. In the nine cities shown on the map below, the number of renters is growing faster than the number of rental units, according to a report published in May by the Furman Center for Real Estate and Urban Policy at New York University. That trend is likely to continue if predictions for falling homeownership rates are realized.
For many cities, the affordability gap hasn't been a growth-killer; in many, it's a consequence of their sustained popularity. People continue to flock to San Francisco for opportunities in its technology industry, despite median rents that were unaffordable to young workers for the first time in 1982. Looming rental affordability problems in Dallas and Houston are probably the result of booming local economies that have attracted workers faster than builders can erect new housing.
Not unexpectedly, the poor have suffered most from the dearth of reasonably priced housing. In 2013, 60 percent of low-income renters were severely rent-burdened, meaning they spent more than half their income on rent, according to the Furman report. Middle-class renters are also struggling to find affordable housing: More than one-third of moderate-income renters were severely rent-burdened in Boston, Los Angeles, Miami, and New York.
In addition to stagnant wages I suspect two, possibly three, things changed:
* The biggest, it seems to me, is that as the US economy becomes less about manufacturing and more about services, it's become a giant winner-take-all game. It's cool to think that a talented young person should stay in Buffalo or Tuscaloosa and contribute to the community where they grew up... but the reality is that the more technical skills you have, the harder it is to resist the lure of the New Yorks and San Franciscos because that's where the best jobs are -- especially early in your career.
* The second biggest is just simple demographic-driven supply and demand. Gen Y or Millennials are the biggest generation, and they need a lot of infrastructure that just wasn't invested in during the demographic trough of Gen X.
* And possible although more speculative: old people NIMBY syndrome making life hard for young people. Here in Silicon Valley it is a giant sucking sound on the whole economy.