
Rents in Megacities Can't Go Up Forever - jseliger
https://www.bloomberg.com/view/articles/2017-03-23/rents-in-megacities-can-t-go-up-forever?cmpid%3D=socialflow-twitter-view&utm_campaign=socialflow-organic&utm_content=view&utm_medium=social&utm_source=twitter
======
geff82
Especially for information technology, I don't understand the rationale why it
has to be concentrated at certain places. As long as there is a good net
connection, it could be anywhere in the world. Let's concentrate on the US for
a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or
Des Moines? Talented people already move from one coast to the other, so they
could as well move to any other place. The rest of the country's
infrastructure is so good that you could connect venture capitalists, founders
and customers in any arbitrary way.

I also say to the main point of the articles: rents have a lot of room to grow
under the current logic. City centers simply get voided of average earning
people and replaced by high earning ones. As soon as they are the average
earners, even more wealthy people move in. Also with the rents, salaries go
up, so people have the possibility to pay for their accommodation again. While
in Berlin you could easily live with 40.000 Dollar/year, you'll probably have
to add another 60.000 so people are at least somehow able to move to work for
your new shiny SV company.

~~~
eli_gottlieb
>Especially for information technology, I don't understand the rationale why
it has to be concentrated at certain places. As long as there is a good net
connection, it could be anywhere in the world. Let's concentrate on the US for
a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or
Des Moines?

Because the real commodity being sold with the apartments and offices isn't
net access or even land. It's proximity to rich people. It's not an open
market economy; it's a feudal system in which you need to stick close to your
patrons.

~~~
startupdiscuss
That's a very interesting and original way of looking at it.

It would also explain clustering in other areas (finance in NYC, Oil and gas
in Houston etc).

Do you have any links or references exploring that idea in greater detail?

~~~
CPLX
I don't mean to have this come across as snarky, at all, but really the
reference for this is the whole of human history.

Wealth is basically self-concentrating. Our political systems tend to end up
with a few capital (and often Capitol) cities where the spoils from the
plundering, both metaphorical and literal, end up.

The original article does present some interesting and relevant examples of
countervailing forces at work as well, and is insightful. But the elephant in
the room, as always, is that returns to capital and rent extraction are the
primary drivers of wealth, and that the winners tend to keep winning and vice
versa.

~~~
startupdiscuss
That's not snarky, and you have a point.

But even if things seem "really obvious" and we can tell "just by looking at
the facts", I feel better if someone has looked at the data and shown that to
be the case.

We aren't living in the feudal era, and a lot of people like to think that the
reason people move to the cities is because of (for instance) bars and
restaurants, museums and the opera, high-paying jobs and so on.

This proximity to wealth may be a symptom of some third factor or it may be
the driving factor.

That's why I appreciate it when smart, hard-working people take their time to
figure it out for me.

~~~
closeparen
It takes relatively wealthy people (or at least big spenders) to make trendy
upscale bars and restaurants work.

Museums, opera, symphony, most theater, etc. are kept alive by the
philanthropy of the local rich.

High salaries are paid by rich VCs looking for return, or companies with more
cash than they know how to handle commissioning prestige projects. (How many
people at Google actually work on revenue generation? That doesn't happen at
Joe's Computers in Nowheresville).

Concentrated wealth is the reason cities can have these things.

~~~
jethro_tell
It should be noted that the vast majority of the IT industry isn't startups.
Lots of the drive of rent is not funded by VCs.

~~~
Mtinie
I'd argue that what you're identifying as those businesses in the majority
were at one time, startups themselves. Without the previous generation of
concentrated wealth those businesses would not be in the position they are.

I do, however, also agree with your counter-point to the previous comment.

------
davidf18
The author of the article is a professor of economics but doesn't state the
true cause of rising housing costs: Market inefficiencies (or market failures)
caused by politically induced market scarcity restrictions called "rent-
seeking" which benefits landowners such as President Trump over people who
rent or are purchasing housing.

Rent-seeking was first illustrated by David Ricardo in the mid-19th century
(IIRC) and surprising that the author did not cite the true reasons for the
rising housing costs.

Harvard Economist Edward Glaeser and Economist and Financial Times writer Tim
Harford among many others writes about this.

Remember, rising prices come from scarcity. Eliminate the scarcity and your
eliminate the high prices. Reverse the zoning density restrictions and you get
lower prices.

~~~
matt_wulfeck
You call them rent seekers, but the vast majority of the anti-builders I see
around the Bay Area are home owners who worry about traffic or some such. It's
not some big conspiracy to increase profits. It's incumbent nimbyism.

Attend a town hall meeting where they're discussing a new apartment building
and you'll meet them.

~~~
sf_rob
Even a lot of bay area renters are anti-development. "They're just going to
build luxury condos and destroy the neighborhood character" is the go-to
phrase.

~~~
davidf18
> "Even a lot of bay area renters are anti-development."

They might be receiving some sort of rent control so that their rent is far
below the market price. I know there are a number of people in NYC that live
in rent-controlled, rent-regulated apartments.

------
supergeek133
> Rents in Megacities Can't Go Up Forever

Yes it can, College Tuition is a great example. Instead of finding the cause
and treating it, we just increase the amount of aid people have access to.

~~~
acchow
No, college tuition will rise with middle-class incomes.

This is a cultural phenomenon. We're "supposed" to get our children the best
education we can possibly afford, otherwise we are bad parents. Since colleges
don't have price discrimination, this essentially means tuition is set at the
absolute maximum that the middle class can afford - squeeze every penny out of
them. This is why aid won't reduce the burden of tuition on the middle class
(tuition will just rise to meet the aid amount). It's also why tax breaks
won't help the middle class either (same idea), although the tax breaks can
help those above the middle class (since they have a higher tax rate, and the
tuition rises to match exactly the effective aid for the middle class).

~~~
dmitri1981
Or rather it will rise with availability of debt. Tuition is not paid cash and
incomes have been barely going up by a couple of percent per year

~~~
acchow
Ah, sorry. You're right. Income is a bad proxy for the real source of the
funding and availability of debt is far more precise.

------
carsongross
For those interested, rentier classes appropriating all surplus value in an
economy has been dealt with outside the typical marxist context:

[https://en.wikipedia.org/wiki/Georgism](https://en.wikipedia.org/wiki/Georgism)

Georgism was wildly popular in the United States, but was memory holed after
WW2 (along with distributism and Texas-style populist banking).

------
trapperkeeper79
This article crystalizes a point that was vague in my mind: "megacities have a
problem making it affordable to raise large or even medium-size families. How
many of us could live in San Francisco, London or New York City and bring up
three children in a decent neighborhood with good schools? Only the already
well-to-do can manage such a feat.".

As a mid-30s person with a new baby, I don't see how the numbers work for new
entrants to the housing market - unless you were a gambler. Your gamble would
be that (a) you don't ever take a hit on your income, and (b) property prices
continue to rise. We've been unable to take that gamble .. and homes have
increase 40% in the blink of an eye.

In Canada, we have a lot of family in the GTA. We're basically priced out of
areas as far away as Mississauga and Milton (Milton went up 20% since Nov
2016). An option we are considering is to move to BC and just rent for a few
years in Vancouver. At least we get a better city out of it. For any Canucks,
are there any other decent places with tech jobs, and somewhat affordable
housing?

~~~
Arizhel
>How many of us could live in San Francisco, London or New York City and bring
up three children in a decent neighborhood with good schools?

The simple solution is to not have any children. Leave that to extremely rich
people and very poor people. Society obviously does not support child-rearing,
given the cost of housing and the lack of support from employers, so why fight
it?

~~~
jamiek88
That is a logical but dystopian conclusion to make.

It disturbs me deeply and I wonder why.

Maybe it was your matter of fact, emotionless delivery of it that caught my
attention.

I can't really dispute what you have said other than it is not an
inevitability. Societies can choose to change this, Sweden being a current
example, Finland too. But people need to organise and want it enough, maybe
they don't. Time will tell.

~~~
Arizhel
>It disturbs me deeply and I wonder why.

I'm very glad about this; it means I must have gotten something right. :-)

>I can't really dispute what you have said other than it is not an
inevitability. Societies can choose to change this,

Exactly, but that's the problem: societies _can_ choose to change this, but
will they? As a pessimist, I say no, other than a few very small countries
like those you cite (and even there those are just attempts at change so far;
the birthrates in those nations are extremely low). Humans are remarkably bad
at seeing impending large problems and collectively working together to change
things to avoid them.

------
cletus
I've said it many times: this is one area where NYC is so much better off
than, say, the Bay Area.

In NYC you have an ultra-wealthy enclave around Central Park and pretty much
the rest of Manhattan really requires winning an affordable housing lottery,
being an incumbent or being in the top 10%.

That might seem like a problem but it's not. Or at least not a huge one. Why?
Because there are affordable options within reasonable distance with public
transit (eg NJ, Queens, the Bronx).

Compare this to the Bay Area where there's really nowhere affordable to live.

So rents here are a proxy for property values. The author is right that
property values have a natural ceiling but that's in the macro sense. There
can be (and are) enclaves that are only the domain of the rich (eg lower CPW,
CPS, 5th on the Park).

This sort of thing tends to have a flow on effect which is why gentrification
tends to radiate outwards.

So you end up with a situation where you can buy an apartment on 57th for
$100m and 30 minutes away you can buy one in Queens for $150k.

That's actually a pretty healthy situation (IMHO). It also means that property
values in Manhattan, for example, still potentially have a huge amount of
upside.

~~~
tutufan
I lived this out a few years ago when I had (great) offers in hand from TechCo
in the Bay Area and FinCo in NYC. Running the numbers, the former was simply
impossible without a four-hour daily commute, whereas the latter worked pretty
well with a commute half that long.

------
ctdonath
Supply and demand. So long as people want a limited resource enough to pay
$X+1 for it, prices will rise. There's a limit to the inherent value of living
in a megacity (adjusting for floorspace, quality, etc), so once insufficient
customers are found, prices will flatten or drop.

Being able to work from anywhere, there's no reason for me to stay anywhere
near a megacity (which I find expensive and distasteful). As employers
discover the cost savings of telecommuting, employees will discover the cost
savings of moving out of megacities ... and prices will slow, flatten, and
perhaps even drop.

~~~
humanrebar
I agree. The only challenge for me is the lack of dining table economics on
the part of employers outside of places like NYC and the Bay Area.

What I mean is that they almost exclusively look at local market prices for
developers. They don't generally factor in what developers can make in the big
cities. Now, some do, but generally they just apply the inverse of a cost-of-
living multiplier and make that offer. That's problematic because then our
savings rate, something that should be measured in absolute terms, is being
reduced.

Anyway, point being, if I add up my benefits, savings rate, and cost-of-living
adjusted _expenses_ , I end up with a big number for most non-coastal-U.S.
employers. I then have the risk of branding myself as an overpriced prima
donna, especially if I'm seen as a cost center instead of as a strategic
resource.

------
ssivark
The article is mistaken about one thing: the size of the financial sector is
not limited by the total wealth of the world. Eg: there could be derivative
contracts (insurance or derived bets) for cumulative values much more than the
value of the underlying asset (arbitrarily high, in principle). This is a big
factor in what makes the global financial system so fragile.

If the finance industry keeps skimming a fraction of all the money flowing
through it then financial hubs like New York city and London could keep
becoming more expensive.

------
diogenescynic
I work for a tech company in San Francisco and would gladly relocate to a
cheaper city if the company allowed us to work remotely or had other satellite
offices. Unfortunately, the satellite offices we do have seem to be dedicated
towards specific departments, which doesn't help me.

~~~
verulito
Why not get a new job then? My neighbors will murder me for saying this but
Austin is wonderful. Move here!!

~~~
diogenescynic
I work in fintech and not in an engineering role, so the jobs that are
available are mostly located in other high cost of living areas. I would
definitely consider Austin if given the option to move there. The income taxes
and housing costs make me salivate.

------
Finnucane
To put it another way, the cost of real estate in a given area is proportional
to the rate of money flowing through that area. Will ever larger flows go
through New York and San Francisco, increasing without end? History suggests
that is unlikely.

~~~
elastic_church
Well the frothiness of the tech bubbles are purely a factor of a lack of
liquidity of meaningful services to create.

VC capital focused on tech is a tiny sliver of available capital given the
sources VCs get their funding from, and an entire order of magnitude of
greater flows could come through.

So if you were using that as an excuse not to buy that costly condo on the
island or peninsula, its not a great excuse.

~~~
mcguire
“The market can stay irrational longer than you can stay solvent.”

~~~
elastic_church
Yes, much much longer or macroeconomic events can spook a few relatively large
funds and dry up funding.

Keep building! There's a very large ecosystem and a lot of continually
generated capital that merely needs to be convinced that the tech sector is
the place to park it.

------
brilliantcode
The article title is spot on. Vancouver is not a megacity, therefore our rent
will go up forever.

It's unbelievable how relatively expensive rent is to income.

I'm beginning to wonder why I'm putting up with Vancouver.

I'm thinking I will take the first train out of here but that doesn't seem to
be coming.

~~~
trapperkeeper79
From Toronto. We have it worse. We are actually thinking of moving to
Vancouver and renting :-p The rents in both places seem the same, except
Toronto has shitty traffic, very limited tech opportunities, bad weather, and
bugs. I looked around at jobs in Vancouver and it seemed a bit surprising how
many tech employers there were.

Can you shed light on why you are fed up with V? Where else are you
considering?

~~~
mattm
It's more disheartening when you think that just a few hours away in Seattle a
developer could be making 50-100% more salary.

~~~
brilliantcode
It's around $126,000 USD /year in Seattle. [1]

They didn't bother listing Vancouver because the salary here is so painfully
low with entry level software engineering positions regularly listing $40,000
CAD /year or $30,000 USD /year, which is what a Starbucks barista in Seattle
clears.

As your experience goes up, so should your salary right? Not in Vancouver.
It's around a couple hundred dollars per month in after-tax pay bump provided
you've slaved at a company for 5 years minimum.

Pretty fucking hard to build a competitive tech company in Vancouver, when
people are unmotivated due to depressed wage, high cost of living with no
upward mobility. Almost everybody I talk to, housing is a big issue. Everyone
is working, commuting on congested public transit, house poor but the image of
living in Monaco, coupled with good ol' Canadian Ohwellism, people really
don't give a shit about career mobility as long as they have a regular job
that will let them sustain a roof over their heads.

There is a large brain drain happening here, in 15 years, this city is going
to be a very different place. I don't know what the impact of losing long time
middle class residents who comprise of the economy.

You will be poor but working in Vancouver, and that alone serves as a novelty
for newcomers. There's really nothing special in Vancouver, to justify a
100%~300% pay cut (factoring in exchange rate and low Vancouver salary).

Vancouver might be multicultural but it's also a ethnically silo'd and very
tough to meet people in general as they are very cliquey and stick with their
own skin color.

Lot of broken dreams and disappointed Canadians/Americans from other
provinces/states who tell me these things, which is why I'm writing this long
comment to warn those who have a romantic attachment to Vancouver.

Fuck Vancouver.

[1] : [http://wonderfulengineering.com/much-software-engineers-
arou...](http://wonderfulengineering.com/much-software-engineers-around-world-
make/)

~~~
gabbo
Your point is 100% correct, but IMO that link understates Seattle earnings
potential. Probably doesn't include equity/cash bonus, which will happen a lot
in Seattle and not so much in Vancouver.

Big tech company jobs in Seattle are extremely common, and a big tech company
job in Seattle will pay you _much_ more than $126k/year USD when you include
stock/cash bonus.

Especially a few years into your career. If you're willing/able to be a dev at
a big tech company, $200k-$300k/year is absolutely normal 10 years into your
career (often much sooner). If you're great, $300k-$400k is completely
possible.

~~~
cylinder
The difference is there's a huge tech bubble in the US which has blown up
salaries for software professionals far ahead of anywhere else in the world.
Think about all the flimsy startups funded by free flowing VC cash who will
never make money. Once they burn through the cash they are done. When you have
millions / billions thrown at you, who cares about paying developers $140k?
The money almost means nothing.

It's the $150k that software engineers make in the US that's _abnormal_ , not
the $50k in Canada or EU. That is where salaries in the US will go once the
funny money moves on.

Engineer shortage? Not really. This is something that can be learned by
studying books, you do not even need a license. Yes, it's hard, technical
stuff, but so is Mechanical Engineering yet they don't make these kinds of
salaries and they have more barriers to entry.

It's funny to see the bias here: high house prices are certainly a bubble, but
high software salaries are definitely 100% earned due to amazing abilities to
generate wealth and market fundamentals.

------
bdrool
Maybe they can't, but that won't stop the people who benefit from high
rents[1] from trying!

[1] (And the people they have somehow brainwashed into being on backing them
up, despite it being against their best interests.)

------
jandrese
What does it look like if a rent bubble pops? Can such a thing even happen?
Rents tend to be difficult to change without moving. I guess rents can fall if
demand considerably outstrips supply and the landlords get desperate, but most
landlords I've seen are pretty stubborn and will hold out until the last
second before they lower the rent a single penny.

~~~
maxxxxx
In 2008 rents didn't drop much. I think landlords will leave places empty
before they will drop rents too much.

~~~
AlexB138
I wouldn't expect rent to have fallen in 2008. Thousands of people were losing
the homes they owned and becoming renters, sky-rocketing the demand for rental
property.

~~~
trapperkeeper79
That's right. At the start of the crisis, I had landlords offer crazy
incentives - 2 months rent free on a 13 month lease. They just wanted to lock
people in. In a few months, when it was clear that people abandoning houses
were moving into apartments, these deals disappeared and rents actually
started to increase!

------
psyc
Not literally forever, of course, but I think it's naive to say people's
inability to have the lifestyle they want will deter increasing rents.
Empirically, society on balance doesn't care one tiny bit how much hardship
people endure, and people will endure the hardship. I'm not seeing what
mechanism is assumed to counter that.

~~~
orangecat
_I 'm not seeing what mechanism is assumed to counter that._

Increasing supply. Which in this case is difficult due to the alliance of
existing property owners and useful idiot "anti-gentrification" protestors.

~~~
Bartweiss
It's also difficult for the more fundamental reason that space is one of the
harder goods to 'manufacture'.

We're not running out of land, obviously, but for standards like "land within
3 miles of the city center and -100 to 500 feet of the surface", that's much
tougher. Not full, but crowded and with exponentially-rising development costs
(since construction gets more difficult and annoys more people).

Of course, that's a problem I associate with NYC, LA, etc. SF (and probably
London?) get blocked politically before they ever reach that point.

~~~
nosuchthing

      1.  Repeal prop 13.
    
      2.  Apply local or state taxes and penalties against empty lots and housing/retail units without real tenets.
    
      3. Reevaluate property tax annually and apply land tax for dense urban cores to encourage mixed development and high density units.

------
legulere
> Many more economic sectors tend to be spread out geographically -- such as
> higher education, caring for the elderly, installation of smart-home
> equipment, fracking, restaurants -- and if more economic activity takes
> these forms, to some extent rents will equalize across different cities.

I do not buy this. In the countryside the economy is backed by the local
resources (forestry, agriculture, if it applies fracking etc.). The rest of
the economy in the countryside lives off the money brought in by those, and
especially off the wages of the workers.

The more automatisation you have, the less you need people spread out. The
trend is that things get cheaper and need less work that is more centralized.
What you need to be able to do is creating new things, and that is easier in
centralized megacities.

------
aljones
Forever is a long time. As a famous economist once noted, in the long run
we're all dead.

~~~
clock_tower
Obviously not forever -- eventually the sun will become a red giant and
consume San Francisco, at which point all rents there fall to $0 -- but I
heard "forever" in that article as "the foreseeable future and its foreseeable
future". Maybe 100-200 years; maybe longer than that... How do you read it?

~~~
aljones
It is unclear. I prefer clarity. I don't know what to think of it really.

------
mcguire
Wait. _Bloomberg_ is saying that the price of something can't go up forever?

------
sgron
Sure they can. That there is a natural bound relative to other fundamentals in
no way means that the absolute price cannot unboundedly increase. Any in any
case, the most thorough spatial equilibrium analysis suggests that there is
natural agglomeration of high skill/wage (locally positive feedback). The
reference is Diamond (AER 2016), but the working version of her job market
paper is a bit more complete:
[http://web.stanford.edu/~diamondr/jmp_final_all_files.pdf](http://web.stanford.edu/~diamondr/jmp_final_all_files.pdf)

------
amyjess
I disagree with the article's premise that urban growth is driven by
creativity.

For example, this doesn't explain Tokyo. Japan's capital of creativity is
Osaka; Tokyo doesn't even come close.

~~~
Bartweiss
Doesn't _ubranization_ drive urbanization? I mean, people (myself included)
treat living in cities as end in itself. People pay more of their income in
rent just for the access and experience of urban life. So yeah, I think
Cowen's justification is off.

There is a second layer where I agree with Cowen more, which is that urban
cash flows need some 'engine'. People can only pay based on their salaries,
and some fraction of spending in a city flows out (to food, industry, etc). So
yeah, having a major economic driver raises your price cap, but it doesn't
have to be creative. It just has to be something you can effectively do in a
city and get money from elsewhere. I don't know what it would be for Tokyo,
but in my home town it was urban-friendly manufacturing not creativity.

------
pasbesoin
I found housing prices to be harbingers of what turned out to be the "Great
Recession". Looking around my metropolitan area, wages and income just weren't
keeping pace (and we didn't have a localized influx of foreign investment,
like in Vancouver, BC).

I suspect that escalating rents, tuition, and perhaps some other things, are
similar signs of change, although it may prove to be less sudden and dramatic.

Sooner or later, the "slop" in consumers' budgets that can accommodate these
runs out.

Also, the U.S. is becoming a less friendly place to foreigners. Although I
don't know whether that applies -- or will be made to apply, by this 'embrace
the "winners"' Administration and Congress -- to the global 1% buying in to
e.g. U.S. real estate. (The U.S. currently being the center of my
perspective.)

------
sanj
" In the early years of smartphones, a big part of the gain goes to Apple. As
cheap imitators enter the market, prices fall and more of the gains go to
consumers, or business users of the product, who are scattered across the
country."

I believe Apple still take 90% of the profit.

------
andrewprock
The author is of course strictly correct, and practically wrong. Eventually
our civilization will collapse, and the sun will go supernova. But for the
foreseeable future, fiscal policy will be managed by inflation, and economic
policy will be managed by economies of scale. The surprising thing is the
author, doesn't mention either inflation or scalability once.

When information technology no longer scales, and we achieve full saturation
for jobs that support scaled services, the prices will plateau. Until then, I
expect them to rise at a rate faster than the rest of world. I don't expect
that trend to end in my lifetime.

~~~
pklausler
> and the sun will go supernova

Nope. Not massive enough.

------
pascalxus
I hope he's right.

But, here's how he might not be: If cities like SF continue to maintain excess
building regulations and "affordability" requirements that actually make it
less affordable for most people. Zoning and land use policies are causing huge
problems. Anyways, a smaller and smaller percentage of people will continue to
prop up these insane housing prices, while a few others either gets free
housing from gov subsidies or price ceilings, locking out any new entrants.

~~~
shostack
Not just that, but CA is unique with Prop 13. That is an artificial pressure
cooker factor that other markets do not have. The best time to buy in CA was
as close to when Prop 13 was implemented as possible.

------
startupdiscuss
I think all almost industries cluster in the sense they are talking about in
the article. The corporations responsible for creating and distributing are
clustered.

For instance, Oil and Gas in Houston, Pharma in New Jersey and so on.

I don't think the economic value of clustering will stop anytime soon.

The trend may stop because people find better solutions to housing than simply
building more of the same.

(And software should not be thought of as an industry, but a tool that enables
other industries, but this is not the place for that.)

------
dba7dba
The way I see it, to renters rent will forever seem to be going up forever.
Because when general pay level goes up, rent goes up to match it.

------
throw2016
There has been a massive debt fueled asset bubble since the late 1990's in
surprisingly nearly all major world cities. And financial policy in most
countries has been not only fueling this but also protecting the banks. Any
asset price drops will most likely devastate them. Unless these policies
change asset prices will continue to rise.

------
Ericson2314
Classic example of trends vs facts in journalism.

SF chronical article today (like any of you read that hah!) talks about
recession-level net migration in the Bay Area last year. Meanwhile in NY
prices have supposedly declined (can only site annecdotes and others claims
unfortunately).

The predicted future is already here.

------
user5994461
> Will New York, San Francisco and London become unstoppable juggernauts,
> soaking up more talent and becoming more expensive each year?

London rent and properties took a 10% hit since the Brexit event.

~~~
cylinder
No they didn't. Some high end billionaire properties did, that's all.

------
tzakrajs
It's easier to move to the bay than to move the bay to you.

------
seppin
In theory, can't the drop in rental prices be in small cities and the more
"desirable" ones keep going up?

------
cheriot
Is wealth inequality bounded? As long as there are people that can afford to
pay more, some will.

------
huffmsa
But why not? There is no precedent to the contrary. Rent has always gone up,
people are social animals.

The needs of business are independent of people's desire to be with other
people.

Virtualization need to improve a lot before the experience of "group" is as
good as real life.

~~~
jseliger
_Rent has always gone up_

This is not true, see e.g.
[http://observationsandnotes.blogspot.com/2011/07/housing-
pri...](http://observationsandnotes.blogspot.com/2011/07/housing-prices-
inflation-since-1900.html),
[http://marginalrevolution.com/marginalrevolution/2016/02/676...](http://marginalrevolution.com/marginalrevolution/2016/02/67635.html),
and
[http://marginalrevolution.com/marginalrevolution/2016/08/lai...](http://marginalrevolution.com/marginalrevolution/2016/08/laissez-
faire-in-tokyo.html) . The housing sector is excellent at providing housing
services but has not over long periods of time and a wide array of places
shown supernormal investment returns, adjusting for inflation.

Robert Schiller has written extensively on this. Here is on pop article on his
work:
[http://www.usatoday.com/story/money/personalfinance/2014/05/...](http://www.usatoday.com/story/money/personalfinance/2014/05/10/why-
your-home-is-not-a-good-investment/8900911)

------
fallingfrog
Well, of course, no number that represents a physical quantity can go up
forever.. neither electric charge, nor information, nor energy, or mass, nor
money. Yeah I'm being a bit nitpicky I guess.

~~~
prewett
Well, since I'm good at contrarian nitpickiness, I'm going to argue that it
can. Mass can increase forever in a black hole, and if you keep accelerating,
you get heavier and heavier so that you can never actually reach the speed of
light. I guess you could argue that black holes will eventually run out of
matter, and you would run out of accelerant, though. Conductivity is infinite
in super-conductors (i.e. resistance=0). I don't see any reason why energy has
any limit to how much it can be concentrated. I think people have argued that
irrational numbers like Pi contain all possible strings (that is, of the
characters [0-9]), although you may have to look pretty far out. So that would
mean that the digits of Pi have infinite information.

Writing this makes me think the world is a stranger place than I thought. I
would have said that a physical quantity cannot go up forever, but I've talked
myself out of that.

~~~
fallingfrog
ok, so there are certain functions that keep rising forever but are still
bounded above. So what I mean is that physical extensive quantities are all
bounded above. Black holes will run out of matter, and there is only so much
accelerant in the universe. Like you said. Conductivity is not an extensive
physical quantity like mass or energy.

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paulpauper
It has to at least track inflation, which varies between 2-4% a year, so yes
they can go up 'forever'

~~~
fred_is_fred
Rents in fact do not have to at least track inflation. With increasing housing
supply or loss of jobs, rents in will in fact go down.

------
ClayM
<Megacities> Hold my beer.

