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Old 07-31-2017, 05:49 PM
 
Location: In the heights
20,111 posts, read 21,722,272 times
Reputation: 10216

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Quote:
Originally Posted by BajanYankee View Post
It hasn't really been the federal jobs that have made the area so expensive in recent years. I remember reading an article a few years ago about how no major corporation had a Washington, DC office in the 1960s. In 2017, there are virtually no major corporations that lack a presence in Washington, DC. Law firms have also exploded in size and prominence since the 1970s. These are things that are indirectly related to the federal government, but it's not the federal jobs that have caused the astronomical rise in the price of real estate in the region.

https://www.theatlantic.com/business...ocracy/390822/
You're right to some extent, but as your link shows, it's not federal jobs per se in terms of the federal government employing people directly. A lot of it is federal expenditure for companies that work with federal agencies, and almost nowhere was that more apparent than it was for Los Angeles which lost a huge number of corporate headquarters and the smaller hanger-ons from those when they moved into and close to DC in order to be closer to the source of funding. You're right, a lot of it is indirect, and it's a combination of both the direct and indirect jobs that helped create DC's growth as a large urban center near the federal seat of power as well as a major shipping port and historic powerhouse in and of itself. It's likely a combination of bad state and municipal politics (infighting) that's had the most to do with its current state.

I will say that, unlike some of the other posters here, I don't gripe about it. It makes a lot of sense and ultimately saves federal dollars to have those corporations close by and it's inevitable as the US grows in both population and GDP. I think the only odd part about it is for me is that close-by Baltimore has not been able to capitalize on more of it. Baltimore to me seems like a city that's truly had a hard time making good on its blessings.

Last edited by OyCrumbler; 07-31-2017 at 05:59 PM..
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Old 07-31-2017, 05:51 PM
 
Location: In the heights
20,111 posts, read 21,722,272 times
Reputation: 10216
Quote:
Originally Posted by Enean View Post
I'm aware, and I stated it was old. Still, it's 3 years ago....not that much has changed, I'm guessing.
Three years has changed a good lot of things as NYC has entered a massive economic growth spurt. This isn't a normal spurt or something that's just tracking the median of the US, but a full-fledged building boom that is an outlier even as NYC itself is an outlier. If your point is that there is a massive pool of have-nots and great inequality is true and has gotten worse, then that stands, but the building boom happening isn't doing that much to make it better.

NYC is currently building at a rate where the construction outside of Manhattan, which by itself is immense, is just a parcel of what's happening in the rest of the metro and city as well. It's not purely Manhattan at all right now.
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Old 08-01-2017, 07:16 AM
 
Location: The mountain of Airy
5,145 posts, read 4,985,538 times
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Quote:
Originally Posted by BajanYankee View Post
But this is tangential to the OP, no? He asked why Chicago and Philadelphia are more affordable than a few other select U.S. cities. The question is not whether someone earning X in NYC is worse off or better off than someone earning Y in Philadelphia.

Why do you think the DC region is more expensive than the Philadelphia region?
I think it's because of rapid growth. When jobs grow too fast to allow for the waves of gentrification to occur, it creates a housing shortage similar to a geographic constraint. That's one of the variables with DC from what I can tell.

And in line with what kidphilly was saying, I do think that there's a zigzag between high paying jobs jacking prices up, COL rising across the board, more jobs showing up, costs going up. Speculation and a housing frenzy (my own amateur term) can happen when all the right constraints and demand occur. Neither of which have happened on a wide scale in Chicago or Philly. Good things for both cities.

Quote:
Originally Posted by BajanYankee View Post
I've been told before on C-D that the only reason certain cities have high salaries is because the COL is so high. That seems backwards to me.
I think at some point that becomes true, but only once COL is already high. If a company moves from St. Louis to NYC, the company will have to pay more and employees will have to survive in a climate where COL is higher because of housing, food, etc. But COL has to already be the benchmark when the company shows up, I think. Otherwise, the company would just be throwing money out the window, and companies that waste money end up failing most of the time.
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Old 08-01-2017, 07:23 AM
 
7,177 posts, read 3,866,252 times
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Quote:
Originally Posted by AJNEOA View Post
I think it's because of rapid growth. When jobs grow too fast to allow for the waves of gentrification to occur, it creates a housing shortage similar to a geographic constraint. That's one of the variables with DC from what I can tell.

And in line with what kidphilly was saying, I do think that there's a zigzag between high paying jobs jacking prices up, COL rising across the board, more jobs showing up, costs going up. Speculation and a housing frenzy (my own amateur term) can happen when all the right constraints and demand occur. Neither of which have happened on a wide scale in Chicago or Philly. Good things for both cities.



I think at some point that becomes true, but only once COL is already high. If a company moves from St. Louis to NYC, the company will have to pay more and employees will have to survive in a climate where COL is higher because of housing, food, etc. But COL has to already be the benchmark when the company shows up, I think. Otherwise, the company would just be throwing money out the window, and companies that waste money end up failing most of the time.
Voice actually doesn't New York. New York has a large concentration of high-wage industries, but on average salaries are rather low in New York City, as compared to other information economy cities. There's a different lifestyle expectation: having a roommate if 32 isn't seen as a mark of failure. Anecdotally speaking, New York seems to have the highest percentage of residents are not dependent on their own income. I've met countless adult professionals with trust funds or who received other financial assistance from their parents.
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Old 08-01-2017, 07:29 AM
 
Location: The mountain of Airy
5,145 posts, read 4,985,538 times
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Quote:
Originally Posted by gladhands View Post
Voice actually doesn't New York. New York has a large concentration of high-wage industries, but on average salaries are rather low in New York City, as compared to other information economy cities. There's a different lifestyle expectation: having a roommate if 32 isn't seen as a mark of failure. Anecdotally speaking, New York seems to have the highest percentage of residents are not dependent on their own income. I've met countless adult professionals with trust funds or who received other financial assistance from their parents.
NYC is a bit different for a number of reasons. Although the concepts work the same. While wages seem low across the board, there are still a ton of high wage jobs. The service economy there is massive due to all the people and the draw of living in NYC. I don't know NYC well enough to go beyond those statements, and I think that NYC would need its own thread talking about COL, wages, etc. to examine it more accurately.
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Old 08-01-2017, 07:41 AM
 
Location: Boston Metrowest (via the Philly area)
4,265 posts, read 7,187,813 times
Reputation: 3952
Quote:
Originally Posted by BajanYankee View Post
But this is tangential to the OP, no? He asked why Chicago and Philadelphia are more affordable than a few other select U.S. cities. The question is not whether someone earning X in NYC is worse off or better off than someone earning Y in Philadelphia.

Why do you think the DC region is more expensive than the Philadelphia region?
It was a bit tangential, and I apologize for that. But I was only trying to counter the point that COL differences are entirely to do with economic strength and the implication that the Philly region doesn't have a high concentration of high-paying jobs, when in fact both standard and relative income data demonstrate that couldn't be further from the truth.

Nevertheless, I did note in another response that the only hard, factual reason we can ascribe to significant variations in housing costs, for example, is a severe imbalance between supply and demand. Things like "desirability" or "better X" etc. are extremely relative and speculative.

The only thing that is provable in this conversation is that cities like SF, DC, Boston and NYC have a scarcity of a finite resource (i.e., housing), which drives up cost.

Last edited by Duderino; 08-01-2017 at 08:10 AM..
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Old 08-01-2017, 08:45 AM
 
11,015 posts, read 21,564,064 times
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Looking at the first half of the year building permits issued, I think one reason Chicago stays down is they are constantly building so darn much stuff everywhere. Comparing Chicago to high cost areas like San Francisco, Boston, Washington DC, San Jose, Seattle and San Diego for housing starts, Chicago has between 40% and 250% more residential units going up than any of those other cities, even though Chicago's population isn't growing overall (although obviously it's growing quickly in those areas where all the housing is going up).

Those expensive cities have much smaller footprints, but realistically the areas where Chicago is getting the 6,000 housing starts the first half of this year and nearly 10,000 last year are concentrated in the downtown, north side and northwest side almost entirely. The areas where people want to move, the areas that would be the supply pressures that you see in San Fran, Boston and DC.

That probably keeps the costs more muted with so many options. First half of the year, many high cost cities are towards the bottom:

New York: 12,023
Los Angeles: 7,620
Denver: 6,548
Chicago: 5,371
Houston: 4,398
Seattle: 3,625
Dallas: 3,034
Miami: 3,395
Atlanta: 2,960
Phoenix: 2,762
San Diego: 2,550
Boston: 2,037
Washington DC: 1,994
Philadelphia: 1,674
Minnesota: 1,542
San Francisco: 1,487
San Jose: 647
Detroit: 612

Even looking at last year Chicago threw up over twice as many residential units as Washington DC and San Francisco, and almost three times as many as Boston. Again, I know Chicago is much larger overall so it should have more, but Chicago is hardly in the news for being bursting at the seams or having a massive inflow of people driving up prices. Yet they build twice as many new units as those other cities anyway, you would think it would be the opposite. It can help keep prices down.

The one big takeaway for me is New York City. They have high prices and huge demand - and yet they're building housing by the tens of thousands.

Last edited by Chicago60614; 08-01-2017 at 09:16 AM..
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Old 08-01-2017, 08:58 AM
 
Location: Crooklyn, New York
27,611 posts, read 24,787,463 times
Reputation: 11185
Quote:
Originally Posted by Duderino View Post
It was a bit tangential, and I apologize for that. But I was only trying to counter the point that COL differences are entirely to do with economic strength and the implication that the Philly region doesn't have a high concentration of high-paying jobs, when in fact both standard and relative income data demonstrate that couldn't be further from the truth.
I never said that higher COL in the DC region was "entirely" due to economic strength. I said it was a major factor that people seemed to be ignoring, instead providing a somewhat intellectually lazy explanation of "supply and demand." "Supply and demand" can't be the sole explanation since many metros with housing shortages (i.e., San Antonio, Atlanta) don't have the ridiculous prices DC has.

It always seemed common sense to me that landlords and sellers could fetch higher prices in DC, NYC, SF, etc. because there were simply more people with the ability pay higher prices. There are dominant high wage industries in these metros (BigLaw and lobbying/Finance and BigLaw/Tech) that exist on a scale that's not present in the Delaware Valley. I don't think there's much more to it than that.

Quote:
Originally Posted by Duderino View Post
The only thing that is provable in this conversation is that cities like SF, DC, Boston and NYC have a scarcity of a finite resource (i.e., housing), which drives up cost.
That's not the only provable thing. It's also very provable that these cities have more high net worth individuals and many more people in high wage industries.
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Old 08-01-2017, 09:12 AM
 
Location: Crooklyn, New York
27,611 posts, read 24,787,463 times
Reputation: 11185
Quote:
Originally Posted by gladhands View Post
Voice actually doesn't New York. New York has a large concentration of high-wage industries, but on average salaries are rather low in New York City, as compared to other information economy cities. There's a different lifestyle expectation: having a roommate if 32 isn't seen as a mark of failure. Anecdotally speaking, New York seems to have the highest percentage of residents are not dependent on their own income. I've met countless adult professionals with trust funds or who received other financial assistance from their parents.
New York is a more bifurcated market than most cities. There are more protections in place for poor people here. Manhattan has a higher % of people living below the federal poverty line than Washington, DC does (which is amazing considering the higher COL).

Philadelphia is very different. Homeownership rates there are high; it actually has a higher % of homeowners than Atlanta). The poor people in Philadelphia aren't there because of tremendous political protection provided to them as is the case for the poor in NYC. They are mostly there because there isn't sufficient demand to price them out.
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Old 08-01-2017, 09:46 AM
 
Location: Crooklyn, New York
27,611 posts, read 24,787,463 times
Reputation: 11185
Interesting to look at prices of different suburbs. This is data for SFHs (data comes from Redfin).

Gladwyne, PA

Low: $137 per sq. ft.
Median: $285 per sq. ft.
High: 1,141 per sq. ft.

Chevy Chase, MD

Low: $191 per sq. ft.
Median: $470 per sq. ft.
High: $774 per sq. ft.

SFH in some urban neighborhoods.

Gold Coast, Chicago, IL

Low: $389 per sq. ft.
Median: $750 per sq. ft.
High: $1,389 per sq. ft.

Presidio Heights, San Francisco, CA

Low: $1,275 per sq. ft.
Median: $1,419 per sq. ft.
High: $1,984 per sq. ft.

Pacific Heights, San Francisco, CA

Low: $951 per sq. ft.
Median: $1,446 per sq. ft.
High: $2,086 per sq. ft.

West Hollywood, Los Angeles, CA

Low: $337 per sq. ft.
Median: $1,018 per sq. ft.
High: $2,429 per sq. ft.

South End, Boston, MA

Low: $823 per sq. ft.
Median: $1,054 per sq. ft.
High: 1,339 per sq. ft.

Georgetown, Washington, DC

Low: $924 per sq. ft.
Median: $1,405 per sq. ft.
High: $2,028 per sq. ft.

Last edited by BajanYankee; 08-01-2017 at 10:16 AM..
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