Will residential rents ever stop rising?
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[{"id": "fqwcza0", "text": "They wi never stop rising.  And neither will pay.  It is the nature of inflation.", "replies": [{"id": "fqxhkfa", "text": "Except average income hasn\u2019t kept pace with inflation+COL which is why people are spending a larger percentage of their income on housing right now than at any time in the past 50 years in the US.\n\nhttps://www.jchs.harvard.edu/sites/default/files/Harvard_JCHS_Americas_Rental_Housing_2020.pdf\n\nhttps://www.huduser.gov/portal/publications/Trends_hsg_costs_85-2005.pdf", "replies": [], "depth": 2}], "depth": 1}, {"id": "fqwd7oe", "text": "Yes\n\nIt's impossible to know what the future will hold. Usually we see inflation and rents tend to increase with that. \n\nAlso, rents are based on supply and demand. If you are in a town with a rising population, rents will typically go up with inflation, but are also effected by demographics and increased demand means higher than expected rents until construction catches up or surpasses demand. This is the case for most places. \n\nIt is also possible that demand can fall and rents can fall relative to inflation. If you are in a town with a declining population then demand will decrease. You might have stable rents, but they could be falling relative to inflation, or even just falling in the basic sense. This won't get balanced out as easily as thebecause the stock of housing can't shrink as quickly as it can grow.\n\nLastly, there is this thing called deflation, where the buying power of the dollar increases. It's not normal, but it happened in 2008, we also had a bad case of it during the great depression. In this case, rents fall and the dollar is worth more. Your property value also likely will fall. You still owe your mortgage payment base on your contract rate.\n\nEdit: dollar is worth more, not less.", "replies": [], "depth": 1}, {"id": "fqwzesc", "text": "No. Rents will always increase.\nSometimes faster and sometimes slower than inflation.\nYou will be able find isolated cases in areas that are largely dependent on one or a few employers. Where when they move or shut down the people start to leave and the town slowly dies.", "replies": [{"id": "fr2upd3", "text": "Rents almost always go up. Sometimes they don't change, and sometimes they decrease.\n\nThere is no law of the universe saying rents always go up. Some years they might go down. \n\nhttps://www.livabl.com/2020/04/la-apartment-rents-falling.html", "replies": [], "depth": 2}], "depth": 1}, {"id": "fqx4r1l", "text": "Rents go up until they don\u2019t. Source: I study rents for a living.", "replies": [], "depth": 1}, {"id": "fqx66zr", "text": "Yes, we will eventually reach a point (quite possibly in this lifetime) where labor becomes free due to automation, and as a result so does essentially everything, including rents.\n\nAs we approach that point, housing construction will decline in price, resulting in an increase of housing supply as demand simultaneously stays constant (more developed nations trend toward stagnating population). Rent will trend downwards.\n\nWe already have a housing surplus (in the USA) by literally millions of unoccupied housing units. That is only trending upward as housing production outstrips population growth.", "replies": [{"id": "fqxikns", "text": "Shhhhh, that\u2019s crazy talk in the RE subs.\n\nJust keep building fellas, this can\u2019t possibly go tits up!", "replies": [{"id": "fqz2rwv", "text": "Are you looking at RE subs populated by residential agents? There's definitely places where you can keep building and places where you definitely shouldn't build", "replies": [], "depth": 3}], "depth": 2}, {"id": "fqxq0ha", "text": "Care to cite any of this non-sense?\n\nAside from population trends,  nothing here is accurate", "replies": [{"id": "fqxrax6", "text": "[Automation of Home Construction](https://www.businessinsider.com/robot-builds-tiny-affordable-house-2018-3)\n\n[Stagnating Population](https://www.pewresearch.org/fact-tank/2019/06/17/worlds-population-is-projected-to-nearly-stop-growing-by-the-end-of-the-century/)\n\n[Stagnating Population #2](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4255510/)\n\n[Number of Vacant Dwellings In USA (15+ Million)](https://fred.stlouisfed.org/series/EVACANTUSQ176N)", "replies": [{"id": "fqxruat", "text": "1) labor reductions outstripped by material cost increases , land prices and municipal costs\n\n2) like I said,  not arguing population trends\n\n3) still not arguing population trends\n\n4) 1.6% vacancy is not a high vacancy rate it\u2019s the opposite..  1.6% tells us we have too few available homes ...  it\u2019s important to understand the data you\u2019re citing", "replies": [{"id": "fqxt5u4", "text": "1) Automation is a chain reaction. Material inputs for home construction will decrease in price as automation moves up the supply chain. Autonomous vehicles reduce raw and finished material transpiration costs, factory automation increases production efficiency, etc. If land price increases, you build taller to utilize economies of scale.\n\n4) I changed the link to include apartments as well, it was previously just SFR and Condos. 15.9 Million vacant dwellings, in a country with only [128.56 Million households](https://www.statista.com/statistics/183635/number-of-households-in-the-us/) is a very significant number. Roughly 12% of available households are vacant.", "replies": [{"id": "fqxvnib", "text": "1.) you\u2019re right that labor reductions do improve finishing costs,  but raw material inputs are commodities and have very little to do with their labor component...  primary inputs are oil,  steel, wood and to a lesser extent aluminum, \n\nConstruction cost ratio is a function of demand,  not efficiency.   More efficiency equates to higher quality finished (luxury) not to lower cost housing\n\nJust look at the last 20 years of home building.  It\u2019s been pinned at between 50-60% of new home cost ...  that trend is because people can afford it and spec up their house accordingly ...  \n\nhttps://www.nahbclassic.org/generic.aspx?genericContentID=260013/\n\nYou\u2019re also assuming automation of things that are labor intensive will be possible (for arguments sack let\u2019s constrain that to include our lifespan). There might be tools that come along to make things easier but if you\u2019ve every built a house you\u2019d understand the insurmountable challenges the preclude robots..  yes you can redesign the house to be better for automation but most people don\u2019t want to live in a warehouse or mobile homes,,  so demand for that style of construction is limited\n\nPoint is,  labor on the material finish side is t huge,  installation and input material component costs aren\u2019t significantly impacted by labor and where there\u2019s demand there will be a market \n\n2)you\u2019re mixing stats that aren\u2019t related\n\nHouseholds != occupied homes\n\nPeople have multiple homes,  vacation homes,  multiple homes for work reasons,  temporary housing,  student housing ,  etc...\n\nYou should be looking at this number https://fred.stlouisfed.org/series/MSACSR", "replies": [{"id": "fr6sc4b", "text": "I'm on fattymccheese's side on this, but I think what you're both forgetting is that housing units and households are not evenly distributed.  There is a surplus of units in Detroit, a dearth in New York.  Any national number is going to hide a lot of sins.", "replies": [{"id": "fr6vj88", "text": "Fair point\n\nTo expand on that,  it starts to overlap with parallel arguments regarding \u2018affordability\u2019. \n\nEverything is affordable if you are willing to live somewhere within your price range..  the conflict is over what you want vs what you need \u2014 claiming desired luxury as \u2018a human right\u2019 (so hard not to put Bernie\u2019s accent into that)\n\nI don\u2019t disagree that people in this country shouldn\u2019t be able to seek help with housing as a social support program..  But how is it reasonable to demand that only qualifies if it\u2019s prime realestate...", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fqx6ylz", "text": "The renters are bulking at landlord demand reduction. Most learned not to pay rent or pay a partial during the shut down.", "replies": [{"id": "fr2a173", "text": "It's called eviction, and it will sort that out really quick", "replies": [], "depth": 2}], "depth": 1}, {"id": "fqxli83", "text": "We are nowhere close to building enough units to keep up with national demand.", "replies": [], "depth": 1}, {"id": "fqxsx5m", "text": "Sure why had no one said anything about  states that have rental caps?", "replies": [], "depth": 1}, {"id": "fr06kkl", "text": "There's a lot of room between $2k/month and infinity.  As long as we continue to have nominal wage inflation, rents will go up.", "replies": [], "depth": 1}]