Why Is Rent So High? The Answer’s Buried in Microfilm
Ever heard of microfilm? It’s an arcane technology that shrinks newspapers down to the size of hockey pucks for easy storage; a once-high-tech “reader” (actually a big box with a lightbulb) is then used to blow them up on a screen to view. And reading microfilm is torture. Which is why you’ve gotta hand it to Eric Fischer, who recently transcribed 30 years of rental ads to answer the $3,500/month question: Why is rent so high, in Silicon Valley and other places across the country?
To find out, Fischer—a digital cartographer who makes mind-blowing maps that have been exhibited at the Museum of Modern Art—compiled data on the median price of a two-bedroom apartment advertised in the San Francisco Chronicle for every year going back to 1979, the first year such info became readily available (meaning it was put online).
There was just one problem: 1979 was also the year San Francisco implemented rent control. So Fisher knew he had to dig further back—so that’s why he schlepped to the library, broke out the microfilm, and started transcribing ads going all the way back to 1956.
Fischer emerged (bleary-eyed) from the process with his hard-won data that point to some interesting discoveries and lessons we can all learn from:
Lesson No. 1: San Francisco rent has increased 6.6% per year over 60 years
That’s 2.5 percentage points faster than inflation. It may not seem like much, but over 60 years, it’s a whole lot. It means that housing prices have quadrupled over everything else you have to buy. In other words, yes, the rent really is too damn high.
Lesson No. 2: Rent control didn’t help
That 6.6% rise in rental prices happened before rent control, and it happened after just the same. So much for that.
Lesson No. 3: Blame the number of jobs, places, and salaries
Fischer didn’t just answer how much rent has risen, he also came up with some highly precise theories why. Basically, it boils down to the number of jobs, number of places for rent, and the salaries being doled out. Change any one of those three variables, and you can lower the rent.
Lesson No. 4: Lowering rent will require major sacrifices
Based on his theories, Fischer reported, “It would take a 53% increase in the housing supply (200,000 new units), or a 44% drop in CPI-adjusted salaries, or a 51% drop in employment, to cut [rental] prices by two-thirds.”
In other words, cut everyone’s salary in half, or fire half of them, or build a whole lotta new housing.
Lesson No. 5: Bottom line: Build, build, build
Since slashing salaries in half or firing half the workforce doesn’t seem all that plausible, the most feasible solution seems to be to build more housing. Of course, this isn’t exactly easy, but it seems easier than the alternatives. And this doesn’t apply just to San Francisco—it’s also needed in many up-and-coming cities where rents are rising faster than people can afford.
Michael Anderson of The New York Observer probably put it best after analyzing Fischer’s data: “I’m going to close with a lesson for cities that are adding jobs and/or wealth faster than homes but are not yet San Francisco: Portland, Seattle, Austin, Denver, Minneapolis. Maybe Oakland and Los Angeles and San Diego and DC still, too. For the love of God, keep adding homes. Keep adding homes so things don’t get any worse and you’re not trapped in a lose-lose-lose shitstorm like San Francisco.”
Oh, and one more thing…
Lesson No. 6: Microfilm is not dead
And if you ever meet Eric Fischer, shake his hand for proving that every answer in the universe does not exist on Google.
The post Why Is Rent So High? The Answer’s Buried in Microfilm appeared first on Real Estate News and Advice - realtor.com.
Related Articles
