TzarKazm t1_jcy3ouf wrote
Maybe this has been asked before, but what is the long term cause of this? I'm no expert in economics, but maybe someone here is?
Looking at census data, the population of RI has only increased 4.3% since 2000. The price for a home has gone from $133k to $428k. I couldn't find rent data older than 2006 but it was $808 then. It's $1199 for a 1 bedroom now according to https://www.rentdata.org/states/rhode-island/2023
If the population isn't increasing much, and salaries aren't increasing much, where is the money coming from? Air b&b? Are there a ton of empty rentals?
What is driving this market?
CocaineSlippers t1_jcy9jvu wrote
We are not building enough housing supply to keep up with growing demand. It really is that easy. Don't let anyone tell you it's oversimplification.
TzarKazm t1_jcydssp wrote
I think I somewhat answered my own question below. But if the population isn't really growing, we wouldn't have to increase supply. There are less than 50k new people living in RI since 2000. at a household rate of 2.6 people per household according to the census, we would have needed about 20k new houses over 20 years to hold every one of those new households.
Turns out RI lost housing over 20 years. So I guess that's the answer, but the new question is why?
Edi: I might have gotten bad data on units, which leads me back to why an increase in population of less than 5% leads to a cost increase of 50%.
realbadaccountant t1_jcym2m2 wrote
The answer is NIMBYs. We don’t have more housing because every development that includes more housing than a site had before is pushed back on by “concerned citizens” who claim to want to prevent this or that or save this or save that, but ultimately don’t want condos near them, especially if they’re “affordable”, whatever that means. And because less housing means homeowners net worth goes up, it’s there’s little incentive to allow further development.
CocaineSlippers t1_jcyumx1 wrote
You also need to account for the increase in access to inexpensive money. The cheap and easy loans drive additional demand by allowing more participants into the marketplace who wouldnt have been able to buy before, and simultaneously empowering those already in a position to purchase to spend more.
Run this up alongside the fact that were not building new housing at any significant pace, and you get back to what i was saying about supply and demand.
Not enough houses to meet demand. it's that easy.
They raise rates hoping that they can kill demand, but the reality is that even at increased rates its still sensible to buy the house with fixed rate debt, because those who carry fixed rate debt in an inflationary environment will see the real costs of repaying their loan decrease.
[deleted] t1_jcydtg2 wrote
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wise_garden_hermit t1_jcy98z0 wrote
Changing household sizes are a big one. Somerville, for example, used to one of the most densely populated places in the country, because you had like 7 people living in a 2-bed. Expectations for space & privacy have increased, so now you have couples with no kids in that same 2-bed that used to hold seven. After the pandemic there was also ton of sudden household formation as people left their parents that brought a spike in rents. Basically, even while there are fewer people competing over houses, there are more households than available homes.
Also, I don't think rental prices grow linearly with pop growth—if the state's population grows by 4% but only enough housing is built to accommodate 3.9% growth, then renter competition is still present, which will increase rents every year until there are fewer households willing to pay the price then there are houses.
TzarKazm t1_jcych6y wrote
Leading me down the rabbit hole, thanks!
I found that the number of households has gone from 408,424 in 2020 to 414,730 now. So an increase of less than 1%. Since population has increased 4% there is actually a smaller percentage of households to population now.
What I did find that was interesting in census data is that apparently in 2000 there were 447,810 housing units in Rhode Island. As of January there are 426,769.
So I think I have some of my answer. There is actually less housing now by over 20k units. I guess the following question is why or how did that happen?
wise_garden_hermit t1_jcyfdym wrote
Where are these numbers coming from? I think your 408,424 numberis from here and for 2000. U.S. census numbers for 2017-2020 show total households as 426,769, which would suggest a ~4.5% household growth outpacing pop growth.
> There is actually less housing now by over 20k units. I guess the following question is why or how did that happen?
This is actually surprising to me and I wouldn't have guessed total units actually going down. I guess houses have a natural attrition rate from fires, neglect, plain old neglect, and things like that. If nothing new is built, then supply will naturally decrease.
TzarKazm t1_jcyid0w wrote
Yea, I have been googling on the phone and switching between screens got me, I shouldn't try and look at numbers until I have a dedicated screen. Sorry for making things more confusing.
wise_garden_hermit t1_jcyk3av wrote
no worries!
SeanRobertsFerngully t1_jd0e5xs wrote
Do we have a demographic shift? Like regardless of population number change, more households now?
Most of my street is empty nesters so like 40 ish houses of just 2 people in 1500±500 ft houses. The neighbor across the street had 3 kids when I first moved here but they all moved out of state so it's just the husband and wife now.
wise_garden_hermit t1_jd2wg0n wrote
There are more households now, there are some stats in this thread. There are also fewer houses, apparently.
But yeah, there is a general trend whereby neighborhoods that lots of people moved in 30-40 years ago are largely inhabited by older folks. Usually these places were in locations close to cities that became more desirable in the last 20 years, increasing their housing values. The kids of these home owners can't afford a house in the same area, so they move away.
It's a sad cycle that leads to both the parents and the kids more isolated because no one can afford to live near each other.
BernedTendies t1_jcyhpwh wrote
I think I saw Residential Properties say pre-pandemic out of state people were like 10-15% of buyers. Now it’s 30% which I’m assuming is from Boston, NYC, or tech people that no longer need to be in CA. All of those people make more money than someone in Providence
10takeWonder t1_jczx1xp wrote
also WFH brought those higher salaries to existing tech residents
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