Tag Archives: tipping point

What it means if a 20% rent price drop in Manhattan may be enough to reverse the market

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With rents in Manhattan and San Francisco declining, how much will prices drop before demand increases? Perhaps 20% in Manhattan:

Photo by Pixabay on Pexels.com

A big drop in rental prices appears to be luring new, younger renters back to the city, even as office workers and wealthy New Yorkers remain in the suburbs and more rural resort towns. New leases in Manhattan increased 33% in October, making it the best October in 12 years, according to a report from Douglas Elliman and Miller Samuel.

The typical rent paid for apartments including discounts, or the median net effective rent, fell 19% from a year ago to $2,868 — a record decline. Smaller apartments, which cater to younger renters, fell the most. The price of studio apartments was down 21%, and one-bedroom apartment prices dropped 19%.

“I think we’re at a tipping point where the consumer starts coming back to the city,” said Jonathan Miller, CEO of Miller Samuel. “Sellers are slowly recalibrating what the values are, and the lower pricing is beginning to bring more people in.”…

And with the average rental price for a one-bedroom apartment still over $3,200 — more than twice the national average — Manhattan is still far from affordable for many young renters. Still, experts say the October increases could begin a long, slow recovery for the nation’s largest real estate market.

Manhattan is an important real estate market. It is part of the leading city in the United States and one of the most important global cities in the world. Housing is desirable there for multiple reasons.

But, Manhattan’s prices are unusual. There is a limited amount of land. Few other places in the United States have a similar local economy and cultural scene. Prices will remain high because they have been high for a while. There is a lot of capital tied up in buildings and land.

Thus, it is hard to know what to do with an article like this in regards to housing. The suggestion is a 20% price drop may be enough to attract new renters who are interested in Manhattan and have the resources to move in. Most people, and perhaps even most residents of the New York City region, do not have the interest or the resources. At the least, this is a reminder that real estate is a very local affair.

But, at the same time, housing is a city-wide, region-wide, and a national concern. The Manhattan market has unique traits but many people face housing challenges, particularly during COVID-19. Manhattan may be a bellwether or it could be more of a curiosity of how a small slice of people think about housing. The bigger question from a story like this could be: have housing costs dropped elsewhere in the United States? Since few markets are like Manhattan, perhaps not. How does this affect people? What are the long-term housing price prospects across different kinds of markets and for more typical residents?

Imagining tipping points for when Americans will not be hesitant about getting into a self-driving vehicle

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A recent survey from AAA suggests Americans are not ready for self-driving vehicles:

The survey shows only 1 in 10 drivers say they would trust riding in a self-driving car, and 28% say they don’t know how they feel about the technology.

According to AAA, trust in automated vehicles can improve with more tangible information on key issues, as well as quality education and experience.

For instance, six in 10 Americans say they would like to have a clear understanding of who is legally responsible in a crash with a self-driving vehicle.

Seven in 10 Americans said they would feel safer riding in a self-driving vehicle if they had the ability to take over control is something goes wrong.

There are a few different issues to address here. Addressing just one, such as who is legally responsible, might not be enough to get people into a vehicle.

I wonder what the tipping point will be on this. Several scenarios could present themselves:

1. A government ruling or edict that makes self-driving cars more attractive. Imagine a guideline that 20% of vehicles must be self-driving in five years.

2. A company that does not make these vehicles invests heavily in them. Think a ride sharing or rental car company goes all in with a fleet of vehicles.

3. Trucking companies switch over to self-driving trucks to cut costs. Would Americans be okay with a self-driving cars if trucks are already doing this (and the alternative might be higher prices for delivered goods)?

4. There is a cool self-driving vehicle that just catches everyone’s attention. Tesla seems to capture attention but does not have a fully-functional self-driving feature yet.

5. There is a significant safety issue that arises with regular vehicles or driving is soon seen as a significant health issue. Perhaps at some point Americans will get fed up with the 30,000+ deaths a year in car accidents. (Could be connected to #1.)

Given the concerns people have, it is hard to know when self-driving vehicles will become a significant presence on the road. 2030? A number of things will need to come together for fears to subside.

Gathering more support for mass transit by telling drivers it helps keep the highways clear

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The growing popularity of mass transit in Utah may be explained by an interesting pitch to drivers:

Oddly enough, one of UTA’s most effective strategies for uniting people was targeting those who don’t use public transit. The agency and its advocates pointed out that TRAX ridership saves 29,000 trips — or two full freeway lanes — in the Interstate-15 corridor every day. Road-reliant businesses like UPS ran ads explaining that FrontLines would help residents get their packages quicker by reducing traffic.

As the article notes, this is just part of the picture in how expensive new mass transit can be built. The message explained above is intriguing: drivers, you may not use mass transit, but you should support it for others so that it makes your drive easier. What is the tipping point here where you need enough of those drivers to stop driving and use mass transit versus some drivers wanting to keep driving because there is less traffic? I wonder if this could also verge into classism: those who can afford to drive and help pay for mass transit will continue to do so while those who would economically benefit from not having to drive as much will do so.

A study looking at “the social cost to academic achievement”

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A psychologist writing in the Washington Post suggests that a new study sheds light on this long-standing issue raised by sociologist John Ogbu about high-achieving minority students who are accused of “acting white.” This study of 13,000 students was recently published in the latest issue of Child Development:

The study took measures at two time points and examined the change in social acceptance across the year. The question of interest is whether students’ academic achievement (measured as grade point average) at Time 1 was related to the change in social acceptance over the course of the year.

For White, Latino, and Asian students, it was—positively. That is, the higher a student’s GPA was at Time 1, the more likely it was that his or her social acceptance would increase during the coming year. It was not a big effect, but it was present.

For African American and Native American students the opposite was true. A higher GPA predicted *lower* social acceptance during the following year. This effect was stronger than the positive effect for the other ethnic groups.

Thus, it seemed that the simpler version of the “acting white” hypothesis was supported.

But the story turned out to be a bit more complicated.

Further analyses showed that there was a social penalty for high achieving African Americans *only* at schools with a small percentage of black students. The cost was not present at high-achieving schools with mostly African-American students, or at any low-achieving schools.

At the same time, there was never a social benefit for academic achievement, as there was for White, Latino, and Asian students.

So it sounds like the context of the school matters quite a bit: when African-Americans are a minority in the school, then high achieving Black students are penalized while this is not the case in majority African-American schools. In these majority/minority schools, African-Americans and whites (and others) are directly in opposition and the high-achievers get caught in the middle.

I wonder if there is a “tipping point” in schools where high-achieving African-Americans move from being called out for “acting white” to being accepted. Does the school need to be 40% African-American or higher? The problem may be that there are relatively few schools with somewhat equal mixes of races. We see tipping points in other areas: in neighborhoods, whites start moving out when the Black population reaches about 15-20% and in churches, it is difficult to keep whites in church once the percentage of Blacks reaches a similar amount.

I’d be curious to see what the authors suggest could be done to counteract this trend.