Wednesday, August 06, 2014

Fleeing New York and San Francisco for ‘Cleveland’

Once again tackling housing supply versus demand at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "Affordable Housing Draws Middle Class to Inland Cities."

Other Links: 1. "Exotic Romancing at Tennessee Williams Fest."
2. "Urban Geopolitics: Why Chicago Is Dying."
3. "The Way the Modern World Works: World Hegemony to World Impasse."
4. "And the Global City shatters into a million pieces. 'Affordable Housing Draws Middle Class to Inland Cities'"
5. "When Social Scientists Fail Demography."
6. "Illusion of Local: Why Zoning for Greater Density Will Fail to Make Housing More Affordable."
7. "Expat Cuts Hit Hong Kong Luxury Rentals: Market Struggles as Multinationals Trim Packages for Relocated Employees."

Postscript: More from Other Link #7:

The normal summertime surge in demand for high-end apartments in Hong Kong's top neighborhoods was weak again this year as companies changed the way they pay for housing for their expatriate employees and the finance sector continued to struggle.

A shift away from banking and toward retail and other sectors, among companies relocating staff, has pushed down demand. Hong Kong's efforts to cool its housing sector have weighed on the market as well.

Expatriate families relocating to Hong Kong, the main prospective tenants for high-end leases above 80,000 Hong Kong dollars (US$10,300) a month, usually move in the summer months before the school year begins. The start of the third quarter is the "traditional busy time" in the high-end leasing market, according to Edina Wong, senior director of residential leasing at Savills, a real-estate consultancy company. This year, "there's been a minor bump, but not as big as previous years'."

It hasn't been nearly enough to make up for the longer trend: a decline in luxury rental demand by 30% to 40% over the past two years, according to Ms. Wong. "It's a huge drop," she said. "The higher the rental, the quieter it is."

The above quoted passage accomplishes two things. First, putting aside the tax intended to cool the real estate market, the demand slack has a dramatic impact on prices. Second, the overall real estate market is segmented, providing a more nuanced picture of housing affordability in Hong Kong. In my next post, I tackle the disaggregation of housing markets.

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