Renting in dynamic cities

Richard Florida’s work, The Great Reset, has launched a great discussion about the place of home rental in American life and the American economy.  I’ve been doing a lot of research and thinking on apartment renting myself, and have a few thoughts on what could be happening now, and in the future.

I would argue that high rates of home renters (vs owners) is a sign of a dynamic economy, rather than the cause.  Places like New York, San Francisco (and in Canada Vancouver & Toronto) are places with jobs, especially “creative” knowledge and service/experience economy jobs.   These cities attract tens of thousands of both national migrants and international immigrants annually to work in and experience the dynamic financial, high-tech and artistic clusters (these are typically well educated immigrants and migrants).

Newcomers to cities (almost any place, actually) have high propensities to rent–especially in expensive places, which these cities are.

Many of these migrants are probably not intending to stay when they relocate to these cities.  They are coming to experience them.  Creative, smart people are attracted to these dynamic cities because they are full of other creative, smart people (interacting with other smart people makes you smarter [Ed Glaeser]).  They are also full of great amenities and interesting — even unique — clusters.

Young, smart people go with the idea of experiencing the jobs and amenities for a few years, and then perhaps moving “back home” or at least closer to family.  Therefore renting is ideal.

A concern for the future: 

In the past, if they did decide to stay, they might have bought a place in nearby suburbia, or perhaps a condo or townhome closer in.  This made room for more newcomers in the rental, which helped to keep these cities’ economies humming.

If suburbia becomes less appealing, because of fewer amenities and poor transit and automotive congestion, will these newcomers along with born-and-raised residents end up renting for much longer periods of time?  Even if they want to buy a small urban home, this will not be cheap.  Tighter mortgage lending rules may mean saving for much longer before buying, or making it impossible for some.

This will mean fewer rental spots for newcomers, which might end up serving as a break on economic growth in that city. It will also drive rental rates up further, creating an additional social, political and economic challenges.

What other challenges will the rental society bring?

7 comments

  1. [...] Renting in dynamic cities | All About Cities allaboutcities.ca/renting-in-dynamic-cities – view page – cached Cities are fascinating. This blog explores the economy, society, communities, people, businesses, organizations, infrastructure, civil society and government of cities — and the tensions and connections between them. (More…) Tweets about this link Topsy.Data.Twitter.User['wendy_waters'] = {“photo”:”http://a1.twimg.com/profile_images/877118646/Wendy_and_Alex_in_CC_NZ_normal.jpg”,”url”:”http://twitter.com/wendy_waters”,”nick”:”wendy_waters”}; wendy_waters: “New at All About Cities: How renting is a sign–rather than a cause–of a dynamic economy. + Future Implications #cities http://ow.ly/1L5pU ” 28 minutes ago view tweet retweet Topsy.Data.Twitter.User['tremblay_rss'] = {“photo”:”http://s.twimg.com/a/1273694933/images/default_profile_2_normal.png”,”url”:”http://twitter.com/tremblay_rss”,”nick”:”tremblay_rss”}; tremblay_rss: “Renting in dynamic cities: Richard Florida’s work, The Great Reset, has launched a great discussion about the plac… http://bit.ly/bU19h4 ” 31 minutes ago view tweet retweet Filter tweets [...]

  2. April Thayer says:

    Rents rise, young people stay in apartments longer, it’s harder to save up enough for a down payment on a house – perhaps building owners and managers will have to look at amenities packages that help young families (i.e., a lifeguard and swimming lessons at the pool or a daycare pick up and drop spot for parents who are running late.) Apartment communities may become more segmented by life stage, depending on the response from management. It will be interesting.

  3. Wendy Waters says:

    Agree that more child-friendly, urban apartment complexes could be in order. Or maybe if people rent for longer they can take initiatives to set up these things. I know condo-dwellers (with kids) who get together with other families in the building to have a swim teacher come to the condo pool so apartment dwellers could also do this.

    Daycare on site would be a great amenity. Again, some condo complexes here in Vancouver have it, so why not larger apartment buildings, or property management companies. “Rent with us, and have access to our great daycare facility.”

  4. Global Urbanist says:

    Rising real estate does not cause a break in the economic growth of a city. On the contrary it is a symptom of economic growth. How many cities are there with rising housing prices / rents and falling populations?

    Limited housing supply is usually not an issue with keeping new migrants away. New migrants are open to adapt to the housing that fits their budget; whether it means fewer rooms, less parking, or sharing with a roommate.

    The challenge of keeping families in the city is not housing prices, but rather the density of automotive traffic. Drive ways, parking pads, and crosswalks come across a childs walk to the park far more often in the innercity than in suburbs. Pedestrian zones like those in Vauban, Freiburg, Germany do a lot more to attract families than condo amenities. Example in article…
    http://www.nytimes.com/2009/05/12/science/earth/12suburb.html?_r=2

  5. After I read that chapter I instantly loved the AVE’s idea to renting and thought or taking it one step further – primary home ownership that functions like a time share. Seems to me that major chain hotels already have the infrastructure to do so, with locations all across the world.

  6. i think that the price of home rentals these days are quite high compared to last year _

  7. you can also save a lot of money when you do some home rentals, just find a cheap one `,-

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