I bet he's entirely blind to the fact that the only reason his paper is getting so much attention is that he's an "MIT graduate".

Attending an elite school like MIT is not even a 1%'er thing, it's a 0.1% thing.

There's probably some poor person, who went to a shitty college, that's even smarter and has a better theory but we'll never hear about it. Think about their career trajectories and the inequality of their outcomes.

Of course the 99.9% contains almost all of the smartest people, but they get almost none of the opportunity. This elitism is absolutely pervasive in American society.

Microsoft: "Harvard dropout inks deal with IBM"

Google: "A new search engine from Stanford."

Facebook: "The exclusive Harvard social network"

Dropbox: "Google Drive killer coming from MIT Startup".

This paper: "MIT graduate student says income inequality is actually about housing"

Something like 95%+ of people that get into elite schools graduate. It's not hard to graduate, it's just hard to get in, and the test for getting in is so gameable and rigged that almost no one pretends it isn't anymore.

As long as the rich can spend fortunes buying elite credentials for their children, we're going to have a ruling class and a worker class.

Now, I'm 30. I have a very well paying job. I have quite a bit of money in my bank account. Things are good for me. Much better than some people I know who started off with less than me and worked twice as hard. I cant help but think that my own status in life can mostly be attributed to the access I had to people of power and wealth. Though my family could hardly be considered part of the 1% I did manage to rub shoulders with enough of them that I have received some residual benefit. School was a huge part of that.

It's a weird thing. I sometimes feel guilty about it. Particularly when I meet people who are smarter or harder working than I am.

As someone from a middle class background who went to a top-tier school, you have no idea what you are talking about. Sure, there were/are plenty of humanities majors who had relatively light workloads, but as an engineering major I worked my ass off 8 days/week.

While they worried about buying food and paying the rent, you "worked your ass off" doing homework in total safety and comfort.

But I was wrong. Poor kids who get into MIT ("Recipients of a Federal Pell Grant") only graduate at a rate of 87%. It's just the wealthy students with such incredibly high graduation rates.

http://web.mit.edu/ir/pop/students/graduation_rates.html

OTOH, that sounds like a pretty darn good "intangible" to me and would certainly warrant further consideration in my book.

(a) If you are underprivileged, you might have time to volunteer somewhere, but typically supporting your family doesn't count as helping the underprivileged. Changing grandma's bedpans isn't volunteer work, and it's kind of exploitative to make that a major portion of your college application.

No, nobody at my school was doing this[1]. Top-tier schools leverage their massive endowments to provide substantial need-based financial aid. Basically their mission is to ensure, if you get in, that there is absolutely no financial friction to attend. In one high-profile instance Princeton University provided a full scholarship entirely from its own endowment to a formerly homeless undocumented immigrant who went on to become his class's salutatorian[2].

[1] except the cockroaches but that applied to everyone as many of the dorms were quite old.

[2] https://en.wikipedia.org/wiki/Dan-el_Padilla_Peralta

I don't know that this is bad as such but the high end schools aren't exactly very good about educating large numbers of people. That is, very large endowments per student. Large state universities do much better in this area. Also large state universities do a better job of recruiting students outside of the top 0.1% of society.

That said, MIT has an unfair reputation of containing geniuses. Elite schools do have a greater impact, but only the true theories/discoveries stand the test of time.

I care more about stress, how many months to go before I go broke, if I can get a job or not, or if I can keep a job, or what is my working condition, how many vacation days I get off, and so on.

How lazy are the 1%ers don't concern me.

Harvard is basically free for low income students, yet they make up a very small percentage of total students.

One thing they could do is to increase their outreach to lower income students. When I was in high school, I had no idea that Harvard was affordable for me. Looking back, I probably had the SAT scores and grades to get in, but I never even considered it as a possibility.

http://www.thecrimson.com/article/2012/1/26/diversity-lack-f...

“We are spending the most money as a society educating the wealthiest people.” -- Ronald Ehrenberg, director of the Cornell University Higher Education Research Institute

https://www.insidehighered.com/news/2015/05/21/rich-universi...

http://money.cnn.com/2015/04/28/pf/college/ivy-league-low-in...

https://www.bostonglobe.com/magazine/2015/04/09/what-like-po...

http://www.forbes.com/sites/maggiemcgrath/2013/11/27/the-cha...

http://www.cnbc.com/2015/09/16/top-1-of-harvard-grads-richer...

"A median 16 percent of their 2012-13 enrollees received Pell Grants, a form of federal aid only available to low-income students, according to an analysis of federal data."

What's low-income? If you define low-income as the bottom 20% of income earnings, that would be very close to proportional representation. That's outstanding, given all the confounding factors connecting performance and income.

- http://www.thecrimson.com/article/2013/9/4/freshman-survey-a...

less than 2% of families earn more than $250,000 / year.

- http://www.politifact.com/florida/statements/2012/apr/10/bar...

The point I'm making is that inequality in colleges is due to better preparation by higher-earning families and not some conspiratorial old-boys club. The hypothetical "some poor person, who went to a shitty college, that's even smarter" the original commenter referred to would have had as fair a shot as any of their caliber to get into the top schools. It's the poor precocious 5 year old that doesn't get read to every night and falls behind because both parents are working late at minimum wage jobs that defines the difficulty of escaping poverty through education. Top schools get to the table wayyy too late to heap the blame on them.

Including: Harvard MIT Stanford Princeton Columbia

etc.

No. If you're insanely hard working, passably smart and somehow lucky, you can get in. I knew someone like that - and she reported that she was one of the dumber people there. If 0.1% have their kids there, these are not slacking at all.

> test for getting in is so gameable and rigged that almost no one pretends it isn't anymore.

SAT tests are rigged?

>It's not hard to graduate, it's just hard to get in,

These two things are related

As most/all other areas of life experience deflation (iphones, education, food, travel, entertainment), HCOL residents will reallocate the savings into housing, pushing the ceiling and housing prices up. Even despite attempts to increase supply, I think. The best solution is to redesign the economy to enable and incentivize the relocation of young people throughout lower tier cities and rural areas in the US.

And the government has made the problem worse, by skewing the mortgage market with ultra-low interest rates and thereby making "as much as they can afford" significantly larger.

> The best solution is to redesign the economy

No, the best solution is to stop messing with it. If long-term interest rates were set by a free market, significantly fewer people would be able to buy homes, or at least homes of the size they're buying now in the areas they're buying now. So they would either choose to live in less populated areas, or they would choose smaller homes, or they would rent instead of buy. All of those things would reduce the average cost of housing compared to other things.

For these same people, moving to less populated areas is probably not an option because they can't afford to commute long distance to their job(s), and don't have the kind of job mobility enjoyed by wealthier people.

They probably can't choose a smaller home, because the small home prices get bid up along with the other homes. (I speak from experience; I recently moved out of a 'starter' size home in the 'bad' end of town, where the houses cost $300K - $500K even over the past few years.)

Renting instead of buying might be an option, but even there prices get bid up in desirable locations.

Where do these people actually wind up? In undesirable locations: places with higher crime rates, more obvious poverty, worse public services, etc. And for most of them, and their children who have to be raised in that environment, it becomes a trap that's very difficult to escape.

"Wealthier" in the sense of "can qualify for a larger mortgage". But the ability to qualify is skewed by the fact that the money that is borrowed is printed on the spot when the mortgage is created; it doesn't come from actual savings. If that didn't happen--if the money loaned out for mortgages had to come from actual savings--the market for mortgages would look very different, which means the population of people who were looking to buy homes would look very different.

And not just that everybody would have less buying power across the board--the people who would qualify for mortgages in a free market would have different financial habits. For one thing, they would have no incentive whatever to use "creative" loan vehicles to buy more home than they could actually afford--which is what many of the "wealthier" people who are bidding prices up in the current market are doing.

> They probably can't choose a smaller home, because the small home prices get bid up along with the other homes.

But a smaller home in a given area still costs less than a larger home in the same area. Furthermore, in a free market for loans, where the government wasn't printing money to finance them, smaller homes would probably be more common, compared to larger homes, than they are now, which would reduce the price of smaller homes relative to larger homes, over and above the general price reduction that would take place if the government stopped printing money for mortgages.

> Where do these people actually wind up? In undesirable locations: places with higher crime rates, more obvious poverty, worse public services, etc.

This is another example of government failure. If the government spent its resources on what it was supposed to be doing--ensuring that everyone's rights were respected--instead of trying to run expensive and damaging experiments with the economy, there would be far fewer locations that were undesirable in these respects.

In effect a transfer of taxpayer money to developers and mortgage originators.

> No, the best solution is to stop messing with it. If long-term interest rates were set by a free market, significantly fewer people would be able to buy homes, or at least homes of the size they're buying now in the areas they're buying now.

That would only work if you also abolish laws regulating the supply and liquidity of the land and housing market, like zoning laws and restrictions on property taxes (such as California's infamous Proposition 13: https://en.wikipedia.org/wiki/California_Proposition_13_%281...).

Without also freeing the supply side of the market, a lower home ownership rate will just be a forced transfer of wealth to rental property landlords.

Zoning laws and sales disincentives are pushing land values so high in major metropolitan areas that it is commercially unfeasible for developers to significantly increase density or supply. They are effectively restricted to building medium-density luxury housing to make a projected profit. Unfortunately between the shrinking middle class, decreasing social mobility, and coming self-driving car commuting patterns this is just inflating another real estate bubble.

Of course, booming cities will nearly always have somewhat high rent prices, but they're way out of whack in some areas.

The best answer for NYC is probably to aggressively gentrify as many neighborhoods as possible, which means (bluntly) displacing most lower income residents and moving in bicycle riding organic jam loving armies of hipsters. This comes with a lot of challenges. The biggest pressure release valve for Manhattan real estate prices has been the very successful gentrification of Brooklyn (and a few years behind is Oakland filling the same role for SF).

The south end and midtown are tall, the rest is not. You can stuff way more density into Manhattan than currently exists.

And Brooklyn is shorter yet, of course. Could put way more tall buildings into Brooklyn if you wanted to.

Better transportation in outer burroughs will expand the supply of housing within a reasonable commute distance.

Ideas:

* Invest more in expanding public transportation. More express buses, local buses that run more frequently and on time.

* Deregulate private transportation (taxis, private buses).

* Incentivize commutes during off-peak hours.

* Encourage working remotely or flexible work schedules.

* Find ways to get tractor-trailers out of dense areas.

* Actually start enforcing double-parking and jaywalking laws (this one even pays for itself).

* Encourage business development away from already-congested areas

Where exactly will you find these armies of upper-middle class people? Wages and social mobility continue to decline.

http://www.epi.org/publication/even-the-most-educated-worker...

http://www.theatlantic.com/business/archive/2015/07/america-...

How many buildings are at the economical height or taller? How many are lower?

I've lived in and around NYC my entire life, and I always thought that the shape of the skyline was governed mostly by the underlying granite: lots of support for huge buildings downtown and midtown, not so much everywhere else. But in the past five years or so very tall buildings have been popping up all over. I think it won't be long until you'll have trouble finding the Empire State Building lost amongst it's bigger neighbors.

https://medium.com/@opirmusic/fixing-the-nyc-rent-crisis-or-...

Read Matt Yglesias' "Rent is Too Damn High" book if you want a more thorough treatment the topic.

New York and SF could do that tomorrow.

Raising property taxes would also help drag down the prices to saner levels and ensure that this rich source of rent ends up distributed fairly rather than coagulating in the pockets of the 0.01%.

You don't necessarily hurt anyone, you just lower the attractiveness of real estate as an asset class. The yield chasers will move their money into a more attractive asset class, the value investors who buy real estate for price stability or tax reasons would stick around with lower yields.

Yet you'd be helping everybody else who didn't take on irresponsibly large debts.

House prices would go down though - a house with a high recurring tax is much a less attractive investment.

My city has several blocks of its downtown used for surface parking lots. If a lot with a building paid the same tax as the parking lot, how long do you suppose it would take for the parking lots to turn into skyscrapers with parking garages?

Of course, this would also force people to sell their property to pay the tax.

(If by "education" you mean "learning something", then yes, I agree with you. If you mean "college degree", though, not so much.)

I don't mean to be a smartass, but https://en.wikipedia.org/wiki/Conspicuous_consumption

In addition to that. Do you see the broad concept of conspicuous consumption increasing or decreasing? All of the signals I see show it decreasing thanks to the great recession and the new generation coming into the market. Dave Ramsey, MMM, et al have started to make it trendy to be frugal. Once it starts to become trendy to go to vocational training or straight into the job market a cultural shift can happen quickly.

Because of its combination of white collar income/career attributes and vocational like self-training nature, I think Computer Science will be at the forefront of this trend. Note how few people advise ''go back to school and get a degree in computer science'' and rather ''learn how to code'' (boot camp, self taught, however possible).

Housing is, to a first order approximation, the only thing I spend money on.

Savings are framed in terms of 'how long could I afford the rent', or 'how long before I could pay off a mortgage'.

Everything else is.. well, fluff. I would be happy to read books for a lifetime, I don't need 'fancy' food, but a stable home is pretty important to me.

A 1 bedroom apartment with a reasonable commute to my job costs £10000pa as a lower bound. Add on the UK's equivalent of property tax and you're at 11000.

Food? 1-2K. Gas, electricity, water, internet, cell phone? 1K, maybe 1.5K. So a combined upper bound of 3500.

The only place in which those costs would get to 100% of housing would be in a depressed economic area. One in which most would struggle to find a job that paid much more than minimum wage.

So the argument should be flipped, I think. Income inequality only actually matters at all because people have to buy housing. If everyone had a stable home then it would matter far less that other people could afford more toys. It's an issue because having a stable base is such a useful thing - without that problem, I don't think it matters that some are rich and some are poor, not really anyway.

Oh yeah the added bonus, when the place does get destroyed the inhabitants find ways to put the blame on the providers to usurp more while taking less responsibility or ownership over the situation.

Some reading:

http://archive.law.fsu.edu/journals/landuse/Vol141/seit.htm

https://books.google.com/books?id=jjX2N9HgmWQC&lpg=PA1&ots=0...

[0]: http://www.amazon.com/Show-Me-Hero-Lisa-Belkin/dp/0316088641

Health and dental care probably rank up there too...dentistry can be quite expensive when you finally need it, and is definitely not "fluff"

When Roosevelt signed the G.I. Bill in 1944, a lot of soldiers who returned from the war were able to claim benefits in the form of tuition assistance, low-cost mortgages and low-interest loans. Soldiers coming home from overseas had the choice of pursuing higher education, purchasing a home, or starting a business. Another result of the G.I. Bill were Levittowns, newly sprouting suburban neighborhoods offering low-cost housing to these returned soldiers ($8,000 in 1950, approximately $80,000 in 2015). With the help of the expanding auto industry and the joining of highways, people began to move out into the suburbs and build new communities.

The unfortunate bit is that while the G.I. Bill didn't advocate discrimination, it was interpreted differently for people according to their race. For example; of the 67,000 mortgages insured by the G.I. Bill, fewer than 100 were taken out by non-whites.

Now, the heavily-inflated value (example; houses in Levittown, NY are selling for approximately $350,000) of these post-WWII homes are passed down and borrowed against or leveraged to send the grandchildren of those veterans to private schools and expensive universities, while many black families struggle financially in urban sectors. The racial discrimination of WWII veterans has been cited as a reason for the increased economic inequality and racial tensions being experienced today in the United States.

As the grandson of a WWII veteran, they ring awfully hollow to me. I assure you we did not live high off the inheritance of his mobile home when he passed on.

The $8,000 figure for the Levitt & Sons housing can be seen on this ad: http://explorepahistory.com/displayimage.php?imgId=1-2-16F7

The $80,000 figure was from http://www.dollartimes.com/inflation/inflation.php?amount=80... . I can't vouch for its accuracy, though.

Current prices for ranch-style homes in Levittown, PA: http://www.trulia.com/PA/Levittown/

67,000 mortgages insured, fewer than 100 to non-whites: A book citation from Wikipedia; https://en.wikipedia.org/wiki/African_Americans_and_the_G.I....

I didn't really explain why this figure is so astonishing, though. According to http://www.shsu.edu/~his_ncp/AfrAmer.html black people comprised around 8-9% of the US military. With that figure in mind, an expected number of G.I. Bill insured loans to black veterans should be around 5,300, not under 100.

Someone's master's thesis on how the Post-WWII G.I. Bill has shaped modern homeownership: http://www.academia.edu/8352751/The_Homeownership_Gap_How_th...

But I do find fault with your conclusion. Where is the proof that the children and grandchildren of WWII vets are living these upper class lives of private schools and expensive universities?

P.76: "Homeownership has numerous positive effects on children" -> Dietz and Haurin 2003

P.77: "homeowners can borrow against their equity at favorable interest rates in order to make investment opportunities that require substantial amounts of money, such as home improvements, education, business ventures, or additional properties, all investments that might provide considerable future returns." -> Zhu Xiao Di, "The Role of Housing as a Component of Household Wealth"

"[life cycle wealth accumulation] is also largely determined by parental net worth, which has been shown to be the most important predictor of wealth in young adults, even over income, savings or investments" -> Conley 1999, p. 50

P.78: Mean lifetime inheritance for white baby-boomers: $125,000. Mean lifetime inheritance for black baby-boomers: $16,000. (according to the value of the dollar in 2000)

P.79: "Transformative assets are those gifts provided by parents to adult children that allow them to maintain a class status that might otherwise be out of reach. These include the payment of private school and college tuition, tutoring and extracurricular lessons for grandchildren, gifts of big-ticket items like appliances and furniture." -> Shapiro 2004, P. 10

Naturally, not all veterans' families share the same story. However, I think it is hard to argue against the immense advantage of being a homeowner on accumulating and protecting wealth, and that this opportunity was unfortunately denied to a large number of black veterans.

The consequence of this assessment is very stark: People with money will continue to invest large chunk of their capital in real estate. The money invested in real estate is essentially "dead" because that money is locked up doing nothing, it doesn't work to produce goods, innovations or make world a better place. But real estate is indeed the most rewarding thing for your investments. So the thing is that behavior of real estate is completely against at odds with advancement of humanity. Real estate is in essence like cocaine of economy and there are no DEAs.

If these conclusions are right then it's huge problem. Goverments across the world should immediately take measure to discourage real estate possessions if you are not living there. Real estate should be placed in same category as food and water. We don't let wealthy hog up all the food and water and then inflate the prices for higher return on their capital. There can be progressive tax for the real estate properties you own but don't live at. Further, there should be national movement to aggressively create and encourage new housing . Without these measures, our economy is living on real estate cocaine with little productivity. I would wonder if our current limbo state of economy where nothing grows except real estate is precisely the manifestation of these issues.

Areas with prestige developments of > £20M houses and apartments are being left almost empty - because they're an investment, not a home.

What you're describing would essentially be a land and property tax. The idea is so shocking that proponents of both - like Henry George - literally tend to be written out of economic history.

Look at yourself, the average joe. Where is the wealth you generate going?

Let's follow the process step by step.

You work for a company and most of the wealth you generate is for said company... the company pays you a salary, lets say 10$/h. In order for the company to afford you, you must be generating more wealth then 10$/h. You're generating 20$/h of wealth and the company is shafting you by paying only half of that. It's one of the ironies of capitalism... employment is usually a deal that is unfair and weighted heavily towards the employer. But hey, it's a freemarket... you chose to get shafted.

The rest of your money goes to things related to your survival. Unless you own a house, then the majority of what's left will go to RENT.

So in the end, rent and labor output is what's sucking out the wealth from underneath you. Where does this wealth go? To the owners of the houses that are rented to you and the owners of the corporations you work for.

In short owners of both HOUSING and HUMAN Capital is where most of your wealth getting extracted. Logically if your friends and coworkers are also employees then the same shit is happening to them and the rest of the population of the united states.

Simply by observing where most of your own wealth goes, you can see where all of the wealth flows in this country and elucidate the primary cause of wealth inequality.

The person who wrote this article seems to think that rich people invest their wealth in something called "technological capital" which "depreciates." What is he talking about? Does he think wealthy people are putting their wealth into warehouses loaded with piles of smartphones and macbooks? Rich people put their money into real estate and stocks (aka Housing and Human capital).

I agree with most of your comment, but the sentence above is a bit of a fallacy. Sure, the employer isn't paying you the whole of the value you generate, but it works the same in reverse - you're getting paid much more than you would be if you were working on your own.

Math:

X = what you can produce on your own Y = what your employer can produce without you Z = what you and your employer can produce together

employment only makes sense if Z > X + Y. In that case, your split of Z is > X, and the employer's split of Z is > Y.

The reason why employers get an unfair share is due to strategic and organized negotiation. They utilize the might of the entire organization itself to negotiate salaries with each individual employee. Unions are designed to counteract this unfairness.

http://www.vox.com/2015/4/1/8320937/this-26-year-old-grad-st...

>The issue here is depreciation. When a firm buys a computer, the value of that purchase erodes with time. A $2,000 computer bought in 2012 is not worth $2,000 in 2014. When you take that into account, business profits look less impressive.

That the resale (or "book" or "scrap") value of a $2K laptop is small after two years' use means nothing in practical terms. It's a significant item in the asset-accounting for the business, sure. But the damn laptop is still working, still being used, still grinding out Excel spreadsheets under Windows XP, two, five, even seven years after it was bought. The department that bought it for $2K in 2012 is, bitter employee experience proves, NOT going to get authorization to replace it with a shiny new one in 2014, nor 2015 either. So although the $2K capital cost of the laptop might evaporate from the company's books, the UTILITY of the laptop remains and it replacement cost is NOT incurred.

This I think would apply with even more force to something like an assembly-line robot. At least my impression from seeing videos of car and motorcycle assembly lines is that the robots and other high-tech tools are quite well built -- better built than the average laptop fer sure -- and although they might depreciate, they won't stop working. In fact don't they become MORE valuable and profitable as their book value drops while their productivity contribution remains steady?

http://www.bea.gov/scb/account_articles/national/wlth2594/ta...

None of the above take into account the "utility goes to zero" fact for certain computer hardware: i.e., if a machine winds up too slow to run the latest software because of ever-increasing system requirements, the practical value of said hardware can go from "less than recently calculated resale value" to "possible resale value of raw parts" or even "zero."

This message, in the form of a very similar graph, was a Reddit post a few months ago and ensured a long discussion where people were quoting all sorts of historical figures who claimed that land ownership was the key to all sorts of power.

I thought it was a fairly common theory.

So we allow all sorts of behavior towards homes that we wouldn't let happen in other markets. NIMBY and zoning laws are a form of collusion.

Also since the housing boom people have viewed high home prices as a good thing.

http://voxtheweeds.slate.libsynpro.com/are-we-counting-pover...

But it's an MIT student! OMG! Time for the front page of HN!

he told me that in high school he didn't care about anything, and then around junior year he realized that he should give a shit, and self-studied for 22 AP courses and got 5s on all of them. he also had research papers lying around everywhere in his room and had also made a ton of money working at Jane Street and said it was fun but not for him.

This isn't:

>Local housing boards have made it damn-near impossible to build new condos. After much infighting, San Francisco plans on building up to 50,000 more units. But, San Francisco’s chief economist, Ted Egan, estimates that that the city would need at least 100,000 new units to stem increasing costs, let alone bring prices down to something more affordable.

>If Rognlie is correct and we really care about inequality, it might be wiser to redirect anger towards those who get in the way of new housing, rather than rely on taxes to solve our problems.

Millionaire NIMBY homeowners in San Francisco fighting with luxury condo developers has nothing to do with the rest of us.

There's something particularly distasteful about luxury condo developers trying to position themselves as champions of equality while trying to gouge huge profits from this state of affairs.

Take the massive development in Hunters Point. 35% of the 12,500 units being built are affordable, but affordable is defined as less than 150% of area median income -- that's AMI for the entire city, not the impoverished Bayview neighborhood the development is being built in.

150% of AMI in San Francisco is $107,050 for one person, or $152,850 for a family of four. A new unit that's priced for someone making six figures a year doesn't really meet the common sense definition of affordable.

And with market rate housing, a lot of it is bought up as an investment property or vacation property for the ultra-wealthy, which means each new unit of housing is underutilized compared to a truly affordable unit bought by someone who lives and works in the city. If a developer builds 5,000 market rate units, that has less of a supply and demand effect than 5,000 truly affordable units, since they aren't even really the same kind of asset. Demand for market rate housing in major cities is largely driven by a need to shelter money, where truly affordable housing is driven by a need to shelter people.

This means that the statistics for San Francisco are even worse than they look, since the 50,000 units being built will be unaffordable and underutilized.

There's no market reason why the floor should be where it is. It's just artificial scarcity to benefit property owners.

I think that this is just a bias that is blinding people to the inherent contradiction. The reason that shithole apartments become so expensive is because there are people with the money to spend who "need" (i.e. work in the area) that apartment. It has nothing to do with construction or maintenance costs, just demand. Even the "luxury" apartments have inflated prices compared to their material values. Which means that there is a lot of room to move up.

Basically what I'm saying is that people need to stop complaining about the "type" of housing. If someone builds 50,000 cubicle apartments or 50,000 luxury flats in a high demand area, your shithole apartment's value/rent is going to change the exact same amount. Because there is plenty of room for the people generating the demand to "afford" better (in strict material/construction terms). It shouldn't matter to anyone who isn't already in the mid-range of units to begin with (i.e. people complaining about the rent on their 400sqft hole in the wall). The real issue is that these places are "only" building 50k (or whatever the number) new units, when they actually need far more.

Maybe building cheaper (and therefore smaller) units could make allocating the area for this number of units more palatable, but that is still a secondary problem. This just runs into the issue that as much as people bitch about "luxury" condos, they want crappy high density ones nearby even less.

It is certainly demand but it's not demand coming from the people working and living there. It's demand coming from millionaire investors buying up high end property as an investment.

Google for dark condos.

data source: https://www.census.gov/hhes/www/income/data/historical/house...

https://news.ycombinator.com/item?id=9263107