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Monday, June 09, 2008

"It's So Expensive That...

no one wants to live there!"

Or so my protagonist on a bulleting board told me. He was trying to demonstrate how much better Dallas was than Brooklyn. (Hey, I know it's a stupid debate, but he was trolling a UConn board saying how Connecticut was the "armpit of the country," and I got sucked in.) I cited the much higher crime rates in Dallas than in NYC, and also the much higher real estate prices in Brooklyn. He jumped on that, and said that was another reason Brooklyn was worse.

This was weird, because, of course, it's actually the very best evidence that Brooklyn is more desirable than Dallas -- people will pay a lot more to live here! Of course, if you could get everything that you desire in a city in Dallas, then the low price makes it a better option, just as not being able to tell the difference between Boone's Farms and Dom Perignon makes Boone's Farm a better bargain--but certainly not a better wine.

And that's one thing funny about those magazine surveys of "The best places to live" -- you don't need a magazine, you just need to see which ones are the most expensive.

16 comments:

  1. Anonymous9:50 PM

    By that utility measure wouldn't value be considered objective and not subjective?

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  2. No -- I'm not trying to tell you which city you should value the most -- I'm telling you which city most consumers do value the most, by the best gauge available. And I'm not at all saying that's infallible or not subject to complications, such as artificial restrictions in supply. Just that it's the best gauge we have.

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  3. Gene, I could not agree with you more.

    I moved to my part of Florida not so much because it was cheap relative to Connecticut, but mostly because it was expensive relative to local income levels. I read in surveys that it was one of the most overpriced markets in the United States! Places get "overpriced" for a reason.

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  4. Yeah Yeah Yeah... I can hear the peanut gallery yucking it up about Florida.

    I don't live in one of the speculative markets. I live in the most densely populated county in Florida and in a long-established subdivision.

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  5. Anonymous1:21 AM

    Gene,

    While I largely agree with the general point you're making (especially if you limit the point to comparative rentals), let me play devil's advocate for a moment:

    Wouldn't your argument about "much higher real estate prices" only strictly hold to the extent that land owners buy and hold their land in these cities as consumers rather than as speculators/flippers who only pay what they pay on the basis of their judgment as to what actual land consumers will one day be willing to pay for it, or again, perhaps on the basis of their judgment as to what other speculators think actual land consumers will ultimately be willing to pay for it?

    Cheers,
    Araglin

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  6. Anonymous1:22 AM

    Gene,

    While I largely agree with the general point you're making (especially if you limit the point to comparative rentals), let me play devil's advocate for a moment:

    Wouldn't your argument about "much higher real estate prices" only strictly hold to the extent that land owners buy and hold their land in these cities as consumers rather than as speculators/flippers who only pay what they pay on the basis of their judgment as to what actual land consumers will one day be willing to pay for it, or again, perhaps on the basis of their judgment as to what other speculators think actual land consumers will ultimately be willing to pay for it?

    Cheers,
    Araglin

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  7. Isn't this argument assuming a bit of perfect knowledge in the market?

    How many people who pay high rents in Brooklyn have ever been to Dallas for an extended period of time?

    I lived in dallas once for three years and it is certainly a city that an East Coaster needs to learn how to live in.

    After you "get" Dallas, it is certainly comparable to Brooklyn, if not better.

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  8. Let us not forget that, unless you are a Brooklyn native and have not considered your situation, most people chose Brooklyn because they cannot afford the same lifestyle in Manhattan.

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  9. "Wouldn't your argument about "much higher real estate prices" only strictly hold to the extent that land owners buy and hold their land in these cities as consumers rather than as speculators/flippers who only pay what they pay on the basis of their judgment as to what actual land consumers will one day be willing to pay for it, or again, perhaps on the basis of their judgment as to what other speculators think actual land consumers will ultimately be willing to pay for it?"

    Sure, there could be a speculative bubble -- but it won't last, so look at the price over a decade, not over six months.

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  10. "Isn't this argument assuming a bit of perfect knowledge in the market?"

    No, just decent knowledge.

    "How many people who pay high rents in Brooklyn have ever been to Dallas for an extended period of time?"

    No need -- word gets around.

    "I lived in dallas once for three years and it is certainly a city that an East Coaster needs to learn how to live in.

    "After you "get" Dallas, it is certainly comparable to Brooklyn, if not better."

    It looked like a strip mall on steroids to me. And, as I noted, the crime rate is about double! No great beaches, flat, boring landscape, and Manhattan is not ten minutes away.

    In any case, I think what you're ignoring is this: I bet you went there to take a pretty good job, yes? Now, perhaps many more Brooklyn residents would like Dallas if they could get the same job there they have in NYC. But they can't -- and jobs are the major part of what makes a city attractive!

    And that's why I think these magazine surveys are really about fantasies -- sure, if in your dream where you could have your $1.5 million a year investment banking job in Boise instead of NYC, your life might be better -- but you can't, so you'll stay in NYC in the real world.

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  11. It looked like a strip mall on steroids to me

    This is exactly my point. You really have to live there for awhile to get it. You are not going to get it passing through.

    There is something that can only be called "Texas Big", the entrepreneurs there, and others, just think differently.

    flat, boring landscape,

    Actually, while in Texas I went into an undeground cave that was an inactive (they told me) earthquake fault line. You climb between two plates of a fault line!!Then they take you up into a tower to show you how previous earthquakes formed various hills. The flat lands (Dallas) are one plate, the hills are another.

    You have not lived unless you have lived through a Dallas hail storm, nothing on the east coast compares. And you haven't lived until you have tried to drive after an ice storm, again nothing like it on the east coast, driving on snow or east coast frozen roads doesn't come close.

    If that doesn't turn you on,then outside of Texas, in Austin,you can go to a bridge where literally at dusk every day millions of bats fly from under the bridge to Mexico and in the morning comeback to the bridge.

    Also spent a few trips on a cattle ranch, just outside the city limits.

    As for Manhattan, it's attractive to me for the business wheeler dealers and the Dallas area has plenty:Boone Pickens,Richard Rainwater, the Bass Brothers, the Hunt Brothers (the mailman once delivered a Hunt Brothers check to me by accident),Jerry Jones, Mark Cuban etc.

    I also think it has more of a community feel centered around the Dallas Cowboys, but, again you would have to live there to get it.

    The nightlife doesn't stop. The beaches that Dallas people go to include Padre Island. It's a bit of a hike but Dallas people think different about distance. A Brooklyn beach is not going to compete with Padre Island.

    As for crime, it would be much, much more difficult to experience crime in Dallas, if you live a white collar lifestyle. You go everywhere by car and are simply never exposed to anything but clean safe areas. You are just not exposed the way you are in NYC to the criminal class. In three years living there I can't remember once looking over my shoulder at a bad seed. In NYC,as you know, it's a near daily occurrence.

    I think in general your thesis about expensive versus inexpensive cities is correct, but not when it comes to Dallas.

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  12. Anonymous4:16 PM

    I spent three days in Dallas, but it felt like a week. At night, they roll up the streets and turn off the lights.

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  13. "The beaches that Dallas people go to include Padre Island. It's a bit of a hike but Dallas people think different about distance. A Brooklyn beach is not going to compete with Padre Island."

    Robert, we can fly to many nice beaches as well. But in a half an hour car ride, I can be at Jacob Riis, part of a 26,000 acre park, with three or so miles of white sand, surf beach backed by deserted sand dunes covered with sea grasses and shrub roses.

    "As for crime, it would be much, much more difficult to experience crime in Dallas, if you live a white collar lifestyle."

    Up here, we don't have to hide in cars and gated-enclaves and keep strictly to white neighborhoods to feel safe! I've walked straight across the one of largest housing projects in Brooklyn, and yuppies are spending $1 million for brownstones one block from that project.

    Look, I'm sure Dallas has lots of cool stuff I haven't seen, and obviously some people love it. But it sounds like life is very good for an elite upper class and not so much for anyone else -- after all, if all that crime is concentrated on only a portion of the population, that stats look even worse!

    Nothing here was meant to say that housing prices tell any individual where he/she would be best off -- only what seems to be true for the "mean person."

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  14. There ya have it, mean people are better off in Brooklyn.

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  15. In summary: my intention here was NOT to dump on anyone else's favorite locale -- Dallas was mentioned only because I had happened to run into an obnoxious Texas bigot (a Connecticut ex-pat!) who was dumping on my home state and the northeast in general. I'm a fan of regional attachment (that stops shy of xenophobia and unthinking patriotism) -- I here reveal that the scene at the end of The Sound of Music where the von Trapps perform "Edelweiss" on stage as they are about to flee their homeland always makes me weepy. My point was that the typical magazine survey of "the best places to live" assigns high housing costs as a negative factor, while, in truth, it is the best rough indicator of a great place to live. Certainly, for some individual -- say, a free-lance programmer who does all of her work over the Internet -- that may be the case. But, in general, real estate prices are high somewhere precisely because that place is so desirable.

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