Wednesday, September 24, 2008

Talking Rents and the Problems With Oversimplifying Anything

The inanity of news never fails to surprise me. Particularly what I read via Yahoo news. Like this story "Most And Least Expensive U.S. Cities For Renters" (from Forbes.com) which is just one of those "Duh" pieces, probably based on a U.S. Census Bureau press release with a smattering of quotes from business school (Or "B School" as a guy at work calls it incessantly) who like to hear themselves quoted. Perhaps I'm being unfair, though. Perhaps it's because I work with this kind of data often that it seems stupid? I don't know, readers, you tell me.

Highest rents? Take a gander. From least to most expensive: Orlando, Las Vegas, Miami, Fort Lauderdale, Etc., New York (no, really?), Boston, L.A., San Diego, D.C. (Hollah! Woo hoo--high rents. Way to represent!), San Fran & San Jose.

But my really favorite part comes with least expensive cities (from most to least): Milwaukee,Nashville, Kansas City,Columbus, San Antonio,Indianapolis,St. Louis,Cleveland, Cincinatti, &....last, but CERTAINLY not least, Pittsburgh.

Ah, Pittsburgh. The city everyone loves to hate on. It's an easy target really. What frustrated me about this article (and really about any other "ranking/rating" article like this) is that it oversimplifies. We like this, it makes things easier, but it's not necessarily right. Here's a snippet about the 'burgh:

"Pittsburgh has the country's cheapest metropolitan area rental units. Lessees there pay a median monthly rent of $608, less than half of San Jose's.

This is partly because Pittsburgh has struggled to rebuild its economic base after the loss of its steel industry, and residents are aging or leaving the city."

Huh? I haven't heard about this steel industry loss! Do tell me more! Oh, they will.

"The bottom line is that Pittsburgh is undergoing a sea shift in its economic base," says Susan Wachter, a real estate professor at the University of Pennsylvania's Wharton School.[Blogger's aside: PUKE] "Rents are relatively low because it's in a state which is losing population, and it is simply not doing well."

But Pittsburgh's problems didn't start with the subprime crisis, and probably won't end soon.

"It's not a moment of low rent," says Wachter. "This is a long-term thing."

Thanks, Susan, for clearing that up for us. I am really upset now that I didn't get such nuggets of wisdom during my education at Penn.

Without turning this into a term paper, the article is somewhat misleading, referring to MSA data as CITIES. A MSA includes multiple counties, often some transitioning rural counties. In the case of DC, this includes Stafford County and areas of West Va, for example. They clarify this in the text at one point, but you totally know most people are just skimming the photos, and they still use the terms interchangeably throughout.  This is why "New York" comes in at 6, behind San Jose and DC. This is including flop houses in Newark as well as Penthouses on Park Avenue.

Additionally, in areas with more affordable housing, like those in the least expensive list, they're often less populous and have a higher percentage of owners than renters. People don't have to be living on top of each other and can afford entry into home ownership. Those who do aren't paying much. On the other hand, in some cases, where people are looking for a more urban lifestyle, those people are paying MORE to rent than it would cost them to buy a single family house to rent a new "loft-style" apartment.

I think what irked me so much about this article--aside from me being cantakorous and tired--is that like most rating articles, it purports to give an easy "solution" to people. There is a lot of backlash against colle
ge ratings, because they take data and manipulate it to create a rating, which many take as Gospel truth for college quality and selection, when the quality of an education means more than endowments and student-faculty ratios. I venture to say places are the same. I'm not disputing that Pittsburgh and Pennsylvania has economic woes, but it's not reflected solely in a low median rent. Knowing the median rent in Miami is $50 over Orlando does not necessarily mean I will forego South Beach for Mouse ears.  And, therefore, I hate these kinds of lists..and yet always read them.

1 comment:

  1. I came on your blog because the humoristic comment on South Beach rents versus Orlando.
    Truth to say as a real estate broker in South Beach myself, the condo you will get in Orlando will be larger and in a better condition than the one in South Beach.
    But I will still get the one in South Beach, come on, Orlando ??
    Regards.

    ReplyDelete

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