Expensive Urban Real Estate Is a Consumption Choice

Speaking of things that sent my twitter feed into a frenzy of conservative "Tu quoquing", earlier in the week the Daily Caller found an interesting way to settle the ongoing debate about the demographics of Occupy Wall Street: they looked up the addresses of people who had been arrested in conjunction with the New York protest.  It turns out that these houses are relatively pricey:


Among addresses for which information is available, single-family homes listed on those police intake forms have a median value of $305,000 -- a far higher number than the $185,400 median value of owner-occupied housing units in the United States.

Some of the homes where "Occupy" arrestees reside, viewed through Google Maps and the Multiple Listing Service real estate database, are the definition of opulence.

Using county assessors and online resources such as Zillow.com, TheDC estimated property values and rents for 87 percent of the homes and 59 percent of the apartments listed in the arrest records.

Even in the nation's currently depressed housing market, at least 95 of the protesters' residences are worth approximately $500,000 or more. (RELATED SLIDESHOW: Opulent homes of the '99 percent')

The median monthly rent for those living in apartments whose information is readily available is $1,850.
My initial reaction was the same as many people I've seen in comments sections: the protest is in New York, which is expensive.  This is hardly surprising.

But on second thought, I don't think that's quite right.  At least some of the houses identified by the Daily Caller are in places like Texas and Wisconsin.  But more importantly, I'm not sure we should "discount" these home values for location.  The fact is that living in an expensive city is a consumption choice.

You hear this argument all the time from people in New York.  "Rich?  Hah!  We've got four people in 1600 square feet, and our school bills are going to put us into bankruptcy."  Many New Yorkers believe that they should be given some sort of income tax abatement because of the expense of living there (with the lost revenue being made up from "really rich" people, natch).  Slightly less affluent New Yorkers frequently believe that landlords should be forced to offer them "reasonably sized" apartments at a modest fraction of their income, because after all, otherwise they couldn't afford to live in New York.

Don't think this is necessarily ideological--the fact is that in thirty-five years of New York, I'm not sure I heard anyone admit to being rich.  Even people with eight-digit wealth routinely refer to themselves as "middle class".  As a friend used to mutter when he heard this, "middle of what?"

There's a sort of irritating supposition in all of this that living in New York (or San Francisco, or Boston) is something that just happens to you, like getting cholera.  And that therefore high incomes, expensive real estate, and so forth, somehow don't count for the purposes of assessing how well off you are relative to the rest of society.  In fact, perhaps society should get busy making it up to you for all the hardships.

Perhaps we should offer such a perceptual discount to the small number of people who really couldn't make anything like their current incomes in any other place--investment bankers, some securities lawyers, a handful of entertainers and creative types.  But in most cases, this is ludicrous.  For starters, not everything costs more--online purchases, to name just one obvious example. 

But more to the point, if you own a $795,000 one-bedroom apartment that you are eventually likely to pay off, you own a very expensive asset far beyond what most ordinary Americans could ever hope to accumulate.  You can sell that place and move to a red state and live very well, any time you want.  Most red-staters can't do the reverse.

After all, to state the obvious, that apartment costs so much because many, many people want to live in New York.  And no matter what the song told you, it is not actually true that all of the best things in life are free.  Living a subway ride away from all that New York has to offer is really great, and also, really pricey.  Which is one reason that I don't live there any more.

Living in a blue state is a choice.  If coming to New York meant that you had to put four people in a three bedroom apartment that's uncomfortably far from a subway line, instead of buying a nice little condo in Omaha, this does not mean that you are not "really" better off than your counterpart in Omaha; it means that you have chosen to consume your extra wealth in the form of "living in New York" rather than in the form of spacious real estate, cheap groceries, and an easy commute.

So yes, the people at those protests--at least the ones who get arrested--really are, on average, unusually affluent.  (Or at least, their parents are).  Whether that matters is a different question I won't opine on.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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