Felix Salmon asks how rentals in Manhattan can be down 58% over last year.

First, if I am reading the report right, that refers to new units rented. So, there isn’t an over 58% vacancy rates. There are just 58% fewer lease singings.

More importantly, however, as incomes and income prospects go up people buy more housing. Not just more square feet of housing, more units of housing. Lower income folks tend to share housing – the dreaded roommate.

There are typically savings to be had by moving in with someone even if you are occupying the same total square feet as you were before because you are sharing utility shafts, hallway lineage, etc.  Now, those savings effect might be blunted in high price-per-square-foot Manhattan, but they probably still exist to some extent.

Moreover, most people who share an apartment do use less space per person, because they share spaces. They typically share kitchen and living space and often share a bathroom or at least a half-bathroom. This brings down the total cost per person.

So in a down economy we should expect the same number of people to cram into fewer housing unit. Housing may seem like its fixed but the consumption of housing is not. Housing supply curves slope upward.

Apologies to those who saw a previous unreviewed version

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