Philadelphia Posers

The NY Times had an article yesterday about how Brooklyn hipsters are moving to Philadelphia because it is cheaper to live there than NYC. This article kind of makes an interesting point about real estate that it probably did not intend to, which is that price trumps all. Basically, if the price of real estate gets so out of whack with what most people can afford, as it has in NYC, then people will move to somewhere cheaper, like Philadelphia. Given constrained supply and excessive demand in a closed economy with no other options, prices should continue to rise indefinitely. Luckily, NYC, no matter how cool or trendy, is not closed. Prices can’t go up indefinitely because eventually demand decreases as buyers exit the system – to Philadelphia.

[WEARING a Paul Green School of Rock T-shirt, his bangs plastered to his forehead in the summer heat, Laris Kreslins pulled in front of a handsome brownstone on Rittenhouse Square, the priciest neighborhood in the city, and hopped out of his car.

"We're going to show you what a real Philly apartment looks like," he said, unlocking the door to reveal a spacious one-bedroom flat sparsely decorated with CD's and copies of music magazines. "As you can see, it has hardwood floors, lots of light and very high ceilings," he said. Then Mr. Kreslins paused and delivered what he knew would be the kicker: "Rent is $800 a month. Heat and electricity included."]

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