The Collapse of American Cities Has Started. And Yours Is Next

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Kinda weak argument. The video is premised around remote work causing migration out of the cities, causing a loss in revenue, but there are still many industries that canโ€™t do remote work.

So yes, the top US cities are seeing minor decreases in property value (specifically NY and SF based on tech/finance), but most cities are not. Again, most cities are not. โ€œYours is nextโ€ get the fuck outta here.

๐Ÿ‘๏ธŽ︎ 4 ๐Ÿ‘ค๏ธŽ︎ u/Ecuni ๐Ÿ“…๏ธŽ︎ Aug 26 2020 ๐Ÿ—ซ︎ replies

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๐Ÿ‘๏ธŽ︎ 1 ๐Ÿ‘ค๏ธŽ︎ u/AutoModerator ๐Ÿ“…๏ธŽ︎ Aug 25 2020 ๐Ÿ—ซ︎ replies
๐Ÿ‘๏ธŽ︎ 1 ๐Ÿ‘ค๏ธŽ︎ u/lost_civilizations ๐Ÿ“…๏ธŽ︎ Aug 27 2020 ๐Ÿ—ซ︎ replies
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this is the san francisco bay area it has been one of the biggest economic hubs of the world for the last 50 years in fact if this region of just 18 000 square kilometers were to be its own country it would have the 19th largest economy in the world ahead of countries like switzerland taiwan sweden belgium and the united arab emirates the bay area has been one of the fastest growing regions in the united states for nearly half a century but then something changed you see the bay area along with many other cities around the world are going through drastic times right now that could spell the end of cities as we know them the year is 1957 a nobel prize winner named william shockley had recently moved to mountain view california and started a company called the shockley semiconductor company and he started this company because he had come up with an idea to build transistors out of silicon instead of germanium that would end up being a revolutionary idea for the time so the shockley semiconductor company began making the first modern day transistors that would go on to be used in every computer for the rest of the 20th and 21st century but there was a problem william shockley rubbed a lot of his employees the wrong way so eight of these employees left the company and went on to start their own semiconductor company in the area called fairchild semiconductor which was a company based around the exact same technology that william shockley invented for years afterwards employees from the fairchild semiconductor company and bell labs continued to innovate in northern california by inventing the integrated circuit and eventually the microprocessor in 1964 and it was after this invention that the world as we know it and the bay area would change forever you see after the invention of the microprocessor tech companies started popping up left and right around the same area in northern california for example intel and amd were two of the first multi-billion dollar tech companies to be founded in what is now known as silicon valley then soon after that in the early 1970s two something guys in the area named steve wozniak and steve jobs heard about this new chip technology in the area so they started to use these new chips in something that they called the apple one and after their startup company called apple generated an ipo value of 1.3 billion dollars and after seeing the success of now dozens of massive semiconductor companies in the bay area venture capital and tech companies began spreading throughout the bay area in hopes that their startup tech adventure would become the next intel or apple what followed was one of the craziest economic experiments in history for example oracle was founded in 1977 in santa clara seagate was founded in 1979 in cupertino adobe was founded in 1982 in mountain view autodesk was founded in 1982 in mill valley cisco was founded in san francisco in 1984 mcafee in 1987 santa clara and dozens of other companies were founded in the late 70s and early 80s that are currently worth billions of dollars today and keep in mind that all of these companies were all located within about 150 kilometers of each other and as a result of this economic and technological explosion in the area the city would go on to change forever you see as these startup companies like apple and cisco grew they needed to hire more people and pay them well for their highly skilled labor so the bay area in the 1980s saw a massive increase to its average income but because of this rapid increase in income and a lack of supply of things like residential housing and commercial spaces the cost of living shot through the roof in fact from 1984 to 1990 the median housing cost increased by just under 150 percent and this trend was far from over within the bay area because the 1990s issued a new age of tech companies called internet companies and it was during this time where ebay paypal google facebook tesla uber twitter and dozens of other companies were founded within this 18 000 square kilometer area in fact if you were to look at a list of the largest tech companies in the world you would see that on any given day nearly half of them are located within the bay area so because of this giant influx of tech companies we saw a rapid increase to the cost of living within san francisco in the bay area and it kept climbing to a point where from the years 1986 up until 2016 trulia reported that the median price of housing had increased by an astounding 557 percent and if that wasn't enough here is another crazy stat in the united states today if you were to earn 192 000 per year as a household you would be considered amongst the top five percent of income earners in the country yet if you were to make a hundred and ninety two thousand dollars per year in san francisco you would be considered middle class to maybe upper middle class depending on which region of san francisco that you live in if you were to take into account that the median price of a detached house is now just over 1.68 million dollars then you would see that if you were to make nearly 200 000 per year in the bay area you likely wouldn't be able to get approved for a mortgage to purchase an average home because a 200 000 a year income is just not high enough to buy an average house in san francisco in fact in 2019 the average rent for a one-bedroom 500 square foot condo in san francisco was a whopping thirty six hundred dollars per month but that was last year and this is today you see in the last six months the average one-bedroom rental has dropped by an astounding 11.8 percent in san francisco and is continuing to fall we have also seen residential vacancy rates jump from 3.9 to 6.2 percent and commercial vacancy rates go from 5.4 to 9.8 and what this all means is that san francisco for the first time in its history is seeing people and businesses leave the city and there are several reasons as to why this is the first of which is that companies like facebook twitter square slack in google all announced that they would allow for many of their employees to work from home for at least one year and potentially forever going forward the second reason is that one of the attractive things about living in a city like san francisco is that it always has tons of events going on lots of places to go and many shops that you can walk around to within a few minutes of your residence but after the lockdowns many of those things have disappeared virtually overnight and lastly the cost of living combined with the previous reasons has made many city dwellers rethink about where they want to live so remember how i said that the average home in san francisco costs about 1.68 million dollars well if you were to drive just about an hour and 20 minutes north of san francisco to sacramento you would find that the average home price is a much more affordable 395 000 and because of this affordability sacramento has actually seen a real estate boom in the last six months and all this means is that many of the workers that are now able to work from home are choosing to leave the expensive cities that they live in in order to live a more affordable lifestyle i mean that same household that makes 192 000 a year in san francisco could potentially buy a mansion in sacramento or they could just buy an average home in sacramento and pay it off in about four years so while san francisco real estate prices have dropped over the last six months areas outside of san francisco have actually seen their real estate prices increase by a whopping 4.8 percent and this trend isn't just being seen in san francisco it is being seen throughout many cities in the united states and the world i mean new york city saw its average sale price fall by a whopping 17.7 since february downtown los angeles has seen only a 2.5 drop in real estate prices but it also experienced a 42 drop in the amount of condo sales compared to this time last year and cities about an hour outside of toronto have seen a whopping 40 increase in home sales compared to this time last year essentially many middle to upper middle class individuals are working from home now and are choosing to get a 2 000 square foot house in the suburbs with a 1600 mortgage rather than paying 2 000 in rent for a 900 square foot condo in the city but it's just not the middle class that is leaving it is also the top income earners in the world as well you see when you have money and live in a high tax densely populated state like california or new york and your entire state gets locked down then you might start to think about moving and that is what is happening across the world in fact the fastest growing real estate market in both the uk and the united states is for homes that are priced above 6.5 million dollars now on the surface this might sound like it would only have a mild effect on cities but the ramifications might be much larger than you think i mean how do you think a city funds its municipal programs like garbage collection road work policing and firefighting well it's not from state or federal income taxes it is actually from property taxes depending on the city up to 60 percent of total municipal revenue will come from property taxes with the most of the rest of the revenue coming from things like gas taxes fines licensing fees permit fees and transfers from state governments but all in all property taxes are the most important source of revenue for almost every city in the united states but now that people are moving out of some cities more residences are becoming vacant or abandoned which is leading to a decrease in property values and lower tax revenues and this is one of the key things that we are beginning to see right now cities are running out of money because of the lack of property taxes being paid now this is partially because less people are paying taxes this year than ever before and partially because there is less tax revenue to collect in the first place and so how much trouble are cities in right now well let's put it this way recently there was a one trillion dollar bailout proposed that would solely go towards both state and local governments and if this financial assistance does not arrive for municipal governments then we could see potentially the largest influx of municipal bankruptcies in history since 1938 only 700 cities have declared bankruptcy that's only about nine per year but right now there are dozens of cities on the brink of bankruptcy and dozens of others that are in very bad financial shape and could face bankruptcy within the next two years so that's why almost every single city in the united states right now is essentially compiling debt to pay off debt so that's why companies like blackrock have reported record levels of municipal bonds across many cities in the united states or in other words municipal governments are taking out record levels of debt in order to help pay for their current debt and other expenses and the trouble is a lot of these cities already had large amounts of debt that they cannot now pay back due to the decrease in tax revenues so that's why in the united states we have seen the highest level of municipal debt defaults since the financial crisis and two of the top seven most indebted cities in the united states are you guessed it san francisco and new york the two cities experiencing arguably the biggest population impact from the lockdowns so it is possible that the combination of debt mass exodus of the population and a lack of jobs might all amount to the collapse of the modern city as we know it and all we have to do to see what will happen in the future is to look to the past you see a city like detroit went from being the fourth largest city in the united states in the first half of the 20th century to being the 24th largest city today with a population that is still declining year after year and even though the fall of detroit is under very different circumstances very large contributing factors were a lack of jobs city debt and a declining population all things that are facing modern cities today now i am not saying that new york or san francisco will turn into detroit but it is possible that we might be seeing the first signs of a significant economic problem for these giant cities i mean there is a decent possibility that with the advancements in technology people may not want to live in cities for much longer for example one of the main reasons why cities were created in the first place was because that's where the resources and the jobs were i mean it wasn't until a few hundred years ago that cities were built solely because they were next to a fresh water source and fertile land but with the expansion of water supplies food distribution electrical grids and infrastructure we saw an expansion to the suburbs throughout the 20th century but during that time keep in mind people still had to commute to work meaning that they would still have to live close to or near city if they wanted a decent job but now with more and more workers being able to work from home permanently people are now no longer bound to living within a one and a half hour commute to work and this trend might continue going forward i mean a recent study from cnbc and surveymonkey showed that most people are happier working from home than they are commuting to work every day however it is worth noting that most of the respondents are happier working from home but ideally would like to go into the office sometimes and they also reported that a lot of their work is harder when they are not in an office setting it's also worth noting that as technology keeps advancing it might become more common for people to move out of cities i mean proportionally the tech sector is employing a larger percentage of the workforce every year meaning that working from home will likely become easier for most people going forward and if you want to look decades into the future we might see technologies like ai and robotics replace a lot of the jobs where you actually need to go into work today but that will be a story for another video but there is another viewpoint about this migration out of cities some people say that this is just a minor blip where people are leaving cities simply because of the pandemic but will likely return once the virus is relatively under control potentially sometime in 2021 and some people just simply like living in cities i mean there are a lot of people that truly don't like living a suburban or a rural lifestyle and want to be in a city no matter how expensive it may be and what's also interesting is that not every single city is facing this problem it seems to really only be the ones with an obscene cost of living that are seeing this mass exodus but meanwhile cities like dallas austin seattle phoenix have not experienced the same problems as much as the most expensive cities in the united states so it is quite possible that only some of these cities will be affected in the long term and this just might be an outlier year in regards to where people live or this could be the beginning of the end of the modern city as we know it only time will tell so what do you think about the future of cities going forward let me know in the comments down below and also please subscribe and hit that notification bell if you want to see my next video which should be out in the next few days also feel free to check out my documentaries playlist as i have a ton of other videos just like this on there so please click on my next video and i will see you guys in just a few seconds
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Channel: Jack Chapple
Views: 1,708,248
Rating: 4.8071241 out of 5
Keywords: Jack, Chapple, San Francisco, San Francisco Bay Area, Silicon Valley, Silicon Valley real estate, San Francisco Real Estate, new york real estate, houses usa, collapse cities, economic collapse, stock market bubble, stock market investing, how to invest, william shockley, buying a house, new york city, american cities, city debt, city property taxes, property taxes, municipal bonds, economics, economics 101, stock market, stocks, bonds, moving out of city, moving to country
Id: Pd2p3oFj-Tc
Channel Id: undefined
Length: 15min 10sec (910 seconds)
Published: Fri Aug 21 2020
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