Comment by tryitnow | Hacker News Reader

Comment by tryitnow | Hacker News Reader

Parent Full thread

Gloomy, but likely correct. A lot of these current valuation numbers just don't make sense.

The implied growth rates in many tech stocks is unrealistically high.

The Bay Area's long-term employment prospects simply cannot support current home values or rental rates.

Once public and private equity valuations drop a lot of software development projects are going to get cut and with them the jobs of many software engineers. Engineers who keep their jobs probably won't experience pay cuts, but new hires are going to be expected to take much lower pay packages.

Why? Because the talent is going to be available at lower pay rates. So why pay more?

This is not necessarily a bad thing. There's a lot of irrationality in the tech business now and it's crowding out the rational participants. There needs to be a weeding out process. It is good that it has begun.

Remember to think long-term. Technology and the Bay Area are here to stay. Let's get the creative destruction process over with as quickly and painlessly as possible so that we can get on with making real innovations.

So what if you're one of those new hires (or hope to be one)?

I'd say keep polishing your resume. If you dropped out of school, look for a school with low tuition that isn't University of Phoenix but finish your degree. Stay on your toes: work your way through to graduation, get internships each September (as much as you can).

And though the retire-as-a-millionaire thing might have vanished, you'll land on your feet.

Build your own product now that generates revenue and profit. Make your own job.

What will you eat, old newspaper clippings? If we could all do this, VCs would not exist in the first place.

Bay Area's real estate is actually pretty cheap, considering how much economical output the area has and how desirable the location has been historically.

Look at Vancouver, Hongkong, Shanghai, Moscow, Tokyo, all have waaaaay lower average household income than San Francisco Bay Area, yet wil much more expensive realestate price.

Living in British Columbia, I had always assumed Bay Area real estate would be astronomical. I found it surprising to see single family detached homes in the Bay Area for $300,000. That's entirely reasonable considering the potential incomes.

Which part of the bay area? Those homes are probably > 1.5 hr commutes for most jobs.

How long ago did you see that? And where?

The median price for a single-family home in the Bay Area is $841,560 as of Summer 2015.

>The Bay Area's long-term employment prospects simply cannot support current home values or rental rates.

Why not? What are you basing this on?

Common sense? Median rents are $5500 a month. No one can afford that. A city can't exist if people can't live there.

Don't forget that the median rent is determined by the very small slice of rentals that are changing hands.

I'd love to know what the median rent across all rentals is in SF! ~70% are rent controlled. I'd guess the median rent is maybe half? Around $2000? Just a guess.

You say no one can afford it, but all the apartments are rented out.

Sure, but that class of people can't do all the things required to run the city (food service, child care, etc). Those people have been priced out and are moving elsewhere. The city suffers; it becomes difficult to sustain the current pattern.

I mean other cities are like this too. Chicago is a very cheap big city. But how many server workers live in Gold Coast or River North? The difference is I guess cheap housing is closer compared to SF?

Except none of the doomsday predictions have come true. There are still of services like food service, child care, etc.

He's reasonably and appropriately worried about both the shaky unicorns and the seed funding bubble, neither of which seems terribly sustainable.

There are other games in town, but those two games were seriously inflating salaries here.

Reply on news.ycombinator.com