Redfin CEO: Stanford is the Hogwarts of Silicon Valley. | Hacker News Reader

Redfin CEO: Stanford is the Hogwarts of Silicon Valley.

blog.redfin.com

1 pointtimr9 comments

a high cost of living – a two-bedroom house in Palo Alto typically costs more than $1.5 million — prevents people from buying homes and having children

Yet again the housing fallacy, this time from a guy at a real estate startup.

The houses in Silicon Valley are not sitting empty because they're expensive. In fact, it's not merely false that SV's high housing prices prevent people from living here, it's necessarily false. The fact that a house cost $x means someone was able to buy it.

What he seems to mean is 'prevents many people from buying homes and having children', which I think is difficult to argue with. Obviously people buy those houses, but they probably aren't 'average middle class american' types, either.

One of the reasons I was happy to return to Italy in 2000 was that most towns there seem to have a mix of young and old, rich and poor that seemed much more real to me than San Francisco, which especially in those days was like living on another planet in terms of how weird it had gotten with all the money and craziness.

I suspect the variation in wealth in SV is as great as in other places, if not greater. It's just that the median is higher.

Maybe it's a high rate of "transience" in that there are a lot of people coming and going, or maybe it's the fact that you simply don't interact as much with other people, but put it all together and I still don't see it as an area where many people choose to "settle down". It's great place to venture forth and try doing startups, but I think the point was that it's not bad if you can also decide to simply call someplace home, which he sees more in Seattle than SV. I tend to agree. I've never been there, but I imagine that this is also more true of Boston.

You can get that in the bay area... you just have to head way out in the east bay to find more 'average' housing and people, I suppose. SV is pretty much full, and zoning regulations, american attitudes and earthquake laws apparently prevent density from going up too much.

But that higher median means that you get less variation in the kind of people around you. You only get the kind of people that could meet that price level. Thanks to the 30 year mortgage, gentrification is slower than conventional economic theory would predict.

The fact that the median is higher means that there's a smaller slice of society that can afford it.

But that higher median means that you get less variation in the kind of people around you.

That is an illusion. To someone poor it might seem like everyone in Silicon Valley is "rich" and thus the same. But that's just an illusion caused by being an outsider, like the feeling children often have when they see people from some very unfamiliar society: how do they tell one another apart?

You'd feel there was even less variation in the people around you if you moved to a city in China, because the people there would be way more like one another than they were like you.

You're right in that, usually high housing prices are a symptom of scarcity, not a cause.

But from what I understand, in Palo Alto, much of that scarcity is artificial. The city, in the process of fending off the rapid, misshapen development of the rest of the Santa Clara Valley, passed a number of zoning laws which restricted height, imposed 'setbacks', and limited the subdivision of lots. While this did work to preserve the community to some extent, the population density is forced downwards.

At some cost to the residents who already live in Palo Alto. Berkeley was lain on an older pattern, with much influence from works such as 'a pattern language', and latin american towns. Consequently there's a high enough pedestrian density to support a town that's much more pleasant to walk in.

Bingo. I try to keep my urban-planning nerdery out of Hacker News, but zoning is the big reason why prices are so high. I mean, there's zoning everywhere, but when you throw in the Bay and the mountains, there's just too little land to start with. When there's unmet demand due to artificially reduced supply, prices can go up very rapidly.

The URL is broken. Try http://blog.redfin.com/blog/2008/02/the_next_silicon_valley....

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