Bay Area hammered by loss of jobs: Lack of affordable housing strangles hiring
mercurynews.com
mercurynews.com
Ive turned down more bay jobs than I can count because at some age you begin to accept the fact that SFBay isnt that great. Rising levels of increasingly aggressive homeless, the inability to afford any housing, and the price of food and public transportation in general are just a few factors that led me to say no.
It makes me wonder that as the young rockstars and H1B recipients age, where will they go? They certainly can't afford to buy a house. I imagine as time goes on, companies in the Bay Area will be awash with young junior talent but will struggle to attract more senior folks.
Other tech hubs. Portland, Seattle - even little Bend has plenty of people from California who are attracted by the (for them) low housing prices. They, in turn, put pressure on housing prices for 'ordinary' people here.
California's housing crisis has repercussions all up and down the west coast.
Then they turn right around and tell all their employees to move to the area, then to get in their cars, buses, trains and start commuting to a physical location, in one of the busiest, most expensive city every single day. So that these workers can then sit on chairs in a building and do probably the easiest thing to do with a remote connection -- write code, documents, email, monitor servers.
I personally know I will never be able to afford housing close to work based on how things are now. Currently I'm just saving my pennies and hoping I can move to another job with a lower cost of living somewhere else in a few years.
Edit: For reference, I am just a just above 'entry level' engineer at Microsoft. I'm paid well, but not well enough for the housing around here.
You're looking at it the wrong way. It's not that the situation in California has wider repercussions, it's that there is a wider problem whose symptoms happen to manifest themselves earliest in California because it's one of the nicer places to live: there are simply too many people and not enough space for them all to live in the nice places.
High real estate prices & rents are the price we're all paying for keeping JPMorgan & Goldman Sachs solvent during the financial crisis.
I left California right before the last housing bubble burst to take advantage of the real estate arbitrage.
I'd love to do it again.
Sacramento!
Very well said. So often, some (usually older) person will tell me, "well I know this [choose your civil servant profession] and they get by fine in SF on a 60k salary, so stop your whining."
Yep, I'd get by fine with 60k and a TIME MACHINE.
It is quite easy to get along on 60k when you've already banked a megabuck.
Wine industry is similar, my wife gets a lot of interns from out of the country through an Ag exchange program. Between the lower pay and higher cost of living here, recent grads who are able to save up money working in Australia, NZ, ZA, or Argentina in the Southern Hemisphere harvest actually end up losing money just living up here for the Northern Hemisphere harvest. A lot of them are looking into ways to work for a more extended period of time in other countries as they are able to live much better in very similar regions climatically.
80-10-10 mortgage on a 1mil home is only 100k down. And the monthly payments split by 2 people (aka a couple) is ~2k / person / month. That's 4k/month all in once you include the tax rebates.
I'm good on that, thanks.
Your normal family property (approx 1500 - 2000 ft/sq, ~1 acre land) goes for $200k - $250k. Still expensive, but doable, especially if both parents are making decent money (>= $50k/year is what I count as decent money). Less than $30k down payment brings your monthly expenses to less than $2k/mo. Exactly half price for what I'd imagine to be similar living conditions in SF Bay (albeit Bay Area public schools are probably better than NH's, though New England has very good schools).
It's clear that you're making a lot more money than I am for similar experience -- I too am less than 30 years old -- but I wonder the difference in percentage our savable income is, given the difference in costs we both pay for housing. I too wonder for others in our age and job demographic what they're able to save when living in SF Bay vs. elsewhere.
The cost of living there doesn't seem worth it to me. Heck, NE I think is too expensive! Been looking to move down to Raleigh, NC after I get married, but that's neither here nor there.
I just 'did the math' in Redfin's mortgage calculator on a $990,000 home. The total monthly cost came out to $6,495 or $3,247 per person (in a couple). That's almost exactly 1/2 of the take-home (after tax) pay of someone making $120,000 a year in California.
-- Monthly expenses on a $990k house in SF --
Principal and Interest: $4,185
Property Taxes: $1,015
HOA Dues: $551
Homeowners' Insurance: $183
Mortgage Insurance: $561
1) That's far more than your $2,000 per person number
2) I'm no expert but, throwing 50% of your income at a mortgage seems foolish. So whether or not you can afford it, depends on your definition of "afford"
I'm going to need a minute to let that sink in.
140K, 40% for taxes, leaves with 84K, 3K a month for housing (assuming you don't want to shack up with some rando Craigslist'er), leaves 48K.
Another 20K for food and booze, and you're left with 28K.
They leave for more affordable cities or head back home to be close to family when they decide to have kids.
EDIT: May I offer up Tampa as a yet-to-get-expensive locale? I'm making SFBA wages in security, but bought a 4 bed 2.5 bath house with a pool on a quarter acre lot twenty minutes from my company's office for ~$200k (and I have fiber to the home for $45/month).
The highest rated beach in the country is in Clearwater, ~30-45 minutes away, we have an amazing craft beer scene, lots of parks, beach/water recreation, very nice international airport (30 min away, $5/day (!!!) for parking), etc.
They tell me about how guards have been placed at their local train stops to cut down on the number of suicide attempts by stressed out high school students who feel insane performance pressure.
As somebody who worked in the US(Bay Area, CA) and then returned to India. The general idea among immigrants is to make it big via stocks and bonuses. Get a green card and move to somewhere in the east coast.
For some people that takes forever. So you just get conditioned to stuff there and live forever. Plus most don't make it even to that phase, for most Indians and Chinese, green card never happens and they return to their countries. Those who survive do it due to a unique combination of work and luck, if you are that lucky already, and are ready to do the work- you will likely go further.
Also whatever the situation is in the Bay Area, its always a huge upgrade from the home country you are coming.
I'd change that to where _do_ they go. This trend is becoming more pronounced but has been around a while.
As other posters note, they leave for other tech hubs, or other industries. Even if they could earn even more in the Bay Area they recognize that it's a long path to a quality of life that would be more accessible somewhere else.
There's also a weariness folks in the industry get after a while. On the one hand, it's an amazing place to get 20 years of experience in 5. Put at some point the bubble grates on you.
It's not uncommon for people to rent. Buying just isn't affordable, if for example you prefer good public transportation. Forget about buying houses though - even rents are becoming crazy.
In my previous job hunt, I had numerous recruiters try to explain to me that the Bay Area was the only place to be. I helped them work the math to show the CoL differences between where I was and where they wanted me. This didn't phase them.
Then I discussed this in terms of required compensation deltas to make this meaningful, using the rubric of not slipping significantly backwards in quality of life measures (house size, commute, food prices, taxes, etc.). This got their attention.
A few times when I replied here on similar articles noting that the Bay Area was simply pricing itself out of competition for talent and companies, the responses varied between sympathy to ... well ... (paraphrasing) you are a fool to expect higher comp to live and work in this utopia.
Well, no.
There are many reasons why the Bay Area is in the state it is in. It isn't quite catastrophic ... yet ... but IMO it is moving there fast.
Burn rates for newcos are massive compared to other regions. General costs are high relative to other regions. Economic theory suggests that this will eventually fix itself, the invisible hand of the market and all.
For me, I took a position that enabled remote work, and can hop a plane to HQ when needed (1/month or so). This is far more cost effective for the company and I than it would be to move me.
Just my $0.02. There are those whom might leap to the defense of the region, but its worth asking if the critique is founded or not. I believe it is.
The top funds, the press, the special talent, the specialized talent, the customers, the early adopters, yada, yada.
When everything is in 'one cluster' - there is a very good reason to be located there, and it almost always makes economic sense.
Very few companies grow gangbusters outside the clusters.
1. One of the things Prop 13 does is to cap the maximum rate at which a property tax grows per annum to 2%. However, due to housing demand, the property values grow at a much faster rate (7% is not unheard of). The property tax can change when there is a sale.
2. Bay area prices have skyrocketed.
3. The peninsula topography and zoning laws make it hard to expand housing capacity.
So, if you are an aging home owner, sure you can cash out of a sale. But where would you go? Unless you can afford another place in the same area, existing home owners do not have incentives to sell their property, which results in a very low inventory. And, low inventory further puts pressure on the prices and drives it up.
I can't speak towards family living, but as a single person willing to live with roommates, you can find pretty nice places in the heart of Silicon Valley for ~$1000/month. Now add in compensation-packages well over 6 figures, brand-name companies for your resume, networking locally with other great engineers/techies, and the ability to switch companies every 1-2 years if you're unhappy. I wouldn't ever recommend a 30-year-old giving up all that to work in Kansas.
...oh wait, you mean $1000/month PER PERSON? Ha, no. In Kansas, you can pay $1000/month to own that whole house.
That would fall squarely in the 'living in relative squalor' category. making 200-300K and living with roomates in a small place? Pretty atypical for most of the world, and completely discounts most people over ~25 years old.
Those types of jobs (think Retail, Government, Construction. Manufacturing, Education -- all major employers) are probably much more impacted on average than tech.
I know plenty of new grads in the South Bay/Peninsula living in apartments or rented houses that would be considered decent or nice in the rest of the country with plenty of money to spare. Mostly at bigger, established companies though. Anecdotal, I know, but it definitely seems like there's a portion of new grads living comfortably in the bay area.
Living somewhere and owning property are very different though.
Lots of people stay here despite the costs because of the positive externalities that come with living in the bay. There are many alternatives to a highway commute (bike in the city, Caltrain, work from home) that many new grads are able to take advantage of. There's easy access to nature, culture, and for a lot of people, an extended network of family and friends that probably wouldn't be so welcoming in other places that don't have the same strains on housing.
I expect that many will move away for opportunities elsewhere before ultimately returning, but that seems to be a desire for exploration rather than dissatisfaction with quality of life. Certainly, few of the people I know are itching to leave the city for even low-density suburban living, and that's a preference that just can't be squared with many of the commenters here that rave about living on their 3 acres of land for $200k in the middle of nowhere while working remotely.
There are a lot of problems in the bay (and even more in the city) that I hope we can address, but making it out to be unlivable for young engineers (again, a very privileged class) is ridiculous. Are there better places to raise kids? Yes. Are there cheaper places to live? Yes. Are there other urban areas that provide some of the same benefits? Yes. Do I want to live anywhere else? Not right now.
Living with roommates is fun when you’re young, but nearly everyone tires of it eventually. You can also get a one or two bedroom with a partner and good salaries, but try adding a kid and that place is packed to the brim.
To counter your anecdote, I’m 30, and have been in the bay about 4 years. I believe I grew my career in the bay faster than I could have anywhere else, and am very happy to have come here.
I’m still single, so have no plans to leave, but _none_ of my friends my age looking to start families are expecting to stay here.
Across the street from my old house in San Mateo (Silicon Valley mid-peninsula), there were what appeared to be a husband and wife, the wife's sister, a cousin, three or four children, the sister or cousin's live in boyfriend, and a renter, all in a two bedroom, one bath house that was about 1200 square feet. Oh and a couple of dogs as well. It was notable because there were six or seven cars for the household, and there were only a couple of parking spots in front of each house, so they ended up parking their cars in front of our house often, forcing us to park down the street somewhere.
If you have four or five adult wage earners at low wages you can make it work. Otherwise you have to live very far away from your job.
Still, I’ve had amazing experiences here and this is a place of magic in many ways. It’s defi worth experiencing in my opinion.
My advice: live there for a few years as cheaply as possible, work at 2+ companies, learn everything you can, then get out of dodge.
Working in a big city at a variety of companies and roles is always a good thing for experience and personal growth.
Women being paid less means they are forced to live in the crappier parts of towns: the squalor, the commute and the danger are significantly more.
When that movie "the Social Network" came out is about when I noticed it changed. It became literally overrun with sleazy easy-money landlords, big corporate entities buying up the apartments, jacking the rents, etc.
There are thousands of better cities than any one in SF bay area. Technology works anywhere, you can work anywhere. My quality of life improved 1000 percent when I left California.
[edit]
I'm not quite sure why it's so hard for readers to fathom that women being paid significantly less than their male peers would be a key factor affecting what is "affordable" to them, and thus their ability to live safely in the Bay area.
The question I was responding to was: "Is it worth it?" and my advice is that it is not. It is especially not worth it for women. Why would it be worth putting yourself in danger where all you can afford is the worst apartment in the worst neighborhood, 70-125 minutes away (each direction) from your workplace?
The golden era of opportunity in Silicon Valley has passed. The real estate factor is now baked too deeply into every facet of life there. And as long as the AirBnb model ensures that only the landlords thrive, the problem will always be bigger than the solution.
SoCal is not exactly cheap. That's completely and utterly insane.
One of the most ineffective, corrupt and unresponsive Governments in the country. Its like a failed state.
young wannabe "rockstars", and perhaps a few actual ones.
Citation needed. The most recent data on this disagrees with you.
Don't get me wrong, my daily 30 minute commute on BART isn't the worst. The worst part is that I make $185,000-$238,000 (with bonus and all) and still can't afford to buy a home because I can't compete with other investors that have deep pockets filled with cash, not to mention buying a semi-decent home in a semi-OK neighborhood sets you easily back by $850K-$1.2MM. It's insane! The best I'm able to do is to pay for a $3550/mo rent and tuck away as much money as I can while providing for the wife and kids, which isn't the cheapest.
Anyway, thanks for reading. Back to work.
Edit: Armenian. Also, I'll check myself, there are others in far worse financial/living condition in the Bay Area. Comparatively speaking, I have it easier than most.
Here in North Texas, I make around 100k/yr, and due to cost of living I can squirrel a lot of that away. We have no state income tax, and our property tax, while high, isn't nearly as high as California's (and will vary depending upon which county you live in -- massively expanding counties like Collin will charge more than rural ones like Johnson).
With that income I was easily able to buy a ~1800sqft two story house in a good neighborhood. My total consistent expenses for each month are maybe 2/3s that of your rent, which includes non-consumables like mortgage, insurance, utilities, etc.
In all of this, of course, I don't have kids and my wife doesn't (currently) work. If your spouse does work, then your spending power here becomes so much greater.
Trust me. Get out. It's the best decision I've ever made and there's absolutely no fucking way I would ever live in CA again.
Erm...guess you don't count some of the largest metroplexes in the country as "cities", do you?
>when it comes to recreations, vacations, day trips, road trips
That's fairly accurate. We don't have a ton of touristy crap, but that's no big deal for me.
>Acceptance of LGBT lifestyles
Did you live in the country or something? Never seen a problem with it here. In any of the urban/metro areas it's no big deal.
>Very church oriented
So? I'm an atheist and I've never had any problems with it. You'll only find a problem if you're actively combative with people about it. Otherwise most people don't care.
>Low salaries, tech opportunities
Houston I can understand. But not Dallas. You must not be looking very hard is all I can say. Even when I haven't been actively looking I get hit up by recruiters all the time. Either that or you're in a very, very specialized field with very low overall demand. My salary has also been going up constantly, and with the cost of living I can live very comfortably with what I make (and I'm not even in the top parts).
Texas seems so far behind when it comes to things like parks, transportation, and publicly available goods that coming to California is like a dream.
I'd happily pay more taxes to be able to have these things be available for everyone.
Been to a lot of very nice parks out here, nearly every city has one or more. Some of which are huge with large trails.
>transportation,
You might be confusing the Bay Area (or perhaps even LA) with all of California in general. I'm from San Diego originally. Public transportation there is a joke, plain and simple. BA and LA are both special in that regard.
>and publicly available goods
What is this?
You may make less money in terms of income in most other cities, but your retirement savings will grow a lot faster regardless. I work on a traveling/remote team. One of my teammates lives in Chattanooga. His 3 bedroom house with I think 2 or 3 aces of land put him back a whopping $200,000.
Can confirm. Founder in Chattanooga. About 13 of our people live here / TN.
Housing options (that appear) much better than in this thread with good public schools and sub-30 minute commute available. Specific ethnic communities may be harder to find.
Pretty great housing from $250-600k all over the place
Not that there aren't a lot of places in the country with good schools and affordable housing prices, but for a lot of people with kids schools matter as much or more than housing prices.
Contrary to apparently-popular belief (based on some other comments in this thread), the Bay Area is not the only place in the United States with ethnic-minority communities/enclaves, or the only region in the entire United States where "brown people" are not, apparently, shot on sight. Otherwise, how could there be articles about how "white" is on the verge of becoming a minority?
(I won't deny that the Bay Area is very, very liberal, but you're really in a filter bubble if you think it's the only one, or even remotely close to describable that way.)
Because the people writing those articles are full of shit.
Edit: there are other communities on the East Coast AFAIK, but I would be trading this for that.
There are a lot of Indians in Dallas; GP can come here. Or if GP doesn't want to live in a solid red state, there's always Millbourne, PA, which is over 40% Indian.
I'm only half jokingly considering becoming an off the grid hermit.
Also, If your commute is 30 min, then you are probably living around Fremont. Is the rent for 900sqft that high over there? This is touching SF territory.
Now it'll likely be a condo, not a single-family home (that'll be more, or further way, or not as nice) but it's doable for sure. Not in SF, but just outside (Oakland, Fremont, Daly City, etc)
What you can get will depend on what you can wrangle as a deposit but there are plenty of options if you can get 10% down.
Source: it’s what I did recently and I pay less than that for a 1300sq ft place in Oakland
There are some really nice places that show up in Rockridge that are reasonable and if you're ok with a little less nice of an area the NoBe area is good too. In Oakland you can do surprisingly well near Highway 13 in the foothills or nearish Mills College.
If you don't mind the commute (I would) then Pleasanton is affordable (just) for large single-family homes, but it's a long ass commute.
There's a ton in the Fremont/Hayward area if you're doing a South Bay commute tho, and that opens up Pleasanton a bit more too.
If you're already driving to work then look to neighborhoods nowhere near BART as reasonable proximity to that can add a 1.5-2x multiplier to the price.
Whereas I live in Oakland and door to door it’s about 45mins if I time it right.
So I’m not sure what your objection is. Working in a big city (be it SF, NYC, or London) means you’ll have commute time.
If you can save that much, it's not really 'squirreling'..
I'm also interested in REI, but not sure where the returns are in this market.
Like, tuck away the money to buy a place somewhere else? Or are you waiting for a housing correction?
California has a number of Asian communities, but depending on which culture you want... there are plenty of other cities out there.
Filipinos are basically everywhere in the USA as far as I can tell... Vietnamese and Koreans are a bit more rare but still exist in virtually every major Metropolian area in the USA (New York, DC, Austin).
A bit of exploration / tourism can go a long way. Visit other cities and look for a new home. Locals often can point you the way towards "Chinatowns" (even if they're mostly Vietnamese or whatever).
https://www.zillow.com/homedetails/1052-Montgomery-Ave-San-B...
Here's a 1200 SQFT 4 bedroom home in San Bruno for only 700k.
The fact is that you are looking at homes over your budget, especially if you haven't saved a sizable down payment. Yes it's worse than other areas, but there are a lot of opportunities for people here.
But yes, the OP should be able to easily afford it.
My payments are insane, basically 4k a month. I'm able to get by because my wife works too so we aren't entirely living hand to mouth.
Since I bought in June, an identical condo in the same complex sold for around 600k.
It really burns when you consider that even in Sacramento you could probably get a full sized single-family home for what I paid...just at the cost of being further away from work.
I've been living in the Bay Area since I was 7, and I've almost been priced out of it. Does not feel good.
However..remember that buying a house does not save you rent. You become an owner, so either you pay rent to the owner, or you stiff him, which happens to be you.
Can you expand on what this means? Have you faced a lot of racism in SF?
being harassed and ridiculed endlessly for being non-white (i'm guessing asian or indian) somewhere inexpensive and 90% homogenous (white or hispanic or black) will produce extremely negative results, to put it mildly. dealing with racism on TV and in movies is one thing, dealing with it in real life is an entirely different proposition.
You have too little of something, and it's causing prices to skyrocket because demand is increasing. So make more of it, reducing the price.
I just got back from a visit to the Bay Area. Outside of SF itself, not a single building over 4 stories tall. All that air space that could be condos, homes for people, anything at all, wasted so that "people can see the mountains better". Meanwhile, my friend and his girlfriend are paying $4000/month for 1000 sqft. Their rent is more than the median total pre-tax income in large swaths of America.
This is a self-inflicted wound. I have little pity.
That said...
San Jose and Oakland both definitely have downtown portions with 20 story + buildings. RWC has been building bigger too.
My guess is that, if significant amounts of extra housing were added in the Bay Area, software devs salaries would fall. Right now, software companies need to pay insane money in order to offset the insane cost of living (as otherwise, they'd lost their workforce). So, filling BA with high-risers would not help members of this forum that much (it would likely be very helpful for people in low-wage jobs though).
So all these people who have already paid millions for their homes will suddenly find their homes devalued by a huge margin.
Needless to say that won't go down well.
Social Finanace (SoFi) | Helena, MT
Oracle | Bozeman, MT
OnXMaps | Missoula, MT
Zaneray Group | Whitefish, MT
Submittable | Missoula, MT
Applied Materials | Kalispell, MT
The biggest downside is a lack of employment options. When the company had a huge layoff I started looking around for other jobs in the area and realized there weren't any.
I ended up taking a great job 1000 miles away in a major city. That's when I realized another downside to smaller markets - it's really hard to sell a house and house values don't change. Even though we bought a foreclosed house in 2007, the value in 2014 was unchanged. After looking at what we had spend on improvements and upkeep we would've been far better off renting a house and putting more money into savings.
Regarding job movement, MT actually has a number of high tech companies per city, but it's a much smaller handful. Using Helena as an example (valley population ~80k), we have: Northrup Grumman, the State Agencies, SoFi, TSI&T, Boeing, Tempest (they work on KOA.com), Blue Cross Blue Shield, etc. Layoffs are not as usual here as we have a significant talent shortage. For instance I believe SoFi has ~200 devs in Helena when they would like 400 devs -- hiring being the biggest barrier.
Throw in decent internet and companies which hire remotely, and you're in good shape.
That said, Bozeman is currently experiencing a housing bubble that doesn't seem to want to break (we attribute it to the older Californians who are trying to avoid taxes on the houses they sold there). Nothing like SF, but 2x-3x the rest of Montana.
Briefly, I had to deploy what is now a pretty standard WISP setup but back then almost nobody was doing that so I had to learn everything from scratch. I'm an EE by birth so it wasn't that hard, and I've worked in the networking/network application development sphere most of my career so that part wasn't too hard either. Being your own ISP is basically just a problem solved only by the application of a subtle combination of time and money.
We exited the ISP market a couple of years ago though since it had turned into a deep money pit with the rise of Netflix. Today the network is still in place but only serves my home, fed by a traditional residential copper coax connection to our office building in town.
I would very much like to see real solutions to some of the problems the US is experiencing wrt concentration of "good" jobs in a few places and them going utterly to hell because of it. I keep kicking around ideas and starting various small websites that often go nowhere. But, I think the internet is a potential means to start giving pushback against this trend and start creating a healthier fabric than we have currently.
I am not trying to dump a project in your lap. I really appreciated your comment. It makes me want to do something with the info.
Before my life was derailed, I was studying to become an urban planner, but was really more interested in regional planning. I have a sincere interest in trying to find real solutions that are lightweight and use existing resources. I am also a recent California escapee.
If you are interested in seeing something more done with this info at some point, please drop me a line. I don't know where to go with it at this point in time, but having a contact on the ground that could feed me info to help jump start something might be useful.
Thank you for making the comment and answering questions here.
Hillmap.com | Hamilton, MT
(I work for the first remotely and founded the second so the presence isn't big but we're here!).
Its actually a few years old and I was thinking of trying to make it more of a money maker at one point but other interests have proven more profitable so I'm not sure I'll ever really push for it to become a true business.
I and many of my friends do get a ton of pleasure out of trips planed with it which is its own reward.
I have been back in Missoula since 2001, and worked a number of different tech jobs here from local government to remote to public companies and startups.
The tech scene has grown a ton here over the last 15 years. There are good opportunities. The biggest hurdle I've seen is being able to find good work for your SO.
Generally Montanas seem to have a "you mind my business and I'll mind mine" attitude. So while there is a large right wing component they seem to be mobilized more by gun rights and logging/mining jobs then being anti gay/trans.
Our rural county did stop taking federal money for the women's health clinic as a tea party grand stand which is unfortunate.
Gallatin GOP Women official says she 'would have shot' reporter Gianforte assaulted
http://helenair.com/news/politics/state/gallatin-gop-women-o...
Counter-counterpoint: Visit Missoula when they are naked biking.
I hope you enjoy crowded national parks and a high cost of living.
Be careful what you wish for. Denver used to be what you've described. Now it's just California's ski lodge.
http://ecpmlangues.u-strasbg.fr/civilization/geography/maps/...
And San Francisco is the 3rd most densely populated city in America, if you look at cities with over 100k people:
https://en.wikipedia.org/wiki/List_of_United_States_cities_b...
So I disagree with the narrative that Bay Area NIMBY-ism is out of control. It's probably similar to anywhere else in America.
There are two unique factors at play here:
(1) Massive growth of high paying jobs in the tech sector, with typical wages for an engineer ranging from $100-200k. This has caused housing to double/triple in cost over the last ten years.
(2) The Bay Area has very unfortunate geography: there is a giant bay in its geographic center, and mountains/oceans all around. This makes traffic and commuting more difficult, and also makes development "outwards" harder.
If they allowed housing to develop they'd have to expand their school, police, fire, garbage and other departments.
There is substantially cheaper housing in the East Bay, compared to SF/Peninsula. However there's no good way to get from the East Bay to where the jobs are: you are limited by one of three bridges, all of which have terrible traffic.
Imagine if we filled up the entire SF Bay with concrete, and demolished all the mountains surrounding the Bay Area. I'll bet you would see improved traffic and more even prices between East/West bay.
http://www.newgeography.com/content/002808-world-urban-areas... https://en.wikipedia.org/wiki/San_Francisco_Bay_Area
Vancouver 2010: 603,000
Vancouver 2016: 631,000
Vancouver increase: ~28,000
SF 2010: 805,000
SF 2016: 864,000
SF increase: ~59,000
[1] https://en.wikipedia.org/wiki/Vancouver [2] http://worldpopulationreview.com/us-cities/san-francisco-pop...
The last landlord I had was a decent fellow - the property was well maintained and he fixed problems promptly. But my rent certainly went to pay his mortgage on the property, and I now have nothing to show for the $thousands I paid him. One time he was showing off the little 8-unit complex to someone he wanted to go into a partnership on another property with him.
My cousin has a few low-end houses that he rents out. He's jokingly referred to himself as a "slumlord", but... rent is what economically strangles his renters.
My grandparents owned both their homes free-and-clear, and stayed in their homes for 40-50 years. This is the hope of anyone who buys a house: independence from the landlord & bank.
The cooperative I'm envisioning would channel rent payments into a fund. After long enough, you'd be able to live there for just maintenance costs, or you could "work off" the monthly fee by contributing somehow. And if a person moves out of the coop, their "equity" could be returned to them over time... Or something like that.
(minor edit on 'work off')
Um, yeah. That's the way it works for property investors. Find a property, borrow money to purchase, rent out property to cover mortgage costs. This happens at low scale (individuals) and high scale (property investment companies, REIs, etc.).
> "I now have nothing to show for the $thousands I paid him"
Presumably, you had a job at the time, for which you decided it was an equitable trade to have the job and not buy a property to live. You made a choice, and the outcome from that choice is what you have to show.
You do the math on the rent/buy decision. In places like New York, San Francisco, etc. it's very common to come out on the side of renter instead of buyer. If you're in the mid-west, you are probably buying. But don't say you didn't have nothing to show for the rent.
Relatively few people are in the position of being able to choose freely between buying and renting.
Equity is never returned to members, they just contribute to cooperative living. Also, members cannot just sell the coöp to profit from increased real estate values; part of the founding charter of the non-profit corporation which manages the coöp says that if it was to disband, the main assets would have to be donated to charity.
You had a roof over your head while you paid him. That's not nothing.
> my rent certainly went to pay his mortgage on the property
Whereas the alternative is for him to not have the property at all because he can't afford it, and you're stuck finding somewhere else to live?
People love to say "if I had only owned my home I wouldn't have thrown away so much in rent." This is typical in areas that have seen large increases in home prices.
You rarely hear about the opposite which is "I'm $100K underwater on my house" because people don't talk about it when things go south.
Renting and not owning removes you from the whims of the housing market. If your landlord took a 30% hit in the value of his property, as a renter you get to walk away and let him/her deal with it. That's worth something.
http://dallas.culturemap.com/news/city-life/03-29-17-us-cens...
- Seattle has more diverse industry. I toured the bio-science companies down at the harbor and was really impressed. Seattle is more than just "tech".
- SF is way too restrictive with allowing new housing to be built. I did not perceive the problem to be as bad in Seattle.
- In SF, a lot of the streets reeked of weed--It's like when someone cranks up their music too loud forcing everyone to listen to it. I don't care if someone smokes weed, I just don't want to smell it everywhere--it's not family friendly. Meanwhile, Seattle's streets appeared much cleaner to me when I explored the city (on foot).
What? Where did you live? I never once had that problem. It's not like the entirety of SF smells like weed 24/7, I think that's a pretty absurd strike to give a city (especially since it's legalized in WA).
And that's not the worst thing I constantly smell / see being done on the streets.
They're the go-to people if you want to be involved in fixing things.
Also, the Domain development has somewhat eased the traffic situation by shifting a lot of new businesses slightly closer to the Northern Suburbs. Which is a welcome respite: the traffic situation would have been a LOT worse (if that's possible ;-) ) had the Domain not been developed.
I'm pretty optimistic about Austin's future. It offers an extremely high standard of living on a developers salary. Most suburbs are not too far away. There is a lot of undeveloped land. And the City Government is proactive and responsive to the needs of citizens. I think it can evolve into another Tech hub, maybe rivaling Seattle. For it to rival Bay Area, I think we would need a lot more VC's to set up shop here.
Disclaimer: lived in Austin for 5 years now, loved every year so far.
I'm looking into buying a house but anything that is affordable is out in the suburbs or neighboring cities. And I say that as someone who makes $100k.
If you want better infrastructure, invest in light rail.
http://www.iwillride.org/what-200-people-look-like-driving-c...
I spent ~10 years living in Europe. While there was still a lot of traffic, huge numbers of people took rail. To me, the cities were much more livable than the average NA city.
I would bet most people have to drive in primarily because there manager did it that way when he/she was in the developer role.
Working remotely is friendlier on the environment and saves time commuting. It's also cheaper for the company and more easily scales as head count increases.
I wonder how self-driving cars will impact conurbation size when compared to other advancements like boats, horses, carts, roads, canals, trams, steam-engines, trains, tarmac, subways, combustion-engines, bikes, cars, steel bridges, and mechanized roadway construction?
[1] http://www.best-cities.org/2014/best-performing-cities-repor...
You either need to get huge promotions in 7 years to double your salary which is very difficult (and this is just to keep your living standards) or be forced to move to somewhere farther and face a crushing commute of at least 2 to 3 hours everyday.
Roughly speaking, buying a house is also not a win since houses closer to where you work will usually be more than 1 million dollars. Mortgage would be around 4k-5k with 20% down payment. So again, you'd be forced to buy somewhere farther.
There's really not much to do about it, it's supply and demand and you need to accept it. There are a couple of things though that tech companies could do: either working with local authorities to help improve public transportation or decentralize the workplace.
Companies, however, are doing exactly the opposite: Buying lands which were previously residential areas and building huge mega-structures so everyone can work in a single place while not having the best from public transportation (e.g. Apple).
I naively thought that making the lives of their employees easier would be in the best interests of tech companies but I just see things getting worse every year.
Perhaps I am naive, but it is my understanding that many of the wealthy people of the Bay Area made the majority of their money through commerce and technology, not by purchasing a house a few years or decades ago and quashing any attempt at increasing the housing stock.
Would it not be in the self interest of all tech corporations, executives, venture capitalists and angel investors in Silicon Valley to ensure the development of housing for their future tech employees - and thus spur their future profits - and the greater economy's service workers?
Even if one buys the insane argument that service workers perhaps ought not to live in the expensive Bay Area, one still must acknowledge that these line chefs, janitors, security guards, hairdressers and many others must live and commute in from somewhere, which affects everybody in the Bay Area, regardless of their wealth.
Everything about Silicon Valley makes sense to me but this.
[1] https://www.theguardian.com/cities/2017/oct/02/rise-of-the-y...
Added: I think the hype might have pumped the job market too full, and net outflows are the only way for the system to concentrate more desirable candidates, with employee compensation being the signal.
Added: Three-dimensional land parcels would solve a lot of the problems with properly valuing natural beauty, direct sunlight, and underground access.
Added: Environmental (noise[aggregate peak SPL, loudness], ground vibration[aggregate peak amplitude], air pollution[aggregate peak particulates, ozone, maybe fuel fumes, maybe heat], ground pollution, EMR [including radio and light]) sensor networks could be used to make it simpler to uphold agreements and ordinances, or litigate environmental property devaluation or damage (reduction in air quality, disturbance of quiet, excessive night time light, ground shaking). You could also include on-board detectors for things like gunshots, car crashes, or desperate cries for help, to aide emergency services. Data like these could be made completely public so that public offices don't need to waste their time determining access.
Singapore also has the problem of being tyrannical in basically every way except the economic, I figure it should be legal to walk around nude in your own house, and also legal to chew gum.
And that's how you keep the market up for $2.4 million homes that would go for $300k elsewhere http://www.mercurynews.com/2017/09/12/now-this-is-ridiculous...
I mean, you increase housing but don't increase retail units or parks in the same area, thereby creating a cultural/food desert. Even if you do, if you don't increase road capacity or install better public transit (which since it's usually at county level requires a lot of coordination), then you're simply increasing problems.
NIMBY is the simplest solution - often folks who end up in that camp have tried advocating other solutions and have failed at them because no-one wants to foot the bill for all the planning bits that make a decent (or even livable) neighborhood.
Just one example: http://www.businessinsider.com/facebook-housing-menlo-park-2...
https://en.m.wikipedia.org/wiki/Company_town
They tend to become exploitative though.
Also, note that SF isn't the fastest growing housing market anymore, it's Seattle (https://www.seattletimes.com/business/real-estate/seattle-no...). Seattle didn't feel as much housing-pressure with Microsoft due to the remote location of its campus in Redmond/Bellevue. That's changing with Amazon; the sales giant is located in prime real estate, just like the tech companies on the peninsula.
I'm glad we did it, but I'm also glad that I moved back to Ohio now.
Beyond having my extended family around here, it just feels like a better place to raise a family and be part of a community, whereas SF seemed more geared towards single or childless folks who were very focused on their carriers.
The Bay Area is also incredibly expensive. After moving back, I went to a movie with a friend, asked for two tickets, then tried to correct the attendant because the price was so low that I thought she must have rung me up for a single ticket. That's just one example, but nearly everything costs more in SF.
Oh, and our house in Ohio cost slightly less than my current annual salary - I had an apartment and the mortgage overlapping for a couple of months here, and even paying both was less than what my rent was in San Mateo.
Of course, now we're bidding to get Amazon to move here. Sigh.
If you want the companies, you must take their employees. If you don't want their employees, you shouldn't have the companies.
What's supposed to happen is inflated prices take up an unjustifiable portion of income and make things like families impossible forcing people to move.
Wages are supposed to keep rising to keep pace rendering some business unprofitable, making others expensive and forcing others to move altogether, all adding up to cause a correction in prices.
But in the real world its not really working that way. While wages are rising there is also large import of labour keeping wages in check with people resorting to more and more desperate measures like sharing rooms.
Without that perhaps the labour crisis would become unmanageable forcing businesses and government to rethink some policies. At the moment its the financial and real estate sectors making out while the average person faces the brunt. This is replicated worldwide in most major cities.
Lack of housing and traffic are familiar complaints, but it bears repeating. I remember when there was never any traffic on 280, now it's a parking lot during rush hour.
If you're just starting out in your career, it's simultaneously the best and worst place to work. Best in that there's a lot of opportunity and you're kinda bathed in the tech ecosystem, worst in that you'll probably be paying 40k (after taxes) for a one bedroom apartment in the city, or stuck commuting for an hour easy way.
> Over the 12 months that ended in September, the Bay Area added 50,400 jobs, a 1.3 percent increase in total payroll jobs during the one-year period.
The interesting part is the percentage slow down over the year, which is what requires more thought than headlines about "hammered job losses" that included area-wide growth.
Just making overpriced metros ineligible for foreign buyers could ease the pricing pressure.
So SF could stop exporting with some sort of ban on foreign buyers. For what's it worth (not much), I think such a ban would have almost no effect, as unless the US bans all Chinese capital wholesale, all the same money can makes it way to SF real estate through less direct means.
Or we could fix our taxes and regulations. The current regime of taxes and regulations actively incentivize speculation, and penalize land use. We need tax revenue, might as well collect it in a way that discourages speculation.
This is the good news. Home prices in the East Bay are 50%-70% of SF prices, and the infrastructure for employers is comparable to SF (public transit, internet, hospitals, restaurants, culture).
The way this reached #1 with no comments (until yours) makes me think that people have strong opinions about it but said opinions are too divergent from what's popular/accepted around here for them to feel comfortable expressing them.
It has a sort of "everyone expects the bubble to pop but nobody wants to admit it" sort of vibe to it.
Maybe Elon or someone else should be city below the sea.
Yogi Berra and San Jose Mercury News on Silicon Valley.