The Price We Pay: How Little Most Bay Area Families Can Afford | Hacker News Reader

The Price We Pay: How Little Most Bay Area Families Can Afford

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83 pointsrafaelc68 comments

Story of my life. I’ve lived in SF for almost 9 years, my wife for 15 years, and we have a toddler, 90 lb dog, and a baby on the way, making it work in 650sf apt on combined $120k. I’m immensely grateful that the only reason we have savings at all is because my wife bought a below market rate condo with the city when she was single making $40k a year.

It feels weird to make this much but feel so poor. That any hiccup in life could make you miss bills. It’s been fine so far but as our family grows there will be no choice but to leave. Childcare is just too expensive.

I love this city, but over time I’ve felt I’ve gotten less out of it in exchange for more.

Prevailing wage data indicates you should really be making north of $110k as a database analyst or administrator with over a decade of experience...

I used to be an analyst, and used to make atleast double that. But to earn that kind of salary you often sacrifice work life balance and experience all consuming stress. I decided being poor was more healthy and quit.

> making it work in 650sf apt on combined $120k.

Ten years ago I announced to my GF at dinner that I was going to write a book. Flat fucking broke in San Francisco on only $250 a day.

Reading about histories like this, not worry. Is everywhere.

Living paycheck-by-paycheck is far more common than most imagine.

In my country, Colombia, is the same not matter where you ask, or if are poor, middle or almost rich.

Some clarification would be helpful for nonamericans. Is 650 sq ft considered small?

In an expensive city like SF, its not small. It's a 1 bedroom. Most single people live in a 1bd or studio apt. But to raise a family with multiple kids, it feels tight. My wife and I live in the living room off the kitchen and our kids will take the bedroom. For the same (market) price of our unit, you can get 10x more space in the "country", but then finding work and interacting with friends will be harder. Lots of trade-offs

If you want SF to have a bright future long term, we need to build and not just housing but infrastructure as well.

San Francisco needs to accept that you can’t declare entire neighborhoods historic. You need to be able tear things down to make taller buildings, bigger roads, more expansive public transit networks.

But they refuse because of “historic significance”. That’s one sure fire way to get your city to be historically insignificant in the long run.

Or for it just to become a theme park for the ultra-wealthy. Other cities have struggled with this as well, see Venice for example.

I'm with most of your points, but "bigger roads" stands out to me. Is there a need for bigger roads anywhere in the city? I would say that most of the city has pretty big roads already, if anything I'd like to see road slimming, or turning two lane roads into 3 lanes with dedicated bus lanes or segregated bike lanes.

Most of the roads are effectively single lane, two at most, once you subtract the taxi/bus lane.

One truck parked in the middle of the road to deliver something, or one car blocking the box at an intersection and it’s a standstill.

Also, Highway 101 turns into a residential street with stoplights for several miles.

A better subway system that goes along more than one route would be more worthwhile.

I'm pretty happy with the dedicated bus lane that goes for most of Geary after divisadero, but it saddens me how it was fought tooth and nail by vocal people on the neighborhood.

Two thirds of the city can have cars parked off street and double parked right across from each other and still have enough space for people to drive by. That is too wide in my mind, it encourages speeding at a subconscious level.

I've noticed this tendency for vehicles to be stopped in very inconvenient, like right at an intersection instead of a few meters back to allow for people to drive around and properly stop at a stop sign or attempt to cross an intersection at rush hour when it is obvious that there won't be enough space and will block cross traffic, but these are things that we can slowly improve by actually enforcing the laws already on the books or designing streets in a way that nudge against that behavior.

Widening highways doesn't improve throughput.

Resident of LA here: if you think more or bigger roads will solve your traffic problem then you’re being delusional.

Should we make rules for the people who live in a suburb, or the people who don’t?

And bigger roads are not a solution to anything.

Entire cities are historic in Europe. You don't need glass and steel towers to cope with growth. Just build more densely populated suburbs and have good public transport infrastructure to connect people.

I feel like I read news in a way other people don't. Maybe I'm wrong? Here's the lessons I take:

* Prices are crazy in the City. Lesson: don't try moving to the Bay area without $1-2M in cash on hand.

* Student loans are predatory. Lesson: avoid student loans. Study hard, get scholarships if it's obvious that you can, and otherwise plan for community college for the first couple of years. No one cares where you did English 101.

* Government research grants are shrinking. Lesson: don't waste time seek research support from the government. There are plenty of other folks looking for ways to spend their money. My job is to show them a way.

The most valuable things you have are time and health. Focus on conserving those.

> Prices are crazy in the City. Lesson: don't try moving to the Bay area without $1-2M in cash on hand.

This is not a reasonable expectation for 99% of the people in the country. If your answer to the housing crisis is “be rich”, you’re not thinking of solutions. Should only millionaires be able to live in San Francisco?

Of course not.

I don't think his numbers are super accurate in his comment, but of course he isn't proposing a solution to the housing crisis, he's offering advice to anyone thinking of moving to SF.

I offer similar advice to people who want to become commercial helicopter pilots.

I don't think "don't try moving to the Bay area without $1-2M in cash on hand" is true at all. If you have an offer for a job with a high income (what is a "high income" depends on a variety of things such as if you have kids, lots of debt, etc.), and they will pay you to relocate / you have enough cash to comfortably relocate, it can be absolutely be worth it.

Say you're single, no debt, and get an offer for $250k/year in CA and currently make like $160k in Seattle/NYC. It's very much worth it to relocate. I really think the bay area COL is overstated, the real pain point is in housing and childcare. Everything else costs about the same across the country (most commodities) or is only slightly more expensive in the bay area (eating out). If you are a skilled software engineer able to get jobs at high paying companies, you're probably financially best off at the Bay Area, with the exception of a small number of positions in NYC and Chicago.

Why would you need $1 million cash on hand? Lol. A $1.4m house only needs a 10% down payment, 20% at most.

Home values are starting to peak:

https://www.zillow.com/palo-alto-ca/home-values/

https://www.zillow.com/redwood-city-ca/home-values/

https://www.zillow.com/los-altos-ca/home-values/

https://www.zillow.com/mountain-view-ca/home-values/

Which basically tells you one thing...people are starting to move out because it's too damn expensive.

Just two data points, but the houses we've seen go up for sale in our neighborhood near Menlo Park were mobbed and went in a week. Prices were higher than I expected, as someone who has been watching the market. Both require massive ($200k+) renovations and/or retrofitting.

Having seen this, and with the coming IPOs, I'd guess prices will continue to trend upward.

I think it will largely depend on how the new stocks perform. The early employees, senior engineers and upper management are probably already pulling in large enough salaries where they could afford to buy if they wanted to. But newer employees (last 3-4 years), HR, sales, etc.. might not have enough appreciation in their options to move the needle much in this housing market ($400k-$500k windfall does not go nearly as far as it used to, and that is probably on the high end for the median employee). This is somewhat due to the fact that these companies have had sky high valuations for so long (Uber was valued at $40B in 2014, projected to go public at $100-120B, so only 3x in 5 years).

I doubt it is people moving out that is causing the slight dip - https://julianalee.com/sunnyvale/sunnyvale-statistics.htm - the move corresponds to increased mortgage rates via the Fed hikes last year.

I also doubt this minor pullback to 2017 levels will last in 2019. It will be interesting to watch if mortgage rates or tech IPOs (2019) have a bigger influence.

Somewhat related to my sibling comment, but at least in the bay area, I think the movement in FAANG stock prices may be playing a bigger role than interest rates. A good chunk of employee compensation at these companies is in RSUs, and the stocks have been on a tear these last 5 years. Very roughly If you got a grant worth $120k/yr 4 years ago, that would be worth about 2-3x when it vests. That is probably why we are seeing a lot of folks on here claim that FAANG is paying 500k to senior engineers. More likely they are paying ~$200k base, and the rest is coming from vested RSUs.

Guy that handled my mortgage said many the houses he's dealt with in the more desirable neighborhoods have a lot of 'odd financials' going on in the deal. Sources of money are odd. And stocks and other types of paper are being traded for the house.

In San Jose, they have already peaked some time ago. Not that the current "post-peak" prices are especially low... but the growth has slowed down for now.

Every time I think about Bay Area rents I feel really sorry for my artist friends who grew up there. They will never be able to move back home.

Artists are not really the ones we need to worry the most about. Amongst my artist circles, there are some who find ways to make it work in SF (cheap roomshares can still be found in the sunset etc), others who have been able to leverage their skills with tech companies to live comfortable lifestyles, those who have found refuge in the east bay, others still who have found other, cheaper cities they feel more comfortable being in... really there are options for artists.

Those we should feel sorry about are those driving the buses, stocking the shelves at Whole Foods, cleaning the floors at the tech offices, delivering nursing care in hospitals, teaching the children, etc.

Why not both?

Because living from your art is a personal choice that, while nice to encourage in modern civilized society, should not be incentivized and protected at the same level as eg contributing to healthcare, education, food production, core infrastructure, etc.

Except the artists helped make San Francisco what it is. You can’t dismiss the importance of culture... the lack of them has dramatically changed the vibe and appeal of SF for the worse.

That makes zero sense. Why does art and creative endeavors not have as much of a value. Art brings together communities and people

Because I don't usually need to live within a certain radius of an artist to be able to experience their work, at least if I'm willing to forego the best viewing experience for some types of art.

But that bus driver? How do they provide their labor to the city (and thus the people in the city who need it) when they can only afford to live far away? Same with the grocer, and janitor, and any number of "normal" professions which don't command enough wages to allow them to live in the area?

If they moved away I can't feel sorry for them. They are probably living somewhere more interesting and affordable.

It's too bad that you don't recognize the well established emotional connection that people make to the places where they live.

Or, for that matter, the extensive loss in social connections/cohesion that results from such a move.

I live 10500 miles from where I grew up ... so maybe I do.

Until some major legislative changes or another recession occur, housing prices are likely to continue getting worse until people collectively agree it would be more desirable to live somewhere else for a lower price.

I used to live in the Bay Area (Mountain View, 2007-08), but moved away because it was too expensive (ironically, just months before the banking crisis & Great Recession hit). I used to be perplexed why more people didn't also move away, but I finally realized (as the article also explains) that being able to move is an incredibly privileged position to be in. Some people simply can't afford to leave the situation they find themselves in, even if (or because) everything around them is too expensive. This could be because they have no/little savings, have family responsibilities, are dependent on their current employment for specific reasons (like medical insurance), safety reasons, or are dependent on local government services in some specific way. The list is long. Some people are stuck and probably won't get unstuck without major legislative changes that could help them.

I sympathize with those concerns. But yet there were many desperately poor people during the Dust Bowl / Great Depression era who somehow managed to migrate across the country in search of a better life. Why were they able to do it?

The Dust Bowl threatening people with starvation hardly seems comparable with high rents. If SF got hit by a natural disaster which destroyed the Tech community (analogous to farming as the main industry of the midwest), you bet people would leave.

Why do you think a state legislature or city government will be able to solve a complex problem like housing prices? Do you know of any successful examples of a government intervention in housing prices?

The closest I've seen is recent rules letting developers ignore city zoning rules to combat NIMBY attitudes that prevent additional housing development.

It’s largely a government caused problem, so why couldn’t there be a government solution as well? Repeal prop-13, reduce permitting costs/time, require statewide by-right, force up zoning, etc. Those are government solutions that would have significant impact if there was political will.

Prop 13 was a ballot measure, and requires another ballot measure to repeal. Government can't help with that.

But it's an uphill battle, vs groups like California Chamber of Commerce and Howard Jarvis. And they've convinced businesses that higher consumer taxes will hurt their profits, which could be true. So you have strong lobbying against repeal.

I'm aware that prop 13 requires a ballot measure to repeal -- I think we may disagree on the semantics of what constitutes a "government solution" though.

They can make it easier to build. Or add is often the case, more difficult for municipalities to oppose development projects that meet certain desirable criteria.

Examples include SB35 and possibly SB50 in the future.

Vancouver got housing prices to drop by about 20% by taxing foreign investors. https://www.huffingtonpost.ca/2017/02/15/vancouver-average-h...

Singapore fixed a decades-long housing crisis in the mid-to-late 1900s via a massive public housing program.

I don’t understand why we care so much. High Bay Area housing prices mainly affect (1) people who already live there, whose anti-development voting patterns created this mess to begin with; or (2) rich people who can afford to move in.

There are a lot of communities around the country that don’t hate development. For a map of desirable places to live, consider Google Fiber cities. (Not just because of the fiber, but the pro-development, low regulation attitudes that attracted Google in the first place.)

Because it is not just a Bay Are problem, they are merely the furthest ahead. It is a U.S. problem where an ever larger percentage of income goes to literal rent. To the detriment of the rest of the economy.

You will note rents also increase by similar percentages in communities with essentially no limit on development. And they also increase in places with shrinking populations.

In fact, in every city with reasonable employment possibilities, housing costs significantly outpace wage increases.

Large rental organizations are able to coordinate on an unprecedented level and no longer feel any threat from legislative intervention. Threats that held them in check through the last half of the 20th century. So rents will rise to their historical levels requiring multi families per unit.

By all means repeal prop 13 and move zoning decisions to the state level, it might slow the rise for a few quarters. But whether ideologically unacceptable or not, nothing is going to work except large scale intervention and aggressive price setting.

It comes down to your definition of "we." People who live in the Bay Area and would like to stay have an obvious reason to care. And since the tech industry is so concentrated in the Bay Area, there's a very large contingent of HN posters who care.

I'll also say, I moved to the Bay Area, with my family of 4, from much more affordable North Carolina, to take a very good engineering job. It's been a huge boon for my career, and basically everything about it -- except for housing -- has been great.

That said, it is frustrating to make solid six figure incomes and work the kind of awesome job that is very hard to find elsewhere, and yet not be able to afford what would constitute a "nice middle class home" anywhere else. Note that I don't mean a suburban house necessarily, I just mean 3-4 bedrooms and 1200-1800 sure feet or so, reasonably new and well maintained. You pretty much need to be a millionaire to get that in the BA.

Or to put it another way: it's nuts to think that you'd go to work every day in a beautiful city with an amazing job surrounded by interesting people making great money, and still find yourself wondering if you'd rather ditch it all for a third bedroom in another state. Surely we could find a way to build more housing here and make this place work, couldn't we?

because there are lots of good jobs paying six figures there. land prices go for a percentage of incomes, always. you probably need to go back to your employer and say that you aren't being adequately compensated. I'm confused why you think you are making great money if it doesn't afford you a modest home? these companies are making huge amounts off our backs and they either need to pay more or they need to move the jobs elsewhere. until employees start being more demanding it won't happen.

Because I can afford mediocre housing and put 50-100k per year in savings, which to me is a lot of money.

However, when the townhome next door sells for $4 million, that savings rate isn’t getting me anywhere (here) very quickly.

And thus I’m playing the same game everyone else I know here is playing: stockpile savings that are worth a little here and in a few years take them somewhere that they’re worth a lot.

The reason to care is that in the current American economy there is an agglomeration effect in large "superstar" cities that causes wages to be significantly higher than in other parts of the country. This impact is seen to an even stronger degree in SF/The Bay Area due to it being the center of the US Tech Industry, arguably America's most successful industry.

Due to the extremely poor housing/development policies of SF/The Bay Area rather than most of the impact going to the actual people doing the work the gains are going to landlords and other land owners. This is a huge waste of potential with a fairly obvious solution that, for various reasons, our local politics is unable to fix.

It also has the added negative effect of keeping a lot of people from moving to the city and accessing these gains.

In addition, as other's have said, this isn't just a SF/Bay Area problem but also a problem in many other American cities. I think there is a good argument to be made that overly restrictive local zoning policies is one of the larger negative forces on American family's prosperity happening right now.

> A host of major San Francisco-based companies such as Airbnb, Pinterest, Slack, Uber and Lyft have gone or plan to go public this year, minting thousands of new millionaires overnight

I always wonder how much truth is in that statement vs FUD. Are there numbers on the (expected number of) people that will get >$2e6 for instance? My bet would be that the majority will be in the < $1e6 bucket: you could make it for a good down-payment, but maybe you could also just live a really good life somewhere else. Still, it would be interesting to get some numbers on that.

At least, that's my thought: if I ever have the money to be able to buy in cash a decent house in SF, I'm out of here :P

I've seen some 1 bedroom apartments that I can actually afford that, with some walls, could probably be a 2 bedroom. Does anyone have experience with that kind of upgrade/renovation? Even if it's just false walls (nothing structural)?

I installed a “sleeping loft” in our 375SF studio apartment to make a bit more room for my wife and son. 11ft ceilings make a big difference there.

I’ve also been looking into getting a 1bd and installing false walls to make it a 2 bedroom.

Wow. 375SF is tiny for a family. Even with a sleeping loft.

Ya, definitely not your traditional style of living but it works for us. We really take advantage of the SF weather and public areas to "extend" our living space outside for most of the year.

We're a young family (1.5 Y/o) so probably won't last too long, although I do like the idea of seeing how creative we can get with the space especially if we have another kid.

Serious question: why don’t you move? I don’t mean it as thinly veiled criticism, I am genuinely interested in the answer.

There's a lot I like about SF. Most of all is it's walkability. We don't own a car and I only have to get in a car 2-3 times/month. Once you get used to this type of lifestyle, it's pretty tough to imagine going back to a life that relies on a car/public transit. We walk/bike everywhere we go. If we need a car, Getaround makes that super easy.

We spend 95% of our time within 2 miles of our apartment yet never feel like we are at a loss for interesting things to do/see, though we are pretty easily satisfied (e.g. sitting in parks watching boats sail is an A+ activity).

The above is mainly due to: 1) Weather 2) Density of the city 3) Size of the city's footprint (~49 sq/mi) 4) Diversity (lends itself to the "interesting" part) 5) City's prioritization to public spaces (parks, stairs, are plentiful) 6) Topography also adds to some interest to our primary mode of transit

Naw.

Just keep paying workers more.

End of problem.

It is an interesting juxtaposition -- companies worth hundreds of billions, whose workforce can't afford a place to live.

And who gets richer when those companies' profits surge? Well, the richest 10% of Americans own 84% of all stocks.

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