San Francisco Tech Boom Brings Concerns | Hacker News Reader

San Francisco Tech Boom Brings Concerns

nytimes.com

86 pointsolegious64 comments

Very real concerns indeed. San Francisco is the most puzzling and frustrating city to try to comprehend. It's equal parts optimistic futurism and steadfast abhorrence to change.

Walk down the streets, look inside City Hall - look at the extreme effort applied to make sure even the streetcars hail from the early 20th century, and that the sanctified Victorians are never touched, and you'd never guess this was a city looking to be at the forefront of massive economic and population growth.

Depending on where you are looking, rents in the city are up from 30% all the way to 130% since this time last year. And the city added a net total of a whopping 269 new housing units in 2011. Everyone has heard stories - entrepreneurs cashing out with Fuck You money, and can't buy a condo - because none are on sale, at any price. We've also heard the stories, of the hated dotcom yuppies going to view an apartment and bidding substantially above the already outrageous asking price. It's getting a little crazy out there.

All the while the city has placed firm caps on the amount of new commercial space that may be developed per year. Worse yet, the city has placed restrictions even on where residential and commercial development can happen - pretty much exclusively in SoMa, which accounts for 0.8 square miles of the total 49 square miles of land in SF.

Meanwhile the other 45 square miles (minus the Presidio and Golden Gate Park) are full of low-density housing that is completely barred from building upwards to accommodate the massive influx of population. The 3-story Victorian House is holy, and must not be sullied by... well, more people living there, rents be damned.

And what's with using Twitter to recolonize crack row? Of all the businesses you can try to import to bring more "desirable" traffic to the area, you had to pick the one that caters all meals internally and has every imaginable perk already in-house? This is supposed to bring new businesses to the area? Not to mention the area's massive homelessness and drug abuse problem is not due to lack of legitimate business traffic, but rather the presence of numerous humanitarian aid organizations, none of whom are going to be moving any time soon (nor should they, nor would it be politically feasible to force them to). The only thing this half-assed plan will ensure is Twitter employees scrambling to make sure they have secured parking at the new office.

Not to disparage your entirely valid argument, but:

> Everyone has heard stories - entrepreneurs cashing out with Fuck You money, and can't buy a condo - because none are on sale, at any price.

That's not what "Fuck You money" means.

"Fuck you money" is buying the entire block and tearing down all the other condos and then buying the real estate company and firing the realtor who showed it just for giggles.

It's an entirely different order of magnitude from "wealthy" or even "filthy rich".

It's the ability to say "fuck you" to literally anyone— with impunity.

Very few people in the tech community have reached this level. Indeed, very few _humans_ have, from any sector.

This seems like semantics, but I've never heard "fuck you money" defined in your way.

The way I've heard it used lines up with how Urban Dictionary sees it:

http://www.urbandictionary.com/define.php?term=fuck+you+mone...

Which is to say, if you can walk into a luxury condo, shrug, and write a check for it, you've got "fuck you money".

I don't know. I've always operated under the assumption that UHNWIs[1] are the people that have "Fuck You Money". The kind of money you are talking about is billionaire money.

[1] http://en.wikipedia.org/wiki/High-net-worth_individual#Ultra...

buying the entire block

You can only buy what is for sale. If it's not for sale, at any price, you can't buy it no matter how much money you have.

Not to mention that even if you could buy the block, San Francisco almost certainly wouldn't let you tear it down.

Having had this discussion with a number of my fellow San Franciscans, I'd say that "fuck you money" is the amount that grants you fiscal independence. Because at that point you can say "fuck you" to a boss without worrying.

The numbers I've heard people discuss are in the $3-10m range, on the theory that with that you can buy decent condo or house here, put the rest in the market, and live off your gains.

It's called "fuck you money" because it's enough to be able to say "fuck you" to your boss and never work again.

This isn't anywhere near the amount needed to be able to buy up an entire city block.

Most of what you are saying sounds true to me, but not this: “no condos for sale, at any price.” There are units in my building on the market right now (for well under a million bucks).

There was a period right before the FB IPO (March-May 2012) where a lot of potential sellers were not listing or moving forward in the sales process at all, in the hopes that everything would change after the IPO.

Agreed. 48 units on Redfin, under a million bucks, listed in the last week alone: http://tinyurl.com/83pknzd

I recently spent two weeks in the bay area and the first thing I noticed was "what's up with the massive numbers of homeless people here?" seriously driving through SoMa it seemed like everyone on the street was homeless.

I'm an engineer who just moved here to the Mission where I'm paying this exorbitant amount of money in rent mentioned in the article. The people in my building (of which 4 of 7 units are Googlers, I'm not one) battle a group of locals who congregate in the park drinking and doing drugs over noise, parking, trash, and various other complaints almost daily. We just want a safe living environment close to our workplace. I don't feel sorry for these low budget semi homeless drunks but hope the gentrification raises property value substantially for the home-owning locals who've been here for years. Its sad other long time locals who rent are also being forced out, but still can't help but think the process is cleaning up the city. Gentrification just never had a bad connotation to me and still doesn't now that I"m seeing it on the front lines.

Not sure why you're being voted down. SF is a crazy place where "gentrification" is a bad word.

Not as bad as in Berkeley.

Presumably they're objecting to "hope the gentrification raises property value substantially for the home-owning locals who've been here for years". Which presumably was the opposite of what the poster meant to write.

is the opposite what he meant to write? It was always my assumption that he was correct; gentrification raises property values, so "home-owning locals" make money off of their real estate value going up, while renters will be potentially pushed out (or stay and pay more in rent). Am I missing something?

'Gentrification just never had a bad connotation to me and still doesn't now that I"m seeing it on the front lines.'

Having lived in New York, maybe I saw a different gentrification? Creatives and artists who brought a lot of pride and interest in a neighbourhood. Local establishments that had character and often people who lived within the area. Cultural diversity.

But as the area becomes more popular, attracting people who are willing to pay higher rent, it becomes ridiculous for people who bring value to the community to exist. That local cafe can't afford to the increasing rent there and so it's replaced by a generic Starbucks. That apartment which houses the band that plays locally is now occupied by a couple who works across bridge. That little restaurant that sold really delicious and cheap breakfast no longer can afford that spot and instead the whole frontage is now another chain.

I'm ambivalent because I understand that's just a normal cycle. But in a way, it's a bit unfair to some of these people who brought a lot of reason to be in that location, but now can't afford it because they helped make it too popular.

I no longer live in NY and reside in an extremely wealthy neighbourhood. Businesses around me are generally overpriced and lack character because... maybe those are the only things that can survive around here.

There's a state of equilibrium between 'bad neighborhood' and bourgeois that needs to be achieved if gentrification is to sustainably hold a diverse base of residents. There's a tipping point that can easily take a neighborhood in one direction or the other. Somehow over the years I've managed to live in this "sweet spot" in a number of different cities - just after the gangs have left, the artists and coffee shops are thriving but the older residents can still afford their rent.

The downside to gentrification is that it never stays in the sweet spot forever, eventually the neighborhood becomes SoHo or SoMa or whatever. With the current wave of re-urbanization in the US this cycle has been moving faster and faster and gentrification moving further afield. Eventually the majority of every major city will look like manhattan with the poor and creative class living nearly to the suburbs.

I'd say thats the real downside to rampant gentrification - a future where urban centers loose all character - and affordability and creativity are relegated to distant enclaves far out of reach

I agree, though the outcome of the gentrification process can still vary. Starbucks and chain restaurants definitely aren't the only possible outcome. Look at the left bank of Paris, for instance. It's a boutique dream. There's something lost, no doubt, in all the wealth. It's hard to imagine a penniless artist catching pigeons in the luxembourg gardens for dinner. But it is an exceedingly pleasant place to go for a walk, look in shop windows, and have a cup of coffee.

I remember an essay (linked to by David Brooks in the NYTimes) about the gentrification of the upper west side in New York. You might be interested in taking a look...

http://www.commentarymagazine.com/article/the-upper-west-sid...

Nobody forced you to live where you live man. There are plenty of other neighborhoods without the "locals" you dislike. Maybe you'd need to pony up the extra dough, but then complaining that you don't have enough money to live where you want to live is silly too. Especially because it's more than affordable in portola/sunset/outer mission/excelsior/parkmerced/ingleside and even daly city/san bruno/pacifica etc... the rents haven't risen nearly as high there as they have in other neighborhoods... but then again, they aren't as "cool" either...

This whole idea that you are somehow entitled to live where you want to live on your own terms is ridiculous. I'm not saying that you should be scared of where you live, but it's buyer beware man, and you get what you pay for.

Also, I doubt those googlers live close to their workplace (no, shuttle doesn't count), which makes it even more ridiculous.

In which San Francisco makes markets illegal and then is surprised when they fail to clear.

There's a good discussion to be had, somewhere, about the implications of rapid productivity growth in the tech sector versus the rest of the country, what this will do to relative equality of outcomes as measured by income ("destroy it utterly"), and the social consequences of that. But I find myself incapable of discussing that vis-a-vis San Fran real estate because that is, fundamentally, a political problem.

The discussion has in fact been had by Matthew Yglesias in his Monexbox column on Slate.com, and by Ryan Avent in his book The Gated City: http://www.amazon.com/Gated-City-Kindle-Single-ebook/dp/B005...

Basically, development restrictions in economically productive areas raise prices and drive out productive workers to less productive areas, improving standard of living for those who move but lowering overall wages and productivity for the country as a whole.

It is an entirely political problem and the only reason it's such an issue in SF is the economic productivity there.

I don't care much for reporting that tries to heat up a conflict where none must exist. There are a lot of underlying assumptions and hidden prejudices in that piece, the most visible was equating black people and poor people. Then there was a cry for maintaining diversity -- it seems that having smart people from all over the world working together to change the planet isn't diverse enough for the NYT. It looks to me like they need appropriate ratios of commonly-recognized political groups. Very poor reasoning.

I've long since given up trying to understand San Francisco politics. It's an extremely dynamic city, but at the same time there's a lot of folks there who consider themselves progressive that are hanging on to 50-year-old ideas from the 1960s. A lot of things are "untouchable." In fact, I'd go so far as to say the city has a huge conservative bent, it's just not expressed by what we would consider conservatives. Don't change things!

I know the neighborhood that's mentioned, and I wish Twitter the best of luck. Hopefully a new administration doesn't take over in a year or two and start undoing all the special perks that lured them there.

California desperately needs Silicon Valley and the spillover into SF. I sincerely hope they keep advancing policies that continue the growth and not go down the road of trying to pick apart each little thing that starts going right.

I'm in favor of the Twitter perks; that neighborhood has needed help for a long time. But I think you dismiss too lightly the displacement of people and the substantial rich/poor divide in this city.

The problem isn't the NYT's reasoning. They just have different values than you do. To some extent I agree with them; San Francisco has definitely gotten less diverse. We don't get smart people from "all over the planet". We get them mainly from whitebread America, Europe, and certain parts of East and South Asia. They're generally well-educated and well off. A lot of people who have been in SF for generations are getting priced out of the city, and that is disproportionately affecting black and Latino residents.

One can legitimately say, "so what?" But it's not irrational to dislike that.

We get them mainly from whitebread America, Europe, and certain parts of East and South Asia.

I.e., they come from half the planet (Europe + USA + China + India == about 3.5 billion people) rather than the whole planet.

You are correct that the NYT has different values, and it's important to recognize what those values are: they view certain privileged [1] groups as deserving of being statistically represented in SF. Their underlying value system is basically corporatism.

http://en.wikipedia.org/wiki/Corporatism

(The term "corporatism" is only peripherally related to modern LLCs. While a modern LLC may be a corporation, so are "black people", "poor people" and "long time residents" in the sense that the NYT is using them.)

Well, most of them come from the well-off portions of those places, so it's a lot less than half the planet. But yes, you seem to get my point, which is that the population in SF is not representative of the globe at large.

I guess if you wave your hands some you could call it a flavor or corporatism. But I think your description of those groups as privileged is pretty rich. From a certain angle it's technically correct, but in a way that aggressively misses the point. You might as well call them lucky duckies.

There are about 2^(6 billion) subgroups of humanity. The NYT consistently chooses a small subset of those subgroups to focus on, and to give moral consideration to.

The particular grouping chosen by the NYT is just an arbitrary moral choice to privilege the {race == black} subgroup over (for example) the {SSN % 7 == 2} subgroup.

Gosh, you've figured it out. That choice is entirely arbitrary and random, and has absolutely nothing to do with history or morality.

I didn't claim their grouping choices had nothing to do with history or morality, nor did I claim randomness. I specifically said that the NYT's choice of which groups deserve privilege is based on an "arbitrary moral choice".

Yes, the choices are moral choices. But by calling it arbitrary, I presume you mean: "Based on random choice or personal whim, rather than any reason or system."

If they are without reason or system, then the can hardly be derived from existing moral systems (that, is morality), or the application of those moral systems to (and lessons learned from) historical circumstance (history).

But by all means carry on with your aggressive point-missing. Would you care to pick this particular nit? Or perhaps a different one?

/rant

Excuse me if I don't cry for SF. Come to NYC and we'll chat over a slice of Lombardi's. Joking aside, this is the kind of garbage divisive reporting that plays both ends against the middle. But actually against each other. Take a look at Detroit. Perhaps these people might consider authorizing new commercial and residential building permits to add supply to the market. But noooooo. Don't touch the historical architecture!

When did it become a crime to be successful in this country? Since when is it a bad thing to make enterprise, move the ball forward and create? You want equality? Build more mixed income housing with all that tax revenue you will receive from all those six figure employees living in your city. Don't ghetto your city like certain parts of NYC by concentrating low income housing. Spread it around. But hey, who am I kidding, rich people won't let that happen.

Everyone needs to give a bit.

Sickening.

Anecdotally speaking, at my last job I was positively priced out of all decent San Francisco neighborhoods while making $80k per year - it's simply not possible to compete with the Googlers and Apple folks making three times what you are. One showing I went to near Alamo Square had about 30 people viewing, and over 12 applied - it was a dingy one-bedroom, but you'd never know from the crowd or from the asking price.

I shudder to think of the non-techies who aren't in rent-controlled apartments; this boom will be exceedingly unjust to them.

By the same token, rent-controlled apartments are unjust to the non-techies who are not in them.

To me it is plausible that the average price of an apartment would actually drop if they were no rent-controlled apartments. You would have more supply etc...

Unlikely. Remember that in San Francsico, just as renters are insulated from the real price of the rental, landlords are insulated from the real price of owning the land (via Prop 13). Repealing rent control without repealing prop 13 will just screw renters. There's a reason rent control was enacted shortly after prop 13 passed.

Rent control is screwing things up in the first place.

For example, without the option to end leases landlord's can't empty a building, demolish it and rebuild with more units. This imposes an artificial constraint on supply. Demand isn't particularly elastic so prices rise.

Meanwhile, the price ceiling encourages overconsumption amongst the rent control population. Kids are off to college -- why downgrade from a 3-bedroom? There's simply no incentive to do so. This further limits supply.

If you want to see rents fall, repeal rent control, repeal Prop 13 and allow construction.

Do you really think the main constraint on supply comes from rent control and not zoning limitations? In SF there is a strong desire to preserve the historical character of the neighborhoods (agree or disagree as you like, but the political will is there) and I think that's the root reason why it's difficult to demolish buildings and rebuild them with more units, not the mechanics of rent control.

In any event, even in a rent controlled building, you absolutely can terminate all of your tenant's leases and kick them out, upgrade the property, condoize it, and sell the condos (Ellis Act.) The only restriction is that you must sell the units, not rent them.

(speaking as someone who, as a side project, is in fact building high density residential units in SF)

Zoning is primary, but without rent control, the Tenderloin would be a lot better (convert the SROs into reasonable rentals). Of course, getting rid of the enablers of homelessness would also be necessary.

It's not rent control that keeps SROs around - there are separate SRO controls. You're not allowed to eliminate SRO beds without building replacement beds in another part of the city (or paying into a fund to cover the cost of someone else doing it, and it's a significant fee.)

Many of the people in SROs have substance abuse or mental health problems or other disabilities, and most (?) SRO tenants are paying their rent in federal housing assistance vouchers (which is why SROs can be so profitable - the government pays you a high price to house people that otherwise wouldn't be welcomed on the rental market, housing discrimination laws notwithstanding.)

Any zoning plan has to make space for this population somewhere in the city. If you let people demolish SRO beds, you're just going to discover that you have to build new ones at public expense.

I should write more carefully.

I didn't mean 'allow construction' was a consequence of removing rent control. I meant it literally as 'remove absurd zoning restrictions that impede construction'.

> If you want to see rents fall, repeal rent control, repeal Prop 13 and allow construction.

Prop 13 doesn't block construction.

Prop 13 keeps property tax revenues relatively stable.

Prop 13 does inhibit construction.

A landlord who has owned a building continuously since 1985 is paying tax on its assessed value as of 1985. A landlord entering the market today pays based on the value today. This is an obvious subsidy for the incumbent landlord. A building built or purchased today is strictly less valuable than an identical one held for years.

> A landlord who has owned a building continuously since 1985 is paying tax on its assessed value as of 1985.

Not true - Prop 13 allows small increases each year.

> A landlord entering the market today pays based on the value today. This is an obvious subsidy for the incumbent landlord.

Or, it's payment for the infrastructure that the "old landlord" paid for that the new landlord will use.

More to the point, that "subsidy" does not affect the demand for new housing, the supply of existing housing, or the cost of providing it. As a result, it can't affect whether building new housing is profitable.

Yes, prop 13 means that different landlords can have different profits on the "same" building, but so what? The fact that someone else can make $10 doing something doesn't affect my decision to do it for $1.

In fact, prop 13's "stable taxation" might actually encourage building in advance of need, to lock in the extra profit potential.

> The fact that someone else can make $10 doing something doesn't affect my decision to do it for $1.

No.

http://en.wikipedia.org/wiki/Comparative_advantage

We're talking about a situation where the guy making higher profits can't grow, so comparative advantage doesn't apply. In this situation, all new supply is the same - there's no comparative advantage.

That last bit is key. The problem here is not rent control by itself, it's the combination of rent control with prop 13 and extreme anti-development laws.

This article repeatedly expresses concerns that “blacks” may be pushed out of the City.

This struck me as kind of odd. Why the repeated mention of just blacks? Is that a racist statement? If not, would it be racist to otherwise imply that blacks (and apparently just blacks) cannot compete with skilled, high-wage workers?

At the bottom of the article, credit is given to what sounds like a black woman for being a contributing reporter. The article is written by what looks like a Japanese person to me. Now I am tempted to think that it’s not negative racism on display here so much as self-interest on behalf of the contributing reporter (and I’m puzzled as to why the lede author turned this piece in as-is).

Basically, I’m not sure what (if anything) to make of this, and am interested in people’s thoughts.

I think it's what happens when privileged people try to write about the real world. You get "blacks" and (my favourite) "poor" people. Then there is everyone else. Shouldn't it just be that there are "people", and some of them are high income, and some are low income?

I have met lots of different types of people through my (very middle class) life and the ones who seriously use "blacks" or "poor" to describe groups of people are usually the very cushioned, over-educated types who are totally clueless about other people's lives.

Actually the article just seems to be quoting Mayor Lee's concerns about 'blacks' being pushed out of the city. Agreed that it isn't very clearly worded but I think it conveys that it was the Mayor mentioning "blacks" not the reporter so it is possible self-interest is not involved here. Or am I misreading it?

Quote :

Mayor Lee acknowledged that he was worried that some groups were being priced out of the city, mentioning black residents, whose population has declined along with those of families.

Here's what I make of it:

I have a big problem with equating blacks to poor people, mostly because it makes blacks monolithic, as if all blacks are poor. This isn't the case, even if you limit your analysis to the SF area.

Consider how ridiculous it is to equate an entire ethnic group with poverty, or wealth for that matter--there are wealthy and poor people across all demographics. Far better for the NYT to have said poorer residents, or some such like.

It does seem the mayor specifically mentioned blacks (could be a political calculus or real concern), but the reporters also referenced them separately, vaguely. Either way, the characterization of blacks in this article was done poorly.

You asked if this is racism; probably something like implicit bias - http://en.wikipedia.org/wiki/Aversive_racism.

Also: it seems you thought that the contributor's name (Malia) somehow indicates that she is black. A google search shows otherwise.

In San Francisco city itself, black and poor are highly correlated, for a variety of historical reasons. Most of the long term middle and upper middle class black residents in the Bay Area are in the East Bay. There are fairly concentrated areas of SF which are low income, low development, and primarily black (HP, Bayview) and some areas which became more developed (Fillmore). Mid market and tenderloin have gotten a bit more developed and more diverse (mainly in that poor Arabs and SE Asians moved in 10-15y ago).

Economics and race in SF is really complex.

I don't know where this guy has been. Unless you make $150k plus or are already in a rent-controlled apartment, you were priced out of San Francisco a decade ago. Between restrictions on development and rent control, there's almost no new rental stock to satisfy demand.

I lived in SF on 60K and knew a ton of people that did the same (or made less). We all lived with roommates.

Well, okay. But then what was your household income?

Maybe the city planning commission that decides how many apartments can be built, shouldn't be stocked with current property owners whose wealth is tied to the artificially low supply of apartments in SF? Just a thought.

I lived in San Francisco for two years, in the Dogpatch, close to the 22nd Street Caltrain.

For one, construction was a regular sight in my neighborhood. (e.g. north of 17th Street) But I think it would be an ideal location for much further construction. There were a bunch of abandoned industrial buildings in my neighborhood. Either rehab them, or tear them down and build six-story apartment buildings. You can leave the existing Victorians intact while still adding a lot of housing stock.

I'm looking at the last cheap parts of the Peninsula and trying to figure out how to gentrify -- East Palo Alto and parts of Menlo Park and unincorporated San Mateo County.

This basically happened a decade or two ago with Foster City.

It seems quite an arbitrage opportunity that a house which goes for $2-2.5mm in Palo Alto goes for $300k in EPA just a mile or two away.

The tech community needs to become a lot more politically engaged.

Particularly where it counts: campaign contributions.

I'd like to see what Twitter would do with the expected 2,600 employees. Hard to see that happening unless they dramatically change the product.

Then again, I am one of the few who still strongly suspects that company will leave a large hole in the ground in a few years.

Forgive me if I don't feel sympathetic to the plight of the poor programmers in SF. Everybody flocks to SF because that's where all the venture money is at. Which is just fine; you want to hit it big with yet another social startup? That's great for you, but I'm not going to feel sorry for you if you don't win the lottery. There are plenty of other places in this country that are vibrant, fun places to live that are also affordable and offer lots of opportunity. I'll enjoy SF as a tourist, thank you.

Sigh. This just REEKS of jealousy while genuinely making no sense. The article is about the non programmers of SF getting pushed out of affordable living by the programmers. Having the response, "well boo hoo, how could I feel bad for these programmers" feels like you either didn't read the article or just wanted to feel better about yourself. Don't get comments like this at all.

This is the New York Times which on a near daily basis features articles with titles like "What you can get for 2 million dollars" (a nice closet in a bad neighborhood) as if thats a bargain.

Expecting sanity in either the SF or NYC market is a waste of emotion. If you can't afford it (and you can't) dont live there. Your a programmer not a rock star.

The not-so-subtle subtext of this conversation is that the last line will be "You are a New York Times reporter, not a programmer, so you should not expect to be able to live in New York."

This is why I've decided to not participate in San Francisco.

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