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Comment by binarycrusader | Hacker News Reader

The living expenses are a real burden, and the average rental rates in the core of the San Francisco Bay Area have increased ~20-30% over the last three years.

They're building new apartments all around the bay now and the greedy realty vultures somehow think it's reasonable to charge as much as $3500-4000USD per month for them (one and two bedrooms). That's easily a mortgage payment on a brand new home out here.

The older apartment complexes have seen this and have been raising their rates as well (the monthly market rate on my apartment went from $2150 USD to $2750 USD in the last six months I've lived there even though it's in the south bay area).

The worst part of all of this is the realization that I'll likely never be able to afford a home out here (median house price is currently ~$500K USD): http://www.mercurynews.com/business/ci_23249121/bay-area-med...

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Wait until you have kids and you want to put them through a decent school...then house prices go up to $1M easily. For a good public school district. Or you can try a private school, but they are crazy expensive and contribute nothing to your own equity.

How does a good private school for your children contribute nothing to your equity? That doesn't seem rational to me. I'd think that a great school of any type is going to be very beneficial to equity and life in general.

I think he means equity in pure financial terms. Really it's more about liquidity.

If you buy a house in a good neighborhood with good schools, your property values will likely trend up, even if they are higher to begin with.

If you buy a cheaper house in a bad neighborhood with poor public schools, you'll have to offset the monthly mortgage cost with private school tuition. This extra cost doesn't give you additional equity in your home, and there are no tax breaks like there are with mortgage interest.

In both cases, you'll have a place to live, and hopefully provide your kids with a good solid education. But if times get tough, you can always sell your house and reap some investment if it's in a good neighborhood. That is not always the case in a poor neighborhood.

You got it right entirely.

And to make it plain for everyone to understand the insanity of it: A year in Elementary school is pretty much free in a Public School. It easily costs you $20K in a Private School. That's for one kid. Tack that on top of your $3K a month rent or mortgage and you quickly see how a six-figure salary does not mean much in this area, for anyone but the single 20-something.

I think it's a bit by design too, as most of the local economy wants young people, with stars and dollar signs in their eyes, who will work 12 hours a day while shacking in groups of 3 in 11x11-foot apartments. LOL

Yeah, shame on the greedy realty vultures for charging what the market will bear. </sarcasm>

Funny, you should read Adam Smith's opinion of landlords:

http://geolib.com/smith.adam/won1-11.html

or quoting from mises.org(!)

Smith was even less kindly to the role of landlords, where he recognized no economic function whatever that they might perform. In pungent passages, he writes that 'As soon as the land of any country has all become private property, the landlords like to reap where they never sowed and demand a rent even for its natural produce'. And again: 'as soon as the land becomes private property, the landlord demands a share of almost all the produce which the labourer can either raise or collect from it'.

But the housing market in California is arguably distorted; it doesn't actually reflect "free market" economics. So I think you're being a bit petulant trying to claim it's just about what the market will bear.

The market only bears it because the government (federal, state, and/or local) in some cases has arguably helped place realty companies and others in a position where they essentially hold a monopoly over vast areas of land and housing.

California also has a unique problem in the form of proposition 13:

http://www.nber.org/digest/apr05/w11108.html

http://www.bloomberg.com/news/2013-05-19/jerry-brown-s-last-...

Rent is crazy here, no doubt about it, and from the submissions we've gotten so far, it's the #2 concern after visas.

I predict, extravagant housing prices lead to the competitiveness of other technology markets. But for the next 5 years at least, feels like there will be more investors, buzz and energy in SV than anywhere else.

Higher perceived chance of success worth increased rent?

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