Rent Affordability Gap in San Francisco
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Heck, when I lived in New York, I lived in a 430 square-foot apartment with a wife and a baby while making six figures. And I was a 35 minute train ride away from Midtown!
Part of the resistance to this comes from the very recent memory of SF residents. The transformation of an SF address into a luxury good is very recent.
I'm acutely aware of this having grown up here. I have a friend whose father was a professor at SF state. He (largely on one salary) raised his family in a pleasant 4 bedroom (!) house in the inner sunset. Another friend's parents were school teachers, one part time elementary, one full time middle school. The had a modest but pleasant place a little further out in the sunset.
It really wasn't until the late 90s that almost all of San Francisco detached from the middle class. I'm wishy-washy on the term almost here... there are still affordable corners, I guess... a modest house in nice shape in the excelsior probably could crack $700. Is that affordable?
I lament this a little bit, but I'm not that outraged. There isn't much to be done. I do think that a creative culture (which includes tech!) can't really flourish in such an expensive city. It just limits options too much when you have to make so much money just to live.
Some of the loss is long term residents who give up on living here (my brother was a professor at SF State as well, he was barely able to afford to share a 2br apartment with a guy he knew from high school - contrast that with the 4br house one generation earlier. They've since left SF, probably never to return as residents, and a good thing for them that they did, because they wouldn't be able to chart their own course in life with that kind of rent).
But this isn't about localism or resenting people who are moving here. Let me put it this way - Harvey Milk became who he was partly because he was able to move to SF and find an inexpensive apartment. SF was once a place where very creative people who didn't really fit in could show up and find their way in life, and interesting things emerged from that. I think that was worth much more than widely available tech talent of VC funding.
One last thing, though - this bashing of "tech workers" is pretty horrendous as well. Like someone isn't allowed to come out here, take a job, and rent an apartment?
I guess I just see it as a done deal. The innovation of life, the kind nobody even understands well enough to fund, that causes people to scratch their heads and say "what are those people doing"? Hard to believe it will come from SF anymore. I'm as bummed as the next guy, I just don't really see any villain here[1].
[1] I know, I know, some people will say building codes are the villain. I'm not prepared to present a long defense because I actually can't rule this out, but I'm highly skeptical of this argument... I guess I'd just ask if building lots of high rise dense apartment buildings would have "saved" manhattan or the left bank of paris from culture killing real estate prices. To me, the real solution is that the creative people will move, locally maybe to Oakland, or that other cities will pop up (austin seems like a prime candidate).
This is exactly why I moved to Portland, Oregon instead of San Francisco 4 years ago. We've had a very strong creative tech scene here, that has not had the same levels of cost pressure. It emulated the situation during the Homebrew Computer Club days in Silicon Valley, it had the formula I thought would make it a good place to do tech startups.
The affordable cost of living has allowed me to work on projects I otherwise would not have been able to in SF, because I simply couldn't have afforded it.
Concernedly, Portland rents/houses have been trending upward recently, largely due to a lot of people moving here from California. It's my hope that Portland is able to maintain that balance of affordability and ambition... we'll see.
Well if we could stop telling everybody about it... ;)
I always thought of tech the way you described it, as part of the slightly quirky and interesting culture.
I don't really know much about the history of SF. Can you give some examples here?
This is not unique to any particular city or country. I personally have experience with SoCal and Moscow. In SoCal, a 2br condo in Santa Monica costs the same as a house in a nice suburb, the difference is an hour+ drive. In Moscow, inner city is gridlocked 24/7 and unlike most of US, that's where the best jobs are, so the closer to downtown, the more expensive it is. Further out, prices are highest in walking proximity to a metro station (just like BART).
Needless to say, this must be stopped ! "Not" because it makes life possible for a huge swath of poor people, that's not the problem. It pollutes ! "We" can't park anymore (because unlike poor people we don't arrive at work at 6am). "We" must stimulate public transport usage (without, of course, using it ourselves). Not that public transport even passes through the places where you'd live if you didn't have money, but who cares about that ?
The cycle continues.
Just because you chose a horrible situation doesn't mean that should be the mean. Many people live in a dirt-floored hut with no electricity or running water and that doesn't indicate that we should find that to be acceptable rather than trying to raise the global standard. That sort of thinking led to the ridiculousness that is SF/NYC real-estate.
There are other parts of the country where you could be living in a house you've purchased and still make "six figures."
I'm hardly a free-market true believer. But this is a basic bit of micro-economics: supply and demand of housing. If demand is high, you'll minimize prices by allowing supply to grow to accommodate demand. If you don't allow supply to grow, prices will explode. You can't legislate away the mechanics of the housing market.
Whenever I hear complaints about housing prices in San Francisco and how the single mothers working minimum wage jobs are getting priced out, I think of this article: http://seattletransitblog.com/2012/04/01/city-looks-to-detro....
Is anyone surprised that cities are expensive or that a city that dramatically restricts construction of high density housing is even more expensive?
I'm a socialist. I believe in Universal Housing (that is every one should be guaranteed/given shelter (also healthcare, education, and sustenance)). But, I definitely don't believe in Universal Housing for whereever you want to live.
I'm thoroughly unconcerned that it requires 4-8x times minimum wage to live in of the best / most popular cities in the world.
Around 1991 my self and 3 other 20-21 yr old college dropouts moved to SF, rented a two bedroom. Can't remember wages, doubt minimum wage cause most jobs pay more than that in SF. I did temp work, two waitresses, and I don't remember what 4th did. There were trade-offs. But we wanted to live in the city even when everyone else our income bracket was being forced out to Oakland. I lived all over SF for 14 years with increasing income and decreasing roomates. It'd doable, if you want it bad enough.
Interesting. How do you think such a system of Universal Housing should work? One alternative is to build high density public housing which, IMHO, has been shown to be an utter disaster from which many poor communities are still suffering.
Another alternative is to incentivize the poor to leave high cost areas and spread out to where they could be housed more affordably/safely/sanely. I'm not sure that's as terrible an idea, but it certainly has downsides, including potentially sacrificing whatever culture and community already exists in poorer areas.
I am not a socialist; my currently preferred form of welfare is simply to give people cash (and more cash, rather than less, if they obtain a job). But I'm definitely curious to hear the other side.
That incentive exists in the form of cost-of-living savings.
Then why do we require paying minimum wage to people working in one of the most popular cities in the world?
Capitalists can answer this easily: exploiting workers by paying them less than a living wage raises the rate of profit.
But how can you answer it?
Yes, nothing increases profits like dead workers. Mwahahaha. adjusts monocle.
Anyway, the answer you're looking for is that when workers can't afford to live in a commutable distance to a given job, the supply-pool of workers for that jobs goes down. When the supply goes down, the price goes up (or other measures to increase the supply kick in).
People living on the edge end up costing more to society, it's an externality not taken enough into account in the labor market.
Intriguing. Source, please?
They literally did not care if their workers died. So workers were employed in deplorable conditions for less-than-livable wages, in order to maintain high profits, simply because the Capitalists could get away with it. I don't know what makes you think the Capitalists of today are significantly different from those of yesterday in this regard. The key difference that separates them, as I see it, is that today Capitalists may (notice the "may"--it isn't guaranteed) be prosecuted or, worse (to them) fined, if they violate labor laws.
And do you have actual evidence to support your second assertion? Especially in the case of the Bay Area in general, or San Francisco in specific?
As a matter of fact, yes. The easiest, simplest, cheapest way to increase profits is to cut wages while encouraging uncontrolled reproduction and forcing self-sufficient populations into the labor market. That gives you an abundance of labor power so large that you can pay them sub-living wages and not run out of workers when they drop dead.
It especially helps if you can finely calibrate things so that they drop dead slowly, particularly after having children. A worker who drops dead of a heart attack or snaps their neck somewhere in the range 40-55 is optimal: they've reproduced sufficiently to replace themselves in your labor force, but they didn't get old enough to be owed a pension.
The way to keep them alive that long while paying a sub-living wage is a simple little thing called Food Stamps. The government makes up (most of) the difference between the wages you pay and the actual cost of staying alive. You thus reap profits that are effectively subsidized by taxpayers while still being able to claim that you're an independent company operating in the free market.
And you know what the best part is? After a few years or decades of this, you can turn around to the government and complain about how much public debt they've got and how high their taxes are! You can then set province against province or nation against nation to compete to subsidize you the most, all the while maintaining your self-image as a heroic free-market ubermensch.
Externalities are so useful, aren't they?
Take a look at Outer Mission, which has a monthly rent of $2150 and an affordability of 4.0.
10.24 $/hour * 8 h/workday * 21 wd/month = 1720 $/m
4.0 * 1720 $/month = 6881 $/month
6881 \approx 3 * 2150
And $1000/m for food is actually really high. That's if you eat lunch and dinner at restaurants every day and don't worry about the price. Figure $500 for food, $500 for health insurance, $150 for transit... it's not adding up to twice rent.
If you come to SF intending to rent an apartment on a 2x factor, you will be homeless.
The insane rents in SF is an express of the extremely constricted supply - which has other effects beyond merely just rent. It's a landlord's market and they can afford to be extremely choosy about who they rent to.
Since I'm doing contract work and don't have a regular salary, one landlord told me outright that even though I had demonstrated I could pay, he wouldn't rent to me because he "wanted a more stable tenant".
It feels terribly insulting to be told that, and makes me long for a humbler city like Chicago or Minneapolis, where if you have money, a landlord will take it without nearly this level of nonsense.
Or Berlin. I looked at apartment prices there and began to feel quite jealous of the Germans :)
Rent control makes apartment rentals more expensive (and lower quality).
Overpaid municipal workers must be supported with higher taxes and/or higher fees.
[1] http://www.sfgate.com/bayarea/article/Families-exodus-leaves...
Regarding housing prices: this may be true in first-rate cities like San Francisco or New York, but here in St. Louis (and in dozens of similar cities in the U.S.) housing is usually cheaper in the city's core. People left for the suburbs to get more space, because they had automobiles, because the housing stock in the suburbs is much newer, because blacks were moving in, and because of crime levels (some real, some perceived).
Also, rent controls depress the quality of housing stock.
Is she arguing SF is or will soon be "destroyed"?
Maybe if SF succeeded from the US and California and ran a tight immigration policy you could make stasis work, but somehow I don't think that's in the cards.
Allocating resources this way would be bad enough if housing stock was a public good, but it's not. It's owned by landlords who are then required to subsidize the lifestyle of the beneficiaries of this "right".
There's one showstopper problem with a more free-market approach--the overriding purpose of rent control is to subsidize rich parasites like Charlie Rangel. It would be a lot harder for such people to have their housing paid for by others if subsidies were explicit and means-tested. Sure, poor people wouldn't come out worse, but they're not the ones making the rules.
Hmm... owning a city as a cooperative? I don't see why not. There are certainly institutional frameworks in which it can and would work.
Further, you could take inheritance tax from the value of the urban citizenship when someone inherits it by coming of age as a citizen/resident of the city. If someone couldn't pay the tax (which could be charged as a portion the market price of rent/purchase in that city), they would be forced out of the city, as today. However, when their citizenship/residency right would be outright sold, the tax would be less than 100%, so they would at least partially recoup on a financial level the loss of their home.
Sounds like a bizarrely good idea. Thanks for thinking of it.
If not, sign me up for a place in Aspen or Greenwich though.
I can see it now, "Johnson, if you don't work the next 3 weekends I'll fire your ass, and per city law you'll have one week to get the fuck out of town to make room for the next SF-employee".
I cannot see any way in which "everyone who works in SF deserves to live in SF" can be implemented that won't make it even more inhumane and tyrannical than the free market it's replacing.
That said, the people that live there tend to be older families that have been in SF for a long time, and to them that's probably not a high priority (they often live under rent control and probably don't work downtown in tech). If you change the status quo, you threaten their ability to live there by raising prices.
I don't think this is going to go away until the exorbitant valuations on tech startups does. It's the main force that's driving these price increases, just like it was during the first bubble.
Household income to afford this rent is always way higher than the median income of those who actually live there. Is there an error in the way these numbers are being calculated or am I misunderstanding the headings?
2) Marginal demand - current supply and demand has more effect on currently available properties than on previously existing leases. If rent control is in effect, long-time rentals may cost much less than the current market rates.
What does it take and how many, indeed, do?
Obviously something is wrong with Financial District, I don't think the data you are using was accurate there.
Still frustrating that people will somehow defend the minimum-wage/rent disparity.
It'd be interesting to find out if two people could afford a studio or 1-br for 4 jobs or fewer. (I'm guessing not, but you never know.)
Though you're right that a 1-br + living space should be "decent" for 2 people (the 2-br probably has a living +kitchen too, so is probably not bad in living arangements). Studios are usually a pretty tight fit (euphemism) for 2 people I'd think though.
It enforces a minimalist aesthetic, excellent cooperation, solid space management and living a good chunk of your life out of the house. Which makes for a nice lifestyle.
However your mileage may vary (and I think it certainly matters that we chose to live this way, and where not forced to...)