The San Francisco Rent Explosion: Part II | Hacker News Reader

The San Francisco Rent Explosion: Part II

priceonomics.com

There is a special hell for people who present tabular data as images.

I sometimes do this in emails because for some reason Gmail hates CUT AND PASTE from an Excel table into an email and none of the work I did to format padding, widths, etc. in cells are preserved.

But that's what they sell! It says so right in the first paragraph

I live in Boston and have visited SF a few times, definitely not connected to the SF rental market like I am to Boston. What I am curious about is how new and how large these 1 bedroom apartments are in SF. My hunch is your dollar probably goes further in SF than it does in Boston.

A 1 bedroom/1 bathroom in the Back Bay (nicer, while not nicest part of the city) will run about $2500/mo. But it'll be 100 years old, 400 sq ft, outdated, no laundry etc.

I wonder how that compares to apartments in SOMA, which appear to be newer buildings at least.

When I moved to SF in 2012 I rented a new apartment in SOMA/South Beach (Carmel Rincon). My rent was $3300/mo for ~600sqft w/ no laundry. When I moved out they were increasing the rent past $3400/mo.

That seems a bit steep. In 2012 I paid $3200/mo (split between two people) for a ~950sqft one bedroom with laundry in a really nice building.

I've had this conversation with a friend from Paris who made the same point.

The stats show that SF rents are as high as places like Paris and NYC, but it may be a comparison between a nice, new studio in SF and an ancient, tiny room that used to house a servant in Paris. It's another layer on top of the stats. (Or we need more stats for a full picture.)

In my experience, in San Francisco, there's no premium for new construction. You either get a place or you don't. The 60 year old victorian split into apartments is still $3,200 just like the modern construction 1 bedroom in SOMA.

The big difference of course is that buildings built before 1979 are rent controlled. Had a friend have his rent go from $1800 to $3200 after his first year.

This place is insane. I moved to sleepy Petaluma an hour north and have no regrets.

I'm sure they could pull this data from the craig^H^H^H^H^H mysterious data source if they wanted.

For reference, I've lived in 2 1BR apartments which were around the median prices listed here and both were newer buildings, 600-700 sqft with laundry.

If you've ever searched for an apartment in these high rent locations, you would know that the data presented from the listings is super super dirty. Often they are lower than actual rent or not the actual apartment (bait and switch tactics).

At least anecdotally, having moved here from Boston, no question that you're correct. You definitely get more space for your dollar in SF than in Boston. The reason is simple - they simply didn't build things as small in SF. People from the East Coast would probably be willing to live in smaller units for less...if they existed - but they really don't, at least not as part of the traditional housing inventory. (Some fancy new apartment buildings are experimenting with them, but needless to say, they're pricey, and at that price/size combination many would prefer to commute from Oakland.)

Even the concept of "Boston" is much smaller than the concept of "San Francisco". If you walk across Boston from any of its edges for an hour, you'll wind up in another town entirely (Allston? Cambridge? Maybe even Somerville). If you walk from an edge of San Francisco for an hour, you'll be smack in the middle of San Francisco, with a lot more walking to go.

I think you're right. Even though, say, Allston is actually part of Boston the residents don't really think of it that way for the most part--certainly not in the same way that (my impression is) San Francisco neighborhoods think of themselves. And Cambridge and Somerville both are and feel like different cities which, at least these days, are more like each other than they are Boston.

I'm not sure why they didn't do $/sqft at least. That should be a relatively easy way to normalize the data.

A quick glance looks like average would be around $3200/mo. The lowest I saw was ~$2800 up to ~$5000 for a 1 bed room. The majority of them were around the $3500 mark.

http://sfbay.craigslist.org/search/sfc/apa?bathrooms=1&bedro...

I have a friend paying $2200 for a 230 sqft micro-apartment in SOMA. It's like having your bed in a tiny kitchen.

I'm paying $1800 for a ~250 sq. ft. microstudio in Soma. It's very much like having my bed in a tiny kitchen, but it's by far the cheapest place within a 15 minute walk of work (FiDi) by myself with somewhat reasonable facilities.

Wow. I pay $2750 for a 2br in a hip neighborhood in Manhattan and I already find that hard to swallow. It's amazing that people can move to NYC (Manhattan no less!) to save money on rent.

My company makes a rent per sqft map that somewhat answers this question:

https://kwelia.com/maps/cbsa_census_tract/Boston-Cambridge-Q...

https://kwelia.com/maps/cbsa_census_tract/San%20Francisco-Oa...

Looking quickly, rents per sqft seem a shade higher in SF but not by a wide margin.

Nice.

(What's up Startup Chile!)

The thing to note is that the "one bedroom" statistic is a little misleading, at least for myself and my peers in technology. They definitely cost $3000-$3500, but I don't know anyone who lives in one by themselves. Last year I shared a huge (~950 sq. ft.) $3200 one bedroom Soma apartment with a colleague.

For comparison, I now live by myself in an $1800 ~250 sq. ft. Soma microstudio.

I'm surprised that the Tenderloin has resisted gentrification for so long. Why is that neighborhood so impenetrable?

My guess would be housing or building regulations. That said, developers are starting to build, what else, high-end luxury condos in the Tenderloin or close to it. I've heard the word "Trenderloin" bandied about unironically. So there's that.

This article talks about it a bit.

http://blogs.kqed.org/newsfix/2014/01/15/123502/san-francisc...

http://www.modernluxury.com/san-francisco/story/arise-tender... is a fascinating article explaining the unique circumstances of the Tenderloin.

According to their numbers, rent for a one-bedroom apartment in the Tenderloin actually fell 12% last year. What's going on there?

>* What's going on there?*

ghetto

Do coders (like at Twitter) typically make over $200K/yr? Or do they just eat ramen every day?

With rent prices like these, food is no longer a significant part of living costs.

Some. Most do not. San Francisco's economy relies on young people not realizing the importance of saving, and the consequent willingness to spend to the bone.

In some cases the importance of saving is realized, but offset by the certainty that they're going to cash out huge Any Day Now(tm).

Also, I would think they are sharing 2-3 bedrooms with other co-workers.

Not most, but not unheard of.

I know one guy (not at Twitter) making around $180k. But his real brilliance was getting in around 2007 and staying in the same place. Right now he's paying around $1500/month for a really nice one bedroom on Valencia.

It's great that we have laws to protect him from predatory rent increases.

More likely, they earn closer to $100K/yr, live in a studio or share a house/apartment with multiple people, and pay closer to $2000 a month, which leaves plenty of money leftover for food (especially after at least one free meal at work) and luxuries.

Geez. Hard to believe that SFO experience trumps making $70K/yr in a middle-tier city, living in your own house and paying less for its mortgage.

Most people like the technology/startup scene and the culture of the city (for me, it's only the former). But even if you ignore that, the relevant financial statistic is your disposable income, not the percentage of your pay that goes to rent.

At $70k a year, you should take home roughly $70k / 12 * 0.65 = $3.8k each month.

At $120k a year (rough estimate for a Facebook engineer, so correct me if this part is unrealistic), you should take home roughly $120k / 12 * 0.65 = $6.5k each month. If you're paying $3k each month on rent (which is quite generous if you're living by yourself), that leaves you with $3.5k each month.

That means that your $70k job only leaves you $300 a month for rent, in order to have the same amount of money left over. That's really pushing it, considering it's only half of the median USA apartment rental, and considering I paid $400 a month for a modest apartment 4 years ago in Springfield, MO, which as I understand it is in one of the cheapest areas in the country.

Obviously there are other effects here that I'm missing. My 65% take home portion could be completely wrong. Food prices are almost surely higher in SF (of course, most startups and tech companies provide some free meals).

Good analysis. Big difference is in the middle-tier city you're buying the house at say $1K / month mortgage, rather than renting. And your house is 2000 sq. ft. with a yard and garage, instead of a 1 bedroom apartment. Less disposable income but your standard of living is subjectively higher.

Good points. Home equity is a big deal changer. I am so remote from even thinking about buying a home that I can't estimate the utility difference equity would make.

Having lots of space is obviously a major difference, but is very subjective. Many people who live in a city probably wouldn't want to maintain a yard or a larger house or need to drive everywhere. I definitely prefer the space.

Bear in mind that your effective tax rate is very different at $120k than at $70k.

$130k/yr, after tax is ~$7000/month. Minus $3000, you've still got $4k to use up as you choose.

If you choose to go for high-end dining for every meal, you won't be saving very much, but $4k/month is hardy ramen.

Not every restaurant in SF is the French Laundry either.

I'm currently interviewing for a position in SF that will likely be a dream job, but as a midwesterner, the rent situation terrifies me. Salaries certainly seem to be inflated because of this, which is fine, but could anyone offer some insight or precautions about moving to SF at this time?

The only thing I can say is that the salary makes up for it. The pay rate here is enough to survive, at a minimum. If you're making less than 80K and want to be more than paycheck to paycheck, you may want to think about living in the East Bay instead.

This is an interesting attitude.

It basically sounds like "Come work at your dream job, where you competed in a global talent pool to get, for employers that conspire to suppress wages, where you can't actually buy any real estate, and we will pay you just enough to survive"

That's an interesting way to look at it..

I have a friend who recently moved to SF. The tip someone gave him was basically to not take anything less than $150K for a salary.

And be sure to get a big raise every year, to cover your 25% annual rent increase.

Only 28 out of 638 startups on AngelList in San Francisco list software engineering jobs at over $150k.

https://angel.co/jobs?utm_source=home_gs#find/f!%7B%22locati...

There's a growing gap between people who know how to negotiate and position and people who do not. Despite heavy competition for talent it's still easy for an experienced, capable engineer to make "only" $120K in SF.

If you really have the chops, and know how to stick to your guns and position yourself in negotiations, companies are willing to break the $150K barrier (even the $200K barrier). They're simply hoping you're not smart enough to know how.

This includes not advertising the fact that they're willing to go above that barrier.

That's because startups aren't interested in paying market rate. They're interested in paying below-market rate plus the lottery ticket known as "equity." AngelList companies are especially amusing in that regard (I saw compensation packages as low as $60,000 + 1%-5% "equity" at one point in the last year). They're okay for a single person or the rare "family person" with no debts from college or misfortunes in life. They're otherwise not good choices for employment. Of the companies in your list, I seriously doubt more than 2-3 of them would ever hire near the top of the listed salary ranges.

Fortunately they aren't the only choices. I work at a pretty big and well known company (not Google, Facebook, or the like). My salary is about what you list, and I'd hazard a guess that I could get something comparable by hinting at the army of recruiters around here I'd be interested in changing jobs, while avoiding startups.

The reality is that for the value even average software developers bring to the companies they work for, the average salary for the average developer in the SF Bay area ought to be at least $150,000/year. Top notch engineers and computer scientists working on cutting- or bleeding-edge systems and research ought to be north of $200,000 on average.

I was offered $150K for an SFO job a long time ago, but didn't consider it because at the time a 3-bedroom house next to a freeway was $900K. Now that house would be north of $2 million.

If you want to live in San Francisco proper without paying a terrifying amount, try looking at some neighborhoods that are not the same places where everyone wants to live (Mission, SOMA, Lower Haight, North Beach, NOPA, etc). The Inner Richmond or Sunset are good picks if you don't mind having a 20-30 minute commute. Still expensive, but not as bad as the aforementioned neighborhoods. Those can easily be $2k per person if you are signing a new lease and not moving in with someone with rent control.

If you want some substantial space for $2k or under, I would look at the East Bay exclusively.

Be prepared to be shocked either way.

I've been doing some browsing and I'm preparing to have to pony up $2.5k-$3k, but it just seems crazy. Commuting is fine as long as I can avoid driving (bike or Caltrain). And a neighborhood with things I can walk to. I don't need to be in the center of SF, so I've been looking around the Redwood area.

Do you mean Redwood City? That's a 1.5 hour Caltrain commute each way if you work in downtown SF. for $2.5k per month you should be able to do a lot better, and avoid the life-sucking commute.

I'd be in Palo Alto

I take that route quite often. Baby bullet is 35 minutes, and full-stop non-express train is about 70 minutes.

Also note that, if you're commuting to the east part of the city (Soma, Fidi, etc.), it's worth researching commute times. To get to Powell station, the commutes are probably fairly similar from Sunset/Richmond and from Oakland/Berkeley.

If the office is within walking distance of MUNI rail stops, you can expand your search to more inexpensive areas of the city (like Outer Sunset). If within walking distance of BART, you can expand to even more affordable areas in the East Bay (like Berkeley, Oakland, or further out).

One question I'm not seeing asked is, other than the wealth of interesting jobs for those in tech, is SF even worth the price of admission as a city? My experience here so far says "no fucking way".

As someone who has never lived there but has probably spent close to a year of his life collectively visiting there, I'd say it's a mixed bag--even though it's clearly on my list of favorite cities. Pretty good climate (though not as much so as the South Bay), great recreational opportunities in the area, great food, pretty walkable although public transportation is a mixed bag, and certainly some areas are nicer than others (I'll leave the last point at that). As an urban experience (as opposed to the Bay area more broadly, there are probably other cities I prefer. But I definitely see the attraction even if I've never succumbed to it, or indeed living in a city, myself.

Seems people tend to conflate the price of admission with desirability. There are plenty of reasons why rents can rise much faster than inflation, other than desirability increasing.

Yes, things like economic opportunity

Current biggest reason is likely that mortgage interest rates are being minimized by gov't so that banks can unload the houses they're holding at higher prices. When house prices rise, rents tend to as well.

This is crazy. I pay $2300 for a large-ish 2 bedroom loft in an expensive place in the Seattle area (Downtown Bellevue). I hope prices here don't get to what they are in SF.

If you plan to stay in Bellevue long term, buy as soon as possible. The Seattle area's population is growing rapidly (mostly immigration it seems) and the cranes aren't keeping up.

Seattle is the fastest growing large American city, according to estimates from the Census bureau: http://blogs.seattletimes.com/fyi-guy/2014/05/22/census-seat...

Seattle seems to have much better planning than SF though. There's a large amount of high density housing being built, and there's not the same restrictions on rent, or prohibitions against micro-apartments.

I can definitely see the Chinese diaspora becoming obsessed with Seattle in the same way they have with Vancouver, Sydney, Melbourne, etc ...

I stopped short of mentioning that. It's harder for them to get into Vancouver now, with a change in immigration law there. I think the ones who would've picked Vancouver now tend to settle on Seattle, willing to pay the same $million in cash for a house.

one reason for sky high rents, with the rules so bent towards renters the higher rents and deposits filter the majority of those people out.

Its akin to renting homes, rent below 1k and your more than likely to get a bad renter.

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