Inside San Francisco's housing crisis | Hacker News Reader

Inside San Francisco's housing crisis

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After reading the article, this quote really jumped out at me:

"I was going along, being a good citizen," Todd, now 52 years old, says. "I was a volunteer firefighter, I coached football and baseball, I was saving my money, doing everything you're supposed to do, being a single father, raising my daughter by myself. Then the economy just went to hell and the company threw me to the wolves."

This is interesting because it sounds like what I've come to think of as the "salaryman" mentality: the idea that there is a contract between employee and company help each other, forever.

I don't want to say it implies entitlement, exactly, but more like a weird view of reality. Why do people think being a "good citizen" who "does everything you're supposed to do" means nothing will ever screw them? Or is this just rhetoric that people use to make themselves sound victimized?

I think this is a generational gap (in America, anyway). I don't think you would ever hear those words coming from a millennial. Maybe we've just learned from the mistakes of people like this guy.

These people still remember when you could graduate high school, go to work for GM for a few decades, and have the company pension to depend on in retirement. A suburban house with a white picket fence is somewhere in there too.

Nowadays we're much more used to the at-will relationship. The employment only lasts until either the employee or the employer decides that things would be better off if the relationship ended. I don't think either is "weird" - just mindsets from different places/times.

Actually, that kind of sounds like dating too.......

Yeah, that's true -- perhaps weird isn't the right word for it; more like foreign (to me). I find the idea of being so dependent on a corporation terrifying, so it's fascinating that some people have just thrown themselves into the arms of the the social contract without any qualms or backup plans.

edit: OK, that sounds harsh. I have no idea what this dude had for qualms or backup plans; I'm just generalizing based on what I read about him. If you're out there, Todd, don't take my comments personally.

What am I supposed to do, live in fear every day of my life that my job might disappear tomorrow?

No, but it might be a good idea to be prepared for that eventuality. Being prepared means also you won't have to be afraid ;)

Should companies be forced to employ people indefinitely?

No, people can just starve on the streets, that's fine.

Edit: this is a flippant response to a thoughtless question. The short answer is "no" and the long answer is: I'm really interested to hear what ideas you come up with when you think about it for more than 5 seconds.

I think it's important to cultivate a skillset that makes you valuable in the market, not just to rely on the security of your current position.

Yeah, it would probably bother me less if it were possible to find a job in a reasonable amount of time. Everyone I know who lost a job recently couldn't find work for months. Any reliable trade I can think of takes years to learn if you're apprenticed full-time, so how could I pick that up on the side?

It doesn't help that, even though I went to a pretty nice college, the "career center" encourages resume-spamming as a good way to find a job. And they have completely ass-backwards advice for what to put on a resume - they're very buzzword-focused. I'd like to think I have marketable skills but I never learned how to market them effectively. I've been working on it but how do I know it will work until I really need a new job? And what if the economy gets worse before then? For that matter, how do I know what skills are in demand right now?

Well, you could just get a degree in CS :)

In all seriousness, I don't really have any advice about it, except to say, skills pay the bills. Marketing yourself is great but IMO you are better off taking the time gathering expertise in your field. There's a book on this topic called "So Good they Can't Ignore You" that I highly recommend.

I have a degree in CS. I also had 3 years experience as a professional programmer when I was laid off. Let me be clear: resume spamming does not work. I was on unemployment which requires documentation, so I know that for 9 months, I applied to a minimum of one job per week. In that time I got only 3 calls back and one interview. Fortunately I interview very well :)

I'm a grown adult who is perfectly capable of maintaining a savings account and investing in a network of peers who I could ask for help with acquiring another job. Why should that be my employer's responsibility?

That is demonstrably insufficient. From the article: "I was a volunteer firefighter, I coached football and baseball, I was saving my money, doing everything you're supposed to do". This guy had tons of contacts and a savings account, and he ended up homeless.

Lots of "perfectly capable of adults" maintain a savings account and cultivate a network they think can fall back on in hard times. Far fewer than you think are able to save enough or have that network come through. In fact, assuming one's savings account is large enough, or one's network is strong enough, is an assumption born of privilege few, even in America, ever know.

At 52, he had no such notion at all, I can virtually guarantee it. That employment model, predicated on strong unions in most cases, was well on its way to oblivion in the mid 80s, and by the time he was actively working, say in the late 80s/early 90s it was on life support. By that time there were vanishingly few people who though they were going to GM or US Steel for a lifetime job with a pension. This millennial vs. the 50-year-old thing is crazily ahistorical.

My impression is that most of the mandatory phase of education in the US teaches this lesson. It was well into my 20s that I really realized that I was taught wrong.

Of course there's a social contract. We also have laws against burglary even if you leave your front door unlocked. There's a limit to how much people are allowed to screw you. If someone takes an action that results in you losing your house, that person is an asshole even if they're not technically a criminal.

Because this view of reality was the American dream promised (literally and figuratively) by politicians, companies, churches, schools, families and advertisements in the 20th century.

>I don't think you would ever hear those words coming from a millennial.

I have heard these words coming from a millennial. The thought process isn't related to age, it is related to the mindset that karma is real: if I do good things then good things will happen to me.

People eat it up because nobody likes to see bad things happen to good people.

There is a huge amount of stigma around homelessness and poverty. "Those people are irresponsible and they deserve everything that happens". His story just reminds us that what happened to him can happen to most people.

It does happen to some people.

There is plenty of collateral damage when technology disrupts markets and jobs appear and disappear. But being possessing a stale skill set with no plan (or willingness) to retrain is simply irresponsible.

If you've sent out 800 resumes for a type of position and haven't gotten so much as a callback, you are in denial.

Absolutely, it can happen to anyone, whether you're a "good citizen" or not.

Without more details of his situation I can't say if I think he was being irresponsible or not, but irresponsibility (which is common) should not cause homelessness (which is bad).

>I don't think you would ever hear those words coming from a millennial. Maybe we've just learned from the mistakes of people like this guy.

Or maybe the world used to be different, and the millennials are being released into a world of unemployment and a largely dismantled safety net. The generation gap has narrowed for them, largely because they're still living with their parents after college.

To add to that in United States even if an employee is laid-off they are given severance package and on top of that they can apply for unemployement benefit and the government happily gives them a pay to survive on for about 6 months. Considering all of this I feel a salary man is in a good position and can find another job in 6 months.

People can and do get laid off in the US with no severance.

First, from the article, he looked for a job for 18 months with solid experience but without success. Second, having been there, if you think going from a couple K a month while supporting a child instantly down to a couple hundred a week is simples, you haven't been there.

"I don't think you would ever hear those words coming from a millennial."

Probably because Millennials grew up knowing there were wolves just outside the gates, and that your employer might throw you to them at any time. We're the first generation of Americans, in quite some time, to have experienced one significant crash or stagnation after the next. There is no "normal" in the job market, the stock market, the housing market, or just about any market for us. There never has been. We don't know normal, so accordingly, we're not clinging to it.

I don't blame older generations for slipping hard when the rug gets pulled out from under them. They are products of a very different era. I wouldn't blame a polar bear for not knowing his way around a tropical rain forest. I wouldn't blame a jaguar for not knowing his way around an arctic tundra. By the same token, I don't entirely blame a person from the "good old days" for not knowing his way around the chaos that characterizes our economy today. And to whatever degree I do blame him, I don't blame him entirely.

"I don't want to say it implies entitlement, exactly..."

That's because it doesn't. Perhaps it's just my cushy, liberal upbringing saying this, but emotionally speaking, I have a very hard time calling Todd "entitled." He works his ass off, struggles to get by, and nearly kills himself trying to make life seem semi-normal for his young daughter. All of this on $30 a day. That's odd behavior for an entitled person.

Maybe he lacked a degree of flexibility, or training, or resiliency in his career that led him to this point. That's a fair critique. He says he saved money, but we don't know how much, and we don't know what his spending habits were. Again, fair. We have plenty of things to analyze when picking apart Todd's story. But one thing he doesn't appear to be is entitled.

This is an understandable but extremely ahistorical perspective. The reality is that the belief that wolves weren't outside the gates was a historical blip from the middle of the 20th century.

Absolutely true. The middle of the 20th century was the aberration, not today. Nevertheless, I think the point still stands: people from the (aberrant) era of stability are unaccustomed to instability.

Since memories only stretch back so far, and appear to be limited to generations, it's fair to say that Todd's generational (proximate) perspective was his "normal," and the "normal" for most people growing up over the last 50-odd years. This can still be true, even if that period was abnormal within the broader sweep of human history.

Furthermore, I'd argue that today's instability is something quite different from the historical mean. We're not simply regressing to the natural state of economics. We're moving out of an aberrant era of atypically shared prosperity, but at the same time, we're being rocked by the result of a decades-long experiment in supply-side economics that has confounded and further destabilized our position. What we were in then was not normal. What we're in now is not entirely normal, either. But your broader point is very true: there have always been wolves outside the gates. That we paid no attention to them for 50-something years is unusual.

I agree, I didn't call him entitled either. Maybe he lacked training or maybe not, and maybe he saved well or maybe not (he did last for 18 months in SF after he was laid off, after all).

No, I wouldn't call him entitled. If anything, I think he was deceived: he bought in to a social contract and it turned out he was more invested in it than his employer was.

Just to clarify: I wasn't saying you'd called him entitled. I'd just felt the need to expand upon that point, because the words "entitle" or "entitled" appear about 12 times on this comments page already, and are bound to appear even more. I sort of picked that section of your comment as a segue into discussing the entitlement topic. Sincere apologies to you if I gave you the impression that I was accusing you of labeling the guy entitled.

> Probably because Millennials grew up knowing there were wolves just outside the gates, and that your employer might throw you to them at any time [...] We don't know normal, so accordingly, we're not clinging to it.

Millennials need to learn some history.

A 52-year-old graduated high school in 1980. They grew up, then worked their first decade, during the economically scariest 20 year period between the Depression and the Recession.

Millennials don't even know what a pension is, let alone having to worry about losing one, or fear the Japanese taking over the world, including both the high-end and low-end manufacturing jobs along with Rockefeller Center.

It was pretty terrifying back then for your rank-and-file blue collar worker, and it didn't let up until the mid 90s. Anyone born around and after 1970 doesn't know "normal."

Thank you for providing some perspective.

When I heard people say how hard Millennials have it I think to myself "harder than the 17 and 18 year olds who went off to fight in WW2?" or "harder than my grandfather who jumped on a freight train at the age of 16 to find work during the depression?"

As a millennial, your attitude doesn't help you one bit. You're still unemployed, or slaving away at short term jobs with no upward mobility--you've just never known any better. Maybe his attitude smacks of "entitlement" (what a dirty word!) but at least he had the opportunity to work in an America where companies had to care at least a little about their employees (because outsourcing and automation had yet to destroy opportunities for ordinary people). So who exactly is the sucker?

You might not hear those words from a millenial, but I’ve heard many millenials complaining that their philosophy degree didn’t get them a well-paying job, or that it’s unfair for employers to expect them to already know how to do a job before hiring them. It feels like a similar mentality, just under different circumstances. (I don’t really buy into the whole “if only they’d worked harder/been smarter/prepared themselves better, they wouldn’t be in this situation” story line, but I also believe that thinking of yourself as a victim is counterproductive.)

You say this as if the 20-something libertarian software engineer isn't just as pissed off when he gets screwed over on equity or stock options as is the 50-something manufacturing worker whose job has just been outsourced.

There is a interesting anti-correlation between this and Prop G.

Prop G will be a retroactive tax applied to anyone who bought a multi unit building in SF in the last few years who would sell it the next few years. Tenants have no problem pushing this bill stating that buying a building does not entitle you to a lifelong contract and that 'things can change' which will negatively effect you. So even though you bought a building a year ago with no hint it could be taxed at 25%, you are now expected to pay that tax if you sell.

Now, on the other hand we have tenants who are upset that they have to leave their homes they (wrongly) assumed they could rent in forever. Either this is from ellis, OMI or other eviction. I feel for these people to a extent- But I am not a believer in the whole "right to stay in your birth city forever" movement. I do not believe anyone has any more of a right to live in San Francisco than they do Malibu or Aspen. It is one of the most expensive metros in the US.

If you are a 90 year old grandmother who was counting on your landlord not evicting the whole building, you should have known that was a risky bet to begin with. If you want to stay in a place forever you should buy the home. Otherwise, you need to be prepared to move should situations change. You need to prepare for all 'disasters' - That could be eviction, fire, death, floods, etc.. If you dont prepare, I will be sorry for you- But I dont think that entitles legal protection either. If you lose your house from a fire with no insurance, you are going to bare that burden alone.

As a non american looking at this from the outside this whole rental/tenant control looks like legislated communism.

As opposed to what other sort of communism?

Also, note that "Prop G" is more or less the opposite of legislative, it's a ballot initiative, direct democracy.

> Also, note that "Prop G" is more or less the opposite of legislative

Legislative = law making. Prop G is more or less exactly legislative.

> it's a ballot initiative, direct democracy.

Yes, its a ballot initiative, which is a direct form of citizen exercise of legislative power (expressly, along with the power of referendum, reserved by the people in the otherwise-general assignment of legislative power to the State Legislature in Art. 4, Sec. 1 of the California State Constitution.)

I think I did okay understanding how the other poster was using the word, they were talking about a government assembly making laws, not about law making in general (why would anybody bother saying "law making communism" vs "communism"?).

If one is using "communism" as in actual Communist theory, then "government-assembly-directed-communism" doesn't make sense either -- that's, in that framework, socialism, communism is what you get after the state withers away.

If you are using "communism" in the usual sense anti-Communist speakers due -- referring to government structure typical of authoritarian regimes that have espouse Communism as an ideology -- then distinguishing "government-assembly-directed communism" vs. "communism" still doesn't make sense, as all such "communism" is, necessarily, directed by a government assembly.

So I don't think "legislative communism" makes much sense in any case.

Your last sentence was more or less my point, I just screwed it up with "more or less the opposite of legislative", which I admit is confused, but I was trying to say that the Prop wasn't being handed down by the government.

Three wolves and sheep voting on what's for dinner is also a direct democracy. Just saying ...

There's no endorsement of direct democracy in my post.

The reason for the double standard is obvious though: no once cares about rich people's problems. I say that slightly tongue-in-cheek, but there's a legitimate social problem here. Rents in SF could not grow so out of control without the income disparities also growing. Of course a city is not a closed population, so a good portion of the problem comes from rich people disproportionately moving to San Francisco, but even with that it's clear that on a national level income inequality is increasing in a very de-stabilizing way and SF is a microcosm of those dynamics.

Unlike previous economic booms of the 19th and 20th centuries, there is no mediating factors such as a massive need for human labor or a common cultural belief among the mega-wealthy in a moral duty towards philanthropy, or even just simple taxation. Automation is getting so sophisticated that these days a lot of productivity gains come from deploying capital to automate things (software being a part of this), and not only do all the gains accrue to the capital holders, but the gains are taxed much less than regular income.

So the deck is stacked heavily in favor of people coming in and flipping SF property for massive profits simply by virtue of holding the capital to be able to do so. The fact that they get one unannounced tax curveball thrown their way is not someone that remotely compares to someone choosing a profession and working their whole life only to find that rents quadrupled in a 5-year period. The answer is not "sorry buddy, you should have been a banker or a computer programmer, but I hear Modesto is still pretty reasonable"; there aren't enough such jobs to maintain a middle class that way.

>> there is no mediating factors such as a massive need for human labor or a common cultural belief among the mega-wealthy in a moral duty towards philanthropy, or even just simple taxation

Are you saying earnings in SF aren't taxed at usual CA rates, being highest in the nation? How could I get on this wonderful deal?

Also, I recently been to some places featuring walls and booklets listing people donating tens and thousands of hundreds of dollars to construction and maintenance of said places. If what you're saying is true, either these people aren't rich (and I wonder what "rich" means in your book then) or they did it of of some sinister motive which I'd like to ask you to explain to me.

>> a lot of productivity gains come from deploying capital to automate things (software being a part of this)

Despite popular belief, software doesn't write itself automatically. There are still some meatbags around clicking on those keys. Of course, you can automate manufacturing - but there's no significant manufacturing in Bay Area to automate anyway, and automation of services is still largely a dream.

>> So the deck is stacked heavily in favor of people coming in and flipping SF property

Last time I remember people trying to come and make living exclusively by flipping property without doing anything else ended up in what is called now Great Recession. I'm not sure that event can be treated as "stacked heavily in favor" of most of those who participated in the flipping. Of course, on higher levels (national-level banks) there were other games, but those didn't do property flipping.

>>> only to find that rents quadrupled in a 5-year period

If you tolerated quadrupling rents for 5 years, you're part of the problem - you're the one allowing to charge quadruple rents by paying it. 5 years is enough time to find other options. In fact, in 5 years you can learn a new language and move to a new country, not just find a job in the next city.

>>> there aren't enough such jobs to maintain a middle class that way.

But from this article we see there's no such jobs in SF either, it's just in Modesto if you're out of a job, your savings last you 3 years of rent, in SF they last you 3 months.

> Last time I remember people trying to come and make living exclusively by flipping property without doing anything else ended up in what is called now Great Recession.

Which was bad for lots of people, but not principally the people actually doing the flipping (some of them may have gotten caught in a bad position with two much sunk in inventory at the wrong time when the market crashed, but, generally -- OTOH, lots of people interested in flipping picked up property at discount prices due to the crash, too.)

Meh. The newer landlords will realize what the rest of us have know for years. You'd be crazy to be a landlord in SF.

Which, of course, is part of the problem.

Which is why massive new rental buildings are coming up? NEMA, One Rincon Hill Tower Two, etc.

Sure, eventually you get an equilibrium. Because nobody else wants to be a landlord you can charge so much that it's worth the aggravation. I wonder how many of these new units would be needed if people were more willing to rent out unoccupied units.

The problem isn't as acute for big companies. If you have 1000 renters you have a staff to deal with problem tenants. You have lawyers on retainer. You expect some number of tenants won't be paying rent at a given time, so you charge everyone else enough that you still make money.

The people who get screwed are the duplex and fourplex owners who wanted to use rental income to supplement their retirement.

Reminds me of that Yogi Berra quote "Nobody goes there anymore. It's too crowded."

So you're expecting rents to go down?

Rent control does not apply to new construction :)

"...tech growth in cities like Seattle has been the same to San Francisco relative to its size, but the rise in the cost of living is less than a third of that experienced in San Francisco. This is largely attributed to the city building more housing to meet demand."

This seems to be the root of the problem. So much of the blame gets put on tech companies or the rich getting richer, but no one blames the elected officials for not doing the right thing and allowing new housing to be built.

And yet this thread will be filled with tech employees shitting on those less fortunate than themselves.

And what tech ceo is showing up at city council meetings up and down the peninsula demanding more housing, or in any fucking way using the platform their job gives them to help even their own employees, let alone other people in their communities?

Ladies and gentlemen, DanBlake:

   If you are a 90 year old grandmother who was counting on your landlord not 
   evicting the whole building, you should have known that was a risky bet to 
   begin with. [1]

Yup. Fuck grannie -- why didn't she anticipate rental prices doubling in 5 years?

TheAceOfHearts:

   Why don't these people just move to more affordable places? [2]

Piss on off out of your community, family, job, network, etc etc etc.

DannyBee:

   Because people believe that once they've lived somewhere long enough, they 
   have a right to live there forever. [3]

Yup, it's a mystery why people living in sf don't like tech employees. It's literally stunning fyigm isn't more popular with the community!

[1] https://news.ycombinator.com/item?id=8495124

[2] https://news.ycombinator.com/item?id=8494967

[3] https://news.ycombinator.com/item?id=8495015

> And what tech ceo is showing up at city council meetings up and down the peninsula demanding more housing, or in any fucking way using the platform their job gives them to help even their own employees, let alone other people in their communities?

http://money.cnn.com/2010/02/18/technology/google_zoning/

Care to guess how that went? Tech CEOs are doing the jobs you proclaim them to not be.

> Yup. Fuck grannie -- why didn't she anticipate rental prices doubling in 5 years?

She didn't need to. She just needed to know that since she didn't own the property, she was at risk. That's the risk you take when you rent - you don't get the safety of owning.

This has been true for centuries. Don't treat it like a novelty.

> Piss on off out of your community, family, job, network, etc etc etc.

I don't know about you, but I've done this. Multiple times. It hasn't killed me. It's not always fun, but that's life.

Since you're here, I'll ask you - what do you think the correct and acceptable way for someone to move to and live in SF is?

One letter from google -- um, golf clap? Contrast that with what a company does when they actually want something. eg Twitter and their tax break [1]. They threaten to leave sf, testimony at the council, meetings with councilpeople, lobbying, etc.

But no no -- one letter means google is actively working for more housing.

My point is that they do try. It just doesn't get results. What would you have them do? Pick up, move, and crash the regional economy?

EDIT: If you look, you'll find that it comes up quite often. It's far from just one letter.

um, they don't actually try, and nothing you've found disproves that. But one letter was sent!

There's actually quite a lot of material out there about Google wanting to build more housing.

http://www.mv-voice.com/print/story/2012/07/13/google-housin...

http://www.mv-voice.com/news/2010/02/16/google-pressures-cit...

http://www.mv-voice.com/news/2008/06/18/google-hotel-falls-t...

And that's just one website. There's lots out there. It hasn't happened, but not because Google hasn't tried. What do you expect them to do?

The same amount of effort as when lobbying for something they actually want. As I said above. See eg twitter for tax breaks, or the $16m google spent lobbying the US alone in 2013 [1]. Or the ceo going to council meetings and being actively involved. Or any of a dozen things you could think of yourself that would demonstrate google actually investing some effort into housing. Or transport.

But no -- your links show they sent a letter. You even found a second article mentioning what appears to be the same letter from David Radcliffe. You've searched the local mountain view papers and there's three whole mentions of google "working" for more housing dating all the way back to 2008... but they sent a letter. (Note they couldn't even be bothered to send someone representing the company to show up to testify at the meeting regarding their letter.)

They're working overtime on this.

[1] https://www.opensecrets.org/lobby/clientsum.php?id=D00002200...

Just to be clear, your position is that Google should invest many millions into things that aren't business concerns at all for them. At a time when they get massive amounts of blowback for any attempt to be involved in local politics.

Is that right?

Just to be clear, you're now moving the goalposts -- I demonstrated your claim that google is involved is patent bullshit. Your claim about blowback is similar.

And yes, companies -- and the larger they are, the more so -- should be involved in the communities in which they and their employees are located. This is true for many, perhaps most, firms that aren't tech firms. And they often are! Go to eg council meetings or zoning board meetings or other local government meetings in eg nyc. For many people in the communities in which these large tech firms are located, they've had bad effects. Google has a responsibility to these communities that they are currently ducking. The tech community as a whole has a responsibility to the bay area the community is almost entirely skipping out on. Being proactive about housing and transport would be helpful to both the employees and other residents of the communities.

I'd say the tech community is obliged to return that care which is shown for them. At a time when "Die techie scum" is a rallying cry, be thankful apathy is all you get.

quod erat demonstrandum

Seattle has 3X the land mass of San Francisco, but yeah, they also do build a lot more housing.

Also, Seattle Metro has buildable land much closer than Livermore, Brentwood, and Morgan Hill.

People are concerned about "Manhattanization". That SF will become a "big city" and lose its "cultural charm", if zoning rules are relaxed and taller buildings are built outside the main valley that runs from FiDi to the Misdion.

Well, you know what's worse than Manhattan? Miami Beach. That's where SF is headed, if this jingoism keeps up. You can't fight a mass of rich people who want to live in your town: you can only contain them.

Build, baby, build.

The housing problem is real. The suppliers/property owners know there is a lack of supply, so now they're just getting greedy.

Three hours ago this unit was $1600. It was updated to $1800. http://sfbay.craigslist.org/sfc/apa/4726648527.html

It doesn't even have a kitchen. It's just a room with a toilet - at nearly $10 per sq. ft.

That is just beyond ridiculous. A small room you can't even sleep in (mentions excessive noise SEVERAL times) for almost $40,000/yr pre-tax all-in. Why people move there is beyond me...

Why don't these people just move to more affordable places?

Ok. Where?

If you're looking for affordable housing, it would probably be wise to look anywhere other than SF:

http://www.businessinsider.com/san-francisco-is-more-expensi...

The East Bay is only a 45 min BART ride away from downtown, and considerably cheaper.

Only coming from personal experience, that $1737 number for a 1bed in Chicago is very high and makes me question the rest of their numbers.

Currently living in Seattle and their numbers seem pretty spot on anecdotally for what people are paying now, though a few of my friends are looking and they have found nothing under $2500 for a 2 bedroom. Seattle I think is going to be a city to watch closely the next few years for similar types of housing strife we see in SF. Once all the Amazon construction is complete it's going to get awfully crowded awfully fast.

How does a homeless person afford the travel to a "more affordable" place? (What does more affordable mean when they have no money?)

Where do the nurses, teachers, security guards, waiters, shop assistants etc etc live?

Well, the first guy profiled could've used his "his savings and his investments" and his "daughter's college fund" to move instead of spending it all on rent. Downsizing is a pretty common occurrence in most parts of the country, but in SF there's really not much to downsize to.

If you're connected to the community you live in (coaching, etc), your child's doing well in a good school, it becomes easy to extend yourself "one more week" in order to maintain that, hoping things will change - and then past the "oh shit" moment you realize you're past the point of effectively affording to move and restart life. Plus, in 2009, i don't think there were places to move to to get an easy job. The guy did apply to 800 places...

I don't know how the homeless travel, but they do. After all, they get to SF somehow.

One example -> the city of San Francisco offers bus tickets home for homeless people who have relatives or friends in another town who are willing to take them in. The program is called "Homeward Bound."

Source: http://www.sfhsa.org/79.htm

Because they have roots and history in SF and the valley. They've got friends, family, and memories there. It's hard to give up your home.

It's those tech upstarts that're causing all the trouble; Moving there en-masse, with their strange ways and disrespect for the local culture. Always trying to "disrupt"; they're obviously troublemakers!

Really, it's no different from casual racism, but you've got to understand the roots: Fear of the unknown is a powerful motivating factor for most people.

>with their strange ways and disrespect for the local culture. Always trying to "disrupt"; they're obviously troublemakers!

This is a straw man. It's the "tech upstarts" money and their willingness to spend it like water that's disruptive, and not because it makes them "troublemakers" but because it makes local rents rise to multiples of what they were before. It's very much different than casual racism.

edit: it's very silly and reality TV drama to think of this as a personality conflict. It's a rent going from $2K to $5K in 5 years conflict.

The attitude is little different. How dare those outgroup people challenge the way things are done!

Because people believe that once they've lived somewhere long enough, they have a right to live there forever.

There are a lot of issues with this article. It talks about the Ellis act as if it isn't standard in every other part of the country.

(in fact, the only thing non-standard is the state of the world pre-ellis act, where landlords in california could never evict people and decide to stop being landlords)

The Ellis Act is kind of fucked up, dude. It's _not_ standard in every other part of the country. It pegs the buyout price of a unit by law, and hasn't been increased in quite a while.

Compare to how it works in Brooklyn:

If your landlord wants to evict you without cause, they must purchase your lease from you at a price which you can negotiate. It's much more difficult (and can be costlier) to evict you _for_ cause here. In a gentrifying area, tenants have been known to negotiate lease buyouts at upwards of six figures - and there have been some lease buyouts in the $MM range.

> never evict people and decide to stop being landlords

This is a pretty huge misconception. It's evicting people _in order to_ stop being landlords. E.g., converting a rental building to condos or single-family housing. It's a cheap way to cash in on skyrocketing real estate: the most you'll ever pay to evict someone is $18,000 a unit.

In most sane places, if a landlord wants to go out of business / quit being a landlord, they must sell the property to another landlord. They can't just say "oops, you guys need to all leave now!" For good reasons.

Even red states like NC have pretty strict restrictions on when you can evict a tenant, and "'Cause I'm shutting down the LLC" is never one of them.

NC has a restriction on evicting a tenant at the end of a lease term? It has mandatory lease renewal?

So what happens when the company that owns the property goes bankrupt because, say, it can't raise rents? Does the state step in and buy the property so everyone can live there?

If the company goes bankrupt then the building is probably put up for sale, and could get sold to a developer rather than another landlord right?

Seems like a fairly straightforward end-run around the law. You go bankrupt in your building and I'll buy it at auction for some price, and the reverse.

Unintended consequences are everywhere as a result of laws like this.

> So what happens when the company that owns the property goes bankrupt because, say, it can't raise rents?

The building becomes foreclosed and bank-owned, or is sold to a new landlord.

Most landlords can raise rent. Less than 2.8% of units are controlled, though 48.6% of units are stabilized. Only 31.9% of units in this city are not regulated - and landlords tend to do pretty well here. Occasionally you'll read about a shitty one that ruins their tenants' apartments to try and force them out instead of buying their leases, but that doesn't happen very much anymore -- and when it does, the city stomps on their necks.

Rent control is almost entirely phased out. When one becomes vacant, it becomes rent stabilized - or is removed from the program entirely.

Rent stabilization is much more common, and has some limitations: the amount the landlord _may_ increase the rent is limited per year; if a unit becomes vacant, the landlord may raise the rent by a larger percentage; if the landlord renovates / improves the unit, they may raise the rent by a number based on the cost of renovation. Renovation typically only happens during vacancy.

A unit becomes deregulated once rent becomes higher than $2,500 and either 1) becomes vacant or 2) the adjusted household income of the tenant is over $200,000/yr for two consecutive years.

Stabilization entitles the tenant, in good standing, to lease renewal (in other words, landlord can't kick you out unless you break the terms of the lease).

Some landlords voluntarily put units under stabilization, in return for a break on their property taxes.

> If the company goes bankrupt then the building is probably put up for sale, and could get sold to a developer rather than another landlord right?

Yes. However, the developer would then gain the responsibilities of being a landlord and could not evict tenants that are in good standing. The stabilized/controlled status of each unit stays with the unit, and is not determined by who owns the building. Units exit the program based on vacancy, legally raised rent level, and tenant income. New units enter into the program when landlords decide to get property tax breaks when they build new properties.

> Seems like a fairly straightforward end-run around the law. You go bankrupt in your building and I'll buy it at auction for some price, and the reverse.

Why, when you could just sell the building to another landlord/capital investment firm for 120% of what you bought it for two years ago? ;) A lot less risky, considering you don't need to go through bankruptcy court and the whole several-years-in-jail-for-fraud thing.

It's a pretty good system. Sometimes it screws the landlords. But it almost never screws the tenants.

Which is kind of the opposite of the Ellis Act, it seems: it gives landlords carte blanche to screw the bejesus out of their tenants as soon as the market winds blow their way.

Don't get me wrong: we definitely have a housing crisis here as well. Some neighborhoods have seen (because units have vacancies often - some people move every freaking year in this city) rent increases from 600sq ft @ $800/mo to 600sq ft @ $2100/mo in a matter of five years.

Of course, the smart tenants in those neighborhoods haven't moved, and are only paying $900/mo.

Either way, landlords interested in purchasing a building know how much each lease is for. They know the stabilization status of a unit. And many of them purchased the buildings they own decades ago for less than 10% of the current market price. It's not like they get surprised by the regulation status on the units they own.

Those are some really foreign concepts to me, but OK. Thanks for explaining!

Given all that the SF rent wars make a lot more sense.

I don't think the Ellis Act allows you to break a lease. It just allows the owner to not have to conform to certain aspects of the rent control law. In most places that aren't rent controlled the leasee doesn't have the option for perpetual renewal in the contract. If the leasee meets all of the stipulations of the contract then he is entitled to live there until his lease expires. The landlord is obligated to perform certain services in regard to the lease and entitled to rent as long as he performs those services. Seems to work everywhere else without the problems listed in the article.

It allows landlords a way to go out of business without selling the property they own.

It's often used to evict tenants who live in units that are regulated.

SF requires a compensation of $5,153 to $18,000 per tenant evicted.

NYC requires that tenants not be evicted unless they have violated provisions of their lease. If the landlord wants a tenant to move out, they can _buy_ the tenant out, at a price the tenant agrees to. If they want to stop being a landlord, they have to sell the building to someone who is willing to be a landlord. This effectively prevents tenants from being screwed with their pants down by their landlords.

Occasionally an asshole landlord will go through one of their buildings while the tenants are away and, say, rip up all the floors. As a nasty way to try and get their tenants to move out so they can renovate and flip the building.

But those guys typically end up in jail.

The reason it tends to work out fine in other places, is because other places are sane about allowing developers to build new units. SF ... not so much.

I am confused. Is the landlord evicting them in the middle of their lease. Example: Landlord signs year long lease with tenant and then evicts tenant mid lease to sell property or are they not renewing the lease at the end of the year when lease contract expires.

"In most sane places, if a landlord wants to go out of business / quit being a landlord, they must sell the property to another landlord. "

Actually no. This is not really true.

There are plenty of states/places where you can simply evict the tenants at some prorated rate, and then go about your life. You mention it yourself a few paragraphs up.

Additionally, for the specific case of condo conversions, which is the largest claim of ellis act "violations", most states are friendlier than you claim.

Let's take maryland (A state I am barred in, so very familiar with property law for): http://www.peoples-law.org/conversion-condominium-ownership

You get 180 days, an offer to purchase the unit at the same price as the best price the unit gets offered for in the next 180 days, and moving expenses. That's it.

"Even red states like NC have pretty strict restrictions on when you can evict a tenant, and "'Cause I'm shutting down the LLC" is never one of them."

Source? AFAIK, this is completely incorrect for "most states"

Other parts of the country don't need an Ellis Act type framework. Most places, you can evict tenants when their lease is up.

Why don't people in the bay area allow cheap housing to be built in their community? Why can't we have giant apartment complexes in the bay area?

Any or all of (a) because it keeps housing prices high, working to the advantage of those who own property; (b) because low density is easy to tie into environmental/quality of life concerns; (c) because the culture is deeply distrustful of market-based solutions, such as market-rate housing.

It's not exactly that straight forward...

As mentioned in the article, many who work full time in SF can't afford to live in the city. "Affordable places" generally means far east or south of their workplace, meaning that they have to spend an enormous amount of money and time commuting to their jobs. With time and money being a finite resource [for most], the commute time comes at the cost of family time and the cost of transportation comes out of their meager earnings (a fact that, if you live in SF or work at a company that provides a private bus, take for granted). Living outside of the city is still unaffordable for many people because of these costs.

The real problem is the scarcity of overall housing resources. With the boom in tech drawing more and more people into SF, it's only going to become more of an issue unless building picks up significantly. This is also true of salaries, which will have to increase in order for companies to hire people who can afford to live here, further driving a wedge between those who can and those who cannot live here.

> Why don't these people just move to more affordable places?

It's not a viable solution to just "go somewhere more affordable" when you don't have the money to leave and there are no jobs where housing is more affordable. What you save in housing costs would be eaten up or exceeded by the cost of just getting to a job.

If you're rich, moving is always an option. If you're not rich or have no financial cushion, you are well and truly stuck.

I just went through a bout of homelessness. What money I did have, I had to spend on gas, food and minimal rent to stay in the area, because the option was going back home where the high-paying job is Walmart or a prison.

And by high-paying, I mean around $28K a year, if you're lucky.

>It's not a viable solution to just "go somewhere more affordable" when you don't have the money to leave and there are no jobs where housing is more affordable. What you save in housing costs would be eaten up or exceeded by the cost of just getting to a job.

This just doesn't make any sense to me.

So, you're homeless and jobless. You're saying I shouldn't somewhere else because 'it's too expensive to find a job'?

These people have an emotional attachment to SF, I get that and absolutely sympathize. The reality is there are many, many jobs in the Bay Area and plenty of them are close to affordable housing. Additionally, if they want to spend time downtown, most places in the bay are no more than an hour via public transport.

I think what the parent was saying was that you literally can't afford to go elsewhere to find a job. When you don't have money to pay your rent, you likely don't have the money to:

- Pay for airfare and a hotel to go out for a job interview (these types of jobs aren't flying you out and putting you in a hotel)

- Have living expenses to cover you for the time it takes to find a new job in the area (the types of jobs we're talking about here don't give you a relocation allowance)

- Rent a truck and gas to move a long distance (certainly not to pay a moving company)

- Pay first and last months rent and deposit

Moving is often "free" for the types of jobs the typical HN reader would have, the company trying to recruit you would pay all of the above. These aren't the types of jobs people discussed in the article have or can get. They are effectively stuck unless they take a huge, potentially even more devastating risk, or are fortunate enough to have some sort of a support network where they are hoping to move to, like family or good friends willing to let you couch surf for a while.

Thousands of years ago a Chinese gentleman wrote "The wise man must be prepared to abandon his luggage". Still true. Most of the behaviors discussed are 'conservative' meaning they try to keep what little you have and risk nothing. Its often an alternative to just 'get up and go', risking all. You can eat at the Salvation Army, stay with a friend or sleep in the park in a tent. I've known now-successful Engineers that moved to Silicon Valley with their wife and 6mo old child, slept in the national park in a tent while interviewing.

Because cost are going up across the board throughout the Bay Area, and the transportation infrastructure - both automotive and otherwise - hasn't kept up.

Moving further means increased commuting cost. For drivers this comes in the form of massively increased fuel costs. For transit users this comes in the form of increased fares, since BART practices distance-based pricing.

Commuting daily from Fremont to SF costs $12, that's over 1h of minimum wage. Imagine if you had to pay 10-15% of your total income (pre-tax!) just to get to work. More if you're unable to get a full 8h of work a day.

Moving further also means a large reduction in disposal free time. Free time is a bit of a misnomer when it comes to the poor though - since the time isn't actually free. The article touches on this at a few points - the working poor require a lot of government subsidies and aid organizations for survival, all of which takes time, and most of which are located in SF.

One of the key inhibitors in helping people out of homelessness is, to be simplistic, lining up for things. The basic services they need to survive have huge lines to access them, making a large proportion of their lives idling in a waiting room, waiting for one necessary thing after another. Imagine the DMV, but every day, and multiple times a day.

All of this exacerbated by living far away. Not only are you waiting around forever for basic things, you're now spending more time to get there in the first place.

Even to a rational, completely-informed actor (an unsafe assumption, to say the least), the economics of living further away may not actually work.

I don't think they mean move to a place more affordable out side of SF, but move away from SF to another part of the country.

Where though? At the end we're really talking about arbitrage. Places with jobs are expensive to live in, places that are cheap to live in don't have jobs.

There's no way to win, except maybe temporarily exploiting an arbitrage opportunity (i.e., a place with jobs but the cost of living hasn't caught up yet). Expecting people to do this is unreliable at an individual level, and disastrous as public policy.

Ultimately the only mid- to long-term solution is to help make job centers cheaper to live in.

There are many affordable and large and fast growing cities with great pay. Dallas, Houston, Boise, and SLC to name a few.

I think you're reading more into his comment than what was intended. He didn't ask, "Why don't these people just move to more affordable places and still work in San Francisco?"

I live in SF and I find it to be a really nice place, but if I was making minimum wage or anywhere near it, I'd never choose to live here. Those kinds of jobs are available in other parts of the country.

And long commutes mean you're very exposed to gas prices. When our next little middle east adventure starts, or isis wins in iraq, or putin uses oil prices to negotiate with the EU, or whatever it is, the same folks whose FYIGM attitude means people who can't handle their housing prices doubling in 5 years have to leave -- will be saying, "They should have known not to get a long commute and expose themselves to gas prices like that."

Many may interpret this as victim blaming but I think it's a valid question: why have we as a country/culture become so much more resistant to moving? I know I've read more comprehensive literature on this before a but a quick google brought up these starting points:

http://www.slate.com/blogs/moneybox/2013/05/11/declining_ame...

http://www.theatlantic.com/business/archive/2012/03/generati...

I understand that we develop local support networks of friends and family and it's easy to understand why moving comes with the fear of having to start in a new place with no such network. But it seems that this fear has become limiting - that we are now refusing to relocate to places where greater opportunity exists because we can't stand the thought of leaving our current network behind. We're stuck, effectively. And it exacerbates the conditions in places like SF.

it seems that this fear has become limiting

A network of friends and family for such things as childcare and temporary accomodation is worth dollars. If you can leave your son/daughter with their grandmother while at work or can find a couch at a friend's house while between jobs you can put up with lower local wages. To move elsewhere, the new job would have to pay enough for childcare and to allow to build a cushion of savings.

A sympathetic ear and a can of beers is also worth a lot. Often, on this board, we read of burnout and nervous breakdowns.

The decision not to move doesn't seem to come from fear, on the contrary, it's rational, elsewhere life isn't going to be better, and very possibly worse. At the low end of the wage spectrum there is no opportunity left anywhere in the nation.

All this is true, and very understandable. But the question remains, why is it NOW more common to stay put rather than relocate? What is it about the modern environment that makes people so much more reluctant to pick up and move? With all the benefits of modern communication and technology that makes maintaining social connections over distances and receiving financial support from anywhere so easy, you'd think it'd be easier to move than before when leaving really meant "leaving."

Families used to live together, so when you moved to a new city, grandma came with you. What's new is splitting a household into many households, such that "leaving" is actually possible.

places where greater opportunity exists

like where? You might as well ask why tech companies don't set up elsewhere and start their own little versions of Silicon Valley instead of spending $$$ to headquarter in SF.

I actually do ask that. Pretty regularly. It was pretty shitty that I had to move to another country 2000 miles away just to find employment, when anywhere with internet is more than capable of employing me. And back home I had 250 down/50 up for $75/mo, so clearly that's not the blocker

Most people don't require the startup connections and capital of SV; they just want to survive and do their job, not start a speculative business venture.

Working as a firefighter/waiter/mechanic/nurse is roughly the same in the Bay as it is in (say) Oklahoma, but prices of living are proportionally much more favourable.

North Dakota? http://www.aei-ideas.org/wp-content/uploads/2014/10/walmart.... [1]

Don't know how the prices are there but doubtfully it's worse than in SF, and the pay seems to be about double of what the same pays in SF.

[1] http://www.aei-ideas.org/2014/10/north-dakota-sets-more-oil-...

I personally seriously don't get it. I mean, the article describes a guy who is out of job, fails to find a job anywhere around after multiple attempts, but it still adamant on remaining in a city where, for example, I - being fully employed and pretty handsomely paid professional - would not live because prices there are freaking insane. Why? I'm not even saying move to Arizona desert or something - but even moving to San Jose - which is not exactly the middle of nowhere either - would be cheaper. And moving further from the epicenter of crazy would make it even better. I mean, I get it if you have to commute to a job, or want to keep close to an active job market. But for that poor person, there's no job market to talk about in SF. Why he insisted on staying in SF and spending all his savings on his landlord, and after getting that wonderful deal and losing all his money - still wanting more of it? Please explain it to me, I can't understand it. I, personally, wouldn't want to live in SF, for a number of reasons, but I get it when some people do. There's a lot of nice things in the city (not like a short BART ride wouldn't get you there... but I digress) but if it just doesn't make sense for you to live there and you can't afford any of the nice things anyway and it brings you only suffering - why?

Twoo things come directly to mind.

1- every place here requires first and last months rent as a security deposit at a minimum. Even I a "cheap" place that's a lot of cash when you don't have a job.

2- credit/background checks make it unlikely that he would ever be approved by a landlord.

True, upfront costs is a huge problem. Credits may be less so, I've rented with literally no credit at all - just came to the US - and I've seen landlords not checking credit at all. Not all of them but some. After all, credit score doesn't guarantee I won't lose my job tomorrow and stop paying. For upfront costs, it is a big hurdle. But staying in most expensive place in the area doesn't make it any better.

Why don't these people just move to more affordable places?

In many cases, they are: most often to Sunbelt cities like Dallas, Houston, and Phoenix, which are the fastest growing in percentage terms in the nation (See Matt Yglesias at http://www.slate.com/blogs/moneybox/2012/06/14/in_the_future... or http://www.slate.com/blogs/moneybox/2013/05/23/fastest_growi...).

Yglesias also details some of this in The Rent Is Too Damn High (http://www.amazon.com/dp/B0078XGJXO?ie=UTF8&tag=thstsst-20&l... -- a must read on these issues, and I usually post a link when discussions like this one arise).

Anyway, lots of cities have dysfunctional political and legal systems that prevent the supply of housing from growing. San Francisco's problems are particularly acute: http://www.citylab.com/housing/2013/10/san-francisco-exodus/... and are exacerbated by rent control, which discourages owners from even utilizing existing space.

So, we got political deadlock in a way that constrains new housing addition.

Why is the law not being changed?

Because they don't want it changed. Is it that hard to imagine that there's a subset of SF residents that don't want new housing built?

It's trivially easy. Just think of all the debates we've had over gentrification in Nob Hill or Pac Heights.

Oh wait. We haven't had any.

Because these are the enclaves of people with so much wealth that even the techies can't afford to move in.

Because the people with political clout are the ones that benefit from the housing shortage.

You could be an owner, in which case the skyrocketing value of your property is something you'd like to defend.

Or you could be a high-income renter, in which case you're willing and able to pay the sums necessary to live in a neighborhood of quaint, charming 3-story buildings, damn the consequences to people around you. This would be the "neighborhood character" argument.

Both demographics have a lot more sway at City Hall than the working poor.

What I find sad are the number of working poor who are fighting for neighborhood "preservation", since said preservation serves nothing except helping the rich live in a theme park of a 1930s emulation, a theme park that explicitly excludes themselves.

It's simple:

Roaring economy, NIMBYism, affordable housing -- pick two.

SF has picked roaring economy and NIMBYism.

I was the person who wrote that super-long take on the San Francisco housing crisis in spring on TechCrunch. http://www.techcrunch.com/2014/04/14/sf-housing/

I'll just say this. It's four issues compounded.

1) Growth controls enacted in the 1960s and 1970s: Beginning in the late 1960s, the California Supreme Court started making a series of anti-development rulings: for example, one decision ruled that cities didn't have to compensate property owners for down-zoning their property, which reduces its value. This, of course, reduced financial risks for city governments that wanted to downzone massive tracts of land in their territory.

At the same time, cities across the Bay began enacting growth controls. Petaluma was the first in 1972, with an ordinance that restricted the number of houses that could be built per year to 500. (Economic studies comparing Petaluma with adjacent cities showed that its property prices rose at a faster pace than cities w/out growth control.)

Anti-growth measures began being widely adopted across the entire region. The behavior of California home prices started deviating from nationwide norms around 1975 or so. The problem became especially acute by the late 1970s, and so homeowners and tenants gave themselves a very sweet deal by effectively freezing their property taxes and rents via Prop. 13 and rent control. This insulated a majority of voters in cities like San Francisco from having to make tough decisions about in-fill development to match population growth. At this point, the mismatch is so out of whack and land is so valuable in San Francisco, that building a lot more housing probably wouldn't make it affordable to, say, a teacher salary level. Construction costs are $500,000 per unit, so your base price has to be at least that.

2) A byproduct of tech-dependent economic development strategy happens to be a lot of income inequality. I haven't seen a good solution to this. After manufacturing jobs dissipated from the U.S., a handful of cities like New York, Boston and San Francisco were successful at reviving themselves through a route of attracting highly-skilled, high-income workers. A consequence of this is a barbell-like jobs market where you have highly compensated workers in finance and tech on one side, and a whole cohort of service workers on the other. I've seen this wherever I travel. I went to Tel Aviv, which is arguably more dependent on tech than San Francisco with 10-11 percent of the workforce in the industry versus 6.7 percent here. Same issues with income inequality, inclusiveness and diversity.

3) Globalization of capital flows. Real estate used to be more of a local business, but now a lot of local firms have been swallowed up by REITS, which don't have any connection to the local community. At the same time, the Chinese property market is collapsing, sending flows of homebuyers and their cash over here. These are people who may not intend to actually live in the Bay Area, yet they buy up homes without even seeing them. The city doesn't know how to police this. How would you build a law or tax around regulating this behavior? New York may attempt a pied-a-terre tax, but no one really knows how to deal with this issue of vacant housing units held as investments. Technologically, it's easy to track who is doing what where at all times. But legally, there are a lot of issues around privacy with policing this if foreign buyers are taking up 1/3 of the new housing stock as investments.

Similarly in the venture world, while overall VC funds being raised is lower than what it was during the first dot-com bubble, according to the NVCA, there's a lot of PE and foreign investment that I don't think is calculated into the overall numbers.

4) Last is the lack of regional coordination. New York is 8.4 million people under one government. London is also 8.4 million people under one government. The Bay Area is 7 million people under 101 city governments and 10 bus and rail systems. There have been numerous attempts to consolidate power over the last century, but all have failed. The California state Constitution also deeply empowers its city governments compared to other states. So what happens is the rich cities don't build any housing, because they like their property values and don't like traffic congestion, or to crowd their schools. This drives prices up in the suburbs to a point where, on balance, urban environments look more attractive -- not just because of changing tastes, but also because they're not that much more expensive than the South Bay. So young people end up crowding into these poorer disinvested neighborhoods like the Mission or Oakland, which then displaces minorities and the elderly far out into the exurbs or even Central California.

> The city doesn't know how to police this. How would you build a law or tax around regulating this behavior? New York may attempt a pied-a-terre tax, but no one really knows how to deal with this issue of vacant housing units held as investments. Technologically, it's easy to track who is doing what where at all times. But legally, there are a lot of issues around privacy with policing this if foreign buyers are taking up 1/3 of the new housing stock as investments.

As someone who seems to know way more about this than I do: what about a land value tax? I've heard a few urbanists talk about a land value tax as an incentive not to withhold properties from the market. The reasoning is that with a property tax, if you leave property undeveloped, it will have a low property value and your tax rates will be low. But with a land value tax, the value (and consequently the tax rate) is a function of the value of that location, which in turn is a function of density, nearby amenities, demand, transit connectivity, etc. With a land value tax, someone keeping a property off the market in SF would be paying increasingly large amounts of tax on it, as the value of the land goes up along with the development nearby.

Do you have thoughts on this?

It would have to be a statewide ballot proposition, and you'd be up against the entire real estate industry, which has large parts of the California State Legislature in its hands. They would spend enormous amounts of money to mis-market it in poor political advertising.

Perversely, two-thirds of the financial benefits of Prop. 13 and its tax freeze went to commercial interests even though it was sold as a way to keep homeowners in their homes. One only-third of its foregone revenues benefit homeowners. A lot of California policymakers have wanted to change this for years, since it really screwed with public school and city finances for decades.

> These are people who may not intend to actually live in the Bay Area, yet they buy up homes without even seeing them.

A higher property tax with a "homestead exemption", i.e. for those who live in the property they own, would serve to counter-act absentee owners.

As you sort of allude to, the tax structure and Prop 13 incentive is to buy and hold, regardless of occupancy.

Right, but how do you prove that?

That is the dilemma all these prospective piece of legislation in Vancouver, NYC are running up against? What would you do? How would you enforce it?

Water bills? Electricity? Which you could fake.

Phone presence?

A rebate program, which no one would vote for anyway.

Occasional random door-to-door checks? (Miss too many, and you lose your local-resident exemption.)

I'm sure voters would vote for that.

Any additional property tax in any city in the state of California has to go before a vote of the affected property owners per Prop. 218, passed in 1996. God bless our direct democracy system. http://en.wikipedia.org/wiki/California_Proposition_218_(199...

A land value tax isn't a property tax, so no problem there.

If it lowers voters' taxes, but increases costs on faraway non-residents/non-voters... isn't that exactly what voters like?

Also, the Legislative Analyst's Office says Prop 218/1996 doesn't affect property taxes, but rather other kinds of property fees. See http://www.lao.ca.gov/1996/120196_prop_218/understanding_pro... – especially figure 2.

Clearly, fixes are going to have to unwind previous statewide and local law... which means convincing people of the causes and solutions, over time. It took decades to enact the bad policies; it'll take many election cycles to chip away at them as well.

Similar to the way deductions are enforced on income tax, i.e. self-reporting and it is a crime to lie about it (essentially the same way that mortgage interest on primary residence is deducted, etc).

Coupled with the fact that you can only have one primary residence at a time.

Won't be perfect, but I'm not sure it needs to be.

Here's a question for you: REITs dehumanize and perhaps volatilize real estate markets. Do their benefits outweigh their costs? And if so, what are those benefits? Is it legitimate public policy in a system that ostensible has free markets as a principle to suppress or otherwise regulate REITs?

Benefit: REITs commoditize the real estate market. If you're just a regular joe and you want to invest in stock or gold or pork bellies, a reasonably small investment is enough to get you started. Trying to buy into real estate is nigh impossible, though, unless you pool money because the "unit" price is so high.

Umm Pork Bellies would be nearly impossible to invest in for an average investor even before they stopped being exchange traded commodities. The margin requirements alone are on the order of real estate investments, not to mention the contract prices.

Initial margin for pork bellies was around $2000, which is hardly on the order of most real estate investments. Anyway, it was just metonymy.

On which exchange?

Well, it's hard to find exact numbers now, but with a daily price limit of 0.03 on a contract of 40000, that's $1200. Figure double for initial margin.

I mean, even if you were to take delivery (!!!), pork bellies traded for less than $1 per pound, so you could buy it outright for less than many real estate deals.

Oh, here, found a number: $1620 for CME. http://www.investopedia.com/university/commodities/commoditi...

One founder told me that a decent personal investment strategy of his was to be a forever-renter and invest in REITs instead. That way you get the financial upside of homeownership but more diversification instead of having all your equity locked up in a single asset. It sort fits the changing profile of this generation, which is more mobile and doesn't want to own cars or huge assets.

On the other side, while I personally don't know enough about the behavior of REITs across the entire country, I can tell you that Sam Zell's Equity Residential is causing huge problems for the Latino and black community of East Palo Alto, which is adjacent to the Facebook campus. They're getting hundreds of eviction notices per month, which the community lawyers have to fight off.

Serious slow clap appreciation for the TC article and this comment. Thank you.

Curious what you think of this chart of home prices showing Los Angeles, San Diego, and San Francisco moving almost in lock step: https://pbs.twimg.com/media/BolI6BiIMAAgpWT.png

To me it seems like this seem would to imply statewide factors exert more influence than local ones (tech jobs, city zoning, etc).

That's not the right chart. The rest of the country probably looks somewhat similar.

If you were to take historical data, California home prices were 27 percent higher than the U.S. median in 1960, then 35 percent higher in 1970. But by 1980, they were 79 percent higher, and then by 1990, they were 147 percent higher. (Fischel, 1995) http://www.hup.harvard.edu/catalog.php?isbn=9780674753884

In the early 1960s, California accounted for one-fifth of the housing permits issued in the entire United States. But this pro-development orientation shifted once the available flatlands in the Los Angeles Basin and the rest of the Bay Area got built out to the hills. It transformed the politics of all the suburbs toward growth control, as residents started fearing that multi-unit dwellings would start encroaching on their single-family homes and bringing poorer people (read: minorities).

Today, California is this: http://www.nytimes.com/2014/09/24/us/a-california-dream-not-...

It's more extreme in SF because we have water on all three sides, and are largely built out. There are only maybe 37,000 market-rate housing units too. The city has created 70,000 new jobs since Jan. 2010 and added roughly 10K residents per year since then. So, yeah, that's why we have the most expensive median market-rate rents in the nation.

Btw, the comparison to NYC isn't really accurate because you're comparing SF against all of NYC. Manhattan alone is probably more of an apples-to-apples comparison.

Not sure what NYC comparison you're referring to.

The chart was simply an observation that SF isn't "pulling away" from Los Angeles and San Diego, since their percentage movements are very similar. I.e., if there were something unique to SF that significantly affected prices (crazy laws, etc) it would follow that prices should rise faster than in other big California coastal cities.

The city doesn't know how to police this [absentee ownership].

The world wants to pay our property taxes, but use a negligible amount of our local services? That doesn't require policing – just wise exploitation.

Allow as much high-density luxury housing as possible. (Let the world pay us to build and hold!)

But then also, make it easier for absentee owners to casually lease out their holdings, so the marginal incentives are to open vacant units up to residents or tourists.

The world wanting to move-to, visit, or even just invest-in your jurisdiction only becomes a problem, rather than a boon, with stubborn mismanagement.

Our property taxes stay relatively constant via Prop. 13, while price appreciation is great given all the growth control.

We do not make it easy for absentee owners to "casually lease" out their holdings. Our tenant laws are some of the more stringent in the entire country and if we were to relax them, all the longtime middle or low-income residents protected by them would might washed out immediately. Furthermore, it just wouldn't happen politically because no one would vote for it. We are a city of 2/3s renters.

Yes, the mismanagement is popular with the incumbent renters (and many property-owners). But people need to understand the potential fixes, even if the best fixes look politically impossible in the short term. As the pain of the current mismanagement increases, big changes will become thinkable. The current setup isn't even that good for all renters (and potential renters) – just a tenured subset.

Maybe absentee landlords (and businesses and holding companies) shouldn't get Prop 13 tax protection. Maybe when the effective tax basis (Prop-13-limited) is wildly out of whack, the yearly increase should be higher than 1%, as a catch-up. (Same with rent control.)

Maybe new tenants, in new construction, should be under a different regime (like how newer construction skips rent control), to enable healthier turnover while 'grandfathering' in the (dwindling) lower-income population.

Your writing has been excellent on causes, but fairly quick to cut short discussion of possible solutions because of current political taboos. But a deeper discussion of unpopular options – that would in fact work very well – is the only way to fix that unpopularity.

To those people who believe this is the fault of tech - I have a question.

What is the ethical way to move to San Francisco? Or anywhere in the Bay? What do you think is a good solution to this, beyond some variant on tech people owing undefined amounts of money to everyone else?

I don't live in the US so my view is purely that of an outsider reading about this on HN over the last few years.

My problem is this: a lot of tech companies, based outside San Francisco go out of their way to make it easy for employees to live in SF and get to work outside of it. This is bad for the people who have lived there for a long time as they can't compete with the money the tech industry brings to the market. If your job is in SF I think it's perfectly fine to live there no matter what industry it's in. But taking space and driving up the price of space that could be used by someone who NEEDS to live there (e.g. a local butcher/hairdresser/convenience store owner) when you don't is unethical in my opinion. Not to mention that if those people can't live in the city and close down or move their businesses your life there won't be as good. It's not illegal and like all ethical questions the answer will differ from person to person but that's what I think about it.

Edit:

Of course the problem is the mindset of a lot of tech people (evident in this thread). They think logically and love 'the free market'. They're also predominantly young. They don't understand living in a place for 30/40 years and being forced out. They seem to ignore the emotions involved or feel they are irrelevant.

> My problem is this: a lot of tech companies, based outside San Francisco go out of their way to make it easy for employees to live in SF and get to work outside of it.

This is not accurate, for two reasons.

First off: Many of the peninsula cities (where these tech companies are located) make it even harder to build housing, especially for immigrants. Most of the housing in cities like PA and MV are single family homes that cost upwards of seven figures. You can't even afford that on your average tech salary; the only reason the people living there can afford it is because they moved in before the prices rose so much.

The second, something I only learned recently, as of Sept 30th of this year, companies in the Bay Area with over 50 employees are legally required to either subsidize public transit for their employees, or provide their own (source: https://commuterbenefits.511.org/). Painting Google busses as "going out of their way to make it easy for employees to live in SF" is (at least as of last month) not accurate

>> "Painting Google busses as "going out of their way to make it easy for employees to live in SF" is (at least as of last month) not accurate"

Ok but as you allude to those buses have been going on much longer than the last month. Also - they aren't public transit. They're private transport. I don't know the specifics of that law but I don't think private transport provided by the company would count.

It does. https://commuterbenefits.511.org/#options

> Option 3 — Employer-provided free or low cost bus, shuttle or vanpool service operated by or for the employer.

> Ok but as you allude to those buses have been going on much longer than the last month.

You're right. I did. Because they have. I don't know the details of any legislation that may have applied before the one that I linked. But I would like to highlight the irony of the voters (via the government) of California legally mandating that these busses be run (see Kalium's comment), even after they have become such a hot button issue.

It's no wonder that we have so many social problems we can't manage, when our voters and legislators act so schizophrenically.

In terms of "a lot of tech companies, based outside San Francisco go out of their way to make it easy for employees to live in SF and get to work outside of it", this argument could be applied verbatim to the government paying for freeways to allow cars to efficiently drive back and forth between cities. This argument could also be applied to people who commute in from the suburbs (look to the bay bridge; there is a metric ton of them) and 'take' high-paying jobs that could be given to the locals who can't afford the rent here. But it doesn't matter. Criticizing the commuter busses for allowing people to live somewhere other than they work is an unrealistic perspective that ignores reality. People will live where they want to and can live. People will work where they want to and can work. Neither of these facts are the busses faults

I think that very few people strictly need to live in SF, probably no one. People desire to live there for a wide variety of reasons, such as having roots in the city, enjoying the social scene, etc.

The issue here is that the desires of tech workers are considered less important because they are considered to be inferior human beings.

I'm beginning to think the honest answer is "DON'T", but people are still scared of being so brazenly xenophobic.

"For many San Franciscans who have been displaced or are on the verge of losing their homes, there's pain and a sense of powerlessness."

When I recently visited the Bay Area for the first time, I spoke with a worker who was helping with the catering of one of the events I attended. I sat with him while he was on break, and getting a bite to eat. When I asked him about himself, the conversation quickly arrived at this topic of gentrification. This sense of powerlessness is exactly how he felt, but there was also resentment toward new inhabitants making enough to afford the high cost of living.

Tech companies and workers are not the only (nor the main) cause of this issue, yet they're likely receiving a higher fraction of the blame. Whether this resentment is justified or not, it doesn't seem to be getting better with time. The cold but logical advice to "just move somewhere more affordable." isn't an acceptable solution to many of those who were or will be displaced.

I don't want to move to the Bay Area and exacerbate the problem, but there are clearly some great benefits of basing a startup there. So it's a difficult choice. Hopefully VR or another technology will make remote work a better solution than relocation in the future. Also, a better way to quickly and affordably retrain and enter a new profession must be made available to displaced workers so automation can replace low-wage service industry jobs faster.

If you are serious about the problems that result from NIMBY anti-growth sentiments, I strongly recommend that you join one of the following groups working to influence their city councils to build more housing. Just liking them on FB goes a long way to giving them more influence and credibility with their city councils and when you reshare their blogs or FB posts, if they gain just one more person willing to come to city hall with them, it's a terrific win. People ARE trying to do something about this problem, including many from the tech sector.

Take the feelings you have from this article and channel into a concrete good that you can do right now, today, for minimal effort and zero cost. The sad truth is that the people whose voices get heard at city council today are generally those people wealthy enough in both dollars and time to spend hours every week at city hall. They're mostly retired homeowners sitting on multimillion dollar properties. Renters, poor people, and homeless people receive almost no representation because they don't have the luxury of coming to city hall meetings- they're busy figuring out where they're going to spend the night and how they're going to feed their kids this week. These groups are doing just that on their behalf, so please support them.

If you're in Palo Alto, check out www.paloaltoforward.com (also www.facebook.com/paloaltoforward

If you're in Mountain View, check out http://balancedmv.org/ and https://www.facebook.com/mvhousingdiversity

If you're in SF, https://www.facebook.com/BARentersFed and www.sfbarf.org

Menlo Park: https://www.facebook.com/MenloParkNoOnM

Something that jumped at me in the beginning, about the soup kitchen line:

Some carry iPods and smartphones, others come in suits.

Am I wrong to assume that somebody that can afford a smartphone and accompanying plans (which are not that cheap) and other gadgets like iPod, which probably means they own a computer and a broadband internet connection too - usually aren't so poor that they would literally starve without a soup kitchen?

Some smartphones are under $200 with pay as you go plans. Also, it's getting harder to get a feature phone now. People keep them for years, for what could be < $0.30/day. Also, if it lets you search for jobs, schedule interviews, etc, it can be essential for getting your next job/interview (ditto the suit).

People make judgement calls about what they need, and a smartphone is probably just as essential to someone seeking employment in the city as a working car is for someone looking for a job in the suburbs. Even if you need to take it to the soup kitchen.

I'm not sure how the smartphone is essential, could you explain? If you need to look up jobs, local library and good old pen & paper is always at your service. Same with recording and keeping appointments - a good old notebook would work. Calling prospective employers doesn't need a smartphone. If you need to make something like printed resume, smartphone is no help, you need a real computer anyway. So where it is essential? I'm not sure I still get it.

This is a common thought, but it can be awfully misleading.

First, anything that doesn't have a recurring charge -- like the suit and the iPod -- is something that may well have been bought when they had a higher income level.

Second, if you're looking for work today -- even outside of the tech sector -- not having a phone is very often not an option. Prospective employers need to be able to reach you and vice-versa, and if you're a temp worker or day laborer you need to be able to get that phone message very fast. If you're homeless a mobile phone may be your only realistic option.

Why not a cheaper phone than a smartphone? Even if you're poor, you may still want email and text messages and web browsing; email is close to a necessity in America today, web browsing is immensely useful, and that smartphone may also be your only source of entertainment. I think HN-ers may also tend to think of "smartphone" as implying "$200+ device and $100/mo bill," but it's pretty easy to get a $50 Android or Lumia phone and a $50-60/mo plan these days.

Last but not least, IIRC the article suggested the "suits and smartphones" types were people who weren't homeless yet, but whose rents had increased to a point where they were having trouble affording food. Someone making $20 an hour, way over minimum wage, would gross about $40K a year and net about $2500 a month -- they'd be lucky if "only" 75% of that was going to rent (assuming they'd started renting a few years ago when that was remotely possible). But they'd be making way too much to qualify for any government assistance like food stamps (SNAP).

iPod is not very useful without a computer and supposedly new music downloaded through the internet using broadband. Phones can be gotten for free (e.g. the famous "Obamaphone" or SafeLink) but it doesn't have to be a smartphone, which requires an expensive data plan ($60/m for a person who has literally no money for food seems to be not a negligible sum). The employer has to reach you, but it doesn't have to like your Facebook updates, right? I'm just thinking maybe it's not always need but sometimes convenience.

Huge props for the beautiful layout and format.

I'm excited that publishers/authors are taking more time into the design of articles they roll out.

Sounds like a great startup idea: End the San Francisco construction ban. Make a lot of money.

Everyone always says to look for pain points when creating your startup, this is a great example. Maybe it's overlooked because it's not internet/software related ;)

Move.

Yes. If housing is so damn expensive where you live, go somewhere else. It's really that simple.

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