Why don't these people just move to more affordable places?
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.
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.
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.
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.
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.
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-...
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)
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.
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.
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.
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.
Given all that the SF rent wars make a lot more sense.
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"
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.
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.
- 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.
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.
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.
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.
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.
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.
Where do the nurses, teachers, security guards, waiters, shop assistants etc etc live?
Source: http://www.sfhsa.org/79.htm
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.
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.
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.
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From my (anecdotal) observations, poor police enforcement appears to be a motivator for homeless people to gather and remain in SF. Walk a couple laps around City Hall and count the number of misdemeanors you can spot in the open and homeless 'tents'. Most other cities don't allow anything of the sort.
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At some point, you run out of places to put all the people who want to live in a given place. You have to have some way of deciding who gets to live there, and to be honest, "blood right" doesn't do it for me.
It's hellaciously expensive to live in Manhattan, but viable for many low-wage workers with jobs in Manhattan to live in NY Metro.