6 ms·

I'm not convinced that the price of existing houses would drop that much. We're talking comparing comparatively large single family homes to probably tallish a

I'm not convinced that the price of existing houses would drop that much. We're talking comparing comparatively large single family homes to probably tallish apartment buildings. They don't compete for quite the same market, and since you'd have to knock over a few SFHs, they might even go up in price, since yards, space and privacy would become rarer. Of course good luck convincing J. Random Householder of that

maerF0x0 10y ago
Alternatives affect the pricing of a good.
- monknomo 10y ago
  Sure, that's a given. But we're not exactly talking interchangeable widgets. Are you telling me that new towers in Manhattan really damage the value of the remaining single family houses on the island?
  - brianwawok 10y ago
    They impact it. I see this in Chicago. Graph price of single family 3 bedroom home and 3 bedroom condo. The prices track. The SFH is worth about double... When condo prices fell in 2008, SFH prices fell too.
    - dogma1138 10y ago
      Hasn't everything fell in 2008? Correlation doesn't not mean causation. It's like saying that building 2000 affordable apartments in London would bring down the price of the multimillion luxury apartments.
      - brianwawok 10y ago
        I don't think that a 200k apartment and a 5 million dollar luxury apartment are substitutes. In Chicago, a 300k condo and a 600k single family home ARE substitutes. I know many people that could afford either. As the delta shifts one way or another, more of them will opt for the other choice.
  - maerF0x0 10y ago
    Of course they impact it. I will price all alternatives. Maybe one of those "single family" homes will actually house me and 3 housemates?
sp527 10y ago
If I could buy a 3BR apartment at $1.5M or a 3BR single story 2000 sq ft hut for $3M, guess where my money's going. But it doesn't matter. The Bay Area region is going to see serious emigration over the next 5 yrs and it'll be primarily the people that SV wants to keep around: younger people who can't afford to lay down roots in SV and furthermore understand it would be stupid to do so at these prices. Especially with engineers, I refuse to believe most under 30 aren't already well aware that the economics favor living cheap, saving up, and then getting out. Tech is very compatible with remote work (even at a low level when you think in terms of microservices and PaaS), and moving operations or starting fresh is relatively easy. Even the networking argument is thin: there are already concentrations of talented engineers in a bunch of major cities. Not to mention I've self-learned almost everything relevant anyway. Conferences and assorted other BS are largely pointless. So what's left? Investors and existing companies. I believe this is why we haven't seen a substantial exodus thus far. I think the argument about career advancement issues being in a non-HQ office doesn't really hold as much water for the large companies. I also think tech companies look at good engineers located outside the expensive SV bubble as a kind of subsidy: revenue isn't nearly as sensitive to geographical distribution of employees as is cost. With investors the story may be different. They want to keep a close eye on their companies and finding good engineers to take a chance on your startup is much easier in a high-density tech zone. But why would entrepreneurs want to suffer the incumbent costs? Assuming the same size of investment round, wise founders would choose to minimize their burn rate by locating somewhere closer to the midpoint on the spectrum of tradeoffs (e.g. Boulder/Denver, Austin, NYC outside Manhattan, Seattle, LA, etc). TLDR: It seems like the status quo is far too tenuous to continue to hold indefinitely.
- bcheung 10y ago
  Yeah, it kind of sucks. If I had to pay $1.5M for just an apartment I would go elsewhere. But unfortunately, all the decent jobs are in the bay area. I tried looking for remote work but couldn't find anything decent that seemed like a good job that paid decent. As soon as I gave up and decided to widen my search to a job that required me to be in the office every day I had a huge abundance of companies I could work at.
  - 10y ago
nikdaheratik 10y ago
It really depends alot on the details and what the zoning allows for. A big trend lately in Melbourne has been knocking down older SFHs and putting up a pair of townhomes then having the owners renting out the other and living in the first. It's one way the owners have managed to increase their income from the property while also benefiting from alot of regulations and tax benefits made for homeowners. However, that makes less sense in a cul-de-sac suburb + highway situation than it does in a city with more public transit options and fewer highways. You basically have to rezone and buy out several lots and put up apartments and the entire neighborhood changes. So if your house gets bought up, you may benefit but it may drop if you live near it but don't sell to the developer.

maerF0x0 10y ago

Alternatives affect the pricing of a good.

monknomo 10y ago
Sure, that's a given. But we're not exactly talking interchangeable widgets. Are you telling me that new towers in Manhattan really damage the value of the remaining single family houses on the island?
- brianwawok 10y ago
  They impact it. I see this in Chicago. Graph price of single family 3 bedroom home and 3 bedroom condo. The prices track. The SFH is worth about double... When condo prices fell in 2008, SFH prices fell too.
  - dogma1138 10y ago
    Hasn't everything fell in 2008? Correlation doesn't not mean causation. It's like saying that building 2000 affordable apartments in London would bring down the price of the multimillion luxury apartments.
    - brianwawok 10y ago
      I don't think that a 200k apartment and a 5 million dollar luxury apartment are substitutes. In Chicago, a 300k condo and a 600k single family home ARE substitutes. I know many people that could afford either. As the delta shifts one way or another, more of them will opt for the other choice.
- maerF0x0 10y ago
  Of course they impact it. I will price all alternatives. Maybe one of those "single family" homes will actually house me and 3 housemates?

sp527 10y ago

If I could buy a 3BR apartment at $1.5M or a 3BR single story 2000 sq ft hut for $3M, guess where my money's going. But it doesn't matter. The Bay Area region is going to see serious emigration over the next 5 yrs and it'll be primarily the people that SV wants to keep around: younger people who can't afford to lay down roots in SV and furthermore understand it would be stupid to do so at these prices. Especially with engineers, I refuse to believe most under 30 aren't already well aware that the economics favor living cheap, saving up, and then getting out. Tech is very compatible with remote work (even at a low level when you think in terms of microservices and PaaS), and moving operations or starting fresh is relatively easy. Even the networking argument is thin: there are already concentrations of talented engineers in a bunch of major cities. Not to mention I've self-learned almost everything relevant anyway. Conferences and assorted other BS are largely pointless. So what's left? Investors and existing companies. I believe this is why we haven't seen a substantial exodus thus far. I think the argument about career advancement issues being in a non-HQ office doesn't really hold as much water for the large companies. I also think tech companies look at good engineers located outside the expensive SV bubble as a kind of subsidy: revenue isn't nearly as sensitive to geographical distribution of employees as is cost. With investors the story may be different. They want to keep a close eye on their companies and finding good engineers to take a chance on your startup is much easier in a high-density tech zone. But why would entrepreneurs want to suffer the incumbent costs? Assuming the same size of investment round, wise founders would choose to minimize their burn rate by locating somewhere closer to the midpoint on the spectrum of tradeoffs (e.g. Boulder/Denver, Austin, NYC outside Manhattan, Seattle, LA, etc). TLDR: It seems like the status quo is far too tenuous to continue to hold indefinitely.

bcheung 10y ago
Yeah, it kind of sucks. If I had to pay $1.5M for just an apartment I would go elsewhere. But unfortunately, all the decent jobs are in the bay area. I tried looking for remote work but couldn't find anything decent that seemed like a good job that paid decent. As soon as I gave up and decided to widen my search to a job that required me to be in the office every day I had a huge abundance of companies I could work at.
- 10y ago

nikdaheratik 10y ago

It really depends alot on the details and what the zoning allows for. A big trend lately in Melbourne has been knocking down older SFHs and putting up a pair of townhomes then having the owners renting out the other and living in the first. It's one way the owners have managed to increase their income from the property while also benefiting from alot of regulations and tax benefits made for homeowners. However, that makes less sense in a cul-de-sac suburb + highway situation than it does in a city with more public transit options and fewer highways. You basically have to rezone and buy out several lots and put up apartments and the entire neighborhood changes. So if your house gets bought up, you may benefit but it may drop if you live near it but don't sell to the developer.