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The Places in America Where Most Income Goes to Rent
- DavidHm 8y agoThe confluence or random circumstance and intentional lobbying that have allowed SF area landlords to ensure that a low stock of housing is maintained in the face of skyrocketing demand is truly fascinating.
- throwawayboye 8y agoIt’s not just SF, it’s every community. I’ve spoken with developers (like, housing) and they face difficulties in every community in America. NIMBYism is running rampant, and disenfranchised voters are unable to fight, or don’t care enough to get involved. This is why local elections matter. My city just elected a NIMBY city council, which means we’re screwed for years, but we won’t stop fighting. People deserve to have places to live, and people deserve sane cities.
- komali2 8y agoEverything always seems behind. When I lived in mountain view, local papers were full of old school residents complaining about nearly finished new housing on Castro that a bunch of googlers would move into. Like... The time to preserve your small town setting passed about 20 years ago lol. It's no longer apricot field town, it's silicon valley, it's staying silicon valley. Why not profit off the rising land values?
- wahern 8y agoBut Silicon Valley was already dead 25 years ago! https://groups.google.com/forum/#!original/alt.folklore.computers/bvE0Ka5nCnM/NAIOQnrEyCAJ https://groups.google.com/forum/#!original/alt.folklore.comp... Newsgroups: alt.folklore.computers Path: sparky!uunet!stanford.edu!nntp.Stanford.EDU!abercrombie.Stanford.EDU!paulf From: pa...@abercrombie.Stanford.EDU (Paul Flaherty) Subject: Re: Sillycon Valley history Message-ID: <paulf.731874319@abercrombie.Stanford.EDU> Sender: ne...@leland.Stanford.EDU (Mr News) Organization: DSO, Stanford University References: <C3p1B1.EDE@csulb.edu> Date: 11 Mar 93 18:25:19 GMT Lines: 20 dpa...@csulb.edu (Dave Palmer) writes: >From what I understand, the shine is rubbing off. The cost of housing is >ludicrous, and companies are fleeing to places like Arizona. But you >still can't throw a silicon wafer in Cupertino without hitting an Apple >facility. I think it's fair to say that Silicon Valley is dead. Cheap venture capital, minimal startup cost, access to university researchers, and good inter business communications fueled an engine which turned ideas into products. You can now find venture capital elsewhere, with the discount rate being what it is. The cost of housing and office space has spiraled out of control, thanks to the environmentalists and Prop 13. The trade secrets and intellectual property mania have pretty much destroyed open cooperation. The universities remain, but aren't the driving force they used to be. The place has a much different, more ossified feel to it than it did seven years ago. -=Paul Flaherty, N9FZX | "My boy, we are pilgrims in an unholy land." ->pa...@Stanford.EDU | -- Dr. Henry Jones Sr.
- bobaccount 8y agoAnd then that guy invented AltaVista, in Silicon Valley: https://en.m.wikipedia.org/wiki/Paul_Flaherty https://en.m.wikipedia.org/wiki/Paul_Flaherty
- pmiller2 8y agoReally surprised to see Detroit that high on the list. I kind of wonder what the relative availability of jobs in Detroit is vs, say, Dallas or Chicago (which offer some significant lifestyle advantages over Detroit). It would also have been a much better comparison if some approximation of state and local income taxes were factored in.
- throwawayboye 8y agoDetroit is in a hype bubble, I think (sauce: lived there for a bit). You can absolutely pay $2,000 for an apartment in a part of town with some blown-out buildings nearby and nothing much to walk to. Why you’d do that, I don’t know, but you can. There are jobs if you wanna work for GM or Quicken Loans, but that’s about it. There are affordable rents there, but what you save in rent you pay in car insurance. Michigan has the highest in the nation, and Detroit has the highest in the state. I paid almost $500 per month for mine. The legislature keeps trying to change policy to fix this (as it is ultimately a policy issue), but it usually gets shot down by the GOP who think it goes too far and Democrats who don’t think it goes far enough.
- surfingtheweb 8y agoIs the $2000 amount the monthly rent, or the total purchase price of an apartment in Detroit?
- throwawayboye 8y agoHeh. Monthly rent if you want walls and running water, purchase price if you don’t (be sure to leave extra for the back taxes).
- saturdaysaint 8y agoA booster's 2 cents: Yes, Texas's lack of income tax (and Detroit's city income tax) would certainly catapult Dallas ahead of Detroit on this list if taxes were properly factored in. Detroit is sort of a well-known "sleeper" city that "might be nice to live in someday", but I think word will get out sooner than later that it's got a lot of livability advantages right now. Great arts/food/drink scenes, 4 major sports teams, a surplus of cheap, high quality housing, a first class research university in close proximity, and mild traffic that's about what you'd expect in a city with a AAA baseball team. It has it's flaws, but I'm really not familiar with anywhere else that offers a lot of those amenities without hell traffic or impossibly expensive housing (usually both). Unless global warming radically reverses, I'd even make the argument that Detroit's weather is becoming a draw - a mild winter is a small price to pay for breezy summers with highs in the low 80's.
- ebikelaw 8y agoIn any place where incumbent landlords are protected from competition, rents will naturally rise to consume all available money.
- tafycent 8y agoI don't think the issue is that landlords are protected from competition. No matter what they do they're competing with the rest of the country. The issue is that there's massive demand for housing in one particular area. As such, the price of housing will increase in that area until the market will no longer bear it.
- w1 8y agoHenry George was right all along! It's amazing to see how similar income levels are after taking rent into account.
- zebrafish 8y agoInteresting how many of the salaries in these samples are tied to college towns. Cambridge, College Station, Knoxville, & Chapel Hill just to name a few that I saw.
- steverb 8y agoData Source: BusinessStudent.com Makes sense that college towns would be over-represented.
- patwolf 8y agoIn the case of Chapel Hill (and I'm sure others as well), it's a bit odd to see it singled out when it's really part of a larger metropolitan area. If I were living in Chapel Hill, I could also be reasonably working in Raleigh or Durham.
- dougmwne 8y agoIt's interesting that some of the highest and lowest after-rent salaries are in the Bay area. That's a pretty clear indicator of SF's constrained housing supply in particular. It's also interesting so many low ranked after-rent cities are in Florida, which might reflect a strong desire to live there despite the lack of job opportunity.
- seanmcdirmid 8y agoTourism and service jobs just don’t pay well in general, which is why Florida gets dinged in these surveys.
- imh 8y agoIt's also relevant that SF is only 47 square miles, compared to the metro area's 3.5k square miles. In many of our cities, people commute to work in different cities (hence the horrible traffic). You can end up with different salary:rent ratios comparing jobs in a city to rent in a city than you'd get looking at salary:rent ratios of jobs of people living in a city to rent in a city. Both are interesting statistics in their own right. I'd bet the difference in those two statistics indicates uneven housing supply (residential areas aren't the same as business areas) and small cities (residential areas are counted differently than business areas).
- anonymous5133 8y agoIt could also be that Florida has no personal income tax and the sales tax rates are reasonably low. I think property tax is about average.
- benwerd 8y agoIf I ever found another startup, I'll do it somewhere with significantly lower rents but proximity to a startup hub. For example, the Santa Rosa area fits the bill in SF, and there are areas of New York that are significantly outside of Manhattan or Williamsburg. It's just not worth the runway hit, and those locations force you to try for a certain kind of funding that might not actually fit the startup (or its stage) well. Cities like SF have enormous value to a startup but not so much that you have to be in them day in, day out. There was a time that this was the optimal thing to do, but I think it's passed.
- ebikelaw 8y agoThe median home price in Santa Rosa is astronomical. Perhaps you meant Chico, or Corvallis, or something like that.
- benwerd 8y agoIt's pretty high, I'll grant you - but 1/3 that of San Francisco. And the rent is correspondingly lower. Chico etc are significantly lower than that, of course, but they're a longer drive away - Santa Rosa is just an hour on the 101 from SF.
- rrdharan 8y agoI'm not convinced it's really just an hour during commute hours.
- ebikelaw 8y agoIt's not, not even close. It's 2H typically, with very high variance.
- pmiller2 8y agoNot to mention it's completely inaccessible by public transportation, and more or less an undoable commute from most of the East Bay, South Bay, or Peninsula. Bay Area commuting in general is a shit show; it's bad enough that I'm basically locked out of any jobs in the South Bay or Peninsula, just because I choose to live in the East Bay to save on housing costs.
- Woofles 8y agoI think Minneapolis is an interesting data point on there, since I've been told (and the data here reflects) that housing in Minneapolis is on par with Chicago right now, but the salaries haven't caught up. Minneapolis ranks as one of the worst Annual Salary After Rent cities, even behind LA and Seattle, which comes as a surprise. Also one thing I've found as I work through a move from an expensive city (SF) to a less expensive one (Minneapolis) is that the things you're getting for the prices shown here are drastically different. I've found 1500sqft 2br/2ba apartments with two parking spots in the Twin Cities for $2300, while that same thing in SF would easily cost $7000. I paid $4500 for a 2br/1ba that was a little under 1000sqft with a single parking space.
- zdragnar 8y agoTech salaries in Minneapolis and the surrounding area aren't terrible if you're reasonably qualified and do some digging- think low $100k and up. The rents seem absurd to me- $1300 for a one bedroom apartment? - but that's because I grew up in a town where a two bedroom apartment above a quiet store would cost $450 a month, tops.
- 2trill2spill 8y ago$1300 for a one bedroom apartment? I'm paying $1360 for a two bedroom and I'm in the heart of Uptown in a nice apartment.
- zdragnar 8y agoYeah, I think it was near the twins stadium, and was brand new, so it was probably inflated a bit compared to what you would get if you looked around. Regardless, I now have a 2k mortgage for multiple acres, waterfront, and no congestion, city noise, smells or lights. It's bliss if you don't mind the occasional snake or bear.
- rsync 8y ago"The rents seem absurd to me- $1300 for a one bedroom apartment?" I think these numbers are unduly skewed by the relatively very large build-out of condo buildings that has occurred in Minneapolis in the past 4-5 years. Prior to 2005 (or so) Minneapolis was a very, very white-flighted downtown area with only a very few condo buildings extant. The notion of living in downtown minneapolis, to most metro area residents, was a weird and wild one. So now, there is a huge influx of supply but it is all made up of "luxury" units that I believe are going online, in the market, with very optimistic rent numbers. I believe those newly online rental units are skewing the number upwards...
- anarchy8 8y agoThey're skewing the data to fit their narrative by only looking at medium rent for a 2 bedroom apartment.
- Finnucane 8y agoAnd they're not actually rating by how much of your salary proportionally is going to rent, but how much of your salary is left over after rent, in absolute dollars. So in College Station, TX, you're paying about 20% of your salary in rent, which is not really a terrible burden, but it's no. 1 on their list.
- ProfessorLayton 8y agoFurthermore, those looking for a 2br are very likely to be dual-income, at which point high cost areas begin to make a lot of sense even if the rent is insane.
- pmiller2 8y agoLikely true, but I would point out that there are significant advantages to having a 2BR if you work from home at all. I use the smaller BR at my place as the bedroom and the larger one as my office, and it's fantastic.
- ghaff 8y agoIt may be almost unthinkable in high cost of living areas but it's pretty common for even fairly young people to rent a 2BR and use the spare room as an office/hobby room/etc. I know I did after grad school. It's another problem with this type of comparison though. What's a "typical" apartment for a young professional to rent in a relatively low cost suburb or small city is likely going to be very different from what the same young professional would rent in Manhattan--even if they're paid more in the latter.
- Iggy173 8y agoThis might skew the data in terms of "How much money will you actually have left after paying rent" but personally I feel it's still a decent analysis on cost of living. I assume (with no evidence to back it up, granted) that you can find the approximate price of a 1br apartment by taking some percentage from the 2 bedroom. Do you see skew in some other way?
- sjg007 8y agoThis fits with anecdotes from people who live in the bay area that they have roughly double the take home pay after rent etc...
- cimmanom 8y agoAre all the charts loading for most people? I could only get the first one to show up.
- pythonistic 8y agoI had to disable Privacy Badger to get the other charts to show up. Disabling uBlock Origin didn't help (or hurt).
- jowiar 8y agoSalary after rent is not necessarily an optimal metric. It works when looking at things like vacations and national products, but when you’re looking at local spend, that rent gets passed through everything that requires local land and labor. Food (especially prepared food) and entertainment tend to be priced in local dollars.
- madcaptenor 8y agoI agree with this. I figure I probably have the same number of dollars after paying for housing in Atlanta as I would working the same job in SF. But I can buy food, entertainment, etc. at Atlanta prices.
- loeg 8y agoWhere the heck do they get $2800 for a 2BR in Seattle from? That seems high to me. A year ago I was renting a 3BR for $2100. Well, ok, "average" across all 2BR in the city. That doesn't really tell the full story and will be drawn up by high outliers. There are a lot of methodology problems here.
- pmiller2 8y agoI'm interested to know how one could arrive at a more reasonable number for a 2br apartment. Obviously, what you say is true: a luxury 2 BR with a doorman, gym, pool, onsite parking, and pets allowed is going to be vastly more expensive than your basic 2BR with none of that included. How do you tease them apart?
- occamrazor 8y agoThe easiest way is taking the median instead of the mean. For more info and other methods, search for “robust estimators”.
- pmiller2 8y agoI guess I wasn't clear enough. Using the median certainly works better if you're looking at the population of "all 2BR apartments." But, I would contend that's a mistake, as luxury apartments are really fundamentally different from non-luxury apartments. And, among luxury apartments, individual amenities matter. A pool is likely to be less relevant than a doorman, for instance. Statistically, I don't see any good way around this other than doing a really gnarly ANOVA to tease out the prices of individual amenities.
- loeg 8y ago2BR just happens to be the category the article chose. It's a reasonable assumption that e.g. families with a kid are going to rent at least a 2BR — of any age and luxury — if they can afford to.
- cimmanom 8y ago
- Jormundir 8y agoI'm genuinely curious why they bothered publishing this in its current state. They don't make tax calculations, so they assume you're paying rent with untaxed income, which makes the comparison all but meaningless.
- pascalxus 8y agoAbsolutely. It's completely worthless in it's current state. Also, the rent jungle numbers look a bit conservative for palo alto. In PA a 220 sq ft loft costs nearly 2000$/mo to rent. I think the 3900$/mo figure they have is a bit conservative for PA. Furthermore, they compared 2BD as their normalization factor, rather than $/sq foot. I would imagine the more expensive areas get less Square footage for a given 2BD apartment. And, notice how they conveniently didn't even mention any comparisons of salary to housing Buy costs.
- Bahamut 8y agoThe housing numbers look poorly researched in general. Sunnyvale for example is not that hard to find a 2 bedroom apartment for under $3k - I'm paying $2700 a month myself for one with over 1k sqft and modern appliances.
- closeparen 8y ago“You can find one for less” isn’t a counterargument when shown an aggregate.
- drngdds 8y agoThey also weirdly assume you have a 2BR on a single income, which is not the norm.
- MrLeap 8y agoIt's a better way to rend in places where that's affordable ;)
- edbaskerville 8y agoThe analysis comparing cities is just (mean salary - mean rent), which is going to make places with high income inequality look better than they are for most people. I'd like to see the 10%, 50% (median), and 90% quantiles for (after-tax salary - housing cost). I bet the rankings would be quite different depending on which of these you chose.
- carbocation 8y agoAbsolutely this. We know that income is generally power-law distributed, so we also know that the majority of incomes will be below the mean. An analysis like this is bordering on nonsensical. It's too sensitive to outliers to be useful, in my opinion. A worked example: the median income per capita in Boston is $37,288[1] and there are 685,094 residents. The total income of people in Boston is then 685094*$37288 = $25,545,785,072. According to [2], Tim Cook's total compensation was $377 million in 2013. If Tim Cook moved to Boston, the mean per capita income would rise from $37,288 to ((25545785072+377000000)/(685094+1)) = $37,838. One person moving can make a 2% difference in mean income by moving to a top 25 city in the US, nevermind any of the smaller cities on that list. 1 = https://www.census.gov/quickfacts/fact/table/bostoncitymassachusetts/IPE120216 https://www.census.gov/quickfacts/fact/table/bostoncitymassa... 2 = https://www.therichest.com/rich-list/world/top-10-people-with-the-highest-salaries-in-the-world/ https://www.therichest.com/rich-list/world/top-10-people-wit...
- asah 8y agoFWIW they mentioned the highest salary was $187k
- pdeuchler 8y agoFor large, sprawling cities like Denver, Orlando, Nashville, Omaha, etc etc mean rent is almost useless. In Denver $1800 will get you a studio in desirable places to live, and will only get you a 2 BR out in deep suburbia or developments that come with 45 minute commutes. You're also going to have widely varying incomes between those two areas... i'd be willing to bet the after rent take home in the fringes of Denver sprawl is much worse than downtown due to ridiculous prices pushing low income workers farther and farther away from the city center while rent decreases at a much slower rate. Also did they get their salary data from BusinessStudent or from Indeed? And where did they get their real estate data from?
- dawhizkid 8y ago70% of rentable units in San Francisco are rent-controlled. I know many very high paid people who pay well below “market rate” for their apartments. If you do it right you can live in SF for less than many “cheaper” cities and yet make much more money.
- dionidium 8y agoHow do you "do it right?"
- nerfhammer 8y agoGet there first
- TomMckenny 8y agoHave true rent control rather than what SF does.
- bvc35 8y agoMake sure you already live in San Francisco and use the government to cap out your rent to the detriment of literally everyone else.
- ironjunkie 8y agoExactly. Use the laws supposedly made for poor people, and use them at your advantage (like most of the wealthy do). Also yell and pretend high and clear that you want to help the poor.
- pmiller2 8y agoStay 5+ years in your rent controlled apartment.
- guiomie 8y agoAgreed. I just left my apartment in SF, 1BR/1BA for 1900$, now whomever is gonna take it will rent at 2200$. I think you can outperform buying house by renting for a longterm in the bay area.
- dmode 8y agoThe one thing that none of these analysis would ever unearth is how much money you can make through real estate in California. That can rarely matched by the incremental savings you get in a low cost area.
- TomMckenny 8y agoWhy do we have a system that financially discourages dense concentrations of smart, productive, inventive people? It seems the market encourages people to avoid doing anything that would make their community attractive.
- anonymous5133 8y agoI think it has more to do with how we build cities. If you think about it all cities just start off as a collection of single story buildings in the central business district (CBD). As the city grows the CBD slowly gets replaced with bigger and bigger buildings. Under normal market forces high rents should be reduced because builders will build more units in the area to meet demand. However, the major factor that prevents this is government planning that restricts market forces from occurring. The end result is there is not enough supply to meet demand which ends up in bidding wars. The rent rises to absurd rates until it meets demand. Also cities are more likely to build high-density commercial since those companies are generally bigger taxpayers and consume less government resources compared to residential.
- mabbo 8y agoThis list makes me very surprised that Amazon dropped Detroit, MI from the finalists on their HQ2 search. Rent there is half of what it is in Seattle. A few AMZN shares would go a lot further to keeping people happy in Detroit than in many other cities. Detroit has a bad reputation because their economy failed. But put 50,000 high paying tech jobs there, that problem would look very different.
- erik_landerholm 8y agoWhomever is a CTO and making $140k a year...really needs to rethink their path in life. That is ridiculous. The amount of responsibility a CTO has at a company of almost any size, is a lot. I don't even know why a company would bother having a CTO if that's all they think it's worth.
- opportune 8y agoIn many, probably most, companies a CTO is not necessarily someone coming from a software developer background but instead essentially an IT manager. And most companies are not headquartered in SF/Seattle/NYC, so $140k/year goes a lot farther there. That $140k figure also does not account for equity/bonuses
- erik_landerholm 8y agoMaybe, but that's avg. So, some CTO's make 350-1M+ a year and so I'm supposed to believe many CTO's make less than 140k, maybe a lot less? Maybe indeed should slice the data in ways that make sense, but company size, or area only. As someone that manages 120+ people...I know a lot about what engineers and other tech workers make. These numbers are straight silliness.
- opportune 8y agoWell there are biases also, first and foremost that this data is from Indeed.com and I doubt most high quality CTO positions are posted there. It would definitely make sense to separate based on company size for executive positions.
- erik_landerholm 8y agoFor sure. It's possible I'm just too sensitive to this stuff, but if you work at company of any size..say over 100, and you manage a lot of people...having your HR dept not understand how region, market, company size, etc effect how you should pay, is a huge pain point. These kind of "studies" just make that a lot harder. Even the custom reports we get are "wrong" if you don't slice the statistics correctly. And a lot of people have no idea what's going on with compensation (salary, bonus and equity) right now, in competitive markets and competitive fields. Our company is only 700 people and it's been a huge challenge.
- guiomie 8y agoWhen I see CFO/CTO with salaries of 171k, I do not know what to think. Is the term CFO/CTO overused? For me a CTO/CFO is someone in a publicly traded company, and in those scenario they usually make in the millions.
- erik_landerholm 8y agoI agree. These kind of reports are the about as useless as they get. I have no idea why anyone would ever use indeed for anything. We get custom made reports with salary ranges in the bay area and LA and our numbers look nothing like these. Nothing in that report even resembles reality, but it's wayyyyy off on CTO and other jobs at that level.
- opportune 8y agoMost companies are not publicly traded. Is the job/life of a CTO of a 15 person company different from one of a 15000 person company? Yes. But they are still a CTO, and it's not necessarily overuse to call them that.
- guiomie 8y agoI think it is, but I guess its a matter of opinion. I see someone using the CEO/CTO title of a 15 people operation as disconnected from reality, makes it seems like these people care about titles more than anything.
- iooi 8y agoThe rents look a bit off, $3,700 is not the average 2BR apartment in NYC. Same for Miami, $2,400 is way too low. Maybe they're including too many apartments in the outer areas of these cities, but if you want to keep your commute <30 minutes in the cities, NYC would be closer to 4.5k and Miami would be hitting 3k.
- rmason 8y agoRent isn't everything. The cost of living in Detroit is absurdly lower than Silicon Valley. I was in SF this winter and everything little thing I bought felt like it was 20% more than in Michigan. When on vacation I can get two weeks in Florida for what one week in SF costs me.