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Software was eating the world – now landlords are eating everything

• thorwasdfasdf 7y ago
  This is a very good point that I wish would get more attention: "Politics is an organizational problem, not a technological one.", "If we want to lower the cost of living, the cost of housing, the cost of doing business in the Bay Area, tech must get involved in politics." People don't realize how conservative SF is: "The most innovative solutions don’t matter when your government has been captured by interests that want to freeze the city in amber" SF won't even allow companies to put more buses on the road (something that would benefit everyone!) This was news to me: "Support for More HOMES in San Francisco was even stronger, at 74%. Despite this popular support, every member of the San Francisco Board of Supervisors voted to oppose More HOMES, except for Asha Safai and Vallie Brown " It seems that politics in SF doesn't represent the majority view. This is part of a much larger set of problems. As we continue into the future all the tech problems get solved or already have been solved. What we're left with is all the problems that can't be solved: those are all political. There will come a day when instead of starting software companies, we'll be starting companies that solve political problems.
  • Gibbon1 7y ago
    I have this other idea, force VC's to point their firehose of cash elsewhere for a change.
    • profunctor 7y ago
      If we are going to take control of capital why not directly take control of the land and build more homes rather than firing money at some collection of small towns and hoping that solves a housing crisis somewhere else?
    • pixelbath 7y ago
      I genuinely don't get it. Sure, you want some of that VC money for your startup, so you start building in SV, where the exorbitant costs of living and doing business necessitate taking VC money to even stay afloat. Do investors really not invest in companies that don't start in the Valley? I have a hard time believing that, but to hear anybody from the Bay Area tell it, it seems to be the default.
      • cycrutchfield 7y ago
        Talent is the lifeblood of tech companies. Ergo, tech companies set up where it is easier to recruit talent.
        • Consultant32452 7y ago
          I agree with you, but I also find it to be confusing. These same companies, when they do open offices in "2nd tier" cities, they offer "2nd tier" salaries. If you go to Houston and offer something close to SF salary, you will be over-run with great talent. I feel like there's some social status or something that comes from paying the higher salaries in places like the valley that just aren't attainable by attracting talent in other cities.
          • inetknght 7y ago
            > If you go to Houston and offer something close to SF salary, you will be over-run with great talent. I live in Houston and I concur. The company I work for has a lot of trouble finding talent that we need. That's not to say the talent doesn't exist here. It absolutely does. It's just that we can't afford Silicon Valley level compensation.
            • lonelappde 7y ago
              You can't afford something you need? How are you still in business?
          • SpicyLemonZest 7y ago
    • carapace 7y ago
      > An Opportunity Zone is a designation created by the Tax Cuts and Jobs Act of 2017 allowing for certain investments in lower income areas to have tax advantages. The purpose of this program is to put capital to work that would otherwise be locked up due to the asset holder's unwillingness to trigger a capital gains tax. https://en.wikipedia.org/wiki/Economic_Opportunity_Zones https://en.wikipedia.org/wiki/Economic_Opportunity_Zones
  • SomeOldThrow 7y ago
    > every member of the San Francisco Board of Supervisors voted to oppose More HOMES, except for Asha Safai and Vallie Brown To my knowledge there aren’t any anti-development supervisors at the moment. The key differentiator is the type of development the supervisor is pushing for.
    • Decade 7y ago
      It has long been impractical to appear completely anti-development. The Housing Accountability Act of 1982 makes outright refusal against California law. Instead, NIMBYs have adopted the CIA’s tools for sabotage. https://www.cia.gov/news-information/featured-story-archive/2012-featured-story-archive/simple-sabotage.html https://www.cia.gov/news-information/featured-story-archive/... So, the majority claim to be for development, but they saddle it with conditions and processes to make it expensive and less likely to succeed. They claim that this process makes the final result “better,” but more often than not what we get is not “better” but “nothing.” And nothing is worse than bad, because what we have is a deep shortage. They’re letting the perfect be the enemy of the good.
  • bongobongo 7y ago
    Lol congrats you just invented the modern university
  • xtiansimon 7y ago
    Maybe all the tech companies should leave SF for San Jose. It has an airport. And SJ isn’t so precious about it’s history.
    • AceJohnny2 7y ago
      Indeed. I wonder why there isn't more visible startup activity in SJ. Is it purely cultural/historical, where it emerged in SF and that remains the main regional attractor? Or are there other political/zoning reasons that make SF more attractive? I believe SF is giving some rich companies discounts to keep them around and reap (I assume) local taxes?
      • foobarian 7y ago
        Can you give some comparison baselines to an uninformed East coaster? I thought SJ is part of the Bay Area and part of the skyrocketing housing cost crisis. Is that not true? If not what is an East coast analogy - e.g. Boston is to NYC what SF is to SJ? I knew a number of people who moved to the SV area, got FAANG type jobs way down in the Valley, and yet still chose to live in SF enduring hellish commutes. I never could quite understand why.
        • JimboOmega 7y ago
          It's something very roughly and geographically like if SF is DC, then SJ is Baltimore. You could theoretically commute between them, but it's quite impractical. SJ is part of the Bay Area and absolutely has skyrocketing costs; it usually tops the lists of cities with the fastest growing housing prices. When I got a job in Redwood City (in between the two), I thought about moving there from SF, but found the costs to be about the same to live there versus SF. So I stayed in SF; it's definitely the anchor of culture of the Bay Area. For everything outside of work it's a much better place to be (for me, a single queer person, especially). I since got a job in SF and have no intention to move or work south again. In fact, the general trend has been for companies to move towards SF away from the peninsula, but mostly because it's where workers want to be. It's much more easier to get by without a car in the city than in the peninsula, it has much better clubs/nightlife, etc. For a young person, the city (meaning SF) is often much more appealing, though of course different people have different preferences.
  • ditonal 7y ago
    The engineer personality profile is basically allergic to organizing. Too passive and introverted, or delusionally individualistic. Silicon Valley engineers see themselves as temporarily embarrassed hotshot entrepreneurs. The funny thing is to the extent engineers do organize it’s usually leftist organization for the lower wage workers (tech workers coalition), which is noble but doesn’t advance engineer goals. Police, teachers, doctors, all have political organization and therefore voice but tech workers cede that voice to their execs. I fantasize about changing that but I’ve come to accept the personality profiles of engineers make it an impossible problem.
    • buss 7y ago
      I'm an engineer; I wrote the piece in the OP. I'm running for DCCC and am a political activist. We exist! Support my campaign :) https://buss2020.org/donate https://buss2020.org/donate
      • muzz 7y ago
        If the thesis were true, why wouldn't VCs get into the landlord game? Seems like they would want to lessen this effect, if it were actually the case.
        • fiestaman 7y ago
          Private capital is certainly getting into the landlord game--and in record numbers. https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/ https://www.theatlantic.com/technology/archive/2019/02/singl... https://www.bloomberg.com/quicktake/rent-wall-street-is-my-landlord https://www.bloomberg.com/quicktake/rent-wall-street-is-my-l...
    • rexpop 7y ago
      I have goals. They pay me six figures, but I'm not on track to own a home within biking distance of the office, and as an individual, I can't move the office. I don't get to control who owns my tech company, which means I don't get to decide what our superordinate goals are. I don't get to decide who our customers are. I don't get to decide the extent to which we participate in the Military-Industrial Complex, or the Prison-Industrial Complex, each of which threatened to destroy people like me. Due to the constraints of office hours, my social development and creative passions are extruded through a meager four hours before sleep—most of which must be spent on trains, due to housing and transit limitations. If you don't think tech workers are alienated, you're fooling yourself. It's industry-standars to "burn out" every 3 years, and flee toxic, stagnant positions for a fresh workplace. This tells me that firms are unaccommodating, and foist the risk of personal development on us as individuals. That refusal to accommodate us is precisely the inhumane factor fomenting alienation. What you've "come to accept" is your own vitality's truncation. Edit: people are downvoting me for saying "I can't afford to live near my work or my friends"? Or because they're in denial of Tech's complicity in Military- and Prison-Industrial atrocities?
  • Pxtl 7y ago
    Oh, the more homes is easy. Everybody supports more homes in the abstract, but every specific plan gets shot down because it's too tall or too sprawl or not in keeping with the feel of the neighborhood - often by the same people who want more housing, just NIMBY.
    • dev_dull 7y ago
      Or they don’t want to remove the debilitating environment and neighborhood regulation which makes new home construction take years when it could be months. Or they want lots of new housing, but they also want the owner to rent control all units. Or they want at least 30% of the units to be under market rent. In other words, they want something for nothing and they’re fine with YOU being stuck with the consequences.
    • noneeeed 7y ago
      Rural housing in the UK is hamstrung by this problem. On the one hand everyone complains that their kids have to move away because they can't afford to live in the village they grew up in, but if you suggest building more houses they kick up a stink. Then they complain that the village is dying because it's all rich people's second homes in the country. While I have distain for a lot of politicians, at the same time I'm not sure anything would convince me to be one, it's a pretty thankless task full of no-win situations in which people will bitch and main no matter what you do.
      • sien 7y ago
        You could join UK YIMBY https://www.ukyimby.com/ https://www.ukyimby.com/
        • noneeeed 7y ago
          I'd not heard of that, cool. Glad to see people are starting to push back against all the cake-and-eat-it nimbys. I live in Bath, which despite being a world heritage site, is actually building quite a lot of new home, some in developments on the outskirts, and lots of infill on brownfield sites. Not a fan of some of the architecture, but glad to see more being built. Now if we ould just sort out the bus network...
  • tathougies 7y ago
    > People don't realize how conservative SF is: You realize having restrictions and governmental regulation is exactly the opposite of 'conservative' (in the republican sense, which it's usually used in pejoratively), right?
    • draw_down 7y ago
      Nope, that is conservatism.
  • sieabahlpark 7y ago
    San Francisco is conservative? I highly doubt that. I can absolutely see anyone not wanting to give away their house they spend $4m "for the greater good" of everyone else who didn't have the capital to buy a house.
  • antpls 7y ago
    > "Politics is an organizational problem, not a technological one." Conway's theorem : "Any organization that designs a system (defined more broadly here than just information systems) will inevitably produce a design whose structure is a copy of the organization's communication structure." > we'll be starting companies that solve political problems. That already exists : lobbying companies, "CivicTech" and "GovTech" companies. I understood CivicTech and GovTech are startups that take the current political processes, and try to digitalise them. But they don't revolutionize the rules nor change the balance of power, since they must be reviewed and approved by the current government. In the short term, they follow Conway's law.
  • JDiculous 7y ago
    Are there people that actually think politics is a technological problem? Politics is quit possibly the lowest tech sphere in existence. I remember going to a city council meeting in NYC and being shocked that they were recording votes by roll call. They're still stuck in the 17th century.
• paulddraper 7y ago
  It took a minute before I realize this was a San Francisco article; all the numbers and discussion are specific to that one area. (I'd suggest reflecting this in the title.) There must be some truly special about SF to be so hated...and yet apparently so loved.
  • cm2187 7y ago
    You can make the very same argument about London
    • sremani 7y ago
      do not worry, London will be its own shell 5 years after BREXIT.
• afinlayson 7y ago
  At some point the bay area will have to become a 1 giant city, instead of a bunch of little nimbism towns. Soon, we'll all live in Bay City!
  • schainks 7y ago
    Megacity 1
  • klipt 7y ago
    Turns out the reason this hasn't already happened is because the CA constitution forbids cities crossing county borders: https://hoodline.com/2017/03/that-time-san-francisco-tried-to-annex-oakland-berkeley-and-most-of-the-bay-area https://hoodline.com/2017/03/that-time-san-francisco-tried-t...
    • afinlayson 7y ago
      That's fascinating, Maybe there can be a megacity that spans multiple cities or something like that. Oakland and SF makes less sense than SF and SJ imo, because there's no space between them. At least Oakland has the bay.
    • masonic 7y ago
      "In the general election of November 1912, the amendment failed to get the requisite two-thirds majority vote" This makes no sense. It doesn't take a 2/3 majority for an Initiative Constitutional Amendment -- just 50% + 1.
  • im3w1l 7y ago
    > Soon, we'll all live in Bay City! If there was a train between SF and SJ that took 30min had frequent departures and free wifi the cities would merge over night.
• Grakel 7y ago
  I think this is all missing the real issue by a mile: greater density would change the city. Those who don't want that have enough power to stop it. Prices start dropping the day after tech companies realize there are other cities that would love to have them.
• kazinator 7y ago
  Funny; a sentence bemoaning "unearned rent" immediately following one ending in "capital investment".
  • buss 7y ago
    I mean... investment in productive activity is the opposite of rentier capitalism.
    • kazinator 7y ago
      The productive activity itself is clearly that opposite.
• WheelsAtLarge 7y ago
  This is a social problem. Tech will only get in the way. Remote work is available now but it has not put a dent on the problem. The solution falls on policy change, city planning and politics. Tech is a tool towards a solution not the solution.
  • wendyshu 7y ago
    Well at least this is true: "tech can only work within the current regulations".
  • buss 7y ago
    I'm advocating that tech, as a collection of individuals, get involved in the social structures that can influence policy and politics. We've sat on the sidelines getting blamed for things for too long.
  • etjossem 7y ago
    By "tech" is meant "the community." You can't get policy change without enough people getting involved and supporting that change. Do you want to fix this? Join YIMBY Action. Support pro-housing candidates at the polls. Tell your friends.
    • WheelsAtLarge 7y ago
      We in tech or the tech community live in a world where everything has a solid yes or no answer there are very few grays. The rest of the world is not like that. It's full of grays and they change constantly. If I can pick between a great politician or a great Techie to lead a community I will always pick the politician. They can lead a group of people. Techies can come up with the right answer given solid facts but that's not the real world.
• dustfinger 7y ago
  What is the origin of the meme "X is eating the world?" I seem to see these titles posted fairly regularly now.
  • traek 7y ago
    Marc Andreessen's famous "Why Software Is Eating The World" article in the WSJ. https://www.wsj.com/articles/SB10001424053111903480904576512250915629460 https://www.wsj.com/articles/SB10001424053111903480904576512...
    • dustfinger 7y ago
      Thank you!
• vgetr 7y ago
  I agree with the problem (“wanting to freeze the city in amber”), but not the solution, at least as the author wants to implement it. The solution would be to deregulate housing (rent control, etc) and let scarcity take over. Yes it’ll be painful for a couple of years, but when all the people who can’t afford to work at the Starbucks leave the city, people are going to start to notice. Wages and home building would shoot up to meet the demand, and things would ultimately level off. This will never happen in SF (the quasi-regulated NIMBYism the author describes seems par for the course), but we’d see some fast results if it did.
  • ryanong 7y ago
    Capitalist dystopian dreams. Nyc has mostly unregulated real estate and it is still horrible. Large development corporations create artificial scarcity that rise the price of rent. Everything just rises in cost including minimum wage and just tracks whatever the developers can extract out of the economy. If the solution doesn’t including bringing everyone along I don’t want it.
    • shuckles 7y ago
      NYC real estate is far from unregulated. In fact, it faces arguably even stronger NIMBY pressures than San Francisco and indeed SF has authorized more building permits per capita than NYC for many years in the last decade. Its rental market also had many new controls added this past summer.
      • buss 7y ago
        Yup, this is correct. NYC is very far from anything resembling a "deregulated" market.
        • stjohnswarts 7y ago
          Yeah not sure what that poster was basing his incorrect point on.
  • aaomidi 7y ago
• slang800 7y ago
  > We’ve shifted the Overton window. That is hyperbolic. Housing development was never outside the realm of acceptable public discourse, it was just less popular.
  • buss 7y ago
    It absolutely has been outside the realm of acceptable political discourse. Jane Kim, who ran for mayor in 2018, said "The only way to make San Francisco more affordable is not by building a lot more market rate housing as possible, it’s by building as much Affordable and middle-income housing as possible." https://medium.com/@sbuss/no-on-kim-58ef07cf459a#1379 https://medium.com/@sbuss/no-on-kim-58ef07cf459a#1379 We still have electeds who say it's not a shortage, but an affordability problem. They literally do not believe that building more market rate housing will help. We almost passed a development moratorium in the Mission in 2015. Public opinion has swung fast in our direction.
  • aidenn0 7y ago
    In SF it was outside the Overton window.
• foobar_ 7y ago
  This is actually called rentier capitalism. There is no glorious competition that happens here. You sit on some asset and generate perpetual revenue from it. Patent trolls blatantly abuse this. Money is just data if you think about it. How does it flow? What is the government but a gloried issue tracker to deal with the tragedy of the commons?
  • nf8nnfufuu 7y ago
    So buy some land, if it is so easy.
• Apes 7y ago
  Not a major deal, but the $1 in $8 calculation is a bit off, since it doesn't take inflation into account. The math still holds for the most part. Adjusting for inflation and rerunning the same calculations: * $2,600 -> $2,902.47 -> 2011 median rent adjust to 2018 dollars * $3650 - $2900 = $750 / month increase in rent. * $750 / .69 = $1086 / month increase (pretax) * $52000 -> Increased yearly burn for a 4 man startup. * $208000 -> 4 year pre-tax burn * $208000 * .69 = $143520 -> 4 year amount to land owners * $500,000 -> $558,166.51 -> Average seed round in 2011 adjusted to 2018 dollars * $2.1M - $558K = $1.5M -> Increase in venture funding So $143K / $1500K goes to Landowners, which is $1 in $11, not $1 in $8, or 30% less than originally calculated.
  • buss 7y ago
    Ah, shoot. I knew I forgot something.
  • jurassic 7y ago
    Few landlords are paying full marginal income tax on their rental income because of the numerous tax advantages of property ownership (mortgage interest, depreciation, etc) that reduce their tax liability. Variation in the tax situation of different landlords makes it a pretty misleading thing to include in the analysis. Besides, how the landlord and the government divvy up the rent money doesn't make any difference to the startup that needs to pony up $208,000 more dollars. Whether rental income is taxed at 0% or 100%, the cost to renters and startups is a large and growing problem.
• buss 7y ago
  Hey all, I wrote this! Feel free to email me at steven.buss@gmail.com with any questions or comments. Also if you have a few bucks to spare for my campaign, please donate at https://buss2020.org/donate https://buss2020.org/donate
  • iandanforth 7y ago
    This needs more historical and modern context to point out that this situation isn't normal even for SF and that much better ways are found all the time, for example in Portland. I am glad though that you focus on the simple ROI calculation of election costs to investment efficiency!
  • dredmorbius 7y ago
    Steve, thanks for tackling this and popping up. This past January, the Commonwealth featured a panel on Bay Area housing crisis, featuring Pastor Paul Bains, Fred Blackwell, Priscilla Chan, Janet Liang, Jennifer Martinez, and Erika Aguilar -- an impressive, intelligent, and motivated group of experts. https://www.commonwealthclub.org/events/2019-01-24/bays-future-new-solutions-housing-crisis https://www.commonwealthclub.org/events/2019-01-24/bays-futu... What floored me, and several friends I shared this with, though, was the collective response that there was no single silver bullet, no way to throw money at the problem to solve it. Which betrays an immense ignorance or denail of San Francisco history. Henry George's Land Value Tax is not only a concept that was developed in (and concerning) San Francisco, but literally raises money from the crux of the problem at the same time it solves it, by creating an effective incentive to increase density. Very simply put, San Francisco and the rest of the Bay Area must grow their way out of this mess, and if they don't, other areas will, and are. And it's not just about outsiders -- it's SF and Bay Area natives who are and have been priced out and forced out of the area, and present residents who will find themselves and their families -- elderly parents, young children -- facing similar fates. And yes, I'm aware that Proposition 13 is political kryptonite, but it's also increasingly economic kryptonite, killing off what once made California an attractive and viable place to be. Though I've known of the initiative for decades, it's only in recent years I've realised just how toxic it truly is. I've also become increasingly aware of the economic toxicity of the tendency toward and incentives for asset inflation, most especially of real productive and essential assets -- land, housing, education, healthcare, essential utilities. Some of the most interesting research on this was conducted in the 1930s and 40s by Bernhard J. Stern, for example "Resistances to the adoption of Technological Innovations" (1937). He traces the practice across numerous innovations, from printing and transport to energy and, yes, housing, naming some very familiar names and tactics. (The post-WWII suburban boom broke the logjam for a time. Oh, and you may have heard of his research assistant, a student named Isaac Asimov.) https://archive.org/details/technologicaltre1937unitrich/page/39 https://archive.org/details/technologicaltre1937unitrich/pag... Markdown/text: https://pastebin.com/raw/fZajYSGa https://pastebin.com/raw/fZajYSGa You're absolutely correct that this isn't a technological problem. It is an organisational one, and a political one, and pits families and the working class against homeowners, banks, investors, and landlords. And it will destroy California, if it hasn't already.
• tinco 7y ago
  If you think paying $1 for every $8 in funding for housing is too much, just move to a different city? Apparently San Francisco is worth it, if it wasn't VC's would have stopped funding startups in SF a long time ago. There's a bunch of graphs showing rents increase, but no real reason for why that's a bad thing. The big number that's supposed to sway us is the rent increasing by 30%, as funding increases by 300%. Maybe there's better numbers somewhere else, but this just tells me rents are not really a problem, at least for the tech industry. And the solution? It's just build more houses, so the rents go down (a little). Do you really want more houses? The NIMBY people don't seem to. Infinite high density cities aren't all necessarily the best thing. Maybe if you think too much money is disappearing in these wealthy people's vaults, raise taxes?
  • buss 7y ago
    > And the solution? It's just build more houses, so the rents go down Right, but the problem is that it's largely illegal to actually build more houses in San Francisco.
    • arcticbull 7y ago
      This right here. The price of housing is solely a supply-side issue, and it's all artificial constraints. The reality is that owners are older, wealthier, stronger-rooted voters -- while renters are younger, transient and don't vote. This is the result. Things like height restrictions, "shade" restrictions, NIMBY-ism, red-tape -- all the way down to mortgage interest tax deductions -- are to the benefit of owners and to the detriment of renters. They're all political issues that can be resolved but we choose not to.
  • etjossem 7y ago
    They really buried the lede. "Politics is an organizational problem, not a technological one." If we could just build more houses by saying that we decree them into existence, we wouldn't have this problem. The author proposes some ways to bolster the pro-housing community and get tech voters involved in local politics (including joining https://yimbyaction.org/ https://yimbyaction.org/), and here we are still wondering whether we want to have lower rents or not.
• bayarearefugee 7y ago
  As someone who lived in the Bay Area and worked in SF for a while but moved out because I didn't like the mono-culture forming from being surrounded by virtually nothing but my own kind -- cry me a river VCs and early-stage startups. Maybe spread-out beyond SF & the Valley? There's a whole big world out here. I'm not a huge fan of excessive NIBMYism, but the industry's inability to take advantage of the entire rest of the world seems like a much easier problem to solve on all fronts, and yet everyone takes it as a first principle that everything must be done in this one place.
  • stjohnswarts 7y ago
    That's why I like living in Houston. Sure it's Texas but it's so much more diverse here than most cities. And the food is wonderful.
• buboard 7y ago
  Tech companies create software. Software does not require an office. All tech companies could be remote. VCs may have their reasons to make landorlds rich. Software will still be eating the world.
  • muzz 7y ago
    Software does not require an office, but the people who create do. And ironically, they work best and most collaboratively in the same place at the same time. This is why cubicles were replaced by open office desks, why companies hire in the expensive Bay Area, and bus their employees to central locations.
• paulsutter 7y ago
  "Choosing San Francisco in 2020 is like choosing Java in 2010... Proven, but makes it harder to do simple things and doesn’t give you an advantage over incumbents"- Balaji S. Srinivasan https://twitter.com/balajis/status/1149073637325979648 https://twitter.com/balajis/status/1149073637325979648
  • karlp 7y ago
    And like Java you might have to take San Francisco just because that's where the money is.
  • buboard 7y ago
    Interestingly , he lives and works there.
    • acd10j 7y ago
      He used to , recently got back to bangalore India for starting his own startup in robotics.
    • nostrademons 7y ago
      Also interesting what he suggests as the alternative - blockchain incorporation, configurable nation states, and fully-remote teams.
      • buboard 7y ago
        I am also a fan of his YC talk https://m.youtube.com/watch?v=cOubCHLXT6A https://m.youtube.com/watch?v=cOubCHLXT6A
  • zygimantasdev 7y ago
    What's bad about java in 2010? Java is still alive today, while Ruby with Rails were overtaken
    • foxyv 7y ago
      Everyone wants to kill Java. However Java has the distinct advantage of an incumbent. It has enough people who know it and the support of MANY major organizations like Apache, Red Hat, Amazon and Google. The libraries available for it are enormous and it has build systems and dependency management systems coming out of its ears. Want a contractor to complete a project? If you are using Java you can get one from almost anywhere. Anything that hopes to replace Java had better come armed with a couple billion dollars and the support of thousands of engineers.
• deleted 7y ago
  [deleted]
• pgreenwood 7y ago
  If the problem is that too much capital is flowing from productive investments, like tech, to unproductive land speculation then perhaps part of the solution is to capture part of that windfall gain through a land value tax [1], i.e. a tax on just the land and not the buildings, thereby reducing the speculative component from housing investment without reducing incentive to develop more housing stock. [1] https://en.m.wikipedia.org/wiki/Land_value_tax https://en.m.wikipedia.org/wiki/Land_value_tax
  • buss 7y ago
    You're right that a LVT would help, but the existing regulations prevent people from actually redeveloping their land into more productive uses. When it's illegal to build apartments in over 70% of San Francisco, that's the first and lowest hanging fruit to pick.
    • pgreenwood 7y ago
      I agree restrictive regulation are a major part of the problem. But LVT would have the effect of reducing prices even if stock were not increased, leaving rents unaffected.
      • qwhelan 7y ago
        LVT is illegal in California due to Prop 13, so you'd need a constitutional amendment to even consider it.
        • rcpt 7y ago
          Well let's get one then. Is it really that hard to put it on the ballot every 2 years? Only needs to pass once to undo 40 years of damage.
          • acdha 7y ago
            I was born around the time prop 13 passed and it wasn’t until I was in my twenties that I realized _why_ everything had been obviously built like an affluent society but crumbling due to lack of maintenance for as long as I’d been aware of it. One memory in particular was when the San Diego Union Tribune ran a picture of new computers from one of those supermarket programs, sitting under a hole in the roof because the district had been underfunded on maintenance for three decades.
• rogerkirkness 7y ago
  Very tall buildings are technology. People don't like them, but they are the only way to make cost of living cheaper in terms of housing and offices. In cities where lots of very tall buildings are going up, rent is going up much slower or not at all. In cities where that isn't the case, it's increasing as population and wealth grow. Building vertically is the only way to prevent if from being zero sum.
  • Retric 7y ago
    You can get high density without very tall buildings. On street parking for example has a huge impact on density. As do wide streets, parks etc.
    • rogerkirkness 7y ago
      I agree, but I'd argue that almost all cities have too few parks and too many low slung buildings.
    • rewgs 7y ago
      A city that starts getting rid of parks is a city I’m not moving to.
  • Spooky23 7y ago
    You can also reduce demand. It’s a big country. The SF situation is the ultimate bubble.
    • closeparen 7y ago
      Boom and bust cycles in the tech and real estate industries definitely play a role in SF's situation, but the real bubble here is sprawl. As we wake up from the automobile-futurism fever dream, the few places in the US whose built environments aren't wholly given over to it are seeing the same pressures. If you can make driving your SUV from the cul de sac to the strip mall to the office park cool again, there are many millions waiting for you at GM, Ford, and Lennar. If not, then no you cannot "reduce demand" for SF and places like it.
• blunte 7y ago
  Do we honestly believe that the landlords eating everything are not related to the VCs? No VC worth their salt would be ignoring the enormous potential that lies in investment property... especially if their own VC funds can feed back to them as rental income. And in the extremely unlikely case that financiers aren't also the landlords... well nevermind. They are smart people; there's no way they are ignoring this opportunity.
• xster 7y ago
  I think this might have been shared in HN at some point in the past but https://www.collectorsweekly.com/articles/demolishing-the-california-dream/ https://www.collectorsweekly.com/articles/demolishing-the-ca... was a super fascinating article depicting local zoning as a social shaping tool all the way back to the 1800s.
• HillaryBriss 7y ago
  the YIMBYism, the pro-tech business mentality, the emphasis on growth, the anti regulation perspective -- all these things make me think a little bit of Houston Texas or Ronald Reagan or the Chamber of Commerce or something.
• deleted 7y ago
  [deleted]
• diogenescynic 7y ago
  So end zoning restrictions and build more. It’s just a supply issue. We haven’t sufficient housing for decades as demand has increased, pushing up prices. I think locals know exactly what they’re doing and are fine with it since their homes are likely a significant portion of their net worth.
• im3w1l 7y ago
  > tl;dr: Landlords are taking $1 of every $8 in venture capital investments That's lower than I expected. Wouldn't be surprised if that's sustainable.
• dreamcompiler 7y ago
  The United States has over nine million square kilometers of land area. Why is the most portable industry in the world (software) being held hostage by a few square kilometers along the coast of northern California?
  • gumby 7y ago
    This topic has been discussed endlessly over the last 40 years (both by local social scientists and people trying to reproduce Silicon Valley elsewhere). The short answer is “it’s a just so story commingling schools, openness, military boom...”. One thing to notice is that plenty of industries have followed this pattern until they became mature (cars, breakfast cereals, aircraft to some degree). And you see this in software: the pressure discussed is at the frothy end of the market.
    • iso-8859-1 7y ago
      I couldn't parse: > it’s a just so story commingling Explanations: In science and philosophy, a just-so story is an unverifiable narrative explanation for a cultural practice, a biological trait, or behavior of humans or other animals. The pejorative nature of the expression is an implicit criticism that reminds the hearer of the essentially fictional and unprovable nature of such an explanation. com·min·gle: mix; blend
      • noneeeed 7y ago
        Thank you. I couldn't parse that comment at all. This is where a few quotation marks (or hyphenation) help, so either just-so-story, or "just so story".
      • edwinyzh 7y ago
        I thought it's just me as a non-native English speaker
    • dreamcompiler 7y ago
      I know some of the answers but at what point does the cost of doing business in the Bay Area outweigh the benefits? Keep in mind when Silicon Valley began they were actually fabbing silicon. That doesn't happen in SV today (AFAIK). It's mostly software now, and software is much more portable than silicon.
• stjohnswarts 7y ago
  Politics in SF are so corrupt that it's laughable. The city is going to have to start rezoning soon or something is going to snap and companies will move away or the best people will decide it's not worth the hastle and go to other parts of the country and start their own startups.
• Mikeb85 7y ago
  And Thomas Piketty was right... Also, this isn't exactly a revelation for those who are in businesses that hinge on physical location (retail, restaurants, etc...). Landlords provide little of value, in most cases did nothing to earn their money (around here the landlords in downtown business districts are the descendants of those who owned that property 100+ years ago) and merely act as parasites. In the case of those who own residential properties, they merely bought at the right time, and due to the scarcity of land are earning far more than whatever value they're providing.
  • nf8nnfufuu 7y ago
    If it is such an easy way to make money, why doesn't everybody simply buy some land. You can pool resources if as an individual you can't afford it.
    • Mikeb85 7y ago
      The vast majority of middle class people's wealth is in their homes. The only reason not everyone does it is because they don't have the prerequisite capital (and pooling wealth usually doesn't work because people suck at sharing, although I do know people who have done it, even without being in a romantic relationship).
    • 0xB31B1B 7y ago
      Because the state of California gives enormous tax advantages to ultra long term landowners, they way to make money in being a landlord is to inherit property, not to buy it.
    • nikanj 7y ago
      The returns are 1% of capital invested, if you invest the $50 million needed to buy a well-located lot today. If your grandfather bought the same lot for $600 in 1922, the returns today are quite something. It’s very hard to become a large-scale land owner today, unless you happen to own a time machine.
      • rficcaglia 7y ago
• timwaagh 7y ago
  One out of eight money units sounds pretty reasonable. I think I capture more than that from the college students who rent with me. But actually property developers do have the option to go outside the law, just like uber. Or maybe not them, but people do anyways. The only way to force political action is actually by ignoring the rules. Building dwellings where they should not exist, using non residential space inappropriately, etc. Build your own slum. People will become homeless if government evacuates them and finding these is hard. so government doesn't like to and cannot do very much.
  • Decade 7y ago
    People tried. The regulators catch up and fine away all the profits and force the owner to revert the property back to what the law allows. https://www.sfgate.com/bayarea/article/SF-sues-landlord-over-state-of-housing-for-9196374.php https://www.sfgate.com/bayarea/article/SF-sues-landlord-over... https://www.sfexaminer.com/news/planning-commission-supervisors-condemn-landlord-for-unpermitted-student-housing/ https://www.sfexaminer.com/news/planning-commission-supervis... I get the impression that a lot of the innovation that tech companies have been able to create were because the regulators didn’t know what they were doing. No such luck in real estate.
• beefcake 7y ago
  Here's a disruptive thought: Why not relocate?
  • muzz 7y ago
    Have market participants somehow not considered this?
• echan00 7y ago
  Welcome to Hong Kong
• everyone 7y ago
  So, San Francisco = the world? That is pretty amazingly blinkered.
• glangdale 7y ago
  So - I'm broadly supportive of the whole YIMBY thing, but I have to ask this: given how dysfunctional state and local governments have been here, are they capable of managing the giant influx of people that would result from a massive rebalancing of policy towards adding more homes? Here in Sydney we've had absolutely no problem managing to flood the market with apartments, but there's been a substantial disconnect in terms of funding and regulation to provide transport, education, healthcare and green space for all those new people.
  • foobar1962 7y ago
    I'm glad this angle has been brought up. (I'm in Sydney too, not that that really matters.) Its one thing increasing housing density; it's another providing services (particularly basic ones like water and sewer) and maintaining a quality of living. It's like, you could fill your bedroom with 4 or six beds, but there won't be enough bathrooms, living rooms, the house internet speed will degrade... it won't be a nice pace to live. At some point it's sensible to go somewhere else. Now, about Sydney in particular and Australia in general: we are dry, don't get much rain, most of the continent except for the costal strip is arid and infertile, and that's where something like 80% of the population live. Sydney's water supply is limited and there are only so many people the water resources can supply reliably (we nearly ran out several years ago, and we currently have level 1 water restrictions in force now). That population is much smaller than the number of people that can be housed on the land in high density developments.
  • wasdfff 7y ago
    In LA the city is really trying to encourage dense building around current and future transit corridors. Metro and city planning really do great work and are staffed with brilliant engineers, but are generally stymied by NIMBYs who eagerly sue their own city and burn their own and public money on subsequent litigation that only serves to dilute these projects. Beverly hills spent millions out of their school district funding mounting a failed challenge against a subway extension: thats the level of delusion among NIMBYs in CA, burning their own childrens education funding in hopes of not seeing a black or brown person at trader joes.
• smikhanov 7y ago
  The rent is just too damn high!
• newshorts 7y ago
  It would seem for every new house you build, you would convert a YIMBY to a NIMBY.
• mikhailfranco 7y ago
  See my old comments: "Startups are ways of exploiting geeks to work hard chanelling money from VCs to local landlords." https://news.ycombinator.com/item?id=18863824 https://news.ycombinator.com/item?id=18863824 Do not feed the landlords. Just don't live there.
• karmakaze 7y ago
  ...in SF This issue is localized and not comparable to the pervasiveness of software. Other cities' startup economies will continue to grow and this will be less of a hotspot problem. [Funny in the context of distributed systems, SF is a hot DynamoDB shard and paying the excessive scaling fees.]
• JDiculous 7y ago
  This is honestly one of the reasons why I left NYC. It's not that I couldn't afford to live there, I'm just against paying exorbitant rents in principle, supporting an aristocracy class receiving money for doing nothing. Same thing with student loans. Feels like the mafia is taking $1.2k/month of my paycheck. I figured I'd rather just opt out than participate in this extortion. It's funny how tech, by definition the most technologically industry, is so backwards when it comes to things like remote work. But VCs by definition are so wealthy that they have more money than they know what to do with, so there's no real incentive for them to change the status quo until it's disrupted underneath their feet. It's like the whole "nobody ever got fired for IBM" trope.
• Hnrobert42 7y ago
  Move.