5 ms·

Yes it's interesting that the SF area has such high demand for technology workers yet almost no space to actually house them (let alone all the down-and-out peo

Yes it's interesting that the SF area has such high demand for technology workers yet almost no space to actually house them (let alone all the down-and-out people living in parks & alleyways). Sounds like kind of a disconnect between the business community and the government as well as the geographic realities of a city crowded onto a little peninsula, albeit of course with many suburban towns nearby but very heavily developed already. I couldn't imagine being lured to the bay area for a job even for double my current salary (standard software engineer very low 6 figs). I have maybe $210K of equity in my current home; how much of a house is that going to get me there? I'd never afford a million dollar mortgage. Would have to be full time remote.

xienze 7y ago
> I'd never afford a million dollar mortgage. Well if HN is to be believed, $350K of total compensation isn’t out of the ordinary for FAANG, so that would get you in a million dollar house. Never seems to occur to anyone that crazy high salaries might be driving crazy high housing prices, not the other way around, though...
- lotsofpulp 7y ago
  >Never seems to occur to anyone that crazy high salaries might be driving crazy high housing prices It's the only logical conclusion. Married couples, each making well over $100k, competing with each other will obviously result in higher home prices, unless you increase the supply of the homes that those married couples desire. If you look at a map of recent home sale prices on Redfin or the real estate websites, you can easily see where all the doctors/programmers/business owners live in a town.
  - garyrichardson 7y ago
    It’s never one thing. Also consider crazy low interest rates and lax borrowing controls making it easy to borrow large amounts of money. This makes it easy to invest/fund companies, easy to pay more to your employees and easier for the employees to borrow more or pay higher rents.
    - deleted 7y ago
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    - deleted 7y ago
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  - Nasrudith 7y ago
    Well if business owners are included by definition salary isn't to blame. Really it is demand/supply with a ceiling limited by ability to pay and ability to add new stock that rougly determines the limit. If the current supply is one remaing for sale house for $5 million when with a per house and land cost of at most $350k but anyone willing to wait could get new land and build it in a year for $500k there won't be any takers unless that are in a major hurry.
    - lotsofpulp 7y ago
      Yes, the supply curve of course plays an equally important role. However, I have read some claims that the high house prices cause the high salaries, which is ludicrous to me. In order for prices to be high, the buyers must be able to afford it and willing to pay it (the demand curve).
      - Nasrudith 7y ago
        There probably is some feedback curve. The higher housing prices do raise labor even of "commodity" low end jobs but there is an important third variable without salary and housing would both collapse - does the employer get anything out of the expensive location which justifies setting up there instead of some place cheaper? That something can take many forms from access to customers, the "prestige" of an area being an effective requisite where those who don't pay the expense are judged as second tier regardless if it is true or not, or simply that the location is a literal prerequisite like minerals in the area for an extractive industry. Let any relevant to the instance specific quality or quantity over others be termed "edge" as it is about relative difference mostly. For a concrete example it would be Lewis Carrollian madness to set up a gold mine the next town over without any precious metals because the no matter how much the land and wages are cheaper for the mine towns have the infinite edge for gold mining over one with literally none. Establishing a mine in the third world with lesser deposits to get half of the gold per mine for a tenth of the wage and real estate costs would still win in spite of the weaker gold veins. In thie case locally biggest threat to wages and housing price value other than literal anhilation would be the loss of an edge to justify it. The edge in this case is fuzzier, partially the prestige and partially the talent of "performers" measured in outcomes. Those are also in somewhat circular feedback loops. The prestige attracts the performers and the success of the performers maintains the prestiege. A slip in performance will cause eventual collapse of prestige if they fail to justify their expense. Damage to prestige may limit income of new talent or lead to an exodus.
- Retric 7y ago
  It could also be crazy high housing prices driving crazy high salaries. Assuming people turn down offers due to differences in cost of living.
  - xienze 7y ago
    It’s a feedback loop. Prices in the Valley weren’t always crazy high, they were just higher than normal for many decades. Then Valley tech companies started getting in a pissing contest with each other to get “the best talent”, driving salaries higher and higher, thus attracting more people, driving housing prices up. Companies continue driving salaries up to convince people that they could afford to live and work there. And on and on...
    - JoeAltmaier 7y ago
      I'm not sure conspiracy theories are sound economic analysis. How about, population rose but land area stayed the same. All the land got developed (it used to be orchards, remember?) so the only way to get more land for housing was, to pay more for existing plots. So the prices go up. No need to imagine a class of evil plotters, trying to make everyone sad.
AstralStorm 7y ago
Only a few jobs can be made remote. Do you have a remote shop clerk? Remote salesman? Remote janitor? Remote gardener? Remote garbage collector? The growth in jobs is not necessarily in the skilled ones. And those are definitely not the jobs poorer people who cannot afford to rent or own do. And there is very strong opposition to going fully remote. When you have to be in office even once a week or every two weeks, you need a temporary place still...
- mythrwy 7y ago
  Why not? Why can some of those jobs not be remote?
pfooti 7y ago
In California, the picture is incomplete unless you include the effects of proposition 13. It has been in effect since 1978 and strongly encourages municipalities to prioritize commercial real estate over residential. Commercial real estate provides a tax base that can be increased over time with the value of the property, and does not represent as large of an infrastructure investment (residential requires schools and so on). It isn't only prop 13 that is to blame for the bay areas particular housing crisis, but encouraging towns to not approve residential starts cannot help.
- danans 7y ago
  > Commercial real estate provides a tax base that can be increased over time with the value of the property, This isn't true. Prop 13 applies to commercial property also. There is a growing movement to repeal that aspect of it in 2020.

xienze 7y ago

> I'd never afford a million dollar mortgage. Well if HN is to be believed, $350K of total compensation isn’t out of the ordinary for FAANG, so that would get you in a million dollar house. Never seems to occur to anyone that crazy high salaries might be driving crazy high housing prices, not the other way around, though...

lotsofpulp 7y ago
>Never seems to occur to anyone that crazy high salaries might be driving crazy high housing prices It's the only logical conclusion. Married couples, each making well over $100k, competing with each other will obviously result in higher home prices, unless you increase the supply of the homes that those married couples desire. If you look at a map of recent home sale prices on Redfin or the real estate websites, you can easily see where all the doctors/programmers/business owners live in a town.
- garyrichardson 7y ago
  It’s never one thing. Also consider crazy low interest rates and lax borrowing controls making it easy to borrow large amounts of money. This makes it easy to invest/fund companies, easy to pay more to your employees and easier for the employees to borrow more or pay higher rents.
  - deleted 7y ago
    [deleted]
  - deleted 7y ago
    [deleted]
- Nasrudith 7y ago
  Well if business owners are included by definition salary isn't to blame. Really it is demand/supply with a ceiling limited by ability to pay and ability to add new stock that rougly determines the limit. If the current supply is one remaing for sale house for $5 million when with a per house and land cost of at most $350k but anyone willing to wait could get new land and build it in a year for $500k there won't be any takers unless that are in a major hurry.
  - lotsofpulp 7y ago
    Yes, the supply curve of course plays an equally important role. However, I have read some claims that the high house prices cause the high salaries, which is ludicrous to me. In order for prices to be high, the buyers must be able to afford it and willing to pay it (the demand curve).
    - Nasrudith 7y ago
      There probably is some feedback curve. The higher housing prices do raise labor even of "commodity" low end jobs but there is an important third variable without salary and housing would both collapse - does the employer get anything out of the expensive location which justifies setting up there instead of some place cheaper? That something can take many forms from access to customers, the "prestige" of an area being an effective requisite where those who don't pay the expense are judged as second tier regardless if it is true or not, or simply that the location is a literal prerequisite like minerals in the area for an extractive industry. Let any relevant to the instance specific quality or quantity over others be termed "edge" as it is about relative difference mostly. For a concrete example it would be Lewis Carrollian madness to set up a gold mine the next town over without any precious metals because the no matter how much the land and wages are cheaper for the mine towns have the infinite edge for gold mining over one with literally none. Establishing a mine in the third world with lesser deposits to get half of the gold per mine for a tenth of the wage and real estate costs would still win in spite of the weaker gold veins. In thie case locally biggest threat to wages and housing price value other than literal anhilation would be the loss of an edge to justify it. The edge in this case is fuzzier, partially the prestige and partially the talent of "performers" measured in outcomes. Those are also in somewhat circular feedback loops. The prestige attracts the performers and the success of the performers maintains the prestiege. A slip in performance will cause eventual collapse of prestige if they fail to justify their expense. Damage to prestige may limit income of new talent or lead to an exodus.
Retric 7y ago
It could also be crazy high housing prices driving crazy high salaries. Assuming people turn down offers due to differences in cost of living.
- xienze 7y ago
  It’s a feedback loop. Prices in the Valley weren’t always crazy high, they were just higher than normal for many decades. Then Valley tech companies started getting in a pissing contest with each other to get “the best talent”, driving salaries higher and higher, thus attracting more people, driving housing prices up. Companies continue driving salaries up to convince people that they could afford to live and work there. And on and on...
  - JoeAltmaier 7y ago
    I'm not sure conspiracy theories are sound economic analysis. How about, population rose but land area stayed the same. All the land got developed (it used to be orchards, remember?) so the only way to get more land for housing was, to pay more for existing plots. So the prices go up. No need to imagine a class of evil plotters, trying to make everyone sad.

AstralStorm 7y ago

Only a few jobs can be made remote. Do you have a remote shop clerk? Remote salesman? Remote janitor? Remote gardener? Remote garbage collector? The growth in jobs is not necessarily in the skilled ones. And those are definitely not the jobs poorer people who cannot afford to rent or own do. And there is very strong opposition to going fully remote. When you have to be in office even once a week or every two weeks, you need a temporary place still...

mythrwy 7y ago
Why not? Why can some of those jobs not be remote?

pfooti 7y ago

In California, the picture is incomplete unless you include the effects of proposition 13. It has been in effect since 1978 and strongly encourages municipalities to prioritize commercial real estate over residential. Commercial real estate provides a tax base that can be increased over time with the value of the property, and does not represent as large of an infrastructure investment (residential requires schools and so on). It isn't only prop 13 that is to blame for the bay areas particular housing crisis, but encouraging towns to not approve residential starts cannot help.

danans 7y ago
> Commercial real estate provides a tax base that can be increased over time with the value of the property, This isn't true. Prop 13 applies to commercial property also. There is a growing movement to repeal that aspect of it in 2020.