4 ms·

part of the reason why: Bay Area leads nation in rental price increases http://www.sfexaminer.com/local/2012/01/bay-area-leads-nation-rental-price-increases htt

by earl 15y ago

part of the reason why: Bay Area leads nation in rental price increases http://www.sfexaminer.com/local/2012/01/bay-area-leads-nation-rental-price-increases http://www.sfexaminer.com/local/2012/01/bay-area-leads-natio... At a previous startup, a ceo was out drinking beers with some engineers. Now this ceo is quite a nice person, so please don't think that I think poorly of him. Somehow, salaries came up and the ceo mentioned that we were all presumably doing pretty well. Then one of my engineer coworkers mentioned he was paying $2300 or something like that in rent for a small one bedroom near Valencia and 20th, and I said my gf and I were paying $2600 for a medium one bedroom in upper haight. The ceo was utterly shocked at what rent prices were, since he'd moved to the city and bought a house nearly 30 years before. It turns out he was paying something like $1300/mo to live in a mansion in pac heights and his mortgage was almost paid off. The thing that bugged me, in retrospect, was his lack of awareness of one of the primary drivers of engineering salaries: the cost of living in sf. And the impact of the city being actively hostile to tearing down a lot of the pretty crummy housing we have and building up. edit: not to mention, if you perhaps want to own, $500 - $600K in most of SF is not exactly living in luxury. If you're near real public transport, ie bart, it's a small one bedroom and if you resign yourself to a crappy commute or driving it's a lower end two bedroom, 700-1100 ft^2. Further, you'll pay $1.1k per million dollars of value per month in taxes, so for a $600k house you're giving the city nearly $700/mo for forever.

roel_v 15y ago
Logically, it's the other way around: rent rises because wages (i.e., ability to pay, with an implied high willingness to pay for better housing) are high. Rent rises to capture some of the surplus that is created by the high amounts of money that go around.
- cpeterso 15y ago
  San Francisco has apartment rent control so new renters (e.g. young people moving to the city) must pay more to offset landlords' loss of rental income from long-time renters.
  - davidu 15y ago
    Your conclusion is not based with facts. Most landlords in the city do not have rent-controlled properties. That is a fact you can look up in the City websites. Therefore, the argument that rent is going up to offset rent-controlled properties is fallacious. :-)
    - rdl 15y ago
      This depends on where in the city you are -- most of the housing stock in SF is pre-1979 construction, and thus IS eligible for rent control. In SoMA, there's a lot of new construction, largely either in the form of condos or big corporate rented buildings (archstone, etc.). Most of the landlords for the older buildings own a small number of units (1-4); the big new buildings might have lots of units but not a lot of individual landlords. Most startup people seem to want to live in the Mission or other older areas, even if they work in SoMA. (something I don't understand; I like the new buildings in SoMA)
      - malyk 15y ago
        I'd chalk wanting to live in the mission or other areas to two things. Most people hate living in large apartment buildings when you can have a sweet victorian flat and the "nightlife" in soma is a totally different vibe than in the mission. Especially the variety of options.
    - earl 15y ago
      While it is possible that most landlords don't have rent-controlled properties, I think the majority of renter-occupied housing is subject to rent control. FYI almost anything built prior to 1979 is rent controlled. Also, what sf calls rent controlled is what nyc calls rent stabilized: when tenants leave the landlord can reset the unit to market rents. The law only caps increases while the same tenant lives in the same apartment. data: proportion of renter occupied housing in sf subject to rent control: http://www.thehdmt.org/indicators/view/192 http://www.thehdmt.org/indicators/view/192 2nd map direct link: http://www.thehdmt.org/img/indicators/pdf/RentControlHousingStock.pdf http://www.thehdmt.org/img/indicators/pdf/RentControlHousing...
- yuhong 15y ago
  I wonder how long this cycle will last.
headstart 15y ago
I make $100,000 a year and my rent is $10,000 per year, I can't imagine earning so much and spending over 1/3rd on rent out of necessity instead of choice. The new place I'm renting (starting next month) will bring my rent up to around $2,800 a month but it's a choice and an incredible place, being forced to spend so much on so little must sting a lot, especially when $100,000 year income is considered well off everywhere else. I'll be living like a king in my new place.
- dasil003 15y ago
  Sure it's by choice: the choice to live in San Francisco or the peninsula—the most exciting locus of tech innovation in the history of the world. Personally I was not crazy about it, so I took the opportunity to move to my company's London office where things are even more expensive. It's all choices though. I doubt you could name a city that I'd be willing to live in where you could get a decent apartment for $800/month.
_delirium 15y ago
SF is pretty expensive, but more of Silicon Valley (both jobs-wise and population-wise) is in the San Jose area, which is considerably more reasonable. Still not cheap, but not $2600/1-bd level; that kind of rent will get you a 2-bd house.
marvin 15y ago
I've been looking at these posts that complain about the cost of living in Silicon Valley for a while, and thought that things were pretty bad. But when comparing to my home country, Norway, things don't seem very bad at all. Granted, Oslo is supposed to be the most expensive city in the world...but from all the complaining I hear from the tech crowd, you'd think the difference wouldn't be large. But Wolfram Alpha reports a 45% / 37% cost of living difference in favor of SV: http://www.wolframalpha.com/input/?i=moving+from+Mountain+View+to+Oslo+salary+%24100%2C000 http://www.wolframalpha.com/input/?i=moving+from+Mountain+Vi... http://www.wolframalpha.com/input/?i=moving+from+San+Fransisco+to+Oslo+salary+%24100%2C000 http://www.wolframalpha.com/input/?i=moving+from+San+Fransis... This is on the top of the fact that we pay, in total, around 50% tax. Housing is more expensive in SV, but everything else is much cheaper than where I'm from. Are these numbers accurate? Because if they are, then, pardon me for being blunt, you guys are really whining a lot. You must be living in one of the places on Earth with the highest ratio of income to expenses. That the cost of living is higher than in the US in general doesn't really seem like an argument to me. You're pretty much swimming in money over there.
- moocow01 15y ago
  Lets trade places. Seriously though SV is decent but America is not exactly the top place to be living anymore in comparison to a place like Norway despite all the 'USA, USA' chanting we do. I'd gladly pay a boatload in taxes if it would genuinely get us out of our current messes.
  - andreer 15y ago
    Feel free to come on over. There's a shortage of good engineers in Norway just as there is everywhere else. You could even work for a US company, as I do. http://jobs.yahoo.no/page/work/jobopenings http://jobs.yahoo.no/page/work/jobopenings
  - afterburner 15y ago
    Good luck getting citizenship in Norway.
usaar333 15y ago
As a sibling commenter noted, it is the other way around. Constrained supply and high demand are driving the prices. Now it is true that the one-bedroom rent increase probably is blowing away the added after-tax salary. However, if the tech worker lives with roommates (where rents hit ~$1000/month), he will take home more income in the Bay Area than elsewhere.
dejv 15y ago
If Bay Area is so expensive, how people with shitty jobs (sweepers, fast food chain workers...) can afford living there?
- moocow01 15y ago
  Cause they all make 100k also - you'll laugh at this until you realize its true. Well I suppose not everyone like fast food workers but in all seriousness there are a bunch of menial jobs in SF that pay 75 - 100k. Usually union protected gigs.
  - _delirium 15y ago
    The median household income in the city is around $70k, so most of the population doesn't have a 6-figure income...
- usaar333 15y ago
  It's housing that is the main thing that makes the bay area pricier. You can get that down by living in a shared unit.

by earl 15y ago

roel_v 15y ago

Logically, it's the other way around: rent rises because wages (i.e., ability to pay, with an implied high willingness to pay for better housing) are high. Rent rises to capture some of the surplus that is created by the high amounts of money that go around.

cpeterso 15y ago
San Francisco has apartment rent control so new renters (e.g. young people moving to the city) must pay more to offset landlords' loss of rental income from long-time renters.
- davidu 15y ago
  Your conclusion is not based with facts. Most landlords in the city do not have rent-controlled properties. That is a fact you can look up in the City websites. Therefore, the argument that rent is going up to offset rent-controlled properties is fallacious. :-)
  - rdl 15y ago
    This depends on where in the city you are -- most of the housing stock in SF is pre-1979 construction, and thus IS eligible for rent control. In SoMA, there's a lot of new construction, largely either in the form of condos or big corporate rented buildings (archstone, etc.). Most of the landlords for the older buildings own a small number of units (1-4); the big new buildings might have lots of units but not a lot of individual landlords. Most startup people seem to want to live in the Mission or other older areas, even if they work in SoMA. (something I don't understand; I like the new buildings in SoMA)
    - malyk 15y ago
      I'd chalk wanting to live in the mission or other areas to two things. Most people hate living in large apartment buildings when you can have a sweet victorian flat and the "nightlife" in soma is a totally different vibe than in the mission. Especially the variety of options.
  - earl 15y ago
    While it is possible that most landlords don't have rent-controlled properties, I think the majority of renter-occupied housing is subject to rent control. FYI almost anything built prior to 1979 is rent controlled. Also, what sf calls rent controlled is what nyc calls rent stabilized: when tenants leave the landlord can reset the unit to market rents. The law only caps increases while the same tenant lives in the same apartment. data: proportion of renter occupied housing in sf subject to rent control: http://www.thehdmt.org/indicators/view/192 http://www.thehdmt.org/indicators/view/192 2nd map direct link: http://www.thehdmt.org/img/indicators/pdf/RentControlHousingStock.pdf http://www.thehdmt.org/img/indicators/pdf/RentControlHousing...
yuhong 15y ago
I wonder how long this cycle will last.

headstart 15y ago

I make $100,000 a year and my rent is $10,000 per year, I can't imagine earning so much and spending over 1/3rd on rent out of necessity instead of choice. The new place I'm renting (starting next month) will bring my rent up to around $2,800 a month but it's a choice and an incredible place, being forced to spend so much on so little must sting a lot, especially when $100,000 year income is considered well off everywhere else. I'll be living like a king in my new place.

dasil003 15y ago
Sure it's by choice: the choice to live in San Francisco or the peninsula—the most exciting locus of tech innovation in the history of the world. Personally I was not crazy about it, so I took the opportunity to move to my company's London office where things are even more expensive. It's all choices though. I doubt you could name a city that I'd be willing to live in where you could get a decent apartment for $800/month.

_delirium 15y ago

SF is pretty expensive, but more of Silicon Valley (both jobs-wise and population-wise) is in the San Jose area, which is considerably more reasonable. Still not cheap, but not $2600/1-bd level; that kind of rent will get you a 2-bd house.

marvin 15y ago

I've been looking at these posts that complain about the cost of living in Silicon Valley for a while, and thought that things were pretty bad. But when comparing to my home country, Norway, things don't seem very bad at all. Granted, Oslo is supposed to be the most expensive city in the world...but from all the complaining I hear from the tech crowd, you'd think the difference wouldn't be large. But Wolfram Alpha reports a 45% / 37% cost of living difference in favor of SV: http://www.wolframalpha.com/input/?i=moving+from+Mountain+View+to+Oslo+salary+%24100%2C000 http://www.wolframalpha.com/input/?i=moving+from+Mountain+Vi... http://www.wolframalpha.com/input/?i=moving+from+San+Fransisco+to+Oslo+salary+%24100%2C000 http://www.wolframalpha.com/input/?i=moving+from+San+Fransis... This is on the top of the fact that we pay, in total, around 50% tax. Housing is more expensive in SV, but everything else is much cheaper than where I'm from. Are these numbers accurate? Because if they are, then, pardon me for being blunt, you guys are really whining a lot. You must be living in one of the places on Earth with the highest ratio of income to expenses. That the cost of living is higher than in the US in general doesn't really seem like an argument to me. You're pretty much swimming in money over there.

moocow01 15y ago
Lets trade places. Seriously though SV is decent but America is not exactly the top place to be living anymore in comparison to a place like Norway despite all the 'USA, USA' chanting we do. I'd gladly pay a boatload in taxes if it would genuinely get us out of our current messes.
- andreer 15y ago
  Feel free to come on over. There's a shortage of good engineers in Norway just as there is everywhere else. You could even work for a US company, as I do. http://jobs.yahoo.no/page/work/jobopenings http://jobs.yahoo.no/page/work/jobopenings
- afterburner 15y ago
  Good luck getting citizenship in Norway.

usaar333 15y ago

As a sibling commenter noted, it is the other way around. Constrained supply and high demand are driving the prices. Now it is true that the one-bedroom rent increase probably is blowing away the added after-tax salary. However, if the tech worker lives with roommates (where rents hit ~$1000/month), he will take home more income in the Bay Area than elsewhere.

dejv 15y ago

If Bay Area is so expensive, how people with shitty jobs (sweepers, fast food chain workers...) can afford living there?

moocow01 15y ago
Cause they all make 100k also - you'll laugh at this until you realize its true. Well I suppose not everyone like fast food workers but in all seriousness there are a bunch of menial jobs in SF that pay 75 - 100k. Usually union protected gigs.
- _delirium 15y ago
  The median household income in the city is around $70k, so most of the population doesn't have a 6-figure income...
usaar333 15y ago
It's housing that is the main thing that makes the bay area pricier. You can get that down by living in a shared unit.