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People are opting out. I redirected my career away from a tech mega-corp for precisely the reason that eventually I'd have to relocate to the bay area to contin
by s1gnp0st 3y ago
People are opting out. I redirected my career away from a tech mega-corp for precisely the reason that eventually I'd have to relocate to the bay area to continue advancing. There's absolutely no way I'm doing that to my family.
- panarky 3y agoIf far more people were opting out, residential buildings would be empty, and rents would fall well below their pre-2020 level. The fact that rents are still higher than that is pretty good evidence that a large number of people continue to opt in.
- hasty_pudding 3y agoI think the fact that rents are still high is because of the general population crush in California, not just tech people.
- xvector 3y agoNot necessarily - you can increase rents further on the people that remain because perhaps you suspect that they are less likely or unable to move.
- hnburnsy 3y agoInertia is a powerful thing.
- DevKoala 3y agoActually there are tons of empty office buildings and residential units. It’s the same situation as in New York. Plenty of landlords can afford keeping their prices high hoping for the eventual bite. If they lower their prices further they do a bigger damage to their portfolio for years to come once you factor in rent control.
- UberFly 3y ago“In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” -Assar Lindbeck
- Jotra7 3y ago[dead]
- sologoub 3y agoThe “damage” part is only real if one intends to refinance constantly and chase the highest multiple possible. The flip-side of rent control is high occupancy. If the building was properly capitalized and rented with a proper return in mind, rent control ensures you keep turning a profit year after year. Not sure about SF, but in many jurisdictions including utilities allows higher increases. Staying on top of these allowed increases and ensuring good budgeting makes a lot of rent controlled buildings a gold mine. EDIT: of course if you mess up, that mistake is now set in stone and backed by legal resource of your city, so it’s not risk free.
- chii 3y ago> rent control ensures you keep turning a profit year after year this assumes the returns set out by the rent control is appropriate in all future situations. Even with the allowance for increases, there are still situations where such an increase is insufficient.
- uoaei 3y agoIf property owners want to turn their buildings into businesses, they need to be smart businesspeople and plan for those situations. If they fail then that's the market dynamics at play!
- sologoub 3y agoI think that comment is talking about evictions and rent increase moratoria we saw during COVID lockdowns. It was very close to a black swan event, at least for me. Now, reality has changed and landlords need to plan for the risk of not having income for several years. It’s not normal rent control/stabilization, so the long term effects are yet unclear. For now, leverage is risky, so new investment is going to be hard to come by.
- nolongerthere 3y agoForget rent control, the way commercial real estate works, many banks give loans based on certain minimum rents being paid, if the landlord lowers the rent the bank can call the entire loan to be paid immediately.
- lotsofpulp 3y agoIf there is no rent, then there is a default too. You don’t get to pretend your property is worth $x per sq ft unless it is landing in the bank account. https://www.investopedia.com/terms/d/dscr.asp https://www.investopedia.com/terms/d/dscr.asp
- chii 3y agoWhat the landlord does in this situation is paying out of pocket the expected interest payment to the bank, while deducting this as a cost from their other more profitable portfolios. They hope to ride out the lows.
- roshin 3y agoIn that case, the landlord could rent for a lower rent than the bank is okay with, and supplement the missing amount himself. That would be cheaper that leaving it empty and paying all the rent himself.
- Qwertious 3y agoThat would require the landlord to report the rent as being higher than it actually is, which is fraud.
- lotsofpulp 3y agoNo, the lender or the servicing company will regularly request the P&L and check up on business. Paying out of pocket does not mean the debt covenants are satisfied.
- mupuff1234 3y agoHasn't the population declined? Seems like people are opting out. The rent being higher feels more like collusion than actual demand. And if you dig into the data you'll also notice that there's "asking rent" and "effective rent" (rent after concessions)
- ammanley 3y agoReminds me of the situation with AOL dialup, which I was surprised as heck to learn is a) still a thing and b) charges way more than I would have expected in areas where its otherwise not feasible to get high speed internet (easily). Could be similar to the situation here with people who can't leave/won't leave for personal or career reasons, and taking up the prices available.
- AlbertCory 3y agoI think "captive market" is the term you want. Same reason cable TV bills keep climbing to +$200/month, and newspaper delivery prices keep going up while the product keeps shrinking. Demand for some things is elastic only down to a point. That's the point where customers are hostages.
- ammanley 3y agoThank you, appreciate that, was looking to put a word to the term in my brainpan.
- TheCoelacanth 3y agoNewspaper prices are more of a death spiral than a captive market. People stop getting papers delivered in favor of online news, so prices have to go up to cover fixed costs, pushing more people to stop getting papers delivered and so on.
- AlbertCory 3y agoInteresting. What's the difference? I notice, walking around the 'hood, that some people still get the San Jose Mercury-News delivered. Why? I think they just have to get a morning paper, and if it's getting shittier by the year, well, so be it. You're right, lots of readers have already cancelled, but there's a core of readers who won't. The Merc can raise the price and they'll just pay it.
- simplyluke 3y agoRead the article. Rents are well below their pre-2020 level.
- antman 3y agoMost probably landowners have cash in hand and don't need to lower the prices substantially even if half of the offices and houses stay empty
- danielvaughn 3y agoSame. I've never lived in SF, but I convinced my wife to relocate to NYC so I could kick-start my tech career. We lived there for 4 years and then moved to FL in 2018. I'm glad I had the experience of living there, but I'll never do it again. Nor will I ever move to SF, no matter how lucrative the offer.
- aplummer 3y agoThe Bay Area is one thing, but why not nyc?
- tshaddox 3y agoThe Bay Area is also a much bigger place than SF. Unless you’re familiar with a lot of the Bay Area it would be pretty unfortunate to refuse a lucrative offer in many Bay Area places because of the problems that SF is infamous for.
- veggieburrito 3y agoThe Bay Area is large and the Greater Bay is massive if you take into account people commute in from Sac, Santa Rosa, and Santa Cruz to name a few.
- Bud 3y ago[dead]
- danielvaughn 3y agoA bunch of reasons, but generally it's just an inconvenient place to live. I'm also about to have a kid and don't want to raise a child there.
- greesil 3y agoYeah they teach Cathode Ray Tubes here in school. No bueno.
- matrix87 3y ago> I'd have to relocate to the bay area to continue advancing. Why the hell do they push this so hard? Is it just some ponzi scheme to prop up the housing market or something?
- deleted 3y ago[deleted]
- s1gnp0st 3y agoIt's defensible to want leadership roles to be able to collaborate in person, but the area is saturated.
- demondemidi 3y agoI think it is a misconception that you need to be in the Bay Area to advance an tech career. Unless you have some ultra-non-portable skill that only develops in one region on Earth, you might need to reconsider your career path, because it sounds too limited to be useful.
- culopatin 3y agoAre you implying that your personal decision is a signal of anything actually going on in SF and in the labor market?
- s1gnp0st 3y agoWhatever answer keeps you from moving to Texas.
- wolverine876 3y ago> There's absolutely no way I'm doing that to my family. Do what?
- s1gnp0st 3y ago[dead]