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The Rise of Bay Area Rents
- jbdeboer 13y agoI'd be interested to know how they are collecting their data. Rent prices are very hard track, short of asking tenants how much they pay. You can monitor Craigslist, but then you are tracking rental advertisements instead of what tenants are actually paying.
- bitcrusher 13y agoCompletely anecdotal, but their rental prices for Redwood City are in line with what I pay. The median prices they list for other cities seem to be in line with what I'm seeing looking at different places to live as well.
- dimitar 13y agoI would get the data from the same authority that is tracking inflation - rent is included in the basket. In the USA I think the Bureau of Labor Statistics does the 'official' data collection. Rent prices are pretty uniform - there isn't that much differentiation between properties of the same class (# of bedrooms and location, are what mostly matters; tenants don't make choices based on the type of furniture); so prices are relatively uniform - you don't have to ask a lot of people get those prices. This is of course confirmed each time someone tries to create yet another index - if you use the same basket and weights, only rarely there are any differences in recorded prices.
- sliverstorm 13y agoIf you want to account for actual pay vs. advertised, you could probably model it to some order of effectiveness by applying a decay function of price vs. age of listing. This operates on the assumption that bargain rentals are on the market briefly, while overpriced rentals languish on the market.
- ffrryuu 13y agoTime to move to Texas.
- jtreminio 13y agoIt's a very pleasant 96*F today!
- saryant 13y ago80˚F in San Antonio right now.
- w1ntermute 13y agoAir conditioning's been around for 100+ years. Start using it.
- outside1234 13y agoSounds like a great idea, well, except for the Texas part.
- w1ntermute 13y agoIf it's a cultural issue, Austin sidesteps that problem nicely.
- comrade_ogilvy 13y agoIt boils down to jobs. Texas is a fine place to live if you work in certain sectors. California is great place to live for other kinds of work.
- coldcode 13y agoI live in Texas and might be moving to SF area. My 2000 SF house here is cheaper than a 1 BR apartment there and no income tax. Prop taxes are a little higher (4% per year). Financially it's way better here but job wise not as much.
- ffrryuu 13y ago
- needacig 13y agoThis is the third or so time this blog has been posted to HN and every time people ask where they got their data and every time there is no response. This time, some of their data doesn't look so good, at least with the boundaries on the map being all messed up. Also it's not clear if they adjust for inflation.
- omarish 13y ago(I work at Priceonomics) Sorry to hear the map boundaries are looking weird to you. We're using US Census boundary shapefiles to draw the city limits. This is how the map should appear: http://i.imgur.com/xk8WI6Q.png http://i.imgur.com/xk8WI6Q.png - does it look different on your end? Email me if there's anything else I can do -- omar@priceonomics.com.
- teddyh 13y agoYou completely (again!) ignored his question about where you get your data from. That was extremely rude of you.
- ChuckMcM 13y agoAgreed, but one wonders if perhaps they did something like scrape Craigslist for it (which might make sense but totally be in violation of the ToS for a very litigious company)
- jamesaguilar 13y agoIs it really rude to not answer a question? I guess it is a little rude to ignore it. He could say something like, "I'm sorry, but I can't answer that question."
- ffrryuu 13y agoI sold the data to him from my white van.
- crazygringo 13y agoIt would look a lot clearer if you didn't overlay the colors over water sections, but limited them to land only. Downtown SF just looks... weird. As do a bunch of other sections. A strange line going down the bay parting the water. It makes it a lot more confusing than necessary.
- gphil 13y agoWe actually recently made a similar map for a number of metros, normalized by square footage to control for different unit sizes. It's interesting to note the differences in the map between the two metrics (total rent and per sqft): https://kwelia.com/maps/choropleth?metro_group=SF+Bay+Area https://kwelia.com/maps/choropleth?metro_group=SF+Bay+Area
- heydenberk 13y agoThis is really awesome. I'm also curious to know where you got your data from.
- gphil 13y agoThanks! We currently get the majority of our data from publicly available online listings (predominately from https://3taps.com/ https://3taps.com/ and http://www.rentjungle.com/. http://www.rentjungle.com/.) Increasingly, we are also adding actual data from integrations with our customers' property management systems. We think this data set will be more accurate and more valuable, although it obviously takes a lot more work to build. One of our goals is to be able to understand the difference between listed and actual prices in various markets.
- ChuckMcM 13y agoIt will be interesting to bookmark this, and then look at it 18 months from now when the market grows by about 28% (number of rental units in the SF bay area expected to come available due to new construction) SF itself has a huge number of apartment projects being built, as do many peninsula cities.
- DanBlake 13y agoNot sure if you are implying there will be 28% more rentals available in 18 months than there currently is, but thats totally untrue. There is about 135k current apartments in SF. About 8,000 new apartments, mostly in mid-rise and high-rise buildings, will come on line between now and 2015. Thats around a 6% increase. However, remember that we also have population gains in SF right now from incoming tech workers. Prices in rent are very unlikely to go down, however they will most likely stabilize. You may be saying that more properties are going to be available around SF, but that has never changed value in SF before (oakland boom, for instance) and instead just made those surrounding areas go up.
- ChuckMcM 13y agoNew building permits in the nine bay area counties. Not just the city of San Francisco. I'll see if I can track down first hand sources for the summary I read.
- ChuckMcM 13y agoOk, found it. You are correct. The increase was in construction activity not in total units. Sorry about the confusion.
- pchristensen 13y ago28% would be a truly astonishing number. Even if all residential construction was rental (no condos or houses) that would still be an insane amount for 18 months.
- RobotCaleb 13y agoA scale that goes from green to red? I'm unable to discern the difference between colors evenly spaced on either side of the middle line. Mousing over to see change does help. Perhaps instead of simply colors (please, designers, don't rely on color alone to convey information. Think of the chil^H^H^H^H color blind individuals) you could have patterns for the fills.
- Raphmedia 13y agoI'm no longer jealous of all those american dev that makes 100k+ in that area. Damn... 3000$ to rent... for a MONTH?! I could get one hell of a house here at that price...
- msoad 13y agoI know five guys living in a 4BR in Palo Alto and they pay $1200 each. All of them are devs that make $130-$150. If you are single or willing to leave cheap there is good options
- mathattack 13y agoMove east to Manhattan and it's easily $5,000/month for a 2BR. If you want a neighborhood with a decent public school, it's even more.
- hackula1 13y agoIn one of the other boroughs or the surrounding area, however, you can find stuff for a good bit cheaper. Hoboken avoids city taxes and is a 10 minute subway ride to Wall Street. You have to go into war zone ghetto or out to a much longer commute to find something more affordable in SF. The job market for tech in NYC is going to be of a more boring variety on average, but with comparable salaries and I would guess increased stability and benefits. Definitely different strokes for different folks, so not a 1-to-1 by any means, but could be a reasonable option for many people.
- nugget 13y agoIt's a gold rush. California is famous for them. Quality of life for most of the tech workers is pretty low, but everyone is focused on the stock option lottery, and there are plenty of winners (next up: Twitter) to keep up faith in the system. Ironically, most of my friends who have liquidated their options end up moving out of the city.
- GuiA 13y ago>Quality of life for most of the tech workers is pretty low, Can you expand on this point?
- nugget 13y agoQuality of life is low in the sense that they are paying a huge % of monthly income in rent and usually sharing sub-standard housing accommodations. They don't save much. They work a lot and rarely have time to enjoy the area. Quality of life is high in the sense that they enjoy what they are working on and feel like there's a decent chance it will make them rich. They are in the middle of a boom and millionaires are being minted left and right. They now have friends they went to school with, who they know well, who have millions of dollars in the bank who rent yachts, vacation in Ibiza, and bang models in Las Vegas (while plotting angel investments and new startups). They feel very close to an indescribable grandeur and if they just keep grinding away they will get there. So in some ways it sucks, and in some ways it's awesome and they will look back on this period as the best time of their lives. But very few of them think about this as ''real life'' the way people elsewhere in the country seem to, when they think about what community they want to live in, who they want to date or marry, where their kids will go to school and how their life will unfold in the decades ahead of them.
- shortsleeves 13y agoI can't relate to this at all. I'd argue that the quality of life is actually much higher here. Even with longer work hours. Sure rental prices suck, but to name a few things: * Weather is amazing. * Wages are higher than anywhere else for my profession. * The quality of food/produce is better than anywhere else I've lived, year-round. * Within a 4-hour driving radius, I can be skiing, surfing, hiking or tasting world-class wine. * Easy to meet up with like-minded people.
- outside1234 13y agoYou should come live in Santa Cruz. Ocean, mountains, cheaper. We have a tech scene here - really!
- rhizome 13y agoSanta Cruz is historically low on rental inventory and (notoriously) low on local jobs. How has this changed in the past 10-15 years?
- outside1234 13y agoTelecommuting.
- wavesounds 13y agoI love Santa Cruz - Go Banana Slugs!
- comrade_ogilvy 13y agoThe other way to look at this is apartment rental prices are merely "correcting" upwards to be less out of line with the housing prices. A $1 million SF home has to charge $6000 in rent each month to break even, to cover cost of capital, taxes, and maintenance. Apartment rents cover utilities to varying degrees, as well. A nice three bedroom apartment is the equivalent of a $600k or $800k condo, which "should" charge $4000+ per month. What is the going price for that rental? Across the bay area, the median is $2500. That makes sense in San Jose, but in other areas, not so much.... So is the issue that house prices are unsustainably high? Or is it the renters have gotten used to prices that lingered unsustainably low for a surprisingly long time? IMO it is a bit of both. But we have probably under built rental units in some markets.
- usaar333 13y agoMay I ask where you got the rent to ownership conversion numbers? I ran this awhile back with the nytimes buy-rent calculator: http://www.nytimes.com/interactive/business/buy-rent-calculator.html http://www.nytimes.com/interactive/business/buy-rent-calcula... With a 4.8% mortgage rate, 20% down, 37% marginal tax rates, 3% inflation, closing/buying costs around 3%, 9% rate of return on capital and ~$700/month: Buying a $600k place is break-even with renting at $2500/month after 4 years and buying is better thereafter. $800k is break-even at around $3300/month There is government distortion playing in. The mortgage tax deduction (esp. in a state with high income tax rates) provides huge incentives to buy. $4,000 a month in rent is only equal to $800k buying if you are below the 15% income tax bracket.
- Brig303 13y agoInteresting! So why are rents on HUD a lot lower? e.g., the rent for 1 BR in SF is $1579 according to http://www.huduser.org/portal/datasets/50per.html http://www.huduser.org/portal/datasets/50per.html
- usaar333 13y agoGood question. It's not clear where there data source is coming from (well, their own service, but where is that coming from?). Data source is important: Using craigslist for instance will ignore tons of places on the low end causing distortions.
- wavesounds 13y agoAre there any studies relating rent control and pro/anti landlord policies in these cities and how they relate to the availability of inventory and rental prices in the bay?
- mehuldesai 13y agoWould have to disagree on everyone being focused on the stock option lottery. 1st its not a lottery. You can do analysis that shows that working for large entrenched dominate company, think Apple, Google or such over 5 years will beat a engineer joining a series B,C company that makes it. For startups there is often a trade of salary for ownership. If you calculate it over many years and payrises, bonus's etc... the numbers may play even. Many many people in the Bay Area are not in startups at all and not playing the option lottery, they are married with children. Some play the management ranks and others contract, etc... I met a woman once in the dot com boom that confided in me that she made $1mill in 2000 over a short time. It got me thinking about the real equations at work. You need to do math, simple math but you need the data which you may not have. Anyhow, that said, it is true I think that engineers do not get their fair share of equity many times in companies even with dozens of people. So this is when ownership or foundership or close to starting is a stock option play. Options are a contract to own at a price set on the contract. If the price rises dramatically you have a massive amount of capital. Stock options are very risky, compared to straight risk adverse salary jobs. For risk there is reward. It has not much to do with lottery, manly with risk and reward and statistics. You need to crunch the numbers and consider risk and then decide on your career paths.
- viscanti 13y ago> It has not much to do with lottery, manly with risk and reward and statistics. A lottery is risk, reward, and statistics.
- gaustin 13y agoWhy don't people live in Oakland and commute? Google Maps gives a < 1 hour each way commute (BART or bike + ferry), which I don't think is horrible. Is Google Maps just super optimistic?
- fourstar 13y agoYou don't think people already do this?
- gaustin 13y agoI know people already do this. My intent was to ask why it's not the default for people who would save $1-2k every month. It seems the assumption is working in SF means living in SF for software developers making > $100k/year.
- duskwuff 13y agoOakland is a big place, and the BART stations are generally either downtown, where the rent is relatively high, in places you don't want to live, or far away from you.
- krakensden 13y agoBART from Oakland to SF is OK. BART to Caltrain to Silicon Valley is a proper hassle. The two systems don't line up real well, you're liable to clock 4 hours a day commuting if you go all the way down to Palo Alto. Driving at an off-peak time is strictly better.
- deleted 13y ago[deleted]