14 ms·

The Housing Market With Nowhere to Go but Up

54 points by samsolomon 13y ago

melling 13y ago
“It’s a block away from all the tech shuttles,” Sounds like the secret to making any area an attractive place to live is by making it covienent to mass transit. So, add more [fast] mass transit so people can live in more places.
- fennecfoxen 13y ago
  Egads. The capital expenditures.
  - wyclif 13y ago
    And don't forget the infamous SF NIMBYs.
    - mjn 13y ago
      It's one issue, but I think you could overcome NIMBY opposition if the money were there. Even traditionally transit-averse LA (finally) managed to overcome the NIMBYs who had blocked the purple line in the 1990s, and is building it now. But the cost of the transit that could usefully be built in the SF Bay Area is really high, so high that it's never really had serious funding prospects and made it to the political-wrangling stage. For example, the transit situation within SF would be a lot better if a crosstown subway replaced the N-Judah or the Geary bus, but there aren't any current prospects for funding such a thing, so the Geary BRT is being built as the low-cost option. The BART extension to San Jose is also mostly hitting cost issues rather than NIMBY issues. It's currently going to extend to... almost San Jose, the north outskirts, because the funding secured so far isn't enough to build the final portion through to downtown and connect to Diridon.
  - skybrian 13y ago
    Buses don't require a lot of capital, which is why there are tech company shuttle buses and not tech company train lines. It would make sense to make public buses work better (more dedicated lanes, more expresses, and so on). Also, tech companies are already outsourcing shuttles to contractors. Those contractors could run other lines if someone were willing to pay them. If it made sense for the tech companies to pay the city to run buses then they probably would. The question is how to provide better service while serving the general public. I wonder if a company like Uber would eventually start running buses?
kiba 13y ago
At the end of the day, the solution is straightforward and clear: build more houses. The only problem is that humans in SF don't want more houses, especially high rise housing.
- rwmj 13y ago
  The solution is also "work remotely from somewhere nice". I like the short walk to my garden office every morning. In summer I can pick some fresh fruit and veg along the way for lunch. The company I work for (Red Hat) has a huge contingent of remote workers. We work on IRC, by email and (oh the irony) Google Hangouts.
  - discard 13y ago
    I also work for Red Hat. While the degree of remote working varies by department, it is substantial, appears to occur at many hierarchical levels on the management chain, and seems to work out pretty well. Also occurring in some cases, and somewhat related, is working out of a 'satellite' office rather than one of the major offices of a particular country. I'm surprised that more tech companies do not allow or encourage such arrangements. The arguments in favor of generally prohibiting remote working strike me as rather flimsy.
- muzz 13y ago
  The only problem with your comment is that construction is under way at a record pace (well, since 1906)
wyclif 13y ago
I could write yet another boring comment about how hypocritical and stupid longtime SF residents are because they complain about rising housing costs or being priced out while simultaneously voting to prevent more housing from being built, but I'd rather ask a serious question: Why do all these Bay-area startups and tech juggernaughts insist that all of their employees squeeze into housing on the peninsula? Of course many of their employees are going to have to work in SF but why is it so impossible to conceive of having a distributed, remote employee base? There are many successful tech companies (and YC startups) that have done this. It would ease the pressure on housing supply/demand, and also make salaries more attractive since engineers would be paid an SF salary but have more earning power by living outside the bubble.
- SamReidHughes 13y ago
  The companies move to where the good employees want to live so that they can hire and retain good employees. I hope that explains that for you.
  - dllthomas 13y ago
    The alternative proposed was "distributed, remote employee base", which - if it worked - would let you hire and retain good employees wherever they wanted to live (even if they didn't all want to live near each other). So your explanation alone doesn't address the issue.
    - SamReidHughes 13y ago
      There are plenty of reasons not to do the alternative. Are we now going to iterate them and iterate counter-reasons and such and such? It's a waste of time.
      - dllthomas 13y ago
        There are doubtless plenty of reasons, but discussing them would seem to be substantially less a waste of time than answering obvious questions that weren't asked. Particularly since at least one person doesn't seem to understand them.
LogicX 13y ago
I'm hoping some people start to wake up and realize they don't have to be in SF or Silicon Valley to be successful entrepreneurs or technologists. Between the harsh northeastern winter, and whats happening in San Francisco, we're making a big push to attract folks with low cost of living and high quality of life in Myrtle Beach, SC through http://WhyNotTheBeach.com http://WhyNotTheBeach.com. With so many companies becoming more and more open to remote workers, remote teams, remote offices, I think more cities will have the opportunity to attract highly paid, highly talented individuals for more quality of life reasons instead of congregating in tech hubs. It just comes down to demonstrating that the resources are available locally, or have advanced enough online so that you're not at a disadvantage. One argument to being in SF is everyone is competing for talent, funding, etc. from the same sources. There are investors and talent elsewhere who would love to get in on opportunities, and I think that can start to turn the tide. As a transplant from Boston, MA to Myrtle Beach - I was overwhelmed after being in the Boston startup scene and involved with TechStars for 4 years. Boston certainly isn't at the SF level, but I still believe there are compelling arguments for those in Boston, NYC, Philly, SF and elsewhere to consider alternative cities with low cost of living and high quality of life. Time will tell!
- polarix 13y ago
  Way easier to recruit employees 50-500 in the valley. - Chris Dixon, http://www.youtube.com/watch?v=fGjGu9gFfO4#t=2119 http://www.youtube.com/watch?v=fGjGu9gFfO4#t=2119
- dannyr 13y ago
  "I'm hoping some people start to wake up and realize they don't have to be in SF or Silicon Valley to be successful entrepreneurs or technologists." Yeah I agree. But being in the Bay Area helps a lot. If I move to Myrtle Beach, would I be surrounded by people like me who are into startups or will I be one of the few? It is not even the local resources or quality of life. San Francisco is a poorly-run city. Startups and entrepreneurship, however, thrives in spite of it. For better or worse, the mindset of the people living in the Bay Area sets it apart. That is something that is hard to recreate.
  - 13y ago
steven2012 13y ago
My wife and I are technically 1%-ers, and we could not oompete enough to buy a house in SF. We gave up and moved to the peninsula. As the article described, one house we bid for had 20 bidders. We bid over $200k above asking, and we were 10th out of 20 bidders. The winning bid was $400k over asking. But am I resentful? No. It's the reality of the situation. For those that are bitching and moaning about not being able to live in SF, you just have to deal with it. And I'm quite confident at some point, the prices will abate. The best cure for high housing prices are high housing prices. And if they don't, then the problems that the article describes still won't come to fruition. Price inflation will creep through to all aspects of life in SF. It's not going to be a complete vacuum where only house prices increase and nothing else. As house prices increase so will the price for everything in SF, including wages. For example, housing prices are too expensive for teachers to live in SF? Teachers from the East Bay, etc will commute to SF, because salaries will increase, especially salaries for private school teachers. If you're not aware, SF is amongst the worst in terms of schools and even worse at placement of children in schools. A co-worker had a list of approx 15 schools he wanted to send his child, and none of them were selected for him. He was forced to send his child to private school, and as demand increases, so will salaries. Restaurant prices will increase, and so will the salaries of waiters, etc.
- dllthomas 13y ago
  "The best cure for high housing prices are high housing prices." Provided you have the possibility of actually building more (and/or denser) housing at a sufficient rate.
  - potatolicious 13y ago
    That's one solution. The other is that housing becomes such a huge liability to local commerce that people will just leave. Housing prices are like high taxes or burdensome regulation - they add to the cost of doing business, and in the extreme case people will just get out. The end game if the Bay Area won't allow more housing to be built is that the industry will move out of necessity. This is already happening, though not at scale.
rdl 13y ago
I wonder what the impact of a marginal $150-250k/yr single person who lives in a high-rise and rides a company shuttle to work (or wfh) is, on city services. Roads would be a big one, but if someone uses a company shuttle and/or drives at off-peak hours, it's not that big a deal. Mass transit and roads are sized for peak-time use. Water (although SF residents use about 10% as much water per person as people with lawns in the Central Valley), electricity (although at PG&E tiered rates, this is probably a profit center), garbage disposal (charged at cost-plus). Unlikely to depend on the "safety net" services in any way, and the marginal impact on police/fire is low as well (private security for the building, compliant with fire codes). Without children, there's no impact on schools, and I don't know of many 150k+/yr income friends who would send their kids to SF public schools. Indirect expenditure via the private sector seems like the greatest impact -- eating in restaurants, buying in stores, etc. -- but sales tax revenue should account for most of that impact, as well as increased profits for businesses, employment, etc.
- supersystem 13y ago
  Infrastructure generally doesn't scale linearly. So while one person doesn't have much of an impact, at some point you're going to have to invest a lot of money scaling.
  - rdl 13y ago
    Yes, but it also usually has declining marginal cost across most of the curve. It's complex. It definitely gets expensive at the margin when growth requires new plant, but the big problem is when growth is unpredictable and may end; SF has a pretty safe long-term growth plan built in, so making 100 year investments (at muni bond rates!) is safe. I just don't see even 100k rich non-services-intensive people as being likely to cause a problem. What SF should do is get rid of the previous stupid payroll tax and Ron Conway/Ed Lee's even worse gross receipts tax and institute an income tax of n% on residents or those working in SF. Maybe make it progressive (just set it as x% of someone's California state tax bill?, maybe +10% so it'd be about 1% of gross income?). Then, having 100k people making ~$300k/yr (reflecting capital gains plus wage income) and consuming <$100/yr in city services in some towers along the eastern side of the city would be awesome. $300mm/yr in extra tax income would do a lot.
greenyoda 13y ago
"Nowhere to go but up"? How quickly we forget the last housing bubble. If the price of housing goes up faster than the salaries of the people who want to buy it, eventually we'll get to the point where demand will drop sharply: someone with a $100K income and $100K in student debt just won't be able to get a mortgage for a $2M condo. As demand drops, housing prices will drop, and people who bought into the market at the top, sure that their investment could only increase in value, will start to panic. There are other possible scenarios for a housing market plunge in SF. For example, if California tries to sharply raise taxes to help pay for their huge government infrastructure, tech companies may decide that they don't want to be in California anymore. They're already hedging their bets. For example, Google has a sizable presence in NYC. When the first big tech company announces that they'll be moving out of Silicon Valley, the housing market will take a dive. And it's not impossible to run a big tech company outside of Silicon Valley. Microsoft and Amazon seem to be doing OK in the Seattle area. The higher housing prices go in San Francisco, the easier it will be to recruit people to go elsewhere.
- encoderer 13y ago
  You didn't read the article and it's obvious. Just delete your whole comment. Trust me.
- repsilat 13y ago
  > "Nowhere to go but up"? How quickly we forget the last housing bubble. The title was an obvious pun, referring to the need for high-rise development (which was touched on in the article, though it wasn't the focus.)
  - greenyoda 13y ago
    I did understand the pun, but most of the article was actually about how quickly the prices in the area were rising, how people were paying rapidly increasing amounts of money for crappy real estate, how they were offering cash payments, payments above the asking price, etc. In other words, he was writing about a real estate bubble.
    - 13y ago
31reasons 13y ago
Such an irony. People who are creating the mobile future are not embracing the mobility and cramming into one spot.
smartistone 13y ago
The left says we're in a housing bubble, but prices keep going up with no end in sight. They want to believe in a bubble like they want to believe in man-made global warming. Outside of the political sector the meritocracy is alive and well. The best and brightest are still getting ahead if the runaway success of snapchat, whatsapp,instagram facebook is any clue. Ambitious, high IQ people are making millions and billions in a matter of months and years through coding, web 2.0, stock market, real estate ,etc. The meritocracy, America's global influence, and the US economy has never been stronger. The left wants to believe that America's best days are behind it because they resent the success of the 1% that make America the success it is.
kleiba 13y ago
I guess it's time to give up that tech job and become a real estate agent.
kleiba 13y ago
I just saw a report on TV about how gentrification in New York City has started to reach even the upper middle class, with young families north of $100,000 per year can no longer afford to stay in their Brooklyn neighborhood. In Manhattan, the super-rich of Russia, China, but also Europe have found a trendy place to buy luxury apartments that they then only use rarely. Not only workers, but also people with high-income jobs have started to be pushed out of the more sought after neighborhoods.
- impendia 13y ago
  An interesting observation. When I lived in Menlo Park, I observed that local politics (definitely including zoning regulations) were controlled by wealthy homeowners, who had a strong vested interest in the status quo. But absentee homeowners, whose principal residence is not in Manhattan, are presumably ineligible to vote there. So it seems plausible that zoning and other local laws might tilt in favor of the renters, middle class, and others who actually live in their neighborhoods.
- dragonwriter 13y ago
  > Not only workers, but also people with high-income jobs have started to be pushed out of the more sought after neighborhoods. "People with high-income jobs" are still workers. The "job" bit gives it away.
  - kleiba 13y ago
    Sorry, I meant "blue collar workers" which we unfortunately have come to expect as victims of gentrification. EDIT: Disarmed previously snarky response.
- OGC 13y ago
  These luxury appartments are investment/speculation vehicles not actual places to live in.
josephlord 13y ago
From the title I was assuming it was going to be an article about Detroit or some other place where there really is no possibility of house prices falling because they are already at or near zero. In SF falling prices is definitely possible even if not likely in the short term. If the acquisitions and other positive exits dry up (even for a couple of years) the prices may readjust quickly and once they start to fall the perception of inevitably rising prices will disappear taking further demand with it (people will prefer to wait for cheaper prices rather than buying urgently before prices rise further). I am not predicting immediate falls by any stretch but when people start saying prices can't fall is when people buy on that basis and are shocked and damaged when they do (which at some point they will).
arbuge 13y ago
The irony of it is that many of the companies in the Bay area are actually building technologies that help people to work from anywhere effectively, such as email programs, messaging apps, project management tools, video-conferencing, etc. So in theory the problem should solve itself. If their apps really work, the pressure on Bay area real estate should ease. In practice I'm not hopeful.
smartestone 13y ago
The left says we're in a housing bubble, but prices keep going up with no end in sight. They want to believe in a bubble like they want to believe in man-made global warming. Outside of the political sector the meritocracy is alive and well. The best and brightest are still getting ahead if the runaway success of snapchat, whatsapp,instagram facebook is any clue. Ambitious, high IQ people are making millions and billions in a matter of months and years through coding, web 2.0, stock market, real estate ,etc. The meritocracy, America's global influence, and the US economy has never been stronger. The left wants to believe that America's best days are behind it because they resent the success of the 1% that make America the success it is.
reallysmart 13y ago
The left says we're in a housing bubble, but prices keep going up with no end in sight. They want to believe in a bubble like they want to believe in man-made global warming. Outside of the political sector the meritocracy is alive and well. The best and brightest are still getting ahead if the runaway success of snapchat, whatsapp,instagram facebook is any clue. Ambitious, high IQ people are making millions and billions in a matter of months and years through coding, web 2.0, stock market, real estate ,etc. The meritocracy, America's global influence, and the US economy has never been stronger. The left wants to believe that America's best days are behind it because they resent the success of the 1% that make America the success it is.
coldcode 13y ago
I would have no trouble finding a job in that area. But why live in a place where even a ridiculous salary is proportionately less than just about anywhere else? If you are competing with stockified millionaires no salary will ever compete. My 2000sf house here in Texas in worth $160,000. In SF it's probably ten or even twenty times that. Can I get paid ten times my salary here? Hell no.
- savvyraccoon 13y ago
  Why do you compare the whole state with on city? You could easily find 2000 sf house in California for $160,000.
pyrrhotech 13y ago
The minimum salary for a police officer is 88k. You can look right on the website. That's for an entry level cop. The average is around the same as the average tech worker, 140k. Some cops pull in 300k+. They are doing just fine
joesmo 13y ago
With the median housing price being ~$825k and a mortgage qualification of $400k (that's pushing it) for an engineer with $150k yearly salary, that's still a gigantic gap. There's little difference in the coveted spots on the rest of the peninsula. Where does the obviously wrong conclusion that tech workers themselves (engineers, scientists, etc.) en masse are the cause of such rising prices come from? What tech worker has ~$825k in cash that they can drop on a house (more like a one bedroom in SF)? It seems to me, people are simply ignoring the math because it's convenient and the idiots attacking google busses and such because they never learned it.

54 points by samsolomon 13y ago

“It’s a block away from all the tech shuttles,” Sounds like the secret to making any area an attractive place to live is by making it covienent to mass transit. So, add more [fast] mass transit so people can live in more places.

fennecfoxen 13y ago
Egads. The capital expenditures.
- wyclif 13y ago
  And don't forget the infamous SF NIMBYs.
  - mjn 13y ago
    It's one issue, but I think you could overcome NIMBY opposition if the money were there. Even traditionally transit-averse LA (finally) managed to overcome the NIMBYs who had blocked the purple line in the 1990s, and is building it now. But the cost of the transit that could usefully be built in the SF Bay Area is really high, so high that it's never really had serious funding prospects and made it to the political-wrangling stage. For example, the transit situation within SF would be a lot better if a crosstown subway replaced the N-Judah or the Geary bus, but there aren't any current prospects for funding such a thing, so the Geary BRT is being built as the low-cost option. The BART extension to San Jose is also mostly hitting cost issues rather than NIMBY issues. It's currently going to extend to... almost San Jose, the north outskirts, because the funding secured so far isn't enough to build the final portion through to downtown and connect to Diridon.
- skybrian 13y ago
  Buses don't require a lot of capital, which is why there are tech company shuttle buses and not tech company train lines. It would make sense to make public buses work better (more dedicated lanes, more expresses, and so on). Also, tech companies are already outsourcing shuttles to contractors. Those contractors could run other lines if someone were willing to pay them. If it made sense for the tech companies to pay the city to run buses then they probably would. The question is how to provide better service while serving the general public. I wonder if a company like Uber would eventually start running buses?

kiba 13y ago

At the end of the day, the solution is straightforward and clear: build more houses. The only problem is that humans in SF don't want more houses, especially high rise housing.

rwmj 13y ago
The solution is also "work remotely from somewhere nice". I like the short walk to my garden office every morning. In summer I can pick some fresh fruit and veg along the way for lunch. The company I work for (Red Hat) has a huge contingent of remote workers. We work on IRC, by email and (oh the irony) Google Hangouts.
- discard 13y ago
  I also work for Red Hat. While the degree of remote working varies by department, it is substantial, appears to occur at many hierarchical levels on the management chain, and seems to work out pretty well. Also occurring in some cases, and somewhat related, is working out of a 'satellite' office rather than one of the major offices of a particular country. I'm surprised that more tech companies do not allow or encourage such arrangements. The arguments in favor of generally prohibiting remote working strike me as rather flimsy.
muzz 13y ago
The only problem with your comment is that construction is under way at a record pace (well, since 1906)

wyclif 13y ago

I could write yet another boring comment about how hypocritical and stupid longtime SF residents are because they complain about rising housing costs or being priced out while simultaneously voting to prevent more housing from being built, but I'd rather ask a serious question: Why do all these Bay-area startups and tech juggernaughts insist that all of their employees squeeze into housing on the peninsula? Of course many of their employees are going to have to work in SF but why is it so impossible to conceive of having a distributed, remote employee base? There are many successful tech companies (and YC startups) that have done this. It would ease the pressure on housing supply/demand, and also make salaries more attractive since engineers would be paid an SF salary but have more earning power by living outside the bubble.

SamReidHughes 13y ago
The companies move to where the good employees want to live so that they can hire and retain good employees. I hope that explains that for you.
- dllthomas 13y ago
  The alternative proposed was "distributed, remote employee base", which - if it worked - would let you hire and retain good employees wherever they wanted to live (even if they didn't all want to live near each other). So your explanation alone doesn't address the issue.
  - SamReidHughes 13y ago
    There are plenty of reasons not to do the alternative. Are we now going to iterate them and iterate counter-reasons and such and such? It's a waste of time.
    - dllthomas 13y ago
      There are doubtless plenty of reasons, but discussing them would seem to be substantially less a waste of time than answering obvious questions that weren't asked. Particularly since at least one person doesn't seem to understand them.

LogicX 13y ago

I'm hoping some people start to wake up and realize they don't have to be in SF or Silicon Valley to be successful entrepreneurs or technologists. Between the harsh northeastern winter, and whats happening in San Francisco, we're making a big push to attract folks with low cost of living and high quality of life in Myrtle Beach, SC through http://WhyNotTheBeach.com http://WhyNotTheBeach.com. With so many companies becoming more and more open to remote workers, remote teams, remote offices, I think more cities will have the opportunity to attract highly paid, highly talented individuals for more quality of life reasons instead of congregating in tech hubs. It just comes down to demonstrating that the resources are available locally, or have advanced enough online so that you're not at a disadvantage. One argument to being in SF is everyone is competing for talent, funding, etc. from the same sources. There are investors and talent elsewhere who would love to get in on opportunities, and I think that can start to turn the tide. As a transplant from Boston, MA to Myrtle Beach - I was overwhelmed after being in the Boston startup scene and involved with TechStars for 4 years. Boston certainly isn't at the SF level, but I still believe there are compelling arguments for those in Boston, NYC, Philly, SF and elsewhere to consider alternative cities with low cost of living and high quality of life. Time will tell!

polarix 13y ago
Way easier to recruit employees 50-500 in the valley. - Chris Dixon, http://www.youtube.com/watch?v=fGjGu9gFfO4#t=2119 http://www.youtube.com/watch?v=fGjGu9gFfO4#t=2119
dannyr 13y ago
"I'm hoping some people start to wake up and realize they don't have to be in SF or Silicon Valley to be successful entrepreneurs or technologists." Yeah I agree. But being in the Bay Area helps a lot. If I move to Myrtle Beach, would I be surrounded by people like me who are into startups or will I be one of the few? It is not even the local resources or quality of life. San Francisco is a poorly-run city. Startups and entrepreneurship, however, thrives in spite of it. For better or worse, the mindset of the people living in the Bay Area sets it apart. That is something that is hard to recreate.
- 13y ago

steven2012 13y ago

My wife and I are technically 1%-ers, and we could not oompete enough to buy a house in SF. We gave up and moved to the peninsula. As the article described, one house we bid for had 20 bidders. We bid over $200k above asking, and we were 10th out of 20 bidders. The winning bid was $400k over asking. But am I resentful? No. It's the reality of the situation. For those that are bitching and moaning about not being able to live in SF, you just have to deal with it. And I'm quite confident at some point, the prices will abate. The best cure for high housing prices are high housing prices. And if they don't, then the problems that the article describes still won't come to fruition. Price inflation will creep through to all aspects of life in SF. It's not going to be a complete vacuum where only house prices increase and nothing else. As house prices increase so will the price for everything in SF, including wages. For example, housing prices are too expensive for teachers to live in SF? Teachers from the East Bay, etc will commute to SF, because salaries will increase, especially salaries for private school teachers. If you're not aware, SF is amongst the worst in terms of schools and even worse at placement of children in schools. A co-worker had a list of approx 15 schools he wanted to send his child, and none of them were selected for him. He was forced to send his child to private school, and as demand increases, so will salaries. Restaurant prices will increase, and so will the salaries of waiters, etc.

dllthomas 13y ago
"The best cure for high housing prices are high housing prices." Provided you have the possibility of actually building more (and/or denser) housing at a sufficient rate.
- potatolicious 13y ago
  That's one solution. The other is that housing becomes such a huge liability to local commerce that people will just leave. Housing prices are like high taxes or burdensome regulation - they add to the cost of doing business, and in the extreme case people will just get out. The end game if the Bay Area won't allow more housing to be built is that the industry will move out of necessity. This is already happening, though not at scale.

rdl 13y ago

I wonder what the impact of a marginal $150-250k/yr single person who lives in a high-rise and rides a company shuttle to work (or wfh) is, on city services. Roads would be a big one, but if someone uses a company shuttle and/or drives at off-peak hours, it's not that big a deal. Mass transit and roads are sized for peak-time use. Water (although SF residents use about 10% as much water per person as people with lawns in the Central Valley), electricity (although at PG&E tiered rates, this is probably a profit center), garbage disposal (charged at cost-plus). Unlikely to depend on the "safety net" services in any way, and the marginal impact on police/fire is low as well (private security for the building, compliant with fire codes). Without children, there's no impact on schools, and I don't know of many 150k+/yr income friends who would send their kids to SF public schools. Indirect expenditure via the private sector seems like the greatest impact -- eating in restaurants, buying in stores, etc. -- but sales tax revenue should account for most of that impact, as well as increased profits for businesses, employment, etc.

supersystem 13y ago
Infrastructure generally doesn't scale linearly. So while one person doesn't have much of an impact, at some point you're going to have to invest a lot of money scaling.
- rdl 13y ago
  Yes, but it also usually has declining marginal cost across most of the curve. It's complex. It definitely gets expensive at the margin when growth requires new plant, but the big problem is when growth is unpredictable and may end; SF has a pretty safe long-term growth plan built in, so making 100 year investments (at muni bond rates!) is safe. I just don't see even 100k rich non-services-intensive people as being likely to cause a problem. What SF should do is get rid of the previous stupid payroll tax and Ron Conway/Ed Lee's even worse gross receipts tax and institute an income tax of n% on residents or those working in SF. Maybe make it progressive (just set it as x% of someone's California state tax bill?, maybe +10% so it'd be about 1% of gross income?). Then, having 100k people making ~$300k/yr (reflecting capital gains plus wage income) and consuming <$100/yr in city services in some towers along the eastern side of the city would be awesome. $300mm/yr in extra tax income would do a lot.

greenyoda 13y ago

"Nowhere to go but up"? How quickly we forget the last housing bubble. If the price of housing goes up faster than the salaries of the people who want to buy it, eventually we'll get to the point where demand will drop sharply: someone with a $100K income and $100K in student debt just won't be able to get a mortgage for a $2M condo. As demand drops, housing prices will drop, and people who bought into the market at the top, sure that their investment could only increase in value, will start to panic. There are other possible scenarios for a housing market plunge in SF. For example, if California tries to sharply raise taxes to help pay for their huge government infrastructure, tech companies may decide that they don't want to be in California anymore. They're already hedging their bets. For example, Google has a sizable presence in NYC. When the first big tech company announces that they'll be moving out of Silicon Valley, the housing market will take a dive. And it's not impossible to run a big tech company outside of Silicon Valley. Microsoft and Amazon seem to be doing OK in the Seattle area. The higher housing prices go in San Francisco, the easier it will be to recruit people to go elsewhere.

encoderer 13y ago
You didn't read the article and it's obvious. Just delete your whole comment. Trust me.
repsilat 13y ago
> "Nowhere to go but up"? How quickly we forget the last housing bubble. The title was an obvious pun, referring to the need for high-rise development (which was touched on in the article, though it wasn't the focus.)
- greenyoda 13y ago
  I did understand the pun, but most of the article was actually about how quickly the prices in the area were rising, how people were paying rapidly increasing amounts of money for crappy real estate, how they were offering cash payments, payments above the asking price, etc. In other words, he was writing about a real estate bubble.
  - 13y ago

31reasons 13y ago

Such an irony. People who are creating the mobile future are not embracing the mobility and cramming into one spot.

smartistone 13y ago

The left says we're in a housing bubble, but prices keep going up with no end in sight. They want to believe in a bubble like they want to believe in man-made global warming. Outside of the political sector the meritocracy is alive and well. The best and brightest are still getting ahead if the runaway success of snapchat, whatsapp,instagram facebook is any clue. Ambitious, high IQ people are making millions and billions in a matter of months and years through coding, web 2.0, stock market, real estate ,etc. The meritocracy, America's global influence, and the US economy has never been stronger. The left wants to believe that America's best days are behind it because they resent the success of the 1% that make America the success it is.

kleiba 13y ago

I guess it's time to give up that tech job and become a real estate agent.

kleiba 13y ago

I just saw a report on TV about how gentrification in New York City has started to reach even the upper middle class, with young families north of $100,000 per year can no longer afford to stay in their Brooklyn neighborhood. In Manhattan, the super-rich of Russia, China, but also Europe have found a trendy place to buy luxury apartments that they then only use rarely. Not only workers, but also people with high-income jobs have started to be pushed out of the more sought after neighborhoods.

impendia 13y ago
An interesting observation. When I lived in Menlo Park, I observed that local politics (definitely including zoning regulations) were controlled by wealthy homeowners, who had a strong vested interest in the status quo. But absentee homeowners, whose principal residence is not in Manhattan, are presumably ineligible to vote there. So it seems plausible that zoning and other local laws might tilt in favor of the renters, middle class, and others who actually live in their neighborhoods.
dragonwriter 13y ago
> Not only workers, but also people with high-income jobs have started to be pushed out of the more sought after neighborhoods. "People with high-income jobs" are still workers. The "job" bit gives it away.
- kleiba 13y ago
  Sorry, I meant "blue collar workers" which we unfortunately have come to expect as victims of gentrification. EDIT: Disarmed previously snarky response.
OGC 13y ago
These luxury appartments are investment/speculation vehicles not actual places to live in.

josephlord 13y ago

From the title I was assuming it was going to be an article about Detroit or some other place where there really is no possibility of house prices falling because they are already at or near zero. In SF falling prices is definitely possible even if not likely in the short term. If the acquisitions and other positive exits dry up (even for a couple of years) the prices may readjust quickly and once they start to fall the perception of inevitably rising prices will disappear taking further demand with it (people will prefer to wait for cheaper prices rather than buying urgently before prices rise further). I am not predicting immediate falls by any stretch but when people start saying prices can't fall is when people buy on that basis and are shocked and damaged when they do (which at some point they will).

arbuge 13y ago

The irony of it is that many of the companies in the Bay area are actually building technologies that help people to work from anywhere effectively, such as email programs, messaging apps, project management tools, video-conferencing, etc. So in theory the problem should solve itself. If their apps really work, the pressure on Bay area real estate should ease. In practice I'm not hopeful.

smartestone 13y ago

reallysmart 13y ago

coldcode 13y ago

I would have no trouble finding a job in that area. But why live in a place where even a ridiculous salary is proportionately less than just about anywhere else? If you are competing with stockified millionaires no salary will ever compete. My 2000sf house here in Texas in worth $160,000. In SF it's probably ten or even twenty times that. Can I get paid ten times my salary here? Hell no.

savvyraccoon 13y ago
Why do you compare the whole state with on city? You could easily find 2000 sf house in California for $160,000.

pyrrhotech 13y ago

The minimum salary for a police officer is 88k. You can look right on the website. That's for an entry level cop. The average is around the same as the average tech worker, 140k. Some cops pull in 300k+. They are doing just fine

joesmo 13y ago

With the median housing price being ~$825k and a mortgage qualification of $400k (that's pushing it) for an engineer with $150k yearly salary, that's still a gigantic gap. There's little difference in the coveted spots on the rest of the peninsula. Where does the obviously wrong conclusion that tech workers themselves (engineers, scientists, etc.) en masse are the cause of such rising prices come from? What tech worker has ~$825k in cash that they can drop on a house (more like a one bedroom in SF)? It seems to me, people are simply ignoring the math because it's convenient and the idiots attacking google busses and such because they never learned it.