5 ms·

I feel bad for the people who grew up in the area and feel connected because of family or whatnot. As a software engineer NOT from SF, it's probably the last pl

I feel bad for the people who grew up in the area and feel connected because of family or whatnot. As a software engineer NOT from SF, it's probably the last place in the country I'd move to - we have such a relative abundance of remote opportunities compared to other professions. I don't really see why I'd be willing to pay maybe up to 4x+ my housing cost for perhaps a 15% increase in pay. It's a nice place and all, but geez.

downandout 12y ago
>I feel bad for the people who grew up in the area The people who grew up there (whose parents owned homes) are doing quite well (at least their parents are) because of the vast appreciation of their homes. Among some of my wealthy friends that have paid ridiculous prices for real estate in SF, I have heard the rather condescending term "thousand dollar millionaires" used to refer to these long-term homeowners that did nothing to create a $1M+ net worth other than pay their mortgage and live in the same place for decades. Anyway, it's not the people who grew up there that you should feel bad for. It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general.
- mbillie1 12y ago
  > It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general. This is more along the lines of what I meant, although I'd wager plenty of people grew up renting and have been slowly pushed out of what feels like their home by skyrocketing housing prices as well.
- sliverstorm 12y ago
  The people who grew up there don't have any extra wealth. So long as their parents continue to live in the same house, it's all just wealth "on paper". Now, if they live with their parents, that is certainly a leg up in terms of not paying rent (or paying much less rent), but other than that...
- ben0x539 12y ago
  Is being a homeowner really the standard situation in SF one generation back?
  - argonaut 12y ago
    Many parts of Silicon Valley were (and possibly still are) suburbs in the past: Palo Alto, Mountain View, Menlo Park.
  - oblique63 12y ago
    Not in SF proper... I'm a native san franciscan that grew up in the mission in the 90's, and virtually every native san franciscan I've ever met has been a renter. I only had like 1 friend in high school whose parents actually owned a duplex in noe valley, but other than that, pretty much everybody was in small apartments. I think this is the reason why a lot of the "if you wanted a stable living situation, you should've bought a home" type arguments aggravate a lot of the anti-gentrification people in SF...
- daemin 12y ago
  That same sort of thing happens in Australia, especially for coastal and beachfront properties. Where property was really cheap because it was far from major centres ended up getting really expensive over time. The only difference here is that those people tend to be squeezed out when they can no longer afford to pay the council rates (local taxes based on the value of the property). So they have to sell up, make a lot, pay a lot in income tax, and move somewhere far cheaper.
  - brc 12y ago
    There is no tax payable on selling your home in Australia, unless it is a second home or investment property, or you purchased it before 1985 (in the case of investments). Council rates are assessed on unimproved land value - which usually lags well behind actual land market value, and far below actual house & land value. Most people pay more for electricity than they do for council rates. I live near several old-lady-millionaires who moved into coastal properties on retirement - husbands have passed away and they are still in the homes 30+ years later. But they have no intention of moving and cashing in, and despite presumably modest incomes, have no problems paying the rates, which add up to about $40-50 per week. I also suspect their children aren't keen on them selling up.
    - daemin 12y ago
      Yes, no tax for the primary residence, somehow I forgot that. But as far as council rates forcing people out, it does do that in some areas, especially when land value goes from something like 100,000 to over 1,500,000 in 30 years.
  - dwd 12y ago
    Sunshine Coast resident here, Demographia's most unaffordable in 2009. The Buderim market was insane during that time. Sold out in 2008 and sat it out until last year.
- muyuu 12y ago
  Asset rich, when your asset is your home, is the worst kind of rich. Unless you have something else very very compelling to back it up. If you sell, then say goodbye to your city. If you don't sell, then you don't have this capital, and you still live in a very expensive place. You can mortgage it for a lot of capital, but this is a poisoned chalice. Other means to actually realise any of that wealth is to try your luck and speculate downwards, which is extremely risky if that's your only big asset. Lots of people are "feeling rich" without being realistically able to realise any of this wealth, since they cannot really move away from their city. This is fictitious wealth that constitutes a massive burden to the city and endangers its competitive place in the future. It will pop sooner or later and its likely to cause massive social problems. It's causing them already even before that happened.
  - thecage411 12y ago
    I'd rather be asset rich than straight up poor!
  - bellcurvetopper 12y ago
    This is an excellent point. I work as a real estate analyst in Shanghai, and this same situation is playing out here. Like San Francisco, buying a 2 BR 1,000 sqft apartment in the city proper can cost upwards of US$1M (RMB 6M), though here the GDP per capita is only US$6,000 vs ~$42k in the US. Also, many Chinese feel to own a home before marriage, which is usually accomplished by pooling the savings of parents and grandparents, and assuming one will be in debt until the end of time. Those that have apartments probably bought them 10-15 years ago, when the price was 10X less. They are, as you mentioned, asset rich, but it doesn't translate into any greater quality of life. The good news is that the rental market is relatively cheap here. In real estate terms, the cap rate (annual rent / sales price) for buying an apartment is around 1.5-2%, compared to 5%+ even in places like SF. The market here in China, and the general obsession with real estate, is a deep an interesting topic. The best summary I've found so far is the corresponding section in the book "In Line Behind a Billion People". It's expensive by ebook standards but well worth the time/money for those curious about China.
  - tibbon 12y ago
- yzzxy 12y ago
  But if you still live in said house, you're actually LOSING money because of the increased property taxes.
  - ben1040 12y ago
    California law has put caps on the increase of assessed values, and a full re-assessment only happens when the property changes hands. http://en.wikipedia.org/wiki/California_Proposition_13_(1978) http://en.wikipedia.org/wiki/California_Proposition_13_(1978... So if you've owned a property since the 70s you're most likely paying less in taxes than someone who'd buy it from you today.
- aeturnum 12y ago
  This is an interesting perspective. I'm from Marin County (the "classic" cloister of the rich in the bay area). While I was growing up (1985 - 2004), there was already a cultural gulf in the community between the older population (families that had purchased houses before the prices spiked) and yuppies who were buying housing at hugely increased prices. On paper, many people in Marin are very wealthy, but in practice this isn't as common as the stats suggest (An ex-girlfriend's parents weren't well off enough to help her attend college, but her parents were considered too rich due to their house for financial aid). I've been lucky enough to have parents who could afford to help me with school, and have an interest in a lucrative field (computer science). However, many of my highschool classmates did not have one (or both) of those advantages. They are also squeezed between a high cost of living and the lack of jobs that provide a realistic living wage. However, unlike migrants from other areas, the less fortunate locals do not have another home to go back to. I know families that moved their entire family out of the state while their kids were still in school because it became financially untenable to live in the area. This situation reminds me of the ongoing situation in SF. There are plenty of stories (anecdotal though they may be) of long-time residents being forced out of communities by the economic climate. It is easy for outsides to look at the Bay Area and see a city made up of tech workers making $100k+ a year, but the reality is very different. The same is true of people who bought their houses in a different economic climate. At least the parents have the "escape value" of their houses, as long as they're willing to sell off 18+ years of their lives.
jlmorton 12y ago
The pay differential for software engineers in the SF Bay Area is much more than 15%. The average adjustment for all jobs in San Francisco is about 40% higher than the national average. Looking at BLS data, jobs for Software Developers in San Jose-Santa Clara are actually about 15% higher than the next highest municipal area in the US (Seattle-Bellevue). The average Software Developer job in San Jose-Santa Clara makes $28,000 more than the same job in the New York Metropolitan Area.
- yourapostasy 12y ago
  If we go by the parent comment's "4x+" metric, and if we keep with the traditional personal finance advice of 33% maximum budget allocation to shelter with no other debt and that 33% covers PITI+M, that 33% expands to 1.32x of the budget. In other words, for compensating just shelter costs alone, you need a salary bump of 132%. This doesn't account for the increased cost of living that should be compensated for, as well as any risk premium for moving in the first place. I don't see how people pencil out the numbers to convince themselves to move into either Silicon Valley or the Bay Area, and I'd honestly like to see how the numbers shake out if someone has made it work. Unless one is Fabrice Bellard-level quality, I don't anticipate most average arrivals to SV or BA ever getting a 200-250% salary increase to just stay in a Red Queen's Race personal-finance-wise. The landowners of Bay Area are the new store owners of this new gold rush, profiting with much lower risk premiums from the majority of "prospectors"/programmers flocking to the new gold fields while the stories of "hits" keep luring in fresh meat each year.
Balgair 12y ago
Well, that's my family. Grew up in the East Bay and my family has been there for 4 generations. My dad bought the house in '81 for ~60 and now the house next door is in negotiations for about 600. That's a 1000% increase. Compare this to wages, and it's still bad. These are 1 bath, 3 bedroom single story 1.5 acre plots. Basically, Levittown houses. Granted, the elementary is 3 blocks away. But still, it's insane in the Bay property market again. Anyone from the Bay knows a bubble when we see one by now. When all the hipsters and their credit-cards run out, the market will crash and the locals MIGHT be able to buy something again. There is also the elephant in the room called Prop 13 that is not mentioned here. That, among all other bubble ingredients is the main reason why property in the Bay is the way it is.
- htormey 12y ago
  "But still, it's insane in the Bay property market again. Anyone from the Bay knows a bubble when we see one by now. When all the hipsters and their credit-cards run out, the market will crash and the locals MIGHT be able to buy something again" Just curious, but what happened to property prices in Oakland/SF during the last crash (2008)?
  - krakensden 12y ago
    Not much. Actually, in Oakland prices started to take off in like late 2009 as professional investors moved in, betting on the rental market
    - Balgair 12y ago
      The East Bay cratered, out in Pinole and Bay Point was way worse. The house we used to live in lost about 2/3 of value in 6 months.
- dwd 12y ago
  Don't count on it bursting. It's just as likely to go sideways for a decade or two with devaluation only due to inflation. Japan is the best example but Australia never had a major crash and seems to have rebounded again. Maybe if there was another DotCom crash it might take the real estate market down with it.
rdrdss23 12y ago
I grew up in the area, and I no longer want to go back; and neither do most of the friends I grew up with. It has not only gotten more expensive, but the culture has changed significantly. The intransigent "family farm" that is ingrained in the American psyche is being eroded by a practical reality - and on some level everyone feels it. The newer generations are increasingly less attached to their place of birth. The Bay Area is rapidly changing, and I'm happy for all the people that now live there and call it their home. It's no longer my cup of tea, but I'll find my place somewhere else. Please don't feel sorry for me =)
JOnAgain 12y ago
>> for perhaps a 15% increase in pay Where are you working? Total comp in the bay is often much higher than other areas (data-points from Seattle, LA, and New York)

downandout 12y ago

>I feel bad for the people who grew up in the area The people who grew up there (whose parents owned homes) are doing quite well (at least their parents are) because of the vast appreciation of their homes. Among some of my wealthy friends that have paid ridiculous prices for real estate in SF, I have heard the rather condescending term "thousand dollar millionaires" used to refer to these long-term homeowners that did nothing to create a $1M+ net worth other than pay their mortgage and live in the same place for decades. Anyway, it's not the people who grew up there that you should feel bad for. It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general.

mbillie1 12y ago
> It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general. This is more along the lines of what I meant, although I'd wager plenty of people grew up renting and have been slowly pushed out of what feels like their home by skyrocketing housing prices as well.
sliverstorm 12y ago
The people who grew up there don't have any extra wealth. So long as their parents continue to live in the same house, it's all just wealth "on paper". Now, if they live with their parents, that is certainly a leg up in terms of not paying rent (or paying much less rent), but other than that...
ben0x539 12y ago
Is being a homeowner really the standard situation in SF one generation back?
- argonaut 12y ago
  Many parts of Silicon Valley were (and possibly still are) suburbs in the past: Palo Alto, Mountain View, Menlo Park.
- oblique63 12y ago
  Not in SF proper... I'm a native san franciscan that grew up in the mission in the 90's, and virtually every native san franciscan I've ever met has been a renter. I only had like 1 friend in high school whose parents actually owned a duplex in noe valley, but other than that, pretty much everybody was in small apartments. I think this is the reason why a lot of the "if you wanted a stable living situation, you should've bought a home" type arguments aggravate a lot of the anti-gentrification people in SF...
daemin 12y ago
That same sort of thing happens in Australia, especially for coastal and beachfront properties. Where property was really cheap because it was far from major centres ended up getting really expensive over time. The only difference here is that those people tend to be squeezed out when they can no longer afford to pay the council rates (local taxes based on the value of the property). So they have to sell up, make a lot, pay a lot in income tax, and move somewhere far cheaper.
- brc 12y ago
  There is no tax payable on selling your home in Australia, unless it is a second home or investment property, or you purchased it before 1985 (in the case of investments). Council rates are assessed on unimproved land value - which usually lags well behind actual land market value, and far below actual house & land value. Most people pay more for electricity than they do for council rates. I live near several old-lady-millionaires who moved into coastal properties on retirement - husbands have passed away and they are still in the homes 30+ years later. But they have no intention of moving and cashing in, and despite presumably modest incomes, have no problems paying the rates, which add up to about $40-50 per week. I also suspect their children aren't keen on them selling up.
  - daemin 12y ago
    Yes, no tax for the primary residence, somehow I forgot that. But as far as council rates forcing people out, it does do that in some areas, especially when land value goes from something like 100,000 to over 1,500,000 in 30 years.
- dwd 12y ago
  Sunshine Coast resident here, Demographia's most unaffordable in 2009. The Buderim market was insane during that time. Sold out in 2008 and sat it out until last year.
muyuu 12y ago
Asset rich, when your asset is your home, is the worst kind of rich. Unless you have something else very very compelling to back it up. If you sell, then say goodbye to your city. If you don't sell, then you don't have this capital, and you still live in a very expensive place. You can mortgage it for a lot of capital, but this is a poisoned chalice. Other means to actually realise any of that wealth is to try your luck and speculate downwards, which is extremely risky if that's your only big asset. Lots of people are "feeling rich" without being realistically able to realise any of this wealth, since they cannot really move away from their city. This is fictitious wealth that constitutes a massive burden to the city and endangers its competitive place in the future. It will pop sooner or later and its likely to cause massive social problems. It's causing them already even before that happened.
- thecage411 12y ago
  I'd rather be asset rich than straight up poor!
- bellcurvetopper 12y ago
  This is an excellent point. I work as a real estate analyst in Shanghai, and this same situation is playing out here. Like San Francisco, buying a 2 BR 1,000 sqft apartment in the city proper can cost upwards of US$1M (RMB 6M), though here the GDP per capita is only US$6,000 vs ~$42k in the US. Also, many Chinese feel to own a home before marriage, which is usually accomplished by pooling the savings of parents and grandparents, and assuming one will be in debt until the end of time. Those that have apartments probably bought them 10-15 years ago, when the price was 10X less. They are, as you mentioned, asset rich, but it doesn't translate into any greater quality of life. The good news is that the rental market is relatively cheap here. In real estate terms, the cap rate (annual rent / sales price) for buying an apartment is around 1.5-2%, compared to 5%+ even in places like SF. The market here in China, and the general obsession with real estate, is a deep an interesting topic. The best summary I've found so far is the corresponding section in the book "In Line Behind a Billion People". It's expensive by ebook standards but well worth the time/money for those curious about China.
- tibbon 12y ago
yzzxy 12y ago
But if you still live in said house, you're actually LOSING money because of the increased property taxes.
- ben1040 12y ago
  California law has put caps on the increase of assessed values, and a full re-assessment only happens when the property changes hands. http://en.wikipedia.org/wiki/California_Proposition_13_(1978) http://en.wikipedia.org/wiki/California_Proposition_13_(1978... So if you've owned a property since the 70s you're most likely paying less in taxes than someone who'd buy it from you today.
aeturnum 12y ago
This is an interesting perspective. I'm from Marin County (the "classic" cloister of the rich in the bay area). While I was growing up (1985 - 2004), there was already a cultural gulf in the community between the older population (families that had purchased houses before the prices spiked) and yuppies who were buying housing at hugely increased prices. On paper, many people in Marin are very wealthy, but in practice this isn't as common as the stats suggest (An ex-girlfriend's parents weren't well off enough to help her attend college, but her parents were considered too rich due to their house for financial aid). I've been lucky enough to have parents who could afford to help me with school, and have an interest in a lucrative field (computer science). However, many of my highschool classmates did not have one (or both) of those advantages. They are also squeezed between a high cost of living and the lack of jobs that provide a realistic living wage. However, unlike migrants from other areas, the less fortunate locals do not have another home to go back to. I know families that moved their entire family out of the state while their kids were still in school because it became financially untenable to live in the area. This situation reminds me of the ongoing situation in SF. There are plenty of stories (anecdotal though they may be) of long-time residents being forced out of communities by the economic climate. It is easy for outsides to look at the Bay Area and see a city made up of tech workers making $100k+ a year, but the reality is very different. The same is true of people who bought their houses in a different economic climate. At least the parents have the "escape value" of their houses, as long as they're willing to sell off 18+ years of their lives.

jlmorton 12y ago

The pay differential for software engineers in the SF Bay Area is much more than 15%. The average adjustment for all jobs in San Francisco is about 40% higher than the national average. Looking at BLS data, jobs for Software Developers in San Jose-Santa Clara are actually about 15% higher than the next highest municipal area in the US (Seattle-Bellevue). The average Software Developer job in San Jose-Santa Clara makes $28,000 more than the same job in the New York Metropolitan Area.

yourapostasy 12y ago
If we go by the parent comment's "4x+" metric, and if we keep with the traditional personal finance advice of 33% maximum budget allocation to shelter with no other debt and that 33% covers PITI+M, that 33% expands to 1.32x of the budget. In other words, for compensating just shelter costs alone, you need a salary bump of 132%. This doesn't account for the increased cost of living that should be compensated for, as well as any risk premium for moving in the first place. I don't see how people pencil out the numbers to convince themselves to move into either Silicon Valley or the Bay Area, and I'd honestly like to see how the numbers shake out if someone has made it work. Unless one is Fabrice Bellard-level quality, I don't anticipate most average arrivals to SV or BA ever getting a 200-250% salary increase to just stay in a Red Queen's Race personal-finance-wise. The landowners of Bay Area are the new store owners of this new gold rush, profiting with much lower risk premiums from the majority of "prospectors"/programmers flocking to the new gold fields while the stories of "hits" keep luring in fresh meat each year.

Balgair 12y ago

Well, that's my family. Grew up in the East Bay and my family has been there for 4 generations. My dad bought the house in '81 for ~60 and now the house next door is in negotiations for about 600. That's a 1000% increase. Compare this to wages, and it's still bad. These are 1 bath, 3 bedroom single story 1.5 acre plots. Basically, Levittown houses. Granted, the elementary is 3 blocks away. But still, it's insane in the Bay property market again. Anyone from the Bay knows a bubble when we see one by now. When all the hipsters and their credit-cards run out, the market will crash and the locals MIGHT be able to buy something again. There is also the elephant in the room called Prop 13 that is not mentioned here. That, among all other bubble ingredients is the main reason why property in the Bay is the way it is.

htormey 12y ago
"But still, it's insane in the Bay property market again. Anyone from the Bay knows a bubble when we see one by now. When all the hipsters and their credit-cards run out, the market will crash and the locals MIGHT be able to buy something again" Just curious, but what happened to property prices in Oakland/SF during the last crash (2008)?
- krakensden 12y ago
  Not much. Actually, in Oakland prices started to take off in like late 2009 as professional investors moved in, betting on the rental market
  - Balgair 12y ago
    The East Bay cratered, out in Pinole and Bay Point was way worse. The house we used to live in lost about 2/3 of value in 6 months.
dwd 12y ago
Don't count on it bursting. It's just as likely to go sideways for a decade or two with devaluation only due to inflation. Japan is the best example but Australia never had a major crash and seems to have rebounded again. Maybe if there was another DotCom crash it might take the real estate market down with it.

rdrdss23 12y ago

I grew up in the area, and I no longer want to go back; and neither do most of the friends I grew up with. It has not only gotten more expensive, but the culture has changed significantly. The intransigent "family farm" that is ingrained in the American psyche is being eroded by a practical reality - and on some level everyone feels it. The newer generations are increasingly less attached to their place of birth. The Bay Area is rapidly changing, and I'm happy for all the people that now live there and call it their home. It's no longer my cup of tea, but I'll find my place somewhere else. Please don't feel sorry for me =)

JOnAgain 12y ago

>> for perhaps a 15% increase in pay Where are you working? Total comp in the bay is often much higher than other areas (data-points from Seattle, LA, and New York)