8 ms·

So You Want To Fix The Housing Crisis

58 points by mdev 12y ago

15 of the 30 cities with the highest rents in the US are all in the San Francisco Bay Area.

jamesaguilar 12y ago
"Fix it, but, uh, not until I leave." As a homeowner in the Bay Area, my politics are: "Let's fix it!" But with as much equity as I've got pulling in the other direction, it is damn hard to toe that line.
- xnull2guest 12y ago
  The danger is that the bubble will burst and that you'll lose all of that equity on its own unpredictable timeline.
- fiatmoney 12y ago
  Building cheaper moderately-high-density housing doesn't really compete with single-family detached houses; it competes with housing further from the core. In fact, with higher general density, you'd expect your lot to become more valuable, since it can now potentially be sold to developers. There's also the knock-on effects of higher economic growth and shorter commute times on property values and available amenities, and broadening the tax base, potentially reducing your tax burden. If you tore down all the skyscrapers in Manhattan, your brownstone wouldn't get more valuable; rather the opposite.
  - jamesaguilar 12y ago
    Huh. That makes me feel better about planning to vote no on M. Thanks.
  - sampo 12y ago
    It is interesting how people's intuition guides them to totally wrong conclusions in this matter. I think what you said is absolutely correct, but I also think that a lot of people still have the opposite opinion based on their intuition.
- ktothemc 12y ago
  I wrote the article, and I'm personally concerned that housing prices affect the mix and balance of companies in the local tech ecosystem in favor of the big corporations like FB, Google, Apple and heavily venture-backed startups. It's bootstrapped and smaller companies that hurt in this situation because they can't afford to pay the salaries that cover the living costs here. If the bootstrapped companies can't afford to be here, they end up starting in some other city far away and growing into a significant presence there. That's probably good for those communities, but not necessarily good for the long-term health of the Valley if our ecosystem ends up being too dependent on two or three mega-corporations. If you look at Palo Alto, it's a microcosm of what could happen to the entire region. That city has basically starved itself of young companies because it's not growing housing or office capacity. And with foreign purchases of 1950s era ranch homes there, I'm mildly concerned that Palo Alto will turn into our regional equivalent of the Park Avenue stash pad or the Kensington ghost mansion for Chinese that are escaping a poorly performing domestic real estate market and Xi Jinping's unprecedented crackdown on domestic corruption. Perhaps that's good for property prices, but it's terrible for having a living, breathing, dynamic community.
  - eloisant 12y ago
    It's bad for bootstrapped startup, but startups who decide to raise funds can still do fine. Anyway that's always been Silicon Valley's strength: VC money. If you want to start a bootstrapped startup, Silicon Valley is a bad place to start with. You're in competition with so many cool companies for recruiting, while in a big enough city with a university you can easily be one of the sexiest company to work for and attract the talented workers who don't want to move to California.
    - ktothemc 12y ago
      Right now, the way that tech companies get around this is by paying their employees progressively more and not really engaging with the political system. But this particular strategy also has its downsides from a community perspective, because it starves out other uses of our city for public service workers, teachers, artists, etc. Perhaps there is another way where we are politically engaged, where we can generate broad political will for more housing given that the largest and most successful companies have a hand in funding or supporting diverse growth (in the way that New York's biggest corporate institutions are also great patrons of the city's arts).
timr 12y ago
"If you need an example of how intense this is, over the summer, 71,421 people, or 8 percent of San Franciscans, decided that we should all vote on every single project over the existing height limits on the waterfront by passing a ballot initiative. It was funded primarily by a single wealthy couple that didn’t want to lose their views, and they put it through in one of the lowest turnout elections in city history." What she doesn't say, really matters: that initiative was primarily about stopping a massive government handout to the multimillionaire owners of a professional basketball team, which would essentially give away a choice bit of public property in order to build an arena in a part of town where no arena should exist. The ballot initiative was put in place to make it much more difficult for that land-grab to go through. This stuff isn't just about people being ridiculous NIMBYs. Honestly, I think it's more ridiculous to look at San Francisco and claim that the problem is that we aren't building enough, when you can walk up to just about any live/work space in SOMA (i.e. the new construction), and see that the tenant list is mostly startups. That's what happens when you let developers build whatever they want -- they build for the most lucrative allowed use of the land. And that usually isn't residential construction. Is there NIMBYism in the bay area? Absolutely. But the biggest problem, by far, is that there's a massive technology bubble inflating everything from real estate to salaries in a very tiny slice of livable property. The price increases are being driven by greed and speculation as much as any sort of sustainable demand.
- techsupporter 12y ago
  So why doesn't the initiative say that? Why run a vote on requiring votes on all waterfront development height changes?
  - deleted 12y ago
    [deleted]
- ktothemc 12y ago
  Why blanket punish and make every single development on the waterfront more expensive because of a single Warriors arena project that was eventually moved to Mission Bay? All of these little costs, process hurdles add up and make housing more expensive. The broad point is that these citizen anti-growth initiatives, which might have a single poorly-designed and consulted project in mind, end up having very long-term and consequential impacts on housing prices across the board. This 2014 study examined 7,300 land parcels in the Bay Area and found that if you increase the number of independent reviews for a construction project by one standard deviation, average land prices increase by about eight percent. http://blogs.lse.ac.uk/usappblog/2014/07/01/regulatory-constraints-on-supply-are-a-key-factor-in-san-franciscos-affordable-housing-crisis/ http://blogs.lse.ac.uk/usappblog/2014/07/01/regulatory-const... I agree and am concerned about how the point of the economic cycle we're in affects the profile, goals and objectives of people we attract to Silicon Valley. You tend to get more true believers at the low points in the cycle versus the gold-rush folk we're seeing now. What do you think is the best way of dealing with this? We can either build a lot more housing or drive away jobs and companies if we think they're too greed or speculation-driven.
Slix 12y ago
I can't find any reason to be optimistic after reading this article. Is there any reason to even consider moving to the Bay Area after graduating? It seems like any other city would be more manageable.
- raverbashing 12y ago
  "whargaaarbl startups whargaaarblr" No, there's no reason. You can find a good paying, interesting job elsewhere. Life is not all about the newest Instagram for Pets (iPhone 6 only)
- kansface 12y ago
  You only read bad news; the reason to move here is because the bay is the hub of the both entrepreneurship and tech in the US. Having said that, rent is expensive but salaries are more or less commensurate.
  - jrjarrett 12y ago
    No, no they are not.* Several times in my career I have looked at moving to SF, and when it's gotten to the point of talking about salary and upscaling that to what I made at the time, that's not true. The numbers discussed were about 20% more, but that did not cover the huge delta in housing costs.
    - mahyarm 12y ago
      Were you looking at google & co or a startup? Usually your bonus & stock compensation is around %40 of your total compensation. Startup stock is non-liquid, and therefore unusable.
    - kansface 12y ago
      It is true that you will spend proportionally more on housing here. It is also most likely true that your total savings will be higher here. EG, you could save 50K$/year in the valley whereas you could only save 20k$ a year working in Iowa. The 20K is much larger compared to the cost of living, but you will be better off when you retire if you squirreled away the 50K$. If you want to move to Iowa at that point, all the better, you can now afford a palace. This assumes you can incur the cost of moving and can stay employed.
raverbashing 12y ago
Stockton is bankrupt. Go build and live there for 20% of the price, you can still come to SF for meeting VCs. Or somewhere across the bay. "Oh but they don't have my favourite vegan frozen yogurt there, and in Starbucks all I see is PCs" grow up. They think of themselves as the most innovative people of this generation and use the internet yet they can't manage to have their team 10mi from where they think it should be. Pathetic.
- tracker1 12y ago
  I'm not really familiar with the Bay Area, only been there a few times for work. That said, it looks like Stockton is a bit farther from SF than your post would indicate... And I'm only guessing that a commute in and out of SF daily would be about 3-4 hours of time (just from what I'd seen going to/from the airport into the SOMA area)... I may be mistaken here. I've spent enough of my life commuting.. I do best with about a half hour commute, which gives me warm up/down time for my day... I really don't want to have a 12-13hour day from when I leave home, and get back. All of that said, I don't get why there is such a focus on bringing people into the Bay area... It would likely be easier and cost less to relocate the Yahoo guys and build-up further in, or hell, Atlanta or Phoenix. The company could spend the savings on building up the community they move into, probably get great tax incentives, and the employees would bank a lot of cash on the relocation. New hires would come in to more closely match the local economy even. Phoenix, for example, has pretty decent internet... an okay cultural scene, some great food (okay, not as good with seafood), and already has some very large companies doing software development here (American Express, Paypal, Wells Fargo, Go Daddy...) with a lower cost of living. Yes, summers can seem like hell on earth, but there are lots of places within an hour or so that aren't. Okay... done ranting...
  - raverbashing 12y ago
    "That said, it looks like Stockton is a bit farther from SF than your post would indicate... And I'm only guessing that a commute in and out of SF daily would be about 3-4 hours of time" You're right. But what I'm suggesting is: Don't commute there. Get your team there. If someone is already living on SF, great, they can stay there and do meeting through Skype/Hangout. If they're moving there, they can live close to the company cheaply. And if someone needs to do a meeting on SF, going there once/twice a week is not too bad.
spikels 12y ago
Another interesting article from Kim-Mai Cutler on the absolutely fascinating Bay Area housing market. In case you missed her last one and the discussion in HN: https://news.ycombinator.com/item?id=7590250 https://news.ycombinator.com/item?id=7590250 One correction is needed: tenancies in common (TICs) ARE NOT a method of avoiding SF rent control rules. It has absolutely no effect on whether or not a particular unit is subject to rent control. It is simply a way that people can share ownership of a multi-unit building - like a coop. On the other hand condo conversion does remove many of the burdens of the SF rent control. That in turn is why the SF government had to essentially outlaw condo conversions. The rules are very complex and constantly changing - educate yourself and then talk to a lawyer.
- ktothemc 12y ago
  I'm aware of that, but unfortunately, a lot of real estate interests use TICs and the state Ellis Act to kick out long-term rent-controlled tenants.
  - spikels 12y ago
    Well technically it is only the Ellis Act that makes eviction easier. TICs just happen to be the best exit for a building that has been "Ellis Acted" and therefore cannot be rented for several years. All the units still remain subject to all the rent control rules if they are ever rented again - plus a whole bunch of other rules meant to discourage the practice. Again TICs are just the way multiple people own a single real estate. BTW - TICs have an unusual meaning in SF. In most (English law) places it simply means property held "as undivided partial interests" - say 50/50 by two owners. In SF it means not merely this but also that all the owners have an agreement between them about who live where, etc - much like a coop agreement. It is sort of a condo-lite created in response to the restrictions on condo conversion - part of the endless war that is rent control (that only reliably benefits lawyers and politicians who are usually lawyers too). Again - complex stuff - see a lawyer. ;)
xenadu02 12y ago
Just moved to SF (with two kids so renting a 3br was a required expense). Why aren't the big tech and VC firms spending a lot more on lobbying, redevelopment, etc? Though I'm the beneficiary of the rapidly increasing salaries, some relief on the housing side would remove a lot of the pressure for wage increases. A lot of really talented engineers won't even bother taking interviews for bay area jobs due to the housing situation. It seems a bit unsustainable to me.
- chrisseaton 12y ago
  Can I ask where you send your children to school in central SF? I heard bad things about SF state schools - is that true? Are there better private schools as well?
netcan 12y ago
Housing is one of those issues where the political paradigm is so complex, it's impenetrable. Everyone has their own opinions about what the main engine is and it's hard to get anywhere. Here's my own perspective, it has nothing to do with any city in particular. (A) Housing is not a free market. Supply and demand exist, but that is not enough to make a market free. It's never a free market because decisions are (necessarily or not) always made at the political level. This covers things from planning, interest rate policies, bankruptcy laws tenancy laws, and even things like bank bailouts. Housing is unavoidably political. (B) There is a conflict of interests between home owners and renters. One wants high prices, low availability, the other wants low prices. (C) There are lots of interests that fall on the rising prices side. Rising prices make it easier to make money on loans, building, etc. They make it easier to raise tax revenue that funds public services that all sorts of parties have an interest in. (D) Owner-occupiers should be neutral. They own one house, regardless of market price. But because of financing, and a lot of incorrect but persistent psychology about personal wealth they usually feel firmly on the high prices side. No one wants their house to lose value. (E) Nominal increase in property value is inflation. Inflation has real impact on the "real" economy (as economists use the term). This has to do with the value of outstanding loans and annuities. We are looking at problems that are mostly political and cultural as if they are economic. Ultimately a lot of the things that drive demand for houses are the same as the things that drive demand for universities. Demand for elite universities is not about competing for education as a scarce resource. Same with housing. It's not about competition and scarcity . It's about culture and politics.
- chrisseaton 12y ago
  "Owner-occupiers should be neutral" Except for people who want their home to provide a cash inheritance for their children when they die, or who want to sell their home and downsize while still alive to raise cash. That's not an incorrect psychology.
  - netcan 12y ago
    Those are edge cases and they can go both ways. Inheritance for their children to buy a house with? Even with inheritance, it can be zero sum. You inherit a house which you use to clear a mortgage or buy your own house. You still have one house. Unless the houses multiply there is nor real addition of wealth. Some people do accumulate capital in their houses and downsize. But even in cases where it happens, they might have been better of with cheaper housing costs all their lives enabling savings amounting to more capital at retirement. Homeowners might end up on either side of this equation. Rapid growth periods place earlier buyers in a better relative place to later buyers. But I think the upside is over valued by home owners while the downside is undervalued. Much of the upside is in fact access to capital. It's interesting how foreign the idea that lower prices make us wealthier is when it comes to housing.
Rapzid 12y ago
I might feel bad for people dealing with housing in SF.. But I live in Auckland. Considering moving back to Texas so I can feel sorry for people dealing with both cities' housing. Most aren't familiar so I'll paint a picture(in NZD). The average selling price for a home just this past September was 683,101. What will 683k get you? Pretty much a shack by US standards. Probably no insulation. No central AC. It's actually pretty hard to describe just how little you get. Sure, you can buy lower but even at 550k homes come with descriptive words like "Real potential", "A real do-up", "Great starting point", "Fringe", "A foot on the ladder". Oh, and did I mention the 20% DP you need for a mortgage now? And the interest rates will have you paying double unless you pay it off fast. Meanwhile, median household income is about 60K(USD). Renting? Anything under 400/week will most likely be unsuitable for a couple. You really don't start hitting "descent" until you're closing in on 500/week and they come with more bedrooms than you need.. Almost no good one bedrooms. There is this threshold you have to cross before you start finding places that have been kept up. See, there is a tremendous housing shortage. This causes much of the low end stuff to go barely maintained through decades of renter churn because they are sure to find another renter regardless. You might search months for a suitable place to rent, and then have to contend with many others after the same place. Often between the time a listing goes up and you can call, same day, it's mysteriously gone. A lot of the choice places don't schedule appointments; they herd groups of 20 through at designated times on viewing days. The property management agents, which you'll most likely be dealing with because you're renting a property from some guys portfolio of like 5(corporate owned apartment complexes are almost unheard of), are often times very unhelpful and even rude. A lot of the points about renting are mirrored in buying. Most homes go to auction because the shortage. People get desperate and end up bidding high to secure a place and be done with the process. In the US people absolutely hate packing and moving. In Auckland simply finding a suitable place to live is so bad, you don't really pay any mind to the actual moving:| End Rant.
retrogradeMT 12y ago
The problems mentioned in the article certainly are not unique to SF, though the scale is pretty large. Sidney, MT, which is in the Bakken oilfield, has such a shortage of housing that workers there spent last winter sleeping in campers and trucks on the side of the road. In the winter, the temperature can dip to -30 degrees. The dept of transportation (DOT) bottled up a housing projected for almost a year over a right of way dispute. In this case the developer agreed to pay for the improvements, but the DOT insisted on overseeing the process, which increased the cost 2x. In my experience: 1. Homeowners fear change because they usually like their neighborhood, have most of their assets "at stake", and envision worst case scenarios. 2. Too many elected officials categorize themselves into a soundbite. They don't just campaign by the soundbite, but they govern by it. Project details and reality be damned, I'm pro-parks! 3. Top municipal employees almost always have too much power. When a new elected official comes in, they listen to his/her goals and then put new processes in place, while seldom removing old processes. This adds unreasonable amounts of time, complexity and cost to projects. The first and second problem can frequently be worked out but the third problem is crippling. If you want to fix the housing crisis, start there.

58 points by mdev 12y ago

15 of the 30 cities with the highest rents in the US are all in the San Francisco Bay Area.

"Fix it, but, uh, not until I leave." As a homeowner in the Bay Area, my politics are: "Let's fix it!" But with as much equity as I've got pulling in the other direction, it is damn hard to toe that line.

xnull2guest 12y ago
The danger is that the bubble will burst and that you'll lose all of that equity on its own unpredictable timeline.
fiatmoney 12y ago
Building cheaper moderately-high-density housing doesn't really compete with single-family detached houses; it competes with housing further from the core. In fact, with higher general density, you'd expect your lot to become more valuable, since it can now potentially be sold to developers. There's also the knock-on effects of higher economic growth and shorter commute times on property values and available amenities, and broadening the tax base, potentially reducing your tax burden. If you tore down all the skyscrapers in Manhattan, your brownstone wouldn't get more valuable; rather the opposite.
- jamesaguilar 12y ago
  Huh. That makes me feel better about planning to vote no on M. Thanks.
- sampo 12y ago
  It is interesting how people's intuition guides them to totally wrong conclusions in this matter. I think what you said is absolutely correct, but I also think that a lot of people still have the opposite opinion based on their intuition.
ktothemc 12y ago
I wrote the article, and I'm personally concerned that housing prices affect the mix and balance of companies in the local tech ecosystem in favor of the big corporations like FB, Google, Apple and heavily venture-backed startups. It's bootstrapped and smaller companies that hurt in this situation because they can't afford to pay the salaries that cover the living costs here. If the bootstrapped companies can't afford to be here, they end up starting in some other city far away and growing into a significant presence there. That's probably good for those communities, but not necessarily good for the long-term health of the Valley if our ecosystem ends up being too dependent on two or three mega-corporations. If you look at Palo Alto, it's a microcosm of what could happen to the entire region. That city has basically starved itself of young companies because it's not growing housing or office capacity. And with foreign purchases of 1950s era ranch homes there, I'm mildly concerned that Palo Alto will turn into our regional equivalent of the Park Avenue stash pad or the Kensington ghost mansion for Chinese that are escaping a poorly performing domestic real estate market and Xi Jinping's unprecedented crackdown on domestic corruption. Perhaps that's good for property prices, but it's terrible for having a living, breathing, dynamic community.
- eloisant 12y ago
  It's bad for bootstrapped startup, but startups who decide to raise funds can still do fine. Anyway that's always been Silicon Valley's strength: VC money. If you want to start a bootstrapped startup, Silicon Valley is a bad place to start with. You're in competition with so many cool companies for recruiting, while in a big enough city with a university you can easily be one of the sexiest company to work for and attract the talented workers who don't want to move to California.
  - ktothemc 12y ago
    Right now, the way that tech companies get around this is by paying their employees progressively more and not really engaging with the political system. But this particular strategy also has its downsides from a community perspective, because it starves out other uses of our city for public service workers, teachers, artists, etc. Perhaps there is another way where we are politically engaged, where we can generate broad political will for more housing given that the largest and most successful companies have a hand in funding or supporting diverse growth (in the way that New York's biggest corporate institutions are also great patrons of the city's arts).

timr 12y ago

"If you need an example of how intense this is, over the summer, 71,421 people, or 8 percent of San Franciscans, decided that we should all vote on every single project over the existing height limits on the waterfront by passing a ballot initiative. It was funded primarily by a single wealthy couple that didn’t want to lose their views, and they put it through in one of the lowest turnout elections in city history." What she doesn't say, really matters: that initiative was primarily about stopping a massive government handout to the multimillionaire owners of a professional basketball team, which would essentially give away a choice bit of public property in order to build an arena in a part of town where no arena should exist. The ballot initiative was put in place to make it much more difficult for that land-grab to go through. This stuff isn't just about people being ridiculous NIMBYs. Honestly, I think it's more ridiculous to look at San Francisco and claim that the problem is that we aren't building enough, when you can walk up to just about any live/work space in SOMA (i.e. the new construction), and see that the tenant list is mostly startups. That's what happens when you let developers build whatever they want -- they build for the most lucrative allowed use of the land. And that usually isn't residential construction. Is there NIMBYism in the bay area? Absolutely. But the biggest problem, by far, is that there's a massive technology bubble inflating everything from real estate to salaries in a very tiny slice of livable property. The price increases are being driven by greed and speculation as much as any sort of sustainable demand.

techsupporter 12y ago
So why doesn't the initiative say that? Why run a vote on requiring votes on all waterfront development height changes?
- deleted 12y ago
  [deleted]
ktothemc 12y ago
Why blanket punish and make every single development on the waterfront more expensive because of a single Warriors arena project that was eventually moved to Mission Bay? All of these little costs, process hurdles add up and make housing more expensive. The broad point is that these citizen anti-growth initiatives, which might have a single poorly-designed and consulted project in mind, end up having very long-term and consequential impacts on housing prices across the board. This 2014 study examined 7,300 land parcels in the Bay Area and found that if you increase the number of independent reviews for a construction project by one standard deviation, average land prices increase by about eight percent. http://blogs.lse.ac.uk/usappblog/2014/07/01/regulatory-constraints-on-supply-are-a-key-factor-in-san-franciscos-affordable-housing-crisis/ http://blogs.lse.ac.uk/usappblog/2014/07/01/regulatory-const... I agree and am concerned about how the point of the economic cycle we're in affects the profile, goals and objectives of people we attract to Silicon Valley. You tend to get more true believers at the low points in the cycle versus the gold-rush folk we're seeing now. What do you think is the best way of dealing with this? We can either build a lot more housing or drive away jobs and companies if we think they're too greed or speculation-driven.

Slix 12y ago

I can't find any reason to be optimistic after reading this article. Is there any reason to even consider moving to the Bay Area after graduating? It seems like any other city would be more manageable.

raverbashing 12y ago
"whargaaarbl startups whargaaarblr" No, there's no reason. You can find a good paying, interesting job elsewhere. Life is not all about the newest Instagram for Pets (iPhone 6 only)
kansface 12y ago
You only read bad news; the reason to move here is because the bay is the hub of the both entrepreneurship and tech in the US. Having said that, rent is expensive but salaries are more or less commensurate.
- jrjarrett 12y ago
  No, no they are not.* Several times in my career I have looked at moving to SF, and when it's gotten to the point of talking about salary and upscaling that to what I made at the time, that's not true. The numbers discussed were about 20% more, but that did not cover the huge delta in housing costs.
  - mahyarm 12y ago
    Were you looking at google & co or a startup? Usually your bonus & stock compensation is around %40 of your total compensation. Startup stock is non-liquid, and therefore unusable.
  - kansface 12y ago
    It is true that you will spend proportionally more on housing here. It is also most likely true that your total savings will be higher here. EG, you could save 50K$/year in the valley whereas you could only save 20k$ a year working in Iowa. The 20K is much larger compared to the cost of living, but you will be better off when you retire if you squirreled away the 50K$. If you want to move to Iowa at that point, all the better, you can now afford a palace. This assumes you can incur the cost of moving and can stay employed.

raverbashing 12y ago

Stockton is bankrupt. Go build and live there for 20% of the price, you can still come to SF for meeting VCs. Or somewhere across the bay. "Oh but they don't have my favourite vegan frozen yogurt there, and in Starbucks all I see is PCs" grow up. They think of themselves as the most innovative people of this generation and use the internet yet they can't manage to have their team 10mi from where they think it should be. Pathetic.

tracker1 12y ago
I'm not really familiar with the Bay Area, only been there a few times for work. That said, it looks like Stockton is a bit farther from SF than your post would indicate... And I'm only guessing that a commute in and out of SF daily would be about 3-4 hours of time (just from what I'd seen going to/from the airport into the SOMA area)... I may be mistaken here. I've spent enough of my life commuting.. I do best with about a half hour commute, which gives me warm up/down time for my day... I really don't want to have a 12-13hour day from when I leave home, and get back. All of that said, I don't get why there is such a focus on bringing people into the Bay area... It would likely be easier and cost less to relocate the Yahoo guys and build-up further in, or hell, Atlanta or Phoenix. The company could spend the savings on building up the community they move into, probably get great tax incentives, and the employees would bank a lot of cash on the relocation. New hires would come in to more closely match the local economy even. Phoenix, for example, has pretty decent internet... an okay cultural scene, some great food (okay, not as good with seafood), and already has some very large companies doing software development here (American Express, Paypal, Wells Fargo, Go Daddy...) with a lower cost of living. Yes, summers can seem like hell on earth, but there are lots of places within an hour or so that aren't. Okay... done ranting...
- raverbashing 12y ago
  "That said, it looks like Stockton is a bit farther from SF than your post would indicate... And I'm only guessing that a commute in and out of SF daily would be about 3-4 hours of time" You're right. But what I'm suggesting is: Don't commute there. Get your team there. If someone is already living on SF, great, they can stay there and do meeting through Skype/Hangout. If they're moving there, they can live close to the company cheaply. And if someone needs to do a meeting on SF, going there once/twice a week is not too bad.

spikels 12y ago

Another interesting article from Kim-Mai Cutler on the absolutely fascinating Bay Area housing market. In case you missed her last one and the discussion in HN: https://news.ycombinator.com/item?id=7590250 https://news.ycombinator.com/item?id=7590250 One correction is needed: tenancies in common (TICs) ARE NOT a method of avoiding SF rent control rules. It has absolutely no effect on whether or not a particular unit is subject to rent control. It is simply a way that people can share ownership of a multi-unit building - like a coop. On the other hand condo conversion does remove many of the burdens of the SF rent control. That in turn is why the SF government had to essentially outlaw condo conversions. The rules are very complex and constantly changing - educate yourself and then talk to a lawyer.

ktothemc 12y ago
I'm aware of that, but unfortunately, a lot of real estate interests use TICs and the state Ellis Act to kick out long-term rent-controlled tenants.
- spikels 12y ago
  Well technically it is only the Ellis Act that makes eviction easier. TICs just happen to be the best exit for a building that has been "Ellis Acted" and therefore cannot be rented for several years. All the units still remain subject to all the rent control rules if they are ever rented again - plus a whole bunch of other rules meant to discourage the practice. Again TICs are just the way multiple people own a single real estate. BTW - TICs have an unusual meaning in SF. In most (English law) places it simply means property held "as undivided partial interests" - say 50/50 by two owners. In SF it means not merely this but also that all the owners have an agreement between them about who live where, etc - much like a coop agreement. It is sort of a condo-lite created in response to the restrictions on condo conversion - part of the endless war that is rent control (that only reliably benefits lawyers and politicians who are usually lawyers too). Again - complex stuff - see a lawyer. ;)

xenadu02 12y ago

Just moved to SF (with two kids so renting a 3br was a required expense). Why aren't the big tech and VC firms spending a lot more on lobbying, redevelopment, etc? Though I'm the beneficiary of the rapidly increasing salaries, some relief on the housing side would remove a lot of the pressure for wage increases. A lot of really talented engineers won't even bother taking interviews for bay area jobs due to the housing situation. It seems a bit unsustainable to me.

chrisseaton 12y ago
Can I ask where you send your children to school in central SF? I heard bad things about SF state schools - is that true? Are there better private schools as well?

netcan 12y ago

Housing is one of those issues where the political paradigm is so complex, it's impenetrable. Everyone has their own opinions about what the main engine is and it's hard to get anywhere. Here's my own perspective, it has nothing to do with any city in particular. (A) Housing is not a free market. Supply and demand exist, but that is not enough to make a market free. It's never a free market because decisions are (necessarily or not) always made at the political level. This covers things from planning, interest rate policies, bankruptcy laws tenancy laws, and even things like bank bailouts. Housing is unavoidably political. (B) There is a conflict of interests between home owners and renters. One wants high prices, low availability, the other wants low prices. (C) There are lots of interests that fall on the rising prices side. Rising prices make it easier to make money on loans, building, etc. They make it easier to raise tax revenue that funds public services that all sorts of parties have an interest in. (D) Owner-occupiers should be neutral. They own one house, regardless of market price. But because of financing, and a lot of incorrect but persistent psychology about personal wealth they usually feel firmly on the high prices side. No one wants their house to lose value. (E) Nominal increase in property value is inflation. Inflation has real impact on the "real" economy (as economists use the term). This has to do with the value of outstanding loans and annuities. We are looking at problems that are mostly political and cultural as if they are economic. Ultimately a lot of the things that drive demand for houses are the same as the things that drive demand for universities. Demand for elite universities is not about competing for education as a scarce resource. Same with housing. It's not about competition and scarcity . It's about culture and politics.

chrisseaton 12y ago
"Owner-occupiers should be neutral" Except for people who want their home to provide a cash inheritance for their children when they die, or who want to sell their home and downsize while still alive to raise cash. That's not an incorrect psychology.
- netcan 12y ago
  Those are edge cases and they can go both ways. Inheritance for their children to buy a house with? Even with inheritance, it can be zero sum. You inherit a house which you use to clear a mortgage or buy your own house. You still have one house. Unless the houses multiply there is nor real addition of wealth. Some people do accumulate capital in their houses and downsize. But even in cases where it happens, they might have been better of with cheaper housing costs all their lives enabling savings amounting to more capital at retirement. Homeowners might end up on either side of this equation. Rapid growth periods place earlier buyers in a better relative place to later buyers. But I think the upside is over valued by home owners while the downside is undervalued. Much of the upside is in fact access to capital. It's interesting how foreign the idea that lower prices make us wealthier is when it comes to housing.

Rapzid 12y ago

I might feel bad for people dealing with housing in SF.. But I live in Auckland. Considering moving back to Texas so I can feel sorry for people dealing with both cities' housing. Most aren't familiar so I'll paint a picture(in NZD). The average selling price for a home just this past September was 683,101. What will 683k get you? Pretty much a shack by US standards. Probably no insulation. No central AC. It's actually pretty hard to describe just how little you get. Sure, you can buy lower but even at 550k homes come with descriptive words like "Real potential", "A real do-up", "Great starting point", "Fringe", "A foot on the ladder". Oh, and did I mention the 20% DP you need for a mortgage now? And the interest rates will have you paying double unless you pay it off fast. Meanwhile, median household income is about 60K(USD). Renting? Anything under 400/week will most likely be unsuitable for a couple. You really don't start hitting "descent" until you're closing in on 500/week and they come with more bedrooms than you need.. Almost no good one bedrooms. There is this threshold you have to cross before you start finding places that have been kept up. See, there is a tremendous housing shortage. This causes much of the low end stuff to go barely maintained through decades of renter churn because they are sure to find another renter regardless. You might search months for a suitable place to rent, and then have to contend with many others after the same place. Often between the time a listing goes up and you can call, same day, it's mysteriously gone. A lot of the choice places don't schedule appointments; they herd groups of 20 through at designated times on viewing days. The property management agents, which you'll most likely be dealing with because you're renting a property from some guys portfolio of like 5(corporate owned apartment complexes are almost unheard of), are often times very unhelpful and even rude. A lot of the points about renting are mirrored in buying. Most homes go to auction because the shortage. People get desperate and end up bidding high to secure a place and be done with the process. In the US people absolutely hate packing and moving. In Auckland simply finding a suitable place to live is so bad, you don't really pay any mind to the actual moving:| End Rant.

retrogradeMT 12y ago

The problems mentioned in the article certainly are not unique to SF, though the scale is pretty large. Sidney, MT, which is in the Bakken oilfield, has such a shortage of housing that workers there spent last winter sleeping in campers and trucks on the side of the road. In the winter, the temperature can dip to -30 degrees. The dept of transportation (DOT) bottled up a housing projected for almost a year over a right of way dispute. In this case the developer agreed to pay for the improvements, but the DOT insisted on overseeing the process, which increased the cost 2x. In my experience: 1. Homeowners fear change because they usually like their neighborhood, have most of their assets "at stake", and envision worst case scenarios. 2. Too many elected officials categorize themselves into a soundbite. They don't just campaign by the soundbite, but they govern by it. Project details and reality be damned, I'm pro-parks! 3. Top municipal employees almost always have too much power. When a new elected official comes in, they listen to his/her goals and then put new processes in place, while seldom removing old processes. This adds unreasonable amounts of time, complexity and cost to projects. The first and second problem can frequently be worked out but the third problem is crippling. If you want to fix the housing crisis, start there.