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Soaring housing costs forces talent to flee Silicon Valley

58 points by joshrotenberg 11y ago

gamechangr 11y ago
I think that maybe more accurate for entry level developers. Housing is an issue to work around for sure. Seattle - Yes (but also quite expense) Austin - Yes to a less degree Portland - Maybe. All of these are great cities with plenty of dev jobs. You really need a strong CS program to build around if you want think about not moving to Silicon Valley. University of Washington totally fits that bill, as does University of Texas- Austin, but I would have to guess that Portland has a good local university (but I'm not familiar with it from afar like the others)
- stephengillie 11y ago
  Seattle has the highest income of any city in the USA at $94,000 a year. And we just got the $15 minimum wage. Portland has good programs and an OK tech scene. A lot of them are poached/contracted by Seattle firms, since it can be cheaper to pay for a contractor's hotel than it can be to hire a local. The wage differential is that big between the cities.
  - unclesaamm 11y ago
    What is that 94k/yr number from? Is that for industry average?
    - stephengillie 11y ago
      It's from newspaper-blog articles about the $15 minimum wage increase.
  - seanflyon 11y ago
    According to http://www.seattle.gov/economicdevelopment/business-owners/economic-indicators/income-distribution http://www.seattle.gov/economicdevelopment/business-owners/e... the median income was $52,048 in 2011. I don't know where the $94,000 number comes from, but I find it suspicious.
Will_Do 11y ago
This is a classic case of "Nobody ever comes here anymore; it's too crowded." It is hard to make the argument that people are fleeing silicon valley when real estate demand keeps reaching new highs.
- aristus 11y ago
  Not quite. Demand is going up faster than supply. Add in rent control and other local oddities, and you get some absurd situations, ike perfectly qualified people leaving the area. My rent is about 40% of the going rate for the identical apartment above mine. This has several consequences. I literally cannot afford to move. For another, it would be difficult to fit another child in the place we have, so we're not having one. And it's more difficult to hire people from outside the area because they can't find affordable places to live.
  - drostie 11y ago
    This is a serious problem for me: I want to move to the Bay Area, but it seems like the up-front moving costs and rent will be too prohibitive even if after a few months they settle down to a net profitability. I just don't have $10k+ in the bank to act as an acceptable safety net for the rent, security deposit, moving fees, tickets, etc. I'd try to do a van-plus-PO-Box-plus-health-club situation but my girlfriend would probably never go for it.
    - dragonwriter 11y ago
      > This is a serious problem for me: I want to move to the Bay Area, but it seems like the up-front moving costs and rent will be too prohibitive even if after a few months they settle down to a net profitability. There are more affordable places (still expensive, but less so than SF/Silicon Valley) within reasonable commute distance of the core of the Bay Area. If you've got good bay area job prospects, you might consider initially living on the peripheries until you can build up a cushion that lets you move further into the core.
    - sjg007 11y ago
      Find a job that pays relocation. A lot also have corp apartments that you can stay in for a few months as well.
mbrzusto 11y ago
searching for a home somewhere doesn't mean you actually moved there.
- chrisabrams 11y ago
  I was thinking the same thing!
- mbreese 11y ago
  But when compared to similar searches historically, you can draw conclusions from the trend. If one assumes a similar historical probability between looking for a house and buying a house, it follows that if more people are looking for houses outside of SV, more people are also buying houses outside of SV. At the very least, it shows that people in SV are more interested in housing markets outside of SV today than they were a few years ago, even if they don't move there.
rossf7 11y ago
London has a similar issue with house prices / rents continuing to rise much faster than the rest of the UK. I relocated from London to Barcelona 3 years ago to do remote freelance work. The cost of living is lower here with a good quality of life. There is lots of interesting work in London and its a good place to gain experience but I've got no plans to go back.
- M8 11y ago
  And unlike Silicon Valley, same salaries are still being offered. Hopefully exiting EU will ease the pressure and make the competition for talent more healthy.
- deleted 11y ago
  [deleted]
deftnerd 11y ago
I live in Austin, TX and had 3 job offers earlier this year in Silicon Valley. I turned all of them down because of the high cost of living. I have 3 children and a wife that I support. Even with the high wages offered from Facebook or Google, our quality of life in Austin was far better than it could ever be in Silicon Valley.
- toomuchtodo 11y ago
  Same reason my wife and I moved to Florida. I can live within 2-3 miles of the beach in a 4K sq ft home for $100K-200K (depending on level of fanciness). I can work remotely from anywhere; why would I artificially lower my quality of life to live in SF proper as long as remote work exists?
  - rdudek 11y ago
    I've been contemplating a move to FL for some time now except that I don't know much about the place other then a few times I've visited. What counties would you recommend for IT folks?
    - toomuchtodo 11y ago
      I'm in Central Florida (Tampa/St Pete area). I never look at the local job market, as its not the type of work I do (either finance or healthcare mostly). IT is taking off in the Tampa/Orlando area, and Miami has a bit of a startup scene that's coming up to speed. I suggest spending a couple weeks in the area, drive around, see what you like and what you need to live near (I don't have kids, but when I do, I'm home schooling. I work remote, so a commute does't matter. My housing selection was based solely on recreation, or rather, where I could park my sailboat).
  - hyperbovine 11y ago
    Because Florida? Unless there is some island of sanity lurking in central Florida that I don't know about (and yes, I have been to St. Pete a number of times due to having family there), it's difficult to look past the massive increase in Dealing with Crazy People that would follow a move from SF to there. I actually like Florida (probably a lot more than your average Bay Area denizen) but the lifestyle tradeoff is a lot more complex than you are making it out to be.
joesmo 11y ago
At around $150k/yr, a bank will typically lend around $350-400k (more would be imprudent, even if the bank agrees). So even with two people working and making a decent, probably average wage for SV, it's still impossible to buy a median home there. Of course people are leaving.
- kordless 11y ago
  Your numbers are low. $150K/yr will get you almost double that with good credit and a decent downpayment.
  - joesmo 11y ago
    Yes, but then your payment is $4-5k a month, more than half of what you're bringing home every month. That's not really feasible and a terrible financial situation to be in.
    - kordless 11y ago
      At higher income levels, it really doesn't matter if you are spending 1/2 of your income on your home. If I'm making $200K/year, that gives me ~$8K of spending power per month for my home and ~$8K, pre-tax, for other things. If the market is going up, long term, then buying a house is a good investment vehicle for your money. It's also a writeoff on your taxes. That said, my response was targeting the comment about what a bank would loan you at a given salary, not whether it was a good idea or not. :)
- vitd 11y ago
  Yeah, and the other thing is that the square footage of a "median" home and its lot size also varies greatly between these places. Not only are homes cheaper outside SV, they're also usually bigger and sitting on bigger lots. So it may be even worse than it sounds.
- geebee 11y ago
  I think they'll lend considerably more than that, though I'm not saying it's a good idea. Here's a link: http://www.sfgate.com/business/networth/article/Bay-Area-a-barometer-for-new-mortgage-rules-5118943.php http://www.sfgate.com/business/networth/article/Bay-Area-a-b... It sounds like they'll go up to 43% for a "jumbo loan" (thats not just mortgage), and according to the article, it can go higher if the buyer is strong in other ways. With interest rates for jumbo mortgages probably a bit above 4%, that would leave a two income household with 200-300K in income enough to purchase the median priced house. I'm not saying it's an appealing idea, just that it isn't impossible.
Quanticles 11y ago
Austin is a great city with great food, music, and brews. And you can even afford a nice house too
- deleted 11y ago
  [deleted]
- muzz 11y ago
  If only people were able to make their own decisions in the marketplace
- hwstar 11y ago
  Great except for the noncompete contract shoved down your throat be Texas employers. I won't work for any employer who won't waive a noncompete contract. This means California or a couple of other states. More states need to make noncompetes illegal.
johnrob 11y ago
If you measure Silicon Valley salaries in houses/year instead of dollars/year, they are quite low.
- rectang 11y ago
  That's brilliant. Does anybody publish such stats? Seeing salaries measured in houses-per-year for different areas would communicate cost-of-living viscerally.
- geebee 11y ago
  Some sort of housing adjusted salary would be valuable. But simply as a percentage type thing might miss the way people experience expenses. Think about it this way. Suppose you make $30,000 a year, and your housing costs are $10,000 a year. Now suppose you make $200,000 a year, and your housing cost are $100,000 a year. Aside from that, prices in the higher cost area are maybe 10-20% higher. You might actually have more disposable income in the second scenario, along with more opportunities to enjoy it. This is why I think SF is still a pleasurable place to live for people who substantially exceed a certain threshold. That threshold is very high, though.
- kqr2 11y ago
  Another tongue-in-cheek metric we like to joke about is Nobel prizes/house, i.e. how many Nobel prizes you would have to win to afford a home. Recent Nobel prize award was about $1.2 million. Median prices in Palo Alto is about $2.4 million so the affordability is 2.0 Nobel prizes / house in Palo Alto. The caveat is that you have to be a solo prize winner, otherwise the award amount will be split. http://www.zillow.com/palo-alto-ca/home-values/ http://www.zillow.com/palo-alto-ca/home-values/
birken 11y ago
FWIW a lot of renters don't pay those prices. If you are buying a house, you are going to have to pay full market value. However, the rental market has different influences, because of widespread rent control and the fact that property taxes are based on the price of the sale (which is way lower than market value for any property owned for more than 10 years). This isn't necessarily good for a multitude of reasons, but it means a large percentage of renters are not paying skyrocketing prices. This is still my favorite piece on the subject (long but good): http://techcrunch.com/2014/04/14/sf-housing/ http://techcrunch.com/2014/04/14/sf-housing/ Also if you are planning to move to Seattle, you should follow the ongoing saga of Bertha. Always a fun topic of conversation: http://en.wikipedia.org/wiki/Bertha_%28tunnel_boring_machine%29 http://en.wikipedia.org/wiki/Bertha_%28tunnel_boring_machine...
- michaelochurch 11y ago
  Rent control drives rents up for the people who aren't part of the program. Because real estate is so price-inelastic and market rents go up by a much larger percentage than is affected by the rent control, landlords as a group actually make more money under RC. The landlords who own RC apartments may lose in the deal, but landlords whose apartments aren't affected end up winning. Purchase prices of 40+ years' rent signify a mix of speculation, regulatory corruption, trophy buying, and weird beta effects (i.e. amplified correlations with the national market). For example, Manhattan real estate has a beta of about 3.0, which means that a 50% swell in national prices drive Manhattan real estate up by 3.375x.
  - birken 11y ago
    It is very complicated, and I'm not suggesting that rent control is good. I'm just saying there is a difference between buying a house in the bay area vs living in the bay area. Right now, the former is insanely expensive, whereas in some situations the latter is not. The article I linked does a great job of explaining the history and various problems and tradeoffs.
    - malandrew 11y ago
flipgimble 11y ago
Not surprised at all that this trend is starting to get big enough for news outlets to finally notice. Only once I moved to small town did I realize how much my quality of life was degraded by the long commutes, the over crowding, and the general scramble for access. Now I have 10min commute, up to 20min driving for any errands or shopping, and can't imagine moving back to the traffic jungles of a major city anytime soon. Especially since an average large townhouse in my neighborhood goes for $250K compared to $400-600K in Chicago. It used to be that in small town America the only decent technology job you could get is by working remotely, or through the local university. Perhaps I got very lucky, but my current company[1] works with the biggest global companies, and I get to ship more software and work with much more diverse technology (most in the mobile space) than in my previous 10 years combined. All I'm saying is that if are frustrated with Silicon Valley, or any other big city, don't assume that is your only option. I was pleasantly surprised when I landed in Charlottesville, VA. [1] Its called Willowtree, and we are hiring, but I don't mean this to be recruiting spam, so look it up if you're interested.
- slapshot 11y ago
  But but but you're destroying the Earth by wanting to live in a peaceful small town where you have to drive to go shopping rather than taking public transit everywhere! /sarcasm To be serious, though, threads about various transit innovations tend to be dominated by people who strongly prefer urban living and can't imagine why anyone would want anything else. Your case study is a nice example of why there are good-natured people (engineers even!) who simply prefer a different style of life. It doesn't prove that there are no externalities to suburban living (nor urban living), but we should all remember to be thoughtful that different people may actually enjoy different lifestyles.
  - akgerber 11y ago
    The Silicon Valley lifestyle, and the long commutes it engenders, aren't remotely 'urban living'. Charlottesville, VA is likewise more of a small city than a small town, where it's perfectly practical for people to walk and bike to commute and do errands in the older neighborhoods. Probably more so than in much of Silicon Valley, in fact. That's because walkability is as much a consequence of development style as urban scale, and much of Charlottesville was built out before than automotive era.
bryanlarsen 11y ago
I did a back of the envelope calculation on how much salary it would take to get me to move my family to Silicon Valley. The answer was "7 figures". Granted, part of that was due to the fact that my wife would have to recertify to find work, but it was still eye opening.
beamatronic 11y ago
http://www.zillow.com/homedetails/1612-W-Hacienda-Ave-Campbell-CA-95008/19659769_zpid/ http://www.zillow.com/homedetails/1612-W-Hacienda-Ave-Campbe... Here's a great listing I noticed this morning 2 beds 2 baths 827 sqft "Bring your tool belt, this property needs some TLC! Great location, this property has much potential! Close to schools, shopping, and freeway access." $900,000
- hnnewguy 11y ago
  But it has a garage, and in the Valley that's where dreams are born.
- joshrotenberg 11y ago
  This was apparently a record sale price for the size in our area just a few weeks ago: https://www.redfin.com/CA/Albany/815-Santa-Fe-Ave-94706/home/2006746 https://www.redfin.com/CA/Albany/815-Santa-Fe-Ave-94706/home... Granted, what was there was nice enough (all 1100 sq/ft of it), but over $1M for a 2/1 ... it's just insane right now. It was listed for $749k. The overbidding situation seems to regularly bring in multiple (as in 10-20) offers for a house.
  - dlubarov 11y ago
    Sounds pretty cheap compared to South Bay homes! Like this 776 sqft "opportunity to do a remodel" which went for 1.75M: http://www.zillow.com/homedetails/133-Coleridge-Ave-Palo-Alto-CA-94301/19497074_zpid/ http://www.zillow.com/homedetails/133-Coleridge-Ave-Palo-Alt...
    - joshrotenberg 11y ago
      Wow!
    - AreaGuy 11y ago
      Wow... and the last time it sold was for $34,000 in 1975. That's a 10.4% annual return per year for 40 years. That's better than the 8.2% returned by the S&P 500 over the same period.
not_that_noob 11y ago
I think there's another effect operating here. New borrowing rules went into effect that reduce the amount that can be borrowed for a given income. As interest rates rise, the approvable loan amount will be trimmed still further. Even if you have stock winnings, most people still need to borrow to buy a home. So buyers are looking at a declining amount that they can bring to bear in the market. However, sellers conditioned on ever rising prices aren't willing to accept lower prices just yet. Some are starting to reduce prices, but recently there have been multiple homes that don't sell and then quietly roll off the market in the 'hot' areas. Thus there is a market standoff, and buyers who want a house realize they can simply not afford a house here. Some react to that by leaving, a trend that is accelerating. It will be interesting to see what happens as interest rates go up, and reduce borrowing amounts still futher. If the future will bring a decline in prices or long-term stagnation - it's anyone's guess.
- beamatronic 11y ago
  Exactly. $200k is a pretty decent windfall for most folks, which conveniently just happens to match up with the 20% down payment for your median priced house. Down payment is the "hard part" of buying a house in the Bay Area, not so much the salary.
elif 11y ago
As a tabletop gamer, I want to see the disparity as an advantage rather than a disadvantage. If typical cost of living drives up wages by even just a 1.5-2x multiplier, you can min-max with lifehacks by, say, living in a van and making that into a disproportionate increase in savings retention, giving you a shorter runway to escape wage slavery. Of course, if your desired end-game doesn't include escaping the paycheck cycle, it is really a wash anyway.. so you may as well go where the fun jobs are.
sjg007 11y ago
In some sense yes. But parts of Oakland, San Leandro and East Palo Alto still offer bargains.
kqr2 11y ago
From http://sf.curbed.com/archives/2015/05/22/san_franciscos_median_rent_climbs_to_a_whopping_4225.php http://sf.curbed.com/archives/2015/05/22/san_franciscos_medi... Median rent is now $4,225 in San Francisco.
Apocryphon 11y ago
So is there any chance that the giant tech companies will band together to lobby local governments for measures that will improve living situations and transportation? Because if all they do is upping salaries (which is doubtful to continue indefinitely) all they do is empower landlords to keep charging higher.
- seanflyon 11y ago
  The obvious solution is allowing people to build more (and denser) residential, but that is a hard sell around here.
  - Apocryphon 11y ago
    Right, which is why I'm saying tech companies- huge economic producers (and tax payers)- should use their influence to lobby for such measures. It's a hard sell until someone with the means gets into the ring and starts fighting for it. FWD.us agitating for immigration reform for potential future employees should take a backseat to lobbying for improving local living conditions in the Bay for current employees who already live in the Bay.
    - seanflyon 11y ago
      Perhaps they can do a better job, but I think tech companies are already pushing for more housing.
    - mavelikara 11y ago
      The management in these firms most likely have personal property in the Bay Area. They will like to keep it just as sparse as it is now. So, don't hold your breath for this to happen.
ryandvm 11y ago
I briefly evaluated a move to Silicon Valley. But after calculating that I was going to pay twice as much for half as much house, quadruple my commute, and have to send my kids to a lower quality (or private) school; the decision was made for me. My rough estimate was that I'd have to make about $300K/year to make it worth it. Instead I'm enjoying the vibrant and feverishly growing tech community of Charleston, SC and the quality of life advantages that come with living in Conde Naste's #1 rated travel destination. I suspect as housing costs in the Bay Area continue to rise, an increasing number of engineers will come to the same conclusion.

58 points by joshrotenberg 11y ago

I think that maybe more accurate for entry level developers. Housing is an issue to work around for sure. Seattle - Yes (but also quite expense) Austin - Yes to a less degree Portland - Maybe. All of these are great cities with plenty of dev jobs. You really need a strong CS program to build around if you want think about not moving to Silicon Valley. University of Washington totally fits that bill, as does University of Texas- Austin, but I would have to guess that Portland has a good local university (but I'm not familiar with it from afar like the others)

stephengillie 11y ago
Seattle has the highest income of any city in the USA at $94,000 a year. And we just got the $15 minimum wage. Portland has good programs and an OK tech scene. A lot of them are poached/contracted by Seattle firms, since it can be cheaper to pay for a contractor's hotel than it can be to hire a local. The wage differential is that big between the cities.
- unclesaamm 11y ago
  What is that 94k/yr number from? Is that for industry average?
  - stephengillie 11y ago
    It's from newspaper-blog articles about the $15 minimum wage increase.
- seanflyon 11y ago
  According to http://www.seattle.gov/economicdevelopment/business-owners/economic-indicators/income-distribution http://www.seattle.gov/economicdevelopment/business-owners/e... the median income was $52,048 in 2011. I don't know where the $94,000 number comes from, but I find it suspicious.

Will_Do 11y ago

This is a classic case of "Nobody ever comes here anymore; it's too crowded." It is hard to make the argument that people are fleeing silicon valley when real estate demand keeps reaching new highs.

aristus 11y ago
Not quite. Demand is going up faster than supply. Add in rent control and other local oddities, and you get some absurd situations, ike perfectly qualified people leaving the area. My rent is about 40% of the going rate for the identical apartment above mine. This has several consequences. I literally cannot afford to move. For another, it would be difficult to fit another child in the place we have, so we're not having one. And it's more difficult to hire people from outside the area because they can't find affordable places to live.
- drostie 11y ago
  This is a serious problem for me: I want to move to the Bay Area, but it seems like the up-front moving costs and rent will be too prohibitive even if after a few months they settle down to a net profitability. I just don't have $10k+ in the bank to act as an acceptable safety net for the rent, security deposit, moving fees, tickets, etc. I'd try to do a van-plus-PO-Box-plus-health-club situation but my girlfriend would probably never go for it.
  - dragonwriter 11y ago
    > This is a serious problem for me: I want to move to the Bay Area, but it seems like the up-front moving costs and rent will be too prohibitive even if after a few months they settle down to a net profitability. There are more affordable places (still expensive, but less so than SF/Silicon Valley) within reasonable commute distance of the core of the Bay Area. If you've got good bay area job prospects, you might consider initially living on the peripheries until you can build up a cushion that lets you move further into the core.
  - sjg007 11y ago
    Find a job that pays relocation. A lot also have corp apartments that you can stay in for a few months as well.

mbrzusto 11y ago

searching for a home somewhere doesn't mean you actually moved there.

chrisabrams 11y ago
I was thinking the same thing!
mbreese 11y ago
But when compared to similar searches historically, you can draw conclusions from the trend. If one assumes a similar historical probability between looking for a house and buying a house, it follows that if more people are looking for houses outside of SV, more people are also buying houses outside of SV. At the very least, it shows that people in SV are more interested in housing markets outside of SV today than they were a few years ago, even if they don't move there.

rossf7 11y ago

London has a similar issue with house prices / rents continuing to rise much faster than the rest of the UK. I relocated from London to Barcelona 3 years ago to do remote freelance work. The cost of living is lower here with a good quality of life. There is lots of interesting work in London and its a good place to gain experience but I've got no plans to go back.

M8 11y ago
And unlike Silicon Valley, same salaries are still being offered. Hopefully exiting EU will ease the pressure and make the competition for talent more healthy.
deleted 11y ago
[deleted]

deftnerd 11y ago

I live in Austin, TX and had 3 job offers earlier this year in Silicon Valley. I turned all of them down because of the high cost of living. I have 3 children and a wife that I support. Even with the high wages offered from Facebook or Google, our quality of life in Austin was far better than it could ever be in Silicon Valley.

toomuchtodo 11y ago
Same reason my wife and I moved to Florida. I can live within 2-3 miles of the beach in a 4K sq ft home for $100K-200K (depending on level of fanciness). I can work remotely from anywhere; why would I artificially lower my quality of life to live in SF proper as long as remote work exists?
- rdudek 11y ago
  I've been contemplating a move to FL for some time now except that I don't know much about the place other then a few times I've visited. What counties would you recommend for IT folks?
  - toomuchtodo 11y ago
    I'm in Central Florida (Tampa/St Pete area). I never look at the local job market, as its not the type of work I do (either finance or healthcare mostly). IT is taking off in the Tampa/Orlando area, and Miami has a bit of a startup scene that's coming up to speed. I suggest spending a couple weeks in the area, drive around, see what you like and what you need to live near (I don't have kids, but when I do, I'm home schooling. I work remote, so a commute does't matter. My housing selection was based solely on recreation, or rather, where I could park my sailboat).
- hyperbovine 11y ago
  Because Florida? Unless there is some island of sanity lurking in central Florida that I don't know about (and yes, I have been to St. Pete a number of times due to having family there), it's difficult to look past the massive increase in Dealing with Crazy People that would follow a move from SF to there. I actually like Florida (probably a lot more than your average Bay Area denizen) but the lifestyle tradeoff is a lot more complex than you are making it out to be.

joesmo 11y ago

At around $150k/yr, a bank will typically lend around $350-400k (more would be imprudent, even if the bank agrees). So even with two people working and making a decent, probably average wage for SV, it's still impossible to buy a median home there. Of course people are leaving.

kordless 11y ago
Your numbers are low. $150K/yr will get you almost double that with good credit and a decent downpayment.
- joesmo 11y ago
  Yes, but then your payment is $4-5k a month, more than half of what you're bringing home every month. That's not really feasible and a terrible financial situation to be in.
  - kordless 11y ago
    At higher income levels, it really doesn't matter if you are spending 1/2 of your income on your home. If I'm making $200K/year, that gives me ~$8K of spending power per month for my home and ~$8K, pre-tax, for other things. If the market is going up, long term, then buying a house is a good investment vehicle for your money. It's also a writeoff on your taxes. That said, my response was targeting the comment about what a bank would loan you at a given salary, not whether it was a good idea or not. :)
vitd 11y ago
Yeah, and the other thing is that the square footage of a "median" home and its lot size also varies greatly between these places. Not only are homes cheaper outside SV, they're also usually bigger and sitting on bigger lots. So it may be even worse than it sounds.
geebee 11y ago
I think they'll lend considerably more than that, though I'm not saying it's a good idea. Here's a link: http://www.sfgate.com/business/networth/article/Bay-Area-a-barometer-for-new-mortgage-rules-5118943.php http://www.sfgate.com/business/networth/article/Bay-Area-a-b... It sounds like they'll go up to 43% for a "jumbo loan" (thats not just mortgage), and according to the article, it can go higher if the buyer is strong in other ways. With interest rates for jumbo mortgages probably a bit above 4%, that would leave a two income household with 200-300K in income enough to purchase the median priced house. I'm not saying it's an appealing idea, just that it isn't impossible.

Quanticles 11y ago

Austin is a great city with great food, music, and brews. And you can even afford a nice house too

deleted 11y ago
[deleted]
muzz 11y ago
If only people were able to make their own decisions in the marketplace
hwstar 11y ago
Great except for the noncompete contract shoved down your throat be Texas employers. I won't work for any employer who won't waive a noncompete contract. This means California or a couple of other states. More states need to make noncompetes illegal.

johnrob 11y ago

If you measure Silicon Valley salaries in houses/year instead of dollars/year, they are quite low.

rectang 11y ago
That's brilliant. Does anybody publish such stats? Seeing salaries measured in houses-per-year for different areas would communicate cost-of-living viscerally.
geebee 11y ago
Some sort of housing adjusted salary would be valuable. But simply as a percentage type thing might miss the way people experience expenses. Think about it this way. Suppose you make $30,000 a year, and your housing costs are $10,000 a year. Now suppose you make $200,000 a year, and your housing cost are $100,000 a year. Aside from that, prices in the higher cost area are maybe 10-20% higher. You might actually have more disposable income in the second scenario, along with more opportunities to enjoy it. This is why I think SF is still a pleasurable place to live for people who substantially exceed a certain threshold. That threshold is very high, though.
kqr2 11y ago
Another tongue-in-cheek metric we like to joke about is Nobel prizes/house, i.e. how many Nobel prizes you would have to win to afford a home. Recent Nobel prize award was about $1.2 million. Median prices in Palo Alto is about $2.4 million so the affordability is 2.0 Nobel prizes / house in Palo Alto. The caveat is that you have to be a solo prize winner, otherwise the award amount will be split. http://www.zillow.com/palo-alto-ca/home-values/ http://www.zillow.com/palo-alto-ca/home-values/

birken 11y ago

FWIW a lot of renters don't pay those prices. If you are buying a house, you are going to have to pay full market value. However, the rental market has different influences, because of widespread rent control and the fact that property taxes are based on the price of the sale (which is way lower than market value for any property owned for more than 10 years). This isn't necessarily good for a multitude of reasons, but it means a large percentage of renters are not paying skyrocketing prices. This is still my favorite piece on the subject (long but good): http://techcrunch.com/2014/04/14/sf-housing/ http://techcrunch.com/2014/04/14/sf-housing/ Also if you are planning to move to Seattle, you should follow the ongoing saga of Bertha. Always a fun topic of conversation: http://en.wikipedia.org/wiki/Bertha_%28tunnel_boring_machine%29 http://en.wikipedia.org/wiki/Bertha_%28tunnel_boring_machine...

michaelochurch 11y ago
Rent control drives rents up for the people who aren't part of the program. Because real estate is so price-inelastic and market rents go up by a much larger percentage than is affected by the rent control, landlords as a group actually make more money under RC. The landlords who own RC apartments may lose in the deal, but landlords whose apartments aren't affected end up winning. Purchase prices of 40+ years' rent signify a mix of speculation, regulatory corruption, trophy buying, and weird beta effects (i.e. amplified correlations with the national market). For example, Manhattan real estate has a beta of about 3.0, which means that a 50% swell in national prices drive Manhattan real estate up by 3.375x.
- birken 11y ago
  It is very complicated, and I'm not suggesting that rent control is good. I'm just saying there is a difference between buying a house in the bay area vs living in the bay area. Right now, the former is insanely expensive, whereas in some situations the latter is not. The article I linked does a great job of explaining the history and various problems and tradeoffs.
  - malandrew 11y ago

flipgimble 11y ago

Not surprised at all that this trend is starting to get big enough for news outlets to finally notice. Only once I moved to small town did I realize how much my quality of life was degraded by the long commutes, the over crowding, and the general scramble for access. Now I have 10min commute, up to 20min driving for any errands or shopping, and can't imagine moving back to the traffic jungles of a major city anytime soon. Especially since an average large townhouse in my neighborhood goes for $250K compared to $400-600K in Chicago. It used to be that in small town America the only decent technology job you could get is by working remotely, or through the local university. Perhaps I got very lucky, but my current company[1] works with the biggest global companies, and I get to ship more software and work with much more diverse technology (most in the mobile space) than in my previous 10 years combined. All I'm saying is that if are frustrated with Silicon Valley, or any other big city, don't assume that is your only option. I was pleasantly surprised when I landed in Charlottesville, VA. [1] Its called Willowtree, and we are hiring, but I don't mean this to be recruiting spam, so look it up if you're interested.

slapshot 11y ago
But but but you're destroying the Earth by wanting to live in a peaceful small town where you have to drive to go shopping rather than taking public transit everywhere! /sarcasm To be serious, though, threads about various transit innovations tend to be dominated by people who strongly prefer urban living and can't imagine why anyone would want anything else. Your case study is a nice example of why there are good-natured people (engineers even!) who simply prefer a different style of life. It doesn't prove that there are no externalities to suburban living (nor urban living), but we should all remember to be thoughtful that different people may actually enjoy different lifestyles.
- akgerber 11y ago
  The Silicon Valley lifestyle, and the long commutes it engenders, aren't remotely 'urban living'. Charlottesville, VA is likewise more of a small city than a small town, where it's perfectly practical for people to walk and bike to commute and do errands in the older neighborhoods. Probably more so than in much of Silicon Valley, in fact. That's because walkability is as much a consequence of development style as urban scale, and much of Charlottesville was built out before than automotive era.

bryanlarsen 11y ago

I did a back of the envelope calculation on how much salary it would take to get me to move my family to Silicon Valley. The answer was "7 figures". Granted, part of that was due to the fact that my wife would have to recertify to find work, but it was still eye opening.

beamatronic 11y ago

http://www.zillow.com/homedetails/1612-W-Hacienda-Ave-Campbell-CA-95008/19659769_zpid/ http://www.zillow.com/homedetails/1612-W-Hacienda-Ave-Campbe... Here's a great listing I noticed this morning 2 beds 2 baths 827 sqft "Bring your tool belt, this property needs some TLC! Great location, this property has much potential! Close to schools, shopping, and freeway access." $900,000

hnnewguy 11y ago
But it has a garage, and in the Valley that's where dreams are born.
joshrotenberg 11y ago
This was apparently a record sale price for the size in our area just a few weeks ago: https://www.redfin.com/CA/Albany/815-Santa-Fe-Ave-94706/home/2006746 https://www.redfin.com/CA/Albany/815-Santa-Fe-Ave-94706/home... Granted, what was there was nice enough (all 1100 sq/ft of it), but over $1M for a 2/1 ... it's just insane right now. It was listed for $749k. The overbidding situation seems to regularly bring in multiple (as in 10-20) offers for a house.
- dlubarov 11y ago
  Sounds pretty cheap compared to South Bay homes! Like this 776 sqft "opportunity to do a remodel" which went for 1.75M: http://www.zillow.com/homedetails/133-Coleridge-Ave-Palo-Alto-CA-94301/19497074_zpid/ http://www.zillow.com/homedetails/133-Coleridge-Ave-Palo-Alt...
  - joshrotenberg 11y ago
    Wow!
  - AreaGuy 11y ago
    Wow... and the last time it sold was for $34,000 in 1975. That's a 10.4% annual return per year for 40 years. That's better than the 8.2% returned by the S&P 500 over the same period.

not_that_noob 11y ago

I think there's another effect operating here. New borrowing rules went into effect that reduce the amount that can be borrowed for a given income. As interest rates rise, the approvable loan amount will be trimmed still further. Even if you have stock winnings, most people still need to borrow to buy a home. So buyers are looking at a declining amount that they can bring to bear in the market. However, sellers conditioned on ever rising prices aren't willing to accept lower prices just yet. Some are starting to reduce prices, but recently there have been multiple homes that don't sell and then quietly roll off the market in the 'hot' areas. Thus there is a market standoff, and buyers who want a house realize they can simply not afford a house here. Some react to that by leaving, a trend that is accelerating. It will be interesting to see what happens as interest rates go up, and reduce borrowing amounts still futher. If the future will bring a decline in prices or long-term stagnation - it's anyone's guess.

beamatronic 11y ago
Exactly. $200k is a pretty decent windfall for most folks, which conveniently just happens to match up with the 20% down payment for your median priced house. Down payment is the "hard part" of buying a house in the Bay Area, not so much the salary.

elif 11y ago

As a tabletop gamer, I want to see the disparity as an advantage rather than a disadvantage. If typical cost of living drives up wages by even just a 1.5-2x multiplier, you can min-max with lifehacks by, say, living in a van and making that into a disproportionate increase in savings retention, giving you a shorter runway to escape wage slavery. Of course, if your desired end-game doesn't include escaping the paycheck cycle, it is really a wash anyway.. so you may as well go where the fun jobs are.

sjg007 11y ago

In some sense yes. But parts of Oakland, San Leandro and East Palo Alto still offer bargains.

kqr2 11y ago

From http://sf.curbed.com/archives/2015/05/22/san_franciscos_median_rent_climbs_to_a_whopping_4225.php http://sf.curbed.com/archives/2015/05/22/san_franciscos_medi... Median rent is now $4,225 in San Francisco.

Apocryphon 11y ago

So is there any chance that the giant tech companies will band together to lobby local governments for measures that will improve living situations and transportation? Because if all they do is upping salaries (which is doubtful to continue indefinitely) all they do is empower landlords to keep charging higher.

seanflyon 11y ago
The obvious solution is allowing people to build more (and denser) residential, but that is a hard sell around here.
- Apocryphon 11y ago
  Right, which is why I'm saying tech companies- huge economic producers (and tax payers)- should use their influence to lobby for such measures. It's a hard sell until someone with the means gets into the ring and starts fighting for it. FWD.us agitating for immigration reform for potential future employees should take a backseat to lobbying for improving local living conditions in the Bay for current employees who already live in the Bay.
  - seanflyon 11y ago
    Perhaps they can do a better job, but I think tech companies are already pushing for more housing.
  - mavelikara 11y ago
    The management in these firms most likely have personal property in the Bay Area. They will like to keep it just as sparse as it is now. So, don't hold your breath for this to happen.

ryandvm 11y ago

I briefly evaluated a move to Silicon Valley. But after calculating that I was going to pay twice as much for half as much house, quadruple my commute, and have to send my kids to a lower quality (or private) school; the decision was made for me. My rough estimate was that I'd have to make about $300K/year to make it worth it. Instead I'm enjoying the vibrant and feverishly growing tech community of Charleston, SC and the quality of life advantages that come with living in Conde Naste's #1 rated travel destination. I suspect as housing costs in the Bay Area continue to rise, an increasing number of engineers will come to the same conclusion.