3 ms·

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 differ

by 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
    I don't know what you're talking about. Renting here is insanely expensive. I pay $1500 for a tiny room in the tenderloin, subletting from a friend who is paying $2900 for the place. It's a small two bedroom with no common space; just two rooms, a small kitchen and a small full bath. Studios in this neighborhood start around $2200. When I live in São Paulo, Brazil (which isn't exactly cheap and going out can be as expensive if not more expensive than San Francisco), my dad and I split the rent on a 2700 ft^2 penthouse duplex with 4 bedrooms, 3.5 baths, deck with barbecue pit, dining room, living room, family room. It was one block from Avenida Paulista on Alemeda Campinas. We each paid around $1300 to cover rent and the building fees. San Francisco is stupidly expensive. The landlord trolls sue to block every single possible development that could alleviate the housing problems because it allows them to earn increasingly more from their real estate with little to no additional capital investment.
    - michaelochurch 11y ago
      San Francisco rents are bad. San Francisco purchase prices are balls-out disgusting: 30 to 50 years' worth of rent. Typical in the US is 15, and that's only because of the mortgage interest tax credit (which drives purchase prices about 30-50% higher than they otherwise should be). Buying at current levels would only make economic sense if you expected rents to keep going up. Right now, buying is a bad move unless you expect the extreme rent situation to worsen (rather than mean reverting) in the long term (20-30 years). Given that it'd take just one genuine progressive mayor to crush the NIMBYs and allow new development, I think that that's a bad bet.
      - dragonwriter 11y ago
        > Given that it'd take just one genuine progressive mayor to crush the NIMBYs and allow new development Well, in an alternate reality where the City and County of San Francisco is a mayoral dictatorship (and using a suitably special definition of "progressive", though that's somewhat tangential) this might be true. Of course, in that alternate reality, you'd still need the mayor with that preference to somehow get elected in San Francisco, which might require even a bigger divergence from the universe we live in than San Francisco having the kind of political structure which would empower a mayor alone to impose the changes you describe.
stephengillie 11y ago
Speaking of renting in Seattle... There's a phenomenon in older apartment buildings on Captiol and First Hills where a large number of renters are barely able to pay rent, or are already past that point and have stopped paying rent. Evicting them just means adding to Seattle's homeless population (the other 1%). This doesn't apply to the shiny new condo you'd be living in. It applies to the ugly, squat, 95-year-old brick apartment building across the street.
- trts 11y ago
  If my rent became unaffordable, that would be unfortunate and inconvenient. But I think rather than choosing to become homeless I would move somewhere else where I could afford it.
  - stephengillie 11y ago
    You're probably basing this prediction of your actions on your optimistic worldview, your resources, employment, and your connections. Some people only start with half of that, and don't know what to do when it starts slipping away. And what do you do if your neuroprocessor isn't powerful enough to get you a good job in the first place? If you worked hard but couldn't become more than just a laborer? If you've never been able to afford even a car? Then suddenly you lose your job but your landlord doesn't kick you out.
  - mbreese 11y ago
    You're assuming that you'd be able to find something that was a) affordable and b) available. The SV rental market has few of either...
samstave 11y ago
>large percentage of renters are not paying skyrocketing prices. This only applies to those who are incumbent in their current residence. Any NEW renters, or those looking to move from their current place are indeed paying a new heightened rent. The costs for even small places is ridiculously high.

by birken 11y ago

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
  I don't know what you're talking about. Renting here is insanely expensive. I pay $1500 for a tiny room in the tenderloin, subletting from a friend who is paying $2900 for the place. It's a small two bedroom with no common space; just two rooms, a small kitchen and a small full bath. Studios in this neighborhood start around $2200. When I live in São Paulo, Brazil (which isn't exactly cheap and going out can be as expensive if not more expensive than San Francisco), my dad and I split the rent on a 2700 ft^2 penthouse duplex with 4 bedrooms, 3.5 baths, deck with barbecue pit, dining room, living room, family room. It was one block from Avenida Paulista on Alemeda Campinas. We each paid around $1300 to cover rent and the building fees. San Francisco is stupidly expensive. The landlord trolls sue to block every single possible development that could alleviate the housing problems because it allows them to earn increasingly more from their real estate with little to no additional capital investment.
  - michaelochurch 11y ago
    San Francisco rents are bad. San Francisco purchase prices are balls-out disgusting: 30 to 50 years' worth of rent. Typical in the US is 15, and that's only because of the mortgage interest tax credit (which drives purchase prices about 30-50% higher than they otherwise should be). Buying at current levels would only make economic sense if you expected rents to keep going up. Right now, buying is a bad move unless you expect the extreme rent situation to worsen (rather than mean reverting) in the long term (20-30 years). Given that it'd take just one genuine progressive mayor to crush the NIMBYs and allow new development, I think that that's a bad bet.
    - dragonwriter 11y ago
      > Given that it'd take just one genuine progressive mayor to crush the NIMBYs and allow new development Well, in an alternate reality where the City and County of San Francisco is a mayoral dictatorship (and using a suitably special definition of "progressive", though that's somewhat tangential) this might be true. Of course, in that alternate reality, you'd still need the mayor with that preference to somehow get elected in San Francisco, which might require even a bigger divergence from the universe we live in than San Francisco having the kind of political structure which would empower a mayor alone to impose the changes you describe.

stephengillie 11y ago

Speaking of renting in Seattle... There's a phenomenon in older apartment buildings on Captiol and First Hills where a large number of renters are barely able to pay rent, or are already past that point and have stopped paying rent. Evicting them just means adding to Seattle's homeless population (the other 1%). This doesn't apply to the shiny new condo you'd be living in. It applies to the ugly, squat, 95-year-old brick apartment building across the street.

trts 11y ago
If my rent became unaffordable, that would be unfortunate and inconvenient. But I think rather than choosing to become homeless I would move somewhere else where I could afford it.
- stephengillie 11y ago
  You're probably basing this prediction of your actions on your optimistic worldview, your resources, employment, and your connections. Some people only start with half of that, and don't know what to do when it starts slipping away. And what do you do if your neuroprocessor isn't powerful enough to get you a good job in the first place? If you worked hard but couldn't become more than just a laborer? If you've never been able to afford even a car? Then suddenly you lose your job but your landlord doesn't kick you out.
- mbreese 11y ago
  You're assuming that you'd be able to find something that was a) affordable and b) available. The SV rental market has few of either...

samstave 11y ago

>large percentage of renters are not paying skyrocketing prices. This only applies to those who are incumbent in their current residence. Any NEW renters, or those looking to move from their current place are indeed paying a new heightened rent. The costs for even small places is ridiculously high.