I left the Bay Area, not Silicon Valley, 6 years ago and since then I've been able to realize a 40% salary increase (this has more to do with experience and seniority than locale - just making the point that good salaries are possible outside SV) and I've purchased a house and a rental property. The latter would have been unthinkable in the Bay Area. Plus the gender ratio is much better for men almost anywhere else.
I don't even think SF and SV are good places to start out anymore. You can learn skills anywhere with the internet, and you miss out on early investments due to the opportunity cost of rent. If you want to live in the Bay Area, it's better to hunker down someplace cheaper for a decade or more, save up a down payment, and then lateral into a midlevel or senior role at a tech company, whose salaries are high enough to service a mortgage but not high enough to save a down payment and pay rent at the same time.
> I've purchased a house and a rental property. The latter would have been unthinkable in the Bay Area.
I purchased a house with my wife here in northern OH, and while we don't have a rental, we do have around 4 acres of land to use and for our son to play on, in an area with an excellent public school district. I know this would be very hard to come by near most tech-centered hubs in the country, and would be very difficult for me to give up now. The more I think about it, the less certain I am that even doubling my salary would convince me to do it.
Well, it all comes down to preference. Many people are responding about how they'd never trade the acreage and large house for a small place in a dense city, and that's totally fine. Personally, I'd never trade the density and culture of NYC for something suburban or semi-rural, and that's totally fine too.
It depends on the nature of the city, of course. I live in SF, and I actually find myself lusting for both the peace of the countryside and a more urban city. Seriously, I do mean the peace of a big city.
I actually think many parts of SF are in a suboptimal density band where it is quite dense, but still car dependent, dense enough to add a lot of cars and concrete but not quite dense enough to reclaim some of the pedestrian space… this link explains it pretty well.
Totally agree about SF, it's not dense or diverse enough for my tastes either. For me the ideal setup is a place in a major city like NYC, getting out of the US at least once per year, and some time in the country every so often to reset.
I'm 50-50 on SF. I did grow up in SF (west of twin peaks, though, so a less urban experience even by SF standards), but I was exposed to a more urban experience when I lived for a year in Paris when I was a kid, and later NYC for a year as a young adult (in my 20s).
SF really is pretty diverse, especially in terms of language diversity (I read somewhere that the number of languages spoken by 1000 or more households is higher in SF than even NY, though I don't have a cite for this). SF also does have decent density by US standards as long as you're not talking about NY. (http://beyonddc.com/?p=4808). I also find that getting out of the city for the countryside or natural surroundings is faster and easier in SF than almost anywhere else (ie. the time it takes to get from a very high density urban neighborhood into a very quiet forest or rugged, undeveloped coast is amazingly short in SF). Since I really value both things, I do get a lot out of living in SF, but there is a kind of truly urban neighborhood, with trees and open pedestrian areas, that is much more prevalent in larger, more dense cities like NY or Paris. The images in that link about curb cuts, contrasting the street scape between Park Slope and Dolores Street in SF, pretty much sums it up. The image of Park Slope manages to both peaceful and highly urban at the same time, largely because it's urban enough to give up on cars and driveways. It almost seems like SF got just close enough and then blinked.
Aside from NY, though, and maybe a very few parts of Boston or Chicago, there really isn't much else out there, at least in the US. For the west coast, you just aren't going to find as many of those little red dots clustered (high density), even in Seattle. Interestingly, LA is becoming much more urban. That said, SF's high density urban neighborhoods are pretty limited in size, and they are breathtakingly expensive.
Yeah, being able to get to Muir Woods or other epic nature in less than an hour is a huge plus for SF. Don't get me wrong, SF is a beautiful city, it's just for the price I'd much rather be in NYC.
But you're right, there aren't many places in the US that hit that balance. I grew up around Boston (found it too small and casually racist), lived in Chicago (you still need a car), have spent a ton of time in SF for work, and have lived in Brooklyn now for about 9 years. When I think of where I'd move if I weren't in New York I usually end up with Mexico City, London, Bogota, Medellin, Tokyo, and other cities abroad.
Oh, I agree that it's definitely an individual preference, no judgement on anyone meant on my part. I grew up in a large city, and before settling down here, I've lived in a few places (the most densely zoned probably being northern Italy while in the military). I actually do appreciate urban life and how great it is to be able to either walk or take public transit anywhere I need to be.
But it turns out I really like having space to play more. YMMV.
Why'd this get downvoted? This comment has been in my mind since I started reading this thread.
I'm 39, happily single, and live in inner Melbourne, Australia. I pay a small fortune in rent. I could live out in the 'burbs in a 4 bedroom house with a 3 car garage - but that's my vision of hell on Earth!
I absolutely have "different considerations". Bars and restaurants literally on my doorstep, a walk to work, no desire to own a car, singles like me as neighbours rather than families, etc.
Wasn't my intention, in any case. I was really just trying to point out, as dispassionately as possible, that (like many disagreements people have about major life choices) it boils down to preferences of values and taste -- and the inevitable tradeoffs was have to make when choosing to pursue these preferences.
Indeed -- some of my favorite people on this planet have homes with more bedrooms, bathrooms, parking spaces, living rooms, extra playrooms, etc, than they could possibly know what to do with. And I love them all dearly, just the same.
> You can buy a 4 bedroom house with a three car garage and a big plot of land for less than a 1 bedroom apartment in SV.
Sure, you can, but your salary would be much lower (half?) in Cleveland. And unless you're fully remote, there are far fewer tech jobs in that area. (I also live in Ohio.)
I grew up in there. Solon is a great place to raise kids, with great schools (state leading math/science) and a low cost of living. Although, my experience was that Ohio is a tough climate for tech employment.
yeah but tech industry in midwest is lowkey compared to NYC and west coast. I grew up in new england, went to college in ohio, but moved back here because of the access to capital/talent of NYC & greater metro. Nobody is going to go out of there way to be in a midwest city because the tech scene is still very small, relatively speaking.
But, it's cold and rainy 7-8 months out of the year. A family of 3 doesn't need 4 acres. You have to admit that most people are willing to pay up for good weather
My wife and I don't need a four bedroom house for the two of us either, but land is cheap, houses are cheap, and I still have a tech job in MI working remote making six figures. Never set foot in SV.
It's not about need. It's about the fact that my life is pretty awesome, I have tons of spare cash, I can relax on my deck and see nothing but trees and squirrels and my dogs running around.
How much room does a family of three need? I think 4 acres is better than a two bedroom, third floor apartment surrounded by pavement and cars.
Couldn't agree more. Acreage is unbelievable therapeutic compared with the city.
Source: Grew up on 4 acres of woodlands. Now live in SF. Would like to move back to a more rural setting after 3 years of hunting for parking spots and spending all my time/money getting away from the city when possible.
>>Couldn't agree more. Acreage is unbelievable therapeutic compared with the city.
If you're an introvert, sure. I love the countryside myself. But extroverts get their energy from being around other people, and dense cities such as NYC are great places for that.
So invite some friends over for a beer and BBQ... Or be an extrovert at work for 9 hours a day. OTOH, I know what you mean about the mental stimulation of big cities -- need to feed that ADD. :-)
The fact that they have 4 acres of land is much more valuable to his kids than having to share that property with a bunch of other people in the city, in my opinion. There is room to expand, build, hike, bike, walk, climb a tree, breathe fresh air that doesn't smell like pavement, enjoy nature.
Plus, who said they don't like cold weather? I grew up on the East Coast and I love Winter. I love seasons. I love snowboarding and hiking in the Winter.
I lived in SF for a while and didn't really enjoy it at all. Too much congestion, too many people and no fresh air. I could barely see the stars at night.
In short, peace and quiet. I really can't describe how sublime the quiet of a winter forest is.
Also, this may or may not be appealing to you, but I find it to be a humbling experience. Being alone in an empty winter forest really makes one feel insignificant. Not in the bad way of making one feel worthless, but instead in the way that makes your worries and aspirations seem trivial. I think it's a nice respite from the myriad concerns of daily life.
It's brilliant. Once you get moving you won't even notice the cold. A snow-filled forest is one of the quietest and most peaceful places you are likely to ever find.
I live in a 3400 sqft ranch on a lake with hundreds of square feet of frontage 20 minutes from downtown Charlotte without traffic and 1.3 acres of land for 600k. The weather is nice and it appreciated ~80k in a little over a year.
Are market prices even remotely comparable to affording that kind of luxury in SV? Hell no.
It's beyond comprehension for me to justify the cost of living out there. I'd be trading in for a postage stamp in an overly populated area.
The urban heat island is my single biggest point of displeasure living in NYC–I so love sleeping the windows open and a cool night breeze in the summer, which would be very possible in my quiet neighborhood of Brooklyn if it were to actually cool off at night.
Instead we have hot days followed by slightly less hot nights, and I run the A/C all night lest I get no sleep at all.
You can live a life of wealth and luxury, or you can enjoy the weather.
Note that given the cost difference between living in SV vs Ohio (although I don't live in Ohio) I could spend 12.8 years with my wife at an all inclusive tropical resort. We'd probably get a discount if we lived there full time, so maybe 15-20 years. Not exactly your average retirement home.
Or cash on the barrel no discounts or financial aid at all I could pay list price to send SEVEN kids thru Harvard for four years with a reasonable allowance for expenses and still have money left over. I don't have seven kids, but I guess I could pay cash on the barrel to send a couple thru med school or law school instead, maybe finance a startup or small business for one of them.
Or I could cash buy six rental properties vaguely similar to the house I live in, and retire as a landlord (although from watching my great uncle do this, being a landlord is no retirement!). The rent off six houses, minus realistic expenses, would be a little less than I get paid now, but its interesting to think about.
A house that can support a family of 9 is not cheap even in Ohio if you want to "life of wealth and luxury".
You'll be paying over $1M for a 5 or 6 bedroom house in a "nice" part of Columbus (i.e. German Village), and you'll be paying around $1.2M for such a house in a decent (though not upper class) neighborhood in Silicon Valley.
The location is really nice, if you look at what you have around you. Comforts of a big city, youre on the coast, napa at a distance, skiing isnt far away, being able to hike and be close to the wilderness.
The only drawback is cost. But I envy all of those possibilities compared to Miami, where all you have is a big city and sea, maybe watersports but precious little of everything else... and Miami is still not that far behind in terms of cost of living.
I wouldn't give up my childhood living on 7 acres that backed up to hundreds of acres of state land for anything. And the weather in the Tornado Alley of Oklahoma was great, ranging from freezing snowy winters to hot and humid summers, giving my childhood a huge range of enjoyable experiences. I could hike, camp, fish, hunt, sled, ride dirt bikes, build stuff, blow up stuff (with my homemade fireworks), play most sports, all just steps from the back door. Seeing wild turkeys, dogs, coyotes, horses, fluffy bunnies (fierce killers), the monarch migration and too many types of birds to list without having to leave the property was invaluable to my curious mind.
The only other experience I'd consider possibly better for raising a child is in NYC (my current home) where the best art and culture exist a short subway ride away, with regular interactions from seemingly every culture in between.
You can have your moderate weather fluctuations (I don't consider cold, rain or snow "bad" weather), I'll take a world of life outside my door.
Silicon Valley does have extraordinarily good weather for my tastes as well as access to great recreational activities etc. But I'm not going to pay to live there just for the weather. Whether or not one cares for Ohio, there are lots of areas in the US where acreage is relatively affordable. Personally, I like having some separation from neighbors.
(I live a little ways outside of Boston. The weather here is probably not better overall than Ohio--which I wouldn't describe as cold and rainy for 7-8 months of the year.)
Seasons don't exist in the Bay Area. And I've noticed over the past decade that summer keeps expanding and moving into other seasons. It took me a while to get used to the Indian summers here, but they've increasingly moved on into December it seems. According to wunderground, Palo Alto Airport reached 80 degrees F on Feb 16th!
Personally, I've always thought the midwestern US actually has a nice set of four pleasantly distinct seasons (Fall being my favorite). I actually like the snow too, though when it starts to get so cold that it doesn't snow anymore (last year comes to mind), then it does stop being very fun.
It's a fair point about seasons. I would probably miss them--and Fall is probably my favorite in New England as well, even if I do like winter activities here.
Judging from the number of my relatives who have left the Great Lakes area for places south and west, many people will. But a northern Ohio fall can be beautiful, and I enjoyed the winters.
Having moved from Seattle area after 15 years to Tampa -- and having purchased a 2 acre property for my family (wife, 3 kids, 3 dogs). we need 2 acres.
Having owned a number of houses - the biggest reason is peace. I've owned houses where I felt the neighbors looked in your back window, everyone could hear what others are doing in their yard around you...
Walking out and having a bit of space is wonderful. And tools like slack and hangouts are making it easier to work remotely as well.
Oh, there's a lot of things you can do with 4 acres. You can maintain extensive gardens and supply substantial quantities of your own food, as a profitable hobby. You can consider owning small farm animals like chickens, or maintain apiaries. Children and pet cats/dogs can run around outside and the children can exercise their imagination through unstructured play in a safe environment, especially in a multi-child family, potentially replacing overly-structured and expensive after-school activities for all but the youngest children (with many opportunities to increase their physical fitness through such activity). You or your children can also practice sports, such as baseball.
>Children and pet cats/dogs can run around outside and the children can exercise their imagination through unstructured play in a safe environment, especially in a multi-child family, potentially replacing overly-structured and expensive after-school activities for all but the youngest children (with many opportunities to increase their physical fitness through such activity). You or your children can also practice sports, such as baseball.
I lived in a tiny apartment right in the city growing up. And I mean very, very tiny - we shared beds. I did all those things in my city-dwelling childhood. You don't have to own the land to do that stuff. In fact city life lead me to spend plenty of time with the neighborhood kids, which was really great and you don't get that if you are spending all your time on your own property. If I was bored I literally just walked outside and see which of the neighborhood kids were out. I don't believe there was or is anything "unsafe" about public property and you can do sooooooo much more on public property. We did have a very small backyard that was shared with 6 families and we spent plenty of time there. And we got to interact with the other kids who lived in the building and the kid next door who saw us playing. You can also find a surprisingly large amount of nature in the city if you go looking for it. The idea you need to own 4 acres of land to play baseball is just laughable.
I'm fact, seems more like living on 4 acres would be a prison. You couldn't leave without being driven!!!
The problem is kids aren't allowed to go outside anymore by themselves.
Growing up with very little made me such a better person. I'm way off the hedonistic treadmill.
> I don't believe there was or is anything "unsafe" about public property. We did have a very small backyard that was shared with 6 families
I wouldn't call it public, it's more of a shared space an apartment complex might have.
The larger the city, the higher is the likelihood of public spaces having a variety of homeless encampments, broken glass, needles and plain old feces.
> The larger the city, the higher is the likelihood of public spaces having a variety of homeless encampments, broken glass, needles and plain old feces.
The larger the city, the higher is the likelihood of accessible but nevertheless private property having those same things; though in either case its likely to be restricted to particular parts of the city, and those are likely to be the ones with lower property values (this reduced property value is both a cause and effect of the condition, its a positive feedback loop.)
The larger the city, also the more likely public -- and accessible private -- spaces are to be fairly pristine enclaves. These will usually be found in substantially different parts of the city than the nasty bits.
This was never the case in my not at all upscale city. There was always plenty of safe places where lots of kids spent their time. Also if this is a problem organizing a cleanup isn't even difficult. We did know some resident homeless people but homeless people are people and aren't dangerous to children by definition. The homeless I knew growing up were pretty friendly and not more dangerous than any other stranger. They were just like every other person who "lived" in the neighborhood. If your kid doesn't know to not touch poop then your kid is too young to go out unsupervised. Other kids just don't touch poop and move on, it's not complicated.
Besides they yard was an after thought, I spent most of my outdoor time in public places and I was outdoors every day in the summer.
You may just as well say "I'm too good for public property, I'd rather not share with the peons." Don't hide behind "safety." There's no major safety issues in letting your children use a public park.
And anyways, it's probably much safer to let your kids have a hypothetical chance of running into hypothetical broken glass (that they can just walk away from) than to put them in a car every time they need to go somewhere, as automobile accidents are the leading cause of death in people ages 5-25 (or something along those numbers)
Dig holes or build forts on public property? Sleep outside overnight? Plant your own flower/herb/vegetable garden? Build bike jumps? Shoot arrows? Generally you're not even supposed to climb the trees, much less build in them.
right, that's great. So, if I don't want to own a small farm and don't like sports, I should live in SF vs Ohio? Since most people don't want to own small farms, this explains at least some of the cost of living difference :)
I similarly got a ~25% income increase with a new job, about a year after leaving the bay area and moving back to Ohio.
I also have a ridiculously lower cost of living - my 15-year mortgage for a nice house on an acre of land is about 1/2 of what rent was in San Mateo, and about 1/4 of what I know friends were paying for apartments in SF.
Please tell me what tech jobs are available with good salaries in Ohio. Most of my friends are in Indiana/Ohio/Kentucky, my parents are in Northern Virginia (very drivable from Ohio) and I would love to be closer to all of these. However, I've not seen anything at even half my current salary (though I do like my job so I haven't been the most motivated job-seeker).
Well, I work remote for IBM, but we do have a few offices in this area if remote isn't your thing. Here's my link to the IBM job site if you're interested: http://u.rfer.us/IBEiwV2J5c
Before that, I freelanced which ended up turning into a full-time gig with a startup in SF that liked my work.
I am confused by the part you say that you left the Bay Area, not Silicon Valley, and then you said that good salaries are possible outside SV. Did you mean outside Bay Area?
At least by that metric, that means it's the toughest place for single heterosexual men to find women to date. I'm curious if women find the imbalance awesome or awkward when it comes to dating (probably a little bit of both?).
Come to DC which has one of the best ratios (for guys, at least), and the women are pretty much all highly-educated, if you're into lawyers, policy wonks, biologists, or NGOers.
Plus, salaries at pure software companies and startups are pretty good. I have had four people in the last week quote me 200k salaries.
My guess, it's not as hard to find women in the office in tech companies in key roles outside of SF at least not as bad as it's made out to be in CA and the tech centric news sources that tend to focus solely on Silicon Valley as representative of tech as a whole. Some of us work in regular old Fortune 500 companies that aren't based in SF, and generally, but not always, they seem to do a better job on the gender mix and attracting female talent granted its not 50/50. Maybe companies in other areas provide better work life balance and stability than start up culture tech companies, I don't know. This is also purely anecdotal and based on my experience.
Might just mean in general, if the person's single maybe the odds are better of meeting someone, no idea.
$500k in 2010, at the depths of the housing crisis, would have gotten me a little over 1000 sq ft near an oil refinery in the East Bay. It's academic though, since that means a $50-100k down payment, which I could not have saved. Everyone gets hung up on the real estate appreciation in the Bay Area, but forgets that down payments are very hard to save up.
Edit: I wasn't considering condos. Go fee simple or go home.
Condo vs single family home :) I'm over by Tamien station off Minnesota Ave if that provides some context. (I call it the ghetto side of Willow Glen, as if there were such a thing. It's still a lovely neighborhood.)
Actually I know someone who bought a 3 bedroom place 2 miles from Apple's new HQ in 2010 for 650K. They took out an FHA loan for 3% down with a PMI. This was a really smart decision because in 3 years their house value increased to 850K, bringing their loan to value ratio within 0.8 thus allowing them to refinance and get rid of the PMI. They had a monthly PMI of 350 dollars. That amounts to $12,600 extra for 3 years. 17% savings in downpayment amounts to 110,500. So essentially they saved 98K.
I have a 1200 sqft house with a nice yard in a cool neighborhood midway betwen Berkeley and downtown Oakland that we got for under $350k (including some largish repairs & upgrades) around that time. Admittedly we timed it well and property values around here have practically doubled since we bought it, but I think that was partly due to a lack of investment in new construction for a few years following the recession.
For anyone interested… We just moved back to Atlanta in September after five years in the Bay Area, to be closer to family, and to be able to afford a house, ever.
I was well paid at Google, and loved working at YouTube. I also severely miss our many friends, as well as beautiful San Francisco: I used to walk up Bernal Hill one or two days a week with my toddler. Pictures of oceans and hills and everything else make me sad…
That said, we could never afford a house in San Francisco. And to get affordable, we'd have had to have gone way out, and the commute would have been terrible.
I was lucky enough to find out that Square has an Atlanta office, full of very smart people, so I was able to keep doing Silicon-Valley-style programming, which is a big win.
My pop bought his place in the east bay right after Viet Nam for ~70k. They pay ~100 a month in taxes and whatnot as the mortgage was paid years (decades?) ago. The exact same footprint ranch house next door just sold to a couple with a little boy. She is a 'local' teacher, he is a recruiter in tech somewhere in SF city. Take a guess how much they paid for a 3 bed, 1 bath on 1.7 acres about 1 hour (on a good day) commute for him.
Yeah, 850k, and that was a steal. The mortgage alone is, what ~3k/ mo? Taxes and everything else push this up to ~4.5k to 5k/ mo, right? And this is going to go for how long? Oh yeah, 20 years.
My folks have no illusions that this sweet couple and little Benny next door are going to be there anymore than 5 years. Even all the way out in the East Bay, it is just not possible.
Get out now before this bubble pops again. Beat the rush.
This isn't as outrageous as it sounds. In the time that your dad's house went up 12X, the S&P went up 20-30X. (In the 1970s it was in the 65-100 range, and now it's over 1900)
While the calculation isn't quite this simple (dividends on stock versus not paying rent, and interest deductions) it highlights that real estate appreciation isn't quite as crazy as it's made to sound.
This is an interesting "investment" example. In addition to the listed trade-offs, the mortgage would've likely allowed 25% cash down in 1976, approximately $18,000. Furthermore, savings in rent would've largely gone toward mortgage interest, repairs and capital expenditures. Given these assumptions, the result over a 40 year period would be an annual return of 10.12%[0].
Even so, the approximate return from the S&P 500 (reinvesting dividends) over the same period would be 11.468%[1].
One thing to add... It's only in rare parts of the US that real estate appreciated so much, but you would have gotten those equity returns anywhere in the country.
According to the BLS’s CPI inflation calculator, $1900 in 1976 is the same buying power as $456 in 2016. Where are you getting $65 from? (Edit: that’s a rhetorical question.)
There’s a huge difference between 300% inflation the BLS claims vs. 2800% inflation you are suggesting.
Inverting the S&P 500 numbers the grandparent posted.
On a practical level, inflation is always relative to what you're actually buying. If you're buying S&P 500 index funds, the inflation rate is the price appreciation of the S&P 500. If you're buying real-estate, the inflation rate is the rate of increase in housing prices.
(Perhaps this is a bad example because you typically wouldn't be buying stock index funds after 40 years of earning, but the point is to illustrate opportunity cost. If someone's goal is to pass wealth on to their children, for example, then the price of income-producing assets is a lot more relevant than the price of milk.)
That doesn’t make sense. If your goal is to leave your children an inheritance, presumably they are supposed to either directly buy goods with it, or hire people to do useful work for them.
The price of goods, services, salaries, etc. have all gone up by roughly 3–4x in the US (with some notable exceptions like housing in certain areas and college tuition). Someone who invested in the S&P 500 and has 29x as many nominal dollars as they did in 1976 can buy about 8 times as much of other people’s labor as they could before.
Some fixed percentage of the total size of the S&P 500 is a practically useless measuring stick. If we use that as a standard, 90%+ of the population in the USA is 8x poorer than they were in 1976.
I don't understand what you're saying. If you put money under a mattress, doesn't it stay the same in worth? If I put a $20 bill under the mattress 40 years ago, it's still a $20 bill, worth exactly $20 today. What did you mean?
I know in Chicago if you were old past a certain age you got some tax breaks (MAYBE at some point a tax freeze). Does SF have some kind of tax rate freeze?
But ya, live is too short to spend a million bucks on a 2 bedroom house.
Bingo. Prop 13 is the elephant in the room that is not mentioned. All discussions of CA property markets have this giant red flag in them. It very much distorts the free markets.
Not to argue in favor of all aspects of Prop 13, but the alternative of just letting valuations for property taxes float with the market means that a lot of people who own houses and have lived in them for a long time get forced out of their communities by increasing taxes. Which I don't see as generally a good thing.
The largest non-primary residence sector is the residential property for rent. Considering that any tax increase very quickly finds its way into a rent increase, what's the rationale for punishing renters?
It's almost a double whammy for someone who wants to buy a house, but can't afford the current prices or was outbid by a cash buyer going over asking price. Cheer up as we've incorporated the price increase into your rent.
> The largest non-primary residence sector is the residential property for rent. Considering that any tax increase very quickly finds its way into a rent increase, what's the rationale for punishing renters?
Assuming we're talking free markets, then the rent should already be set at the maximum price the market will bear. (If not the landlord is leaving money on the table.) Increasing property taxes is to depress the price of real estate. A simple property tax could also discourage new investment, while a land value tax incentivizes owners to maximize the value of their holdings.
> The largest non-primary residence sector is the residential property for rent. Considering that any tax increase very quickly finds its way into a rent increase, what's the rationale for punishing renters?
So, treat primary residences as primary residences, whether or not they are the primary residence of the property owner. For multi-unit rental properties, the total value of the property is divided among units proportionately to the rent charged for each unit to assess this.
Is your primary goal here to extract more revenue from timeshare owners and people who own a pied-à-terre? Don't those constitute negligible portion of California real estate market (as opposed to some places like Hawaii, where absentee ownership is significant and property taxes on timeshare / second home owners are very high)?
While it's probably not a bad idea, I don't see it moving the needle much.
> Is your primary goal here to extract more revenue from timeshare owners and people who own a pied-à-terre?
I'm discussing ways to achieve the goal upthread of insulating people from property tax uncertainty on their primary residence.
I would expect that the larger purpose of that is to allow full-value taxation on all other real property; of which non-primary-residence residential property is a subset (and a fairly small subset, at that.)
Remember that Prop 13 applies to all real property, not just residential property.
This happens to renters when the market rate rises. If you can't afford to live somewhere, you go live somewhere else. This applies to everything else governed by a market, why shouldn't it apply to property taxes?
Prop 13 is a blatant wealth transfer between people who are new to the area (mostly the young) to the people who were originally here (mostly the old).
> This applies to everything else governed by a market, why shouldn't it apply to property taxes?
Taxes aren't governed by a market; the same rules don't apply. Arguments against government protectionism in markets don't also apply to protection against the actions of the government itself.
That said, proposition 13 doesn't seem like a good implementation of this. There's no good reason for a sudden increase upon sale; that breaks the ability to buy a home. There should be a hard cap on property taxes that doesn't change on sale.
Why should taxes get to increase without bound or control on existing property? Once you've paid off your home, you should not have an ever-growing expense to keep it.
(You shouldn't have an expense to keep it at all, but that's a separate argument.)
Property taxes are based on property values, which are governed by a market.
My view is that property taxes fund the very things that make a particular neighborhood desirable, like good schools, roads, parks, and other local services. Your property's value is what it is because of these things, and you shouldn't be able to reap these benefits without paying taxes proportional to the value you've captured.
> My view is that property taxes fund the very things that make a particular neighborhood desirable, like good schools, roads, parks, and other local services.
In California, that's less true than it might otherwise be, given the prop 13 limits on both assessments and tax rates. Lots of those things are funded by sales tax revenue, income tax revenue (primarily state income tax funding local programs), development fees, and other revenue sources other than property tax.
They typically mostly fund schools, which long-time home owners generally aren't even using. One of the whole reasons to buy property is to have some long-term residential stability, which doesn't happen if property taxes can increase rapidly. If I'm holding onto my home, I've only captured value in a theoretical sense. I don't have any cash to pay for the increased property taxes until I sell.
> My view is that property taxes fund the very things that make a particular neighborhood desirable, like good schools, roads, parks, and other local services.
I think you're arguing that richer neighborhoods should have nicer schools, roads and parks. Granted, SF is an exception here, but that's precisely how things work elsewhere in California.
And if richer neighborhoods don't get that, California made annexations pretty easy, which is why you see those tiny municipalities in the vicinity of Los Angeles, San Diego, Anaheim, etc.
I'm arguing that richer neighborhoods DO have nicer schools, roads, and parks. Prop 13 says you may live in such valuable neighborhood while not paying taxes in proportion to that value, merely because you happened to buy a long time ago.
I an questioning how big of a problem that is empirically.
One can't really arbitrage that effectively.
Municipalities can't run consistent deficits, so the new schools, roads and parks will be built after a wave of newcomers buys properties, locking in higher prices and higher tax base.
In case there are no such newcomers (i.e. everybody is maximizing their Prop 13 benefit by not selling), the municipality just sticks to the last year's budget with a 2% increase permitted by Prop 13. But in that case new schools, parks and roads that make the neighborhood better don't appear either.
> This applies to everything else governed by a market, why shouldn't it apply to property taxes?
Does it apply to anything else you own? If 2004 Honda Civics suddenly got really popular and I already owned one, I wouldn't suddenly be priced out. Or if I own gold or stocks, and the price goes up, that doesn't affect me at all unless I sell.
> If 2004 Honda Civics suddenly got really popular and I already owned one, I wouldn't suddenly be priced out.
In California, since the state has ad valorem taxation on vehicles (the vehicle license fee, which is 1.15% of the market value of the vehicle) which does not have prop. 13 style limits, you, in fact, could be priced out of your 2004 Honda Civic if the market price suddenly and radically increased.
Oregon solved this problem differently: there's a hard annual cap on property tax increases period, which doesn't change when the property changes hands.
That prevents people from being taxed out of their home, without creating a situation that makes it hard for people to buy new homes.
The Oregon system started out with good intentions but ended up being devilishly complicated to understand and unfair to many people. It's probably a great case study in the long-term unintended consequences of laws intended to control real estate taxes.
The Deschutes (Oregon) County Tax Assessor's office made a really good video explaining how three almost identical houses in the same location can have completely different tax bills:
In addition to what the video says, I wanted to point out that the 3% hard annual cap you mention is only on the property's Maximum Assessed Value, which is only one of the many inputs into the computation for a property's tax bill. For example, one thing that can cause taxes to go up more than 3% are general bonds approved by voter measure.
Portland Commissioner Steve Novick also wrote a really good article about all of the problems with Oregon's tax system and made some recommendations:
Our property taxes are still actually pretty low -- around 1%. My sister just bought a house in Ohio for 20% what our Bay Area house host, but their taxes are more than half as much as ours. In fact, their taxes are half their mortgage while ours are practically negligible.
I mean schools need funded somehow.. many states fund them almost all through property taxes.
A lot of places I have lived capped property tax at 2% of market value. In Ohio are their taxes significantly higher than 2% of property value? I wonder if they have tax missing somewhere else, like no local income tax or something... Ohio doesn't strike me as a high tax zone.
Taxation distorts the free market. Prop 13 is not an elephant in the room, everyone knows about it and it's a hot topic of public discussion even long after it was passed.
For those unfamiliar, you can think of Prop. 13 as an effective cartel to discourage people from selling their property.
Basically, it subsidizes keeping property and never selling it. This is because every year the owner's property taxes essentially go down, presuming any normal level of inflation. And because of follow-on propositions, you can transfer that advantage from parents to children. Yes, this does let existing residents stay somewhere indefinitely. Equivalently, we can say it strongly discourages mobility.
The crazy real estate prices you see are simply a result of the proposition-established cartel. This drives up prices for new arrivals, which California depends on to keep this going, which makes the people holding on to their property think two things: "I'm rich because my home is worth so much" and "I could never get by without Prop. 13 because my home is worth so much." This has made Prop. 13 untouchable — it would basically have to be overturned at the state Supreme Court level at the behest of broad popular opinion.
However, this is just another bubble. California as a state has done relatively quite well in the last thirty years, so it continues to inflate. However, California and local governments have also spent a huge amount of future revenue on state workers, so it has become harder to sustain. But for the huge amount of income tax receipts from the investment class of California, things would already be in rough shape.
Someday, the bubble will burst. If Prop. 13 was ruled unconstitutional tomorrow, it would cause a real estate crisis, followed by an economic crisis, that is hard to imagine. But that might be preferable to having Prop. 13 crumble in the middle of a statewide economic crisis, which is the most likely ending of this story. In the meantime, yes, it does keep grandma in her tidily-appreciating house instead of some filthy tech hipsters chasing the next gold rush.
If you don't mind me asking, how does your absolute salary fare when moving to a lower cost of living region? Do employers tend to keep you at the salary you had, or does it take a hit (even though it is supposedly "equivalent" in some sense)?
Total compensation is base salary plus stock/options. If your stock grant goes down by enough, total compensation may fall even if base salary went up.
I'm actually a stock trader, so it's even more skewed for me and would be a good example. Let's say I get paid $50 per year. At the end of the year, depending on my/our performance, I will get paid between $0 and $200 as a bonus, which I wouldn't count as part of my base comp.
Other forms of non-base include stocks/options/etc.
Like most of these things, this calculator makes some broad assumptions.
For instance, it assumes transportation costs in Manhattan are higher than most other places. This is unbelievably inaccurate in my experience. Maybe it assumes people here take taxis all over the place? I've found transportation to be cheaper in NYC than anywhere else in the USA. No car or gasoline or insurance or maintenance, etc. A car costs on average about 9k/year to own according to AAA. In a place like NYC if you take the Subway every day your cost is about 1,300/year. Throw in a few hundred for cabs and you're looking at 1,800/year. It doesn't cover the rent gap compared to most places but it helps.
In effect this calculator says a salary in Chicago goes nearly twice as far (so if you make 200k in NYC that would be 106k in Chicago. In my experience that is simply untrue. 200k in NYC would be closer to 170k in Chicago.
I think this calculator is making the assumption someone would require the same resources, like a car in all places. Or that someone who had 1600 square feet of living space would expect the same in NYC, which would be ridiculous. No reasonable person would assume they would move to NYC and get a car and garage it. That simply isn't the typical lifestyle here. Most my friends born and raised in the city don't even have licenses.
It also claims that living in San Francisco is significantly cheaper than NYC which is untrue as well.
I moved to Chicago from SF and took a substantial hit. But I was doing a lateral move and am still early in a career change. If you are moving to a higher position or you have lot of experience you may carry better across geos. Like a guy I know is long time marketer and got wined and dined by 20ish startups in Chicago. Im sure he did fine on salary.
honest question: what does "Silicon-Valley-style programming" mean? I've been living in SF for 5+ years and I'll prob stay for a few more. But I can't see myself living for too long mainly because of rent and house prices. Europe, to me, looks a lot better (I'm thinking Berlin).
But re: "Silicon-Valley-style programming", I don't see any difference here than any other similar place.
Silicon Valley style programming means working on consumer apps that have a chance of being used by thousands and millions of people.
Especially in Europe, most programming goes to custom software for banking and various industries. There are very few Microsoft, Square or Google style companies in Europe, where software is the product. A lot of software is a cost center for something else. For some, it doesn't give them the same feeling of accomplishment.
It's the same in Silicon Valley. Software developers are a "cost center" and balance sheets and accounting reflect that - even at companies like Google.
I've spent large chunks of my career in the Midwest as a consultant. Senior devs go into very long term consulting gigs because then companies can afford to pay us much more: we count as 100% capex.
Companies that might pay an employee $110K a year will have zero problem paying rates that end up with take-homes of +$200K a year after paying your own benefits and taking vacation time off.
Actually, assuming you're not just maintaining a code base (i.e. you're mostly adding features or making something new), the cost of software development is typically an asset on the balance sheet
So there are lots of programming jobs out there at places that are not like the valley. Thing Initech from Office Space - business casual dress code, gantt charts, dreary cubes, long death march schedules you have no control over, people are resources first, salaries are intentionally below market rate...
I landed at one of these a few years ago and got out ASAP. They're out there, but not so much in the Bay Area because the talent war is so hot - any place like that wouldn't be able to hire or keep anyone.
I don't do "SV style programming" but we have no dress code, no death March schedules, no charts, no meetings, etc. Same thing as my last job in another city.
Though we also don't have ping pong, Foosball, stocked fridge, or many young people if that's what you are looking for. Oh, and not a lot of turnover either.
It usually means working on apps used by a lot of people, entertaining stuff and exciting new technology. That "style" is not available in every part of the world.
In some places of Europe it's most of the time just working for bank, insurance, industry or european institution with too old technology, long and fixed schedules and not so much excitement or feeling of making something useful. Add this to under-market salary, suits everyday, ... Developers are not killing it there, they just cost money, they don't have that aura of hype, respect, perks and all.
It isn't geographically close enough to make the claim that living in SF is necessary because you work there.
Of course, even if the office was in SF that wouldn't be justified. It's hardly unusual for people to commute into SF from places with lower living costs.
Housing on the peninsula is incredibly constrained so most people are priced out. Right now in the East Bay, San Leandro and Castro Valley are probably the best price points for square foot per $. Commutes suck from both places but they are equally positioned between valley and city giving you access to both.
If the bubble continues I would expect that both places will get priced out in the next 2-3 years. At that point you'll have to look at the Tri-Valley area (Dublin, Pleasanton, Livermore) for the affordable price points.
The Tri-Valley is actually quite a bit more expensive than the mid East Bay region (Hayward, Union City, San Leandro, Castro Valley). It's still cheaper than the Peninsula or South Bay, though.
If you're looking at the East Bay you're too late. Castro Valley and San Leandro were marginally affordable about 4 years ago. Now, you are probably going to need a salary of over $200K to support buying there. Dublin and Pleasanton have good schools so you'll need more $$$ out there. Livermore is probably still affordable to a mere mortal but I'd start looking further out towards Tracy or Stockton at this point.
He worked at Youtube, which is actually in San Bruno. Living in SF is the trendy thing to do so he probably felt the 'real' experience would be more worthwhile (which it sounds like it was). From the southern part of SF (not South San Francisco, that is different) it's not a crazy commute to San Bruno. To Mountain View it would have been hell.
Just wanted to point out one thing, the comparison between Atlanta and SF is a bit more nuanced. Atlanta is about 3x larger (in square miles) and encompasses an incredibly economically diverse area. Within two miles, you can find a house for $20,000 and a house for $1,000,000+. This certainly brings down the 'average cost of living', but does not account for the cost of living in a safe and desirable area, which is not quite SF price levels, but is equally in demand and short of supply.
I was afraid I'd end up in a corporate IT department in a big company that does something other than technology as its main thing.
In Mikey Dickerson's talks about fixing Healthcare.gov he talks about two strains of programming: that descended from a more engineering mindset, and that descended from the IT department. (I'm paraphrasing badly: I'll try to find a better link when I have more time.) I guess I was using "Silicon Valley" as shorthand for the former.
If at all possible, you want to work where you're a net benefit and somehow directly visibly producing output the company is selling, not where you're a net cost.
Note how the word "computer" doesn't appear in that sentence; it's not unique to computer programming.
I've been there. You are nothing but a commoditized resource when you are in a "corporate IT" job. That being said programmer-centric jobs can be found anywhere outside SV.
How do you switch from one strain to another? How do you know what strain you work in?
I am working for a large bank this summer in San Fran on their main website. This site has an Alexa score in the top 25 for the US, and is in the top 100 overall. They have said I would be working in NodeJS, as they are rewriting large portions of the site with node. Will this project most likely contain people of the Engineering, or IT mindsets?
End up around people that already have that strain, get their attention, and become friends so you can learn and they can teach. You unfortunately just can't teach yourself everything.
It sounds like another form of pedigree selection. Or maybe dividing the field up into "us vs. them". Pretty understandable sentiment if you get pushed into fixing Healthcare.gov like he describes in one of his talks and working with guys arguing about tickets not existing because they're on different ticket systems and people with zero motivation to build a decent product. Wastage is immense in IT from the sounds of it in this talk: https://www.youtube.com/watch?v=7Vc8sxhy2I4
You realize that that sweet $140,000 Silicon Valley base salary at FaceGoogBox is worth less than that very middle class $80,000 in Atlanta, once you adjust for cost of living, right? If you want to buy a house, it's more like
$40,000 in downtown Atlanta. It ain't poverty, but no one's getting dirty rich off of that kind of salary, either.
Is someone making $80,000 for doing 60 hours a week of highly-skilled, highly-profit-bearing work "overpaid". In my opinion, that's underpaid.
If anything, we've seen recent evidence that SV salaries are "deflated" compared to other industries and areas of the country, due to collusion, frequent targeted hiring of very young, often naive grad, inflated time at work, etc.
I don't work in SV, for the reasons I outlined above, so this isn't some kind of self-justification.
Edit: To be clear, I don't disapprove of people working there, I know it's beautiful and a nice place to live. I'm actually defending SV engineers from accusations of "inflated" salaries. It's just not a good place to go to get rich as an engineer with a family.
I don't (and won't) live in the Bay Area, but I live on the west coast, in an area a lot more expensive than Atlanta. When I got serious about moving to a "low cost of living" area and started doing the math, I found it to not be nearly so cut and dried. While housing and taxes are cheaper, many other things cost the same or more. For example, it's often MORE expensive to go on vacation from a cheaper area because the airport is smaller and there aren't direct flights to as many places (granted, not an issue in Atlanta). And of course everything on the other end costs the same regardless of whether you're coming from SF or Des Moines. Buying a car costs roughly the same (sales tax and car registration may make a small impact). Gadgets and electronics cost the same. Food may cost slightly less, but not in proportion to the pay difference. Cable, internet, cell service, health insurance, etc. all cost about the same.
When I put everything on a spreadsheet, the lower housing costs in other parts of the country didn't sufficiently make up for the drastically lower salaries. YMMV, but I encourage everyone to very carefully do the math before making these kinds of decisions.
(I do think that SF may be a special case, since it's SO expensive, but even then it's worth doing the math.)
One thing I've noticed about cost-of-living discussions is that people fail to take into account that the cost-of-living isn't some abstract constant, but is still buying something "real". In general, which area has more crime: The 90th percentile cost of living area or the 5th percentile cost of living area? Which area has nice stores with a wide variety of organic fruits and veggies, and which area has stores where they can't afford to replace the floor tiles when they pop out? As you say, you can't just do a cost-of-living calculation blindly.
That said, adding in those factors often makes Silicon Valley come out even worse. I've visited it quite a bit and it is not nicer enough to account for cost-of-living difference, unless you simply can not stand to live somewhere with less than perfect weather. But I think that's special to the Valley.
> Which area has nice stores with a wide variety of organic fruits and veggies, and which area has stores where they can't afford to replace the floor tiles when they pop out?
It's interesting that you bring this up. In the case of food, at least, lower COL areas (which are typically more rural) have access to something far better than any store - farmer's markets and actual farms.
Some would describe the 'perfect weather' of the Bay Area as 'tepid' or 'freezing cold'.
It's a nice area for certain, but it makes me wonder about myself when I'm wearing a parka and everybody else is walking around with a scarf or light jacket.
Both, but more so SF-proper I suppose. In the city, I look like an astronaut, but further south I only look like a moderate weirdo, mumbling to myself about people wearing shorts while zipping my coat up over my chin.
> Buying a car costs roughly the same (sales tax and car registration may make a small impact).
Parking is a big difference though. You can rent an apartment in the Midwest for what it takes to park a car in some major cities. Not to mention higher gas and insurance.
That's probably true in the city of SF (at least with respect to parking), but I'm not sure it's true in the rest of the Bay Area, and definitely isn't my experience in several other west coast cities. It's been nearly 10 years since I've had to pay for a monthly parking spot, and the random meter here and there costs me WELL under $25/mo. Gas and insurance are a tiny part of my budget; moving somewhere that allowed me to even take them to zero wouldn't make a noticeable impact. And I honestly can't imagine they're more than 25-30% cheaper in most areas. That stuff isn't THAT expensive here.
> For example, it's often MORE expensive to go on vacation from a cheaper area because the airport is smaller and there aren't direct flights to as many places (granted, not an issue in Atlanta).
I live in Cincinnati with one of the most top 10 most expensive airports in the country (CVG). I also spend a lot of time traveling and searching for flights.
One strategy I've used to avoid this is booking Kayak-style "hacker fare" for a domestic ticket to a hub like LAX/ATL/etc. with an international flight out from the hub, then a return ticket from destination to home (with connections of course).
It doesn't sound like it'd be that significant, but it made a recent trip to New Zealand & Australia about 40% cheaper, though it does take some extra effort.
it also depends on what you care about. For example, in New York, you pay up for easy access to culture. But what if you don't care about culture and are happy to just watch netflix every night? then, living in NYC makes no sense for you, unless you can't leave for some reason
I wish I could figure out how to get it to run each statement in parenthesis as a separate statement then combine them. A lot of time when I'm trying to combine a lot of different values it'll get confused and just evaluate one of them individually. Same thing with happens with units sometimes.
Maybe I'm just not writing my queries just right but it's my major pain point with Wolfram Alpha.
> You realize that that sweet $140,000 Silicon Valley base salary at FaceGoogBox is worth less than that very middle class $80,000 in Atlanta, once you adjust for cost of living, right?
I find that very hard to believe. If you make $12,000 a month in SF and spend $3,000 a month on rent (which is pretty generous for one person), you still have more leftover money per month than your entire paycheck at an $80,000 annual salary.
$140k after taxes in California nets you about $7,100 per month. $80k after taxes in Georgia nets you about $4,500 per month. A ~700 square foot apartment in a luxury building runs $1,300 in Buckhead (the most desirable location downtown). Looks like a similar apartment runs $3,800 in a desirable part of San Francisco. So immediately, your pay difference is swallowed up by the rent differential. But everything else is substantially cheaper in Atlanta too. It's not the land of $4 toast. Prices at a nice restaurant will be ~70% of that in SF.
Yeah, at that point it really comes down to whether your personal utility from living in San Francisco outweighs the disutility of having a smaller apartment or sharing an apartment. I don't know of anyone (who's not independently wealthy) who pays for a 700 sq. foot SF apartment with just one income. Most people I know pay around $2k a month on rent.
Sure, you may weigh the benefits of living in SF higher than the cost of doing so, but that doesn't mean the cost differential when comparing like-with-like isn't significant. Moreover, once you have a family, the cost-benefit analysis changes in a surprising way. My wife and I are dedicated urbanites and currently live in downtown Baltimore. We could afford an awesome house in a dense urban neighborhood walkable to restaurants, bars, our daughter's nursery school, etc. But we're relocating to D.C. where a house in a similar neighborhood would cost 5x as much, and are facing the prospect of having to move out to the 'burbs (or the more boring suburb-y parts of the city).
> but that doesn't mean the cost differential when comparing like-with-like isn't significant.
That is kind of true, but it's also not realistic to just compare identical housing arrangements in very different regions. It makes more sense to compare not just median costs of two regions, but also median housing size/type. But of course, if spacious housing is very important to someone, that's perfectly fine, and it's a perfectly good reason to live somewhere else.
I make 50% more here than in Utah. Before stock, I am saving less than I did in Utah. I had a $1100/mo mortgage in Utah (4 bed, 2 bath). I'm paying $3800/mo in rent here (3 bed, 1.5 ba). Utilities are about 2x. Food about 30% more. I pay roughly 10% salary more in a taxes.
It's expensive to live here. That doesn't mean I don't like it though :)
To be clear, I'm writing from the perspective of having a family with children. Believe me, I've run the numbers and there's no way I could buy or even rent a decent house there without a massive commute (which I can't stand).
Glad to be proven wrong here. I'd go back and entertain offers I've had if I knew I was wrong.
Childcare in the peninsula is hugely expensive even when it is available. 150 person waitlists for 50 kid facilities are the norm. A dirty daycare will run 2k per month, and a nanny around 3k. I'm not sure what the situation is elsewhere but I have to imagine it is better. Home daycares aren't available because no one can afford a home. The crazy prices lead to shortages of services because none of the people who would provide them can live there.
Childcare is substantially more expensive and the public schools are not very good. You almost have to put your child in private school, and you are looking at $20k-$30k/year/child. The city is not very kid friendly in general.
I did a quick comparison. This doesn't include all the costs, but it should give you an idea of what he/she means:
The median sales price of a Santa Clara County 3 bedroom house is $820,000. This is $3,877/mo, plus $850/mo property taxes, for a housing cost of $4,727/mo
That $140,000/yr is taxed at $48,922 in the state of California, leaving $91,078, or $7,589/ mo income.
CA Income ($7,589) - CA Housing Costs ($4,727) = $2,682 leftover.
---
The median sales price of a Cobb County 3 bedroom house is $173,000. This is $818/mo, plus $140/mo property taxes, for a housing cost of $958/mo
That $80,000/yr is taxed at $23,600 in the state of Georgia, leaving $56,400, or $4,700/ mo income.
GA Income ($4,700) - GA Housing Costs ($958) = $3,742 leftover.
---
I'm not saying my numbers are valid for every person's situation, only that this is an example of a situation where the numbers work in Atlanta's favor.
Do you have a source of this data? I have tons of friends in the Bay Area who work at a wide variety of tech companies, and none of them are making $100k or less. I guess maybe they really are "all above average" but I find it hard to believe that the median salary for software engineers in the bay area is really $100k.
Of course, this is just "a couple minutes of google research"--I am not a subject matter expert, as someone on HN kindly pointed out last time I posted these here. Also, they are based on self-reported surveys and don't include sellable equity, so take it with a grain of salt. I don't know where better data would be published. I'm intuitively not too surprised by these figures--I think the HN demographic is probably pretty skewed towards the higher end, judging by all those threads where people toss around $150K and $200K salaries as "normal".
12,000$/month is pre taxes. You get taxed more on 80-140 than 0 to 80, and California has higher income tax rates to make up for messed up property tax rates.
>>If anything, we've seen recent evidence that SV salaries are "deflated" compared to other industries and areas of the country, due to collusion, frequent targeted hiring of very young, often naive grad, inflated time at work, etc.
Conversely, they're also being propped up by the massive amount of VC money at play there, which is driving an arms race for programming talent not seen elsewhere around the country. I'm not saying you're wrong about your point about collusion, but there are multiple factors at play there.
It's also the case that going back decades, moving to very high cost of living areas like Manhattan and Silicon Valley has tended to result in paying out relatively more for housing than salaries tend to increase. Yes, the situation today is particularly bad but such places have long been something of a "luxury location."
> You realize that that sweet $140,000 Silicon Valley base salary at FaceGoogBox is worth less than that very middle class $80,000 in Atlanta, once you adjust for cost of living, right?
You're ignoring equity here, which after a couple years will be more than your base salary anyway.
With a total comp of $300k+, a lot SV workers don't mind paying $30k/year more in rent to live in the Bay Area. As many others have noted, it really is beautiful here...
You mean where everyone is from an upper middle class family, a private highschool, and one of 20-30 prestigious engineering schools at which they studied under one of the same four degree programs, after which they decided to go and work at "this really hot tech company!"
Boy that's diverse.
The area basically vacuums everyone who fits the exact same mold from anywhere in the world – that does not make the area more diverse.
I call b.s. I pulled numbers off a few sites that estimate cost of living in Atlanta at ~$26k/year. Just ran my own numbers, and my own costs last year were ~22k. For reference, I live in Santa Cruz with that sweet job as FaceGoogBox. There are a few places I'd consider moving to for a $80k pay cut, but Atlanta isn't one of them.
It is not unusual for someone in that position to be renting an apartment for $1,000 per month which, accounting for the increased salary by living in the bay area less opportunity cost of buying vs renting in ATL, is still a net win for that individual in their stage of their life. They key here is that this person can buy the so-called $40K house after 1-2 years of saving and living here, where as you will still have a mortgage.
It's not really true in my experience. If you can live in the East Bay, there are definitely still really nice and affordable places to be found. Yes, the prices have gone up significantly over the past few years in the East Bay too, but it is still cheap enough where it probably will make the high Bay Area salaries financially worthwhile.
That wasn't my argument at all. $40,000 was in reference to salary (ie, a $40,000 salary in Atlanta can get you the same type of house as $140,000 salary in SF).
By the way, many here assuming I'm in Atlanta. I am not (and don't wish to be, because of the crazy traffic).
Does this really exist? If a company could meet the need cheaper, wouldn't they? Instead, you're either referring to using the wrong tool, and hence a high salary, or you're being relative to a given location. If that's the case, then pretty much everyone's salary is inflated, since there's certainly someone in the world who will do the job for $20k USD.
I suspect this refers to the languages and frameworks in vogue (Rails, Node, Angular/React/Ember), emphasis towards open source, and using Apple hardware. There's still a ton of work done in unsexy companies on Dells and HP using PHP/ColdFusion/.NET/etc.
Welcome back (my office is in the 201 building too). As you'll soon find Atlanta has a lot to offer but you just have to look a bit harder or drive a bit further.
You can't fix the lack of proximity to the ocean, but being able to get a direct flight to most airports in the Caribbean almost makes up for that.
Agree 100%. I will say though that there are many suburbs of SF that are way better to inhabit than visit, and give SoCal a run for it's money (cycling through vineyards on the way to downtown Livermore for example)...
Really? Los Angeles seems like an awful place to live. I've been spending quite of time there recently. The hours that people spend in their car is absolutely horrific.
The best way to afford housing in the bay area is to have already bought when the market was low. You can use that money to put in for a 3 bedroom house in or very close to SF. Unfortunately, it's too late to do this for anyone interested now.
Of course, life isn't about how big/nice your house is. But at some point you realize you've just been working on a CRUD app the last few years (and not changing the world with a self-driving AI satellite hyperloop), you can't cross your apartment without stubbing your toe, and you have enough money for whatever you want but no time or room for anything, and maybe (just maybe) there's delicious food outside silicon valley, too.
These are list prices, we are finding list and sale prices are quite different in the Bay Area. Folks list low on their realtor's advice to ignite bidding wars. And bid buyers do. On the plus side now we are hearing from our realtor and others that prices are stabilizing (i.e. not going up as fast, but definitely not coming down). Still hugely unaffordable for most.
Also, even if you can bid, cash is king. So, not only is everyone driving the prices up, but the winners are usually all cash. I don't know anyone who has a few million in the bank, ready to move on property. Sadly..
Well, according to the article 3/5 of foreign buyers paid cash, 1/3 of domestic buyers paid cash, and 1/5 of all buyers are foreign cash-only buyers.
1/5 (all buyers) = 3/5 (foreign buyers)
So one in three buyers is foreign. Which means two in three buyers are domestic, which means two in nine buyers is a domestic buyer who pays cash. So that puts the number of cash-only domestic buyers higher than foreign investors. That means that it's roughly the same absolute number of domestic cash-only and foreign cash-only (allowing some fuzziness in the numbers), not quite mostly foreign cash-only.
We can safely then conclude that the article linked does not support the claim that the people bidding cash are mostly foreign.
Buying != Bidding. You don't just bid on one property and buy it.
When you're in an auction market, which has a segment of bidders that are more accustomed to bidding over with cash, you're going to see them push auctions into the cash over range more frequently, even if they aren't the ones ultimately buying.
A reasonable hypothesis. Since there is no evidence that domestic cash-only and foreign cash-only buyers have different bidding patterns, we can then conclude (contingent on your latest hypothesis) that the link with the stats does not support the idea that it's mostly foreign buyers bidding up the price.
It's not a hypothesis - it's part of auction theory for markets that use absolute and reserve auctions. Why are you so adamant in attempting to redefine this to dismiss it?
Absolutely. Unfortunately I know many, many who have a few tens of millions; unfortunately^2 I am not one of them. People say it's the Chinese buyers with the all cash offers, but I see locals do it left, right, and center with money made in SV within the last few years.
Ha! I'm experiencing all the negatives of the region that you listed, and since I'm not into restaurants I'm not experiencing the one positive you name.
Wow, that Mountain View place looks like a real bad deal. Will need to do a complete renovation there. Judging by the date it was built and the condition it was in, you're probably going to have to look at at least repairing the foundation/roof/etc. I didn't realize prices have gone up so high in the South Bay. Makes San Francisco seem very reasonable by comparison.
I think you're saying that people must prefer crappy housing with SV's tech scene, versus the alternative nice houses with a smaller scene? If so, that much is self evident. It is what it is.
I've been wanting to leave the Bay Area for at least 3 years -- Seattle, Austin, or Berlin. I don't love California, but really dislike virtually everything about San Francisco. Of course, I've been working in San Francisco for 21 months now, but that's because of a specific company -- otherwise I'd be gone, at least to the South Bay.
SFBA is not a good place to hire engineers, unless you're heavily funded AND a clear winner and need to hire a bunch of diverse types. For anything else, I could find other places which are far superior.
It's a great place to hire professional services to support startups, and the best place in the world, hands down, to raise money. YC being here makes it great early on, too. I think investors become less location-sensitive as you get to later stages, if you're winning.
The biggest problem is if you're selling b2b to tech companies at all, you can literally bump into your customers here.
With my next startup, I plan to do Seattle (probably) or Austin for a US office, with a small SFBA presence, and then Berlin, and run EU and US companies as separate entities with separate officers, so people can choose if they want to be customers of a US or EU company. Maybe add other location in the future.
(I'd obviously be doing something in the infosec space, which is becoming increasingly jurisdiction sensitive.)
I absolutely encourage people to work in SFBA for a while to build a network, but after that, GTFO unless you really want to be here.
Out of curiosity, why would you prefer other US cities over a Californian city? (That is, why don't you love California. Also excluding European alternatives.)
CA laws (guns, primarily; taxes, secondarily, and a bunch of other stuff. Guns are a personal thing for me, but the rest has business impact.). I'd also like to actually be involved in my community somewhere, but everything about SF (and CA) is repellent to doing that. (In Bellevue/Issaquah/etc., I'd happily be a volunteer EMT or even reserve PD officer; might get involved in local non-partisan politics. There is no way I'd ever want to do anything like that in SF.)
There are also no non-SFBA cities in CA that I'd actually want to do an infosec startup in. The set of places I'd personally consider (in no real order) is: Seattle, Portland, SFBA, Austin, DC-Metro, Boston, Boulder/Denver, SLC, Raleigh/Durham. I dislike NYC and Chicago but those are also viable (also dislike Atlanta; might be ok). I actually like Las Vegas, Nashville, and Louisville, but they would be challenging. I think Houston, Dallas, Miami, Phoenix, LA, San Diego, Philadelphia, Pittsburgh could work, but not sure. Some other big university places (Ann Arbor being the canonical example) could be fine if you're from there.)
I moved my family (wife, 2 kids) from SF/Bay Area to Seattle in 2011 after living down there for a decade (and loved most of it). Worked in downtown SF, lived in the East Bay. For a while there, we could drive our Prius over the bridge in the HOV lane - and bypass tolls - and I could get to work from my house in 18 minutes. We owned a home in El Cerrito near Albany with some initial d/p help from family. It was a very nice neighborhood, walkable, and close to BART (which we also used regularly). The house was small, but we made it work. But the school situation was horrific. Either go to so-so schools which lacked financial support at the time, or pay upwards of 20K for private school kindergarten. Nope! In Seattle, with as much public angst as there is for the schools here, they are light years ahead of the public options we had before us down there. Everything up here just feels easier. Stress reduced, larger house for kids to grow up in, neighborhood where everyone knows everyone else no matter where you go - I've never experienced this type of community my whole life. And the tech sector has plenty of opps here, too.
We love it.
To be fair, my wife has to commute to SF at least twice a month for her job, so she still gets her SF fix. I, on the other hand, have gone pure North West. I've got my Subaru to prove it. ;)
Made the transition from SV to Brooklyn. Wages are basically the same, housing is much more affordable (our apartment would be at least 2k more per month in San Francisco), and there are people here who do things that are not tech! Don't get me wrong, there are plenty of startups and great companies with offices in Brooklyn and Manhattan, but it's SO refreshing to be around people who don't just want to pitch their startup or talking about growth hacking.
I'm very happy with the change. I do miss the beauty of the pacific northwest, but otherwise it's been great.
Sorry but I LOLed. I would've never believed you had I not made the same move, but in reverse. I lived in a good 2BR apartment in the best part of Manhattan downtown -- we even had a fireplace (but no fire escape...such is the situation with old Manhattan construction)...Now I live in Palo Alto. In a converted garage. And while it is technically a 1 bedroom, it is much, much more than what I paid for in New York. Quality of life is much worse in Palo Alto too.
Wow, your housing in Brooklyn is MORE affordable vs SV? What neighborhood are you in? Brooklyn has some of the highest housing costs in the country and is on par with Manhattan at times depending on the neighborhood.
It's just so fucking expensive to live here, and coupled with the constant drumbeat of money money money, and seeing the vast differences in wealth, it's just so so depressing.
Glad you pointed out the vast differences in wealth as a negative of the Bay Area. Even if you're not an envious person by nature, it's really depressing and grates on you when you see it day in and day out. A 15 minute drive can take you from "bullets whizzing over your head crime and poverty" to filthy, shameful mega-wealth. Parking my Toyota between a Tesla and a Maserati when I go downtown with the family. People at work talking about paying [my salary * 0.5] for their kid's private school. Sheesh...
I come from a small town where the best off made maybe 3X the worst off. The Bay Area is total culture shock.
> People at work talking about paying [my salary * 0.5] for their kid's private school. Sheesh...
Before you judge too much, consider that some (not all) of those folks might be paying that because they live in an area that has failing public schools, and they may be living in that area because they can't afford housing in an area with better public schools. Many middle to upper-middle class people find themselves faced with that choice.
In California overall, aside from anomalies like San Francisco itself, wealthier cities correlate with better public schools, and the correlation is > linear.
And where public schools are good, it feeds back on itself, esp in Cupertino and Palo Alto. Good schools draw in tech millionaires, who supplement their kids' public education with private tutors and summer school booster classes. Scores go up, house prices follow. Seems like there is an infinite supply of newly minted tech millionaires to consume all available housing. And to be fair, who wouldn't want what's best for their kids? It's a culture of being the best.
I'd love to know where all these "tech millionaires" are coming from, because there are only so many companies in the Valley, and they each only have a handful of top execs. Yet there are thousands upon thousands of $1MM+ houses and people are buying them left and right...
Not judging at all--just pointing out how weird it feels to live and work side-by-side with people on all parts of such a massively wide income spectrum.
A question I have for you folks who left SF for a smaller town: Aren't you worried about what you'll do if/when you lose your job or have to leave? In the Bay Area, you walk across the street resume in hand to one of the 5 tech companies in that office park and you're all set (in the best times), or you tough it out through a 3-6 month job search (in not so great times). In small town America, you may be working for the only tech company in 200 miles. What happens when the recession comes? I moved from small-town tech to SF tech for the employment security.
Talk to someone who lived through the first dot-com crash. A lot of good folks were moving from the bay area, because they couldn't find jobs. Living here is no guarantee of anything, except (possibly) of a higher cost of living.
Tech is such a weirdly age-distorted industry that there seems to be no historical memory. They forget that as recently as 2009, a lot of highly qualified people around here were struggling to get work.
There are lots of places with thriving technology scenes. It's not exclusive to the Bay area. A high skill programmer is going to have no problem findings jobs in places like Portland, Austin, Seattle, Denver, Boston, or New York. With the rise in remote work moving beyond even those places isn't going to be problematic for most.
I worked remote before moving to the bay area, and went back to working remote when I moved back home (Ohio). It might not be for everyone, but I enjoy it.
I moved to SF from NYC about 3 years ago and, yes, it's now definitely more expensive than NYC.
But I've built a friend network here that's absolutely unsurpassed in my short 37 years on this earth. I feel more at home in SF than I ever did in NYC - I see friendly faces all around the city, I run into people when out for a walk, I've got a group of people I cycle with regularly.
So - for that reason - even if you offered me 2x what I earn and a home/apartment 3x the size - I wouldn't even give leaving a minute's thought.
How does that play into the thinking for other folks? Do the folks who are thinking of just picking up and leaving not have friends they care about? There's got to be more to where you live than whether or not you own a home (and how big it is)....
I lived in the bay for 10 years - 2004-2014. Half of my friends from there are now up in Seattle where I am. Wait until you stop seeing all those friendly familiar faces around the city because their landlord decided to sell the place. I don't think I have any friends left in the bay that are in an industry other than tech.
I'm at a London based startup (MarketInvoice) that's open to sponsoring work visas and we've seen an increasing number of candidates from SF, not only for tech roles but across the board.
London isn't exactly known for cheap housing so there's likely other factors at play.
Greenville and Charleston, SC are working pretty hard to become tech hubs. Charleston is booming to a degree that housing is starting to go the way of SF (which is nuts in this area) but Greenville and it's surrounding cities have virtually no risk of that degree of price inflation. There's just too much land and space.
I live in Easley, which is about 10 minutes from downtown Greenville and you can get a decent 1100 square foot, 2 BR/2BTH apartment with washer/drier for about $500 / month.
I lived in Greenville for two years. For the southeast it's a pretty great spot especially if you want to own a house and have a family and comfortable life. The tech scene is good, comparatively and there are some really talented people around. The one drawback for me is the strongly ingrained conservative nature of the area.
Greenville's the biggest school district in the state so like any area, schools will vary. There are some very, very good ones and some that are more average. The only place where "too conservative" concerns comes into play are the small private schools. There's actually one big episcopal private school that's the best school in the entire state (Christ Church Episcopal). Lot of BMW execs send their kids there.
I grew up in Greenville and am moving back in a month. I would love to connect. You didn't have anything in your profile, so feel free to drop me a line to the email in my profile, if you want.
Oh hi Greenville people! I don't have a ton to add really but since the city almost never comes up on Hacker News I just wanted to chime in. Was born there and lived there until I went to college. Mom still lives there so I visit once or twice a year. Great lil' town.
If your mindset is $$$ first it doesn't matter where you live. We have a ton of valley expats here in Portland. The ones who are really artists and creatives at heart and work to subsidize their outside lives tend to thrive here. The ones who just want to live more cheaply end up miserable because this is not California North.
Wanna move to Portland? By all means come on up! But leave your dot-com privilege and your "live to impress VC's" mentality back home. Come to Oregon and be an Oregonian.
Also- if you're attached to your car, Portland is not for you. The commutes from the 'burbs are as nasty as the Bay Area, and the inner city is made for biking and walking. Your car is good for the weekends- getting to the Coast and the Mountains- but not for your work week. Change your perspective on commuting. This ain't CAr-ifornia
Note- I said "weekends", meaning Saturday and Sunday when you are not working. If that is a foreign concept to you, Oregon is not for you.
I mean I was fine with most of what you said until you literally wrote, CAr-ifornia. What? People actually use that word and expect to be taken seriously?
I mean maybe there are people who talk too much about VCs, but your post didn't make you sound any better than those people. Talk about exclusionary.
"The ones who just want to live more cheaply end up miserable because this is not California North." Why do you think that is?
I'm interested in it due to the lifestyle but also the idea of being able to afford to bootstrap my next company in the next year or so. My gf had a friend who moved up but couldn't stand the lack of sun (former San Diegoan) - this has made her reticent to make the move from our rent-controlled shoebox...
I came to the bay area five years ago from Ohio where I was working a soul-sucking job. I have two roommates and a SO, and my rent is $800 (my cost) for a two bedroom loft in Potrero hill.
I get the opportunity to work at an amazing startup and have been able to build a specialization in mapping technologies. On the weekends, I can hike or take a day trip or go to Sausalito, Angel Island, or just hang out and get high at Delores Park. Sometimes it feels like life isn't real we are so privileged around here, despite all the negativity.
I've made lifelong friends and connections here who "get me" more any other place I've lived. The gay community here is also especially strong...and weird! ;-P
It makes me sad that people are struggling, but I think the key is to value your experiences and spend the best part of your life less consumed with strict acquisition of wealth, and more with the depth and richness of experience. Of course that's a trade off.
Here's my advice on the bay area:
Don't rent an apartment in SOMA. Don't be consumed with trying to buy a house. Learn to accept living with roommates even though you make 6-figures and your friends back home are buying huge houses on far less. Forget about trying to save a lot of money. Be creative in your living situation if you want to save money. Enjoy your life and all that SF has to offer. I've lived all over the world and there's no place like it.
I guess for most people they are consumed with having kids and feel pressure to own a home and save for retirement. I've been able to save money and keep my living expenses down by having roommates, but I know owning a home here is probably out of my reach and that's OK. If you're unhappy here and really want to live a different lifestyle, and SF isn't able to provide you what you need to be happy, I would say you should move so you can give someone else the chance to be happy and thrive here.
> Learn to accept living with roommates even though you make 6-figures and your friends back home are buying huge houses on far less.
I'm glad you like the Bay Area and this is a great post. If this is what it takes to love the Bay Area it's no wonder people would want to leave. But you are right. The extraordinary expense of living there will chase a lot of privileged people away because they don't want to pay the price. (Unfortunately some of the less privileged cannot be so flexible.)
I've adopted a similar mindset. My rent is about the same and it lets me save like 60% of my salary less taxes. I grew up in coastal California so owning a nice home has never been on my radar. I'm hoping to retire around age 40-45 and rent indefinitely.
After leaving the YC startup I co-founded, then doing consulting in SF for about 6 months after, I decided to leave the valley at the end of 2015.
Where did I move to? Medellin, Colombia. While I'm not sure I'll stay here forever and may move back to SF at some point, I'm definitely enjoying living down here for the moment. I'm doing remote software consulting, so I am geographically agnostic.
I definitely miss friends, the hustle, and being surrounded by smart people in SF. However, there are a lot of things I do not miss about SF. For example:
Prices: SF <> Medellin
Rent: $2000 (mediocre) <> $300 (nice, best part of town)
As a happy engineer in LA, I'm pretty sad to see we're not in the top 8. I just wanted it say that the tech industry here is pretty great and you should all check it out. Actually, talent is pretty hard to come by down here and plenty of companies are hiring.
It's not really clear from the graphic but in the paragraph above, it says it's searches of places outside California.
I agree that LA is a pretty good place right now. Industry is good, and you get a lot of the cultural benefits of a big city without the ridiculous costs of the Bay Area or NYC.
I got a job in Santa Monica, while living in Long Beach. Commute was painful at 45-60 min, and I only had to be at work by 10:30.
I moved into a 1BR for $1500 in nearby Culver City, which cut my commute down to 20-25 minutes. Not so bad. I'm across the street from a little downtown area with bars, restaurants, a movie theatre, 3 yoga studios, and a grocery store. Fairly walkable.
The job market is pretty hot. The problem in my job search was lining up interviews to get as many offers as possible at once so I could have my pick of the litter.
The downtown / Santa Monica Expo line extension is opening in March, the Gold line is opening a bunch of new stations in April, extending it almost all the way to Claremont, and they have an LAX metro line they're building to prevent the traffic clusterf* that LAX has become.
Not the best comparison points when you're comparing the most expensive places to live in the United States. L.A. is still kind of expensive compared to everywhere else besides those mentioned. My gf and I are considering sharing an apartment with another couple just to be able to make a dent in our student debt and savings. I can't imagine owning a house or a condo. I also don't foresee being able to afford having kids for some time. Hell, I'm holding off on getting a dog because of high rent.
Agree, an apartment I used to rent in LA has appreciated by 50% in 4 years. The housing crisis isn't as full-blown as in SF, but it's quickly getting there.
With cost of living going up, minimum wage going up, you think business would think to bump their base wages up to account for cost of living. But not everyone does, and some that do don't do it by much.
One example is my gf: set production assistant wages have not gone up with cost of living in the area, at least for the companies she works for. Set production assistants are freelance, non-reliable work with sometimes terrible hours. You think they'd make okay money. But even in L.A. where the industry is at it's biggest, they're usually shortchanged.
Another example: A friend of mine accepted a position as a mid-level gameplay programmer at a place that is choosing to pay them hourly so they can make them work overtime without having to pay $100k or more, because of CA law. Yet another business strong-arming someone who wasn't in a good position to negotiate due to circumstances. Hopefully that friend can work their way into a senior level position soon, but even then not every place pays senior level as well as they should.
Industry can be very stingy, focusing on the short-term business instead of long term employees.
I always thought it was incredibly ironic that an industry that's responsible for creating the virtual world would require all those working to create it to live in the same physical neighborhood.
Don't worry, it will happen naturally when the current tide recedes. I think a lot of older people underestimate how flexible young people, especially ones who graduated into the financial crisis, are.
That's really interesting; I wonder why that's the case. My girlfriend and I are split on this particular issue. I have no problem moving around to wherever the best job offers are (even if they're in a different country), whereas she wants to stay in the town she grew up in — or at least within a few hours drive of it.
The difference may come down to how we grew up; my father traveled quite a bit when we were younger, so I lived in France from ages 3-6. I thought those few years added to my life experience and gave me a unique cultural perspective. My girlfriend never moved growing up though, and she believes that moving hurts the friendships that young children develop. To be honest, I'm not sure who's right. I was always kind of introverted, so I didn't have particularly strong attachments, but she is very outgoing and extroverted and still keeps in touch with friends from elementary school.
> That's really interesting; I wonder why that's the case.
Kids are stuck near their parents because they can't get decent jobs.
If they're still living with their parents in their 20's, well, they can't relocate unless whatever job they have can absorb a huge increase in housing cost.
And, even if they did move out, they're so close to the economic edge that having Mom and Dad nearby when the car breaks down, the washing machine dies, etc. is huge.
Sure, unemployment rate may be different in different areas, but why move from one McJob to another McJob?
I suspect the root cause is related to women's rights (and that's mostly a good thing).
50 years ago, if your girlfriend said she didn't want to move but you got a job across the country you would probably both move across the country. In part that's because you would likely be the primary income for the two of you and partly because women's wants were not often considered as equally important as men's wants.
Would that have been true in every case two generations ago? Maybe not. And would it still be true in some cases today? Probably. But the odds have changed over time quite dramatically. My wife earns nearly the same salary that I do (and made waaay more back when I was a student). We can't move somewhere unless we both have job offers lined up.
Also, our culture now has a rather unhealthy (imho) obsession with trying to make life perfect for our children that previous generations were less inclined towards.
There are concrete reasons to choose a place to raise children, unrelated to obsessive parenting. I moved to a rural community. The kids could go out the door with a backpack and sandwiches on a summer day, wander all morning exploring, and still be at home. Harder to do in the city. Not so many frogs, salamanders, redwing blackbirds and creeks to explore there.
What I'm saying is that the ones who could move did, and if stuff gets bad again, they will move back to where their parents live to become part of the "Why Bother" generation (per that article, though I think it should be called the "Who Can Afford This Rent" generation). Just from personal observation, a lot of people I bump into along the major west coast cities are not originally from there.
If they were so flexible, they would work from a condo overlooking the ocean in a tropical island. There is little need to congregate in an old city for this kind of work.
Because jobs aren't flexible. What I mean is that the people that could move somewhere more "fun" or "interesting" because they could get a relatively high paying job to cover the rent did, and there's no reason for them to stay if those jobs disappear. I could imagine a lot of "reverse gentrification" in insane rent markets like SF or NYC.
I've been wondering, as someone who has been observing the Bay Area on the outside, is it really the cost of living that's so high or just the cost of housing?
If it's just housing that's insanely expensive, I could see why some have been trying to arbitrage the situation by living in alternate housing arrangements (think RVs), such as some notorious cases with Google employees.
My opinion is it's the cost of housing that people mainly talk about here, but often call it "cost of living". Don't get me wrong; housing is definitely part of cost of living, but if you own or are have been renting in a rent controlled situation then you don't have much to complain about really.
This article is strange to me. The conclusion it tries to get you to draw is that the Bay Area is expensive to live at so techies are now starting to leave. The data they draw this conclusion from is search data for jobs. The number 1 place on that list; New York City. So people are leaving SF Bay Area to go to NYC, because it is cheaper?
NYC, in my experience, is cheaper, yes. We just hired someone who left Apple to come out east because they were being priced out.
Obviously NYC can be ridiculously expensive and the real estate market is annoying to navigate (broker's fees, wtf) but there is more housing stock available here, with decent-to-great public transportation that makes living in the outer boroughs pretty convenient.
Brooklyn, Queens, and Jersey City (NYC metro area) are all much cheaper than SF. Even parts of Manhattan above 59th st are quite affordable.
I'm guessing NYC is at the top simply because it hosts the greatest number of opportunities. it's the rest of the list that's telling. the article also points out that the age 30-40 cohort represents the greatest portion of searches, which could indicate a natural course of settling down with family etc.
[which further proves to me that suburbs are not dead. it's merely been the vocal majority (millennials) blabbering on about big city living and how they'll never do this or that, only to hit the family creation stage in life and realize they were naive to think in such extreme absolutes]
I don't think this is a millenial problem, this is true of the young adult population in every generation. One trend I've noticed is that those who grow up in suburbs tend to prefer cities in their 20s, and those who grew up in cities tend to prefer urbanized suburbs.
I can mention one reason why it could happen and would:
Price
Taking your IT out of SF and SV means you could spend the money you save on offices and increase developers salary.
On the other side for developers it could mean better earnings with less being spent on paying rent and other services which could lead to more savings for you.
At industry level this would translate to a competitive advantage as you can build a service cheaper.
>spend the money you save on offices and increase developers salary.
Yeah, the salary of the developers is usually increased when moving into a lower cost of living area, because of all the money the company saves thanks to the low office rent.
That seems counter to other professions. You typically have to pay people more to live in the less desirable areas. Everyone wants to live in <insert cool city here>, so you can pay them less.
That's not my experience. My company transfers people to India to be point person with an outsourcing company. After a year they get a huge pay cut "because India is so cheap". I highly doubt any computer company will pay people in Kansas City more than in SF. Other industries or the government might but not high tech.
After eight years in Silicon Valley, we returned home to Seattle last year. Bought a huge house on an acre with awesome schools. Now that I'm a parent, it just wasn't worth the cognitive dissonance of doing very well financially, but not being able to buy my family a good home. There are definitely things I miss, but overall, it was absolutely the right move to make.
The job market, while 1/10th what is was back in the valley, is still great. Now that Microsoft is embracing open source, the vast pool of talent that was previously locked away in msft's proprietary tech will be free to leave and spin off many new start ups over the next few years.
SF in your 20s, South Bay in your early 30s and Seattle when you have a family.
I moved the opposite direction. Granted, I'm only in my mid-30s, but I have no plans to move back to the Northwest. I love it when I visit, but I realize what you see of an area when you visit is very different from when you live there. I always visit when weather is nice, I don't mind the traffic as much when I'm on vacation..
Granted, the traffic on the Peninsula has gotten really bad in the past few years, it's ALMOST as bad as Seattle!
Indeed.com, a job search site, published stats that show how tech workers in the Bay Area, and especially those from age 31 to 40, are increasingly looking for job opportunities outside, mostly in New York, Austin, Seattle.
This might be attributed to the search for a balance between happiness and opportunity.
Also, this type of migration is common in other parts of the world, and tech companies are willing to follow these trends, such as Facebook opening offices in Austin and Seattle, or Google in Portland.
Boulder is more startupy and small to medium size companies, but just southwest of Boulder is Interlocken, which has some biggish tech companies (Oracle and Level3 being the largest). Downtown Denver has all manners of software companies, from startups to big telcos. And then in south Denver (about 1-1.5 hours of commuting from Boulder) are a bunch of larger corporations (it's called the Denver Tech Center).
Come to Alpharetta, Ga (or Atlanta in general). It's great. Home prices are not terrible, taxes are not bad, great schools & people are friendly. Only real problem is traffic - staggered commutes and working from home can mitigate that.
Surprised at how many upvotes this has. If you honestly are looking for a coding position around here (Alpharetta), feel free to DM me (shoot me a tweet asking for refollow). I don't mind sending your info to my local contacts. I love building the local IT community. Great community, awesome local gov't support and large companies moving in daily. Honestly, it gets no better.
If I weren't in San Diego and in SV or SF instead, I'd move to another city like Los Angeles, or where I am now. Most other US states allow noncompetes. I won't sign a noncompete
so unless they'll let me work without one, I won't be working outside of California.
Additionally, California labor laws are more employee friendly when compared to other states.
I know this limits my choices as businesses are leaving California due to the employee-friendly labor laws and the high cost of housing, but I'm semi-retired anyway so it doesn't matter to me. I can be choosy when it comes to taking a job.
The tech industry needs to be more global, why is it, that we build global communities on the internet, take pride of them, yet, we cannot make it work if we're more than 100 cm away from each other.
People keep asking this, along with why people love the bay area with it's high cost of living. It has to be obvious that a great swath of people are willing to pay high rent/housing costs to have access to: lots of sunshine, bright people everywhere, top notch arts, culture, food scenes, good universities. And that should be enough of an answer. Silicon Valley isn't more international because they don't have to be.
well, i forgot the most important part: be in a cluster of a jobs, opportunity and entrepreneurship. Where else is going to match all that? Taken together, NorCal leads the world in spades,
Sure. But you live in Iowa. You may like it, but many people don't. It's great that it works for you. As a visible minority, I wouldn't be too comfortable myself in any of the flyover states. The lack of diversity and general ignorance (But where are you FROM?) is not worth $200/month rent to me.
I live in Iowa City (well, near it). Its got the University of Iowa, with a population of faculty, staff and students from 100 countries. Its hard to stand out here. And in the top 10 cities in America for PhD's per-capita.
Per capita. That's great. I went to school in a place similar to that (Waterloo). Extremely diverse, smart people abound, blah blah. Still once you move on from campus life, it's about as boring and whitewashed as one would expect. There's cool stuff going on, but it's like 1 or 2 things. Not many. The stimulation dies off. fast.
D’Arcy said this type of migration—from big to smaller cities—is common around the world. The same patterns can be found in the UK and Germany, for example, with people moving from London to Cambridge and Berlin to Munich.
This is a strange comment, given that 5 of the 8 cities listed as top destinations outside of San Francisco are larger cities/metro areas.
Bay Area native here. Born basically at 17 and 85, aside from some months living in Europe, I've lived in the Bay Area my whole life. With my current role, I work at home full time unless traveling -- I do go up to SF now and then to hang out with other team mates who do go into the office. I like the flexibility, the lack of time spent in a car, etc.
That said, we will likely relocated for a period of time later this year/early next north of Seattle for a bit of a change (ties there). That may dictate the overall plans we have.
Honestly, while having strong ties here (and owning a house) I'm not wedded to this area. Cost for the quality of life (I live in Santa Cruz) is ridiculous -- crime, drugs, etc. -- surfing and biking are great though.
I suspect the balance we will end up finding is part time in CA, part time in WA, and part time in Europe -- we both currently have location independent jobs.
I never went to SV or the Bay Area for work, instead opting for NYC since I lived nearby anyway (nearby being within 3 hours). It's a similar issue, though. Housing is way too much. Taxes are horrendous. You make a good salary, but the cost to live there is rough, especially if you have a family.
I still work for a NYC-based company, I just work remotely from Richmond, VA. I like it better this way. I may not always work for a NYC co, but I will stay here. I bought a house last year that would be well into the millions in NYC's commutable suburbs. My kids go to just as good of a school as they did in NJ. There is no traffic to speak of.
If you have a dream of being in one of those cities, one of those scenes, then by all means, go for it. It's just not for me (and from what I can see, a lot of other folks on here).
I 'grew up' in the Valley, 80's and 90's, lucky enough to wise up and leave it by way of a move to Europe. Never looked back.
My personal, subjective reality is that the reason to leave the valley is this: culture. Which is to say, by way of corollary, a reason to Be in the Valley is this: the lack of culture.
Let me explain what I mean by culture: If you have to drive and park, its not culture.
After 15 years of success in the Valley as a relatively content systems software developer, what it boiled down to was this: can I take a bus where I need to go? No?
Well, go where the buses are. Go where the train, is.
Too many long days spent in dread of the ride home, the inevitable gear-grinding maelstrom of disaster that starts on the onramp and doesn't end until you get to your generic hide-away.
Unless you love cars, in which case driving is a joy. California has some of the most enjoyable twisty roads on the planet. I've got a couple of cars, a motorcycle, and a handful of bicycles.
And I can bike commute. Yes, in the suburbs of the bay area.
I get what you're saying, but it's too absolutist. I would simply never, ever live anywhere I couldn't keep a car. I enjoy being able to bike or take public transit where I want to go. I've spent entire months with cars parked in the driveway that I never use. But I simply cannot live without the freedom to load up the car and take a multi-hop roadtrip. Out to the woods to go camping. Up to the mountains to go skiing. Yes, some of these things can be accomplished, at some pain, via transit. But not all.
While I find the comment you replied to poorly stated, I think I can buy the point if modified slightly. No matter how great any city's culture is, cities that require one to spend a significant amount of time commuting inherently limit the culture that can be experienced in any given day. I don't see how an hour car ride vs. an hour bus/train/bike ride operates any differently in this regard though inasmuch as the time spent is non-optional for traversing the city.
I think both of you have missed the point: you don't get culture from sitting on a freeway for 2 hours every day, all by yourself.
You get it from sitting on a bus, going somewhere local, with a bunch of locals.
The fact of the distance between things just makes the culture there so .. dire. Seriously. So much time spent traveling, so little actual human interaction beyond the parking lot.
Well, I wasn't describing anything, just thinking a little bit about a post I really didn't care for at first. I've never thought about the impact of travel on culture much, so I found it interesting.
fit2rule said it a little brashly, but there's truth, beyond the fact that commuting in a car is just a drag. Cars have ruined the city, in very profound ways. There's the noise & pollution of course, but cars also made the city unsafe for children and seniors.
The difference between a city that's been given to cars, and a city that has resisted it is incredibly stark. Even America's "walkable" cities, like SF, NYC and so on, are ever so inhuman, due to the cars. The young and poor tolerate it, and the rich can buy nice things to make it tolerable, but a city where cars have taken over pretty much half of the public realm is profoundly flawed.
Required anecdote: I've lived and worked in Europe for a while in a city that's mostly pedestrian, and whatever traffic there was, was incredibly slow. It was basically an environment that was fully build-up, no nature-proper for miles, but it felt natural, human, and, well, "cultured". I stepped out the door in a place that was made for me, a feeble 6ft meatbag.
Looking back at it, I find the feeling incomparable, and I miss it. I live in a US city now, in a verdant, central area of town. Mobility is never an issue. It has many of the same qualities you'd attribute to attractive urban neighborhoods, like stupendous architecture, lush gardens, good walkability, a variety of things close-by. But the streets are for cars. And it is jarring. They don't belong. They are too fast. The asphalt ribbons are ugly. The noise is out of place.
Cars do have their place. They're very useful, for longer trips, hauling things, having a fun leisurely drive in the country. So I get why a family would want one or more. But cars are poison to cities, and it's been a terrible mistake to either have them take over our older cities, or design our new cities around them.
I've been working from home of the past four years. About once or twice a month I get an email from a recruiter from the Bay Area. I in turn reply that I'd be interested if I didn't have to relocate and can continue working from home, to which they usually reply no.
At what point in this tech worker shortage/drastic expensive economy do I convince one of these companies that I'd be a better value working remotely, even willing to work for less salary? The tooling is so good now it almost seems like I'm in an office anyway. And the irony is many of these companies already have distributed teams that use these tools.
I am from Europe and all European companies/offices have same attitude. Even you have global customer/projects and nobody (from customer side) cares if your are sitting here or 500 kilometers over there. They still expect the same service.
From my point of view there are issues like "knowledge sharing", team spirit, group problem solving, reporting, etc. All of these "important" reasons are raised to be on-site, even you have project specific position where you are the only one who has required knowledge (nobody for sharing), you are the only one working on project (like migrations).
It seems like we have some fully remote startups (Buffer) and SMBs (Basecamp) that embrace this culture.
But I think the problem is that you're being contacted by recruiters in the bay at big tech cos. The small cos. might not have a recruiter, and the big cos. grew big without a remote-first culture.
Those companies are definitely on the bleeding edge of remote work culture, but there seem to be many others who would hire someone remote if it were the right fit (my company for example). I've been contacted by outside recruiters and corporate recruiters big and small, but when in comes to bay area they always seem to be hellbent on you being on site.
Then again, maybe it's because I'm not really looking, and I'm being contacted by those who are just grasping at straws at that point.
That's a good point -- not willing to relocate can certainly be interpreted ambiguously.
My company is a mid-stage startup of ~30 distributed across Cincinnati (75%), NYC (20%), and SF (5%). I would say we're semi-remote: most of our tech team works from home 1-4 days per week. I've personally done a few trips working remotely in another U.S. city one week at a time. In our case the culture isn't quite ready to accommodate a person being fully remote, though I'm hoping to be the guinea pig.
For anyone reading this and looking for fully remote, there's a nice "database" of remote jobs in this GitHub repo.
I guess it depends on what you want. I think it's fair to say that most work places outside of SV have less innovation (with some exceptions of course). I'm saying this as someone who moved from Texas to SV.
For me personally, there are tons of activities to do and not enough time in SV, which wasn't the case in Texas. It's a fast paced life and it took a while to get used to.
Yes there are negatives: cost of living, taxes, commute etc. but I'm okay with this trade off. IMO, I don't need 4 acres of land in the middle of suburbia or nowhere with nothing to do.
and here I am thinking, surely Silicon Valley will be nothing like Vancouver, we are all leaving Vancouver for better paying jobs and housing we can afford.
I love Vancouver, and I hope our government is able to mitigate the housing crisis before it totally tears the city apart. Families and non-professional workers are being driven further into the suburbs by housing prices, sterilizing the core of the city and fomenting a bitter class divide. We need to make radical moves -- heavy penalties for vacant properties, aggressive densification, serious investment in mass transit... We're letting a small reactionary minority filibuster these projects and dictate the city's future. From what I've heard, it's much the same in SF.
where the heck have you been? the entire west coast of north america is in the same boat (because it's awesome). the Chinese are buying as much property as possible as fast as they can, young people are moving there as fast as they can, and we aren't making any more land.
Your table is conveniently lacking the salary ranges I've been offered from over a dozen higher paying companies in the city...
In fact, not a single company that pays well whom I've talked to is on your list other than Amazon and Microsoft (Whom will pay a whole lot more if you point the spread out to them).
I am planning on converting this data to website that will keep track of what tech employers are in the city. Kind of like HackerBatch but just listing companies, not delivering job postings. (Also, it will be available to the public, not just UBC/SFU students. You won't have to get 50 students from your school to sign up like with HackerBatch, either.)
For the moment, I'm protecting the sheet so I have a stable source from which to work. Stay tuned...
> Software Engineers in Vancouver make ~US$45,000 a year...
Which is $60K CAD. If you get roommates, rent can be $600-1000 (again, CAD)/month. Health insurance is $72/month, single-payer, and increasingly being 100% covered by tech companies. You don't have to worry about a car if you live downtown, and transit is good enough that living downtown isn't your only option if you don't want a hellish commute. (e.g. Hastings-Sunrise, Metrotown, New West)
If you get roommates your rent in SF will be ~$2800 CAD, meanwhile you're earning $220,000 CAD a year and your other expenses are pretty much the same as Vancouver.
No way Vancouver is more affordable than SF (if you have to work in tech for a living).
Depends on what you're talking about. Vancouver has cheap rent compared to SF rents, but houses are more expensive than SF and Vancouver wages are no where close to what people in SF are paid. It is one of the most unaffordable cities in the world in that regard.
Zurich is one of the most expensive cities in the world to live[1], though I have fond memories of when I did my postdoc there. I lived downtown a block from the Hell's Angels, 4 blocks from where the junkies and hookers hung out, and it was still cleaner than most parts of San Francisco.
[1] https://www.wolframalpha.com/input/?i=cost+of+living+index+z...
That is right but Zurich is tiny and almost everyone lives "in the suburbs" where the rents are half as much and which only means a 10-15 min commute[1] to town (using the superb public transport).
[1]"Living in the suburbs" anywhere else in the world but Switzerland means a >1h commute...
The latest complaints in Austin is the lack of access to large VC money. Personally I see that as a good thing. Go be profitable and bootstrap a bit before looking for money.
Lots of tech in Boston, including bio and pharma. There's just a lot less of the startup Internet/App stuff going on. But pretty much all the big West Coast firms have Boston/Cambridge offices in addition to all the local companies. Boston/Cambridge real estate has really be escalating as well, both for residential and commercial.
You can remodel: If you really like cooking, for example, you can rearrange your kitchen how you want, buy appliances, etc. If you are really into woodworking you could convert the garage.
You get stability: Don't need to worry that the rent will go up or that the landlord will sell and stop renting to you.
Additionally, in many markets, certain kinds of housing are for all intents and purposes buy-only. Nobody is renting out a house with a yard in a good school district that you want to be in, for example.
The money you spend on your mortgage (minus interest) is still yours, in the form of equity. If/when you sell, you get that money back, modulo market fluctuations. Or your kids get it via inheritance.
When you rent, you might as well be lighting that money on fire.
There are a few other terms in the equation (property taxes in particular) but that's it in a nutshell.
I've heard that argument a lot. Then I calculate how much a mortgage costs for an apartment in a place I'd like to live in. And the mortgage payments are literally more than for rent.
Take SF for example. I'd need $1mil to buy an apartment. At 30 years, that gives me a mortgage payment of $4700.
Rent for a similar apartment is $3400. And I don't have to pay for upkeep.
So if my rent stays the same, I will have saved almost $40,000 in the next 30 years.
I can do a lot with an extra $1300 per month.
Not to mention I can maintain my desired lifestyle of moving every 2 years or so.
If mobility is your priority then you shouldn't buy. Buying may have financial benefits although that's not a given. IMO, buying because of the financial calculations is not a good idea--especially in an expensive area.
What it does buy you is that you can customize your place to a significant degree and you can't be forced to move if you don't want to. If you're not at least planning to stay put, it probably makes no sense for you to buy.
You do but obviously you can be foreclosed on if you stop making your payments. (And, of course, even after your mortgage is paid off you still need to pay taxes, insurance, upkeep, etc.--although those will usually be a lot less.
My basic point though was that you can easily lose the lease on a rental property even if you've religiously made your lease payments every month. Or the lease can be increased significantly if you live in an area where real estate prices are rapidly increasing.
It's ultimately about predictability/control vs. mobility. IMO, some variant of that tradeoff is what potential buyers should really focus on.
My grandparents have a "property they can now sell". They never will. They've been investing in it and adding to it for so long that it has become useless to any potential buyer, and parts of it are now so old they really really need repairs.
They cannot afford to sell because the investment to make it sellable for a good price is too high. Nobody would want to buy because the investment to turn it into a useable large house, is too high.
So instead they turned a tiny part of the house into an apartment for themselves because the costs of living in the whole thing are too high. They turn on the heating in the rest of the house just enough during winter to keep the pipes from freezing.
None of the kids want to inherit the property. None of the grandkids want it either.
The location isn't that great either because the economic activity the location was great for (wine) is now in tatters and the government is paying people to please for the love of god stop making wine and cut down their vineyards.
My mum has a nice flat in a downtown area. She recently had to go into debt to afford to fix it up. She could potentially sell, but then she'd have nowhere to live. She's too young to buy a rural house (same price) because she still goes to work. She's too entrenched to deal with finding a new apartment somewhere else. And she'd have to pay more for a new apartment than she'd get for her current flat. At 50-ish, she also doesn't really want to go into another 10+ year mortgage.
So ... no, I don't see the value in owning.
Basically: Having all your wealth tied up in an illiquid asset is twoplus not good.
If the land and property aren't worth anything, thats an awful investment I'll grant you.
Regarding your mum - I assume there are rent controls in her area - in mine (Western US) there aren't necessarily those. If she rented she'd have been priced out of her flat years ago as the landlord ups the rent to market rates or "renovate".
I wish just one of you droids parroting this argument was actually old enough to have done it. My parents own a property like this. They are never going to sell it because (among other things) they have invested more money in upkeep and renovations to make it just the way they want it than it is worth to an average buyer, plus they like having it for family get-togethers. It's simply not at all the investment vehicle you starry-eyed dreamers think it is.
Its still assets at the end of the day, no? Just because they don't sell it or they put a lot of money into it doesn't mean they can't. A renter doesn't have that option. I'm not making claims about its efficiency as an investment vehicle, I'm simply pointing out that in the example that I replied to you they'll end up with an asset worth more than the $40,000 they saved by not buying.
He forgot to factor in the ~$250K cash downpayment to buy that $1MM mortgage. The opportunity cost on that over the next 30 years has to be added in. At 7% annual return (which you can get from Vanguard mutual funds) that 250K is worth almost $2MM in 30 years. Sure, rents will rise over time, but it's probably closer to a wash when you figure the insane downpayments you have to make.
> When you rent, you might as well be lighting that money on fire.
OK, try lighting that money on fire. Then go live under a bridge because your rent money is ashes.
Rent gets you a roof over your head and it's completely ridiculous when people claim it's "lighting money on fire" or "throwing money out the window". Obviously it's not because if it were "lighting money on fire" people wouldn't do it.
Ownership also comes with expenses--maintenance, insurance--and with the substantial risk that your property will decrease in value or that you will need to move and take a loss on the sale. Also, the transaction costs when buying and selling are considerable--agent commissions and taxes are thousands of dollars.
That doesn't necessarily make buying a bad idea but renting is certainly nothing remotely close to "lighting money on fire".
A good portion of what you pay for in mortgage, you retain in equity. Zero of rent does. Insofar as you pay more in rent, than the non-equity part of your mortgage, the difference is 'money set on fire'.
Even if you ignore the fact that your capital is at risk (or do you think house prices never drop?) you also forget the opportunity cost of all that money sunk into the down payment.
I own property and only a fraction of what I pay each month goes to reduce loan principal. By this logic everything else I pay is "lit on fire". This is ridiculous logic. It buys me a place to live.
It also turns out that when I buy and eat a pizza, I built no equity either. Did I just light money on fire?
Property also goes up. I sold a quarter acre in downtown San Jose and bought a farm in Iowa. Which has since appreciated by a multiple. So, do that with rent.
> It also turns out that when I buy and eat a pizza, I built no equity either. Did I just light money on fire?
Obviously. If you would just buy a pizza restaurant instead, your payments would go towards your pizza equity. You'd get pizza, but you would also get returns from your mortgage payments on the pizza restaurant.
The first 5 or so years of 30 year mortgage you don't really pay off that much at all, it pretty much is interest, plus other holding costs and depreciation - money on fire. I was lucky with my place my last place and gain some significant equity in the first few years, but the value has been flat since the GFC. I haven't been living in my place for a few years either, I've moved around to where ever suits at the time.
> The money you spend on your mortgage (minus interest) is still yours, in the form of equity. If/when you sell, you get that money back, modulo market fluctuations
A house degrades with use and has a limited lifetime. You take a hit due to wear and tear, or you have taken a hit due to having made remodelling. So you are paying for that wear either way.
You can get some idea if you tally up the cost of full renovation (including pipes, roofs etc) and divide that over the expected age of those, for example 25 years. Plus a fuzz factor for the smaller stuff.
(If comparing to renting, there are other significant fixed costs that come on top of the mortgage payments which are included in the rent.)
Ugh, everyone who totes the "equity equity equity" argument about robotically. Probably the same suckers who think they are going to get rich off of their startup options.
Once you factor in the risk offset (what happens when that once-in-a-century flood ruins the house? if you're renting, you just fuck off scot-free) and the ability to pick up and move to another city (which is what this whole article is about) if you still can't see the value prop you deserve your property taxes and underwater mortgages that you will never see a return on, because your house is not really an investment vehicle.
also esp in California, you wont get mortgage hikes unlike rents. And, you are much more free to do as you please with your own property, like maintenance and upgrades.
It's your place and you can do whatever you want there: own a pet, change the colors of walls, install a decent kitchen.. anything. For example, I love cooking (and invest decent amount of money for equipment), do various DIY home improvement weekend projects, but I would be much less tempted to invest my time and money to someone's else place. Also, my girlfriend moved in recently and I didn't have to ask anyone's permissions for that. I see a lot of benefits with only few downsides, in the worse case scenario, I can always move somewhere else and rent my property -- currently mortgage monthly payment is less than the rent for a similar flat in this part of city where I live.
Naw, us stumptowners don't mind y'all moving up here. Just don't be spreading lies about how great life in Portland is. Sucks up here, rains all the time, can't find a good cup of joe or pint of beer to save your life. Did I mention the rain?
oh, actually you're right. I forgot about all that. It does suck here, you all don't want to come here, too wet. Beer sucks so bad, no good food anywhere. Nothing to see here, carry on.
I moved to Europe a few years ago, though entirely for personal reasons and not because of the cost of living in the SF Bay Area. I'm sure I'd be making more money if I'd stayed, but I'm also pretty sure I wouldn't have the same quality of life.
I know others who did the same thing, and are doing fine over here ("here" being mostly Berlin but also further afield). I think the trick is to know what you're moving for, as opposed to what you're moving away from.
In most cases you will make less money, at least over time, and miss out on career opportunities. But there are other opportunities people in SF are missing out on. And as others have said, the income difference can easily be balanced out by a cost-of-living difference.
My 2 cents as someone who left the Bay Area in 2003 and came back in 2014...
If you want to be at the core of a game changing software company that's got a decent shot of being a rocket ship, you're most likely to do it in the Bay Area. It isn't about getting rich, or cost of living or any of that. If you want a good stable technology job with a large house in a good school district, you can get it anywhere. If you want to maximize the likelihood of earning cash, hold your nose and go to Wall Street. If you want to work at Google or Facebook, you can live very well outside the Bay Area.
But... The best chance at grabbing onto the next Google or Facebook, it's best to go where these companies are sprouting from.
If you don't do R&D, if you don't aspire to founding a successful startup, if you don't need to work with the smartest people on the latest tech... the Bay Area does not make sense. But if you check yes to any of those, you get what you pay for.
i am sorry but this is a very elitist comment, please consider all the successful startups that are born outside of Bay Area/US and really smart people who work on them...
I'm not disparaging those people. However, the fact is that the best and brightest give up a lot to move to the bay area and build the things that change the world.
I'm not convinced this is a zero sum game. There will be a lot of small Silicon Valleys popping up. And as companies in these little valleys grow and/or die (germinating other companies), they will grow to be the size of SV and maybe support the capital costs of some of the moonshots that take place in SV. SV will always be there to welcome new entrants into the tech industry and foster old ones :).
Source: Proud Waterloo-ite surrounded by Ex-Blackberries. Possibly moving to the Valley soon.
P.S: Every region that wants to grow will face the real-estate crunch SV is. Look to your municipal laws/stucture to see how your region will weather this storm.
Lived in Austin (Hyde Park), loved it, but it felt like I was constantly bidding up the price of things that used to be appealing because they were so fun, simple, and cheap. Barbecue, housing, Mother's, breakfast tacos... When I left in 2010, the only part of the city that still felt real and vital to me was Lamar north of Central Market. The part with the stip malls.
Of all the comments I see stating how happy they were to _leave_ San Francisco. I'm wondering if there's anyone in the opposite - happy _moving to_ San Francisco.
I live in Mid-Ohio (Columbus), and have been contemplating a move for some time. I know there's lots of tech companies outside of the Bay Area, but it seems like there's sooo much concentration there that I want to experience it at least for a short while. I was planning to try it out for a year or so, but now I'm not so sure.
FWIW, I make about 100k and but plan a significant increase when I transition into my own consulting full-time.
I was very happy to move to SF from the midwest, because: much better job (albeit with lower pay and much higher living costs), more walkable city, can-do/optimistic/accepting culture, better weather, more options in the job market. But things were much cheaper then and something's gotta give. If not for rent control, I might have moved away already.
Wow , I wasn't aware of rent control in SF, but a quick google search shows there's a big debate. Any suggestions on where to best look for apartments? From my brief visit (1 week trip) I really liked pretty much all over the downtown area, although it looks crazy expensive. I'll be living with my gf, so the rent would be split between the 2 of us which makes it easier.
The cool part of town where the new billionaires live is The Mission. Note that it is a transitional area with a more crimey side (east) and a more gentrified side (west). This is also the area where anti-tech-worker sentiment, violence, etc. is most common. The Castro is a nice, vibrant gayborhood in the south. The Tenderloin/Civic Center/Western SOMA are pretty gritty, but other than that the entire northeast quadrant is nice and walkable. The western half of the city has a more suburban flavor and worse weather, but it's cheaper.
In general, I'd recommend you take a short-term rental to explore the city rather than trying to lockdown a long-term rental from afar. Especially because the open houses are often open for an hour or two and result in waiting lists (dozens of would-be tenants) in length.
Also, just be aware of rent control. I think the market prices aren't any different between older (rent-controlled) and newer buildings, but after a couple of years of 20% pa price increases for the non-rent-controlled place, the rent controlled unit will be much relatively cheaper.
There are a ton of people here in Bend who have had their fill of the bay area, and want a place where they can afford a decent house, have good schools, and so on.
Feel free to ping me if you're interested in the area.
Doesn't Boulder have similar high expense issues? I considered that area for all the tech opportunities, but found myself realizing I'd need to live 30+ miles away in Longmont for a house with a decent sized yard.
I also have been considering south of Denver but it has similar expense issues.
It's expensive for Colorado but I don't think it compares to SF or SV.
Houses with decent size yards are 450-600k in Boulder, depending on location and square footage (7000 SF lots). Low property taxes (CO has a counterpart to prop 13, TABOR, where every tax increase needs to be voted on by the public), a flat 4% state income tax, and great schools (in Boulder) add to the attraction, IMHO.
I haven't looked at the rental market for housing in depth, but I think you can get a 4br 2br ranch w basement for about 2000-2500/month.
Lived most of my adult life in Boulder so can't really speak to the real estate situation in south Denver.
The numbers I quoted are definitely anecdata, based on homes for rent over the past year in my south Boulder neighborhood, which is probably one of the more affordable.
Don't forget that Zillow will have the asking rent price, which is not always the same as the final rent.
But thanks for injecting some hard data into the discussion!
I have spent a bit of time in Bend and it is a great place, and definitely more affordable than Boulder. The issue I have with it is the 3 hour drive to a city of any size.
But, your blog post about Boulder hit the nail on the head. So far we have dealt with growth by pushing lower income residents to the L cities (Longmont, Louisville, Lafayette) and accepting large amounts of in-commuting.
> The issue I have with it is the 3 hour drive to a city of any size.
Yeah, that's a dealbreaker for some people. I don't mind much - my wife wouldn't mind being a bit closer to somewhere larger.
On the other hand, I live 10 minutes by bike from work and pay 1000 less a month than I would have for something further out from downtown Boulder. So we only have one car, rather than two, resulting in more savings.
I could easily imagine living in Boulder if I were younger and wanted a more outdoorsy alternative to the bay area - there is a lot of tech stuff going on there.
It's so surprising to me that so many of the posts here are about owning a house. Why is that so important? Sure, real-estate is a good investment, but it's a volatile one (especially given the current market in most major US cities).
I would not sacrifice my quality of life (diversity, food, education, etc.) to live somewhere else because it was cheaper.
12 years ago we moved from Silly Valley (where I worked for 20 years at places you've definitely heard of, and some start-ups) to the Seattle area. Great move, would do it again. With the exception of a little weather and geography (the motorcycling is definitely poorer up here), I don't miss SV at all.
I definitely don't miss California. Never going back there.
I want to design a system that will be fabricated in China, and sold to customers in Europe. I expect my engineers will work from home a lot of the time. Where should I locate the firm? I know! How about the most expensive fucking are in the USA, so I have to pay the highest possible salaries, which everyone will blow on basic living costs.
I work for a nonprofit in DC. I have a higher standard of living, lower stress, shorter commute, and generally am happier than friends in the Bay Area making 120K, when I make about half that. It says something about my time in the valley that DC feels cheap.
Regarding the specific case of working in SV while living in SV vs. commuting from SF:
I've lived in SV for about 9 years now. I know a lot of people who live up in SF and commute to SV. I don't know how accurate this is, but my observation is that SF housing prices are >= SV. The people that live in SF and commute to SV universally do it because they would prefer to live in SF for one reason or another, rather than for financial reasons.
When comparing what $x of housing will get you in SF vs. SV, the SF equivalent for the same price will have very different characteristics. The SV housing will likely be much newer and less unique than the SF housing, but it will also likely be in better condition than the SF housing.
Another huge aspect is the length of that commute. It's 60-90 minutes each way, every day. Some people are much more OK with that than others- I personally couldn't do it. The big SV companies have generally nice buses with bathrooms and wifi, where you might be able to get work done and might even be comfortable, but even so that means 3 hours/day on a bus. A nice bus, but still- 3 hours/day on a bus is 3 hours/day on a bus.
Now, some people will say that's great, because they use SF public transport and take the company bus to work and now they don't have to spend money on a car. In theory that sounds great, but what if you want a car? You're living in northern California, which I think is one of the most beautiful, varied, and interesting places in the world. Not owning a car means not being able to take off on a whim and go drive down Big Sur, or out to the desert, or Tahoe, or wherever. In theory a non-car-owner could rent a car when they want one and enjoy that lifestyle, but in practice most people end up sticking to destinations they can get to via public transit. That might not be a tradeoff everyone wants to make.
Ah, one might say, but you can have it both ways! You can own a car and live in SF, and still enjoy the commuter buses. Well, get ready to spend several hundred dollars a month on a place to store your car that you only use for weekend jaunts, road trips, and whatever needs pop up. Now the housing that was $x in SV that included car storage will cost you $(x + y) in SF, where $y is the cost of a parking space.
All of which is a long-winded way of saying that SF and SV cost about the same but it's very hard to do an apples-to-apples comparison of what $x will get you in either place. The choice comes down to how an individual assigns weights to the pros and cons of each locale.
It's interesting that almost all the comments are related to housing costs. If Silicon Valley dies as the premier tech hub it will be because there wasn't enough done to develop housing for a growing population. That would be such a shame.
I left California (L.A.) for Raleigh three and half years ago and my quality of life skyrocketed. The pay is the same, the worst N.C. commute is half of the best California commute, and my mortgage is the same cost as my 650 sq ft apartment was.
I left SV for Santa Barbara and could not be more happy. My compensation package took a hit but living expenses decreased proportionally. More importantly, I got my life back. My commute went from 90 mins to 15 mins and my family is happier.
it's hard. Prices are really high, and land lords are not friendly. We've been discriminated two times, we found affordable apartments, but were said that little one will make noise for downstairs tenants. Complained to department of housing 2 months ago, no reply.
And then what? All other houses are doubled. Does he cash out his "money for nothing" and live elsewhere or realise that the gap between his 2 bed and a 3 bed is now also twice as large.
Property speculation is utterly engraved into Western society now and it's killing it.
EDIT: it's interesting how people upvote this as they can see it's a truism, but downvote my post attacking land speculators.
NEWSFLASH: buying land and sitting on it to exploit scarcity creates no wealth. Therefore if you buy lower and sell higher that money comes from wealth created elsewhere, making you a leech. If you buy somewhere to live in, fine, but more than one place to speculate: you are leeching off of the labour of others.
EDIT: don't have time to reply now as i've got a prod issue to debug. Read up on Henry George or don't.
If you think making money from doing nothing then using the same money to consume goods is fine, well to hell with you.
Good question. No, we don't do that. I think I've sometimes broken that rule to fix a typo or two while in an obsessive mood, but rarely, and that's it.
> buying land and sitting on it to exploit scarcity creates no wealth. Therefore if you buy lower and sell higher that money comes from wealth created elsewhere, making you a leech. If you buy somewhere to live in, fine, but more than one place to speculate: you are leeching off of the labour of others.
I disagree that this is leeching. For one thing, there's no guarantee the speculator's land is going to go up in value. It could just as easily flatline or decrease.
For another thing someone has to own the land. Whether it's another person or a government. A speculator can't force anyone to sell their land. On the other side of the purchase, there was a previous landowner who wanted to sell. The speculator created a market in which that seller can sell their land. Are you suggesting it should be incumbent upon the seller to discern the motives of every buyer and only agree to sell to someone who's not speculating? How could they? Also, why would they artificially limit their pool of potential buyers? They don't gain anything from that.
The buyer presumably created some value at some point in the past in order to have the wealth to buy the land in the first place. Owning it and maintaining it in a salable condition until someone needs it is a useful service.
Land value tax would see the govt effectively own the land and you own the right to build on it (and to capture the gains made by the building). They keep the value they create, but they pay for the location which has it's value added to by society and the state.
This is where the distinction is. Most people think their "house" is worth $2MM - no it's the land, the wood and bricks are easily replaced.
Depends on where you live. My house is worth far more than the land it sits on. I know people who've bought a couple acres for under $25k just so they can put a mobile home or an RV on it.
A Land Value Tax would tend to reduce the appeal of land speculation, by encouraging land owners to do something productive with the land, rather than just speculate on it.
A Georgist might say that wealth is actually created in the scenario you describe, but that it's created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and that the speculator's current ability to capture all of that increase via his untaxed monopoly on the ground rent creates a deadweight loss for the broader economy.
Exactly right. There is wealth being created but it's captured by people doing nothing for it. Redistribute this via land value tax and discourage speculation, all for one.
Isn't it possible that they (speculators) prevent possible frivolous usage due to low prices? Speculators can serve to raise prices over time so that, presumably, more worthy owners can make better use of a property than a much lower bidder would have done several years prior?
I've never heard this argument before, no. Land value tax in fact would force people to realise the true value of the land by taxing them whether they use it or not. If they don't use it to full potential they either hemorrhage money or sell up ASAP.
I didn't realise land has a true value. How is it determined? What does it mean to use land to its full potential? I could build a petrol station, or I could build a mini-market/strip-mall on the same land; is one better?
> NEWSFLASH: buying land and sitting on it to exploit scarcity creates no wealth.
You don't sit on it, you rent it out to people who can't afford or don't want to buy their own homes. Where are those people supposed to live if there were no landlords?
I'm very happy and grateful I can pick any city in the world, move there, and find someone with an extra home willing to let me live in it in exchange for some cash.
Most people making money on real-estate are doing so not on yield but on capital gains. The rise in land prices make the cash.
With proper taxes discouraging speculation, like land value tax, income taxes could be far lower and we'd have a world where working actually got you somewhere instead of leveraging up on land to build a property mini-empire.
Would love to know how many people made very little from their failed SF startup but overall made out good due to land prices appreciation.
HN is full to the brim with people complaining about high rents. You are not the common case.
As someone else pointed out in this thread, you would have made a lot more money dumping $70,000 into S&P index funds in 1975 than buying a $70,000 bay area house at the same time and holding it empty to 2016.
So I disagree with your premise, no rational investor purchases houses and leaves them empty. And the ones who don't are providing a valuable economic service by assuming all capital loss risk, interest rate risk, maintenance, opportunity costs, etc. involved in owning property in exchange for a tenant's cash.
Most people don't have $70k. This is the thing about land. You can borrow against it from the banks.
Go to your bank and ask for $70 to mess about on stocks because "you think they will go up". Yes there are margin accounts but these are not in common use.
All roads lead to land speculation and the banks are waiting with a big hat to capture all the surplus.
It's cheaper to borrow against a stock portfolio than real estate (since it's much easier for a broker to liquidate your stocks than for your bank to foreclose on your home): https://www.interactivebrokers.com/en/index.php?f=1595
Although they only give you 4x leverage vs. the 5x-20x common in residential real estate.
Anyways, I think you're grossly overestimating how good of an investment real estate is. Unless you have some kind of edge (like you're a developer and your friend is on the zoning board or whatever) you're not going to magically get rich doing it. It's just another asset class.
I explicitly named margin accounts so you wouldn't go there. Most people don't know about this. It's all about land.
I'm not saying real-estate is the route to riches, I'm saying everyone is speculating on it ("they only go up!"). The system ensures that land prices run ahead of wealth creation which shifts all productivity gains to rentiers.
The difference is you could have lived in that house or rented it out and created additional income. In the book 'Ascent of Money' Niall Ferguson does a breakdown on the housing market in London vs investing in the stock market through index funds and shows how housing really was one of the better investments. It's worth checking out the book for that section.
The issue I see is that hindsight is always 20-20 so even if housing was the better investment in the past, I still wouldn't want most of my savings/wealth to be invested in an asset that isn't very liquid and is susceptible to swings in the market. However, if you buy in a place like London or San Francisco those swings are probably only minor setbacks if you're in it for the long haul.
Genuinely, how "high" do you want this land value tax to be? I currently pay about 1% of the market-valuation of my property per year in "land value tax", or whatever it's called. And that's with some sort of "small-property" rebate, so it's probably more than that.
You make it seem like it'll be this panacea for all of the ills relating to property renting and ownership. The market will most likely "absorb" the distortion caused by your proposed tax. What you'll then be discouraging is property investment/development into areas that don't have immediate and/or predictable returns that justify the investment for whatever period the capital owner wants. Not only that, but you'll make it even more difficult for small/medium business to do the same.
Land value tax would replace other taxes such as income tax.
I don't see how the market would absorb this tax. Rent is set at what the market can bear. If you raise further in light of being taxed more your renter cannot pay.
Rents are set by wages. Land values are set by the ability of banks to lend against land based on the price they just lend on ... land, all "financed" by fiat money created by banks.
"Land value taxation is so beloved of economists because, in theory, it does not distort decision making. Suppose a land value tax of one per cent on land value is introduced tomorrow. There can be no supply response: there would still be as much land as there is today. Neither would consumers’ preferences change, as land would be no more useful, either. So if the market for land is competitive, no transactions would be deterred or encouraged. All that changes is the price, which falls until it exactly offsets the discounted cost of paying the tax forever. The buyer assumes the burden of paying the tax, so all things considered is no better or worse off. Landlords are unable to pass the tax on to tenants, because the supply and demand of rented land is unchanged too. Furthermore, if LVTs replaced property taxes, incentives against improving homes and developing land would be removed. Yet LVT would continue to account for "undeserved" gains landowners make on the investment of others, such as the government improving nearby transport links (this feature of the tax appealed to Winston Churchill)."
> Land value tax would replace other taxes such as income tax.
Considering 30% of US land is owned by federal government (and there's more by states and municipalities), how would this replace the income taxes? Federal budget is comprised of 46% personal income taxes and 13% federal income taxes, so roughly two-thirds of it would have to be replaced by land value tax.
> Considering 30% of US land is owned by federal government (and there's more by states and municipalities), how would this replace the income taxes?
By taxing the land not owned by the federal government, since obviously it can't tax itself.
> Federal budget is comprised of 46% personal income taxes and 13% federal income taxes, so roughly two-thirds of it would have to be replaced by land value tax.
So? Look, to replace the entirety of federal revenue (which is more than you need to replace, since obviously things like fees for uses of federal land, which are part of federal revenue, aren't going to go away with a land-use-tax scheme) with land use tax on the 70% of land not in federal use, assuming a flat per-acre tax (which has the virtue of making calculation easy, even if its not the most likely tax scheme), you'd need an annual tax of $3.02 trillion / 1.7 billion acres, or a land-use tax of about $1776 per acre per annum.
To extract $3 trillion out of $23 trillion the tax would need to be established at an average 12% annually, which will probably cause some massive repricing.
"Most people making money on real-estate are doing so not on yield but on capital gains."
If this were true, why would you have a problem with landlords in general? They are providing a service at cost. If a landlord is not buying land in a speculative market, what is your criticism of them?
It's a huge game played by the banks to extract economic rent. Landlords are taking a slice and providing a risk buffer for the banks. I find the whole practice, which as you noted in SF is taking up all spare income, disgusting.
Your comment is worded strangely also - I'm saying they are speculating on land. If they are buying and making a little just by providing a service I have less of a problem with them, but this simply isn't possible in the current environment of unlimited fiat issuance. The bank lending and endless speculation means wealth producers are squeezed to the limit.
It's worth noting as well that houses don't disappear when landlords sell them.
Most landlords don't build new homes to house people. More commonly they compete with owner-occupiers to buy existing property. Remove the landlord from the story and the renter may well become a buyer, at a lower price.
p.s. Thank you for your comments in this thread and elsewhere - you have inspired me to finally read Henry George.
Really truly do it. The best thing about Henry George is the way his love of fairness and humanity shines through. It's really rare now to read someone who is actually altruistic and an intellectual force. It's inspiring.
ps you can tell he's a nice guy because he has utter disdain for rentiers, the enemy of all working people everywhere!
I'm largely a believer in private property (and mostly libertarian even), but I really don't think that this dividing up the earth into tiny little squares and pushing everyone out of them in order to make money is defensible.
You're damn right it's not. We are effectively asking young people to join a game of monopoly that's been going for 2 hours. Would you play under those conditions? Well actually you have no choice thanks to the banks and their landlord foot-soldiers.
As many economists have noted, land is not applicable to the general laws of economics because it is finite in supply.
We need land value tax to squash speculators who add nothing to the world, right now.
Both "private" and "property" have changed meaning frequently over time, both legally and as social constructs. One American judicial philosophy is "pragmatism" -- that a judge should rule however is best for society, then explain why the law should be interpreted that way afterwards. In this fashion, the law can keep up with the times.
It's likely that most judges follow this pragmatism, even if they claim to believe in a different, more idealized philosophy. It's hard to falsify that hypothesis. We'd have to find several cases where the judge admitted that the ruling was worse for the world and yet must be enforced as the best interpretation of the law or precedent.
Agree with the sentiment, but it's not simply a matter of sprawling. In practice there will always be a need to live in close proximity. The community creates value.
NEWSFLASH: buying land and sitting on it to exploit scarcity creates no wealth. Therefore if you buy lower and sell higher that money comes from wealth created elsewhere, making you a leech. If you buy somewhere to live in, fine, but more than one place to speculate: you are leeching off of the labour of others.
Is that entirely true? If you're willing to take on the responsibilities of being a landlord, and rent out your property, you are providing utility to those renting from you.
I think more people would agree with you if you were talking about those CREATING scarcity, by arbitrarily raising prices in a real estate market that has an inherent cap on supply.
The owner of this plot was able to hold onto a huge empty lot (with weeds) for ~$1000 a year in property taxes until 2014 when it was sold for more than $2 million with an original purchase price probably under $30 thousand. In less than one year, it was flipped for $3.3 million.
06/01/15 Sold $3,300,000+56.0%
08/15/14 Sold $2,115,000+41.5%
07/21/14 Listed for sale $1,495,000
> it's easy to speculate with empty plots of land.
It's easy once you pony up the cash (land loans are generally in 70-75% range, 80% is an exception, so one needs to have the 25-30%), have a credit history that's good enough for the bank to approve the other 70-75%, willing to take a hit on the property tax (~1% annual), and will generally be okay and have other sources of income if the market were to cool down or take a dive.
I see your point and agree rampant speculation is a problem but most societies do this. it is problematic for example that 3/4 of the Chinese stock market is owned by regular people IF (and many were) they buy on speculation and borrow capital to do it.
Regardless, in the land example you raised it is not neccessarily true you are a "leach".
* someone living/working there would of course need a place to stay, and owning something that increases in value would be intelligent.
* it may have been non-obvious in 2000ish to be buying.
* while it is likely you are capturing much of the value from external input, it is also from demand. Sf/sv is finite and as societal resources concentrate into urban areas (as it has been for decades) the issue is supply. That previous statement agrees with you however, it isn't clear birthrate/deathrate ratios will fall enough to stabalize total pop. So to some extent you are capturing value from buying an asset that is scarce while more people will be born who need it.
Ideally this can force correction in that SF may build more resedential housing or that another place does and engineers relocate there.
So yes, in a black/white I buy 2 housing blocks and literally rent collect, choosing to have no tenants rather than lowering prices, I would consider that unethical. This happens. It isn't phenomenal for society.
However, there are many other factors where people own homes or assets and some degree is speculation, some is need and some is risk minimization.
Bitcoin is good example. Some people buy in, this creates the value as it is externally valued. Then more adopters come in and buy. Some more come in and begin trading. Etc.
In your land example, this land initially had limited value (way way back). It isn't particularly clear SV/SF couldn't have existed 50 miles south or north.
Who are the speculators?
* the settlers
* the originsl chip manufacturers
* people coming in 90s
* companies buying real estate in 2000s when some of the above went bankrupt
* people coming pre 2010
* people coming post 2010
This is a continuum and also it is driven by complex factors. There are many people/actors and it isn't clear that you can call 1 sector/type of market action objectively "bad" or a "leach"
Personal attacks—which you started here and continued downthread—are not allowed on Hacker News. We ban accounts that do this, so please don't do this.
Many landlords have made a lot of cash for themselves using leverage by sitting on property which is forcing up land prices. I think that's undisputed.
I know landlords always harp on about how hard their (chosen) path is but land prices have rocketed in SF due to this mentality. His post intimates it was a core reason for leaving. Then off he goes and joins those who let the plebs work for them once they can get a down-payment together.
Our laws facilitate the leaching of labor to land owners (feudalism). If it were easier to build a surplus of housing, this wouldn't be such an issue but between NIMBYism, zoning, local municipal red tape, and the near zero incentive from developers to build inexpensive housing units in mass quantities near urban centers, than this issue will remain siphoning any surplus of wealth from labor in cities (Silicon Valley, NYC, etc).
Restrictions on construction and density drive the housing crisis in the Bay Area more than the desirability of the area or the economic opportunities, in my opinion. For example, if you can fetch a salary in Austin that is similar to one in San Jose, then opportunities between the two cities are the same. If you can live in a cool neighborhood in Brooklyn that has the same amenities as one in SF, then desirability is the same. The difference is that Austin has far fewer restrictions on development, geographical and legal, than SV. In the second case Brooklyn has far more legacy housing units than SF. In both cases the supply of housing is more in line with demand.
The high cost of housing in the Bay Area is partly due to geographical limitations, partly due to the attractiveness of the area and its amenities, partly due to economic opportunities, partly due to speculation, and lastly partly due to restrictive zoning and development laws. One of these five factors - which are not exhaustive - is much easier to rectify than the others. Reforming common law property rights, which is what the land tax proposes, is much, much harder than reforming local laws against density and development.
No, we are responsible for our actions. If we have a horrible system of exploitation it is incumbent upon people to avoid this.
The USA has a real problem with ethics that stems from the simple problem "it's just business". "Yeah I kicked him in the face and robbed his family, but it's just business" seems to be an acceptable sentence there. It covers a multitude of ethical sins. And let's not cop out of this with "but who decides what is ethical" - you do. This guy didn't like being exploited by high rent in SF.
It also seems impossible for people in the USA / UK to imagine a world where, although they are satisfied and have plenty, they would actually forgo having even more money for ethical reasons. Thinking "yes, I could holiday in luxury and exploit my fellow man" seems fine to them.
Who is to say that he exploited the tenets in his rentals? Maybe he provided fair market value rents? Just because he's a property owner doesn't make his actions bad.
> "Yeah I kicked him in the face and robbed his family, but it's just business" seems to be an acceptable sentence there.
No, kicking someone in the face and robbing his family is illegal. It is not "just business." Unless you're trying to equate owning property and renting it out to kicking people in the face and robbing their family...
I don't even think SF and SV are good places to start out anymore. You can learn skills anywhere with the internet, and you miss out on early investments due to the opportunity cost of rent. If you want to live in the Bay Area, it's better to hunker down someplace cheaper for a decade or more, save up a down payment, and then lateral into a midlevel or senior role at a tech company, whose salaries are high enough to service a mortgage but not high enough to save a down payment and pay rent at the same time.