Blame Zoning, Not Tech, for San Francisco's Housing Crisis(citylab.com)
citylab.com
Blame Zoning, Not Tech, for San Francisco's Housing Crisis
http://www.citylab.com/housing/2016/03/are-wealthy-neighborhoods-to-blame-for-gentrification-of-poorer-ones/473349/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheAtlanticCities+%28CityLab%29
216 comments
How about attaching a direct cost to NIMBYism?
Sure, you can vote against zoning or building high density housing, but it's going to cost you. The price will be your prorated cost share of moving the project somewhere else. Don't want that tower block next to your house? Fine, pay $1M to have it moved.
You could combine this with a reverse auction of subsidies. As in, yes, I'll take that tower block for $500k.
Eventually the market clears and the problems get solved.
Sure, you can vote against zoning or building high density housing, but it's going to cost you. The price will be your prorated cost share of moving the project somewhere else. Don't want that tower block next to your house? Fine, pay $1M to have it moved.
You could combine this with a reverse auction of subsidies. As in, yes, I'll take that tower block for $500k.
Eventually the market clears and the problems get solved.
That's an amazingly good idea imo.
The devil's in the details. It's hard to come up with measures and targets that are both fair and easily communicable.
If you go with number of people, well, that's the wrong measure (and hard to enforce // easy to fake). Number of bedrooms is also incorrect, as is square footage. Number of rentable units is also weird, since it encourages studio apartments and the like at the expense of splitting bigger units and sharing areas.
Another option is using a baseline of "however many people currently live there", but that favors parking lot owners and the like. "Average density of the local region" is unfair in that it suddenly imposes a new cost on the density hold-outs.
You can calculate a target based on something like distance-to-transit and local zones, but that gets complicated and political in a hurry. Land-value would be a good choice, since the price conveys really useful information - but that is likely illegal due to proposition 13.
My next-best idea is collective punishment: charge zoning districts based on the difference between how their residential and commercial/industrial construction. Mountain View is much less likely to vote to let Google expand their campus while blocking commensurate housing construction if it means they have to start subsidizing the places those workers start commuting from.
If you go with number of people, well, that's the wrong measure (and hard to enforce // easy to fake). Number of bedrooms is also incorrect, as is square footage. Number of rentable units is also weird, since it encourages studio apartments and the like at the expense of splitting bigger units and sharing areas.
Another option is using a baseline of "however many people currently live there", but that favors parking lot owners and the like. "Average density of the local region" is unfair in that it suddenly imposes a new cost on the density hold-outs.
You can calculate a target based on something like distance-to-transit and local zones, but that gets complicated and political in a hurry. Land-value would be a good choice, since the price conveys really useful information - but that is likely illegal due to proposition 13.
My next-best idea is collective punishment: charge zoning districts based on the difference between how their residential and commercial/industrial construction. Mountain View is much less likely to vote to let Google expand their campus while blocking commensurate housing construction if it means they have to start subsidizing the places those workers start commuting from.
You could tie minimum wage to median home value. It'd push places out of business, lowering labor demand. Sort of an indirect way of making people leave the city. And let those that can stay afford whatever ridiculous amount of money they have to pay for a 300sq ft studio.
The goal isn't to push poor people out of the area and replace them with rich people. The goal is to price out landowners who fail to develop housing.
To that end, it's probably better to somehow align the tax consequences with the people who can successfully NIMBY up development projects. That is, subsidizing living next to a high-density apartment complex, rather than subsidizing building a high-density apartment complex. Or in addition.
Like, if building a tall apartment complex in the Mission meant that all the neighbors got $50/month in density subsidies, I'd imagine that a lot of opposition would dissolve.
To that end, it's probably better to somehow align the tax consequences with the people who can successfully NIMBY up development projects. That is, subsidizing living next to a high-density apartment complex, rather than subsidizing building a high-density apartment complex. Or in addition.
Like, if building a tall apartment complex in the Mission meant that all the neighbors got $50/month in density subsidies, I'd imagine that a lot of opposition would dissolve.
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"Once it reaches a certain threshold, the process of institutionalization becomes counter-productive."
- Ivan Illich
This is an example of why planning doesn't work. And the unforeseen side-effect of any policy is an example of why central control is not just inefficient but often counter-productive -- why hiring processes to identify high-capacity creative individuals select for the opposite; why the school system produces not learning but limits it so as to produce ignorance; why housing policies aim to improve cities and lower inequality makes cities like San Francisco and Stockholm some of the most unequal in the world.
http://p2pfoundation.net/Counterproductivity
This is an example of why planning doesn't work. And the unforeseen side-effect of any policy is an example of why central control is not just inefficient but often counter-productive -- why hiring processes to identify high-capacity creative individuals select for the opposite; why the school system produces not learning but limits it so as to produce ignorance; why housing policies aim to improve cities and lower inequality makes cities like San Francisco and Stockholm some of the most unequal in the world.
http://p2pfoundation.net/Counterproductivity
> This is an example of why planning doesn't work.
Surely this is merely an example of planning not working, not proof that it can never work. Many cities do not have these problems.
Surely this is merely an example of planning not working, not proof that it can never work. Many cities do not have these problems.
This is an example of why planning doesn't work.
You misunderstand.
Any system taken to its logical extreme then becomes its opposite.
Ivan Illich advises pragmatism over dogma.
You misunderstand.
Any system taken to its logical extreme then becomes its opposite.
Ivan Illich advises pragmatism over dogma.
You're right. My comment went a bit far.
It's generally called a 'land value tax'. Most of the value of land derives from the amenities provided around it. By taxing the land you encourage development and discourage speculation: excess land value will be extracted through taxation.
Land-value is a better measure of how much housing "should" be built in an area. Ideally, it'd be a land-value tax with a housing capacity subsidy, making the entire thing revenue-neutral.
Unfortunately, Prop 13 makes a LVT infeasible to implement. Maybe a national LVT program would work, but that's replacing a smaller problem with a more difficult one.
Unfortunately, Prop 13 makes a LVT infeasible to implement. Maybe a national LVT program would work, but that's replacing a smaller problem with a more difficult one.
Instead of a subsidy you could just allow the write-off of the structure's depreciation. Structures, unlike land, lose value over time since they have to be maintained and suffer wear and tear.
The bigger the structure, the bigger the tax write-off.
LVTs make perfect sense and won't ever be implemented because we just started off on the wrong path. We're stuck with Prop 13.
The bigger the structure, the bigger the tax write-off.
LVTs make perfect sense and won't ever be implemented because we just started off on the wrong path. We're stuck with Prop 13.
"Nobody really has the power to do this"
The State of California has the power to fix this and, presumably, the motivation to lift this albatross from the neck of the economy.
The State of California has the power to fix this and, presumably, the motivation to lift this albatross from the neck of the economy.
The government is not a monolith - it's made up of people who follow incentives. Proposition 13 is basically the third rail of California politics, and there's very strong NIMBY tendencies in voters.
Fixing the housing issues in the Bay Area would be worth billions to the larger economy, but the people who make and influence the decisions are largely concerned with other matters (specifically, house prices and doing things that voters approve of).
Fixing the housing issues in the Bay Area would be worth billions to the larger economy, but the people who make and influence the decisions are largely concerned with other matters (specifically, house prices and doing things that voters approve of).
The end will come when people cease to reap the benefits-- Prop 13 delivered a lot of value to homeowners from 1978 on, but home prices now incorporate the "savings" one gets from the absence of Prop 13-- the only people who benefit are those who are locked in.
The amount of California residents that are forced to be renters makes the continued existence of Prop 13 less and less tenable every year.
The amount of California residents that are forced to be renters makes the continued existence of Prop 13 less and less tenable every year.
Only once the renters start actually voting.
I don't understand why you think that what you're describing (essentially a land-value tax) isn't an ad-valorem tax.
Thanks, fixed.
It's not an ad-valorem tax because it isn't based off of the price of the property. A $1M house next to a $1.5M house would have the same tax bill, so long as they have the same housing capacity and land area. If the price of a house doubles, their tax obligation would remain unchanged.
It's not an ad-valorem tax because it isn't based off of the price of the property. A $1M house next to a $1.5M house would have the same tax bill, so long as they have the same housing capacity and land area. If the price of a house doubles, their tax obligation would remain unchanged.
No matter where you'd like to pin the blame for the SF housing crisis, be it zoning, NIMBYism, new money, gentrification, or anything else, there is one thing I think we can be pretty confident about:
The only solution to the problem is for the city to build its way out of it.
There is no rent control regime that will, in the medium term, prevent money from ultimately swamping local concerns. Real estate is a good, not a moral principle, and most people who own real estate have a number.
I would be interested in anyone with a counterexample of a US metro area that withstood sustained market interest, without extensive new building, without skyrocket housing prices and the demographic shifts that come with them.
The only solution to the problem is for the city to build its way out of it.
There is no rent control regime that will, in the medium term, prevent money from ultimately swamping local concerns. Real estate is a good, not a moral principle, and most people who own real estate have a number.
I would be interested in anyone with a counterexample of a US metro area that withstood sustained market interest, without extensive new building, without skyrocket housing prices and the demographic shifts that come with them.
Talking to a few activists about this solution and most of them say that "building your way" out of it only makes sense if you are also building affordable housing.
I don't see a builder voluntarily building low-cost housing in the Mission district, just more luxury condos. A municipal ordinance that removes restrictions while imposing a requirement to build affordable housing along with more luxury condos might be the right solution.
I don't see a builder voluntarily building low-cost housing in the Mission district, just more luxury condos. A municipal ordinance that removes restrictions while imposing a requirement to build affordable housing along with more luxury condos might be the right solution.
> Talking to a few activists about this solution and most of them say that "building your way" out of it only makes sense if you are also building affordable housing.
They are incorrect. Building luxury housing will take some of the demand pressure off of non-luxury housing (which constitutes the vast majority of the housing in San Francisco), thereby lowering its price.
The only way this wouldn't work is if nobody could afford to live in the new luxury housing. But we know for sure that there are plenty of people who want to, can afford to, and are moving into the newer luxury developments as soon as they are available. The lower-quality housing those people move out of is now available for people who can't afford the new luxury housing.
They are incorrect. Building luxury housing will take some of the demand pressure off of non-luxury housing (which constitutes the vast majority of the housing in San Francisco), thereby lowering its price.
The only way this wouldn't work is if nobody could afford to live in the new luxury housing. But we know for sure that there are plenty of people who want to, can afford to, and are moving into the newer luxury developments as soon as they are available. The lower-quality housing those people move out of is now available for people who can't afford the new luxury housing.
> They are incorrect. Building luxury housing will take some of the demand pressure off of non-luxury housing (which constitutes the vast majority of the housing in San Francisco), thereby lowering its price.
Nothing stops capital from rushing into non-luxury housing, acquiring it, and then renting it at new "market rates".
You will need to swamp SFBA with housing (tens of thousands of new units a year) in order to drive down market prices.
Nothing stops capital from rushing into non-luxury housing, acquiring it, and then renting it at new "market rates".
You will need to swamp SFBA with housing (tens of thousands of new units a year) in order to drive down market prices.
"You will need to swamp SFBA with housing (tens of thousands of new units a year) in order to drive down market prices."
Or just wait ... what, another year or two ?
Every 5-8 years you have an opportunity to buy SFBA real estate at fire sale prices. If all of the activists and hand-wringers and bloggers[1] spent half as much time doing some simple financial planning instead of bemoaning the end of SF as they know it, they'd all be owners instead of renters and the "character" of the city (as they understand it) would be saved.
Or is it different this time ?[2]
[1] http://www.48hills.org/
[2] No, it isn't.
Or just wait ... what, another year or two ?
Every 5-8 years you have an opportunity to buy SFBA real estate at fire sale prices. If all of the activists and hand-wringers and bloggers[1] spent half as much time doing some simple financial planning instead of bemoaning the end of SF as they know it, they'd all be owners instead of renters and the "character" of the city (as they understand it) would be saved.
Or is it different this time ?[2]
[1] http://www.48hills.org/
[2] No, it isn't.
Non-luxury housing is already being rented at market rates, except for the rent-controlled units, but those are effectively not part of the liquid housing market anyway because the tenants won't leave. Hence the recent increase in landlords trying to force the tenants out, so the housing can be rented at the market rate, like all other housing already is.
Everything I wrote presupposes that all housing is rented at the market rate, including the non-luxury housing.
I suppose you put quotes around "market rates" as a form of sarcasm, but aside from rent-controlled units, all housing rents at the equilibrium market rate determined by supply and demand. If someone jacks up the price of older apartments and is still able to find tenants, all that proves is that those apartments had been rented out at a price below the market rate before now. The market rate is quite simply the amount people are willing to pay.
Everything I wrote presupposes that all housing is rented at the market rate, including the non-luxury housing.
I suppose you put quotes around "market rates" as a form of sarcasm, but aside from rent-controlled units, all housing rents at the equilibrium market rate determined by supply and demand. If someone jacks up the price of older apartments and is still able to find tenants, all that proves is that those apartments had been rented out at a price below the market rate before now. The market rate is quite simply the amount people are willing to pay.
> I suppose you put quotes around "market rates" as a form of sarcasm, but aside from rent-controlled units, all housing rents at the equilibrium market rate determined by supply and demand. If someone jacks up the price of older apartments and is still able to find tenants, all that proves is that those apartments had been rented out at a price below the market rate before now. The market rate is quite simply the amount people are willing to pay.
Hence, my quotes around "market rate". The tech industry can afford to keep pouring salaries into employee pockets, therefore, tech workers will always be able to price out non-tech workers seeking affordable rents in the bay area.
You will never be able to outbuild what Facebook, Google, and the like can pay their workers. Zoning is not the issue, a slanted labor market is. And the tech labor market will continue to soak up whatever housing comes onto the market.
Hence, my quotes around "market rate". The tech industry can afford to keep pouring salaries into employee pockets, therefore, tech workers will always be able to price out non-tech workers seeking affordable rents in the bay area.
You will never be able to outbuild what Facebook, Google, and the like can pay their workers. Zoning is not the issue, a slanted labor market is. And the tech labor market will continue to soak up whatever housing comes onto the market.
The Seattle and Denver metros are managing to keep a lower deficit of available housing than the SF Bay Area.
The high salaries of developers in the Bay Area are a reaction to that feedback loop. The companies you listed offer lower salaries to workers outside of the Bay Area, using what they call Prevailing Market Rate to determine pay bands.
I don't really understand why Apple, Facebook, Google, et al. spend so much money on hiring in the Bay Area instead of hiring aggressively outside of it in cheaper regions. Are they benefiting from the network effect anymore? I can understand startups needing to be close to VC funding sources, but how does it benefit the larger players?
The high salaries of developers in the Bay Area are a reaction to that feedback loop. The companies you listed offer lower salaries to workers outside of the Bay Area, using what they call Prevailing Market Rate to determine pay bands.
I don't really understand why Apple, Facebook, Google, et al. spend so much money on hiring in the Bay Area instead of hiring aggressively outside of it in cheaper regions. Are they benefiting from the network effect anymore? I can understand startups needing to be close to VC funding sources, but how does it benefit the larger players?
Quite a few of the best software engineers in the world live in the Bay Area and do not want to leave, and the larger players want to hire them. They could hire engineers elsewhere for a lot less money, but they want to hire these specific engineers, and are willing to pay what it takes.
> Quite a few of the best software engineers in the world live in the Bay Area and do not want to leave, and the larger players want to hire them. They could hire engineers elsewhere for a lot less money, but they want to hire these specific engineers, and are willing to pay what it takes.
Unless its more financially advantageous to train new engineers then keep paying the ones in SFBA? 7 billion people? Its not like only the brilliant ones are in SF.
Unless its more financially advantageous to train new engineers then keep paying the ones in SFBA? 7 billion people? Its not like only the brilliant ones are in SF.
It doesn't quite work like that... being a brilliant engineer isn't a matter of "training". And because of the attraction factor, yes, a lot of the brilliant ones end up in the bay area. For years the only place to do cutting edge tech was here, and it's pulled them in, from far away. Out of the country even.
So more than you think in fact.
So more than you think in fact.
None of the big software companies have remote development cultures, and most don't even have serious offices away from HQ. You can work for Google or Facebook away from SFBA, in a couple of smaller satellite offices, but it'll limit the kinds of things you can work on.
None of those companies are going to restructure their engineering cultures just to relieve housing pressure in SF. Just like the rest of the mainstream, they probably see the problem in SF as one of artificially limited supply, not demand.
None of those companies are going to restructure their engineering cultures just to relieve housing pressure in SF. Just like the rest of the mainstream, they probably see the problem in SF as one of artificially limited supply, not demand.
You will never be able to outbuild what Facebook, Google, and the like can pay their workers.
NYC 1921-1929 (prior modern zoning): "The total of 658,780 new dwellings averaged 73,198 units per year, a figure ... In the most prolific year, 1927, 94,367 dwellings were built"
https://books.google.com/books?id=AS1bGTRSggYC&pg=PA122&lpg=...
NYC 1921-1929 (prior modern zoning): "The total of 658,780 new dwellings averaged 73,198 units per year, a figure ... In the most prolific year, 1927, 94,367 dwellings were built"
https://books.google.com/books?id=AS1bGTRSggYC&pg=PA122&lpg=...
"You will never be able to outbuild what Facebook, Google, and the like can pay their workers."
Heh. Okay, let's not even try.
Heh. Okay, let's not even try.
Am I stopping you? Is anyone stopping you from trying? Get funding. Attempt to community organize renters. Attempt to sway public opinion and zoning commissions. You waste the next 5-10 years of your life spinning your wheels. Me? I've got more productive ways to spend my life then trying to live in a specific region. The world is a huge place.
>You will never be able to outbuild what Facebook, Google, and the like can pay their workers.
"Never" is a long time. Mature companies don't continue with gangbuster growth, and eventually company management has to look around for savings. San Francisco isn't immune to what happened to the rust belt cities.
"Never" is a long time. Mature companies don't continue with gangbuster growth, and eventually company management has to look around for savings. San Francisco isn't immune to what happened to the rust belt cities.
> You will need to swamp SFBA with housing (tens of thousands of new units a year) in order to drive down market prices.
Ok, when do we start?
Ok, when do we start?
When you convince the majority of SFBA property owners (ie voters) its in their interest.
> Nothing stops capital from rushing into non-luxury housing, acquiring it, and then renting it at new "market rates".
Supply and demand-- you build enough, and you cannot have artificially high "market rates."
Supply and demand-- you build enough, and you cannot have artificially high "market rates."
> They are incorrect. Building luxury housing will take some of the demand pressure off of non-luxury housing (which constitutes the vast majority of the housing in San Francisco), thereby lowering its price.
Agreed. Also, rich people can just buy an old Victorian and modernize the inside, converting a non-luxury housing unit into a luxury one. That's one less unit on the market for normal people to buy or rent.
For example: http://sf.curbed.com/2015/10/8/9913302/victorian-disembowele...
This is what happens when you don't allow development to proceed. It only makes things worse. Rich people will get their luxury housing, one way or another. The rest of us are left with fewer options.
Agreed. Also, rich people can just buy an old Victorian and modernize the inside, converting a non-luxury housing unit into a luxury one. That's one less unit on the market for normal people to buy or rent.
For example: http://sf.curbed.com/2015/10/8/9913302/victorian-disembowele...
This is what happens when you don't allow development to proceed. It only makes things worse. Rich people will get their luxury housing, one way or another. The rest of us are left with fewer options.
> Also, rich people can just buy an old Victorian and modernize the inside, converting a non-luxury housing unit into a luxury one.
Oh, it's worse than that: they can buy an old Victorian full of apartments and convert several non-luxury housing units into a single luxury housing unit. Which is something that tends to be generally encouraged by the zoning and planning codes, because single family houses are regulated much less strictly than any other kind of building, and also tend to be exempt from things like rent control.
Oh, it's worse than that: they can buy an old Victorian full of apartments and convert several non-luxury housing units into a single luxury housing unit. Which is something that tends to be generally encouraged by the zoning and planning codes, because single family houses are regulated much less strictly than any other kind of building, and also tend to be exempt from things like rent control.
There's another way it wouldn't work: if the pent-up demand is so large that it would take an impractical number of units to make any dent in the non-luxury market price. It's possible that this is the case: I read about one economic study that claimed that in SF today it would take about 100,000 new units before prices started falling, which is a pretty impractical number. (Sorry, I don't have a citation at the moment but I can try to find it later.)
Affordable housing requirements make sense to me, I don't think they're silly, and I'm glad to see them. But they make only a marginal difference.
The default trajectory for SF is towards pricing out the working class. Rich people can afford to live in SF even with its nosebleed prices, and they will hold a systemic and intractable advantage against the working class over the long term, because, again, real estate is a good, not a moral principle. When things get more expensive, rich people get more of those things.
I'm sure there are cases where this isn't true, but as a general rule, any opposition to new housing in SF concedes ground to wealthy owners at the expense of working-class renters.
If there's a place/time this scenario has played out differently elsewhere in the US, someone, please let me know.
The default trajectory for SF is towards pricing out the working class. Rich people can afford to live in SF even with its nosebleed prices, and they will hold a systemic and intractable advantage against the working class over the long term, because, again, real estate is a good, not a moral principle. When things get more expensive, rich people get more of those things.
I'm sure there are cases where this isn't true, but as a general rule, any opposition to new housing in SF concedes ground to wealthy owners at the expense of working-class renters.
If there's a place/time this scenario has played out differently elsewhere in the US, someone, please let me know.
"I'm sure there are cases where this isn't true, but as a general rule, any opposition to new housing in SF concedes ground to wealthy owners at the expense of working-class renters."
You're missing a few critically important pieces of context:
1) The city of SF gives developers two options for the low-income housing set-aside -- they can make a percentage of their units low income, or they can contribute a percentage of the project cost to a city-wide fund.
2) Developers hate both of these options, but they far prefer the latter one (donate to a fund), since it's a fixed cost.
3) Because the city is in competition with these same private developers for land, the low-income housing fund is at a significant disadvantage when it comes to actually building low-income housing. IIRC, the city has only built a few projects in the last decade.
4) As a result of 1-3, most of the community resistance to new construction ends up being about forcing developers to choose the first option (i.e. actually building low-income units). They use the only political leverage they have to compel this choice: the planning process.
5) Many/most skirmishes about permitting get characterized as "NIMBY opposition", when in reality, they're about low-income housing set-asides. It's just easy to point to the zero-influence yahoos who show up to any public meeting, and mischaracterize them as the source of the problem, so developers do this.
Basically what I'm saying is: unless compelled, there's no situation in SF where developers build anything other than luxury units. There's no ROI otherwise; land is too expensive. And they won't build new luxury units into a down market, either, for the same reasons. Low-income housing requirements are the only way this stuff happens.
So I'll turn your question around on you: name one US market that has successfully lowered real estate prices via construction. Even in places canonically held up as examples (e.g. Houston), affordability is maintained by sprawl...which is not an option for San Francisco. For the exact economic reasons you've cited, nobody buys or builds real estate that they know will lose value. That's the fundamental problem with the "build out of it" argument.
You're missing a few critically important pieces of context:
1) The city of SF gives developers two options for the low-income housing set-aside -- they can make a percentage of their units low income, or they can contribute a percentage of the project cost to a city-wide fund.
2) Developers hate both of these options, but they far prefer the latter one (donate to a fund), since it's a fixed cost.
3) Because the city is in competition with these same private developers for land, the low-income housing fund is at a significant disadvantage when it comes to actually building low-income housing. IIRC, the city has only built a few projects in the last decade.
4) As a result of 1-3, most of the community resistance to new construction ends up being about forcing developers to choose the first option (i.e. actually building low-income units). They use the only political leverage they have to compel this choice: the planning process.
5) Many/most skirmishes about permitting get characterized as "NIMBY opposition", when in reality, they're about low-income housing set-asides. It's just easy to point to the zero-influence yahoos who show up to any public meeting, and mischaracterize them as the source of the problem, so developers do this.
Basically what I'm saying is: unless compelled, there's no situation in SF where developers build anything other than luxury units. There's no ROI otherwise; land is too expensive. And they won't build new luxury units into a down market, either, for the same reasons. Low-income housing requirements are the only way this stuff happens.
So I'll turn your question around on you: name one US market that has successfully lowered real estate prices via construction. Even in places canonically held up as examples (e.g. Houston), affordability is maintained by sprawl...which is not an option for San Francisco. For the exact economic reasons you've cited, nobody buys or builds real estate that they know will lose value. That's the fundamental problem with the "build out of it" argument.
> Even in places canonically held up as examples (e.g. Houston), affordability is maintained by sprawl...which is not an option for San Francisco.
We do possess the technology to build higher buildings, rather than simply create sprawl. Housing is expensive enough in SF that said technology could be profitably employed.
This is especially important to consider in much of silicon valley, which has very few high buildings and not much density.
Adding more housing is probably not going to drastically drop prices, but it'll certainly help contain price increases.
We do possess the technology to build higher buildings, rather than simply create sprawl. Housing is expensive enough in SF that said technology could be profitably employed.
This is especially important to consider in much of silicon valley, which has very few high buildings and not much density.
Adding more housing is probably not going to drastically drop prices, but it'll certainly help contain price increases.
Silicon valley is about 60 minutes south of San Francisco by any mode of transportation convenient to low-income people. It's also a different government. So while I agree that there should be more high-density construction in, say, Mountain View, it's a different discussion.
As for higher buildings: I'm not going to argue that we shouldn't raise building heights in SF. I'm just saying that developers aren't going to voluntarily make any of those tall buildings cheaper than market rate. They also won't build more space than they know they can make a comfortable profit on, at current prices.
Again, name a city in the US where construction has lowered real estate prices. Developers don't have any natural incentive to do that.
As for higher buildings: I'm not going to argue that we shouldn't raise building heights in SF. I'm just saying that developers aren't going to voluntarily make any of those tall buildings cheaper than market rate. They also won't build more space than they know they can make a comfortable profit on, at current prices.
Again, name a city in the US where construction has lowered real estate prices. Developers don't have any natural incentive to do that.
> Developers don't have any natural incentive to do that.
Unless they're colluding, they'll keep building if it's profitable to do so. And there's a lot of margin for that in SF, especially if they get rid of some of the big obstacles.
There are various articles about 'filtering' and how it's not happening in cities like SF. Here's one - there are probably better ones:
http://www.forbes.com/sites/scottbeyer/2016/02/19/what-liber...
I know SV is a separate entity (entities, actually), but it's obviously very closely related.
People in the US are going to have to figure out density sooner or later. This stuff has knock-on effects all up and down the west coast. Lots of people move here to Bend to escape the bay area, and are driving up local prices...
Unless they're colluding, they'll keep building if it's profitable to do so. And there's a lot of margin for that in SF, especially if they get rid of some of the big obstacles.
There are various articles about 'filtering' and how it's not happening in cities like SF. Here's one - there are probably better ones:
http://www.forbes.com/sites/scottbeyer/2016/02/19/what-liber...
I know SV is a separate entity (entities, actually), but it's obviously very closely related.
People in the US are going to have to figure out density sooner or later. This stuff has knock-on effects all up and down the west coast. Lots of people move here to Bend to escape the bay area, and are driving up local prices...
<Unless they're colluding, they'll keep building if it's profitable to do so.>
if it's profitable over the long term.
Keep in mind that builders have to allocate ever-increasing percentages of units to "below-market housing".
Then, with the current bubble bursts, they're stuck with the below-market renters but will be scrambling to fill the rest of the units.
if it's profitable over the long term.
Keep in mind that builders have to allocate ever-increasing percentages of units to "below-market housing".
Then, with the current bubble bursts, they're stuck with the below-market renters but will be scrambling to fill the rest of the units.
"Filtering" -- interesting dynamic. So why isn't filtering working in SF?
> "Filtering is the idea that, as new market-rate housing is built, higher-income people move into it, leaving behind older housing stock for lower-income people."
> "Filtering is the idea that, as new market-rate housing is built, higher-income people move into it, leaving behind older housing stock for lower-income people."
> So why isn't filtering working in SF?
It does, there was an article here a few weeks ago where they had studied gentrification in SF and found that the areas that allowed more new (luxury) apartment construction had less reduction in poor people living in the area compared to the ones that didn't.
It does, there was an article here a few weeks ago where they had studied gentrification in SF and found that the areas that allowed more new (luxury) apartment construction had less reduction in poor people living in the area compared to the ones that didn't.
Because no one is building much of anything there!
name a city in the US where construction has lowered real estate prices.
I watched Seattle build like crazy in the late 90s. It seems like every month a huge skyrise apartment building came online in Belltown. Many thousands of units were added every year. It coincided with a continuing influx of people so I don't think it lowered the absolute price of real estate, but the laws of supply and demand are pretty inviolable. Seattle is pretty affordable by present SF standards, and with much of the same cultural appeal.
(I live in SF but used to spend lots of time in Seattle)
I watched Seattle build like crazy in the late 90s. It seems like every month a huge skyrise apartment building came online in Belltown. Many thousands of units were added every year. It coincided with a continuing influx of people so I don't think it lowered the absolute price of real estate, but the laws of supply and demand are pretty inviolable. Seattle is pretty affordable by present SF standards, and with much of the same cultural appeal.
(I live in SF but used to spend lots of time in Seattle)
I lived in Seattle from 2000-2008. Rent (and property values!) went up by -- more than inflation -- nearly every year that I lived there. They skyrocketed by the end of that period. Wikipedia says the population grew by 8% between 2000 and 2010.
I'll give you that Seattle is more affordable than San Francisco...but it's also at least twice the land area of SF, with fewer people and geographic constraints. And the weather is...an acquired taste.
I'll give you that Seattle is more affordable than San Francisco...but it's also at least twice the land area of SF, with fewer people and geographic constraints. And the weather is...an acquired taste.
SF is half as dense as Brooklyn. The major supply constraint is not geographic, its land use regulation.
Seattle is not without a strong NIMBY contingent of its own.
None of these places is really keeping up with demand. SF is simply the worst of the worst from that point of view.
I agree completely about the weather. I grew up in western Oregon and I don't know how it's possible to sustain human life further north without an IV of antidepressants!
None of these places is really keeping up with demand. SF is simply the worst of the worst from that point of view.
I agree completely about the weather. I grew up in western Oregon and I don't know how it's possible to sustain human life further north without an IV of antidepressants!
New York from 1910s-1930s. Manhattan had more people living on it in 1920 than it does right now. During that time there was a ton of construction: prices went from $10/sq ft to $15/sq ft. Then with the market crash, demand for the overbuilt city real estate went down, leading to costs more in the range of $5/sq ft: http://www.millersamuel.com/change-is-constant-100-years-of-...
No, housing prices do not necessarily immediately sink. Developers will only build when they believe they can turn a profit. But you can overbuild during boom times and allow housing prices to correct when demand diminishes.
No, housing prices do not necessarily immediately sink. Developers will only build when they believe they can turn a profit. But you can overbuild during boom times and allow housing prices to correct when demand diminishes.
LOL. I was waiting for someone to confuse an economic crash as an answer to my question. You get a prize for suggesting that the actual Great Depression is an example. Well done!
Obviously, with perfect foresight, few intelligent developers would choose to begin a construction project just before a major economic retraction. But if your suggestion is that we should build now, then wait for economic armageddon to really adjust prices downward, then I guess I can't argue.
Obviously, with perfect foresight, few intelligent developers would choose to begin a construction project just before a major economic retraction. But if your suggestion is that we should build now, then wait for economic armageddon to really adjust prices downward, then I guess I can't argue.
The cheap housing created by new construction isn't the new construction itself. It's a result of reduced demand for older housing stock.
http://cityobservatory.org/what-filtering-can-and-cant-do/
http://cityobservatory.org/what-filtering-can-and-cant-do/
I think that it is part of the same conversation. Many of the workers in SV live up here in SF because finding housing in the valley is such a pain. If there was more housing down south, a good chunk of the pressure would be taken off of San Francisco proper.
If building continues at the clip it has for the past 10 years, what do you think is going to happen to the SF real estate market? What I think will happen is that it will be owned almost entirely by wealthy people.
It's already owned entirely by wealthy people. That ship sailed a long time ago. Ripping down tenements and replacing them with luxury condos doesn't do anything to solve that problem.
If you ask me, the best we can do now is improve regional transit to make SF look more like Manhattan, and fight to hold on to whatever low-income property remains on the SF peninsula in the meantime.
If you ask me, the best we can do now is improve regional transit to make SF look more like Manhattan, and fight to hold on to whatever low-income property remains on the SF peninsula in the meantime.
You keep arguing against allowing construction because you don't see it as actually lowering housing prices. I don't think adding, say, 1000 units of affordable housing will lower housing prices in SF, but I don't see a reason to be politically opposed to such a proposal. Isn't the fact that it will ease the pressure on continue housing price increases reason enough to allow more development?
Point to the place where I argue against allowing construction.
I'm making a more nuanced point: indiscriminate high-end construction doesn't help, and that's what you get in SF without the kind of planning that people in this debate like to call "NIMBYism".
I'd personally love it if someone were to build 1000 units of affordable housing. The thing is, nobody is gonna do that unless they're forced to do it -- in this town, it takes years of fighting to get a fraction of that number built (for example: NEMA phase II had 52 'affordable' units built, out of a total of 489. Those other 437 units have some of the highest rents in San Francisco.)
http://sfist.com/2013/11/18/middle_class_screwed_in_current_...
I'm making a more nuanced point: indiscriminate high-end construction doesn't help, and that's what you get in SF without the kind of planning that people in this debate like to call "NIMBYism".
I'd personally love it if someone were to build 1000 units of affordable housing. The thing is, nobody is gonna do that unless they're forced to do it -- in this town, it takes years of fighting to get a fraction of that number built (for example: NEMA phase II had 52 'affordable' units built, out of a total of 489. Those other 437 units have some of the highest rents in San Francisco.)
http://sfist.com/2013/11/18/middle_class_screwed_in_current_...
So, if no one wants to do it, then where does this idea come from that it's a good idea? What's wrong with allowing the market to determine what kind of housing is going to be built? I'm skeptical about this whole Soviet Russia style concept where somehow the government ought to be involved in building a bunch of crappy, cheap, high-density apartment buildings.
I'm comfortable with the idea that the market will figure out the right amount of housing, and the right price for housing. I'm not saying that there should be no zoning laws, but within whatever zoning laws you have, why not allow it to be a free market? The forces of supply and demand do a good job shaping what supply is provided. Zoning itself may be a big part of the problem as well:
"The artificial upward pressure that zoning places on house prices—primarily by functioning as a supply constraint—also may undermine the market forces that would otherwise determine how much housing to build, where to build, and what type to build, leading to a mismatch between the types of housing that households want, what they can afford, and what is available to buy or rent" ( Jason Furman, Chairman, Council of Economic Advisers)
Perhaps we'd all be better off leaving much more of land use to the market as well.
I'm comfortable with the idea that the market will figure out the right amount of housing, and the right price for housing. I'm not saying that there should be no zoning laws, but within whatever zoning laws you have, why not allow it to be a free market? The forces of supply and demand do a good job shaping what supply is provided. Zoning itself may be a big part of the problem as well:
"The artificial upward pressure that zoning places on house prices—primarily by functioning as a supply constraint—also may undermine the market forces that would otherwise determine how much housing to build, where to build, and what type to build, leading to a mismatch between the types of housing that households want, what they can afford, and what is available to buy or rent" ( Jason Furman, Chairman, Council of Economic Advisers)
Perhaps we'd all be better off leaving much more of land use to the market as well.
Actually, if you could build 1000 units of really high end housing in place of, say, 100 units of average, low-density housing, it would still help, because it lessens the pressure on some of the existing housing.
That's the point, to increase the supply.
That's the point, to increase the supply.
I think you just need to build more of everything. They're building luxury condos because there is demand for them. So let them have their fun building luxury condos (which are likely higher profit) but at the same time let them also build affordable housing, which they can also make a profit off of.
Building becomes more expensive across the board (when things like Impact Fees are used to disincentive new construction).
Is it surprising that only large projects that benefit the well-to-do are feasible to pull through this tangle of regulation and fees? If we streamline construction and incentivize new projects, we will get not only new luxury housing, but more affordable housing for everyone.
Is it surprising that only large projects that benefit the well-to-do are feasible to pull through this tangle of regulation and fees? If we streamline construction and incentivize new projects, we will get not only new luxury housing, but more affordable housing for everyone.
You'd think so, but we actually already have such a thing, and it's not doing anything to mitigate the issue it was designed to address.
A city ordnance was passed in the late 70s, IIRC, which says that for every SRO (Single-Room Occupancy, basically, long-term flop house) in the Tenderloin that a developer wants to tear down and replace with a high-rise hotel or whatever, that developer must also put up another building with an equivalent number of SRO units to the one being torn down, somewhere else within the 7x7. So, you have to build two buildings for the price of ... well, at least two.
Now, given the current rental market in SF, I can't imagine we're actually very far from (or even already over) the inflection point where that becomes economically viable, but it's demonstrably not affecting the new construction rate in any way I've noticed...
A city ordnance was passed in the late 70s, IIRC, which says that for every SRO (Single-Room Occupancy, basically, long-term flop house) in the Tenderloin that a developer wants to tear down and replace with a high-rise hotel or whatever, that developer must also put up another building with an equivalent number of SRO units to the one being torn down, somewhere else within the 7x7. So, you have to build two buildings for the price of ... well, at least two.
Now, given the current rental market in SF, I can't imagine we're actually very far from (or even already over) the inflection point where that becomes economically viable, but it's demonstrably not affecting the new construction rate in any way I've noticed...
All construction drives down housing prices in the region, by providing alternatives to bidding up any particular piece of housing. IMHO, "affordable housing" is a misnomer: all expansion of residential stock makes housing more affordable.
When people say "affordable housing", I think they mean affordable by non-tech workers, like teachers or police officers. Not just 10% cheaper, more like 50+% cheaper.
> I don't see a builder voluntarily building low-cost housing in the Mission district, just more luxury condos. A municipal ordinance that removes restrictions while imposing a requirement to build affordable housing along with more luxury condos might be the right solution.
Yeah, that is pretty much the only solution.
The other real option is going the NYC route of subsidized housing. However, I'm not sure SF really has the revenues for this to be viable tho.
http://www1.nyc.gov/site/nycha/eligibility/eligibility.page
Yeah, that is pretty much the only solution.
The other real option is going the NYC route of subsidized housing. However, I'm not sure SF really has the revenues for this to be viable tho.
http://www1.nyc.gov/site/nycha/eligibility/eligibility.page
Inclusionary zoning is both a perfectly reasonable idea and, by empirical evidence, dramatically insufficient to spur affordable housing production:
http://cityobservatory.org/inclusionary-zoning-has-a-scale-p...
Much of the problem stems from undersupply driving formerly affordable housing to gentrify— that's why I, as a well-paid programmer, live in a formerly-abandoned tenement.
Much of the problem stems from undersupply driving formerly affordable housing to gentrify— that's why I, as a well-paid programmer, live in a formerly-abandoned tenement.
If everyone builds luxury condos then there is too much competition and the price declines, builders will seek to build more profitable units. So long as "affordable housing" is above cost, then eventually it will be the most attractive new good to provide the market.
It will take a long time for the process to work though, because it takes years to build things, plus a year for Leases to cycle. In the meantime I imagine NIMBYs will say "see? nothing improved".
It will take a long time for the process to work though, because it takes years to build things, plus a year for Leases to cycle. In the meantime I imagine NIMBYs will say "see? nothing improved".
It depends on the timeline you're looking at. If you think of the next 5 to 10 years then building luxury condos doesn't help.
However if you look at a 30 to 40 year timeline and we allow all the market rate houses to be built that developers want then those same "luxury" houses will become more affordable over time.
Instead we're sand bagging any development in favour of 25% affordable housing to be built by private developers.
However if you look at a 30 to 40 year timeline and we allow all the market rate houses to be built that developers want then those same "luxury" houses will become more affordable over time.
Instead we're sand bagging any development in favour of 25% affordable housing to be built by private developers.
> Talking to a few activists about this solution and most of them say that "building your way" out of it only makes sense if you are also building affordable housing.
That's because you're talking to the wrong people. Talk to urban planners instead. As a rule of thumb, activists lacking specialized technical education are useful for pointing to problems and useless for pointing to solutions.
That's because you're talking to the wrong people. Talk to urban planners instead. As a rule of thumb, activists lacking specialized technical education are useful for pointing to problems and useless for pointing to solutions.
That's why the city needs to support building across price ranges, without enforcing prices at a neighborhood level.
It's OK to have wealthier areas. The problem we want to avoid is forcing slightly less wealthy people to rent from areas that are significantly less wealthy... because that's what drives people away.
It's OK to have wealthier areas. The problem we want to avoid is forcing slightly less wealthy people to rent from areas that are significantly less wealthy... because that's what drives people away.
That's the SFO optimized solution.
Fortunately, the market isn't just SFO. Eventually the prices are so out of whack, and the governance and tax structure gets onerous enough that people and businesses head off to other places. New York City and State circa 1965 is a great example of this phenomenon.
There were sleepy small towns and farms within 15-20 miles of Manhattan welo into the 70s.
Fortunately, the market isn't just SFO. Eventually the prices are so out of whack, and the governance and tax structure gets onerous enough that people and businesses head off to other places. New York City and State circa 1965 is a great example of this phenomenon.
There were sleepy small towns and farms within 15-20 miles of Manhattan welo into the 70s.
Do you have any citations for your assertion about NYC circa '65?
I'm not doubting you, I'm just curious and would like to read more about it.
I'm not doubting you, I'm just curious and would like to read more about it.
Good places to start:
- Wikipedia has a good survey https://en.m.wikipedia.org/wiki/History_of_New_York_City_(19...
- later chapters of "The Power Broker" by Robert Caro
- Google around about the shift of shipping from Brooklyn/Manhattan to Newark
- Chekc out the Lindsay administration and crippling transit and sanitation strikes
- finance companies fled NYC from the 60s till the 80s. I read a good book in college about the reasons that I'll try to find.
The 1970s were a terrible time for NYC -- over a million people left. If you have ever driven up the Major Deegan expressway in the Bronx towards Yonkers/White Plains, the level of decay was shocking. When I was a kid in the 80s, easily 80% of the buildings were vacant, with broken windows and druggies in plain sight. I watched a car get stripped before my eyes while stopped at a light two blocks from Yankee stadium.
- Wikipedia has a good survey https://en.m.wikipedia.org/wiki/History_of_New_York_City_(19...
- later chapters of "The Power Broker" by Robert Caro
- Google around about the shift of shipping from Brooklyn/Manhattan to Newark
- Chekc out the Lindsay administration and crippling transit and sanitation strikes
- finance companies fled NYC from the 60s till the 80s. I read a good book in college about the reasons that I'll try to find.
The 1970s were a terrible time for NYC -- over a million people left. If you have ever driven up the Major Deegan expressway in the Bronx towards Yonkers/White Plains, the level of decay was shocking. When I was a kid in the 80s, easily 80% of the buildings were vacant, with broken windows and druggies in plain sight. I watched a car get stripped before my eyes while stopped at a light two blocks from Yankee stadium.
>The only solution to the problem is for the city to build its way out of it.
no, the only solution is to improve transit and infrastructure
no, the only solution is to improve transit and infrastructure
I wouldn't say this is the only solution, but I think it's the best one. "Affordable housing" gives you long waiting lists and too many opportunities for political patronage and graft.
How does that help? We can build really nice trains to low density suburbia?
They could help a lot simply by adding capacity to existing transit, especially CalTrain and BART.
BART gets so overloaded that smart people wanting to board downstream of the choke points take a train the wrong direction for a few stops to get a seat by boarding upstream of the rush.
BART gets so overloaded that smart people wanting to board downstream of the choke points take a train the wrong direction for a few stops to get a seat by boarding upstream of the rush.
How about both?
> The only solution to the problem is for the city to build its way out of it.
I dunno, accepting that most other places on the planet would be a better place to {move|start a business} might be a decent place.
I dunno, accepting that most other places on the planet would be a better place to {move|start a business} might be a decent place.
Nobody is going to do that. They don't have to. There is absolutely no formal process to require them to. Is this really the endgame of the anti-tech movement in SF? To shame people out of the city? We are talking about people so shameless they can raise a 5MM seed round for a cat-sharing startup.
It seems to me --- and I'd welcome an argument to the contrary --- that simultaneously protesting tech and opposing new building is, in effect, a strategy to concede the whole city to the wealthy.
It seems to me --- and I'd welcome an argument to the contrary --- that simultaneously protesting tech and opposing new building is, in effect, a strategy to concede the whole city to the wealthy.
I wouldn't say it's about shame so much as common sense. Why build where resources are scarce? Even the plentiful developers are more expensive for living costs. For individuals, there are no shortage of jobs elsewhere.
To be fair, the city has enacted some rather ill-conceived regulatory changes to encourage tech growth, most of which should probably be reversed. It's not about shaming...it's a matter of good public policy.
It makes no sense to me, for example, that we should be giving tax incentives to developers to convert buildings on Market street into office space. Why not apartments? Or how about the fact that we're incentivizing large companies to hire more employees in the city? Or that we're looking the other way while startups colonize all of that shiny new residential construction? (Aside: one of the under-reported scandals of this boom is the number of market-rate apartments that are being used as offices. Who can afford a $6,000 one bedroom? A startup office.)
It's hard to argue that these are intelligent responses to the growth crisis.
I think this is a bubble and it will eventually pop. But we could be doing more to manage the explosion in the meantime.
It makes no sense to me, for example, that we should be giving tax incentives to developers to convert buildings on Market street into office space. Why not apartments? Or how about the fact that we're incentivizing large companies to hire more employees in the city? Or that we're looking the other way while startups colonize all of that shiny new residential construction? (Aside: one of the under-reported scandals of this boom is the number of market-rate apartments that are being used as offices. Who can afford a $6,000 one bedroom? A startup office.)
It's hard to argue that these are intelligent responses to the growth crisis.
I think this is a bubble and it will eventually pop. But we could be doing more to manage the explosion in the meantime.
> ...one of the under-reported scandals of this boom is the number of market-rate apartments that are being used as offices.
The fix is easy: If the folks using that apartment as an office aren't also using that apartment as their living quarters, call City Planning.
If they are also living in that apartment, who cares? Tolerance of low-to-no foot traffic commercial activity (such as programming work) inside one's apartment has been a thing for a very, very long time.
The fix is easy: If the folks using that apartment as an office aren't also using that apartment as their living quarters, call City Planning.
If they are also living in that apartment, who cares? Tolerance of low-to-no foot traffic commercial activity (such as programming work) inside one's apartment has been a thing for a very, very long time.
Your definition of "easy" is only actually easy if we ignore the little problems of detection, enforcement and proof. Anyone can call the city on illegal residential property uses today, but obviously, that approach isn't working I can flip through the listings of any newer residential building in SOMA, and see 50% of the units occupied by startups.
As for tolerance: what is acceptable in small doses becomes pathological when taken to extremes. Just like AirBnBs, it's not an issue when a handful of apartments are being used for commercial activity in a healthy market. When you have a huge percentage of renters doing it in a housing crunch, it's a concern.
As for tolerance: what is acceptable in small doses becomes pathological when taken to extremes. Just like AirBnBs, it's not an issue when a handful of apartments are being used for commercial activity in a healthy market. When you have a huge percentage of renters doing it in a housing crunch, it's a concern.
It might not be, if the protests start to become effective in lowering demand.
Right now, tech workers want to live in SF. But if they see hatred and protests against them at every corner, then at some point those tech workers won't want to live there anymore.
Similarly, if tech workers arriving drives up prices which drives up the homeless rate, making the city less and less pleasant to walk around in, then at some point those tech workers won't want to live there anymore.
A third way to decrease demand is if the city increases taxes on the well-off, making it much more expensive to live in San Francisco if you have a software engineer's salary.
I think all of those are sad, but if we don't build a lot more housing, things will get a lot worse. Either things will spiral out of control, or they'll get so bad that demand starts to fall.
Right now, tech workers want to live in SF. But if they see hatred and protests against them at every corner, then at some point those tech workers won't want to live there anymore.
Similarly, if tech workers arriving drives up prices which drives up the homeless rate, making the city less and less pleasant to walk around in, then at some point those tech workers won't want to live there anymore.
A third way to decrease demand is if the city increases taxes on the well-off, making it much more expensive to live in San Francisco if you have a software engineer's salary.
I think all of those are sad, but if we don't build a lot more housing, things will get a lot worse. Either things will spiral out of control, or they'll get so bad that demand starts to fall.
People don't want the truth, they wan't someone to blame. Rich 20-something white males from out of town are a very convenient and easy target.
Brogrammers ruining this city.
Brogrammers ruining this city.
Oh, the "bros" (and less sardonically, the tech crowd in general -- independent of age, ethnicity and gender) themselves aren't to blame. They are but passive agents.
However, the influx of their paychecks is quite obviously a factor. Attempts to deny this fact are just that... denial.
However, the influx of their paychecks is quite obviously a factor. Attempts to deny this fact are just that... denial.
Yeah, the middle class is such a damper on this city. How dare the middle class want to live in the Bay Area.
Also, let's completely ignore that medical wages are higher on average than tech in the city, and that the major redevelopment of China Basin s/Mission Bay/ was spurned by the med sector of the economy; tech worker's middle-class wages are to blame.
Also, let's completely ignore that medical wages are higher on average than tech in the city, and that the major redevelopment of China Basin s/Mission Bay/ was spurned by the med sector of the economy; tech worker's middle-class wages are to blame.
A $120k median salary definitely isn't "middle class."
And there's been nothing like an influx of medical workers that would any way be comparable to the tech influx since the start of the century.
EDIT: Also, medical workers, though larger as a force head-count wise, appear to have decidedly lower median salaries ($67k) than to tech workers. Based on some quick searches, my guesstimate above appears to have been a bit off, but not by much -- and only when we include the non-engineering component of "tech" workers (i.e. marketing and regular admin types).
In any case there definitely appears to be a significant gap between the two industries, in terms of median salary.
And there's been nothing like an influx of medical workers that would any way be comparable to the tech influx since the start of the century.
EDIT: Also, medical workers, though larger as a force head-count wise, appear to have decidedly lower median salaries ($67k) than to tech workers. Based on some quick searches, my guesstimate above appears to have been a bit off, but not by much -- and only when we include the non-engineering component of "tech" workers (i.e. marketing and regular admin types).
In any case there definitely appears to be a significant gap between the two industries, in terms of median salary.
> A $120k median salary definitely isn't "middle class."
In the San Francisco Bay Area, it is.
The median household income for SF residents is $78,378. [1]
However, to purchase a home at the median price ($682,410), a family must make $115,510. [2]
One article suggests the ceiling for middle class in the Bay Area is $170k. [3]
It appears your focus is nationwide, and not regional.
[1] http://www.census.gov/quickfacts/map/PST045214/06075
[2] http://blog.sfgate.com/pender/2014/02/18/how-much-income-do-...
[3] http://www.npr.org/sections/money/2015/03/19/394057221/how-m...
Edit: added [3]
In the San Francisco Bay Area, it is.
The median household income for SF residents is $78,378. [1]
However, to purchase a home at the median price ($682,410), a family must make $115,510. [2]
One article suggests the ceiling for middle class in the Bay Area is $170k. [3]
It appears your focus is nationwide, and not regional.
[1] http://www.census.gov/quickfacts/map/PST045214/06075
[2] http://blog.sfgate.com/pender/2014/02/18/how-much-income-do-...
[3] http://www.npr.org/sections/money/2015/03/19/394057221/how-m...
Edit: added [3]
What in the world? You're not buying a $682K house on a $115K salary. Not a chance. That's like 6x your salary. Isn't the rule of thumb no more than 3x? Assuming 20% down, what lender in their right mind is going to lend you 4.5x+ your salary to buy a house?
You can do much less than 20% down; you can get away with 5% down (with mortgage insurance).
In my experience, lenders will actually lend you past what is a good idea for you. It's possible to purchase the house on that income....if you spend all your money on it and nothing else.
In my experience, lenders will actually lend you past what is a good idea for you. It's possible to purchase the house on that income....if you spend all your money on it and nothing else.
Thatsthepoint.jpg
You're looking at it wrong.
Lower/middle/upper-class isn't just based on the relative distribution of income 10 miles radius of where you live. Some areas have different proportions of lower, middle, and upper class.
People in high-cost areas are quick to scale everything against the cost of living, but forget that cost-of-living is a economic signal of very high value for living there.
It's not that middle class is $170k. It's that the Bay area has a larger proportion of middle and upper class than other areas.
Lower/middle/upper-class isn't just based on the relative distribution of income 10 miles radius of where you live. Some areas have different proportions of lower, middle, and upper class.
People in high-cost areas are quick to scale everything against the cost of living, but forget that cost-of-living is a economic signal of very high value for living there.
It's not that middle class is $170k. It's that the Bay area has a larger proportion of middle and upper class than other areas.
There's a very obvious logical flaw in your argument.
Sorry -- I don't have time to flesh it out for you. But just look more closely. I'm sure you'll see it.
Sorry -- I don't have time to flesh it out for you. But just look more closely. I'm sure you'll see it.
[deleted]
"A $120k median salary definitely isn't "middle class.""
No, but it's close.
A middle-class family could live in San Francisco on 150-180k if they're frugal and don't insist on living in a nice neighborhood or having good transit access.
No, but it's close.
A middle-class family could live in San Francisco on 150-180k if they're frugal and don't insist on living in a nice neighborhood or having good transit access.
No, but it's close.
Median individual income in the Bay Area is around $50k.
So you're saying $120k is "close to" $50k?
A middle-class family could live in San Francisco on 150-180k
Median family income is around $78k.
Are you sure, then, that you don't see anything wrong with the logic in the argument you're making?
Median individual income in the Bay Area is around $50k.
So you're saying $120k is "close to" $50k?
A middle-class family could live in San Francisco on 150-180k
Median family income is around $78k.
Are you sure, then, that you don't see anything wrong with the logic in the argument you're making?
You're missing the point that middle class is a subjective measure. You're arguing that its median income. They're arguing its based on affordability markers.
You're missing the point that middle class is a subjective measure.
It's a bit fuzzy. But not that fuzzy.
They're arguing its based on affordability markers.
That's not my reading of what "they" are saying (aside from the fact which posters here, aside from the one a few up from here, that you're referring to is more than a bit unclear).
But more to they point -- they're welcome to "argue" that point if they like. But if they do, it doesn't seem to have much to do with the commonly accepted notion of "middle class":
https://en.wikipedia.org/wiki/Middle_class
For which "median income" might not be an exact equivalent -- but is good enough, to a first-order approximation.
"Median affordability in the most expensive large-scale real estate market in the U.S.", in comparison -- just doesn't make very much sense.
It's a bit fuzzy. But not that fuzzy.
They're arguing its based on affordability markers.
That's not my reading of what "they" are saying (aside from the fact which posters here, aside from the one a few up from here, that you're referring to is more than a bit unclear).
But more to they point -- they're welcome to "argue" that point if they like. But if they do, it doesn't seem to have much to do with the commonly accepted notion of "middle class":
https://en.wikipedia.org/wiki/Middle_class
For which "median income" might not be an exact equivalent -- but is good enough, to a first-order approximation.
"Median affordability in the most expensive large-scale real estate market in the U.S.", in comparison -- just doesn't make very much sense.
50k is now middle class?
At this point Poe's law is ringing. You must be trolling.
At this point Poe's law is ringing. You must be trolling.
"The Census Bureau estimated [nationwide] real median household income at $53,657 for 2014 and $54,462 in 2013."
-- an easily findable source.
EDIT: Yes, of course there's been a gap between (current) median income in the Bay Area and the national median. But it's a round-off error compared to the more basic confusion in this thread between household and personal incomes. And even less significant compared to the brokenness of defining "middle class" as "able to afford median real estate prices in the current market."
-- an easily findable source.
EDIT: Yes, of course there's been a gap between (current) median income in the Bay Area and the national median. But it's a round-off error compared to the more basic confusion in this thread between household and personal incomes. And even less significant compared to the brokenness of defining "middle class" as "able to afford median real estate prices in the current market."
I think what's been pointed out to you (maybe you've misunderstood) is that it's not really possible to use the national median income to determine 'class' in any real sense. It's too greatly affected by cost of living, household size, and numerous other factors.
It would obviously be difficult to describe someone with an income of $120,000 as 'upper class' – especially in the Bay area, where the cost of living is so high. That kind of leaves 'middle class' as the realistic descriptive.
It would obviously be difficult to describe someone with an income of $120,000 as 'upper class' – especially in the Bay area, where the cost of living is so high. That kind of leaves 'middle class' as the realistic descriptive.
I think what's been pointed out to you (maybe you've misunderstood) is that it's not really possible to use the national median income to determine 'class' in any real sense.
No -- everything that's been "pointed out" in this sub-thread thus far seems to conflate household with individual income figures. Which is of course a non-starter, basic logic-wise. So that's where about 80% of the noise in this thread seems to come from.
The other 20% comes from a hidden circularity: In that people are now basically saying that "median incomes in a city that has become affordable only to the upper-middle, and higher classes in very recent years, are uh, you know, middle class for that city." Which you can buy into, if you want. But it completely circumnavigates the question of whether things haven't drastically changed in the city in the past 20 years -- when it actually was much more of middle class city than it is now.
But then again, if one has no recollection of the former SF at all -- like, fairly stated, your average tech worker filing into the city, these days -- then I suppose that kind reasoning might make a lot of sense.
(Parenthetically: I'll acknowledge that there's some jitter between "median income" and "middle class," even restricted to a particular geographic area. But compared to the disconnect that started this whole sub-thread -- someone basically saying that tech worker salaries are "middle class"; and other people using personal and household income figures interchangably -- it's fairly negligible).
No -- everything that's been "pointed out" in this sub-thread thus far seems to conflate household with individual income figures. Which is of course a non-starter, basic logic-wise. So that's where about 80% of the noise in this thread seems to come from.
The other 20% comes from a hidden circularity: In that people are now basically saying that "median incomes in a city that has become affordable only to the upper-middle, and higher classes in very recent years, are uh, you know, middle class for that city." Which you can buy into, if you want. But it completely circumnavigates the question of whether things haven't drastically changed in the city in the past 20 years -- when it actually was much more of middle class city than it is now.
But then again, if one has no recollection of the former SF at all -- like, fairly stated, your average tech worker filing into the city, these days -- then I suppose that kind reasoning might make a lot of sense.
(Parenthetically: I'll acknowledge that there's some jitter between "median income" and "middle class," even restricted to a particular geographic area. But compared to the disconnect that started this whole sub-thread -- someone basically saying that tech worker salaries are "middle class"; and other people using personal and household income figures interchangably -- it's fairly negligible).
No -- everything that's been "pointed out" in this sub-thread thus far seems to conflate household with individual income figures.
That's really irrelevant. Let's assume that a household with two tech workers has a household income of $250,000, or $125,000 each, to avoid any of this 'noise'.
This figure is still below that which is required to buy the media property in San Francisco! (http://www.businessinsider.com/san-franciscos-epic-housing-c...) The median house price in SF is in excess of $1.3M!
I find it difficult to agree that a household who cannot afford to buy a house can realistically be considered 'upper class'. Upper-middle, maybe. That's not a 'hidden circularity' – the price increase in housing has reduced the affordability of the area, meaning that people do not fall into the same economic class that they might were they to live elsewhere. How else does one define economic class, if not in terms of the affordability of their environment?
I absolutely believe that SF has changed dramatically since it became the foremost global tech hub. I don't doubt that large tech salaries have played a part in that. But it doesn't magically make people who receive those salaries 'upper class'.
That's really irrelevant. Let's assume that a household with two tech workers has a household income of $250,000, or $125,000 each, to avoid any of this 'noise'.
This figure is still below that which is required to buy the media property in San Francisco! (http://www.businessinsider.com/san-franciscos-epic-housing-c...) The median house price in SF is in excess of $1.3M!
I find it difficult to agree that a household who cannot afford to buy a house can realistically be considered 'upper class'. Upper-middle, maybe. That's not a 'hidden circularity' – the price increase in housing has reduced the affordability of the area, meaning that people do not fall into the same economic class that they might were they to live elsewhere. How else does one define economic class, if not in terms of the affordability of their environment?
I absolutely believe that SF has changed dramatically since it became the foremost global tech hub. I don't doubt that large tech salaries have played a part in that. But it doesn't magically make people who receive those salaries 'upper class'.
That's really irrelevant.
It amounts to a 50% noise factor, across the board. Which means arguments based on this fudge factor basically don't make any sense, in my view.
But if you want to to a different route and consider this disconnect "irrelevant", hey, that's fine.
As to the "circularity" part of what you're saying:
If one defines the "middle-upper" distinction in terms of affordability within the current SF real estate bubble then your argument would be a lot more sensible.
But I don't buy that definition; I don't think it's tenable; and I don't think it jibes would how most people (who aren't disgruntled SF tech workers) would define that distinction. I think it's fundamentally flawed, in other words (and quite obviously so).
Again though, that's just me -- and basically everyone I've come in contact with in regard to the whole inequality / affordability debate since long before it became the huge, glaring thing that it is now. You can of course define it however you like.
It amounts to a 50% noise factor, across the board. Which means arguments based on this fudge factor basically don't make any sense, in my view.
But if you want to to a different route and consider this disconnect "irrelevant", hey, that's fine.
As to the "circularity" part of what you're saying:
If one defines the "middle-upper" distinction in terms of affordability within the current SF real estate bubble then your argument would be a lot more sensible.
But I don't buy that definition; I don't think it's tenable; and I don't think it jibes would how most people (who aren't disgruntled SF tech workers) would define that distinction. I think it's fundamentally flawed, in other words (and quite obviously so).
Again though, that's just me -- and basically everyone I've come in contact with in regard to the whole inequality / affordability debate since long before it became the huge, glaring thing that it is now. You can of course define it however you like.
Median income is not necessarily middle class.
I doubt there's been a sudden influx of med related workers. I suspect the Bay Area's universities, pharmaceutical, and biotech companies have created a slow influx over time. Like tech, a long slow one. Because a large chunk of "tech" is medical related.
It's worth excluding the lab techs, genetic counselors, admins, etc., from the medical field if you're going to exclude the non-engineers from the tech field. It makes for a more apples to apples comparison.
It's worth excluding the lab techs, genetic counselors, admins, etc., from the medical field if you're going to exclude the non-engineers from the tech field. It makes for a more apples to apples comparison.
What percent of Bay Area "tech" is medical-related?
I couldn't give a percentage, but there are a lot of biotech companies in the peninsula, especially in South San Francisco, and Kaiser Permanente is one of the largest employers in the area. UCSF and Stanford Medical Center are also major employers.
There is widespread, often reasonable disagreement about what middle class means, either in terms of salary or total assets. Or cultural practice.
It's true, people do under-acknowledge other industries - law, finance, medicine.
http://www.sfgate.com/business/article/Tech-isn-t-biggest-S-...
Average SF health-related salary in 2014 - 67k.
"The industry employs 20 percent of the city’s workers, with nearly 122,000 jobs. The average annual wage across all jobs in the sector — from pharmacists to surgeons to genetic counselors — was $67,410."
When does health stop and tech being? Often it's a fuzzy line.
It's true, people do under-acknowledge other industries - law, finance, medicine.
http://www.sfgate.com/business/article/Tech-isn-t-biggest-S-...
Average SF health-related salary in 2014 - 67k.
"The industry employs 20 percent of the city’s workers, with nearly 122,000 jobs. The average annual wage across all jobs in the sector — from pharmacists to surgeons to genetic counselors — was $67,410."
When does health stop and tech being? Often it's a fuzzy line.
tech worker's middle-class wages
Tech workers salaries in SF are anything but middle class. If you're single and making more than $72k per year, you're in the upper class.
"The three highest-paying positions in San Francisco, as self-reported by Glassdoor members, are all in tech. The average salary in San Francisco for a data scientist is $127,000 a year; software engineers make $103,000 a year; and database administrators earn $77,000."[0]
[0] - http://www.pewresearch.org/fact-tank/2015/12/09/are-you-in-t...
[1] - http://www.nerdwallet.com/blog/loans/student-loans/average-s...
Tech workers salaries in SF are anything but middle class. If you're single and making more than $72k per year, you're in the upper class.
"The three highest-paying positions in San Francisco, as self-reported by Glassdoor members, are all in tech. The average salary in San Francisco for a data scientist is $127,000 a year; software engineers make $103,000 a year; and database administrators earn $77,000."[0]
[0] - http://www.pewresearch.org/fact-tank/2015/12/09/are-you-in-t...
[1] - http://www.nerdwallet.com/blog/loans/student-loans/average-s...
It depends on the tech worker. Not all tech workers are in those roles. It'd be interesting to see the distribution of all tech salaries. Entry level marketing, support, qa, and sales are all in tech, too.
https://medium.com/@taliajane/an-open-letter-to-my-ceo-fb73d...
I wonder how popular Glassdoor is outside of tech. And there's always the uncertainty about how accurate it is.
The calculator says: "One limitation of the calculator is that the income range that defines each income tier does not vary across regions or cities within the U.S. If you live in a relatively expensive area, such as New York City, it is possible that the calculator places you in a higher income tier than it might if a cost of living adjustment had been made. Conversely, if you live in an inexpensive part of the country, the calculator may place you in a lower income tier than it otherwise might."
https://medium.com/@taliajane/an-open-letter-to-my-ceo-fb73d...
I wonder how popular Glassdoor is outside of tech. And there's always the uncertainty about how accurate it is.
The calculator says: "One limitation of the calculator is that the income range that defines each income tier does not vary across regions or cities within the U.S. If you live in a relatively expensive area, such as New York City, it is possible that the calculator places you in a higher income tier than it might if a cost of living adjustment had been made. Conversely, if you live in an inexpensive part of the country, the calculator may place you in a lower income tier than it otherwise might."
If you're single and making more than $72k per year, you're in the upper class
SF Median household income is 77k, average is 104k. Earning 72k does not put you in the upper class, not in the slightest.
This is dead wrong.
"Upper-middle class" may have been a better description for tech worker incomes, on average. Which I'm sure you know caries a very different cachet, socially and politically, than "middle class"
Basic point being (and more germane to the thread as a whole) "middle class" as a label for tech workers is clearly off base.
"Upper-middle class" may have been a better description for tech worker incomes, on average. Which I'm sure you know caries a very different cachet, socially and politically, than "middle class"
Basic point being (and more germane to the thread as a whole) "middle class" as a label for tech workers is clearly off base.
72k isn't even 'upper-middle'. You have been backpedalling all over, and in another comment even claimed 50k was the number for 'middle class'. You have no idea what middle class means or you are trolling.
The real upper class laughs at you guys arguing amongst yourselves over what qualifies as "middle class" and "upper middle class" and "upper lower middle class" and "lower middle upper middle class". So silly.
You're referring to household income.
The context of this sub-thread (starting 3 up from here) clearly referred to "salary", a.k.a. personal income. The two categories are, of course, very different. Which explains the great bulk of the noise in this discussion.
You might want to read things more carefully before accusing people of backpedalling and trolling, in other words.
The context of this sub-thread (starting 3 up from here) clearly referred to "salary", a.k.a. personal income. The two categories are, of course, very different. Which explains the great bulk of the noise in this discussion.
You might want to read things more carefully before accusing people of backpedalling and trolling, in other words.
"Tech workers salaries in SF are anything but middle class. If you're single and making more than $72k per year, you're in the upper class."
Yeah, in Dipstick, Nebraska.
But in SF $72k isn't upper class or even middle class.
Yeah, in Dipstick, Nebraska.
But in SF $72k isn't upper class or even middle class.
I used to support the view articulated in this article, but I'm more skeptical now.
If higher density were the solution I would expect to see highly dense cities have cheaper real estate than less dense cities. Instead, it's just the opposite.
That's because of the other side of the economic equation: demand.
And therein lies the devil. I hypothesize that increasing the supply of housing in a city actually increases demand in such a way that the supply increase has little downward effect on housing costs.
It makes sense why this is the case. If more people live in a city, then there's more people who are likely to move there. If you know a bunch of classmates who are all moving to San Francisco after graduation that's going to make you more likely to move to San Francisco too.
So yes, supply exerts downward pressure on housing costs, but I would bet that heigthened density then causes a near commensurate increase in demand such that the supply increase has little effect.
If higher density were the solution I would expect to see highly dense cities have cheaper real estate than less dense cities. Instead, it's just the opposite.
That's because of the other side of the economic equation: demand.
And therein lies the devil. I hypothesize that increasing the supply of housing in a city actually increases demand in such a way that the supply increase has little downward effect on housing costs.
It makes sense why this is the case. If more people live in a city, then there's more people who are likely to move there. If you know a bunch of classmates who are all moving to San Francisco after graduation that's going to make you more likely to move to San Francisco too.
So yes, supply exerts downward pressure on housing costs, but I would bet that heigthened density then causes a near commensurate increase in demand such that the supply increase has little effect.
This is just wrong. Every reputable economist I've come across disagrees with what you're saying. As with climate change, if we ignore experts, we will needlessly careen toward disaster.
Conservative economists like Edward Glaeser have long opposed restrictive zoning[1]. President Obama’s Chief Economist sees that “income inequality across cities remains entrenched and may even be exacerbated” as a result of restrictive zoning[2]. According to Nobel laureate and New York Times columnist Paul Krugman, “this is an issue on which you don’t have to be a conservative to believe that we have too much regulation.”[3]
[1] http://www.city-journal.org/2008/18_3_houston.html
[2] https://m.whitehouse.gov/sites/default/files/page/files/2015...
[3] http://www.nytimes.com/2015/11/30/opinion/inequality-and-the...
Conservative economists like Edward Glaeser have long opposed restrictive zoning[1]. President Obama’s Chief Economist sees that “income inequality across cities remains entrenched and may even be exacerbated” as a result of restrictive zoning[2]. According to Nobel laureate and New York Times columnist Paul Krugman, “this is an issue on which you don’t have to be a conservative to believe that we have too much regulation.”[3]
[1] http://www.city-journal.org/2008/18_3_houston.html
[2] https://m.whitehouse.gov/sites/default/files/page/files/2015...
[3] http://www.nytimes.com/2015/11/30/opinion/inequality-and-the...
The problem is that the increased density is happening anyway.
It isn't that if we build more housing, more people will come, which will bring more people in an exponential cycle. The reality is that tech workers are coming anyway, and paying whatever is required of them to live in SF. They aren't being stopped by high rents, because high as they are, they can afford them.
However, they are raising prices for people that can't afford it. That pushes other people out.
The result is that whether we build or not, tech workers will live in the city. Building more won't bring more of them. The only question is whether other people can live there too.
It isn't that if we build more housing, more people will come, which will bring more people in an exponential cycle. The reality is that tech workers are coming anyway, and paying whatever is required of them to live in SF. They aren't being stopped by high rents, because high as they are, they can afford them.
However, they are raising prices for people that can't afford it. That pushes other people out.
The result is that whether we build or not, tech workers will live in the city. Building more won't bring more of them. The only question is whether other people can live there too.
Similarly, I used to think that terrible traffic would discourage growth. Not really... people's tolerance is surprisingly high.
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I'm curious, how does a place like Hong Kong handle this? It's another large city that's locked on 3 sides by water (they do have other islands but I imagine the population is not signifiant on those).
I know rent in the city even in the fancy condos is expensive but they still have their working class workers. Where do they live?
I know rent in the city even in the fancy condos is expensive but they still have their working class workers. Where do they live?
Short answer, it's not pretty:
http://www.hk-magazine.com/article/10676/coffin-homes-subdiv...
http://www.hk-magazine.com/article/10676/coffin-homes-subdiv...
Basically they don't. The average price per square foot in Hong Kong is insane despite their swarm of high rises.
> It's another large city that's locked on 3 sides by water
Or Manhattan, for that matter.
Or Manhattan, for that matter.
In Manhattan's case, there's a generally good public transit system that lets people commute to (relatively) inexpensive communities like Queens fairly easily.
Right -- which tends to moderate the up-ending effects of rising real estate costs in NYC to a significant degree.
That, and the fact that (within city limits) public transit is much more affordable than BART (plus whatever secondary transit needed to get to/from BART).
That, and the fact that (within city limits) public transit is much more affordable than BART (plus whatever secondary transit needed to get to/from BART).
In Manhattan's case the workers increasingly live off the island (as opposed to the northern slums).
Manhattan's northern neighborhoods aren't "slums."
South Bronx, circa 1980
https://s-media-cache-ak0.pinimg.com/736x/93/80/50/938050346...
https://s-media-cache-ak0.pinimg.com/736x/93/80/50/938050346...
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I live on the "urban frontier" in Oakland (east side of Lake Merritt) and it's pretty nice, I don't feel endangered at all.
South of me there's just huge swaths of residential and commercial land that can be developed - and I think will be developed. The main problem is that there are not enough professional/middle class people living there now. But once some move in, more will follow (as has happened in other parts of Oakland).
My point is that the Bay Area has quite a bit of capacity for further development once you step out of SF.
South of me there's just huge swaths of residential and commercial land that can be developed - and I think will be developed. The main problem is that there are not enough professional/middle class people living there now. But once some move in, more will follow (as has happened in other parts of Oakland).
My point is that the Bay Area has quite a bit of capacity for further development once you step out of SF.
[deleted]
I'm not sure why San Francisco being an enormously popular place that lots of people want to live in is a reason why we need to raze San Francisco and build something else there instead, vs. and not a reason why we shouldn't go to one of the many other shite places that everyone hates, raze that, and build more San Francsico.
Other than myopic entitlement, I mean.
Other than myopic entitlement, I mean.
The amount of tech workers buying up housing is also up for debate. Though this article focuses on cash transactions (perhaps mortgaged ones don't contain occupational data?), it paints a picture of other white collar professions performing the majority of cash purchases of housing in the Bay Area.
The data was taken from a company that controls 10% of the real estate market in the Bay Area.
http://realestateconsulting.com/tech-buyers-only-a-small-por...
The data was taken from a company that controls 10% of the real estate market in the Bay Area.
http://realestateconsulting.com/tech-buyers-only-a-small-por...
Some of them -- most likely the majority -- rent also, you know.
Right, so how could they be responsible for pushing up housing prices if most are renting?
Gosh, I don't know. Maybe housing prices and market rents are like... related somehow?
Could you flesh out your point instead of simply repeating it?
The sale price of a house is always going to be capped by how much you could make instead by renting it. If the average rental makes $45K a year nobody would sell that house for $250K.
In general, the more you can rent a property for... the more you can sell it for.
Cash inflows from overseas are also a major contributor. The exemption of real estate from money laundering regulations makes it a sink for a lot of shady revenues.
1. I'm not sure this is true.
2. Even if it is, housing is actually an amazing American export: http://www.slate.com/blogs/moneybox/2013/05/19/exporting_hou..., though it's rarely recognized as such outside of the literature.
2. Even if it is, housing is actually an amazing American export: http://www.slate.com/blogs/moneybox/2013/05/19/exporting_hou..., though it's rarely recognized as such outside of the literature.
Are there any pieces of data quantifying how much of an effect this is having in San Francisco?
There's a very small amount of data available. It suggests that international purchasers are around 6% of the total cash buyers of real estate.
https://news.ycombinator.com/item?id=11270279
https://news.ycombinator.com/item?id=11270279
It is somewhat frequent for the buyer to be local, and the money to come from overseas. Son buys a house with his dad's dubious-origin money.
And given the lack of required information & intentional ignorance ("so, Mr. Boriskypov, would you describe yourself as an oligarch?") I'm not sure how that dataset could reliably identify "international" purchasers.
And given the lack of required information & intentional ignorance ("so, Mr. Boriskypov, would you describe yourself as an oligarch?") I'm not sure how that dataset could reliably identify "international" purchasers.
The dataset was from a real estate company's reports from individual realtors. I'm confident the realtors know the origin of money.
I think a more appropriate criticism would be to focus on the narrow class of purchases (cash only) or small sample size (n=300, though the company represents 10% of the real estate market in the SF Bay Area). Unfortunately, it's the only published information I could find.
I think a more appropriate criticism would be to focus on the narrow class of purchases (cash only) or small sample size (n=300, though the company represents 10% of the real estate market in the SF Bay Area). Unfortunately, it's the only published information I could find.
This article throws around numbers like 15% for the Bay Area (not US), in 2014. Not sure about SF.
http://www.sfgate.com/business/networth/article/How-and-why-...
Is the information public? Equity investments are visible in SEC filings, but can this even be quantified from public data?
Keep in mind neither tech nor entertainment was ever California's main industry. It is and always has been real estate. Money from real estate flows down stream into MANY pockets.
I don't get it. Why does everyone need to live in San Francisco?
The real story here is poor commuting infrastructure. Not enough of it and the existing is slow or unreliable.
The real story here is poor commuting infrastructure. Not enough of it and the existing is slow or unreliable.
Sure, but if you have high prices and high demand, that's driven by money. Where's the money coming from? And, what happens when the money runs out?
A year or two ago, ~8% of SF's population worked "in tech".
It seems like median tech salaries are in the very low six-figure range. 120k/year gross will (assuming no car or loan expenses) pay for -at most- $3500/month rent with typical utilities, Internet, and food expenditures. Even then, that leaves you with $2,500/year to save for emergencies or retirement.
Where's the money coming from? It's likely not coming from the majority of tech workers.
What happens when it runs out? I... really don't know. Whatever happens, it will take quite some time for landlords to adjust their rates to match the new reality. In the interim, I would expect even more "grassroots" hate generated for tech workers.
It seems like median tech salaries are in the very low six-figure range. 120k/year gross will (assuming no car or loan expenses) pay for -at most- $3500/month rent with typical utilities, Internet, and food expenditures. Even then, that leaves you with $2,500/year to save for emergencies or retirement.
Where's the money coming from? It's likely not coming from the majority of tech workers.
What happens when it runs out? I... really don't know. Whatever happens, it will take quite some time for landlords to adjust their rates to match the new reality. In the interim, I would expect even more "grassroots" hate generated for tech workers.
It doesn't have to come from the majority--the fact that there's a lot of it is what causes the distortions. I live in Cambridge, and there's a lot of money going through the biotech sector--that money is surely as unevenly distributed as the tech money in SF, but it's a lot of money going through a small space. Sure, you can build more housing where you can squeeze it in, but as long as the money hose is going full blast, there's no way to keep up with it.
The other problem that kind of gets lost here is that we have a few places where there is a lot of money, there are jobs, housing shortages, etc., and a lot of places in the country where the opposite is true. And that's not really good. I don't think it's really sustainable to think that a few coastal cities are going to be able to accommodate everyone who would like to live and/or work in them. We could actually relieve some of the pressure on these cities by making _other cities_ more desirable destinations.
The other problem that kind of gets lost here is that we have a few places where there is a lot of money, there are jobs, housing shortages, etc., and a lot of places in the country where the opposite is true. And that's not really good. I don't think it's really sustainable to think that a few coastal cities are going to be able to accommodate everyone who would like to live and/or work in them. We could actually relieve some of the pressure on these cities by making _other cities_ more desirable destinations.
Bingo. This sort of dynamic has played out forever, but whatever the flaws in housing policy in today's shiny locales, not everyone can live there however perfect housing and construction policies were (and, of course, not everyone will agree on what constitutes perfection). The good news is that this is somewhat self-correcting. To the degree that a locale becomes unsupportably expensive, people and jobs start shifting to other areas. Adding a million housing units to San Francisco and the South Bay isn't going to happen anytime soon whoever is setting policy.
Money doesn't "run out." It circulates. Unless you see less of a future for tech sector in SF in the future, waiting out this problem is not an option.
Yeah, in a global sense, it doesn't. But in its easy availability for spending in some particular direction, it does. Or do you not remember the end of the housing bubble?
I have a basic question about prop 13. I though the point of not increasing property assessments is so that if rich people start bidding house prices around you, your property taxes don't start to increase.
But as I dug into this, this doesn't make sense. The community has certain expenses. These get divided based on the value of the homes. If all homes double in price but the community expenses stay the same, it is irrelevant to have different assessment amounts on homes. I've heard the term "mil rate" and am not sure what that is, but is perhaps relevant. Any experts willing to clarify?
But as I dug into this, this doesn't make sense. The community has certain expenses. These get divided based on the value of the homes. If all homes double in price but the community expenses stay the same, it is irrelevant to have different assessment amounts on homes. I've heard the term "mil rate" and am not sure what that is, but is perhaps relevant. Any experts willing to clarify?
"Mil rate" the number of thousandths of the property value assessed in tax each year. i.e. 20 mils = 2% of the annual property value is taxed. The actual property tax owed is rate x assessments.
https://en.m.wikipedia.org/wiki/Property_tax
https://en.m.wikipedia.org/wiki/Property_tax
Cool. That makes sense. Is there a reason they use 1000? Just convenience/convention?
Also .. my question about prop 13 stands. Curious why increasing home values would cause an issue if municipal spending stays constant?
Also .. my question about prop 13 stands. Curious why increasing home values would cause an issue if municipal spending stays constant?
> Is there a reason they use 1000? Just convenience/convention?
Because the mill(e) is the smallest unit of currency in the United States.
Because the mill(e) is the smallest unit of currency in the United States.
Zoning is a demand-side control residents use to raise rents and housing prices. Tech is a supply-side control residents use.
In other cities and countries, Tech is a proxy for Immigration -- it could be any industry drawing people in. There's other cities in the US, as well as virtually all of them in Canada, Australia, and New Zealand, where the twin controls of demand-side zoning and supply-side immigration are used to raise housing costs, both sale prices and rents.
In New Zealand, because the largest city, Auckland, and the smaller ones surrounding it make up over half the country's population, this is seen very clearly because the city government and national government are virtually the same thing. Government representatives speak in a wink wink nudge nudge manner, talking about fast-tracking new housing stock in Auckland and controlling immigration, but making sure house owners know they're not serious so they don't lose votes.
So we should blame both demand-side Zoning and supply-side Tech (i.e. Immigration) for housing crises.
In other cities and countries, Tech is a proxy for Immigration -- it could be any industry drawing people in. There's other cities in the US, as well as virtually all of them in Canada, Australia, and New Zealand, where the twin controls of demand-side zoning and supply-side immigration are used to raise housing costs, both sale prices and rents.
In New Zealand, because the largest city, Auckland, and the smaller ones surrounding it make up over half the country's population, this is seen very clearly because the city government and national government are virtually the same thing. Government representatives speak in a wink wink nudge nudge manner, talking about fast-tracking new housing stock in Auckland and controlling immigration, but making sure house owners know they're not serious so they don't lose votes.
So we should blame both demand-side Zoning and supply-side Tech (i.e. Immigration) for housing crises.
Building up SF or SV is not the solution, High Speed Rail is the solution. Get on a HSR train, travel 20 - 40 miles out of the city in under 30 minutes. People would still have access to SF, SV and the jobs but would be scattered upwards of 40 - 60 miles from SF, SV. It also fixes NIMBY; you can either have HSR or be surrounded by large apartment blocks.
Low density zoning—especially suburban, single family zoning—is tantamount to segregation. We must end it. It forces people who want to save money by purchasing less land to live somewhere else. That is, it forces lower-income people to live in different neighborhoods than higher-income people. And given America's racial disparities in income, these laws segregate by race, too.
https://medium.com/@niranbabalola/we-must-repeal-our-segrega...
https://medium.com/@niranbabalola/we-must-repeal-our-segrega...
I just wish the tech industry had taken root somewhere less NIMBYish that actually wanted growth and I'm hoping that SF gets what it wants and the tech industry just leaves.
The Bay area has grown enormously. There were fruit orchards in Silicon Valley not (relatively speaking) all that long ago. No, I don't see the tech industry leaving. A lot of people like the Bay area for reasons that have nothing to do with tech jobs. It's also the case however that it's simply not possible (or desirable) for everyone in tech to work and live in a geographically constrained peninsula and people/companies need to deal with that reality.
Maybe Vegas?
This week I saw exactly one building under construction between SFO and Menlo Park. That's utterly insane. I should have seen a couple dozen just from the highway.
You should have got off the freeway. There is new construction everywhere in Redwood City, for example.
Most of the 101 corridor has been built up for decades. The construction is not happening right next to the freeway.
Most of the 101 corridor has been built up for decades. The construction is not happening right next to the freeway.
Yet just 3 years ago, you could drive the length of Central Expressway and see more vacant commercial space than occupied space.
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As someone from outside the US with no horse in the race, I'm seriously annoyed that entrenched landowners work hard to prevent new construction and that in turn keeps housing unaffordable for a generation of young people that are already worse off than their parents. Thanks guys...
It is mind-numbing the extent to which everyone playing a role in this housing crisis wants to wriggle out of their share of the blame more than they want to actually solve the problem.
I was one of the people constantly seeking a single source of blame for this until I read a book about systems thinking. Completely changed my life. The problem is I now see how the competing interests of all the players make this an almost completely intractable problem.
A huge influx of highly-paid workers is partially to blame for the housing crisis. So are activists who prevent any new construction. So are politicians who make policies making new construction prohibitively expensive. Etc etc etc. Everyone plays a role, but nobody wants to give anything up, so the people who lose, as always, are the people who are already marginalized.
We need less writing like this and more writing that gives people a bird's-eye view of the entire problem.
I was one of the people constantly seeking a single source of blame for this until I read a book about systems thinking. Completely changed my life. The problem is I now see how the competing interests of all the players make this an almost completely intractable problem.
A huge influx of highly-paid workers is partially to blame for the housing crisis. So are activists who prevent any new construction. So are politicians who make policies making new construction prohibitively expensive. Etc etc etc. Everyone plays a role, but nobody wants to give anything up, so the people who lose, as always, are the people who are already marginalized.
We need less writing like this and more writing that gives people a bird's-eye view of the entire problem.
> Everyone plays a role, but nobody wants to give anything up,
I'm just curious, but what could new tech workers give up, exactly?
Entrenched local interests could ease up on building restrictions. That's what they'd give up.
Politicians who make anti-construction policies could stop doing that. That's what they'd give up.
I don't understand what migrants like myself (a programmer who moved here a few years ago to work at a startup) are supposed to give up.
I'm just curious, but what could new tech workers give up, exactly?
Entrenched local interests could ease up on building restrictions. That's what they'd give up.
Politicians who make anti-construction policies could stop doing that. That's what they'd give up.
I don't understand what migrants like myself (a programmer who moved here a few years ago to work at a startup) are supposed to give up.
Not necessarily the migrants themselves, but to pose a thought: The "broader tech community" could become more accepting of remote work, and focus more effort on removing the blockers people see in the way of allowing more remote work within their scope.
Us migrants (myself included) can have a role in this, we can give portions of our very limited free time in trying to find solutions to the remote problem, which may lie largely in the technical space we find our strengths.
(I understand the thrust of your statement, just positing some actionable steps that even those of us most at the whims of the existing powers that be can push towards a better outcome for ourselves.)
Us migrants (myself included) can have a role in this, we can give portions of our very limited free time in trying to find solutions to the remote problem, which may lie largely in the technical space we find our strengths.
(I understand the thrust of your statement, just positing some actionable steps that even those of us most at the whims of the existing powers that be can push towards a better outcome for ourselves.)
Instead of getting involved in bidding wars for apartments in prized locations and driving up the price, you could choose to live somewhere a little further away and commute, for instance.
Or VCs could give up forcing all of their portfolio companies to move to San Francisco and allow people to build businesses wherever they are.
Or tech CEOs could give up having everyone in the office and allow people to work from wherever they want.
Speaking for myself, I gave up a whole lot of comfort to live in a construction site while I'm building a tiny house in a friend's backyard. I am adding to the housing stock, instead of increasing the price of the existing housing stock.
Or VCs could give up forcing all of their portfolio companies to move to San Francisco and allow people to build businesses wherever they are.
Or tech CEOs could give up having everyone in the office and allow people to work from wherever they want.
Speaking for myself, I gave up a whole lot of comfort to live in a construction site while I'm building a tiny house in a friend's backyard. I am adding to the housing stock, instead of increasing the price of the existing housing stock.
The problem is that housing limits are not restricted to SF. The housing crunch is felt all across the bay area. Even if all the tech folks decided not to live in SF, that would still drive up prices elsewhere: San Mateo, Palo Alto, Mtn View, etc.
This problem will persist as long as the various SF bay area cities don't deal with the development/infrastructure issue. For example, San Mateo will gladly allow new office space but block new housing. Where are those office workers supposed to live? The problem just gets brushed under the rug.
This problem will persist as long as the various SF bay area cities don't deal with the development/infrastructure issue. For example, San Mateo will gladly allow new office space but block new housing. Where are those office workers supposed to live? The problem just gets brushed under the rug.
> live somewhere a little further away and commute
I wonder if we're reaching a "tipping point", where 10% more traffic means 33% longer commutes.
I wonder if we're reaching a "tipping point", where 10% more traffic means 33% longer commutes.
> Instead of getting involved in bidding wars for apartments in prized locations and driving up the price, you could choose to live somewhere a little further away and commute, for instance.
OK. Say I do that. Are you going to thank me for it? Am I just going to be reviled by a slightly different set of NIMBYs? Am I going to still get lectured about how I'm personally to blame for ruining everything about someone's multiple-decade-old memories?
In order, the answers are: no, yes, and yes.
OK. Say I do that. Are you going to thank me for it? Am I just going to be reviled by a slightly different set of NIMBYs? Am I going to still get lectured about how I'm personally to blame for ruining everything about someone's multiple-decade-old memories?
In order, the answers are: no, yes, and yes.
Are you doing something to make a difference, or because you want to be personally rewarded for it? If you want a medal, go train for the olympics.
I'm punished the same no matter what personal sacrifices I do - or don't - make out of concern for other people and a desire to make a difference.
If the people I'm trying to help are going to actively punish me for trying to help them, I'm going to quickly conclude they don't want my help. I was taught that it's incredibly rude to force help on people who don't want it. Since that is indeed what's happening, it's clearly time for me to stop trying to help.
Thank you for helping me to this moment of moral clarity. I really do mean that sincerely.
If the people I'm trying to help are going to actively punish me for trying to help them, I'm going to quickly conclude they don't want my help. I was taught that it's incredibly rude to force help on people who don't want it. Since that is indeed what's happening, it's clearly time for me to stop trying to help.
Thank you for helping me to this moment of moral clarity. I really do mean that sincerely.
What was this book?
Thinking in Systems: A Primer
An excellent book, and unfortunately one that most people are not going to bother reading. It has permanently changed how I think about problems and their solutions.
To really put this to the test, could we compare with cities in the bay area with different zoning laws? I know there are tons of places around here where housing prices have gone up like mad. Are the ones with more lax zoning exceptions?
San Francisco is going to be begging for the tech industry to return after it has all left because the city failed to accommodate employees with housing.
this is a myth perpetuated by "urbanists" and developer shills. none of the new construction is "affordable". you can't build your way out of this problem. desirable areas will always be expensive.
infrastructure and improved transit are the solutions to these problems, not more housing.
infrastructure and improved transit are the solutions to these problems, not more housing.
[deleted]
Whether to blame the supply or demand side seems almost like a philosophical question.
OK, but some philosophical questions have reasonably clear answers. Here's the philosophical difference. There's a realistic solution to zoning laws: fight hard to remove them. There's no "solution" that involves slowing down or constraining the growth of technology. That would not be a solution, that would be be a disaster. Therefore, appropriate moral blame rests on zoning, not tech.
What a simplistic article.
Any examination of the housing woes in SF will reveal multiple factors, playing out over decades. And yes, "new money" is definitely one of them.
Any examination of the housing woes in SF will reveal multiple factors, playing out over decades. And yes, "new money" is definitely one of them.
Which the article says, "The new wealthy are ruining everything because the old wealthy decided not to let them live anywhere near them."
No it doesn't.
It points to only two factors, and clearly implies that zoning (the decisions of "the old wealthy") was the more important of the two.
As if decades of voting patterns in this (once) famously and beautifully economically diverse city might not have also had something to do with it.
It points to only two factors, and clearly implies that zoning (the decisions of "the old wealthy") was the more important of the two.
As if decades of voting patterns in this (once) famously and beautifully economically diverse city might not have also had something to do with it.
> Any examination of the housing woes in SF will reveal multiple factors, playing out over decades.
Is "new money" more or less significant than zoning restrictions? [0] If it's less significant, is it so much less significant as to be nearly insignificant when compared to the effect of zoning restrictions? (Spoiler alert: I expect that it is.)
[0] Restrictions which include the ability of SF residents to effectively veto new development that they don't want to happen, for whatever reason.
Is "new money" more or less significant than zoning restrictions? [0] If it's less significant, is it so much less significant as to be nearly insignificant when compared to the effect of zoning restrictions? (Spoiler alert: I expect that it is.)
[0] Restrictions which include the ability of SF residents to effectively veto new development that they don't want to happen, for whatever reason.
You can debate that all you want.
But an article which attempts to explain the SF housing situation by listing just two factors (ignoring several other very obvious factors of equal or greater weight) -- just doesn't seem to explain very much.
But an article which attempts to explain the SF housing situation by listing just two factors (ignoring several other very obvious factors of equal or greater weight) -- just doesn't seem to explain very much.
The Author is 1/2 Right
>The answer is to build. Build more fucking housing, just like Nolan says. But the answer is also to zone: To take away land-use decisions from neighborhoods
that is where the statement should end, Take away land-use decisions from neighborhoods, and put them in the hands of property owners, if a developer wants to build something on land they legally acquired, then they should be free to do so even if the neighbors do not like it
>The answer is to build. Build more fucking housing, just like Nolan says. But the answer is also to zone: To take away land-use decisions from neighborhoods
that is where the statement should end, Take away land-use decisions from neighborhoods, and put them in the hands of property owners, if a developer wants to build something on land they legally acquired, then they should be free to do so even if the neighbors do not like it
That's completely idiotic. Communities are completely within their right to dictate terms of their community. If prospective owners don't like the rules, they shouldn't purchase.
If the rules are put in place pre-sale, with the agreement of the owners wishing to sell sure..
My problem is that communities change the rules with out the consent of the property owners. I do not believe in Democracy, I do not believe that 50.1% of a community has the ethical right to impose rules on the other 49.9% of a community
My problem is that communities change the rules with out the consent of the property owners. I do not believe in Democracy, I do not believe that 50.1% of a community has the ethical right to impose rules on the other 49.9% of a community
And also facilitate a market for easements allowing the neighbors to cough up the dough if they care enough.
I still hate the playas
Nobody really has the power to do this, and the voters are demanding NIMBY policies, so I'm not holding my breath. The next best strategy is coming up with an acceptable measure of how many people a certain plot of land "should" house and taxing/subsidizing landowners based on how much housing they actually provide on the land. That's technically not an ad-valorem tax, so would dodge Prop 13, while still pricing out people who really should make room for better use of the land.