I've lived here since 2014, and have been successively priced out of every single apartment I've had at the end of a lease. I had a ~10 minute commute from West Oakland at first, then when the landlord doubled my rent it became a ~30 minute commute from El Cerrito. When the rent went up 30% there, I was forced all the way out to Pleasant Hill after spending months looking in Berkeley/Albany for something affordable.
I now pay the same rent for a 1 bedroom in Pleasant Hill that my 3 bedroom in West Oakland rented for in 2014. And after 6 months of a hellish 1 hour+ commute I'm realizing it is completely untenable from a mental health perspective. This is for a single person who makes six figures. I can't even imagine what has happened to working class families in that time period.
That's surprising to me -- Craigslist shows a number of 1BR places around Oakland in the $1500-$2000 range. Which is still crazy expensive in an absolute sense, granted, but should be reasonably affordable for a single person with a 6-figure income.
If your apartment in Oakland was built before 1976, it's rent controlled and that's definitely illegal. Even if there wasn't a former lease, they can't raise the rent by more than a certain amount, often less than 1%.
Shouldn't employers provide Japanese style sleeping capsules for employees at that point? Or can they keep up wages with the increasing cost of living?
After living here since 2009 I think I've figured out the Bay Area and San Francisco. SF is a city that doesn't want to be a city. It just doesn't want to grow up. Silicon Valley has since spilled over into San Francisco and we have a combination of massive job growth, prosperity and extremely limited new construction. Every year more people arrive than we construct housing for.
Compounding the problem are many local politicians. Serious local political players are divorced from reality denying the relationship between supply and demand with the cost of rent; while focusing on price fixing techniques such as rent control as a solution.
The only way out of this is to build. We have to make this decision.
Well, we could also repeal / sunset Prop13 and allow existing properties to reach their actual market values. This would suck in the short term, but it would lead to way more liquidity in the market, even if 0 new units were built.
1. It uses a two-bedroom home as a baseline instead of a one-bedroom. While I understand that may be interesting for historical reasons, it's not a practical metric for modern considerations. If we want to talk about housing affordability, it's more honest to discuss one-bedroom apartments for single earners. We could also talk about two-bedroom apartments for dual-income earners.
2. The 30% pre-tax rent metric doesn't make sense to me at all. Why would that be invariant across income levels, and across states, given both graduated taxation and the vast differences in both income tax and sales tax across different states? In California, 30% pre-tax works might work out to more than 40-45% post-tax, depending on your income, and the remainder doesn't translate well to purchasing power given varying state sales taxes.
I'm not saying that affordable housing is not a problem, because it clearly is. Just that, to address the problem honestly, we need to use better metrics to figure out what a fair solution is.
2. The standard in the Bay Area is for landlords to require tenants have gross earnings of 2.5 to 3.5 times the rent and to verify this with pay stubs. Personally I think this is ridiulous and antiquated as it should be my personal choice to blow half my cash on rent if I want to! But that’s the way it is.
Re #1 - why would a 2 bedroom not be more applicable when discussing affordability? Having a roommate is pretty standard when trying to save money, and I don’t think ‘not wanting one’ changes wether or it it’s not affordable that way.
I think it's very important to note that the entire purpose of minimum wage, per FDR, who instituted it, is to ensure it's enough to support an entire family of four on only one income earner alone, above merely sustenance levels, and allow them not only to rent but to own a home. And by that metric, we've horribly failed as a country.
“By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.” (1933, Statement on National Industrial Recovery Act)
The tech gravy train won't last forever –everyone, us tech workers included, will be better off from advocating for fairer wages, even if that means taking a pay cut in the meantime. Otherwise I fear the extreme wealth gap will bring upon a new Gilded Age worse than the one pre-1929. And we all know how that turned out...
It’s a nobel intention but home ownership is always going to be impossible for many in a growing city which refuses to build new housing, no matter how much wages are. Elevating the salaries of those at the bottom isn’t a solution to SF’s current housing problems as those at the top will just bid higher. Building is necessary.
At the time, the labor pool wasn't truly global yet. It's one argument to pay living wages inside a closed-ish economy, it's another when low skilled jobs, especially in manufacturing, are done for pennies on the dollar across the globe. There's always tradeoffs.
This thread really paints a bad picture for the mindset of a lot of people in the high-earning technology industry.
That someone would argue against every job being enough to afford a roof over your head just due to their own need for validation of their importance is frankly sickening.
There's two ways to reach the desired state here (no full time employed individual cannot afford housing) - increase pay, and decrease housing costs. The trouble with increasing pay is that the rents themselves are set by the market - the bay area has dramatically under built housing for decades, and is still not building much. Raising pay for everyone is essentially a giveaway to current landowners - rent will just rise to absorb the new money flowing into the same amount of housing units. This effect can be observed (at a much higher scale) in the Mountain View housing market - landlords adjust their rent increases with the google stock price. Better solutions include:
The problem isn't that we need to raise salaries to meet housing. The problem is a housing problem. We need to reduce the cost of housing so that people can afford a roof over their head.
A floor on the minimum allowable job is not a floor on the minimum possible standard of living. $0/hr and homeless is also an option. Now, a UBI or job guarantee that pays the cost of our desired minimum standard of living - then we might have something.
There are very real reasons to object to an artificial floor to salaries (minimum wage) that have nothing to do with validation.
How expensive do you really want your burger to be? Operational costs get passed on to the consumer after all. Raising the minimum wage just increases the rate of inflation leaving everyone holding the bag.
Also, jobs should pay what they are worth to the business and nothing more. Why should a high school student working for McDonald's be able to afford a 2 bedroom apartment in the Bay Area? That's not some sort of right.
Maybe we should be talking about realigning education to give people valuable skills instead of pushing for the non-skilled to get an artificial raise that evaporates in meaning due to inflation.
EDIT
I'm really surprised by the push back on this from a community of entrepreneurs. Anyone who has run a business will tell you that you can't just raise salaries without increasing costs. It's Econ 101 but apparently that's not the general sentiment here. I hear a lot of complaints about how things "should" be and what's "fair" but the math and reality isn't there to support that. Some jobs just don't have much economic value and pretending that's not the case isn't going to solve anything. It's nice to imagine a situation where janitors and fast food employees can have a middle class lifestyle but who is supposed to pay for that? When the costs of good raise dramatically, their additional pay will get sucked up by inflation. Again, Econ 101.
> Zoned Out forcefully argues that the debate about transportation and land-use planning in the United States has been distorted by a myth. The myth that urban sprawl is the result of a free market. According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer. Jonathan Levine confronts the free market myth by pointing out that land development is already one of the most regulated sectors of the U.S. economy. Noting that local governments use their regulatory powers to lower densities, segregate different types of land uses, and mandate large roadways and parking lots, he argues that the design template for urban sprawl is written into the land-use regulations of thousands of municipalities nationwide.
If I had to guess somewhere in the next ten years when the absurd number of boomers who have been putting their retirement savings into second and third homes all try to cash out at the same time, flood the market, and find out that it was all just Monopoly money.
We've already collectively decided that. The problem is that a significant fraction of people have been misled about which policies will fix it. The problem is that local governments are controlled by the landlords, and they use zoning restrictions to limit supply and keep prices up. The fix is to transfer that power to the state government, which will allow enough housing to be built.
> At what point do we collectively decide, you know what, this is ridiculous.
When tech workers get over their “I simply MUST live in the Bay Area, ugh, anywhere else is simply unliveable” mindset that in turn drives companies to concentrate in said area.
You are probably missing the fact that many VCs are likely heavily invested in Real Estate and this chain simply loops back to them, what incentive would they have for changing the status quo?
Part of it's that these cities make it hard to build more housing, sometimes illegally. I give money to CARLA[1] which enforces the housing laws in California.
It is slowly starting to change as more tech companies arent even located in the bay area anymore. Companies flocked to the bay area for the employee skills but now more of the talent can be found in other cities as well.
That's what happens when you don't allow population density to grow to its equilibrium state. An overpriced, congested city, with absolutely no culture, as the only people who can justify living in SF are basically engineers, designers, and marketing people at tech companies. People living on a dime trying to do something interesting (art, tech, music, ...) is what gives cities their characters. When you take that away, you get a homogeneous group of people making between 100k and 200k a year who think about nothing other than money.
> The National Low Income Housing Coalition used that number to calculate the hourly wage a household must earn to afford a home while spending 30 percent or less of their income on rent.
This is a nit, but I don't think that's a reasonable way to calculate the relationship between housing cost and affordability. Some expenses do scale with housing cost (mainly things that depend on local labor), but many important ones don't (car payments, grocery bills). So in an area with very high housing prices and a relatively-high minimum wage, you'd expect low-income workers to be able to spend more than the "standard" 30% on housing, and still be able to afford other daily necessities.
I certainly don't mean this as a refutation of the article however -- the Bay Area is a very hard place to live on a low income.
This is why I just ignore Bay Area (in fact, all of California) recruiters these days. I know y'all work on some cool poop over there, but unless you're willing to triple my salary, I'll stay put here in Florida.
"To remedy the situation, the coalition urges Congress to invest in housing assistance."
Of course their answer is federal subsidies. Never mind that regulations can be passed at the local level to ameliorate the situation -- without costing the government a cent -- by allowing for more housing construction. With interest groups like these we'll never get anywhere.
When I left San Diego for the Bay Area in 2008, I repeatedly heard from others, "I could never leave this place".
As I prep to sell my Bay Area house and move back to San Diego, I have only heard "I don't know if I can stay here much longer". That sentiment is the same regardless of the person's occupation, from VC partner to guy at Staples recycling my old electronics.
I'm still surprised by that. I visited Manhattan in 2010 and was noticing 1br rents that average around 6k per month. Nothing luxurious, just a decent 1br. Manhattan is far larger than the entirety of SF, but when they talk about rents, they compare the entire greater NYC area to SF, which is disingenuous.
Honestly, I don't think SF is equipped to handle such a high population density. I'm not sure it ever will be. Oakland probably could though.
So, which came first to the bay area? the engineers, or the companies? Are we at a point where most people move in to the bay area for work? Or is it the other way around (ie. companies wanting to establish a foothold in an area known for its prestigious/unique population of software-engineers)?
My point is, not only are the employees losing here, but also the employers. I no longer understand the motivation of companies to continue expanding at problematic locations (such as the bay area and new-york).
If Google left the bay area completely tomorrow, would that somehow restore the equilibrium?
I was shocked when I compared cost of living and discovered various online calculators show that making $60k in Tucson, Arizona is about the same as making somewhere in the $104-140k range in the Bay Area (I'm not sure of what the different assumptions are between calculators that lead to the range, could see it be something like including Oakland vs San Rafael).
'Root Cause' of high housing costs is in the success of the tech companies that are rooted in Silicon Valley. Specifically tech because of their:
1. Penchant for offering stock options as a form of compensation.
2. Extraordinary growth in scope and profits.
3. Leverage of virtually free computing and network power, which makes the output of a single engineer distributable to billions of consumers. This justifies 'whatever it takes' salary structures.
4. Very high density of these companies in Silicon Valley.
Among the current top 100 US tech companies by Market Cap, 14 are in Silicon Valley, representing > $4 Trillion in 'new money' market cap, combined:
Apple: $929 Billion
Google: $830 Billion
Facebook: $557 Billion
Intel: $256 Billion
Cisco: $207 Billion
Oracle: $187 Billion
Netflix: $171 Billion
Nvidia: etc.
Comcast: etc.
Adobe: etc.
Broadcom:
Paypal:
Qualcomm:
Tesla: (#100 as of this writing)
The housing costs what it costs because supply is highly constrained and the companies that are headquartered here can afford to pay the salaries that enable their workers to pay these astonishing prices.
Duh! Those places are probably also the most expensive to buy.
I don't really know about the Bay Area but I would bet that rents are probably "cheap" compared to prices.
Where I live, it currently takes 30 annual rents to buy the same place.
The average over the last couple of decades is 26 annual rents. Which means renting has relatively become cheaper. I bet the same holds true for the Bay Area.
Opening satellite offices all over the midwest, NE, and south is just begging to happen. Cost of living is comparatively dirt cheap in MN, MI, WI, OH, IL, IN, MS, TN, GA, AR, AL, NY (outside of NYC), PA, etc, and quality of life is very high. But alas those locations aren't trendy, so the west coast obsession continues despite the wild costs.
[+] [-] aphextron|7 years ago|reply
I now pay the same rent for a 1 bedroom in Pleasant Hill that my 3 bedroom in West Oakland rented for in 2014. And after 6 months of a hellish 1 hour+ commute I'm realizing it is completely untenable from a mental health perspective. This is for a single person who makes six figures. I can't even imagine what has happened to working class families in that time period.
[+] [-] kcorbitt|7 years ago|reply
[+] [-] liveoneggs|7 years ago|reply
[+] [-] bartozone|7 years ago|reply
[+] [-] temporaryacc62|7 years ago|reply
[+] [-] AnsisMalins|7 years ago|reply
[+] [-] justinzollars|7 years ago|reply
Compounding the problem are many local politicians. Serious local political players are divorced from reality denying the relationship between supply and demand with the cost of rent; while focusing on price fixing techniques such as rent control as a solution.
The only way out of this is to build. We have to make this decision.
[+] [-] anonymous5133|7 years ago|reply
[+] [-] kec|7 years ago|reply
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] SoylentOrange|7 years ago|reply
1. It uses a two-bedroom home as a baseline instead of a one-bedroom. While I understand that may be interesting for historical reasons, it's not a practical metric for modern considerations. If we want to talk about housing affordability, it's more honest to discuss one-bedroom apartments for single earners. We could also talk about two-bedroom apartments for dual-income earners.
2. The 30% pre-tax rent metric doesn't make sense to me at all. Why would that be invariant across income levels, and across states, given both graduated taxation and the vast differences in both income tax and sales tax across different states? In California, 30% pre-tax works might work out to more than 40-45% post-tax, depending on your income, and the remainder doesn't translate well to purchasing power given varying state sales taxes.
I'm not saying that affordable housing is not a problem, because it clearly is. Just that, to address the problem honestly, we need to use better metrics to figure out what a fair solution is.
[+] [-] jahewson|7 years ago|reply
[+] [-] briffle|7 years ago|reply
[+] [-] djrogers|7 years ago|reply
[+] [-] thebradbain|7 years ago|reply
“By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.” (1933, Statement on National Industrial Recovery Act)
The tech gravy train won't last forever –everyone, us tech workers included, will be better off from advocating for fairer wages, even if that means taking a pay cut in the meantime. Otherwise I fear the extreme wealth gap will bring upon a new Gilded Age worse than the one pre-1929. And we all know how that turned out...
[+] [-] jahewson|7 years ago|reply
[+] [-] gdilla|7 years ago|reply
[+] [-] bad_good_guy|7 years ago|reply
That someone would argue against every job being enough to afford a roof over your head just due to their own need for validation of their importance is frankly sickening.
[+] [-] charleslmunger|7 years ago|reply
1. Get rid of single-family-home zoning for large swathes of the bay area. 2. Incentivize developers to build more units per site, rather than fewer - https://www.sfhac.org/state-density-bonus-arrived-san-franci...
[+] [-] rubicon33|7 years ago|reply
[+] [-] closeparen|7 years ago|reply
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] malvosenior|7 years ago|reply
How expensive do you really want your burger to be? Operational costs get passed on to the consumer after all. Raising the minimum wage just increases the rate of inflation leaving everyone holding the bag.
Also, jobs should pay what they are worth to the business and nothing more. Why should a high school student working for McDonald's be able to afford a 2 bedroom apartment in the Bay Area? That's not some sort of right.
Maybe we should be talking about realigning education to give people valuable skills instead of pushing for the non-skilled to get an artificial raise that evaporates in meaning due to inflation.
EDIT
I'm really surprised by the push back on this from a community of entrepreneurs. Anyone who has run a business will tell you that you can't just raise salaries without increasing costs. It's Econ 101 but apparently that's not the general sentiment here. I hear a lot of complaints about how things "should" be and what's "fair" but the math and reality isn't there to support that. Some jobs just don't have much economic value and pretending that's not the case isn't going to solve anything. It's nice to imagine a situation where janitors and fast food employees can have a middle class lifestyle but who is supposed to pay for that? When the costs of good raise dramatically, their additional pay will get sucked up by inflation. Again, Econ 101.
[+] [-] Reedx|7 years ago|reply
You'd think VCs would push back on this too, because that's where their money is going.
VC -> Startup -> Employee -> Landlord.
[+] [-] dmix|7 years ago|reply
Government policy:
https://www.amazon.com/Zoned-Out-Regulation-Transportation-M...
> Zoned Out forcefully argues that the debate about transportation and land-use planning in the United States has been distorted by a myth. The myth that urban sprawl is the result of a free market. According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer. Jonathan Levine confronts the free market myth by pointing out that land development is already one of the most regulated sectors of the U.S. economy. Noting that local governments use their regulatory powers to lower densities, segregate different types of land uses, and mandate large roadways and parking lots, he argues that the design template for urban sprawl is written into the land-use regulations of thousands of municipalities nationwide.
[+] [-] monocasa|7 years ago|reply
[+] [-] gnarcoregrizz|7 years ago|reply
[+] [-] erjjones|7 years ago|reply
I would say things are at that point. So move to a different city. Success != The Valley
[+] [-] jimrandomh|7 years ago|reply
[+] [-] xienze|7 years ago|reply
When tech workers get over their “I simply MUST live in the Bay Area, ugh, anywhere else is simply unliveable” mindset that in turn drives companies to concentrate in said area.
[+] [-] jimbofisher1|7 years ago|reply
VC -> Startup -> Employee -> VC/Landlord
[+] [-] zerostar07|7 years ago|reply
[+] [-] arthurjj|7 years ago|reply
1. https://carlaef.org/donate/
[+] [-] avn2109|7 years ago|reply
Hate to be the bearer of bad news, but the VC is the landlord. They're not stupid, and this setup is intentional.
It's a company town. History doesn't repeat itself but it rhymes.
[+] [-] anonymous5133|7 years ago|reply
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] nicodjimenez|7 years ago|reply
[+] [-] kcorbitt|7 years ago|reply
This is a nit, but I don't think that's a reasonable way to calculate the relationship between housing cost and affordability. Some expenses do scale with housing cost (mainly things that depend on local labor), but many important ones don't (car payments, grocery bills). So in an area with very high housing prices and a relatively-high minimum wage, you'd expect low-income workers to be able to spend more than the "standard" 30% on housing, and still be able to afford other daily necessities.
I certainly don't mean this as a refutation of the article however -- the Bay Area is a very hard place to live on a low income.
[+] [-] jcadam|7 years ago|reply
[+] [-] duckfruit|7 years ago|reply
Of course their answer is federal subsidies. Never mind that regulations can be passed at the local level to ameliorate the situation -- without costing the government a cent -- by allowing for more housing construction. With interest groups like these we'll never get anywhere.
[+] [-] realPubkey|7 years ago|reply
[+] [-] agrippanux|7 years ago|reply
As I prep to sell my Bay Area house and move back to San Diego, I have only heard "I don't know if I can stay here much longer". That sentiment is the same regardless of the person's occupation, from VC partner to guy at Staples recycling my old electronics.
[+] [-] CryoLogic|7 years ago|reply
[+] [-] iamcasen|7 years ago|reply
Honestly, I don't think SF is equipped to handle such a high population density. I'm not sure it ever will be. Oakland probably could though.
[+] [-] aswanson|7 years ago|reply
[+] [-] xtrapolate|7 years ago|reply
My point is, not only are the employees losing here, but also the employers. I no longer understand the motivation of companies to continue expanding at problematic locations (such as the bay area and new-york).
If Google left the bay area completely tomorrow, would that somehow restore the equilibrium?
[+] [-] Glyptodon|7 years ago|reply
[+] [-] 11thEarlOfMar|7 years ago|reply
1. Penchant for offering stock options as a form of compensation.
2. Extraordinary growth in scope and profits.
3. Leverage of virtually free computing and network power, which makes the output of a single engineer distributable to billions of consumers. This justifies 'whatever it takes' salary structures.
4. Very high density of these companies in Silicon Valley.
Among the current top 100 US tech companies by Market Cap, 14 are in Silicon Valley, representing > $4 Trillion in 'new money' market cap, combined:
Apple: $929 Billion
Google: $830 Billion
Facebook: $557 Billion
Intel: $256 Billion
Cisco: $207 Billion
Oracle: $187 Billion
Netflix: $171 Billion
Nvidia: etc.
Comcast: etc.
Adobe: etc.
Broadcom:
Paypal:
Qualcomm:
Tesla: (#100 as of this writing)
The housing costs what it costs because supply is highly constrained and the companies that are headquartered here can afford to pay the salaries that enable their workers to pay these astonishing prices.
[+] [-] snarfybarfy|7 years ago|reply
I don't really know about the Bay Area but I would bet that rents are probably "cheap" compared to prices.
Where I live, it currently takes 30 annual rents to buy the same place.
The average over the last couple of decades is 26 annual rents. Which means renting has relatively become cheaper. I bet the same holds true for the Bay Area.
[+] [-] notadoc|7 years ago|reply