San Francisco Has a People Problem(wsj.com)
wsj.com
San Francisco Has a People Problem
https://www.wsj.com/articles/san-francisco-has-a-people-problem-1521691260
29 comments
I live in SF, having been in the Bay Area for nearly a decade. I like it here and don't feel a desire to move (and I've lived in Texas and Chicago before, so I do know what it's like outside California). I have many friends here, but I don't know if they qualify as "serious roots". Am I "batshit crazy" because I really enjoy the area and want to stay?
Respectfully, I would like to suggest that there can be many valid reasons to choose to live in one area or another. It's fine if you don't like SF, and I think it's great that you like where you live, as Chicago is very nice! I like where I live too.
Respectfully, I would like to suggest that there can be many valid reasons to choose to live in one area or another. It's fine if you don't like SF, and I think it's great that you like where you live, as Chicago is very nice! I like where I live too.
If your friends are worth paying SFBA mortgages --- with your eyes open to how expensive that is --- to stick around, then, yes, I would call those pretty serious roots. I understand why many people stay.
I also have an implicit mental bias towards families, since I'm at an age where most of my close peers have families. I understand how different the equation is for single people in their late 20s and early 30s --- I wasn't any more rational about my personal finances back then (despite having 2 kids) than anyone paying to live in SFBA is now.
I think though that a lot people out there should leave; it's not a good deal.
I also have an implicit mental bias towards families, since I'm at an age where most of my close peers have families. I understand how different the equation is for single people in their late 20s and early 30s --- I wasn't any more rational about my personal finances back then (despite having 2 kids) than anyone paying to live in SFBA is now.
I think though that a lot people out there should leave; it's not a good deal.
It's the "eyes open" part of this that matters. Opinions and personal desires can't be argued with, but my experience is that a lot of people are plainly ignorant of basic facts about a lot of the U.S.
If you're staying in the SFBA because you imagine, say, the Midwest to have no culture and no jobs and no future, then I'd propose that you're operating on incorrect information (not just subjective feelings).
Software developers are very well paid in the middle of the country. And every medium-sized American city is (more or less) a liberal outpost, with gay bars and music festivals and meetups and tech scenes and Wolfpack Hustles and craft beer and on and on, even in what many imagine to be farm country.
Look, I get it, I live in NYC now, because I wanted that experience and I was willing to pay for it. But I'm not here because I think Cincinnati or St. Louis or Nashville are culturally-deficient wastelands with nothing going for them.
I think folks are really underestimating what kind of life they could be living by leaving the most expensive parts of the country behind.
If you're in your 20s and dating? Sheesh, by all means, pay to experience the wonders of San Francisco or NYC. But if what you want is a family and kids, then you owe it to yourself to know what your options are. They're better and more diverse than you might expect.
If you're staying in the SFBA because you imagine, say, the Midwest to have no culture and no jobs and no future, then I'd propose that you're operating on incorrect information (not just subjective feelings).
Software developers are very well paid in the middle of the country. And every medium-sized American city is (more or less) a liberal outpost, with gay bars and music festivals and meetups and tech scenes and Wolfpack Hustles and craft beer and on and on, even in what many imagine to be farm country.
Look, I get it, I live in NYC now, because I wanted that experience and I was willing to pay for it. But I'm not here because I think Cincinnati or St. Louis or Nashville are culturally-deficient wastelands with nothing going for them.
I think folks are really underestimating what kind of life they could be living by leaving the most expensive parts of the country behind.
If you're in your 20s and dating? Sheesh, by all means, pay to experience the wonders of San Francisco or NYC. But if what you want is a family and kids, then you owe it to yourself to know what your options are. They're better and more diverse than you might expect.
> I wasn't any more rational about my personal finances back then (despite having 2 kids) than anyone paying to live in SFBA is now.
> I think though that a lot people out there should leave; it's not a good deal.
That implies that it's never rational to buy in the Bay Area, which is too extreme of a position. I agonized about the decision to become a homeowner out here for something like 5 years. Even now I'm terrified about it. But literally everyone I've talked to agrees that my decision, given my personal circumstances, was a good one. To be clear, it's not the right decision for many, perhaps most people out here, and lots of people here should consider opportunities in other areas! But settling down in the Bay Area can make sense, depending on roots, quality of life, employment situation, personal financial situation, risk tolerance, family obligations, etc. etc. It just depends.
This is perhaps getting into the weeds a bit, but most real estate experts don't think that the SF housing market is a bubble. It's probably somewhat overvalued [1] [2], but it's not for example Vancouver, where the wage/housing price imbalance is far worse [3].
[1]: https://www.ubs.com/global/en/wealth-management/chief-invest...
[2]: https://www.bizjournals.com/sanfrancisco/news/2018/02/15/san...
[3]: http://time.com/money/5017121/least-affordable-expensive-cit...
> I think though that a lot people out there should leave; it's not a good deal.
That implies that it's never rational to buy in the Bay Area, which is too extreme of a position. I agonized about the decision to become a homeowner out here for something like 5 years. Even now I'm terrified about it. But literally everyone I've talked to agrees that my decision, given my personal circumstances, was a good one. To be clear, it's not the right decision for many, perhaps most people out here, and lots of people here should consider opportunities in other areas! But settling down in the Bay Area can make sense, depending on roots, quality of life, employment situation, personal financial situation, risk tolerance, family obligations, etc. etc. It just depends.
This is perhaps getting into the weeds a bit, but most real estate experts don't think that the SF housing market is a bubble. It's probably somewhat overvalued [1] [2], but it's not for example Vancouver, where the wage/housing price imbalance is far worse [3].
[1]: https://www.ubs.com/global/en/wealth-management/chief-invest...
[2]: https://www.bizjournals.com/sanfrancisco/news/2018/02/15/san...
[3]: http://time.com/money/5017121/least-affordable-expensive-cit...
One of the tragedies of course is that lots of people with serious roots don’t have the opportunity to stay.
This is a pretty pedestrian article. Very little background. That might make sense for the average WSJ reader, but I would guess most HN viewers are already aware of the tiny amount of data shared in this piece.
If you are interested in actually learning more than surface-level details about this topic, I highly suggest starting with Kim Mai-Cutler's excellent "How Burrowing Owls Lead to Vomiting Anarchists":
https://techcrunch.com/2014/04/14/sf-housing/
If you are interested in actually learning more than surface-level details about this topic, I highly suggest starting with Kim Mai-Cutler's excellent "How Burrowing Owls Lead to Vomiting Anarchists":
https://techcrunch.com/2014/04/14/sf-housing/
This link to the article via Reddit wasn't behind a WSJ paywall for me.
Go to Reddit link => Click on link via Reddit.
https://www.reddit.com/r/sanfrancisco/comments/86bdeg/san_fr...
Go to Reddit link => Click on link via Reddit.
https://www.reddit.com/r/sanfrancisco/comments/86bdeg/san_fr...
thanks, this worked for me
San Francisco has a NIMBY problem.
Not sure why you're getting downvotes, but you're absolutely right.
A lot of the housing issues would go away if people in the Bay Area (ie. my neighbors) didn't vote down every single thing that would allow more than a single family home. I'm ok with my home price being cut in 1/2 if it means more middle class people can move in. Most of my neighbors aren't.
There is a "missing middle" of housing throughout the entire Bay Area of 4-8 unit apartment buildings near transit.
SB827, flawed as it is, is trying to fix this. If it passes, SF basically won't be able to block construction anymore, regardless of what the residents want. If it passes you'll see a lot of eight story buildings replacing single family homes.
A lot of the housing issues would go away if people in the Bay Area (ie. my neighbors) didn't vote down every single thing that would allow more than a single family home. I'm ok with my home price being cut in 1/2 if it means more middle class people can move in. Most of my neighbors aren't.
There is a "missing middle" of housing throughout the entire Bay Area of 4-8 unit apartment buildings near transit.
SB827, flawed as it is, is trying to fix this. If it passes, SF basically won't be able to block construction anymore, regardless of what the residents want. If it passes you'll see a lot of eight story buildings replacing single family homes.
If you were a resident before everybody started moving in, wouldn't you want to have a say to how the land is used in the city you own property in? Playing devil's advocate, a lot of SF natives didn't want tech to be here in the first place. (I'm born and raised in SF but also in tech. I have a lot of family and friends who complain about the "gentrification", and they have every right to)
I did move in before prices went crazy, and yes, I'd like to have a say. But people aren't negotiating "in good faith". They simply want to keep their property values sky high, without regard to what is good for the community.
They don't realize that their plumber and their house cleaner and their kid's teachers can't afford to live nearby anymore, which means they will either have to pay a fortune for those services, or deal with crappy service. They refuse to see the big picture and realize that sky high housing prices aren't what should be optimized for.
And now, because of their stubbornness, SB827 is going to come in and take away any control they had. Now local residents will have zero say in what happens, because the state is going to set the rules. So now we won't get a say in what's actually important because a bunch of stubborn people wouldn't allow anyone to do anything.
They don't realize that their plumber and their house cleaner and their kid's teachers can't afford to live nearby anymore, which means they will either have to pay a fortune for those services, or deal with crappy service. They refuse to see the big picture and realize that sky high housing prices aren't what should be optimized for.
And now, because of their stubbornness, SB827 is going to come in and take away any control they had. Now local residents will have zero say in what happens, because the state is going to set the rules. So now we won't get a say in what's actually important because a bunch of stubborn people wouldn't allow anyone to do anything.
Yes I think you are right that one reason for this is homeowners want their property to continue to skyrocket. But really, can you blame them for that? If you were a homeowner wouldn't you rather have your house worth more?
The second reason for skyrocketing housing prices is the rise in wages. If people didn't get paid so much in the city, rent prices could not possibly be as high as it currently is. So while we do pay a crap ton in rent, most of us who can afford that rent probably are still WAAAAY better off than the average american.
The second reason for skyrocketing housing prices is the rise in wages. If people didn't get paid so much in the city, rent prices could not possibly be as high as it currently is. So while we do pay a crap ton in rent, most of us who can afford that rent probably are still WAAAAY better off than the average american.
> But really, can you blame them for that? If you were a homeowner wouldn't you rather have your house worth more?
I am a Bay Area homeowner, and no, I do not want that. I'm able to see the long term effects of that, and realize that in the end it will bad for me, bad for everyone around me, and bad for my community, when all the people that provide services in our community get priced out.
And the wages are only going up because of the housing costs. If the costs weren't so high, companies would not have to pay so much to get people to move here, which is the main driver in determining wages.
You hit the nail on the head though with "most of us who can afford that rent probably are still WAAAAY better off than the average american". Not everyone can afford the high rents. And eventually there won't be anyone left to provide any services, or the cost of those services will have to go up, and people will move away even faster as companies decide it just isn't worth paying that much anymore and start locating elsewhere.
I am a Bay Area homeowner, and no, I do not want that. I'm able to see the long term effects of that, and realize that in the end it will bad for me, bad for everyone around me, and bad for my community, when all the people that provide services in our community get priced out.
And the wages are only going up because of the housing costs. If the costs weren't so high, companies would not have to pay so much to get people to move here, which is the main driver in determining wages.
You hit the nail on the head though with "most of us who can afford that rent probably are still WAAAAY better off than the average american". Not everyone can afford the high rents. And eventually there won't be anyone left to provide any services, or the cost of those services will have to go up, and people will move away even faster as companies decide it just isn't worth paying that much anymore and start locating elsewhere.
I am an SF homeowner, and I look forward to all the new development in my neighborhood. I want to see more people out and about, especially people from more walks of life than just tech.
It's weird that it's come to self-described "socialist" groups like DSA and Gay Shame chastising people like me, a homeowner, for advocating against my financial interests in favor of members of my generation who are less well off. Bay Area housing politics are wild.
It's weird that it's come to self-described "socialist" groups like DSA and Gay Shame chastising people like me, a homeowner, for advocating against my financial interests in favor of members of my generation who are less well off. Bay Area housing politics are wild.
Hey, you're an awesome person for fighting against your financial interests in favor of members of your generation. Don't let other people bring you down on that!
I'm very glad people like you 2 exist because I too would love cheaper rents along with welcoming a more diverse crowd outside of tech. I am also a homeowner and would vote in favor for building more complexes to lower rent for people of lower income to stay in San Francisco. Was just playing devil's advocate and saying that it seems like most SF homeowners don't think the way we do
A lot of longtime residents of Bay Area suburbs got to be residents in the first place because of redlining and other discriminatory practices. I don't think they have a particular right to perpetuate their communities' exclusivity.
Isn't this more or less identical to anti-immigrant sentiment at the national level, and isn't that something that's rather politically unpopular in SF? Isn't this a bit hypocritical?
I think when a ton of people move into a place you call home all at once, you can't blame people for being upset about their habitat right? Anti-immigration sentiment at the national level is just Trump enforcing our current immigration laws plus some other hateful stuff. SF residents prior to 2012 has seen what they turned into their habitat transform into this overly crowded tech land full with prices for all sorts of goods going up. Once again just playing devil's advocate I feel they have every right to be upset.
Me as the techie and SF native do feel like they are using their oligopoly for selfish personal gain and would love to see more people go out and actually vote on these zoning laws to allow more complexes to be built
Me as the techie and SF native do feel like they are using their oligopoly for selfish personal gain and would love to see more people go out and actually vote on these zoning laws to allow more complexes to be built
Land owners in SF benefit massively from the infrastructure that society has created, yet don't pay for it.
A Land Value Tax would ensure that people monopolizing a limited resource that owes it's value to the society that has been built in San Francisco actually pay their fair share.
A Land Value Tax would ensure that people monopolizing a limited resource that owes it's value to the society that has been built in San Francisco actually pay their fair share.
A land value tax is not even needed if land-use planning and related regulation would be relaxed.
It seems that almost everywhere supply of housing is being artifically restricted leading to rising prices. This is also unsurprising. Housing is the biggest investment most people have, so people prefer policies that keep housing prices to be ever increasing.
Sometimes it sort of reminds me of "bitcoin for old people". Why invent new things when you can get decent returns on housing? Of course until the bubble bursts. But if that happens the government tends to intervene to a degree, not so for crypto bubbles.
It seems that almost everywhere supply of housing is being artifically restricted leading to rising prices. This is also unsurprising. Housing is the biggest investment most people have, so people prefer policies that keep housing prices to be ever increasing.
Sometimes it sort of reminds me of "bitcoin for old people". Why invent new things when you can get decent returns on housing? Of course until the bubble bursts. But if that happens the government tends to intervene to a degree, not so for crypto bubbles.
How is that different from the property taxes homeowners pay today?
California’s Proposition 13 (1978) is the anti-Land Value Tax. Instead of taxing away the land rent and encouraging improvements, it does the opposite by protecting private land rent and taxing turnover and improvements.
• Under Proposition 13, the statutory tax rate is only about 1.2% (1%, plus voter supermajority-approved bonds). Ideally, a land value tax would be higher.
• You’re taxed according to acquisition value plus an inflation adjustment (instead of current fair market value), so the average effective tax rate is only about 0.7%. What this means is that property investors (instead of the community) pocket 100% of the unearned value increase until they sell.
• But it also causes reassessment when you renovate or rebuild. So if you construct an addition, the effective tax rate on the addition is actually greater than the effective tax rate on the land. (Contrast to land value tax, in which the tax rate on improvements is 0%.)
• Under Proposition 13, the statutory tax rate is only about 1.2% (1%, plus voter supermajority-approved bonds). Ideally, a land value tax would be higher.
• You’re taxed according to acquisition value plus an inflation adjustment (instead of current fair market value), so the average effective tax rate is only about 0.7%. What this means is that property investors (instead of the community) pocket 100% of the unearned value increase until they sell.
• But it also causes reassessment when you renovate or rebuild. So if you construct an addition, the effective tax rate on the addition is actually greater than the effective tax rate on the land. (Contrast to land value tax, in which the tax rate on improvements is 0%.)
That proposition exists as a protection from homeowners being screwed by the government being unfair about the value of their land. Yes I agree many homeowners are paying less taxes than what the land is actually worth, but hey, does property tax really even make sense? This person PURCHASED the land but still has to owe the government taxes even though they own it?
Secondly, it is really important to think of real estate as an investment more than a physical asset. These people got in the market early and their investment is giving them great returns. I think that is fair. They purchased these homes maybe 40 years ago when SF was full of crime and property was worthless. Their "penny stock" or whatever you'd like to call it popped off because tech decided to be in the bay area. I think it is right that they are rewarded greatly for picking a great investment.
Secondly, it is really important to think of real estate as an investment more than a physical asset. These people got in the market early and their investment is giving them great returns. I think that is fair. They purchased these homes maybe 40 years ago when SF was full of crime and property was worthless. Their "penny stock" or whatever you'd like to call it popped off because tech decided to be in the bay area. I think it is right that they are rewarded greatly for picking a great investment.
> I think it is right that they are rewarded greatly for picking a great investment.
This "reward" you're talking about is a massive subsidy that everyone is forced to pay existing residents. Public funds don't need to go to millionaires. Period.
And that narrative is completely inaccurate when it comes to commercial property and suburbs, many of which were founded on redlining and racial exclusion. Do we need to be "rewarding" longtime homeowners for being fortunate enough to be of the right race at the right time, at great public expense?
This "reward" you're talking about is a massive subsidy that everyone is forced to pay existing residents. Public funds don't need to go to millionaires. Period.
And that narrative is completely inaccurate when it comes to commercial property and suburbs, many of which were founded on redlining and racial exclusion. Do we need to be "rewarding" longtime homeowners for being fortunate enough to be of the right race at the right time, at great public expense?
Now you’re asking normative questions instead of the positive question I responded to above. So I can give my opinion, but of course you are free to disagree.
> That proposition exists as a protection from homeowners being screwed by the government being unfair about the value of their land
According to The Permanent Tax Revolt (https://www.amazon.com/Permanent-Tax-Revolt-Property-Transfo...), Proposition 13 was largely the opposite. Previously, homeowners benefited from informal and corrupt tax assessments that lagged market values. After assessment practices were modernized and standardized, homeowners demanded protection from the market. And while many states created protections (e.g. low-income circuit breakers, elderly exemptions, and homeowner exemptions), California’s Proposition 13 protections (along with the later Proposition 58/193 hereditary privileges) are probably the most regressive among the states.
> does property tax really even make sense? This person PURCHASED the land but still has to owe the government taxes even though they own it?
Yes, a property tax (particularly, on the unearned portion which is the land value) makes sense as a progressive way to enable the fruits of the community to be used to benefit the community. For one thing, a private owner should not reap all the benefits from the economic activity around him that he did not earn. For another thing, private ownership should not last forever because that leads to concentration of wealth; one could similarly ask whether copyright and patents should last forever.
> Secondly, it is really important to think of real estate as an investment more than a physical asset. These people got in the market early and their investment is giving them great returns. I think that is fair.
I disagree. The economic justification for investing in capital is that investors help to make the country more productive. Driving up the price of land does the opposite; investment in land crowds out investment in capital. The value of land comes from the neighborhood’s economic activity and public investments, not from the individual landowner. Now, you could argue that giving the landowner some incentive will encourage more civic-minded engagement, but I think it’s a far cry from justifying giving him 100% of the increase in ground rents.
For a recent book on the moral foundations of land ownership, I recommend Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd, Laurie Macfarlane (https://www.amazon.com/Rethinking-Economics-Land-Housing-Rya...)
> That proposition exists as a protection from homeowners being screwed by the government being unfair about the value of their land
According to The Permanent Tax Revolt (https://www.amazon.com/Permanent-Tax-Revolt-Property-Transfo...), Proposition 13 was largely the opposite. Previously, homeowners benefited from informal and corrupt tax assessments that lagged market values. After assessment practices were modernized and standardized, homeowners demanded protection from the market. And while many states created protections (e.g. low-income circuit breakers, elderly exemptions, and homeowner exemptions), California’s Proposition 13 protections (along with the later Proposition 58/193 hereditary privileges) are probably the most regressive among the states.
> does property tax really even make sense? This person PURCHASED the land but still has to owe the government taxes even though they own it?
Yes, a property tax (particularly, on the unearned portion which is the land value) makes sense as a progressive way to enable the fruits of the community to be used to benefit the community. For one thing, a private owner should not reap all the benefits from the economic activity around him that he did not earn. For another thing, private ownership should not last forever because that leads to concentration of wealth; one could similarly ask whether copyright and patents should last forever.
> Secondly, it is really important to think of real estate as an investment more than a physical asset. These people got in the market early and their investment is giving them great returns. I think that is fair.
I disagree. The economic justification for investing in capital is that investors help to make the country more productive. Driving up the price of land does the opposite; investment in land crowds out investment in capital. The value of land comes from the neighborhood’s economic activity and public investments, not from the individual landowner. Now, you could argue that giving the landowner some incentive will encourage more civic-minded engagement, but I think it’s a far cry from justifying giving him 100% of the increase in ground rents.
For a recent book on the moral foundations of land ownership, I recommend Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd, Laurie Macfarlane (https://www.amazon.com/Rethinking-Economics-Land-Housing-Rya...)
I just wanted to post here that I read and acknowledge your claims. I would like to respectfully agree to disagree as I don't think this conversation is going to convince either one of us what we currently believe.
- In the last 30 days, 413 houses sold in SF proper with a median selling price of $1.5MM.
- 33 homes sold in Menlo Park, median $2.59MM.
- Just 20 homes are for sale in Cupertino, with median selling price of $2.3MM.
- Of the 38 homes for sale in Palo Alto, just one, a 1bdr condo, costs less than $1.5MM. 30 day median sale price: $3.08MM.
- 263 houses sold in Oakland. Median: $735k.
I live in a nice, relatively upscale part of Chicagoland, and you could buy 4 of my houses for the median price of a home in San Francisco.
I'm sure it's not the case for all software jobs, but I know it's increasingly the case for security roles: you can get the SF rate even if you don't live in SF. If you have that option, it seems batshit crazy to move to SF. Really, unless you have serious roots in your SFBA community, it seems batshit crazy to stay in SFBA with that opportunity on the table.