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San Francisco rents
Old 07-20-2015, 09:43 AM   #1
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San Francisco rents

The San Francisco “Housing Crisis” Gets Ugly | Wolf Street

Stunning prices. Where do they go from here?

Curiosity about who could live there, led me to this website to get an idea of the economic bracket and other demographics:
ZipWho.com - Free ZIP Code Demographics

Comparing my Illinois town's median income ($38K) to that of Naperville Il, next to where we used to live, about 70 miles away ($97K)... puts into focus how much location can play a part in retirement costs.

In the same zipwho website, I looked up many of the SF zip codes, and found median incomes of from $22K to $95K. This gets a little confusing, when the same zip codes show "cost of living" indexes of over 500%. Some of the other factors seem pretty far out in things like male to female ratios of 88%.

If it's just a poor website, I can understand, but the numbers are quite confusing.

Shed some light?
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Old 07-20-2015, 10:37 AM   #2
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From the article:
Quote:
If a household earns the median household income, forget buying. Leaves renting.
Tech workers generally make well above the median income of the area. Combine that with a working spouse and you have very high household income that can pay rents or even afford to buy.

Still I knew working couples at SV mega corps that probably jointly made 200-300k (at least) and still had difficulty finding "affordable" housing.
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Old 07-20-2015, 11:15 AM   #3
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I live down in Silicon Valley (which I really don't like, I won't be here long term) and a few years ago had entertained the thought of moving up to San Francisco and try city living for a year or two, which I've never done before.

Not anymore.

The rents and home prices have gotten stratospheric, and I can't afford to pay those kinds of prices, and even if I could, I wouldn't. A million dollars just gets you a crackerbox of a condo, and for half that, I could get a really nice home in the Rockies somewhere. I just can't justify it.

I think the only way I'd ever be able to afford San Francisco is if another tech bubble burst and drove away a significant number of people, or an 8.0 earthquake rolled through and decimated property values.

If either of those happened and reduced prices by about 30-50%, I'd probably swoop in and buy something. Otherwise, San Francisco is off limits to me, unless I win the lottery, and then I'm more likely to end up in Vail than SF.
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Old 07-20-2015, 11:18 AM   #4
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In my gentrifying SF neighborhood, plenty of new rental units have come on the market over the past year and many more are still under construction and scheduled to hit the market over the next year. Yet, we have just been handed the largest rent increase in 4 years. So my guess is, absent a tech sector crash, prices are heading higher. If RE prices do go bust, I might buy a condo here. Otherwise, like so many people, I will probably get squeezed out of here sooner rather than later.

So who lives in this neighborhood? In short, the young and affluent. In fact, at 41, I feel like a old man here. We have tech workers for sure. But we are also close to the UCSF campus and the new hospital complex, and we have plenty of well-paid healthcare professionals. And we are close to downtown, so we have people working for banks and hedge funds too.

But we also have a lot of mostly unoccupied units either rented by corporations (as corporate housing) or owned by wealthy foreigners parking their cash on our safer shores. The two apartments next to mine for example are rarely occupied (people stay there for a week or two, then the place is empty for months).
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Old 07-20-2015, 11:58 AM   #5
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It is funny the boom and bust of SF....


When I worked at mega, at the end I was dealing with their real estate... they had rented a 25+ story building for BIG money... the group that rented it was proud they won.... they had planned to use the bottom of the bldg and rent out the top... then the crisis hit... so the rent that mega was hoping to get, over $125 per foot, dropped to less than $20 per foot... we were taking losses of over $25 mill per floor!!! I bet that the rent has gone back up...


Also, I was talking to my sister... she has a daughter that lives in SF... she told me about someone she knew who offered asking price to rent a apt.... and lost... others offered more than asking.... yep, when that is happening then RE is out of control.....
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Old 07-20-2015, 02:27 PM   #6
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Originally Posted by imoldernu View Post
The San Francisco “Housing Crisis” Gets Ugly | Wolf Street

Stunning prices. Where do they go from here?

Curiosity about who could live there, led me to this website to get an idea of the economic bracket and other demographics:
ZipWho.com - Free ZIP Code Demographics

Comparing my Illinois town's median income ($38K) to that of Naperville Il, next to where we used to live, about 70 miles away ($97K)... puts into focus how much location can play a part in retirement costs.

In the same zipwho website, I looked up many of the SF zip codes, and found median incomes of from $22K to $95K. This gets a little confusing, when the same zip codes show "cost of living" indexes of over 500%. Some of the other factors seem pretty far out in things like male to female ratios of 88%.

If it's just a poor website, I can understand, but the numbers are quite confusing.

Shed some light?
Some of the people living there are in rent controlled apartments and others are long time owners with mortgage free homes under Prop 13 property taxes. Most of the cost of living is in housing so if you have that covered it doesn't take much more income to live in San Francisco or Bay Area in general than other urban areas. There are a lot of free or cheap things to do, inexpensive mass transit and food is relatively affordable because the Central Valley is close by.

Not sure about the male to female ratios but it has been like that in the South Bay for years because of less women in software engineering kinds of jobs. And without a software engineer kind of salary it is hard to afford to live there at current housing prices.

As to who lives there - here is a sample of salaries for a Ruby on Rails developer in San Francisco:

Ruby On Rails Developer Salary in San Francisco, CA | Indeed.com

Multiply those salaries times 2 or 3 for a couple or roommates and there you go. Plus add in dwellings owned by wealthy overseas investors and hedge funds. The homes aren't all owned by locals.
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Old 07-20-2015, 02:59 PM   #7
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Some of the people living there are in rent controlled apartments and others are long time owners with mortgage free homes under Prop 13 property taxes. Most of the cost of living is in housing so if you have that covered it doesn't take much more income to live in San Francisco or Bay Area in general than other urban areas. There are a lot of free or cheap things to do, inexpensive mass transit and food is relatively affordable because the Central Valley is close by.
Let me disagree a little bit. Food in San Francisco is pretty expensive because we don't have a lot of competition in the food distribution area. And because incomes are high, the few grocery stores that we do have can and do charge more. Healthcare is very expensive as well - assuming you actually pay for it yourself. My family doctor charges $500 for a physical and routine blood work is nearly $1,000 if you are paying out of pocket. Car maintenance, parking, and even car insurance is expensive.

I remember reading an article showing that San Francisco is a city with one of the worst income disparity in the country. Either you are poor and you can stay here because you get a lot of freebees, or you have to be rich to live here. The middle class can't afford it. Even the mayor famously said that a family making $100K a year cannot afford to live in SF.
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Old 07-20-2015, 03:11 PM   #8
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I remember reading an article showing that San Francisco is a city with one of the worst income disparity in the country. Either you are poor and you can stay here because you get a lot of freebees, or you have to be rich to live here. The middle class can't afford it. Even the mayor famously said that a family making $100K a year cannot afford to live in SF.
I believe that this is increasingly true of many magnet cities. Best to be either under some sort of public assistance or subsidy, or better yet, to be seriously rich.


Sometimes a poster will suggest that average household income is (only..whatever), with the implication that someone who retires at 40 and can scrape this income together is in the clear. Not true because much of what is actually supporting the lower income tiers is not being counted, While ERs can often get ACA subsidies, they will usually have a much harder time getting snap, housing assistance, etc., etc.

The rich at present are keeping America afloat. They are paying a huge portion of income taxes.

Ha
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Old 07-20-2015, 03:18 PM   #9
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That's crazy rent to be peeing away every month.

I feel sorry for those 20-something professionals who have to board together in squalor just to stay afloat.
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Old 07-20-2015, 03:53 PM   #10
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Let me disagree a little bit. Food in San Francisco is pretty expensive because we don't have a lot of competition in the food distribution area. And because incomes are high, the few grocery stores that we do have can and do charge more. Healthcare is very expensive as well - assuming you actually pay for it yourself. My family doctor charges $500 for a physical and routine blood work is nearly $1,000 if you are paying out of pocket. Car maintenance, parking, and even car insurance is expensive.

I remember reading an article showing that San Francisco is a city with one of the worst income disparity in the country. Either you are poor and you can stay here because you get a lot of freebees, or you have to be rich to live here. The middle class can't afford it. Even the mayor famously said that a family making $100K a year cannot afford to live in SF.
+1
Practically everything is more expensive incl food, healthcare. Businesses also pay the same high real estate costs. The only thing we found less expensive, when we moved from Chicago, was haircuts! Don't know why. Oversupply?
Very true about either poor or rich. For very low income, in a highly blue state like CA, there are a lot of freebies. Middle class has the toughest time here. Unless you bought your home decades back and benefit from low housing costs incl Prop 13.
Even the well paid tech employees often end up sharing apartments, sometimes even sharing rooms.
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Old 07-20-2015, 04:01 PM   #11
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Let me disagree a little bit. Food in San Francisco is pretty expensive because we don't have a lot of competition in the food distribution area. And because incomes are high, the few grocery stores that we do have can and do charge more. Healthcare is very expensive as well - assuming you actually pay for it yourself. My family doctor charges $500 for a physical and routine blood work is nearly $1,000 if you are paying out of pocket. Car maintenance, parking, and even car insurance is expensive.

I remember reading an article showing that San Francisco is a city with one of the worst income disparity in the country. Either you are poor and you can stay here because you get a lot of freebees, or you have to be rich to live here. The middle class can't afford it. Even the mayor famously said that a family making $100K a year cannot afford to live in SF.
I don't live in SF proper but our experience is that it is actually pretty reasonable to live in the Bay Area in general, other than housing. I don't spend a lot on groceries and I see the same stores I shop at with locations in San Francisco, like Costco and Grocery Outlet. According to bestplaces.net, most of the cost of living difference is in housing -

SF compared to the US
Cost of Living in San Francisco, California

SF compared to Chicago
Cost of Living Comparison: compare San Francisco, California to Chicago, Illinois
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Old 07-20-2015, 04:06 PM   #12
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I guess I wasn't out of line (several years ago) when I told a headhunter I wanted 2x my pay (for starters) to take a job in SF when I was living in Houston...
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Old 07-20-2015, 04:20 PM   #13
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I was working in the Bay Area one week, and ran by to visit a steamfitter friend that was working on a project and living just north of Oakland. The construction company gave them an apartment in a very nice neighborhood. And life was good for them.

They casually said that just about everyone in their apartment had both husband and wife working full time, and most had second jobs--to pay for their lifestyle. Life wasn't so easy for the locals.

I've been to California many, many times and traveled the San Francisco area earlier this year. But I honestly don't know how it would be possible to retire early with housing costs and taxation in California.
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Old 07-20-2015, 04:25 PM   #14
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That's crazy rent to be peeing away every month.

I feel sorry for those 20-something professionals who have to board together in squalor just to stay afloat.
Agree on the first. But, the second isn't necessarily the case. Some choose to live like that to save $$. Our eldest (engineer, but not software) chooses to live 3 guys in a small 2 bdrm, squalid apartment so that he can fully fund his 401k, keep his options vesting, and save right at half his take home.

From his 26-yr-old perspective, it isn't a bad price to pay, given the quality of work available, and the outdoor recreational activities.... Not my cup of tea, but objectively understandable.
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Old 07-20-2015, 04:32 PM   #15
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Just sayin, I didn't have to do that when I was 26.


DW and I owned a small (1100 sq ft) house about 4 miles from downtown Houston (Heights) and we maxed out our savings. I just don't get the justification for the rental $$$$.


But yeah, living in Houston definitely had its downside.
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Old 07-20-2015, 04:42 PM   #16
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In the RE bust of 2009-2011, there were many homes like the following offered for under $1M, only about 2 miles from me. This is not a McMansion but a real one, as it is in an exclusive area and not a tract home. Of course there's the 120F summer weather to contend with, but it's dry heat. And you have lots of space, indoors as well as out, clean air, and clear sky.

For $1M, I would not be happy with a condo, but it's just me.

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Old 07-20-2015, 04:50 PM   #17
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Housing production is a big part of the problem, constrained by geography, and just as important, by regulation.

In year 2000, population was 777360, at the end of 2013 it had reached 1 million. [edit: Bah! I should read more carefully. Current estimates put it at 825 - 850k, not the Mercury News' one million, still not enough dwellings, though.] In the same period, living units of all types produced amounted to 27826.

http://www.sf-planning.org/ftp/files..._Inventory.pdf

It's like a nineteenth century gold rush: "would you like a tent, sir? Oh yes, I can supply it, $1200 please. Yes, that is a lot of money, but this is where the money is."
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Old 07-20-2015, 05:20 PM   #18
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Housing production is a big part of the problem, constrained by geography, and just as important, by regulation.

In year 2000, population was 777360, at the end of 2013 it had reached 1 million. In the same period, living units of all types produced amounted to 27826.

http://www.sf-planning.org/ftp/files..._Inventory.pdf

It's like a nineteenth century gold rush: "would you like a tent, sir? Oh yes, I can supply it, $1200 please. Yes, that is a lot of money, but this is where the money is."
Backyard tents on airbnb near Mountainview for rent -

Man Lists Tent in Backyard on Airbnb for $899 a Month - DBVNews.com
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Old 07-20-2015, 06:07 PM   #19
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Backyard tents on airbnb near Mountainview for rent -

Man Lists Tent in Backyard on Airbnb for $899 a Month - DBVNews.com


I guess they included a pick and shovel = wifi for this gold rush.
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