Comment by declan | Hacker News Reader

Comment by declan | Hacker News Reader

Silicon Valley wages would have to increase by something like 3x--or house prices would have to drop by over 50%--to make houses here as affordable as the national average. Neither is likely to happen.

A median house in San Mateo County costs 11.3x median county income. A median house nationally costs only 3.3x median national income. So if you wish to buy a house in this area (and of course many people may prefer to rent), you should avoid moving here unless you can make those numbers work.

The reality for homebuyers is a bit worse than even those numbers indicate. Income taxes in California are very high, and most of the SF and peninsula housing stock is older and smaller than the national average. The median San Mateo County home is 1500 sq. ft; the median national home is closer to 2,500 sq. ft.

Construction, renovation, and maintenance costs are higher as well. Gas taxes are higher than the national average, sales taxes are higher, electricity costs are higher, etc. SF and peninsula municipalities have planning reviews that can add tens of thousands of dollars, plus state requirements (Title 24) and local requirements (no site development without survey, civil engineer, etc.) that add still more. Also geotechnical reviews and more expensive foundations--remember we're in earthquake country, folks.

On the other hand, we have very pleasant weather. :)

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Sources: San Mateo County's median home value is $1.13M[1]. The county's median household income is approx. $100K[2]. A house costs 11.3x income. [1] http://www.zillow.com/san-mateo-ca/home-values/ [2] http://www.mercurynews.com/2014/08/28/can-working-class-fami...

The national median home is $188K[3]. The median national household income is $56.5K[4]. A house costs 3.3x income. [3] http://www.huffingtonpost.com/2014/03/13/median-home-price-2... [4] http://www.census.gov/newsroom/press-releases/2016/cb16-158....

Unfortunately just increasing people's salary (even 3X) without an accompanying increase in housing supply won't help; that will just exacerbate the situation.

The best solution is to align people's incentives to create more regional housing. The two major classes of people are existing home owners and renters.

Although there is a hodgepodge of solutions, one way to do this would be to phase out Proposition 13 and rent control. Of course this would be really unpopular but should in theory lead to more market efficiency and create incentives for both groups to want more housing.

Existing home owners would want more housing to keep property taxes down. Renters which were previously protected by rent control would also be more vocal about creating new housing. People might actually work together to change zoning laws to increase density and improve transportation solutions.

In the current situation, there are some perverse incentives. For example in SF, if you are in a rent controlled apartment but can actually afford to buy a house, it makes sense to rent the house at market rate while you stay at your rent controlled apartment.

one way to do this would be to phase out Proposition 13 and rent control. Of course this would be really unpopular

Yeah, to the point that you should think of a different solution. Prop 13 is the 'electric rail' of California politics.

The situation is getting crazy enough in the Bay Area that one can perhaps begin to have some hope of a countervailing political pressure building. See my longer post elsewhere on the page: https://news.ycombinator.com/item?id=12576948

No, you are wrong. All you will have to see are pictures of old people being evicted from their homes, and the world will turn against you.

And frankly, I too think you are heartless for wanting to evict old people. Come up with a better plan.

It's particularly obvious that 'repeal prop 13' is a bad idea when you consider it still won't allow major housing increases in San Francisco where the height limit is the main problem: http://www.businessinsider.com/san-francisco-density-thought... Focus on finding main problems.

Phasing out Proposition 13 is not the same as immediately repealing it and going back to pre proposition 13 taxes.

If you read the OP's detailed comment, he proposes limiting the yearly tax payments. Consequently it would be no worse than now if someone wants to stay in their home. What would change, however, is that the person would pay more of the gains to the city when the house is sold. In your senior citizen example, the elderly will most likely stay in their home until they pass so this will affect only the inheritance.

This would also discourage property owners from just sitting on their property. There are empty lots in Palo Alto because the owner only needs to pay $1000 year in property taxes. This would encourage them to sell the land to people who could use it more productively.

You didn't even read my plan.

"Focus on finding the main problems." Your plan definitely doesn't lol.

For the price of an okay family home in an okay neighborhood of Palo Alto you can buy a villa in the South of France...

I'm still not sure how to process that.

The whole thing really puts the lie to the myth engineers in the valley are well paid. In the land of million dollar entry level homes, even $200k of income (!!!) means you will struggle to own somewhere to live. That barely qualifies you for a $1m loan, and that with a $100k downpayment.

I'm aware you can commute eg an hour plus each way from easy bay and find homes for $700k (a bargain!), but something has gone wildly wrong when supposedly well-paid employees can't afford an entry level home in the city they work in.

Do most people own their own home in New York, London, or Paris? I don't think so...

Where are you getting the idea that it's normal to be able to own a home in a major desirable city and global economic hub?

Owning a home and raising a family without killing yourself commuting is basically the American dream.

And you can still do that in 99% of the country, just not major global cities like SF.

The modern American Dream, perhaps. The historic American Dream was a marketing campaign centred around enjoying the long commute in your American made automobile.

nyc is significantly cheaper. Three minutes on trulia found multiple yorkville/ues 1bed doorman units under 6 minutes from the 86th st express stop for under $650k. Add in not needing a car and it's a lot cheaper than living in sf/peninsula.

Agree- my girlfriend's sister just rented a nice 2br on the UES for $2500 a month. I can't get anything close to that in the same price range in SF, even for a 1br.

Don't forget the maintenance on that apartment, which is at least 1500 a month. 650k is extremely low, even then. I've only seen that on properties with a large tax abatement that is set to expire, or the land isn't owned by the building and the lease on the land will expire in 10 years. I wish you were right, but New York isn't that kind, even compared to SF.

Yep - in NYC, there are no public deals. The price always has literally everything baked into it. If it seems low, there is definitely a good reason.

As someone who is currently planning to buy in Manhattan, $650k for a 1br in Yorkville sounds about right.

Quick Streeteasy eyeballing around 86 suggests the maintenance need not be $1500 either -- you either get a fancy elevator building at that price, or you get a walkup at a lower price than $650k.

You're wrong, as glancing at the mentioned sites will show you.

Also, you pay property taxes (higher on new purchases), maintenance, and so forth in CA too.

> The whole thing really puts the lie to the myth engineers in the valley are well paid. In the land of million dollar entry level homes, even $200k of income (!!!) means you will struggle to own somewhere to live.

No, they are _very_ well paid. Anywhere else in the country (minus NYC I guess), they're getting half as much. Simply paying Bay Area developers more money isn't going to make housing more affordable -- what do you think will happen to housing prices when even _more_ money is floating around in the local economy?

Elsewhere they are paid half as much, but living expenses in SF are, say, four times higher, or worse. I can rent a whole 2000 sqft house here, under an hour north of Boston, for about $1500/month. I hear that's the going rate for a cardboard box out in the Bay.

> Anywhere else in the country (minus NYC I guess), they're getting half as much.

Odd, when I was actually willing to sniff around for jobs in the Bay Area I couldn't find anyone willing to come close to doubling my Dallas salary. As far as I can tell, unless you can score a job at Google or Facebook your statement isn't accurate.

You could buy an island villa in Greece for next to nothing. No work there, though. Not sure exactly point you're making.

Work remotely. All of these companies exist virtually on the internet.

You won't be paid as much, though. And get ready for double taxation.

Versus what, spending half your pay on rent, and your life in commutes?

Yet few will allow full-time telecommuting - the big tech companies even ship their employees 40 miles south from SF every on a bus because they want them in the office.

You do realize one can live an hour drive from Palo Alto and have a place than the 25% of the price in Palo Also? And the commute time is much shorter than from France. It is just that people want to be close as possible to work.

Having a 2-hour commute driving in heavy traffic every day is something many people, myself included, would move across the country to avoid. In general, it's awful for one's relationships and health, and it's awful for the environment (perhaps less so with a Telsa or Chevy Bolt and solar panels, but that's presently an outlier).

It might be the right personal choice for some people, but public policy should not be designed so long commutes are the norm.

You can live 10mins away in East Palo Alto and pay less. The big issue is schools. Same with Oakland and San Leandro.

I'm acquainted with a construction worker who's the foreman for a general contractor working on the mid-peninsula. Current projects include single family homes in Palo Alto, Atherton, Woodside, and Menlo Park. The foreman makes $44/hour without health insurance and is about to close on a house in Hollister.

Hollister to Atherton is 68 miles. To get to Atherton by 8am tomorrow, Google says he should leave at 5:50am: https://goo.gl/maps/bfSBp4vFtJQ2

If cheaper housing could be built on the peninsula--where there happens to be lots of low-density housing and open space!--he could live closer to work and the 101 and the 280 would have one less vehicle twice a day. But for reasons we all know, this will not happen.

PS: The structured wiring guys on this project are driving in from Tracy in the Central Valley and staying at a hotel on the mid-peninsula. That commute is even worse than Hollister. Google estimates it at 2hrs 40min one-way (!) for an 8am arrival time tomorrow.

The only place within an hour of Palo Alto where this might have been true is East Palo Alto. It's adjacent to PA. It is still a somewhat dangerous community.

That's changing. Prices in EPA are now >50% of equivalent housing in PA, and rising rapidly through the same processes that have given us $1.7 million starter homes elsewhere in the Bay Area.

There's really nowhere within an hour of PA that has home prices even 50% of PA, much less 25%. Three hours, maybe.

Gilroy?

Union City across the Dumbarton Bridge should be less than 50%. It's 22 minutes with no traffic. You can also get to SF in 40 minutes on BART.

I've lived in a home similar to http://www.zillow.com/homes/34404-Torrey-Pine-Ln,-Union-City...

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