Comment by earl | Hacker News Reader

Comment by earl | Hacker News Reader

part of the reason why: Bay Area leads nation in rental price increases http://www.sfexaminer.com/local/2012/01/bay-area-leads-natio...

At a previous startup, a ceo was out drinking beers with some engineers. Now this ceo is quite a nice person, so please don't think that I think poorly of him. Somehow, salaries came up and the ceo mentioned that we were all presumably doing pretty well. Then one of my engineer coworkers mentioned he was paying $2300 or something like that in rent for a small one bedroom near Valencia and 20th, and I said my gf and I were paying $2600 for a medium one bedroom in upper haight. The ceo was utterly shocked at what rent prices were, since he'd moved to the city and bought a house nearly 30 years before. It turns out he was paying something like $1300/mo to live in a mansion in pac heights and his mortgage was almost paid off. The thing that bugged me, in retrospect, was his lack of awareness of one of the primary drivers of engineering salaries: the cost of living in sf. And the impact of the city being actively hostile to tearing down a lot of the pretty crummy housing we have and building up.

edit: not to mention, if you perhaps want to own, $500 - $600K in most of SF is not exactly living in luxury. If you're near real public transport, ie bart, it's a small one bedroom and if you resign yourself to a crappy commute or driving it's a lower end two bedroom, 700-1100 ft^2. Further, you'll pay $1.1k per million dollars of value per month in taxes, so for a $600k house you're giving the city nearly $700/mo for forever.

I've been looking at these posts that complain about the cost of living in Silicon Valley for a while, and thought that things were pretty bad. But when comparing to my home country, Norway, things don't seem very bad at all. Granted, Oslo is supposed to be the most expensive city in the world...but from all the complaining I hear from the tech crowd, you'd think the difference wouldn't be large. But Wolfram Alpha reports a 45% / 37% cost of living difference in favor of SV:

http://www.wolframalpha.com/input/?i=moving+from+Mountain+Vi...

http://www.wolframalpha.com/input/?i=moving+from+San+Fransis...

This is on the top of the fact that we pay, in total, around 50% tax.

Housing is more expensive in SV, but everything else is much cheaper than where I'm from. Are these numbers accurate? Because if they are, then, pardon me for being blunt, you guys are really whining a lot. You must be living in one of the places on Earth with the highest ratio of income to expenses. That the cost of living is higher than in the US in general doesn't really seem like an argument to me. You're pretty much swimming in money over there.

Lets trade places. Seriously though SV is decent but America is not exactly the top place to be living anymore in comparison to a place like Norway despite all the 'USA, USA' chanting we do. I'd gladly pay a boatload in taxes if it would genuinely get us out of our current messes.

Feel free to come on over. There's a shortage of good engineers in Norway just as there is everywhere else. You could even work for a US company, as I do. http://jobs.yahoo.no/page/work/jobopenings

Good luck getting citizenship in Norway.

It's hardly impossible. You'll need to hold down a job (which provides a work visa) for seven years, don't be convicted of a criminal offence, and attend 300 hours of tuition in the Norwegian language or have documented sufficient skills in Norwegian or Saami. Only 20% of applications are rejected, and most were rejected for failing to meet those conditions.

How hard is getting the work permit (or whatever gets you in in the first place)?

It looks like you'll have an easier time if you're in an EU country (even though Norway isn't), due to the EEE.

I don't know... Norway might do everything perfectly for all I know, but it's way too cold and wet for my tastes!

Someone downvoted you, but you're right about the climate. Cold, wet, dark and somewhat hard to make new friends. Lower salaries and status for highly-trained professionals. Otherwise good. Generally great health care, employment benefits, work-life-balance, workers' rights, justice system etc. If you can get an operative oil job, you'll make great amounts of money.

[Edit: To the GP, I'm not sure I would want to trade places. Work-life balance is very important to me, and is something that is worth quite a bit of money to me. It seems like most Americans work very long hours with few holidays, although you do seem to get paid a lot. I wouldn't want to settle down in the US, but it might be nice to try for a couple of years.]

I visit northern California between 2 and 4 times a year for work, have done for the past 4 years or so, but I live in London.

The most noticeable thing is that the lowest end of the economy seems to run on cheap Hispanic labour; food especially. Fuel and general goods are cheaper, from probable combination of lower taxes, more competition and scale from the large market.

Major roads are in surprisingly poor surface condition; back roads in the Santa Cruz mountains are frequently narrow and dangerously uneven. The whole place generally has a feel of being hastily put together in a few years; which it has, more or less, from the combination of earthquakes and its American youth.

Consider the lack of density outside of central San Francisco - how spread out everything is - and it seems clear that infrastructure investment is thinned out over the larger area.

It's a nice place to live if you like being outdoors, but if you don't have a lot of money you'll need private transport to get to a decent bit of that outdoors.

On careful consideration, I prefer London. I end up with a lower salary, a similar cost of accommodation, I'm a lot lower in the social and financial "pecking order" owing to finance industry etc., but I have a lot more choice of things to do.

From an outsider point of view, USA is good, if you want to live there for a several years, save some money and return to your home country. On the other hand, Norway (or any similar "kind-of-socialist" country in Europe) is good if you want to live there permanently.

I've always found these cost of living calculators to be enormously useless. I've used them for every city move I've made, and the results have never been close to reality.

This is particularly true for housing, since there's more to finding a place to live than the median price of a rental. The "median" apartment in SF is likely a studio in the Tenderloin (e.g., stabby stabby!). It doesn't take into account what is being rented, nor where it is, nor transportation, nor any other crucial factors. The metric "average price of a rental apartment" is pretty much as useless as can be.

Take this for example, I moved from Seattle to SF not too long ago:

http://www.wolframalpha.com/input/?i=moving+from+San+Fransis...

According to Wolfram, housing in Seattle is about half of SF. Except, if you actually shop in both markets, you will find that in Seattle you'll find a big 1BR in a nice part of town, with a doorman, elevators, probably nice shared facilities like gyms, hot tubs, BBQs, and saunas.

For 2x that in SF you'll find a 1BR in a crappy part of town, not close to mass transit, built at the turn of the century, comes with a book full of asbestos and lead-paint warnings, and forget about the gym, you probably won't even have your own damn washing machine in the flat.

So yeah, apples to oranges really. Cost of living calculators can go burn in hell.

I'm Norwegian, I used to live in Oslo, now live in London and was considering moving to California.

The tax difference is much lower than Norwegians like to think (what would Norwegians do if there was no excuse for complaining about high taxes). I calculated my Norwegian tax, UK tax and what I'd pay in California including VAT / sales tax, and while Norway came up on top, on my - way above average salary - total tax came out at about 39% for Oslo, and about 34% for California, and about 36% or so in the UK, before taking into consideration things like difference in health care coverage.

There are places in the US where the tax gap compared to Norway is large, but California isn't it.

It's hard to end up paying around 50% tax in Norway even including what you pay in VAT, unless you make a huge multiple of average salaries. You could of course add in employers payroll taxes ("arbeidsgiveravgift"; but in that case, don't forget to do that for California as well), but if so, you're considering it part of your income and need to adjust gross salary up accordingly too - I see people try to add in payroll taxes to inflate the tax number, but nobody takes the payroll taxes into consideration when comparing salaries, or when negotiating them.

The marginal income tax band is capped below 50% (when you add in state income tax, federal income tax and local taxes, the marginal tax rates in some US locations is not that far away either), and unless your salary is way above average and you spend it all, even with the 25% VAT adds up to much less because most people simply don't spend that much of their salary on buying top rated goods. On top of that, deductions reduce the gap. Of course if you live in the cheapest place possible and spend all your remaining money on highly taxed goods like alcohol and cigarettes and warm your house with petroleum, then, yes, you may manage to end up paying 50% or more to the government.

That said, overall you'd probably come out better in SF on the same salary due to the cost of goods and services. But the "we pay so much tax" thing from fellow Norwegians is a pet peeve of mine, after I moved to the UK, and, surprise, didn't actually pay much less tax.

You're probably in the right ballpark with the numbers. My point wasn't to whine about getting taxed (I am very happy with the services I get for my money), rather to point out that they are a factor. The 5% tax difference you cite between California and Norway does make a difference when making a cost-of-living comparison, considering that the jobs we are looking at would have health care included.

Logically, it's the other way around: rent rises because wages (i.e., ability to pay, with an implied high willingness to pay for better housing) are high. Rent rises to capture some of the surplus that is created by the high amounts of money that go around.

San Francisco has apartment rent control so new renters (e.g. young people moving to the city) must pay more to offset landlords' loss of rental income from long-time renters.

Your conclusion is not based with facts. Most landlords in the city do not have rent-controlled properties. That is a fact you can look up in the City websites. Therefore, the argument that rent is going up to offset rent-controlled properties is fallacious. :-)

This depends on where in the city you are -- most of the housing stock in SF is pre-1979 construction, and thus IS eligible for rent control. In SoMA, there's a lot of new construction, largely either in the form of condos or big corporate rented buildings (archstone, etc.). Most of the landlords for the older buildings own a small number of units (1-4); the big new buildings might have lots of units but not a lot of individual landlords.

Most startup people seem to want to live in the Mission or other older areas, even if they work in SoMA. (something I don't understand; I like the new buildings in SoMA)

I'd chalk wanting to live in the mission or other areas to two things. Most people hate living in large apartment buildings when you can have a sweet victorian flat and the "nightlife" in soma is a totally different vibe than in the mission. Especially the variety of options.

While it is possible that most landlords don't have rent-controlled properties, I think the majority of renter-occupied housing is subject to rent control. FYI almost anything built prior to 1979 is rent controlled. Also, what sf calls rent controlled is what nyc calls rent stabilized: when tenants leave the landlord can reset the unit to market rents. The law only caps increases while the same tenant lives in the same apartment.

data: proportion of renter occupied housing in sf subject to rent control: http://www.thehdmt.org/indicators/view/192 2nd map direct link: http://www.thehdmt.org/img/indicators/pdf/RentControlHousing...

> Most landlords in the city do not have rent-controlled properties.

But what about tenants? The San Francisco Tenants Union says, "most [San Francisco] tenants are covered by rent control." [1]

I couldn't find recent numbers, but the San Francisco Rent Board's 2002 Tenant Survey Summary Report [2] says two-thirds of survey respondents’ units were rent-controlled and 10% were market rate:

San Francisco’s rental housing stock is still dominated by rent controlled units. Over two thirds of survey respondents’ units were classified as rent controlled; 13 percent were subsidized or assisted, 10 percent were market rate and the remainder were either occupied by close relatives of the property owner or their market status was undetermined.

[1] http://www.sftu.org/rentcontrol.html

[2] http://www.sfrb.org/Modules/ShowDocument.aspx?documentid=188...

All the rent control in the world doesn't mean a thing if a newcomer to SF can't actually rent such a low-priced unit. Here you go:

http://sfbay.craigslist.org/sfc/apa/

Show me where the rent-controlled units I can get are.

They don't exist, because whatever ones are out there are either crappy enough to more-than-make up for their cheapness, or snapped up by well-connected people.

(Btw, love the URL -- at a glance it reads as stfu, lol.)

Apart from the other argument made that SF has a low portion of rent-controlled properties (I don't know anything about that really), your reasoning would only work if all landlords would collude in keeping rent prices artificially high; something that is often claimed by those less informed about economics but highly improbably in reality (for a variety of reasons - there is so much literature on why large-scale collusion for price inflation of commodities is implausible that it makes little sense for me to repeat it here).

Furthermore, I think you're misunderstanding pricing strategies landlords use to set rent prices. A landlord doesn't (and can't) just say 'oh I need a 4% ROI on my capital, so I need to charge 1200$ of rent for this unit to make up for the 800$ I can charge on the other'. As a landlord, you try to capture as much of the value that consumers are willing to pay for housing as you can. There are various ways of trying that, but all involve variables that are completely separate from the rental income made from other properties (somehow the gambler's fallacy comes to mind, I think both lines of reasoning are in the same class of common cognitive mishaps).

San Francisco also has an artificial housing shortage caused by enforced height-limits for new buildings.

Furthermore there's a significant amount of "affordable housing" and public projects sitting on huge multi-billion dollar lots. All that contributes to artificially high prices for everyone else.

Most of San Francisco's woes directly result from policy-makers who don't understand basic Economics.

Or who eschew basic economics to provide a place to live for the underprivileged and underserved (in the case of affordable housing).

I wonder how long this cycle will last.

SF is pretty expensive, but more of Silicon Valley (both jobs-wise and population-wise) is in the San Jose area, which is considerably more reasonable. Still not cheap, but not $2600/1-bd level; that kind of rent will get you a 2-bd house.

If Bay Area is so expensive, how people with shitty jobs (sweepers, fast food chain workers...) can afford living there?

Cause they all make 100k also - you'll laugh at this until you realize its true.

Well I suppose not everyone like fast food workers but in all seriousness there are a bunch of menial jobs in SF that pay 75 - 100k. Usually union protected gigs.

The median household income in the city is around $70k, so most of the population doesn't have a 6-figure income...

It's housing that is the main thing that makes the bay area pricier. You can get that down by living in a shared unit.

As a sibling commenter noted, it is the other way around. Constrained supply and high demand are driving the prices.

Now it is true that the one-bedroom rent increase probably is blowing away the added after-tax salary. However, if the tech worker lives with roommates (where rents hit ~$1000/month), he will take home more income in the Bay Area than elsewhere.

I make $100,000 a year and my rent is $10,000 per year, I can't imagine earning so much and spending over 1/3rd on rent out of necessity instead of choice. The new place I'm renting (starting next month) will bring my rent up to around $2,800 a month but it's a choice and an incredible place, being forced to spend so much on so little must sting a lot, especially when $100,000 year income is considered well off everywhere else. I'll be living like a king in my new place.

Sure it's by choice: the choice to live in San Francisco or the peninsula—the most exciting locus of tech innovation in the history of the world. Personally I was not crazy about it, so I took the opportunity to move to my company's London office where things are even more expensive. It's all choices though. I doubt you could name a city that I'd be willing to live in where you could get a decent apartment for $800/month.

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