Comment by steven2012 | Hacker News Reader

Comment by steven2012 | Hacker News Reader

My wife and I are technically 1%-ers, and we could not oompete enough to buy a house in SF. We gave up and moved to the peninsula. As the article described, one house we bid for had 20 bidders. We bid over $200k above asking, and we were 10th out of 20 bidders. The winning bid was $400k over asking.

But am I resentful? No. It's the reality of the situation. For those that are bitching and moaning about not being able to live in SF, you just have to deal with it.

And I'm quite confident at some point, the prices will abate. The best cure for high housing prices are high housing prices.

And if they don't, then the problems that the article describes still won't come to fruition. Price inflation will creep through to all aspects of life in SF. It's not going to be a complete vacuum where only house prices increase and nothing else. As house prices increase so will the price for everything in SF, including wages.

For example, housing prices are too expensive for teachers to live in SF? Teachers from the East Bay, etc will commute to SF, because salaries will increase, especially salaries for private school teachers. If you're not aware, SF is amongst the worst in terms of schools and even worse at placement of children in schools. A co-worker had a list of approx 15 schools he wanted to send his child, and none of them were selected for him. He was forced to send his child to private school, and as demand increases, so will salaries. Restaurant prices will increase, and so will the salaries of waiters, etc.

Yes but hysteresis effects likely come into play where actual price points can't keep up with ideal market price points when the ideals change quickly. E.g., residents would balk at a $30 Chipotle burrito (I'm guessing here) even if that's the price it would need to be for a Chipotle owner to break even. By the time residents update to the "new normal", the damage is already done.

I think you may be missing the point...

there would be no Chipotle if the housing prices kept going up.

Or if there was, it would be a tourist stop and would certainly make its money on volume. Basically, it would be like that god awful McDonald's on the Champs Elysee.

In any case, the price for it's burritos would, in all likelihood, not rise to an unaffordable number. At the same time, local residents would not make up the bulk of its customers.

> there would be no Chipotle if the housing prices kept going up.

I don't follow this at all. Are you suggesting that restaurants would simply disappear from SF entirely? Or that locals would never go to restaurants? It seems much more likely that restaurants would just get more expensive during which time there would be some churn and turnover in the market.

Don't worry, Chipotle will weather the storm just fine. However, the good burrito places will have a very hard time.

It makes me cringe that one would even think of Chipotle as an acceptable place to eat in fucking San Francisco.

"The best cure for high housing prices are high housing prices."

Provided you have the possibility of actually building more (and/or denser) housing at a sufficient rate.

That's one solution. The other is that housing becomes such a huge liability to local commerce that people will just leave.

Housing prices are like high taxes or burdensome regulation - they add to the cost of doing business, and in the extreme case people will just get out.

The end game if the Bay Area won't allow more housing to be built is that the industry will move out of necessity. This is already happening, though not at scale.

Hm, sure, that's conceivably a way it could reduce demand, I guess.

From my limited understanding, I take that this is the issue in SF. There is a lot of regulation issues with building denser housing thus the shortage in supply.

Your understanding is certainly limited. Housing prices all over the Bay Area have increased similarly. SF is not an outlier in terms of percentage appreciation compared to nearby cities.

That is not necessary. If prices get so high that no one wants to or can afford to live in SF, then the prices will naturally decline.

I'm old enough to be a crusty dot-com boom veteran. Rent prices were about as crazy as they were today, except it was more in the South Bay than SF, so no one appeared to care as much. My 2 br apartment in the South Bay went from $1700/month to $2300/month after the lease was up. We had to move out and into a shitty rental in Sunnyvale for 2 years, when the rent prices started to drop because of the dotcom bust.

So, the supply-demand equation is very real, and at some point, prices will abate. Nothing goes up forever.

lol at your baseless wishful thinking

Cry me a river. The demand if from millionaires an billionaires both foreign and domestic. Whatsapp made each employee a millionaire many times over. Twitter IPO. Rich Chinese & Russians. What goes up will keep going up, lib.

>>That is not necessary. If prices get so high that no one wants to or can afford to live in SF, then the prices will naturally decline.

I think you have a fundamental misunderstanding of the problem.

For people outside the tech industry, this is already becoming the case. This is why entire neighborhoods are being gentrified: middle and lower-middle class can no longer afford to live there.

Tech workers though? Their companies have bottomless pockets. Google can afford to increase employee wages to keep up with increasing real estate prices. The issue is that Google employees need services like everyone else: police, firefighters, teachers, water, electricity, sewage, just to name a few. But if those service-providers can't afford to live in the city, then what will happen?

Probably this: http://imgur.com/CbyLy7O

To say that tech companies have bottomless pockets actually shows that you have a fundamental understanding of the problem. Since you don't live in SF, I'll chalk that up to you buying into the media hysteria and not really knowing how life has been here over the past little while. People have always been predicting about how basic services will stop functioning because the workers will be unable to afford it, and it just won't happen. There will always be people to pick up the work.

In terms of tech companies having bottomless pockets, tht's simply nonsense. Startups can't afford to keep up paying Google-like wages (~200k/yr + $100k/yr in RSUs). And just like the dotcom boom, there will be a reckoning when "promising" startups don't get bought up by Google or Facebook, and their investors start fleeing en masse. Then, as people start moving out of the $5000/month 2 br condos in Mission Bay (as one of my friends were actually paying), prices will drop. It's just the nature of the beast.

I'm not sure what your concern is here. What makes you assume these people live in the city?

While the cartoon is cute, One of two things will happen:

1. The service will decline, people will complain, and the salaries will increase until they are enough to live in the city, or attractive enough to someone to commute.

2. The service won't decline, because these people were not living in the city anyway.

Most of the police officers i knew for DC, for example, lived in the suburbs of Maryland (a 1 hour commute).

I doubt most teachers in the bay area were living in SF, they were priced out of the market a long time ago.

"So, the supply-demand equation is very real, and at some point, prices will abate."

Only if demand goes down or supply goes up. The dotcom bust was an example of demand going down, but I don't see that it had anything to do with the high price of housing.

"Nothing goes up forever."

I don't think you can count on anything going up forever, but I'm not sure I would want to bet too heavily on any particular thing not going up forever - particularly when you consider that something could "go up forever" while having a horizontal asymptote.

Note that I'm not saying nothing else can solve the problem - another decline in tech certainly would - but for it to be the high prices that solve the problem requires those high prices be able to motivate useful behavior.

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