As a result, it’s costly for local municipal and county governments to zone for residential areas, because of the need for schools, parks, libraries, and other public services needed. If property taxes don’t balance out those needs, then zoning for commercial buildings instead ends up being far more attractive to local governments. The results: more office buildings, more jobs, but insufficient housing to support them.
Increasing property taxes is tricky because of the risk of further displacing long-term residents, or older residents, who have owned their homes for a long time. But in my view the impacts of property taxes on cost of living and the housing crisis are undeniable, and it’s unusual to me that so few people ever even _mention_ it in these discussions.
[1]: https://torontoist.com/2014/01/everything-you-ever-wanted-to...
But it goes well beyond that. A landlord can own a $4 million dollar shithole but only be collecting $3000 a month from tenants because they've been there for 12 years and the landlord can't increase rent. If they try to sell the building with long term tenants it becomes an intractable problem because there are few ways to force anyone to leave an apartment and tenants know this - it is not uncommon to offer tenants more than $50k to leave an apartment, and it actually doesn't make economic sense for tenants to take less because if they have been there >5 years they are probably saving at least a thousand dollars a month in rent.
So the end result is that a lot of landlords simply have no incentive to fix up a place. Roof is leaking? Too bad. Your landlord might not fix it and sure, you can take it to the courts and win BUT that means you have to leave your apartment until they fix it the issue and any other thing the inspector finds. Which tends to stretch out for years while renters have to find a new place. So renters generally deal will all types of illegal and unsafe housing issues so they don't lose their "good deal" on rent. So both renters and landlords are incentivized to accept shittier and shittier housing while the letter of law for housing inspections gets more precise and costly for owners when things finally get bad enough.
The lifecycle of a house in San Francisco is 20-40 years of disrepair followed by a complete teardown (except the facade so they can still call a "remodel", yes this is a well-known SF red tape workaround) then a new bigger house is put in it's place and sold for top dollar ($3-5 million is the going rate for a nice new rebuild). This is why shacks are still commanding $1-2 million because the land itself (and the facade) is worth it.
A personal residence can only be about 30 years out of date in terms of assessment. And, when the owner dies, that assessment corrects.
Commercial real estate will get buried behind layers and layers of sublease agreements in order to avoid triggering a reassessment. At one place I worked, we had to find the actual original building owner because someone drove a car through a support beam and the rework was going to cause everything to come up to code. We moved out because nobody could actually get through all the layers of subleases (11 layers when I last checked) and guarantee a completion date.
The solution is to remove the Proposition 13 protections from commercial real estate. Good luck. Every company with real estate on the books in California is going to fight you tooth and nail.
When you inherit property from your parents the Proposition 13 tax basis is preserved. Many of the kids I grew up with still live in their childhood homes for this reason. Seems a bit ironic: those who can afford to keep inherited property continue to benefit from the Government subsidized tax break, while those who can't afford to are forced to sell.
https://assessor.lacounty.gov/proposition-58-and-proposition...
If the people wanting that very change simply organized the requisite petition drive, I'm guessing it would pass easily. That's how Prop 13 was installed in the first place -- the Jarvis-Gann initiative amendment. Same with the California Lottery and legalized marijuana (I think the latter was just statute law, which has a lower number of required signatures.)
The economists of both SF and California agree on the issues. Its official. The problem is political.
The conclusion is that unfixed, california will hit a ceiling on its growth, and people will move out.
The issue with SF is amazingly complicated zoning laws which prevents building up and the NIMBYism which continue to support it.
https://www.housingwire.com/articles/41786-los-angeles-surpa...
They take a small group of people that actually are moving and blow it up into a trend. It's been going on for years.
Yes home prices are insane. No salary doesn't make up for it. Yes your house will be smooshed in between others unless you got a lot of money. Yes you could get 2x the house for 1/2 the price anywhere else.
But it ignores two huge factors keeping people here. One the network density for tech. There are more jobs and support here than other places. More investment dollars create more startups which hopefully have more exits which attracts more investment dollars. It's a virtuous cycle.
Two is the lifestyle. Yes there's a liberal bent but it's traditionally been one of the most open minded places in the country. There are few other places you can experience so much of life's variety within a 3 hr drive.
And the whole remote working thing sounds logical but I see few companies actually widely adopting it. A lot of people prefer to connect in person, even though there is no rational reason why anymore.
When looking at where to locate my startup we considered SF but when I ran the numbers our runway would be severely limited. Instead we could run for years off of personal savings in the southeast. Instead of being forced to raise VC money I could control my own destiny.
There are definitely strong network effects of living in the valley. They are not strong enough to beat out market forces if you have the skills to make the product yourself. A single person has a lot more leverage than they did 10 years ago. Most tech companies don't require hordes of engineers. There are smart and talented people everywhere.
The majority of tech happens outside of the valley, and its status as the center of innovation is more likely to be a quirk of history than an act of predestination. Build great products that people love to use and everything else will follow.
Not at all. I've lived in several states and I think you're conflating the "liberalness" with open mindedness. If anything, the Bay Area is one of the most closed-minded places in the country. There's absolutely no room for conservative ideas
I know plenty of Christians in the Bay Area - my wife grew up in a conservative, evangelical household (and her parents are still very devout), so basically everyone she hung out with up through college runs in those circles. We don't personally drink or smoke out, though we have no problem with people who do. I have friends that go shooting regularly. I've been to a gun range with them, and enjoyed myself. My politics run mostly moderate libertarian - I'm for lower taxes and smaller government, but also believe that government has a role in righting externalities and ensuring a level playing field for everyone.
I've never met anyone in the Bay who has a problem with how I live my life - but then, I don't believe that other people need to live their lives the way I live mine.
The downsides are:
* It's hard to motivate to actually work during "down" times whereas if I were at work physically I'd be much more inclined to do something once my regular tasks are complete. * You lose a lot of the in-person communication that occurs either because you overhear coworkers or you run into people in the hall & just chat semi-socially. * You are largely a forgotten quantity. Out-of-sight out-of-mind is real. * Whiteboards are really hard even with moveable cameras & don't work for collaboration. Maybe there's software to help with this but it's not natural. * Meeting infrastructure has to be extremely reliable & coworkers need to plan to account for every meeting being remote. A broken telecom unit, internet issues etc make unplanned changes harder to adapt to. Even harder is if, for example, an external partner is visiting & needs to present regularly & the local connection cannot be presented via the telecom system. * There's far fewer opportunities for work which means it's hard to look for more lucrative opportunities. Similarly, the lack of opportunities means it's harder to leverage that for salary negotiations. * The opportunities that do exist are at firms that aren't doing the bulk of interesting tech work. Even for multinationals the most interesting tech work (granted at least for my interests) tends to still be centralized in the Bay Area. * If you're already working for a big tech company you're probably at the top of (or even above) your salary range for any alternative job unless you manage to get a promotion at the same time.
From an employers perspective, the efficiency costs aren't worth it. For companies that didn't start with remote work, it's hard to justify supporting it when the office space is a sunk cost. Keep in mind that employers don't move employees around regularly for no reason. The bulk of the reason is to have as many people that need to communicate regularly as physically close to each other as possible.
There are few other places you can experience so much of life's variety within a 3 hr drive.
This, more than anything else, is what makes me reticent to move.
What if you want to ride a Google Bus to work, and have the audacity to think that you don't deserve to be shot at or have bricks thrown through your window? [1] [2]
[1] https://www.theverge.com/2018/3/2/17071308/callifornia-highw...
[2] https://www.theverge.com/2013/12/20/5231758/protesters-targe...
Is it? It's hearsay, of course, but I was told it's closer to $4K.
It's mind-boggling for me that a hundred-plus year old house costs that much, frankly.
LA is expensive as well, but there are places that you can rent on the cheap, or at least a reasonable amount of money, and be safe. If this wasn't the case, LA as a city would break down. We need music, artists, actors, people pouring coffee, and serving tables to keep this city alive. We need a poor person living in the same building as an executive. On top of that, we need places where poor people can afford to eat, so there is a McDonalds anywhere you go.
I bring up McD's because I was "over-fooded" in SF and went on a desperate search for something trashy to eat, almost to no avail.
I'm just wondering how SF is able to sustain itself and how it plans to sustain itself in the future if they push all the poor people to such a distance that they can't even take the BART or bus to work anymore.
The other difference is that LA is very much a gig economy. There are a LOT of people out here that either don't have a job and live just fine, or they have a day job and do random gigs during their off-hours. As someone once told me, you don't sleep in LA, you just rest. Others have pointed out that this is a work area, and so on. But even so, there are so many different industries down here that you can, with time, talent, and luck, have sustainable life and your own place, well outside tech, movies, music, art, and so on.
My impression is that the bay area is an area with a few viable ways to make a living. Is it just that the lower class has to live in the dangerous areas of Oakland (and elsewhere) to just have a roof over their head?
There is no shortage of fast food workers, waiters, retail workers, coffee shop workers, handymen, etc. It's expensive to live in the Bay Area, but clearly those people are able to make a living or they wouldn't be around anymore.
And they don't all commute from far away. I know plenty of people working those jobs who live in the Bay Area near their places of work.
A colleague once remarked, "It's the second derivative of the thing that'll get you."
Regardless, it sounds like a more affordable place (if car-bound).
The difference is that, while LA is well-known for Hollywood, you can go a few miles in any direction and get away from "the industry." Considering there were bench advertisements for big data all around SF, it didn't feel like you could get away from tech or really any of the things that are more or less a deep reflection of the cliche tech crowd.
So, whether "on purpose" or not, the fact is that the resulting food, work, life, and so on appear very different. For an example, if you trying to be an actor, you'll likely fall through the cracks, though it's entirely possible you will still work in entertainment in some capacity.
The difference is that you can leave that industry entirely and still have a viable way of making a go at life. This is different than being a place that (feels like) you have the option of tech or get out.
I'm not bashing SF at all, by the way. It seems there is a bit of a resistance to welcoming other things at this point. I could be thinking wrong here, but the "tech is everywhere" is definitely a comment I've heard from people living there or visiting there that have no involvement in tech.
hn@ycombinator.com
I've lived here since Bubble 1.0, but I still keep in touch with people in the midwest. There are plenty of startup-oriented people there, but in their view to get real investment, they have to move to SF.
It'd be great to see more companies starting and growing in places where housing and office spaced is reasonably priced. The Internet has made location much less important for so many things; we should make that true for startups as well.
Also, our angel was largely on the basis of personal relationships. Plus our lawyer pointed out that, even now, comfort with SAFEs is a pretty bay area phenomenon. So if you're trying to raise an angel, how many people in the midwest are comfortable writing a $15-$30k check on an unpriced note with a reasonable (phone call ceo, deck, phone call all founders) basis?
The curious thing is that expansion to places within reasonable driving distance like East Bay has been slow as well. Is the cost saving from East Bay locations not large enough or is it some other factors?
Sacramento is almost a normal American city in terms of real estate prices. It would be pretty reasonable to live and work there, and take the train to SF for investor meetings.
How does a company running glorified dormitories have a $20 billion valuation with only two locations?
The Bay Area economy alone is larger than most countries in the world. You can add up 100+ cities in the world and it won't compare to the Bay Area
And it's even worse in the Silicon Valley towns - Palo Alto, Mountain View, etc. The zoning restrictions there are absolutely bananas.
> This is how people outside the area imagine living in San Francisco.
She doesn't seem to think much of her readers.
> San Francisco's chief housing inspector deemed living in boxes illegal.
Who are these people? There are a lot of homes there, so there must be a whole lot of buyers with $1M in cash. There are enough of them that they even try to outbid each other by slapping an extra $100k no top of asking price.
Thing is, changing this is like changing the gravitational constant. It's baked into the DNA of property rights, leases and taxes.
sanFran is maybe on an extreme here for the USA but it's not necessarily worse than say Tokyo, or the eggegious failure of leasehold in London, or a number of worldwide housing issues
