
San Francisco real estate going to collapse: Angel investor Calacanis - SQL2219
https://youtu.be/nTg5cw1YeAs?t=290
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lisper
My wife and I live in the SF Bay area and we own our primary residence. I
would _love_ to see real estate prices collapse. Why? Because we would like to
do a lateral move (i.e. sell our house and buy a different one in our area for
about the same price) but right now it's too expensive. The price of both our
house and the one we'd want to move to have both doubled since we bought ten
years ago. If we moved today we would have to pay capital gains tax and our
annual property tax would nearly double. If housing prices collapsed and went
back to where they were when we bought we could make the move essentially for
free.

That's the insidious thing about rising housing prices. In order to cash in on
your gains you have to actually sell your house. But then you still have to
live somewhere.

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kemiller
FYI you would not have to pay cap gains on your primary residence. But yes, I
feel the same way. I’m stuck in a starter house because I couldn’t easily get
back in the market.

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foobiekr
I thought the capital gains exclusion ended at 500k? Because if a house in SF
doubled in value, the gain is likely more than that.

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lisper
Yes, exactly right. We have considerably more than $500k in gains. It's a nice
problem to have, but it's still a problem.

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hn_throwaway_99
One of the things that I think rarely gets mentioned WRT remote work,
especially when the "you can hire workers anywhere in the world" platitudes
get bandied about.

While distance may not matter as much, _time zone_ absolutely does. I think
many companies have finally realized that for software teams outsourcing to
Indian and East Asia, with a colocated team in the US, is _horribly_
inefficient. As a sometimes dev manager I refuse to manage people where one of
us has to be online from 10-midnight or some nonsense like that to get a teeny
window of overlap.

~~~
cwzwarich
You can usually find a way to make it work with any pair of timezones (e.g.
North America and Europe, North America and Asia), but when you throw in a
third distant timezone it becomes a huge pain.

At Mozilla, we had people working on the same project in North America,
Western Europe, and Australasia. The meetings alternated between
inconveniencing Europe / Australasia, but the additional latency of having all
3 timezones involved in decisions really slowed things down.

~~~
hn_throwaway_99
Yes, I agree, you can "make it work", but not without a real negative cost to
efficiency and employee morale. I don't know anyone that doesn't hate that
"super early or super late" time span, and it just sucks for everyone. Over
time I think many of your best employees will just refuse to work those kinds
of hours indefinitely if they have other options.

I specifically contrast that to when I worked with some excellent devs in
Brazil who were only a couple hours off and the whole project and relationship
was fantastic.

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LarryMade2
This is a short term prediction - it will be interesting to see how remote
work plays out over time.

I had done it a few years back and it is very disconnecting, that human
interaction is important. Remote staff might be fine for a few months, but
those remote people may be without local community - being a nerd in rural
parts, I don't relate as much to this community as I would in a more nerd
populated area. I think a lot of the dynamics of the bay area is there is a
lot of competitive dynamics at play not just in your company but peers in your
community,

I can see where on both sides (management/staff) it can add additional stress
with lack of immediate one-to-one interaction and increased distance
monitoring/recording.

~~~
Retric
It makes a huge difference where you’re living while doing remote work. Living
just outside the reasonable commute range of a major city, but close enough to
get there outside of rush hour is IMO a great compromise.

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save_ferris
This is my dream scenario. I couldn’t fathom having to fight horrendous
traffic for 2 hours every day, but I’d be fine to do it once a week/on an
altered schedule that avoids rush hour.

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dhuk_2018
Can't help but wonder, is this going to be like offshoring, where we thought
it was a good idea, but it only works for some tasks and companies? Will we go
through a phase of globalization of hiring (for remote) then pull back into
onsite?

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nabla9
The assumption that economies of agglomeration just don't exist because it's
possible to increase remote work seems like wishful thinking.

Hopefully increased remote work eases the diseconomies of agglomeration in
expensive areas like SF.

~~~
goldcd
I think that makes sense. Always seemed strange that you wouldn't want to
break the strange-hold on "setting up your company where the talent/expense"
is. I'd have thought a decent model for something leaving incubation would be
to almost build a campus/kibbutz somewhere nice and cheap. You're leaving
education, we'll give you a nice house, a salary that leaves you better off
once rent deducted - and base yourself somewhere nice. For starting out, gives
you an opportunity to build up some cash. For the employer your staff are less
likely to quit on you. For wherever you choose to base the company, you're
providing infrastructure, young/educated tax-payers etc. Plus as people do
eventually leave, they're reasonably likely to remain in the area to start
their own startup.

~~~
SpicyLemonZest
Many companies do break that strangle-hold, deciding that saving money is more
important than finding good talent. It's a perfectly reasonable and very
common business model. There are niches that generate $5m per year and require
exactly 5 talented engineers but have no use for more; if you find one, you
can just settle yourself into it and there's no reason to locate yourself
based on talent availability. There are even niches where it just doesn't
matter whether any of your engineers are talented.

You don't hear very much about those companies on most discussion forums
because they're not very exciting.

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dgellow
> it's interesting what you say about talent, you know, it can be found
> anywhere. [...] they didn't realize that they could literally find talent
> anywhere around the world and hire people in ways that they never even
> thought they could prior to covid 19.

Sorry, but that exchange is complete bullshit. Nobody in 2020 believes that
talents only exist in SF. Any successful company in SF has other offices
around the world, so they know as a fact that talents can be found elsewhere
and know how much that costs. Remote work is well known since decades by
companies, they definitely knew that was a thing and decided (for the
majority) to not do it while being aware that was an option.

If that's the case, that you are managing a company or HR team and didn't know
that was an option, I'm sorry, but you're completely clueless and shouldn't be
the one allocating/managing resources.

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olivermarks
Calcanis is framing this as a victory for globalization: create a global rat
race to employ people all over the world in their homes, pay them less money
and have them eat the costs of eating, heating etc. Many businesses already
attempt to operate in this way, with massive outsourcing of just about
everything. These same companies are often heavily financialized and some are
zombie companies today in the current economic reality. The reality is that it
takes a huge effort to get a good collaborative team of people to work
together well on multiple levels. It takes even more effort to keep morale and
momentum up. It only takes a few poisonous office politics players to wreck
the above. You have to have a strong core and clear direction and that is much
harder if remote participants have never physically met. I do think silicon
valley is going to take a big economic hit for the next ten years but
reinvention is synonymous with the area so it will be interesting to see what
emerges next...

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SQL2219
To be clear - he specifically says collapse will come to commercial real
estate, he also mentions 10-20% reduction in rentals/homes.

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hoaie
The rental market in Beverly Hills has already deceased 15-20%. The number of
people moving out of luxury condos like 10000 Santa Monica Blvd seems extreme
(30-40 available units).

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NonEUCitizen
How much are those condos? Thanks.

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nemothekid
I think it's clear to see that corporate real estate is going through a
paradigm shift. Before this crisis, I remember Stripe was having a lot of
trouble finding a big enough space in SF before deciding to move to South SF.
What if Stripe just didn't have a big office and expected most of their base
to work from home?

What isn't clear to me is what happens to residential real estate. Sure, some
of us, who would prefer to live in suburbs out where it's cheaper, or maybe in
comitted relationships with kids would prefer that. But I don't think the the
group of people who are maybe single, or prefer the recreational aspect of
living around people in a city would go away. There's a balance which isn't
immediately clear to me. If more people exit the city, does this effectively
reverse a lot of the gentrification we are seeing and sharply stop growth? Or
if it goes the other way does the city become _more_ exclusive for those who
want to live there?

~~~
tinyhouse
There will always be places that are safer, more fun, better schools, etc.
Proximity to work opportunities is only one factor. Also, commercial real
estate can shift to co-working spaces which will have higher demand as more
companies move remote (many people prefer that than working from home, esp if
it's a short commute and paid by their company). I think the biggest impact
would be on the suburbs as families would have more flexibility in picking
where to live. We'll likely see some price drops but as he mentioned I don't
think we will see dramatic price drops. Not to mention that most companies
still plan to go back to the office when things reopen. Might be too early to
make predictions about remote work.

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nemothekid
It would be funny if WeWork comes out ahead after all this.

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samfisher83
Its still going to be expensive. Maybe a 1000sqft house in the hood will be
800k instead of 1.2 mil.

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generalpass
People and businesses may well choose to move out of the city for quality of
life reasons, but the other claims he makes seem weak due to some assumptions
he seems to be making:

People in occupations that could work remotely have not been looking for
remote work positions.

Increase in demand for remote workers will not increase price paid to remote
workers.

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sna1l
Keep in mind a lot of people are associating remote work with "remote work
during a global pandemic."

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lharries
Interesting point about why does being a contractor vs employee have to be
binary? Couldn't there be a third option for gig workers where employees have
flexible hours with progressive benefits e.g. pension + sick days after
working a certain amount

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nikivi
I would love for this to happen as it's quite a shame really how most
companies still require you to move to US to work despite being a tech
company.

So much talent is not even considered due to archaic immigration laws of US.

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influx
It’s miserable trying to schedule meetings between Europe and the US/Pacific
time zone. Even if every is remote, being in the same time zone is everything.

~~~
jmvoodoo
Latin America solves this nicely. I've done a significant amount of work with
teams in central and south America. It has been fantastic.

I also relocated to Puerto Rico myself at the end of March. The rise of remote
work and the tax benefits here make it too good to pass up.

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purplezooey
Not going to collapse. The factors that drove it up, lack of willpower to
build anything, growth in workforce, not being Texas, are staying.

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naveen99
I have been saying real estate is not going to do well long term even before
the plague. Absolutely no reason for real estate to represent > 60% of wealth
in the future. Breathing the same air as someone else usually a liability,
only rarely worth the risk. Once people start doing remote relationships only
meeting for procreation, real estate will go to zero. Yes this might take a
while, and I am not waiting for it... but it’s going to happen.

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dragonwriter
Location isn't important just for procreation. There are reasons that certain
places are more attractive to live than others other than that (climate,
accessibility for trade goods, proximity to natural physical recreation
venues, etc.) Shifts in technology may change exactly what locations are more
attractive, but they won't change that some locations are more attractive and
that land in attractive locations is scarce.

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naveen99
Agree. But there will definitely be a lot of losers in the locations that lose
value...

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ryanmarsh
So does this solve the housing crisis?

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ldiracdelta
Not when supply is constrained by mountains and political policy and the price
is set by a pair of married engineers buying a house..

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asah
Married, childless engineers, with a couple of success startups...

