
SF's Rising Rental Prices beat NYC: $3500/month for single family homes - jackhammer2022
http://blog.sfgate.com/ontheblock/2012/09/05/what-3500-gets-you-in-sf-single-family-homes/
======
mc32
San Francisco has limited land, so there is a natural constraint on growth; in
addition, there is a form of rent control and then there are lots of
stipulations for building new units in the city. these things contribute to
the low inventory, I think.

I wish they would allow more common sense building in the city. For example,
in some areas, the shadows from new buildings may not be allowed to cast on
neighborhood parks from 10am to 4pm, or so. This has killed a few projects.
Then you have powerful neighborhood groups (like the ones along the
embarcadero) who won't allow dense building because they would limit their
view. I understand their position, but it's a selfish one. No one "owns" a
view. More over, their buildings obstruct buildings behind them, but they
would insist on having their own buildings be demolished to give others a view
--nevermind that this could go on till very few houses were left.

The building requirements, in my layman's view, is that the requirements are
onerous (compared to say San Jose) and make housing in SF an artificially
limited/scarce resource which puts pressure on housing. The Peninsula is not
much better. Neighbors always bring up traffic but then never approve BART to
alleviate some of that traffic concern (or some other form of local mass
transit (let's say spurs from the main Caltrain stations meandering to the
local downtowns which host offices). My frustration is such that I wish
someone like ABAG were given the power to overrule locals and allow them to do
proper (integrated regional) planning and allow building up (vertically) to
take the pressure off of housing in the Bay Area.

~~~
travisp
>No one "owns" a view.

I agree with your sentiment about neighborhood groups using the law to protect
their high property values, but you can, essentially, own a view. You can
purchase the "air rights" above existing houses and buildings from their
property owners if you wish to prevent them from building something taller and
blocking your view. Trump World Tower in New York is an example of a building
that did this.

If you can't convince the owners of such air rights to sell them to you at a
rate you're willing to pay to guarantee the view, you don't deserve to prevent
them by law from blocking your view (basically stripping them of their air
rights without compensation).

~~~
jowiar
If you were designing a new city from scratch, this makes sense. Much like in
software, cities have "legacy systems" to deal with. In the case of homes in
San Francisco, "air rights" had largely been priced into properties by way of
historical architecture limitations (lack of elevators, then earthquake
resilience).

What the zoning restrictions have done is serve as a mechanism to allocate air
rights. Effectively, properties come with the air "in front of" them, not
"above" them. This is reasonable, and consistent. I doubt anyone bought low-
lying property in SF with the idea in replacing it with a skyscraper, but most
people up on a hill definitely paid for the privilege. A shift in pricing of
air rights would cause a dramatic market shift from the previously existing
condition.

------
jboggan
I think the increase in rental prices is going to continue for quite awhile.
My recent experience moving to SF and trying to find a place was incredible. I
was just looking for sublets, but most people that I got to personally meet
told me their email rate for a CL ad was 150-300 emails a day. I quickly
learned that unless I was discovering the ad within 2 hours of posting there
was no point to even replying.

I was only able to get an apartment after (1) enlisting my mother on the East
Coast to spend all her spare time on CL forwarding me appropriate listings,
(2) calling an ad's phone number 22 minutes after it was posted, (3) making
sure I was the very first person that was personally screened, and (4) forcing
a check for two months' rent into their hand unsolicited with the message that
if they found anyone better I'd just stop payment. It's a rough market and it
is still getting crazier. I think someone on a previous HN comment thread
mentioned the city gained only 270 new housing units last year.

~~~
bearmf
Sounds crazy. Are there any real estate brokers who can do this job for you?

~~~
potatolicious
This tickles my funny bone. Of all the New York-isms to import to the west
coast!

So now instead of signing away your firstborn for a studio at a stabby corner
of the Mission, it's now your firstborn _and_ 2 months rent for the privilege!

~~~
bearmf
Skipping the above process is clearly worth something! Though two months is
too much, even in Manhattan.

------
BadassFractal
This chart from Lovely was making the rounds of /r/sanfrancisco the other day,
sounds relevant to this post:
[http://cdn1.uptownalmanac.com/cdn/farfuture/N3k8kY5x460_wHNR...](http://cdn1.uptownalmanac.com/cdn/farfuture/N3k8kY5x460_wHNRZtkp6o_AmKVLJEfZ8idNV6rTQCU/mtime:1337022082/sites/default/files/images-
on-cdn/5-14-12uuugggghhhh.jpg)

------
briandear
San Francisco is a nice enough place, but I fail to see the attraction: high
taxes, fees for everything you do, a fascist city council, homeless people
pretty much do whatever they want and people that love to berate you for not
driving a Prius. The geography of San Fran is nice but it's like living in an
Al Gore version of Animal Farm. Aside from the weather, Texas is a far more
logical place to be. In Austin, $3500 per month would buy a palace compared to
San Fran.

~~~
rayiner
The Texas cities (Houston, Dallas) have some of the most pollution this side
of NJ. They're like LA without the culture.

~~~
xradionut
> "The Texas cities (Houston, Dallas) have some of the most pollution this
> side of NJ. They're like LA without the culture."

Much of the pollution in North Texas, (from traffic, cement and power
production), is due to the influx of people from the surrounding states, the
coasts and overseas by the looser regulations attracting businesses.

Eventually I will probably move elsewhere. The pollution and the allergy
environment is wreaking my health. Traffic is a crazy mix of over aggressive
yuppies, over careful illegals and commercial trucks. The water system is
stressed and the deregulated power system is over priced and in decay to
increase profits.

------
roycyang
I dont think this article is comparing apples to apples. There are no single
family homes to be had in most of manhattan and parts of Brooklyn. I'm living
in pacific heights now and also live in lower manhattan. Manhattan is still a
bit more expensive IMHO.

------
briandear
"Rent control protects tennants from higher prices.."

That's bullshit. What rent control does is distorts the market so you have
people hanging onto apartments when they may not need them. As a result, it
creates shortages. When some dude in Soho NYC is paying $600 for a nice two
bedroom, and his next door neighbor is paying $4500, then there's a big
problem with that system.

~~~
daveman
Absolutely correct. When prices go up, newer tentants end up subsidizing
squatters who are paying below-market rates. If rent prices were variable then
the market would be more liquid and the total supply would be higher, and thus
new rentals would be lower.

I guess it's nice not having your landlord jack up your rent each year (and
landlords can't price little grannies out of their homes). But you also get
stuck in one apartment because the cost of moving keeps getting higher.

------
grimlck
Isn't this just a symptom of san francisco proper being much smaller than new
york city?

A more fair comparision is comparing San Francisco to Manhattan.

~~~
potatolicious
I just moved from SF to Manhattan. Apples to apples (insofar as it's
possible), SF is more expensive.

Obviously I wasn't looking at single-family homes in Manhattan, but when it
came to studios and 1BR apartments, the busy parts of SF (e.g., not the Sunset
or Outer Richmond) are probably marginally more expensive than Manhattan.

If you want to get as close, lifestyle-wise, as possible, you're comparing
Rincon Hill to Midtown, and Rincon Hill will be more expensive. Even if you
expand the parameters out to the high-rises in western SOMA (towards crack-
stab-town) SF will still edge out.

If you're comparing more residential-y areas, like, say, the Upper East Side
to Hayes Valley or the Castro, SF will still win out, though you will probably
get a tad more space in SF for your troubles.

It's hard to declare with great certainty who is the clear winner (or rather,
loser), but SF is definitely neck and neck with Manhattan.

------
cletus
San Francisco is now for all intents and purposes a boom town.

At one end of the spectrum it is awash with tech money from the likes of
Google, Facebook and Twitter. On the other you have pretty much everyone else.

I'm familiar with this coming from Perth, Western Australia. Australia is
undergoing an unprecedented resources boom thanks to China's insatiable
appetite for metals and petroleum products. This has affected different parts
of the country differently. Perth, Brisbane and some region centers have
ridden this wave for more than a decade.

On one side you have those who have owned property for this entire time who
are sitting on huge windfalls (eg a house you could buy for $85,000 in 2001
cost $350,000 by 2005). Now you won't find a house cheaper than $250,000 in
the Perth metropolitan area which stretches for 100 miles of coast and 50
miles inland (at peak; it's in between a triangle and a semicircle).

To view this is a positive is ultimately shortsighted. You see, it's
incredibly difficult for new people entering the market. And I'm not just
talking about purchasing. It flows on to renting. Those rents are inputs into
all other costs and this all adds up to an inflation bomb just waiting to
explode.

The "haves" in Australia are those associated with mining and construction
(since mining demands a lot of infrastructure). The "have nots" are everyone
else. The have nots are, at best, asset rich and cash poor.

At some point the economy simply ceases to function. Office space is
incredibly expensive in Perth such that, for example, there are fewer and
fewer software engineering jobs as companies relocate or centralize to Sydney
and Melbourne (exacerbating a natural trend), which incidentally is one of the
reasons I moved a couple of years ago.

Honestly I think it's cheaper for me to live in Manhattan than anywhere
central in Perth now. _Manhattan_. Rents are more expensive here but not by
much. Everything else is cheaper. I can walk into a large number of eateries
and have appetizers for <$5 and entres for <$10, just as one data point.
Utilities in Perth are super-expensive. I know people with $1500 electricity
bills... for _two months_.

Now Perth isn't land-contrained like San Francisco (or Manhattan) for that
matter but the socialist bent in SF is ultimately a problem.

Rent control is a huge problem in SF. This has been covered here previously.
Some estimates run at 1 in 8 rentable units being left permanently vacant,
arguably due to rent control.

The city's building restrictions mean new units simply aren't entering the
market.

NYC has several things going for it here:

1\. It did away with rent control in 1973. It provided a smooth landing with
rent stabilization, which is now rapidly disappearing from Manhattan;

2\. Manhattan has excellent transport links, probably the best in the country.
The fact is if you work in Manhattan, you can live in the five boroughs, New
Jersey, upstate New York, Long Island or even further afield without having to
drive into the city.

Compare this to the woeful transport situation (in comparison) in the Bay
area. Caltrain is barely serviceable and at best runs once or twice an hour.

3\. New York allows new construction, at least in some areas. Financial
district, Battery Park, Midtown West, etc;

4\. The surrounding areas of NYC are more densely populated. Compare this to,
say, Menlo Park, which reserves almost all land for single-family residences
on large blocks and like much of the rest of the Valley, virtually prohibits
high-rise construction.

This low density is ultimately shortsighted as it comes at the expensive of
amenities and will at some point impact the ability for employers to stay in
the area as the rising property prices make commercial activity increasingly
untenable.

5\. The geography doesn't help SF. Whereas New York, London and other densely
populated urban centers can expand in multiple directions, SF is more
constricted.

Facebook really wanted to stay in Palo Alto. Zoning restrictions made it
difficult. They had split offices and eventually had to move. Twitter for some
reason is sticking to SoMA but as the seedier areas gentrify and go up in
cost, this is going to become increasingly difficult. At some point it's
simply going to make more sense to relocate out of these kinds of areas.

What happens to SF when large numbers of jobs move out of the city?

The whole rent control and construction limits is going to have to end. The
longer it goes on, the worse the correction will be (IMHO).

~~~
rayiner
Zoning for singe-family residences is so bizarrely 1950's, it's ironic that a
high-tech place like Silicon Valley would buy into such idiocy.

~~~
briandear
It sucks living in a beehive. I don't particularly want to share walls with
random people unless I have to. There's no virtue in being crowded unless
that's your thing. Suggesting that everyone should be crowded to fit some
urban planner's idea of efficient is the real idiocy. The people making the
rules don't live in 400sf apartments.

~~~
jvm
There's a big difference between making your own choices and forcing other
people to make your choices, which is what density restrictions do. Housing
markets reflect the collective desires of people that live in an area, and SF
housing markets are begging on their hands and knees for density. It's the
urban planners that are standing in their way.

The most maddening thing for me about this issue is that removing density
restrictions in inner cities actually makes it _easier_ to live in a detached
single-family unit with two cars, since more people living downtown means
fewer people competing to use space and freeways out in the suburbs.

~~~
_delirium
I don't think it's purely the urban planners, as if they've usurped power
against residents' wishes. The desire of would-be _new_ residents may be for
density (which is what markets would reflect), but in much of the SF Bay Area,
the desire of current residents is in the opposite direction, which is what
their elected officials and planning boards therefore implement. So that's
another kind of collective desire, but of a different collection. Places like
Palo Alto, for example, retain rules requiring single-family homes with
certain minimum lot sizes, because that's what Palo Alto residents want their
city to be like.

You actually get that in the private sector as well, if a municipality doesn't
set such rules. The neighborhood I grew up in in Houston had minimum lot sizes
and restrictions on subdividing houses for rental, all implemented via
contract law. When the subdivision was built, all buyers agreed to set up a
homeowners' association and certain rules, which are now conditions attached
to the deeds. In an alternate world where Palo Alto had been set up that way N
years ago, with subdivision organizations and contract law mandating lot
sizes, rather than municipal government setting them, the end effect seems
like it would be largely the same, so it doesn't really seem like a government
vs. market distinction (at least, unless you restrict freedom of contract
enough to make this kind of private-sector zoning impossible).

~~~
rayiner
These sorts of restrictions are all wildly inefficient. Buying property
doesn't buy you the right to control how the composition of the area changes
with time. If you've got 10 people in a neighborhood with single family homes,
and 100 people who want to move into the neighborhood into high density
apartments, why should the minority be able to override what the market
demands?

~~~
_delirium
But the market is what set up the restrictions in the first place, in
Houston's case! They're just private-sector agreements in contract law that
you agree not to do X/Y/Z to your property, in return for your neighbors
agreeing to the same.

Is the argument that people shouldn't be able to agree to a contract saying,
"I will not subdivide this land, and will only sell it to someone who agrees
to the same condition"? I'm not entirely averse to that, but it seems like
it's a more complex issue than just allowing whatever the market demands,
because there's market demand for these restrictive covenants (people really
do sometimes want reciprocal agreements with their neighbors about what each
will do with their land), which would have to be prohibited by restricting
what kinds of contracts people are allowed to sign.

~~~
rayiner
Just because something is achieved contractually does not mean it doesn't
undermine market mechanisms. Cartels are contractual but that still undermines
the market.

There is a proposition in the law of property that restraints on the
alienation of land are to be avoided whenever possible. restrictions on
alienation reduce the fungibility of property and increase transaction costs,
reducing efficiency. In some states, e.g. NY, there are limits on what sorts
of restrictions on alienation courts will enforce when written into deeds.

------
steve8918
We got lucky. 1.5 years ago, we rented a house in SF for $2700, and the rent
was frozen at $2700 for up to 3 years. A friend of ours moved into our
neighborhood and is paying $3300/month for a comparable place.

I'm not sure what we're going to do once the lease is up in 1.5 years,
hopefully the rent prices will stabilize. I know my friend in SOMA who bought
his 2 br condo for $580k can now sell it for probably $800k, and charge at
least $4k/month for it. It's absolutely crazy how much rents have gone up,
it's as bad as during the dotcom boom, where my rent went up $500/month after
the 1st year lease. (I moved out to a worse neighborhood instead of renewing
the lease).

------
ajays
Let's not forget: AirBnB isn't helping either. No, not the AirBnB employees;
but the loads of people renting out their spare rooms, when earlier they would
have taken in a roommate. I just checked, and 2300 listings came up for San
Francisco.

Plus, SF Tenants Union is very powerful. Once you are a renter, you can
basically do anything and the landlord can't kick you out. Consider this
example from today's paper: [http://www.sfgate.com/bayarea/article/Landlord-
nightmare-in-...](http://www.sfgate.com/bayarea/article/Landlord-nightmare-in-
eviction-attempt-3849250.php) . As a result, some people are leery of renting.

In other words: while the demand has gone up, the supply seems to have come
down.

~~~
patio11
_Once you are a renter, you can basically do anything and the landlord can't
kick you out._

People seem to think that this is entirely independent from the evil tech firm
seducing naive owners into believing 40% utilization of a room non-regulated
beats 90% utilization regulated.

------
vinayan3
:( I've been living with roommates for a few years in SF. I want to move to a
1BR place I guess it won't happen till the bust happens.

------
andrewfelix
This is nothing compared to Sydney. We were paying $4k AUD for a run down 3
bed apartment in Newtown. This has been the norm for quite some time, and is
probably down to the fact that Sydney has 1% vacancy.

I've since moved to a town called Newcastle and pay $1700.

------
ronaldj
My friend and I always talk about how, given our salaries, we could have both
bought houses by now if we weren't living in the Bay Area. A tempting idea is
just to save as much as possible for a few years and then move someplace
cheaper.

------
mixonic
Finally, something New Yorkers are happy to be #2 at.

------
jcfrei
how are the prices in the rest of the bay? equally high?

~~~
gwillen
No, they are high but not as high as SF.

Honestly the quoted price sounds low to me for a single-family home in SF.

~~~
001sky
_What does $3,500 a month get you in a San Francisco house?

In the <Sunset>, you can get three bedrooms, two bathrooms, an attached garage
and a big yard._

Not all neighborhoods are equal, presumably

~~~
gsibble
Yep. $3,500 gets you a 1br in SOMA where you actually see the sun.

