
Thousands of New Millionaires Are About to Eat San Francisco Alive - Slartie
https://www.nytimes.com/2019/03/07/style/uber-ipo-san-francisco-rich.html
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throwaway-1283
I'm honestly really skeptical that much will change. You would think prices
would be edging up in anticipation of a bidding war for housing but nothing
indicates that has been the case.

Plus, with the limit on SALT deductions, liquidating shares as a CA resident
will be especially painful. As a former employee of one of these companies
about to IPO, anecdotally I have seen many of the earlier employees already
move out of state. That, plus the lower mortgage interest rate deduction cap
of $750k (studio status in SF!) and highish property taxes basically can't be
deducted anymore (due to SALT cap you'll hit with an average base salary
alone) makes it really unattractive to stay here.

Most rank-and-file joining one of these cos in the last 4 years or so will be
lucky to net $1-2m pre-tax (and below $1m post), which is a good amount of
money but not exactly Wolf of Wall Street status. After taxes, you'll be
competing for a run-down 1-2 bedroom in a bad location, if you choose to put a
good chunk of that into a down payment.

Honestly I think for most people the game in SF these days is to play the
startup lottery for a few years, and then take your winning elsewhere,
especially if you are at the age where you plan to or already have started a
family.

~~~
rayvy
> Most rank-and-file joining one of these cos in the last 4 years or so will
> be lucky to net $1-2m pre-tax

Yea I'm confused as to where all these splurge-happy millionaires the article
mentions will come from. There will definitely be people well off (as you
mentioned), but I'm not sure if these folks will have the money (that they
want to spend) on boats, and lavish parties. It seems like a good deal of
these employees will get early retirement/nest egg money, and a few execs will
get a few million, while founders obviously make out the best. Not sure why
that would "eat San Francisco alive".

A sensationalist headline if ever there was one {facepalm}

~~~
sjburt
The SF housing inventory is not large, only a few hundred homes on the market,
and few thousand sales per year total. A couple hundred people that can buy at
any cost, and a thousand more that are willing to push their finances to the
limit and you could see a pretty significant change.

There's also a multiplier as price jumps let people cash out of their current
homes with lots of spare equity.

~~~
throwaway-1283
My point is that most of the rank-and-file at these companies will make, on an
annualized basis, about as much as a typical FB or Google or Netflix employee
makes in liquid comp today (of which there are many thousands). I'm just not
sure if the marginal increase in "people who are now liquid" will do anything
to the market and from what I've seen prices are not trending sharply up in
anticipation of some sort of bidding war. I could be wrong. It's just an
observation.

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mruts
How is it that we live in a time in which more rich people is somehow a bad
thing? People are always talking about wealth inequality, but why, exactly is
it bad? Would it be better if everyone was dirt poor?

What kind of probability density function due people want wealth distribution
to look like? A normal curve? A flat one?

I, in fact, live in a country in which almost everyone is dirt poor
(Tanzania), and let me tell you, it's not very good at all.

~~~
metalliqaz
a normal curve would be nice.

The problem is not that there are rich people. The problem is that the rich
are so incredibly more rich than everyone else. I'm talking about wealth that
exceeds human comprehension. I'm talking about one person consuming as much as
100,000 others.

And of course, you may not consider that intrinsically bad, but it's not even
the whole story. Once they become that wealthy, they go about tilting the
entire system in their favor. So not only are they going to contribute a
smaller relative portion of their treasure towards the common good, but they
are going to actually acquire more wealth from those who are less well off.

Even if you _still_ don't see this as a moral problem, you should surely
recognize that it isn't sustainable. Eventually, the guillotines come out. It
would be better for everyone if that kind of violence was avoided.

~~~
beaner
> I'm talking about one person consuming as much as 100,000 others

Most rich people, even very rich, have mostly normal things, just at the
higher end of the scale. A Mercedes instead of a Ford - Restaurants instead of
cooking at home. Etc.

How many people _really_ consume 100,000 x more than a regular person? That's
impossible. A house that is 100,000 times as big? Cars and food that use
100,000 times as much resources? What! You make it sound common. For this to
be real we'd have to live in a fantasy universe where some visible fraction of
the populace drives things as big as the Titanic to work and park it in their
house that's a skyscraper.

Most people who are mega wealthy do not consume anywhere near 100,000 times
more resources as everyone else. The planet doesn't have nearly that many
resources. Just look around you - they live mostly normal lives.

The difference between the average first-world person and the mega wealthy is
smaller now in terms of life experience than it has ever been in history.

Some may have 100,000 times more money, sure - but that's different. For
people with that much wealth, it's not even liquid. It's locked up on paper as
things like ownership of a fraction of a company.

The times when massive amounts of money are spent on material goods privately
often tend to be on things that are so far on the end of the spectrum that
they drive technology for the whole world. The technology in Teslas flows to
other developers, helping us fight global warming. The technology in even
higher-end sports cars helps us discover new tricks of efficiency and
engineering which also flow outward. Moving into spacious new apartments on
billionaire's row develops new advancements in architecture, and also removes
the super rich from competing for regular housing.

And for the things that seem superfluous, like a $300M yacht, I would say, why
do you really care? I don't know about you, but I wasn't brought up to be
envious of the rich. (My parents never fed me any political opinions, which in
retrospect I am incredibly thankful for.) But as a result, I know that things
like yachts can exist, and I've always thought they were marvels of
engineering, beautiful for their own sake. Plus to be built requires the
employment of thousands. Luxury items that big are basically private wealth
redistribution.

The existence of an uneven spectrum of wealth is a good thing _precisely
because_ of how it affects resource allocation. Taking that money from the
marginal wealthy and giving it to everyone would only be an incremental
increase for the rest of us. But its concentration and availability for things
like starting Space X, starting Tesla, and, yes, fancy yachts, means that
advancement can happen. The mega rich don't use more - proportional to their
wealth, they use much less, but smartly designed. And those designs eventually
help everyone else.

~~~
metalliqaz
It is definitely possible:
[https://duckduckgo.com/?q=megayacht](https://duckduckgo.com/?q=megayacht)

~~~
beaner
My comment explicitly mentioned yachts if you read it.

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ajmarsh
What percentage of people head home after a liquidy event? The bay area was
great and all but the money spends a lot better back here in flyover country.

~~~
gumby
How many people moved here for the payday? Feels like a lot over the past 20
years; when I moved here in the 80s it was all about the tech, so there was
little sense of "just visiting"

Of course it's not called the "golden state" for nothing: SF was really put on
the map by the literal gold rush.

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mlindner
The ones eating San Francisco alive are the local officials that block the
building of additional housing. Those people are elected by NIMBYs that want
to pour amber all over San Francisco and freeze it in time, like the author of
this article.

~~~
anarazel
A lot of formerly YIMBY people become very NIMBY as soon as they own property.
I've seen that with a number of people succeeding in the startup game, for
example. I don't think the lines are as clear as you make them to be.

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nytesky
So we expect successful IPOs all around despite unprecedented multi year
losses by unicorns?

~~~
bguillet
Even with unsuccessful IPOs, lots of people are suddenly gonna have access to
liquidity. They may get 300k instead of 600k but still, this is going to be a
change for thousands of people compared to the previous years.

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toomuchtodo
This is good. Those owners are going to have to pay more property taxes than
those grandfathered in through Prop 13. It’ll also push the city to the brink
faster, driving everyone else out to cheaper cities.

Let SF eat the millionaires then (as a necessity, not punitively). You choose
to live somewhere, these are the costs.

~~~
thewarpaint
What an optimistic outlook.

~~~
mlindner
The best optimism available is to collapse the bubble that is Silicon Valley
and get prices back to a reasonable value. Any software company looking to
incorporate should stay out of Silicon Valley and San Francisco in particular.

~~~
Apocryphon
Would an earthquake help?

~~~
mlindner
Probably, but I'd prefer we not have to kill people to do it.

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purplezooey
Just get it over with. What's the difference between $1M and $5M for a starter
home. Might as well be $50M.

~~~
ohaideredevs
There is a difference if you plan to sell your heart, body, soul, dreams, and
best years to Google for 300k one day and put down $200,000 on a house so you
aren't just throwing away money and can leave with a million USD asset one
day.

Doubling the downpayment to $400,000 makes that absolutely unrealistic.

Edit: I am pretty sure Google isn't paying 300k in Houston, or 200k (for jobs
where it pays 300k in Cali)

~~~
stirfrykitty
Should one wish to work for Google, they have heaps of offices worldwide in
much more reasonably-priced locales. I left California years ago and I will
never return. My modest home here in Texas would go for over 2M in California,
along with the ridiculous property taxes and other shenanigans there. Texas is
not perfect, but Houston beats California hands down in terms of quality of
life (with the exception of the heat). Everything here is fairly inexpensive.
You can still buy a plot of land and build a house for under 200k. 200k
wouldn't buy the postage stamp lot in California. Texas also doesn't have
state tax. Politicians suck in both states. Traffic here is mild in
comparison. I work 27 miles from home and the commute takes me about 30
minutes, even in decently heavy traffic. I pay $70 for 400/50 Internet
connection, and I live in the sticks. SlingTV is another $30.

~~~
bilbo0s
>* Houston beats California hands down in terms of quality of life (with the
exception of the heat)...*

I lived in Houston, (Museum District/Third Ward/Whatever you want to call it),
for a good long time. (Three or four hurricanes.) I actually _loved_ it. That
said, I would not say, _at all_ , that it beats the valley for QoL. Setting
that expectation up in peoples' minds just leads to disappointment. And it's
the genesis of a lot of the bad stories we hear about peoples' experiences in
Texas on a daily basis.

If you have realistic expectations, and subscribe to the "When in Rome..."
philosophy, you will find a lot of fun things and fun people in Houston. You
will have a really good time. If you come with the expectation and demand of a
great QoL, a QoL that rivals San Fran, or Boston, or Chicago, etc, you're
likely to be disagreeably surprised.

We need to start measuring cities on their own merits. Measuring cities
against the bar set by what are really becoming early stage city-states is a
little unfair. Houston is great. Omaha is AWESOME. Minneapolis is a blast.
Don't even get me started on how awesome places like Charlotte or Madison can
be.

But you have to be open to what's there, and not go there looking for
everything you had in San Fran. You do that in Houston, and you'll just be
disappointed, and then the yearly floods will come, and you'll be pissed off
on top of being disappointed. But if you look out your window after the storm,
you'll probably see everyone on your block out grilling! (May as well get rid
of any meat in your fridge by grilling it, because you don't know when the
power will come back on!) I mean, it really can be a blast! Seriously, Just do
without the wifi for a few days. (Or weeks if it was a hurricane.) You'll be
happy you did.

~~~
stirfrykitty
I agree with you. For me, it's better than CA. I live near The Woodlands, so
the hurricane thing is not so much of a worry. My wife has family down in
Montrose, and it can be fun down there, but I would not live in Houston proper
due to the sheer amount of time it takes to get places, as you know. It takes
a vast amount of time to drive across Houston, even at night. People don't
realize that Houston, area wise, is like a small country. If I want to go to
the beach from here, it's like 2 hours.

Like I said in another post, if I ever came into serious money, I'd buy some
land and build a house outside Burlington, VT. Proper four seasons, proper
fishing, proper winter activities.

~~~
bilbo0s
> _if I ever came into serious money, I 'd buy some land and build a house
> outside Burlington, VT..._

I hear you man, I live on a lake in Wisconsin. (In my case it's not as
impressive though, because in Wisconsin nearly everyone lives on, or near a
large lake.)

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DigiMortal
Not so related, but damn my dad was right about read everything that you can,
the more you read the better. I'm finding new insights, through reading more
and more. This site provides great links to read more and more. I hope to
continue this path

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prewett
According to the article, in a city of almost 900k people, only 5600
properties were sold?! I don't know what a normal number would be, but this
seems incredibly low.

~~~
huac
various incentives, e.g. waiting for more liquid cash to come in, also your
property tax is tied to home value when you purchase the home, so if you
bought a home in the 80's/90's and still own it, you're paying pennies in tax,
which is a much better deal than you can get elsewhere, which disincentivizes
people from selling

~~~
ndyg
Subjectively, this seems like a big deal. I was fortunate to buy a small condo
before the last round of rocketing housing costs. My low property tax bill
definitely influences the calculus whether to sell. If the intent for current
CA property tax rules were to reduce inequality, I think they have the
opposite effect.

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781
Talk about a decadent society, where you hire 15 people to sculpt in ice,
instead of being paid to do something a little more productive.

~~~
cylinder
Consider that this bullshit is tax deductible too

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mlcrypto
Instead of complaining think about how to take advantage of the wealth
available to spend money. Like an overpriced cat cafe

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kaycebasques
> “Even if just half the I.P.O.s happen, there’s going to be ten thousand
> millionaires overnight,” said Herman Chan, a real estate agent with
> Sotheby’s.

Does that figure sound right to you all?

~~~
kingnothing
You'll have ten thousand people with hundreds of thousands of dollars.
Probably less than half that will see a million.

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refurb
Not a bad time to buy as the SF housing market is much softer than a year ago.
Rather than going for 20% over asking, most are going for 0-5% now.

