
Housing in the Bay Area - dwaxe
http://blog.samaltman.com/housing-in-the-bay-area
======
akanet
People should actually call in! Over at the SFBARF, we have a thread of people
reporting on how long it took to call their representatives:
[https://groups.google.com/forum/#!topic/sfbarentersfed/7G4Kr...](https://groups.google.com/forum/#!topic/sfbarentersfed/7G4KrGBAB_8).

I managed to talk to someone at both of my representatives' offices within a
minute, without any sort of delay. It's very easy, please do call in if you
support this measure!

Also, when you do call in, post here afterwards with how long it took you. A
lot of people don't bother because they think it'll be a hassle, but it's
about a 100 times easier than calling to book a restaurant reservation.

~~~
jevinskie
Thank you for this post. I am now very encouraged to contact my state
legislators. I might even muster up the courage to call my federal
representatives!

~~~
studentrob
[http://tryvoices.com/](http://tryvoices.com/) \- great app for calling
representatives

------
s3r3nity
This is one of the top factors preventing me from moving back to the Bay Area.
It's good to know there's at least SOME serious attempt at a solution (even if
folks around here are mostly pessimistic.)

It still surprises me that an industry that's all about connecting the world
through the internet and allowing anyone to work with anyone else on anything
says "yeah but you need to work in this small area of the country to do it."

The armchair economist in me says that high housing prices in the Bay Area
will cause a market "correction" of sorts with other cities exploding as tech
sectors -- see NY, Boston, Chicago, Austin, Las Vegas -- as those cities can
get away with much better housing for cheap, even if the opportunities aren't
as plentiful (yet.)

<conspiracy theory> The cynic in me likes to think that VC's and other wealthy
tech execs are trying to keep housing prices high by artificially creating
this in-elasticity ("you can have my funding if you live in SF" or "we don't
allow remote workers"), as they all probably own houses in the area; the
incentives for them would be to have housing prices keep rising, NOT fall, as
they would lose significant real-estate equity. </conspiracy theory>

~~~
nostrebored
Somehow the city with the highest average salary/cost of living usually goes
unmentioned... Seattle has two huge tech companies, a lot of mid sized tech
companies, and a growing startup scene... and it's not that far away from the
bay.

~~~
incepted
On top of the weather, which is a big deal to a lot of people, the problem is
exactly in what you said: there are two huge tech companies. And that's it.

Basically, if you move to Seattle, you are pretty much restricted to working
for Microsoft or Amazon and that's it. Period. Nothing else.

It's a huge career limiting move, make sure you're okay with it.

~~~
joeskyyy
Microsoft and Amazon only you say? Don't know where you'd get that data from.

Google has a big campus here in Fremont and Kirkland, and they're building a
huge new complex in South Lake Union (Amazon's stomping grounds).

Facebook just opened their brand new office in SLU.

Samsung is here. Adobe is here. Atlassian is here. Uber is here. DocuSign is
here.

Expand the metro area to Bellevue (since we included Microsoft above) add
companies like Redfin, Zillow, Expedia, FICO, Disney.

Edit: Oh yeah, forgot Intel and EMC as well.

I'm sure there's many I missed but there's WAY more than just Microsoft and
Amazon.

... Just don't tell anyone. Go to Portland instead. I hear they want you ;)

------
jevinskie
There is so much pressure, career-wise, to move to either the Bay Area, the
West Coast in general, or a major urban hub.

I honestly like living in a semi-rural part of the Midwest. I _like_ seeing
fields and forests while driving to work. If I want to get out to some
wilderness, I can do so in 15-30 minutes. I travel in a car that, I feel,
offers me freedom. To boot, I have a nice, reserved spot in the garage below
my apartment. I live _downtown_ and I still feel great freedom/"space". I cant
imagine being able to do anything like this in a place like SF or even
Chicago.

My cost of living is very cheap. My commute is 15 minutes. I live close to my
family. Why should I want to leave?

~~~
danjayh
With you all the way.

I have 11 acres, horses, a goat, cats, a dog, and I live 15 minutes from
downtown and 17 minutes from work. This is in a mid-sized midwest city (Grand
Rapids, MI). While I realize that I could achieve a substantial pay raise on
one of the coasts, a similarly sized plot there would cost millions. I paid
under 200k 5 years ago with a 1500sf house on it, and it's still probably only
worth the mid 200k range after we improved it (cleared 6 acres of trees,
planted and fenced a bunch of pasture, made significant improvements to the
house). I could not achieve a similar lifestyle on an engineer's salary near a
major urban center on a coast ... and I have no desire to move to one :).

Plus, I get to make avionics, which is on my short list of the best jobs ever.

~~~
Jgrubb
I know I found a Rails shop there in a search years ago, but generally
speaking is there a tech career scene in GR? If so, are there any trends as
far as the tech that companies are using that you can tell? I've got 3 acres
with dogs and chickens here in NJ, but we have no family for a 10 hour radius
and my wife's family is in Livingston county (don't want to be _too_ close).

Thanks in advance.

~~~
maxsilver
> generally speaking is there a tech career scene in GR?

Not _really_.

There's plenty of tech work in GR, if your just looking for a job you probably
won't have any problems. And there's plenty of social / networking events. GR
definitely punches above it's weight for the region -- but not enough to
compare to a real market.

Grand Rapids is closer to a small town than a major city, so despite our best
efforts, there isn't really a scene that's comparable to anything like what
I've seen in Minneapolis or Portland or Austin or even Milwaukee.

Of course, those places are larger and cost more. Low cost of living is great,
(cheap housing even with good schools, lots of space, easy commutes, no crime,
silly amounts of lawn and garden) but it has its own drawbacks (very low
wages, worthless public transit, everything's suburban, greatly reduced career
opportunities, etc)

I would personally prefer an urban lifestyle, and that's impossible to have in
Michigan, which is frustrating to me. But if you want a suburban lifestyle in
a ranch house with a huge yard, Grand Rapids is perfect for that. There's tons
of those properties around for about $200k.

------
abalone
This is a contentious issue and in case you are not from SF and wondering why
Y Combinator is taking a stand on it, it has to do with the politics of the
tech boom.

The plain truth is that the housing crisis is a combination of too much sudden
demand fueled by the tech boom and too little supply. The tech community likes
to deflect criticism of their sudden influx of relatively high-income workers
and say "don't blame us, it's a supply problem."

This bill focuses mainly on juicing supply by removing restrictions on
builders. But part of that is weakening the affordable housing restrictions on
them.[1] The problem with that is, increasing market-rate housing alone may
not make an _appreciable difference_ in prices where it matters most from a
macroeconomic perspective: for low-to-mid income residents.

Cities need teachers, service industry workers, artists, etc. Already the
restaurant industry is facing a major worker shortage.[2] Let's not even get
into the cultural effects of long-term residents getting displaced en masse.
So if market-rate supply alone can't solve this, then you need affordable
housing regulations to set aside spots.

Sam has offered a rather simplistic statement on the law of supply and demand
on this. But that masks the real question: whether weakening affordable
housing demands as this bill does is a smart move. Will juicing mostly market-
rate housing be _enough_?

[1] [http://48hills.org/2016/05/22/a-terrible-housing-bill-
looms-...](http://48hills.org/2016/05/22/a-terrible-housing-bill-looms-in-
sacramento/)

[2] [http://www.bizjournals.com/sanfrancisco/print-
edition/2016/0...](http://www.bizjournals.com/sanfrancisco/print-
edition/2016/02/12/restaurant-labor-shortage-sf-business-costs-bubble.html)

~~~
davidw
I don't live in SF, but having spent most of the past 15 years in Europe,
which _is_ dense: it's almost completely a supply problem. SF is not really
very dense at all for a place with such a high demand for housing.

Random place in SF:
[https://www.google.com/maps/@37.7718267,-122.4388549,3a,75y,...](https://www.google.com/maps/@37.7718267,-122.4388549,3a,75y,143.66h,92.09t/data=!3m6!1e1!3m4!1s7PTH3Jshnfj4VZCDNw0Dog!2e0!7i13312!8i6656!6m1!1e1)

Near where I lived in Padova, which is way smaller than SF, and way, way less
well off:

[https://www.google.com/maps/@45.3850829,11.8706466,3a,75y,18...](https://www.google.com/maps/@45.3850829,11.8706466,3a,75y,183.83h,93.14t/data=!3m6!1e1!3m4!1st_alGR0roo8WaXCMoaK7gg!2e0!7i13312!8i6656!6m1!1e1)

They look fairly similar, despite a 3 bedroom, 2 bath house in that area of
the suburbs in Padova going for under 200K euro.

Here's what Milan looks like, which does have a decent economy, for Italy:
[https://www.google.com/maps/@45.4582853,9.2105922,3a,90y,219...](https://www.google.com/maps/@45.4582853,9.2105922,3a,90y,219.5h,87t/data=!3m7!1e1!3m5!1snWGqaEBVqvtHw-
Cr4Wv61g!2e0!6s%2F%2Fgeo1.ggpht.com%2Fcbk%3Fpanoid%3DnWGqaEBVqvtHw-
Cr4Wv61g%26output%3Dthumbnail%26cb_client%3Dmaps_sv.tactile.gps%26thumb%3D2%26w%3D203%26h%3D100%26yaw%3D46.500008%26pitch%3D-3!7i13312!8i6656)

None of this 2/3 story crap, even if it's fairly far out from the city center.
They've built _up_.

~~~
abalone
Apples to oranges. SF has always been more of a boomtown. Neither of the
cities you mention have experienced the sudden, massive surge in demand that
SF has in recent memory.

When you have sudden surges in demand you can't just pin it on supply. You
have to think about macroeconomic objectives for the city (i.e. preserving low
and mid income housing) as well as how to plan for the long term, like when
the boom turns to bust and lots of those new residents leave.

~~~
avar

        > Neither of the cities you mention have experienced
        > the sudden, massive surge in demand that SF has
        > in recent memory.
    

They haven't? According to what? I just looked this up for Milan real quick:

SF had 350k people in 1900, and 800k in 2010[1], a growth of ~2.3x. Milan had
550k people in 1900 and 1.3 million in 2010[2], a growth of ~2.35x.

I don't understand how you think SF is the exception in this example. Both of
these cities have had similar population growth, Milan slightly more actually.
It seems the difference is that Milan decided to build up.

1\.
[http://www.sfgenealogy.com/sf/history/hgpop.htm](http://www.sfgenealogy.com/sf/history/hgpop.htm)

2\.
[https://en.wikipedia.org/wiki/Timeline_of_Milan](https://en.wikipedia.org/wiki/Timeline_of_Milan)

~~~
abalone
First, you are looking at the wrong time scale. Second, population growth is
not the same as demand. In just a few years SF has experienced a massive surge
in demand, i.e. the price new residents are willing to pay for housing.

~~~
avar
Well of course population growth isn't the same as demand, that's the point!

What davidw was observing was that there's plenty of cities that do better at
satisfying the demand for housing than San Francisco does.

You can have a growing population in the same area while demand goes down, if
you're building enough new housing to offset the demand. The examples davidw
and I have been citing here show cities that have faced similar population
growth that have built up rather than succumbing to SF's housing problems.

I think your claim that it's apples to oranges is invalid. Yes SF has been a
boomtown, but plenty of cities all over the world have been boomtowns without
the same issues.

The issue is that SF has been a boomtown _AND_ hasn't gotten its act together
when it comes to building up density. That's what makes it a special case, and
that's why both the demand for housing housing prices are ridiculous there.

~~~
abalone
_> cities that have faced similar population growth_

You've simply ignored my point about the _rate_ of growth in demand. That
introduces a new factor, which is the need to control displacement of lower-
income people and maintain healthy economic diversity.

Also, the issue here is not that SF is opposed to density. SF has many high-
density neighborhoods and virtually all new construction is higher density.
The issue is how hard the city should negotiate with developers to set aside
price-controlled units to maintain economic diversity.

~~~
davidw
> the issue here is not that SF is opposed to density.

Sure it is. Otherwise, given the prices you could get for building higher
buildings, someone would have done it. It'd be like printing money.

------
sytelus
I highly doubt this bill would pass without severe modifications. The problem
is that we have two groups in population: One who own houses and other who
don't. First group don't want new houses and dilute value of their property.
Politicans very well knows that making this group unhappy will end their
careers. The second group is often in minority outside large cities. This is
why its very hard to pass laws that would allow build new houses. It's great
that SamA is taking interest in this. If enough valley billionaires can pay
for lobbing then politicians can finally ignore their majority constituents
and do the "right thing" :).

~~~
birken
Around 65% of the population in SF are renters. If it were simply homeowners
vs renters, renters would win in a landslide.

Who do you think was pushing for proposition I (an 18 month development
moratorium in the mission) to pass? It wasn't homeowners, that's for sure. It
was renters living in the Mission who were (not incorrectly) terrified that
new development means they will get evicted and displaced.

Why did 60% of SF voters (keeping in mind only 30% are homeowners) vote for
Proposition B, requiring a city wide up-or-down vote on all new waterfront
development over 40-80 feet? A measure that was also endorsed by multiple
major newspapers? Because people are afraid of everything changing too quickly
and the nice beautiful waterfront turning into midtown Manhattan.

It's complicated. This isn't homeowners giving the middle finger to everybody
else. The situation is more akin to existing residents fighting against future
residents. Though whatever the situation is, pointing fingers at individual
constituencies instead of trying to understand the problem holistically is not
helping anything.

~~~
BurningFrog
> It was renters living in the Mission who were (not incorrectly) terrified
> that new development means they will get evicted and displaced.

This is such a bizarre idea.

How exactly do renters get displaced by _adding_ more housing?

~~~
bagels
Because the actual building they live in gets demolished to build another
building. Or because the new building next door is filled with 'luxury'
$5000/mo rents, which might drive the rent up in their building.

~~~
BurningFrog
> because the new building next door is filled with 'luxury' $5000/mo rents,
> which might drive the rent up in their building.

This is such a stupid myth. On par with "vaccinations cause autism" or
Bigfoot.

Science has studied how price depends on supply and demand _very_ thoroughly.
Increased supply _always_ leads to lower prices.

~~~
youngButEager
Here a scenario that can illuminate the unavoidable fact of supply and demand.

\- A building owner doubles his rents from $3000/month to $6000/month. What
happens? Everyone moves out. The high price eliminated Demand for that
building.

ANALYSIS: When the owner tried to jack up his rents too high, it created an
excess supply of $6000/month units and not enough demand. What will happen to
that owner? ANSWER: go out of business or increase Demand by lowering his
asking rent. CRUX: owners only have 'pricing power' matching the strength of
demand, they cannot just start 'greedily' raising rents.

Now assume Zynga opens up shop in the neighborhood. Does demand increase for
apartments? YES. There are hundreds of new renters.

Building owners see they get 20 applications now for a vacancy instead of 5.
They raise their asking rents to $3100 and people pay it due to lack of Supply
of units.

The owners cannot raise the rent unless Demand increases. But in San
Francisco, which has become much more of a Tech hub over the past 20 years,
Demand for apartments has increased. Supply hasn't kept up.

INCREASE IN DEMAND = more applications for a vacant unit = HIGHER RENT because
lack of supply means renters have few choices.

Okay, now assume Zynga goes out of business.

Does demand DEcrease for apartments in the neighborhood? YES. There are
hundreds of fewer renters.

Building owners see they get 5 applications now for a vacancy instead of 20.
If they keep the rents at $3100 there is now an excess supply of expensive
units. They must lower their asking rents or wait longer to fill a vacancy and
lose money on an unrented unit.

I own/operate rental properties. Supply and Demand is alive and well in the
apartments realm on the Peninsula.

During the worst parts of the recsssion we had 20% vacancy (normally it's
between 3% to 5%).

Demand for apartments dropped precipitously. Did we lower our rents? We had
to. We entered a 'race to the bottom' competition with other rental property
owners.

THERE WAS AN EXCESS SUPPLY OF APARTMENTS in the 2008-09 recession. Rents
dropped.

Right now there is a lack of supply of units because Demand rose as the job
market got healthy.

Rents are higher.

When Demand drops in the next few years in the next recession (due to layoffs,
tech firms folding, etc.), will my firm have to lower our asking rents?

OH BABY. Yes indeed. It hurts too.

The argument 'Supply and Demand don't apply to housing' is patently false.

During a recession, there's lower Demand for units (fewer people working;
living in parent's basement or leave the area). RENTS DROP.

During a healthy job market, there's higher demand for apartments (more people
working -- move out of parent's basement; and new people get hired locally and
move to the area). RENTS INCREASE.

The argument that 'everyone must have an apartment in San Francisco,
regardless, if they want one' is BOGUS. If you cannot afford to live there,
that's YOUR FAULT. Not the city's fault. Not Zynga's fault. YOUR FAULT.

~~~
DrScump
Perhaps Zynga is not an optimal example here.

------
stale2002
If you are passionate about the housing crisis in The Bay Area, you should
check out The San Francisco Bay Area Rentors Federation.

They are one of the groups doing the most activism on this issue.

~~~
akanet
Yup! If you're interested in a low-effort way to influence the local market,
please consider voting by June 7th:
[http://www.sfyimby.org](http://www.sfyimby.org).

Fun fact: some of you may have seen us canvassing at tech bus stops in SF.

------
simonebrunozzi
This is one of the worst piece of advice, IMHO. Here's why.

1) You can't add housing without adding proper infrastructure (transportation,
sewage, power, etc). Adding infrastructure is expensive and takes a very long
time. There will be no budget for proper infrastructure increase if the
population keeps rising - remember that hundreds of thousands of people work
for companies that offshore their taxes.

2) Most people need financial advice on what real estate investment means. If
there's another bubble burst, a lot of average income people will have their
life ruined. They would have bought an apartment for, say, $1M, with 200k
down, only to see its value decrease by 30-35%, essentially wiping out their
savings and forcing them into unsustainable debt.

3) I wish there was an easy way to fix the housing problem in SF. There isn't.
Let's be realistic about it.

Please don't downvote me just because you disagree with me. Instead, tell me
why.

~~~
cynicalkane
> Please don't downvote me just because you disagree with me. Instead, tell me
> why.

I'll do both, because you are acting like an informed person but wrong about
very basic things.

> 1) You can't add housing without adding proper infrastructure
> (transportation, sewage, power, etc). Adding infrastructure is expensive and
> takes a very long time. There will be no budget for proper infrastructure
> increase if the population keeps rising - remember that hundreds of
> thousands of people work for companies that offshore their taxes.

One, you don't "offshore taxes", you offshore profits. Two, corporations don't
pay local taxes based on profits, so I'm not sure what you're on about. Tech
workers? They pay quite a lot in local taxes.

> 2) Most people need financial advice on what real estate investment means.
> If there's another bubble burst, a lot of average income people will have
> their life ruined. They would have bought an apartment for, say, $1M, with
> 200k down, only to see its value decrease by 30-35%, essentially wiping out
> their savings and forcing them into unsustainable debt.

It is not the purpose of an economy to coddle wealthy people with artificial
market restrictions, so I don't have any sympathy here. Also, mortgage debt
isn't like college debt or credit card debt; it's secured by your house alone.
Banks can't go after you for it. All they can do is give you a bad credit
score for seven years. Which is bad, but I'm sure people who can afford
million-dollar homes can afford to face the consequences of their actions.

> 3) I wish there was an easy way to fix the housing problem in SF. There
> isn't. Let's be realistic about it.

This isn't saying anything.

------
Tiktaalik
Even if this bill passes and substantially more multi-family housing starts
getting built, do not be surprised if house prices remain extremely high.

Vancouver doesn't have the same anti-development issues that SF has, and has
been building multi-unit condos and apartments all over the region for
decades. Multi-unit housing starts are about at its highest level ever. The
average price of a detached house however is C$1.3 million (~US$998k thanks to
the weak Canadian dollar) and rising. Low interest rates, "fear of missing
out," incredible amounts of real estate speculation and a dash of foreign
investment can go a long way.

It's likely that the strongest benefits to increased supply in SF will
manifest itself in lower rents and/or lower rate of rent increases.

~~~
pedalpete
Vancouver is a bit of an anomaly, and much of the housing pricing there is
being driven by foreign investment rather than occupation rates.

I moved out of the sea-to-sky about 6 years ago (I'm from Whistler) but I seem
to recall huge amounts of apartment vacancy in Yaletown and even Coal Harbour
areas. From what I've been reading in Canadian news, it seems that many of
these properties remain empty and are not in the rental pool as the act as a
shell game for foreigners to move money our of other contries (mostly China,
but others too I'm sure).

SF is a very small city, even compared to Vancouver, and from what I
understand, vacancies are almost nil.

~~~
shalmanese
The official vacancy rate is low but the unofficial vacancy rate is much
higher. Many empty units are kept off the rental market due to how tilted the
rights are in favor of tenants. 39 percent of the landlords surveyed in 2003
said they kept vacant apartments off the market because of regulations. [1]

[http://missionlocal.org/2015/06/a-closer-look-at-airbnbs-
inn...](http://missionlocal.org/2015/06/a-closer-look-at-airbnbs-innocence-in-
sfs-housing-shortage/)

------
carapace
I'm in favor of how "building in the Bay Area is approved by discretion", I
call it having some power over what gets built. "Democracy" y'know?

I'm from SF. I grew up here. I'm also a computer nerd.

To me, the tech "industry" has been ruining the city I love since the Dot-Com
boom. To me, they are an invading army culturally speaking. In a very real
sense my home is being destroyed.

The saddest part is, this city kinda sucks. It's not even a good place to
locate a business. The city gov is soft-corrupt. The weather NEVER gets
better. We're on a damned peninsula. If I were starting a company I'd go to
Davis CA! People aren't coming here because it makes sense. This is just where
the game is being played. They are drawn here like aspiring actors are drawn
to Hollywood, but the prospects are just as glamorous and illusory. A few will
strike gold, the rest will toil and vanish.

This is a town for freaks and weirdos. If you don't believe me, visit Civic
Center. ;-) It is said "The people who are too strange for the rest of the
country move to California, and the people to weird for California move to San
Francisco." (If you are still too weird you go to Berkeley.)

What concerns me the most is that the newcomers might lack the environmental
commitment, and tip the scales from valuing conservation to valuing rampant
development. San Francisco is the largist metropolitan area with the most
wilderness/open space around it in the world. The last thing we need is more
lux condos and freeways.

I'm going to be calling those numbers, you can bet, but it will be to urge
"con" on this abrogation of the weirdo-freaks ability to stonewall
development. This is a good thing.

Y'all "young gods" will just have to figure out some other place to hatch the
singularity. Move away. Build a floating "Seastead". Just please stop trying
to cram a million more people into the Bay Area. It's not actually a good
idea!

Also, I hear Portland is nice.

~~~
fintler
> San Francisco is the largist metropolitan area with the most wilderness/open
> space around it in the world.

It's high on the list, but it's not the one with the most:

    
    
      Vienna 51% 
      Singapore 47% 
      Sydney 46% 
      Hong Kong 40% 70% is the total green space 40% is protected
      Rio De Janeiro 40%
      London 38.40% Almost 40%!
      Stockholm 30%
      Johannesburg-Gauteng 24%
      New York City 19.7 % or 14% Park Score/World Culture Report
      San Francisco 17.9%
    

[http://www.skyscrapercity.com/showthread.php?t=1660203](http://www.skyscrapercity.com/showthread.php?t=1660203)

~~~
jackfoxy
Believable (17.9%) if you are measuring only within the S.F. city limits. San
Mateo and Marin counties and the East Bay have huge tracts of open space for
metropolitan areas.

~~~
outericky
Same can be said for the surrounding areas of some of the other cities on the
list.

~~~
seanmcdirmid
Not Singapore or Hong Kong of course, but those are special cases.

------
sakopov
Isn't housing just a painful side effect of an astronomical influx of people
moving to one city? IMHO, the problem is the tech industry being too
centralized.

------
brudgers
I suspect this might have an impact. The timeline though will be ten to twenty
years, optimistically.

1\. Eligible property will have to change hands and land in the right hands to
make the projects happen. That's the nature of redevelopment, someone has to
be willing to knock down a profitable building in hopes of building something
more profitable.

2\. The rate at which property will change hands will correlate to the legal
certainty it can be redeveloped. Until new legislation successfully survives
court challenges, the uncertainty will swirl around its "by right" provisions.

3\. The trades base will affect the cost of construction and hence the
viability of projects. Imagine there is some number /n/ of plumbers in the Bay
area. At some threshold amount of construction, these plumbers are all in
demand, and so the price of plumbing rises. This happens across several trades
and formerly viable _pro forma_ 's pencil out poorly with the new cost
structure.

4\. People sitting on the land now are already in a wait and see mode. As land
becomes more desirable to developers, prices go up. Rising prices attract
speculators hoping to sell on. The rate at which developable land flows to
competent developers remains moderate.

5\. Five years from identification of a feasible redevelopment site for
multifamily housing to full occupancy would be pretty quick even in a
relatively development friendly culture. Research, options, due diligence,
financing, entitlement, design, bidding, construction and leasing...any one
[or several] can run out over a year.

Throw in the normal rate economic and financial cycling and the sorts of
effects experience indicates these have on the construction and housing
sectors, and even in the next ten years, there will likely be a period where
half of all projects in the pipeline die.

There's no silver bullet.

------
jeffdavis
I've wondered for a while weather housing exclusivity can improve economies in
some respects. Do the high housing costs create a strong selection bias to
bring in only the most determined to take part in the SV culture?

Obviously, lower housing costs would cause a higher absolute density of
people. But maybe the presence of people with other unrelated interests would
somehow dampen the tech economy, even if the absolute density of tech people
remained the same.

Let me be clear that I support more residential construction on the peninsula,
so I am not saying this as part of a weird socio-political agenda. It's purely
out of curiosity.

~~~
Xcelerate
Yeah, I've also wondered this. SF is easily the best place on earth for
technology, but the price to access it is steep. My friends poke fun at me for
wanting to move to an area where you pay $3,000 a month to live in a box.
"Isn't Atlanta almost as good? You can get a whole house for that price!"

------
JimboOmega
I tried to read the bill, but don't know how the old text read, and am far
from a development lawyer.

Will this have the impacts Mr. Altman suggests they will? Specifically -
significantly more development of multi unit dwellings?

------
joe_the_user
"His bill would make it so multi-family buildings are automatically approved
by right as long as they comply with local zoning, and have 5-20% affordable
units--the percentage depending on location and subsidy offered."

The problem here is that this leaving height limits in place and could create
a rush to impose even more stringent zoning restrictions.

What would be necessary would be legislation that pre-empts both local zoning
and other mechanism for a relatively small area to allow the construction of a
few high rises without the destruction of existing housing stock.

The ideal of Nimbys seems to be no development and the ideal of developers
seems to be building a limited number of ultra-high-priced units in the super
desirable places like the Mission. The sane approach would be to allow a
series of high rises in Potrero Hill and along the Bay.

This approach sounds like it would simply push-through development according
to the developer ideal, which would serve the Nimbys right but also destroy
whatever remains of the character of the mission.

------
pfarnsworth
Companies that extract advertising and other revenue from around the world,
like Google, Facebook, LinkedIn, etc, should create job centers outside of the
Bay Area.

This is the only way that house prices will moderate, is if these globally
significant companies spread their distribution of money around the
country/world. There's too much concentration of money flowing into the Bay
Area in terms of revenues, and that is creating this hyper-inflation that we
see here.

My house value when up by 60% in 2 years. I can sell it for almost $2 million
if I wanted to, which I don't. I keep thinking it's not sustainable, until I
hear the offers that people get from these companies. Google offered one of my
friend $160k + 400k in RSUs, and Facebook offered another one $180k and $500k
in RSUs. That's well over $1M over 4 years for both. Of course salaries like
this will cause hyper-inflation in this area.

~~~
muzz
If it made economic sense for them to create job centers outside of the Bay
Area, they would. This gives one an idea of just how great the economic
advantage of locating in the Bay Area is.

~~~
ghaff
Or just an idea of how the herd mentality can so utterly overwhelm common
sense.

~~~
muzz
Businesses using a "herd mentality" will be out-competed by those which are
profit-maximizers

------
1945
Can we scale the schools, transportation, etc. to support this legislature? If
so, I'm all for it. But the way things stand currently, it's already pushed to
the limits.

~~~
gorkemyurt
turns out its easier/cheaper to do all these things, if people actually live
in a dense city rather than spread out suburbs

~~~
1945
That's not the current environment.

------
epicureanideal
This is good, except that I oppose subsidies for "below market rate housing".
If workers are needed in an area, businesses will eventually need to pay them
more. Subsidizing their housing is a backdoor subsidy to the business owners
who don't need to pay their workers enough to deal with living in the Bay
Area.

~~~
abalone
That's not an unreasonable perspective but you didn't go far enough. If
business owners were to pay workers enough to live at market rates in San
Francisco, what would the effect on prices be? How much would a restaurant
meal cost? Then, once prices resettle at $50/entree, how appealing a city
would SF be?

Note: Paul Graham recently spoke on how important affordable restaurants are
to creating startup hubs![1] That's macroeconomics for you.

[1] [http://paulgraham.com/pgh.html](http://paulgraham.com/pgh.html)

------
rajacombinator
A benevolent dictator could bulldoze easily upwards of 50% of housing in areas
like the sunset, entire peninsula, and Oakland, and replace it with high
quality, high density condos that would increase quality of living by at least
10x, while reducing costs by 50%. But, alas, we got kleptocrats.

~~~
muzz
Yes, property rights are a pesky thing

------
pjc50
The most likely "correction" of this is going to be the next big earthquake.
:(

------
godzillabrennus
I'd be happy to extend a beta license for a brand new grassroots lobbying
platform to the folks at YC for them to be more efficient and effective while
managing this effort.

Heck, if anyone on HN is part of any lobbying effort in California and would
like a beta experience of a new platform email me lane (at) fastAdvocate (dot
com)

Warning you in advance, the website up today is horrible and not
representative of the beta product. The homepage is about to be replaced. We
focused on the product first.

------
honkhonkpants
When I look at this bill I have to wonder if it will really help. Outside of
the city of San Francisco itself, almost nothing is being built, because the
construction costs are too high. Not the permitting and planning costs, but
the actual guys-with-hammers-and-saws costs. For example in Oakland there are
number of properties that are fully entitled to build and have been sitting
that way for years. So how does Brown's bill help?

~~~
arebop
If construction costs explain the high price of bay area housing, how is it
possible that houses in the midwest are produced at less than 1/5 the price?
Are the Kansas guys with hammers really making 1/5 the wages of the California
hammer swingers?

~~~
honkhonkpants
Construction costs do not explain housing prices, but construction costs do
explain which developments are undertaken and which are not. Consider that
construction costs are basically the same in Oakland and San Francisco, but
prices are higher in San Francisco, it makes little sense to develop in
Oakland. The profits are simply not there.

------
spoonie
It's probably a marginal issue, but would decreased living costs reduce
salaries? Presumably if living costs were lower companies could pay less while
still offering a higher net-income than other areas. I guess what I'm asking
is how connected are the high salaries in the bay area with the cost or living
there?

------
eru
The long term solution was proposed more than a century ago ironically enough
by an economist from San Francisco.

[http://qz.com/169767/the-century-old-solution-to-end-san-
fra...](http://qz.com/169767/the-century-old-solution-to-end-san-franciscos-
class-warfare/)

------
youngButEager
Some landlords (such as our firm) are liquidating our rental assets due to the
increasing risk of 1979-1995 properties being pulled into rent control
regimes. Cities like San Jose, Richmond, San Mateo, just this year either
debated increasing or actually increased control over rental properties. The
population is rising; the supply of rental units is too low; cities want to
stop landlords from raising prices; so they are just this year increasing rent
control (San Jose just did this).

Anything built before 1995 (that's a California State statute) can be (will
be) rent controlled (unless population drops dramatically in cities near the
coast).

The State passed a law (the "Costa-Hawkins Rental Housing Act") that prevents
California cities from pulling in any property built _after_ 1995 into a rent
control regime. But Costa-Hawkins does _not_ protect rental properties built
between 1979-1995.

Right now, properties built _before 1979_ are rent-controlled in California
cities (San Francisco, San Jose, etc.)

But at the drop of a gavel, a municipality can pull in all properties built
between 1979 and 1995 into rent control -- the Costa-Hawkins is the _only_
thing stopping municipalities at the year 1995 (they'd like to be able to rent
control every property necessary to accommodate their increasing population
over time).

The citizens of a municipality in Southern California -- Santa Monica I
believe -- narrowly defeated a rent control change designed to extend rent
control to apartments built up to 1995.

That does not help supply. Jerry Brown trying to 'fast track' development does
not remove the risk that newer properties will be rent controlled in the
future.

A new developer sees partial-confiscation of their asset being a possibility,
because the California legislature could modify Costa-Hawkins and remove 1995
as the limit year for rent control.

Once a city/state has demonstrated a commitment to seizure of:

\- a restaurant's right to increase prices \- a dentist's right to increase
prices \- a doctor's right to increase prices \- a private school's right to
increase prices \- a rental property's right to increase prices

Those restrictions lead to: \- fewer restaurants \- fewer dentists \- fewer
doctors \- fewer private schools \- fewer apartments

Businesses _must_ have freedom to operate or no one will start businesses
(supply of businesses will drop).

Once a city/state has demonstrated a commitment to partial seizure of personal
assets (restaurant, dental practice, apartment property, etc.) of a person, or
a business, there is a very strong likelihood that 'seizure/state control'
tendency will never stop.

So the governor of California can wave his hands all he wants with this kind
of "fast track" proposal to building real estate assets in California.

Until the state makes it clear that they will stop the partial or "legislative
seizure" of rental properties, very few developers are stupid enough to risk a
change/nullification of Costa-Hawkins.

~~~
kspaans
I get that, generally speaking, the owner of a house should have the right to
set their rental prices. But what is the risk associated with a property you
own suddenly coming under rent control? Sure, there is the opportunity cost if
the market rent goes up. But do costs correlate with the market rental value?
I would assume (and I could be wrong), that when you buy a property you look
at the current market rental value to decide if the property could be
profitable. Are there landlords who buy properties that will rent at loss
because they are speculating that they'll be able to raise the rents by
20%/year (to pull a number out of the air)? Does the cost of maintaining a
property rise faster than what the rent-control laws allow you to charge for
rent?

And yes, I get that the possibility of rental control can scare of developers.
But I'm wondering what the effect is on current owners. I've never been a
landlord so there is probably something I'm missing.

------
WWKong
How does this benefit/harm the folks who already recently bought a house at
exorbitant price, burning all their savings, calculating their returns based
on how bay area prices have behaved over the last couple decades? Will they be
screwed?

~~~
DrScump
When this bubble bursts, absolutely.

------
puppetmaster3
Does anyone see a problem w/: 'legislation that would allow a lot more housing
to be built'?

I stopped reading after that, as I was satisfied as to what the problem and
solution is.

------
johncbogil
I made an app that uses your GPS location to show you who your elected
representatives are, lets you call, tweet, email them.

TryVoices.com (iOS + Android)

------
blazespin
Great, I'm sure the 101 will just be a blast to drive now! Maybe they should
solve the transportation grid lock first..

------
mickrussom
Too little too late. Middle class is gone.

------
foobarqux
Apparently not all economists agree that increasing housing supply would make
rents cheaper.

~~~
sinak
Source?

~~~
TJTorola
I can't say for sure if this is what Foobarqux was referring to but this
article
[https://news.ycombinator.com/item?id=11708873](https://news.ycombinator.com/item?id=11708873)
came up a couple weeks ago which states

> Tim Redmond of 48 Hills has argued that building more housing would make the
> problem [high housing costs] worse because the people who would move into it
> are likely to be wealthy newcomers whose demand for services will increase
> low-income employment, putting further pressure on older, lower-cost
> housing.

~~~
dragonwriter
The affordable housing requirements to qualify for the streamlined process
should mitigate this effect, to the extent that it's real in the first place.

~~~
justizin
this is a reduction of current affordable housing restrictions, and
"affordable" / Below-Market Rate housing is currently awarded by a lottery
which is harder to win than the actual lotto.

------
tomjacobs
12,000 people moved to San Francisco in 2014. 4,000 homes were built. What's
the problem?

[https://medium.com/@TomPJacobs/what-housing-
crisis-3c0568a5d...](https://medium.com/@TomPJacobs/what-housing-
crisis-3c0568a5dd44#.w021ouwnc)

------
powera
"The bill is currently being debated in California's Congress as part of the
upcoming annual budget" \- it's called the Legislature.

I mean, yes, I knew what he meant, but it doesn't give me confidence that he
understands how to influence the political system.

~~~
noahlt
I think it was written to be accessible to a very broad audience.

~~~
msane
It's specifically about California. This level of government is the
"Legislature" in all states.

    
    
        "State Legislature":
          - "State Senate"
          - "State Assembly"

~~~
erispoe
Nebraska has only chamber, but it's still called the Nebraska Legislature.

------
tryitnow
I love this, but why does he list just those specific members?

------
sseal
And now HN has started to push a political agenda...

~~~
Apocryphon
It's about time. Tech companies, both startup incubators and the big software
megacorps, should have been lobbying Bay Area gov'ts for more housing and
transport infrastructure for the last five years. What's the point of all that
wealth and power if they're not going to use it to enrich their local
communities?

------
Pica_soO
This being California- when can we expect housing on the ocean floor of the
bay?

------
weisser
Cannot believe I'm posting here but relevant:

I have a room in my house in the Sunset opening next month. $900. It's month-
to-month rent. Looking to house a founder/hacker/designer/etc currently
struggling with SF rent (or someone who wants to move to SF but didn't think
they could afford to live in SF)

My email is in my bio.

~~~
phamilton
That's cool and all, but sort of counter to the point being made. Subsidizing
housing for those already on top doesn't really help with wealth inequality.

~~~
weisser
Couldn't be further from my intent. I'm not looking to give housing to people
who are "already on top" \- those people would not want to live in an old
house in the Sunset ;)

~~~
phamilton
Designers and hackers are pretty much on top, relative to the majority of the
bay area inhabitants.

------
aaronbrethorst
typo: "legislative aides," not "legislative aids"

------
iamleppert
I'm currently renting out my upstairs walk-in closet. I live in Potrero, near
26th & Rhode Island. The closet is pretty big and can easily fit a double bed
and dresser. $900 + utilities, but we might be able to work something out.

edit: this is a serious post

~~~
blantonl
This boggles this mind.

And is unsustainable.

~~~
iamleppert
How is it unsustainable? I have a room for rent, that's more than a lot of
people.

~~~
muzz
If you don't have a window, it's technically not a room. Fire codes usually
require 2 directions of egress.

~~~
DrScump
I think you mean _bedroom_. There is no legal definition of a generic "room".
Such rooms are often part of the building plan and are called "bonus rooms".

------
branchless
Won't work. Imagine supply is met, housing is cheap. People then want to live
there more. Eventually the point of equilibrium is restored which is that
banks keep on creating fiat money until land prices reach a point where you
can just about eat _and_ afford the interest repayments.

Land value tax is the answer for all those who don't simply want a quick in so
they can get on the gravy train and actually want their kids to grow up in a
society where wealth creation, not money creation, makes you richer.

~~~
cylinder
Yeah, it's always going to be a function of income in the area. People value
housing enough to pay up to 50% of their income towards it in desirable
cities. If more inventory is available more people will elect to live in SF
and rents will find equilibrium at around the 50% of incomes

~~~
branchless
In large part because many people own/mortgage multiple homes because it's a
one-way bet under the current system where all productivity gains flow to
land.

