
Living in a Fool’s Paradise - Mz
http://www.boomcalifornia.com/2014/06/living-in-a-fools-paradise/
======
ryandrake
I want to know who's living in these places.

I work in a fairly senior role in a well known South Bay tech company (you've
heard of it). I live in Livermore. (For those of you not familiar with the Bay
Area, Livermore is so far away from everything, it might as well be Nevada.)
Why do I live in Livermore? Because I can't afford anything within a 20 mile
radius of Stanford. All over the Peninsula (and the areas in Santa Clara
county you'd want to live) are dotted with $1.5M single family houses and
$4,000/mo apartments. Summoning the voice of Jerry Seinfeld, "Who are these
people? Really, who are they?" They can't all be stock option multi-
millionaires can they? I'm doing pretty well for myself, but I can't afford to
live anywhere in basically two counties. What do these people do who can
afford to live down there?

The Bay Area is going to eat itself soon. There's just no way this housing
situation is sustainable? What is the end game? Is this going to turn into
Elysium? How will normal people survive here without affordable housing?

~~~
kghose
So, a double income family, each person earning $250,000 with proceeds from a
previous house sale for downpayment, can manage quite easily, no?

Pre tax income: 41666/month

20% Down = $300000 Borrow 1.2M @ 4.0% = $5728.98/mo

This looks quite doable.

Heck, with half that income, you could do it!

~~~
SheepSlapper
Only in the Bay Area do people say "Well, if your household is making half a
million a year it's affordable!" It reminds me of the Wall Street Journal
disconnect last year [0] regarding taxes (those single mothers making $250k a
year are really suffering). The Bay isn't the real world by a long shot.

I just moved away from the Bay Area for this exact reason. I went from making
$120k a year to $85k a year, but in Washington I can get a decent family home
for $150k. The Bay Area can't come remotely close to matching that kind of
deal, even with the ludicrous salaries.

[0] [http://i.imgur.com/bdgZa.jpg](http://i.imgur.com/bdgZa.jpg),
[http://online.wsj.com/news/articles/SB1000142412788732368960...](http://online.wsj.com/news/articles/SB10001424127887323689604578220132665726040)

~~~
declan
>The Bay isn't the real world by a long shot.

Neither is Manhattan. From the NYT in 2009, and prices for schools and child
care and real estate have only gone up since then:

[http://www.nytimes.com/2009/02/08/fashion/08halfmill.html](http://www.nytimes.com/2009/02/08/fashion/08halfmill.html)
"Five hundred thousand dollars — the amount President Obama wants to set as
the top pay for banking executives whose firms accept government bailout money
— seems like a lot, and it is a lot. To many people in many places, it is a
princely sum to live on. But in the neighborhoods of New York City and its
suburban enclaves where successful bankers live, half a million a year can go
very fast."

A lot of this is real estate and private schools, of course. You could get a
5br/5,000 ft^2 house in Green Bay, Wisconsin for 400K:
[http://www.zillow.com/homedetails/3318-Whittier-Ct-Green-
Bay...](http://www.zillow.com/homedetails/3318-Whittier-Ct-Green-Bay-
WI-54311/67984340_zpid/)

While a 5br/5,000 ft^2 prewar apartment (not even a single-family home!) in
Manhattan would be $24M, and that's with a kinda small and not very attractive
kitchen: [http://www.mironproperties.com/NY/NYC-
Apartment-38737-Upper-...](http://www.mironproperties.com/NY/NYC-
Apartment-38737-Upper-East-Side-5-Bedroom-Apartment-For-Sale)

Many folks, like you, are better off moving away from the Bay Area and taking
a salary cut if they don't already own a house and would like to buy one.

~~~
jacobbudin
NYC is very expensive, but $24m is hyperbole. Corcoran listings for 5+ bedroom
townhouses in Manhattan begin at $2.3m, still a very princely sum:
[http://tinyurl.com/l7hukd6](http://tinyurl.com/l7hukd6)

(If you're willing to live outside Manhattan, in one of the "outer boroughs",
prices drop dramatically.)

~~~
declan
Um, I think you left off a zero. :)

If you use that Corcoran link you provided and restrict your searches to
townhouses in the $2.3-$2.7M range with 5br, you get only Harlem, not
Manhattan: [http://tinyurl.com/nvftwqm](http://tinyurl.com/nvftwqm)

~~~
zb
Harlem is in Manhattan.

~~~
declan
Ah, didn't know that. I'm a non-NYC dweller and thought it was a separate
borough.

------
declan
This BoomCalifornia.com article is well-written but misses a pretty big point:
these are in large part choices that SF bay area governments have made to
limit new development. The article does discuss SF, true, but SF has only
perhaps 10% of the area's population, and a negligible part of the area.

Housing prices on the SF peninsula once were in line with the rest of the
country. Then came anti-development fervor, pushed in large part by existing
homeowners who benefited from a rise in demand coupled by fixed supply.

That's one reason why, even though I have enough land to build a small guest
cottage that I could then rent out on the SF peninsula, my local government
makes it cost-prohibitive or impossible to do (can't cut down trees, can't
disturb natural habitat, can't build within 40' of a stream, etc.). That's
also why Facebook's massive new campus logically should be surrounded by high-
density housing instead of ranch homes on quarter-acre lots, and isn't, and
why no housing can be built within walking distance of the Googleplex in MV.

Thomas Sowell, an economist at Stanford's Hoover Institution, wrote about this
back in April:

[http://www.dallasnews.com/opinion/latest-
columns/20140423-op...](http://www.dallasnews.com/opinion/latest-
columns/20140423-open-spaces-and-housing--the-high-cost-of-liberalism.ece)
"There are people who claim that astronomical housing prices in places like
Palo Alto and San Francisco are due to a scarcity of land. But there is enough
vacant land (open space) on the other side of the Interstate 280 freeway that
goes past Palo Alto to build another Palo Alto or two — except for laws and
policies that make it impossible. As in San Francisco and other parts of the
country where housing prices skyrocketed after building homes was prohibited
or severely restricted, this began in Palo Alto in the 1970s. Housing prices
in Palo Alto nearly quadrupled during that decade. This was not from expensive
houses being built, because not a single new house was built in Palo Alto in
the 1970s. The same old houses simply shot up in price. That is part of the
unacknowledged cost of open space and just part of the high cost of
liberalism."

~~~
mtviewdave
>That is part of the unacknowledged cost of open space and just part of the
high cost of liberalism.

The devotion to open-space around Stanford/Palo Alto actually comes out of the
backlash to all the highway construction in the 50s and 60s. I find it odd to
see opposition to big government programs described as "liberalism".

~~~
xorcist
Well, it shouldn't be _that_ odd, it is after all what the word means in the
rest of the world...

~~~
alextgordon
I'm certain that "liberalism" has no meaning whatsoever now. It's just an
empty word, like "fascism", that politicians use to rally their supporters.

~~~
geebee
The writer of this passage weakened an otherwise good message with this empty
and needless use of "liberalism."

I see this was published in a Dallas based newspaper. Ok, I'd like to go build
a 20 story cinderblock apartment building called "the proletarian towers" in
the middle of a wealthy, republican-leaning Dallas suburb. Hey, I bought the
land, I should get to do what I feel like with it, right?

~~~
rsync
I think you can actually do this in Houston ... where, last I checked, there
are no zoning laws ?

I was there in 2002 and there were people running mini mart stores out of
their front porches, in a completey residential neighborhood.

~~~
seandhi
It is still very much the case that Houston has no zoning laws. That does not,
however, mean that there are no neighborhoods with their own zoning rules,
i.e. home/property owners association regulations and other land use
restrictions. However, because there are no overall zoning laws, the
restrictions only apply to the immediate neighborhoods that have the H/POA.

------
mturmon
Boom is a small, high quality journal put out by UC Press. The whole issue of
Boom this quarter is devoted to the San Francisco tech influx, and it is
excellent
([http://www.boomcalifornia.com/2014/06/summer-2014/](http://www.boomcalifornia.com/2014/06/summer-2014/))

They have articles from both pro-growth and anti-growth people, including
Rebecca Solnit, whose piece on Google buses in the February LRB really touched
a nerve.

~~~
mturmon
I submitted the Rebecca Solnit interview in the same issue a few days ago
here:

[https://news.ycombinator.com/item?id=7957573](https://news.ycombinator.com/item?id=7957573)

Solnit is of course anti-development, whereas the editorial stance of the
issue is generally pro-development.

------
Uehreka
Finally, finally, finally. An article on Hacker News about the whole San
Francisco housing thing that doesn't assume that you're familiar with the
issue and have picked a side. After all the rhetoric I've read about, say...

"the defeat of the proposition to prevent the blockage of construction on the
waterfront proposed by the cool NIMBY elitist outcasts who are driving up
housing prices to keep out the cool rich tech outsiders who are ruining this
city"

...it's nice to have some history and context about what's actually going on.
Thank you.

~~~
damncabbage
This is also an excellent (and very long) piece that does the same:
[http://techcrunch.com/2014/04/14/sf-
housing/](http://techcrunch.com/2014/04/14/sf-housing/)

------
digisign
Come to Los Angeles. It's not perfect, but the weather's better, economy
broader, there's more space, its downtown is improving every year, and
building up (in several places) is encouraged. Even the long neglected Metro
is seeing investment.

~~~
rdtsc
For the longest time I didn't even know LA had a Metro.

I guess I just went there to visit friends/family and we ended so much time
stuck in traffic it really got to me after a while. (Usually visit a week at a
time). One day the friends had to work and suggested we take the Metro around
town. Except that Metro didn't seem to go where we wanted to go. We opted for
a bus. It worked out ... ok, the bus ended up stuck in traffic just as well as
the other cars.

With that level of traffic, unless there is Metro and it is effective or some
other public transportation system, I would go crazy. (Note: I haven't visited
SF so not comparing it with, maybe it is just as bad there).

~~~
overdrivetg
I almost don't want to weigh in here since LA is kind of this hidden secret
gem, but the answer is to just live on the Westside (Venice/Santa Monica).

You can almost never have to drive if you work it out this way - I bike to
work along the beach every day and drive somewhere maybe once a week if that.
It's amazing, and it's pretty much 70-80 degrees every day.

You could also live downtown (which has turned around in the last couple years
and now is becoming very nice) - the Metro will connect there and Santa Monica
in another year or two.

Sidebar: what I've also found here (I moved down from SF around 2002 & have
lived all over the US) is that you really get back what you bring here. If you
want to connect with smart, creative, great people, they're all over here. If
you expect to meet a bunch of a-holes, well... They're here too, if that's the
attitude you're bringing.

~~~
beachstartup
too late, secret's out. SM real estate has been skyrocketing for about 2 years
now.

there's nothing even listed in my zip code for < 700k.

when i moved here in 2008 (from SF) people were still talking about scripts
and auditions in the cafes and bars. now it's all startups and web technology.
i moved 500 miles and ended up in the same damn place.

life is funny like that.

------
rtpg
So Google can't build property in Mountain View, what about building another
campus outside of the Bay Area? Maybe an hour south of Mountain View or
something, where they could still recruit in the area.

I imagine Google's thought about this more than I have though.

>that workers in the technology industry do not belong here and are not the
type of people who are supposed to be in San Francisco. It is a strangely
unprogressive attitude for this open-hearted city.

It's always ironic to see how people in 'rejected' subcultures tend to reject
outsiders as well ( this happens way too much in tech as well).

~~~
Plasmoid
>So Google can't build property in Mountain View, what about building another
campus outside of the Bay Area? Maybe an hour south of Mountain View or
something, where they could still recruit in the area.

Google is doing that to an extent. They have a lot of campuses world wide,
mostly due to their acquisitions. It also decreases the amount of sway an
individual municipality has over their growth and operation, which isn't a bad
reaction given how much MV is mucking around with them.

------
Mz
Excerpt:

 _To fully understand what’s happening here, let’s zoom out and take in the
wider picture. San Francisco is a relatively small part of a much larger nine-
county metropolitan area of over seven million people. Within this area,
governance is fragmented at the county and city levels and it is served by a
slew of separate transportation agencies, including six separate but
overlapping bus agencies and four regional rail or light rail agencies. There
are three major airports, run by separate agencies, and while regional housing
policy is supposed to mandate that all municipalities provide their respective
shares of housing demand, based on employment patterns, this is often
undermined at the local level. Public policy is often not coordinated in any
meaningful way at the regional level._

~~~
greggman
There are at least 10 separate train companies running 40+ lines in Tokyo and
yet that seems to work for them. JR, Tokyu, Seibu, Eidan, Toei, Odakyu, Keio,
Tobu, ... I'm too lazy to look them all up. There are probably as many bus
companies as well.

On top of that in Tokyo there are 23 wards each with it's own laws, taxes,
etc.

What's special about California? Why does it work in Tokyo with 25 million
people (or maybe it doesn't?) and why doesn't it work in the bay area with
only 9 million?

~~~
WildUtah
The counties and wards of Tokyo don't have the power to impose discretionary
zoning on landowners. In fact, they don't have the power to impose any of the
kinds of abusive and harmful zoning and parking requirements that are
universal in the Bay Area. [0]

Japanese zoning and urban development policy are set by the central national
government. That policy is considered the gold standard for simplicity and
promoting quality development by planners everywhere in the developed world.

If the quality and honesty of government urban planning that Japan has could
be transplanted, life in the Bay Area would improve immensely. No amount of
land scarcity or Google shuttles or rising demand or offshore Chinese corrupt
officials parking money or anything else would be able to make things
unaffordable if local governments were good, honest, and effective. But
quality government is simply not possible with the current politics of
California.

[0] [http://urbankchoze.blogspot.com/2014/04/japanese-
zoning.html](http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html)

~~~
jpatokal
> _That policy is considered the gold standard for simplicity and promoting
> quality development by planners everywhere in the developed world._

Nnnno, they're not. In fact, Japanese zoning -- which, incidentally, is set at
the federal, prefectural _and_ local level -- is widely regarded as batshit
insane. For example, there's a giant garbage incinerator right in on the
northern side of central Tokyo (Ikebukuro); taxation makes "used" houses
nearly worthless and thus encourages building new cheap crap; draconian
building restrictions make Japanese apartments tiny; the well-intentioned
"sunshine laws" have all sorts of perverse side effects like making it well-
nigh impossible to build tall, high-quality residential buildings in the city
center but encourage tall but cheap, crappy ones in the middle of nowhere, etc
etc.

This Nomura Research report is an excellent read:
[http://www.nri.com/global/opinion/papers/2008/pdf/np2008137....](http://www.nri.com/global/opinion/papers/2008/pdf/np2008137.pdf)

------
skybrian
I was surprised that he said that the Marriott Hotel was ugly, as if this were
a widely-held opinion. I haven't heard anyone else say that, and personally I
rather like it.

~~~
ak217
I agree, Marriott is one of the more beautiful high-rises in the city. Maybe
he meant Marriott Union Square. Or Hyatt.

------
dba7dba
When people claim it's too expensive to live and do business in California, I
think some miss the influence of the geography.

Yes the tax in CA is higher than other states but not THAT high. CA state tax
is not 100% or 200% higher than most states. But housing is.

The point of moving to CA for most people is to live on or near the coast, I
think... Thus most centers of commerce in CA is relatively close to the beach,
like SF or LA or San Diego.

What this does is it almost immediately cuts the the available land for
housing by HALF. In midwest of US (including Texas), you put a dot and draw 30
mile circle around it. All of that land is available for housing. In coastal
regions like coastal California, put a dot near coast and draw a 30 mile
circle around it. You get HALF of a circle available for housing.

No wonder house price in coastal CA is easily double of equivalent in Texas
and other cities.

Tax in CA is not that bad. But the geography is bad for making affordable
housing available, and that's not the fault of the politicians or Democrats or
etc.

------
visarga
> This is the tone of a now-dominant narrative among the city’s
> progressives—that workers in the technology industry do not belong here and
> are not the type of people who are supposed to be in San Francisco.

I find this kind of phobia as repulsive as xenofobia or discrimination against
blacks.

Why are they so holy they can't accept the Google employees as regular folks?

~~~
Shivetya
There is nothing in common with the plights of blacks in the city to tech
workers, unless you count of course that many well off people moving in drove
minorities and the poor into further substandard housing because the cost of
living skyrocketed. Mom and Pop businesses folding so trendy restaurants and
boutiques can take their spot.

For an industry that boasts connectivity it sure seems location bound at
times. Frankly, the fact they have to have / desire to have charted bus
services just for themselves should be a hint - your living in the wrong
place, be closer to work.

However, many in the industry who like think they are open minded and above it
all it must be fun to find out that your not wanted by people that are
normally associated with open mindedness.

~~~
nerfhammer
> Frankly, the fact they have to have / desire to have charted bus services
> just for themselves should be a hint - your living in the wrong place, be
> closer to work.

To be a real NIMBY is to be able to say with a straight face that those darn
people ought to be fighting other NIMBYs somewhere else.

------
Fuxy
Stupid question but why don't big companies like Google and Apple just move
the bulk of their office outside of San Francisco where there are no
regulations and they could just build everything they need there.

If SF is being so hostile towards basically the driving engine of their local
economy the best option is to relocate to a place where there are fewer
restriction.

A build your own small city kind of situation. They can certainly afford it.

It's win-win Google gets their employes close to the office the employees get
cheaper housing and if it's a large enough community you will be getting new
people coming in opening shops and other stuff to take advantage of the
demand.

The only one slightly worse off is SF with all the money leaving the place but
it's not like they appreciate what they have now anyway.

~~~
fernly
As noted in the article, Google is in Mountain View, Apple in Santa Clara,
both suburban towns well outside SF. Both towns have strict development laws,
also described in the article, that throttle development. Apple has proposed
building a new HQ and Santa Clara may actually approve it, but that does
nothing to increase housing.

There is no land with 100 miles of Silicon Valley where you could "build a
town". Supposing they went the necessary distance (500 miles, or even more,
into Nevada perhaps) how practical would it be to get 1000s of employees to
relocate to live in a "company town" in the middle of nowhere?

~~~
Fuxy
Seems pretty practical to me instead of fighting with the locals to do basic
things spending god knows how much money trying to approve things.

Plus once you do it you have all the room you need to expand build towers,
create housing etc.

It doesn't even need to be something very complex at first just something
quick and dirty to see if it's a valid solution.

I find it amazing that there's no large areas of land for sale withing a 100
miles of Silicon Valley.

As for as employee relocation is concerned don't they already have to relocate
to SF and the surrounding suburbs to work there?

~~~
optimusclimb
> As for as employee relocation is concerned don't they already have to
> relocate to SF and the surrounding suburbs to work there?

Yes, and they choose to live in San Francisco, with bars, members of both
sexes, restaurants, museums, parks, baseball, etc...

How fun do you think this theoretical company town is going to be for someone
in their 20s?

------
ojbyrne
"When I moved to San Francisco in 2003, I found a place to live in one
weekend."

But from what I recall after moving to San Francisco in 2005, you would not
have been able to.

And from what I've been told, if you moved to San Francisco in 2000, you also
would have had a difficult time.

boomcalifornia seems to be an appropriate name.

~~~
toufka
Moved to SF in 2008 - stayed with a friend in Berkeley over a long weekend and
found a place to rent on craigslist by the time I left. Was 'expensive'
compared to my midwestern rents - but still within reason. Literally
impossible now.

------
gojomo
Can we outsource our regional land-use governance to the Chinese Communist
Party? We need much more housing and transit, fast, and they're the pros.
Gains from trade!

~~~
zghst
Yeah no thanks. I wouldn't want them building over historical artifacts or
putting up apartments that will fall apart in 10 years.

------
michaelochurch
The "Manhattanization" argument always struck me as odd. How is a mess of
ugly, uncomfortable five-story buildings (at ridiculous prices) superior to an
80-story tower of modern housing? Sure, the tower is more prominent, but it
frees up space for parks and makes housing cheaper. These people should either
have the courage to say, "We're trying to keep housing costs artificially high
and rob people" or get out of the fucking discussion.

Manhattan is expensive, but relative to the local job market, it's cheap. It
has its problems, but it's relatively smartly designed. San Francisco is
expensive, relative to the job market. Even in California, it's almost
impossible to crack $175,000 doing real work, and every corrupt official in
Asia has bought housing in SF and the Valley, driving prices into the
millions.

California seems to insist that it is building the future, and yet it lives so
much in the past.

~~~
maxerickson
It would be interesting if you would post roughly how many corrupt officials
you believe there are in Asia and approximately how many housing units they
each purchase.

~~~
michaelochurch
It's well-known that Russian and Arab billionaires keep Manhattan real estate
(usually bought through shadowy shell companies) so that, if their people ever
revolt and bring them to justice, they have a place to hide. There's so much
money laundering it's sickening: [http://nymag.com/news/features/foreigners-
hiding-money-new-y...](http://nymag.com/news/features/foreigners-hiding-money-
new-york-real-estate-2014-6/)

Generally, the corrupt scum of Europe and Africa and the Americas focus on New
York while the corrupt scum of Asia (where half the world's people live) tend
to use California. I'm not sure if that's because geographical proximity
matters, or if it's something else.

In addition to the purchase of safety housing by corrupt foreign officials,
much bigger is the secondary market in U.S. real estate that exists _because_
of this purchase pattern. The fact that every overseas scumbag wants a U.S.
house (preferably a high-value one, because if your assets are frozen and have
to change your identity, you may have to borrow against the house for 3 years
while your fixers buy you a resume and get you able to work legit) in case
shit goes seriously wrong, U.S. real estate has become a store of value.

I don't know the numbers. I don't think anyone does, but as for how much
housing is being bought by foreign scumbags (or to sell to them, but
speculators betting on scumbaggery) it's probably on the order of 1-10% on the
high end, and possibly much higher (10-50%) on the ultra-high ($5M+) end. That
might not seem like a big deal, but there are two things to consider. First is
the push-down effect. Billionaires buying penthouses push modest millionaires
into 3BRs and upper-middle-class families into 1BRs and the middle- and
working classes out. It propagates down the socioeconomic chain, making
everyone pay higher prices.

The second issue is extreme price inelasticity. 1% supply destruction doesn't
increase prices by 1%, as one might hope or expect. It can cause them to
double.

~~~
kghose
I don't have the link, but I read somewhere that foreign investors (I think
this was data upto last year - things may have changed fast) don't make up
THAT much of the market, and only for the 1M+ homes, which is way above median
price in the US.

~~~
lmm
Way above median for the US as a whole, but according to the article $1M is
close to the median in SF.

