
‘The American dream is not working out here’ - mudil
https://www.theguardian.com/technology/2017/feb/27/silicon-aa-cost-of-living-crisis-has-americas-highest-paid-feeling-poor
======
tradersam
> “We make over $1m between us, but we can’t afford a house,” said a woman in
> her 50s who works in digital marketing for a major telecoms corporation

If you make $1m/yr and are scraping by, I don't care where you live, you're
terrible at managing money.

~~~
exclusiv
So true. And the notion that you must own a home is stupid anyway and
oversold.

I currently pay $4500/mo to rent a home in California. Because of it's
location, the home would cost $2M+ for me to buy. So the debt service /
maintenance / taxes is way more than the rental income. You're either renting
the house or renting the money (mortgage). The idea that you're throwing money
away on rent never considers the gap between rental income and expenses,
vaporized down payments and going underwater from falling prices, tax hikes,
etc.

I'll probably move into a smaller house soon because I don't need as much
space and I've been buying investment homes instead of worrying about my
primary residence. My first investment property pays the mortgage and makes
money. It's increased in value too but I don't bank on that.

Why buy a home you cannot rent out for more than the debt service? Also - why
buy a starter home in California for $1M+. That's fundamentally messed up to
spend that much on a home that you know for a fact is not your forever home.
The only way to know if it's a good deal is if you can rent it out for more
than it costs, or about the same and you're going to be there for ~7 yrs+.

~~~
dikdik
So your landlord is losing money by renting it to you? This doesn't make any
sense to me...

~~~
sagarm
They probably have a massive prop 13 subsidy.

~~~
exclusiv
Yeah it's in a family trust and they haven't done any major renovations. Taxes
are lower than they should be. But even if taxes were zero, it still wouldn't
make sense to buy this place for 2M+ when rent is only 4500. For 4500 rent you
need to be around 900k max purchase price. If it's an investment it should be
way less, like 450k.

I've rented 4 different homes in Cali and 3 were owned by family trusts. The
one that wasn't made nothing and she ended up selling to get out. I rented
that house for $3600/mo and she got 925k for it.

------
the_gastropod
Complaining about the struggles of making ends meet while earning $160k is
plenty absurd. Complaining about the same while earning $700k is maddening.
The median household income in SF is $88k (as of 2015). When you earn 2x that
and complain about being unable to make ends meet, I think it's time to admit
you just suck at money.

~~~
linguae
Keep in mind that it's not just how much money one makes, but it's also _when_
one moved to San Francisco and whether they bought when home prices were much
lower than today or whether they secured rent-controlled housing at lower
rents than today's market levels that makes a dramatic difference in
affordability. There are some people making less than the median income yet
have very low living expenses because they were able to secure a mortgage or
rent-controlled housing back when housing was much cheaper.

~~~
the_gastropod
Let's say this person making $160k takes home ~$90k after 401k and taxes and
such. And let's say their rent is 50% of their take home ($45k/year or
$3750/month).

1\. That's ~$300/mo more than the average 1 BR apartment [1], so seems
reasonable.

2\. That leaves another $3750/month for non-rent spending money, which itself,
more than most Americans earn in salary. (note: this leaves a LOT of room to
spend more in rent if you need a 2br, 3br, etc)

So yes. San Francisco is expensive. But if you feel like it's a struggle while
earning $160k, you probably have a lot of fat you need to cut in your budget.

[1] [https://www.rentjungle.com/average-rent-in-san-francisco-
ren...](https://www.rentjungle.com/average-rent-in-san-francisco-rent-trends/)

~~~
SmellTheGlove
You're pretty much making the same point as the people mentioned in the
article, just framed positively. Single renters can get by if they're willing
to spend a large portion of their take-home, but a family on the same salary
cannot.

35 year old me could not live like 25 year old me.

------
geebee
I'll be the first to admit that money doesn't go far in San Francisco, and
that developers actually aren't especially well paid given the cost of living
and the constant claims of a "critical" shortage talent.

I live in an unfashionable neighborhood south of 280, but even here, you'd be
lucky to get a decent 3br for less than a million. So assuming you have a down
payment together, you're probably looking at 4k a month in mortgage. You get a
tax break, yeah, but you also get property taxes, maintenance, and insurance,
so it's a wash.

Child care is the real killer. Standard 8am-6pm child care runs north of
$2,500 a month. Same for preschool. If you have two kids, oh man. So now
you're looking at

6,500 a month with one kid 8,000 a month with two kids

Keep in mind, if you can afford the child care in SF, odds are you're too high
income to qualify for the child care tax break. So all in all, it really is
true that it isn't easy to make it on two incomes totaling 200k a year.

Beyond that, though? If you're north of 350k, I'd say this is about
expectations. You should be able to make it fine.

There is one strategy - remain a one income family! $120k a year for a family
of 4 qualifies for government housing assistance in SF. Developers must set
aside a number of units for "middle". It's hard to get, but if you can pull it
off, you're guaranteed a lower rent (I think it's about $2500 a month at that
income level) and it's intensely rent controlled.

So Silicon Valley employers, take note. Hire a middle aged person with a
family for $120k a year, and you can get that highly skilled worker in
critical shortage that you've told congress you can't hire at any price, and
you can get the taxpayer to cover the gap between the salary you pay and the
housing costs in the Bay Area! Seriously, consider the benefits of hiring
older people with families.

~~~
gydfi
If childcare costs that much why not just hire a full-time nanny?

~~~
angry-hacker
I can only guess because the nanny needs a salary that he or she can afford a
place to live too?

But seriously, fly me over from EU and I'll sleep in your basement and teach
your kids computers, for 2000 per month.

------
throwaway_atl
I interviewed a few years ago at a Start up in San Francisco; I live and work
in Atlanta. One of the things that worried my girlfriend to death was how we
would afford to live there.

One of the guys I interviewed with said he spent $1,800 a month to rent a
single room in a house with a few other people. He didn't even have his own
bathroom. My friend that tried to get me the job out there was paying over
$3,000 a month for a small 1 bed room apartment across the street from
Twitter.

In Atlanta I was renting a 2,600 sq ft warehouse loft for $1425 a month.

The weirdest part was they offered me the job of a Lead Android Developer for
$135k. I make almost $160k here in Atlanta as an Application Architect, and it
costs way less to live here. Glad I turned that down.

~~~
wakkaflokka
I remember seeing a headline a while back about apartment square footage (I
think it was this: [https://www.rentcafe.com/blog/rental-market/us-average-
apart...](https://www.rentcafe.com/blog/rental-market/us-average-apartment-
size-trends-downward/)), and Atlanta was at the top of the heap for size.

I used to live right next to the Beltine near PCM in a 1 bedroom, 1 bath, 900
sqft, all upgraded unit for less than $1200 a month. Now the prices are
ridiculous (for ATL) - $1800+ for a one bedroom.

But it's still a hell of a lot cheaper than our most expensive cities. You
would think the salaries would be adjusted accordingly, but from my experience
job hunting, they aren't to any appreciable degree.

~~~
sdflkd
What is the ATL market like for entry-level developers? Is it that salary
isn't adjusting accordingly or that rent costs are catching up to the
increased wealth?

------
andy-x
“We make over $1m between us, but we can’t afford a house,” - lying
hypocrites. They probably cannot afford $20M house, but there are plenty $2M
houses around even in relatively expensive areas.

~~~
angry-hacker
Why not rent for 10 years, save money, and then move to a cheaper city and own
a damn mansion?

------
scarface74
Simple solution: Move

There are plenty of great software developer jobs in major cities paying 130K+
where the cost of living is a lot lower.

~~~
sdflkd
Examples?

~~~
patorjk
Baltimore/Washington DC area. Mostly government contracting stuff though.

~~~
RickS
DC native, former SF resident: not really, any more. You can swing it, but it
won't be fun. It's more comparable to SF than it is to someplace like
portland. At least DC/DMV proper. Once you get into the "baltimore" parts I
imagine the costs plummet.

------
mark_l_watson
I agree, generally, with the article. I worked as a contractor at Google for
four months in 2013. Great experience but my wife and I burned through about
$6000/month in living expenses. I returned home (mountains in Arizona) to earn
much less writing books and remote consulting, but better off financially.

------
vlucas
I could generally understand some struggle for people with a family, even with
a higher salary (due to the extreme housing costs) until I got to this:

> "He said he won’t miss some of the more mundane day-to-day costs, like
> spending $8 on a bagel and coffee or $12 on freshly pressed juice."

What. The. Hell. There are so many ways to save money that people just flat
out ignore or pretend don't exist. This is much more about expectations of how
they should be able to live rather than actual struggles. This article isn't
going to go over well.

------
SmellTheGlove
Being an east coaster, maybe I'm just not clear on this, but in proximity to
the big tech companies, how far out are we talking for the examples discussed
in this article?

Put another way: How far out does one have to live to house a family of 3 or 4
affordably with respect to a 160k salary? Lets say, hypothetically, 2000 sq ft
dwelling of some kind (house, condo, rowhome), good school district, for
~$2500-3500/mo - rent or mortgage? Or if that's a ridiculous question for the
Bay Area, let's say 35-40% DTI and call it $5000/mo.

Speaking anecdotally, when I lived in the DC area, it ran me ~2400/mo for my
900 sq ft rowhouse in a good zip code walkable to the metro. The problem being
that a 3rd bedroom would put me north of 600k (closer to 750k today) for a
home if I wanted to be in the same zip code, or move outside the beltway and
commute 90 minutes. I moved... to northern new england.

~~~
klipt
Here's a map of houses under $1M with at least 2000 sq ft:
[https://www.redfin.com/city/4561/CA/Cupertino/filter/max-
pri...](https://www.redfin.com/city/4561/CA/Cupertino/filter/max-price=1M,min-
sqft=2k-sqft,viewport=37.79325:36.82551:-121.68934:-122.54352,no-outline)

Notice the peninsula (where a lot of the good school districts are) is pretty
empty. Also most houses go for a large percent above asking.

------
bootload
_" The cost of housing is a common complaint among Bay Area techies. Engineers
can expect, according to one analysis, to pay between 40% and 50% of their
salary renting an apartment near work."_

This is the core problem.

~~~
Mc_Big_G
The simple solution: Don't live near work.

A 20-30 min. bart ride from East Bay to SF is not only reasonable but
decreases your rent by half. The people in the article don't have a solid grip
on reality.

------
danblick
I have this sense that home prices all over the US are being artificially
inflated. That said, if you figure 4% interest on $1 million, that works out
to about $3333 per month. Q: Are there enough people in the Bay Area who are
willing to spend ~$3333/month to live in a home currently priced at $1M in
order to support that price level? A: Yes, I think so. (Granted, $1M would be
quite low for a house near where I live in Mountain View, but maybe the
numbers don't seem so crazy?)

~~~
sagarm
Interest isn't the only cost to own a home.

[http://www.nytimes.com/interactive/business/buy-rent-
calcula...](http://www.nytimes.com/interactive/business/buy-rent-
calculator.html)

~~~
danblick
I think "home price appreciation" is one of the more interesting factors here.
If home prices grow at 4% and wages don't keep up, it seems like that's not
likely to be a sustainable over the long term.

~~~
sagarm
That is why housing costs have generally risen with inflation on average.

Appreciation in the Bay Area and other denser areas have seen prices grow at
more than inflation, which is probably attributable to restrictive zoning
limiting supply over the long term. I agree that's not sustainable
economically, socially, and hopefully politically.

------
bobosha
is housing outside the valley core just as expensive, how about north bay such
as sausalito or berkeley?

~~~
tsunamifury
Berkeley is easily as expensive as SF of not more.

~~~
gydfi
I wouldn't say so. You can still get perfectly alright freestanding houses in
the non-ghetto parts of Berkeley for under a million.

~~~
tsunamifury
Listed, not going. Berkeley right now has the highest over asking sale price
in the bay, averaging 48%.

