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The Decline of Investment in San Francisco Startups (tomtunguz.com)
255 points by kawera 9 months ago | hide | past | web | favorite | 392 comments



Both top-level comments have mentioned housing prices. I grew up in the Bay Area and want to stay here and I am trying to work to change policy to help build more housing. Unfortunately due to law, bad policy and NIMBY's the market is not going to solve this problem on its own, without political change rents and housing prices will keep increasing. Here are some political actions you can take to help:

- call your State Assemblymember about SB 35, which would streamline (read: Force cities to approve) the production of housing near transit. Up for a vote very soon

- call your State Assemblymember and ask them to vote Yes on AB 71, which would end the state tax deduction on second/third homes and use the money to build affordable housing.

- contact the Brisbane City Council and ask them to build housing on the Baylands, near Bayshore Caltrain. The developer wants to build 4,400 units and the city wants to build 0. Baylands@ci.brisbane.ca.us

- Ask for more housing in the Central SOMA plan. BART and Caltrain are packed every commute hour and they want to add 50,000 new jobs and only 7,500 new housing units. Best is to show up for the hearings, failing that, email the plan director, steve.wertheim@sfgov.org. http://sf-planning.org/central-soma-plan#contacts


There are also YIMBY orgs almost everywhere. The south bay YIMBY twitter account has updates on what you can do as well.

From following the YIMBY movement (http://www.slate.com/articles/business/metropolis/2017/06/yi...) it's hard to not take the YIMBY position. More needs to be built, but we can have ~10% BMR requirements as ways of increasing diversity in a neighborhood and preserving some local control/culture. If enough is built, there won't be a need for BMR.


BMR is a scam in my opinion. It just prevents wages rising as they would naturally need to if housing became increasingly unaffordable to the point that workers can't even commute in. It recruits people into a program of lucky allocation rather than working for more. Busy or I'd write more.

Look how rent control turned out.


I agree BMR is a scam, but not because of its effect on wages. It is too small of a factor, but because it is not market-based and leads to quotas, lotteries, middlemen, bribes- all bad.

To offset crazy high demand and prices, the only option is to increase supply (build taller, denser apartments/condos) or limit demand (disallow foreign buyers who speculate or invest, increase property taxes for owners that rent out their houses)


Rent control works great when it cover the entire rental stock.

See e.g. Berlin vs LA: https://goo.gl/aNHzGQ

In Berlin all rents are controlled by default[1]. And despite similar purchase prices, rental prices are half of LA's.

[1] only newly built units or those renovated for more than 1/3 the value of the unit are allowed to be rented without price restrictions. This keeps the vast majority under rent control.


Affordable housing is actually quite scarce inside the city right now, people on average don't really earn that much. The rent controls had no actual effect on price increases. It has been suggested that the rules are simply being ignored and most tenants won't pick a legal fight with their landlords when housing is so scarce:

https://www.welt.de/finanzen/immobilien/article150877146/Die...

There's more than enough housing for higher-income people, so rent control there is moot.


Rent control in berlin goes beyond the mietpreisbrmese - most significant is that you can't increase the rent once you get a tenant beyond the rate of inflation and that you (almost) can't kick out a tenant.

I have friends in London whose rent (in the same apartment) went up 10% every year for years until they had to leave the apartment. This is not happening in Berlin.


You can increase the rent up to 15% (Berlin) within three years, well above the rate of inflation. This forces some people to move out, as well.

Rents in Berlin are a joke compared to London. You can actually get cheap and plentyful housing just outside the city, but then you'll need a car as well.


I didn't know that, every place I lived in here had much slower rent increases (despite the market around the apartment raising more than that - in fact in my current place I'm still paying then same rent 3 years into living here).

Either way 15% in 3 years is still rent control.


Like I said, there's a demand for affordable housing and in Berlin that means very affordable. Lots of students, lots of artistans, and also lots of unemployed people.

> Either way 15% in 3 years is still rent control.

...which affects very few people.

There are some places that suddenly became "hip", where rent increases drove out lots of low-income people, which caused political backlash. These people really just had to move to less popular places.


Well I don't know what your point of comparison is, but my wife and I have been looking at buying or renting a bigger place (new baby) and all the stats I see when looking at places indicate purchase pricing going up at about double the rate of rental prices (often 5-7% YoY rent increase vs 10-15% YoY purchase price increases).

This has been the case for the last couple years at least. What do you attribute the discrepancy in rent increases vs purchase price increases if not for rent controls?

Do you know nobody living cheaply with an old contract that they would never get today, and that their landlord can't increase to market rate? Cause I know loads such people and this would not happen in a place without rent controls.


Real estate prices all over the world have gone up as a consequence of zero-interest monetary policy. Berlin is still on the cheap end, so it's still attractive to buy there even now.

Rents don't go up proportionally, simply because the demand isn't there. During the US housing bubble, rents didn't go up either, while property prices went through the roof.

> Do you know nobody living cheaply with an old contract that they would never get today, and that their landlord can't increase to market rate? Cause I know loads such people and this would not happen in a place without rent controls.

That's because most contracts specify that increasing the rent follows the standard procedure: Over three years, rent can rise by up to 20% (15% in Berlin), if the comparable rents in the area have risen as well (which is influenced by market rate). Ultimately, this limits the pace at which rents rise, but not the extent. In Berlin, only very few areas could sustain such growth, whereas in places like Munich where people earn way more, rents have risen much higher.

This is also not the rent control specific to Berlin (which is what you originally referred to), these are federal regulations.


I refereed to rent controls in the sense that the american OP said are causing price increases in SF (afaik this is simply limiting rent increases for existing contracts, which is the default in Germany).

All of Germany is under rent control in that context, and IMO it works compared to exploding rents in the US and other countries (UK, Israel, most places really aside from some of continental Europe).

    That's because most contracts specify that 
    increasing the rent follows the standard 
    procedure: Over three years, rent can rise 
    by up to 20% (15% in Berlin), if the comparable 
    rents in the area have risen as well (which is
    influenced by market rate). Ultimately, this 
    limits the pace at which rents rise, but not 
    the extent.
This is a form of rent control almost nobody in the rest of the world outside of continental europe enjoys - prices generally rise as quick for current tenants as they do for everyone there: your landlord can tell you tomorrow than the next time your contract is up to renewal (usually yearly), the price will be 2x the current one and if you don't like that you have to leave.


> your landlord can tell you tomorrow than the next time your contract is up to renewal (usually yearly), the price will be 2x the current one and if you don't like that you have to leave.

It all depends on your contract. Some contracts may put limits on rent increases in. Yes, in Germany there effectively is rent control that prevents a doubling of the rent within a year, but generally rents don't double within a year.

If those rent controls were good enough to satisfy the affected people, why are there protests and demands for additional laws for even more rent control in places like Berlin? Why is living in Munich so hard to afford? At what point does rent control start to "work"?


It works, it's just not enough. It's still better than the situation in the US, UK, etc where there's even less (I remind you that the OP's argument was that rent control was a bad thing).


There's too many variables to say that rent control for the entire housing stock is what keeps Berlin's rents down.

For starters, Berlin is known to be one of the cheaper German cities until recently ("poor but sexy"). In addition, the climate, geographies, and economies between LA and Berlin are significantly different.


Compare berlin to any big American city and you would see that the rent-to-purchase-prices ratio is always much lower in berlin.


>>> Rental prices are half of LA's.

Because income is one half of LA.


And yet purchase prices are the same. Rents are controlled and purchase prices are not.


I don't think it's a scam. I would agree on rent control, but I think that has it's uses too in the current rental market.


Wages don't naturally rise just because rent is higher, if anything the converse is true.

You'd end up paying 25$ for a coffee just so that the barista can afford their overpriced housing.

If you're just raising the cost of living, but not the standard, you're not gaining anything for anyone.


>> Wages don't naturally rise just because rent is higher, if anything the converse is true.

I'll offer a lay-person first-person view in contradiction to this theory: rents set a solid bottom salary level acceptable to people. A typical Bay Area rent can consume 100% of your salary once you have a family involved.

As countless HN threads discuss, i'll pre-answer the typical nay-sayers. Yes, i realize I can raise my entire family of four in a studio apartment. I choose not to. Most people I know choose not to. Yes, i realize I can raise my entire family on ramen noodles, i choose not to. Yes, perhaps i'm picky. Yes, I realize I can drive 5hrs a day and live in a nice house -- I choose not to (mostly because my workday is already 10+hrs.). Yes, I can have roommates live with my family (seriously, someone suggested this on another HN thread. This is down-right creepy. I dont want a roommate living in the same house as my 1yo daughter.)

Call me prissy, but I just figured that Ivy League educations, CS degrees from top-5 institutions, 15yrs of experience and two decades of hard work would afford me more than a studio apartment.

Where does this all put me? It means I have a hard-hard bottom on what salary is acceptable in the Bay Area. Practically speaking, it has meant that I stay in NYC where live is more affordable (yes, i've done the math 10x and can demonstrate it.). I have a great live in NYC on a good tech salary. I'd give up half my quality of live to live in SF, which means that I need a much, much higher salary in SF to make it worth moving there.


What are you contradicting? You are supporting my point. You are sitting in NYC because you're not getting enough money in SF. High rents didn't make wages rise enough to make SF attractive even for you, a hot shot software developer. Now think about all the ordinary people that hail from SF...


Someone usually replies to statements about not being able to raise a family on a professional income in SF by suggesting these sacrifices and acccusing the poster of being entitled and having unrealistically high lifestyle expectations. ("Of course you can't live a suburban lifestyle here. Change your lifestyle"). Looks like parent was responding preemptively.


I see what you are getting at and I see your point, thank you. I had an orthogonal point that high rents put an absolute minimum on required salaries. You are absolutely right that sometimes that absolute minimum required salary is realized by the job simply not being taken!


Be definition there's always a shortage of BMR housing (otherwise it wouldn't be below market rate). BMR doesn't remotely solve the problem.


10% is way low. SF has been negotiating for 25% and up.[1]

BMR isn't just about culture and diversity. It's about teachers and service industry workers and everyone a functioning city needs. The gap is so large between market rate and affordability, and there are so many richer people still wanting to move into SF, that it is likely wishful thinking that market rate development will be "enough" to solve the problem.

And that is the reason why the Yimby position is not an obvious choice. Cities need to negotiate with developers to have sufficient BMR housing to be functional.

[1] http://48hills.org/2017/07/18/scott-wiener-trying-undermine-...


If you read policy documents YIMBY support all sorts of housing for everyone. Generally ambivalent about inclusionary housing requirements because a) it depresses the production of market rate housing by 2.5 to 6 units per one BMR unit and 2) historically it hasn't been very effective at adding new units. Post Prop C the housing pipeline in SF dropped off a cliff.

Targeting BMR is going to be insufficient in SF anyway when 96% of the city rents units that reset to market rate when someone moves out, only thing that's going to help is a lot more new units of all shapes and sizes, hence the legislation listed above.


BMR units should not be required by private developers. This is a public problem that private developers are being forced to solve and many are just refusing to build more housing because they cant make a profit. Instead of requiring them to build BMR units just require all apartments to rent out 25% of units to section 8 housing and the city can subsidize the rent of low income people. The more barriers to housing you put in the more developer leave the market. If you want BMR units then have the city build them and they can build 100% BMR complexes


This is a problem which will eventually leave shortsighted developers holding the bag if they're not forced to deal with it.

Think of it like overfishing: you could just as easily say overfishing is a public problem that private fishermen shouldn't be "forced" to solve through quotas. Some fishermen used to believe that, too, right up until the day there weren't any more fish for them to catch because they'd destroyed the population they relied on for their livelihoods.

If housing costs in and around SF don't get under control soon, we're going to have a lot of very rich people who can't do much because there won't be any Uber drivers, baristas, waiters, garbage collectors or really any lower-paid service-sector people to keep the area functioning. And that will pop the housing bubble in a way that's devastating to developers, but they currently don't believe they have any incentive to head it off -- let somebody else build the cheap housing, I'm going to build as expensive as I can!


This would make sense if there was naturally 'cheap' housing and 'expensive' housing. There isn't. It's just housing. The fish analogy just doesn't work, we're talking about increasing supply of a durable good, not a natural resource. The only way is to make more. I'm sure tons of developers who don't bother playing the bay area would come back if cities lowered their BMR requirements. Leading to better designs, and more units. That plot of land that's designated mixed-use and has a gas station and a strip mall in the sunset isn't getting re-developed because developers know they'd have to do 25% BMR. With 0% BMR, that plot of land gets re-developed into 5-10 housing units. You're counting on prices being high-enough for redevelopment which is another self-fulfilling prophecy, instead of just building normal units. You can have 10% BMR and still get redevelopment quicker.

I would agree about the in-elasticity of the labor market, we're finding out right now. I see plenty of hiring signs around.


This would make sense if there was naturally 'cheap' housing and 'expensive' housing. There isn't. It's just housing.

So luxury condos and basic apartments either don't exist, or are identical to each other?


Are they both not housing? Can I not renovate one into another over a few weeks? I give developers more credit. If they want to make money, they need to figure out what the market will bare. And it's not their fault if only enough housing is being allowed that they can get away with making luxury only housing. If more was allowed without BMR conditions, there would be a much less price difference between what you find at avalon vs craigslist. The difference is actually not that much, everything is just very high and unaffordable period. Hence the dilemma we're in.


Can I not renovate one into another over a few weeks?

Unlikely. I strongly suspect you don't actually understand anything about physical construction given your seeming belief that all housing units are fungible. So I'll simply state it for you clear and plain: they are not in fact all fungible.

And it's not their fault if only enough housing is being allowed that they can get away with making luxury only housing.

Ah, it's the evil gubmint's fault. Well, that explains a lot.


Here's the economist saying housing is fungible, just for you: https://www.economist.com/blogs/freeexchange/2014/04/housing...

Did you read what I said enough to make a counterpoint with new information or thinking? Care to be wrong about other things?


BMR-renting makes sense at 25% or more. You can kick someone out in a yr. if they've started to earn more. You can rent at-cost, and not lose money like you would in a BMR sale.

Wouldn't you rather be using the loan/tax subsidy to house 10 people in rentals instead of 2 in a BMR condo? Asking for 25% BMR is holding back development and the marginal number of units built in each development. 10% is good compromise for service jobs (though service jobs do pay competitively in the bay area for the most part, teachers make 100k+, cops make 150k+). I'm not saying end BMR completely, just a compromise for which valid reasons exist, with the aim of hopefully someday eliminating it.

How long has SF had a BMR program? and rent control? I think they've both hurt more than help. Possibly even by design.


> teachers make 100k+

You're way off. The median annual Teacher Elementary School salary in San Francisco, CA is $69,389, as of June 28, 2017.[1]

Cities also need a large number of service industry workers that make even less than this.

[1] http://www1.salary.com/CA/San-Francisco/Teacher-Elementary-S...


I would say most bay area and CA cities pay their public sector employees rather well (with pensions). It's the artists, private-sector service employees, and other low-income jobs that are squeezed the most.


Have you read the Obama administration's report on affordability of housing, or the UC Berkeley displacement report? Both show MR development has a protective effect on displacement.


Instead of having BMR requirments, you could build so many houses that the new market prices are LESS than whatever the BMR requirements are.


The higher the %, the more expensive the market rate apartments have to be, which creates its own pressures. It also seems that every time a developer caves, no one is satisfied, and people are back demanding a higher number.


Four large apartment buildings in the East Bay have been burned by arsonists (likely the same one or group) in the last year. One in Uptown a few weeks ago. One, in Emmeryville was burned down twice.

I agree, we need to build more housing. It seems it's not quite that simple, though.


As an example of how Bay Area housing politics are silly.. there is a document that local governments use that purports to show that building more housing creates demand for even more housing, and use it to justify not building things.

By that logic, these arsons will help reduce rents in Oakland... it makes no sense.


By that logic, these arsons will help reduce rents in Oakland... it makes no sense.

No. That is a fallacy on your part, denying the antecedent.


I think Kevin was being snarky.


The idea of induced demand can't be discounted, that said building housing doesn't have the same negative impacts as building more highest lane miles, so the fact that it could induce demand is not as bad. Just keep building housing until every person who wants a roof over their head has one.


Maybe it does make sense. I want to live in Oakland even less now.


NIMBYism is merely one of the theories why the buildings in Emeryville to which you refer were set ablaze. Another begins with the phrase "follow the money..."


I guarantee you that the developers would rather have the housing built than the insurance money.


There are people other than developers. There are plenty of other people who might benefit from housing prices not going down.


It's almost comical how overcrowded BART has gotten at rush hour. Embarcadero and Powell stations become standing room only. I live deep in the east bay, and the new apartment building going up across the street has 1 bedroom layouts starting at $2800. Something has to give, or people will simply give up.


> Riding BART into and out of SF as a commute is ridiculous at a new level nowadays.

Especially given the shocking number of uneducated people who insist on keeping their backpacks on their shoulders despite the train being packed. Totally pisses me off!


Ok, while we are on BART gripes: what is the deal with people trying to squeeze their way upstream and board the cars before everyone has fully detrained? In NYC peeps form little ad-hoc queues to the left and right of the doors, let the exiters exit, then enter in two quick streams. In the Bay, I feel like MFing Moses trying to part the sea when exiting a train.

Don't even get me started on the weird station lines that people form at Embarcadero/Montgomery/Powell...


It's even more annoying given that passengers waiting to board know EXACTLY where the door will be when the train stops, thanks to those black edge marks. It might not be a bad idea to ask BART to add some floor marks telling people where to line up on crowded stations.


Seems like adding these stickers would be useful: http://thesource.metro.net/2013/02/13/new-platform-decals-re...


You'd think, but at crowded platfroms people are still standing right in the middle of the yellow, and don't budge when the train arrives. :-(


I've seen the same behavior in London tube and Singapore MRT as well, despite display boards that indicate removing backpacks in crowded trains. Mumbai locals handle this in the best possible way, you simply cannot get on the train during peak traffic if you have a backpack. I mean you probably can wiggle in, your backpack might not :)


I like those backpacks. They provide a nice buffer between me and the next person, allowing for some breathing space.


Pisses me off that I have to take off my bag. I have to keep my feet together to protect it, which doesn't help my balancing leverage.


Try to just hang it with your hands, you'll see, it's not that bad and the bonus is that you don't piss off other people.


How do you know they're uneducated?


In Spanish and Portuguese "mal educado" == literally "poorly educated" is used to mean "someone with poor etiquette ... doesn't know how things should work" ... writer probably means in that sense.


Perhaps they mean "uneducated in riding public transport in a way that doesn't hassle other passengers."


Anecdotal I know but from what I've seen they probably know they should put their backpacks in front, they just don't care. I went to a museum once where patrons were asked to either wear their backpacks in front of them or lock them up near the entrance. Literally almost everyone disregarded those instructions and put their backpacks on their back despite being asked directly multiple times to put their backpacks in front. They would for a quick second then move them to their back once the museum staff looked away. It was a real eye opener on people's self centeredness.


He meant "uneducated" on how to behave in the tube. We would say the same thing in Europe if somebody is walking on the wrong side of escalators or similar, it doesn't mean we are literally saying they are uneducated.


Thanks, I'm unfamiliar with this usage. It was an honest question, don't know why I got downvoted.


Placing the backpack at your feet takes almost the same space, unless you are really fat, plus it becomes a tripping hazard and gets kicked.


Unless you are a slug, or have elephantitis, your torso and arms take up twice the volume of your legs.


It's called 'straddling'.

This way, the space between your legs (which is about the same width as your shoulders) serves as a convenient location to store said bag, while also allowing you to stand over it and thereby protect it from trips/kicks and reduce your overall surface footprint.


That's normal in every major city. Tube is stand only during rush hour.


Yeah, if you want to see crowded ride the Tokyo subway sometime. They have workers on the platform literally squeezing people in so the doors will close.


Ditto most suburban trains into London.


I live in Mexico City, riding the metro here.. well during rush hour... I wont go into it


Correct.

And the best way to fix Bart overcrowding is to build apartments near where people work so they don't HAVE to commute.


Can BART overcrowding be addressed in part by improving BART itself? It'd be one thing if it were already moving such large numbers of people that it'd be infeasible to expect higher capacity, but its current ridership isn't even all that high. The Chicago "L", for example, has a similar number of track-miles (though more stations), but moves twice as many people on an average day. How is BART moving half as many and yet overcrowded?

Wikipedia says that current headways fall short of the original plan, which seems like it could be part of the problem:

> In the 1970s, BART had envisioned frequent local service, with headways as short as two minutes between trains and six minutes intra-line on the (quadruple-interlined) section in San Francisco. However, headways have fallen short of the original plans, presently three minutes between trains, and 15 minutes intra-line in San Francisco.


Yeah, especially coming back from China where you don’t have to worry upon missing a train since the next one will be there in a couple minutes. BART trains come extremely infrequently, it’s especially annoying when you just missed the train and you’d almost rather get out of the station and walk/Uber but you’ve already paid.

What is the reason for this? Do they not have enough trains? Is it a safety issue? Do they not have enough conductors/drivers/personal? Is it an engineering problem, a money problem, something else? Seems like increasing train frequency would alleviate a lot of the stress on the system and be relatively inexpensive.


According to BART it's due to insufficient train cars and outdated control systems. They say they're working on it.[1]

Reading between the lines it sounds like there is a money problem constraining it, and then we get to the controversial issue of how they manage costs.

[1] https://www.bart.gov/guide/faq#frequent_trains


BART is run in a hilariously inefficient way and most of its budget is wasted.


Just want to point out that Detroit built itself this way through the 1950's and 1960's. At the time, urban planners thought it would be efficient and sensible design.

What ended up happening, though, is that as factories shuttered, the neighborhoods that were built around them started to collapse. The net result was pockets of localized decay, that eventually led to the entire urban area rotting as more people left. It's actually kind of stunning to see in person. (I live about 50 min South of Detroit). And oh, the riots of 1967 didn't help, either.

It's hard to imagine that happening the the metro-Bay area, but I remind myself that people once thought GM, Chrysler and Ford could never go under.


Detroit was built as low rise slum though, density was not on the list when urban planners designed Detroit. Thus how you end up with a highly dispersed population requiring infrastructure you can't maintain and could never afford to (were it not for federal grants up front).

Lafayette, Louisiana is in a similar state, all this suburban infrastructure investment that is ultimately a giant waste: https://www.strongtowns.org/journal/2017/1/9/the-real-reason...


Some other reasons why Detroit collapsed: - Imposing a city income tax whereas neighboring suburbs did not. - Corrupt and short sighted city management - Crippling bureaucracy and union jobs in city government (as of 2012, the water department employed a horseshoer even though the had no horses--I think this position has been done away with now though) "The city pays $29,245 in salary and about $27,000 in benefits for the horseshoer position." https://www.michigancapitolconfidential.com/17404 - Lack of density - Flight from the city -- caused by variety of factors that include taxes and racial reasons


if your entire economy rapidly contracts then you're going to have pockets of decay regardless. Detroit also is a massively sprawling city with 138 sq miles of land vs. SF's 49 square miles of land and oakland's 55 sq miles of land.


I had a similar thought seeing all the office/luxury condo construction going up in Redwood City. Their can't be more then a handful of "large" tech companies in the immediate vicinity and what will happen when they inevitably downsize (as almost all companies do over the course of decades...)?


RWC is a great place to commute as far as Hayward, SJ near 101, or SF near Caltrain. I wouldn’t be worried about living there at all.


Factories are not the same as office buildings.

If a factory closes down, you are stuck with a specialized building that can't really be used for anything else.

If a company in an office building closes down, you can pretty easily replace it with either a different company, OR with simply more residential housing stock.


The best way is to make work from home / remote default. If US does then devloping countries can follow. If Fortune 100 company makes rule for thier offshoring companies allow work from home then they pretty much can solve traffic issues all Bengaluru, Chennai, Hyderabad in a month. And the country like India can also improve infrastruture other than road .


Remote-by-default will only work if the workday is profoundly transformed and telecommuter areas (generally more suburban or exurban) can be made more social.

Unless the idea is social isolation, anyway. Sometimes the gleeful description of "progress" makes it sound like there's cheering on of the cyberpunk dystopia going down.


> And the best way to fix Bart overcrowding is to build apartments near where people work so they don't HAVE to commute.

Why not build businesses where people live? Apple can spend 5 billion on its new campus in the middle of nowhere, but the public has to shoulder the cost for transit. 90 percent of Google's and Apple's domestic workforce could probably do at least 70 percent of their work from home. Apple prides itself on renewable energy usage, but it's perfectly OK for its employees to spend 3 hours idling in traffic?


If you want to build a big new campus it pretty much has to be in the middle of nowhere, because people tend not to like you bulldozing a chunk of city. They could build their own housing but people tend not to like the "company town", and for good reason. Fixed-line transit is pretty much impossible to build without eminent domain powers; I'm sure the tech companies would be happy to contribute to building a line but they would need cooperation from the government. Meanwhile they do run their own bus services because that's the only form of transit that a private company can realistically operate, and people complain about those too.

Planned development areas where you get a bunch of housing, businessplaces and transit built in the same place can work really well. But they need coordination and collaboration from the public side; there's only so much one business can do on its own.


If the city allowed Apple or whoever to build a whole bunch of skyscrapers in the middle of Soma SF, then I can assure you that the companies would Love to do that.

I agree. Density should be the focuses. And zoning laws should be changed so BOTH companies and residential apartment companies are allowed to build more densely.


Apple should have build a couple apartment towers next to it.


Cupertino didn't let them.


Apple has enormous influence, and Jobs was a very good salesman. Maybe Apple didn't try very hard.


Cupertino voted down the attempt to replace Vallco with mixed-use because it might increase traffic. They’d rather have the corpse of a mall than anything apparently.


Then you'd have a bunch of millionaires in a price war to live right next to work


Why is that a problem?

For every millionaire that is price waring over NEW Apartments is one less millionaire that is gentrifying and kicking out a family living in the mission.


Even simpler, let people work remote.


People should give up. People should leave the area. They should move where they can find a job and a cost of living that's reasonable. The fact that people don't give up is why landlords can afford to charge $2,800/month for a 1 bedroom. You can't rent at $2,800/month if no one will sign the lease.


Many do. The cost to society is enormous.

If housing and labor markets were entirely elastic, and those are the only two factors your people need to consider, then "go away" could be a reasonable government policy. But people are more than their income and their cost of living.

Consider a recovering opioid addict making minimum wage. Medicaid for health care. They are recovering, not relapsed, because of great support from their parents, brother, and grandparents, all of whom live in (say) Oakland. If we look at the labor market and the housing market, the rational economic decision is to move away. Away from their family, the support network that keeps this person employable (and quite possibly alive). Should the whole family move? Not all jobs are everywhere. Should the brother quit Berkeley? These webs are not easily untangled.

If their support network were a Church, or a local football club, the cost would be same: leave your life behind so the Bay Area can stay suburban.

Expensive housing destroys the small, vital institutions that hold our society together by driving people apart.


This is a great comment and I wish I saw more like it on HN, where such webs are frequently ignored when discussing the latest opportunity for disruption.


Moving obviously doesn't work in all cases. But urbanizing doesn't permanently remove the problem, it delays it. Ultimately any plot of land has a maximum carrying capacity. If some of these issues are not solved, what's to say that a decade after we urbanize, we won't be right back here with this same problem?

Personally, I have definitely noticed many people who have convinced themselves they have to stay despite their miserable conditions. Nevermind they have no family in the area, few friends, and despite their very well paying job they can barely afford food & rent. They could surely never be happy elsewhere!

It's like some kind of bubble, where we imagine the whole rest of the country is a backwater hellhole and won't even imagine we could leave.


You claim demand to live in the Bay Area exceeds housing technology carrying capacity. Do you have any evidence for this?

No city on Earth is full. (Indeed, estimates of human population growth show planetary population stabilizing at less than one tenth our global carrying capacity, so this is not surprising.) It would be extraordinary for the Bay Area to be the first, and so calls for extraordinary evidence.


I did not say demand exceeds housing technology carrying capacity. I said if the peninsula urbanizes (i.e. denser building, maybe 2-4x, not mega skyscrapers with bunks) demand will keep up. That should not be an extraordinary claim, given how many bedroom communities and commuters already surround it.


Why are you limiting the possible technologies? Skyscrapers work.

Housing is a cost of living. Driving the cost of being alive as low as possible should be a high priority. We should use the tools we have to do it.


Because I believe they sacrifice quality of life for density, and I think we can do better.

We don't need to pack everyone in like sardines. As you already noted, there's plenty of space in the world. (You just have to turn your eyes outside the peninsula).

P.S. I do not live nor aspire to live in the peninsula, or anywhere near it


Why are you limiting the possible technologies through government regulation?

No other city is full because at some point people decide not to live so tightly packed together, and demand dries up.

Current laws raise prices to enforce low density. That's wrong.


The simple fact is that there are a lot of people who need to live in the Bay Area. Wishing people would just leave is what the NIMBY organizations have been trying for decades. It doesn't work, and it inflicts undue hardship on everyone who wasn't one of the lucky ones who bought in early.

The only thing that does work is confronting the fact that a lot of people need to live here and encouraging housing supply to meet demand.


"Wishing people would just leave is what the NIMBY organizations have been trying for decades."

...and yet, this crisis is only about 5 years old. Between 2008 and 2012, San Francisco rents were going down, not up. San Francisco's population declined in the 1980s. Say what you will about construction rates, but this is an acute housing crisis, brought on by an asset bubble, instigated by historically low interest rates.

One way to look at the current situation is to get upset and say "how dare this community not overturn its way of life to accommodate our industry!", but another, equally valid viewpoint is to acknowledge the simple fact that it's painfully stupid to try to cram the entire tech industry in a 49-square-mile patch of land (or realistically, a 20-square mile patch; nobody in tech believes there's life west of Divisidero or east of Embarcadero).

So no, people don't "need" to live here. There's no practical reason that the tech industry couldn't be spread all over the world. It was actually always kind of dumb and impractical to found startups here. But it's trendy for 20-something tech bros to live here right now, and therefore, everyone else is expected to move aside and make room.


5 years. How cute. Prop 13, a law with horrific long-term consequences, was passed by the voters in response to the housing crisis. 40 years ago.

http://www.latimes.com/projects/la-pol-ca-housing-supply/

San Francisco rents have sometimes gone down slightly, but they never returned to sane levels, and affordable housing for the poor hasn’t been abundant in many, many years.


Yeah. Prop 13 massively depresses housing turnover and reduces property tax revenue, which means they need to collect more from income tax. Malcom Gladwell's excellent podcast on golf courses has a great discussion of this.

http://revisionisthistory.com/episodes/11-a-good-walk-spoile...


That article has nothing to do with Prop 13 (the only mention of prop 13 is in the comments). And while I think Prop 13 is an abomination for a variety of reasons, there's basically no evidence that it reduces new construction.


Yeah, I was in a hurry. My point was that voters were already voting to save themselves from the housing crisis 40 years ago; while making the crisis even worse. The article was about how the housing crisis goes back even further.

Ultimately, the original sin was racism.

http://www.oaklandmagazine.com/May-2017/The-Real-Cause-of-Ge...

https://www.theatlantic.com/business/archive/2015/11/zoning-...


AirBnB is a huge factor. Take a look at http://insideairbnb.com/san-francisco/ and the chart under Activity and see it go up after 2012.


AirBnB doesn’t cause 3 bedroom tract houses in Cupertino to cost $2 million. There is AirBnB in Houston and it has almost an unmeasurable effect of prices. I don’t know if the Bay Area has rent control, but those types of policies (along with planning commissions and other bureaucracies have more deleterious impacts than a thousand AirBnBs.

The simple fact is that if you own a Bay Area home, you will oppose increased supplies because it makes your home less valuable. Homeowners are simply attempting to protect their equity. If housing prices dropped 20% because of increased supply, suddenly tens of thousands are now upside down on their home.

I know the actual reason, but I still can’t help but wonder why Hong Kong/Seoul/Shanghai style high rises are not more of a thing in the Bay Area. There seems like a ton of good spots along the 280 from San Bruno to Woodside.


Houston has a 20% vacancy rate [1]. Unfortunately, I can't recall the source but I did read a study that concluded that Airbnb has no effect on rental prices where the vacancy rate is 6% or more but it absolutely drives prices up in low vacancy rate cities.

I live in one with < 1% vacancy rate and it's also a tourist city. Apartment prices have gone up more than 50% in the past few years.

[1] http://www.zerohedge.com/news/2017-04-17/houston-commercial-...


"The simple fact is that if you own a Bay Area home, you will oppose increased supplies because it makes your home less valuable."

Yeah, this is a bit of "yimby" rhetoric that's pretty simple-minded. People don't oppose new construction because of abstract fears like "property value"...they oppose them because of concrete fears, like changing the character of the neighborhood, or increasing traffic.

I'm not saying I agree with those fears, but it's helpful not to make cartoon characterizations of the other side's arguments, when many of those arguments have merit. If you spent most of your life savings on a house in a cute suburban neighborhood, you'd (rightly) be pretty pissed if people suddenly wanted to surround it with high-rises.

Again, I don't agree with these arguments, but it's helpful to actually understand them.


Neighborhood character is what they cited when they kicked out Willy Mayes. We are talking in some cases about people who bought houses knowing construction was permitted opposing it.

Traffic goes down when we have mixed use zones vs. Euclidean zoning.


"Neighborhood character is what they cited when they kicked out Willy Mayes."

I see. Because people have used this complaint to do bad things, it is therefore always incorrect. Got it.


It's fundamentally about turning public space into a private club. Fine. Just don't expect me to be happy about paying for roads and sewers in places that keep poor people out.


I would not consider property values abstract in any sense of the word, especially when your "concrete" fears directly affect those values.

Writing off the whole notion that people fear their property value falling is illogical.


They're entirely abstract. Unless you're a professional real estate analyst, you have absolutely no idea what some proposed development is going to do to your "property value" (even then, you're basically guessing).

When you go to planning meetings, people are not generally complaining about property values. They're complaining about neighborhood character, traffic, parking, etc. I'm not going to say it never happens, but when it does, you should dig deeper. There are always real concerns.


This is manifestly untrue. The city has been out of vacant land since 1954 and common talk of a "housing crisis" in San Francisco started in at least 1966 [0]. We have been failing to build enough housing to meet demand for decades.

What is true is that for decades people who came here at some time in the past complain about how newcomers are overturning its way of life, despite having been newcomers themselves at one point.[1] Aging hippies complained in the 80s that yuppies were ruining the Haight, despite having been "neighborhood-ruiners" themselves when they came in the 1960s; the Mission used to be an Irish and Italian neighborhood before it was the center of Latino culture in the city, but it's the neighborhood most vociferously complaining about newcomers and insisting on building moratoriums to stop the neighborhood from changing.[2] It's all deeply hypocritical and unprincipled, but also completely unsurprising.

tl;dr: San Francisco has always been an expensive place to live and we've never built enough housing to meet demand [3]

[0] https://experimental-geography.blogspot.com/2016/05/employme...

[1] https://ww2.kqed.org/news/2014/04/15/san-franciscos-current-...

[2] http://sfist.com/2015/10/07/san_francisco_has_always_been_a_...

[3] http://www.huffingtonpost.com/entry/san-francisco-housing-cr...


"This is manifestly untrue."

Actually, everything I wrote is a fact, and you can verify it. SF rents went down as recently as 2012, and are currently in a pronounced, acute period of hyperinflation [1]. San Francisco's population declined rather dramatically from 1950-1980 [2]

I'm sorry if this doesn't fit with your preferred narrative, but citing opinion articles does not provide data for your position.

[1] https://medium.com/@mccannatron/1979-to-2015-average-rent-in...

[2] https://cdn.vox-cdn.com/thumbor/2FrCiZiCNaMFiUqWC_RK8sh3NnU=...

Edit: even your sfist link confirms the basic facts, despite its (inaccurate and hyperbolic) headline. To wit:

"Dips in the population, urban flight, and a decaying Edwardian housing stock — much of which was built between 1907 and 1910 and was in great disrepair by 1970, when areas like Alamo Square were extremely "low-rent" and dilapidated — may have made life cheaper for the hippies, but that all began to change by the early 1980s."

So yeah...SF hasn't "always" been an expensive city. No more than any other city, anyway.


I am much less interested in what "should" happen in a macroeconomic sense than what is happening: lots of people need to live here right now. It's worth remembering that the people most hurt by NIMBY policies are not, by and large, the tech workers making six-figure salaries. The victims are the teachers, firefighters, artists, nurses, secretaries, and everyone else who isn't a programmer.

Yeah, it might be nice if the US tech industry were more geographically distributed throughout the country (though that would also potentially have negative consequences due to constant relocation necessary when switching jobs). But NIMBY policies have broadly failed at getting people to move away. They have, in fact, just made the situation worse.


"The victims are the teachers, firefighters, artists, nurses, secretaries, and everyone else who isn't a programmer."

I'm coming late to this just to make a narrow point, but I'm not sure you should put nurses into that sentence. Take a look at US News Best Jobs and see a roundup of BLS stats for salaries in San Francisco.

Registered Nurses earn a median salary of $133,650 in San Francisco

https://money.usnews.com/careers/best-jobs/registered-nurse/...

A software developer in SF earns a median salary of $117,770

https://money.usnews.com/careers/best-jobs/software-develope...

Now, that does seem suspiciously low to me (in San Jose, the salary is over $140k). And every time I mention this, I am careful to point out that I have no objection whatsoever to nurses making lots of money, more than programmers. It's a tough and important job that deserves good pay, and while I wouldn't argue that it should pay more, I certainly wouldn't argue that it shouldn't, either (I do think programming is a tougher and more stressful job than people generally realize).

But the notion that programmers with their high pay are driving out nurses seems a stretch. I would argue that programmer compensation is higher than what is cited here, and there are other factors. But none of this is enough, to me, to overcome these numbers. While low income people are driven out of SF by the presence of higher earning workers, I don't think you can really say Nurses are driven out by programmers. Doesn't really work.

And programmers, I assure you, are most definitely hurt by the high housing costs in SF.


"The victims are the teachers, firefighters, artists, nurses, secretaries, and everyone else who isn't a programmer."

OK...but that's also an argument for creating public policy that discourages tech companies from locating in the city. We could start by eliminating the mid-Market tax incentives.

The "yimby" movement is at least as much about tech companies who have invaded and now want to change their environment, as it is "everyone else who isn't a programmer." I wish we could be honest about that fact.


The housing crisis is much MUCH older than the tech boom. From your privileged position, with lots of income relative to normal Americans, there wasn’t a crisis until you couldn’t afford San Francisco.

My parents are poor, so I watched the market from the bottom end. What I experienced was that the amount we paid for what we got was sort of dumb, but at least we could afford an illegal in-law. Then, in the early 1990s, we got an OMI eviction and moved in with relatives. And now I’m paying twice as much for a fourth of the space in the same neighborhood, while my parents were ripped from their communities and moved out of the Bay Area.

For the low end of the market, any restriction will make housing more scarce, and San Francisco is not short on restrictions. That is why I support the YIMBY movement.

https://sf.curbed.com/2013/4/3/10257506/navigating-the-treac...

Even without the tech boom, California hasn’t been keeping up with housing demand:

“Every generation, civilization is invaded by barbarians - we call them ‘children.’” - Hannah Arendt

http://ochousingnews.com/california-nimbys-dont-love-childre...


"The housing crisis is much MUCH older than the tech boom."

Except, it isn't. As I've documented in this thread, like most American cities, the SF population was declining for ~30 years, until the mid/late 1980s. The first tech boom really kicked things off for local real estate again, starting in the early 90s...which was the last time the city saw a building boom. Developers build in times of increasing demand, and that's exactly what happens in SF.

In any case, repeating the "supply and demand" mantra doesn't change basic facts about the timing and cause of this boom. The problem is not that developers "didn't build enough" in 1980...it's that we've disproportionately grown demand starting in ~2012, and large housing projects don't get built that quickly in tiny, landlocked cities.

Cutting the counter-productive tax incentives for tech should be on the very short list of ideas for restoring sanity to SF.


I admit that “supply and demand” is not the cause of the housing crisis. It merely explains the high price of housing (with minor contributions from a bunch of other factors[0][1]). I feel that supply and demand is most useful as an intuitive appeal to balance: There is way more demand than supply,[2] of course we suffer from a shortage. The cause of the crisis is the array of regulations against homebuilding, that caused the shortage.

As you say, developers build in times of increasing demand, yet there hasn’t been a real building boom since the early 1990s.[3] In a normal situation, increasing prosperity would bring both jobs and homes to an area. Here, we have the jobs but not the homes.[4]

The developers intimately know how price is caused by supply and demand, and do not build unless they are reasonably certain that they can make a profit. They avoid causing gluts. The problem here is that California has some of the most misguided regulations,[5][6] and municipalities some of the worst processes,[7][8] that prevent housing from being affordable to build.[9] Developers can’t be certain to make back their investment when housing is not in crisis, and we need to fix this.

Like sea urchins in a kelp desert,[10] mega-developers with large projects are not the core issue. Mega-developers work best when trampling over pristine wilderness. We need to build inside cities.[11] The core issue is that we collectively do not have the imagination to enable thousands of small-time landowners to undercut the mega-developers with naturally affordable housing.[12] Zoning makes it illegal,[13] and government process makes it impractical, for ordinary non-developer people to build around here.

The Republican mantra is that “Government is the problem.” But at the local level, the government is the people, or a funhouse subset of them. The policies that create the housing crisis enjoy bipartisan support. My support for the YIMBY Party[14] is not about supply and demand. It’s about creating a political demographic for getting people into humane homes.

[0] http://www.sightline.org/2017/07/05/stop-blaming-foreign-hom...

[1] https://fivethirtyeight.com/features/the-tax-deductions-econ...

[2] https://sf.curbed.com/2016/10/12/12945854/bay-area-cities-jo...

[3] https://twitter.com/mottsmith/status/856553360278736896/phot...

[4] https://sf.curbed.com/2017/7/26/16040938/san-francisco-jobs-...

[5] http://www.builderonline.com/building/regulation-policy/the-...

[6] http://www.spur.org/publications/urbanist-article/2003-07-01...

[7] https://sf.curbed.com/2013/4/3/10257506/navigating-the-treac...

[8] http://www.oaklandmagazine.com/May-2017/The-Real-Cause-of-Ge...

[9] https://www.strongtowns.org/journal/2016/6/15/affordable-hou...

[10] https://cdfwmarine.wordpress.com/2016/03/30/perfect-storm-de...

[11] http://www.latimes.com/politics/la-pol-ca-housing-climate-ch...

[12] https://www.strongtowns.org/journal/2017/6/12/the-power-of-g...

[13] https://www.curbed.com/2017/3/7/14837014/affordable-housing-...

[14] http://www.sfyimby.org


"The cause of the crisis is the array of regulations against homebuilding, that caused the shortage."

No. That's what YIMBY people keep repeating. Regulations account for only ~20% of the cost of new construction in SF. The "cause of the crisis" in SF is acute demand on a tiny peninsula where there is no unbuilt land. I can't speak for the rest of the bay area, but the YIMBY line is almost entirely wrong when it comes to San Francisco.

"In a normal situation, increasing prosperity would bring both jobs and homes to an area. Here, we have the jobs but not the homes."

San Francisco has been in the midst of a dramatic building boom since ~2013. There are projects all across the city. Mission bay went from vacant land to fully developed in less than four years.

In other words, aside from the fact that huge multi-family housing projects take a few years to get built (everywhere!), things are working exactly as they should. But no, you can't build giant housing projects faster than the tech bubble has inflated in SF. That part is true.

"The problem here is that California has some of the most misguided regulations, and municipalities some of the worst processes, that prevent housing from being affordable to build. Developers can’t be certain to make back their investment when housing is not in crisis, and we need to fix this."

Repeat after me: 80% of the cost of building in SF is land, labor and materials. Meditate on that fact every time you're compelled to repeat something about regulations. When developers in SF complain about regulations, they're dog-whistling to the BMR housing subsidy. That's the bulk of their "regulatory" costs.

Also, stop confusing "California" and San Francisco. They're different. Atherton's building policies have nothing to do with SOMA construction projects.

"The core issue is that we collectively do not have the imagination to enable thousands of small-time landowners to undercut the mega-developers with naturally affordable housing. Zoning makes it illegal, and government process makes it impractical, for ordinary non-developer people to build around here."

Nonsense. Small-time landowners cannot fix housing density in dense, fully-built cities like SF. To create any meaningful amount of housing, you need the capital to buy large amounts of land, labor and materials for high-rise buildings. That's why big developers are doing the construction -- not "regulation", and certainly not "zoning" (while I agree that height limits can/should be higher in many places in SF, it wouldn't suddenly enable small landlords to build skyscrapers. Your "evidence" for this claim has very little to say about zoning; it's merely a collection of snarky graphics).


Oh, I’m pretty sure that the cost of regulation is well over 50%.[0] Maybe if you consider a development that actually succeeds (as opposed to bought and then not developed, so the cost of regulation is 100% and there is no additional housing), and maybe if you file all the pre-construction costs in another category (e.g., having to redesign your building for stupid reasons[1]), then you get 20%. But the biggest cost to society is all those units that nobody even imagines building.

I don’t know if you’ve been paying attention, but San Francisco is in California. Bad state laws are being abused in San Francisco,[2] and the entire state is in housing crisis.[3] Additionally, Atherton affects San Francisco because it is within commuting distance. If Atherton built 500,000 units of housing especially within a mile of their Caltrain station, that would dramatically affect housing prices in San Francisco.

You keep using words like “dense.” San Francisco is not dense.[4] Most of the recent development has been on 20% of the land.[5] Go west or south of the Mission District, and except for small “transit corridors” and a few pockets of housing, it’s like a time capsule from the 1950s. With a lot more cars.

The idea that an area once built is finished, is a disease that threatens the viability of this country.[6] Small-time landowners cannot fix the crisis because around a third of the privately owned land is zoned for single-family homes (even worse down the peninsula).[7] It is actually illegal for most landowners to increase density, so they don’t even try.[8]

We do not need mega-developers with mega-towers at this time. Those have very high building costs. We can satisfy current demand with a whole lot of medium-sized buildings with much lower building costs.[9]

[0] http://sfist.com/2017/02/15/another_study_contends_sf_housin...

[1] https://sf.curbed.com/2017/4/28/15476540/1924-mission-review

[2] https://www.thebaycitybeacon.com/politics/how-cities-bypass-...

[3] https://www.nytimes.com/2017/07/17/us/california-housing-cri...

[4] https://sf.curbed.com/2017/3/8/14856316/san-francisco-densit...

[5] https://archpaper.com/2017/05/san-francisco-housing/

[6] https://www.strongtowns.org/journal/2016/4/17/sprawl-is-not-...

[7] http://www.slate.com/blogs/moneybox/2013/11/25/bay_area_zoni...

[8] https://yimbyaction.org/upzoningletter/

[9] http://www.businessinsider.com/san-francisco-density-thought...


There is no such thing as "invading" your own country. The level at which we can make such claims, and implement such controls, is the national border.

The equal protection clause of the Constitution establishes freedom of movement for all Americans. Native and longtime San Franciscans have no more or less right to be there than the Iowans and Wisconsinites flooding in.

If you want to change that, then secede from the United States.


5 years? LOL

It’s been a problem since the 90s but it eases off for a year or 3 every recession.

Same deal here - it’s been crap for decades but the 2008 crash deflated the balooon a little for a while.


The economic need will, of course, compensate for higher housing costs by providing higher compensation, which ultimately makes housing costs a moot issue for anyone providing value to the local economy.

As someone from outside of the region, what reasons necessitate that a lot of people be in the Bay Area that is beyond the economic need?


Compensation isn't nearly as elastic as housing prices though.

Not only that, the demand side for housing is also the supply side for the job market, so prices are squeezed on both sides.


> Compensation isn't nearly as elastic as housing prices though.

Because there is usually room to give. If people were on the brink of actually having to leave due to rising costs, incomes would lose their inelasticity pretty quickly, insofar as the need for labour is required. There is always superfluous work that is useful at a low price, but fine to give up completely if costs grow too high.

> Not only that, the demand side for housing is also the supply side for the job market, so prices are squeezed on both sides.

Squeezing is necessary to a point. After all, the economy eventually seeks equilibrium. It has been the case – at least before housing costs grew out of control – that one could make a fortune by moving to the Bay Area, where average incomes are significantly higher than most of the rest of the country. Now the costs are rising to close the gap with lower-income areas.

If someone in a low-cost area has a gross income of $30,000, and expenses of $25,000, then someone in a high-cost area with a gross income of $150,000 can take on expenses of $145,000 without being any worse off. While housing isn't the only cost one has, it is usually among the largest (with taxes being the other major expense). Having $145k to spend on expenses each year can go a long way.


"If someone in a low-cost area has a gross income of $30,000, and expenses of $25,000, then someone in a high-cost area with a gross income of $150,000 can take on expenses of $145,000 without being any worse off."

I disagree: $5,000 has a lot more buying power in the low income area than the high-cost area.


I guess that ultimately depends on what you want to do with your discretionary money. The day-to-day costs are already accounted for in our hypothetical examples.

Someone in a low-cost area may want to travel to the city to take in the entertainment and amenities available in the big flashy city, in which case that money is being spent in a high-cost area. Similarly, someone in a high-cost area may want to travel to a low-cost area to take in what it has to offer and thus will spend it in a low-cost area. In that case, the person with $5k in a high-cost area is actually still better off.

If you're going buy an iPhone with that money, the price isn't going to vary much in either place. If the $5k is saved in both cases, there is no real difference either.


I claim that there only has to be at least one so-called discretionary thing priced differentially based on housing/CoL to make living in the lower cost area more financially optimal. It's easy to show there exists at least one; in fact, there are many.


Why's that? And why doesn't the reverse hold true? I can think of many things that are usually more expensive in lower-cost areas than in higher-cost areas.


Almost, except that progressive taxation significantly advantages low-income-low-COL. The $145k earner will pay more than proportional taxes, so will need lower than $145k expenses to achieve that $5k surplus.

Lenders also don't seem wild about letting you commit 80% of your take-home to a mortgage, even if your discretionary cash after the mortgage would be the same as in a cheaper place with a mortgage at 25% of your take-home.


maybe they were born there and their family, community and network is there?

or is that a nonsense thing to say in the States? In some places of Europe that would be a pretty normal feeling.


> "or is that a nonsense thing to say in the States?"

It's a nonsense thing to say in front of the educated American elite.

Most of America agrees with you, but as we've seen, there is a disturbing trend amongst American elites to mock anyone who is unwilling to sacrifice their families, communities, and networks in the name of career development/personal advancement.

I'm not into most aspects of the populism that is sweeping the US right now, but the elite dismissal of basic family- and community-building is IMO completely real. The brutal policies that result - of forced displacement, of people adrift without support networks - are one of the very real reasons why anti-elite sentiment will continue to increase.


Each of the places that elites think we should abandon was created, in its time, by people uprooting their families to move to it. Most had zero or minimal population until a few generations ago.

It's unclear why migration should stop now. Why is this the status quo that should be locked in, rather than the status quo of 50 years ago or 50 years from now?

The disturbing trend is that migration has slowed to historical lows. Among Americans, being unwilling to move for opportunity is the new development. Of all the settlement patterns that could be locked in for eternity, today's is a poor choice.


> Most of America agrees with you

The ever increasing urbanization rate suggests otherwise. If the majority of Americans had stuck close to their families, these cities would be small settlements at best, and maybe wouldn't even exist at all. In reality, the high cost (which may come in the form of lower income) of living elsewhere has pushed most into these cities.


Like the other user said, the pattern of what people end up doing isn't necessarily the pattern of what people want to do.

More specifically, though, the majority of Americans have stuck close to their families - they may not live in the same exact town they grew up in, but most live within a certain radius of where their family/community/network is. Americans have shown that they are willing to move to follow economic fortunes, but remain tethered to the general area their families and loved ones are in.

And this - at least anecdotally - is a common preference. I've lost count of the number of conversations I've had with colleagues and friends about where they can live where they can still be in range of [parents|grandparents|cousins|organizations|institutions].

And this is where I think the rhetoric goes off the rails - some forcible relocation may be inevitable - after all, we can't ensure there are enough jobs for all people in all places at all times.

But there's a line between acknowledging that forced migration is necessary/inevitable, and regarding those who resist it with derision. God help us if we ever fault someone for wanting to stay near their family and their community.


I think woosh might be in order here. @potatolicious is discussing how people value their communities but American elites can't understand not sacrificing everything for your career or economics, and your reply is to just discuss the economics?


If you want to take that point of view, the American elites are giving these people an opportunity to return to the communities they would have lived in had they not been pushed out of those areas in the first place.


Just because one relocates out of economic necessity doesn't mean that was their best preference or philosophical ideology.


anyone providing value to the local economy

Nice to see that all the people who actually make the city function -- so that those high-paid "value providers" can live there and get work done there -- are completely written off in your analysis.


Where are they written off, exactly? They are most definitely included. If anything, they are specifically the people who am I talking about.

Unless there is some reason their function isn't actually necessary, in which case, yes, the jobs may disappear. But I do not see the trouble with unnecessary jobs disappearing. Nobody is crying over the loss of loom operators either.


Turns out a city needs police officers. And firefighters. And garbage collectors. And transit operators. And cooks. And cleaners. And waiters. And teachers. And construction workers. And... lots and lots of jobs that don't involve getting paid $200k to use node.js to build a platform that does nothing, earns no revenue, and goes under 12 months later having provided no return on $100m in VC money. But for some reason that is the job people on HN think is "value".


There is no big book in the sky that says how much a job has to be paid.

It is simply supply and demand. If the populace needs police officers, firefighters, garbage collectors, transit operators, cooks, cleaners, waiters, and teachers, there is no reason those jobs cannot also pay $200k per year – if that is what it takes to keep people in the region doing those jobs.

Nobody thinks there is special value in that node.js job. It is simply that $200k is what it takes to incentivize someone to both live in the Bay Area and work on that node.js project. If the VCs could find people matching that criteria to do the job for less, they would be jumping all over those people. Why do you think SV's largest tech companies have been pushing the government so hard to ensure that everyone learn how to code in school? But, for now at least, they don't exist.

And when the people for the other aforementioned jobs don't exist at a lower price, pay has no choice to go up for the jobs as well. Unless the local population decide those jobs aren't as necessary as you claim they are and choose to forego them entirely. Which is always an option too.


Why shouldn't we build more to promote clustering?


As someone living in the Midwest and telecommuting to SFBA, that's almost unbelievable to me. I pay less than that for my brand new and quite nice 5/4 house on almost half an acre of land.

With all of the remote work available, why would you stay here? I manage a team with two remote-friendly job openings currently. You could work for me and go live in Telluride, CO for less than that East Bay 1br and still have money left over.


I work remotely for a company in the Cupertino area while living on 2 acres in the south of France – my entire “estate” cost less than a 2 bedroom apartment would have cost in SFO. Even commuting monthly for two days of meetings is still cheaper than living in the Bay Area.

I would like to live in the Bay Area but it’s financial suicide.


There's not much remote work available. Those jobs are the most desirable and also the very hardest to get. In the past 10 years, i've received 100s of calls from desperate recruiters looking for Software engineers: and every single time, it's because they're looking to fill positions of companies in Palo Alto or San Francisco. Anytime, I ask them to find a position outside of the penninsula or SF, they turn up empty handed (east bay).

Companies can learn from this as well: there's a difference between # of workers working in a field and labor supply vs labor demand.


I think we're starting to see a shift. Today, as a hiring manager that hires remote workers, I have the pick-of-the-litter when it comes to talent for my team (infrastructure engineering). I can find the very best folks, people that I would have a much harder time winning when up against the FANGs (Facebook-Amazon-Netflix-Google) of the world if I was hiring in my company's SFBA home base.

Having remote-friendliness in my pocket, I can be choosy and can hire strong senior-level folks. I think it's inevitable that the rest of the Valley catches on and figures out how to make remote work for them. When this happens, I think we'll see who things:

- A leveling-up of remote salaries. Not such a big deal at my company and on my team, because we don't hold someone's remoteness against them and we pay fair SFBA salaries. Other companies (GitLab, etc.) adjust salaries based on cost-of-living. This is a reduced-fare lunch for them but probably not sustainable. Other companies are going to catch on and snap up top talent at average SFBA comp levels and the salary-savers will be forced to level up.

- SFBA talent will start leaving the Bay Area for more affordable and enjoyable areas. We'll see engineers moving to Central American beach towns, Colorado ski towns, back home to flyover states, etc.


Interesting. Where do you usually advertise remote positions, Chris?


The HN Who's Hiring thread, our website, a few other job sites, etc. You can probably find it in my recent comment history.


What's a 5/4 house?

The Midwest is stereotypical for "affordable living" but I live in New England and it's fairly affordable here too in comparison. I own a three bedroom in town, with 20% down my P+I is $750 a month and PITI is $1275 a month. If I financed the whole thing the PITI would be $1462 a month. I think my housing cost is about average for the US.


> What's a 5/4 house?

5 bedrooms/4 bathrooms


I think here, it means 5 bedroom 4 bath.


>With all of the remote work available, why would you stay here?

As the other comments have said, remote work is extremely competitive, low paying, and unstable on the whole unfortunately.

It's either tough it out and deal with the gauntlet of traditional tech interviews and sky high rents in the Bay Area, or hustle your ass off 24/7 competing with the millions of new CS grads in India and China who are just as skilled as you (or more) and can work for $4/hr.


I stay here because I've not found any place on Earth that's as good for working in technology. And, every year, this area creeps even further ahead. It's just an amazing place. So, I tolerate the pain for the opportunity to enjoy my career to the fullest.


I don't understand this sentiment. Whenever I see an announcement out of Silicon Valley, it is invariable an old technology hyped as the latest sensation.

Compare that with for example Microsoft Research, who actually do things I find interesting.


Odd, I find the bay rather stagnate. It's constantly chasing last weeks fad and a few years behind cutting edge research.


Where do you live?


Move where exactly? So many people want to live there for a reason. If moving to another city saves you $1k a month on rent, but you lose $1.5k in income, it doesn't make any economic sense.


Seattle. Lose ~2-5 thousand a year in income on average as a Software engineer, save 1-2 thousand a month on rent, and no income tax: https://www.codementor.io/blog/best-cities-software-engineer...


People keep using Glassdoor numbers and think they’re representative.

Representative of low performers, maybe, but even then I’m not convinced. The idea that a high performer only gives up $5k total comp going to Amazon or Microsoft in Seattle is... well, feel free to believe that. You’re making a ton of money any which way relative to the general population.

But most people I know in the Bay Area don’t report that they’re leaving net income on the table staying here. Maybe all those software engineers are just bad at accounting, seems to be everyone’s analysis.


Eh, it doesn't really matter what stats you drive from they all paint the same picture. More and more engineers are moving here from San Francisco for that reason. People never report that there leaving net income on the table, especially once they have enough to be comfortable, and most never even search to look.


If you’re looking at $100-150k total comp, and expect to max out there, you should definitely move to Seattle.

If you’re interested in earning $300-400k/year after working for a BigCo for 4-5 years, Seattle isn’t going to work out to a better net savings/year.

I think it’s perfectly fine to max out at $100-150k. You’re still extremely rich by any standard. And startups in The Bay Area will pay you vastly less regardless, so Seattle may well be a better place for startups.

But I think you’re doing people a disservice if you convince them they’ll save more money working in Seattle than the Bay Area.


The same people who make 300-400k in San Francisco, also do so in Seattle. I don't know where your getting your information from, but all existing stats disagree with you for a reason.


And your source for this is... Glassdoor?

I have hired many people who worked for Seattle BigCos, and I know many people who have gotten offers from Seattle BigCos trying to lure them away from the Bay Area.

And I’ve chatted with people doing competitive analysis on what offers to make to engineers.

The Bay Area generally has 20-30% higher total comp after the first 2-3 years.

Somewhat amusingly, the headline salaries are pretty similar, which makes people think total comp is similar. It’s all about the bonus and RSUs.


Even if you were right, and someone made 20% more total compansation, they would loose more than half of that right off the bat due to the mutliple layers income tax in San Francisco, and easily the rest and then some to increased housing cost. Not to mention Seattle tends to have a much more relaxed and healthy working culture, so your probably working less hours too.


Every city has its pros and cons. Seattle is no exception. You move to Seattle so you can save a couple bucks, okay so what? Then you get seasonal depression because its overcast all the time.*

*except during summer when it's beautiful


Eh, I've been in LA for a year and it's too darn sunny. I can't wait to move back to Seattle and get some good pine scented rain again.

But I get your intention, and it's been our strategy for a few decades now: over exaggerate seattle's rain problem to keep Californians from moving up and driving housing prices up even further. Unfortunately, it's no longer working, Seattle just keeps getting more popular and more pricey every year.


I feel ya there, I don't think I could do LA, but then again I was getting sunburned just driving around with the windows rolled up when I spent a few weeks down there.


Sure that's true. I take Vitamin D, and have a light that I use during the winter. However, it's really both the Spring and Summer that are beautiful IMO, which is half the year. I make sure to take my vacations during the other half. I also tend to get more work done during that half, since staying indoors is conducive toward it. But, per the article I posted: it's not a couple bucks, on average - you end up after paying your rent, and taxes - having double the money left over living in Seattle over San Francisco. And it will probably only move more in Seattle's favor, as Seattle keeps on building: http://www.spur.org/news/2017-06-15/keep-building-oakland. Vitamin D pills are cheap. Living in San Francisco is not.


IMO we still need to dezone Seattle, parking minimums and height caps are strangling new development and eliminating the possibility of affordable, unsubsidized housing for the average working person.

I hate seeing my old classmates and friends move from Fremont to Marysville or further, no good reason why we have to keep every single building in Seattle super short and build parking that will sit empty.


100% agree. We are doing better than most tech cities right now, but that's unfortunately a low bar. I want us to build so much that anyone who wants to live or start some crazy business here can without hesitation.


Yeah, I'd much rather see an apartment or condo building go up in the city limits rather than up in say Bothell. Dense complexes where a 3bed/2bath is in the low $1600s shouldn't be held 15 miles outside the city limits, there is no reason beyond terrible zoning that that couldn't be built in Ballard or Magnolia or the Central District.


There are over a dozen new buildings, five story, 100s of units built over the last few years. Large and small units all over the place. And they are full!


Fremont here means a neighborhood in Seattle, not an East Bay town.


Ha, don't tell 'em about Seattle, remember its cold and wet and the sun never shines up here!

On a more serious note, after spending a few weeks in SoCal with the SO, I have no intention of ever moving to such a hostile climate. No onshore breeze + sunburns from driving for 40min = No bueno. At least it takes more than 40min to burn on a sunny day in Seattle :P


The vast majority of the world deals with seasons. It'll be okay. And frankly, the PNW is outright pleasant. The NE gets covered in snow for 1/4 of the year, and transplants to Portland and Seattle complain about it being cloudy.


this. so much this. A thousand times this. You have no idea how much it affects you to be in a city that has gray skies for like 3/4 the year. You can go days without seeing the sun in the Winter. Honestly, I theorize, half-jokingly, that Seattle's startup scene never took off because people get too depressed by the weather and give up.


Seattle is full/horrible. Do not move here if you are a San Franciscan. Especially don't bring your government philosophy, tax policies, or aversion to reality here.


Don't be fooled by Seattle's position on income taxes. Seattle has some of the highest regressive taxes. For example, alcohol taxes in WA are 10x higher than CA https://taxfoundation.org/how-high-are-taxes-distilled-spiri...


Seattle just passed a city income tax.


Yes. With 3 important caveats: 1) similar things have happened in the past and got overturned, because it's against the WA state constitution. A challenge has already been mounted and the income tax isn't even in effect yet. 2) There is a very very small number of Tech Employees this would actually affect as it's only a 2% of income tax on income over 250K for individual, and 500K for married couple. 3) It's only on Seattle proper, independent of where you work, so you could literately live one block outside of Seattle and not pay. Most people who make that much already do live outside Seattle in Medina or Bellevue.

It's really just a symbolic gesture, to appease the base of those in office, that will most likely be overturned.


Suburban Atlanta is always an option.


I did. LA is 1000x better. I don't miss anything about SF, except Golden Gate Park :)


Maybe it's time for some soft vigilante action. Start mailing people brochures about how Denver, Seattle, Portland and Austin are really really nice places. And enclose a bullet.


Denverite here. It's not Silicon Valley, but rents and housing are pretty out of control here too. Additionally it's still very car-centric. Lots of opportunity though.

I really have no idea what the "enclose a bullet" part means.


He means put a bullet in the envelope as some vague threat.


All those places are sick to death of Californians moving in and fucking things up.


Oregon has been putting commercials on SFBA airwaves saying "move here."


And housing is getting expensive here too.


Why does everyone have to squeeze into San Francisco and the peninsula? Can't you tech workers gentrify West Oakland at least? Guess a few street thugs are a force more powerful than million dollar home prices. I bet those guys are really proud of the chaos they create that forces all of you to avoid their neighborhoods.


Yes. Thugs. Drugs. Drive by shootings. The east bay is a burning trash heap with no redeeming value. Please do not move here.


When I moved to Menlo Park in 1987, there was automatic weapons fire from Whiskey Gulch every weekend. It was all liquor stores and bars, hence the name. The fried chicken outlet there had full transparent bulletproofing, heavier than some banks. East Palo Alto was Murder City, USA. Tiny Whiskey Gulch, about three city blocks, had the highest murder rate per square mile in the US. I thought I was moving into a declining area, so I rented a house, instead of buying.

That was fixed by leveling the entire area, removing a freeway offramp, and replacing the liquor stores and poor people with a Four Seasons hotel and a large office building housing a law firm and medical offices. The final solution to the underclass was thus implemented.

When Facebook moved to Menlo Park, house prices went through the roof.


> The final solution to the underclass was thus implemented.

If "final solution" refers to relocating people, what term will you use if they're deliberately killed?


Yes. On the way to work I got mugged three times, before having acid thrown in my face. Oakland is a burning hellhole, stay the fuck away if you value your life and property.


Did you miss the part where BART is packed every commute hour? There are huge numbers of people in Oakland and the rest of the east bay. But the most efficient transportation system is one that doesn't have huge rush hour stresses, i.e. ones where people live close to where they work. So if the offices are getting built in SF, then so must be the housing.


so then build the offices in oakland ;)


This is actually what happened in parts of Westchester and Connecticut. All the executive staff were commuting from their suburban homes to their various headquarters in NYC, then they realized they could just move their office instead.


It was also the case that if you wind the clock back not all that many years, relatively few of the people working for, say, IBM (especially at the executive level) actually wanted to live in Manhattan.

Obviously the Bay Area as a whole has a problem with housing prices. (It has for a very long time but it's become extreme relatively recently.) But one of the big issues with housing prices in "prime" cities is that professionals weren't clamoring to live in them until quite recently.

Look at Boston/Cambridge as well. Teradyne was probably the only significant tech company with a major office in Boston until the dot-com/bomb and it later moved out. All the growth in Kendall Square and Seaport is recent. It's no wonder urban housing and transit hasn't kept up.


If you look at small-to-mid sized law (or other professional) firms in the Bay area, you see a lot that have 2 offices: One in FiDi, one in Walnut Creek (or somewhere similar). Guess where the partners are all spending any day that doesn't require a client meeting? :)


Uber tried this and backed off of it because their employees didn't want to move.


...And why didn't their employees want to move from those sky high San Francisco rents? I hear rents are really cheap in West Oakland! Back we go to my original point.


Couldn't a company that big add a second office in Oakland?


> So if the offices are getting built in SF,

This is the problem. Embrace edge cities, people. There's no reason to expect hundreds of thousands of people to commute to a downtown area. Scatter the businesses throughout the suburbs, dammit. Start locating new startups not just in Oakland but even farther out, in places such as Walnut Creek or Santa Rosa. Hell, maybe a tech influx could get the crime down in Stockton.


Have you paid no attention to that happened in the past century? The sprawl and traffic and unsustainable scaling?

Why should cities not be allowed to change and have their density spread? The heart of a city is its density and population mass. It didn't become the perfect amount of population when the current residents arrived, never to be changed again. A city that does not change is dead.


I live in Dallas where everything is suburb outside of a very tiny urban core, and I absolutely love it here. I adore sprawl, and I want more of it. The only reason I'm even considering moving out of town this year is because the state legislature is becoming increasingly hostile to trans people (and being trans myself, this personally affects me), and even then I'm planning on moving to either SoCal or Vegas, both of which are full of sprawl.

And traffic isn't a problem if the city is designed right. The idea is that each suburb is an edge city with plenty of businesses. In Dallas, for example, it's not uncommon for people in an inner-ring suburb to commute to an exurb, and when people do commute farther inwards, it's typically people commuting from an exurb to an inner-ring suburb. The long commute form exurb to downtown doesn't happen that often here. Street layout helps, too: we have arterials on a grid system, and all arterials are six-lane divided highways. Freeways are placed at regular intervals on both the north-south and east-west axes to segment the city into bite-sized chunks (just go to Google Maps: Dallas looks like a sequoia because of the way the multiple loop roads are laid out). Five-layer stack interchanges are used to cut down on the bottlenecks in freeway interchanges.

Cities are antiquated, noisy, dirty, and crime-ridden. Suburbs are much more comfortable places to both live and work.


Good for you, glad you like it! People who share your opinion have a plethora of places to choose from! It's not for me.

For those of us that want to live in particular cities because of the city itself, supply is far below demand. Some of current residents are trying to keep supply low. That's what we're objecting to.


The problem with this is couples who get jobs in different edge cities (or buy/inherit a house then change jobs). I personally ended up in Pleasanton because I work in SV and my wife worked in Walnut Creek; public transit options aren't great out here so we each add to traffic with our single-person cars. If our jobs were in SF (or even Oakland), I'm confident we'd be living lower-impact lives right now.


That's what you have in DC and it's a total clusterfuck. Nobody wants to move just because they change jobs, and spouses won't limit job choices just to be in the same suburb as each other. So you have people commuting in random directions through inter-suburb roads that weren't designed to handle it.


Agreed things are a mess there traffic wise further out - but -

Part of the problem with DC metro is that the suburbs where it would make sense to expand the roadways are full of multi-million dollar homes owned by rich politically connected people (not just several hundred thousand dollar homes owned by mere mortals), plus you have the 4 'local' state governments (dc,md,va,fed) plus cities (e.g. chevy chase, arlington, etc) and bazillions of agencies (e.g. park service) throwing their hat in the ring too..

E.g. hypothetically, why should the northern tip of DC (and therefore the fed) pay to improve a congested road full of traffic between rockville and chevy chase? and why is my mansion being demolished and not yours etc.


this. Too much herd-following and fear driving location choice.


Oakland...takes a harder line against gentrification than most other parts of the Bay [1].

[1] http://www.mercurynews.com/2017/07/07/oakland-blaze-looks-su...


The fires are unfortunate but Oakland has approved a lot more market rate housing than SF or surrounding cities have, in part because rents have been appreciating more quickly than in SF. Oakland also wants to do more for housing.


Yeah, it seems like despite all the market distortions, the most fundamental issue is the notion that San Francisco can fit everyone who wants to live there.


npm and uber are in Oakland.

Edit per comment below: uber Oakland office was going to 3000 people, but yeah, now it's been reduced to a few hundred: http://www.mercurynews.com/2017/03/20/uber-scales-back-initi...


Uber is in SF, Palo Alto and Seattle, oak office is very small and hasn't opened yet.


Looks like they reduced it. Thanks for heads up, have edited accordingly.


So housing prices aren't that big a deal?


More like BART is painful but tolerable.


How does any of that help when the real issue is the distorting effect of prop 13 on the market? Insane housing prices are being driven by an illiquid market, adding more housing isn't going to change that.


Prop 13 affects all of CA, you don't see prices in LA going up 100% in 3-5 years like you do in most south bay cities.


LA hasn't seen anything like the VC / tech boom that the bay area is currently in. Prop 13 reduces liquidity, but that doesn't automatically have an outsized effect on prices. It's only when a market is illiquid and there's a huge spike in demand that you see ridiculously negative effects like this.


Prop 13 is a factor: http://lao.ca.gov/Publications/Report/3497#Does_Proposition....

And overturning it for commercial real estate won't do much to help housing prices, except for any re-zoning that happens. Overturning prop 13 or amending it might not happen for 5+ years, if ever. Note: https://www.bizjournals.com/sanjose/news/2017/07/19/californ...

Over the short, medium, and long-term then, building more is the only choice (SB 35, AB 71). Since you see prices not increasing as much in other parts of the state, it means building more can in fact keep prices down, as the deep-east bay construction shows.


True, but Seattle is seeing large increases in housing prices do to low inventory as well. Maybe it will play out different in the long term vs the bay area?


Politics is about "the art of the possible" and not letting the perfect be the enemy of the good. First the low-hanging fruit, then you keep going.


well yes, but what problem are you actually solving by adding more units? Yes, you're adding more people, but due to larger market effects you're not actually making the area any more affordable....


By adding supply, you will bring down prices or at least stabilize them.

This is what all the economic literature on the subject says.

Of course, it may not seem like you're making a dent, because housing has been so badly undersupplied there for so long.


Prices are determined by supply and demand.

I can guarantee you that if you built a million apartments, then prices would go down.


London native here, so I will only mention this one thought which arose last week, discussing the same issues after we'd been reading about the Apple headquarters...

Could not transportable housing be sited on short lease plots, with the aim of being a rudimentary means to live in a city but without having permanent planning or zoning decisions implemented?

Certainly if I was younger, I would be interested in prefab housing for say 5 years lease on the site, and not expecting any permanent conversion or to be a squatting occupier, if I faced the London market at present again. Location is so important, and I pass so many empty lots even in the city's central Whitechapel area as I walk into the City centre. I would probably have been thrilled to meet my needs at twenty, this way.


There has been some progress in this direction, but the construction unions aren't happy and construction unions are for better or worse a powerful political force. In the past they've filed CEQA lawsuits to block housing projects that haven't used union labor.

https://sf.curbed.com/2016/10/31/13481254/micropad-tour-patr...


Londoner here. Building housing is not the biggest problem to solve though. I live in zone 2 and even there the housing density is not massive. You could probably double it without too much problem.

The problem is that the transport network is at capacity: road, bus, train, tube - everything is packed at peak time, the main roads are a continuous stream of busses, there are 3 train in 20 minutes, a dlr every 3 minutes, ... If you double the density, you need to double the transport links too.

Then there are the nurseries/schools/hospital. My GP has literally thousands of people registered despite a 3 street catchment area. It take at least a month to get a GP appointment.

What's the point of living in a cheapass flat if you need to pay 2000 GBP for nursery or similar for private school, you need to go to private GP when you get a cold and you are still miserable in the public transport and ambulance do not get to you faster than if you were in the middle of the country side. London is at capacity for people working in the City/WestEnd/CanaryWharf. You need to expand it outward (eg: Crossrail ) and start encouraging business centers off the convergence commute route.

BTW I don't think the cost of building is really a problem. The new build quality is appalling, a luxury unit cost little more than 50K to build and will be sold off plan for close to 1 million, years before the builder gets the council approval.


How much money does it take to meaningfully move SF elections? (wondering about the viability of a Super PAC backed by SF rentiers and commuters)


Some people are talking about that but honestly you have to start with building coalitions and groups, and lobby for all the policies in between elections, it can't just be November every 2 years.

These people are working on it and you should talk to them: http://www.sfyimby.org/. Also SFHAC, East Bay Forward.


Honestly, another thing that could be done is that VCs could start funding things outside of Silicon Valley. There is precisely zero reason why they all need all of their companies to be right there.


VCs want their portfolio companies within easy driving distance to facilitate multiple meetings per day.


If you want help changing local policy I bet the folks behind http://sfbarf.org would be helpful to your fight.


Are the Bay Area public schools good? Or is it the thing to do to send kids to private school there like every other urban center?


Many of the Bay Area public high schools are very good. Schools like Monta Vista, Lynbrook, Gunn, and Palo Alto high school are top in the state if not the nation.


It varies, but many of them are world class. That affects housing prices dramatically. People make calculations of where to buy a house depending on how many kids they expect to have: 0-2, buy somewhere cheap and send the kid to private school; 3+ and you need to buy somewhere with a better public school.


In fact, public school quality seems to be one of the biggest contributing factors to a home's price. And good / bad public schools seem to be dotted randomly across the Bay Area, so you have this weird effect where houses prices right across the street from each other could vary widely based on which school district it's in.

Take Castro Valley in the East Bay. Highly rated public schools. Your kid will get pretty good schooling there, but you need to fork over 900K for a little 4 bedroom split level. A few blocks over, you see the same house for the bargain basement price of $600K, but lo and behold, you're in Hayward, where you're going to need to send your kid to school wearing a bullet-proof vest.


The one that confuses me is AB 71. Aren't 2nd and 3rd homes basically rental stock? Owned by individuals and not the Irving Company if you care about that.


A house in Tahoe you use 3 weeks a year is not really rental stock, and it's not clear what benefit the public gets from your 2nd home that would justify a tax subsidy


With VRBO and other sharing apps, yes that house in Tahoe is rental stock.


Short-term rentals aren't housing.


Yes, they are, but short-term, and it takes longer-term housing off the market. This is ravaging the housing markets of many mountain villages.

Re-reading the comment I was originally replying to, the commenter might have meant that the 2nd home didn't justify a tax deduction, which I would most definitely agree with. A 2nd home is an investment, and there should be no tax incentives on that sort of investment.


Well in the states, a first home is already often a person's biggest investment.


Sure, but in silicon valley one thing to do with your smalltime IPO winnings is buy a house and rent out your old one to someone who has yet to hit paydirt. Maybe part of what pushes prices up, but I like to think my renters are getting a better deal than they would from old-man Irvine. (The incentives to play this game are razor-thin, mostly down to tax advantages.)


Thanks for your work on this issue!


or vote with your wallet and leave


Among other reasons this is impractical, my parents are here, my girlfriend's here, the companies I want to work for are here, everyone I went to high school with is here. Not clear where I'd go or how my life would be better.


TL;DR: The investments are moving from the city proper to South Bay over the last 2-3 years. Mostly a good writeup backed by sufficient data points.

If I may anecdotally share my observations, of the handful of people that I personally know who have founded Startups in 2016 and 2017 -- all of them are in their late 30s, and have dependents (spouse, children, pets). All of them currently live on the peninsula or in the south bay, even if at some point in the past most of them lived in the city.

It is increasingly getting harder and harder to justify the costs of living in the city in view of the small livable space that your apartment gets you. Add to that a lousy school system, a never-ending homeless problem, and an incompetent MTA. Living in Palo Alto, Menlo Park, or Mtv. mitigates most of these flaws while retaining all the upside of being in the bay area.


> It is increasingly getting harder and harder to justify the costs of living in the city

Palo Alto, Menlo Park, or Mtv are hella expensive too, and you need a car.


Those places are all just as, if not more, expensive than SF and come with their own challenges as well. The school systems in the peninsula are fantastic though, and for most families that trade-off alone is probably worth it.


Menlo Park and Palo Alto, sure. But MTV, Sunnyvale and San Jose are still pretty cheap. (relatively)


Excuse me, but I believe you are very much mistaken. Those places are as much or MORE expensive than most places on the peninsula... In fact, the reality is that prices have almost normalized across all of the cities from SF to Los Gatos.

It is becoming increasingly hostile to any new arrivals as the barrier of entry is skyrocketing to the point of being out of reach even for "rich" people.


The average house in Palo Alto is well over a million dollars. Despite popular opinion, the rank and file staff in tech companies can't afford this. I'm a software engineer and can barely afford to rent in Oakland...


> Add to that a lousy school system

We've had a reasonable experience in SFUSD. It seems like most parents are pretty happy with the quality of education, and many schools are highly rated (by third parties).

The problem with SFUSD is the horrendous lottery system. This is what drives people away.

They are now messing with the "funnel" plan they had set up for middle schools (no lottery for middle school, based on where you went to elementary). This has pushed at least two families I know off into private schools just in the past couple months.


Didn't Silicon Valley _start_ in the South Bay?

Sounds like things are just moving back to where they started. In the long run, SF was just a passing fad I guess.


This article misses what seems like the most obvious explanation, which is that the USA economy has recovered from the Great Recession. We had a stretch from 2009 to 2014 when it was difficult to find any normal investment that paid better than 1% or 2% a year. Seeking yield, money poured into startups, because they seemed like the only thing that might be able to offer better than 20% returns (assuming a basket of startups, most of which fail and some of which return 100x).

Since 2015, the economy has returned to almost normal, so the need to invest in software startups is reduced. And this would most likely effect San Francisco the most, since it had received the most investment during the era 2009-2014.

Now that the economy is almost back to normal, there are a lot of areas in the economy that offer possible returns. The need to focus on software startups is diminished.


I think remote working really is a part of solution to this.

Perhaps augmented/virtual reality could be a good solution for some sort of application to have remote meetings with colleagues with headset in a virtual room/scenery and collaborate like that.

It could be used for daily standups and other meetings and it would remove the social isolation problem of remote working and make it much more feasible. Is any AR/VR company working on anything like that?


> Is any AR/VR company working on anything like that?

Probably every AR/VR company not working on games.


Which ones would that be? Of the top of my head I only know of the Hololens being developed mostly for professional use, any other AR/VR tech is all gaming, gaming, gaming.


> Which ones would that be?

Oh, I did not imply that there are any, just that the only largish applications besides games and "experiences" are probably fancy vanity applications for businesses.


It seems like a smart space to try to develop something for. On the business side though, most of what I've seen are flashy and would probably get used less than a dozen times before being ditched for being to cumbersome.


Actually just had a meeting with a company that develops VR experiences for events/product demos/etc. I'm still on the fence whether it's useful or a gimmick though.


Bigscreen is the closest I've seen to working on this.



Complaining about housing prices and city living are easy targets; there's a secondary question - what are SF founder pitching VC's? and how does that compare to what founders are pitching down in the valley?

Is everyone in SF pitching yet another subscription box food delivery services? Drones? VR?

Also keep in mind this is VC investment money - it comes with a price, and in the graph of rounds, by region, series A rounds are down from a peak in 2014, but SF and SV are fairly close - it's the other rounds where SF has really fallen. An alternate explanation (based on the very limited data presented here) could be that SF companies are to keep going without accepting VC funding; either with large cash infusions from the blue chips, or by having enough customers give them enough money.


We considered starting a company in SF a couple years ago. I'm glad that we decided to instead start it in Mountain View (http://www.dremio.com). We're able to attract very talented people from San Jose, Milpitas, Redwood City, etc. where rents are a bit more reasonable.


What are the best alternatives to the Bay Area?

Off the top of my head I'm thinking Portland, Seattle, Boston, Austin and Chicago in no particular order.

The annoying part is that there's so much talent concentrated in the Bay Area that it makes going elsewhere very difficult, especially if you have specific senior talent in mind that have already established their lives there.

Hopefully telepresence tech gets so good that one day it won't matter.


Depends on what viewpoint your coming from, but from that of a software developer there are many alternatives that have been much better than San Francisco for years, especially Seattle https://www.codementor.io/blog/best-cities-software-engineer..., which is also set up for future success as it keeps building http://www.spur.org/news/2017-06-15/keep-building-oakland. Honestly, I think what we are seeing, is a shift from technology companies, to technology simply being in everything, reducing the usage of such an odd concept as "Silicon Valley". For example: the biggest "Technology" company recently in Seattle is Amazon, a store first - that leverages technoloy. Even the recent things coming out of Silicon Valley have been similar (uber - taxi company that uses technology for efficient trip planning with customers, all the food delivery startups, etc). As we move more and more in this direction, where the startups are X (with technology!) it makes sense for the product to be developed where X is best instead of where technology is best.


There simply aren't enough engineers in Seattle, especially what I will call "startup" engineers. You're competing against Amazon, Google, and Microsoft (Facebook to a lesser degree) and the engineers in Seattle tend to prefer these established companies over startups. A large chunk of the Bay Area engineering community won't work at Amazon (Facebook and Google are another story) and came there to do startups. It's a bit of a self-fulfilling prophecy of course.

I worked at Twitter when we opened our Seattle office and we were trying to hire maybe 50 engineers the first year. This was before the IPO, trying to hire the ideal skillset for the area (backend) and it was still hard. Meanwhile we had more than 50 offers a week in SF.

The employee base is just so much bigger, it's no wonder companies feel like they have to have offices here.


What your describing is not a lack of engineers, it's a low uneployment rate. There are enough engineers for 100s of new startups. The only thing that excarbates more than San Francisco, is that there is much less a culture of jumping ship here, which is good for companies long term. Also, it's much easier to convince engineers to move to Seattle than San Francisco, which is probably why we are growing at over 3x the rate.


How does this jibe with the complaints of "talent shortages" in the Bay Area? How does a concentration of engineers benefit you if you need to woo them away from someone else?

Also, why are you looking exclusively at the local market? I spent years trying to leave Dallas for greener pastures, only to be ignored by almost everyone out-of-hand except Amazon and Google.


> For example: the biggest "Technology" company recently in Seattle is Amazon, a store first - that leverages technoloy.

Amazon is most definitely a technology (or, at least, a logistics) company with a store, not the other way around.


This is all about perspective. Now that's definitely the case with AWS and service first design etc. But from the beginning it was trying to be a bookstore, an online one, for sure. But not pure technology, as say a search engine or an operating system - that don't require much integration with existing physical infrastructure.


In my opinion:

1. Seattle 2. Boulder 3. Minneapolis 4. Austin

In each city, you have amazingly talented folks and wonderful opportunities to build against common everyday problems without a ton of competition. You can net the same amount that you would in Silicon Valley or San Fransisco if you play your cards right.


Denver/Boulder area as well. :-) Plus if you like doing things outside we have that in spades here.


NYC? It's not as expensive as people say, especially if you have a tech salary (which is about twice the median household income). If you have a family I think that changes things, though.


I got a couple of offers from NYC, the living costs are still much higher than seattle.


Depends on whether or not you are fine with either a studio or roommates. Even then it's hard to get an affordable place that is near the jobs.


With a non junior tech salary you can have a half hour commute and get your own apartment. It's not bad unless you want to live 15 mins from your job.

I've done more than fine here with $80k and $100k, but maybe I have a cheaper lifestyle than most.


"Pittsburgh has some important advantages over most would-be startup hubs." --Paul Graham, 2016[1]

[1] http://www.paulgraham.com/pgh.html


It's a self correcting cycle. Money pours in - salaries and living expenses go up - real estate goes up. Money flows out - everything shrinks.

What goes up must come down. Everything is cyclical. SF economy is no exception.


Uhh, ever hear about the depression, dot com bubble, great recession/housing market crash?

You're basically advocating "Let's do nothing, the market always corrects itself." Which is true to an extent, but in the extreme it also ruins lives, the country, and itself left unchecked during this process.

This is why a completely unregulated market is a horrible idea. Government needs to step in at certain times. This might not be as expansive as those (localized to the SF area), but it's pretty clear government intervention can be helpful when a market doesn't correct itself fast enough and the majority are screwed in favor of the few (or none).


Isn't government intervention the reason why real estate prices are so high there in the first place?


You’d need government intervention to keep prices low, too. What if there‘s no zoning, but also no support to build sewer systems and transit? What if the NIMBYs start practicing arson?

Libertarianism won’t get you anywhere with social problems.

(This is besides the basic issue where loans mean prices don’t matter, so they’re free to go up…)


>> Uhh, ever hear about the depression, dot com bubble, great recession/housing market crash?

All of these are cyclical repeating events. Look at the historical data. This is how humans function. Trying to control cycles is pointless and i would say impossible. You just have to be mindful of them and may be "pad" yourself when you reach the extremes.

Markets are pretty efficient at deciding what things are worth at the current point in time, trying to regulate that is again pointless. The issue we often have is collusion of interests (and government is full of that).

SF will resolve itself. Just let the market do its thing and this too shall pass..


>All of these are cyclical repeating events. Look at the historical data. This is how humans function.

Yeah, that's kinda my point. It's awful when left unregulated. And with the great depression/housing market crash, government stepped in to help people out and get the market going again once it was obvious the market had failed/was failing.


the history has shown so far that we cant control/regulate these large economic cycles.


Since when is the market unregulated?


Yeah I suppose unregulated is the wrong word. My overall point though is that this is something the local government can and should do something to fix.

Boston is currently also experiencing a housing shortage/crisis, and has a short and long term plan to help with it, which has already begun to start working.

Over the last 3 years new housing development has outpaced growth (which is also projected to stay strong)[1][2]. And rents are finally starting to dip. [3]

[1] - http://bostonrealestatetimes.com/boston-mayor-walsh-announce...

[2] - https://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&...

[3] - https://www.bostonglobe.com/opinion/editorials/2017/05/28/bo...

Saying "this is cyclical the market will correct" is probably true, but corrections can take a long time before becoming swift and detrimental. It's possible to fix it quicker, less drastically, and improve things over the short term and long term with well thought out government intervention.

The private market isn't flawless. Steady growth is better than boom and bust.


In a sense, I think you are right.

This is a comment from a recent thread: https://news.ycombinator.com/item?id=14763198

Is seems to me that the problem is the amount of money flowing into SF and once that dries up, housing prices will go with it.


That is not the case. Prices have steady risen since the 1970's.


Prices on pretty much everything increased since 70s. Its just with some assets/localities the prices deviated too far from the trend line..


Real prices on manufactured goods have tumbled.


People complaining about real estate prices miss the point, or didn't read the article. Non-SF Silicon Valley firms got more funding, ruling out cost of living as the reason.


Another explanation could be that real estate costs is driving founders and startups out of the city. If most of the founders don't live in SF, they're more likely to open offices in the valley. Heavy traffic to/from SF doesn't help with the situation.


Or the costs are driving potential founders out of founding. If you double your monthly costs, you double the amount you need to save in order to have enough runway to "two guys in a basement" your way into enough traction for funding. Plus you need more funding for getting enough roadway for employees and an actual business.

Maybe I'm far more mobile than others, but I'm really surprised that there isn't a wave of people trying to poach childless engineers into moving 1-4 hours out of SF to set up shop. Reno, in particular - it's 4 hours out, has actually reasonable real estate prices, and no state income tax. Maybe getting funding requires the VCs to make the trip to your office, and you're not able to just have your leadership make the trip out to SF?


If that was viable, people would move to Tracy or Stockton or Davis which are nearer to SF than Reno and cheaper. That's not how things work though.


But why isn't it viable? I don't understand.


VC's like their investments nearby and very few people would choose to live in those cities, in particular childless engineers.

It's the same reason Twitter, even though they threatened to move their office from SF to Brisbane several years ago, absolutely would never have followed through with it. Too many of their employees would have quit immediately, and we're talking about a town that's 20 minutes away, let alone 2 hours.


Too add to that, repeat founders often live in the area where they start their companies. Also, if you want to poach away a top talent in a niche area, chances are they are unlikely to move far from where they are currently leaving. Example, easier for Tesla to poach from Apple vs. GM to poach from Apple


Once you have a social circle is hard to move. Not many People are open to completely uprooting to an area where they have zero friends or family


Nevada is too different, the combination of non-enforceable non-competes and the nice weather can be duplicated elsewhere in CA easiest, and this is happening. If your state has big corporate HQs forget about getting non-enforceable non-competes.


No one is forcing you as a company to make employees sign a non-compete, enforceable or otherwise. I've generally lived in states where non-competes are enforceable and I've signed exactly one.


I think they're speaking from the perspective of founders who, until they start the company, do have day jobs somewhere. In California, there's no issue, but in other states with enforceable non-competes, that can be a pretty big hinderance to starting the company.


It's not about you or a company, once the market tolerates non-competes, employers will use them for any sort of a knowledge-based position. People will shift jobs less, wages will lower, followed by other economic effects of slightly lower wages.


Wouldn't CA companies/employees not get pushed to sign unenforceable non-competes (because they're in CA, so it doesn't help the employer any, so they don't push for it in contracts)? So if you're poaching from CA anyhow...


It's the employees' choice, take a lifetime of lower earnings or not, everything else being the same.


I find normally its the childless engineers who don't want to move out the city, because that's where the fun is at. I think that's why this isn't happening.


The article already addressed this. Real estate has no impact, since Palo Alto, which is equally expensive, has seen dramatic increase in funding. The trend is really random. Tomorrow Uber will raise $5bn and will all come up with a different explanation


I'm no local, but isn't it much easier to get to Palo Alto from places with lower rent than to SF?


Not really- you have to drive or live along a single train line (with no places with rent significantly lower than SF, really)


Or the hour+ commute. The opportunity cost of not only that much time 5 days a week, but the tiredness, delays, and other hassles that are involved, are just something you avoid if you have the leverage.


But that hypothesis doesn't let the author post a click-bait title/article!


History repeats itself. The coal industry extracted resources from the land in West Virginia until it was forced by resource depletion and regulation to scale back. The tech industry is just extracting wealth from society instead of the land and what's left is scarred, poisoned and will go on to cause problems downriver. The SF is starting to look less attractive and operations are slowly spinning up as needed at adjacent mining sites. Eventually there will be noting left to mine and the mining towns will be destitute and states downstream (Like Colorado and Oregon for example) will have polluted water to deal with.

Internalize the profits. Externalize everything else. It never changes.


Dude... you might have a good point in there somewhere. But that analogy is making me hate you.


Too many infantile products. Basically apps telling you what earlier generation knew through common sense.


I'm surprised no-one is calling "regression towards the mean" on this.


A few questions for HN:

1.) Do you think San Jose will ever become "a thing" for tech startups? Is there enough to do there? There is a WeWork and San Pedro Square in downtown San Jose. Or is a waterfront view what make San Francisco, Seattle and Portland what they are? Also, if you did want to live in San Jose there where are the up and coming places for HNers to live?

2.) Cupertino used to be cherry orchards and suburbs. Will Morgan Hill (strawberries) or Brentwood (cherries) ever become "a thing"?

3.) Is it bad if housing prices are high on the West and East Coasts? If housing was unconstrained in the Bay Area and at cost parity with the MidWest, wouldn't that remove any reason to live in the MidWest?


> If housing was unconstrained in the Bay Area and at cost parity with the MidWest, wouldn't that remove any reason to live in the MidWest?

That is hilarious. The Bay Area centrism to imply that there is no reason to live any where else besides cost is absolutely ludicrous.


There's some guys a few cubes over from me talking about how "Not for sale in California" is a marketable feature on engine powered equipment.


Does that mean that the product doesn't meet Californian regulations? How is that a selling point?


California emissions regulations being more stringent than elsewhere (i.e. in the Midwest) means that us flyover rednecks take pride in our big ol' machines that drink up dinosaur guts. Take for example all the stupid-big Ford and Ram pickups chugging along downtown streets here.

The implication being that, even if housing prices were equal, some might prefer to live in SF or Seattle as opposed to Pittsburgh or Columbus due to "culture fit" (hah, a buzzword applied to something novel).

At least, that's how I assume the parent intended their anecdote to be.


There is a comment in this thread recommending moving out of the Bay Area and directly to China, Russia, Brazil as good alternatives.


1) I believe so. Once Google goes into Diridon, enough young people would gather around the station, businesses would also gather, higher-density buildings will go up, start ups will start to gather as well.

2) Cupertino is close enough to Stanford and Moffett, which were the two centers of initial Silicon Valley. Morgan Hill and Brentwood are quite far. Still, its population and real estate markets will grow.

3) High price sometimes attracts people by itself.


Cupertino is so ridiculously boring that no one wants to live there though.


Boring is of course personal opinion ( the prominent Taco Bell behind the welcome to Cupertino sign on Stevens Creek ...) but the latter part of your statement is not supported by local housing/rental price/availability.


You must not like milk tea.


I grew up in SJ. I don't think it will ever be a 'thing' if you're young and want things to do in a vibrant city, even if it does have Pedro square, Santana Row, close access to Santa Cruz and SF, etc. That being said, if you're looking for a quiet place to live with your family then it's a great city. IBM Research has a couple campuses in between SJ and Morgan Hill - probably interesting places to work.


I would rather leave California than move to San Jose.


Oakland has a much better chance.


http://tomtunguz.com/cost-challenges-facing-the-valley/ New article uploaded and it seems we are not only a startup benefit from 'Labor Arbitrage' by having our development team back in South Korea


For people looking for an escape from San Francisco: come join us in Seattle! https://www.codementor.io/blog/best-cities-software-engineer... it's great here. And we have been building several times the housing to keep up with demand: http://www.spur.org/news/2017-06-15/keep-building-oakland.


Seattle housing market is still crazy. Not a lot for sale. Plus it rains for 6 months and miserable. If you like that then it's great. I love it in Seattle. You don't get as many startups here though. It's just the big companies doing business as usual.


Not as many as San Francisco, but there's a ton of startups here and the city has a solid startup culture: https://www.geekwire.com/startup-list/. Some notible ones include Zillow, Redfin, Rover, and OfferUp. I agree houses are getting to be too expensive for most, but for those in the rental market things are increasing, but the Outlook looks good as soon many units are getting built.


9 months more like it! I moved back to Florida for that sweet, sweet vitamin D.


IMHO, you only get lots of startups in the city at the rising part of the cycle. When everyone's so desperate for talent they'll do anything to woo young engineers.

There are plenty of very good experienced engineers that have no tolerance for commuting up to SF every day in this traffic. And also, most of the VC firms are in the suburbs too :)


Why doesn't a developer build a mile high building there? Maybe it could even be built in the ocean like this:

http://www.businessinsider.com/tokyo-mile-high-skyscraper-wo...


For what purpose? If you convert these brownstone houses in San Fransisco that hosts only 3-4 families to small condominiums that have 10-12 levels, you almost solved the problem.*

* The condominiums should have 2 underground floor of parking and preferably there should be 1 or 2 metro lines to handle the new population.


The smart bet IMO is out of the US altogether. Eastern Europe (and Moscow/St Petersburg), China, Brazil, Argentina.


There are massive swaths of the US with much cheaper living than SF and better infrastructure, markets, and basic rights than Russia, China, or Brazil.


I would strongly recommend Canada, especially the Kitchener-Waterloo area. The rents are very reasonable (~$700 USD for a one bedroom apartment, in the safest neighbourhood in Waterloo) and there are tonnes of resources and help available there for early stage startups (Velocity - a free incubator that provides mentorship & office space, Communitech, etc) Not having to worry about things like health insurance is very nice. Also, there are lots of grants offered by the government and the universities there that make starting companies much easier. Last but not least, the access to lots of talented engineers graduating from UW who have experience working for companies like Apple, Google, Tesla, etc makes hiring good engineer so much easier.

The only shortcoming it has is a lack of access to capital which is quickly changing.


Yeah, we have an office in Waterloo and the people are very solid. I should have mentioned them!


however the salaries are sooo much lower.


There are dangerous neighborhoods in waterloo?

Canada is pretty much safe everywhere. Maybe vancouver east side excepted.


And very few people. So, this works only if you develop apps or a cloud service.


Overland Park, KS is rapidly becoming a tech hub, and it has both a six-figure population (and over 2M in the metro area) and a low cost of living.

If you're not familiar with the name, it's a suburb of Kansas City.


Even then you need to be able to hire engineers. It's no accident that the companies located in that vast swathe hire a lot of remote employees.


Alternately, you can do what TI did and grow your own.

When Texas Instruments decided to establish their headquarters in Richardson, TX, they faced a shortage of talent as Richardson hadn't really been built out yet. So the founders of TI (Cecil H. Green, Eugene McDermott, and J. Erik Jonsson) started their own university with an explicit focus on STEM subjects. Eventually, they gave control of the university to the state, and it became the University of Texas at Dallas. It's now the most prominent STEM university in the southwest, and TI is still closely affiliated with it (disclaimer: it's also my alma mater).


>So the founders of TI (Cecil H. Green, Eugene McDermott, and J. Erik Jonsson) started their own university with an explicit focus on STEM subjects.

Interesting. I had two German friends in high school. They used to carry TI calculators, and I think I remember them telling me that TI was founded by Germans. Is that right? (I can google the info, but thought of asking since you have some background there.) The founder names you mentioned do not seem German (based on what I know of that), except for Jonsson, which seems more Scandinavian.


Nope.

Cecil H. Green was an Englishman who spent some time in Canada before moving to the US. Eugene McDermott and J. Erik Jonsson were both born in the US; I can't find much on McDermott's ethnic background (but I'd guess Scottish or Irish), but Jonsson's parents were Swedish immigrants.

By the way, due to their philanthropic and political work (Jonsson was the Mayor of Dallas for a while, and he helped greenlight DFW Airport), their names are all over Dallas. There's a major arterial in the suburbs (McDermott Road), the main branch of the Dallas Public Library (J. Erik Jonsson Central Library), a bridge named after Eugene McDermott's wife (the Margaret McDermott Bridge; she was a philanthropist in her own right) etc. And of course half the buildings at UTD were named after the founders.

One of the early donors to UTD, though, was of German descent: Karl Hoblitzelle. He was born in the US, but he was ethnically German, and both his parents had German surnames (I don't know if his parents were born here or if they were immigrants). Like the other three, his name is all over the place here: I first heard of him because of Hoblitzelle Hall at UTD, and there's also a Hoblitzelle Park in Plano, plus plaques dedicated to him all over Downtown Dallas, and probably more I can't remember. He founded the Majestic Theatre, which is the only part of Dallas's historic Theatre Row that hasn't been bulldozed in favor of office buildings (and it's still a functional theatre!).


Thanks for the info. US history and culture is interesting, more so because of it being a melting pot. Endless interesting stuff to read about.


That would be awesome! There's so much of middle America that would probably retrain in a red hot second if they knew there was a job at the end of the path.


All of those countries you listed have horrible internet infrastructure and in some cases massive amounts of censorship (particularly China). I have been working in China for over a decade - wouldn't recommend it for software engineers at all.


Perhaps ICO investments are not yet large enough to matter, but one would wonder if that is drawing away some of the money that would have otherwise been invested in the more traditional way measured by the article.


Different sectors are hot now and different sectors are concentrated in different areas. It’s not consumer social that is hot. Nor is it enterprise. It appears to be silicon. That is South Bay.


I don't see how more vetted, responsible investing hurts anybody.


I wonder if Tunguz looked at B2B vs B2C trends. It seems that there's lots of B2C apps in SF that are crashing, yet many of the startups in outside SF in the valley are B2B.


Yes it's in the article.


This is excellent opportunity for anyone who wants investment from west coast VCs but doesn't want to deal with San Francisco, Oakland or the bay area.

San Francisco frequently has human feces on the sidewalk in many areas right near the city center, high housing prices and a combination of startup bros and angry hard left outrage culture folk. The bay area is a cultureless void and Oakland is still dangerous.

Better Portland, LA or (from what I hear) Boulder.


> The bay area is a cultureless void

Would you please not post slurs like this here? It's pure flamebait and leads to worse.


You're really proving him wrong by calling that a "slur"...

Seems very odd to me that a mod would find it worth his time to tsk tsk at someone making a commonly held observation about the Bay Area but is seemingly fine with the elitist opinions that are all over HN about other parts of the country


Actually it's really simple. You can't post national or ethnic or regional slurs like that and we tell people so whenever we see them doing it. The issue isn't defending the Bay Area, it's defending HN against the usual internet poisons.

> seemingly fine with

That's a non sequitur. A comment going unchided doesn't mean mods are ok with it—it's far more likely that we didn't see it. Relative to what gets posted here, the set of comments we see has measure zero.


Calling the bay area a cultureless void - which it is - isn't a 'slur' and comparing this statement to an ethnic slur is absurd and warrants an apology.

If you weren't dang it would seem like you're being deliberately argumentative. Instead I'll suggest you're being overzealous in this case.


Would you please stop? What you posted was obviously a swipe. That sort of contentless putdown leads to flamewars that destroy this community. There was a nasty spat about a different region last night. It's all generic, and you just can't post like that here.


"San Francisco frequently has human feces on the sidewalk"

This did it for me. I stepped on a big mound of human feces when walking along Market Street on my way to a job interview. The dichotomy of SF was perfectly portrayed in that 15 minute walk: expensive cars driving on Market street (most likely driven by a tech person) while homeless people were openly shooting up and defecating on the street.


Other cities just arrest / export those people, in SF they do not.


Portland, LA, and Boulder all have the problems you listed...

Also the idea that Boulder has some kind of culture that the Bay Area doesn't is laughable. Disregarding that only 100,000 people live there, I've never seen a place more homogenously populated by "rich boring white people" in my entire life. It's like an entire city of the stuff that pops up when neighborhoods gentrify.


Did it ever occur to you that a nice, "boring," safe culture is what many people want?


Yes, it did? Boulder seems like a nice enough place to live. I was pointing out how preposterous it is to claim that the Bay Area is a "cultureless void" because of tech bros and left-wing politics and then claim that somewhere that's the absolute epitome of those things is better.


Portland and LA are way cleaner, even at their dirtiest.


A cultureless void. That is honestly one of the most ignorant things I've ever heard. The bay area has culture coming out of its ears. Try getting outside of the tech/startup/VC bubble. For a very basic and accessible start go walk around First Friday in Oakland and talk to some people that you normally wouldn't.


Oakland is its own city, I wouldn't call it the Bay Area, I'd just call it Oakland. It certainly has more culture than places like Mountain View but it has its own issues too.


IMO Boulder itself isn't really an awesome place to live, but pretty much anywhere else along the Front Range (Ft Collins to Castle Rock) is lovely. Obviously there's a lot of VC in Boulder - a commute from the southern regions would be prohibitive. I just gave up a commute from downtown Denver to Boulder because it was pretty bad.


SF culture has descended into purity spirals [1]. The last time I was there I was shocked by the amount of signaling that was happening.

[1] - http://www.redgulls.com/2016/08/17/the-purity-spiral/


This is one of the reasons I'm considering a move to SoCal, but I will never, ever consider moving to NorCal.

One thing I've heard is that SoCal is full of superficial, shallow, materialistic people, and that people in NorCal are expected to have a cause. It doesn't have to be a left-wing cause, either; look at Curtis Yarvin, for example.

I'm somewhat SJW myself, but really I'm a consumerist at heart. I just want to live in a cookie-cutter suburb, eat tasty food, watch TV shows I enjoy, hack on code as a hobby, etc. I would be very uncomfortable in NorCal being surrounded by militant vegans and Bernie Bros on the left and dark enlightenment people and physical-removal ancaps on the right. On the other hand, SoCal sounds pretty close to paradise to me (it's actually between SoCal and Vegas for me... I can't decide which one I'd rather move to).


Your perspective on residents of SoCal is a huge generalization of literally millions of people. Of course there is some of that and it varies by area, but you can definitely find large cities in SoCal where that is definitely not the norm.

Equally, NorCal is not full of militant vegans or Bernie Bros. I recommend you spend some time in these areas before forming such a negative perspective on their societies.


> such a negative perspective on their societies.

You misunderstand me. Yes, my perspective on NorCal is negative, but my opinion of SoCal is very much positive. I am specifically looking to move to a place that's superficial and materialistic. I want superficial. It's exactly what I'm looking for. It's a compliment, trust me.


This comment about NorCal is hilariously wrong. Literally a AM talk show talking point. NorCal (rather Bay Area) is composed of endless suburbs (such as San Mateo, Belmont, palo Alto, Fremont, Dublin) where 99% of the folks are bothered about more mundane stuff like sending kids to school, or shuttle them to extracurricular activities, or getting Boba team. The only place where you would be remotely surrounded by military vegans is probably Berkeley. Even that is unlikely. In Bay Area you will most likely surrounded by a lot of immigrants.


I say this is a good thing. Bubble benefits no one.




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