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Thousands of New Millionaires Are About to Eat San Francisco Alive (nytimes.com)
106 points by Slartie 15 days ago | hide | past | web | favorite | 106 comments



I'm honestly really skeptical that much will change. You would think prices would be edging up in anticipation of a bidding war for housing but nothing indicates that has been the case.

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

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

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


Makes perfect sense.

Option 1: buy $1.5M SF condo, continue with the startup rat race even though you effectively won the stock option lottery.

Option 2: move back to the Midwest where many grew up, buy $350k 4bd/4bth home, retire before you hit 40, and raise your kids near family.


Option 2 can involve working remotely, working for a Midwest startup, etc. if kids or retirement aren't appealing.


This. When people talk about leaving the area there is an assumption that not only will you be able to work for your current company remotely but you’ll also keobsbly keep your salary. Neither of these are necessarily true, especially for your _next_ job.


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

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

A sensationalist headline if ever there was one {facepalm}


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

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


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


Yes, and the people who have really made a lot of money (the founders, execs, earliest employees) have likely already had several opportunities to cash out over the years, so the market is already priced accordingly.


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

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

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


a normal curve would be nice.

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

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

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


Do you see the wealth inequality between you and the people in at Level 1 poverty as a moral issue and how do we as a society solve that?

I pose this question because it's often overlooked how we might have wealth inequality in the USA but it's beginning to reflect that of the wealth inequality between the USA and other nations.

https://www.gatesnotes.com/Books/Factfulness

I have not read this book, but Gate's Notes on it are very interesting to me. Of course this is coming from one of the wealthiest men on the planet, but it's interesting in how we break this topic down.

This argument doesn't defer the fact that we have a pronounced problem in the USA, I am strictly pointing out that if we take this as an issue of morality we should probably apply our morality globally not locally. Politics isn't moral in it's nature. It's about a limited scope of morality (us).

We do need much better migration from rich to poor in the USA but I think this article points to a ton of people changing from one class group to another, which is the "American Dream."

The issue I think a lot of people can agree on that we need to break down is wealth hoarding, and generational wealth. That's a problem we need to address in the USA. If I get Bill Gates wealthy, that shouldn't mean my great grand kids are in the upper class. It might mean they have more opportunity to maintain their wealth, but not a guarantee of wealth.

I think we should all focus on issues that attack entrenched wealth like automation, incoherence, etc. So we can establish a playing field that encourages people to go the extra mile for the extra payoff at the end.

Edit: a curve is great but with wealth it's all about migration from one level to another.


You provide a good depiction of the current state but that still does not explain why some person that has as much as 100'000 others do is inherently a bad thing. Tilting the system in their favor may be undesirable for the society at large but now 1. that is something natural to do and is actually done by each of us (and the very attempt of incriminating the rich for their status can be counted as example) and 2. it would make more sense to narrow the targeting to the individuals that actually do that kind of tilting/corruption of the system. Blaming the rich for being rich will have bad consequence for the driving force that moves the society forward.


> You provide a good depiction of the current state but that still does not explain why some person that has as much as 100'000 others do is inherently a bad thing.

Is it really that hard to see that people having more wealth than they can spend in a lifetime while others can't afford healthcare is an issue?


"Is it really that hard to see that people having more wealth than they can spend in a lifetime while others can't afford healthcare is an issue?"

Yes, because it lies on assumptions that I'm not sure I'd understand or agree on. Let me try. "More wealth than they can spend in a lifetime" could mean that financial independence or life of opulence is the assumed reason for that wealth. If that is your assumption, then I'd say that for taking on some enterprise that (at least for me) would serve insufficiently as a driving force long term. What would serve adequately would be gaining enough leverage to be able to eventually do some meaningful change in the world (for the better according to my values), i.e. to make as much as I can out of my existence. That may mean gaining more than I may require personally in my life and would be hard to understand for people with less potential (which consequently can afford to aspire only to some lesser goals). Do we, in the name of equality, have to limit the fruition of our potential? Do we have to limit the amount of wealth we can create as well? (The last two questions are society-wise.)

EDIT: Regarding the sustainability and the potential social disturbance resulting from inequality, there was a sibling comment (that I've answered to) here: https://news.ycombinator.com/item?id=19330811


You do realize that there will be 100,000 poor people that are pissed right? And they will start rolling out the guillotines. Last I remember guns are still legal in this country and poor people have a lot of them.


One of the reasons we have a society at all is to prevent us hunting each other for whatever reason, all for the common good. When that stops working, the society falls apart. Good luck going through a communist revolution better than others though.


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

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

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

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

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

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

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

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

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


>The mega rich don't use more - proportional to their wealth, they use much less, but smartly designed. And those designs eventually help everyone else.

There's a saying -- "being poor is expensive".


If you look at it from a global perspective, you can find the 100,000x. Obviously people are split between it being wrong to spend 100,000x more, and people who think it's wrong to be able to only spend 1/100,000th.


It is definitely possible: https://duckduckgo.com/?q=megayacht


My comment explicitly mentioned yachts if you read it.


A few random points:

1) Guillotines require extreme discomfort. The French Revolution, commonly cited as the example here, was not about income inequality. It was caused by the fact that the French were practically, in some cases literally, starving while the government flailed about ineffectively, accrued tremendous debt seemingly to no end largely driven by fruitless wars, and ultimately turned to taxation to try to sustain a failing state. It was not an otherwise comfortable people suddenly deciding to start lopping off people's heads because wealth inequality rose beyond some acceptable level. The current situation in France emphasizes this. They have an arguably horrible and out of touch government with presidential approval ratings headed towards the teens. And there are active protests on the streets each weekend regularly featuring violence from the police. If France, as a whole, wanted to - they could depose their mostly despised government. But, for the most part, they're comfortable enough to remain apathetic.

2) I don't think even the wealthiest of the wealthy are personally consuming anything like you're referencing. 100,000 times more would be e.g. $5 billion a year compared to somebody earning $50k. I doubt even the richest of the rich would ever get remotely close to that level of consumption spending in their entire life, let alone per year. Stereotypical ultra high end luxury purchases such as artwork are also frequently appreciating assets. That means they're effectively free as they increase a person's wealth, rather than reduce it. In the worst case their 'real' cost is a fraction of their paper cost. In any case those sort of things are also just shifting wealth from one ultra rich family to another. Personally, I can live without an original Monet in my 'study'.

3) Finally, wealth isn't "money." Jeff Bezos is worth $140 billion or some other insane number, but almost none of that is in cash. It's in various assets and especially Amazon stock. The thing is, if he tried to liquidate even a substantial portion of that, the price of the stock would go plummeting. It creates this interesting sort of paradox where it may be true that somebody is 'worth' $140 billion, yet in reality they have nowhere near $140 billion in 'real' money or assets. On a macro-economic scale this is an extremely important point as asset prices are extremely inflated relative to what they could be liquidated at, which in turn provides extremely inflated measurements of wealth.

----

All this said I'd agree that huge wealth inequality is not a great thing. However, my one nuance there is that I think every method we have for combating such inequality tends to be even less desirable. So like many social or political issues, it comes down to picking bad or worse.


Well, there are two things happening, and if you want sources, I can hunt them down later.

1) Wealth inequality is bad for social stability. People in general care less about how much they have as compared to how much they have compared to everyone else. When you are dirt poor but so is your neighbor, you care less. The Internet has magnified this effect as now it's very easy to see when you are dirt poor that lots and lots of other people are not. And they are not great people a lot of the time. So, populations are generally happier when things are more equal.

2) Money can generally translate to power in our world and so it creates absurdly uneven power distributions. The US for instance suffers from politicians generally listening to money over the people that they serve, and those people generally are listening to whatever the people with money are putting in front of them, etc etc. Laws are meaningless if you can afford the fine. This is also bad for society.

3) Generally, accumulating tremendous wealth is done on the backs of people and not on bringing them up as well. There are exceptions of course, but usually tremendous wealth creation at the individual level is not done through a series of actions with an equal social benefit.

As to your other question, what should it look like? This of course is up to debate, but historically, when it starts to look as it does, people begin to get angry and violent. Which is bad for a stable society.


3) Generally, accumulating tremendous wealth is done on the backs of people and not on bringing them up as well. There are exceptions of course, but usually tremendous wealth creation at the individual level is not done through a series of actions with an equal social benefit.

Yes, wealth uplift of the general public must be a rare exception. This is why everyone are still peasants who have dirt floors, no electricity, no plumbing, and no Internet.

You are technically correct that there isn't exactly equal social benefit. However, many poor people in industrialized nations in 2019 are better off in many ways than some rich people from centuries ago. Go back just a little in time, and even rich people had high infant mortality and no access to antibiotics.


1) "Wealth inequality is bad for social stability."

That may be true only on a raw/natural level. People also have a lot of other traits that may naturally threaten the social stability. The solution was education, and enforcing social conventions and mechanisms that lead to improved social stability and society's operation capacity. Just as unacceptable is now discriminating against sex or race, can become prohibited also the discrimination (as merely having a different attitude) towards being rich or poor.

2) "Money can generally translate to power in our world and so it creates absurdly uneven power distributions."

"Can" being he operative word here. We're talking about a possibility not a certainty. Each of us can be a potential criminal but we're not treating each others as such. We're innocent until proven otherwise. Money translating to power is just a phenomenon. Inherently it is neither good nor bad, it just is. Just as it may have bad results it can also have good ones.

3) "Generally, accumulating tremendous wealth is done on the backs of people and not on bringing them up as well."

This is the basic assumption of Communist Doctrine and it was proven wrong. Wealth accumulation does not necessarily imply exploitation of others.


It may not be implied in all cases, but there are plenty of examples out there where great wealth is a direct result of exploiting labor: Nike, Apple (most hardware in fact), Amazon, Uber, etc…


No one is saying that it would be better if everyone was dirt poor. The main criticism of wealth inequality (as I understand it being a developer and not an economist) is that with the systems currently in place in America (and other nations) rich people are given outsized ability to become wealthier without transferring any of the wealth to other people.

Wealth inequality is bad because it leads to worse wealth inequality. Essentially everyone above a certain line gets richer, and everyone below a certain line gets poorer. This is bad for everyone except the rich. Most of us are on the "poor" side of this line. If something benefits a few at the expense of the many, most moral frameworks would call it bad.

Again. Not an economist. Not an ethicist. Just some dude.

Edit: Typo


It's hard to reason about wealth inequality because it is so massively, massively skewed right as a distribution. I don't think humans are very good at reasoning about distributions that are not normally distributed.

For example, the world's eight richest people have the same wealth as the poorest 50%.

It feels to me like that's a little unfair.


"the world's eight richest people have the same wealth as the poorest 50%"

What exactly is objectively bad about that? (I don't condone nor condemn that level of inequality in any way, just curious.)


It takes a lot more to run a major city than the Tech elite. Think of all the teachers, firemen, police, sanitation and utility workers, cooks, childcare workers, grocery stores employees, and all the distributors who work behind the scenes to make it happen.

Tech millionaires will push these lower income workers to the brink. I mentioned only a few types but they extremely vital to any major city.


There's a very strong narrative of the tech elite sitting at the top of an oppressive hierarchy in San Francisco, but there should be some critical thought about the mechanism of this oppression.

Most of these tech workers are exchanging their millions for very typical dwellings. Much of the wealth created by technological development is passing through the tech workers to the land owners. It is the land owners and their political allies who insist that we must keep the housing scarce so that the land owners can continue to extract wealth from the labor of upper middle class.

Tech-derived prosperity is not causing deprivation.


If SF allows high density condos to start being built, do you think developers will build “regular” housing or high end condos? Assuming the developers have a choice.

What happens to the neighborhood if million dollar housing is built? I know what happens and I can see it around me. I’m priced out of my current area and I’m not in SF or a high cost city. I could afford it but I can buy 3x the house and property 20-30 mins away with better schools. Same commute. The weathly residents in my current area can afford private schools so there’s no incentive to improve the public schools.


Rich people are usually spending their time trying to get richer or maintain their wealth, which is usually at the expense of people poorer than them. So yes, it's usually a bad thing.


Can you expound on what you mean by "usually at the expense of people poorer than them"? I understand this sentiment when it comes to things like predatory lending, but would like to learn more about how it applies to non-exploitative areas.

A couple possible examples to help with the discussion: 1. A new millionaire buys a house from someone in SF and lives there. 2. A new millionaire buys a rental property from someone in SF, renovates it, and raises the rent to make back their capital outlay. 3. A new millionaire buys a broken down classic car, invests capital into repairing it, and sells it to a collector for a profit.


> spending their time trying to get richer or maintain their wealth

and poor people don't ?


No, poor people are spending their time making money to ensure that their basic needs are met.


The difference is the poor does so in a struggle to survive. We could solve a whole host of issues in this country (crime, healthcare, housing, etc) if rich people decided to put their efforts towards the public good instead of being greedy.


The poor being in a struggle to survive may have a wealth of source reasons. Mismanagement (not necessarily limited to the financial aspect of their lives) is the first thing that comes to mind.


Some like to pretend that the economy is a zero-sum game, that in order for some people to get rich, they need to climb on the backs of the poor. In some cases this is true, but in most, wealth isn't transferred, it is created. This is certainly one of those examples.


You did notice top of the list is Uber, right?


>Some like to pretend that the economy is a zero-sum game, that in order for some people to get rich, they need to climb on the backs of the poor.

This sounds familiar... It's SF's housing market!


More rich people in and of itself is not a bad thing, and as you say, having a baseline level of wealth in a nation leads to huge quality of life improvements.

However, the increasing divergence between the rich and poor in wealthy nations causes all sorts of indirect harms - https://www.ted.com/talks/richard_wilkinson?language=en


Its bad when 10% if the population had the same wealth as the 90% and all of them live in the same 30km radius without enough homes to go around.


Look at all the HNers already complaining they can't afford to live in SF on $150-$200k/yr. Once the [mb]illionaires come in and push them out of places they can afford, it's going to be really hard going on the housekeeping staff and baristas and waitresses in the area.

On the other hand, though, they might finally have enough sway with the local government that they will actually push the homeless problem into someone else's jurisdiction /s


People are always talking about wealth inequality, but why, exactly is it bad?

Here's what the psychological research says about wealth inequality. There will be a certain number of young men who will make the calculation, "There's no way I can compete for mates in the current social order. So there's no reason why I should subscribe to it." Then they become law breakers or revolutionaries.

This isn't an absolute comparison. It's a relative one. So even though the poor might all have a home, refrigerators, and TV sets, the relative status calculation still applies. Also, the best guess, is that this has been part of our evolutionary heritage for awhile now, and so is wired into Homo sapiens at an unconscious level.

My conclusion is that any society needs some form of wealth redistribution, even if it's in the form of some sort of noble "everyman" and "everywoman" pastime that's provided by markets for a cheap price.

https://www.youtube.com/watch?v=M3XYHPAwBzE


Your points might be valid a polygamist society, but otherwise, it will always be pretty simple for males to get reproductive access.

I'm confused why you're treating large income inequality as prerequisite to general societal wealthiness.

Rich people are, after all, by definition rich at the cost of the poorer people. Tanzania and Africa in general is a great example, actually. Colonial powers became and are still getting a lot more rich from it, very much at the cost of the future and health of the local population. The Wealth and excess of the west, even more so of the rich people in the west, would not be possible without child slaves mining for precious metals in Africa and workers driven to suicide in China.


I’m not an expert at all, but I think I know how to answer your question in the somewhat mathy terms you’ve framed your it in. I think the main argument is to get rid of a bi- (or multi-) modal distribution and move to a unimodal normal distribution that’s taller and narrower. That way you wouldn’t have a few people with tons of money while most people have no money. You’d instead of a lot of people who mostly have comparable spending power.


That's assuming the area under the curve remains constant, when it doesn't. Redistribution will make the total wealth shrink.


What sort of graph were you picturing? I was imagining wealth x population, in which case “area under the curve” would be “total population”, and wouldn’t change under a redistribution operation. I don’t know whether your claim about total wealth is true or not, but it seems like it relates to a slightly different idea than I was expressing.


The problem isn't wealth; it's segregation of the wealthy from the rest. There's a common social trend toward lowering the variance within groups and (as a natural consequence) increasing the variance between groups, and a host of studies assert that this is generally a bad thing by causing long-term instability in society. It certainly causes deep divides that are very easy for demagogues and authoritarians to exploit.


Then maybe let's try to take an active role against demagogues (and any other possible factors who's effect is taken for granted as damaging) and prevent in this way social destabilization, instead of this scorched-earth tactic in hope we'd leave them without doctrine fuel?


A sudden influx of liquidity! What could possibly go wrong?

(This stuff does pretty much always end up balancing out over time, though...)


Day to day life is not bad here in USA. Its just human nature to compare with others. And all these newspapers feed on it.


I would think life is pretty good for Tanzania's richest. Just as it is for America's richest.

But my real income growth trajectory has looked like a flat line for decades now, while the cost of housing and education (the biggest wealth-builders in the West) have continued to increase.

After 2008, banks borrowed from the Fed at near-zero rates for years, while I get to borrow at "market rates". Corporate profits are higher than ever thanks to the Trump tax cuts. But when the impact on the national debt is felt, it will be I who'll be told to tighten my belts.


"The greatest trick the devil ever pulled was convincing the world he didn't exist." --verbal kint, the usual suspects (paraphrasing baudelaire, apparently)

wealth worship (underlying certain strains of capitalism, but not all) relies on an economic misdirection that disassociates people's labor from money (and therefore wealth) and instead associates money/wealth with things. this way, we don't feel nearly as bad when a person accumulates wealth, because it's just things they're accumulating. but really, they're accumulating (the value created by people through their) labor.

for example, you could say that gold is intrinsically valuable, but that value derives from our desire to put it to use (via human labor) and its relative scarcity. if a person never unlocks that value with their labor by digging the gold up, then it effectively has no value.

so we should remember that money represents someone's labor (in many cases, it just represents our own labor). accumulating money is accumulating people's labor. (with enough force behind the this, and it becomes slavery.)

that isn't to argue entirely against wealth. some people (but not as many as the wealth disparity might indicate) are truly capable of being more productive with our labor than we ourselves can be. it's reasonable to let them accumulate some of that additional production unlocked by their labor investing in us. it's why we look to, and follow, leaders. (tangentially, this is why legacy wealth through inheritance is generally a net negative because it's almost never as productive as it initially was.)

but underlying a stable social structure is a delicate balance between our own freedom to apply our labor to create value and giving up some freedom by lending our labor to others. wealth disparity increasingly takes away that choice. backing people into a corner is dangerous indeed.


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


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

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


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


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


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


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


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

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


What an optimistic outlook.


The time for optimism has passed IMHO due to unresolvable gridlock and paralysis.

Residents don't want affordable housing (NIMBY), politicians can't use eminent domain or go against the NIMBY desires without getting voted out of office, businesses create the demand for local housing through refusing to support remote work, and the lack of government doing anything leaves few options, but to watch things burn from afar. Residents who flee have the chance of a better life elsewhere, albeit not in their first choice.


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


Would an earthquake help?


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


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


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

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

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


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


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

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

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

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

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


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

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


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

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


My family moved from Berkeley to Auburn Lakes, right outside The Woodlands last month. It is different, but we see a lot of great things so far. My email is in my profile if you'd like to meet up sometime!


I think your depiction of Houston is accurate but it also applies to SF, Boston and Chicago (especially those cities!). Each has a very specific culture that is great if you fit with and horrible if you don't. Ever try to get good Mexican or Indian food in Boston or Chicago?

SF is a bit different as it does have many options that aren't available in second tier cities. That being said, the QoL is the lowest of all in many ways due to cost of living, commute... It also has a very specific political culture that many don't find appealing.


smoke these meats!


California is a nice place but pretty overrated, and I'm saying this as someone who has lived there most of this life but has been to/lived in other states and countries. The cost of living and the taxes here are atrocious in comparison to what we get in return, which is subpar schools and lousy public transit. Let's not even get started on the homeless problem.

The more we decentralize tech out of California, the better. Having pockets of tech in different cities would be preferable so long as we have more opportunities to use our earned dollars effectively. You can make six figures in California and still end up living like a rat because of how expensive everything is.

Having recently landed a fully-remote job, I want this to be a year of "reconnaissance" where I'm going to take small trips around the country to check out places where I might want to live next, and where I might actually be able to enjoy some of what I earn. I'll have to add Houston to the roadmap.


The Woodlands is a great place in the Houston area. It's north of the city and a fairly varied place as far as Texas goes. There are tons of companies, tech and otherwise here. Housing can be expensive by Texas standards, but would not cause a Californian to flinch. I know several California families who sold their homes there and bought their houses outright here in Texas, which has done wonders for their incomes.

IT pay in Texas is subpar. I used to live in Northern Virgina and my base pay there was over 100k. Good luck with that in Texas--anywhere. The cost of living here just doesn't support those wages. The average IT salary here is 55-75k. More can be had, but those jobs are just not prevalent here like on either coast. I had a potential job opportunity in NYC, but my wife looked at me like I had grown horns. The money would have been great, but like California, the COL is outrageous. But...the public transport is great. It's walkable. Tons of culture and food, better weather. I like snow. I like rain.


But can you hop jobs every two years between Google, Facebook, Uber, Airbnb, Pinterest ? And grow your savings exponentially ? There are other social reasons that I personally don't want to live in Texas, but that's a separate discussion


There are also reasons why people would rather not work for Big Tech / unicorns. Money isn't everything to everyone, and hopping between these companies every few years loses its appeal for those who actually want to settle down and have families. You can work outside of Silicon Valley and make a salary that puts you in the top 10% of earners. If being smack dab in the middle of "the biz" works out for you, then that's great, but it also can be a carrot on the end of a stick for those who aren't cut out for that lifestyle in the first place.


I agree money isn't everything. But having a lot of it makes life a little easier. Living here is also an opportunity to live in the front lines and see early adoption. Also, the limitless ability to take on challenging projects. I actually have a family with a kid. I am thankful that I can work on great stuff and raise a family


Living in Texas just isn't the same as living in CA. Some people prefer it, but it's cheaper for a reason. On the whole, fewer people prefer it.


I agree with you. I'm here because this is where my wife is from. She's a Houston native and wants to be near her parents. Mine are dead and she and our children are my family, so it works for me.

Socially, Texas is a backwater. The culture here is fairly homogeneous. The cities are a little better, but not by much. Austin is touted as a more progressive city, but really it's not. I've attended a number of tech conferences there, done work in the area, and it's largely the same as Houston. Keep Austin Weird is their mantra, but what it really amounts to is we will not arrest the homeless, illegals, and occasional dope smokers. Every other aspect is the same. Austin lives and dies because of UT, 6th Street, and the live music scene. That's it.

Were I to suddenly come into money, I could see myself buying a plot of land and building a house in Vermont near a lake.


Absolutely. Good luck with the lake plan, sounds like a good idea :)


Just a nit pick. It doesn't necessarily mean fewer people want to live in Texas. SF and the Bay Area in general have a hard constraint on city size, limiting the available inventory (and pushing up prices). In Texas cities can spread indefinitely, thus keeping costs down.

It also could be that fewer people with lots of money want to live in SF and bid against each other.


That's fair. It also takes a certain amount of wealth to get to choose where you live in the first place. But I think my point is still "mostly" true :)


People seem to focus a lot on the small things.

Can I make $300k/year a few years out of college in Texas? If I want to switch companies, can I easily find another similar position near by? Can I golf and ski and hike in the same weekend (really just making an argument for the weather here)?

Those are the questions that matter to me the most. I'm looking to put as much money into my savings as I can per year.

1) Cost of food/other living expenses is a very small percentage.

2) $1500 rent (sharing with gf) = $18k a year, also a small percentage if I ended up paying, what, half in Texas? a third?

3) Sure, I can't buy property here, but I'm fine with that for now.

4) My commute is 20 minutes right now.

* This is all with tech salaries. Obviously with lower salaries, smaller things become larger percentages.


As a native Houstonian (out in Katy) I do agree. I'm interested to see the metropolitan area grow further and to see what more IT work comes out of it all.


I don't get out to your area often unless I'm heading towards SA and the Hill Country. What's the tech scene like out there? Any purely IT companies or is it IT for services, schools, etc?


While I'd consider the energy corridor as the closest source of high-tech to Katy (with a handful of small to large oil/gas/energy operations) I see everything else still more into Houston. I work up and down the Sam Houston toll road, so it's a casual 30-45min commute to work. There are a handful of local industry parks out here with small/medium-sized businesses that will in-house their IT or contract out the work. Amazon built their distribution center just 15min out, but I don't think that houses any IT work, yet.

Being in Katy for 25+ years and seeing it blow up in growth, I'm interested to see how northwest Houston grows (new subdivisions, industry parks, infrastructure, etc.)


Thanks for the reply. Interesting. Sadly, here in The Woodlands area, last year the O&G industries laid off tons of IT people. Loads of people suddenly found themselves with no jobs or working at Home Depot to make ends meet. My own neighborhood had a scary amount of For Sale signs up, so I asked around and learned it was because of the downturn. One of the guys sold forklifts for a living to big companies and he was thinking of getting out of O&G sales altogether. Houston is an interesting place to be sure.


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


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


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


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


If you owned a house in SF free and clear and capped property taxes would you sell?

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


Consider that this bullshit is tax deductible too

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


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

Does that figure sound right to you all?


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


sounds right for a real estate agent hoping to drive market action.


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


[flagged]


Please don't call names in HN comments, regardless of how wrong someone is or you feel they are.

https://news.ycombinator.com/newsguidelines.html


Sorry. I've edited my original post.




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