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Software was eating the world – now landlords are eating everything (medium.com)
338 points by Reedx 22 days ago | hide | past | web | favorite | 289 comments



This is a very good point that I wish would get more attention: "Politics is an organizational problem, not a technological one.", "If we want to lower the cost of living, the cost of housing, the cost of doing business in the Bay Area, tech must get involved in politics."

People don't realize how conservative SF is: "The most innovative solutions don’t matter when your government has been captured by interests that want to freeze the city in amber" SF won't even allow companies to put more buses on the road (something that would benefit everyone!)

This was news to me: "Support for More HOMES in San Francisco was even stronger, at 74%. Despite this popular support, every member of the San Francisco Board of Supervisors voted to oppose More HOMES, except for Asha Safai and Vallie Brown " It seems that politics in SF doesn't represent the majority view.

This is part of a much larger set of problems. As we continue into the future all the tech problems get solved or already have been solved. What we're left with is all the problems that can't be solved: those are all political. There will come a day when instead of starting software companies, we'll be starting companies that solve political problems.


The engineer personality profile is basically allergic to organizing. Too passive and introverted, or delusionally individualistic. Silicon Valley engineers see themselves as temporarily embarrassed hotshot entrepreneurs. The funny thing is to the extent engineers do organize it’s usually leftist organization for the lower wage workers (tech workers coalition), which is noble but doesn’t advance engineer goals. Police, teachers, doctors, all have political organization and therefore voice but tech workers cede that voice to their execs. I fantasize about changing that but I’ve come to accept the personality profiles of engineers make it an impossible problem.


I'm an engineer; I wrote the piece in the OP. I'm running for DCCC and am a political activist. We exist! Support my campaign :) https://buss2020.org/donate


If the thesis were true, why wouldn't VCs get into the landlord game? Seems like they would want to lessen this effect, if it were actually the case.


Private capital is certainly getting into the landlord game--and in record numbers.

https://www.theatlantic.com/technology/archive/2019/02/singl...

https://www.bloomberg.com/quicktake/rent-wall-street-is-my-l...


I have goals. They pay me six figures, but I'm not on track to own a home within biking distance of the office, and as an individual, I can't move the office.

I don't get to control who owns my tech company, which means I don't get to decide what our superordinate goals are. I don't get to decide who our customers are. I don't get to decide the extent to which we participate in the Military-Industrial Complex, or the Prison-Industrial Complex, each of which threatened to destroy people like me.

Due to the constraints of office hours, my social development and creative passions are extruded through a meager four hours before sleep—most of which must be spent on trains, due to housing and transit limitations.

If you don't think tech workers are alienated, you're fooling yourself. It's industry-standars to "burn out" every 3 years, and flee toxic, stagnant positions for a fresh workplace. This tells me that firms are unaccommodating, and foist the risk of personal development on us as individuals. That refusal to accommodate us is precisely the inhumane factor fomenting alienation.

What you've "come to accept" is your own vitality's truncation.

Edit: people are downvoting me for saying "I can't afford to live near my work or my friends"? Or because they're in denial of Tech's complicity in Military- and Prison-Industrial atrocities?


I have goals. They pay me six figures, but I'm not on track to own a home within biking distance of the office,

I have goals, earn six figures and had a 3100 square foot house built in the burbs within a 30 minute commute of where I work less than three years ago. I’m also “in tech” and probably, my six figure salary is a lot lower than yours.

and as an individual, and from where I don't get to control who owns my tech company, which means I don't get to decide what our superordinate goals are.

The last company I worked for decided to move their offices to a place in the metro area that wouldn’t have been the commute I desired. “I changed my office location” by calling up the many external recruiters in my network and had them find my a job closer to where I live.

I don't get to decide who our customers are. I don't get to decide the extent to which we participate in the Military-Industrial Complex, or the Prison-Industrial Complex, each of which threatened to destroy people like me.

I decide that all of the time by choosing the company I work for. I got to make all of the other decisions by choosing to live in another part of the country where the cost of living versus what I could make as a software developer was a lot more in sync with my goals. My last three jobs have been in the healthcare industry.


I didn't downvote you for being dissatisfied with your circumstances. I downvoted you for whining whine refusing to take responsibility for your actions or take steps to improve the situation. There are cheaper places to live and work.

The harsh reality is that we need a military and prisons, and there's nothing inherently wrong with tech companies selling to those industries. While there are occasional excesses and even criminal acts, those are best dealt with through governmental channels.


I totally agree with you that we almost certainly need some version of those things, but I’m curious specifically about the “best dealt with through government channels.” approach to how this person chooses to address concerns.

There will always be someone telling detractors to “let the government deal with problems” and there will always be people telling detractors to “use their own personal wallet—let your cash do the talking” and there is always someone telling concerned people to “band together with others who feel the same and take action.” etc...

I’m certainly not accusing you of personally using all of those other slogans, you seem content with your own choices, but at some point, people have to realize, address it how you personally see fit, there will absolutely never be a way one can draw attention to an issue or even attempt to change an issue which would be free from someone condemning their choice. Someone will always say “no, you’re doing it wrong.

Someone will always chime in to say “do nothing” or “organize” or “spend the correct way” or whatever. In the end, I’m not sure we accomplish much by condemning others personal choices. Unless of course our goal is to just not rock the boat, in which case, this never do it correctly approach probably works.


These are mere justifications of the steps I'm taking.

You don't know what steps I'm taking.

You assume I'm taking none, but actually I am taking drastic, radical steps in light of these circumstances.


So domestic terrorism then?


No.

Edit: if you think worker-organizing to establish vehicles for collective bargaining is domestic terrorism, then: yes.


That attitude is carefully encouraged to keep unions away.


Thank you for calling that out: it’s interesting seeing how resistant tech workers have been to basic market negotiation while we have such a culture around things like long hours, poor working conditions, being blamed for management failures, etc.


This is false. The problem is not tech vs nontech. The problem is young vs old. The old control politics and are very adverse to change.


> "Politics is an organizational problem, not a technological one."

Conway's theorem : "Any organization that designs a system (defined more broadly here than just information systems) will inevitably produce a design whose structure is a copy of the organization's communication structure."

> we'll be starting companies that solve political problems.

That already exists : lobbying companies, "CivicTech" and "GovTech" companies. I understood CivicTech and GovTech are startups that take the current political processes, and try to digitalise them. But they don't revolutionize the rules nor change the balance of power, since they must be reviewed and approved by the current government. In the short term, they follow Conway's law.


Maybe all the tech companies should leave SF for San Jose. It has an airport. And SJ isn’t so precious about it’s history.


There are also other places than California. Just sayin.


There are a lot more states than California....


Clearly the demand for CA living indicates how people feel about those other states.

It’s not like everyone is clamoring to live in say, Georgia.


It is like people are whining because their “six figure salaries” can’t buy a decent house in California when you can get a 3100 square foot brand new build for $2100 a month with less than $10K down, in a great school district in metro Atlanta.


Markets reveal preferences. The differences in prices reflect the dollar votes cast in the marketplace. Whining doesn't affect markets-- participation does.


Slow your roll. Markets are fine for business. Not for families. Tell you kid you'll make it up to them in Q4. ;P

Isn’t the problem that the people who are complaining can’t “participate” because all of the current homeowners don’t want new houses built?


Hundreds of new housing units are sold every year in San Francisco. (Edit: the actual number appears to be 4,700 for 2019, which is actually lower than previous years)


And yet people still complain how about their 250K+ salaries can’t afford them a home....


250k/yr is about enough to buy a median-priced home in San Francisco

https://www.hsh.com/finance/mortgage/salary-home-buying-25-c...


Fair enough. And $200K is still more than a “software Engineer IV” makes in San Francisco on average.

https://swz.salary.com/SalaryWizard/Software-Engineer-IV-Sal...

And let’s be honest. $1,050,000 “the median house price” doesn’t get you much.

https://www.zillow.com/san-francisco-ca/


there's a lot of people who don't want to leave their families. That doesn't mean they want to be in CA.


San Jose can be in SF in ~1hr, so commuters from SF can get there for work. haha

People want to live in SF because it's cool.

A lot of people who work at Facebook and Google would still rather live in SF and commute 2-3 hrs roundtrip each day rather than live in Menlo Park/Mountain View (or surrounding cities).

Tech companies are going to start where the talent is, and a bulk of that talent want to live in SF.


Is it really still cool? So much of the authentic character has evaporated away, compared to the mid 90’s. I’m curious what people consider an authentic San Francisco experience in 2019.


Even if SF exists purely as a simulacra of it's past, cool self, it's still leagues ahead anything offered in the south bay.

I lived in cupertiuno for 2 years and you could cut off all my fingers and I could still count how many times my friends that live in the city would rain CalTrain south to come visit me.


I'd say that factual thing to focus on is density of people. If you apply Metcalfe's law to IRL connections of people you just meet out and about, it's very appealing for those working on a startup and being stuck on a problem. You very often accidentally run into people in SF that can either help with that problem, or fund you so that you can work on it longer. Just this afternoon at an SF Museum, I ran into 2 investors with a net worth both north of $50 million. This simply hasn't happened in the East Bay (more middle class than wealthy people), nor down the Peninsula (not dense enough).


You're thinking about this wrong. You needed new friends from Willow Glen, Alma-Almaden neighborhood or Los Gatos. When I lived there, peeps would make the hike from Santa Cruz, too. Community is where you make it. Don't expect the world to change for you, be the change.

Market Street circa 6th to 3rd, thanks for asking. What kind of a dysfunctional municipal administration allows this and for what reason?


IMHO, the politics has created an industry of homelessness. SROs or other business are created by political fiat to cater and keep people homeless.


San Francisco largely stopped being a happening place more than 50 years ago. What's remained is the perception.


What are you basing that on?


    > what people consider an 
    > authentic San Francisco 
    > experience in 2019
(U+1F4A9) 💩

(HN isn't compatible with the authentic San Francisco experience...)


It's not cool, it's "cool". Gentrifiers chasing the mystique and destorying it when they show up.


I don't like that word, 'cool'. Everyone uses it for everything--meaningless. Cool died September 28, 1991 in Santa Monica, CA.

It is also walkable and it has a nice geography. As opposed to the valley which is flat and built for cars. I am mostly a loner but I also lived in SF and commuted in because of those reasons.


Unlike SF, SJ is actually height-limited due to the airport. (Not that's it's fully built right now)


SJ has an immense amount of densification potential, should it choose to exercise it. The housing stock is even more sparse than SF.

I've long marvelled at why Oakland rather than SF is not the natural hub of the SF Bay Area. It has everything SF lacks: indigenous water (EBMUD), a working port, space, improved climate (still gets fog, but not as socked in as SF), transporation (highways, BART, airport), a major technical university at its doorstep (Cal), and bedroom communities at its back (MorInDette, Walnut Creek, Pleasant Hill, Concord), as well as the east-bay communities to the south, and a direct BART link to downtown San Jose (as of quite recently).

But somehow it's SF, PA, MV, and Santa Clara that own tech.


SF had the working port until the era of containerization, and that plus inertia drove pretty much everything else.


SF had a working port, but because of rail access, Oakland was the preferred hub.

Until the SF-Oakland Bay Bridge was built, railcars were ferried across the Bay (though yes, the Peninsula SP lines also existed, and have some interesting corporate legal landmark case history and shenanigans). Then, after the tracks were torn up for the lower-deck reverse auto flow, Oakland and Richmond served as the principle railyards on the East Bay, for the Santa Fe.

I don't know what port tonnage compared across the years in SF and Oakland, but I'd be surprised if Oakland hadn't surpassed SF at least during WWII, if not before.


> During the decade between 1921 and 1931, the ports in Oakland and San Francisco both experienced explosive growth in commercial shipping, although the pace of growth favored Oakland. Prior to 1927 (when the Port of Oakland was formally organized), shipping tonnage in San Francisco more than doubled that in Oakland. By 1921 [sic] the gap had narrowed: Oakland handled about three-quarters the tonnage of San Francisco. Oakland's port would continue to outgrow San Francisco's through World War II before overwhelming it during the 1950s and 1960s.

Source: A Tale of Two Bridges, p. 20, https://books.google.com/books?id=XiyVDwAAQBAJ&pg=PT20


Thanks!


Pier 80 in SF is actually used today, for roll-on, roll-off cargo like cars (Teslas are shipped from there)


The reason for that is that is Santa Clara and Stanford Universities. IBM and and cold war era defense contractors.

The reason SF and not Oakland is simple racism.


So, Stanford, obviously.

But ... what's Santa Clara University's significance? It's always seemed a minor local school to my knowledge.

If anything, SJ State would be a bigger factor, turning out armies of technical and applied (rather than theoretical) engineers.


I think the OP was focusing on Santa Clara the city/county not the university. Either way my understanding is that the aerospace industry was the root of the tech industry and was based out of the South Bay, notably Moffett field. I wonder if land was also not just insanely cheap in the South Bay in the 60’s when all this got going.

Also Fairchild semiconductor was in Sunnyvale and was a hub for a lot of the following Silicon Valley development. Finally William Shockley moved to Mountain View to be closer to his ailing mother and founded Shockley semiconductor.

These are all why peninsula and not Oakland, but SF vs SJ I am less clear on. When I moved to the bay about 13y ago the center of tech was on the peninsula but people were starting to look to SF. I think the refocus north is relatively more recent.


Land was vastly cheaper on the Penninsula & south bay generally, yes. Most especially than San Francisco. It was both denser and had more opportunities for expansion at the same time than Marin. Why the South Bay won out over the East Bay (Mare Island Naval Base, Concord Naval Weapons Station, Alameda Air Base), I'm not entirely sure, though Stanford and Terman and electronics and that whole history (see Steve Bank's "Secret History of Silicon Valley" https://steveblank.com/secret-history/) likely had something to do with that.

Then Shockley, and Intel, and we're off to the races.

The move to SF is definitely more recent. South Park, Reddit, and Twitter led much of that.


  Finally William Shockley moved to Mountain View to be closer to his ailing mother and founded Shockley semiconductor.
No, Shockley preceded Fairchild Semi. The latter was founded by the "traitorous eight" who fled Shockley.


Santa Clara University is a private Jesuit university.

MorInDette? I lived in Lafayette. Never heard that... you’re talking Lamorinda right?


Yes.


Is it intentional to sound like "more in debt"?


Most of SF has a 45 foot height limit :\


Glen Park, a neighborhood near multiple rapid transit lines, has an even lower 40ft limit for the commercial area near the BART station.



Only a fraction of San Jose is subject to airport height restrictions. And even in the downtown area most buildings are shorter than the limit.


Like SF, most buildings in SJ are much, much shorter than the tallest existing buildings in the respective city.


Indeed. I wonder why there isn't more visible startup activity in SJ. Is it purely cultural/historical, where it emerged in SF and that remains the main regional attractor?

Or are there other political/zoning reasons that make SF more attractive? I believe SF is giving some rich companies discounts to keep them around and reap (I assume) local taxes?


>...it emerged in SF...

It didn't emerge in SF. Quite the contrary, virtually all tech startups for most of the Bay Area's history were no farther north than Menlo Park, and often much farther south (Netflix was founded in Scotts Valley). That's why YC was headquartered in Mountain View until recently.

SF only became a startup hub within the last decade, IMHO in response to the desire of Millenials to live in urban environments.


Startup activity did in fact not emerge in SF. Silicon Valley was traditionally the Santa Clara valley area (roughly, San Jose/Los Gatos to Palo Alto/Menlo Park). There were no tech jobs in SF (outliers aside, of course), it was a hippy city an hour north of Silicon Valley.

It it only during the present decade that startup activity has appeared in force in SF, away from Silicon Valley. Due largely (I believe) to the tax breaks SF created in 2011 to encourage that.


Shuttle busses allowed techies to live in SF and work in places like Google, Facebook, etc. Prior to shuttles, it was a huge pain to do the commute. As they left big tech companies, they faced the choice of doing the commute again, or joining/starting companies in SF. I think this is an underrated factor.


South of Market was cheap, starting in the early 1990s. Startups back then liked cheap.


The center of Silicon Valley oscillates between SF and SJ on a roughly 10-year cycle, corresponding to major technology generations (and loosely, to bubble/build cycles). It was around Redwood City in the early 1970s (Ampex, Oracle), moved to Palo Alto and Cupertino for the PC/workstation era in the late 70s (Sun, Cisco, Apple, Seagate) down as far as San Jose and even Scotts Valley during the 80s (Adobe, Memorex, Borland), started moving north to Mountain View in the early 90s (SGI, Netscape), moved back to SF for the dot-com boom, moved back south to Palo Alto and Mountain View in the late 90s (Yahoo, Paypal, Google, Facebook, YCombinator), then moved back to SF starting in 2006 and significantly accelerating in 2011 (Reddit, AirBnB, Stripe, Twitter, Zynga, Medium, etc.) It's still in SF, though it remains to be seen where the next technology generation will take hold or if it'll even be in the Bay Area.


I see a lot of building in downtown RWC and San Carlos. Maybe won’t be the center, but definitely a significant uptick.


You're comparing Medium to Adobe. Wow.


The term "Silicon Valley" originally referred to the Santa Clara Valley, which is where San Jose is. Most of the original Bay Area tech companies are there -- Intel, AMD, Apple, Cisco, etc., also newer large companies like Netflix and Google. The startup scene in SF is more recent.


Can you give some comparison baselines to an uninformed East coaster? I thought SJ is part of the Bay Area and part of the skyrocketing housing cost crisis. Is that not true? If not what is an East coast analogy - e.g. Boston is to NYC what SF is to SJ?

I knew a number of people who moved to the SV area, got FAANG type jobs way down in the Valley, and yet still chose to live in SF enduring hellish commutes. I never could quite understand why.


It's something very roughly and geographically like if SF is DC, then SJ is Baltimore. You could theoretically commute between them, but it's quite impractical.

SJ is part of the Bay Area and absolutely has skyrocketing costs; it usually tops the lists of cities with the fastest growing housing prices.

When I got a job in Redwood City (in between the two), I thought about moving there from SF, but found the costs to be about the same to live there versus SF.

So I stayed in SF; it's definitely the anchor of culture of the Bay Area. For everything outside of work it's a much better place to be (for me, a single queer person, especially). I since got a job in SF and have no intention to move or work south again.

In fact, the general trend has been for companies to move towards SF away from the peninsula, but mostly because it's where workers want to be. It's much more easier to get by without a car in the city than in the peninsula, it has much better clubs/nightlife, etc. For a young person, the city (meaning SF) is often much more appealing, though of course different people have different preferences.


Communting SJ-SF is, unfortunately, doable and done. It's an hour drive off-peak on 280, or about the same time (though crowded and being pinned dead on a rail timetable) by CalTrain express. Off-peak rail runs 90 minutes, and you've still got terminal-to-endpoint to deal with, which is problematic in both SF (improved with the Transbay Terminal), and SJ (residential regions sprawl for miles from the principle train stations).


It is also done to commute from Baltimore to DC; for me it's just way too much. Redwood City was my limit and I really hated it, even with my motorcycle. I know there's a Google Bus from very near to me all the way to Sunnyvale, but I considered that still unacceptable.

Of course, late at night I once did SF-SJ in 45 minutes. Having tried every solution at all times of day (e.g., biking to the caltrain, carpooling, etc) the "big bike" always wins; truly off peak the car is just as fast, in theory (and, hey, safer and more comfortable... but less fun).

But, let's be honest all the solutions are stressful and sucky. You can trade time for stress to a certain extent, but you're spending a lot of both no matter what.


Oh, absolutely on "stressful and sucky".

But far from theoretical.

I'd not recommend it.


Interesting. So if SJ does not seem to have the NIMBY cohort putting on the brakes for development, and has plenty of high-rises and other housing, and the prices are still sky-high - does that indicate that maybe more housing in SF is not going to help things as much as people usually think at first?


There are plenty of NIMBYs in the San Jose area and there is not a lot of high-rise housing. Both San Jose and San Francisco have median house prices over a million dollars, but you get more house for your money in San Jose and apartment rents are a lot cheaper (and the apartments generally come with parking, which you'll need because public transit is a joke).


Of course. Density begets density. Housing is just like highways, add more, and demand will catch up.

NYC is way more dense than the Bay Area. It’s not exactly a cheap place to live.


Not sure who downvoted you, but yes. More housing requires more businesses in the area to due to spending of the residents, which in turn creates jobs, which in turn creates housing demand.


San Francisco (and Oakland) are the only real dense urban areas. The rest of the Bay Area is a suburb. San Jose is mostly houses and shopping centers.

Most of the young people I know who work in tech want to live in or near San Francisco -- it has nightlife, restaurants, cultural events, etc. This is especially the case for people who are not from the Bay Area originally. When they start looking into buying property or having children a lot of them leave San Francisco and move closer to the suburbs.


> yet still chose to live in SF enduring hellish commutes. I never could quite understand why.

I grew up in the South Bay. I can answer that question.

The South Bay is eye bleedingly BORING by design. It's an absolutely terrible place for a teenager or young adult. Most of the fun stuff in the city is illegal in the south bay.


It’s illegal in San Francisco too, just more widely tolerated.


San Francisco is the best you can do if you want a walkable lifestyle on the evenings/weekends and work in Silicon Valley. (Oakland/Berkeley are more interesting and more affordable but/because the commute is unendurable.) The SF to SV commute is mostly against the flow, so getting to Page Mill Road takes about the same time from Mountain View (next suburb over) as from southern parts of SF.


I think the issue might be that plenty of people live in SJ relative to the amount of housing available, and so it's expensive just like SF, but it's far less developed / more sprawling, so there's less slack in the system for office space for small companies and fewer apartments for young workers.


Oakland is the Bronx. SF is Queens. There is no Manhattan or Brooklyn. San Jose is central New Jersey.

(This comparison is unfair to both Queens and the Bronx, mind you.)


> I wonder why there isn't more visible startup activity in SJ.

Because VCs are mostly investing in software startups with twentysomething who are stupid enough to believe the hype. Those who believe hype want to live in the "cool" area, and that's San Francisco or Berkeley--not San Jose.

Those people building real businesses don't care, and probably aren't even located in the valley anymore.


Probably because noone wants to live in San Jose


Someone seems to want to live there.

Population of San Jose: 1.0 million.

Population of San Francisco: 880k.


eh. San Jose is a sprawling amalgamation of a dozen towns that encloses 2 airports. SF is a fraction of the size.


Are you counting the small one on Tully Road, in addition to SJC?


Oh, the more homes is easy. Everybody supports more homes in the abstract, but every specific plan gets shot down because it's too tall or too sprawl or not in keeping with the feel of the neighborhood - often by the same people who want more housing, just NIMBY.


Rural housing in the UK is hamstrung by this problem. On the one hand everyone complains that their kids have to move away because they can't afford to live in the village they grew up in, but if you suggest building more houses they kick up a stink. Then they complain that the village is dying because it's all rich people's second homes in the country.

While I have distain for a lot of politicians, at the same time I'm not sure anything would convince me to be one, it's a pretty thankless task full of no-win situations in which people will bitch and main no matter what you do.


You could join UK YIMBY

https://www.ukyimby.com/


I'd not heard of that, cool. Glad to see people are starting to push back against all the cake-and-eat-it nimbys.

I live in Bath, which despite being a world heritage site, is actually building quite a lot of new home, some in developments on the outskirts, and lots of infill on brownfield sites. Not a fan of some of the architecture, but glad to see more being built. Now if we ould just sort out the bus network...


Or they don’t want to remove the debilitating environment and neighborhood regulation which makes new home construction take years when it could be months.

Or they want lots of new housing, but they also want the owner to rent control all units.

Or they want at least 30% of the units to be under market rent.

In other words, they want something for nothing and they’re fine with YOU being stuck with the consequences.


I have this other idea, force VC's to point their firehose of cash elsewhere for a change.


I genuinely don't get it. Sure, you want some of that VC money for your startup, so you start building in SV, where the exorbitant costs of living and doing business necessitate taking VC money to even stay afloat. Do investors really not invest in companies that don't start in the Valley? I have a hard time believing that, but to hear anybody from the Bay Area tell it, it seems to be the default.


Investment happens outside the Bay Area, but there is, to quote CityLab, an "extreme geographic inequality."

https://www.citylab.com/life/2018/03/the-extreme-geographic-...

Or, as PitchBook puts it, "traditional hubs still account for preponderance of activity" (https://pitchbook.com/news/articles/the-state-of-us-venture-...)

NY and Boston get their share of funding dollars, too, but compared to the rest of the United States they aren't cheap places to live, either.


Industry clusters are a very real thing. Talent, support industries, and VC money are found principally in a few hubs. SF-SJ, Austin TX, NYC, Seattle. Maybe DC.

Beyond that, even in what are otherwise major metros, the game is farm league. LA, Chicago, Atlanta, Denver, Boston.

Several of which still have expensive housing, relatively.

The US are digging their own asset-inflated graves.


Yep, I've been reading about how the rust belt is having a huge brain drain problem. Young people go to college or get jobs and leave to never return. My goal's been to get my own startup going and when money isn't a stopper move somewhere nicer like Austin or Miami. I feel I'd be a lot happier even if a higher cost of living. While my family is going through a cold winter I can be walking around in shorts. More things to do, warmer, less taxes especially if I was a successful tech person. Depending on how successful, even traveling full time is an option I've thought about.

I feel like many places aren't even on the radar for companies or people. States in the South are attracting a lot of people like AZ, TX, FL. TN is very nice too, and I doubt their winters would be as bad as here. I think weather is part of it, but things like less red tape and taxes draw people in too. ID and SD are growing too, even though they get pretty cold I feel like the cost of living and smaller more efficient government helps.

I follow some full time RVers and people pick SD as their domicile and the state makes it easy to do since still need to live somewhere on paper legally but I was amazed you can renew your license online every other time. I'm surprised a state with less population is more technically advanced than larger states. I feel if they wanted to do something like that here, there'd be too much bickering going back and forth that nothing would ever get done. They kept arguing back and forth about getting rid of front license plates and it passed, but now someone is wanting to repeal that change before it comes into effect next July. So I think some of these states are organized and more efficient too which is drawing people.

I like to look at data on a site called Where Money Walks and it shows that the Northern States, California and parts of the midwest are losing a lot of people and money. I can't wait to see what the 2020 census will be, as I feel that will show more details. Maybe states will lose federal dollars and wake up where they need to come up with a strategy to compete for people, tech, tourism and many other areas. I think some of these politicians are too comfortable as we've seen a huge shift. Last time the census was done the iPhone was only a few years old and that changed phones are we know it for example.

I know states can't compete with weather, but there's many other things that they seem to be leaving on the table. Why would anyone want to live in a cold place like New York with high taxes, vehicle inspections, ugly yellow license plates which in some states get confused with party plates (people who were convicted of a DUI get them as a punishment in my state, but I think it's only if more than once), people who like sports cars get turned off by front plates when they could enjoy Miami with a lot less bs and warmer? If they had infomercials for both, I know which one I'd prefer. I know I was reading NJ is one of the most moved out states, these places are driving people away. Wouldn't surprise me if the schools were even better in FL. I think NYC would be cool to visit, but I don't think you could pay me to live there. California and Maryland have a bunch of problems too, so hopefully looking at the data is a wake up call for places to improve and start competing. In California you are more likely to be arrested over smog than committing a federal crime, plus people can't afford to live there so Austin is a growing tech hub full of California license plates, Apple is expanding there too and is going to be the cities largest employer. Then you have Facebook, Google, Oracle, etc too in Austin.


The case of the University of Illinois is particularly compelling, though you could make the same case for any number of other institutions with a similar track record of minting, and immediately losing, talent: Purdue, Bloomington, Carnegie Mellon, Waterloo, even MIT and Harvard.

Students graduating with technical, programming, maths, and/or engineering knowledge leave not only the univerisity and its immediate surroundings, but the state. Marc Andreeson as an example from U of I is a classic: he co-invented the graphical browser ... and immediately departed for California. (Apparently annoying a fair fraction of U of I faculty and students in the process.) Chicago certainly can't hold that talent.

And I don't think it's just the weather, though it's not only the winters that suck, most of the summer's not so hot, or rather, far too hot, and humid, as well. It's hard to think when your brain's a puddle on the floor.

High taxes, at least for housing, may be a red herring, as that actually helps keep housing affordable. Dysfunctional government, gridlock traffic, an actively anti-intellectual and often racist general population, sprawl, and the rest, don't help. There are scattered locations of focused intellectual activity, but not concentrated enough, and/or in the wrong disciplines, to leverage off one another.

And most of the region lacks the easy recreational escapes of the SF Bay Area -- you're not minutes from a bayside trail, or the bay itself, or beaches, hills, or mountains. Or a couple hours' drive from snow and alpine hiking. There are some opportunities, but they're far less immediately accessible, attractive, and rewarding.

NB: New York City does clearly appeal to many and draw much talent, though most of that has been in FinTech. Which I'd criticise, though compared to what Silicon Valley's produced over the past decade, I'm afraid it's a case of arguing for lesser evils. Front plates don't seem to deter people from California. And taxes, generally, pay for government services and infrastructure which supports and encourages economic development, so long as waste, misspending, and incurred institutional obligations are reasonable.

Places to register residency on retirement (SD) and places to work ... have a different attractions and qualifications, that's not really a legitimate comparison.

Smaller or mountain states might mount a challenge. I've been impressed with Colorado (who wouldn't be) and Boise, though that's a long way from nowhere.

So was San Francisco, once.


Yeah, good points. I'm sure people don't factor the front plates issue in too much but many other factors also for California or any other place to look at. South Dakota has front plates and that's the state I'd pick if I was an RVer but I'd be driving an RV and towing a Jeep is the dream so not looked at like someone would a Lamborghini even though a Diesel Pusher can cost the same. But if I was some millionaire with Lamborghini's, no way I'd want to live in California with them along with a weight of other factors.

Some of the RVers aren't retired and work remotely or own businesses too. I guess in a way full time RVers or digital nomads are homeless in a way but the traditional world expects you to receive mail somewhere, so mail forwarders and SD DMV makes it easy. I know there's a theory the state makes it so easy because they hope it will increase their federal funds, while in some states they won't accept full time RVers so even if you wanted to stay a resident they make it almost impossible unless you claim you live with someone else when you don't.

I've thought about Utah but even though Utah would be a nice state to live it does get cold. The mountains are attractive though, I was thinking it'd be cool to own a log cabin somewhere in the smokies. I think snowboarding would be cool to try, so even if I lived somewhere warm a vacation to a snow covered place would be neat for a week or two since snow is pretty but be glad not to be forced to stay in it.

I think I'm more set on traveling full time when I can make it work instead of settling down though as I feel like no area would make me happy long term 365 days a year. Even somewhere like Vegas or Orlando would probably get boring after a while I think. Do some travel by plane or ship along with RVing across the US.

Not sure how high taxes would help with housing... California is one of the highest-taxed states on income. I think a state with no state income taxes or a flat low rate like Utah would be better. I was surprised to learn cities in Utah don't tax income, only the state and fed unlike here where there's a city, school district(some areas do it by property taxes while some it's a separate income tax) and state along with the feds. So with multiple different income taxes instead of a single one seems much better. Some cities with taxes don't even have a way to e-file or so localized tax software doesn't include them. I know Trump's changes to deducting local and state taxes are another thing cited as people moving, and some states like California and New York are suing over it but haven't been following the case. I tend to see more conservative states as more efficient and less bloated.

My problem has been sticking with ideas but the goal is to get a prototype and either get funding or bootstrap it but still very early... So at some point, if things do work at, I'd need to decide where I'd want an office or just make the company completely remote. Having a company ran by nomadic travelers sounds cool and even niche job boards for that. But I wonder how accountability and distractions come into play... But other companies have experimented with this too... Another idea I had was maybe 3D virtual world environment might work too, so while somewhat roleplay with a virtual office building and conference room might be better than just regular chat and more dynamic. But I'm getting ahead of myself. I know people are saying the future of tech are all remote, but I kinda wonder though too as it seems a bit less social. Plus security and trust being a larger factor to probably for some roles. If Google ever went 100% remote, I wonder if they would want some guy working out of their bedroom to have root access to some systems.


High housing taxes tend to reduce housing prices. Better if it's a land value tax (not much seen). But this is a hidden/underappreciated benefit of states / cities such as Illinois / Chicago.

California's Prop 13 is actually a key driver of the state's housing problems. Not the only one, but a major factor.

Utah, in parts, isn't all bad, though it helps a lot if you get along with Mormans and don't care much for beer or coffee. Community values and institutions seem generally strong.


The agglomerative effects of cities are real and extremely positive, both in terms of technological innovation and cultural progress. Cities tend towards liberalism and breed new ideas. Advocating that we collectively abandon the Bay Area and try again someplace new would result in a massive destruction of wealth and human potential.

There is no universe where bootstrapping a brand new region with world class universities and infrastructure is cheaper than just fixing a broken bureaucracy.


I would not call SF infrastructure "world class". It is nothing compared to big cities of almost any other developed, and many still developing countries. Compared to EU and Asian biggest cities it's next to not existing.


It’s embarrassingly bad. Potholes everywhere, poor transit options, no police, no resources for homeless....I could go on.


No homes for the homeless. The city government’s budget for 2019–2020 is $12 billion, including $300 million on homelessness. A lot of that money goes toward programs to prevent people from becoming homeless, though we don’t quite know the effectiveness of it. Mayor London Breed has promised to improve accountability there.

The major problem is NIMBYism. It is extremely difficult to create new homes for homeless people. Even trying to build a new shelter, there is a lawsuit filed by nearby landlords trying to stop it.

NIMBYs also make market-rate housing expensive, and make transit difficult to expand. Thus, the pay scales that the city can afford are not high enough to fill the vacancies in SFMTA and SFPD and other agencies.


>There is no universe where bootstrapping a brand new region with world class universities and infrastructure is cheaper than just fixing a broken bureaucracy.

I think some tea got thrown in a harbour once in an argument about almost this exact point.


Heh, SF has its own little version of American Exceptionalism.


Talent is the lifeblood of tech companies. Ergo, tech companies set up where it is easier to recruit talent.


I agree with you, but I also find it to be confusing. These same companies, when they do open offices in "2nd tier" cities, they offer "2nd tier" salaries. If you go to Houston and offer something close to SF salary, you will be over-run with great talent. I feel like there's some social status or something that comes from paying the higher salaries in places like the valley that just aren't attainable by attracting talent in other cities.


> If you go to Houston and offer something close to SF salary, you will be over-run with great talent.

I live in Houston and I concur. The company I work for has a lot of trouble finding talent that we need. That's not to say the talent doesn't exist here. It absolutely does. It's just that we can't afford Silicon Valley level compensation.


You can't afford something you need? How are you still in business?


"Talent" includes other roles that aren't so fungible. If a VC-backed startup starts a major widget spinning project, they often want to poach a director of spinning widgets from a top company, and Houston won't necessarily have one.


That doesn't explain why companies DO hire in Houston but refuse to pay close to what they'd pay the same person if the person moved to Mountain View or SF. It's simple status garbage to sustain the illusion that people in SV are "better"


I mean, I dunno, I feel like you have to look at it from the other direction. A lot of companies agree that that the premium for SV engineers is "simple status garbage", and therefore they don't want to pay it in markets where they don't have to. It only makes sense to pay your developers in Houston the same as the ones in SF to the extent that you believe the higher paid engineers really are more skilled.


If we are going to take control of capital why not directly take control of the land and build more homes rather than firing money at some collection of small towns and hoping that solves a housing crisis somewhere else?


> An Opportunity Zone is a designation created by the Tax Cuts and Jobs Act of 2017 allowing for certain investments in lower income areas to have tax advantages. The purpose of this program is to put capital to work that would otherwise be locked up due to the asset holder's unwillingness to trigger a capital gains tax.

https://en.wikipedia.org/wiki/Economic_Opportunity_Zones


Are there people that actually think politics is a technological problem? Politics is quit possibly the lowest tech sphere in existence. I remember going to a city council meeting in NYC and being shocked that they were recording votes by roll call. They're still stuck in the 17th century.


> every member of the San Francisco Board of Supervisors voted to oppose More HOMES, except for Asha Safai and Vallie Brown

To my knowledge there aren’t any anti-development supervisors at the moment. The key differentiator is the type of development the supervisor is pushing for.


It has long been impractical to appear completely anti-development. The Housing Accountability Act of 1982 makes outright refusal against California law. Instead, NIMBYs have adopted the CIA’s tools for sabotage. https://www.cia.gov/news-information/featured-story-archive/...

So, the majority claim to be for development, but they saddle it with conditions and processes to make it expensive and less likely to succeed. They claim that this process makes the final result “better,” but more often than not what we get is not “better” but “nothing.” And nothing is worse than bad, because what we have is a deep shortage.

They’re letting the perfect be the enemy of the good.


San Francisco is conservative? I highly doubt that. I can absolutely see anyone not wanting to give away their house they spend $4m "for the greater good" of everyone else who didn't have the capital to buy a house.


> People don't realize how conservative SF is:

You realize having restrictions and governmental regulation is exactly the opposite of 'conservative' (in the republican sense, which it's usually used in pejoratively), right?


"Choosing San Francisco in 2020 is like choosing Java in 2010... Proven, but makes it harder to do simple things and doesn’t give you an advantage over incumbents"- Balaji S. Srinivasan

https://twitter.com/balajis/status/1149073637325979648


And like Java you might have to take San Francisco just because that's where the money is.


Interestingly , he lives and works there.


He used to , recently got back to bangalore India for starting his own startup in robotics.


Also interesting what he suggests as the alternative - blockchain incorporation, configurable nation states, and fully-remote teams.


I am also a fan of his YC talk https://m.youtube.com/watch?v=cOubCHLXT6A


What's bad about java in 2010? Java is still alive today, while Ruby with Rails were overtaken


Everyone wants to kill Java. However Java has the distinct advantage of an incumbent. It has enough people who know it and the support of MANY major organizations like Apache, Red Hat, Amazon and Google. The libraries available for it are enormous and it has build systems and dependency management systems coming out of its ears. Want a contractor to complete a project? If you are using Java you can get one from almost anywhere.

Anything that hopes to replace Java had better come armed with a couple billion dollars and the support of thousands of engineers.


As someone who lived in the Bay Area and worked in SF for a while but moved out because I didn't like the mono-culture forming from being surrounded by virtually nothing but my own kind -- cry me a river VCs and early-stage startups.

Maybe spread-out beyond SF & the Valley? There's a whole big world out here.

I'm not a huge fan of excessive NIBMYism, but the industry's inability to take advantage of the entire rest of the world seems like a much easier problem to solve on all fronts, and yet everyone takes it as a first principle that everything must be done in this one place.


That's why I like living in Houston. Sure it's Texas but it's so much more diverse here than most cities. And the food is wonderful.


If the problem is that too much capital is flowing from productive investments, like tech, to unproductive land speculation then perhaps part of the solution is to capture part of that windfall gain through a land value tax [1], i.e. a tax on just the land and not the buildings, thereby reducing the speculative component from housing investment without reducing incentive to develop more housing stock.

[1] https://en.m.wikipedia.org/wiki/Land_value_tax


When a bungalow from 1940 sells for 1.1m in santa monica, its not because that bungalow is plated with gold, but because you can destroy the bungalow and build on that plot in santa monica. All of the inflated values of houses in ca is due to the parcel and not the structure already. A house might only be 200k, but the dirt it sits on is worth 900k.

Prop13 really needs to go away. It chronically defunded local government and schools for almost 50 years and directly brought us to the crisis where we are at today.


You're right that a LVT would help, but the existing regulations prevent people from actually redeveloping their land into more productive uses. When it's illegal to build apartments in over 70% of San Francisco, that's the first and lowest hanging fruit to pick.


I agree restrictive regulation are a major part of the problem. But LVT would have the effect of reducing prices even if stock were not increased, leaving rents unaffected.


LVT is illegal in California due to Prop 13, so you'd need a constitutional amendment to even consider it.


Well let's get one then. Is it really that hard to put it on the ballot every 2 years? Only needs to pass once to undo 40 years of damage.


I was born around the time prop 13 passed and it wasn’t until I was in my twenties that I realized _why_ everything had been obviously built like an affluent society but crumbling due to lack of maintenance for as long as I’d been aware of it.

One memory in particular was when the San Diego Union Tribune ran a picture of new computers from one of those supermarket programs, sitting under a hole in the roof because the district had been underfunded on maintenance for three decades.


Building maintenace is the most readily glaring, but by far the worst aspect of prop 13 passing is how much school districts were and still are defunded. Untold damage to 40 years of students.


I’m also curious how it’ll work for hiring new teachers: they’re usually offered worse wages than the retiring boomers saw at the same point in their careers and the housing market is much worse.


It’s working poorly.

All the school districts near me have chronic teacher shortages, and there’s tremendous teacher turnover. Occasionally a teacher will go homeless before leaving for a district with lower cost of living.

A prominent neighborhood activist has switched from NIMBY to YIMBY because his wife was recruited on an emergency basis to teach high school English without a teaching certificate, and has been teaching for the past several years.

All the teachers I know of my age are living either with parents or with their parents’ financial assistance.

The one mitigating factor is that young parents are having difficulty affording this region, so schools are starting to close and not need any teachers anymore.


The United States has over nine million square kilometers of land area. Why is the most portable industry in the world (software) being held hostage by a few square kilometers along the coast of northern California?


This topic has been discussed endlessly over the last 40 years (both by local social scientists and people trying to reproduce Silicon Valley elsewhere). The short answer is “it’s a just so story commingling schools, openness, military boom...”.

One thing to notice is that plenty of industries have followed this pattern until they became mature (cars, breakfast cereals, aircraft to some degree). And you see this in software: the pressure discussed is at the frothy end of the market.


I couldn't parse:

> it’s a just so story commingling

Explanations:

In science and philosophy, a just-so story is an unverifiable narrative explanation for a cultural practice, a biological trait, or behavior of humans or other animals. The pejorative nature of the expression is an implicit criticism that reminds the hearer of the essentially fictional and unprovable nature of such an explanation.

com·min·gle: mix; blend


Thank you. I couldn't parse that comment at all. This is where a few quotation marks (or hyphenation) help, so either just-so-story, or "just so story".


I thought it's just me as a non-native English speaker


I know some of the answers but at what point does the cost of doing business in the Bay Area outweigh the benefits? Keep in mind when Silicon Valley began they were actually fabbing silicon. That doesn't happen in SV today (AFAIK). It's mostly software now, and software is much more portable than silicon.


Clearly the cost outweighs the benefits for run-of-the-mill software and hardware, as the majority of the world's code is written outside the valley, and most low end hardware is designed outside it as well.

Also it's not worth it where the valley is behind the curve (e.g. engines are designed in different centers of excellence).

Even for venture-backed (intended-to-be) high-growth companies, the Bay Area is only about 50% of all US venture capital investment. And there has been some spread: in my professional lifetime the "Valley" has grown to encompass SF and parts of the East Bay. When I first started working here people lived in SF and commuted to tech jobs in MP and points south.

But some products are just so high margin (iPhones, Internet search, USB-powered vape tubes) that it's cheaper overall to be here and take advantage of the affordances available.


It happens but on a very small scale. Very niche fabs for stuff that isn’t at mass market scale.


The very short answer is social graphs are dense enough. Land use is important even if you have tons of land like the US.


It's to minimize distance.

Aka factories minimize distance between inputs, other factories, and customers. So Coca Cola builds multiple factories because buying water locally and shipping the finished bottle 10 miles is cheaper than shipping it 1000 miles. For car factories there are some costs for traveling in between factories so most of them are still clustered in certain states, but the factories can be spread out. Plus, once a city has too many factories increasing wages, the next company that comes along will build their new factory elsewhere.

Tech offices have effectively zero distance to customer cost (at least within the USA, you might build another place for say the eu) So the main costs to minimize are input costs (employees) and costs between offices (coordination).

Unfortunately the "cost" between offices is relatively high. Unlike multiple factories, aka ship the plastic bottle from one factory and the plastic cap from another factor to the main bottler factory, multiple offices require coordination with one another. Or to put it in tech words, it's not easily parallelizable. The more offices spread out in multiple cities you have, the more meetings you need to coordinate between each city.

And the cost between offices is essentially "time" the most precious resource for a tech firm, which cannot really be removed. And so tech firms pay the higher col rather than spreading out into other cities; well until the col really increases too much.


You're ignoring the whole remote work thing enabled by the internet and tools like Hangouts/Skype/Slack. There's no for software engineers to be in the same physical office.


Good question!

Remote work is a viable option. Some "remote first" companies have been very successful. And ... there are lots of talented people who do not live in SF.

Perhaps it is the founders and VCs that are clinging to the status-quo.


And Thomas Piketty was right...

Also, this isn't exactly a revelation for those who are in businesses that hinge on physical location (retail, restaurants, etc...). Landlords provide little of value, in most cases did nothing to earn their money (around here the landlords in downtown business districts are the descendants of those who owned that property 100+ years ago) and merely act as parasites.

In the case of those who own residential properties, they merely bought at the right time, and due to the scarcity of land are earning far more than whatever value they're providing.


If it is such an easy way to make money, why doesn't everybody simply buy some land. You can pool resources if as an individual you can't afford it.


Land is expensive. People that sit on land, in booming areas know this, and will either:

- Not sell

- Ask for ridiculous amounts

As the old real-estate saying goes: "Location, location, location".

Furthermore, land as has a pretty long-term maturing period. It can easily take 10-20 years for land to go from cheap to really expensive. Oftentimes that process involves rezoning of land, and eventually gentrification.

Lots of cities are plagued with the same levels of bureaucracy and regulations as SF, where it can take 10 years from planning to first shovel in ground.

You could have a perfectly fine spot of land in a major city, but because it's not zoned for your use, it's essentially worthless now - but everyone knows that it could be very valuable 10-15-20 years from now.

And lastly; There are tons of real-estate investors that focus 100% on these kinds of things.


None of the things you mention seem to support the original claim.

The original claim was that landowners are basically just freeloaders, making easy money.

Land presumably can't cost ridiculous amounts, only what people think it will be worth - how much money they can make with it.

That it takes years to maybe appreciate, maybe not - wouldn't that indicate that perhaps it is not so easy to make money with it after all?


Some landlords have seen their buildings value and the rents they can command go up well over 100%. There are landlords whose buildings were paid off decades ago. And all these landlords pay property tax on their purchased price, not the current value of the property. And I can tell you in LA county that you will absolutely not loose money on real estate if you ride out a business cycle. Its a perfect system designed for a parasite by parasites and supply comes to market in paltry controlled drips.


If it is a perfect system, again, why doesn't everybody do it? Just because of the property taxes?

Everybody is free to buy land, no?

Also I don't think people can just ask for arbitrarily high rents wherever they want. It is a gamble to buy in a location where rents will rise.

People then only see the winners and not the losers and get envious.

Take some risks of your own, then complain.


The vast majority of middle class people's wealth is in their homes.

The only reason not everyone does it is because they don't have the prerequisite capital (and pooling wealth usually doesn't work because people suck at sharing, although I do know people who have done it, even without being in a romantic relationship).


The returns are 1% of capital invested, if you invest the $50 million needed to buy a well-located lot today.

If your grandfather bought the same lot for $600 in 1922, the returns today are quite something.

It’s very hard to become a large-scale land owner today, unless you happen to own a time machine.


Not necessarily- but it takes financial savvy and raising capital and a lot of hard work...sorta like building a tech startup. In fact, I had this conversation this week randomly with 2 different groups of former tech execs...they are leaving tech and applying their skills to engineering commercial and residential real estate portfolios...they have each been dabbling for the past few years but now growing disgruntled with tech (not for financial reasons, more quality of life stuff). They each started small ~$50K initially, and use debt and tax law efficiently. They look for underpriced areas across the US (without giving away any proprietary info, mostly Midwest).

The returns are consistently well north of 10%, and that includes deals pre-2008. Naturally that may be harder to do at scale.

But the point is you don’t need a time machine, you need skills, effort, discipline and focus.


You don't have to be large scale to earn rent.

And why not buy something today that can be worth millions for your grandchildren?

Because it is not so easy, after all.

So you think it is unfair that somebodies grandfather bought land, and it appreciated? Do you think ownership in general is unfair, or what exactly is the unfair part?


I think its unfair that the source of these gross profits is due to limiting supply to the market and avoiding as much tax burden as possible. Fair would be if anyone could build anything anywhere however high and were taxed according to todays value. Real estate is not a free market, demand is massive and building supply is continually opposed to keep prices high.


Nevertheless, if the rules were known in advance, it seems the game is fair.

For example if you ponder buying a plot of land, presumably the rules there would factor into your decision. If there was already a rule of "no skyscrapers", then everybody could have factored that into their decision.

It would likewise be unfair to change rules after the fact, because it would devalue people's investments.

As for tax rules, I can't comment. But that is a fault of the government, not of the landlords.


https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...

Alas, mostly the rules have changed quite a bit to favour the incumbetents and the grandfathered-ins


and who gets to change the laws? If it is the current residents at the time, maybe that is fair, too?


Because the state of California gives enormous tax advantages to ultra long term landowners, they way to make money in being a landlord is to inherit property, not to buy it.


Because not everyone can come up with 50k to put 5% down on something that wont start printing you money for 10 years. 4/10 americans can’t come up with $400.

But if you can afford it there is no better investment. Practically no home in LA county lost money over an arbitrary 10 year period. The problem is the source of these profits is from squeezing middle and working class renters absolutely dry.


You could pool resources, and start with smaller investments.

Personally I don't believe it is really so easy. But that is the narrative of the leeching landlords.


The claim was that being the owner of high-priced land is easy, not that becoming the owner of high-priced land is easy. Your question is essentially asking why people don't decide to just time the market successfully or inherit valuable estates.


But that is the point - it was not easy to become owner of those high-priced lands, so maybe it is not fair to simply describe it as leeching and parasitic. People took risks to get there.

In the same vein, would you all say people who earn money in the stock market by investing in the right things are just leeches and parasites?

When do people deserve anything?

Just wondering how deep the socialist attitude runs.


They generally didn't just decide to become wealthy. They got lucky about price movement.


They got lucky, by taking risks. People who don't take risks want to get their share in the winnings, but not their share in the losses.

So investing in something is stupid, because if you are successful you don't deserve it?

When is anything deserved?


Hey all, I wrote this! Feel free to email me at steven.buss@gmail.com with any questions or comments. Also if you have a few bucks to spare for my campaign, please donate at https://buss2020.org/donate


This needs more historical and modern context to point out that this situation isn't normal even for SF and that much better ways are found all the time, for example in Portland.

I am glad though that you focus on the simple ROI calculation of election costs to investment efficiency!


Steve, thanks for tackling this and popping up.

This past January, the Commonwealth featured a panel on Bay Area housing crisis, featuring Pastor Paul Bains, Fred Blackwell, Priscilla Chan, Janet Liang, Jennifer Martinez, and Erika Aguilar -- an impressive, intelligent, and motivated group of experts.

https://www.commonwealthclub.org/events/2019-01-24/bays-futu...

What floored me, and several friends I shared this with, though, was the collective response that there was no single silver bullet, no way to throw money at the problem to solve it. Which betrays an immense ignorance or denail of San Francisco history.

Henry George's Land Value Tax is not only a concept that was developed in (and concerning) San Francisco, but literally raises money from the crux of the problem at the same time it solves it, by creating an effective incentive to increase density. Very simply put, San Francisco and the rest of the Bay Area must grow their way out of this mess, and if they don't, other areas will, and are.

And it's not just about outsiders -- it's SF and Bay Area natives who are and have been priced out and forced out of the area, and present residents who will find themselves and their families -- elderly parents, young children -- facing similar fates.

And yes, I'm aware that Proposition 13 is political kryptonite, but it's also increasingly economic kryptonite, killing off what once made California an attractive and viable place to be. Though I've known of the initiative for decades, it's only in recent years I've realised just how toxic it truly is.

I've also become increasingly aware of the economic toxicity of the tendency toward and incentives for asset inflation, most especially of real productive and essential assets -- land, housing, education, healthcare, essential utilities. Some of the most interesting research on this was conducted in the 1930s and 40s by Bernhard J. Stern, for example "Resistances to the adoption of Technological Innovations" (1937). He traces the practice across numerous innovations, from printing and transport to energy and, yes, housing, naming some very familiar names and tactics. (The post-WWII suburban boom broke the logjam for a time. Oh, and you may have heard of his research assistant, a student named Isaac Asimov.)

https://archive.org/details/technologicaltre1937unitrich/pag...

Markdown/text: https://pastebin.com/raw/fZajYSGa

You're absolutely correct that this isn't a technological problem. It is an organisational one, and a political one, and pits families and the working class against homeowners, banks, investors, and landlords. And it will destroy California, if it hasn't already.


You're right about everything. A LVT would go a long way to solving our problems, but it must also be paired with dramatic zoning reform to actually allow land to be redeveloped into a higher use. Doing that is illegal in the vast majority of San Francisco and the Bay Area at large.

Opposition to Prop 13 is building, and I think we will see meaningful reform within 10 years. Hopefully full repeal within 20. But this is an even bigger political lift than fixing our broken Bay Area governments.

If you haven't already, check out http://thecommonssf.org/, an org based in SF that's centered around LVT.


The trick with LVT may be to find an alternate form of it that skirts Prop-13 restrictions, in the meantime.

As for zoning, that's likely a chicken-egg issue, but once holding nonproductive land becomes nonviable, reversing restrictive zoning may become far more tractable.

Alternatively, cracking the nut outside SF (and yes, I realise you're in the City) might be an option, where if a sufficient alternate jobs-and-housing magnet were formed, SF would be forced to follow suit. Not my first choice, but I'd take it.

Tackling this as a strategic "having defined our point B, how do we get there from A" question, and finding the least-cost path seems the right approach. Finding examples of other areas which have successfully tackled the problem is another.


We also need to find a way to crack the nut in the city. Soma is the only place with any movement.


The challenge I see is that tackling the asset-protecting interests head on may be too great a challenge.

As a comparison, California in the 1950s represented an alternative to challenging development-averse and innovation-averse practices in points East -- New York, Boston, Chicago, Detroit, and other established centres of population and industrial power.

Rather than fight on home turf, innovation packed up and headed West. A classic example being RAND Corporation, which literally loaded a train with researchers and families and headed to the (then cheap) locale of Santa Monica, CA.

The history of research and academic centres as being adjacent but removed from centres of commerce and power is a long one, dating back to Plato's Academy, an eponymous grove about a 30 minutes' walk outside Athens, then centre of the Western world.

I've been diving a bit into the history of major research laboratories, such a DuPont, Kodak, AT&T, IBM, Xerox, and others. Similar trends. The Manhattan Project is an extreme case, with additional constraints (secrecy, not disturbing the neighbours).


If you think paying $1 for every $8 in funding for housing is too much, just move to a different city? Apparently San Francisco is worth it, if it wasn't VC's would have stopped funding startups in SF a long time ago.

There's a bunch of graphs showing rents increase, but no real reason for why that's a bad thing. The big number that's supposed to sway us is the rent increasing by 30%, as funding increases by 300%. Maybe there's better numbers somewhere else, but this just tells me rents are not really a problem, at least for the tech industry.

And the solution? It's just build more houses, so the rents go down (a little). Do you really want more houses? The NIMBY people don't seem to. Infinite high density cities aren't all necessarily the best thing. Maybe if you think too much money is disappearing in these wealthy people's vaults, raise taxes?


> Infinite high density cities aren't all necessarily the best thing.

Then SF shouldn't have permitted the office space that brought all these people. City planing needs proportions. When a city adds offices, it needs home, schools, grocery stores, etc

We're not talking about Manhattan-esque high rises. 3/4 of the city is limited by law to single family homes. Allowing mid-rise buildings like Amsterdam and Paris would more than solve the problem


> And the solution? It's just build more houses, so the rents go down

Right, but the problem is that it's largely illegal to actually build more houses in San Francisco.


This right here. The price of housing is solely a supply-side issue, and it's all artificial constraints.

The reality is that owners are older, wealthier, stronger-rooted voters -- while renters are younger, transient and don't vote. This is the result.

Things like height restrictions, "shade" restrictions, NIMBY-ism, red-tape -- all the way down to mortgage interest tax deductions -- are to the benefit of owners and to the detriment of renters. They're all political issues that can be resolved but we choose not to.


I don't think it is necessarily as simple as just, "build more housing".

Rent costs are complicated. A big part of the reason that SF housing is so expensive is that it is so desirable to live and work there. Companies want to be there because that is where the talent and capital is, and talent wants to be there because that is where companies and capital is, and capital wants to be there because that is where the companies and talent are. High cost is what keeps some companies/talent/capital away DESPITE the benefits of being in the area... but if we lower real property costs, MORE companies/talent/capital will want to be there and the cost saving won't persist. There is latent demand ready to fill up any extra housing you build.

There have also been studies that ask this same question, and they have found that opening up housing development in high rent areas just means developers build more luxury living places, and costs don't go down.

https://www.citylab.com/equity/2019/05/housing-supply-home-p...


San Francisco's desirability is not skyrocketing the way its property values are. The views and weather were there in 2011 too, when things were at half their current level. And of course making it cheaper means making it accessible to more people; that's the point.


If desirability is not skyrocketing, why are people prepared to pay the property prices?

It is not views and weather, it is access to the startup environment, venture capital, tech talent and so on.


And some speculation. I see first hand a lot of high end apartments bought that sit vacant. Maybe the owners live in Asia or EU 9 months of the year, I dunno. But in some of the swanky towers downtown there are entire floors with at most one owner present year round.


In a normal market, I suppose speculation would help increase supply - by driving prices up, it would become more attractive to build. Of course if no building is possible, that won't work.

Nevertheless, there has to be a ceiling to the prices. If no space for living is available, eventually the tech companies won't be able to grow further because they can't hire more people.


This article is really buried but fantastic. It makes a lot of sense that knowledge workers and wages are really driving the prices.


> "If you think paying $1 for every $8 in funding for housing is too much, just move to a different city?"

What a useless, unconstructive comment. It's sad that when anyone wants to improve anything in this world, people like you come out of the bushes and say "if you don't like it, why don't you just move!"

> "There's a bunch of graphs showing rents increase, but no real reason for why that's a bad thing."

How thick and delusional can one be to say something like this? Have you taken a look at San Francisco recently? It's littered with homeless people and feces.

> Infinite high density cities aren't all necessarily the best thing

Right, because there's no medium between San Francisco and "infinite high density cities"

> "Maybe if you think too much money is disappearing in these wealthy people's vaults, raise taxes?"

A Land Value Tax would be a great idea. Further burdening the working class laborers who are already being raped by landlords with tax increases would only be more destructive.


Do you really believe homeless people will suddenly become not homeless if you build more houses? What are you going to do, give them to them?

Building more houses will do just one thing, let more people live there, which means more people will move in, maybe rents go down a little for rich programmers, and the homeless will stay homeless.

But yeah, please do complain both about feces in the streets and homeless people and taxes at the same time.


Building more homes is a “necessary but not sufficient” condition. @buss is also campaigning for more funding for affordable housing, but all the funding in the world is not worth squat if it’s not legal to build the homes.


They really buried the lede.

"Politics is an organizational problem, not a technological one."

If we could just build more houses by saying that we decree them into existence, we wouldn't have this problem. The author proposes some ways to bolster the pro-housing community and get tech voters involved in local politics (including joining https://yimbyaction.org/), and here we are still wondering whether we want to have lower rents or not.


Do we honestly believe that the landlords eating everything are not related to the VCs?

No VC worth their salt would be ignoring the enormous potential that lies in investment property... especially if their own VC funds can feed back to them as rental income.

And in the extremely unlikely case that financiers aren't also the landlords... well nevermind. They are smart people; there's no way they are ignoring this opportunity.


So end zoning restrictions and build more. It’s just a supply issue. We haven’t sufficient housing for decades as demand has increased, pushing up prices. I think locals know exactly what they’re doing and are fine with it since their homes are likely a significant portion of their net worth.


See my old comments:

"Startups are ways of exploiting geeks to work hard chanelling money from VCs to local landlords."

https://news.ycombinator.com/item?id=18863824

Do not feed the landlords.

Just don't live there.


Very tall buildings are technology. People don't like them, but they are the only way to make cost of living cheaper in terms of housing and offices. In cities where lots of very tall buildings are going up, rent is going up much slower or not at all. In cities where that isn't the case, it's increasing as population and wealth grow. Building vertically is the only way to prevent if from being zero sum.


You can get high density without very tall buildings. On street parking for example has a huge impact on density. As do wide streets, parks etc.


A city that starts getting rid of parks is a city I’m not moving to.


I agree, but I'd argue that almost all cities have too few parks and too many low slung buildings.


You can also reduce demand. It’s a big country. The SF situation is the ultimate bubble.


Boom and bust cycles in the tech and real estate industries definitely play a role in SF's situation, but the real bubble here is sprawl. As we wake up from the automobile-futurism fever dream, the few places in the US whose built environments aren't wholly given over to it are seeing the same pressures.

If you can make driving your SUV from the cul de sac to the strip mall to the office park cool again, there are many millions waiting for you at GM, Ford, and Lennar. If not, then no you cannot "reduce demand" for SF and places like it.


At some point the bay area will have to become a 1 giant city, instead of a bunch of little nimbism towns.

Soon, we'll all live in Bay City!


Turns out the reason this hasn't already happened is because the CA constitution forbids cities crossing county borders: https://hoodline.com/2017/03/that-time-san-francisco-tried-t...


"In the general election of November 1912, the amendment failed to get the requisite two-thirds majority vote"

This makes no sense. It doesn't take a 2/3 majority for an Initiative Constitutional Amendment -- just 50% + 1.


That's fascinating, Maybe there can be a megacity that spans multiple cities or something like that.

Oakland and SF makes less sense than SF and SJ imo, because there's no space between them. At least Oakland has the bay.


> Soon, we'll all live in Bay City!

If there was a train between SF and SJ that took 30min had frequent departures and free wifi the cities would merge over night.


Megacity 1


Politics in SF are so corrupt that it's laughable. The city is going to have to start rezoning soon or something is going to snap and companies will move away or the best people will decide it's not worth the hastle and go to other parts of the country and start their own startups.


It took a minute before I realize this was a San Francisco article; all the numbers and discussion are specific to that one area. (I'd suggest reflecting this in the title.)

There must be some truly special about SF to be so hated...and yet apparently so loved.


You can make the very same argument about London


do not worry, London will be its own shell 5 years after BREXIT.


Not a major deal, but the $1 in $8 calculation is a bit off, since it doesn't take inflation into account. The math still holds for the most part.

Adjusting for inflation and rerunning the same calculations:

* $2,600 -> $2,902.47 -> 2011 median rent adjust to 2018 dollars

* $3650 - $2900 = $750 / month increase in rent.

* $750 / .69 = $1086 / month increase (pretax)

* $52000 -> Increased yearly burn for a 4 man startup.

* $208000 -> 4 year pre-tax burn

* $208000 * .69 = $143520 -> 4 year amount to land owners

* $500,000 -> $558,166.51 -> Average seed round in 2011 adjusted to 2018 dollars

* $2.1M - $558K = $1.5M -> Increase in venture funding

So $143K / $1500K goes to Landowners, which is $1 in $11, not $1 in $8, or 30% less than originally calculated.


Few landlords are paying full marginal income tax on their rental income because of the numerous tax advantages of property ownership (mortgage interest, depreciation, etc) that reduce their tax liability. Variation in the tax situation of different landlords makes it a pretty misleading thing to include in the analysis. Besides, how the landlord and the government divvy up the rent money doesn't make any difference to the startup that needs to pony up $208,000 more dollars. Whether rental income is taxed at 0% or 100%, the cost to renters and startups is a large and growing problem.


Ah, shoot. I knew I forgot something.


So - I'm broadly supportive of the whole YIMBY thing, but I have to ask this: given how dysfunctional state and local governments have been here, are they capable of managing the giant influx of people that would result from a massive rebalancing of policy towards adding more homes?

Here in Sydney we've had absolutely no problem managing to flood the market with apartments, but there's been a substantial disconnect in terms of funding and regulation to provide transport, education, healthcare and green space for all those new people.


I'm glad this angle has been brought up. (I'm in Sydney too, not that that really matters.) Its one thing increasing housing density; it's another providing services (particularly basic ones like water and sewer) and maintaining a quality of living.

It's like, you could fill your bedroom with 4 or six beds, but there won't be enough bathrooms, living rooms, the house internet speed will degrade... it won't be a nice pace to live.

At some point it's sensible to go somewhere else.

Now, about Sydney in particular and Australia in general: we are dry, don't get much rain, most of the continent except for the costal strip is arid and infertile, and that's where something like 80% of the population live. Sydney's water supply is limited and there are only so many people the water resources can supply reliably (we nearly ran out several years ago, and we currently have level 1 water restrictions in force now). That population is much smaller than the number of people that can be housed on the land in high density developments.


In LA the city is really trying to encourage dense building around current and future transit corridors. Metro and city planning really do great work and are staffed with brilliant engineers, but are generally stymied by NIMBYs who eagerly sue their own city and burn their own and public money on subsequent litigation that only serves to dilute these projects. Beverly hills spent millions out of their school district funding mounting a failed challenge against a subway extension: thats the level of delusion among NIMBYs in CA, burning their own childrens education funding in hopes of not seeing a black or brown person at trader joes.


I think this might have been shared in HN at some point in the past but

https://www.collectorsweekly.com/articles/demolishing-the-ca...

was a super fascinating article depicting local zoning as a social shaping tool all the way back to the 1800s.


This is honestly one of the reasons why I left NYC. It's not that I couldn't afford to live there, I'm just against paying exorbitant rents in principle, supporting an aristocracy class receiving money for doing nothing.

Same thing with student loans. Feels like the mafia is taking $1.2k/month of my paycheck. I figured I'd rather just opt out than participate in this extortion.

It's funny how tech, by definition the most technologically industry, is so backwards when it comes to things like remote work. But VCs by definition are so wealthy that they have more money than they know what to do with, so there's no real incentive for them to change the status quo until it's disrupted underneath their feet. It's like the whole "nobody ever got fired for IBM" trope.


What is the origin of the meme "X is eating the world?" I seem to see these titles posted fairly regularly now.


Marc Andreessen's famous "Why Software Is Eating The World" article in the WSJ.

https://www.wsj.com/articles/SB10001424053111903480904576512...


Thank you!


Funny; a sentence bemoaning "unearned rent" immediately following one ending in "capital investment".


I mean... investment in productive activity is the opposite of rentier capitalism.


The productive activity itself is clearly that opposite.


I agree with the problem (“wanting to freeze the city in amber”), but not the solution, at least as the author wants to implement it. The solution would be to deregulate housing (rent control, etc) and let scarcity take over. Yes it’ll be painful for a couple of years, but when all the people who can’t afford to work at the Starbucks leave the city, people are going to start to notice. Wages and home building would shoot up to meet the demand, and things would ultimately level off. This will never happen in SF (the quasi-regulated NIMBYism the author describes seems par for the course), but we’d see some fast results if it did.


"Let it get really bad so people notice" isn't even close to a solution. We all know there's a housing crisis; the solution depends on who you ask.

Some folks are going to say "let's have high affordable housing requirements in new projects." They may genuinely want lots of affordable units, or they may want to freeze housing supply and thus preserve the value of their single-family homes. Pro-tenant renter groups may not care about a "neighborhood character" argument, but they may care quite a bit about a "gentrification" argument, which is almost the same thing. Depending on what kind of YIMBY you ask, you could get someone who cares deeply about affordability, or someone who believes the market will fix everything.

All of this to say: this is a political problem about getting enough different groups with distinct interests to work together. Nobody gets a magic wand to deregulate everything, nor would it help.

If creating that coalition is something you care about, join the group the author recommended: https://yimbyaction.org/


>Yes it’ll be painful for a couple of years, but when all the people who can’t afford to work at the Starbucks leave the city

But, that's not how reality works. Instead those people end up working two, maybe three jobs, cohabitating with multiple people and just end up having their quality of life continue to deteriorate. Leaving the city's not necessarily an option.


This isn't a solution. You're misattributing the effect with the cause.

Developers aren't building more _now_ because it's illegal in the majority of the city, and where it _is_ legal, your permits take about four years to get. By the time you're approved to build, the market has moved out from under you.

We have to change the laws that make building illegal, and to do that we have to change the politicians.


Capitalist dystopian dreams. Nyc has mostly unregulated real estate and it is still horrible. Large development corporations create artificial scarcity that rise the price of rent. Everything just rises in cost including minimum wage and just tracks whatever the developers can extract out of the economy.

If the solution doesn’t including bringing everyone along I don’t want it.


NYC real estate is far from unregulated. In fact, it faces arguably even stronger NIMBY pressures than San Francisco and indeed SF has authorized more building permits per capita than NYC for many years in the last decade. Its rental market also had many new controls added this past summer.


Yup, this is correct. NYC is very far from anything resembling a "deregulated" market.


Yeah not sure what that poster was basing his incorrect point on.


Except the supply here is necessarily constrained by the amount of land available to build on. You're treating this like microeconomics 101, which is a fundamentally flawed way to look at the problem.


That's not true at all.

Nearly 75% of land in San Francisco alone is zoned for low density single-family or duplex homes. 37% of it is just for single-family homes alone. [1]

Nearly 98%(!!) of land in San Jose is zoned for single-family homes. [2]

Replacing every ~10 single family homes with even a 6-7 story apartment building can easily increase the supply necessary to reach equilibrium, and that's ignoring the fact that you can build affordable apartments that are >20 stories (see: Long Island City, New York).

[1] https://www.latimes.com/politics/la-pol-ca-single-family-zon...

[2] https://haasinstitute.berkeley.edu/single-family-zoning-san-...


  Nearly 98%(!!) of land in San Jose is zoned for single-family homes
You misquote your source (it says that NYT says that it is 94%, but that's hogwash given that far less than that is zoned for any form of housing). The referenced NYT article doesn't annotate a source.

More likely, the data says that 94% of precincts have at least one single family home.

Well over 10% of land is rights of way (e.g. streets, watersheds, etc.), easements, or is public property.


The link seems to indicate 94% of residential land in San Jose is zoned for SFH.

But even that could be misleading, since San Jose has massive city boundaries that includes hills and other places that really couldn't be built on regardless of what they were zoned for.


This is true, but zoning laws are ultimately determined by who owns land. Landlords and landowners are incentivized to increase the value of their property at the expense of everyone else. They use zoning laws to do this, which they indirectly control by being active in political lobbying.


No disagreements there.

Per the parent comment, the prescribed solution is to eliminate (or heavily curtail) such zoning laws. In other words: “deregulate housing”.


Now all you've got to do is to convince those ten families who enjoy having a backyard for their kids and dog to give it up for a vague "better good"


...or sell it? Today if I bought those houses at fair market value, it would still be illegal for me to build a 6-7 story apartment in their place.


Why would they sell a house they enjoy living in, near the school their kids attend, near the jobs they work at, in the city where their friend are? Or do you propose to force them out?


Because if that land was able to be developed into MDUs, the value of the land would be so high that you'd be a fool to not take it.

For example, here in Chicago the value of land downtown is upwards of $40 million per acre. It has nothing to do with the location of the land or that we're completely maxed out for development. It has everything to do with the fact that you can build 250+ units on that plot of land.


Why would you build 250+ units on a plot of land? Because people would want to buy or rent it. Why would people want to buy or rent it? Because the location is good.

Real estate always has to do with the location.


If you were only able to build SFH on that land it would be worth a small fraction of what it would be otherwise worth when you can develop it.


Money convinces a lot of people, especially if the land goes from being only to support 1 family to 40+ because of vertical advantage.


I think you misunderstand my position. Nobody is proposing proscribing single family homes, or forcing people out of their homes.

People will sell their homes in the market, as they do today. Today it is illegal for a buyer of such homes to build multi-story apartment buildings in their place. The argument is to simply allow such construction to happen.


And I am explaining to you why those 10 families will vote against any of your proposals. Because once you allow more building the next logical step is to force them out to make some money for developers who'll wreck their houses and build those condos.


Force them out... by giving them really good offers for their homes that they willingly accept?

You have a strange definition of "force".


Ever looked at SF from the air? 3/4 of the city is suburbs filled with bungalows. This is a patently false argument.


We have plenty of land; the problem is the regulations that make it illegal to build apartments in over 70% of the city. Check out http://sfzoning.com


As someone who has lived in both Hong Kong and San Francisco, this comment made me chuckle.


We literally have hundreds of examples of "take away regulations" not working.

We have hundreds of examples of "come down on landlords like hawks and make them suffer" working.

Stop it. Do some research.


https://marginalrevolution.com/marginalrevolution/2016/08/la...

> Tokyo, Japan’s capital city, has a growing population of over 13 million people but house prices have hardly increased in twenty years. Why? Tokyo has a laissez-faire approach to land use that allows lots of building subject to only a few general regulations set nationally.


I don't get this argument. Right now, we literally have thousands of examples of "add regulations" not working.


That's not the same thing as coming down on landlords. We could criminalize slumlording and use civil forfeiture to turn slumlord's properties into public housing. We could put a hefty property tax on all rental properties. We could create a vacancy tax on all unoccupied units that would force prices down. The problem is landlords and land owners and their rent-seeking and speculative behavior. The solution is to stop enabling them by protecting their property rights over the well-being of the population.


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