What I don't get is all the companies actually setting up shop in San Francisco. If I were a tech startup, I'd actually setup shop in a nice area relative to cost of living, then attempt to draw people out.
If you can get someone already in SF out to say Boise, Denver, or Phoenix they can make 80% of what they made in SF and have a better lifestyle. If you cover the cost of moving that should make it a very attractive offer. Sell their home in SF (if they own), and buy a nicer/roomier place in the new location.
Phoenix in particular has a pretty thriving tech community, and a far better cost of living. The main reason I stay here is the job market is great, and the cost of living is far better, relative to programming pay than most other areas. Of course there is the down side (June, July and August).
The reason people do their startups here is because there are several related, overlapping professional and social scenes spanning 2+ generations.
From a less cynical perspective, the fact of the matter is that compared to anywhere I'm aware of, the Bay Area has a much stronger culture of entrepreneurs assisting each other. There's a much stronger culture of what could perhaps be framed as mentorship, with a large population of people who have been in the game for a long time and are still engaged as founders, executives, or investors. It's also probably one of the few places where there's a widespread acceptance that innovation means experimenting with risky business models without being forced to constantly focus on short-term revenue.
From a more cynical perspective, in many cases for younger or newer founders, this means it's easier to climb the social ladder and be in the "tech entrepreneur" scene. It feels exciting and the money flowing around between young people (something that doesn't exist everywhere) makes everything seem more real than it is. I also think it's far easier to inflate the value of companies here for a variety of reasons.
> a large population of people who have been in the game for a long time and still engaged as founders, executives, or investors
Yeah, I dunno. Today Silicon Valley sounds more and more like the old money club of Wall Street than the kids in the garage that will soon revolutionize the world.
Of course, a big part of revolutionizing the world is not knowing you're doing it. You can't throw a rock and miss a start-up in SF that isn't planning on "changing the world" right now. Most are doomed.
> Today Silicon Valley sounds more and more like the old money club of Wall Street
... or Holywood, where VCs (producers) minimize risk by funding well-known formulas betting that a blockbuster will save the summer, while talented programmers (actors) get any job out there, stay a few months, cash in and go to the next gig. A bunch of other untalented wannabes (biz devs, MBAs, PRs) act as talent scouts, schmoozing at "parties" (meet-ups) trying to find the next fresh-out-of-the-boat programmer to exploit.
In that sense, I believe NYC and other areas provide a much healthier environment for true "indie" productions (aka customer-centric development)
I believe NYC and other areas provide a much healthier environment for true "indie" productions (aka customer-centric development)
I love NYC as a city, but New York VC-istan is awful. Just fucking taint-sniffingly hideous. Unimaginative, with even more MBA-culture. And the sorts of MBAs that end up in New York startups are catastrophically bad-- people who just weren't smart enough to stay in finance (and that doesn't take much).
Go to "other areas" if you want an indie scene: places that are clearly on the rise like Austin, Durham, Boulder and Baltimore. Funding will be harder to get, though.
Most were always doomed. Its an odds game and you get a few game-changers by achieving a critical mass of startups in a given area, then allowing them to cross-polinate and share resources in order to breed more successful startups.
Your statement is an example of a non-bay-area mindset. Failure if a badge of honor -- it means you contributed to the community.
Michael, I think your pragmatic perspective here is important, but I disagree.
If you aren't prepared financially to play the startup game, you shouldn't. If you do play, you should be WELL AWARE of the risks associated. It is a game, you play for sport not survival.
The problem is that, while founders are aware, most startup employees have no idea and there are plenty of companies that make a policy of deliberately misleading people.
this all sounds great for entrepreneurs, but what about the software engineer that just wants to work on cool projects and have a nice home/kids/car and isn't really interested in networking much, having a "mentor" or raising capital to start a company?
This is exactly the reason I moved to the Bay Area. On top of the ability to easily move between jobs, if I ever decided to try my luck at doing my own startup, this would be the easiest place to raise money, find co-founders, early adopters, etc.
Yes, this is SF's main advantage. It's a continuous/liquid market instead of a discrete/illiquid one. No matter how finicky you want to be, you can find what you're looking for (on either side) at some price.
Of course, most companies are interested in networking and raising capital, which makes the concentration of jobs higher in those areas that support it.
But honestly, if you want to live a life that involves kids, a car, and doesn't involve the community as heavily, SF isn't for you.
"But honestly, if you want to live a life that involves kids, a car, and doesn't involving the community as heavily, SF isn't for you." See but that is sad.
I would not argue that its intentional, the environment really promotes a certain kind of person living in the city - the kind of person who can and wants to spend countless hours at a startup.
The kind of person who doesn't have a car, who DOES go out all the time, and so on.
Speaking of - I was thumbing through the blog that the original article was on, and there was an article about the market for Aeron chairs... hidden in there was the fact that, "oops, none of us have cars, how can we transport these?!"
It's somewhat telling. Can you think of another place in the US(besides the other startup hub, NY) where you'd see people making over $100K not having cars?
It's a very precise social strata that SF is selecting for, and it is a strata that includes ideal tech workers. Companies move here because that's where the workers are. Having 50% more real income isn't worth much if it tears you out of the great social environment, especially to a third-tier city.
Good news, though: it's not like the whole Bay Area is the same. There are perfectly family-friendly communities in other areas, including parts of the South and East Bay.
I could go on at some length - since I've been in both the job hunt and the online dating world heavily, I've become very acutely aware of just what is (and isn't) cool, especially as cities go - since it's a fascinating intersection of economics and sociology.
I lived in Phoenix and I moved to San Francisco to find work precisely because of Phoenix's dismal tech industry. After my contract ended last year, I had three or four job opportunities in Phoenix that I had to turn down. There is no worse feeling in the world than turning down work when unemployed because those jobs would have been huge steps backwards in my career.
One was with a college where I'd be rewriting the same web form in PHP with some rudimentary javascript every day--no growth opportunities. One was with a custom automotive shop that hosted their website on phpBB and had the worst code imaginable as demonstrated to me on a programming test. Another was with a web design firm that listed the most extreme political candidates in the state as its clients. None of these jobs were accessible by transit, incidentally, and would have given me upwards of a 20 mile commute from downtown (the only place in the Phoenix area with a modicum of arts, culture, and entertainment options--and that's about 0.001% of what the Bay Area can offer).
IMHO, it's still 2006 in Phoenix's web dev industry, with a bunch of crappy PHP jobs and maybe five Ruby on Rails jobs postings a year. Companies that serve millions of users and are on the absolute cutting edge of technology simply do not exist in that town. I am certain that my job, writing enterprise social media management software in Ruby on Rails does not exist in the state at all.
Practically speaking, the access to venture capital, tech journalism, and labor in San Francisco and Silicon Valley is utterly unmatched in the nation.
Personally speaking, my quality of life, partially because of a 43% higher paycheck (before bonuses) than I'd ever make in Phoenix is unmatched. My rent might be three times as much, but I've more than made up for it in improvements to my social life, mental health, dating life, and about two dozen other factors. The funny thing about expensive places to live is that they're worth it. Your idea that people have a better lifestyle in Phoenix compared to San Francisco is an absolute Dunning Krueger--there are FAR more factors to one's quality of life than how big their house is.
When I talk to Californians about Arizona the only positive thing I heard was that somebody liked Sedona or Spring Training on vacation. The vast majority said Phoenix was too hot and racist and couldn't imagine living there for any reason. I wouldn't move back to Phoenix for a part time job that paid a half million a year.
In my 20's I built a thriving web business in Phoenix on my own. There was no support, no venture capital, no community, etc. Nothing to help me build my business. I eventually moved to SF...and brought talent with me.
Arizona doesn't get it. If you aren't building, selling or financing homes...they can't help you.
I've had jobs at various tech companies. I'm fairly confident I could make a good living in most cities in the US, either through working remotely, contract work, or working for local companies if I can find a good one.
However, I just can't get the quality of work in Arizona that I can get here. When I go hunting for a new job here I can talk to dozens of world-class companies making products used across the world. More importantly, these companies are really innovating. They aren't just rebuilding or reapplying the same technologies.
That fulfillment in my work is worth dealing with the cost of living, though most of the companies compensate well.
If you are using C#/.Net or Java tools, there is lots of work... ad lots being done that is pretty nice. NodeJS is also seeing a lot of movement here, and is on par with SF, Seattle, & Portland. No, there isn't much Ruby, and there are a lot of crap PHP jobs. That doesn't mean there isn't a thriving tech industry so much as the tools you like aren't popular here.
I also thought Boise was a bad example. From my perspective, the natural alternative to San Francisco is Seattle: decent public transit, awesome food, has a tech culture, friendly cannabis policies, amazing landscape, and (most importantly to me) a much more affordable cost of living. When I was making the choice to relocate to the west coast, I started out 100% set on getting to the Bay Area. But as I visited the cities, looked at the job opportunities (disclosure: I am not a programmer by trade, but have worked in the tech industry), and evaluated my living choices, San Francisco just didn't make any sense for me.
Of course I don't mean to suggest that's the only alternative. Rather, I agree with the OP that it seems like there's an argument to be made for basing your start-up outside of San Francisco, and there are at least decent alternatives.
No city is 100% perfect. I've found that the rain in Seattle is one of those things most brought up by people that have never lived here. It's a daily light rain, and not constant. The annual rainfall in Atlanta is higher than the annual rainfall in Seattle. It is dark in the winter months though, and for some that will be a big bummer. But it's an easy trade for me if that means I can easily afford to live in the city.
As someone who spent his childhood east of the cascades (Eastern Washington), I think you are being a bit harsh on Boise (and let's just throw in nearby SLC since it has more tech). Sure, the landscape is semi-arid, but the surrounding mountains are very nice, and you have lots of good skiing with dry snow you aren't getting in California; that is very good powder. Food is becoming less of a problem as these cities attract more immigrants (SLC).
Idaho and Montana have been lax on cannabis forever, even if their laws don't explicitly allow for it. There is something quirky about libertarian survivalists, hippies, and LDS members living closely together in the same state.
Well, some people live in San Francisco because they think it's wonderful and they can, but that's not a universal opinion.
Some people are annoyed by San Francisco but live there just because that's where the work is. Other people like San Francisco just fine but are ready for a change. Those people are the ones that can be lured to new places, not you.
If I leave a job in SF, I can have a new job within days. I am not sure the same can be said about other regions. Yes, its ridiculously expensive here, but I know I will have a job.
I'm originally from Michigan, and have lived in Houston, Boston, and Ft. Lauderdale. I can safely say that the "cheaper" places were a huge PITA to find a good job in. Especially if I didn't want to deal with office politics, puritanical dress codes, or other stupid bullshit.
And fwiw, I've worked with Startups, Hospitals, Banks, Researchers, and Factories. There are definitely bonuses to living in a cheap & small town. But unless you are able to work remotely you will likely have to "settle" for a job.
Yes–having previously been enamored with the idea of someday founding a startup in SF, I'm more and more enjoying staying right here on the Central Coast of CA. I'm in San Luis Obispo and between here and Santa Barbara we've got good universities, a big digital agency, a small Amazon office, iFixit, RightScale, MindBody, and a lot of other smaller startups. Being driving distance to both LA and SF means I can hit meetups and hackathons at any time. I'm at the beach on almost a daily basis.
Our biggest drawback is a weak VC climate and no international airport. Housing isn't exactly cheap either (median home is $567K) but there are plenty of options within 20 min drive. So, we won't be the next SV but it would be cool to see more companies starting and staying here–or more large companies setting up satellite offices here.
Except none of those places are Silicon Valley or San Francisco. There are few major hubs of startup activity, the other major one being New York City. The atmosphere and population density of ambitious programmers and like minded designers and business guys play a key role in why those active hubs exist in very few places.
VC money and the active community play huge roles here. There are dozens of meetups you can go to and meet people interested in programming or startups. There are hackathons every other weekend and a lot of tech based conferences are pretty much routine. There are happy hours almost every day of the week at various incubators or shared work spaces or even at clubs hosted by a startup.
The sheer volume of events and startups and tech based companies here blows Boise, Denver, Phoenix, .... all other cities out of the water. That's why SF is so expensive to live in -- all these tech guys get paid $$$ and landlords feel as though they can just keep raising prices to take over that income. It's similar to how NYC got extremely expensive because of all the financial guys making tons of $$$. If there is cash to be had, it'll raise the cost of everything.
One thing that's left out is that young people want to move to certain cities because other young people also live there.
The economic/networking benefits are huge, of course. But you can't ignore the "cool" factor.
It's not just some ephemeral thing. Being in a "cool" city means vastly more and better dating opportunities. Also social ones - more like minded people - but dating ones in particular.
Young people with disposable incomes want to hang out and date others like them, and that's one of the biggest draws of a city like San Francisco.
As a 28 year old single male who isn't about to impress women the world over with his athletic prowess, the dating pool is probably the biggest reason I live in San Francisco as opposed to some nearby cheaper suburb or even another city. It's not to be underestimated.
Also the same article suggests that 2.2% of households are gay male, while .8% are lesbian. That means the heterosexual ratio is even better.
Now I'll grant that it's easy as any place to run in circles that are skewed, and as much as we might wish (and often work) for it not to be the case, there are many more men involved in developing. If you only work and go to tech events (or other heavily gender skewed events, like Magic:The Gathering events), it might seem pretty skewed. But it's really not. There's a lot going on in the city.
Even then, "[the] odds are good, but [the] goods are odd" sells developers well short.
"If there is cash to be had, it'll raise the cost of everything."
If there's cash to be had, it'll rase the cost of... some things.
First of all, obviously, of real estate, because there is a finite stock of developed real estate, there is finite land nearby (especially in San Francisco), the short-term supply curve is relatively inelastic (i.e. it takes time to build apartments) and the long-term supply curve isn't that elastic either (because local governments limit construction through the political process).
And then that will push up the price of things with real estate as an input (e.g. restaurants and grocery stores) and with labor as an input (also restaurants and grocery stores and other things in the service industry)....
But that's about it. Some things will remain cheap. You can buy the same cheap electronics and home furnishings and digital media off Amazon.com as anyone else does.
Drawing people out can be hard, though. A lot of tech companies recruit young engineers and new grads heavily, and many 20-somethings won't be convinced to leave SF.
SF might be expensive but it's fun in a way that Boise isn't for (most) young people. If you ask a fresh Stanford or Berkeley grad to move to Boise and take a 20% pay cut (even though it's more pay relative to the cost of living) they're going to hang up on you.
In banking this was attempted and achieved mixed results. UBS for example tried to get people to move to Stamford but they've migrated from that strategy because they couldn't recruit top talent out of schools. Young people don't prioritize saving money, they want to have fun.
Goldman Sachs' #2 campus is in Salt Lake City. They pay less and save on costs but I suspect the real ambitious employees don't take that assignment. You are going to have trouble climbing the ranks if you're posted out in Salt Lake City. It does attract the people who don't care so much for corporate climbing and prefer quality of life.
> What I don't get is all the companies actually setting up shop in San Francisco. If I were a tech startup, I'd actually setup shop in a nice area relative to cost of living, then attempt to draw people out.
I live in Vancouver. I can wake up in the morning take the Canada Line -> YVR -> SFO -> BART -> your SF office by 10AM.
I bet there are a bunch of other cities like that. Portland would be a good bet, too.
But intellectual density matters. It matters especially at inflection points like launches, fund raising, etc.
Serendipity matters, too. You're going to end up meeting that next hire, customer, journalist, etc the next time you are in a coffee shop.
SF is the place to be because of the glorification of the young engineer. If you're hiring people around 25 y.o., SF is the place to be to win the talent war. But engineers with kids can't live there. If you're hiring engineers around 35 y.o., SF is the wrong place to be.
We're still in the facebook era with regards to how most founders think about hiring talent. So SF it is.
Many of the other places you mention are much more family friendly, and still pretty cool for young people.
When I was at a startup many years ago, we were so busy that no one had time to take advantage of the various entertainment and cultural offerings of the Bay Area or Silicon Valley during the week. It was only on the weekends that we might have time to take a break and go out to a nice restaurant, or a show, or a club, or whatever. Best someone might do during the week was catch a movie.
Given this, what's the point of putting the company there? We could have put the company in Modesto or Stockton, where people could live in much nicer homes during the week (and the company would pay a lot less for office space), and they would save so much in living expenses that even if every weekend they drove to San Francisco and stayed in a nice hotel and ate every meal at a nice restaurant, they would still come out ahead.
If your business model does not include strong growth, you have the option to organically growing your dev team from smart and less experienced people over the course of many years.
If your business model includes VERY strong growth, paying top dollar to hire experienced people may be a necessity. Large numbers of experienced people can (more or less) only be found in SF/SV. It might cost 4X as much, but it can offer a potential payoff 10X or 20X or 40X as great. (At least that is what the VCs are looking for.)
And many businesses live in between these extremes, where the optimal choice is unclear. Choose wisely.
My personal pick is South Lake Tahoe. No state income tax, 3.5 hr drive to SF, commercial airport, and stunningly beautiful. Heck, a lot of SV/SF bigshots already have vacation homes in the area.
Exactly... There are lots of really nice locations all across the country that seem to be far more attractive options to a startup wanting to draw in talent.
How are you going to convince people to move a rural area where they know nobody just to work for your startup that might not be around in a year? All to save what, $1,000 a year? How are the schools in Tahoe?
Vacation homes, exactly. Lifestyle business guys, freelancers, writers, yeah of course. But trying to found the next Google in Tahoe doesn't make sense unless there's already a major "anchor" tech company in place there.
It is better to have a higher salary in a higher cost of living area than a correspondingly lower salary in a lower cost of living area. The price of many many things are constant regardless of where you live, especially with online shopping. These items are all cheaper relatively if you live in San Francisco and make $100k than if you lived elsewhere and made $80k.
Food/nightlife and housing are the biggest expenses for me and most of my friends in the 20-30 y.o. age group, and where I live (Austin), 80k goes a lot farther with regard to those expenses than 100k in Austin.
One of my portfolio companies set up shop in Portland, Oregon and managed to convince some of the best developers on the planet (in my opinion) to move there.
Not sure if that would work in Boise or not, but it's doable.
Naw, it sucks up here in stumptown. Rains all the time. Can't find a decent pint of beer or cup of coffee to save your life. Place is full of hipsters -- have you seen Portlandia? You wouldn't like it. Best stay away.
As a developer in SF, I've been telling everyone that Portland is the place to be. You can actually live comfortably and (relatively) safely ride your bike to work. Plus, it's undoubtedly a more beautiful city.
Unfortunately, I haven't been too impressed with the job selection in Portland. Though, I may be doing my own startup in a few months; Portland may be my spot for seeking residence and capital.
SF has a lot of qualities you definitely can't find in Boise, Denver, or Phoenix. Places, sadly, are not simply interchangeable - if what you value is amazing food and a good night life, NY, LA, and SF (along with a few other cities) are tough to beat.
I defy you to find me one place in Boise that you'd consider 'good night life'. I know of at least 3-4 places in SF that are great, and of course, NYC is in a league of its own.
Yes, when everything is reasonably walkable or a short Uber or Lyft ride away. Last call at the bars is at 1:30AM, but the party rages on in private residences.
Ignoring the lifestyle argument (SF/City life vs. Boise, Denver), there's a practical aspect too. I would take the right offer in SF and relocate there because if the company went under, or I didn't like it, or it somehow didn't end up working out, I am confident I could find something else comparable.
I can't say the same thing about any of the cheaper places you mentioned.
Startup people flock to San Francisco and the Bay Area in general because of accelerated learning. You get accelerated learning because everyone is here. Need some paid CAC, viral growth, fundraising, scaling or pretty much anything startup expertise? Those people are all here.
It's similar to picking between State vs. Private institutions for school. You will certainly get more bang for your buck in at the State school but you will miss out on the pools of brilliant minds at MIT. (There are similar echo chamber trade offs)
Raising funds aside, you gotta ask yourself... is the additional runway gained from moving to a cheaper location worth the potential gains in learning? Is my startup about the hours I put in or about how smart those hours are? I think that you acquire entrepreneur knowledge quicker in SF than pretty much anywhere in the world. I feel like I've gained decades of experience in only 2 years here.
1. I can walk to everything I need within a half mile radius from home, including most entertainment.
2. I can get married to my (also male) partner.
There are quite a few places in Europe that are open to me, but surprisingly few American cities. And that's why many of us are in SF -- we dislike driving and like liberals. :)
Actually #2 is a false assumption: Keep in mind that California approved prop 8 and just recently the courts rejected it after a long and tough fight.
In addition, my wife was a teacher and advocate for at-risk minority kids in SF, and I can tell you this whole thing about SF being "minority friendly" is a bunch of BS. Affluent new residents (such as high-tech employees) are very passive-aggressive about "accepting" minorities, but behind closed-doors they are actually very conservative. And the city policies are there to prove my point.
I am not trying to discourage you. I'm just trying to alert you to take the whole "SF vibe" with a grain of salt, as my wife and I have witnessed that first hand.
I think this is why Portland's tech scene is really booming. Much lower cost of living, supportive tech scene, and still a cool city to live in. Though the weather isn't nearly as nice...
In the medium and long term, employee cost is less important than missing out on the absolutely best employees and mentors. The work of great employees scale, and the great employees willing to join startups tend to flock towards cities like San Francisco.
Yes you can pull it off in Boise, but it's harder. And when you factor in loss of access to mentors, VCs, and suppliers and leading edge customers, you wind up being penny-wise and pound-foolish.
I think there are too many people like me: I've been developing professionally since 2000, and I would never work outside of the city, no matter how much better the cost-of-living to income ratio is.
My typical response to recruiters pitching their next hot startup "right in the heart of SOMA" is remote work with a combination of travel + corporate housing. That usually brings the conversation to a halt.
In my opinion, this is what will eventually spur a braindrain in SF in 5-10 years.
My theory, if it holds, says that a bunch of 20-somethings flooded into SF in the past 2-3 years. When they reach their early/mid-30s, they will begin their nesting phase.
They'll want to find/will have found their mate and will want a house with some space.... The chance to finally to get out of their dumpy studio/3-bedroom-with-roommates... Some well-deserved adult digs, after years of hard work in this industry.
However, they'll look around at house prices, look back at their bank accounts, and realize such dreams could never be fulfilled here.
At that point, they'll pick one of four paths:
-Buy property in a remote, suburban sprawl-y part of the Bay Area (an unattractive option to anyone who's lived in SF for many years)
-Buy some depressingly expensive one bedroom condo and stay here
-Become a lifetime renter
-Move away from the Bay Area ('back home', or elsewhere)
In my opinion, a 30-something, on the verge of midlife crisis anyways, will take one more shot at the great unknown and set out for a new region, outside the Bay Area.
Unless, of course, they sold their startup for 8-figures and escaped with a big chunk of compensation.
I've lived in SF for going on 30 years now, and can tell you that this(moving to SF in your 20's) was true even before the first dotcom boom. Lots of folks moved here to live out "their wild years" before returning back to where ever they came from. I got really lucky in that I bought a house before the first boom, and the equity has made it possible to stay here, but there's no way I'd be able to do the same thing today. I really worry about where my kids will live when they get older.
Yup, thats true. Not a year goes by where I don't wonder if I should move, but as others have pointed out, the Bay Area is pretty fantastic. I don't even know where I would go...
Also, try being from the Southeast and missing Southern culture (well, the good parts of it, at least). There's very sparse tech hubs in the Southeast. Effectively none if you want to live in a coastal city.
Move away from the Bay Area ('back home', or elsewhere)
I work remotely for an SF-based company from Dallas, and I actually observe this happening.
Every month or so, we get an email about some departure from one of the Bay Area folks who is moving "back home." Any digging usually reveals the person had their first child.
I've been surprised to see this as well. The advent of a first-child seems to drastically change a family's priorities and I'm seeing many of my friends move closer to their parents to get the additional support for raising their child.
I actually observed one couple do the opposite. They subsidized one of their mothers expenses so that she could move to this area, work part time, and act as their primary daycare provider for their new child. They ran the math and found that it was cheaper than daycare and with healthcare reforms the mother was no longer tied to her old job and could so afford to quit and move.
However, this parent was renting to begin with, and I don't expect most parents to leave their hard-earned homes and communities to come support their children rather than the other way around.
This all depends on how you define "dream". If it's a picket fence, yard, pool, 2,5 kids, etc, that's not gonna fly in the Bay. But if the dream is to live in a nice place with easy access to a fantastic city, that's achievable anywhere in the Bay Area (Oakland has it's moments of greatness, Berkley has it's chartms, and SF is SF). My take is that the East Bay is about to start growing like crazy.
> This all depends on how you define "dream". If it's a picket fence, yard, pool, 2,5 kids, etc, that's not gonna fly in the Bay
It might fly if you fly. :-) I don't know if this is still true, but when I lived in Silicon Valley a little over 20 years ago, I did some price comparisons, and it worked out that for the cost of a nice SV house, you could buy a much bigger house and pool in the Merced area in the Central Valley, and a Mooney M20 (private plane with a cruise speed of over 250 mph), hanger space for the plane in Merced and Palo Alto, and a car to keep in Palo Alto. You could even get the house on enough land with room from a runway, to save having to drive to the Merced airport every day. Get a couple other people to move to Merced and share the commute to split operating costs of the Mooney, and it looked like this would actually be quite viable.
Up here in Portland, one of my friends just got his private pilot's license - he lives in Bend, and can commute if he so desires. It's expensive, but probably reasonable.
It's already happening in the East Bay, and it's weird. A two-on-a-lot just went up on across the street from me, not 50 feet from where we had an 5-way shootout in broad daylight two years ago. I couldn't believe my eyes when they got snapped up for $750k a piece; I pay $500/month in rent. Just in the last week somebody started parking their new Porsche in front of my house, on a street where I still wouldn't feel comfortable leaving my old 1997 Civic overnight. Various brewpubs, taprooms, etc. have started opening up. This feels exactly like how people describe living in the Mission circa fifteen years ago.
Holy cow, I think I may be your neighbor; I bought one of those houses, judging from the brand new Porsche I've been seeing when I head to work in the morning. Do you have a link to the shoot out?
Except my half of the Berkeley two-on-a-lot cost substantially more than $750k...
There's no reason for this, either. San Francisco has to relax their brain-dead backlash toward high density construction. Los Angeles, too. Is it a California thing in general?
Feel free to be cynical in your answer, but why would a property owner who just paid a fortune to buy a single family house in SF want to rezone the neighborhood to see a large apartment complex built next door? Now that they've paid the heavy toll, they stand to lose the most.
That is completely overshooting it. Rent in a safe area starts at $2k a month. At the 2.5% rule, that's 80k of income to qualify.
If you network and land in a rent controlled apartment (a friend of a friend has the 4th floor of a mansion in the haight for $900/month) you can do it for even less.
A 1-bedroom in a building next door to the Mission Hotel - San Francisco's biggest SRO hotel, located in the Mission District - just went for $2800/mo.
That have been always true. San Francisco kids population is only 13.4%: the lowest in country [1]. But there is also constant flow of fresh blood (20s something).
Now, the problem is that percentage of kids has been constantly declining. It is interesting to see at which point the economic system of the city will collapse because it lacks diversity. Or it is really possible to have city without kids and without older residents: just dogs and DINKY couples.
I guess I don't see why options 2 or 3 are that bad, but either way, there isn't going to be a brain drain as long as the job market is good. New York, even at twice the expense (600k 1-BRs, sign me up!) doesn't have a problem with brain drain. Sure people leave every year, but more move in, as the quality of life in the city cannot be matched anywhere else.
When you are ready to have kids then either your finances have probably improved and you can afford that 2BR or you move farther out to cheaper areas of the city / suburbs.
Or be happy with a life without children as a lot of us are.
Well, according to this link, the average 2BR condo costs ~$900k. To put it bluntly, aint no way I'm gonna spend close to a million for a 2BR condo! That's even more depressing!
So, this brings me back to the original predicament: when you get to nesting age (which normally runs concurrent, or closely precedes Having Kids Time), you're gonna start looking at your finances and looking at the local real estate market and many will need to make some very tough decisions - decisions that I, personally, don't see including San Francisco.
A $900k home is ~$3,600/month P+I after 20% down. Considering that principal is actually savings and you can deduct X% of the interest, you are looking at a true effective cost at under $2k + real estate taxes and maintenance. The carrying costs are easily doable by a couple in the tech industry, let alone the actual effective monthly costs. What's depressing about that?
It sounds like you're brought up with a more traditional expectation of constitutes a house - 2.3 kids, picket fence, et. all. That's depressing.
IMO, this braindrain could possibly synergize with the current trend of increasing remote work and we'll begin to see the stranglehold the SF Bay Area has on tech workers/startups chip away at an even faster pace.
Arguably, the SF rent issue has implications in that sphere, as well.
It all sounds reasonable, except I think that it has probably been the case in San Francisco for much longer, and I don't know if the past 2-3 years has really seen an unprecedented or new swell of 20-somethings.
History doesn't support this. Industry dominance tends to concentrate. NYC is still the finance capital of the west. Everyone claims the high costs will drive the industry to migrate to Florida or something but it doesn't happen. Especially when you can just go across the river to Jersey City if you want to live cheaper. SF is expensive but you can still go to Oakland or Alameda or something which is a lot more reasonable than asking someone to move to Idaho for your company.
I left New York not because I couldn't afford the prices (if I stayed in finance, that'd be a non-issue) but because I started hating what the high real estate prices did to the culture. You do get to a point, around 35, where your only options (if staying in NYC) are to move into management or finance. Non-financial programmers don't make enough to live there, and managers don't get to program.
I also think that New York's tech scene has a lot of quantity but not much in the way of quality. For every good company there are 50 dipshit companies founded by fired bankers and real estate guys who think waterfall is a valid software methodology and not an anti-pattern.
High housing prices truly are culturally toxic. I'm surprised more people don't get that.
I'm curious to hear about the SF Bay Area tech scene frame in a similar point of view, from the older (wiser) hackers here.
My young brain hadn't yet connected the dots about the whole 'reaching a point where you have to move into management or finance, due to career path' thing, which is a very interesting angle.
You know, there is more in the bay area than San Francisco. If you try living in Berkeley or Oakland for a few months, you will find that it isn't "a remote, suburban sprawl-y part of the Bay Area." It's only a half hour away by BART from all those shiny SOMA offices. And there is San Mateo and all the other towns on the penninsula.
Like others have mentioned, the possibility of a brain-drain from SF is a very likely scenario in a few years (if the cost of living stays this shitty). It would be more beneficial if startup land would decide on one of the secondary tech hubs as opposed to everyone going wherever. Having 2 people move to Seattle, 4 of them to Boulder and 3 to Phoenix isn't gonna establish much in either of those. But having 10 people all move to Austin seems like a bigger impact.
Why do people want to live in a foggy, high priced city?
1. Nerdy guys are hit on by women.(Yes--they are that desperate--remember the lack of available guys?) 2. It's
a strict union city--meaning if you get into a union you have a decent living. There's a ton a jobs, but if it's not union expect around 10/hr. If you look good--a chick will take you into her rent controlled apartment. Money/intellect doesn't mater in your 20-30's though--you have to be a Fonzie--in order to get rent controlled girl.
Owning a car is like shooting yourself in the foot to stop a robbery, except in a handful of neighborhoods.
It's a great town for young men(some of you), but it's horrid for straight women. If you make your fortune
with your start-up, you will move to Marin, and live like
a hermit. Although, your neighbors won't steal from you.
Home is really a state of mind. I've seen successful Flat Landers arrive in the Bay Area, and realize they might
have been the popular kid in there town, but in reality
there just a C student--on all levels. They become depressed within a year.
If you do decide to live if San Francisco most people assume
you have an advanced degree. They are not impressed by
where you went to school. They are impressed with what
you built in your garage though. If you enjoy working
with you hands, and back, look into local 6 apprenticeship
program. If you become a book 1 dude, you will make $100/hr. If you become book 1, don't turn into an asshole
though. Remember, the only reason you make that money is
because of a liberal Union.
Always worth noting that "this time may be different." Specifically, this trend may or not be the beginnings of a long-term structural move of the world's wealthy from suburbs to urban areas, with world cities like San Francisco, New York, and London becoming luxury dwellings for the 1%. If so, then prices will continue to rise substantially.
This is a tech-heavy community, but the interest of foreign buyers cannot be overlooked in this current market. San Francisco is a world-class city and if you look at overall macro trends of comparable cities (London, New York, Paris, Tokyo, etc), SF is still downright cheap. There will always be a wave or renters in great locations, so if you have the cash SF real estate is a good place to park it.
Average price of a 3 bedroom house in central London is currently around $4,900,000.
Europeans get xenophobia all wrong. They freak the fuck out about minarets but do nothing to keep foreign speculators and billionaires out of their real estate markets.
If you want a decent life in your town, keep the despots and oil sheikhs and drug kingpins the fuck out of your real estate market.
I saw the same thing in Italy when I lived there in the 90s - any kind of real estate was much more expensive than it seemed like anyone would be able to afford.
Never did figure it out - in the US, the public policy issue with homeownership is making mortgages easier or harder to get. If they're easy, then prices go up but more people own something. If they're hard, then prices go down (because no one bids them up) but fewer people own. I can't figure out a policy that leads to high prices and low rates of ownership.
Restricting affordable housing so that it doesn't grow as fast as population. In the UK the rise in the price of housing is expected to hit 7%, whereas inflation is supposed to maybe get as high as 2% over the next two years. This should give a property bubble in the southeast before the next election, which the government can claim represents an economic recovery.
It seems hard to extrapolate a long-term boom-bust cycle from those graphs. SF may be more sensitive to national trends, but I only see two clear busts, and one was 2008, during which housing markets collapsed almost everywhere. The earlier one coincides with the 2001 downturn and dot-com bust. You'd probably see echoes of those busts in plenty of other housing markets.
If you can get someone already in SF out to say Boise, Denver, or Phoenix they can make 80% of what they made in SF and have a better lifestyle. If you cover the cost of moving that should make it a very attractive offer. Sell their home in SF (if they own), and buy a nicer/roomier place in the new location.
Phoenix in particular has a pretty thriving tech community, and a far better cost of living. The main reason I stay here is the job market is great, and the cost of living is far better, relative to programming pay than most other areas. Of course there is the down side (June, July and August).