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The Decline of Investment in San Francisco Startups

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Re: The Decline of Investment in San Francisco Startups

#381

Post by TuringNYC »

Zahlmeister wrote: post #375
epicureanideal wrote: post #193

Earlier quoted context omitted.

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

Wages don't naturally rise just because rent is higher, if anything the converse is true. You'd end up paying 25$ for a coffee just so that the barista can afford their overpriced housing. If you're just raising the cost of living, but not the standard, you're not gaining anything for anyone.

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

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

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

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

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

Re: The Decline of Investment in San Francisco Startups

#382

Post by user5994461 »

ido wrote: post #378
epicureanideal wrote: post #193

Earlier quoted context omitted.

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

Rent control works great when it cover the entire rental stock. See e.g. Berlin vs LA: https://goo.gl/aNHzGQ In Berlin all rents are controlled by default[1]. And despite similar purchase prices, rental prices are half of LA's . [1] only newly built units or those renovated for more than 1/3 the value of the unit are allowed to be rented without price restrictions. This keeps the vast majority under rent control.

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

Because income is one half of LA.

Re: The Decline of Investment in San Francisco Startups

#383

Post by Zahlmeister »

TuringNYC wrote: post #381
Zahlmeister wrote: post #375

Earlier quoted context omitted.

Wages don't naturally rise just because rent is higher, if anything the converse is true. You'd end up paying 25$ for a coffee just so that the barista can afford their overpriced housing. If you're just raising the cost of living, but not the standard, you're not gaining anything for anyone.

>> Wages don't naturally rise just because rent is higher, if anything the converse is true. I'll offer a lay-person first-person view in contradiction to this theory: rents set a solid bottom salary level acceptable to people. A typical Bay Area rent can consume 100% of your salary once you have a family involved. As countless HN threads discuss, i'll pre-answer the typical nay-sayers. Yes, i realize I can raise my…

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

Re: The Decline of Investment in San Francisco Startups

#384

Post by Zahlmeister »

ido wrote: post #378
epicureanideal wrote: post #193

Earlier quoted context omitted.

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

Rent control works great when it cover the entire rental stock. See e.g. Berlin vs LA: https://goo.gl/aNHzGQ In Berlin all rents are controlled by default[1]. And despite similar purchase prices, rental prices are half of LA's . [1] only newly built units or those renovated for more than 1/3 the value of the unit are allowed to be rented without price restrictions. This keeps the vast majority under rent control.

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

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

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

Re: The Decline of Investment in San Francisco Startups

#385

Post by randomdata »

ubernostrum wrote: post #334
randomdata wrote: post #94

Earlier quoted context omitted.

The economic need will, of course, compensate for higher housing costs by providing higher compensation, which ultimately makes housing costs a moot issue for anyone providing value to the local economy. As someone from outside of the region, what reasons necessitate that a lot of people be in the Bay Area that is beyond the economic need?

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

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

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

Re: The Decline of Investment in San Francisco Startups

#386

Post by ido »

et-al wrote: post #380
ido wrote: post #378

Earlier quoted context omitted.

Rent control works great when it cover the entire rental stock. See e.g. Berlin vs LA: https://goo.gl/aNHzGQ In Berlin all rents are controlled by default[1]. And despite similar purchase prices, rental prices are half of LA's . [1] only newly built units or those renovated for more than 1/3 the value of the unit are allowed to be rented without price restrictions. This keeps the vast majority under rent control.

There's too many variables to say that rent control for the entire housing stock is what keeps Berlin's rents down. For starters, Berlin is known to be one of the cheaper German cities until recently ("poor but sexy"). In addition, the climate, geographies, and economies between LA and Berlin are significantly different.

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

Re: The Decline of Investment in San Francisco Startups

#387

Post by ido »

user5994461 wrote: post #382
ido wrote: post #378

Earlier quoted context omitted.

Rent control works great when it cover the entire rental stock. See e.g. Berlin vs LA: https://goo.gl/aNHzGQ In Berlin all rents are controlled by default[1]. And despite similar purchase prices, rental prices are half of LA's . [1] only newly built units or those renovated for more than 1/3 the value of the unit are allowed to be rented without price restrictions. This keeps the vast majority under rent control.

>>> Rental prices are half of LA's. Because income is one half of LA.

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

Re: The Decline of Investment in San Francisco Startups

#388

Post by ido »

Zahlmeister wrote: post #384
ido wrote: post #378

Earlier quoted context omitted.

Rent control works great when it cover the entire rental stock. See e.g. Berlin vs LA: https://goo.gl/aNHzGQ In Berlin all rents are controlled by default[1]. And despite similar purchase prices, rental prices are half of LA's . [1] only newly built units or those renovated for more than 1/3 the value of the unit are allowed to be rented without price restrictions. This keeps the vast majority under rent control.

Affordable housing is actually quite scarce inside the city right now, people on average don't really earn that much. The rent controls had no actual effect on price increases. It has been suggested that the rules are simply being ignored and most tenants won't pick a legal fight with their landlords when housing is so scarce: https://www.welt.de/finanzen/immobilien/article150877146/Die... There's more than enough ho…

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

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

Re: The Decline of Investment in San Francisco Startups

#389

Post by closeparen »

Zahlmeister wrote: post #383
TuringNYC wrote: post #381

Earlier quoted context omitted.

>> Wages don't naturally rise just because rent is higher, if anything the converse is true. I'll offer a lay-person first-person view in contradiction to this theory: rents set a solid bottom salary level acceptable to people. A typical Bay Area rent can consume 100% of your salary once you have a family involved. As countless HN threads discuss, i'll pre-answer the typical nay-sayers. Yes, i realize I can raise my…

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

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

Re: The Decline of Investment in San Francisco Startups

#390

Post by randomdata »

Hydraulix989 wrote: post #367
randomdata wrote: post #309

Earlier quoted context omitted.

I guess that ultimately depends on what you want to do with your discretionary money. The day-to-day costs are already accounted for in our hypothetical examples. Someone in a low-cost area may want to travel to the city to take in the entertainment and amenities available in the big flashy city, in which case that money is being spent in a high-cost area. Similarly, someone in a high-cost area may want to travel to…

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

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