The Bay Area’s tech boom in historical and social context • Hacker News Board

Re: The Bay Area’s tech boom in historical and social context

#81

Post by nradov » Fri, Jul 06, 2018, 8:58 PM UTC

guiomie wrote: post #51

True story: 2 mid-level engineers both working at a FANG, and we can barely afford a 3bdr/2.5bath in Sunnyvale/Santa Clara without burning thru 30-40% of our monthly income (including RSUs). Having bid on a few houses, I'm amazed by how opaque the market is here. Houses will be listed 30% less than expected selling price and when you do make an offer, the seller will come back with a higher price to all those who mad…

New homeowners anywhere in the country frequently stretch their monthly budgets to that range based on the expectation that their incomes will eventually increase while mortgage payments remain fixed.

The housing market is fairly efficient and with so many participants effective collusion would be implausible. Asking prices are essentially meaningless, just the starting point in a negotiation.

Re: The Bay Area’s tech boom in historical and social context

#82

Post by nradov » Fri, Jul 06, 2018, 8:59 PM UTC

rdiddly wrote: post #69

"It illuminates the basic crisis and contradiction of the San Francisco Bay Area, which is an example of capitalism at its most innovative and dynamic, and simultaneously the site of severe inequality and failing public policies and infrastructure." No contradiction there. Inequality was always both a feature and a bug of capitalism. Inequality is kind of the whole motivation for participating in capitalism. People s…

That's not how capitalism works. If you make a new widget for $4.50 and sell it for $5.00 then both the buyer and seller are enriched. You haven't impoverished anyone.

Re: The Bay Area’s tech boom in historical and social context

#83

Post by cameronlpmoore » Fri, Jul 06, 2018, 8:59 PM UTC

guiomie wrote: post #51

True story: 2 mid-level engineers both working at a FANG, and we can barely afford a 3bdr/2.5bath in Sunnyvale/Santa Clara without burning thru 30-40% of our monthly income (including RSUs). Having bid on a few houses, I'm amazed by how opaque the market is here. Houses will be listed 30% less than expected selling price and when you do make an offer, the seller will come back with a higher price to all those who mad…

Listing a property below the expected selling price is a common strategy to induce a bidding war. If a homeowner receives 10+ offers at or above asking price then that homeowner is perfectly reasonable in coming back with an even higher price and seeing which bidder wants it the most. It's the homeowner's asset and it makes sense for that person to sell it for as much as possible - no collusion needed.

Re: The Bay Area’s tech boom in historical and social context

#84

Post by paulsutter » Fri, Jul 06, 2018, 9:01 PM UTC

sulam wrote: post #36

aresant wrote: post #12

The principal issue, full stop, in the Bay Area and most of California is housing. There are two solutions to this: 1) Build more. But this is outrageously difficult due to a well-meaning political view of safety / fairness / etc. These restrictions employ an awful lot of bureaucrats for enforcement but add $10s of thousands in fees and delays for builders, that are IRR driven and would rather concentrate their effor…

Forget older Californians, you can get priced out of your house just from property value increases in the last decade! Also keep in mind that there's no great system for appraising houses. As someone who has bought two houses and sold one, the appraisal system comes down to "can I find a few houses in this neighborhood that have roughly equivalent room count and square footage that have sold in the last 6 months." So…

Actually there are many ways of appraising houses, and they track the market pretty well (own multiple rental properties so I keep an eye on it)

> here's no great system for appraising houses

Re: The Bay Area’s tech boom in historical and social context

#85

Post by nradov » Fri, Jul 06, 2018, 9:02 PM UTC

sulam wrote: post #38

ohthehugemanate wrote: post #8

Very interesting read. When we discuss inequality, I think there are a lot of assumptions made that make it hard to really judge. For example, TFA trots out the high number of people on minimum wage, and the high percentage of people below the poverty line. This is misleading, because it misses out on some key ways that "capitalism raises all boats," which are tricky to measure. Off the top of my head... The first is…

Poor people would be very surprised to hear that they all have washing machines. So would Laundromat owners. They may have TVs, but they can't afford cable so it's OTA only. And while they have a fridge, they can't afford food to put in it. Most importantly the cost for a place to put all these things is completely out of reach to anyone under the poverty line in the SF Bay Area.

You would be surprised how many poor people have cable TV. It may not be financially prudent but some think of it as a necessity.

Re: The Bay Area’s tech boom in historical and social context

#86

Post by jorblumesea » Fri, Jul 06, 2018, 9:06 PM UTC

guiomie wrote: post #51

True story: 2 mid-level engineers both working at a FANG, and we can barely afford a 3bdr/2.5bath in Sunnyvale/Santa Clara without burning thru 30-40% of our monthly income (including RSUs). Having bid on a few houses, I'm amazed by how opaque the market is here. Houses will be listed 30% less than expected selling price and when you do make an offer, the seller will come back with a higher price to all those who mad…

This is how real estate works in a high demand market. Houses are intentionally listed as lower than their true market value in order to create a bidding war between possible buyers. Seattle does the same thing.

Re: The Bay Area’s tech boom in historical and social context

#87

Post by rdiddly » Fri, Jul 06, 2018, 9:07 PM UTC

nradov wrote: post #82

rdiddly wrote: post #69

"It illuminates the basic crisis and contradiction of the San Francisco Bay Area, which is an example of capitalism at its most innovative and dynamic, and simultaneously the site of severe inequality and failing public policies and infrastructure." No contradiction there. Inequality was always both a feature and a bug of capitalism. Inequality is kind of the whole motivation for participating in capitalism. People s…

That's not how capitalism works. If you make a new widget for $4.50 and sell it for $5.00 then both the buyer and seller are enriched. You haven't impoverished anyone.

You're reacting to the word impoverished. You have "extracted 50 cents from them," is that better? I'll change it. Don't get distracted.

Edit: Also, there's short-term and long-term enrichment. The widget I sell might be a capital good that earns an income for its buyer, or it might just as easily be something that only depreciates or even destroys other wealth. Whereas the money I've collected can reliably be made to earn an income in any number of ways, which is why I always argue that the money is usually inherently worth more, and nobody on HN seems to agree with that.

Re: The Bay Area’s tech boom in historical and social context

#88

Post by kjeetgill » Fri, Jul 06, 2018, 9:08 PM UTC

nradov wrote: post #81

guiomie wrote: post #51

True story: 2 mid-level engineers both working at a FANG, and we can barely afford a 3bdr/2.5bath in Sunnyvale/Santa Clara without burning thru 30-40% of our monthly income (including RSUs). Having bid on a few houses, I'm amazed by how opaque the market is here. Houses will be listed 30% less than expected selling price and when you do make an offer, the seller will come back with a higher price to all those who mad…

New homeowners anywhere in the country frequently stretch their monthly budgets to that range based on the expectation that their incomes will eventually increase while mortgage payments remain fixed. The housing market is fairly efficient and with so many participants effective collusion would be implausible. Asking prices are essentially meaningless, just the starting point in a negotiation.

They point is that they're FANG employees and they probably make FAR above what most anyone else can be expected to. 30-40% of their monthly income is means that anyone outside of FANG is priced out. They feel the pressure but hey, they'll be fine. Anyone short of FANG will really feel it.

Re: The Bay Area’s tech boom in historical and social context

#89

Post by TACIXAT » Fri, Jul 06, 2018, 9:11 PM UTC

guiomie wrote: post #51

True story: 2 mid-level engineers both working at a FANG, and we can barely afford a 3bdr/2.5bath in Sunnyvale/Santa Clara without burning thru 30-40% of our monthly income (including RSUs). Having bid on a few houses, I'm amazed by how opaque the market is here. Houses will be listed 30% less than expected selling price and when you do make an offer, the seller will come back with a higher price to all those who mad…

It's absolutely insane. We need to give up the idea that we can have huge employers surrounded by single family homes. I'd take a nice apartment close to work over a million dollar home and 45 minute commute. That was one of the biggest contrasts to me going to China, "small" cities were incredibly dense. It was just apartment after apartment. I don't know what the catalyst will be in the US to get us to go from single family communities to density.

Re: The Bay Area’s tech boom in historical and social context

#90

Post by frgtpsswrdlame » Fri, Jul 06, 2018, 9:16 PM UTC

ThrustVectoring wrote: post #47

frgtpsswrdlame wrote: post #35

Earlier quoted context omitted.

I think the problem is that you're thinking of it in purely economic terms. Ending Prop 13 will increase home turnover because it prices people out of their homes but I don't think that's really what we want in our housing market. Telling people to think of their homes as a commodity upon which market forces should be brought to bear in order to ensure production of housing services at competitive prices is obtuse. P…

You cannot escape the vicissitudes of the market - you can only externalize the costs onto other people. In Prop 13's case, it was largely a one-time benefit to property owners at the time of passage, at the expense of both future residents and the economy in general.

>you can only externalize the costs onto other people.

For a marketeer this seems quite a lot like zero-sum thinking.

Besides you absolutely can escape the market. Not everything has to be a market, for example healthcare can be provided using market or non-market logic. You can also shrink the impact of markets, for example look at this [1] example of food-banks run using a market-ish system. They removed the parts of the market that they didn't want ie. everyone starts from a level playing field and cash is distributed regularly based on need but then they kept the price discovery system. We have this same power over markets, we can just get rid of the parts we don't want through laws. In homeownership we want to get rid of most of the frictions of the market that rub up against long-time asset holders. In investment securities we don't mind a structure that compels people to sell to produce market liquidity because most people don't have an attachment to their shares of $VTI. In home ownership people have as strong an attachment as you can have to a physical commodity so we don't want a structure which compels people to sell.

[1] https://www.npr.org/sections/money/2017/11/22/565736836/epis...