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Average Rent in San Francisco Has Dropped $1k This Year

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Re: Average Rent in San Francisco Has Dropped $1k This Year

#71
post #22
post #13

Earlier quoted context omitted.

Both. I spent the last decade having these conversations with people who also grew up here and can’t afford to remain here without staying with their parents, with some of the stranger conversations devolving into my counter parties brainstorming ways to kick tech people out of the City and stop new people from moving in altogether, as if freedom of movement in the United States wasn’t really a thing. It’s not “suppl…

Exactly -- there's a pervasive belief in the bay area that high rents are solely due to the evil cabal of landlords who meet every week in a dimly lit room and agree to charge sky-high rents while cackling maniacally and twirling their perfectly-waxed moustaches. The sudden COVID-related rent price drop indicates that this theory is nonsense, and that the high rents are solely a function of supply and demand, but I'm…

Technically it is supply and demand, but there are systemic factors at play that can't be ignored. This is not a typical supply and demand marketplace. The supply here is artificially constrained by existing regulations, and there's a vicious relationship between land owners, elected officials, and demand pressure from folks with high paying jobs.

It's interesting to see how little things have progressed over the last few decades. For example, check this study [1] from fourty years ago.

TL;DR: "A recent survey of local land use policies in the Bay Area identified the important role that land-use controls play in limiting developments. The suburban land squeeze is not the exclusive result of immutable natural constraints. It is the outcome of the restrictive land use and development regulations imposed by many of the region's 100 land governments. A new mood has emerged in the suburbs; land use controls now place severe limits on where, when and how the region can develop. Continued suburban land conversion is now viewed as undesirable, and efforts to limit residential development are well organized and effective."

It's certainly not an "evil cabal of landlords in a dimly lit room", but it'd be naive to ignore the systemic forces at play.

[1] https://escholarship.org/uc/item/0ds0q9q4

Re: Average Rent in San Francisco Has Dropped $1k This Year

#72
post #13

Earlier quoted context omitted.

Do they ignore it, or are they using it for their own gain? For people who actually own property in San Fransisco, consider how enriched they have become by the obscenely rising rent/real estate prices. This comes along with them getting to keep their neighborhoods static instead of having to have a gigantic shadow erected across the street. Sure there are downsides, but you can always just sell and get our with a pr…

Both. I spent the last decade having these conversations with people who also grew up here and can’t afford to remain here without staying with their parents, with some of the stranger conversations devolving into my counter parties brainstorming ways to kick tech people out of the City and stop new people from moving in altogether, as if freedom of movement in the United States wasn’t really a thing. It’s not “suppl…

It's all but illegal to build new or higher density housing in SF. We need to start electing people who will actually embrace or at least allow construction.

This is what it's like:

"San Francisco Man Has Spent 4 Years and $1 Million Trying to Get Approval to Turn His Own Laundromat Into an Apartment Building"

https://reason.com/2018/02/21/san-francisco-man-has-spent-4-...

Re: Average Rent in San Francisco Has Dropped $1k This Year

#73
post #42

Earlier quoted context omitted.

It's a side effect of de-taxing land. The more land becomes an asset and the less it becomes a liability (e.g. by capping property taxes) , the greater incentive there is to hoard it and jealously guard its value with NIMBYism which leads to even less development, greater shortages and even higher prices on an upward spiral. Saying "it's about supply and demand" is not technically wrong but it glosses over the toxic…

Even if land were historically taxed at say NYC rates in SF the supply and demand problem would still rear its head. The problem is artificial supply constraints created first and foremost by zoning and secondly by a myriad of other regulation that infringed upon property rights and adds friction (time, money, risk, all of the above) that prevents people from exercising their property rights. Prop 13 (a monetary ince…

> a myriad of other regulation that infringed upon property rights and adds friction (time, money, risk, all of the above) that prevents people from exercising their property rights. Prop 13 (a monetary incentive to not sell) falls into this latter category.

I think Prop 13's incentive not to redevelop is actually more significant here than its incentive not to sell.

Re: Average Rent in San Francisco Has Dropped $1k This Year

#74
post #66

Earlier quoted context omitted.

> Saying "it's about supply and demand" is not technically wrong but it glosses over the toxic systemic changes which brought us here and exculpates the people who deliberately fought for them to create this mess. I am happy to discuss all variables which inform the price, so long as we agree to give supply and demand top billing. We can even discuss the variables which inform supply if you like.

Is Supply and Demand really the end-all, be-all of economics? Don't things like Veblen goods demonstrate that there is some nuance to the topic.

More nuance than including high prices as one of the goods for which there's demand?

Re: Average Rent in San Francisco Has Dropped $1k This Year

#75
post #3

> the weighted average asking rent for an apartment in the city, which currently measures around 2.3 bedrooms when counting a studio as having one, has dropped to $3,100 a month. Still too high. Was checking into apartment prices earlier in the year and it is amazing the number of landlords that will try and sell you on a “kitchen” that is a mini-fridge, tiny sink, microwave and a hot plate whilst still charging you…

Over the years I’ve come to the realization that a number of “kitchens” in luxury apartments are clearly designed for making at most breakfast and otherwise looking pretty. It’s not all luxury apartments, not by a long shot, but a surprising number were unusable due to layout mistakes or a complete lack of equipment (on the owners side). The conclusion I came to is that the people who rented these units valued a pret…

Not just new construction. Studio apartments in old buildings have also been retrofitted into 1-bedrooms by gutting the kitchen and carving out one of these crap kitchenettes from the main room, including in a building I used to live in.

When I was exploring listings to see how the pandemic affects prices earlier in the year, these “kitchens” I described were also the norm over in the Sunset and Richmond around... Septemberish? Why? I don’t know, in some cases the stove had actually been removed, but maybe the full sized fridge was left in.

Re: Average Rent in San Francisco Has Dropped $1k This Year

#76
post #66

Earlier quoted context omitted.

> Saying "it's about supply and demand" is not technically wrong but it glosses over the toxic systemic changes which brought us here and exculpates the people who deliberately fought for them to create this mess. I am happy to discuss all variables which inform the price, so long as we agree to give supply and demand top billing. We can even discuss the variables which inform supply if you like.

Is Supply and Demand really the end-all, be-all of economics? Don't things like Veblen goods demonstrate that there is some nuance to the topic.

No but when figuring out what informs a price you want to look at supply and demand first. There’s room for other variables, but you normally start there.

EDIT: While I’m inside the edit window, let me throw in another big variable as an example. Costs are another factor that inform a price, and a big one. You could make a case that it deserves higher billing than supply and demand, but if your costs are $X but you can only sell your widget for $X-1, and not $X+>=0, then $X-1 is your price ceiling. Your business is unprofitable and losing money.

I’m trying to be careful with my words but I still seem to be leaving some people with the impression that I think supply and demand is the only variable that informs a price. It’s not, but it’s still incredibly important and often dismissed as a non-factor when discussing San Francisco rental and real estate prices with San Franciscans.

Re: Average Rent in San Francisco Has Dropped $1k This Year

#77
post #42

Earlier quoted context omitted.

It's a side effect of de-taxing land. The more land becomes an asset and the less it becomes a liability (e.g. by capping property taxes) , the greater incentive there is to hoard it and jealously guard its value with NIMBYism which leads to even less development, greater shortages and even higher prices on an upward spiral. Saying "it's about supply and demand" is not technically wrong but it glosses over the toxic…

Even if land were historically taxed at say NYC rates in SF the supply and demand problem would still rear its head. The problem is artificial supply constraints created first and foremost by zoning and secondly by a myriad of other regulation that infringed upon property rights and adds friction (time, money, risk, all of the above) that prevents people from exercising their property rights. Prop 13 (a monetary ince…

Zoning is a result of NIMBYism.

NIMBYism is a result of people who really want to protect the value of their land. Some of these people will be quite desperate to do this because they're highly leveraged. Negative equity is a good incentive to turn up to your local planning meetings and inhibit development.

Re: Average Rent in San Francisco Has Dropped $1k This Year

#78
post #3

> the weighted average asking rent for an apartment in the city, which currently measures around 2.3 bedrooms when counting a studio as having one, has dropped to $3,100 a month. Still too high. Was checking into apartment prices earlier in the year and it is amazing the number of landlords that will try and sell you on a “kitchen” that is a mini-fridge, tiny sink, microwave and a hot plate whilst still charging you…

>will try and sell you on a “kitchen” that is a mini-fridge, tiny sink, microwave and a hot plate whilst still charging you full rent. To be fair, that is a Kitchen to a great number of people on this planet. I shared a mini fridge, tiny sink, and a hot plate with 2 other roommates when I lived in Paris for a few months and the rent was not cheap their either. Was about 2,000 Euros/mo 15 years ago iirc.

Yeah, Paris aint cheap.

Most big European cities have huge rents as well but no Bay Area salaries to make up for it.

Re: Average Rent in San Francisco Has Dropped $1k This Year

#79
post #45

Earlier quoted context omitted.

On a semi related note, I've seen a lot more 'stop' and 'stop it' on the internet lately. Arguably the various forms of saying the same thing come and go in terms of what is commonly used, but I've been surprised to see such empty words suddenly so common. Personally I would be a bit embarrassed to just tell people to 'stop it' as to me it seems sort of childish, but apparently not everyone. It's strange.

Because it gets old listening to the same tired uninformed troupes from some random person on the internet that is just regurgitating misinformation. For people that actually live in San Francisco this is a real issue that affects our daily lives. Having some random person spreading more incorrect info is insulting and actually potentially harmful to the people that actually live here and have to pay those rents like…

C'mon, you should know simply that telling a hacker to "Stop it" with no real reason has never, ever worked.

Re: Average Rent in San Francisco Has Dropped $1k This Year

#80
post #42
post #13

Earlier quoted context omitted.

Both. I spent the last decade having these conversations with people who also grew up here and can’t afford to remain here without staying with their parents, with some of the stranger conversations devolving into my counter parties brainstorming ways to kick tech people out of the City and stop new people from moving in altogether, as if freedom of movement in the United States wasn’t really a thing. It’s not “suppl…

It's a side effect of de-taxing land. The more land becomes an asset and the less it becomes a liability (e.g. by capping property taxes) , the greater incentive there is to hoard it and jealously guard its value with NIMBYism which leads to even less development, greater shortages and even higher prices on an upward spiral. Saying "it's about supply and demand" is not technically wrong but it glosses over the toxic…

But they are using land productively as they are making $3100 a month off of a small studio. Also I doubt if raising taxes will result in anything more than them passing that cost on to the renters.
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