Average Rent in San Francisco Has Dropped $1k This Year • Hacker News Board

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

#521

Post by klipt » Tue, Dec 29, 2020, 3:30 AM UTC

phenkdo wrote: post #460

pound wrote: post #384

Earlier quoted context omitted.

not enough housing to meet demand means raising property values, which is beneficial for property owners without having to pay more taxes

I thought "there is no shortage if you pay enough" shibboleth is universally applicable. H1b/housing/healthcare ?

Actually no, land is the one thing you can't make more of, which is why economists say a land value tax is one of the most efficient taxes (since supply is fixed, taxes can't reduce supply).

It's true you can make more housing by building up, but only if city zoning allows, which NIMBYs don't want.

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

#522

Post by smegger001 » Tue, Dec 29, 2020, 3:55 AM UTC

epistasis wrote: post #400

fortran77 wrote: post #377

Earlier quoted context omitted.

What does Prop 13 have to do with the fact that they're not building enough housing?

Prop 13 gives huge tax benefits to using land less than productively. Both selling land, and building on it will massively increase taxes. Property values are rising at 5%-10% per year, but bulidings themselves only depreciate without dumping more money into the building. So that 5%-10% is all land value gain. As a property owner, why increase taxes by using the land more productively with new buildings, when you can…

> As a property owner, why increase taxes by using the land more productively with new buildings, when you can continue to profit just as much without that?

because the bubble will pop eventually.

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

#523

Post by fortran77 » Tue, Dec 29, 2020, 4:07 AM UTC

sagarm wrote: post #487

fortran77 wrote: post #388

Earlier quoted context omitted.

I don't think every California home owner is some evil beast trying to keep others out. I support building more homes, and would love it if every single family detached home were automatically rezoned for two units on the parcel. But if it weren't for Prop 13, my home and my business would have been forced out by people moving in and paying too much money for homes next door to me. And "raising property values" only…

By "forced out" you mean you could 1) sell, reaping a huge windfall. 2) use a HELOC or reverse mortgage to pay for the higher property taxes. But of course you'd prefer both to keep the windfall and not move, a privilege afforded to you by prop 13. That is only natural. Meanwhile, homelessness in the state continues to rise as high land values make housing production and anti-growth activists on planning committees e…

> use a HELOC or reverse mortgage to pay for the higher property taxes.

So you're saying a frugal person, who wants to be able to plan and save and live in retirement in his home shouldn't be able to if some dot-com specuvestors bid up the prices of houses on his block forcing him to sell?

There's no "windfall". He still has property tax that rises 2%/year, and the cost of maintenance on his home. And if he sells, he'll have to pay capital gains tax if there is a "windfall."

You are cruel and evil.

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

#524

Post by abalone » Tue, Dec 29, 2020, 4:23 AM UTC

whakim wrote: post #454

abalone wrote: post #410

Earlier quoted context omitted.

You’re mischaracterizing the left-wing / long term renter position here. This is a very common tactic among local SF “YIMBYs” for some reason. Progressives are not objecting solely on the basis of “character of the city” and in fact regularly poll in favor of development. What they fight for is affordable housing development. Underlying this problem is a massive income disparity between techies and working class folk…

This is a mischaracterization of the YIMBY position. Most YIMBYs are not opposed to raising taxes so that the city can pay for the construction of affordable housing units. (Note that the city doesn't build housing even if they pay for it - developers still do!) YIMBYs also believe, however, that we need housing of all kinds, including market rate housing. That is where YIMBYs and progressives disagree. Separately, d…

> This is a mischaracterization of the YIMBY position. Most YIMBYs are not opposed to raising taxes so that the city can pay for the construction of affordable housing units.

This is false. YIMBYs opposed the recent prop I to tax >$10M real estate sales to fund “emergency rent relief and permanently affordable housing.”[1]

[1] https://ballotpedia.org/San_Francisco,_California,_Propositi...

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

#525

Post by Seb-C » Tue, Dec 29, 2020, 4:23 AM UTC

deeeeplearning wrote: post #98

PedroBatista wrote: post #7

Drop 50% and then we can start to talk about reasonable values..

SF is still a major city and there are premiums due to that. You're talking about having rents in SF close to those in places like Nashville or Dallas which I think is totally unrealistic.

This $1k drop is more than my total rent in Tokyo for 45 square meters, close to a station and the center.

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

#526

Post by chii » Tue, Dec 29, 2020, 5:14 AM UTC

kelnos wrote: post #516

cwilkes wrote: post #80

Earlier quoted context omitted.

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.

When people talk about "using land productively", they aren't talking about a single person's profit. It's more of a "collective productivity". You can only pass on so many costs before demand drops because the price you're asking just isn't feasible. Non-resident landlords in SF, to my knowledge, aren't really anti-development. They recognize that 2x the number of units on the same parcel of land won't cut the per-u…

> plus 2020-assessed property taxes

which is why i think property taxes are a stupid form of taxation. The property's income should be what's taxed - not the "value" of the property. And that income should be taxed at the marginal tax rate of the owner.

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

#527

Post by chii » Tue, Dec 29, 2020, 5:36 AM UTC

maxsilver wrote: post #361

FreakyT wrote: post #22

Earlier quoted context omitted.

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…

> 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, Except your own example demonstrates that it's not. If it was "solely supply and demand", then rents should drop far more dramatically than they have, down to levels comparable to other cities that used to be equally unpopular. Yet there's a literal pandemic and even t…

> where demand is regularly falling in many places, where new construction always outpaces population growth every single year, and yet the housing prices still always rise

that just sounds wrong, and may be i can't see the whole picture from just your comments, but the price _can't_ be rising if demand is falling. Otherwise, these new construction will not sell at all. SO there _must_ be some sort of demand.

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

#528

Post by chii » Tue, Dec 29, 2020, 5:43 AM UTC

epistasis wrote: post #357

cam0 wrote: post #351

Earlier quoted context omitted.

I think you make a lot of good points here, but I think a little more weight needs to be placed on the "big paychecks" part. When my wife and I bought a house here (in SF) a couple of years ago, we had to make offers on nearly 20 homes over the course of 18 months before we had an offer accepted, and we were coming in with an all cash offer at or above asking price every time. The problem we ran into was that there w…

Right, and imagine that if instead of all your money going to the profits of the previous owner, your money could be used productively to pay labor to build new housing for you! Instead of your wealth being transferred to a laborer who has less wealthy, it was transferred to somebody who is likely quite a bit more wealthy. And instead of your wealth being used to improve the city, it was all used for the profits of s…

> pay labor to build new housing for you!

good luck using labour to generate a piece of land to which you can build on that's near where you want it.

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

#529

Post by chii » Tue, Dec 29, 2020, 5:54 AM UTC

site-packages1 wrote: post #503

ashtonkem wrote: post #34

Earlier quoted context omitted.

Commercial real estate rents work differently, at least in America, because of how they’re financed. Unlike residential housing, commercial buildings are continuously refinanced. When the owner of a commercial building gets a new mortgage on their building, the potential for rent is weighed more by the banks than the current rent. The way the math works out, it’s much better for a commercial land lord to leave a unit…

Really interesting. There's an empty spot in my building that's a coffee shop storefront. When we moved in, I saw that it was vacant (beginning of 2020) and asked about rent. It was $9k/mo. I offered them $5k and they declined. Still vacant. That's a lot of lost income, but perhaps it makes sense in the sense of commercial real estate.

if they can offset the cost of the lost income from the (lack of) rent with some other source of gains, they pay less taxes!

Also, if they accept a rent of $5k/m, it sets a new (lower) price ceiling, where as a $9k/m original price was the original ceiling which supports the current valuation. Thus the commercial real estate would have a harder time to capitalize on the equity. S

Therefore, the losses are more than just the $4k/m difference - it's lost capitalization/equity to which one may leverage against, and lost tax offset potential as well.

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

#530

Post by djsumdog » Tue, Dec 29, 2020, 5:57 AM UTC

packetlost wrote: post #391

djsumdog wrote: post #379

Earlier quoted context omitted.

Worse: Chicago.

Ouch. If you can put up with the winters, Madison is quite a bit nicer than Chicago, even in it's current state. But, it's not really a city. Aside from 3 blocks around the capitol, there's basically no density and you're driving a minimum of 10 minutes to get to anything worthwhile. I grew up here, but I personally hate winter and can't wait to get out of this entire region.

I've only been up that way to see The House on the Rock. I can't stand the winters though, or Mayor Lightfoot's disastrous policies. I'm definitely moving down south.