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San Francisco, I Love You But You’re Bringing Me Down

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Re: San Francisco, I Love You But You’re Bringing Me Down

#391

Post by bane »

gknoy wrote: post #198
enraged_camel wrote: post #164

Earlier quoted context omitted.

>>I'd love the city I'm sure, but after glancing around I've come to the conclusion that home ownership is unthinkable to anyone who hasn't had a cash-out event. I've never understood this crazy, if not outright insane obsession with home ownership. Why does everyone want to tie significant amounts of their lifetime earnings into physical property that historically has had very low appreciation in value? It's like pe…

As someone who recently (this past year) went from being a renter to a homeowner, and had previously been a home owner for several years, it's not all rational... but here are some of the reasons. I don't have to worry about the rent going up every year / six-months. If I plan to own the house for multiple years, a large chunk of my money goes to equity: I'm banking away value for later that you will get back when yo…

The equity you build up also give you unbelievable borrowing power in the future. I'm a handful of years away from paying off my house. When that happens I'll be able to borrow, in one shot, more money than the last startup I worked for had to struggle to raise over several rounds and 5 years, and on better terms.

The key is to do everything possible to minimize how much interest you pay, usually by shorter mortgage terms and paying off the principle as fast as humanly possible.

I wish I had the money I spent on rent when I was young and put it into a mortgage instead. I would have lived in a nicer environment, had more space for stuff, and had rooms I could have rented out in turn (which I do off and on over the years, you can usually pay off the interest every month just by renting out a spare bedroom).

Re: San Francisco, I Love You But You’re Bringing Me Down

#392

Post by bane »

api wrote: post #30

I've got a possibly great job offer on the table from SF/SV, but may turn it down. I'd love the city I'm sure, but after glancing around I've come to the conclusion that home ownership is unthinkable to anyone who hasn't had a cash-out event. The real estate market is certifiably, utterly bat-dookie insane. NYC is often considered more expensive, and Manhattan is certainly... well... Manhattan. But taken collectively…

San Francisco is like a low density lower Manhattan without the other Burroughs or New Jersey to save it and a slightly better mass transit system than L.A...which ain't saying much.

Re: San Francisco, I Love You But You’re Bringing Me Down

#393

Post by bane »

enraged_camel wrote: post #230
gknoy wrote: post #198

Earlier quoted context omitted.

As someone who recently (this past year) went from being a renter to a homeowner, and had previously been a home owner for several years, it's not all rational... but here are some of the reasons. I don't have to worry about the rent going up every year / six-months. If I plan to own the house for multiple years, a large chunk of my money goes to equity: I'm banking away value for later that you will get back when yo…

>>If I plan to own the house for multiple years, a large chunk of my money goes to equity: I'm banking away value for later that you will get back when you sell the house. (Assuming the market doesn't go pear-shape: a big assumption.) In contrast, money you spend on rent is a pure cost, and irrevocably lost. This logic is fundamentally flawed. Contrary to the popular conventional wisdom (repeated by our Baby Boomer p…

> You are getting something for that payment, which is a place to live.

Interestingly, for about the same amount per month, you can pay off a mortgage, get a nicer place to live and build equity at the same time...and you don't have a super telling you to turn the music down at 3 in the morning.

Re: San Francisco, I Love You But You’re Bringing Me Down

#394

Post by fyolnish »

deadfall wrote: post #10
DanBlake wrote: post #8

The reason for San Francisco's high rent/home price is very simple, despite how others like to complicate it more: 1: Its desirable for most people to live here. Possibly the most desirable place in the USA, depending on your tastes. As a result, people are willing to pay more to live here. There are jobs, culture, food, art and much more all in this great city. 2: Rent Control. I wont get too much into it, but my ta…

SF approved "tiny apartments" http://www.wired.com/design/2012/11/san-francisco-micro-apar...

Interesting title, considering that 20m^2 is considered pretty roomy in Tokyo

Re: San Francisco, I Love You But You’re Bringing Me Down

#395

Post by bane »

dllthomas wrote: post #387
7Figures2Commas wrote: post #376

Earlier quoted context omitted.

> If you rent, the cost of staying may be completely out of your control. Indeed, it may not even be possible. That's arguably a feature, not a bug. Rents generally don't skyrocket without cause, and they usually don't skyrocket in isolation. If you're living in an area where rents are increasing rapidly and your income isn't keeping pace with the cost of living (of which rent is typically a substantial component), y…

> Your house isn't yours unless and until it's paid off. That depends what you mean. It's my understanding (as a non-homeowner of any stripe) that you can do more substantial remodelling projects without asking for your landlord's blessing in a home you have a mortgage on, which seems to have been the kind of thing the parent was talking about, and is a potentially substantial practical difference in whether a space…

I could knock my house down and replace it with a flower pot for all the bank cares so long as I keep making my mortgage payments.

Re: San Francisco, I Love You But You’re Bringing Me Down

#396

Post by michael_miller »

rayiner wrote: post #69

San Francisco is dealing with the same problem that New York had with finance. New York seems to have gotten over it, mostly: everyone realizes that finance pays the bills in New York, and finance people are mostly content with paying their taxes and leaving it at that. I wonder if San Francisco will come to terms with its reality before it's too late. As for moving to Portland, it's a great idea. Wonderful city if y…

One caveat I'd add is that in NY, finance might pay the bills, but it doesn't dominate the city. There are plenty of other industries which play significant roles in the city: fashion, publishing, filmmaking, etc. In SF, tech dominates the culture of the city. Countless times, I've gone to bars and heard pitches about startups, or discussions about some new technology. In NY, I've seldom heard people talk about i-banking, or anything finance related. It just feels way less like a monoculture.

Re: San Francisco, I Love You But You’re Bringing Me Down

#397

Post by bane »

dllthomas wrote: post #389
7Figures2Commas wrote: post #376

Earlier quoted context omitted.

> If you rent, the cost of staying may be completely out of your control. Indeed, it may not even be possible. That's arguably a feature, not a bug. Rents generally don't skyrocket without cause, and they usually don't skyrocket in isolation. If you're living in an area where rents are increasing rapidly and your income isn't keeping pace with the cost of living (of which rent is typically a substantial component), y…

> Yes, these individuals might be able to sell their homes at substantial profit, but they'll still have to move once they sell. They have to move if they were renting, too, and would be have less money (if they didn't leave the very instant rent rose at all) instead of more. Of course, that's just saying that it's better to be long an asset when its price jumps. Also, if your work doesn't tie you to a region and you…

> you can always rent out your house instead of selling it

Even if you lose a little on the rent, somebody else is now paying for your mortgage and you can enjoy a cheaper apartment elsewhere. Or if you've earned enough, just buy a second house. Mortgages aren't so hard to come by even these days that it's outside the realm of the possible.

Re: San Francisco, I Love You But You’re Bringing Me Down

#398

Post by ScottBurson »

malyk wrote: post #161
ionforce wrote: post #104

Earlier quoted context omitted.

How can middle class not mean anything? Doesn't it refer to the fat section of the income curve, where there are supposed to be the most number of people?

Sure, except that the perception of the middle class is significantly screwed (at least in the US, but probably similar up north). In the US, the median household income is $51,404[1]. So, the middle class should probably be centered around that number. Say, $35000 to $75000 or so. I bet your looking at that number and saying "No way! I'm middle class and my household income is $150k!" Well, turns out that basically…

I think the middle class is defined to be those people who have enough income that mere survival is not a daily concern, but do not have so much money they don't have to work.

That is, indeed, most people, which is why further divisions are useful, and so we talk of "lower-middle" and "upper-middle".

Re: San Francisco, I Love You But You’re Bringing Me Down

#399

Post by pyoung »

mwfunk wrote: post #287
hoov wrote: post #219

Earlier quoted context omitted.

> I've never understood this crazy, if not outright insane obsession with home ownership. And, I don't understand why so many people on HN seem to think it's insane. I'd like to be more in control of my environment. I don't want to be at the whims of a landlord, particularly in the future, when I have children. I want a place that is mine to customize as I see fit. I don't want to have to ask if I can paint, I want t…

I'm guessing that there's nearly a 100% correlation between the people accusing prospective homeowners of having an "insane obsession" and people who live in apartments in SF. SF is one of my favorite cities in the world, but there are a LOT of downsides to it. I find that a lot of the people I know who live there adopt a borderline Stockholm Syndrome attitude about those downsides. If you live in SF, you have easy a…

You have some good points, but some of them miss the mark. I entirely disagree with you sentiment that "you have to take the bus (or ride a bike)" is a downside. I consider this a major selling point to SF, you can get drinks with friends and not have to worry about driving under the influence. Almost every other city I have been to, you either need a DD, or you have to pony up a ton of money for a cab.

Regarding the old houses, roommates, and homelessness, by themselves none of these are really that big of a deal, and are probably pretty common in any major city. What is a little absurd (and you sort of alluded to this), is that we are paying some of the highest rent in the country, for these 'privileges'. However, I imagine most people who live here, including myself, don't exactly look at it that way. Instead, we look at it as we are paying high rent, for the privilege of living in SF and all it's perks (good jobs, active social life, etc..), and the old houses, roommates and homelessness are just a part of SF life.

Re: San Francisco, I Love You But You’re Bringing Me Down

#400

Post by mhomde »

gknoy wrote: post #198
enraged_camel wrote: post #164

Earlier quoted context omitted.

>>I'd love the city I'm sure, but after glancing around I've come to the conclusion that home ownership is unthinkable to anyone who hasn't had a cash-out event. I've never understood this crazy, if not outright insane obsession with home ownership. Why does everyone want to tie significant amounts of their lifetime earnings into physical property that historically has had very low appreciation in value? It's like pe…

As someone who recently (this past year) went from being a renter to a homeowner, and had previously been a home owner for several years, it's not all rational... but here are some of the reasons. I don't have to worry about the rent going up every year / six-months. If I plan to own the house for multiple years, a large chunk of my money goes to equity: I'm banking away value for later that you will get back when yo…

The problem with home ownership is that people don't know how to properly value risk the way financial institutions do.

One of the more eye-opening assignments I've had was working with portfolio theory for a bank. Portfolio is pretty much hoppycock used to explain for the customer why they bank lost money on your investment. Giving you nice charts for how much risk was taken and how they performed compared to some index. While portfolio theory in itself is BS it demonstrates well how risk is something that has a value, and protecting against that risk costs money (hedging)

Texas Hold'em is the same, what is the risk (odds of winning) and how much can I win determines how much I can bet (invest) in a hand (home).

With homes people have no proper sense of the risks they're taking. Cognitive dissonance together with a surprisingly short view of history and survivor bias makes investing a home seem like a no brainer.

Its often futile to even have a discussions of potential risks with a homeowner because they don't want to hear it. Sure the risk might greater or it mighty be less in the same way that you can play russian roulette with one bullet or five, but there's always some risk and often greater than you would think in these times.

Homeowners however vehemently will deny any risk and keep spouting about how homes have gone up in the last 5, 10, 20 or whatever years and some neighbour who made it rich. In any case they say if the price goes down I'll stay put until it goes up again since I have no plans of moving, like the bank won't take your home if it goes down enough that you can't cover your mortage.

I'm not saying you absolutely shouldn't by a home but at least one should be aware of the risks :)

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