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

See: https://docs.google.com/spreadsheet/ccc?key=0Ak1exuXV7898dDR....

San Francisco is about 47 square miles of land area. The densest 47 square miles of Chicago has a population of 1.1 million people and a density of 23,500 people per square mile (versus 825,000 people for San Francisco and density of 17,600 people per square mile). If you look at the subset of Chicago neighborhoods that have the same combined average population density as San Francisco, they have a combined population of about 2.3 million people.

Housing prices are much lower in Chicago than in San Francisco, despite comparable density over comparable areas of the cities. A big part of that is lower demand. Chicago has fewer job opportunities and is stable/shrinking in population while San Francisco is growing. At the same time, supply is also a huge issue. As of last year, there were seven residential skyscrapers under construction in the downtown Chicago neighborhoods: http://www.domu.com/blog/apartment-projects-under-constructi.... These projects are adding thousands of new units to a market that is by all measures growing much more slowly than downtown San Francisco.

As a renter, you're going to be dealing with rents rising year over year. Those with fixed mortgages will see the same payments for decades.

If you have kids, you want some more stability, most likely. If the building you rent in is sold, or the rent is raised too much, you have to move. You want to install anything permanent for the kids? Have to ask permission from the landlord.

Not to mention the fact that, if you're paying $1,000/mo for rent, at the end of the year, you have almost nothing to show for your $12,000. In a house/home, you have equity in said house.

And since when did the housing bubble have anything to do with "obsession with home ownership"? I was under the impression it was a combination of unsound investments ("home prices always go up, so it's OK to spend more than you can afford!") and shady mortgage companies dishing out loans with no regard as to whether a person could pay for them.

If you're not a thug, all evidence (or at least many anecdotes) suggests that Oakland doesn't want you.

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 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.

There are several "rent vs buy" calculators that can visualize (based on interest rates and rent vs mortgage costs) the crossover point where it's cheaper than it is to rent for X years, and what it does for your net worth. For me, it appears that about 2-3 years of owning will be a break-even point, and less if my rent would have increased.

In my case, the mortgage on a house (3 bedroom) + yard + garage, with a nice kitchen, was about $100 more per month than a cramped, 2 bedroom apartment with a miniscule (and poorly designed) kitchen, no space for the kids to run around, and not enough space to even unpack our stuff.

I OWN IT. Until you've owned one, it's possible you might not fully comprehend this double-edged sword.

I can paint the walls, break the walls, rip up the floor, put in a new mailbox, take out the trees I don't like. There's nearly nothing that keeps me from renting out a bedroom to a friend, or letting the in-laws stay for a week. If I want to mount a swamp cooler outside my window, I can, or turn my garage into an archery range.

There are downsides, too. As an owner, you risk that the market will fall out from under you. It's harder to move, as you have this limbo of not being able to buy a house until you've sold the previous one. (I haven't figured out how to make this not suck. Same goes from transitioning from a lease to ownership.) I have to mow the lawn, make sure the garden is watered. The utilities are a bit more expensive.

Also, as a homeowner, you tend to accumulate More Crap, since you have more space to fill.

All of this is worth it, though, as I do not worry about whether it's OK to paint my kids' rooms, or tear out a ceiling fan that I hate, or stain the deck a different color, or completely redo the landscaping. When someone (me, or the kids) busts a hole in a wall by accident, I think "Dangit, I have to fix that..." rather than "well, there goes my security deposit".

I'm sure that a big part of the appeal of home ownership is that our parents valued it, but I feel like there's a real intrinsic value to it as well. Consider surveying your friends who have owned + also rented, and ask them about the things they like or dislike about it.

Yours is an interesting perspective. It seems like both extremes are a double-edged sword. On one hand, slower mellower and less expensive places give you the free time to think and play and create. But on the other hand, they drain you of your sense of urgency and they create a culture where people don't hustle -- as you say.

I'm trying to get something off the ground in Asheville now (https://www.zerotier.com/) and it's required a lot of self-motivation. There's not a huge tech scene either, so if it starts to get real traction I'm not sure what resources I'd have to surf the wave aggressively.

On the flip side, I lived for quite a while in the Cambridge, MA startup orbit and experienced my fair share of hustle. What I saw was a lot of me-too, a lot of crackpot stupid ideas frothing around and getting funding because the founders were connected, and a lot of workaholism that eventually drained people (including me) of genuine creativity or excitement about what they were doing. Costs were high, time was short, and inspiration got thrown under the bus for the need to perform.

So I agree that there's probably an optimum in between. My sense is that Asheville, Austin, probably Portland, etc. are probably too far on the mellow end and that today's SF/SV is probably too tweaked out and overpriced.

I get the feeling that SF and SV in the 1990s was right at that happy medium. Wasn't there, so maybe I'm wrong, but that's the sense I get.