San Francisco braces for commercial real estate crash • Hacker News Board

Re: San Francisco braces for commercial real estate crash

#301

Post by mbfg » Tue, Sep 06, 2022, 6:56 PM UTC

commandlinefan wrote: post #173

darth_avocado wrote: post #127

The city officials are asleep at the wheel. Blame it on remote work and pandemic as much as you want, but the reality is that the city was in decline even before that. It is too expensive to live in the city. It is too expensive to commute to the city. It is too expensive to feed yourself in the city. Crime is rampant. Drug use and filth is everywhere. Most importantly city has been hostile to tech and business owner…

I suspect this will inevitably be blamed on greedy capitalist building owners, but the crazy tax assessors have some blame here, too. They value these buildings in the hundreds of millions of dollars and asses taxes based on that valuation - and that was "ok" because the building owners could extract that kind of value from the buildings by raising the rents. Now they can't - but the valuation and the taxes owed stay…

Yes, but there are still "greedy capitalist building owners" willing to sign up for the deal. So the taxes seems to be following supply and demand. At some point as the article claims, that may change. If/when it does, then both parties will change.

Re: San Francisco braces for commercial real estate crash

#302

Post by nikanj » Tue, Sep 06, 2022, 6:56 PM UTC

cjbgkagh wrote: post #54

onlyrealcuzzo wrote: post #14

Earlier quoted context omitted.

I'd argue that a "crash" isn't really a "crash" if it comes after a 50% increase in 2 years. Anything short of a 20% correction is simply a reversion. If prices shot up 100% in 1 year, and then were down 3% in two months - no one would be talking about a crash.

I generally have the same rule of thumb; not a crash until down 50% from peak. But housing is leveraged. It’s not like stock where few people have margin accounts, a 20% reversion sends most people who bought recently underwater. Plus the size of the real estate market is much bigger than the stock market. The flow-on reverse wealth effect will feel like a stock crash to many people.

A 20% reversion is back to early 2021 prices..

Re: San Francisco braces for commercial real estate crash

#303

Post by ethbr0 » Tue, Sep 06, 2022, 6:57 PM UTC

mortenjorck wrote: post #147

ptmcc wrote: post #32

Earlier quoted context omitted.

But that is also key to the problem: the cost to convert these buildings is already prohibitively expensive, and converting them into dormitories cannot possibly recoup the cost. It's like how sometimes it just doesn't make sense to refactor code because it is fundamentally designed for a different purpose. Sure you can grind it out but will it be any better or cheaper than starting fresh?

> converting them into dormitories cannot possibly recoup the cost Once we start talking easing housing code requirements, especially if it's done in the name of increasing access to housing, the conversation becomes about just how much conversion is really necessary, and how little can be done to break even. And there's a big continuum. If one end of this continuum is a standard college dorm setup, the other is lite…

> The idea of an office tower slum is incredibly dystopian

It's hard to get more contemporary cyberpunk than an organic community nesting in an ex-Facebook office building.

Re: San Francisco braces for commercial real estate crash

#304

Post by zdragnar » Tue, Sep 06, 2022, 6:57 PM UTC

CuriouslyC wrote: post #196

gfodor wrote: post #154

Earlier quoted context omitted.

You think drug use doesn't lead to crime?

Drug prohibition clearly leads to crime. Drug users would rather use drugs than commit crimes, but paying for a drug habit when drugs are expensive and you have a hard time holding down a 9-5 job (usually due to mental illness) forces people to do things they don't want to do. Ending prohibition and diverting some resources from police to mental health and preventative services is just a sensible thing to do.

Ending prohibition would, at best, depress prices and increase use. You don't need to legalize the use or sale of methamphetamine or fentanyl or crack to offer more mental health and preventative services.

Re: San Francisco braces for commercial real estate crash

#305

Post by Taniwha » Tue, Sep 06, 2022, 6:57 PM UTC

Part of this is tying property taxes to real property values (yes I know SF's hands are bound by CA law and prop 13 in particular).

These days I live in NZ here rates (the local name for our property tax equivalent) are determined by relative property values. Effectively the City decides it needs to raise $N this year - your property tax will be the fraction of this determined by the value of your land divided by the value of all the land in the city - times that $N.

What this means is that if all property values double (or halve) your property tax doesn't change.

If you're worried that cities will raise property tax too much - limit increases in that $N (you'll have to allow for simple inflation).

Re: San Francisco braces for commercial real estate crash

#306

Post by lghh » Tue, Sep 06, 2022, 6:57 PM UTC

silicon2401 wrote: post #125

lghh wrote: post #92

Earlier quoted context omitted.

Seems to me like lots of people in SF would rather live in an indoor box than an outdoor box. Why not let those without homes choose if they are willing to take the risks associated with ignoring those rules over l king on the streets?

> Why not let those without homes choose if they are willing to take the risks associated with ignoring those rules over l king on the streets? I'd rather have a government that enforces a high quality of life.

Sure, but if the choice is this in the immediate term vs "a government that enforces a high quality of life" in the maybe-but-not-for-certain long term, I'd much rather take steps in that direction instead of waiting for some mythical perfect situation to present itself.

Re: San Francisco braces for commercial real estate crash

#307

Post by inferiorhuman » Tue, Sep 06, 2022, 6:57 PM UTC

commandlinefan wrote: post #173

darth_avocado wrote: post #127

The city officials are asleep at the wheel. Blame it on remote work and pandemic as much as you want, but the reality is that the city was in decline even before that. It is too expensive to live in the city. It is too expensive to commute to the city. It is too expensive to feed yourself in the city. Crime is rampant. Drug use and filth is everywhere. Most importantly city has been hostile to tech and business owner…

I suspect this will inevitably be blamed on greedy capitalist building owners, but the crazy tax assessors have some blame here, too. They value these buildings in the hundreds of millions of dollars and asses taxes based on that valuation - and that was "ok" because the building owners could extract that kind of value from the buildings by raising the rents. Now they can't - but the valuation and the taxes owed stay…

  I suspect this will inevitably be blamed on greedy capitalist building
  owners, but the crazy tax assessors have some blame here, too. They value
  these buildings in the hundreds of millions of dollars and asses taxes
  based on that valuation - and that was "ok" because the building owners
  could extract that kind of value from the buildings by raising the rents.
  Now they can't - but the valuation and the taxes owed stay the same. If
  they hadn't tried to squeeze every last tax dollar out of the real estate
  market in the first place, the buildings wouldn't have become so expensive
  to begin with.

What?

Prop 13 ensures that most of these office buildings are not being taxed on the market value of the property. Prop 8 ensures that tax assessments go down when the market value of the property declines. Property tax is not the primary reason rent is so expensive in San Francisco.

Re: San Francisco braces for commercial real estate crash

#308

Post by danenania » Tue, Sep 06, 2022, 6:57 PM UTC

CuriouslyC wrote: post #196

gfodor wrote: post #154

Earlier quoted context omitted.

You think drug use doesn't lead to crime?

Drug prohibition clearly leads to crime. Drug users would rather use drugs than commit crimes, but paying for a drug habit when drugs are expensive and you have a hard time holding down a 9-5 job (usually due to mental illness) forces people to do things they don't want to do. Ending prohibition and diverting some resources from police to mental health and preventative services is just a sensible thing to do.

While I agree prohibition certainly does more harm than good, spending time in parts of SF where crack/meth/heroin/fentanyl are effectively legal has convinced me a firm hand is also needed to contain the externalities. It destroys a place and makes it unlivable. You can't just allow it wherever.

Re: San Francisco braces for commercial real estate crash

#309

Post by pcwalton » Tue, Sep 06, 2022, 6:58 PM UTC

systemvoltage wrote: post #162

darth_avocado wrote: post #127

The city officials are asleep at the wheel. Blame it on remote work and pandemic as much as you want, but the reality is that the city was in decline even before that. It is too expensive to live in the city. It is too expensive to commute to the city. It is too expensive to feed yourself in the city. Crime is rampant. Drug use and filth is everywhere. Most importantly city has been hostile to tech and business owner…

Quoted post unavailable.

> Expecting downvotes still because it is criticizing progressives.

The guidelines ask you not to do this.

Re: San Francisco braces for commercial real estate crash

#310

Post by lghh » Tue, Sep 06, 2022, 6:58 PM UTC

entropicdrifter wrote: post #117

lghh wrote: post #92

Earlier quoted context omitted.

Seems to me like lots of people in SF would rather live in an indoor box than an outdoor box. Why not let those without homes choose if they are willing to take the risks associated with ignoring those rules over l king on the streets?

Because that's how you get the haves taking even greater advantage of the have-nots, to the point of injury, illness, and death in the name of slightly greater profits.

How? By letting them sleep inside? I don't understand.