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Businesses The Almighty Buck Technology

Some Root For a Tech Comeuppance In San Francisco 729

HughPickens.com writes: David Streitfeld writes in the NYT that cities do not usually cheer the downfall or even the diminishment of the hometown industry, but the relationship between San Francisco and the tech community has grown increasingly tense as the consequences for people who do not make their living from technology become increasingly unpleasant. "It's practically a ubiquitous sentiment here: People would like a little of the air to come out of the tech economy," says Aaron Peskin. "They're like people in a heat wave waiting for the monsoon." Signs of distress are plentiful. The Fraternite Notre Dame's soup kitchen was facing eviction after a rent increase of nearly 60 percent. Two eviction-defense groups were evicted in favor of a start-up that intended to lease the space to other start-ups. The real estate site Redfin published a widely read blog post that said the number of teachers in San Francisco who could afford a house was exactly zero. "All the renters I know are living in fear," says Derrick Tynan-Connolly. "If your landlord dies, if your landlord sells the building, if you get evicted under the Ellis Act" — a controversial law that allows landlords to reclaim a building by taking it off the rental market — "and you have to move, you're gone. There's no way you can afford to stay in San Francisco."
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Some Root For a Tech Comeuppance In San Francisco

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  • Why stay? (Score:4, Insightful)

    by Anonymous Coward on Friday March 11, 2016 @11:43AM (#51677727)

    I lived in the San Francisco Bay Area before and it's a real shithole (as is most of California). Why stay when there are so many better places to live?

    • Why get a job there is there are so many better places to live?
  • by Ed Tice ( 3732157 ) on Friday March 11, 2016 @11:46AM (#51677747)
    If you own your home, you have the huge advantage that you don't get gentrified out and won't be forced to move. The down side is that you may never be able to move. If you rent your house, you run the risk of getting gentrified out and might have to move. Unfortunately it's not an easy problem and most of the proposed solutions seem to do more harm than good.
    • by Rinikusu ( 28164 ) on Friday March 11, 2016 @11:51AM (#51677789)

      If you didn't get in in the good old days of, hell, the 90s, buying is not really an option anymore. A house I was looking at sold for $360k. For a 450sq foot house. Just barely bigger than my apartment.

      Rents and Housing are absolutely out of control all over LA, not just SFO. I have no idea how anyone affords it on anything less than tech wages unless they're shacking up with 3 people. What's the point of making good money if you're spending it all on rent?

    • by mrchaotica ( 681592 ) * on Friday March 11, 2016 @11:54AM (#51677821)

      If you own your home, you have the huge advantage that you don't get gentrified out and won't be forced to move. The down side is that you may never be able to move.

      That's because Prop 13 distorted the market. Without it, and without rent controls, people who don't need the housing would stop hoarding it because they're grandfathered-in to a below-market deal, making it (counter-intuitively) more affordable for everyone else. Reasonable zoning codes that would allow for an increase in density would help too, of course.

      • I forgot about California Prop 13. It doesn't exist other places. However, even in those cities, you don't get gentrified out due to tax increases unless the property value goes *way* up in which case you just had a huge financial gain. Most people would take this deal. I can tell you that if somebody offered me 3x the current market value of my house to move, I'd take it and retire!
    • If you own you can be forced out through tax increases, special assessments, and eminent domain. I've seen all 3 happen.

      • Yes they all happen. Tax increases happen due to the fact that your property just became worth a fortune. I have a tough time garnering much sympathy for these people for the same reason I don't feel bad for traders who have to pay capital gains tax on their investments. Special assessments are a function of an HOA as far as I know. Usually affects condominiums but not related to gentrification. Emnient domain you get fair market value and *should * be able to purchase something compaable.
      • Assessments and Eminent Domain means that you get at least most (if not all) of your monetary investment back (via the sale of property to the local gov or to someone else).

        Eviction/termination-of-lease for any reason means that you get $0.00 in compensation - in other words, you're just fscked.

  • So, uh, LEAVE (Score:5, Interesting)

    by drinkypoo ( 153816 ) <martin.espinoza@gmail.com> on Friday March 11, 2016 @11:52AM (#51677797) Homepage Journal

    There are too many people in California in general and too many people in San Francisco in particular. (Not as bad as LA, but anyway...) If you moved to a place you knew you could never afford to buy housing, which was one of the most highly desirable real estate markets in the world, and then rents spiraled out of control, you have only yourself to blame. I have sympathy for people who are born there as renters and can't afford to leave. I have zero sympathy for people who moved there and then complained that they couldn't make it.

    This is a problem faced by the whole wide world, and unless you want to skip socialism and head straight for communism, there's no fairer way to decide who can live there than by who can afford to live there. If you think you have a way to implement a meritocracy in our society, I'm interested, but mostly for the sake of amusement.

    Our whole society is founded upon the idea that might makes right, and he who has the gold gets to decide who gets to live where. I'm highly sympathetic to the notion that this is harmful, but it really is our founding principle. If teachers can't afford to live in SF, then maybe people unwilling to home school should start moving their families out, too. Big dirty cities (SF fits this description admirably, if you include environs, needed for "big" though not for "dirty") are no place to raise a family in any case. Maybe SF doesn't need fast food restaurants. Maybe it's not just okay but actually desirable to gentrify some cities, and let the culture in them disperse to other areas that could use some that isn't growing between someone's toes.

    TL;DR: If what is going on with SF rents is wrong, then our whole society is wrong, and you can't fix SF without fixing everything else, too. They can enact local laws, but as long as the state works against them, it's always only masturbatory.

    • by creimer ( 824291 )

      I have sympathy for people who are born there as renters and can't afford to leave.

      That's the boat I'm stuck in now. I've been in my studio apartment for over ten years and paying several hundred dollars less than market rate rents since rent control caps rent increases to 8% per year. I've been wanting to move for some time, quite possibly from Silicon Valley to Sacramento. I'm still recovering from the Great Recession and rebuilding my finances. Maybe next year.

    • by Junta ( 36770 )

      I would also consider that sentiment for the tech companies. Why *must* you have your tech company in SF area?

    • Re:So, uh, LEAVE (Score:5, Insightful)

      by Frobnicator ( 565869 ) on Friday March 11, 2016 @12:15PM (#51677991) Journal

      This is a problem faced by the whole wide world ... TL;DR: If what is going on with SF rents is wrong, then our whole society is wrong, and you can't fix SF without fixing everything else, too. They can enact local laws, but as long as the state works against them, it's always only masturbatory.

      Exactly. Property value has ALWAYS increased near population centers. It has ever been so, and will continue to be.

      This has nothing to do with San Francisco specifically. It has happened and continues to happen in every city and every town through all of history.

      A central district will have the primary draw where everyone wants to be. A central business district, a big employer, the marketplace, whatever. There are places where people want to be for economic or social opportunities. Location, location, location.

      Tools like rent control can "help" for a short time -- in that they make it a little easier for some individuals -- but they cannot stop the reason behind it. Consider the long view. Either demand for the services will drive everyone's wages (and costs) up, or the inability to have workers drive the property values back down as the region enters a decline.

      As people are priced out of the market there will be fewer good teachers, meaning worse schools, meaning less draw to the area as it falls to decline. Alternatively, the people will demand quality teachers and increase wages to get them. Fewer service people mean stores and marketplaces can't keep people employed, so either the store workers will leave the area for a better life balance, meaning less draw to the area as it falls to decline, or the demand for shops will mean higher costs so they can pay higher wages.

      No matter their wealth, the kings and castles rely on the services of the townsfolk. Either they all grow together or the kingdom declines.

      • No matter their wealth, the kings and castles rely on the services of the townsfolk. Either they all grow together or the kingdom declines.

        As Machiavelli said; you (the Prince) should always take care of the people before you take care of the nobles. You can make and unmake nobles daily but you are stuck with the people (and if they come after you, you are in big trouble)!"

      • Re:So, uh, LEAVE (Score:4, Insightful)

        by SScorpio ( 595836 ) on Friday March 11, 2016 @01:17PM (#51678681)

        It directly does have San Francisco to blame. There are a whole bunch of "Not in my backyarders" who vote down new high capacity housing projects.

        Normally when housing prices spike like they have in San Francisco developers will come in an start building new apartments since they can turn a large profit. But the developers currently can't as any proposed projects keep getting turned down.

        So while prices in major cities and towns have generally always gone up. Areas like San Francisco are well above the norm. And this isn't accounting for all the foreign investment from China buying up property as quickly as they can which causes prices to jump when lots of places sell above asking price due to bidding wars.

    • Re:So, uh, LEAVE (Score:4, Informative)

      by T.E.D. ( 34228 ) on Friday March 11, 2016 @12:26PM (#51678127)

      The problem here is that a city, even in the Bay area, needs low and mid wage workers too in order to function.

      Think about it this way: How is the Bay Area tech industry going to function when there's nobody left to staff their Starbucks'?

    • Re:So, uh, LEAVE (Score:5, Insightful)

      by ooloorie ( 4394035 ) on Friday March 11, 2016 @01:32PM (#51678835)

      TL;DR: If what is going on with SF rents is wrong, then our whole society is wrong, and you can't fix SF without fixing everything else, too.

      San Francisco is a poorly run city, but that's the business of San Franciscans. There will always be poorly run cities (and other organizations, public or private) in the world. You can't "fix" that.A far better solution is to let cities and states make local choices and force them to live with the consequences of their choices. That way, San Francisco can fail, Fremont can prosper, and people can vote with their feet. If you try to "fix our whole society", you just risk such problems become national and taking away any ability of people to get away from bad government.

      What annoys me is the massive state and federal subsidies that flow into San Francisco, to help the poverty and social problems that its misguided policies create, to help it cope with its dysfunctional transportation issues, and to subsidize both its corporations and residents merely for living there. Stop pouring money into SF from the outside, SF prices will drop, and some degree of sanity will be restored.

    • Re:So, uh, LEAVE (Score:4, Insightful)

      by sjames ( 1099 ) on Friday March 11, 2016 @03:21PM (#51679879) Homepage Journal

      It's going to be really funny when the well paid techies discover there are no schools, no police, and no fire department because nobody doing those jobs could afford to live anywhere near there. Perhaps it will take the next great fire to convince people that the current plan is a total loss.

  • The real problem (Score:5, Insightful)

    by Fire_Wraith ( 1460385 ) on Friday March 11, 2016 @11:58AM (#51677843)
    The real problem is that San Francisco adamantly refuses to build more housing to meet demand. Sorry, but that's the way the market works. If you don't increase the supply to meet the demand, the price is going to go up as the demand does. Instead, though, they insist that they want to keep it "the way it is", not build new apartment buildings that might relieve some of the excess demand for housing, and the corresponding infrastructure to go with it. That leaves them only with hoping that the demand goes down, which is idiotic.

    I hope it does go down though - I hope the tech industry increasingly decides to just say "F**k San Francisco" and moves elsewhere, where there's more land, cheaper cost of living (because at this point almost anywhere is cheaper), and less insane/stubborn neighbors. San Francisco has its upsides, sure, but none that are worth enough to make me want to live there unless you're offering me 4-5 times as much as I make elsewhere. Let San Francisco's economy tank, because that's what they clearly would prefer to actually dealing with the boom that most cities would bend over backwards for half of.
    • Re:The real problem (Score:4, Informative)

      by Improv ( 2467 ) <pgunn01@gmail.com> on Friday March 11, 2016 @12:02PM (#51677881) Homepage Journal

      Sorry, but how democracy works is people have the ability to decide what their city is like. Democracy is more important than markets.

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        They can decide to make it however they like; it's just silly to prevent housing expansion and simultaneously complain about housing costs.

      • Re:The real problem (Score:4, Interesting)

        by eth1 ( 94901 ) on Friday March 11, 2016 @12:18PM (#51678041)

        Sorry, but how democracy works is people have the ability to decide what their city is like. Democracy is more important than markets.

        Yes, and the people of SF have apparently decided that forbidding additional development is preferable to lowering prices by increasing supply. So they should either shut up about the cost, or allow development.

        • by Improv ( 2467 )

          They can grumble about whatever they like. Perhaps it's more complicated than you think and something else could give. If it is actually that simple, all that happens is that they grumble about something that can't be fixed given their starting ground. It's hard to tell if something else can give, so the grumbling isn't necessarily pointless.

      • by SuperKendall ( 25149 ) on Friday March 11, 2016 @12:20PM (#51678061)

        San Franciscans have decided what they want the city to be like - a place where no-one but the richest can afford to live.

        They may say otherwise but all of the ACTUAL CHOICES they make reinforce the notion that SF wants the city to be for the rich.

        On a side note, I can only assume that San Franciscans really enjoy watching homeless people suffer since choices they make also lead to that outcome.

      • Sorry, but how democracy works is people have the ability to decide what their city is like. Democracy is more important than markets.

        And the voters can vote that the sky should be a deeper shade of blue on Sundays, and that the value of pi should be a nice, round 3.

        Democracy doesn't changes the laws of physics, mathematics or economics. If demand increases and supply stays constant, price goes up.

    • Re: (Score:3, Informative)

      by creimer ( 824291 )

      The real problem is that San Francisco adamantly refuses to build more housing to meet demand.

      Even if San Francisco did allow more housing, developers will want to build more luxury housing and apartments to maximize their profits. My apartment complex in Silicon Valley had three different corporate owners in as many years. Each one slapping on a coat of exterior paint, redoing the landscaping, charging "luxury" rental rates and selling the complex when they don't get their expected return on investment. The current corporate owner is actually renovating the apartments since exterior paint and lands

      • by Ichijo ( 607641 )

        Even if San Francisco did allow more housing, developers will want to build more luxury housing and apartments to maximize their profits.

        And then the not-so-wealthy will move into their old apartments, and then the less-wealthy-than-that into theirs, and so on.

        • by creimer ( 824291 )

          And then the not-so-wealthy will move into their old apartments, and then the less-wealthy-than-that into theirs, and so on.

          This would be true in an ideal market where the population is relatively stable. San Francisco has too many people who want to move into town. The landlord of the old apartment will slap on a coat of paint, install new carpets and granite countertops, and jack up the rent so much that only an outsider can afford to pay.

      • by b0bby ( 201198 )

        Even if San Francisco did allow more housing, developers will want to build more luxury housing and apartments to maximize their profits.

        That just shows how much demand there is. At some point, there will be no more rich people who want to live in San Francisco, and developers will start to concentrate on moderately priced housing.
        It really does seem like the problem is simple - more people want to live there than the existing housing supply can support. So you can either build more housing or (as the article suggests) hope to crater the economy so fewer people want to live there. If it were me, I'd choose building more housing.

  • by bigsexyjoe ( 581721 ) on Friday March 11, 2016 @12:01PM (#51677869)

    Okay, maybe if you literally get a job with Google, move there. But otherwise, why? The pay premium you get from living there doesn't make up for the sky-high housing costs. And most of these people live in San Fransisco and then do a long commute out to a suburban area. It's really not worth it.

    The tech market is hot. The main implication of that is you don't have to move to a special city to do tech. You can work somewhere like Chicago instead. There is still a big tech community, the opportunity to work with cutting edge tech, a much bigger city, AND you get to live in a four bedroom house on programmer pay and only commute a half hour on the train.

    If the people of San Fransisco don't want you, don't bother them. You can live anywhere. Probably somewhere nicer.

  • the movie Demolition Man Seems oddly prescient now. I believe it was LA, but seems San Francisco is trying to build their own version. Clean, shiny, everyone trying desperately to not offend anyone else, and those who don't or can't fit the mold are swept out of sight. Does this happen in other places? Sure, but it's sadly ironic that the center of the free love, countercultural revolution has come to this.
  • My heart goes out to those evicted, or fearing eviction. To my untrained eye, the problems seem like an obvious result of supply-and-demand. SF has limited land, hasn't built much in the way of housing for a long time, and is in high demand. Of course the housing prices will go way up. The only solutions are to make it less desirable (lower demand), or increase housing (increase supply). Here's an interesting article: https://medium.com/@Scott_Wien... [medium.com]

    Other cities have done this, e.g., DC has aggress

  • SF Tech Bubble 2.0 (Score:5, Interesting)

    by ErichTheRed ( 39327 ) on Friday March 11, 2016 @12:15PM (#51677997)

    It's really amusing to watch this whole dotcom bubble from the late 90s being replayed almost exactly the same way. VC valuations lead to IPOs that lead to temporary market insanity, and it all comes crashing down when people realize it can't last forever. And just like the first dotcom boom, the products are websites, phone apps and other software.

    I guess the thing SF and California in general have going for them is the climate, so it's not like San Francisco is going to become some Rust Belt city when the bottom falls out. But, the reality distortion field around SF, SV and Los Angeles is really powerful. Coming from a place where a Lincoln Town Car was an aspirational vehicle, and seeing 25 year old kid CEOs driving Maseratis and Mercedes is a big shocker.

    I do feel for people who have normal jobs or are artsy types in SF. Can you imagine being, say, a cop or a civil servant in the county clerk's office making the statewide civil service wage, and having to compete for housing with someone who's making $250K working for Google or Apple, and just wants to live in hipster land? (That's another interesting phenomenon -- these techies could easily afford a house in SV closer to work, but they choose a multi-hour commute so they can live in a hipster loft.

  • by tomhath ( 637240 ) on Friday March 11, 2016 @12:27PM (#51678135)

    There are plenty of affordable homes in Detroit. Probably thousands of properties that can be had for almost nothing from HUD.

    It was a thriving and prosperous city until its golden goose moved away.

  • by gordguide ( 307383 ) on Friday March 11, 2016 @12:52PM (#51678427)

    Not exactly on topic, but the article, San Francisco's situation, and the conditions over time not just in cities, but states, nations, any identifiable economic area all point to what I consider a flaw in Economic reporting, that, to my amazement, many people fail to grasp.

    The strength of any economy is reported as good, bad, improving, failing, the "world's best", the "world's worst" ... whatever rank you care to put on it ... based solely on the inflated value of the whole. City A is twice as prosperous as City B if the rents, wages, and prices are all twice City B's. No matter that an hour's wages buys the same square foot of land, the same block of cheese, the same latte, the same month of cable TV in both cities. City A is clearly "better" based on the Economic Data. If City A happens to be the most expensive city on the planet to work and live then it's defined as the wealthiest city on the planet, the most successful economy, the "place to be". Except as far as the day to day goes, it's just another, ordinary city.

    [Somewhat more on topic] And then we get the issues regarding the transition from a City B economy to a City A economy ... there are people on fixed incomes or working in fields where the high wages aren't sustainable, who get stuck in the old economy when their fellow citizens are part of the new economy. They need each other ... someone has to build the homes, make the cheese, pour the latte ... but they can't afford each other. Similarly, if a visitor from City A comes to City B for a vacation, they seemingly have twice as much money to spend. But not at home, where twice as much buys just enough.

    The economic realities are constantly shifting and the solution for SF residents of today is the same as it's always been ... wages and rents must go up, and some people must move to a City B (or even a City C) economy.

    This is not really new ... time to roll the ubiquitous "is this news?" Slashdot comment. (Just kidding).

  • by sootman ( 158191 ) on Friday March 11, 2016 @01:02PM (#51678535) Homepage Journal

    Do we have to have this argument every year? The reason SF is expensive has very little to do with recent trends in the tech industry -- they're just a current, visible scapegoat. There's a good, thorough overview here: http://techcrunch.com/2014/04/... [techcrunch.com]

    I was born in SF in the 70s and stayed in the area until after college. It has ALWAYS been expensive. It's a great place and I'd move back in a second if I could afford to, but I can't, so I don't. Yeah, it sucks that police, firefighters, and teachers can't often afford to live nearby, but it's been that way for DECADES.

  • The City should use eminent domain and take over large blocks, and rent them to public school teachers, college instructors, and make it available after that for people with an income up to 1.5 times the poverty level.

    And you libertarian assholes, as Phil Ochs sang, "go find yourself another country to be part of".

                      mark "oh, that's right, you don't believe in countries"

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