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Even Apple and Google Engineers Can't Really Afford To Live Near Their Offices (fastcompany.com) 370

That's according to the Y Combinator-backed real-estate startup Open Listings, which looked at median home sales prices near the headquarters (meaning within a 20-minute commute) of some of the Bay Area's biggest and best-known tech companies. Fast Company: Using public salary data from Paysa, Open Listings then looked at how many software engineers from those companies could actually afford to buy a house close to their office. Here's what it found: Engineers at five major SF-based tech companies would need to spend over the 28% threshold of their income to afford a monthly mortgage near their offices. Apple engineers would have to pay an average of 33% of their monthly income for a mortgage near work. That's the highest percentage of the companies analyzed, and home prices in Cupertino continue to skyrocket. Google wasn't much better at 32%, and living near the Facebook office would cost an engineer 29% of their monthly paycheck.

Even Apple and Google Engineers Can't Really Afford To Live Near Their Offices

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  • Huh? (Score:5, Insightful)

    by JohnnyBGod ( 1088549 ) on Wednesday February 14, 2018 @02:43PM (#56123863)

    So they can't survive with two thirds of a presumably good paycheck? What's the title on about?

    • Re:Huh? (Score:5, Informative)

      by Scarred Intellect ( 1648867 ) on Wednesday February 14, 2018 @02:46PM (#56123893) Homepage Journal
      Hell, I pay over 40% of my paycheck to NOT live that close to work!
    • by amiga3D ( 567632 )

      Really, two thirds of the reported average salary of an engineer at Apple is still 100,000 dollars. That's enough to pay the bills I would think. Yeah, 50,000 dollars a year is a lot to pay but real estate is an investment. Usually it sells for more than you paid.

      • Re: (Score:3, Insightful)

        real estate is an investment

        You just put a giant target on your head. Every scammer in the world now knows you're an easy mark.

        Real estate isn't an investment unless you're a high-dollar real estate investor. If you're living in it, it's an expense, and a liability. It takes time to pay that loan off, during which you lose money to interest. You have maintenance, which costs money. You pay taxes and insurances. By the time you sell that house you've lived in, you've lost more or less about the cost of renting.

        I always assume

    • by Kjella ( 173770 )

      So they can't survive with two thirds of a presumably good paycheck? What's the title on about?

      Pretty much. If you're making $30k and paying 1/3rd you got $20k left over for "other stuff", but if you're making $150k and paying 1/3rd you got $100k to go. Besides, how many single people buy a house in the subrubs all to themselves? I got an apartment even though I could very well afford a house, I just wouldn't want all the upkeep. In rural areas I suppose, but there prices aren't that ridiculous either.

      • Re:Huh? (Score:4, Insightful)

        by bv728 ( 943505 ) on Wednesday February 14, 2018 @03:05PM (#56124077)

        Note that's 28% before taxes. Between State, Local, and Federal, figure they get $150k a year pretax, $100k a year post-tax, but spend $50k a year on their mortgage. That's $50k a year for ALL other expenses, and that number excludes homeowner's insurance, car payments, car insurance, health insurance, property taxes, electricity, water... oh, and food. That's why 28% is so important - you wind up with 30% on Taxes, 30% on Mortgage, 10% on a Car and Related Expenses, 10% on Home Related Expenses... and you just ate 80% of the yearly income.

        Cali's actual total tax rate is a little higher than that, but you get the point I think - 28% isn't an arbitratry number, it's more like a 'this is a good margin of error' factor.

        • by dgatwood ( 11270 )

          The fact that property tax and homeowners' insurance are based on property value makes it even more painful. When you're talking about a $1.5 million home, the property taxes will cost you $15,000 per year. And insurance averages out to about $3.50 for every thousand dollars of home. So that's another five grand. That means that in the hypothetical example above, property tax and insurance add up to 40% of your net income after income taxes and house payments.

          • I've had the experience: "Oh, you're buying a $2 million home? Your property taxes alone will cost you more than I spend on my mortgage... which is why I can't afford a house like that!"
    • Well theres 40% in taxes to consider.

    • So they can't survive with two thirds of a presumably good paycheck? What's the title on about?

      Minus federal tax, state tax, property tax, 9% sales tax, mortgage insurance, etc. No thanks, I'll rent.

      Somebody will say "but properties appreciate in value!" Yes, and the interest payments for a 4.5% 30-year mortgage (if you can scrape enough afford it) are about $800k. Unless you're rich enough to buy without financing it just seems like a great investment for the mortgage company. Compare the $800k of interest payments (not including PMI etc) to the returns your $200k downpayment would see invested in t

    • Re:Huh? (Score:5, Informative)

      by bluefoxlucid ( 723572 ) on Wednesday February 14, 2018 @04:12PM (#56124581) Homepage Journal

      There's a financial guideline about only paying a third of your income for rent or mortgage. That's based on HUD's guidelines about how much of your income should be rent or mortgage when on assistance, not on any sort of sound financial advice.

      Mind you, higher liabilities means bigger risk. My mortgage is about 12% of my after-tax income, so I don't have to worry about money ever getting too tight. A Congressional salary would be $100k more than I make now, which is cool, but I'm not about to argue that Congressmen maybe need to get paid more--not on the east coast, anyway. On the other hand, the legislators in my state make less than some struggling families I've met; I would argue they should be paid better, despite legislature being in session only 4 months of the year, because they shouldn't be distracted seeking some kind of supplemental income for those other 8 months when they should be speaking with us about what we want done in Annapolis.

    • Their calculation is based on gross pay, not net after taxes (probably a good 30-40% haircut) and other deductions. They might not be slumming it, but a $1M mortgage with $150-200K gross income is far less comfortable than their talent/skill sets would afford them elsewhere in the country.
  • Taxes! (Score:4, Insightful)

    by Zorro ( 15797 ) on Wednesday February 14, 2018 @02:43PM (#56123865)

    They forgot to deduct all the California and local taxes before you ever see that amount.

    California has the highest US taxes on everything.

    • Re:Taxes! (Score:4, Insightful)

      by sycodon ( 149926 ) on Wednesday February 14, 2018 @02:47PM (#56123901)

      They'll all really be sucking wind in April 2019 when they can't deduct the outrageous CA property and income taxes

    • Re:Taxes! (Score:5, Informative)

      by Ichijo ( 607641 ) on Wednesday February 14, 2018 @03:27PM (#56124255) Journal

      California has the highest US taxes on everything.

      Except property taxes [taxfoundation.org]!

      The reason California taxes everything else so high is partly because of its social and environmental protections, partly because it has such a low property tax and must make up the difference, and partly because it and other blue states subsidize most of the red states [redstatesocialism.org].

      • Re: (Score:3, Informative)

        by tsqr ( 808554 )

        Property tax in California is not a source of much revenue to speak of for the state, and hasn't been for over 80 years. Since 1933, the only property tax directly levied, collected, and retained by the state has been the tax on privately owned railroad cars (source [uscommonsense.org]).

        • Higher local property taxes means the state doesn't have to fund as many local projects, so state taxes are lower than they would be otherwise.
      • by ttsai ( 135075 )

        California has the highest US taxes on everything.

        Except property taxes [taxfoundation.org]!

        The reason California taxes everything else so high is partly because of its social and environmental protections, partly because it has such a low property tax and must make up the difference, and partly because it and other blue states subsidize most of the red states [redstatesocialism.org].

        California's property tax structure is effectively bimodal, i.e., both really expensive and cheap. It all depends on when you bought your home. I pay $12k/year, while my neighbor pays $500/year, even though we have basically the same house. I just happened to buy my house 55 years after he did.

        This bimodal property structure also contributes to the housing problem. Senior folks with $500/year property taxes and no mortgage have a big incentive to not sell their homes, thus exacerbating a low-supply mark

      • The reason California taxes everything else so high is....because it and other blue states subsidize most of the red states [redstatesocialism.org].

        California - and Californians, and other Blue States and their residents, are BIG BELIEVERS in those with money providing subsidies to those without money. So what's the problem here?

  • by 140Mandak262Jamuna ( 970587 ) on Wednesday February 14, 2018 @02:46PM (#56123895) Journal
    Why do you think those campuses let you keep pets in your 'office" and have huge multi cuisine cafeteria? You are not supposed to live near the campus. You are supposed to live in the campus. And work way more than 8 hours a day. Immerse yourself with so much of company amenities, and befriend other company employees you don't think of moving to a start up. duh...
  • I am making half as much, however I have a larger home, and it is only 24% of my income.

    That said, other expenses are not proportional to the areas. So my 76% of my income will need to go more into other expenses.
    So the difference between a 18k car vs a 25k car is a big deal to my budgeting.

  • by bigpat ( 158134 ) on Wednesday February 14, 2018 @02:50PM (#56123937)

    I think there is an idea for a start-up. Autonomous campers which just drive around all night or find cheap parking someplace. Your camper could drive up to 4 hours away from work while you slept and get you back in time for work.

    • I think there is an idea for a start-up. Autonomous campers which just drive around all night or find cheap parking someplace. Your camper could drive up to 4 hours away from work while you slept and get you back in time for work.

      I've read that issue of Judge Dread!

  • I can't afford to live close to where I work. I commute down backgrounds past 1 million dollar homes and horse farms. I choose to work here because it pays a good salary. How is any different than most places? You commute to work within your comfort level and live where you want to live. Ever talk to commuters to NY? They can't afford to live in NY. Lots of places are like this.
  • by xxxJonBoyxxx ( 565205 ) on Wednesday February 14, 2018 @02:53PM (#56123971)
    >> 20-minute commute in Silicon Valley

    What is that, 4-5 miles?

    I can get about 15 miles away where I live, and commute even further. I like it that way, because it means that I only rarely bump into coworkers (or bosses or employees) when I'm not actually trying to work.
    • by tepples ( 727027 )

      I can get about 15 miles away where I live, and commute even further.

      How long does that take you on the bus? Or how sweaty do you end up on a bicycle?

  • by supernova87a ( 532540 ) <kepler1@hot m a il.com> on Wednesday February 14, 2018 @02:54PM (#56123985)
    Redirect your anger towards the incompetent governments of the cities around the Bay Area, and the already-got-theirs citizens of these cities who choose to do nothing about the growing numbers of people who want to move here.

    It's the inability of government to handle these problems (and the lack of leadership to tell citizens they're going to have to experience change) that you're seeing companies step in to take the role of transportation, education, social welfare for their employees. Where governments let their infrastructure and civic fabric fall apart because of complacent old people, companies have taken on the responsibility.

    All the people who protest these giant companies causing traffic, gentrification, etc... Companies are providing jobs and skills and livelihoods to people, things that everyone wants. You should thank them and their employees for keeping our economy going. And criticize the people who refuse to admit change in their neighborhoods, saying that "we don't want displacement" or "we need to preserve the character of our neighborhood". Well, fuck that. Things change, and no one ever promised you that the place you moved into you'd never have to move out.

    Everyone reflexively jumps on the bandwagon of displaced elderly or gentrified neighborhoods, because they're easy to see. But who advocates for the thousands of young people who come here and have to pay $2000 just for a single room? Your kids, your classmates, who come here in search of having the American dream too? Sorry if I don't have sympathy for the "locals". The lives of the young professionals who come here are far more impacted by the cost of living and lack of housing than anyone who's already been here for 20 years and got theirs (and pulled up the ladder behind them).

    Figure out whose side you're really on.

    /rant.
  • It seems obvious that they need to upzone all arterial blocks to 65 foot Multi Family Home zoning. This won't force any rich executives to sell their single family homes, but will allow condos to be built for families with 2 bedrooms. If they make the parking optional and not required, this will increase transit and bike use (or electric scooters) and eventually stabilize prices. I'd recommend they rezone any SFH citywide, just to be on the safe side, and not subject to design review.

  • My wife and I do OK. Between the two of us, we make a good chunk of change. We also live in Pittsburgh. Now, while I grant you, Pittsburgh IS a shit hole, we're also only paying 6% of our (pre-tax) monthly income for our house payment (loan, property taxes, insurance). SIX PERCENT!! That leaves an awful lot left over for other things. There is NO WAY I would want to live someplace where we were paying 28% for a place to live - let alone 33% or whatever. That's just insane. There is NO amount of money

    • Well, you are also a two income household where the study is indicating a single income household. So, given a spouse that makes as much money, they'd be looking at 11-16%. Your 6% is good. I doubt others near you have an equally great deal as that is typically far below the historical average, and I'm guessing you got a really good deal or are living below your means (lower than other people of similar pay anyway). Actually, the deals for the high tech workers isn't bad and is near past historical (middle

      • by registrations_suck ( 1075251 ) on Wednesday February 14, 2018 @03:24PM (#56124237)

        Well, you are also a two income household where the study is indicating a single income household. So, given a spouse that makes as much money, they'd be looking at 11-16%. Your 6% is good. I doubt others near you have an equally great deal as that is typically far below the historical average, and I'm guessing you got a really good deal or are living below your means (lower than other people of similar pay anyway). Actually, the deals for the high tech workers isn't bad and is near past historical (middle class) averages where housing now (and has been for decades) the largest household expense as the past largest (33-50%), food, has dropped drastically along with clothing.

        Yeah - I was going to mention the whole two vs one income thing. And you're right. And yes, she makes basically the same money I do. So even as SINGLE people, either one of us would basically be paying only 11% or so on our house. Of course, as single people, we would buy less house and be paying even less. Probably more in the 9-10% range. But you hit on another point. The real key is living below your means. We didn't get any great deal on our house (we probably paid a little too much), but we did buy MUCH (MUCH MUCH!) less house than we could have. We also drive old and/or crappy cars. The people in our neighborhood would be totally shocked if they knew how much money we make. Food and clothing...our food budget is about the same as our house payment (we're a family of 3). Clothing? Shit. Not even a blip on the radar. At the end of the day, the key to having money to buy shit is to STOP BUYING SHIT - including houses you can't afford.

  • by Megahard ( 1053072 ) on Wednesday February 14, 2018 @03:05PM (#56124079)

    CEOs do. And they can afford to live in the swankest areas.

    • by davek ( 18465 )

      That's why the workers need to seize control of the means of production... right?

      Or are you one of those delusional people who think they're going to be on the handle side of those pitchforks?

      • Then the workers would be the shareholders and would hire someone else to do the work. It's a vicious cycle.
  • To all of those two ask 'why don't you just move to where the jobs are'.. This is why! Why get a better salary if you just have to piss it away in a house and commuting time.
  • You should try Vancouver [businessinsider.com]. When I was there around 2010, average monthly housing costs exceeded 100% of median income. I hear it's gotten better and it's "only" 79% now [vancourier.com].

    Which brings up a important caveat to these type of stories. These home price to income ratios are assuming you just got a job there and need to move and buy a home in the area. If you've been living there for a while, you bought your home when the price was much lower, so it still makes sense for you to live and work there.
  • In the 80's I worked in the south bay area of LA (Manhattan, Redondo, Hermosa) and spent around 30% of my take home on rent so I could live in the area. I imagine NYC is also crazy expensive.

    • 30% of take home pay is not nearly as much as 30% of gross pay. I have no idea why these things are measured in gross pay. I live in FL where 30% of my gross pay might be tolerable to pay. In CA, 30% of your gross pay may be 80% of your net pay.
      • Agree big diff between gross/net. Although in high tax states (well was then in CA) a mortgage unlike rent was deductible at both fed and state level.

  • What's the big deal? To quallify for a loan, lenders generally won't quallify you if you're going to be spending more than about 38 - 40% of you're income on housing. people push right against that limit all the time. It seems like when people get to where they are spending less than 30% of their income on housing, they're looking to upgrade.
  • The threshold of 28% doesn't make a lick of sense. For higher salaries and higher home prices, employees can easily afford to pay more than 28%, especially if it is two cohabitating people sharing finances (married or otherwise). Consider:
    • The price of a Honda Civic is the same plus or minus a few bucks whether purchased near Google HQ or anywhere else in California.
    • The price of electricity, gasoline, natural gas, water, Netflix, Hulu, or just about any other utility is the same plus or minus a few bucks
  • Modest minimally livable fixer-uppers within 20 minutes of Apple in Cupertino cost about $1.5M, with mortgage and property tax that's about $7,000 to $8,000 per month, or about 35% of your monthly income.
  • Most of us can't afford a home on *ONE* person's salary. I don't see how this is a shocker. You mean it's tough to afford a home in a high demand area with high prices on one persons salary?!? You don't say!

    SEE: http://www.pewresearch.org/ft_... [pewresearch.org]
  • Cupertino/Sunnyvale/Mountain View/Palo Alto are not the only areas that have seen ridiculous housing price sky rocketing... Nearby areas such as San Jose, Morgan Hill, Gilroy, Milpitas, Fremont, San Mateo, San Carlos... they all got housing pricing so high that engineering jobs can no longer afford a house. The year 2007 was considered most expensive housing before the real estate market crash. But now housing is so much higher that I wish I bought a house back in 2007. If we look further into the past aro
  • Apple engineers would have to pay an average of 33% of their monthly income for a mortgage

    Most workers in most cities would consider that an absolute bargain - some of the most affordable rates there are.

    For a short time during the early 1990's when mortgage rates doubled over 2-3 years, to nearly 15%, I was paying nearly 75% of my monthly take-home pay.

  • by jezwel ( 2451108 ) on Wednesday February 14, 2018 @06:30PM (#56125625)
    Where property prices have escalated way out of control, a mere 30% of my income to pay mortgage and strata fees would be soooo nice - it's more like 50% right now.

    At least slow wage growth drops that % down a smidgeon each year.

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