Slashdot Mirror
The High Cost of Valley Living
Small Hairy Troll writes "An ZDTV article
(requires Realplayer, Media Player or Quicktime) on how insane housing prices in Silicon Valley have become. An income of $50,000 with a family of four qualifies for government assisted housing.
Ties somewhat into the earlier Slashdot thread 'Too Old To Code?':
What interesting times we live in.
"
Of course, the reason they would cause traffic hassles is because there is no mass transit. And the reason there is no mass transit is because the housing density is too low to make it cost effective. Classic catch 22.
Don't get me started about how the rich developers here defeat all proposals to relax zoning ordinances in "blighted" areas to allow manufactured housing. We could demolish all the substandard housing in Phoenix and replace it with brand-new manufactured housing (at $20K apiece), which would be far cheaper than subsidizing rent or building new housing complexes for the poor (since land is still relatively cheap in the Phoenix area), but the developers who run Phoenix don't want that. They're hoping that, once the blighted areas run down far enough, they can pick up the land for cheap, demolish the crumbled remains of the substandard housing, and build luxury apartments and golf course resorts. They've already started doing that in the area just north of South Mountain.
Since the government in the Phoenix area is run by developers, they also make sure that zoning and development ordinances are used to effectively red-line areas that developers wish to redevelop. For example, one area south of the downtown area is being eyed by developers for luxury apartment complexes. The city has red-lined this area by re-zoning it as commercial/industrial, meaning that homeowners can't get permits to expand or remodel their homes and basically can't sell their homes (which are on too small of lots for commercial/industrial use). Thus homeowners end up moving out, and renting their former homes to whoever will pay, and the area becomes more and more blighted. And whenever the developers want, they can re-zone the land for multi-family dwelling (apartment), due to the fact that they own the city councel and thus can over-ride the zoning board any time they wish. The individual homeowners, of course, cannot do so, since they don't have enough money to buy city counsellors. Thus the developers who run Phoenix ensure their profits with the power of government at the expense of homeowners.
-E
Send mail here if you want to reach me.
Personally, I'm seeing coalescing trends like this also in Canada - in Ottawa, they are predicting that the city could double in size due to high tech growth.
Yes, I'd imagine that a Tim Hortons based Edonut.com could really take off in Ottawa. The truly frightening thing is I just checked that URL, and it is owned by a squatter firm. Somebody is taking my idea seriously!
The problem is more demand than supply. It has to be rationed somehow. If not by price, how? Govt boards? Roll of the dice?
Right. Do you really think money wouldn't talk somehow? I knew of many people in rent controlled cities who paid cash under the table to get "cheap" over the table rents.
--
Infuriate left and right
This is hardly anything new. I lived for a while in the Bay area in the late 80's and ended up moving back to the midwest because I couldn't make a decent living out there. The salaries out there seem to only be about 1/2 again as much as what they are around here, but the cost of living is roughly double. Mostly it is housing costs that are insane out there (you can buy a decent house around here for under $100k, and you can buy a very nice house for $100-$200k), as noted above.
:-)
Car related expenses are also sky high in the Bay area... Gas is more expensive -- I can buy the 90 octane mid grade here for $1.49 a gallon. Insurance is double or triple that in the midwest. Cars themselves are more expensive because they have to have 'California Emissions'. Getting your car smogged all the time is not only expensive, it is a pain in the ass. Out here we never have to do that, or even have cars inspected -- if there is a place to screw a license plate onto it, its street legal. Registration is done entirely by mail.
Food costs are closer to reality in the Bay area, and some things are actually marginally cheaper (seafood and fresh fruits and vegetables often are), but boxed and canned goods , meat and dairy products are generally more expensive.
Taxes out there are also higher. I don't know what the sales tax is in the Bay area these days, but it was over 7% when I lived there 10 years ago. The sales tax here now is either 5 or 6% now depending on the local option tax (and that is too high). Sales taxes disproportionately burden people on the lower end of the economy. The fact that salaries are higher in the Bay area usually means that you pay more in federal income taxes too. Although many midwestern states have higher state income tax and property tax rates than California, the fact that most incomes and houses are lower in the midwest means that the actual amount of taxes paid is lower.
And if you think the midwest is the cheapest, it isn't. I'm thinking about moving to Florida... Like Tampa or Orlando No state income tax, and generally cheaper cost of living -- AND nice weather. In general the southeast is probably about the cheapest place to live, if you can stand all the rednecks...
No way man! We gotta go to Timmies in person to get the hockey scores from the counter girls!
Pope
Freedom is Slavery! Ignorance is Strength! Monopolies offer Choice!
It doesn't mean much now, it's built for the future.
How many thousands of acres of top quality land in the Valley is tied up in freeways and roads? Stop subsidizing the usage of the automobile - tax the land used up by highways and freeways and pay for it with gasoline and other auto related taxes.
(see http://www.henrygeorge.org for some related ideas on this subject).
Exactly which government is paying the housing subsidy, the feds or the state? If its the feds then as a non-californian US taxpayer I'm outraged to be subsidizing stupid Californian socio-political choices.
Its those unintended consequences again...
90% of the wealth is in 2% of the pockets. Bummer to be in the majority.
I paid $1275 a month for a two bedroom one bath house (half a duplex). It wasn't a very nice place, had no back yard and only a tiny front yard. One car garage and tiny kitchen.
I'm getting married to a woman from Newfoundland and am staying here for a few months until our wedding. In St. John's we're renting a three bedroom house with a large kitchen, two and a half bathrooms, front and back yard. There's both a large living room and a family room.
The rent is US$500 with a US$133 deposit (no last months rent down). In Santa Cruz one of the things contributing to the homelessness that is so common there is that it requires several thousand dollars to move into a place, for first, last, plus a deposit.
But what was getting me about Santa Cruz wasn't the expense. It was the crowding. You couldn't drive across town at 5pm.
I thought that by becoming a consultant I'd get away from those insane Valley freeways, and although I didn't have to commute anymore sometimes I'd want to go downtown to the store or a cafe or something and it would really be a drag.
Housing is so tight that UC Santa Cruz houses students at the old Fort Ord Army base and Monterey and transports them in on buses, an hour's ride.
I used to live in LA and hated it there. I stayed in Santa Cruz because of the rural atmosphere and tight-knit community feel. That's not really there anymore.
We'll be heading back to the states after the wedding but for sure we won't go anywhere near Silicon Valley.
I'm very adamant, and have been for a long time that I will only accept work I can do "from my own office" - which means my home office. You can do this too. Screw the cubes at the valley, stop working for the pointy-haired boss. Throw away your flip tie!
Read how I do it at Market Yourself - Tips for High Tech Consultants
You don't have to move to Newfoundland but you'd have the choice to at least not drive on the freeway anymore if you stay in the valley, or at least move somewhere reasonable that you can afford.
Mike
-- Could you use my software consulting serv
The same thing is true here in Atlanta. You can make $70K-$80K and have a standard of living as if you were making $90K-$100K. Reasons? Well, everyone is already saying them, but:
Lower taxes (this means that the cost of living is lower, too, because businesses don't pass those extra costs to their customers).
Low Prices (due to above): $800-$900 per month rent on a nice apartment (even one in the city!), $10 for an ok restaurant tab, cheap groceries. $1.36 for a gallon of gas (and this is unusually high right now).
Plenty of growth. Atlanta is growing ridiculously fast. There is plenty of room, land is cheap, and everything is brand-new.
None of this is anything that any amateur economist wouldn't notice, but people hear how red-hot California is. Then you hear about enormous salaries and don't think about cost of living. A friend recently worked out the numbers for $100K california vs $80K georgia, and realized that he'd keep more of what he earns down here.
Plus, we have Georgia Tech producing engineers and programmers, Emory producing marketting people, and both giving us managment/money people. And the venture capital is more plentiful and available on better terms.
I used to live in Santa Cruz, a short 30 minute drive across HWY17 through the beautiful Santa Cruz mountains. The cost of living in Santa Cruz is very comparable to that of the communities around Boston, MA. Living in communities such as Millbrae, San Mateo, San Carlos, and others while owning a home is not only possible.. but affordable and attainable.
There will always be exclusive or expensive areas, no matter where you live. Commonwealth Ave, Back Bay in Boston. All of Manhattan is terribly expensive. Lets not even discuss West 57th. Beverly Hills, Sun Valley, Austin TX near One Infinite Loop... you name it.
I think it is a shame that housing in some parts of California has become so expensive for quite another different reason :
THE MAJORITY OF PEOPLE RENT NOW
Renters have few rights, and very little in the way of protections. While the owner of the house enjoys a tax break that helps defer the interest on the mortgage loan, the renter pays exorbitant rental fees. These fees are in no way tax deductible, and we end up with a class of people who can only rent.
The money poured into rent in California, and other tech zones, is incredibly high. In the Bay Area, some studio apartments rent for $1500 and up in the NON-exclusive or desirable zones.
$18,000 a year ... wasted. Just thrown away for a roof. Usually power, water, and garbage are -not- thrown in as services. A comparable mortgage for 30 years would allow a person to buy a $300,000 home. Imagine. If you used that rent to buy a car you could pay off that Porche 911 in THREE years. Five years would get you a car worth $90,000 or so, if you qualify for one of those %1.9 financing loans.
Unfair? yes.
So .. what are you going to do about it?
---------------------------------
Reach out, extend to, and embrace the universe.
-Einstien
-----
Embrace, extend, and engulf the universe.
Reach out, extend to, and embrace the universe.
-Einstien
-----
Embrace, extend, and engulf the universe
Right now I live in Hayward, CA, and work in San Mateo, CA. Both are on the fringes of Silicon Valley. What makes me laugh is the number of people who say they "can't" afford to buy a home here... but blow money on all sorts of ridiculous stuff and have maxed out their credit cards. My wife and I decided we wanted to buy a house and saved up money so we could do that. Now I have a good job and a nice house. My wife has chosen to not work for a couple of years so she can stay at home with our toddler. A lot of the problem is that individuals need to plan better.
However, I am not taking the blame off of the companies and civic leaders. There is definitely too much of a rush for businesses to be built when the companies and government know there isn't adequate housing or transportation. If you go for a drive in Santa Clasra county you will see countless businesses being built. At the same time, the government is complaining about the lack of space to build housing! Another problem that many areas face is that the people who already live there will always fight AGAINST new housing development. By limiting new houses, they drive their property values through the roof. I have seen this everywhere I have lived... England, Sacramento, North Carolina... it is all the same.
-------------
TheInfoBox.com
Another techie hangout... please visit so I can say I've been slashdotted!
OK, I've been living out here in Silicon Valley for about 20 months now, and I've previously lived over large sections of both Boston MA, Pittsburgh PA, and Washington, DC.
A couple of things people need to realize about the Bay Area: physically, there are six generally distinct regions out here (San Francisio proper, Marin County (north of SF), Oakland/Berkeley, the East Bay, the Peninsula, and San Jose). I'm going to be making general statements that don't completely categorize the entire areas, but are mostly true.
Housing in San Francisco is impossible. 1000sq ft lofts run $400k. Forget anything else. Condos start in the $600k-range.
East Bay still has decent housing prices, depending on where you look. Middle-class housing runs $200-400k.
Marin has a variety of housing, depending on where you live. It can be cheap ($150k) to very expensive ($1.5m) for the same house, depending on which community you live in.
Berkeley is still a college town, and you compete with the students for housing. My advice is: don't. Oakland and San Jose are still industrialized, with suburbs. The suburbs of San Jose generally have housing similar to the Peninsula.
Gas is the most expensive in the US (running $1.70 nowdays), but the rest of the cost of living is about the same as other major cities.
Zoning laws are preventing high-density buildings, and lower-income (ie, those without a tech job) people are starting to flee. Public transportation isn't going to get any better, and there is no more room for roads. Unless something changes drastically, Silicon Valley will choke to death in about 5-10 years.
Fundamentally, the only real reason to live here anymore is that you can hope to cash in on an IPO. Moving out here to work in a regular tech job is not a good decision - you should look elsewhere.
This is not meant to be a compete downer. I love my friends here, and there are major perks. But this is a hard-core Boom Town. Adjust accordingly.
-Erik
There are always four sides to every story: your side, their side, the truth, and what really happened.
This is part of the same reason that, when I graduated from college, I decided to stay in the Pittsburgh area. All of my friends were like, "Why? You could have a great job in the valley which pays twice as much!" But the cost of living in Pittsburgh is microscopic in comparison. At $60k a year, I'm sitting pretty. And the tech environment out here is much more astounding then you would expect, with the entire breadth of the industry represented.
--------- Beware the dragon, for you are crunchy and good with ketchup.
During the 1990's this was made worse by letting people sell off apartments as condos. So, you had a siazable fraction of the apartments cut off from the populace, which inflated the market price considerably. When rent control was (finally) lifted, all the rents went up to meet what market was left (since the condos remained condos). Since all the rent control apartments were already occupied, demand stayed high and supply stayed low.
The vacancy rate is almost zero, and has been that way for several years. Attempts to fix that (i.e., building more housing) have failed because the people who have places to live refuse to allow any large-scale housing to be built (favorite quote: "housing destroys our urban landscape").
I live one town over, which used to be the "unfashionable" (read: affordable) place to live, but I've seen rents double in five years (fortunately, not mine - yet). To rent a 2-bdrm apartment at what's supposed to be the "right" fraction of your income, you'd have to make at least $45-50K.
Because Boston is such a college town, landlords can ask for anything and get it. They'll just squeeze more people into an apartment. It's very common to have every room converted into a bedroom save the kitchen and bathroom (although even that's not a certainty; an ex-BF of my sister slept in a de-commissioned 2nd bathroom!). I have also seen ads around Cambridge asking for (literally) a closet to sleep in for $100/month (the ad gave dimension requirements and everything).
As always, it's simple supply and demand. Unfortunately, there's no clear solution for increasing the supply.
I can see those expensive South Bay towns from the top of the hill I live on. Yet it costs much less to live here. Sure, it's even less expensive as you get away from the bay, but it's possible to find a happy medium.
What burns me is that some people think they can't afford to live where I am, because they confuse it with "Silicon Valley".
Thanks
Bruce Perens
Bruce Perens.
When I first went to work in the Silicon Valley in the early 90's the cost of living wasn't nearly as bad. I had a $65,000 a year job and lived pretty damned well on that. I owned 3 bedroom house in Mountain View that I'd paid $190,000 for and thought I was on top of the world. Then the 'boom' began and everything changed for the worse. In the period of only a couple years I became the poorest person on my block. I thought I'd hit easy street when a job change catapulted me into a $110,000 a year position coding backend web apps (C) but even at that salary I quickly found myself stetching to make my paychecks last due to the increased cost of living. Couple this with the fact that the serious increase in traffic and increasing time at the office were keeping me away from my home for more than 15 hours a day and you can probably see why I began to get burned out on the whole 'Silicon Valley' mystique.
:) Two years ago however, I decided that enough was enough. I sold my home for $600,000 and moved to Elk Grove. I found a job with a Sacramento based application development company that pays $70,000 a year in TWO DAYS.
Like many people in this business I had always assumed that all of the 'good' jobs were located in the Silicon Valley, and that the rest of the country was a technological waste of time. Doing quick salary comparisons seemed to confirm this when I found that no other area of the US offered competitive salaries to the SV companies for someone with my skills and experience. Also, since I'm a Nothern California native, I wasn't exactly eager to move far
I know all of you Silicon Valley residents are probably saying "$70k? That sucks!", but you cannot forget the lower cost of living and the intangibles that go with living out here. $70k in the Sacramento Valley probably lasts as long as $200k in the Silicon Valley once cost of living adjustments are made (I paid $225,000 for a 5000sq foot 4 bedroom home with a REAL YARD!). When you factor in things like a commute of less than 20 minutes, actual friendly neighbors, lower gas and utility prices, and weekend entertainment that wont break the bank, the move becomes TOTALLY worth it.
The point? All of you Silicon Valley techies that are complaining about the high cost of living over there should MOVE. Contrary to popular belief, there are good jobs elsewhere that you guys could be taking. I realize that I will probably never get rich on stock options from the latest startup, but I'm happy now...and enjoying your life is the only thing that really matters in the end.
There is nothing so pathetic as seeing a beautiful young theory roughed up by a tough gang of facts.
It's an interesting phenomenon, call it 'Gold Rush Fever' or 'capturing the face to face synergy'. Why are prices high? Because everyone wants to live there. Why does everyone want to live there? Lots of reasons I suspect. Reasons like:
;-) .com without a california mailing address. ;-)
a) If you want to be perceived as a hot mover and shaker, you have to live in California
(Note: Real movers and shakers can live anywhere they want
b) The people I want to work for/with are all there
c) I can't be a
d) What I really want to find is a California Girl
e) If I don't have a job, I go to where there are lots of jobs and look there.
Personally, I'm seeing coalescing trends like this also in Canada - in Ottawa, they are predicting that the city could double in size due to high tech growth. I don't think that the popularity of these 'hot spots' means that distributed collaboration doesn't work - just that there are other reasons to be in close proximity.
However, I have to say that I think there will be a self-limiting feedback involved. As the cost of living spirals upward, more companies will choose spots like Reston VA, Rockville MD or Ottawa ON.
Of course, the mob mind may rule, and in the land of illusions (California) perception is King.
--My opinions belong only to me, until you realize I'm right