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. "

Comments

Myths and Realities in Silicon Valley...

[trims]

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.

• Jobs are concentrated in San Jose and the Peninsula. About 75% of all tech jobs are in these places. San Francisco has about 10%, and the East Bay has about 10%. There are relatively few jobs in Marin or Oakland/Berkeley.
• Commuting from Marin County to anything other than San Francisco or Oakland is ludicrous. There are major traffic choke points that simply won't go away, and you can't get around. Commuting from Oakland or SanFran to San Jose is nasty (IMHO not doable), and commuting from East Bay (or further east, like Walnut Creek) to the Peninsula is really harsh.
• Rent is quite high on the Peninsula and San Fran. It usually runs $1200-1500 for a 1br, and around $2000 for a 2br. These are prices for decent places. Rent in San Jose is less, as is East Bay (up to 25% less, as a rule) for about the same thing.
• Housing on the Peninsula is atrocious. Don't let anyone else tell you otherwise. 30-year-old, not-well-maintained houses go for not less than $300k and up to $700k. None of these would be in "exclusive" neighborhoods - this is middle-class housing in average places. A nice house in a good neighborhood (say a chunk of San Mateo) runs $1.2million easy.

  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.

• Commuting can be really harsh, since there are several large choke points that most traffic must pass through to get from one of the areas to another. Commuting within your area is pretty decent.
• Public transporation is really only usable within urban San Jose, and within/between SanFran/Oakland (due to BART). Public transportaion in the other areas is a joke.

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

Re:This is why I no longer work there...

[CMU_Nort]

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.

It's not much different on the other coast.

[waldeaux]

Boston's housing market is also especially tight, esp. in the Cambridge area. Cambridge didn't get rid of rent control for 20 years causing an artificial deficit in the number of available apartments on the open market. (According to one study, only 30% of the people living in rent controlled housing would've qualified for it had there been any means test. Abuses were rampant.)

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.

East Bay prices are fine, don't be scared away!

[Bruce Perens]

Over here in the East Bay, Berkeley area, I see lots of nice homes in the $220K range. Really good office space runs $2 per square foot, and I'm paying less because I found a sub-let. I'm at most 1.5 hours from any valley destination with traffic, but I can live in a nice place and work in the same town, and spend 10 minutes on the commute. There is every sort of culture and entertainment right here, and S.F. is a 20-minute train ride away. Outsiders think the food prices are high, but the fact is we eat better than many parts of the country because the standards for groceries are higher, and in my experience the food prices aren't any worse than the East Coast even though the quality is much better here. Gasoline does cost more because higher pollution standards mean we can't use the same gas as the rest of the country - it has to be refined differently, and we can't import cheap gas from elsewhere because it won't burn as cleanly.

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

This is why I no longer work there...

[BrianH]

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.

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 :) 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.

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.

Location, Location, Location

[Madd_Matt]

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:

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 .com without a california mailing address.
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.