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Finding the Downside In San Francisco's Tech Boom
snydeq writes "The NYTimes reports on the San Francisco's shifting socio-economic landscape thanks to a massive influx of tech workers and tax and regulation breaks to big-name startups. 'In a city often regarded as unfriendly to business, Mayor Edwin M. Lee, elected last year with the tech industry's strong backing, has aggressively courted start-ups. But this boom has also raised fears about the tech industry's growing political clout and its spillover economic effects. Apartment rents have soared to record highs as affordable housing advocates warn that a new wave of gentrification will price middle-class residents out of the city. At risk, many say, are the very qualities that have drawn generations of outsiders here, like the city's diversity and creativity. Families, black residents, artists and others will increasingly be forced across the bridge to Oakland, they warn.'"
That this is also an economic boon for Oakland.
First they complained because of "suburb flight" where affluent persons moved to the suburbs and left-behind a poor base in the city.
Now they are complaining that the affluent people are moving back in.
I wish they'd make up their mind.
Do they want the upper/middle incomes to leave the city, or stay in the city? Either way, it appears they will wine about it.
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
USA Today was reporting on this 5 years ago.....
http://www.usatoday.com/news/nation/2007-08-26-urban-blacks_N.htm
"The average reporter we talk to is 27 years old......They literally know nothing." - Ben Rhodes
So there's no way a successful and educated population can be diverse and creative. Got it. I do like to check in on ideologythink now and again.
Why not report on the apparent boon that's coming Oakland's way, what with the tide of diverse and creative refugee artist families heading their way.
If you make X more desirable, you will likewise make X more valuable. It doesn't much matter what X is as long as X is a finite resource. Whether it's a boom town in North Dakota with rents in the thousands of dollars per month or San Francisco is completely moot. Demand increases value, value increases cost, cost decreases affordability.
Why, oh why, are people surprised by this? This was old news in the times or the ancient Romans. To put it simply, this economics 101, supply and demand in action. Next big surprise story, Chinese factories have long hours for little wages, yet still turn down 10 applications for every job?
it takes years to get any large structure built and while you read about politicians and community activist bemoaning the lack of affordable housing you never see real progress. Instead you get locals doing the classic NIMBY maneuver. Oh its fine and dandy if you build it OVER THERE!... which of course the over there crowd don't want it either. Lots of lip service and little action, the point being that the type of construction needed for truly affordable and sustainable housing is not the type that occurs.
then there is the whole concept of what affordable housing really means.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
This has already been happening for quite a while, and among friends who live in the area, San Francisco has already developed a reputation as being a sort of fortress of elite upper middle income people. The city's demographic, according to friends, is most favorable to mid-career types in their late twenties and early thirties: people who have already established their careers and have the money to afford the skyrocketing cost of living in the city but at the same time do not need space for raising children. Lower-middle incomes, poor people and families are being replaced by yuppies. You see similar trends in major cities across the United States, New York, Washington DC, etc., but San Francisco is noteworthy because of the sheer amounts of money being thrown around thanks to the new tech boom.
It's more laid back and the Berkeley/Oakland hills are backed up by thousands of acres of parks and undeveloped reservoir land. Plus both the views and the weather are better. And you can get into the city in a matter of minutes plus have a shorter drive to Tahoe and Yosemite.
Wayne Cooksey joined the flight of African-Americans from this city last year to escape soaring rents and buy a home. Michael Higgenbotham left six years ago for a safer neighborhood and better schools for his three children.
One guy bought a home, and the other guy found a better school? Sounds to me like people are moving up in the world! These are two success stories.
"First they came for the slanderers and i said nothing."
Which is worse: hobos or hipsters?
"Overspecialize, and you breed in weakness." - Major Motoko Kusanagi
This situation probably sounds like something somewhere on the scale from no big deal to f'in great if you are a 20-30 something temporarily occupying that space between overpaying employer and overcharging rentier.
Meanwhile, cities can not sustain themselves on these kind of demographic patterns. Cities need all kinds of people working at all income levels to work efficiently. Banishing the working poor to the hinterlands drives up costs (commuting). It also perverts the perspectives of those living on either side of the tracks, where the motivations and plights of each other become alien, leading to misunderstanding and unnecessary tensions.
Sooner or later, these booms become busts or the underlying social structure collapses, leaving dysfunction.
What I want to know is how an industry that constantly sells itself on easy communication and reduced operational friction continues to centralize itself in a way that drives up its own costs of living and makes it physically vulnerable.
Yep. Our housing finance system forces the middle class portfolio to be overweighted towards leveraged real estate. If you were constructing a portfolio with liquid assets, no manager in his right mind would recommend: 75% REITs bought on margin, 25% other things. Yet that's where a lot of people are except that it's an illiquid asset instead of a REIT.
Until this situation changes, nobody will really want affordable housing despite what they say.
Affordable housing means falling prices, and the whole system is designed so that falling prices are bad. That's why "affordable housing" requires you to earn the poverty badge. A world where section 8 vouchers provided $100 of your $120/mo rent instead of $800 of your $900 rent would work just as well, if not better for the government. It's the trannsition that's a bitch. We missed a golden opportunity with this crisis. The rallying cry should be "START FORECLOSURES". Yes, "owners" would have to move; but if we let the blood run in the housing market, they'd move into a place where the rent was 25% of the mortgage. They could put the other 75% in CDs earning 8% interest instead of paying it to the banks.
Maybe some day the bank/housing cartel really will collapse. I certainly won't mourn its loss; but for now it continues to be propped up.
Diversity is all about which races you need to have to be diverse.
Racial diversity is not what diversity is all about. Its also about differences that tend to break down on financial lines (though that is often just a coincidence of our societal priorities).
A community where a 1400sq ft. house costs $1m has no place for people who devote their lives to educating children, caring for the victims of unpopular maladies like getting old or mental illness, or even ensuring that basic infrastructure is maintained and protected. When the providers of these services are not part of the community, they invisible to residents, the value that they provide is artificially diminished, as is their incentive to perform or even continue to provide services. This drives quality down, and the cost of raising quality up.
If you can't pretend to be a victim, you are not welcome as a participant in "diversity".
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Reading some of the early comments, it seems like people are acting like this just affects artists or poor black people or that this is somehow a reversal of white flight (largely a middle-class phenomenon).
I grew up in San Francisco and still live in the Bay Area. Middle-class and even many (by national standards) upper-middle class people have been and continue to be pushed out of the city. It's not really about racial diversity either. It's a socio-economic and cultural thing. It's also an age thing. To me the quintessential San Francisco resident is a yuppy transplant female in her late 20s or early 30s . She works in tech marketing. She's a foodie and loves visiting all the trendy new brunch places and maybe hitting up a street fair afterwards. She could be white, Asian, hispanic or something else. That doesn't mean it's not monotonous and homogenous. It is homogenous and that's what people are complaining about. And if you want to have a family in San Francisco, you need to be downright wealthy. So there's nothing wrong with being a young professional in itself, but when that's all a city has it's lost a lot of its character.
Anyway, such is life in a market economy. I don't know if there's a right or wrong here and a city like San Francisco has seen waves of demographic changes. But don't think this is like people complaining if white people were to return to inner-city Detroit. This is nothing like that. This is really an entire city becoming like the wealthier parts of Manhattan. I don't expect people from other cities to care, but as a San Francisco native I wish Silicon Valley had been a place in Washington state.
Bad Now? Just wait 300 years! Apartments are going to be a B*I*T*C*H when Star Fleet United Federation of Planets moves into Sausalito.
Problem with doing that is that you wipe out the imaginary nest egg that millions of baby boomers have in their housing values to rely on for retirement now, rather than later. And that's an awful lot of people in their 50's and 60's to bankrupt and/or force retention in the job market long past their prime. Not to mention clog up social movement/career advancement for the younger generations. There simply is no good answer.
Here's to hot beer, cold women, and Glaswegian kisses for all.
No huge budget deficit, ultra conservative politicians
Your first one is a lie, and your second one is a reason to stay the fuck away.
Yuppie Enticement is actually a strategy used by city planners to develop blighted communities. Heard a great story on this on NPR a year or so ago. Basically, you encourage all the artists, musicians, and gays to move into an area and make it hip and interesting. Then, the white bread yuppies who want to be hip and interesting after working their 8-5, 5-6 figure, suit-and-tie jobs move in. That drives up prices on rent, encourages development and businesses to move there to exploit all that yuppie entertainment budget capital. Ba-da-bing, you've got a nice clean area. The gays, artists, and musicians get priced out and go look for a new blighted community where they can afford to live. Rinse, lather, repeat.
I believe the idea originated with Greenwich Village in NYC.
I swear to God...I swear to God! That is NOT how you treat your human!
"The only real way to fix this is to make everybody poor."
It seems you have never heard of rent control.
Get an education before you spew bullshit, you moron.
There is rent control in S.F. But there aren't rent caps, so people that got into apartments in S.F. before the prices went up are relatively safe (then again there are problems if the apartment owner wants to sell/privatize and you are kicked off and can't afford the current rent prices).
As you said, there are no price caps, so what Rent Control does is make prices spiral to very high levels. The landlord factors in that he can only raise the rent a couple percent/year (varies per year based on the a consumer price index) for as long as the tenant lives there so rents are much higher than they otherwise would be. Worse for landlords is that it's exceptionally hard to evict a tenant regardless of cause, especially tenants that are disabled or elderly, so many landlords that might otherwise rent out an inlaw apartment chose not to to avoid the headaches if they get a bad tenant. Even when there is a legitimate reason to evict a tenant, it can take 6 months or longer to evict, after paying thousands in legal fees. If you own a house in SF, you cannot evict a disabled or elderly tenant to move into your own house.
Even if you're not a protected tenant, the owner needs to buy you out ($5,000 per tenant, but you can negotiate higher if the landlord wants to avoid a protracted eviction process) to help cover your relocation.
I spent 10 years in a rent controlled apartment, not because it was a great apartment but when you're paying under $1000/mo for something that would cost $2000/mo to rent today, it's hard to move. I now live in a non-rent controlled house outside of SF (but near transit) and pay much less for this house than if I tried to rent a similar place in SF.
They are a New York paper complaining about a competing city getting all the high tech startups and therefore venture capital now that Wall Street has basically self-destructed the New York financial markets. Meanwhile the same paper is reporting that the jobs ax is going to fall again on the banking sector as upper level management throws middle management overboard in order to save their own bonuses: http://news.yahoo.com/wall-st-few-places-hide-jobs-ax-hovers-220146813--sector.html
About the only thing that needs changing about San Francisco (and California, in general) is to not have Prop 13 apply to non-residential commercial properties. There would be a quick rebalancing in what gets built.
-- Terry