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Even Apple and Google Engineers Can't Really Afford To Live Near Their Offices (fastcompany.com)
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.
So they can't survive with two thirds of a presumably good paycheck? What's the title on about?
They forgot to deduct all the California and local taxes before you ever see that amount.
California has the highest US taxes on everything.
Quit your job and be homeless anywhere you feel like.
The article assumes a single income household, that is no longer typical. Two engineers can afford these housing prices and there are enough two engineer households to support the prevailing house prices.
33% Of your monthly paycheck is easily affordable at their compensation. What people fail to realize is that when you are earning the $$$,$$$ the other necessitates become a microscopic part of your paycheck. Say maybe 10% at MOST. That still leaves about the other 50% for "whatever" money.
Pardon me...I have my violin here in my shirt pocket.
But they want that CA lifestyle I guess.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
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...
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
This assumes a single earner family. Many families rely on 2 incomes to get their mortgage under 28% of household income. A single engineer would not likely need as much house as a family with kids... and if they wanted one anyway, they are single... their expenses are lower... so they can most likely safely exceed the 28% threshold or make a larger downpayment to get under that.
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.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Basically everybody I know is paying between 33 and 66 percent of their income for *RENT*, so paying 28-33 percent or more of their income towards a mortgage for the 'highest demand' jobs in the 'highest demand' areas, sounds downright cheap in comparison.
But then, maybe they know something I don't. For example if that income is pre or post tax.
If your a direct consumer related business, like a branch of a bank, or even a sport stadium, I get why you want your location to be "in the thick of it," but why do tech companies insist on building their work places in super expensive cities? How much money could these companies save by building in a nearby suburb where their employees could actually afford to live?
Stupid sexy Flanders.
People will pay a large percentage of their salary for housing.
People will live further away than 20 minutes.
The employers will have to pay their employees more.
The employers will set up offices elsewhere.
The employers/employees will complain to their local govt and the local govt will end the NIMBYism which prevents the construction of additional housing.
I strongly suspect #5 will not happen.
Isn't this exactly what you would expect from something pleasant and rare? If you just want to make an area more affordable, you should make it less pleasant.
The answer is to do this more, until it's not special, and during the process subsidize. In fact, if mixed-use areas are inherently more livable, build more public housing projects around a mixed-use format.
Unfettered development
If housing is soo expensive the other developers (housing developers that is) would make a killing to build there until they returned to affordability (and then they would probably still fall some more).
Once you put the profit motive INTO the equation the affordability problem improves.
Other examples of sprawling government causing housing/affordability problems: Hawaii and Venezuela
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.
Spending 29% - 33% of your income on a mortgage is quite affordable for an area that will only continue to increase in property prices
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.
Sent from my TARDIS
Maybe you've heard of taxes? In a place like California, between paying local, state and federal income taxes, plus social security and medicare taxes, the government is probably letting you have only HALF of your paycheck. Perhaps 60% of you're lucky. So of the 50-60% you're allowed to keep, spending 28-30% of it on a place to live is going to give you maybe 20-30% for ALL other expenses. I certainly wouldn't want to live that way.
>> 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.
If you find yourself at the top of an Insanely Great company, you're probably a go-getter extrovert who put himself "out there" and struck it big; your whole world view therefore revolves around the importance of being "where it's at", and where it's at is naturally the Big, Beautiful, Expensive city.
Duh.
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.
/rant.
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.
They're a complete fabrication. They're high so the bank can get the most profit off the transaction. Prices are reached though unscientific and arbitrary methods. I live in a farm town full of poor Mexican migrant workers near Miami. I present to you a tiny beaten down house with no attic, no garage, no pool, a horrible school district, terrible public transportation, very little commerce, and a 3 hour traffic filled commute back and forth to Miami, for all that wonderfulness you will pay minimum $150,000 to get that beaten down house in dire need of maintenance. New houses are in the $250-750K range. Real estate prices are complete garbage, and the government will never do anything about it because those inflated prices give them their tax dollars. It's a system which places value on perceived value and ignores actual value.
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.
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I recently considered relocating to NYC for a software engineer position in Manhattan... until I saw the price of housing. I'd either have to live in the Bronx or commute 2.5 hours every day from the ass end of Long Island to make it work. No thanks...
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 that someone would ACTUALLY be willing to pay that would be sufficient for me to actually live in places like California, New York, New Jersey, Maryland, Massachusetts, etc. We will settle for our hum-drum, not-very-exciting jobs that easily allow us to live on one paycheck and bank the other one.
Two engineers can afford these housing prices and there are enough two engineer households to support the prevailing house prices.
Yeah, and the problem with that is it automatically penalises anyone who has children and loses an income (or a large portion of one income to childcare). This is great for those who don't have children. They can out-bid families for housing resources, and use their surplus income to build up assets for their retirement. When they retire they can then use those assets to buy the economic output of the children that other people brought up. Meanwhile those who had the children are disadvantaged in their retirement for doing so.
There is a localised logic towards the idea that people who don't have children should get to keep more resources for themselves, but overall that is going to lead to a japan style demographic (and economic) implosion in the future. So far the west has avoided this by stealing (immigrating) the children of parents in other countries, but older people don't even want that gift horse anymore.
CEOs do. And they can afford to live in the swankest areas.
I eat only the real part of complex carbohydrates.
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.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
So who's living in all those houses if engineers can't afford them? Squatters?
You should try Vancouver. 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.
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.
Do you think all those rich executives will allow their politicians to change the zoning laws? Things are getting ridiculous with real estate. CEO are buying homes that was originally built for the middle class while middle and lower classes are driven to less desirable lands.
I live 10 minutes from my job as a software developer and pay less than 7% of my salary on very comfortable housing in the Cleveland suburbs. I worked in the Bay area several years ago. The salary was OK but I got tired of the traffic and long hours. Life is too short waste in a rat race.
Moving to Ohio was an excellent decision that I have never regretted. My employer is smaller, but they offer flexibility and challenges that would never be available at the previous job. Not only can I afford a Tesla, but there are actually places to drive it without traffic snarls.
That's why it needs to be citywide without design review.
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Los Alamos has more PhD per capita than any city in the world and consequently also has more millionaires per capita (12%). That doesn't make it the wealthiest city in total capitalization, just the one where the medial salary is higher than typical, so almost everyone gets a good wage. There's no traffic (none) and it's surrounded on all sides by national forest, preserves, monuments, state and native american lands. And it has the cultural mecca of Santa Fe a short no-traffic commute far away. A house on a 1/3 acre lot with an obstructed view 200 feet in the air on a canyon cliff edge is under 300K$. There's a ski area right in town. It's a high tech worker paradise.
Or live in the bay area, suck fumes, pay and spend 1/6th of your life in your car or bus
I live in SF proper, not even south bay. My wife and I have almost paid for our house in 10 years even. Just live frugally, the salaries are insane.
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.
I've been hiring engineers in SF for a decade. The median salary in the bay area for software engineers is not 210k. Aside from some companies like netflix that really do go all in, most folks are not making nearly that much.
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.
So if we think of purchases as [housing] plus [everything else] and we increase both wages and housing by $40,000/yr, the percent of money being spent on housing increases, but the ability to purchase everything else remains unchanged. In areas where wages and housing costs are high, the 28% metric is out-dated. People can and do spend far more on housing, in total dollars and as a percentage, without necessarily sacrificing groceries or prescription drugs or Netflix.
Support a few technologists in Washington.
The next Big Thing will one day be created by a company headquarted in a "fly-over" state, because that's where it will be cheap to start up.
This will begin a massive exodus of talent from the coasts towards the Midwest, where it's cheap to live, and relatively easy to build. Of course, the youngins like cool activities, so this will probably occur around the Rocky Mountains where it's legal to smoke marijuana (e.g., Colorado), and where there is already a large pool of hard-working people (e.g., Utahns).
I mean, look, Amazon is already making a move.
If Apple engineers claim they're having problems with their money... might I suggest they're just holding it wrong?
33%? It's more like 50% in Auckland
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.
California in Danger: Why the Dream is Dying and How We Can Save It
Several of these companies recently opened NEW campuses in those expensive areas - it makes little sense.
"nobody ever goes there, it's too crowded"
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_...
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 around 2002-2005, if I would have bought a home back in those years, I could now sell it now and have enough money to buy several
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.
politicians are like babies' nappies: they should both be changed regularly and for the same reasons
Is the percentage based on Net or Gross pay?
I spend 30% of my Net pay on my mortgage. I also work from home.
Maybe my perception of "normal" is skewed from growing up in Southern California. I now live in Oregon, and the fact that I can even afford a house in a good school district seems like a godsend to me. I do not feel like I am being taken to the cleaners spending 30% of my income on a mortgage. There is still plenty left over for bills, food and savings.
and game developers can't live in downtown Montreal. Typical commute in the Boston area is like an hour in from the I495 or New Hamshire areas. And there is good public transport farther out than that. Montreal has good public transport and several neighborhoods that are set up for on-foot living.
And as I understand US mortgages, banks will finance 2.5x annual salaries in most areas and 4x salaries in California (as the ground, for the most part, is invariant). If you want to buy in areas with limited supply, salaries will be an issue. That's not new as the bubble near 2000 saw similar commutes from the Oakland hills into SF etc.
Those estimates are crap. 200k nets you about 10-11k / month after taxes depending on where you live and what you claim.
Want to spend 5k on a median house in CA? Probably a crap 12-1500 sq ft ranch. Big shot engineers dont want that but then again, im not in their shoes.
1.2M$ for Toronto would be a typical, and in many neighborhoods a deal. Consider that our taxes are higher here than California and our winters are colder. But high prices are what you get when it you live in one of the most desirable places in the world. Even if it does snow a few months of the year.
Anybody who thinks about the cost of living for two seconds should realize that a lower salary in other areas results in more disposable income. I moved from a pricey area of New Jersey to a similar although less expensive part of New Hampshire. I am reasonably well off and have twice the home at the *same* rate of pay. I know plenty of people who moved to New Hampshire as part of the Free State Project from California and silicon valley and went from being what I'd consider poor to being filthy rich. I'm sick and tired of hearing about the poor socialists who refuse to move. If you move to places where you can maximize your income to cost of living ratio you won't be poor and you won't have to commute 20+ minutes to work. My commute is less than 5 minutes and I make six figures. Even employees who make $12 / hour are doing great here and there are plenty of jobs in New Hampshire. We have a very low unemployment rate and taxes are comparatively low or non-existent. We have no sales tax and no income tax.
Ok, I get that living and working in Silicon Valley and New York can be really cool but there are lots of desirable cities across the US that also offer very good engineering jobs, with really good pay, and a cost of living that will allow you to live close to your office.
Optional parking? I have a kick scooter because generally I can't park withing 3/4 of a mile of my Bay Area room rental already.
Taxes there are $0.
Enjoy.
At least slow wage growth drops that % down a smidgeon each year.
California, like pretty much all progressive blue states, is a net 'giver' to the rest of the country. If brings in more federal tax revenue than it receives. The states which are net 'takers' are pretty much all red states, filled to the brim with illiterate morons like you.
Companies go where the talent is. Companies choose in Silicon Valley, Boston, Austin, etc. because those areas have large populations of potential employees. Why do those areas have large tech populations? Stanford, Berkeley, MIT, UT Austin, etc., etc.
Applying for jobs there, I have to offset my requested salary by at least $40k just to account for the astronomical rent. I'm not sure how anybody could afford to live there or how any business could afford to employ there. Every other major metro area on the west coast is significantly cheaper. I only apply to places in Silicon Valley or SF if they offer 100% remote anymore, with the added advantage that they don't have to pay me as much since I don't need $1000 extra every month to pay for my housing.
You can make 100k easy doing a job which only pays 40k elsewhere in the country. When your expenses are too much for your income it doesnâ(TM)t matter if you make a million bucks a year or 10000 bucks a year.
Not saying it isnâ(TM)t easier with more money, just saying donâ(TM)t rush to conclusions.
at least, as progressive as you can get in America. Property taxes are regressive. They do two things:
a) Keep the poors out of your neighborhood. Since they present an additional barrier to entry in well to do neighborhood
b) Keep the posh people from having to fund schools and parks for the poors.
Lower property taxes and higher income taxes allow for wealth redistribution. This is a good thing, no matter what anyone tells you. Money tends to collect at the top if you let it, and before you know it the folks at the top get real, real conservative as they struggle to hang on to more and more money while the rest eat cake. Eventually you get dark ages when progress is halted rather than risk disruption to established powers.
Google's a good example of this. Thanks to a public works project (the Internet) they now compete head on with Microsoft & Apple as one of the largest software companies in the world. That wouldn't have happened if wealth redistribution (e.g. taxes) hadn't allowed the Internet to become a global phenomenon.
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The market is highly saturated, and what is offered is sub-par compared to other areas of the country. If you're lucky to own one of these "median" homes, it would probably be built around 1960s, and not upgraded since then. The A/C may or may not be there, the plumbing will suck (or not suck, depending on how you look at it), and you'll be far away from any viable public transport.
There is a lot of resistance to building new structures, and this is all across California. According to one study the entire state of California issued less single family housing permits than a single city (Houston) in Texas: http://www.aei.org/publication...
And do not let me start about the state of the infrastructure, power costs (i.e.: pg&e), traffic and roads, etc.
Do not get me wrong, I still prefer Silicon Valley, however housing is one of the worst aspects of it.
I work in a city center. It takes 10 minutes to get out of the parking. It takes 10 minutes to get from my desk to be on a moving bus. 20 minutes would mean walking distance and nobody wants to live there.
My travel time from door to desk is about an hour. The average is around 45 minutes. Almost nobody moved for the job.
Don't fight for your country, if your country does not fight for you.
Working in IT in southern Spain. For an apartment 30 minutes from work I'm paying 25% of my AFTER tax income. I don't really know what's my before tax income is but I guess the tax rate is about 25-30%. You do the math.
What makes matters a lot worse when it comes to supply and demand, is that "being close to work" has a pretty high value to you when you have everything else.
I don't live in California, but I do live in one of the other big tech centers. Same deal, housing prices out of control.
Which isn't too surprising: when talking to most of my teammates, a good chunk of them don't want kids (so more disposable income), want to live by the subway (no car payments), and put an extremely high value to short commute (many live a block from the office).
When you're making 150, 200, or 300k a year on your own, and your significant other may also be in tech and make the same amount, who cares if 50% of your income is going to housing (especially if you bought). Quickly enough, half the money you're putting in is going to you anyway (equity), and a tiny fraction of your income is more than enough for food, utilities, insurance, and saving for retirement.
That means anyone NOT in that situation is completely hosed, obviously. That's the problem.
I live in Manhattan and ride my bike to work. It's expensive to live here but it's worth it to me.
Bay area is crazy. Austin is nice, but getting crazy - er. My next move is to San Antonio. Low cost of living, beautiful suburbs, and more tech then anyone knows about.
... just for you poor, poor babies. How dare they require you to pay 30% of your hard-earned income for housing.
Don't they know you are precious and special; that you are rock star, superhero brogrammers. It is so cruel and unfair!
Don't worry. Us dirty, unwashed masses will start a GoFuckYourselves page to fund your lavish lifestyles. You ARE the future, after all.
I earn several times 6 figures in a stronger currency and a simple one-person apartment is half my salary.
California is cheap.
thanks to more and more government programs, unemployed social services "clients" can and do afford to live in many of the areas those busting ass to pay the bills cannot. Maybe because of the housing programs keeping rents up and making "investment properties" that are then rented thru Housing Authority a guaranteed winner?
something is wrong when you'll tax workers for millions so the perpetually unemployed can remain in Silicon Valley and other desirable areas, but the workers themselves cannot...in part because the State and the Fed is making sure to skim off almost a third of their gross income every year...
For example, those who teach engineers' children, and pay 50 - 60% of their income for a small apartment.
Google, Apple, Amazon, Microsoft, whomever; They should just build complexes to provide housing for their employees. This would have the effect of killing any speculative increases in the housing markets. When the market bubble bursts it would also be extremely punitive towards anyone (foreign investors especially) who were using those housing markets as investments and artificially inflating prices to increase the value of their investments.
Even if each company only added housing for 20% of their employees the effect would be dramatic.
So I did some work with a spreadsheet. Here is what I found concerning where our income goes, living in a relatively "cheap" city and state:
27%: TAXES! That's federal, state, local, social security, medicare and property taxes. Doesn't include sales tax.
7%: Daycare (one child).
7%: Food (family of 3).
5%: Mortgage payment
5%: Utilities, HOI and Cell Phones
That is 51% of our income. Everything else scales down from there.
Taxes are our biggest expense, BY FAR. They're a bigger expense than our daycare, food, mortgage, utilities and such COMBINED!!
California? Not for any amount of money. Not for $200K/year and a FREE FUCKING HOUSE 20 MINUTES FROM WORK. No thank you.