Housing in the Bay Area (and California) is going to continue to get worse due to Prop 13. It destroys liquidity in the housing market. Elderly people can’t downsize since their taxes would rise dramatically, thus the abundance of retired couples in multi-bedroom houses and young families in apartments. People with multiple homes are incentivized to rent and never sell since they are receiving a government subsidy through below market tax rates. Until Prop 13 is dealt with California will continue to be the leader in inequality with a landed gentry extracting more than their share from the state. The density of tech only exacerbates the problem in the Bay Area, but it is a California problem.

It's not true at all that the elderly cannot downsize. There is a loophole in all of this specifically designed for them:

http://www.assessor.saccounty.net/LowerMyTaxes/BaseYearValue...

The lack of indexing of capital gains taxation is a far bigger factor. As it is, a would-be seller faces losing * over a third* of the paper profit above 250K, and the cost basis doesn't reflect inflation.

If you're leaving the Bay Area, you're going to a far less expensive property, plus a dozen or so counties accept transfers of Jarvis-Gann protections anyway. But the tax hit is the crippling factor.

I'm not familiar with the YIMBY stance on Prop 13, but as an advocacy group that endorses local measures, you could join and promote propositions that would eliminate 13 - and have a real effect as our voter guide is sent to tens of thousands of bay area residents.

I generally approve of Yimbi, but eliminating prop 13 is not something they have the influence or the scale to accomplish on their own, or even to lead in a credible way - not even close. California is very large, and prop13 is very popular with a majority of the state’s population. It would take a landslide political change at the state level to revert it, and an alliance of diverse political interests unlike anything that exists in California today (to my knowledge).

True. But you could say exactly the same thing about any advocacy group.

Its a big country. Its a big state.

You’re right of course. I just think reverting prop13 is important enough, and difficult enough, to warrant creating or joining an organization solely dedicated to that one issue. I feel like pro-housing Californians tend to tuck it into a tactical bullet point, instead of appreciating it for the root cause that it is.

By the way, Prop 13 was a response to what was happening as a result of property values dramatically rising. It was an effect, not the cause, so repealing it isn’t likely to reverse the increase in property values.

It will increase liquidity though and thus assist in creating a more efficient market.

I agree with you, but I'd also like to point out that property tax per se is a political decision that was made at some point. Lots of places do just fine with no recurring property tax whatsoever.

[edit]: Anybody care to explain (or speculate) why this is being downvoted?

Until you have an alternative to people on fixed income being forced to move from the homes they own because they literally were priced out of the neighborhood, I will defend Prop 13 with words, money and actions. You will never convince me or people like me that it’s okay that my family buying a house in the neighborhood should by itself force our neighbors to have their costs go up. Not only do I not want that, you’d find it also wouldn’t lead to very good relationships.

Prop 13 was not created in a vacuum, it exists to solve a very real problem. And don’t forget, the young people that mostly don’t feel this problem don’t vote nearly as much as the older people for whom this problem is most keenly evident.

The solution would be to build more housing to keep prices low - somethung which homeowners would support if prop 13 weren’t a thing.

They have plenty of other reasons to support it. The people that don’t support it for the most part are the large scale landlords who are happy with the run up in rents.

Large scale landlords actually want to invest in more property. E.g. the apartment building I reside in was built only a few years ago by a publicly traded REIT.

It is nativist homeowners that oppose new building because it reduces home appreciation and brings traffic and ethnically different people to the neighborhood / city.

Do you vote?

What if those pesky younger people did vote? What if they outvoted all of these older NextDoor-Angry people?

Sure I vote. “Pesky” younger people are welcome to vote for repealing Prop 13 if that’s what they want. I won’t, at least not if it has the effects described here.

Would you support repealing Prop 13 for non-owner-occupied or commercial properties?

What’s that going to do? People with market rate rents will see them go up x% and people in rent controlled apartments will simply get more pressure to move so the landlord can convert the unit to market rate.

> What’s that going to do?

It will remove the immoral handout landlords have gotten themselves in the name of the residents facing unexpected increase in property taxes.

The solution is to means test property taxes. To keep lower-income residents in their homes, we discount their property tax from the standard rate.

If you're wealthy and can afford to pay a market rate property tax, then you pay it.

It seems like gp’s proposal is to eliminate Prop 13 literally so that people will be forced to move out or that the threat of being forced to move out will cause them to man the barricades and demand more housing to lower property values (good luck with that).

If the point is simply to raise income for the state, that’s an interesting discussion that we can chat about. But the topic is housing availability and I don’t see how this proposal would affect that with real means testing. People who can afford it won’t move and landlords will simply pass the costs on to renters.

That would be impossible to manage in practice. It would be too easy to game such a system, for example by doing a fake sale to a low-income relative.

Allow deferral of excess property tax payments until the property is sold. Simple as that.

Furthermore, landlords shouldn't be able to raise rent faster than their property taxes go up.

Groceries are actually one of the things which have not been getting more expensive over time. The national calculated inflation rate is such that $100 in 1983 is equivalent in purchasing power to $253.02 in 2018. In the bay area, "food at home" (in linked document) is found to cost 252% what it did in 1982-84.

https://www.bls.gov/regions/west/news-release/2018/pdf/consu...

This document interestingly shows that motor vehicles have been getting cheaper in the bay area, even before adjusting for inflation.

>Day care costs are exorbitant. Groceries, gas prices, inflation is across the board because well paid tech workers are driving up the costs. Even costs to get work done on your house or property has doubled in 6 years.

That's cause wages of other workers go up, because the supply of workers dwindles if wages don't keep up with housing costs (people wouldn't work here if they weren't payed enough to afford to live within say an hour and a half of work).

I moved away from the bay area, because housing is the problem. Or at least housing + transit. The reason labor is expensive is because housing is expensive, which is totally unsurprising because everyone's cost to live there is high.

Sure, if tech workers stopped living there then there would not be as significant a problem, because housing prices would have to fall.

On one hand, spreading work around the country/world is good, on the other hand there are real productivity gains by having people in physical proximity, as we can see from the fact that cities are the most productive parts of the world.

An increasing number of devs are moving to places like Phoenix and air commute to work in SV housing costs have gotten that out of control.

I think the problem is that a lot of those cities are not ones people want to live in. On the other hand, SF has amazing weather, culture, decent public transportation (at least compared to many other cities), permissive drug laws, relatively open work culture (e.g. dress code, work from home, perks), a progressive culture, etc.

To some extent, a large enough diaspora from the bay area could bring that culture to other cities over time.

Thgat's not necessarily a good thing.

Also, one would think it is pretty clear that there is a correlation between SF's "culture" (like permissiveness about drug use) and the amount of excrement and needles on the streets.

Which is precisely why it's expensive to live in the Bay Area. It's hugely in demand. And the YIMBY folks don't have the ability to claw back some of the property rights of existing property owners to upzone.

pfarnsworth is spot on. Either pay the market rate, or move somewhere cheaper. This is primarily the fault of large tech employers who refuse to relocate jobs elsewhere. They are causing the housing inflation with their deep pockets for worker salaries.

Well it's a combination of tech companies liking the bay area location and the supply of any kind of real estate being artificially limited by NIMBYs. We can "solve" this be either reducing demand or increasing supply. To me decreasing demand seems like a terrible solution. You want people to live in your city. It's insane! Something happened a few decades ago where we started seeing cities as "completed" and any change from that state is seen as bad and"loss of character". Cities are changing, living things. If we prevent the change the city dies.

The more reasonable solution that is being acted on is to raise the issue up to the level of the state government where the representative of those impacted by the issue but unable to vote in the relevant local elections can pass laws restricting the ability of local governments to obstruct development.

If I were going to take a job in, for example, the midwest, I would expect a higher salary in order to compensate for the lower quality of life during the winter. Wouldn't that then defeat the purpose of moving a company somewhere cheaper in order to pay people less?

Edit: toomuchtodo brings up a good point. I was thinking more in terms of a higher pay after adjusting for cost of living (e.g. being payed the same amount as an engineer in SF while living in Cleveland). Otherwise it seems like I would be taking both a pay cut and a cost of living cut.

You're making an assumption that there aren't others who would take the job without requiring a bump in pay to compensate for winters (quite a contingent of tech workers already in Chicago, for example). There are already large cohorts of tech professionals who take a pay cut (not saying they should, but they do) for the ability to work remote. I would be remiss if I didn't mention that Google and Facebook are expanding rapidly in the downtown Chicago area. [1]

Bay Area tech salaries are already the highest in the nation; you could make the pitch to an employer, but I think you'd be hard pressed to get a higher salary for living in the midwest (considering the much lower cost of living). Midwest workers (tech workers anywhere outside of the Bay Area really) would be thrilled to get SFBA salaries where they live.

> Menlo Park, Calif.-based Facebook is negotiating to lease more than 200,000 square feet in a recently constructed office tower at 151 N. Franklin St. in the Loop, according to sources.

> Meanwhile, sources said, Google plans to add more than 100,000 square feet of office space in the city’s Fulton Market district, where the company already has a large Midwest headquarters.

> The new Facebook space alone would be large enough to accommodate more than 1,000 employees.

[1] http://www.chicagotribune.com/business/columnists/ori/ct-biz...

> Bay Area tech salaries are already the highest in the nation; you could make the pitch to an employer, but I think you'd be hard pressed to get a higher salary for living in the midwest (considering the much lower cost of living).

Not just the lower cost of living. Being compensated for living through winters is a novel idea, but if you're thinking about the soft factors that don't directly involve salary and cost of living, not having to deal with the bay area commutes is pretty strong compensation in and of itself.

Having to take a pay cut and live through a season you get to ignore in CA could be kind of a bummer for some people. Getting as much as 20% of your waking life back in time spent not commuting can be a pretty strong compensation for it, though.

edit: please do comment in addition to downvoting, if you see a problem with the logic here

There's more to quality of life than just temperature. After 4 years in the Valley, I will certainly take Chicago winter over anything in SV, even with a reasonable pay cut.

> Either pay the market rate, or move somewhere cheaper.

Yes, I am sure that this is what the home owners who own multi-million dollar properties would want. Either leave or drive up their housing prices.

But another solution is to vote for new laws that would increase their taxes (an thus incentive them to sell), or vote for laws that would drive down the price of their investment.

The renters in the city are slowly but surely increasing in voting power, as less and less people are able to afford owning property, until we are soon able to outvote the rich property owners. And when that happens we can pass laws that will reduce prices, raise taxes on the rich property owners, and ruin their investments.

Sure, and also ruin the investments of the property owners who are anything but rich, but managed to scrape their away into buying property anyway.

But who cares about them as long as current renters get to take their homes? /s

Well, if they are living in their house, I am not sure why it would matter if the value of it goes down.

They will still have a house to live in.

If instead it is an "investment", well that's the risk of investing. Nobody is forcing them to sell.

It is actually literally the opposite. It is that other people want to have a right to build stuff on property that they own, and the other home owner wants to force people not to do thie, in order to protect their investment.

How about people are instead allowed to build things on property that they own and nobody forces them to do otherwise?

Did you read any of the preceding - about prop 13 in particular? It doesn’t sound like it.

I think you are correct to some degree. With the housing market being essentially an additional equity program I don't really see how anyone will be able to convince people to take a huge loss, or give up future gains, so there can be affordable housing.

Surprised this comment is getting downvoted, because it is dead-right. The core "problem" is that the Bay Area has experienced a gold rush unlike any other in human history, and it's happened so quickly that some things can't keep up. Yes, there are regulatory problems that have compounded this, but those problems are just tangential and I doubt fixing them would do a ton to completely alleviate housing affordability.

The problem is that Silicon Valley is awash in money.

I think the issues with the comment is the implication that the wealth creation is the problem. That framing leads to solutions that tend towards reducing the wealth creation. That seems a bit like cutting off our nose to spite our face.

We want society to be more wealthy, and the tech industry has been a huge creator of wealth. The other thing about the tech industry is it's fairly unique in how widely it distributes that wealth. What other industry gives stock options to low-level employees? Sure tech founders get a disproportionate share, but look at a different industry, and it would be rare to see any ownership extended beyond higher level employees, but in tech, stock compensation is ubiquitous.

(this may be due to a labor shortage, and yes you can point at things like Amazon's warehouse workers as a counter example)

The trouble is now we have quickly raising housing costs, and a large portion of the population who's quite wealthy, living next to many who are not doing nearly as well. Crime and general unhappiness are not necessarily linked to poverty; it's highly linked to inequality. This is likely why we have so much property crime in San Francisco. Income inequality. When you see the person next to you is doing much better, you get mad.

Frame this so it's not about limiting wealth creation, but about limiting income inequality.

When you create a website, and it gets users, that's what you want, right? But now your massive number of users become a problem. You need to scale to handle the number of users.

Same thing with wealth creation. Too much wealth creation is the problem, the same way having too many users is the problem. It's a good problem. It's a problem you're delighted to have. But it is a problem, and one you have to solve.

Disclaimer: I have very little idea how to get SF to scale. I don't even live there.

The number of users is not the problem, the lack of scaling to support them is the problem. Scaling sf would be easy - just approve housing development projects faster.

Housing is only one part of the problem. Infrastructure and public services also have to be scaled up when population increases. Otherwise you end up with third-world type cities.

Massive wealth creation in a very small geography creates inflation. I don't see how this is controversial in any way.

Ask the citizens of Portland why they are so angry at Californians moving into the area. It's because a small number of Californians are moving into the area, and they are considerably richer than Portlandians, so they drive up the housing prices for everyone. The exact same phenomenon is happening right now there, and Seattle where rents and house prices are skyrocketing because of wealth.

> What other industry gives stock options to low-level employees?

I'm genuinely interested in which companies offer stock options to their cleaning staff, security staff and receptionists.

The first company I worked for in Silicon Valley during the dot com boom gave stock options to their receptionist, and after IPO she had enough money to quit and buy a vineyard.

Yahoo?

By concentrating all of the wealth creation in the Bay Area itself, isn't that also a form of income inequality? As opposed if companies spread themselves geographically, thus distributing the wealth generated and the beneficiaries? There ought to be income equality both in the Bay Area and outside of it.

> You want to start a company? Go somewhere else. Be a part of the solution, not part of the problem.

We can agree to disagree.

I just hope that the people that really believe in the merits of San Francisco, believes in its future and does not want to leave will work with me to make it more affordable for everyone.

You blame home owners and Prop 13 for causing skyrocketing house prices, meanwhile homeowners and Prop 13 have always been here for decades with not too much inflation. Meanwhile, tech in SF has been a recent phenomenon, and correlates perfectly to when housing prices started going crazy. In 2007/2008 I was renting a 1 bedroom apartment in SF for $1700/month. High, but not toxic. Now that same one has doubled. I've been here 20+ years and I've never seen the housing market like I have in the last 7 years.

Look at the stock market of FANGs since Jan 2011. Google has gone up 8x including splits. Amazon is up 11x. Facebook is up 6x since IPO. Netflix is up 15x. Apple is up 28x (including 7:1 split). Even legacy companies like eBay are up 7x. Microsoft is up 6x. There are a lot of regular employees who are extremely wealthy of the last several years. They are driving up the prices everywhere for housing. There is an insatiable amount of inordinantly rich tech workers that are ruining it for everyone. I'm one of them as well. So are you.

If you really want to do the right thing, go to the Midwest like Kansas City, with a good university and great fiber infrastructure. Or go to Detroit. But you won't because similar to NIMBYs, you're a "Not for my Startup" mentality thinks you need to be in SF to become a billionaire. Then you're part of the problem.

I actually am curious on this:

What would you do if you had "the start-up dream", move as you prescribe to the parent comment or stay and "be part of the problem"?

The Bay Area is 7 million people. That’s not even top ten in the US, never mind the world. It is no way, shape, or form full.

Ya’ll need to start acting like a major city rather than stamping your collective feet while shouting “I won’t grow up!”

And if you refuse either Sacramento or Washington DC should force the issue for the good of the state and country respectively.

Almost the entire country is filled with places to live in detached houses on significant fractions of an acre (or more). The NIMBYs can sell to developers for huge amounts of money and move to any one of them.

I live in SF and face daily the eldritch horror abominations NIMBY's brought upon this world. It's getting increasingly hard trying to keep my sanity. Their nextdoor incantations against a 24 hour bus schedule because it will degrade road quality (true story). The little leaflets they put in my mail inviting me to join their cthonian ceremonies of opposing and punishing a neighbor's hybris. The heretic wanted to remodel his parking space, but construction will raise up dust which their kids will breath while playing outside (true story). Trying to reason with them is impossible, it only results in madness..

Ok now, joking aside (though the 2 examples I mentioned are 100% true, they opposed a late-night bus because it would cause noise + somehow degrade road quality. Who can reason with old-bitter people with too much time on their hands?).

The issue I am seeing with them selling to developers for huge amounts of money, is that the developers will want to make that that amount of money++ back. Current zoning laws limit the height of buildings, so... their only option is to only build small insanely overpriced condos and grant permissions only to super-upscale businesses, that only rich or rich-young-tech people can afford and want. Perhaps the market will correct that in time, but powerful people as aways will fight for that to not happen.

I feel we need more relaxed zoning laws, let people build bigger and higher.

> I feel we need more relaxed zoning laws, let people build bigger and higher.

Bingo. If there is currently a detached house of 1500 sq ft that can be torn down and in its place can be put up a six story building apartments totaling 8000 sq ft of livable space, there’s plenty of room for profit for the prior homeowner, the developer, and also for the new units to be more affordable than what was there before. Increasing the supply is a win-win-win.

As I said, if necessary—-and it looks like it is—-higher levels of governments should step in to prevent local, narrow minded, parochial interests from killing the goose that lays golden eggs.

What about parking, traffic, water, sewers, electricity usage, etc? You are now putting 6x the amount strain on the public infrastructure in that single area. Building more buildings is the naive, first order solution.

What about them? Is it no longer possible for America to build public infrastructure? Have we just given up?

Sure upgrading infrastructure is possible but the costs are huge. It's subject the same inflation as everything else, plus city worker unions have a lot of political power. Once a sewer line reaches capacity we can't do a minor increase; the whole thing has to be ripped out and replaced which is tremendously disruptive.

A real-world example to support your comment that my civil engineer buddy recently told me: in Columbus, one of the main streets past Ohio State University into downtown is completely at sewage/rain water capacity. Decades ago when the street in question (High St) was being built, the only buildinga along it were single/multi-family homes. Now there are large student dorms and apartment complexes. During intense thunderstorms, the gutters along the street which feed the sewage system reach capacity and the whole street floods. And I mean floods.

This is an "easy" fix in theory: gut the previous system and just build anew. The problem is, that would be such an enormous undertaking (b/c you have to divert sewage during the whole process, etc) that the city is effectively forced to apply what amounts to band-aid fixes in its place.

Yeah but if you live in a detached house that will no longer get any sun in its backyard when the six-story building goes up, you too are most likely going to be down at City Hall or wherever one goes, fighting against this one six-story building, even if you're a well-known advocate for taller buildings. Because it's My Back Yard, right?

It's definitely not win-win if that shadow falls on your beloved back yard, ruining your legal cannabis plot. Or if you live in the top floor of the five-story building that was built prior and your view will now be of the six-story building.

NIMBY works ("works") because most people put their own specific self interest before community when the former is threatened. They do this pretty reliably, and on the individual level it's usually pretty rational.

(Also, I might have reasons other than economics to keep my 1500 sq ft house from being torn down.)

There’s no reason the guy with the cannabis plot shouldn’t be outvoted by all the people that will benefit from the new building. The issue there is some combination of a collective action problem and what amounts to corruption.

The answer, as mentioned, is go to a higher level of government where there are even more people to outvote Mr. “But Muh Views”.

In the case of CA there’s seven million people in the Bay Area and 33 million in the rest of the state that would benefit from continued growth there and don’t care at all about shaded backyards in Palo Alto. That sounds like a referendum waiting to happen to me.

I agree the cannabis-plot guy could (maybe should) get out-voted, but I'm pretty skeptical it could happen by doing a ballot proposition.

That would come up against the same forces that fuel NIMBY-ism, i.e. the relative political clout of home owners and the power of the story that it's my back yard today, but it's gonna be YOUR back yard in the next shadow.