What I wonder is: by pricing out the not-already-rich, does real estate hyperinflation actually destroy the engine of youthful ambition that created the success in the first place? I mean, $3000/month rent for a one-room apartment makes it very hard to take the risk of founding a startup at 22.

That's pretty much on par with a lot of places in New York. It's still possible to found a startup at 22 with those kinds of expenses, but your margins are basically non-existent. And as you say, it's does weigh heavily on the ambitions of many. Your enthusiasm will also go out the window when you're debating whether to spend money on food and utilities vs a roof over your head.

I'm curious, where are you having trouble finding one-room apartments for under $3000/month?

Throughout the South Bay, I'm seeing prices between $1000 and $2000/month for one-bedroom apartments (not one-room apartments!). Even that gets a bit of sticker shock when I tell friends outside the Bay Area about prices here.

The $3000 figure is probably referring to San Francisco. $2000 a month for a one bedroom in Mountain View is a fantasy. Sure, you can go south to sunnyvale or further, but that adds quite a significant commute if one is working in Palo Alto/Mountain View.

For what it's worth, I lived in MV (rengstorff and sierra vista) for a year last year, in a 2 bedroom I kept all to myself for $1800 a month. It had a lovely back yard with a family BBQ area.

Wow, sounds like you lucked out.

You, too can be this lucky (adjusted for inflation):

http://sfbay.craigslist.org/search/apa/pen?zoomToPosting=...

Just browsing through the first Google hit for "one bedroom mountain view" got me this: http://www.apartments.com/California/Mountain-View/Avalon-at... One bedroom for "$1565-1725".

I don't know if that apartment is actually available at that price, but $2000/month for one bedroom looks doable.

It probably takes a while before everyone notice. Problems like this usually stays around until after we hit the end of our growth phrase.

Nope. The ambitious will simply take their ambition somewhere else. There will be a tipping point (and we must be close to it) where the market cannot bear it any more, and the market will fracture/move. "Disruption" on the geographic level instead of corporate level.

Example: We own a gorgeous 1550 sq ft house, built in the mid-1700s with lots of character, complete with 800 sq ft garden in what we believe is the coolest part of Philadelphia… and we pay less than $2400/mo including taxes and insurance.

Right around the corner, there are tons of tech biz (the kind that make money) including all the entrepreneurs at IndyHall, AppRenaissance, the makers of Postmark, etc., and everyone's favorite ecommerce-dev-shop-meets-bar-restaurant, Weblinc/National Mechanics.

And: we really splurged on our house. There are very nice 1br rentals from the mid-$1k right here, with new kitchens and lovely architectural details, and you could rent for half that if you were willing to take the subway 15 minutes.

Philly has a great entrepreneurial culture, a welcoming network, and it's cheap. Bonus: a newcomer here has more of a chance to distinguish themselves because the local "market" isn't flooded with a bunch of clones. A city can only support so many "ambitious" 22-year-olds before it becomes a sea of sameness and the fight to be noticed outweighs any potential for "networking."

And if you're really lucky you can have the wonderful experience of getting your ass kicked by a flash mob of asshole teenagers.

Seriously, Philly is great, but the crime is a real drag. I'm sure your neighborhood is very safe (comparatively) but is it safe compared to a typical SV neighborhood? (Let's not count Oakland. haha)

Nobody here has talked about flash mobs for about a year… they got boring and they appear to have stopped completely. A few white middle class people got beat up, it's true. But there aren't many places in Philadelphia you would go on a daily basis that are half as scary as the Tenderloin at night… nor as easy to wander into, nor as close to tourist/business attractions. Also, frankly, I have never seen human feces on the street after living here part time for 2 years and full time for 1… which is more than I can say for a week-long trip to SF. For better or for worse, those parts of Philly are quite segregated.

Now, I am comparing to SF, where all the technohipsters I know are spending thousands on rent. If you want to live in a suburb (which Mountain View etc are) then I'm pretty sure you have equally safe options here.

Granted our weather is shit by comparison, but you can't have everything.

  The ambitious will simply take their ambition somewhere else...

Easier said than done.

"Easier said than done" is itself easier said than backed up.

I've been where some of these people are. I haven't been outright homeless and sleeping outdoors, but once upon a time I did have everything I own to fit basically in the same area as half a mattress. In the town I was in at the time, the only comfort was that I knew were food and basic services were. You just don't up and leave those behind cause it "might" be easier elsewhere.

In that kind of atmosphere, I used my school library to learn web programming as much as possible, since our CS class was only teaching basic C++ (PHP just reached 3.0), and somehow, I scraped together enough cash (mostly borrowed) to put up a small website. By some miracle, I found work as a designer and with the basics I learned on several forums and with my pirated copy of Photoshop 5, I slowly made enough cash to pay rent and finally move to some place to stretch my limbs out.

It's a slow and painful transition that's impossible to do if you just "take their ambition somewhere else". No, I nurtured my ambition where I was until I could actually get somewhere else.

Empathy is a terribly scarce commodity it seems.

"Empathy is a terribly scarce commodity it seems."

Not at all. The commenter was talking about something quite different than the article. The commenter was talking about the kids from the midwest etc. who move to San Francisco to strike it rich on the sweet oil fields of VC, which is the opposite of being stuck there because you are too broke to move.

I came to the U.S. for exactly the same reasons. I could have stayed where I was and lived a fairly comfortable life without too much worry, but there was gold in them hills and I aimed to get it.

So, yeah, the situation described was pretty much the same. As I said... empathy.

"I've been where some of these people are. I haven't been outright homeless and sleeping outdoors, but once upon a time I did have everything I own to fit basically in the same area as half a mattress. In the town I was in at the time, the only comfort was that I knew were food and basic services were. You just don't up and leave those behind cause it "might" be easier elsewhere."

Perhaps I misread the thread but most everyone here appears to be quite empathetic to the problems raised by high housing costs.

I'm relatively certain the parent was referring to the entrepreneurial set rather than those who cannot currently (and will be even less able to in the future) afford to live in San Francisco.

If anything living outside SV might have made the process you went through easier if you could avoid a large portion of your earnings going solely to housing.

That's the thing, we don't all often have a choice of leaving where were presently are. Its easy to think about leaving SV (or NY for that matter), but even if most of your earnings are going toward housing, moving isn't easy.

And I felt OP was being trite by only looking at it through his perspective (the entrepreneurial set), whereas the article was about the poor.