Skyrocketing rents. Stratospheric home prices. Housing costs in the Bay Area are among the highest in the country, and there is little relief in sight. As part of our “Priced Out” series on the high cost of living in the Bay Area, we look at what’s driving the market, what it means for the region, and what to expect in the short and long term.

Carolyn Said, staff writer covering economics and real estate for the San Francisco Chronicle
Jed Kolko, chief economist for Trulia, an online real estate market
Kevin Hamilton, owner and CFO of Red Oak Realty, based in the East Bay

  • Moderate Republican

    I can’t wait to hear this. It’s long overdue in my opinion. When I was born the house I grew up in cost my dad 2X his annual salary. My wife and I live in a similar house bought in 2001 that cost us (we both have to work) 6X our household income. This should be front page news every day and twice on Sundays. Where does all that money go?

    • Casual_Economy

      Moderate Republican, look at income distribution in this country. The folks working for tech are earning upwards of 100,000 a year to make apps, meanwhile a school teacher is lucky to earn half that. If our economy valued different kinds of labor the way it did when you were born, there would not be such income disparity and more people would be able to afford to live here.

    • marte48

      Just remember that Reaganomics (called “voodoo economics” by Bush Sr) shifted the tax burden to the professional working class. Anyone who hits the $100K mark pays almost a third to taxes, thanks to Saint Ronald Reagan.

  • chrisfs

    It’s acknowledged that rents and house prices are skyrocketing, and yet people (including some of Said’s journalist colleagues at SF Chronicle) call BART workers over paid for making less than the average Bay Area salary. Who is going to run the trains and buses and teach the kids and clean the buildings if rents/houses are unaffordable to people making under 100,000/yr ?

    • TrainedHistorian

      The Gilded Age proves that it is possible to have a very large, poorly paid workforce together with a small wealthy upperclass in the US and only a small middle class. (We are not exceptional: if we don’t control population increase here we can have the same sorts of class divides as Latin America or even South Asia). As far as the elites are concerned, there is no big problem with making us peons go back to living with much less than the 1945-75 generation : much smaller spaces, more family members per unit, more lodging with others, turning many workers into servants who are paid so poorly they cannot afford to have families of their own. Yes,teachers were once such a class, in many locations they had to lodge & board with others because of low pay).

      Political correctness does not allow a frank discussion of the fact that you simply cannot pursue a policy of essentially unlimited immigration (began in 1986 when our elites signalled that they would not really enforce the legal limits on immigration that were enacted in 1965), and expect anything OTHER than stagnating wages and rising rental prices for everyone too poor to afford any land of their own (i.e. at minimum your own house) . That’s supply and demand. Population growth rates that exceed economic growth rates favor capital and land owners at the expense of those without land or capital. Always have, always will.

  • Frank Emery

    The series needs to cover more than SF, Marin, San Mateo, and Santa Clara Counties and the West Side of the East Bay (which will be Krazny’s penchant). There are areas in Solano, East Contra Costa counties where home prices are still about half their 2006-2007 prices. In those days (mid-2001s), many were moving to those locations and commuting to SF, San Jose, etc. While it is clear that rents are rising rapidly in SF, there are some finding reasonable rents in close-enough commute distances by BART, Ferries, ACE train, car-pools etc. Part of the solution will be movement of jobs (companies) closer to affordable (for CA) housing. The companies should be looking ahead to a time when their workforce is no longer single, but young couples rearing children–it is possible they will be moving away from SF then.

    • Agreed, when talking about Bay Area housing it does need to actually encompass the entirety of the Bay Area. So many want to discount Solano and the not-so-rich parts of Contra Costa as not part of the Bay Area, but they are, like it or not.

      Though these places may have more affordable housing, commute costs are staggering. Gridlock at multiple points of the commute is a daily certainty in multiple spots en route, starting in East Contra Costa and extending into the TriValley or towards Oakland/San Francisco. Public transportation offers no good alternatives with costs at $6 one way from Pittsburg to Embarcadero. Cost of living is simply outrageous.

  • Lifer

    It’s not just young people who are priced out—seniors/retirees are too. I’m a 5th generation working-class San Franciscan who loves her City. I am fortunate to have finally purchased a small home recently, but it’s unlikely I will be able to stay in it when I eventually retire. Even if I can manage the mortgage in my non-working years, the property taxes in San Francisco are budget-busting–my property taxes already exceed my state taxes, and are closing fast on my federal tax amount. It seems younger renters vote for every property tax increase that may benefit their quality of life, at the expense of struggling property owners who have special assessments added to their tax bills each year. Property owners in SF aren’t all wealthy absentee landlords! Some of us are your senior mom or grandma!

    • Skip Conrad

      yeah, what’s with the special assessments?

  • Paula

    I think for someone earning minimum wage or a little more, it’s still expensive anywhere around here. Do the math.

  • Matthew

    I work as a teacher at a charter school in the Bay Area. I grew up and still live in San Francisco. However, I have resigned myself to the fact that this will be my last year in SF. It has become too expensive for my wife – also a teacher – and I to live in the city. Most of the teachers at our respective schools have moved out of the city because they cannot afford it. I’m sad that I will not be able to pursue my passion and live in the city I grew up in. What values are our society preaching when teachers can no longer afford to live in the same city as they work? Instead, SF has become home to techies and whoever else can manage to pay these exorbitant rents. This is not the city I grew up in. We should be embarrassed by this.

    • Rosemary B.

      Agreed. I’m a teacher too and was working for a school on the peninsula where I grew up and trying to live close to work. As a professional with a Master’s degree I couldn’t afford more than I studio. I just moved to Beijing to work at an international school where I’m well taken care of and can save 5x what I put away at home with a comparable lifestyle (save the air pollution). Who knew China would be the new land of opportunity?

      • marte48

        this is what I mean by the problem is global.

    • Robert Thomas

      Matthew, while my sibling was an elected member of the school board for two terms in a medium-sized K-8, high-ESL district in northern California, I found out a lot of things (the most important being that everyone who ever went to school thinks they know something about education). Throughout multiple contract negotiations (my sibling received Teachers’ Association support in both elections) it became clear that a “third rail” in those talks, a subject never to be broached, was the fact that those who enjoy a nine-month work schedule cannot expect to be paid commensurately with those of us unable, practically speaking, to work less than fifty weeks. I accrue over five weeks of PTO annually but I know the disadvantages in the forms of stacked-up work, loss of influence and leadership, impediment to advancement etc. there are in taking even two weeks away out of the year.

      My sibling’s school district experimented with some year-round school schemes (driven by temporary lack of school facilities). The result was disaster- enmity being earned from both parents and teachers.

      If you want to afford to live next door to me (or most other work-a-day people in our region) – no matter how you may argue about our relative worth – working at your paying job under the supervision of your boss forty weeks a year isn’t the best way to get there.

      • Anne-Marie Ross

        Oh, please. A teacher used to be a solid middle-class job. My parents were both teachers and my brother and I both went to private K-12, and we went to Europe several times in our childhoods. They owned two houses. TWO. The point the original writer was making was that a middle-class person without a spectacular salary cannot live in the city. This was not so at one point in history. It would be the same story if he were a bus driver or clerical worker or any of the other jobs that make the city run so that the techie masses can stagger out of their 5000 dollar apartments and piss their cocktails directly onto the streets of the Mission every night.

        • Robert Thomas

          I feel I must offer an apology for the disgraceful misbehavior of promiscuously urinating “techies” who have displaced the worthy bums and honest, working-class whores from their sincere Mission District garrets. Quelle disaster!

          Now that we’ve cleared the air with reciprocally bigoted, juvenile insult, I admit admiration for the resourcefulness and financial success of your parents Both of my grandmothers were elementary school teachers in California, Iowa and New Jersey in the early part of the twentieth century as was my aunt Edith, in Tunica, Mississippi. Even in the case of my paternal grandmother who provided a relatively unusual second income to her pretty solid, pretty middle-class (so I have always thought!) marriage, private educations for her children and trans-Atlantic travel weren’t in the offing. Living most of her adult life, proudly on a single income, my other grandmother fared substantially less well.

          Are you seriously arguing that the labor of highly trained, underemployed, poorly-paid women, once ubiquitous as K-8 educators, is not now a played-out gold mine of value for society, a memory that’s no longer viable in the post-war, post “lace-collar”, double-income-norm world? Things were once one way that are now another way. Now, every educated couple is in competition with many families with two fifty-week incomes every year, who are willing to devote an ever-higher proportion of those incomes to housing. In the present world, it’s a practical fact that forty-week annual incomes no longer play well.

      • Another Mike

        So college professors should earn even less than schoolteachers, because they work even fewer weeks a year, and typically spend only six hours a week in front of a class, instead of 30.

        • Robert Thomas

          Perhaps so. Then I could similarly demand more compensation than do PhDs I know who work fewer hours than I do. Sadly for me, they live in Los Altos and I live in Santa Clara.

      • Miss J-W

        I expect to make a salary I can live off of. Between meetings and responsibilities (but not professional development), let’s assume I work 50 hours a week. I think that’s low, but you probably wouldn’t believe the reality. If you distribute the “extra” ten hours more than the minimum 40 required to be considered full-time, that means I work an equivalent 50 weeks during the year. It’s just condensed. The other two weeks would be two weeks unpaid vacation. No one looks at it that way and I don’t expect that to change. I’m not complaining about the hours, I knew what I was getting into.

        There are jobs that make more money and require more hours too, I understand that. I don’t expect to make a high paying salary, but it would be nice if I could afford to live in the same city I teach in. I don’t live in the SF Bay Area anymore, but I’m getting priced out of the FL community I live in too. I’m looking for a part-time job, but I’m not sure where the time (or the job) will come from.

        • marte48

          It should also be said that 75% of the teachers in the JC system are part timers, with no benefits, no job security, less pay, etc.

        • Robert Thomas

          I agree that it’s impossible to start comparing the work loads of disparate professions. While I have worked a number of memorable “thirty-six hour days” (struggling to deliver products at quarter-end and so on), they were really fairly few in the last thirty-five years – the result, actually, of poor planning and the decisions of immature management. I am skeptical therefore of claims commonly made in my industry (network machinery and computing machinery) of sustained periods of such labor. The deleterious effects this practice necessarily wreaks on performance quality is too great; exhaustion and success are rare partners.

          I have no doubt whatever that the burden, any given week in term, of a classroom teacher is great.

          The problem that I saw (from a distance) during the negotiations between the TA and the school board on which my sibling served was that the TA quite properly treated the size of their members’ compensation package as their paramount objective, ignoring all else. How could they do otherwise? income disparity between the community (a high ESL community, at that) and the teachers was never less than substantial. The consequence was (through two sets of negotiations) that important non-teacher-compensatory “evil” administration cost was stupidly disparaged. Such “administrative waste” included the services of a successful and admired truancy investigator who had much more than paid for his own position with the money realized by the district from returning scared, defeated kids and kids whose parents had desperately removed them from attendance in order to have them care for young siblings or elderly relatives (etc.), back to the classroom. In private, even the TA negotiators admitted the position should not have been eliminated. But the statistical pressure of the median income of educated 50-week workers in the area could not allow such an expenditure to persist.

          I DO NOT know how to fix public education. But I saw, clearly, that in a highly competitive real estate market, the problem of 40-week workers being made to compete with many well-compensated 50-week workers was just an insurmountable obstacle that no one was willing to discuss. Overcoming this problem may not suffice as a fix-all but it is nevertheless necessary. Ignoring it doesn’t make it go away.

      • marte48

        we have always had summer vacation, even when houses in Cupertino were less than $10,000. The problem is more global.

        • Robert Thomas

          If what you mean is that there is a supply of real estate and a demand for real estate, and that this is a global condition, I can’t argue with that.

          Teachers have always had summer vacation and it used to be that competing families were unwilling to devote as much income to housing as they now are. My grandparents used to live on Hoo Hoo Hill in Cupertino, on a dirt road in an orchard. At that time, they couldn’t afford to live in the Rose Garden or Naglee Park or in Willow Glen, where my grandmother taught school. My cousins bought a dump of a little ranch house in Loyola Corners when Los Altos was definitely NOT desirable real estate. Traveling to the GM plant in Fremont was a LONG commute. My parents used to hang out at the Black Watch fifty years ago when Los Gatos was a decidedly working class address.

          That was then, this is now. Work 50 weeks (minimum) a year, or the ample supply of educated double-50-week earners are going to outbid you. Also, two plus two is equal to four.

  • Steve

    I’ve lived in a small condominium in the East Bay (San Leandro) for the last 18 years. I would LOVE to buy a house in the Bay Area, but when I look at the prices, I am so discouraged. There is NO WAY that I could buy a house and pay anything close to the $700 to $800 a month I pay now. I feel so helpless and I’m resigned to being stuck in my current place forever.
    I guess, I’m lucky that I DO have a place in the Bay Area where I can live cheaply. Still, back when I was growing up in the area, back in the 50s and 60s, people were able to, and did, move up when they wanted to. This is no longer an option for many.
    Just WHO IS buying houses in the Bay Area today??? How can anyone even think about moving into San Francisco?

    • TrainedHistorian

      Yes, you are very, very lucky. Where exactly do you live? I don’t know anyone who can find a $800/month housing unit in the Bay Area anymore. Haven’t seen a housing for so low since I had to move out of a rent-controlled Berkeley apartment in 2002.

  • Gary Orr

    There are many reasons that housing costs so much in the Bay region. To outline a bit of history. Post war suburbs were build small with a type of home that is no longer built. Single family homes were built with single pane aluminums, small kitchens, vinyl flooring, a couple of light fixtures and pop-corn sprayed ceilings. Homes were smaller, communities didn’t have fees for parks, roads, schools, and there wasn’t energy efficient upgrades, fire sprinklers, mountains of building codes that conspire to add costs to a project. Building permits are so expensive because the staff of your local building department is flooded with technicians to look over plans and stamp them and approve or deny them. The cost to build today does not look like the cost of yesterday or last decade or 20 years ago. Social factors in commnities limit lot sizes that keep land rare and real estate ultra-costly due to rarity. The new Carquinez bridge had legal threats that pounding piers in the bay was killing Salmon. So, millions later special baffles were installed a 10 million to buffer shock waves to save 500 fish. These things cost time and money and make road tolls increase. The new Bay Bridge has a suspension section that added years and billions. Driving over the bridge is underwhelming and faux cables and a nice design feature could have cost hundreds of millions less and again costs would less. The overall theme is that “the home owners association fee” to live in the Bay Area adds 100% to the costs of housing. The bottom line is that costs have risen, regulations have risen, the social standards of what is an acceptable base level of design have risen, expectations of size and neighborhood standard and ammenity has risen and pay scales of certain high-education careers of young 30 year olds have shot to levels of pay that were reserved for late life earners that in previous generations were reserved for 50 year olds. All of these factors and more make living in the Bay Area in many ways better than it ever was and more expensive that it ever has been. Its been 5 years since the world got blasted in the worst global scale recession and greed, lazyness, entitlement, environmental-economic excess, credit score driven, credit card society. My parents had a great house with no payment, they did’nt own a credit card, had used cars and sent us to private school and drove us to the Sierras for vacation. Its a different world and things cost more because we want more!

    • TrainedHistorian

      You have grossly exaggerated the role of regulations. Housing standards are NOT substantially higher here than in the rural Midwest–in fact they’re often much lower because you do not have to build for cold weather, The vast bulk of the housing cost is not the house cost but the LAND cost value, (that’s why houses themselves depreciate over time but the land they’re built on generally appreciates) and LAND (not house) costs are high whereever population growth and/or density is high, and low where growth and/or density is low. Land prices were much lower in California in the 1950s because the population was much, much smaller: Those days will never return, and as long as the population here keeps growing so fast,relative to economic growth the cost of land is going to keep going up relative to wages.

  • Frustrated in California

    I purchased my house 1 year ago, the taxes, insurance(s) required are putting my house in jeperdy. The IRS people are rude and are not helpful. In addition it is difficult to talk to them. The state is the same way they do not follow thru with what is discussed during the phone conversation. The government employees have no responsibility or ethics to discuss the issue at hand.

  • We need affordable housing here in San Francisco. Housing that a person who is NOT a Blue-Blood, can afford. As a Native San Franciscan, growing up in the city was truly something that us kids took for granted. Our parents worked 2 jobs and our grandparents baby-sat us. During the 80s I noticed a shift in people flocking to San Francisco from all over the USA. Perhaps it was the Dot.com boom/bust. I was living in Marin County (Sausalito) during the 90s when people from Connecticut, Boston, New York – with old money (and proud of it, I must say- can you blame them?) – moved to CA., offering double the asking price for rentals in Sausalito and San Francisco. Oh, we got priced out of our apartments quickly. As a result, us Natives had to move to Daly City, South San Francisco, San Leandro, Oakland, Fresno, Patterson, Antioch – and we can’t even think about moving back to our Native City – San Francisco. Michael Krasny – WE need a Super Hero, with an “S” on his/her chest, to help us get a decent place to live in the City. Where is the love?

    • Another Mike

      Supply and demand means affordable housing will quickly become unaffordable. Only government housing can keep entry-level rents low.

      • I hear you, @Another Mike, and appreciate your words of wisdom. It is my understanding that in S & D, the demand for supply is supposed to increase the price, thus requiring more housing(quantity). Question:
        When will we ever reach an Equilibrium? When a)All of the Native San Franciscans are a thing of the past
        b) Only the wealthy purchase all of the water front properties c)All of the wealthy purchase the waterfront properties AND all of the Native San Franciscans have exited the City? d) Your thoughts….please…

        • Another Mike

          The only thing I can see is if basic housing is built on the so called “brownfields,” former industrial property like the shipyards or Schlage Lock company. But then you wouldn’t want to grow vegetables, or let the kids play outside, unless you were sure it was safe. Down by Geneva and Third, the Cow Palace area.

          • You know what’s so ironic, @Another Mike? I believe someone(s) has taken your advice and built on the so called “brownfields” – decades ago. Perhaps someone thought it was an excellent idea, and several agencies built projects in the Geneva/BayView Hunters Point/Double Rock areas – would that qualify as “brownfields”? During the “Great Migration” of the 40s, when many African-Americans left the South, seeking better opportunities, i.e.,work, housing, education, infrastructure and a chance at being treated like a first class citizen instead of a second class stamp – the only place that they could live in San Francisco was in BayView/Hunters Point/Double Rock area.
            Most worked in the Navel Ship yards. 80% of the workers died of cancer (my grandfather moved to SF in 1942, and was proud to work @ the Navel Shipyard in San Francisco – he died of cancer as well – asbestos exposure). What’s so ironic is, my uncles died of cancer as well. As it stands, the descendants of the men who worked in the Naval Shipyards and lived in the projects built on questionable land in the Bayview Hunters Point has the highest rate of cancer in the United States. It could be my imagination, but it seems as if someone thought about the “brownfields” then.

        • Robert Thomas

          d) [When] ALL waking minutes of the day available to ALL those aged 18 – 34 are finally assigned to staring at their mobile internet devices.

          • I knew that our youth would be silently walking down the streets of the USA, when during the 90s, I saw it happening in London, UK and Seoul, Korea. People were texting each other, while standing right next to each other. I knew it was just a matter of time before it reached the USA. Ain’t that the hurt? My advice? Pick up the phone and call someone! Listen to their voice! Hello?

        • TrainedHistorian

          Actually, classical economic theory says that with housing prices, you never do reach equilibrium. As long as population grows, housing prices will always rise long term. Thus housing is fundamentally different from consumer goods, This is because the supply of land, unlike consumer goods, cannot be easily increased. It’s not like the producers of say, pencils, who can quickly bring prices down by easily increasing the supply of pencils. Now that we know how badly landfill does in earthquakes, and low shorelines do in hurricanes, tsunamis and sea-level rise, the options to artificially increase land supply is, rightly, even more restrained than folks thought it was 50 years ago, when idiotic politicians were suggesting that we fill in SF Bay.

          This is why immigration policy does matter. Accepting unlimited numbers of immigrants, especially from high fertility countries, will lower the living standard of anyone here who is too poor to afford their own land (i.e. house). Increasing worker populations faster than economic growth leads to stagnant or declining real wages and higher rental costs..Always has, always will.

    • Skip Conrad

      Mexico has a policy that only legal residents can own property. I can’t say I’m an expert on the details of the policy, but it does seem to take the speculation aspect out what is, along with food, a basic human need.

      • Good for Mexico. Quite a few countries have that same policy.

        • Kurt thialfad

          We should adopt the same policy. It would do wonders to ease our homeless crisis.

          • We are a day late and a dollar short. America has sold America to the highest bidder. Now we have to deal with the results of such thinking/ strategy.
            Trivia: What top 3 countries would one think, owns America now?

  • G_Nikus

    Tech companies have decided locate all their jobs in the bay area and fulfill their expansion by importing workers from all over the world. Slowly we are turning into New York, a place for top income earners. If we are worried about cost of living, are we ready to say “no” to these jobs, especially since they are being filled by imported workers?

    • thucy

      Sorry, but as a fourth-generation San Franciscan who lived in NY for over a decade, I can tell you that we will never be NY: we will never match the level of decency of New York, nor its protections for the poor. The very fact that Bill de Blasio looks set to win the NY mayoralty… a guy that liberal/progressive could NEVER win in Ed-Lee-Town.

      • Very interesting comment from a 4th generation San Franciscan
        ( I probably would have left that part out…)

        New York and San Francisco are two different variables –
        Apples and Oranges.
        I love San Francisco, and realize that change is inevitable. I Love New York. The energy is totally different – which is great!(Just my opinion)

        When I’m in New York, I see the over crowded-ness and the hustle/bustle – and it gives me a rush!
        In the world of luxury, in New York, the people
        (in general) that I meet are pretty satisfied with their lifestyles. Having conversations with (some) of the working class people don’t feel like they have opportunities to grow in New York. So, they pack up and head West. Just to arrive in LA/San Francisco, and throw stones at how
        San Francisco is nothing like New York. Newsflash: IT’s NOT New York… I never look for San Francisco anywhere else on the Globe –
        I won’t find it…
        P.S. Bill de Blasio could simply buy lots of property in San Francisco – and charge exorbitant amounts of rent – no need to run for Mayor here in San Francisco…Live on the East Coast, and purchase up the West Coast…Boom! There it is!

    • Skip Conrad

      Obama is pushing to create jobs. He’s not pushing to employ Americans in these jobs.

    • Slappy

      America has become the land of opportunity for those born outside its borders. The reason is mainly because we are under-educating our own children to the point where they are too incompetant to cut it in science majors in universities. Thus, universities look overseas for tech students. As a result, the only people that tech companies can hire are these foreign students, who in turn are pushing out the native citizens.

      If San Franciscans want to face those who are to blame, they need only look in a mirror.

      • I can understand accepting a certain percentage of responsibility – San Franciscans have openly welcomed people from all over the USA and the Globe – so yes, it’s our fault. Even if we are working class, and have no wealth and/or political ties to the Mayor’s Office. When people migrate to San Francisco, we should then, what? Get hostile and send them packing back from whence they came? Got it!

        • TrainedHistorian

          Try holding politicians responsible for winking at employers who hire “undocumented.” Hold universities, who hire foreigners for jobs that perfectly qualified Americans are available for, responsible for that costly extravagance. (Yes, it happens: some American humanities PhD’s now need food stamps because they cannot get decently-paid work while universities hired foreign humanities PhDs into the jobs that we were supposedly educated for)

    • TrainedHistorian

      Try telling any of our elites that we don’t need more foreign workers at this moment in time due to decades of stagnating or declining real wages and even, nowadays, increased underemployment and just see how far you will get. You will immediately be smeared as xenophobic or, the biggest insult of all, racist.

      Actually, the problem is not that the Bay Area has only top-earners.Since their employers do not want to pay a decent wage to the janitors, teachers, and other service workers whose jobs cannot be exported, we have plenty of bottom-earners here as well. For companies and the well-off are quite happy to underpay workers, even if the Bay Area’s former middle class is thereby transformed into semi-dependent low-income workers. Even worse, the same actors underpaying us then grumble about the “slow economy” and “welfare” : problems they caused by creating a class that cannot afford to buy much, and even needs income supports to survive.

  • thanks for the show, to Krasny & Stupi & KQED staff.
    I’d like to add pointers to two recent articles which give helpful background and suggestions about housing costs:
    1) “The San Francisco Exodus” in Atlantic Monthly by Gabrielle Metcalfe, Executive Director of SPUR (San Francisco Urban Planning and Research Association): http://www.theatlanticcities.com/housing/2013/10/san-francisco-exodus/7205/.

    2) “How Can We Build Cheap Urban Housing” by area architect Mark Hogan. http://markasaurus.com/2013/10/25/how-can-we-build-cheaper-urban-housing/

    Building on Metcalfe and Hogan’s suggestions, I would suggest some additional approaches, which might be considered radical but I think could play a role in the picture:

    1) intermediate-term building, i.e. temporary.
    2) Mobile or “agile” housing.
    3) Reallocating land from current uses, particularly from vehicle & parking use.

    I have a project I call “houselet” or “Startup House” to prototype
    mobile microunits that may fit on standard parking units. Part of the
    motivation is the observation that even in such fiercely regulated and
    land-use-contentious places as San Francisco, huge areas of public land
    are basically being given away for private enclosure as parking. As
    Shoup’s “The High Cost of Free Parking” argues, our cities are in effect
    structured around parking practices, with resulting remarkable
    misallocations of space and resources.

    While a long-term rethinking of such land uses is clearly under way,
    I’m interested in the potential of interventions such as “Startup House”
    to accelerate new thinking & practices and solve immediate problems
    like tech-worker housing.

    Among the precedents I’d cite are post-emergency situations, in which
    large numbers of low-cost units are often created, such as after San
    Francisco’s 1906 earthquake. I’d suggest the current rapid escapalation
    in SF housing prices is likewise a large-scale civic crisis — although
    one of highly disparate impact, e.g. to current residents/landowners vs.
    to future residents & non-owners. Considered as a crisis or
    extraordinary situation, it might warrant extraordinary
    intermediate-term measures.

    I also find it interesting and opportune that major tech employers
    like Facebook and Google, as well as Stanford, are now highly concerned
    about housing and traffic-impact issues. So part of the Startup House
    idea is to propose mobile micro-units as flexible live/work-space units
    for the high-growth, high-mobility needs of such organizations.

    I am currently researching many precedents and current practices
    related to this, and considering various avenues by which to pursue it.
    For example, a “houselet” international design contest sponsored by SF
    Mayor’s Office of Innovation (winner and me get a space to live on!); a
    demonstration unit for Google or Facebook or Twitter campuses; and
    building and living in my own prototype unit, in Palo Alto or SF. More
    info: “Parking Houses: modular housing to fit on city parking spaces” http://tjm.org/2012/08/30/parking-houses-modular-housing-to-fit-on-city-parking-spaces/ (August 2012).

    Tim McCormick
    Palo Alto @tmccormick tjm.org

  • Cynthia

    A lot of the blame is being placed on the IT workers — but not all of us are working at places like Facebook, Google or an angel invested startup. Some of us work in normal places, making much less than those workers, and finding it hard to find a place close enough to work. I currently live with an over hour commute for 30 miles, and moving closer to an equal place would be an $300/month increase. That is a lot!

  • Ben Rawner

    How come we don’t charge those tech buses that come from Silicon Valley a large premium to price them out of the city. How can someone who gets paid an average wage compete with someone who gets bussed to work, plus they get paid higher and don’t even have to pay for their commute.

    • Robert Thomas

      Q1) “How come we don’t charge…?”
      A1) I don’t know. Is it because not enough San Franciscans are envious, vindictive and resentful?

      Q2) “How can someone who gets paid…?”
      A2) The same way that those with jobs that pay an average wage can afford a Ferrari.

  • Chomsky_P

    People who live in these areas and vote for the people in charge are responsible for our housing policies which makes it very difficult to increase density, increase height, and build in general. When locals make new supply difficult, we should not be surprised at increasing prices. In addition, once you live here and have a place, you have a strong interest in continuance of these policies to maintain the value of your home, if you own.

  • Sanfordia113

    This issue is overblown. We are a 3-person family with a 4-year old daughter and live on Potrero Hill in a 600sqft apartment that costs us $1550 per month. Granted, we signed a contract 16 months ago, but still. Our combined income is $60,000, which is only 70% of AMI for a family of 3. If we chose to live in Daly City, San Bruno, Visitacion Valley, or Hunter’s Point, our rent:square foot ratio would be even more favorable. After 16 months at this monthly rent, our bank account balance has increased by $15,000. Living in a high-rent area like SF has positive tradeoffs, like not needing to own a car, cheap farmer’s market and immigrant store foods, and tons of free entertainment options.

    • Gene Keenan

      Overblown? You are an outlier: You might want to investigate the cost of a 1BD now. It’s $3,500+

    • TrainedHistorian

      Would you mind telling me where I can get a comparable $1550/month apartment? Most people cannot find that anymore.

  • Fay Nissenbaum

    Please comment on Mayor Ed Lee and his policy for SF of tax exceptionalism for tech businesses that adds pressure to housing stocks. The migration into the city is on steroids. these policies for the few hurt the ability of many people to live and afford daily life.

  • Joel

    I live in Redwood City, I rent a mere room with a private bath and my rent is $730. My room is 14 feet wide.
    The problem is all the people who paid $80k for their homes that are now worth $500k have stayed. Only a tiny percent of the existing housing is available to rent.

    • Another Mike

      Prop 13 is one thing keeping people put. You can take your basis only to another of a handful of other expensive counties. If you move to Eureka or the Sierra foothills you have to pay the full property tax freight.

  • GiorgioOrwell2nd

    This is a global problem, London, Hong Kong, New York all have the exact same trend of cities pushing out artists, musicians, teachers, etc in favor of “elite” workers (tech and finance) and investors. Welcome to the economy of the 1%. No easy answer for San Francisco where the 7×7 mile land restriction and a hatred for tall buildings really limit the solutions.

    • TrainedHistorian

      Neither Hong Kong, nor NYC has a “hatred” of high rises and those too have very high housing prices, so this shows that building very high and paving over all the urban parkland will do relatively little to alleviate housing prices, but it will definitely bring down the quality of life in cities. There would be less pressure on the Bay Area land prices if 1. other parts of the US were doing better economically, atracting Americans elsewhere 2. Politicians actually enforced current legal limits on immigration.

  • Kat B

    My husband and I bought a condo in Richmond in April of 2006 after a 2 year fruitless search in other outlying counties. We did that after educating ourselves and listening to panel members on this program say that ‘now is the time to buy!’ One month after we signed the papers, this program then had a segment on the bubble bursting and how ‘this is the worst time for home buyers’

    In all honesty we couldn’t afford a condo then and with the prices reduced we still can’t afford anything in the Bay Area now (we had to shot sale our home). I don’t know how we make ends meet with two full time jobs.

  • WoeIsMe

    Rent control is locking up apartments from new teachers and fire fighters from moving in. What about means testing? It drives me crazy. I have friends who 1) bought a vacation home in Napa with their savings 2) another friend who lives in Mexico half the year from the money she makes subleasing her apartment to others 3) a friend who owns millions in real estate and lives in a rent-controlled penthouse 4) and I read an article in Business Insider about someone else who subleases his apartment on Airbnb, sleeps at his girlfriend’s, then bought a house outside of SF as an investment that he rents to others. It’s insane. These people are creating a shortage. Means testing would open up a lot of housing. These people lock up apartments, profit from their landlord’s properties while be locked in a low rates. If Bart workers get a 3% increase a year, why not landlords?

    • TrainedHistorian

      Agreed in theory. Rent control should be means-tested. But this is another way of saying there should be more subsidized housing for the really low-income so the well-off do not underpay for rent controlled housing at their expense. And this has not happened: the politicians and taxpayers have not supported increasing Section 8 housing. So if you’re against rent control, you need to also support changing the opposition to increasing the stock of means-tested subsidized housing.

      Section 8 housing is way under produced in the Bay Area. On a yearly income of between $4500-8000 (yes 4 figures! obviously I needed other income supports to survive) I waited 2 and half years to get Section 8. By the time it was offered, I was making too much money–at the lordly level of $11,000/year–to qualify any more. But I could not afford market rates at that income level either.

  • Jeanette

    There IS enough affordable housing within the main transportation corridor (e.g. East Oakland) but these areas are mostly dangerous places to live, with poor quality of life, and bad public schools. We need to improve these areas, not just build new houses in more affluent areas. This would address violence, inequity in education, and our housing needs.

    • Nope Nope nope

      Oakland has a bad reputation, and your comment does nothing to educate people on the reality of things. I avoided Oakland primarily based on misinformed statements like yours. I met someone living near Lake Merritt which encouraged me to explore the Eastbay and was very impressed with the high quality of life out here. After a few months, I decided to buy a place – 3 bedroom 2 bath at about the same amount I was paying for my rent controlled ONE bedroom Alamo Square apartment! Not only did I get tons more space, 2 car parking and a working kitchen, I was also able to cut my commute time to the SF Financial district from 45 minutes to under 27 minutes from Oakland. This city has great food options, an expanding art scene and lots to see and do. The middle class exodus from SF is improving Oakland and I wholeheartedly hope this trend continues. I am glad I moved when I did and hope that people realize that SF is not the ONLY game in town. There are great transit connected communities all over Alameda and Contra Costa.

      • TrainedHistorian

        I agree that much of Oakland is fine–(I lived there for 14 years), but only as long as you do not have kids, Public schools are a problem beginning around middle school age. (My son was in K-3 public school there: the “Arts School” on Broadway it was fine for that age. But there were no safe academically-oriented high schools nearby).

  • Gene Keenan

    AirBNB is also contributing to the lack of housing. I have friends on both sides of this equation. Folks who rent out their apartments or rooms and have their rent completely covered or make a profit and land lord friends who have had to evict these people who have moved out and are renting their apartments for DOUBLE what they pay.

  • Felicity Dashwood

    Our family income is approximately $400k/year and our long term plan is to leave the bay area. We have massive student loans and have started a family which makes it hard to save $150k for a down payment. I don’t know how this housing market is sustainable. It is too bad as I’ve lived on the peninsula my whole life and my community is here. On the other hand it is lucky for the people who have lived here since the 70s, as their home is a massive nest egg when they decide to sell.

  • Evan Barbour

    I’m an underemployed, professional artist with two graduate degrees who works a day job catering lunch service to tech startup employees, most of whom are ten years younger than me, most recent transplants to California.
    While they’re able to afford living in SF, the best I can do is a basement apartment in Oakland. Because of the disparity, it’s hard not to feel resentful of the tech industry here – the proliferation of mega-busses – AND not feel discouraged about my career decision to be an artist.
    -Evan in Oakland

    • Another Mike

      Well, you could move to Brooklyn, and start resenting hedge fund managers and other Wall Streeters. I would move to Portland, myself.

    • marte48

      Evan, as fast as you can, learn HTML. Art + HTML = jobs.

  • Fay Nissenbaum

    Link to recent article about tax giveaways – now up 10 million in one year – to tech companies in the City:

    • Another Mike

      Who else is going to invest in that rundown (frankly scary) area? And payroll taxes have driven large employers out of San Francisco since the Difi era, to the benefit of Bishop Ranch and San Ramon.The biggest remaining employers cannot leave as they serve San Franciscans only: SF government itself, CPMC, and UCSF.

      • Fay Nissenbaum

        Tax giveaway policies are meant for declining economies, but we dont have that, do we? In an appreciating market, why in hell are MY TAXPAYER dollars being giving away? If you believe in free enterprise, then businesses should embrace the market instead of sopping up gov’t welfare – AKA the public’s money.

        • Another Mike

          San Francisco jobs for San Francisco residents.

          • Skip Conrad

            We do have a local hire ordinance passed about January 2012, and sponsored by John Avalos. Unfortunately, the requirement for being considered a local is spending 7 nights in the City – anywhere. No utility bill, no voter registration, no drivers license, no mortgage, no rent receipt, no nothing. So just about anybody can get a job as a local hire.’=

          • Now, ain’t that the hurt? >>>>So just about anybody can get a job as a local hire.’=

          • I so agree with you. I know people who live in New York and commute back and forth, working here in San Francisco. I know, I know, good for them. I guess it’s not about what you know. It’s who you know.

  • Pamela Trounstine

    No speculators in SF? It goes beyond hedge funds. What about Chinese investors and all-cash offers? That was big in 2008 but it’s still big now.

    • Skip Conrad

      I know of real estate broker who fly to China to market Bay Area house – residential houses. There is also the element of supply and demand, since the US is the 3rd most populous country in the world, with a annual population growth rate in the top ten.

  • Another Mike

    I couldn’t believe the guy (Jed Kolko?) who said that most housing was luxury housing that had been in effect passed down the socioeconomic ladder. In the South Bay, there are huge swaths of starter homes, from Mountain View and Cupertino, through Sunnyvale and Santa Clara, and into San Jose, that sell for $500,000 to $1,000,000. So here, housing went in the opposite direction, from single-income returning GI factory workers to double-income high-income professionals.

    • TrainedHistorian

      Indeed. And this what happens when wages for “workers” i.e. the bottom half of the income ladder stagnate or decline, as they have for the last thirty years or more: those “workers” no longer can afford to buy houses. (Although in today’s glutted lower-skill labor market, that income group barely qualifies as “worker-class” any more due to their increasing inability to secure full-time employment).

      Pressure on housing prices here was also exacerbated by the hollowing out of economic opportunity elsewhere in the US, which is why Californians should NOT have been so cavalier in the 1980s and 90s about the troubles of the Rust Belt. As an Midwesterner who came here for college and hated being forced to stay in this overpriced housing market because my parents said “don’t come home, there are no jobs here!,” I well remember the “vote with your feet” mantra–don’t demand help for Cleveland, move to California!.


  • Fay Nissenbaum

    Society is better when homes aren’t treated as investments meant to skyrocket. This was the case until the late ’70s and ’80s. Before that, homeowners had security of a paid off mortgage but without the geometric increase in values. When citizens of foreign nations and consortiums of investors buy up Single Family Homes, we got a real problem! Would it be legal to restrict buying to actual people instead of speculators – could such a policy be workable?

    • Another Mike

      Bay Area real estate has been unaffordable since the mid 1970s. In the mid-80s an SF apartment averaged over $1000 a month. During the dotcom boom, $1000 a month would get you a 10 x 10 room carved out of a garage.

  • Another Mike

    Since the dot-com boom, SF has been evolving into a bedroom community for well-off young techies. Other than restricting restaurants, dance clubs, and other places of entertainment, I don’t see a solution.

  • Nope Nope nope

    I avoided Oakland for a long time due to its reputation as an unsafe place. I eventually met someone living near Lake Merritt which encouraged me to explore the Eastbay and was very impressed with the high quality of life out here. After a few months, I decided to buy a place – 3 bedroom 2 bath for about the same amount I was paying for my rent controlled ONE bedroom Alamo Square apartment! Not only did I get tons more space, 2 car parking and a working kitchen, I was also able to cut my commute time to the SF Financial district from 45 minutes to under 27 minutes from Oakland. This city has great food options, an expanding art scene and lots to see and do. The middle class exodus from SF is improving Oakland and I wholeheartedly hope this trend continues. I am glad I moved when I did and hope that people realize that SF is not the ONLY game in town. There are great transit connected communities all over Alameda Co and Contra Costa Co. People need to wake up to the fact that market forces have transformed SF for better or worse.

    • Another Mike

      Realize that some will despise you as a gentrifier, preferring to keep Oakland full of cozy slum neighborhoods.

  • disqus_wDkIqwxHFs

    I work for a local non-profit that provides emergency financial asssitance for disabled people. Obviously, given that I work in nonprofit, I live hand to mouth on a monthly basis and am not able to save anything for the future, and if it wasnt for my rent controlled apt I wouldnt be able to stay in SF. But enough about me, what I want to say is I work with clients every day who are trying to surviving on a monthly SSDI (Social Security Disability Income) which on average is 886.40 a month. Staying in SF is vital for many of them because there are other services here they need to access that are not available outside SF. Some of them are securely housed in low income housing situations, but over the last year I have seen so many of our clients become Elis Act evicted out of there rent controlled apartments and become homeless. Even the worst, nastiest, bed bug infested SRO Hotel in SF costs 1000.00+ monthly in this rental market these days! Imagine a society that allows disabled people with chronic illnesses to live on the streets because there is not enough low income housing avaiable, not to mention affodable regular housing? So you know all those homeless people living like animals on the streets and using the gutters as toilets you have to step over on the sidewalk? There’s a good chance they are living with a disability/chronic illness and have been Ellis Act evicted out of their homes and on to the sidewalk and have no other option

    • Another Mike

      This year, 165 rental units were lost to Ellis Act conversions. How many people does that represent?

      People living on SSDI need to be in charitable or government housing, not for-profit housing.

      • disqus_wDkIqwxHFs

        There isn’t enough low income housing, or charitable housing. They used to be able to stay in their rent controlled apartments where they were stable. Now, more and more, they are being ellis acted evicted. I have seen many of that 165 you mention

        • Another Mike

          Then you shift the charitable burden to the landlords, who are thus incentivized to leave units vacant rather than freeze the rent of a lifetime tenant.

          People invest money because they want to earn more, not because they feel a mission to house people. Rent control limits their potential revenue.

  • Berkeley Bob

    I’m not sure why the cost of high housing in SF is a surprise.

    It’s been an active policy of the city for the past 20 years to constrict the supply of housing with byzantine zoning laws and rent control (rent control is price control by any other name and always results in market failures, while favoring a small minority and resulting inefficient housing investment). Given the high demand from a flourishing tech sector it’s inevitable that house prices should sky rocket.

    Streamline the new construction approval process (more supply in SF) and invest more in public transportation infrastructure (take some of the pressure off SF to the nearby areas) to and you’ll see this problem go away. Unfortunately these solutions require current residents to sacrifice some of the historical characteristics of their neighborhood and embrace developement, so I don’t see this getting done anytime soon.

    • Another Mike

      People like their low rise city and their street parking. Megabuildings are fine for the formerly industrial SoMa, but I don’t see them fitting into the neighborhoods.

      • Berkeley Bob

        That’s absolutely fine and the prerogative of current SF residents, as it should be.

        I’m just saying that a necessary consequence of this choice is sky high costs of housing and driving out poorer residents further from the city.

        Preservation of low rise views and historical character are valid goals of the city, but people must accept that it’s also a conscious decision to constrict affordable housing supply.

    • TrainedHistorian

      Invest more in public transport? That would require raising taxes, and there is not much support for this; raising the gasoline tax in particular has been resisted by the more well-heeled, while the burden for funding transit in the Bay Area has been disproportionately shoved onto lower-income folks by the high, very regressive sales taxes here . Not currently a good solution for alleviating the burden on cost of living for the lower-income folks, unless the way of funding transit changes,

  • lfivepoints69

    As a San Francisco homeowner, I am so jubilant about the recovery in
    home values. I pray that they keep increasing at least to the level of
    the 2006 peak. It drives me crazy that only renters have power and representation in the public debate on this.

    • TrainedHistorian

      Only renters have power in the debate? When rents are so high, as they are here, that statement makes no sense whatsoever.

  • Stephanie Billett

    In regards to the listener who called in regarding VA … I am a realtor in the East Bay and have been working with many vets using the VA loan and have devised a formula that is working and have been successfully getting them into homes. I suggest asking your loan agent to get your package submitted to a lender so that you have a full loan approval with a TBD (to be determined) property. When you go to submit offers have your realtor send in the full loan approval with the offer and express with confidence that the loan will go through and quickly. Since VA requires 0% down offer incentives to the seller stating you (the buyer) will cover any additional cost for repairs required by the VA.

  • RS

    Michael, thank you for doing this series! Please ask your future guests about the lasting impacts of Prop 13 on constraining housing in California. Part of the lack of affordability is the fact that those who buy houses today pay hundreds if not thousands more in taxes per year than those who owned in the 70’s. In addition, in places like Berkeley, buyers get hit with transfer taxes to help make up for the lost revenue. This is a shameful aspect of Prop 13 that is not discussed enough.

    • Another Mike

      Huh? People pay the same percentage of the purchase price in property tax that they did thirty-plus years ago.

      Property tax is the most regressive tax of all, because the amount has nothing to do with ability to pay. If your neighbor sells his house for twice what he paid, that does not put one dollar in your pocket. But if you’re able to pay a million five for your house, presumably you can pay the same proportionate property tax as the fellow who bought in 1983.

      Property tax is anachronistic — from an era where one’s property was the source of one’s income, whether acres of farmland or woodland, or square feet of workshop, or number of bedrooms in the boarding house. Now that we can calculate income easily, and tax income progressively, we no longer need to use a proxy like property tax.

  • Michele T. LaCagnina

    While I don’t disagree that home prices and rents are crazy high, I’d like to point out that those prices are generally confined to the so-called “desirable areas”. There are plenty of single family homes for $250K or less in my neighborhood in East Oakland. Sure, there is no Whole Foods or Peet’s Coffee within walking distance. But BART is only 2 miles away, and you can get to SF in 25 minutes by train. Sure, I have to lock my doors at night, but by no means am I worried about getting shot on my front porch. If you do your research and choose the right area, you can find hidden gems very close to the urban core.

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