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rents are driven by jobs.
no jobs means low rent.
the rent is great in detroit.
Rent is still high in San Diego and the job market is subpar San Jose and the jobs pay less in San Diego. Some say it's the Sunshine Tax, much like which is common here in Miami.
I like to know where these people live making $10 to $15/hour?
A rented room in someone's house for $500/month is where someone like me is. Even making $16 per hour, if I were to somehow find a studio or one bedroom for as cheap as $1300 (setting aside trying to find one in a decent area), after food and other expenses I wouldn't even have anything left over. In fact, crunching the numbers, it's actually $30 over what I bring home (aka I'd be in the hole).
Not living in a place that is completely, 100% ours is where we live.
I don't know why it's necessary for housing prices to be so high purely because wages are so high (like someone just mentioned). It seems completely arbitrary; as if those with the true wealth are trying to keep common people from saving too much money or something. It seems like regardless of where you are, regardless of what the cost of living vs the median wage is, it always seems to balance at a point that prevents too much disposable income (greater than 1/3 or so). As if such a "privilege" is reserved for the 5-10%.
And the tech jobs aren't as easy to come by as some say. Maybe for someone already in the field, but not for people trying to get in. They're not just falling out of the sky. I'm going to school for programming, and even the internships read like mid level job descriptions; not even mentioning the entry ones sounding like senior level positions in the description.
To answer your question why housing price has to be high where wages is high. It is because the seller always try to sell the highest price possible. They will keep increasing the price when they see there is still room for the market.
There is no problem with that. The real problem with Bay area is people here are willing to spend a much larger percentage of their income on housing. There are million dollar homes everywhere. But in most other places, people who buy those houses are usually doctors, lawyers, or business executives who earn at least twice as much as Silicon Valley engineers. It is definitely not just the wage that affected the housing price.
Quote:
Originally Posted by PhoenixSomeday
A rented room in someone's house for $500/month is where someone like me is. Even making $16 per hour, if I were to somehow find a studio or one bedroom for as cheap as $1300 (setting aside trying to find one in a decent area), after food and other expenses I wouldn't even have anything left over. In fact, crunching the numbers, it's actually $30 over what I bring home (aka I'd be in the hole).
Not living in a place that is completely, 100% ours is where we live.
I don't know why it's necessary for housing prices to be so high purely because wages are so high (like someone just mentioned). It seems completely arbitrary; as if those with the true wealth are trying to keep common people from saving too much money or something. It seems like regardless of where you are, regardless of what the cost of living vs the median wage is, it always seems to balance at a point that prevents too much disposable income (greater than 1/3 or so). As if such a "privilege" is reserved for the 5-10%.
And the tech jobs aren't as easy to come by as some say. Maybe for someone already in the field, but not for people trying to get in. They're not just falling out of the sky. I'm going to school for programming, and even the internships read like mid level job descriptions; not even mentioning the entry ones sounding like senior level positions in the description.
There are several reasons that housing costs are so high.
1: There is very little land available for development. This makes the land itself very expensive. The old supply demand principal.
2: It costs much more to build in San Jose than many places. That is due to higher development costs, high labor costs, high permit and fee costs. Etc., etc.
3: There is a shortage of properties for sale and for rent compared to the demand in San Jose area. The old supply demand principal in action again.
We bought our first home in Cupertino in 1956 for $13,750. Today these over 50 year old homes are reselling for about $750,000 to give you an idea of what has happened in that market. Prices have gone through the roof.
The real problem with Bay area is people here are willing to spend a much larger percentage of their income on housing. There are million dollar homes everywhere. But in most other places, people who buy those houses are usually doctors, lawyers, or business executives who earn at least twice as much as Silicon Valley engineers. It is definitely not just the wage that affected the housing price.
In which case, we would have a situation where many people are living beyond their means. Which would likely mean it's a bubble waiting to burst, but that doesn't seem terribly apparent at the moment. Prices keep going up as demand for stagnant inventory continues to rise, and that inventory won't meet demand unless employers help provide housing for all these new people they're bringing in.
Correct. And suburbanites fight high density development tooth and nail, unless it's on vacant or dumpy land no one wants...and there aren't many tracts of land that fit that description (the development on the site of the old cannery near downtown SJ being one example of the exceptions).
In short, the problems are well known and understood, but people, especially long time homeowners, fight tooth and nail for their interests, which conflicts with the needs of other folks. I hope these long time homeowners don't mind the fact their kids will be living out of state (or at least out of the Bay Area) if they actually want to own homes.
Mysticaltyger,
You are spot on. My wife and I were both born and raised in the South Bay. Concerning my 3 siblings and myself, one lives in the Bay Area, one lives about 2 hrs north, and two of us live out of state. Of my wife's 3 siblings one lives in the Bay Area, and the others live out of state. My mother in law and mother have all been deprived of not seeing over half the total number of their grandchildren grow up. We are done raising our children and make it out to California at least once and usually twice per year. Those of us that live out of state are not involved in tech, those that do live in state are or have worked primarily in tech. On my wife's side the ones who moved out of California , for various reasons, not the least of which was economic, are currently the wealthiest. My sister in law and her husband are looking to buy a place in the Napa Valley ( cash) but intend to live there less than 6 months per year to avoid California income tax. They currently live in the south in a state without income tax. I don't think my mother or mother in law have a clue about how the cost of living ( especially housing) has affected their lives with respect to their children/grandchildren. They are both so happy that they have made so much money on their homes over the years and they both pay ridiculously low prop 13 property taxes.
Last edited by WeakandDizzy; 07-24-2012 at 07:53 AM..
Reason: emphasis
I don't know why it's necessary for housing prices to be so high purely because wages are so high (like someone just mentioned). It seems completely arbitrary; as if those with the true wealth are trying to keep common people from saving too much money or something. It seems like regardless of where you are, regardless of what the cost of living vs the median wage is, it always seems to balance at a point that prevents too much disposable income (greater than 1/3 or so). As if such a "privilege" is reserved for the 5-10%.
I think the biggest problem in CA is that we simply don't build enough housing. That's partly because the popular areas are buillt out, but it's also because of anti-growth attitudes and restrictive zoning laws. Prop 13, which limits property tax increases, also acts as a disincentive because cities say they don't get enough revenue from property taxes to cover their costs of servicing residents.
I don't think most with the "true wealth" are tryiing to keep common people from saving money. Those who are better off in this area complain that they can't afford to own homes or that they can't afford nearly as much house as they could in most other places. I know that's a small consolation when you're at the very bottom of the housing market renting a room, but the high prices hit everyone...but they do hit those with the lowest incomes the hardest, no question about it.
Also, ordinary people are also part of the problem. The more people who are willing to shell out 1/3 or more of their incomes in rent, the more rents can be jacked up (My landlord allows income to be only 2.5 times rent). In America for the last 30 years, we've had stagnant or very slow growth in wages, yet people just tried to make up for this by adding on more debt....until 2008 happened, and the house of cards came tumbling down. So, when people's "must have" lists are too large for their incomes, it makes life much more stressful, not only for the people living at or beyond their means, but also for other people as a result of increased prices for everything. In essence, we've been competing with each other for the last 30 years to see who can go into debt the fastest. That hasn't worked out too well and the pain is not over .
Grew up most of my life in the South Bay and San Jose winters are far from perfect. It still gets into the 30's and high 20's sometimes in the inland valleys and it can rain quite a bit in the winter. I agree that the "quality of life" is really what you make of it. My priorities are Family, Friends and cost of living rather than career advancement or weather. You have to ask yourself what is important to you and you make that choice in an intelligent and logical way.
What if your family and friends, in addition to better QOL and higher wages, are all in the Bay Area? Then what? Do you really think I'd be happier ALL ALONE in some podunk/backwater town, or strange urban area, just to save a few bucks on rent? I don't make an "impressive high-tech salary," just a decent librarian's salary, and have lived here for more than half of my life... it's not easy at times, but well worth it for living in such a great place! I've also lived in the northeast (born in MD), Oregon, Tahoe, Stockton, etc, and somehow keep ending up back here. There's a reason it costs a lot to live here, and I also happen to make around 1.5-2x what I'd earn for the same job in other regions.
That being said, I do hope the rental prices drop soon! I'm getting a decent deal right now (by our standards), but would love to find something less expensive... my lease is up next March, and if budget allows I'm hoping to move to either Mountain View or Campbell.
P.S. To give you an idea of how much rental prices have gone up recently, I moved out of San Francisco in March 2011... at the time I was paying $1670 for a 2br/1ba townhouse-style apartment, and they are now renting that same (type of) unit for around $2800. Yowzas!!!! Sadly it seems I am now priced out of San Francisco (if I ever wanted to return), unless things go back to "normal" in the near future.
Correct. And suburbanites fight high density development tooth and nail, unless it's on vacant or dumpy land no one wants...and there aren't many tracts of land that fit that description (the development on the site of the old cannery near downtown SJ being one example of the exceptions).
In short, the problems are well known and understood, but people, especially long time homeowners, fight tooth and nail for their interests, which conflicts with the needs of other folks. I hope these long time homeowners don't mind the fact their kids will be living out of state (or at least out of the Bay Area) if they actually want to own homes.
Why do you assume that? Again, the salaries and opportunities are also better here, so there are folks in the younger generations buying homes... my sister and her husband own a beautiful house in the South Bay, and about half of my similarly-aged friends own houses or condos. I hope to buy a townhouse myself, but will probably have to wait a few more years for it to happen.
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Sadly it seems I am now priced out of San Francisco (if I ever wanted to return), unless things go back to "normal" in the near future.
