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Places where rents are soaring the most seem to be the highest income areas.
But it is the highest 20% earners distorting the market, combined with a lack of new housing supply in these markets (often caused by burdensome zoning and permitting regulations and NIMBY-ism).
That may (or may not be) the consequences, but that is not the intent. Homeowners don't care one bit about how much rentals are. They just want to protect the neighborhood that they bought in to. .
That is the problem. It's the "I got mine, the heck with everyone else" mentality disguised as protecting one's neighborhood. Just because people don't intend negative consequences doesn't mean it's ok to keep doing it after the negative consequences are revealed.
Now always true... when more voters are renters you get rent control.
True. Renters can be just as selfish. Everyone wants to rig the game in their favor and claim they only had the best of intentions. Like Shakespeare said, the road to hell is paved with good intentions.
I'll explain things from my perch as a fairly well paid professional in the Bay Area.
1. Rents are ridiculous. One bedroom apartments near-ish my job are 3x what I pay in my rent controlled apartment in a nearby city. The commute would be about the same for me if I moved. If I wanted to be on the block of my job the rent is well over any smart financial decision-making would allow me to spend.
2. Buying a basic one bedroom condo in the city I live in is about $350k.
3. There are no actually affordable to median income earners lower middle to middle class places to live within an 45 minute commute to any of the major job centers.
4. To afford the basic middle class lifestyle with a family, you need a minimum household income of $200k. You will sacrifice two of these items on that salary: square footage, commute time or school quality. A 3 bedroom condo costs around $700k in a "cheaper" part of the Bay Area. You may get good schools in a place like Dublin, but if you work in SF or Silicon Valley you have an hour commute or more.
5. Well-paid workers are doubling up for roommates that they are not romantically linked to. This means median workers need to triple up or more for crappier accommodations.
6. Current wages do not support current home values. Most of the people in the expesnive zip codes could not afford those homes at today's prices.
7. Formerly modest / basic / middle class areas have appreciated so much they have become haves for the very affluent only (with the current home prices.)
Now I'll talk about some friends. I have 3 working couple-friends with kids. One has 2 software engineers, one has a tenured teacher and a software engineer. Another has a senior software engineer with a mid level manager. So the net is, everyone makes above the median income as an individual and a couple. None of these people can afford more than a 2 bedroom condo in Silicon Valley nearish to their jobs in decent school districts. These are what in a previous generation would have been upper middle class families. Buying a 3 bedroom home that needs renovations would cost $1.3M. Ands we are talking about a Brady Bunch era ranch home.
Where does this leave workers with basic income or even low income?
Nowhere.
And that is why we have a housing crisis. Affluent people can barely afford anything family sized, which causes a lot of downward pressure on to what would be regular joe housing.
The pay rates for folks in the area are likely 3X higher than in my neck of the woods (maybe more), but with housing prices the way you describe, the higher salaries don't exactly help that much. I suppose that's why there was 1 google employee living out of his car and I'm sure he was earning more than $150k per year)
In most cases, the higher pay doesn't make up for the higher cost of living here.
Quote:
Originally Posted by gunslinger256
Some folks who don't understand the issue (like the OP) would tell you to suck it up and find a higher paying job but the reality is you are working in the place that pays the highest in the country (my speculation) so there really isn't anywhere to go.
There is some truth on both sides. The problem is we have an overly regulated housing market, controlled by NIMBYs, which limits supply and jacks up prices. The other problem is renters will often act like homeowner NIMBYs. They'll push for rent control, which is good for existing renters, but which, in the long run actually acts as a disincentive to build new housing, further worsening the supply/demand imbalance.
My job / specialty is not very popular in other metros. And I have family / friends / social networks / work networks are based in the Bay Area. I was born here and would like to stay here. Why would I move to a place I have no ties. My parents are older and they won't get on a plane so I should stay within driving distance of them.
Moving is not a logical solution for many people!
But for many people, moving is a necessity, but folks are living in denial about it. Economic success usually means moving outside one's comfort zone (building new skills, moving away from family and social networks, earning more, moving somewhere cheaper before you're paying 50% of you income in rent, etc.). It's a b*tch, but sometimes you just have to bite the bullet, no matter how unfair it is (and rent/home prices are unfair in the Bay Area & other high cost metros, in many respects).
I am sympathetic to the people who are victims of radical rent increases. I have a potential big rent increase hanging over my head. At some point, I may have to give up and move somewhere cheaper....and I won't be waiting until I'm living payday to payday (i.e. "cant afford to move") before I do it.
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