A close relative of mine is a top real estate appraiser based in San Francisco, and she's terrified about what happens in Q2 2021, when leases will start terminating en masse. She's had a call with the St. Louis Fed, as they're trying to get an idea of what this will look like. She thinks it will be a bloodbath, and deal a death blow to corporate real estate (and other capital markets by extension).
The other week I was on real estate sites and I saw a bunch of "apartments" in SOMA that just looked like offices with some hastily slapped on anemities, as if there was some "wink wink nudge nudge" going on and they had to call the place an "apartment" for some city ordinance but everyone knew it was an office.
However, I realized it was exactly the opposite. These people were taking their office spaces and desperately chopping them up and getting up to code so they could be leased as apartments.
Especially good if the converted office space also provides a good work from home environment. Everyone is working from home and those that can are scrambling to expand their houses to suit a new lifestyle.
Is there data supporting the conclusion that lack of housing is what causes homelessness? I always thought that it was more of a failure of the social safety net.
Really? Living in a country with a safety net, it looks pretty damn positive to me, you get unemployment checks while you're unemployed which makes it much easier to take your time to find a good next job.
Unemployment varies greatly state by state and rarely keeps up with the reality of the cost of living.
On top of this, it only applies if you lose your job due to "lay-offs". I've been laid off four times in my life, all 3 times the companies claimed they were not lay-offs and fought my claim. 2 times I was denied.
The third time I received unemployment benefits for 5 months. I received $4,000 in benefits then my former employer won an appeal, and my claim was deemed "fraud". I had to pay $8,500 back ($4,000 + $4,500 in "fraud fees").
If you are fired for "cause", "screw you, have a nice day".
8 months ago 10% of my company's engineering department (screw you, cloud passage) was fired "for cause" and replaced with cheap Belarusian contractors. This time I didn't even bother for unemployment, I didn't want to risk having to pay it back + 100% fines. I also do not get covid stimulus, and have had to sell my 401k to keep from being homeless.
America has no social net whatsoever. I do not qualify for unemployment, food stamps, or anything else even though I have been working my ass off and paying taxes for 25 years.
This is infuriating :( Hope you weather the storm and end up in a better spot soon.
But, this is one of my concerns too. I equate money with time and if, as a law-abiding citizen, I work diligently for a couple of decades and pay my taxes, when circumstances change – I should be assured some sort of a safety net. Otherwise, what is the point of wasting time working to pay taxes? Is this the hard reality that we cannot rely on governments taking care of us and need to come up with more individualistic backup plans in such circumstances? Does paying all of your taxes and being a model law-abiding citizen make you a sucker?
Not to mention you have to make enough money to qualify for unemployment. My wife was once denied because in the window of time they use to calculate unemployment her pay was too low. They told her that in order to qualify for unemployment, she had to get a job and make more money, and then lose that job and reapply.
Also, when it comes to the stimulus programs, if you made too much $$ then you don't qualify. Even if I had qualified for unemployment, I wouldn't have qualified for the extra $300/week and the $1200 stimulus plans.
The only thing really keeping us afloat is we fled the USA and move to my wife's town where she owns a home and there's a low cost of living. Luckily I was raised with the philosophy that if I cannot afford to buy a thing in cash, I cannot afford to buy that thing, so I have never had any debt.
Yes, but I have a feeling that's what the GP refers to when they say "trapped forever". I don't feel like our system traps you at all, so I was wondering why the GP feels that people get trapped.
Haha no worries! I have not been on unemployment, so I'm afraid I can't comment on that. As someone else mentioned it does vary a bit state by state, so there could be something there.
But that doesn't happen as you say. What people do is just take 2 year sabatical at the expenses of all the taxes while they go Thailand, etc. That is what happens with most of the unemployment checks.
In Spain is very common to take 2 year sabatical while enjoying the welfare. Most of them go away and sign online through proxies or use family members to do that.
Well yes, for many of the young working class - rent is eating up over 2/3rd of their paychecks.
We are being scammed by the Bourgeoisie with inherited wealth.
This explains our situation well imo:
-
"So where did our land system come from?
Weirdly enough, the land system that we have today has its origins in a problem specific to medieval kings, which is ‘how do I fund military campaigns and defence, without paying to keep a standing army?’
And it was William the Conqueror who perfected the answer. It was a piece of paper. And on that piece of paper was basically an agreement between the Crown and a noble, saying ‘if you provide men for military campaigns when I ask, in exchange I will grant you a monopoly over your own private fiefdom, where you can levy as high taxes as people can bear to pay’.
So effectively — rent is the original tax, paid via lords to the King.
In fact the word ‘feudal’ derives from the latin word feudalis — for ‘fee’. In other words, rent. So the whole system of government by which the Normans ruled over the Anglo Saxons was based on rent.
If you’re a King, there’s only really three groups of people you’re scared of: other kings, your family, and your nobles. So over time landowners managed to engineer a set of concessions, whereby increasingly taxes were levied directly on people and business, leaving them (the lords) as the owners of a monopoly right to extract privatised land tax.
So what you’re left with is a set of power relations in society: an enforced system of servitude and control. As the economist Henry George pointed out, it is essentially a diluted version of slavery.
“Ownership of land always gives ownership of people… Place one hundred people on an island from which there is no escape. Make one of them the absolute owner of the others — or the absolute owner of the soil. It will make no difference — either to owner or to the others — which one you choose. Either way, one individual will be the absolute master of the other ninety-nine.”
Fast forward a few hundred years, to post-civil-war America and that’s exactly what played out. The plantation owners could no longer own slaves, so what they said is ‘Ok, I’ll pay you, say, $2 dollars a day’ — but by the way, I own the land, and the rent is… $2 a day.’’. Which, incidentally, led to the invention of a clever invention called a ‘chattel house’ which was a kind of kit house that gave families of plantation workers the ability to relocate to try to escape exploitative landlords."
Fast forward again to today, and land is still the fundamental mechanism of racial inequity. To be blunt, all across the UK and the US, there are tenants with black and brown skin paying rent to landlords and mortgage lenders with white skin. Or commuting for hours. Or both.
I imagine all of you have seen the speech made a couple of weeks ago by a young American writer called Kimberly Jones — if you haven’t, do — it’s absolutely the most eloquent piece of public speaking I’ve seen in a long time (https://www.youtube.com/watch?v=llci8MVh8J4). In it she uses this incredible image of getting white people to imagine what it feels like to play “four hundred rounds of Monopoly” with the game rigged against you, enforced by violence. There’s an interesting backstory here, that you may know, which is that the game of monopoly was first invented by a woman called Elizabeth Magie — and originally called ‘The Landlords Game’ and it was created so that… basically one day someone could make exactly the speech that Kimberly Jones just did.
So, broadly speaking — and I’m simplifying here — there were two positions in this power diagram. Tenant and landlord.
And over time that piece of paper became a tradable asset, as well as an inheritable one: so you can literally buy the right to extract taxes from people. And it’s amazing to me that we don’t find that more weird than we do — it’s right there hidden in plain sight in the language we use: landlord.
But such an extreme overclass/underclass diagram is politically hard to sustain. So, over time we saw the slow emergence of a middle position, which is for those who could get together just enough money to buy their own freedom from rent. Again, that’s why we have the word ‘Freehold’; it’s not free as in ‘no cost’ it’s free as in, ‘liberty’."
"There are many kinds of monopoly, from utilities to pharmaceutical patents, but the greatest – the ‘mother of all monopolies’ as Churchill described it – is land. Land rents are a weird leftover of the medieval feudal system: a privatised location tax that is suffocating every Westernised economy today."
"It is worth remembering that there is no political argument —Left, Liberal or Right — that even attempts to justify economic rent-seeking on the basis of principle. You will not find one in any book. Adam Smith was against it, Karl Marx was against it, Keynes was against it, Friedman was against it. Even Ayn Rand was against it. Economic rent-seeking survives only in the dark, by obfuscation, distraction, corruption and perverse incentives. It endures only because it has not been part our political language for the last century, and in the tussle of everyday life, we are all susceptible to quietly putting our own short-term convenience ahead of our principles if we can get away with it (then justifying it to ourselves later)."
Buying property to rent doesn't seem like a good way to make money every time I've run the numbers. The only way it makes sense is if capital gains ratchets up the property prices significantly.
Multi-Dwelling-Units. I'd never buy a single unit property to rent, as there's just too much risk tied up in a single tenant, but I'm very happy with my mixed 3 residential + commercial space in a small town.
> Buying property to rent doesn't seem like a good way to make money
Landlordism is one of the oldest games. It is true that you do need quite a bit of capital in order to 'start'. This is the reason why many big corporations like Blackstone have gotten into the game. In the UK, landlordism is a common way to 'becoming a millionaire'.
After the '08 financial crash, the UK government even pledged to underwrite mortgages, making the game of starting a Monopoly-like property empire in the UK risk free for elites. Sheikh Khalifa is a big fan. [1]
> The only way it makes sense is if capital gains ratchets up the property prices significantly.
That's exactly what corporates do. It's the slow corporate fininancialization of the housing market [2].
"Between 2011 and 2017, some of the world’s largest private-equity groups and hedge funds, as well as other large investors, spent a combined $36 billion on more than 200,000 homes in ailing markets across the country. In one Atlanta zip code, they bought almost 90 percent of the 7,500 homes sold between January 2011 and June 2012; today, institutional investors own at least one in five single-family rentals in some parts of the metro area" [3]
+
"Scaling up portfolios consisting of thousands or tens of thousands of rental homes has made it possible for Wall Street firms to roll out financial instruments suited to “a rentership society”. Securitisation allows big investors to borrow against the value of the properties, to buy more properties and pay off old debt, and acts as a loan that tenants pay back with their rent checks.
Wall Street is no stranger to the housing business in America. But their involvement as landlords of single-family homes is new, and so are the financial instruments they have developed." [4]
On the one hand, this is a fascinating perspective. On the other it's clearly historically incorrect. The Bible already talks about land ownership, and at least by the time of the Talmud they had rental and sharecropping, long before feudalism.
I wouldn’t mind living in FiDi if it were in a brand new loft/studio apartment at an affordable price.
All my SF life I’ve tried to stay in the real residential neighborhoods, the ones tourists don’t know exist. Would be nice to change it up without being rent gouged.
I mean, Terminus House was essentially turned into a large project where people were dumped, an approach that has shown similarly disastrous results in the US for decades. That's quite different from turning office space into desirable apartments.
In what way? In Harlow, government took a hands off approach on zoning and oversight and let the free market figure out housing for the country's poorest.
It all seems very similar to me. I'm sure at the start they also thought they were turning defunct office space into desirable apartments too.
The article linked by the comment I replied to stated this:
> Smith is one of hundreds of residents placed at Terminus House in Harlow by councils in and around London, often many miles from everything and everybody they once knew.
I'm not familiar with the specifics of UK subsidized housing, but it sure sounds like the residents were placed in this building by government.
Yeah, you're not and totally misunderstanding how that works.
Councils used to be the biggest house builders in the UK.
Then the neoliberals decided that was silly and the free-market could sort it. So they banned councils from building houses in the 80s. House builds plummeted from 300k per year to 30k per year. Plus they forced the council to get rid of their affordable housing by letting people buy their council house from the council.
So now, when poor people who are guaranteed a house need one, the council have to buy a slot from the free market (and obviously need to go for cheap).
Now the UK has a housing crisis.
Yay, free market.
Basically, the opposite of what you think. The council didn't 'choose' to put people there, they were forced to by the market and disasterous neo-liberal policies.
What hn_throwaway_99 means is: If the policy was "Homeless people rent a house of their choice and the state pays the rent" or "homeless people get cash to spend as they see fit" it wouldn't matter if there were low minimum standards and shitty houses on the market, as they would be rejected by everyone looking for housing - including homeless people.
In contrast if the policy is "Government pays the rent on the cheapest houses on the market, for homeless people" or "government has a fixed budget and must house as many homeless people as possible" then the legal minimum standard is crucial, because that's what you'll likely be giving to homeless people.
For councils to build houses and build them to a reasonable standard would, as you say, be another option.
As others have noted, this is not the opposite of what I think, or what I argued. I'm saying at the end of the day (without making any comment on neoliberal policies) poor people were dumped into, and importantly, concentrated into this building. There is no 'free market' involved here when the residents had no choice. This is very different from converting office space to apartments and putting those out to rent for individuals.
I think you're arguing at cross-purposes. Terminus House is social housing (no-one's arguing that it's not, and that it's not bad), what they're describing in SF is different as it's commercial, and certainly at least medium-grade private housing.
Whether or not the free market has caused the use of private companies to provide project style social housing on the fringes of cities (short answer: of course it has) is somewhat irrelevant compared with converting city-centre commercial property into private accommodation.
>> sounds like the residents were placed in this building by government
> council didn't 'choose' to put people there
Again, your response isn't to the point being made really - no-ones really arguing against your point. Just because they didn't have any real alternative doesn't invalidate the point that they did it.
Can anyone buy some land and build whatever they want on it, like massive apartment buildings? If the answer is no, how can you claim there is a free market? I think the problem is clearly on the heavy regulations, licensing and zoning that keep companies from building.
> Can anyone buy some land and build whatever they want on it, like massive apartment buildings?
They probably can, but The Market™ may give better ROI to (e.g.) condominiums so who'd want to do it?
With apartments you have to do things like put up with tenants and such, and who wants to do that? With condos you sell the units, create a condo corporation, and then walk away with your money once it's constructed and never think about it again.
Why build rental units for poor people when you can sell to oligarchs who want an asset to park their money in?
> Why build rental units for poor people when you can sell to oligarchs who want an asset to park their money in?
As with everything else in a capilistic economy: because there is profit to be made.
Same as we have very expensive top-of-the-line smartphones and very cheap but functional ones, a truly free market housing economy would provide cheap housing for the poor. The reason why we don't see that happening is because of all the regulations that increase the cost of building, making such companies inviable.
Poor people would benefit the most from truly free markets, if we care about them we should be asking for less government intervention, not more.
> As with everything else in a capilistic economy: because there is profit to be made.
As someone who lives in Toronto, Canada where there's a lot of condo construction, and little-to-no purpose-built rental construction, the "capitalist economy" has decided that rentals are generally not worth it.
At least when it comes to builders: plenty of people are buying condos and renting them out instead of living in them, but apartment blocks seem to be not worth the effort.
I think you are missing the point: if there is "little-to-no purpose-built rental construction" I guarantee it's because of laws and regulations preventing companies from fulfilling demand. Think whether people or companies can purchase any land and build whatever they want on it. No they can, local governments must zone it as residential, and then they usually have strict restrictions on how many units can be built on each area, licenses, permissions, building codes...
You are right to complain about this issue, but don't blame free markets, because they are not free: government intervention prevent the necessary competition for the market to work and fulfill demand.
Also consider financing. Buying a home for owner-occupancy is often subsidized while purchase for an investment property (rental) is not. I don't think this is wrong, but certainly the incentives shape the market.
> No they can, local governments must zone it as residential, and then they usually have strict restrictions on how many units can be built on each area, licenses, permissions, building codes...
Which are exactly the same for condo or apartment.
The reasons are economic AFAICT:
> For a long time, the economics of constructing a rental made little sense compared to a condo. Condo builders get a significant portion of their financing directly from future unit owners, who give hefty deposits to secure their spot and therefore assume some of the risk. Rental landlords, on the other hand, need to front the majority of the equity, assuming all the risk themselves. When a condo building is complete and all the units have been sold and paid for, the developers quickly reap the returns on their investment and move on. For a rental building, the returns take many, many years longer.
Toronto has had vacancy rates <2% for decades, so it's not like rental demand wasn't there. In fact prices peaked just before the pandemic and are now falling because the Airbnb folks are switching to long-term rentals. The price of condos is dropping as well since plenty of people are just selling their Airbnb units and flooding the market to certain extent.
A good number of rental buildings are actually being constructed in partnership with insurance and pension funds, as they need long term cash flows and baby boomers aren't getting any younger.
Might be a real fight with the zoning agencies and other "interested" groups to get it done. I expect any attempt to convert office space will run afoul of requirements to set aside a portion for rent controlled units and that alone could end many conversions.
Before anyone has a hissy, while a good sounding idea it can raise costs for remaining units and price other people completely out of the market again and greatly delay a project as each group wants its pound of flesh. So the very same reason there is a lack of housing will rear its ugly head in this case as well
Looking at an office tower and a residential tower being built side by side by my window. I would never live in a converted office building.
The resi tower has concrete separations between floors and if you are lucky, between flats on the same floor. Office buildings don’t have any real separation between floors as you are supposed to walk on accessible fake floors and have fake ceilings too.
The sound insulation between flats on a converted office building must be nil.
> The sound insulation between flats on a converted office building must be nil.
A lot of the older buildings in SF just have 2x4 walls separating the apartments, with fiberglass insulation. It's not very good at insulating sound either.
If the office conversions are done properly they will be better at sound insulation than much of the existing housing stock in SF.
The real question is, why bother renting in SF when any of the surrounding cities are cheaper? Most of the reasons to live in SF (restaurants, nightlife, cultural events) are shut down indefinitely, and commute distance isn't relevant if you are working from home. Renters can get a lot more for their money in the East Bay or the Peninsula.
> The real question is, why bother renting in SF when any of the surrounding cities are cheaper?
Because the pandemic-related shutdowns are temporary (though of course there will be lasting effects), and rents are 30% off their highs, with many landlords throwing free months and other incentives at people to get them to rent.
Sure, if you need/want to save some money over the span of the next 8-12 months, moving out might be a good idea, but if you want to live in the city, you're going to move back eventually, and moving itself isn't free. I think that's a thing that people seem to be missing: posts like yours seem to suggest that the only or main reason people live in SF is because their jobs are there and they want a short commute. That's... just not the case for many, many people.
I think there are valid arguments for leaving, valid arguments for staying, and valid arguments for moving in. But it depends on each person's individual situation and wants and needs.
Concrete separation also acts as fire barriers, which is very important in areas where people will be cooking stuff. Office buildings don’t typically have stoves with open flame everywhere.
Most apartment buildings in the Bay Area are made of wood with 2x4 wall framing and sheetrock, except for a relatively small number of high rise buildings. We haven't really had a fire problem.
I would assume that office buildings aren't set up with gas lines running all over them, so likely these retrofits will include electric ranges and stoves.
There's still a fire danger, of course, with any kind of cooking, but at least there shouldn't be open flames all over the place.
Is mass the only way? The building I worked in had problems due to us transmitting a lot of noise up concrete columns, and it was solved by isolating the source from the columns. Rubber feet were used to separate the noisey equipment from the floor.
So couldn’t you isolate the noise with false ceilings and walls that are constructed to minimise transmissions?
Both is best, but typically a 6" deep wall with offset 2x4 studs, insulation in the wall, resilient channel, 5/8" drywall (which is also fire resistant usually, with fiberglass in the core) and the right caulk and electrical install will stop all but very loud low rumbles.
The key is the installation and design of the system, though. Miss one vent, electrical cutout, or gap (or even using the wrong length of screws) makes all that material useless.
Usually fire code mandates a 2 hour fire rating for each unit, so you end up with two parallel air gapped 2×4 walls that have sufficient sheetrock on the one side facing the unit the wall was built for to get that 2 hour fire rating.
I've seen one of the offices where I work while it had the ceiling removed for renovations. There were probably 4 feet of space between the ceiling and the floor above. I've also seen the same thing in my apartment and there was about 1 foot of space. I don't think noise will be an insurmountable problem.
There's a category of mixed-use development popular in South Korea called officetels[1] that started more or less exactly this way. Newer ones can be pretty nice because there's a lot more care put into the design of the residential spaces, but the older ones that you can tell are converted offices are...not great, unless you're just a big fan of foamcore dropped ceilings.
How does that work? Typical office space typically has no kitchens, offers limited restrooms (and showers are still rare), has no noise isolation for someone who wants to watch TV, listen to the music, or just snore away into the sunrise.
Outside of some makeshift co-living shelter-like concept it does not seem that convertible.
This is a good point. I explained it to my mother with an analogy to a cruise ship heading toward shore at full speed. Everyone knows this means the ship will run aground, but few appreciate that given the mass (and thus momentum) the ship would travel far inland just scraping across the ground.
The coming economic response to the pandemic has the potential to be like that, basically 10x the 2009 "great recession" and a lot of second and third order effects.
Hard to predict what to do and it's nice to hear the Fed doing their research. The TARP program in 2009 was pretty creative and managed a pretty big thwack without nearly as much pain as their could have been.
Where it ends is anyone's guess, and the worst part will be the second and third order effects it won't be super easy to predict. Things like pension/401K/Superannuation funds with high Commercial real estate exposure leading to reduced retirement income, state pension funds that suffer as big US cities see revenue plummet after the population moves, European cities with vastly worse economies - the UK with London hurts there the most - and the cyclical effect of Italian demand reducing French production, reducing French demand reducing Italian production, ad nauseam.
This will be a multi-speed problem, with some countries, cities, counties, suburbs & streets affected far more than others.
If it wasn't so tragic it would be a truly fascinating thing to watch unfold.
> Things like pension/401K/Superannuation funds with high Commercial real estate exposure leading to reduced retirement income,
An interesting second (or even third) order effect of the 2008-2009 financial meltdown was the collapse of many German state banks (Landesbanks I think they're called) which had invested massively in US-based CDCs and the like. I don't think many people would have predicted that happening in 2005-2006.
It is tragic. You’d think that drawing on all our cumulative knowledge and wisdom from the past, we could handle global crises better than we do today. But we clearly have a long ways to go.
> analogy to a cruise ship heading toward shore at full speed. Everyone knows this means the ship will run aground, but few appreciate that given the mass (and thus momentum) the ship would travel far inland just scraping across the ground.
Are you sure you aren’t basing that analogy on the movie Speed 2?
(mostly scrap yards) -- generally much less mass than a ship that is more seaworthy (a lot of early salvage happens before they get to the scrap shore, ships aren't fully loaded, look at their waterline in the videos). And most importantly much much less velocity (1/2mv^2 goes down rapidly with slower velocity). What is is truly impressive is that they estimate the mass, and know very closely what speed to get them too in order to solidly ground them without wasting a lot of energy getting them going faster than necessary.
The analogy fails to account for the captains investment in wings that makes the ship fly over land (remake offices into appartments with dirt cheap labour).
At risk of extreme naivety, why do failed real estate investments merit Fed support and attention? I thought they were just for maintaining a sound dollar and liquidity and the financial system, not charity for real estate kings.
The Federal Reserve manages both the money supply and unemployment, generally against GDP growth targets.
Real estate --- residential, commercial, and industrial --- is among the largest asset classes in the financial system, and it acts as collateral and backing of loans and other financial instruments. Those in turn affect banks and their own ability to generate loans, themselves much of the total money supply.
When market value of these assets falls dramatically, it has ramifications across the financial system. The 2007--2008 global financial crisis was the result of a prior crash in real estate valuations. Japan's Lost Decade (1991--2001) was the result of its own real estate-inflated asset bubble collapse. (https://en.wikipedia.org/wiki/Lost_Decade_(Japan)). Money available for business investment (already constraind) will further contract.
Additionally, for many people, lacking a defined benefit pension, real estate is a major component of household asset portfolios.
Whilst real estate asset inflation is highly problematic, and is not a contributor to economic growth, sudden collapse is tremendously disruptive. And very much a concern of the Fed.
Of course, special interest intervention may be another factor in decisionmaking, though there's ample reason for interest without any such.
Traditionally the Fed has bought and sold Treasury bonds on open market transactions.
Beginning with the 2008 GFC, this was expanded to buying "distressed assets" (https://blogs.wsj.com/economics/2008/11/10/fed-takes-step-in...). This was, and remains, controversial (as noted in the WSJ link), and poorly understood (I'm still not certain I grasp it well, let alone fully, myself).
My understanding is that the Fed's goal isn't profit, but of buying money into, or selling assets, and hence money out of existence. The Fed's asset-buying targets are better thought of as liquidity-injection targets (where liquidity is money created by the Fed to be injected into the economy). The Fed stabilises asset prices as a buyer of last resort, incidentally to its primary goal of both ensuring sufficient money in the economy and in creating greater ceertainty in asset values which allows banks to function.
The Fed can always buy assets or lend money, as it has the sole power (save the US Treasury) to create money without restriction. And in practice, it makes profit on these transactions (which is contributed to the US Treasury).
The distortionary effects on risk and incentives ... remains fuzzy to me.
This is largely my own conceptualisation, it seems generally to agree with other explanations, and smells strongly of MMT.
Their mandate requires a stable financial system with solvent institutions and sufficient liquidity moving through the system.
By definition, solvency and liquidity at the country level depend on major asset classes maintaining some amount of value.
That baseline changes based on regulations of what can or cannot be used as collateral for different measures, what ratios institutions have to maintain, etc, but there is a floor of some sort at which point the financial system implodes and the economy collapses.
Given their powers and mandate, preventing economic collapse is of the utmost importance.
The problem with this is that no amount of efforts by CBs can cure solvency risk, and attempts to do so only exacerbate moral hazards and make those collateral valuations even more fragile since the fundamentals underlying the collateral valuations, like cashflows and trust between counterparties, will continue to decline.
Wall Street bailouts, letting corporations exfiltrate revenue to off shore tax havens, defunding the IRS, oddly specific tax loopholes, tax cuts on the wealthy, letting lobbyists write the laws. That's just from thinking about it for ten seconds.
It's known as "the Fed put". Whenever rich people have taken on too much risk the fed has been printing money to keep asset prices high so no one gets hurt. Im sure you know that the Fed is even directly buying corporate bonds now. This is paid for by main street through the inflation tax.
Nothing wrong with your question, the thing you're missing is that many of the commercial buildings are not owned outright. What is happening is similar to what happened in 2008 with residential housing, all be it the reasons for the occurrence are very different.
Probably the worst consequence from a failed commercial real estate market will be the collapse of the economy that services and depends on these spaces. Restaurants, trasport, maintenance workers and so on will inevitably fail. This will lead to loan defaults, bankruptcies and eventually this trickles down to every citizen in the community if not the country.
For a historical view of this type of collapse, look into any resource based boom to bust city or town. The sad part is those that can leave, get out long before the SHTF and it's only the middle class to poor left holding the bag. Then when the Fed steps up with a bailout the parasitic rich start showing up again to ride the recovery, lining their pockets once again.
Because the worst case scenario looks a lot like the '08 crash. These developers are highly leveraged, because property values were skyrocketing in major cities. It was a "you can't lose" situation. And now major banks are stuck holding the loans again, and these guys simply won't be able to make their payments.
The Fed does a lot of macroeconomic modeling and forecasting, so their analysts being interested in the effects of the pandemic on particular sectors of the economy doesn't sound particularly unusual (I have no insight in the the particular circumstances referenced in the parent comment of course).
After 2008 the Fed and various gov agencies are constantly on the hunt for "systemic risks" to the economy. They only really care if the failure of one section of the economy could spill over into others. Commercial real estate definitely could pose a systemic threat. I remember they were looking into bitcoin briefly at the height of the bubble but something like that is way to small of a market to rise to the level systemic risk and warrant fed attention
Though I'd dispute that the Fed cares particularly about their valuation. The Fed's dual mandates are inflation and unemployment, not balance sheet returns.
Some of the largest investors in commercial real estate are private equity and other investment funds that invest on behalf of the largest pension funds in the US. A commercial real estate blood bath could also result in a blood bath for the elderly and those who will retire in the near future. But also it could set off a chain reaction.
In terms of suffering, I'm more worried about the loss of support workers and supporting businesses over the long-term. Especially in a place like Chicago where the installed base of offices is much much larger than SF, and where portions of the future sales tax revenue has already been securitized and sold to investors.
Developers in Chicago are building as fast as they can right now. It's counterintuitive to people on the outside, but from what I read, it's because labor, material, and capital are dirt cheap. So the developers are putting up new skyscrapers and other mega-developments so they're in a good position to take advantage of the recovery.
Dozens of new residential towers have been announced, and at least a dozen are under construction, including one that's almost finished at 101 stories tall.
Exactly the same in NYC. Real estate investment is planned on 50-100 year basis. We're in for a 3-5 year blip from a utilization perspective, but on longer timeframes, now is really just a great time to add to the capital base.
You are correct, metal prices are up 3x and wood at least 2x. Building might be happening due to demand, but not because the materials are cheap. It might be possible that labor in big cities might be cheaper, but I doubt it.
I'm quite interested in what your relative thinks might be the impact of the looming property tax reform in CA; if the ballot initiative passes next month then commercial real estate will no longer be able to enjoy the prop13 caps by using pass-through entities to own the buildings, and changing the beneficial owner of the real estate holding corporation instead. Plunging rents plus escalating tax liabilities seem like a perfect financial storm.
Oh relax. They're not going to implode the buildings and nobody is going too die. Rents will fall, some bond holders will default, but at some cost point that real estate has value to someone. Rents are not going to zero.
Basically this. Lots of people leave. Lots of companies go fully remote or are wound up. Lots more people and companies get more bang for their buck in the real estate market. Some real estate businesses tank. The market finds a clearing price.
There is a mass exodus of people from HCOL cities as jobs go virtual as well as a massive amount of office downsizing.
Residential real estate may be okay in the cities receiving this exodus in the South, Midwest, Texas, Idaho, etc. but as for HCOL cities I’m just not sure. There may be enough demand to at least cushion it.
Commercial will definitely be a bloodbath of epic proportions, especially in formerly hot markets.
Edit: too early for good stats but here are some cities that seem to be receiving HCOL expats as determined by the highly scientific process of observing anecdotes:
Phoenix, Santa Fe, Boise, Denver, Dallas, San Antonio, Austin, Atlanta, Cincinnati, Pittsburgh, Chicago... I’m sure that list is not exhaustive. Those are just some I have seen.
Those vary in terms of how not-HCOL they are but all of them are much less expensive than California, NYC, or the Seattle area. Much better places to live if you don’t have to live somewhere with $500k to $1.5m “starter homes” and other absurdities. Now that we are discovering that we can actually use this Internet thing, good riddance to that madness.
Housing prices are actually already trending back upward in the bay area. I don't think there will really be that much of an exodus. Your company might let you retain most of your salary post-relocation but once you change jobs you'll have far fewer prospects. Also the internet doesn't help with timezone differences.
House prices are being buoyed by insanely low rates, but if offices are downsizing CRE is toast.
As for tech hubs, they are now only economically rational if you are high up at a large FAANG or similar company that is able and willing to pay huge salaries.
Startups, bootstrappers, and labors of love are not going to happen there unless they are lavishly funded or only comprised of straight out of college folks willing to live on couches.
There's a lot of variation in that trend. Prices are up for the kinds of places you'd like to WFH indefinitely from (large detached houses in nice neighborhoods), and down for the kinds of places you wouldn't (shoebox studios downtown).
There is no evidence of exodus to other cities. There is exodus to suburban Bay Area where you can still commute 2-3 days a week and buy a 3k sq ft home. Bay Area real estate is no fire now with median price over $1mn and up 20% over last year
https://www.sfchronicle.com/business/networth/article/Bay-Ar...
How about Cape Town? Bali? Toronto? Athens? Rio? Remote work isn't even close to priced in yet and it's not the cost of living that needs to readjust - it's the salaries!
This has happened every few years in corporate real estate for the past half century (Sam Zell's biography is a good take).
Every. Single. Time. Valuations too high. Debt too high. Equity too low.
I am pretty cynical because I have read a bit too much history and seen this so many times working in investment management but...so what? Some rich people lose a ton of money...okay? Capitalism has losers. You lose.
Also, in the last crisis, a ton of people (particularly Blackstone) made a ton of money buying huge deals at the very top of the market. None of this excess came out of the market. Lots of people who borrowed tons of money were just able to take their paper to the Fed, and keep playing.
Point taken, but I don't think you're taking into account the monumental impact of COVID-19. We've never had such a large, immediate, and impactful shift to work culture.
Working remote was still a niche idea at the beginning of 2020, now it's ubiquitous. That has never happened before.
I think the shift to remote work is temporary. There will almost certainly be a relatively large crash in commercial real estate, but it will recover, probably within a year or maybe two.
A permanent shift of even 5-10% of the workforce to permanent remote (which _will_ happen; far too many people with negotiating power have realized that this is an option now) will drastically alter commercial real estate.
It doesn't seem that way. Technology is making it more and more possible, companies like Dropbox, which have never supported remote work, are even shifting over.
I'd bet within a year or maybe two tops that the vast majority of "permanent" remote companies will have reverted to be mostly or entirely on-premise again. One or two might last, but most won't.
Why do certain companies succeed as a remote company (Gitlab comes to mind) and others wouldn’t? I think you’re probably right, but I’d like to understand. Will working from home force a change in management style?
To compensate for lack of socialization in the office, I notice that companies like Gitlab organise corporate gatherings were all employees can meet in person. Open Source projects teams meet at (the fringe of) Fosdem and probably at their yearly conference a second time.
1) size
Non-linear diseconomies of scale mean that all other things held equal smaller companies are more likely to be able to pull it off than larger companies
2) first mover / selection
I’d guess that there’s a relatively small fraction of employees that can be competitively productive in an indefinite WFH scenario. Companies that were always remote first and got there before everyone else were able to pick off these outliers. Companies trying to convert to it have the luck of the draw and further as the market saturates everyone will have a harder time chasing after these few.
Agreed. Very hard to estimate that effect. With corporate real estate, it is inherently local (you cannot export an office) so the question is about the swings in vacancies.
Have some markets seen ~15% vacancies before? Yes, corporate real estate is very cyclical, no-one builds for years, and then the market adds 40-50% in a few years. But when it gets to 30-40% then you are probably looking for examples outside the US...and SF will be the worst-hit market, others should be less.
But...the world will move on, write down the value of property, assign losses, pay off remaining creditors, the world moves on...I don't think anyone could say a fault of the last ten years has been that shareholders/creditors were forced to swallow too many losses. The strength of a capitalist economy is that losses can be assigned quickly, and everyone moves on...in theory.
You're right, things will move on, and I am not (personally) all that worried. Nor are the creditors who can afford to eat a loss.
My concern is more about the ripple effects. Many low-skilled workers rely on service work, and servicing corporate real estate is a real industry (janitorial services, managerial duties, parking lot attendants, plumbers, even construction). They are already having a pretty hard time of it, and if this industry vanishes, "moving on" may mean going out on the streets. San Francisco, Los Angeles, New York, and San Diego have enough homeless already.
> I wouldn't be surprised to see established companies expand on cheap real estate and start offering closed offices to employees.
As much as I like closed offices, I think that companies that want to save money still won't offer them. The cost of closed offices isn't just more square footage; they also incur construction costs that open office space don't: walls, doors, their own heating/cooling/ventilation ducts, their own lighting and electrical wiring, etc. And an office layout with closed offices is more expensive to modify.
Warehouses is another one (in addition to coworking). I am not sure how easy it would be to rezone (some places have an industrial category that is separate from office/residential) but being able to fulfill orders out of city-centres is obviously attractive (but debt and equity would go to zero then, you could probably maintain prices with coworking but warehouse space is going to be a 90%+ loss).
Remote work is ubiquitous among jobs that can be done remotely. In reality, something like 30% of the US workforce has been remote due to COVID-19. That's not a small amount, to be sure, but that's hardly ubiquity.
It seems unlikely that a commercial real estate crash wouldn't have second-order effects on residential. After all, if none of this commercial space is getting used, there is less of a reason to be interesting in the residential housing that surrounds said commercial space.
Depends on what is meant by "commercial". If we're talking about retail and restaurants and bars, then sure, the loss of those things will make it less attractive to live in/near those locations.
But if we're talking about office buildings, and the reason for the collapse is because people don't need/want offices at all (not because those offices are moving elsewhere), then I think it'll have a much smaller effect on the residential markets.
What I think has a higher chance of hurting residential markets would be hiring moving away from HCoL areas because companies believe that most workers can be remote (and workers in LCoL areas are cheaper comp-wise). That hiring movement already seems to be happening, though SF home prices haven't changed much. There might just be a delayed response to that, though.
We're seeing a shift in demand across different sectors of the real estate market, not a destruction in demand. The market for office space is cratering, as is the market for 1BR apts/condos in dense urban cores. But most of the people who would've occupied those buildings are still working, they're just working from home. The market for SFHs (particularly large suburban ones with home offices) is exploding. I'm seeing some in Mountain View and the SF peninsula go for ~$350-500K (up to 15-18%) over asking.
This is mainly a concern for one year leases that were renewed this March/April/May, which won't be renewed in 2021. There are many companies which budgeted for a few weeks or months of work from home, now they're transitioning permanently and the office space they were using is no longer needed.
One year leases on commercial office real estate?!? That's unheard of around here (Boston). You'll be lucky if you find a commercial landlord who will rent to you for 5 years instead of the more usual 7, 10 or 20.
Sorry for my lack of semantic nuance. Most of the leasers rely on payments from their subletters to pay their leases, so the effects will translate over in either case, just with more "buffer time".
There are also a fair amount of 1-year direct commercial leases, depending on the area.
But the decision to terminate happens when the lease expires at any point after the pandemic happened, not exactly as the pandemic started. If you signed a 1-year lease in 2019Q3 and then realized that you're going to permanent WFH in 2020Q2, you let the lease expire in 2020Q3 and count yourself lucky. So the impact of this should be spread across the year following lockdowns/wfh, not all concentrated in 2021Q2.
Of leases 24 months long the average lease should be 12 months in right now (given steady state). I.e half of them expire in a year. Lets say that they realised this summer that things will be different then the effect should gradually start to show almost immediately.
I think that was GP’s point. We have a few one-year leases on small spaces, but most of ours are 5 year leases, usually with renewal options, sometimes with break options (for $$) at 3 years.
Yes, and we are seeing it, but there are many leases continuing until Q2 2021 (and beyond). The past few months have seen a slow and gradual decline, but a fair number of leases are still being paid and are locked in. Q2 2021 is when that decline accelerates and drops off a cliff.
I think the data from the article on subleasing really supports this. The absolute explosion of all this unused office space available for sublease means there are already loads of companies who wish they could escape their rent payments, and very few of them will probably want additional space any time soon.
Don't know squat about corporate real estate, but why would lease terminations occur en masse in Q2 2021?
I would expect that a sliding window of leases would be expiring all the time, and that the bloodbath would be slightly more gradually occurring right now.
What is normal? If companies can be as productive (or close ) without the expensive office space - would they all go back to what had been considered “normal”? I doubt it.
Same in Boston —- the office space market is a bloodbath. I have little knowledge of the commercial office space market but it’s not difficult to imagine how mass defaults in this sector could trigger a crisis.
I tell you what: if that comes to pass and I'm working remote, I'm looking forward to getting a sweet lease on a 150-200 sqft solo office with a nice view.
I looked at various online domains a few years back, and STL Fed publishes far more articles than the rest of the Federal Reserve branches. ~106k STL vs. 6--8k for others. federalreserve.gov publishes about 1/2 what stlouisfed.org does.
I'm excited by the idea of permanent remote work and moving somewhere more affordable. I moved to SF relatively late in my career, and only realized afterwards that I have nowhere near enough savings to own a nice home here.
But most of my coworkers seem eager to return to the office. They miss the office environment, the perks and catered meals, and the socialization. And the managers, who subsist on meetings and in-person interaction, seem even more anxious to get everyone back to their desks. The powers-that-be probably have personal motivations for keeping everyone here as well (e.g., many millions of dollars tied up in their homes, which could lose significant value if the housing market deflates).
All this is to say, I'm skeptical that workers won't be called back into the office as soon as leadership gets the chance.
I agree, but with a caveat. The _very_ top execs of large organizations (Google, Facebook, etc.) may be anxious to get to a lower-salary environment, and remote work may be a necessary part of that. If they are determined to move to a structure where they don't have to pay SV salaries, they might overrule their middle-management and extend remote work in order to facilitate that.
This is a very underrated comment. Many people romanticize the work from home no commute in a rural area, but do not be surprised to find corporations taking advantage of your new found anchor.
Also consider the expanding talent pool and competition. I live in Michigan. I would love to work with Microsoft or Google, because they do some very interesting work. However relocating across the country, away from established friends and family, isn't something I can currently consider.
Average developer salaries for my area are between 60-100k, so if Microsoft can offer 120k+, a lot of (great) devs in my area would probably take that. Local devs get better wages, and companies save some money.
However, they could also outsource to India for even cheaper results, but who knows how well that will go.
Having been present for outsourcing attempts that went badly, I can say that generally they will not (did not) go well. I don't know if it was that the devs were not good, the communication loop was bad, they were supporting too many outsourcing customers at once, or what. But, on multiple occasions I've seen it not turn out well. That ship sailed long before the pandemic.
So, the question is, will it work any better in Michigan? Quite possibly; the timezone and language differences are much less. Plus, if you worked for Microsoft or Google, you probably wouldn't try to also work for 2-3 other employers at the same time. But, if the issue was simply that remote work impedes good communication, the results will be similar.
My guess, it will sometimes work. I guess we'll find out soon.
> And the managers, who subsist on meetings and in-person interaction, seem even more anxious to get everyone back in their desks.
I recently quit my job so I could stop being a manager and return to IC, exactly because of this. In a WFH climate managers have to work twice as hard to stay competitive in the political games.
Effort and business utility are not necessarily linear. For argument's sake let's assume they are. A manager affects the productivity of all of his/her reports. Let's say a manager has 10 reports. If the manager stops working twice as hard, maybe all of the manager's reports would become 1/2 as productive. That means the manager's 2x work provides the same business utility as 5 ICs.
Lots of people in a business aren't submitting code, but that's not really my point. Depending on a manager's style they can increase synchronization overhead between team members and different teams to the point that everyone's productivity is reduced while the manager has never been busier or productive on paper.
A manager's productivity IS the team's productivity, and should be measured in results.
A "productive" manager that slows down the team isn't an effective manager at all, no matter how hard he or she is working.
The manager might be able to scapegoat a poor team member or two when poor results become evident, but sooner or later, he or she will have to pay the piper.
> All this is to say, I'm skeptical that workers won't be called back into the office as soon as leadership gets the chance.
That forget the leadership on top of that leadership though!
Where I work, before covid they were working on expanding quite a bit the amount of office space but as far as I understands, all theses plans got cancelled and instead we won't have permanent desk and instead we will works remotely 2-3 days a week. That's coming from a company that had literally no remote works before Covid (except while travelling).
It represents so much money to have less office space, as long as the manager doesn't play too much with their staff efficiency during Covid, it will just make sense to save money there.
Working from home 2-3 days a week is not what I would consider "remote work," since you'd still need to live close to the office.
From my perspective, this is worst of all possible scenarios. Employees are still shackled to an expensive city, but now they must pay for housing that supports a dedicated "home office" space (e.g., a larger apartment with an extra room, or carving out part of their living room/bedroom). This is just shifting the cost burden of real estate from the company onto the employees.
I disagree. If I only had to come into the office, say, once or twice a week (3x might be pushing it) I'd be willing to live much further out because I'd be willing to tolerate a horrible commute if I only had to do it a small percentage of the time.
For example, in Austin, these days anything located within a half hour of downtown tends to be horribly expensive. But just go a little beyond that and house/real estate prices drop precipitously. You're going to see a boom in these exurbs as these "mostly remote" jobs increase.
Seeing those empty Walgreens shelves was it for me.
Even the social programs and tolerance of the squalor is not that real, it is simply that the transient population is not affected: students and programmers. The same population that just left.
I appreciate all the optimism for San Francisco but it just seems to lack context from the mid-atlantic cities that are carcasses of an industrial era which never returned.
The brick and mortar boutiques were struggling there during the best market in the history of man kind.
This is more obvious to see when you leave. Its harder to see when your life is built around never acknowledging it and pouncing on everyone that says what they observe, on Nextdoor.
You seem to be hinting at interesting things here but its hard to follow, the writing feels like a disjointed short hand with unstated context that requires experience to unpack. What are "those empty Walgreens shelves", not having been there I don't know what you mean. Further, SF was not unique in experiencing that. I experienced it in North Carolina and Utah. What do you mean "squalor that is not that real?", what is the "context from mid-atlantic cities" and how is that relevant or informative to SF in particular? What is obvious when you leave? Where did you go and what did you experience?
It might require the added context of living here.
San Francisco has one of the highest property crime rates in the United States [1], and Walgreens is a popular target of shoplifters, who regularly clear out entire shelves of merchandise. The company hasn't come out and said it, but some believe that rampant shoplifting is a reason why eight Walgreens locations in the city have been permanently closed [2].
I have a family member who works at walgreens. The theft is incredible. In the bay area and particularly SF this is not one or two candy bars a week theft.
In SF, if you stop a shoplifter and they are hurt, if they are in a protected class etc, it's game over for you as an employee and possibly the store. Even if you stop someone, even if police come and arrest, DA is never going to prosecute. If they do prosecute, its a misdemeanor. It's pretty wild the first time you see it.
The clerks know who is coming in to steal. The stats above are from 2016. 2020 is worse, and much / most of the property crime goes unreported. If walgreens reported every shoplifting incident the numbers would be nuts.
For sure. But pharmacy is very competitive and at some point it's a losing game.
For example - Walgreen runs about about a 4% margin and profit runs about $4 billion (all very rough numbers).
The problem with theft is that its a total loss so it can really chop into margins - these are shelves that you build a supply chain and staff to stock and then get zero.
Someone walks in with a backpack and just fills it full (maybe 50 - 100 individual items). Meanwhile you have 20 customers buying a few items (1-5). So you sell 100 items at 104% of all in cost (4% positive margin) and 100 walk out the door (if only the knapsack guy steals) at 0% of cost. Your margin is negative immediately (-40%+).
Walgreens actually has budgets for theft store managers try to work with in (pretty high ones actually). But theft the way it happens in SF - you need to understand there are no consequence, the only folks to get in trouble would be employees trying to stop it.
It also drives away customers you do want (older people filing scrips will go to what are perceived as safer locations) and moves other sales to online / delivery etc.
They are robbed while TV crews are filming about robberies :)
SF talks a lot of crap about Amazon, but if amazon offers a safe / delivery to your garage / car / inside door pharmacy service it could be game over for a lot of players.
Proposition 47 essentially decriminalized shoplifting. Californians literally voted for this petty crime wave. As a Florida resident, all I can say is, y'all have fun with that
When I read about them moving to states like Texas in numbers, all I can think is that they will inevitably try to take these same policies with them when they find out wherever they moved too isn't quite liberal enough
Seems like a large portion of people in this thread at least are more concerned about lowering cost of living while still being in a large active city than about local polotics, even if those things do tie together
take the bay area salary, work remote in texas/arizona/nevada because its cheaper and rationalize it by saying its the politics thats making me move.
i've had this conversation 5 times this week with friends and colleagues, and none of them have actually spent more than a week in texas/arizona/nevada.
anyone that wants to live in one of those states, try it for a couple months if you can before taking the dive.
I think you're totally right in some capacity, but there's also a lot of people who are excited to get away from the hyper-liberal climate of California.
I guess it just depends on California's vs Texans definition of hyper liberal. I don't know what level of liberalism it would take to get dislike from the average Texan but I know it has to be miles away from declaring that arresting shoplifters is racist.
Interesting. Is it possible that this is also due to the policy of many states and cities of sending their homeless and mentally ill citizens to California on on way tickets?
The author is referring to the rise of crime and homelessness in San Francisco. The Walgreens comment is referring to how several Walgreens are shutting down in San Francisco, partially because they have been unable to stop shoplifting.
Many San Francisco residents are very opposed to any language that smacks of anti-homelessness - arguably anti-homeless language is promoting systematic racism - which encourages a certain crypticness in commenting.
Thanks for elaborating, for others. Yes, the residents enable the squalor and I have no better solutions to offer them, but I am able perceive that the collective opinion of the residents is a byproduct of a largely apathetic transient population that masquerades as a progressive movement, while not needing to live with the results.
I can recognize that it is incapable of creating a more collaborative and sanitary urban environment, and that's just not worth paying for.
Please don't be rude in comments here, and please don't pile on.
digitaltrees' reply gives vmception a nice invitation to expand, which would benefit all of us. Swipes like the one in your comment unfortunately have the opposite effect on conversation.
Hard to know exactly what you mean, but you might be misreading our intent here. The intention is to optimize the site for curiosity: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor.... We've learned a lot about how to do that over the years. Swipes lead to flames, flames tend to spread, and that whole approach to internet discussion is definitely not good for curiosity.
The empty Walgreen's shelves can be seen at the Walgreen's on the corner of Eddy and Van Ness Streets.
People come in & take whatever they want because they know Walgreen's has a "no contact" policy (they won't stop you). They shoplift everything. And Walgreen's doesn't rush to re-stock.
There are a lot of homeless and drug addicts in that area, but I don't know firsthand if they're the shoplifters.
I spoke to a police sergeant at the Walgreen's at Broadway and Polk, and he said it's pretty bad, and that even he has a hard time getting the shoplifters to stop.
> The empty Walgreen's shelves can be seen at the Walgreen's on the corner of Eddy and Van Ness Streets.
It won't be a problem much longer – that location is going to be shut down permanently.
Shoplifting has been a problem here even before Covid. Shoplifters know the law (<$950 is a misdemeanor), they know the police likely won't make an arrest, and even if they did, they know our DA likely won't prosecute.
Seems like a really simple solution, revert drug stores and retail to the old behind the counter model that dominated in the 1800-1900s. You walk in, go to the counter and ask for for specific products rather than being self serve. As a few kiosks to order and a few pick up windows; that would be significantly cheaper than losing this much product from shop lifting or closing stores.
Haha, I hear horror stories from my friends who are on NextDoor. At some point, a guy reported seeing a coyote on Lafayette park while walking his dog at 2am. You know, just being nice to the neighbors and letting them know to be careful about their dogs. Next thing you know, a bunch of people started questioning what he was doing 'so late' on the park, then other people started accusing him of being a drug dealer or some shit, one threatened to contact the authorities... WTF? It's like Facebook boomer threads on steroids, but in real life.
That's pretty funny, I've moved around SF and different neighborhoods had very different NextDoor cultures.
Some neighborhoods would never be accusative of a drug dealer, but would definitely like a review on the quality of what they are suspected of dealing.
Other neighborhoods would appreciate the warning about the coyote and move on.
That type of thing is exactly what I'm referring to. At its worst NextDoor is a social network for a clone army of Nosy Nancy. "Saw teenager walking on sidewalk. Suspicious. Noted, shall call police." Nosy Nancy lives a block away from a school and watched a student walking home after school.
Iterate ad nauseam for Goodwill donation trucks, VTA Lite Rail stations, recycling centers, whatever fits that neighborhood's definition of "undesirables" and what "attracts them".
Yes, there are good things regarding NextDoor and I have experienced some of them. However, in my experience the ratio skews poorly and towards suspicion and towards hate.
It's been a few years since I've been there and I have no regrets. On a nice day, it was a silly place.
I'll never forget the conversations I had with Uber drivers during my many trips there. Many were natives who were pushed further and further out. "Even out of Oakland" they lamented.
I imagine the non-transient population, as you describe, cannot wait for them all to be gone, and the city can get its soul back.
For those that think this is the end of San Francisco, take a deep breath. The empty office space and worries about expiring leases only applies to companies that can't work remote. SF has a huge service industry, swaths of culture, and some pretty nice weather.
A bunch of chair warmers and button pushers moved to Tahoe or Mazzula, so what? It is nice to have a huge house and some land, but city living is are a tradeoff. Living around a bunch of people means food, entertainment, and social options that simply can't be had from a Zoom room.
If CRE prices drop, the offices will still get filled to the brim with new companies in a couple of years. Will there be some CRE bankruptcies? Certainly. But has anyone looked at on time payments of office REITs? Keep an eye on those for dividend cuts as a predictor.
Thinking of starting a business here? I'll beat my drum once again -- it has never been a better time to setup shop here. Take risks when others panic.
Eras like this are about survivors. Anyone who was here in 2009 would prefer that era to dot-com 1999 or FAANG 2019. So as far as they’re concerned - faster, please.
Consider this a test whether you are a Californian or San Franciscan or someone from somewhere else here to rake in the google dollars. If the latter, I’m sorry your demands were not accomodated. Enjoy the farm in upstate NY or the frowns you get in Tahoe or Austin.
Austinite here who moved from New York, and previously from California. People actually talk to you out here in general and have been nothing but pleasant. There's also far less of a homeless issue and you can actually buy a house with a low six figure salary. Austin is great.
"I don’t think everyone who lives in San Fran wants do life in San Fran. They’re here because that’s where the jobs are."
I live in San Francisco and I want to do life here. I moved here very specifically to set down roots and raise my family in the SFBA.
I have the option to live anywhere in the world and I believe that the confluence of the west marin national seashore and the city center of San Francisco is unique in all the world for contrasting landscape, and energy boundaries, all within fifteen minutes driving.
On top of it all, Squaw Valley - the set location of all my childhood ski heroes - is just three hours away.
> I moved here very specifically to set down roots and raise my family in the SFBA.
To a raise a family, you moved to a city with more dogs than children[1] and more drug addicts than high school students? [2] Or are you planning on moving to Marin County (close, very expensive, very nice), one of the southern suburbs (close, expensive, not nice), or Dublin/Pleasanton (far, less expensive, nice) once the kids are born?
Seriously asking. (About me: I prefer dogs; If I have a kid I prefer my kid hang out with dogs; my extended family is spread out in the SFBA from Daly City to Dublin; I grew up there; I left; I miss the weather).
Sure some people live in SF because they want to be here. Others live (in my case lived) there because of a job. I don't care for SF the city, but I do like the greater bay area.
Having said that, your driving time estimates are incredible optimistic. Squaw is not 3 hours from SF, not even with no traffic (this scenario doesn't really exist) and good weather. Getting anywhere in the bay area also takes significantly longer due to traffic which is pretty bad most of the day.
> Squaw is not 3 hours from SF, not even with no traffic (this scenario doesn't really exist) and good weather.
I'm sure this is mainly due to the pandemic, but I just drove back from there last month (slightly farther than Squaw, actually), and it took 3 hours and a single-digit number of minutes. Hell, the travel time Google is showing from Squaw right now is 3 hours and 9 minutes.
I do agree that's atypical. But... so what? "Correct" the parent's statement to "4 hours" and the argument is just as valid. Seems like you're nitpicking and missing the forest for the trees.
Yes, I agree that most major cities have these things, but I truly believe the SF Symphony is special, almost as brilliant as the NY Philharmonic.
They regularly host top performers from around the world -- Itzhak Perlman, Gustavo Dudamel, Yuja Wang, and so many more. And Michael Tilson Thomas is a treasure. Anyway, I can ramble about this forever and I appreciate the response :)
I wish I would've went to one, I think my wife was slated to go since her company was sponsoring the symphony. I'm a casual classical music fan. I play some violin and have played in symphony before, watch TwoSet, and watch stuff like Ray Chen and Hilary Hahn. I wanted to become part of those public drop-in symphonies too.
There is a huge difference between being a classical music fan in SF and being a classical music fan in Denver or Kansas City. We're talking world-class performances.
This is either ignorant or disingenuous. There are plenty of us who live in SF and want to continue living here, and it has nothing to do with jobs.
I do welcome the departure of people who don't actually like the city and have been "forced" to live here due to their job. I feel like the city will be a lot healthier from a community standpoint with a higher percentage of people who want to live here.
My bigger concern with SF is property crime and homelessness. I don't feel safe in this city. It's been getting worse every year and there is no end in sight. Major conferences already relocated because of it.
The pandemic has managed to cure a few of San Francisco's ills. Rents and real estate prices are trending down towards sanity, the city/county government has managed to get a large number of homeless folks situated indoors, restaurants are getting outdoor seating space, and initiatives to massively reduce the amount of red tape small business have to work through are getting fast tracked. All that, and the number of COVID-19 cases and deaths are extremely low relative to the rest of the country, even as businesses re-open. The post-pandemic San Francisco has a decent shot at being a livable city again (though the property crime problem isn't yet on a path to being solved).
I agree on most points. My guess is that some homeless were put into hotel rooms, which is why there are fewer on the street. I don't know how sustainable that is or what will happen when the pandemic is over. Will they be allowed to stay there indefinitely? Who will pay for all that? I have a hard time believing that the homeless population actually decreased during COVID with all the generous social programs going on.
I live in a state where we are suddenly inundated with California’s refugees, fleeing the state now that they don’t have to physically live there. Reasonable taxes, a much less stressful work-life balance, bigger homes all make it very appealing to ditch the once0golden state.
Our company has decided not to reopen a majority of it’s office space. Ironically, the Bay Area office is remaining open while other offices are being closed, but even there it will be a shadow of it’s former self
I would like local and federal governments to come up with a plan for the inevitable bail out that transforms some of this space into more livable space, more community access, and more on-demand office space.
Apple’s HQ has turned into the worlds largest set piece for a iPhone ad.
San Fran is going to come out of COVID dramatically weaker. That’s been inevitable for a while, the pandemic just accelerated it.
I can't help but think this take is projecting a bit too much.
Inundated? How so? What are you seeing?
Tax benefits, work-life balance and bigger homes? Really, you can see these changes in the last 6 months of a pandemic? I could be wrong but I don't think the majority of employers are letting employees change states (and state taxes). WFH does not mean work from anywhere, especially tax-wise.
This all sounds plausible longer term but to say you're inundated seems like it must be hyperbolic.
A majority of tech workers in California are from somewhere else, who came to California for the opportunity. They know what it's like back home. And yes, especially the 30-somethings with kids, they're leaving
I'm not saying there isn't some desire among employees but most companies do not want to pay taxes in 50 states. I don't think the vast majority of workers can simply move without changing employers.
> but most companies do not want to pay taxes in 50 states
Surely not but I would wager that most employees work for companies that already have multi-state (and in many cases multi-national) operations, and therefore have the administrative infrastructure to support employees in arbitrary states.
You are an engineering manager for XYZ Corp. Your boss asks you whether employees should be able to work out of state, and still be equally productive.
After during research, you come to the conclusion that yes, productivity won’t fall. However, you note that finance has flagged the payrolls issue.
Your boss tells payroll to sort out multi state taxes.
And if anyone reading this is thinking of doing this, really research the taxes. For example if your company does not have an office presence in the state you move to, you will pay state taxes for both that state and California. If your company gave you any stock related compensation, California wants a piece of those too, even after you've moved.
Not OP, but I know three different families who are actively visiting other states to decide where to live next because they so loathe Newsom and the California governance writ large. They never liked it, but the wildfires, pandemic response, and ability to work elsewhere pushed them over the edge.
Yea, I would leave the Bay Area in a millisecond, but only if I could still keep access to the Bay Area job market as a remote employee. There are plenty of great places in the USA without the crushing taxes, endless commutes, and one-sided politics of CA. I would gladly accept a "cost-of-living adjustment" to my salary if I could work from home in NV or FL or something.
Stories about problems in California get a lot of clicks, so people see a couple week’s worth of bad news and think the state is on fire is ways that aren’t due to actual flames.
It takes some time to get a feel of the culture of a new place, but trust me as someone that has lived in a few other states, it eventually makes a big difference. California has dramatically out performed other states, and is more expensive because it was working, in part because of the culture that is unique to California.
I live in NYC and lots of friends have left town for upstate New York or similar places. But I'm waiting to see how great they think these places are after they have eaten at the same 5 restaurants for a year. And once live culture returns to NYC and other places, how will they feel then?
Of course, the other way to look at the de-campers is that they were going to move to the burbs inevitably. Which good for them, but cities are injured, not dead.
I feel like comments like this often lack perspective. Upstate NY, especially Buffalo and Rochester have plenty of things to do in them and far more than five restaurants.
It strikes a nerve with me because in Massachusetts a similar sentiment is expressed by Boston-Cambridge folks about Lowell, Worcester, and other periphery cities. Its simply mot true that these places are devoid of culture snd cuisine and in the age of Yelp and Google Maps it takes almost no time to find it.
As someone who moved from a large small city (300k residents, 100k students, 300k daily commuters) to San Francisco ... yeah the density is totally worth it. Back home we had restaurants and cuisine and all that. It wasn’t a wasteland.
But SF has more high quality restaurants within a 20min walk of my apartment than my hometown had in total. Average restaurant quality is higher too. Just because there’s more competition.
Another fun example: in SF we have 5 grocery stores within a 10min walk. Back home the nearest grocery store was a 3min walk away, great. But the next one after that was 10min. To get to a proper supermarket size grocery store ... that’s a car trip. In SF it’s a 15min walk.
Density is wonderful. There’s economies of scale that you get at 18,400 people per square mile that you just can’t pull off at 4,500.
The ultimate test for a city is this: Do you have 5 “asian restaurants” or do you have 5 south vietnamese, 3 north vietnamese, 10 cantonese, 5 ramen, 6 japanese grill, 3 sushi, 4 dimsum, etc
For example back home we had the mexican restaurant, here you have 10 for each type of mexican food.
The way you feel about SF vs your 300k residents town is how I feel about Tokyo vs SF. When I'm in SF it's sad how few choices I have and how bad most of them are. And all those asian restaurants you mention are not remotely "good". You can find a few descent asian restaurants in the south bay like say Fremont but LA does them all significantly better and in far higher quantity
I find Tokyo far more walkable than SF. I don't like the public transportation in SF. It's dirty, gross, and slow and have to walk over homeless people and smell piss everywhere and even without transportation most areas in Tokyo are super walkable with access to almost everything you could need just a few minutes walk away.
I'd say Paris and London (and most > 1m people cities in Europe and many in Asia) are also more walkable than SF.
I fear this is exaggeration. San Francisco has a few nice restaurants; but many, more affordable cities do just as well or better. The problem facing SF restaurants is the economics: it's so difficult to afford a place to live there, that kitchen staff definitely can not afford to do it. Combined with the relatively poor access story -- it's surrounded on 3 sides by water -- it means the core staffers have to be recruited from hours away, two hours or more. Restaurants definitely got worse in the last few years that I lived there (up until early this year).
There are exceptional cuisine resources in San Francisco, and amazing grocery stores, like Bi-Rite and Rainbow, but as a whole the situation neither benefits from the culinary community that it used to have (how many people have moved away) or from the kind of consumer that it used to have (well to-do kids just out of Stanford or a midwest school are not people who know what buffalo mozzarella is, or why you'd want to buy it, but their money rapidly became the only money that mattered).
You’re right what counts as “nice restaurant” depends a lot on perspective.
So here’s some perspective: My entire home country has 6 Michelin star restaurants. Of those, 1 is in the capital which is the home town I’m comparing above.
Whether that means you're eating better food on a regular basis in SF than in many other less dense urban areas in the USA (nearly all are less dense) is a different question, though: and the truth is, you're not.
Places with stars don't have the economic situation I discussed: they have the money to really go beyond their surroundings.
The thrust of my argument is that there’s more of everything in a bigger city. As such you have more options and more competition.
The competition means that a lot of places scraping by in smaller cities can’t make it in a bigger city. In theory that means median quality is higher.
And even a 3-star restaurant won’t survive in a place that doesn’t get enough well-to-do visitors to sustain it.
For a more casual perspective, SF has 126 restaurants on the Michelin list (not all hve stars). My entire home country has 52.
None of this speaks to whether or not SF has more to offer you than other less dense cities in the US, so many of which have excellent restaurants and, indeed, better restaurants. I was very impressed with the food in Austin on a recent visit, for example. Perhaps if SF had continued on the high density curve while maintaining affordability (as Tōkyō has done) it would be a different story.
Quality food has more to do with agriculture and supply chains than money or density per se -- good salad is not something you can buy if no one is growing it -- and more and more areas in the US have made the transition to that kind of farming and production.
Now challenging SF on grocery stores -- that's another matter. They are drawing on deep roots, there.
The reality is, unless you're really in the sticks, there are probably some reasonable, if not pretty good restaurants around. Case in point: Amherst MA, college town, tons of great restaurants that probably equal Cambridge or Somerville (not in quantity, but maybe quality). Also some pretty interesting places in both Holyoke and Northhampton MA.
In fact some of the best food & drink I've had was in parts of Nebraska & Missouri and Wisconsin. You absolutely don't need to be in the city to get good food & entertainment.
I think the grandparent is probably referring to upstate in the Hudson Valley sense of the phrase. Plenty of cute towns, but Hudson / Woodstock / Kingston are definitely in the O(tens) of great restaurant options, comparable to a slice of any single Manhattan / Brooklyn neighborhood most tech people live in.
That’s an interesting observation that’s normally only made about political affiliations.
I wonder if there is precedent with the migration out of NYC and the like in the post-WWII/mid Century period. It was a real boom time for the West...California in particular. A lot of folks came from back East or the Midwest...
Not many tried to explicitly recreate their East Coast/Midwest life in the West...in fact they made a point of trying to create a unique California “lifestyle”. That new California lifestyle was the hot US cultural trend from, say, 1960 to 1990.
May happen again, but in the reverse direction, Californians creating a new Montanan/Utahn/Ohioan/etc. culture by engaging in the roots of their new not-California and building something better, bringing their creativity while leaving behind their California. Of course, if they try merely to graft a California-lite onto their new rootstock...well, they could be an important new source of protein for the locals...
I don’t think this creative dynamic could happen in other “tech hub cities”, because, frankly, there is no essential culture there to work with. Austin may be nice, but it seems more parasite on Texas culture than symbiont.
(Which has been a slam against California over the years too. What’s the difference between California and yogurt? Yogurt has an active living culture. More people outside of California believe that than you might think. It’s been 30 years since CA has been a dominant nationwide cultural thing, Hollywood as almost a metaculture notwithstanding. Silicon Valley? That’s getting onto 25 years old now...that’s senescent in US cultural terms.)
haha.... here you are posting on a California based website/forum, and pretty much use California based products without even knowing (facebook, reddit, google, youtube, iPhone, Android, Macs), they are all California culture, in digital form.
CA, like it or not, has an outsized influence to the whole world, to the point that it kinda becomes 'undistinguishable' as it is everywhere. I am talking about tech/SF/SV and Hollywood. They have risen to the 'metaculture' level which few places/countries have.
ps, HN, reddit, FB, started in the east coast, but had to move in the west in order to flourish. Same with the Movie industry. It started in the NYC and New Jersey suburbs, but had to move West in order to flourish.
Haha... What is California culture in digital form? I remember being 16 and posting this rant but substituting "USA" for "California". Gotta make sure everyone knows my group is the best!
Nah, the spending power of the federal government, and the tax collection of the federal government are not linked.
So long as the fed can print money the federal government can spend. It cares not about the states or how much income tax flows in. Hence, it can run up structural deficits until faith is lost in the $ (inflation).
State governments, on the other hand, cannot print money. They must operate in a zero-sum mode.
Yes, the federal government could bail out state and local governments (and indeed that’s some of what the Heroes Act does – passed by the House in May).
But the GOP Senate intransigently refuses to act or even negotiate, and so state/local governments are getting crushed.
Define "reasonable tax rates." I'll tell you this: states where there are very low taxes (e.g. no income taxes, low sales/other taxes) tend to be net takers when it comes to federal dollars: they get more from the federal government than their populations pay in taxes. States like California are net givers: their populations send more to the federal government than they get back.
As a bonus irony, the "taker" states also tend to house the most vociferously free-market/anti-government types.
- Connecticut (- $4,000)
- New Jersey (- $2,368)
- Massachusetts (- $2,343)
- New York (- $1,792)
- North Dakota (- $720)
- Illinois (- $364)
- New Hampshire (- $234)
- Washington (- $184)
- Nebraska (- $164)
- Colorado (- $95)
And these are the top taker states:
- Virginia ($10,301)
- Kentucky ($9,145)
- New Mexico ($8,692)
- West Virginia ($7,283)
- Alaska ($7,048)
- Mississippi ($6,880)
- Alabama ($6,694)
- Maryland ($6,035)
- Maine ($5,572)
- Hawaii ($5,270)
The majority of those top taker states are under Democratic Party control, and 40 out of 50 states are takers of federal dollars, so I don't see much evidence for your point.
Virginia/Maryland are a special case, since they are immediately adjacent to DC, so are home to a large number of federal workers. New Mexico is impoverished and filled with elderly retirees, and also has (relative to population) a large number of well-paid federal workers at Los Alamos and Sandia national labs.
In every state though, rural and ex-urban areas are subsidized by federal and state tax revenue coming from cities.
The source of your data is a SUNY Rockefeller Institute of Government report: https://rockinst.org/wp-content/uploads/2019/01/1-7-19b-Bala.... Scrolling down to page 14 shows a nice visual that completely supports my contention. The two surprises to me are ND and California, but the rest essentially show that taker states tend to have higher populations of individuals who are opposed to the federal government spending money ("anti-government spending").
Thanks for sharing this. What I see on page 14 is a map of the same data I shared. It shows that there's a small number of net producer states, and a larger number of net takers. If you look at page 17, you'll see that most states actually fall into the low tax and low spending quadrant. So while they may need to raise taxes by some amount, they're hardly being hypocritical the way it seems you want to paint them.
Personally I don’t think “low taxes” are “reasonable”. We live in a complicated society and we all benefit when we collectively pay people to do a huge variety of important jobs which are hard to fit into a pure-profit system. Cutting funding for those exposes us to a wide variety of risks and eliminates many future opportunities, in the long term harming us all. The Covid pandemic is a perfect case study in the way that e.g. public health infrastructure, expertise, and political support can save hundreds of thousands of lives. (While we are talking about San Francisco here, it’s worth noting that SF and the Bay Area has done by far the best of any US city / metro area at containing Covid and preventing needless deaths of residents, despite some failure especially early to properly target testing resources toward poor/minority areas full of “essential workers”.) But infectious diseases are only one of the many risks that individual people cannot adequately understand and protect against on a personal basis, for which it helps to have collectively funded public institutions.
Instead of income or property taxes, some places raise money via sales taxes instead, or other regressive schemes. Some places raise money by questionable fines on their own residents. Some places make money off the back of wanton environmental destruction.
Some just accept shoddy local services. (When you compare the US to other wealthy nations, it’s really shocking how poor our basic infrastructure and public services are, even in the richest US states and cities.)
But most low-tax areas of the US are substantially supported by federal-level transfers, for example from federal highway budget, from military bases and defense contracting located there, from federal agriculture subsidies, from federal welfare and healthcare funding, from social security payments to people who retired somewhere different than they lived while actively working, ...
There are really two axes that everyone seems to conflate into one. There is funding, as in whether or not there is sufficient funding to achieve certain outcomes. Then there is competence, as in managing the resources to achieve certain outcomes. Both are necessary but neither sufficient by themselves, only together.
The U.S. seems to be stuck in a loop wherein the available funds are argued about endlessly, and everybody acts as if that's the only dimension about which to speak and win. Not nearly enough is done to boost competence in the government sector. I think this is plenty true even if we set aside the current U.S. administration in which a number of federal entities are headed by naked toadies (to be fair, it's certainly not true of all federal organizations even now).
I tend to agree with you that the U.S. is probably not taxing enough for consistently high-quality outcomes in areas where the government is responsible. Yet I'm sympathetic to those that point to places where tax rates are high and so is wastefulness. But when the only lever it seems that can be pulled is on the revenue/spending, it's no wonder the correlation between that lever position and good outcomes is low - it ignores the competence with which any of those funds are managed.
I think it's entirely possible to have competent government if that is made a priority and addressed with some flexibility.
There is a single problem with this line of thought: you cannot raise taxes over 100%. Yes, more taxes gives you better services and it benefits the society more (not the tax payer), so increasing the taxes is the logical way to go... until you reach 100% and you are stuck. At that point one can still argue taxes should be increased for better services, but it will be harder to do it. Then people will start thinking about how to limit the spending and how to get the most from less money, maybe even to reduction in taxes.
California refugees is a weird point to make (I know you are trying to make a political point here). But in my 13 years of living here, I have met only a handful of “native” Californians. Everyone is from somewhere else. And that’s what make this special. I have lived all over the world, and consider CA to be the best place in the world to live for me
North Carolina is decent. Made the move in 2013, been working for SF Bay Area companies since. Cost of living is very low, kids' education is decent (impacted by COVID-19 currently, of course).
As a homeowner in San Francisco... this is great. The cost of living has been too high here for ages, and the prices distort both our society and the economy. It'll be rough for speculators, but in the medium term everyone will come out stronger.
After the pandemic, we'll have the chance to see real businesses start here that don't rely on giant checks from VCs for viability; new restaurants will see more opportunities to take risks, as the cost to rent will collapse; and we'll end up with people moving here who want to live here, not those who despise the city but feel compelled to move here in pursuit of the almighty dollar.
I encourage companies to continue to support remote work. And, if you do hate the city, please leave, move to Boise, and let people in who will appreciate it.
It's funny you mention Boise; that city, and many parts of Idaho/the west, are undergoing their own insane housing price inflation at the moment that's surging through the pandemic; real estate prices are a serious problem in a lot of places that aren't SF/NYC.
Only SF residents can say and mean this, no city wants jobs to go away. It is not just jobs you don't like that goes, those jobs support and pays for a lot of other jobs in the area. They also a pay lot in taxes which keeps the city running
Ghost towns are not the same small towns. Larger cities become ghost cities not go back to being smaller.
SF is lot more likely to become Detroit if businesses leave, everyone should worry about that.
SF won’t become Detroit. I credit SFs culture for a lot of the innovation seen here. Not sure if it’s gold rush energy or what, but there’s an unparalleled optimism and just people looking to reinvent themselves.
It has actually happened before in San Francisco. 100 Van Ness was reskinned and renovated into a 400+ unit apartment building from its previous use as an office tower: https://socketsite.com/archives/tag/100-van-ness
This problem is entirely of the Bay Area’s own making. They have been pursuing exclusionary housing policies while cranking up taxes and spending for a long long time. Now the revenue base for those taxes are collapsing at the exact time they need the revenue to weather the storm.
SF literally created the first zoning laws in America. Nothing that's happened there in terms of zoning and real estate cost is an accident, it's a natural result of politicians and citizens valuing real estate value above pretty much anything else.
I think you would see this occur. As inflexible as local government tends to be, they get the idea pretty quick when rich people start losing money. Where I am, tbf I am in the UK and the rules are likely nowhere as inflexible, but property is being rezoned (and green zones are being built in, all the apparently immovable shibboleths of local govt are tumbling).
Many of them can't because they don't have sufficient plumbing everywhere (apartments would have far more bathrooms and kitchens) and most buildings can't be retrofitted.
Plus, land-use laws would have to change, which is also extremely difficult.
I guess they could make bigger apartments if they are bottlenecked on plumbing.
But I wonder what people could do with commercial office space so cheap? For startups that can't really go 100% remote (mostly hardware) that's a dream come true!
The UK authorised this, years ago, because it's obvious that our economy is transforming so that fewer shops and offices are needed but the population is still growing.
The homes built under these rules are generally poorer quality, they tend to be smaller and more expensive to run than an otherwise equivalent new build home. But they are homes, and it's not as though San Francisco has too many of those.
At the extreme of what can be done, Birmingham is a British industrial city, and once upon a time as it began to take off there was enormous pressure to build homes so they constructed what were called "Back to backs". These were groups of homes packed together "back to back" so that you only had windows facing out one way, the other three sides of your home were walled in by other housing. They were squalid and almost all of them were torn down, although the World Wars diverted resources so that the last of them ceased to be homes only in the mid-20th century.
But historical preservation means Birmingham still has one set of Back to Backs, most of which is a museum you can tour to see how they were lived in during different periods, but one home was instead converted into a fairly nice two person overnight apartment you can hire. They plumbed a modern bathroom with shower and toilet, kitchen and so on, and of course in the 21st century we can light interior spaces cheaply and easily so it doesn't feel permanently gloomy, also of course it's just one couple in a double bed for one or two nights, whereas these would have been homes for families of eight people for a lifetime...
So yes, if there's money you can add everything. A Back to Back as constructed has zero running water, let alone sewage, unlike an office building so they'll have had to use modern narrow bore sewage pumping and other expensive tricks to make it work, but if the building would otherwise sit empty...
Ive been told in a lot if cases this is virtually impossible due to cost and structural constraints of office construction vs residential... notably ceiling heights, plumbing and floor plans are poorly designed for residential conversion.
England's experience with it should probably serve as a warning too. We had a law change that meant office blocks could be converted to housing without planning permission. Having lived in 1 that was converted into studio flats at the higher end of the market I think they really become houses of last resort, some of the units in the UK ones ended up being smaller than a single car garage. Obviously there are chances for better conversions if the country has housing standards that are enforced but even the ceiling height, like you say, gets oppressive after a few months.
So, I know you were joking but this idea has more than a little validity. In my vision, it would be a small group of families that would meditate daily together, and collaborate on chores and child-raising, and (this part I haven't figured out yet) work on the same project, or perhaps WFH on software-like things. Ideally there would be daycare, gardening, and some sort of exercise (yoga) involved. I mean, yeah its easy to imagine how such a thing could go horribly wrong - bad actors taking advantage, cult-like groupthink, etc - but its also easy to imagine what it would be like with the right mix of people being good to each other. Maybe call it a "Sci Fi Kibbutz" or something.
What you describe is basically an intentional community with a revenue stream from a software product. Something I'm interested in, but unsure how to make it work.
There are intentional communities that support themselves with their own, often agriculture based, products sold on the open market. Plus the usual homesteading.
The skills needed for this kind of work are not highly specialized and in general not well paid, therefore levelling the playing field for everyone in the group.
I think the opportunity cost for IT professionals building a SaaS to support the community is a lot higher, and while I would love to see that work, the chances of key community members dropping out to make more money for themselves is fairly high. I'm not sure if a simple time based system for everyone involved is fair, given the high upfront investment to get the skills needed for IT work.
Right now it isn't -- if you look on Zillow, apartments are in places about 10 deep trying to be rented. There are also a bunch of new apartment buildings that came online, and are sitting basically empty.
But yes, your statement is true. What SF needs is a revamp of its zoning and "neighborhood preservation" policies that are not setting it up for resilience against things like this.
It's likely only partially temporary. Many companies were already decreasing hiring in the bay area pre-pandemic. That will only continue as other places are much cheaper.
Between the high tax corporate rates of SF & California along with increased salary due to cost of living, an SF-based engineer must produce 2x as much output as an engineer based elsewhere and 3x as one based on Canada.
They've certainly been dropping, but 30% off their highs is still not even remotely affordable. And it's unclear if these price drops will be permanent, or if prices will start to bounce back once COVID restrictions are gone.
Before covid rents in SF were among the highest in the world, which implies very high demand. I’m confident that many people still want to live in SF, e.g. single people like to cluster next to other single people. In other words working in tech is a draw but not the only draw for living in SF or any other urban area.
Money a lot of money,networking opportunities etc was THE draw.
There are dozens of cities that have everything else that SF has. If $$ goes away it will crash so hard it will make Detroit look like a model city.
My hope that after election hysteria is over and Vaccines get approved we will be back to something resembling normal by next summer. SF has a huge value as a place for tech with all its other faults it would suck to loose it
San Francisco was a popular city before the tech boom, and remains popular for much more than just software engineer networking. That doesn't mean losing the tech industry can't cause problems, of course, but saying that software is the only thing special about SF is like saying banking is the only thing special about Manhattan.
All the data I've read says they still are and landlords are still holding out for a covid fix (via vaccines I get) and overall rent has only fallen 5 or 6 %
Well, for starters, they're not. Even now the US's workforce is only around 30% remote. There are still plenty of jobs that don't work remotely.
And beyond that, people will continue to live in SF just because they want to, not because they have to for their job. Sure, some people will leave because they never really wanted to live here in the first place, but I promise you there are plenty of us who will stay, regardless.
Are Progressive mayorships in places like SF and New York the right mentality at the right time when it's an economic catastrophe to be averted?
The Mayor of NYC said a few days ago, 'Midtown is not the center of the universe' when asked about sudden new squalor and economic catastrophe. Unfortunately it is the center of jobs for the region. Is SF run like this as well?
What do you mean, billionaires? What about all the small businesses who used to get daily business from those office workers who bought coffee, lunch, drinks, and so forth?
The hubris and myopia of the 'eat the rich' mentality is galling and a little depressing.
> What about all the small businesses who used to get daily business from those office workers who bought coffee, lunch, drinks, and so forth
My expectation is that they’re pretty much dead already (after 6 months of this).
Even if not, while it sucks for them, I don’t think it will necessarily kill them, more vacancy may mean less customers, but it also means lower prices.
Presumably there were shops before SF became juppy heaven, so it will have them after.
billionaires are fine and few of them rely on real estate wealth.
The real losers are the middle class whos savings are invested in securities that rely on corporate real estate. and then obviously the lower class because they get screwed no matter what and they provide services easily stopped by covid.
plenty of people are doing fine, that's why they're going out to buy million dollar covid homes.
... Wait, what would you expect the mayors to do about it? Use their dictatorial mayoral powers to force people to extend leases or the city’s infinite funds for a stimulus or bailout?
The federal government and to some extent the states have the money and power; expecting a mayor to wave a magic wand and fix it is, well... optimistic.
Honestly, I can’t imagine that commercial real estate or cafes and restaurants and similar are doing so great in Austin right now, either. For the moment, commercial real estate and businesses dependent on office workers will be suffering pretty much everywhere.
Businesses and residents are leaving both cities are a cadence unlike anything we've seen in decades. My point is singular: are mayorships concerned with progressive issues the best qualified to stem that tide? The numbers speak for themselves in terms of residents (tax revenue) and businesses (tax revenue and jobs).
But there's glee in these comments. People are saying things like, who cares about billionnaires and their office buildings.
That was literally the first links of dozens. I can pull articles from NYT, Crain's, CNBC, you name it, all showing the trend. The budget deficit alone should suffice. The fact that you ascribe a "political agenda" and use the phrase "show your ass" - what is this supposed to mean, that we discovered the enemy in the room? Don't answer that, I don't want to know.
I don't want dozens of links to Crain's. I want primary data that shows the current net domestic migration out of New York (or SF, you pick) is unprecedented in decades, which is what you said.
So, no data at all? I think you've really shown your whole ass to everyone by citing an ALEC position paper. ALEC has rated California as having either the #1 or #2 "worst business climate" in America every year it has published it's rankings, which are merely propaganda for a certain political viewpoint. ALEC's "Rich States, Poor States" paper has been reporting from Oppositeland for decades.
If you are right then it would by indicated by some data I could read, yes? Show me anything which indicates that the net domestic migration out of SF (proper or metro area) has increased during 2020.
So, you don't have any data? Just checking that we're in total agreement here.
This is exactly why I've long said that the only course that should be required of every college major (or ideally every high school graduate) is basic accounting. The number of things in a system is the cumulative result of all inflows and outflows. The population of a city can fall without any kind of change in the outflow process. By the way population flows are both domestic and international. If you stop foreign in-migration but you don't touch domestic out-migration then the population will decline.
By the way SF's population also declined 2000-2009 and sequentially in each of 2001, 2002, 2003, 2004, and 2005. So unless you have real data showing SF population already fell more than 4%, I also question "unseen in decades".
that number could be wrong. but that 20% beats your 4% by a comfy margin. and that 20% has special impact on the city center that employs many service workers. those people are no longer commuting. if they're no longer commuting, then prices of apartments close to jobs will lose value. then rents will fall. rents are hard data that you apparently refuse to google.
I really think most of our society actually operates on the level of a 14-year-old, with a ton of rationalization on top for why it makes perfect sense.
Maybe they have favorable taxes or something, but so so a lot of other cities that are ghost towns.
Business has been moving to places like Austin for years. Las Vegas, Phoenix, Atlanta, Nashville, Orlando. The pace will accelerate now that it is even more acceptable to do so.
Can’t think of a single unicorn that came out of these cities over the last 10 years, forget the Facebooks, Googles, Tesla’s, Ubers, Airbnb’s, Slacks, Snowflakes, and Zooms of the worlds. I have lived in Phoenix and Vegas for many years. Extremely overrated and couldn’t wait to leave
I think the existence of unicorns is more predicated on access to VC funding more than anything else. One would expect that to be concentrated around areas with lots of VC's of which the Valley is probably the prime exemplar.
I’m licking my chops and hoping the SF bay does get cheaper; I’d love to live in the city or in Berkeley if the prices dropped significantly. Especially if commuting isn’t a big part of my life.
Meanwhile, you couldn’t pay me an extra 100k a year to consider moving to the Midwest or Texas. I just value weather and nature and outdoor activities far too much to deal with those places. I guess if your family is there or something, but most of the year is unbearable away from the west coast.
I really hope the creatives and studio types are taking advantage of this once-in-a-generation type opportunity to film in deserted SF neighborhoods. Post-apocalyptic, zombie or killer-virus* films could all be shot on location instead of some studio lot.
How does this compare to 2001 when the dot-com neutron bomb his SF? Lots of empty real estate and huge construction projects continuing or starting (due to low interest rates and long lead times)?
Tech was not an existentially-huge fraction of SF's economy back then.
The peninsula, where it always has been, got hammered.
At the time I was commuting from SF to the mid-peninsula. I recall meeting with one of my clients in a field-house sized cubicle farm which must've had at least 300 desks, probably more. We were the only two people in there in the middle of the day on a weekday.
Suburban office space gets spooky during recessions, due to its sheer bigness...
In 2003 SF office vacancy rate exceeded 20% with 17 million square feet available. This 12 million is smaller in absolute and relative terms (about 14%).
Purely incidental, but: I check housing prices in Tokyo every once in a while and I've found a lot more of what I'd consider "a good deal" in the last couple of months. Not buying a place anytime soon, just find it interesting to see.
I also took a short trip to Okinawa (the beach islands of Japan) and the Airbnb prices were anomalously low, in fact it was more expensive renting a car for the time I was there than my stay. Not surprising, considering that last year ~31 million tourists visited Japan but this year that number must be very low.
If leasing activity and sales volume are good indicators, it’s down. Though prices are up slightly…
Also that data is nation-wide, and not specifically for Toronto, which is reasonable to assume would be the hardest hit. (Biggest city, and Ontario has not controlled this as well as British Columbia.)
I think aggregate for the country is almost meaningless, these things are very local.
Toronto residential rentals are dropping but not that quickly. Construction has not slowed and condos are popping up like mushrooms. Prices seem stable for now
There is A LOT of hiring by US companies. Canadian labor is so cheap compared to CA. Every startup past series A seems to be opening a Toronto branch. This is awesome news as it will drive salaries up.
On another positive side we do not have homeless shitting on every corner. Drug addict camps are pretty small and localized and Winter is Coming. Plus courts are actually letting city clear the encampments.
This will (proportionately)happen to downtown Palo Alto when Palantir moves out, though that will probably be good for downtown. They had too large a percentage of the available real estate.
The city council ought to find a way to stop this kind of monoculture though I’m not sure how it could reasonably be done.
Good idea, but not permitted under california constitution.
Also Palantir is renting so the basis would presumably be set by the landlord’s overall bill. Have to say that that’s not itself bad: a small number of entities own a lot of the commercial real estate in the city.
On the flipside, I wonder how much of a market there will be to rent individual offices?
Many like working at home, but a lot of us have rather ad-hoc situations. Even with a perfect home office, kids etc at home can make concentration tough. And the space separation and seeing other adults is very valuable.
Does anyone know of any good sites, podcasts, books, which have a good analysis of the current economic situation, and an idea of what may happen next? It's hard for me to follow every "big" story about all the crazy things happening right now.
>And while landlords held firm through the second quarter of the year, asking rents for office space in the city dropped nearly 6 percent in the third quarter alone to $78.45 per square foot (per year)
as expected, rents are still on the NY retail space level
Typical office leases are 3-5 years. This is just the tip of the iceberg. So far <20% have been up for renewal since the pandemic started, and even fewer since it became clear that things were not going back to normal within a few months.
I like how most of HN is probably comfortably within the 1%, but as soon as we start talking about ‘owners of real estate in SF’, we are easily able to call them ‘the rich’, because the wealth is on a completely different level.
When REITs and the like lose money, at least those losses are tied up to their company. Worst case, they go bust - but their owners aren't personally responsible for the losses.
Now, imagine being some average tech-Joe that bought a house for $2M last year (almost entirely on a mortgage), the job market goes to sh!t, and subsequently the housing market follows after. You're forced to sell, and take a 20% loss - selling it for $1.6M
You're now $400k in the red.
That's a massive debt to carry around, if you're not able to continue in some high-earning job.
This is something you (unfortunately) see in cities that are heavily affected by boom/bust cycles.
Price volatility can be a real killer if you've stretched your resources to the max, even if the market rebounds. Solvency can be a killer.
(But as for why this could affect average people - I'd imagine there being some correlation between business real-estate, and private real-estate. The general real-estate market has a big market psychology component to it. So hysteria in one market could very well transition to another)
My employer had planned on not renewing our lease in San Francisco this year; I'll miss working in The Presidio when I'm in town, but I won't miss it much.
We haven't even seen the extent of the depression yet. Combined with congressional inaction on social spending a lot of people are going to be in very deep finanical issues. This is a systemic problem that we needed fixed 3 months ago.
The lack of continued large-scale stimulus is tragic. We need a strong stimulus package with direct monetary relief (one $1200 check is not enough), and a program of structured financial relief / rent forgiveness. Unfortunately, I don't see it happening.
We should have explicitly been paying people to stay home, but somehow the $1200 + the $600 unemployment bump became welfare payments, and morons were giving speeches about how they were incentivizing people to stay home. No shit.
Once we had things under control, we could loosen up quarantine, then when it got shitty again, tighten it up again and pay people to stay home. It would have goddamn paid for itself. If people could quarantine and know their livelihoods were secure, they wouldn't be so upset about it.
edit: this is a rehearsal for when the next coronavirus comes around that has an infection rate like covid-19 but a death rate like MURS. It's going to whip through the world like the plague.
Well fucking said but both times the stimulus was enacted we neglected large portions of the economy. If we do so again it wont be fixed and hello deep depression.
The problem is that one stimulus check cost $2 trillion dollars. Doing that every single month for an indefinite period of time is, quite expensive to put it mildly. And that’s not even taking into consideration that there’s a lot of people with monthly expenses in excess of $1200 per month.
I know these are large numbers, but the 159 million economic impact payments cost $267 billion [1]. This article [2] gives a pretty good overview of the $4T spent in total so far
> I know these are large numbers, but the 159 million economic impact payments cost $267 billion [1].
Great, but the bill cost $2T. Same with the recent one that’s been put on ice. Because there’s no such thing as a bill that only contains direct cash payments to citizens, they’re loaded up with pork and stuff that doesn’t even having anything to do with the pandemic.
Yes, we need at least another 6 trillion. Maybe 20 trillion. Why stop there? We should quadruple the money supply maybe, we need to protect commercial real estate investors, after all.
... and then in 2021 we can all scratch our heads and wonder why income inequality is worse than ever, and despite all this spending, we didn't even make an appreciable dent in the impact of Covid-19 on public health.
Monetary stimulus (QE, Low interest rates) is not fiscal stimulus (spending). Maybe we need to do a lot less buying assets, and a bit more spending on people and jobs. The parent is recommending the latter (spending), not the former.
When you dramatically expand the money supply you make the rich richer. It doesn't matter how the money is distributed, it tends to inflate asset prices, and the people who own the most assets (the rich) reap the rewards in the end.
If you wanted to stop that, you'd have to actually pay for your spending, perhaps by implement some sort of wealth tax or dramatically increasing income taxes. Of course, nobody wants to increase taxes, so we just keep printing money to try and fix every problem.
The number of people who are homeless, in medical debt, and unable to work or make any money due to limited skillsets and COVID is astounding. These people need some type of immediate help, and if they don't receive it, the effects will be far more detrimental than the effects of fiscal stimulus.
And I think you're confusing monetary stimulus with fiscal stimulus.
> It doesn't matter how the money is distributed, it tends to inflate asset prices
For the US, that's not true. The US Dollar is the world's reserve currency, and the Fed isn't worried about inflation, but a lack of money supply. The pandemic has led to a huge demand for safe assets, including Treasury bonds, which has led to incredibly low interest rates on Treasury bonds, and a stronger dollar. See, for example, this article: https://www.washingtonpost.com/business/2020/04/05/what-2-tr....
Why not just print 1 million dollars per person and end poverty in one fell swoop? If there are no consequences for printing 3 trillion, why not print 300 trillion?
This is the worst strawman argument I've ever seen. The problem is precisely that corporations (especially badly managed ones) have been able to bleed the stimulus coffers dry, and they will continue to do so, because we have a system of government which caters to them.
Direct payments and rent forgiveness are not "printing money", they are limited, specific relief packages targeted at people in need. These are people who are about to be evicted, homeless, in medical debt, etc. These people need help, or the consequences will wreak havoc on a colossal scale.
I think it's instructive to set aside money for a minute and think about things in real terms: if we shut things down, then which parts of the economy won't be functioning and what is the cost of that.
For example: suppose hospitality workers are paid to stay at home. How is that paid for? Well actually it's entiely paid for by people having fewer of the hospitality experiences that they are used to. It is obvious when you take money out of the equation that hospitality workers staying at home will not cause there to be any less of essentials such as food and shelter to go around.
There are other sectors like manufacturing where there is a real cost to be paid. But that could be as small as delaying the purchase of the manufactured goods by period of lockdown. No so bad.
Whem you look at it like this way, QE seems entirely justified. All it really does is spread the effects accross the economy to people who can bear them, and avoids financially ruining people which will be a primaey cause of long term economic damage once things reopen.
I'm not concerned about justification for QE, but more about where is the limit of debt you can take on to provide cash to a vast population, and is there a better way to fix things?
I see the problem as a lack of agility of the economy. The hospitality works could have another job, but those jobs can't get created fast enough. How can they get paid by other people rather than the government.
Another question is post-covid do we want to ramp up consumption again. Do we need people flying to hotels to meet up, or will Zoom do? And if Zoom will do, what of the hospitality industry (already taking a stab wound from Airbnb etc.).
They don't need jobs because we don't need those people to work. What we need them to do is stay at home.
There shouldn't need to be any debt involved. It should be as simple as printing money (the central bank can do this) and distributing it to the people who need it. Normally this would cause excessive inflation because it would be injecting extra money into the economy. But it shouldn't in this case because it's injecting money that was already there until very recently.
Mostly deficit spending. QE and the like is for increasing the money supply, not really spending. Though it can have a knock on effect in terms of the rate the govt borrows at.
Really, it's an infrastructure problem. We don't have direct payment rails set up for something like UBI, and the political will to build this infrastructure is next to zero.
Most of the companies receiving relief were badly managed before the pandemic, and they should be allowed to fail. But it's very hard to structure relief in a fair and effective way.
How many people are/were barely attached to the banking system? Especially if you’re working, well, a bit under the table, in day labor situations like construction or office cleaning.
I got my stimulus check. Basically immediately. Because I have a standard 9–5 salaried job with direct deposit, so the government knew exactly where to send the money. But that seems to obviously not have the force multiplier effect of sending it to someone who just got fired from a movie theater.
I'm not the above poster, but I took your comment to mean direct deposit from your employer to your account, not direct deposit from the IRS to your account (for tax refunds, which is what I assume the above poster means).
Yep. It's any tax refund setup to direct deposit from the IRS to your bank account. It doesn't matter if you have employer direct deposit. One other problem is that many people in the US are unbanked so they get prepaid debit cards or a check.
I agree its very difficult and in making decisions like this we will incidentally help pick winners and losers.
I dont think temporary relief will make or break a business model effected by the pandemic. On some of those edge cases we will need to decide whether the government will get their money back or accept losses.
In WW2 we transformed every industry overnight to be geared for war.
I think we can handle setting up a payment system...
Like what kind of weak ass excuse is that? You can't figure out how to pay everyone?
Please. Give me a break.
Ubi is the effective and fair way to stimulate the economy btw.
All this stimulus aimed at businesses is absolutely moronic.
If people know they have secure pay coming in they will spend the money. Its the uncertainty that causes people to hard cash.
Businesses don't need the cash, if they can't stay afloat during this they shouldn't be allowed to make it through.
I do believe they deserve some help,aybe tax breaks, maybe short term allowance to make people redundant / reduce so they can equalise the books but there is no fair way to give them money and not the people.
In an economy with 80% consumer spending, your assertion should be supported because it is fundamentally at odds with the economic context and make up of economic activity.
Supporting consumers obviously worked this year, the fact that a 30% drop in economic activity has been as mild systematically as it has is direct counter evidence to your statement.
This is too reductive and unclear what you are saying.
If we do no redistribution and simply allow people to starve in the streets then revolution is coming.
On the other hand, if we prioritize helping people, and stop propping up failing businesses then we can maintain social stability long enough for the economy to restructure according to natural economic forces.
You don't need to print money. The measures of injecting money for consumption never work. There are too many precedents, the best, I think, is Argentina, which uses the Keynesian method of injecting money to generate consumption, creating brutal annual inflation and putting the country into recession every 2 years. If you really want to improve people's quality of life, you have to encourage investment, saving and deregulating things so that prices fall, and investment strategies change and focus where it would really give money.
Between the socialists years, 2006-2010 they've spent so much in consume programs that we will be paying for that many years. We're lucky that we have euro, but the proof is unemployment is hight as crazy every year and there are no signs of investement. People also changed mindset from savings to spendings, and now they are demanding more money from the goverment for anything. Please check also Chile, they had couple of programs made by Bachelet, they all failed.
I agree that there was a massive mal-investment in much of the Eurozone post 2002 (I'm irish and remember this well), but I don't really see how this maps to socialism/socialists. Can you clarify?
It is not. During Zapatero's we had the worst crisis ever, now we have covid's and Sanchez ruling agenda: money spent on gender, progresive things and not in real infraestructure. There's a sort of basic income done, and it is not even working.
Democrats are part of the problem. The solution isn't to vote democrat or republican, it is to vote for people that care.
Term limits would go a long way to solving that problem.
At worst, the Democratic party will make all the right speeches but ultimately do nothing.
In contrast, the Republican party stole medical supplies from blue states[0] during the acute phase of the pandemic and chose to minimize the federal response to SARS-CoV-2 because the pandemic was only killing Democrats[1]. Depriving your political opponents of medical supplies during a pandemic is arguably a crime against humanity.
Neither of these choices are particularly good, but one choice is far worse than the other.
Getting rid of First Past the Post with something like Star Voting (https://www.starvoting.us) would go much further without imposing arbitrary limits.
Do you have a suggestion for who to vote for who “cares”?
And as my sibling comment mentioned, eliminating first past the post would, in my opinion, be a gigantic improvement. If you’re in Massachusetts, please vote Yes on 2 this election so we can have ranked choice voting statewide.
I would agree that "people who care" are a good thing; However, I dont agree term limits achieve that.
Better than term limits would be an informed electorate who would vote for a new person once the old one stopped caring or being effective. I think limits are a poor bandaid.
We should never have sent a 1200 check at all. The people who need help were the ones who lost their job. And they got it through extra unemployment benefits.
I do realize there is an issue with some people who don't qualify for unemployment either because they still work part time or because they were self employed. That group should have been targeted and or given benefits as well
Not at all! Your comment was super specifically on topic.
The generic one which I detached was https://news.ycombinator.com/item?id=24890238 - detach means it's no longer a reply to your comment but is rather a top-level comment that can therefore float to a lower location on the page.
There's nothing wrong with https://news.ycombinator.com/item?id=24890238 either. It was just more generic. Also important to understand: the moderation decision is not primarily about a comment, it's about the entire subtree. I don't want people to feel blamed for what they posted, especially when it was other commenters who ended up going further off topic.
Well this isn't the collapse of San Fransisco - but rather the office rental market. Also interesting that people let go of the office space. Companies making a lot of money wouldn't do that they'd keep it for a year or so simply to have the continuity. They are too busy making money to worry about their rent.
But if they are looking to cut back on rent costs it makes me think times are tough. That paying attention to cutting this cost (and the hassle it will cause now and when things return to normal), and taking that attention away from growth means that there is an issue.
Obviously this isn't the permanent collapse of SF but it might be a nail in it's long term coffin. I can't imagine in 50 years time, with globalisation, with global currencies, remote working, VR etc. that you'd need to be tied to a physical location to innovate or get investment.
I guess this number doesn't include vacant as in barely anyone actually using the office space but still leased. In that case 14% vacancy rate sounds low.
However, I realized it was exactly the opposite. These people were taking their office spaces and desperately chopping them up and getting up to code so they could be leased as apartments.
Or... you know... just give homeless people housing?
https://www.smh.com.au/opinion/how-to-fix-homelessness-give-...
[1]https://en.wikipedia.org/wiki/Unemployment_benefits_in_the_U...
On top of this, it only applies if you lose your job due to "lay-offs". I've been laid off four times in my life, all 3 times the companies claimed they were not lay-offs and fought my claim. 2 times I was denied.
The third time I received unemployment benefits for 5 months. I received $4,000 in benefits then my former employer won an appeal, and my claim was deemed "fraud". I had to pay $8,500 back ($4,000 + $4,500 in "fraud fees").
If you are fired for "cause", "screw you, have a nice day".
8 months ago 10% of my company's engineering department (screw you, cloud passage) was fired "for cause" and replaced with cheap Belarusian contractors. This time I didn't even bother for unemployment, I didn't want to risk having to pay it back + 100% fines. I also do not get covid stimulus, and have had to sell my 401k to keep from being homeless.
America has no social net whatsoever. I do not qualify for unemployment, food stamps, or anything else even though I have been working my ass off and paying taxes for 25 years.
But, this is one of my concerns too. I equate money with time and if, as a law-abiding citizen, I work diligently for a couple of decades and pay my taxes, when circumstances change – I should be assured some sort of a safety net. Otherwise, what is the point of wasting time working to pay taxes? Is this the hard reality that we cannot rely on governments taking care of us and need to come up with more individualistic backup plans in such circumstances? Does paying all of your taxes and being a model law-abiding citizen make you a sucker?
The only thing really keeping us afloat is we fled the USA and move to my wife's town where she owns a home and there's a low cost of living. Luckily I was raised with the philosophy that if I cannot afford to buy a thing in cash, I cannot afford to buy that thing, so I have never had any debt.
[0] https://en.wikipedia.org/wiki/Welfare_trap
Well yes, for many of the young working class - rent is eating up over 2/3rd of their paychecks.
We are being scammed by the Bourgeoisie with inherited wealth.
This explains our situation well imo:
-
"So where did our land system come from?
Weirdly enough, the land system that we have today has its origins in a problem specific to medieval kings, which is ‘how do I fund military campaigns and defence, without paying to keep a standing army?’
And it was William the Conqueror who perfected the answer. It was a piece of paper. And on that piece of paper was basically an agreement between the Crown and a noble, saying ‘if you provide men for military campaigns when I ask, in exchange I will grant you a monopoly over your own private fiefdom, where you can levy as high taxes as people can bear to pay’.
So effectively — rent is the original tax, paid via lords to the King.
In fact the word ‘feudal’ derives from the latin word feudalis — for ‘fee’. In other words, rent. So the whole system of government by which the Normans ruled over the Anglo Saxons was based on rent.
If you’re a King, there’s only really three groups of people you’re scared of: other kings, your family, and your nobles. So over time landowners managed to engineer a set of concessions, whereby increasingly taxes were levied directly on people and business, leaving them (the lords) as the owners of a monopoly right to extract privatised land tax.
So what you’re left with is a set of power relations in society: an enforced system of servitude and control. As the economist Henry George pointed out, it is essentially a diluted version of slavery.
“Ownership of land always gives ownership of people… Place one hundred people on an island from which there is no escape. Make one of them the absolute owner of the others — or the absolute owner of the soil. It will make no difference — either to owner or to the others — which one you choose. Either way, one individual will be the absolute master of the other ninety-nine.”
Fast forward a few hundred years, to post-civil-war America and that’s exactly what played out. The plantation owners could no longer own slaves, so what they said is ‘Ok, I’ll pay you, say, $2 dollars a day’ — but by the way, I own the land, and the rent is… $2 a day.’’. Which, incidentally, led to the invention of a clever invention called a ‘chattel house’ which was a kind of kit house that gave families of plantation workers the ability to relocate to try to escape exploitative landlords."
Fast forward again to today, and land is still the fundamental mechanism of racial inequity. To be blunt, all across the UK and the US, there are tenants with black and brown skin paying rent to landlords and mortgage lenders with white skin. Or commuting for hours. Or both.
I imagine all of you have seen the speech made a couple of weeks ago by a young American writer called Kimberly Jones — if you haven’t, do — it’s absolutely the most eloquent piece of public speaking I’ve seen in a long time (https://www.youtube.com/watch?v=llci8MVh8J4). In it she uses this incredible image of getting white people to imagine what it feels like to play “four hundred rounds of Monopoly” with the game rigged against you, enforced by violence. There’s an interesting backstory here, that you may know, which is that the game of monopoly was first invented by a woman called Elizabeth Magie — and originally called ‘The Landlords Game’ and it was created so that… basically one day someone could make exactly the speech that Kimberly Jones just did.
So, broadly speaking — and I’m simplifying here — there were two positions in this power diagram. Tenant and landlord.
And over time that piece of paper became a tradable asset, as well as an inheritable one: so you can literally buy the right to extract taxes from people. And it’s amazing to me that we don’t find that more weird than we do — it’s right there hidden in plain sight in the language we use: landlord.
But such an extreme overclass/underclass diagram is politically hard to sustain. So, over time we saw the slow emergence of a middle position, which is for those who could get together just enough money to buy their own freedom from rent. Again, that’s why we have the word ‘Freehold’; it’s not free as in ‘no cost’ it’s free as in, ‘liberty’."
Source: https://medium.com/@AlastairParvin/a-new-land-contract-684c3...
+
"There are many kinds of monopoly, from utilities to pharmaceutical patents, but the greatest – the ‘mother of all monopolies’ as Churchill described it – is land. Land rents are a weird leftover of the medieval feudal system: a privatised location tax that is suffocating every Westernised economy today."
"It is worth remembering that there is no political argument —Left, Liberal or Right — that even attempts to justify economic rent-seeking on the basis of principle. You will not find one in any book. Adam Smith was against it, Karl Marx was against it, Keynes was against it, Friedman was against it. Even Ayn Rand was against it. Economic rent-seeking survives only in the dark, by obfuscation, distraction, corruption and perverse incentives. It endures only because it has not been part our political language for the last century, and in the tussle of everyday life, we are all susceptible to quietly putting our own short-term convenience ahead of our principles if we can get away with it (then justifying it to ourselves later)."
Source: https://medium.com/@AlastairParvin/progress-again-6f6213bdcd...
Landlordism is one of the oldest games. It is true that you do need quite a bit of capital in order to 'start'. This is the reason why many big corporations like Blackstone have gotten into the game. In the UK, landlordism is a common way to 'becoming a millionaire'.
After the '08 financial crash, the UK government even pledged to underwrite mortgages, making the game of starting a Monopoly-like property empire in the UK risk free for elites. Sheikh Khalifa is a big fan. [1]
> The only way it makes sense is if capital gains ratchets up the property prices significantly.
That's exactly what corporates do. It's the slow corporate fininancialization of the housing market [2].
"Between 2011 and 2017, some of the world’s largest private-equity groups and hedge funds, as well as other large investors, spent a combined $36 billion on more than 200,000 homes in ailing markets across the country. In one Atlanta zip code, they bought almost 90 percent of the 7,500 homes sold between January 2011 and June 2012; today, institutional investors own at least one in five single-family rentals in some parts of the metro area" [3]
+
"Scaling up portfolios consisting of thousands or tens of thousands of rental homes has made it possible for Wall Street firms to roll out financial instruments suited to “a rentership society”. Securitisation allows big investors to borrow against the value of the properties, to buy more properties and pay off old debt, and acts as a loan that tenants pay back with their rent checks.
Wall Street is no stranger to the housing business in America. But their involvement as landlords of single-family homes is new, and so are the financial instruments they have developed." [4]
[1] https://www.theguardian.com/uk-news/ng-interactive/2020/oct/...
[2] https://www.theguardian.com/artanddesign/2019/sep/10/push-fi...
[3] https://www.theatlantic.com/technology/archive/2019/02/singl...
[4] https://theconversation.com/wall-street-landlords-are-chasin...
Ah yes, a most trustworthy source. A book written by many authors and used by monarchs to subdue their populations.
I am not saying this post is factually/historically correct.
All my SF life I’ve tried to stay in the real residential neighborhoods, the ones tourists don’t know exist. Would be nice to change it up without being rent gouged.
https://www.bbc.co.uk/news/uk-england-essex-47720887
It all seems very similar to me. I'm sure at the start they also thought they were turning defunct office space into desirable apartments too.
> Smith is one of hundreds of residents placed at Terminus House in Harlow by councils in and around London, often many miles from everything and everybody they once knew.
I'm not familiar with the specifics of UK subsidized housing, but it sure sounds like the residents were placed in this building by government.
Councils used to be the biggest house builders in the UK.
Then the neoliberals decided that was silly and the free-market could sort it. So they banned councils from building houses in the 80s. House builds plummeted from 300k per year to 30k per year. Plus they forced the council to get rid of their affordable housing by letting people buy their council house from the council.
So now, when poor people who are guaranteed a house need one, the council have to buy a slot from the free market (and obviously need to go for cheap).
Now the UK has a housing crisis.
Yay, free market.
Basically, the opposite of what you think. The council didn't 'choose' to put people there, they were forced to by the market and disasterous neo-liberal policies.
In contrast if the policy is "Government pays the rent on the cheapest houses on the market, for homeless people" or "government has a fixed budget and must house as many homeless people as possible" then the legal minimum standard is crucial, because that's what you'll likely be giving to homeless people.
For councils to build houses and build them to a reasonable standard would, as you say, be another option.
Whether or not the free market has caused the use of private companies to provide project style social housing on the fringes of cities (short answer: of course it has) is somewhat irrelevant compared with converting city-centre commercial property into private accommodation.
>> sounds like the residents were placed in this building by government
> council didn't 'choose' to put people there
Again, your response isn't to the point being made really - no-ones really arguing against your point. Just because they didn't have any real alternative doesn't invalidate the point that they did it.
Can anyone buy some land and build whatever they want on it, like massive apartment buildings? If the answer is no, how can you claim there is a free market? I think the problem is clearly on the heavy regulations, licensing and zoning that keep companies from building.
They probably can, but The Market™ may give better ROI to (e.g.) condominiums so who'd want to do it?
With apartments you have to do things like put up with tenants and such, and who wants to do that? With condos you sell the units, create a condo corporation, and then walk away with your money once it's constructed and never think about it again.
Why build rental units for poor people when you can sell to oligarchs who want an asset to park their money in?
As with everything else in a capilistic economy: because there is profit to be made.
Same as we have very expensive top-of-the-line smartphones and very cheap but functional ones, a truly free market housing economy would provide cheap housing for the poor. The reason why we don't see that happening is because of all the regulations that increase the cost of building, making such companies inviable.
Poor people would benefit the most from truly free markets, if we care about them we should be asking for less government intervention, not more.
As someone who lives in Toronto, Canada where there's a lot of condo construction, and little-to-no purpose-built rental construction, the "capitalist economy" has decided that rentals are generally not worth it.
At least when it comes to builders: plenty of people are buying condos and renting them out instead of living in them, but apartment blocks seem to be not worth the effort.
You are right to complain about this issue, but don't blame free markets, because they are not free: government intervention prevent the necessary competition for the market to work and fulfill demand.
Which are exactly the same for condo or apartment.
The reasons are economic AFAICT:
> For a long time, the economics of constructing a rental made little sense compared to a condo. Condo builders get a significant portion of their financing directly from future unit owners, who give hefty deposits to secure their spot and therefore assume some of the risk. Rental landlords, on the other hand, need to front the majority of the equity, assuming all the risk themselves. When a condo building is complete and all the units have been sold and paid for, the developers quickly reap the returns on their investment and move on. For a rental building, the returns take many, many years longer.
* https://nationalpost.com/life/homes/is-this-rare-new-rental-...
Toronto has had vacancy rates <2% for decades, so it's not like rental demand wasn't there. In fact prices peaked just before the pandemic and are now falling because the Airbnb folks are switching to long-term rentals. The price of condos is dropping as well since plenty of people are just selling their Airbnb units and flooding the market to certain extent.
A good number of rental buildings are actually being constructed in partnership with insurance and pension funds, as they need long term cash flows and baby boomers aren't getting any younger.
The building looks and was named straight out of judge dredd.
Before anyone has a hissy, while a good sounding idea it can raise costs for remaining units and price other people completely out of the market again and greatly delay a project as each group wants its pound of flesh. So the very same reason there is a lack of housing will rear its ugly head in this case as well
The resi tower has concrete separations between floors and if you are lucky, between flats on the same floor. Office buildings don’t have any real separation between floors as you are supposed to walk on accessible fake floors and have fake ceilings too.
The sound insulation between flats on a converted office building must be nil.
A lot of the older buildings in SF just have 2x4 walls separating the apartments, with fiberglass insulation. It's not very good at insulating sound either.
If the office conversions are done properly they will be better at sound insulation than much of the existing housing stock in SF.
The real question is, why bother renting in SF when any of the surrounding cities are cheaper? Most of the reasons to live in SF (restaurants, nightlife, cultural events) are shut down indefinitely, and commute distance isn't relevant if you are working from home. Renters can get a lot more for their money in the East Bay or the Peninsula.
Because the pandemic-related shutdowns are temporary (though of course there will be lasting effects), and rents are 30% off their highs, with many landlords throwing free months and other incentives at people to get them to rent.
Sure, if you need/want to save some money over the span of the next 8-12 months, moving out might be a good idea, but if you want to live in the city, you're going to move back eventually, and moving itself isn't free. I think that's a thing that people seem to be missing: posts like yours seem to suggest that the only or main reason people live in SF is because their jobs are there and they want a short commute. That's... just not the case for many, many people.
I think there are valid arguments for leaving, valid arguments for staying, and valid arguments for moving in. But it depends on each person's individual situation and wants and needs.
There's still a fire danger, of course, with any kind of cooking, but at least there shouldn't be open flames all over the place.
So couldn’t you isolate the noise with false ceilings and walls that are constructed to minimise transmissions?
The key is the installation and design of the system, though. Miss one vent, electrical cutout, or gap (or even using the wrong length of screws) makes all that material useless.
source: I tried very hard to soundproof between floors. Sound passage is non-existent but footfalls are plainly heard.
Sheetrock (gypsum) can solve this problem if you use enough of it. But that can get expensive.
1. https://en.wikipedia.org/wiki/Officetel
Outside of some makeshift co-living shelter-like concept it does not seem that convertible.
The coming economic response to the pandemic has the potential to be like that, basically 10x the 2009 "great recession" and a lot of second and third order effects.
Hard to predict what to do and it's nice to hear the Fed doing their research. The TARP program in 2009 was pretty creative and managed a pretty big thwack without nearly as much pain as their could have been.
Where it ends is anyone's guess, and the worst part will be the second and third order effects it won't be super easy to predict. Things like pension/401K/Superannuation funds with high Commercial real estate exposure leading to reduced retirement income, state pension funds that suffer as big US cities see revenue plummet after the population moves, European cities with vastly worse economies - the UK with London hurts there the most - and the cyclical effect of Italian demand reducing French production, reducing French demand reducing Italian production, ad nauseam.
This will be a multi-speed problem, with some countries, cities, counties, suburbs & streets affected far more than others.
If it wasn't so tragic it would be a truly fascinating thing to watch unfold.
An interesting second (or even third) order effect of the 2008-2009 financial meltdown was the collapse of many German state banks (Landesbanks I think they're called) which had invested massively in US-based CDCs and the like. I don't think many people would have predicted that happening in 2005-2006.
Are you sure you aren’t basing that analogy on the movie Speed 2?
Real estate --- residential, commercial, and industrial --- is among the largest asset classes in the financial system, and it acts as collateral and backing of loans and other financial instruments. Those in turn affect banks and their own ability to generate loans, themselves much of the total money supply.
When market value of these assets falls dramatically, it has ramifications across the financial system. The 2007--2008 global financial crisis was the result of a prior crash in real estate valuations. Japan's Lost Decade (1991--2001) was the result of its own real estate-inflated asset bubble collapse. (https://en.wikipedia.org/wiki/Lost_Decade_(Japan)). Money available for business investment (already constraind) will further contract.
Additionally, for many people, lacking a defined benefit pension, real estate is a major component of household asset portfolios.
Whilst real estate asset inflation is highly problematic, and is not a contributor to economic growth, sudden collapse is tremendously disruptive. And very much a concern of the Fed.
Of course, special interest intervention may be another factor in decisionmaking, though there's ample reason for interest without any such.
Beginning with the 2008 GFC, this was expanded to buying "distressed assets" (https://blogs.wsj.com/economics/2008/11/10/fed-takes-step-in...). This was, and remains, controversial (as noted in the WSJ link), and poorly understood (I'm still not certain I grasp it well, let alone fully, myself).
My understanding is that the Fed's goal isn't profit, but of buying money into, or selling assets, and hence money out of existence. The Fed's asset-buying targets are better thought of as liquidity-injection targets (where liquidity is money created by the Fed to be injected into the economy). The Fed stabilises asset prices as a buyer of last resort, incidentally to its primary goal of both ensuring sufficient money in the economy and in creating greater ceertainty in asset values which allows banks to function.
The Fed can always buy assets or lend money, as it has the sole power (save the US Treasury) to create money without restriction. And in practice, it makes profit on these transactions (which is contributed to the US Treasury).
The distortionary effects on risk and incentives ... remains fuzzy to me.
This is largely my own conceptualisation, it seems generally to agree with other explanations, and smells strongly of MMT.
I may be badly mistaken, however.
By definition, solvency and liquidity at the country level depend on major asset classes maintaining some amount of value.
That baseline changes based on regulations of what can or cannot be used as collateral for different measures, what ratios institutions have to maintain, etc, but there is a floor of some sort at which point the financial system implodes and the economy collapses.
Given their powers and mandate, preventing economic collapse is of the utmost importance.
Probably the worst consequence from a failed commercial real estate market will be the collapse of the economy that services and depends on these spaces. Restaurants, trasport, maintenance workers and so on will inevitably fail. This will lead to loan defaults, bankruptcies and eventually this trickles down to every citizen in the community if not the country.
For a historical view of this type of collapse, look into any resource based boom to bust city or town. The sad part is those that can leave, get out long before the SHTF and it's only the middle class to poor left holding the bag. Then when the Fed steps up with a bailout the parasitic rich start showing up again to ride the recovery, lining their pockets once again.
https://www.bloomberg.com/news/articles/2020-09-01/fed-s-mor...
Though I'd dispute that the Fed cares particularly about their valuation. The Fed's dual mandates are inflation and unemployment, not balance sheet returns.
A new 57-story office tower opened just last week: https://www.chicagoarchitecture.org/2020/10/18/a-new-skyscra...
Dozens of new residential towers have been announced, and at least a dozen are under construction, including one that's almost finished at 101 stories tall.
https://www.chicagoarchitecture.org/2020/10/05/sit-back-brea...
Surely this didnt start or finish as a result of the last 6 months?
Residential real estate may be okay in the cities receiving this exodus in the South, Midwest, Texas, Idaho, etc. but as for HCOL cities I’m just not sure. There may be enough demand to at least cushion it.
Commercial will definitely be a bloodbath of epic proportions, especially in formerly hot markets.
Edit: too early for good stats but here are some cities that seem to be receiving HCOL expats as determined by the highly scientific process of observing anecdotes:
Phoenix, Santa Fe, Boise, Denver, Dallas, San Antonio, Austin, Atlanta, Cincinnati, Pittsburgh, Chicago... I’m sure that list is not exhaustive. Those are just some I have seen.
Those vary in terms of how not-HCOL they are but all of them are much less expensive than California, NYC, or the Seattle area. Much better places to live if you don’t have to live somewhere with $500k to $1.5m “starter homes” and other absurdities. Now that we are discovering that we can actually use this Internet thing, good riddance to that madness.
As for tech hubs, they are now only economically rational if you are high up at a large FAANG or similar company that is able and willing to pay huge salaries.
Startups, bootstrappers, and labors of love are not going to happen there unless they are lavishly funded or only comprised of straight out of college folks willing to live on couches.
Every. Single. Time. Valuations too high. Debt too high. Equity too low.
I am pretty cynical because I have read a bit too much history and seen this so many times working in investment management but...so what? Some rich people lose a ton of money...okay? Capitalism has losers. You lose.
Also, in the last crisis, a ton of people (particularly Blackstone) made a ton of money buying huge deals at the very top of the market. None of this excess came out of the market. Lots of people who borrowed tons of money were just able to take their paper to the Fed, and keep playing.
Working remote was still a niche idea at the beginning of 2020, now it's ubiquitous. That has never happened before.
To compensate for lack of socialization in the office, I notice that companies like Gitlab organise corporate gatherings were all employees can meet in person. Open Source projects teams meet at (the fringe of) Fosdem and probably at their yearly conference a second time.
1) size Non-linear diseconomies of scale mean that all other things held equal smaller companies are more likely to be able to pull it off than larger companies
2) first mover / selection I’d guess that there’s a relatively small fraction of employees that can be competitively productive in an indefinite WFH scenario. Companies that were always remote first and got there before everyone else were able to pick off these outliers. Companies trying to convert to it have the luck of the draw and further as the market saturates everyone will have a harder time chasing after these few.
Doesn’t this require the pandemic to be gone? I hope it is, but that’s one hell of a condition.
Have some markets seen ~15% vacancies before? Yes, corporate real estate is very cyclical, no-one builds for years, and then the market adds 40-50% in a few years. But when it gets to 30-40% then you are probably looking for examples outside the US...and SF will be the worst-hit market, others should be less.
But...the world will move on, write down the value of property, assign losses, pay off remaining creditors, the world moves on...I don't think anyone could say a fault of the last ten years has been that shareholders/creditors were forced to swallow too many losses. The strength of a capitalist economy is that losses can be assigned quickly, and everyone moves on...in theory.
My concern is more about the ripple effects. Many low-skilled workers rely on service work, and servicing corporate real estate is a real industry (janitorial services, managerial duties, parking lot attendants, plumbers, even construction). They are already having a pretty hard time of it, and if this industry vanishes, "moving on" may mean going out on the streets. San Francisco, Los Angeles, New York, and San Diego have enough homeless already.
And, if it doesn't, in the absence of work they always have the option of moving somewhere with a more attractive income to cost of living ratio.
Much harder for a company to up and move than an individual or a family.
I wouldn't be surprised to see established companies expand on cheap real estate and start offering closed offices to employees.
As much as I like closed offices, I think that companies that want to save money still won't offer them. The cost of closed offices isn't just more square footage; they also incur construction costs that open office space don't: walls, doors, their own heating/cooling/ventilation ducts, their own lighting and electrical wiring, etc. And an office layout with closed offices is more expensive to modify.
But if we're talking about office buildings, and the reason for the collapse is because people don't need/want offices at all (not because those offices are moving elsewhere), then I think it'll have a much smaller effect on the residential markets.
What I think has a higher chance of hurting residential markets would be hiring moving away from HCoL areas because companies believe that most workers can be remote (and workers in LCoL areas are cheaper comp-wise). That hiring movement already seems to be happening, though SF home prices haven't changed much. There might just be a delayed response to that, though.
Subleases are a different story, of course.
There are also a fair amount of 1-year direct commercial leases, depending on the area.
Do leases tend to get renewed in Q2?
I would expect that a sliding window of leases would be expiring all the time, and that the bloodbath would be slightly more gradually occurring right now.
Better to run it into the ground — this stuff will get bailed out to protect the banks.
I thought the general expectation, or at least the hope, is that that's about when things start to go back to normal.
I looked at various online domains a few years back, and STL Fed publishes far more articles than the rest of the Federal Reserve branches. ~106k STL vs. 6--8k for others. federalreserve.gov publishes about 1/2 what stlouisfed.org does.
https://old.reddit.com/r/dredmorbius/comments/3hp41w/trackin...
But most of my coworkers seem eager to return to the office. They miss the office environment, the perks and catered meals, and the socialization. And the managers, who subsist on meetings and in-person interaction, seem even more anxious to get everyone back to their desks. The powers-that-be probably have personal motivations for keeping everyone here as well (e.g., many millions of dollars tied up in their homes, which could lose significant value if the housing market deflates).
All this is to say, I'm skeptical that workers won't be called back into the office as soon as leadership gets the chance.
Average developer salaries for my area are between 60-100k, so if Microsoft can offer 120k+, a lot of (great) devs in my area would probably take that. Local devs get better wages, and companies save some money.
However, they could also outsource to India for even cheaper results, but who knows how well that will go.
So, the question is, will it work any better in Michigan? Quite possibly; the timezone and language differences are much less. Plus, if you worked for Microsoft or Google, you probably wouldn't try to also work for 2-3 other employers at the same time. But, if the issue was simply that remote work impedes good communication, the results will be similar.
My guess, it will sometimes work. I guess we'll find out soon.
I recently quit my job so I could stop being a manager and return to IC, exactly because of this. In a WFH climate managers have to work twice as hard to stay competitive in the political games.
A "productive" manager that slows down the team isn't an effective manager at all, no matter how hard he or she is working.
The manager might be able to scapegoat a poor team member or two when poor results become evident, but sooner or later, he or she will have to pay the piper.
That forget the leadership on top of that leadership though!
Where I work, before covid they were working on expanding quite a bit the amount of office space but as far as I understands, all theses plans got cancelled and instead we won't have permanent desk and instead we will works remotely 2-3 days a week. That's coming from a company that had literally no remote works before Covid (except while travelling).
It represents so much money to have less office space, as long as the manager doesn't play too much with their staff efficiency during Covid, it will just make sense to save money there.
From my perspective, this is worst of all possible scenarios. Employees are still shackled to an expensive city, but now they must pay for housing that supports a dedicated "home office" space (e.g., a larger apartment with an extra room, or carving out part of their living room/bedroom). This is just shifting the cost burden of real estate from the company onto the employees.
For example, in Austin, these days anything located within a half hour of downtown tends to be horribly expensive. But just go a little beyond that and house/real estate prices drop precipitously. You're going to see a boom in these exurbs as these "mostly remote" jobs increase.
Seeing those empty Walgreens shelves was it for me.
Even the social programs and tolerance of the squalor is not that real, it is simply that the transient population is not affected: students and programmers. The same population that just left.
I appreciate all the optimism for San Francisco but it just seems to lack context from the mid-atlantic cities that are carcasses of an industrial era which never returned.
The brick and mortar boutiques were struggling there during the best market in the history of man kind.
This is more obvious to see when you leave. Its harder to see when your life is built around never acknowledging it and pouncing on everyone that says what they observe, on Nextdoor.
[1] https://www.sfchronicle.com/bayarea/philmatier/article/SF-ra... [2] https://www.sfchronicle.com/bayarea/philmatier/article/Rampa...
In SF, if you stop a shoplifter and they are hurt, if they are in a protected class etc, it's game over for you as an employee and possibly the store. Even if you stop someone, even if police come and arrest, DA is never going to prosecute. If they do prosecute, its a misdemeanor. It's pretty wild the first time you see it.
The clerks know who is coming in to steal. The stats above are from 2016. 2020 is worse, and much / most of the property crime goes unreported. If walgreens reported every shoplifting incident the numbers would be nuts.
For example - Walgreen runs about about a 4% margin and profit runs about $4 billion (all very rough numbers).
The problem with theft is that its a total loss so it can really chop into margins - these are shelves that you build a supply chain and staff to stock and then get zero.
Someone walks in with a backpack and just fills it full (maybe 50 - 100 individual items). Meanwhile you have 20 customers buying a few items (1-5). So you sell 100 items at 104% of all in cost (4% positive margin) and 100 walk out the door (if only the knapsack guy steals) at 0% of cost. Your margin is negative immediately (-40%+).
Walgreens actually has budgets for theft store managers try to work with in (pretty high ones actually). But theft the way it happens in SF - you need to understand there are no consequence, the only folks to get in trouble would be employees trying to stop it.
It also drives away customers you do want (older people filing scrips will go to what are perceived as safer locations) and moves other sales to online / delivery etc.
They are robbed while TV crews are filming about robberies :)
https://www.youtube.com/watch?v=7FmN4e1fNUo
SF talks a lot of crap about Amazon, but if amazon offers a safe / delivery to your garage / car / inside door pharmacy service it could be game over for a lot of players.
take the bay area salary, work remote in texas/arizona/nevada because its cheaper and rationalize it by saying its the politics thats making me move.
i've had this conversation 5 times this week with friends and colleagues, and none of them have actually spent more than a week in texas/arizona/nevada.
anyone that wants to live in one of those states, try it for a couple months if you can before taking the dive.
https://www.theguardian.com/us-news/ng-interactive/2017/dec/...
https://www.sfgate.com/bayarea/article/Another-San-Francisco...
Many San Francisco residents are very opposed to any language that smacks of anti-homelessness - arguably anti-homeless language is promoting systematic racism - which encourages a certain crypticness in commenting.
I can recognize that it is incapable of creating a more collaborative and sanitary urban environment, and that's just not worth paying for.
digitaltrees' reply gives vmception a nice invitation to expand, which would benefit all of us. Swipes like the one in your comment unfortunately have the opposite effect on conversation.
https://news.ycombinator.com/newsguidelines.html
People come in & take whatever they want because they know Walgreen's has a "no contact" policy (they won't stop you). They shoplift everything. And Walgreen's doesn't rush to re-stock.
There are a lot of homeless and drug addicts in that area, but I don't know firsthand if they're the shoplifters.
I spoke to a police sergeant at the Walgreen's at Broadway and Polk, and he said it's pretty bad, and that even he has a hard time getting the shoplifters to stop.
It won't be a problem much longer – that location is going to be shut down permanently.
Shoplifting has been a problem here even before Covid. Shoplifters know the law (<$950 is a misdemeanor), they know the police likely won't make an arrest, and even if they did, they know our DA likely won't prosecute.
That place was a nice idea just like Facebook, Twitter, and LinkedIn were.
NextDoor worked out just as well as the rest of them.
Some neighborhoods would never be accusative of a drug dealer, but would definitely like a review on the quality of what they are suspected of dealing.
Other neighborhoods would appreciate the warning about the coyote and move on.
Iterate ad nauseam for Goodwill donation trucks, VTA Lite Rail stations, recycling centers, whatever fits that neighborhood's definition of "undesirables" and what "attracts them".
Yes, there are good things regarding NextDoor and I have experienced some of them. However, in my experience the ratio skews poorly and towards suspicion and towards hate.
It's been a few years since I've been there and I have no regrets. On a nice day, it was a silly place.
I imagine the non-transient population, as you describe, cannot wait for them all to be gone, and the city can get its soul back.
like them, SF will also be affordable to artists and creatives again soon
A bunch of chair warmers and button pushers moved to Tahoe or Mazzula, so what? It is nice to have a huge house and some land, but city living is are a tradeoff. Living around a bunch of people means food, entertainment, and social options that simply can't be had from a Zoom room.
If CRE prices drop, the offices will still get filled to the brim with new companies in a couple of years. Will there be some CRE bankruptcies? Certainly. But has anyone looked at on time payments of office REITs? Keep an eye on those for dividend cuts as a predictor.
Thinking of starting a business here? I'll beat my drum once again -- it has never been a better time to setup shop here. Take risks when others panic.
Consider this a test whether you are a Californian or San Franciscan or someone from somewhere else here to rake in the google dollars. If the latter, I’m sorry your demands were not accomodated. Enjoy the farm in upstate NY or the frowns you get in Tahoe or Austin.
Austinite here who moved from New York, and previously from California. People actually talk to you out here in general and have been nothing but pleasant. There's also far less of a homeless issue and you can actually buy a house with a low six figure salary. Austin is great.
Wish I could be as cool as them.
I live in San Francisco and I want to do life here. I moved here very specifically to set down roots and raise my family in the SFBA.
I have the option to live anywhere in the world and I believe that the confluence of the west marin national seashore and the city center of San Francisco is unique in all the world for contrasting landscape, and energy boundaries, all within fifteen minutes driving.
On top of it all, Squaw Valley - the set location of all my childhood ski heroes - is just three hours away.
To a raise a family, you moved to a city with more dogs than children[1] and more drug addicts than high school students? [2] Or are you planning on moving to Marin County (close, very expensive, very nice), one of the southern suburbs (close, expensive, not nice), or Dublin/Pleasanton (far, less expensive, nice) once the kids are born?
Seriously asking. (About me: I prefer dogs; If I have a kid I prefer my kid hang out with dogs; my extended family is spread out in the SFBA from Daly City to Dublin; I grew up there; I left; I miss the weather).
[1] https://www.kqed.org/news/11669269/are-there-really-more-dog... [2] https://www.sfchronicle.com/bayarea/philmatier/article/San-F...
Having said that, your driving time estimates are incredible optimistic. Squaw is not 3 hours from SF, not even with no traffic (this scenario doesn't really exist) and good weather. Getting anywhere in the bay area also takes significantly longer due to traffic which is pretty bad most of the day.
I'm sure this is mainly due to the pandemic, but I just drove back from there last month (slightly farther than Squaw, actually), and it took 3 hours and a single-digit number of minutes. Hell, the travel time Google is showing from Squaw right now is 3 hours and 9 minutes.
I do agree that's atypical. But... so what? "Correct" the parent's statement to "4 hours" and the argument is just as valid. Seems like you're nitpicking and missing the forest for the trees.
The parks are beautiful, and you can get out into nature in about an hour's drive.
Living in SF is expensive, but salaries are high too. Especially if you're in tech like most on HN, you can have a very nice lifestyle here.
But anyways I agree SF is beautiful in many areas, and no one should listen to any opinions of SF from anyone who calls it "San Fran" :)
They regularly host top performers from around the world -- Itzhak Perlman, Gustavo Dudamel, Yuja Wang, and so many more. And Michael Tilson Thomas is a treasure. Anyway, I can ramble about this forever and I appreciate the response :)
I do welcome the departure of people who don't actually like the city and have been "forced" to live here due to their job. I feel like the city will be a lot healthier from a community standpoint with a higher percentage of people who want to live here.
The pandemic has managed to cure a few of San Francisco's ills. Rents and real estate prices are trending down towards sanity, the city/county government has managed to get a large number of homeless folks situated indoors, restaurants are getting outdoor seating space, and initiatives to massively reduce the amount of red tape small business have to work through are getting fast tracked. All that, and the number of COVID-19 cases and deaths are extremely low relative to the rest of the country, even as businesses re-open. The post-pandemic San Francisco has a decent shot at being a livable city again (though the property crime problem isn't yet on a path to being solved).
Our company has decided not to reopen a majority of it’s office space. Ironically, the Bay Area office is remaining open while other offices are being closed, but even there it will be a shadow of it’s former self
I would like local and federal governments to come up with a plan for the inevitable bail out that transforms some of this space into more livable space, more community access, and more on-demand office space.
Apple’s HQ has turned into the worlds largest set piece for a iPhone ad.
San Fran is going to come out of COVID dramatically weaker. That’s been inevitable for a while, the pandemic just accelerated it.
Inundated? How so? What are you seeing?
Tax benefits, work-life balance and bigger homes? Really, you can see these changes in the last 6 months of a pandemic? I could be wrong but I don't think the majority of employers are letting employees change states (and state taxes). WFH does not mean work from anywhere, especially tax-wise.
This all sounds plausible longer term but to say you're inundated seems like it must be hyperbolic.
Surely not but I would wager that most employees work for companies that already have multi-state (and in many cases multi-national) operations, and therefore have the administrative infrastructure to support employees in arbitrary states.
After during research, you come to the conclusion that yes, productivity won’t fall. However, you note that finance has flagged the payrolls issue.
Your boss tells payroll to sort out multi state taxes.
If only the world was so simple, haha.
Stories about problems in California get a lot of clicks, so people see a couple week’s worth of bad news and think the state is on fire is ways that aren’t due to actual flames.
Of course, the other way to look at the de-campers is that they were going to move to the burbs inevitably. Which good for them, but cities are injured, not dead.
It strikes a nerve with me because in Massachusetts a similar sentiment is expressed by Boston-Cambridge folks about Lowell, Worcester, and other periphery cities. Its simply mot true that these places are devoid of culture snd cuisine and in the age of Yelp and Google Maps it takes almost no time to find it.
But SF has more high quality restaurants within a 20min walk of my apartment than my hometown had in total. Average restaurant quality is higher too. Just because there’s more competition.
Another fun example: in SF we have 5 grocery stores within a 10min walk. Back home the nearest grocery store was a 3min walk away, great. But the next one after that was 10min. To get to a proper supermarket size grocery store ... that’s a car trip. In SF it’s a 15min walk.
Density is wonderful. There’s economies of scale that you get at 18,400 people per square mile that you just can’t pull off at 4,500.
The ultimate test for a city is this: Do you have 5 “asian restaurants” or do you have 5 south vietnamese, 3 north vietnamese, 10 cantonese, 5 ramen, 6 japanese grill, 3 sushi, 4 dimsum, etc
For example back home we had the mexican restaurant, here you have 10 for each type of mexican food.
If it weren’t for SF’s high concentration of my industry (tech), I’d likely move to NYC, London, or Paris.
I'd say Paris and London (and most > 1m people cities in Europe and many in Asia) are also more walkable than SF.
Agreed, and I think the parent was saying that LA and Fremont are less walkable than SF, not that Tokyo is.
There are exceptional cuisine resources in San Francisco, and amazing grocery stores, like Bi-Rite and Rainbow, but as a whole the situation neither benefits from the culinary community that it used to have (how many people have moved away) or from the kind of consumer that it used to have (well to-do kids just out of Stanford or a midwest school are not people who know what buffalo mozzarella is, or why you'd want to buy it, but their money rapidly became the only money that mattered).
So here’s some perspective: My entire home country has 6 Michelin star restaurants. Of those, 1 is in the capital which is the home town I’m comparing above.
SF has 7 restaurants with 3 stars.
Places with stars don't have the economic situation I discussed: they have the money to really go beyond their surroundings.
The competition means that a lot of places scraping by in smaller cities can’t make it in a bigger city. In theory that means median quality is higher.
And even a 3-star restaurant won’t survive in a place that doesn’t get enough well-to-do visitors to sustain it.
For a more casual perspective, SF has 126 restaurants on the Michelin list (not all hve stars). My entire home country has 52.
Quality food has more to do with agriculture and supply chains than money or density per se -- good salad is not something you can buy if no one is growing it -- and more and more areas in the US have made the transition to that kind of farming and production.
Now challenging SF on grocery stores -- that's another matter. They are drawing on deep roots, there.
In fact some of the best food & drink I've had was in parts of Nebraska & Missouri and Wisconsin. You absolutely don't need to be in the city to get good food & entertainment.
I wonder if there is precedent with the migration out of NYC and the like in the post-WWII/mid Century period. It was a real boom time for the West...California in particular. A lot of folks came from back East or the Midwest...
Not many tried to explicitly recreate their East Coast/Midwest life in the West...in fact they made a point of trying to create a unique California “lifestyle”. That new California lifestyle was the hot US cultural trend from, say, 1960 to 1990.
May happen again, but in the reverse direction, Californians creating a new Montanan/Utahn/Ohioan/etc. culture by engaging in the roots of their new not-California and building something better, bringing their creativity while leaving behind their California. Of course, if they try merely to graft a California-lite onto their new rootstock...well, they could be an important new source of protein for the locals...
I don’t think this creative dynamic could happen in other “tech hub cities”, because, frankly, there is no essential culture there to work with. Austin may be nice, but it seems more parasite on Texas culture than symbiont.
(Which has been a slam against California over the years too. What’s the difference between California and yogurt? Yogurt has an active living culture. More people outside of California believe that than you might think. It’s been 30 years since CA has been a dominant nationwide cultural thing, Hollywood as almost a metaculture notwithstanding. Silicon Valley? That’s getting onto 25 years old now...that’s senescent in US cultural terms.)
CA, like it or not, has an outsized influence to the whole world, to the point that it kinda becomes 'undistinguishable' as it is everywhere. I am talking about tech/SF/SV and Hollywood. They have risen to the 'metaculture' level which few places/countries have.
ps, HN, reddit, FB, started in the east coast, but had to move in the west in order to flourish. Same with the Movie industry. It started in the NYC and New Jersey suburbs, but had to move West in order to flourish.
But this pandemic is going to be crushing state and municipal budgets across the country, and many of the worst-hit places will be rural and exurban.
So long as the fed can print money the federal government can spend. It cares not about the states or how much income tax flows in. Hence, it can run up structural deficits until faith is lost in the $ (inflation).
State governments, on the other hand, cannot print money. They must operate in a zero-sum mode.
But the GOP Senate intransigently refuses to act or even negotiate, and so state/local governments are getting crushed.
That's a political decision and the gop has decided to let the states that need bailouts diy it.
I don't think it's wise, but it sure is within gop policy aims
As a bonus irony, the "taker" states also tend to house the most vociferously free-market/anti-government types.
There are only ten donor states in 2019:
And these are the top taker states: The majority of those top taker states are under Democratic Party control, and 40 out of 50 states are takers of federal dollars, so I don't see much evidence for your point.In every state though, rural and ex-urban areas are subsidized by federal and state tax revenue coming from cities.
New York put together a report for 2017 that seems more reliable than the list you are using: https://www.osc.state.ny.us/reports/budget/2018/federal-budg...
Instead of income or property taxes, some places raise money via sales taxes instead, or other regressive schemes. Some places raise money by questionable fines on their own residents. Some places make money off the back of wanton environmental destruction.
Some just accept shoddy local services. (When you compare the US to other wealthy nations, it’s really shocking how poor our basic infrastructure and public services are, even in the richest US states and cities.)
But most low-tax areas of the US are substantially supported by federal-level transfers, for example from federal highway budget, from military bases and defense contracting located there, from federal agriculture subsidies, from federal welfare and healthcare funding, from social security payments to people who retired somewhere different than they lived while actively working, ...
The U.S. seems to be stuck in a loop wherein the available funds are argued about endlessly, and everybody acts as if that's the only dimension about which to speak and win. Not nearly enough is done to boost competence in the government sector. I think this is plenty true even if we set aside the current U.S. administration in which a number of federal entities are headed by naked toadies (to be fair, it's certainly not true of all federal organizations even now).
I tend to agree with you that the U.S. is probably not taxing enough for consistently high-quality outcomes in areas where the government is responsible. Yet I'm sympathetic to those that point to places where tax rates are high and so is wastefulness. But when the only lever it seems that can be pulled is on the revenue/spending, it's no wonder the correlation between that lever position and good outcomes is low - it ignores the competence with which any of those funds are managed.
I think it's entirely possible to have competent government if that is made a priority and addressed with some flexibility.
And are we really going to pretend that "high-tax" blue states don't take federal funds?
Your post here makes it sound like you should move to a basically socialist European country and stop complaining.
After the pandemic, we'll have the chance to see real businesses start here that don't rely on giant checks from VCs for viability; new restaurants will see more opportunities to take risks, as the cost to rent will collapse; and we'll end up with people moving here who want to live here, not those who despise the city but feel compelled to move here in pursuit of the almighty dollar.
I encourage companies to continue to support remote work. And, if you do hate the city, please leave, move to Boise, and let people in who will appreciate it.
Ghost towns are not the same small towns. Larger cities become ghost cities not go back to being smaller.
SF is lot more likely to become Detroit if businesses leave, everyone should worry about that.
A lot of that optimism that makes SF vibrant is driven by the immigrant population [1].
The exodus that OP prefers, if it comes to pass will be lot more them than the 2nd-3rd gen residents
[1] immigrants to San Fran, or California or the U.S.
I've lived in a lot of these other states, TX, NC, NV... No matter how big your backyard is, the grass isn't greener there.
This problem is entirely of the Bay Area’s own making. They have been pursuing exclusionary housing policies while cranking up taxes and spending for a long long time. Now the revenue base for those taxes are collapsing at the exact time they need the revenue to weather the storm.
This is not true. The first was either in Modesto in 1885, LA in 1908, or NYC in 1916, depending on how you define things. Definitely not SF, though.
Doesn’t really change your point, I just want to correct an urban legend.
You missed a "not" there.
You talk about that like it's a law of Physics.
It's not.
Plus, land-use laws would have to change, which is also extremely difficult.
Right up until 50% of the city center is empty. You’ll see those laws changing real soon.
But I wonder what people could do with commercial office space so cheap? For startups that can't really go 100% remote (mostly hardware) that's a dream come true!
(There are only 96 five-minutes bathroom breaks available during 8-hour work day, to share between all employees.)
The homes built under these rules are generally poorer quality, they tend to be smaller and more expensive to run than an otherwise equivalent new build home. But they are homes, and it's not as though San Francisco has too many of those.
At the extreme of what can be done, Birmingham is a British industrial city, and once upon a time as it began to take off there was enormous pressure to build homes so they constructed what were called "Back to backs". These were groups of homes packed together "back to back" so that you only had windows facing out one way, the other three sides of your home were walled in by other housing. They were squalid and almost all of them were torn down, although the World Wars diverted resources so that the last of them ceased to be homes only in the mid-20th century.
But historical preservation means Birmingham still has one set of Back to Backs, most of which is a museum you can tour to see how they were lived in during different periods, but one home was instead converted into a fairly nice two person overnight apartment you can hire. They plumbed a modern bathroom with shower and toilet, kitchen and so on, and of course in the 21st century we can light interior spaces cheaply and easily so it doesn't feel permanently gloomy, also of course it's just one couple in a double bed for one or two nights, whereas these would have been homes for families of eight people for a lifetime...
So yes, if there's money you can add everything. A Back to Back as constructed has zero running water, let alone sewage, unlike an office building so they'll have had to use modern narrow bore sewage pumping and other expensive tricks to make it work, but if the building would otherwise sit empty...
https://www.theguardian.com/money/2019/mar/02/will-these-be-...
You forgot to read the rest of the sentence including the very important “due to cost”.
No shit we can technically do it and have done it.
There are intentional communities that support themselves with their own, often agriculture based, products sold on the open market. Plus the usual homesteading.
The skills needed for this kind of work are not highly specialized and in general not well paid, therefore levelling the playing field for everyone in the group.
I think the opportunity cost for IT professionals building a SaaS to support the community is a lot higher, and while I would love to see that work, the chances of key community members dropping out to make more money for themselves is fairly high. I'm not sure if a simple time based system for everyone involved is fair, given the high upfront investment to get the skills needed for IT work.
But yes, your statement is true. What SF needs is a revamp of its zoning and "neighborhood preservation" policies that are not setting it up for resilience against things like this.
I therefore have a doubt about the current COVID-19 Office Space Glut in San Francisco, let alone the Bay Area, on top of all that.
It's a temporary shift and things will balance out in a few years.
Between the high tax corporate rates of SF & California along with increased salary due to cost of living, an SF-based engineer must produce 2x as much output as an engineer based elsewhere and 3x as one based on Canada.
Is this still true? Rents are plummeting because of people leaving. Plenty of apartments for rent right now. No need to convert commercial space.
There are dozens of cities that have everything else that SF has. If $$ goes away it will crash so hard it will make Detroit look like a model city.
My hope that after election hysteria is over and Vaccines get approved we will be back to something resembling normal by next summer. SF has a huge value as a place for tech with all its other faults it would suck to loose it
And beyond that, people will continue to live in SF just because they want to, not because they have to for their job. Sure, some people will leave because they never really wanted to live here in the first place, but I promise you there are plenty of us who will stay, regardless.
The Mayor of NYC said a few days ago, 'Midtown is not the center of the universe' when asked about sudden new squalor and economic catastrophe. Unfortunately it is the center of jobs for the region. Is SF run like this as well?
Billionaires suddenly losing their tenants is now economic catastrophe?
Is this another variant of ‘too big to fail’?
Those buildings won’t be going anywhere regardless of anything else.
The hubris and myopia of the 'eat the rich' mentality is galling and a little depressing.
My expectation is that they’re pretty much dead already (after 6 months of this).
Even if not, while it sucks for them, I don’t think it will necessarily kill them, more vacancy may mean less customers, but it also means lower prices.
Presumably there were shops before SF became juppy heaven, so it will have them after.
The real losers are the middle class whos savings are invested in securities that rely on corporate real estate. and then obviously the lower class because they get screwed no matter what and they provide services easily stopped by covid.
plenty of people are doing fine, that's why they're going out to buy million dollar covid homes.
The federal government and to some extent the states have the money and power; expecting a mayor to wave a magic wand and fix it is, well... optimistic.
Business seems to be moving to places like Austin. Why do you think that is?
This is yet another version of the classic “No one goes there anymore, it’s too crowded”
But there's glee in these comments. People are saying things like, who cares about billionnaires and their office buildings.
There is no data underlying this statement whatsoever.
https://www.gradingstates.org/alecs-rich-states-poor-states/...
a simple google search shows figures. there are lots. rent data is the simplest.
This is exactly why I've long said that the only course that should be required of every college major (or ideally every high school graduate) is basic accounting. The number of things in a system is the cumulative result of all inflows and outflows. The population of a city can fall without any kind of change in the outflow process. By the way population flows are both domestic and international. If you stop foreign in-migration but you don't touch domestic out-migration then the population will decline.
By the way SF's population also declined 2000-2009 and sequentially in each of 2001, 2002, 2003, 2004, and 2005. So unless you have real data showing SF population already fell more than 4%, I also question "unseen in decades".
During regular Monday - Friday business hours, the city's population surges by at least 20 percent -- or more than 160,000 people. https://www.kqed.org/lowdown/11327/interactive-how-san-franc...
that number could be wrong. but that 20% beats your 4% by a comfy margin. and that 20% has special impact on the city center that employs many service workers. those people are no longer commuting. if they're no longer commuting, then prices of apartments close to jobs will lose value. then rents will fall. rents are hard data that you apparently refuse to google.
I really think most of our society actually operates on the level of a 14-year-old, with a ton of rationalization on top for why it makes perfect sense.
Maybe they have favorable taxes or something, but so so a lot of other cities that are ghost towns.
Meanwhile, you couldn’t pay me an extra 100k a year to consider moving to the Midwest or Texas. I just value weather and nature and outdoor activities far too much to deal with those places. I guess if your family is there or something, but most of the year is unbearable away from the west coast.
https://zwischenzugs.com/2020/07/25/the-halving-of-the-centr...
The ramifications are pretty bad in London, but I imagine even worse in SF, where there's such a predominance of remote-friendly work.
*that may be a little too close to the truth
The peninsula, where it always has been, got hammered.
At the time I was commuting from SF to the mid-peninsula. I recall meeting with one of my clients in a field-house sized cubicle farm which must've had at least 300 desks, probably more. We were the only two people in there in the middle of the day on a weekday.
Suburban office space gets spooky during recessions, due to its sheer bigness...
I also took a short trip to Okinawa (the beach islands of Japan) and the Airbnb prices were anomalously low, in fact it was more expensive renting a car for the time I was there than my stay. Not surprising, considering that last year ~31 million tourists visited Japan but this year that number must be very low.
http://trreb.ca/index.php/market-news/market-stats#commercia...
If leasing activity and sales volume are good indicators, it’s down. Though prices are up slightly…
Also that data is nation-wide, and not specifically for Toronto, which is reasonable to assume would be the hardest hit. (Biggest city, and Ontario has not controlled this as well as British Columbia.)
Toronto residential rentals are dropping but not that quickly. Construction has not slowed and condos are popping up like mushrooms. Prices seem stable for now
There is A LOT of hiring by US companies. Canadian labor is so cheap compared to CA. Every startup past series A seems to be opening a Toronto branch. This is awesome news as it will drive salaries up.
On another positive side we do not have homeless shitting on every corner. Drug addict camps are pretty small and localized and Winter is Coming. Plus courts are actually letting city clear the encampments.
I still can’t believe people are paying $600,000+ CAD for a 533 square-foot condo, and yet, condo prices are even headed up a bit.
The city council ought to find a way to stop this kind of monoculture though I’m not sure how it could reasonably be done.
Also Palantir is renting so the basis would presumably be set by the landlord’s overall bill. Have to say that that’s not itself bad: a small number of entities own a lot of the commercial real estate in the city.
Many like working at home, but a lot of us have rather ad-hoc situations. Even with a perfect home office, kids etc at home can make concentration tough. And the space separation and seeing other adults is very valuable.
as expected, rents are still on the NY retail space level
https://www.youtube.com/watch?v=RX1uzbAOnXc
Is it possible to short mortgage backed securities?
https://www.pimco.com/en-us/resources/education/understandin...
https://www.investopedia.com/articles/optioninvestor/08/cds....
https://www.quora.com/Can-retail-investors-buy-credit-defaul...
Here's the WSJ article he was referring to: https://archive.is/QjPNf
Yes, you can buy a credit default swap. They might not be as underpriced as they were ahead of the financial crisis of 2007-2008.
Top 10% maybe, since that’s around 125-150k.
https://www.mic.com/articles/2636/compared-to-the-rest-of-th...
A couple of two, both making $200k/year is outside the 1%.
When REITs and the like lose money, at least those losses are tied up to their company. Worst case, they go bust - but their owners aren't personally responsible for the losses.
Now, imagine being some average tech-Joe that bought a house for $2M last year (almost entirely on a mortgage), the job market goes to sh!t, and subsequently the housing market follows after. You're forced to sell, and take a 20% loss - selling it for $1.6M
You're now $400k in the red.
That's a massive debt to carry around, if you're not able to continue in some high-earning job.
This is something you (unfortunately) see in cities that are heavily affected by boom/bust cycles.
Price volatility can be a real killer if you've stretched your resources to the max, even if the market rebounds. Solvency can be a killer.
(But as for why this could affect average people - I'd imagine there being some correlation between business real-estate, and private real-estate. The general real-estate market has a big market psychology component to it. So hysteria in one market could very well transition to another)
Office space is vacant, property prices drop, tax revenue drop, city services get reduced.
Once we had things under control, we could loosen up quarantine, then when it got shitty again, tighten it up again and pay people to stay home. It would have goddamn paid for itself. If people could quarantine and know their livelihoods were secure, they wouldn't be so upset about it.
edit: this is a rehearsal for when the next coronavirus comes around that has an infection rate like covid-19 but a death rate like MURS. It's going to whip through the world like the plague.
[1] https://www.irs.gov/newsroom/159-million-economic-impact-pay...
[2] https://www.washingtonpost.com/graphics/2020/business/corona...
Great, but the bill cost $2T. Same with the recent one that’s been put on ice. Because there’s no such thing as a bill that only contains direct cash payments to citizens, they’re loaded up with pork and stuff that doesn’t even having anything to do with the pandemic.
... and then in 2021 we can all scratch our heads and wonder why income inequality is worse than ever, and despite all this spending, we didn't even make an appreciable dent in the impact of Covid-19 on public health.
Corporate lobbyists know the government is a cash cow, and they take advantage of this. They will always get relief if they ask for it.
Direct payments are the opposite of this.
If you wanted to stop that, you'd have to actually pay for your spending, perhaps by implement some sort of wealth tax or dramatically increasing income taxes. Of course, nobody wants to increase taxes, so we just keep printing money to try and fix every problem.
And I think you're confusing monetary stimulus with fiscal stimulus.
> It doesn't matter how the money is distributed, it tends to inflate asset prices
For the US, that's not true. The US Dollar is the world's reserve currency, and the Fed isn't worried about inflation, but a lack of money supply. The pandemic has led to a huge demand for safe assets, including Treasury bonds, which has led to incredibly low interest rates on Treasury bonds, and a stronger dollar. See, for example, this article: https://www.washingtonpost.com/business/2020/04/05/what-2-tr....
Direct payments and rent forgiveness are not "printing money", they are limited, specific relief packages targeted at people in need. These are people who are about to be evicted, homeless, in medical debt, etc. These people need help, or the consequences will wreak havoc on a colossal scale.
For example: suppose hospitality workers are paid to stay at home. How is that paid for? Well actually it's entiely paid for by people having fewer of the hospitality experiences that they are used to. It is obvious when you take money out of the equation that hospitality workers staying at home will not cause there to be any less of essentials such as food and shelter to go around.
There are other sectors like manufacturing where there is a real cost to be paid. But that could be as small as delaying the purchase of the manufactured goods by period of lockdown. No so bad.
Whem you look at it like this way, QE seems entirely justified. All it really does is spread the effects accross the economy to people who can bear them, and avoids financially ruining people which will be a primaey cause of long term economic damage once things reopen.
I see the problem as a lack of agility of the economy. The hospitality works could have another job, but those jobs can't get created fast enough. How can they get paid by other people rather than the government.
Another question is post-covid do we want to ramp up consumption again. Do we need people flying to hotels to meet up, or will Zoom do? And if Zoom will do, what of the hospitality industry (already taking a stab wound from Airbnb etc.).
There shouldn't need to be any debt involved. It should be as simple as printing money (the central bank can do this) and distributing it to the people who need it. Normally this would cause excessive inflation because it would be injecting extra money into the economy. But it shouldn't in this case because it's injecting money that was already there until very recently.
Most of the companies receiving relief were badly managed before the pandemic, and they should be allowed to fail. But it's very hard to structure relief in a fair and effective way.
How many people are/were barely attached to the banking system? Especially if you’re working, well, a bit under the table, in day labor situations like construction or office cleaning.
I got my stimulus check. Basically immediately. Because I have a standard 9–5 salaried job with direct deposit, so the government knew exactly where to send the money. But that seems to obviously not have the force multiplier effect of sending it to someone who just got fired from a movie theater.
“salaried job with direct deposit”
No it's not. Seemed to work fine in July didn't it? It's obviously a political problem. Why can't we just use the same mechanism again?
edit: Maybe you're talking about the business/paycheck replacement relief and not the individual checks like the parent was?
I dont think temporary relief will make or break a business model effected by the pandemic. On some of those edge cases we will need to decide whether the government will get their money back or accept losses.
I think we can handle setting up a payment system...
Like what kind of weak ass excuse is that? You can't figure out how to pay everyone?
Please. Give me a break.
Ubi is the effective and fair way to stimulate the economy btw.
All this stimulus aimed at businesses is absolutely moronic.
If people know they have secure pay coming in they will spend the money. Its the uncertainty that causes people to hard cash.
Businesses don't need the cash, if they can't stay afloat during this they shouldn't be allowed to make it through.
I do believe they deserve some help,aybe tax breaks, maybe short term allowance to make people redundant / reduce so they can equalise the books but there is no fair way to give them money and not the people.
Supporting consumers obviously worked this year, the fact that a 30% drop in economic activity has been as mild systematically as it has is direct counter evidence to your statement.
If we do no redistribution and simply allow people to starve in the streets then revolution is coming.
On the other hand, if we prioritize helping people, and stop propping up failing businesses then we can maintain social stability long enough for the economy to restructure according to natural economic forces.
I agree that there was a massive mal-investment in much of the Eurozone post 2002 (I'm irish and remember this well), but I don't really see how this maps to socialism/socialists. Can you clarify?
In contrast, the Republican party stole medical supplies from blue states[0] during the acute phase of the pandemic and chose to minimize the federal response to SARS-CoV-2 because the pandemic was only killing Democrats[1]. Depriving your political opponents of medical supplies during a pandemic is arguably a crime against humanity.
Neither of these choices are particularly good, but one choice is far worse than the other.
[0] https://www.snopes.com/fact-check/trump-admin-seizing-ppe/
[1] https://www.vanityfair.com/news/2020/07/how-jared-kushners-s...
And as my sibling comment mentioned, eliminating first past the post would, in my opinion, be a gigantic improvement. If you’re in Massachusetts, please vote Yes on 2 this election so we can have ranked choice voting statewide.
Better than term limits would be an informed electorate who would vote for a new person once the old one stopped caring or being effective. I think limits are a poor bandaid.
I would imagine people are experiencing such things already seeing as how it’s been seven months with nothing but a single $1200 check.
The generic one which I detached was https://news.ycombinator.com/item?id=24890238 - detach means it's no longer a reply to your comment but is rather a top-level comment that can therefore float to a lower location on the page.
There's nothing wrong with https://news.ycombinator.com/item?id=24890238 either. It was just more generic. Also important to understand: the moderation decision is not primarily about a comment, it's about the entire subtree. I don't want people to feel blamed for what they posted, especially when it was other commenters who ended up going further off topic.
Is it surprising to people who are working from home, that the office they used to work in and cannot yet return to is now vacant?
People have been calling the collapse of San Francisco since the gold rush. It's clearly had its ups and downs, but the overall trend is clear too.
But if they are looking to cut back on rent costs it makes me think times are tough. That paying attention to cutting this cost (and the hassle it will cause now and when things return to normal), and taking that attention away from growth means that there is an issue.
Obviously this isn't the permanent collapse of SF but it might be a nail in it's long term coffin. I can't imagine in 50 years time, with globalisation, with global currencies, remote working, VR etc. that you'd need to be tied to a physical location to innovate or get investment.