This morning, Josh Brown, CEO of Ritholtz Wealth Management and ubiquitous financial media personality (Twitter handle @ReformedBroker), wrote up his impressions of San Francisco. They’re very good, he’s mostly right, you should read them.
But when he says everybody’s talking about their startup or some aspect of the tech industry, he’s not exactly right.
Yes, there are plenty of people who use this chatter about funding rounds and term sheets as a way to indicate social status.
But the much more common conversation among people who live here, which can be used in a similar way, is about real estate.
Just in the last seven days, I’ve had conversations about:
- The guy who bought a house in a marginal area of San Francisco 2008 for $US390,000, fixed it up, and just listed it for $US600,000, expecting to get $US800,000.
- The couple who just bought a four-unit building in what used to be a pretty scary block in the Mission — the kind of block where you wouldn’t have wanted to walk around alone at night unless you had your wits about you — and is now renting the two-bedroom units out for $US6,000 a month. The owners got the money for the place by selling their successful startup. Nearly all of the tenants work for startups or big tech companies.
- A former colleague who rented a house in Marin County, a suburban area north of town, a year ago, and is worried that he’ll never get rid of his 70-minute commute because he and his wife cannot afford to buy anything in Marin or closer to San Francisco. The last house they bid on, they bid $US100,000 over asking. They were not in the top six bidders.
- Another person in the media industry who has been shopping for a house for the last three months and was gratified that he was “only” outbid by $US50,000 on the last house he and his girlfriend bid on.
- Two separate couples griping about how their landlords didn’t fix anything, but at least they hadn’t raised the rent to market rates, so they were going to stay quiet. (In San Francisco, rent control only applies to multi-unit buildings; these are standalone houses). One lamented that the family would never be able to move off the busy street they’re now on.
The tech industry boom is one big reason why housing has gotten so ridiculous in San Francisco, but there’s also a lot of foreign money coming in — people tell stories of Chinese nationals who are diversifying by buying property in California, paying cash — and the fact that San Francisco is a tiny city (only 46 square miles) with very little new housing stock.
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