Inside the Bubble

15 thoughts on “Inside the Bubble”

  1. I found your blog when I was researching a place to live. My husband and I currently live in San Francisco with 2 little kids. Your post “What are you willing to compromise for location?” really spoke to me. We ended up choosing “a smaller more manageable city that provides most (but not all) of what premier cities offer at a price that makes sense” as you recommended, which for us is Frederick, MD. It will satisfy our adult needs for walkability and independent shops and restaurants, while still being family-friendly and getting more space for the kids. I hope you can check out Frederick’s cute little downtown sometime!

  2. Enjoyed the post Johnny. In the last ten years I have done the urban and now the Mayberry thing. For this traveler there is no clear winner. We know what makes the city tick – the food, the events and other happenings, the choice. Rubbing elbows with humanity in all its flavors. Well I can also report I find it nice in a small town too. I like seeing the stars. I like the quiet at night, and sleeping with the window open. I like the greater green space and more abundant flora and fauna. But neither space really ticks all the boxes, does it.

  3. Johnny — I lived in a traditional Japanese house in Taipei — moved out after an earthquake almost knocked it down and moved into a new apartment building with air conditioning. It was an improvement. I also lived in the venerable Chungking Mansions in Kowloon for a while. It was pretty crazy, and very organic, but I guess it has been cleaned up now.

    Before they built those skyscrapers full of tiny apartments in Hong Kong a lot of people lived in boats in the harbor. The problem is HK isn’t bad planning, the problem is there are a lot of people and not much land.

  4. It may be a bubble, but i think San Francisco proper is on a trajectory to turn into something like Manhattan. If this bubble pops, another one will come. Once the densification feedback loop starts, there’s no stopping it. Manhattan avoided the sprawl thing altogether, San Francisco is getting over it. Also like Manhattan (and Mumbai, Hong Kong and Singapore) it is at an important port, it has a high international profile, and it is mostly cut off from its surroundings by water.

  5. My brother lives in Oakland. Doesn’t seem too crazy expensive (I own a small house in Cambridge, MA on a schoolteacher’s salary), but maybe I’m missing something. Is Oakland considered too far away or dangerous or kooky? What IS what you call “the Oakland thing”? I guess I’ll ask my brother, but he’ll probably just say that Oakland is to SF as Queens is to Manhattan. When I lived in NY I lived Manhattan, but pretty far uptown. Now I probably couldn’t. Neighborhoods change, and in a highly unequal society you shouldn’t expect to live right downtown in a very trendy city. No?

    1. Eric, I’m working on another blog post about the Oakland situation. Keep checking back. In the meantime, see the previous two here:

      Parts of Oakland like Rockridge are in fact the “Queens” of the Bay Area. Other parts can be compared favorably to Brooklyn. But you pay a lot extra for the privilege of living in those sections of town. Most of Oakland is either “The Bronx” or “Staten Island”. In other words, it’s either too crappy or too dull and generally too far (both physically and socially) from the things that make people want to be in the San Francisco region.

      The “thing” about Oakland is that it’s right in the middle of a lot of great stuff: Culture to the west in San Francisco, high paying jobs to the south in Silicon Valley, prosperous suburbs like Walnut Creek to the east, and great natural beauty in Marin, Napa, and Sonoma to the north. Oakland also has an international airport, seaport, amazing industrial infrastructure, and loads of great public transportation along with the usual freeway connections. In theory it should be thriving. And in some neighborhoods it is. But most of Oakland’s cost/benefit analysis doesn’t add up. It isn’t cheap enough or good enough relative to other options. By the time you get down to the “affordable” $400,000 fixer upper in a dodgy neighborhood you’ve already compromised yourself out of most of the things you want from the Bay Area. If you can afford a $1,000,000 cottage in Rockridge or a $700,000 condo in the Emeryville area… why not just move to one of the funky parts of Denver or Houston where you get five times as much for half the price? If Denver or Houston aren’t cool or edgy enough for you there’s New Orleans, or some forgotten corner of Miami or Portland…

  6. Again, thanks for the great post. Well, my bf and I lived in a cheap, moldy apartment in a nicer area in Portland for 10 years and saved up $30k. When the bottom dropped out in 2011, we sprung for a house way out in East Cully neighborhood, which was not and still isn’t considered desirable by many people’s standards. We bought a 1350 sq ft (4 bed, 2 bath) foreclosure on a quarter acre for $127k. Our monthly mortgage/tax/insurance is $860, which is what a person might pay for a studio apartment around where we live now. I’ve saved up another $30k and am thinking of converting an existing building in the backyard into a rental. Even if this area never gets any sexier or more walkable, I still wouldn’t move to a cuter house with more architectural detailing, closer-in towards the city center (I’m too cheeeeep!). I always think about the former owners who got foreclosed on and remember that that could still be us if some unforeseen medical catastrophe hits…

    1. Biki, Very smart. Debt is not your friend. And a granny flat in the back garden (legal in Portland!) would be a win/win/win for you, your tenants, and the neighborhood. I actually like Cully. I had to get to know the area slowly to discover its charms because it doesn’t immediately scream “Super Cool and Amazingly Sexy!” It’s like the difference between the captain of the football team or head cheerleader in high school vs. the quiet shy boy/girl you meet at the library. It’s very livable over the long haul. Good for you.

  7. In 2011, my wife and I (+toddler) decided it was time to buy. We had been in a spacious (yet dated and moldy) rent-controlled 2-bdr flat in the Outer Richmond for $1500. We wanted 3+ bdr, decent schools, low crime. Even though 2011 was the bottom of the last bust, we could not find anything in SF proper that we liked at our price point (<500k). Reality set in and we started a wide ranging search – Pleasant Hill, Dublin, Daly City, San Jose… Seattle, Sacramento and Portland were also seriously discussed but we're Bay Area natives who have built up lives in SF over years and didn't want to leave.

    Eventually we bought a 3/1 1050 sq ft home in South San Francisco for $435k. With decent income, we can comfortably afford it but it's a lot to pay for a small 1950s house. SSF is historically a blue collar town: schools are so-so and it's generally not very scenic or walkable, but that was the price we paid to stay close to SF.

    Homes on my block are now going for 650-700k, unremodeled. With an extension or new finishes, tack on an extra 100k. So even though we're "in", what will our kids do? Do I even want to live in an area middle class people (e.g. my friends and family) cannot afford to settle down in? Should I cash out now and just buy a mortgage-free McMansion somewhere in the boondocks? Personally, I'm waiting for the bubble to burst to get an idea of long-term trends.

    1. This is a common dilemma in rapidly gentrifying places like San Francisco, Boston, New York, etc. and there are no good answers. I also hear a slightly different version of this from downwardly mobile people in outer suburbs where the 2008 housing crisis has not yet stabilized and where employment prospects continue to decline. Where do you go from here? In the end you need to compromise on something. Have you read these related blog posts?

  8. It’s a bubble, but I can’t help but think the high real estate prices in vibrant cities like San Francisco and Manhattan is due to the fact that America lacks a good supply of high quality urban environments. Local politics – like limitations and height and density are still harming somewhat, but we need to increase the supply of quality urban places around America so not everyone wants to flood to San Fran.

    1. Andrew,

      Yes and no. Yes, people are flooding quality urban environments like NYC and San Francisco and driving up the cost of real estate. But there are still many, many great cities, neighborhoods, and buildings all over the country with the same qualities that are radically undervalued. NYC and SF have the additional benefit of a hyperactive local economy (finance, tech, foreign investment) that push things over the top and into serious bubble territory. Building new urbanism is too hard administratively and often too expensive. We need to re-inhabit the old urbanism in Buffalo, Cincinnati, Pittsburgh, etc that is already in place and fabulously inexpensive. When enough talent moves and concentrates in a town the jobs will emerge.

  9. Good read, Johnny. When my wife and I relocated here four years ago we thought the cost of housing was crazy. Of course it’s only gotten crazier as the bubble continues to expand, to the point that we wouldn’t be able to afford to move here today. For the time being we’ll hang on as renters and hope for a little of that tech pixie dust to sprinkle down on us. But I do live with the knowledge that this isn’t a permanent living situation whether we like it or not, and at some point in the not-too-distant future we’ll have to take our family (now plus-one) to more affordable pastures — maybe somewhere with a bit of overlooked urban potential. It will be sad to go.

    1. This is what interests me the most. What qualifies as your Plan B? If you don’t hit the tech lottery where will you, your wife, and child eventually move to? Will you swallow hard and buy a split level ranch in Walnut Creek in a good school district? Will you do the Oakland thing? Will you become an urban pioneer in an “up and coming” neighborhood in Cincinnati, Buffalo, or Pittsburgh? Or will you move out to a little Mayberry type town in the country? What does “not San Francisco” look like to you?

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