To anyone who has spent time in a great metropolis, San Francisco can only be experienced as a collection of dysfunctions interrupted by the occasional nice view. The housing market is the stuff of nightmares. Traffic heading in and out of town sits gridlocked for hours a day. The overcrowded public transit system primarily serves a narrow corridor of neighborhoods. Whole tracts of the city are weirdly barren of restaurants or supermarkets.
And let’s not even start on the ways this increasingly wealthy city fails its large homeless population.
All this dysfunction creates a ready market for consumer-focused startups that can ease the suck a little. It’s no accident that Uber, Airbnb, and Instacart all started here. And so it was when app-enabled electric scooters started showing up on the streets of San Francisco in March, a lot of people wanted to ride them. Cheap, convenient, zero-emissions transportation that gets you exactly where you’re going–that’s something that would improve every city, not just one this broken.
A LITTLE MORE than a month after a startup announced it was unleashing robots to deliver food to San Franciscans, a city lawmaker wants them curbed.
Marble’s robot is technically semi-autonomous, as a human operator monitors each robot in case it gets in any trouble. But that’s not good enough for San Francisco Supervisor Norman Yee, who just proposed legislation to ban delivery robots of all types, saying they’re a public safety hazard. While he isn’t aware of robots tangling with humans on the sidewalks of San Francisco yet, that’s not the point. “For me to wait for something to happen is silly,” Yee says, “because I think it’s going to happen.”
Wells Fargo & Co., the bank working to contain a scandal over bogus accounts, was suspended from doing some business with its hometown of San Francisco.
The city’s Board of Supervisors on Tuesday suspended the firm for two years from providing services as a broker dealer, in commercial banking and in commercial paper. The measure, sponsored by Supervisor John Avalos, also removed Wells Fargo from securities investments and counterparty/repurchasing agreements. San Francisco had barred the lender in September from a banking program for low-income residents.
The current state of Bay Area housing bears resemblance to the years leading up to the dotcom bubble in 2000 and the 2008 housing market collapse. At the peak of the housing bubble in 2007, the median sale price for a home in San Francisco was $895,000 while renters were paying just over $2,400 a month on average.
There’s no doubt that the Bay Area real estate market is white-hot once again and it’s largely due to the surging tech industry. Over the last few years, San Francisco has begun looking more and more like Silicon Valley, with companies like Google, Twitter, Airbnb and LinkedIn scooping up office space.
Nine years since the 2007 peak, housing prices, home values and rental rates are once again climbing to unsustainable levels. In 2015, home values jumped by more than 14% and the median sale price, meanwhile, is hovering around $1.1 million.
According to the California Realtors Association’s Housing Affordability Index, just 20% of residents living in the nine Bay Area counties can afford to pay that much for a home. Renters aren’t faring any better, with the median rent for a one-bedroom apartment in San Francisco hitting a whopping $3,490 as of January 2016.
San Francisco has long been hailed the home of the tech startup — the place to be for entrepreneurs looking to lay the foundation for the next big thing. As a mobile app platform with high aspirations, we joined the mix, sharing an area code for four years with the lauded engineers of Silicon Valley and inserting ourselves into the supposed center of the tech world. It seemed like the best possible move.
And for a while, it was.
California has reached a deal which will raise the state minimum wage to $15 an hour over the next few years. It’s likely to be formally announced by Jerry Brown later today. Such a deal raises such hopes, doesn’t it? All those poorly paid workers in Los Angeles and San Francisco will be able to pay their way in life. And yet there’s always that nagging doubt that such price fixing might turn around and bite us. And we actually do have proof of this: a report about what a $15 minimum wage will do to employment in Los Angeles City. This is not, by the way, a report by some from market fundamentalist like myself. This is from Michael Reich et al at Berkeley, stout supporters of a rise to $15. And yet even their report states that the net effect will be fewer jobs. And that’s after they play rather fast and loose with one of the major effects they are thinking of.
There’s also the problem that not all of California is all that rich so the towns of the Central Valley are going to have a much harder time. This simply isn’t going to work out well.
PROPOSITION F HAS failed. The San Francisco ballot measure, which would have more severely restricted Airbnb-style short-term rentals, was defeated last night 55 percent to 45 percent, with about 133,000 votes cast and all precincts reporting. (Citizens in the state of California have the ability to bypass legislature and propose their own laws, which they vote on in these local elections.)
The measure—known casually as the Airbnb initiative—has captured the interest not only of residents living in San Francisco but beyond as a symbol of the tensions in a city grappling with the dramatic effects of the tech boom.
On one side, there are the San Franciscans who maintain that Airbnb and services like it chase long-term renters out of the city by restricting housing supply and sending rents skyrocketing. On the other, you’ll find the residents who say Airbnb helps them make ends meet by letting them make a little more income by renting out their homes. Airbnb reportedly spent north of $8 million on the measure, versus $1 million spent by Prop F supporters.
In San Francisco, the richest 5% of households rake in an average of $423,000 a year, while the poorest 20% make around $24,000. The income gap between rich and poor is even worse in Atlanta, where the wealthiest people make nearly 20 times more.
As the gap between rich and poor grows in the U.S., it’s worst in big cities. In a Brookings Institution ranking of the most unequal cities in the country, Atlanta and San Francisco topped the list, but others were close behind.
Big cities have more inequality for two reasons, says Alan Berube, deputy director and senior fellow of the Metropolitan Policy Program at Brookings. For one, they contain relatively more subsidized housing and services for the poor. On the other end of the spectrum, most cities are also home to the highest-value jobs in their regions, in sectors like finance, professional services, education, and technology.
It’s gotten a lot harder to make the rent.
Rents have been soaring across the country, even outpacing home values, according to a recent Zillow report. Some areas are facing a particularly harsh reality: In San Francisco, renters have seen a nearly 15% yearly increase, and Denver tenants have faced an 11.6% rise.
And it’s not just a big city problem.
“Places that were more traditionally affordable are growing more quickly,” said Skylar Olsen, senior economist at Zillow.
The reason? A shortage of available rentals.
“Vacancy rates are at very low levels, which continues to push rents higher,” said Andrew Jakabovics, senior director, Policy Development & Research at Enterprise Community Partners.
Everything that follows actually happened. I’ve changed the circumstances and identity of the people involved significantly, but the gist of the story is true. It’s at once proof of the old adage, ‘The truth will out’.
Sara and Tom have been friends since they worked on a successful advertising campaign for a major spirits producer. In their ten years as friends they’ve shared a lot: Holiday gatherings, the breakup of Tom’s marriage and their dreams of opening a music venue. Sara’s husband Bill was also good friends with Tom and supported their idea of opening the night club, up to the point pledging property he and Sara owned free and clear in San Francisco to secure start up money.
Because of their connections in the advertising and corporate worlds, Tom and Sara knew a lot of inside stuff. For example, they found out that a coastal city was pouring millions into a waterside development and had attracted several X Games type events to the area to take place in about two years time. Knowing this, the pair secured a lease on a large space in the heart of the development, negotiating a six month delay in rent payments.