Someone has calculated that it would be less expensive for San Francisco workers to rent a two-bedroom apartment in Las Vegas and commute by air than to rent a one-bedroom apartment in San Francisco. They reasoned that a one-bedroom in San Francisco is about $3,100 a month while a two-bedroom in Las Vegas is about $1,000 a month, and four-day-a-week airfares would be about $1,100 a month. Even with local transport, Las Vegas is less expensive than San Francisco.
While most responses focus on the quality of life in Las Vegas vs. San Francisco, the point is that the latter is so terribly overpriced that some software engineers are actually living out of their cars.
The smart-growth mantra is “build up, not out,” but that’s clearly not working out. Between 2000 and 2010, the area of land in the San Francisco-Oakland urbanized area grew by zilch (in fact, according to the Census Bureau, it declined by 0.6%), and developers only managed to build 14 percent more units of housing. Meanwhile, Las Vegas-area developers built 52 percent more housing units as developed land expanded by 46 percent.
The result is that the median home in the San Francisco-Oakland area was worth $615,700 in 2010, rising to $679,800 in 2014. In the city of San Francisco itself, it was abut 25 percent more: $768,000 rising to $846,800 in 2014. Meanwhile, the median Las Vegas-aea home was only $156,300 in 2010, rising to 188,100 in 2014, while the city of Las Vegas itself wasn’t much different: $166,900 in 2010 rising to $187,300 in 2014.
Prices in the city are influenced by prices in the suburbs. If suburbs have nowhere to expand, their prices will rise, and the cities will rise even more. If the suburbs have room to grow, their prices will remain affordable and the cities’ will as well.
San Francisco has other barriers to affordable housing. Rent control discourages builders from building much more rental housing. The city’s strict tenant-rights ordinance discourages people from renting out their homes. Inclusionary zoning ordinances in many Bay Area suburbs discourage new development in those suburbs. Lengthy permitting processes make it difficult for builders to respond to changes in demand. All of these things help explain why San Francisco is so expensive that someone might find it cheaper to commute from Las Vegas.
It would be less expensive to commute from Livermore, on the eastern edge of the Bay Area, than from Las Vegas. A two-bedroom in Livermore is about $1,800 a month, well under San Francisco rents. But Livermore is also quite a bit more than Vegas, and it will remain so until California realizes that it has to grow out, not up.