Wednesday, May 23, 2018

People are bailing from San Francisco?

Rent a moving truck from Las Vegas to San Jose and you'll pay about $100. In the opposite direction, the same truck will cost you 16 times that, or nearly $2,000. 
What accounts for the difference? The simple laws of supply and demand, says economist Mark J. Perry. With so many people leaving the Bay Area, there are not enough rental trucks to go around. Perry, a University of Michigan professor, published his findings in a new study with public policy think tank American Enterprise Institute (AEI). 
CBS News reported recently that operators of a San Jose U-Haul business have trouble getting their rental vans back "because so many are on a one-way ticket out of town." The revelation inspired Perry to compare the costs of U-Haul rentals for trucks leaving San Jose versus those heading into the city. 
Silicon Valley has arguably one of the highest costs of living in the nation. The cost of leaving isn't cheap, either. Perry tracked the costs of renting a 26-foot U-Haul truck to San Jose from six cities deemed destinations for those moving out of the Bay Area — Las Vegas, Phoenix, Portland, Ore., Nashville and Atlanta. 
In every model, the price of renting a truck outbound from San Jose was at least double the amount of renting the same vehicle in the opposite direction. See the prices in the above gallery. 
I guess I would like to know who is leaving San Francisco, and who is staying. The income level of the people outmigrating would be interesting to know. 

7 comments:

  1. I'm cynical about AEI's involvement, but it sounds plausible. Lots of jobs pay next to nothing, and if housing is so expensive then it's going to be difficult for the people who do those jobs to stay. Even if you can move up to management in a service job, you'll probably have difficulty finding a place where you could get married and raise a family (not to a suburban standard, but to an "I actually have space for two or three people" standard). $15/hr still only gets you to $30K/yr before taxes ($45K if you work 60 h weeks). Two people working 60 h weeks would probably keep $60K/yr (10% state income + 15% federal + city?), and housing would probably eat $24K (estimating $2K/month)?. Given that, anyone in general service jobs, teachers, firepeople, police, etc. (anyone that has a job present somewhere else) would likely not want to stay - they can move other places and make less money but work fewer hours and have a better life. At some point, the benefits of living in NoCal are swamped by what it takes to pay for it.

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  2. I suspect that many of the people moving there may get relocation covered or use moving companies, whereas more of those leaving may opt to rent a UHaul, so that may skew the "UHaul index". Still, there are always a lot of flux of people moving in and out, and has been for at least the last 40 years. Even people with decent salaries opt to leave for various money/quality of life reasons.
    I grew up there and returned after my postdoc. I left 8 years ago and had a fairly typical PhD staff scientist salary, perhaps slightly low ( $110k in 2010) I had a house with a low mortgage thanks to getting lucky at a startup and also 12 years of living fairly frugally (at least by Bay Area standards), but was single so high taxes/no dual income to help pay the bills. I could've afforded to stay but was tired of the startup cycle and wanted to try something new. My lifestyle now is similar, since I'm cheap, but there's a lot less conspicuous consumption where I live now, so I feel richer.
    It's a nice place to live, and I do miss it, but at current prices I couldn't afford to move back unless chemist salaries have gone up significantly.

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  3. I can't help wondering how far that $1900 price difference would go toward the cost of driving the truck back yourself.

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    1. To Las Vegas? Southwest won't give a cheap fare ($309-325 5/24 one-way), but you could probably get a cheaper flight (Allegiant and Spirit - <$150) without baggage. From LV to Oakland is 8.5 hours, so probably 10 h (and 35-40 gallons of gas - so $150 + time cost) with a moving truck. So the base cost without time is probably about $400. $1500 would buy a fair amount of inconvenience, I would think.

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  4. This is why housing costs are soaring in the pacific NW because most California people can sell their house for ridiculous sums and move up to PDX/SeaTac for a tiny fraction of what they had paid, and still have relatively low costs of other monthly bills. Unfortunately, this negatively affects the longtime renters living in the PNW area or those looking to move to PNW from outside of California.

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  5. Boise, Idaho is one popular destination. https://www.wsj.com/articles/boise-idaho-feels-the-growing-pains-of-a-surging-population-1523793600

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  6. I think the clustering trend has gone too far, and the pendulum is going to swing back. As Hap pointed out, it doesn't make economic sense for a person in a service job to stay in SF, and I think this is also becoming true for anyone in a white-collar field that hasn't clustered there. If you're an accountant or something like that, you can just as easily be an accountant in Boise and ditch the roommates and 90-minute commute. Even for those in industries that did cluster in SF, a chemist can move from a pharma company to some other part of the chemical industry, or a computer geek can work remotely.

    SF might be a fun, happening place, but for anyone making less than 200K a year, it's 90-minute commutes and 40-year-olds with roommates. The coolness factor is a small consolation for that.

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