February 11, 2014

Bay Area Tops List Of California Incomes, San Francisco Ranks Sixth

Based on 2012 tax returns, the median income for joint filers in California was $70,938, an increase of 4.1 percent over 2011 according to the Franchise Tax Board.

The California county with the highest median income based on joint returns was Marin ($127,471), followed by San Mateo ($109,827), Santa Clara ($109,309), Alameda ($93,557), and Contra Costa ($93,367).

San Francisco ranked 6th with a median income of $87,446 based on joint returns, up 7.7 percent versus 2011 and the largest percentage gain of any county in California.

In terms of individual returns, San Francisco County ranked 4th in California with a median income of $47,655, just above Contra Costa ($47,140) and behind Santa Clara ($49,921), San Mateo ($52,025), and Marin ($54,894). The statewide median for individual returns was $35,910.

First Published: February 11, 2014 11:30 AM

Comments from "Plugged In" Readers

Oddly enough the median income in Alameda County is higher than SF, yet the median home sells for 30%+ less.

Median home / Median income in SF = 10
Median home / Median income in AC = 6

That's the direct effect of rent control in SF: economical discrepancies due to intensive social engineering.

Posted by: lol at February 11, 2014 3:27 PM

Or plain NIMBYism

Posted by: Toady at February 11, 2014 4:27 PM

Toady,

If it were NIMBYism that would not explain how a median citizen making 87K can afford a median 880K home.

Without rent control there would be a natural equilibrium, probably the median income moving closer to 120K or 140K through change in the population mix.

But since 60%+ of the population is renting, and that a huge majority of these renters are rent controlled, the median citizen of SF is probably a rent controlled tenant who doesn't have to adjust his income to afford a median home (either for purchase or for rent).

Posted by: lol at February 11, 2014 5:10 PM

The real question is: what does it take to get into the 1% of Bay Aryans... who cares about the rest of the state!!

I may be disappointed to learn that $600k won't cut it in this county.

Posted by: Jimmy (Not a Real San Franciscan (TM)) at February 11, 2014 8:47 PM

Jimmy, don't know about Bay Area per se, but nationally top 1% is close to $10 mil net worth. BTW, a millionaire is only top 10% nationally. Being a millionaire sure ain't what it used to be. IMO, $5 mil is the new "millionaire" status, especially for the Bay Area, where a good $2 mil of that would be sunk in your home. Me not there yet (but def on the way), hence me moniker, da poor.ass.(multi).millionaire!

Posted by: poor.ass.millionaire at February 12, 2014 7:48 AM

Why would I care what the rest of the country is doing? I only really care how rich I am compared to my immediate neighbords (ie, not very). I just need a target to shoot for ...

Posted by: Jimmy (Not a Real San Franciscan(TM)) at February 12, 2014 9:55 AM

It is far easier to just move to a poorer neighborhood in order to feel richer than getting more money to improve your standing in your current neighborhood. I judge my wealth against the low cost area I plan to retire into rather than where I currently live during the week. It is similar to Rodney Dangerfield’s old advice of surrounding yourself with heavier people in order to feel thinner.

Posted by: Rillion at February 12, 2014 10:16 AM

Does anyone have a link to where this information came from? I'm curious to see some of the data for counties not included in this blurb.

Posted by: Rillion at February 12, 2014 10:17 AM

Fact of life: there's always someone with a better pay, a better house, a better car. What most people chase after is what they see as their ideal situation which is usually the next level close by, either geographically, socially or professionally. Then they get there and they can see the next level. Ask anyone what they see as the pay or assets they would be comfortable with and they'll typically give you 40% more than what they have today.

What's fun is to go from a high income area to a place like NV and see that your average tech pay (that I kept) and SF rent income suddenly puts you a few notches higher. As they say, do you prefer to be #1 in your village or #2 in Rome.

Posted by: lol at February 12, 2014 10:21 AM

Oh I don't actually want to move or spend it. I just want to have it and know, purely for my own amusement, that I am in a >1% cohort as opposed to my current standing in the 2% (by income, nationally). Of course we are in the 2% by choice as I choose not to take more than my immediate cash needs from my businesses ... no sense giving it all to Jerry Brown and Barack Obama now is there!

Posted by: Jimmy (Not a Real San Franciscan(TM)) at February 12, 2014 10:34 AM

The one who dies with the most money wins!

Posted by: lol at February 12, 2014 11:05 AM

lol, I'd say that whoever dies with the largest cumulative cash outflows wins. You can't take the cash with you, might as well put the cash to work in whatever way you see fit....a yacht, charitable contributions, anything.

Posted by: anon at February 12, 2014 11:15 AM

curious about 1% in the bay area as well.

I would assume it would be at least $20M in assets and >$500K/yr in income.

there's too many people bitching about people making $200K in tech with maybe $250-$500K in assets.

this is not rich. it is very middle class in bay area

Posted by: the wolf at February 12, 2014 12:22 PM

@wolf You are talking about the Mass Affluent.

http://en.wikipedia.org/wiki/Mass_affluent

I would call that crowd upper middle class, myself. If you can afford to buy a house in San Francisco or Silicon Valley you aren't really middle class anymore.

That income and asset level will get you a very nice house in an East Bay Suburb.

Posted by: NoeValleyJim at February 12, 2014 2:40 PM

thanks for the link. nice term

Posted by: the wolf at February 12, 2014 3:06 PM

I totally agree with NoeValleyJim

The working middle and middle class in the Bay Area are in the Alameda, south eastern Contra Costa, Solano (big time) and far southern Santa Clara countries with rapidly shrinking pockets in San Mateo and San Francisco countries.


Posted by: zig at February 12, 2014 3:15 PM

Jeeemmmyyy- it's all about having income producing assets. Who gives a sh!t about high income you a) gotta work for and b) pay much taxes on? Top 2% but working yer ass off? no thanks!

Posted by: poor.ass.millionaire at February 12, 2014 4:07 PM

what are people's definition of wealthy in the Bay area?

For me, you would job out of mass affluent or upper middle class into the wealthy category if..

a) you have greater than $10M in liquid assets
or
b) you have greater than $5M in liquid assets and make over $500K/yr

i don't consider anything less than this as wealthy

Posted by: the wolf at February 12, 2014 4:14 PM

I agree with the $5mil assets (5mil is the new "millionaire" status IMO) but not everyone needs $500k income. For instance, if your primary residence is paid off, if you don't have kids, etc. Getting $500k in annual income means only two things: a) you're working your ass off, so you are VERY time poor, or b) you have way more than $5mil assets to produce $500k of consistent and reliable passive income.

Personally I'd much rather have $2-3 mil passive income producing assets that pay me what I and my wife need to live comfy in SF, have a nice 2nd home, travel few times a year, etc.

Posted by: poor.ass.millionaire at February 12, 2014 4:53 PM

Too much ruler waving in this thread.

Posted by: woolie at February 12, 2014 5:02 PM

Income can be dividends

Posted by: The wolf at February 12, 2014 5:07 PM

Truthfully I enjoy my work and I couldn't imagine sitting around idle collecting rent and dividends. I love the rush of closing a huge sale. I'd probably do it even if I didn't need the money, just for sport.

Posted by: Jimmy (Not a Real San Franciscan (TM)) at February 12, 2014 5:21 PM

I agree with p.a.m. there, I think wealthy for me starts at about $3M. With a $1M paid off home and $2M in income producing assets, you can quit working, travel a bit, eat good food, drink wine, etc. and have a good life.

Now for some people that is not enough. They want a big house, an expensive car, frequent overseas travel and want to impress others with how wealthy they are. That probably requires $5M and if you are insecure, the sky is the limit here.

Posted by: NoeValleyJim at February 12, 2014 6:28 PM

I need 15m to retire. Less than that not enough for me

Posted by: The wolf at February 12, 2014 6:33 PM

Guess we'z are all different when it comes down to income, wealth and lifestyle. Hope everybody gets what they want (or what they need.)

Posted by: poor.ass.millionaire at February 12, 2014 9:27 PM

As I was told recently by a Southern Californian when visiting L.A. at a party (Architecture/Design community charity AIDS benefit) at the Montage Hotel when I said I was from San Francisco.......

"San Francisco is a beautiful city, but all anybody ever talks about up there is money, start-ups, stock options, and how much money someone else has made. Don't you get bored of everyone talking about money all the time up there?"

You know the world has changed when you hear this from someone in L.A.!!!

Posted by: Arch at February 12, 2014 11:25 PM

"San Francisco is a beautiful city, but all anybody ever talks about up there is money, start-ups, stock options, and how much money someone else has made. Don't you get bored of everyone talking about money all the time up there?"

If that's your perspective on SF you're hanging around the wrong people.

Posted by: R at February 13, 2014 8:34 AM

No, that is what I was told by people down in Los Angeles. I was quoting THEM, not making the comment.

However , all you have to do is read the discussion above to see they have a point. I'm always especially fascinated at how renters are spoken about by posters here as if they somehow don't deserve to live in San Francisco. I may be in the 1%, but I don't talk about it constantly and I do not talk down to citizens such as "renters" the way I have seen posted by some here.

Posted by: Arch at February 13, 2014 9:28 AM

Arch,

Not to speak for everyone on this site, but I think you may misconstrue any antagonism towards renters. For my own part, I have nothing against renters and for many (most?) people renting makes perfect sense and is the appropriate way to obtain housing.

However, in SF tenants can often develop a very skewed viewpoint around tenancy and wish to obtain all of the benefits of ownership with little, if any, of the responsibilities. The fact that many tenants organizations champion the "rights" of tenants to pay far less than even the basic rent necessary to maintain a building is illustrative of this point. Rather than working to develop reasonable solutions to our housing issues, our politicians and the tenant organizations have developed a "blame the landlord" mantra and it's only natural that some will tend to take offence.

Posted by: parklife at February 13, 2014 9:51 AM

Well, I moved to SF 8 years with a fresh view, as I was both a landlord and tenant.

There is antagonism, but it's mostly coming from the tenant side.

- Tenant advocates make supes vote law after law after law to restrict the landlord business
- Tenant advocates are picketing private citizen who are exercising their right to try and use their private property in a legal way.
- Tenant advocates target hard working (and yes successful) citizen who are doing the right thing by commuting collectively instead of individually.

In the mean time rent-controlled tenants are more often than not living very cheaply in someone else's property, totally oblivious of the adverse effects of what such a situation can cause to other people: 1) the young cannot move here anymore except for a happy few brats. 2) small long term landlords are losing money month after month, and their families are suffering the consequences.

If you ask me, yes we should "blame the game, not the player", but the players have bent the rules of the game to their sole advantage. Once you understand that you can only have very little compassion for long term renters whatever their status.

Posted by: lol at February 13, 2014 10:16 AM

Writing the law is a harsh game. It has nothing to do with idealized or abstracted reason, but power on the ground, money, and votes. Landlords shouldn't act surprised or victimized; they've certainly profited handsomely from the same set of rules.

Posted by: woolie at February 13, 2014 1:40 PM

woolie,

In any other environment the following things would be unacceptable:

Tenant A pays 5 times what tenant B pays due to seniority

Landlord A gets market rate when Landlord B gets a miser, due to the fact that his Landlord A's building was built in 1980, while Landlord B's dates from 1978.

The reality is that tenants are writing their own rules and the consequences, social, economical, political are very heavy in consequence. People's livelihoods are affected. The ability of people to move freely is affected. The relationships between people is affected. Politicians are not doing their job because of this elephant in the room. This is a failed policy and everyone knows it.

But when your livelihood depends on you not understanding something, as they say...

Posted by: lol at February 13, 2014 1:53 PM

People often create laws that benefit themselves at great cost to the people of the future. It's fundamental human nature. The adverse consequences are not 'unintended', but the natural result of aggressive self interest.

Posted by: woolie at February 13, 2014 2:10 PM

"In any other environment the following things would be unacceptable:"

Ummmm ... Not Reilly.

People do the same job, but have stock options with different strike prices just based on when they started. Long term leases just based on when the lease was signed. Long term mortgage rates just based on when they got the mortgage. Long term purchase contracts.

Heck, even health clubs routinely change their dues only for new applicants while letting current customers paying at their current rates.

Posted by: anon at February 13, 2014 2:16 PM

anon, you cannot compare employment and rental.

- An employee who got in after stock options were granted can always switch to more favorable position at another employer. An SF tenant paying market rate cannot switch to a subsidized rental.

An employer can fire an employee at will if he finds that the relationship is not beneficial. A landlord who has a low paying tenant in SF is stuck with him almost forever.

And many many more reasons why you can't compare the 2. But it's a nice rationalization. This shows how we can find explanations to random unfairness, when we are on the receiving end of a F-ed up situation. Otherwise we wouldn't be able to function. One day a long time ago I found a gangster roll with $500. I rationalized it was probably a thug losing it, or that I was smart enough to have spotted it. I know it was undeserved money but I would never accept to give it back today. It's mine goddamit!

Posted by: lol at February 13, 2014 3:29 PM

Well of course you can't back out of a long term contract just because it's not in your favor. That would eliminate the value of long term contracts. Hence the concept of "option".

If the landlord took the rent money knowing full well the allowable rent increases, where's the random unfairness?

We don't let insurance companies take people's insurance premiums then later just decide to drop someone because they are getting more benefits than someone else.

Posted by: anon at February 13, 2014 4:05 PM

Insurance companies have actuaries who will determine the risk and define allowable premiums. They also have a large pool of subscribers, and CAN ADJUST THE PREMIUM based on updated data, including changed risk or market conditions, something that landlords cannot do...

Most the rest of America would never allow rent control. Your landlord increases the rent after the first year: either you accept or you leave and try and use the market to your advantage.

You can't catch-up? Well either you adjust and change yourself or someone more adjusted to the environment will thrive in your place. And this is the way a society works, otherwise we'd be full of writers and musicians because everyone needs to follow his "dream". A painter barrista cannot pay rent? Try graphic design instead, or architecture. It's harsh, but why would anyone give you a free pass? Well, maybe except a sugar daddy SF landlord, lol.

Posted by: lol at February 13, 2014 4:32 PM

rent control is destroying San Francisco!!! round up the communist non-working leeches and put them in battery acid.

unless they are old or really poor, of course

Posted by: the wolf at February 13, 2014 5:02 PM

"Insurance companies have actuaries who will determine the risk and define allowable premiums. "

San Francisco has vacancy decontrol, No? So you can charge whatever you want. If some landlord made a poor actuarial analysis, who's fault is that?

"They also have a large pool of subscribers,"

So don't try being a landlord for a small number of rent controlled units. Plenty of businesses require large scale and access to sophisticated financial talent. If you just want income, buy an uncontrolled unit or stocks or bonds.

"Well either you adjust and change yourself or someone more adjusted to the environment will thrive in your place."

Exactly. If you have got poor actuarial skills and no ability to scale, get out of the way and let someone more adjusted take over.

Posted by: anon at February 13, 2014 5:22 PM

Are you suggesting that small landlords are doomed by design? One sec, I need to check my GPS.... Nope, still the same old USofA. Land of the Free and all that. Maybe SF didn't get the memo.

Posted by: lol at February 13, 2014 5:35 PM

You're free to try.
But if you don't have the skills or scale to make it, who's problem is that?

And since you don't even seem to enjoy being a rent controlled landlord, why not buy an uncontrolled unit or somewhere else? Or try graphic design?

Posted by: anon at February 13, 2014 5:49 PM

I am not rent controlled at this point, getting a steady flow of corporate-rental-duration airbnb tenants. And I still have a day job that brings much more than graphic design, FYI.

I had to "adjust" and am scaling up, just not in SF at least until the patients stop running the loony bin.

I currently live in the America that I came for, with risks, rewards and fair rules. Not a place you'd like I think.

Posted by: lol at February 13, 2014 6:16 PM

I see.
You couldn't make it as a landlord and were put out to pasture by your employer.

You got to try, didn't make it and moved on to give room to someone else. SF isn't for eveyone. That's how America works.

Posted by: anon at February 13, 2014 6:23 PM

Doesn't everyone at least agree that any household making more than the median income (78k) should not be eligible for rent control? It should be for the lower and lower middle class

Posted by: Jill at February 13, 2014 8:09 PM


I might be ok with phasing out rent control along those lines or perhaps graduated based on income, as long as we were similarly phasing out prop 13 and the tax deduction for mortgage interest.

Posted by: Money for nothing at February 13, 2014 8:29 PM

anon,

Many would wish to not succeed like that. Pied a terres and rentals in 3 of the most desirable areas in the world. Collecting enough to make my tech job a hobby.

Posted by: lol at February 13, 2014 8:50 PM

anon makes the perfect case for why there are an increasing number of units held off the market. Given that over 20% of SF's housing stock is in 2-4 unit buildings, we are seeing many small landlords who are choosing to leave their units vacant rather than subject themselves to the myriad regulations.

Perhaps there are large entities with "scale" that are buying up two unit buildings, but I am not aware of any. Instead the trend in my neighborhood is to either use the vacant unit as a guest house or to sell off the building as a TIC.

It's somewhat ironic that the city wants to limit "chain" retailers while encouraging "chain" housing providers.

Posted by: parklife at February 14, 2014 7:33 AM

Why would a landlord with more units be more immune to rent control? If you have a pre-1979 place with 50 tenants and they've all been there more than 10 years you're as screwed as a 3-unit landlord. These people are not moving out except if you buy them out or do an Ellis. Plus that OMI option that would allow a small landlord to get 33% of his building back with no sweat will not work out for the larger landlord.

Aside from some economies of scale (you'd save on legal fees per unit), a rental deficit is a rental deficit.

Posted by: lol at February 14, 2014 9:23 AM

lol,

Although the advantages associated with larger landlords are many, the primary advantage has to do with the ability to project future vacancies with some degree of accuracy and to receive a cash flow based upon both current market rents and prior, below market rents.

To use the insurance analogy, an insurance company wouldn't write a policy for one insured, but instead manages their risk by insuring many insured. In the same way a larger landlord can assume that a certain number of units will become vacant each year as a result of death, or other life changes. The underlying property then is valued based upon these projections. A small landlord who owns a two unit building and lives in one of the units has no such ability short of applying standard life expectancy tables to their tenant.

Posted by: parklife at February 14, 2014 10:05 AM

Somebody should market "rent control insurance" to small landlords so they can hedge against getting drained by a long term tenant.

Posted by: The Milkshake of Despair at February 14, 2014 10:20 AM

parklife,

Yes, an insurance can be a good analogy, but if we take for instance a car insurance, everyone who can afford it will have one and this ensures a very reasonable pool to average risk. No one subscribes a car insurance with the purpose of getting into an accident. You are in a pure risk/income situation.

But in the case of a large rent controlled pool, tenants have a vetted interest NOT TO get out of the building, since it would likely cause them financial harm. Therefore turnover will be much lower than with a free-functioning market, the pool of tenant will get older, and your rental deficit will increase, totally changing this risk/income premise.

Sure a low turnover is a good enough reason to charge outsize rates for the occasional units that get freed up eventually, but the overall situation might not be very favorable financially. You start fresh with 30-year old and 30 years later they are mostly 60-year old. You probably paid off your mortgage by now then there's a chance you are still cash-flow positive. But it's a pretty low ROI.

Posted by: lol at February 14, 2014 11:08 AM

I agree with parklife on the insurance analogy. There are more than a few instances when people with low rents move out on their own: get married, job relocation, family member sick/go stay with them, sick of city life, etc., etc. An older and poorer person, however, is more likely to be a lifer.

Sooo...let's compare a 40 unit 'big LL' to 4 unit small prop guy. Say each has 50% tenants with 10 year tenancy. So 4plexer has two dudes to play roulette with. 40 guy has 20. Probably a good chance that a few of those 20 will turn over in the next few years. Just 2-3 guys moving on can translate to $3-5k more in montly income. So when dealing with RC rentals, scale matters, to a certain degree.

Posted by: poor.ass.millionaire at February 14, 2014 12:06 PM

I agree p.a.m. The benefit is the lowering of the risk of extreme situations (100% lifers) with a wider sampling.

But the basic math is the same.

Someone who moved in more than 3 years ago is in the money by more than 25%. You will need a pretty big incentive to move out, and the likelihood of still being there 5 years from now is pretty high.

Posted by: lol at February 14, 2014 1:04 PM

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