How Facebook Is Ruining My Economy

Last week Kamel got an email notice from our landlord that they will be raising our rent in August 13.71% (Thank you Sarah for the math on that!). We were, of course, outraged. This is how the conversation went, quote tags are irrelevant:

“Fuck this! This is bullshit!”

“I don’t want to move though, I love our home.”

“I know, but are you kidding me?!”

“I hate this! I hate this so much!!”

“I’m going to fight this.”

“It won’t work, they won’t budge, they are a company, not an independent landlord.”

“They have to! This is total crap!”

And then we began researching the situation. What could my landlord actually do? If they raise out rent above 10%, they had to give us 60 days notice, and by golly they gave us 60 days notice on the dot. (Again, thanks to Sarah for that knowledge.) So legally, all we could do was ask nicely and maybe whine about the crazy neighbor situation and the construction that has left us without a pool since we moved in.

Then! To pad our case we started researching other 1 bedrooms in the area, because they could not possibly be that expensive! We were hoping to see apartments (brace yourself non-bay area residents) around the 1400-1550 mark for a 1 bedroom. What we saw instead was 1700-2100 for a ONE BEDROOM! What?! That is insane! We aren’t even in the city! So Kamel started calling other landlords and guess what they said?

Because Zynga and Facebook had recently gone public, making a bunch of people insta-millionaires, the median income level has jumped and suddenly a lot of newly rich young people are willing to pay way more for rentals. And also completely fucking over the rest of us who didn’t just come into a shit ton of monies. Can I pull science out of my hat and show you the proof? Not really. So whether it’s perception that’s screwing me over or reality, it makes no difference. After our calling our landlord, they almost laughed in our face. Starting rents for new tenants are $1840 – $2100 (depending on size) and thankfully our new rent isn’t as high as the lowest rent in that scenario. For a non-shit hole and a place that is relatively the same size as what we have, we’re stuck with high rent… but apparently not has high as it could be. In 1 year that’s a huge huge huge jump.

If you need another reason to hate Facebook or Zynga, please, be my guest.

A year ago today I talked about discovering Esopus! If you’re interested in a quality and diverse art journal, you should scope them out! (Support the arts!)

16 thoughts on “How Facebook Is Ruining My Economy”

  1. You know what is funny about the whole IPO millionaire scenario though? All those people already were living in the bay area and likely making 100k+ and paying whatever rent they were paying, so its just funny to think that all of a sudden demand everywhere is just going to go up by 30%. These people didn’t get a huge increase in salary and were already compensated really well.

    I could see maybe higher selling prices and there is the scenario that if everyone raises rents it becomes the new normal so people pay it. But really fundamentally, things didn’t change that much – also, if employees didn’t sell their stock in the IPO and held on to it, they usually have to hold it for at least 6 months, therefore making the windfall illiquid. And one more thing – why would you use such a windfall to fund higher rent in the same place?

    1. It’s kind of like the stock market. It doesn’t matter what the real situation is, if the vibe is that everyone is richer, then boom prices jump. If people are willing or capable to pay, then they stay up. If not, then they creep back down.

      Most of the people in Silicon Valley are young and without kids. They aren’t interested in running off to buy homes necessarily. People are willing to pay more for an apartment close to work. The housing and renting market here has always been a unique and frustrating situation.

    2. This effect is quite real, affecting San Francisco considerably more, but overall the entire Bay Area is seeing a huge hike in rental prices due to these new tech companies.

      Here is a recent look at it from NYT

      The majority of employees were not paid very well pre-IPO, I know this first hand from friends who work at these companies. They were paid slightly lower than market value salaries, but given tons of shares. Starting this June-July they are able to sell those. Prior to this, they still lived with roommates, or in tiny studios. And now they are excited because they can afford to pay up to 2k a month for a 1 bedroom now. So the landlords raise to meet what they can pay. Only the high ranking execs were already paid well, but those bought homes already.

      The big issue is that these companies only account for a few thousand people, in an area of millions. And those few thousands are ditching their tiny studios/roomie situations and taking up the already low inventory of open rentals. Paying whatever. They don’t care that they are paying over 2k for a 1 bed room 600sqf apt.

      The good news, is that this effect will settle within a few months when they all take up their new overpriced apartments. Forcing landlords to lower the rents back to realistic rates for the rest of us. Though this sucks for us since the timing of our renewal coincided with the timing of the stock hold expiration. ๐Ÿ™

      1. Oh, I totally wasn’t disputing that the effect was real, just musing about how all of the various factors go in to create something that won’t likely be a lasting trend. I live in the city and feel very fortunate to be in a rent controlled amazing apt.

        It is super unfortunate that your renewal came up at the exact wrong time!

    3. Unfortunately, it DOES work this way. DC and the surrounding areas are proof. (I work in the rental industry.)

      Government contractors out here are paid a TON of money, and are willing to pay higher rental rates. Each year, the rental rates are raised, and each year they continue to be paid. It becomes the norm, and while we moan and groan about the cost, we eventually pay it to live in a place we love.

      Our rental increase this year was actually a higher percentage than Lauren’s. We chose not to pay it (as much as we love our current place), and found another place that … while more than our current rent … wasn’t quite so high. The rental company relisted our apartment at an even HIGHER cost than they’d offered us … and it was snatched up within a week. There’s no incentive to lower rates when the higher will be paid.

      As for using a windfall to pay a higher rent on your current place … some do it to stay. And some, immediately look for a new “better” place … at a higher rate. Then the buildings with vacancy see their neighbors leasing at a higher price, and decide to see if they can get it, too. And they do. Easily. And the cycle continues.

      It’s messy, but it happens. And the rest of us get left out in the cold.

  2. I can’t even get through to the end because my eyes bugged out when I read the price you were *hoping for* for a 1bdrm!!! Apparently, if I lived in the bay area and wanted to pay what we pay here for a (very nice) 2bdrm, I’d be living in a closet. A very expensive closet. Or maybe a box.

  3. Mountain View is the same story. Google had a baby boom so not only are apartment full, so are the day cares. It MIGHT have made me hyperventilate last night… finding the balance between price/location/schools/what if we want another baby/can’t live in the same high school district my husband teaches (awkward factor… I want to move far far away..

  4. I’m not sure I buy into the whole facebook-causing-it thing, but the rental market is a simple matter of supply and demand. People are obviously willing and able to pay those prices.

    I really think you should complain about the pool not being fixed though! If you are paying for that facility, it should be provided!

  5. Chicago rental prices jumped too… we got lucky with a minor increase, but were really concerned that we were going to get hit with a $100-$200 increase as well. It super sucks though ๐Ÿ™ and I’d raise a big stink about the pool too- did they guarantee access to it in your lease or anything?

  6. Unfortunately, this insanity with rents is happening in places outside of the Bay area as well, though I do wonder what Boston’s excuse is.

    Our rent jumped some ridiculous amount this year. When we first found out the new rent amount from our landlord, I honestly thought it was a typo. We were indignant, just like you, but had little choice but to renew the lease – our lease was up 9 days before our wedding, and things were way too hectic to add a move into the mix. So we stayed. But next year, we are definitely moving.

    Anyway, I’m just commiserating with you. Good luck with your rent situation.

  7. They can raise rents by more than 10%?????? That blows my mind, and makes me very happy for Canadian regulations that cap rent increases well below that.

    I can’t even wrap my head around how high rents in your area are. Those are some nutty prices!

  8. *grumph* Suck. I’d bitch too but you already have plenty of the venting.

    I was thinking over negotiation tactics, and while they mostly have you over the market rate barrel because that is just the breaks right now – you can try going back to them with:

    1. your willingness to commit to a slightly longer term lease than whatever they currently ask for
    2. the fact that their pool is currently out of commission until they have a hot tub in which makes them look less attractive to a prospective new leasee because let’s face it, it IS a buyer’s market right now, that’s why they’re jacking up their prices in response
    3. take a look around – what else makes them look less attractive, all else being equal but you’re willing to overlook (because you like it but you don’t say that latter part out loud?)

    Take that to them with let’s talk about you only raising my rent 3.71% because we’re good tenants who will make this place look good to your other prospectives and [insert all of the above].

    Part of a place that attracts good new blood that pays more is good old blood. Play that up.

  9. We had the same issue in Fremont in Feb, we were already paying almost 1700 for a 1bedroom and they wanted to raise our rent to over $1800!! We said “uhh oh hell no” and put in our notice. Thankfully we had somewhere to go. It is outrageous to rent at the moment, hope it works out for you guys!

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