Filed to: this is why you can't have moderately priced nice things

The San Francisco skyline. Photo : Justin Sullivan ( Getty )

The day started with an intense tropical storm consuming San Francisco, but by evening the clouds had parted just in time for a group of grinning and excited venture capitalists, techies, and real estate agents to gather atop a downtown highrise that overlooks the city all the way to across the Bay to Oakland.


Everyone was there to discuss all the money to be made off the newest class of overnight millionaires that Silicon Valley is about to birth.

2019 is slated to produce an extraordinarily long list of multi-billion-dollar IPOs from San Francisco Bay Area heavyweights like Lyft, Uber, Palantir, Pinterest, Airbnb, Slack, Postmates, and Instacart. The result will be a massive and sudden injection of liquid cash into a region already infamous for both the nation’s priciest real estate as well as a vast and growing wealth gap between rich and poor neighbors.


On stage at Monday’s event, a three-hour catered affair titled “Tech IPOs effect on Bay Area Real Estate” held in DocuSign headquarters, Deniz Kahramaner, a big data real estate agent at the tech real estate firm Compass, laid out a series of shocking numbers about what to expect as San Francisco’s rich prepare to get so much richer. He estimated $250 billion in total valuation of the local companies expected to IPO this year, based on private investment, which dwarves anything seen in half a decade.

“Are we going to see a one bedroom condo worth less than $1 million in five years?” Kahramaner rhetorically asked the room. “Probably not.”

When Bravo reality television star and Sotheby’s real estate agent Roh Habibi took the stage, he thought out loud about whether his newly IPO-rich clients should spend $9 million on a single San Francisco property or buy three $3 million properties spread out around Northern California.

A few miles away, Oakland High School teacher Matt Fields lives in a two bedroom apartment with three people. Even sharing a bedroom with a friend, Fields still pays around $1,000 monthly in rent in order to live in the community where he teaches.


The City of Oakland is three days into a public school teacher strike centered around the difficulty of living in the Bay Area on a non-tech salary.

Combined with student loans and the learning curve any second-year teacher faces, Fields says his $47,000 salary and glacial pace of raises makes the grueling first few years of teaching even more taxing. The result is an extraordinarily high teacher turnover rate in every corner of Oakland.


If union demands for higher teacher salary and better school conditions are met, Fields says, the best case scenario is that he may be able to rent his own bedroom inside a shared apartment.

“It’s not an option to fail,” Fields told Gizmodo in a conversation about the strike. “We’re in a situation right now where I, as a college educated, second-year teacher, cannot even afford to have my own bedroom in the place where I teach, and that needs to change.”




“I have been reconciled for some time to the fact that my own income is not enough to support my family in Oakland,” Lara Trale , an English teacher at Oakland High School, said on Monday to Gizmodo by phone. “Students and families are being priced out too. I’ve seen the same thing to happen to colleagues. They’re excited, motivated, and driven but feel like they can’t make a lifelong living in a place where they have to share a room.”



The imminent slate of tech IPOs promises to push real estate prices higher in what is already the costliest market in the country, according to multiple studies as well as the real estate agents in the room at DocuSign.


That is “super beneficial,” Habibi told a rapt crowd of real estate brokers on Monday, for the tech industry rich who will be readily buying and the real estate agents who will be aggressively selling. For people stuck on the outside looking in, the view is turning dark.

Back inside DocuSign headquarters, it’s bright as hell. A group of real estate agents couldn’t help themselves from uttering “wow” out loud with every new big dollar figure on center stage: 211 techie buyers projected to purchase property above $10 million, thousands expected to buy above $1 million, and San Francisco’s real estate dominated by buyers—51.1 percent of whom come from the software industry—who are about to have a whole lot more money in their pocket.




Laughs and maybe a little jealousy hit when the conversation turned to Nema, a luxury housing company known for building and buying property within walking distance to tech giant headquarters in downtown San Francisco and then selling at absurd prices to engineers who readily pay whatever it takes to avoid public transportation. Here’s a $6,303 per month studio from Nema near Uber’s headquarters, in case you happen to be nearby and about to come into a windfall of cash.

As you might expect from a crowd like this, California’s income inequality gap and housing crisis—problems deemed a “code red” by Democratic Governor Gavin Newsom—never came up during Monday night’s beautifully catered event.


Instead, the panel’s last question probed Habibi about the flashiest pads he’d sold recently to clients rich enough to buy huge amounts of land in the heart of Silicon Valley. A panel consisting of a real estate agents, tech CEO, and venture capitalist was congratulated as a “very well balanced” conversation about the impact of new tech IPOs. The teachers like Fields and Trale , up since 6:30 am that morning to strike despite flash flood warnings, went unrepresented and unmentioned.

“I wish I had a clever, optimistic answer,” Anthemos Georgiades, CEO at the real estate startup Zumper, said. “But the next two to three years, if you look at the liquidity about to come to market with these IPOs, and then you look at how few buildings coming to market that would actually bring inventory. It’s basic supply and demand. It makes no sense to think anything will get cheaper.”




For someone who doesn’t make what a Facebook employee does—the company has a median annual salary of $240,000— the prospects of living in and around Silicon Valley and the entire San Francisco Bay Area is now more uncertain, even for the students who were born, raised, and recently began their public education there.

“It’s a crisis,” Newsom said last year when he was running for governor. “We can’t live on intentions. At the end of the day, if you want to move the mouse, you’ve got to move the cheese. The middle class of the state is leaving in droves. This is a Code Red in California.”