Facebook IPO: The good and the bad

05.18.12 - 11:09 am | Tim Redmond |

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Facebook went public and the people who got in at the initial price of $38 made a little money, but the stock is hardly exploding in the way that suggests social-networking is the next stock market darling. In fact, right after Facebook started selling, Zynga (which gets the vast majority of its revenue from Facebook) collapsed so quickly that trading was halted.

Still, about 1,000 Facebook employees are a lot richer today, and Mark Zuckerberg will join the likes of Bill Gates and Larry Ellison atop the Forbes 400 leaderboard. The state of California gets a nice bump, too -- according to some accounts, the state will eventually pick up close to $1 billion in tax revenue when the Facebook Fuckinzillionaires exercize their options and start selling their stock.

But for all the rest of us? Sure, increased consumer spending will help the local economy (dealers in luxury cars are drooling in their cheap coffee). But if that's not your line of work, you may not be so lucky.

The biggest factor in lifestyle and economic security in San Francisco is the cost of housing -- and that's going the wrong way. The Chron estimates that the total increase in the housing market will approach $1 billion, which doesn't seem all the much spread around the Bay Area, but it will be concentrated in a few popular places, and the east side of San Francisco, particularly Noe Valley, the Mission and surrounding nabes, will be part of ground zero.

Meaning if you are looking to rent or buy a place in this city, you just lost a bunch of money. That is, you will now have to pay more for your housing, which will be a net benefit to landlords and sellers.

And it's not necessarily such good news for small business and other startups:

The winners are of course the 1,000 or so Facebook employees who will cash-in, however the losers will be the rest of Silicon Valley for the following reasons. Housing prices will rise across the whole Bay Area. For local businesses and start-ups, recruiting due to difficulty moving to this area because of those rising prices

Go at it, trolls. Tell me I'm utterly wrong. Because it seems like those non-radical types at the Chron and Trulia seem to agree with me that there's a downside here, too.

Comments

Yes, Tim, a billion in tax revenue and lots more local spend.

But none of that matters if your main rationale is hating those who succeed.

Oh, and rents won't go up because we have, er, rent control.

Car salesmen drink cheap coffee? What is your basis for that throwaway line? Why not try serious journalism rather than nasty snide stereotypes?

Posted by Guest on May. 18, 2012 @ 11:13 am

Rent control?

My friend, you don't understand SF tenant law. Rent control only applies when a tenant remains in an apartment -- and every building constructed after 1979 is exempt. Rents soar at times like this -- when you are looking for an apartment you're seeking a place that is by definition empty, so it can be rented at "market value." I said that for people SEEKING an apartment or wanting to buy a house, this is not such a great thing.

For lower-income people -- for whom housing cost is the number one issue in San Francisco -- these tech booms tend to be a net negative. They don't see the spillover money and they get hammered on housing costs.

That's a fact, and has nothing to do with my feelings about rich people, which have been amply debated here.

Oh, and I've been to a few car dealers in the past two years. The coffee was awful.

Posted by tim on May. 18, 2012 @ 11:57 am

I know that, Tim, but the only people looking for new rentals

are presumably outsiders coming here, probably for those well-paying IT jobs, and so can afford the higher rents anyway.

The low-income, long-time residents of the city are happily ensconced in their rent-controlled lifetime leases, protected from eviction without just cause, and they can laugh at wholesale rent increases.

While those new FaceBook millionaires will be buying homes that low-income folks wouldn't be competing for anyway. And luckily, it looks like projects like 8-Wash will absorb the demand without those rich people chasing down cheap flats in the Mission.

So if approval of 8-Wash cancels out the excess demand of the FaceBook IPO, isn't it a wash?

Posted by Guest on May. 18, 2012 @ 12:15 pm

rent control is not so simple as that

This comment overlooks the obvious - life circumstances change...a rent-controlled apartment for one or even two can be easily outgrown. What looked like awesome living in your 20s can become a serious nuisance in your 30s as you're looking to spread your wings and grow a bit. Not to mention that rental living is commonly in flux in SF and property managers are going to put the squeeze on residents who are outstaying their welcome and paying super-low rent...no need to provide them with the same timeliness as those paying 2x-3x more. Property managers can make it very uncomfortable for long-term tenants to try to stay on.

Anyway there are long-term residents who are being ousted. I know some who have thrown in the towel and moved, whether it's to Oakland or beyond.

Posted by Guest on May. 27, 2012 @ 2:29 am

I know tenants who have clung to their RC place since the 80's.

And they have done this even though they really didn't want to. So the question you have to ask yourself is whether Rc is working at all when it causes people to behave so irrationally.

And not just tenants either. Landlrods jump thru hoops to get rid of tenants and tenants jump thru hoops to cling to an unsuitable home. what kind of policy lunacy is this?

Instead, abolish RC to encourage new build of rentals. And relax zoning ruels so we can build high-rise - the only way any congested city can deal with a housing shortage.

Posted by Guest on May. 27, 2012 @ 8:34 am

This comment overlooks the

Anyway there are long-term residents who are being ousted. I know some who have thrown in the towel and moved, whether it's to Oakland or beyond.

Posted by Guest on May. 27, 2012 @ 2:30 am

Guest wrote:

"...the only people looking for new rentals are presumably outsiders coming here
"

"Presumably" is the key word here and indicates Guest's faulty thinking.

Posted by Michael W. on May. 18, 2012 @ 12:27 pm

MW, if you want to claim my thinking is "faulty" then you have

to offer some evidence for that. You did not. Merely gainsaying me is not refutational.

Most people with rent control don't move. Indeed, it is precisely that which is what landlrods hate about rent control. in my experience, landlords can live with the rent limits - they just can't deal with the lifetime sentence.

Posted by Guest on May. 18, 2012 @ 12:39 pm

What about all the people who get evicted?

People get evicted all the time in SF as apartments are turned into TICs. Those people, often longtime residents, are suddenly looking for a new rental. And the price they have to pay goes up massively.

Not everyone who moves to SF is taking a high-paid tech job. There are lots of other jobs in this city -- for example, in tourism, the city's leading economic driver -- that pay barely enough for a tiny apartment.

If you doubt the facebook impact on housing, consider this:

http://thebasispoint.com/2012/05/17/the-facebook-effect-on-san-francisco...

Posted by tim on May. 18, 2012 @ 12:35 pm

Wow, Tim, you're actually quoting a source that states:

"San Francisco is the only California city that requires employers to pay a 1.5% tax on gross earnings of all employees (yes, it blows). Obviously payroll tax would be quite prohibitive . . "

Posted by Guest on May. 18, 2012 @ 12:46 pm

How do you come up with the

How do you come up with the idea that tourism is The City's number one economic driver? I think it employs more people than any other industry but produces mostly lower paying jobs, so there are other sectors that produce more economic activity.

I could be wrong here, BLS is not very much use and I don't know what other source to use. Where are you pulling your data from Tim?

Posted by GlenParkDaddy on May. 20, 2012 @ 10:50 am

And then there is Guest's use of "probably"

"...probably for those well-paying IT jobs, and so can afford the higher rents anyway."

Very sound arguments, Guest.

Posted by Michael W. on May. 18, 2012 @ 12:43 pm

So again. MW, no facts or argument. Just conjecture.

I'll take that as an indicator that you have no valid counter-argument.

Posted by Guest on May. 18, 2012 @ 12:55 pm

Guest: As I wrote a minute ago

your argument contains no facts and is, in itself ,conjecture; full of assertions andunsubstantiated claims.

Demonstrate to me how your claims are vaild, then I will make a counter-argument.

Posted by Michael W. on May. 18, 2012 @ 1:16 pm

I made a statement that you failed to refute.

You can either refute it or ignore it. But gainsaying it is vacuous.

Posted by Guest on May. 18, 2012 @ 1:28 pm

Making arguments based on assertions and unsupported claims,

even if they are what you think to be "obvious" is not only vacuous, it is sophistic.

Posted by Michael W. on May. 18, 2012 @ 1:42 pm

MW, if you want to believe that SF renters routinely give up

on a great rent-controlled deal so that they can pay far more in rent, I doubt that I or anyone else can dissuade you from that odd notion.

Posted by Guest on May. 18, 2012 @ 2:31 pm

Guest: I never made that claim.

I only wanted you to provide proof, other then what you think is "obvious", to back up your claim that most people in rent controlled apartments don't move.

Posted by Michael W. on May. 18, 2012 @ 2:37 pm

A tenant with a sweet rent-controlled deal is not going to

move unless either the landlord can winkle him out or the tenant wins the lottery, and maybe not even then.

If you don't know that tenants cling to rent-controlled units until they, in some cases, die there, then you don't live in this city.

Posted by Guest on May. 18, 2012 @ 3:40 pm

Guest: I have lived here for

19 years.

Posted by Michael W. on May. 18, 2012 @ 4:36 pm

Then you know of which I speak.

QED.

Posted by Guest on May. 18, 2012 @ 5:35 pm

How does my living in San Francisco for 19 years

validate your assertions?

Posted by Michael W. on May. 18, 2012 @ 11:38 pm

I had a sweet rent controlled apartment and I moved

People move for a million reasons. Maybe they got a new job somewhere else. Maybe they had a falling out with their roommate. Maybe they hooked up with someone and decided to move in with them. Maybe they wanted to start a family. Maybe they just wanted a bigger place. Maybe they wanted a different neighborhood. Maybe they started making more money and could afford a better place now. Etc Etc Etc

Few people have lives that are so stagnant that they never have to move. That's why I've always said that rent control needs to be extended to vacant units to really have teeth.

Posted by Greg on May. 19, 2012 @ 12:09 am

Maybe, maybe, maybe. Etc., etc., etc.

But I've met too many people aged 40 plus who sadly and pathetically cling to their grim apartment that you moved into 20 years earlier to believe that you made-up maybe's are anything more than a small minority.

Rent control impedes mobility.

Higher rents are a sign of prosperity. If you want cheap housing, move to Detroit.

Posted by Guest on May. 19, 2012 @ 5:31 am

Funny

I don't know too many people at all who live in the same *apartment* they lived in 20 years ago. The dead troll Arthur Evans did (all the while detesting progressives who made it possible, natch). But he was a rare case. Before I moved out of my 16 unit building, only 1 of the 16 was occupied by someone who lived there 20 years.

I *do* know a lot of people who still live in the same *house* they bought 20 years ago -not because they wouldn't like to move, but because they don't want to pay their fair share of taxes. As a result, you get these wide disparities in taxes in the same neighborhoods, prices skyrocket because there's less inventory, and it's getting harder and harder for first time buyers to break into the California housing market. You want to know what impedes mobility? Prop 13 impedes mobility!

Since it's much more likely that people will unnecessarily hold on to their houses than their apartments, and since owners are usually wealthier than renters, it makes more sense to me to get rid of Prop 13 and strengthen rent control. But like a lot of things, we do it ass backwards.

And the same people who whine about how rent control "impedes mobility" will be the ones who staunchly defend Prop 13.

Posted by Greg on May. 19, 2012 @ 8:00 am

I know of 6 separate

I know of 6 separate apartments with tenants who have lived there for 20 years or more. That's just on my block in the Mission.

I'm not sure what this has to do with the Facebook IPO, but I thought you'd be interested.

Posted by Guest on May. 19, 2012 @ 8:31 am

Monk lives in a long-time RC unit, and Marcos did until he

took an opportunistic buyout. Anyone who lives in SF knows that many RC tenants cling to their deal where in any other city, they would move on and up. It's sclerotic.

Posted by Guest on May. 19, 2012 @ 8:33 am

Guest: You make your argument

On what you “presume” or is "probable" to you. You are not stating facts, just assertions and unsubstantiated claims. (Such as "most people with rent control don't move".) Therefore, there is no reason to consider your argument as it is not based on any reasoning or evidence. That's what I mean by faulty thinking. Why should anyone give a counter-argument to assertions and unsubstantiated claims ?

Then you go on to assert that people with money should pay whatever the rental market demands. Am I to gather that you believe that wealthier people should be exploited by landlords?

Are you, or will you always be, be in a postion to pay wants the market (and landlords) demand?

Posted by Michael W. on May. 18, 2012 @ 1:12 pm

But, then you would have to admit Mr. Redmond is Doing the Same

Tim Redmond cited no sources, other than some second-hand quotes from a real estate website and the Chron, which themselves are not based on any empirical evidence. And, he brashly concluded his unsubstantiated piece with the challenge, "Go at it, trolls. Tell me I'm utterly wrong." So, it seems you would have a field day with this editorial, but you seem fixated on making the argument that everyone else should ignore Guest's comments because they are just "assertions and unsubstantiated claims."

Well, by your own logic, Mr. Redmond's entire editorial is nothing more than "assertions and unsubstantiated claims," and just a bunch of "faulty thinking," which doesn't warrant a counter-argument. So, it is a giant waste of time for anyone to comment on it, and even a greater waste of time for you to get into an argument with Guest about the validity of his comments on the editorial.

So, why don't you both take a break from your Mom's basement, and get outside in the fresh air? And, if you have so much free time, then pick one or two of the thousands of non-profits in the Bay Area that would love for you to lend a hand through volunteering. I am sure there must be more important things in life to do than arguing over an unsubstantiated comments on an unsubstantiated editorial.

Posted by Chris on May. 20, 2012 @ 4:24 pm

I'm not offering any opinion on what people "should" pay.

I'm offering the ratehr obvious opinion that you have little choice but to pay the cost of something you need. That's not explitation - it's reality.

But yes, most people with good rent control deals do not move. Why would you? and if rents are going up, as Tim claims, then that trend would surely be more emphatic.

Posted by Guest on May. 18, 2012 @ 1:24 pm

Exploitation is a reality

No one is arguing that. *You* as an individual may have little choice but to put up with it or move, but *We* as a society do have a choice. That's a reality that you ignore.

When it's clear that some people exploit the rest of us, charging much more for something than is necessary to merely recoup their investment or make a profit, simply because they can, that kind of behavior can and should be controlled. That kind of behavior tears apart the social fabric for the narrow interests of a few, and in a democracy we have not only a right, but a duty, to stop it.

Posted by Greg on May. 19, 2012 @ 9:11 am

Greg, why is it "exploitation" when someone asks for the best

price they can get? Did Bruce exploit the buyers of the SFBG building?

And is it "exploitation" when in a bad RE market, a tenant makes a lowball offer?

Posted by Guest on May. 19, 2012 @ 10:21 am

Of course it's human nature to take advantage of others

If there were no laws to prevent it, we'd be back to child labor, 72-hour workweeks, and worse. And when certain things are scarse, there will always be people willing to profiteer. The question is, how much abuse are you willing to allow? I think we can, and should, limit predatory and sociopathic behavior.

As for tenants taking advantage of landlords, if that becomes a huge problem, maybe we should work on that as well. So far, though, I don't see it. Most of the abuse goes the other way. And the law adequately takes care of the few exceptions in most cases. There's too much in the law already to protect the strong from the weak, and not enough of the other way around.

Posted by Greg on May. 19, 2012 @ 10:44 am

Greg, you didn't answer my question

Is seeking the best price "explitation"?

Posted by Guest on May. 19, 2012 @ 11:57 am

Depends

Sometimes it is. Sometimes it isn't.

When I'm shopping for CDs on Amazon, I seek the best price. When someone hoards grain during a famine and sells it for outrageous prices while people die, that person is just seeking the best price too.

With the exception of a few demagogues and scoundrels, most people can see the difference between the two. That's why we're given brains. The first scenario is generally considered a normal part of life. When the second is encountered, the natural reaction of normal people is to hang the perpetrator from the nearest tree.

Most cases of "looking for the best price" fall somewhere in between, and the reactions should be somewhere in between. Only a demagogue would demand rigid, hard and fast rules. But I think a good rule of thumb is that the amount of government intervention to regulate price gouging should be proportional to A) how scarce the commodity is, and B)how necessary it is.

Price gouging shelter in an atmosphere of severe scarcity... I don't think that rises to the level of hanging landlords from the nearest tree, but I do think the case for strong government regulation can be made.

Posted by Greg on May. 19, 2012 @ 6:33 pm

Greg, in both cases, the motivation is the same

As a LL, I want the best rent

When Bruce sells the SFBg building, he wants the ebst price

When you sell your CD's at amoeba, you want the best price.

It's all the same and, insofar as you see two different cases, that merely reflects your ideology.

Posted by Guest on May. 20, 2012 @ 4:52 pm

Call it what you will

You believe that your right to "find the best price" trumps all else, and gives you the right to wreak havoc on other people's lives and cause human misery; I believe that's the law of the jungle. It isn't every case where capitalism results in suffering and misery, but in those cases where it clearly does, I believe the government has a right and a duty to step in and prevent that misery.

Yes, you and I have different "ideologies." Mine is the ideology of a human being. Yours is the ideology of a reptile.

Posted by Greg on May. 21, 2012 @ 8:26 am

Wow, Greg, so Bruce is a "reptile"?

That seems harsh.

But then, I sold some CD's last week for the best price I could get for them, so I must be a reptile too.

Posted by Guest on May. 21, 2012 @ 9:12 am

Repeating the same tripe doesn't make it true

There you go again. You bring it back to the most innocuous scenario -selling CDs. And from that, your ideology extrapolates that every example of "seeking out the best price" is morally "the same" as you put it -selling CDs to Amoeba... charging outrageous rents far beyond what you need to survive, just because you can... hoarding food in times of famine and selling it for outrageous amounts to only those who can pay, while others starve. It's all the same to you.

No. It's. Not.

All actions are must be evaluated in context. Depending on the context of what your actions do to other human beings, the same kinds of actions can range from innocuous to severely morally reprehensible. Taking advantage of other people's misery by gouging the price of necessary commodities (not CD's, probably not office buildings either... but food, yes, and ordinary residential housing, yes) -that is morally reprehensible. And under a truly democratic government, it would be actionable.

I'm not sure if you're just engaging in demogoguery here, or you're just incredibly dense, or your moral compass is just so far off kilter having grown up on the morally depraved diet of capitalism that you truly can't see the difference in these things. But for most people, understanding this should come pretty naturally. I'm done here.

Posted by Greg on May. 21, 2012 @ 2:06 pm

Greg, you're floundering here, because your ideology is flawed.

You claim that housing is a "necessity" and therefore that the price should be controlled. And yet when Bruce sells a building for the best price he can get, regardless of the great good that could have been done with that space if it had instead been sold at a discount to a non-profit or charity, then you give him a pass for no reason other than that he's a left-winger.

The simple fact is that you have no methodology for determining what products and services are discretionary and which are essential and therefore, by your skewed standard, whose price must be controlled by some bureaucrat in city hall in a cheap suit.

The irony is that wherever socialism of the kind you advocate, with state control of prices and the means of production, has been tried, it has collapsed in abject failure. And yet here you are, promoting the same ol' same ol' centralized command and control.

Give it up, dude.

Posted by Guest on May. 21, 2012 @ 2:19 pm

State control of prices and

State control of prices and the means of production of certain sectors has worked fabulously. Compare Canadian medicine vs. United States. Their system is cheaper and better than ours.

Overwhelming Socialized Medicine kicks butt over privatized by all objective means of measurement whenever and wherever tried.

The same goes for fire fighting, mass transit, education and a few other sectors. Your ideology just blinds you to the truth.

Posted by GlenParkDaddy on May. 21, 2012 @ 3:52 pm

Socialized healthcare is only better if you are unemployed and

poor. And if the Canadian system is so good, why do they send so many of their patients to the US for care?

Posted by Guest on May. 21, 2012 @ 4:24 pm

Ten times as many Americans

Ten times as many Americans engage in "Medical Tourism" to get health care overseas as visa versa. If the American health care system is so great, why do so many Americans have to overseas to be treated?

Posted by GlenParkDaddy on May. 22, 2012 @ 3:53 pm

A free global market in healthcare is what you describe and I

have no objection to people exercizing freedom. Do you?

Posted by Guest on May. 22, 2012 @ 4:19 pm

The bubble is about to burst anyway

When the Euro folds, most of these social media stocks (especially stocks in companies that are unprofitable) are going to tank harder than the market in general. It's only a matter of weeks now. You'll get the cheap rents you're looking for then. But you'll probably also get President Romney as another side-effect. He'll make a much better bogeyman than your fellow San Franciscans.

Posted by Guest on May. 18, 2012 @ 1:53 pm

Then short FaceBook stock and you can buy a unit at 8-Wash

There is often as much opportunity in bear markets as in bull markets.

Posted by Guest on May. 18, 2012 @ 2:33 pm

Once again, Guest:

back up your assertions and claims and then I will make a counter-argument. As it stands, I see no reason or point to make counter-arguments against assertions, unsubstantiated claims, and ad hominems.

Posted by Michael W. on May. 18, 2012 @ 3:02 pm

General Motors pulled its FB

General Motors pulled its FB ads this week, saying the ads don't work. Not a good sign.

What's more disconcerting is how Jerry Brown and the Legislature are banking on taxes from Facebook stock sales/stock option exercises to keep us afloat. If a state is reliant on a single company pumping in money to the tax coffers, that's a bad sign. And Jerry Brown was on a talk show today saying FB was invented in CA. He seems disconnected.

Posted by The Commish on May. 18, 2012 @ 8:29 pm

Are U saying the state's not gonna get $1 B in taxes from FB?

Are U saying the state's not gonna get $1 B in taxes from FB? Or are you saying $1 B is insignificant? It would seem that if the state is gonna get $1 B in taxes (or close to that), that would be a big help to the state's deficit. To ignore all that money like it didn't matter much, which is what you seem to think JB should do, doesn't make sense.

Posted by Guest on May. 19, 2012 @ 1:42 pm

No, the point is...

It is not a good sign when the state is relying on a one-time extraordinary events to balance its budget- where's it gonna get that $1 billion next year??
In order to do the fb revenue estimate, the state is guessing what the stock the price will be in six months- pretty risky stuff.

Brown didn't "balance' the budget last year and he won't balance it this year either. But of course he is seeking a $65 billion raise.

A big NO on that.

Posted by Guest on May. 19, 2012 @ 2:45 pm