In 2016, London-based business consulting and services firm PwC once again included San Francisco in its annual Cities Of Opportunity report, lauding us as one of 30 cities in the world most attractive for new business ventures.
The PwC analysis did mention one small catch, though:
Cities with the greatest economic strength today often have housing that is priced out of reach. Five of our top 10 cities in economic clout fall at midpoint or lower in rent affordability (London, New York, San Francisco, Beijing, and Shanghai). This foreshadows difficulty in talent attraction, retention, and, ultimately, cities possessing critical, hands-on skills they need.
This piqued apartment site RENTCafe’s curiosity to the point that, at the beginning of July, the RENTCafe blog published a breakdown of what kind of opportunities the Cities Of Opportunity afforded to the rest of us—that is to say, how easily can the workforce in the world’s greatest business cities make ends meet?
In the site’s calculations, San Francisco came in as the eighth hardest place to pay the rent out of the 30 big business hubs.
Even though several cities with worse rankings had much, much lower rents (in Lagos, Nigeria the average renter pays $355/month in U.S. currency), SF enjoys a much higher average income as well, which tips things back a bit.
The average San Francisco renter pays 41 percent of yearly before-tax income toward housing in the breakdown.
On the one and, that’s not nearly as bad as places like Mexico City (60 percent) or the Manhattan borough of New York (59 percent).
Then again, it’s a wearying statistic when compared to Kuala Lumpur, Malaysia (20 percent) or Moscow, Russia (21 percent).
As PwC points out, business interests in major cities have a money incentive to want the cost of living to stay at least somewhat reasonable.
In Los Angeles, for example (which didn’t make the PwC list), the LA Business Council found that 60 percent of surveyed employers complained that the cost of housing was making it hard to attract and keep new hires.
Do RENTCafe’s numbers check out? Well, the calculation is based on an average before-tax income of just over $92,000/year.
But the Mayor’s Office of Housing, on the other hand, estimates a non-adjusted median income for one person at less than $81,000 in early 2017.
And the U.S. Census pegs the figure at just a bit over $81,000 (although that figure is for 2015, the most recent available). So it’s possible things are even worse than eighth place.
But the census also reports a median citywide rent of $1,558/month, considerably lower than RENTCafe’s $3,150/month estimate, although again, the most recent census data is now two years out of date.
RENTCafe competitor ApartmentList has been trying to calculate what it says is a more accurate citywide median rent using the census number as a base and calls the number at $2,418/month now.
That would put SF’s rent burden as low as 31 percent, using the highest income estimate. Or as high as 46 percent using the lowest.
Meanwhile, a look at the checkbook every month removes any ambiguity for most San Franciscans.