America’s Black Hole. My sister Judy once called California ‘America’s Black Hole.’ I never forgot that because it’s true. What she meant was that moving to California is like entering a Black Hole. Nothing that enters a Black Hole comes back out. Once people move to California, they never go back to where they came from.
Adios Baltimore! I grew up in Baltimore, a Rust Belt city. The population of Baltimore peaked in 1950 and has been declining ever since. The heavy industries that once supported Baltimore’s prosperous working class are gone. Baltimore’s shipyards that once employed 50,000 people are gone. The Glen L. Martin aircraft factory that once employed another 50,000 people is also long-gone. The Bethlehem steel mill that once produced 10,000 tons of steel a day is gone. As the jobs dried up, so did Baltimore’s population. Thousands of row houses in Baltimore with their famous white marble stoops are just rotting away.All of Baltimore’s once-fashionable downtown department stores are now abandoned. There are dozens of cities just like Baltimore all over this country, once bustling industrial centers that have been in decline for generations. Without the jobs, what is to keep people in Baltimore? Baltimore is hot and muggy in summer and can be bitterly cold in winter. There are no interesting geographical features in Baltimore like mountains or waterfalls or palm tree lined beaches. We can’t stop people from leaving places like Baltimore and moving to California, and it is a fantasy to imagine that people won’t come here from places like Baltimore if we just don’t build housing for them.
Every now and then, a tenant will ask me if he can pay his rent with a credit card. My answer is No. All of my leases state that the rent must be paid by check or money order. I don’t accept credit cards. Why? It’s the bank fees. Most of the new apartment houses in Berkeley and San Francisco allow tenants to pay their rent with credit cards, but that’s because credit card fees are an insignificant expense for them. A 2 bedroom apartment in a new building in downtown Berkeley rents for $4,000 to $5,000 a month, but I’ve seen some that are over $6,000 a month. If I was getting that kind of rent, I would accept credit cards too!
A growing number of landlords are allowing their tenants to pay their rent with Bitcoin. I really, really don’t understand that. Cryptocurrencies like Bitcoin are not currencies, they are not money, and they are not legal tender. I don’t know what they are, but I do know that I can’t pay my property taxes, garbage bills, fire insurance, etc. with Bitcoin. I can’t buy cocoa beans with Bitcoin either. I think some businessmen accept Bitcoin because they think it’s tax-free income; however, income that you don’t report on your tax return is not tax-free income. That’s called income tax evasion, not tax-free income. You don’t need to be a CPA to know there’s a difference. Supposedly, Bitcoin transactions and transfers are completely secret and untraceable, but I wonder if that’s really true. I suspect that the IRS has figured out how to crack Bitcoin’s computer codes.
Military Grade Encryption. People tell me that there is no way the U.S. government can get into Bitcoin computer records because they use military grade encryption. But what does that mean? Does ‘military grade encryption’ mean ‘unbreakable’? As you know, I teach history, and history tells me to be very suspicious of unbreakable military codes. For over 5,000 years, governments have been trying to create unbreakable military codes, but without much success. During World War 2, the Germans thought they had an unbreakable military code, but Winston Churchill and Franklin Roosevelt got decoded copies of Hitler’s most secret coded messages to his generals before the generals to whom they were addressed got their decoded copies! That went on all through the war too. During World War 2, the U.S. also broke the Soviet diplomatic code and several Japanese codes.
The Battle of Midway. The biggest naval battle of World War 2 was the Battle of Midway. There will never be another naval battle like that again. The Japanese were hoping to win a decisive victory that would knock the U.S. out of the war. The Japanese thought they were going to catch the U.S. fleet by surprise; however, the U.S. Navy had broken the Japanese naval code, so they knew where and when the Japanese were coming. Instead of ambushing the U.S. Navy, it was the Japanese that got ambushed instead. The U.S. Navy sank all the Japanese aircraft carriers at Midway. As a result, Japan also lost hundreds of their best pilots. After all the Japanese aircraft carriers were sunk, Japanese pilots had no place to land. When they ran out of fuel, Japanese pilots crashed their planes into the sea and drowned. Midway was a disastrous defeat for Japan from which they never recovered. Prior to Midway, Japan was always on the attack. After Midway, they were always on the defense. OK you say, that was then, but what about now? Now we have military grade computer encryption. Well Yes, we do have that, but you know, Vladimir Putin didn’t seem to have much difficulty getting past U.S. computer encryption during the 2016 presidential election. I think that people who do business in Bitcoin in the belief that they are fooling the IRS may actually just be fooling themselves instead.
As I said last month, Parker Berkeley on Shattuck Avenue is now open and renting apartments. It is 4 blocks from my house. This place is huge. It covers a whole block and half of the next block. 2 bedroom apartments at Parker Berkeley rent for $4,500 a month. Parking and utilities are extra. The rent is even higher if you have a cat. (You know, I have been a landlord for a long time, and it seems to me that if a landlord is getting $4,500 a month for a 2 bedroom apartment, he can afford to let a tenant have a cat for free.)
So – how much do you have to earn in order to rent one of these apartments? By my calculations, you would need to make at least $200,000 a year. You see, a person making $200,000 a year is only going to take home $100,000 after withholding. He is going to spend 33% of his income on federal income tax, plus 10% for California state income tax, plus 6% for Social Security. That leaves this guy with $100,000 a year or $8,300 a month in take-home pay. Landlords don’t like to rent apartments to people who are going to be spending over half their take-home pay in rent. So – what kind of people are going to live in this building or any of the other pricey new apartment houses going up in Berkeley? How many people in Berkeley make $200,000 a year? A lot more apartment houses like Parker Berkeley are going up. Many are already under construction. I think this a bubble, and I think it will end badly. The thing that I especially dislike like about these new apartment houses in Berkeley and San Francisco is that they only contain housing for the rich, the poor, and the elderly. Nothing, absolutely nothing, is being built for normal working people.
The short answer is No. There have been a lot of claims in social media and the press that landlords in Berkeley will no longer rent apartments to Irish students because of the balcony collapse at Library Gardens downtown that resulted in the deaths of 6 Irish college students. These stories are untrue. I have been a landlord in Berkeley for over 40 years, and nearly all my tenants are U.C. Berkeley students. I know a lot of other Berkeley landlords, and none of them blame the victims for this tragedy. It is true that there were far more people on that balcony when it collapsed than was prudent; however, engineering reports showed that the cause of the collapse was poor construction resulting in wood rot and that had the balcony been properly built, it could have supported the weight of those students. The sympathies of all the landlords I know are with the families of these students. Yes, it is hard for Irish students to rent apartments in Berkeley for the summer, but not because they are Irish. There is a severe rental housing shortage in Berkeley, and because of our local rent laws, most leases in Berkeley prohibit sub-leasing. The Irish counsel general in San Francisco has investigated claims of discrimination against Irish students in Berkeley and has concluded that these stories are baseless and has said so publicly.
- Studios $4,250 a month
- One Bedroom $5,300
- Two Bedroom $7,000
Why would anybody pay $7,000 a month rent for a 2 bedroom apartment? I know several people who bought houses in San Francisco within the past couple of years, and all of them are spending a lot less than $7,000 a month for housing, and they all have mortgages. To be fair, the Jasper really is a luxury building. The apartments are large, and the building has a lot of amenities. Most of the apartments have balconies; however, I don’t know how much time I would spend on a balcony next to the Bay Bridge on-ramp at rush hour, especially on a hot, dry day. Breathing air like that can’t be healthy.
The minimum wage in San Francisco is now $12.25 an hour, which I think is too low. I ask you – how can anyone live in San Francisco who works at minimum wage? According to Zillow, the average apartment in San Francisco rents for $3,950 a month. That means that a worker would need to make $79 an hour, or $153,000 a year, to rent the average apartment in San Francisco without spending more than 30% of his pre-tax income on rent. I don’t know how much McDonalds pays their hamburger flippers in San Francisco, but I’m pretty sure that it is considerably less than $153,000 a year. There are a lot of people working for minimum wage in San Francisco, but where do they live? I really can’t figure that out. The people who work at McDonalds and Walgreens in the City must live someplace – but where?
Do You Rent To Cats? Many years ago, I rented an apartment in Oakland. The day after I posted my listing, I got a phone call from a woman who said: “I saw your ad for a one-bedroom apartment on McAuley Street. I have a question. Do you rent to cats?” I thought that was an oddly worded question so I was careful how I answered her. I said: “No, I don’t rent apartments to cats, but I do rent apartments to people with cats.” The woman said, in a dejected tone of voice: “Oh, that’s too bad” and hung up the phone. I never heard from her again. Although this happened many years ago, I still think about that woman every now and then and wonder what was on her mind.