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.