San Francisco is now for all intents and purposes a boom town.

At one end of the spectrum it is awash with tech money from the likes of Google, Facebook and Twitter. On the other you have pretty much everyone else.

I'm familiar with this coming from Perth, Western Australia. Australia is undergoing an unprecedented resources boom thanks to China's insatiable appetite for metals and petroleum products. This has affected different parts of the country differently. Perth, Brisbane and some region centers have ridden this wave for more than a decade.

On one side you have those who have owned property for this entire time who are sitting on huge windfalls (eg a house you could buy for $85,000 in 2001 cost $350,000 by 2005). Now you won't find a house cheaper than $250,000 in the Perth metropolitan area which stretches for 100 miles of coast and 50 miles inland (at peak; it's in between a triangle and a semicircle).

To view this is a positive is ultimately shortsighted. You see, it's incredibly difficult for new people entering the market. And I'm not just talking about purchasing. It flows on to renting. Those rents are inputs into all other costs and this all adds up to an inflation bomb just waiting to explode.

The "haves" in Australia are those associated with mining and construction (since mining demands a lot of infrastructure). The "have nots" are everyone else. The have nots are, at best, asset rich and cash poor.

At some point the economy simply ceases to function. Office space is incredibly expensive in Perth such that, for example, there are fewer and fewer software engineering jobs as companies relocate or centralize to Sydney and Melbourne (exacerbating a natural trend), which incidentally is one of the reasons I moved a couple of years ago.

Honestly I think it's cheaper for me to live in Manhattan than anywhere central in Perth now. Manhattan. Rents are more expensive here but not by much. Everything else is cheaper. I can walk into a large number of eateries and have appetizers for <$5 and entres for <$10, just as one data point. Utilities in Perth are super-expensive. I know people with $1500 electricity bills... for two months.

Now Perth isn't land-contrained like San Francisco (or Manhattan) for that matter but the socialist bent in SF is ultimately a problem.

Rent control is a huge problem in SF. This has been covered here previously. Some estimates run at 1 in 8 rentable units being left permanently vacant, arguably due to rent control.

The city's building restrictions mean new units simply aren't entering the market.

NYC has several things going for it here:

1. It did away with rent control in 1973. It provided a smooth landing with rent stabilization, which is now rapidly disappearing from Manhattan;

2. Manhattan has excellent transport links, probably the best in the country. The fact is if you work in Manhattan, you can live in the five boroughs, New Jersey, upstate New York, Long Island or even further afield without having to drive into the city.

Compare this to the woeful transport situation (in comparison) in the Bay area. Caltrain is barely serviceable and at best runs once or twice an hour.

3. New York allows new construction, at least in some areas. Financial district, Battery Park, Midtown West, etc;

4. The surrounding areas of NYC are more densely populated. Compare this to, say, Menlo Park, which reserves almost all land for single-family residences on large blocks and like much of the rest of the Valley, virtually prohibits high-rise construction.

This low density is ultimately shortsighted as it comes at the expensive of amenities and will at some point impact the ability for employers to stay in the area as the rising property prices make commercial activity increasingly untenable.

5. The geography doesn't help SF. Whereas New York, London and other densely populated urban centers can expand in multiple directions, SF is more constricted.

Facebook really wanted to stay in Palo Alto. Zoning restrictions made it difficult. They had split offices and eventually had to move. Twitter for some reason is sticking to SoMA but as the seedier areas gentrify and go up in cost, this is going to become increasingly difficult. At some point it's simply going to make more sense to relocate out of these kinds of areas.

What happens to SF when large numbers of jobs move out of the city?

The whole rent control and construction limits is going to have to end. The longer it goes on, the worse the correction will be (IMHO).