Rent in this California city is so expensive that people are spending $700/month to sleep in tiny pods, with just a curtain for privacy — and the tenants aren’t who you think they are

San Francisco — dubbed the AI capital of the world — is a dream destination for ambitious tech founders looking to create the next big start-up. But living in this tech hub is exceedingly expensive; the median home price stands at $1.4 million, while the median rent for a one-bedroom apartment is over $4,200 per month.

Those costs are out of reach for entrepreneurs like Ben, who moved into a pod to save money and focus on open-source projects without the burden of high rent.

"I was living in the Presidio before and was kind of looking for cheaper options just so I could keep working on the stuff I wanted to and working on open-source projects," Ben told ABC reporters.

“Are pods a smart choice for start-up founders? ”

The residents of the pods aren't simply budget-conscious renters; they’re primarily tech entrepreneurs looking to make it in Silicon Valley. With a limited income and big dreams, they're opting for the $700 pods as a temporary solution. Pod resident Ruidi, a University of Illinois graduate, moved to San Francisco with dreams of changing the world.

"Almost everybody is a founder. They want to achieve something greater and build something that creates more impact for society." Ruidi told reporters.

Brownstone Share Housing has faced significant regulatory hurdles in its development. After the pods went viral in 2023, San Francisco’s planning department deemed them illegal due to zoning issues. Following a year-long battle and necessary adjustments, including changes to the front entry lock, Brownstone finally secured approval on September 5, 2024.

"There was never anything illegal about the pods,” James Stallworth, spokesperson for Brownstone, said to reporters. “It's just that we didn't have a change of use because this building used to be [a] bank. So, we went through that process for about a year.”

"San Francisco offers few options to address housing challenges”

San Francisco's high cost of living and climbing housing prices create significant barriers for those seeking affordable housing. While pod living offers a creative solution for some, the city is also developing affordable housing communities, like Islais Place, which offers 317 affordable units in the Excelsior District.

Managed by BRIDGE Housing, this newly opened community serves households earning between 30% and 103% of the area's median income. The property features a mix of one- to three-bedroom apartments and amenities like a community room, bike parking and public art. Located just six miles southwest of downtown San Francisco, the facility also includes a health clinic and services from Urban Services YMCA. Islais Place is a notable addition to San Francisco’s dwindling affordable housing inventory, which saw a 27% decrease in unit deliveries in 2024 compared to the previous year.

“Are pods enough to address San Francisco's housing crisis?"

While pod living provides a unique approach to affordable housing, it also underscores the challenges many residents face when searching for reasonably priced options. As San Francisco continues to attract tech talent, the city will likely see an increased demand for creative housing solutions, like the pods. However, pods are not a suitable option for many residents, especially those with families.

Unless the permitting process becomes more efficient and affordable housing becomes a greater priority, San Francisco could see tech talent leaving for more affordable destinations, along with an increase in the rising unhoused population. The city has made strides with initiatives like Senate Bill 35, which helps fast-track affordable housing projects that meet specific criteria, but many believe more needs to be done.

In the meantime, companies like Brownstone Share Housing plan to expand, with a larger building set to open next year.