Look at gas prices. 3x, more actually, from 1993. Why aren’t you talking about a bubble in gas?

Or milk, $7 a gallon for Organic milk at Safeway or any other major market. Where’s the milk bubble?

Here’s one primary factor for much of the cost increase in the Bay Area, government greed. Yep, local governments figured out that they could strong arm the builders to fund their socialist experiments in “low income” or even better, once they figured out that was a bit too much truth in advertising, “inclusionary” housing. The “impact fee”, is often $150K per unit. Do you have any concept of how much instant unaffordability that builds into the market? Some greedy local city decides to redistribute some wealth and suddenly every house in the city gets a $150K boost, minimum. So there it is folks, there is more than one reason for everything.

If you’re a simpleton, keep digesting tripe like burbed.com simple information and you’ll be happy. If you want to understand things, you have to be a bit more analytical about it.

In June, it re-listed with a different agent at $535k.

In July, it re-listed with a third agent at $515k.

I’m walking by it the other day, and the “$515″ is crossed out and “$500″ penciled in…

So that’s a 10% drop in asking price over the past in less than six months. Has the bubble popped yet?

There’s the problem right there.

No one wants to leave the Bay Area – it’s the most special and perfect palce on earth.

Actually you can dice that even further.
When Goog went public they only had some 3000 world wide? But thats ok too… No you really have to go back even further. Say 1998-2001 for fully vested options to take effect. Now we are talking around 500 employes per their S1 when they filed. It also depends on number of options granted. Some only get 1000 shares. No big impact. Read their Cap Table in S-1. As one news story pointed out back during the IPO only 300 or so benefited.

So ok, lets really ask these 300 or so how they felt when they Google Hit 300-400 per share.

I will tell you. Everythings changed. You wake up! Call you broker sell everything. Send an email to your new boss that was hired last month! ( You really cant stand this guy, because you know more and he came from a dead busted company) and give your notice. You go back to bed and sleep.

Next you move out of the Bay Area to LV or Miami where prices are 1/3 and homes are 2x bigger.

You dont even bother to stick around Bay Area. You see once the realtors in Palo Alto figure your from Google, which they ultimatly do via background check.
Your toast! They will jack up real estate prices 100%
And you can pay because your from Google. Everyone is like that! Your life has changed and you need to leave fast before you loose everything.

You leave for LV or Miami or SoCal … as far from BA as you can…
There is no sales tax or state income tax and you live on 5% of your cash. I doubt you will find anyone from IPO date working at Google. They are all gone just like the Yahoo and other dot.coms.

For full disclosure I worked for two tech companies that went IPO in 1994 and 1996. By 2000 I had $2.5M and that grew to $6M by 2006.

That’s only $46,548 or $41,376 a year in mortgage payments.

But just think, you would get $10k back in tax deductions. That should at least cover the property tax and insurance.

See the graph below if no WSJ
http://img131.imageshack.us/my.php?image=subprimemh6.png

See the WSJ article
http://online.wsj.com/article/SB117167930652011972.html?mod=hps_us_inside_today

Wow… very well said.

Actually, that effect is tiny. Google currently employs 10,674 people. And not all of those are completely in the Bay Area. Also, the proportion of those that actually made the millions (or billions) is only a fraction of that. So arguments sake, let us assume that 20% of the employees became millionaires. (It is likely a lot smaller) So roughly 2000 millionaires.

If you compare that as a ratio of the total population of the Bay Area, it is hardly a hiccup. Even taking the total employee base of google and determining the ratio, it is still only a small fraction.

But ultimately, one has to consider the demographics as well. Where do you suppose the google millionaires are purchasing their homes? Answer: Los Altos, Atherton, Palo Alto. I can pretty much guarantee that very few google millionaires purchased homes in sunnyvale, fremont, san jose, daly city, etc.

I think one of the major points that this blog (and others are attempting to demonstrate) is that sections of the Bay Area are quote-unquote, ‘desirable’, while others are little more than standard suburbia. Somewhere in the past 8 years or so, that distinction became hazier.

I have also been wondering
what component of bay area housing bubble
is due to the googzillionaires.

The spike in housing starting Q4 03 defies
logic

This is how I see the BA housing market. I’ve been tracking some homes loosely in SJ lately because that is where I’d like to buy at some point. I’ve seen many different things happening on the local MLS:

-Houses are ‘for sale’ for a LONG time. Some as long as 150 days.
-Many listing I’ve tracked have been ‘canceled’ or ‘expired.’ You can bet those listings fall into one of three categories 1) The seller is waiting for a while to relist to reset the ‘days on market’ value. 2) The seller plans on renting for a year or so until the prices start going up 20% a month again. Then they’ll be RICH!!! Donald Trump says so! 3) They think that relisting in the summer when the market is typically ‘hotter’ will cause their house to sell for a higher price.

My prediction is that this summer many homes will be listed and re-listed. This will cause the biggest surge in home inventory we’ve seen in a while. Many sources show that foreclosures are up… Just wait and see friends. Stick to your guns, don’t give in and wait for prices to come down to a more reasonable level. It will happen. As burbed has so eloquently shown the bay area ISN’T special and we’re going to get what we want soon.

Prices have actually come down. I have seen evidence of this in many areas. The problem is, housing is not as liquid as the stock market or other assets. Also, there is a level of stubborness amongst home owners who do not wish to see large cuts in probably their largest investment.

Remember that we are only at the precipace of this housing debacle. And because of the slow nature of the way housing normally moves, this will take years to play out. Historically, the duration of an upturn in housing matches the duration of a downturn. So if you go by the assumption that this bubble, especially in the bay area, started around 1996-1997, we are likely not going to see a bottom for some time.

The one wild card is how the exotic mortgages will effect the situation. It is possible that mass defaults will correct the market faster. Its the big unknown. But if we toss in that and a recession to boot, it may happen quicker. Although realistically, you probably won’t begin to see evidence of a bottom until around 2011-2012.

Why the hell won’t the prices go down around here. Apart from the extreme examples found on this site, by far and large, the sellers still haven’t budged yet. How much longer is it going to take? And if it does happen, what’s the drop gonna be like? 5%, 10%? Still not enough