February 8, 2008

Proof that Palo Alto is prime: $1204 per square foot.

Reports
740 HOMER AV

740homer.jpg

Palo Alto (Palo Alto) 94301
Detached Single Family (Class 1)
Bed/Bath: 2 / 1
SqFt: 660
Lot: 1,742 sq ft
Age: 82 years
List Price: $795,000
Assoc Fee:
Remarks
OPEN HOUSE SUN. 1/20, 1-4. CHARMING PALO ALTO COTTAGE NEAR DOWNTOWN!! LOTS OF NATURAL LIGHT & SITUATED ON A CUTE CUL-DE-SAC. REMODELED KITCHEN W/BIRCH CABINETS, CORIAN COUNTERS, STAINLESS APPLS., ETC. HARDWOOD FLOORS & DUAL PANE WINDOWS. NEWER FOUNDATION AND STUCCO. UPGRADED ELECTRICAL & PLUMBING. ENTERTAIN GUESTS ON THE NEW DECK. DON’T MISS THIS OPPORTUNITY TO OWN NEAR DOWNTOWN!!

How sweet it is. $1204 per square foot. Palo Alto is clearly prime. Next year, this is going to be at least $914k – a modest 15% bump.

Heck, it’s even got Corian counters – you don’t see that very often these days. None of that granite crud here. And look, you can entertain your guests on the deck!

740homer1.jpg

In fact, that’s where you’ll be talking to your friends (one at a time albeit) about how your Facebook options have made you a millionaire, and how this house will be $1.4 million in 1 PFBIPO (Post Facebook IPO).

You heard it here first!

Comments (45) -- Posted by: burbed @ 5:59 am

45 Responses to “Proof that Palo Alto is prime: $1204 per square foot.”

  1. PA Homeowner Says:

    Wow Burbed – its like you read my mind. I was going to send this one to you, but you obviously found it. This is part of a little courtyard of mini-houses on a 10-12,000 sq foot lot that was subdivided 70-80 years ago. There is a driveway in the middle and each house sits off the driveway.

    Its an impossibly small house, but if you really, really need to say you are a Palo Alto homeowner, its for you. Plus you can send your kids to Addison School, which is a short walk from here. I think its the cheapest single family home in PA now.

  2. Winston Says:

    That’s a really nice $79,500 house. Oh, wait, I slipped a decimal point. Never mind!

  3. ex-sunnyvale-renter Says:

    I’m with you Winston. That’s what I’d pay. Mortgage + tax etc would run a bit over $1000 a month, no problem.

    Where’s Senor Cardgage? Sign me up!

  4. ex-sunnyvale-renter Says:

    This guy will hook you up!

    http://www.youtube.com/watch?v=87T6jIK9QZg

  5. TenSpeedSF Says:

    Unless your “guests” are a couple of shade-loving potted pacasandras, there’ll be no entertaining on that deck.

  6. Robert Says:

    Well, at least it’s got two bedrooms. I think that’s a huge plus.

    When we were house-hunting in 1999, there was a house for sale just south of downtown Palo Alto for $499K–the cheapest house in Palo Alto in months. We showed up at the open house, and found it absolutely mobbed. The house was a 1 bedroom 1 bath on a 3000 square foot lot. There was no way to expand it. The glassed-in back porch was being used as an office, and the basement was still dirt and only partially excavated.

    But wow was it tricked out inside. High ceilings, granite counters (before that was mandatory in California), beautiful woodwork. It just shined. It certainly matched the street; I doubt there was a house worth less than a million within four blocks.

    The house had something like 25 bids, and ended up selling for somewhere above $700K if I remember. We heard the listing agent got a lot of grief from coworkers; lots of people saw “house in Palo Alto for less than $500K” and rushed over, creating a feeding frenzy. Most of the agents thought that the house had been underpriced just to attract all the attention, but the agent kept saying “it’s a one bedroom, and it can’t be expanded. Who would have paid more than $500K?”

    Of course, that house wasn’t the lovely shade of yellow seen on this house. I’ll bet you can’t even buy house paint this color any more. Wonder if I could get an SUV in that garage?

  7. ex-sunnyvale-renter Says:

    Robert that’s one of the most concise descriptions of California living I’ve heard anywhere.

    High high prices for what’s actually 3rd world living, but Shhhhh – don’t tell.

  8. RealEstater Says:

    The nice thing about Palo Alto is that they are willing to sell you land in little pieces. In Atherton, you have to buy a whole acre. Who has that kind of money, and who needs an acre anyways?

    Think of it this way, for way under $1M, you get the same environment, same schools, and same name as the guy next door who paid multi-millions!

  9. RealEstater Says:

    >>When we were house-hunting in 1999, there was a house for sale just south of downtown Palo Alto for $499K–the cheapest house in Palo Alto in months.

    Wow, don’t we all wish we could go back to 1999? You could’ve bought anything on Burbed and came away with big profit.

  10. Malcolm Says:

    That place is smaller than the first one bedroom I rented when I moved to the Bay Area 10 years ago! LMAO!

    660 sqr feet? That is about the size of my brother’s family who lives in upstate New York.

    The people in the Bay Area smoke WAY too much ganja. It is effecting their depth perception. (Among other things)

  11. zanon Says:

    Hello all:

    REALESTATER: You make a great point. Given the appreciation between 1999 and 2007, *anything* (and not just in Palo Alto) would have been a killer buy.

    But hey — why stop there? 2017 is coming, and while I don’t know what’s going to happen, I’m interested in what you think. Will prices double again?

    -zanon

  12. Pralay Says:

    > Given the appreciation between 1999 and 2007, *anything* (and not just in Palo Alto) would have been a killer buy.

    And that includes places like Stockton, Sacramento and Modesto.

  13. Pralay Says:

    > Will prices double again?

    If NAR says so (based on its “historical data”), it is going to be for sure.

    http://www.realtor.org/pac.nsf/pages/HomeValues

  14. RealEstater Says:

    Pralay:

    Didn’t I tell you that days ago? This is such common knowledge even your grandmother knows.

  15. RealEstater Says:

    Malcolm,

    It’s all about choice. If you cannot afford Palo Alto, you can still afford a small piece of it.

    Buying a small piece of something still better than not having anything, because at least you have a starting point on which to build equity and trade up.

  16. zanon Says:

    RealEstater: Again, you make a great point. And you are right — buying a small piece lets you build equity *if* prices increase.

    Pralay points out that this has *not* been the case in Modesto, Stockton, and Sacramento — prices there have fallen. But, as you point out, prices in Palo Alto have *not*!

    So I’m interested — where do you think 2011 Palo Alto prices will be compared to 2008 prices?

    How about Stockton, Modesto, and Sacramento — what’s your call for 2011 vs 2008?

    -zanon

  17. sg Says:

    RealEstater Says:
    Buying a small piece of something still better than not having anything, because at least you have a starting point on which to build equity and trade up.
    —————-

    Alternatively, known as Ponzi scheme.

  18. Robert Says:

    > Wow, don’t we all wish we could go back to 1999?
    > You could’ve bought anything on Burbed and came away with big profit.

    That assumes you’ll want to sell. That’s my mistake — I keep thinking of a house as the place I’ll be spending the next thirty years in. When we were house-hunting, “could I stand to get stuck in this house if prices fall?” was my first question.

    Yeah, it was so 1950’s not to think of real estate as a big piggy bank. Or as something I could walk away from if my bet on the market went wrong.

    Robert

  19. Real Estater Says:

    Zanon,
    >>So I’m interested — where do you think 2011 Palo Alto prices will be compared to 2008 prices?
    >>How about Stockton, Modesto, and Sacramento — what’s your call for 2011 vs 2008?

    My answer is: Who cares where prices will be in 2011? All you need to know is that prices will double in about 10 years.

    Don’t invest in those other places outside of the Bay Area. There’s no cool jobs, no smart people, no diversity, no ramen noodles, no Pho’, therefore, no doubling in price every 10 years.

  20. Real Estater Says:

    >>Yeah, it was so 1950’s not to think of real estate as a big piggy bank. Or as something I could walk away from if my bet on the market went wrong.

    Robert,

    Some alternative ways of thinking:

    — If I’m wrong, is it really so bad to get stuck in Palo Alto?

    — Most houses in the Bay Area are 50 years old or older. What could you have bought 50 years ago that is still functional today, and worth multiple times more?

  21. Robert Says:

    > If I’m wrong, is it really so bad to get stuck in Palo Alto?

    I was usually more worried about “is it really so bad to get stuck in *this house*”. If living in Palo Alto meant a 900 square foot house on a 3000 sf lot and no parking for thirty years (or even five), then no, I would have hated to get stuck in Palo Alto.

    Hell, we could have gotten stuck in Menlo Park in a 3 bd/1ba cinder block house right next to the train tracks and a short walk to downtown. Maybe it’s worth a million now, and appreciated more than the house we ended up buying. But I would have hated living in that house.

    That’s why we ended up buying a house we liked at a price we felt we could afford in San Jose.

    I’m still sounding like I’m stuck in the 50’s. I ought to go watch some of those real estate infomercials to get the house flipper enlightenment.

  22. Pralay Says:

    > Pralay:

    Didn’t I tell you that days ago? This is such common knowledge even your grandmother knows.

    – Either you are in RE industry who takes anything coming out from NAR as gospel.
    – Or you are dumb enough to take NAR propaganda as truth.

    Which one is true? There is no “historical data”. It’s simply a PROPAGANDA. Why so? Because they want 6% commission. Here, the long term trend of housing market taking inflation into account (compiled by Shiller).
    http://bp0.blogger.com/_aYmx3hE2E8E/R6PYPmXpC3I/AAAAAAAAAro/zpzRz_EdZU4/s1600-h/bw_Feb08.JPG

    I think you still have hangover for your grandma, considering the fact that she is the only data source you have. Let me tell you some facts. If someone’s grandma is living in Detroit, it’s very likely that she have seen enough drop on her home price. If she is living in Palo Alto, she is just lucky enough to living there and see her home price soars. Still not convinced that the Gospel Of Realtor is nothing but a propaganda?

  23. Pralay Says:

    > My answer is: Who cares where prices will be in 2011? All you need to know is that prices will double in about 10 years.

    See the inflation adjusted graph here:
    http://www.burbed.com/2008/02/02/san-francisco-bay-area-area-inflation-adjusted-housing-prices-1987-present/

    If someone bought home in 1990, of course his home price did not double in 1990.

    – If you say that your forecast is based on historical data, the above graph proves your wrong.
    – If you say that you have a magic crystal ball where you have seen home price doubling in 2018, in that case most likely you are right :)

    Which one? Historical data or magic crystal ball?

  24. Pralay Says:

    If someone bought home in 1990, of course his home price did not double in 1990.

    Sorry, in above comment (in post #23) the 2nd number will be 1999.

  25. Pralay Says:

    > What could you have bought 50 years ago that is still functional today, and worth multiple times more?

    How about this 1955 Chevrolet Belair 2 dr sedan?
    http://www.oldcars.com/car1497.html

    Asking price $30,000. In 1955 it used to cost $1000-$1200 (for a new one). That makes it 30 times more.

    Of course I did not take inflation into account. Why should I? After all I am a car salesman who wants sell a car by saying: “if you buy a car today it will cost 30 times more after 50 years”.

  26. Pralay Says:

    > My answer is: Who cares where prices will be in 2011?

    Everyone should care about 2011 especially in this present housing market condition, unless he/she is super-rich. It’s a matter of million dollar (or multi-million). It’s not like a buying a car where you can make up your debt from your savings/pocket when something wrong happens and/or you cannot (or don’t want to) keep the car anymore. That’s why 2011 is more important than 2211, because chances of you having negative equity is more in 2011 than 2211.

  27. Pralay Says:

    > Don’t invest in those other places outside of the Bay Area. There’s no cool jobs, no smart people, no diversity, no ramen noodles, no Pho’, therefore, no doubling in price every 10 years.

    Is it another sort of pecking order? I though similar things are told by all the big city people about so-called “suburbs”. For example, Manhattan people about NJ or Queens (“we are not bridge-end-tunnel people”). SF city people about all the suburbs around it (including Palo Alto).

    About diversity. I am sure Stockton people used to say “there is too many Chinese, Indian, Mexican, Muslim, blacks in Alameda, Santa Clara and San Mateo counties. Hence it does not worth living there”.

  28. RealEstater Says:

    Robert,

    Like I said, having something is better than having nothing at all. In other words, having a house in San Jose beats renting in Palo Alto any day!

  29. RealEstater Says:

    Pralay:

    I did quote you the a site showing prices in the 1950’s. The data does go back that far, and plenty of people remember those prices. It’s sort like the holocaust — the people who witnessed it are still alive! There’s no denying these facts.

  30. Pralay Says:

    > I did quote you the a site showing prices in the 1950’s. The data does go back that far, and plenty of people remember those prices. It’s sort like the holocaust — the people who witnessed it are still alive! There’s no denying these facts.

    Actually better analogy will be car. I have shown example already (post #25). In 1950’s it used to cost only $1000. Now same car (but used) it is $30,000. :)

    You cannot take your girlfriend to fancy restaurant for dinner using home. But you can with your fancy car. So, why invest on home? Invest on car. Just ask your grandmother.

  31. RealEstater Says:

    Pralay,

    What’s the chance that car is still functional? It’ll cost you 30 grand just to restore it. Even the most avid car collector will tell you a car is not an investment.

  32. Pralay Says:

    > What’s the chance that car is still functional? It’ll cost you 30 grand just to restore it.

    It’s called maintenance. And it is required for both – home and car.

    Even the most avid car collector will tell you a car is not an investment.

    Let me guess. They don’t get 6% commission for telling lie and pushing people to buy.

  33. Pralay Says:

    > Even the most avid car collector will tell you a car is not an investment.

    Secondly, why are you ready believe “avid car collector” when I have clearly shown that it costs 30 times more after 50 years? On the other hand, Robert Shiller shown in the graph (post #22)that home as an investment is not all that great. What makes “avoid car collector”‘s words believable and Robert Shiller’s graph not?

  34. RealEstater Says:

    >>What’s the chance that car is still functional? It’ll cost you 30 grand just to restore it.

    >It’s called maintenance.

    The car you’re pointing to cannot be driven daily, if at all. It probably stopped being operational decades ago, and got restored later on. No amount of maintenance will keep a 50’s vehicle alive for this long. In fact, most GM vehicles have a “planned obsolescence” of around 100K miles. The life span of a house far exceeds that of any car. Majority of the houses built in the 50’s are still livable today, while majority of the cars from that era have long been sent to the scrap yards. Just look on the road. Do you even see many cars from the 80’s still around? Chevy Citation anyone?

  35. Pralay Says:

    >> The car you’re pointing to cannot be driven daily, if at all.

    You are moving the goal post according to your convenience. You asked if there is something that be functional and cost many times more. I have shown you.

    >> The life span of a house far exceeds that of any car.

    Again, you are moving your goal post. Every asset has its unique kind of maintenance and lifespan. I am not arguing here which one has more life. If that is the case, gold has more lifespan than home. Do you want to argue about it?

    >> Majority of the houses built in the 50’s are still livable today, while majority of the cars from that era have long been sent to the scrap yards. Just look on the road. Do you even see many cars from the 80’s still around? Chevy Citation anyone?

    Well, I have just shown you that how inflation and other economic factors can take their tolls. This is something you never take into account when you make a sales pitch for real estate. Car is just an example. It was more of a sarcastic post where I was acting like a car salesman (just like you are doing for real estate). I have shown that a car which was priced $1000 in 1955 can cost $30,000 in 2008. So, next time don’t tell me that your grandmother’s home was only $20,000 in 1950s. If you think that comparing a car price between 1955 and 2008 is stupid (actually it is), then comparing home price between 1955 and 2008 is stupid too (which you are doing exactly).

  36. RealEstater Says:

    >>If that is the case, gold has more lifespan than home. Do you want to argue about it?

    Gold is not a functional entity. You can’t live in gold, nor drive it. Stupid analogy.

    >>Well, I have just shown you that how inflation and other economic factors can take their tolls.

    Inflation is a home owner’s best friend. The more inflation there is, the more valuable the house becomes. This should be self-evident.

  37. Pralay Says:

    >> Gold is not a functional entity. You can’t live in gold, nor drive it. Stupid analogy.

    Ha ha! You are arguing from dumb to dumber. What exactly do you mean by “functional”? Is it your invented word which you can twist anyway you want? Let’s quote Alan Greenspan:

    “Gold, having both artistic and functional uses and being relatively scarce, is durable, portable, homo-geneous, divisible and therefore, has significant advantages over all other media of exchange.”

    What did he mean by “functional use” here? Any idea?

    >> Inflation is a home owner’s best friend. The more inflation there is, the more valuable the house becomes. This should be self-evident.

    Self-defeating argument. It’s very apparent that you don’t have very basic knowledge of economics. No wonder you sound so much like a RE agent!

  38. RealEstater Says:

    Pralay,

    Don’t quote Alan out of context. Let me say it again, Gold is not functional. When you invest in gold, you cannot use it for anything.

    Not sure what is your argument regarding inflation. Let me say it again — inflation is the home owner’s best friend.

  39. Pralay Says:

    >> Don’t quote Alan out of context. Let me say it again, Gold is not functional. When you invest in gold, you cannot use it for anything.

    Are you simply trolling? So I am sure you know the actual context when he wrote in 1966. Let me know what was that.

    >> Not sure what is your argument regarding inflation. Let me say it again — inflation is the home owner’s best friend.

    Inflation devalues money. If $1 gets devalued to $0.50 within one day (say from Monday to Tuesday), then there is no point of saying “I bought a gallon of milk for $3 on Monday and its value appreciated and become $6 on Tuesday”.
    Here, the value of milk did not appreciate. Rather its price increased due to inflation.
    It’s really amazing how you claim “inflation is the home owner’s best friend”. Your economic knowledge is really poor.

  40. burbed Says:

    Well in fairness, inflation for a fixed-rate debtor because the debt becomes less over time.

  41. densityduck Says:

    Oh dear Lord is someone actually trying to argue in favor of the gold standard?

  42. RealEstater Says:

    >>Well in fairness, inflation for a fixed-rate debtor because the debt becomes less over time.

    Exactly. Don’t know wny Pralay fails to understand such basic concept:

    Leverage + inflation = wealth

  43. burbed Says:

    uh. less debt != wealth

  44. Pralay Says:

    Exactly. Don’t know wny Pralay fails to understand such basic concept:

    Leverage + inflation = wealth

    —————–

    What is stupid comment. Inflation does not make you wealthy.

  45. What will you do when house prices double in the Real Bay Area? [Burbed.com] Says:

    […] was thinking of this comment from the other day: Proof that Palo Alto is prime: $1204 per square foot. [Burbed.com] Real Estater […]


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