Will stock options save the Bay Area?
A guide to the different parts of the Bay Area [Burbed.com]
Name Says:
May 10th, 2008 at 11:46 pmBurbed (and others waiting for a housing price “correction”),
I have a question for you:
The primary premise I have seen for why folks expect housing prices to correct is that people don’t have sufficient income to service their mortgage debt at the current home valuations.
However, anecdotally I know of many people in the Bay Area who have received several hundred thousands of dollars in stock option grants in the last decade. They use substantial portions of it as a down payment that leaves them with a serviceable mortgage given their incomes.
The question then is this:
Is it possible that these folks represent a large enough fraction that they can support current prices or let them drop only 10-20% (as opposed to the 60-70% some here seem to expect)?
Is it truly different now from the period upto a decade ago. Perhaps till then lay employees didn’t get the large option grants - with the companies’ profits going to the investors, whereas now more goes to the employees?
Does anyone have data of asset (not income) distributions for Bay Area towns?
Great question. I’m pretty sure everyone in the Bay Area has amazing stock options, like the masseuses from Google. But there might be a few people who don’t - and those people really ought not to be living here anyway.
In any case, does anyone have this sort of data?
May 14th, 2008 at 8:44 am
Most certainly any sr. manager, director, VP, and other executive management continues to receive stock options on top of 6 figure incomes. Multiply that by the number of companies here, and you can see why there is so much demand for housing.
May 14th, 2008 at 8:49 am
We’re almost June now, and so far the gloom and doom predictions have not materialized in the real Bay Area. Let’s take a look at the different aspects, using 94087 (Sunnyvale CUSD) as an example:
1. Price has not dropped at all. You wouldn’t have saved any money by waiting.
2. Inventory came and went. You can easily see this on the Movoto map search. Houses that came onto the market were quickly snapped up. You barely see any inventory south of Fremont Ave.
3. Still barely any foreclosures.
May 14th, 2008 at 10:05 am
With a few exceptions (e.g. Google), stock options have not amounted to much value in the last 7 years. Personally, my options over that period on average are worth <$1/share. I don’t think options are the reason for high home prices.
Bay area home prices have always been high. I don’t think they are any higher (relative to national average) in recent years than they were 10, 20 or 30 years ago. This is simply a case of a lot of demand, a lot of wealth, and limited supply.
May 14th, 2008 at 10:33 am
In any case, does anyone have this sort of data?
————–
There are some scattered information in internet (e.g NCEO) but I haven’t found anything specific to bay area (or hitech industry for that matter).
But as Madhaus pointed out already, cashed in options do get reflected in overall income.
I am going to rehash the same points I made in other thread:
1. Stock options do not explain the real estate run-up between 2002-2006. Keep in mind that in dot-com bubble (in 2000-2001) many employee’s options became worthless. If something becomes worthless in 2001, how did it managed to help in 2002/2003/2004 in real estate? In the end it boils down to same thing which had impact all over America - easy money of 2002-2006.
2. For the sake of argument, even if we assume that stock option is helping greatly in bay area real estate, why is the sale volume dropping gradually since 2007? As far I understand people should have more options (and their value) in 2008 than 2004, considering the fact hitech industry improved significantly after dot-com bubble burst. Does that mean that people do have stock options but they started having less faith on real estate (hence they are not cashing in their options and investing all their money in real estate)?
May 14th, 2008 at 10:39 am
Prices in some areas have not dropped….yet. We are nowhere near the ninth inning. This time last year, most areas hadn’t fallen. My prediction is that by the end of this year, all places will have at least started to fall. Of course the correction won’t be near complete by the end of the year (especially if their is a bailout), but I think it will have started accross the board, with some areas of course being harder hit than others (those in which the correction has already started). Just my thoughts. I’ll put it this way, if the “RBA” was a stock, I would have shorted it long ago. Maybe it would be a loser, but I highly, highly doubt it.
May 14th, 2008 at 10:46 am
So, I decided to look into past home prices to back up my statement that the ratio of bay area home prices to national home prices has been more or less constant for a long time. It’s not exactly the case, but it may not be as out of whack as some wish to believe.
In 1979, bay area median price was 99,600, while national median price was 55,700. A ratio of 1.8.
In 1990, that multiple became ~2.6, and it stayed that way through 1999.
From 2000 to 2004, that multiple grew to 3.5, hence the recent run-up. That’s the latest data available on those sites.
Is it a bubble? Sure. Will it burst? Not necessarily. If bay area home prices stay flat through 2010, while national home price increase at the historical rate of 6%, then the ratio will return to a pre-1990 level (<2.5). I think it will take a dramatic shift in local industries to for the ratio to return to pre-1980 level.
Sources:
http://www.realestateabc.com/graphs/natlmedian.htm
http://www.data360.org/dataset.aspx?Data_Set_Id=9356
May 14th, 2008 at 10:51 am
CSCO: In 2002 the stock was $10. Now it is $26.
ORCL: In 2002 the stock was $8. Now it is $21.
AAPL: In 2002 the stock was $7. Now it is $190.
EBAY: In 2002 the stock was $14. Now it is $30.
You don’t have to work for Google. You just need to be in tech.
May 14th, 2008 at 11:16 am
RealEstater, I’ve seen you post some pretty retarded stuff but that really takes the cake.
CSCO: In 2000 the stock was $79. Now it is $26
ORCL: In 2000 the stock was $46. Now it is $21
AAPL: In 2000 the stock was $34. Now it is $190
EBAY: In 2000 the stock was $30. Now it is $30
Only 1 out of the 4 has made owners richer. 2 out of the 4 are still missing >50% of their money. In the same span of time, housing has skyrocketed. It has nothing to do with stock everything to do with lax lending standards, which are gone. RIP real estate.
May 14th, 2008 at 11:21 am
Prices in some areas have not dropped….yet. We are nowhere near the ninth inning. This time last year, most areas hadn’t fallen.
———–
I agree. One year back same argument made for whole bay area (RBA + non-RBA) that bay area price would not fall.
May 14th, 2008 at 11:39 am
Only 1 out of the 4 has made owners richer. 2 out of the 4 are still missing >50% of their money.
———-
Sw,
Anybody got hired around that time (with stock options) which would greatly benefit him? I have some friends in Cisco who survived 2001-2002 period. Forget stock options in promotion or annual perf review, there was not even pay raise.
In addition, don’t forget that the quoted price was from year 2002 to show dramatic improvement.
May 14th, 2008 at 11:47 am
Real Estater, you’re picking the lowest point in the last 6 years to make your point. Unless you have the luxury of back dating, you don’t get to set your option price at the bottom. There was a low point in 2002, but most stocks quickly rebounded. Sure, some stocks have done well (GOOG, AAPL, HPQ), but many tech stocks have been flat for a long time (INTC, AMD, A, AMAT, JAVA, PALM). So it’s certainly not “you just need to be in tech.”
R, I wouldn’t short BA homes. It’s not good, but not that bad. Median home price drops have been exaggerated by the fact that the jumbo loan market has been essentially frozen, which skew the number towards the low side. That will not last.
Pralay, you are one of the most opinionated posters here (and you know what opinions are compared to)? What’s your projection for BA median home price in 2010? I say it’s up 3% from today.
May 14th, 2008 at 12:18 pm
What’s your projection for BA median home price in 2010? I say it’s up 3% from today.
———–
Well, if you start adding up various factors in both sides (positive and negative), a very few points go towards positive side. Job growth to keep up the appreciation? Relaxed lending standard? Requirement of 20-30% downpayment? In addition, there are too many unknowns looming in near future - Alt-A reset, economy, impact of foreclosure. Given all these unknowns, I simply don’t have any prediction (and I don’t know how anyone can predict definitive 3% or 10% appreciation without knowing and taking all these factors). But given current trend of inventory vs sale volume I would not bet on 3% appreciation. I would be flat or negative depending on area.
May 14th, 2008 at 12:22 pm
Median home price drops have been exaggerated by the fact that the jumbo loan market has been essentially frozen, which skew the number towards the low side.
————
But isn’t also true that in some areas it is skewed towards upper side due to the fact that lowers end homes are not selling?
May 14th, 2008 at 1:05 pm
sw,
Note the context. I was making a point relative to Google. GOOG stock did not exist in 2000.
Second point: even with the dot com bubble gone, those who did not cash out still have plenty of residual wealth left, because stock prices have doubled since 2002 in many cases.
After the dot com bust, the best time to buy a home was 2003. By the end of 2004, stock wealth was already making a sustained come back, and there would be no letting up in real estate prices. In other words, if you bought after the dot com bust, you were one step ahead of everybody.
May 14th, 2008 at 1:09 pm
Pralay Says:
But isn’t also true that in some areas it is skewed towards upper side due to the fact that lowers end homes are not selling?
Without data, I can’t say. From what I see, low end homes do sell… for the right price (except for a few “gems” feature on this site).
May 14th, 2008 at 1:11 pm
>>there are too many unknowns looming in near future - Alt-A reset, economy, impact of foreclosure. Given all these unknowns, I simply don’t have any prediction
>>would not bet on 3% appreciation. I would be flat or negative depending on area.
He doesn’t have any prediction, and then he gave his prediction.
May 14th, 2008 at 1:17 pm
The best opportunity to get into BA real estate is when there is economic uncertainty. That way, by the time the dark clouds are gone and the sun shines through, you would just be sitting there capturing all the appreciation, watching others scramble to bid for your neighbor’s home.
May 14th, 2008 at 1:28 pm
As far as I know, the stock market drives house prices in high-end cities such as Atherton or Los Altos Hills, but middle-class neighborhoods such as Palo Alto or Cupertino do not follow the stock market movements the way Atherton did 7 years ago. So, no stock options will not save the BA, and a crash in the stock market will not sink the BA. But the wealthier the neighborhood, the higher the impact of the stock market.
May 14th, 2008 at 5:42 pm
Don’t be moronic and cherrypick companies. Let’s look at some other biggies in the area.
Nektar Nov. 02–$9.13 May 08–$4.77
AMD May 03 — $7.13 May 08–$7.28 (with a high of $40.33)
Affymetrix May 03 — $22.06 May 08–$12.02
VMware (this year) 41.41 to 125.25 to 66.32
There’s only a few folks that cash in the big bucks with sweat equity and that’s if they pick the right start-up early. There’s a secondary wave of folks that get decent options. The next wave don’t get much at all (ie the current google wave).
Then there are plenty of high tech companies that fold as well. Of course, those are the companies that are no longer on NASDAQ…….
May 14th, 2008 at 5:45 pm
Buying after the dot.bust is “thinking ahead”. I’m pretty sure some of my SV friends that lost over 70% of their equity with aggressive portolios were more concerned about surviving than finding the next bubble.
You don’t deal much with even the upper middle class do you?
May 14th, 2008 at 6:14 pm
Without data, I can’t say. From what I see, low end homes do sell… for the right price (except for a few “gems” feature on this site).
———-
Take the example of Sunnyvale where median price is around $900K for SFH. Now check MLS listing. The total number of listings below median is 228 and above median is only 84. Doesn’t it mean that median price of Sunnyvale is overwhelmingly dominated by higher end homes? Other cities are no different. Of course it is not a perfect comparison because median is based on last months sale where the MLS listing is for current months, but it gives some idea.
May 14th, 2008 at 6:19 pm
My prediction - 1999 prices in 3 years. Book it. Sell now or be bankrupt forever!
Prices in RBA already tanking and picking up speed: http://www.viewfromsiliconvalley.com/id410.html
Real Estater - don’t end up like this dude: http://www.reuters.com/article/newsOne/idUSN0952458820080511?ref=patrick.net
May 14th, 2008 at 6:40 pm
I predict flat prices in the better areas and dropping prices as they get less “real.” This prediction is based on the following:
- inventory not dropping
- loans more expensive and restrictive
- ninja and liar loans are gone
- foreclosures continue to rise, pressing down prices
- plenty of foreclosures not realized because the banks are hiding how bad their bottom line is
- sellers in upper-tier properties are choosing to not sell rather than take actual market prices, but the drawback to housing prices being sticky is that they are “stuck.”
I know someone trying to sell her house in Newark since she now works in SV. Sold, by cutting the price 28%, but it hasn’t closed yet. Meanwhile, she lost the place she bid on, which stopped her from trading up. And where she’s moving up to has not dropped 28%. Yet. There are plenty more like her.
Stock options are not as big a deal as they used to be for regular tech dudes and dudettes. They are no longer handed out like candy due to new SEC reporting requirements. When I started working in SV in 1987 I got stock options every time I changed the oil. If you’re in on the next Google, great, you can buy a bigger house. Otherwise, you’ll be lucky if you get enough to buy a small Lexus instead of a Camry.
May 14th, 2008 at 6:57 pm
Click link in my name for some useful income numbers that are about two years old. I don’t think there has been significant change in wages lately.
Top 20% in Mountain View make $251K or more, enough to safely purchase a middle class house.
May 14th, 2008 at 7:52 pm
One’s wealth–or the perception thereof–seldom equates with fiscal prudence. Big reason for lots of folks overpaying for homes here and for some to continue under the delusion that the party won’t end, especially in view of the garbage houses in crappy neighborhoods featured on this site.
May 14th, 2008 at 8:58 pm
Thanks for the link, Rudolf.
May 14th, 2008 at 9:03 pm
Take the example of Sunnyvale where median price is around $900K for SFH. Now check MLS listing. The total number of listings below median is 228 and above median is only 84. Doesn’t it mean that median price of Sunnyvale is overwhelmingly dominated by higher end homes? Other cities are no different. Of course it is not a perfect comparison because median is based on last months sale where the MLS listing is for current months, but it gives some idea.
I don’t understand how this can be unless the overall amount of money being spent on houses is decreasing massively month-to-month. I mean, the median price is the price in the middle of the population. It should be half above and half below. If, in a given month, you’ve got 75% under and 25% above the previous month’s median, then either the median is reported falsely, or people are setting their prices lower.
May 14th, 2008 at 9:10 pm
It didn’t exist in 2002, either.
May 14th, 2008 at 9:24 pm
Renter4,
Sorry for not being clear enough. When I mentioned about MLS listing, I was referring to the homes in the market (not sold).
Basically I was trying to say that ratio of inventory vs number of sale in certain segment would tell whether the number is skewed.
In case of Sunnyvale, there were 48 home sold in April (that makes 24 homes should below median and 24 homes above median). If we assume that last month’s inventory was similar to this month, that means in below-median range, only 24 homes sold from 228 homes in market. On the other hand, in above-median range, 24 homes sold from 84 homes in market. It indicates that the median home price of Sunnyvale is skewed towards higher end homes.
Of course I am comparing this months inventory with last month’s sale data, which is not correct way to compare.
May 14th, 2008 at 9:31 pm
>>Then there are plenty of high tech companies that fold as well. Of course, those are the companies that are no longer on NASDAQ…….
This is why, as soon as the lucky ones make money from stocks or stock options, they funnel it into BA real estate, which is something tangible, something they can live in, and won’t drop to nothingness like stocks.
May 14th, 2008 at 9:34 pm
>>Real Estater - don’t end up like this dude
Napping,
I’m a big advocate of fiscal prudence. I would only use conventional mortgage in all cases, and I would only recommend buying in the real Bay Area, where you have the geography and the demographics working in your favor.
May 14th, 2008 at 9:38 pm
Thanks, Pralay, that makes sense.
May 14th, 2008 at 9:45 pm
RealEstater,
If you see the distribution of mortgages in the Bay Area, about 2/3 were taken in the last 3 years, 2/3 of those were Interest-Only, Option ARM, or regular ARM (2/28, 3/30, or 5/25) with resets distributed around the mode 2 years from now. So it’s perfectly plausible that you won’t see any selling pressure, inventory rise, or pain (foreclosures and reduced prices) till 2009-2010 around here. The absence of these phenomena does not justify your inference.
May 14th, 2008 at 9:51 pm
islandboy,
Bay Area home prices were dramatically different 10, 20, and 30 years ago. A home that is today about $3M was typically about $600K 10 years ago and only about $2-300K in the 1970s.
If you take a look at the data, you will see the largest price run up occurred in the last 5 years, a moderate run up occurred in the 1996-2001 period, and the rate was higher than inflation but nowhere near current rates in the 1980s.
May 14th, 2008 at 9:56 pm
Pralay,
Anecdotally, I know that there are a variety of reasons why people with more money from options are not currently supporting the market. As you alluded, some people no longer think real estate is the best place to invest. Others have already bought homes and are in a holding pattern till they are ready to upgrade to a bigger home. Still others are ready to move but watching the market to see how it plays out given the abundance of bearish real estate stories in the media nowadays. What will happen going forward is anyone’s guess, in my opinion.
May 14th, 2008 at 10:21 pm
Name, don’t know where you got that from. A house that was 600k in 98 would be around 1.6m by now, 3m seems way too high. Though a lot of 150k houses in 98 want to sell for 500k now.
When people talk about CSCO, GOOG, AAPL, don’t forget those once high flyers most used to fetch more than 100:
Ariba, CommerceOnce, Tibco, Yahoo, AOL, Informatica, BEA, OpenWave, CMGI, Selectica, Juniper, Sycamore, Corning, blah blah blah, the list goes on and on and on, and on. With so much wealth in 99 the housing market did not really act crazy as in 05, now a handful of companies will not save the mess.
May 14th, 2008 at 11:53 pm
#21 - the median price is not the average price.
If 228 houses are below the median price (Sunnyvale, MLS) and only 84 are above then I guess some houses advertised for less than $900K eventually sell for more than that.
However the current MLS listings show a median (asking) price of $695K (212 houses), far from $900K. Where does the $900K figure come from? Is it only for 94087?
May 15th, 2008 at 12:06 am
If 228 houses are below the median price (Sunnyvale, MLS) and only 84 are above then I guess some houses advertised for less than $900K eventually sell for more than that.
———
228 + 84 is the current inventory of Sunnyvale.
———-
Where does the $900K figure come from? Is it only for 94087?
———
$900K is the median sale price (not median listing price) for Sunnyvale in last month.
Read post #29 for farther explanation.
May 15th, 2008 at 8:41 am
In 1999, it was cheaper to buy than rent.
This was also true in 1992.
It’s always humorous to read about how that’ll never happen again.
Is everyone who’s pumping used house sales under 30? Or just amnesiac?
RealEstater, how old are you? When did you move here? Have you no sense of history?
“We’re working off a totally new economic model.”
“Prices have reached a permanently high plateau.”
Either of those sound familiar? The first is from Florida, 2005. The second was from Wall St, 1929.
Within a couple of years, it will be cheaper to buy than rent - it’s aleady getting there, outside of the Real Bay Area, in places like Santa Teresa, and Evergreen, and Cambrian - but not quite there yet. Houses that sold for $650k in 2005 are selling for $450k. Once they get to $350k, it’ll again be cheaper to buy than rent in those areas - provided rents don’t continue the downtrend they’ve started in the last 6 months…
When it’s cheaper to buy than rent, it’s time to buy. Not before.
May 15th, 2008 at 8:44 am
none of my friends are older than 35. none. and it is an interesting split. exactly half are immigrants to California (not necessarily the US) and the other half are life long residents. the people who push real estate the most are the parents of the life long residents. Buying real estate in California is a sure bet or so they say.
May 15th, 2008 at 1:39 pm
Ask ‘em about the early 90’s. Things didn’t really come back until ‘96 or so, and if you bought in ‘90, you weren’t in the black until ‘97. That means that if you’d just rented for those 7 years, you’d have been in the same place at the end as someone who bought (with zero down). And of course, if you bought with a downpayment, it took even longer to catch up, as your money was fallow for the entire time, instead of getting even 4% in a CD.
And that run up wasn’t nearly as sharp as this one.
Sure bet? Yeah, sure bet to lose money at the top, sure bet to make money at the bottom. Just like anything.
May 15th, 2008 at 4:03 pm
You all miss the point again. Reading this blog is like a classic case of group think. The reason houses were flat for an entire decade in the 90s is because the stock market was usurping all the investment money. Stocks were a better investment in the 90s - since the dollar was rising. Now the dollar is falling, people are running as far and fast as they can from stocks.
May 15th, 2008 at 4:23 pm
As to whether homes will appreciate/depreciate… frankly, I don’t a phuck because as far as I’m concerned, even a 50% reduction here is still entirely too much money to be paying for a small house in an increasingly crowded metro.
In my opinion, the smart people are the ones who are quietly saving their inflated wages, renting cheap, and making plans to move after they’ve saved enough to buy with cash elsewhere and put the rest into retirement. Even now, the cost of living in most other medium sized metros is a fraction of what it is here.
I’ve been here 9 years. The same over-exuberance pollutes every aspect of living here. I’m over it.Will prices come down or miraculously go up? Who cares. I’ll be gone by then, living somewhere else with zero debt.
May 15th, 2008 at 4:44 pm
Bob,
It’s easy enough to find places that are cheap to live. You only need to travel about 1.5 hours from SF to hit one of the foreclosure towns in the Central Valley.
That’s not the point, however. When you live in a cheap town, the people all around you are low income. The school is no good. The social services are no good. Crime rate is higher. The vibe is not there, and the smart people are not there. Regardless of how nice the house is elsewhere, there is just no substitute for RBA.
May 15th, 2008 at 9:53 pm
Willowglenner,
I’m sorry but the data flatly contradicts your claim. For example, stocks did very well from 1996 to 2001 and so did Bay Area real estate.
When the market goes up, it creates a wealth effect that improves the psychology of many participants who are then willing to pay more for everything including their homes, and vice versa when the market drops.
Similarly, a rising market allows people to extract profits that can be used for mortgage payments, and cash in options for down payments. Just look at the data - the Case-Shiller graph of housing prices super-imposed on the Nasdaq/SP500/Dow.
May 16th, 2008 at 7:47 am
RealEstater,
I’m not talking about moving to another town within the Bay Area or California for that matter. I’m talking other states and cities. Other cities might include Nashville, Austin, Raleigh, Atlanta, and so on. These cities are signifigantly less expensive than most in California. Austin actually has a fairly significant tech and research industry, and is No.2 in the country in terms of the amount of creative people that live there. People are not as you say - dumb. I grew up in the sticks in the rural South. I’ve been all over the country, and people are basically the same. There isn’t some magical helot hanging over the Bay Area. Nobody is from here anyway.
Additionally, California’s school system is ranked 47th in the country. If you take a dart and blindly throw it at a map of the US, you’re more than likely going to hit a state that you could live in that has better schools.I don’t have kids nor plan on having them, so schools aren’t a concern of mine. In fact, I’d prefer to live somewhere with BAD schools. That way home prices will be cheaper since hand-wringing parents won’t be bidding up the prices.
The way I see it is this: In all those cities I mentioned, you can still- even today- buy a starter home for 150k or so.Perhaps more in cities with more advanced economies like Austin or Raleigh.I pretty much almost have enough saved up to buy a house in any of these cities I mentioned. But since the economy is in the crapper, I am also saving up enough to put into retirement and let it work for me. I’m only 30 now, so I figure if I can save an additional 75k and put that away, then wallah- retirement is taken care of.
So if I’m living in say- Nashville and my house is paid for, my retirement is running itself, and I basically have no major living expenses, then what I do for a living is actually less crucial. I’ve never been a big spender, so even if the job I get pays 50% or less of what I get now, I will still be a lot better off there than if I stayed here, making even more than I do now.
Again- I don’t care what happens here anymore. I imagine that some miracle technology will once again get discovered here and bingo- another investment/boom /bubble will rapidly inflate, prices will go ape, and heeeeere we go again, hoping, wishing, wanting prices to fall. Trust me- I desperately wanted those prices to fall and still do. But if they don’t, screw it- I’m leaving and all the RE agents who think they’re getting any of my money for some overpriced POS in the BA can put that thought out of their heads.
May 16th, 2008 at 9:23 am
Bob,
I applaud your comments. I see you taking a very pragmatic approach. Basically you’re saying that the BA housing market does not work for you, and you’ll save up to find another game elsewhere. This is in sharp contrast to some of the other chatters above who:
- Are praying that housing prices would drop sharply
- Try to convince themselves that housing prices will either drop soon, or will drop in the area they wish to buy
- Attack anyone who believes otherwise
May 16th, 2008 at 9:37 am
Real Estater,
I’m not exactly discounting the realistic possibility that prices could fall in the Bay Area because there’s an awful lot of downward pressure being applied. Loans are now far more difficult to get, most banks now require a 20% down payment, which in SV means as much as 250k up front, and lastly, the economics for buying simply don’t make sense.
But I admit that the Bay Area is a different animal altogether. It is… “desireable” in a sense as much as I hate to say that. But the other culprit is population- as simple as that sounds. More people =more competition, and that tends to lead to higher prices. I don’t deny that prices here will ever be cheap in a sense. They will most likely remain high by national standards. But most people- myself included- strongly feel that current prices are too high and have a good probability of falling to levels that at least make economic sense for at the very minimum- the upper 20-30% of the earning populace. Will it happen? I don’t know. I think it would be a good thing if more people could afford it. Otherwise, I see this as becoming an economic hamper for none other than many people my age are leaving the area. We represent the future brains of the industry that makes this area tick. If a lot of us leave… what does that do to the area? Perhaps people like me are helping to pave the way to lower prices as a result.
Prices aside, my reasons for leaving are also for my personal preferences. The quality of life here isn’t at the same level that it is in my home state, which most from here don’t realize since most here are usually from other equally expensive coastal metros. I am also doing so because many of the cities I mention are growing robustly as a result of a quite exodus of young professionals like myself from places like the Bay Area who want better living standards and less crippling living expenses.
Lastly, the situation here simply makes me angry. I’m tired of it and am ready to live somewhere that has more laid back people, less financial rat-race pressure, a lower cost of living, and therefor a benefit to my mental well-being. I have a lot to be thankful for being in the Bay Area. I’ve done well for myself financially. But if I stay and buy, then I’m only continuing along the same trough the area has been in for over 20 years, which is an environment of incredible disparity. I want no part of that.
May 16th, 2008 at 9:58 am
Bob,
You plan is great until you meet a Norcal girl and get hitched. Ain’t no way you can convince a CA native to move to Nashville or Texas.
May 16th, 2008 at 10:36 am
“You plan is great until you meet a Norcal girl and get hitched.”
heh-heh… I dodged that salvo. I’ve been married for a few years now, and my Wife wants to get out of here even more than I do. Actually- she really hates it here and reminds me of this on a semi-frequent basis. So we’re basically living cheap and saving away for a few more years until we have our goal met.
May 16th, 2008 at 10:44 am
Is RealEstater in the real estate industry? Does anyone know? Just curious… it would make sense.
May 16th, 2008 at 11:27 am
Is RealEstater in the real estate industry?
———
Do you have any doubt?
May 16th, 2008 at 12:12 pm
Is RealEstater in the real estate industry?
Does the Pope crap in the woods? Is a bear Catholic? If equity falls and no one notices, are you still priced out forever?
May 16th, 2008 at 12:43 pm
Kevin,
Please let me speak for myself. I am a regular Silicon Valley tech guy, without any association with the real estate industry. The reason I’m here is pretty much like everyone else, to chat about real estate in the BA. The couple of guys above keep accusing me of being a realtor. The fact of the matter is, if I were a realtor, I’d be more inclined to spread the “prices have dropped” line, sending buyers to check out the market.
May 16th, 2008 at 1:11 pm
If Real Estater wants to email me (burbed@burbed.com) from a tech company e-mail address, I’ll be more than happy to settle this question once and for all.
That said, 1 in 50 adults in California are Real Estate agents. So even at a small start up, there might be at least one Real Estate agent.
May 16th, 2008 at 1:26 pm
That said, 1 in 50 adults in California are Real Estate agents. So even at a small start up, there might be at least one Real Estate agent.
———–
I know! And some of the real estate investors work for paystubs.
May 16th, 2008 at 1:47 pm
If Real Estater wants to email me (burbed@burbed.com) from a tech company e-mail address, I’ll be more than happy to settle this question once and for all.
No it won’t. I’m sure RE knows somebody who is an actual tech guy who could send you a message.
That’s the problem with teh internets. Nobody knows that you’re a Realtor.
May 16th, 2008 at 1:54 pm
Whatever! Does it matter? I would go back to old saying: If it walks like a duck and quacks like duck, it IS a duck.
May 16th, 2008 at 3:07 pm
Our quality of life sucked in Texas. That’s why we moved back to the bay area. I’ve been to Atlanta and Raleigh and I think our life would suck there as well. Even with astronomical housing costs, the grass is green enough for me here.
I don’t believe that stocks will save the housing market here. I don’t foresee many people getting rich from stock options; not the numbers needed to support the housing market as it is today.
I see companies trying to secure funding before the recession hits. Companies will no longer be able to secure funding as VC’s will be a lot choosier with where they invest their money. With less money to go around how are so many people going to get rich from stocks?
We have rising food and oil costs and tighter lending standards. In short there is a lot less money to go around which leads me to believe that prices will go down and stay flat for at least a few years.
May 16th, 2008 at 3:35 pm
Burbed,
I’d be happy to do that; however, there is one favor I’d like to ask:
Once verified, I require a public apology from both Madhaus and Pralay for making baseless accusations.
>>I’m sure RE knows somebody who is an actual tech guy who could send you a message.
This moron probably won’t believe it no matter what evidence is given. Recall he even said I am Burbed or an agent of Burbed. There are ways to circumvent any doubts; for example:
1. I can send the email during odd hours (e.g. 11PM). No colleague is likely to do that kind of favor.
2. I can send the email multiple times, over the course of a few days (again, that would be too bothersome to a colleague)
May 16th, 2008 at 3:37 pm
Once verified, I require a public apology from both Madhaus and Pralay for making baseless accusations.
what about burbed’s point that there are part-time real estate agents in tech companies. i know of at least 1 in my company.
May 16th, 2008 at 3:56 pm
LOL! Someone, who starts his own posts by calling others amateurs, is expecting public apology!
May 16th, 2008 at 4:14 pm
“Our quality of life sucked in Texas. That’s why we moved back to the bay area.”
-You say that you moved back. My question is are you from the Bay Area or somewhere else? I find that people that are either from the BA or another large coastal metro don’t generally do very well in different locations. I’m actually from a really rural small town and even to this day, still prefer that arrangement. I only came out here because at the time, this and NY were about the only places that offered professional options. Now that I’ve been here for 9 years, my industry has spread to many of the cities I mentioned. I mentioned Nashville because it’s sort of a hidden gem. Very nice city. I had a blast when I visited.
I guess for me and my Wife, we’re not really what you’d call Urban fans. I’ve never really liked cities and we don’t typically do the whole city scene: clubbin’, partyin’, or other stuff along those veins. I’m perfectly content farting around the house or yard- preferably a large yard. You can do that anywhere.
But… different strokes for different folks. To me, it’ll be a luxury not having the whole house situation or the cost of living hanging over my head.
May 16th, 2008 at 4:16 pm
>>what about burbed’s point that there are part-time real estate agents in tech companies. i know of at least 1 in my company.
I don’t see any issue there. Do I collect a fee from anyone?
May 16th, 2008 at 4:18 pm
Pralay,
Are you afraid to take up the challenge? Don’t be a loser.
May 16th, 2008 at 4:29 pm
Crossroads,
If you can think of any way for me to demonstrate I have no real estate license or industry affiliation of any kind, please share.
In the absence of that, I will say again backed by my personal honor that this is the case.
May 16th, 2008 at 5:05 pm
I’ve been reading the comments on this site for a long time and I think Real Estater is telling the truth that he is not a realtor. Pralay, I like your comments, but you do sound a little bitter sometimes. If Burbed confirms RE’s e-mail is from a tech company that is good enough for me. (Actually, I don’t really care whether he is a realtor or not.) I enjoy Re’s point of view too. This would be boring without both sides.
May 16th, 2008 at 5:08 pm
Oh, and MadHaus you’re creative too.
May 16th, 2008 at 5:34 pm
Stepford Hottie,
As I said before, it does not matter. If you think someone is not Realtor, you are welcome to think so. If someone thinks except him rest of the people here are JUST AMATEURS, he is welcome to think so. Same way, if I think he is a real estate agent based on his comments/posts, I don’t see anything wrong in it. It’s all about perceptions. It’s a free country.
As you have noticed already, the only person here is crying about “baseless accusations”, who himself cannot stop name-calling on others. Nobody accused him. And neither I nor Madhaus asked him to verify if he is a real estate agent or not. Based on his comments/posts, I just think him that way. Period.
BTW, I don’t think you as “Hottie”. Can I think that way? Or are you going to say that I am accusing you as non-hottie?
May 16th, 2008 at 8:06 pm
No doubt that the answer to the RealEstater question will settle once and for all whether stock options will save the bay area.
You guys are serial thread hijackers
May 16th, 2008 at 8:20 pm
What Pralay is trying to say is that, if he thinks the prices are dropping, the prices must be dropping. His mind performs miracles. It determines everything. Even false things will become true.
May 16th, 2008 at 8:28 pm
I just don’t see that it matters. He/she regularly advises people to take serious financial risks and calls them losers if they don’t make a lot of money. I mean, if it turns out to be true that he or she does work at a software company, the advice & the nastiness aren’t going to get better all of a sudden.
May 16th, 2008 at 10:28 pm
Stepford Hottie, thanks for your kind words. I’m glad you enjoy my posts. Please post more so I can enjoys yours, too.
Renter4, I am with you.
DreamT, I am really am doing my best to avoid feeding obvious trolls and I wish others (ahem *cough* Pralay) would do likewise. One way a troll will disrupt a site is by impugning others’ honor and integrity while being indifferent to such limitations himself.
So, for the 96th time DNFTT!
burbed how come I see my Gravatar when I write this but it doesn’t show when I post? I gave you a link, you should have torn down and remodeled this website the split second I mentioned it. I think it’s been hours. Do you not have enough equity to borrow against for the granite countertops?
May 16th, 2008 at 10:29 pm
Just wait until I install some Pergo!
May 16th, 2008 at 10:34 pm
bob, it’s fine if you don’t like life in a big metro area. What I don’t get was you are so bitter about it. It sounds like you’re going to take your big pile of equity and live large somewhere you prefer. That’s great. If more people did what you’re doing, it would lower prices in Silicon Valley for those who like it here.
BTDT likes it better here. So do I. Don’t laugh, I really did move here for the weather. I love the weather here. It isn’t humid all summer, it doesn’t snow, it doesn’t rain all spring, it isn’t so cold in November that I want to kill myself.
I like the danged sushi. I like the choice of jobs and all the smart people to work with.
Yeah, it’s expensive. It’s expensive because people want to stay here. And if we’re going to have a Depression, I can certainly grow a lot of my own food in the Valley of Heart’s Delight.
May 16th, 2008 at 11:54 pm
burbed, don’t forget the porthole window. All the best flips have them.
May 17th, 2008 at 9:08 am
Bob-
I loved the people and the culture out in Texas (there are smart progressive there contrary to what others believe). It was just too hot and humid for us that felt like I was trapped in our big beautiful house when I wanted to be outside doing things. In addition the bugs and having to drive so much really killed it for me.
I was born overseas (military) but I consider myself to be from the the bay area since I moved here when I was 6.
I love being able to go to the beach or to the redwoods on the weekend. I like being able to ride my bike all year around and go hiking when I like to. I’m not much of a partier.
May 18th, 2008 at 2:49 pm
Guys,
If I were a realtor, would I be here right now? Check the timestamp. Sunday afternoon is Open House time!
May 19th, 2008 at 7:51 am
In regards to where you move, where you live, and why people choose to pay “x” amount of dollars to stay, I suppose that I simply don’t look at it in the same way. I think most people who claim they can’t live anywhere else are really wanting to take the Bay Area with them. I’m originally from East Tennessee. So no- perhaps you won’t find the exact same things there that you would here. But the same can be said for the fact that California lacks some of the natural and cultural attributes of TN. If I move to say-m Austin TX, I plan on leaving the Bay Area behind. That’s it. No more Bay to the breakers, Sushi on every corner, and so on. It will be Austin. Or it could be Nashville, Chattanooga, or Raleigh. Either way, it’ll be someplace new.
I grew up with the humidity, the heat, and the changes in the seasons. It never bothered me. But on the other hand, I lived in Boston for a few years and absolutely hated the winters there. It got down to the 40’s like it does here in TN. But it got down to -10 in Boston, and that was beyond the limit for me. So if some of you can’t stand the humidity, I suppose I can understand.
The other way I look at it is that every time I go and visit back home, the area is changing. It is doing so because there are so many people just like me who got fed up. A few years ago, you wouldn’t find Sushi, wine bars,Brew pubs,fine dining, and all that other stuff many in larger cities hold dear. Now there’s quite a decent selection of those things. So in reality, I feel that the dynamic change that many in the Bay Area claim as being advantageous attribute is actually occurring at a more progressive tilt in other medium sized up and coming cities.
In my mind, these medium 2nd tier cities now offer a lot more in terms of value, growth, professional opportunity, a more youthful population( usually from cities like SF) and a better quality of living. I think places like SF, NYC, Boston, and so on have gotten themselves into a hole with less room to make changes that benefit their population.
I suppose what really made me decide to make the decision was that I realized that I am now 30 years old. Even if the crash happens at the rate that I want it to- which would be a dramatic 50% decline in prices, the prices would still be high, the traffic will continue to get worse and worse, the schools, public infrastructure will likely continue to suffer, and by the time me and m Wife finally got to where we were somewhat ’settled’, we would probably be in our 40’s. We would probably also have to retire very late, if at all. So the choice for me was easy. We want to live a better life, and sushi, weather, and the lack of humidity are a tiny consequence for not living in ‘heaven’. Even if we could afford it here, I feel that the huge amount of people here will continue to negatively effect the quality of life.
Anyhow, that’s my stump speech. I’m not making this decision anytime soon because as mentioned, I have to save up enough to make this plan work. But in the mean time, I would love to see this thing crash and land on its face for none other than that I think that people in the BA(homeowners) are sort of arrogant and deserve a little bit of humble pie.
May 25th, 2008 at 5:06 am
[...] do you like about the (Real) Bay Area? Will stock options save the Bay Area? [Burbed.com] been_there_done_that Says: May 17th, 2008 at 9:08 [...]