Friday the 13th – what would happen if a lot of bad luck struck here?
It’s Friday the 13th! And in honor of this day, let’s take a look at what could happen if a streak of bad luck happened to us – Austin, TX and cheap housing:
4508 Sharpshinned Hawk Cv
Austin, TX 78738
$500,000
4 Bed, 3.5 Bath
3,365 Sq. Ft.
0.24 Acres
Estimated Payment:$2,337 Per Month*
Single Family Property, Area: LS, Subdivision: Spillman Ranch, Falconhead, County: Travis, Approximately 0.24 acre(s), Year Built: 2003, Golf course view, Two story, Central air conditioning, Fireplace(s), Dining room, Office
This, my friends, is the kind of nightmare that the Bay Area may become if we don’t all do our parts to keep house prices high. Think about it – if you could buy a house like this in the Bay Area for $500k, what incentive would you have to continue to work and foster the amazing innovations that Silicon Valley is famous for.
No, you’d probably become fat, lazy, and do nothing but sit around and eat Amy’s Ice Cream all day like they do in Austin. Austin defenders will point out that they have a tech industry there – just look at Dell. Do that, I say “Yeah, just look at Dell and how they’re falling apart compared to HP.” The only reason HP is succeeding is because of their top talent here in the Bay Area.
Do you want to be around only healthy skinny people? Bay Area.
Do you want to be around only smart and well educated people? Bay Area.
Do you want to get paid insanely great salaries and have amazing stock options that will make you rich? Bay Area.
Do you want access to sushi and great food – not just grits and ‘Q? Bay Area.
Do you want to enjoy 400 days a year of great weather? Bay Area.
Do you want cheap mansions that will make you fat, dumb, poorly paid, pay low taxes, and die in the heat? Austin.
’nuff said.
(Note to Austin readers: I’m sorry for the harsh words. But your cheap housing really disgusts me. That said, Amy’s ice cream was pretty awesome. The fact that you can get it at the airport is great too.)
June 13th, 2008 at 11:58 am
I think for a more dramatic effect, it’s be better to compare the difference in price between a 1960’s Rancher home in Palo Alto to a 1960’s Rancher home in Austin,TX.
There’s this one:http://austin.craigslist.org/rfs/718714051.html
3 bedrooms, 2 bath: $135,000
Then there’s this in Palo Alto:
http://sfbay.craigslist.org/pen/rfs/716245887.html
Price with nifty price reduction: $600,000!!!
So there you have it folks- comparing the typical housing stock on Palo Alto to typical stock in Austin shows that you can get a house 6 times cheaper ( and nicer) in Austin than here.
Whoa! b-b-but but it’s in Austin!
June 13th, 2008 at 12:28 pm
I wonder where they come up with an estimated payment of $2337/mo on a 500K house in Austin, that is way too low. Assuming 20% down and a 400K mortgage, you are looking at $2463./mo for a 400K mortgage at 6.25% (which is quite a low rate these days and most probably can’t get that)- plus, Austin property tax rates are around 2.5% so that is another $1K/mo for this house, or payments of $3463., a far cry from $2337.
June 13th, 2008 at 12:55 pm
WillowGlenner, I bet the mortgage rates are lower in Texas than California. My mortgage broker once told me to ignore the national rates because everything is #1 in the Bay Area, including our interest rates.
bob, that’s pretty funny comparing an East Palo Alto duplex to an Austin SFH. Did you account for the Austin schools being six times better?
June 13th, 2008 at 1:45 pm
This just tells you one thing: Austin is a worthless place. You will never become a millionaire by living in your house.
June 13th, 2008 at 1:49 pm
The thing that is harder to understand is that that house in Austin would likely cost over a million just to build here. The price of land is one thing, the price of construction is another. It just shouldn’t be THAT much cheaper to build in Texas (or anywhere else) than California, but for some reason it is. Substantially more.
Hec, for the cost difference, it might almost make sense to contract a Texas crew build here and ship them and all possible materials here. I bet it would be close.
June 13th, 2008 at 1:51 pm
From what I read, property tax in Texas is much higher than the Bay Area so their properties aren’t as desirable. I’m pretty sure you can rent that huge house in Austin for cheaper, too.
June 13th, 2008 at 1:58 pm
wow burbed, this server sucks and it isn’t the comments on the sidebar either (because thats gone).
June 13th, 2008 at 2:26 pm
Only crap, $600k for TWO units in PA? What this world has come to? That 1/1 unit should be selling for this much right?
Otherwise this place is cheaper than SJ. I bet it is a EPA school district with PA zip code.
June 13th, 2008 at 3:48 pm
Property taxes seem to be a rather mute point considering that as I demonstrated, a “Palo Alto” typical home can be had in Austin for 150k or less. That alone pretty much sums it up. Of course everyone in the BA is too smart for Austin, so might as well forget about it anyway.
June 13th, 2008 at 4:38 pm
Why do you all keep calling that duplex a Palo Alto place? The listing clearly says EPA. It’s like the difference between The White House and The Big House.
June 13th, 2008 at 4:40 pm
>>The thing that is harder to understand is that that house in Austin would likely cost over a million just to build here.
I think it’s due to economy of scale. If you hire a contractor to build just 1 house like this, it will cost over a million dollars. However, if a company like KB Homes utilizes shared resources to build a whole development, then it can be done very cheaply.
June 13th, 2008 at 4:46 pm
I got an email from “bayareabankreo” today who run a website called bayareabankreo.com that lists bank owned properties. Its sort of useful but the navigation of the site is so difficult I don’t always bother to look there. But anyway they say this:
Home prices in many areas have dropped in prices to levels that are showing signs of a Bottom.
June 13th, 2008 at 4:50 pm
I used to live in Austin. The “palo alto” part of Austin is somewhere called TARRYTOWN. Tarrytown has small charming houses like Palo Alto and is not cheap. This house that burbed is listing is in the outskirts of Austin. Yes it is still Austin but way out there. Austin used to have one million people so there are fewer zipcodes, reasonably large areas are covered by one zipcode.
Tarrytown:
http://www.ericbramlett.com/tarrytownlistings.php
June 13th, 2008 at 5:02 pm
Honestly, these discussions are getting very old. Prices are determined by the market. If you feel that Austin has more of what you want, move there, please. I would if I were you. I wouldn’t knock people for wanting pay more to live here. To each his own. There are many valid reasons why one would want to live in a $1M cottage in the bay area than a $500K McMansion in Texas.
June 13th, 2008 at 5:13 pm
bob, that 135K house is not in Austin. It is in a city called Kyle Texas. Here is a map of Kyle. The reason they are posting it on the Austin CL is because Kyle is one of those artificial towns that builders created that really doesn’t exist except for the housing bubble. It is 100 mi from Austin, in between Austin and San Marcos, and fyi San Marcos is a town characterized by one thing: its outlet mall. That is ALL that is there.
Kyle:
http://maps.google.com/maps?ie=UTF-8&oe=utf-8&rls=com.google:en-US:official&client=firefox-a&q=Kyle,+TX,+USA&um=1&sa=X&oi=geocode_result&resnum=1&ct=title
To compare apples and apples you would need to take the Kyle house and compare it to what you can get in the very inland areas of the bay area like maybe Tracy.
June 13th, 2008 at 5:31 pm
To compare apples and apples you would need to take the Kyle house and compare it to what you can get in the very inland areas of the bay area like maybe Tracy.
Heck, Tracy is only 50 miles away. How about Stockton? People do commute to Silicon Valley from Stockton. People who bought houses there after 2004 aren’t very happy these days.
June 13th, 2008 at 7:09 pm
I’m doing my part to prop up property values by buying a dinky little house in Oakland at $300 a square foot. And yes, my offer was accepted today, on Friday the 13th.
June 13th, 2008 at 7:13 pm
SMHSIT:
Property taxes may be higher in Austin, but this is because property tax and the sales tax are the primary sources of government revenue. There is _no_ state income tax in Texas. The income tax savings are substantial. Plus, given the price differential in housing the property tax may come out closer to the same dollar amount more often than you might expect. As a former Austin homeowner I can assure you I’d take that deal here if I could.
WillowGlenner:
Tarrytown is an analog for Palo Alto only if your criteria is “1940/1950’s construction at high median prices”. I won’t deny the appeal of the area, but if you choose an Austin neighborhood based on the actual quality of life issues like those often used to explain Palo Alto’s desirability (schools, safety, parks, etc.) the options are far more numerous. WestLake, Bee Caves, Bella Lago, Allendale, Shoal Creek, Spicewood Springs… the list goes on and on.
But the real punchline is, of course, that if you want to live just slightly more modestly the options are even broader. Pricing covers a more gradual spectrum in Austin, so there is not nearly as steep a quality decline once you move out of the most desirable areas. In concrete terms, I owned a house in a safe, quiet neighborhood just a few blocks from a good elementary school and a short drive to work. All for less than half the median price of the not-real-bay-area.
Finally, I strongly suggest you read your own map. Kyle is further out of Austin than I would choose to live, but its hardly “100 mi from Austin”. Its 22 miles from Kyle to downtown Austin and only about 38 miles to the _farthest_ point in the NW Austin tech corridor. If you work in south Austin (AMD, Intel, Motorola, etc.) its not a terrible choice (though again, a bit more than I would chose to drive).
The BA may be “special”, but let’s not pretend that affordable housing is nearly the same problem in Austin or that most folks commute into Austin from Tracy-like distances (61 miles from Tracy to Mountain View).
June 13th, 2008 at 8:30 pm
Sorry, I said 100 mi from Kyle to Austin, but I was thinking 50 mi. The problem is Round Rock is actually the employment center if you want to discuss commute, and that is North of North Austin. Kyle is a Looong way from Round Rock.
But anyway you slice it, Kyle is not an “in town” town. Its an outskirts housing development, something VERY SIMILAR to what we have here! If you are going to complain about bay area real estate, and then you use an outskirts house in some other location to make your point, you aren’t really saying much. We have outskirts houses in Tracy at 250K that look about the same as that Kyle house- in fact I think this looks a little better.
http://www.tracyhomes.com/ourlistings/286/listing.html
On tarrytown vs Palo Alto come on, Palo Alto is nice but it is the PRESTIGE address. If you ask me, personally the willow glen lifestyle is actually superior to Palo Alto so I’d rather live in WG. But thats not the way the market sees it. Same with Tarrytown vs … Shoal Creek are you kidding? Do you actually think Shoal Creek has the same cachet in Austin that Palo Alto does here? Sure those locations you list are nice, but they are NOT the top address in the area. You listed the Sunnyvale, Campbell, or Mountain View of austin. All nice places, but not Palo Alto- Tarrytown is palo alto.
June 13th, 2008 at 9:12 pm
Sorry on the 100 mi, I was thinking of Kyle to Round Rock, where Dell is, not Austin. But even so the point is Kyle is one of these periphery towns, and if you want to compare apples to apples you would need to go to Tracy and compare to that house -where you can get a decent house for $250K.
On Tarrytown, are you claiming that Shoal Creek and Spicewood Springs have the same cachet in Austin that Palo Alto does here? Come on. Sure there are any number of places you can LIVE IN that might be more appealing than tarrytown for any number of reasons. Just like I personally prefer Willow Glen to Palo Alto but that doesn’t mean Willow Glen is functionally equivalent to PA and the prestige addr in Austin is Tarrytown and you can see where the prices are. Lower than here, to be sure but not 500K for a McMansion. A McMansion in Tarrytown is probably $2MM+.
June 13th, 2008 at 10:40 pm
WillowGlenner:
“The problem is Round Rock is actually the employment center if you want to discuss commute”
Huh?
Dell is (mostly) in Round Rock, essentially no other tech firm is located there. Dell is a major employer (although more of sales and support, not nearly as much engineering or tech management), but its hardly the bulk of commuter traffic. 183 and 360 and their satellite roads employ more tech people (centered on IBM, the MCC tech incubator, JJ Pickle Research, and the Braker area in general). Not to mention the major employers in south Austin you conveniently ignored (again Intel, AMD and Motorola all have major sites in south Austin).
But let’s pretend for a moment you actually work at Dell. Of course no one sane would commute from Kyle to Round Rock. Why would they? Round Rock is hardly expensive with a median price around $120,000 and plenty of listings (http://www.trulia.com/TX/Round_Rock/). With the 620 corridor done in the last few years there’s also been plenty of build-out through north Austin towards the lake.
“On Tarrytown, are you claiming that Shoal Creek and Spicewood Springs have the same cachet in Austin that Palo Alto does here?”
I’m not claiming anything about “cachet”, I specifically called out quality of life issues. These are ostensibly the reasons for high prices in Palo Alto. All of the areas I mentioned cover those bases at least as well as Palo Alto. Bob (who you were originally replying to, after all) was talking about housing stock and quality of life, not whatever premium that Palo Alto carries just because it manages to stick its head above the generally low quality of the rest of the BA suburban sprawl.
So you see, I’m not claiming that Spicewood (or anywhere else in Austin) is viewed with the same “specialness” that Palo Alto holds. Quite the contrary, I’m arguing that _nowhere_ in Austin really claims that kind of awe. There are simply too many high quality places to live across a spectrum of prices. Again, the fall off in quality is much less dramatic.
Folks in Tarrytown may be buying bragging rights, but unlike the BA and Palo Alto, very few people I knew in Austin cared. For example, unlike the RBA vs. non-RBA you weren’t “ruining your kids future” if you didn’t own in Tarrytown. It wasn’t even the best schools in the area, that honor fell to WestLake (http://en.wikipedia.org/wiki/Westlake_High_School_(Texas)). Similarly, if you were looking for university-town culture you were just as likely to be looking at Hyde Park. And so on…
Tarrytown may have once carried a premium for old-Austin townies, but for tech WestLake was often viewed with more desire, its no accident that Mike Dell and all the various startup CEOs live there.
In the end, though, you need to pay attention to my essential point. You can’t point at Tarrytown and Kyle and pretend there’s nothing in between. Bee Cave (where burbed’s listing is located) has a median family income of $170,871 vs. a mere $117,574 for Palo Alto. Its disingenuous to pretend that somehow one can’t compare Bee Cave to Palo Alto.
June 13th, 2008 at 10:56 pm
A house in Austin that costs $500K is over-priced. You might as well go blow your cash on a new Lamborghini. The reason I say this is because in Texas land is ubiquitous, and properties don’t go up in value. In this case a house becomes an expense, not an investment. Why pay $500K when you can find plenty of sufficiently good homes there for $300K or less?
June 13th, 2008 at 11:02 pm
Part of the reasons Palo Alto has the cachet is because of its rich history and association with Stanford University. 100 years ago, Palo Alto was already there, while BenAndJerryTown was probably just a piece of desert.
June 13th, 2008 at 11:54 pm
Palo Alto was formed by the merger of University Park and Mayfield. In 1925. That’s why Palo Alto has two different core shopping areas, “downtown” (near Stanford) and “midtown” (near California Ave).
But thank you for playing.
June 14th, 2008 at 12:11 am
why do people know so much about austin here? strange.
June 14th, 2008 at 12:23 am
why do people know so much about austin here? strange.
Because Eric Johnson plays there.
June 14th, 2008 at 3:17 am
http://www.amazon.com/review/R3KW5NE6LY6Y7U/ref=cm_cr_rdp_perm
“When I moved to Austin TX, I didn’t realize that it is considered the worst place in the US for allergies.”
Somehow they didn’t mention that on the flier when I bought that house in Austin!!
June 14th, 2008 at 9:08 am
Long story short:
Mayfield was formed in 1855.
Palo Alto celebrated its centennial in 1994.
Palo Alto annexed Mayfield in 1925.
Check out Wikipedia for the interesting story of Palo Alto, Mayfield and Stanford… Read on, it’s about alcohol
http://en.wikipedia.org/wiki/Palo_Alto,_California
June 14th, 2008 at 10:20 am
I had terrible allergies in Austin too. Another place where allergies are out of control is Oregon. My guess is allergies in the bay area would be horrible except for the urbanization cut down all the trees.
On Austin, Kyle etc- What I have found is that there are literally hundreds of small towns near every major city in every state. Why these towns exist I don’t know- was it that you needed a town 100 years ago to get US mail? For example in my area there is a place called Robertsville which looks like Cambrian and another city “New Almaden” which is an actual town. Fremont used to be 4 towns, one of them was Niles and now those are districts in Fremont. Well Austin is like that too, dozens of “towns” on the map but do these things actually function as towns, today is the question. What builders did in the bubble was choose one of these towns and build an entire new development around it. Mountain house for example. The problem is the needs for those “towns” disappeared 100 years ago and now you have a bunch of mcmansions in the boonies.
June 14th, 2008 at 10:24 am
madhaus, I wonder if Burlingame had a merger of small towns also because they also have 2 shopping districts, Burlingame ave and that other one.
June 14th, 2008 at 11:13 am
Thanks Herve, I did read the Wikipedia history, which neglected to mention the year that University Park changed its name to Palo Alto (unless it’s somewhere other than the history section, flippin’ amateurs). I’m stunned that the legal entity of Palo Alto is older than the city I’m from in the northeast.
DreamT: I am allergic to ragweed pollen, which is very common back East and does not grow in the Bay Area (but does in the Central Valley). My visits to family there are unpleasant allergy-wise. I am mildly allergic to other pollens but nothing knocks me for a loop like ragweed.
WillowGlenner you are probably right about there being another town where the second shopping district is for Burlingame. The city I grew up in, back east, also had a town that got eaten yet the shopping district remains.
Fremont was a merger of 5 towns, not 4: Irvington, Centerville, Mission San Jose, Niles, and Warm Springs. All remain as district names. Union City is the merger of Alvarado, Decoto, and New Haven. And did you know Newark is completely surrounded by Fremont? Resistance is futile, you will be assimilated and your property values will drop by 25%.