Silicon Valley Rent Rises, you are now very priced out forever
South Bay leads increases as rents soar
The sharpest increases occurred in the South Bay counties, with the average rent jumping 8 percent to $1,786 in San Mateo and 7 percent to $1,679 in Santa Clara in the second quarter compared with the same period a year earlier. Even rents in the East Bay, where growth was more modest, climbed, helped by the strength of the San Francisco and Silicon Valley markets, according to Jerry Smith, regional manager for Marcus & Millichap’s East Bay office.“The East Bay is being framed by some very, very strong bordering markets that are experiencing 7, 8, 9 percent rent growth,” Smith said. “Silicon Valley and San Francisco are leading markets on a nationwide scale for rent growth. We’re seeing a lot of pressure on those rents, and it’s spilling over into the East Bay market.”
Average rents and vacancy rates
It remains a landlord’s market as rents have increased and the vacancy rate has remained stable during the last year in all nine Bay Area counties.*
County 2nd quarter, 2007 2nd quarter 2008 Year-over- year change
Vacancy rate Alameda $1,337 $1,409 5.4% 4.7% Contra Costa $1,250 $1,328 6.2 5.1 Marin $1,528 $1,591 4.1 2.8 Napa $1,264 $1,307 3.4 3.7 San Francisco $1,757 $1,926 9.6 4.0 San Mateo $1,654 $1,786 8.0 4.1 Santa Clara $1,569 $1,679 7.0 2.7 Solano $1,137 $1,164 2.4 5.0 Sonoma $1,140 $1,212 6.3 5.5
Didn’t you wish you had bought a place? Prices are still rising in the Real Bay Area. Rents are zooming. That giant gap between renting and buying? Well, it’s closing fast!
Pretty soon, if you don’t buy a place, rent will be $10,000 a month, and you will have no choice but to live in a Honday down by the river.
July 16th, 2008 at 6:48 am
What river? There’s no river around here; you mean the creek that runs through Palo Alto?…;-)
July 16th, 2008 at 7:27 am
[...] Emerald Hills. I hadn’t given that much thought, but her suggestion was reinforced today on Burbed, in an article about the rise in Silicon Valley rents. The increase in San Mateo County jumped 8% [...]
July 16th, 2008 at 7:37 am
test
July 16th, 2008 at 7:41 am
Oh no! If my rent rises another 8%, then my rent will only be around 1/4th of what it would cost to buy. I’m so tired of throwing money away…
July 16th, 2008 at 8:39 am
This is actually a big part in why I am buying. My rent is 21% lower than what my landlady is charging new tenants, and I have no rent control. If she raises my rent, and she probably will, then it will be cheaper to own (albeit on the other side of the water).
July 16th, 2008 at 9:24 am
sonarrat,
The latest house to sell in my hood sold for 380k. So there’s starting to be some cheaper houses in safer neighborhoods. This house was for sale @ 475k last year. Huge drop. So I think you could very well find cheaper houses in the not-so-far future.
July 16th, 2008 at 9:33 am
I’m not looking to catch a falling knife. I just want to get the hell out of my apartment, and I’ve been very patient waiting since the peak in 2006. I would not have been able to afford the Laurel six months ago.. I would’ve been stuck in Elmhurst or the Murder Dubbs.
July 16th, 2008 at 10:12 am
Well…
Good luck with whatever you do. But I’d probably be looking at what’s going on with the price declines that seem to still be occurring in transitional hoods. I wouldn’t be surprised if homes eventually hit 300k or less in these areas.
July 16th, 2008 at 10:45 am
Unless they hit $125K, I won’t be able to afford them. The peninsula is certainly going to stay out of my reach until I have some equity in a property in the East Bay.
July 16th, 2008 at 11:06 am
I don’t know what this average rent means. Two bedroom? And it varies so much in the same county.
I do notice recently rents in craigslist are going insane. Just a month ago they were pretty much as expected, and then several months back it was insane. Maybe there is a strong seasonal thing?
July 16th, 2008 at 11:41 am
>>Pretty soon, if you don’t buy a place, rent will be $10,000 a month, and you will have no choice but to live in a Honday down by the river.
It’s best to get out of renting when you still have breathing room. You don’t wait until the high tide comes before deciding to retreat from your spot on the beach. By that time, your options will be limited. You don’t want to choose between living in a Honda Fit or Austin.
Mark my words: Low rent and low interest rate will not stick around forever, and home appreciation is only a matter of time.
July 16th, 2008 at 12:13 pm
Mark my words: Low rent and low interest rate will not stick around forever, and home appreciation is only a matter of time.
Sounds like threatening words, RE. Rent almost always goes up when the housing market slows. Either that or the economy is in some sort of industry bubble like the tech boom. The reality is that even with the rise in rent, renting is still vastly less costly than buying, even when compared to the lower home prices. That more people rent is no surprise: less people can qualify to buy houses, which ultimately means more downward pressure on home prices. This could very well mean an eventual delta: home prices fall, rent rises, and the two meet closer together. When that occurs, then perhaps it would make more sense to buy. As it is now, there’s no rush.
I will say that the number of available rental houses seems to have gone down and of those available, the rent is a lot more than what I’m paying. Typically, the rent on 3-4 bedroom homes around us is $2200-$2500. That’s still signifigantly less than paying the $4,400-$5,000 you’d have to shell out for the equivalent home if you bought. But when we got into our rental 5 years ago, we had our pick of homes ranging from $1,000-$1,400. The one we chose was on the upper end of the rental scale at $1,600. But the landlord loves us so our rent is still the same.
By the time rents become insane, we’ll probably be out of here anyway- to Austin ( as you suggested we should avoid choosing above) or somewhere else. Good riddance.
July 16th, 2008 at 12:57 pm
Austin seems like a nice place, I visited there in 2004, as part of a group of accepted students for a PhD program to UT Austin. I really liked the town, I didn’t end up going to the program there, but it seemed good.
The town might be somewhere I could consider settling at. There is the summer which is really hot, I went during March, and it was somewhat hot. But then again I was in the Bay Area 2 weeks earlier and it was hot here too. At one point we went to Zilker Metropolitan Park, and rented boats, and rowed to the river.
July 16th, 2008 at 1:45 pm
How can you be priced out forever if average rents are up? “Priced out forever” refers to buying. If you can’t even afford to rent you aren’t priced out forever, you’re s— out of luck.
Tune: Forever Young, Alphaville
Let’s live in style, eat sushi a while
Heaven is here where we’re sipping our lattes
Hoping we qualify but not enough saved
Are you going to drop our rate or not?
Let us buy now or let us rent forever
We don’t have the income but the options might strike
We don’t have any WiFi, can’t paint the walls
Want to water my own lawn
Can you imagine when we borrow a mil
Scared of loans recasting on a one-year hill
Rent is increasing and LTV is clamped
This is a game for madmen
Forever out, I don’t wanna be forever out
Do you really wanna move to Austin, forever exiled away
Forever out, I don’t wanna be priced way way out
Do you really wanna try Seattle, never SF Bay
July 16th, 2008 at 2:48 pm
There is the summer which is really hot, I went during March, and it was somewhat hot.
Yup- it does get hot. Where I grew up was hot. Boston got hot and cold. Believe it or not, I’m probably one of the two people in the Bay Area that actually prefers hot weather. No problemo for me.
July 16th, 2008 at 2:57 pm
Yup- it does get hot. Where I grew up was hot. Boston got hot and cold. Believe it or not, I’m probably one of the two people in the Bay Area that actually prefers hot weather. No problemo for me.
You ought to move to Livermore, then. Or Gilroy. Hot towns, lots of bargains. Alameda stays much cooler. Heck, Sunnyvale is warmer than Alameda.
July 16th, 2008 at 3:04 pm
I love going out the the Sierra Foothills in the summer. It gets so hot,you can actually go swim in the rivers and lakes. I always thought the tragic thing about the BA was that even though its right on the ocean… you can’t swim in it because it’s freezing cold year-round. I grew up swimming in lakes, so to me that’s what summer is all about.
July 16th, 2008 at 3:30 pm
Here’s a price comparable: moved to an Avalon “luxury” rental complex in Mountain View in 2004. Initial rent for a tiny (<525 sq. ft) one bedroom apartment: $825/month. Now? $1,425/month for the same place. That’s with a one-year lease. Month-to-month they were asking for $2,100+.
July 16th, 2008 at 3:33 pm
Sounds like they caught wind of Archstone’s modus operandi and decided they could do the same.
July 16th, 2008 at 3:47 pm
> Mark my words: Low rent and low interest rate will not stick around forever, and home appreciation is only a matter of time.
RE,
Thanks for providing entertainment.
Are you saying home will appreciate further when interest rates rise?
July 16th, 2008 at 4:03 pm
Initial rent for a tiny (<525 sq. ft) one bedroom apartment: $825/month. Now? $1,425/month for the same place. That’s with a one-year lease. Month-to-month they were asking for $2,100+.
All them durn’ Facebook employees…
Anyhow, it amazes me that rent could be so much more just a few miles down the freeway. I could drive a Ford Excursion from the East Bay every day and the cost of gas still wouldn’t cost as much as the difference in rent here versus the Peninsula. Oh well. I will never live anywhere near SV. Regardless- rent and housing is overpriced there by a huge margin.
July 16th, 2008 at 4:24 pm
I’m just no seeing the savings, if I move from Belmont to Newark/Fremont/Union City I save maybe $200/month on rent, but my commute goes from 3 miles each way to 15-17 miles each way. Roundtrip costs that means I will need to buy 1 extra gallon of gas a day. $4.60 a workday for fuel additional $4 extra for bridge tolls. Total $8.60 ignoring extra costs for tires, wear and tear, expected costs of additional accidents possible. $8.60 x 20 workdays a month = $178. So I save a great amount of $22/month, I just don’t see it working for me that way.
Granted I could trade the Accord for a Civic.
July 16th, 2008 at 4:30 pm
CEOs and Googlers can afford $10K/mo
July 16th, 2008 at 5:07 pm
sg,
Yes, when interest rate rises RE goes higher, and when interest rate is getting lower, boy, RE goes even higher.
And finally renters are put out of their misery by not being afford to rent, hence only multi-millionaires and people living in cars live in the BA.
July 16th, 2008 at 5:26 pm
he sharpest increases occurred in the South Bay counties, with the average rent jumping 8 percent to $1,786 in San Mateo and 7 percent to $1,679 in Santa Clara in the second quarter compared with the same period a year earlier.
——–
Gosh! It seems lots of people are renting nowadays. Even Facebook CEO is renting
This guy got to be heading for “Priced Out Forever” category.
July 16th, 2008 at 5:59 pm
Bill Gates is unemployed and Mark Zuckerberg rents a small apartment. And Carly Fiorina is backing a losing candidate.
What’s next? Is Jerry Yang being foreclosed on?
July 16th, 2008 at 9:14 pm
I didn’t realize rents were so high. I know the rental market is strong, because one of my houses was vacated (the current renters were paying $1700/mo with essentially no repairs), and when they moved out I had dozens of people contact me for the place, and one group (a couple coming up from LA, and some friends of theirs from the area) were so aggressive it really put me off, so I decided to keep the place vacant for 2+ mos while I put in a tile floor where the carpet was. that place will now rent for $2200- maybe more.
But seriously people- paying anymore than $1500 mo rent just doesn’t make sense. Put your pride away and buy a place in one of the borderline areas that I buy for investment. You will have a decent appreciating asset and you might be surprised in how much you like living there. When I moved to WG in the mid-90s I had to do it for work, thinking I never wanted to live in SJ- but now I wouldn’t go back to the mid-pen for anything.
July 16th, 2008 at 10:23 pm
>>But seriously people- paying anymore than $1500 mo rent just doesn’t make sense.
Exactly my point to Pralay, who’s paying over $2000 a month. It’s like giving away a 47″ flat screen TV every month. How generous of him! The funny thing is that these people think they are saving money. I guess without people like him, it’d be harder for people like me to make money.
July 16th, 2008 at 10:26 pm
The increasing tightness in the rental market demonstrates how heavy the demand for housing is in the Bay Area. It’s a sure sign buying a house here is a great investment.
July 16th, 2008 at 10:37 pm
The increased tightness in the rental market is due to increasing foreclosures. Not exactly a customer base for home purchases in an expensive market.
Oh yeah, and Countrywide is now requiring 25% down on jumbo loans, exactly what the RBA needs to keep prices up. Not.
July 16th, 2008 at 10:42 pm
I’ve been tracking this house on Loree for a long time, looks like the bank (Coldwell Banker) finally put the FB out of their misery. It is now relisted.
http://www.redfin.com/CA/Cupertino/18624-LOREE-Ave-95014/home/1830581
The FB bought it for 800k and the bank took back for 600k, the difference looks like a good down payment that the FB has lost.
July 16th, 2008 at 10:45 pm
25% down is a good idea anyways.
Your statement about rental prices being driven by foreclosures is nonsense. I already showed you less than 1 out of every 10,000 households are affected.
The real reason rents are going up is that we are at full occupancy for housing in the BA. In addition, rents are too low relative to home prices, so it must catch up.
July 16th, 2008 at 10:48 pm
Oops, looks like this one is more complicated than I thought, Coldwell Banker is just the RE broker.
July 16th, 2008 at 10:54 pm
You also have to consider that the decent areas haven’t dropped much in price (yet) so renting is still much, much cheaper. You might be able to buy a crap shack in bad parts of SJ for 400k, which would make buying there close to the same cost of renting in a much better area, but why would you want to?
Ignoring the fact the “RBA” are IMO 20% overprice relative to historical prices and rents, I can’t think of many people that would rather buy a shack in the hood than rent for the same price in a decent area. You have to compare apples to apples.
For instance in Sunnyvale, it only costs around 2k to rent a place that list for 700k (often more). Why on earth would one buy? Not having a calculator, I’m guessing you’d have to get about 10% appreciation a year for close to 10 years to break even. Not to mention you’ll be able to buy the place in 09′ or 10′ for 150k less. No, buying in any area that hasn’t already dropped 33% is still a very untenable proposition and will be until prices correct.
July 16th, 2008 at 11:20 pm
rich, why are you following that house on Loree? Trying to see how cheap Cupertino can get?
July 16th, 2008 at 11:43 pm
RealEstater: You are right — prices are way too high compared to rents.
All: I ran a calculator (that included mortgage tax break at 35% tax rate — it’s for CEO’s right) and essentially a $2.3K/mo house is equivalent to a $500K purchase if you assume real estate appreciation of 3% and inflation of 2.5%. (YES, those are BIG ASSUMPTIONS).
My $2.3K/mo house in Palo Alto would sell for about $1.5M, but I would not rent this place for $7K/mo.
R: at 10% appreciation a year you can more than break even very very quickly, esp. if you put very little money down. 10% appreciation + leverage ALWAYS beats renting hands down. RealEstater knows this.
-zanon
July 17th, 2008 at 1:58 am
Exactly my point to Pralay, who’s paying over $2000 a month. It’s like giving away a 47″ flat screen TV every month. How generous of him! The funny thing is that these people think they are saving money. I guess without people like him, it’d be harder for people like me to make money.
——
Another straw man argument. Where did I say exactly that I am saving money by renting? To me, it does not make sense to pay $6000 for the same house which I am renting for $2000. That’s all. Nothing more and nothing less.
And, no Mr RealEstater, you are definitely not making money on me. You are paying $6000 for the mortgage for very same housing which I am renting for $2000. So, you are running with deficit of $4000 every month. And that explains why you hate renters so much and want them to buy your house. I guess rental is not a lucrative business for a landlord who bought his home at top of the bubble.
July 17th, 2008 at 3:07 am
My $2.3K/mo house in Palo Alto would sell for about $1.5M, but I would not rent this place for $7K/mo.
——-
Too bad you are giving away ONLY ONE 47″ flat screen TV instead of THREE every month.
July 17th, 2008 at 8:25 am
Pralay,
Like a sub-prime lender, you fail to see the long term results of renting. I am definitely saving money compared to you, because my home equity is higher than the value of your rental house (assuming you live in typical house in Santa Clara). In other words, if I choose to live in your house, it would be paid off already. My payment would be $0 compared to your 47″ TV giveaway.
July 17th, 2008 at 8:26 am
Correction: I mean sub-prime borrower.
July 17th, 2008 at 8:42 am
madhaus,
Oh yeah, and Countrywide is now requiring 25% down on jumbo loans, exactly what the RBA needs to keep prices up. Not.
This isn’t true- where did you come up with this. As an anecdote, my recent house which was not a jumbo was actually financed through countrywide- I had no idea, I thought I was dealing with Wells. But anyway it was essentially a NO DOC loan. To read the press you’d think no doc loans were a thing of the past. Untrue. Same with jumbo. I am qualified to buy any jumbo property I want with 5% down. Now not many can get this deal but a lot of people can get the 10% down. You just need a good loan broker. Maybe if you are a first time buyer with a 550 credit score you need 25%.
The fact is that banks made too much money off of bay area mortgages to turn their back on this area. There are hardly any defaults here except 95111 and 95148.
July 17th, 2008 at 8:46 am
As I have previously pointed it out numerous times, in BA both renting and owning are equally bad options even now. There were times when owning was worse than renting. But with recent RE price decline, both are kind of equally bad. More adjustments in price and/or rent has to happen for either one to be good. The reason behind this situation is simple: The hype that BA is “the” place to stay and work. The reality, on the contrary, is that BA provides the worst qality of life with worst cost of living. Perhaps the worst balance. The best option is to quit the place altogether.
July 17th, 2008 at 8:48 am
R, you know this is the renters fallacy around here.
You might be able to buy a crap shack in bad parts of SJ for 400k, which would make buying there close to the same cost of renting in a much better area, but why would you want to?
Believe me I know where you are coming from because I felt the same way in the early 90s. I couldn’t buy in the areas that I could rent in, so I avoided buying. THen I finally took the plunge and realized some things about the market. You need to buy a cheap house that you can afford in some appreciating area, and wait. Yes for the first few years it will not be as desirable experience living there as where you could rent, but that changes over time. I sat and watched while Hayward Park, San Mateo went from a ‘hood to a high end neighborhood. Same thing with Evergreen in san jose, or some outlying streets of Willow Glen happening now. Or foster city, once cheap. Some people are totally hung up on living in Palo Alto and for those, on a salary they will likely always be renters- fine if thats what you want but RE is a great investment for those interested in opening up the possibilities.
July 17th, 2008 at 8:53 am
High five WG. Hope to join you on that ladder soon.
July 17th, 2008 at 9:06 am
THen I finally took the plunge and realized some things about the market. You need to buy a cheap house that you can afford in some appreciating area, and wait….
…Then wait until you’re 40, sell, buy another ‘nicer’ house, sell, move up, turn 50, buy a “nice” house, wait some more, sell, move to Oregon like 99% of the BA old farts do because you realize that you don’t have enough to actually retire in the BA… buy a house in Bend, Oregon… wait…
I only mention this because that’s what I see people do here all the time. Jump through silly little hoops just to get the bare-essentials without even realizing it.Most people who’ve “made it” in the BA are old by the time they do when people elsewhere simply live their lives longer, cheaper, and more comfortably.
Or- you could perhaps do what Austindweller and many others do and save your excessive BA wage ( assuming you make one of those) for 5 years, move to another city, but a nice house from the very start by the time you’re 35, and retire at a decent age and actually get to stay put. No silly games. No get-rich schemes. No crazy risk taking.
The rent argument is still very heavily in the favor of renters. As I mentioned above, the only reason rent is going higher is because less and less people qualify. A year or so ago, if you could breath air, banks would lend you money, and give you a 0% down loan. Those types of people are the ones who live in the’bad’ parts of SJ, Oakland, EPA, etc.
This is why those houses are now getting to be “cheap” and also why anyone who buys them now will lose even more money because for one- rich people do not want to live in crappy neighborhoods, and secondly, the people who would won’t qualify for anything over 250k max.
I realize that my situation is highly unusual, but me and my Wife pay $1,200 a month for our part of the rent on our house. The cost to buy would be around $4,500 a month. Even if rent goes up 50%, we’re still paying a fraction of what it costs to buy. At least in our neighborhood, prices are going down. So if we bought, we would be losing money every month. What we put into investments- which I’ve already mentioned is more reliable- will gain more than what homes will appreciate. Homes in the juicy parts of the BA are flat at best. So even for those renting there, they are still saving more on avg than those who bought are are now losing value.
July 17th, 2008 at 9:13 am
zanon, hmm I am not so sure about your calculator, can you give any details?
All: I ran a calculator (that included mortgage tax break at 35% tax rate — it’s for CEO’s right) and essentially a $2.3K/mo house is equivalent to a $500K purchase if you assume real estate appreciation of 3% and inflation of 2.5%. (YES, those are BIG ASSUMPTIONS).
3% appreciation on 500K property is 15K per year or $1,250 per month. The mortgage on that property is $2770 assuming 50K (10%) down and 6.25% loan. Add another $600 per month for escrow approx. Your monthly payments are $3370, or $2225. if you want to take the tax advantage off the top. Personally I never use “tax savings” on my calculations and I don’t think I need to here, but you did so lets go with that. You have a $2225 out of pocket “cost” per month for a 500K house, but then, you are getting that 3% appreciation of $1250, therefore your actual cost of this house monthly is $975!!!!!! You can’t rent for that.
True, you lost the “investment potential” of the 50K you put down. Thats another red herring in this decade as far as I’m concerned because there are very few home run investments for individuals anymore with this whacked stock market. But anyway that is a negative.
I would ignore the 30% tax savings in my calculations, because after all what if you don’t work one year? In that case you have a payment of $3370 per month and a net gain of $1250 per month or cost of $2120- STILL a better deal than renting.
I would say a 500K property now would yield higher than 3% appreciation by the way, just due to the bad market climate for the low end properties.
July 17th, 2008 at 9:15 am
>> Or- you could perhaps do what Austindweller and many others do and save your excessive BA wage
Since you mentioned saving, actually, I could not save much with the BA wage in BA. Now I find myself in a situation that I save more than twice with my BA wage in Austin. I have to admit though that very few could be fortunate enough to keep their BA wages when they move to outside state.
July 17th, 2008 at 9:26 am
Me and my Wife save a significant amount of our take-home pay. As in more than 50%. Perhaps even 55%. This is primarily because we live extremely frugal lives. No car payments, schools payments, kids, gadget fetishes, and we eat out rarely. I realize most people don’t live like that, and with the number of new cars I see on the road, I’d imagine most people are shelling out a chunk for car payments alone.
We sort look at the BA as our time period for “doing time”.We’re fully taking advantage of what we save because what we do put away every year is like another 10 years of home payments elsewhere. Again, our rent is incredibly cheap for today’s standards. So for us, renting absolutely makes sense.
July 17th, 2008 at 9:59 am
WG, you left the quality of life factor out of #43. Your proposal makes sense for someone starting out and wanting to get on the property ladder. However, some folks just want to live in a nice area. They have the funds to buy in that area or rent. So why not take the $300k+ in equity, invest it, and pay $2500-$3000 to rent in an area where you’d have a mortgage payment in the $5k/month range PLUS another $1,000/month for property taxes?
In this market it seems like a sane approach.
July 17th, 2008 at 10:02 am
One thing I left out – another alternative (bob’s kind of approach) would be to pay cash to live in EPA and not have a house payment at all!
July 17th, 2008 at 11:17 am
madhaus,
That house is probably the longest listed under $1m in Cupertino. I just wonder why it hasn’t been sold yet, afterall it is Cupetino, you see junks got sold all the time and this one is actually not that bad. Doesn’t RBA matter to someone?
July 17th, 2008 at 11:24 am
Like a sub-prime lender, you fail to see the long term results of renting. I am definitely saving money compared to you, because my home equity is higher than the value of your rental house (assuming you live in typical house in Santa Clara). In other words, if I choose to live in your house, it would be paid off already. My payment would be $0 compared to your 47″ TV giveaway.
——
What a convoluted comment. Who cares about YOUR example? If you really want to prove your theory, you should compare apples to apples – and with some number. Paying $6000 for mortgage for which can rented for $2000 is insane.
Atleast WG is able to make some his argument with some solid numbers. I have no reason to believe that you are smart. You are just a plain simple homeowner.
July 17th, 2008 at 11:38 am
I just wonder why it hasn’t been sold yet, afterall it is Cupetino, you see junks got sold all the time and this one is actually not that bad. Doesn’t RBA matter to someone?
———–
It’s too bad that all the bloody renters ignored RBA spirit and refuse to rescue Mr Martinez from his bad “investment” decision.
July 17th, 2008 at 12:20 pm
Hey that 6000 paid is 5500 in equity – in the last few years of your mortgage.
July 17th, 2008 at 12:21 pm
Or maybe you ignore the fact that the house is gaining 6000 equity every month?
July 17th, 2008 at 12:33 pm
Pralay,
Your post #52 is weak. Try again.
The outcome already speaks for itself. How did you get yourself into a situation of hosting the flat screen TV giveaway? Thank about that.
July 17th, 2008 at 12:38 pm
>> Hey that 6000 paid is 5500 in equity – in the last few years of your mortgage.
If you stay put there for ummmm… 30 years. Otherwise you are always paying the interest. Even then apart from the interest you will be making a lot of repairs and you may have to forget about that payment.
July 17th, 2008 at 12:45 pm
How did you get yourself into a situation of hosting the flat screen TV giveaway? Thank about that.
——–
I guess homeowners don’t pay interests. Those bank CEOs must be working in minimum wage then, right?
What outcome? Oh, I forgot – you work for frequent flyer mileage.
July 17th, 2008 at 12:47 pm
RealEstarer,
Needless to mention that you have no clue anything other than your personal experience.
July 17th, 2008 at 12:49 pm
Or maybe you ignore the fact that the house is gaining 6000 equity every month?
——-
I never knew that banks are giving home loans in 0% interests with no down.
July 17th, 2008 at 12:54 pm
Pralay, I think that comment from Rick was dripping with sarcasm…
July 17th, 2008 at 1:22 pm
RE,
I think Parlay made a good valid point, which is you were to compare apples to apples,buying or renting right now, Paying $2,000 versus $6,000 is too drastic to ignore. To say that buying would be more economically sensible would assume your house would gain $4,000 a month in equity, which as you’re well-aware of, it isn’t and in fact is actually losing value per the most recent report.
In a market like this, a renter will make more money investing in stocks over buying RE and losing equity every month.
July 17th, 2008 at 1:32 pm
I think Parlay made a good valid point, which is you were to compare apples to apples,buying or renting right now, Paying $2,000 versus $6,000 is too drastic to ignore.
———
Don’t expect him to compare apples to apples. All he will say that it WILL make sense in 2018.
July 17th, 2008 at 1:37 pm
I can understand that kind of a buy to rent spread in a place like Palo Alto, Atherton, or Saratoga which have always been destination places. You don’t get a neg-am zero-down loan to buy a property there, and you certainly don’t rent your house out (unless you’re an idiot). You buy there only if you have a substantial fortune or substantial equity in a number of different properties already, and you want a house that befits your elevated station in life. But Cupertino? Mountain View? Santa Clara? You’ve got to be shitting me.
July 17th, 2008 at 4:08 pm
On a 650K mortgage at 6.25% interest, you have $4K payments and you buy down the principal by about 8K that first year. So it is not that *nothing* goes to the principal- a little does. In the first 2 years, about $650 per month goes to principal, years 3-8 you are putting between $700-$1000 per month into principal, and from then on start with $1K and add about $100 per year that goes to the principal… so that in year 20 its about $2000 out of the $4K payment to principal, and so on.
When you buy a house, its amazing how fast the first 4 years go by while you are in that house. I was like many here thinking I had paid nothing to the principal during the first 4 years of a mortgage and I was pleasantly surprised to have paid down about 35K on my recent house.
July 17th, 2008 at 5:16 pm
WillowGlenner: This is the rent vs buy calculator I used
http://www.dinkytown.net/java/MortgageRentvsBuy.html
I was just interested in seeing what it said by $2.3K/mo rent was equivalent to, so I played with numbers to see.
So yes, on a cash basis flow, $2.3K/mo gives me a $500K house (as your own calculations showed). 3% appreciation gives me an extra $15K a year, which is material. lower (or negative appreciation) makes the house a nightmare financially. Given that the house is a $1.5M house, you need more heroic appreciation assumptions to come out ahead.
I too am ignoring expected return on the downpayment, as stocks have been a lousy place to be for a decade. That said, real estate is coming off a historic bull run, which has not ended in the RBA, while stocks are getting pummeled. The next 10 years might look quite different.
-zanon
July 17th, 2008 at 5:22 pm
On a 650K mortgage at 6.25% interest, you have $4K payments and you buy down the principal by about 8K that first year.
——-
Or alternately, according to RealEstater, I can have zero dollar payment every month (no mortgage). No 47″ TV for bank CEO either.
July 17th, 2008 at 5:24 pm
Oh, all this math, it hurts my head – so I thought, hey, I’ll look at one of those houses in a “distressed” area that WG is talking about.
Hmm, yeah, it’s $500k for a house that rents for $2000. But appreciation will make up the difference, right?
But wait! It sold for $650k just two years ago? I don’t think I like that price appreciation very much. In fact, I don’t appreciate it at all.
Even *I* get that math.
I guess I’ll just stay a dumb ol’renter for a while longer.
(And for the humor impaired, yeah, I know how to run the numbers, I’m just tired of posting them again and again. It’s a dumb time to buy. Wait ’till prices bottom out, it takes a long time to save $50k, but only months to lose it in this housing market.)
July 17th, 2008 at 5:38 pm
And who says it’s hard to get good returns outside of RE, so might as well put it there? (WG, was that you, or REer? I’m too lazy to read the whole thread again.)
I have a “play” account for a small portion of the down payment that I’ll one day use, and I’m up by 25% so far this year – and that’s *after* the thrashing I got the last two days.
Of course, that requires actual work (research), and risk (15% or so of capital), unlike buying RE, where all you have to do is risk 150% of your leveraged capital, and fix toilets and such.
July 17th, 2008 at 5:39 pm
WG, I am sure the remaining years go back even faster than the first 4 years.
July 17th, 2008 at 5:40 pm
WG, I am sure the remaining years go by even faster than the first 4 years.
July 17th, 2008 at 5:43 pm
I can understand that kind of a buy to rent spread in a place like Palo Alto, Atherton, or Saratoga which have always been destination places. You don’t get a neg-am zero-down loan to buy a property there, and you certainly don’t rent your house out (unless you’re an idiot).
You don’t, err, live there, do you? I know a couple guys who live in those places, and yes, you can (or could) get a neg-am zero-down loan to buy those properties (the cheaper ones, anyway). And yeah, you can rent there, too, even in the more expensive parts, if your checkbook can handle it.
But maybe the folks I know are the exception, and you’re speaking from experience. I’m hardly an expert in such hoity toity living – those places make me itchy… If I had that kinda money, I wouldn’t live there, I’d just retire to a shack on a tropical beach.
July 17th, 2008 at 7:17 pm
**Oh yeah, and Countrywide is now requiring 25% down on jumbo loans, exactly what the RBA needs to keep prices up. Not.**
This isn’t true- where did you come up with this. As an anecdote, my recent house which was not a jumbo was actually financed through countrywide- I had no idea, I thought I was dealing with Wells. But anyway it was essentially a NO DOC loan. To read the press you’d think no doc loans were a thing of the past. Untrue. Same with jumbo. I am qualified to buy any jumbo property I want with 5% down. Now not many can get this deal but a lot of people can get the 10% down. You just need a good loan broker. Maybe if you are a first time buyer with a 550 credit score you need 25%.
WG, this is as of a week ago. You bought your latest house before then. Give your broker a call and check if you can still have those conditions. Read it on a San Francisco real estate blog and the editor confirmed it.
Pralay, if you’re giving away flatscreen TVs can I have one too? My mortgage runs about one flatscreen TV as well.
rick, there’s a bunch of cheapo Cupertino property in Rancho Dinkynada. I can’t tell you why Loree hasn’t sold. Was it where the brothel was?
July 17th, 2008 at 8:42 pm
You don’t, err, live there, do you? I know a couple guys who live in those places, and yes, you can (or could) get a neg-am zero-down loan to buy those properties (the cheaper ones, anyway). And yeah, you can rent there, too, even in the more expensive parts, if your checkbook can handle it.
Yes, I grew up in such an area. Even in the late ’80s when my parents bought, the only people buying were people who owned their own businesses, had healthy portfolios, or were high up the corporate ladder lived there. There are absolutely no rentals in the area, whatsoever. I mean, you don’t buy a truly desirable property because you want to rent it out. The numbers just don’t add up, because they’re not supposed to. I can’t understand why anyone would do that to themselves. My parents could only afford to buy and move out here because they made a fortune off of stock options. Before that, they rented a house in Wellesley, Mass.
By comparison, I’m doing it the hard way, keeping my nose clean and waiting the bust out until I can get something acceptable on an inadequate salary. Meanwhile, a lot of other people my age who got in over their heads buying their first homes in the past few years have ensured they won’t really be able to own a property for another decade at least.
July 17th, 2008 at 10:00 pm
I mean, you don’t buy a truly desirable property because you want to rent it out. The numbers just don’t add up, because they’re not supposed to. I can’t understand why anyone would do that to themselves.
I think your data may be old.
Sure, you don’t buy it to rent it, but Prop 13 means that you’ve got a strong incentive to never sell, so if you’re spending some time overseas (for instance), you could leave the place fallow, or you could rent it out.
Now, most of the rich people I know dislike wasting money. For many of them, that’s how they got rich. Leaving a house fallow would be pretty abhorrent to them. And selling little better. So guess what that leaves. (Of course, for people who just struck VC Lotto, they tend to be a touch more careless with cash, so those folks don’t count for this discussion…)
Craigslist isn’t where *I* would go to look for such a rental, but see here:
http://sfbay.craigslist.org/sby/apa/753271387.html
6 br/ 4 ba / 8000 sq ft / $12k
July 17th, 2008 at 10:27 pm
>>Pralay, if you’re giving away flatscreen TVs can I have one too? My mortgage runs about one flatscreen TV as well.
The difference being Madhaus is buying the TV for himself, while Pralay is giving it away. In the long term, that is ALWAYS what ends up happening. Even you buy at the top, it would still end up that way. Guaranteed. Don’t try to time the market. It doesn’t help, and it doesn’t matter.
July 17th, 2008 at 10:47 pm
In the long term, that is ALWAYS what ends up happening. Even you buy at the top, it would still end up that way. Guaranteed. Don’t try to time the market. It doesn’t help, and it doesn’t matter.
Look at the pretty diagram here after the term “sweet spot.”
It most certainly matters. If I’d bought this house in 1990 instead of 1993, I would have paid 20-25% more for it. Actually I would have been Priced Out of this house, and would have bought a smaller place or stayed out of CUSD.
When prices go up again, they won’t shoot up right away. But there is plenty of time to save more.
July 17th, 2008 at 10:48 pm
Pralay, if you’re giving away flatscreen TVs can I have one too? My mortgage runs about one flatscreen TV as well.
——
Of course you can get one TV every month provided you give me your house for living (of course with a big kitchen and lawn for watering). Although shelter is more important than a TV, but don’t expect that I am going to buy your home for the price of THREE TVs every month and pay for your retirement – even if you have a home at 94301 zipcode and you are still living in denials.
July 17th, 2008 at 10:54 pm
>>It most certainly matters. If I’d bought this house in 1990 instead of 1993, I would have paid 20-25% more for it. Actually I would have been Priced Out of this house, and would have bought a smaller place or stayed out of CUSD.
Madhaus, you are the testament to my statement. You could’ve bought ANY house in 1990, and still made tons more money than a renter can save. It does not matter if you bought in 1990 or 1993, and it does not matter if you’re in CUSD or not. The worst decision you could’ve made was to not buy. In fact, even if you bought in 2003, as I did, you would still be just fine. 2008 could be another 1990. So what?
July 17th, 2008 at 10:56 pm
Pralay,
I think you can drive a Ferrari for $2000/month. Have you thought about that? You are giving out free rides in a Ferrari.
July 17th, 2008 at 10:58 pm
When prices go up again, they won’t shoot up right away. But there is plenty of time to save more.
———–
Madhaus,
Two years back those vultures from RE industry said “don’t get priced out forever” (in other way to say: timing is important). Now they are saying “don’t try to time the market” (which also means: price is falling, so what? buy it anyway.).
Basically, it’s ALWAYS good time to buy NOW.
July 17th, 2008 at 11:06 pm
I think you can drive a Ferrari for $2000/month. Have you thought about that? You are giving out free rides in a Ferrari.
——
That’s perfectly fine. I refuse to give THREE Ferrari rides to some homeowners who want to sell their homes in inflated prices.
It’s such a dumb analogy, RealEstater. I thought being smart is the norm in RBA, especially in management class neighborhood of 94301 zipcode.
July 17th, 2008 at 11:12 pm
It’s such a dumb analogy, RealEstater. I thought being smart is the norm in RBA, especially in management class neighborhood of 94301 zipcode.
Lots of dumb analogies tonight like the claim of “even buying in 2003,” which was the beginning of the ninja loan housing bubble. The whole point of timing the market is to buy at the trough or at least the beginning of the rise.
I cannot take advice from anyone who could say
School.
District.
Matters.
More.
Than.
Anything.
Else.
To.
Us.
July 17th, 2008 at 11:16 pm
You could’ve bought ANY house in 1990, and still made tons more money than a renter can save. It does not matter if you bought in 1990 or 1993, and it does not matter if you’re in CUSD or not. The worst decision you could’ve made was to not buy. In fact, even if you bought in 2003, as I did, you would still be just fine. 2008 could be another 1990. So what?
———
I just can stop laughing after reading your comment, RealEstater. I repeat my earlier statement: I thought being smart is the norm in RBA, especially in management class neighborhood of 94301 zipcode.
Anyway, here the gist of the comment:
- if Madhaus bought on 1990, he would have made tons of money.
- Madhaus bought on 1993, hence he made tons of money.
- RealEstater bought on 2003, he still made money.
Conclusion:
- if you buy NOW, you will make tons of money.
- if you buy on 2011, you will make tons of money.
- if you buy on 2021, you will make tons of money.
Bottomline, you are going to make money anyway. No hurry. Don’t try to to time the market.
July 17th, 2008 at 11:22 pm
Lots of dumb analogies tonight like the claim of “even buying in 2003,” which was the beginning of the ninja loan housing bubble.
———–
It seems someone just can’t accept the fact that the home price run-up he saw since he bought his home in 2003 is not going to happen again. Poor guy.
July 17th, 2008 at 11:24 pm
Come on Pralay, SillyCon valley has a lot of $250k couples who are dying for a Ferrari.
Where do you think you are? $2000 for a Ferrari ride? That only happens in Stockton, here it only gets you a 1950 Chevy. Here we have the air and the most beautiful freeway in the world, not to mention the privilege of driving to see Google/Apple, in Stockton you smell dunk and see cows.
July 17th, 2008 at 11:40 pm
Tune: Alice’s Restaurant
You can’t buy a thing you want
The RBA’s Priced You Out
You can’t buy a thing you want
The RBA’s Priced You Out
Rent a house but sit in the back
You might as well live by a Superfund tract
You can’t buy anything you’d want
So wait until 2010.
July 17th, 2008 at 11:45 pm
It seems someone just can’t accept the fact that the home price run-up he saw since he bought his home in 2003 is not going to happen again. Poor guy.
Not only that, that was the world’s shortest family vacation I’ve ever seen for someone who gets an entire month off every year. So this guy prefers being insulted here more than spending quality time with his actual family. That’s really sad.
July 18th, 2008 at 12:20 am
Madhaus,
I’m actually taking 2 vacations. Vacation #2 will start in about a month. It’ll be a longer international trip. When are you taking your vacation?
July 18th, 2008 at 12:21 am
Thanks for the TV, Pralay.
July 18th, 2008 at 12:23 am
Not only that, that was the world’s shortest family vacation I’ve ever seen for someone who gets an entire month off every year.
———-
Running short of frequent flyer mileage? Not smart as David Phillips, who could earn enough frequent flyer mileage WITHOUT working 9-5 everyday? I thought smartness the norm in RBA.
July 18th, 2008 at 12:31 am
Come on Pralay, SillyCon valley has a lot of $250k couples who are dying for a Ferrari.
————
Ooops, I totally forgot about it. But don’t forget about Porsche and Trophy wife.
July 18th, 2008 at 8:33 am
School.
District.
Matters.
More.
Than.
Anything.
Else.
To.
Us.
Dude… I just came up with another plan. If California wants to make housing more affordable, they can do it much more inexpensively by actually having a good school system. If California built new schools and stocked them with better paid, more qualified teachers in EVERY district, then it wouldn’t be like a third world country anymore: ALL neighborhoods would be in GOOD school districts. This would dump property values like a rock all over the place because suddenly parents wouldn’t be prepared to do hand-to-hand combat with each other to get their kiddies into the “best” schools. Why… you could live anywhere and your kids would have a good education no matter what. Am I a genius or what?
July 18th, 2008 at 10:45 am
madhaus obviously school district matters most to you, which is commendable. But it is not the key determining factor in real estate all the time. It just isn’t. It HELPS to be in a good school district of course. And some areas like Cupertino have nothing to offer *but* a school district so obviously it matters there. School districts tend to be sort of a midrange carveout of importance to real estate. The highest of the high end areas don’t really care about schools and for years HILLSBOROUGH had worse schools than foster city. That may well still be true. San Mateo area in general had crappy schools due to the districting issues there, this was the *entire county* including Burlingame, San Mateo westside, etc. It didn’t matter to property valuations and now that RE has appreciated there, the schools are improving, but they are still not better than some *much cheaper* San Jose areas such as Evergreen. In fact there is this one blog poster on the san jose sq ft blog who whines about how overpriced willow glen is every month or so because “the schools aren’t that good”, and properties are $1mm in WG. She doesn’t get it.
Moral of the story, if you need schools because your kids are in school fine. If you are buying for investment, schools are one of a HUGE LIST of important characteristics to look at.
July 18th, 2008 at 10:49 am
bob, we simply could not allow that! It sounds like communism.
Only the rich are entitled to a good education for their kids, and they must pay the price – wait – to the RE “investors?” (Hehe, just think: even if a little of that bubble inflation went to taxes instead, we could have really good schools already!)
RE, your entrenched beliefs, stated over and over with only the flimsiest support really are tiresome. I think even the most adamant real estate investor or realtor, who is rational and somewhat objective, could agree that in some cases it just doesn’t make sense to buy right now. Some people don’t have the 30-year time horizon to not care if they pay 20% too much for their place, if this turns out to be Japan-style meltdown. Check this out:
http://www.oftwominds.com/blogoct06/japan-bubble.html
2006 was the first year in 15 years that prices went up. And they were up 0.9%. Yippee.
Now I don’t think our case will be anywhere near that bad, but I can respect the opinions of people who don’t feel ready to take the plunge.
July 18th, 2008 at 10:51 am
WG,
I am curious, what is on your list?
It would be interesting to compare expensive neighborhood to average ones and see whether there is a big difference.
July 18th, 2008 at 11:11 am
Madhaus,
Two years back those vultures from RE industry said “don’t get priced out forever” (in other way to say: timing is important). Now they are saying “don’t try to time the market” (which also means: price is falling, so what? buy it anyway.).
Basically, it’s ALWAYS good time to buy NOW.
If you can afford it – no, really afford it, not just saying of course you can, not spending 95% of your monthly income, not based on winning a $50K lottery scratchoff, not only for five years until the interest rate resets then you’re screwed – then it always is a good time to buy. The only bad time to buy is when it’s not safe for your own security (or the majority of other potential buyers) to do so. How many people who bought in 2006 could qualify for the same size of loan today? 25%?
The market has now had to correct based on how much money and how much income people actually have at their disposal. So it makes sense that economically working-class areas like Menlo Park’s Belle Haven, East Palo Alto, Oakland, and San Francisco’s Bayview lead the declines, because the people there don’t make much money and don’t save enough of it anyway, plus they are more susceptible to scams and schemes. That’s not to say it didn’t happen in every sector of the market, because it did. I’m talking simple economic principles here. The more money you have, the more closely you guard it, because everybody is out to get your dollars.
July 18th, 2008 at 11:40 am
bob, school districts will never all be uniformly good anywhere. The reason is simple- the KIDS in the schools matter as much as the school itself. You will never be in a location where all kids from every town are identical- there are always smart kids, not so smart kids and troublemaker kids that take up a schools resources etc and those kids are not uniformly distributed anywhere.
I once remember a frontline episode about kids locked up in jail for life in the USA. There was this one kid from Colorado whose parents were venture capitalists and he obviously came from a good home, involved parents etc. The problem was this kid was in a BAND at school, and one of the band kids came from a bad home living in an apt in town. The good kid went to the bad kids’ house to practice, and at that very moment the bad kid killed his mom (accidentally) by hitting her in the head with some fireplace tools. Now, the good kid is in jail for LIFE, because his trial just happened to be the same week as the Columbine kids trial (and his first name was Eric). What was the real problem here- the SCHOOL that kid attended had some “wrong side of the track” kids in it. Teachers and no child left behind will not change this type of situation.
July 18th, 2008 at 11:46 am
Through the eyes pf Californians, sure- I’d buy that there’s a belief that a public school system can’t be universally good. This was certainly not the case back in TN or probably in many other states for that matter. It was a given back home that if you went to public school, then you probably went to a ‘good’ school. Nobody made a big deal about it. There weren’t any lotteries.
In all seriosness though, California has a serious, growing stratification problem. I do believe that this has a lot do do with real estate prices. As people with kids seem to allude to, having a good school system in their district is about the same as having a giant golden nugget sitting in the back yard. It shouldn’t be this way. I feel that by making attempts to equalize the school system, this would eliminate much of the added preciousness to areas simple because they’re near a good school.
Its all crap in my opinion. If I had kids, I’d probably do what was best for them and move to a state that had better schools.
July 18th, 2008 at 11:57 am
rick, I would put lot size (6500+ flat lot), view, charm of house (a 40s charming house is superior to rancher as long as it is upgraded), proximity to a good “downtown” (WG, Los Gatos, Los Altos are the best for this)- preferably walking distance, close in to major employers (example San Bruno fails this), close in to other amenities like grocery,hospital all as things to consider as well as school in evaluating whether a property is worth buying. Then you need to look at the price, and what you get for the money. The problem is that in the best school districts like Cupertino- virtually ALL of the above features fail except lot and employer. Palo Alto has great schools and all the other things so thats fine, but Cupertino/Sunnyvale doesn’t. Its not like schools don’t change, either. Like I said San Mateo schools have sure changed for the better.
July 18th, 2008 at 12:39 pm
close in to major employers (example San Bruno fails this)
SFO airport? South City’s biotech? And it’s only 30 minutes to downtown SF.
July 18th, 2008 at 1:21 pm
WG, that is a big surprise, you don’t talk about weather (San Carlos would be quite different than WG, living in the hills of San Carlos is different than down the hills), etc.
Let’s check San Carlos vs Fremont (since you might think I think too much of Cupertino):
1. good “downtown” – I like San Carlos better, but Fremont definitely have a bigger downtown and more shops/varieties. There is a good feeling hanging around San Carlos downtown but if you want to shop Fremont is better.
2. Close to major employers – other than Oracle which is not in San Carlos and there is little around. Fremont has pretty diverse employers, there is even a automobile research center there.
3. Grocery, hospital, food. I think Fremont beats San Carlos hands down, unless you only consider expensive ones.
In the end I think it all comes down to how far are you away from the money centers, which really puzzles me about San Francisco and north of it. PA and the sillicon valley maybe able to lift a few cities around them, but San Francisco and San Jose are much bigger populations with very little going for them.
July 18th, 2008 at 2:09 pm
WG you are buying for investment. I am buying (or holding off on buying) for a family home and secondarily for appreciation. Therefore we have different priorities on what we look for. As I clearly stated above, school district is the most important thing to us. Not to you or necessarily to anyone else.
I certainly never said that real estate prices were based only on school district, but it’s a huge factor in otherwise identical houses around here. Cross Fremont Avenue to Sunnyvale school district and you lose 15%. Cross the boundary from Cherry Chase to Cumberland and the price goes down again. Or compare the same house on either side of Wolfe where you go from Cupertino to Santa Clara school district.
Hillsborough school scores, 2008:
Crocker Middle – 948, gee almost as high as 3 of Cupertino’s middle shcools
North Hillsborough – 967
South Hillsborough – 960
West Hillsborough – 970, only elem school to break out scores by White & Asian, which means other 2 don’t have enough Asians
Going by school scores, the kids can pass the danged test. So what was “bad” about Hillsborough schools? Were they just not as gold-plated as the houses?
July 18th, 2008 at 2:48 pm
I suppose most of you saw the report a few days back indicating that 25% of all students in California drop out. That’s disturbing. What’s more is that most who drop out are black or Hispanic while those who stay are Asian or white. There is some really disturbing racial inequality in this state these days, and the most offensive are the schools. Again- I blame the fact that people are so willing to shell out small fortunes to live within the ‘better’ school districts that it has the unfortunate effect of basically shutting the door on other minorities. That’s really sad. Racial inequality in my opinion should never occur in the classroom.
July 18th, 2008 at 3:32 pm
Bob,
If a certain racial group doesn’t emphasize education, you can’t blame it on inequality. No one is prevented from buying into a neighborhood due to race.
July 18th, 2008 at 3:52 pm
I feel that by making attempts to equalize the school system, this would eliminate much of the added preciousness to areas simple because they’re near a good school.
The equalizing that needs to take place is about class ratios, which are not going to change until funds are increased across the board. The “good” schools are good partly because parents have the leisure to be involved, thereby putting more adult eyes on the student, and partly because parents have more cash to shell out for the holes in the roof.
The problem is that there is a knee-jerk resistance to increasing teacher salaries. They’re just layabouts who get the whole summer off, etc. This cuts off educational improvement at the knees, because a high number of adults in the school, is the one factor that makes the most difference in student outcomes.
July 18th, 2008 at 3:56 pm
In other words, it’s not about band classes or art classes or a nice computer lab or a nicer classroom or better school books, all of which are relatively easy to get money for. All those things, nice and useful as they are, are gravy. What studies show to be important, is having the grown-up there to catch the kid who’s slipping. That’s why certain populations (that not coincidentally are likely to be poor) fail in school; it’s because the adults are distracted by the business of survival.
July 18th, 2008 at 4:12 pm
It’s also about what those failing kids’ parents value. If their parents are also in survival mode, and there aren’t any (or few) role models who succeeded because of education, the kid has no incentive to do well in school anyway.
The best way to ensure your child succeeds at school is to read to him every night — that child will then read on his own, and a reader does better at school. The other best way is to pick your child’s school so that his peer group is full of readers, not wastrels. That’s really what those parents are outbidding each other for: an exceptionally high-performing peer group.
July 18th, 2008 at 4:13 pm
WG re: comment #98, I thought the band kids were the “good kids.” They must have been in rock band, that’s full of losers.
July 18th, 2008 at 5:44 pm
I don’t know how to get the historic APIs, madhaus. But San Mateo schools were baaaad in the early 90s. Like we once mentioned here, Carlmont High was the inspiration for the movie “dangerous minds” about hood kids, and that is in the middle of the San Carlos hills! Clinton gave a “whats wrong with education in the USA” speech THERE, of all places around 98 if I recall. Well, ALL of the SM county schools were like that! Aragon, everywhere. There used to be a large mexican part of San Mateo right off the downtown near 3rd that was really rundown and beat up, and then you had all the east side kids from EPA bussed everywhere. I think the EPA bussing was the key issue- EPA is in San Mateo county. Anyway thats all cleaned up now. but had you waited for schools to improve back then, you would have missed out on great RE gains. BTW my area WG has the same problem with our schools- apparently these were the best schools in SJ in the 60s and 70s and then the bussing started with the kids from the other side of the tracks which in this case is a street called Alma and Alameda. But, like with san mateo time passes, these rundown areas that are next to the million dollar areas improve, and the schools improve. Of course if you have kids at the moment you can’t wait. And Cupertino has been the best school district forever so it is a sure thing.
July 18th, 2008 at 6:39 pm
If a certain racial group doesn’t emphasize education, you can’t blame it on inequality. No one is prevented from buying into a neighborhood due to race.
It would have been better to stop after the first sentence. The second is rather, um, elitist at best. I’m sure you don’t need me to tell you this, but certain racial groups tend to have a high proportion of working class folks. They can’t afford to buy a home. They can barely afford rent, much less in an area with good schools. And if a group doesn’t emphasize education, the caliber of the schools would be a moot point anyway.
It’s been said on here before: parent involvement (and even peer pressure) have as much to do with the value derived from an education as classroom size or teacher ability. There are always stories you can find about kids who come from severely disadvantaged backgrounds and are able to overcome it through adult encouragement and a focus on the value of education.
July 18th, 2008 at 8:15 pm
ho ho ho madhaus. There are 2 kinds of “band kids”. The kind you are thinking of are the people in the SCHOOL BAND. The other kind are the kids that start a rock band in their spare time to play at parties in the area.
2 different groups of kids there.
July 18th, 2008 at 8:21 pm
But San Mateo schools were baaaad in the early 90s. Like we once mentioned here, Carlmont High was the inspiration for the movie “dangerous minds” about hood kids, and that is in the middle of the San Carlos hills! Clinton gave a “whats wrong with education in the USA” speech THERE, of all places around 98 if I recall. Well, ALL of the SM county schools were like that!
That was because Ravenswood High closed in the ’70s, and much of the student body – from Belle Haven and East Palo Alto – was bussed over to Carlmont, which was just as much white bread then as it is now.
July 18th, 2008 at 8:58 pm
ho ho ho madhaus. There are 2 kinds of “band kids”. The kind you are thinking of are the people in the SCHOOL BAND. The other kind are the kids that start a rock band in their spare time to play at parties in the area.
2 different groups of kids there.
There are 3 bands at the high school my oldest will attend. Marching band, concert band, jazz band.
WG, I did mention rock band above. We just came from my younger kid’s rock band concert. He spent 2 weeks in rock music camp and they all wrote original songs. Their band defined their genre as “Alternative/Hard Rock.” Sweet. We must be grooming him to be a baaaaaaaaad kid. At least my older kid is going to do jazz at music camp.
Heck, they both did theater camp, they are destined to be arty weirdos in high school anyway. Wonder if they’ll end up befriending the type who’d hit their parents with a tire iron.
Nah, this is Cupertino school district. You know what an Asian Fail is here? A “B.” Hahahahahaha! I think one of those kids could get rid of a parent by bringing home straight “A-”s.
July 18th, 2008 at 9:23 pm
I want to quote what Madhaus wrote above, which is so true it should be framed:
“The best way to ensure your child succeeds at school is to read to him every night — that child will then read on his own, and a reader does better at school.” The other best way is to pick your child’s school so that his peer group is full of readers, not wastrels. That’s really what those parents are outbidding each other for: an exceptionally high-performing peer group.”
July 18th, 2008 at 9:39 pm
Pralay says,
“To me, it does not make sense to pay $6000 for the same house which I am renting for $2000. That’s all. Nothing more and nothing less.”
Anybody who talks about a $6000 mortgage is smoking dope. Data shows that the typical mortgage payment in Santa Clara County is only $2880/month (http://blogs.mercurynews.com/realestate/2008/07/18/are-santa-clara-county-homes-affordable-at-least-typical-new-mortgage-payments-are-dropping-added-bonus-positive-news/).
July 19th, 2008 at 8:07 am
RE, I think that “typical mortgage for SC buyers in June” might be a bit misleading. I believe the hottest part of the market right now in Santa Clara county are these cheap low end properties like what I just bought. Somebody lit a fire under the low end in May sometime. From your link,
And another fact that hit the editing room floor: The percentage of homes sold in June in Santa Clara County that had previously been foreclosed upon rose to 17.9 percent in June, up from 16.8 percent in May. In June 2007, only 1.7 percent of sales were previous foreclosures.
This is skewing the numbers. Investors are looking for 500K properties and buying them.
For the purposes of the people here though, who are typically looking in the better areas to live, I would honestly say that a very common mortgage for a family buying in a good area they intend to live in, is about $4500-$5000 when you include escrow. Thats a 650K loan on a 850K property or thereabouts- in other words a DECENT house somewhere.
But $4500 in mortgage payment is not really a problem, particularly with rents at $2000+.
July 19th, 2008 at 9:06 am
Quote: “right now is a good time to buy.”
By: Leslye Krutko, director of San Jose’s housing department.
Source: San Jose Mercury News
Link: http://www.mercurynews.com/ci_9919747?source=rss
July 19th, 2008 at 9:11 am
Based on the above article, anyone who is saying they are priced out is making excuses. Right now SV is affordable for the majority of folks here who are making tech salaries.
So, I agree with Leslye Krutko. Buy now, or don’t complain about be priced out later.
July 19th, 2008 at 9:28 am
Anybody who talks about a $6000 mortgage is smoking dope. Data shows that the typical mortgage payment in Santa Clara County is only $2880/month
———-
It seems our “hitech guy” started liking data nowadays. Otherwise, why would he post aggregated data for WHOLE Santa Clara County that includes San Jose? I guess he cannot back up his argument with RBA numbers.
In any case, as he is loving aggregated data for WHOLE Santa Clara county, here some more data for him. According to latest DQ news the median price of WHOLE Santa Clara county is only $612K. I am pretty sure the price of $2000 rental home is lot more than that.
July 19th, 2008 at 9:38 am
Quote: “right now is a good time to buy.”
By: Leslye Krutko, director of San Jose’s housing department.
——
See, “hitech guy” is not wrong. There is at least one more person who are saying so.
Leslye Krutko referring to the SJ area where prices dropped enough. On the other hand, our “hitech guy” is applying the logic to all over. How misleading!
Point to note that although the main slogan “good time to buy now” remains same, the reasoning behind it changed. Few months back it was “no downturn here, hence good time to buy now” and now “price is down enough, good time to buy now”.
July 19th, 2008 at 9:42 am
But $4500 in mortgage payment is not really a problem, particularly with rents at $2000+.
—–
WG,
Define “problem”. Of course even paying $6000 is not “problem” for us either. But should we do just because it’s not a “problem”? I don’t think so.
July 19th, 2008 at 10:38 am
WG,
So if you rent for 2000, you should pay 4500 if you buy the house? Wow, only makes sense in BA.
July 19th, 2008 at 10:42 am
I hope that is not your rental investment strategy.
July 19th, 2008 at 11:09 am
Pralay Says:
>>Leslye Krutko referring to the SJ area where prices dropped enough.
So your conclusion is, prices have not dropped where you would like to buy; i.e. RBA. Correct?
July 19th, 2008 at 11:36 am
So your conclusion is, prices have not dropped where you would like to buy; i.e. RBA. Correct?
——
Of course you are not correct. You are just twisting my words to fit your argument. Some places price dropped significantly and some places did not. This market has long way to go.
July 19th, 2008 at 1:09 pm
When you combine the tax benefits of home ownership plus a *very conservative* 2% appreciation every year in the value of the house, buying trumps renting at $4500 vs $2000. by a fairly wide margin too.
What is routinely bantered about here is the difference between renting for say, $1800 vs buying for $6500. which is the kind of thing that happens in palo alto. Thats a much more difficult equation. But buying at 4500 vs renting at 2000 is a no brainer.
July 19th, 2008 at 3:57 pm
WG,
Pralay is basically trying to weasle his way out of his losing argument.
Pralay,
What exactly is the price point at which you’re priced out of? We’ll let the group here decide whether you have a case, or whether you’re trying to join a peer group you don’t belong with. My point being, I am also priced out — out of 2 acre property in Atherton. Yet, I don’t keep preaching the price would drop hoping that one day I might be able to steal it.
July 19th, 2008 at 5:08 pm
RealEstater,
Don’t you understand joke? I thought being smart is the norm in 94301 management class neighborhood.
I and many others, including Burbed (read the title of this feature) use those real estate industry catch pharses as sarcasm. I am curious why do you visit burbed.com? Reading sarcasms/jokes or do you get paid for it (or earn frequent flyer miles)?
On the other hand, I am not preaching for price drop. Those are the facts on ground. Just look at the numbers.
Lastly, you are indeed “Priced Out Forever” for Atherton propeties. You are a big time loser, even if you have a trophy wife, lots of frequent flyer miles and do lots of virtual international travels.
July 19th, 2008 at 5:17 pm
RealEstater – my condolences for that 2 acre property in Atherton. I was telling my wife just yesterday that our backyard is too crowded to build a stable. Fortunately there’s still San Martin:
http://www.santaclararealty.com/bin/web/real_estate/AR68193/PROMOTE_VT/1172042240.html?ZKEY=&acnt=AR68193&action=PROMOTE_VT&inwindow=&hs_action=VIEW_DETAIL&listing_id=REASIL43264901&start=0&grp=ALL
(30th picture)
Maybe you’re not priced out of that one?
July 19th, 2008 at 6:10 pm
I was at Guitar Center yesterday and was happy to see I am at least not priced out of any of the Strats I was
slobbering overtrying out. Since I cannot buy 10 acres in Woodside I have to be happy about something. Also I can play guitars at the store for free. No one is making me hand in amini flatscreen TViPod every hour I sit and play.Moral: You can lead a donkey to Atherton, but it can’t attract a trophy jenny.
July 19th, 2008 at 9:01 pm
DreanT,
I wonder why RealEstarer is not practicing his own “move-up” theory and buying 2 acres property in Atherton. After all he has enough equity and he can pay off his mortgage anytime (atleast that’s what he told earlier).
Or may be he is trying and that’s what he meant when he mentioned that he is planning to buy a property by this year end.
July 19th, 2008 at 9:35 pm
Do you all get the feeling that Pralay is a stalker? He keeps track of everything I write, and can quote just about everything I say at an instant. He probably keeps a database full of “data” on my activities.
July 19th, 2008 at 9:36 pm
Pralay,
Why don’t you just answer the question? At what price point are you getting priced out? Is there some reason why you can’t be forthcoming?
July 19th, 2008 at 9:40 pm
>>I wonder why RealEstarer is not practicing his own “move-up” theory and buying 2 acres property in Atherton.
That topic has been covered. I said before that based on my habit, I should be moving up right around now. However, I can’t find a place I’d rather be. Atherton is certainly doable, but as I mentioned before I’m not too crazy about Menlo-Atherton high.
Is your database down today?
July 19th, 2008 at 9:45 pm
Pralay says,
>>On the other hand, I am not preaching for price drop. Those are the facts on ground. Just look at the numbers.
What? You now swing back the other way? So what’s your excuse for not buying now? Plenty of affordable homes in San Jose, as you said it yourself.
July 20th, 2008 at 1:36 am
Do you all get the feeling that Pralay is a stalker? He keeps track of everything I write, and can quote just about everything I say at an instant. He probably keeps a database full of “data” on my activities.
——–
Dear Lowtech guy,
That’s just google (have you heard about it?). Yesterday I was googling your “useless data” for post#120 and found that one. I am very surprised that you haven’t figured out already and I had to tell you.
Are you embarrassed that I google your old posts and find all the contradictions?
July 20th, 2008 at 1:43 am
Why don’t you just answer the question? At what price point are you getting priced out? Is there some reason why you can’t be forthcoming?
—–
Over and over I keep thinking if it is just very low IQ (that would be extraordinary in 94301 zipcode) or just an used car salesman attitude? Just few days you were asking stupid question to DreamT why he does all the non-”VP-type” of household works.
The question of “price point” comes only if I am thinking about buying. I have no reason to do it now. Don’t you get it?
Regarding “price out” – that’s just sarcasm. Don’t you get it?
July 20th, 2008 at 1:53 am
What? You now swing back the other way? So what’s your excuse for not buying now? Plenty of affordable homes in San Jose, as you said it yourself.
—–
RealEstater,
Is it possible that I don’t like San Jose for same reason you don’t like Atherton?
And regarding “excuse”, people need reason (or excuse) to buy something. I don’t own a Ferrari. If I want to, I need a reason (or excuse) to do so (and that could well be “I just love Ferrari”). I am very amazed that you don’t understand these simple things of life. Are you a guy from another planet or just plain simple real estate agent who is trying to make living from commissions? Which one?
July 20th, 2008 at 1:58 am
Pralay – RealEstater is just everybody’s favorite troll, nothing more, nothing less. If we could pet him, we would. Short of that, we just entertain him with our answers.
July 20th, 2008 at 2:00 am
However, I can’t find a place I’d rather be. Atherton is certainly doable, but as I mentioned before I’m not too crazy about Menlo-Atherton high.
——–
What a loser! Giving all kind of excuses for now buying a 2 acre property in Atherton. What a loser!
July 20th, 2008 at 2:12 am
RealEstater is just everybody’s favorite troll, nothing more, nothing less. If we could pet him, we would. Short of that, we just entertain him with our answers.
———
Sometimes I wonder if this guy is real at all. He calls himself real estate investor but shows no sign of it in his posts (note the contrast between WG and him).
Then he tells us that he works fulltime for the purpose of getting frequent flyer miles.
Then he tells us that that he is going for vacation but returns within 3 days and start posting messages here.
July 20th, 2008 at 2:14 am
If we could pet him, we would.
——
You mean that small white creature in your gravatar image?
July 20th, 2008 at 2:48 am
Pralay – No! That “creature” is our cat Mikado. I meant more like a… hmm… hamster? You know the kind that spins its wheel all day just for the fun of it. Only outcome is increased exposure due to all the effort, but still ends up at the same place. Also I figure a hamster is very likely to be priced out of Atherton and I’m told they’re into trophy wives too.
July 20th, 2008 at 2:52 am
Hmmm. That small white thing in front of cat – that’s hamster, right? Or rat? I was referring to that white thing.
July 20th, 2008 at 3:30 am
Sorry Pralay it’s just the cat’s paw. Wish the gravatar pic was a wee bit larger.
July 20th, 2008 at 11:55 am
Quotes of the day:
“Hmmm. That small white thing in front of cat – that’s hamster, right? Or rat? I was referring to that white thing.”
“Sorry Pralay it’s just the cat’s paw. Wish the gravatar pic was a wee bit larger.”
July 20th, 2008 at 12:03 pm
>>Is it possible that I don’t like San Jose for same reason you don’t like Atherton?
In summary:
- You’re not priced out. You’re just priced out of RBA. It’s like saying you’re priced out of a car, since you only like Ferrari.
- Prices have not dropped in RBA, a point I’m been making all along, and one you finally have to admit.
July 20th, 2008 at 4:03 pm
Sorry Pralay it’s just the cat’s paw. Wish the gravatar pic was a wee bit larger.
——-
My bad! In any case, I would very interesting to see a hamster running a wheel marked “94301“. I would install a tachometer on the wheel to measure “Equity“. That would make RealEstater The Hamster (what a rhyme!) happy.
July 20th, 2008 at 4:06 pm
- Prices have not dropped in RBA, a point I’m been making all along, and one you finally have to admit.
—-
Seriously? There so such thing called RBA. It only exists in sarcasm. So I guess you are not serious and just joking.
Of course, a hamster hardly understands sarcasm.
July 20th, 2008 at 4:21 pm
Prices have not dropped in RBA, a point I’m been making all along, and one you finally have to admit.
Fascinating. Prices are slowly dropping in 94087. So is it part of the RBA or isn’t it?
I’m off to the theater. Don’t beat each other up too much.
July 20th, 2008 at 4:59 pm
Pralay,
What’s your fixation on 94301 anyways? If I’d were you, I’d be watching Sunnyvale non-94087 as a starting point.
July 20th, 2008 at 5:12 pm
What’s your fixation on 94301 anyways?
———
That’s not my fixation. That’s just hamster thing. Hamster thinks anybody outside 94301-wheel is loser.
July 20th, 2008 at 5:15 pm
Prices are slowly dropping in 94087. So is it part of the RBA or isn’t it?
——–
In that it is not part of RBA. Wait a minute! That makes Sunnyvale uniform again – only negative way this time.
July 20th, 2008 at 6:25 pm
Pralay,
What’s your fixation about management class anyways? You’ve brought it up like a hundred times already. The funny thing is why keep talking to me about it? I hardly ever discuss this subject, and I can’t give you a promotion.
July 20th, 2008 at 10:51 pm
You also can’t answer a simple question: is 94087 in the RBA or not? Because the prices are going down.
July 21st, 2008 at 12:32 am
Madhaus,
Please show some proof 94087 is going down. To be clear, I’m talking about CUSD. The Santa Clara side is irrelevant.
July 21st, 2008 at 1:46 am
You don’t get to make up the rules, dear. 94087 is going down, the Dataquick stats show it. So now only CUSD is RBA? Don’t worry, my neighborhood is going down too.
July 21st, 2008 at 1:49 am
Madhaus,
Don’t play this game again. It ain’t going down just caus’ you’re saying so.
It’s simple enough to do a search for current listings, and I don’t see any price movement. You can fool the amateurs, but it doesn’t work with me.
July 21st, 2008 at 1:50 am
DreamT,
Is your laundry done yet? You’re going to cook breakfast in a few hours, right?
July 21st, 2008 at 2:01 am
Yes it is. Like I care if you say “no it isn’t” when you haven’t a clue which high school is which in 94087? You’ve already proven you have nothing to back up any of your claims.
94087 is no longer RBA.
94301 will be out within 15 months.
July 21st, 2008 at 2:12 am
Madhaus,
Show me where in DQ it says 94087 is going down? I looked all over for it, and didn’t see anything.
Santa Clara County overall is only down 12%. Considering the hit places like Gilroy and San Jose is taking, it means RBA has to be solid to hold up the average.
DQ also explains that half of the contributing factor to price going down is the increased # of sales at the low end, due to bargain hunting.
July 21st, 2008 at 10:35 am
What part of “huge inventory” do you not understand? The issue is not just that prices are STARTING to fall, it’s that they will continue to fall because there are too many units for sale compared to number of buyers.
Ninja loans were used in high-end transactions as well as low-end. There are very few people who can buy a house for over a million, so all those million dollar shacks can’t stay priced that high.
July 21st, 2008 at 11:12 am
- Prices have not dropped in RBA, a point I’m been making all along, and one you finally have to admit.
Oh- but they have and are. You sound very confident and sold on the belief that prices will not fall in the “RBA”. But the mechanism for price collapse has been in the works for over a year now. As I previously mentioned, lower prices in the BA, higher inventory, stricter lending standards, higher down payments, resetting loans, and higher unemployment are now having an affect on the last standing region of the area. Here.
So I wouldn’t get too comfy with the notion that your house is still “making money”. If you are, then you might be in for some disappointing news.
Besides, who cares anyway? You have a house…. right? So unless you foolishly count it as your primary source of financial well-being ( and we all know you’re too smart to do that), then you should be a-ok. just like in the thing for Christ’s sake and be happy.
July 21st, 2008 at 11:23 am
RealEstater – You post this just the day I slept early:) Breakfast was at a Palo Alto coffee shop for a job interview, if you really want to know. Was strange to have coffee again (I’ve reverted the saying and been applying it religiously: “Pas de travail, pas de cafe”)
July 21st, 2008 at 12:37 pm
All that really matters is the inventory TREND. If the trend is trending down in terms of number of units, which it is, then its too late to claim “we are going down any minute now”.
Inventory peaked in April in most places.
On another note, my new property now shows my buy in Zillow. And this:
ZESTIMATE®: $645,000
Zestimate
A Zestimate home valuation is Zillow’s estimated market value. It is not an appraisal. Use it as a starting point to determine a home’s value.
Learn more
The Value Range is the high and low estimated market value for which Zillow values a home. The more information, the smaller the range, and the more accurate the Zestimate. See data coverage and accuracy table
* Value Range: $548,250 – $657,900
* 30-day change: -$10,500
* Zestimate updated: 07/18/2008
Last sale and tax info
Sold 06/26/2008:
$420,000 *
2007 Property Tax:
$6,014
Transaction Not Included in Zestimate
This transaction was not used in computing the Zestimate for this house due to anomalies we detected with this transaction. These anomalies can include unusual document or transaction types, sales between possibly related parties, unusually high or low transaction prices, or other data irregularities that might indicate the transaction is not a full-value, arms-length transaction.
July 21st, 2008 at 12:46 pm
madhaus, come on. You are using year over year comparisons on inventory? Thats hardly going to indicate a trend in this market. Last year, July 2007- was the absolute peak in prices at least in my area.
Heres a good inventory tracker. What is important here is the month over month TREND.
http://bp0.blogger.com/_8GEmmG-C-5g/SGwCTFv-IgI/AAAAAAAAAf4/CS67bbLcUuA/s1600-h/inventory+trend+by+MLS+area+(2).jpg
July 21st, 2008 at 1:18 pm
Zillow is about as accurate as a blind person throwing darts. They overestimated the value of my parent’s home by almost 100k, which is ridiculous given the total value as of now is 180k-thus overestimating the value by almost 1/3rd.
Secondly, DQ and other reports do shows a decline in San Mateo, Santa Clara, and Marin countys. Their sales declines were the highest of the immediate Bay Area.
The numbers are as follows:
Sales Volume:
Santa Clara Sales volume: -24.8%
San Mateo Sales Volume: -25.2%
Marin Sales Volume: -26.3%
Median declines:
Santa Clara Sales volume: -24.8%
San Mateo Sales Volume: -12.40%
Marin Sales Volume: -13.20%
Do you see the pattern? Its following exactly what happened around 7-8 months ago in the East Bay. I know because I’ve been following this area heavily. What is happening is that bottom feeders are buying up the crap off the street. This of course drags down the median. But just like in the East Bay, buying up the crumbs doesn’t mean that sales or median prices are trending up. Quite the opposite actually.
So yes- the “unspeakable” is happening. the RBA is catching up. Guess investing in RE isn’t as bulletproof after all is it?
July 21st, 2008 at 1:40 pm
>>What part of “huge inventory” do you not understand? The issue is not just that prices are STARTING to fall, it’s that they will continue to fall because there are too many units for sale compared to number of buyers.
You’re using “greater San Jose area” inventory as an indication for 94087? Get real. Inventory in 94087 is on the delcine right now. On the peninsula, all but 2 cities are having declining inventory.
It’s not like this is really hard to check. Just do a search for listings in 94087. There isn’t a whole lot available, and million dollar listings are everywhere.
July 21st, 2008 at 1:43 pm
Madhaus,
One more time. Show me where in DQ it says 94087 is going down?
July 21st, 2008 at 1:47 pm
Bob says,
Don’t waste your time cheerleading on sales volume. It can happen for another year, and prices still won’t drop in the RBA.
July 21st, 2008 at 1:54 pm
I follow the listings in 94087/CUSD very carefully, and asking prices are down from a couple months ago (as well as last year). Stuff listed for $1.1-$1.2 went for under asking or sat on the market. Juliana Lee’s reports show most high-end Sunnyvale sales (assume all 94087 at these prices) went below asking. I also note she stopped including her ridiculous percentages now that they showed properties going under asking routinely.
Again, how could someone who insistently and erroneously claims he knows what high school covers MY zip code, who STILL hasn’t admitted he made a bonehead mistake in pushing this, and who still touts himself as a real estate maven give me any flipping advice whatsoever? I watch the trends — asking prices are down and selling prices are spreading.
WG, I gave you a link to inventory above, what’s wrong with it? You can see both year over year and month to month inventory changes. In particular, I’m intrigued by the idea of listing it as a listings per capita ratio, you can really see how much inventory has climbed. I’ll take a look at your website above, but I am getting ready for a trip back East so I don’t have the time now to do it justice. Please remind me of the site either when I return next week or if I actually have time to hit teh tubes and visit youz guyz.
Now, if any of you know how we can get the absolute info on loan types by zip code, we can answer the most important question:
How many loans written in the RBA used toxic financing, that is: Option-ARM, Interest-Only, or Piggyback?
July 21st, 2008 at 2:01 pm
RE,
Did you read the DQ reports? Sales and prices are both down in every single county. I don’t have to prove anything. The numbers show the proof already. Next…
July 21st, 2008 at 2:01 pm
I hardly ever discuss this subject, and I can’t give you a promotion.
——
But you did say, isn’t it?
Regarding promotion, I have no doubt that you are not even qualified to promote anyone. Even if you are a hitech guy working for a hitech company, it’s very likely you are still sitting in a cubicle – long way to get your personal office and be eligible to promote anybody.
July 21st, 2008 at 2:02 pm
Madhaus,
>>Juliana Lee’s reports show most high-end Sunnyvale sales (assume all 94087 at these prices) went below asking.
That’s always been the case. Sunnyvale sells well for up to around $1.1M. Anything above that is case by case basis.
>>Again, how could someone who insistently and erroneously claims he knows what high school covers MY zip code, who STILL hasn’t admitted he made a bonehead mistake in pushing this, and who still touts himself as a real estate maven give me any flipping advice whatsoever?
You’re repeating the same thing over and over like an old lady. As I told you, I know someone who lives in your zip and went to Homestead High. School boundaries do change; that’s why you’ll see in most RE flyers that buyers need to verify.
July 21st, 2008 at 2:05 pm
Bob,
It only takes a few minutes to read the report, and I read it. The question is do you understand what you are reading? Do you understand Santa Clara County includes vast areas of San Jose that is in the dumps? Yet median has only dropped by 12%, which means RBA is holding up very strongly.
July 21st, 2008 at 2:10 pm
RE,
That’s stupid. All areas of all the countys are included in the report. If you want to break it down street by street, then be my guest. But the so-called RBA you all crow about is declining, whether you want to spin it or not.
July 21st, 2008 at 2:42 pm
Bob,
That’s stupid to lump everything together? Are you implying Central San Jose market is the same market as Sunnyvale 94087? Ever heard the term Real Estate is local?
July 21st, 2008 at 3:08 pm
RE,
What it boils down to is that you guys who’ve tied everything to your houses are going to argue with every report showing the decline creeping up until its at your very door step. The argument just a year ago was:
“Oh-there’s a slowdown in California?, well… It doesn’t count because it’s only happening in Sacramento and San Diego, but it’ll NEVER happen in the Bay Area…”
Now that it has actually hit the BA fairly hard and now working its way towards the last holdout of the bubble, I’m sure the denial will last right up until the very end, and those who cling to their precious home values will deny what’s happening-huddled in their bunkers until it arrives. The BA is full of a bunch of Ostriches in my opinion-thinking that whatever happens elsewhere, even in their back yards is irrelevant.
Lastly, I don’t care anyway. The Peninsula is an overrated dump with some of the less than beautiful landscapes. I’d never buy here anyway, but even so, I think the obvious is going to happen whether you or anyone else who’s “invested” in RE wants to admit it. We’re just making it easier for you in preparation.
July 21st, 2008 at 3:33 pm
The argument just a year ago was:
——
Bob,
You don’t have to quote other people. Just look at here how RealEstater’s logic shrinked from Santa Clara County To Sunnyvale To Some Area of Sunnyvale.
July 21st, 2008 at 3:37 pm
Ever heard the term Real Estate is local?
——–
You mean hitech guy David Lereah?
July 21st, 2008 at 4:32 pm
Bob,
Actually, people like you are making projections about something that has not happened, and those projections have been out there for some time now. So far, there is no sign whatsoever that RBA is affected, and my stance has been the same since the beginning.
July 21st, 2008 at 5:22 pm
madhaus,
WG, I gave you a link to inventory above, what’s wrong with it? You can see both year over year and month to month inventory changes.
Maybe I have the wrong link. What I have from your post is a blog titled “bubble markets inventory tracker” which has 2 charts of year over year real estate numbers. The first list of numbers is monthly 2007 vs 2006 (fairly irrelevant). The second group is 2008 vs. 2007.
The point is if this site is trying to sensationalize the large increase in inventory that occurred in 2008, its a little late for that- we all know that- whoopee. Who cares about year over year data? What the people who think we are on the edge of another inventory explosion need to show is some kind of INCREASE in inventory that is happening month over month this year. This chart doesn’t show that, in fact if you read the comments on this blog they also believe that from a purely inventory perspective we have peaked (which is what I also believe). Now, it may take forever to work through this inventory that is true. But I don’t think there is any evidence of this big “shadow inventory” monster people keep claiming exists.
anyway from the blog,
Inventory numbers are listed first followed by sales figures in parenthesis, with corresponding inventory and sales information from prior year to the right. Inventory include SFR, Condos, MFR, and land parcels, data obtained from ZipRealty. Sales include new and resale homes from DataQuickNews.
July 21st, 2008 at 5:32 pm
People- RE, bob, madhaus et al,
Even if you are using “greater san jose inventory” as some kind of trend identifier- even the worst zipodes like 95127 are stabilizing and bouncing off the bottom. I actually worry that I missed my window to buy a second cheap property (under 400K) in this cycle but I have some work to do in my last one so I’m stuck. the great thing is the number of contractors willing to do work on a cheapie rental now vs a few years ago. But anyway I look at the cheap zipcodes in San Jose and the demon has passed.
July 21st, 2008 at 9:02 pm
Here’s a fairly typical 94087 CUSD property that I consider to be “desirable”:
http://www.movoto.com/real-estate/homes-for-sale/CA/Sunnyvale/1353-Flicker-Way-100_80821503.htm
It came on the market recently at $1.025M. Using it as an example, I can say that:
- Prices have not dropped.
- It will certainly sell in short order, as there’s no lack of demand for properties like this
July 21st, 2008 at 10:15 pm
As I told you, I know someone who lives in your zip and went to Homestead High. School boundaries do change; that’s why you’ll see in most RE flyers that buyers need to verify.
RE, there are 2 very important things you left out.
1. The person who went to Homestead and lived near Ortega Park must have gone there many years ago. The high school districts have been stable the entire time I’ve lived here. Since Sunnyvale High was closed in 1981, that is probably when the district lines were redrawn. Therefore you were touting information that was over 25 years old.
2. You haven’t admitted you screwed up by touting information that was over 25 years old. I know you detest George Bush as much as I do, but your refusal to admit when you make mistakes (and you make a lot) makes you very much like him.
WG, the numbers are there for every single month, you can see whether a number is bigger or smaller than the one next to it. Yes, you had the website I was referring to.
For your sake I hope you haven’t missed the window by much, but my take is with these loan restrictions the market isn’t exactly going to go roaring back. I figure it doesn’t matter if you buy tomorrow or 2 years from now.
July 21st, 2008 at 10:21 pm
Bob,
You don’t have to quote other people. Just look at here how RealEstater’s logic shrinked from Santa Clara County To Sunnyvale To Some Area of Sunnyvale.
I hope you noticed he’s moved from touting 94087 to only the Cupertino district portion of it, that’s a little less than half the zip. The property listed above (Flicker) is CUSD but the wrong high school. Very soon RE will only admit CUSD/Homestead (SW corner Sunnyvale) is RBA, but I think it’s too late for even that. I think that area is about 10% of the city, or maybe 25% of the zip at most.
Remember, even Cupertino now has portions that are no longer RBA, namely the NE corner known as Rancho Rinconada that hasn’t had substantial improvement (read: complete teardowns of the entire block).
July 21st, 2008 at 10:34 pm
I took a further look at Flicker and believe it is overpriced by $100K. It’s on a small lot (there are many Sunnyvale properties on near-8000 sf lots), it’s the less-good high school, and the house is on a neighborhood straightaway that will have cars rushing past the house. It’s only 6 houses away from the noise from Fremont Avenue, which is a 4-6 lane 40 mph arterial depending on which section you’re at (the 3rd lane on each side comes and goes). The elementary school gets good scores but is the most overcrowded in the district, over 800 kids. And you have a long haul over to the middle school from here.
If this house is worth a mil, my house is worth $1.15, and I don’t think it is any longer. I have a couple comps from my tract; mine should be under them because of improvements, so I’m pretty sure of how I’m valuing my place.
I’ve asked burbed to post a place I found here (94087/CUSD) for $749K.
July 21st, 2008 at 11:02 pm
Madhaus,
I already acknowledged that school boundaries do change. What I said before is that I know someone who went to Homestead, which is not a mistake. Why are you so keen on trolling this one? I can point out all kinds of mistaken/misleading information you have given, such as the assertion that 94301 has a median price of $1M. Currently there are only 25 properties for sale in that zip, and only 2 are under $1M. Both of them are on Alma, which is like living on Fremont Ave. with a train running through it.
July 21st, 2008 at 11:08 pm
>>I hope you noticed he’s moved from touting 94087 to only the Cupertino district portion of it, that’s a little less than half the zip.
You are making up crap again.
I always meant 94087 CUSD from the start, and I clarified it more than a few times. What differentiates 94087 from the other parts of Sunnyvale is CUSD. There is no other reason to talk about 94087. The rest of it is just plain Sunnyvale.
When I see a person repeating the same points and acting sturbborn, I see a sure sign of aging.
July 21st, 2008 at 11:16 pm
>>I took a further look at Flicker and believe it is overpriced by $100K.
You don’t understand the neighborhood and you haven’t been paying attention to the comps. The “Birdlands” neighborhood always commands a premium. Flicker is a good street, and this property is a safe distance away from Fremont Ave. By your definition, virtually all the streets in that neighborhood are “neighborhood straightaways”, but it never bothered any of the buyers before. 1342 Flicker is already pending at $1.268M.
July 21st, 2008 at 11:49 pm
“When I see a person repeating the same points and acting sturbborn, I see a sure sign of aging.”
Ladies and Gentlemen, RealEstater at his evilest and nastiest! Please drop him a penny for his efforts.
July 22nd, 2008 at 12:33 am
Here’s a fairly typical 94087 CUSD property that I consider to be “desirable”:
——-
There goes the snake oil – “desirable”. So by definition, a “desirable” home in Nevada desert could be part of the RBA too.
July 22nd, 2008 at 12:37 am
hope you noticed he’s moved from touting 94087 to only the Cupertino district portion of it, that’s a little less than half the zip.
————
Note that he added “desirable”. With this definition, he can never be wrong.
RBA = some homes in some area minus undesirable homes.
July 22nd, 2008 at 12:52 am
Ladies and Gentlemen, RealEstater at his evilest and nastiest! Please drop him a penny for his efforts.
——
Damn! I thought he is here to help and will be dropping a few pennies from his equity and a few miles from his frequent flyer account.
July 22nd, 2008 at 1:02 am
Why would Birdland be “desirable”? Lousy High School. The only thing it has going for it is the scores at Stocklmeier, if you like sending your kid to kindergarten knowing he could get lost finding it since there’s 6 full classes. There are decent sized lots 1-2 blocks over (Arleen) but the Flicker area are the teensy ones.
1342 Flicker is already pending at $1.268M.
Assuming you didn’t pull that number out of your butt, that must be one of those rich knife-catchin’ furriners! I see 300K of negative equity. Course redfin and movoto both say it’s active, so you’re just making crap up again. Oh, did I mention my older kid is friends with a kid 2 doors down from this house? That the dad is another guitar player? So I can check up on that price very easily if you persist in your latest lie. The whole family is coming to see my kid’s theater production, I’ll just chat them up then.
Free clue: To upset somebody, you have to hit them about things they actually care about. That’s why I keep reminding you that your advice sucks, not only does it bug you, it’s also true. Why you’d think I’d react to age jokes is beyond me. Anyone who jokes about my age will get whacked with my cane. Whippersnappers.
July 22nd, 2008 at 7:25 am
Even if you are using “greater san jose inventory” as some kind of trend identifier- even the worst zipodes like 95127 are stabilizing and bouncing off the bottom
But “Bouncing off the bottom” doesn’t mean diddly-squat given that indeed- you can pick up some crummy little house for say- $400k-450k all day long. But those prices aren’t rising above that mark either. I’d also wager that the further that the median falls-meaning the next level of houses up, the 500-550k homes lose more value, then the bottom scraper homes are actually going to fall further in value.
That’s precisely what has been happening this summer in the East Bay, where the down cycle has been occurring longer than it has in the Peninsula where its only started more recently.The median last year, which was at the start of the down cycle for us was around 600k, down from 650k. Now those homes are 550-575k. The scraper homes have gone from 450k to 350k, which is in lock-step with the reductions in the homes priced in the next bracket.
Anyone buying starter homes right now is only buying someone else’s offloaded crap and won’t see any “profits” before 2012. But I’m not going to stop anyone from becoming bag holders either.
July 22nd, 2008 at 8:31 am
>>Assuming you didn’t pull that number out of your butt, that must be one of those rich knife-catchin’ furriners! I see 300K of negative equity. Course redfin and movoto both say it’s active, so you’re just making crap up again.
Go check mlslistings.com. It says right there.
July 22nd, 2008 at 8:35 am
Bob,
What you fail to understand is that those bottom scraper homes costs WG next to nothing to buy. He simply rents them out and have someone else buy it for him. If he can make this work for 1 house, he can make it work for 10. Eventually, he’ll become financially independent while you’re still waiting for your dream home to fall from the sky.
July 22nd, 2008 at 8:49 am
400k= $ 2,334.29 per month mortgage payment.
+$6,400 property tax
+$1,500 Yr, insurance
+$15,000 minimum amount quoted for “repairs”
The grand total would be roughly $3,000 per month in cost, not including the $15,000 initial repairs, or any other impending repairs in the future.My estimates are also on the low side. So in order to “monetize” a crappy, starter, less-than-perfect-shape house in a not so great area, you would have to rent it for more than $3,000 per month. These homes aren’t going up in value either, so scrap the whole “instant equity” argument. Simply put- there is no way that you could monetize a home with those numbers.
Sorry, but that ain’t happening. If you buy 10 such properties, then you would be hemorrhaging money.I get a feeling that you RE “investors” are hoping that you’re right and that somehow, your little investments are gonna pay off… because they better or you’re screwed. Sometimes you have to anticipate failure. That’s life.
July 22nd, 2008 at 10:23 am
Madhaus,
Are you man enough to admit you made a mistake regarding 1342 Flicker?
>>Oh, did I mention my older kid is friends with a kid 2 doors down from this house?
Isn’t that a clear giveaway you’re is in the same school district as Flicker? Looks like you’re not too high on CUSD.
July 22nd, 2008 at 10:24 am
Madhaus,
Are you man enough to admit you made a mistake regarding 1342 Flicker?
>>Oh, did I mention my older kid is friends with a kid 2 doors down from this house?
Isn’t that a clear giveaway you’re in the same school district as Flicker? Looks like you’re not too high on CUSD.
July 22nd, 2008 at 10:55 am
RE, you really are dumber than a bag of hammers. My older kid goes to Cupertino Middle, which covers ALL of Sunnyvale/CUSD. If you actually knew 94087 you wouldn’t be making blunders like this. Why don’t you tell us about some places for sale in your neighborhood since you don’t seem to know much about anywhere else?
If the Flicker house is pending, I’ll know about it soon enough, from someone I actually trust.
July 22nd, 2008 at 11:08 am
Madhaus,
By law, if a house is pending the realtor must reflect it on MLS. MLS is the source to check, not your kid’s friend’s mother.
July 22nd, 2008 at 11:14 am
>>RE, you really are dumber than a bag of hammers. My older kid goes to Cupertino Middle, which covers ALL of Sunnyvale/CUSD.
What did I say? You’re in the same district as flicker. That can’t be all bad, can it? A family moving in will enjoy at a minimum good elementary and middle school. Based on statistics, most people will move before that staying at a place that long.
Of course, you’re beyond statistics.
July 22nd, 2008 at 11:23 am
Instead of harping 1342 Flicker is sold 1342 Flicker is sold why don’t RealEstater come back after one month with the actual sale numbers?
How many million dollar plus homes in 94087 were sold on or over asking price in June? Only 4 our of 16. Go and check tech gal’s website.
July 22nd, 2008 at 11:36 am
Pralay,
Search mlslistings.com. Sunnyvale 94087 currently has 28 listings priced at $1M or higher. 9 of them are already pending.
July 22nd, 2008 at 11:46 am
Sunnyvale 94087 currently has 28 listings priced at $1M or higher. 9 of them are already pending.
——
Considering the fact that 94087 is part of RBA, I am very surprised that all of them are not getting snapped up within days. And whatever is selling, most of them are selling below asking price. What a surprise.
BTW, please do come back with actual sale numbers (instead of “pending”).
July 22nd, 2008 at 12:09 pm
Pralay,
The high-end of any neighborhood does not get tend to get as many overbids. Just think about it, would you pay $1M to live in your neighborhood?
July 22nd, 2008 at 12:22 pm
The high-end of any neighborhood does not get tend to get as many overbids.
——
Which part is getting overbidding? As usual you try to give impression that overbidding is all over except high-end markets. Only two months back you mention “overbidding is everywhere” when less than 50% homes are sold over or on asking price.
If you really want to sound credible, show some numbers. Not some vague words.
July 22nd, 2008 at 12:25 pm
If you’re so gung-ho about the Flicker sale, why haven’t you given us a link? Too technical for ya?
$1.26m is a ridiculous price for that house. What does it have inside, gold-plated fixtures and a ballroom?
By law, if a house is pending the realtor must reflect it on MLS. MLS is the source to check, not your kid’s friend’s mother.
Since you couldn’t be bothered to provide the link, you probably made the whole thing up.
July 22nd, 2008 at 12:26 pm
I’m pretty danged sure that just a month ago, tech guy was saying that all of 94087/CUSD was over a million, not the “high end” of the neighborhood.
July 22nd, 2008 at 12:29 pm
Sunnyvale 94087 currently has 28 listings priced at $1M or higher. 9 of them are already pending.
Wow, no link. What does “already” mean? How long have those listings been listed that you’d use a statement of quickness such as “already”? Consider that 94087, the whole zip, not just the CUSD portion, used to have a median danged close to a mil, now you’re talking about “high end of the neighborhood” That proves 94087 is dropping.
July 22nd, 2008 at 12:36 pm
Consider that 94087, the whole zip, not just the CUSD portion, used to have a median danged close to a mil, now you’re talking about “high end of the neighborhood”
——
Madhaus,
You know what, 94087 is not “uniform”.
July 22nd, 2008 at 12:56 pm
Madhaus,
Is it too technical for you to do a query in mlslistings.com?
The reason I don’t give you a direct link for that site is because it’ll just redirect you to the main page. Try it: http://www.mlslistings.com/Reports/Main.aspx?propertyId=859267
Will you admit your mistake and apologize?
July 22nd, 2008 at 1:00 pm
Pralay says,
>>As usual you try to give impression that overbidding is all over except high-end markets.
You really have a reading problem. Even Madhaus got it.
Let me lead the horse to water one more time. Do you understand the difference between high end of a particular neighborhood and the high end market?
July 22nd, 2008 at 1:06 pm
Let me lead the horse to water one more time. Do you understand the difference between high end of a particular neighborhood and the high end market?
—–
Aha! Now you want to do nitpicking when you don’t mind to provide misleading information. Which parts are having overbidding? Lower end? Middle range?
July 22nd, 2008 at 1:10 pm
No more zip code wars, ok? The issue will be settled with a few more DQ reports anyway.Patience.
July 22nd, 2008 at 1:27 pm
Pralay,
Nitpicking? We’re talking about completely different things!
July 22nd, 2008 at 1:43 pm
Nitpicking? We’re talking about completely different things!
——
Not really. You are dodging to answer the question: what range of homes are getting overbidding in 94087 neighborhoods?
July 22nd, 2008 at 2:14 pm
Pralay,
Which homes are dropping in value in 94087?
>>what range of homes are getting overbidding in 94087 neighborhoods?
Here’s the over all stat, based on actual results reported at http://www.julianalee.com/reinfo/sold-SU.htm:
Range________# homes sold_______#sold at or above list
400K-600K____________6_________________5
600K-800K___________15_________________7
800K-1M_____________24_________________15
over 1M______________17_________________5
Does that answer your question?
July 22nd, 2008 at 3:28 pm
RealEstater,
Aren’t you the very same guy who was trying to show that 94087 (especially CUSD) is different from “just plain Sunnyvale” (post#190)? Or was it a different RealEstater?
Now you are showing some tech gal’s stat for “just plain Sunnyvale”. In already saw those numbers which indicates that that NONE of the price range is getting “as many overbids”.
And some corrections in your numbers. In 800K-1M range, the number of homes sold at or over asking price is 13 (not 15). An over million, the number of homes sold at or over asking price is 4 (not 5). May be I should start demanding apology from you. But who care about your cooked-up numbers and apology anyway.
July 22nd, 2008 at 4:23 pm
Pralay,
I’m trying to show you overbidding in all ranges.
Now will you answer my questions? Is 94087 dropping? Is there a market downturn in the RBA? Are all these buyers over-paying just to be nice?
July 22nd, 2008 at 5:49 pm
OMG! Overbidding is so much that even hitech gal can’t make SP/LP over 100 (keep in mind that hitech gal always calculates that number with last listed price, not the original listed price – just to make this number look good). How was it a few months back? 102?
If you really want to know the downturn just compare the year-to-year numbers.
July 22nd, 2008 at 5:56 pm
I’m trying to show you overbidding in all ranges.
—–
Did you really try to show that? Which post? Or you just tried to brush off the fact that there are very few properties over 1 million in 84087 is selling over asking price. Overbidding is everywhere, right?
July 22nd, 2008 at 5:57 pm
Pralay, good reminder that should cool heads. That’s why I’m not fond of her overbid calculations. Overbidding rate is more revealing of a market strategy than of market health, and with her numbers we see not only a very skewed but also (as you point out) incomplete picture of it. It is a waste of everybody’s time to infer conclusions based on her numbers.
July 22nd, 2008 at 6:05 pm
Overbidding rate is more revealing of a market strategy than of market health, and with her numbers we see not only a very skewed but also (as you point out) incomplete picture of it. It is a waste of everybody’s time to infer conclusions based on her numbers.
——
I agree, DreamT. SP/LP does not provide info about health of the market unless you take other factors into account – median price, inventory etc. SP/LP alone means nothing.
Even places like Stockton has SP/LP like 96 or 97 where home price dropped more than 50%. Is it a surprise that SP/LP is not 50% there? Nope. That’s because over time sellers lower their expectation and list their properties according to market price. That’s how SP/LP always has a tendency towards 100.
It’s ridiculous when some people try to use this number to demonstrate “overbidding is everywhere”.
July 22nd, 2008 at 6:06 pm
Good Lawdy! You’re basing those stats on the reduced price, not the original list price! What total nonsense! In a balanced market, there wouldn’t be so many reduced prices in the first place.
Also I seem to remember your touting tech gal’s charts for showing sales “above list price” (even though it was really above REDUCED list price), now it is at 100%. That proves prices are going down!
Your MLS link goes to the main page, as you said it would, so I don’t see why you ask me to apologize for something you don’t demonstrate. The listing is still “active” on redfin.
bob, this isn’t a zip code war. This is someone who has repeatedly been invited to discuss his own neighborhood, where he might even know something about what listings are good and which are dogs and why, who instead falls on his face talking about places he doesn’t understand at all. I did not make that choice for him.
July 22nd, 2008 at 6:15 pm
This is someone who has repeatedly been invited to discuss his own neighborhood,
—-
Madhaus,
This is RealEstater’s management class neighborhood – active more than 130 days.
July 22nd, 2008 at 6:31 pm
Don’t be silly, Pralay. That’s a high-end property. They don’t market those the same as the low end of town. Kind of like the difference between Flicker and, say this place. Be sure to check out the price listing history.
July 22nd, 2008 at 6:32 pm
Best of all, the place I showed is 126 days active, just like the management class place!
July 22nd, 2008 at 7:42 pm
>>This is RealEstater’s management class neighborhood – active more than 130 days.
Pralay, I get your point. Palo Alto is definitely not selling now. Sellers are in so much trouble. I wish I was renting in Santa Clara just like you are!
July 22nd, 2008 at 7:46 pm
>>The listing is still “active” on redfin.
Wow, you are really acting like George W Bush, refusing to admit your mistake! Who cares about Redfin. MLS is the source of truth for real estate. Go ask your son’s friend’s mother. I’ll still accept a late apology.
July 22nd, 2008 at 8:23 pm
I hate how MLSListings.com doesn’t allow you to deep link.
July 22nd, 2008 at 9:36 pm
Right. I hate how I had to explain all that to Madhaus.
July 22nd, 2008 at 10:25 pm
DreamT,
You’re giving realtors too much credit. It’s just plain supply and demand. Nobody’s falling for some realtor’s “strategy”. If realtors were that smart, Pentagon should be consulting them on how to pull out of Iraq.
It’s amazing how you guys come up with all these excuses to try to explain a RBA market that has been consistently strong and unaffected by everywhere else.
Just go ask Madhaus, “Since the market is falling, would you like to discount your house by $100K?”. His answer will be the same as every RBA seller: “Hell no”.
If you look at the numbers of overbids in Sunnyvale, and consider what percentage of homes on the market are actually “good” properties, you’ll find that virtually every good property is selling above asking.
Let me explain. Look at the sold listing in the link. Check to see how many of those properties are:
- Too small?
- On very small lot?
- On busy streets?
- In a bad location?
- Needs a lot of work?
I bet you, you’ll find a bunch. On any given day, only around 20% of the properties meet my “first pass” criteria. Yet, we’re seeing that more than 20% are overbids. In other words, anything that is truly worth buying will need to be competed for in this market. That matches my experience in real life.
July 22nd, 2008 at 10:38 pm
RealEstater – I agreed with Pralay this realtor’s calculation on overbidding rate are skewed, and furthermore cautioned not to infer anything about market health (positive or negative) based on that data. I never inferred there was a strategy behind this (she just took the numbers she could access), or gave credit for anything (how can one give credit for useless data?).
I also am not drawing conclusions based on the data to “try to explain” anything – since the data is skewed and incomplete.
Your accusations are baseless and your reading comprehension needs some work.
July 22nd, 2008 at 10:51 pm
DreamT,
You’re not in very good mood today. Did you not get the job in PA?
The numbers I showed in my post are not based on the realtor’s calculation. All I did was to count up the figures from individual transactions shown. Those are just raw numbers and have nothing to do with skewed or not skewed.
July 22nd, 2008 at 11:04 pm
RealEstater – The interview went quite fine, and my mood is quite fine as well. Maybe you’re just used to more diplomatic phrasing.
Incidentally, if I have cause to disagree with your other statements, I’ll be very vocal about it. Just assume that silence speaks volume as far as I’m concerned.
July 23rd, 2008 at 10:53 am
Pralay, I get your point. Palo Alto is definitely not selling now.
—–
RealEstater,
My example of 900 University Ave home is as good or bad as your example of 1353 Flicker Way home. Both are purely anecdotal and demonstrates nothing about the health of the market.
July 23rd, 2008 at 12:28 pm
Right. I hate how I had to explain all that to Madhaus.
You didn’t explain anything. You just said I could click on the link but I wouldn’t see anything, just the main page. I looked up the property on MLS Listings, there’s no offer amount mentioned. So your silly number of $1.26 mil cannot be documented.
Why do you not discuss some 94301 listings? You said you gave here to offer advice, yet you don’t discuss the one place you ought to know about.
July 23rd, 2008 at 12:38 pm
bob you’ve got an excuse for everything but the fact is, the peninsula and San Jose side have nothing to do with the East Bay. You want to see evidence of this, just go to CL and look at RENTAL AVAILABILITY. the rental market in the East Bay reminds me of Texas, you can rent anytime, anywhere, whatever you want for however long you want. TONS of availabilty. On the peninsula side, not true at all. I practically have renters banging down my door for my new place, in fact, I might even RAISE the initial rent I charge by $100 vs what I was considering a month ago. I have this one couple practically harassing me over the house. This is the case for any rental property in WG, Campbell, Santana Row area right now and I am sure applies to pretty much every peninsula town. In fact, in the “close in” peninsula you can probably buy *any* house under maybe 550K, that would be those bad areas of sunnyvale and that ilk, and as long as it is in presentable condition, rent it for within 30% of your mortgage payment so that the tax benefits + rent of the transaction basically net themselves out.
July 23rd, 2008 at 12:42 pm
I’m sorry, I have this image of watering my own lawn with renters banging down the door while property flies through windows.
July 23rd, 2008 at 12:49 pm
Realestater, you don’t need to waste time with that realtor website for the information you want (avg list price, % over list etc) for various neighborhoods, it is readily availble on Trulia:
http://www.trulia.com/real_estate/Sunnyvale-California/
http://www.trulia.com/real_estate/Palo_Alto-California/
Palo Alto never adds up, I think most of the “sales” are actually prop 13 handed down transfers. But all the other cities work fine, its good info
July 23rd, 2008 at 1:03 pm
WG,
Why would I buy something only to rent within 30% of the mortgage, not including the property taxes, repairs, and so on? Are you saying that it is completely A-ok to invest in a depreciating asset that doesn’t even cover its cost? If so, the you don’t have any validity. Perhaps that explains why so many people are upside down simply because they made bad investments.
July 23rd, 2008 at 1:12 pm
whatever bob, your constant drumbeat of “depreciating asset” does not make it true. Remember I am talking about buying a distressed property, NOW, and renting it. Will an REO that you buy today for a depressed price continue to depreciate from these levels? Highly doubtful, especially in an inflationary environment.
July 23rd, 2008 at 1:23 pm
Realestater, you don’t need to waste time with that realtor website for the information you want (avg list price, % over list etc) for various neighborhoods, it is readily availble on Trulia:
——–
Trulia? That would be “useless data” for him because it reveals that average listing price is down (year to year) in 1, 2 and 3 bedroom homes.
July 23rd, 2008 at 1:32 pm
Buying a distressed property doesn’t instantly signify profits. One thing is for certain, and that is as long as there are banks failing, lending standards tightening, foreclosures rising, sales falling, and other forms of bleeding, RE isn’t going to turn around. if you invest in anything, you should anticipate risk and losses along with long term success. We are far from the bottom of this cycle and the kinds of people who would buy your distressed home are losing the ability to buy every single month. It helps to realize that the house went into foreclosure for a reason, and that reason is price, the kind of neighborhood and people who buy there, and the median credit situation within that neighborhood.
July 23rd, 2008 at 1:47 pm
well that trulia data has issues too, for one thing I *think* it lumps condos and houses together, so that screws things up. But its at least as accurate as some RE agent’s website I would say. But trulia on the whole bugs the hell out of me. Their niche is that unlike the other sites, they involve the real estate agents, industry. And they have this “trulia voices” section where you can read the clever RE agent replies to questions like “why do RE agents lie”, its hilarious. RE agents think their skillset is rivaled only by the rocket science profession, I find anyway.
July 23rd, 2008 at 2:02 pm
Bob,
One thing is for certain, and that is as long as there are banks failing, lending standards tightening, foreclosures rising, sales falling, and other forms of bleeding, RE isn’t going to turn around.
What if inflation clocks in at double digits?
We are far from the bottom of this cycle and the kinds of people who would buy your distressed home are losing the ability to buy every single month.
Based on WHAT, oh wise one? the fact that inventory is depleting and not increasing means we are nowhere near the bottom in your world?
It helps to realize that the house went into foreclosure for a reason, and that reason is price, the kind of neighborhood and people who buy there, and the median credit situation within that neighborhood.
LOL- oh is that right. Wow I never thought of that. Well houses were selling for 800K in that neighborhood at the peak which is too high I agree. But what about 400K? The fact is bob, if you had any experience evaluating foreclosures you would know that you pull your opinions right out of a flying pig’s @ss. The banks have no facility to market the properties they hold as foreclosures. They can’t even turn on the lights. If you have a house like mine with a clogged drain and 2 broken windows, the bank has no choice but to offer it for some dirt cheap low price and wait for investors to come in like vultures. This has nothing to do with what a decently marketed house would fetch even in today’s market. Pretty much every foreclosure I have seen is going for 80K or so less than it would sell for if even the most minute set of repairs were made like a $1500 paint job. Even the worst properties are selling now, like this:
http://www.redfin.com/CA/San-Jose/560-MINOR-Ave-95125/home/1544168
July 23rd, 2008 at 2:05 pm
bob – You really sound like a real estate agent, in reverse. You keep making predictions as if you had an agenda. What’s with the blanket statements “RE isn’t going to turn around” or “We are far from the bottom of this cycle” that you keep making on this site every day (note that these two statements contradict each other, BTW: after a bottom, there is a turnaround)?
Are you just looking for comforting words of approval from other posters, and won’t find solace until you get unanimously voted Preacher in Chief, finally displacing RealEstater from his hard-earned pedestal?
Seriously, are you merely rebuking WG and others out of spite or is it out of bigotry? Sometimes you sound like you’re striving to convince yourself more than others.
July 23rd, 2008 at 2:36 pm
Nothing that I’m saying is rocket science. In fact, what I quoted above was nothing more than simply mentioning precisely what Mr. Bernanke said yesterday, which is that unless financials are firmed up, the economy and subsequently- housing will not recover. The machine that created the outlandish bubble cycle is completely out of commission.
I have never said that over the long haul, RE isn’t a bad investment. It isn’t as good as stocks or even mutual funds, but if you buy today and hold for 15-20 years, then your house will be worth more than what you paid.
My argument is that right now is probably not a good time to be buying because there is simply way too many distressing factors in the market. I recall talking with some friends who tend to also think somewhat conservatively when it comes to RE and we all agreed that as soon as there was any sign of distress, investors would immediately jump right back into the market. So what if a starter home is 400k. I think there’s a bit too much Kool-aide mist leftover from the bubble party still floating around and somehow, 400k for a crappy starter house is deemed a good deal is telling that we aren’t out of the thicket yet.
I am by no means predicting anything. But I have just as much of a compelling case to think that housing is far from recovering. The data that pours in almost every day is reason enough to at least acknowledge this possibility.
July 23rd, 2008 at 2:55 pm
bob, I am not questioning your message (nicely nuanced in your last post) but your motivation for posting it here again day after day. A lambda poster would consider he/she has made his/her point after posting it maybe three times. Such a dedication denotes either utter boredom, intense passion, a hidden agenda, compulsive behavior, a deep need for comfort and reassurance, or… the unspeakable… a machine! Which is it?
July 23rd, 2008 at 3:03 pm
I dunno bob, a lot of people here think I’m a permabear (I’m not) but I don’t buy your line of thinking completely. There are a few problems with it.
1. From some of your statements, I don’t think you completely understand the difference between buying for investment and buying for shelter. It’s kind of funny because you were berating others for not understanding economics and finance, yet there’s such a gap in your understanding of real estate investment it’s sort of embarrassing to watch you operate. You could learn a lot from WillowGlenner, but instead of taking the opportunity, you just keep telling his he’s wrong. Not a good plan.
2. Beating the drum on this every day. We’ve already scrapped over my mentioning your tendency to do this. You also tend to ignore any info whatsoever that doesn’t fit in with your daily delivery. I think DreamT is really onto something in calling you a reverse RealEstater.
3. You really take yourself far too seriously. Even our favorite troll RE occasionally laughs at himself. Soon I’ll be using a callback just for you, it will be like leading a donkey to water 43 miles from his home.
July 23rd, 2008 at 3:06 pm
DreamT,
Are Europeans experts at insulting people? Listen- everyone comes here at talks about the same things. Not just me. There’s the investors who talk about buying houses, people who make fun of the crummy houses, people who talk about schools, and people like me who talks about the housing economy and often conflicting views. These are the opinions that I believe. That’s it, and nothing more.
But just to prove that I’m not all anti-house, first of all, I’ve mentioned numerous times that me and my Wife will be buying. Just not here because housing is overpriced and the quality of life is lacking for out tastes. So as you can see, I’m not totally anti-house. I am against buying overpriced houses though as well as buying merely for investments.
Secondly, if I were a member of the Real Estate investor church, I wouldn’t invest in California, Florida, Nevada, Washington, Oregon, Michigan, New York, or any of the other overinflated and now deflating markets. Say what you want, but there’s a lot of risk in doing so. But if I were to do so, I’d do more research first. There are sections of the country that attract young families and middle class people. These areas are growing rapidly and faster than anywhere else. They do so because they offer something that’s lacking elsewhere: affordability. If you want to invest in housing, invest where people are moving.
I found this article yesterday. It makes for a very compelling case:
“Urban centers that have been traditional favorites for young singles, such as Chicago, Boston, New York, Los Angeles and San Francisco, have experienced below-average job and population growth since 2000. San Francisco and Chicago lost population during that period; even immigrant-rich New York City and Los Angeles County have shown barely negligible population growth in the last two years, largely due to a major out-migration of middle class families.
Married people with children tend to be both successful and motivated, precisely the people who make economies go. They are twice as likely to be in the top 20% of income earners, according to the Census, and their incomes have been rising considerably faster than the national average.
Indeed, if you talk with recruiters and developers in the nation’s fastest growing regions, you find that the critical ability to lure skilled workers, long term, lies not with bright lights and nightclubs, but with ample economic opportunities, affordable housing and family friendly communities not too distant from work. “People who come here tend to be people who have long commutes elsewhere, and who have young children,” notes Pat Riley, president of Alan Tate company, a large residential brokerage in Charlotte, N.C. “They want to be somewhere where they don’t miss their kids growing up because there’s no time.”
There is a basic truth about the geography of young, educated people. They may first migrate to cities like New York, Los Angeles, Boston or San Francisco. But they tend to flee when they enter their child-rearing years. Family-friendly metropolitan regions have seen the biggest net gains of professionals, largely because they not only attract workers, but they also retain them through their 30s and 40s.
So if you really wanted to do some investing, Raleigh Durham is probably one of your better bets. A good economy, growing immigration-primarily young families- and prices that aren’t haywire. Let’s say that you buy a home there for 150k. You can easily monetize that.For the price that you paid for a crappy starter home in PA, you could buy three in Raleigh, rent them all and actually make a profit, and later sell. I assure you that this area is hot and will continue to grow. In my opinion, that would be an intelligent strategy.
July 23rd, 2008 at 3:13 pm
>>Let’s say that you buy a home there for 150k. You can easily monetize that.For the price that you paid for a crappy starter home in PA, you could buy three in Raleigh, rent them all and actually make a profit, and later sell.
And later sell for $150k?
Look, there are good reasons why a home there is still only worth $150K after a huge national real estate run-up, so there’s good reason to believe properties there have very limited upside.
July 23rd, 2008 at 3:29 pm
RE,
Not necessarily. I’m familiar with the area and have friend who live there. 5-6 years ago, the homes that sell for 150k now sold for 50-60k back then. I have a friend who bought a house for 35k 4 years ago. He just sold it for 130k and moved up to a nicer house. His example represents an almost 200% appreciation. Dollar wise, it sounds negligible compared to what houses individually sold for at the peak of the Bay Area boom. But the difference is that their market is stable, and additionally as I mentioned, a 150k house could easily rent for $1,500 a month, giving you a net profit every month.
What I’m getting at is that the inherent risk is lower and the chances for upside growth is more. What you want is slow and steady. Nice reliable appreciation and solid profits in the meantime.Raleigh is a major tech and bioengineering hub. Just look at any relocation web forum: the sites are absolutely loaded with people wanting to move there- including from here. I might be joining them too.
July 23rd, 2008 at 3:51 pm
This is a good start for looking at how stable things are in Raleigh-Durham. Poster has a nice website with lots of crunchy data.
I highlight 2 grafs in particular:
July 23rd, 2008 at 3:56 pm
bob – Too bad you misconstrued gentle taunting as an insult. Maybe you do take yourself a bit too seriously, and I think you’re still missing my point which ws about your motivation to post, not about your opinion on real estate.
Regarding the article you posted, it makes sense that married couples with children can be more successful. The responsibility of providing for family members generally makes for a greater motivator than self-driven ambition, and once you have children you are also typically experienced, i.e. more attractive to an employer with several years of work to show on your resume.
One would think, though, that a head of household would seek job stability rather than take risks (i.e. missing on the reaping of greater rewards which would have made him still more successful). Also he would have less time to devote to his firm, because of family time. So I’m a little bit curious why the statistics still turn out to be greatly (2/3 of 20% top earners, you say) in favor of people married with children.
Incidentally, every single person who’s been buying in my neighborhood so far has brought family+kids with them. So while the point may be correct for San Francisco proper (not attractive for families) – and we’ve known for a long time that save for Noe Valley, the Mission and Bernal Heights, SF is mostly a city for singles – I doubt this point applies anywhere else in the SF bay area.
July 23rd, 2008 at 4:00 pm
Madhau,
I think you’re missing my point entirely. Yes, sales are down in Raleigh, and so are prices to an extent. But as mentioned, you can in fact purchase a decent home there for 150k or less. Put one and one together. Rent would cover the mortgage plus give you a monthly profit.
I think most of the investors here are hoping for a repeat of the last bubble, with instant double-digit appreciation and a quick turnaround in sales and profits. But for me, coming from parents who own a rental, I’m looking at it from a rental income perspective. If you can rent and monetize, then that alone is a gradual transition into further profits as the home gets paid off. As it is here in the BA, you can’t monetize property at current values.
Did you check out that site by the way? Lots of people moving in aren’t there? That same site has a section for San Francisco. Compare the two. That’s very telling of just where people are moving to.
In any regards, I’m not interested in RE investment. But again, there are ways to do it with less risk in areas that show more promise.
July 23rd, 2008 at 4:03 pm
DReamT,
the entire state of California has had a net loss of domestic in-migration since 2003. That people are moving with kids to your hood doesn’t change this. Simply put, major cities are seeing the start of another repeat of the 70’s urban flight, except this time it’s the flight from major metros to minor ones.
July 23rd, 2008 at 4:18 pm
DreamT, you can lead a donkey 43 miles to water, but he’ll keeping braying about the lake 2000 miles away.
bob, actually people are moving back into Silicon Valley again, compared to previous outflow following dot-bomb. Just like the city you live in, you’re a bit behind the times. That can be a nice choice for lifestyle but it doesn’t suit well in a discussion, especially for one who is so danged sure he’s right.
Clearest sign people are moving back: traffic’s getting worse again.
July 23rd, 2008 at 4:22 pm
Bob – As long as you reduce your posts to lofty, unsubstantiated predictions, designed to illustrate radical stances and invite radical counterpoints, it’s difficult to even hold a conversation. I tend to favor discussing balanced viewpoints backed with impeccable data.
In the core silicon valley where I live, there is no evidence whatsoever of any urban flight. To the contrary, the city of Santa Clara is revisiting its general plan assuming both growth of residents and jobs. They were also mandated by the county, like neighboring cities, to make room for lower income housing, because most current residents of course would rather keep residential density as is. City and county planning may well get it wrong in the end, but I suspect they’ve done a bit more research and forecasting than you have.
July 23rd, 2008 at 4:32 pm
Bob, from your post #143,
Lastly, I don’t care anyway. The Peninsula is an overrated dump
You could have fooled all of us here. Sure seems like you care- A LOT.
July 23rd, 2008 at 4:58 pm
The return of the neverending Flicker Road argument.
I am going to have to admit I misread one of RE’s posts here (#191). There were two completely different houses for sale on Flicker (when I was out there taking my kid to see the friend, there was only one).
One was listed for $1.024M. That’s the house that RE brought up in the first place, 1353 Flicker, MLS 80821503.
In the next post he discusses the house and happened to mention a completely different house at 1342 Flicker, MLS 80820224. I have the equivalent in math of “relative pitch” in music, I don’t hear actual keys, just intervals. So I saw -42 as the same ending as -53, you know, last number is two less. I missed that it was not the same house. And the completely different house was listed for $1.268M, and is pending.
The reason 1342 is listed at $250K higher is it’s an extra 1100 sf bigger, with an extra full bath. The 2 homes are not comparable and the sale of a larger home with newer construction can’t refute my claim that the original house was overpriced.
I will plead guilty to missing that it was a different house, though.
July 23rd, 2008 at 5:04 pm
madhaus – I can’t being to imagine how many mistakes you must have made in your life to realize that your memorization process was keying numbers off intervals. And I’m amazed you eventually figured it out. It’s as if the donkey figured out how to use a GPS rather than just braying. Can it be taught?
July 23rd, 2008 at 5:54 pm
For one, I love bob’s post. Great work bob. You are able to explain what I ‘experienced’ as an individual middle-class head of the household in Bay Area. I not only understand fully where you come from, but also feel that your predictions are based on a better marriage of logic and data than the rest. Despite what others say BA remain a over hyped dumpster.
July 23rd, 2008 at 6:07 pm
Madhaus,
Thanks for acknowledging your mistake. As the record here shows, I would not make up anything.
July 23rd, 2008 at 6:11 pm
Madhaus,
your post is a tad old, as in over a year old. Being that now we’re in a recession and that the Second “sleeper” dot-com I mentioned previously is now also starting to fizzle, it’ll be interesting to see what happens next and if the theory that people are moving back in is actually correct, which I doubt anyway.
If horrible traffic is a sign of success, then by all means go out and enjoy it. If the area is to lose its middle class and be replaced with the wealthy, materialistic snobs, then again- feel free to enjoy. No thanks.
DreamT, Every Bay Area city has plans to make new developments in “anticipation” of needed growth. But these will never get built. The old farts who love prop 13 and the make-believe NIMBY environmentalists will shut those plans down fast. But hey- that’s great for you isn’t it? It’ll make your house worth more!
Anyhow, this had turned into a “everybody against Bob” post, so if you have any further little tit for tat remarks, insults, or proof that I’m totally wrong and you’re totally right, then by all means- post them for my reading enjoyment.
July 23rd, 2008 at 6:26 pm
>> Anyhow, this had turned into a “everybody against Bob” post
Looks like I don;t count, bob. Well talking about insults, that’s one. Have I made a RealEstater of myself lately ?
July 23rd, 2008 at 6:26 pm
>> Anyhow, this had turned into a “everybody against Bob” post
Looks like I don’t count, bob. Well talking about insults, that’s one. Have I made a RealEstater of myself lately ?
July 23rd, 2008 at 6:41 pm
Bob – “But these will never get built”
Another lofty statement. Fortunately you do know what you’re talking about. By the way do you realize that You are the snob on this thread?
July 23rd, 2008 at 7:09 pm
DreamT…Ironic isn’t it? A good ole’ boy from the South being called a snob by Someone from Europe? my my my….
July 23rd, 2008 at 7:11 pm
Austin,
I wasn ‘t referring to you. Anyhow, how’s things going in Audstin?
July 23rd, 2008 at 7:15 pm
Yeah, on this monster thread RE both agreed to end an argument and earlier posted a statement agreeing with reading to ones’ children. Quite a contrast with the Number One Fan of the Clan in Tennessee.
Tune: Please Come to Boston
Please come to Raleigh for the Spring Bounce
I’m staying with some friends and they’ve got scads of room
You can find a tech job in RTP
At least they tell me they hope there’ll be more jobs soon
Please come to Raleigh
She said no, boy you come home to me
And she said, Hey aimless man why don’t ya pick a place
Raleigh ain’t your kind of space
There ain’t no lattes and there ain’t no diversity
I’m a fan of the man who can afford Silicon Valley
Please come to Austin to see our costs fall
We’ll move up to the Hill Country
So far no sushi can be found
And throw a tiny offer and
Down payment ’round
If I keep my pay our house
will be paid off in just six years
Please come to Austin
She said no, boy you come home to me
And she said, Hey aimless guy why don’t ya pick a spot
Austin’s just too f—ing hot
There ain’t no lattes and there ain’t no diversity
I’m a fan of the man who can afford Silicon Valley
Now the flyover world’s got Fannie Mae
At least ’til they were overdrawn
And I doubt I’ve seen the last of Alt-A
Cupertino’s where I have no lawn
Don’t wanna rent a white box again
I want to paint my walls
He said please come to Memphis and fifteen acres
You want a lawn to water, you get that and more
I saw a place that had room for twenty houseguests
And you can buy up half the town if I get a job
Please come to Memphis
I just said no, Boy, you come home to me
And she said, Hey rootless guy why don’t ya pick a home
Memphis is a no-go zone
There ain’t no lattes and there ain’t no diversity
I’m a fan of the man who can afford Silicon Valley
I’m the number one fan of the land close to 280.
July 23rd, 2008 at 7:25 pm
Aww… Madhaus, what a sweet little diddy. Tell you what, I have one for you too, but since I’m not as talented, You’ll have to excuse me if it fails to meet expectations.
I come from New Joisy and…
Whoops, sory, but I don’t feel like wasting any more time when I could be outside enjoying the weather and drinking a few beers. Thanks for spending all that time writing that though.
What a MONSTER, nasty thread! You people have lots of energy.
July 23rd, 2008 at 7:51 pm
Bob – Well you did use the word ‘Snob’ first. In any case I’m quite sure you’re not the quintessential Southerner, they tend to reflect and ponder rather than jump hastily to conclusions.
So in your opinion anybody from Europe has got to be snobbish? Way to build credibility, bob! You do know even more about people than you do about real estate economics.
July 23rd, 2008 at 8:07 pm
There once was a fellow named bob
Who called other commenters “snob”
He praised rural life so
And put Cali below
That everyone said “Shut your gob!”
Mandatory housing portion of message: Prices are going down, but so what?
July 23rd, 2008 at 9:08 pm
The geste of Robert -
Bob sure ain’t no FOB
So he ain’t be robbed
You won’t see him sob
‘Cause he’s rather snob
Raleigh has more jobs
It’s The place for Bob!
(chorus) Go Bob! Go Bob! Go Bob!
July 23rd, 2008 at 9:35 pm
Great work bob. You are able to explain what I ‘experienced’ as an individual middle-class head of the household in Bay Area. I not only understand fully where you come from, but also feel that your predictions are based on a better marriage of logic and data than the rest.
OK, sorry I can’t let this go. Austindweller wrote this, but it has bob all over it also.
You bay area naysayers are trying to cover a very simple emotion that is ENVY and camouflage it with all these other made up “higher consciousness” BS. Yes your logic is superior to the rest of us people that area happy living here
The fact is that to most people that look at the bay area from afar, it seems like the bay area should be just another burb, like every other burb, around Austin or wherever. The REALITY is that the bay area, due to its geography and demographics (basically, constrained land and a VC capital) we have a location that is PRICED like some of the top locales in the world- Manhattan, London, Singapore, etc., places like that.
People who come here from some burb off of a US city have no concept they are entering a Manhattan-esque real estate arena price-wise. They are shocked to see million dollar shacks and constantly whine that the area can’t withstand these prices, but really, their complaints are mostly that they can’t afford these prices. The problem is that the bay area LOOKS too much like Austin and not enough like Hong Kong or Manhattan. They think that since the bay area isn’t priced like Austin, something must be wrong with everybody but them.
July 23rd, 2008 at 9:58 pm
WG,
That’s a great post. Couldn’t have said it any better!
July 24th, 2008 at 7:58 am
A little voice in my head says I should have dropped this a loooong time ago. But I’m going to reply anyway. First of all WG, I and not many others who are in my same line of thinking are ‘whining’ or envious as you say. I’ve studied why prices are as high as they are in the BA for years and the reasons have been discussed countless times: Anti-development and environmental regulations, prop 13, and poor transportation systems which forces people to live within close proximity of their workplaces or live in far-flung exurbs. I admit that some of it has to do with the bubbly nature of economics. There’s tons of people out here with a huge desire to get rich super quick off of “the next big idea”.
But the bottom line is that the BA simply doesn’t make concessions or changes that enable more logical growth and infrastructural improvements to better manage future residents. So naturally that makes anything with a roof increasingly rare and hence more valuable. This has had a multi-generational effect on the overall social strata of the area, with each new round of housing bubbles forcing another class of people from the area. The working class long ago lost their ability to pay for a house.This generation saw the middle class lose theirs. As it is now, what is actually lower middle class housing is being sold to upper middle and lower upper level wage earners. This site illustrates this perfectly.This is also why the article I placed above has truth to it. Cities like the BA and others have inadvertently created new cities where those who wanted what they couldn’t have in larger cities could get it. If history serves as a lesson, then these new cities will become the new growth centers of culture, ingenuity, and originality. No society has survived long without a middle class. So it’ll be interesting to see how the BA works out without theirs.
This leads to one of my most prominent points and reasons for making the decision to move several years ago. If leading a pedestrian middle class lifestyle in the BA means having to make an upper level income, then is the act of living here worth it when a ordinary middle class wage would afford the same and more elsewhere? Sort of like asking if a Dime is worth the same whether its in SF or Austin.I myself am not middle class. But I tend to think that areas that attract middle class people has the most promise, thus I see more opportunities in those areas.
Lastly, It depends on what your point of view and opinions are. For me, I’m less concerned about where I live and more about how I live. For others, where they live is extremely important, sort of like how some people are really concerned that their purse is a Gucci or their watch is a Rolex.To say that you live somewhere that has “diversity” is about the same. But I look at the way in which I live my life day to day and at least for me, what I do isn’t tied to place. That isn’t to say that I’m right and everybody else is wrong. So how about we just leave it at that. I’ve said my peace, and you all have said yours. Perhaps I don’t think the same as others. But that’s alright ain’t it?
July 24th, 2008 at 8:41 am
Bob,
The reason for BA to be at this price level is because it’s a high growth area in a land-locked situation. Even without the industries and all that, BA is still a highly desirable place with great weather.
July 24th, 2008 at 8:43 am
>>Perhaps I don’t think the same as others.
The way you think is like a southern country boy who’s seen a big city for the first time.
July 24th, 2008 at 9:11 am
>> They are shocked to see million dollar shacks and constantly whine that the area can’t withstand these prices, but really, their complaints are mostly that they can’t afford these prices.
You are right on this one. I felt priced out here. I could never understand
1. why a crappy shack costs so much
2. why should I compromise my financial security for the great weather of BA which I could not enjoy because I was always at work.
3. why somebody like me taking 250 grands as annual household income feels poor in BA ? If the answer is rest of the populace in BA is richer then how come the median salary is so low ?
4. why the roads here are so damn f*cked up and shcools so bad ?
And the when I started asking these question to myself, I could not justify wasting my life on this area.
July 24th, 2008 at 9:21 am
“The reason for BA to be at this price level is because it’s a high growth area in a land-locked situation. Even without the industries and all that, BA is still a highly desirable place with great weather.”
That might well be the case. However, nothing has changned since 2002 to make the Bay Area more high growth or land-locked. Those two factors have always been present and have always been factored into the price of BA real estate. However, many parts of the Bay Area, the Peninsula in particular, are still selling 25-35% above their historical, pre-bubble prices. That is why most believe that buying in the “RBA” is not a wise investment right now. Sure, the RBA has things going for it, but it always has. The only difference between now and pre-bubble is the unwarranted and unsustainable bubble premium caused by funny money and irrational exuberance.
July 24th, 2008 at 9:41 am
austindweller,
I think you’ve answered your own question. BA is not for people who cannot afford it.
July 24th, 2008 at 9:42 am
…which is pretty much like everything else in life.
July 24th, 2008 at 12:14 pm
The way you think is like a southern country boy who’s seen a big city for the first time.
Thanks. I take that as a compliment. If I start thinking like you, please warn me in advance.