Another acid tripping house in Cupertino? Or just another house?
19060 MEIGGS Ln Cupertino, CA 95014
Price: $768,000
Beds: 3
Baths: 2
Sq. Ft.: 1,249
$/Sq. Ft.: $615
Lot Size: 6,000 Sq. Ft.
Age (Years): 53
Year Built: 1955
Type: Detached Single Family
Style: Ranch
Stories: 1 Story
View(s): Neighborhood
Neighborhood: Cupertino
County: Santa Clara
MLS#: 80820567
Source: MLSListings
Status: Active
On Redfin: 3 days
Nice quiet street. It has bright and open floor plan with very good potential. Remodeled it & live in or build your dream home. Sellers prefer “AS-IS” sale.
Thanks to burbed reader Madhaus for this find and for this explanation:
[This house] is so awful in the photos that burbed should feature it as another acid trip. Hideous. Hard to decide which is the worst photo, the front, the back “lawn” or the prominently featured roll of TP in the bathroom. The unmade bed is another winner. Also it’s in Rancho Rinkydinky, not “real” Cupertino.
Hm, personally I don’t think it’s as trippy as the last Acid Cupertino house featured on this site:
Most importantly, the price is lower - so it’s simply not as special.
Is the fall of Cupertino?? Is the rapture at hand? Will I be “left behind”?
July 23rd, 2008 at 7:38 am
Another example of how rich people can buy this and make-believe that they’re poor. How humble!
July 23rd, 2008 at 9:06 am
“Aw crap, the college students all graduated and moved out! Welp, time to sell.”
July 23rd, 2008 at 9:32 am
Seller prefers “AS-IS” sale, wow, if I bought there I would be constantly afraid of there possibly being toxic waste buried in the back yard. Maybe there was mold, but in Cupertino? I don’t know, I don’t think I could live there.
July 23rd, 2008 at 10:34 am
I wonder what the implication of this California foreclosures graph will be:
http://bp2.blogger.com/_QMoXJ8fOgo4/SIY7CGuO44I/AAAAAAAACfM/xjlMkKKNcD8/s1600-h/CA+foreclosure+2008+q2.JPG
Will it affect the RBA?
July 23rd, 2008 at 10:39 am
Wow. That is quite a graph. Shoot for the moon!
Love the dart board over the fireplace. Nothing says a home is worth a million dollars like your own game room.
July 23rd, 2008 at 11:33 am
Huh, that’s actually 200x rent (assuming that there isn’t a major structural flaw - a big assumption, in this case).
150x rent, and we might be talkin’. (Though not about that dump.)
Don’t think that’s possible? Remember when Cupertino was 400x rent? What was that, 3 years ago?
July 23rd, 2008 at 11:35 am
You need to take a look at the rest of the photos to understand what kind of people live in there. Especially the last bedroom photo, the carpet probably has an older age than the owner.
Generally the guy is just a cheap dude who is trying a lot of do-it-yourself projects and failed miserably. Can’t even keep his front porch looking decent.
July 23rd, 2008 at 11:47 am
This house definitely will not fetch $3700 in rent, just go check out its competition in Craig’s list. This is one of the worst looking one, the outside looks like patched with cardboards.
July 23rd, 2008 at 11:53 am
What happened with the lawn?
The owner no longer likes watering his/her own lawn?
July 23rd, 2008 at 12:21 pm
no this won’t rent for $3700 like this.
But if you have cheap construction contacts (many RE investors don’t), and you did some landscaping, and exterior painting (total cost $2500) you could rent this for $2800-$3000. The interior seems like it looks but I can’t see the small photos too well. The point is you can really doll up a place with less than 10K in upgrades. Its only the major structural that gets expensive. This could need a new roof, thats expensive.
July 23rd, 2008 at 12:37 pm
19070 Mieggs is luckier, it’s “pending without release.” Seriously, asking price was same as 19060 except they added lucky 888 to the listing price. Both of them on redfin 14 days exactly. Also both owners chose not to water their own lawns. 19070 is empty in the photos instead of the, ahem, individual decorating style we see in 19060.
What is the difference between pending with and without release?
July 23rd, 2008 at 1:02 pm
These Rancho Rinconada faux Eichlers are becoming an endangered species. Buy this one and scrape the lot quick before the city protects them as historic sites!
July 23rd, 2008 at 1:15 pm
pending with release is contingent on the sale of the buyers existing property. But usually the only times I see pending with release is when the new buyer already has his first house IN ESCROW with a buyer already. These days not many sellers will accept “I want to buy your house but I need to list and sell my house first”.
July 23rd, 2008 at 1:19 pm
What’s with the black flex pipe in the backyard? Recreation for their pet rodents?
July 23rd, 2008 at 2:08 pm
“These days not many sellers will accept “I want to buy your house but I need to list and sell my house first”.”
Odd. Why don’t they just ask to buy the buyer’s house for instant equity?
July 23rd, 2008 at 2:22 pm
nomadic, I think it is for a project to build a pavement, except the guy has only done this part.
July 23rd, 2008 at 2:23 pm
‘These days not many sellers will accept “I want to buy your house but I need to list and sell my house first”‘
This is a seller’s market.
July 23rd, 2008 at 2:39 pm
I want to meet someone who would pay $3,000 for renting this piece of Shiet. I would enjoy telling them what a complete retard they are for doing so.
July 23rd, 2008 at 2:40 pm
I like the corrugated translucent plastic roof on the deck. Very retro!
July 23rd, 2008 at 2:48 pm
I am not from the Bay Area but find this blog fascinating. To me, this house doesn’t look it was built that differently from some of the ones in East Palo Alto that have been shown on the site, e.g.:
http://www.burbed.com/2008/07/09/you-snooze-you-lose-2-219000-house-in-the-peninsula/
http://www.burbed.com/2008/07/08/you-snooze-you-lose-109500-house-in-the-peninsula/
But, maybe it’s hard to tell from photos. So, were they historically built for the same clientele, except that afterward one area became desirable and the other became run-down, or was the architecture/construction quality actually different to begin with?
July 23rd, 2008 at 2:49 pm
I left the Bay Area in ‘99, expecting the crash, thinking that maybe in ten years things would be sufficiently sane to return. Whooda thunk–it’s just getting worse.
But about these two houses you’re missing the point: it’s CUPERTINO! When you sit on the throne each morning, you get a bowl of *i*Crap!!!!
The more I hear from CA, the more attractive northern Michigan looks. I haven’t met many Michigan Militia people–a few, not many–but every last one of them made more basic sense than the Siliconjobs. Not nearly as scary either.
calla
July 23rd, 2008 at 2:54 pm
>>These days not many sellers will accept “I want to buy your house but I need to list and sell my house first
You will also not find many sellers willing to fix anything — definitely not anything major. That again is a sign of a seller’s market.
July 23rd, 2008 at 3:00 pm
East Pallie has a reputation for high crime. Rancho Rinkydink is an erstwhile slum undergoing the most tacky gentrification process in the RBA, thanks to the ultra desirable Cupertino school district.
July 23rd, 2008 at 3:02 pm
“So, were they historically built for the same clientele, except that afterward one area became desirable and the other became run-down, or was the architecture/construction quality actually different to begin with?”
Micromarkets, baby. It’s a cornerstone of the scam.
July 23rd, 2008 at 3:29 pm
Per Altos Research, every city in the RBA is a buyers’ market. Cities outside the RBA are a flippin’ fire sale. I think rick was being sarcastic.
Here’s what they say about this Market Action Index:
Cupertino - 25.63
Los Altos - 23.88
Menlo Park - 21.73
Mountain View - 24.05
Palo Alto - 26.73
Saratoga - 17.67
Sunnyvale - 20.94
Woodside - 13.08
And some Not Quite RBA cities
East Palo Alto - 13.03
Milpitas - 15.38
Redwood City - 17.82
San Jose - 15.76
Santa Clara - 18.32
July 23rd, 2008 at 3:58 pm
I think this rental is comparable with the house for sale. $2290/month. That works out to 327x rent.
July 23rd, 2008 at 4:41 pm
I love the way that everyone keeps inventing new statistics to show us how everything is the most horrible anything ever. “Right now this House Vegetable Income Index is up to 497,012,351,235! That’s how much this house would cost if you tried to pay for it with beans!”
July 23rd, 2008 at 5:17 pm
Madhaus, Sedgwick is one of the lowest quality elementary schools in Cupertino (of course it is way above the 800 for “good” school). But that house is MUCH better than the one on burbed, heck it looks better than any Cupertino house on burbed.
July 23rd, 2008 at 8:17 pm
rick, it’s in Rancho Stinkumuppa, its another poorly maintained Eichler, and the renters don’t get to water their own lawn, so whaddaya want? Believe in, when only 3 elementaries in CUSD aren’t over 900, the housing prices of those 3 will show it.
July 23rd, 2008 at 9:49 pm
madhaus, you really have it in for that pathetic neighborhood - what did it ever do to you? Is it just indignance that those folks can say they’re just as good as you ’cause they’re in CUSD?
July 23rd, 2008 at 10:05 pm
>>Per Altos Research, every city in the RBA is a buyers’ market.
That’s why so many people pay above list all over the RBA, because they enjoy giving away as much money as possible!
July 23rd, 2008 at 10:57 pm
I may have offended some people by being obsessed with schools, but that is all I care about renting selection right now, if not for my kid anywhere is just fine as long as it is a safe neighborhood.
My life style has little to do with the neighborhood, because we are not around most of the time.
July 24th, 2008 at 9:07 am
Off topic, but this may be a good one for Mr. Burbed to post:
188 Higgins Ave in Los Altos
“This home is clean with “good bones” and has been priced to sell at an “entry level” price. Visionaries will be delighted; remodelers and contractors strongly encouraged! Visit the City of Los Altos Planning Office to see what you can do!”
only $1,398,000.
It’s in much better condition than this Cupertino place, and better location. But still, $1.4m…
I’ll bet they get it too. I saw a smaller but nicer place in LosAltos last week for 1.4m, already had 5 offers over asking by Monday. And a place on Stafford Ave in Cupertino (west of 85, nicer than Rancho Rinconada), 1900 ft for 1.4. Listed on Tuesday, already had accepted an offer by the open house on Saturday.
no crash now, that’s for sure. I don’t know what the future will hold though.
July 24th, 2008 at 9:39 am
Madhaus, Pralay, Bob, and other agenda minded people,
Any comment about SiO2’s post? Totally different world in the RBA.
July 24th, 2008 at 9:47 am
So RE, are you buying or selling the RBA right now?
The fact that segments of the RBA are still hanging tough doesn’t mean they will continue to do so. The entire BA was still strong two years ago. Substantial portions of the BA were still strong last year. The walls are rapidly closing in on all areas, including the final bubble hold outs like the “RBA”. Eventually the RBA will be affected because the RBA can only command a set premium over non-RBA areas. And guess what, I am guessing the premium will be about the same as it historically has been. Thus, when neighboring communities fall, which they are doing, the RBA’s premium over those areas will become to high, pushing the RBA lower.
July 24th, 2008 at 10:15 am
R,
I tend to agree with you, with two caveats. We have seen in the last 8 years that the rich (let’s say salary above $200k or so) are getting most of the benefit of the expanding economy. These folks are more interested in buying Los Altos, Palo Alto, etc. So, since that segment has more money, we could see an increasing gap between those places and places like San Jose, Milpitas, etc.
Other caveat - there’s more people who would like to move to LA, PA etc than there are houses for sale there. There has been hardly any expansion of housing stock there, unlike Evergreen for example.
And a bonus - there’s a historical guideline of ~35% of income for housing, which has been exceeded recently. But if a family makes $200k let’s say, they don’t necessarily spend 2x the $100k family evenly. E.g I make 2x what I made 10 years ago, yet my car was only 25% more than than the car I had then. And I spend roughly the same on vacations. So I can choose to spend more on housing if that’s what I like to do. I don’t want to go to 50% of income but I could easily do 40% or more. So we could see higher price to income in higher priced areas.
I don’t know what will happen in the future. But it’s clear to me that the “RBA” prices are flat, maybe slightly down from last year. Nothing like gilroy or Los Banos where prices may be down 30% or more.
July 24th, 2008 at 11:03 am
I tend to agree with you, with two caveats. We have seen in the last 8 years that the rich (let’s say salary above $200k or so) are getting most of the benefit of the expanding economy. These folks are more interested in buying Los Altos, Palo Alto, etc. So, since that segment has more money, we could see an increasing gap between those places and places like San Jose, Milpitas, etc.
These folks also get their earnings largely in equity which is likely to drop a lot in value now. Further, the higher earners are the most likely to lose their jobs in a downturn as its the low cost wage slave that makes the meat and potatoes that is better value to the corporation.
Other caveat - there’s more people who would like to move to LA, PA etc than there are houses for sale there. There has been hardly any expansion of housing stock there, unlike Evergreen for example.
A big draw for people is the companies that employ them. As credit becomes harder to come by, venture capitalists spend less, revenues at existing companies drop, and the number of jobs reduces, making these areas’ proximity of less utility, cutting demand for them.
And a bonus - there’s a historical guideline of ~35% of income for housing, which has been exceeded recently. But if a family makes $200k let’s say, they don’t necessarily spend 2x the $100k family evenly. E.g I make 2x what I made 10 years ago, yet my car was only 25% more than than the car I had then. And I spend roughly the same on vacations. So I can choose to spend more on housing if that’s what I like to do. I don’t want to go to 50% of income but I could easily do 40% or more. So we could see higher price to income in higher priced areas.
People like to upgrade their life styles qualitatively. If your income is double what it would be in Austin, but all your costs are as triple, many folks (like Bob) will leave the area and move to the Austin’s, where they can enjoy a better life and thus take the demand off. Only if people can experience a better life with higher income will enough be incentivized to remain here.
I don’t know what will happen in the future. But it’s clear to me that the “RBA” prices are flat, maybe slightly down from last year. Nothing like gilroy or Los Banos where prices may be down 30% or more.
I hope you can see the contradiction between saying you don’t know and then going on to stating that it will be flat.
July 24th, 2008 at 11:16 am
All fair points that I don’t disagree with. I would just however, that places like LA and PA have always had more people wanting to move there than the number of houses, so again, I’m not sure anything has changed. I don’t think the RBA will crash as hard as outlying places like Los Banos, but only because they didn’t rise as much relative to historical prices. I tend to think history is a great indicator. I think places like Los Banos will eventually settle around their historical trend line. I believe the same will hold true for places like Palo Alto, with perhaps a slight, slight uptick over historical prices based on the growing disparity between the top 5% of wage earners and everyone else.
July 24th, 2008 at 11:19 am
“I don’t know what will happen in the future. But it’s clear to me that the “RBA” prices are flat, maybe slightly down from last year. Nothing like gilroy or Los Banos where prices may be down 30% or more.
I hope you can see the contradiction between saying you don’t know and then going on to stating that it will be flat.”
I don’t think SiO2 said “RBA” will be flat, I think he said they are now flat (thus, presumably meaning they will go lower, just haven’t yet).
July 24th, 2008 at 11:28 am
>>Further, the higher earners are the most likely to lose their jobs in a downturn as its the low cost wage slave that makes the meat and potatoes that is better value to the corporation.
Wrong. With outsourcing, low wage jobs do not need to be done here. Corporations get more value out of people who know how to manage the low wage workers oversees. Thus, what’s happening is that BA is moving even higher up the food chain.
July 24th, 2008 at 11:46 am
I agree with RealEstater. It makes zero sense to me to claim that a person paid only half as much as another would be deemed more valuable. For a company, value is reflected in wages.
Scarcity and experience drive value. Your meat and potatoes people require less experience and training and are less scarce, so they are considered more dispensable, not less. Most companies have no idea how to formally train for management and esp. leadership.
July 24th, 2008 at 11:48 am
“Wrong. With outsourcing, low wage jobs do not need to be done here. Corporations get more value out of people who know how to manage the low wage workers oversees. Thus, what’s happening is that BA is moving even higher up the food chain.”
Totally. We have no need for low paying jobs here. There’s no trash to be collected, cars to be fixed, tables to be waited, offices to be maintained…nor is there a need for nurses, cleaning people, etc.
Good riddance! Some day we can only hope to be like San Francisco. Let’s price out all the blue collar workers. What? Are they the only people grouped in “low wage?” What exactly is low wage? Are you talking 50-120k? Maybe we can get rid of the engineers. Clearly, with outsourcing there is no need for the people who actually understand what the outsourced people are delivering. This is why google takes such great pains to hire extremely intelligent people _here_.
Sir, your ignorance is appalling; what’s worse is that you think you know something about investing and economy because you have been able to make money in the real estate market for the past X years. In case you haven’t noticed, any financially unsavy idiot was able to make money in the bubble up until around 2006. You are only one small step up from the flippers who are now going under.
July 24th, 2008 at 1:00 pm
anon wrote: Totally. We have no need for low paying jobs here. There’s no trash to be collected, cars to be fixed, tables to be waited, offices to be maintained…nor is there a need for nurses, cleaning people, etc.
Now there’s a vast over-simplification. RE was talking about CORPORATE jobs that get outsourced. He mentioned off-shoring but that could be local as well. Virtually all area companies have outsourced janitorial services to other companies. Obviously, that can’t be sent out of the country.
But low-level programming and engineering has been sent to India and China. Those are the “low paying” jobs to which (I believe) he was referring. Wages for the best & brightest are equalizing somewhat worldwide, so there will be a limit to what can be sent away. (Thank god!) But I think it’ll be more related to costs, rather than the arrogant belief that we’re smarter. Senior workers in other countries are getting up to speed.
July 24th, 2008 at 1:54 pm
Its sort of an ignorant assumption to assume that the mid-level and lower level working populace of an area can simply be done away with without an impact on the local economy. I realize that a lot of this conversation is completely tongue and cheek, but the reality is that to this day, tech makes up well over 30% of the Bay Area economy. Take that away and its basically a repeat of the fallout of the defense and aerospace industry back in the 80’s and early 90’s.
A good comparison of outsourcing is when Detroit started exporting its labor and became increasingly reliant on automation and robots to build cars. Detroit was at one time considered the pinnacle city for American industry, innovation, higher wages, and growth. Once international competition and the effects of outsourcing took hold, it was all over and as of today, the city is a hollowed out shell.
The only safeguard for the Bay Area in the past has been that other countries and other cities in the US didn’t have the expertise and knowledge at hand to develop tech. China, India, and indeed other cities and states are catching up really fast. When they do, there will be very little compelling reason to pay people twice as much to work in SF when the same quality can be had for less elsewhere.
July 24th, 2008 at 1:58 pm
“Now there’s a vast over-simplification. RE was talking about CORPORATE jobs that get outsourced. He mentioned off-shoring but that could be local as well. Virtually all area companies have outsourced janitorial services to other companies. Obviously, that can’t be sent out of the country.
But low-level programming and engineering has been sent to India and China. Those are the “low paying” jobs to which (I believe) he was referring. Wages for the best & brightest are equalizing somewhat worldwide, so there will be a limit to what can be sent away. (Thank god!) But I think it’ll be more related to costs, rather than the arrogant belief that we’re smarter. Senior workers in other countries are getting up to speed.”
Right. Corporate outsourcing. I was unaware that they are now outsourcing CEOS, VPs, attorneys and upper level management nowadays.
If you or RE were correct, it won’t be long until all the jobs in the bay area are outsourced and there will be nobody left to pay for the overpriced shit boxes.
CORPORATE outsourcing my ass.
July 24th, 2008 at 2:01 pm
“The only safeguard for the Bay Area in the past has been that other countries and other cities in the US didn’t have the expertise and knowledge at hand to develop tech. China, India, and indeed other cities and states are catching up really fast. When they do, there will be very little compelling reason to pay people twice as much to work in SF when the same quality can be had for less elsewhere.”
Thank you, Bob for having the patience to spell out what I assume these people already understand.
July 24th, 2008 at 2:10 pm
Those Indian and Chinese wouldn’t know how to be a historian or sell houses would they?!
July 24th, 2008 at 3:00 pm
Wages for the best & brightest are equalizing somewhat worldwide, so there will be a limit to what can be sent away.
———–
Is anybody still arguing this kind statements? This argument is being made for last 10 years that “core” hitech jobs won’t be outsourced, only to find out that his cubicle, where he was doing his “core” works, is getting cleaned up next month.
So it looks like RBA. Just like RBA, “core” jobs are shrinking.
July 24th, 2008 at 3:04 pm
China, India, and indeed other cities and states are catching up really fast.
—–
Don’t worry Bob. Those foreigners will save RBA housing market. Don’t you think that those Indian and Chinese hitech workers want their crash pads in Palo Alto or Mountain View while having business visit at their headquarters?
July 24th, 2008 at 3:17 pm
Those Indian and Chinese wouldn’t know how to be a historian or sell houses would they?!
—–
But those foreigners will come and start buying home left and right. Buy home before they come.
July 24th, 2008 at 3:23 pm
Roche buying Genetech? Great! Roche will create thousands of new job, which in turn will create housing demand. Therefore, great time to buy home NOW.
Jobs are getting outsourced? Great! It’s good that lower level jobs are getting outsourced. Only people higher up in the “food chain” will live here and buy million dollar homes. Hence, it’s great time to buy home NOW.
July 24th, 2008 at 3:24 pm
Totally, I think they all want a piece of RBA to prove that they’ve arrived. Wouldn’t that increase the price of RBA much more than people expected of Roche/Genentech?
How come nobody tought about that possibility?!
July 24th, 2008 at 3:32 pm
Well, if only rich people are gonna’ live in the BA from now on, then I guess we better buy up the remaining Budweiser since rich people only drink fine imports and micro brews.
With all those wealthy people around to patronize the arts, the BA will become even more diverse and artistic!
July 24th, 2008 at 3:50 pm
“Totally, I think they all want a piece of RBA to prove that they’ve arrived. Wouldn’t that increase the price of RBA much more than people expected of Roche/Genentech?”
Indeed, a sign of wealth is owning RBA property! They’re not making any more, you know.
Who was it posted that said something to the effect of: I’d never get any respect from the people at work if they found out I had property THERE…
Sad times when a human being feels they need to own a piece of overvalued property in order to get “respect.” I suppose if one has nothing else to hang their hat on, then you gotta do what you gotta do…
July 24th, 2008 at 4:01 pm
Well, if all goes to plan and RE in the BA has never-ending appreciation and the houses simply get tinier and crappier, such as the one featured today, then perhaps a new industry would be to start investing in chunks of wood and scraps from BA housing. Invest in a piece of siding that came from the RBA… own a piece of enviable RE, except in this case, pieces. Display it prominently in your home in loserville, flyoverland USA and show it off to your friends.
July 24th, 2008 at 4:02 pm
“Roche buying Genetech? Great! Roche will create thousands of new job, which in turn will create housing demand. Therefore, great time to buy home NOW.
Jobs are getting outsourced? Great! It’s good that lower level jobs are getting outsourced. Only people higher up in the “food chain” will live here and buy million dollar homes. Hence, it’s great time to buy home NOW.”
Lovin’ it….
Job market goes up; good time to buy. (more money in economy)
Job market goes down; good time to buy. (those left working are more “important” to company and therefore make higher salary )
population goes up; good time to buy. (more population = increased demand)
population goes down; good time to buy (less people who can afford houses)
stock market goes up; good time to buy (people have more money!)
stock market goes down; good time to buy (stocks aren’t as appealing any more so people look for other avenues)
It certainly is _always_ a good time to buy. LOL.
When will you real estate speculators admit you have been scammed by a bunch of banks and brokers?
July 24th, 2008 at 4:16 pm
Roche already bought Genentech once before in 1990 timeframe. Then Genentech broke apart as a separate entity around 2000. Now they are merging again.
July 24th, 2008 at 4:19 pm
Actually with the declining dollar, it might make sense for the Europeans to outsource their stuff to the US. I think Roche is one of the first to recognize the potential of leveraging the low paying BA professionals.
July 24th, 2008 at 7:14 pm
“Roche already bought Genentech once before in 1990 timeframe. Then Genentech broke apart as a separate entity around 2000. Now they are merging again.”
Roche bought 60% of DNA in the early 90’s; the currently owns 55% of the outstanding stock. They just need to gobble up the last 45%.
July 24th, 2008 at 9:30 pm
if you look at the palo alto daily site, the commenters talk about how the existing Roche in Palo Alto is closing down.
July 24th, 2008 at 11:25 pm
Roche in Palo Alto is closing down? Well, that’s going to release the market pressure from all those Facebookers!
July 24th, 2008 at 11:55 pm
>>Roche in Palo Alto is closing down? Well, that’s going to release the market pressure from all those Facebookers!
No really. It’s not like anyone already living in Palo Alto is going to move to South SF to be closer to the job.
July 25th, 2008 at 2:31 am
“No really. It’s not like anyone already living in Palo Alto is going to move to South SF to be closer to the job.”
Lol, you really don’t get it, do you?
July 26th, 2008 at 8:34 am
But low-level programming and engineering has been sent to India and China. Those are the “low paying” jobs to which (I believe) he was referring. Wages for the best & brightest are equalizing somewhat worldwide,
Anon, this is true but what is happening is that Indian salaries are rising to US levels so it is not deflationary to US salaries. The whole offshoring boom moving software to India is over. It now costs over $60K per year to hire in India. Not even close to being worth it. This is one reason the rental market in the BA is on fire again.
I think offshoring engineering jobs to india was always a bad idea and didn’t pan out for most companies that tried it. Thats what happens when you get a finance weenie making decisions about “building great products”. You wind up with a whacked out scheme like- ~lets move R&D to india and wait for all the GREAT products to come rolling in!!!~ LOL. Microsoft was a huge offshoring machine for Vista. How did that work out.
Anyway we will have a better president in a few mos and that might lend some stability to the dollar which is half of the reason indian salaries are so high. But I really think that demon of offshoring has passed. The companies that never did it, like Apple and GOOG, prospered way more than Dell and MSFT who tried it.
July 26th, 2008 at 9:33 am
Gee WG, can you give some statistics to back it up?
My company has 1/3 employees in India. I know the market is white hot there, but your number is obsurd.
July 26th, 2008 at 9:49 am
which number? the indian salaries? BTW the 60K number includes the massively overpriced facility costs over there which are much more than here. But anyway here you go-
(this is from 2007 and prices have risen- DRAMATICALLY- since then)
Then Indian salaries soared.Last year, Shah paid his engineers in India about half of Silicon Valley levels. By early this year, it was 75%. “Taking into account the time difference with India,” he says, “we weren’t saving any money by being there anymore.” In April, Shah shut down the Bangalore office…
http://venturebeat.com/2007/07/03/hiring-staff-in-india-no-longer-worth-it/
there are thousands of articles like this - but you have to dig for them and I’m not going to bother- I just went straight to ventureweb and looked.
the thing is, you don’t get the same productivity out of these offshore relationships. For a while offshoring was moving UP the food chain against higher and higher salaries and now it is moving DOWN the food chain so that callcenter and a few other areas are all that is being considered. Of course for the companies that already moved their business over there, they will stay but new ventures aren’t bothering and thats a fact. Ask any VC.
July 26th, 2008 at 4:34 pm
WG,
1. SV cost of hi-tech employee including everything has been close to 200k 10 years ago. This is estimate from my previous medium size companies.
2. I don’t see anywhere in your link about 60k.
3. 60k overall probably means they are making 30k, which is the typical salary for India eng with 3-5 years of experience.
Worked with them extensively, I do agree that they do not worth half the salary of SV employees. Some of them are exceptionally bright, but those ones are already here.
Workers from China have a good chance of filling that void if it happened that Indian eng are overpriced. They are actually better trained, only barrier is English.
July 29th, 2008 at 1:16 am
Then Indian salaries soared.Last year, Shah paid his engineers in India about half of Silicon Valley levels. By early this year, it was 75%.
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WG,
Above example does not make too much sense. You will get some idea if you read all the comments below that article.
July 29th, 2008 at 8:44 am
It doesn’t matter what the comments say, Pralay. Those are just more individuals ranting. The article itself is correct (and researched). For one thing the US dollar has been cut in half- that made offshoring engineering work twice as expensive as it was before just on that basis alone. In order for offshoring to work these people need to be less than half of US salaries, because it is not a productive proposition trying to hire engineers offshore. The best managers never did it in the first place - Google for example. But anyway the stupid companies tried it and it sort of half worked and now it is too expensive and they need to pull these jobs back in, and THAT, more than anything else is why rentals are so high now- I think anyway.
The entire “indian offshore engineer” business model was hatched when these people cost $10K per year ALL INCLUSIVE and their US counterparts were 20x that.
July 29th, 2008 at 8:49 am
Rick you are just splitting hairs. If an article says engineering salaries are 75% of US salaries that means they are costing about 75K- MINIMUM, which is about right. The thing that has really got out of hand in Bangalore are facilities costs- these are double Silicon Valley office buildings, approaching hong kong level. Anyway believe what you want- I find it odd that I have seen no articles discussing this- and the resulting effect on rents in the bay area (because I think it is related).
Anyway, this whole offshore idea was hatched by a bunch of finance wonks anyway. Its a bad way to do business unless the dept that is offshored is totally compartmentalized. You can’t build great engineering products with no proximity to your workers, that is obvious. And anybody trying to manage this way realizes it immediately.
July 30th, 2008 at 4:07 pm
It doesn’t matter what the comments say, Pralay. Those are just more individuals ranting. The article itself is correct (and researched).
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WG,
I don’t think this article is well-researched. It just showed the worst case scenario to prove its point. It’s an exaggeration.
Offshoring never cost $10K per year and 20X less. That’s another exaggeration. The thumb rule of offshoring (contracting work to another company) is typically 3X. For example, instead of hiring an engineer with salary $150K you can offshore with a cost $50K. But thing can more complex than that because you don’t offshore one engineer’s work. You do project-wise. Same rule does not apply for companies who open their own office there (e.g. Microsoft, Google etc). Their overhead could be more because they are investing from US dollar there.
Due to fall of dollar, let’s assume it is 2X now. So what?
Needless to mention that India, just like China, manipulates its own currency to make dollar higher and keep it attractive for offshoring and exports.
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In order for offshoring to work these people need to be less than half of US salaries, because it is not a productive proposition trying to hire engineers offshore.
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Actually it is lot less than that.
PayScale stat. Engineers with 5-9 years of exp earn 417K (US $10K). There is no doubt engineers earn lot less there. Main cost of offshoring is overhead, because it requires additional manpowers - just to manage offshore projects and additional process with a place halfway around the world (logistics, communications, infrastructure, security etc).
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But anyway the stupid companies tried it and it sort of half worked and now it is too expensive and they need to pull these jobs back in, and THAT, more than anything else is why rentals are so high now- I think anyway.
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In dot-com bust, there were enough “stupid companies” went under water. There is no doubt that there are enough “stupid companies” who are going busted on offshoring. Offshoring requires good strategy and process. Company that has no offshoring strategy will burn its finger no matter how cheap offshoring deal it gets.