Santa Clara county home sales are going gang busters!
Los Altos Town Crier » National home sales down, locally – up
In Santa Clara County, single-family home sales appear to be on an upward trend, according to information from MLSListings Inc., the Multiple Listing Service for the Silicon Valley Association of Realtors see article on page 38. There were 927 closed sales of single-family homes in Santa Clara County in June, up from 873 closed sales in May, 654 in April and 583 in March. The average price of homes in June was $922,149, down from $970,702 in May. During the same period a year ago, there were 982 closed sales of single-family homes in Santa Clara County, and the average price of homes in June 2007 was $1,066,610.Today’s market offers long-term value for buyers, according to SILVAR President Leannah Hunt.
“As home prices drop a bit, there are good opportunities out there for serious home buyers,” she said.
Sweet! Things are rocking and rolling! This might not be a year of our god given 15% annual appreciation, but it might just coming back soon!
The Real Bay Area: unstoppable.
2009’s catch phrase? “Damn I’m priced out forever!”
August 4th, 2008 at 7:32 am
From the NYT, more good news for CA -
“Housing Lenders Fear Bigger Wave of Loan Defaults
By VIKAS BAJAJ
Published: August 4, 2008
The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.
Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.
The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.
“Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. “Prime will be far bigger in its impact.”
In a conference call with analysts last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple in the coming months and described the outlook for them as “terrible.”
That’s gonna leave a mark.
August 4th, 2008 at 7:46 am
This appears to be another one of those useless shill pieces published by a small local paper, which as we all know are the kinds of papers that rely very heavily on Real Estate advertising revenue. The article is almost laughable. Oh gee! Prices are now 920k versus 970k?! Holy crap! What a buying OPPORTUNITY, especially for SERIOUS buyers, versus some of us buyers who were really just big kidders.
Lastly, the fact still remains that prices are down. The article did a pretty good job of smothering that little tidbit into obscurity. In addition, there’s zero value in paying almost a million bucks for a tiny little house. I don’t care if the house was located on the moon.
August 4th, 2008 at 8:08 am
I agree that the article is nothing more that a PR placement, but I can assure you that prices are up in the paper’s home city. Courtesty of an open house last week, I am looking at a list of 150 closed deals from the last nine months in Los Altos and I am not seeing any bargains. Only 28 sold for under $1.5M and half were at $2M and above.
Right now, in Los Altos, a 2000 sq ft ranch home with minimal updates since its 195x construction date will sell the first week for $1.7 provided it has the semi-standard 1/4 acre lot and isn’t on a busy street. More significantly, these deals are often closing in 1-3 weeks, an indication that the accepted offers have no financing contigencies. These are very well qualified buyers with no issues accessing capital.
Here’s a great example. 584 Cuesta – a busy street. Prop was listed on 4/29. It closed escrow on 5/8. Sales price, 1.55M for 1942 sq ft on a 1/4 acre lot. Not likely to see that property as an REO anytime soon.
August 4th, 2008 at 8:23 am
It just seems amazing to me that some of these areas can still sell at these prices. Over here in the East Bay, the story is totally different: NOTHING is selling, even in the nicest parts. Prices have been falling, and appear to still be doing so. Eventually, the prices here are going to be too steep for those looking on the Peninsula to ignore, and this will create a sort of vacuum.
Another interesting observation I made was that I spend the weekend up in the Foothills of the Sierras. These small gold towns had some serious price reductions over last year. For the first time I saw a billboard for homes starting in the 100’s. Yes- the 100’s. Not the 300-500’s they were last year. The Sacramento is where the bust originated. It’ll be interesting where the BA winds up.
August 4th, 2008 at 8:42 am
A 13.5% YOY decline? Unthinkable!
August 4th, 2008 at 8:50 am
Seriously, Bob, I’m with you. I sometimes marvel that puff-pieces like this get published anymore. You are also right to remind us that the collapse in prices began in the Central Valley and have spread outward toward the BA and into the Sierra foothills.
Tom
August 4th, 2008 at 8:53 am
Re:”Here’s a great example. 584 Cuesta – a busy street. Prop was listed on 4/29. It closed escrow on 5/8. Sales price, 1.55M for 1942 sq ft on a 1/4 acre lot. Not likely to see that property as an REO anytime soon.”
I know the family who sold this house, hahaha! What a small world. They had multiple offers and it went for over asking. But come on, Los Altos is a different world…
Places like Los Altos will be the absolute last to feel the collapse of the bubble.
August 4th, 2008 at 9:05 am
To get news & numbers from someone whose livelihood doesn’t depend on you buying a house, try
“Santa Clara County June-08 Foreclosure Stats” at
http://www.viewfromsiliconvalley.com/id433.html
-or-
“The Last 30 Days (Jun’08 Data)”
http://www.viewfromsiliconvalley.com/id431.html
Then tell me if prices & sales are going up.
August 4th, 2008 at 9:06 am
HELLBOY: I agree. If Los Altos feels prices declining, the bubble really has well and truly popped.
As a Los Altos resident (right on the PA/LA border) I can tell you that price/rent is still *way* out of whack here. Until 2BR/2BR start renting for $6000/mo, anyone buying is betting on 10%-15% appreciation or fear of being priced our forever, because on a cash flow basis they are deep in the red.
Finally, I would add that so far, demand remains robust in Los Altos.
-zanon
August 4th, 2008 at 9:08 am
@Hellboy: Why were they selling? Where are they moving to?
August 4th, 2008 at 9:13 am
Obtain a copy of the Town Crier. Scan the ‘paper’ for actual hard news. What do you see? I see a REIC/local real estate cartel propaganda sheet exrolling the virtues of the many, so called REALTORS operating in the area. It is, and has been this way for years. Its also a geat way to validate the status of the used-house peddler crowd so they can continue deducting their business expenses and automobile leases when the IRS comes calling and give them something to talk about and congratulate themselves at Rotary, Kiwanis, etc, etc…
Caveat Emptor. Why would ANYONE pay 6% to sell/buy a home or trust one of these strangers advertised in a local weekly paper? Do your homework and make sure their E & O policy is up to date…
Los Altos Native
August 4th, 2008 at 10:45 am
@vfsv, do you have any stats for foreclosures in Los Altos or Palo Alto? or sales data from these cities?
@bob, here is a short explanation on how prices in the (true, not imaginary) RBA can hold. Let’s take two areas in RE’s favorite city, Palo Alto, as an example.
A post last week on valleywag about a certain google founder’s house cause me to zillow sale prices for the stretch on either side of waverly btw Oregon and Addison. for those that don’t know, this is the nicest part of the city and true, high end RBA. the housing stock is old and large, the lots are expansive (for palo alto). and, the location is excellent. you can walk to downtown or a football game; you have a short drive to your tech job. this is a $4-14M neighborhood
now, look at the dates on last sales, especially for the bigger lots. not too many in the 2000s. not too many in the 1990s. a few around the last big bubble (88,89). you can’t feel sorry for those “bubble” buyers as their $1M investment is now worth 8x or more. but, the point is that (post-prop 13), people are leaving these houses feet first, and there are far more buyers than there are sellers. dial down the appreciation some and you can repeat this analysis for atherton, hillsborough, presido heights, pac heights, etc.
now let’s head over to south palo alto to the “low” end and look at greenmeadow (either side of creekside dr). this is faily crappy housing stock, build in the early 50s. they are roughly 1800sq ft on 7500 sq ft lots, yet they sell immediately for $1.5++ when they hit the market. look at the last sales. see a pattern? lots of original owners (or their kids) still there. you’ll see this repeated in los altos, west menlo park and burlingame.
as I mentioned in another post, of course all this could change dramatically. but, a first step is that there have to be sellers. absent a massive earthquake, a tech/VC depression (not a blip like 2001) and/or the repeal of prop 13 I don’t see that happening anytime soon.
August 4th, 2008 at 11:06 am
@ Burbed, re:”@Hellboy: Why were they selling? Where are they moving to?”
They wanted to get a bigger place, kids tend to do this to a family. They had considered moving north as far as Burlingame( one works in SF the other is Tech in the valley )but I’ve since found out they got a deal IN LOS ALTOS no less so they are staying in the area. I can’t wait to see the house…
August 4th, 2008 at 11:09 am
Steve’s observation is spot on for my neighborhood in Los Altos.
I bought several years ago from an original owner whose father developed his orchard into housing in the early 1950’s. My original owner passed away shortly after selling to us, but her brother and a couple of her cousins still live in their original houses in this neighborhood.
A joke that is popular with our friends that have bought in Los Altos is, “People are dying to get out of Los Altos”.
August 4th, 2008 at 11:25 am
15%? 15%?? FIFTEEN PERCENT? No no no no no! The God given amount is more like 21% (because you have to give the real-a-tors their God given 6%
–Timeline Guy™
August 4th, 2008 at 11:37 am
I’m not sure it’s prop 13 that keeps the oldsters in their homes. I thought there was a way to keep your same property tax if you are over a certain age and stay in your county thus you could trade down. Maybe they stay because of the tax consequences. In the areas mentioned by Steve, most of the original owners have probably easily made over 500k and would then have to pay the capital gains unless it was given to the kids in the trust.
August 4th, 2008 at 12:02 pm
Well,
One thing I’d like to see if there’s any information pertaining to the actual mix of houses sold. I don’t deny that there’s some super-rich people spending big bux on homes around here. But if say- a few multi-million dollar homes sold in one month, that would grossly inflate the median value of the home sold. I’m guessing that there’s a ton of bottom-scraper REOs and knockdown houses selling, which would explain the rise in the number sold.
Regardless, anyone buying a million-dollar house had better be making at least 400k-500k a year minimum because the payments on something like that would be pushing over $10,000 a month not including taxes.Even if you made 500k, close to 50% of your take home pay would be going to the mortgage alone. And again, if you’re making half a mil and buying a 50’s starter home, I’d hope that at least some of them stop and think for just a second at the irony of paying big to live like middle class paupers.Something about these going prices still doesn’t compute and is grossly out of line with sound financials on par with the peak of the boom in the rest of the BA.
August 4th, 2008 at 12:19 pm
“15%? 15%?? FIFTEEN PERCENT? No no no no no! The God given amount is more like 21% (because you have to give the real-a-tors their God given 6%”
Au contraire good sir, please see the ad on:
http://www.burbed.com/2008/07/31/what-does-1199999-buy-in-alamdea-these-days/
In these tough times its now 8% (4%x2! Ahh, real estate scumbags. It certainly is a good time to pay them a commission for being worthless…
“Regardless, anyone buying a million-dollar house had better be making at least 400k-500k a year minimum because the payments on something like that would be pushing over $10,000 a month not including taxes.”
Good point. Now, I recall RE stating that the 1.2mil TURD in Sunnyvale would be purchased by a director level person. How many directors make 400-500k?
August 4th, 2008 at 12:21 pm
Btw, bob, your numbers are a little skewed – someone making 500k would take home around 250, but never the less the point is valid.
Let’s be very clear: Only an idiot would buy a home in the RBA.
August 4th, 2008 at 12:24 pm
Bob – I don’t mean to specifically pick on you but could not let this pass. “The irony of paying big to live like middle class paupers” sounds straight from RealEstater’s mouth. Equally large chip on the shoulder.
Let me assure you that the size of the house or even the location has pretty much NOTHING to do with anyone’s lifestyle. I’d even venture that the larger the mortgage, the tighter the lifestyle as a result. So your sentence really makes no sense except it reveals your utter contempt for us common people.
August 4th, 2008 at 12:26 pm
Rocket – Love the quote. Definitely a sign of a great neighborhood when it takes a gun, rope or poison to free a spot and move in.
August 4th, 2008 at 12:28 pm
“Let me assure you that the size of the house or even the location has pretty much NOTHING to do with anyone’s lifestyle.”
This is a joke, right? I missed the sarcasm. What factors do you feel ARE relevant to one’s lifestyle?
You go on to say:
“I’d even venture that the larger the mortgage, the tighter the lifestyle as a result.”
This is precisely the point bob is making. Having overpaid on a SHITTY home, there isn’t as much left over for other incidentals, correct? Is living a ‘tight’ lifestyle because one overpaid for a home good “lifestyle”?
August 4th, 2008 at 12:29 pm
anon – “idiot” is the new fashion word with Trolls. Sure enough to elicit reactions.
After all if they have so much money to burn, they must be idiot, the whole lot of them. Good thing we know better don’t we.
August 4th, 2008 at 12:31 pm
anon – “idiot” is the new fashion word with Trolls. Sure enough to elicit reactions.
After all if they have so much money to burn, they must be idiot, the whole lot of them. Good thing we know better don’t we.
I’m sorry. I will use the term fools instead in the future. That’s much more pc, wouldn’t you agree?
August 4th, 2008 at 12:36 pm
anon – no sarcasm. Lifestyle / quality of life: primarily time spent commuting and $$ available for hobbies, good food and cultural events. What seems overpriced to you may be a nice compromise for someone else who could afford a bigger house. That’s the choice we made a few years ago. By buying a smaller place (”shitty home”) we can afford not to live like “paupers”, exactly the opposite of what bob is stating.
August 4th, 2008 at 12:42 pm
anon – As long as your vocabulary reflects your thoughts…
Idiot: “person [...] having a mental age of less than three years old and an intelligence quotient under 25.”
Fool: “a person who lacks judgment or sense.”
I think you know well what you’re doing when you use the word “idiot” on this board.
August 4th, 2008 at 12:42 pm
Zanon, I can assure you property in Los Altos IS renting for $6K/mo. The rental market is on fire on the peninsula and south bay. Just looking on craigslist for Los Altos, 3+ BR (to weed out the apts)- there are 13 listings over $5K/mo… 6K and 7K common, and 19 under $5K/mo with many of these in the $4900 range. The rental market is priced competitively with home ownership for the first time I have seen in almost 10 years. A $5K/mo rental equates to a $7500 mortgage payment after all.
We are now at a place where the high end districts like Palo Alto, Los Altos, Burlingame etc are renting at 5K/mo AND UP.
I know you said owning in LA isn’t price competitive with renting until a 2BR/2BA rents for $6K, and I’ll grant you we aren’t there YET, but we are close. I would love to hear the rationale for why rentals are rising like this also- I am surprised by the strength in rental pricing.
August 4th, 2008 at 12:47 pm
You have flip flopped. The above post is in stark contrast to your previous statement: “Let me assure you that the size of the house or even the location has pretty much NOTHING to do with anyone’s lifestyle.”
Now you say: “Lifestyle / quality of life: primarily time spent commuting and $$ available for hobbies, good food and cultural events.”
So, does it not stand to reason that the location has quite a bit to do with quality of life? The amount of time spent commuting is related to the location, right? The proximity to good food and cultural events is also related?
Again, you are saying the same thing as bob. You chose a less nice home so that you would not be “house poor,” correct? This is exactly the point I am trying to get across.
Sure, you “compromised” when you bought your house. My assertion is that in order to live in the bay, you had to compromise too much. Put another way, WHATEVER you spent on your home, you did not get much VALUE. Why did you have to compromise so much? Because too many speculators were using the banks money to sell each other homes at over-inflated prices.
Whatever. I suppose it all comes back to the fact that it’s special here…right? Sophistication by proximity and the like…
August 4th, 2008 at 12:48 pm
previous post directed at dreamt
August 4th, 2008 at 12:53 pm
Steve (post #3) -
Just because the property closes escrow fast doesn’t mean people are paying cash. I closed the last two houses I bought in 10 days. I was mostly pre-approved and the mortgage broker had to move FAST. But I assure you, both places had mortgages. It can be done… especially now when brokers aren’t very busy!
August 4th, 2008 at 1:02 pm
bob – No flip-flop on location. By location I mean for example walking distance to Castro Ave. or University Ave, versus living two cities away not far from a freeway. The point I’m making is we don’t consider ourselves “middle-class paupers” by having chosen the latter even though real-estate wise this is a ‘poorer’ location choice.
A more “prime real estate locations” in my opinion does not guarantee a better quality of life due to the compromise on house price. You can have a better location and end up poorer. Read my posts again in this light, maybe you’ll see this time that there’s no contradiction.
August 4th, 2008 at 1:03 pm
But to get back to Bob’s point -
“Regardless, anyone buying a million-dollar house had better be making at least 400k-500k a year minimum because the payments on something like that would be pushing over $10,000 a month not including taxes.”
This statement would only be correct for a buyer who did not previously own a home right? Los Altos would be a trade up area I think.
Today (don’t know what will happen in the future) I have about 850k equity in my home. If I wanted to buy the $1.5mil house I would not need 400-500k salary.
My new mortgage would be 1.5mil – 850k = $4162. mortgage. Personally, I would not want this large a mortgage as I would also have to pay the new higher property taxes so I would likely sell some of my options and throw another 200k at the downpayment.
Anyway, that is how it is done if you don’t make 400k a year. Feel free to correct my math. This is my real case though so it is not based on assumptions.
August 4th, 2008 at 1:12 pm
WG “I would love to hear the rationale for why rentals are rising like this also- I am surprised by the strength in rental pricing.”
My neighbors sold their home at the top of the market (guessing correctly it was the top of the market) because they wanted a larger home and didn’t want to remodel. I think they probably got 100k more then they would have had they not sold. They are renting until home prices go lower and won’t buy until this happens. This is a finance guy and he new the bubble would eventually pop. He purposefully sold when he did and is purposefully waiting. I doubt that many others had this insight and are doing the same, but he did become a renter. This is on the peninsula.
August 4th, 2008 at 1:14 pm
anon – I disagree with you, I don’t feel I compromised too much to live where I live. I feel I found the right compromise between house price and lifestyle at this time in my life. Accordingly, I don’t feel my house was overpriced and I am getting the value I expected, and recent buyers in the same neighborhood have drawn the same conclusion. Most important, I don’t feel I live like a “middle-class pauper.” For some people, purchasing in MV is a compromise, for us it would be a stretch. For some purchasing where we live would be a stretch, for us it’s not. You’re hardly credible if you say that nobody’s getting their value’s worth when they purchase a house here, because it’s easy to find people who’ll contradict you based on personal experience.
August 4th, 2008 at 1:16 pm
Of course anon anybody who’ll disprove your assertions will be labeled an “idiot” won’t he/she?
August 4th, 2008 at 1:18 pm
I’m not going to entertain discussing the difference in the “quality of life” in regards to paying a ton of money for a little house anywhere, even if it in perfect tropical paradise. If paying these kinds of prices is meant to indicate a higher standard of living, then that plate of Sushi you’re buying, or that chamber orchestra you’re watching, or those sidewalks you’re walking on had damned better be the best sushi, orchestras, and sidewalks on the planet, because you’re paying DEARLY for the privelage, which to me is beyond nonsense. You see, I still can’t really take much of this seriously simply because my common sense part of the brain screams otherwise.
Paying 6k for rent is ludicrous. Paying a mil for a house is equally so.
August 4th, 2008 at 1:23 pm
Bob – My point was not about what’s in a quality of life but about your perception of the bay area residents (not just buyers, but all residents). In your opinion we’re all middle class paupers. I thought that comment revealed a lot about you (and besides disagreed with your premises). I stand by the ‘chip on shoulder’ comment.
August 4th, 2008 at 1:24 pm
WillowGlenner: I live right on the Palo Alto/Los Altos border, I know many people who live here, I know how much rents are.
Yes, they are higher than they were 3 years ago, but you can rent a SFH 2 BR/ 2 BR place for ~$2500/mo. I don’t know about craigslist, I just know how much folks I live with in the area pay.
Rents are going up because rent/price is out of whack, and those two numbers need to shift to get back in line with historical averages. If prices are not going to go down (just as RE, and you are also bullish on housing prices) then rents have to go up. It’s pretty simple.
You can use creative (and now nonexistent) financing to pay almost any amount for a home, but paying rent is straight cash-in, cash out. $6K/mo in rent is $72K/year, post-tax, which is about $110K/year pre-tax. Even in a two engineer family, that’s hovering at 50%+ of pre-tax takehome pay, which is a lot to pay for housing. I sure hope the dry cleaners of los altos don’t have big dreams, as there isn’t much left for them.
I don’t think anyone is paying for these places OOP, I think they are executive housing, subsidized my the company for a year until they can find a place to buy. Certainly they do not represent the standard housing market.
-zanon
August 4th, 2008 at 1:38 pm
DreamT,
One thing I’m curious about is if you’ve lived anywhere except Europe and California? Your answer would probably shed some light for me.
Anyhow, Just to drastically prove a major point, I kind of forgot that I had made a photo album showing where I grew up, as well as some of the pictures I took around my home state awhile back. Take a look at the pics of the family home and property.Also look at photos of the various cities. My Parents are squarely middle class. Both live less than 10 miles from their work. The home has been paid for since the 80’s, and they bought in the 70’s. Even today, the property is worth 180k. Probably less now. Now take a look at this and compare it to any number of the small, 1 million dollar houses on this site. See anything sort of wacky? Do you now see where am coming from?
http://s265.photobucket.com/albums/ii226/bobwilson1977/
August 4th, 2008 at 1:38 pm
I actually do feel like a middle class pauper as I know I could be living in a huge house somewhere else in some parts of the country. However, when I visit my cousins Mcmansion in Ohio, I am only envious until I remember I would have to wake up every morning in Toledo. Not that there is anything wrong with Toledo…
August 4th, 2008 at 1:42 pm
One other thing you all might want to consider is that rents are moving higher b/c of all the FB’s who bought out in livermore or merced or tracy or modesto figuring they would commute but then got caught with their collective pants down when the bubble burst. If they still have a job they are certainly considering moving back to the bay area to rent both to save money on gas and mortgage…
August 4th, 2008 at 1:53 pm
Bob, it’s all a matter of what people can afford and are willing to spend to be comfortable. You are living frugally for a number of reasons. Your choice; more power to you for not falling into the “spend” impulse that grips too many these days.
When I first moved to CA in 2001 we rented for $2700/month. Why? Because we had moved out of our 3600sf house in the midwest (mortgage, $2200/mo), and wanted to be comfortable in a nice place in a nice neighborhood. I looked at at LEAST a dozen apartments, starting at about $1500/month. Didn’t like any of the cheaper ones. With only one of us working, we could afford it so why not maintain our standard of living in terms of housing? Does that make us foolish?
Reminds me of a Suze Orman quote I just laughed at the other day… she was asked if it’s possible to get your money’s worth buying a home in SF. She said “if you have the money to get your money’s worth, you bet you can.” Seemed nonsensical until she clarified by pointing out how much she values walking to Crissy Field and doing other local things. The point though is that she can afford it.
August 4th, 2008 at 1:54 pm
I find more value owning a smaller home in a place I love to live, rather than a large home where I have no interest in renting. If I have 3 million in the bank, it isn’t much of a stretch to pay a million and half for a home. Salary shouldn’t have much to do with buying a million dollar home. Luckily, for most people the prices are coming down around the bay area which will give average (income wise) people a chance to own a home. They won’t be able to buy in Los Altos, but they will be able to buy in many other cities in the bay area. I however, would rather have that small home in Los Altos than that big one over in Fremont.
I think the mindset that one should live in a big house or as big of a house that they can afford is flawed. I’d rather use less gasoline, less energy and buy fewer things to fill my home and have more time with my family.
People shouldn’t buy homes they can’t afford, and banks shouldn’t lend money to people who can not pay it back. As long as someone can afford it, why do some have to label others as idiots, when they are enjoying their lives? I can easily put labels on those that buy homes outside the bay area because I don’t feel they share my values, they don’t live the way I want to live, so there must be something wrong with them right? When someone doesn’t share the same viewpoint as ourselves there is something wrong with them isn’t there?
August 4th, 2008 at 2:03 pm
DreamT,
You try to bolster your point by stating: “By location I mean for example walking distance to Castro Ave. or University Ave, versus living two cities away not far from a freeway.” Again, this is a far cry from: “Let me assure you that the size of the house or even the location has pretty much NOTHING to do with anyone’s lifestyle. ”
I am done discussing this because if you can’t see it, you’re not going to.
Of course you don’t feel like you compromised too much. You already made your decision and acted upon it. Now, you’re trying to rationalize it as if it was a good decision. I hope that you like where you are because it will be a while before you can leave without incuring a substantial financial loss.
With respect to your statement: “Of course anon anybody who’ll disprove your assertions will be labeled an “idiot” won’t he/she?” You’re correct. My assertion that the amount of home you get for the amount of money you spend in the bay area is just about the worst in the country. I don’t see how you could dispute this. It’s like trying to dispute gravity or the fact that the sun is the center of our universe. I’ll say it again: What you get for the money in the bay area is a joke.
Bob, beautiful pics: Looks green and serene. But, where are the fart sniffers? The starbucks on every corner? the traffic? the smog? the 17% increase on groceries!?????!
You must have had an awful childhood.
August 4th, 2008 at 2:03 pm
No Bob, I don’t see anything wacky. People aren’t rushing from their hometowns to move to TN. There aren’t many people competing for homes in TN. I don’t want to live in TN. TN, doesn’t have as much to offer me as the bay area does. There are many people that feel the same way, which is why you pay a premium to live in the bay area. BTW- just in case you didn’t know there are “turd” houses that sell in other parts of the country for premiums in the nicer parts of their cities. What’s wrong with owning a 1500 square foot ranch home on a golf course and paying a premium for it rather than buy one of those new 2600 square foot homes in the subdivision up the street? Not everyone wants a lot of land and yard to take care of either.
August 4th, 2008 at 2:19 pm
Reminds me of a Suze Orman quote I just laughed at the other day… she was asked if it’s possible to get your money’s worth buying a home in SF. She said “if you have the money to get your money’s worth, you bet you can.” Seemed nonsensical until she clarified by pointing out how much she values walking to Crissy Field and doing other local things. The point though is that she can afford it.
There’s a point here, if you took the average worker and gave him a $150,000 two bedroom apartment in San Francisco it would still be a challenge for him to get the most out of the experience. It’s like getting a Porsche for cheap at an auction – fun for a few days until you realize how much it costs to maintain and insure the damn thing.
August 4th, 2008 at 2:50 pm
zanon, pardon me for suggesting this but you sound a little like bob. Care to qualify your statements please, back them up with facts etc?
I provided a source of what new rentals are going for. Thats all that matters, really, the fact that you know people renting for $2500/mo in los altos only means they were lucky or got in prior to the recent uptick in rents, but it isn’t meaningful as to what the current rental climate is like.
Rents are going up because rent/price is out of whack, and those two numbers need to shift to get back in line with historical averages.
What historical averages? Are you trying to say there is some kind of historical average of rents vs. mortgages in the bay area? I don’t think such a thing exists, but if it does it would typically register that rents are lower than mortgages, which is what you seem to be saying anyway.
but paying rent is straight cash-in, cash out. $6K/mo in rent is $72K/year, post-tax, which is about $110K/year pre-tax. Even in a two engineer family, that’s hovering at 50%+ of pre-tax takehome pay,
No it isn’t! Christ the constant banter of bears trying to save the consumer from themselves is getting really old. First of all a “2 engineer family” as you say probably brings in more than $144K after taxes. If one of those engineers is a contractor, they can write off everything and probably take home 144K on one income alone.
August 4th, 2008 at 2:54 pm
Hellboy and thread, what does FB stand for?
Yes I can come up with 2 things driving rents through the roof, 1) more local jobs now that hiring in India is too expensive, 2) people who bought in tracy or outlying areas need to come back in due to cost of commuting.
thats probably most of it.
August 4th, 2008 at 3:00 pm
>> My assertion that the amount of home you get for the amount of money you spend in the bay area is just about the worst in the country. I don’t see how you could dispute this. It’s like trying to dispute gravity or the fact that the sun is the center of our universe.
I stand by you anon. We agree with BA housing situation completely . Just a disagree with the mistake that sun is center of universe. There millions of suns like ours in the universe and it’s hard to ascertain if any one of them is at the center because universe keep growing all the time. You could have said:
It’s like trying to dispute gravity or the fact that the sun is the center of our solar system.
August 4th, 2008 at 3:09 pm
@hellboy, it is a small world, and yes, los altos, palo alto, atherton, menlo park, burlingame, hillsborough, … are in a different reality — they are the RBA
@zanon, agreed. although I have heard about some crazy rents these days. my agent mentioned a 1500 sq ft PA house that rented next day at $5200.
@WG, good data. backs up others are saying about RBA rents.
@rocket, awesome. reminds me of something I read about Palo Alto along the lines of “if you just want to live in Palo Alto, you never will,” the point being you needed to have an all-consuming desire to come out on top of the multiple offer heap to live in PA.
@nomadic, totally agreed. my point wasn’t so much tha the offer had to be all cash, just that the access to financing had to be rock solid (”These are very well qualified buyers with no issues accessing capital.”) I imagine you fall into this category. And for them, like you, I’m not seeing foreclosures on the horizon. don’t prove me wrong
@madhaus from a few threads ago, thanks. sounds about right for sunnyvale, although it might be headed back up. I had a strange weakness for mid-century modern so a few weeks ago I saw an Eichler on Olympus Ct (hear Homestead). It was listed for 1.149 and it is under contract over 1.2. Its next door neighbor is now on the market for 1.149 and it will certainly sell above 1.2. The open house was crowded on Sunday.
finally, @bob, this one will blow your mind. also from my Sunday tour MLS 80808963. great lot but sadly, remember I like mid-century modern, it has enough structural issues to make it a tear down. I’m not sure how long it will sit, I’m not looking for tear-downs so I don’t know the market, but it will sell.
August 4th, 2008 at 3:13 pm
If one of those engineers is a contractor, they can write off everything and probably take home 144K on one income alone.
——–
WG,
Geez, you are demanding others to qualify their statements, but you yourself making such a blatant statements.
What kind of contractor can write off “everything”? Contractor working in Google office? Contractor working from home? If it is home, how many hitech engineers work from home 40 hours per week? They got to be rare species of contractors.
I am not even going into other expenses like buying health insurance (could be quite expensive), dental, life etc.
August 4th, 2008 at 3:20 pm
We are now at a place where the high end districts like Palo Alto, Los Altos, Burlingame etc are renting at 5K/mo AND UP.
———-
Do you have any idea how much 3 bed/2 bath SFH for $2900 at Palo Alto would cost?
August 4th, 2008 at 3:26 pm
Or may be this $3200 / 3br – 2ba Professorville home.
August 4th, 2008 at 3:28 pm
Gee, steve, didn’t your agent tell you that Palo Alto houses are renting for $10k a month now?
http://sfbay.craigslist.org/pen/apa/783020723.html
Yeah, ignore other places that goes under $6000 a month in Palo Alto and Los Altos, they don’t exist because they don’t fit your imagination.
August 4th, 2008 at 3:30 pm
How about this 2000 sqft and 10,000+ Lot 3br Los Altos home which is renting for $4500?
August 4th, 2008 at 3:53 pm
Willow Glenner: Please don’t conflate me with Bob (not that there’s anything wrong with Bob, but Bob does not believe that a small house is ever worth $1M and I do not hold that position. I do hold the position that buying something that’s cash flow negative in the hopes of appreciation is risky).
You point to craigslist, I can point to craigslist too (although I prefer http://www.housingmaps.com/ for rentals). I see 3-4 BR going for $3100 to $6500 in Los Altos. The $6500/mo rental has a zestimate of $2.2M and has prop. tax of just $8K, so it’s been a while since it was sold last. Monthly payment with 30 year fixed, 10% down, is $13K.
So, if you’re going off Zillow, renting is still 50% cheaper than owning on a cash flow basis, but as we’ve discussed many times, appreciation (if it happens) will put you ahead, while depreciation will wipe you out.
But I personally know too many renters at $2-2.5K in $1.5M-$2M houses to say that the $6K example is representative of the overall rental climate. Just as an FYI, one of my LA neighbours who renter recently said that it was a competitive market — lots of people showed up to get the place — so I’m not saying it’s not tight.
WG: “What historical averages? Are you trying to say there is some kind of historical average of rents vs. mortgages in the bay area? I don’t think such a thing exists, but if it does it would typically register that rents are lower than mortgages, which is what you seem to be saying anyway.”
I assure you that you can take historic data of rents in the bay area, and divide by historic house price information in the bay area, and get a historic ratio. It’s just math.
This historic ratio has recently jumped dramatically. So, if price/rent was 500, it’s now 1000. I like looking at the ratio because it takes out all the rubbish about how nice the bay area is, how much tax deduction you get, the evils of prop13 etc. etc. etc. and simply looks at the ratio since that other stuff has been the same. The ratio changed dramatically due to cheap credit. Now that cheap credit is gone, the ratio is reverting to mean through falling prices outside of the RBA. Within RBA, maybe rents will rise to restore it?
WG:”First of all a “2 engineer family” as you say probably brings in more than $144K after taxes”
At 35% national and 9% state, and 7% FICA? To get $144K after taxes you would need $300K household income a year, $150K each. That’s the top 1% of households in the US. Glad they all live in the RBA!
August 4th, 2008 at 4:16 pm
“It’s like trying to dispute gravity or the fact that the sun is the center of our solar system.”
point taken; thank you.
August 4th, 2008 at 4:17 pm
Oh come on zanon, just think about the tax savings.
You can save on the $13k a month in interest payments, and then later on you can sell it with $2m tax free income in 10 years. Boy I haven’t even mentioned all the expenses you can deduct from renting out this out: your truck, your gas, your visit as a landlord, etc.
August 4th, 2008 at 4:27 pm
a contractor can’t write off everything… They can only deduct things that are ‘reasonably related’ to their business.
August 4th, 2008 at 4:31 pm
This article is spot on regarding the RBA market, and it’s what I see everywhere around me. What Bob and Pralay can’t relate to is that competition is heavy at the top.
Rental market does not matter. People who rent out their house in Los Altos are not looking to cash flow. They may be on an overseas assignment, and just want to get a few bucks to cover taxes, and have someone there to exercise the plumbing.
August 4th, 2008 at 4:32 pm
Great post zanon.
Drives the point further that the housing euphoria and perpetual state of denial I am seeing from bubble sitters basically mirrors the exact same behavior that I witnessed during the dot com bubble. Guess we never learn.
A thousand justifications and convoluted facts to try to desperately justify these inflated housing prices.
In the end, the only thing that will force them to accept the obvious is when it hits them directly over the head. And I’d love to see Congress try to justify another housing bailout to help those “poor Real Bay Area” folks making $200k+ per year. That will fly well. Not!
August 4th, 2008 at 4:36 pm
bob – I grew up in the countryside 15 miles from the Atlantic ocean. My dad’s job was 3 miles from home (elementary school teacher), the land is 1.3 acres, the village consists of 10 houses including 2 relatives and 3 farmers. I don’t have pictures to share but suffice to say the place is as gorgeous as your first picture shows. The house looks vastly different of course, it’s not made of wood but breeze blocks(?) and orange tiles. The only place that comes close to where I grew up is Atherton, not because of the mansions but because of the small winding countrywisde roads, the large acreage and the grass smell in the night.
Fortunately I am not so one-dimensional as to think that unless I find a replica of that environment, the place is overpriced. I’m not sure this site is the right place to debate bay area suburban live versus country life, but one does get spoiled living close by everything, and the convenience esp. as parents cannot be beat.
I’ll admit though that I’ve not been to TN nor to NC. I plan to visit both in the years to come.
Re. your question where I’ve lived, add NY and Manila. But Europe is diverse enough to cover most of what’s out there in term of living environments.
August 4th, 2008 at 4:41 pm
@TNTinCA, I read zanon saying that rents and sales prices are out of balance — something that has been true for most of the time I have lived in the RBA and something few people will dispute.
I don’t read zanon predicting a collapse in pricing for historicall desireable property. Since you are staring into your crystal ball, can you tell me what will happen to Palo Alto and Los Altos sales prices over the next 1-3 years and explain why? I think they are going to continue to edge up because demand >> supply, but I am clearly in a state of denial.
August 4th, 2008 at 4:41 pm
They may be on an overseas assignment, and just want to get a few bucks to cover taxes, and have someone there to exercise the plumbing.
——
I would love to have those kind of landlords. I am sure if they don’t find renters in reasonable rent price, they will let people live in their homes free to “exercise the plumbing”.
August 4th, 2008 at 4:43 pm
anon – “It will be a while before you can leave without incuring a substantial financial loss” You’re incorrect. The recent comps (4 houses for 2008, one a month) indicate prices are still increasing in my neighborhood. It would not only take a decrease but a drop of ~15% for me to be in the red. It might happen! But until we even see signs that prices stop going up locally, your statement is flat-out wrong. You’re making the basic mistake of extrapolating what’s happening in a specific neighborhood based on county-wide statistics.
August 4th, 2008 at 4:52 pm
I know right, Pralay! Perhaps you should take out an ad on craigslist: Looking for RBA property to house sit in while owner is overseas. Will be sure to poop in each toilet at least once a week. Will water lawn with love.
Evidently you roll with a different crowd of wealthy people than I do, RE. Aside from the ones that come from old money, the wealthy people got that way by sound financial decisions.
August 4th, 2008 at 4:53 pm
DreamT,
Try to sell your home. See what happens.
August 4th, 2008 at 4:55 pm
threads like this are interesting as they expose many divides.
there are the Bay Area is a great place to live folks (WG, DreamT, …) v. the Bay Area sucks guys (Bob and some folks who have moved away)
then there are the you can be cash flow positive guys (WG, maybe Nomadic) v the no matter what you buy you will lose money guys (Pralay, et al)
finally there are the prices are rising in the best plaes people (me, RE, DreamT and others in this thread) v they are falling everywhere
Can we agreee on the following:
*if you hate the bay area, move. the rest of us will appreicate the drop in conjestion
*only very experienced investors should be (or are) buying BA property to generate income. most people are buying for schools, neighborhoods and, most importantly, because they can
*prices in Palo Alto, Los Altos, etc (the RBA) are rising and seem completely de-coupled from what happens in the east bay (always have, always will?)
August 4th, 2008 at 4:57 pm
Steve & DreamT: You both make good points. A collapse in prices seems tough when demand remains strong. And prices will need to fall (15%) to leave some folks in the red.
Given that the housing run-up was caused by cheap credit, the housing down-turn will be driven by that credit disappearing.
The East Bay is a nightmare of subprime from Oakland down to San Jose. You get very little subprime on the Peninsula, except for EPA, Redwood City, Sunnyvale, and parts of San Jose. Prices in all of those areas will come under pressure as the debt under those houses collapses.
I cannot find any stats for how much of the Peninsula was Alt-A. People think that subprime was the only high-leverage mortgage instrument on the market, but this is not true. Alt-A was extended to prime borrowers and is not classified as subprime mortgage financing, but it does enable the borrower to be very highly leveraged. If the RBA is sitting on a huge pile of mortgage debt, it will also come under pressure as the finance system deleverages. If it’s not, it won’t.
Does anyone have data on this?
-zanon
August 4th, 2008 at 5:05 pm
Steve/Zanon,
Actually I do think Zanon thinks that because rents are cheaper than buying – desirable property in RBA will collapse. Did I read that right, Zanon?
I agree with Steve-
- I dispute that renting vs buying equation makes any difference
- I think rents are starting to do what they did in 99 anyway where renting here was as expensive as owning anyway
August 4th, 2008 at 5:05 pm
@zanon, exactly. Honestly, I’d rather see my current property return to 2002 prices so I could buy something I like more at the same discount, but I don’t see it happening. There have been too few sales the past 4 or 5 years to very qualified buyers (best terms like big % down and fast close win multiple offer situations) for their to be REO danger.
The exception would be if folks got HELOC-crazy Irvine style. I’ve heard that info like this is available at PropertyShark. Does anyone have a subscription?
August 4th, 2008 at 5:07 pm
anon – Why would I sell? I’m not a flipper and not planning to sell for ~ 7 more years.
What makes comp sales so irrelevant that I’d have to place my own house on the market to prove a point? Please answer this question and explain to everybody here why comp sales are in your opinion irrelevant.
August 4th, 2008 at 5:10 pm
steve – I agree with your post except I’m not claiming the RBA is a great place to live. I think it’s a great place to start a career in your early 20s if you can, build a nest egg, and if you can afford the good places, raise a family. When I no longer need a job, I’ll probably retire away from the bay area, in a place much more similar to where I grew up. Different times, different needs.
August 4th, 2008 at 5:17 pm
@DreamT, fair enough. for me, I came out too long ago for college and all of my friends settled here, so it is hard to imagine living anywhere else at this point.
must stop reading burbed and go back to doing work…
August 4th, 2008 at 5:18 pm
RE, I think you missed what’s probably the case for quite a few of those lower-priced Los Altos rentals. The owners have probably had the places for 10+ years and at the lower rates they are cash flow positive or very nearly so. They hang onto the house for further appreciation and they don’t need the cash. It’s probably (some of) their retirement funds.
Steve, you summed things up quite nicely there in post 68. P.S. I personally wouldn’t buy a rental in this market but I’m fiscally conservative and am not experienced enough with property strictly from an investment perpective. I’ve also seen that while overall prices are still rising in the best places there are exceptions. It’s touch and go out there right now. (By exceptions, I mean on an individual house basis.)
August 4th, 2008 at 5:20 pm
Without knowing the specifics of your home, its impossible to say. The market is changing on a monthly basis and unless they were sold within that time frame they are irrelevant.
If you’re not a flipper, what do you care if it goes down? In the ***LONG*** run, it will go up so stop trying to assert that it hasn’t gone down in value in the past year.
Am I the only one who drives around and sees the same home with a for sale sign for months and then sees it removed? Why is this happening?
August 4th, 2008 at 5:21 pm
the no matter what you buy you will lose money guys (Pralay, et al)
———
That’s another blatant statement, Steve. Where did you find such a statement made by me? Care to provide the reference?
———-
*prices in Palo Alto, Los Altos, etc (the RBA) are rising and seem completely de-coupled from what happens in the east bay (always have, always will?)
——-
Come on, Steve. Even one year back East Bay was strongly coupled with south bay and the whole area was de-coupled from Stockton. Then sometime happened and now you are saying east bay is de-coupled from RBA. If that is the case, it seems the point of de-coupling is moving around with time.
August 4th, 2008 at 5:25 pm
WillowGlenner:
You said: “Actually I do think Zanon thinks that because rents are cheaper than buying – desirable property in RBA will collapse. Did I read that right, Zanon?”
Half right. Rents and prices are out of whack, but rents could always rise and prices stay the same to bring the ratio back into historical alignment. Personally, I don’t see that happening as I honestly don’t think the incomes here can support that, but I could be wrong.
Alternatively, rents and prices would stay out of whack for a while as people buy going for that appreciation upside. Who cares if you are cash flow negative at $6k/year if you’re gaining $100K/year in appreciation? I think that making that bet is risky. As we both know, stocks were great from 1988-1998, but they stunk from 1998-2008. RBA home prices have had a historic run from 1998-2008, but 2008-2018 has yet to be written. And if that appreciation does not materialize, I can see folks moving their money elsewhere.
One way I’m trying to get more information on what might happen is to see how leveraged homeowners in the RBA are. People who have been here for decades probably have no debt at all since they’ve enjoyed so much tax free appreciation. On the other hand, homebuyers from 1998-2008 might be very leveraged and had to take a low money-down mortgage to fit into the property (esp. 2003-2007).
As we all read in the papers, credit is collapsing in the US. If the RBA’s housing market was fueled by credit, then it’s in trouble. If it’s not, it’s not. I just don’t know the answer, and was wondering if anyone had any data on how leveraged the RBA home owner is. You cannot just look at subprime originations and see, as RBA borrowers are not subprime, but may still be very-small-downpayment borrowers.
-zanon
August 4th, 2008 at 5:25 pm
Zanon – you left out Prime loans in the form of Option ARM’s, I/O’s, and Hybrid ARM’s. Santa Clara County, San Mateo County, and SF will be the last to find out what happens when credit contracts…
The Map of Misery shows option payment loans make up a significant portion of Bay area loans and they don’t come free although they seem to for about 3-5 years.
August 4th, 2008 at 5:40 pm
this thread is like quicksand, must escape…
@pralay the no matter what you buy you will lose money guys (Pralay, et al)
sincere apologies if I misread some of your posts. are there are Bay Area places, if purhased today, you think will appreciate over the next 5 years?
August 4th, 2008 at 5:49 pm
anon – “what do you care if it goes down” – Not much in the short term really. Who said I did? I’m not planning to refinance either.
“stop trying to assert that it hasn’t gone down in value” – Why not? I was describing comps and keeping it objective. You sound like you’re making it personal and try calling it wishful thinking instead. Not knowing what house we’re talking about, you just end up sounding like a sad, frustrated person with no facts to put on the table with regards to my situation.
So in your opinion, comps are generally irrelevant. I guess I’ll leave our discussion at that.:)
August 4th, 2008 at 5:54 pm
Zanon, can you please post a link to this “ratio” or whatever it is? I don’t believe any rent to buy ratio has jumped recently. It cost double to buy vs rent in 92, was roughly even in 99 and reverted back to double in this decade, from my perspective.
I don’t believe any ratio here doubled etc due to cheap credit either, because nobody buys with max credit unless they are in East San Jose.
I assure you that you can take historic data of rents in the bay area, and divide by historic house price information in the bay area, and get a historic ratio. It’s just math.
This historic ratio has recently jumped dramatically. So, if price/rent was 500, it’s now 1000. I like looking at the ratio because it takes out all the rubbish about how nice the bay area is, how much tax deduction you get, the evils of prop13 etc. etc. etc. and simply looks at the ratio since that other stuff has been the same. The ratio changed dramatically due to cheap credit.
August 4th, 2008 at 5:58 pm
Hey does anybody ever click on burbed banner or some post link on this site and get a strange page full of special characters? What does this mean, is it me, my browser, a virus or what?
- signed, a marketing person
August 4th, 2008 at 6:11 pm
WillowGlenner: I have no idea why you have “ratio” in scare quotes. Ratios are not scary.
Perhaps you mean you don’t believe I have a historic rent-to-price series for the RBA? You are correct in that, I don’t, as I don’t think the RBA is tracked as a distinct entity anywhere outside this blog. But I think it’s pretty obvious that from 1998-2008 rents have stayed pretty flat, while house prices have gone up by 100%+. It was not cheap renting in RBA in ‘98, and it’s not cheap now, but prices were much lower 10 years ago. I think that’s pretty obvious to everyone on this board, but maybe I’m wrong.
I can link you to other historic rent-to-price series, but I’m not sure if that’s really what you want.
http://money.cnn.com/magazines/fortune/price_rent_ratios/
http://209.85.173.104/search?q=cache:YP8_wFS2pzUJ:morris.marginalq.com/DLM_fullpaper.pdf+historic+rent+to+price+ratio&hl=en&ct=clnk&cd=2&gl=us
http://bigpicture.typepad.com/comments/2008/05/housing-price-t.html
http://azrealestate.wordpress.com/2007/11/28/25-us-real-estate-markets-poised-to-fall-nov-2007/
-zanon
August 4th, 2008 at 6:36 pm
Just for yux, I checked Craiglists again for my neighborhood to see what my house would rent for today. Hard to say, but it looks like prices are up a little from last time I checked. I didn’t find a house close enough like mine to be sure. Several places in Sunnyvale/CUSD renting over $3500. Several places in the Ortega Park area for rent, too. I don’t know if they are for rent because the owners want income or because they can’t sell them for the wishing price.
steve, there is little for sale in 94087/CUSD/Homestead where I live. A few that have sat around for a long time and many that sold quickly. The place listed for under a mil was snapped up in 6 days, I’d say it went for over a mil but not by much, it’s on Cascade which is a thoroughfare but not as bad as Homestead (a place there not selling).
As to the Alt-A data, again, the NY Fed reserve has this data and their maps show Alt-A loans and % late, resetting, etc.
August 4th, 2008 at 7:07 pm
So far, the only thing I’ve heard in response to my link showing how a typical middle class resident lives in another area is
” Well “x” state isn’t in the Bay Area, and I can’t get all the things that I can in the BA”
In other words, none of you have lived much of anywhere else. People in general fear what they don’t know, and clearly that’s the case. Someone made the comment that everyone is moving out of TN, or other rural areas, etc. Or that there isn’t any competition for houses. That last one sort of blew me away. Isn’t LESS competition what you want anyway? That to me sounds like an oxymoron. The previous comment is also inaccurate, since in reality, NC,TN,and even AL are all enjoying record growth for precisely the same reason that people are displeased with areas like the Bay Area-aka- prices and too many people fighting at the teat… to compete for space. What’s more, the same assumptions are made that anywhere that’s outside a very limited area is totally incapable of being just as progressive and full of intelligent, forward-thinking people.That too isn’t a black and white situation.
It isn’t my place to say that you’re wrong for liking the BA so much that you’re willing to pay a massive premium for it over other areas. But to say that the BA is worth the price because it is better or provides more than an area you’ve never even been to, let along lived in isn’t really a case at all.
Anyhow, I’m not going to try to do anymore convincing. A lot of people already get what I’ve claimed here. My advice: Go out and explore your country. There’s a lot more than just NY and CA.
August 4th, 2008 at 9:07 pm
Oh Bob, keep your advice. I have explored the country. I’ve lived in other states and other countries. TN, a place that I have been to, does not offer me the life that I want to live, a life that I am willing and able to pay a premium for in the bay area. The bay area is worth the price because it provides a life that is better suited *for me*. Who are you to say what the case is or isn’t for bay area residents? You must think an awful lot of yourself and your opinions. You keep repeating the same assumptions about the people who choose to make the bay area home.
1. They have never been to TN
2. They have never explored the country
3. They think that everyone outside of SF or NY is less progressive or unintelligent
Who said that people were moving out of TN or other rural areas? Also, if rural areas are experiencing population growth, they probably are not rural anymore. Or did you mean certain cities and suburbs of your mentioned states are experiencing record growth?
Bob, the size of your house doesn’t lay the foundation for your lifestyle. I can live in a 1950’s starter house and send my kids to private school, pay for college and yearly trips overseas and make sizable donations to the charities every year. Heck, maybe one of those stupid lazy people that lives in one of those overpriced ranchers in Palo Alto travels all over the world to give money to those less fortunate to help them build better communities and better lives. One can also live in a 1950’s starter home and only afford the very basics in life. One can live in a 1950’s starter home and be in debt with the heat off in the winter. Why on earth would anyone assume the 3 have the same lifestyle based on the type of house they have? Can you not see the flaw in your in thinking while pointing how illogical and under-travelled everyone else is?
August 4th, 2008 at 9:11 pm
In other words, none of you have lived much of anywhere else. People in general fear what they don’t know, and clearly that’s the case.
You’re a gem, bob.
August 4th, 2008 at 9:37 pm
nomadic Says:
>>RE, I think you missed what’s probably the case for quite a few of those lower-priced Los Altos rentals. The owners have probably had the places for 10+ years and at the lower rates they are cash flow positive or very nearly so. They hang onto the house for further appreciation and they don’t need the cash.
I agree with your explanation, and let me add to that: Everyone knows RBA is a great investment. The longer you stay, the more equity you gain. Rent is a small part of the equation. That’s the part I didn’t get to elaborate on in my haste to write that post (too busy managing mega project at work). In any case, rent doesn’t matter. How much do you make in rent anyways? 30K before taxes? That’s small change compared to the million dollar equity most of these home owners are sitting on. Many of these houses are either paid off, almost paid off, or can be paid off. That’s why I keep reminding people that rent vs. buy is a very lousy way to judge the RBA market. Rent simply doesn’t matter.
August 4th, 2008 at 9:42 pm
From my understanding, people buy investment properties in the BA with the understanding that rents will keep going up as wages continue to inflate unabated. So far, that particular bet has never gone wrong. It’s like buying a high-divided stock such as AHR – hold on to it until you retire and the money you earn from it will dwarf the speed bumps from market fluctuations.
August 4th, 2008 at 9:50 pm
THE Bay Area has the crappy problems of NY, but not the glam nor the history nor the museums nor the teams nor the celebs nor the infra nor the diversity. Heck – it’s more expensive than NY sometimes.
August 4th, 2008 at 9:52 pm
Pralay says,
>>That’s another blatant statement, Steve. Where did you find such a statement made by me? Care to provide the reference?
Because it’s so blatantly obvious. You need a reference? Where should one start?
I gave you a suggestion to look at San Jose if you want low prices, but you wouldn’t consider it. You want RBA. That’s why you so desperately want prices to fall, so that you can take advantage.
Let’s just say that if you are waiting for RBA to fall, you’ll be waiting for a long, long time. Just remember: Home ownership in RBA is a privilege, not a right.
August 4th, 2008 at 10:11 pm
Willowglenner I’m calling you out as a soft housing head.
You pick the bottom of a neighborhood on housing price and the high end *asking” rent price on a rental and just call the $1500/mo difference “about the same as buying”. Give me an f—ing break.
You think someone should give away $18K a year to the bank in a declining market and call that a good investment? Your math is on crack!
Why is it again that anyone should take your opinions as insightful?
August 4th, 2008 at 10:17 pm
And Real Estater – your math and confused logic aren’t up to their typical pretzel-ly, trollish goodness today.
You’re going to need to work harder than “privilege not a right” to get your troll-star rating today.
August 4th, 2008 at 10:21 pm
Don’t know what you are talking about Wanker, can’t follow your post or what you are trying to say.
It seems like you might be making a big deal out of a $1500 discrepancy in rent vs mortgage, but on a typical bay area mortgage thats about the tax differential. So a $3000 rent vs a $4500 mortgage is about even in terms of out of pocket costs, just as a ballpark.
August 4th, 2008 at 10:21 pm
RE, you left out one more thing. You said “rent simply doesn’t matter.” One more factor that makes that true for some landlords – Prop 13. You can bet that if they were paying $1,000 per month in property taxes, rent would start to matter a bit.
bob, I didn’t comment on your ode to TN because I’m not interested in TN. This is an RBA blog. I’ve lived in the midwest and have been to at least 35 states. Just not interested right now. Yay for you – one less person to compete with you over there.
August 4th, 2008 at 10:26 pm
>>One more factor that makes that true for some landlords – Prop 13. You can bet that if they were paying $1,000 per month in property taxes, rent would start to matter a bit.
Prop 13 isn’t going away, since voters overwhelmingly support it. God bless Prop 13!
August 4th, 2008 at 10:27 pm
@wanker, near the top of the thread I posted a quick summary of los altos sales in since 12/07. I think the low was around 1.25M – the high was over 4M. The median was right around 2M and only 28 of the 150 were at 1.5 or under. around 2.1 or 2.2, the house start looking like “million dollar houses” – below that, nothing special with some being tear downs.
I think we’ll all stipulate none will rent for total costs (oppty cost on the down, debt service, insurance, TAX, maintenance), so some would say these 150 buyers were foolish. where do you stand, or do you just enjoy jabbing a stick at RE (not that that isn’t fun)?
August 4th, 2008 at 10:32 pm
“Everyone knows RBA is a great investment. The longer you stay, the more equity you gain. Rent is a small part of the equation. That’s the part I didn’t get to elaborate on in my haste to write that post (too busy managing mega project at work). In any case, rent doesn’t matter. How much do you make in rent anyways? 30K before taxes? That’s small change compared to the million dollar equity most of these home owners are sitting on. Many of these houses are either paid off, almost paid off, or can be paid off. That’s why I keep reminding people that rent vs. buy is a very lousy way to judge the RBA market. Rent simply doesn’t matter.”
Wow. Are you kidding me? What impeccable logic and analysis. And you manage people? Good lord.
“What you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.”
- The Principal
August 4th, 2008 at 10:34 pm
anon13 – “Why on earth would anyone assume the 3 have the same lifestyle based on the type of house they have?”
Thanks so much for synthetising my long tentative of an explanation into one clear question.
August 4th, 2008 at 10:37 pm
@RE, God bless Prop 13!
I write a post defending you and you have to go do that. As Madhaus has explained, Prop 13 has been a disaster for city and county services.
Aditionally, prop 13 distorts the RE market (if you locked in low taxes, why sell if you can afford to hold on) and it is inherently unfair. Let’s say I move next door to you. I can guarantee that I will consume less services yet I will pay 5x or more the tax.
I agree it will never die, but Prop 13 (and its inter-generational provisions) is very poor public policy.
August 4th, 2008 at 10:42 pm
LOL.
This part is my personal favorite.
“Many of these houses are either paid off, almost paid off, or can be paid off. That’s why I keep reminding people that rent vs. buy is a very lousy way to judge the RBA market. Rent simply doesn’t matter.”
Yep. I guess that about covers it. Absolutely brilliant.
August 4th, 2008 at 10:42 pm
We have anon, zanon and anon13 and all three seem to hold different views. Can two out of the three upgrade to a semi-anonymous pseudonym? And don’t get me started on “What?” post #98.
August 4th, 2008 at 10:47 pm
“I agree with your explanation, and let me add to that: Everyone knows RBA is a great investment. The longer you stay, the more equity you gain. Rent is a small part of the equation. That’s the part I didn’t get to elaborate on in my haste to write that post (too busy managing mega project at work). In any case, rent doesn’t matter. How much do you make in rent anyways? 30K before taxes? That’s small change compared to the million dollar equity most of these home owners are sitting on. Many of these houses are either paid off, almost paid off, or can be paid off. That’s why I keep reminding people that rent vs. buy is a very lousy way to judge the RBA market. Rent simply doesn’t matter.”
RE, I’m sorry, but there is no way in hell that you’re not a Realtor.
August 4th, 2008 at 10:47 pm
steve – RealEstater is our local scorpion. He may look accommodating and play along for a while, but eventually it’s in his nature to sting with a lofty, indefensible yet unattackable assertion. It’s just in his nature.
August 4th, 2008 at 10:50 pm
The purchase price to monthly rent ratio in desirable sections of SF, Peninsula, and South Bay is somewhere between 280-320x. In the example above a $4500 a month mortgage (excluding prop-tax) using a 5/1-ARM/20% down would pencil in at $900k purchase price. The equivalent rental can be had for about $2800-$3000/month. If you throw in property tax, upkeep, and maintenance you’re talking about $5500+/month.
Is there any doubt that renting is a good idea, especially in a market where housing most probably will be a deflationary asset? If you’re an investor and can cut that down by 60% then the property may pencil out (6% cap rate).
As rates increase purchase prices must either come down or wages must come up. As we are entering a recessionary phase, any takers on rising wages? If you had $180k cash to put down on a house wouldn’t you rather put it in a deflation fighting financial instrument?
August 4th, 2008 at 10:54 pm
sonarrat – what’s a “high-divided stock”? A google search on this yields exactly one result.
August 4th, 2008 at 11:07 pm
DreamT, Steve, and all,
Supporting Prop 13 is not a sting. This is the view of the majority in a democratic country. One man one vote is as fair as it gets.
August 4th, 2008 at 11:15 pm
>>As we are entering a recessionary phase, any takers on rising wages? If you had $180k cash to put down on a house wouldn’t you rather put it in a deflation fighting financial instrument?
You made an assumption that is wrong. We are living in an inflationary environment, not deflationary. I’ll be a taker on rising wages. Wages will rise if there’s inflation. As wages rise, your mortgage becomes a smaller percentage of your budget. In addition, your mortgage debt gets devalued. If you have cash right now, your best move is to be in real estate.
August 4th, 2008 at 11:22 pm
Come on, RealEstater, as a manager you should have recognized the scorpion tale. Here’s a re-telling of the story:
http://findarticles.com/p/articles/mi_qn4158/is_20071113/ai_n21101146 (end of article)
It was not in reference to the content of your message but in reference to steve’s disappointment. The sting is an analogy and simply means you’re your usual self.
August 4th, 2008 at 11:22 pm
“We have anon, zanon and anon13 and all three seem to hold different views. Can two out of the three upgrade to a semi-anonymous pseudonym? And don’t get me started on “What?” post #98.”
This is the internet, sir; if you are not anonymous you are a liar.
August 4th, 2008 at 11:25 pm
“What” brings the good quotez, though. That one from Billy Madison was a gem.
August 4th, 2008 at 11:25 pm
“What” brings the good quotez, though. That one from Billy Madison was a gem.
August 4th, 2008 at 11:29 pm
anon – huh? I didn’t get the joke.
RealEstater – this is common wisdom, but there are also unprecedented powerful deflationary forces at play with regards to wages. Unless the US suddenly becomes more protectionist (which I grant isn’t unlikely), your scenario may not happen. It generally takes more effort nowadays to raise wage level that in the past. More aggressive, competent global competition. More frequent need to update one’s skills. I tend to agree with you on this but wouldn’t be so definitive.
August 4th, 2008 at 11:32 pm
There is no joke, only the truth.
August 4th, 2008 at 11:50 pm
anon: the same guy who calls BA residents idiots is calling posters who divulgate personal info liars. He also has a privileged handle on the truth. As trolls go, he’s probably a bit too transparent. Fortuitously, he’s… anonymous!
August 5th, 2008 at 12:19 am
DreamT, wake up. I said only an idiot would buy a home.
Fortuitously, indeed. Here’s one for ya: I’m a BA resident. You can trust me because I am anon.
August 5th, 2008 at 12:23 am
anon – yes, I confused your ‘idiot’ with bob’s ‘middle-class paupers’. That’s what happens when you’re anonymous, you end up looking like someone else.
August 5th, 2008 at 12:35 am
Wages today are on par with those during the dot com bubble. In real dollars wages were higher in the dot com bubble than today. At the same time housing, food, and energy costs have doubled or tripled. Much of this can be attributed to the cheap dollar, cheap credit, and exotic mortgages. The last two are going the way of the dodo so unless wages double or triple to keep up with house prices, housing will become a deflationary asset. Especially if wages are stagnant, rates rise, and energy is high in real dollars. There are lots of new drivers in China who have never seen oil at $100/barrel and they have money (our money).
August 5th, 2008 at 12:41 am
Perhaps, but its the only way you can know I am honest. I have nothing to prove.
For the record, I find bob’s middle class paupers characterization both accurate and comical. Comical in the sense that BA residents have to work so hard to afford mediocre homes (read: turds) and accurate in that a pauper implies one looking for a handout, which is precisely what most people will do if and when the crunch affects the RBA.
August 5th, 2008 at 12:42 am
@RE This is the view of the majority in a democratic country. One man one vote is as fair as it gets.
Actually, no. Nothing about majority rule is inherently “fair” as our Founding Fathers recognized. Our system of government emphasizes the protection of the minority from the tyranny of the majority.
If you want to some analysis on fairness, you should start by reading Rawls. The veil of ignorance is an important thought experiment and one applicable here given that chief impacts of Prop 13 have been inter-generational (young to old) wealth transfer and the destruction of the CA education system (first to last). However, I’ll provide an example that you might be able to relate to.
Suppose you were a landlord in a city that passed rent control. Rent control is popular in places like SF (the will of the people and all), but would you really submit to a taking of your property as fair because 50% of your fellow citizens voted for it?
August 5th, 2008 at 1:07 am
anon – nothing to prove, then why bother posting responses to my posts and others?
Maybe you’re trying to prove that your predictions are grounded in reality and that your logic isn’t flawed. Hardly a sturdy justification for honest posting, considering the success you’ve had so far. Anyway, enough with you.
steve – nice post. Expediently debunks the myth that rule of majority reflects fairness.
August 5th, 2008 at 2:13 am
Nice blog, just found it last week.
On the RBA rental prices, here are some notes from the field. We currently rent in Palo Alto and are looking for more space (2 adults, 1 kid). We have been looking in Palo Alto, Los Altos, and CUSD areas. Our budget is like $2700-$4k/month, depending what we find. Info below is up to date as of this weekend, as we are actively looking and have a few applications pending. We’ve also “lost” on a few places in the past few weeks.
Palo Alto – “nice” midtown single family homes of 1600sqft and up start around 4k and go up. E.g. 2521 South Court — nice kitchen remodel a few years ago (they blew away the formal dining room entirely), but only about 1600 sq ft on a smallish lot; asking $4250, will probably get that or slightly under. A block or two away, 450 El Dorado was (may still be) on the market for about $4000/month but the kitchen is tiny and original; everything is original except the 2 added baths above the garage. The lot size in Zillow is inaccurate; somehow the owner managed to build two houses on the one lot. Also in the area, renovated to (varying degrees) Eichlers with less space sometimes go for even more per square foot. 370 Ely, renovated but nevertheless something like 1150 sqft, went for $3495/mo if I recall; we were 1 out of apparently quite a few applicants and didn’t get it. I have seen a few others around 1500 sqft offered for $4k or more. We have basically stopped looking at them due to lack of storage, generally high price, etc.
Los Altos – places in the $3k-$4k range tend to be either small, or original and unrenovated. Examples I’ve seen include 115 E Portola (1432 sqft, renovated kitchen, pretty decent rest of house) — looks like it’s off the market but had been listed for $3600/month IIRC. 1156 Miramonte — busy street, for Los Altos; unrenovated interior; excessively dark; smallish baths; bad landscaping; excess pavement; random garage-like buildings in back — has been on the market for 2 months. Good candidate for a knockdown. For like $3800/month (probably will go for less) you can rent 990 Berry (1776 sq ft) at the corner of Miramonte; everything is original, except some underesirable added patio covering that darkens the living room excessively. Tiny, tiny kitchen (counter space may actually have been removed). Bottom line is that in my opinion it is very difficult to rent for under 4k/month a 3+bed/2+bath SFH in Los Altos with 1500 sqft+ and which meets my wife’s (pretty typical) criteria for niceness.
As an aside, here is one fabulous one-of-a-kind Los Altos Hills exception ($3900 for 2800 sqft/1.25 acre):
http://sfbay.craigslist.org/pen/apa/780722653.html
It’s been in the owner’s family for about 50 years and, having seen the place this weekend and talked at length with the owners, it is probably safe to conclude that rental income is not their primary motive.
Sunnyvale/CUSD – Seen a few here; suspect we may end up here (or Sunnyvale/Cherry Chase). One recent one, 1526 Blackhawk Drive (1837/6700) near Ortega Park, listed for $2995, has recently refinished wood floors and paint, 4 bedrooms (obviously not large), some original bathroom touches (e.g. yellow/pink tiles); overall the place feels pretty livable. I suspect it will go pretty quickly at the asking price.
Cupertino – prices vary but are generally about $1.5 – $1.75/sqft. This weekend we saw two places with pools and other recent updates (if not much backyard space) in the ~2200 sqft size in the Monta Vista area.
Currently we are still looking.
For what it’s worth, we could buy (with like 50%+ down payment), but choose to invest elsewhere.
—-
I know the rule about not feeding the trolls, but the “rent doesn’t matter” comment above cracks me up. Perhaps intentionally, it’s basically a paraphrase of the dot-com mantra: “profit doesn’t matter”. We all know how well that worked out.
August 5th, 2008 at 2:24 am
rba_renter, the “rent doesn’t matter” was no doubt an exaggeration, but the underlying truth is that in locations where demand for permanent housing will ALWAYS exceed supply due to low turnover and comparatively very attractive lots, rent and house price will never correlate the way they do elsewhere. Your Los Altos Hills example is very telling.
Thanks for sharing – fact-based posts like yours make visiting this blog worthwile.
August 5th, 2008 at 7:39 am
Yes, thanks RBA_Renter
The prices you are seeing are higher than the prices I am seeing, but I’m OK with more remote locations, as 280 access is more important to us thank walking distance to stuff. As you get closer to U. Ave, rents certainly go up.
-zanon
August 5th, 2008 at 7:52 am
Bob, the size of your house doesn’t lay the foundation for your lifestyle. I can live in a 1950’s starter house and send my kids to private school, pay for college and yearly trips overseas and make sizable donations to the charities every year.
The argument wasn’t about the size of houses. But you seem to bringing a whole other argument to the table, which I think cuts to the core of why people have this perception of the area that makes it so precious: Lifestyle. By what you say, you’re suggesting that the lifestyle that exists in the BA is exclusive to this area, hence warrants the higher costs.You mention being able to send your kids to private school and travel overseas as well as pay for your kid’s education as well as make donations to charity. Guess what?
My parents did all of that as well except that our public schools were already good and well-funded, hence they didn’t have to send us to private school. They also travel. They go to Europe, The Mediterranean,and come out here as well. By Dad volunteers as two charities and even rings the bell for Goodwill at Christmas. But… wait- they live in TN, so that must not count… right? The argument that the culture, lifestyle, and so on in the BA is somehow better than somewhere else is inaccurate. Sorry, but I’ll never buy it.
I didn’t comment on your ode to TN because I’m not interested in TN. This is an RBA blog. I’ve lived in the midwest and have been to at least 35 states.
ALERT: the Midwest is NOT TN. Neither is Ohio, Arkansas, or Oklahoma.
Either way, a million bucks for a little home, ANYWHERE is too much to pay- even if you could make the claim that the culture is superior in any regard.
August 5th, 2008 at 8:02 am
bob… did you read the two posts you just commented on? You obviously did not comprehend that not everyone is just like you and values the same things as you and in the same way. You love TN. Great. No one will keep you from leaving when you go back.
I know where TN is. The point wasn’t to be that specific. The point is the midwest has a lower cost of living and also has good schools. I don’t have kids. I don’t care much about schools, other than my personal belief it’s one of the core things a country should provide to its citizens.
Can you not agree that different people want to live different ways and value different things? That doesn’t mean any particular way is better than another. Sheesh.
August 5th, 2008 at 8:06 am
@rba_renter – excellent post! thank you for sharing your experiences
August 5th, 2008 at 8:28 am
Because it’s so blatantly obvious. You need a reference? Where should one start?
——
RealEstater,
Please start. I know your ability. You are overestimating yourself.
———–
I gave you a suggestion to look at San Jose if you want low prices, but you wouldn’t consider it.
————
As if I care for a “suggestion” from a real estate agent who is claiming that he has home in RBA – and a Porsche. That would be the biggest joke.
——
You want RBA. That’s why you so desperately want prices to fall, so that you can take advantage.
——
I am not desperately looking. It’s just falling without even my “looking”. Do you want to me quote one more time evolution of your RBA – from SCC to “core cities” (including Sunnyvale) to South Sunnyvale to only-CUSD?
—–
Home ownership in RBA is a privilege, not a right.
——
This is one of those rare occasions you are actually right. YOu know there is a say, even a broken clock is right twice a day.
August 5th, 2008 at 8:42 am
Wow. Are you kidding me? What impeccable logic and analysis. And you manage people? Good lord.
——-
Do you have any doubt about managing ability of a troll who spends his significant work hours in burbed?
August 5th, 2008 at 9:08 am
Can you not agree that different people want to live different ways and value different things? That doesn’t mean any particular way is better than another. Sheesh.
I totally agree with you. No doubt.I mean, last week we had a topic on here, and people were making claims at how inferior the east bay- just a few miles away- was compared to Palo Alto or Sunnyvale. So people here seem to really be sensitive to very minute differences, hence a comparison between two totally different states or cities would probably be pointless here.
But just to make my final analysis, are the prices currently in the RBA really worth the value of these differences? If you were to attach a mathematical equation comparing the cost of living to what you get in return here… are the costs still sensible? I suppose I simply don’t see how that’s possible.
August 5th, 2008 at 9:38 am
Bob, you’re clueless. You can not comprehend a single post. You keep seeing things that are not there and continue with the straw man argument. Do you know what a straw man is?
You keep putting words into other people’s post and twisting things around so you have new things to argue with, that the poster never stated.
Look at your post #125 You completely miss the point. I wasn’t pointing out anything about the lifestyle the bay area offers. I was pointing out how one can have a different lifestyle while living in the same style house.
You then go into the second paragraph swinging with a straw man argument. No one said those things were not possible in TN, nobody. No one said they were exclusive to the bay area, no one. Please put it into quotes where I made that argument. I’m trying to get you to understand that one who has a rancher in Palo Alto does not automatically have the life of a middle class pauper. That is what the explanation was for. It has nothing to do with your parents’ lifestyle in TN or what other people can do in TN. I’m fully aware that people all over this country have different lifestyles and enjoy different things and different ways of life, it is you Bob that does not understand this.
Again, I never claimed the culture was superior ever, you just can not understand what you read. Please put it in quotes where I said the culture was superior.
You Bob, are the one that is going around making blanket statements and value judgments about people living in a certain area (the bay area). You can’t wrap your head around why some people pay to live in the bay area. You don’t get it. It isn’t about the size of a house. It is about paying for the land to live in a place that one loves. The land is in great demand, supply and demand. The market is correcting itself as we speak, but prices in the bay area like other areas of the country will always be higher than they are in other parts of the country.
August 5th, 2008 at 9:47 am
Bob- Holy crap I can’t believe your last post (think arrogant). Yes, I prefer to live in Sunnyvale or Palo Alto to the east bay. I grew up in the east bay. It was pretty shitty. I loved all the gang violence in my school, and watching drug deals go down in the school library. I loved watching a shooting victim come into a cafe holding there insides after being shot in the stomach. I like having past classmates that are in jail for murder. I loved living in fear going to school instead of being able to focus on getting good grades.
I know there are nice places in the east bay, but again, those places do not offer me the life I have over here. Some of the nicer places that also offer the lifestyle I love are also to crime ridden areas which would put my family at an increased risk for crime. Am I being sensitive? I don’t know my friend was stabbed to death in Rockridge. You’re really rich, to be offering up all of your judgments, assuming that no one has ever been anywhere or lived anywhere, therefore our arguments are baseless. I will never subject my kids to what I was subjected to live buy a bigger house in the east bay so I can have a better lifestyle than a pauper.
August 5th, 2008 at 9:53 am
Sorry for all the errors. It should read some of the nicer places in the east bay that offer the same lifestyle are also close to crime ridden areas.
The last line should read I won’t subject my kids to the life I had in order to buy a bigger house in the east bay.
August 5th, 2008 at 10:09 am
The bottom line is simple: More people live here. More people means more competition. More competition means higher prices. More people= more crime. I make choices, you make choices, and we live by them.
No, I don’t agree that kids in the East Bay can’t have what those living in other parts of the Bay have. As you mentioned- it depends on where you live in those areas, and even where you live now, there are “bad” areas too. That’s universal.Pick your Poison because anywhere you choose has its own brand. All I know is that the kids around where I live all get along just fine. Perhaps it was bad when you were a kid. So too was the city closest to where I grew up. Now its a nice, safe, clean city. Places change. So do people.Then again, I’m not you and didn’t have your experiences as a child.
If I sound like I’m criticizing people for paying huge sums of money for a house here, or anywhere else for that matter, then I suppose I am,which is why I suppose me and others have a difference of opinion. A house is not something I equate with the quality of life, and never will. It is a liability as long as the bill is due to the Bank you bought it from, and as long as it is such, I see no reason to put me or my Wife at risk by purchasing in this area. But that’s just me. But if someone simply must shell out the dough because they think they can’t live anywhere else or live any differently, then yes- I am wrong for criticizing that aspect of their choice.But you’ll never get me to agree that paying such a huge amount for a pedestrian home is ever worth what these prices demand.
August 5th, 2008 at 10:23 am
People who are claiming that E-bay is full of crimes and Peninsula and South bay have no crime are full of BS.
This is nothing but a perfect example of pure smugness.
Dare I say this is “bay area smugness”?
Lets compare two cities,
Fremont and Sunnyvale.
How about Santa Clara and Danville?
August 5th, 2008 at 10:24 am
DreamT,
RealEstater – this is common wisdom, but there are also unprecedented powerful deflationary forces at play with regards to wages. Unless the US suddenly becomes more protectionist (which I grant isn’t unlikely), your scenario may not happen. It generally takes more effort nowadays to raise wage level that in the past. More aggressive, competent global competition. More frequent need to update one’s skills. I tend to agree with you on this but wouldn’t be so definitive.
I am fairly close to this issue. We experienced wage deflation esp in Silicon Valley in the 2001-2005 period, due to globalization made possible by the internet, but that has reversed. It now costs almost as much to hire in india as here- not quite, but close (60K). This is the key reason rents are going through the roof imho. The whole offshore model only works when salaries offshore are 30% or less of what an american worker costs. We are way past that now. The only issue with wage deflation now, is whether MORE cheap labor comes online from some other locale to create a climate like we had in 2002- personally I think not. The crashing dollar has caused the current uplift in foreign salaries, but I am not expecting a reverse anytime soon. Obama has a mess on his hands, paying off this Bush debt will probably take all of our lifetimes unless they inflate it away, and either of those options means salaries will hold or increase. So basically what I am saying is this offshore labor arbitrage is yesterday’s news that is reversing. Just my opinion.
August 5th, 2008 at 10:26 am
anon13,
> It should read some of the nicer places in the east bay that offer the same lifestyle are also close to crime ridden areas.
That’s completely incorrect.
You are ignorant about East bay.
August 5th, 2008 at 10:27 am
thanks for the data Rba_renter. $4K for the RBA sounds about right. Its $3K in willow glen now for a good, remodelled place so $4K in Los Altos makes sense.
August 5th, 2008 at 10:31 am
DreamT,
With respect to your statement: “nothing to prove, then why bother posting responses to my posts and others?
Maybe you’re trying to prove that your predictions are grounded in reality and that your logic isn’t flawed. ”
By believing the lie, you are propagating it.
Just what predictions have I made, sir? That the value of your and ALL the homes in the bay area have gone down at least some in the past year?
August 5th, 2008 at 10:32 am
Bob- “A house is not something I equate with the quality of life” Yes it is. You said as much when you said that people over pay for a 1950’s starter home to live the life of a middle class pauper.
Prices and what people are willing to pay are relative. Your parents’ home TN might seem like over priced luxury to someone else.
A low socio-economic area = more crime (of course this varies from country and culture). When I was living in a small trailer park out in the middle of Nevada the population was small, yet petty and violent crime was everywhere. You have to look at the per capita stats to assess risk, not just count how many people are in an area.
Bob, I can live anywhere, I just want and desire to live here. It doesn’t have anything to do with me thinking I can’t live some place else or live differently (there you go again making assumptions and judgments). I don’t want to live differently, and there is no compelling reason why I should. The bay area is a good value for my money. I understand I am not buying the home, I am buying the place. You don’t think it is a good value for your money. Neither is a fact nor should it be stated as so.
The bottom line is simple, you have made a lot of asinine comments, value judgments and assumptions about the people who choose to make the bay area home. Everyone gets that you don’t think it is a good value for the money, it is all the utter nonsense you spew to validate and bolster your opinions over others. It is the way you claim that everyone else’s opinions are baseless because you think they couldn’t have possibly been any place else than the bay area.
August 5th, 2008 at 10:32 am
but the “rent doesn’t matter” comment above cracks me up.
That was RE’s comment and he was talking about long time owners in Palo Alto or wherever who choose to rent their house. Those people don’t care about rent, they care about getting somebody in there to take care of the property. I agree with RE on this point. But that is a pretty small group of landlords. People like me, who buy houses to rent them out, DO care about rents (although even I am looking for quality renters who won’t kill the place- I will rent for lower rent to get a good tenant, most landlords will). But the point is that rents where they are today are FINE for almost any landlord to get the price he needs to keep up the rental. I don’t need “top dollar” to make ends meet with a rental these days. Just the average rent will do it. Even people that bought only a few years ago feel this way, with rents at $4K.
August 5th, 2008 at 10:33 am
“If I sound like I’m criticizing people for paying huge sums of money for a house here, or anywhere else for that matter, then I suppose I am,which is why I suppose me and others have a difference of opinion.”
Bob, you should be. By continuing to buy homes at outrageous prices, it keeps the price up.
Oh well, I hope that people know they’re paying for the real estate scammer (broker)’s single transaction with a full year of home payments…
August 5th, 2008 at 10:59 am
Really SG? All of the places I would want to live are near Oakland (Alameda included). I will never live near Oakland. Maybe you could tell me about some of those places that I am ignorant to.
August 5th, 2008 at 11:09 am
anon13,
Follow my comment 136.
Try to compare apples to apples.
East bay != Oakland only, same as Peninsula != Redwood City only.
August 5th, 2008 at 11:11 am
“Bob, you should be. By continuing to buy homes at outrageous prices, it keeps the price up.”
It doesn’t matter if the people buying can afford it. The problem is that a lot of people bought what they could not afford and the checks and balance system went out the window as banks lent huge sums of money to people who were not going to be able to pay it back.
As long as the government puts the kibosh on poor lending practices the market will correct as it is already doing in many areas around the bay.
August 5th, 2008 at 11:12 am
Correction to post 146, Price doesn’t matter if the person buying the homes can afford to pay for it.
August 5th, 2008 at 11:13 am
And BTW, I don’t see any difference in “lifestyles” between South Bay and East Bay.
The most of part of the peninsula has somewhat better lifestyle than either of them. But that also comes with a premium.
August 5th, 2008 at 11:15 am
I didn’t say the east bay was full of crimes. I said the places that I would want to live in the east bay are near places that are crime ridden. I know the east bay has nice places to live, most of them are not practical for my situation. I know the east bay doesn’t equal Oakland, however the places I like are too close to Oakland for my comfort.
August 5th, 2008 at 11:16 am
And BTW, I don’t see any difference in “lifestyles” between South Bay and East Bay.
The most of part of the peninsula has somewhat better lifestyle than either of them. But that also comes with a premium.
The traffic is certainly not as bad on the Peninsula (except on 101 between SFO and San Mateo). Every time I go back down to Santa Clara or San Jose I think oh god, not this shit again.
August 5th, 2008 at 11:18 am
Exactly SG, it comes with a premium, one that I am willing to pay.
There are places in the east bay that do offer the same lifestyle and quality of life, none of them are near work and we don’t want a commute.
August 5th, 2008 at 11:40 am
Anon13
You wrote the following:
Bob- Holy crap I can’t believe your last post (think arrogant). Yes, I prefer to live in Sunnyvale or Palo Alto to the east bay. I grew up in the east bay. It was pretty shitty. I loved all the gang violence in my school, and watching drug deals go down in the school library. I loved watching a shooting victim come into a cafe holding there insides after being shot in the stomach. I like having past classmates that are in jail for murder. I loved living in fear going to school instead of being able to focus on getting good grades.
August 5th, 2008 at 11:47 am
> Exactly SG, it comes with a premium, one that I am willing to pay.
You mentioned Sunnyvale. I did not include Sunnyvale in the Peninsula. If you are willing to pay in Hillsborough or Atherton, go for it.
> none of them are near work and we don’t want a commute
Near “your” work.
Not everyone works in Sunnyvale.
Honestly, I see absolutely no difference between Fremont and Sunnyvale whatsoever, other than proximity to some jobs.
In fact, if someone works in the city, it might be faster for him/her to take BART and go to work from Fremont, than from Sunnyvale.
Also, Pleasanton is becoming another hub of tech jobs.
August 5th, 2008 at 1:22 pm
Yes, my work, SG. I didn’t say there weren’t any jobs out there. It was a reason given that the city was not practical for me, so I figured writing “my work” would have been redundant.
There are many differences between Sunnyvale and Fremont, too many to go into here. I suspect one of the reasons why Sunnyvale costs about 200,000 more is because the cities that surround Fremont have a lot more crime than the surrounding areas of Sunnyvale (except for Mountain View).
August 5th, 2008 at 1:34 pm
WG #137 – I meant globalization as a whole, not specifically offshoring of engineering work to India. Such things for example as China talent becoming increasingly available, aggressive and competitive, an unsettling reality for new MBA graduates.
I also think rents are increasing primarily because people are holding off buying houses, due to oversimplification by the media. It’s the herd mentality. So I don’t see higher rent to be as permanent a phenomenon as you do.
August 5th, 2008 at 1:57 pm
I don’t believe the high rents will be sustainable for the long term either. How much would the average worker have to make in order sustain those rents? I would dip into my savings and investments to pay for a house, I wouldn’t to pay for a rental, which is what would have to happen if we remain renters and the prices keep escalating. Those who earn top salaries in tech (not counting VPs and up) wouldn’t be able to rent based on salary alone. I think there are a lot of people like us who are able to buy now but are waiting to see what happens with the market in the next year before we purchase. There comes a time when buying is cheaper than renting and I think that time is around the corner. Once things settle down and the market has corrected, I would expect to see prices in line with salaries for most of the bay area.
Who would sell off their stock options to pay rent? Of course this is the bay area where anything can happen with housing…
August 5th, 2008 at 2:00 pm
Lol OVERSIMPLIFICATION BY THE MEDIA LOLOLOL…
Just what is oversimplified about the fact that homes are depreciating? Banks are going under?
August 5th, 2008 at 2:06 pm
anon13,
> Fremont have a lot more crime than the surrounding areas of Sunnyvale (except for Mountain View).
I gave you links for comparative crime statistics of Fremont and Sunnyvale in #136.
Take a look at them when you get a chance.
August 5th, 2008 at 2:23 pm
anon – Don’t worry, my post was not meant for you, don’t feel like you need to LOL it
Happy posting.
August 5th, 2008 at 2:26 pm
Laughing, good sir, is an involuntary response. It’s not done out of necessity.
Despite your post not being directed at me, I am asking YOU: Just what part(s) of the current housing CRISIS do you feel is “oversimplified” by the media?
August 5th, 2008 at 3:05 pm
SG- we’re talking about the surrounding areas, so those links that show crime in Sunnyvale and Fremont are not relevant. Go to that same website and check out Hayward, Union City, and Newark. The only city near Sunnyvale that comes close to those crime stats is Mountain View.
The city with the lowest crime which borders Fremont is Pleasanton. The city with the lowest crime that borders Sunnyvale is Los Altos. Los Altos has a lot less crime than Pleasanton.
Over all, Fremont is surrounded by higher crime areas than Sunnyvale.
Now if you want to take my words and quote me out of context like you did in your previous post, then feel free to beat a straw man.
This is what I said:
“I suspect one of the reasons why Sunnyvale costs about 200,000 more is because the cities that surround Fremont have a lot more crime than the surrounding areas of Sunnyvale (except for Mountain View).”
This is how you quoted me:
> Fremont have a lot more crime than the surrounding areas of Sunnyvale (except for Mountain View).
Two very different things.
August 5th, 2008 at 3:14 pm
Oh my gawd, sg, you are not SERIOUSLY proposing there is NO difference between Sunnyvale and Fremont, are you?
There is. If Sunnyvale is the Toyota Corp, then Fremont is Hyundai.
Fremont does have a nice area in Mission SJ, but most of it is pretty much Mipitas del Norte, or Newark writ large.
Median household income, 2005
Fremont: $81.5K
Sunnyvale: $74.4K
Median home/condo value, 2005
F: $635K S: $677K
So far, if anything, this suggests that Fremont is wealthier than Sunnyvale, yet the homes are valued for 5% less. Let’s look a little more closely, shall we?
Median home value, 2Q2008
F: $595K S: $798K
Whoa, Nellie! What happened here in just 3 years? What was a 5% difference is now a 33% difference!
Education rate, 25+, college and/or graduate degree
F: 60% S: 71%
2006 Crime Rate Index, Avg for US = 323
F: 224 S: 151
There are graphs in City-Data that show commute times to work. The Sunnyvale graph is significantly skewed to the left (shorter commute times) compared to Fremont. It is not a graph that lends itself well to copying the data out here, so I suggest you look at the two graphs. The Bay Area Census pages gives me the mean: Fremont, 31.4; Sunnyvale 22.2.
And that really boils down into why Sunnyvale is more valuable than Fremont: proximity to jobs. There are more high-paying jobs in Sunnyvale. There are more high-paying jobs close to Sunnyvale. And if you live in Fremont, you have two congested routes to those jobs, 237 or 84.
Now, long ago I once found a huge table of all the different kinds of jobs and how many people did them, in Sunnyvale. I can’t find it now. But a simple comparision via the Simply Hired webpage shows 54,000 jobs in Sunnyvale vs 31,000 in Fremont. I know there are more jobs than that, but clearly Sunnyvale has more of them.
Okay, I found something in the ACTUAL US Census, you can get an Economic fact sheet on any city. They break out # of jobs by sector but don’t add them up. this is 2002 data.
Quick adding up gives me:
Sunnyvale, 83,000 jobs listed in these sectors.
Fremont, 72,000 jobs.
Wonder how things changed between then and now.
Fremont,
When I moved to Sunnyvale 15 years ago, the Murky news said it had more jobs than people.
August 5th, 2008 at 3:17 pm
anon – For a start, read this realtor’s articles on market indicators http://johnfyten.com/articlesindex.htm
Other articles he wrote attempt to nuance media statements. His last article for ex (”bottom heavy”): “There it is, in all its gory. Prices up 1.2 percent—essentially flat—at the top end. Better than a kick in the head, as grandpa used to say, and certainly not the 22.9 percent decline the Chronicle blares. Further down the price range in Mountain View, average sales price dipped 5.4 percent between May 2007 and May 2008, and I hope you’ve noticed that 5.4 percent is also not 22.9 percent. Next step down and, okay, now there’s visible damage: average sales price fell 16.1 percent for better San Jose CID May over May. One more step down and watch that step: low-end San Jose CID has lost about 32 percent.”
This is just an excerpt from one of many articles he published. Read them all then we can discuss.
August 5th, 2008 at 3:50 pm
Madhaus,
Nice, you just did not highlight one thing that Fremont has more
, i.e. household income!
From your own post:
Median household income, 2005
Fremont: $81.5K
Sunnyvale: $74.4K
In my own post, I suggested Sunnyvale is more close to jobs than Fremont. Read them up. But from your own data, even that does not look as big as I had expected.
>>And if you live in Fremont, you have two congested routes to those jobs, 237 or 84.
You know, I have commuted to the Peninsula from both Mountain View and Fremont through 84. I can tell you that driving on 84 is a joyous experience compared to 101 N from MV during office hours.
I guess 237 would be worse though. But I don’t know since I never used that route for commute.
Anyhow, I don’t think any difference between them is significant enough to demand 33% price difference right now.
If you believe that 33% difference will continue or widen, we disagree.
August 5th, 2008 at 3:56 pm
Wow…incredible. At first I saw your response and thought to myself..Ok, he couldn’t possibly be ignorant enough to link me a realtor’s website to bolster his position…But then, I clicked and sure enough: Yep – that’s exactly what it is.
Every one of those articles is chock full of bs. That’s Bull Shit. Trash. Garbage. It is the same tripe that RE spews.
Don’t you understand that real estate agents have a vested interest in real estate changing hands? If people aren’t buying and selling homes then they make no money. NOT ONLY THAT, they have an interest in driving up the price because the higher the home sale price, the higher their comission is. Does that strike you as odd? Both the buying and selling agent want to see the home go for the highest price possible.
I’m not even going to give those articles a second glance as they are written by a party who could not be more biased.
You seem like a nice enough guy and maybe I’m being overly harsh, but this is reality. Maybe some other kind soul would help me explain this to you with some words that are more kind.
August 5th, 2008 at 3:57 pm
From my data, sg, the 33% differential is quite recent. Sunnyvale prices, for now, are mostly holding. Fremont prices are just about in freefall. So the real question is, will Sunnyvale follow Fremont over that cliff. And remember, the income numbers are from 3 years ago. The home value numbers were much more in accord back then.
Also, my crime index shows Fremont is 50% crimier than Sunnyvale (232 vs 151) while you claim your stats show them similar. But the “links” you allude to in your older post are BOTH for Fremont.
I have never lived in Fremont, but I’ve driven the other way, Sunnyvale to 237 to North San Jose/First St, and I’ve seen how backed up it was in the opposite direction (Milpitas/Fremont residents on their way to Sunnyvale & Mountain View). That alone was enough to tell me I would never live in that part of the region, even for free.
August 5th, 2008 at 4:00 pm
anon, you’re not seriously telling us that you refuse to read an article because of the profession of who wrote it, are you? I read 2 of them and they were interesting. On another blog I like, one of the best participants is a real estate agent. Sweeping generalizations are bad things to make no matter what point of view you are advocating.
And remember, WG and RE think I’m the homeowning permabear. Giggle.
August 5th, 2008 at 4:02 pm
Anon13,
> Over all, Fremont is surrounded by higher crime areas than Sunnyvale.
Like I said, I don’t think the difference in crime is large enough to demand a huge premium in Sunnyvale than Fremont. If you disagree, feel free to buy a fixer upper and Sunnyvale for a million and enjoy your “safe lifestyle”. Only future will tell us if the difference continues.
I definitely do not agree that entire east bay is crime-ridden, like the way you intended to portray.
I am quoting your post again:
> Yes, I prefer to live in Sunnyvale or Palo Alto to the east bay. I grew up in the east bay. It was pretty shitty.
You did not say “near Oakland” or something.
Honestly, I don’t have good opinions about Sunnyvale.
Fremont is almost same. But at least it has some decent looking and newer houses at a relatively cheaper price.
August 5th, 2008 at 4:08 pm
Yep, that’s pretty much exactly what I’m saying. If I want information about the housing market I would go to a less biased source.
It’s like asking a car salesman if he sells good cars. What the hell do you think he’s going to say?
August 5th, 2008 at 4:10 pm
I will however admit that curiosity got the best of me and I read the one about how people view real estates similarly to car salesman.
The obvious conclusion is: This guy must be trustworthy because he wrote about his own profession isn’t well regarded in the public eye…right??
August 5th, 2008 at 4:12 pm
>Also, my crime index shows Fremont is 50% crimier than Sunnyvale (232 vs 151) while you claim your stats show them similar. But the “links” you allude to in your older post are BOTH for Fremont.
This how statistics can be twisted.
I will quote a few from cityratings.com:
Murder:
Sunnyvale: Is 0.20 times the National Average
Fremont: Is 0.13 times the National Average
Rape:
Sunnyvale: Is 0.55 times the National Average
Fremont: Is 0.45 times the National Average
Robbery:
Sunnyvale:Is 0.23 times the National Average
Fremont: Is 0.31 times the National Average
Assault:
S: Is 0.17 times the National Average
F: Is 0.34 times the National Average
…
Overall:
All violent crimes:
S: Is 0.22 times the National Average
F: Is 0.35 times the National Average
All Property crimes:
S: Is 0.50 times the National Average
F: Is 0.62 times the National Average
August 5th, 2008 at 4:12 pm
anon – I answered your question. You refused to read the articles, which was quite predictable of you. Others will read and find that the articles are well-balanced, sometimes offering thought-provoking insight, and factual rather than biaised. As for you, you just proved again what a child you are
August 5th, 2008 at 4:14 pm
Sg- the big difference between Sunnyvale and Fremont will come into fruition when the downtown shopping district in Sunnyvale is completed. Sunnyvale will have a true city center complete with train service which will be accessible to nearly all sunnyvale residents either by walking, biking or short drive.
Fremont is a large sprawling city without a city center within reach of all residents. It has districts with very small main street like centers. None of these centers have realized their full potential, although steps have been made to revitalize.
August 5th, 2008 at 4:14 pm
anon – Actually what I like most about this guy’s articles are the very old ones about each and every neighborhood of the peninsula and south bay. Here’s a realtor who loves each and every neighborhood of the bay area. Yes, even East Palo Alto. The closest I’ve seen here are WillowGlen’s postings on BA history. There’s something to glean and learn on every page of his website. Plus he’s open-minded unlike you.
August 5th, 2008 at 4:16 pm
anon – I am not directing you to trustworthy sources, but to balanced and well-supported viewpoints. That’s more than you (and many media) offer.
August 5th, 2008 at 4:16 pm
> That alone was enough to tell me I would never live in that part of the region, even for free.
Thank you! One less competition for house bidders
.
Anyhow, like I said, you are probably right about 237.
I know people even commuting from San Ramon, Pleasanton etc. to Santa Clara.
Fortunately, I never used that route. And 84 is much nicer than that.
August 5th, 2008 at 4:19 pm
I’ve got to say, in the last few days I’m watching anon turning into a bob-like poster.
Also, if bob tells us one more time that he’s not going to comment on our insane prices or how nuts we are to pay them to live here, I’m going to *plonk* someone. Because you know he’s going to say the exact same thing in his very next post.
August 5th, 2008 at 4:22 pm
“anon – I am not directing you to trustworthy sources, but to balanced and well-supported viewpoints. That’s more than you (and many media) offer.”
Balanced and well supported. You seriously believe that a real estate broker is going to supply you with this point of view?
August 5th, 2008 at 4:25 pm
Anon13
> Sg- the big difference between Sunnyvale and Fremont will come into fruition when the downtown shopping district in Sunnyvale is completed. Sunnyvale will have a true city center complete with train service which will be accessible to nearly all sunnyvale residents either by walking, biking or short drive.
Good luck with that. Redwood city actually has a very nice new city center. I was impressed. But it didn’t change much about its overall rating.
August 5th, 2008 at 4:26 pm
Oh, and Madhaus, don’t worry: I’m nothing like Bob.
I won’t ever stop saying that paying over a mil for a blue collar home is crazy. Well, maybe not NEVER, but it will take a lot of dollar devaluation for that to occur.
August 5th, 2008 at 4:40 pm
DreamT and other homeowners,
You may believe what you choose to believe.
And you wish that comes true.
But I will agree with Anon here.
I won’t believe any realtor’s view point about housing prices. Sorry, I think they have much less credibility in general than the media.
August 5th, 2008 at 4:56 pm
“Here’s a realtor who loves each and every neighborhood of the bay area. ”
Wow, a realtor that LOVES REAL ESTATE. Holy crap. If I were a car salesman, I’d love cars. What does he care where the home is that he sells? Do you think a real estate agent who sells homes in the ghetto LOVES the ghetto? I’m sure they do!
Call me a child all you want. If I were a real estate agent, I would love YOU because you’ll gobble up all the crap that I spew.
Instead of giving me a reading assignment which I have no interest in completing, why don’t you try to parse my argument and explain why Real Estate Agents aren’t biased?
August 5th, 2008 at 5:04 pm
SG- If you take what I wrote out of the context for which it was written, it will look like I am trying to portray the east bay as crime ridden. Just like stats can be bent, so can quotes.
Growing up in the east bay (generically stated to be anywhere in the east bay) was shitty, which I described later in the paragraph.
I later went on to clarify my views of the east bay in the same post:
Here is exactly what I said:
I know there are nice places in the east bay, but again, those places do not offer me the life I have over here. Some of the nicer places that also offer the lifestyle I love are also to crime ridden areas which would put my family at an increased risk for crime.
Fremont and Sunnyvale are not the same, that is a fact not an opinion. Look at the size of Fremont compared to Sunnyvale.
You might feel like Fremont is a better value for your money, that is your opinion. I think that Sunnyvale is a better value, which is also an opinion. I don’t plan on purchasing a house in Sunnyvale, I said I would rather live in Sunnyvale or Palo Alto than the east bay.
Sunnyvale is not Redwood City. Apples to Oranges. Sunnyvale has much better schools, which is reason enough for people to purchase in Sunnyvale over Redwood City, not to mention that Sunnyvale doesn’t have the crime that Redwood City has.
What are these ratings you speak of?
Anon- What exactly are the determining factors when deciding a house is a “blue collar” home? Do you have a list of criteria? Where are these million dollar blue collar homes you speak of?
August 5th, 2008 at 5:05 pm
anon & sg – You guys on a crusade? I know, wielding swords is so much more fun than reading long articles. Black and white opinions are so much neater than grey. Discounting without checking must be the right thing to do. Glad you guys are not my neighbors.
Anon, if the realtor was posting his articles anonymously, no doubt he’d meet your approval. Do the right thing, and e-mail him with this suggestion.
August 5th, 2008 at 5:10 pm
I love city smack! What we need is a tournament of the area codes. In the varsity division:
650 v 415
Atherton v Pac Heights
Menlo Park v Mill Valley
Los Altos v Larkspur
Woodside v Belvedere
Hillsborough v Presidio Heights
Palo Alto v Noe Valley
burbed v socketsite
In the JV division, 408 v 510
San Jose v Oakland
Willow Glen v Alameda
Santa Clara v Hayward
Saratogo v Peidmont
Cupertino v Berkeley
Sunnyvale v Fremont
I’m tempted to call for a 501 v 925 play-in game to determine who really deserves the #4 seed, but I don’t think the 510 could survive Blackhawk, Danville, Walnut Creek and Lafayette, and I so want to see that Sunnyvale v Fremont death match.
August 5th, 2008 at 5:16 pm
Santa Clara vs Hayward? Now that’s mean.
August 5th, 2008 at 5:20 pm
@dreamT there are bound to be some blowout games
August 5th, 2008 at 5:24 pm
Steve what you need to remember is that no two bay area cities are alike, they all have their own charm which makes them special.
August 5th, 2008 at 5:32 pm
> Sunnyvale has much better schools
Yea, definitely better than RWC.
However, I found an old list with APIs, I will dig for a more current one.
1 Whitney (Gretchen) ABC Unified Los Angeles 966.0
2 Lowell San Francisco Unified San Francisco 925.0
3 Calif Acad Math & Science Long Beach Unified Los Angeles 909.0
4 Piedmont Piedmont City Unified Alameda 906.0
5 Mission San Jose Fremont Unified Alameda 888.0
6 Gunn (Henry M.) Palo Alto Unified Santa Clara 885.0
7 Oxford Anaheim Union High Orange 874.0
8 San Marino San Marino Unified Los Angeles 868.0
9 Lynbrook Fremont Union High Santa Clara 867.0
10 Miramonte Acalanes Union High Contra Costa 867.0
11 Saratoga Los Gatos-Saratoga Joint Union Santa Clara 862.0
12 La Canada La Canada Unified Los Angeles 858.0
13 Campolindo Acalanes Union High Contra Costa 856.0
14 Monta Vista Fremont Union High Santa Clara 854.0
15 Torrey Pines San Dieguito Union High San Diego 854.0
16 Palo Alto Palo Alto Unified Santa Clara 852.0
17 Acalanes Acalanes Union High Contra Costa 850.0
18 Oak Park Oak Park Unified Ventura 846.0
19 Monte Vista San Ramon Valley Unified Contra Costa 842.0
20 Palos Verdes Penins. Palos Verdes Peninsula Unified Los Angeles 840.0
21 University Irvine Unified Orange 836.0
22 Northgate Mt. Diablo Unified Contra Costa 834.0
23 Agoura Las Virgenes Unified Los Angeles 825.0
24 Troy Fullerton Joint Union High Orange 825.0
25 Laguna Beach Laguna Beach Unified Orange 822.0
26 Beverly Hills Beverly Hills Unified Los Angeles 820.0
27 Corona del Mar Newport-Mesa Unified Orange 820.0
28 Leland San Jose Unified Santa Clara 819.0
29 Calabasas Las Virgenes Unified Los Angeles 818.0
30 Tamalpais Tamalpais Union High Marin 817.0
31 Davis Davis Joint Unified Yolo 812.0
32 La Jolla San Diego City Unified San Diego 812.0
33 Redwood Tamalpais Union High Marin 812.0
34 San Ramon Valley San Ramon Valley Unified Contra Costa 812.0
35 California San Ramon Valley Unified Contra Costa 803.0
36 Rancho Bernardo Poway Unified San Diego 803.0
37 Center for Enriched Studies Los Angeles Unified Los Angeles 802.0
38 Las Lomas Acalanes Union High Contra Costa 802.0
39 Los Gatos Los Gatos-Saratoga Joint Union Santa Clara 801.0
40 Rio Americano San Juan Unified Sacramento 801.0
41 Coronado Coronado Unified San Diego 798.0
42 Foothill Pleasanton Unified Alameda 797.0
43 Westlake Conejo Valley Unified Ventura 797.0
44 Arcadia Arcadia Unified Los Angeles 795.0
45 Irvine Irvine Unified Orange 794.0
46 Malibu Santa Monica-Malibu Unified Los Angeles 793.0
47 San Dieguito High Academy San Dieguito Union High San Diego 792.0
48 Arcata Northern Humboldt Union High Humboldt 791.0
49 Mendocino Mendocino Unified Mendocino 790.0
50 South Pasadena South Pasadena Unified Los Angeles 790.0
August 5th, 2008 at 5:33 pm
Looks like may top ones are crime-ridden east bay
?
August 5th, 2008 at 5:40 pm
DreamT,
> anon & sg – You guys on a crusade?
If you think this particular NAR member has valid points, care to summarize here?
August 5th, 2008 at 5:43 pm
sg – No, do your homework and go read the articles. Make your parents proud and study, instead of babbling and demanding.
What’s with the entitlement attitude?!
August 5th, 2008 at 5:43 pm
I have never argued that the east bay didn’t have good schools. Keep on bringing out straw men SG.
August 5th, 2008 at 5:49 pm
But look at the top end of the San Jose CID market: virtually no (1 in 45) short sales, and no REOs. Remember, same city—but different neighborhoods and a different price range and, therefore, different buyers.
——–
DreamT,
That realtor’s article says:
It amazes me that that so many intelligent people forget about past so easily and make argument based on ONLY present data – as if the truth can be found only in present. Keep in mind that not long (before summer 2007) people were talking about “virtually non-existent” short sales and REOs in bay area. And they were not talking about “different market” or “different price range” or “different cities”. So my question is: What changed? Let me add one more factor in above statement: different time. Different areas in different price ranges are showing stress signs in different times. So, I don’t think media ignored different prices ranges and “oversimplified”.
According to your logic, just referring dot-com bust would be “oversimplification” too, because companies like pets.com disappeared and yahoo.com survived. After all they are different companies and had different stock prices, right?
August 5th, 2008 at 6:00 pm
steve, LOL on the area code playoffs, but you left out poor Mountain View. How about they play San Rafael? And East Palo Alto can play Marin City. And Redwood City will take on the Mission. But La Honda is up against Bolinas!
Sunnyvale will whip Fremont’s butt. I will personally drive my Toyota Sienna over their crappy little Hyundai toys. I think Campbell should play Hayward, while Santa Clara should take on, say, something more upscale, like Union City (bwa ha ha ha ha!)
925 has to play Sacramento & foothills area.
Then the winners are up against the 213, 310, 714 and 619 champs down south. Most of them will forfeit because their homeowners are so under water they can’t afford the entry fees. Also they are all tied up in court fighting the excluded area codes like 858, 949, 818, etc.
August 5th, 2008 at 6:08 pm
>DreamT Says:
August 5th, 2008 at 5:43 pm
sg – No, do your homework and go read the articles. Make your parents proud and study, instead of babbling and demanding.
You are the one babbling about “media oversimplification” from a realtor’s articles.
I didn’t. I asked for proof.
If it is just your belief, say it.
> What’s with the entitlement attitude?!
Good job!
You have no point to prove. So you go with personal attacks.
Honestly, you would not have been like this if you were convinced yourself about his “views” instead of trying to impose it on me.
Good luck with your wish about ever-escalating appreciation.
August 5th, 2008 at 6:10 pm
Pralay,
That is the whole recession story, people only look at the rear view mirror, and then claims there is no way they could have foreseen it (of course, because you are looking at the REAR).
Anybody notice that there is a 20% week-over-week spike in asking price for Phoentix Arizona? Look at housingtracker.net. It is very strange, I wonder why RE bulls have come all out and declared victory.
August 5th, 2008 at 6:13 pm
Pralay – The reference to oversimplification is, as I’ve argued many times here, using aggregate statistics to infer conclusion at the micro-market/neighborhood level. I think that guy is doing a good job showing why media reports are misleading in this respect.
I am not defending specific viewpoints of his, incidentally, just directing anon (and sg) to an example of a generally better-researched, better-formulated analysis of the current real estate market, with historical information on neighborhoods to boot. Playing along was also a good way to expose them, which they did earnestly.
The dot-com bust affected high-end rather than low-end neighborhoods (he argues that low-end actually improved in 2002 while high-end was crashing). Stocks are packaged into funds so many more people are affected – it truly was a global bust as long as you had some money invested somewhere including a 401k plan. Whereas real estate woes so far have greatly varied in location with most US homeowners so far still unscathed, sitting pretty on tidy equity. Some people suffer, most are either unconcerned or overworried.
August 5th, 2008 at 6:16 pm
“The plunge in the price of homes gets worse…Prices are still dropping everywhere and at record rates…’I would say what’s happening is a freefall’…the San Francisco metropolitan area…is the sixth worst-performing region in the country…prices fell 22.9 percent in May compared to a year ago…’I don’t want to undermine the fact that…San Francisco is not doing well; prices are in sharp decline’” etc. etc. says or quotes the July 30 San Francisco Chronicle, right on page one.
More reasons for first-time buyers to sit on the fence. More affirmation for clueless doomsayers. More paranoia for consumers. More Chronicles sold—maybe. More sfgate Web site traffic—maybe.
———-
Ok, now the honesty part. Did you guys read Al Franken’s “Endnote” on Ann Coulter? It was about how she does not provide footnote and instead she provides endnote so that it becomes difficult to cross-check.
Here, this realtor guy did not even bother to provide endnote. Ok, let’s look at the original article at SFgate.
It’s says:
It’s not the Chronicle reporter who is saying. It’s Patrick Newport, U.S. economist with consulting firm Global Insight in Lexington, Mass. Mr Realtor carewfully omitted the name and tried to project as if the reporter is saying so.
I think it pretty much summarizes Mr Realtor’s honesty.
August 5th, 2008 at 6:20 pm
DreamT,
Did you cross-check the Chronicle’s article to know what this realtor is talking about?
Did this realtor ever mention anywhere in the article that the Chronicle article was about Case-Shiller index?
August 5th, 2008 at 6:21 pm
> I have never argued that the east bay didn’t have good schools. Keep on bringing out straw men SG.
Anon13,
This is a more generic remark. I was actually looking for the rank of “great” Sunnyvale schools
.
Jokes apart, I think the part close to Cupertino is in the good school district (Monta Vista?).
You had given more negative views about east bay than the reality. That seemed like a misinformation to me. You acknowledged it yourself.
Anyhow, if you like Sunnyvale over anywhere else, there is nothing else to argue.
It’s your personal choice.
Peace out.
August 5th, 2008 at 6:25 pm
There comes a time when buying is cheaper than renting and I think that time is around the corner.
On the rentals I’m looking at, the default Zillow mortgage cost (at 10% down, and excluding tax deduction) generally estimates that the monthly cost to rent is usually about 2.5X the mortgage cost. On top of that, the places we’re looking at tend to be at least somewhat renovated (kitchen, baths, windows, floors, etc), so unless the Zillow estimates somehow take that into consideration in the comparables they use, this would tend to understate the value of the rentals we’re looking at. In other words, I suspect the comps include random unrenovated places owned by the same person for 30 years that happened to sell recently in the neighborhood.
August 5th, 2008 at 6:27 pm
Sorry, the previous post should say that the mortgage is 2.5X the rent.
August 5th, 2008 at 6:29 pm
I think that guy is doing a good job showing why media reports are misleading in this respect.
———–
Is it so? If media wants to write article about every micro-market I wonder how many pages it would be.
Secondly, I am sure this realtor was criticizing same way 3-4 years back when media was the cheerleader of housing market. I am sure you found such article and determined that this realtor guy actually provides balanced and non-biased view.
Lastly, arguing against Case-Shiller Index method directly and openly is more honorable position (and I am sure this realtor does not have guts or capacity to do so). But arguing against it in sleezy fashion (as I mentioned in earlier post) is only a sign of crookedness.
August 5th, 2008 at 6:29 pm
anon – I do have points to prove! They just happen to relate to postings on this site, rather than general assertions on real estate markets. In your case, it’s not what you second-guess (generally wrongly) but the fact that you second-guess at all that makes you an easy target. You don’t help your case by insulting people (#19). So what I’m proving with your help on this thread is that you are the idiot…
madhaus – Union City is ghetto, as in gang-ridden. I know, I lived there.
August 5th, 2008 at 6:35 pm
Pralay #199 – I can’t say I enjoy the rant in some of the recent articles. But I don’t see your point in this case: the newspaper is responsible for the quotes it chooses to publish. That’s the reporter and the editor. I don’t think it’s misleading to mention the Chronicle, since the point is quality of reporting from local medias. But you’re right about the footnotes.
As for your other comment on #204, well I don’t know the guy and found his site via the Eichler section. So I cannot say if he’s crooked or honest. But he certainly contributes more than sg and anon in my opinion. You’re entitled to disagree.:)
August 5th, 2008 at 6:45 pm
@madhaus, too funny! I am adding you to the tourney selection committee.
August 5th, 2008 at 6:47 pm
But I don’t see your point in this case: the newspaper is responsible for the quotes it chooses to publish. That’s the reporter and the editor. I don’t think it’s misleading to mention the Chronicle, since the point is quality of reporting from local medias. But you’re right about the footnotes.
———-
DreamT,
Do you think media should never quote Lawrence Yun? Or do you think NAR’s viewpoint is media’s viewpoint just because media attended NAR’s press-release and reported it?
It indeed makes lots of difference. And this realtor guys knows it very well. That’s why he did not quote the article paragraph completely. Instead he cherry-picked quotation parts and tries to give impression that SF Chronicle is just one of those “doomsayers”.
August 5th, 2008 at 6:51 pm
sg Lynbrook is in FUHSD along with Monta Vista & 3 other high schools that didn’t make the top 50. It is the only high school in SJ in that district, there are 2 in Cupertino and 2 in Sunnyvale.
Also next time you share data like that it might help to prune the non-Bay Area schools out, like so:
The East Bay schools to make the list are mostly Beyond The Caldecott over in 925-land. The 2 exceptions are Mission San Jose, in the East Hills of Fremont, and Piedmont, an East Hills enclave near Berkeley/Oakland.
South Bay schools, looks like Leland and Lynbrook are it for San Jose. Also, NOT A SINGLE SAN MATEO SCHOOL?
Oh wait, you said this is an old list. I think I found it, it’s free 1999 data, right?
Here’s the new scores (2007 API Base) for East Bay & South Bay schools:
Almost all the schools on the list went up since 1999, some quite a bit. There are probably other schools who would outrank some of these that we don’t know about, too. Most went up about 25 points, some quite a bit more. Teaching to the test works, but I’m sure the students learn much less.
August 5th, 2008 at 7:09 pm
Sg-Anyhow, if you like Sunnyvale over anywhere else, there is nothing else to argue.
What are you talking about? See there in lies the problem, you keep inferring things, instead of just reading what is written. I never said or implied that I liked Sunnyvale over anything else. There are many places I prefer over Sunnyvale.
You said Fremont is the same as Sunnyvale, it isn’t.
August 5th, 2008 at 7:16 pm
“What’s with the entitlement attitude?!”
Entitlement? You seem to feel as though you are entitled to demand we go read your biased articles.
“I am not defending specific viewpoints of his, incidentally, just directing anon (and sg) to an example of a generally better-researched, better-formulated analysis of the current real estate market, with historical information on neighborhoods to boot” (look at his 5th installment of reading market factors)
Lol, you call looking at housing trends since 2000 “better researched?” As pralay points out, you are looking at the wrong time. History didn’t start in the 2000’s, sir.
“Whereas real estate woes so far have greatly varied in location with most US homeowners so far still unscathed, sitting pretty on tidy equity.”
Unscathed?? UNSCATHED?? OK, now I’m starting to think you’re just playing around! Is beahr stearns unscathed? A media/doomsayer scandal designed to artificially lower home prices? You sir have indeed drunk waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaay too much of the cool aid.
The fact that you took my statement in 19 personally is quite comical. Did you see your name or id anywhere in that posting? This just too easy. Explain: Why do you take #19 personally? Again, your name is not mentioned there.
Pralay, thank you for helping DreamT. He needs to snap out of his slumber.
August 5th, 2008 at 7:25 pm
@anon, do you have any data or any concrete predictions to share, especially concerning the RBA?
for example, are prices in PA and Los Altos higher or lower this year compared to last?
what will Alt-A impact be in Menlo Park or Atherton?
when exactly should I act to grab my 5 acre woodside mansion at rock bottom prices?
August 5th, 2008 at 7:28 pm
Steve: Nope, not a one.
DT,
You want to talk about entitlement? Here’s what I am entitled to do:
I am entitled to sit back and laugh at people like you who did not have enough common sense to look at the housing market and think: GOD THIS IS INSANE; I am not going to buy.
August 5th, 2008 at 7:32 pm
Anon- Only idiots with IQ’s above 135 and went to ivy league schools right? Intelligent people don’t exist in the “RBA” (I prefer high end real estate market) only idiots who don’t know left from right. What is the definition of an idiot?
If you have 5 million dollars in the bank or even more, paying a million dollars for a house to live in area that you love and want to live in, a million dollars or 2 or 3 is a drop in the bucket. How many high end homes were purchased based on salary and with a bad mortgage? Financial freedom opens up many doors, this happens all over the world not just in the high end real estate market..
What does your portfolio look like anon? Are you a multi-millionaire, angel investor? What are you doing right that those Idiots out in Palo Alto don’t get?
August 5th, 2008 at 7:35 pm
Correction to 214- not just in high end real estate in the bay area.
Also, anon- can you not distinguish high end real estate, from those real estate markets where people purchased on easy credit?
August 5th, 2008 at 7:50 pm
Pralay: “Do you think media should never quote Lawrence Yun? Or do you think NAR’s viewpoint is media’s viewpoint just because media attended NAR’s press-release and reported it?”
Even vfsv’s last article (”matter of scale”) overplays with aggregate statistics, so I don’t like to see the trend spreading.
Neither one. As I said I’m providing a link with articles of interest (some thought-provoking, some with unique historical information), not vouching for the exhaustiveness of their content/their journalistic quality, or for the guy who wrote it. You and a few others are quite trigger-happy, but you’re shooting at the wrong target.
Incidentally, who else on this website would have had the guts to throw the link to a realtor’s site, knowing half of the posters would dismiss it as cheaply as they can?
anon: unscathed as in “Hello I’ve bought my house long ago and either have paid it off or have plenty of equity in it”. You sure are slow. So in your opinion, there’s no such people in the bay area? No, please, don’t respond, I didn’t mean to ask.
August 5th, 2008 at 7:51 pm
13,
If you have 5 million dollars in the bank, paying 3 million is 3/5 of your life’s savings. You wouldn’t say that’s a lot? If you know people who think like that, you must run with a different crowd of wealthy people than I do. I suppose it just goes to support the old addage that the quickest way to make a small fortune is to start with a large one.
I am not talking about the high end homes, I’m talking about the lower end home. Are you familiar with the term price compression? I would expect that very few high end homes were purchased with a shady mortgage. The turnover rate on the high end homes is also less, as has been pointed out.
Your personal inquiries are fun, but they will elicit no response.
Let me qualify my previous statement since you’re all holding me to it. Would it be more accurate it I said: Only a fool would buy a mid to low end home in the RBA in the current market? Are you all happier now?
August 5th, 2008 at 7:52 pm
DT, what do you mean by ‘long ago’? 7 years? 30? 50?
August 5th, 2008 at 8:06 pm
anon – all of the above. Can be 2-3 years as well, it depends on the neighborhood. And your post to anon13 shows you’re not so dim: low turnover rate is the key. If you graph’d local house price volatility (divergence from straight-line trend) based on local turnover rate, I bet there’d generally be great correlation except in 2002. Lower-end neighborhoods have a higher turnover rate because they’re less desirable, so prices are more volatile.
That said, I disagree that Palo Alto is a better bet than East Side right now. The former looks frothier than the latter. No deals to be found in Palo Alto.
August 5th, 2008 at 8:28 pm
the hills are alive with the sound of trolliiiiiiiiiiiing
August 5th, 2008 at 8:37 pm
madhaus,
Look at your own data.
5 Mission San Jose Fremont Unified Alameda 888.0 927
Do you know where it is BTW?
Here is a hint. It is certainly not in 925 area code.
August 5th, 2008 at 8:46 pm
Agreed, but my opinion and rationale regarding those two particular areas are 1) there are no deals in EPA because my view on the on the general market is bearish and the low end (epa is low end, right?) is the worst hit and will be further. Lower end homes saw a higher percentage gain and will see a higher percentage drop accordingly.
2) there are no deals in PA because people can afford to stay. They will either get the price they want or leave feet first.
Hence, I think it would be a bad idea to buy in either.
Look, I have no vested interest whatsoever in Bay Area property. I’ll freely admit that. BUT, I have before and I have lived here for over 30 years. I could buy a home if I were so inclined, but I choose not to. There is no burning desire to purchase a roof to maintain, a lawn that requires maintenance, or pipes that need to be “EXERCISED” Seems like I would be fairly impartial? The affect the market (in its UP or DOWN) has had on me is none. However, I feel bad for the people who are feeling the results of a bunch of speculators driving up the price only to have them come crashing back down. If you are one of them, I apologize. Still, I implore you: please do not help propagate the lie that real estate never goes down. And remember, real estate brokers are out for number one even if they are seemingly impartial.
I suppose one could argue that I’m making a decision to stay out of the market so I want to see it go down, but again I have no desire to stay here long term and really don’t care.
August 5th, 2008 at 9:00 pm
anon – “please do not help propagate the lie that real estate never goes down.”
Real estate is a cycle. It goes up, then down, then up, then down. There’s only one DreamT but three variations of anon on this thread, yet you are quoting things I didn’t post and do not agree with.
Also I meant East Side SJ, the parts with low crime. I wouldn’t buy in EPA, period – too much of a gamble.
August 5th, 2008 at 11:07 pm
As I said I’m providing a link with articles of interest (some thought-provoking, some with unique historical information), not vouching for the exhaustiveness of their content/their journalistic quality, or for the guy who wrote it. You and a few others are quite trigger-happy, but you’re shooting at the wrong target.
———–
DreamT,
That’s not my point. I just tried to show how deceptive his realtor is. He cherry-pick quotes and attacks the messenger (media). Then you defended him and said “I don’t think it’s misleading to mention the Chronicle, since the point is quality of reporting from local medias“.
Keep in mind that the original Chronicle article was about latest Case-Shiller Index report and Patrick Newport quoted in that specific context. But this realtor guy did not even bother to mention it and tried to portray that Chornicle wrote about generic context. It’s a classic case of quoting out-of-context.
PS: If Chronicle is responsible for whatever they quote, then if you quote some realtor you are responsible too, right? Atleast that’s what your logic is.
August 5th, 2008 at 11:16 pm
Looking at Pralay’s post above, he’s just about dead on in describing himself, including:
- Cherry pick quotes
- Attacking the messenger
- Quoting out of context
August 5th, 2008 at 11:34 pm
Pralay, quoting out of context is only deceptive if the meaning is altered (by placing a new, different context that changes the message).
If I quote a realtor, I am responsible for the faithfulness of the quote. That’s why I place (…) and [in] in my quote. In addition, I assume my choice of quotations. Then you can say “DreamT quoted this sentence (…)” The guy placed a bunch of quotes from the article and stated the Chronicle either said or quoted them. He could have been more specific with footnotes to state which was said and which was quoted, I agree with you. But I don’t feel this specific instance was deceptive, just not A-grade journalism.
As for the Case-Shiller Index you keep bringing up, he had previously written various articles discussing his opinion of both its use and limits. For ex., http://johnfyten.com/articleshomeprices.htm. The day I read something as balanced and researched as that piece on this site, I’ll send a $$ contribution to burbed (how’s that for a bet?). I don’t necessarily agree with his viewpoints. I just like that no blanket statements are thrown in my face and I’m left drawing my own conclusions if I feel that I should. Kind of the exact opposite of bob’s and anon’s approach.
August 5th, 2008 at 11:39 pm
Seriously, I don’t understand what’s the hang-up regarding realtors. Just because someone is a realtor his comments must not be trusted? Should economists not talk about economy? Should techies not talk about tech?
Not so long ago when I quoted Richard Calhoun of Creekside realty, Pralay immediately got into his habitual attacking mode, without realizing that Richard actually has a highly credible reputation and is frequently quoted by mainstream media.
August 5th, 2008 at 11:41 pm
Pralay, the media is a political and economic power, not merely a messenger. There is no way to be comprehensive, absolutely objective and unbiaised, except by quoting verbatim. A messenger would only work in quotes – that’s the case of a small-time paper quoting Reuters or AFP verbatim without even adding a title. So with necessary bias comes responsibility.
Who’s oversimplifying now?
August 6th, 2008 at 12:23 am
anon #211 – I wrote that you were “insulting people (#19)” and had previously pasted the dictionary definition of “idiot” to support that this was meant as an insult. Where does it say, where do I show, that I took the word “idiot” personally?
If you were the kind to do your homework, you’d know that I don’t live in the qualified RBA and was therefore not targeted by your comment. So what? You were trolling and I’m calling you on it.
August 6th, 2008 at 7:41 am
madhaus, yep, not a single san mateo school. The best school district in San Mateo county used to be FOSTER CITY!. Now if anybody knows anything about San Mateo county real estate prices, Foster City is near the bottom of the heap, WAY BELOW the San Mateo hills, burlingame etc.
Schools are bad in San Mateo, and yet, property values are high.
BTW the other district along with Almaden in SJ that has excellent schools is Evergreen. I think the elementary there is Matsumoto, and HS Evergreen high? Not quite sure.
August 6th, 2008 at 7:46 am
I don’t trust Realtors anymore than I would trust a used car salesman because they are essentially the same.Anyone that earns a living via commissions is indeed looking out for numero uno.Most of the Realtors I’ve met don’t have college degrees. SO why would you entrust someone with the biggest financial decision of your life?
Secondly, why do you even need a Realtor to start with? About every 2-3 weeks, I peruse houses in Nashville, Raleigh, Austin, and Atlanta within a price range of 100k-200k. There are thousands that are listed for sale by the owner. When me and my Wife buy, I plan on bringing a flashlight, my Dad ( who knows a thing or two about foundations), and a camera. I’ll inspect the thing myself, and if I like it after thinking it over for a few days, I’ll buy it from the seller, who will be saving money since they’re not having to pay a Realtor. Besides, the owner has likely lived in the house for years and knows it better than some stranger who might have thrown up some curtains and spent 30 minutes walking around it.
Lastly, I don’t like the NAR. Anyone seen their new ads? The whole campaign is a giant fluff piece: ” Now is a great time to buy a home.” Ok… well first of all, I’d say right this very minute isn’t the BEST time to be buying. But if you have the money, like the home, and like the area, then MAYBE it is.But blanket statements made by industry organizations accomplish nothing except distrust them even more.
In my opinion, the NAR should be gotten rid of, Realtors should be required to have at least a Bachelor’s degree;preferably in business management, undergo a rigorous entrance exam, and not be paid via commission, but rather a set salary.
August 6th, 2008 at 7:53 am
don’t disagree with not needing a Realtor (although Redfin seems like a good alternative for buyers), but definitely hire a good inspector that knows what they’re doing. Not something you want to do youself to save a few bucks.
August 6th, 2008 at 8:05 am
If it weren’t for my Dad, I’d definitely hire an inspector. Worth every cent. I know too many people who bought homes assuming that everything was a-ok only to find that there was some serious foundation or structural issues requiring 10’s of thousands of dollars to repair.
August 6th, 2008 at 10:34 am
But I don’t feel this specific instance was deceptive, just not A-grade journalism.
———
DreamT,
Just ask yourself, when you read this realtor’s rant about “doomsayers” which one of these three impression did you get:
1. Chornicle (or media in general) was off the mark.
2. The Case-Shiller has shortcoming.
3. Mr. Newport’s description was exaggeration.
If it is #1, the Mr Realtor was indeed successful. As you used the word “oversimplification” about media, I have no doubt that you are a case #1.
August 6th, 2008 at 10:46 am
Looking at Pralay’s post above, he’s just about dead on in describing himself, including:
- Cherry pick quotes
- Attacking the messenger
- Quoting out of context
———-
Aha, RealEstater. You contradict yourself so often (and in a very dumb way) that I have no doubt that you are not a management class guy. Probably you are still sitting in a cubicle – whether you are a real estate agent or a hitech guy.
Not long ago you accused me for “can quote just about everything”. Did you notice that I always google and provide link to the original post so that readers can read it and understand the original context? Now you are accusing me just opposite – quoting out of context.
August 6th, 2008 at 10:53 am
If you don’t use a realtor to buy a house, I think I read somewhere that it is prudent to have a lawyer look over the contract.
August 6th, 2008 at 11:00 am
Seriously, I don’t understand what’s the hang-up regarding realtors. Just because someone is a realtor his comments must not be trusted? Should economists not talk about economy? Should techies not talk about tech?
———-
More joke. This guy with screen-name “RealEstater” does not even understand what a realtor’s job is. Let me give an analogy.
Would you trust a techie guy (Yahoo employee) talking about how Yahoo stock is going to be $800 per share in next one year? Buy Yahoo stock now. Buy it NOW.
Realtors are good at home sale transactions. They should do just that. They may know local markets, but forecasting housing market is not their expertise.
——–
Not so long ago when I quoted Richard Calhoun of Creekside realty, Pralay immediately got into his habitual attacking mode, without realizing that Richard actually has a highly credible reputation and is frequently quoted by mainstream media.
——–
Ha ha! Again that “doomsayer” mainstream media which is “oversimplifying” the housing market! Richard Calhoun was quoted by media, then he must be right all the time – is that your whole point Mr RealEstater?
August 6th, 2008 at 11:09 am
The whole issue with the schools must be a local thing, where I grew up people weren’t that concerned about the schools, don’t get me wrong they were concerned about the schools, but just not so obsessed.
It also didn’t take a fortune to go to a good school. My parents paid less than 1/4 Million for a large house, and my brother and I went to a extremely good high school. This was in the DC suburbs, so maybe it is a that the county runs things there.
August 6th, 2008 at 11:17 am
Pralay, the media is a political and economic power, not merely a messenger. There is no way to be comprehensive, absolutely objective and unbiaised, except by quoting verbatim.
——-
DreamT,
I am not defending media (or Chronicle for that matter). Please read my earlier posts. All I am saying that the realtor guy chose a deceptive method to label media as “doomsayers”. Even if I consider that Chronicle chose a wrong person (Mr Newport) to describe Case-Shiller data, but two wrongs does not make it right. This realtor chose to quote from Chronicle article omitting the person’s name to give an impression that Chronicle reporter is saying so.
August 6th, 2008 at 11:23 am
My parents paid less than 1/4 Million
But in fairness, that was “back then money”. Assuming that your parents bought your house when you were born, I’m guestimating that was in 1987.
As mentioned earlier, apparently the NAR is running a nationwide radio ad that says real estate doubles every 10 years. So by now, your parents place is probably $1 million.
That and there’s the fact that it’s in the DC suburbs. There’s no diversity, no good food, and no good schools there.
BTW, just the other day I heard someone say “Monta Vista is one of the best high schools in the nation.”
Um. Hm.
August 6th, 2008 at 11:29 am
Stepford, regarding realtors and lawyers reading over contracts…. totally agree. An individual really needs some sort of skilled contract person before they enter into a RE transaction. This is just to do the necessary legwork to ensure no liens against the property etc. The entire problem with this service, that RE agents do indeed provide, is that the entire task is worth maybe $2K in terms of value provided to buyer or seller, THATS IT. As it stands due to collutive and monopolistic practices of NAR regarding the MLS, it costs anywhere from 30K all the way up to 200K just to sell an AVERAGE bay area house! Ridiculous. I suggest using redfin which works pretty well if you are buying an REO. Redfin’s charges and rebates are fair. The problem is that if you are bidding on a desirable property with multiple bids I can almost guarantee you a Redfin offer will not get the property. Listing Agents are not allowed to discriminate against Redfin… but they do. They will do things like not return the phone calls of the redfin brokers until all these other offers have come in and -WELL WHAT DO YOU KNOW- the best offer came from the same office as the listing office. BS like that goes on in Real estate which is why so many consumers including myself want to see the entire system broken down (like they did with the phone monopolies in the 80s).
August 6th, 2008 at 11:35 am
>>The whole issue with the schools must be a local thing, where I grew up people weren’t that concerned about the schools, don’t get me wrong they were concerned about the schools, but just not so obsessed.
School is an issue up to a point, because CA has some districts that are seriously under performing. However, I would not be too obsessed to compare which schools have the absolute highest API score. API score judges only the academic aspect. There are other important parts of the equation such as extracurricular activities and social environment.
August 6th, 2008 at 11:35 am
The entire problem with this service, that RE agents do indeed provide, is that the entire task is worth maybe $2K in terms of value provided to buyer or seller, THATS IT.
——–
I completely agree. Tying their fee as some percentage of total transaction amount is preposterous.
August 6th, 2008 at 12:04 pm
Actually my parents bought their house in 1998, in 1987 we were all living in Peru, suffering through some crazy hyper-inflation, and guerrilla terrorists blowing up electricity towers. In ‘87 the house would’ve probably cost about 180k, not ~235k that my parents paid. (failed to double then, bad neighborhood maybe?)
Anyway it isn’t really that large, just large by RBA standards, ~3000sqft on 3 floors, and 9800sqft lot.
August 6th, 2008 at 12:22 pm
#241,
WG, well put. For Sale By Owner came to the scene to cut out these monopolies, but since the bubble those owners become “Make me Move” types asking yesteryear’s prices that they are pretty much a non-factor now.
August 6th, 2008 at 12:32 pm
Agee, well put WG. I would just also add that I believe Realtors offer greater value to a seller, if for no other reason, because seller disclosure requirements are quite onerous in CA and failing to provide adequate disclosures subjects you to potential liabity. Realtors can also help stage the property as well, which does make a difference. But if you are a buyer, Realtors certainly don’t offer the same value, as they certainly won’t advise you not to buy, even if they should.
August 6th, 2008 at 1:27 pm
@cardinal2007, schools are more of a focus here because the quality varies so widely. Things are more consistent in NoVa and the better Maryland suburbs.
consider your graduating class, assuming you have a freshly-minted diploma from the Farm. my guess is that some of the sharper folks you went to school with were from some of the better high schools in the country. I’m thinking about the famous prep schools and public ones like Boston Latin, Bronx Science, the great Chicago suburban schools (GBN, GBS, New Trier) and the suburban DC schools. without speaking to the overall quality of Paly, Gunn and (yes, madhaus) Montevista, the students who graduate at the very top of their class from these 3 schools seem as well educated as any in the nation.
real estate values on the peninsila are very much tied to schools. the first cut is for the neighborhood schools covering k-8. if you don’t have a good elementary school you will take a hit. you’ll see differences on streets in los altos based on elementary preferences, and bigger ones in mountain view. At the extreme, RWC can be solid or a disaster (and properties are priced accordingly). with the exception of the unincorporated part of MP north of Atherton (that has RWC schools), elementary schools are very good for MP, Los Altos, PV, Woodside, Foster City, Burlingame and San Carlos (the key to its recent rise). (sorry for leaving our the 408, just don’t know much about it.)
the next level is high school, and there aren’t many good ones. Menlo-Atherton isn’t loved, so people either move to Palo Alto or go private. Los Altos isn’t loved either, so Los Altos address that feed Mountain View High School are preferred (everthing else being equal). I have no clue what folks do in Hillsborough, Burlingame, etc, but I imagine they go private.
August 6th, 2008 at 1:35 pm
People definitely go nuts about schools here. That’s something I noticed pretty quick. At first I wasn’t sure why. I figured – well hey: you don’t like that school? send em’ to another one. I too grew up somewhere that by and large had universally good schools and school systems, thus less emphasis was placed on specific neighborhoods in regards to proximity to schools.
August 6th, 2008 at 1:40 pm
@WG and R – great points. there is no rational reason for real estate agents to charge what they charge. in fact, most very high property is sold under different terms and these transactios almost always use lawyers as well. that said, in this area if you want a house in a very competitive market (read Palo Alto) you’d be crazy not to use the best connected local buyers agent possible.
it doesn’t really matter to an agent if a property sells for 1.45 or 1.55. they care a lot more about fast transactions and relationships. a connected buyers agent has a much better chance in a muliple offer situation than out of town agent or redfin.
on the selling side, make sure it is someone you can trust. a sellers typical agent will press you to take an early offer or steer you toward one from their office. in some climates (read RWC or Belmont) this is good advice. if you can sell now, you should.
in other area, (Los Altos, PA) you could be leaving money on the table. as an aside, does anyone know why there are so many pocket listings in SF? still, when you see a very well-marketed, well-staged house sell for a record setting amount (and I am thinking of some Potero and Noe properties now) you can appreciate what a great agent can really do.
August 6th, 2008 at 1:42 pm
sg, we have to talk about your poor reading comprehension, because you say:
Look at your own data.
5 Mission San Jose Fremont Unified Alameda 888.0 927
Do you know where it is BTW?
Here is a hint. It is certainly not in 925 area code.
But in the same comment you are replying to, I clearly said:
The East Bay schools to make the list are mostly Beyond The Caldecott over in 925-land. The 2 exceptions are Mission San Jose, in the East Hills of Fremont, and Piedmont, an East Hills enclave near Berkeley/Oakland.
When did I ever say this school was in 925? Didn’t I clearly state that it was one of two exceptions? Why are you criticizing me for your inability to understand clear English?
So if you aren’t going to bother to read what others write, how valuable is your opinion to anyone else? As anon13 noted, you reply to things people did not actually say, or in this case, you accuse me of not saying something I actually did say. I think I’ve shown where the problem here lies.
Maybe you should just back off that claim that Sunnyvale and Fremont should be valued equally. And when you say you’d rather drive 84, have you tried crossing the Dumbarton in the morning?
And here’s another poor reader, anon, who said:
Oh, and Madhaus, don’t worry: I’m nothing like Bob.
I won’t ever stop saying that paying over a mil for a blue collar home is crazy. Well, maybe not NEVER, but it will take a lot of dollar devaluation for that to occur.
In this case, anon saw the house but missed the subdivision. What I said was:
Also, if bob tells us one more time that he’s not going to comment on our insane prices or how nuts we are to pay them to live here, I’m going to *plonk* someone. Because you know he’s going to say the exact same thing in his very next post.
See, I was noting that bob says the same thing, over and over, and you disagree, saying you’ll keep saying the same thing, over and over.
What the heck is going on here? RealEstater stops posting every 10 minutes and a bunch of you are drinking 64 oz of stupid in his place. (but I’m only up to message 222, so he could take his title back)
August 6th, 2008 at 3:16 pm
Madhaus,
Do you hear that annoying, grating sound? It’s New Joisy, and they want you back…
August 6th, 2008 at 3:31 pm
Actually I only got my Masters from Stanford, I started in a PhD program and transferred out. I’m sure the undergrads are probably from a really well of background, just judging from the fact that their cars were usually better than the cars in the grad lots, but I could be wrong. Either way I could go on and on about how the undergrads seem to be living some sheltered life on “The Farm”, with crazy grade inflation and some greatly inflated egos because they go to Stanford.
I actually did my undergrad at some little known school in Pittsburgh, at least outside of my major anyway.
But going on with the education comment, I’m fairly certain that regardless of the school, it only matters so much. There are schools that are bad match for people, and they won’t learn well there, but I don’t really think this model of different school districts is the best. Let me ask you this, do you think as a child you would’ve really learned more if the other students were much smarter than you? What about the opposite? Just because your parents earn a lot of money does that mean you’re able to handle a tough courseload?
Anyway the middle school and elementary school I went to were so-so, they were location based, and the student body was fairly diverse in many ways. The high school was very good, the facility was not great but okay, but what made a difference was the student body, since there was an exam to get in, they could assure the quality of the student body, and therefore be able to cater to them. Regardless of where a student lies regarding their capabilities in different subjects catering to those specific capabilities will result in better returns than just a one size fits all approach.
And yeah my HS is kind of one of the best in the nation because of student body, but at the same time it is not taught in the same way as all other HSs in the county, since that would just be a waste, it is not a place where everyone gets an A or B, it is not meant to be a walk in the park, unlike someplace I mentioned earlier. Anyway that high school would work well for only people it works well for, put in an average kid, and you might end up with someone who just really hates their life, average scores aren’t everything in education, only your kid’s scores matter, push them too hard, or too light, approach problems incorrectly, too much repetition, and his scores might not improve.
Well that’s it for my rant, go on chasing the high APIs if you want.
August 6th, 2008 at 3:33 pm
Pralay says,
>>I completely agree. Tying their fee as some percentage of total transaction amount is preposterous.
You don’t pay them anything when you buy a house. As far as the buyer is concerned, it’s a free transaction.
August 6th, 2008 at 3:52 pm
Right, because they don’t “build” it into the cost of the house.
If you want to take such a stupid viewpoint, you’d be more accurate to say that for the seller its a free transaction because the buyer is paying the money.
August 6th, 2008 at 5:45 pm
My data point for the day. (knowing that the plural of anecdote is not data)
20042 Karn Circle, Saratoga. 5/3 on a 14k lot. CUSD, Lynbrook high. “interior needs updating.” but looked ok on the outside. A nice neighborhood too.
Asking 1.485, Zestimate was 1.484. Listed on Monday. It’s now pending, on Wednesday. This is the fastest I’ve ever seen. Assuming it went for asking or thereabouts, the price is about the same as 2007, but the speed of sale surprised me.
August 6th, 2008 at 6:18 pm
bob, you go on and on about how nobody but you knows squat about rural living. Well you don’t know squat about New Jersey, because if you did, you would never call it “Joisy.” That is Brooklynese. Free Clue: Brooklyn is not in Juhzzy.
The NJ pronuniciation of itself is \jə-zē\. If you want to imitate the accent, you must learn to replace almost every vowel with a schwa. Actually if you want to learn anything, you will have to shut your mouth for once.
August 6th, 2008 at 6:25 pm
SiO2, I know that neighborhood, it’s south of Prospect Ave, with San Jose (95129) on the other side. Middle School is Miller. You have to be careful buying there because the school district lines even go through houses. Campbell School district begins somewhere near Titus Ave.
That price is for the 14K lot too. I’ve seen houses get listed and sell very quickly around there. There aren’t any stores in walking distance so I don’t completely get it. There’s a strip mall at Bollinger & Miller, there’s stores on Saratoga-Sunnyvale, and then there’s stores on Cox south of Saratoga Ave. Looking at a map, I see this house is conveniently situated between 85 and the railroad tracks.
August 6th, 2008 at 7:16 pm
Madhaus,
No comment on NJ. I’ve met enough of them for a lifetime. Perhaps I don’t know everything about rural living, but I do know about how to wean myself off of the teat of the rat race. Anyhow, we obviously need to stop sparring with each other. It isn’t healthy, don’t you think?
August 6th, 2008 at 8:28 pm
You may have met people from NJ but you out yourself by calling it by its Brooklyn title. Just as no resident of SF would ever call it Frisco, no Juhzzy guhl would speak of “duh boids on toidy-toid stweet.”
Fun fact: James Gandolfini of The Sopranos had a native North Juhzzy accent, and worked with a voice coach to sound more Brooklynese because that is how the rest of the US expects a Jerseyite to sound.
And that is where I will leave it, spars holding up the rigging.
August 6th, 2008 at 10:09 pm
Thanks to Burbed, I learned something new today!
August 7th, 2008 at 12:07 am
Madhaus,
> But in the same comment you are replying to, I clearly said:
Yes, you did. Too busy with work, so it’s difficult to context switching sometimes.
>Maybe you should just back off that claim that Sunnyvale and Fremont should be valued equally.
Absolutely not. You are wrong, according to me.
> And when you say you’d rather drive 84, have you tried crossing the Dumbarton in the morning?
Didn’t I say I did?
It’s an absolute pleasure.
You are ignorant about traffic at Dumbarton.
Stayed at a friend’s place for a few days.
I am planning on moving close over there.
With carpool, even the toll is waived.
That frees up at least another 500 miles per month.
August 7th, 2008 at 12:14 am
Madhaus,
Sometimes it’s ok to acknowledge sometimes if you don’t know something. The same is applicable to me as well. I don’t claim I know every Bay area neighborhood.
I work in the heart of the Peninsula. If I choose to live anywhere other than Peninsula or the city, I would prefer East bay close to 84 than South Bay. Based on my personal experience, 84 is *far* better than 101 N from Sunnyvale. The intersection near Mountain View is kinda nightmare.
Like I said, 238 could be crowded, I am not sure about that. I am happy I don’t have to go near there, at least during office hours.
August 7th, 2008 at 12:17 am
> I actually did my undergrad at some little known school in Pittsburgh, at least outside of my major anyway.
Hey Carnegie Mellon is Number 1 in CS, along with MIT and Stanford.
August 7th, 2008 at 7:42 am
Hi Madhaus,
Thanks for the tip. That neighborhood is a great example of the school district affecting house prices. The same house will be $200k more in CUSD than in Moreland. And another $50k-100k to go a bit south into Saratoga schools! But with private school at $15-30k per year, it pays off with 2 kids or more.
The school and park are walking distance, which is nice. With kids in school, you’ll go there more often than the store. And there is a safeway on saratoga sunnyvale. It depends on your definition of walking distance!
The RR tracks are a drag, but trains are only a couple of times per week. The bigger problem (to some) is the powerlines parallel to the tracks, but I don’t know how obtrusive they are from this house.
August 7th, 2008 at 9:58 am
check it out, a bank-owned in Los Gatos! It’s the 3rd distressed house I’ve seen in LG.
14550 BLOSSOM HILL RD, Los Gatos 95032
Former Care Home, 9 Bedrooms, 5 Bathrooms, Separate Living, Dining and Family Rooms, Large Lot, The possibilities are endless, Close to Leigh High School, Los Gatos Address, Not A Short Sale, Bank Owned.
9 bedrooms. Rent them out for $800/mo, it just might cash flow.
August 7th, 2008 at 10:00 am
Regarding Saratoga and schools:
11941 BROOKGLEN DR, Saratoga 95070
Asking 1.288, for a reasonably nice 3/2.5 with 1907 ft. And it’s been on the market for a few weeks. So why didn’t it sell in 2 days like Karn Circle, even though it’s 200k less and nicer condition? It’s Moreland schools.
August 8th, 2008 at 6:21 pm
SiO2, there’s a school right on Titus, it’s one of the 5 CUSD alternative schools, so people from all over CUSD go there. It’s a K-8 program. And yet there are places literally across the street that CAN’T go there. How nuts is that? I think the same thing happens with Miller and Hyde middle schools, they are amazingly close to each other, and Hyde is on Bollinger with kids right across the street from Hyde going to Miller instead. I think Bollinger is one of the borders, but it’s weird to have the school on its own border.
Yeah, I knew about that Safeway south of the tracks, is it by Argonaut? Definitely not walking distance, anyway. I bought the house I did because there was stuff to walk to within a mile, parks and shops. All the nearby schools, though, had been closed and leased to other groups. Anyway, the lack of nearby walk-to stuff is why I didn’t like that neighborhood, because we did look there. I did love how big the lots were.
Moreland schools are so-so, they go to Prospect High. I actually used to live in the Country Lane elementary area, which was the best Moreland school. This was long before kids yet even then we noticed this. But the middle school (Rogers) was pretty iffy.
It is so bizarre that Saratoga is divided up into so many difference school districts. Have you noticed whether there is a premium for CUSD vs Saratoga-LG?
August 12th, 2008 at 9:46 am
Madhaus,
there seems to be a premium for Saratoga (elem, goes to saratoga high) vs CUSD. Maybe $50k or so, not as big as the obvious premium of CUSD over Moreland or Campbell. Hard to tell, there’s not really that many sales that you can look at comparable houses.
I’d prefer Saratoga over CUSD. With CUSD there’s the chance that you get the shaft and end up not at Blue Hills but somewhere farther away. School is still good but inconvenient. And Saratoga has higher per pupil spending so they get more amenities, like the new auditorium at Saratoga high.