July 31, 2009

More affordable housing in San Jose

1460 KARL St, San Jose, CA 95122 | MLS# 80839880
1460 KARL St San Jose, CA 95122
Price: $299,000

1460
Beds: 3
Baths: 1
Sq. Ft.: 1,711
$/Sq. Ft.: $175
Lot Size: 6,000 Sq. Ft.
Property Type: Detached Single Family
Stories: 2
Year Built: 1961
Community: Alum Rock
County: Santa Clara
MLS#: 80839880
Source: MLSListings
Status: Active
On Redfin: 278 days
This home is very large and has converted bonus rooms!!! Great area and neighborhood! One of the largest homes in the area.

Maybe I should just make it policy to feature affordable housing on Fridays or something. To counter those whiny people that there’s no affordable housing in the Bay Area.

In fact, this area supports a diversity of lifestyles – you can be in proper Palo Alto and live in the Real Bay Area, or you can be in affordable San Jose and live in the related Bay Area.

That said, just check out the equity that’s waiting to be unlocked when you buy this house:

1460a

Cha-ching! Come on… it won’t take that long for this house to move back to its 2007 or 2005 price. And them BOOM, cash out time!

As for the house itself, it’s got potential. Lots of potential. Trust me, you really don’t need pictures of the inside.

Comments (55) -- Posted by: burbed @ 5:39 am

55 Responses to “More affordable housing in San Jose”

  1. sfbubblebuyer Says:

    The previous house featured was 95% new, this one is 95% crap.

    And while I’m a big fan of buying the biggest shitpile in a good neighborhood, this house’s ugly mug would make me wince.

  2. aaa Says:

    So, this is what someone making ~$100k/yr in SJ can expect to live in? That is why I left SV and live in a relative palace for less money.

  3. BuyersAreIdiots Says:

    I can’t believe some doorknob paid $500k for this POS! Hell, even that $172k purchase in 1997 looks moronic to me. And they wonder why I rent? ;-)

    #2 (aaa)

    Where did you move to if you don’t mind my asking?

  4. Alex Says:

    http://sfbay.craigslist.org/pen/reb/1287300551.html

    Wasn’t the above sh*tbox featured on burbed a while back?

  5. zanon Says:

    aaa: someone making $100K can rent a $1M for $2K.

  6. Alex Says:

    zanon, where can i rent a $1M for $2K in the peninsula?

  7. SiO2 Says:

    I’m with Alex – for $2k you get about a $600k house around here. I’m sure some people have sweet deals and have gotten a $1m house for $2k rent but that’s not the norm.

  8. nomadic Says:

    The November 2007 “sale” was actually the bank foreclosing. HSBC has owned this piece of crap for nearly two years! WTF?

    It’s also bizarre that the repo was for more money than the purchase price. No interim refi. Maybe the “owner” didn’t even bother to pay property taxes?

  9. nomadic Says:

    Haven’t seen that house before, Alex. What a gem you found! On the corner of San Antonio, on a postage stamp lot, and backing to a parking lot. Sweet!

  10. nomadic Says:

    oh, and reduced to $1.7M on redfin:
    http://www.redfin.com/CA/Los-Altos/25-Alvarado-Ave-94022/home/1463573

  11. Gavin Says:

    I agree than a 1 million dollar house renting for $2000 per month is an exaggeration.

    However how about a $840k house renting for $2495 per month?

    http://sfbay.craigslist.org/pen/apa/1297833779.html

    Address: 126 Spuraway Dr, San Mateo, CA 94403

    Last sale: $840,000 (07/28/2006) on redfin

  12. sfbubblebuyer Says:

    My rental is 2500 a month, and when we moved in houses just like it were selling for 800-900k. Now they’re selling for 500-600k.

    If they get down to 300-400k, I might be tempted to buy.

  13. CB Says:

    Burbed, did you see this?

    http://www.sfgate.com/cgi-bin/blogs/ontheblock/detail?entry_id=44647

    “Hat tip to Burbed for spotting the Woodside listing…”

  14. R Says:

    Having looked recently, depending on the neighborhood, 2.5k will get you a 600-750k house. 3k will get you a 800-1M house. 3.5k will get you about a 1.5M house. Once starters are going for 400-500k and the 3k rental house for 600-700k, I’ll be tempted to buy. But we’re not close yet.

  15. Real Estater Says:

    R, Gavin, etc: You guys are all part of the “shadow demand” in the Bay Area.

  16. Gavin Says:

    Real Estater: Part of that “shadow demand” is melting away as the undemployment rate increases. From today’s Wall Street Journal:

    Silicon Valley’s Jobless Unplug From Tech

    Jobless workers in Silicon Valley are giving up on the region’s dominant technology industry and trying to switch to other fields, as the area’s unemployment rate spikes above the national and state average.

    If a person willing switches occupations, it is likely that he is being paid a higher salary in his new field. On the other hand, if he is forced to switch to another field due to job loss, his new income is likely to be lower.

    If future income growth is poor, the “shadow demand” for homes at current prices will be weak.

  17. R Says:

    “the “shadow demand” for homes at current prices will be weak.”

    Exactly. Of course there are many would be buyers on the sidelines. But there is a reason. Prices are still too high and have to come down. Once they do, people like myself will buy. Not until then. There is no reason to plop 50k+ down for the right to pay 4k a month for a house I can rent for +/- 2.5k with no money down.

    Demand at current price levels will remain weak for that reason. Once we normalize, I expect a typical balanced market and real estate to appreciate with inflation. What I don’t expect is another period of “buy now or be priced out forever.” That once in a lifetime period is done and not coming back.

  18. anon Says:

    Don’t lose sight of what matters:

    Shadow supply vastly exceeds shadow demand.

  19. anon Says:

    Silicon valley wins:

    As a result, Silicon Valley’s unemployment rate — which was below California’s average and largely tracked the national average last year — has soared, surpassing the state average in May. By June, the area’s unadjusted unemployment rate was 11.8%, worse than California’s 11.6% and the national rate of 9.7%, according to the latest figures from California’s Employment Development Department. The rate of job losses was particularly steep in sectors such as semiconductor manufacturing, where employment dropped more than 13% in June from a year earlier.

  20. R Says:

    Soaring unemployment is great news for real estate prices. It means more people are stuck at home unemployed. This means more time to paint, water the lawn, and enjoy all the other intangibles that only owning brings. I expect prices to soar.

  21. Pralay Says:

    You guys forgot the most important thing – unemployed people have more time shop around for homes. Even if they “go out” casually, they “might even change [their] mind”. More power to bay area housing market. I am predicting that price will soar along with unemployment.

  22. Real Estater Says:

    All,

    Unemployment is temporary and lagging indicator. Most of the stimulus money has not arrived. Meanwhile, baby boomers will be retiring by the millions in the next few years. I actually expect there to be a worker shortage within 5 years.

    Due to housing demand (both shadow and current) far outstripping supply in Silicon Valley, unemployment rate is unlikely to have a significant impact. We’ve seen this cycle before. During the dot com crash, far more jobs were lost.

  23. Real Estater Says:

    R says,
    >>Prices are still too high and have to come down.

    Prices too high is the symptom. The cause is unrelenting demand for housing and limited supply.

    Gavin says,
    >>Part of that “shadow demand” is melting away as the undemployment rate increases.

    What is more likely happen is that the demand for lower end market increases. Demand won’t melt away as long as people want to live and work here, and immigrants keep coming.

  24. zanon Says:

    *sigh*. we go through this every month.

    Bear with me as housing maps seems not to work, but it had a 2bd cottage in College Terrace for $2,250

    The address in the craigslist listing is now down, but doing my best on Zillow it looked kinda like this:

    http://www.zillow.com/homedetails/2301-Williams-St-Palo-Alto-CA-94306/19504539_zpid/

    2bd for $900K.

    A 1BD for $1800 on the corner of S California and Williams St can be your for a cool ~$800K (could not find exact comp).

    So, cannot find an exact 2BD rental that’s $1M but it isn’t too far off. Mix in the fact that there are some people out there with deals (like myself) and I think it’s a reasonable average.

  25. Pralay Says:

    Due to housing demand (both shadow and current) far outstripping supply in Silicon Valley, unemployment rate is unlikely to have a significant impact.

    RealEstater comment in nutshell: nothing is going to have any impact on housing market, because RealEstater says so.

    So, how did RealEstater come to conclusion that “housing demand (both shadow and current) far outstripping supply in Silicon Valley“?

  26. nomadic Says:

    Due to housing demand (both shadow and current) far outstripping supply in Silicon Valley

    I think RE’s definition of demand is different than what the rest of us are thinking. You could argue there was a ton of shadow demand during the bubble too – all of those people who would have liked to buy (even R and Gavin) but were “priced out.” Not necessarily priced out because they couldn’t afford to buy a place but priced out because they didn’t see a value in plunking their money down on a $1M shack. That makes the shadow demand irrelevant at current prices.

    Based on anon’s statistics in #19, I won’t believe more jobs were lost (locally) in the dot-com than during the current recession. Please support that argument RE; I’m willing to be convinced otherwise.

  27. Pralay Says:

    and immigrants keep coming.
    —–

    Hey guys, did foreigners with cash arrive? Where are their buses?

  28. Pralay Says:

    Please support that argument RE; I’m willing to be convinced otherwise.
    —-

    Math is hard.

  29. Pralay Says:

    Not in tech sector, but more unemployment coming in bay area:
    Report: Toyota leaning to close NUMMI

    But who cares? NUMMI plant is full of workers holding screwdrivers and welding torches. These people won’t buy homes in RBA anyway. NUMMI is free from management class people.

  30. Real Estater Says:

    nomadic says,
    >>Based on anon’s statistics in #19, I won’t believe more jobs were lost (locally) in the dot-com than during the current recession. Please support that argument RE; I’m willing to be convinced otherwise.

    Check here:
    http://www.beaconeconomics.com/people/press/MercuryNews041709.pdf

    The last section says:

    Dot-com bust worse

    Still, the job losses in this recession pale in comparison with the dot-com collapse, when 123,900 jobs were lost during one 12-month period. The valley shed 36,200 jobs in the past year.

    Any more questions?

  31. nomadic Says:

    Thanks for following up this time. I remembered your article (and that you referenced it before) but didn’t want to go searching for it. Based on the part you quoted, and the fact the article is 3.5 months old, I would agree that while we’ve definitely had a lot more job losses since then, we’ve most likely lost fewer jobs this time. However, a lot of tech people left after the dot-crash so the pool of higher-paying jobs is probably smaller.

    Still, the info is encouraging.

    .
    #29 – yes, Pralay, we all know that NUMMI didn’t employ a single engineer. ;-) Besides, they aren’t in the “high tech” field and don’t matter, right?

  32. Real Estater Says:

    Remember the track record. Math is hard — for Pralay. Every time he argues with me, he loses sooner or later.

  33. Alex Says:

    If this POS hasn’t been featured on burbed, then I must have come across it on my prior craigslist house search. It just struck me as being ugly and overpriced. And it was definitely listed for a sh*tload more a couple months ago.

    Haven’t seen that house before, Alex. What a gem you found! On the corner of San Antonio, on a postage stamp lot, and backing to a parking lot. Sweet!

    oh, and reduced to $1.7M on redfin:
    http://www.redfin.com/CA/Los-Altos/25-Alvarado-Ave-94022/home/1463573

  34. BuyersAreIdiots Says:

    The reference to more job losses occurring during the dot com bust is a poor frame of reference. How many of those job losses were eventually refilled? Virtually all the dot coms that existed back then disappeared. The remaining companies that survived picked up some of those who were laid off. But based on census data I have seen, a great many of those workers simply left the area.

    That being said, losses in tech occurring now are happening based on an already reduced labor pool from the dot com bust. And if you look at the so-called ‘earnings’ of companies that reported recently, the vast majority of them were able to meet profit numbers through massive cost cutting and attrition programs.

    Couple this with companies expanding continuously in China and India, and you create a scenario similar to what happened to workers in the early 80s when much of this country’s manufacturing base began to be shipped elsewhere.

    The baby boomer statement by Real Excreter, which he points as something rosy, is actually another massive shoe to drop for this country. A HUGE proportion of baby boomers have little to no savings to speak of. Much of their wealth is in real estate which they will begin to start selling off as they get rid of vacation homes and downsize their primary residences. Furthermore, those that can work longer likely will, placing an additional strain on our job market.

    At least, that is my opinion. But what do I know. I’m some idiot who opted to get a Stanford degree instead of buying real estate. :-)

  35. Real Estater Says:

    BAI says,
    >>But based on census data I have seen, a great many of those workers simply left the area.

    Everyone left the area, and then real estate took off. That shadow demand must be huge.

  36. DreamT Says:

    Lots of speculation here. On one hand, I’d like to see A. Lewis focused on investigating the shadow inventory (nasty if you believe Business Week). On the other hand, the impact of layoffs on demand (presumably most laid-off tech workers were not about to buy a house in 2009) balanced with the # of job creation (not negligible in the bay area!). It would beat the plethora of opinions we can read in the thread that really amount to nothing more than speculation and opinions based on incomplete or no data. I also invite to consider something that was already brought up a few times: if jobs are getting lost in the BA, jobs are also getting created. Other areas in California are hurting much more as far as job creation goes (even if local unemployment figures are worse in the SV this month). Population growth in the Silicon Valley continues to be positive in balance. So let’s stop the speculation and look at cold, hard figures, especially if we have some insiders here.

  37. zanon Says:

    RE is right. The dot com bust was worse.

    Luckily, Alan Greenspan inflated the housing bubble by dropping rates to zero and banks starting giving money away.

    Prices rose in !RBA, and people took their equity and moved up into RBA.

    But now, interest rates cannot go lower, and banks are back in the business of making loans. There is no move up equity.

  38. Alex Says:

    BAI, how much did you pay for your Stanford degree? =P If you hadn’t, maybe you could have bought a nice house in the Real Bay Area. :ppppp

    At least, that is my opinion. But what do I know. I’m some idiot who opted to get a Stanford degree instead of buying real estate

  39. BuyersAreIdiots Says:

    Everyone left the area, and then real estate took off. That shadow demand must be huge

    Actually, that was a debt fueled bubble. Try to keep up Excreter. You are lagging behind. :-)

  40. nomadic Says:

    DreamT, who wants to do work on this blog? We’d rather just speculate and pick on our troll. :-)

  41. DreamT Says:

    A. does! Just because his previous effort was misguided, doesn’t invalidate his skill at playing with numbers! (see, I can compliment him!)

  42. nomadic Says:

    Compliment? uh, yeah.

  43. Herve Estater Says:

    > Just because his previous effort was misguided […]

    Yeah, that sure sounds like a compliment…

  44. DreamT Says:

    come on guys, I am trying here. I could have written “just because he didn’t have a clue and still won’t”. Instead I blamed it on a faulty guidance system!

  45. Jojo Says:

    As a meth lab this is great investment.

  46. SiO2 Says:

    Zanon, that’s an interesting example of $2k rent for $1m property. I concede that point. However that is unusual.

    Also, I have to think that part of the $1m value is the potential to expand, whereas the $2k rent is strictly for its current usefulness. Take it to the extreme, an undeveloped lot in RBA (let’s say a total loss due to fire) could sell for $800k, but would not be rentable at all.

  47. R Says:

    Land has value, but land + cost of construction should not exceed the rent the completed home can bring in by that much. If it does, something has to give. Rents have usually been within 10% or so of the cost of ownership, even in the most desirable areas.

  48. zanon Says:

    SiO2: It is not that unusual in PA. I use housing maps to bring up PA properties — look at anything around $2K, compare to address on Zillow, and the Zestimate will get you a price for $1M.

    Entry level PA (~$1M) remains the *most overpriced* segment on the peninsula.

    Your “potential to expand” actually makes things worse — it says that the $1M cost is where it is because of future appreciation, but you’re talking about the segment that already has the highest potential future appreciation prices in. There is nowhere up for it to go.

    Price/rent gets better as you go to nicer homes. Price/rent gets better are you to to less nice homes. There is no move-up market to roll equity into entry level PA, so you need $300K two engineer couples willing to take on a tonne of risk.

    R: You got it.

  49. A. Lewis Says:

    Wow, I got mentioned more than once and I didn’t even post in this thread until now! I’d say Burbed is getting better if I get more thought by not posting than RealEstater does by posting. :-)

    Back-handed compliments notwithstanding (and I’m smiling about it today – I guess I’m in a better mood, DreamT!), I’m not going to give you any detailed analysis on shadow inventory. Too much missing data.

    I have details for the 3 blocks near my house, but I’m keeping it as insider info – and it’s hard info to come by! (Hint: shadow inventory is high). CalculatedRisk regularly talks about inventory, and estimates of shadow inventory, but in general it’s on a US-aggregate level.

    I think the ‘shadow demand’ has decreased massively since say 2005. Sure it’s there, and I’m part of it – but it’s much less due to income numbers, rent numbers, higher lending standards, and lack of move-up buyers: serious fundamentals. The caveat is the desperate need to get your kids into a good public school, near your job, and you have the last leg propping up the RBA.

    That’s why you see ‘entry-level’ Palo Alto as the worst. The ever-shrinking pool of people who can still afford that idea and are willing to over-pay that much to own in a good school district.

  50. DreamT Says:

    A. Thanks for smiling :) If you won’t tackle shadow inventory, nobody but an insider will. As for shadow demand, if burbed could take the time to build an actual interactive poll on his/her front page, I’d be curious to hear from each of us how many people we know have bought in the past six months, as opposed to say 2008. I suspect we’ll see an upsurge of demand.

  51. SiO2 Says:

    Hi Zanon,
    I don’t have hard data, so I will believe you that there’s many 2br for rent in PA for $2k with $1m Zestimates. That’s very interesting.

    My point on potential for expansion is not purely financial. My point is that someone who wants to build a house a certain way will value this plot of land higher than will the renter, who has no intention of upgrading the house. Just like nobody would rent an undeveloped lot, but someone could buy it.

    R, people having been saying that rent should be less than cost of ownership since the mid 90s, when I rented a ~360k house for $1800. Back then with interest rates at 8%, the mortgage would be $2100 (with 20% down). Plus prop tax of $330/mo. I’m sure someday this relationship will be true around here, but I don’t know when.

    Anyhow this is good news for those who prefer to rent, you can live in a $1m house for $2k/mo!

  52. SV Shopper Says:

    Mr. Lewis – Don’t know where you live, but I see demand in areas with good schools. 1-1.5 million is the band buyers are looking in. Many people moved to the bay area in the last 5 years haven’t bought, and as soon as they started a family, they all feel the urgency to buy. Inventory in my target range is very tight. I offered a house for 10% under list, and never got a counter.

  53. DreamT Says:

    he lives far away, at least one bridge too far

  54. aaa Says:

    BAI,

    I moved to the Chicago suburbs after living and working in SV for 5 years. It was an easy decision once the wife and I had kids.

    In SV, both my wife and I would need to work at professional jobs (i.e. each one ~100-150k/year salary) just so we could spend a ridiculous percentage of our income to live in a shack that would be owned by a crackhead or dropout somewhere else. Plus, we’d likely have private school expense because most CA schools are awful. Plus, all the taxes are obscene.

    Upon leaving CA, I found that my wife could stay home with the kids and we could live quite well on one salary. We have a very nice 2000+ sf house in a quiet, safe neighborhood served by excellent public schools. My house value is about 2-2.5 times my salary. I am able to save a lot in 401(k) and 529 plans for the kids, plus drive a high-end car, each out a couple times a week, and take a great family vacation each year. I would proably need to make 3X what I currently do to lead a similar lifestyle in the Bay Area (and my house would probably be crap).

    Contrary to what most SV folks believe there are very many highly educated professionals around here, plus I can drive 10-15 minutes to get wonderful Chinese, Thai, BBQ, Sushi, etc.

    All in all, the Bay Area is beautiful. If I won the Powerball, I’d move to Woodside, Burlingame, or Los Gatos in a heartbeat. However, having to work and save for the future, I find it much better to live elsewhere…in my experience there is only a slight salary premium in the Bay Area and the lifestyle it affords working people is equivalent to a plumber or garbageperson in another state.

    At the time I left, there were many 30- and 40-somethings leaving. I think there is a psychological tendency to want to stay and ‘make it’ in SV, but a vast majority of people don’t make it. Rather, they barely get by, though over time they don’t realize that they are living like paupers.

  55. bob Says:

    aaa,
    Chicago is a bit too cold for my tastes but I too am also making the same decision as you. I’m in talks with an Austin TX company at the moment. We’ve actually been planning such a move for years because while we make good money here in the BA, what you get for your money is kind of lame. With what we have saved and what I am likely going to be getting paid, we can not only just buy a house in Austin outright, but also already have a good bit of our retirement spoken for.
    A great many people my age are also leaving. Same reasons.


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