November 3, 2014

House prices are amazing in the Bay Area

Modest Bay Area homes hit mind-boggling prices

Two years of tight supply and intense demand have pushed prices for modest Bay Area homes in trendy neighborhoods to mind-boggling heights.

In Palo Alto, tiny homes sell for multiple millions of dollars. In Oakland’s sought-after Rockridge district, a home just sold for $500,000 over the asking price.

On both sides of the bay, it’s the location that commands the biggest price, even as the amount paid per square foot reached new peaks in more than a third of 155 Bay Area ZIP codes analyzed for this newspaper by CoreLogic DataQuick.

With the price of homes in Palo Alto skyrocketing, Ken Plourde, a 79-year-old retired jazz bass player, decided it was time to sell the home he bought for $35,000 in 1970.

"I was sitting on a gold mine," said Plourde, whose income from music gigs has been declining with his advancing years and changes in the live music business.

The 992-square-foot-home within walking distance of Stanford University was snapped up in one day by a wealthy Stanford graduate in China for $3 million, a price that comes to just over $3,000 a square foot.

Real estate agents say two groups are leading the pack of home shoppers in Silicon Valley: newly wealthy tech workers and overseas buyers, particularly from Asia.

Congrats to the Bay Area. You are making me so proud.

2015 is the year where the median price will be $1250 per square foot across the entire real Silicon Valley. I just know it!

Maybe it’s time to retire this blog.

Comments (34) -- Posted by: burbed @ 5:15 am

34 Responses to “House prices are amazing in the Bay Area”

  1. Michael Says:

    When will this crap end?

  2. Real Estater Says:

    Perhaps the most entertaining part of this website is Pralay’s projection of real estate from a couple of years back, and the guitar lady’s support of it. The catastrophic miscalculation is matched only by the likes of George W.

  3. mtv-renter Says:

    I think I should buy a house in Palo Alto, irrespective of price, then 30 years from now, when I’m retired, I can sell it for $20 billion, buy a tropical island somewhere, and live like a king.

    Hell, banks should lend money against future appreciation so I can buy that island now!

  4. Dewane Says:

    Burbed is made for times like these! I mean, Palo Alto has the Cheesecake Factory and a Fry’s not too far away, I can see why this is to expensive. That taqueria on (what’s that street just north of University?) is pretty OK too. There are two Apple boutiques! C’mon people!

    I harp, but downtown Shallow Alto is actually a pretty great place. It’s nice that the Stanford Theatre is still there and….did I mention the Stanford Theatre?

  5. nomadic Says:

    mtv-renter, you’re about six years late for that loan for your island. I’m sure Countrywide would have obliged. No proof of income required!

  6. nomadic Says:

    God, this place is dead. Here’s a cartoon to amuse you while we wait for burbed to find a new post.

  7. burbed Says:

    Seriously. Someone should write some new posts.

  8. Alberto Says:

    Well, Burbed, what could we say more?
    Is this really a local house bubble? the most of the money that heated up the market so much comes from abroad. And it’s not ending. And it won’t end, I guess as rumors say houses are not even bought to live here. Are those rumors true? Even in the case of a “business correction” in the Bay Area, I do not see too much of a change, it will just be additional incentive to more investment from abroad I guess.
    Am I wrong?

  9. DreamT Says:

    Houses are still cheap compared to Paris, London, Ontario, Zurich, Singapore, etc… And land that was sitting still for two decades is finally being developed to support AAPL and GOOG growth. Traffic’s never been so bad (from what I hear) and every day on city-data a new person asks for assistance in finding housing in the south bay because of a “tech giant”‘s offer. Doesn’t exactly feel like a housing bubble.

  10. Bill Lumberg Says:

    LMAO comparing RBA to London, Paris, or Zurich. Please.

  11. Alberto Says:

    Ok. Let’s hope then that neither GOOG nor AAPL will get through tough times…you know…

  12. DreamT Says:

    Bill – I know, I wouldn’t want to live in any of these grey, fast-paced, often segregated cities. Yet they’re more expensive! What gives?!

  13. burbed Says:

    >the most of the money that heated up the market so much comes from abroad.< Frankly I'm stumped. 25-33% of all transactions are all cash. There's almost none of the shady mortgage stuff like the last time. I'm not sure how to read this situation.

  14. Alberto Says:

    I was told something similar happened at the time Japan’s economy was soaring. A lot of investments for pricey housing. However, per my understanding here the situation is a bit different. I have a couple of friends who got good return from their company buy-out, and still had to compete for buying their house with foreign investors.
    That’s why I do not really buy into GOOG or AAPL good times as driving all of this: they sit on piles of cash, but it’s not that they are pouring all of it around to their employees. In particular, the fact that first time buyers are actually cut out. Not everyone here works for Facebook. I have colleagues that were able to buy 2-3 years ago and now that they look at the market they candidly admit they wouldn’t be able to buy in the same area today….

  15. Dewane Says:

    It is weird. Just feels different. Not quite sustainable, but different. I’m old enough to remember Japan – not so much here, but prices around Pebble Beach went through the roof in the ’80s because the Japanese liked golf so much. And they didn’t start to reach those pervious heights for 20 years or so. I don’t understand who can afford this – a lot of it is definitely offshore money. Even some non-cash offers must be shadow buyers. I don’t see how this is possibly sustainable, but I bought this year, so I hope it is.

  16. Sd Says:

    It is a Chinese money laundering bubble

  17. Bill Lumberg Says:

    Sd nailed it.

  18. slowcheetah Says:

    I’m so glad I have found this website. I’m not an economist or real estate professional, but my gut feeling tells me that we have a bubble. I would love to see any sort of data that correlates the increase in home prices due to foreign investment. I know the Chinese are buying up tons of homes in the SF Bay, but I would like to see some statistics.


  19. Sd Says:

    Well at least San Diego is nicer and less expensive than the RBA!

  20. Long Dong Says:

    Check out the description for this listing. Funniest thing I’ve read in awhile:

  21. madhaus Says:

    Somebody *really* needs to write some new posts.

    Guitar Lady

  22. 2million$shack Says:

    I hope Burbed is back in the New Year! I keep checking for new posts….it’s been awhile.

  23. nomadic Says:

    “dong,” that listing is hilarious. Did you see pic #17? WTF?

    And what’s with the wall in #21? That is weird. So is the kitchen layout.

  24. burbed Says:

    I check out the comments all the time. But unfortunately I’ve been so busy that I haven’t had time to post!

  25. maryjane Says:

    Happy New Year guys. Keep checking this site. I know it’ll never die.

  26. nomadic Says:

    Happy New Year, Maryjane! No new posts for two months – it’s on its deathbed.

  27. Petsmart groomer Says:

    How can this site die when houses like this one exist?

  28. Twol Says:

    Its truly amazing what has happened. 5 years ago, I found this & other sites and felt soooo smart for waiting out the upcoming RBA crash. Back in 09-10, I envisioned 2015 as being filled with fire sale prices, and large groups of burbed readers patting each other on the back as we all bought, and this site would go out with a celebratory bang!

    Instead, its going out with a whimper, with us patient renters being ground down into a pulp. But its true, thats where we are now. I admit defeat. I really WAS priced out forever. Good luck to the rest of you, but its time for me to pick up the pieces of my shattered dreams and move on. It just wasnt supposed to happen like this…

  29. maryjane Says:

    Nice house Petsmart groomer. I can’t imagine what happened there but you know someone is going to pay over asking to find out. You can’t go wrong – it’s in PA!

  30. nomadic Says:

    Oooh! Move-in ready and only $1.8M!

  31. Alberto Says:

    >1M in Santa Clara. Easy access to San Tomas (just open your backyard door and you’re there..)
    Sold in July for 650K and remodeled.

    Am I missing something when I think that it seems a bit overpriced, regardless of all the remodeling done?

    @twol: you’re not alone….

  32. nomadic Says:

    Yes, the price seems a bit high for the neighborhood but the cost per sf is actually lower now than the last sale. The remodel included doubling the size of the house and adding two bathrooms. I’m betting they tore the old house down and left only the garage walls standing (and re-used the foundation) to be able to call it a remodel. Here’s the old listing:

  33. Alberto Says:

    …pending already.

    Ok, I guess I didn’t understand anything about RE here…

  34. Minton Says:

    Its over. Even has thrown in the towel. Sigh.

    Looking back at some of my rants, I am ashamed of what I wrote (now writing under a new pseudonym). I always expressed the utmost confidence in a upcoming crash. In reality, I really knew nothing, but was simply lashing out in a reactionary, emotional non-analytical way simply because prices seemed way too high!

    Yet they werent. The market was right and I was wrong. I accept that now. Worst part about it is not the catcalls from all the anonymous bulls here – but all my family members & friends who snarkily reminded me about what I said in the past, and watched me eat shit all these years, renting and waiting for the “crash” that never came.

    Well now its time to eat my words and move on. I wish all of you the best of luck and I am sorry if my confidence in a crash caused any of you to stay sidelined longer than you should. It cost me badly but I hope to recover over time, and I hope that you do too.

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