February 1, 2014

I Can Haz Stock Optionz?

Here’s a piece of investment and career advice: If your job doesn’t give you a piece of equity in the company you’re working for, it’s time to move on.

You Need Equity To Live In Silicon Valley

140131-stanford-memeMay 22, 2013 – Andy Rachleff Wealthfront

The other day we were modeling our typical client’s spending when we realized something disturbing – an average Bay Area-based young couple has to own equity in a business if they hope to send their kids to a good university and be able to retire well.

Investing well alone can’t get you there.

Our analysis found you need to work for at least one company where your equity stake can generate at least a few hundred thousand dollars after tax to make your economics work in the Bay Area.

The problem is the hole that opens up in a typical couple’s budget when they are in their late 30s. Three big pressures converge then: the mortgage on your expensive Bay Area home, and the dueling needs to fund your retirement and your kids’ college early so that you take advantage of compounding.

That’s why we say: You need equity to live in Silicon Valley.

And we say, you need even more equity to live in The Real Silicon Valley.  Then again, you could always rent AND send your kids to Community College and Cal State AND move to Arkansas for your Golden Years.

Basically this is another one of those “We make $250,000 a year and we feel sooooooo poooooor” pieces. Please all join in this First World Problems Pity Party because in lieu of another crap house for your disapproval.

Comments (9) -- Posted by: madhaus @ 7:06 am






January 11, 2014

Online Realty Pricing Sites: Do They Work?

Yes, they work. But are the prices valid? That’s another story. Let’s listen in as the San Jose Mercury News (motto: We’re a newspaper just like Burbed is a real estate blog, haha!) explains why the valuation models don’t agree with each other.

Online sites can help tell you what your home is worth

141010-avm-unioncityBy Pete Carey, San Jose Mercury News
POSTED:   12/27/2013 05:00:00 PM PST; UPDATED: 12/28/2013 06:17:12 AM PST

You’re likely to get a warm fuzzy feeling if you look at what your home is worth on Zillow, Trulia or any of the other real estate sites that provide values for millions of houses. Home prices have risen rapidly, and the value these sites assign to your home is sure to reflect that.

But don’t carried away by a single Zestimate, SmartZip quote or Trulia estimate. While they are fine for spotting trends, these home valuation services come with a caveat: they offer rough approximations by computer programs. If you want a more precise estimate, hire an appraiser, talk to a real estate agent or check around your neighborhood and see what homes are selling for.

The sites all use what’s called "automated valuation models," or AVMs, to make sense of mountains of data, typically drawn from recent sales, property history, size and number of rooms, market trends and other factors that influence price.

We can’t believe they spent all that trouble writing an article that says, “If you want to really know what your house is worth, hire an appraiser.” There are multiple models out there, but this piece won’t tell you how they differ, or why. We did learn that Santa Clara County prices are more likely to be correct than Alameda County, but again, no explanation why.

We know why!  It’s because the Real Bay Area’s prices only go up, and all the models built that in.  Feel free to speculate on what’s going on with the AVM of your choice and why your house is So Special that the price estimates are Way Too Low.  Unless you’re buying, in which case they are Way Too High.

Comments (5) -- Posted by: madhaus @ 7:11 am

December 14, 2013

Priced Out For-EVEH AGAIN!

Don’t look now, but the FHA just swiftly kicked California in the housing numb…ers.

Housing Agency Will Reduce Mortgage-Loan Limits

FHA will drop the maximum mortgage loan it will guarantee next month

131213-mortgageBy NICK TIMIRAOS, Wall Street Journal, Dec. 6, 2013 5:17 p.m. ET

The Federal Housing Administration will drop the maximum size of home-mortgage loans that it will guarantee beginning next month in nearly 650 counties, the agency said Friday.

The maximum for single-family homes in certain "high-cost" housing markets including Los Angeles, San Francisco and New York will fall to $625,500, from the current level of $729,750.

The FHA doesn’t make mortgages but instead insures lenders against defaults on loans that meet its standards. It allows borrowers to make down payments of just 3.5% and has played an outsized role backstopping mortgages in the aftermath of the housing bust.

You just know those New York and DC types are behind this, trying to harsh our mellow, and kill our housing price leadership.

131213-fhaWell, we just have one thing to say to that: PTHTHBBBT.  That’s not going to hurt us here where the Engines of Creativity run 24/7/365.25.  No FHA mortgage backstop means everyone has to put 20% down on their above-$625,000 loans.  But so what?  Everyone here has a brazillion stock options and can buy houses for cash found under their Tesla Model S seat cushions! You know who that’s going to hurt, instead?

Los Angeles.  Moohahahahaha!  Look at the reaction by the California Association of Realtards, who are terrified of county median values resetting downward.  Of course, in the Real Bay Area, prices continue to only go upwards.

And as this is the first Weekend Open Thread we’ve provided in a while, feel free to comment on government housing issues, why SoCal’s housing market sucks compared to ours, or anything on your mind.

Comments (7) -- Posted by: madhaus @ 7:03 am

November 10, 2013

Building a new house is easy!

Nobody even noticed we had a new article yesterday. And it was on topic and everything! So just for that, we give you a lame-ass Ikea rip-off on what to do if they ever made any more land. And you managed to get some.

131109-houss-instructions

This is your weekend Open Thread.  Heck, this is probably going to be your Open Thread for the whole effing month of November at the rate we’re going.

We would love to properly credit and link to the author of these instructions. Let us know if you can figure out who it is.

Comments (14) -- Posted by: madhaus @ 7:02 am

November 9, 2013

We’re Number One! In Rent!

Take that, NYC.  San Francisco rents are even higher than yours.  Thanks very much to Burbed reader Petsmart Groomer for passing this awesome news along.

San Francisco Rents Skyrocket, Up 10.1% From Last Year

Forbes, LIFESTYLE | 11/05/2013 @ 12:59PM | 2,823 views

131108-rents-listTrulia TRLA +3.3% Chief Economist Jed Kolko dives into the latest findings from the Trulia Rent Monitor, the earliest leading indicator of how rents are trending nationally and locally. It adjust for the changing mix of listed homes and therefore show what’s really happening to rents.

Among the 25 largest rental markets, rents are rising fastest in San Francisco, Portland, and Seattle, while they’re falling slightly in Washington, D.C., and Philadelphia. San Francisco has not only the steepest year-over-year rent increase, but also has the highest median rent ($3250/month) for 2-bedroom units in the country, edging out the New York metro ($3150). No other market comes close to San Francisco and New York: Boston, the third-most expensive, comes in at $2300. At the other extreme, median rent for a 2-bedroom unit is less than $1000 in Phoenix, St. Louis, and Las Vegas.

Can you imagine how much higher SF rent would be if they threw in Santa Clara County? And there is a bit of a cheat in here, buried deep in the FAQ we discover this nugget:

Some MSA’s [Metropolitan Statistical Areas] are split into Metropolitan Divisions, which we use instead of MSA’s where available. For example, we report the “San Francisco – San Mateo – Redwood City” and “Oakland – Fremont – Hayward” metropolitan divisions separately, rather than the “San Francisco-Oakland-Fremont” MSA.  [explanation added –ed.]

Ho, ho, ho! So that’s how we did it, by throwing away away Oakland, Richmond, and Hayward, City of Diversity!  Meanwhile the New York City subcategory, according to this thrilling OMB document on Metropolitan Statistical Areas, is still saddled with all the working-class outer boroughs as well as the pricier suburbs.  At least we now know which government agency is responsible for splitting SF and SJ into two separate metro areas.

Comments (1) -- Posted by: madhaus @ 7:07 am

October 19, 2013

San Francisco & San Jose: Two Different Metros. WTFF? WHY?

131014-sfsj-bayareaThe conventional definition of the Bay Area was always the nine counties that touched SF Bay somewhere.  These were:

  • San Francisco, which everyone used to acknowledge as The City, because it was a City and a County both!
  • Alameda, its close-by yet cheaper urban commuter residence, home to Oakland, Berkeley, and of course, Hayward.
  • Contra Costa, further away, and featuring the lovely features of Richmond contrasted with the excitement of the I-680 corridor.
  • San Mateo, the nicer bedroom county. Not as nice as Marin, but easier to get to, and more importantly now, waaaaay closer to Google.
  • Santa Clara, formerly the valley of fruits and nuts, now home to the real economic engines. As in Google and Apple and Facebook and Intel and Cisco and a bunch of other places that make it possible for you to read this blog every day.
  • Marin, home to aging hippies and even more aging real estate, it’s the whitest part of the Bay Area
  • Sonoma, rural and removed from, well, everything above.
  • Napa, even more rural and removed except when the tourists clog up the wineries.
  • Solano, our very own Stockton on the Bay. That’s a reference to their finances, not their cattle ranching. Vallejo has a different economy.

Yet The Bay Area is often missing from lists comparing different parts of the country because the Census Bureau (now in shutdown mode!) decided to break The Bay Area into two different metropolitan areas.  There’s the San Francisco Metropolitan Statistical Area, and there’s the San Jose one.  San Francisco also got Alameda, Contra Costa, San Mateo and Marin counties. 

What did San Jose get?  San fucking Benito.  Thanks a LOT, Census anal-retentives.  You take the fifth largest metro area in the country and bust us into number 11. And number 34. Thanks a fucking lot, people counting geeks.  We really appreciate all the respect for our geographic integrity.

131014-sfsj-commuter-map

Breaking SF and SJ into different metros is utterly stupid. Also, SF gets San Mateo AND Alameda Counties, which have plenty of commuters crossing into Santa Clara County.

I finally found some actual commuting numbers in this chart here.  72 thousand San Mateo County residents commute to SF and 61 thousand commute to Santa Clara County.  But… this was in 2010. Lots more people even in SF taking the Google Bus now.  (SF-to-SCC commuters was 18K, the reverse was 7K)

You know what else is stupid? This graph. The size of the arrows seems to have little to do with how many commuters they represent when compared to the same size arrow in another county.  That big-assed snot-green one coming out of Contra Costa to Alameda?  It actually is the biggest inter-county commute, with 120 thousand people crossing the line to get to work. But the two opposed arrows out of San Mateo County, going to SF and Santa Clara County?  The baby shit brown one is longer but the purple one represents 10,000 more people.  Similarly, the same two colors coming out of Alameda?  That fabulous purple arrow is longer and just as wide, but there’s 6,000 more people heading to Silicon Valley than The City.

The chart key says arrow width is what matters, not length. But that’s bad design.  A stubby arrow connotes direction but also represents area.  A longer arrow should either show a longer commute or also more commuters.  And both SF vs SJ (well, SCC) arrows are not equilinear, yet the danged chart doesn’t tell us why that is.

131014-sfsj-commuteThere are more jobs in SCC than any other county in the Bay Area, too, 953K.  The next biggest job center is Alameda County with 737K, and The So-Called City is third with 621K.

Feel free to talk about your commute, where your job is in relation to your house, or anything you want. It’s not like we’ve ever removed a post for being off-topic.

Comments (18) -- Posted by: madhaus @ 7:01 am

October 14, 2013

We’re #1! We’re #1! We’re… PRICED OUT FOREVER!

Yesterday we shared a San Jose Mercury News (motto: Website now as thin as our newspaper!) piece showing many first-time buyers are going to remain full-time renters for the time being.  And that’s true even if we spot them places like Hayward and Mountain House.

That’s distressing news if you hate your blood-sucking landlord (but we repeat ourselves), your noisy neighbors, or your shiftless property “manager.”  Let’s balance that cup of cold crappy colloquy with some news that will turn your frown upside down.

Where Can the Middle Class Buy a Home?

131013-sf-least-affordable-ggbBy CONOR DOUGHERTY, The Wall Street Journal

If you’re in the middle class and want to buy a home here’s a piece of advice: Move to Ohio (if you’re not already there).

Some 86% of homes in the Akron, Ohio area are within reach of middle-class buyers in the area, the highest share in the nation, according to a report from Trulia, the real estate listings site. The next two cities on the list, with 85% of homes affordable to middle class, are Dayton and Toledo, respectively.

For those of you in the coastal elite who are reading this post for the perverse pleasure of finding out just how unaffordable your city is, you might be surprised to hear that New York isn’t No. 1. San Francisco is the least affordable place to be a middle-class buyer, with only 14% of homes within reach of those making the median San Francisco household income of $78,840, according to Trulia.*

However, we were slightly surprised by the next two most unaffordable places, Orange County and Los Angeles, respectively. New York was the fourth least affordable place to be middle class. After that were San Diego and San Jose and Ventura County.

Sooooo, SF is #1 but Silicon Valley is #6? But note, California completely PWN3D New York and the entire East Coast in the unaffordability sweeps. Washington DC? Shut out by the shutdown. Later, you imperialist running dogs no longer feeding at the public trough for the next few days!  When it comes to places nobody can afford to live in, we can revel in our Specialness!

131013-sf-least-listThe Trulia link above (yes, of course it works) says that while San Francisco has a 60% higher median income than most-affordable Akron, Ohio, homes there sell for (deep breath, now) seven times as much.  Only 14% of homes for sale are affordable to a household earning median income for the area.  Even worse, whoops, we mean better, San Francisco has dropped ten more percentage points in affordability since last October when 24% of homes could be purchased by a median income household.

To get slightly wonky, the real formula was what percent of homes’ monthly payments were 31% or less of the median household income, which shows the problem right there.  Everyone knows if you want to buy a house in SF, Cash is King. Monthly payment? Might as well ask if they’ll sell you the house for a hogshead of buggy whips.

San Jose’s affordability index per Trulia was 31%, but then again, none of the contenders were anywhere close to SF.  Second-place Orange County came in with only 23% of homes rated affordable by the “middle class.”

Trulia also provided a “maximum affordable home price” for each area.  Let’s take a look at what you get for that price.  Here’s a 5 BR/3 BA in SF at only $10K less than the maximum affordable amount. Of course this house is in Bayview and it has some permit issues, but you can’t have everything.

131013-sf-least-newhall

Contrast to how far your dollar S-T-R-E-T-C-H-E-S in San Jose!

131013-sf-least-waverly

Wow, a gated estate with lots of CAPITAL LETTERS and it’s yours AS IS, which means the seller won’t switch houses on you!  And just for giggles, let’s see what an “affordable” house in Akron (highest affordable house: $226K) looks like.

131013-sf-least-akron

OMG look at that house! Those bricks are going down into a big ol’ pile as soon as The Big One hits! Not only that, it would take at least a couple more hours to get to Google from here than the other two houses we showed you.  And when you look out in the boonies like this, notice what you don’t get: a decent fence around the place to keep the nosy neighbors away.

We won’t even get into the difficulty of transferring into Cupertino schools.

Comments (8) -- Posted by: madhaus @ 7:08 am

October 13, 2013

More of you are Priced Out For-EVEH!!!!!!

And now for some Totally Obvious News for Anyone Who’s Been Paying Attention, courtesy of the San Jose Mercury News (nickname: Adventures in Irrelevance).

Many first-time buyers shut out of Bay Area housing market

131012-pricedout-proudBy Pete Carey, San Jose Mercury News
POSTED:   10/06/2013 04:00:00 AM PDT, UPDATED:   10/07/2013 03:59:42 PM PDT

As the peak homebuying season ends, months of rising prices, tight inventory and competition from investors have left many would-be first-time buyers on the sidelines.

Prices are up an astonishing 31.7 percent in August from a year ago for all types of homes in the nine-county Bay Area, and for moderate-income buyers that represents a growing hurdle.

And the slice of home sales for less than $500,000 has dropped from a combined 59.1 percent to 42.2 percent in August in Contra Costa, Alameda, San Mateo and Santa Clara counties, according to real estate information company DataQuick. Homes under $300,000 are down from a combined 29.7 percent in the four counties to 15.2 percent.

See the proud homedebtor in the piccie above? He got himself a house.  In Hayward, City of Diversity. And lately we’ve been seeing ads for new homes in Mountain House.  Not Mountain View, Mountain House.  Mountain House is what people in Livermore point to when asked where the “exurbs” are,  Extra chuckle points to whatever robot put that page together calling San Ramon a “nearby community.”  Sure, just like Prunedale is “nearby” Almaden Valley.

Just as there is nothing wrong with any house that price cannot fix, there is nothing wrong with any price that distance cannot fix either. It’s just that some of you are going to have to buy in Turlock.

This is not only your Weekend Open Thread, it may have to do for the entire week. Tune in tomorrow and find out if there’s going to be a new edition of Burbed or not!

Comments (8) -- Posted by: madhaus @ 7:04 am

October 5, 2013

Open Thread Salute

It’s the weekend! Time to see what’s available because YOU SHOULD BE BUYING A HOUSE! Or selling one.

131004-rikers-ugh

We hope you appreciate the two-tone paint job as well. Now tell us how your Open House visits go in this Weekend Open Thread.

Comments (12) -- Posted by: madhaus @ 7:05 am

September 30, 2013

Buying A Home Still Beats Renting By 35% In America’s Biggest Cities

Buying A Home Still Beats Renting By 35% In America’s Biggest Cities

Despite rising home prices and mortgage rates, it’s still cheaper to buy a home than to rent one in America’s largest cities. A new report from San Francisco, Calif.-based real estate site Trulia finds that, nationally, it’s 35% less expensive to own a home. Even in notoriously pricey, renter-heavy cities like San Francisco and New York, it remains 9% and 21% cheaper, respectively.

Of the top 10, eight are located in Calif., a state in which many cities, despite being plagued by high unemployment and the foreclosure crisis, never saw prices fall enough to fully align with other local economic fundamentals like median income.

The metro area that will swing back toward renting first is San Jose, Calif., when mortgage rates climb to 5.2%. It’s currently 4% cheaper to buy than rent in the Silicon Valley hub, a dramatic change from last year when it was 31% cheaper.

This really proves what we’ve all known: buying is cheaper than renting. It’s always a good time to buy.

I’m not sure what you’re doing this Monday morning, but if you’re not buying a home, you’re probably starting off this week in the wrong way.

What does your calculations show? Is buying cheaper than renting?

Comments (8) -- Posted by: burbed @ 5:42 am