patrick.net

Can I sell my 3/2 crap shack in Fremont and retire to Monaco?

curious2 says

My question is, why don't the tech companies insist on building housing for their workers?

Because they are not in building/rental business, duh.

joshuatrio says

My kids are in private because my wife and I refuse to let the gov't educate our kids. We live in a great area with great schools, but I'll still go private, until high school/college... Plenty of area's with schools rated 8-10 down the board.

Methinks you may have put privatization ideology ahead of results, if you are paying extra for schools that don't even teach you how to spell "areas" correctly. It reminds me of people who insist on prayer in schools, and "intelligent design" alongside evolution: paying extra for worse results.

rando says

i could retire if i want to go back to the midwest where i came from. but i don't want to go back there either.

Why not?

lalalala says

curious2 says

My question is, why don't the tech companies insist on building housing for their workers?

Because they are not in building/rental business, duh.

But why? GOOG is building cars and phones and Nest "smart home" stuff, while FB is building headsets and launching dirigibles and Mark Zuckerberg and his wife reportedly spent more than a year renovating a single house. The executives are spending a lot of time on their own housing, which is needlessly complicated with stress and strife. Can anybody even calculate the opportunity cost of that time? These companies provide employees with cafeteria meals, free snacks, all sorts of services from daycare to dental to medical to laundry. What makes housing so different that they cannot cope with it, even though they must live somewhere?

mmmarvel says

curious2 says

My question is, why don't the tech companies insist on building housing for their workers?

The bottom line reason is because.

Again, why? If some employees aren't satisfied with a dorm, or an apartment tower, they could venture out on their own, but most (especially the new ones) might prefer to slot in with peers in a place where everything is already set up and managed for them. Even if you can't satisfy 100% of the people 100% of the time, why is the only alternative to provide 0%, nothing ever? It seems to reflect techies' tendency towards binary thinking, as I had observed previously. Life isn't all-or-nothing. An iphone or nexus phone doesn't satisfy everyone either, but each succeeds well enough in its target market.

Maybe I should use a more familiar logic syllogism, and the transitive law.
1) Companies need people;
2) People need food, clothing, and shelter (a place to live);
Therefore, companies need food, clothing, and shelter.
GOOG provides food and laundry, but not shelter, unless you want to live in a microbus in their parking lot. Theoretically, as between an office building and a dorm or apartment building, the office building is the one the company could do without. At universities worldwide, including many where the CS grads attended, people can live in dormitories, and work from their rooms, and meet in common rooms or a shared cafeteria or library. In cities worldwide, people can live in apartment buildings, and work from home offices, and meet at restaurants. In contrast, it would be rather awkward for everyone to sleep at their desks and shower at the gym. I suppose if the company limits its binary focus to minimizing rentable square feet per employee, the solution is cube farms and open office floor plans, but the company continues to pay the cost of housing one way or another.

curious2 says

But why? GOOG is building cars and phones and Nest "smart home" stuff, while FB is building headsets and launching dirigibles and Mark Zuckerberg and his wife reportedly spent more than a year renovating a single house. The executives are spending a lot of time on their own housing, which is needlessly complicated with stress and strife.

C'mon "renovating a house" is not work - it's what wives of rich folks do for fun.

As for "why not do housing" - because it's not as profitable as selling ads and not as sexy as "moonshots". Besides, salaries in tech companies are not THAT different between BA and, say, Texas, so the idea that googlebook or faceber is grossly overpaying their employees because of high costs of housing is not exactly true.

SFace says

Patrick, after 25 years, what the heck happened to renting and buying the Menlo park place with CASH from all the monies that will get you ahead. Your theory, calculators are broken.

Here's a Larger Reason to leave the region. We're collecting a growing population of gotcha! Snarkers.
Patrick probably don't want his kids to grow up in an environment like that.

rando says

i myself am considering leaving the bay area, mostly because of real estate prices.

This thread is the ultimate of ironies. Most here dismissed the "priced out forever" meme of years ago as nothing more than realtard(tm) scare tactics. Yet, here we all are, a decade later realizing how very real the "priced out forever" mantra is as we are now being systematically being picked off one by one.

Renters win again!

nah, it's not quite priced out forever. it's that the ratios never changed.

it was expensive before, and it's expensive now. but in terms of multiple of salary, it's no different than 20 years ago.

it was easier to save money as a renter before, and it's still easier as a renter now -- in the bay area.

i've gone over it many times, and my conclusion is that it's all about the same around here. i have a bundle of stock, but if i'd bough a house, it would be about the same in terms of equity. at least i have the flexibility to do what i want now.

but this is just the bay area, which is weird. other places really got clobbered.

Homeowners in menlo park owns a shit load more stocks as well

If you fixed your living expensed long time ago, owners are raking it with your discipline. You'll have both homes and just as much stocks.

Again, why can't SV workers, work remotely? Really, why do they need to be in SV?

If they don't work and meet daily/weekly metrics, Fire Them!

Really, it's that easy. These ppl can all live in university towns, like Pat's Ann Arbor Michigan, Burlington VT, Boulder CO, Urbana-Champaign IL, Madison WI, etc, and telecommute.

it just doesn't work very well telecommuting. you miss out on "overhearing" things in the office, seeing who is around, or going out to lunch, or playing ping pong. seriously, those things are huge, and a really important part of the job. you just can't do it even half as well if you're not physically there.

amazing that the internet has not actually made distance irrelevant.

rando says

it was easier to save money as a renter before, and it's still easier as a renter now -- in the bay area.

Yes - the 38 years trajectory of price vs rent.

2009 Rent ($2,500) vs Buy ($2,900) = RENT
2016 Rent ($3,800) vs Buy ($4,450) = RENT
2021 Rent ($4,100) vs Buy ($4,750) = RENT
2027 Rent ($5,000) vs Buy ($5,700) = RENT (bubble)
2031 Rent ($4,800) vs Buy ($5,250) = RENT (crash)
2038 Rent ($5,200) vs Buy ($5,775) = RENT
2042 Rent ($5,350) vs Buy ($5,950) = RENT
2047 Rent ($5,625) vs Buy ($6,500) = RENT

Dont buy at $2,900 - Wait, get priced out, then pay $6,500 on your deathbed. Massive savings here - renters win again!

rando says

it just doesn't work very well telecommuting. you miss out on "overhearing" things in the office, seeing who is around, or going out to lunch, or playing ping pong. seriously, those things are huge, and a really important part of the job. you just can't do it even half as well if you're not physically there.

amazing that the internet has not actually made distance irrelevant.

The only time management is interested in telecommuting workers is when they are slave labor from undeveloped nations.

More Government help needed:

http://www.noozhawk.com/article/santa_barbara_goes_after_vacation-rental_owners

JasonM says

rando says

i myself am considering leaving the bay area, mostly because of real estate prices.

This thread is the ultimate of ironies. Most here dismissed the "priced out forever" meme of years ago as nothing more than realtard(tm) scare tactics. Yet, here we all are, a decade later realizing how very real the "priced out forever" mantra is as we are now being systematically being picked off one by one.

The mistake we made was to underestimate the amount of financial depravity AND crony capitalism that Congress and the Federal Reserve would be willing to engage in to re-inflate asset prices.

I guess we will see soon whether it worked or whether we will have another financial disaster.

justme says

The mistake we made was to underestimate the amount of financial depravity AND crony capitalism that Congress and the Federal Reserve would be willing to engage in to re-inflate asset prices.

I guess we will see soon whether it worked or whether we will have another financial disaster.

Not really. There was already a hard floor on prices due to investors. When the ROI of buying and renting gets to a certain level, there are almost unlimited #s of investors looking to buy.

justme says

The mistake we made was to underestimate the amount of financial depravity AND crony capitalism that Congress and the Federal Reserve would be willing to engage in to re-inflate asset prices.

This is the fed. I learned long ago (college econ/greenspan days) the country will choose inflation over deflation 100 out of 100 times. This will never change.

lalalala says

Besides, salaries in tech companies are not THAT different between BA and, say, Texas, so the idea that googlebook or faceber is grossly overpaying their employees because of high costs of housing is not exactly true.

That's a point, but there is no free lunch. Tech workers make sacrifices to live in RSFBA, for many reasons. They choose to live here for career networking, access to startup capital, friends and family nearby, nice climate, whatever; the precise reasons are not really the point. Employers trying to lure workers to TX must pay to compensate for the reduced advantages and increased disadvantages of living in TX. Ceteris paribus, employers could pay less here if there were more housing. It's a converse corollary of Bellingham Bill's assertion that higher incomes end up getting absorbed by higher rents: lower rents would likely result in lower wages. That might sound bad, but consider: are you really making more if the extra goes into higher taxes and rent, or more debt? I look at the fully depreciated Sears catalog houses that sell for more than $1 million, and consider that even a 10%/year drop could wipe out new buyers' equity, and even existing owners' total annual income, for years.

SFace says

I learned long ago (college econ/greenspan days) the country will choose inflation over deflation 100 out of 100 times. This will never change.

The American postwar/boomer era corroborates your opinion, but does not prove it. We did have a period of deflation in housing prices, and IMO that was interrupted largely by the Fed. Those who think the Fed had no role should advocate abolishing the Fed; why pay to continue that organization if even its most enormous interventions have no effect? The extremely swift and sharp moves in the financial markets, with no news other than Fed announcements, indicate a very strong connection between Fed actions and market reactions. SF prices fell to approximately rational levels in 2010, for around one day, then resumed their irrational exuberance based on (ir)rational expectations of greater fool theory. Meanwhile, other countries have benefited from deflation. The American Empire of Debt has produced a culture of borrowing and spending, where people can believe the most absurd things, e.g. debt is wealth, ignorance is bliss. Most Americans have debt and little or no savings, and so they have preferred inflation over deflation, and that has worked wherever the greater fool theory has continued to work, but many housing markets outside RSFBA have seen falling prices for a long time. Reasonable housing prices are almost the only advantage of TX compared to SF, and yet that one advantage is evidently enough to lure employers to relocate.

JasonM says

This thread is the ultimate of ironies. Most here dismissed the "priced out forever" meme of years ago as nothing more than realtard(tm) scare tactics. Yet, here we all are, a decade later realizing how very real the "priced out forever" mantra is as we are now being systematically being picked off one by one.

Don't confuse unwilling to pay the price with priced out.

FP says

Don't confuse unwilling to pay the price with priced out.

OK---try this then:

JasonM says

Yes - the 38 years trajectory of price vs rent.

2009 Rent ($2,500) vs Buy ($2,900) = RENT

2016 Rent ($3,800) vs Buy ($4,450) = RENT

2021 Rent ($4,100) vs Buy ($4,750) = RENT

2027 Rent ($5,000) vs Buy ($5,700) = RENT (bubble)

2031 Rent ($4,800) vs Buy ($5,250) = RENT (crash)

2038 Rent ($5,200) vs Buy ($5,775) = RENT

2042 Rent ($5,350) vs Buy ($5,950) = RENT

2047 Rent ($5,625) vs Buy ($6,500) = RENT

Dont buy at $2,900 - Wait, continue to be unwilling to pay, then pay $6,500 on your deathbed. Massive savings here - renters win again!

JasonM says

Yes - the 38 years trajectory of price vs rent.

2009 Rent ($2,500) vs Buy ($2,900) = RENT

2016 Rent ($3,800) vs Buy ($4,450) = RENT

2021 Rent ($4,100) vs Buy ($4,750) = RENT

2027 Rent ($5,000) vs Buy ($5,700) = RENT (bubble)

2031 Rent ($4,800) vs Buy ($5,250) = RENT (crash)

2038 Rent ($5,200) vs Buy ($5,775) = RENT

2042 Rent ($5,350) vs Buy ($5,950) = RENT

2047 Rent ($5,625) vs Buy ($6,500) = RENT

Dont buy at $2,900 - Wait, get priced out, then pay $6,500 on your deathbed. Massive savings here - renters win again!

You are overlooking several things:

1. No family needs to rent a large house in an expensive neighborhood for 38 years. Once empty nesters, downside and move to a less expensive region.

2. The stock market has gone up significantly since 2009 as well.

3. Long term tenants offen end up with significantly below-market rent.

4. In my neighborhood, houses that rented (market) for $2,500 in 2009 had PITI over $3,500 (after tax savings taken into account and without maintenance costs included). Current (2016) market rent of the same houses is ~$3,600.

5. There are clearly scenarios under which renting wins. It depends on individual circumstances. Not becoming obsessed with owning RE helps too.

tatupu70 says

OK---try this then:

How about you trying to think before writing, for a change?

FP says

You are overlooking several things:

1. No family needs to rent a large house in an expensive neighborhood for 38 years. Once empty nesters, downside and move to a less expensive region.

2. The stock market has gone up significantly since 2009 as well.

3. Long term tenants offen end up with significantly below-market rent.

4. In my neighborhood, houses that rented (market) for $2,500 in 2009 had PITI over $3,500 (after tax savings taken into account and without maintenance costs included). Current (2016) market rent of the same houses is ~$3,600.

5. There are clearly scenarios under which renting wins. It depends on individual circumstances. Not becoming obsessed with owning RE helps too.

All of those are valid points, but they change nothing about the point of the post. Even if renting is cheaper in year one, owning is usually cheaper if you plan to stay in the same area for a decent amount of time.

FP says

How about you trying to think before writing, for a change?

lol--I'm the one who knows how to properly evaluate the rent vs. buy equation.

tatupu70 says

All of those are valid points, but they change nothing about the point of the post. Even if renting is cheaper in year one, owning is usually cheaper if you plan to stay in the same area for a decent amount of time.

You are hopeless. Really.

FP says

You are hopeless. Really.

OK--get back to me when you understand how to do the math.

you all should just use the ny times rent vs buy calculator. they have the whole thing pretty well nailed in terms of numbers.

where people tend to go wrong is over-estimating appreciation.

SFace says

justme says

The mistake we made was to underestimate the amount of financial depravity AND crony capitalism that Congress and the Federal Reserve would be willing to engage in to re-inflate asset prices.

This is the fed. I learned long ago (college econ/greenspan days) the country will choose inflation over deflation 100 out of 100 times. This will never change.

Agreed and this is actually one of the reasons in favor of owning a house, or rather the land underneath. Not that people say I am a perma-bear on housing. However, there comes a time where the fed-induced inflation cannot be distributed evenly enough anymore (or they can't lower rates any more and run out of bullets) so that the majority of the people cannot pay exorbitant prices anymore, so the prices may be high but any overly inflated assets will become highly illiquid unless prices are dropped towards affordability. Also if only a few can afford the area is vulnerable to economic and cultural trends and if any of those go out of favor prices can drop rapidly.

rando says

it just doesn't work very well telecommuting. you miss out on "overhearing" things in the office, seeing who is around, or going out to lunch, or playing ping pong. seriously, those things are huge, and a really important part of the job. you just can't do it even half as well if you're not physically there.

amazing that the internet has not actually made distance irrelevant.

Not really, it's that a lot of companies can't adopt Donald Trump's thinking. If you're not available by voice, IM, text, or webcam between certain core hours ... YOU'RE FIRED!

In all honesty, it's that simple. The watercooler nonsense is that basic politicking of an office and seeing who's kissing whose ass.

If I'm on the east coast, then for the most part, I'm 100% available between the areas of 9 AM and 5 PM EST. If I don't respond to an IM or phone query during that time, even if I'm at the post office, park, or ice skating, I'll face a pink slip. And once a company makes this official, trust me, ppl will respond.

joshuatrio says

Plenty of area's with schools rated 8-10 down the board

Please show me where those schools are in districts for 68/sf

joshuatrio says

Alpharetta, Cumming

Alpharetta is 140/sf up from last year by 10% and Cumming will be catching up with all the south indians moving in but thanks for the facts and links.

http://www.trulia.com/real_estate/Alpharetta-Georgia/
http://www.trulia.com/real_estate/Cumming-Georgia/

Out of all the towns you mentioned only Alpharetta has good schools because A. It has pretty much always been affluent (Deion Sanders had a home there in the 90s) B. Lot of companies there C. Boatloads of South Indians software engineers moving in to do back end work.

Most of your neighbors there wouldn't be 'happy go lucky' or whatever you called it. More like Cupertino level cutthroat, with much lower RE prices and small drop off in salary.

Acworth which is still 95/sf....not the 68 with great schools you claimed.....And far as hell from Atlanta with nothing to do. If you get a house for 68/sf in Acworth or Kennesaw, it's GUARANTEED to be a shithole.

http://www.trulia.com/real_estate/Acworth-Georgia/
http://www.trulia.com/real_estate/Kennesaw-Georgia/

-To your point Allatoona high school is 9/10 (I was surprised to discover that)...Wonder how they came up with that number when you compare their resources to better schools in Milton, Alpharetta, Marietta (Wheeler and Walton) or Johns Creek.

Atlanta is a decent value with a vibrant job market, but don't fool yourself into believing that you will get your school age children into a great public school by living in a place that is below 140/sf outside the I-285 perimeter.

Inside I-285 it will be 150-361/sf

http://www.trulia.com/real_estate/Chamblee-Georgia/
http://www.trulia.com/real_estate/Brookhaven-Atlanta/8280/

By the way, where actually did you buy joshuatrio? Even in North Decatur, I bought at 86/sf and my neighborhood is 135 for new construction and the comps for the zipcode are 157/sf and that is with a school (Druid Hills) that is rated 5/10. Even Druid Hills has more to offer than the 9/10 school in Acworth (IB program and several AP courses)

https://en.wikipedia.org/wiki/Druid_Hills_High_School#Academics
https://en.wikipedia.org/wiki/Allatoona_High_School

So what school district are you in?

joshuatrio says

$400-500 sq. ft. for shitty school districts our West ranked less than 5. Those same shitty districts in ATL metro would be in that $60 sq. ft. range that you are talking about.

Outside of Oakland or East Palo Alto, parts of Hayward or San Leandro or some shitty neighborhood in SF where, assuming you are speaking about the bay area?

actually EPA (527/sf)
-Carlmont high school 9/10
-Menlo-Atherton 8/10
-Woodside 5/10

San Leandro 6/10 (381/sf)

Hayward (358/sf)
Mt Eden -7/10
Tennyson -4/10
San Lorenzo - 5/10
Hayward 4/10

Fremont is 554/sf and has much better schools
Castro Valley 434/sf with 9/10 for Castro Valley HS

Places in ATL for 60/sq ft are straight ghetto. Outside Atlanta you still wouldn't be in the best school districts in places like Kennesaw at that price unless you're talking about a fixer upper or a house out of the better school district at 68/sf.

Atlanta is affordable but it has appreciated a lot (Not SF level) but not as far off as you might think. Most of the new starter home constructions I am seeing around Emory/Druid Hills area are about 2200sf and starting around 450-500K...basically townhomes.

I guess in theory you could pay 68/sf for a house but it still wouldn't be a convenient commute to any reputable private school in Atlanta. Unless you live in College Park and send your kids to Woodward Academy

Patrick,
About your Water Cooler Talk, - you really believe that?
What happened to all the heavy manufacturing in the Middle West where you came from?
I remember when all the chip factories left the Bay Area in not so long ago decades, first for other places in the USA, then for Asian foundries. Then there was NAFTA, then "The China Price", then Bangalore, call centers in India-Philippines-Mexico, Jet Blue heavy maintenance in El Salvador, etc.
What about "Water Cooler Talk"? You think so?
Is it because here in The Bay Area, "We're Special?"
Really?
How is that any different than the local Realtors saying "It's Different Here. It's Different This Time"?
It's not Water Cooler Talk.
It's Water Cool-Aid Talk.

rando says

you all should just use the ny times rent vs buy calculator. they have the whole thing pretty well nailed in terms of numbers.

where people tend to go wrong is over-estimating appreciation.

The calculator is just formulas. The two most important factors future cost, future rent, future X is unknown. It's basically useless tool. A fourth grader can compute.

"where people tend to go wrong is over-estimating appreciation"

In 2009 and throughout, your calculator defaulted to negative rent over the long term, How did that work out? Driven to the GROUND.

Where people go wrong is assuming that human behavior can be predicted on a spread sheet.
I don't think the elites are stampeding their ill gotten gains and college age kids out of Communist China because of a Spread Sheet Calculation.

B.A.C.A.H. says

Where people go wrong is assuming that human behavior can be predicted on a spread sheet.

I don't think the elites are stampeding their ill gotten gains and college age kids out of Communist China because of a Spread Sheet Calculation.

Housing is more social science, not calculators. Been saying that since 2009.

Mostly, most don't understand location, location, location is in 2016 will be location X5 in 2026. The calculators have a basic flaw that don't understand people pay $$ for value and they sure will be a lot more.

SFace says

Mostly, most don't understand location, location, location is in 2016 will be location X5 in 2026. The calculators have a basic flaw that don't understand people pay $$ for value and they sure will be a lot more.

Not only location, location, location, but also timing, timing and timing. Right location always helps, but right timing will bail you out in any market cycles.

Hey Pat - don't let anyone's complaining get you down. This site has been a great service to me and as some others have said, "it's all based on one's personal situation."

I've learned a lot from you and others on this site and so if you do move I hope this site sticks around. I'm a native of the bay area who's lived other places and am glad I moved in 2012 before the recent run up in NorCal. It sucks here in San Diego though. Nobody reading this move here please!

Just to add to the recent comments: Water cooler talk - yes, in my case it helps my job immensely. Even though I write code for genetic analysis at biotech companies and can in theory work from home, being able to hear what's going on around me is invaluable. Hall talk about potential molecular biology designs and, 'things we might try', are irreplaceable not only for me but for whatever organization I'm working for.

That said I think at some point housing prices in places like the SFBA won't be driven by the need to be on-site. Why? Well because this internet shit is about to get real! I'm not sure when it will happen (internet-5?) but I'm confident in our not-too-distant future we won't 'have to be there'.

Wouldn't it be cool to just walk from home across a park to a former strip mall and 'plug in' to your 'work environment'? I'm WAGing that will be the first implementation of a truly virtual internet acceptable to large employers (security, bandwidth, other requirements etc) followed by home versions.

Manual stuff will be handled by Boston Dynamics Atlas sort of employee.

One of Trumps son's will have exported all forms of degenerates.

Dogs and cats will live together.