Walking around my place in the 94040 Mountain View I checked out a cute small 1500 square foot 2 bedroom home selling for 700k. Place had lot of termite damage and realtor said it was lowered from 850k to 700k because of this. Amazed at how many people were walking around. House faces the busy freeway so there is lot of road noise as well. I am not buying here will bank the $$ and retire in south Florida rich and happy and free. Bay area is WAY overpriced.
Busy open house in Mountain View
By SJ Follow Sat, 2 Jun 2012, 6:12pm 2,480 views 28 comments
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Speaking of overpriced Bay Area houses, on my way to Moffet Field today, I passed by some new MV condos build right next to 101.
Can you imagine the noise and pollution?
Realtors of course, would say it's a great deal.
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The thing is these dumb idiots with too much money overpay for crapboxes because of so called "schools". I call BS on this as one can go to an average school and still make it to Harvard or Stanford.
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SJ says
You are absolutely right!!
It is truly BS, here's a wake up call for those with small kids.... it's not the school, it's the student!! You can put a lazy student in a good school, and their grades will suck! You take take a good student and put them in a crappy school and they will get good grades.
The school has very little to do with it. It's all about how focused the student is.
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Well I went to one of the worst public schools and still made it to graduate from a top university so I call BS on the dumb tiger moms who overpay for crapboxes because a school district test API schools. I'd rather bank a few million and retire to the Caribbean than spend 30 years paying for some crapbox in the RBA.
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San Jose, CA
For intelligent and willing to learn student, average school with pleasant atmosphere is all what he/she need. Highly competitive school with pressure around, actually can do damage to student attitude and self-esteem.
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SJ says
700K with free termites+ noise? reduced from 850K? Simply amazing!
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REpro says
No "kidding". That's why the kids they found on the Caltrain tracks were from Gunn, not Gunderson.
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Call it Crazy says
Shh !!!! There's already enough Tiger Parents outside of The Fortress to lift up all of the boats but not yet turning the campuses into some kinda grade-grubbing enclaves.
Remember, everything that's not top tier API sucks. Horrible school. Bad school. Awful terrible school that will shame Mom's face in her social circle and doom her kids to a lifetime of underachievement.
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B.A.C.A.H. says
That's right. If the API is not high, they will never be successful doctors, lawyers or investment bankers with diplomas from colleges that everyone has heard of! NO RESPECT! Bring shame to the family!
But yeah, the only people that I know acting like that are 0-gen immigrants that are still mentally on their home continent. Their first-gen kids grow up here, see the absurdity of mom's insatiable demands (and in some cases dad's, but he usually keeps his mouth shut & focuses on running his business back home) and don't parent that way when it comes to be their turn.
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So when will the bay area real estate overpriced insanity ever stop?
I know that prices dropped in east bay and north bay but not in Mountain View, Palo Alto, Sunnyvale areas. I guess I will need to bank a lot of money and head to south Florida for good weather and affordable real estate!
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SJ says
That's a multi-billion dollar question. If we knew that, we wouldn't be sitting here. We all would have been multi-millionaires. :)
So my partner and I just acquired this nice 2/1 condo in the South Bay on May 8th. We put lipstick on this pig, put it on the market today, and got it rented immediately for $1,750. If we had 5 more units like that, they all would have been rented. We paid $157,300 for it. This unit is the South Bay and not the Peninsula. Talking about a hot rental market.
Interesting that almost everyone was asking the same questions. How often do we raise rent? By how much? People were asking the same questions when we rented the other unit in April. I guess these people are like you. They got chased out of their apartments by ridiculous rent increase.
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SJ says
Our Bay Area employers have the same sentiment... thats why they hire more outside of CA than in CA. See what the Godfather says...
http://pressheretv.com/?p=2710
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Mountain View, CA
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SJ says
Honestly, I do not think that it will ever feel "reasonable" to people with middle-class incomes (that's $200k gross household income in the SV) that don't want to borrow a ton of money or pay way more then they would renting an apartment. The MV/PA areas have a (relatively) low density feel to them, while still being walking distance to major employers. People will pay out the nose for that, and you either need to be willing to compete with everyone else, rent or move elsewhere. The actual houses in most of MV are run down shit shacks. Those will fetch well over $500k, and anything livable barely starts at $700k. MAYBE if the stock market keeps getting hammered things will slide a little here, maybe. Then people with solid wage incomes may have a chance to compete, if they are willing. There have been many articles about how inhospitable the SV/BA is to middle class folks trying to start families, despite having incomes that would make them upper-class in a majority of states. Living here is expensive, and sadly, I don't see demand letting up any time soon while supply isn't really growing (rentals or RE). I was born and raised here, all of my family is here, but I have been considering leaving the state since buying here would require me to drastically cut my quality of life to pay for a house (sorry, condos and townhouses are not options...why the hell would I pay $$$$$ for shared walls & a bossy HOA? I am renting that now for a lot less than buying would cost).
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Call it Crazy says
Thinking afar, I find it odd that say for example, one of the most educated large town in America, like Cupertino or Palo Alto, where the buying population is considered wildly successful are considered dumb or got it all wrong.
The way I see it, I would pick their brains and find out the reasons for their choices. and it has nothing to do with Chinese or Indians, the white colleagues, partners and directors if you will, send their kids to 40K a year private schools and have the same standards. High standard people have high standards no matter the race. I don't think having high standard is bad, do you?
If you put it into a sports context, say baseball and you want your kids to be a professional ballplayer, would you send your kids to a league where kids have fun (albeit he is the best player with bad competition) or do you want to be part of a team that makes it to little league world series and represent the region and perhaps the country (albeit your kid needs to practice hard just to keep up)? I would think the latter, no?
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Campbell, CA
bmwman91 says
Not that I disagree with anything that's happening, but the median household income for SV is around 75K. 75K is middle-class just by definition.
Hence either there's a ton of people that bought years ago and/or there's a ton of people that want to exit and/or that should be in the foreclosure process, or obviously some combination of both.
Personally I think there's many more people on the brink of bankruptcy than most people realize. When we enter our next recession (which will be soon IMO) I think the inventory will increase substantially.
Heck if we could get the banks to release the inventory they're sitting on (yes, I believe there's an absolute ass-ton of homes in the BA the banks are sitting on or haven't started the foreclosure process on) prices would decrease. I don't believe there are enough people to support the "real" inventory, and the banks probably know this.
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SJ says
When the quality of life in Mtn View, P.A. and Sunnyvale is no longer an improvement over the quality of life in places like Shanghai, Taipei, Mumbai, Bangalore, AND after dust settles from the coming Unraveling in China.
But they'll still be expensive for the same reasons as before we got wealthy immigrant pricing.
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Mountain View, CA
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CrazyMan says
Sure, I was taking a little liberty with the definition of "middle class" in my post. The point is that it is absurd that a couple pulling $200k has a really hard time finding a house that is a 3X multiple of their income, without having to commute an hour each way. Last time I checked, $200k puts a couple at the 74th percentile in the SV.
My rational side looks around the SV and generally gets the same feeling you do about lots of people being on the brink of bankruptcy. There is either WAY more money in this area than I realize or acknowledge, or people are financing everything as hard as they possibly can to keep up appearances. It's probably a combination of both.
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ptiemann says
Maybe, one should be careful on assumptions about rising income.
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ptiemann says
True. When my parents bought in 1978 for 3X income with 21% down, interest rates were 16%. With the historically low rates we have now, people can "afford" to borrow a lot more.
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B.A.C.A.H. says
very true, especially in Hi Tech
cut out the bottom half wage earners.. mfg people.. results in boost avg income figures..
move some middle tier jobs out to other states further boost avg income ...
outsource some jobs .. etc again further boost avg income ...
what you have left is the much smaller - higher paid upper management positions and some support for legal reasons...
not to mention, we have much fewer employers than say 1994 or 2000.
Yep! income seem much higher today, but they are not!
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bmwman91 says
interest rates in the past had not much of an impact on prices.. certainly wasnt the case in 89-91 as rates fell or as rates fell more recently.
fact is people bargained on the price and not on the monthly payments.
that is something that still needs to be corrected for the avg. consumer.
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ptiemann says
So of all places why did the ubber rich areas of Malibu and Beverly Hills fall? and fall they did....
1. Naples, Florida
Expected price drop: -16.6%
Median family income: $62,800 (137th highest)
Unemployment rate: 10.5%
Median home price: $225,000 (40th highest)
Projected to hit lowest level: Q4 2012
Like much of southwest Florida, Naples was one of the fastest-growing communities in the country as it prepared for the millions of baby boomers on the cusp of retirement. When the housing bubble burst, however, the thousands of construction projects for condominiums and retirement communities were halted or lost money, and home values plummeted. From peak home value in 2006, prices dropped by 55%. They are expected to keep falling through next year more than any major city in the country. By Q1 2012, home values will drop an additional 16.6%, or nearly $40,000.
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REpro says
Test scores is the #1 indicator for housing prices. Housing prices is the #1 indicator for wealth and income.
Of course anyone can succeed, but if you talking about an avg student they would be better off in a good school than a bad school. If your top fish in small pond then by the time you get into college you're no longer in a small pond.
High pressure schools can cause damage but so can laid bad schools with a lot of violence and crime. There are not many average schools with a pleasant atmosphere. Even those average schools you're priced out of the housing market. Based on CA standards an average school would be considered a score of 700 to 800 on the API exam and houses in those areas are over 400k. It's usually the good schools that have a better atmosphere.
You learn best with smart people, not dumb people. It's a drain for a smart kid to pretend to be dumb just so he wont get his ass kicked after class.
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E-man says
How much are the HOA dues?
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ptiemann says
I think it was Bellingham Troy that summarizd it best. Housing costs eats most of the margins and does not follow a percentage of gross assumption.
For example (simple model),
Income 60K, housing cost 20K or gross margin is 40K.
Income 120K, housing cost 50K, or gross margin is 70K.
gas, food, health care are not costs that are competed for, but houses and housing costs are, most of the gross margin delta from income gets eaten up by housing.
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supersunken says
But those kids can't be too smart, if they inherit those genes from their parents who always overpay for housing.
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SFace says
I agree and have seen it firsthand. The private school I taught at attracted a lot of kids from the ghetto (who had parents that wanted them out of the horrible public schools there). The environment made a huge difference, since this school valued education, college prep, and held the "smart kids" and achievers in high esteem.
It creates a self-fulfilling environment, where students AND teachers expect to learn and teach-- achieve.
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supersunken says
I wasn’t referring to bad school but average school. SV have its own mentality, not found in the rest of country, where great school have roughly only 10% impact on house prices/rental rate.
http://www.forbes.com/2011/04/25/best-schools-for-real-estate-buck.html