patrick.net

Who cares? It is a generally overrated place. The only people really interested in it are the ones obsessed with school API scores. There is no sound logical reason to want to live there, unless you work at Apple & want to bike to work in under 15 minutes or something.

Also, don't assume that all of the Asian people you see there are Chinese nationals / foreigners. Many Chinese-Americans are naturalized- or born-citizens and also fluent in Mandarin and/or Cantonese. They certainly have a different mentality about school than the "typical white American," but they aren't necessarily FOBs.

Getting down to it the reason its expensive in Cupertino is that there are a lot of large tech companies in the area and there are probably enough well-paid people who work in those companies and also want to live close to work. As far as the area itself its not all that remarkable in any way so logically its less about its appearance and more about proximity. Frankly I'm fine with it being super expensive there because I really have no interest in living there anyway since I find the area boring and pedestrian. Thus those that do can have it alllll to themselves.

High demand and low inventory. Not sure about investments from foreign countries but it is a fact the majority of the homeowners are asians ( as somebody could be second/third generation. a major economic crisis in bay area could change it - i don't know

edvard2 says

Getting down to it the reason its expensive in Cupertino is that there are a lot of large tech companies in the area and there are probably enough well-paid people who work in those companies and also want to live close to work.

Over the years.. more in Santa Clara-Sunnyvale than Cupertino.
Most people commute from Fremont, and So San Jose. So Cupertino employers are not a factor. Many employers clearly have moved around the south bay every so 3-5 years, so close proximity isnt a factor either.

dellman says

a fact the majority of the homeowners are asians ( as somebody could be second/third generation. a major economic crisis in bay area could change it - i don't know

Was true even in the 80s and 90s. But that didnt stop prices from falling.

It's just different there.

thomas.wong1986 says

So Cupertino employers are not a factor.

Christ. Apple's R&D & SG&A was $3.3B in the MRQ. That was their total annual sales 10 years ago.

Thomas World must be a very interesting place.

To answer the question, there has been no housing stock add in 95014 in a very long time.

Prop 13 is a big give-away to long-time owners who want to hang onto the property and get some nice income.

While it's true it's a pretty sucky place to live, nicer places are more expensive, and less nicer places involve a commute and more exposure to crime.

One of the mistakes I made was trying to commute into Cupertino. Shoulda just bought a goddamn condo in Mt V and used the time saved better.

@bmwman91: I don't really care but I want to make the point that I think changing demographics and shifts can have a huge effect on housing prices. Just look at Cupertino in 1995 compared to Cupertino in 2010. Over a 15 year period, something drastic happened...

@Katy Perry: Dude (or girl), I'm not saying "it's just different", I'm listing reasons why I think the prices are so high in this "fortress" community. I'm not some housing shill or housing diehard, I just want to discuss other viewpoints besides "everyone who doesn't think housing will drop 59% in every area is a realtor bitch." Hope that makes sense.

Bellingham, I heard that the Bay Area in general is very anti-development. It's one of the reasons that the San Mateo green belt and preserve has lasted so long (prime real estate if developed). So I agree that lack of inventory makes it a simple supply problem when it comes to prices, or at least that's part of the explanation.

Does anyone know what Cupertino's price index or rental market was like 10 years ago? Was Cupertino even at rental parity 1998-2000?

Bellingham Bill says

Christ. Apple's R&D & SG&A was $3.3B in the MRQ. That was their total annual sales 10 years ago.
Thomas World must be a very interesting place.

Its been there a long time ago.. a freaking long time. Tandem was twice as big compared to Apple.. end of the day.. so what?

The picture will look much different in 5-10 years in Cupertino. Apple will also look different, not in a good way. Spin the wheel and take your chances. Good luck

Goran_K says

Over a 15 year period, something drastic happened...

Many outside of SV discovered they too can become 25 year old multi-millionairs ... so they moved here as if it was the 1848 California Gold Rush. So what happened in the year 2000. 5 Year ARM made sense if they were planning on winning the lotto by then.

thomas.wong1986 says

Tandem was twice as big compared to Apple.. end of the day.. so what?

End of the day the companies may go but the people stay.

The successful ones, at least.

Goran_K says

Does anyone know what Cupertino's price index or rental market was like 10 years ago?

10 years ago the valley was in a major down cycle, the occupancy ratio was falling and so were rents, and home prices were at best static on their post-dotcom plateaus.

But interest rates were falling in 2002 which provided immense price support, even before lending got totally whacky 2004-2006.

I remember walking around some Cupertino nabes 10 years ago and it seemed a bit dead, really. Google's IPO was still a year out (not that Google had any presence in Cupertino). Symantec was doing OK but other there wasn't any apparent dynamism anywhere. Just the dotcom hangover.

Sun was there in some presence but spinning down their operations.

Cupertino itself is kinda a horrid place. Not as bad as Sunnyvale, but that's not saying much.

All the cool kids at Apple lived in the city and carpooled down 280 every day, LOL.

Thanks for the info Bellingham.

I guess my point is that some places were overpriced even before the recent bubble. Take Malibu for instance. In 1998, the median home value was $973,000. The median income for a family at the time was $120,000.

Do people really expect a place like this to be selling at 3 to 4 times the median income? Because it wasn't true before the bubble, why would it become true today?

Goran_K says

I'm guessing low inventory, lots of foreign (asian) buyers, and prime location have skewed the pricing here

There's lot of factors, but the #1 factor for Cupertino and why there is so much demand are the schools.

As you can see above, your typical resident is a family with school age children. The parents are around 30-50 years old an peak at 30. Purchases are dominated by high income family who uses Cupertino as a de factor private school without the private school cost.

As I advocated many times, school district is a pass-thru cost with the only incremental expense are the increased interest and property tax. That is significantly less than private schools. There's plenty of wealth in families as 33% of San Francisco children attends private school anyway. The potential demand are more than the 500 homes being sold a year. Cupertino has not built SFH home in about 20 years nor will there be anymore. As the population in Santa Clara county expand, it raises' the game for everyone else. Santa Clara gained about 500K new residents in the last 20 years, but the stock of SFH in 95014 remained the same.

So why do parents covet schools so much? Simple, Cupertino is dominated by tech workers, software, and business. It is really the most educated place on earth as far as degree achievement. To boot, majority of which comes from Asian background which for the most part as kids have to compete early to get into the best college as only a small percentage gets accepted and process selction is more brutal. Falling behind early can really mean an end to your education as the system selects who to invest in. The school is a reflection of the parents value who thinks no child left behind means everyone is held back.

This is just the demand reasons from school, there are just as many econcomic reasons why Cupertino is what it is.

Thanks for the info SFAce. Really puts it in perspective especially with the graphs.

Cupertino is staying up because of 1. Chinese immigration 2. Apple and similar employment.
Ever hear about those random Chicoms who are corrupt and exit China with considerable dough? They buy places in San Francisco, Vancouver, Cupertino, etc.
My Chinese ex-girlfriend was arranging to get her family to pool money to buy a house in California.
You already know that Chinese often invest in those empty apartments and so-called ghost cities in China.
Some who have a family member here want to do the same in California. Our American property rights are much better than in China where you never ever own land under your place and an actual house is very expensive.
Hong Kong forget it, prices are astronomical compared to even Cupertino.
The weather in Cuperitino is vastly better than Hong Kong, Shanghai and Beijing. Actually I think the weather anywhere on earth is probably better than Beijing.

Goran_K says

Thanks for the info SFAce. Really puts it in perspective especially with the graphs.

There's 29 SFH for sale in 95014 and 13 of them are pending. 16 not pending. That's less than 1 month supply.

http://www.redfin.com/homes-for-sale#!market=sanfrancisco&region_id=39365&region_type=2&sf=1,2&uipt=1&v=6

Katy Perry says

It's just different there.

When someone says this, all the more reason to run! The was the motto back before the dot com implosion, and also the motto before the housing bust. When all people have to reason the over-inflated prices is "things are different", then they have nothing at all. Cupertino got its fair share of low paying jobs and crappy houses. Even the $1 million dollar+ houses would be valued at 150K in any other part of the country. Just because a small percentage of the people have high paying jobs just means the drop is a little behind. Falling prices in neighboring cities will eventually have an effect. Logic says that anyone looking in Cupertino is now also exploring other close by areas. The little demand will seek out the best values. Unless, you assume that people in Cupertino are not reasonable?

Based on my few Chinese friends, they'd hang onto their Cupertino "investment" until the bitter end, and never bail out strategically. I would call this tenacious clinging to beliefs while the previous poster may call this being "unreasonable" :)

RentingForHalfTheCost says

When someone says this, all the more reason to run! The was the motto back before the dot com implosion, and also the motto before the housing bust. When all people have to reason the over-inflated prices is "things are different", then they have nothing at all.

That's generally sound advice when the claim doesn't make sense.

But do you actually think that there should be no price difference between different cities based on real factors like location, access to jobs, great schools, safety, etc?

Should Inglewood, Compton, West Oakland, Richmond, and Cupertino just be similar priced or is Cupertino "different" in some way?

Goran_K says

RentingForHalfTheCost says

When someone says this, all the more reason to run! The was the motto back before the dot com implosion, and also the motto before the housing bust. When all people have to reason the over-inflated prices is "things are different", then they have nothing at all.

That's generally sound advice when the claim doesn't make sense.

But do you actually think that there should be no price difference between different cities based on real factors like location, access to jobs, great schools, safety, etc?

Should Inglewood, Compton, West Oakland, Richmond, and Cupertino just be similar priced or is Cupertino "different" in some way?

compare price/rent of cupertino today versus price/rent of richmond today. so you get something like this:
cupertino P/R(today)
------------------ = cupertino premiium(today)
richmond P/R(today)

then compare the P/R for cupertino and richmond from 10 years ago:
cupertino P/R(10 years ago)
------------------ = cupertino premiium(10 years ago)
richmond P/R(10 years ago)

the cupertino premium has inflated greatly.

meaning cupertino prices have increased much faster than richmond prices over the last 10 years.
the rate of increase is surprising.

it's suggesting cupertino today is much more desirable (and maybe it is) relative to richmond. the question is: is that huge increase justified? maybe. maybe not.

I think that's the important question.

Is living in a neighborhood with far better schools, safety, and access to jobs worth the premium?

I know for a fact even if Compton went way under rental parity and they were practically giving them away (like in Detroit), I wouldn't buy there and would prefer Cupertino even if that premium of Cupertino was 10x higher.

There are those factors that are hard to quantify because everyone's tolerance is different when it comes to certain characteristics in a neighborhood or city.

We'll beat this dead horse a bit more. Check out Cupertino census data from 2000 & 2010 here. School age kids (5 to 17 years) increased from 10,403 to 12,902 over a ten year span. This is also reflected in the increase of 'family households with children under 18' which went from 7,570 to 9,275. Total population increased from 50,546 to 58,302. Without a lot of building, that translates into pressure on home prices and rents.

EBGuy says

We'll beat this dead horse a bit more. Check out Cupertino census data from 2000 & 2010 here. School age kids (5 to 17 years) increased from 10,403 to 12,902 over a ten year span. This is also reflected in the increase of 'family households with children under 18' which went from 7,570 to 9,275. Total population increased from 50,546 to 58,302. Without a lot of building, that translates into pressure on home prices and rents.

Basically S vs D at its most basic.

Hysteresis says

the question is: is that huge increase justified? maybe. maybe not.

This is the central issue to a lot of discussions here.

I would say that, yes, it seems to be justified to ENOUGH people. If the prices were unjustifiable, nobody would buy at those prices, prices would drop to a justifiable level, and people would then buy them. The market as a whole seems to support these sensibility-offending prices.

You don't necessarily have to be wise with money to make a lot of it, and people that are not great with money will usually overpay for things, or just plain buy things they they don't actually need. If you happen to have lots of people that are great at making money and pull $200k+ household incomes, but not so great at using it wisely, you will end up with house prices that offend sensible folks. That is my general opinion about why prices are what they are in certain areas. We have enough of these folks in the SV that I don't really prices in places like Cupertino coming down.

I forget who said it, but this seems like the best summary: "You can't compete with stupid."

Goran_K says

people who have lived in Hong Kong, Taiwan, Singapore, and Shanghai

bmwman91 says

You don't necessarily have to be wise with money to make a lot of it, and people that are not great with money will usually overpay for things, or just plain buy things they they don't actually need.

What they are paying for is not the house, but access to a "public" K-12 with high standardized test scores ("API"). Note where the Goran says they mostly came from: they have brought the Gaokao Culture with themselves.

ContStinks DeGroot says

And nobody is. Precisely the reason housing sales are at 15 year lows.... and falling.

We're talking about Cupertino. 60 houses on the market and 200 sales in the last 6 months. That is a healthy market moving what inventory is coming up.

I was going to comment but Bellingham pretty much said what I wanted to say. Cupertino is not at some imaginary 15 year low.

RentingForHalfTheCost says

The picture will look much different in 5-10 years in Cupertino. Apple will also look different, not in a good way. Spin the wheel and take your chances. Good luck

One thing I've noticed is with Jobs dead, the company raping record profits off the backs of their Chinese slaves, and them now being run by the scumbag who initiated allot of its evil policies; Apple is at a edge now.

The very edge of how far they can push their immorality before there is a consumer, public and political backlash. Though they are few now, the ranks of people who will not give money to Apple just out of principle is growing, and could become a tide. That is if the sheeple ever wake up, fat chance. :P

That is the only way Cupertino will ever exit its reality distortion filed. (Posted on my six year old Quad G5 btw)

clambo says

Hong Kong forget it, prices are astronomical compared to even Cupertino.

Comparing Hong Kong to Cupertino, now, hah. Perhaps, while you are at it, you should also point out that Paris, France is more expensive than Biloxi, Mississippi.

dunross, I am not a fan nor apologist for Cupertino.

But really, living like rats in those high rises where things like dengue fever and SARs happen, compared to the "wide open spaces" in Cupertino.

SFace says

Purchases are dominated by high income family who uses Cupertino as a de factor private school without the private school cost.
As I advocated many times, school district is a pass-thru cost with the only incremental expense are the increased interest and property tax. That is significantly less than private schools.

Its very easy to see the cost of private school, they are published and open to the public. Back that out and compare to other cities in Santa Clara County.. its pretty obvious you have a highly inflated costs. Private local schools have a long history of success.

B.A.C.A.H. says

dunross, I am not a fan nor apologist for Cupertino.

But really, living like rats in those high rises where things like dengue fever and SARs happen, compared to the "wide open spaces" in Cupertino.

If you want open spaces go to New Zealand or Brazil. You can find good weather down there too.

There are very good fundemental reasons why cupertino prices should of skyrocketed in the 80s and 90s by the same degree as we have seen in the past 10 years.... but those same reasons dont exist today. No its doesnt make any sense.

B.A.C.A.H. says

dunross, I am not a fan nor apologist for Cupertino.

But really, living like rats in those high rises where things like dengue fever and SARs happen, compared to the "wide open spaces" in Cupertino.

Yeah, Cupertino really is cheap compared to HK. It basically doesn't matter how much money you have in HK...you can't get a SFH because there are like 17 of them in the whole SAR. $1M (US) will get you a 700SF flat on HK island, maybe, and something a tad bigger out somewhere like Tuen Mun. Anyway, HK isn't as terrible as you make it sound, but I suspect that you know that.

With that said, I really like HK. I would live there over SF or NY any day. The great public transit is a big part of the reason. The other part is the people; people there have self respect, and don't act trashy like they do here in the US (minus the spitting thing...). Add to that the little stuff like the abundance of outdoors recreation (~50% of the SAR is undeveloped, mountainous land), environmentally conscious population, CHEAP unprocessed food, nicely maintained beaches and most people speaking some English & all signage being in English + Chinese. All of that almost makes up for the yucky weather you get 10 months out of the year!

For those that don't know, HK /= China. There is a world of difference. You cross the border from one to the other...yup, different world.

dunnross says

If you want open spaces go to New Zealand or Brazil. You can find good weather down there too.

This is not a snide remark or sarcastic question, but an honest one: Have you ever been to HK?

It does not sound like it, but I might be mistaken.

thomas.wong1986 says

There are very good fundemental reasons why cupertino prices should of skyrocketed in the 80s and 90s

>>>> There are very good fundemental reasons why cupertino prices should of skyrocketed in the 80s and 90s

It is "Should HAVE" not "Should of"

thanks for the correction.