patrick.net

I had a thread about this in March. At least one of the comments there is from a colleague who's been in in biz in the BA for a long long time, and seen it "die" before. He'll tell you that this time is nowhere near as bad as it was when the chip plants packed up and left. That was much closer to a Detroit scenario than loss of one type of knowledge job for another. Back then we had to replace manufacturing jobs with knowledge jobs. Something many experts claimed was altogether impossible.

Randy,
I'll concede that indeed, I would be surprised if the BA lost it's lustre. As someone has mentioned on this forum many times, the jobs exsist where the CEO chooses to live. So as long as there are wineries to drink at, beaches to see, somewhat pleasant weather( even though this year sucked) and lots of other rather affluent trendy places to eat at, I wouldn't worry about the BA economy tanking even if the only people left in 5 years are ALL CEO's.
But on the other hand, history hasn't been kind to any given area for any long length of time. The US is a micromodel of the world. Certain parts of the country have been leaders.Other parts have been paupers. The wealthy stats hold priority and influence over the lesser known states. Turn on a TV: All the shows take place in NYC, SF, LA, and Chicago. If any take place in the south, a visual romanticism of the old, decrepid, ancient south is shown, and usually in a diffrent time period.
But just as diffrent parts of the world have at times held the reins of power, so too do I see the remote possibility that the traditional regions of the country that have held the reins may lose them just as easily. A swift look at the numbers shows a projected growth of over 40% in the SE and Midwest. Signifigant gains have been made already. TX is way up there too, procuring more new business than just about any other state. There simply are more opportunities not only for individuals, but business as well. If a company makes a killing, what good does it do if the employees are priced out of the market? The model that exsists in SF simply no longer works. High wages are not good enough. The smart people will leave. The economy will go the way of the once indestructible US consumer electronics industry, with the biggest one- RCA falling into an era of corruption as the " old hands" at the top cut more and more off the bottom, bleeding the company dry. The same predictment will occur here. Companies that cannot compete with the likes of new startups in other states will cut more, and more, and more until finally they are simply shells with only the top of the company still functioning.
I have no doubt that the BA economy will continue on. But it might be one with only a hollow shell devoid of employees.

But on the other hand, history hasn’t been kind to any given area for any long length of time.

How long have London and NYC been leading nexuses? I'm trying to think of a nexus city that's fallen into demise in modern history and having trouble coming up with one. Even Tokyo remains a nexus today; and it hasn't been one nearly as long as NYC (or arguably SF). Maybe you could argue Berlin; but I'm not sure it really was ever a nexus...just portrayed as one for political reasons.

About all I can come up with is Vienna, and that's stretching the limits of the current era (but it does overlap London and NYC).

Michael wrote:

> With a price drop. The new price is $1,294,888.

I can't believe it didn't sell to a Chinese buyer at that price...

To BA,

not really, Euro held up throughout this mess. I sense that people cashing out of commodities and emerging markets are NOT heading back into USD, they are taking refuge in Euro instead.

SP,

I repsectfully disagree.

The initial asking price was never realisitic to begin with. My observation is, most of homes that have gone through reductions were asking for 15-50%(!) higher than last year's price, of course they can't sell. The asking price was never consummated at any point in time.

I need to see reduction from 2005 price level to call this the beginning of the correction.

I am betting on 10-15% below 2005. By the end of this year. Not in all areas.

Here is a nice downtrend. MLS 40153534 on ZipRealty.
DOM : 109
Price Reduced: 05/03/06 -- $790,000 to $780,000
Price Reduced: 05/08/06 -- $780,000 to $750,000
Price Reduced: 05/19/06 -- $750,000 to $730,000

60K already reduced in May. This is almost 2005 price.

This will spread. This spring has been bad. Real BAD. Nothing to do with super-bowl, rain, allergies, American Idol etc. Fall is going to be worse.

This actually happened. It's been a while since I heard anyone saying it.

I was part of a group discussing RE. I keep very quiet in these discussions. I have mastered the art of nodding and saying "Hmm", "yeah" and so on. Seems like everyone is now aware of the problems in other parts of the country. Everyone agrees tha DC is gone, Florida has tanked, Sacramento has crashed and buying in Phoenix is a real bad idea. Even South California is down 20% or more ! (I wasn't aware of that).

Then comes the real clincher. This area is different though. Everyone wants to live here.

Those exact words. People actually say those EXACT words. Like a parrot. In that order. The exact words we bubble believers are used to making fun of.

I have a new found respect on my own ability to keep a straight face.

Any Google Employees care to share their Haha's here with their job responsibility? Would like to know if they are paid below Market level.

Number of Pre-IPO employee for Google should be around 1,600.

However, those with significant options to cash out that would make them AFTER-TAX millionaires will be smaller than 400. Anybody joining AFTER the IPO, unless acquired or brought on board into a senior position, won't become an after-tax millionaire even at today's stock price.

Nowadays, the typical package of google for a fresh (or slightly stale) PhD from a first tier college is around 100K with

100K with less than 200 options.

My anecdotal survey of recent Google offers (and one who took the offer against my own and others' advice to the contrary) is that they pay below market salaries. Not a huge amount below market, but still materially below. They also demand hugely expensive educational creds. Ivy MBAs or equivalent. Glamorous PHd, etc. So, you're cost of getting into Google isn't going to pay off at a ~ 100K salary. There may be something to the prestige factor. It is a fact that Fortune 500 like to hire from recognized names. Any pure-bred entrepreneur can testify to that. No matter how much success you've had as an entrepreneur, if you can't put a headline name on your resume you have very little chance of getting through the gate-keepers to those jobs.

As to GOOG options, they are required to value them at the market when you accept your offer (or higher). They can no longer play games to give you in-the-money options. You go ahead and tell me if a few hundred at-the-money $370 options are worth anything at all. Even at a B-S valuation, they're not terribly valuable; and if you factor in liquidity preference, you're not making enough to cover your salary discount at a risk-free rate (esp. with rising inflation).

Google is running a great operation down there. Genius they can get new employees to accept their deal. If I were to consider working there (and they wouldn't have me, I can promise that), I'd demand a package with 0 options and all cash salary & bonus.

OO,

I will (in principal) agree. I can't speak directly to BA specifics but what I would prefer to see is virtually all residential RE revert back to pre-bubble prices with "normal" inflation factored back in. Will I get that to the "T". Doubt it. But make no mistake, a correction is none the less underway. I believe *To BA's* description is pretty accurate for most major markets. I feel (as apparently you do as well) that much of 2005's pricing just wasn't real. Perhaps that is why we have to endure so many bulls rantings about the handful of instances where someone BOUGHT in 2005, SOLD in 2005 and actually made a profit worth talking about! 2005 wasn't real and trying to flip a property in that year will be looked back on as a "risky lifestyle choice".

I hate to keep beating this to death (especially b/c it's Peter P's) but all we need to see a crash is for prices to simply stop appreciating. We're there. It's a major step in the right direction.

I recently accepted a management position...

Looks like USD has devalued against HaHa again. Home prices in HaHa have dropped.

what would happen if HaHa ever upgrades his skillz?

WWII,

I wouldn't worry too much about RE prices all over. The South has ample buildable land, especially over the long run. California RE lotto winners will be exhausted at some point and then new supply will come out.

Plus, Texas has very high carrying RE carrying costs relative to price in terms of property taxes and HVAC bills. That will encourage Californicators who has money but no earning power to cough their houses out, in time.

Anonymouse,

Thanks for the info;)

However, if Randy H's wage information is accurate, I will speculate that the GOOG effect will be quite short lived indeed. Once these options lotto winners realize they can take their money and run to a more lucrative gig with their GOOG stamped resumes, they can take the money out of Mountain View area.

So, I see a potentially permanent increase in rental demand in MV area for as long as Google employs high level workers, but I do wonder how many of these people will stick around long enough to affect MV housing prices.

On salary topic again:

Full Benefits …..

Do your benefits include 24hr wrinkled star availablity? One question fucknob, who the fuck would pay a fucking moron like you over 6.50/hr? Let me know as i want to short their stock.

I would very much like to know exactly how many times the maggot HaHa posts his salary information, truly, I would love to calculate it. My guess is that he is a very short man, as he seems to have short mans complex, internet version.

Ray W,

It could go either ways. Google has put out some great stuff and MS continues to produce some of the clunkiest and least stable software out there. I would welcome a Google made OS and full office suite.

John Haverty,

"And one has to work for a company actively helping a communist regime enslave and suppress people in China :) Happy happy joy joy."

Sour grapes? :P Don't worry, the Chinese do fine oppressing themselves, and "enslave" is a bit harsh. You really shouldn't compare China to North Korea. Every government does propaganda and social engineering, the Chinese have just done it for longer than anybody else (the Mandarin selection system is as much about social control as it was about selecting government officials).

Google effect will be short-lived if Google is short-lived. There is always the possibility that Google is the next Microsoft (in terms of industry dominance and maturity curve). If this is the case, then Google could have a very significant impact on the local economy for years to come.

I'm undecided on whether Google has what it takes. MSFT enjoyed bona fide barriers to entry (and they still do). GOOG has no sustainable barriers. Leading innovation and first mover are not sustainable, and always get eroded and usually overtaken by followers. But Googlers are smart, so I don't count them out either.

Ray W,

HaHa's story is actually quite believable, unlike another infamous troll on this blog. That's the most important lesson of trolling, don't assert too much and hold out just enough reality to make everything hold together...kind of like selling pre-construction condos.

I actually have no problem with HaHa, except that he was quite rude to someone here and he really should apologize...

On missing lotto tickets:

I interviewed with SGI in 1990 and turned down a full package to relocate from the Midwest to Mtn View with lots of options.

I interviewed MSFT in 1993 and turned down a package to work in Chicago for 2 years with the option of relo to Seattle on their dime. I turned it down because the salary was sub-market and they were paying options. I lived in Chicago and thought options were traded on the CBOE/T for things like pork bellies.

The list goes on, but those are the two biggest option runs I missed.

It's good to be existential about such things.

Randy H,

I'd argue that the Googlers are the followers. Most of the stuff they do have already been attempted (badly) elsewhere, they just do a much better and more intuitive job.

I think their main problems are MS money and the lack of a moneymaking business model. I just don't get how they can produce anything that'll make enough money to justify their share prices.

If the Googlers beat the odds and make it, then why would they stay in Mountain View. If that place is having trouble absorbing 5000 Googlers, then it's not gonna hold MSFT level population.

Ray W,

Yeah, and Detroit's Big Three was unbeatable, until they got beaten. I don't think Google necessarily has the odds on their side...but as a lay person customer, I like what I've seen from them so far.

Randy H,

LOL! See what discounting the irrational exuberance of the masses gets you?

But the job market for fancy Ph.Ds and MBAs aren't quite like that. They get paid enough for dinner either ways, as long as they don't start buying $9/piece toro with their paper millions.

I made the *perfect* graphic for this thread, but Peter P won't use it.
I feel slighted... :-(

Unless lawyers start finding a better place to live and work, Palo Alto real estate prices won't decline much in the near term. The place is swarming with attorneys. That is why it is still so expensive. The techies are still around, but the lawyers have taken over.

The main problem with Palo Alto now is that the schools are starting to get overcrowded. It is such a desirable school district, it is now a victim of its own popularity. They sold off a bunch of schools in the '80's and converted them to housing. Now those schools are lost forever and the families are starting to cycle in again. Major catastrophe starting to happen: http://www.paloaltoonline.com/weekly/story.php?story_id=967

John Haverty says:
I was interviewed at GOOG in early 2003. Man I missed a boat.

Sorry to hear about that. Hope you're not too bitter about it. :-)

I didn’t make the cut, the GLAT / Google labs aptitude test didn’t exist yet at the time but the interview process sucked.

They know that their interview process sucks, they have been trying to fix it for years now, and I think it just got worse. I heard interesting stories from two guys who went through the process in the last few months.
One did not make the cut (I honestly cannot imagine how that could have happened. He must have shown up drunk), and they pissed the other one off with their boundless arrogance, right in the first round.
On the other hand, out of the top five people I'd prefer not to work with again, four are currently at Google.

However, GOOG is a thing on your resume, its a “degree.” They see it as such. he pay is low, the options are the only reason to be there are the hours are long and hard.

True. Options and contact networks, ultimately.

Nowadays, it really sucks to be there. There is not much possibly to upside on the stock, the rich people are bored and have nothing to do but to spend 10s to hundreds of millions, they could care less about working.

Everybody who works there denies that, but both they and I know it's true. I've worked at a company in a similar situation in the late 90s, and human nature doesn't change. What's worse, they'll leave soon after the first earnings miss, leaving behind only a cloud of dust and a few thousand befuddled peons who must now make sense of their undocumented spaghetti code.

As for compensation for new-hires: The hearsay is that they pay indeed at least 15% below market, and the options packages are in the hundreds, vested over five years (and only if you actually perform useful work - they mention that a lot in their handouts. Hmmm. I wonder... :-) ).

So, unless the stock goes to $1,000, I suspect that won't be too many new Google gazillionaires these days.

There's enough housing supply out there for the folks who actually stroke it rich, since for years a lot of new construction in the BA has been luxury homes > $2 mil. And honestly, wouldn't anyone who made it in '04 have bought in '05 at the latest?

Flood zone. That reminds me. There are over 4000 properties in Palo Alto in the flood zone. In 1998 there was a $25M flood. Yet those same "flooded" houses still sell for >$1M. Unbelievable! I looked at a tiny one on University Avenue (2bd/1ba) for $925K last September. It was owned by the creator of Pong. It sold and I think it is back on the market again already. Six month flipper due to the standard mortgage penalty clause?

Girgl,

the google options are not in the hundreds, to be exact, it is topped by 200 for anyone who doesn't go in as a middle or upper manager. Even right after the IPO, the first batch of people I know who got in didn't get any meaningful number of options (sub 1000 for sure), and yes, vested over 5 years.

So ignoring the 400 or so google millionaires, the other average google employees, 5,000 of them, will be lucky if they end up with six figure lottery after-tax when they are fully vested.

During the dotcom time, the standard practice for vesting was around 3-4 years, certainly not longer than 4.

Creator of Pong? You mean the early computer game Pong?

Bike2work,

where is the flood zone of Palo Alto located? This is the first time that I've heard about it. Please elaborate.

Gees, there is so much to learn about the BA on this site, keep it coming.

Yes, Alan Alcorn. I really wanted to bid on the place just for that fact. But I doubt he ever lived there. It was a tiny rental place.

The part of Palo Alto that flooded in '98 was due to San Francisquito Creek. This creek can't handle a 2/3rd's of the 100-year flow. It flooded in '55 too. That covers about a third of the Palo Alto flood zone. The other two thirds are part of the tidal flood zone. This zone is subject to the 100-year high tide. It is currently protected by "uncertified" tidal levees. Given a good storm surge at the right time, major bad "bathtub ring".

burbed,

I assume you're going by SAT stats or 4 yr college admission rates. Just don't go by the Newsweek survey, it is utter rubbish.

I'm pretty shocked by the 5 year vesting process. I hope things continue to be good at Google...the way you all discuss it, it sounds like the late 90s all over again, and it'll be very sad for the peons at the bottom.

GOOG = 5 more years of grad school