patrick.net

Here are a whole bunch of free bricks from Detroit:

http://www.zillow.com/homedetails/1183-Glynn-Ct-Detroit-MI-48202/88281594_zpid/#image=imgId%3DX1-IA1cs7afczomgsx_cycop

And, by the way, the free bricks come with a fairly well constructed house, something that your $100/hour construction workers in Lafayette don't have a solid clue about.

The reason why I compared market cap with GDP was because, in a world not filled with absurdity and bubble valuations (something you obviously know nothing about), the market cap and revenue of a company should approach parity. So, comparing market cap of Yahoo to GDP of Brazil, is, in fact an absurdity, in itself, for if, Brazil was actually a company, it's market cap would have been sufficiently lower than that of Yahoo.

Market cap is a function of equity (assets - liability) and earning multiple (valuations) and have limited relationship with revenue. Google generates about the half the revenue as Dell, yet is valued more than 8X more than Dell.

Brazil is the largest economy in the Southern Hemisphere and top 10 in the world with GDP around 600B in 2000 substantially more now. Yahoo peaked at around 200B market cap, so your facts are wrong here (like pretty much everything else.) Market cap is also a function of hoarding cash. Mircrosoft would be sitting in 200B in Cash and would have a higher market cap than Apple if they didn't release a portion of their equity.

Both me and Kevin are confused about your string of logic here.

Kevin says

They do both, actually. A lot of it is short term, sure, but banks also borrow plenty long term.

How can banks borrow long term? I’ve never heard of a 30-year CD, only 5 years at the longest, but maybe I don’t know where to look.
I’m pretty sure there’s no long term inter-bank lending, nor even long term borrowing from the Fed. So that would seem to leave the banks open to huge interest rate risk when they write these 5% 30 year jumbo mortgages. They can’t sell them, so they have to hold them and suffer the risk that their own borrowing cost will soon exceed the interest borrowers are paying. So I’m still not clear why they’re lending at 5%, at least in the jumbo market.

It's quite simple actually. Banks working capital is free flowing and not locked in. Even in a 30 year mortgage, they receive interest and principle, new working capital which would be deployed at higher interest rate in a higher rate environment so their borrowing cost and lending revenue will always be X+% if they manage it correctly. As long as their business is increasing and they are lending at a constant margin, they will never be upside down on average.

Banks that can't increase their working capital and roll over their capital fails.

dunnross says

The reason why I compared market cap with GDP was because, in a world not filled with absurdity and bubble valuations (something you obviously know nothing about), the market cap and revenue of a company should approach parity

That is patently absurd and it will take a very simple example to prove it to you. Company A has $5B in revenue with 5% net margin. Company B has $5B in revenue with 20% net margin. Should those two companies have the same market cap??

tatupu70 says

dunnross says

The reason why I compared market cap with GDP was because, in a world not filled with absurdity and bubble valuations (something you obviously know nothing about), the market cap and revenue of a company should approach parity

That is patently absurd and it will take a very simple example to prove it to you. Company A has $5B in revenue with 5% net margin. Company B has $5B in revenue with 20% net margin. Should those two companies have the same market cap??

If Company B has 20% net margin, they are probably lying about their income, and, unless their dividend yield approaches 6%, I would stay away from that company, just like buying an investment property in the BA which has no cash flow, no longer makes any sense. The point is, in a new era of deflationary economy, people are going to demand fixed income on their money, and companies which don't offer that, will see a severe decline in their stock prices. Since owning RE is a much bigger headache than owning stocks (not to mention the liquidity problem with RE), an investor would not touch any RE, unless it pays over 12% return. So, let me see if their are any math geniuses out there, that can tell me how much would a house in, let's say, Lafayette, have to fall by, in order to generate a 12% return for an investor.

dunnross says

If Company B has 20% net margin, they are probably lying about their income

Well done. Completely avoid the example. I made it a bit extreme to show you why you are wrong.

And, that is the best case scenario, because it assumes that rents don't drop from today's levels, which they, most certainly, will.

I don't know about Lafayette, but I, myself, have been happily living in a $1M house, down here in San Jose, west side, and only paying $3K rent. A lot of my friends are also doing the same thing. I have a friend in Mountain View, who is living in a $700K house, and only paying $1.5K rent.

A wishing price of $1325 doesn't mean it rents for that much. This appt is 1 bdrm and 700sq ft. His house is 2 bdrm & 900sq ft. The house right next door, just like his, recently sold for $650K.

robertoaribas says

Patrick: the banks are borrowing short to lend long. they can get money for less tahn 1% today either on savings and checking deposits, or prime rate lending facilities. Borrowing at 1% to lend at 4.25% makes for FANTASTIC profits today… BUT:

People in the finance world must look at this site and laugh their asses off. This is utter nonsense, not even close to what happens.

Long term mortgages used to be (still are to some extent) securitized into mortgage backed securities. These in turn make up an entire market for bond like investments, which have a higher yield and higher risk than government bonds. Without rehashing the complexities of what happened, these securities were sliced and diced into securities that were not understood and which were rated much higher than they should have been.

So the money for mortgages came (comes) from people who invest in mortgage backed securities. Bank profits come from a small interest rate spread and fees that they generate up front. The profit of the small spread is realized when they sell the mortgage to the people who package it and securitize it. OR when they sell it to whomever.

I haven't followed how much the mortgage backed securities market is back up and functioning. And I don't claim to be any kind of expert. Obviously these days the gses such as Fannie mae have a bigger role in the mortgage market and the MBS role isn't what it was.

But your conjecture is WAY off.

As for the risk of tax payers being on the hook again, because of new morgages at low rates ?

That’s the best explanation I’ve heard yet. The banks are just taking the easy money now and leaving their risky future to be handled by yet more massive bailouts from taxpayers.

It's the most absurd explanation I have heard. Interest rate risk on mortgages now is a risk maybe to the government, but not to banks, who essentially take their profits on mortgages up front. And usually don't even keep the mortgages on their books, although they likely do service it. The government may be buying overpriced mortgages. For which we could ultimately be on the hook. And new low or no money down FHA mortgages might conceivably cost us. But banks don't gamble in the way you suggest.

Besides, if some institutions such as Fannie Mae are borrowing short and lending long, there are vehicles for totally offsetting that risk. Although I believe those markets aren't as liquid as they used to be, and presumably the cost of hedging is priced in to the 4.5% or whatever the going mortgage rate is.

marcus says

robertoaribas says

Patrick: the banks are borrowing short to lend long. they can get money for less tahn 1% today either on savings and checking deposits, or prime rate lending facilities. Borrowing at 1% to lend at 4.25% makes for FANTASTIC profits today… BUT:

People in the finance world must look at this site and laugh their asses off. This is utter nonsense, not even close to what happens.
Long term mortgages used to be (still are to some extent) securitized into mortgage backed securities. These in turn make up an entire market for bond like investments, which have a higher yield and higher risk than government bonds. Without rehashing the complexities of what happened, these securities were sliced and diced into securities that were not understood and which were rated much higher than they should have been.
So the money for mortgages came (comes) from people who invest in mortgage backed securities. Bank profits come from a small interest rate spread and fees that they generate up front. The profit of the small spread is realized when they sell the mortgage to the people who package it and securitize it. OR when they sell it to whomever.
I haven’t followed how much the mortgage backed securities market is back up and functioning. And I don’t claim to be any kind of expert. Obviously these days the gses such as Fannie mae have a bigger role in the mortgage market and the MBS role isn’t what it was.
But your conjecture is WAY off.
As for the risk of tax payers being on the hook again, because of new morgages at low rates ?

That’s the best explanation I’ve heard yet. The banks are just taking the easy money now and leaving their risky future to be handled by yet more massive bailouts from taxpayers.

It’s the most absurd explanation I have heard. Interest rate risk on mortgages now is a risk maybe to the government, but not to banks, who essentially take their profits on mortgages up front. And usually don’t even keep the mortgages on their books, although they likely do service it. The government may be buying overpriced mortgages. For which we could ultimately be on the hook. And new low or no money down FHA mortgages might conceivably cost us. But banks don’t gamble in the way you suggest.
Besides, if some institutions such as Fannie Mae are borrowing short and lending long, there are vehicles for totally offsetting that risk. Although I believe those markets aren’t as liquid as they used to be, and presumably the cost of hedging is priced in to the 4.5% or whatever the going mortgage rate is.

But the MBS security holders didn't take a loss because of the housing crash, because, like any other
bond holder, all they had to do is wait until the expiration date of their bonds, to receive the full face value of the bonds, and most of these bonds were short term. So, banks had to take the brunt of the losses, which they are holding (but not on their books) even today. Today, as the aftermath of the crash, the MBS (private mortgage) market is almost completely dead, and most loans are now written directly by the banks with FHA guarantee. The banks are now back to the 3-6 (or 1-4 model today), where they borrow at 1% and lend at 4%. The old days of profiting from commissions are long gone, and, in this kind of an environment, loans are much harder to come by.

marcus says

Long term mortgages used to be (still are to some extent) securitized into mortgage backed securities.

I'm pretty sure that securities market is completely dead now. I think no one at all is buying mortgage-backed bonds made from jumbo loans, because they can't be guaranteed by Fannie/Freddie/FHA.

dunnross says

I never said housing will drop 80% everywhere, I just said it’s going back to 1975

Going back to 1975 would be an 80% drop, so, yes, you did say it will drop 80%. There is absolutely no logical basis for this argument.

dunnross says

The reason why I compared market cap with GDP was because, in a world not filled with absurdity and bubble valuations (something you obviously know nothing about), the market cap and revenue of a company should approach parity. So, comparing market cap of Yahoo to GDP of Brazil, is, in fact an absurdity, in itself, for if, Brazil was actually a company, it’s market cap would have been sufficiently lower than that of Yahoo.

No, market cap is rarely equal to revenue. Properly valued, it's usually a multiple of projected profit, plus any assets. You must not buy stock. A company with a 90% profit margin and massive assets is valued very differently from a company taking losses with huge debts.

dunnross says

If Company B has 20% net margin, they are probably lying about their income, and, unless their dividend yield approaches 6%, I would stay away from that company, just like buying an investment property in the BA which has no cash flow, no longer makes any sense.

Holy crap, you're a shitty investor. I can point to plenty of companies with much greater than 20% net margins. Are you familiar with the software industry? You claim to work in Silicon valley, so I thought you would be. Real people pay real money to buy real products that really produce those real margins. There is a massive difference between a Wal Mart and an Apple.

Now, the last few posts you've made about returns on housing are also ridiculous. If house prices fell 80%, why on earth would you believe that they would continue to rent for the same amount?

You seem to now be arguing that house prices will fall 80%, but the rest of the economy will be unaffected. That's an even less informed argument than claiming an 80% fall in the first place.

I'll tell you what though, I'll make you a bet. If national housing falls to 1975 levels at any point in the next 20 years, I'll give you the entirety of my net worth, about $350k today (though, admittedly, it might only be 20% of that if your predictions come true).

On the other hand, if this doesn't happen, you agree to never say a stupid thing again.

marcus says

Long term mortgages used to be (still are to some extent) securitized into mortgage backed securities.

I’m pretty sure that securities market is completely dead now. I think no one at all is buying mortgage-backed bonds made from jumbo loans, because they can’t be guaranteed by Fannie/Freddie/FHA.

The vast majority of loans are well under the Jumbo threshold. Mortgage backed securities are alive and well.

dunnross says

That’s total BS, Mr. Kevin. Here are some statistics from Zillow.com:

Mountain VIew National Ratio
Median Household Income $69K $44K 1.5x
Median House Price $734K $180K 4x

Also, what you call a median house in Mountain View is only fit for farm animals in other parts of the country. These types of houses which they have the tenacity to sell in MV for $750K are only bought for demolition in other parts of the country.

The city's official data says that the median household income is 73,850, and 112,500 for a family of 4 (national data says 38k and 52k respectively). Yeah, my numbers are a little off. For a family of 4 it's ~ double in mountain view vs the national average.

The median sales price for July-September 2010 (most recent data I can find) is 628K. National numbers say $180k for the same period. So that's ~3.5

So, assuming that:

1. Mountain view housing in no way justifies a price multiple greater than the rest of the country (a pretty weak argument, considering housing density and disposable income levels)

2. People won't just hold onto their current prices (because they can't afford current payments?)

The, yeah, you *might* see a 40% decline in prices in mountain view, which would give you a median sales price of $376k.

That gives you a mortgage for about the same as rent on a one bedroom apartment.

Good luck with that. My bet still stands. See you in 20 years.

Kevin says

There’s really little reason to believe that the prices in silicon valley will fall 75 or even 40%. Mountain view currently has a median house price that is ~3x the national average, and a median household income that is ~2.5x the national average.
So maybe you’re claiming there’s going to be a 40% drop in national housing from its current levels rather than 80%. I doubt even that’s the case, but at least you’re starting to make an argument that makes sense.

Its happened before and certainly can happen again. Income/salaries are what local employers are willing to pay. As in prior decades, jobs/salaries when they become impossible to maintain have moved further out into other states and countries.

http://www.paloaltoonline.com/news_features/real_estate/fall2000/2000_09_22.trends.php

"No one wants to recognize it, but between 1989 and 1992, prices dropped 30 to 40 percent. There's no question that could happen again. Everything has a cycle and real estate is no exception. It's foolish to think prices will go up forever. In the longer term they will, if you can weather the downturns in between. There's no way to know," Dancer said.

Its remarkable that this guy was warning about price drops even in 2000 when prices were disconnected from incomes.

thomas.wong1986 says

No one wants to recognize it, but between 1989 and 1992, prices dropped 30 to 40 percent.

Yeah, there's a few problems with this:

1. Prices have already fallen substantially (probably not 40% from peak yet though). 40% from where they are today just sounds like wishful thinking from someone who makes a high 5 figure salary thinking that they'll be able to own a house near stanford some day.

2. Prices didn't actually fall 40% from 1989 to 1992 in PA. It was more like 15%, or about 10% when adjusted for inflation. I'm positive some homes lost 30-40% of their value. I'm positive some homes lost 100% of their value. That's not what we're talking about htough.

I'll even agree that the *inflation adjusted* prices could fall back to 1975 levels at the national level. Shit, they already practically have:

Median national price 1975: $39,000
Median national price 1975, adjusted for inflation: $167,778.62

Current median price: $180,000.

But that's not what mr mc crazy pants is arguing. He's arguing that prices are going to fall back to 1975 in absolute terms. That, my friends, is crazy, and it isn't going to happen.

I don't know what the inflation adjusted price in PA would be, but I'll wager that it's not 80% lower than whatever it is currently (and, of course, ignoring the very real population and job growth that has occurred in the area since 1975 is absurd).

Kevin says

But that’s not what mr mc crazy pants is arguing. He’s arguing that prices are going to fall back to 1975 in absolute terms. That, my friends, is crazy, and it isn’t going to happen.

Your right, prices will not go back to 1975 in absolute terms. 1996-97 adjusted for inflation will do just fine.

dunnross says

Did people hold on to their Sun stock when the price crashed from 130 to 2.

People don't live and raise their children in their Sun stock.

dunnross says

Now, you still didn’t consider the quality of a house you get in Mountain View, which, means you still need to multiply by a factor of 2.

Why, because you say so? Mountain view houses tend to be smaller, but with higher end finishes than the majority of the country. The "quality" difference is already priced in, in the sense that you get a lot less house for the same price. Actual construction quality and the like are more or less the same.

So, at current levels prices in Mountain View are about 5x overpriced relative to the rest of the country. If you assume that a median price goes down 20-30% in the US,

I don't assume that. In fact, I assume that national house prices will go down by less than 10% from where they are now. More likely, I think they'll just go sideways for a few years. But weren't you just claiming that they were going back to 1975 levels a few posts ago?

how much should the MV price drop to get to a fair price valuation relative to the rest of the country - or is it that our sh*t don’t stink in Mountain View.

I don't really know, because you can't make such a statement looking at price : income ratios alone. Do you also think that NY real estate should be priced similarly to the rest of the country, despite historically having a price: income ratio more than double the national average? Do you believe that Silicon Valley's economy is comparable to that of Detroit? How about Cleveland? How about Houston? No? Ok.

thomas.wong1986 says

Kevin says

But that’s not what mr mc crazy pants is arguing. He’s arguing that prices are going to fall back to 1975 in absolute terms. That, my friends, is crazy, and it isn’t going to happen.

Your right, prices will not go back to 1975 in absolute terms. 1996-97 adjusted for inflation will do just fine.

On a national level, they already have. In 1996 the median price was $132,000. Adjusted for inflation that would be $179,000, which is roughly where we are today.

That's why I don't think national housing prices will go down significantly from where they are right now, if at all. There's just no real reason for that to happen.

Inflation is far, far more likely. Once interest rates start inching upward, expect the printing presses to flow.

Kevin says

On a national level, they already have. In 1996 the median price was $132,000. Adjusted for inflation that would be $179,000, which is roughly where we are today.

I was thinking locally to Bay Area-South Bay using late 90s figures. Our bubble started out post 97 while the rest of the nation started out after 2002-3.

Many other national metros have corrected nicely already and dont expect too much fluctuations from here. Yes, it makes more sense NOW to buy that vaction home in SoFLA for $100K vs $400K a few years ago.

"Now is the best time to buy, rates are super low" -- speaking for LY of NAR.

thomas.wong1986 says

I was thinking locally to Bay Area-South Bay using late 90s figures. Our bubble started out post 97 while the rest of the nation started out after 2002-3.

I don't know what "South Bay" refers to, but based on the numbers I can find online, the whole bay area is actually below it's inflation-adjusted 1996 prices (should be $450k, is about $400k right now).

What was the median price in the "South Bay" in 1996? (hey, for that matter, what was it in 1975?)

bubblesitter says

“Now is the best time to buy, rates are super low” — speaking for LY of NAR

Eventually you so see Blood in the Streets.. No not in SF Bay Area, but in Miami or other places! If prices went down by large % from peak and have adjusted to normal levels comparable to prior decades adjusted for inflation, yes its a good time to buy. This may not be the case in your or mine town/city. But it certainly gives you an idea where the real bottom is.

Kevin says

I don’t know what “South Bay” refers to, but based on the numbers I can find online, the whole bay area is actually below it’s inflation-adjusted 1996 prices (should be $450k, is about $400k right now).
What was the median price in the “South Bay” in 1996? (hey, for that matter, what was it in 1975?)

sure, South Bay is Mt View to South San Jose. As some call Silicon Valley.
we have yet to see prices fall fell back to 1996 adjusted, but getting there.

Kevin says

What was the median price in the “South Bay” in 1996? (hey, for that matter, what was it in 1975?)

It wasnt unusual to have seen fairly priced, affordable homes in South Bay (Santa Clara County) back in 1995-96. After 1997 and into 2000 it all went bonkers.

http://www.housingbubblebust.com/OFHEO/Major/NorCal.html

See figures, below chart

That looks like some kind of price index. Are there actual numbers somewhere?

Kevin says

That looks like some kind of price index. Are there actual numbers somewhere?

Yes its a price index and is fairly approximate to prices as well.
You would have seen prices in say 1996-97 for a home for 225K or so.
Same home went to 450K by 2000 and then 650K by 2006. Same home! Seen
similar homes today down to 500K.

So now what the price inflation of 100% as it relates to 1998-2000 years ?

thomas.wong1986 says

Kevin says

That looks like some kind of price index. Are there actual numbers somewhere?

Yes its a price index and is fairly approximate to prices as well.

You would have seen prices in say 1996-97 for a home for 225K or so.

Same home went to 450K by 2000 and then 650K by 2006. Same home! Seen

similar homes today down to 500K.
So now what the price inflation of 100% as it relates to 1998-2000 years ?

Ok, I get that, but what was the median for the south bay? I can find the median for the whole bay area without issue. Not trolling, I genuinely want to know.

Kevin says

thomas.wong1986 says

Kevin says

That looks like some kind of price index. Are there actual numbers somewhere?

Yes its a price index and is fairly approximate to prices as well.
You would have seen prices in say 1996-97 for a home for 225K or so.
Same home went to 450K by 2000 and then 650K by 2006. Same home! Seen
similar homes today down to 500K.

So now what the price inflation of 100% as it relates to 1998-2000 years ?

Ok, I get that, but what was the median for the south bay? I can find the median for the whole bay area without issue. Not trolling, I genuinely want to know.

Why don't you just go backward using today's median with 3% inflation. Put your calculator to work.

Kevin says

Ok, I get that, but what was the median for the south bay? I can find the median for the whole bay area without issue. Not trolling, I genuinely want to know.

There are a number of sources...
(1) FHA data http://www.fhfa.gov which used as data points on the chart
(2) published data at Dqnews.com http://www.dqnews.com/Articles/archive.aspx
(3) just general search in historical Google (timeline)
(4) http://www.archive.org/web/web.php

using archive.org + dqnews only back to Dec2000 data..

http://web.archive.org/web/20010304002000/www.dqnews.com/ZIPSFC.shtm

loads slow! so be patient...

Sorry, maybe I'm not clear -- I can't find median house prices for the *south bay* specifically, from 1975. Greater bay area, and current data for the south bay is easy to find.

I definitely know my way around Google ;)

The data from 1996 is a reasonable point, but I already saw that and pointed out that we're already back at that level, at least for most of the counties.

Much of the SB data was published by newspapers San Jose Mercury news and would require a fee to access the info. Was not on the internet. Or pay dqnews.com for data directly.
Much of the archived data requires paying some fees to someone these days.

Nadda, not even close to 1996 or 1997 plus inflation today. You most likely would laugh at prices then... take 2000 prices and cut in half will get you 1997 prices.

John Bailo says

Starting in mid 70s, New York apartments started going up, yuppies appeared and mortage rates went sky high.

Between 1980 and say 1989-90 we (Santa Clara County) saw a genuine economic boom in tech. Employment/salaries went up across all income levels and so did home prices. By mid 90s they corrected for number of reasons. Even though we had fall in interest rates, raise in new construction, prices didnt boom over 75-100% compared to the after 1997 as prices inflated by 300%...

1975 would be a far stretch for Santa Clara County.

John Bailo says

yuppies appeared and mortage rates went sky high

Hell of a coke habbit them yuppies! but thats New Yorker Yuppies for you!

So where did they go after 2000, look no further than tech companies and south bay!

God I hope they leave one day!

thomas.wong1986 says

Nadda, not even close to 1996 or 1997 plus inflation today. You most likely would laugh at prices then… take 2000 prices and cut in half will get you 1997 prices.

The numbers I'm finding say 1997 prices were 250-320k depending on county. That puts us at 320-430k adjusted for inflation, which is right around the current bay area median sale price.

Yeah, Santa Clara and San Mateo are still a bit off from that, but really not that much. Remember Santa Clara includes the shitty parts of sunnyvale and san jose, and San Mateo includes EPA.

John Bailo says

thomas.wong1986 says

It wasnt unusual to have seen fairly priced, affordable homes in South Bay (Santa Clara County) back in 1995-96.

Well, I’m a lot older than you, but this is what I remember.
Before the mid 70s people didn’t talk about “real estate” as finance. You got a house, and you lived in it. Starting in mid 70s, New York apartments started going up, yuppies appeared and mortage rates went sky high. Life in my parents middle class family changed forever, as what seemed like a gradual uphill path, turned into doing the dog paddle to keep from drowning.
In my view, all of the housing inflation starting from 1974 on is only justified as a bubble.
Hence, prices will return to those levels.

It's good to know that you believe that housing is immune to inflation (because building materials grow on trees and labor is free!). Housing is only slightly higher than where it should be going on inflation data alone (national should be ~$168k, but it's actually $180k right now...about 8% over valued)

Shit, and that's using the official government inflation numbers.

But keep on beating that drum. I'm sure if you just keep on waiting you'll be picking up that lovely 4 bedroom in PA for $50k before you know it. And everyone else will apparently be out of a job, but that won't result in unrest worse than 1930s europe. Either that or everyone will still have their jobs, but will for some reason not want to buy houses that they can afford with their annual bonuses.

Good luck!

John Bailo says

Kevin says

But keep on beating that drum. I’m sure if you just keep on waiting you’ll be picking up that lovely 4 bedroom in PA for $50k before you know it.

You were saying:
http://goo.gl/4eXW
5BR/1BA Single Family House - Pottsville

5 beds: $50,000

Palo Alto, not Pennsylvania. Jesus.

What you don’t understand is that at one point in this country people were not working all week long just to pay the rent or mortgage.
Which is pretty much where we ended up.

There was a very brief period in this country where that was true, from about 1945 until 1980. It had very little to do with house prices.

Not having a job all the time, but owning a house, could make us a better and more independent country.
The kind of country where a guy could spit at bigwig or politician and not fear losing everything….because he still had his land, his business, his home…

Party like it's 1799 man.

Kevin says

The numbers I’m finding say 1997 prices were 250-320k depending on county. That puts us at 320-430k adjusted for inflation, which is right around the current bay area median sale price.

Yes! thats about right! and $32OK would be the high end in Mill Valley and Palo Alto/San Jose...
Crazy times after 1997!

Nov-96 Nov-97 Chng.

Alameda ................................$207K $230K 11.1%
Contra Costa...........................$197K $210K 6.6%
Marin.........................................$343K $349K 1.7%
Napa.........................................$175K $180K 2.9%
San Francisco .............................$270K $307K 13.7%
San Mateo .................................$285K $339K 18.9%
Santa Clara.................................$259K $311K 20.1%
Solano........................................$138K $147K 6.5%
Sonoma.....................................$185K $199K 7.6%
Bay Area....................................$229K $260K 13.5%

Inflation cal... http://www.westegg.com/inflation/

What cost $200000 in 1996 would cost $270706.09 in 2009.
What cost $25000 in 1996 would cost $338382.61 in 2009.
What cost $300000 in 1996 would cost $406059.13 in 2009
What cost $350000 in 1996 would cost $473735.65 in 2009.

But not yet there!