patrick.net

LarryPatrickMaloney says

Nomograph says

LarryPatrickMaloney says

did you know starting salary for San Jose police is $94,000

Incorrect, as usual. In fact, that's almost the TOP salary, not the starting salary.

http://www.sjpd.org/joinsjpdblue/SalaryBenefits.html

WHERES MY FREE HOUSE LARRY I WANT MY FREE HOUSE

Did you calculate in the benefits package?

Why would he have done that. You specifically stated "salary".

Take a drive down Central Expressway in Santa Clara between Lawrence and De La Cruz and note the number of For Sale and For Lease signs. Those are a pretty good indication that the total number of jobs continues to decline in the Bay Area. . . .

It's misleading to focus on average compensation for tech workers. You have to look at median family income overall, which I seem to recall is about $70k/year for Santa Clara County. That's actually very high compared to the rest of the U.S., but still grossly out of whack with local median housing prices.

dunnross says

Yes, but there is 100% more culture, night life, friendlier people, more trees/greener, lake, etc. Besides the weather, the Bay Area doesn't really have that much to offer in comparison to Chicago.

I lived in Boston for a few years. If Chicago has as bad of weather as Boston, and I'm pretty sure its actually worse, then I could really care less about night life, culture and whatever else might be there. I absolutely hate nasty, cold, miserable cold weather.

One of the factor for housing demand in Bay area - immigrant mindset to buy property. If you are making above average (I consider $100K as above average salary for Techies), you are tempted to invest in property. Think of the alternative - moving from one apartment complex to another every year

The Bay Area is one of the few bright spots in the entire economy.
People are very confident here in their future earnings potential. And companies are doing very well, too many to name. Couple that with the highest salaries on average in the nation, and limited space, and I see housing prices maintaining in the good areas, though not booming.

dellman says

Think of the alternative - moving from one apartment complex to another every year

Motherfucker movers destroyed my Ikea bookcase last year.

I didn't blame them because it's Ikea, but that thing cost more than the cost of the movers.

Wish I had stuck to my rule 2000-2005 of not buying anything that wouldn't fit in my Miata.

ducsingle5313 says

Take a drive down Central Expressway in Santa Clara between Lawrence and De La Cruz and note the number of For Sale and For Lease signs.

Here's the old Sony building in N San Jose:

http://g.co/maps/96q4p

Goodbye!

Last year I was driving by a perfectly good office building from the late 1980s being torn down.

More housing, yeay! I guess we can all work from home or Starbucks now.

dellman says

One of the factor for housing demand in Bay area - immigrant mindset to buy property. If you are making above average (I consider $100K as above average salary for Techies), you are tempted to invest in property. Think of the alternative - moving from one apartment complex to another every year

1. riiiight magical immigrants with unlimited money.
2. why would you move from one complex to another every year? I've moved 3 times in 15 years renting, all of them because I wanted to be closer to work or wanted to upgrade.

ducsingle5313 says

Take a drive down Central Expressway in Santa Clara between Lawrence and De La Cruz and note the number of For Sale and For Lease signs. Those are a pretty good indication that the total number of jobs continues to decline in the Bay Area. . . .

Okay, so boring median areas are declining. But the Real Bay Area continues to skyrocket in price! And if you show a place with prices going down, then obviously it's not in the REAL Bay Area.

Of course I think the RBA is down to 6 houses in Palo Alto and one of them belonged to Steve Jobs.

The RBA gets smaller and smaller each year.

CrazyMan says

The RBA gets smaller and smaller each year.

Yeah, but don't forget the law of conservation of REAL. REAL can neither be created nor destroyed. As the RBA shrinks, the REAL-density increases. At some point all of the REAL will be crammed into a single property, probably somewhere in SF. This will be where the portal to hell inevitably opens as the REAL density reaches a critical threshold and tears a hole in our universe through which demon spawn will march.

Actually, I think this already happened. Considering how many realtors are around, it would seem that numerous demon-spawning portals to hell have been open for quite some time.

I make more than $250k/year and chose to rent because for me it makes economic sense to do so. The comments about renters having to move every year seem strange. I've *never* been forced to move from a rental, and none of my renter friends have either. So this issue seems grossly exaggerated.

The comments about California weather are interesting. Lots of folks mistakenly think that this has a huge impact when there are very clear studies that show weather has little effect on happiness. The reality is people adapt to their local weather conditions and life goes on. In fact people who experience crappy winters tend to appreciate the other seasons more.

I know lots of folks who say they live in California for the weather who are complete homebodies. They make absolutely no effort to engage in the wide variety of outdoor activities available in the Bay Area and spend most of their time glued to the TV or computer.

I was chatting with one of my work friends (who recently bought a house in Los Altos) about high end Bay Area prices.

He asked me if I thought high end prices would remain stable or increase. In response, I asked him what percentage of people who own houses in Palo Alto, Los Altos, etc. could afford to buy their own house at current market value. Then I asked him if he thought enough *really* wealthy people would be moving to the Bay Area over the next 20-25 years to soak up the number of $1.25 - 3 million houses that would be put on the market by aging Baby Boomers during that time.

Prices will only remain stable or grow if there is sufficient demand to soak up supply. It will be interesting to see what happens when more aging Baby Boomers sell, either to fund their retirement or to move closer to their grandkids because their kids can't afford to buy in the Bay Area.

Serpentor says

1. riiiight magical immigrants with unlimited money.

Unlimited money? Maybe.

Maybe not. Maybe, "just enough money". And to have "just enough money" to buy in The Fortress, or to even rent in The Fortress, is to be wealthy.

Of course it is. Just ask the people like my neighbors in my Blue Collar neighorhood. The kind of people who clean the toilets in the office buildings Fortress residents work in, the kind of people who bring them their food at the restaurants, change the oil in their cars. They work their assess off to live in blue collar neighborhoods around the Bay, and the only reason they go into The Fortress is for their low wage service jobs, to serve the wealthy people in The Fortress.

Because you have to be weathly to pay cash for a residence in The Fortress. You have to be wealthy to qualify for a mortgage to borrow for a Fortress residence. You have to be wealthy to pay the Property Taxes on a recent purchase in The Fortres, or even to pay the Market Rents in The Fortress.

Of course they are wealthy.

Yes, yes, I know there's the Old Folks living off Prop-13 subsidy in The Fortress who are not immigrants, but they have not had to pay market prices to live in The Fortress for decades, and their kids grew up already.

The rest, outside of a relatively few Hipsters from places like Chicago or wherever, and wealthy immigrants. Go to the Public K-12 in neighborhoods in The Fortress and look at the faces of the kids. Yes, mostly children of immigrants. Wealthy immigrants.

Never said they have unlimited money. But by comparison to most of The Rest of Us in the USA and in the Bay Area, they are wealthy.

ducsingle5313 says

It will be interesting to see what happens when more aging Baby Boomers sell, either to fund their retirement or to move closer to their grandkids because their kids can't afford to buy in the Bay Area

Thanks to Prop 13, they & their heirs can just rent these places out for a nice monthly income.

ducsingle5313 says

Then I asked him if he thought enough *really* wealthy people would be moving to the Bay Area over the next 20-25 years to soak up the number of $1.25 - 3 million houses that would be put on the market by aging Baby Boomers during that time.

You could have asked why these homes were only a fraction of the million dollar price before the bubble. Were they aware that $1M home was only $300K, even though we had a booming tech industry for decades past. Why didnt these same $1M homes skyrocket decades before ?

ducsingle5313 says

I know lots of folks who say they live in California for the weather who are complete homebodies. They make absolutely no effort to engage in the wide variety of outdoor activities available in the Bay Area and spend most of their time glued to the TV or computer

No, Charlie dont surf ! I wonder if they even passed through La Honda!

ducsingle5313 says

I was chatting with one of my work friends (who recently bought a house in Los Altos) about high end Bay Area prices.

He asked me if I thought high end prices would remain stable or increase. In response, I asked him what percentage of people who own houses in Palo Alto, Los Altos, etc. could afford to buy their own house at current market value. Then I asked him if he thought enough *really* wealthy people would be moving to the Bay Area over the next 20-25 years to soak up the number of $1.25 - 3 million houses that would be put on the market by aging Baby Boomers during that time.

Prices will only remain stable or grow if there is sufficient demand to soak up supply. It will be interesting to see what happens when more aging Baby Boomers sell, either to fund their retirement or to move closer to their grandkids because their kids can't afford to buy in the Bay Area.

You bring up a really good point re: how many of the those living in the more expensive areas could afford to buy their home at the current market prices especially when you factor in the property tax increases they've been sheltered from by Prop 13. Demographics - i.e., the Baby Boomer generation - certainly aren't in favor of increasing home prices either nor is globalization with many decent paying jobs flowing overseas. Lastly, you can only kick the can down the road so far before the debt / deficit problems come home to roost.

SFace says

Ask Thomas how many wealthy people moved into Los Gatos and how many homes were built in the last 20 years in Los Gatos?...In any case, affordabiity is a function of earnings and wealth, wealth is accumulated over time. I don't get the argument if everybody have to reset and buy today?

Things in LG were fairly stable when I moved here in early 80s up to the late 90s. Prices were not all that inflated unless your thinking of homes on the hill, which were the millions dollar homes.

The increase in home pricescame from in inflated stock prices from the late 90s. Or as some would call it, lotto tickets. Its easy to make a Pandora, LinkedIn, or FaceBook employee a Millionair.. just give them your cash for over inflated stock which will tank by over 50%..and you take a loss.. they become rich its that simple. I would not call it 'getting rich from accumulated savings over time' by any measure.

Prices from LG to LA to Menlo would be much lower without stock bubbles.

I am a lifelong resident of the South Bay. I went through K-12 in the South Bay and took three different degrees at SJS over a period of decades. I worked in the defense industry and in "tech" for decades in the South Bay, including back when there was no such thing as an H-1 and when "immigrant engineers" mostly meant non-Californian Americans from places like Chicago or wherever.

So over the decades I've made friends, aquaintance, etc. with "lotsa" locals before "tech", the regional economy and the local real estate came to be dominated by "non-American" immigrants. And here is what the majority of the local kids from The Fortress do when their Prop-13 parents move on or pass away: (mostly) they sell and divide up the proceeds among siblings, or, one sibling buys out the others' share. (In that case, they might maintain the Prop-13 but they still have a large cost). This is what happens. Running through the years of recall I can recollect so many examples of this, and come to think of it, I cannot recall a single example where they held onto the property, though I am sure people with whom I haven't been aquainted have done it. Especially maybe, an "only child".

SFace says

There's about a 250K millionaires in Santa Clara, San Mateo and San Francisco alone. In 20 years there may be well over 500K to over a million millionaires in the region (In fact you are on your way as well).

I dont think those numbers are valid. And to have 500K of wealth would mean many others outside would lose their savings. I have seen both real legit wealth creation and shaddy irrational wealth transfers.. Today, many have confused both and have no moral compass... utterly blind and too greedy.

thomas.wong1986 says

I dont think those numbers are valid. And to have 500K of wealth would mean many others outside would lose their savings.

So what even if they are valid?

How wealthy are they really, if they're paying market mortgages and market property taxes or market rents to live in The Fortress?

OK! say they are .. if they decide to move, who will fill in their homes on the market... we are looking for a very large new influx of millionairs to fill in the vacant spot to support current or higher prices...

SoCal and Florida, look alot more attractive if you have cash to burn and a have better life style. Buying into Fortress gets you a nice stroll around University Avenue...

thomas.wong1986 says

Prices from LG to LA to Menlo would be much lower without stock bubbles.

Thank you Captain Obvious : )

Bellingham Bill says

Thank you Captain Obvious : )

Not so obvoius for many who came here with long long tales of hitting it big with the idea home prices were 'always' more expensive for years. Fact is its been more institutionalized in recent years by the media. A stark difference from decades prior to 1999. You kill the myths you kill high home prices.

thomas.wong1986 says

A stark difference from decades prior to 1999. You kill the myths you kill high home prices.

Thing is, all these stock-option rich aren't leaving. Place is stuffed to the gills with them, and they're still making more . . .

http://www.businessweek.com/news/2012-01-29/facebook-is-said-to-plan-ipo-filing-for-as-early-as-next-week.html

Thanks to Microsoft, Netscape, Yahoo, Apple, Google, and many others, we've had thousands of millionaires being created every year in the area, but the last major home subdivision was filled in last year . .

http://losaltos.patch.com/articles/walls-go-up-at-old-pumpkin-patch-as-the-enclave-takes-shape

There are 36 houses on the market in Los Altos right now. Demand is probably 3000X that.

And this is just tech winners. There's also medical sector millionaires and other professionals that need a place to live in this place.
Waiting for this place to get affordable is going to be a very very long wait. Santa Cruz might be up in the Arctic Circle by then.

Just for fun I checked zillow for a random area of Saratoga (bounded by Chateau and Argonaut).

Of the 33 homes (built in the mid-50s, all with market values of $1.3M+), 11 have assessed values of under $500,000 and no record of sale.

A further 11 were sold in the 1990s.

The last 11 were sold once or twice in the 2000s. So on average there's been one sale every two years on this block, but there were 3 sales in 2003, 2005, and 2010.

From the looks of it, around 40% of this particular area will not be on the market ever.

ducsingle5313 says

The comments about renters having to move every year seem strange. I've *never* been forced to move from a rental, and none of my renter friends have either. So this issue seems grossly exaggerated.

Most of the apartments in Fortress/adjacent areas increase the rents year after year. I saw 10% increase in 2010 and 15% increase in 2011. If you don't want to pay more, you need to move out.

I accept that my "engineer salary" is pretty much average for the bay area, but I still believe I shouldn't have to pay more than 3X my salary for an "average" home.

Sorry, I just can't look at a 40 year old home on a dinky lot and scream "I gotta have this for 7X my income!"

I'll rent the house, sure, for a bit, but no way in heck would I ever commit to buying it.

Strange, I lived in the same 3 BDRM house in Campbell for ~8 years and my rent never increased.

Try being a good tenant.

dellman says

ducsingle5313 says

The comments about renters having to move every year seem strange. I've *never* been forced to move from a rental, and none of my renter friends have either. So this issue seems grossly exaggerated.

Most of the apartments in Fortress/adjacent areas increase the rents year after year. I saw 10% increase in 2010 and 15% increase in 2011. If you don't want to pay more, you need to move out.

I call BS on that.
If all apts raise rent by 10% every year, then how does moving help you?

Yes, during boom times, the larger complexes do raise rent as demand gets higher, but I've never had to deal with it. Larger complexes suck anyways: they almost always smell like ethnic cooking, invite lots of petty crimes, very overpriced, and just overall poorly managed by indifferent apt managers.

If you are a good tenet and rent from a private landlord, they have no reason to want to make you leave and risk losing rent money and having to find good tenets. 2 of neighboring duplexes have been in the same units for 15+ years.

dellman says

ducsingle5313 says

The comments about renters having to move every year seem strange. I've *never* been forced to move from a rental, and none of my renter friends have either. So this issue seems grossly exaggerated.

Most of the apartments in Fortress/adjacent areas increase the rents year after year. I saw 10% increase in 2010 and 15% increase in 2011. If you don't want to pay more, you need to move out.

Where are you living/renting?

I got a 5% rent DECREASE in summer 2010, and then faced a 10% increase in summer 2011, at which time I moved out of Central Park at Whisman Station (large complex, managed by Prometheus) & into a 12 unit building. The market has cooled off a lot since then, and rents have fallen back toward their pre-Google-hiring-binge levels (although not all the way). I will be negotiating hard for a rent decrease when my lease expires in late August since I doubt that Google is going to hire another 5000 people this summer, and my building currently has 2 or 3 of 12 units vacant, although that is certainly subject to change between now & then.
(this was all in Mountain View)

Serpentor says

If you are a good tenet and rent from a private landlord, they have no reason to want to make you leave and risk losing rent money and having to find good tenets. 2 of neighboring duplexes have been in the same units for 15+ years.

I try to be a good tenant. I'll only call the landlord if absolutely necessary, and I'll even do minor upgrades on my own dime, with approval, such as adding a digital thermostat, etc... essentially anything that makes my life easier, and in some cases like the thermostat, less expensive.

And come the 1st of every month, that rent check is either in their mailbox or I'll deliver it personally.

In return, if I get slapped with a rent increase, I'll take my excellent and drama-free tenancy somewhere else that will appreciate it. So far that hasn't happened, though.

Question I have for all of you would be, did the Bay Area ever recover (meaning, deflate) from the Dot-com bubble? Anecdotal, to be sure, but I see a lot of houses in the inner bay going to pre-2000 prices. Could it be that we have further to fall from the prolonged bubble?

bmwman91 says

Where are you living/renting?

Sunnyvale. Renaissance (@old sanfrancisco rd) increases rents every year. It is possible to get better deals in Sunnyvale but you need to move -that's my point. If you like a neighborhood, chances of getting a rental that won't increase year after year is not very good.

CL says

Question I have for all of you would be, did the Bay Area ever recover (meaning, deflate) from the Dot-com bubble? Anecdotal, to be sure, but I see a lot of houses in the inner bay going to pre-2000 prices. Could it be that we have further to fall from the prolonged bubble?

No, not quite.

It seems most of the BA is slowly deflating, though there's exceptions (parts of PA, Cupertino) that don't seem to be budging much. On the bright side, I worked for years in both of those towns and while I like PA, Cupertino is pretty much shit so its pricing is irrelevant to me :)

Everywhere else seems to have a slow hissing sound accompanying it though. So yes, we're still going down.. slowly.

CrazyMan says

Everywhere else seems to have a slow hissing sound accompanying it though. So yes, we're still going down.. slowly.

How low though? Where is our collective resting place? I see a lot of properties that went up 50% from 2000-2005, but they had a pretty crazy run-up prior to that? Maybe this is a longer fall than most?

After the dot-com bubble, we had 9/11, then low-interest rates to combat it, combined with creative financing. It must've been the early 90s when we last had a normal market.

I wish I knew the answer (I'm sure we all do) but I'm still seeing properties in my price range (550-700k) still dropping, though some obviously do sell.

I pay attention to the trends and the trend is still down overall. I think the next couple summers will tell us a lot. On the bright side, there is a chance somewhere between 0 and a cold day in hell that home prices in that segment will start trending up anytime soon, so I'm happy sitting here waiting a bit longer.

CrazyMan says

I wish I knew the answer (I'm sure we all do) but I'm still seeing properties in my price range (550-700k) still dropping, though some obviously do sell.

i'm seeing the same - the lower prices are giving me an itchy trigger finger to buy. but rationally i know i should wait for the prices to flattened out , and then go up a bit before i buy.

houses that were selling in the $700k range last year (and sold very quickly) are listed in the $600k range this year and sitting unsold.