patrick.net

Rew says

Trulia shows meidan home-price for SJ as 600K and SJ has been reported as having the highest median income in the nation, 77K plus.

I think we need to be careful--the median household isn't really buying the median home. There are 35% of the people renting, mostly in apartments.

The bay area is cranking out the overpriced house slaves. get large wage and feel rich - overpay for POS house - lose job in the next recession - lose house.
Rinse and repeat.

Moderate Infidel says

- overpay for POS house - lose job in the next recession - lose house.

Rinse and repeat.

I think you're referring to those who OVERBORROWED. There's lotsa wealthy immigrant elites who paid cash or made very large down payments. They may have overpaid but they did not OVERBORROW. Their "cost" is only their property tax, and besides they can always get more cash from "back home".

B.A.C.A.H. says

I think you're referring to those who OVERBORROWED. There's lotsa wealthy immigrant elites who paid cash or made very large down payments. They may have overpaid but they did not OVERBORROW. Their "cost" is only their property tax, and besides they can always get more cash from "back home".

Those people are a tiny portion of the average housebuying fool.

tatupu70 says

Rew says

Trulia shows meidan home-price for SJ as 600K and SJ has been reported as having the highest median income in the nation, 77K plus.

I think we need to be careful--the median household isn't really buying the median home. There are 35% of the people renting, mostly in apartments.

So 65% have a house ... ok.

What is the median household income buying then? Or are you saying they are all renting? Is that likely, even with your 35% are renting number?

I agree, it isn't straight median income that is purchasing homes, it is those making over that ... but it looks comfortably within their reach.

I thought the Japanese bought everything in the US in the late 70's/early 80's?

Moderate Infidel says

I thought the Japanese bought everything in the US in the late 70's/early 80's?

I didn't say that. Their rich didn't send a tsunami of their kids here for grad school + H1. That's the difference.

Moderate Infidel says

Those people are a tiny portion of the average housebuying fool.

Agreed.

But in The Fortress, they are the average buyer.

Rew says

What is the median household income buying then?

I don't know, but it's almost certainly higher than the quoted median income. So, to really look at income/house price, you need to understand that using median income is not really accurate. Especially as disparity grows.

Rew says

o 65% have a house ... ok.

What is the median household income buying then? Or are you saying they are all renting? Is that likely, even with your 35% are renting number?

I agree, it isn't straight median income that is purchasing homes, it is those making over that ... but it looks comfortably within their reach.

65% are home owners.

More than half of existing homeowners may not be able to afford to buying their own home today! Their payments and tax bills are much lower because they bought the house a long time ago (either low monthly payment to begin with or refied to low payment) or have have paid off already or inherited the house.

Reality says

More than half of existing homeowners may not be able to afford to buying their own home today! Their payments and tax bills are much lower because they bought the house a long time ago (either low monthly payment to begin with or refied to low payment) or have have paid off already or inherited the house.

That's true for my family and for everyone on my culdesac. Silly-Con Valley is only for the rich to buy into nowadays. God bless'em paying those super high assessments to subsidize local government for the rest of us.

Reality says

More than half of existing homeowners may not be able to afford to buying their own home today! Their payments and tax bills are much lower because they bought the house a long time ago (either low monthly payment to begin with or refied to low payment) or have have paid off already or inherited the house.

This is a huge point. Many people bought when SJ wasn't a big deal, or when their neighbourhoods were like living in Gilroy or Tracy, but today they're front and center.

The people buying now, have the high levels of income necessary to buy there. The 77K average income is pretty high, but if you remove the 35% who are renting, I bet that shoots up. If you remove the people who have lived there 20+ years, the income probably shoots up even further.

B.A.C.A.H. says

Those people are a tiny portion of the average housebuying fool.

Agreed.

But in The Fortress, they are the average buyer.

I live in the Fortress, and while most of my neighbors are immigrants, they came through the "traditional" path; come as a student, work in high tech, save money, then buy a house. Just because someone speaks a foreign language or is named Wong doesn't mean they have access to unlimited commie dragon gold. There's many wealthy immigrants, but most made their money here.

Yes, there are more Asian buyers with foreign-earned cash nowadays than 10 years ago, but it's not the majority.

SiO2 says

I live in the Fortress, and while most of my neighbors are immigrants, they
came through the "traditional" path; come as a student, work in high tech, save
money, then buy a house. Just because someone speaks a foreign language or is
named Wong doesn't mean they have access to unlimited commie dragon gold.
There's many wealthy immigrants, but most made their money here.

Yes, there are more Asian buyers with foreign-earned cash nowadays than 10
years ago, but it's not the majority.

This demographic is also very diligent and skilled in saving money. They don't blow all their cash at the mall every weekend to stimulate the economy aka transfer their money to the 1%.

pkennedy says

Reality says

More than half of existing homeowners may not be able to afford to buying their own home today! Their payments and tax bills are much lower because they bought the house a long time ago (either low monthly payment to begin with or refied to low payment) or have have paid off already or inherited the house.

This is a huge point. Many people bought when SJ wasn't a big deal, or when their neighbourhoods were like living in Gilroy or Tracy, but today they're front and center.

The people buying now, have the high levels of income necessary to buy there. The 77K average income is pretty high, but if you remove the 35% who are renting, I bet that shoots up. If you remove the people who have lived there 20+ years, the income probably shoots up even further.

So, short summation, we are saying lots of people own their homes, they are worth a lot more than they were in the past, they make a lot of money, and can afford to buy/sell in the South Bay.

To original post : Must be #5 then!? Unless economic total disaster or Tech suddenly collapses and is replaced by ... ? ... sounds like a good bet.

# 5 Drink the Cool-Aid!

dublin hillz says

SiO2 says

I live in the Fortress, and while most of my neighbors are immigrants, they

came through the "traditional" path; come as a student, work in high tech, save

money, then buy a house. Just because someone speaks a foreign language or is

named Wong doesn't mean they have access to unlimited commie dragon gold.

There's many wealthy immigrants, but most made their money here.

Yes, there are more Asian buyers with foreign-earned cash nowadays than 10

years ago, but it's not the majority.

This demographic is also very diligent and skilled in saving money. They don't blow all their cash at the mall every weekend to stimulate the economy aka transfer their money to the 1%.

No, they transfer it to the 0.1% who run the banks.

SiO2 says

I live in the Fortress, and while most of my neighbors are immigrants, they came through the "traditional" path; come as a student, work in high tech, save money, then buy a house. Just because someone speaks a foreign language or is named Wong doesn't mean they have access to unlimited commie dragon gold. There's many wealthy immigrants, but most made their money here.

how are they any different from other past silicon valley worker bees... so why didnt the former worker bees who did all the heavy lifting make more...

did these people make the CPU run from 8mhz to 3 Gigh or expand Storage space from 10 megbytes to 2 Terabytes... evolve software from DOS to what it is today...the list goes on.. and on...

Nada... not even close! so in fact they are overpaid in their projects and product innovation. Seems to me many are just collecting a pay check.

Rew says

Must be #5 then!? Unless economic total disaster or Tech suddenly collapses and is replaced by ... ? ... sounds like a good bet.

And thats what pushed prices down from late 80s to mid 90s. Japanese entered
the Tech business/industries and dumped products on US/Global markets way
below their cost to produce. All hell broke lose and shit hit the fan for manufacturing.

And Product Dumping below cost happens still everyday.

Remember when Netscape went bust when Microsoft gave Web Browsers for free.

thomaswong.1986 says

Rew says

Must be #5 then!? Unless economic total disaster or Tech suddenly collapses and is replaced by ... ? ... sounds like a good bet.

And thats what pushed prices down from late 80s to mid 90s. Japanese entered

the Tech business/industries and dumped products on US/Global markets way

below their cost to produce. All hell broke lose and shit hit the fan for manufacturing.

And Product Dumping below cost happens still everyday.

Remember when Netscape went bust when Microsoft gave Web Browsers for free.

I remember the dot com bubble, sure, but that wasn't due to competition. Sony didn't make low cost goods and it ruled that era. They were the premium, and they rated it, with best products.

You think tech will crash, trend down, because knockoffs will flood the market taking out Goog, Sam, and Apple? I've watched tons of cheap tablets and media players sell in insignificant numbers and not impact things at all over the past couple years. Cheap is cheap and you get what you pay for. I don't see it having an impact.

The big US corps. aren't actually too focused right now in the US. The markets they want are the emerging market spaces. (India, china, Latin America, eastern Europe) The knockoffs and cheap goods rule in volume there, but the demographics are changing, and as soon as the better products take hold, they are brand sticky.

I'd like to see a knock off with integrated cloud, store, or automotive integration hit the market. Hint: cannot happen. That takes an integrated and costly service or 3rd party partnership to happen. The knock offs won't touch the leading edge at all. Cheap HD TVs, etc etc ... sure ... but any of the new innovation, even if the Chinese manage to patent troll/steal won't be able to copy what is being done.

I think the effect will be negligible. Tech probably isn't going to be as lustrous as say energy or maybe bio/pharm ... but it looks like it will hold. The complex products of today take huge coordinated effort to produce. Unlikely a few factory theft and grey market manufacturers will compete at all.

Rew says

You think tech will crash, trend down, because knockoffs will flood the market taking out Goog, Sam, and Apple?
...
I'd like to see a knock off with integrated cloud, store, or automotive integration hit the market. Hint: cannot happen.

...I think the effect will be negligible. Tech probably isn't going to be as lustrous as say energy or maybe bio/pharm ... but it looks like it will hold. The complex products of today take huge coordinated effort to produce.

Thomas, you are old and jaded and you just don't get it.
It's different here.
It's different this time..

thomaswong.1986 says

Nada... not even close! so in fact they are overpaid in their projects and product innovation. Seems to me many are just collecting a pay check.

Well, they don't spend all day posting on patrick.net.

Just like Xenogear, Wong is a last name.
He will not change it even he was born in US.

FunnyBayAreaBuyer says

What would you recommend me?

1) Wait for a 5% decrease in good school districts, then buy

2) Wait for a 10% decrease in good school districts, then buy

3) Wait for a 25% decrease in good school districts, then buy

4) Wait for a 30% decrease in good school districts, then buy

5) Close your eyes, take a deep breath, and just buy! now! overbid everyone!!

Obviously it depends (a lot) on your situation and why you are buying. If it is for investment purposes primarily, you have to evaluate your plan with some assumptions about the future. If you are going to live there, and owning a house is important for whatever non-investment reason, you have to evaluate against that.

Interest rates aren't as important if you are going to flip it in a market that is going up, but overpaying could be a big deal....if you hold it for 20 years, a 1% interest rate change might be more important than a seemingly significant price swing...etc

For me it was a mix -- I wasn't necessarily looking for an investment but I didn't want to make a bad financial decision. I had to find a place that "worked" for my family, and the requirements (price, school district) we had drastically limited the inventory that was available to us. I did *not* want to pay for someone else's flip -- I don't mind paying their profit on the job, but they typically make decisions that I wouldn't make....why pay for that? Also I enjoy projects, so a house that needed some work was a plus in that way.

In the end we feel fortunate to have found a place that was within our budget, in the school district we are currently in, and hadn't been ruined by a flipper....It wasn't ideal in every way, but we are thrilled with it. In hindsight we almost missed out -- we were too timid, underbid the market, and only by some luck were able to secure the deal. I fretted and obsessed about interest rates, prices, trends, owner's equivalent rent, tax deductions, opportunity costs etc....I should have focused more on the emotional stress that we were enduring by being in house limbo for so long (committing to renting long term would have been an OK option too...it was the uncertainty that was a problem)

If I had it to do over? I'd worry less about the financial side (still being prudent, of course) and more about finding the right house. I'd be more aware of the emotional cost of being in limbo, and I would put more weight on acting sooner rather than waiting for some possible price drop in the future.

E-man says

Apparently someone missed the boat

I guess I did miss the boat since I was 15 in early 2009 and currently live in North Carolina. You are so wise and don't at all sound like a pompous douchebag when you make forced assumptions about someone.

CameronCrazy says

You are so wise and don't at all sound like a pompous douchebag

Welcome to The Bay Area, Cool And Hip.
That's why we're better than you / smarter than you. Because we are Bay Areans, Cool And Hip.

CameronCrazy says

E-man says

Apparently someone missed the boat

I guess I did miss the boat since I was 15 in early 2009 and currently live in North Carolina. You are so wise and don't at all sound like a pompous douchebag when you make forced assumptions about someone.

So, why are you commenting on the Bay Area housing market?

JFP says

So, why are you commenting on the Bay Area housing market?

Same reason why I read worldwide news. To be informed. But I didn't know you had to live in an area to pay attention to the news there. If only you spread your genius sooner then I wouldn't have wasted my time reading about the Zimmerman trial since I don't live in Florida.

CameronCrazy says

If only you spread your genius sooner then I wouldn't have wasted my time

You got that right sista!
The Bay Area (Cool and Hip) has the highest concentration of patent holders and Smarty-Pants geniuses in the world!

B.A.C.A.H. says

Rew says

You think tech will crash, trend down, because knockoffs will flood the market taking out Goog, Sam, and Apple?

...

I'd like to see a knock off with integrated cloud, store, or automotive integration hit the market. Hint: cannot happen.

...I think the effect will be negligible. Tech probably isn't going to be as lustrous as say energy or maybe bio/pharm ... but it looks like it will hold. The complex products of today take huge coordinated effort to produce.

Thomas, you are old and jaded and you just don't get it.

It's different here.

It's different this time..

It comes and goes in cycles. Are you going to be so scared your whole life of that, that you stay out of the water, or are you going to finally jump in and catch a wave.

(This is CA after all. We all surf, right?)

Rew, thomas just doesn't get it.

B.A.C.A.H. says

CameronCrazy says

If only you spread your genius sooner then I wouldn't have wasted my time

You got that right sista!

The Bay Area (Cool and Hip) has the highest concentration of patent holders and Smarty-Pants geniuses in the world!

The bay area has the smartest people in the world!!!:

1) In Y2K they thought that companies with losses would keep seeing theirs stocks rise!!. And they were fighting for buying stocks at 1000s times earnings (and most times, negative P/E!).
2) In 2006, some of them bought in east palo alto!!!! Thinking that east palo alto was the next palo alto :-)
3) In 1991 same thing happened. The only difference is ... i bet you, nobody remembers. Or better, nobody wants to remember :-).

Nothing personal, just to add to the discussion.

I guess a good question would be: Is the bay area about to make an all time high in house prices???

Again, just to add to the discussion folks. I do not know what's gonna happen. You home owners in the bay area: this is your time to explain that your houses will keep rising in price. (and to add a bit more spice: explain how is that gonna happen although they are 40+ years old and although most of your neighbors, while sitting in a $1M asset, do not have money to build a new house)

(btw, I would not be surprised if palo alto and other cities double in price in the next 5 years. But it would be interesting to see what you guys think the reasons behind it would be)

B.A.C.A.H. says

Thomas, you are old and jaded and you just don't get it.

It's different here.

It's different this time..

Perhaps.. but it different for all the wrong reasons.

FunnyBayAreaBuyer says

The bay area has the smartest people in the world!!!:

It seems only the media believes this.. but its not true if you been in the trenches..
we might have a few brilliant people here and there.. but certainly not many.

We certainly could argue in past decades we had smarter people real engineers working in Semiconductor, Storage, Telecom vs what they call Engineers (programmers ) today for advertising companies.. Google- Face Book- Pandora..

As such i cant see anyone justify such comments.. It all stinks..
Your 1-3 above are all good points...

Reasons would be: stampede out of Communist China. Kinda like, on a much smaller scale, stampede outta Iran to the L.A. area in the late 1970's. Nowdays, grad school and h-1 programs gives them an outlet through their kids.

Instability and stampede outta Communist China will like cause sympathetic stampede outta Taiwan and Hong Kong too.

That's why, in The Fortress, it is different this time.

FunnyBayAreaBuyer says

Nothing personal, just to add to the discussion.

I guess a good question would be: Is the bay area about to make an all time high in house prices???

Ask the Job providers...

http://www.sfgate.com/business/ontherecord/article/ON-THE-RECORD-CARL-GUARDINO-2574540.php#ixzz1v6EFUJaI

You mentioned housing. It probably is the top concern we hear about in Silicon Valley from both CEOs and employees in terms of local issues. Does that have an impact? Let me put a finer point on it.

Hewlett-Packard and Dell are the top two computer-makers in the world. Corporate headquarters for HP are located in Palo Alto and Dell is in Round Rock, Texas. Obviously, they both have people and facilities around the globe.

In those two communities where their corporate headquarters are and where a lot of research and development takes place, the median resale price for a home in Palo Alto is about $1.6 million. In Round Rock, Texas, it's about $180,000, except the home and property are bigger.

We hear from HP all the time that a huge deterrent to the ability to recruit and retain people anywhere near Silicon Valley is the housing issue. We don't hear that from Dell, which is also a member company, about their operations in Round Rock. It does continue to plague us and we will continue to sound the alarm.

Thomas, you have recycled that tired old story so many times. It is different here, dammit, and foreigners covet Fortress communities in the Bay Area. They don't covet places in flyover land like Austin.

B.A.C.A.H. says

Thomas, you have recycled that tired old story so many times. It is different here, dammit, and foreigners covet Fortress communities in the Bay Area. They don't covet places in flyover land like Austin.

what "they" covet makes no difference. Our employers business plans dont cover what SFBA communities foreigners covet. Never had...

Its a very good article worth recycling since many dont really ask what the employer side of the equation looks likes.... and it does not favor higher home prices. ... such price inflation kills jobs.

I don't disagree with the facts on the ground that you cite. Facts are facts. But sometimes they are irrelevant. We haven't been a manufacturing powerhouse for a long time. We have morphed into a bedroom community of the rich elites that is beyond the reach of authority from places like Shanghai and Mumbai. And that's also a fact. For every Siport Case we scrape off the office carpet, there's thousands more jockeying to live here.

B.A.C.A.H. says

The Bay Area (Cool and Hip) has the highest concentration of patent holders and Smarty-Pants geniuses in the world!

Burlington, Vermont holds the most patents due to the University of Vermont's research centers.

You may want to reconsider the concept of "good school district" when said districts will now be packed with mainland Chinese whose kids won't be the best companions for yours. They'll be extremely cliquish, clannish, interested in all things Chinese, and disinterested in socializing
Outside their ethnic/language sphere. Their tiger moms and dads will be annoying as all hell in every school function. And forget about your kids winning any scholastic awards. The first 30 Chinese kids with 4.99 GPA will split those.

That's not "good" in my book. Perhaps find an area not so favored by the sino-tsunami and save some cash on the purchase. If the schools totally suck at some point, send the kids to private schools, which may still be cheaper.