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Explain prices in cities like Cupertino
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2012 Feb 6, 1:33am 92,547 views 309 comments
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its not the schools are great but wealthy parents who pay for after school classes and test preparation...
"Wealthy' parents plan long ahead and send their kids to Bellermine, Presentation, and other private schools. If you compare costs they are actual savings buying elsewhere and sending your kids to private schools like Bell. But its a herd buying mentality based on gossip and not long standing facts...
Nice try Thomas, Apple stock is at $500, what's Dell stock at? The googlers I know are panicking about the facebook IPO and trying to buy now
As we have found out.. Apple did not hand out stock to employees.. You forget Steve Jobs hates money and dislikes the notion how people behavior changes. A leasson learned from the 80s.
page 15..."The Company did not grant any stock options during the three months ended December 31, 2011 and December 25, 2010"
The googlers I know are panicking about the facebook IPO and trying to buy now.
Buy what ? and from who ? .. hasnt been priced or issued yet.
Im sure the SEC would be interested..
People come to SV thinking 1996-2000 was the norm in prior years and after 2000.. I got news.. that era is over! Unless you want to commit securities fraud. Im sure the SEC would be interested as well..
tatupu70
2012 Feb 23, 4:52am
Over the long run, RE prices, adjusted for inflation, remain flat.
Tell that to folks living in Detroit.
tatupu70
2012 Feb 23, 4:54am
If you compare costs they are actual savings buying elsewhere and sending your kids to private schools like Bell. But its a herd buying mentality based on gossip and not long standing facts...
Actually, that is not true. Others have pointed this out to you numerous times, but you choose to ignore them. That is fine, but at least stop repeating the BS.
tatupu70
2012 Feb 23, 4:54am
Buy what ? and from who ? .. hasnt been priced or issued yet.
Im sure the SEC would be interested..
People come to SV thinking 1996-2000 was the norm in prior years and after 2000.. I got news.. that era is over! Unless you want to commit securities fraud. Im sure the SEC would be interested as well..
I'm guessing he meant buy a house now before all the FB millionaires spend their IPO money.
Tell that to folks living in Detroit.
see chart...and data points
tatupu70
2012 Feb 23, 4:56am
Tell that to folks living in Detroit.
see chart...and data points
So Detriot is severely undervalued right now, right?
Actually, that is not true. Others have pointed this out to you numerous times, but you choose to ignore them. That is fine, but at least stop repeating the BS.
The tuition fees are published on their websites. Any reasonable person can make the judgement call on buying in parts of Santa Clara County compared to Cupertino and see the difference.
How much in Cupertino,
Less Private schools costs
Less Other SCC prices
equals
Excess bubble prices your paying living in Cup
... and its certainly pretty large.
do the math...
tatupu70
2012 Feb 23, 5:02am
do the math...
Done. It's pretty simple to figure out that it's cheaper to buy in a good school district than to go to private school.
So Detriot is severely undervalued right now, right?
good time to buy if your interested...
Las Vegas, Arizona
http://www.housingbubblebust.com/OFHEO/Major/SouthWest.html
Miami
tatupu70
2012 Feb 23, 5:04am
good time to buy if your interested...
I'm not, because I don't think it's undervalued. I don't think every city will track inflation over long time periods. I don't try to apply macro theories to micro environments.
Done. It's pretty simple to figure out that it's cheaper to buy in a good school district than to go to private school.
You can buy a shack for $1M in Cup or get a real home in other parts of SCC.
http://www.redfin.com/CA/San-Jose/2118-Shiangzone-Ct-95121/home/972348
http://www.redfin.com/CA/San-Jose/1603-Rangewood-Pl-95138/home/700132
Fact is you can knock off $100-200K and that pays more than enough for tuition Bell fees several times over.
I'm not, because I don't think it's undervalued. I don't think every city will track inflation over long time periods. I don't try to apply macro theories to micro environments.
So the basis of Robert Shillers studies are all wrong ?
So why did Silicon valley back in the early 90s fall back to inflation adjusted line. What went wrong with the micro environment?
Someone took it in the shorts....
Property History for 1603 RANGEWOOD Pl
Date Event Price Appreciation Source
Jan 30, 2012 Pending (Pending With Release) -- -- MLSListings #1
Jan 18, 2012 Listed (Active) $919,900 -- MLSListings #1
Sep 20, 2011 Sold foreclosed. $846,000 -- Public Records
Apr 20, 2006 Sold (Public Records) $1,555,000 27.8%/yr Public Records
Sep 10, 2004 Sold (Public Records) $1,048,000 -- Public Records
Goran_K
2012 Feb 23, 5:23am
I'm not, because I don't think it's undervalued. I don't think every city will track inflation over long time periods. I don't try to apply macro theories to micro environments.
So the basis of Robert Shillers studies are all wrong ?
So why did Silicon valley back in the early 90s fall back to inflation adjusted line. What went wrong with the micro environment?
The Case Shiller doesn't make sense over the long term. Does the price of a median Mahattan home from 1910 track with inflation to 2010? No it doesn't. Why?
The Case Shiller doesn't make sense over the long term. Does the price of a median Mahattan home from 1910 track with inflation to 2010? No it doesn't. Why?
see 2:55
SFace
2012 Feb 23, 5:31am
Done. It's pretty simple to figure out that it's cheaper to buy in a good school district than to go to private school.
You can buy a shack for $1M in Cup or get a real home in other parts of SCC.
http://www.redfin.com/CA/San-Jose/2118-Shiangzone-Ct-95121/home/972348
http://www.redfin.com/CA/San-Jose/1603-Rangewood-Pl-95138/home/700132
Fact is you can knock off $100-200K and that pays more than enough for tuition Bell fees several times over.
House price difference is a pass thru cost. A family buying the school premium for the school district will sell for a premium as well. That is not permanent.
What is permenent is school tuition which is probably 15K a year per child and twice that for high school. Two children and it is around 30K of after-tax permanent cost and presuming it is not private high schools. Private schools have been increasing fees around 5% annually overall.
House price difference does create permanent cost as well. Incremental interest and incremental property tax. In your example, 200K increment @4% +200K @1.25 = $10,500. That increment is tax deductable at 33% and permanent cost net of tax = 7K
$7,000 increment (buying) vs. 30K increment (private school) per year. You'll be way poorer going the private school route. It will cost you 1/2 million.
What is permenent is school tuition which is probably 15K a year per child and twice that for high school. Two children and it is around 30K of after-tax permanent cost.
Your using published private school data ($15K) and using it as public school data... "Probably" is not gonna cut it. You need to provide actual costs if they are available. Are you also including the unions defined pension plan in your figures ?
SFace
2012 Feb 23, 5:42am
Your using published private school data ($15K) and using it as public school data... "Probably" is not gonna cut it. You need to provide actual costs if they are available. Are you also including the unions defined pension plan in your figures ?
This is not the court of Thomas Wong or an audit so get over it. I have school age kids so am well aware how much it costs. Take it for what its worth.
House price difference does create permanent cost as well. Incremental interest and incremental property tax. In your example, 200K increment @4% +200K @1.25 = $10,500. That increment is tax deductable at 33% and permanent cost net of tax = 7K
$7,000 increment (buying) vs. 30K increment (private school) per year. You'll be way poorer going the private school route. It will cost you 1/2 million.
So what your saying is .. over the long run... Private schools in the South Bay like Bellermine, Presentation and others have bankrupted rich well to do families.. WOW! not what is really rich!
This is not the court of Thomas Wong or an audit so get over it. I have school age kids so am well aware how much it costs. Take it for what its worth
Bullshit... your pulling numbers out of your ass.. Yes it is an audit...and you have a vested interest.
Ok, lets look this way, $1,000.000 house in Cupertino, 20% down ($200,000), M+Taxes about $5,000
$750,000 in other part of Bay Area, 20% down ($150,000), M+Taxes about $3,700 per month
The diference is $1,300 per months, what kind of private school you get for this money especially if you have more than one child?
To make it simple I didn't include in this calculation tax benefits and paying of principle instead of giving the money to the private school.
Goran_K
2012 Feb 23, 6:51am
That's not Cupertino.
Compare it to what you get in Cupertino for same amount.
Compare that to what you would get for that price in Plano, Texas. Could it be that location matters to some people?
Also your video did nothing to answer why homes in Manhattan from 1910, or 1920, or even 1930 to 2010 didn't track with inflation.
Here's an actual paper that found that in 1930 the median home price in Manhattan was $30,000.
http://people.hbs.edu/tnicholas/Anna_tom.pdf
Using the BLS inflation curve, that gives us an inflation adjusted price of $407,000 in 2012 dollars. Is that the current median price in Manhattan?
Nope, and that's why the Case Shiller cannot be used in every situation because it's a macro approach to a micro problem.
Compare that to what you would get for that price in Plano, Texas. Could it be that location matters to some people?
Cost of doing business is lower in Texas... no wonder my former employers AMD has more people there.. Intel has more people in Folsom and Oregon than Santa Clara. That being said, why didnt home prices skyrocket in the 70-80-early 90s to the same degree.
But lets hear it from the leadership group...who pony up the salaries. So why are they alarmed ?
Q: So are those really challenges?
A: Unequivocally, yes. Not only to the CEOs in the boardroom, but to any family you talk to in their living room. What we hear time after time from CEOs as well as frontline employees is how incredibly difficult it is to come here and stay here. That truly does have an impact on a company's bottom line when the cost differential is so much higher here than it is in other regions around the state, nation and globe, or the ability to recruit top talent is also impacted.
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.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/13/BUG91PO3US1.DTL&ao=all#ixzz1nFUsSVxD
Also your video did nothing to answer why homes in Manhattan from 1910, or 1920, or even 1930 to 2010 didn't track with inflation.
Here's an actual paper that found that in 1930 the median home price in Manhattan was $30,000.
http://people.hbs.edu/tnicholas/Anna_tom.pdf
Using the BLS inflation curve, that gives us an inflation adjusted price of $407,000 in 2012 dollars. Is that the current median price in Manhattan?
Nope, and that's why the Case Shiller cannot be used in every situation because it's a macro approach to a micro problem.
Macro ? Shiller already looks at individual markets. And as such has presented his data.. agree/disagree is your choice.
The last 30 years of data is pretty sufficient to show his conclusion.
Goran_K
2012 Feb 23, 7:21am
So the CS is only good if you go back to 1987?
I don't know about you, but it seems to me people were buying and purchasing houses for a lot longer than that.
So the CS is only good if you go back to 1987?
Suggest you contact Shiller on that point or read his book which provides the data.
http://www.econ.yale.edu/~shiller/
I don't know about you, but it seems to me people were buying and purchasing houses for a lot longer than that.
So what happened to the people back in So Cal between 1989 to early 90s.. why did so many leave ?
Why is in-out migration in CA about the same over the past 10 years ?
It must be incredible to have written some of the papers Shiller/Case wrote from 1988-1995. If you read some of these you'll see that they've been considering historical data back to 1890 for some of the studies.
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.
I see that recent HPQ news has once again raised the issue of cutting up HP and selling it off. Clearly these inflated expectations of high home prices in South Bay cannot last long. It has only destroyed our best companies and industries we once had for decades.
tatupu70
2012 Feb 23, 7:59am
Macro ? Shiller already looks at individual markets. And as such has presented his data.. agree/disagree is your choice.
I think you'd agree that individual neighborhoods won't track inflation. Nice areas in 1950 might be ghettos now.
Similarly, cities that have experienced large job losses (Detroit) will lag inflation, whereas areas that have had large increases in high paying jobs (BA?) will beat inflation.
tatupu70
2012 Feb 23, 8:01am
So what your saying is .. over the long run... Private schools in the South Bay like Bellermine, Presentation and others have bankrupted rich well to do families.. WOW! not what is really rich!
Funny, I don't recall the word bankrupt in any of his posts.
Wong--get over it. Home costs are a pass through. Private schooling is not. That should end the argument.
Goran_K
2012 Feb 23, 8:04am
Suggest you contact Shiller on that point or read his book which provides the data.
That's fine and dandy, but you're the one using his research as the crux of your argument that homes are supposed to fall back to an inflation adjusted line. People bought homes a long time before 1987, and that's why your point fails for Manhattan (and many other cities as well).
People bought homes a long time before 1987, and that's why your point fails for Manhattan (and many other cities as well).
You havent looked at the video, or Shillers comments regarding NY and compounding annual increases. Eventually you will have correction. Many salaries as in the case of SV are tied to inflation index. Fact is even in SoCal (Irvine) prices fell to to their long term mean... As shiller points out, buyers expections of 25-50% appreciation was unrealistic.
Wong--get over it. Home costs are a pass through. Private schooling is not. That should end the argument.
How do you pass through a foreclosure or a complete loss on your sale of a residence ? Pass through sounds like a ponzi scheme for the next sucker.
tatupu70
2012 Feb 23, 9:26am
How do you pass through a foreclosure or a complete loss on your sale of a residence ? Pass through sounds like a ponzi scheme for the next sucker.
Well, the average family could lose $300K on the sale and still come out ahead....
I think you'd agree that individual neighborhoods won't track inflation. Nice areas in 1950 might be ghettos now.
Similarly, cities that have experienced large job losses (Detroit) will lag inflation, whereas areas that have had large increases in high paying jobs (BA?) will beat inflation.
So why didnt prices skyrocket in the 1970-late 80s in SV ?
and more important why did they fall in the mid 90s back to the inflation line like every other city in the USA ?
At least I would agree that prices should of skrocketed during the the 1970-1990, we certainly had more employers, more income, greater economic growth and everyone had a tech job.. we had over 300 public companies and then 400 by year 2000, yet today we down to 200 and shrinking ... local employment and income has shrunk.. more tech positions shiped elsewhere due to high SV housing costs...
where will this magical money come from ?
CHINA! Inflated Facebook Stock ? Give me break...
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According to Redfin, Cupertino's median sold price has actually gone up since 2010, unlike other cities.
I'm guessing low inventory, lots of foreign (asian) buyers, and prime location have skewed the pricing here.
I work with people who have lived in Hong Kong, Taiwan, Singapore, and Shanghai, and they say that the prices here are actually cheap for what you get compared to asia.
I don't see places like this ever correcting to before the bubble pricing nominally.