patrick.net

And just what will happen when interest rates start returning to historical norms? Or.. do Bay Area realtors tell you interest rates will drop for next 30 years....

Realtors are more crooked than lawyers.

dunnross says

Advertising is a derivative business, and will never generate as much revenue as selling directly to the consumer. In a recession, advertising budget is the first thing companies cut.

100% correct, you certainly dont cut your assets that turn over into revenue (sales).

dunnross says

flat says

I was just pointing out that based on the current tech climate, I wouldn't hold your breath for it.

All the bulls just keep repeating the same mantra about how attractive PA is, and how desirable it is, but nobody would dare to answer my question: How did PA become 5 times more desirable relative to another desirable city like Walnut Creek, in just 6 short years?

I would say that it is actually pretty rational to be willing to pay a significant premium on living close to where you work. If you save 30 min each way on your commute that's an hour of your life every day, what is more important that that?

So if lots of well paid people live in the same area we would expect that rather rationally the price of housing to go up. Even if it is expensive, it is worth it to them.

The risk they have to face when they *buy* a house (as opposed to rent) is what if the demographics change over time...

drtor says

I would say that it is actually pretty rational to be willing to pay a significant premium on living close to where you work. If you save 30 min each way on your commute that's an hour of your life every day, what is more important that that?

So if lots of well paid people live in the same area we would expect that rather rationally the price of housing to go up. Even if it is expensive, it is worth it to them.

Yup. This is exactly why I spend probably ~$200 more per month to rent a 2BR in Mountain View* than I would in Santa Clara or San Jose. It would be cheaper elsewhere, but having a 15 minute walk to work / 5 minute bike ride to work is worth at least $100 a month in gas, maybe the equivalent of $40 a month in tires and maintenance, and then there's the value of my time. I used to commute from Cambrian to MV, and if I worked 7AM - 4PM it was tolerable (25 mins in the morning, 30-50 mins in the afternoon).

Honestly though, I really have a hard time thinking about having 5-7 hours less free time per week. I have tons of hobbies and I love having zero dependence on a car. Want to get drunk? 20 minute walk to Castro/CalTrain. And on top of all of that, being a big fitness nut, riding/walking has obvious benefits. I'll occasionally run to work, although it is a pain with a backpack, and I even ride my old longboard (skateboard) for kicks sometimes. If it rains, out comes the mountain bike & off I go through the mud next to the Stevens Creek trail! I last drove to work sometime in mid-January because I had a dental appointment that day.

With that said though, I would never BUY in MV. Condos/Townhouses are absolutely not options for me...why the hell would I pay more to be stuck in something about as nice as my rental? If I buy, the property must have no shared walls, a 2+ car garage/workshop and some sort of yard. In MV, the cost of that is just so far beyond reason that I can't even justify it to keep my awesome bike commute. Lots of Googlers live here, and they make a LOT of money (salary+bonus+stock incentives). Certainly, they have the means and willingness to pay for a SFH with a killer commute. I don't, but that's OK. Lots of the houses here are sort of decrepit shit-boxes, and the last thing I need is to be fixing a house every weekend.

* I looked in west Sunnyvale; hordes of unattended children roaming the streets turned me off to it. I don't want my car radio stolen, and good luck finding parking after 4PM when most neighboring units have 8 families crammed into them.

drtor says

I would say that it is actually pretty rational to be willing to pay a significant premium on living close to where you work. If you save 30 min each way on your commute that's an hour of your life every day, what is more important that that?

So, if the ratio of PA/WC increased 10 times during 6 years, is it because there are now 10 times as many people as 6 years ago, who have jobs in PA vs. WC, and don't want to commute, or is it because, they all just realized that they didn't want to commute.

dunnross says

drtor says

I would say that it is actually pretty rational to be willing to pay a significant premium on living close to where you work. If you save 30 min each way on your commute that's an hour of your life every day, what is more important that that?

So, if the ratio of PA/WC increased 10 times during 6 years, is it because there are now 10 times as many people as 6 years ago, who have jobs in PA vs. WC, and don't want to commute, or is it because, they all just realized that they didn't want to commute.

It could be enough that incomes went up significantly more in PA than in WC. And it does not have to be 10x more, price points can be sensitive when the supply is inelastic like houses. For another example check out how the Baltic Dry Index of shipping costs goes up and down like crazy when there are modest changes in demand volume.

That said, I don't claim to be an expert on PA real estate, just mentioning a general principle. Did the rents in PA go up with the houses? If yes, that would seem to indicate that it is driven by underlying supply/demand/demographics. Which does not mean it will stay that way forever but it would suggest that it will stay as long as the demographics remain the same. If on the other hand houses are expensive relative rents that would suggest they are more driven by speculation/bubble thinking.

PA real estate is hot right now with all of the natural gas drilling going on.

Oh...crap...wrong PA...

drtor says

I would say that it is actually pretty rational to be willing to pay a significant premium on living close to where you work. If you save 30 min each way on your commute that's an hour of your life every day, what is more important that that?

It goes both ways. Everyone has their own value system. I'm one of those people who drives 30 minutes each way. On the other hand we pay $1,250 for our part of the rent for a 4 bedroom house with another housemate who is seldom if ever home. So when I go home I have a big back yard, an office, my own garage, and a spare bedroom even. The neighborhood we live in is also walkable. You can walk to town if you wanted. We have nice bike lanes too. As a result of this we've saved up a lot of cash. I know for fact that a 4 bedroom house anywhere near where we work would rent for double, if not more than what we pay now. To me that's not worth it and on top of that, I don't really like the Peninsula anyway.