patrick.net

Buying is only for the Peninsulars.

Well there's always East Palo Alto for the advenurous.

Also some very nice places up in the Santa Cruz mountains. I used to work with someone who did that. His commute to Palo Alto wasn't so much longer than mine from South San Jose. Prettier too.

silicon valley/peninsula is full of techies/optimistic/irrational people, who thinks, every start up will become the next google and prices of homes always goes up in palo alto. VCs pour money into the area, ceo/execs drive up prices, foreign buyers are naive, so they buy at any price - all cash too. i hope the market crash again and tech bubble 2.0 crashes along with it, so prices will correct and people will start thinking rationally again.

New renter says

Well there's always East Palo Alto for the advenurous.

I thought East Palo Alto was an exclave of Detroit.

dcllee says

VCs pour money into the area, ceo/execs drive up prices,

I have a few friends in start-up land, one who was recently offered capital for a project. He was quoting some stats on how VC funding has dramatically dropped in the area in the past 5 years. I am not sure it is as liquid as it used to be.

Patrick,

I have had the same question (again) in Pacifica. Some prices have dropped 20% or so from the peak. It still seems way to expensive for these crappy little elevated ranchers. Last time I asked you, you said you thought Pacifica was still overpriced and sticky on the way down. Would you say that assessment continues to be accurate today?

BG

I am blessed to have a great tenant in my rental unit. He's a real estate agent and knows the market here, He says we are having a glitch up and prices will drop as we move toward end of year. Hold your money for now!

Stay away and hoard your savings. Our time will come.

Painful,but true.

Stay away and hoard your savings. Our time will come.

This is the fallacy which will result in most people here missing their opportunity. "Your time" will be individual for each of you, because you each have different situations, drivers, needs and values.

If you think some divine signal will sound out and the angels will trumpet their horns so the bubble-faithful can come riding in on sacred elephants to the front of their pristine home, you've got another thing coming.

For some, the proverbial bottom has come and gone. For others it is yet to appear. For many, sadly, it is never to be because they are paralyzed with bias that prevents them from doing their own economic value equation.

"Do your Math". The emphasis is on "your" because everyone has variables in their equation, and those variables are what make RE a market instead of a giant Costco full of commodity pricing.

Peter P says

New renter says

Well there's always East Palo Alto for the advenurous.

I thought East Palo Alto was an exclave of Detroit.

Pretty much but with better weather. East Palo Alto contrasts strongly with Palo Alto right across the freeway. For the adventurous East Palo Alto may offer a bargain. That is provided the bargain seeker dosen't mind the occasional stray bullet and home invasion weekends.

New renter says

Peter P says

New renter says

Well there's always East Palo Alto for the advenurous.

I thought East Palo Alto was an exclave of Detroit.

Pretty much but with better weather. East Palo Alto contrasts strongly with Palo Alto right across the freeway. For the adventurous East Palo Alto may offer a bargain. That is provided the bargain seeker dosen't mind the occasional stray bullet and home invasion weekends.

The Ikea was built to shield stray bullets from making it to the other side of the freeway.

i am not sure how accurate realtytrac and redfin data are, but i did a simple search and in San Carlos alone, there are 112 homes in foreclosure vs. 44 homes on the mls. something is wrong with that picture.

Another possibility: Buy somewhere else. Like the East Bay or something.

New renter says

Also some very nice places up in the Santa Cruz mountains. I used to work with someone who did that. His commute to Palo Alto wasn't so much longer than mine from South San Jose. Prettier too.

I work with quite a few people who live in Santa Cruz, Scotts Valley and Capitola. Yes, their commute is roughly the same as mine but the 17 can be very nasty on a Friday night or when it's raining.

bg says

Last time I asked you, you said you thought Pacifica was still overpriced and sticky on the way down. Would you say that assessment continues to be accurate today?

Yes, IMHO.

For me, the only question is how much money I can save by renting. If I can save a ton of money by renting, I'm not going to buy.

E-man says

You should hope you'd still have a job then. What good does cheap house prices do when one doesn't have a job? :)

Yes, prices move with jobs (but even more, with lending).

You avoid the job and the lending problem if you have saved a giant pile of cash by renting and waiting.

Randy H says

"Do your Math". The emphasis is on "your" because everyone has variables in their equation, and those variables are what make RE a market instead of a giant Costco full of commodity pricing.

In other words, "irrational exuberance." The math is always the same. What is your income? What is your net worth? Now what do you want to spend? If your answer to the last question equals the answer to the second, watch out!
I think the amount people spend on houses is an abstract number which they ignore to be in the game.

I agree with patrick, saving more by renting is a great thing. But will we ever see houses in $400k range for 4bd/3ba is a decent neighborhood, if and when interest rate go through the roof (13%+)?

We have been looking at houses, half-heatedly (given we are too lazy to get pre-approved yet). Recently, I came across a house in San Mateo, nice view, cul-de-sac, close to crystal spring and 280 (kind of checked all my dream list) and it is asking for 899K. After taking a look at the house, one realtor said the house had foundation and termite problems, maybe you could knock off 100K as it costs around that to fix. But, the truth, we would need to completely demolish the house if we want a decent life style, so the question is really whether if you want to pay 799k for a piece land + additional 500-600k for rebuild. Move-in-ready remodeled house in peninsular would be close to 1.3M, but still with ugly facade, buying a piece of junk and rebuild, will not be any cheaper. Unless, ones are using bay area move-in ready standard (even a couple of decades backward compared to my home country-third world), maybe, 800k-1M ..... Of course, there is an East Bay,if only they will extend the BART from Fremont to Santa Clara NOW! Or drop a couple of nice to have criteria from my list, but given what we have to pay so much, why should we?! So, I would just be contented as a renter.....

dcllee says

New renter says

Peter P says

New renter says

Well there's always East Palo Alto for the advenurous.

I thought East Palo Alto was an exclave of Detroit.

Pretty much but with better weather. East Palo Alto contrasts strongly with Palo Alto right across the freeway. For the adventurous East Palo Alto may offer a bargain. That is provided the bargain seeker dosen't mind the occasional stray bullet and home invasion weekends.

The Ikea was built to shield stray bullets from making it to the other side of the freeway.

That does explain a lot, thank you!

rootvg says

New renter says

Also some very nice places up in the Santa Cruz mountains. I used to work with someone who did that. His commute to Palo Alto wasn't so much longer than mine from South San Jose. Prettier too.

I work with quite a few people who live in Santa Cruz, Scotts Valley and Capitola. Yes, their commute is roughly the same as mine but the 17 can be very nasty on a Friday night or when it's raining.

True but there are also Boulder Creek, La Honda, Half Moon Bay and the Los Gatos Mountains

I'm not saying its for every one but it is a good option for some. If you do go that route I'd recommend a car with AWD for the winter commute.

SparrowBell says

Recently, I came across a house in San Mateo, nice view, cul-de-sac, close to crystal spring and 280 (kind of checked all my dream list) and it is asking for 899K. After taking a look at the house, one realtor said the house had foundation and termite problems, maybe you could knock off 100K as it costs around that to fix. But, the truth, we would need to completely demolish the house if we want a decent life style, so the question is really whether if you want to pay 799k for a piece land + additional 500-600k for rebuild. Move-in-ready remodeled house in peninsular would be close to 1.3M, but still with ugly facade, buying a piece of junk and rebuild, will not be any cheaper. Unless, ones are using bay area move-in ready standard (even a couple of decades backward compared to my home country-third world), maybe, 800k-1M .....

I just went through this myself. The nice thing about a tear down and rebuild is you'll get a chance to completely redo the house the way YOU want, at least as much as your timeline, budget and the city will allow. I'd advise you to keep the foundation as similar to its current plan if possible, also keep the wood burning fireplace, you won't get to put in another one like it.

Start by living in the house a while if you can. Get to know the current design's strengths and weaknesses. Take measurements and make a computer simulation of the house in a CAD program. Even better get a pro to do it for you but understand how they did it. I like Better Home and Gardens Home Designer. Its reasonably priced but powerful enough to cover most of the necessities like a virtual walk through of the house. Once you understand the program you can start making changes to it.

In my experience the CAD mockup was critical. I can't tell you how many ideas I had that looked fine in 2D that were ludicrous in 3D. Get your plan well thought out BEFORE you talk to a builder. Change orders are REALLY expensive!

Also go tour new custom home developments. See what current trends in home building are. 9ft ceilings are one. coffered ceilings another. Skylights, whole house fans, french doors, >4/12 roofs, fully insulated interior walls, the list goes on. Its cheap to include these in the beginning, MUCH more expensive later.

Good luck

Peter P says

I thought East Palo Alto was an exclave of Detroit.

The entire silicon valley is an exclave of Detroit, only with a 20 year shift in time.

dunnross says

The entire silicon valley is an exclave of Detroit, only with a 20 year shift in time.

I thought Larry Ellison said the same thing. I will not be surprised if this becomes true.

dunnross says

Peter P says

I thought East Palo Alto was an exclave of Detroit.

The entire silicon valley is an exclave of Detroit, only with a 20 year shift in time.

Having been to Detroit I can tell you no, the entire BA does not fit that model. Pockets of it maybe.

The tragedy of Detroit is one of scale. There are blocks upon blocks of destroyed houses that were once beautiful. Same with commercial areas. Oakland is probably the closest we have but it is still nowhere the scale of Detroit

For me, the only question is how much money I can save by renting. If I can save a ton of money by renting, I'm not going to buy.

Min. monthly cost to live in the size of a bay area kitchen cabinet is about $2400.
A couple friends of mine who recently came out of the closet moved to the bay area only to climb back in.

many on this site say big inflation is coming. If so, why would you want to hoard your savings?

If I thought massive inflation were coming, I'd take out the biggest loan I could.

these house prices *might* be justified if big inflation is coming. (I don't think inflation is coming)

Yeah, I don't think inflation is coming. We need demand to stoke inflation and we have an excess of everything-except good paying jobs .

of course we could always end up like Zimbabwe, where a loaf of bread costs a gazillion dollars.