patrick.net

Darrell In Phoenix says

B.A.C.A.H. says

I gave up on trying to understand affordability and value in nominal price terms a few years ago. What helps me to understand things better is "how many hours does one have to work to pay for" the thing.

The only way to understand pricing is construction costs.

I was speaking more broadly than just on the housing. Even things like eggs and cars, tuition and insurance premiums, etc.

B.A.C.A.H. says

Why you wanna waste your time and joules arguing with Fools?

Amazing. Best one-liner evah!

B.A.C.A.H. says

By self-selection now, we live in a region dominated by Fools.

yes.. we are and indeed is the best one liner...

Robertoaribas,

Do you ever worry about the temperature rising too much in Arizona to the point that it becomes uninhabitable?

I believe that this last DataQuick report coincides well with a top in a stock market. Election results drove all of the selling in the stock market and will affect CA housing market similarly.

Taxes going up on high income earners:
- 1-3% California income tax
- 3% - Obamacare surcharge
- 4% Federal tax rate or equivalent cut in deductions

The only thing that can offset it is interest rates on 10 years going below 1%.

robertoaribas says

dipstick, investors rent homes out... dunnross says

So, now that we all agree that investors are not very good at sustaining house price appreciation, we can finally agree that investors are very good at sustaining rental price depreciation.

B.A.C.A.H. says

how many hours does one have to work to pay fo

And since there is no wage growth, nominal prices and hours is the same graph. What you should be looking at is the price of house in oz of gold.

treatmentreport says

I believe that this last DataQuick report coincides well with a top in a stock market. Election results drove all of the selling in the stock market and will affect CA housing market similarly.

Taxes going up on high income earners:
- 1-3% California income tax
- 3% - Obamacare surcharge
- 4% Federal tax rate or equivalent cut in deductions

The only thing that can offset it is interest rates on 10 years going below 1%.

It is always interesting to watch and see what exactly triggers corrections, be they in the stock market or housing market. This may well be one of them.. Even as prices started to decline, there was plenty of denial until late 2009.. then the shit hit the fan.

denial and fools are plenty in the Ca. ... sobriety is rare.

Tiger says

Robertoaribas,

Do you ever worry about the temperature rising too much in Arizona to the point that it becomes uninhabitable?

Eh, thats what AC is for.

It seems to me that the same groups of people have been insisting that things will just keep getting worse for at least the last 5 years or so that I've been using this site.

I bought a house 3 years ago against the advice of this forum. I borrowed $440,000 at 5.5% interest to buy a home priced at $550,000.

Last year I threw in some cash (because what the hell else was I going to invest in?) and refinanced to $417,000 at 4%, cutting my payment by 20%.

I'm now considering selling my current place to build my dream home. The house was appraised at $585k, which is more or less what the guy down the street sold his house for over the summer, and he had a smaller house that needed new carpet.

Renting an identical house here would cost more than what i'm paying for mortgage + tax, and I wouldn't be able to deduct that from my taxes.

If I had listened to all the doom-saying on this forum, I would have continued renting a place that was entirely too small and expensive for my family. While I will most likely merely break even equity wise on the place, by my estimate I've saved $30-40k over the period compared to renting.

Basically this place has just become filled with people who will insist that it is never a good time to buy housing and it's always an awful thing to spend your money on.

I'm going to go blow a million bucks on a new, custom built, modern 4000 sqft home on a huge piece of land surrounded by streams and forest.

I'll check back in 3 years and we can swap notes.

Darrell In Phoenix says

Kevin says

The house was appraised at $585k,

LMAO. Who cares what the realtors say its "worth"?

You couldn't find a buyer for a fraction of what you paid. You got suckered. Like everyone else who listed to the used house salesmen

What kind of moron bases appraisals on realtors? You must gave never bought or sold a home. You hire professional appraisers for this. No bank would accept anything else.

I have two neighbors who have sold within the last year. Both are smaller houses with worse finishes and both sold for the same range as what I'm selling for.

How have your financial decisions worked out in the last 5 years?

Kevin says

Renting an identical house here would cost more than what i'm paying for mortgage + tax, and I wouldn't be able to deduct that from my taxes.

If I had listened to all the doom-saying on this forum, I would have continued renting a place that was entirely too small and expensive for my family. While I will most likely merely break even equity wise on the place, by my estimate I've saved $30-40k over the period compared to renting.

Where do you live?

Agreed there is a fair bit of doom-saying on the forum. But I think a lot of those folks live in areas where house prices are very questionable relative to fundamentals. For example, in many cities in the core SF Bay Area. The outcome of the rent vs. buy equation varies substantially depending on the locale, so there is no right answer for everyone.

ducsingle5313 says

Where do you live?

Agreed there is a fair bit of doom-saying on the forum. But I think a lot of those folks live in areas where house prices are very questionable relative to fundamentals. For example, in many cities in the core SF Bay Area. The outcome of the rent vs. buy equation varies substantially depending on the locale, so there is no right answer for everyone.

I live in the puget sound area. Housing is expensive here, as in any coastal region, but much cheaper than, say, NYC or SF.

I used to live in the bay area. I heard all the time about how nobody could afford to buy there and thus the prices were going to come crashing down, but that never happened either. That's why I moved up here. Back in 2005 I waited. If I had waited until now the result would be that houses were 10% more expensive in the areas I wanted to live.

The Bay Area is a weird place. People are willing to spend 60%+ percent of their income on housing. I knew a guy who made less than $8k a month and had a $5k mortgage. They're all on interest-only mortgages anyway, so the drop in interest rates over the past 5 years only made housing less expensive for them.

A big part of the problem there are all the chinese and indian immigrants who are culturally pressured to buy an expensive home. They have few to no kids. They're probably making terrible decisions, but they think that's what they're supposed to do. So they go out and spend two thirds of their income on a house and never take vacations.

The only real fix for the bay area is going to be either relaxation of the ridiculous building restrictions that make the place look like one giant housing tract, or by reducing the number of high paying tech jobs.

Renting is definitely more sensible than buying in the bay area, I'll grant that. It's one of the few places where that actually holds though.

bmwman91 says

So the real answer to finding affordable housing is to:
a) Make a lot more money
b) Get the hell out of the SFBA

More and more companies are making (b) possible by moving tech jobs to other locales. Software is still growing in SV, but mostly the core project management groups with the worker bees distributed around other states and/or countries. Most of the hardware companies seem to be reducing or flatlining their SV staffing levels.

ducsingle5313 says

bmwman91 says

So the real answer to finding affordable housing is to:

a) Make a lot more money

b) Get the hell out of the SFBA

More and more companies are making (b) possible by moving tech jobs to other locales. Software is still growing in SV, but mostly the core project management groups with the worker bees distributed around other states and/or countries. Most of the hardware companies seem to be reducing or flatlining their SV staffing levels.

The problem is that most of them aren't going to the same areas, so you become a bit of a slave to that one company.

The nice aspect of living in SV is that there are dozens of companies that will hire you. You move elsewhere and demand is much lower (which means you get paid less).

I'm lucky. I started working in a SV-based company and they transferred me up to seattle without a change in pay. So I got lower house prices, better schools, lower taxes, and an overall lower cost of living. All I had to give up was sunshine :)

Kevin says

A big part of the problem there are all the chinese and indian immigrants who are culturally pressured to buy an expensive home. They have few to no kids. They're probably making terrible decisions, but they think that's what they're supposed to do. So they go out and spend two thirds of their income on a house and never take vacations.

actually it's whites who have the least amount of kids. i guess you haven't read the papers during the past few decades.

Asians are the second fastest growing group in the US behind Latinos.

i don't see a lot of Indians and Chinese being underwater and having to run away from their foreclosed homes, it's mostly blacks, Hispanics and whites.

how about they bought houses there because they worked there and could afford to buy?

Asians make the most in this country on average so why wouldn't top Asian earners be able to buy more expensive houses than the average Americans?

Kevin says

The nice aspect of living in SV is that there are dozens of companies that will hire you. You move elsewhere and demand is much lower (which means you get paid less).

yes.. this was true at one time.. but becoming more and more non-existent.

And frankly you might be locked out from going to the competition. Such practice has been very common over the decades.. especially in the Semi, PC/Workstation, software industries. Another reason many moved out to get distance from each other.

Feds sue eBay over secret anti-poaching deal with Intuit
Posted: 11/16/2012

Document: Department of Justice civil antitrust lawsuit against eBay

The U.S. Justice Department on Friday accused eBay and former CEO Meg Whitman of conspiring with Intuit executives to not poach each others' employees, adding to the list of Silicon Valley companies linked to similar antitrust allegations.

In a lawsuit filed in San Jose federal court, the federal government alleges that eBay and Intuit entered into an "illegal agreement" between 2006 and 2009 that prevented the rivals from raiding their respective workforces and damaging opportunities for employees at the two companies. Federal regulators say the deal specifically barred eBay from recruiting Intuit workers to the point that eBay executives were instructed to throw out the résumés of Intuit candidates.

according to these numbers, the rate of homeowner ship for whites in the SV and SF bay are still higher than that of Asians so if there is a group that's responsible for the ridiculous prices in those areas it's white people. lets not be racist.

http://diversitydata-archive.org/Data/Rankings/Show.aspx?ind=210

Mark D says

actually it's whites who have the least amount of kids. i guess you haven't read the papers during the past few decades.

That's entirely irrelevant.

I never claimed these good folks were under water either. House prices are holding up so why shouldn't they be? But I also see lots of people paying 50% of their pre-tax income for housing. That's why the prices remain so ridiculous.

When you have people with a shit ton of money who are willing to spend most of it on housing, housing becomes unaffordable to anyone not willing to go to such lengths.

It's not *just* immigrants; far from it. They just seem to be much more affected by the 'spend half of your income' mentality. There are some good reasons for this, like being able to establish permanent residency and having a safe guard if you have H1B issues, but it's still a problem.

thomaswong.1986 says

And frankly you might be locked out from going to the competition. Such practice has been very common over the decades.. especially in the Semi, PC/Workstation, software industries. Another reason many moved out to get distance from each other.

Not legal in california.

I have not seen anywhere outside of silicon valley that is able to offer so many options for tech people. In most big cities there are maybe two or three viable employers, if you're lucky. More likely than not you'll just be running the website for some bank or retailer for a third of what an entry level engineer at a bay area company makes.

Mark D says

according to these numbers, the rate of homeowner ship for whites in the SV and SF bay are still higher than that of Asians so if there is a group that's responsible for the ridiculous prices in those areas it's white people. lets not be racist.

There is a tendency to refer to "Asians" as a single demographic group. However, there are huge cultural differences between different Asian groups in the Bay Area. Fourth generation Chinese-Americans don't have much in common with more recent FOB arrivals.

That being said, there is a natural tendency for people to cluster by ethnicity. That's one of the biggest reasons why different Asian groups are drawn here.

My prediction is that medium to long term there will be somewhat of a "white flight" out of the Bay Area as white Baby Boomers sell their houses and move to other parts of the U.S. where their kids have settled (because their kids can't afford to live in SV) to raise families.

Kevin says

It's not *just* immigrants; far from it. They just seem to be much more affected by the 'spend half of your income' mentality. There are some good reasons for this, like being able to establish permanent residency and having a safe guard if you have H1B issues, but it's still a problem.

that has not been my experience.

i think it's the opposite actually. it's usually Asians and Middle Eastern Immigrants that tend to spend money on both luxury cars and housing while whites buy a $5000 car and put the rest into housing because they don't want to pay taxes and support blacks and Latinos.

not to mention Asians are the ones who are willing to live 5-10 people in one house. every single white person wants a 2-3 bedroom house to themselves, even when single, just so they can say "I have made it."

lets not be racist.

Kevin says

Not legal in california.

Its been around now for 30+ years.. so pretty much everyone knows about this.. its no secret.. the Gentleman's Agreement between archrivals Intel and AMD.. not to hire each others employees until a 2 year separation. Seagate and Connors..Apple and Sun Micro...similar arrangements.

Kevin says

I have not seen anywhere outside of silicon valley that is able to offer so many options for tech people. In most big cities there are maybe two or three viable employers, if you're lucky.

It make no difference to the Employer anymore... be Intel sets up shop in the NorthEast, SouthWest or Where ever.. Its no longer locations. Im sure there will be plenty of Engineers coming from University of Arizona that would be too glad to be working in their native Phoenix. The planning department makes those choices.. not employees. After all can you point to one spot on the map and call it GE or IBM capital. Its all divisions seeking lower of cost advantage.

ducsingle5313 says

My prediction is that medium to long term there will be somewhat of a "white flight" out of the Bay Area as white Baby Boomers sell their houses and move to other parts of the U.S. where their kids have settled (because their kids can't afford to live in SV) to raise families.

The "White Flight" already happened in the South Bay.. moved up north, southwest and Florida early since the late 80s . And its not the poor.. they are really really well off doing well in Florida.. smug!

The bubble prices more recently moved many many more.. the greater fool theory is no theory!

http://www.manhattan-institute.org/html/cr_71.htm#.UKsd0kiUx0w

SFace says

I have to respectfully disagree. Just look at mobile.

Apple, Samsung USA, (mobile software development), HTC, Nokia, Motorola Mobile, Amazon (Kindle Fire), Dell, HPQ. Research in Motion, Microsoft and Google. All the top players are here in hardward design and/or mobile development. The cluster effect as you will.

Microprocessors very small and very fast... something that has been around for a very very long time.. not to mention...Telecom equipment, mass storage... nothing you mention of the toys i mean was possible from all the work from decades past from people you will never meet..

and to think many here were still in their pampers...

The H.P. Touch Computer (1983)
https://www.youtube.com/watch?v=X-THdG5gVTw

thomaswong.1986 says

The "White Flight" already happened in the South Bay.. moved up north, southwest and Florida early since the late 80s . And its not the poor.. they are really really well off doing well in Florida.. smug!

this is good. when white flight is completed, prices will go back to normal in the Bay area.

a typical Asian immigrant family consists of husband, wife, the guy's parents and unmarried kids.

in a typical white family, mom and dad are divorced, grandparents are divorced even at age 75. everyone MUST get their own house or life is not worth living. no wonder houses are so expensive and won't go down.

if white people would learn to live together in the same house prices would become A LOT more affordable.

SFace says

You sound like a grandpa dude.

I might well be.. at least I do understand the toys you point to are really all from semiconductors, software (UNIX) , mass storage, global telecom infrastructure which was designed and evolved long long before you. Most dont talk about the real work what was created decades ago...

so im not that impressed by the toys the cool and hip wack off with today...

I guess the white folks had it right for decades past.. perhaps the immigrants have a lot to learn. You Think ?

thomaswong.1986 says

I guess the white folks had it right for decades past.. perhaps the immigrants have a lot to learn. You Think ?

not when the country is going bankrupted. it's not just America (where there are minorities to be blamed), look at Europe

the immigrants you spoke of are the ones that will be here paying tons of taxes that finance all the entitlement programs. the US government has never paid a dime to raise and educate them and now they are getting a nice steady stream of tax revenue. looks like Americans are getting a good deal.

white people should be thanking them for migrating here and bailing them out.

Mark D says

this is good. when white flight is completed, prices will go back to normal in the Bay area.

a typical Asian immigrant family consists of husband, wife, the guy's parents and unmarried kids.

in a typical white family, mom and dad are divorced, grandparents are divorced even at age 75. everyone MUST get their own house or life is not worth living. no wonder houses are so expensive and won't go down.

if white people would learn to live together in the same house prices would become A LOT more affordable.

LOL

My wife, who moved here from Hong Kong in 1997, thought exactly the same thing back before she really knew very many white people. You are either making things up or only know white people on TV. Don't try to make it sound like white people are the only ones with marital problems lol. They certainly do have them, but they are not alone. If you have been to Asia at all, you know that any guy with a business and money over there has women on the side, and often unwanted children running around. Going to KTV and fucking prostitutes is pretty standard too. Well, than again, I bet that about as many of them do that as normal middle class folks here are serial-divorcees. Generalizing is fun!

Housing in major Asian metros is vastly more unaffordable for normal working class people, even with them piling 3+ generations into a 400 square foot condo. Your argument that people living multi-generationally will lower house prices is ludicrous at best. If everyone was willing to live 6+ people to a house, with two working couples and some cash from the grandparents, housing would cost a hell of a lot more since people could afford to pay a hell of a lot more.

Anyway, this thread is getting off onto an odd tangent. I don't think that anyone here is single-handedly blaming any one ethnic group for anything. The demographics of the SFBA are changing, and part of the new demographic that is phasing in places more value on housing than others. It sucks for resident natives, but for those coming from tougher places in the world it's great. Dummies over-paying for housing is not race-specific anyway. It just gets noted in here because the SFBA is seeing an influx of Asians and Indians and they will probably establish themselves as a major component of the upper-middle class in the coming decade. White folks had better get used to it.

The idiocy surrounding the cost of living here is just plain old human stupidity. The SFBA is a psychotic salt lick for people with money to burn (or that think they have it). As user BACAH notes, it all runs on the Greater Fool principle, and the SFBA has self-selected itself into a region of fools. There are still waaaaaay worse places to be, but it is just annoying as hell for those of us that grew up here and want to stay close to their family and friends without having to engage in the big frenzied rat-race being pushed by people from other parts of the US and world. That's life though.

SFace says

What you think of fool is just economic reality.

I can agree with that.

My beef is more with the quality of life aspect, which is indeed subjective. Spending countless hours in an office and in traffic to fund a house isn't "living" in my book. But, it is "living" to many people and I do have to compete with them around here. Maybe I am just a simple guy living in a place where simple folks don't belong. I know I should just shut up and either put up with it or move. But bitching on the interwebs is more fun.

thomaswong.1986 says

t make no difference to the Employer anymore... be Intel sets up shop in the NorthEast, SouthWest or Where ever.. Its no longer locations. Im sure there will be plenty of Engineers coming from University of Arizona that would be too glad to be working in their native Phoenix. The planning department makes those choices.. not employees. After all can you point to one spot on the map and call it GE or IBM capital. Its all divisions seeking lower of cost advantage.

You have obviously never worked in a real tech company. Location absolutely matters. The myth that people can work anywhere was dead a decade ago.

bmwman91 says

Going to KTV and fucking prostitutes is pretty standard too. Well, than again, I bet that about as many of them do that as normal middle class folks here are serial-divorcees. Generalizing is fun!

What goes on in Soap Land..stays in Soap Land... LOL!

Kevin says

You have obviously never worked in a real tech company. Location absolutely matters. The myth that people can work anywhere was dead a decade ago.

Yes, I worked in tech for 30+ years.. worked on and seen plenty of local operations (SV) moved to other states.

There are no myths.. since any SV company you point to have 90% of their operations elsewhere and not in SV.. Look at Intel, HP, Symantec, or any others.. HP certainly doesnt have ALL 350K employees in NorCal.. why would they need to?
HP is all to happy to have R&D in Colorado where its cheaper. And the natives in CO and state Govt are all to happy to have jobs in their state.

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=8290834-140891-145328&type=sect&dcn=0001047469-11-010094

HP R&D...

Cupertino, Roseville, San Diego, and Woodland, California

Houston, Texas
Corvallis, Oregon
Aguadilla, Puerto Rico
Indianapolis, Indiana
Andover, Massachusetts
Boise, Idaho
LaVergne, Tennessee
Vancouver, Washington
Ft Collins, Colorado
Sandston, Virginia

Certainly R&D isnt a function need to be local..but long term projects unrelated to day to day revenue generating tasks. They have no importance to running operations each month, have no customer interaction, and certainly unimportant in regarding financial and tax compliance/disclosure.

But dont take word for it.. talk to your CEO/CFO and planning department...

SFace says

The cluster effect

Yeah, the region has become a cluster something, you bet.

thomaswong.1986 says

Kevin says

You have obviously never worked in a real tech company. Location absolutely matters. The myth that people can work anywhere was dead a decade ago.

Yes, I worked in tech for 30+ years.. worked on and seen plenty of local operations (SV) moved to other states.

There are no myths.. since any SV company you point to have 90% of their operations elsewhere and not in SV.. Look at Intel, HP, Symantec, or any others.. HP certainly doesnt have ALL 350K employees in NorCal.. why would they need to?
HP is all to happy to have R&D in Colorado where its cheaper. And the natives in CO and state Govt are all to happy to have jobs in their state.

Come'on Thomas, don't you know by now, The Big Lie becoming the Real Truth? Say it often enough, and it is so. I think that was Goebbels' method (except in today's Cool and Hip "tech" parlance, "methodology", - it's so much hipper and cooler and smarter-sounding than "method").

"Tech" is companies like FB or google, or any other organization that involves only a cubicle and a workstation and internet hookup. Ya' know, "TECH". What you are talking about has icky poo stuff like chemistry, physics, materials, real stuff not "TECH". That's not tech, it's icky poo. You don't think so? Just ask any young hipster.

Remember, we have become a region of Greater Fools.

SFAce is right. You're just an old fart. Kevin is right. You haven't worked in "real" tech.

bmwman91 says

SFace says

What you think of fool is just economic reality.

I can agree with that.

Yes it is. The Reality that our region, by self-selection, is dominated by fools making their housing choices, - their economic choices, with the need for the Ever Greater Fool to come along. The Fool Reality. No wonder HP had a problem today.

B.A.C.A.H. says

Come'on Thomas, don't you know by now, The Big Lie becoming the Real Truth? Say it often enough, and it is so. I think that was Goebbels' method (except in today's Cool and Hip "tech" parlance, "methodology", - it's so much hipper and cooler and smarter than "method").

yes.. i understand. its all ichy poo..

I would add, that pop finance media is Our New Age Goebbels, naming stuff like Social Media as "TECH". Our good True Believer worker bees here in the region can't help it; they really don't know any better than did some of my Hitler Youth relative from Austria back in the day.

Yes, companies have offices in other locations. Welcome to 20 posts ago.

You completely miss the point. There is NO OTHER PLACE ON THIS PLANET where so many different companies cluster.

Companies can't just "go anywhere". It doesn't work. Offices spring up in places where they have a critical mass, but it doesn't correspond to anything particular about that area.

Companies that have distributed offices and are actually successful (HP no longer counts; they're incompetently managed and anything they do should be ignored) aren't doing cross-site collaboration. An office in boston might be doing one project while an office in tel aviv does another one.

Once again, outside of SV (and maybe NYC) you'll be lucky to find two or three good quality employers in any given city.

Kevin says

You completely miss the point. There is NO OTHER PLACE ON THIS PLANET where so many different companies cluster.

It no longer matters.. it was only true some 30+ years ago.. its no longer true.
We had 3x more employers and 3x more employed while salaries were more balaned as were the workers.. which included mfg, sales, eng, mrtk and g&a..

Besides, you have no say in the matter.. that is left for those in power... the Financial Analysis and Planning Group and Management who map out long term strategies..

What are you going to do.. maybe unionize and go on strike... because you feel

entitled to a big pay, big house, big lifestyle in SFBA...... good luck on that...

As BACAH has already put it so rightly .. welcome in the greater fools.

Hey Kevin, my jobs were "gone anywhere" lotsa times. Georgia (I think), East Fishkill, San Antonio, Njimegen, Portland, Taiwan, Japan, etc. Yes you are right, the "companies" maintained a facade here for the hipsters and office workers etc., though you might be surprised how many of the back office functions for professions like accountants and lawyers have also "gone anywhere" when the company still kept a shingle in the Bay region.

Just how long have you lived in this region and how many years of "tech" experience are you speaking from?