patrick.net

dunnross says

This is the dumbest argument

Not sure what you are referring to. However, vc investment is not flowing to Detroit. It is however, flowing to produce Tesla cars.

http://blogs.wsj.com/venturecapital/2009/09/15/the-money-keeps-raining-down-on-tesla-motors/

Tesla, btw, is located in Palo Alto, not in Detroit.

And how many workers has Tesla hired in SF vs. GM in Detroit?

Are these houses going to be bought by the workers or the VCs?

And, BTW:

"GM sold 2.5 million vehicles globally in the second quarter, while Tesla set a sales target of selling about 5,000 cars during the same quarter. "

And, also, keeping with the style of just about everything being overpriced in SF:

"The share price of Tesla (TSLA) has more than tripled so far this year and the company now has a market value of $14 billion. GM (GM, Fortune 500)'s market value is $50.6 billion."

thomaswong.1986 says

(1) why not make the comparison to prior decades.. why not ask why prices are still high above the historical average. did you consider when prices were 100/sq ft. not that long ago before the bubble.

What year were prices 100/sf?

thomaswong.1986 says

(2) venture capital has been around since the 60s even as priced were more rational. Therefore there is no connection to VC capital..

VC capital has increased by epic proportions since the 1960s. And as such, there is a correlation between vc money and the price of real estate in the SFBay area. thomaswong.1986 says

Frankly there is little connection to SF and Santa Clara County Tech Industry at all.

The original article states otherwise. thomaswong.1986 says

Today given high home prices, it makes more sense to set up shop in Tennessee or any other cities ... and certainly many Tech leaders have exactly that... that is why we have a few employees in SFBA and far more in other cities.

http://techcrunch.com/2012/08/27/san-francisco-tech-job-data/

http://www.techamericafoundation.org/cybercities2010-executive-summary

http://www.techamericafoundation.org/cybercities

High-tech Employment
The New York metropolitan statistical area, which includes counties from New York, New Jersey, and Pennsylvania, led the nation in high-tech employment, with 317,000 tech workers in 2009, the most recent data available at the metropolitan level.
Washington, DC, which includes counties from three states and the District of Columbia, ranked second with 293,000 tech industry workers in 2009.
San Jose/Silicon Valley, the heart of the tech industry, while not as large a metro area as New York or Washington, DC, was the third largest cybercity by number of tech industry jobs. In this report, San Jose/Silicon Valley, San Francisco, and Oakland are all considered to be separate cybercities.
Boston and Dallas-Fort Worth completed the list of the nation’s top five cybercities by employment, with 219,800 and 174,800 tech industry workers in 2009, respectively.
San Jose/Silicon Valley had the nation’s highest concentration of tech workers with almost one in three private sector jobs in the technology industry.
Huntsville ranked second by concentration of tech workers with 23 percent of its private sector workforce in the tech industry.
Boulder, Durham, and Palm Bay-Melbourne, FL rounded out the top five cybercities by concentration of high-tech workers with 22, 17, and 15 percent of their private sector workforce in the tech industry in 2009, respectively.

dunnross says

And how many workers has Tesla hired in SF vs. GM in Detroit?

Are these houses going to be bought by the workers or the VCs?

http://en.wikipedia.org/wiki/Tesla_Motors

Tesla currently employs almost 3,000 full-time employees[2] and is recruiting employees for positions in the headquarters in Palo Alto, California, at its European headquarters in Maidenhead, UK, and at an increasing number of sales facilities throughout North America and Europe.[25]

Yep, it's too bad none of these new employees can afford to buy a house anywhere close to their new job.

dunnross says

"The share price of Tesla (TSLA) has more than tripled so far this year and the company now has a market value of $14 billion. GM (GM, Fortune 500)'s market value is $50.6 billion."

GMs market cap has been rather stagnant for years and their market share is at an 88 year low. Tesla, otoh, has grown from nothing to estimated delivery of 21000 units next year.

dunnross says

Yep, it's too bad none of these new employees can afford to buy a house anywhere close to their new job.

Source?

SF property overpriced???

Property or anything is worth what someone will pay for it. There is no way I'd pay what is being asked (and paid) for the real estate in SF or LA or NY or a ton of other places I could name. However, if I ask what I consider to be a high price for my house and someone is lame brained enough to pay me that amount. Good for me, and I hope they have money left over for a good shrink.

This, of course, is one of the causes of bubbles. Someone asks a certain amount, another person buys - and often thinks they can ask more and do. The next buyer does likewise till we reach the end of the row where people finally run out of money and gain some sense and the newest owner can't find anyone willing to pay $2 million for the 900 sq foot house, in fact he can't even sell if for the $1.8 million that he bought it for. No one else wants it, it starts spiraling down until values settle to what they should have been all along. Is SF property over priced - pretty much yes.

Buster says

Source?

You mean to tell me that you need a source to show you how an automobile factory worker can't afford to buy a house in Palo Alto? Are you kidding me?

dunnross says

Buster says

Source?

You mean to tell me that you need a source to show you how an automobile factory worker can't afford to buy a house in Palo Alto? Are you kidding me?

An autoworker might be able to "afford" East Palo Alto

Buster says

GMs market cap has been rather stagnant for years and their market share is at an 88 year low. Tesla, otoh, has grown from nothing to estimated delivery of 21000 units next year.

Because some fool estimates that their sales are going to go up 10 times in the next year, I need to fork over 84 years of my life (their forward-looking PE ratio is 84), to lend them this money by buying their stock (which btw, pays $0 divident), right? And your average Tesla worker who works in Palo Alto, is supposed to buy into this story, that somehow his stock options are going to make him a fortune one day, even though he can't afford to buy anything, will rush out and buy a house in Palo Alto.

New Renter says

An autoworker might be able to "afford" East Palo Alto

Nope, I don't even think he can. The company expects him to commute from Detroit.

BTW - the Tesla factory is in Fremont (the old NUMMI plant that made Toyota corolla and Pontiac Vibe)

Buster says

dunnross says

"The share price of Tesla (TSLA) has more than tripled so far this year and the company now has a market value of $14 billion. GM (GM, Fortune 500)'s market value is $50.6 billion."

GMs market cap has been rather stagnant for years and their market share is at an 88 year low. Tesla, otoh, has grown from nothing to estimated delivery of 21000 units next year.

Yes, and when this happens (if it ever does), Tesla market cap would be higher than that of GM (which would still be selling over 500 times as many cars as Tesla), just so that their factory worker can afford to buy in East Palo Alto. Yes, you bulls are surely making lots of sense these days.

dunnross says

Nope, I don't even think he can. The company expects him to commute from Detroit.

It's not only that he can't even buy the house anywhere close to where he works, he can't even afford to buy the same car that he is building, so that his commute becomes a little bit more economical for him. The lowest priced car that Tesla has is $63K.

New Renter says

An autoworker might be able to "afford" East Palo Alto

Yes, with termite infested shacks selling at $454/sq ft, East Palo Alto has suddenly become the affordability capital of the Bay Area:

http://www.redfin.com/CA/East-Palo-Alto/2148-Ralmar-Ave-94303/home/865217

These guys are also looking for VC funding, to pay for their heroin addiction.

San Francisco will continue to be the most lucrative housing market in the country.

Heraclitusstudent says

How about considering the average income in the Bay area?

Largely irrelvant. This is not a market driven by the average person.
* 65% are renters, so the average person is a renter
* of the home owned occupied, half are off limits forever which reflects the lowest housing turnover in the country.
* Buys are driven by wealth not income. Wealthy people just buy property straight up so income is not a significant factor. Homes are driven by income at the 80% tile which is the most lucrative in the country.
* the population in San Francisco was 750K in 1950, In 2013, it is about 850K. 5M people added in the region but 100K in San Francisco. It's been built out for six decades and there will be no new single family homes ever. It's been proven to build up in measured ways. I love owning land here.

Buster says

But when you consider that venture capital investment here is hundreds of times more, than it puts a different spin on things....

SFBA has taken approx 40-50% of the countries VC spend for decades now. San Francisco makes up a bigger slice of it. It's the transition from hardware/software industry.

Whether you think employees are overpriced is irrelevant. To build a company, you have to build a product first, and there is a reason nothing is built in Nashville vs. San Francisco. The end result is start-up have to built where the success is the most probable first.

Over the last decade, SFBA has expanded north of market with additions of Twitter, Yelp, Uber, Lfyt, Square, Airbnb, Instigram, Kixeye etc. These are all 1K-3K employer. Then south of market, you have the new office park expanding south on third ave, anchored by UCSF and biotech. San Francisco is benefitting from the new industry, high paying industry centered on research and product engineering, high value add things that are not easy to relocate. This is on top of the west coast finanical center for professional services, software, finance, and banking.

SFace says

* 65% are renters, so the average person is a renter

Hey, if 65% of us are renters, why don't we just vote these ass*hole home owners out of their price propping prop 13, and all the other tax advantages they are getting. Why not increase the margin requirements on RE down-payments by 100% like they did for silver. I vote YES on all these great ideas.

And, I will also vote YES on even stricter RENT CONTROLs, so that all these ass*hole investory/landlords can't milk us for all the rent money.

Yep, looks like Silicon Valley ventures are really ramping up now. While house prices are about double of what they were in 2000, VC capital is only 1/3 of what it used to be back then.

dunnross says

And, BTW:

"GM sold 2.5 million vehicles globally in the second quarter, while Tesla set a sales target of selling about 5,000 cars during the same quarter. "

And, also, keeping with the style of just about everything being overpriced in SF:

"The share price of Tesla (TSLA) has more than tripled so far this year and the company now has a market value of $14 billion. GM (GM, Fortune 500)'s market value is $50.6 billion."

Dunross,
You're assuming people will delve deeper into the figures. Good luck with that around these parts.

http://www.zerohedge.com/news/2013-06-03/how-many-cars-must-tesla-sell-interactive-calculator-has-scary-answer

APOCALYPSEFUCK is Shostakovich says

COMMIE FUCK SHIT! Their assets, their judgement, fuck all! If they buy every house in the valley and 10000x the rents, they should be applauded for their investment savvy and relentless pursuit of maximizing their investment's value. This is Freedom's promise and glory!

Notice how I said that I would VOTE for these appeals. Unlike your dictator Ben Bernanke, the head of the f*n bank MAFIA CARTEL coming in and ramming these stupid laws down the throats of all young people who are trying to put a roof over their heads, and manipulating the price of everything in sight.

OK, you filthy duck. How much of this do you think I could fake?

Let me see the same kind of graphic from you in the next 15 minutes:

And, BTW, your 15 minutes are up. Sorry, you lost! Better luck next time.

toothfairy says

13 years of inflation?

But we had the same 13 years of inflation in Detroit, Miami, Phoenix, Las Vegas and other cities too, where prices are about the same or even lower as they were back in 2000. In fact, the things that those cities make have gone up in price much more than the things Silicon Valley makes. And, mind you, all those cities were not even 1/2 as overpriced as SF was back in 2000.

Bigsby says

Why does someone who held half a million just in gold complain so much about house prices?

Because, thanks to the FED, and 30 years of price manipulation, gold is still underpriced while housing (especially in the BA) is way overpriced.

dunnross says

Bigsby says

Why does someone who held half a million just in gold complain so much about house prices?

Because, thanks to the FED, and 30 years of price manipulation, gold is still underpriced while housing (especially in the BA) is way overpriced.

But that hardly addresses my point. You had half a million in gold and yet you rent and complain about median house prices. Presumably you could buy a multi million dollar house in cash and could have done so back in 2010 and 2011 when prices were a fair bit lower in San Jose. And yet here you are...
And why did you sell half of your holdings if you thought it was underpriced?

David Losh says

Cities have jobs, number one, but some cities, like Paris, New York, London, Mumbai, and San Francisco have financial centers.

I hope not to disturb your wet dream, but San Francisco is not a financial capital of the world. Ever heard of the Chicago Board of Trade or the Mercantile Exchange. Those institutions are much much bigger than anything San Francisco has. By that token RE prices in Chicago must be, at least, double of those in San Francisco.

Call it Crazy says

how do you get a half a million from a 235K listed trade???

That's because he's been getting math lessons from the phoenix math professor.

dunnross says

Call it Crazy says

how do you get a half a million from a 235K listed trade???

That's because he's been getting math lessons from the phoenix math professor.

Or maybe because you said you sold half your stake in gold with that sale! Odd that you would forget that, or should I have said 470k instead of rounding it up?

Bigsby says

Or maybe because you said you sold half your stake in gold with that sale! Odd that you would forget that, or should I have said 470k instead of rounding it up?

No, the 1/2 sale was separate, and that was done several weeks earlier. Unfortunately, the Etrade records don't go that far back in history.

dunnross says

I hope not to disturb your wet dream, but San Francisco is not a financial capital of the world.

So, that does explain that, you are completely delusional.

You can go anywhere in the world and they know where San Francisco is.

You didn't need to pull Chicago out of your ass, you could have just said Las Angeles. You could say anything, but here is the dynamic.

San Francisco is where old money, and new went for the lifestyle, the convenience, and prestige.

Let's concentrate on the term prestige. People buy addresses.

I'm dollars ahead if I buy New York, or San Francisco as opposed to Chicago.

dunnross says

And I am not making any predictions

You may not be now, but you do have a history of making some of the most outlandish calls on this board.

/?p=651978

About one year ago, I asked if you still stood 100% behind this call (1975 nominal prices by 2014), and at the time you said...

dunnross says

CDon says

Seeing as its now 18 months later, do you still stand by this prediction 100%, or is it now time to start distancing yourself from this call?

/?p=1216267&page=2#comments

So, im curious - now that another 12 months has passed, do you want to double down on that 2014 call, or perhaps are you ready to start distancing yourself from it?

Sorry, heres the whole thing

dunnross says

CDon says

Seeing as its now 18 months later, do you still stand by this prediction 100%, or is it now time to start distancing yourself from this call?

Yes, I still stand by it. Don't forget that prices in some cities such as Detroit, Cleveland are already at 1975 levels, so some of the cities have already reached my level of prediction.

So again, as we stand here now on the eve of 2014, do you want to double down and say yes we still are going to hit 1975 nominal prices by 2014, or do you want to start distancing yourself from that call?

/?p=651978

Manipulated markets don't need a normal. Housing is never going to go down.

dunnross says

Bigsby says

Or maybe because you said you sold half your stake in gold with that sale! Odd that you would forget that, or should I have said 470k instead of rounding it up?

No, the 1/2 sale was separate, and that was done several weeks earlier. Unfortunately, the Etrade records don't go that far back in history.

That's not the way you described it above. You clearly stated you sold half your holdings and kept the other half. If you then post a $235k deal from back in 2011 as proof of that...
And more to the point, if you did the 1/2 sale earlier and then sold 235k several weeks later, then it rather sounds like you had a lot more than 500k in gold...

donjumpsuit says

exfatguy says

Manipulated markets don't need a normal. Housing is never going to go down.

I agree.

60% all cash,

Most others, some ratio north of 20%.

Nobody who is all cash in a house is selling for a loss, even in a down market.

Why would you sell for a loss, when you can rent and make a annual profit while waiting out equity or the market to return.

To a certain extent yes, but we will see them drop again, nobody wants to sit in dead money either and rents will be capped by what people can afford. Then there is upkeep..

Oh jeez dunross just move toShangri-La Chicago already!