patrick.net

To be expected...

This has even been happening at Stanford and SCU.

I'm the on-call substitute for both universities in dance, and guest lecturer in physics and the art of dance. Each year I am called in to teach, and there is always news of another beloved instructor who has moved to Oregon, or somewhere back east. It's depressing. I was recently asked by the chair to fulfill one if the positions until they could find a replacement. I have two kids and a business, so I'm not their gal. The commute isn't worth it, and I make more money concentrating on my business. It's hard finding educated and qualified people in the Valley. No one can afford to live here unless they are in tech. Soon Silicon Valley will be nothing but tech, restaurant owners, doctors and everyone else living in poverty.

It's been going that way for awhile. Take Los Gatos for an example; it used to be a charming community of artists and owner-builder engineers. This was back in the seventies when an engineer was more likely to be a rather artistic dad working on his own house, repairing his own car and than riding his bike to IBM or HP. They were middle-class and their wives usually stayed home and the kids usually played outside.

Half the reason the downtown is still so charming is all the "stay at home" seventies and eighties moms who saved all the historic homes during an era when it was trendy for most towns to tear them down. Why Los Gatos and not other towns? A strong sense of community and artists that fought to save them, that's why.

Now the homes are sterile looking, the streets are lined with luxury cars instead of kids. Dad's are not working on much outside of covering up their affair from their wife they never see. No worries, she's usually doing the same in between her hair appointments, manicure and power job. Kids are not outside, they are on their iphone. Any signs of an artistic or family community are almost gone. A generalization, I know, but not far off the mark.

"There goes the neighborhood" means different things to different people. Personally, I feel it applies to Los Gatos, especially if you were a native to LG in better times.

From the article:
"Caveats aside, the data could actually overestimate affordability. Some prospective home-buyers may be sitting on oodles of cash, but many aren’t—and instead have loads of debt. Redfin is assuming, for simplicity’s sake, that borrowers don’t have any student loans, car payments, or credit-card bills to pay—things that lower credit ratings and hike up borrowing costs. If such debts were included, “these numbers would plummet,” Redfin analyst Tommy Unger says."

How many educated professionals have no student loans? How many doctors? And how many of these have $130,000 in cash to put down? I'd make a fair bet on next to none of them who didn't get money from rich parents.
The key to home ownership is obviously simple, as Robert Kiyosake preaches, "have a rich dad."

Homeowners in the Valley:
1.Techies
2. Property owners who are not citizens and therefore do not contribute to the republic in the same way a citizen is expected to.
3. People who bought in before the nineties, usually boomers.
4. Flippers
5. Kids with financial help from mom, dad, grandma or grandpa, or they inherited it

End of story.

hrhjuliet says

It's hard finding educated and qualified people in the Valley. No one can afford to live here unless they are in tech. Soon Silicon Valley will be nothing but tech, restaurant owners, doctors and everyone else living in poverty.

Even in tech... The foot soldier of the tech in Silicon Valley is the entry level engineer, and their standard of living is pathetic in the Valley. The incentives are increasingly aligned to go somewhere else. The difference in salary or stocks just doesn't compensate for the extra housing cost.

Most SV profits go to landlords.

True enough. My husband is one of them.

Heraclitusstudent says

Even in tech... The foot soldier of the tech in Silicon Valley is the entry level engineer, and their standard of living is pathetic in the Valley. The incentives are increasingly aligned to go somewhere else. The difference in salary or stocks just doesn't compensate for the extra housing cost.

Most SV profits go to landlords.

This is a competitive advantage that companies outside the Bay Area are gaining as housing cost become more ridiculous here. Many times I have heard the argument that Bay Area is the best place to do business cause of it's talent. How is Silicon Valley and SF going to keep it's talent pool if refuses to build high density housing and Prop 13 pushes prices up for new talent without increasing value?

I myself left. Till about 2002/2003 I could afford a home. I can still buy a home, but will be stretched. I am looking at minimum of 1 acre properties here and have my pick of neighbourhoods and prices. I still do love CA, but prefer not being in debt . Of course then there is southern California and horrific commutes. I thought I would settle down in LA-not to be. I definitely prefer warmer weather-but hey maybe in another 15-20 yrs might move again. With the money and savings and if things go according to plan, I might be able to retire, so might move somewhere warmer . I wouldn't mind the southwest.

evilmonkeyboy says

Heraclitusstudent says

Even in tech... The foot soldier of the tech in Silicon Valley is the entry level engineer, and their standard of living is pathetic in the Valley. The incentives are increasingly aligned to go somewhere else. The difference in salary or stocks just doesn't compensate for the extra housing cost.

Most SV profits go to landlords.

This is a competitive advantage that companies outside the Bay Area are gaining as housing cost become more ridiculous here. Many times I have heard the argument that Bay Area is the best place to do business cause of it's talent. How is Silicon Valley and SF going to keep it's talent pool if refuses to build high density housing and Prop 13 pushes prices up for new talent without increasing value?

SV is building high density housing, a lot of it!

Milpitas: 4692
San Jose: 8383
Fremont: 980
Sunnyvale: 413
Santa Clara: 2338
Los Altos: 414
Palo Alto: 150
Mountain View: 183

Total: 16890 units I've accounted for so far

That's only the ongoing and recently completed projects, lots more are on the way.

http://patrick.net/?p=1240888

Other communities where high density housing could be built:

Livermore
Dublin
Pleasanton
Castro Valley
Union City
Hayward
San Leandro
Oakland (yes Oakland, remember BART is coming)
East Palo Alto

I guess only the uneducated individuals are still living here.

E-man says

I guess only the uneducated individuals are still living here.

Yes, because that is what the article said...

If they're so smart, how come they're not rich already?

Ceffer says

If they're so smart, how come they're not rich already?

Smart doesn't make rich. Smart just keeps one off the pipe and the bottle.

FortWayne says

Ceffer says

If they're so smart, how come they're not rich already?

Smart doesn't make rich. Smart just keeps one off the pipe and the bottle.

Well, you're no fun. I am going to report you to Big Pharma as a dangerous non-conformist.

hrhjuliet says

It's hard finding educated and qualified people in the Valley. No one can afford to live here unless they are in tech. Soon Silicon Valley will be nothing but tech, restaurant owners, doctors and everyone else living in poverty.

Certianly wasnt the case pre-2000 and pre-housing bubble.... but tech
is on the decline and there are fewer and fewer jobs...

http://www.siliconbeat.com/2010/02/17/vanishing-public-companies-lead-to-the-incredible-shrinking-silicon-valley/

It has long been noted that big cities are corrupt, even before they were concentrated with smoke and inorganics:

http://www.monticello.org/site/research-and-collections/chain-email-10-jefferson-quotations

evilmonkeyboy says

This is a competitive advantage that companies outside the Bay Area are gaining as housing cost become more ridiculous here. Many times I have heard the argument that Bay Area is the best place to do business cause of it's talent. How is Silicon Valley and SF going to keep it's talent pool if refuses to build high density housing and Prop 13 pushes prices up for new talent without increasing value?

So are you arguing we need to elim Prop 13 which would increase property taxes for employees.. while other states are luring jobs away from Santa Clara with NO PROPERTY and INCOME TAX incentives to employeers... like Arizona, New Mexico, Texas and Washington ?

This is a self correcting problem. Bubbles pop. Prices cannot soar indefinitely when people leave cities en masse.

Great idea.
Move to an area with cheaper house prices so they can overpay for overpriced shacks there.

thomaswong.1986 says

So are you arguing we need to elim Prop 13 which would increase property taxes for employees.. while other states are luring jobs away from Santa Clara with NO PROPERTY and INCOME TAX incentives to employeers... like Arizona, New Mexico, Texas and Washington ?

Eliminating prop 13 does not increase taxes on people that rent. Prop 13 is a subsidy that takes from new landowners to give to older landowners. It only distorts the market.

APOCALYPSEFUCKisShostikovitch says

ASSHOLES!

There we go!

Quigley says

How many educated professionals have no student loans? How many doctors? And how many of these have $130,000 in cash to put down? I'd make a fair bet on next to none of them who didn't get money from rich parents.

Even some of these all-cash buyers are basically using parent money to make all-cash offers and then applying for a mortgage after the fact. I know a couple people who didn't qualify for the mortgage afterward, which was not surprising to anyone except for the idiot parents who bought the houses. Gee, shocker, he doesn't make steady income (commission-based job) and has questionable credit.

evilmonkeyboy says

Prop 13 is a subsidy that takes from new landowners to give to older landowners. It only distorts the market.

It also re-distributes the tax base from residential to commercial property, results in state-government control of local matters because local governments don't have enough money, results in higher sales taxes, etc. I've written about this before:

http://patrick.net/?p=1108148&c=772799#comment-772799

That fact that Prop 13 tax bases are inheritable is also ridiculous.

controllio said: That fact that Prop 13 tax bases are inheritable is also ridiculous.
I'm not so much against Prop 13 for primary residences and even the inheritance business. It's Prop 58 where the real craziness kicks in: $1 million limit (taxable value) on transfers of non-principal residence property. We're becoming feudal.

EBGuy says

Prop 13

+

EBGuy says

Prop 58

=

EBGuy says

We're becoming feudal

Btw, is 58 local to SFBA or statewide?

THe Educated people? We're talking about those folks that find fault and social travesties in the way neighbors in other neighborhoods, they've never stepped foot it, act towards each other. Then get all activist to pass laws on how those people carry on discourse with one another.

Yet when the shit hits the fan, if they can't afford to live in the exclusive gated communities with a Moat, they are the first pull up anchor and head off to greener pastures. They wouldn't be caught DEAD living anywhere NEAR the Shit they created.

Educated Americans are ousted by uneducated Chinese.

JH says

This is a self correcting problem. Bubbles pop. Prices cannot soar indefinitely when people leave cities en masse.

True.

EBGuy says

controllio said: That fact that Prop 13 tax bases are inheritable is also ridiculous.

I'm not so much against Prop 13 for primary residences and even the inheritance business. It's Prop 58 where the real craziness kicks in: $1 million limit (taxable value) on transfers of non-principal residence property. We're becoming feudal.

Both should be on the ballot this year. They need to be abolished, or like you said, at the very least, prop 13 needs restrictions.

Can we throw out NAFTA while we are at it?

Call it Crazy says

....with LOTS of family money...

Well, that's our money anyways.

EBGuy says

It's Prop 58 where the real craziness kicks in: $1 million limit (taxable value) on transfers of non-principal residence property. We're becoming feudal.

Agree, and don't forget Prop 193 regarding grandparents/grandchildren. The whole scheme has a lot of structural problems.

corntrollio says

EBGuy says

It's Prop 58 where the real craziness kicks in: $1 million limit (taxable value) on transfers of non-principal residence property. We're becoming feudal.

Agree, and don't forget Prop 193 regarding grandparents/grandchildren. The whole scheme has a lot of structural problems.

Prop 193 is only applicable when the parents have died. A property van be passed down ad infinitum using a combination of prop 58/193.

http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm

I verified this personally with a call to the CA board of equalization

Call it Crazy says

Well, then it's nice that they are recycling it back into our country, right??

Well, yes, it comes around. First we were enjoying the fruits of their cheap labor. Now that money is going to screw our next generation for sure.

Call it Crazy says

bubblesitter says

Call it Crazy says

....with LOTS of family money...

Well, that's our money anyways.

Well, then it's nice that they are recycling it back into our country, right??

Since we got the land cheap with guns and biological warfare, we are making tons of profits selling them for real hard cash.

Young educated people with student loan debt cannot buy a house anyway. They are moving into the cities where the jobs are as renters.

Silicon Valley will always be a magnet as start-ups require a mix of skills that can be found in Silicon Valley quickly. Once a company is mature, it can consider moving. It often moves operations that are not as dependent on the skills available in the valley to a lower cost location keeping certain operations in Silicon Valley.