patrick.net

if you wait you’ll buy much more house for the same amount of money.

True, but the cost of financing will be higher. The most important thing is to spare yourself from the stress of being underwater.

Why is school district commanding such a high premium when private school is as cheap as what Bap33 said?

True, but the cost of financing will be higher.

That won't matter if you have a good stash!!

That won’t matter if you have a good stash!!

It helps but the opportunity cost for your good stash may go up too.

Because it isn’t really that cheap.

It makes sense then. The Bay Area really disincentivizes having children. I see.

Hey Face Reality, I am trying to convince a friend to consider living in Los Altos instead of Palo Alto. Can you give me some talking points?

Q; how is this possible? Wont they (on paper) lose their deposit if there’s a 20% drop? And for all the years it’ll take for the home to appreciate back up to cover that amount, aren’t they throwing money away (versus renting and investing the difference)? What am I missing? Not to mention what others have already pointed out: if you wait you’ll buy much more house for the same amount of money.

You are of course correct as a quantitative exercise. In fact, I tend to largely agree with you. But I am trying to recognize that there is a significant portion of the total-buy-decision which is qualitative. Some people have their quality of life, for whatever reason, vastly improved by owning their own home. I can use my own case as an example. My disabled mother lives with us. We have owned for years, but now rent. It is a huge inconvenience to try to work around this and keep everyone comfortable. At some point, well below the "bottom of the market", I will be in a situation where buying improves my life quality more than the opportunity cost I lose by renting another year. Others have other reasons, some more tangilbe than mine, some much less. But each person has their own "break-even" threshold; usually involving things like proximity to friends, family, and stable schools.

All that said, so long as someone doesn't end up upside-down, and they are living within their means, then they may be marginally happier owning even though they could be making out better by renting.

sounds like an unbelievably strong market

The key word is "unbelievably". I'm seeing empty open-houses and homes sitting around here unsold since January.

In what part of the Bay Area are you seeing this? I think the West SJ/Cupertino/Sunnyvale area where Nancy is looking for a house in a good school district is doing ok.

Cupertino and Mountain View just registered y/y median price decline.

Microsoft is readying an attack on them, fueled by an MS boss from Europe.

It is about time. I am sick of the Google mania.

Where did you see that? It doesn’t make sense. The county median price went up 14.7% from 1/05 to 1/06.

From the realtors themselves:

http://www.car.org/index.php?id=MzU5NjU

Cupertino DOWN 6.7% year over year.

all that money Apple pays its Far East engineers comes back to BA real estate. Naturally they all buy in Cupertino!

Yeah, it goes nowhere inside the infinite loop.

Where did you see that? It doesn’t make sense. The county median price went up 14.7% from 1/05 to 1/06.

It doesn't make sense. I wonder why.

You certainly need to achieve a pretty high level of financial success (or inherit it) to be able to have children and raise them well in this area. The bar is just much higher for everything here than in most places. I’m not saying it’s good - it’s just reality here.

I don't know. I do not want kids because I can barely handle cats.

It really depends on what he/she is looking for. Both are very nice towns, but different. There’s not much that I can say that your friend can’t figure out by driving around these towns and checking them out. The differences in character are pretty obvious.

Can you describe why you have chosen LA over PA? It seems that if you like one you will have to hate the other. How does it compare to Menlo Park?

It looks like there was some anomaly with the data (such as too few sales).

If it is not what you want there must be something wrong, right?

Houses in Morgan Hill are much larger. And they are building ever larger homes. This can explain the higher MEDIAN prices.

Places like LG, LA, and PA are traditionally more upscale places. I can see more strength behind the increases.

Cupertino is really nothing without its ever more crowded schools. It is desirable to middle class families who cannot afford private schools. The data suggests that the area may be credit-dependent and is already too expensive.

I think the far more likely scenario is that some bloated Chinese real estate flippers are trying to get into some North America action.

They do not buy shitboxes. Look for clues in Manhattan and other prime areas.

Nancy Says:
Just got a call from my agent saying my last offer was rejected. There were more than 14 offers and mine is $100k short. The house is in west San Jose area, listed ~$940K. I offered more than the list price. Now I feel much reliefed. I’d rather rent.

Wow. West San Jose housing is still hot. I've noticed that there are next to no open houses in the area, very few houses for sale, and I'd estimate more than half of the "For Sale" signs are "Sale Pending" already, most after a few days on the market.

It must be because the local high school district is really cracking down on folks who don't live here, but attempt to send their offspring to local "desireable" schools anyway. Now that fake PG&E bills, fake driver's licenses and other dirty tricks don't work anymore, you actually have to live here to get in. It's time to pay up :-)

The obvious alternative is to rent here. craigslist has, among others, a 4BR/2000sf house in Cupertino for $2,200 (probably negotiable, too).

I rather not be in San Jose at all.

I think all schools should be privitized, with merit based financial aid. The free market will make education a lot cheaper.

... Says:
It’s absurd to say that China based engineers can afford to buy what their US counterparts can no longer afford.

Yeah, you're probably right.

However, in the end, it's all about who can run faster in the rat race, and what your potential neighbours are willing to sacrifice for a little extra speed.

My daughter's high school newspaper recently had an article by a student complaining about the impending increase in the price of food sold at the school. She gets only $0.50 per day from her parents, and can thus eat only every second day as it stands.

Seems incredible, but you'll believe it if you look into the faces of some of the kids going there.

Now that fake PG&E bills, fake driver’s licenses and other dirty tricks don’t work anymore, you actually have to live here to get in.

They should be prosecuted to the fullest extent.

In what part of the Bay Area are you seeing this? I think the West SJ/Cupertino/Sunnyvale area where Nancy is looking for a house in a good school district is doing ok.

Marin, Mill Valley/Tam Valley to be precise. I've been looking at Mill Valley, Corte Madera, and Larkspur for the past year. We sold on the Peninsula and have been renting since moving up here.

Face Reality Says:

March 7th, 2006 at 6:36 pm
sounds like an unbelievably strong market

I think you two should get together and go see Brokeback Mtn. Then you can snuggle up in your chaps and Face Reality with a jar of astroglide.

You two fuckers can fuck yourselves. Face Reality, fuck you, you are a fucking pompous fuck, the kind the fucking valley is filled with. Oh and BTW, I was just up in the BA and I have to re-state, most of you fucks are fucking fooling yourselves. The BA is a fucking shithole, the weather isn't really nice, it's just not bad. Sure there are some good areas, La Morinda for one. Berkeley, kiss my ass, the worlds largest public urinal. SF? For the most part a ghetto, sure there are nice areas, but for the most part the BA is a shithole, get over it.

Whatever desirability must have been discounted by the market long ago. A good school district will not help future appreciation. It may actually hurt because schools can only deteriorate, unless of course there is more revenue.

I think the West SJ/Cupertino/Sunnyvale area where Nancy is looking for a house in a good school district is doing ok.

I think you need to Face Reality and realize that a single fucking posting on a blog does not make a robust market.

Berkeley, kiss my ass, the worlds largest public urinal.

We install urine detectors in the public, like those in Singapore.

No, I have no particular stake in the numbers for Cupertino vs. other towns. It just seemed very surprising that Cupertino would go down while most other towns go up so much. How many sales do you think there were in Cupertino in 1/06 or 1/05? Probably very few. There isn’t a whole lot of turnover there, especially in January.

Mountain View also dropped. Burlingame (much more desirable) dropped 20%.

The main thing I don’t like about it is that it has no downtown area.

If you count Vallco... :)

I love Los Altos downtown.

If it is not what you want there must be something wrong, right?

This is a half joke anyway. Don't worry. ;)

surfer-x and I are the same guy, but he's the half from the alternate universe where Spock has a beard.

Median price is VERY misleading, I hope we can come up with more effective and telling measures.

I remember some economist came up with a more realiable measure: the cost of the SAME house on a timescale, not median home price. You throw in a few new condo in the mix, the median price goes down, you sell a few more SFH in the mix, the median price goes up. Instead of looking at median or average housing price, you need to look at "comps", and that's why I think as a consumer, you just need to go pore over the details, dig up the transaction record of homes in your desired neighborhood - meaning that few streets - and then determined if price has gone up or down.

Btw, I don't understand why Burlingame is so attractive, it is next to the airport for god's sake. I don't want to live anywhere in the path of airplanes. Burlingame is the ONLY airport community that I have seen that is considered "attractive", in other cities, people can't pay enough to get away.

Half of Belmont is on the fault line, and San Mateo is quite mixed (some crime). Millbrae again is an airport community, the only nice areas up the peninsula from geographical point of view is Portola Valley. The other neighborhoods are just hyped up due to its commute distance right in the middle of SF and San Jose. But honestly, I can't imagine why people want to pay a premium to be near a major international airport.

Los Altos has a better brand than Palo Alto, but you really want to drill down to the details of WHERE in Los Altos and Palo Alto one wants to live. It is after all about what you see and feel every day.

There are parts of Los Altos that is very Mountain View like, close to apartments, non-descript, and the nice part (bordering Los Altos Hills and Western Cupertino, where the downtown is). Parts of Palo Alto is nice, but again, some part around Oregon Expressway feels more like Mountain View and San Jose than Palo Alto. You can say the same thing about almost every West Valley community. Part of Cupertino near foothill is nice, but the rest is just San Jose, the same applies to Los Gatos. The consistenly nice neighborhood all the way through is Monte Sereno, and hence then price tag. The part of Saratoga north of 85 is just like any part in San Jose, and the school district is in San Jose, so there is really no advantage in acquiring the Saratoga address.

It is not the China-based engineers who are flipping properties in North America. It is the owner / entrepreneur of those outsourcing companies that are doing so, they are typically based in the US/Canada which makes it convenient for them to look for outsourcing projects (yeah, now you know who your anger should be directed at).

I know of two such owners of IT outsourcing firms with operations in China who are flipping properties in Palo Alto and Cupertino. Chinese love Palo Alto more than Cupertino, it is just more expensive to get into the former.

By the way, what makes Burlingame so desirable? I’m not all that familiar with the towns in north San Mateo county. I know Hillsborough is nice (and very expensive).

I was told that Burlingame is for those who like Hillsborough but cannot afford Hillsborough. :)

I like some San Mateo town because people are more mature. San Jose looks like a third world country.

surfer-x and I are the same guy, but he’s the half from the alternate universe where Spock has a beard.

I see. Mirror Mirror.

I guess one advantage that those towns have is that you can commute to either SF or Silicon Valley from there. Does this explain why the prices there are higher than in Santa Clara county?

Probably.

Burlingame is the ONLY airport community that I have seen that is considered “attractive”, in other cities, people can’t pay enough to get away.

I thought planes usually take off towards the bay and land from the south. I bet they rarely fly directly above Burlingame. Can someone confirm?

Fewlesh,

yeah, that strip actually starts from Los Altos Hills, along the foothill, cutting down through western Cupertino, Saratoga, and all the way down to Los Gatos along Highway 9, that area is what you really expect where 1M+ properties should be. I still can't get used to thinking any 40-year home of 1500 sqft on a 5000 sft lot going for 1M.

Peter P Says:
They should be prosecuted to the fullest extent.

These folks know that, if caught, they won't even get their wrists slapped. Nothing to lose, a lot to win. It's a no-brainer.
I can't imagine there's shame in the equation, but probably some high-fiving if it works. :-)

Here's a page with details about what documentation is now required to enroll a child in one of these highly desireable schools:

http://www.fuhsd.org/regINFOns.htm

Actually you guys are giving the Chinese and Indian families too much credit.

The first generation Chinese and Indian families save like crazy at a serious peril of their quality of life, many of them live the life of a third world country while earning a first world salary, that's how they save up with so much downpayment.

Now, one generation down, the situation is entirely different. Disgusted with their parents' obsessive saving habits, the next generation grow up no different from any white Americans and sometimes they overract by being an obsessive spender. I have this ABC friend who started carrying an 80K-and-growing credit card loan in his early 20s.

So what you are competing against is the survival instinct of a typical first generation immigrant, who always work harder. Then all are on the same playing field.

Girgl,

wow, that is stringent. I heard the FUHSD has a lot of address frauds, so they are ramping up on the investigation. Perhaps we can all start a business here as an address cop (as opposed to a library cop on Seinfeld?), lol.