patrick.net

OO Says:

> What was Hillsborough like when you were growing up?
> Was it always prime?

Hillsborough has always been super nice, but the city has changed… When I was a kid the city was made up of the “super rich” people I caddied for at the Burl CC who were decedents of the PU Club and Bohemian Club guys who controlled the state in the late 1800’s and the “working rich” the young doctors and young lawyers who could buy one of the modest ranch homes built on one of the subdivided estates for under $100K until mid way through Carter’s presidency. Today the city still has a lot of decedents of the power brokers of the late 1800’s, but unless you play golf at Cypress, the Burl CC or the SFGC or head up to the Grove for Spring Jinx or the Summer encampment you don’t see much of them. Many of the young professionals that bought in the 60’s and 70’s have moved on and in recent years the tech. guys have been tearing down a lot of the $3mm single story ranchers to build McMansions.

> From what you wrote, I sensed that Baywood/Highlands
> were nicer areas than they are today, relatively
> speaking of course, because I know of a couple of
> friends who cashed out of their homes in Baywood
> to move to Burlingame. I was rather surprised that
> they would move a few blocks but according to them
> Burlingame is decisively nicer than Baywood San
> Mateo, so either Burlingame shot up real fast, or
> part of San Mateo slowed down quite a bit.

The Baywood and Highlands areas of San Mateo are very different. Many say that “San Mateo Park is the best area of San Mateo, but I have always liked Baywood (that is a little more suburban but has some amazing homes designed by legendary architects) better. Baywood is the area of San Mateo just west of downtown and just south of Crystal Springs Road that borders Hillsborough, and my High School that was designed by Willis Polk For Templeton Crocker (of the Crocker Bank, Southern Pacific Railroad Crockers) and his wife to be Helene Irwin (of the C & H sugar Irwins) . The San Mateo Highlands is an are of mostly flat roof Eichler homes at the top of the hill just north of 92 and east of 280 and due to fog pouring through the Belmont gap the Highlands has the second worst (foggy and windy) weather in San Mateo. Even without considering the bad weather most of Burlingame is nicer than the Highlands area of San Mateo, but in my opinion other than a few streets in Burlingame Hills (that is actually outside the Burlingame city limits in unincorporated San Mateo County) the Baywood area of San Mateo is nicer than all of Burlingame.

> Did Half Moon Bay become less prime over the years?

When I was a kid Half Moon Bay was a lot like West Marin with mostly actual farmers (the Half Moon Bay High School yearbook had “future framers” in the senior poll and a photo of the 4H club next to the surf club in the early 80’s) and some random hippies. Other than a few nicer new home developments the coast has not changed much since I used to ride the Sam Trans bus to Half Moon Bay in the late 70’s to go Boggie Boarding. Things would be a lot different on the coast today if the tree huggers had not stopped Highway 1 and 92 from becoming full freeways and stopped Interstate 380 dead it it’s tracks at 280… I don’t know who would want to live over at the coast since it is almost always foggy (Montara just north of HMB is the “foggiest spot in the US) and traffic is a nightmare (especially when Devil’s slide collapses every few years)…

Perhaps hard landing is now out of the question.

http://tinyurl.com/n3pnd

DS,

now can you adjust those figures for CPI?

They are already adjusted into real dollars.

urk. so the $550 in 1980 was really $400 or something at the time? (and which of the dollars are 'real'? ;) )

in that case, median rent, after adjusting for inflation or CPI increases, has gone up 300% in 26 years in real terms? due to the info tech boom in CA? then maybe you need to adjust for median wages as well...

FAB,

thanks for the very insightful information on the Peninsula, an area that I know little about. It's just incredible that a small stretch can have so much variance of micro-weather. The South Bay, on the other hand, seems to have a bit less difference in weather except up in the mountains.

I've been to Half Moon bay over a couple dozen times and I only saw it once without fog.

Randy,

I fear the correction will be a lot more drawn out. Bernanke is no Volcker and a mercifully quick correction seems unlikely. The political outlook for quite action is very bad. Bush II is the lamest of lame ducks and the legislature is gonna be close and combative after the November elections.

i will arbitrage some socialized medicine from over here, newsfreak... ;)

DS,

Those are the numbers. Come to my blog if you want to download the data sets.

300% increase in 26 years in real terms is not out of line for expectations. Even depressed areas of the US like the Midwest have experienced over 100% increases during the same period.

Further, the medians for this area moved dramatically over the past 26 years as the demographics & population changed rapidly. Real rent medians can climb quickly when more high-rent units are constructed over 20 years (which includes SFH rentals).

You're an empirically literate sort. Don't just mock the data; come up with some contradicting data and we'll talk. I love contradicting data.

test message trying to post from the treo.

You’re an empirically literate sort. Don’t just mock the data; come up with some contradicting data and we’ll talk. I love contradicting data.

??? I'm not mocking it -- i'm looking for explanations for 300% increases in asking rents -- as per the 30% of household income housing distress benchmark. i just want to make sure the data is adjusted for wage inflation before drawing any conclusions... there has probably been a huge demographic shift due to hi tech industries starting up in the last 25 years. a number of factors have to be controlled for or explained before making any firm conclusions...

Larry Nusbaum,

You are correct, but you are ignoring something. Alternative returns.

In your analysis, the owner who sells out of the bubble before the top did nothing with her extracted equity + her net savings from renting versus owning (which is about 2.5x in the Bay Area).

There were really only slightly less than 2 years of real-gains in housing prices in the Bay Area that significantly exceeded the returns one could have earned in a well-diversified, tax-managed investment portfolio.

Given that, the owner who exited, banked their equity, invested both the extracted equity and incremental savings, then buys back in when price reversion occurs: comes out dramatically ahead of the "buy & hold" owner.

That's assuming the bubble bursts, and in a timely fashion -- sometimes they take years to unwind. I think another faulty premise is the assumption that you should be 'playing' residential real estate like some sort of speculative penny stock, rather than just letting people buy places and live in them at reasonable, affordable prices and thus ensure a decent social settlement.

Larry's site on the one hand seems to be downplaying fears of a bubble, and on the other hand providing huge amounts of advice on how to buy foreclosing properties cheaply. a lot of foreclosure purchase advice is stock standard seminar material, already written up in lots of books and binders over and over, in large type with big margins and lots of empty pages for 'notes' -- every time the seminars blow through town, the Town Clerk gets hit with frenzied requests for foreclosure lists from 100 people at once...

The advice is mostly about how to exploit others' unfortunate situations for your own attempted profit.

I see. People want to know about foreclosures. Some of them may be on the pointy end of a foreclosure themselves before long, they have reached record highs in the last 2 years in this country due to the boom unravelling and interest rate hikes. One place bought for $260K in 2003 just sold for $90K. Another bought for $460K sold for $240K. I've posted links to both these stories recently in this blog. Both of these 'corrections' brought asking price reasonably back into line with rental returns, pointing to prior irrational exuberance (aka 'bubble'). It would seem to me that right now IS a good time to be discussing cashing in on foreclosure sales if you had a mind to.

I am the calm in the eye of the storm.

The "still point" of the "turning world"?