patrick.net

The bubble is still there in many areas. Some of it is due to government constantly keeping it up, some due to other factors. Government isn't going to keep subsidizing them long enough, besides with Republicans swooping into the congress lately took away all the subsidizing.

It really is just a matter of time. Patients is rewarded if you wait a few more years. Free market won't let the prices stay up there, currently they are just unrealistic.

Let me get this straight, according to the article, prices are typically 24 months of pay. So areas where the median salary is ~$100k (Cupertino, MV, Sunnyvale, etc.), prices should only be $200k? Yeah, ok!

Here are the 30 year averages of price to median household income from HSBC’s A Froth Finding Mission: Detecting US housing bubbles for the Bay Area MSAs (circa 2005):
Oakland-Fremont-Hayward (MSAD) 5.9
SF - San Mateo-Redwd City (MSAD) 6.4
Six times definitely seems like a floor (at least to me) given the historic trend. Bear in mind they were 11x around peak.

Yes indeedy! 6x is the floor. The bay are is a reeeal bargain. 11x peak, that made sense.

But wait. Let me semi-randomly pick some other places (the following from City-data.com) -

Hampton VA
Estimated median household income in 2009: $46,440
x 2 years: $92,880
Estimated median house or condo value in 2009: $204,300
House / income: 4.399

Colorado Springs, CO
Estimated median household income in 2009: $52,984
Estimated median house or condo value in 2009: $213,800
House / income: 4.035

Boca Raton, FL
Estimated median household income in 2009: $68,254
Estimated median house or condo value in 2009: $393,400
House / income: 5.76

Fort Wayne, IN
Estimated median household income in 2009: $41,038
Estimated median house or condo value in 2009: $100,800
House / income: 2.456

Columbia, MO
Estimated median household income in 2009: $42,800
Estimated median house or condo value in 2009: $166,000
House / income: 3.878

Now, let's try the bay area:

Belmont, CA
Estimated median household income in 2009: $99,517
Estimated median house or condo value in 2009: $833,405
House / income: 8.374 (YOWZA!)

Berkeley, CA
Estimated median household income in 2009: $60,625
Estimated median house or condo value in 2009: $676,700
House / income: 11.16 (OMG!!)

Capitola, CA
Estimated median household income in 2009: $52,250
Estimated median house or condo value in 2009: $534,808
House / income: 10.235 (OUCH!)

Daly City, CA
Estimated median household income in 2009: $76,357
Estimated median house or condo value in 2009: $552,600
House / income: 7.23 (FINALLY something affordable - wait, it's a craphole)

Hayward, CA
Estimated median household income in 2009: $61,752
Estimated median house or condo value in 2009: $320,400
House / income: 5.188 (Now we're talking baby! Cheap!)

Mountain View, CA
Estimated median household income in 2009: $92,504
Estimated median house or condo value in 2009: $799,500
House / income: 8.64 (Buy now!)

Redwood City, CA
Estimated median household income in 2009: $67,611
Estimated median house or condo value in 2009: $782,400
House / income: 11.57 (But it's really not Deadwood Sh!!ty anymore!)

So I am seriously chastened. My old rule of thumb is gone. I am now thinking 4x family income is reasonable for a lot of this Country. I still think better parts of the bay area are reasonably a bit more.

I also see areas that are really not all that desirable in the Bay area still up above 8x.

Sounds like Columbia, MO is a great place to make $75k. Let's remember a $800k house there is probably next to non-existent, few if any houses would ever cost that much, and $350k is probably a mansion or near to it. I don't know that town at all, but I have lived in 5 states and know from experience that a median house around here (BA) is a comparative dump. So let's be real, the equivalent to that $800k MV house in Columbia is probably $80k. In other words the quality of housing stock in these 'fly-over areas' is much, much better. Not only are they cheaper, they are better.

But I'll be fair and say I see your point. There are other factors as to why prices are what they are. I'm just not going to go out and buy a house in MV any time soon. If I lived in Columbia, I definitely would.

SF ace says

The real difference between location is what you find in the top 25% of the jobs, which is where areas like Mountain View and San Francisco shines and Columbia are absolute duds.

http://online.wsj.com/article/SB10001424052748704422204576130520662465078.html?mod=googlenews_wsj

Former Sun CEO Worries About Region's Prospects

"I see a migration from the early days of the Valley. We aren't doing manufacturing; we aren't doing design; we aren't doing computers. It's all moving to Asia and other places where there are lots of technical engineers who are willing to work at a more reasonable salary because they don't have to spend $3.5 million on a home and pay half of it to taxes."

http://articles.sfgate.com/2007-05-13/business/17245441_1_carl-guardino-silicon-valley-leadership-group-high-tech-industry/2

On the Record with Carl Guardino

A: Unequivocally, yes. Not only to the CEOs in the boardroom, but to any family you talk to in their living room. What we hear time after time from CEOs as well as frontline employees is how incredibly difficult it is to come here and stay here. That truly does have an impact on a company's bottom line when the cost differential is so much higher here than it is in other regions around the state, nation and globe, or the ability to recruit top talent is also impacted.

You mentioned housing. It probably is the top concern we hear about in Silicon Valley from both CEOs and employees in terms of local issues. Does that have an impact? Let me put a finer point on it.

Hewlett-Packard and Dell are the top two computer-makers in the world. Corporate headquarters for HP are located in Palo Alto and Dell is in Round Rock, Texas. Obviously, they both have people and facilities around the globe.

In those two communities where their corporate headquarters are and where a lot of research and development takes place, the median resale price for a home in Palo Alto is about $1.6 million. In Round Rock, Texas, it's about $180,000 except the home and property are bigger.

We hear from HP all the time that a huge deterrent to the ability to recruit and retain people anywhere near Silicon Valley is the housing issue.

We don't hear that from Dell, which is also a member company, about their operations in Round Rock. It does continue to plague us and we will continue to sound the alarm.
----------------------------------------

If so why do so many Local SV companies have a larger workforce outside in places like Minnesota, Oregon, Washington, Texas, Arizona etc etc etc.
Even Omaha, Nebraska is very attractive for SV employers. Employers like HP (PA) have over 300K employees world wide. Many certainly do not live in Mt View or any part of the SF Bay Area.

So Wong, are you moving to TX any time soon?