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Silicon Valley home prices hit record high

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M

Marty Chinn

Member
How high does this ladder stretch? With spring buyers vying for a limited number of properties, the median price for Santa Clara County homes reached yet another all-time high in April, climbing to $905,000. San Mateo County set a record, as well -- $1,194,500 -- as did Alameda County, where the median price tag rose to $690,000.
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"Prices are jumping," said Kristine Kim-Suh, a Palo Alto-based agent for the Sereno Group. "Some properties are selling for $30,000, $40,000 or $50,000 beyond last month's comparables, and it's making buyers that much more aggressive. For example, they know that the comparable is $825,000 and they're bidding $885,000, they're so anxious. It's even surprising the listing agents."
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The April sales volume was 7.5 percent higher than a year ago in Santa Clara County, representing a three-year high, and 16.5 percent higher in Contra Costa County, making for a five-year high. But sales dropped by 10.4 percent in San Mateo County and by 3.1 percent in Alameda County. Looking at the region as a whole, Bay Area sales were up by 7 percent over last year.
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On the Peninsula, "nothing has slowed down," said Alain Pinel agent Nick Granoski, who recently worked with first-time homebuyers Becky and Brandon Stroy, who had been outbid and worn out since their house-hunting began in December.

But by throwing an extra $400,000 on top of the $1,350,000 list price on a Mountain View ranch-style home in the Varsity Park neighborhood, the Stroys were finally winners.

"There were 17 other offers and ours was sort of just barely high enough to win," said Brandon, an attorney. He received news of the successful bid while on his way to work, taking it in with "a mixture of joy and relief and surprise -- and then terror, I guess."
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David Yeh, a semiconductor engineer, grew up in Houston and attended college in Austin, Texas: "But as hot as the real estate market is there, it's not as hot as it is here, for sure. I was not expecting houses to go in seven days, and probably even sooner as cash offers."

Nor did he expect to land his own place in less than 24 hours, but he did: a townhouse near downtown San Jose.

Kim-Suh, the Serreno agent, helped him bid on another townhouse in the same development last month. He lost. In early May, while perusing the MLS listings, she spotted the second townhouse: same size, same layout. She called Yeh, who gave her the green light to negotiate. She called the listing agent, who encouraged her to make a bid, as the sellers were hoping for a fast sale. Sight unseen, Yeh offered more than the $620,000 asking price and, after some phone jockeying, the deal was sealed that night: "Zero days on market," Kim-Suh noted.
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It's crazy here and it sucks. I feel lucky I found something recently. I bet I could flip it and make a profit already too.

Just a small note about the part where homes are going 30 to 50k more than the comparables over the previous month. That doesn't mean over list. Homes area already selling well over the list price. That means an additional on top of being well over list.

More detail here:

http://www.mercurynews.com/news/ci_28162254/silicon-valley-home-prices-hit-record-highs-again
 
K

Kieli

Member
I wonder what will happen to this market if you add foreign speculation on top of it.

It will be a housing market electric boogaloo. $2 million townhomes or $1.5 condos.
 
F

FriedConsole

Banned
That's funny because it seems like businesses and residents are fleeing to San Fran proper. Been going there off and on for 16 years and it is becoming a ghost town. In 1999 it was crazy.
 
old

old

Member
We need enact some sort of regulation about this. Housing is too important to the health of a society and an economy to be at the mercy of a free market.
 
A

Aureon

Please do not let me serve on a jury. I am actually a crazy person.
old said:
We need enact some sort of regulation about this. Housing is too important to the health of a society and an economy to be at the mercy of a free market.
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eh, i'm a commie at heart, but the issue is actually excessive building regulations.

If there's too much demand.. up the supply and shut up some goddamn NIMBYism.
 
L

liliththepale

Banned
old said:
We need enact some sort of regulation about this. Housing is too important to the health of a society and an economy to be at the mercy of a free market.
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It balances out. If housing is going up somewhere, either housing is going down elsewhere or the economy is going up in general.
 
E

EatinOlives

Member
Aureon said:
eh, i'm a commie at heart, but the issue is actually excessive building regulations.

If there's too much demand.. up the supply and shut up some goddamn NIMBYism.
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This.

Cities don't build high rises for shits and giggles. They're built to meet rising demand. People can't ban high rises then complain housing costs are too high, they can't have their cake and eat it too.
 
T

Talka

Member
EatinOlives said:
This.

Cities don't build high rises for shits and giggles. They're built to meet rising demand. People can't ban high rises then complain housing costs are too high, they can't have their cake and eat it too.
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The people banning high rises aren't the ones complaining about housing costs.
 
I

iamblades

Member
old said:
We need enact some sort of regulation about this. Housing is too important to the health of a society and an economy to be at the mercy of a free market.
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Which has only been a complete disaster everywhere it has been tried.

Even the most die hard leftist at this point should be able to admit that price controls are a failed concept. Shit has been tried over and over since Diocletian, and the result is always shortages.
 
S

Syriel

Member
EatinOlives said:
This.

Cities don't build high rises for shits and giggles. They're built to meet rising demand. People can't ban high rises then complain housing costs are too high, they can't have their cake and eat it too.
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Talka said:
The people banning high rises aren't the ones complaining about housing costs.
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In San Francisco, those people are one-and-the-same.

BTW, in news that may seem odd, San Jose has been showing up as a more expensive city than San Francisco when it comes to housing.

http://www.movoto.com/blog/top-ten/most-expensive-housing-zip-codes/

That South Bay resurgence! ;)
 
P

Polari

Member
iamblades said:
Which has only been a complete disaster everywhere it has been tried.

Even the most die hard leftist at this point should be able to admit that price controls are a failed concept. Shit has been tried over and over since Diocletian, and the result is always shortages.
Click to expand...

Still need a solution though. It's not just Silicon Valley - globally this is becoming a massive issue.
 
G

gcubed

Member
Kieli said:
I wonder what will happen to this market if you add foreign speculation on top of it.

It will be a housing market electric boogaloo. $2 million townhomes or $1.5 condos.
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There already is, basically.

I've been looking around and I live in the cheap part of San Mateo county. An 850 sqft 2/1 just sold for over 700k at the end of my block. I just... Don't see this lasting forever and am getting gun shy about buying

Banks are pushing interest only mortgages and crappy arms right before interest rates rise. Is not going to end well.

At some point companies that never turn a profit are going to crash, slowing SV down
 
M

Marty Chinn

Member
Kama_1082 said:
Which banks are willing to lend that much over asking price?
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They aren't. They are offering based on the appraised value which certainly can be higher than the list price. The buyer is on the hook to pay the difference if it doesn't appraise as high as the offer. If someone gets in a contract that waivers contingencies and it appraises way less, they can get really fucked.
 
E

Edward

Banned
Vancouver is worse.

At least the crazy real estate prices in San Fran are at least partially justified by the crazy wages.
 
M

Marty Chinn

Member
Edward said:
Vancouver is worse.

At least the crazy real estate prices in San Fran are at least partially justified by the crazy wages.
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It's weird people keep mentioning SF in this thread when it's not about SF. Silicon Valley is 45 min to an hour south of it.
 
B

bodyboarder

Member
If you are buying in that area, you do so for work, so can afford it. Feel sorry for the long term renters who will no doubt have been kicked out already due to owners selling.
 
K

Kama_1082

Banned
t26 said:
Many are paying cash.
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I'm an engineer just like the person in the OP and couldn't imagine being in this profession that I'd ever get paid that much, even if I moved over there.. I would imagine that he should be getting paid 500k to even try to afford this house with such a huge cash payment, right?
 
N

NuclearSpy

Member
Glad I left. The cost of living there was just soul crushing.

That being said, my dad needs to develop his land there and cash in on that. Time for him to retire.
 
M

m_shortpants

Member
It fucking sucks.

I work and live here but I don't think I'll ever be able to afford a house.

Foreign investors, primarily Chinese, are swooping in and outbidding everyone with cash offers for a lot of houses. It's pretty crazy right now.

Slayven said:
What are rental prices like?
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In Sunnyvale, CA (in between Santa Clara/San Jose and Mountain View), there are new, 1 bed/1 bath 600sqft apartments that go for $3000-$3500 a month.
 
T

The Beard

Member
m_shortpants said:
It fucking sucks.

I work and live here but I don't think I'll ever be able to afford a house.

Foreign investors, primarily Chinese, are swooping in and outbidding everyone with cash offers for a lot of houses. It's pretty crazy right now.



In Sunnyvale, CA (in between Santa Clara/San Jose and Mountain View), there are new, 1 bed/1 bath 600sqft apartments that go for $3000-$3500 a month.
Click to expand...

That's an extreme example. I also live in Silicon Valley. 3.5 years ago I rented a newly renovated 800sqft 1 bed 1 bath w/ washer and dryer, with cable and all utilities included for $1500. About a year and a half ago I moved into a 3 bed 2 bath house for $2100 a month. Both places are in very nice neighborhoods, I refuse to live in shitty areas. You can find reasonable rent prices if you look.
 
S

Syriel

Member
Talka said:
No. The people voting against high-rises are home-owners. The people complaining about housing costs aren't.
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Home owners are a noticeable minority in San Francisco. While some are going to vote against additional high-rises in order to protect their "investment," the majority NIMBY forces in San Francisco against additional development are the tenants rights groups.

Renters in San Francisco have long had a majority and renters have long been against additional development for a handful of reasons.

  • NIMBY stuff like "views" and "increased congestion." If you have a RC place in SF, you pretty much have all the rights of an owner (except you don't worry about property tax or building maintenance).
  • The fear that an increase in ownership will eventually push the City from majority renter to majority owner and if that happens then tenant protections will be at risk of legislative change.
  • A desire to block projects to use as a bargaining chip for something else.

Now, when you figure in the extremely high cost of construction in SF (due in part to all the NIMBY roadblocks that can be thrown up during planning), the end result is that only high end construction and the associated below market rate construction is viable. There is no money to be made in middle class housing.

So middle class housing doesn't get built, which then in turns leads to TICs being the only viable option for the middle class. And the only way to get a TIC is to buy a apartment building, evict all the tenants and sell off the units as TICs.

The forces protesting higher housing prices AND the forces protesting against development in San Francisco are one-and-the-same.

pillowtalk said:
Yeah, but It's really not that far. Been commuting that route for 5+ years now.
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Yeah. Silicon Valley and San Francisco are all one big blob as far as jobs are concerned.

Devil Theory said:
Required reading for anyone interested in this subject:

http://techcrunch.com/2014/04/14/sf-housing/

One of the most detailed pieces I've seen on the situation; dispels some myths about the causes.
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This is an excellent piece and should be read by all.
 
S

Slayven

Member
m_shortpants said:
It fucking sucks.

I work and live here but I don't think I'll ever be able to afford a house.

Foreign investors, primarily Chinese, are swooping in and outbidding everyone with cash offers for a lot of houses. It's pretty crazy right now.



In Sunnyvale, CA (in between Santa Clara/San Jose and Mountain View), there are new, 1 bed/1 bath 600sqft apartments that go for $3000-$3500 a month.
Click to expand...

Good lord
 
A

atr0cious

Member
For all this state claims to talk about being enlightened, they sure have their head up their ass when it comes to economic equality. Can't wait to get out of here.
 
F

friskykillface

Banned
I wonder if san fran will ever limit tourists and etc from entering, san fran will become elysium in the future ;p

these prices are insane 0_o
 
H

hokahey

Member
There are a lot of hot markets out there right now where people are over bidding just to get the house, forgetting they still have to get the damn thing appraised. I've never seen so many low appraisals (vs purchase price) in all my years in this industry. Either the values will catch up to the bids, or the thing will bust soon. It's an odd time for housing with the economy finally near full recovery. People are ready to buy high, but the comps aren't there yet. It's a catch 22.
 
M

Messofanego

Banned
"You're always going on and on about how this is such a good neighborhood. Do you know why it's such a good neighborhood? Do you know why your shitty house is worth 20 times what you paid for it in the 1970s? Because of people like us moving in and starting illegal businesses in our garages. All the best companies — Apple, Google, Hewlett-Packard, even Aviato — all of them were started in unzoned garages. That is why Silicon Valley is one of the hottest neighborhoods in the world — because of people like us, not because of people like you." - Erlich Bachman, Silicon Valley
 
M

Mik2121

Member
Been to San Francisco twice and it felt like a great city where you could walk to anywhere, great weather and views from above the hills. My brother also used to live in Mountain View until earlier this year when he moved to another branch (Switzerland).
I would love to live for a while in that city if the wages let me afford it, but even then the rents are massive and buying a house there for such amount of money is just ridiculous...
 
R

ronito

Member
My fave story I have about housing in Silicon Valley was that I was going to lunch with a CFO of a rather large company. We were driving to the lunch place in his stunning new convertible porsche. I said, "So, do you live in the city?" to which he gave me an honestly stunned look and said, "Just who the hell do you think I am?! I don't have that kind of money!!"
 
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