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Million Dollar Shack : Trapped inside Silicon Valley's housing bubble

unirr said:
Are you suggesting the bay area is the only one?
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Please indicate where I said such a thing. Are you srs or just trolling? Of course there are other great places to live. Just because the BA is expensive doesn't make it automatically terrible.

I wonder then what's your personal background and why this clear logic escapes you.
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My background is I'm a California native (southern, actually). I can afford to live in the bay area and like many of things it has to offer. Is it perfect? Of course not. No place is.


Archimedes said:
If you think low interest rates are what's driving the Silicon Valley real estate market, you're clueless. The run up in values here have little to nothing to do with interest rates and everything to do with supply/demand issues. And the lion's share of the demand isn't being driven by interest rates.

Where the market goes from here is anyone's guess, but an interest rate induced bubble this is not.
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Very much this. The madness is 2008 is different than the madness now. There is simply a lot of money in this area and people are willing to spend it to be here. Do low rates play a part? Of course they do, but people spending all this money on homes in the peninsula actually have the money, unlike the situation that caused the last big national crash. There's a reason why it was only a small dip in the peninsula while everything else crashed hard.
 
Archimedes said:
Do you all you guys get your financial advice from Huff Po or do you actually follow the markets and/or work in these industries you love to disparage?

And you think startups get their money from banks, borrowing at rates supported by FOMC decisions?

The risk this area faces, which is very real, is the fact that the IPO window is closing, due not to rate issues, but to the fact that recent tech IPO's have underperformed badly. That, along with changes in hedge fund appetite for investments in private tech right now, is putting a squeeze on venture money and valuations in the Valley. That is the single biggest risk to real estate in the valley right now, not a rise in interest rates.
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^^^ Ahhh so after I cut through the thick condensention, you're saying the small percentage of IPO money and venture cap money in Silicon Valley is causing the housing bubble in the bay area and country?

Makes sense.

Real estate and the stock market historically grow opposite of each other. If the market is not performing or volatile, people put their money into real estate. But again, I get my real estate info from Huff Po and Motley Fool.
 
Archimedes said:
:laughing Bitter much? Arrogant much?
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Don't deflect. You've already been made a joke of yourself earlier in this thread where you challenged me on markets being manipulated and said I was a fool for saying so only to be quoted in saying that very thing.

I'm here with time to burn w/ a fat option straddle @ SPY 2090 level waiting for it to break to either side. They've been trying this level for over a year now so i'm laughing my ass off at the struggle that's occuring at this level once again...
The breakout will net me huge cash.. so, i'm just here on my multi-screen setup waiting to click a button.

So, lets have some conversation.. that is if you're not burdened with your 9-5 that you need to pay the bills.
 
Archimedes said:
Do you all you guys get your financial advice from Huff Po or do you actually follow the markets and/or work in these industries you love to disparage?

And you think startups get their money from banks, borrowing at rates supported by FOMC decisions?

The risk this area faces, which is very real, is the fact that the IPO window is closing, due not to rate issues, but to the fact that recent tech IPO's have underperformed badly. That, along with changes in hedge fund appetite for investments in private tech right now, is putting a squeeze on venture money and valuations in the Valley. That is the single biggest risk to real estate in the valley right now, not a rise in interest rates.
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The money that ends up in the hands of VC firms is derived from various sources :
> Gains from equity markets (facilitated by the trillions the fed is printing and low interest rates)
> Gains from real-estate investments (facilitated by the trillions the fed is printing and low interest rates)
> Hedge fund funnels (facilitated by the trillions the fed is printing and low interest rates)
> Gains from all other investment classes (facilitated by the trillions the fed is printing and low interest rates)

So, on that point and the sourcing therein, you're wrong (Again).

Beyond the VC circus is the broad and far reaching equity market...

> Any 9-5 tech worker gets stock options in the bay area, when the equity market is zooming, so is the wallet of a 9-5'er tech related worker in the bay area .. they cash out and buy homes
> Tech companies flourishing in equity markets = more hiring and more capability to pay more for talent

> International investors ... Investors meaning that they have cash at work in investments and investment class vehicles which are doing good due to low interest rates/trillions being printed by central banks.

It all comes right back to that : Money printed by central banks and low interest rates. If that was doing nothing for the economy, they wouldn't do it. It clearly is and it clearly benefits the investment class and trickles down.

This is clear logic, econ 101 ... So, where do you get your news/understanding from? the toilet?

P.S - I have tons of friends over in Atherton who work at various VC firms and whom are ex-wallstreet workers now in the bay area. Let me know if you'd like to have a meeting w/ one of them so you can get educated on how all of this works.
 
meanwhile there is something like 6-7 million people around here who aren't going anywhere. :laughing
 
Dubbington said:
Dont you think that low rates increase the investors desire to buy and flip or buy and rent? Their buying power is greater with lower rates.

If a rate hike happens, the market will immediately correct, not go down but the constant growth will stop.

Supply and demand makes sense but also low rates. It's a combination of it all.
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:thumbup Good post
 
Two things that really suck about the Bay Area as a result of all this are the ridiculous traffic and the ridiculous wait time at restaurants.

I avoid the first with a moto and the second by cooking ;)
 
KnifeySpoony said:
Please indicate where I said such a thing. Are you srs or just trolling? Of course there are other great places to live. Just because the BA is expensive doesn't make it automatically terrible.

My background is I'm a California native (southern, actually). I can afford to live in the bay area and like many of things it has to offer. Is it perfect? Of course not. No place is.
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You got extra detail on my logic. I'm assuming it has no flaws as you haven't pointed any out. I love the nature/weather in the bay area. I'm traveled so I know that main attraction is elsewhere. I'm not a native. So, I have no qualms with leaving. I can more than afford living here. So it's a matter of : Does it makes sense to. I'm getting older and am going to start a family soon. As such consideration, there's more to life than the bay area. Buying a house easily in cash and skipping a 30 year financial ball and chain that could go south and being able to see 25+ years out w.r.t to financial support for my family matters more to me than the bay area. Does that make sense?

No place is perfect as you said .. So, I act accordingly and don't get fooled into paying stupid prices to be in any particular place.
 
unirr said:
Buying a house easily in cash and skipping a 30 year financial ball and chain that could go south and being able to see 25+ years out w.r.t to financial support for my family matters more to me than the bay area. Does that make sense?

No place is perfect as you said .. So, I act accordingly and don't get fooled into paying stupid prices to be in any particular place.
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My friend paid $115,000 cash for a really nice two-story house in San Antonio, with a garage and a massive backyard with shade trees.

But then he gained 50 lbs because it's called Fat Antonio for a reason. :laughing
 
KnifeySpoony said:
LOL at the logic that high housing prices makes a place terrible to live. No, it just makes it expensive. If you can afford it, it's a great place to live. If you can't, then move on. Live within your means.
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WTF does that even mean?

Seriously.

When I get a decent normal person pay of $60k a year and rental costs are almost 60% of the net income, there isn't much I can do to live more within my means. Having even 30% tied up in housing is mind boggling stupid according to any financial planner. And there are people getting WAY less income than me here.

Rents have pretty much gone up an average $100 each year the last five years. And other general living expenses too. I have a 14 year old car, old phone, shitty clothes, and no hobbies. I can't trim any more fat off my financial bone.

Maybe $500 a month is nothing to you, but it's 15% of my monthly income. That shit cuts into EVERYthing else I need to pay. So yeah. The sacrifices someone in my position has to make because housing costs are so high really DOES make the bay area a shitty place to try and live.

Unless by telling me to live within my means you simply mean for me to GTFO of this Lexus SUV utopia that I clearly can't afford? (Even though half a decade ago I was able to have a great life here at slightly less income).
 
Zerox said:
My friend paid $115,000 cash for a really nice two-story house in San Antonio, with a garage and a massive backyard with shade trees.

But then he gained 50 lbs because it's called Fat Antonio for a reason. :laughing
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One of my neighbors just bought a house in Texas with 2 1/2 acres out in Bumfuck (just past it), and told me his new mortgage is $258/month. He said it came with a running tractor, so he is living the same dream as I have, to move some dirt around. $258/month. I could collect aluminum cans and come up with $258/month.

Who else remembers that "$200k Fixer Upper" alongside 101 about halfway to Coyote Valley. Seems like a bargain now, but that shit was funny back then.
 
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antidote said:
WTF does that even mean?

Unless by telling me to live within my means you simply mean for me to GTFO of this Lexus SUV utopia that I clearly can't afford? (Even though half a decade ago I was able to have a great life here at slightly less income).
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In those words... no. But basically yes. There are plenty of dramatically more affordable places to live in this state or other states. Does it suck that many people (renters) are being priced out of the the expensive parts of the bay area? Yes. But I don't think it is a human right to be able to live anywhere you want. As they say, you gotta pay to play. And for many people the right choice is to live within your means and leave an expensive area to one that you can afford. Most of the wage earners in Redwood City that I meet don't live here. They're all commuting from the east bay. I will be joining them. Because even though I can afford it, I don't think it's worth the price of admission to live here.
 
antidote said:
WTF does that even mean?

Seriously.

When I get a decent normal person pay of $60k a year and rental costs are almost 60% of the net income, there isn't much I can do to live more within my means. Having even 30% tied up in housing is mind boggling stupid according to any financial planner. And there are people getting WAY less income than me here.

Rents have pretty much gone up an average $100 each year the last five years. And other general living expenses too. I have a 14 year old car, old phone, shitty clothes, and no hobbies. I can't trim any more fat off my financial bone.

Maybe $500 a month is nothing to you, but it's 15% of my monthly income. That shit cuts into EVERYthing else I need to pay. So yeah. The sacrifices someone in my position has to make because housing costs are so high really DOES make the bay area a shitty place to try and live.

Unless by telling me to live within my means you simply mean for me to GTFO of this Lexus SUV utopia that I clearly can't afford? (Even though half a decade ago I was able to have a great life here at slightly less income).
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bingo.


(here come the "just work harder and make more money" replies, though)
 
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