8 ms·

No ‘For Sale’ Sign? Silicon Valley Buyers Aren’t Deterred

29 points by e15ctr0n 10y ago

jedberg 10y ago
Prop 13. It's destroying the market here. People don't want to sell because it could cost them dearly. If I wanted to sell my house and move next door (our houses cost about the same), besides the fees to the real estate agents, my property taxes would literally double (from about 10K a year to 20K) and I've only lived here (Cupertino, right next to Apple HQ) for eight years. My neighbor, who has been in the house for 35 years, would go from 1K a year to 20K a year. Because of Prop 13, I'm highly unmotivated to sell.
- linkregister 10y ago
  I agree that Prop 13 is destructive and an unfair wealth transfer from the young and new residents to the house owners with seniority. On the other hand, the only meaningful macro effect it can have is to reduce liquidity and moderately buoy prices. A family can't upgrade to a larger house without incurring the increase, so they don't move. A family receives a better job offer... but the commute will be too far so they don't accept it. A family wants to move, but they demand a premium to sell to cover their increase of property taxes. On the other end, a family buys a house that is far too expensive than reasonable (6x income) but does this with the expectation that their frozen property tax rate will not scale with their income and their property value. Families that aren't willing to accept this default risk miss out on being able to purchase in that area. Both of these effects are bad but I think it only partially explains the differential between house prices and annual incomes. I assert the overarching reason is scarcity due to geographical constraints and insufficient development. If Prop 13 were a primary factor, we would see high house prices in the Central Valley and near Joshua Tree.
  - SamReidHughes 10y ago
    The macro effect you aren't accounting for is political -- there's no penalty to residents for nimby policies.
    - linkregister 10y ago
      Sure there is. They can't upgrade to a larger house when they have another child because they won't be able to find a deal that compensates their huge property tax increase. They have to live with the crushing reality that their children most likely won't be able to live in the area unless they were the percentage of those who could be successful. These are enormous costs. I agree that they may not be apparent to most residents.
  - jedberg 10y ago
    > On the other hand, the only meaningful macro effect it can have is to reduce liquidity and moderately buoy prices. Exactly. The article is about the lack of inventory. I was explaining why there is a lack of inventory.
    - linkregister 10y ago
      I got sucked in by the dramatic language: "destroying" and missed the general point you were making.
- karma_vaccum123 10y ago
  Of course, and prop 13 also creates soft forms of blight. Old people stay in their homes long after they should have sensibly downsized...but ANYWHERE they move in California (even into a one-bedroom condo in nowhere-ville) will increase their property taxes! So they don't move. But they also can't afford the outrageous local costs for upgrades and basic maintenance, so their homes are slowly falling apart.
  - jedberg 10y ago
    Actually there is an exception for old people in certain counties where they can keep their old property tax. Which makes the problem even worse because they can sell their house, upsize and yet keep their old 1980s tax rate.
tptacek 10y ago
This isn't a very substantive comment, but as a former (brief) resident of the area, I'll make it anyways and take my licks for it: It blows me away what houses in SFBA go for. They aren't very nice houses! They're often cramped, the lots are tiny, the block landscaping isn't nice, nothing is walkable, nobody is all that close to public transportation, the surrounding areas are all strip malls and trunk roads, traffic is a nightmare. At least when you over-pay for an apartment in Brooklyn you're in one of the greatest cities in the world. What's, really, the upside of living in Palo Alto? Palo Alto is nicer than Sunnyvale, I guess? But as a college town, it's not even as good as Evanston, let alone Ann Arbor.
- aphextron 10y ago
  >What's, really, the upside of living in Palo Alto? Work, that's it. No one I know actually likes living here (short of the 20+ year resident homeowners). It's just where the jobs are.
  - p1itopre 10y ago
    I assume you guys (or gals) are single or DINKs :) School districts are by far the biggest driver in South bay. I'm personally not sure about SF.
    - tptacek 10y ago
      School districts are the biggest driver all around the country. If you stipulate that Palo Alto is part of a major metro area, and you can choose to work in any of the major metros in the US, you don't pick Palo Alto for the schools, do you?
      - karma_vaccum123 10y ago
        Palo Alto public schools -do- rank very highly. There are also preschool programs run by the Stanford education college that are well-regarded. Local private schools rank among the best in the nation (as well as being absurdly expensive), and you will find lots of kids that go to school all over the world...their parents can afford it. I get that you don't like Palo Alto. Its not Oz. But you seem to be casting it as a dumpy suburb that has exploded for no reason. (edit: wow, you really don't like Palo Alto!)
aweisman 10y ago
Obligatory silicon valley clip: https://www.youtube.com/watch?v=4B0JmWeW5XE https://www.youtube.com/watch?v=4B0JmWeW5XE
venomsnake 10y ago
Everything becomes for sale, given the right price.
RyanMcGreal 10y ago
This phenomenon is not peculiar to super-heated markets like Silicon Valley. We've had several people cold-visit us to see if they can buy our house, and I live in Hamilton, a mid-sized Southern Ontario city around 90 km west of Toronto. Our real estate market has certainly picked up over the past several years (after decades of being severely undervalued), but median house prices are still less than half of what you pay closer to Toronto.
legohead 10y ago
I've gotten a few letters from realtors asking if my house was for sale because they had a client that really wanted to move into the area. Out of curiosity, I contacted one of these realtors, and they asked me questions about my house -- how many bedrooms, bathrooms, detached garage, etc. When I said it was 2 bedroom, she said "oh, well, my client wanted a 3 bedroom. but since you are thinking of selling anyway..." -- it felt like a scam, like they were just trying to see who was willing to sell their house so they could be my realtor.
Symbiote 10y ago
When I lived in a nice part of London, I got letters asking me to sell the house every week, sometimes more than once a week. "Mr and Mrs Jones are both professionals, with two children at private school. They are looking to move into this area. ... Properties like yours are selling for over £600,000 on this road." etc. I was renting, so obviously these all went in the bin.
spullara 10y ago
Every comment in here seems to be missing the obvious. Palo Alto, Menlo Park, Mountain View, Cupertino and San Francisco have the most successful companies in the US/world. Further, the concentration of talent feeds back on itself as people that move here get addicted to the fact that they can meet with almost anyone in the tech world that matters in an hour. Hell, when people visit me in Los Altos I take them on a driving tour where we check out Apple, Yahoo, Google, Facebook and finally through Palo Alto to Stanford before getting back to my house in about an hour. If you are a developer you should move here and leverage the network that exists. I moved to SF in 1996 to be a software engineer at WebLogic from consulting in Chicago and I can tell you that remotely working for some company would never, ever have given me the opportunities that actually meeting with people in the Bay Area has given me. Further, my kids go to Cupertino public schools and they are some of the best in the nation. It is amazing how stringently they enforce the residency requirement, even to the point of visiting the homes of students who they suspect don't live in the district. Palo Alto schools are also very good though lots of people send their kids to the private schools there and in Menlo Park. Someone also mentioned the outdoor opportunities. It is amazing how close the wilderness is to almost anywhere in the Bay Area. I can get to the beach, the mountains, or a redwood forest within an hour.
- karma_vaccum123 10y ago
  This needs to be reinforced. Go look at Fortune's list of the world's most valuable companies. Those that are American are all located with a one-hour drive. I live near a ton of Apple executives. They have moved here from all over the world. Simply put, if you want to work at (for example) Apple and have a significant position in the company, you must be here. Must.
  - AstroJetson 10y ago
    Fortune Top 10 - Walart, AK / Exxon, TX / Apple, Cupertino CA / Berkshire Hathaway, NE / McKesson, SF CA / United Health Care, MN / CVS Health, RI / General Motors, MI / Ford, MI / AT&T, TX. Only two in CA, the rest are scattered over the US. But if you had to pick another place to live, looks like Detroit would be a good choice.
gfo 10y ago
I'm curious... what has this done to the job market for those who aren't in tech? Where do the nurses, garbagemen, policemen, etc. live? Their salaries are not nearly that of those in tech so I can't imagine these prices wouldn't lower the number of people in essential non-tech jobs in the area (unless they're willing to suffer through the commute).

29 points by e15ctr0n 10y ago

Prop 13. It's destroying the market here. People don't want to sell because it could cost them dearly. If I wanted to sell my house and move next door (our houses cost about the same), besides the fees to the real estate agents, my property taxes would literally double (from about 10K a year to 20K) and I've only lived here (Cupertino, right next to Apple HQ) for eight years. My neighbor, who has been in the house for 35 years, would go from 1K a year to 20K a year. Because of Prop 13, I'm highly unmotivated to sell.

linkregister 10y ago
I agree that Prop 13 is destructive and an unfair wealth transfer from the young and new residents to the house owners with seniority. On the other hand, the only meaningful macro effect it can have is to reduce liquidity and moderately buoy prices. A family can't upgrade to a larger house without incurring the increase, so they don't move. A family receives a better job offer... but the commute will be too far so they don't accept it. A family wants to move, but they demand a premium to sell to cover their increase of property taxes. On the other end, a family buys a house that is far too expensive than reasonable (6x income) but does this with the expectation that their frozen property tax rate will not scale with their income and their property value. Families that aren't willing to accept this default risk miss out on being able to purchase in that area. Both of these effects are bad but I think it only partially explains the differential between house prices and annual incomes. I assert the overarching reason is scarcity due to geographical constraints and insufficient development. If Prop 13 were a primary factor, we would see high house prices in the Central Valley and near Joshua Tree.
- SamReidHughes 10y ago
  The macro effect you aren't accounting for is political -- there's no penalty to residents for nimby policies.
  - linkregister 10y ago
    Sure there is. They can't upgrade to a larger house when they have another child because they won't be able to find a deal that compensates their huge property tax increase. They have to live with the crushing reality that their children most likely won't be able to live in the area unless they were the percentage of those who could be successful. These are enormous costs. I agree that they may not be apparent to most residents.
- jedberg 10y ago
  > On the other hand, the only meaningful macro effect it can have is to reduce liquidity and moderately buoy prices. Exactly. The article is about the lack of inventory. I was explaining why there is a lack of inventory.
  - linkregister 10y ago
    I got sucked in by the dramatic language: "destroying" and missed the general point you were making.
karma_vaccum123 10y ago
Of course, and prop 13 also creates soft forms of blight. Old people stay in their homes long after they should have sensibly downsized...but ANYWHERE they move in California (even into a one-bedroom condo in nowhere-ville) will increase their property taxes! So they don't move. But they also can't afford the outrageous local costs for upgrades and basic maintenance, so their homes are slowly falling apart.
- jedberg 10y ago
  Actually there is an exception for old people in certain counties where they can keep their old property tax. Which makes the problem even worse because they can sell their house, upsize and yet keep their old 1980s tax rate.

tptacek 10y ago

This isn't a very substantive comment, but as a former (brief) resident of the area, I'll make it anyways and take my licks for it: It blows me away what houses in SFBA go for. They aren't very nice houses! They're often cramped, the lots are tiny, the block landscaping isn't nice, nothing is walkable, nobody is all that close to public transportation, the surrounding areas are all strip malls and trunk roads, traffic is a nightmare. At least when you over-pay for an apartment in Brooklyn you're in one of the greatest cities in the world. What's, really, the upside of living in Palo Alto? Palo Alto is nicer than Sunnyvale, I guess? But as a college town, it's not even as good as Evanston, let alone Ann Arbor.

aphextron 10y ago
>What's, really, the upside of living in Palo Alto? Work, that's it. No one I know actually likes living here (short of the 20+ year resident homeowners). It's just where the jobs are.
- p1itopre 10y ago
  I assume you guys (or gals) are single or DINKs :) School districts are by far the biggest driver in South bay. I'm personally not sure about SF.
  - tptacek 10y ago
    School districts are the biggest driver all around the country. If you stipulate that Palo Alto is part of a major metro area, and you can choose to work in any of the major metros in the US, you don't pick Palo Alto for the schools, do you?
    - karma_vaccum123 10y ago
      Palo Alto public schools -do- rank very highly. There are also preschool programs run by the Stanford education college that are well-regarded. Local private schools rank among the best in the nation (as well as being absurdly expensive), and you will find lots of kids that go to school all over the world...their parents can afford it. I get that you don't like Palo Alto. Its not Oz. But you seem to be casting it as a dumpy suburb that has exploded for no reason. (edit: wow, you really don't like Palo Alto!)

aweisman 10y ago

Obligatory silicon valley clip: https://www.youtube.com/watch?v=4B0JmWeW5XE https://www.youtube.com/watch?v=4B0JmWeW5XE

venomsnake 10y ago

Everything becomes for sale, given the right price.

RyanMcGreal 10y ago

This phenomenon is not peculiar to super-heated markets like Silicon Valley. We've had several people cold-visit us to see if they can buy our house, and I live in Hamilton, a mid-sized Southern Ontario city around 90 km west of Toronto. Our real estate market has certainly picked up over the past several years (after decades of being severely undervalued), but median house prices are still less than half of what you pay closer to Toronto.

legohead 10y ago

I've gotten a few letters from realtors asking if my house was for sale because they had a client that really wanted to move into the area. Out of curiosity, I contacted one of these realtors, and they asked me questions about my house -- how many bedrooms, bathrooms, detached garage, etc. When I said it was 2 bedroom, she said "oh, well, my client wanted a 3 bedroom. but since you are thinking of selling anyway..." -- it felt like a scam, like they were just trying to see who was willing to sell their house so they could be my realtor.

Symbiote 10y ago

When I lived in a nice part of London, I got letters asking me to sell the house every week, sometimes more than once a week. "Mr and Mrs Jones are both professionals, with two children at private school. They are looking to move into this area. ... Properties like yours are selling for over £600,000 on this road." etc. I was renting, so obviously these all went in the bin.

spullara 10y ago

Every comment in here seems to be missing the obvious. Palo Alto, Menlo Park, Mountain View, Cupertino and San Francisco have the most successful companies in the US/world. Further, the concentration of talent feeds back on itself as people that move here get addicted to the fact that they can meet with almost anyone in the tech world that matters in an hour. Hell, when people visit me in Los Altos I take them on a driving tour where we check out Apple, Yahoo, Google, Facebook and finally through Palo Alto to Stanford before getting back to my house in about an hour. If you are a developer you should move here and leverage the network that exists. I moved to SF in 1996 to be a software engineer at WebLogic from consulting in Chicago and I can tell you that remotely working for some company would never, ever have given me the opportunities that actually meeting with people in the Bay Area has given me. Further, my kids go to Cupertino public schools and they are some of the best in the nation. It is amazing how stringently they enforce the residency requirement, even to the point of visiting the homes of students who they suspect don't live in the district. Palo Alto schools are also very good though lots of people send their kids to the private schools there and in Menlo Park. Someone also mentioned the outdoor opportunities. It is amazing how close the wilderness is to almost anywhere in the Bay Area. I can get to the beach, the mountains, or a redwood forest within an hour.

karma_vaccum123 10y ago
This needs to be reinforced. Go look at Fortune's list of the world's most valuable companies. Those that are American are all located with a one-hour drive. I live near a ton of Apple executives. They have moved here from all over the world. Simply put, if you want to work at (for example) Apple and have a significant position in the company, you must be here. Must.
- AstroJetson 10y ago
  Fortune Top 10 - Walart, AK / Exxon, TX / Apple, Cupertino CA / Berkshire Hathaway, NE / McKesson, SF CA / United Health Care, MN / CVS Health, RI / General Motors, MI / Ford, MI / AT&T, TX. Only two in CA, the rest are scattered over the US. But if you had to pick another place to live, looks like Detroit would be a good choice.

gfo 10y ago

I'm curious... what has this done to the job market for those who aren't in tech? Where do the nurses, garbagemen, policemen, etc. live? Their salaries are not nearly that of those in tech so I can't imagine these prices wouldn't lower the number of people in essential non-tech jobs in the area (unless they're willing to suffer through the commute).