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$782k over asking for a house in Sunnyvale
- SCAQTony 9y agoIf the house were for sale by a politician I wold suspect that it was one hell of a bribe!
- andrewstuart2 9y agoWorking at a huge tech company like Google or Facebook is attractive to me, but not enough to justify spending $2.5M on a smaller house, or 12x more per square foot. And this is just in Phoenix. I know there are other places with tech jobs and much lower cost of living, or better income-to-COL ratios.
- maxerickson 9y agoI imagine the calculation is more like risking $1 million out of several million of assets. There is always the potential for a crash in the housing market, but it can also end up that the $2.5 million is a winning investment (as compared to being spent).
- tryingagainbro 9y agoThey might have tens of millions and think that the house will retain and probably increase value. Greater fool theory. You are not buying this with a $150k salary.
- coding123 9y agoYep this was bought on an upswing that will be impossible to sell at this value again for 100 years.
- aqpgreendragon 9y agoThey aren't paying that much for the house. They're paying that much because it's located in a good area. They'll knock it down and built a brand spanking new house and sell that for a profit. This happens every day in hot real estate markets
- brianwawok 9y agoThe description kind of hinted the lot would be big enough for 2 houses. Would the local lets law you flatten the house, build 1 house to live in on half the land, and say sell the other half of the land for a million bucks to a developer?
- hkmurakami 9y agoYou go through a city planning commission to do the sudivison.
- methodover 9y agoStartup idea: Let people pool money to buy larger lots and do exactly this.
- vasilipupkin 9y agoexactly
- Balgair 9y agoDepends on the HOA, if there is one, and the city planner's office. You may not be able to do so at all or the new house may be very expensive, especially in a place like Sunnyvale with 'green' building codes and state earthquake laws. I mean, yeah, that's still chump-change for a $2.5M lot, but those HOAs will get you.
- deleted 9y ago[deleted]
- tehlike 9y agoyou tell: https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-...
- BoorishBears 9y ago> but not enough to justify spending $2.5M on a smaller house, or 12x more per square foot. Maybe it's just the wording but I don't get that. If they're paying enough that 2.5M is within reach where it wouldn't be in Phoenix is it really a problem? I'm in the middle of a job search right now and I'm finding that while absolute numbers sound appalling (ie. 2.5M for a 2,000 sq.ft. house) the income:COL is not as dramatic. I rent, but so far places that have high-end apartments that cost 2x what my current one does pay about 2x more (usually even a bit more) on average. To me it comes down to wether you'd like to live in Sunnyvale or Phoenix as long as the companies in both locales are paying enough to afford comparable housing (I wouldn't expect identical square footage). Remember we're talking about a 2.5 Million dollar home 1 mile from what is probably one of the most advanced tech campuses on Earth (and probably has some of the best paid). When you put it like that I don't think it's hard to see why some people would sacrifice a little square footage for living and working at a place like that over Phoenix in an instant (I know I would).
- deleted 9y ago[deleted]
- vasilipupkin 9y agoNo, you people don't get it. That house is on a large lot. You could knock it down, build a much bigger house for a 1 million and have a 4-5 million dollar house for 3.5 million. it's a good deal.
- BoorishBears 9y agoI do get that, 2.5M for that plot is still a large amount of money. The point is that even a 3.5M for the new house will be a lot, but by virtue of it's location and salaries at Apple it's justifiable
- dsp1234 9y agoHere is a snapshot of sales of lots that are 10.000 to 20.000 sqft sold in the last 3 months: https://www.redfin.com/city/19457/CA/Sunnyvale/filter/min-lot-size=0.25-acre,max-lot-size=0.5-acre,include=sold-3mo https://www.redfin.com/city/19457/CA/Sunnyvale/filter/min-lo... 2,5M, with respect to the existing market, doesn't appear to be out of the norm.
- 2600 9y agoCan you extrapolate your thoughts on Phoenix real estate?
- valuearb 9y agoI have a 50% bigger single story custom house on a 50% bigger lot in a really convenient location with virtually no traffic in one of the most sought after cities around Phoenix. It's worth $700k. You can get a decent house in a nice location for $400k in Phoenix itself.
- deleted 9y ago[deleted]
- angryasian 9y agoi'd rather be dead in california than alive in Phoenix
- rconti 9y agoMuch lower cost of living / much better income-to-COL ratios? Better sure, but I don't know about MUCH better. Arizona is famously inexpensive. Sure, you might be comparing to the midwest, but there I'm not sure there are the high paying jobs there to support the "much better income-to-COL ratios" claim.
- Mankhool 9y agoPlease come to Vancouver, BC. We have bidding wars on houses and many have sold WAY over the asking price. Here's a fine example: http://www.cbc.ca/news/canada/british-columbia/vancouver-teardown-real-estate-1.3449869 http://www.cbc.ca/news/canada/british-columbia/vancouver-tea...
- habosa 9y agoAside: I don't think it should be legal to not accept the asking price for a home. With any other thing I want to buy, if I agree to pay the list price I get the item. Sometimes I can haggle the price down but the listed price is always accepted. This system of listing a price to 'get people in the door' and then igniting a bidding war makes it impossible for anyone to shop for a house except for realtors who are 'in the know' and can tell you the real price based on listing.
- maxerickson 9y agoThat just shifts things to everybody listing their house for far more than it is worth. The response to that is to either not worry about it or to have some entity fixing prices...
- TheSpiceIsLife 9y agoOne issue I see is: houses aren't like any other item, there are exactly only one of each house. If you miss out on the house you want, you can't go across town and get another one just like. Edit to add: Also, it occurs to me, if you go to ebay.com you can bid at auction for general consumer goods. So there's that.
- lsadam0 9y ago> Aside: I don't think it should be legal to not accept the asking price for a home. You're attacking basic supply and demand here. Let's say I set a list price and then figure out I could have asked for more...you want to legally bind me to sell for less than what the free market is willing to offer? Where does this stop? Should we ban speculative investments as a whole?
- blackskad 9y agoNo, it just reverses the dynamics: instead of starting out low to get people into the door, you start with a list price that's too high. If the bids you're getting are always far below your asking price, you know the free market isn't willing to cough up what you want, and you lower the price to something that is more in range. If your initial asking price is $1MM and all bids are around $800K, consider dropping the list price to $850k and see if they want to play now. That's the usual dynamic in Belgium.
- jarjoura 9y agoYes South Bay is so overpriced right now it’s ridiculous. Keep in mind that 5 years ago that same house would have sold for 650k and even then people would have been complaining that’s it was way overpriced. One things certain, east bay across the 84 is still under a million at the moment. I suspect that will change soon.
- jondubois 9y agoYes, I bet that in the near future, a modest house will cost $20 million, Bitcoin will be $100K per coin and Facebook will be a $10 trillion company. Poor SV suckers will spend their lives paying off their $20 million shoeboxes with their $500K per year salaries. Meanwhile I will be living in some exotic place in a mansion which I will have bought for $200K. I like where the future is going.
- iopuy 9y agoI bet that in the near future, a modest house will cost $20 million, Bitcoin will be $100K per coin and Facebook will be a $10 trillion company One of these things is not like the other.
- exclusiv 9y agoYeah I'm in Southern California and I could buy a primary but I'd have to spend at least $1.25M for a small place where I'd want to live. It just doesn't make sense though. I rented a $2M house last year for $4.3k/mo. It's just way cheaper to rent at that level. You're either renting the house or renting the money (mortgage). I've been buying investment properties for $500-600k each that cash flow instead. I don't want to rely on appreciation and I don't want to come out of pocket to cover the debt. The cash flow offsets your liability and improves debt to income so you can get approved for buying more cash flowing homes (once you can show income). So you should be able to buy a home at least every 2 years. I may buy a primary if the market corrects, but otherwise I'm perfectly fine renting my primary. Too many people get infatuated with the idea of owning a primary residence. If you live in an expensive area, it's best to earn the higher salary there and rent, invest elsewhere and move somewhere cheaper later.
- 9y ago
- anticipation 9y agoI'm guessing it's bitcoin money !
- ccorda 9y agoRedfin listing: https://www.redfin.com/CA/Sunnyvale/1129-Prunelle-Ct-94087/home/1376492 https://www.redfin.com/CA/Sunnyvale/1129-Prunelle-Ct-94087/h...
- victorNicollet 9y agoIn France, there's no such thing as paying over the ask price. You are forced to sell to the first buyer who offers to pay the ask price. I suspect that this is done to prevent prices from rising too quickly.
- jandrese 9y agoAre asking prices artificially limited somehow, or do people just set the price high so they can negotiate between potential buyers?
- saiya-jin 9y agono they aren't limited anyhow, and if I would be selling my flat there this is definitely a tactic to do
- planteen 9y agoAre houses ever sold in auctions in France? How long are typical houses on the market? It seems in this situation that you would start the house price high and then lower it over weeks/months until you get an offer. In the US, sometimes houses are priced "low" intentionally and the listing agent says something like "offers will be accepted until noon Monday" to encourage over asking, all cash offers, and waiving inspections. Sometimes, houses are also sold at auctions in the US. This is common for foreclosures and seizures, for example.
- wtvanhest 9y agoIMO, over the long-run, the market always wins. You cannot randomly change an unimportant technical detail and actually impact the long-run pricing. The type of mechanism that is described where you must take the price offered has so many drawbacks, like... how do you handle contingencies, etc.
- foota 9y agoAre you familiar with auction theory? The conditions for the auction can significantly change the optimal bid.
- matt_wulfeck 9y agoIt's a 13k lot a mile from Apples new campus. The person who bought it knows it's potential. Even if you make 10% of that initial investment you're still doing amazing.
- eigenvalue 9y agoI think you're on to something here; usually when you see transactions that seem absurd from the outside, there is some other angle that you don't know about (like, you can rip down the existing house and build one 3x the size that you can sell for $8mm).
- loeg 9y agoOr 6-7 smaller houses and sell them for ~$1m each.
- ryandamm 9y agoNot on a 13k square foot lot! But yeah, that has happened elsewhere in the Bay Area. (Zoning tends to prevent it, though, so there's an element of regulatory arbitrage.)
- mediaman 9y agoYou could definitely fit that many units in a 13k square foot lot. Fitting a narrow format house on a 2k square foot lot (40x50') is plenty doable. Even more so if they have some adjoining party walls, as with townhomes. Though as you mention, zoning may prevent it. Some areas have 5,000 s.f. minimum lot sizes.
- methodover 9y agoThis should be illegal. There's no good reason why you shouldn't be able to split up your 13,000 sq ft lot into smaller lots and sell those separately if you want to. Setting some reasonable state right-to-split-lots bill might go a long way to helping solve the housing crisis.
- Jeremy1026 9y agoMy $235,000 home is also 4-BR, 2-BA, 2000 sq ft. Its just located on the wrong coast.
- bsvalley 9y agoI see this everyday in the Bay Area. In this case it seems to be a tech worker. Usually these are bought by some investors in China and the houses are never occupied.
- ryandamm 9y agoI doubt that's the "usual" case -- yes, cash-only transactions occur, and foreign investment buyers are in the market, but I don't see a ton of vacant homes. I recall hearing from a real estate agent that foreign purchases were fewer than 10% of the transactions, but I have no idea what her source was. Vancouver circa 2016, though...
- napolux 9y agoIf they keep paying for it, you should just really rise prices. It's the market, baby.
- loeg 9y agoYes, presumably the asking price was just far under market.
- misiti3780 9y agoAnd I thought NYC RE was bad .... Northern California is out of control
- Iknowsecurity 9y agoA colleague that was looking to buy a house last Spring said that the house he put a bid on in San Francisco sold for 100% above the listing price.
- ryandamm 9y agoI assume that's last "spring," and not that your team is doing agile real estate sprints. But I'd be happy, and rather curious, to be wrong....
- Iknowsecurity 9y agoFixed. Thanks!
- loeg 9y agoThey're paying for that 13,000 sq feet of property, not so much the house.
- wnevets 9y agoIsn't this how trump is accused of accepting bribes from the russian government?
- koolba 9y ago> The four-bed, two-bath house — less than 2,000 square feet — listed for $1,688,000 and sold for $2,470,000. Using a ballpark figure of $500/mo per $100K of house, this comes out to $12,500/mo. That's $150K/year, mostly after tax (there's a bit of a deduction for interest but let's ignore that for now). Using the standard 30% rule, that means you should have a gross income of about $500K. What I'm questioning is, how many people are there with that income level to eventually sell these insanely expensive houses to? Sure you have a bunch of all cash offers but that eventually dries up as well right? Plus 4BR at 2000sqft isn't particularly spacious. And only two bathrooms at that size? IMHO that's insane.
- stygiansonic 9y agoTwo people working at a big tech company in the area will easily gross > 500K total comp.
- koolba 9y ago$250K/year isn't chump change either. Let alone both having such jobs. Salaries in SV are high but they're not that high for most. At the single income level it's rare to have employees (NOTE: not contractors or business owners) surpass $3-350K. Plus, if you plan on raising a family[1] then you'd have the added costs of a full time nanny as I doubt anyone with a $250K+ job is going to be around much to raise their kids. [1]: Which I'm assuming they are if they're buying a 4BR house...
- dmoy 9y agoYou get promoted once at a place like Google or Apple after 4 years and you're making like 250k/yr (as a software person). 300-350k is easily attainable. I think there's a lot of people on HN who are unaware of how high comp is at the big 4/5 tech employers.
- jsjohnst 9y agoYou obviously don't work at Apple! ;)
- dagw 9y agoI guess it must be a cultural thing. In major cities in Sweden 15% over the asking price is the asking price and 50% over the asking price, while rare, is hardly unheard of. No seller ever accepts the asking price unless they're really desperate.
- thriftwy 9y agoI've read that in Sweden, participation of recent immigrants in economy is lower than in most other European countries. Why not create some jobs for them at building new homes and propping price down? Genuine question.
- dagw 9y agoYou can't build houses without land to build on, and desirable land makes up most of the price of desirable housing.
- thriftwy 9y agoI don't think of Sweden as a country that lacks land. Population of Sweden is comparable to that of Bay Area but seriously. I imagine if you could just go and buy a home in "the next suburb by the road" really affordably, it would deflate prices for most desirable places too.
- dagw 9y agoIf you could just get plenty of cheap land in the suburb down the road someone would have built houses there 30 years ago. Sure there is land and there are plenty of places where you can buy a nice house for less than, say, $100k. However none of those places are within a one hour commute of where any jobs are.
- thriftwy 9y agoWell, I'm looking at map of Sweden near Stockholm and sure as hell I see a lot of place for building up. Glades with direct access to highway.
- ryandamm 9y agoFor all the comments about listing shenanigans, we're overlooking a basic game theory issue here: when you set a price that looks to be near the value of the home, you're saying you're willing to accept reasonable offers. You're setting an implicit cap on the value of the home. An obviously undervalued home, though, in addition to driving up interest (and creating a bidding war), suggests a much fuzzier cap so there's less signaling around price and a less obvious ceiling to offers. In other words, buyers are stuck wondering what other buyers might offer, rather than discussing whether to go some normative amount over the ask (like 10-20%). Also, there's a 'curse of the winner' dynamic in auction-like environments, where the deal will necessarily go to the party that values the asset the highest. (This is evidently destructive to profits in oil and gas leasing auctions, for what it's worth.) I think that's the dynamic, because no one is actually fooling anyone by underlisting prices, and real estate agents talk to each other and know immediately if something is priced to generate interest, or if the price is closer to what the buyer expects.
- trhway 9y ago>The property is one of more than 50 South Bay homes that sold in the last month for at least $200,000 above the listing price. More than half of those deals were made in Sunnyvale. Others were made in Cupertino, Saratoga and West San Jose as they mentioned this house is close to that humongous Apple new campus, and the mentioned areas - too. Given the current traffic and what it can become near that campus, one can understandably want to live closer, especially given the current fashion for the biking, walking, etc.
- lisper 9y agoAbout a half hour north of Sunnyvale, there is this brand new 3300 sqft spec house offered at 2.5M: http://www.glenlochway.com http://www.glenlochway.com It has been on the market for months without selling. [UPDATE] Downvotes? Seriously? Why?
- dandr01d 9y agoWhat's the catch?
- lisper 9y agoIt's on a small sloped lot, so it has no yard. And it's not in Sunnyvale.
- rconti 9y agoI don't get your point. It's a different house, in a different location. I live in Redwood City too; the schools aren't as good as Sunnyvale, the commute will be longer, etc etc.
- Iknowsecurity 9y agoSome areas in Vallejo above Oakland are also currently rising in price pretty quickly. After San Francisco, even Oakland is running out of affordable houses. There is a Ferry that goes from Vallejo to the Ferry building in San Francisco with free wifi. Unsurprising more people decide to live there.
- CPLX 9y agoGreetings from New York. You people are fucking insane, for the love of God please consider building some apartment buildings. Cheers.
- jchung 9y agoThe strength of NIMBYs here is dramatically higher than in New York. That is supported structurally through the fragmentation of local politics. Source: I'm a New Yorker transplant to Palo Alto.
- JumpCrisscross 9y ago> The strength of NIMBYs here is dramatically higher than in New York. That is supported structurally through the fragmentation of local politics. Also the lack of developers. Probably owing to concentrated land ownership, e.g. the Getty family. New York's structural consolidation was driven, in part, by private companies developing real estate and transportation systems. Developers seem to play a unique political role in organizing, in absentee, renters. Homeowners tend to self organize. This is because (a) they bet a lot of money on their houses, (b) have the time and money to politically organize, evidenced by (a), and (c) stay put for a while. Renters don't naturally self-organise. Developers naturally counterbalance homeowners by seeking to (x) increase housing supply and (y) consolidate small plots into larger ones, thereby also (z) driving density.
- sureshv 9y agoApartments wont change the dynamics of SFH in the South Bay/Peninsula given local zoning rules. The main driver of price seem to be the local schools.
- detroiter99 9y agoGreetings from Detroit. Lolololololol Cheers.
- wott 9y agoSomeone who wants a house is not really willing to have an apartment. Someone who is ready to put this amount of money in a house is definitely not willing to get an apartment.
- Justsignedup 9y agoI remember a time when a company would open a campus, and provide cheap housing rental or purchase but only to employees. Now the same is happening, except with crazypants pricing.
- rbanffy 9y agoAfter living in Dublin, Ireland, for a year, this looks rather unimpressive.
- sureshv 9y agoListing under to create a bidding war is definitely a thing in the Bay Area. It's really gotten out of control the last few years. From last month: Listing: $2M - https://deleonrealty.com/property/4136-briarwood-way-palo-alto/ https://deleonrealty.com/property/4136-briarwood-way-palo-al... Sale Price: $3.2M - https://www.redfin.com/CA/Palo-Alto/4136-Briarwood-Way-94306/home/1391820 https://www.redfin.com/CA/Palo-Alto/4136-Briarwood-Way-94306...
- megamindbrian 9y agoHEY! MOVE TO PHOENIX. HOUSES ARE CHEAP!
- misterbwong 9y agoThis is absurd but not quite as absurd as the headline makes it out to be. FTA: Over-asking sales are at least partly the result of agents’ sleight of hand. It’s become common strategy to list homes under their market value in order to entice Silicon Valley buyers; they are all too willing to fight over the few houses available in this chronically tight market [...] Given prices to the north, spending less than $2.5 million for a house in Sunnyvale on a large lot — about 13,000 square feet — “wasn’t a wrong move,” Kalkat said.
- aidenn0 9y agoAs a tech worker with a large family (this house is too small for my family), I believe I am now officially priced out of every moving to SV. And that's with me being quite wealthy; I have about $1MM in equity in my house, and various other investments and retirement savings.
- cdkee 9y agoSouth San Jose (Evergreen) and the East Bay would be within your reach most likely.
- aidenn0 9y agoWhat are commute times like to where the jobs are from those (Cupertino, Palo Alto it seems)?
- edison85 9y agoMany jobs actually are in San Jose and Sunnyvale. About 45 mins from evergreen which has great schools, safe, big houses on big lots. $1.7M would be 3k sq feet East bay to the valley is not possible for commute under 2 hours
- oldsklgdfth 9y agoAs a skeptical home-owner of a modest town house this screams housing bubble. The only thing left is to figure out how to make money off of it.
- luckydude 9y ago"Large lot - 13000 square feet". So I'm not anywhere near as good of a commute location, takes me 25 minutes to get to Los Gatos, so getting to Apple is probably 40, but I've got 15 acres, a main house almost twice as big (it's too big in my opinion, just gathers junk, so not necessarily a plus), a barn that we have turned into 1/4th man cave, 1/4 exercise room, 1/4 chicken house, and 1/4 barn, and a 1 bedroom guest house, and a 1500 square foot shop, and a quonset hut you can park 3 or 4 semis in. All for less than what that buyer paid, admittedly 10 years ago. So it's in no ways apples to apples. My guess is my place is worth about what they just paid. Yeah, my commute would not be great if I worked at Apple, but you guys remember Rands in Repose, right? The manager dude with the blog about managing? Worked at Apple? He's my neighbor. We've got lots of Google/Apple/whatever people up here, you get way way more house and property for your money and you are not living right on top of each other. If you are house hunting and you want to consider the mountains, PM me, I'll hook you up with an excellent real estate agent. It's definitely not for everyone, if owning and running a generator, tractor, chainsaw seems nuts to you, yeah, not for you (though I didn't know anything about tractors before I moved up here, now I own two and an excavator and do jobs for $1000/day). Happy to answer questions on or off the forum about the mountains, I frigging love it up here. I'm blown away that people will spend that much for a boring ranch house on a little lot. I could get it if it were downtown Mountain View, that's pretty pleasant, ditto Palo Alto, but Sunnyvale? That seems nuts. Does anyone else feel like it is a bubble? Or is this the new normal?
- rconti 9y agoI have zero desire to own a big house in the mountains. Like you say, it's not for everyone. shrug The land, house, commute, dealing with septic and water services, all sound like a lot of work.
- luckydude 9y agoIt is a lot of work. We've got a saying in the mountains: there is no need for a gym membership :) But there is some satisfaction from learning how to run a tractor, fetching fresh eggs from the hen house, etc. I lived in San Francisco for 19 years before I moved here, I like it here fine. Very little in the way of neighbor problems. It may be an age thing, I remember when I was in my late 20's going backpacking with a friend who said "when I have enough money I'm going to buy 40 acres in the shape of a square and put a house dead center." I remember thinking why on earth would you want to do that? Then I had neighbor problems and the light went on. I like it but you are absolutely right, it's not for everyone.
- bobosha 9y agoare there any affordable places in around SF? North Bay or Berkeley or further south? or are they all just as insane prices?
- rconti 9y agoNo; everyone's already thought of that. Your cost will be inversely proportional to your commute misery. Though as mentioned elsewhere here, the Santa Cruz mountains are the biggest bargain in the area. By far. It's just not for everyone.