8 ms·
How much does it cost to build a home in Silicon Valley? (2016)
- deleted 9y ago[deleted]
- svp55 9y agothese numbers seem wildly inaccurate
- skronch 9y agoFor the cost of construction or the land itself? The post is from November 2016, which could explain inaccuracies in the latter.
- ifightcrime 9y agoFrom what I know they seem in the ballpark to me. Los Altos especially is one of the more higher end, expensive areas in SV.
- cdibona 9y agoThey're a little off, but not much. The problem is that most people can't build a 5k sq ft place on a 7500 sq ft lot without going down as well as up. Basements in the Palo Alto flood zones are crazy expensive to build and permit so most don't do it, opting to stick to the sq ft requirements, which on a 7500 sq ft lot would be ... 3200? 5k would need a 10k lot in palo alto. A 10k lot in palo alto goes for 3m to 5m depending on neighborhood. So , yes, it's nuts.
- Y7ZCQtNo39 9y agoIn my opinion, 3200 sq ft is more than plenty for a single family (2-4 people).
- JKCalhoun 9y agoLand/lot cost: pretty dead on from my browsing of real estate in the Bay Area. I think the cost to build ($2M) is a little high — but I suppose the kind of person that drops $2M on the lot is "in for a pound" so to speak and will want the works when the house is constructed.
- tyler_larson 9y agoPresumably you mean they're to low? Don't forget that land and construction prices have continued to increase by a fair amount in the past two years, so expect to pay somewhere between 10% and 20% more, depending on the area. Also note that your local muni government may flat out refuse to let you build the house you want to build, depending on which city you're in and how big the house is you're trying to build.
- pkaye 9y agoDo does that mean housing prices are justified based on construction costs?
- empthought 9y agoNot sure what I am supposed to do with the extra 3500 square feet there...
- matte_black 9y agoMovie theatre, grand dining room, home gym, steam room, VR room, office, woodworking shop, wine cellar, etc. The possibilities are endless.
- jacobolus 9y agoNot to mention living with all of your extended family under one roof, starting a church or homeless shelter or disco club, stockpiling enough food to outlast a zombie uprising, or displaying your collection of luxury cars you never drive.... More seriously, in general single-family houses should be on the order of 1000–2000 square feet. The rest is typically a complete waste (nobody I know who has a 4000+ square foot house actually uses most of the space – people with real on-site wood shops etc. put them in a separate space detached from their home, not in spare bedrooms), and serves to isolate households from each-other, force a car-centric lifestyle, drive up housing costs for everyone and force people working essential menial jobs to live far away and commute long distances, cost much more public infrastructure than denser alternatives, etc. I have a several rich programmer friends (early facebook or whatever) who bought outrageously large houses in Silicon Valley as a status symbol, but work all the time, eat out every meal, and only go home to sleep. What a tremendous demonstration of unthinking excess.
- matte_black 9y agoI don’t know about you, but 1000-2000 sqft for a single family home with an actual family in it is downright cramped. You could turn a garage into a wood shop though if you don’t have a particular need to store your car in a garage. The point of a large home is to turn it into your own personal oasis where you can spend days at a time without ever really needing to leave, and without feeling bored. The thing is, many people just don’t know how to live in a big house, because they spend so much time in cramped quarters until they can afford a home. A big house is all about features. Every room is an opportunity to have a space dedicated for something, if not for sleeping. Mindless excess is dumb, but thoughtful excess is amazing.
- pxlpshr 9y agoMaybe I'm missing something but it looks like she omitted general contractor fees unless she rolled them into the sq/ft cost. Not that most people are qualified but I know people who GC the projects themselves to save a great deal of money. It's worth calling out as it's own item... I found an up and coming architect so my design fees were substantially less than my GC fees... by about 8-10x.
- maratd 9y agoSquare foot costs are only given by a GC, so that's already included. > I know people who GC the projects themselves to save a great deal of money. Do not do this unless you know what you're doing. One bad contractor (and you will be hiring many) can trash the whole project. The value of the GC is that he brings a stable of quality contractors that he knows and works with. I've gone both ways, it really depends on the situation.
- vvanders 9y agoYup, and the good ones don't usually advertise since word gets around that they know their stuff.
- kqr2 9y agoAny advice on how to find a good GC? All the people I know who remodeled their home seem to have horror stories. A couple of them ended in law suits with the GC.
- killjoywashere 9y agoLook for someone who also does commercial work.
- carllerche 9y agoI had good luck. As mentioned above, finding a good GC is not easy because they do not advertise. It is entirely word of mouth. I live in the pacific NW where there are a lot of old craftsman style homes. High quality woodwork details is the theme. I started by calling high end custom furniture shops and asked them if they could do built in cabinetry work. They did not, but they recommended a number of woodworkers that moved on from furniture into contracting (carpentry, custom window sashes, storm windows, etc...). Then, I asked them what GCs they have worked with in the past and which they would recommend. A few names came up often, I spoke with them, picked one, and was really happy with the work. I guess the tl;dr is, good GCs use highly skilled subs, so find the subs then ask which GCs they recommend.
- fernly 9y agoHad a chat with our insurance agent recently; she wants us to increase our insurance coverage on our home in old palo alto, which is currently calculated based on $350/sq.ft. rebuild cost. She said that clients in the burned-out areas in Santa Rosa were being quoted much higher rates, and although she admitted that was partly due to a large number of people competing for contractors all at once, she believes $450 is a more realistic replacement cost basis. That would be also based on replacing the existing structure, which is single-story, no basement. What almost always happens when an older house is sold in this area, is that the property sells for between 1M and 2M, is immediately scraped and replaced by a two-story-plus-full-basement (with home theater and au-pair apartment), which then sells for 6M-8M with a profit of circa 1.5M.
- jdavis703 9y agoSo based on that rate I should be able to easily purchase my ~550 sq. ft. apartment. In fact the payments on a 30 year mortgage would be about $1300/month. Clearly the problem is the price of land, made even less affordable because of density maximums. If the price of a lot could be split over 6 people, a lot more people could afford to purchase a house.
- sjg007 9y agoYes but your nimby neighbors won’t allow it. Also high end homes and condos have higher profit margins, this is because finishing costs are cheap relative to sale value.
- rootusrootus 9y agoI've always wondered what software developers make in the heart of silicon valley. I see some things that basically say 'more than Portland but only by maybe 50% or so', which means perhaps $180K or so? Nobody is buying a million dollar house on that kind of income, but in Portland (where I think houses are pretty expensive) someone making $120K wouldn't have any problem buying a perfectly fine place, even pretty close in to the urban core. Maybe I'm getting my numbers from the wrong place.
- Zhenya 9y agoThese homes aren't being built/bought by your general software dev. This is the Dir/VP/EVP + founders + high equity;low digit employee id exitors.
- Y7ZCQtNo39 9y agoAren't there many more general software developers than there are VP's, founders, and low digit employee exiters? Like, I'm curious what drives the demand for homes in the ~$2M range in the bay area, if it's not the general software developer who's able to afford it.
- jonathankoren 9y agoWith two software developers in the family you're bringing in 300k to 400k. That makes 2M much more reachable.
- Zhenya 9y ago~$2M is definitely an established developer. But this home was estimated north of $6M "The total cost would be $6,562,500."
- reassembled 9y agoFrom what I understand the insane home prices in SV are also due to a large number of foreign cash buyers coming in and quickly securing deals. Sometimes multiple all cash bids on the same house. My grandmother's home and my childhood home, both in Cupertino, just sold for upwards of 2.5 mil each to all-cash buyers. I can't verify the foreign money aspect for these sales but people I have worked with who have left the valley in the last few years indicate it is quite common. I left silicon valley nearly 10 years ago now but was born and raised in Cupertino.
- linkregister 9y agoThis is an interesting article that describes building a $2-6 million dollar house in a matter-of-fact manner. I wonder what the prospective audience size for this article is in the Bay Area –maybe less than 5000 local people are capable of affording these properties.
- scarmig 9y agoThat's a wild underestimate. I'd guess at least 100k people can afford properties like that, unless you mean something like afford it in cash. Even then, it's still an underestimate.
- chrissnell 9y agoSo, a $3MM home costs approximately $30K a month after interest, depreciation, taxes, and insurance, right? That's around $360,000 a year. Assuming you're going way overboard and spending half of your income on housing, that's $720K/yr of salary required to support that--or more, if you want to save a little money and have a life outside of work and writing mortgage checks. How many households are pulling this kind of cash down? Is that a common salary at a big tech company? Maybe for CxOs but not for run of the mill Director-level middle management.
- nitrogen 9y agoHow do you arrive at this $30k/mo figure?
- scarmig 9y agoIt might be slightly high, but it sounds about right extrapolating from my situation.
- chrissnell 9y agoCommonly accepted figure for total cost of a house is 1% a month.
- johnny99 9y agoThe comments in this thread focus on senior engineers, but a lot of the big earners I know in the Bay Area aren't engineers--they may be in tech, but senior BD, marketing, product, finance, legal, and especially sales people can all make well north of $300k. At my last company the biggest W2's were all sales people.
- dpc_pw 9y agoLet me see... I can either spend next 15 years, hoping that tech market doesn't crash again and using my SWE salary to pay off property taxes and mortgage on a crappy SV house, making rent-seekers of all sorts rich... ... or I can pocket the money, and be financially independent when I'm 35-45, and spend rest of my life with family and working on interesting open source/business projects of my choosing. Tough one.