4 ms·

Aren'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

Aren'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 ago
With 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 ago
From 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.
- dcldcl 9y ago
  I keep hearing the foreign money story, but I can't really find much evidence of it. (I'm currently in SV; touring properties and talking to RE agents nearly every weekend.) I'm not saying it's 0% of the transactions, but I'd be really surprised if it were even 5%. I'm going to temporarily ignore the "superexpensive" properties, which I'll arbitrarily define as over $4M in SV. That's a different market... for the "global jet-set." Or the people who were the first X employees at a startup with a real liquidity event (and their founders treated them fairly). Down on the valley floor, $1-3M is within reach of a lot of people in tech, especially double techies. (If you've been here since before the last 2 booms, you've got even more going for you.) Most big tech companies (FANG) stock is way up... Take that as a downpayment... multiple it 2,3, or 4 times and voila. Markets that have really been hit by foreign money are Vancouver [1] and certain neighborhoods in Los Angeles [2]. Having been to those places (for extended periods of time), I can say SV doesn't feel like those to me. One last bit of anecdata: I know of one house in SV that received at least 7 offers in the past month. Only 1 of those 7 was all cash foreign money... but they weren't the high bid. 5 other "locals" with loans had higher offers. [1] https://betterdwelling.com/city/vancouver/foreign-buyers-45-25-billion-worth-vancouver-real-estate/ https://betterdwelling.com/city/vancouver/foreign-buyers-45-... [2] https://www.bloomberg.com/news/articles/2014-10-15/chinese-home-buying-binge-transforms-california-suburb-arcadia https://www.bloomberg.com/news/articles/2014-10-15/chinese-h...
- kamaal 9y ago
  What you are saying actually makes sense. A friend who was trying to buy a home once told me, the homes more or less were instantly bought when put for sale on places like redfin, before they(remainder of the crowd wanting to buy) could arrange for mortgage. Indicating that some body had all the cash to make it a straight pay-and-buy deal.
closeparen 9y ago
>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. The margins. The actual numbers of homes turning over at such prices is miniscule.

jonathankoren 9y ago

With 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 ago

From 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.

dcldcl 9y ago
I keep hearing the foreign money story, but I can't really find much evidence of it. (I'm currently in SV; touring properties and talking to RE agents nearly every weekend.) I'm not saying it's 0% of the transactions, but I'd be really surprised if it were even 5%. I'm going to temporarily ignore the "superexpensive" properties, which I'll arbitrarily define as over $4M in SV. That's a different market... for the "global jet-set." Or the people who were the first X employees at a startup with a real liquidity event (and their founders treated them fairly). Down on the valley floor, $1-3M is within reach of a lot of people in tech, especially double techies. (If you've been here since before the last 2 booms, you've got even more going for you.) Most big tech companies (FANG) stock is way up... Take that as a downpayment... multiple it 2,3, or 4 times and voila. Markets that have really been hit by foreign money are Vancouver [1] and certain neighborhoods in Los Angeles [2]. Having been to those places (for extended periods of time), I can say SV doesn't feel like those to me. One last bit of anecdata: I know of one house in SV that received at least 7 offers in the past month. Only 1 of those 7 was all cash foreign money... but they weren't the high bid. 5 other "locals" with loans had higher offers. [1] https://betterdwelling.com/city/vancouver/foreign-buyers-45-25-billion-worth-vancouver-real-estate/ https://betterdwelling.com/city/vancouver/foreign-buyers-45-... [2] https://www.bloomberg.com/news/articles/2014-10-15/chinese-home-buying-binge-transforms-california-suburb-arcadia https://www.bloomberg.com/news/articles/2014-10-15/chinese-h...
kamaal 9y ago
What you are saying actually makes sense. A friend who was trying to buy a home once told me, the homes more or less were instantly bought when put for sale on places like redfin, before they(remainder of the crowd wanting to buy) could arrange for mortgage. Indicating that some body had all the cash to make it a straight pay-and-buy deal.

closeparen 9y ago

>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. The margins. The actual numbers of homes turning over at such prices is miniscule.