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My friends own a flat in downtown San Francisco, about a 30 second walk from the 4th and King station. They're waiting till the middle of this year to sell beca

My friends own a flat in downtown San Francisco, about a 30 second walk from the 4th and King station. They're waiting till the middle of this year to sell because of the expectation of many new millionaires seeking property after the Lyft, Uber, slack, and other IPOs.

toomuchtodo 8y ago
Smart money gets out at the top.
- masayune 8y ago
  Disagree. Smart money is probably already out. There’s no guarantee you can accurately define when the top is. Fortunes are lost when people think they can.
  - toomuchtodo 8y ago
    > Smart money is probably already out. Is it? https://www.mercurynews.com/2019/03/28/bay-area-home-sales-dip-as-prices-continue-to-rise/ https://www.mercurynews.com/2019/03/28/bay-area-home-sales-d...
- twblalock 8y ago
  > Smart money gets out at the top. People were saying we were at the top 5 years ago, but housing prices are way up since then.
  - toomuchtodo 8y ago
    Yield curve inversion, IPOs Of profitless companies, longest economic stretch without a recession. The cycle has to end at some point. I’m not saying when the recession will happen, I’m saying it will eventually arrive.
    - ummonk 8y ago
      If house prices double between now and then and then drop by 30% it is profitable to buy now. As much as I hope house prices fall below where they currently are some time in the future, I wouldn’t count on it.
  - john_moscow 8y ago
    Bubbles last longer than most people think. And then they pop.
shereadsthenews 8y ago
I hope your friend is prepared to hang on through mid /next/ year, since that's when the employee lockup expires, assuming this company even exists at that point.
- romanhn 8y ago
  Lockup periods are generally 180 days, so current shareholders should become liquid in the September timeframe.
- mrnobody_67 8y ago
  Banks will loan against asset values. Getting a mortgage for $5m if you own $25m in stock is a no brainer for any underwriter, even if you can't technically sell it for 180 days.
  - perfmode 8y ago
    Is it legal to seek a loan against locked up public stock?
    - what_ever 8y ago
      Yes...? It's up to the bank to evaluate its options.
    - jaggederest 8y ago
      At least when I had stock in a lock up, it was not. Loan against stock is effectively a sale.
      - usaar333 8y ago
        A loan is nothing like a sale because you still take on all the asset risk. At most, a non recourse loan gives a slight hedge which isn't selling either. (You don't realize capital gains when you take loans or hedge a security) Some market standoff agreements might prohibit using stock as collateral, but plenty don't. I chatted with an ibank willing to lend me money against locked out shares to buy a home with.
diminoten 8y ago
Ah yes, timing the market! Always a good plan!
minimaxir 8y ago
There wasn’t much of a real estate price change in that area when Okta IPOed or GitHub was acquired (both a couple blocks away from Lyft/4th and King).
lotophage 8y ago
I read one theory a while back that suggested that a lot of people in SF are doing exactly this, which may ironically lead to an oversupply of inventory after the string of IPOs this year and cause house prices to dip.
- nlh 8y ago
  A LOT of people are talking about and planning on this exact strategy. It’s for that reason that I agree with you - I think it’s going to look a lot like that NYE a year after Uber had the $300 surge price fares and all the drivers started counting all their money in advance - “Oh man I’m gonna make so much when prices shoot up at New Year’s again!” Then of course there was a ton of driver supply and prices didn’t go anywhere. Everyone is talking about the “easy money” of selling a home as soon as “all those new millionaires are willing to pay top dollar for a new home”. The problem with this plan is threefold: First, the basic supply and demand rules. Second, all the people selling homes are going to need to live somewhere else, right? So they too are going to have to pay an inflated price for a new home, which will eliminate any gains (the exception is if you own a home in SF and are planning on either leaving town or majorly downsizing). Third, just because someone is newly wealthy doesn’t mean they suddenly decide that paying 20, 30, 40% more for a home is rational. Many folks will keep renting or stay in their current homes if there’s a sudden rush to buy. I wouldn’t be surprised if prices tick down a bit in 6-12 months from the oversupply before continuing on their regular scheduled steady march upward :)

toomuchtodo 8y ago

Smart money gets out at the top.

masayune 8y ago
Disagree. Smart money is probably already out. There’s no guarantee you can accurately define when the top is. Fortunes are lost when people think they can.
- toomuchtodo 8y ago
  > Smart money is probably already out. Is it? https://www.mercurynews.com/2019/03/28/bay-area-home-sales-dip-as-prices-continue-to-rise/ https://www.mercurynews.com/2019/03/28/bay-area-home-sales-d...
twblalock 8y ago
> Smart money gets out at the top. People were saying we were at the top 5 years ago, but housing prices are way up since then.
- toomuchtodo 8y ago
  Yield curve inversion, IPOs Of profitless companies, longest economic stretch without a recession. The cycle has to end at some point. I’m not saying when the recession will happen, I’m saying it will eventually arrive.
  - ummonk 8y ago
    If house prices double between now and then and then drop by 30% it is profitable to buy now. As much as I hope house prices fall below where they currently are some time in the future, I wouldn’t count on it.
- john_moscow 8y ago
  Bubbles last longer than most people think. And then they pop.

shereadsthenews 8y ago

I hope your friend is prepared to hang on through mid /next/ year, since that's when the employee lockup expires, assuming this company even exists at that point.

romanhn 8y ago
Lockup periods are generally 180 days, so current shareholders should become liquid in the September timeframe.
mrnobody_67 8y ago
Banks will loan against asset values. Getting a mortgage for $5m if you own $25m in stock is a no brainer for any underwriter, even if you can't technically sell it for 180 days.
- perfmode 8y ago
  Is it legal to seek a loan against locked up public stock?
  - what_ever 8y ago
    Yes...? It's up to the bank to evaluate its options.
  - jaggederest 8y ago
    At least when I had stock in a lock up, it was not. Loan against stock is effectively a sale.
    - usaar333 8y ago
      A loan is nothing like a sale because you still take on all the asset risk. At most, a non recourse loan gives a slight hedge which isn't selling either. (You don't realize capital gains when you take loans or hedge a security) Some market standoff agreements might prohibit using stock as collateral, but plenty don't. I chatted with an ibank willing to lend me money against locked out shares to buy a home with.

diminoten 8y ago

Ah yes, timing the market! Always a good plan!

minimaxir 8y ago

There wasn’t much of a real estate price change in that area when Okta IPOed or GitHub was acquired (both a couple blocks away from Lyft/4th and King).

lotophage 8y ago

I read one theory a while back that suggested that a lot of people in SF are doing exactly this, which may ironically lead to an oversupply of inventory after the string of IPOs this year and cause house prices to dip.

nlh 8y ago
A LOT of people are talking about and planning on this exact strategy. It’s for that reason that I agree with you - I think it’s going to look a lot like that NYE a year after Uber had the $300 surge price fares and all the drivers started counting all their money in advance - “Oh man I’m gonna make so much when prices shoot up at New Year’s again!” Then of course there was a ton of driver supply and prices didn’t go anywhere. Everyone is talking about the “easy money” of selling a home as soon as “all those new millionaires are willing to pay top dollar for a new home”. The problem with this plan is threefold: First, the basic supply and demand rules. Second, all the people selling homes are going to need to live somewhere else, right? So they too are going to have to pay an inflated price for a new home, which will eliminate any gains (the exception is if you own a home in SF and are planning on either leaving town or majorly downsizing). Third, just because someone is newly wealthy doesn’t mean they suddenly decide that paying 20, 30, 40% more for a home is rational. Many folks will keep renting or stay in their current homes if there’s a sudden rush to buy. I wouldn’t be surprised if prices tick down a bit in 6-12 months from the oversupply before continuing on their regular scheduled steady march upward :)