7 ms·

Buying a house and settling in the Silicon Valley/SF/etc... does not make any financial sense whatsoever. They are all pretty much overpriced, crappy and old.

Buying a house and settling in the Silicon Valley/SF/etc... does not make any financial sense whatsoever. They are all pretty much overpriced, crappy and old. Even the quality of the new "luxury condos" is crap. Seriously, take a closer look at the quality of the windows, walls, doors, floor, everything...it is all paper thin cheap stuff way overpriced. Not to consider taxes, earthquake and fire insurance. Cost of life, school, pre-school, daycare etc, they are all crazy expensive. Public transportation is nearly non-existent. Traffic is insane. People who live in SF wake up at 5.30am/6.00am to catch the bus and commute to the Valley oO. They spend at least 2hours if not more a day in traffic. The only thing that imo makes sense is to move there, save as much money as possible. Maximize your 401k and pension plan contributions. Don't work in scrappy startups for a low paycheck and stock options (most startups are doomed to fail or will never go IPO) but prefer instead bigger companies or close to IPO ones that have a good 401k matching plan, bonuses, incentives, and higher base salary. Get a new job every 2/3 years, so that you can increase your salary quickly + signing bonuses. Do this for ~10years and then move to a normal place where you could buy a super nice house in cash and then work remotely.

byebyetech 8y ago
>> move to a normal place where you could buy a super nice house in cash and then work remotely. Can't you do that without doing time in Silicon Valley?
- stuart78 8y ago
  Yes, but there is probably a lot of value in the network you build would would make those remote jobs easier to get.
  - bpicolo 8y ago
    There's definitely something to be said for the rate at which you can learn to be a strong developer in SV / similar tech hubs, because there's a lot of good mentors in the area to absorb knowledge from.
- veryworried 8y ago
  The short answer is no. I find people that attempt to do this without having worked in the valley always end up with some milquetoast quality to them that people in the valley can always pick up on. You could maybe fool people who are not from the valley, but you will never fool the valley. The much longer answer is yes, but I do not have the time to explain it.
- gwbas1c 8y ago
  It's almost impossible to start a new job remotely.
  - nwatson 8y ago
    I've started a new job twice in the last 6 years working remotely from North Carolina (after already having been established here in NC), and not in one of the tech-heavy areas (RTP / Charlotte). In the first remote job I worked nearly 3 years at a Santa Clara, CA startup. I've been almost 3 years at a large 10K-plus employee Mountain View, CA company now ... first non-startup in 20+ years. It helped that both jobs came through my network.
  - ndnxhs 8y ago
    Why? I see lots of jobs listing ads for remote positions.
  - elliotec 8y ago
    No it's not. I mean... what are you even talking about? There are hundreds of remote-only or remote-first companies that hire new remote hires.
- int_19h 8y ago
  SV is not the only tech hub in the country. Others are also expensive, but not that expensive. And if you're willing to tolerate commutes as long as SV, then it can be much cheaper.
LifeLiverTransp 8y ago
Men, sounds like people spending 4 h on a bus. Well with a laptop, you can start you startup in a bus at least.
- beamatronic 8y ago
  So it’s WeWork, but on a bus?
- yeutterg 8y ago
  If it's the company bus, does that mean you are on company property?
spamizbad 8y ago
Or just start your career in a city like Chicago, work normal hours, take public transit to work, buy a condo after saving for a few years, then when you're ready to settle down: buy a SFH in the bungalow belt or one of the nearby suburbs.
- guiomie 8y ago
  Pretty much sums up my life in bay area. Saved some money, bought a house.
- nradov 8y ago
  Chicago may be on track for bankruptcy if they can't get their pension costs under control.
  - cobookman 8y ago
    Same goes for almost every single blue state. Especially for California. It's a national pension crises.
  - barry-cotter 8y ago
    That’s a a when, not an if. The Illinois Supreme Court ruled unanimously that state pensions are sancrosanct. Illinois and Chicago will go bankrupt and absent changes to the state constitution state pensions will not be touched during the process. > Chicago’s land tax and how the city survives being such a fiscal mess > But wait, isn’t Chicago a fiscal mess? How about the state of Illinois? It remains the case that living in Chicago is still remarkably affordable, and many of the neighborhoods have wonderful food, buildings, and offer a relatively safe (not always) and walkable environment. You may even hope to find a parking spot. > I would put it this way: there are many ways to impose a Georgist land tax, fiscal insolvency being one of them. Very wealthy people and institutions know that if they relocate to Chicago, they will be required to ante up for the final bill. And so they stay away. For a city of its size and import, Chicago just doesn’t have that many billionaires, nor do I think a rational billionaire should consider moving there. > In other words, there is a pending wealth tax. Either directly or indirectly, this will place fiscal burdens on Chicago land, the immobile factor. And this keeps down rents in Chicago now. > Overall, I do not recommend this fiscal course of action, and Chicago may well become a worse city due to eventual insolvency at the local and state levels. Still, if you are wondering how it is that Chicago is so affordable — and wonderful — right now, this is part of the answer. > I also should note that not every neighborhood in Chicago benefits from this equilibrium, as in some parts gentrification is difficult to come by. https://marginalrevolution.com/marginalrevolution/2018/02/chicagos-land-tax-city-survives-fiscal-mess.html https://marginalrevolution.com/marginalrevolution/2018/02/ch...
hellisothers 8y ago
The canonical “I can’t/don’t want to afford to live here therefore it’s crazy/dumb for anybody else to” position
pcwalton 8y ago
It's fashionable to hate the Bay Area here, but these kinds of comments are stereotypes, nothing more. It's perfectly fine to not like the area—I could happily live in L.A., Austin, Portland, or Chicago (well, if not for the winter) too. But portraying the Bay Area as some kind of hellhole is just silly. I've been here for ten years and have no plans of leaving anytime soon. > They are all pretty much overpriced, crappy and old. My SF condo is new. > Seriously, take a closer look at the quality of the windows, walls, doors, floor, everything...it is all paper thin cheap stuff way overpriced. Windows, walls, doors, and floor are all actually high quality in my condo. I haven't had any problems whatsoever with them. > Not to consider taxes, earthquake and fire insurance. I recently did some back of the envelope math on what my taxes would be in Texas (where I grew up), and the lower property tax rate here in SF (due to Prop 13) roughly compensates for the high CA income tax. It's pretty much a wash. The main difference is that property would be cheaper in Texas, so the tax rate would be lower, but for the same property value the taxes end up about the same. > Cost of life, school, pre-school, daycare etc, they are all crazy expensive. Aside from housing, cost of living isn't that different, at least if you don't have kids. Things you buy from Amazon cost the same. Maybe it'd be a different situation if I had children. > Public transportation is nearly non-existent. Compared to NYC or Europe? Sure. Compared to Texas? The transit here is a dream. I take the Muni (or walk) to work every day, and I don't own a car and don't plan on purchasing one. > Traffic is insane. SF traffic is nothing compared to Los Angeles or even Austin. Not having a commute helps. > People who live in SF wake up at 5.30am/6.00am to catch the bus and commute to the Valley oO. Not me. > They spend at least 2hours if not more a day in traffic. Not me, not by a long shot. > The only thing that imo makes sense is to move there, save as much money as possible. Maximize your 401k and pension plan contributions. I do that, but not because I want to move away (if I did, it'd be somewhere else in California most likely). Rather it's because I want to maximize my chances of staying, regardless of the economic situation in the future. I quite enjoy my quality of life. > Get a new job every 2/3 years, so that you can increase your salary quickly + signing bonuses. I've been working at the same place for a decade and enjoy it. > Do this for ~10years and then move to a normal place where you could buy a super nice house in cash and then work remotely. Aside from the fact that buying a house in cash is not necessarily a great idea even if you can afford it, no thanks. I actually like it here and don't want to move elsewhere. And it's easier to get jobs locally, and I'm obviously not planning on retiring anytime soon.
dmode 8y ago
I made ~300K selling my first home. And have already accrued ~500K in home equity for my current home. This is bad financial advice. I have seen people posting in this forum over many years how buying in SV is a bad financial move. When , I believe, it is actually a very prudent financial move.
- opportune 8y ago
  Past returns don't guarantee future returns. The day before the peak of the bubble always looks like an attractive time to buy. I don't think SV housing is a pure "bubble" per se since it's single family housing in a region with strict supply caps, very high wages, and close proximity to millionaires, but its continuing rise is contingent on those conditions continuing.
  - TomVDB 8y ago
    > Past returns don't guarantee future returns. Yes. But that's essentially a platitude that doesn't help making a rational decision. You can apply the same slogan to the stock market. Here's how I look at it: for the real estate market, how many periods were there were you'd end up having to sell lower than what you paid for it when you bought?
- refurb 8y ago
  A few thoughts: - You can currently rent a house in SF for less than 50% of what the ownership costs would be. That offsets equity gains significantly. To the tune of $60,000 per year on a $1M home. If you make $250,000 in equity gains in 5 years, you've basically broken even with renting (the $50,000 accounting for paying down principle). - What you said is what everyone was saying in the early 2000's before the housing crash. "You'd be stupid not to jump in when prices are going up so fast!" That said, I don't think SF is the same situation. - Until you lock in that 500K in home equity on your current home by selling it, I wouldn't assume it's given.
  - ralph84 8y ago
    I'm not following your math. PITI for a $1M house with 20% down is around $5,000/month. You're saying you can rent a $1M house for $0/month?
rconti 8y ago
New construction is generally considered to be crap nationwide. It's not unique to the bay area. Of course, you're also insisting the OLD housing stock is crappy, so.. "People who live in SF wake up at 5.30am/6am to commute to the Valley" .. well, there are people who make poor life choices the world over. Living in an urban area to commute 50 miles to a suburban area rarely makes much sense (other than the fact that it's a reverse commute). It has nothing to do with traffic being bad, frankly. The reverse commute is actually pretty fast. If you're commuting from the suburbs to the city, that's where your bad commute comes in. I commute from the peninsula into SJ and do 85-90mph pretty much the whole way (EV+also carpooling), at 7:30. If I commute solo in the non-carpool lanes, it takes me a horrific 25 minutes to go 20 miles. Maybe 30 or 35, at the outside, on the way home. I didn't choose this commute; I used to bike commute until my company got acquired, but I'm still quite happy with my commute. Again, if you choose a crappy commute, you'll have a crappy commute. If you want to live in the city, you should probably choose to work in the city, which has only become much more viable in the past 10 years as many tech companies have moved north.
- shostack 8y ago
  Pretty sure there's nowhere on that route that allows that speed limit. Please don't endanger the safety of yourself and others to shave a few minutes off your commute.
ip26 8y ago
Seriously, take a closer look at the quality FWIW, growing up in SV the low quality was invisible to me because I didn't know anything else. I didn't know it was crap. It wasn't until I lived elsewhere that I saw the nose on the face.
- codazoda 8y ago
  I wonder if some of this is the moderate climate. I live in Utah and my house has 2x6 walls with lots of insulation. I suspect that's all about keeping me warm in the winter and cool in the summer. In CA the temp changes less so you need less of that insulation. That doesn't excuse the expense, of course.
  - ip26 8y ago
    Yes, I make a similar argument about the roads as well. Winter is hard on roads & buildings. Subzero temperatures, ice dams, & two feet of snow on your roof make quick work of uninsulated shacks, while ice & snowplows demand a regular cycle of road repair. In nice climates on the other hand you can scrape by with slowly crumbling roads and declining housing stock for decades.
  - nostrademons 8y ago
    Consequences of the climate as well. Because we get no frost, termites are endemic here. Pretty much every house needs to be tented every 5 years or so, and after 30-40 there may not be much foundation left. Doesn't make a whole lot of sense to build to last when it's not going to last anyway. Same thinking for earthquakes & wildfires. Over the short term, CA is paradise. Over the long term, it's temporary. That kind of thinking suffuses a lot of the CA worldview.
m463 8y ago
I remember being in Silicon Valley in 1994 and people had the same sentiments. "$300,000 for a house?!? that's crazy!"

byebyetech 8y ago

>> move to a normal place where you could buy a super nice house in cash and then work remotely. Can't you do that without doing time in Silicon Valley?

stuart78 8y ago
Yes, but there is probably a lot of value in the network you build would would make those remote jobs easier to get.
- bpicolo 8y ago
  There's definitely something to be said for the rate at which you can learn to be a strong developer in SV / similar tech hubs, because there's a lot of good mentors in the area to absorb knowledge from.
veryworried 8y ago
The short answer is no. I find people that attempt to do this without having worked in the valley always end up with some milquetoast quality to them that people in the valley can always pick up on. You could maybe fool people who are not from the valley, but you will never fool the valley. The much longer answer is yes, but I do not have the time to explain it.
gwbas1c 8y ago
It's almost impossible to start a new job remotely.
- nwatson 8y ago
  I've started a new job twice in the last 6 years working remotely from North Carolina (after already having been established here in NC), and not in one of the tech-heavy areas (RTP / Charlotte). In the first remote job I worked nearly 3 years at a Santa Clara, CA startup. I've been almost 3 years at a large 10K-plus employee Mountain View, CA company now ... first non-startup in 20+ years. It helped that both jobs came through my network.
- ndnxhs 8y ago
  Why? I see lots of jobs listing ads for remote positions.
- elliotec 8y ago
  No it's not. I mean... what are you even talking about? There are hundreds of remote-only or remote-first companies that hire new remote hires.
int_19h 8y ago
SV is not the only tech hub in the country. Others are also expensive, but not that expensive. And if you're willing to tolerate commutes as long as SV, then it can be much cheaper.

LifeLiverTransp 8y ago

Men, sounds like people spending 4 h on a bus. Well with a laptop, you can start you startup in a bus at least.

beamatronic 8y ago
So it’s WeWork, but on a bus?
yeutterg 8y ago
If it's the company bus, does that mean you are on company property?

spamizbad 8y ago

Or just start your career in a city like Chicago, work normal hours, take public transit to work, buy a condo after saving for a few years, then when you're ready to settle down: buy a SFH in the bungalow belt or one of the nearby suburbs.

guiomie 8y ago
Pretty much sums up my life in bay area. Saved some money, bought a house.
nradov 8y ago
Chicago may be on track for bankruptcy if they can't get their pension costs under control.
- cobookman 8y ago
  Same goes for almost every single blue state. Especially for California. It's a national pension crises.
- barry-cotter 8y ago
  That’s a a when, not an if. The Illinois Supreme Court ruled unanimously that state pensions are sancrosanct. Illinois and Chicago will go bankrupt and absent changes to the state constitution state pensions will not be touched during the process. > Chicago’s land tax and how the city survives being such a fiscal mess > But wait, isn’t Chicago a fiscal mess? How about the state of Illinois? It remains the case that living in Chicago is still remarkably affordable, and many of the neighborhoods have wonderful food, buildings, and offer a relatively safe (not always) and walkable environment. You may even hope to find a parking spot. > I would put it this way: there are many ways to impose a Georgist land tax, fiscal insolvency being one of them. Very wealthy people and institutions know that if they relocate to Chicago, they will be required to ante up for the final bill. And so they stay away. For a city of its size and import, Chicago just doesn’t have that many billionaires, nor do I think a rational billionaire should consider moving there. > In other words, there is a pending wealth tax. Either directly or indirectly, this will place fiscal burdens on Chicago land, the immobile factor. And this keeps down rents in Chicago now. > Overall, I do not recommend this fiscal course of action, and Chicago may well become a worse city due to eventual insolvency at the local and state levels. Still, if you are wondering how it is that Chicago is so affordable — and wonderful — right now, this is part of the answer. > I also should note that not every neighborhood in Chicago benefits from this equilibrium, as in some parts gentrification is difficult to come by. https://marginalrevolution.com/marginalrevolution/2018/02/chicagos-land-tax-city-survives-fiscal-mess.html https://marginalrevolution.com/marginalrevolution/2018/02/ch...

hellisothers 8y ago

The canonical “I can’t/don’t want to afford to live here therefore it’s crazy/dumb for anybody else to” position

pcwalton 8y ago

It's fashionable to hate the Bay Area here, but these kinds of comments are stereotypes, nothing more. It's perfectly fine to not like the area—I could happily live in L.A., Austin, Portland, or Chicago (well, if not for the winter) too. But portraying the Bay Area as some kind of hellhole is just silly. I've been here for ten years and have no plans of leaving anytime soon. > They are all pretty much overpriced, crappy and old. My SF condo is new. > Seriously, take a closer look at the quality of the windows, walls, doors, floor, everything...it is all paper thin cheap stuff way overpriced. Windows, walls, doors, and floor are all actually high quality in my condo. I haven't had any problems whatsoever with them. > Not to consider taxes, earthquake and fire insurance. I recently did some back of the envelope math on what my taxes would be in Texas (where I grew up), and the lower property tax rate here in SF (due to Prop 13) roughly compensates for the high CA income tax. It's pretty much a wash. The main difference is that property would be cheaper in Texas, so the tax rate would be lower, but for the same property value the taxes end up about the same. > Cost of life, school, pre-school, daycare etc, they are all crazy expensive. Aside from housing, cost of living isn't that different, at least if you don't have kids. Things you buy from Amazon cost the same. Maybe it'd be a different situation if I had children. > Public transportation is nearly non-existent. Compared to NYC or Europe? Sure. Compared to Texas? The transit here is a dream. I take the Muni (or walk) to work every day, and I don't own a car and don't plan on purchasing one. > Traffic is insane. SF traffic is nothing compared to Los Angeles or even Austin. Not having a commute helps. > People who live in SF wake up at 5.30am/6.00am to catch the bus and commute to the Valley oO. Not me. > They spend at least 2hours if not more a day in traffic. Not me, not by a long shot. > The only thing that imo makes sense is to move there, save as much money as possible. Maximize your 401k and pension plan contributions. I do that, but not because I want to move away (if I did, it'd be somewhere else in California most likely). Rather it's because I want to maximize my chances of staying, regardless of the economic situation in the future. I quite enjoy my quality of life. > Get a new job every 2/3 years, so that you can increase your salary quickly + signing bonuses. I've been working at the same place for a decade and enjoy it. > Do this for ~10years and then move to a normal place where you could buy a super nice house in cash and then work remotely. Aside from the fact that buying a house in cash is not necessarily a great idea even if you can afford it, no thanks. I actually like it here and don't want to move elsewhere. And it's easier to get jobs locally, and I'm obviously not planning on retiring anytime soon.

dmode 8y ago

I made ~300K selling my first home. And have already accrued ~500K in home equity for my current home. This is bad financial advice. I have seen people posting in this forum over many years how buying in SV is a bad financial move. When , I believe, it is actually a very prudent financial move.

opportune 8y ago
Past returns don't guarantee future returns. The day before the peak of the bubble always looks like an attractive time to buy. I don't think SV housing is a pure "bubble" per se since it's single family housing in a region with strict supply caps, very high wages, and close proximity to millionaires, but its continuing rise is contingent on those conditions continuing.
- TomVDB 8y ago
  > Past returns don't guarantee future returns. Yes. But that's essentially a platitude that doesn't help making a rational decision. You can apply the same slogan to the stock market. Here's how I look at it: for the real estate market, how many periods were there were you'd end up having to sell lower than what you paid for it when you bought?
refurb 8y ago
A few thoughts: - You can currently rent a house in SF for less than 50% of what the ownership costs would be. That offsets equity gains significantly. To the tune of $60,000 per year on a $1M home. If you make $250,000 in equity gains in 5 years, you've basically broken even with renting (the $50,000 accounting for paying down principle). - What you said is what everyone was saying in the early 2000's before the housing crash. "You'd be stupid not to jump in when prices are going up so fast!" That said, I don't think SF is the same situation. - Until you lock in that 500K in home equity on your current home by selling it, I wouldn't assume it's given.
- ralph84 8y ago
  I'm not following your math. PITI for a $1M house with 20% down is around $5,000/month. You're saying you can rent a $1M house for $0/month?

rconti 8y ago

New construction is generally considered to be crap nationwide. It's not unique to the bay area. Of course, you're also insisting the OLD housing stock is crappy, so.. "People who live in SF wake up at 5.30am/6am to commute to the Valley" .. well, there are people who make poor life choices the world over. Living in an urban area to commute 50 miles to a suburban area rarely makes much sense (other than the fact that it's a reverse commute). It has nothing to do with traffic being bad, frankly. The reverse commute is actually pretty fast. If you're commuting from the suburbs to the city, that's where your bad commute comes in. I commute from the peninsula into SJ and do 85-90mph pretty much the whole way (EV+also carpooling), at 7:30. If I commute solo in the non-carpool lanes, it takes me a horrific 25 minutes to go 20 miles. Maybe 30 or 35, at the outside, on the way home. I didn't choose this commute; I used to bike commute until my company got acquired, but I'm still quite happy with my commute. Again, if you choose a crappy commute, you'll have a crappy commute. If you want to live in the city, you should probably choose to work in the city, which has only become much more viable in the past 10 years as many tech companies have moved north.

shostack 8y ago
Pretty sure there's nowhere on that route that allows that speed limit. Please don't endanger the safety of yourself and others to shave a few minutes off your commute.

ip26 8y ago

Seriously, take a closer look at the quality FWIW, growing up in SV the low quality was invisible to me because I didn't know anything else. I didn't know it was crap. It wasn't until I lived elsewhere that I saw the nose on the face.

codazoda 8y ago
I wonder if some of this is the moderate climate. I live in Utah and my house has 2x6 walls with lots of insulation. I suspect that's all about keeping me warm in the winter and cool in the summer. In CA the temp changes less so you need less of that insulation. That doesn't excuse the expense, of course.
- ip26 8y ago
  Yes, I make a similar argument about the roads as well. Winter is hard on roads & buildings. Subzero temperatures, ice dams, & two feet of snow on your roof make quick work of uninsulated shacks, while ice & snowplows demand a regular cycle of road repair. In nice climates on the other hand you can scrape by with slowly crumbling roads and declining housing stock for decades.
- nostrademons 8y ago
  Consequences of the climate as well. Because we get no frost, termites are endemic here. Pretty much every house needs to be tented every 5 years or so, and after 30-40 there may not be much foundation left. Doesn't make a whole lot of sense to build to last when it's not going to last anyway. Same thinking for earthquakes & wildfires. Over the short term, CA is paradise. Over the long term, it's temporary. That kind of thinking suffuses a lot of the CA worldview.

m463 8y ago

I remember being in Silicon Valley in 1994 and people had the same sentiments. "$300,000 for a house?!? that's crazy!"