3 ms·

Well, I live within a five-mile radius of Stanford on the SF peninsula in a single-family home I bought a few years ago. I can tell you what I've seen in my own

by declan 12y ago

Well, I live within a five-mile radius of Stanford on the SF peninsula in a single-family home I bought a few years ago. I can tell you what I've seen in my own neighborhood. These $1.5M single family homes (and those would be far lower than the median in many towns around here) tend to be owned by double-income professionals or long-standing owners paying pennies on the dollar in property taxes who have little incentive to sell. On the higher end, I've seen folks with significant liquidity events who no longer rely on income move to Palo Alto or Woodside, or perhaps Los Altos or Portola Valley, but then you're talking $5M+ and over 4,000 ft^2 and possibly a guest house or pool house too. In my neighborhood there's a CEO at a funded sensor chip startup whose wife works at a large tech company, a physician married to another professional, an investment banker whose spouse doesn't work, some Stanford faculty married to other professionals, a partner at a major Silicon Valley law firm, and some retirees. The retirees are often paying around 1/20th what I do in property taxes -- less than what they'd pay if they were to move to Florida or Nevada, I imagine. To try to answer your question more directly, if you're buying a $1.5M place and putting 20% down, Zillow says you can afford the resulting mortgage on a $265K/year salary: http://www.zillow.com/mortgage-calculator/house-affordability/ http://www.zillow.com/mortgage-calculator/house-affordabilit... That seems like a stretch to me, but if it's accurate and banks believe it, you could get a mortgage on that $1.5M house if each person is making $140K a year or thereabouts. Hope it doesn't need repairs or remodeling!

sytelus 12y ago
This is pretty enlightening. I've asked same question myself many time "who are this people?" because tech population is actually very small percentage. From your answer it appears that that people living in these 1.5M houses are not all tech works but rather new double income families and old pre-boom residents. BTW, Zillow uses 36% debt ratio which is like the absolute max that you can possibly get mortgage (i.e. worse case scenario). That kind of debt ratio only makes sense for incomes > $250K. Once you can take out $10K as your monthly expenses, rest you can pour in to mortgage. With that calculation $260K income + $500K downpayment would allow you to live in 1.5M house without cutting too many corners. The downpayment can come in from previous house ownership gains or from equity stakes. This is probably not a good idea because you are in essence investing in already overpriced assets. There is no doubt that pressure is going to continue and bubble can only blow up so much.
- alexeisadeski3 12y ago
  >...bubble can only blow up so much. I'm no housing bull, but this is simply not true. Even after NYC was established, everything north of Wall Street (where there was a wall) was farmland.
waterlesscloud 12y ago
I'm not a SV resident, but my visits to the area make me think Woodside is a whole other level of wealth. Like, estate level money. Is that right, or a mis-impression? What's the hierarchy of the upper-upper end neighborhoods?
- declan 12y ago
  >What's the hierarchy of the upper-upper end neighborhoods? It's not as much a hierarchy as different areas appealing to different types of people and families, with a big property size/walkability dividing line being I-280. Let's say you have the nice problem of spending $10M+ on a house. If you want acreage and multiple guest houses and privacy and your own vineyard and stable, you might end up west of the 280 in Woodside off of Whiskey Hill Road. This is the Larry Ellison, Steve Jobs (Jackling House), Thomas Siebel, and Gordon Moore approach. Trivia: I was talking to a general contractor last week who said Gordon Moore's home upgrades/maintenance on his estate in a private valley on the north end of Woodside kept his business afloat during the 2008 downturn. If you want significant acreage, you'll need to budget tens of millions. But in Woodside you don't get very much within walking or horseback distance, except Roberts Market/Bucks/Woodside Cafe. If you prefer the south bay with even less within walking distance, you might end up in Los Altos Hills or the hills overlooking Saratoga or Los Gatos. Portola Valley is another option. If you want a 10,000+ ft^2 estate behind walls close to El Camino, you choose Atherton. If you want to be able to commute to SF and don't mind cooler weather, you choose Hillsborough. If you want to walk to a thriving downtown area with excellent restaurants, you (likely) lose the walls and gates and buy a more modest house for the same price in Palo Alto. The Palo Alto approach is what some Google and eBay executives have done, what Steve Jobs did in addition to the Jackling House, and what Tim Cook reportedly has done.
fernly 12y ago
Howdy, neighbor! Or so I imagine, since you could be describing my neighborhood. Our 1,300sqft, 90yo cottage is, per Zillow, worth $1.3M. We bought in 1973, paid off the mortgage in the 90s, and yeah, our recent assessment notice had only a 5-digit number.
- declan 12y ago
  And howdy, neighbor! Yep, if you were to buy your house today you might be talking about $15,000 a year in property taxes alone....
geebee 12y ago
One thing to keep in mind is how high salaries are across the board in San Francisco. According to sfgate and us news best jobs, registered nurses earn an average of 122K a year in San Jose, and dental hygienists earn 106k in San Francisco (software developers fall between these two groups). So this means a nurse and dental hygienist couple earns a family income of about 230K a year. They probably aren't buying in palo alto, but they aren't priced out of other nice suburbs. The sad thing is that most of the high salary is dumped into the housing market (and child care, which can be 25k per kid, which becomes a huge issue when you need two incomes). I guess it all depends on how much you love living here (if you have the right setup, it actually is pretty incredible, but you truly do pay). It's not easy, but you don't have to scratch your head and wonder "who are these people". A two income middle class couple is in striking distance.
- NDizzle 12y ago
  If everyone is dual income, 6 digit salary each, where are their kids care givers going to live? Are they going to make a 6 digit salary each, too? I can't stand dual income. I can't stand commutes now, either. That's why I left the bay area last year.
  - declan 12y ago
    >where are their kids care givers going to live? San Jose, East Palo Alto, parts of Redwood City, Pacifica, etc...
    - NDizzle 12y ago
      I'm fairly simple. I grew up 15 miles from a town of 3k in Arkansas. I came to the bay area in 2000 with $350 in my pocket. The parts of those places you listed that I can (could) afford, I wouldn't live due to various problems like crime, neglect, etc. They aren't really a good choice for normal, simple people like me. I think most people aren't there by choice, but by necessity. I'd much rather have the people watching my kids in a spot by choice than necessity. You may ask why that would matter, but given a little thought it'll matter you as well.
mcguire 12y ago
> long-standing owners paying pennies on the dollar in property taxes Proposition 13?

by declan 12y ago

sytelus 12y ago

This is pretty enlightening. I've asked same question myself many time "who are this people?" because tech population is actually very small percentage. From your answer it appears that that people living in these 1.5M houses are not all tech works but rather new double income families and old pre-boom residents. BTW, Zillow uses 36% debt ratio which is like the absolute max that you can possibly get mortgage (i.e. worse case scenario). That kind of debt ratio only makes sense for incomes > $250K. Once you can take out $10K as your monthly expenses, rest you can pour in to mortgage. With that calculation $260K income + $500K downpayment would allow you to live in 1.5M house without cutting too many corners. The downpayment can come in from previous house ownership gains or from equity stakes. This is probably not a good idea because you are in essence investing in already overpriced assets. There is no doubt that pressure is going to continue and bubble can only blow up so much.

alexeisadeski3 12y ago
>...bubble can only blow up so much. I'm no housing bull, but this is simply not true. Even after NYC was established, everything north of Wall Street (where there was a wall) was farmland.

waterlesscloud 12y ago

I'm not a SV resident, but my visits to the area make me think Woodside is a whole other level of wealth. Like, estate level money. Is that right, or a mis-impression? What's the hierarchy of the upper-upper end neighborhoods?

declan 12y ago
>What's the hierarchy of the upper-upper end neighborhoods? It's not as much a hierarchy as different areas appealing to different types of people and families, with a big property size/walkability dividing line being I-280. Let's say you have the nice problem of spending $10M+ on a house. If you want acreage and multiple guest houses and privacy and your own vineyard and stable, you might end up west of the 280 in Woodside off of Whiskey Hill Road. This is the Larry Ellison, Steve Jobs (Jackling House), Thomas Siebel, and Gordon Moore approach. Trivia: I was talking to a general contractor last week who said Gordon Moore's home upgrades/maintenance on his estate in a private valley on the north end of Woodside kept his business afloat during the 2008 downturn. If you want significant acreage, you'll need to budget tens of millions. But in Woodside you don't get very much within walking or horseback distance, except Roberts Market/Bucks/Woodside Cafe. If you prefer the south bay with even less within walking distance, you might end up in Los Altos Hills or the hills overlooking Saratoga or Los Gatos. Portola Valley is another option. If you want a 10,000+ ft^2 estate behind walls close to El Camino, you choose Atherton. If you want to be able to commute to SF and don't mind cooler weather, you choose Hillsborough. If you want to walk to a thriving downtown area with excellent restaurants, you (likely) lose the walls and gates and buy a more modest house for the same price in Palo Alto. The Palo Alto approach is what some Google and eBay executives have done, what Steve Jobs did in addition to the Jackling House, and what Tim Cook reportedly has done.

fernly 12y ago

Howdy, neighbor! Or so I imagine, since you could be describing my neighborhood. Our 1,300sqft, 90yo cottage is, per Zillow, worth $1.3M. We bought in 1973, paid off the mortgage in the 90s, and yeah, our recent assessment notice had only a 5-digit number.

declan 12y ago
And howdy, neighbor! Yep, if you were to buy your house today you might be talking about $15,000 a year in property taxes alone....

geebee 12y ago

One thing to keep in mind is how high salaries are across the board in San Francisco. According to sfgate and us news best jobs, registered nurses earn an average of 122K a year in San Jose, and dental hygienists earn 106k in San Francisco (software developers fall between these two groups). So this means a nurse and dental hygienist couple earns a family income of about 230K a year. They probably aren't buying in palo alto, but they aren't priced out of other nice suburbs. The sad thing is that most of the high salary is dumped into the housing market (and child care, which can be 25k per kid, which becomes a huge issue when you need two incomes). I guess it all depends on how much you love living here (if you have the right setup, it actually is pretty incredible, but you truly do pay). It's not easy, but you don't have to scratch your head and wonder "who are these people". A two income middle class couple is in striking distance.

NDizzle 12y ago
If everyone is dual income, 6 digit salary each, where are their kids care givers going to live? Are they going to make a 6 digit salary each, too? I can't stand dual income. I can't stand commutes now, either. That's why I left the bay area last year.
- declan 12y ago
  >where are their kids care givers going to live? San Jose, East Palo Alto, parts of Redwood City, Pacifica, etc...
  - NDizzle 12y ago
    I'm fairly simple. I grew up 15 miles from a town of 3k in Arkansas. I came to the bay area in 2000 with $350 in my pocket. The parts of those places you listed that I can (could) afford, I wouldn't live due to various problems like crime, neglect, etc. They aren't really a good choice for normal, simple people like me. I think most people aren't there by choice, but by necessity. I'd much rather have the people watching my kids in a spot by choice than necessity. You may ask why that would matter, but given a little thought it'll matter you as well.

mcguire 12y ago

> long-standing owners paying pennies on the dollar in property taxes Proposition 13?