patrick.net

Goran_K says

I think prices will come down, but I don't see a 65% crash like some of the extreme bears are claiming.

A 15% drop in Cupertino housing is at least a 65% drop in wealth for many families that bought during the hype. Remember that leverage thingy. Even in Cupertino people haven't built up any equity these last 5 years. I don't know about you, but losing any money at all pisses me off.

RentingForHalfTheCost says

Even in Cupertino people haven't built up any equity these last 5 years.

RentingForHalfTheCost,

Forget about it. Some people here will never get this.

bubblesitter says

toothfairy says

It's a myth to think that all asians are wealthy high tech workers. we have about 2x as many Asians in Oakland than Cupertino.

Yeah,but the ones in Cupertino are the rich ones financed from black money in Shanghai. LOL. This whole Chinese thing never goes away. Every few weeks someone attributes these prices to the rich Asians.

pretty soon they'll be attributing Palo Alto prices to NBA money. LOL
LINSANITY!

justwantaniceplacetostay says

I think there is enough money to fuel the bubble in small enclaves with good schools. Many tech couples are DINK (dual income no kids) making entry level salaries + bonus of > 200K. At my stage low to mid thirties this number crosses 300K for most couples I know.

On top of this people buy more house then they need around 4X income and in good school districts. And thats why the 1million per home rate is becoming sort of standard for anything in MV, Cupertino and PA.

Agree that Cupertino has nothing interesting going on like university ave, castro or santana row..but these folks are more in piano lessons and after school programs so they probably are in a stage of their lives that they dont care.

Go to Citydata.com. the number just don't support your statement. Yes its a high income area, but the vast majority of families make less then 150k, dink or not.

toothfairy says

It's a myth to think that all asians are wealthy high tech workers. we have about 2x as many Asians in Oakland than Cupertino.

Oakland isn't seen as a desirable city to live in except in the hills. The school district itself performs poorly overall.

It's not really a great comparison.

justwantaniceplacetostay says

I think there is enough money to fuel the bubble in small enclaves with good schools. Many tech couples are DINK (dual income no kids) making entry level salaries + bonus of > 200K. At my stage low to mid thirties this number crosses 300K for most couples I know.

I agree with this. There's only 38 houses for sale right now. The fact that the median income is $119k means nothing. All you need is 38 couples making a good chunk of money, and all of the houses currently listed are gone. Since 2009, lending standards have been extremely strict, so you know everyone who has bought since 2009 has had to qualify for these $1M+ homes. Chances are those people are making $300k+ or have a lot of cash.

tiny tina says

Chances are those people are making $300k+ or have a lot of cash.

If you see the daily commute, its no wonder many actually live in San Jose and Fremont. They also are dual income no kids. For $1M dollars, instead of a 1100 sq ft shack in cupertino or Palo Alto, you can actually get a home in So San Jose, like SilverCreek.

http://www.redfin.com/CA/San-Jose/5450-Arezzo-Dr-95138/home/1319283

toothfairy says

As far as Round Rock Texas the problem with a low barrier to entry on housing prices is there's no exclusivity. You may be a Dell executive living in your 180k house and you could easily find that your next door neighbor works part time at the local Walmart.

Why should there be exclusivity today, when none existed for decades in SV before.

tiny tina says

Chances are those people are making $300k+ or have a lot of cash.

Strange thing about DINKs making over 300k. Many of them will not survive together. The job stress on top of the stagnant house prices have forced many to split. That percentage does anything but help the house prices. Best case one person takes over the house and is now paying off a 600-800k mortgage with a 150-200k salary. I know many in this situation and I almost went there myself years ago. DINK can be a negative as well as positive, nothing is set in stone in this market.

RentingForHalfTheCost says

Strange thing about DINKs making over 300k. Many of them will not survive together.

In the case of SV,historically factual .. you have a 50/50 chance and the divorce "always" gets nasty over assets and alimony.

Serpentor says

Go to Citydata.com. the number just don't support your statement. Yes its a high income area, but the vast majority of families make less then 150k, dink or not.

Number of families with income > $150+: Cupertino:
17.2% (2,453)
California:
7.3% (611,270)

Number of families with income > $200k: Cupertino:
25.7% (3,654)
State:
7.2% (601,155)

42.9% makes above 150K.

http://www.city-data.com/income/income-Cupertino-California.html#ixzz1mVpLDwPM

That is based on census data in 2009 which is surely understated and a lot higher in 2012.

In any case, Cupertino is hardly a dink's area. It has the highest concentration of families with kids by far in California.

SFace says

49.4% makes above 150K.
Read more: http://www.city-data.com/income/income-Cupertino-California.html#ixzz1mVpLDwPM
That is based on census data in 2009 which is surely understated and a lot higher in 2012.

lol!
How do you count 3-4 unrelated unmarried professionals renting rooms in a house (house sharing) each earning pretty good money, but not enough to rent their own home.

Answer: many are not families...

nationality, would be foreign citizen i take it ?

Or do you mean by race...

If your thinking Chinese Citizen.. that would be troubling,
since its illegal to do so as is with many other foreign nationalists.

would have had better luck buying land in Northern Louisiana.
Natural Gas deposits are paying out some rich royalty...

As far as the Asians in Cupertino... stupid and foolish to buy as we are unable to maintain rich salaries to keep these prices high enough.. what do these rich asians expect next years appreciation.. 10-15-20%.. really really stupid...and when the micro bubble in Cupertino pops.. I sure wont pay for thier mistake.

E-man says

To me, the people that buy in Cupertino are hard working professionals, who are doing well, but not rich yet. The rich live in Palo Alto

The working professionals live in many parts of the county, I have my payroll records, for the past 30 years, that atest to that fact.

The "rich" dont live in PA.. there are better places like Woodside, SilverCreek, Saratoga & LG Mts. A 1000 sq ft shack is hardly a millionairs mansion. I have known CEOs, CFOs, VC, for the past 30 years and none live in PA.

This will take some time to unwind, but unwind it will and these same foolish Asians buying into Cupertino will suffer some pretty big hits to so called home wealth.

http://realestate.yahoo.com/promo/americas-most-affluent-neighborhoods.html

FunTime says

I agree that if people are willing to spend their entire lives in massive amounts of debt so that at the end of their lives they have enough money to feel like they did okay, the economy will continue to grow, get propped, at the expense of these people and to the benefit of the people who have enough money to loan them.

You've stated gross incomes and then multiplied those as a way of determining house prices. I don't understand why anyone thinks this is reasonable.

From what I have seen, most people get peer pressured or wife pressured into living in debt and thats what keeps prices like this. Hoping this supply will run out. In the last 2 years all the new recruits into my department have bought homes few months after starting work. Many with 120K plus salaries using FHA loans as well.

I think the safe mortage rule for banks was 3X annual gross not net income.

Cupertino is a brand for the brand conscious. If you come into money and you have friends and family overseas, you want to tell them that you live in a place with a name they would recognize and go "oooh s/he's done good for themselves!" without saying out loud "look at me, I'm a rich bastard". The brand conscious would never live somewhere so pedestrian like Milpinis. Who knows how long the Coop will retain its cachet. A rash of high profile murders or even worst- bad test grades, or if Oakland all the sudden becomes the rage... but the point is that it does have appeal so if buyers consider it North 90210, then folks will pay for it by any means necessary including pooling family money together.

I attended De Anza College back in the days when I was young, dum, and full of gum. Cupertino never struck me as anything special and the only place I gravitated to during those days was the el cheapo Miyake Japanese restaurant when I got tired of eating ramen and chilling at my friend's swanky house next to De Anza. He wasn't particularly hard working or high scoring, in fact he was a lazy bum just like me which made it all the better since he and I would go crazy over Wing Commander and the day we set up an ethernet network using COAX cable (none of that RJ-45 nonsense) to play Warcraft will be a glorious day forever etched into my neural circuit.

When the tech boom hit and I came into some money, I never even considered buying in the Coop. As a matter of fact, I wanted to git the flock out of the Bay Area completely. My reasoning was that the whole Northern Hemisphere was getting inundated by too many male engineers and it seemed like such a frackin sausage factory. I had a few female friends who thought they were 8's but were really 6's because of all the attention they got. And the converse applied- because I'm a guy, I had to lower my number by 1 or 2 due to overcrowding. That meant if I wanted to get any game, I would have to go dancin with the coyotes. Long story short, I escaped the GitNo Bay and am in the process of trying to live happily ever after, but that's hard to do because the only thing that would really make me complete is if I had my own pet Orc.

Sorry I went off topic. All this talk of Cupertino had me reminiscing of days bygone...

E-man says

To me, the people that buy in Cupertino are hard working professionals, who are doing well, but not rich yet. The rich live in Palo Alto. It's another step-up in the ladder in my opinion. Not sure why people are comparing Palo Alto with Cupertino. :)

The going rule in the workplaces I have seen: tech couples with 5-10 years of work are generally in sunnyvale, cupertino area; directors or VPs can make it to Palo Alto and people above that or those who came from acquisitions are in places like woodside

groundhogdaze says

hen the tech boom hit and I came into some money, I never even considered buying in the Coop. As a matter of fact, I wanted to git the flock out of the Bay Area completely. My reasoning was that the whole Northern Hemisphere was getting inundated by too many male engineers and it seemed like such a frackin sausage factory.

A common experience among many. Yes, Cup is more of a Brand where Market branding had no meaning before... and will not afterwards when all is said and done.

thomas.wong1986 says

The "rich" dont live in PA.. there are better places like Woodside, SilverCreek, Saratoga & LG Mts. A 1000 sq ft shack is hardly a millionairs mansion. I have known CEOs, CFOs, VC, for the past 30 years and none live in PA.

Steve Jobs
Larry Page
Mark Zuckerberg
Tim Cook
Reid Hoffman
...

It really goes on and on. Actually, they do live in PA.

lol Wing Commander.. ahh the good old days

Steve Jobs
Larry Page
Mark Zuckerberg
Tim Cook
Reid Hoffman
...
It really goes on and on. Actually, they do live in PA

A lot of dinky homes in Palo Alto... Pauper homes.
Look what the other "Apple Guy" bought. Most of these homes, located in the Hills of Los Gatos are not often seen by the public, but they been around for some time now. There are some massive mansions up there. Same with Saratoga and Woodside.

http://www.taxivignettes.net/2007/03/woz-that.html

http://www.Cb8JPaoa4b0

http://celebrityhousegossip.com/steve-wozniaks-house-in-los-gatos-ca

The oracle of SV...

http://blog.sfgate.com/ontheblock/2011/09/27/tour-the-many-homes-of-larry-ellison/

As one vetern x-CEO now VC, once said ... where do I park my horse in Palo Alto ?

Wow, that video is a realtor desperately trying to play the Jedi mind-trick on someone with too much money: "This IS the house you're looking for..." but actually they're playing it on themselves: "I WILL get that million dollar commission..."

Thomas,

There are a LOT of wealthy people in PA, and they live in much larger, nicer houses than the silly ones down in the valley. PA encompasses much of Moody/Page Mill/Altamont, and those are definitely ESTATES. Yes, there are a lot of laughably-priced junk-boxes (ZOMG AN EICHLER!) down in the congested valley, but PA is bigger than just that. I guess people think that they are somehow getting a piece of the "Estate life" of the real rich people by buying an unremarkable wooden box in a neighborhood where people need to take a vote before you can plant new flowers. Hey...you DO get access to the PA Foothills Park! Residents only, up in there! (I go running up in there & the other preserves all the time...I wonder if I could get arrested for trespassing?)

Anyway, the point is that not ALL of PA is comprised of the silly wooden boxes that we all make fun of in here. Really affluent people don't buy those because there are actual estates to be had. You pay extra for them because they aren't visible from the public road, and many people aren't really aware of them because they are outside of the suburbs.

A friend that I went to college with has parents that live up there (10 acres off of a private drive on Page Mill, PA address). They make me want a time machine...I believe that they paid something like $150k in the late 1970's for it. Since then his dad did very well in the 1990's with start-ups, and he does VC / start-up stuff for fun now. Man, 10 acres of oak forest 1800ft up in the hills...panoramic views of the valley, enough space to make as much noise as you want without disturbing anyone, trees to climb & set up rope-courses...someone give millions of $dollars please!

bmwman91 says

There are a LOT of wealthy people in PA, and they live in much larger, nicer houses than the silly ones down in the valley. PA encompasses much of Moody/Page Mill/Altamont, and those are definitely ESTATES. Yes, there are a lot of laughably-priced junk-boxes (ZOMG AN EICHLER!) down in the congested valley, but PA is bigger than just that

LOL! no not wealthy ... but very lucky (some former Ariba employees). And i yes, lots of Eichler crap.

If you really want million $$ gaga homes... they are up in the hills alright.

And not bad with a 50% discount.

Property History for 300 SANTA ROSA Dr
Date Event Price Appreciation Source
Feb 25, 2009 Sold (Public Records) $3,100,000 -23.7%/yr Public Records
Mar 15, 2006 Sold (Public Records) $6,900,000 30.7%/yr Public Records
Oct 22, 2004 Sold (Public Records) $4,750,000 -- Public Records

Yeah, sometimes I look through the listings up in the hills, just to make sure that I feel poor. I am seeing all sorts of $500k price cuts and stuff. It is extra amusing to pull up Los Altos and Los Altos Hills on www.foreclosureradar.com and see all the delinquent borrowers with well over $1M in outstanding debt. Where on earth does someone borrow that much money from?! I guess it strikes me as odd that someone seriously looking at $2M+ houses would finance any part of it.

bmwman91 says

Yeah, sometimes I look through the listings up in the hills, just to make sure that I feel poor. I am seeing all sorts of $500k price cuts and stuff. It is extra amusing to pull up Los Altos and Los Altos Hills on www.foreclosureradar.com and see all the delinquent borrowers with well over $1M in outstanding debt. Where on earth does someone borrow that much money from?! I guess it strikes me as odd that someone seriously looking at $2M+ houses would finance any part of it.

May be Patrick is right on his assertion on widening wealth gap between middle class and top 1%. :)

bubblesitter says

bmwman91 says

Yeah, sometimes I look through the listings up in the hills, just to make sure that I feel poor. I am seeing all sorts of $500k price cuts and stuff. It is extra amusing to pull up Los Altos and Los Altos Hills on www.foreclosureradar.com and see all the delinquent borrowers with well over $1M in outstanding debt. Where on earth does someone borrow that much money from?! I guess it strikes me as odd that someone seriously looking at $2M+ houses would finance any part of it.

May be Patrick is right on his assertion on widening wealth gap between middle class and top 1%. :)

so all these $500k price cuts and delinquencies: are they the middle class or the 1%?

Serpentor says

so all these $500k price cuts and delinquencies: are they the middle class or the 1%?

Haha. May they are still in the middle class and on their way to exit or the top 1% are not living up to their obligations.

http://finance.yahoo.com/news/u-foreclosure-crisis-beverly-hills-050531722.html

". Many are walking away not because they can't pay, but because they judge it would be foolish to keep doing so."

Rich are not so naive after all. :)

bmwman91 says

It is extra amusing to pull up Los Altos and Los Altos Hills on www.foreclosureradar.com and see all the delinquent borrowers with well over $1M in outstanding debt. Where on earth does someone borrow that much money from?! I guess it strikes me as odd that someone seriously looking at $2M+ houses would finance any part of it.

Yes, that is a very good question to ask/ponder on.. there is more to all of this. Certainly not the norm in prior decades.

bubblesitter says

http://finance.yahoo.com/news/u-foreclosure-crisis-beverly-hills-050531722.html
". Many are walking away not because they can't pay, but because they judge it would be foolish to keep doing so."
Rich are not so naive after all. :)

"It's a business decision, not an emotional one which it is for normal people," said Deborah Bremner, owner of the Bremner Group at Coldwell Banker, which specializes in high-end properties in the Los Angeles area. "I go to cocktail parties and all people are talking about is whether it is time to walk away, although they will never be quoted in the real world."

Now that is remarkable.. instead of cocktail parties on open homes, is now if to defualt of the mortgage.

Serpentor says

so all these $500k price cuts and delinquencies: are they the middle class or the 1%?

When you cut the number of public companies in Silicon Valley by half, you certainly dont need as many CEOs, VPs and middle managers anymore. Yes, the top earners get wacked...

http://www.siliconbeat.com/2010/02/17/vanishing-public-companies-lead-to-the-incredible-shrinking-silicon-valley/

Vanishing Public Companies Lead To The Incredible Shrinking Silicon Valley

One of the most significant trends I’ve been watching over the past decade is the dramatic drop in public companies in Silicon Valley. Naturally, that number was artificially inflated during the dot-com bubble when it reached 417 in 2000. For our purposes, Silicon Valley includes San Mateo and Santa Clara counties, and the southern half of Alameda County.

But the number of public companies has dropped for nine straight years now. Even when IPOs briefly reappeared in 2006 and 2007, they weren’t enough to overcome the net loss of public companies through acquisitions or bankruptcy.

In 2008, the number had fallen to 261. We just updated our records and the latest figure is 241.

That’s not just less than the dot-com era, that’s well below the 315 public companies the valley had in 1994 when the Mercury News started keeping track.

when I drive though Cupertino (good asian food and decent movie theater) and l look at the houses there, I don't think "wow these people are loaded!" I see middle class homes and fixed up McMansions in small lots. Nice, if you are an average Joe Chang, but not mind blowing by any means...

However, sometimes I'll take a drive up to the hills in Los Altos, Atherton, Palo Alto, San Mateo...etc and those mansions are absolutely incredible.

So if the prices of Mansions are dropping and people are defaulting (intentionally or not) on the the super high end. I don't see see why people think regular ol Cupertino is somehow immune.

But by comparison to what is average or median or typical or whatever in the US and even in California, they are loaded.

They are either loaded with equity, or they are loaded with a high income to pay the rent or pay the loan + property tax. As long as they keep those high incomes that SFAce cited coming in, they are loaded.

Loaded with debt? It doesn't matter, because in order to qualify to borrow to be loaded with big debt, they were already loaded with income.

Rich? As you said, probably not. That'd be places like Woodside. But wealthy? You bet.

B.A.C.A.H. says

They are either loaded with equity, or they are loaded with a high income to pay the rent or pay the loan + property tax.

Wealth comes here from...

(1) inflated stock we unload on the markets.

No one talked about Cisco or Yahoo when they went IPO back in the early 90s. Not many around here were wealthy from the many prior decade IPOs, except until the late 90s. Cisco like many issued their stock at 20/share and only appreciated based on real earnings and hard work.

(2) salary from sales of products

Lets face it.. Sales/Revenue comes from other regions who are willing to buy our capital goods.. As such we compete with the Japanes, Koreans, and Europeans.. Maybe even the Chinese in the future. Anyone of the major global industries decides to skip over our products IT WILL have a impact on jobs and salaries.

If we are loaded today, better to save it for rainy days vs blowing it on bubble priced homes. But many came here post 2000 and they want their piece of the action.. regardless if its here or not. Watch your wallets...

B.A.C.A.H. says

But by comparison to what is average or median or typical or whatever in the US and even in California, they are loaded.

They are either loaded with equity, or they are loaded with a high income to pay the rent or pay the loan + property tax. As long as they keep those high incomes that SFAce cited coming in, they are loaded.

Loaded with debt? It doesn't matter, because in order to qualify to borrow to be loaded with big debt, they were already loaded with income.

Rich? As you said, probably not. That'd be places like Woodside. But wealthy? You bet.

I think this post paints it best. People have bought homes in Cupertino since 2006, and definitely after the big crash. If homes are still at 2006 prices in Cupertino, and people are continually buying them today, we have to assume they aren't all FHA loans, a lot of them were bought by wealthy, loaded, people. Banks are NOT handing out "credit" like they were back in those days, you need real skin in the game qualify for a mortgage on a $1,000,000 home.

B.A.C.A.H. says

But by comparison to what is average or median or typical or whatever in the US and even in California, they are loaded.

They are either loaded with equity, or they are loaded with a high income to pay the rent or pay the loan + property tax. As long as they keep those high incomes that SFAce cited coming in, they are loaded.

Loaded with debt? It doesn't matter, because in order to qualify to borrow to be loaded with big debt, they were already loaded with income.

Rich? As you said, probably not. That'd be places like Woodside. But wealthy? You bet.

are they so "loaded" that the are immune to economic forces? If even wealthier areas are seeing price reductions and foreclosures (intentional or not) what makes you think Cupertino is immune? You can explain away everything by saying ooh they are rich, but the majority of Cupertino residents are hard working immigrants with regular jobs with regular problems. If they were richer, the'd be in Palo Alto or Atherton. Are they wealthier then most, yes, but that doesn't make them immune to market forces. and please for the love of Jeremy Lin don't mention commie money from china again unless you have proof

bayhousehunter says

Here is my perspective on why the Cupertino prices will never crash.

wouldn't a lot of these reasons also support the Cupertino area never bubbling? So, I would expect that Cupertino did not rise in value in a statistically significantly different way from 2000-2007.

dunnross says

SparrowBell says

I hate to say this, though I don't believe the prices were driven up soley by Asians, I do think Chinese from mainland are much more readily to pay premium for educations and houses b'cos few of my Chinese friends here, who do not own a house, and most of them own a house in the premium neighborhood ....

If you don't think the Chinese can crash the housing market, take a look at what happened in Hong Kong back in the late 90's. Chinese surely like to
gamble with their real-estate, so, prices in places like Cupertino will crash just as hard as they escalated.

They are many kinds of "Chinese". People from Hong Kong are culturally different from mainland Chinese. But, coming back to the real estates bubble, bubbles in HK or Shanghai are rather speculative. But, a lot of those at Cupertino mostly paying into the school district. I do hear hear people from china buying up property here simply bcos china is expensive. But, what is the %? Or lobby us to curb nonresident from owning property then.