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thomas.wong1986 says

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

Something weird was going on with this house. After it was bought in Mar 2006, it was right back on the market in Sept of 2006 and was on and off the market many times until it sold in 2009. If you look at any extended price chart for these really expensive areas, the declines are no where near 50% from peak to now; more like 10%.

In the case of Cupertino, I have found many homes that have sold above their 2004-2006 price.

It doesn't make any economic sense to me, but people are buying these homes today in a horrible credit market. These buyers are loaded.

Goran_K says

It doesn't make any economic sense to me, but people are buying these homes today in a horrible credit market. These buyers are loaded.

SparrowBell says

But, a lot of those at Cupertino mostly paying into the school district.

That is right. And what is it about the school district? It is the API. And what is the API?

http://en.wikipedia.org/wiki/Academic_Performance_Index_(California_public_schools):

"Due to the API's heavy reliance on standardized testing (although some factors such as attendance and graduation rates are considered), many criticisms of standardized testing can also be leveled at the reliability and accuracy of API scores as an indicator of a school's level of "academic achievement." "

http://en.wikipedia.org/wiki/National_Higher_Education_Entrance_Examination

..."Gao Kao, is an academic examination held annually in the mainland of the People's Republic of China. This examination is a prerequisite for entrance into almost all higher education institutions..."

..."The examination is essentially the only criterion for tertiary education admissions. A poor performance on the test almost always means giving up on that goal. Students hoping to attend university will spend most of their waking moments studying prior to the exam. If they fail in their first attempt, some of them repeat the last year of high school life and make another attempt the following year. Fear of failing the exam is such an issue that students who can afford to will sometimes go abroad to attend university despite the greater expense - up to 15 - 30 times the cost of an education in China..."

This, friends, is what it is all about.

Folks too busy working hard making money to get wealthy enough to "get-in" to high API score public K-12 so that they don't have time to "invest" with feet on the ground to learn what goes on in the classroom, what is offered or available at the schools for students to have the opportunity to succeed after grade-12.... Outsouring a parenting responsibility to the API and the standardized tests behind it.

Sad, really. Because, the kids don't excel because the schools have high API's: instead, the schools have high API's because those hard driving kids with Tiger Parents go to their schools. Those kids would excel just about anywhere that is safe and that offers the requisite courses. Jerry Yang, Stanford alum and founder of Yahoo, graduated from Piedmont Hills High School in East San Jose.

Realtors® have cynically exploited the frenzy about API to their advantage. And, Education Professionals, especially those outside of the classroom like administration, are quick to take credit for the API results. But the API result is not because of those Education Professionals who rest on the laurels of their students' standardized test results; the API result is from the nose to the grindstone memorization skills and test taking skills of the students. Hardly surprising since their parents came from that Culture.

B.A.C.A.H. says

Sad, really. Because, the kids don't excel because the school have high API's: instead, the schools have high API's because those hard driving kids with Tiger Parents go to their schools. Those kids would excel just about anywhere that is safe and that offers the requisite courses. Jerry Yang, Stanford alum and founder of Yahoo, graduated from Piedmont Hills High School in East San Jose.

I'm not a strong believer of *premium* school district but I have no idea on how bad could other school districts be since I don't have kids.

But, I would say one thing, I went to the lowest ranking middle school/high school in a third world country, that didn't stop me later on went on to Stanford grad school with paid scholarship/assistantship after a second-tier college in US. I really don't see the need to pave the *road* for the kids if they are not meant to be there. And, it's not necesarily a bad thing. My brother who didn't have college degree, is saving as much money as I am today in bay area back home. (Maybe, that points to something is wrong with the taxation system here .. at the end of the day, it's what is left that counts ...)

And, if you want your kids to have a good chance for the so-called *good* school without paying for the premiums, bug your friends who have contacts with Stanford/Berkeley professors, send them there for voluntary summer research (like in medical school) or a big company where someone who is willing to take intern. And, that would make the kids resume shine much more than just having a Palo Alto or Cupertino high school name.

B.A.C.A.H. says

Sad, really. Because, the kids don't excel because the school have high API's: instead, the schools have high API's because those hard driving kids with Tiger Parents go to their schools. Those kids would excel just about anywhere that is safe and that offers the requisite courses. Jerry Yang, Stanford alum and founder of Yahoo, graduated from Piedmont Hills High School in East San Jose.

I think it is probably a lot about achievement but I have seen people equally concerned about the friends that will be made if they were in other schools in say san jose. Many of these kids are very sheltered, parental controls on everything. Many fear that kids in non-Coop schools from inattentive or struggling families as friends will lead their kids to be slackers, get into drugs, parties and relationships very early on. Fear is sometimes a bigger motivator than achievement.

B.A.C.A.H. says

Those kids would excel just about anywhere that is safe and that offers the requisite courses. Jerry Yang, Stanford alum and founder of Yahoo, graduated from Piedmont Hills High School in East San Jose.

Many people dont get this. They dont realize many who grew up in Santa Clara County and worked in Silicon Valley did very well. Many didnt go the best schools or best univesities ... but at the end did more to make shape and form much of the tech revolution.

SparrowBell says

My brother who didn't have college degree, is saving as much money as I am today in bay area back home. (Maybe, that points to something is wrong with the taxation system here .. at the end of the day, it's what is left that counts ...)

in short is your brother saying success should be taxed more (punished) ?

Goran_K says

It doesn't make any economic sense to me, but people are buying these homes today in a horrible credit market. These buyers are loaded.

No. they are formally loaded.. No longer loaded. When you pay, you no longer have that cash.. you exchanged for a home at a highly inflated exchanged price.

thomas,
I think they are still loaded. Either with, equity, or else with high incomes required to service the debt, pay the property tax, or else to pay the high rents in those neighborhoods. SFAce has shared his figures here about the high incomes in Cupertino.

B.A.C.A.H. says

thomas,
I think they are still loaded. Either with, equity, or else with high incomes required to service the debt, pay the property tax, or else to pay the high rents in those neighborhoods. SFAce has shared his figures here about the high incomes in Cupertino.

Well If i was still an auditor, I would ask.. Show me!

Show me bank and brokerage statements for the past 5 years. Show me Payroll records and other Income earnered from Cupertino residents.

As we all recall, people with very little or no "wealth" were buying up mega mansions ..everyone assumed they were rich buying homes they could not otherwise afford up to the day the music stopped.

What did we learn, based on all the demographics data, studies and papers, and plenty coming from paid media, seems everyone got it wrong. Even Greenspan got it wrong regarding RE prices and household debt load. But then again he received te data from the NAR.

SFace says

So why do parents covet schools so much? Simple, Cupertino is dominated by tech workers, software, and business. It is really the most educated place on earth as far as degree achievement.

Cupertino like many other cities in Santa Clara has been around decades "dominated by tech workers, software and business" and plenty of hardware manufacturing.

Yet we didnt skyrocket in prices back in 1980-95 to the same degree as we have over the past 10 years... so whats different.

Its the same High Schools, Community College and other 4 years Univsersities. Yet we had real economic and income growth back in 1970-95 vs decline since 2000.

Hype.. thats all that is left to explain ...

If all you said is true, surely prices would not be correction (declining).
All bubbles eventually end.. it many not coincide with your retirement plans.

thomas.wong1986 says

As we all recall, people with very little or no "wealth" were buying up mega mansions ..everyone assumed they were rich buying homes they could not otherwise afford up to the day the music stopped.

That was 2004-2006. This is a different credit environment. No one is going to walk into a bank and mortgage a $1,000,000 home with fake income statements and lies anymore. To get approved to even mortgage above the jumbo limit, do you know how much paper work and verification you have to go through? You need 5 years of verified income, 20% down, 25% for the best rates. For a $1,000,000 home that's $250,000 cash and proven income of around $200,000 to $250,000.

People buying in Cupertino today are loaded, and obviously so.

Goran_K says

People buying in Cupertino today are loaded, and obviously so

your talking to a former auditor.. just because YOU say so .. dont fly with me.. I want to see collaborative evidence.

For all we know they may well be all foreign spys sent by the Chinese Intel Services on espionage to steal Industrial secrets from SV companies. Would not be the first time that happened.

http://en.wikipedia.org/wiki/Chinese_intelligence_operations_in_the_United_States

Goran_K says

To get approved to even mortgage above the jumbo limit, do you know how much paper work and verification you have to go through? You need 5 years of verified income, 20% down, 25% for the best rates. For a $1,000,000 home that's $250,000 cash and proven income of around $200,000 to $250,000.

Normal operating procedures... as i and many others went through.

thomas, yep. Loaded.

E-man says

Not sure why u think Cupertino is way over price here. Home prices went from $550k in March 1998 to $1.1M now, which is about 4% appreciation per year. Back then the conforming loan limit was $240k compared to now $729k. Yes, $729k not $625k. In addition, interest rate was at 8% then compared to 4% now.

All those things are completely irrelevant, in the long term. The only thing which counts in house price appreciation is household income, which has declined since 1998. So, fundamentally, there is no explanation for an increase in price of 100% in 14 years. Basically, all those places you've mentioned are still in a HUGE bubble, which have yet to implode.

Basically, people are wondering why other places, like Vegas, continue to depreciate. The answer is simple. It's because, this crash isn't over, until the fortress falls, and there are 80-90% losses across the board. When this thing is over, you will know it, because nobody will be spared.

Exactly. How are $1,000,000 in cupertino being bought by non-loaded people in this credit environment?

It doesn't make sense to explain it that way.

tito says

Exactly. How are $1,000,000 in cupertino being bought by non-loaded people in this credit environment?

It doesn't make sense to explain it that way.

You got 100K saved from stocks/options/RSUs and double income then you will qualify for a 1million home. They go off you gross income, not your net like they should. Say 200k income for two people in the bay area (not a stretch at all), then a 900k jumbo loan at todays crazy free money rates would only be $4500 (4.5% and PMI included). That is only 54K so about 25% of gross. A bank would find that more than reasonable.

They would pay about 1.6million in the end of 30 years when all said and done. Now, the real question is should they. I think not a chance, but obviously many see these numbers and all they think about is "we can do 4500/mth for 30 years". For me, 30 years is not in my vocabulary. If it takes me 30 years to buy old lumber and concrete, and a small patch for a backyard, then they can keep it. That is just me though and I am allowed to have my opinion just like everyone else.

I think many many more people can buy in the BA, but like me they run the numbers and think things will get more in their favor in time. Good for them, I think they are making the correct choice. Most people that seem to have a different view are either in the industry or own homes already. Everyone I know that are renters, and I know many, think just like me. You can say whatever on this forum, but I would just think you are lying anyway and in one of the first camps, because trust needs to be earned, it doesn't come for free. ;)

RentingForHalfTheCost says

100K saved from stocks/options/RSUs and double income then you will qualify for a 1million home. ... Say 200k income for two people in the bay area

Yes.

By any normal standards of what is a typical average household in the USA, in California and even in the Bay Area, such households are quite wealthy.

And in Cupertino, almost all of them are wealthy immigrants. And as long as they keep coming, and keep bidding against each other for their kids to have access to the coveted Cupertino School District, the prices for living there will stay high or probably even keep going up.

I don't know why Serpentor gets bent out of shape of what is going on. Like Eman said, "It is what it is".

I had an immigrant coworker who had spent some years in a different ('red') state before coming here. He thought the Cupertino or Bust mentality in our office was kind of insane, and he would say so, sometimes quite vocally; he said others tried to make him feel or look stupid for saying so. One time a different immigrant who had recently bought a home in The Fortress discretely took me aside and she explained to me that he was saying those things because he was jealous.

B.A.C.A.H. says

I don't know why Serpentor gets bent out of shape of what is going on. Like Eman said, "It is what it is".

you obviously didn't go to a Cupertino school, because your reading comprehension is horrendous. I get "bent out of shape" because people like you keep repeating the same BS about my people without any proof.

Your entire knowledge of immigrants is based on stories and interactions with your immigrant coworkers and you do not even have detailed knowledge of the financial situation of that tiny subset of a huge and diverse group of people. You make broad assumptions and present them as fact of an entire multinational group of people without any proof.

Immigrants don't have unlimited source of money to prop up housing forever. "Rich" is a relative term, it doesn't mean unlimited funds and it does not mean that rules of economics doesn't apply. How many times do we have to do this?

There is no fucking commie dragon gold.

Serpentor says

people like you keep repeating the same BS about my people

Are your people the same as the subset of Buyers in The Fortress? Or are your people from a different (larger) subset?

B.A.C.A.H. says

bmwman91 says

Yup. It is a different culture, and a different mentality. Status is huge,

There's a whole lotta regular folks from those places for whom status is not The Religion. But they're not the ones immigrating to Cupertino. So 'Tino has become a "self-selected" population of a certain sub-Culture.

Serpentor says

Immigrants don't have unlimited source of money to prop up housing forever.

You are right. But like SFAce, Rentingforhalfthecost, EMan, Gorak and others have pointed out, they don't need unlimited source of money to do that in Cupertino. They only need to be wealthy enough. Maybe not propping up forever, but just as long as more of them keep comin', and keep bringing their API-centric attitude with them.

Serpentor says

Your entire knowledge of immigrants is based on stories and interactions with your immigrant coworkers

My entire knowledge of immigrants is not based solely on coworkers. My inlaws are (Asian) immigrants, including the ones that have stayed with us from time to time. Being a local kid like you are, many of my friends and classmates were immigrants or children of immigrants, from K-12, community college, college and grad school. Roommates in college, from Japan, Hong Kong, Philippines, kids of Mexican immigrants, and a couple of New Yorkers too. Nowadays most of my neighbors are immigrants. Some from Latin America, some from Asia, some (multiple households) from the Azores. Like the other immigrants, the Latino immigrants are my equals, my peers. They are not just the people who wait my table, clean the toilets at night in the office where I work, change the oil in my car; because those are not the only interactions I have with them. Because I live among, work out at a nonprofit gym with, go to church with, go to afterschool K-12 activities, volunteered at our schools with them. Because like you, I don't live in a place in The Fortress like Cupertino.

Like you said, Fortress People are a relatively small subset. But that's what the thread is about, prices in Cupertino (read title). Like E-man said, "it is what it is". They are the buyers and the buyers set the prices. Wealthy. Immigrants. API rank (a standardized test, like the gao kao). This thread is not about the rest of us.

Goran_K says

Serpentor says

Do you think Cupertino is the center of the fucking universe? ....

I never said Cupertino is full of only millionaires. Why are you so angry?

Maybe....

B.A.C.A.H. says

I had an immigrant coworker who had spent some years in a different ('red') state before coming here. He thought the Cupertino or Bust mentality in our office was kind of insane, and he would say so, sometimes quite vocally; he said others tried to make him feel or look stupid for saying so. One time a different immigrant who had recently bought a home in The Fortress discretely took me aside and she explained to me that he was saying those things because he was jealous.

B.A.C.A.H. says

Maybe not propping up forever, but just as long as more of them keep comin', and keep bringing their API-centric attitude with them.

Did anyone ever question how can it be, that these API scores are so high if these schools are only attended by immigrants form China? As far as I know, very few immigrants can learn English that fast, and beat out API scores of native-born English speakers. My guess is, that these are not immigrants at all, but 2nd/3rd generation of Chinese Americans, who are attending these schools.

dunnross says

that these API scores are so high if these schools are only attended by immigrants form China?

Because it's their kids who are the students. Kids like Harvard alum Jeremy Lin. Dunross, it sounds like you don't spend much time in local public K-12.

I'm thinking some writers here are not aware of which countries make up the continent of Asia.

well if you want to be semantic about it, much of Hong Kong is not part of continental Asia. Nor is much of Mumbai. Nor is Taiwan, nor Singapore. For that matter, my NY relatives don't live in the continental United States.

dunnross says

As far as I know, very few immigrants can learn English that fast, and beat out API scores of native-born English speakers.

Take the Vietnamese in San Jose. The early ones that came over in the 70s-early 80s.. dirt fucking poor but educated in the French style schools and took to US schools pretty well. Heavy on Science/Math/language. See them back in the day with Calculas and Computer Science text books were a common sight with these kids. Math and Comp programming are a language on their own. They did well with their work ethic, hard work, savings, etc. Language skills at first were poor but they managed ok.

The same applied when HK was about to be handed over to Mainland China in 1997.. so many 10 years prior "fled" to the US, settled in places like Cupertino, Santa Clara, San Jose, which impacted test scores, but didnt impact home prices which declined from 1989 to mid 90s. Certianly many knew English, since it as a British Colony. I certainly didnt see any getting hired into SV back than, their Children after college did... I saw them as mainly merchants who set up small stores locally and did well. Many stores like the ones you see in ranch 99 were abandoned strip malls which became Chinese stores. However even today Valco mall, hasnt even come close to recovering back from the 89-mid 90s recession. Back in the 80s Valco was much more busier than today.

Chinese immigrants to Cupertino today... beats me. Its a mania.

Neither the Vietnamese or HK Chinese had money or willing to overpay for homes so we didnt have a RE mania due to foreigners. I could throw in Japanese, Korean, some British and some French I met as well.

As far as getting a highly paid job in Silicon Valley.. Good luck on that.. They have always been pretty hard on hiring US University Grads only... and mainly from local universitiies..and US Companies which can be verified.
SJ State/Hayward/Chico/Fresno, Santa Clara Univ. and from UCD/UCB... forget about foreign universities or employers, cant get verification on degree or job history!

So prior waves of immagration has no impact on prices.

thomas.wong1986 says

dunnross says
As far as I know, very few immigrants can learn English that fast, and beat out API scores of native-born English speakers.

I can certainly recall how this young vietnamese kid.. couldnt speak a word of proper english passed the CPA exam back in the day ... perfect score in College and the CPA exam. Didnt make it to the Big 8.. went to work for the IRS.

memorization techniques.. infact ..AICPA freaked out by the mid 90s so many were passing the exam, but learned nothing, so they started to change content, and added written essay and simulations. In fact you have to sign a non-disclosure agreement regarding the exam questions. Passing rates last I saw was around 30-40%. For the BAR exam its 80%.

B.A.C.A.H. says

Maybe not propping up forever, but just as long as more of them keep comin', and keep bringing their API-centric attitude with them

Self fulfilling-feeding Ponzi scheeme. LOL! Someone is gonna go belly up.

thomas.wong1986 says

B.A.C.A.H. says

Maybe not propping up forever, but just as long as more of them keep comin', and keep bringing their API-centric attitude with them

Self fulfilling-feeding Ponzi scheeme. LOL! Someone is gonna go belly up.

Thomas-you seem to be applying macro theories to a micro environment. I know nothing about Cupertino. But I do know that some areas of the US will rise faster than inflation, and some areas will rise slower (or decline).

Take Detroit, for example. Home prices there have most certainly lagged inflation over the last 20 years. My guess is by a lot. So that means prices somewhere else have probably beaten inflation. As (wealthy) people have moved around, prices in individual cities have deviated from the long term trend because demand has increased/decreased with the movements of people.

Just because some of the BA has increased faster than inflation doesn't necessarily mean it is overpriced.

RentingForHalfTheCost says

You got 100K saved from stocks/options/RSUs and double income then you will qualify for a 1million home.

What? The percentage of lenders who would give you a 10% down jumbo loan on a $1 million home is about 0.0000000000000000001%.

This isn't 2006. Your scenario seems highly unlikely, and unrealistic.

Here are some realistic numbers for today's credit market:

At 25% down, for a $750,000 mortgage, 1% tax rate, $300 HOA, and $1200 in insurance, and a pristine 30 year jumbo rate of 4.25% you're PITI would be around $5,000 a month.

Required income: $212,000

The person with $250,000 in liquid cash, who could afford a $5000(PITI) is loaded, plain and simple.

Honestly Goran, that describes a LOT of DINK couples in the SV. A 212k+ gross household income is fairly common (with respect to the number of properties that become available in a place like Cupertino) here. The real test is saving $250k, which I don't think too many can do, but there are probably enough to soak up Cupertino properties. Now, anyone wise enough to save that much cash (one would hope) would see that it is a lame value proposition. Buuuut, something about having kids makes people think that it is OK to toss common sense out the window if it is "good for the children." Darn near everything we do is driven by our reproductive urge, and housing is indelibly intertwined with that, making it very easy to convince people to make poor decisions by exploiting their fears about raising happy, successful children. Lots of DINKs plan on having kids in the near future, and realtors know damn well how to exploit all of the related unknowns that DINKs face there.

bmwman91 says

Darn near everything we do is driven by our reproductive urge, and housing is indelibly intertwined with that, making it very easy to convince people to make poor decisions by exploiting their fears about raising happy, successful children.

Isn't that the truth.

I had a realtor tell me that my child will have better memories by buying in a particular Orange County neighborhood.

Almost gag inducing.

bmwman91 says

Honestly Goran, that describes a LOT of DINK couples in the SV. A 212k+ gross household income is fairly common (with respect to the number of properties that become available in a place like Cupertino) here. The real test is saving $250k, which I don't think too many can do, but there are probably enough to soak up Cupertino properties. Now, anyone wise enough to save that much cash (one would hope) would see that it is a lame value proposition. Buuuut, something about having kids makes people think that it is OK to toss common sense out the window if it is "good for the children."

I think you made the exact right point. Fear sells better than anything else.

Couples that have worked for around 4years can save up that much taking into account sign-on packages. Many also take loans from their own 401ks for the downpayment. If you max out 401k, the company match can be worth close to 30K for each person over 4 years.

Many also use FHA loans and dont need high downpayment.

Most of this is about irrational emotion based decision making at this point. Not so much about getting rich by flipping. Also we have to remember that the vast majority of tech immigrants are chinese/indians. In their home countries, the only hedge against inflation was housing and if you didnt buy in 10-12 years ago the prices are way too high now. So there is some of that conditioning at play here as well atleast in those buyers.

Goran_K says

RentingForHalfTheCost says

You got 100K saved from stocks/options/RSUs and double income then you will qualify for a 1million home.

What? The percentage of lenders who would give you a 10% down jumbo loan on a $1 million home is about 0.0000000000000000001%.

This isn't 2006. Your scenario seems highly unlikely, and unrealistic.

Perfect credit, long-standing bank relationship and the proper appraisal and they will. For the sake of argument, however, move it up to 20-25% dp then. Just means the couple needs to have more savings, probably from an equity sale or bank of parents. Seen all types and classes.

Don't get me wrong, I don't think it is smart, but when your playing with family money you haven't really earned yourself it seems okay to most. I earned every friggin dollar in my savings, and under no terms is anyone getting a red cent for free from me. I'll fight you until my last dying breath to protect my own savings. Not everyone feels the same, because as they say YMMV.

I think that's great, and I'm glad you're a big saver.

Back to the topic though, no one is going to mortgage a Cupertino home with 10% down, and pretending they have money. They have to have money, and lots of it in this credit environment whether it's from parents, siblings, or IPO stock.

Goran_K says

I think that's great, and I'm glad you're a big saver.

Back to the topic though, no one is going to mortgage a Cupertino home with 10% down, and pretending they have money. They have to have money, and lots of it in this credit environment whether it's from parents, siblings, or IPO stock.

Then these brokers are talking out of their asses I guess.

http://sf-re.com/WordPress/2011/05/11/jumboloans90ltv/

More documentation on 10% down up to 1.1million jumbo loan options. I know a few couples that have done this recently in places such as San Mateo, Menlo Park, San Francisco, etc. Without this almost criminal program they would still be renting.

http://www.ijumboloan.com/articles/can-i-get-a-jumbo-loan-with-10-percent-down.htm

About the 10% dp, you are making the point that Goran and I have been trying to make: of course people like that are loaded.

Because, if it takes a high household income to pay interest (and taxes) on a 20% loan at Cupertino prices, it takes an even higher one to pay interest (and taxes) on a 90% loan at Cupertino prices.

So, like I said; like you related in your post, those (mainly immigrant) buyers in Cupertino are quite affluent by any standard of what is normal in the USA, in California and even in the Bay Area.

If, it's a lot of smoke and mirrors or an unstable income that they cannot sustain, (hopefully not) after they drain the other wealth in their retirement accounts or from rich family "back home", they will just sell (probably at higher prices) to the next ones who come along who can afford it.