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Explain prices in cities like Cupertino
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2012 Feb 6, 1:33am 92,571 views 309 comments
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NOW, where do you guys stand on rent/buy?
Rent. Especially when you're just moving here and getting settled. Colleagues who work with me in San Francisco moved here and rented in places like Burlingame and San Mateo for a year or two before buying places in the same areas. They seem happy with it and purchase prices will go down while you're renting.
jnnyrttn says
NOW, where do you guys stand on rent/buy?
Rent. Especially when you're just moving here and getting settled. Colleagues who work with me in San Francisco moved here and rented in places like Burlingame and San Mateo for a year or two before buying places in the same areas. They seem happy with it and purchase prices will go down while you're renting.
I would be interested to hear why you think purchase prices will go down while I'm renting. Not disagreeing but it seems the consensus after reading many articles and blogs is that the market in that area is at or very near its low point. Some of those with that opinion say it is because there is available money floating around, but inventories are low due to people waiting out the economy. Now my personal take is that if all that is true.....from a price elasticity standpoint if values did continue to fall slowly, the turds that are on the market now will be irresistible to pass up for another class of buyers waiting in the wings. Of course if there is another major economic crisis all bets are off and it may be time to get off the grid and build a hovel in the hills....
.NOW, where do you guys stand on rent/buy?
If you are moving from Texas, rent for atleast one year before buying. you should be able to find a rental home in cupertino for 3-4K. One you are familiar with the area, you may decide to buy in a different place and commute daily
I would be interested to hear why you think purchase prices will go down while I'm renting. Not disagreeing but it seems the consensus after reading many articles and blogs is that the market in that area is at or very near its low point.
Mine is just another opinion and probably not as well informed as others here. I would not summarize the consensus at patrick.net the same way as you. The consensus is prices will go down. Did you read the bloomberg articles of the last two days on the main page? Do you follow the Shiller data? Does the ratio of people's incomes to home prices make any kind of supply/demand sense to you? If you look at where prices trend historically, there's room to go down. They've gone down a lot, but there was a lot of room for them to go down. I haven't figured out what year would make sense in the Bay Area, as what really matters to me is the income/price ratio. Shiller draws a trend line where prices have been heading. I've seen such a graph on patrick.net recently, but don't remember where at this moment.
SFace
2012 Feb 23, 4:06am
Need to find a home for me and my family (wife plus three small kids) somewhere in silicon valley. New job is in Cupertino.
Congrats on the new job, hope you negotiated well.
In any case, unless you are chinese/Taiwanese coming from Texas, you will hate Cupertino. I know your kids will because it will be a culture shock for them more than anything else. But you'll also love the weather year round and the working environment is unlike anywhere in this world. You have it easy.
With three small kids, you do need to be within a good school district as that seems like a minimum criteria. The area most similar to Texas will probably be the TRI-Valley area of Dublin/San Ramon/Plesanaton. Maybe others can comment what the commute will be like as I'm sure many make that trek and maybe there is a work shuttle that drops off at Bart station.
Los Gatos, Saratoga, Palo Alto is even more expensive than Cupertino. Your kids will probably appreciate it more though.
San Jose may be a choice as the school district assignment is divided by sections (Districts within districts). I heard a lot of good things about Willow Glen (or probably the west side bordering Cupertino, Campbell)
You should rent so the second question is irrelevant. The places you like will probably go up becuase everyone with the means like them as well. Not enough to overcome the fact that you need to figure out where you want to raise your family first.
Wow, so many single minded folks on this thread. I figure I'll contribute.
Worked at a law firm in Austin so I figure I can talk about living in Texas and CA with some real basis of "facts".
Let's start with Round Rock....it's a pretty crappy town with little access to anywhere interesting. In Cupertino, at least you can hoof it down to Santa Cruz, over to Half Moon Bay, etc.
Politics. Your mileage may vary. I find not talking to bible thumpers or folks who call Arabs "sand niggers" to be good for my health. When I bought my place in Austin, a neighbor came by and said I was a good gardener and asked me how much I charged. Back in college, I got pulled over near San Antonio during Spring Break and got asked if I had crossed the "River." I was like...um the "Rio Grande". Yeah, as an Asian with a tan, I got profiled as a Latino. nice....
I'll pay a premium to get away from that. I'd also pay the premium here for great weather, skiing, cycling and climbing.
Nice try Thomas, Apple stock is at $500, what's Dell stock at? The googlers I know are panicking about the facebook IPO and trying to buy now. I don't think purchase prices are going down in Burlingame when that FB IPO rolls around. Burlingame schools have a great API and a few Asian couples I know have tossed down over 1.2 million for homes there in the past year.
Maybe I'll take a bath on the place I just bought in SF. So what? It's down 30% from it's high and I can rent it out to cover. Money's not everything and I make enough that I can pay for it. Most the folks buying these homes are coming in with a big down payment so it's not like these are uneducated folks buying up real estate with 2-5% down. If they want to splurge on their home instead of taking big vacations or going into credit card debt, that's their choice.
We lived in Cupertino for about 11 years, renting 2/1 apartment across Apple head quoter for 1,400 + per months, then moved to 3/2 townhouse in MV area for 2,200 in 2006, rented a house in the same area for $2,400 in 2007-2009 before we purchased 3/2 condo with 3.5% down in Santa Clara with Cupertino schools, not the best schools in Cupertino, but anyway. Our monthly mortgage is 2,200, plus $400+ HOA. I'm sure there are plenty of condos in Santa Clara/San Jose with Cupertino schools even for less, at least in our complex. We're planning to buy a house as soon as we find the one that we like and not overpriced, we don't care anymore about good schools (one child in college now, another one is finishing HS next year) and rent this one or sell it. 3-4k is insane in my opinion for Cupertino schools, its not the schools are great but wealthy parents who pay for after school classes and test preparation...
I would be interested to hear why you think purchase prices will go down while I'm renting. Not disagreeing but it seems the consensus after reading many articles and blogs is that the market in that area is at or very near its low point. Some of those with that opinion say it is because there is available money floating around, but inventories are low due to people waiting out the economy. Now my personal take is that if all that is true.....from a price elasticity standpoint if values did continue to fall slowly, the turds that are on the market now will be irresistible to pass up for another class of buyers waiting in the wings. Of course if there is another major economic crisis all bets are off and it may be time to get off the grid and build a hovel in the hills....
SF Bay Area has been around for a long time, as well as Cupertino and yes Apple Computers. Some just discovered both in recent years. But do you see similar pattern in the 80s. Today, we have alot of new people in Bay Area, and sadly they were misinformed about RE prices. Of course they give the same reasons for higher prices, but those same reasons have been around for a long time when we had lower reasonable prices. Thus that is why you have a bubble.
Nada! Over the long run, RE prices, adjusted for inflation, remain flat.
In any case, unless you are chinese/Taiwanese coming from Texas, you will hate Cupertino. I know your kids will because it will be a culture shock for them more than anything else.
wtf. I hate living in a world with comments like this one. I don't even understand what this might mean except that people are only happy living near people who look the same?
We share far more similarities than differences.
its not the schools are great but wealthy parents who pay for after school classes and test preparation...
"Wealthy' parents plan long ahead and send their kids to Bellermine, Presentation, and other private schools. If you compare costs they are actual savings buying elsewhere and sending your kids to private schools like Bell. But its a herd buying mentality based on gossip and not long standing facts...
Nice try Thomas, Apple stock is at $500, what's Dell stock at? The googlers I know are panicking about the facebook IPO and trying to buy now
As we have found out.. Apple did not hand out stock to employees.. You forget Steve Jobs hates money and dislikes the notion how people behavior changes. A leasson learned from the 80s.
page 15..."The Company did not grant any stock options during the three months ended December 31, 2011 and December 25, 2010"
The googlers I know are panicking about the facebook IPO and trying to buy now.
Buy what ? and from who ? .. hasnt been priced or issued yet.
Im sure the SEC would be interested..
People come to SV thinking 1996-2000 was the norm in prior years and after 2000.. I got news.. that era is over! Unless you want to commit securities fraud. Im sure the SEC would be interested as well..
tatupu70
2012 Feb 23, 4:52am
Over the long run, RE prices, adjusted for inflation, remain flat.
Tell that to folks living in Detroit.
tatupu70
2012 Feb 23, 4:54am
If you compare costs they are actual savings buying elsewhere and sending your kids to private schools like Bell. But its a herd buying mentality based on gossip and not long standing facts...
Actually, that is not true. Others have pointed this out to you numerous times, but you choose to ignore them. That is fine, but at least stop repeating the BS.
tatupu70
2012 Feb 23, 4:54am
Buy what ? and from who ? .. hasnt been priced or issued yet.
Im sure the SEC would be interested..
People come to SV thinking 1996-2000 was the norm in prior years and after 2000.. I got news.. that era is over! Unless you want to commit securities fraud. Im sure the SEC would be interested as well..
I'm guessing he meant buy a house now before all the FB millionaires spend their IPO money.
Tell that to folks living in Detroit.
see chart...and data points
tatupu70
2012 Feb 23, 4:56am
Tell that to folks living in Detroit.
see chart...and data points
So Detriot is severely undervalued right now, right?
Actually, that is not true. Others have pointed this out to you numerous times, but you choose to ignore them. That is fine, but at least stop repeating the BS.
The tuition fees are published on their websites. Any reasonable person can make the judgement call on buying in parts of Santa Clara County compared to Cupertino and see the difference.
How much in Cupertino,
Less Private schools costs
Less Other SCC prices
equals
Excess bubble prices your paying living in Cup
... and its certainly pretty large.
do the math...
tatupu70
2012 Feb 23, 5:02am
do the math...
Done. It's pretty simple to figure out that it's cheaper to buy in a good school district than to go to private school.
So Detriot is severely undervalued right now, right?
good time to buy if your interested...
Las Vegas, Arizona
http://www.housingbubblebust.com/OFHEO/Major/SouthWest.html
Miami
tatupu70
2012 Feb 23, 5:04am
good time to buy if your interested...
I'm not, because I don't think it's undervalued. I don't think every city will track inflation over long time periods. I don't try to apply macro theories to micro environments.
Done. It's pretty simple to figure out that it's cheaper to buy in a good school district than to go to private school.
You can buy a shack for $1M in Cup or get a real home in other parts of SCC.
http://www.redfin.com/CA/San-Jose/2118-Shiangzone-Ct-95121/home/972348
http://www.redfin.com/CA/San-Jose/1603-Rangewood-Pl-95138/home/700132
Fact is you can knock off $100-200K and that pays more than enough for tuition Bell fees several times over.
I'm not, because I don't think it's undervalued. I don't think every city will track inflation over long time periods. I don't try to apply macro theories to micro environments.
So the basis of Robert Shillers studies are all wrong ?
So why did Silicon valley back in the early 90s fall back to inflation adjusted line. What went wrong with the micro environment?
Someone took it in the shorts....
Property History for 1603 RANGEWOOD Pl
Date Event Price Appreciation Source
Jan 30, 2012 Pending (Pending With Release) -- -- MLSListings #1
Jan 18, 2012 Listed (Active) $919,900 -- MLSListings #1
Sep 20, 2011 Sold foreclosed. $846,000 -- Public Records
Apr 20, 2006 Sold (Public Records) $1,555,000 27.8%/yr Public Records
Sep 10, 2004 Sold (Public Records) $1,048,000 -- Public Records
Goran_K
2012 Feb 23, 5:23am
I'm not, because I don't think it's undervalued. I don't think every city will track inflation over long time periods. I don't try to apply macro theories to micro environments.
So the basis of Robert Shillers studies are all wrong ?
So why did Silicon valley back in the early 90s fall back to inflation adjusted line. What went wrong with the micro environment?
The Case Shiller doesn't make sense over the long term. Does the price of a median Mahattan home from 1910 track with inflation to 2010? No it doesn't. Why?
The Case Shiller doesn't make sense over the long term. Does the price of a median Mahattan home from 1910 track with inflation to 2010? No it doesn't. Why?
see 2:55
SFace
2012 Feb 23, 5:31am
Done. It's pretty simple to figure out that it's cheaper to buy in a good school district than to go to private school.
You can buy a shack for $1M in Cup or get a real home in other parts of SCC.
http://www.redfin.com/CA/San-Jose/2118-Shiangzone-Ct-95121/home/972348
http://www.redfin.com/CA/San-Jose/1603-Rangewood-Pl-95138/home/700132
Fact is you can knock off $100-200K and that pays more than enough for tuition Bell fees several times over.
House price difference is a pass thru cost. A family buying the school premium for the school district will sell for a premium as well. That is not permanent.
What is permenent is school tuition which is probably 15K a year per child and twice that for high school. Two children and it is around 30K of after-tax permanent cost and presuming it is not private high schools. Private schools have been increasing fees around 5% annually overall.
House price difference does create permanent cost as well. Incremental interest and incremental property tax. In your example, 200K increment @4% +200K @1.25 = $10,500. That increment is tax deductable at 33% and permanent cost net of tax = 7K
$7,000 increment (buying) vs. 30K increment (private school) per year. You'll be way poorer going the private school route. It will cost you 1/2 million.
What is permenent is school tuition which is probably 15K a year per child and twice that for high school. Two children and it is around 30K of after-tax permanent cost.
Your using published private school data ($15K) and using it as public school data... "Probably" is not gonna cut it. You need to provide actual costs if they are available. Are you also including the unions defined pension plan in your figures ?
SFace
2012 Feb 23, 5:42am
Your using published private school data ($15K) and using it as public school data... "Probably" is not gonna cut it. You need to provide actual costs if they are available. Are you also including the unions defined pension plan in your figures ?
This is not the court of Thomas Wong or an audit so get over it. I have school age kids so am well aware how much it costs. Take it for what its worth.
House price difference does create permanent cost as well. Incremental interest and incremental property tax. In your example, 200K increment @4% +200K @1.25 = $10,500. That increment is tax deductable at 33% and permanent cost net of tax = 7K
$7,000 increment (buying) vs. 30K increment (private school) per year. You'll be way poorer going the private school route. It will cost you 1/2 million.
So what your saying is .. over the long run... Private schools in the South Bay like Bellermine, Presentation and others have bankrupted rich well to do families.. WOW! not what is really rich!
This is not the court of Thomas Wong or an audit so get over it. I have school age kids so am well aware how much it costs. Take it for what its worth
Bullshit... your pulling numbers out of your ass.. Yes it is an audit...and you have a vested interest.
Ok, lets look this way, $1,000.000 house in Cupertino, 20% down ($200,000), M+Taxes about $5,000
$750,000 in other part of Bay Area, 20% down ($150,000), M+Taxes about $3,700 per month
The diference is $1,300 per months, what kind of private school you get for this money especially if you have more than one child?
To make it simple I didn't include in this calculation tax benefits and paying of principle instead of giving the money to the private school.
Goran_K
2012 Feb 23, 6:51am
That's not Cupertino.
Compare it to what you get in Cupertino for same amount.
Compare that to what you would get for that price in Plano, Texas. Could it be that location matters to some people?
Also your video did nothing to answer why homes in Manhattan from 1910, or 1920, or even 1930 to 2010 didn't track with inflation.
Here's an actual paper that found that in 1930 the median home price in Manhattan was $30,000.
http://people.hbs.edu/tnicholas/Anna_tom.pdf
Using the BLS inflation curve, that gives us an inflation adjusted price of $407,000 in 2012 dollars. Is that the current median price in Manhattan?
Nope, and that's why the Case Shiller cannot be used in every situation because it's a macro approach to a micro problem.
Compare that to what you would get for that price in Plano, Texas. Could it be that location matters to some people?
Cost of doing business is lower in Texas... no wonder my former employers AMD has more people there.. Intel has more people in Folsom and Oregon than Santa Clara. That being said, why didnt home prices skyrocket in the 70-80-early 90s to the same degree.
But lets hear it from the leadership group...who pony up the salaries. So why are they alarmed ?
Q: So are those really challenges?
A: Unequivocally, yes. Not only to the CEOs in the boardroom, but to any family you talk to in their living room. What we hear time after time from CEOs as well as frontline employees is how incredibly difficult it is to come here and stay here. That truly does have an impact on a company's bottom line when the cost differential is so much higher here than it is in other regions around the state, nation and globe, or the ability to recruit top talent is also impacted.
You mentioned housing. It probably is the top concern we hear about in Silicon Valley from both CEOs and employees in terms of local issues. Does that have an impact? Let me put a finer point on it.
Hewlett-Packard and Dell are the top two computer-makers in the world. Corporate headquarters for HP are located in Palo Alto and Dell is in Round Rock, Texas. Obviously, they both have people and facilities around the globe.
In those two communities where their corporate headquarters are and where a lot of research and development takes place, the median resale price for a home in Palo Alto is about $1.6 million. In Round Rock, Texas, it's about $180,000, except the home and property are bigger.
We hear from HP all the time that a huge deterrent to the ability to recruit and retain people anywhere near Silicon Valley is the housing issue. We don't hear that from Dell, which is also a member company, about their operations in Round Rock. It does continue to plague us and we will continue to sound the alarm.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/13/BUG91PO3US1.DTL&ao=all#ixzz1nFUsSVxD
Also your video did nothing to answer why homes in Manhattan from 1910, or 1920, or even 1930 to 2010 didn't track with inflation.
Here's an actual paper that found that in 1930 the median home price in Manhattan was $30,000.
http://people.hbs.edu/tnicholas/Anna_tom.pdf
Using the BLS inflation curve, that gives us an inflation adjusted price of $407,000 in 2012 dollars. Is that the current median price in Manhattan?
Nope, and that's why the Case Shiller cannot be used in every situation because it's a macro approach to a micro problem.
Macro ? Shiller already looks at individual markets. And as such has presented his data.. agree/disagree is your choice.
The last 30 years of data is pretty sufficient to show his conclusion.
Goran_K
2012 Feb 23, 7:21am
So the CS is only good if you go back to 1987?
I don't know about you, but it seems to me people were buying and purchasing houses for a lot longer than that.
So the CS is only good if you go back to 1987?
Suggest you contact Shiller on that point or read his book which provides the data.
http://www.econ.yale.edu/~shiller/
I don't know about you, but it seems to me people were buying and purchasing houses for a lot longer than that.
So what happened to the people back in So Cal between 1989 to early 90s.. why did so many leave ?
Why is in-out migration in CA about the same over the past 10 years ?
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According to Redfin, Cupertino's median sold price has actually gone up since 2010, unlike other cities.
I'm guessing low inventory, lots of foreign (asian) buyers, and prime location have skewed the pricing here.
I work with people who have lived in Hong Kong, Taiwan, Singapore, and Shanghai, and they say that the prices here are actually cheap for what you get compared to asia.
I don't see places like this ever correcting to before the bubble pricing nominally.