
A Sunnyvale, CA home that went for nearly $800K over the asking price - jseliger
http://www.latimes.com/local/california/la-me-lopez-housing-population-20170916-story.html
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dvt
The bubble seems to be back. My parents bought their house in 2011 (my dad had
the foresight to buy at the low point). The house has miraculously gone from
$700k to $1.1m in less than a decade.

I've come to terms with the fact that unless I win the startup lottery (or
there's another 2007-2008 crash), I'll probably never be able to afford a
house in California.

~~~
stouset
That's only a 4.5% rate of growth over 10 years. And that's boosted heavily by
the incredible fortune of having bought at the low point. If they financed at
3%, they only made a 1.5% return on their money.

If your parents had put that same money in the stock market, they would have
made something like a 7% return and have well over $1.4mm — or possibly much,
much more depending on the exact timing.

They could easily have afforded $3,000/mo or more of rent (in the 2007 market)
— assuming they financed the house — and still come out well ahead. Especially
when you throw in insurance, maintenance, etc.

~~~
candiodari
Sure, but it's probably boosted by the 10x leverage that mortgages allow.

Let's say it cost $1M with $100k money down, interest-only loan. You get the
1.5% on the $1M, not on the $100k.

So if you measure it like that you get $15000 interest on $100k, so in reality
this is a 15% per year return, not a 1.5% return.

Works the same in reverse when house prices go down, of course.

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justboxing
It's not as much a bubble as it is a supply-demand situation.

> The buyers, who work in tech, had been hunting for a home for a while — but
> kept getting out-bid, said Mini Kalkat, the Intero agent who represented
> them: “They lost two before they bid on this one, so we kind of knew what
> the numbers would be. It’s a crazy market, but there’s a way to maneuver the
> market.”

Source: Mercurynews.com [posted in previous Discussion]
[https://news.ycombinator.com/item?id=15238835](https://news.ycombinator.com/item?id=15238835)

Given that the house is close to Apple HQ and other tech companies there, and
that these buyers kept getting out-bid 2 times before, they probably got tired
of it, and had the money to put in a very high 1st bid that would almost
guarantee that they'd win it, and they won it.

San Francisco went through a very similar situation from 1998 to 2004 (the
.com bubble and burst was in that period). If you lookup any house in the city
for a 10 year period (from 1995 to 2005) you'll notice that the prices almost
tripped for most house, condos, big or small, because .com millionaires were
doing something similar to what's mentioned in this story back then, i.e.
placing ridiculously high bids over asking so they could guaranteed get a
place, and since they had the money, they didn't give a sh*t.

Even though the .com bubble burst brought down prices from 2004 - 2008, they
didn't fall nearly as much as they rose in the 10 year prior.

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rayiner
Why do people put up with California? This is a 3 bedroom 2 bath house in a
completely generic charmless suburb almost 40 miles away from the city. For
$2.4 million. A similar house where I live (about 35 miles east of DC) would
go for about $400,000, with a water view (also, fiber internet).

~~~
TaylorAlexander
Sunnyvale is near Apple and Google headquarters. Dual income families where
both adults earn $250k+ per year are the type of people I imagine buying these
places.

They appreciate in value, so it doesn't really matter if the price is inflated
as long as it continues to inflate. You throw some money down, make payments,
and cash out and move away when you're older.

It's still annoying, but it does make some sense to me.

~~~
Johnie
I bought my house in Mountain View right after Larry Page announced that hey
intends to bring another 10-20K employees to the Mountain View campus.

It's just a pure numbers game. You can't have a single employer bring in that
many people and expect everyone to commute in. There is always going to be a
population that can afford and will pay to live closer to campus. Also, as the
population of Googlers age, there will be pressure to move to the suburbs
after they get married and have kids.

Also, there's lot of new development in Mountain View that will make the city
more appealing to live in. If and when the monorail to Google
([http://www.mercurynews.com/2017/09/13/mountain-view-
studying...](http://www.mercurynews.com/2017/09/13/mountain-view-studying-
automated-transit-system/)) arrives, this will make downtown Mountain View
even more appealing.

Mountain View is now broaching the prices that Palo Alto was. Sunnyvale is the
next Mountain View.

~~~
ubernostrum
_the monorail to Google_

If only there were already multiple expandable mass-transit systems in the
area that could add new lines/capacity...

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nuna
every time someone writes about this they talk about the teachers, janitors
and minimum wage people. Although they struggle they have some assistance
(discounted day care or affordable housing). What no one talks about are
middle class with dual income, that still can't afford a home, and don't
qualify for anything at all. The dependent care spending account covers only
about 2.5 months of my child's preschool cost. It's much much worse than it
seems

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trcollinson
Anecdata time! I grew up in Southern California, first in the San Fernando
Valley (Los Angeles County) then Ventura County and then Orange County. The
housing market was amazing and crazy. My father started buying property in the
late 1960's and finally left in 2006. He worked hard his entire career to
afford to live there. Honestly, it wasn't much better in the late 70's and
early 80's than it is now. Imagine buying a small rambler in Reseda for a bit
more than $200,000 with a 19% mortgage. Remember also that you had to have 20%
down. Then imagine a 3 bedroom two story in Thousand Oaks for a bit north of
$300,000 with 17.5% interest rate. Or maybe a little Huntington Beach home
that more then tripled in value and then dropped (in 2009) to 20% below the
original purchase price within a 10 year timeframe.

So yes it is wild, very expensive, and can (if you are intelligent and lucky)
make you very wealthy. In about 2000 I had made a windfall profit off of Y2K
consulting and met a beautiful woman from Pittsburgh who had 3 children and I
decided to settle down. I could have moved them all to California and used my
savings to get us a modest home. We decided to not do that and we have been
very pleased with our decision.

California is amazing and has a really interesting economy and job market. But
I have as of yet never regretted leaving. I have always been employed. I have
a very nice home with great schools and a beautiful area to live in. I make a
substantial income and have no problem saving for retirement and investing. I
also invest in property to this day and have done extremely well by almost all
standards I have come across.

You really don't have to deal with California if you don't want to. It's a
great place. But there is no real reason to live there.

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tritium
Quick, someone build that carbon nanotube cable for the fabled space elevator
we used to dream about out in middle-of-nowheresville, U.S.A. and watch a new
boomtown draw off all of California's excess population in quest of The Next
Big Thing® or whatever.

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ryanx435
Good to hear that at least one person in California recognizes that it's a
supply/demand problem.

Build more housing. Build more high density housing.

Simple solution to a complex problem.

~~~
irq11
Reduce demand. Tax the tech industry to encourage it to relocate anywhere else
in the 99.99% of America it doesn't currently occupy.

Also, for good measure: eliminate the mortgage deduction, and tax short-term
capital gains on property at 100% to eliminate rampant speculation.

Simpler solution to a complex problem.

~~~
tehlike
eliminating mortgage deduction could help with the prices, but overall,
probably wouldn't affect how much each people end up effectively paying. I
could pay 10K before the deduction, and effectively pay, say 8K, out of
pocket. Remove deduction, i still pay 8K. Effectively nothing changes.

Also, in the bay area, plenty of houses used to go for cash (to chinese). No
amount of mortgage interest deduction cut could help with that.

The demand & supply problem is somewhat due to prop 13, but still not
entirely.

