

San Francisco median home hits $1 million - prostoalex
http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/05/median-home-price-hits-1-million-in.html

======
quanticle
This, more than anything else, is going to be what kills Silicon Valley. All
those twenty-something hackers today are going to look up one day and realize
that they can't have a family in the Bay Area, and leave.

~~~
w1ntermute
Austin is calling: <https://news.ycombinator.com/item?id=5794372>

Lower cost of living, less restrictive zoning laws, and a more business
friendly legal system.

~~~
jbooth
I think the points related to better transit expanding the amount of available
housing stock in other commuter markets have more to do with it than a
'business friendly' legal system or even zoning laws.

We're developers. We know shit-all about common vic licenses or actual brick
and mortar business, those of us who own businesses incorporate in delaware
anyways. Supply and demand of housing stock is much more important than 10%
marginal friction in dealing with regulators (who we don't deal with anyways).

Austin will succeed or fail at continuing to grow based on how much they can
grow their housing stock without turning into a gridlocked nightmare.

~~~
w1ntermute
Texas has no personal income tax. So it is important regardless of where you
incorporate.

~~~
jbooth
Cops and teachers have to get paid somehow -- Texas doesn't print the money,
it gets it from property taxes and other sources.

I'd say that even if you hypothesize a gain in not-paying-taxes of, say, 5% of
income -- that doesn't change the game compared to local economy, as evidenced
by the house prices that TFA is talking about.

It's not all about politics. Everyone says they believe in the free market,
maybe they should look there first for an explanation of the housing prices.

~~~
Domenic_S
Property tax:

SF: ~1.25% appraised value

Austin: ~1.9%-3.1% appraised value

(consider the typical "appraised value" in both locations and think in terms
of actual dollars)

Sales tax:

SF: 8.75%

Austin: 8.25%

State income tax:

SF: usually 8%-10% for tech folks

Austin: 0%

edit: You had a reply that reiterated that TX still can't print money, but
deleted it. My response is that you're ignoring the other option, which is to
spend less. TX doesn't have a super-train-to-nowhere project or other spending
issues that CA has.

CA ranks 4th in per-capita spending, with a (pre-federal) budget of nearly
$146 billion. TX ranks 50th per-capita, with an $80 billion budget.

~~~
jbooth
That's all great. People still want to buy a house in CA so bad that it costs
a million bucks.

Political conservatives go on and on about the free market and then say with a
straight face that a single government policy, income tax rates, is the most
important thing to business, more so than market conditions, even if that
narrative conflicts with the empirical evidence.

We've been hearing about the decline of liberal CA and the northeast for so
long now, and it hasn't happened yet. House prices will probably come down and
soak some of the new dumb rich, and things will proceed as before.

Texas is doing great, and all power to them, but by the time they eclipse
CA/NY, they'll be liberal too.

~~~
Domenic_S
Outside of celebrities I don't hear of many folks who move _to_ California to
buy million-dollar homes. The handful of people I know who made it big in
business have moved out.

California's a big place. You can get an awesome house on some property for
$150k in many many places in CA. The million-dollar homes are concentrated
mostly in SF (+Napa/etc) & LA (+Santa Barbara/etc). IMO a lot of it is the
tradeup nature of housing - buy a $300k house, sell it 10 years later for
$700k, buy another at $800k, sell 5 years later for $900k, buy at $1MM, on and
on. And since SF/LA are centers of business, that's where the people earning
that kind of dough live. The $500-700k inventory in the Bay is _fiercely_
competitive, and what do you know, that's the price range two young married
techies are looking in. Not a coincidence. I agree with the poster upthread
who predicts that once the new generation realizes they're basically
permanently priced out the whole area will collapse.

> _We've been hearing about the decline of liberal CA and the northeast for so
> long now, and it hasn't happened yet._

It's been in progress for a long time and shows no sign of slowing. We've got
big swaths of folks who are protected in the armored bubble of technology, but
for the average folks things are worse than ever. I could go on and on about
business owners I know making plans to evacuate, or the scores of friends rich
and poor who have fled, or the stories of the behind-the-scenes trouble from
friends and family in the CA government, or just plain looking around up and
down the state, but the bottom line is that only time is going to tell.
Eventually, one of us will be proven right and I sincerely hope it's you.

------
api
Sell. Seriously. If you own one of these, sell. Then laugh.

This real estate hyperinflation is going to destroy the very engine of class
mobility and youthful enthusiasm for a better life that powers the Valley.
When that's gone, the Valley will decline. When the Valley declines, the local
real estate bubble will pop.

Want a historical example? Detroit. It once had the highest average income in
the U.S., and now look at the property values there. The reasons for its
collapse are different and it's unlikely that SF (which is desirable for other
reasons like climate and landscape) would ever fall as far or as fast as
Detroit, but it's illustrative nonetheless. It shows that one should be
cautious about long-term value in overinflated one-horse-town economies.

And if SF is not a one-horse-town, it soon will be. Industries other than tech
will succumb to the lure of lower costs of doing business and leave.

~~~
timcederman
You could sell and laugh, but then where would you live? You either get a
ridiculous commute, or you have to pay exorbitant rent. Something decent runs
for over $4k/month everywhere in the valley these days. Everyone said the same
thing about the Valley during the last 2 bubbles, but it keeps going up.
People need somewhere to live - selling now on some hypothetical crash makes
living your life very difficult.

~~~
lotharbot
> _"where would you live?"_

Do you absolutely need to be in the [EDIT] Bay Area?

If the answer is no, then there are a lot of other cities with reasonable tech
scenes and much cheaper housing. Boston and Seattle are around $350k median
home value. Denver, Atlanta, and Minneapolis-St. Paul are around $200k. Those
places all count as "somewhere to live", and don't make life particularly
difficult (unless your life revolves around something specific to SF/SV.)

~~~
timcederman
All this assumes that people want/can leave where they currently live.
Personally, with family, friends, fulfilling job, and a lot of fun stuff to
do, I don't particularly want to relocate.

~~~
lotharbot
"I don't want to relocate" is a far cry from "selling... makes your life very
difficult".

If you're particularly attached to and fulfilled by everything you have where
you are, maybe you should stay, even if it costs a million dollars for a 2
bedroom house. Personally, I've got family, friends, fulfilling work, fun
stuff to do, and a much bigger house that cost under $200k where I am. Life is
not "very difficult" here; it's quite pleasant.

EDIT: to phrase it slightly differently, you're criticizing others for
_assuming_ people can relocate or _assuming_ people might prefer Denver for
the extra money. Yet you yourself _assume_ the Valley is the only place that
makes sense to live. That assumption simply isn't valid for most people.

~~~
timcederman
Selling makes your life very difficult if you don't want to relocate. I am
criticizing folks who say "wow, that's expensive, you should just sell!"
without any critical thought as to what that actually means.

~~~
lotharbot
And I'm criticizing those folks who say "leaving is impossible" without any
critical thought as to the potential benefits of cashing out, or potential
alternate locations where a million dollars would go a loooooooong way to
making a good life.

It's possible we're both criticizing folks who don't actually exist.

~~~
timcederman
No, I'm criticizing real people in this thread.

------
andyl
Median housing prices in my area (palo alto) have already been well above $1M
for a long, long time. Doomsday prophets: nothing new here, really - just
continuation of a well established trend.

------
tomkarlo
The title here is a little deceptive; it's the median price for a "single
family home". A lot of the inventory in SF is either apartments in small
buildings or duplex / multi-residence structures, which are generally less
expensive (and it would be better to have more of those and fewer single
family dwellings, since they use space more efficiently.)

------
dreadsword
The examples at 322/280/etc. per square foot seem cheap. I live in _WINNIPEG_
and houses on my street go for $450+ per square foot, and that's in Canada
where mortgages aren't tax deductible, and Winnipeg in particular where the
climate is... challenging. The one's that are $500+ per sft --- well, that's
the cost of location. Deal with it.

~~~
Zimahl
As an American, I don't seem to understand Canadian currency at all. I've
watched 'Love It or List It' on HGTV knowing that it's a Canadian show but the
prices of the houses are all typically anywhere from $700k-$900k for 1600 to
1800 square feet. Trying to convert it back to a price in US dollars I guess
isn't quite right. What's the median income in Canadian dollars that makes
home prices so high?

Side nitpick: do Canadians primarily use square feet as a measurement? Is that
a real estate standard even though Canada is mostly metric?

~~~
dreadsword
Real estate and houses are just cheaper in the US -- like cars. That's just
the way it is. In real estate, square feet rule in Canada - just one of those
holdover things.

------
Mankhool
Here's what $1 Million will buy you in Vancouver, Canada.
[http://realestateresults.ca/officelistings.html/details-2956...](http://realestateresults.ca/officelistings.html/details-29566874)
I rent a 2BR apartment in a 1950s building for $1615/month. Would love to
see/hear comparisons.

~~~
lotharbot
Half a mile away from me, on the west edge of Denver, Colorado:

[http://www.redfin.com/CO/Lakewood/1826-S-Manor-
Ln-80232/home...](http://www.redfin.com/CO/Lakewood/1826-S-Manor-
Ln-80232/home/34685489)

For comparison, here's a $1 mil home in SF:

[http://www.redfin.com/CA/San-Francisco/96-Broad-
St-94112/hom...](http://www.redfin.com/CA/San-Francisco/96-Broad-
St-94112/home/1982242)

------
hkmurakami
Since I don't really have a sense for the size of the houses in SF, I'd be
interested to know how SF's numbers for "$/sq.foot of floor space" and
"$/acreage" compare with places like Palo Alto.

~~~
papa
This site provides some good neighborhood-specific price/square foot info.

<http://pricesquares.com/#/county/1/san-francisco/>

You can see that the north and northeast portions of the city carry the
highest rates (close to $1k/sq foot in Pac Heights and the Marina).

Zoom in to drill down to smaller neighborhoods/sub-districts.

For comps between SF and Palo Alto, I'd recommend Redfin. Last I checked, the
Palo Alto prices were above SF prices (on a square foot basis).

Edit: I'll just add some more detail!

Here's the Redfin report for Palo Alto ($1,168/sq ft):
<http://www.redfin.com/city/14325/CA/Palo-Alto>

Here's the Redfin report for SF ($660/sq ft)
<http://www.redfin.com/city/17151/CA/San-Francisco>

------
aresant
"Today's low mortgage interest rates and tight supply of homes for sale are
"creating a kind of witch's brew of extreme price spikes," says Stan
Humphries, Zillow chief economist. (1)

Logic tells me that when the all-important "monthly payment" rises, as a
result of higher mortgages rates, that is going to be instantly detrimental to
the housing market to a nearly equal degree.

But when I've asked this question of people I know in real estate (from
realtors to investors) the answer is "yah but there are a lot more factors at
work"

What are those factors? The FED is going to raise rates and when they do is
this going to leave a lot of recent homebuyers holding the bag, again, on an
inflated asset?

(1)
[http://www.usatoday.com/story/money/business/2013/05/28/home...](http://www.usatoday.com/story/money/business/2013/05/28/home-
prices-climbing-but-not-in-bubble-territory/2366953/)

~~~
muzz
Mortgage rates do not affect cash buyers. Despite low interest rates-- and
high dollar amounts-- there are surprisingly many cash buyers in the Bay Area.

[http://sanfrancisco.cbslocal.com/2013/04/03/rise-in-all-
cash...](http://sanfrancisco.cbslocal.com/2013/04/03/rise-in-all-cash-home-
sales-frustrates-bay-area-first-time-buyers/)

~~~
tomkarlo
Buyers don't buy in a vacuum. When mortgage rates rise, it reduces the buying
power of a large portion of the market, and the value of the homes themselves
decline as a result. Yes, a cash buyer could still pay the same amount, but
why would they?

~~~
muzz
In efficient markets, buyers are theoretically not irrational either.

In theory, the cash buyers of today have factored in their expectations of
rising interest rates and the effect on home values going forward.

~~~
tomkarlo
Does anyone really still believe that real estate represents an efficient
market?

Regardless, if someone did believe that, and factored in expectations of
rising rates, they simply _wouldn't be a buyer_ in this market.

