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Million Dollar Shack: Trapped In Silicon Valley's Housing Bubble

searcher

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#1
Million Dollar Shack: Trapped in Silicon Valley's Housing Bubble
(Michelle Joyce)


https://youtu.be/SBjXUBMkkE8

Published on Oct 19, 2015
Our family has been priced out! Has the Bay Area gone crazy? Real estate prices have doubled in the last few years, a tent in the backyard can rent for $900/month, foreign investors are driving up prices, evictions and rent hikes are everywhere, people are commuting longer than ever, the middle class is disappearing, empty investment homes are everywhere, and locals are leaving in record numbers. The worst part? Some people are calling it "progress".
#‎MillionDollarShack
http://milliondollarshack.com/
 
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Ensoniq

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#2
Time to move ;)

I remember the late 90s tech boom in Silicon Valley

The streets were lined with campers and RV's

Phd's were living there weekdays and driving East to their "home" on the weekends
 

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#3
Palo Alto residents who earn up to $250,000 a year to qualify for SUBSIDIZED housing in new affordable housing plan as teachers, cops and janitors are forced out of the city
  • House prices average $3m in Palo Alto, CA; a plot of land sold for $2.7m
  • Even those on $250,000-a-year drop two-thirds monthly wage on mortgage
  • It means low-income workers like teachers cannot afford to live in the city
  • In a bid to tackle the issue, the city has launched a new housing plan
  • The plan reserves 587 units for people earning more than $127,000-a-year


Read more: http://www.dailymail.co.uk/news/article-3507025/Palo-Alto-residents-earn-250-000-year-qualify-SUBSIDIZED-housing-new-affordable-housing-plan-teachers-cops-janitors-forced-city.html#ixzz43oOdUDxz
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Fiat Metaler

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#4
the housing prices are ridiculous - am surprised the major employers don't relocate the line employees to a more reasonable cost of living locale.

still, you can't feel sorry for someone who now owns a $2 million shack.
 

ToBeSelfEvident

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#6
$2 million buys you a tiny shithole in Palo Alto with no yard and the 2 tiny bedrooms are actually in the attic. And though the man and wife each make $200k they have no chance at the market unless they borrow $2 mil from her parents. Makes me wonder about all those nice 4 story Victorians in San Francisco. What are they worth, $15 million? 20?

People commuting 4-5 hours each way? 10% - 20% of the homes are owned by Chinese citizens who have never actually seen the place and who just let it sit empty? I guess they'll sell the empty lot in 5 years for 3x what they paid for the house. Meanwhile the whole area is poisoned by Fukushima.
 

earplugs

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#7
know when to fold and when to hold. in this case, it's time to fold and settle down elsewhere. take the money and run. work that area for a few years and make some bank, burn out and settle down elsewhere for a fraction of that area. that's why my aunt did, and she retired at 50. not bad.
 

Ensoniq

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#10
Sell because those prices are unsustainable. Just think of the property taxes.
Californians have prop 13

Property taxes can't rise me than 2% per year

In San Diego we had people paying $800/year to live in 5-10 million dollar houses, because they owned them for so long,
 
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latemetal

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#11
Forty odd years ago,I lived in Sunnyvale Ca., part of sillycon valley, that house is now worth 1.2 million, back then, it was a $250,000 house. That place has been nutz for years...
 

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#12
For The Average American, Owning A Home Is Increasingly Unaffordable


Submitted by Tyler Durden on 03/24/2016 21:01 -0400


One month ago, in its traditionally cheerful assessment of the US housing market, the NAR's Larry Yun snuck in an unexpected warning:



"Home prices ascending near or above double-digit appreciation aren't healthy – especially considering the fact that household income and wages are barely rising."

He did it again just a few days ago:



"The overall demand for buying is still solid entering the busy spring season, but home prices and rents outpacing wages and anxiety about the health of the economy are holding back a segment of would-be buyers."

This is about as close to a warning that the US housing market is back into bubble territory as one can hope to get from the NAR.

Overnight, we got another confirmation of American runaway - if only for the vast majority of people - home prices, when RealtyTrac released its Q1 2016 Home Affordability Index, which showed that in Q1 2016, 9% of U.S. county housing markets were less affordable than their historically normal levels, up from 2 percent of markets that exceeded historic home affordability levels a year ago.



That may not sound like much but it means that marginal "bubble" conditions of the type the NAR was warning about, have returned. It means that home buyers need to spend more of their incomes on housing, leaving less money for other purchases.

But where this home inflation is most evident is in the clear disconnect between home prices which are rising faster than wages in most of the United States, making homeownership increasingly difficult for average Americans.

The report found that home price growth exceeded wage growth in nearly two thirds of the nation's housing markets so far this year, with urban centers like San Francisco and New York City among the least affordable.

This is what the RealtyTrac report found:



Annual change in median home prices in Q1 2016 outpaced annual change in average weekly wages in Q3 2015 (the most recent county-level wage data available from BLS) in 276 of the 456 counties analyzed for the report (61 percent).



The top five most-populated county housing markets where price growth outpaced wage growth were Los Angeles County, California (5 percent median home price growth and 3 percent average wage growth); Maricopa County, Arizona in the Phoenix metro area (8 percent median home price growth and 2 percent average wage growth); San Diego County, California (5 percent median home price growth and 4 percent average wage growth); and Orange County, California (5 percent median home price growth and 2 percent average wage growth).



Other markets where median home price growth outpaced average wage growth included counties in Miami, Brooklyn, Dallas, Seattle and Las Vegas.



“I’m sure it comes as no surprise to anyone in Seattle that it’s getting harder and harder to afford a home,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Thanks in part to strong income growth and intense competition, home prices continue to escalate at rates that are negatively impacting affordability. Something else pushing up prices is the Washington State Growth Management Act, which continues to limit developable land and is holding back many builders from adding much-needed inventory to the market.”

More troubling is that at the national level, prevailing home prices have now risen faster than average wages for four consecutive years.





It is this troubling trend - which is leading to declining demand as well as even bubblier, debt-fueled conditions for the rest - that the NAR is worried about.

So is RealtyTrac: "While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets," said Daren Blomquist, senior vice president at RealtyTrac, which monitors housing market trends.

Well, that's what mortgage debt is for; the same debt the Fed is hoping US consumer will splurge on and US lenders will eagerly hand out just so the housing bubble of 2006/7 can be recreated and housing can again become a "money-like" instrument - which as we have explained in our shadow debt series is the all important missing link which the Fed needs to come back so it can finally stop micromanaging the US market and to a lesser extent, economy.

It is the stubborn unwillingness of Americans to comply with this directive to go out and rake up as much mortgage debt as they can that is the biggest hurdle to "renormalizing" to a post-bubble economy, because in addition to a stock bubble, the US economy also needs a housing bubble to restore its previous "shine."

RealtyTrac also found that the national median home price requires 30% of average wage. This means that in Q1, the average wage earner needed to spend 30.2% of monthly wages to make monthly mortgage payments (including property taxes and insurance) on a median-priced home ($199,000), up from 26.4 percent of average wages needed to buy a median-priced home in the first quarter of 2015.

It adds that "when home prices were most affordable nationwide in Q1 2012, the average wage earner needed to spend 22.2 percent of monthly wages to buy a median-priced home. When home prices were least affordable nationwide in Q2 2006, the average wage earner needed to spend 53.2 percent of monthly wages to buy a median priced home."

* * *

What this simply means is that while few will want to admit it, the bubble conditions of an unaffordable (for most) housing bubble have returned.

Finally, for those curious, these are the least and most affordable housing markets in the US:

Markets least affordable by absolute standard

The top five least affordable counties based on percentage of average wages to buy a median priced home were Kings County, New York (Brooklyn) at 120.4 percent; Marin County, California in the San Francisco metro area at 109.2 percent; Santa Cruz County, California in the Santa Cruz metro area at 106.9 percent; New York County, New York (Manhattan) at 105.1 percent; and San Francisco County, California at 95.3 percent.

Markets most affordable by absolute standard

The top five most affordable counties based on percentage of average wages to buy a median priced home were Wayne County, Michigan (Detroit) at 8.5 percent; Baltimore County, Maryland at 9.2 percent; Clayton County, Georgia in the Atlanta metro area at 10.1 percent; Bay County, Michigan in the Bay City metro area at 11.5 percent; and Rock Island County, Illinois in the Davenport-Moline-Rock Island metro area at 12.3 percent.


http://www.zerohedge.com/news/2016-03-24/average-american-owning-home-increasingly-unaffordable
 

Usury

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#13
Not so sure I buy into all the data in the ZH article. Yeah prices are pushing up....bubbly so in some markets again (i.e., CA/FL/etc)--mostly big cities. I've held for a while now that in most of those big city markets, you'd be a fool to buy--just rent.

HOWEVER, most of the country is not like that. In most places, I believe the affordability is still there AND it's probably cheaper to buy (if you're going to be around for a while).
 

lumpOgold

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#15
Forty odd years ago,I lived in Sunnyvale Ca., part of sillycon valley, that house is now worth 1.2 million, back then, it was a $250,000 house. That place has been nutz for years...
There is quite a bit of hyperbole in that video, it is a problem, but not for rational people. The video points out the real issue, the "book" in Chinese and English for the people touring around. Even if these Chinese people move into the house, they are likely not to be connected to the community. This goes for a lot of culturally diverse people, not just Chinese, but Russians, Nigerian princes, Indian and other people tend to associate with people that speak the same language, eat similar foods and have a shared religion.

I have a 30 minute commute, bought a house in 2011 ($300k+ in equity), make under $100k and plan to retire in 5 years. My spouse and I bought 2 acres on the coast an hour north of SF and plan to build there. A 2 bdrm house near me just sold for $565,000, not bad, and it's in a area with excellent to good schools. And it's only 15 minutes to San Jose!
http://www.zillow.com/homedetails/16922-Helene-Ln-Morgan-Hill-CA-95037/19846036_zpid/?view=public

The 800 square foot house I rented in Palo Alto for 10 years just sold for $1,400,000. And it's on a 4 lane road across the street from the main rail line up and down the peninsula, you literally couldn't hear the TV when traffic was heavy or a freight train was going by. Check it out, 1433 Alma St, Palo Alto, CA 94301


Who wants to live in suburbia, I want deer and turkeys walking through my yard! Venison and turkey jerky!
 

searcher

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#16
Better than a condo? Realtor lists Brooklyn tool shed for 'only' $500,000 and says it's a 'great opportunity for a single family'
  • Realtor Anthony Mussolino listed a Brooklyn tool shed for sale on Trulia
  • Listing boasts the shed is a single-family home and 'better than a condo'
  • Mussolino said that the 'teeny tiny house' is the smallest he's ever sold
  • Shed is listed for a whopping $500,000 and 'can fit six cars' in driveway


Read more: http://www.dailymail.co.uk/news/article-3558616/Better-condo-Realtor-lists-Brooklyn-tool-shed-500-000-says-s-great-opportunity-single-family.html#ixzz46vlTKL3i
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SheepDog68

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#17
Socialism is the obvious answer!

I mean it would fix this problem in a minute!

The real problem of course is that all these socialist are moving to other parts of the country and bringing their rabies like disease with them.

The wife and I could very likely live pretty much anywhere, but we choose to live in a rural area that has low prices on property and labor on average.

The secret is that many times employers have to pay premium salaries for specialized skills which allows you to do well on both ends of the spectrum.

Little socialist who bitch and moan about getting run over by the train should get off the tracks!

They have two choices! Move or make more money!

It's easy really just decide and work that direction. It doesn't happen overnight but a few years from now they could move back and buy whatever they want if that is their goal!

We lost a family farm when young. Our choices where to work at Walmart (Or whatever) and try to keep the family farm or get educated and buy whatever we wanted later. We allowed it to motivate us beyond where we had previously aimed!

SD
 

searcher

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#18
Inside Manhattan's first $2,500 a month micro-homes: Tiny apartments are sold as the answer to the city's lack of affordable housing
  • Carmel Place, located on Kips Bay's East 27th Street, is the city's first micro-unit development
  • Their unprecedented size called for several mayoral overrides
  • There are 55 studios ranging from 260 to 360 square feet
  • They are the brain child of nArchictects and Monadnock Development
  • nArchitects scored the winning proposal for the 2013 adAPT NYC


Read more: http://www.dailymail.co.uk/news/article-3636939/Inside-Manhattan-s-micro-homes-Tiny-apartments-nestled-Kips-Bay-New-York-s-answer-housing-crisis.html#ixzz4BLs0VlHp
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#19
Absolute dump on the market for $5MILLION in Palo Alto shows just how outrageous property prices are in Silicon Valley
  • The run-down four-bedroom home, built in 1923, in the Professorville neighborhood is on sale for $4,998,000
  • Facebook's Mark Zuckerberg and Google's Sergey Brin live nearby and the former home of Steve Jobs is close by
  • The property sits on 10,000 square feet of land in the heart of Silicon Valley and is also near Stanford University
  • But it seems the price is putting off buyers as the price has already dropped from original listing price of $5,498,000


Read more: http://www.dailymail.co.uk/news/article-3647758/Absolute-dump-market-5MILLION-Palo-Alto.html#ixzz4BvXrfvqc
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southfork

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#20
It only gets worse doesn't it, no inflation they say, and in many areas where housing is quasi affordable the cost of property taxes exceed the monthly cost of the mortgage, homeowners ins is getting the same way as taxes.
 

lumpOgold

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#22
  • The property sits on 10,000 square feet of land in the heart of Silicon Valley and is also near Stanford University
The house I used to rent in Palo Alto just sold for $1.4 million. It's a crappy little 800 sf house, on a 1300 sf lot, it is also on a 4 lane road with the commuter diesel electric rail (Caltrain) across the street and Stanford nearby (Alma and Churchill). It's also across the street from Palo Alto High School, so you get track meets and marching band practice along with not being able to hear the TV or ordinary conversation.

I now live 45 miles south of there and can't imagine moving back to that nasty place.
 

searcher

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#23
Go Midwest! Only three cities in the US tick the boxes for affordable homes, strong economies and quality of life
  • Only 3 cities excel at affordable homes, strong economies, quality of life
  • They are Des Moines, IA; Oklahoma City, OK and Omaha, NE
  • Across the rest of America only 12 cities managed to excel at two factors
  • Figures come from the Oregon Office of Economic Analysis
  • Affordability drops as economies and quality of life attract people


Read more: http://www.dailymail.co.uk/news/article-3648677/Midwest-best-three-best-places-live-U-S-revealed-East-West-coasts-missing-out.html#ixzz4C1oGJYrg
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searcher

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#24
Least affordable US cities revealed: You need a salary of $160,000 to buy a home in San Francisco but in Pittsburgh you can get by on $32,000
  • To buy a house in San Francisco, US family requires a salary of $160,000
  • By contrast, buyer only needs $32,400 to purchase a home in Pittsburgh
  • Home prices have gone up since the first quarter of the year in every area except Tampa, Orlando and Miami, all in Florida


Read more: http://www.dailymail.co.uk/news/article-3756761/Least-affordable-cities-revealed-need-salary-160-000-buy-home-San-Francisco-Pittsburgh-32-000.html#ixzz4IGpyQZw2
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#25
I remember the drive up to Silicon Valley from Fort Ord, there was an old falling down farm shack that somebody painted on "Handyman Special $500,000"
I laughed every time I saw it. Think it was 1990 or so.
 

latemetal

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#27
Amazing the number of people living in vans and RV's, a whole subculture of educated working people living on the streets.
 

lumpOgold

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#28
Here's a little fixer-upper you can probably get for $450,000. Just was erected near my work in N San Jose
SiliconValleyFixerUpper (2).jpg
 

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#29
What really pisses me off is when these people have finally had enough and they move out because of how ridiculous things have gotten.

And then, when they get to their new city, state, etc, they vote for the same crap that got them into the position they just left.
 

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#31
I guess I don't understand the whole Silicon Valley appeal for tech companies.
I thought one of the big selling points working on computers was that it can be done from ANYWHERE. People working at home a couple days a week, or working while on vacation, etc......

So why do these tech companies all want to be in an area with over-inflated property values and ridiculously high salaries that need to be paid?

Shoot, why don't they set up here in Michigan where you can still get a nice house at a good price, cost of living is reasonable and pay those people half the salary?
 

Joe King

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#32
So why do these tech companies all want to be in an area with over-inflated property values and ridiculously high salaries that need to be paid?

Shoot, why don't they set up here in Michigan where you can still get a nice house at a good price, cost of living is reasonable and pay those people half the salary?
th_smiley-raising-waving-hand.gif




Because they're stupid?
 

searcher

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#33
Is Real Estate Finally Rolling Over?
By: John Rubino
Amid all the epic financial bubbles that have emerged in the past few years, real estate has been a bit of an afterthought. Still, the action in hot market trophy properties has been pretty bubbly. And now the run may be ending. London penthouses are sitting empty due to Brexit uncertainty. Vancouver condos aren’t selling because of recent taxes imposed on foreign buyers. And in the US some formerly red-hot markets are heading south.
 

searcher

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#35
Not Silicon Valley and not shacks..................

Average price of a Manhattan apartment soars above $2MILLION for the first time
  • Co-ops and condos sold in 2016 for an average price of $2.2 million, up from $1.9 million in 2015
  • A number of sales at city's tallest residential skyscraper, at 432 Park Avenue, pushed Manhattan prices sky high
  • The 1,396-foot tower accounted for roughly half of the 25 most expensive sales in the borough this year
  • Top three sales were $87.6 million, $60.9 million and $59.1 million, all at 432 Park


Read more: http://www.dailymail.co.uk/news/article-4031856/Average-price-Manhattan-apartment-soars-2million-time.html#ixzz4SoFqZo5w
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searcher

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#36
Fixer-uppers in San Francisco now cost almost $1 MILLION on average - and here's what YOU can get at this price
  • Homes labeled fixer-uppers sold at a median price of $920,000 in 2016, a new report has found
  • The designation lowers the price of the property, as does being tenant-occupied
  • But an elevator, a view of the Golden Gate Bridge or a wine cellar increased median prices to $4,869,000, $2,569,000 and $3,050,000 respectively
  • Single-family homes remain expensive in San Francisco due in part to a lack of new houses being built
  • A $950,000 stucco home located in 38th Avenue works out at $864 per sqft


Read more: http://www.dailymail.co.uk/news/article-4102640/Fixer-uppers-San-Francisco-cost-1-MILLION-average.html#ixzz4VJhVRjIM
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Usury

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#37
Batshit crazy.
 

Agavegirl1

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#38
My daughter left the Bay Area in August because it was unaffordable. Her husband found a job in Ojai. She is now doing freelance while he works full time as a high school teacher. She is doing work for companies in the LA area and it is not to far for the times she needs to meet people in person. They are living with his mother and saving for a home.
 

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#39
One or two million to live in a shithole? That kind of stupidity should be painful. And fortunately the market punishes those people by taking their one or two million dollars.