On the living part: My folks live in Concord and their next door neighbor just moved into assisted living at 95. Her house sold within a week for 700k to a young couple. It's a 3 bed 1 bath single story in Concord with drainage problems, mind you. Lets do the math here shall we: What is the mortgage and taxes(thanks prop13) on a place like? Well, at 4.05%, good credit, and 15% down, it's 2857.80/month just on the loan, then we have taxes at about 729.16/month and ancillary insurance and repair will round us up to about 4k/month (48k/year) on just housing for a 3 bed 1 bath. Since spending about 1/3 of your income on housing is normal, you'd need about 150k/year as a couple to afford the house next to my folk's. You simply cannot get a job out in Concord for that salary, so you need 2 working people at ~75k, which is just out of Concord's range for a young person. The only place you are going to find salary at that price is in the South Bay or the City. So now you have to ride Bart or 680 for an hour each way, putting you at at least 10 hour days. Oh, and the closer you get to SF or the further south you go, the more the houses cost. You can't win.
Mind you, they live next to my folks who pay about 120.00/month for the house since my Dad was a GI and got the house for 70k in the 70's. Same Levit-town style house, 40 fold cost difference. Neighbors with completely different lives.
> sold within a week for 700k
> got the house for 70k in the 70's
For perspective, the S&P 500 was at 68.56 in 1975 and began 2014 at 1848.36, a 27 fold gain. You also wouldn't be paying ongoing real estate taxes, etc. So the house bought in the 70's wasn't that great of an investment, long term.
Pop is a mechanic and will likely die under a car (we've come to accept this). His know-how of the S&P is suspicion at best as he has no formal algebra-2 training (due to Vietnam and all). He did not buy the house to generate a return, he bought it because he needed a pot to piss in, a bed to sleep in, and a house to raise a family in. Our home is not worth only money.
My intent is not to judge your pop, but to put the 10 fold increase in the value of the house in perspective.
BTW, when I work under my car, I put two sets of jack stands under it, and don't work alone. When I was a kid I jacked up my car and put cement blocks under it to hold it up. Before I slipped under it, the blocks crumbled and the car collapsed onto the ground. Yikes! Glad I was able to learn that lesson the easy way. Best regards to your pop!
No, I meant it quite literally. He uses jacks and has seen many friends die for lack of them. It's not an accident that will kill him, just old age or a heart attack of a sort. We are pretty sure that Mom will walk out to the garage one day and find him dead under a car with what he really loves to do.
Historically America residential property has been a zero return investment. It kept up with inflation and that was it. It's only recently that America has seen the boom and bust property cycles that affect other parts of the world
My guess is, anecdotally, that there is very high turnover, but still net positive population growth. I participated in YC but really had no desire to be in SV and thus moved back to Boston where I feel life/culture/people are much more balanced. Being in SV for work, I felt like I was in a perpetual startup/tech bubble.
I think the parent commenter paints a gloomy but somewhat realistic picture - it 'works' because there's a high volume of people looking for success, but it can be very stifling for some (such as myself).
I've worked here in SF as a Rails consultant for the past four years. It's quite obvious that the work force skews younger. My best friend just became a CTO and his bosses are both 20. He's 41. :-0
When you look to start a family, the pressures of working in the valley are going to bubble to the surface. You can either endure a 60 minute drive (that should really only be 20 based on distance) to a child's dr. appt for which you endure wall-to-wall traffic with a screaming child, you try to ride bart with a child in stroller and packed cars, or you shuttle a car seat to and from an Uber.
Or, you pay 30-60K for a nanny and let them handle those headaches.
It's hard to live in SF with a family. Really hard.
Hmm, seems like a business opportunity here, for Uber/Lfyt etc. to offer a car seat as an extra (in which case the car arrives with seat all set up and ready).
The data tell us that some people leave California in search of cheaper housing. A much larger number come from other countries (India, China, etc) for high-paying jobs. Net migration from Mexico has been very low recently.
1) lots of other stuff rocks, so you don't want to leave and you can downgrade your living space to something smaller that is more "affordable" to get most of what you want
2) people are leaving, but at a slower rate than they are coming. Basically, come here, work hard, burn out, and go somewhere else. Or maybe you get a job on the periphery, like say san jose, and then you live way out in Morgan hill or gilroy or in the cheaper parts of san jose. Or you get a job in Dublin/Pleasanton and then live in like antioch/pittsburgh/tracy.
Anecdotally, it seems like they are moving out of there and moving in here. (Disclaimer: there's an alarming number of people here that are opposed to that. I'm not one of them.)
Thing to consider, though. There still isn't nearly the concentration of VCs (and thus networks) here as there are there. Depending on where you're at with your project/startup/company, that's got to be a sizable consideration when thinking about moving to/moving from the valley.
Anecdotally, the Northwest has been complaining about people from CA moving up and "ruining the place" for decades. (see: "Californians driving up our housing costs", "Californians don't know how to drive", etc. I grew up in the Seattle suburbs, and it was a common refrain in the 80s and 90s, and I'm sure it goes back at least to the 1962 World's Fair, if not the early days of Boeing.
Also anecdotally, I moved to the Bay Area, my parents moved (back) to SoCal after 40 years in the Northwest grey. Plus, I have 4 dot-com era friends who have moved from the Seattle tech boom to the Bay Area tech boom, all in their late 20s/early 30s (so not just-out-of-college types), and I know a few others who are considering the same. And I don't know a soul from here who moved north, except for people who came down here for college and then returned home.
I guess it's like they say, "the plural of anecdote is not 'data'".
Manhattan is expensive, but I think you benefit a bit more from the efficiencies of extreme urban living. With the exception of a few neighborhoods, it's much harder to get by in SF without a car. In fact, SF is sort of in the worst of both worlds - dense enough that it's quite difficult to own a car, not so dense that it's easy to get by without one.
I'm not convinced they aren't. I live in Sunnyvale with a wife, 2 kids and a single income. Many of our friends with similar circumstances are considering leaving and some already have.
There'll always be new blood that offsets people leaving. I think the housing shortage is so bad that even if people were leaving it wouldn't decrease pressure right away.
I'm guessing that the housing market is dancing with the maximum value of "1/3 of the typical house-buying population's salary" that buyers are willing to pay. If a lot of house-buyer are couples and they make $75-100K each, then that is balanced against maximum-tolerable commute time and voila, prices drop off once you get to Hercules, Tracy or Gilroy.
Bingo, I'm in Colorado now. 700k in a good school district is 3 stories, 5 bed and 3 bath with an acre in the back. Also, the beer and slopes are nicer here.
Don't live in BFE Concord? Could get a 3/1 on the Peninsula for a bit more (say, 800-850). Less if you're willing to live in Daly City or EPA or something.
Single-family or townhome/condo? In the Mountain View/Sunnyvale/Los Altos area you can get a 3/1 townhome for about $800K, but if you want a single-family home with a postage-stamp yard those start at around $1.2M.
SFH. Obviously you're going to pay out the nose for MTV or Los Altos. I haven't shopped in Sunnyvale but that comparison (to the other 2) surprises me. I'd expect it to be cheaper than, say, Redwood City.
I remember back in '06, places in MTV were cheaper than Santa Clara. Should have bought back then! I remember thinking Google couldn't get any bigger, it was already a huge company. Guess I couldn't have been much more wrong.
For 1.2M you can get a decent-sized 3/2 or 4/2 of maybe 1800sqft. Not in Mountain View, obviously.
Mind you, they live next to my folks who pay about 120.00/month for the house since my Dad was a GI and got the house for 70k in the 70's. Same Levit-town style house, 40 fold cost difference. Neighbors with completely different lives.
And they say there isn't a bubble?