Real Estate Market

[CKN]

Depends. Those who move to Idaho, Utah, Montana are not the same people who bid up the property and stay here.

The people who got out look at real estates different than those who stay but move further away (i.e. longer commute) or pay more by leveraging more (dual incomes, or at least 1 tech worker, look at real estate as asset and investments).

I don't think a $500k house in Idaho would appreciate much because there is always green field construction and nearly free land there. Your $500k house will be a $60k lot and $400k construction cost, and the structure will depreciate, the income level of the residents will lower as it age and higher income folks move to new neighborhood and selling to lower income folks, it will still appreciate due to inflation in general. Income wise, even if you are tech worker for Micron. You may make $140k the rest of your life in Boise vs $250k in San Jose (on the low end) vs $350k in San Francisco (on the high end). It is not the same lifestyle, just like you need to make $500k to live in Queen or $2M to buy a house in Manhattan.

In California due to land shortages in major cities (or in Jeff's case, LG or other SV area), the higher income neighborhood is in short supply so prices stays high, people then gradually buy into slightly cheaper neighborhood and "transform" it into a higher income neighborhood. A lot of people leverage more because to them it is an "investment" to get into the up and coming neighborhood. The appreciation is mainly due to the tech boom and the tech stock appreciation, and the shortage of land (it is a bay, with a lot of mountains, and the zoning / public hearing hell for rebuilding, and rent control, etc).

The lifestyle is different, they will likely cash out eventually or pass down to their children, instead of moving to Idaho early and invest in dividend stocks or index fund.

Yes, a lot of people are leaving, but a lot of people are still buying. The market is functioning as expected.

No. I have a friend (ex Southern Californian) that bought beautiful new house (over $500,000.00) in a Suburb of Boise. It has gone up $75,000.00 in a year. That's over 10%. The entire Western United States-has seen massive real estate depreciation in the last 5 years-partly driven by (in select markets) by Californians thinking they have won the lotto after crossing state lines. I have personally known six Southern Californians who have left the state.

I moved out 8 years ago. Paid cash for the house outside of Salt Lake-put the rest in the bank. Let's face it-anybody who owns a house in California in any half-decent area-with any money in the bank is a millionaire in California. That's something to think about-and gives one LOTS of options. It doesn't give you many options living in the state-but if you cash out it does.

BTW-you show great ignorance saying the land is "nearly free". You think the farmers-or mostly the children that the land was passed on to don't know what they have? Hardly. What's going on with land prices up in the Heber Valley, UT area is crazy. Or as I mentioned earlier-Star Valley, Wy of all places.

 

[Dave Hess]

$500K buys you a mansion in Humpy Dumpty, Iowa...... it will also buy you a prefabricated plastic dog house in California.

But seriously, comparing home values and property taxes in different areas of the country is not a good idea.

 

[wings&wheels]

Crazy prices. House across the street sold recently for about 10% over asking. We saw five different groups of people coming to look at it on the first day on the market, despite covid lockdowns. Property taxes here temper total pricing, but the market is crazy.

Prices at the beach are also raising fast. I suspect that older folks are selling their high priced homes, and moving to the beach and or a smaller suburban home with lower taxes, and a beach house. I know a good number of folks who are nearing retirement and are doing this... Im preparting to be in the market for a beach house too. Lots of demand, but Im waiting for the drop...

Assuming that the beach house will be in a solid, attractive area that will hold values the 'bubble' is less relevant and I am not sure I would wait. Life is short... As far as the future market, in addition to what you say, I think you also will see younger folks and families moving to beach and similar areas as long as the schools are decent (or good private is close) as more folks have the ability for remote work at some level, especially professional, tech and managerial staff. Only needing to make an appearance a day or two a week makes a much longer commute tolerable. We are seeing it here.

 

[CKN]

$500K buys you a mansion in Humpy Dumpty, Iowa...... it will also buy you a prefabricated plastic dog house in California.

But seriously, comparing home values and property taxes in different areas of the country is not a good idea.

It's the fact about others not knowing about massive real estate appreciation in other states because there is "available land". Then thinking somehow you are going to sell you land cheap your family has farmed for in many cases 100 years-especially when there is a sub division next door.....

 

[Gladtojoin88]

I was a sucker. I paid too much for my home, in the late 1990's. Like $340K for a broken down house built cheaply in 1962. 1,200 square feet.
Put $150K into it. I got ripped off for a ton of that money; the guy went to prison for fraud, grand theft and other charges. More people than me were involved.
My house is probably on the low end on my block; it would sell for the better part if $2M in a matter of days.

The 2 recent sales on my street were $2M and $2.3M.

Sounds like you did just fine!

 

[PandaBear]

BTW-you show great ignorance saying the land is "nearly free". You think the farmers-or mostly the children that the land was passed on to don't know what they have? Hardly. What's going on with land prices up in the Heber Valley, UT area is crazy. Or as I mentioned earlier-Star Valley, Wy of all places.

By "nearly free" I mean it is not 80% of the cost of the property. How much do you think a 2000 sqft lot here cost vs in say, Boise Idaho in a new virgin lot? It is definitely not 1M for sure. If it is less than 75k it is "nearly free" figuratively speaking.

Gasoline in rural America compare to Singapore is also "nearly free" (technically about 1/4 only).

 

[CKN]

In comparison, that $500K property will not appreciate. That's the difference.
Silicon Valley is not for everyone, but there is gold here.
I tell people, if you can't make it here, you cant make it anywhere. Opportunity abounds.
That's my experience.

You missed my above post that real estate in Boise, ID has gone up 12% in the last year. Including my friends very nice one year old $500,000 new house. It's up $75,000.00

It would seem the Silicon Valley is losing it's shine and you would be much better off moving to Texas-where property is much more reasonable-and that's where MAJOR I.T. companies are heading-
Silicon Valley—and its numerous tech firms—have attracted talent for decades. Now, though, exorbitant housing costs, high taxes, and strict regulations have made it a challenging place to live, work, and do business. A silver lining of the COVID-19 pandemic is that many firms have successfully implemented work-from-home strategies. Moving forward, this will give companies and employees alike more flexibility over where and how to work.
https://www.investopedia.com/why-silicon-valley-companies-are-moving-to-texas-5092782

 

[PandaBear]

It would seem the Silicon Valley is losing it's shine and you would be much better off moving to Texas-where property is much more reasonable-and that's where MAJOR I.T. companies are heading-
https://www.investopedia.com/why-silicon-valley-companies-are-moving-to-texas-5092782

My brother in law moved to Dallas (Allen to be exact) a couple years ago. This is what he told me:

You are moving to Texas to settle down and "rest and vest". You don't go there to climb the corporate ladder. People have the impression that the work forces and companies moving there are 2nd tier vs higher cost of living area like Seattle and Bay Area (or even Los Angeles). You will make a comfortable 200k income the rest of your life, your house will appreciate a bit but not a lot. You will end up having 4-5 kids and have a boat in your garage, you will also get used to your toll road very quickly (probably cost you 200-300 a month depends on how often you drive). Many people realized that working hard doesn't matter anymore, just keep hopping between companies with stock growth potential and just do the bare minimum. You will not make 350k-500k a year, your tax is lower, food is cheaper ($1 milk vs $4).

So far, if I were to move for low tax tech hub I'd pick Seattle instead of Texas. The pay is on par with the bay and the opportunity is there. "IT" is not a good industry to be in, web based e-commerce seems to be where the growth is at (although I still don't think there is much tech in that, more like startups and businesses on websites). Yes the housing cost is double of texas but the opportunities is worth it.

Anyways, different stroke for different folks. It is a free country. I wish more people move out of the bay area, I want to buy a couple more homes to pass down to my children.

 

[PimTac]

Depends. Those who move to Idaho, Utah, Montana are not the same people who bid up the property and stay here.

The people who got out look at real estates different than those who stay but move further away (i.e. longer commute) or pay more by leveraging more (dual incomes, or at least 1 tech worker, look at real estate as asset and investments).

I don't think a $500k house in Idaho would appreciate much because there is always green field construction and nearly free land there. Your $500k house will be a $60k lot and $400k construction cost, and the structure will depreciate, the income level of the residents will lower as it age and higher income folks move to new neighborhood and selling to lower income folks, it will still appreciate due to inflation in general. Income wise, even if you are tech worker for Micron. You may make $140k the rest of your life in Boise vs $250k in San Jose (on the low end) vs $350k in San Francisco (on the high end). It is not the same lifestyle, just like you need to make $500k to live in Queen or $2M to buy a house in Manhattan.

In California due to land shortages in major cities (or in Jeff's case, LG or other SV area), the higher income neighborhood is in short supply so prices stays high, people then gradually buy into slightly cheaper neighborhood and "transform" it into a higher income neighborhood. A lot of people leverage more because to them it is an "investment" to get into the up and coming neighborhood. The appreciation is mainly due to the tech boom and the tech stock appreciation, and the shortage of land (it is a bay, with a lot of mountains, and the zoning / public hearing hell for rebuilding, and rent control, etc).

The lifestyle is different, they will likely cash out eventually or pass down to their children, instead of moving to Idaho early and invest in dividend stocks or index fund.

Yes, a lot of people are leaving, but a lot of people are still buying. The market is functioning as expected.

Another thought on this is that many buyers are not thinking of their homes as investments in total but consider lifestyle, lower crime rates, more family friendly and other observations.

Not everyone wants to live in a densely populated area with sirens continuously going and always having to watch your family and property, even if the property values are going up like crazy.

 

[CKN]

Another thought on this is that many buyers are not thinking of their homes as investments in total but consider lifestyle, lower crime rates, more family friendly and other observations.

Not everyone wants to live in a densely populated area with sirens continuously going and always having to watch your family and property, even if the property values are going up like crazy.

I would agree that younger people do not look at houses as investments-they prefer a "lifestyle". Seattle is a very nice area-but then again property isn't cheap.

 

[wings&wheels]

You missed my above post that real estate in Boise, ID has gone up 12% in the last year. Including my friends very nice one year old $500,000 new house. It's up $75,000.00

It would seem the Silicon Valley is losing it's shine and you would be much better off moving to Texas-where property is much more reasonable-and that's where MAJOR I.T. companies are heading-
Silicon Valley—and its numerous tech firms—have attracted talent for decades. Now, though, exorbitant housing costs, high taxes, and strict regulations have made it a challenging place to live, work, and do business. A silver lining of the COVID-19 pandemic is that many firms have successfully implemented work-from-home strategies. Moving forward, this will give companies and employees alike more flexibility over where and how to work.
https://www.investopedia.com/why-silicon-valley-companies-are-moving-to-texas-5092782

Yes companies are moving some operations out of the Valley, but the key talent and exec will remain there. Why? The same reasons that the RE values are what they are; great place to live, opportunity abounds and proximity to Stanford, etc. Aside from tech itself, you have all of the supporting industries of lawyers, bankers, etc. and their high rollers want to live in the Valley for the same reasons.

We lived there for ~4 years and I would have stayed longer although I am not sure I want to raise a family in the heart of the Valley. Different story for some of the great "outer" towns like Los Gatos and Saratoga, maybe Los Altos Hills, but then what ~$1.3M gets you outside of Boston (which isn't cheap) costs $3M++ in the Valley, or that ~$1M buys you a 1k sqft ranch on a postage stamp in Atherton.

 

[PandaBear]

I would agree that younger people do not look at houses as investments-they prefer a "lifestyle". Seattle is a very nice area-but then again property isn't cheap.

In that case, comparing rent vs rent. Those $3-4k a month apartments cost that much for a reason. It really boils down to the job market.

 

[PimTac]

I would agree that younger people do not look at houses as investments-they prefer a "lifestyle". Seattle is a very nice area-but then again property isn't cheap.

And I would agree, especially with regards to younger people. Singles and couples with no kids are what are moving into Seattle itself. Families will move elsewhere in the suburbs as the city itself is not a family friendly environment.

I know because I live just south of Seattle.

 

[JeffKeryk]

I would agree that younger people do not look at houses as investments-they prefer a "lifestyle". Seattle is a very nice area-but then again property isn't cheap.

Interesting... I never thought of it this way. Wow... A purchase as large as a house as a lifestyle? Stupid.

 

[PimTac]

Interesting... I never thought of it this way. Wow... A purchase as large as a house as a lifestyle? Stupid.

Everyone has their idea of what kind of lifestyle they want. Some are experiencing huge gains in their home while they hear gunshots and sirens at night. Others prefer clean air and quiet.

It’s not all about money.

 

[mightymousetech]

Hmmmm......

I’m not trying to push “doom and gloom” during the holiday season, but,

Does anyone else recall when the stock market (Humpty) and the real estate market (Dumpty) were absolutely sizzling like a filet on the grill? And it wasn’t too many years ago.

And we all know what happened to Humpty Dumpty........

The big market crash did not really happen here. That was almost exclusively in the US thanks to sub prime mortgages.

 

[Dave Hess]

And I would agree, especially with regards to younger people. Singles and couples with no kids are what are moving into Seattle itself. Families will move elsewhere in the suburbs as the city itself is not a family friendly environment.

I know because I live just south of Seattle.

With all the problems in that area do you plan on staying ?

 

[brianl703]

Even though there may be "available land" it does not mean that:

1)There aren't zoning requirements that prevent you from being able to use it. Where I live, there is a limit of 1 house per 10 acres. (My lot is smaller than that because it was subdivided prior to the zoning rule change, therefore grandfathered).

2)The utilities are close by. It can be prohibitively expensive to extend electrical, water, and sewer lines.

3)It's even a buildable lot. If there is no public sewer and no public water, then the land must be suitable for a septic system and you must be able to drill a productive water well on it.

 

[CKN]

Even though there may be "available land" it does not mean that:

1)There aren't zoning requirements that prevent you from being able to use it. Where I live, there is a limit of 1 house per 10 acres. (My lot is smaller than that because it was subdivided prior to the zoning rule change, therefore grandfathered).

2)The utilities are close by. It can be prohibitively expensive to extend electrical, water, and sewer lines.

3)It's even a buildable lot. If there is no public sewer and no public water, then the land must be suitable for a septic system and you must be able to drill a productive water well on it.

There is plenty of available farmland that is being sold in "The West" to develop in to sub divisions. In almost all cases developers are required to upgrade existing roads and infrastructure. Utilities are usually on the main road and brought in. I would imagine that prior to buying this land-developers have already petitioned for any zoning changes. What is happening is Daddy Farmer passes away-the kids inherit acreage. The kids ask themselves-do I want to get up at 5 a.m. and milk cows?-OR do I want to sell the land for $10 million dollars and have an easy life? That is an actual scenario.

 

[PimTac]

With all the problems in that area do you plan on staying ?

I have another home elsewhere. Unfortunately travel is not possible right now.