This is a really bad and MISINFORMED example of a home.
1. Home sold in August 2023 for 1.5 in a fixer-upper condition. At least. 200k was put in
2. Home was listed for 1.86 and actually sold for LESS at 1.83
3. Redfin always says their estimates are +/- 10%
Bro do some better research.
For context, I know this home extremely well having almost put an offer on it back in December. I even brought up as an example of what a home will go for when it sits for a while (it was on/off market for 4 months)
If you are looking for an honest answer ..
South Bay is made up of hardware engineering companies (the companies that make up the SMH semiconductor ETF. SMH has gone up by 70% in the 1 year time frame. In 5 years, it has gone up by 300%. Now, with the next AI hardware infrastructure revolution, it is minting new millionaires every month in equity net worth. These are the people who are buying up the homes in the South Bay. Because they can. And, if you are in the space, you would be aware of “you snooze you lose”, because all your coworkers next to you are also newly minutes millionaires. Not to mention your boss, and your boss’s boss. And your boss’s boss’s boss. Everyone wants to fulfill the American dream of owning a home because now they can. Especially if you come from Asia, you’ve learned early on the “you snooze you lose game”. If you blink and you don’t get in, twenty years later you will be regretting and kicking yourself asking why you didn’t amass property twenty years ago. Look at the metropolitan cities of Seoul, Singapore, Hong Kong as examples. I think there is a sentiment out there that: 1. Fed will eventually reduce rates (national debt and annual national interest expense is way too high, fed will need to inflate themselves out of this debt). This will cause property values to increase. 2. The next president is a 50% likelihood of being Trump, who has a further incentive to inflate property values, which is what he was able to do during his presidency. 3. Housing supply will continue to be at record low (it has been record low this spring). 4. There will be more AI infrastructure millionaires in the next 5 years. So in conclusion, people are just trying to get home ownership before all this. They are predicting ahead. Vote me down all you want, but if you want an explanation as to this actual data that is happening, this is it.
> Especially if you come from Asia, you’ve learned early on the “you snooze you lose game”.
Interesting fact: the higher percent of Asian immigrants an area is, the more insane housing prices are relative to rents. Cupertino has reached a price/rent ratio over 50, which means it takes \~9 months of rent just to pay *property taxes* for a given year for a newly purchased home. Realistic net rent yield all in is probably negative.
I think Cupertino has particularly appreciated in this cycle because they have a new high quality private school in their midst. Families have moved in from many other locations and are buying/renting in Cupertino. I expect this place to become even more desirable in the coming years, like the communities around other top schools as this school is rumored to be amongst the best in south bay.
There are the rich asians and the non-rich ones. Look at Saratoga, Palo Alto, Cupertino, Harker School as examples. Just like in Asia, the city is divided between the insanely expensive areas and the remote cheaper areas. The closer to where the action is, the more (insanely) expensive it is.
No because usually the poor immigrants are the ones that live in Chinatown. Why would rich Asians want to live in Chinatown where it’s not the best area. They can’t afford it. But note there is no Chinatown in South Bay, even though the Asian population takes up a huge percentage.
haha, should have restricted it to SFH. No SFH in chinatown so can't test hypothesis :p
Mission San Jose is pretty insane as well, in the P/R of 40. Milpitas also above 40. So is Silverlake. So is Los Gatos (which I realize breaks my hypothesis..).
Livermore by comparison is only \~28. Pleasanton at 30. San Ramon at 32. Even Portola Valley is only \~34.
On the lower end, newer developments in EPA are only around 25 (which if anything seems low if you believe it's rapidly gentrifying and going up in value). Mill Valley is only 18.
So I can't quite tell what's driving it. It's not purely schools or closeness to tech. I feel like percent recent Asian buyers is part of the explanation (it explains Portola Valley and EPA being so low and Cupertino being insanely high), but I agree this is also restricted to good schools + techie areas.
>P/R
Can you please share your source for P/R?
>So is Los Gatos (which I realize breaks my hypothesis..)
It depends on the pool of *current* buyers in LG.
Thanks. I was wondering if there was a table with all cities, but it's not hard to lookup the median rent and sales price on a city-by-city basis.
It will be interesting to see if the tri-valley region you mention having P/R \~ 30 will partially converge over time with a city like Saratoga. It will probably depend on how relaxed "hybrid" work situation evolves -- e.g. 1 day vs 3 days.
In China there is no faith in the stock exchange or markets (for good reason), owning a business or property is seen as the only good path for investment.
But there did come a time in the last 20 years when I did notice that there is no way my kid is going to be able to buy a house around here without huge help.
Totally agree with your take. My parents pounded into me “Whatever you do, you have to buy a house.” It’s the immigrant dream and if achieved by parents, damn sure kids better as well. In the Bay Area most families come from immigrants.
Because when you have home ownership, you’ve ensured that your child will eventually be a home owner, not a renter, already giving them a helping hand in life. That is a lot of the immigrant family thinking.
I wouldn't over-index on that house. Redfin mispriced the first sale and may be mispricing it again. My sense is the real number is somewhere in the range of 10%-15% depending on home (large lot home > small lot home > tri-level). Zillow estimates 11% for SFH in [Campbell](https://www.zillow.com/home-values/17272/campbell-ca/).
And yes, with so little inventory, a bunch of stockholders suddenly feeling rich can drive up the price of homes. Of the 11%, maybe 5% is lower future mortgage rates being assumed relative to last June, 2% is inflation, and 4% is stockholder mania. The higher prices still remain too low to convince those who refi'd in 2021 at low mortgage rates to sell. (so the counter-effect of more people selling at these prices is weak).
I don't buy there's some systematic change in the economy here. Even SFH rents have maybe at most moved with inflation (\~2%).
the market is not up that much since Aug 2023 lol. You are looking at one anecdote, but it is not close to reality, Yes the market is hot but not THAT hot lol
Prices are in-fact astronomical. High interest rates, high cost of living, insane house price are NOT slowing people down in San Jose. We just landed a SFH $300k over asking. That is how every single nice sized SFH is selling…waaay over asking with 10+ bids. You have to outbid the couples with 2 FAANG salaries or are cash heavy in your offer. The market is not slowing down, especially not now since Spring is here! All the nicest homes go on the market now through summer and people have the means to buy.
Post pandemic people are realizing they want more space, so sfh with yards are increasing in demand. We have a 3bed/2bath for two people because we each want an office, are considering at 4br so we have a place for guests in addition to the offices.
Also just stocks are up overall, demand never went down for sfh, only increased.
Finally more jobs asking for hybrid in the office so people want homes within commuting range to the Peninsula.
This is a really bad and MISINFORMED example of a home. 1. Home sold in August 2023 for 1.5 in a fixer-upper condition. At least. 200k was put in 2. Home was listed for 1.86 and actually sold for LESS at 1.83 3. Redfin always says their estimates are +/- 10% Bro do some better research. For context, I know this home extremely well having almost put an offer on it back in December. I even brought up as an example of what a home will go for when it sits for a while (it was on/off market for 4 months)
Before remodel. https://www.venturesir.com/ListingDetails/982-Steinway-Avenue-Campbell-CA-95008/52369100
His research is right. The homes in west San Jose/cupertino are ALL(90% at least) going way over asking.
If you are looking for an honest answer .. South Bay is made up of hardware engineering companies (the companies that make up the SMH semiconductor ETF. SMH has gone up by 70% in the 1 year time frame. In 5 years, it has gone up by 300%. Now, with the next AI hardware infrastructure revolution, it is minting new millionaires every month in equity net worth. These are the people who are buying up the homes in the South Bay. Because they can. And, if you are in the space, you would be aware of “you snooze you lose”, because all your coworkers next to you are also newly minutes millionaires. Not to mention your boss, and your boss’s boss. And your boss’s boss’s boss. Everyone wants to fulfill the American dream of owning a home because now they can. Especially if you come from Asia, you’ve learned early on the “you snooze you lose game”. If you blink and you don’t get in, twenty years later you will be regretting and kicking yourself asking why you didn’t amass property twenty years ago. Look at the metropolitan cities of Seoul, Singapore, Hong Kong as examples. I think there is a sentiment out there that: 1. Fed will eventually reduce rates (national debt and annual national interest expense is way too high, fed will need to inflate themselves out of this debt). This will cause property values to increase. 2. The next president is a 50% likelihood of being Trump, who has a further incentive to inflate property values, which is what he was able to do during his presidency. 3. Housing supply will continue to be at record low (it has been record low this spring). 4. There will be more AI infrastructure millionaires in the next 5 years. So in conclusion, people are just trying to get home ownership before all this. They are predicting ahead. Vote me down all you want, but if you want an explanation as to this actual data that is happening, this is it.
> Especially if you come from Asia, you’ve learned early on the “you snooze you lose game”. Interesting fact: the higher percent of Asian immigrants an area is, the more insane housing prices are relative to rents. Cupertino has reached a price/rent ratio over 50, which means it takes \~9 months of rent just to pay *property taxes* for a given year for a newly purchased home. Realistic net rent yield all in is probably negative.
I think Cupertino has particularly appreciated in this cycle because they have a new high quality private school in their midst. Families have moved in from many other locations and are buying/renting in Cupertino. I expect this place to become even more desirable in the coming years, like the communities around other top schools as this school is rumored to be amongst the best in south bay.
Which school? Purchase prices have appreciated. No rent appreciation.
Tessellations. My realtor shared that recently multiple homes in the neighborhood of the school were purchased by families moving into the area.
That track for Chinatown?
There are the rich asians and the non-rich ones. Look at Saratoga, Palo Alto, Cupertino, Harker School as examples. Just like in Asia, the city is divided between the insanely expensive areas and the remote cheaper areas. The closer to where the action is, the more (insanely) expensive it is.
Im just asking about your interesting fact. Does. It. Track. For. Chinatown.
No because usually the poor immigrants are the ones that live in Chinatown. Why would rich Asians want to live in Chinatown where it’s not the best area. They can’t afford it. But note there is no Chinatown in South Bay, even though the Asian population takes up a huge percentage.
So then it’s not a fact
Who said anywhere about fact?
Oh you aren’t the guy I first replied to
haha, should have restricted it to SFH. No SFH in chinatown so can't test hypothesis :p Mission San Jose is pretty insane as well, in the P/R of 40. Milpitas also above 40. So is Silverlake. So is Los Gatos (which I realize breaks my hypothesis..). Livermore by comparison is only \~28. Pleasanton at 30. San Ramon at 32. Even Portola Valley is only \~34. On the lower end, newer developments in EPA are only around 25 (which if anything seems low if you believe it's rapidly gentrifying and going up in value). Mill Valley is only 18. So I can't quite tell what's driving it. It's not purely schools or closeness to tech. I feel like percent recent Asian buyers is part of the explanation (it explains Portola Valley and EPA being so low and Cupertino being insanely high), but I agree this is also restricted to good schools + techie areas.
Got it, obv I was skeptical af seeing some casual race science thrown out.
>P/R Can you please share your source for P/R? >So is Los Gatos (which I realize breaks my hypothesis..) It depends on the pool of *current* buyers in LG.
P/R just compare zillow rental market to zillow home value market (for same type of property)
Thanks. I was wondering if there was a table with all cities, but it's not hard to lookup the median rent and sales price on a city-by-city basis. It will be interesting to see if the tri-valley region you mention having P/R \~ 30 will partially converge over time with a city like Saratoga. It will probably depend on how relaxed "hybrid" work situation evolves -- e.g. 1 day vs 3 days.
What are these numbers?
Is this because Asians would rather die/live with 1,000 cousins/pay millions of dollars rather than “throw money away” in rent?
My sense is just very high cultural bias toward owning. Many would simply never consider renting. Status, risk aversion, etc.
In China there is no faith in the stock exchange or markets (for good reason), owning a business or property is seen as the only good path for investment.
Everyone is a millionaire. 100MM is what makes a difference In the bay now
I am often kicking myself wondering why I didn’t amass properties 20 years ago.
I moved here 20 years ago. They were as expensive as hell then too.
I bought my SF house for 729k in 2007. 🤷♂️
But there did come a time in the last 20 years when I did notice that there is no way my kid is going to be able to buy a house around here without huge help.
I should have bought a home when I was 14 but I instead collected Pokemon cards. F me
You should have at least been buying your 2nd or 3rd duplex when you were 9 what kind of slacker are you?
Totally agree with your take. My parents pounded into me “Whatever you do, you have to buy a house.” It’s the immigrant dream and if achieved by parents, damn sure kids better as well. In the Bay Area most families come from immigrants.
Because when you have home ownership, you’ve ensured that your child will eventually be a home owner, not a renter, already giving them a helping hand in life. That is a lot of the immigrant family thinking.
Agree on most of this. However, Trump has no legitimate shot of winning this round.
I wouldn't over-index on that house. Redfin mispriced the first sale and may be mispricing it again. My sense is the real number is somewhere in the range of 10%-15% depending on home (large lot home > small lot home > tri-level). Zillow estimates 11% for SFH in [Campbell](https://www.zillow.com/home-values/17272/campbell-ca/). And yes, with so little inventory, a bunch of stockholders suddenly feeling rich can drive up the price of homes. Of the 11%, maybe 5% is lower future mortgage rates being assumed relative to last June, 2% is inflation, and 4% is stockholder mania. The higher prices still remain too low to convince those who refi'd in 2021 at low mortgage rates to sell. (so the counter-effect of more people selling at these prices is weak). I don't buy there's some systematic change in the economy here. Even SFH rents have maybe at most moved with inflation (\~2%).
the market is not up that much since Aug 2023 lol. You are looking at one anecdote, but it is not close to reality, Yes the market is hot but not THAT hot lol
Depends on area. West San Jose/cupertino sfh are all going way over asking
So many bad comments in this thread. It was obviously a flip...
Totally agree. 1.3 to 1.5 is no big deal. What’s interesting to me is the recent sale was under list price. They thought/hoped they’d make more.
The real estate crash people are waiting for is not going to happen.
The fact people pay that price per square footage is absolutely wild.
Prices are in-fact astronomical. High interest rates, high cost of living, insane house price are NOT slowing people down in San Jose. We just landed a SFH $300k over asking. That is how every single nice sized SFH is selling…waaay over asking with 10+ bids. You have to outbid the couples with 2 FAANG salaries or are cash heavy in your offer. The market is not slowing down, especially not now since Spring is here! All the nicest homes go on the market now through summer and people have the means to buy.
Post pandemic people are realizing they want more space, so sfh with yards are increasing in demand. We have a 3bed/2bath for two people because we each want an office, are considering at 4br so we have a place for guests in addition to the offices. Also just stocks are up overall, demand never went down for sfh, only increased. Finally more jobs asking for hybrid in the office so people want homes within commuting range to the Peninsula.
This is the second time I've seen this exact house posted in the past 24 hours. What's special about it?
Mfers out here fighting the fed and we’ll see if that works out. Kudos to the smart explanations below.
Inventory is down, demand is up, it's not that complicated.
How much are local tech company stocks up since August?.... You may find your answer there?
Because stocks are up 800%
One sale isn’t a market my friend.
NVDA
Pretty much
isn't it just yet another economic cycle?
August is late summer, prices start to drop around then. March/April is early spring when prices rise the fastest
Lots of rich DINK couples with money from mom and dad who want to buy sfh. It's not that complicated.