$2,800,000 for a 1,500sq. ‘ home in Silicon Valley !!

[matthewsx]

Yes, salaries are high and many two income families can entertain very high mortgages but pressure from overseas investors are the real driver.

Also, different ways of financing and/or living contribute to the increases. Probably 25 or 30 years ago I asked one of my Chinese neighbors how they could afford such an expensive house.

They explained two things, first there were often multiple families in one home plus parents, grandparents, etc.

Second, financing through non-standard lenders that offered 100 year mortgages. Your kids would be obligated to pay the mortgage long after you were dead, and their kids too.

Neither option was available to me so I moved away, eventually circumstance opened the door and I snuck back into Santa Cruz....

John

 

[Janderso]

I got two offers early in my career that would have landed me in the thick of it up there. I visited the area, which was nice but very crowded, even then. The money was pretty attractive and "Silicon Valley!", but once you did the math (salary minus expenses), I was better off with a lower salary where I was. It was one of my better life choices I think.

We have this fridge magnet that shows different statistics in 1959: Average income: $5016, Average home cost: $12,400, Gallon of gas $0.25, Dow Jones ~600 (now about 35000). The $5K income would put you squarely in the 22% tax bracket. If you were rich and made $100K, your tax bracket was 75% ! Average income last year was about $51K, 12% bracket with the highest bracket being 37%. (Married/joint) Interest rates were pretty good then too at about 2.6% but went up quickly in the following years through 1985.

I’m always interested in the percentage of annual income that home or new truck is.
People use to buy a new car every few years because they could afford it.
That has drastically changed.
Let’s ask the group.
What percentage of your family gross income was your first home?
Same question for the 1990 Chevy you bought new?

I’ll start.
My first home was .533 of my gross annual income. I could buy my home in two years if all my gross income went into the house.
Three years ago, my wife and I had a percentage as follows, 0.297. It would take a little over three years to pay for our home if our gross income went to pay off the home.
My new truck was less than half of my annual income in 2017.

I know this is a ghetto math problem but it does illustrate the lack of buying power in our dollar.

 

[mmcmdl]

Pretty soon I'll be able to tear the old house down up in the mountains and sell the " barnwood " for a couple million .

 

[Reddinr]

My first purchased home was ~1.5X gross income, mid 80's in So. Cal.. and about 2.5X gross for last one in late 90's (but 2.5X larger with 40X the land in lower cost of living area). It is hard to compare apples to apples.

I don't remember what I paid for cars except for my first car was about $300 + ~$100 in parts, used, and worth every penny.

 

[CluelessNewB]

~1987 I was working for as a Computer Engineer in VT and had just bought my 1st house about 15 minutes from work. I went to San Jose CA on a 2 week assignment and was working with some other engineers with similar backgrounds and work experience. Four of them were sharing a tiny 2 bedroom apartment and had a 1.5 hour commute each way to work. Needless to say they were very jealous. Location, location location.

 

[7milesup]

I don't feel sorry for people choosing to live in their car and choosing to work in a place they can't have a life. If you choose to live that way, that is on you.

There are all kind of places people can live and work and have a life. You get what you deserve in most cases.

That is pretty harsh and quite narrow-minded. There are a lot of people that are stuck in a circumstance, for whatever reason, that results in a tough living situation. With the price of rent and new homes skyrocketing, there is now a growing number of working people that are getting displaced, with some of them living in their cars.
As far as your last two sentences, it seems to ring of entitlement.

 

[Winegrower]

It’s clearly more difficult to start out these days. My first job was in 1970 with HP in Loveland Colorado, at the princely salary of $1075/mo. I rented a 3 bedroom house, garage, fenced yard a 5 minute walk from the HP facility for $160/mo. Car was a 6 year old Pontiac Catalina, in marginal shape after a winter in Cambridge, MA, but paid for. Food seemed insignificant as a budget item, the utility bill was laughable looking back. In 3 years we had saved enough for my first house, a terrifying $29,500 investment.

Frankly, I have never felt as rich since.

 

[mickri]

Early in my life cost of housing was never an issue. I have never rented in my life. My mom told one of our friends who mentioned renting when I was looking for my current home "I would rather live in a tent on my own land then rent."

Fresh out of college the payment on a condo was the same as rent. I bought a condo. My friends thought that I was nuts. They were renting. That condo helped me move to a house. Next was another condo a block from the beach in San Clemente. Then a house two blocks from the beach. Another house two blocks from the beach after a divorce. This house was bought at the bottom of a market downturn. Just lucky. That house appreciated so much that I was able to pay cash for my last two houses.

I doubt that I will ever move again unless it is to an ADU on my daughter and son-in-law's ranch. I like to buy fixer upper homes. Getting too old to do that again after I get done with my current house.

 

[Craig1514]

My wife read an article this morning about a home near Apple Park sold for $800,000 over the asking price.
This is a .12 acre parcel in a standard high density sub division.
1,500 square feet! 3 bedroom- two bath.
What, who, how can anyone afford this?

Went to Lowes yesterday, I needed 12’ of #10 stranded wire. I need red and black. They had no black in bulk or in rolls.
I paid $12.83 for two strands.
A 500 foot roll was $508.
Is it just me or does the value of dollar seem to be darn near worthless?
On a positive note, fuel prices are expected to drop soon

Arkansas here, I moved to the area 4 years ago, 100k buys a house and some land. But, it is Arkansas…..

 

[ahazi]

The significantly higher prices for homes in California has been a mystery to me for almost fifty years. I can see how land and lot prices may be higher but building material costs shouldn't be that much different than the rest of the 48.

It is the cost of land + heavy regulation and building codes by the city that cost $$$ (architects, structural and soil engineers) to comply with and construction labor shortage that makes everything more expensive. ...and on top of it, profit margin and expectations by developers and a willing and able buyer pool drives up the prices plus cheap money when interest rates are low.

I know this from experience, I live in Los Angeles for 40 years.

Ariel