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How much does it cost to build a home in Silicon Valley? (2016)

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Re: How much does it cost to build a home in Silicon Valley? (2016)

#61

Post by [deleted] »

jmathai wrote: post #48
xenadu02 wrote: post #33

Earlier quoted context omitted.

Senior should make 175-200k base plus 100-200k in RSUs per year rolling - that is if you get a good initial grant and keep getting good reviews by year 4 you have staggered vesting that nets that amount. At 300-400k per year you should be able to live a good lifestyle while saving for a house. Really senior engineers can certainly make more; 500k for a top 10% performer. For reference I just got my tax statement for…

I don't think that's what a typical software engineer makes. A Level 5 SWE at Google makes that. But that is far from representative of the vast majority of SWEs. More likely, you can afford a $1m mortgage on a double income of $150k which, IMO, is a lot more common. The reality is that a lot of people (single and married with kids) rent with the hopes they will be able to afford a mortgage.

[deleted]

Re: How much does it cost to build a home in Silicon Valley? (2016)

#62

Post by prawn »

matte_black wrote: post #45
woolvalley wrote: post #27

Earlier quoted context omitted.

Bedrooms, multiple kids, large spacious bathrooms, an office, a gym, a combined living room/kitchen/dining room open space for hosting parties, and most importantly of all, storage space. That can become 3000 sqft fairly quickly, of which you only use 1000 sqft frequently as a family :D

Do not forget spacious walk-in closets, which are very underrated. Having a boutique-like experience for picking out clothes and a full size mirror to check them out in is a great way to start a day or prepare for a fancy event.

I have a fairly modest house and incorporated a dressing room. Wouldn't be without one in any future house, assuming I could afford/justify it. I would also try for a utility room behind my kitchen for stashing mess as our kitchen gets overrun very quickly when we host people (10+ people reasonably often). Things like home offices, games room, second lounge area, etc quickly take up space.

Re: How much does it cost to build a home in Silicon Valley? (2016)

#63

Post by RestlessMind »

rootusrootus wrote: post #22

I've always wondered what software developers make in the heart of silicon valley. I see some things that basically say 'more than Portland but only by maybe 50% or so', which means perhaps $180K or so? Nobody is buying a million dollar house on that kind of income, but in Portland (where I think houses are pretty expensive) someone making $120K wouldn't have any problem buying a perfectly fine place, even pretty clo…

Given the constrained supply of houses in south bay, you need only a handful of people with 300-400K+ salaries to justify the home prices.

For example, today there are only 44 homes (3+ bed, 2+ bath) in Sunnyvale [1]. That means you need only 44 successful bids to cover entire Sunnyvale market. Now consider number of E5/L5 SWEs in FB/Google and their equivalents across LinkedIn, Microsoft, Apple etc. Also consider double income couples where one person is somewhat junior with a spouse contributing further to gross family income. Also consider other high paying roles in similar companies like Product Manager, Sales etc. There would be thousands of families passing the bar of 300-400K gross annual income.

It is in fact a surprise that median price of those 44 homes is less than 1.3M [1], given the proximity of Sunnyvale to all these companies. Home prices are really determined at the margins of income distribution and not at the averages.

[1] https://www.redfin.com/city/19457/CA/Sunnyvale/filter/min-be...

Re: How much does it cost to build a home in Silicon Valley? (2016)

#64

Post by dcldcl »

reassembled wrote: post #55
Y7ZCQtNo39 wrote: post #26

Earlier quoted context omitted.

Aren't there many more general software developers than there are VP's, founders, and low digit employee exiters? Like, I'm curious what drives the demand for homes in the ~$2M range in the bay area, if it's not the general software developer who's able to afford it.

From what I understand the insane home prices in SV are also due to a large number of foreign cash buyers coming in and quickly securing deals. Sometimes multiple all cash bids on the same house. My grandmother's home and my childhood home, both in Cupertino, just sold for upwards of 2.5 mil each to all-cash buyers. I can't verify the foreign money aspect for these sales but people I have worked with who have left th…

I keep hearing the foreign money story, but I can't really find much evidence of it. (I'm currently in SV; touring properties and talking to RE agents nearly every weekend.) I'm not saying it's 0% of the transactions, but I'd be really surprised if it were even 5%.

I'm going to temporarily ignore the "superexpensive" properties, which I'll arbitrarily define as over $4M in SV. That's a different market... for the "global jet-set." Or the people who were the first X employees at a startup with a real liquidity event (and their founders treated them fairly).

Down on the valley floor, $1-3M is within reach of a lot of people in tech, especially double techies. (If you've been here since before the last 2 booms, you've got even more going for you.) Most big tech companies (FANG) stock is way up... Take that as a downpayment... multiple it 2,3, or 4 times and voila.

Markets that have really been hit by foreign money are Vancouver [1] and certain neighborhoods in Los Angeles [2].

Having been to those places (for extended periods of time), I can say SV doesn't feel like those to me.

One last bit of anecdata: I know of one house in SV that received at least 7 offers in the past month. Only 1 of those 7 was all cash foreign money... but they weren't the high bid. 5 other "locals" with loans had higher offers.

[1] https://betterdwelling.com/city/vancouver/foreign-buyers-45-...

[2] https://www.bloomberg.com/news/articles/2014-10-15/chinese-h...

Re: How much does it cost to build a home in Silicon Valley? (2016)

#65

Post by dpc_pw »

Let me see...

I can either spend next 15 years, hoping that tech market doesn't crash again and using my SWE salary to pay off property taxes and mortgage on a crappy SV house, making rent-seekers of all sorts rich...

... or I can pocket the money, and be financially independent when I'm 35-45, and spend rest of my life with family and working on interesting open source/business projects of my choosing.

Tough one.

Re: How much does it cost to build a home in Silicon Valley? (2016)

#66

Post by dagw »

lostlogin wrote: post #46
matte_black wrote: post #18

Earlier quoted context omitted.

I don’t know about you, but 1000-2000 sqft for a single family home with an actual family in it is downright cramped. You could turn a garage into a wood shop though if you don’t have a particular need to store your car in a garage. The point of a large home is to turn it into your own personal oasis where you can spend days at a time without ever really needing to leave, and without feeling bored. The thing is, many…

And a well designed small house is better still in my view - having everything you describe in a small place without it feeling cramped. My suggested measure is being able to vacuum the whole house from a single power point.

And a well designed small house is better still in my view

The design and layout of a house is so much more important than just the sq ft. I wish more people would focus on that. We have a really well planned out 1500 sq ft. house and we have literally more usable rooms and space than many people I know with houses more than twice the size.

Re: How much does it cost to build a home in Silicon Valley? (2016)

#67

Post by closeparen »

paxys wrote: post #50
rootusrootus wrote: post #22

I've always wondered what software developers make in the heart of silicon valley. I see some things that basically say 'more than Portland but only by maybe 50% or so', which means perhaps $180K or so? Nobody is buying a million dollar house on that kind of income, but in Portland (where I think houses are pretty expensive) someone making $120K wouldn't have any problem buying a perfectly fine place, even pretty clo…

A million dollar home is comfortably affordable on a $180K income if you save for a few years for a downpayment.

A $180k income with a maxed 401k in California is around $8500/mo in take home. Servicing the mortgage alone would be $4728. With maintenance, insurance, etc. you're pushing 70% of your take-home dedicated to housing. That's not "comfortably."

Re: How much does it cost to build a home in Silicon Valley? (2016)

#68

Post by closeparen »

Y7ZCQtNo39 wrote: post #26
Zhenya wrote: post #23

Earlier quoted context omitted.

These homes aren't being built/bought by your general software dev. This is the Dir/VP/EVP + founders + high equity;low digit employee id exitors.

Aren't there many more general software developers than there are VP's, founders, and low digit employee exiters? Like, I'm curious what drives the demand for homes in the ~$2M range in the bay area, if it's not the general software developer who's able to afford it.

>Like, I'm curious what drives the demand for homes in the ~$2M range in the bay area, if it's not the general software developer who's able to afford it.

The margins. The actual numbers of homes turning over at such prices is miniscule.

Re: How much does it cost to build a home in Silicon Valley? (2016)

#69

Post by kamaal »

reassembled wrote: post #55
Y7ZCQtNo39 wrote: post #26

Earlier quoted context omitted.

Aren't there many more general software developers than there are VP's, founders, and low digit employee exiters? Like, I'm curious what drives the demand for homes in the ~$2M range in the bay area, if it's not the general software developer who's able to afford it.

From what I understand the insane home prices in SV are also due to a large number of foreign cash buyers coming in and quickly securing deals. Sometimes multiple all cash bids on the same house. My grandmother's home and my childhood home, both in Cupertino, just sold for upwards of 2.5 mil each to all-cash buyers. I can't verify the foreign money aspect for these sales but people I have worked with who have left th…

What you are saying actually makes sense. A friend who was trying to buy a home once told me, the homes more or less were instantly bought when put for sale on places like redfin, before they(remainder of the crowd wanting to buy) could arrange for mortgage. Indicating that some body had all the cash to make it a straight pay-and-buy deal.

Re: How much does it cost to build a home in Silicon Valley? (2016)

#70

Post by dagw »

closeparen wrote: post #67
paxys wrote: post #50

Earlier quoted context omitted.

A million dollar home is comfortably affordable on a $180K income if you save for a few years for a downpayment.

A $180k income with a maxed 401k in California is around $8500/mo in take home. Servicing the mortgage alone would be $4728. With maintenance, insurance, etc. you're pushing 70% of your take-home dedicated to housing. That's not "comfortably."

you're pushing 70% of your take-home dedicated to housing. That's not "comfortably."

30% of $8500 is $2500. You can live very comfortably on $2500 a month if all your housing costs are taken care of.

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