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Home Values Are Rising by $800 a Day in San Jose

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Re: Home Values Are Rising by $800 a Day in San Jose

#31

Post by MrL567 »

rubicon33 wrote: post #24
ninkendo wrote: post #13

Earlier quoted context omitted.

I believe the pricing growth is fueled by tech wage growth which is unsustainable. I also think the tech sector in general (especially any company that is driven by ads) is due for a major correction soon, if not a full burst. I can’t tell you exactly why I feel it, it’s more an emotional thing, but I don’t see a better strategy than that when trying to predict long-term housing prices.

I believe tech salaries will decline starting in about 5 years, and accelerating in 10 years. Why? HUGE influx of people into the field, fueled by government programs, people in tech pushing for more people to join (why they would ever do this is beyond me, say goodbye to your salary), education in high school and younger, wide availability to learn online, outsourcing, etc... The influx of workers will simply outstr…

https://blog.codinghorror.com/why-cant-programmers-program/ Considering articles like this and the fact FizzBuzz tests are even a thing I wouldn't be so sure. I get your point, but the problem is while with enough time one can get it, quite a few people are going to hit a wall and not be able to pass it.

Re: Home Values Are Rising by $800 a Day in San Jose

#32

Post by sidlls »

tehlike wrote: post #21
ttul wrote: post #15

Earlier quoted context omitted.

What is the price to rent ratio?

Cap rates are hovering around 2% Hong kong is worse, i hear.

2% in SJ? That's insane. I'm paying 0.35% of the average sale price in rent for a townhouse in my community (San Mateo/Burlingame area).

Re: Home Values Are Rising by $800 a Day in San Jose

#34

Post by e3b0c »

AceJohnny2 wrote: post #14
ninkendo wrote: post #4

Lived in a rental house in SJ for 7 years now watching prices go up and deciding to sit it out, after having lost 30% on my house in the midwest years ago. I’m kicking myself for not buying earlier, but not a chance you’d get me to buy in now. We’re in a bubble that’s ready to burst IMO.

> We’re in a bubble that’s ready to burst IMO. Not necessarily. Bubbles are based on speculation. The last bubble was powered by sub-prime mortgages, which is what burst. The Bay Area has the problem of ongoing immigration, a very highly paid demographic, and housing market that isn't keeping up. Simply, Offer Offer isn't looking to catch up any time soon [1], and demand crashing would mean the tech economy will have…

Not necessarily. I am afraid that such sentiment would be priced in as well. If people are so certain about the market, the price would be led by the expectation rather than the fundamental.

Re: Home Values Are Rising by $800 a Day in San Jose

#35

Post by PretzelFisch »

rubicon33 wrote: post #24
ninkendo wrote: post #13

Earlier quoted context omitted.

I believe the pricing growth is fueled by tech wage growth which is unsustainable. I also think the tech sector in general (especially any company that is driven by ads) is due for a major correction soon, if not a full burst. I can’t tell you exactly why I feel it, it’s more an emotional thing, but I don’t see a better strategy than that when trying to predict long-term housing prices.

I believe tech salaries will decline starting in about 5 years, and accelerating in 10 years. Why? HUGE influx of people into the field, fueled by government programs, people in tech pushing for more people to join (why they would ever do this is beyond me, say goodbye to your salary), education in high school and younger, wide availability to learn online, outsourcing, etc... The influx of workers will simply outstr…

I felt this way 20 years ago before the dot net bubble popped. But I greatly miss judged the size of the demand. I am not sure the ten year outlook is that bad.

Re: Home Values Are Rising by $800 a Day in San Jose

#36

Post by tomrod »

Yeah... that's not going to be sustainable.

I know folks like to point at the big techcos in the area being flush with cash as evidence this can continue a long time. And in a vacuum, wage growth in tech could continue to keep pace, perhaps. But that is 300k in appreciation a year.

How far out will school teachers, janitors, chefs, mechanics, city employees, and similar need to live before their not-quite-as-quickly-increasing salaries fail to keep up, and they leave the area en masse?

Cut the NIMBYism and you might see some improvement, but only as fast as the city can approve permits.

As Buffett likes to point out: be "fearful when others are greedy and greedy when others are fearful".

Re: Home Values Are Rising by $800 a Day in San Jose

#37

Post by d--b »

htormey wrote: post #22
d--b wrote: post #18

There is a double bubble there: 1. low interest rates have been pushing people to buy houses for a decade. 2. and cheap borrowing costs pushed investors into riskier businesses like startups increasing the flow of capital in that region. Add the NIMBY mentality, and you get skyrocketing prices. My guess is that raising interest rates are going to change all this drastically before year end.

So what do you think the first signs of this will be?

I think we're already seeing the signs:

- stock market is less bullish on tech: https://finviz.com/futures_charts.ashx?p=d1&t=NQ

- less startup funding: https://techcrunch.com/2017/11/30/theres-an-implosion-of-ear...

- mortgage costs going up: https://www.zillow.com/mortgage-rates/ca/bay-area/

Re: Home Values Are Rising by $800 a Day in San Jose

#38

Post by htormey »

rubicon33 wrote: post #24
ninkendo wrote: post #13

Earlier quoted context omitted.

I believe the pricing growth is fueled by tech wage growth which is unsustainable. I also think the tech sector in general (especially any company that is driven by ads) is due for a major correction soon, if not a full burst. I can’t tell you exactly why I feel it, it’s more an emotional thing, but I don’t see a better strategy than that when trying to predict long-term housing prices.

I believe tech salaries will decline starting in about 5 years, and accelerating in 10 years. Why? HUGE influx of people into the field, fueled by government programs, people in tech pushing for more people to join (why they would ever do this is beyond me, say goodbye to your salary), education in high school and younger, wide availability to learn online, outsourcing, etc... The influx of workers will simply outstr…

I’m not so sure. Many tech related jobs are fundamentally hard things for the majority of people to do. Even those with college degrees.

The problem with a bad hire in tech is that they can be worse than useless. Mentoring a junior software engineer can be very expensive and not many companies want to do that in an environment like the Bay Area where people hop between jobs frequently. Personally I think this is very short sighted and sad as I love mentoring junior engineers.

Thinking logically and being able to clearly articulate your thought process is a rarer skill than you would think.

I do a lot of teaching/consulting in the Bay Area. I see a lot of people coming out of bootcamps trying to get entry level positions.

Some of the candidates graduating from these bootcamps are awesome and have lots of potential but those are few and far between. Also, their is a shortage of entry level positions.

The best bootcamps filter heavily and generally only take people with a vaguely related college degree (Economics, law, physics, biology) or who have shown an aptitude (portfolio).

I’m summary, I wouldn’t be surprised if the growth in tech jobs outstrips the supply of quality candidates. If anything having years of relevant experience is going to become even more valuable as time progresses. It’s the entry level candidates that are going to have a harder time landing a job and paying rent in the Bay.

Re: Home Values Are Rising by $800 a Day in San Jose

#39

Post by duxup »

thatfrenchguy wrote: post #33

And San Jose really is a really really boring suburb...

As someone who worked outside CA and ended up working for a company based in San Jose I was all pumped to visit the corporate HQ for the first time, silicon valley here I come. The offices were very nice, saw lots of signs for super cool companies that I knew. It was great .... except it was all just a lot of office park... and nothing else.

I'd take the train up to SF on weekends for things to do. Otherwise I was more entertained back home around Minneapolis than most places outside SF.

Re: Home Values Are Rising by $800 a Day in San Jose

#40

Post by halbritt »

tehlike wrote: post #19
aphextron wrote: post #12

Earlier quoted context omitted.

>People were saying the exact same thing before the crash in 2007. People were buying overvalued homes they couldn't afford in the middle of nowhere on subprime adjustable mortgages, which caused the crash of '07 when the ARM rates kicked in and they couldn't afford payments. This is a fundamentally different situation. Now, a very small number of elite highly wealthy people from around the world are treating America…

I dont have much knowledge, but i hear asian buyers investing looked similar to japan investing in 80s.

In the period after the downturn and just before the market started to tick up in mid 2012, there were a number of Asian investors buying up large swaths of foreclosed and distressed homes in Oakland for cash.

I recall this specifically, as I was in the market for a house at the time. Fortunately, I didn't face much cash competition as I was shopping slightly upmarket. The line seemed to be $300-400k. Those folks would be seeing pretty good returns at this point as those houses are now typically worth $500-600k and might be renting for $2-3k.

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