SFBA population growth slows, San Mateo and Santa Clara counties net losing people. However, prices have jumped in response to surging stock market. So who are buying? My suspicion is more senior folks in mega cap companies like Apple, Facebook, and Google. My rationale is only these folks have accumulated enough RSUs to raise cash. If your tenure is too short, you don’t have many RSUs and most are unvested. I don’t think foreigners are buying.
Rents are falling in most SFBA cities except Petaluma, Alameda, Hayward, San Leandro, Livermore, Concord and Vallejo. Is it because of uncertainties relating to H1Bs and immigration? Or beginning of the end of RE appreciation?
Re: who are buying, I think your thinking is spot on. Many of my coworkers have been renting for the past 5 years (don’t ask me why…), hoping to get into PA, LA, Cup etc. They missed 2015, and they saw 2016 as an beginning of a collapse, and waited more. Then Trump and rate hikes happened, now they can’t wait any longer. Most folks at Facebook, Apple, Google who have been waiting till now have ~800k cash reserve. If they’re single income, they can’t take >1M mortgage, ergo 1.8M price target for sunnyvale. Believe or not, there just aren’t that many dual income FANG couples. If there were, we would see crazy demand in PA,LA,CU for 2M+ price range.
I just read a post in other forum (written in Korean). It said one of Eichler home in Homestead high area went pending with 2.6 million offer. I am not sure about the size but don’t expect huge sqft with Eichler home. In addition, it was mentioned that the location is quite close to Highway. Amazing…
Holy cow on the 800k reserve!!! Geez if I had that, I’d be flipping houses. Sheesh.
That said, who cares about the rate hike? Just means that you should get a house at a lower price, and if you pay it off faster, you’ll save money in the long run. I see high interest rates as a means to a faster payoff.
Not sure if I understood what you meant by “Higher rates -> faster payoff”. For first time home buyers, 4.2% rate doesn’t feel all that high, compared to us who locked in at 3%. It’s all relative
The rate hikes impact where you can afford though. These guys are already maxing out on their DTI. If the difference between MV and Sunnyvale is 200k, that’s ~$843 difference at 3%, which “feels” not that much (not as bad as HOA in SF condo! ). With 4+%, that’s >$1000, which “feels” much more.
I agree on your reaction to 800k reserve. What troubles me is that there are some uneducated financially illiterates who left their entire net worth in RSU. Bad quarter at Apple, there goes 10% of their net worth. Sheesh…
No risk no gain. At one time, AAPL represents 90% of my net worth for many years, suffers through a few crashes of 50%-90% decline in value. 10% decline is nothing. If you’re worried about 10% decline, then you shouldn’t invest in stocks. Btw, I’m in AAPLs since 1997 upon return of SJ, basis of the stock bought in 1997 is a few pennies.
Slightly different scenario but I accept what you’re saying. But I still wouldn’t hold all my net worth in 1 rsu while 1) looking to buy a home in next few yrs, 2) while renting, 3) and all my paycheck is coming from the very same company I’m holding my RSUs from.
My guess is this one.
The description was “newly remodeled Eichler home near highway and school (not desirable location according to OP)”.
Base on the description, this one matches well.