The concept of Sunnyvale, Cupertino etc being premium location where people are willing to pay $3M for a 1900 sq ft ranch house is a bit of a joke, considering that pop music stars are buying houses in Beverley Hills 90210 for just over $2M…
IMO, they take calculated decisions on paying premium as risk is less at such locations, either Sunnyvale, Cupertino or Beverly Hills ! Even if there is a price drop, they recover fast by virtue of cash rich people holding homes strongly at economically distress time.
When recession is out for peak, high cash locations will have less foreclosure than low cash locations ! Seen this last two recessions.
It is the difference between buying 200B market cap companies at peak economic cycle and smaller 500m level penny stocks !
IMO back of the envelope/napkin calculations tell me that a $3M house costs currently @$180,000/year pre tax, i.e. @$15K/month so, @6% cost of capital excluding maintenance.
Post tax the cost of capital is @4.5%.
Checked some Fred data… looks like median house prices in US grew by @5.3% per year compounded since 1963(@58 years).
Sorry Rory …elaborate your point
So does that mean your capital is growing by this difference ( 5.8% -4.5% ) plus serving the living benefit out of this house ?
very rough calculation.Made some assumptions about downpayment vs mortgage, ROI on other investment, income tax, property tax etc. 5.3% is for the whole US and will vary by geographical area, also it’s historical data so can’t say for sure how things will turn out in the future whether +ve or -ve, what happens when one is retiring is the housing market down then? what to do if one needs to sell during a slump etc etc.
Ok, so your median $2.5M Silicon Valley SFH will double to 5M in 15 years, instead of 12 years. Not such a bad thing. Better for Silicon Valley also
This trend of SV house price appreciation decoupling from the stock price of superstar companies headquartered in SV has already been underway for some time.
House prices in SV are declining wrt share prices of AAPL FB GOOG yet employees claim they can’t afford housing? Sold their RSUs upon vested? Or those claims are from potential employees from out of states?
Even for those receiving RSUs from FAANG companies, it probably takes some time to accumulate $500k (which is the minimum 20% down payment needed for a median SV 2.5M home). They need to wait for $800k worth of RSUs to vest and then pay tax on those to get $500-600k cash. This probably takes 5-6 years, which the incoming FAANG employees don’t like - they probably feel entitled to buy a home on day 1 or at least after year 1.
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I do not think that’s true (they are not entitled as you would think). I know a lot of people you describe personally, and nobody is looking to buy 2.5M house from year 1. Many if not all of them buy their first townhomes or starter homes around 1M - 1.25M. And they kept that house when they buy 3bedroom SFH when they either get married or starting a family. Their original 400K vest is now worth 800K coz market double whiles they are enjoying their life.
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Yes, many smart techies are building their wealth by investing in SV real estate this way
And then there are some other people such as a close neighbor of mine, early 30s one 2 year kid who was born in this house which he rents while also owns 2 Tesla Model Ss, every weekend+ long weekend the family is out with bikes attached to the end of their Model S. 
Point is different people have different viewpoints of life
Already, 130 of its 2,600 global employees have requested to move somewhere new, with a majority requesting to move out of the San Francisco Bay Area (though, while some companies like Oracle have taken steps to relocate their headquarters, Okta doesn’t plan to). Nearly all of its new job openings are remote eligible and, so far, 60% of its new hires are not located near any of Okta’s 14 existing offices, which are spread across 10 countries.
Ultimately the firm expects that once its transition to “dynamic work” is complete, about 85% of its workforce will be remote, compared to 30% pre-pandemic.
Are you saying those guys are not the ones complaining about high cost of housing? Then who are the ones complaining? Or those complaints are imagination of journalists? Or are they just ploys to demand higher pay?
@SVRE was responding to the original issue of who are the one complaining about high cost of housing.
FAANG or whatever the acronym now is only a very, very tiny percent of Bay Area people. The people who aren’t at similar places with similar comp have no chance.
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Even within FAANG it depends on what you can negotiate or how your perform i.e. if you’re important. I know at least 4 people(whose salaries I know) in Apple pulling in low to mid 200’s, age late 30s to early 40s. I mean it’s good but is it great for Bay Area cost of living? I know a full hands on techie who makes @500K + bonus in Yahoo(non FAANG) just mid-30’s because he has become important there. I know a few mid 40s early 50s people in non FAANG who make @400k -@750K. So, I think it varies. Only the last 2 are management and only 1 has an MBA.
Btw none of these people paid more than $1.2M for their houses in fact only one paid $1.1M rest all paid lower than $1M, and none of them have a rental and all of their wives work except one, so double income on top.
Just providing some anecdotal info, since real stats are hard to come by.
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Base pay or total compensation (i.e. include bonus, RSUs, ESPPs, 1for1 401k)?
base
Hard to tell how much is the total compensation.
Senior ICs to Senior Managers have base in that range.