Los Gatos / Saratoga vs Palo Alto / Mountain View / Los Altos

102

Mountain View home prices on fire. Check out this modest 1600 sq ft ranch house.
Price went up 3x in 10 years: from $1.1M in 2011 to almost $3.3M in 2021. Sellers scored big on this one

https://www.redfin.com/CA/Mountain-View/1666-Lee-Dr-94040/home/641991?1280460695=variant&600390594=copy_variant&231528114=variant&utm_source=ios_share&utm_medium=share&utm_nooverride=1&utm_content=link&utm_campaign=share_sheet

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103

Almost $2000/ft on a smaller lot. My goodness.

104

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Normal appreciation for SFHs in CU MV WSJ WSV

105

Yes, it does seem that way.

Here is an Eichler that sold in Sunnyvale for $2.4M. It had last sold for $684k in 2004.
3.5x appreciation in 17 years - Sweeet

Wonder if the same pattern will hold for next 17 years. If so, this house should sell for $8.4M in 2038!!!

Mind boggling, seems unlikely to me. I think appreciation from today’s price point of $2-3M is likely to slow down

https://www.redfin.com/CA/Sunnyvale/1476-Flamingo-Way-94087/home/1064693?1280460695=variant&600390594=copy_variant&231528114=variant&utm_source=ios_share&utm_medium=share&utm_nooverride=1&utm_content=link&utm_campaign=share_sheet

106

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I know because I bought a SFH in CU for about $1.1M too and SFHs of similar config is selling for $3.2-$3.3M.

Historical annualized appreciation is 6-8%. 3x over 10 years is 11%. Prices in 2011 has undershot the “mean” because of the financial crisis 2007. If no financial crisis, the price of $1.1M SFHs in 2011 should be $1.4-$1.5M.

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107

If the mean of 6-8%, I.e., 7% annualized appreciation, holds for the next 10 years, then home prices will have doubled by 2031.
Today’s $3M starter SFH in MV or CUP, could be worth $6M in 2031.
That would require a down payment of $1.5M and over $1M in annual income to afford a starter home :crazy_face::crazy_face::crazy_face:

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108

Does it make sense?.. So much cost of living…

109

It does not make sense to me. That’s why I think the rate of appreciation will slow down. Today’s $3M home will more likely be worth $4.5M in 2031 (50% higher), instead of $6M (100% increase)

I don’t think RBA real estate will be as attractive from an investment point of view going forward

110

I think it really depends on where the stock market is in 2031. If stock doesn’t go up, no way RBA can.

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111

6M in 2031 may not be that outrageous to people in 2031. It looks outrageous to us today. Sure. But what if Nvidia, Facebook and google are worth 5T each come 2031? And some companies that don’t even exist today burst into the scene and revolutionize things? That’s been what’s happening in the valley for the last 50 years.

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112

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Not going to be what if if Fed keeps printing money. Fed may be printing quadrillions instead of trillions.

113

How cares? What will a loaf of bread cost in 2031? The dollar is worthless already.

114

Dollar is not worthless.

Anyway my point is just that, think back in 2011, would people believe a Sunnyvale house would sell for $3M 10 years later?

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115

I remember when gas was 15 cents stamps were 2cents. Cars were $3k and houses were $30k. Back when people were making $10k year. Compared to then the dollar is worthless. A deficit of $4trillion a year giving to people that won’t work and to boondoggle infrastructure projects will make it worth even less.

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116

+1. I clearly remember a house in PA (a shack) being sold under 1m back in 2011. I don’t think it’s outrageous to repeat that given: 1) the stocks do well as last 10 yrs, and 2) firms in southbay continue to do well.

Previously, I had no doubts about 1), but more doubtful about 2). Now, I think the FANGs still have another 10 more yrs of churning out more boring stuff.

117

I was buying houses in PA for $250k in the 80s

118

Hope you still own them PA houses - if yes: baby, you are a rich man :joy::joy::joy::+1:t3:

119

Yes, that has been the way of Silicon Valley in the past. Apple and Google probably will be worth 5T by 2031. But, recently local tech stock appreciation has begun to outpace local home value appreciation. In other words, if not for the leverage effect, buying RBA house is not as good an investment as buying QQQ

120

I think there will be some reset in the stock market/prices and consolidate for a while in a multi year timeframe. I think the bigger questions are:

  • Will dollar lose its reserve currency? Seems to be headed that way as more and more countries are diversifying and also buying less treasury. This will have lasting effect on US corporate valuations and general borrowing conditions in the US.
  • Can US continue to dominate the world market in certain sectors? To me, I see other countries catching up slowly one by one. It’s not hard to imagine a world’s most popular social network not in the US or world’s most sold ev company not based in the US and etc.
  • I just know that I need to remain very liquid so I can move my money quickly in the long and short term.
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121

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Many stocks have been declining. Look at TDOC, ZM, FSLY and EV stocks. QQQ breaking new highs mainly due to FANGMAN, FinTech and eCommerce stocks.

Declining EV stocks may be an indication of the long term outcome.

Depreciating dollar is good for exporters, MNCs and FANGMAN.

Crypto is more liquid than dollar?