Tech bubble in San Francisco slowing?

[holden j caufield]

I'm sure a lot of people here work or live in the area. I assume the tech bubble is 99% the reason the real estate there is going through this huge bubble increase and when the tech bubble goes I assume the housing market will follow.

Is there any signs this might be coming to and end or is it still growing at an unsustainable rate (in regards to the tech industry or the housing market).

 

[maddogchen]

only thing i've seen slowing is my commute to work. took me 20 mins longer to drive to work today. SOOOOO much more traffic recently.

 

[Buttzilla]

yeah, my commute went from 15 min, to 20 and now it's averaging 35.

 

[purbeast0]

my tech lead just moved from MD to NorCal(mountain view, so not quite SF) for a tech lead position at google, and he was telling me that buying the equivalent of his house here, over there, would run him at least $2 million.

sounds pretty ridiculous to me still. google's paying for him to live in an apartment for 3 months until he can figure out permanent living situations though, which is pretty solid.

 

[Phanuel]

There's basically no way non-exec staff are buying houses in this area right now.

 

[s0me0nesmind1]

I forgot the site, but someone once showed me a site that shows where everyone is moving from/to. it was pretty neat, and one of things I noticed was an influx of people from SF/Bay Area moving to places like Austin, TX - obviously to avoid the shitty housing situation in CA.

Anyone here know that site? Definitely wouldn't mind seeing it again.

 

[dr150]

Consistent, marked increases in the morning commute traffic mean more imported employees to the region and thus, housing pressure.

 

[Homerboy]

meh... my nephew just moved there to work for start and he's some highfalutin tech nerd. I don't even want to know what he's making and what his cost of living is. I should have stayed in school... 🙁

MANY lifetimes ago I pass on a job offer to work at EA Sports Online out there. Would have been fun, but not with the wife and kids in tow.

 

[SKORPI0]

I forgot the site, but someone once showed me a site that shows where everyone is moving from/to. it was pretty neat, and one of things I noticed was an influx of people from SF/Bay Area moving to places like Austin, TX - obviously to avoid the shitty housing situation in CA.

Anyone here know that site? Definitely wouldn't mind seeing it again.

Maybe this one from 2011? ^_^

http://www.forbes.com/special-report/2011/migration.html

 

[Ns1]

I'm sure a lot of people here work or live in the area. I assume the tech bubble is 99% the reason the real estate there is going through this huge bubble increase and when the tech bubble goes I assume the housing market will follow.

Is there any signs this might be coming to and end or is it still growing at an unsustainable rate (in regards to the tech industry or the housing market).

Aren't the Chinese also buying heavily?

 

[Imported]

Aren't the Chinese also buying heavily?

Sure seems that way. It almost seems like every real estate listing in Palo Alto is targeted at them. Chinese speaking agents, bilingual pamphlets/signs.

 

[Fenixgoon]

As far as I could tell both LA and SF were only growing. There's a huge problem with Apple/Google/Facebook employees not being able to afford houses in the bay area, even on 2-300k salaries. It's mind boggling to me. I just took an 8k pay cut that's effectively a 25% pay raise thanks to a dramatically lower cost of living compared to LA.

 

[s0me0nesmind1]

Maybe this one from 2011? ^_^

http://www.forbes.com/special-report/2011/migration.html

Close - that's how it looked like with the lines - but it was an ACTUAL interactive map where you could mouse over a particular city and it would show you lines for that particular city where INCOMING people are from, and where OUTGOING people are going to from that city.

edit: Ah - clicked on the link, yes the one I was was very similar to that, though not quite this one.

 

[maddogchen]

Aren't the Chinese also buying heavily?

Lots of Indians and Eastern Europeans too. Well I think they are Eastern...

 

[K1052]

Foreign cash buyers and higher level execs/people cashing out after lockups expire still sending everything though the stratosphere. Mere mortals that need financing and can't pay 20% above list don't stand a prayer. For $1-$1.5M I should love the places that may possibly deign to talk to you about taking that cash…but I don't….a lot of them suck but inventory is quite limited. Someone recently paid half a mill for a 400 sq ft studio in the Tenderloin with one window that has a breathtaking view of a brick wall a few feet away.

It's been an interesting couple years and was the right career move for the husband unit but looking to relocate back home now in the nearish future. The cash burn penalty you incur from just existing in the SF area is pretty astounding.

 

[holden j caufield]

I don't know what happens on the ground floor but if China's stock market is going down the tubes are people there looking to stash even more of their money in California real estate, is that the money escape strategy for rich foreign Chinese.

I'm hoping the stock market slumping in China makes it less likely. Though every open house I go to now has a Chinese family and I can't compete with their all cash offers.

 

[Buttzilla]

Foreign cash buyers and higher level execs/people cashing out after lockups expire still sending everything though the stratosphere. Mere mortals that need financing and can't pay 20% above list don't stand a prayer. For $1-$1.5M I should love the places that may possibly deign to talk to you about taking that cash…but I don't….a lot of them suck but inventory is quite limited. Someone recently paid half a mill for a 400 sq ft studio in the Tenderloin with one window that has a breathtaking view of a brick wall a few feet away.

It's been an interesting couple years and was the right career move for the husband unit but looking to relocate back home now in the nearish future. The cash burn penalty you incur from just existing in the SF area is pretty astounding.

This, I'm close to six figs and I can't even find an affordable studio/1br after all my bills. Right now, San Jose for 1br, semi new is 2200/month.

What bothers me in the new apartments that are built around public transportation. Much of those are section 8 and from what I've seen (especially around BART), those tenants don't care for the property at all.

I'm seriously thinking about moving out of state to save money and pay off debt.

 

[baydude]

Absolutely not. Even commercial real estate space is hot. There's a commercial building in SF Civic Center that houses over 70 startups and most of them are on ONE floor.

There's like 3-5 tech startup Pitch/Demo Meetup events every week.

They're still building new residential apartment high rises and you still need to get on the waiting list for the $2500+ rent when it hasn't even been completed!

 

[K1052]

and you still need to get on the waiting list for the $2500+ rent when it hasn't even been completed!

I never thought I'd have to engage in behavior that would probably merit a restraining order anywhere else in the country just to be allowed the opportunity fork over the gross national product of a small island nation in rent.

 

[K1052]

I'm seriously thinking about moving out of state to save money and pay off debt.

We came to the conclusion that it would be fiscally irresponsible long term to stay and that the lifestyle we could afford here was drastically lower than we previously enjoyed in other urban areas that, IMO, have more to offer.

 

[Imported]

I'm trying to convince the wife that we're better off saving for a down payment (or total house payment at this rate) in another area of the country and trying to get transfers there later. We make enough to comfortably rent here and have considerable savings but not near enough to buy.

 

[manly]

Personally I think the Silicon Valley tech/housing bubble is peaking this year although I don't have any metrics to refer to. Reportedly real estate transaction values continue to rise year over year in coastal California after a brief lull.

Long-term it's just not sustainable when even the "upper" middle class can't afford to buy, and can afford to rent only with great sacrifice. I don't even know how working class people do it. The post- Great Recession expansion has officially gone on for quite a while, so the party can't and won't last forever.

This, I'm close to six figs and I can't even find an affordable studio/1br after all my bills. Right now, San Jose for 1br, semi new is 2200/month.

What bothers me in the new apartments that are built around public transportation. Much of those are section 8 and from what I've seen (especially around BART), those tenants don't care for the property at all.

I'm seriously thinking about moving out of state to save money and pay off debt.

sorry for the thread hijack but where's a good local place to watch Packers games on Sunday?

 

[Kneedragger]

I'm sure a lot of people here work or live in the area. I assume the tech bubble is 99% the reason the real estate there is going through this huge bubble increase and when the tech bubble goes I assume the housing market will follow.

Is there any signs this might be coming to and end or is it still growing at an unsustainable rate (in regards to the tech industry or the housing market).

Since buyers are coming in with cash and over bidding, if the housing market dips its not gonna be significant..

I honestly don't see a tech bubble bursting. Back when the last one happened it was a .com start up kind of thing and I don't think many made it.. Now all the solid big names like Nvidia, Google, Samsung and Apple to name a few are expanding and making all the moves.


I've been actually thinking about leaving CA because I don't think my kids will be able to afford this area. I'd rather put them in a state where the real estate market is affordable..

 

[Imported]

sorry for the thread hijack but where's a good local place to watch Packers games on Sunday?

Wife says The Pub at Ghiradelli Square.. or try St. Stephens Green in Mountain View. It's a UW badgers bar.

 

[mikegg]

I'm sure a lot of people here work or live in the area. I assume the tech bubble is 99% the reason the real estate there is going through this huge bubble increase and when the tech bubble goes I assume the housing market will follow.

Is there any signs this might be coming to and end or is it still growing at an unsustainable rate (in regards to the tech industry or the housing market).

First, you're assuming that there is even a tech bubble in the first place. Many of these companies have solid revenue and worldwide reach including Uber, Lyft, Twitter, Airbnb, Pinterest, Zenefits, and many more. Is tech overvalued? It probably is. Is it a bubble? No one knows but it isn't like 2000.

Second, you're also assuming that there is a housing bubble. It's not really a bubble ready to burst if people are paying cash and owning the place outright. This isn't the same as 2008.

If I were to break down the reasons SF real estate is nuts, I'd say it's something like this:

-25% Tech Money
-25% from foreign buyers such as Chinese
-20% Low interest rates makes buying cheaper than renting and creates easy money
-15% from people saved up money during the crash and is now ready to buy
-15% from just a really good overall local economy

Someone else mentioned that the recent Chinese crash might cause more investment into Bay Area properties as a safe haven.

I think the market will slow down in 2016, maybe even flatline in growth but it won't "crash".