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Housing Slump? Are You Kidding?

What happens when an already-pricey area for home buyers heats up again?

 

A blog posted this week on Palo Alto Patch suggests that the city's housing woes are over and that the real estate market in Stanford's back yard is fully recovered.

It also informs readers that the median price of a single family home in Palo Alto topped $2 million in April.

As Sheldon might say on The Big Bang Theory: "Bazinga!"

The author of the Patch blog is local Palo Alto realtor Michael Talis.

To support the MLS data, Talis points out that homes are now selling faster than at any time since March 2005, just shortly before everything went into the dumper. In fact, homes are now on the market an average of 14 days before they have a committed buyer.

Is it the Facebook phenomenon? Are those who are about to become fabulously wealthy making the search for a new home incredibly difficult for the rest of us? And is it just Palo Alto? Or has the market throughout San Mateo County become nothing but a broken American Dream?

Foreign investors - particularly Chinese - continue to flood the area with cash offers on pricey homes. Startup companies are selling for large sums of money, creating more and more independently-wealthy local residents.

Where does it all end? Is there (home) life left for the 99 percent? Can agencies attempting to create affordable housing succeed in this climate? Are we heading for a lifetime of landlords and slumlords? Or is what we're witnessing simply good economics, supply and demand? A testimony to those who work hard to succeed.

Tell us your feelings in the comments. And vote in the poll we've included below.

Doug Radtke May 14, 2012 at 04:45 PM
I suppose I could talk about the $16 billion deficit and the poor cost-benefit of that whole affair but I'm gonna not waste my breath. I'm likely getting a 5% pay cut courtesy of Jerry Brown because of the way this state wastes money. Stop picking on the little guys Sacramento and defund some of the more asinine projects you dumped money in! Ugh..
Reality Check May 14, 2012 at 07:35 PM
Don't lump very highly-paid police and firefighters with teachers. Maybe police & fire used to be poorly paid like teachers ... but for as long as the local papers have been publishing income data for public employees, police & fire have completely dominated the $100+K (and up!) part of the pay data tables in every city I've seen the data for. A number of them, in Redwood City for example, in the $150-$200K range. And they have incredible retirement and healthcare benefits that people in the private sector could only dream of ...
Reality Check May 14, 2012 at 07:38 PM
Vanessa, "really nice house on a very large plot of land" in Menlo Park, for $750!? You're way off! Figure on closer to $2m for "really nice" on "large plot" in Menlo.
Andrew Boone May 14, 2012 at 08:36 PM
Doug, you've pointed out some of the worst things about living in San Francisco (you missed one, though - high crime). Yes, San Francisco does have some disadvantages, but it also has advantages - some that are a result of high-density development and tall buildings - such as the ability to walk and bike to many destinations and a vibrant, creative, and diverse culture. Maybe you don't care about these things (and maybe most Menlo Parkers don't either right now), but most young people do. The youth will determine the future. The San Francisco problems you've pointed out are real and significant - homelessness, urine odors, municipal debt, poor street surfaces, unaffordable housing, poor quality of education, and crime. But those aren't caused by tall buildings - it's much more complex than that. There are many cities all over the world that have both tall buildings and excellent street surfaces, for example. Other cities have both tall buildings are very little homelessness. And so on. Menlo Park can be developed in such a way to minimize those problems - if we work together to implement good policies - and yes, even with skypscapers.
Andrew Boone May 14, 2012 at 08:48 PM
Buck, when you say "all in the name of GHG", it sounds like you don't believe that greenhouse gas emissions is a serious problem. But it is. Greenhouse gas emissions are the principle cause of global warming and climate change, which has some very serious consequences. For us in California, it threatens our fresh water supplies due to diminishing winter snow and ice accumulation in the Sierra Nevada, and it threatens agricultural production in the Central Valley due to the increasing probability of droughts. Also, sea level rise will negatively affect all of San Francisco Bay through increased erosion and destruction of wildlife habitat. AB32 doesn't mean "no cars". The Global Warming Solutions Act of 2006 establishes a comprehensive program to reduce California's greenhouse gas emissions to 1990 levels by 2020. There are many cost-effective ways to do that - many of which also benefit local businesses - such as those that manufacture solar panels or develop products for energy-efficient buildings. There isn't any provision of AB32 to prohibit cars - or even reduce the number of cars. Vehicles can be made more fuel efficient through a number of technologies that are currently being developed - some by California companies (such as Tesla Motors) in response to AB32. These technologies can be sold or licensed to auto manufacturers worldwide. AB32 is good the environment, and good for business.
Buck Shaw May 15, 2012 at 12:10 AM
When completed, Plan Bay Area will be the region’s 25-year guide to jobs, population and housing distribution, as well as transportation investments. California’s Sustainable Communities and Climate Protection Act (SB 375) requires that each of the state’s 18 Metropolitan Planning Organizations – and in the Bay Area specifically MTC and ABAG – develop a long-range plan to reduce per-capita greenhouse gas emissions from cars and light trucks. The Bay Area is required to reduce emissions by 7 percent by 2020 and by 15 percent by 2035. SB 375 also requires the plan to house 100 percent of the region’s projected population growth, without displacing current low-income residents. MTC Chair Adrienne J. Tissier said, “We are especially pleased that when our transportation investment strategy and preferred land use scenario are combined together, we are able to fully achieve the greenhouse gas reduction and housing targets required by law.” MTC is the nine-county San Francisco Bay Area’s transportation planning, coordinating and financing agency. ABAG is the council of governments and regional planning agency for the nine counties and 101 cities and towns of the San Francisco Bay region. Dear Menlo Park; Doesn't sound like you have much local control left. Won't it be wonderful.
Buck Shaw May 15, 2012 at 12:45 AM
No I don't think its a "serious" problem. I think it can be delt with differently than forcing people to live differently or forced zoning changes. By dangeling millions and Billions of tax payer dollars in front of city councils with strings attached based on GHG. Just read the Bills they all are based on reducing GHG They say it in the first sentence. Even you say it. If GHG from cars are the problem then work on cars. KISS. Rather than making people live where YOU think they should live. Building 5 story Apts. in Menlo Park has already raised some objection right here in the Patch. In Europe by haveing less stringent and its only small percentage less GHG on cars you get 60 mpg at the drop of a hat. What's your "definition" of climate change. Mine is about 3 to 4 hours when the fog comes in. "The climate has changed" Whats yours? 3 to 4 Millinium 3 to 4 weeks 3 to 4 years Whats his? Whats Martha's?.. Why haven't the weathermen on TV given us rain totals for this year and your snow totals that you mentioned. Its so you and others can blame GHG. The reason farmers don't have water is because CONGRESS has been deniying it. Based on your "Climate Change" Oh! by the way don't forget to use California native plants in your landscaping to save water. But don't let the Sierria club find out they will arrest you if you use the wrong plant "This is the worst Fire season ever" for the last 35 years..... Won't it be wonderful...
Catherine May 16, 2012 at 04:43 PM
The reasons the prices are going up are because investors are buying all the foreclosed properties and short sales, putting minimal effort into repairing them, and running the prices way up after they are done. They then sell the properties to out of area, a lot from foreign countries, buyers moving to the Bay Area for business. I know this because I used to work with investors that did this on the side of their real businesses. The people that lost their homes are now renting all the apartments in the area driving the price of rent to the same price of a small home or condo mortgage payment. So people between the ages of 18-30 are now forced to move back in with their parents. At the same time the people ages 18-30 who are college educated don't get paid enough to compete for any housing options in the area because they get offered around 30-40 thousand a year salary, no benefits, and minimal raises. Anyone making minimum wage in the service industry is working 2-3 jobs to survive and are completely taken for granted by the rich people that use their services daily and get paid millions to work less but got lucky to find a job that pays them to sit on their ass all day. Anyone who grew up in the area has completely been forgotten or swept under the rug.
Catherine May 16, 2012 at 04:52 PM
I forgot to mention that "low-income housing" is a joke, it doesn't really exist as anyone who has tried to apply for it knows. Five to seven years on a waiting list, most of which are closed lists anyway so you cant even apply.
Buck Shaw May 16, 2012 at 10:55 PM
I don't understand. Isn't 18 to 30 year old fresh out of School just that Fresh out of school. Entry level. You don't pay an apprentice plumber journyman wages. They get apprentice wages. Same with other jobs? Starting salery is just that! I'm not going to pay you top salery when you haven't proven yourself to me, not going to happen. Do you honestly think its fair to do otherwise. You know it was you who signed that student loan. Its your handwrighting not mine, not the guy next door. YOUR the one on the hook. Took me 52 years to get off the mortgage and credit hook. Welcome to the "Real World". P.S. I need a gardner starting wage is $8 an hour. Lunch not included. After 3 months if work is good theres a wage increase to $8.25.
Doug Radtke May 16, 2012 at 11:01 PM
Buck, apprentices at the San Jose IBEW start at $24/hr approx if you can get in tge union. Most Big 4 accountants start at about 50k a year with a BS in Accounting. Their hourly would plunge them almost to minimum wage because they're on salary. Why are apprentice wages on par with a salaried professional? It's a clear reflection of the SKEWED cost of living in the Bay Area. Good luck getting a gardner for $8. That's unsustibable for the cost of living in SF or San Mateo County. You're totally out of touch with the economic reality facing the Bay Area man.
Doug Radtke May 16, 2012 at 11:02 PM
Oh and if you went to graduate school and saddled with 100k debt at the earliest possible age of 24-25, it's even worse!
Catherine May 17, 2012 at 12:52 AM
Okay Mr. I know everything. First of all you don't know me. You don't know whether or not I have a student loan to pay. I am employed and not looking to waste my hard earned degree as a gardener when my skills are needed other places. I am not fresh out of school and I worked all the way through school so I am more than qualified to be earning more than what is being offered to me around here. Business owners have gotten greedy. The point is that if you don't want to pay your employees then you won't have any and in this area you have to pay your employees more so they can find an apartment at least. I'm not even asking for a house I just want my own living space but in this area it's not likely to find anything worth the price. I looked at a place that was "remodeled" the other day, 1 bedroom, 1 bath for $1,350 a month nothing included and nothing fancy. When I got there the fridge was pulled out of the wall, there was a bed in the living room, a t.v. on the floor, it smelled horrible, and the place hadn't had the carpets changed since the 70's. The point I was trying to make, which you missed, is that the trickle down effect has made rent sky rocket on the peninsula so all of us recent grads can't even find our own place to live because we are competing with people that make ridiculous salaries but were too irresponsible to pay for their houses. So Mr. negative don't act like you know what you're talking about b/c you obviously haven't done your research.
Sarah H. May 17, 2012 at 02:15 AM
It's all such a mess. People are willing to do anything just to get a piece of the dream. The problem is, back in the day, that dream was actually realistic. Now people are willing to plunge over 50% of their net income on their mortgage. Banks made this possible because they would keep loaning out hundreds of thousands of dollars. Banks made it "easy" so people bit, thus continuing the upward spiral in home prices. As long as people are willing to mortgage themselves to death, housing prices will continue to be high. The problem, which Catherine refers to, is the ripple effect. This area has turned into one of the haves and the have nots. I grew up in this area, I would like to be able to buy a home in this area, I make a good salary, but can I afford a $700 home and the property taxes that go with it? NO. I just don't see it ever happening. So, I rent and I deal with all the insecurities and market/rent fluctuations that come with it. And as a person in their 40s and supporting a family, it's a bitter pill to swallow.
Buck Shaw May 17, 2012 at 05:24 PM
Doug. So your saying Accountants should be paided more than electrical workers. OK valid argument. I just don't understand the reasoning behind STARTING salaries that must be more For the different job discriptions. P.S. If I don't find a gardner I can: A. Do the work myself. B. Raise the starting wage. C. Not have a gardner. D. Complain about it.
Buck Shaw May 17, 2012 at 05:45 PM
What was easy about a mortgage of $360 a month when my monthly salary was $814. Albeight no children then but, don't you think I we had the same struggle going on. You borrow money from you folks or where ever you could find it. Plus a second mortgage. Two jobs maybe untill the kids or even after they arrive. I don't see the difference between us. Other than having the experince of doing it before you. Perhaps this new One Bay Area will make more Apts. Available and you won't need a car anymore will help.. "They" have it all planed out. Go to you-tube and listen to Pete Seigers song "Little Boxes" he wrote it in the Sixties...
Doug Radtke May 17, 2012 at 06:13 PM
Yes Buck, considering the time investment in a bachelor's degree, possibly a graduate degree (because the CPA requires 150 semester units anyway these days) and the time and energy devoted toward a CPA.... there is absolutely no way a journeyman should be making a higher salary than an accountant. Consider the investment and cost towards college, and then 400+ hours of study toward the CPA plus $1,000 in testing fees and around $3,000 for a review course. A public accountant with a CPA in the Bay Area will probably be pulling in 65,000 had they made all the right moves and got in a firm at age 22, and then completed their CPA by the end of year 2. That's 6 years from 18, possibly saddled with 30k in student debt had they not been able to afford college straightaway (assuming you finish in 4, you probably had help or loans). I took the community college route to save money, but sacrifice time. If a kid happens to get in a union right off the bat like the SJ IBEW, you'll be paid $24/hr during your apprenticeship. You'll get $6 raises every 6 months until you get journey wages of $58/hr. Even if the kid is working only 50% of the year full-time, he's still making more in overall compensation than the kid who probably went to school full-time including summer as an accountant. That's just one part of my point Buck.
Doug Radtke May 17, 2012 at 06:17 PM
THEN, you expect with the overinflated housing prices in the Bay Area (driven up by speculators, foreigners, real estate professionals, and all the outside investment money going in Silicon Valley) you expect this same kid to save 15% down on a house valued over a million dollars??? How long is it going to take that accountant at age 26 to pay off his student debt and then find the ability to save 150,000 in the clear to put a down payment on the house? It's absurd, it's not going to happen before he's well in his mid 30s. Then you expect this same guy to saddle himself with a 30 year loan for the rest of his adult life? How is that even CLOSE to a rational good idea, good use of money. It makes absolutely no financial sense to do. Buck if your monthly salary was $814 in either 1959 or $814 in the 1960s you already made DOUBLE the average salary in America so don't give people this crap. You made GOOD money. Wheras HOUSING and COST OF LIVING has increase in the Bay Area, the commensurate salary for the LOW and MIDDLE class HAS NOT. Software Engineers making 100k in Silicon Valley is the NORM, NOWHERE ELSE but in Silicon Valley. Only THESE kinds of folks can afford to live here!
Doug Radtke May 17, 2012 at 06:20 PM
What Buck fails to let you guys know is from 1959-1970, $814 is quite a comfortable monthly salary... double the national average in a time where California real estate prices were not some of the highest in the nation.
Buck Shaw May 17, 2012 at 09:28 PM
It was in 71 actually. My point was it was about %40 to %50 of take home pay for a mortgage. Its what you had to anti up to play. Can I assume the point you are trying to make is. My generation had it easy and yours didn't. We all have a tuff time at life. It just shows up with a different face on it. As you go through life, make this your goal. Keep your mind upon the doughnut, and not apon the hole. "Author unknown"
Doug Radtke May 17, 2012 at 11:20 PM
No Buck, the point is relative to the income level that was considered "average" at that point in time in American history is that you were ABOVE what was considered "average". That might explain your lack of empathy. I'd love to spend 40-50% of my take home pay on a housing. The fact is that most people in the Bay Area can't afford it Buck. They don't pay typical workers enough!!!!! A two income home in the Bay Area making 100,000 a year might be taking in $3,000 a month in post tax. You take away half of that, it's $1,500. Try making car payments, paying property tax, feeding a family of more than two individuals, and oh..... saving towards retirement on that income. It simply can't be done short of denying yourself any pleasure in life for 30 years. If you're gonna tell me "wake up to reality" one more time, I'm going to simply say that this is the REASON.... the middle class is FLEEING california. This is the REASON business is fleeing CALIFORNIA and moving to other states. OUR ECONOMY IS UNSUSTAINABLE WITH A $16 BILLION DEFICIT OVER OUR HEADS. Do you think a reduction in tax receipts has something to do with that??? You better believe it! People are LEAVING the state en masse!!! GET A CLUE!
Buck Shaw May 18, 2012 at 03:29 PM
Bay area average? LA. average? California average? National average? Guess I stood in the right line for jobs. For that matter why didn't you stand in that IBEW line you talk about with such envy. There are a hundreds of subsidies available to your two person 100 K example. The PP 20% added to you PG&E bill is available to them for starters. Theres alot more, to many to list that come from the government. Part of that $16 bilion we share. What do you do? What do you do? Stop there help or pay the $16 billion? Maybe we could help ourselves and save some money. Then we wouldn't have to move, flee , or work so hard? Your points are well taken. I disagree on some agree on others. I'd say lets have a beer and a good cigar and continue to solve the worlds problems. But Mr. Armstrong and Prop. 29 will end that. I'm sure that Beer will be next. Even though we all know its been tried before. In my man cave the gang wagers on what is next. White sugar, then Sweetners, then Corn Syrup. Want to try and guess whats next. Just musing here... You gotta love the Legislative Analyist's opinum on Prop. 29 I'm paraphrasing here. Money saved on stopping cancer from smoking. Will still cost more because they will now live longer and cost more in the long run. Won't it be wonderful... I
Doug Radtke May 18, 2012 at 04:49 PM
That was the national average. I did "stand in line" for a variety of trades jobs even with a college degree. I actually have an apprenticeship interview coming up very soon, and if I get an offer I might just switch careers despite being an accountant. Buck, I work in tax. You're sorely mistaken about any "subsidies" available for a two family $100,000 income earner. I challenge you to name 5 federal tax breaks a married filing joint couple with an annual income of $100,000 gets. The "poor" get the bulk of all tax breaks given in the form of EIC and CTC. Buck, millions of Californians pay taxes. We've have some of the highest taxes in general in the union. We have the second highest sales tax, and that idiot Moonbeam in Sacramento wants to increase it because we're not hitting "revenue" to cover the $16 billion deficit. It's absurd. My point Buck is the so-called "middle class" is getting the hardest squeeze.Truthfully to be "middle class" in the Bay Area is starting to become a $100,000/person salary affair. You got homes averaging a million dollars here, but wages not reaching that. I believe the Bay Area average is around $45,000? I think Texas is like $35,000? You could probably get by "sweating it out" like you're suggesting in Texas on a $100,000 home on $35,000 in Houston. Ain't happening in San Mateo though if you're making $45,000.
Doug Radtke May 18, 2012 at 04:52 PM
I voted no on Prop 29. Not just because it creates another useless group of administrators who sit there and do nothing. It doesn't create any funding for cancer research. How much smoking education do we really need? Doesn't take a rocket scientist to figure out it's bad for you. If they raise the cigarette tax obscenely, you're gonna have compliance problems over time. New York City Department of Finance and the New York State Department of Taxation and Finance has their own special "cigarette tax" bureau to enforce the higher cigarette tax rates. There's liquor stores and bodegas in NYC that offer cigarette rolling machines where you pay the guy a small fee, and he'll roll a cigarette from loose leaf tobacco for you with the machine (thus avoiding cigarette tax). They also smuggle non-duty paid cigarettes across the Canadian border. So if people are really going to go through those lengths to get cigarettes, I don't think something as lame as Prop 29 is going to do a damn thing. Quit demonizing smokers. Their overall health cost to society is MUCH lower than fast food and obesity.
yesenia May 19, 2012 at 03:08 AM
i see millbrae becoming china, lol! AKA millbrasia as it is known with the high school students at mills high, lol! most everything that is being built in millbrae is chinese something. and most owners are chinese something too. why is that? (i heard someone talk about this and he said that millbrae is being taken over by oversea investors?
Doug Radtke May 19, 2012 at 03:11 AM
Millbrae already is an official SAR of China like HK is LOL... but seriously, dozens of houses have been bought up by overseas investors and they plunk their kids in the school district. some of those investors also lease/sub-lease their houses and pour more kids in the district. lot of those folks living out there are just kids or satellite wives
Buck Shaw May 19, 2012 at 05:13 AM
What are they going to do when no one smokes any more? Where will they get there money? 50 million from prop 29 feeds the old prop in 1993 because there are less smokers now than then. 10 years from now prop. XX will feed prop. 29 which feeds the 93' prop. On and on. It creates four funds to feed research employment and that admin group you mentioned. Its not a good Prop. Mr. Lance Armstrong. Doug; I agree I was comming up from the bottom. Theres that 100% of poor thing at 32K and the more peopleyou have in the household the more poor allowance you get. So a family of 5 can make 100k or something like that and still qualify for monitory help and what I call subsidies. They ask to be paid in cash, don't report it and stay below the poverty line. Collecting benifits, low income housing, discounts of PG&E. That sort of thing. Makes me upset.
Doug Radtke May 19, 2012 at 01:21 PM
Buck that would be EIC i spoke of earlier, and the max income a household can make with 3 or more children is $43,279. However, they would also get child tax credits (non-refundable) likely lowering their tax liability to nothing if they were really making that little money. EIC gives out a maximum $16,998 benefit for having 3 or more kids. A household of 5 on that income is broke too, so they would likely qualify for EBT (food stamps) and section 8 housing. They're not pulling in 100k at all, but I understand what you're saying because I know families like this. They do cash jobs and misreport their income. I see it all the time. It's a bizarre artificial poverty. They won't get off the dole because they think they're coming out ahead, but they can't make a large capital purchase like a house making a ton of money in cash.
Buck Shaw May 19, 2012 at 02:50 PM
Do you think we chased Mr. Boone out of the conversation or did he move on to the next article? We're old grass clippings already. Ha Ha...
Buck Shaw May 19, 2012 at 03:08 PM
Not looking forward to "Obummer" day in Redwood City. May 23 everything is closed. Traffic totally messed up. Downtown forced closings. Not that I go downtown anyway. Wonder if the County Court system will function. Guess its West to 280 and over to 92 or 84 to function. I guess and its a guess ECR will be at very least slowed down to a crawl. Oh well. The Republic can survive a Barack Obama, who is, after all, merely a fool. It is less likely to survive a multitude of fools, such as those who made him their President. That should get the dialog going again! Pow! Zip! Pop! Bang! A whot !

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