I know you guys are downvoting me but I don't give a shit. I used to see similar graphs for Incline Village (in Tahoe). But suddenly after 2008, the party stopped. The reason was that prices finally got to a level where people honestly just couldn't afford to bid higher.
For prices to double again in the Bay Area, you need to start seeing engineers earning $400k per year. It isn't going to happen.
Oh and by the way I have a house in Oakland that I bought in 2000 that has like quadrupled so I already won the lottery. I'm just trying to help others out here.
I do work in tech, and while that kind of comp exists, it's the exception and not the rule. There was a posting today here on HN about a database of salaries that more or less directly contradicts your assertion here.
Oh and your entire comment is based on the premise that tech isn't in a bubble (hint: it is).
It might be surprising given how hot the market is, but the # of homes actually changing hands is pretty small. Prop 13 provides a strong financial incentive for homeowners not to sell. With relativey few homes going on the market compared to the area’s population, the salaries of an unusually small slice of the income distribution can affect the average home price.
Agreed that lack of selling is a huge issue. That said prop 13 isn't the only disincentive (and a relatively weak one - homeowners older than 55 can transfer their basis to a cheaper property). The other issues are:
1. (older residents) Capital gain taxes. If your house is up by $1.5M, selling incurs capital gains on $1M ($500k excluded). That's nearly $300k (20% of value) in capital gains taxes owed -- a huge hit to move to a cheaper place. And if you stay in place and die? Your heirs don't have to pay cap gains at all.
2. (newer) Mortgage tax deductability grandfathering. New buyers have $750k mortgage interest be deductible; old buyers get $1M. Guess you aren't moving until you bought recently!
Comments
I know you guys are downvoting me but I don't give a shit. I used to see similar graphs for Incline Village (in Tahoe). But suddenly after 2008, the party stopped. The reason was that prices finally got to a level where people honestly just couldn't afford to bid higher.
For prices to double again in the Bay Area, you need to start seeing engineers earning $400k per year. It isn't going to happen.
Oh and by the way I have a house in Oakland that I bought in 2000 that has like quadrupled so I already won the lottery. I'm just trying to help others out here.
Thats pretty funny, because sr engineers at big tech are making close to $400k!
Rents and prices have disconnected about 2 years ago. Rents are flat or slightly down while housing prices have kept on going up.
I do work in tech, and while that kind of comp exists, it's the exception and not the rule. There was a posting today here on HN about a database of salaries that more or less directly contradicts your assertion here.
Oh and your entire comment is based on the premise that tech isn't in a bubble (hint: it is).
And therefore one would think prospective buyers would look at this and conclude buying doesn't make economic sense. (I did at least: https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-t...)
A small fraction of engineers have compensation that high, certainly not enough to really impact house prices that dramatically.
It might be surprising given how hot the market is, but the # of homes actually changing hands is pretty small. Prop 13 provides a strong financial incentive for homeowners not to sell. With relativey few homes going on the market compared to the area’s population, the salaries of an unusually small slice of the income distribution can affect the average home price.
Agreed that lack of selling is a huge issue. That said prop 13 isn't the only disincentive (and a relatively weak one - homeowners older than 55 can transfer their basis to a cheaper property). The other issues are:
1. (older residents) Capital gain taxes. If your house is up by $1.5M, selling incurs capital gains on $1M ($500k excluded). That's nearly $300k (20% of value) in capital gains taxes owed -- a huge hit to move to a cheaper place. And if you stay in place and die? Your heirs don't have to pay cap gains at all.
2. (newer) Mortgage tax deductability grandfathering. New buyers have $750k mortgage interest be deductible; old buyers get $1M. Guess you aren't moving until you bought recently!
How many dual income families make that much?
Looking at the sold houses in my neighborhood and the families that move in: a lot.
Oakland is still full of gangsters and crime, everyone stay away for your own safety.
yes, please stay away. Do not come to Oakland it sucks and you shouldn't move there.