Only asking $1029 sq/ft

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That's actually a nice house, totally worth saving. I'll betcha keeping the original house allows them more options in constructing the new units. Around here I think it is anything over 80% modified needs to adhere to current building codes.

I guess they couldn't find investors and now they are selling? Why do all the hard work planning it out to hand it to someone else to make all the money?
 
Originally Posted by dareo
Originally Posted by PandaBear
Originally Posted by dareo
what a crazy price. last year i paid less than 1/10th per square foot and got 3.3x the land.


You probably get paid 1/4 as much as the potential buyer/renter of the finished home too, that's why it is 1/10th per square foot and 1/3 the total price. Real estate is all about location and local income level.


Median household income for my county 75k. "The typical San Francisco household makes about $96,677 each year." 2018 census bureau.

All that real estate is just grossly overpriced.


Census huh? The typical buyer of that said Oakland lot after the redevelopment is likely going to be dual income with 350k total or more. You seriously believe 96k is the typical SF household income that can buy that property? The family is likely living in a rent controlled apartment or bought the home in 1990s, when they were only 400k ea.

Like I said, I have nothing against people living elsewhere, but West Oakland is now a techie neighborhood and you should not expect the buyers to be a typical "elsewhere" household (i.e. 2 teachers with 2 kids and a dog, with 60k student loan and 8k credit card debt).
 
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Yeah, people cannot afford the bay area today. Even with a great tech job north of 200k/year after taxes and rent you aren't left with a ton of money to save up a down payment. 1 million dollar home is going to need about 200k down. That could take years to save up. Ultra wealthy cash buyers have skewed the values very high. Normal jobs are nowhere near even dreaming about buying any property there and so these people commute for hours to get in and out to a suburb.

Is the census number low? Probably. However, there is no way a medium cost area like utah is 4x lower paid than the bay area. Not that Utah is a poster child for affordable housing or anything, its actually quite high here for what many jobs pay. People who have lived in their homes for over 10 years are unlikely to be able to afford the current value if they had to buy it again.

I'm not sure why all these tech firms insist on being there. They could practically take over a cheap state like Ohio or something. Paying 200-300k a year because homes are 1-1.5 million just doesn't make sense. These firms won't have endless money and when a crash happens its going to be super ugly for a young engineer who just dropped hundreds of thousands on a down payment on a 7 figure house that is now only 6 figures and is out of a job.
 
Part of the reason for location is easy access to travel, mainly to Asia. For example, Apple will fill a whole business class section on certain flights. I'm sure Google, Amazon, and the rest do the same. So cities like Seattle and the Bay Area are favored.

But they are spreading. Austin has grown leaps and bounds because of the tech industry locating there as one example.
 
People oftentimes get their down payment with stock options.
Houses in good areas sell quickly, but they have dropped in the last 2 years.
But yes, it takes 2 decent salaries, perhaps $350K combined. Or more...
 
Let's look at that 350k dual earner scenario, roughly 30% lost to taxes before it can be saved up. The companies paying this 350k are likely paying at least 10% on top of this for the total payroll cost, maybe a lot more depending on benefits. Company is out 400k, people take home 245k or less. They also sit on incredibly valuable offices that could literally be anywhere and do the same task. Maybe the air travel thing is a nice perk but these are all publicly traded for profit companies just burning through cash here.

If they went somewhere cheaper, all kinds of tax money would be saved, property costs saved, ect.

They could set up shop in Nevada and live like kings. Save the sky high california state tax of 10% (or more, income based), lower the salary a bit to say 125k each or 250k total, now their federal is only about 43k. Cost to company now about 280-300k and the people see 207k left over. Then they can buy real estate that has sane prices and be left with far more money every month.
 
That is good in theory but doesn't work in real life. Companies set up shop where the talent are. If they're not in the middle of nowhere they're not going to set up shop there.
 
Maybe your right but if you are [the talent] and you want to work for [google, apple, fb, amazon, ect] you want to work there for the name first and pay second. People compete worldwide for these jobs and would probably take them even if they were in Alaska. The money can play into it as well seeing as some senior developers can be 300-500k at Google for example. The people would chase the company wherever it went. They just all are in a very expensive area. If 1-2 major players moved out like say Google and FB, then the values would normalize in the bay area improving life for all others left behind.
 
Originally Posted by aquariuscsm
From the pictures it looks like it's in the hood.


It was the hood until recently, now the hood has shrunken to only the East Oakland.

Originally Posted by dareo
Let's look at that 350k dual earner scenario, roughly 30% lost to taxes before it can be saved up. The companies paying this 350k are likely paying at least 10% on top of this for the total payroll cost, maybe a lot more depending on benefits. Company is out 400k, people take home 245k or less. They also sit on incredibly valuable offices that could literally be anywhere and do the same task. Maybe the air travel thing is a nice perk but these are all publicly traded for profit companies just burning through cash here.

If they went somewhere cheaper, all kinds of tax money would be saved, property costs saved, ect.

They could set up shop in Nevada and live like kings. Save the sky high california state tax of 10% (or more, income based), lower the salary a bit to say 125k each or 250k total, now their federal is only about 43k. Cost to company now about 280-300k and the people see 207k left over. Then they can buy real estate that has sane prices and be left with far more money every month.


You are correct in theory.

In practice, it is hard to move an existing ecosystem once it is established. Back in the 80s California was cheap still, companies leave Boston to start in California because of the way around the non-compete clauses. Now Boston has no more new tech left and every tech giants (which were once a startup) established in the valley. It is very hard to move 10k people out of a valley and into, say, Longmont Colorado. These employees will switch jobs instead of moving to a cheap area. (i.e. Seagate combine Maxtor's and Seagate's Longmont sites into the new Seagate and shutdown Silicon Valley R&D, most of the former Seagate and Maxtor people ended up in SanDisk, Marvell, Tesla, Apple, WD, etc instead).

BTW, WD shut down their Salt Lake City R&D for SSD instead of the Milpitas (Silicon Valley) R&D. So that sort of proves that "saving money by moving out of state" doesn't always work. Especially when they are focusing on saving money instead of delivering results and making new money. Companies pay 15-30% more to recruit from competitors, they will be losing more if they are throwing their employees to the competitors just to start over in a low cost of living state instead. All the savings are lost when they have to recruit again.

As I mentioned previously, my brother in law moved to Dallas / Plano and took a 30% paycut, he is now going to chill instead of trying to climb up the corporate ladder, because that won't happen in Plano anyways. He has a nice house, and saved some serious cash, but he basically can't switch job every 2 years like he used to and get up to market rate every 2 years (i.e. you'll fall behind after 4 years at the same job). I'm not going to do that, nor will my other coworkers who already bought homes 10-20 years ago. This is not even including the fact that California has prop 13 capping your property tax at purchase price x inflation, instead of taxing it at market rate every year.

So, in a nut shell, not everyone will move because California is too expensive to companies trying to cut costs instead of growing in new area fast.
 
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Top end talent also value lifestyle. So managers and other executives that get paid a lot don't want to live in the middle of nowhere. Those are the guys making the decision. All the people in the company are important. No point losing a large percentage of your employees if you move to the middle of nowhere.
 
Originally Posted by dareo
Maybe your right but if you are [the talent] and you want to work for [google, apple, fb, amazon, ect] you want to work there for the name first and pay second. People compete worldwide for these jobs and would probably take them even if they were in Alaska. The money can play into it as well seeing as some senior developers can be 300-500k at Google for example. The people would chase the company wherever it went. They just all are in a very expensive area. If 1-2 major players moved out like say Google and FB, then the values would normalize in the bay area improving life for all others left behind.


Reputable companies will pay you top money too. The fastest way a company becomes reputable in a new field is to pay top dollar to recruit from another reputable company, and the fastest way a reputable company go down is to be cheap to the employees.

Example:

Apple recruits most of the good wireless engineers from Motorola, Palm, Sierra Wireless.
Google jump start by recruiting from Microsoft during Steve Balmer time.
Facebook get big in ad by beating Google in every single competing offer (bring your Google offer, we'll beat it).
Microsoft lost a lot of people because they adjusted their stock grant policy, and outsource to India.
Cisco and HP, what can I say, they are not even tech companies anymore.
Netflix paying you top of market, and they will do the market price audit for you every year, you won't even need to go interview to get that, their HR will do it for you automatically.



Now please name some good companies that have been getting bigger and better by relocating to cut cost? I'd like to hear and avoid them in my future.
 
Originally Posted by Wolf359
Top end talent also value lifestyle. So managers and other executives that get paid a lot don't want to live in the middle of nowhere. Those are the guys making the decision. All the people in the company are important. No point losing a large percentage of your employees if you move to the middle of nowhere.


So are the super riches that live in Atherton, and visit the VC offices on Sand Hill Road, Palo Alto. Unfortunately the riches decide where the start up should be at, and the start up has to be near the riches to get funding, and the VCs to supervise.
 
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Google is big enough to move anywhere and take their people along. Amazon, Jeff Bezos, they would do ANYTHING to save a buck. The guy's building his own airport. Just because it hasn't happened yet doesn't mean it wont happen in the future. If you did relocate your giant tech company it would be a bit harder for your existing talent to jump ship. They'd have to move.

Where does the crazy salary wars and real estate prices end up? Crashing, IMHO.

Wal-Mart has top level executives in the sticks of Bentonville Arkansas, been there, its a dump prospering because wal-mart happens to be there.

its all mildly interesting!
 
Originally Posted by Wolf359
Companies set up shop where the talent are.

This is exactly the reason.
For example, Ford, the Dearborn guys, wanted to learn about and develop an autonomous car. They opened up an office in Palo Alto. Filthy expensive but they wanted the local talent.
Ford Silicon Valley.

The talent is here. Hi Tech has moved manufacturing out for the most part, but the tech is committed to the valley.
FYI - Google bought a huge area of older San Jose; they re building structures that will dwarf the Apple Spaceship.

When will it stop? Crash? Who knows?
I got news for you... You ain't seen nuthin' yet. 5G is a game changer. 3nm tech node baby!
By the way, to make real money, you have to be in charge of, or develop, something mission critical.
Then you get the golden handcuffs.
 
Originally Posted by dareo
If you did relocate your giant tech company it would be a bit harder for your existing talent to jump ship. They'd have to move.


Not really, that's not how it works.

What makes you think Amazon finally opened offices in Silicon Valley instead of staying in Seattle? They tried to force people to move, but they can't always find people (other than Canadians wishing to be close to the border, and people leaving California because they haven't bought a house yet). The same goes for Google opening office in Seattle.

People move around companies, not relocating with a job that they have no loyalty to.

BTW, Walmart throw in the towel and had to open their lab in Sunnyvale too, they can't hire people to do it in Arkansas. People aren't interested in going there.

Talking about Uncle Jeff, that guy is not cheap and stupid, he pays well if he knows he can make money from you. Anonymous insider close to the source of the 2nd HQ discussion in Blind (a work place social app) on Amazon's employee forum said, that the decision is not based on cost of living (i.e. housing cost, labor cost), but tech talent pool, and local universities. In other word, they are opening new offices in other tech hubs so they can pouch talents, not trying to move to a low cost of living places and force people to move and then cut their pays. The final candidates are rumored to be NYC, Arlington VA, Austin, Los Angeles (mainly due to Hollywood), and Boston. I'm sorry to tell you but none of them are cheap and none of them are about forcing people to move there.

This is not a US only situation, in Japan most of the top talents are in Tokyo and Tokyo gets bigger and the small towns in the rest of the nation die off, Detroit style.
 
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PandaBear,

A big reason Amazon has been expanding elsewhere is that Seattle has pushed for a head tax on employees. Amazon is actually moving a lot of people out of Seattle and into Bellevue across the lake.

There is a 50-60 story building going up downtown Seattle that Amazon was going to occupy the vast majority of. They have since pulled out of that deal. Those people will go to Bellevue.

It's a story most people outside of Amazon and Seattle might not know of.
 
Originally Posted by PandaBear
Includes approved shovel-ready plans for a beautiful redevelopment of the massive lot into 5 units

That's why it is worth $1M, the approved shovel ready plan means you don't need to deal with the messy public hearing right?


That's what I was thinking. This is priced as a turnkey construction project that yields high rental income in an upcoming area.



Originally Posted by dareo
Originally Posted by PandaBear
Originally Posted by dareo
what a crazy price. last year i paid less than 1/10th per square foot and got 3.3x the land.


You probably get paid 1/4 as much as the potential buyer/renter of the finished home too, that's why it is 1/10th per square foot and 1/3 the total price. Real estate is all about location and local income level.


Median household income for my county 75k. "The typical San Francisco household makes about $96,677 each year." 2018 census bureau.

All that real estate is just grossly overpriced.


There can be lots of folks making sky high bucks to offset the group making or showing zero.

Thing I don't understand is just how much the average person in tech makes. Because these million dollar deals seemingly would make them house rich and entirely poor real quick without a decent income. Case study: How much does a mid level tech person make? $350k/yr?

Then take something like 50% away from all taxes (federal, state, ss/medicare, sales), and then you've got maybe $14k/yr.

A $1.5M home, 30% down, 30 years at 3.8% results in something like $7600/month, assuming $24k/yr property tax.

So someone with what I'd say is a good paying job, $350k/yr, is paying out half of their take home on a mortgage, granted they still would have $7k/month for other things. Adjust calculations from there. That's a lot of free cash.
 
Originally Posted by PimTac
PandaBear,

A big reason Amazon has been expanding elsewhere is that Seattle has pushed for a head tax on employees. Amazon is actually moving a lot of people out of Seattle and into Bellevue across the lake.

There is a 50-60 story building going up downtown Seattle that Amazon was going to occupy the vast majority of. They have since pulled out of that deal. Those people will go to Bellevue.

It's a story most people outside of Amazon and Seattle might not know of.


Yes, I remember that part about Amazon freezing development suddenly when the Seattle tax might be a real thing and then all of a sudden Jeff pulled out of the development deal. Another reason is they ran out of people willing to move to Seattle at the current cost of living. Their quota for putting people in performance improvement plan (warning: you will be fired, we are doing this because we don't want you to have any ground on fighting a lawsuit) means they need to have a constant pool of employees coming in and going out, and if you don't have fresh meat you need to go to another metro to cycle through other companies' employees. This is why they favor other large tech hubs despite high cost of living: they don't want to be the only employer in a cheap town, they want to be one employer that can snatch the cheapest 10% out of the top 20% workforce in the metro, and they need to have other companies to snatch from and dispose to.

Originally Posted by JHZR2

There can be lots of folks making sky high bucks to offset the group making or showing zero.

Thing I don't understand is just how much the average person in tech makes. Because these million dollar deals seemingly would make them house rich and entirely poor real quick without a decent income. Case study: How much does a mid level tech person make? $350k/yr?

Then take something like 50% away from all taxes (federal, state, ss/medicare, sales), and then you've got maybe $14k/yr.

A $1.5M home, 30% down, 30 years at 3.8% results in something like $7600/month, assuming $24k/yr property tax.

So someone with what I'd say is a good paying job, $350k/yr, is paying out half of their take home on a mortgage, granted they still would have $7k/month for other things. Adjust calculations from there. That's a lot of free cash.


This. The amount people pay for housing among tech hub is never the 28%, and a lot of them aren't doing 30% down. Regarding to pay, it can go all over the place depends on the company, the stock market, the guy's bargaining power, and luck. Example: one of my new grad coworker joined an "old tech" company that I'm currently in, and got paid like 100k out of school, he was not happy because his friends were all making 120-140k and then after a year he started interviewing around, got 2 offers, and used them to bid on each other, and finally landed in a company that pays him 200k. He then ask me when will he make 300k and then I have to tell him it is hard to say, because sadly after 20 years in old tech I'm still not making that much, so all I can offer to tell him is to keep interview skill sharp and stay in new tech instead of old tech.

Even among tech not everyone can afford to buy, a lot of the people in unicorn got lucky and exited (IPO, company sold, so their paper money RSU are now worth cash despite a discount), and they finally has a big chunk of money for down payment. So you have a bunch of techies that make 200k (I think that's likely the average mid level) and the 20% of them that got startup exit, pay tax (sucks because it is not capital gain and you have to pay all that in one year instead of spreading among 4), and your income discounted for the loan because RSU cash out is a one time event, then you can finally started to buy something. Yes it sucks, that's why the new trend is to stay away from startup because this is no longer the 90s, IPO won't get you a paid off house, and your exit may only break even compare to working for FANG in a stable job for the same amount on average after all that risky maneuver.

Yes, the tech scene is a bit messed up right now, and maybe a bubble, and definitely the SF Bay Area is overpriced, but the market is the market and companies aren't moving because it is hard to move a whole tech hub. You can expand but it is not a guarantee you can move your project around and not fail (let alone be a success).
 
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