I lived in Silicon Valley for around 6 years. I say "around" because, as a New Englander, it's hard to keep track of time in a place that doesn't have seasons. My wife and I often talk in terms of, "That April when we got two feet of snow" or "that summer when it rained every weekend."
Sorry, I got a little off-track there. Discussing weather in Silicon Valley is a whole other topic. There are microclimates and even sub-microclimates as I read that article. None of this related to money, but I find this stuff interesting.
What I really wanted to highlight today is a video.
Before we get to that video, I want to tell you that I personally feel the message of the video and it's a large reason why I moved back to New England. Financially, I covered some of our reasons for moving in this article back in 2012: Financial Analysis of Moving From San Francisco to Boston.
I'd be remiss if I didn't share my emotions that I wrote at the time here: “I Think I’ll Go to Boston”.
Without further ado, here's the video:
This video is actually "old news" from October of 2015, but things haven't changed... and they won't likely change for a long time. If anything they've only gotten more exasperated.
If you haven't watched the video above, you should. It isn't short, but I'll think you'll get more value out of than a Friends or Seinfeld rerun (not that there's anything wrong with those!)
And if that isn't enough emphasis in watching the video, think about the last time you been to an open house with a barista. I'm guessing it was, ummm, never.
One of my favorite parts of the video was the mention of the house being listed at 1.888 million. The "888" lucky number in Chinese culture is why I wrote "nearly 900K" in this article.
I can't help but point out the information at the 4:30 mark. A small condo, with asbestos concerns, that has highway noise concerns, is listed for a shade under a million dollars... and that was the "teaser" price to lure a bidding competition.
And the video highlights a point I previously wrote about: Rent a Tent for $900 a Month?
That's a lot to chew on. It's easy to say, "Hey it's supply and demand... and there's a housing shortage."
It is supply and demand, but the video points out that there's no housing shortage. Many of the houses are empty, bought by overseas investors... and they don't want the "hassle" of renting them out at $4000 a month.
Can you imagine a world where the investor doesn't want to collect nearly $50,000 a year? I can't.
I'm reminded of a conversation I had with a co-worker back in 2006. He said I should buy a house instead of renting. I thought it was the most ridiculous thing I've heard considering Housing Prices in California? Hold your hat! and Survivor Winner Can Buy a Starter Home. As a side note to the last link it's fun to read in biography "joined the business strategy group at Internet search firm Google." In 2006, Google was characterized as an "Internet search firm." That's an accurate description, but I think you'd sound like an alien using those words today.
I greatly agree with much of the video, but around the 19 minute mark, I need to disagree. I don't believe that the extremely high prices in one region prohibits people from having "a place to live." It's not like the people in Silicon Valley have no other options.
In fact, around 80 miles away there are people almost begging to sell their houses. Remember the millions that was highlighted above? Here's a great quote from that article of people further away, "His home now is worth about half the $126,000 he paid for it." I'm going to use my exceptional math skills to estimate the home value at around $63,000.
Around the 21:30 mark there's a significant point made. I think it is worth discussing. Let's use the comments for that.
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