Tech bubble burst on the horizon? (2015, rental, eviction)

[HockeyMac18]

Originally Posted by Chuck5000

Anyone who has a down payment and needs to buy real estate now and can in the Bay Area should buy now. Why? Rates are low, payments are manageable. Because unless there is a sudden, steep (30, 40%+) drop (and I would bet anything against this happening) people will be renting for 1, 2, 4, 5 more years.....and even if they pay 20% less (a more plausible drop) in x to 5 years, they've spend that much money renting in the meantime.

*Everyone* talks a big game about how they're going to buy on the dip. But even in 2009, there were multiple bids on homes. I know 2 people who wanted prices to go down even further....they never made it. I think really they were never going to buy.

Renting is a good value if you need flexibility to move around - esp. in the Bay, where traffic is becoming intolerable. But if one has kids....strong argument for staying put and owning.

The problem is one of saving enough for the needed downpayment. It's hard to pay Bay Area rents AND save up a downpayment in the process. I've been working on it for years and am still pretty far away. Which is more a reflection of bad timing on my part (leaving school and entering the workforce just after the recession started and the Bay Area economy was down...and as it heated up, I couldn't make money fast enough before prices started rising). I would certainly buy now, if I had the means.


That said, I'm fairly content to continue to rent (i.e. I'm not trying to whine here since I'm still pretty comfortable). It would be nice to have a bit more long-term stability that one gets from owning, though.

[Netflix]

Originally Posted by HockeyMac18

The problem is one of saving enough for the needed downpayment. It's hard to pay Bay Area rents AND save up a downpayment in the process. I've been working on it for years and am still pretty far away. Which is more a reflection of bad timing on my part (leaving school and entering the workforce just after the recession started and the Bay Area economy was down...and as it heated up, I couldn't make money fast enough before prices started rising). I would certainly buy now, if I had the means.


That said, I'm fairly content to continue to rent (i.e. I'm not trying to whine here since I'm still pretty comfortable). It would be nice to have a bit more long-term stability that one gets from owning, though.

Don't beat yourself up. Interest rates are at historical lows nationally, which means housing prices are at historical highs nationally. So now is one of the worse times to buy in the history of the country, especially in the bay area where prices are just insane. If you could put together a down payment you could find yourself upside down in short order and that would be worse than renting, unless you have someone who can bail you out.

Renting affords you the ability to quickly move if you need to leave the area (or move within the region) due to a job change, and not be burdened with having to unload a house. Figure out the price you would pay a realtor to sell a house, it may be equal to a years rent. Property taxes are probably 1/3rd of what you're paying in rent. As it relates to home ownership in the current economic climate, the grass is not always greener.

[Chuck5000]

I do think that anyone who does not have children simply does not need to buy housing in the Bay Area, that is a luxury. Homeownership has become a religion in the US; people have come to think that it's a slam dunk investment. It is not. Housing is useful, and *sometimes* returns very well, historically. If I did not have kids, I'd be happy renting forever here (unless I just had so much money buying was easy - but that will never happen, sadly.)

Anyone who thinks that the steep appreciation in the last 20 years of Bay Area real estate is guaranteed forever, and therefore everyone MUST buy, EVEN if they aren't going to stay long term, is foolish.

Separately, but related to homeownership-as-religion, I hear of young single people moving here and getting bummed out that they're earning 140k, and they're pissed off they can't buy their own house. I think that is stupid; the price of entry is the price of entry, and dual professional incomes or a single very high income is the price. Now, of course, I think the region should be adding 200,000 housing units and expanding rail, etc....but the pace too little, too late.

[gone down south]

Replying to the original article, Twitter is laying off people because they were WAYYYYY overstaffed. Given what the service is, and the quality of their apps, they could easily get by with 1/3 their current staffing levels.
Alphabet is laying off because they're closing some moonshot projects that didn't pan out and they now have a CFO who's smart enough to say "no" to some of the zanier ideas being pitched. Nothing in there is a comment on tech at large.

[Netflix]

Staying on topic. Here is a panel (10/2016) discussing the possibility of a tech bubble. One comment towards the end of the video:

"I'm certain that a higher percentage of employees in Silicon Valley are working for money losing companies than anytime since 1999. I'm certain of that."

Where Is the Valley Headed? | Vanity Fair

Sounds frothy.

[jade408]

Originally Posted by Netflix

Staying on topic. Here is a panel (10/2016) discussing the possibility of a tech bubble. One comment towards the end of the video:

"I'm certain that a higher percentage of employees in Silicon Valley are working for money losing companies than anytime since 1999. I'm certain of that."

Where Is the Valley Headed? | Vanity Fair

Sounds frothy.

I think that is true, but the money losing companies are both smaller and easier to spin up than they were in 1999. So when these money losers fail, their employees will be able to find another similar company/role quickly.

[beb0p]

Originally Posted by Netflix

Staying on topic. Here is a panel (10/2016) discussing the possibility of a tech bubble. One comment towards the end of the video:

"I'm certain that a higher percentage of employees in Silicon Valley are working for money losing companies than anytime since 1999. I'm certain of that."

Where Is the Valley Headed? | Vanity Fair

Sounds frothy.

The thing is, money losing companies are not in and of themselves bad, some of them can even be great.

Amazon lost money for 20+ years. Uber lost a chunk of money and is on course to lose a lot more.

The key question is their business sustainability, which is a harder thing to measure.

.

[Commonproject]

Originally Posted by Netflix

Staying on topic. Here is a panel (10/2016) discussing the possibility of a tech bubble. One comment towards the end of the video:

"I'm certain that a higher percentage of employees in Silicon Valley are working for money losing companies than anytime since 1999. I'm certain of that."

Where Is the Valley Headed? | Vanity Fair

Sounds frothy.

That doesn't mean anything. You have to look at where the money is being spent. Many tech companies lose money today because they're putting back all of their potential profits into growth. losing money is combined with low growth, then there's trouble. Funding is meant to support that growth in spite of short term cash burn

[xani]

Originally Posted by Chuck5000

Anyone who has a down payment and needs to buy real estate now and can in the Bay Area should buy now. Why? Rates are low, payments are manageable. Because unless there is a sudden, steep (30, 40%+) drop (and I would bet anything against this happening) people will be renting for 1, 2, 4, 5 more years.....and even if they pay 20% less (a more plausible drop) in x to 5 years, they've spend that much money renting in the meantime.

*Everyone* talks a big game about how they're going to buy on the dip. But even in 2009, there were multiple bids on homes. I know 2 people who wanted prices to go down even further....they never made it. I think really they were never going to buy.

Renting is a good value if you need flexibility to move around - esp. in the Bay, where traffic is becoming intolerable. But if one has kids....strong argument for staying put and owning.

If someone put saved money into huge downpayment, and then lose their job, as tech industry is volatile (and always been)...they might have to head out of the SF area for another position...then they have to sell losing a lot of money.(unless they like being a landlord in SF, where might be hard to have tenants move out). Pay insane 6% US realtor fees, state tax, and they'd have paid loan fees, plus all the $$ in interest, which doesn't really help that much with tax write offs unless someone is a pro at that, has multiple properties, businesses or low tax bracket etc.
It seems like people still buy houses together, also, as couples--buying in single person would be very difficult in Bay area now....this doesn't compute on my side at all; such things have 50% probability of ending in divorce or other split up...guess how this is going to turn out.

[xani]

Originally Posted by HockeyMac18

The problem is one of saving enough for the needed downpayment. It's hard to pay Bay Area rents AND save up a downpayment in the process. I've been working on it for years and am still pretty far away. Which is more a reflection of bad timing on my part (leaving school and entering the workforce just after the recession started and the Bay Area economy was down...and as it heated up, I couldn't make money fast enough before prices started rising). I would certainly buy now, if I had the means.


That said, I'm fairly content to continue to rent (i.e. I'm not trying to whine here since I'm still pretty comfortable). It would be nice to have a bit more long-term stability that one gets from owning, though.

Frankly, if one got enough money for downpayment in Bay area already and enough income stability to buy, they can save just a little more and retire early, outside the US, instead of killing health in the race race and commute for another 20 years and dying before they have a chance to get out.