My son notes that he can buy in his midwestern hometown, the fanciest house on a bluff overlooking a river and a park on an acre and with 3000 sq ft, for what in Santa Clara would buy a burned-out trailer.
But then you would be in that midwestern town ... not saying thats bad but it better be what you want. There is a reason the median price in Sunnyvale is already $2.3M. No snow, 300+ days of sun ... running a little low on water tho. Ive lived all over the country and while Central Coast Ca is relatively expensive compared to other places I could never be as happy elsewhere. Edit: Further, I am willing to bet whoever bought the house in Sunnyvale still works (probably a lot). If you buy a $2.3M house in the midwest you aint commuting to a job.
You're casting a very narrow net on what you consider "the midwest" there. I assure you that there are literally millions of people here that both live in $1+ million dollar houses and commute into work every day.
Fair enough. There are many urban centers in the midwest that are very expensive. But im pretty sure we were not talking about those places. Edit: Also rural centers that are very exclusive (Jackson Hole etc).
It's like Chicago doesn't exist in the collective conscientious of the east and west coast white collar class. ILL is a dumpster fire of a state, but the COL to quality of life ratio is pretty excellent as far I'm concerned.
Minneapolis, Madison, Milwaukee, Detroit are all fun cities too. I say this as someone who went to college in Boston/NYC and lived all over the Acela corridor and London.
It exists. But it's viewed as houses in the middle of a cornfield or a decaying steel town, no decent jobs, no culture, lousy weather, etc.
To the last point, there are a lot of people, especially on the West coast who really can't imagine living anywhere with real winters. To be honest, you don't hear much about Boston either although I think it's something like #3 in VC funding and has a lot of tech of various kinds.
I don't actually think anyone -- statistically speaking -- from California views Chicago that way. There is a stereotype of Californians which feels unusually pernicious which I see a lot on HN, generally either from people who have never been to the Bay Area or feel they "escaped" the Bay Area and take every opportunity to tell people that they bought an 8000 square foot mansion for $100K, pay $7.99 a month for 100Gbps internet service, and so on.
I kid, but seriously, many of us have actually been to other cities across the United States and the world and have appreciation for them. There are many places I would be happy in besides the SF Bay Area. I would be able to find friends and good microbreweries and good craft coffee, cocktail bars, interesting cheap restaurants, interesting expensive restaurants, museums, nature hikes, the whole shebang. Some of my absolute favorite examples of each of those are outside the SF Bay Area! It's simply that so far, I haven't found a metro area (at least in the US) that can combine a similar concentration of such places with a comparable climate, tech job market, and markedly cheaper cost of living.
Tech scene in Boston is really huge. It’s a bit less “Facebook for cats” than Silicon Valley and tends to be more stuff that needs the big brains from MIT and the like. Moderna is a great example.
Pharma/biotech is particularly big but look at a magazine like Tech Review and there's a lot of diversity.
In addition to the weather (which really isn't that bad), part of it is I think that a lot of people with SV companies tend to think of tech as "what SV companies do" which naturally leads to them seeing less "tech" in other places. (Though there are sizable outposts of quite a few West coast employers at this point in addition to the home-grown ones.
Tech actually in the city was almost non-existent for a long time. Hence the Route 128 computer companies. But that's shifted a fair bit again over the past 20 years.
Everyone’s calculation of utility is different, but Chicago/IL land also has a non explicit cost of land prices being held down by expected increases in taxes disproportionate to increases in other parts of the country, due to disproportionate levels of debt per taxpayer.
Instead of your land appreciating by a few hundred thousand, it might only appreciate by a hundred thousand, which is a decent difference in return for many people.
Obviously, that is offset by needing less cash upfront, but it does make the CoL calculations less obvious in favor of Chicago.
Well, I live here because I need a house, not as an investment property. That might be why the housing situation in California is a superfund site and in Chicago I live in an expensive house because I want to.
I do not think it matters if a house is an investment property (i.e. not the house you are living in) versus a house you need (i.e. to live in). My point is the cost of living calculation also involves the opportunity cost of the difference in land price appreciation.
Of course, this opportunity cost only exists if you have the opportunity to choose between two or more locations.
ROI would have to be calculated using the levered amount. Even paying $2.7M cash for this house, you can refinance and take out 80%, and have the $2.7M asset for $540k in a non recourse state with a non callable margin loan. And with capped 2% property tax increases.
Plus you get to live in it. Plus you get CA amenities (value dependent upon individual preferences, but obviously valued very highly amongst people with money). One of those CA amenities is very worker friendly non compete laws and strict limitations on what employers can claim is theirs, a not insignificant benefit for knowledge workers in my opinion.
Ah, but $1 million allows me to borrow upwards of $6.5 million at 0.75 percent from my broker. Real estate allows significant margin for the lower and middle class, but there's literally zero overlap between those people and people buying $2.75 million homes in Sunnyvale. Way better off leveraging your SPX shares than a house.
I suspected this would be brought up, which is why I tried to pre-empt it by specifying that a home mortgage has special conditions that make it not 1 to 1 comparable to other leveraged investments, such as non callability, non recourse (in California), you get to live in it, and you get to live in that specific location (assuming you value it).
I am not so sure. Another benefit of CA real estate is that you can gift it to your kids and not be subject to state estate taxes, and the capped property tax carries forward to your kids.
The best benefit to one of these houses in this area is that you have one of these houses in this area. My house isnt an investment but a roof over my head and a good sized yard not far from a very beautiful bay and lots of mountain trails. Its worth more to me than what zillow says.
> Real estate allows significant margin for the lower and middle class, but there's literally zero overlap between those people and people buying $2.75 million homes in Sunnyvale.
People buying $2.75 million homes in Sunnyvale are largely either working (knowledge workers dependent primarily on wage labor) or middle (petit bourgeois; independent business owners and workers with mixed dependency on wage labor and capital investments) class.
True, but New York City has a per-capita municipal debt load double Chicago's, Connecticut and New Jersey are really the only two states in more dire financial straits than Illinois and for the pleasure of living back east I get to pay what seems like an order of magnitude more in taxes and housing costs.
And obviously California is California. Loved, loved, loved it when I went to college in Los Angeles but have no real desire to ever work there. Maybe once I make my 50th million I'll be on the next flight out.
Once climate change starts destroying the coasts and warming the interior, we'll see how bad the hick midwest really is :)
> Minneapolis, Madison, Milwaukee, Detroit are all fun cities too
Different ideas of fun abound, but I doubt the people getting nervous at the uptick of crime in California cities are much interested in Detroit and it's second-highest-in-the-nation rate of violent crime.
Sunnyvale’s in the south SF Bay Area. The central coast is further south and considerably less expensive but also more isolated.
The other thing persistently lowering quality of life all over CA besides water getting scarce and high taxes is the wildfire smoke. There are benefits to CA, but there are definite downsides.
Im not sure what you mean by high taxes. A house in texas comparably priced to mine is almost 3x my property tax and I get the majority of my income tax back. Texas sales tax is like 1% less than in my town. I just dont see it.
And again, then youd be in Dallas (which has harsher water restrictions than here now). Ive been there, I bought here. Im glad everyone that is there enjoys it tho.
NorCal and SoCal are attitudes more than actual points. I consider Monterey Bay to Morro Bay Central Coast. I live 3 miles from Monterey Bay and ~40 from Sunnyvale. Greater area San Jose people seem to consider themselves 'Bay Area' rather than NorCal but it is easy to spot the ones that do consider themselves NorCal.
> No snow, 300+ days of sun ... running a little low on water
All reasons I will never live in California. My ideal is four seasons, generous servings of rain and snow throughout the year, ideally never above 60 F, and not worrying about water. I do whatever I can to encourage people to keep flocking to NYC/LA/SF/etc so they stay out of everywhere else
Yes you are commuting to your job when offices open. Suburbs of the big Midwest cities have lots of 2.3mm+ prices and you work downtown in finance, tech or whatever. Quite a few inner-city houses built by the original rich classes of those cities demand those prices too.
Go where you are happy, spend as much as you want. Sunnyvale is a cultural desert compared to the Twin Cities, Chicago, Detroit. And on its way to being a real desert too.
A very good point but el camino leads to koreatown or the city so hopefully you have a car or enjoy the bus/train. That road is terrifying on a bike tho.
You can do a lot better than Chilis. There’s a huge variety of dining options in and around the South Bay, some of them on the higher end. I think the question is more whether the Chili’s is the only game in town or whether you have options that aren’t Chili’s or fast food.
Yes, absolutely. Gochi is one of my favorite lunch spots, and a short walk away. This is also true for every college town in the rest of the country. The Bay Area isn't magic.
Having lived in Sunnyvale for a bunch of years, this is just not true. Heck, there’s more than one Michelin starred restaurant with tasting menus well above $100 a head in the South Bay (Manresa, Baume, and Chez TJ).
How is it "just not true"? There are literally a couple Chili's (and plenty of TGIF's and other similar places) within a couple miles of the house in question. The fact that there are _also_ some real nice places doesn't change that (also, my wife and I literally fell asleep while eating at Chez TJ. One of my worst meals ever. Baumé is superb, however.)
The Bay Area isn't uniquely bad. It just isn't uniquely great either. It's a nice place to live. So are lots of other places. There are some great restaurants. There are some great restaurants in other suburbs, too.
That's a little hyperbolic... some places in the midwest can be outright hostile towards certain types of people. That's a completely legitimate concern regardless of political affiliation.
Yeah - so this same list can be marked true for places in and around HCOL areas of CA, NY, Insert any other "desirable location." Your sentiment towards the Midwest is de-constructive.
No, not any worse than they would wherever you're at, yes, and no.
There is no "gotcha" to life in the Midwest, the cost of everything in coastal cities is just ridiculous. You don't have to be surrounded by luddites and people who hate minorities to buy a house for less than $2.6 million.
For that matter, while a city like Boston in the Northeast is expensive, you can drive or take a train less than an hour and be in towns where there are decent houses to be had for a few hundred thousand dollars. (Yes, there are expensive towns too.)
If you believe this, you must be living in a bubble. This will be akin to someone from the midwest not wanting to move to California because of drug-loving hippies. It's kinda a gross generalization.
Have you ever actually visited the midwest or are all your negative stereotypes based completely on the casually accepted discriminatory comments you've read online?
To answer your question- people of color would be treated identically to white people. You do realize the racial history of the midwest is safehouses for the underground railroad and soldiers for the Union army during the civil war right? And that Iowa legalized gay marriage years before California.
There are good and bad people everywhere, smart and dumb people everywhere. Negative stereotypes based on city, state or region are just as bigoted as any other stereotypes.
Chicago had the first LGBT-friendly community in the United States. They were out and proud long before Stonewall. Illinois was the first state in the country to repeal its (unenforced) sodomy laws.
California, on the other hand, elected Ronald Reagan as governor in order to "send the welfare bums back to work" and then re-elected him because they loved that he banned black people from carrying guns.
When I had a house in Claremont, CA I often found myself traveling a lot. I used to play the "what will my house buy here?" game. Invariably it was always something much nicer, but I liked living in Claremont. I lost that house to unemployment in the 90s recession/housing market crash. Every so often I'll look at it on redfin. It's been improved a fair amount since then, but not so much that it seems like it's really worth 5 times what I paid for it in the 90s.
From https://www.usinflationcalculator.com I get that the value of the house should have increased by 92.4% from the purchase price in 1993. The last sale (four months ago) was up by 438%¹. It gets worse if I go from the sale price in 1997 where inflation shows 73.2% but the increase was 525%
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1. To be explicit, the house sold for 5.48× more than the purchase price.
A friend of mine lives in a 2k person town in Wisconsin, about a 30min drive from Madison. The house next to his is on the market for ~$100k (3 bed room, in need of some maintenance).
It some ways it's unreal that a house can be that cheap, but considering that I'm not even buying at that price is probably the reason why its that cheap.
It's not the house but the land. I've seen rundown shacks where I am sell for $1.5m because they're nice allotment size against a large lake. New owners knockdown the shack and put up a new build.
Salary differences are huge, though. I recently got an offer for a $100k perm. raise + relocation benefit on top of that to move to Mountain View - and I'm not in a cheap city. My current company as well, if you move somewhere cheaper in the current remote work environment, they cut your salary.
It looks like they way under priced it on purpose. Zillow shows comps over the past year in the same neighborhood: 2.19M, 2.6M, 2.3M, 2.19M, 2.52M. This one is a bit smaller, but expecting a sale in that range given the other sales is not noteworthy. (The article calls this out at the end: "the median sales price of a single-family home in Sunnyvale is $2.375 million" and this one is $2.68M)
The realtor's going to say: if you underprice then you'll get more offers and have a chance of starting a bidding war, which could put the sales price even higher than if you'd priced it more realistically.
It seems like a pretty clear-cut case of self-interest. And in this case, it looks like it worked.
I've had a similar conversation with my agent in the past, and the answer was to create a bidding war. Once you have one real offer you can go back and counter to all of the others to see if they'll go up, and then rinse and repeat. That isn't a story too hard to sell.
The other thing about this one is that it was fixed up, so it could have been a flip. However I didn't go track down the real estate records to know for sure.
You don't have to sell if someone offers asking and you are nearly guaranteed to get significantly more. The asking price is effectively meaningless at this point.
Remember that you need to assume that every counterparty is an asshole in anything real estate, and everyone who isn’t your attorney has a grift.
You can use underpricing as a tool to hide problems with the house. If you have a lot of offers with what is a closed auction, you control the flow of the process and avoid learning things that have to be disclosed.
If you “suspect” that you may have mold, foundation problems, lead paint, asbestos, or other problems, you can use the offer flow to cherry pick bidders who don’t demand inspections or cash bidders who don’t have a bank or other party looking for due diligence. Your real estate agent may want to steer business to preferred partners for kickbacks or to ensure that certain home inspectors get used.
If you price for the amount you expect it to sell for you might only get 1 or 2 offers even in a hot market. That can still work, you can get a great offer you are happy with right away. But there is a significant risk that you won't get an offer you are happy with without this competition. A buyer who is willing to pay $2.5m might only offer $2.2m if there is no competing offer. You need to keep the home listed for a few more weeks until you get a better offer or more competition.
If you put in a lower list price you will probably get 5+ offers, you can either pick the best one, or counter offer a few, and you can be almost certain that you will be under contract by mid next week if you list on a Thursday or Friday.
Most people are also buying a home at the same time, if they are moving to another high cost area a delay of a couple weeks on the sale of their home can cause a lot of problems with their purchase.
The asking price thing really messed with my mom's mind. She was trying to buy a home and everywhere she read she had to bid at least 25% over asking. And then she just added 25% to each listing and considered what was in her price range. It was really hard to convince her to make an actual estimate of the house's value and make a bid according to that, disregarding the asking price and the dumb 25% rule.
It was super stressful but eventually she succeeded.
This has been standard practice in Sweden since the early 2000s. No one ever sells at the sticker price, the apartment is shown Sunday and Monday, then a 2-3 day bidding war breaks out and the sale closes on Wednesday.
If the bidding war isn’t as successful as the seller wants the apartment is taken of the market for a week and then reappears with at 30% price jack and a title that says “fixed price! First come first served”
When I lived in Sunnyvale and worked on Kiefer Rd, making Sunnyvale paper, I wouldn't call chili's a night out. There was all kinds of excellent Asian food, loads of Indian grocery stores/bakery/sweetshops and strip clubs weren't bad.
Is it common to use the forward slash as a separator between sq and ft? My physics brain reads that as squares per foot, which doesn't make much sense.
Meanwhile, a 4,826 sq/ft house in Los Altos Hills sold for almost $2 million above asking (~35%) after 16 initial bids and a bidding war among 3 of those bidders.
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[ 4.0 ms ] story [ 24.6 ms ] threadI'm one of them :/
Minneapolis, Madison, Milwaukee, Detroit are all fun cities too. I say this as someone who went to college in Boston/NYC and lived all over the Acela corridor and London.
To the last point, there are a lot of people, especially on the West coast who really can't imagine living anywhere with real winters. To be honest, you don't hear much about Boston either although I think it's something like #3 in VC funding and has a lot of tech of various kinds.
It’s also an old place with weird enclaves unknown to outsiders. You may find your lovely townhome is adjacent to a superfund site.
Who views it that way? People who have never been there and also know nothing about it? People who have never left California?
I kid, but seriously, many of us have actually been to other cities across the United States and the world and have appreciation for them. There are many places I would be happy in besides the SF Bay Area. I would be able to find friends and good microbreweries and good craft coffee, cocktail bars, interesting cheap restaurants, interesting expensive restaurants, museums, nature hikes, the whole shebang. Some of my absolute favorite examples of each of those are outside the SF Bay Area! It's simply that so far, I haven't found a metro area (at least in the US) that can combine a similar concentration of such places with a comparable climate, tech job market, and markedly cheaper cost of living.
In addition to the weather (which really isn't that bad), part of it is I think that a lot of people with SV companies tend to think of tech as "what SV companies do" which naturally leads to them seeing less "tech" in other places. (Though there are sizable outposts of quite a few West coast employers at this point in addition to the home-grown ones.
Tech actually in the city was almost non-existent for a long time. Hence the Route 128 computer companies. But that's shifted a fair bit again over the past 20 years.
Instead of your land appreciating by a few hundred thousand, it might only appreciate by a hundred thousand, which is a decent difference in return for many people.
Obviously, that is offset by needing less cash upfront, but it does make the CoL calculations less obvious in favor of Chicago.
Of course, this opportunity cost only exists if you have the opportunity to choose between two or more locations.
Plus you get to live in it. Plus you get CA amenities (value dependent upon individual preferences, but obviously valued very highly amongst people with money). One of those CA amenities is very worker friendly non compete laws and strict limitations on what employers can claim is theirs, a not insignificant benefit for knowledge workers in my opinion.
I'm far better off buying a $300k house than having $60k in investments but those comparisons become a bit more fuzzy at these 7-figure numbers.
Popular California land is a very unique asset.
People buying $2.75 million homes in Sunnyvale are largely either working (knowledge workers dependent primarily on wage labor) or middle (petit bourgeois; independent business owners and workers with mixed dependency on wage labor and capital investments) class.
True, but New York City has a per-capita municipal debt load double Chicago's, Connecticut and New Jersey are really the only two states in more dire financial straits than Illinois and for the pleasure of living back east I get to pay what seems like an order of magnitude more in taxes and housing costs.
And obviously California is California. Loved, loved, loved it when I went to college in Los Angeles but have no real desire to ever work there. Maybe once I make my 50th million I'll be on the next flight out.
Once climate change starts destroying the coasts and warming the interior, we'll see how bad the hick midwest really is :)
But also a higher per capita GDP and faster economic growth.
Different ideas of fun abound, but I doubt the people getting nervous at the uptick of crime in California cities are much interested in Detroit and it's second-highest-in-the-nation rate of violent crime.
The other thing persistently lowering quality of life all over CA besides water getting scarce and high taxes is the wildfire smoke. There are benefits to CA, but there are definite downsides.
A house in Texas comparably priced to yours is probably 14 acres in central Dallas.
Primarily the dire lack of housing and the local politics that keep it from being built.
Granted, you'll always be able to get more land in the midwest, but the lack of homes is a policy choice.
All reasons I will never live in California. My ideal is four seasons, generous servings of rain and snow throughout the year, ideally never above 60 F, and not worrying about water. I do whatever I can to encourage people to keep flocking to NYC/LA/SF/etc so they stay out of everywhere else
Go where you are happy, spend as much as you want. Sunnyvale is a cultural desert compared to the Twin Cities, Chicago, Detroit. And on its way to being a real desert too.
I love the Bay Area, but suburbs are suburbs.
Edit: I checked; it's not quite the closest "fine dining", but there actually is one a short walk away =)
The Bay Area isn't uniquely bad. It just isn't uniquely great either. It's a nice place to live. So are lots of other places. There are some great restaurants. There are some great restaurants in other suburbs, too.
BRB, going to meet a friend for lunch at Chili's.
There is no "gotcha" to life in the Midwest, the cost of everything in coastal cities is just ridiculous. You don't have to be surrounded by luddites and people who hate minorities to buy a house for less than $2.6 million.
To answer your question- people of color would be treated identically to white people. You do realize the racial history of the midwest is safehouses for the underground railroad and soldiers for the Union army during the civil war right? And that Iowa legalized gay marriage years before California.
There are good and bad people everywhere, smart and dumb people everywhere. Negative stereotypes based on city, state or region are just as bigoted as any other stereotypes.
California, on the other hand, elected Ronald Reagan as governor in order to "send the welfare bums back to work" and then re-elected him because they loved that he banned black people from carrying guns.
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1. To be explicit, the house sold for 5.48× more than the purchase price.
It some ways it's unreal that a house can be that cheap, but considering that I'm not even buying at that price is probably the reason why its that cheap.
The realtor's going to say: if you underprice then you'll get more offers and have a chance of starting a bidding war, which could put the sales price even higher than if you'd priced it more realistically.
It seems like a pretty clear-cut case of self-interest. And in this case, it looks like it worked.
The other thing about this one is that it was fixed up, so it could have been a flip. However I didn't go track down the real estate records to know for sure.
You can use underpricing as a tool to hide problems with the house. If you have a lot of offers with what is a closed auction, you control the flow of the process and avoid learning things that have to be disclosed.
If you “suspect” that you may have mold, foundation problems, lead paint, asbestos, or other problems, you can use the offer flow to cherry pick bidders who don’t demand inspections or cash bidders who don’t have a bank or other party looking for due diligence. Your real estate agent may want to steer business to preferred partners for kickbacks or to ensure that certain home inspectors get used.
I would prefer if all the negotiations were public though.
If you put in a lower list price you will probably get 5+ offers, you can either pick the best one, or counter offer a few, and you can be almost certain that you will be under contract by mid next week if you list on a Thursday or Friday.
Most people are also buying a home at the same time, if they are moving to another high cost area a delay of a couple weeks on the sale of their home can cause a lot of problems with their purchase.
It was super stressful but eventually she succeeded.
If the bidding war isn’t as successful as the seller wants the apartment is taken of the market for a week and then reappears with at 30% price jack and a title that says “fixed price! First come first served”
(I'd argue that highest asking price would be a better comparison, since the seller might have dropped the price. But still useful.)
[1] https://www.redfin.com/city/19457/CA/Sunnyvale/housing-marke...
https://www.redfin.com/CA/Los-Altos-Hills/25680-Elena-Rd-940...
https://www.mercurynews.com/2021/12/02/even-less-affordable-...