Tagged: Silicon

Silicon Valley’s Ultimate “House Robbery”

The people of Silicon Valley are climbing a mountain, an invisible mountain. The name of the mountain is Silicon Valley Housing Prices.

Silicon Valley's Ultimate "House Robbery"

“I finally bought a house!” Litchi couldn’t help but “scream up to the sky” in the circle of friends.

In the recent wave of Silicon Valley housing looting, Litchi can be said to have been defeated repeatedly. Every time he watched his favorite house being bought by others at high prices.

After carefully adding 70,000, 100,000, and 130,000…every time she missed the house, this time, she decided to increase the price by 280,000 dollars in one go, and she was about to take down this detached house in San Mateo. . The house was finally robbed, and the wallets of the young couple were quite empty.

Sitting on the floor of his new home, Lychee felt a sense of emptiness after the war. When she bought a house in Silicon Valley for the first time, she never thought that she would join a group of people holding up cash to fight for the house.

“I’ve grabbed it anyway, and many of my friends around me are still running around to check out the house every day, and I can’t buy it even if I keep increasing the price.” Litchi told the Silicon Stars.

The lychees who got the house at the beginning of this year belonged to those who ended the battle early. As she said, many people who buy houses in the Bay Area are still exhausted, looking at houses, bidding, writing offers, and being rejected again and again. Those involved in this house robbing battle are exhausted physically and mentally.

In the first half of 2020, many people thought that the previous housing prices in Silicon Valley were exaggerated, and technology companies are also leaving Silicon Valley one after another. Housing prices may fall by a wave; however, in the past six months or so, housing prices in many parts of the Bay Area have been reduced. The price has soared by 10%-20%, and there have also been many legendary robbing stories.

And this, according to the prediction of real estate dealer Zillow, is just the beginning. The story of skyrocketing housing prices in the Bay Area, which has appeared several times in the past ten years, has once again been staged.

|The comeback of “house grabs”

Last year, under the impact of the epidemic, the housing market in the Bay Area also entered a short cooling-off period. In the first two quarters of 2020, housing prices in Silicon Valley generally fell, and even dropped to the lowest point in recent years in May and June.

But this situation did not last long. Starting from the third quarter, except for downtown San Francisco and surrounding areas, housing prices in other parts of the Bay Area have gradually recovered. Especially since the end of the fourth quarter, there has been a new wave of housing looting.

Even in the winter when the number of new crown cases has surged and most people are still at home, it has not been able to stop the enthusiasm of people in the Bay Area to buy houses.

Housing prices have risen accordingly, and houses with similar locations and conditions often happen at a price per month.

Awei, who works as a real estate agent in Silicon Valley, told the Silicon Stars that she only helped a client place an offer for a detached house near Alameda in November last year. At that time, it was sold for 1.42 million. The result was less than a month, the same street, the same apartment. The house sold for 1.58 million, and the transaction price at the beginning of February this year has reached 1.72 million.

“It’s really an exaggeration. Almost all of the rooms we looked at before have more than 20 offers. My agent also said that she helped clients place more than 60 offers in a room two days ago.” Litchi is right. The Silicon Star sighed.

This is the first time for a young couple in Litchi to buy a house in Silicon Valley. They have no actual combat experience. They once naively thought that adding about 100,000 to the seller’s asking price would be very competitive.

The first house they saw was in the Oakland Hills. Lychee especially liked it. The house was close to the company of the young couple. The community environment was also very good. The most important thing was that through the large French windows in the living room, one could see the distant view at a glance. The Golden Gate Bridge, Bay Bridge, and the towering Salesforce Tower in downtown San Francisco.

Picture: The view from the favorite Auckland house in Lychee
“We went to see the house three times before and after. The more we looked at it, the more we liked it. Later we started discussing how to decorate it after we moved in. We were confident that we increased the price by 150,000, but we did not expect that the price we gave would be the bottom. Knowing that I didn’t buy it, I cried.”

Litchi said that she completely underestimated the enthusiasm of other buyers, and every time she thinks about it later, she regrets that the bid at that time was too conservative.

“In fact, we can also afford the final transaction price of the house, which is very regrettable. Therefore, when we place another offer, we will let go and increase the price, usually with an increase of 200,000. And we don’t dare to go all the time. I’m looking at the house, I’m afraid it’s the same as last time, I like it but can’t buy it.”

However, even if the price is increased by more than 200,000 yuan, it is not possible to buy it if you want to buy it. In the two subsequent bids, they were defeated in the fierce competition of more than 20 offers.

At that time, the Christmas holiday was about to begin, so they decided to take a rest, review the experience and lessons, and wait for the start of 2021 to fight again.

After missing the house of their choice, Litchi learned his lesson, and no longer had a chance, thinking that he could pick up the leak, but started to increase the price when he saw the one he liked. Under this strategy, they defeated more than 10 offer, bought a house you like.

The story of lychee is a microcosm of recent Silicon Valley homebuyers. Everyone is throwing money crazy for the house they like, and an increase of RMB 3 to 400,000 is an unusual case. “I feel that the overall buying sentiment in the Bay Area is going up, but in some places it has risen so much that we feel it is too exaggerated.” Awei said.

“No one will be so crazy as soon as they come up, but after your rationality makes you miss it a few times, you realize that only if you try your best to reach your price limit every time, you have a little hope.” Friends who are also struggling to buy a house recently sighed on social media.

| Fight the bottom line, fight for cash, fight for cruelty

People in this round of house robbing have gradually reached a consensus: Money is not enough.

Who has gone through so many unicorn IPOs in 2020-2021 and the stock prices of so many technology companies soaring in Silicon Valley, who can’t have any money in their hands? In this fierce competition, whoever has low requirements for a house, who has more cash, and who is willing to pay a high price, is likely to win the battle.

Not long ago, the transaction price of the “small black house in the Bay Area”, which is highly sought after by home buyers, has once again refreshed people’s perceptions.

This house in Sunnyvale, built in 1930 and measuring only 667 thousand feet, was sold for a sky-high price of 1.3 million US dollars on February 16.

Picture cut from Redfin website
Let’s take a look at the interior of this house. How about this broken floor and rusty furniture? I’ll give you $1.3 million. Would you like to buy it?

Picture cut from Redfin
What’s even more amazing is that the asking price of this house is only 800,000 US dollars, that is to say, the buyer has added more than 60%-500,000 US dollars to grab this house from a group of competitors. .

But even the location of this house is not very good. A familiar friend told the Silicon Stars that the street where it is located can only be considered a middle-lower in Sunnyvale. However, the big advantage of this house is that it has a courtyard of 7,660 thousand feet. Therefore, it is not bad to demolish the small black house and build a new one. However, considering the expensive labor costs in the Bay Area, rebuilding also requires a total of US$400,000 or US$500,000, which makes the total price of the house nearly US$2 million.

With this momentum, the sellers laughed at the bidding, and the buyers had to carry out the ultimate “involution” competition.

A friend of the Silicon Stars revealed that some people sold their two small companies not long ago, thinking about an increase of US$150,000 to buy a detached house in Burlingame, South Bay. Unexpectedly, the final transaction price of the house was completely higher than the asking price. 900,000 U.S. dollars. In Fremont, a 26-year-old guy only became the winner of dozens of offers with an increase of $600,000 and all cash.

Townhouse, which was not so popular before, has also risen recently. In the first half of last year, you could still buy a relatively new townhouse in South Bay Fremont for RMB 7 to 800,000. Now, all the new townhouse properties opened in Fremont are more than RMB 1 million, and they still have single parking spaces.

“I just bought a Townhouse for a client in the Vietnam area of ​​San Jose, and the final transaction price was just over $1 million. I managed to grab it. When the house was put up last year, it was 800,000 that nobody would look at.” Awei said.

In fact, in areas like Sunnyvale and Santa Clara that are already popular in Silicon Valley, houses are sought after and housing prices are rising within an understandable range. But recently, in areas that are more remote from the core of Silicon Valley and more like the “rural” that everyone calls, the skyrocketing housing prices are shocking.

“You know Tracy Valley? It’s more east than the East Bay Outlets. It takes 2 hours to drive from San Francisco during peak hours. Who would think about it before? But recently it’s been a mess.” Awei Say.

“We drove to see the house, it was really a veritable rural area, along the way with cattle farms, orchards, windmills and traffic jams, the air was filled with the breath of grass and pastures. Because the owner was old, he was on the market for five days. Among them, only two inspections were opened in the afternoon. Who would expect to receive 16 buyer offers immediately.”

Figure Location of Tracy valley
Although Awei felt that he should make a formal bid after the inspection, there were too many buyers to have enough time to make a detailed decision, so he immediately placed a clean offer of US$1 million for the client.

What is Clean offer? That is, if the house cannot be inspected, a bid without regret is given. For example, if the loan is not approved or there are special circumstances that need to be changed later, the buyer’s previous deposit will not be refunded.

“The price of that community was 60,000 to 700,000 a few months ago, and the transaction price was only 800,000 a few weeks ago. We already felt that we were taken advantage of by giving a clean offer of 1 million at that time. I didn’t expect that the price was not exciting at all. After a little splash, I later learned that not only the price should exceed 1 million yuan, but also a one-time payment in cash for hope.”

Awei said that many houses in large rural areas around Silicon Valley have now become “sweet and pastry”, and house buyers have swarmed in and sold the houses of hundreds of thousands in the past to more than one million.

| The 2021 rally continues, and the city center turns into a depression of value?

The real estate rush that started at the end of last year did not seem to stop this year. The entire Bay Area real estate market is still under a “seller-led” situation.

The following is a set of real estate dealer Zillow recently released a set of housing price statistics and forecast data in the Silicon Valley area:

“House prices in the San Francisco Bay Area have risen by an average of 5.8% in the past year, and it is expected that house prices will continue to rise by an average of 9.3% in the next 12 months;

House prices in Alameda have risen by 7.8% in the past year and are expected to continue to rise by 10.5% in the next 12 months;

House prices in Santa Clara have risen by 14.4% in the past year and are expected to continue to rise by 11.9% in the next 12 months;

House prices in San Mateo have risen by 2.1% in the past year and are expected to continue to rise by 9.5% in the next 12 months;

House prices in Napa have risen by 7% in the past year and are expected to continue to rise by 9.5% in the next 12 months…”

In short, although last year’s epidemic was so severe and the real estate market suffered a severe setback in the first half of the year, housing prices in most parts of the Bay Area will continue to rise in 2020, and the increase in 2021 may be even greater than that in 2020. Big.

But it should be noted that not every place in Silicon Valley is rising. For example, housing prices in downtown San Francisco and surrounding areas have continued to fall recently, and have even fallen back to their lows in recent years.

Housing price trends in major areas of Silicon Valley, the picture comes from Zillow
“The price of the Condo bought by my relative in San Francisco dropped from 1.2 million to 950,000, and the rent fell from 4,500 US dollars a month to 3,200 US dollars. This wave was mainly affected by telecommuting after the epidemic. Many used to live in the city center and Everyone from the surrounding area went to the surrounding area to buy a house.” Awei told the Silicon Stars.

As a result of the COVID-19 pandemic, home prices and rents in downtown San Francisco and nearby areas have begun to plummet. According to Realtor’s statistics, as of the end of 2020, rents in San Francisco have fallen by more than 20% on average, while the prices of Condo/Townhouse houses are average A drop of more than 10%.

“Although many people don’t put distance as the main consideration and go to the suburbs to buy houses, I personally feel that as the epidemic is brought under control and everyone’s lives slowly return to normal, the housing prices in San Francisco will rise again. The fire is like that, it’s time to buy the bottom in the urban area.”

Awei believes that telecommuting may exist for a long time in the future, but in the long run, compared to Tracy Farm, where the weather is hot and dry, San Francisco, where life is convenient and the scenery is pleasant, will be more “sweet” in the long run.

Since the third quarter of last year, the housing sales rate in San Francisco and nearby areas has indeed begun to rebound, showing a trend of increasing day by day. Many people have begun to take advantage of low prices to start with much lower prices.

In fact, buying a house is the same as buying stocks. Sometimes you think you are buying the bottom, but you may be on the hillside. Sometimes you think you are buying on the top of the hill. Maybe you are standing on the hillside.

In the past ten years, Silicon Valley’s housing prices have repeatedly experienced “big storms”. Under the subprime mortgage crisis in 2008, the situation of Silicon Valley housing prices being cut in half and mourning may still be vivid for many people, but those who had the courage to take over are now also Relying on a few suites in Silicon Valley to live a carefree life.

The economy has cycles, and so does the housing market. And whether this new wave of “house grabbing fever” is being staged, is it a short-lived boom or the prelude to a real estate bull market? Only time can give the answer.

But in the face of fanaticism, being rational and full of vigilance is the self-cultivation of an old Silicon Valley person.