Wednesday, July 25, 2018

Maybe it won't spread.....said in the most sarcastic way.

More bad housing news out of California: San Francisco Bay Area June home sales plummet as prices surge.

I'm a huge housing bull, but what I've been seeing lately makes my eyes grow large. It's time for a pull back. I was curious where "the surging prices" were happening. Because I think that is temporary.

I was sort of curious how the cities around me were faring. My city is definitely in price reduction territory.

Silicon Valley proper is still holding up. In Fremont the average time on market is still 9 days. No markdowns. But they are set to bring a new development on line relatively soon. We will see how long that holds up because it's pretty massive.

However, once you get into the bedroom communities, there are a lot of markdowns. I didn't check them all, but I checked the next city inland, and the next one after that. Both have price reductions on a lot of stuff. These are also the communities where you have to spend hours on the freeway to get home these days. People working in my town are commuting an hour and a half to get to my bedroom community. It's normally a 30 minute trip.

The other thing that is really perplexing is the general makeup of new construction in all of these cities. I haven't really been paying attention to it much before, but a lot of cities including my own are putting up a lot homes on the really high end. There is a crazy amount of 3000+sq feet inventory coming on which is sort of your more high end buyer. This segment of the market seems to be showing a lot of build up because of this.  And of course, these houses generally take longer to sell. You just kinda need a big family or absurdly large furniture.

So I guess McMansions are back. I don't care one way or another about McMansions, but during the housing crash everyone said we would never see those again. And yes, the definition of a McMansion is anything over 3000 square feet. Google it.

What really made me start paying attention to this is my city let a developer tear down a school. I'd never seen happen before. They promptly started putting up houses. But I just found out those houses are like 3000 square feet and that neighborhood is slightly run down for that type of construction. Most of the other houses are half the size. It isn't a bad neighborhood, but if I'm spending money on a house that size you don't want to look across the street and think - clean yo shit up.

Of course,  the neighborhood got a huge gift because all of their house prices just went up, and they can fix their places up now and feel like they can get a return on it. It's just an odd place to put big houses though.


  1. Where they took down the school to put up 3,000 sqft homes, what is the average price of a preexisting home in the area? Do the prices make the places a home you had to have bought 40 years ago to be living in today?

    Back in March my new bride & I were in Calif looking at places we used to live when we were kids, my stuff was the Torrance- Redondo Beach area of SoCal, her's were in Los Gatos. Those houses today are really expensive for "just a house". I remember when a million dollar home was FAR more than an ordinary tract home.

  2. The houses in that neighborhood go for 7-800k depending on condition.. The new McMansions go for 1.25ish. So I would say yes. These things are also 5 bedrooms, and that is not your typical market.

    Los Gatos has always been out of reach to most of us. That's old money. If she grew up in Los Gatos she's pretty swank. Good job. They do have some rent control in Los Gatos though. But even if you could snag it, you could never drive anywhere. Los Gatos is just crushed with traffic these days.

    Next time you are round the Bay Area shoot me a line. We could do a beach trip. ;)

    Yeah, it's super freaky that every house is touching a mil these days. I never wanted to live in one because they are hard to get rid of. But now I do. But so does everyone else almost.

  3. Mind you... my neighbor who had the husband die bought their house for 33 grand.

  4. My wife lived there in the early 60's, it was Saratoga (I just asked). I was in LA in the late 60's before we moved back to the bay area. Terra Linda High in San Rafael, class of '71.

    I have a son & grandkids out by Santa Cruz & my great grand parents are buried in Santa Cruz. Turned out it's a small world...

    The beach sounds like a fine idea!

  5. Capital of Texas Refugee and Future California Criminal Straw-ManMonday, July 30, 2018 2:17:00 PM

    My grandmother went back to find her old high school many years ago ...

    She couldn't find it, and most of the people in the area couldn't tell her where it was, but she absolutely knew it had to be in that particular spot.

    Eventually she found someone around her age (very old) who knew that her high school was in fact where she had been standing.

    Her old high school wasn't replaced with houses, however.

    She had been standing in the middle of a surface parking lot.

    Remember the song "Back to Ohio" by The Pretenders?

    They weren't making that shit up.


    I just bought ten thousand straws so I can send some big-ass boxes of them to friends in the UK where they're being banned by flatulent eco-terrorists who want to boss people around because they're losers.

    Get me the names and home addresses of everyone on the Santa Barbara city council and I'll see what I can do about an "anonymous delivery" of one hundred thousand plastic straws.

    Would that make me the biggest criminal in California history?

    I'm just asking so I can make one of my lawyer friends choke on his coffee the next time we have a chat. :-)