A 180 square foot shack in Palo Alto, with one bed and one bath, built in 1930, is currently listed for $1,998,000.
It's all about the land, of course (And Janet Yellen money pumping). The tiny shack sits on a 6,886 square foot lot,
The listing agent, Alex Wong of the Sereno Group tells potential buyers that the the city of Palo Alto “allows for above ground max floor area of approx. 2,816 sq. ft. not including possible basement addition,” reports the San Francisco Chronicle.
The estimated monthly mortgage payment to buy the land and the shack: $7,863, reports realtor Esately.
-RW
Under standard lending requirements (mortgage should be no more than a third of income), qualifying for that mortgage payment quoted in the article will require a monthly salary of $23,589, which translates to an annual salary of $283,068.
ReplyDeleteIt's possible for a software engineering power couple with 10+ years of experience working at financially successful companies to bring home a household income at this level. But the killer will be the down payment. 20% of $2 million is $400,000, which is a very formidable sum.
I wish I had some data, but my hunch is that the people who are buying homes in Palo Alto, Los Altos, and even Mountain View and Cupertino are those who won the startup stock lottery, either through IPO or acquisition, and can afford the down payment or, in luckier cases, could outright buy the home in cash. The down payments needed to purchase a home in an area of Silicon Valley with good public schools are a formidable, if not impenetrable, barrier for professionals working in the area. And as for the middle class, they're stuck between buying or renting homes in areas with mediocre to bad schools or commuting from faraway places like Gilroy and Tracy.
Hopefully the NIMBYism in the Bay Area, particularly San Francisco and San Mateo County, will recede so that more housing will get built to meet the demand. The housing prices here are insane.
I don't understand how the companies out there can still hire engineers from other places. It literally requires a complete liquidation just to come up with the down payment for a house. And it's not like the salary can make up for it in a few years, the entire increase and then some goes to pay the mortgage.
DeleteThe monthly mortgage is quite an amount for this small house. Don't think it's worth it.
ReplyDelete