Based on the houses near me, I doubt anyone will pay the asking price. They will probably pay more.
Unless the house has an issue, that is.
I live in the Bay Area, and that price doesn’t seem absurd to me at all. I live in a very unfashionable, middle class area, and house prices here are well over a million dollars. Palo Alto is a very fashionable high end area.
That’s just what things are like here.
Just sold my house in the Santa Cruz area (another Silicon Valley commute area). It sold in one day, for over $40K more than it was listed for. That is what the housing market is like there. Fookin crazy.
I live in a similar area( well one with some minor cachet )and those prices still seem absurd to me. I mean I live one of those houses and it seems absurd. The rental market even more so. And I’ve been in the Bay Area pushing four decades now. Which may be part of the problem - I can remember all to clearly what things went for in the past.
I totally accept that is the way it is from a practical standpoint and I understand the economics of why and all that. But my gut reaction will always be that it is absurd ;).
So that’s how a millionaire lives in Palo Alto, CA. Doing much better than I thought.
Yeah, someday Bezos or Zuckerberg will realize “Hey, if we just move our HQ to Pottsville, PA, our employees can buy huge victorian houses for $69,000!” Maybe FaceGoogAzonBook, Inc. saves a bundle on payroll (and healthcare and taxes), but even at if their salary’s less than in the Bay Area, the workers are way ahead.
Hey, Bezos or Zuckerberg or Pichai or Cook, if you move to Pottsville, give me a share of stock for giving you the idea.
ps: "Apart from being one of the most affordable housing markets in the country, Pottsville is also home to America’s oldest brewery. Heck, the Yuengling brewery here has been operated in the same building since Andrew Jackson was president.
from an article titled Tired of Big-City Squeeze?
I’m with Tamerlane. I grew up in the northeast US, and houses were reasonably priced. I live in a modest house and it’s silly what it’s valued at. Ikve been here almost 40 years and prices were always crazy high, but some new listings are absurd. Like in the OP.
My in laws are from Wisconsin, and when they moved here in the 1060s they were embarrassed to tell their WI family how much their modest house cost.
Ridiculous.
Yeah, in the 11th Century the prices were insanely high. 
Or to add them if your older house was getting its first furnace and/or water heater. There are a bunch of houses in our area with little basements that were pretty obviously added later. They have to be small to keep from undermining the existing raised foundations (or from having to completely rebuild the foundations).
As to the scarcity of land in the bay area, heck, they kicked out the dead in 1912. Google with the keywords Colma and cemetery to learn about it.
That’s just San Francisco, which has house price woes of its own. The rest of the Bay Area has cemeteries aplenty.
Some months ago of of curiosity I looked up 1-br apartment rentals in SF. The only district where the minimum was less than $3,000 a month was Outer Sunset, and that was $2,800; Marina it was $4,000. There are a lot of San Franciscans renting just a room.
That’s just San Francisco, which has house price woes of its own. The rest of the Bay Area has cemeteries aplenty.
Some months ago of of curiosity I looked up 1-br apartment rentals in SF. The only district where the minimum was less than $3,000 a month was Outer Sunset, and that was $2,800; Marina it was $4,000. There are a lot of San Franciscans renting just a room.
Oh, and Tamerlane, if you think a cottage in PA is the housing equivalent of a gold saddle with embedded Rolexes, I have a bridge I can offer you.
There’s a company offering what are essentially dorm rooms in San Francisco. For $1,400-2,400, they’re offering furnished rooms of 130-220 square feet. Bathrooms are down the hall (shared with a couple of other rooms). They’re aiming these at people making $40,000-90,000 annually.
A free bridge? I’d love a free bridge! I could charge tolls!
Sadly, it appears you are correct. Despite diligent searches on line, I couldn’t really find a gold camel saddle with embedded Rolexes to compare :(. However it does appear that a purchase price for a good racing camel starts at around ~$55,000, which you’d think I could then swap for this place in Sharon. A really top notch camel should totally be worth that home in Palo Alto :).
Did your in-laws know Willian the Conqueror?
Good lord, 2 million for a storage bin?
Lot is only 4k sq ft total? Heck my garage is near 4k sq ft, and it is nothing fancy at all.
For 2 million i could build you a house bigger than that whole lot sitting on several acres of yard and give you some of the money back.
Scratch Palo Alto from my list of prospective places to live.
There have been enormous variations in prices for a long time. There’s surviving ancient Roman writing complaining about how ridiculous the house prices were in Rome, saying that for the price of a hovel unfit to be a dog kennel in Rome you could buy a large, fine quality house with a large garden in most places.
I remember when I was living in London, back in the mid 1970s, that a space that had been a wardrobe sold for £38K nearby. In those days, you could have bought a large detached house in a nice area for that amount. It wasn’t anywhere near large enough to live in, of course. It was turned into what might have been the world’s smallest shop. That was ridiculous then, but it’s much worse now. For example, the average house price in the Kensington area of London is £2.2M. It’s £8400 a month to rent a small terraced house. That’s probably not even the most expensive - it was just the first one I found in the first area of London that came to my mind as an expensive one.
I’ve read that parts of Paris are even worse.
Oh — I meant the 1960s. In the 1060s they would’ve enjoyed Halley’s comet.
Doh.
Tokyo real estate prices went from a relative baseline of 100 to around 350 then back to around 100 for many years (with inflation adjustment a minor factor since also persistent national Yen inflation of approximately zero).
Some Japan related graphs here, blog piece written awhile ago
Some comparatives of more recent info of various Bay area municipalities
The Tokyo rise though was a lot quicker, 350 relative ca. 1987 when 100 only a couple of years earlier. The Bay area graph shows ~4+ fold nominal increase (inflation does matter more in this case) over ~25 yrs in the faster appreciating areas. Which isn’t as much as the anecdote given, there are always some higher cases obviously. My house, inner NY area, has increased ~5.5 fold since 1993 if you believe Zillow now (and I think it’s roughly correct), though again it’s comparing an anecdote to a general graph. That’s ~7% pa compounded nominal. Interesting thing is, the annualized rate is also in the 7’s using the then-owner’s estimate of the value of my house given in the 1940 census.
Overall the rate of house price appreciation should be something like inflation or even less, and more than one study has found it to be true, not even subtracting repair and capital improvement costs over the years. But much higher appreciation rates can persist in particular areas for decades, or there can be big drops. Impossible to know.
This is the wrong way to think about it, because nothing is lost there. Whoever used to own the painting can now spend that $40 million on parks and programs and whatever. The painting still exists and the money still exists. They’ve just changed hands.
Same with the house. Someone owns this itty bitty expensive house, and after it’s sold, someone else will own it. Sure, a little of the money that changes hands is going to end up spent in transaction fees, but most of the money is still around. Whoever sells the house can go do something socially valuable with it. Or not! But it’s not the same as, say, spending the money to fill a swimming pool with jello, or to set off fireworks. Consumption goods are actually used up. Fine art and property aren’t.
The idea that there’s not enough land in Silicon Valley is nonsense. There’s not much land in Manhattan either, but so what. We figured out how to stack dwellings on top of each other over a hundred years ago. The problem is that there’s not enough land for everyone to have detached single-family houses, and other forms of housing are basically illegal to build. It is entirely a political problem, not actual resource constraints.
I basically agree with all that but for two points:
-There is also an issue of potential overinvestment in property as in building, fixing up and renovating (whereas what you say I strictly agree with when it comes to land, somebody bought it, somebody else has the money, that’s all). And that issue is arguably connected to the some of the same factors as high prices. It’s not filling pools with jello, but it’s fixed investment in something which isn’t creating more capacity to produce other things as a factory or better road would. You can’t invest nothing in land improvements (ie buildings) but it is possible to judge what’s invested as too much. Whether that’s actually a big problem practically can be debated.
-Part of the reason housing is so expensive in places like NY and Bay Area is restrictions on building and land use. But part of it is also simply a virtuous or vicious, depending how you look at it, circle of greater concentration of ‘premier’ economic activity in those places which draws more and more talent, creates more and more wealth, but even with the most enlightened policies land is finite. Where I live right next to Manhattan there is simply no ‘solution’ to sky high housing prices except some paradigm shift away from the attractiveness of Manhattan. Once every ex-factory/warehouse/pier site in town has a high rise (getting close), you could start tearing down stone row houses like mine. But that doesn’t mean it would be a livable place, already bordering on overcrowded, besides factors like sewer, water infrastructure. Same for Manhattan by and large for a long time. It’s true there are places in the Outerboroughs of the City there that’s not quite as true and pro-housing policies might help. But the product would still not be ‘affordable’ in terms of normal incomes, just a bit less ridiculous than it is now.