My friend’s home in Palo Alto tripled in value in 10 years!

[Anonymous]

Friends in Palisades bought 8 years ago for $1.9M and just sold for $3M. So, nothing like Palo Alto, but nothing to sneeze at either.

[Anonymous]

Pimmit Hills. $1m for a new build 3 years ago. Now $1.6m for a new build. Could easily be at $2m in 2 years. So that's a doubling in 5 years time.

Part of this growth is imaginary, though.

[Anonymous]

Unless you lived in California it's hard to understand how the market works there. First you have proposition 13 which freezes property taxes, which are already low to start with. This creates an enormous disincentive to sell, which reduces inventory. Second you have enormous windfalls of wealth. When Facebook went public, all of a sudden you had a few hundred people in Palo Alto/Menlo Park/Atherton who all just received a $5m+ bonus. I was there at the time and all of a sudden every open house would be filled with FB employees. Multiply that by fifty other IPOs that came afterwards (and now a $5m IPO windfall is on the lower end) and that's how prices 3x in 10 years. The only constraint to SF real estate prices is the fact that it became too expensive to live there, and therefore too expensive to recruit new talent there, so companies started to open satellite offices elsewhere (Seattle, LA, Boston, NY, Denver, Austin) which took some wind out of the sails.

[Anonymous]

On a much smaller scale, but I bought a 2-bd, 1 bath condo in Arlington in 1999 for 120K and sold it 5 years later for $380K.

[Anonymous]

Live in MoCo and have owned for 12 years. My home has appreciated by approx 10-15% lol

[Anonymous]

Smaller scale, but our home value tripled on th eastern side of Shaw in 10 years (bought at $400,000, now neighboring identical homes selling at $1.3 million).

[Anonymous]

Anonymous wrote:Friends in Palisades bought 8 years ago for $1.9M and just sold for $3M. So, nothing like Palo Alto, but nothing to sneeze at either.

This seems the closest we have to 1M properties appreciating. The cheap stuff east of rock creek may have tripled, but off a much lower base. Remember going from $0 to $5 is an infinite appreciation.

[Anonymous]

Anonymous wrote:Smaller scale, but our home value tripled on th eastern side of Shaw in 10 years (bought at $400,000, now neighboring identical homes selling at $1.3 million).

Our house in Truxton Circle nearly tripled too according to Zillow but it needs to be gutted with all new plumbing, electrical, sewer, etc. if we did that it’ll be similar to the 1.4 mil houses on the block.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:That's a 12% y/y rate of return.

The stock market more than tripled in value in the last 10 years -- the sustained rise that started under Obama (once the financial crisis was over) and continued until today interrupted only by COVID.

S&P was 1,200 in 2011, and is around 4,000 today.

Ok let's assume you are right.
What you don't understand is that real estate is a leveraged investment.
Buy a $1.5m house, put 20% down ($300k). House triples in 10 years ($4.5m). Your profit is $3m. You have 10x your investment. That's called leverage.
The same $300k invested in the S&P would have given you a 3.5x return on your investment at best.

That's true, of course.

But leverage has more risk too: more risk of downside. If the house went down to $1.2 M in price, when you tried to sell, you might owe money.

There's no such thing as a free lunch. Buying a home is a leveraged investment. If the market is going up as it has recently, great. If it goes down that's not great.

[Anonymous]

Suburbs of San Jose like Los Gatos and Los Altos are crazy too. My friend bought for $2.5 million 4 years ago, and just sold it for $4 million. The house isn’t very big nor updated. Lot is really nice though. The market is just crazy there.

[Anonymous]

The tech stock market yields a lot wealth too. People ended up making hundreds of thousands more in income because the stock value on the number of shares they negotiated a few years ago skyrocketed.

There are multigenerational families that pool their cash.

Foreign investment is also pretty high. Wealthy Chinese seem to park money in London and the Peninsula to South Bay.

Rents are still sky high. To rent a four bedroom house in Los Gatos it would be around 7 K a month, probably 8 K. Really nice larger homes are over 10 K a month. In Atherton and Los Altos there are rentals at 20-40k a month.

[Anonymous]

I just looked up my parents old house in Fremont in the East Bay. We sold after my mom died in 2017. We made $1m on the sale but we’re cheated by a realtor who was self dealing. The house is now estimated in Redfin to be worth $2.8. Insane indeed. My parents bought it around 2000 for $700k. Sold after death for $1.7, though buyer made a lot of demands so it was more like $1.6. Now worth $2.8. My parents were immigrants. They achieved the American Dream. We no longer have any Bay Area property sadly. Note to self: Don’t ever sell! Hold!

[Anonymous]

Tech stock really can fly up. In pandemic I got crazy lowballed on salary as unemployed but did get 50k sign on bonus in options. (3-year vesting). They are worth 300k now. We have folks at work from 2017 sitting on millions in options and RSUs. Many are between 26-34. It is free money not like our parents hard end money.

[Anonymous]

Nope, but I think some parts of LA did. I had a chance to buy a townhouse in Santa Monica, north of Montana for around 700K but I was young and an idiot.

This one was 1.5MM in 2004, on the market for 13MM now.

https://www.redfin.com/CA/Santa-Monica/233-Marguerita-Ave-90402/home/6781752#property-history

[Anonymous]

Does anyone think this kind of appreciation can happen. Ke that amazon is going to grow and set up shop? South Arlington and Alexandria have a lot of undesirable aspects (mostly schools) so maybe those markets will see a bigger boost of companies shift offices there instead of Reston and Herndon.

I can see growth here slowing but more sustained.