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

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[quote=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.[/quote]

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