It’s not unusual to have your friends tell you you paid too much for your home. It is unusual to have your local newspaper tell you you paid too much for your home.
The latter happened recently to buyers caught in the act of paying almost $800k over the list price for a “humble” house in “once modest” Sunnyvale. To one newspaper editor looking for a catchy I’m-mad-as-hell headline this unpardonable act of commitment to Silicon Valley made them the poster family for everything wrong with our housing market.
“Now this is ridiculous: $782,000 over asking for a house in Sunnyvale” generated 255 online comments and a surprisingly sane discussion of how tech money is raising the cost of housing in the Valley. The story was picked up by KPIX, the Denver Post, a North Carolina TV station and, for all I know, the Namibian Sun.
Welcome to the neighborhood!
I’d share in the general indignation except that I’ve seen this sort of thing since 1998–the “crazy” overbids and the media’s open-mouthed reaction. Land sakes, Ma! That’s why it makes perfect sense.
With 20 offers, a home listed at $1.688M is going to sell for well over $2M in any kind of healthy Silicon Valley market. The only question is how “well over”. According to the well-researched article–I doubt it was the reporter who wrote that rabble-rousing headline–the winning $2.470M offer wasn’t an outlier–there were others close to it. And next door, in Los Altos, the home would have sold for over $3M, not that this matters, but it sorta kinda does.
Key factors in the bidding:
- huge 13,068 sq.ft. lot
- four bedrooms
- two baths
- highly-regarded schools, and
- the chicken tenders the listing agent serves at his open houses
Sellers, this stuff is better than staging!
Note that I’m just now getting around to mentioning that the house is close to the new Apple campus. It took KPIX just two seconds to credit the overbid to “the Apple Effect”, even though there’s no indication the buyers work at Apple. It’s just the media’s usual attempt to turn the real estate market into a superhero cartoon.
It’s a bird! It’s a plane! It’s a foreign investor! No, it’s Appleman!
No, what drives home prices here are people who may be a lot like you: smart highly-educated tech workers and their camp followers. People who, like these buyers, are committed to putting down roots and can afford to do so. People who often have to lose a few times, as these buyers did, before they can make a winning offer.
People who have a long-term perspective, and know that–or at least strongly suspect that, or may not even care if–in ten years their “ridiculous” overbid will look plenty smart.
copyright © John Fyten 2017