US real estate prices US house hype: Even billionaires have to wait

US real estate prices US house hype: Even billionaires have to wait

US real estate prices US house hype: Even billionaires have to wait

At least once a week a real estate agent calls my home in California: “Don’t you want to sell your house? I already have a lot of interested parties. “

These are the golden times for real estate agents. If they have something to screw up. For the first time in the summer there were more real estate agents than available properties. In California, the disparity is even greater. The Golden State, with its 39.5 million inhabitants, is short of at least three million homes due to bureaucracy, costs and local resistance to building projects. Governor Gavin Newsom has just given the green light for a new law. Plots previously reserved for single-family houses can now be built with several apartments. Newsom only signed the law after it was voted out of office. As liberal as the Californians like to be, they are conservative when it comes to real estate. The law is controversial because it puts even more strain on the already outdated infrastructure.

It is deficiency that drives prices up. When my wife and I bought our house from the heirs of our long-term landlord in June 2014, our region around Santa Cruz was an insider tip. Back then you could still buy presentable houses under a million dollars. The manager of the city of Palo Alto, who is responsible for affordable housing, also moved to Santa Cruz at that time. She, of all people, couldn’t afford a house at her place of work.

-Founder Reed Hastings, the most prominent entrepreneur from Santa Cruz, has set up the new headquarters of his video empire on the edge of Silicon Valley. So that he can be back in his beloved Santa Cruz within half an hour’s drive. That is feasible – outside of rush hour traffic. It is not recommended every day, if only because of the winding Highway 17. It leads through the Santa Cruz Mountains into Silicon Valley and is considered one of the most dangerous roads in the USA. Since Covid established the home office, this natural barrier is no longer an obstacle for the “techies from behind the mountain,” as locals call them.

Since then, it has been swarming with prospects from Silicon Valley,,, and. They outperform locals because they can often pay cash (!). Santa Cruz is now the most expensive region in the US based on local wage levels. Still affordable compared to Silicon Valley. In Palo Alto, where founder Mark Zuckerberg lives, a decent single-family house with a garden is now worth almost three million dollars. In Santa Cruz this mark has not yet broken. But as in Silicon Valley, the prices listed on real estate portals are only bait here. In Mountain View, where is located, a house recently sold for a million dollars above the advertised price.

My neighbor Nate is fed up with the high cost of living in California. He has given up hope that his children and grandchildren, who live in Arizona and Oregon, will move near him. “It can no longer be done financially,” he says. That’s why Nate put his house on the market in the summer. A typical wooden house, clinging to the slope, with three rooms, spread over 220 square meters. Overlooking the Pacific. However, he has to share his narrow driveway with the neighbor. His broker advised a price of $ 1.4 million. Nate put in $ 450,000. Within a week it was sold to a Los Angeles couple for $ 1.8 million. Nate has now bought a motorhome the size of a single family home for $ 600,000 and plans to tour the United States with his wife over the next two years. In doing so, he has solved the problem of many homeowners who want to sell but cannot find a new, above all affordable, replacement.

Taxes in the USA make the situation even more difficult. In California and many other US states, property tax is calculated based on the last sale price and then increases by usually two percent per year. So if you bought your home for $ 80,000 in the 1980s, you only pay a few thousand dollars a year in property tax. Anyone who, like young families, has to shell out $ 2 million for a house in Silicon Valley pays at least $ 20,000 in property taxes per year. Downsizing makes no sense for long-term homeowners. To change that, 55+ year olds can now take their low property taxes with them when moving within California.

The lack of housing is not only annoying to the middle class. Nivida founder Jensen Huang is one of the richest men in Silicon Valley, and business magazine Forbes estimates his fortune at $ 19.4 billion. He told me he was flirting with a house in Santa Cruz. “But I couldn’t find anything suitable.”

The . The dangers grow with house prices: if interest rates rise, there is a threat of new social divisions and economic upheaval.