Cost and savings of home ownership in Silicon Valley

Real Estate Agent with (408) 425-1601 CA bre 1519182

                                                                                    Sam Shueh

                                                Realty One Group

                                                                           San Jose, CA

Owning a home can give the homeowner a sense of pride. This is especially in Silicon Valley where the rent often is high and jobs are plentiful.  Most people move in the area are not likely to move out of the area and they need a place called home to stay.

The homeowner has no landlord or rent payments which can increase every year. The buyer can maintain his home appearance, smoke, enjoy pet ownership if desired.  

Only a few areas outside outside of San Francisco Bay Area (SFBA) in the US that have higher appreciation rate. Most homes have tripled in value since the end of Great Recession. Most Silicon Valley homes has more than doubled (2.2-2.6X) last 10 years. The best neighborhoods like Palo Alto, Sunnyvale, Cupertino has seen about 3X in home value. A home you like may cost more than $2M thanks to generous package these high technology companies are paying to skilled workers.  

Unlike the uncertainty of rental increases, the buyer's mortgage payments remain constant. Over time, equity is built up by the payments and appreciation of the home's value. Equity in a home is the actual value of the home owned beyond the amount due on the mortgage(s).

The home owner has tax advantages that does not come with renting. Property taxes (~1.3%  of total sales) and interests help one to reduce income tax. Assuming a $1.4M modest tract home the property tax is about $18,200 a year or $1,500 a month. The interest payments of $20,000 paid is based on amortization. Not all interest payments are deductible as there is a cap. Check with your CPA on it. 

A main advantage of home ownership provides stability for the home owner and his family. By owning as opposed to renting a home, the chances of uprooting and moving are greatly reduced. When a college intern is offered a 6 figures compensation to learn about what company does he is likely to stay on as there are very few places that provides same level of opportunity.  A few reach to ~9 figures networth after just a few years. Those who owns a home quickly see his net worth grow exponentially.  SFBA happens to have 220,000 millionaires who's wealth came mostly through home ownership.

Unlike other parts of US, the likelihood of  property decline here is almost negligible.  Banks always ask what is the expected home sellers concession will be? The correct answer is "zero" only strong buyers willing to offer more than asked even over appraisal vale to avoid paying, for example, +10% more a few months away. That is also the answers most buyers respond why they want to fore go $5K security deposit as renters. They are not dumb. They see things others don't. 

The owner is responsible for insurance, property taxes, up keep and steep monthly mortgage payments. Furthermore, utilities for the home and maintenance costs must also be paid for the privilege of home ownership. A disadvantage of home ownership is the inability to easily move out of the area for other opportunities such as a better job. It impairs mobility.  If there are 1000s of companies in the area why people want to leave?  The offers are often less as most technical and sales positions they compensation is very competitive. There are billion dollars brought into Silicon Valley to develop new technology.  The area has transformed computer, internet to futuristic technology to allow people to move, eat, socialize and live better. 

Maintain and update a home is an endless part of home ownership. This responsibility is not only time consuming and back breaking. A home owner met at Home Depot paint department told me he has been working on his home painting for over 6 months now.  19 ft height ceiling is tall enough where his wife complains about color contrast not right from bright diffused lights.  

After factoring in the pros and cons of home ownership, the person considering a home purchase will make the decision best for his situations.  This is often the largest investment one has made. 


Sam ShuehRealtor    Phone (4-0-8)  425-1601   

 I've called San Francisco South Bay home for over many years. We love this area and all it has to offer, and I enjoy sharing what I know about homes.  I documented in several books about Silicon Valley history.

I have much expertise in real estate and technology...please give me a call. 


Advice of realtors wanting to get into Silcon Valley 

 Silicon Valley Realtor Sam Shueh Website   


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Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Sam. Home ownership is the highest form of wealth creation for 99.4% of Americans. Enjoy your day!

Jun 09, 2019 06:26 AM #1
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

There really is NO place like home...and sooo much more least for us when it is your own !

Jun 09, 2019 09:58 AM #2
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Exactly. Studies show these 220,000 millionaries from the area attributing owning their home is one of the reasons. Those who rent attribute their landlord as affluent owners.

Jun 15, 2019 08:14 AM #3
Debe Maxwell, CRS | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

WOW, I'm blown away at the numbers on the west coast, Sam! 

A 300% increase in value in less than 10 years - that's CRAZY! OH to be a Realtor® in your area! 

Thank you for your entry in this month's challenge, Sam! Loved your stats!

Jun 16, 2019 07:36 AM #4
Kathy Schowe
California Lifestyle Realty - La Quinta, CA
La Quinta, California 760-333-8886

If only we had known that Silicon valley would become such a valuable place to own property... wow!  

Jun 18, 2019 09:46 PM #5
Patricia Feager, MBA, CRS, GRI,MRP
Selling Homes Changing Lives

Sam Shueh - This is a great post to attract executives to buy. I hope the ones working at HP in Palo Alto come to you in droves!

I wish you a lot of successful business. 

Jul 09, 2019 08:20 AM #6
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