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Technology Stocks : Intel Corporation (INTC)
INTC 39.51-3.1%3:59 PM EST
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To: Wyätt Gwyön who wrote (123701)12/27/2000 7:28:41 AM
From: Amy J  Read Replies (3) of 186894
 
Hi Mucho Maas,
RE: "That seems a very high price for just 120K income. "

Exactly. That was my point. That would leave almost nothing left.

And, since $130k is the average household income (salary, not investment income) in certain exec cities per a report, and since $700k 3-bedrm (price in these cities) translates into $120k gross (base pay), then clearly it is obvious Silicon Valley folks in these cities are using stock options towards mortgages, not just the average base pay in those particular cities.

And you could do this same type of drill on the other cities: Silicon Valley average cost of a house is now about $500k and the average household income was $80k per a report 2 or 3 years ago. You'd get the same results which is: Silicon Valley is a stock option economy for most salary levels and that fuels housing prices.

RE: "The problem with allowing a 120K salary to buy a 700k home is twofold"

Exactly why folks run into problems when Nasdaq tanks - they're assuming their mortgage payments will be paid from stock options. That's the cart before the horse. Better to sit on the stock options until they are sufficiently large enough to be cashed out. Even then, a person has to be careful not to put too much in the real estate market. Probably better to diversify. Better to be frugal too.

I have a contact that had bought a multimillion dollar house before the market crashed. I think it's going to be tough for him, which is weird when you think about it. This could only happen in Silicon Valley, where housing prices are directly tied to the Nasdaq and where housing prices go up in lock step with stock options and the Nasdaq.

I'm wondering if they will go down with them too. I'm hearing about some panic housing sales at 35% off - but I haven't seen a lot of For Sale signs, so maybe this is temporary.

Regards,
Amy J
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