This is Menlo Park. mk and I had lunch there last week. It is sketchy. It is minority. It is economically depressed. it is right off the goddamn freeway and filled with tiny, shitty houses. This is the most recent home sale near where we had lunch. it's literally the next street over, a 2 minute walk. It's 1100sqft, 3br, 1 bath. What do you think it went for? How about $1.1m? It doesn't take a genius to figure out that nobody in that neighborhood is buying in that neighborhood. So the people that have lived there their whole lives are being priced out of their own neighborhoods by assholes that can afford $1.1m starter homes. And the people that make their sandwiches at Panera Bread? They're spending three hours in the car. For the honor of sweeping the floors at Dropbox, people are changing their oil every month. $100/sqft in the land of shitty shotgun shacks. Gini coefficient on par with Rwanda.
I can't help but think that bubble will burst. In Madison, WI, that house would be less than $200k, and that neighborhood is not sketchy and only has some sort of sketchy apartments a few blocks north. At some point tech companies will decide the pains of recruiting young people away from the coasts will be offset by employees who demand less to have a better standard of living.
Here are the problems: 1) San Fran is a peninsula. That means that there's no way for property values to diffuse in any direction but one. 2) Property taxes in San Fran are fixed at the time of purchase. This has knocked the bottom rungs completely out of the property ladder. It goes down, but it never returns to normal. San Francisco real estate was retarded in 2009, 2001, and so on.
I don't think it's to the same degree of contrast, but in house shopping around here, we've come across a few neighborhoods where literally all you have to do is go two blocks over and the entire place seems completely different. Property is better taken care of, theres fancier cars parked on the street, etc. They seem to go across township lines or school lines or something. Shit's weird yo.
Storytime: I took a walk with my wife to get the feel of a neighborhood near our apartment. Walked a mile to a park, walked 6 blocks down one street in this neighborhood to the main road, and then back home. First 2 blocks by the park: 1/3 or 1/2 acre beautifully manicured yards with nice houses -- their property taxes are more than our rent. Next 2 blocks: 1/4 or .2 acre lots with moderate sized, well taken care of houses. The sidewalks were edged. The prices about double our budget. Last 2 blocks got sketchy: peeling paint, torn shingles, broken garage doors, barred tiny windows, on small houses on small, unmown lots. Sidewalks were overgrown more than halfway to the middle and we had to step over a dead possum on the sidewalk. I can forgive fresh roadkill but I don't want to live in a neighborhood where a possum lays stinking on the sidewalk getting crusty for a week, and nobody bothers to grab a shovel and toss it in a dumpster. (We live in DFW)