Don't Quit Your Day Job…

A couple of weeks back, we here at DQYDJ tried to get some Bay Area street cred with our screed on how Bay Area house prices make more sense than one might think (please read that article if you are genuinely interested in our model). After being informed by the readers on the Bay Area home site Burbed that our definition of the Inner Bay Area (the ‘Real Bay Area’) was too large, we’re back for another pass. Thanks to Burbed’s super-intelligent head editor Madhaus and a huge amount of comments we’re back with two calculators we’re titling “The Burbed and DQYDJ Real Bay Area Calculators!”. Since all Bay Areans hope for 7.2% annual home value returns (check it – doubling every ten years!), we hope everyone will enjoy this little demonstration of the absurd amounts of wealth that the place we call home generates.

The San Francisco Bay Area, generally agreed to include the nine California counties of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano and Sonoma, is one of the wealthiest regions in the United States. From its powerhouse engineering and business schools to the Venture Capital firms in Menlo Park and Palo Alto; from the financial buildings in San Francisco to the tech firms in Silicon Valley, the region has an immense capacity for generating wealth (and a history of massive booms and devastating busts).

There is a part of the Bay Area, which I’ll call the Inner Bay (although I know it is sometimes called the “Real Bay Area”) which has an especially concentrated amount of wealth. That wealth is reflected in home prices which are among the top in the nation. In the Inner Bay, consisting of Alameda, San Francisco, San Mateo and Santa Clara County, it’s not unheard of for houses around 1,000 square feet to sell for close to a million dollars (or more, in places like Atherton, Saratoga, Los Altos and Palo Alto).

I recently purchased my first house here in the Bay Area, and I did it in a decidedly non-traditional way.  For a few years I had been reading about a smaller real estate company known as Redfin which operated in a more hands-off way than a normal real estate firm.  Redfin leverages technology and a slick user interface to help its users (most of which will not use Redfin to buy a home, but the search feature is that good) find homes on their own.  Once a house is purchased, Redfin actually refunds some of the brokerage commission.  In most places, 3% of the purchase prices goes to the seller’s agent, 3% to the buyers, and 1.5%, 50% of Redfin’s commission, goes back to the end user.  So… what’s the catch?

(Updated with information on Facebook’s potential IPO in April 2012). Remember back just a few short years ago when the ultimate goal of a start-up in Silicon Valley was to either get bought out (by a public company) or to go public? The first internet bubble saw companies like Amazon and eBay make their debuts, but it also relegated other companies to the history books: iWon.com, pets.com, and Startups.com. As a result of new regulations and laws (a major piece being the Sarbanes-Oxley Act of 2002), an Initial Public Offering may not be the glamorous exit strategy it once was. A perfect example most of us have experience with? Facebook.

The official U-3 unemployment rate is now 9.6%, up a tick from the 9.5% we saw last report. However, private employers added 67,000 jobs in August, while July’s numbers were revised upwards to 107,000 private sector positions and June numbers were also adjusted to 61,000.