Maybe I'm getting my numbers from the wrong place.
Really senior engineers can certainly make more; 500k for a top 10% performer.
For reference I just got my tax statement for last year and I’m over 300k.
More likely, you can afford a $1m mortgage on a double income of $150k which, IMO, is a lot more common.
The reality is that a lot of people (single and married with kids) rent with the hopes they will be able to afford a mortgage.
Maybe a different region would have better balance, even at lower pay. I know people who own a newly constructed, large house with a garden, two cars, and raise kids in Romania on a meagre salary compared to yours. In the Bay area most of the profit and hard work goes to pay the exorbitant housing prices - just making the landlords and constructors rich.
Reminds me of Andrew Ng who expects "70-90 hours a week" from his employees, and is talking up "importance of velocity" with his new fund. That's 15 hours of work per day and one day off per week. Crazy! Why bother to do that, it would be a disaster for balanced life. (https://techcrunch.com/2018/01/30/andrew-ng-officially-launc...)
It's a bit tight at the beginning, but since salaries seem to be increasing at a crazy pace, and your housing costs would be locked in, it gets easier in a few years. Or everything goes to hell, and at least California is a no-recourse state, so at worst, you can walk away with ruined credit and no further obligation to pay.
For example, today there are only 44 homes (3+ bed, 2+ bath) in Sunnyvale [1]. That means you need only 44 successful bids to cover entire Sunnyvale market. Now consider number of E5/L5 SWEs in FB/Google and their equivalents across LinkedIn, Microsoft, Apple etc. Also consider double income couples where one person is somewhat junior with a spouse contributing further to gross family income. Also consider other high paying roles in similar companies like Product Manager, Sales etc. There would be thousands of families passing the bar of 300-400K gross annual income.
It is in fact a surprise that median price of those 44 homes is less than 1.3M [1], given the proximity of Sunnyvale to all these companies. Home prices are really determined at the margins of income distribution and not at the averages.
[1] https://www.redfin.com/city/19457/CA/Sunnyvale/filter/min-be...
There are also some other factors which tend to push up Bay Area home prices. Due to building restrictions, the market for homes is undersupplied. Due to prop 13 and the nice weather, people are less likely to leave even if they don’t need to be here for work anymore. So the market for homes is not very liquid and prices are sort of a one-way ratchet (barring economic meltdown). Really, only the top 10-20% or so of earners are in competition to buy a single family home at all in the area, and that number is shrinking.
Consider a random engineer at Google who bought their home seven years ago for $1M and it’s now worth $2M, while they paid off the mortgage with their RSUs. This person is no bigwig, but they might get approved for a mortgage on a $5M house and afford the down payment no problem.
This is the Dir/VP/EVP + founders + high equity;low digit employee id exitors.
Like, I'm curious what drives the demand for homes in the ~$2M range in the bay area, if it's not the general software developer who's able to afford it.
My grandmother's home and my childhood home, both in Cupertino, just sold for upwards of 2.5 mil each to all-cash buyers. I can't verify the foreign money aspect for these sales but people I have worked with who have left the valley in the last few years indicate it is quite common. I left silicon valley nearly 10 years ago now but was born and raised in Cupertino.
I'm going to temporarily ignore the "superexpensive" properties, which I'll arbitrarily define as over $4M in SV. That's a different market... for the "global jet-set." Or the people who were the first X employees at a startup with a real liquidity event (and their founders treated them fairly).
Down on the valley floor, $1-3M is within reach of a lot of people in tech, especially double techies. (If you've been here since before the last 2 booms, you've got even more going for you.) Most big tech companies (FANG) stock is way up... Take that as a downpayment... multiple it 2,3, or 4 times and voila.
Markets that have really been hit by foreign money are Vancouver [1] and certain neighborhoods in Los Angeles [2].
Having been to those places (for extended periods of time), I can say SV doesn't feel like those to me.
One last bit of anecdata: I know of one house in SV that received at least 7 offers in the past month. Only 1 of those 7 was all cash foreign money... but they weren't the high bid. 5 other "locals" with loans had higher offers.
[1] https://betterdwelling.com/city/vancouver/foreign-buyers-45-...
[2] https://www.bloomberg.com/news/articles/2014-10-15/chinese-h...
The margins. The actual numbers of homes turning over at such prices is miniscule.
But this home was estimated north of $6M
"The total cost would be $6,562,500."
At least that is the way it works here in Stockholm where $1M houses frequently are bought by people with way lower salary than 180k, often not even 180k combined in the family. However, prices here are very inflated and rates are super low.
30% of $8500 is $2500. You can live very comfortably on $2500 a month if all your housing costs are taken care of.