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Guest Opinion: Will 'ghost houses' hollow out our community?

 

We live in a ghost town. I, at least, already live on a ghost block.

In the last two to three years, three of the 20 houses on my block (counting both sides of the street) have become "ghosts." At that rate, my entire block will be ghost in 6.8 years.

There's no reason to believe my block is special, so I project Palo Alto will be a ghost town within seven years. Global warming and rising seas are going to flood the town? No worries, no one will be here when it comes!

A "ghost house," you may know, is one that is typically bought for far over the asking price by presumably wealthy buyers who then do not live in the house but leave it empty, albeit well-cared for. Not to dance around the subject, the buyers are often from China. (See tinyurl.com/PAWghost2015.)

Now, before I'm accused of racism, let me just say that I am not complaining about the presence of anyone. I am complaining about their absence: Please come live with us! We're really pretty nice people if you'd get to know us!

Maybe we should all feel flattered that we live in a place desirable enough to be a "second home" destination. After all, just what is my beef with the ghosts? They pay taxes. They're probably driving up the eventual resale value of my home. They appear to keep up the properties, even if they do seem to be using an unconscionable amount of water on their grass (and, often, the lights are on). I don't envy their wealth. I'm not convinced by those who say the houses might be a security problem, attracting burglars.

So just what is it about them? I think it's this: There's no denying that their emptiness makes a social hole in our neighborhood. For years I've organized the block party for our street; I remember the people who used to live in those houses. They had children; they had lives there.

Perhaps it's because I'm aging and being nostalgic, but it's the emptiness itself that assaults my sense of community. The architect Le Corbusier famously said that a house is "a machine for living" -- it is designed and built to be lived in. Not living in it perverts its purpose, its reason for being. And no house truly stands alone. The organic whole of a town such as Palo Alto is composed of its pieces. If you empty out enough of the pieces, the whole will be hollow.

I guess I can't really blame the ghosts. If I were in their shoes I would probably buy a house in Palo Alto, too (wait, I did buy a house in Palo Alto!). And I can hear the mercenary real estate agents now: It's a free market; get over it. But free markets do have unpredictable and sometimes undesirable consequences.

In fact, a global real estate market is producing an economic phenomenon of staggering scale. Your local ghost house is a drop in a flood of an estimated annual (in 2014 and 2015) one-half trillion (yes, 500 billion) dollars of mostly cash foreign-capital flow into the U.S. real estate market, with Chinese spending one-third to one-half of that amount. (See tinyurl.com/housing-irvine09-15.) According to Juwai.com, a Hong Kong-based property search engine, California is the most popular U.S. destination for these buyers.

The result in some local markets is price inflation and narrowing of market access such that one has to wonder if the term "market" even applies any longer. It's more like a trading club with relatively few members.

And this is not just a U.S. phenomenon. Credit Suisse reports that a surge of foreign buyers in Australia has caused housing prices to become "decoupled" from local income levels to the extent that "a generation of Australians are being priced out of the property market. Many face a lifetime of renting."

So what, if anything, can be done?

Australia has a raft of old and newly proposed laws regarding foreign buyers. One of them prohibits "temporary residents" from buying "established properties" for investment only and requires them to use the properties "as their residence" in Australia. This apparently doesn't apply to new construction, or to "established properties" that are deemed uninhabitable and can be demolished, so it's unclear just how much the law is preventing "ghosts." But as far as I can tell, the three ghost houses on my block are "established properties" under such a law and thus would have to be lived in. (See tinyurl.com/AFIP-379.)

This is obviously a touchy issue, involving nationality/race, free market capitalism, and American ideals such as offering opportunity to immigrants. But it's conceivable that "ghost" property could reach a level at which our community really would begin to feel hollowed out. Again, I'm not being a Trump-ian nativist here -- I want the home buyers to live in my neighborhood. So if we could craft a law that would pass constitutional muster and make that happen, why not discuss it?

But if law can't or won't make that happen, what's the alternative? Maybe the best we can hope for is "friendly ghosts." Sellers and real estate agents should encourage buyers to meet the neighbors and be honest about their intentions. They should introduce their "house watcher" if there is one; make it known how often they will live in the house, and what their long-term plan is; exchange contact information. If the buyers are going to live in the house part time, neighbors should take the opportunity when they have it to get to know the buyers as well as they can. None of this really fills the "social hole" that a ghost house makes, but it would be a start.

Scott Carlson is a freelance writer living in the Community Center neighborhood. His email is norskee@comcast.net.

Comments

30 people like this
Posted by ConservaTIM
a resident of Midtown
on Oct 23, 2015 at 10:22 am

Thanks for your well-thought and thought provoking article. I appreciate you using a tone that isn't overly negative, critical or cynical!

I definitely agree with you that its sad to see the character of a community changing, especially when it goes from a place teeming with life and vibrancy, to one where houses just sit empty.

I also think that it just kind of "is what it is." There isn't much you can do about it. Though the ends are admirable and desirable, it might not justify the means required to right the situation, if it can be righted at all! Laws often have unintended and far-reaching consequences, and can often be ignored or danced around. Yes, free markets have problems too - its impossible to deny that greed, dishonesty and disrespect abounds (of course there's a whole middle ground there too!)

I think when you look at communities you'll see they change over time, and I think in this case, the river of time will just run its own course. The economy in China is bound to change, the tech economy is bound to change - in 40 years it could be completely different than anyone could really predict - maybe better, maybe worse, or maybe just different!

I would say this though- I have met plenty of newcomers to my neighborhood who come from many different parts of the world (or even the US) and most of them have really wanted to get involved and meet their neighbors, so we must not paint with too broad a brush.

In any case - good to know there are neighbors out there like you that really do care about their neighborhoods! And hey, if there are less people at your block party, that's more beer and burgers for you (or me!)


43 people like this
Posted by Peter Carpenter
a resident of Atherton
on Oct 23, 2015 at 2:36 pm

Peter Carpenter is a registered user.

Another consequence of ghost homes is the risk that they pose to firefighters.

Firefighters' first priority when responding to a home fire is rescue. The standard rescue effort is a room by room search for anyone trapped in the burning building. If the home is empty then any rescue efforts will be wasted but the firefighters will still be exposed to considerable and unnecessary risk.


46 people like this
Posted by theotherside
a resident of Another Palo Alto neighborhood
on Oct 23, 2015 at 3:11 pm

If the code is changed to you must live in your house, the most likely outcome for those who are buying homes in Palo Alto as investment properties would be to rent them out. That would solve the problems of too many ghost homes.

But what if the rental property is turned into a big business -- San Francisco has the problem of multiple tenants in small houses. In Palo Alto you are not supposed to have tenants under 30 days, but go try to prove your neighbor is doing that! And if it's 31 days, then you can pack in as many tenants as you wish, along with many, many cars.

Maybe your ghost houses aren't so bad after all!


31 people like this
Posted by Curmudgeon
a resident of Downtown North
on Oct 23, 2015 at 3:32 pm

Think of them as bargains awaiting the next real estate crunch, without the interim wear and tear.


97 people like this
Posted by LTR
a resident of Old Palo Alto
on Oct 23, 2015 at 7:33 pm

We will have no control on this until our government makes radical changes in our laws. There are many empty dwellings (both high rise condos and single family homes) in all the major cities including suburban areas in Canada, London, Australia, and Singapore, and here in the US. I have seen it in Vancouver Canada, Bellevue WA, Southern California, and in Palo Alto (my hometown). It is creating anger and resentment towards foreign investors - globally.

The migrants who immigrated earlier are mad at foreign investors parking their money in the local real estate and driving prices beyond their reach. [Portion removed.]

Soaring Home Price Spur Anger Towards Chinese Buyers (New York Post, July 2015)

Web Link

Locally, when many of citizens here in Palo Alto are themselves renters, who have been waiting, willing, and wanting to buy a home, their disgust of foreign investors is understandable. It is simply not fair that non-residing Third World investors are allowed to bid against them. I have not seen many examples where a property (residential and commercial) was purchased by foreigners and later re-sold back to ordinary home buying American citizens.

I have also seen most of the new infill housing sold to foreigners. Many simply rent them out to other foreigners to help them get their "foot in the door". We must come to the realization that we will never be able to build enough housing to meet the needs of the realtors who are marketing our properties to several billions of people in the developing world.


78 people like this
Posted by eileen
a resident of College Terrace
on Oct 23, 2015 at 10:39 pm

A local realtor who manages high end properties for foreign buyers told me that there are over 20 "ghost houses",
in College Terrace alone. Imagine how many there are in all of Palo Alto! I agree with LTR that the laws and loopholes
need to change. No matter how many condos and houses we build in Palo Alto, foreign buyers seem to outbid renters and residents who already live here waiting to finally buy into this market. No more housing should be built until we fix these housing problems.


99 people like this
Posted by LTR
a resident of Old Palo Alto
on Oct 23, 2015 at 11:48 pm

This is how our real estate looks to 1.357 billion people in China. It includes both residential and commercial property listings.

Web Link

Meanwhile the people who helped build-up, conserve, preserve, reduce, and recycle to keep the area nice for their children and grandchildren are stuck.

Westerners are not allowed to own properties in Asian countries.
It is a one-way street.


8 people like this
Posted by Carlos
a resident of Green Acres
on Oct 24, 2015 at 12:01 am

[Post removed.]


7 people like this
Posted by Neal
a resident of Community Center
on Oct 24, 2015 at 8:21 am

[Post removed.]


16 people like this
Posted by Veda
a resident of College Terrace
on Oct 24, 2015 at 9:03 am

People are always complaining about too much traffic, not enough parking and too many people living in houses. I would think they would welcome ghost homes-- fewer people and less traffic. [Portion removed.]


24 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Oct 24, 2015 at 9:27 am

I am not sure that there are "ghost homes" in my neighborhood, but there are certainly neighbors who are rarely if seldom seen. There are also rumors of kids going to our schools who are not sleeping 24/7 in the addresses they claim to live.

On top of that, there are tech workers who can't find somewhere to live here.

Not sure exactly where I am going with this but I am wondering if this is just a Palo Alto phenomenon and whether it is in other Silicon Valley communities also.

Also it strikes me as a strange ideal that children are growing up thinking that what we have here is normal and wonder if they will be able to move into a normal neighborhood environment when they are adults with families of their own.


41 people like this
Posted by SlipperySlope
a resident of Barron Park
on Oct 24, 2015 at 9:47 am

Why are they buying investment properties in Palo Alto? Because many people want to live here so the real estate is hot. Why do people want to live here? Because it's a vibrant community filled with smart people, great schools, and innovative businesses. What will happen when neighborhoods become ghost towns? The smart people will leave, the schools and the businesses will close, and no one will want to live here anymore. Not a great way to protect your investment. Why aren't they renting these homes? If they have the money to buy them at inflated prices, then they can hire professional property managers to rent them out and keep Palo Alto vibrant and popular.


Like this comment
Posted by Carlos
a resident of Green Acres
on Oct 24, 2015 at 9:53 am

[Post removed.]


16 people like this
Posted by Martin McNealis
a resident of Community Center
on Oct 24, 2015 at 10:25 am


Scott,

Good article, capturing recent sentiment around Palo Alto.

Now while unoccupied residences do reduce overall demand on city resources,
beyond a point they create an emptiness in the neighborhood, so appreciate you highlighting this as something to monitor.


73 people like this
Posted by Slow Down
a resident of Community Center
on Oct 24, 2015 at 11:22 am

Slow Down is a registered user.

[Portion removed due to deletion of referenced comment.]

Vancouver is suffering from a similar ghost problem, on a much larger scale.

"Entire downtown neighbourhoods and chunks of the west side are growingly becoming ghost towns as permanent residents are replaced with investors who don’t occupy their units. Local shops on the west side are going out of business because fewer and fewer people actually live there for most of the year, if at all. There is an eerie feeling you get walking in between the dozens of Coal Harbour’s high-rises at night. Despite the density of buildings, hardly anyone else roams the streets. By 2013 estimates, one quarter of condo units in that neighbourhood were unoccupied."

Web Link


9 people like this
Posted by OPar
a resident of Duveneck/St. Francis
on Oct 24, 2015 at 11:51 am

I don't think the unintended consequences effects of a law that required houses to be occupied would be that severe. We have a desperate shortage of hoousing and a high demand for rentals. If a large chunk of home sales are going to investors who don't rent or live in those houses, we may be going backwards in terms of being able to meet the demand for housing in the city.

Which, in turn, hurts Palo Alto's long-time function as an innovation/start-up center. [Portion removed.] While it boosts our short-term real-estate prices, long-term it's bad for us. People need to live somewhere when they're trying to build the next-big-thing. When I first moved here, there were numerous small houses and funny little apartments that were available for that--and it did make Palo Alto a fun, vibrant community.


21 people like this
Posted by Anonymous
a resident of Another Palo Alto neighborhood
on Oct 24, 2015 at 11:53 am

Proposition 13 took more housing off the market than any overseas buyers.


25 people like this
Posted by Selective censorship
a resident of another community
on Oct 24, 2015 at 12:04 pm

Find it disturbing that the censors removed a couple of postings asking if the specific nationality of these foreign buyers is what's triggering these comments, but are allowing postings bashing foreigners and third-world people.
Selective censorship only contributes to misunderstandings and will never allow for an honest and open discussion.


31 people like this
Posted by OPar
a resident of Duveneck/St. Francis
on Oct 24, 2015 at 12:31 pm

Selective Censorship,

I disagree with you--I saw one discussion about the ghost house issue go completely off the rails as concerns about ghost houses were dismissed as racism. (No, I wasn't part of that discussion.)

Not wanting a bunch of empty houses in a housing market where there's a huge shortage of housing doesn't strike me as inherently racist--implying that it is without evidence seems to me to be a way of shutting down, not encouraging, discussion. I sometimes wonder if it's a deliberate tactic to do just that. There are certainly people who don't want any change in the status quo--i.e. real-estate agents making money hand over fist in this crazy market.


4 people like this
Posted by SteveU
a resident of Barron Park
on Oct 24, 2015 at 12:32 pm

SteveU is a registered user.

If all these Ghosts were occupied, what would the impact upon City Palo Alto Utilities (Gas, Water, Electric). (Assumes the current of each usage is mostly minimal).
Someone is paying a full Utility bill for each of these properties, even if many of the services are not consumed.


18 people like this
Posted by Slow Down
a resident of Community Center
on Oct 24, 2015 at 1:44 pm

Slow Down is a registered user.

@ Anonymous - If someone is living in the house, it shouldn't be on the market. Prop 13 saves us from ghost houses by encouraging owners to live in their house instead of selling them to investors who leave them unoccupied.


28 people like this
Posted by Curmudgeon
a resident of Downtown North
on Oct 24, 2015 at 1:59 pm

Curmudgeon is a registered user.

Ghost houses generate no traffic and have zero carbon footprint. Welcome them.


20 people like this
Posted by Peter Carpenter
a resident of Atherton
on Oct 24, 2015 at 2:04 pm

Peter Carpenter is a registered user.

Should ghost houses be required to register so that firefighters would not need to place themselves at risk by performing a rescue search of an unoccupied house?


18 people like this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Oct 24, 2015 at 2:17 pm

I wonder if this is as big a problem as our guest opinion’s author makes it out to be. It was not that long ago that there was a discussion on this forum about the undesirability of AirB&B rental units in Palo Alto neighborhoods. There were several people who offered up good examples of the problems that such units introduced into their neighborhoods. If memory serves, some of these rental units were in homes where the owner did not live in the home.

The suggestion that the whole town will be “hollowed out” one of these days into a “ghost town” is beyond silly. At the moment, there is no reliable data about how many of these homes have been purchased by foreign money, or even for what purpose. Who knows what the Chinese government will do in the future about repatriating capital that has escaped to other countries?

Comments about how Palo Alto is changing certainly are on the table from other discussions about how Palo Alto is being targeted by big money developers and their minions. Looking at the possibilities of having multi-family dwellings forced into R1 neighborhoods would seem like a much bigger problem that we should be considering—since it is a very real possibility in the coming years.

It’s way past time for people in Palo Alto to organize into some sort of coherent organization that is prepared to spend some money coming up with a cogent view of the future and then putting people on the Council who will make that view happen.


34 people like this
Posted by neighbor
a resident of Another Palo Alto neighborhood
on Oct 24, 2015 at 2:58 pm

Web Link

The latest charming (not!) article about Deleon in the San Francisco Chronicle and by the way, read the comments...

[Portion removed.]


49 people like this
Posted by Nayeli
a resident of Midtown
on Oct 24, 2015 at 3:07 pm

Nayeli is a registered user.

With the grossly inflated property values in Palo Alto and most of the Silicon Valley, is there a reason why neighborhoods in Palo Alto are being purchased by foreign nationals? Is it merely for the purpose of investment?

If this is being done solely for investment purchases, it seems that there should be some sort of federal or state tax or tariff associated with the foreign purchase of property in America (without a specific visa associated with full or temporary residency). Local governments could issue some sort of vacant housing tax too. That might cool such a trend, right?


55 people like this
Posted by Community Center Neighbor
a resident of Community Center
on Oct 24, 2015 at 3:55 pm

I live in this neighborhood. Due to divorce, I sold a wonderful home in which my kids grew up. I now live nearby what was my house, as a renter.

It is a ghost house. The current owners are from China, have young children, hard to know if the kids are here for school or back in China for that. The place appears to be well maintained, except no one lives there. It is heartbreaking for me, since it was my house until my divorce.

Scott Carlson points out the main point. We want to be neighbors. The few times I have seen and talked with the people of what was my house, they exhibit no interest in being a neighbor.


21 people like this
Posted by casey
a resident of Midtown
on Oct 24, 2015 at 4:20 pm

casey is a registered user.

The comments here are unbelievable. This is still America. If someone buys a home, they can move in or leave it unoccupied as they please. And, it's none of our business. What next? If an individual occupies an entire house, we're going to force him/her to take in roommates?


20 people like this
Posted by Scott Carlson
a resident of Community Center
on Oct 24, 2015 at 4:22 pm

I'm happy to see a conversation here, and later would like to participate. In the meantime I'd like to emphasize--and I think I went out of my way in my column to make this point--that it doesn't matter if the ghost homeowners are from Greenland or Patagonia or China. The point is their emptiness. Anyone who uses the column to launch attacks against Chinese or other foreigners is missing the point.


61 people like this
Posted by LTR
a resident of Old Palo Alto
on Oct 24, 2015 at 4:31 pm

There are 4 empty homes in my immediate area. All were sold to foreign investors. Something is "fishy" when someone pays 5 million dollars cash and doesn't live in a property. I don't care where they are from.
Meanwhile, our local news reported that tech employees are secretly living within office buildings or in trucks and vans in the parking lots because they can't find housing. Ridiculous!
I have met at least 6 couples this year who decided to leave tech (and one finished law school and went back to Oregon) simply because they could not find housing anywhere in the Bay Area. We ARE losing new families, let's face it.
It is affecting communities. Businesses will eventually be hurt.

This same problem (foreigners buying up housing stocks and running up prices so local populations can't afford them) is happening all over. Here is just one of many stories about this from the "Daily Telegraph", in Sydney (July 2015).

Web Link




34 people like this
Posted by Max
a resident of Mountain View
on Oct 24, 2015 at 5:00 pm

I wonder at what point the big tech companies take notice and start to make a stink. If this continues, they will have to increase the pay scale for their workers or they won't have workers who can afford to live here.


23 people like this
Posted by Thoughtful
a resident of Another Palo Alto neighborhood
on Oct 24, 2015 at 5:37 pm

Thoughtful is a registered user.

Excellent article. More from you please!


40 people like this
Posted by Sam
a resident of South of Midtown
on Oct 24, 2015 at 5:41 pm

This is an easy problem for the home owners of Palo Alto to solve without new government regulations. If you are selling your home and you get an offer of say $3M from a Chinese investor and an offer of $1.5M from a Caucasian family who wants to live in the house, take the $1.5M offer. Problem solved.

Someone like Community Center Neighbor above would not need to be heartbroken then, and it would only cost him $1.5M, not much to be happy!


47 people like this
Posted by LTR
a resident of Old Palo Alto
on Oct 24, 2015 at 5:56 pm

To Sam -It doesn't matter what race the buyers are. I think most of us just want the homes to be sold and occupied by families who live and work in our community / Bay Area / State, or Country.

I don't think this is "Un-American" or even asking a lot.



4 people like this
Posted by truthis
a resident of Barron Park
on Oct 24, 2015 at 8:46 pm

Neighbor, Airbnb or Ghost. Take your pick! Don't ask for any law if you can't afford another measure in the ballet. Housing price here will stand the Test of Time!


38 people like this
Posted by Nayeli
a resident of Midtown
on Oct 24, 2015 at 9:12 pm

Nayeli is a registered user.

@ casey:

That is just the point. This is AMERICA. How is it that residential neighborhood property is being purchased by foreign nationals yet sits unoccupied?

I can understand if someone is purchasing them as a vacation home or a "home-away-from-home" for foreign citizens who are legally residing part-time in the Silicon Valley for frequent business. I suppose that this could be what is happening; however, I still wonder if that is what is happening here.

I agree that it would be nice to see people living in residential home properties -- particularly in neighborhoods -- no matter their race or ethnicity. I do think that it is not helpful for homes to be purchased by foreign citizens solely for investment purposes if those homes will sit vacant. It does affect a community.


Like this comment
Posted by Merica
a resident of Crescent Park
on Oct 24, 2015 at 9:40 pm

[Portion removed.]

A house may be a machine for living, but it's just an improvement to the land. What's the value, the asset, here? It's the land. And with central banks around the world easing monetary policies and event contemplating punishing saving by negative interest rates, hard assets have global appeal.


22 people like this
Posted by casey
a resident of Midtown
on Oct 24, 2015 at 9:51 pm

casey is a registered user.

@ Nayeli

In America, we don't care whether the buyer is an American citizen, a green card holder, or a foreign investor. If the buyer wants to overpay, we don't stop them. If they want to pay $25,000 in property tax each year, leave the house empty, and derive absolutely no benefit from the property, we don't stop them.

If you don't like this, move to a planned community that is tightly regulated by CC&Rs. I'll take freedom instead of excessive regulation from a HOA board.


39 people like this
Posted by what a mess
a resident of Another Palo Alto neighborhood
on Oct 24, 2015 at 10:11 pm

Ghost houses are preferable in a city which allows slum-like conditions
to go on indefinitely in occupied houses with no control, no code enforcement, no abatement,no concern. The City is just in an horrendous
downward spiral by so many measures except property values and that's the
reason, the anomaly, why the CC doesn't step in, in a forceful way. If property values and office rents started to drop people would start to address the mess that is becoming, has become Palo Alto. Imagine how that would change the political dialogue. In this regard I remember former Councilman Klein once saying property values are corroborating what we are doing here as a government. That statement at a Council meeting went unchallenged and that is still unfortunately the backdrop.


48 people like this
Posted by OPar
a resident of Duveneck/St. Francis
on Oct 25, 2015 at 12:33 am

Looks like there's a flip side to the Ghost House issue, which is the clown bus house. Because rents are so high, some landlords are renting out houses to dozens of people who are crammed into a small house and parking all over the place. There's one of those near me and reference to another just popped up on FB--16 people in 2200 feet.

This isn't a resort area--we don't have the space for people to buy up our limited housing stock and then leave it empty. It's also not the lower East Side in 1900.

I know the city doesn't want to do anything, but we're beginning to move toward a crisis point.


19 people like this
Posted by Mike
a resident of University South
on Oct 25, 2015 at 5:01 am

LTR says, "To Sam -It doesn't matter what race the buyers are. I think most of us just want the homes to be sold and occupied by families who live and work in our community / Bay Area / State, or Country.

I don't think this is "Un-American" or even asking a lot."

Many people have second homes and vacation homes. I wouldn't think twice about buying a beach home on the coast and only visit occasionally.


36 people like this
Posted by theotherside
a resident of Another Palo Alto neighborhood
on Oct 25, 2015 at 8:51 am

@OPar -- right on, agree with you and good name for it, clown houses. We have one near us and there are 20 people plus in the house. Turnover is frequent and there are as many cars, causing musical chairs parking spots.

We would prefer a tidy ghost house to that!

So much for your rental house should not negatively impact the neighborhood -- that's on the books but not enforced.


19 people like this
Posted by One Objection
a resident of Another Palo Alto neighborhood
on Oct 25, 2015 at 1:06 pm

[Post removed.]


17 people like this
Posted by Curmudgeon
a resident of Downtown North
on Oct 25, 2015 at 1:53 pm

"How is it that residential neighborhood property is being purchased by foreign nationals yet sits unoccupied?"

Investment.


42 people like this
Posted by I Don't Mind
a resident of Another Palo Alto neighborhood
on Oct 25, 2015 at 3:12 pm

Actually, ghost houses can be the best kind of neighbors--absent ones. Unless, of course, the houses are left derelict, which sometimes happens.

I would much rather have a ghost house on my block than a " clown bus house", which we have next door [portion removed.]

I assume ghost house owners pay their taxes, but don't use local resources, so other than adding to the housing shortage ( most people could not afford the rent anyway, hence 12-20 people co-renting), I don't see any severe consequence.


32 people like this
Posted by chris
a resident of University South
on Oct 25, 2015 at 5:14 pm

The ghost houses will not be empty permanently. At some point, they will be lived in either by the current owners or by new owners after the gains are monetized.

The main reasons these houses are being bought is 1) a future residence where children can go to school 2) a safe have for capital with potential investment returns 3) a home for retirement.

The rapid rise of house prices here combined with the instability and bad environment in China has accelerated the purchase of these houses. As the Chinese economy slows down and Palo Alto real estate levels off, we should see a slowdown in the rate of Chinese purchases.


55 people like this
Posted by Commentator
a resident of Professorville
on Oct 25, 2015 at 5:33 pm

"I do think that it is not helpful for homes to be purchased by foreign citizens solely for investment purposes if those homes will sit vacant. It does affect a community."

Palo Alto WAS a community. It has BECOME a commodity.


29 people like this
Posted by common sense
a resident of Midtown
on Oct 25, 2015 at 6:34 pm

I don't mind the ghost houses - less traffic in the neighborhood, helps share the tax load through their high property taxes for schools & city services, helps amortize the fix costs of the utilities, less crowding in our schools.

I'd rather have a ghost house, than a house which is rented out to 5 - 10 millennial high tech employees, with 5 - 10 cars taking up the neighborhood parking.


39 people like this
Posted by Thoughtful
a resident of Another Palo Alto neighborhood
on Oct 25, 2015 at 6:40 pm

Thoughtful is a registered user.

Related to THE DARK SIDE OF CALIFORNIA in NYT yesterday


30 people like this
Posted by m2grs
a resident of Midtown
on Oct 26, 2015 at 12:08 am

According to Wikipedia Palo Alto population in 2014 is estimated 4% more than 2010.

Ghost houses or not more and more people are coming and living in Palo Alto.



30 people like this
Posted by Barron Park
a resident of Barron Park
on Oct 26, 2015 at 12:16 am

[Post removed.]


42 people like this
Posted by casey
a resident of Midtown
on Oct 26, 2015 at 12:51 am

casey is a registered user.

@Barron Park. If you are a buyer or seller, you can contract with a different real estate agent. No one is forcing home owners to sell through DeLeon. Evidently, the firm must be doing something right since it has earned quite a lot of business in the area.


44 people like this
Posted by Wadda Big Creep
a resident of Another Palo Alto neighborhood
on Oct 26, 2015 at 8:46 am

[Post removed.]


28 people like this
Posted by Dodged a Bullet
a resident of Old Palo Alto
on Oct 26, 2015 at 9:20 am

[Post removed due to same poster using multiple names, unverifiable factual asserttions and defamatory comments.]


37 people like this
Posted by Annika
a resident of Barron Park
on Oct 26, 2015 at 10:32 am

Annika is a registered user.

There's a mysterious 8 bdrm/10 ba 1 story house (no need to get ARB approval hence a 2,8,00 sq ft basement) being built in Barron Park by an investor. Neighbors are concerned it will become a boarding house for renters wanting to get into PA schools. There is no limit to the number of residents in a single family home in PA, and proving a short term rental situation will be next to impossible. BP also has many ghost houses as well as homes that seem to house start-up businesses rather than families. Like it or not, I doubt if this trend can be stopped with new laws and resolutions.


24 people like this
Posted by PAmoderate
a resident of Old Palo Alto
on Oct 26, 2015 at 10:58 am

PAmoderate is a registered user.

[Portion removed.]

It's true - Prop 13 has ossified Palo Alto and taken more property off the market than any investor. There's a huge supply-side issue here. Too many people with low property tax assessments that can't afford to move anywhere else in the Bay Area. It's impossible for folks to downsize, even if they want to.

It's a vicious cycle - with fewer people able to move, fewer properties to sell on the market, the more prices go up on the few that are available.

In fact that's the reason why property values are so high, which ironically makes Palo Alto a great place to "invest."

It's the same problem on the rental side in San Francisco. You can say there are a bunch of "ghost rentals" because of rent control - someone who has moved away from SF, but can maintain a $350/month pied de terre there? Sure!

So stop blaming the "investors" - it's the local and state policies that are the root cause of the "ghost houses" - however few there are.


24 people like this
Posted by Midtown
a resident of Palo Verde
on Oct 26, 2015 at 11:02 am

Many democratic and capitalist countries that emphasize personal freedoms are facing the problem of ghost houses. CHRIS gives three reasons, "The main reasons these houses are being bought is 1) a future residence where children can go to school 2) a safe have for capital with potential investment returns 3) a home for retirement."
There is a FOURTH reason that I've witnessed in several countries ... in dictatorships or volatile political places, those with money look for "bolt holes," where they can run to when things get too hot to handle in their native lands. In one city I saw a huge condo/apartment complex (over a hundred units) completely finance by individual buyers before construction started.
It stood almost vacant until the political regime of the buyers' home country collapsed.


19 people like this
Posted by Curmudgeon
a resident of Downtown North
on Oct 26, 2015 at 11:20 am

"So stop blaming the "investors" - it's the local and state policies that are the root cause of the "ghost houses" - however few there are."

You forget/overlook that Prop 13 was voted in by the state populace. Palo Alto was one of only two cities to dissent.

Why stop blaming the investors? They are eminenty blameful. Pile on the blame! Prices can rise only if somebody pays them. A buyers' strike would bring down prices very fast.


29 people like this
Posted by anon
a resident of Evergreen Park
on Oct 26, 2015 at 11:30 am

To follow up on Annikas comments about the house of may bedrooms in Barron Park.

There are many examples of Illegal hostels /rooming house/ hotels popping up all hover Palo alto in Residential neighborhoods.

They advertise on Air BandB, Craigs' list, facebook etc… etc…

The city should get a handle on this and shut it down before it gets out of control!


7 people like this
Posted by Robert
a resident of another community
on Oct 26, 2015 at 11:37 am

@anon

Considering that Palo Alto now has the highest rents in the country, I assume that taking on a large number of roommates is the only way many can afford to live here.


19 people like this
Posted by the_punnisher
a resident of Mountain View
on Oct 26, 2015 at 11:44 am

the_punnisher is a registered user.

A real problem:

We were told by many people to " invest in land, there is no more created and the price will always go higher " for OVER A HUNDRED YEARS!!!
Now you are seeing the effects of unleashed SUPPLY AND DEMAND when it comes to housing and real estate. These houses are "investments", not " Machines for living ". We have done the same investments, except that is to preserve our farming interests in WI, where I was born. That land is kept in use for farming, not development.
We as a nation, are getting divided into the working poor and the uber rich. Guess what? The uber rich CAN AFFORD TO INVEST IN OTHER COUNTRIES!
That is what is driving supply and demand right now. Many other nation's ( uber rich ) citizens would also like to own desirable properties around the globe. Palo Alto properties are a bargain when you consider San Francisco, for an example.
Our country is much more free when it concerns ownership of land. In many other countries, the STATE owns the land and you are allowed to stay on it at it's whim. Pay tribute or die is the law. No legal maneuvers, you get shot on the spot if the government needs it.
That is the basics of seeing " ghost homes ". In CO, there are " adverse possession " laws: you stay in a property and pay taxes for 7 years, YOU GET TITLE TO THE PROPERTY!
When CO has a ghost town, it really IS a ghost town!
Maybe the State of California needs a similar law on the books. When an investor sees the risk, they move an investment to something else.
A thought. What if HP OFFSHORED it's facilities and INVESTED in the old properties AS A FOREIGN INVESTOR! They win, Palo Alto LOSES!

That is an understandable approach to why you are seeing " ghost houses " all over the world. How that is solved is your problem.


42 people like this
Posted by Ex-Palo Altan
a resident of Old Palo Alto
on Oct 26, 2015 at 12:15 pm

Bernie Saunders likes to point to Denmark as an example of a society worth emulating. They have a solution for this as well. You cannot own property in Denmark as a foreigner until you've lived there for 5 years. Worth a think.

This is a growing global problem with entire neighborhoods in Paris being shuttered and local shops closing because there are no customers.

Not at that level in Palo Alto and when we sold five years ago we deliberately sold to a family with kids who needed our home and actually passed up a slightly higher offer from a couple we weren't so sure about. Wasn't a huge difference but we did what we could for the neighborhood.

Now we're in San Francisco where the issue is more Airbnb focused.


12 people like this
Posted by OPar
a resident of Duveneck/St. Francis
on Oct 26, 2015 at 1:35 pm

It's not just Prop 13, which has been around since the 70s. I blame Prop. 13 for a lot of things, but the ghost house syndrome is recent.

There are things the city could do--Menlo Park, for example, has a no-overnight parking law that means you have to provide off-street parking for any cars. That, alone, would discourage boarding houses in single-family homes. We could also put a limit on the number of dwellers per square foot of housing. It's a reasonable thing to do as overcrowded houses are a fire hazard among other things.

The city's chosen not to do anything about air BnB, though it could if it wished to. Given how short we are of hotel rooms, I'm okay with this--I don't think Air BnB is the problem here that it is in San Francisco--yet.

As far as China goes--a couple of things--one is that you can't buy property in China, you can only get a 70-year-lease. If you don't trust the Chinese stock market (and there are good reasons not to), it's logical to invest in real-estate overseas, particularly to countries that let you buy your way in (which the U.S. does if you invest a few million dollars).

About a year or so ago, a survey of Chinese millionaires showed that around half of them intended to emigrate. Prime spot was Hong Kong, but Canada and the U.S. were up there on the list--and why not? These countries have established Chinese ex-pat communities and a lot less pollution. Palo Alto's housing prices are crazy, but it's still cheaper than Hong Kong.

What the Chinese investors are doing is perfectly logical--whether it's good for Palo Alto is a completely different question.


23 people like this
Posted by Mamau
a resident of Crescent Park
on Oct 26, 2015 at 1:44 pm

Here is what I would do. Either city counciL or whatever other body can do this should impose a stiff fee on any residential real estate transactions with foreign buyers. In other words buyers pay oenalty of say 20% over purchase price to buy into our neighborhoods. Fee should be whatever it takes to level the playing field. I have two close relatives trying to make house purchases for occupancy. They cannot compete with what the foreign investors are offering.


7 people like this
Posted by Bruce
a resident of Crescent Park
on Oct 26, 2015 at 3:55 pm

Well said Scott. It looks like the two most recent sales on our block (next door to each other) are also long term vacancies. I'd much rather have neighbors with all the good and bad that comes along with them.


14 people like this
Posted by Nayeli
a resident of Midtown
on Oct 26, 2015 at 4:04 pm

Nayeli is a registered user.

@ casey:

Like I said, I don't have any problem with Americans purchasing a second home, a vacation home, etc... I don't have a problem with foreign nationals with a work visa purchasing a home for short-term occupancy when working in the United States. I don't have a problem with foreign nationals who are legally permitted inside the U.S. to purchase vacation homes.

However, I do have a problem with foreign nationals purchasing homes for investment and leaving them empty. Yes, they pay the property taxes on such residential homes. However, I think that there can be a economic means for limiting such purchases by non-citizens or non-residents. This might not end ALL of them, but it would limit any sort of "ghost neighborhood" trends.

Remember: This affects the community and home values of others.


17 people like this
Posted by Old but wise
a resident of Palo Verde
on Oct 26, 2015 at 4:47 pm

Hm..... on a court of 19 houses we have 1 ghost, a previous ghost(they moved here for schools and may leave again when the kids are done) and 2 houses with many students living in all rooms of the house(a 4 bedroom house with 11 residents), The ghost is a shame...we don't mind the students..they came to the block party and are cheerful. give me a student than a ghost any day.
Meanwhile I have 2 educated, hard working kids(both work full time and do other work outside of that) who can't afford to buy a house(or even a garden shed) in this area....something is not good in Palo Alto.


4 people like this
Posted by theotherside
a resident of Another Palo Alto neighborhood
on Oct 26, 2015 at 4:55 pm

I don't really think that ghost homes will harm Palo Alto because most likely this trend will either end or slow down considerably due to the economy. (Granted I could be wrong about that.)

What I do see as a big problem changing our neighborhoods right now, is when single family homes are stuffed with more and more tenants. This results in more and more cars taking up our parking spaces in front of our homes. Rapid turnover so we don't know who is there. Fire and safety hazards most likely as these homes were not built for such a load. And a negative impact on the neighborhood because it increases density, traffic, and turn over. This is not a problem that "might" happen -- it is happening because the city will not do anything about it.

Good idea to cap how many people are in a home based on square footage!


14 people like this
Posted by Jane
a resident of College Terrace
on Oct 26, 2015 at 4:58 pm

In keeping with America's capitalist ideals you can buy a visa from the government.


22 people like this
Posted by PAmoderate
a resident of Old Palo Alto
on Oct 26, 2015 at 5:13 pm

PAmoderate is a registered user.

"It's not just Prop 13, which has been around since the 70s. I blame Prop. 13 for a lot of things, but the ghost house syndrome is recent."

The supply problem didn't happen overnight - it took 30 years of homeowners trapped in their own tax basis and anti-development, not just in Palo Alto, but throughout the Bay Area. Add the economic growth (which, by the way, is considered a good thing by most people) since even before the inception of Prop 13, and you have what we have today, which is, like many things here, completely overblown.

Call me cynical (or old), but this "concern" sounds a lot like the concern of the 1980s where everyone thought the Japanese were going to buy everything. Coincidence that it's a different group of Asians?

Gee, I wonder if we replaced Chinese w/British, Danish or some other Western European country of origin and would we get the same reaction?

I seriously doubt it.

This is NIMBY on steroids. You have to be a citizen to have unfettered access to property here?

This is embarrassing for Palo Alto to have 1950s thinking in 2015. I see more progressive attitudes in Texas and Mississippi than I'm seeing on this thread.


9 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Oct 26, 2015 at 5:23 pm

We have a different type of house which I think is also a trend. This type of house is a boomerang house. The kids return back to living with their parents because although they are working in the area they can't (or won't) find somewhere else to live.

On one hand, why should they pay big bucks for somewhere to live when presumably they can save some money to eventually buy somewhere even if it isn't Palo Alto. But on the other hand, is there something about the next generation, or at least some of them, who like living with their parents?

These boomerang homes can have 5 or 6 cars, most of which are parked on the street.


17 people like this
Posted by LTR
a resident of Old Palo Alto
on Oct 26, 2015 at 8:53 pm

Homes purchased by foreign buyers and left empty have affected neighborhoods in many other cities.
I noticed this was becoming a problem for the cities of Kirkland and Bellevue Washington. And it is making people leave major cities in Canada and develop land further out. People move into cities to form communities which are our schools, and local businesses.
Recently a blog on tumblr was started entitled "Beautiful Empty Homes of Vancouver". The blog quickly gained national attention.

VAncouver residents are complaining about many of the same things we are.
Empty homes, no available homes for local working people, affordable housing, and homelessness.

"The City of Vancouver lets large family homes sit empty and boarded up for years - at the same time, the City has thousands of working young people and families unable to afford housing, as well as one of the country’s largest homeless populations."

Web Link

Cities in Australia, Singapore, UK, and the UK are having the same problem.

[Portion removed.]

I am afraid this will soon happen here too.



2 people like this
Posted by MadamPresident
a resident of Old Palo Alto
on Oct 26, 2015 at 9:00 pm

[Post removed.]


22 people like this
Posted by Carlos
a resident of Green Acres
on Oct 26, 2015 at 9:33 pm

[Portion removed.]

This is the US. As long as you are not breaking any laws, you are free to purchase any property you want, regardless of whether you live in it or not. And these so-called foreigners (many might even be naturalized citizens) are entitled under the law to all of this. Stop the immigrant bashing just because they are doing better than some of the native residents.


12 people like this
Posted by Shameful
a resident of Another Palo Alto neighborhood
on Oct 27, 2015 at 8:40 am

[Post removed.]


6 people like this
Posted by Jim Hols.....
a resident of Community Center
on Oct 27, 2015 at 5:41 pm

Jim Hols..... is a registered user.

The Web Link about Vancouver was very interesting.

Remember how mainland Americans with more money than local Hawaiians bought up paradise?

But Palo Alto is not paradise (-: And most mainlanders either occupied or rented out the properties in Hawaii. I don't understand why foreign investors want to buy a property for $5 million and then not get the $150K rent each year.

Unless the house is just being used to establish California residency for in state tuition. But then why not buy a small house in Modesto?

If you buy a property, I think you should be free to occupy it, rent it, or just leave it vacant.

But, I think some states have hit on the solution to help locals compete with wealthy out of state buyers.

Charge higher property taxes to out of state home owners whether they rent it out or leave it vacant. Either be a full time California resident or pay a higher property tax.


11 people like this
Posted by SteveU
a resident of Barron Park
on Oct 27, 2015 at 7:49 pm

SteveU is a registered user.

This is the United States.
You have the right to leave your house vacant as long as it is maintained and not an eyesore or becomes a public nuisance (squatter haven).
IMHO Dumb, but still your right. Many locales had Summer Homes (hint: Baron Park was an escape from the Fog of SF in earlier centuries). Those homes were probably vacant part of the year.


7 people like this
Posted by NeilsonBuchanan
a resident of Downtown North
on Oct 28, 2015 at 9:45 am

NeilsonBuchanan is a registered user.

Resisting the flow of foreign capital is like defying gravity. Impossible. See Wall Street Journal article Oct 27, 2015 "In China's Alleyways, a Means for Moving Money".

"No official data track the underground transfers, but central-bank officials who attempt to say that underground banks handle about 800 billion yuan ($125 Billion) annually, and more than usual this year"

In my naive opinion, we US citizens are complicit with this surge of capital. At the highest levels of US government this flow is welcomed for complex economics and politics. At our local Palo Alto level, many residents may complain but accrue economic benefits enormously (at least in short term)


4 people like this
Posted by NeilsonBuchanan
a resident of Downtown North
on Oct 28, 2015 at 12:51 pm

NeilsonBuchanan is a registered user.

For more insight see DeLeon Insight November 2015, page 8.

"Chinese Stock Market Woes and the RMB Devaluation's Impact on Silicon Valley Real Estate"

"......While it is too soon to conclude whether the interest from Chinese buyers will continue at the same pace, we expect that we will continue to see a "flight to safety" mentality for at least 18 months."

Web Link

To be fair we have to recognize that capital flows into Silicon Valley from many other countries.


6 people like this
Posted by Peggy Bunker
a resident of Community Center
on Oct 28, 2015 at 12:58 pm

Peggy Bunker is a registered user.

Hello everyone: I'm a reporter with NBC Bay Area. We're covering this story, about ghost houses and international buyers, and the neighborhood-wide impact this trend is having on Palo Alto -specifically for those native to the area. We've interviewed several realtors, some who are quite pleased with the trend, but now we need to hear from the neighbors and how this is impacting them. We are under deadline and would like to conduct interviews this week (Thursday 10/29 or 10/31) or late in the day Nov. 3rd. Please feel free to call my work cell, (408) 726-3165, or email me at peggy.bunker@nbcuni.com. And while it's preferable to interview people on camera, we can also shoot our interviews anonymously. Thank you! Peggy


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