California Homebuying Insanity

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Northern Flicker
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Re: California Homebuying Insanity

Post by Northern Flicker »

One solution is not choosing to live in coastal California cities.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
Brewo
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Re: California Homebuying Insanity

Post by Brewo »

owls wrote: Fri May 07, 2021 11:58 am
How many jobs in LCOL pay $200k each? With remote work, LOTS!
This is where I get lost. The average household income in the US is like 87k, but you claim that not only are there are "LOTS" of $200k jobs in a LCOL area, but that many will let you work fully remote? I'd like to see some citations please.

And if this were true, wouldn't those areas pretty quickly not be LCOL anymore as all these high income people moved in and started bidding things up?

A final thought to ponder, another name one can use for a LCOL area is "economically disadvantaged." But then the advice doesn't sound so good...
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willthrill81
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Re: California Homebuying Insanity

Post by willthrill81 »

Brewo wrote: Sun May 09, 2021 9:46 pm A final thought to ponder, another name one can use for a LCOL area is "economically disadvantaged." But then the advice doesn't sound so good...
This is highly judgmental. There are many incredibly wealthy people who live in LCOL areas. And there are some decided financial advantages to LCOL areas, one of which being that it's much easier to own a home without becoming house poor.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
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eye.surgeon
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Re: California Homebuying Insanity

Post by eye.surgeon »

Brewo wrote: Sun May 09, 2021 9:46 pm
owls wrote: Fri May 07, 2021 11:58 am
How many jobs in LCOL pay $200k each? With remote work, LOTS!
And if this were true, wouldn't those areas pretty quickly not be LCOL anymore as all these high income people moved in and started bidding things up?
This is literally happening all over the country.
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Brewo
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Re: California Homebuying Insanity

Post by Brewo »

willthrill81 wrote: Sun May 09, 2021 9:51 pm
Brewo wrote: Sun May 09, 2021 9:46 pm A final thought to ponder, another name one can use for a LCOL area is "economically disadvantaged." But then the advice doesn't sound so good...
This is highly judgmental. There are many incredibly wealthy people who live in LCOL areas. And there are some decided financial advantages to LCOL areas, one of which being that it's much easier to own a home without becoming house poor.
Is it? By definition there is less money flowing through the economy in a place where it costs less to live, no? I don't doubt there are very wealthy people living in LCOL areas. But how can there be "LOTS" of $200k jobs (nearly 2.5x the average household income) available while still being LCOL? It's logically inconsistent.

Those "incredibly wealthy people who live in LCOL areas" may be able to take advantage of their wealth to live very well but it's pretty crappy advice for the general American to say well just get one of those 200k jobs that grow on trees and then move to a place where houses cost less than a years salary AND you can work remotely. That's not how economies work.
stoptothink
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Re: California Homebuying Insanity

Post by stoptothink »

Brewo wrote: Sun May 09, 2021 10:21 pm
willthrill81 wrote: Sun May 09, 2021 9:51 pm
Brewo wrote: Sun May 09, 2021 9:46 pm A final thought to ponder, another name one can use for a LCOL area is "economically disadvantaged." But then the advice doesn't sound so good...
This is highly judgmental. There are many incredibly wealthy people who live in LCOL areas. And there are some decided financial advantages to LCOL areas, one of which being that it's much easier to own a home without becoming house poor.
Is it? By definition there is less money flowing through the economy in a place where it costs less to live, no? I don't doubt there are very wealthy people living in LCOL areas. But how can there be "LOTS" of $200k jobs (nearly 2.5x the average household income) available while still being LCOL? It's logically inconsistent.

Those "incredibly wealthy people who live in LCOL areas" may be able to take advantage of their wealth to live very well but it's pretty crappy advice for the general American to say well just get one of those 200k jobs that grow on trees and then move to a place where houses cost less than a years salary AND you can work remotely. That's not how economies work.
The availability of these opportunities has certainly increased over the past year, but who knows if that will last? As someone married to a successful tech professional, who has had several opportunities to significantly increase her income if we were willing to relocate to Bay/Seattle (including one a handful of weeks ago), I don't think the drastic regional variation in pay in that industry is (by and large) going anywhere.
investingfan
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Re: California Homebuying Insanity

Post by investingfan »

Brewo wrote: Sun May 09, 2021 10:21 pm
willthrill81 wrote: Sun May 09, 2021 9:51 pm
Brewo wrote: Sun May 09, 2021 9:46 pm A final thought to ponder, another name one can use for a LCOL area is "economically disadvantaged." But then the advice doesn't sound so good...
This is highly judgmental. There are many incredibly wealthy people who live in LCOL areas. And there are some decided financial advantages to LCOL areas, one of which being that it's much easier to own a home without becoming house poor.
Is it? By definition there is less money flowing through the economy in a place where it costs less to live, no? I don't doubt there are very wealthy people living in LCOL areas. But how can there be "LOTS" of $200k jobs (nearly 2.5x the average household income) available while still being LCOL? It's logically inconsistent.

Those "incredibly wealthy people who live in LCOL areas" may be able to take advantage of their wealth to live very well but it's pretty crappy advice for the general American to say well just get one of those 200k jobs that grow on trees and then move to a place where houses cost less than a years salary AND you can work remotely. That's not how economies work.



California topics are like the fox and the grapes.
Brewo
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Re: California Homebuying Insanity

Post by Brewo »

stoptothink wrote: Sun May 09, 2021 10:29 pm
The availability of these opportunities has certainly increased over the past year, but who knows if that will last? As someone married to a successful tech professional, who has had several opportunities to significantly increase her income if we were willing to relocate to Bay/Seattle (including one a handful of weeks ago), I don't think the drastic regional variation in pay in that industry is (by and large) going anywhere.
Yup. Working in biotech I see it too. It's a choice between one VHCOL area (Cambridge) or another (California). In our case it seems self sustaining so far, as you can't really do lab work remotely and both the talent and NuCos come from the co-located university ecosystem.
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willthrill81
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Re: California Homebuying Insanity

Post by willthrill81 »

Brewo wrote: Sun May 09, 2021 10:21 pm
willthrill81 wrote: Sun May 09, 2021 9:51 pm
Brewo wrote: Sun May 09, 2021 9:46 pm A final thought to ponder, another name one can use for a LCOL area is "economically disadvantaged." But then the advice doesn't sound so good...
This is highly judgmental. There are many incredibly wealthy people who live in LCOL areas. And there are some decided financial advantages to LCOL areas, one of which being that it's much easier to own a home without becoming house poor.
Is it? By definition there is less money flowing through the economy in a place where it costs less to live, no? I don't doubt there are very wealthy people living in LCOL areas. But how can there be "LOTS" of $200k jobs (nearly 2.5x the average household income) available while still being LCOL? It's logically inconsistent.

Those "incredibly wealthy people who live in LCOL areas" may be able to take advantage of their wealth to live very well but it's pretty crappy advice for the general American to say well just get one of those 200k jobs that grow on trees and then move to a place where houses cost less than a years salary AND you can work remotely. That's not how economies work.
I don't dispute any of that, but it's not good advice for the 'general American' to move to a VHCOL area either. Even in places like San Francisco, around half of the population has a household income under $100k. That's far from a recipe for great financial success in such an expensive place to live.

Much of this is industry and/or career specific. For instance, in my line of work as a professor, incomes are not very dependent on the COL of the area; hence, LCOL areas offer much greater wealth building potential. But in something like tech, the Bay Area is indisputably the best place to be.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
Brewo
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Re: California Homebuying Insanity

Post by Brewo »

willthrill81 wrote: Sun May 09, 2021 10:44 pm

I don't dispute any of that, but it's not good advice for the 'general American' to move to a VHCOL area either. Even in places like San Francisco, around half of the population has a household income under $100k. That's far from a recipe for great financial success in such an expensive place to live.

Much of this is industry and/or career specific. For instance, in my line of work as a professor, incomes are not very dependent on the COL of the area; hence, LCOL areas offer much greater wealth building potential. But in something like tech, the Bay Area is indisputably the best place to be.
I won't dispute that's true of your career, nice work! But the thread was started by someone that works in tech, and the quote I responded to was "How many jobs in LCOL pay $200k each? With remote work, LOTS!"

My challenge stands to that poster; let's put some evidence behind that statement as I think it's inconsistent with economic reality.
stoptothink
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Re: California Homebuying Insanity

Post by stoptothink »

investingfan wrote: Sun May 09, 2021 10:41 pm
Brewo wrote: Sun May 09, 2021 10:21 pm
willthrill81 wrote: Sun May 09, 2021 9:51 pm
Brewo wrote: Sun May 09, 2021 9:46 pm A final thought to ponder, another name one can use for a LCOL area is "economically disadvantaged." But then the advice doesn't sound so good...
This is highly judgmental. There are many incredibly wealthy people who live in LCOL areas. And there are some decided financial advantages to LCOL areas, one of which being that it's much easier to own a home without becoming house poor.
Is it? By definition there is less money flowing through the economy in a place where it costs less to live, no? I don't doubt there are very wealthy people living in LCOL areas. But how can there be "LOTS" of $200k jobs (nearly 2.5x the average household income) available while still being LCOL? It's logically inconsistent.

Those "incredibly wealthy people who live in LCOL areas" may be able to take advantage of their wealth to live very well but it's pretty crappy advice for the general American to say well just get one of those 200k jobs that grow on trees and then move to a place where houses cost less than a years salary AND you can work remotely. That's not how economies work.



California topics are like the fox and the grapes.
For some that may be the case, but there are plenty here who can absolutely have the grapes but have no interest in them. My family would be significantly better off financially if we were willing to move back to California. We aren't, barring income potential significantly more than OP is making (for a few years, then we'd leave).

It is interesting how these threads always end up with two divergent factions.
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willthrill81
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Re: California Homebuying Insanity

Post by willthrill81 »

Brewo wrote: Sun May 09, 2021 10:50 pm
willthrill81 wrote: Sun May 09, 2021 10:44 pm

I don't dispute any of that, but it's not good advice for the 'general American' to move to a VHCOL area either. Even in places like San Francisco, around half of the population has a household income under $100k. That's far from a recipe for great financial success in such an expensive place to live.

Much of this is industry and/or career specific. For instance, in my line of work as a professor, incomes are not very dependent on the COL of the area; hence, LCOL areas offer much greater wealth building potential. But in something like tech, the Bay Area is indisputably the best place to be.
I won't dispute that's true of your career, nice work! But the thread was started by someone that works in tech, and the quote I responded to was "How many jobs in LCOL pay $200k each? With remote work, LOTS!"

My challenge stands to that poster; let's put some evidence behind that statement as I think it's inconsistent with economic reality.
Well, according to Owl Labs, about 18% of the workforce consists of full-time remote workers. That's around 29 million people. And $200k of income would be at the 90th percentile. I suspect that the average remote worker makes more than the average non-remote worker, but even if assume that the same percentile ranking holds, that means that there are about 2.9 million remote jobs paying $200k or more. Some might say that's small in terms of a percentage, which is true, but others would say that 2.9 million jobs is still a big number, which is also true.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
Wannaretireearly
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Re: California Homebuying Insanity

Post by Wannaretireearly »

It's recently gone bonkers. Seeing houses in our SF east bay city sell for close to 200k over asking. E.g. 1400 Sq ft house listed for $1.2M closing for $1.38M!

Honestly cannot be sustainable. I get supply is low, but a ton of 'legacy' (i.e. 20 or 30 year old) tech companies are either moving out of CA, or actively NOT recruiting here.

Somethings gotta give...
This time next year, we'll be millionaires!
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VeganBH
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Re: California Homebuying Insanity

Post by VeganBH »

I feel like I have to chime in on all the pro-California comments. As a CA native (3rd generation), DH and I are up and leaving in a few weeks time. Why? 1) Forest fires are out of control. The entire north half of the state last year was burning up - and did so for over 3 months. The air quality was horrific. 2) "Controlled" power outages - again, last year. We lost the entire contents of our freezer/fridge on two separate occasions, not to mention the other inconveniences. Like trying to telework. 3) It's really over populated (and we're in No. CA). Trying to avoid crowds during the pandemic, it was near impossible to find such a unicorn (and I've hiked all over the state). 4) Been verbally assaulted/threatened by homeless folks on numerous occasions. The homeless problem is 100% out of control, from San Diego, to the small town of Mount Shasta. Someone was just knifed/killed near the trail we regularly bike on (homeless person).We simply don't feel safe recreating in many of the old places we used to....and many of our river water bodies are polluted from encampments and we can no longer swim here. Similarly (but entirely different city/body of water), we like to windsurf in the bay area (near Alameda) - but the water quality from uncontrolled encampments is downright dangerous. :(

Actionable-ish: With a serious eye on relocating this year, we recently circled back to the handful of cities in the southwest/west (not CA) that we were interested - before deciding on a new place to call home. Prices there have similarly gone off the charts - the house/neighborhood we bought in is up 30%+ from less than a year ago. Same could be said for all the areas we were interested in relocating (Oregon, Arizona)....
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ScroogeMcDuck
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Re: California Homebuying Insanity

Post by ScroogeMcDuck »

willthrill81 wrote: Sun May 09, 2021 10:44 pm Even in places like San Francisco, around half of the population has a household income under $100k.
Just because I looked it up recently - median household income in San Francisco is actually over $112k.
Iridium
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Re: California Homebuying Insanity

Post by Iridium »

Dave55 wrote: Sun May 09, 2021 8:13 am
abuss368 wrote: Sat May 08, 2021 7:32 pm
Dave55 wrote: Sat May 08, 2021 9:19 am We have the same insanity with house prices here in the suburbs of Denver.

Dave
Dave -

We are in northeast (you know where we are). Home prices INSANE with mass exodus from New York New Jersey.

Tony
A few days ago a news article from ABC News but also reported elsewhere: California leaving: State population declines for first time
California's population declined in 2020 for the first time since state officials have been measuring it
California’s population fell by more than 182,000 last year, the first yearly loss ever recorded for the nation’s most populous state that halted a growth streak dating to its founding in 1850 on the heels of a gold rush that prompted a flood of people to seek their fortune in the West.

This is a driver in the Denver metro for housing demand.

Dave
The CA real estate market combined with the population loss is the part that makes no sense to me. California had 100,000 net new housing last year, and people I have talked to have indicated that construction activity is accelerating. How can demand be this crazy when housing is actually getting more plentiful? All of these home buyers have to be coming from somewhere, but the numbers show that actually more are leaving than arriving. It doesn't make any sense!
Monsterflockster
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Re: California Homebuying Insanity

Post by Monsterflockster »

Iridium wrote: Mon May 10, 2021 12:03 am
Dave55 wrote: Sun May 09, 2021 8:13 am
abuss368 wrote: Sat May 08, 2021 7:32 pm
Dave55 wrote: Sat May 08, 2021 9:19 am We have the same insanity with house prices here in the suburbs of Denver.

Dave
Dave -

We are in northeast (you know where we are). Home prices INSANE with mass exodus from New York New Jersey.

Tony
A few days ago a news article from ABC News but also reported elsewhere: California leaving: State population declines for first time
California's population declined in 2020 for the first time since state officials have been measuring it
California’s population fell by more than 182,000 last year, the first yearly loss ever recorded for the nation’s most populous state that halted a growth streak dating to its founding in 1850 on the heels of a gold rush that prompted a flood of people to seek their fortune in the West.

This is a driver in the Denver metro for housing demand.

Dave
The CA real estate market combined with the population loss is the part that makes no sense to me. California had 100,000 net new housing last year, and people I have talked to have indicated that construction activity is accelerating. How can demand be this crazy when housing is actually getting more plentiful? All of these home buyers have to be coming from somewhere, but the numbers show that actually more are leaving than arriving. It doesn't make any sense!
It’s pretty simple really.... There are still A LOT more buyers than sellers. Buyers have LOTS of money. They are willing to cash out stocks for a down payment. Likely have two high income salaries and are willing to pay LOTS of money to live closer to work and not commute 2+ hours.

Hope that helps clear it up for you.
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lindsayinsf
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Re: California Homebuying Insanity

Post by lindsayinsf »

Iridium wrote: Mon May 10, 2021 12:03 am
Dave55 wrote: Sun May 09, 2021 8:13 am
abuss368 wrote: Sat May 08, 2021 7:32 pm
Dave55 wrote: Sat May 08, 2021 9:19 am We have the same insanity with house prices here in the suburbs of Denver.

Dave
Dave -

We are in northeast (you know where we are). Home prices INSANE with mass exodus from New York New Jersey.

Tony
A few days ago a news article from ABC News but also reported elsewhere: California leaving: State population declines for first time
California's population declined in 2020 for the first time since state officials have been measuring it
California’s population fell by more than 182,000 last year, the first yearly loss ever recorded for the nation’s most populous state that halted a growth streak dating to its founding in 1850 on the heels of a gold rush that prompted a flood of people to seek their fortune in the West.

This is a driver in the Denver metro for housing demand.

Dave
The CA real estate market combined with the population loss is the part that makes no sense to me. California had 100,000 net new housing last year, and people I have talked to have indicated that construction activity is accelerating. How can demand be this crazy when housing is actually getting more plentiful? All of these home buyers have to be coming from somewhere, but the numbers show that actually more are leaving than arriving. It doesn't make any sense!
Housing construction might be accelerating in a few places but it is not accelerating fast enough and the deficit is so large that it will take many years to catch up. There's a 30+ year deficit in housing and most counties have not, are not, and have no plans to, build enough housing for their residents:

https://www.ocregister.com/2019/12/09/l ... ing-goals/

https://cayimby.org/how-many-new-homes- ... nia-build/

Perhaps demand is high because the people who can most afford to remain in California are the ones who are staying:

https://calmatters.org/economy/2021/03/ ... ia-exodus/
khram
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Re: California Homebuying Insanity

Post by khram »

.....
Last edited by khram on Mon May 10, 2021 3:04 pm, edited 1 time in total.
Nomar
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Re: California Homebuying Insanity

Post by Nomar »

"The CA real estate market combined with the population loss is the part that makes no sense to me. California had 100,000 net new housing last year, and people I have talked to have indicated that construction activity is accelerating. How can demand be this crazy when housing is actually getting more plentiful? All of these home buyers have to be coming from somewhere, but the numbers show that actually more are leaving than arriving. It doesn't make any sense!


Housing construction might be accelerating in a few places but it is not accelerating fast enough and the deficit is so large that it will take many years to catch up. There's a 30+ year deficit in housing and most counties have not, are not, and have no plans to, build enough housing for their residents:"


This is the core of the issue. The newspaper headlines speak of fires, the homeless, demographic migrations and tech salaries. The housing issue is a supply issue--scarcity--that has been created and sustained by a government that has placed obstacles in the way of construction. The property tax system, single family zoning and expensive regulations. The builders used to create whole new communities in coastal Southern California to address demand. That is no longer possible in most cases. As my friend who owns property on Nantucket wryly remarks, "They aren't making any more land."
Grogs
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Re: California Homebuying Insanity

Post by Grogs »

willthrill81 wrote: Sun May 09, 2021 10:57 pm
Brewo wrote: Sun May 09, 2021 10:50 pm
willthrill81 wrote: Sun May 09, 2021 10:44 pm

I don't dispute any of that, but it's not good advice for the 'general American' to move to a VHCOL area either. Even in places like San Francisco, around half of the population has a household income under $100k. That's far from a recipe for great financial success in such an expensive place to live.

Much of this is industry and/or career specific. For instance, in my line of work as a professor, incomes are not very dependent on the COL of the area; hence, LCOL areas offer much greater wealth building potential. But in something like tech, the Bay Area is indisputably the best place to be.
I won't dispute that's true of your career, nice work! But the thread was started by someone that works in tech, and the quote I responded to was "How many jobs in LCOL pay $200k each? With remote work, LOTS!"

My challenge stands to that poster; let's put some evidence behind that statement as I think it's inconsistent with economic reality.
Well, according to Owl Labs, about 18% of the workforce consists of full-time remote workers. That's around 29 million people. And $200k of income would be at the 90th percentile. I suspect that the average remote worker makes more than the average non-remote worker, but even if assume that the same percentile ranking holds, that means that there are about 2.9 million remote jobs paying $200k or more. Some might say that's small in terms of a percentage, which is true, but others would say that 2.9 million jobs is still a big number, which is also true.
Will,

Not sure where you come up with 90th percentile for $200k salary. I think you may be looking at household income rather than individual. According to this page, $200k in individual income puts you in the 96-97th percentile. That would reduce the number of jobs by about a factor of three to 1 million or so. Still, as you say, it's hard to really make sense of that number. A lot of it probably depends on what kinds of jobs are considered remote in that study.
MiddleOfTheRoad
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Re: California Homebuying Insanity

Post by MiddleOfTheRoad »

Iridium wrote: Mon May 10, 2021 12:03 am
Dave55 wrote: Sun May 09, 2021 8:13 am
abuss368 wrote: Sat May 08, 2021 7:32 pm
Dave55 wrote: Sat May 08, 2021 9:19 am We have the same insanity with house prices here in the suburbs of Denver.

Dave
Dave -

We are in northeast (you know where we are). Home prices INSANE with mass exodus from New York New Jersey.

Tony
A few days ago a news article from ABC News but also reported elsewhere: California leaving: State population declines for first time
California's population declined in 2020 for the first time since state officials have been measuring it
California’s population fell by more than 182,000 last year, the first yearly loss ever recorded for the nation’s most populous state that halted a growth streak dating to its founding in 1850 on the heels of a gold rush that prompted a flood of people to seek their fortune in the West.

This is a driver in the Denver metro for housing demand.

Dave
The CA real estate market combined with the population loss is the part that makes no sense to me. California had 100,000 net new housing last year, and people I have talked to have indicated that construction activity is accelerating. How can demand be this crazy when housing is actually getting more plentiful? All of these home buyers have to be coming from somewhere, but the numbers show that actually more are leaving than arriving. It doesn't make any sense!
Foreign buyers too.
Combining diversity, lifestyle, weather, and the fact that we always have the best first (pfizer and moderna vaccines anyone? Many of us are taking this for granted). If you have a ton of money as a foreigner and can buy CA housing, I don’t see why you would not buy in.
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willthrill81
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Re: California Homebuying Insanity

Post by willthrill81 »

ScroogeMcDuck wrote: Sun May 09, 2021 11:47 pm
willthrill81 wrote: Sun May 09, 2021 10:44 pm Even in places like San Francisco, around half of the population has a household income under $100k.
Just because I looked it up recently - median household income in San Francisco is actually over $112k.
It varies significantly depending on which source you use. Still, it illustrates that incomes are far from universally high in the area.
Grogs wrote: Mon May 10, 2021 8:23 am Will,

Not sure where you come up with 90th percentile for $200k salary. I think you may be looking at household income rather than individual. According to this page, $200k in individual income puts you in the 96-97th percentile. That would reduce the number of jobs by about a factor of three to 1 million or so. Still, as you say, it's hard to really make sense of that number. A lot of it probably depends on what kinds of jobs are considered remote in that study.
Yes, that was HHI, not individual. But I suspect that there are more than 1 million such jobs since remote work is rarely unskilled. I suspect that the number is somewhere between 1.5 and 2.5 million such jobs.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
mervinj7
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Re: California Homebuying Insanity

Post by mervinj7 »

willthrill81 wrote: Mon May 10, 2021 9:35 am
ScroogeMcDuck wrote: Sun May 09, 2021 11:47 pm
willthrill81 wrote: Sun May 09, 2021 10:44 pm Even in places like San Francisco, around half of the population has a household income under $100k.
Just because I looked it up recently - median household income in San Francisco is actually over $112k.
It varies significantly depending on which source you use. Still, it illustrates that incomes are far from universally high in the area.
Grogs wrote: Mon May 10, 2021 8:23 am Will,

Not sure where you come up with 90th percentile for $200k salary. I think you may be looking at household income rather than individual. According to this page, $200k in individual income puts you in the 96-97th percentile. That would reduce the number of jobs by about a factor of three to 1 million or so. Still, as you say, it's hard to really make sense of that number. A lot of it probably depends on what kinds of jobs are considered remote in that study.
Yes, that was HHI, not individual. But I suspect that there are more than 1 million such jobs since remote work is rarely unskilled. I suspect that the number is somewhere between 1.5 and 2.5 million such jobs.
We can endlessly debate whether we should we trust data directly from the US Census website or from smartasset.com or whether OP can keep his $600k jobs by moving to a LCOL with minimal effort but debates like that end up going nowhere and derail the thread. In this case, OP's family makes over $600k (and rising) and they would like to stay in their current locale for personal career growth, financial, and family reasons. Let's keep the thread focused on OP's specific housing related questions and NOT get it locked like many other CA/anti-CA threads in the past few weeks.

Since I seem to be one of the few folks in this thread who actually live in CA, I would like to comment my tech company's local office is planning on being back in person in 6 weeks. I won't speculate on remote work taking over the rest of the industry without any actual data to back it up. The few couples I know who are looking to purchase housing this month are being pressured to beat the rush once our county officially opens up on June 15th.

OP. in your specific situation, with $600k HHI, you can easily afford a $1.4M house. As another poster said, if the numbers work out and you still are hesitant to purchase, then it's not a financial question you need to answer.
stoptothink
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Re: California Homebuying Insanity

Post by stoptothink »

mervinj7 wrote: Mon May 10, 2021 11:49 am
Since I seem to be one of the few folks in this thread who actually live in CA, I would like to comment my tech company's local office is planning on being back in person in 6 weeks. I won't speculate on remote work taking over the rest of the industry without any actual data to back it up. The few couples I know who are looking to purchase housing this month are being pressured to beat the rush once our county officially opens up on June 15th.
My n=1; while not in California, my wife was offered another job in California (in tech) just a few weeks ago and this mid-size company was in the process of requiring all employees physically return full-time. She's had multiple offers in the past year in California and one each in Seattle and Austin, but all were turned down because none of them offered fully remote. Interestingly, my mother happens to work for one of the companies who offered my wife (the one in Seattle) and my mother has been fully remote for about 20yrs. Wife's mid-size tech employer here (in Utah) has required all employees spend at least two days per week in the office since the beginning of the year, which she is crossing her fingers is the "new normal".
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poppy42
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Re: California Homebuying Insanity

Post by poppy42 »

OP here. Since this topic got hot figured I would update. I’m in escrow. A house that we liked came up, we got in the first offer, bid $175k over, and waived appraisal and loan contingencies. And we actually got it. Now just biting my nails on how low the appraisal will come in. A couple similar homes in the area sold at our offer price in the last 6 months, but that doesn’t mean it will appraise at that price. So we may be very very cash poor in the coming months, but I think it was the risk we had to take to actually win.

A lot of this discussion has made me realize how much of this is emotional and not logical. I know in my heart it’s probably easier and cheaper to rent. But I want a house for my family. I’m entering middle age. I grew up in a blue collar neighborhood and my parents bought a house in their 20s. So even though I know my situation is completely different, in this insanely expensive area of CA, there was still that stupid American dream fantasy of being a homeowner. Anyway. Thank you for the lively discussion. Hopefully I won’t end up completely upside down in 5 years :)
mervinj7
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Re: California Homebuying Insanity

Post by mervinj7 »

poppy42 wrote: Fri May 14, 2021 10:23 pm OP here. Since this topic got hot figured I would update. I’m in escrow. A house that we liked came up, we got in the first offer, bid $175k over, and waived appraisal and loan contingencies. And we actually got it. Now just biting my nails on how low the appraisal will come in. A couple similar homes in the area sold at our offer price in the last 6 months, but that doesn’t mean it will appraise at that price. So we may be very very cash poor in the coming months, but I think it was the risk we had to take to actually win.

A lot of this discussion has made me realize how much of this is emotional and not logical. I know in my heart it’s probably easier and cheaper to rent. But I want a house for my family. I’m entering middle age. I grew up in a blue collar neighborhood and my parents bought a house in their 20s. So even though I know my situation is completely different, in this insanely expensive area of CA, there was still that stupid American dream fantasy of being a homeowner. Anyway. Thank you for the lively discussion. Hopefully I won’t end up completely upside down in 5 years :)
Congrats, OP. You'll be fine no matter what happens in 5 years.
:happy
Imadeit
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Re: California Homebuying Insanity

Post by Imadeit »

Congratulations! You’ll be ok in time. When I purchased my California Bay Area home in 1985 it was the highest price in the neighborhood at the time. My house has since been paid off for many years and consider it one of the best investments I have and a major asset to my net worth. I can sit and allow continued appreciation while having no payment or I can sell and move to a cheaper area and pocket the gain. But at the time of purchase it was a struggle.
mervinj7
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Re: California Homebuying Insanity

Post by mervinj7 »

Imadeit wrote: Fri May 14, 2021 11:02 pm Congratulations! You’ll be ok in time. When I purchased my California Bay Area home in 1985 it was the highest price in the neighborhood at the time. My house has since been paid off for many years and consider it one of the best investments I have and a major asset to my net worth. I can sit and allow continued appreciation while having no payment or I can sell and move to a cheaper area and pocket the gain. But at the time of purchase it was a struggle.
Plus, your property taxes are locked in.
Imadeit
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Re: California Homebuying Insanity

Post by Imadeit »

mervinj7 wrote: Fri May 14, 2021 11:07 pm [quote=Imadeit post_id=6007895 time=<a href="tel:1621051359">1621051359</a> user_id=174753]
Congratulations! You’ll be ok in time. When I purchased my California Bay Area home in 1985 it was the highest price in the neighborhood at the time. My house has since been paid off for many years and consider it one of the best investments I have and a major asset to my net worth. I can sit and allow continued appreciation while having no payment or I can sell and move to a cheaper area and pocket the gain. But at the time of purchase it was a struggle.
Plus, your property taxes are locked in.
[/quote]

Yes thankful to prop 13 and the ability to move to other counties that accept the property tax transfer without increase.
Luckywon
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Re: California Homebuying Insanity

Post by Luckywon »

Imadeit wrote: Fri May 14, 2021 11:18 pm Yes thankful to prop 13 and the ability to move to other counties that accept the property tax transfer without increase.
I believe Prop 19, among many other things, made the issue of which counties accept property tax transfer moot. It is now statewide.
valleyrock
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Re: California Homebuying Insanity

Post by valleyrock »

Did anyone suggest to focus on a house, and forego matching Teslas? Cars lose value over time. Used cars can be quite fine. That and some other frugality could help with buying a $2M home.
softwaregeek
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Re: California Homebuying Insanity

Post by softwaregeek »

Tingting1013 wrote: Fri May 07, 2021 9:01 pm
Bungo wrote: Fri May 07, 2021 8:56 pm
poppy42 wrote: Thu May 06, 2021 10:27 pm
Yesterdaysnews wrote: Thu May 06, 2021 10:23 pm Who are these people showing up with $3M cash to buy a house on the spot? Where is this money coming from, the tech industry? I don’t see that kind of liquid folks around where I live.
It’s tech, but it’s also people who bought a while ago and are trading up. They have seen their home values increase by a ton in the last decade. Homes in my current neighborhood were selling for about 400k 10 years ago. Those same houses will now go for 2M. Not an exaggeration.
What neighborhood is this? I bought 9 years ago in San Jose at around 650k, and my house is currently worth roughly 1.6M, which is a 2.5x multiple. Where in the Bay Area is there a 5x multiple vs. 10 years ago? I'm not saying it's false, but if it's true it's not on my radar!
OP is in SoCal
Certain areas are up at least 4x, such as Laurelwood in Santa Clara next to the apple campus. Parts of Menlo Park as well. Sunnyvale Cherry Chase about 3.5x
A-Commoner
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Re: California Homebuying Insanity

Post by A-Commoner »

The house we bought in 2017 here in a Los Angeles suburb for $1M now has a Redfin estimate of $1.43M. I think it's insane, but I'm not complaining. :)
Imadeit
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Re: California Homebuying Insanity

Post by Imadeit »

Luckywon wrote: Fri May 14, 2021 11:22 pm
Imadeit wrote: Fri May 14, 2021 11:18 pm Yes thankful to prop 13 and the ability to move to other counties that accept the property tax transfer without increase.
I believe Prop 19, among many other things, made the issue of which counties accept property tax transfer moot. It is now statewide.
I didn’t realize there was a prop 19! That’s awesome! Looks like I have more options of where to move in the future. And I see the price of the new home could be higher priced if i wanted to upgrade instead of downsize.
softwaregeek
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Re: California Homebuying Insanity

Post by softwaregeek »

ScroogeMcDuck wrote: Sun May 09, 2021 11:47 pm
willthrill81 wrote: Sun May 09, 2021 10:44 pm Even in places like San Francisco, around half of the population has a household income under $100k.
Just because I looked it up recently - median household income in San Francisco is actually over $112k.
SanFran has rent control. So thousands of people paying a few hundred a month for an apartment. Plus there are places with young people 2 per bedroom and even families doubling up or accepting boarders. I used to live across from a house we called ‘the anthill’ because so many people lived there.
A-Commoner
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Re: California Homebuying Insanity

Post by A-Commoner »

Observation: our neighbor 3 houses down from us drove an Acura MDX. He sold his house to a guy who drives a G wagon.

While our subdivision was already affluent when we bought in 4 years ago, the newcomers buying homes here seem to be on the next rung up on the affluence ladder, if cars are a reliable indicator.
davedci1
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Re: California Homebuying Insanity

Post by davedci1 »

Similar situation here. Doesn't seem right to buy. I feel ya. It's crazy out here. I rented in the area we want our kids to go to school in. Gonna wait a year or two to see if something opens up. If it doesn't, we'll buy elsewhere and rent that out until the kids finish school then move into it. Location location location for public school is a real thing. (I ain't paying for private....haha)
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ApeAttack
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Re: California Homebuying Insanity

Post by ApeAttack »

Iridium wrote: Mon May 10, 2021 12:03 am
Dave55 wrote: Sun May 09, 2021 8:13 am
abuss368 wrote: Sat May 08, 2021 7:32 pm
Dave55 wrote: Sat May 08, 2021 9:19 am We have the same insanity with house prices here in the suburbs of Denver.

Dave
Dave -

We are in northeast (you know where we are). Home prices INSANE with mass exodus from New York New Jersey.

Tony
A few days ago a news article from ABC News but also reported elsewhere: California leaving: State population declines for first time
California's population declined in 2020 for the first time since state officials have been measuring it
California’s population fell by more than 182,000 last year, the first yearly loss ever recorded for the nation’s most populous state that halted a growth streak dating to its founding in 1850 on the heels of a gold rush that prompted a flood of people to seek their fortune in the West.

This is a driver in the Denver metro for housing demand.

Dave
The CA real estate market combined with the population loss is the part that makes no sense to me. California had 100,000 net new housing last year, and people I have talked to have indicated that construction activity is accelerating. How can demand be this crazy when housing is actually getting more plentiful? All of these home buyers have to be coming from somewhere, but the numbers show that actually more are leaving than arriving. It doesn't make any sense!
The demand has been high for a long time and will continue to be high for the foreseeable future. There are over 15M people living in the LA/OC/Riverside/San Bernadino counties area. Most residences are single or two story, so a lot of urban sprawl and relatively low population density compared to east coast cities.

Recently I've seen many new expensive condos being built in Orange County. Lots of new expensive apartments too. They tend to be 4+ stories. Have to build upward now.
Just another lazy index investor who recently found out about I-Bonds (https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm).
stoptothink
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Re: California Homebuying Insanity

Post by stoptothink »

A-Commoner wrote: Sat May 15, 2021 12:48 am The house we bought in 2017 here in a Los Angeles suburb for $1M now has a Redfin estimate of $1.43M. I think it's insane, but I'm not complaining. :)
Proportionally, that's not necessarily high compared to some other areas of the country. Based on Zillow estimate and the recent sale of direct comps in my townhome community (like my next-door neighbor's about a month ago), the value of my home in Utah is up nearly 80% since we bought in 2016. Oops, just checked, make that 85%; bought for $189k in 2016, estimate now $348.5k. Our friends across the street are the only original (from new construction) owners on the block, I think they paid $138k in 2013. The word "insanity" could be used when discussing real estate pretty much everywhere in the country right now. We make over 3x median income in our area and feel like we're priced out of a single family home now (were planning on upgrading in 2-5yrs).
Last edited by stoptothink on Sat May 15, 2021 8:33 am, edited 1 time in total.
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willthrill81
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Re: California Homebuying Insanity

Post by willthrill81 »

stoptothink wrote: Sat May 15, 2021 7:59 am
A-Commoner wrote: Sat May 15, 2021 12:48 am The house we bought in 2017 here in a Los Angeles suburb for $1M now has a Redfin estimate of $1.43M. I think it's insane, but I'm not complaining. :)
Proportionally, that's not necessarily high compared to some other areas of the country. Based on Zillow estimate and the recent sale of direct comps in my townhome community (like my next-door neighbor's about a month ago), the value of my home in Utah is up nearly 80% since we bought in 2016. The word "insanity" could be used when discussing real estate pretty much everywhere in the country right now.
We too have seen approximately 80% appreciation on our home over the last 6.5 years.

I don't know how much of the seemingly nationwide real estate appreciation is collective 'insanity' or more a result of record low interest rates making many want to 'hurry up and lock in low interest rates' even if they have to pay a premium for the house. I've heard talk of a housing shortage, but I'm less persuaded of how much of a factor that is playing.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
BogleFan510
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Re: California Homebuying Insanity

Post by BogleFan510 »

DosCommas wrote: Sat May 08, 2021 6:57 pm I have a different perspective on this, having 2 kids in a 2BR condo in a VHCOL market, similar income, and budget to OP. We chose something we could easily afford in a location we liked and just deal with having less space. Sometimes I curse it out (working from home right now), but we chose a location near parks / public spaces and we make use of them. We walk to the gym, restaurants, etc. We spend whatever we want, on whatever we want, because our housing is supremely affordable to us and we're not in a rush to get that big expensive house. What if you slashed your budget to 1.25m, get something smaller with less COVID appeal, and possibly even keep $100-150k aside to do a little renovation before you move in (i.e. new kitchen and bath)? With $600k income and a $1m mortgage you'll feel pretty good about expensive vacations and still see your savings and future options increase every year. We're even thinking about a vacation place to go to on weekends now rather than trading up to the bigger house and cutting back elsewhere...
Good points. We just went into contract with a buyer to sell a very cute 1000sq ft, 2 br/1ba home with big yard, 1.5 blocks to large park, schools, walking to downtown Napa that had been a rental property. Buyers will love this house as almost 100% of space is very usable, nice 1 car garage and super friendly and helpful neighbors. Walkable to Ace hardware, groceries, great restaurants, 60 bands play on porches during yearly festival, fireworks at river walkable, live bands at a multiple venues walkable, including Bottlefest festival. And plenty of wine, of course.

Happy they are chosing a super efficient home with great freatures and hope we can close with appraisal contingency the only barrier.
Big Dog
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Re: California Homebuying Insanity

Post by Big Dog »

And $200k of income would be at the 90th percentile.
Small nit...isn't that number household income, i.e., two CA teachers or other workers making $100k each could be at that number.

And wrt to academia....many Unis in high cost areas, including CA, offer housing subsidies to faculty, and once monthly housing cost is lowered, VHCOL CA becomes much less costly. Property taxes are essentially capped, energy use is low, food is plentiful....
Big Dog
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Re: California Homebuying Insanity

Post by Big Dog »

Iridium wrote: Mon May 10, 2021 12:03 am
Dave55 wrote: Sun May 09, 2021 8:13 am
abuss368 wrote: Sat May 08, 2021 7:32 pm
Dave55 wrote: Sat May 08, 2021 9:19 am We have the same insanity with house prices here in the suburbs of Denver.

Dave
Dave -

We are in northeast (you know where we are). Home prices INSANE with mass exodus from New York New Jersey.

Tony
A few days ago a news article from ABC News but also reported elsewhere: California leaving: State population declines for first time
California's population declined in 2020 for the first time since state officials have been measuring it
California’s population fell by more than 182,000 last year, the first yearly loss ever recorded for the nation’s most populous state that halted a growth streak dating to its founding in 1850 on the heels of a gold rush that prompted a flood of people to seek their fortune in the West.

This is a driver in the Denver metro for housing demand.

Dave
The CA real estate market combined with the population loss is the part that makes no sense to me. California had 100,000 net new housing last year, and people I have talked to have indicated that construction activity is accelerating. How can demand be this crazy when housing is actually getting more plentiful? All of these home buyers have to be coming from somewhere, but the numbers show that actually more are leaving than arriving. It doesn't make any sense!
100k units is not even a rounding error in a state of near 40 million. Plus, many of those are in the low cost Central Calley or Inland Empire (SoCal). NorCal leads the nation with no-low growth policies and NIMBY'ism. It takes years to obtain permit approval to build new units in the Bay Area.
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