Anyone else agree with my logic on silicon valley housing?

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GrandDesigns
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Anyone else agree with my logic on silicon valley housing?

Post by GrandDesigns » Mon May 15, 2017 7:26 pm

I'm an engineer living in silicon valley, and I am pretty sure I'm going to exit within the next year, to somewhere like Austin, Texas or something. I came to the revelation that I need to live SV when I realized that, as long as I am comfortable financially, lifestyle is more important to me than numbers, and I want to work 40 hours a week and have a house with a decent yard and a grill, and that just isn't the lifestyle here.

Anyhow, I do want to make sure I check all my bases before leaving so I was going through the supposed math that the income-to-debt ratio of average housing cost means its still better to live here (if you're an engineer). Let's ignore that the average housing here is lower quality than elsewhere. I make $150k/year in salary and another $100k/year in stock, all taxed at the 33% bracket + 10% state tax. Let's suppose that I decide to spring for a $1,000,000 2 bedroom condo (yes there are cheaper options in South San Jose, etc. but this is the lifestyle thing - if I can't even afford to live near work I am not willing to stay).

If I put $200k down and borrow the other $800k, I am now leveraged 5:1 on this "investment." But more disturbingly, that investment is almost my entire net worth (I max my 401k out but I'm only 27). So if this condo loses even 10% of its value, I'm in big trouble. Next up will be property tax ($1,000/mo) and HOA fees, which means that I'll easily owe $1,300/mo or more just for "management fees." And on the hook for $4,800/mo or more on this highly leveraged asset thats consuming my entire net worth, how will I ever get out of the rat race? What will happen when I want to get out of the condo which means now tying $2,000,000 up into a tiny house with double the property tax? I'm not convinced I will own a 2 bedroom condo so much as that condo will own me.

I would much rather move somewhere like Texas and buy a house with $150k/down and $150k mortgaged, which leaves me leveraged 2:1 on an asset that actually affords me the lifestyle I want and isn't consuming my entire net worth, and with mortgage payments that don't loom ominously over all of my life plans.

Maybe my logic is completely wrong, but I'm hoping if nothing else some other people who got out of Silicon Valley (or Manhattan) will remember once going through similar thoughts and share their revelations with me. Thanks!

TL;DR: Thoughts on the perils of justifying huge amounts of debt based on having a large income.

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Pajamas
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Re: Anyone else agree with my logic on silicon valley housing?

Post by Pajamas » Mon May 15, 2017 7:38 pm

Two thoughts:

Housing in Austin may not be as cheap as you think it is.

If you can get a job with Silicon Valley pay that allows you to work remotely and keep it for as long as you can after you move, that will put you way ahead financially. I have known several people in NYC who did something similar.

rec7
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Re: Anyone else agree with my logic on silicon valley housing?

Post by rec7 » Mon May 15, 2017 7:39 pm

I thought you might like this video. https://www.youtube.com/watch?v=SBjXUBMkkE8&t=1157s
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

NoGambleNoFuture
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Re: Anyone else agree with my logic on silicon valley housing?

Post by NoGambleNoFuture » Mon May 15, 2017 7:41 pm

As someone that works for a Bay Area company while living in Austin I'll state that your income isn't going to take a significant, if any type of, cut. Obviously, no state income tax here which will help. And, you don't even want to see what the same amount of $$ would get you here.

My mortgage on 2200 sq ft brand new home on an acre is a thousand bucks less than my 500 sq foot nob hill apartment was and I'm taking home more living in Texas...

The trick is to make Bay Area money in Texas.

GrandDesigns
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Re: Anyone else agree with my logic on silicon valley housing?

Post by GrandDesigns » Mon May 15, 2017 7:43 pm

Pajamas wrote:Two thoughts:

Housing in Austin may not be as cheap as you think it is.

If you can get a job with Silicon Valley pay that allows you to work remotely and keep it for as long as you can after you move, that will put you way ahead financially. I have known several people in NYC who did something similar.


Yes, I did not point this out but that is a key element of my plan, is to transfer my job to one of my companies other offices. Since I'll retain all of my unvested stock in doing so, I'll be pulling in $100k to $150k a year in stock without living in SV. That should put me way ahead.

GrandDesigns
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Re: Anyone else agree with my logic on silicon valley housing?

Post by GrandDesigns » Mon May 15, 2017 7:46 pm

NoGambleNoFuture wrote:As someone that works for a Bay Area company while living in Austin I'll state that your income isn't going to take a significant, if any type of, cut. Obviously, no state income tax here which will help. And, you don't even want to see what the same amount of $$ would get you here.

My mortgage on 2200 sq ft brand new home on an acre is a thousand bucks less than my 500 sq foot nob hill apartment was and I'm taking home more living in Texas...

The trick is to make Bay Area money in Texas.


I also live in a 500 square foot apartment so I have to ask. Did you eventually get to the point of screaming if you didn't get out of such a tiny apartment, look at the insane cost of anything else, and decide, this is nuts, I'm moving somewhere else? That's kind of what happened to me.

btenny
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Re: Anyone else agree with my logic on silicon valley housing?

Post by btenny » Mon May 15, 2017 7:56 pm

I agree completely with your logic. I stayed in Phoenix for my entire career due to the lower COL and low cost real estate and a better quality of life. I tried the start up stuff when I was young. It was OK but sort of a crazy work load and not that good pay wise. And in my case there was no great stock reward at the end. I learned how the workers were treated. The finance people got all the stock money. So after that I stayed at my OK company and made a good living doing engineering in Arizona. It was fine. It paid me enough money to have a nice life and a nice home and raise good two kids. We always had enough money to have fun. We had enough money to invest in the market and retire early.

Over the years I did not go to work for Intel or IBM or xyz in various HCOL areas like silicon valley or LA or Seattle. When ever I looked seriously at a job offer it always came back with a lower life style for the new job. The issue was always giant housing costs and giant tax costs that never got better. So I never moved. Others I know love the technical talk life style and are willing to pay big $$ for housing. I say each to his own choices. Every person needs to make there own decisions.

Good Luck.

bigred77
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Re: Anyone else agree with my logic on silicon valley housing?

Post by bigred77 » Mon May 15, 2017 7:56 pm

The problem is if you need another comparable job at some point, there are a lot more of them where you are than in Austin (In terms of making 250k+ with 5 yrs experience).

Some people would drastically prefer living in San Jose to Austin in terms of weather, the beach, etc. this may not apply to you.

If I was a single 20 something in Tech, SV is where I would want to be. No, you can't buy property there at 27, but there is a lot of other benefits to being there. I would just keep putting money away and enjoy yourself.

sunny_socal
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Re: Anyone else agree with my logic on silicon valley housing?

Post by sunny_socal » Mon May 15, 2017 7:59 pm

If I didn't have family firmly rooted out here in CA I'd move to TX in a heartbeat.

visualguy
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Re: Anyone else agree with my logic on silicon valley housing?

Post by visualguy » Mon May 15, 2017 8:01 pm

bigred77 wrote:The problem is if you need another comparable job at some point, there are a lot more of them where you are than in Austin (In terms of making 250k+ with 5 yrs experience).

Some people would drastically prefer living in San Jose to Austin in terms of weather, the beach, etc. this may not apply to you.

If I was a single 20 something in Tech, SV is where I would want to be. No, you can't buy property there at 27, but there is a lot of other benefits to being there. I would just keep putting money away and enjoy yourself.


+1

Higher chance of finding a good next gig with more (maybe much more) money.

Also, once you buy, chances are that your property will appreciate more than in other locations.

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simplesimon
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Re: Anyone else agree with my logic on silicon valley housing?

Post by simplesimon » Mon May 15, 2017 8:04 pm

GrandDesigns wrote:If I put $200k down and borrow the other $800k, I am now leveraged 5:1 on this "investment." But more disturbingly, that investment is almost my entire net worth (I max my 401k out but I'm only 27). So if this condo loses even 10% of its value, I'm in big trouble. Next up will be property tax ($1,000/mo) and HOA fees, which means that I'll easily owe $1,300/mo or more just for "management fees." And on the hook for $4,800/mo or more on this highly leveraged asset thats consuming my entire net worth, how will I ever get out of the rat race?


Anybody who puts 20% down, a very reasonable Boglehead-ish down payment, will be leveraged 5:1 on the asset. A $1MM house on a $250k salary is not unreasonable, so I think you're being too pessimistic about not being able to get out of the rat race. A $2M SFH on the other hand, yeah you'll want to marry someone with the same salary.

What kind of life are you living now i.e. what are your expenses? Do you feel like these costs are choking you? What parts of SV life do not appeal to you? If culturally you don't feel like you fit in, then by all means move.

EnjoyIt
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Re: Anyone else agree with my logic on silicon valley housing?

Post by EnjoyIt » Mon May 15, 2017 8:05 pm

We moved out of NY to Texas for the same reason about 8 years ago. Our lives couldn't be better.

GrandDesigns
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Re: Anyone else agree with my logic on silicon valley housing?

Post by GrandDesigns » Mon May 15, 2017 8:13 pm

EnjoyIt wrote:We moved out of NY to Texas for the same reason about 8 years ago. Our lives couldn't be better.


Thanks. All the replies here are great and super helpful, but they seem to be confirming the conclusion I came to originally. You can spin the math about housing anyway you want based on future career prospects, etc. and so you really have to get to the bottom of who you are as a person and what you want out of life. SV is a very high octane, busy, crowded lifestyle, and if you are drawn to that, you can definitely make enough money as an engineer to own something here.

I am not drawn to the lifestyle here at all. If it was cheaper to live here I think I could look past some of my disagreements with the bay area, but why would you bury yourself in that much debt to live somewhere you don't even like?

Thanks for the replies, because even the people who disagreed with my logic helped me get to the bottom of what I really want.

ourbrooks
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Re: Anyone else agree with my logic on silicon valley housing?

Post by ourbrooks » Mon May 15, 2017 8:15 pm

Please, please, don't move to Austin. There are 20,000 - 24,000 people moving here a year and the City of Austin has done a miserable job of planning for growth. They expect traffic on the main, MOPAC freeway, to go from 185,000 trips per day this year to 320,000 trips a day by 2030. What are they doing about it? Adding two more lanes to the 183 freeway which feeds into MOPAC. They estimate that what is now a 15 minute trip will become a 40 minute trip.

Prices near downtown Austin are near Bay Area prices; people have been moving to Austin from the Bay Area for several decades now and they've driven the prices up. Increasingly, the lower cost housing is moving further and further out. If you're talking 2200 sq ft on an acre, my guess is that you're talking 10-20 miles from downtown. Austin looks more and more like it's going to become the next Los Angeles - hundreds of square miles of single family homes connected by miles and miles of freeways. How would you feel if you moved here and discovered that every year your commute was becoming 20% longer?

If you can work remotely all or a large part of the time, consider Dallas, particularly the northern suburbs, like Richardson or Plano. Prices there are substantially lower than in Austin and Dallas has a functioning public transit system.

Do check your numbers on cost of living. Like many states which don't have income taxes, they make up for it in property taxes and sales taxes. As I recall, Texas actually ranks in the upper third for cost of living.

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celia
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Re: Anyone else agree with my logic on silicon valley housing?

Post by celia » Mon May 15, 2017 8:20 pm

Let's look at your numbers.
GrandDesigns wrote:I make $150k/year in salary and another $100k/year in stock, all taxed at the 33% bracket + 10% state tax.
Your income taxes are partly at 0%, part at 10%, part at 15%, part at 25%, part at 28% and part at 33% (federal).
The amount equal to your standard (or itemized) deductions and the exemption are taxed at 0. Only the following is taxed at 33%:
$150K + $100K - $6K (deductions) - $4K (exemptions) - $191K = $49K (assuming you are single)
https://taxfoundation.org/2017-tax-brackets


Let's suppose that I decide to spring for a $1,000,000 2 bedroom condo (yes there are cheaper options in South San Jose, etc. but this is the lifestyle thing - if I can't even afford to live near work I am not willing to stay).

If I put $200k down and borrow the other $800k, I am now leveraged 5:1 on this "investment." But more disturbingly, that investment is almost my entire net worth (I max my 401k out but I'm only 27).
So even though you have high income taxes, you have amassed $1M by age 27? Very impressive!

So if this condo loses even 10% of its value, I'm in big trouble.
Property values can go up or down. What if it went up 10% instead (which is more likely)? If it went down, do you think it will always stay there?

Next up will be property tax ($1,000/mo) and HOA fees, which means that I'll easily owe $1,300/mo or more just for "management fees."
HOA fees include garden maintenance and, homeowners insurance for the exterior part and common areas, and exterior replacements (roof, pathways, re-stuccoing, community room, etc.) You will have to save some money for that for any property you buy, anywhere you buy it. The property tax and interest on the mortgage are deductible on your taxes, so now your income taxes would decrease, too.

And on the hook for $4,800/mo or more on this highly leveraged asset thats consuming my entire net worth, how will I ever get out of the rat race? What will happen when I want to get out of the condo which means now tying $2,000,000 up into a tiny house with double the property tax? I'm not convinced I will own a 2 bedroom condo so much as that condo will own me.
Why would you move to something more expensive? You could then move to any property in the US that costs similar. And if you sell that condo for $2M, but buy an equivalent property for the same price in California, you get to keep the original property tax (subject to a 2% year increase.)

Why don't you take a week's vacation and go visit Austin, TX. Go talk to some locals, look around, and see what the lifestyle is really like. (I'll bet there's nothing going on after midnight and the weather isn't as nice.) Or you can keep your current job for "x" more years while renting and sock away as much as you can, then move.

Elbowman
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Re: Anyone else agree with my logic on silicon valley housing?

Post by Elbowman » Mon May 15, 2017 8:25 pm

GrandDesigns wrote:Yes, I did not point this out but that is a key element of my plan, is to transfer my job to one of my companies other offices. Since I'll retain all of my unvested stock in doing so, I'll be pulling in $100k to $150k a year in stock without living in SV. That should put me way ahead.
Are you at a company which does stock refreshes? What will the refresh amount be in Texas? If it is much lower then you will only keep that income for an average of two years (assuming a four year vesting period).

Also, you presumably have not hit the high point in your career at 27. I would pay close attention to what senior engineers make in the locations you are considering, because it gets really crazy in SV.

ourbrooks
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Re: Anyone else agree with my logic on silicon valley housing?

Post by ourbrooks » Mon May 15, 2017 8:31 pm

I'll agree that the weather in Austin isn't as nice as in the Silicon Valley area; it gets a lot hotter in summer and freezes in winter. If you come to visit, August is a good month to see what the weather is really like.

Honesty compels me to state that there are a lot of music places available after midnight. You won't be able to take Uber or Lyft to get home afterwards, though; they both stopped doing business in Austin after they badly lost a referendum on their operating regulations.

Before buying property in Austin, be sure to understand the new CodeNEXT zoning code. It might have a big impact on what your house is worth five years from now.

imperio
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Re: Anyone else agree with my logic on silicon valley housing?

Post by imperio » Mon May 15, 2017 8:38 pm

visualguy wrote:
bigred77 wrote:The problem is if you need another comparable job at some point, there are a lot more of them where you are than in Austin (In terms of making 250k+ with 5 yrs experience).

Some people would drastically prefer living in San Jose to Austin in terms of weather, the beach, etc. this may not apply to you.

If I was a single 20 something in Tech, SV is where I would want to be. No, you can't buy property there at 27, but there is a lot of other benefits to being there. I would just keep putting money away and enjoy yourself.


+1

Higher chance of finding a good next gig with more (maybe much more) money.

Also, once you buy, chances are that your property will appreciate more than in other locations.

Do you mean you think property in SV will appreciate at a faster rate than other locations? I worry that it might be a bubble of sorts, which is why I get nervous thinking about buying at current prices.

LarryAllen
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Re: Anyone else agree with my logic on silicon valley housing?

Post by LarryAllen » Mon May 15, 2017 8:44 pm

Just on the surface it seems you would be stretching to buy a $1mil home only $250k. Not to say you can't afford it but after taxes, 401k contribution, etc... not a lot of money left to play.

To me, if you can keep your same salary it's a no brainer. Austin has been a go to place for 20 years and nothing appears to be slowing down there. I know several people that live there and in that general part of Texas and they love it. A touch hot/humid in the summer and big nasty bugs but otherwise good spot!

countofmc
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Re: Anyone else agree with my logic on silicon valley housing?

Post by countofmc » Mon May 15, 2017 8:45 pm

imperio wrote:
visualguy wrote:
bigred77 wrote:The problem is if you need another comparable job at some point, there are a lot more of them where you are than in Austin (In terms of making 250k+ with 5 yrs experience).

Some people would drastically prefer living in San Jose to Austin in terms of weather, the beach, etc. this may not apply to you.

If I was a single 20 something in Tech, SV is where I would want to be. No, you can't buy property there at 27, but there is a lot of other benefits to being there. I would just keep putting money away and enjoy yourself.


+1

Higher chance of finding a good next gig with more (maybe much more) money.

Also, once you buy, chances are that your property will appreciate more than in other locations.

Do you mean you think property in SV will appreciate at a faster rate than other locations? I worry that it might be a bubble of sorts, which is why I get nervous thinking about buying at current prices.


As a Bay Area renter, I wish it was a bubble. But maybe the prices of say 1980-2004ish were just low, and the "bubble" of 2004-2007 and especially 2012-present is just adjusting prices to what they should be. I just use the 80s cause that's when Silicon Valley really started taking off. There was still land then to build homes and accommodate new residents. Now it seems like no new homes are being built, but tech continues to skyrocket and more people want to move here. And of course add in the influence of foreign (esp Chinese) money.

It seems unlikely that this current rate of appreciation would continue. Otherwise in 5 years we'd see another doubling of prices in certain areas. You'd have ordinary suburban homes in East San Jose going for $2 million. Even with all the tech and Chinese millionaires, I don't know how an entire region could support such prices. But I don't think it's farfetched to say prices will continue to rise at at least inflation (which is long term trend for real estate) going forwards, and the 10-20% drop some people are calling for won't happen.

twins2012
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Re: Anyone else agree with my logic on silicon valley housing?

Post by twins2012 » Mon May 15, 2017 8:51 pm

For 1mm in the bay area , you are looking at 1.3% to 1.4% in property tax with other assessments. Downtown Austin is fun for young people like you with lot of bars and restaurants. You will like Austin but be prepare for the summer heat.

runner540
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Re: Anyone else agree with my logic on silicon valley housing?

Post by runner540 » Mon May 15, 2017 8:57 pm

twins2012 wrote:For 1mm in the bay area , you are looking at 1.3% to 1.4% in property tax with other assessments. Downtown Austin is fun for young people like you with lot of bars and restaurants. You will like Austin but be prepare for the summer heat.


Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13). Also, housing costs in TX have been rising very quickly so if you're using a 2013 cost of living calculator, it's going to lowball.

badger42
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Re: Anyone else agree with my logic on silicon valley housing?

Post by badger42 » Mon May 15, 2017 9:00 pm

Counterpoint:

Take the lifestyle hit for a while, and enjoy the things that are good in the SFBA (e.g. outdoor activities). Sock away as much $$ as physically possible. Keep riding the gravy train at least until the next bust. Between the insane prices (price/rent ratios that do NOT make sense), Earthquake risk, housing bust risk, etc - just don't buy here.

We're in the greater Bay Area, renting, saving $$ like crazy (be sure to max out your 401k, mega backdoor if your employer does it, etc) and will likely relocate and FIRE sometime in the next 5-7 years.

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Re: Anyone else agree with my logic on silicon valley housing?

Post by freebeer » Mon May 15, 2017 9:03 pm

GrandDesigns wrote:... I'm hoping if nothing else some other people who got out of Silicon Valley (or Manhattan) will remember once going through similar thoughts and share their revelations with me. Thanks!


Well I got out of Silicon Valley in 1995 after a decade in SW and it probably cost me $100M! OK maybe not but I definitely went from the "fast track" to the "lifestyle track". I'm pretty sure it cost me $15M.

OTOH maybe I missed out on the big pay-out but I am in great health, financially independent (albeit certainly not "wealthy" by Valley standards), and I've been hiking and biking today... a work day. And SUP is already strapped on my SUV for tomorrow AM paddle....another work day. My kids are doing fantastic and not succumbing to any "trustafarian/privilege" issues.

So I don't think this is about debt or your $2M condo vs. something in Austin but about whether you really really want to make the big score (even if at expense of lifestyle). If so, stay in Bay Area would be my advice (but don't be looking for that $150K +$100K stock thing at BigCo, look for that promising late-stage startup thing and prepare to do that 2 or 3 times until the score happens).

GrandDesigns
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Re: Anyone else agree with my logic on silicon valley housing?

Post by GrandDesigns » Mon May 15, 2017 9:13 pm

badger42 wrote:Counterpoint:

Take the lifestyle hit for a while, and enjoy the things that are good in the SFBA (e.g. outdoor activities). Sock away as much $$ as physically possible. Keep riding the gravy train at least until the next bust. Between the insane prices (price/rent ratios that do NOT make sense), Earthquake risk, housing bust risk, etc - just don't buy here.

We're in the greater Bay Area, renting, saving $$ like crazy (be sure to max out your 401k, mega backdoor if your employer does it, etc) and will likely relocate and FIRE sometime in the next 5-7 years.


That's a reasonable strategy, but its what I have been doing for the last four years and that's why I'm going nuts. I just kept telling myself to save and have fun, but a decent lifestyle here gets farther out of reach every year, and at some point, sometime has to give. For example, me leaving the bay area. :-\

Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13).


That's a valid point because 3% of $300k is $9,000 a year. However, there's no income tax so it's kind of a wash in my opinion. I won't disagree with the notion that states without income tax make up for that revenue somehow.

twins2012
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Re: Anyone else agree with my logic on silicon valley housing?

Post by twins2012 » Mon May 15, 2017 9:20 pm

runner540 wrote:
twins2012 wrote:For 1mm in the bay area , you are looking at 1.3% to 1.4% in property tax with other assessments. Downtown Austin is fun for young people like you with lot of bars and restaurants. You will like Austin but be prepare for the summer heat.


Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13). Also, housing costs in TX have been rising very quickly so if you're using a 2013 cost of living calculator, it's going to lowball.


Here is one of the most expensive zip codes downtown Austin

http://www.realtor.com/realestateandhom ... 091#photo4

Annual property tax $8727


Here is middle not top expensive zip codes for the bay area.

http://www.realtor.com/realestateandhom ... 6480-85793

Annual property tax $11432

twins2012
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Re: Anyone else agree with my logic on silicon valley housing?

Post by twins2012 » Mon May 15, 2017 9:23 pm

GrandDesigns wrote:
badger42 wrote:Counterpoint:

Take the lifestyle hit for a while, and enjoy the things that are good in the SFBA (e.g. outdoor activities). Sock away as much $$ as physically possible. Keep riding the gravy train at least until the next bust. Between the insane prices (price/rent ratios that do NOT make sense), Earthquake risk, housing bust risk, etc - just don't buy here.

We're in the greater Bay Area, renting, saving $$ like crazy (be sure to max out your 401k, mega backdoor if your employer does it, etc) and will likely relocate and FIRE sometime in the next 5-7 years.


That's a reasonable strategy, but its what I have been doing for the last four years and that's why I'm going nuts. I just kept telling myself to save and have fun, but a decent lifestyle here gets farther out of reach every year, and at some point, sometime has to give. For example, me leaving the bay area. :-\

Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13).


That's a valid point because 3% of $300k is $9,000 a year. However, there's no income tax so it's kind of a wash in my opinion. I won't disagree with the notion that states without income tax make up for that revenue somehow.


But your house is half the price comparing to the bay area so you don't really pay more in property tax.

GrandDesigns
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Re: Anyone else agree with my logic on silicon valley housing?

Post by GrandDesigns » Mon May 15, 2017 9:33 pm

twins2012 wrote:
runner540 wrote:
twins2012 wrote:For 1mm in the bay area , you are looking at 1.3% to 1.4% in property tax with other assessments. Downtown Austin is fun for young people like you with lot of bars and restaurants. You will like Austin but be prepare for the summer heat.


Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13). Also, housing costs in TX have been rising very quickly so if you're using a 2013 cost of living calculator, it's going to lowball.


Here is one of the most expensive zip codes downtown Austin

http://www.realtor.com/realestateandhom ... 091#photo4

Annual property tax $8727


Here is middle not top expensive zip codes for the bay area.

http://www.realtor.com/realestateandhom ... 6480-85793

Annual property tax $11432


Also note the price per square feet. $429 versus $999.

EnjoyIt
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Re: Anyone else agree with my logic on silicon valley housing?

Post by EnjoyIt » Mon May 15, 2017 10:08 pm

GrandDesigns wrote:
twins2012 wrote:
runner540 wrote:
twins2012 wrote:For 1mm in the bay area , you are looking at 1.3% to 1.4% in property tax with other assessments. Downtown Austin is fun for young people like you with lot of bars and restaurants. You will like Austin but be prepare for the summer heat.


Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13). Also, housing costs in TX have been rising very quickly so if you're using a 2013 cost of living calculator, it's going to lowball.


Here is one of the most expensive zip codes downtown Austin

http://www.realtor.com/realestateandhom ... 091#photo4

Annual property tax $8727


Here is middle not top expensive zip codes for the bay area.

http://www.realtor.com/realestateandhom ... 6480-85793

Annual property tax $11432


Also note the price per square feet. $429 versus $999.


For the price of a tiny 1 bedroom studio in NYC you can have a very nice house with a back yard and a pool and still have cash left over to furnish the place and buy a decent car to drive. Although the percent property tax is higher in Texas, because the cost of the home is so much lower you end up paying the same if not less for a much nicer dwelling.

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Watty
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Re: Anyone else agree with my logic on silicon valley housing?

Post by Watty » Mon May 15, 2017 10:13 pm

The numbers are different but you sound like me when I was a few years older than you.

I was a computer programmer in Silicon Valley in the 1980's and I left when I was ready to buy my first house. It was one of the best decisions I ever made.

In addition to housing pretty my overall cost of living was a lot lower too so I was a lot better off financially. I was able to find a job up in Portland Oregon that paid the same and Portland was inexpensive back then, but not so much now. After renting for about a year I bought my first house in Oregon for about a fifth(maybe less) of what it would have cost in the Bay Area

It wasn't just a financial good move but I think socially and the lifestyle was a lot better outside of Silicon Valley since there were a wider range of people. Within a year of moving I met my wife and within two years we were married.

I am not real status conscious but when I was in Silicon Valley I was just a somewhat nerdy guy out of a gazillion (mostly) guys working in tech. When I moved to Oregon having being a computer programmer who worked in Silicon Valley for companies that people recognized made me stand out when I was with a group of people my age, even if I was still a tad nerdy.

I am in Atlanta now and I have a son here who is your about age who has a CS degree and is a software engineer. He and his computer friends all make VERY good money, but my impression is that the stock options are not nearly as good as they are in Silicon Valley but that may vary by company.

For comparison he is married now and three years ago they were able to easily afford a starter house. It was in a desirable location but it needed a fair amount of work and with the work it cost in the mid $100's. Their mortgage payment was in the ballpark of a car payment and they were able to pay for the needed work out of their income.

They have a kid now so they are buying a different better house with better schools and they plan to stay in that house for a long time. There I'm not sure of the exact figure but I think their mortgage payment will be a bit less than a thousand a month. They were considering going with a 15 year mortgage, which they could have afforded, but they decided to go with a 30 year mortgage.

A few suggestions;
1) Take your time and wait for great opportunity for your next job. If it takes six months or a year you can just save up more money while you are waiting.

2) When you look at houses on the internet it will be misleading since you don't know the different areas. Some of the inexpensive houses will be in bad areas or areas that have a real bad commute.

3) Don't just pick one city, pick at least three then visit them to see if you like them or not. Don't just do tourist things, get up early and try a dummy commute during rush hour. In some ways Austin may be somewhat similar to the Bay Area but with better BBQ because it has grown so much.

4) Once you move rent at first. You want to make sure that the new job works out, learn the local housing market, and decide if the city is really right for you. When I moved to Portland I literally did not know anyone there. In some ways that was a good thing, After the first few weeks I forced myself to plan several things each week to get out and meet people.

5) Don't too hung up on the details of the dollars. Do all your numbers in after tax and after rent(or mortgage) numbers. If you pay cash for a $200K house then you may not need a real high income to have the same disposable income. If you move you will still be making great money in a relatively low cost of living area. You are 27 now so you have less than 13 years until you turn 40. The time goes fast no matter how much you make you can not buy more time.

6) The only red flag I saw was, "I want to work 40 hours a week". I'm not sure what type of engineering you do but jobs like that are pretty rare. You might have to settle for having a real short commute and not too many extra hours.

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Re: Anyone else agree with my logic on silicon valley housing?

Post by visualguy » Mon May 15, 2017 10:33 pm

imperio wrote:Do you mean you think property in SV will appreciate at a faster rate than other locations? I worry that it might be a bubble of sorts, which is why I get nervous thinking about buying at current prices.


It's a supply/demand imbalance, not a bubble. There are enough people with a lot of cash to buy the available inventory without excessive debt.

There's no doubt in my mind that it will continue to be one of the fastest appreciating locations in the country. It keeps attracting large amounts of talent and wealth, and there's no reason for that to change.

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Watty
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Re: Anyone else agree with my logic on silicon valley housing?

Post by Watty » Mon May 15, 2017 11:02 pm

visualguy wrote:
imperio wrote:Do you mean you think property in SV will appreciate at a faster rate than other locations? I worry that it might be a bubble of sorts, which is why I get nervous thinking about buying at current prices.


It's a supply/demand imbalance, not a bubble. There are enough people with a lot of cash to buy the available inventory without excessive debt.

There's no doubt in my mind that it will continue to be one of the fastest appreciating locations in the country. It keeps attracting large amounts of talent and wealth, and there's no reason for that to change.


A couple of reasons;

1) Low mortgage interest rates end. Buying a house with a 6% mortgage is a lot harder than with a 4% mortgage.

2) People are willing to pay high housing prices there in part because they expect for them to go up even higher. If prices flatten out there will be a lot less people in a hurry to buy.

randomguy
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Re: Anyone else agree with my logic on silicon valley housing?

Post by randomguy » Mon May 15, 2017 11:19 pm

twins2012 wrote:
GrandDesigns wrote:
badger42 wrote:Counterpoint:

Take the lifestyle hit for a while, and enjoy the things that are good in the SFBA (e.g. outdoor activities). Sock away as much $$ as physically possible. Keep riding the gravy train at least until the next bust. Between the insane prices (price/rent ratios that do NOT make sense), Earthquake risk, housing bust risk, etc - just don't buy here.

We're in the greater Bay Area, renting, saving $$ like crazy (be sure to max out your 401k, mega backdoor if your employer does it, etc) and will likely relocate and FIRE sometime in the next 5-7 years.


That's a reasonable strategy, but its what I have been doing for the last four years and that's why I'm going nuts. I just kept telling myself to save and have fun, but a decent lifestyle here gets farther out of reach every year, and at some point, sometime has to give. For example, me leaving the bay area. :-\

Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13).


That's a valid point because 3% of $300k is $9,000 a year. However, there's no income tax so it's kind of a wash in my opinion. I won't disagree with the notion that states without income tax make up for that revenue somehow.


But your house is half the price comparing to the bay area so you don't really pay more in property tax.


Lets see how that works out. Something like
SV: 1 million dollar house, 10k/year taxes
Austin House: 400k house, ~9k/year taxes.

is about right. Call it even. Now it is 30 years later and you are ready to retire
SV: 3 million dollar house, 15k/year in taxes
Austin: 1.200k house, 30k/year in taxes
Which house would you now rather own during your retirement.:) Ok the odds of them having the same appreciation is low but Prop13 really favors buyiing a house and staying forever.

Yes buying a 1 million dollar piece of property versus a 150k is going to have higher variance. Both your loses and gains will be bigger. Over the past 30 or so years, pretty much everyone has been happy with their SV housing purchases. Even 2007-2010 was a pretty minor blip (most of the horror stories were in east bay or areas south of the SV). Houses didn't sell but prices sure didn't crash 40%. I am sure some day the rapid appreciation will stop. But they have been saying that for 20 years now.

In the end housing costs should be drive where you live. Job opportunities ( a crappy job versus a fun one is a huge QOL issue) and personal stuff (i.e. where can you do your favorite hobbies) are equally important.

And FWIW, nobody has all their income taxed at the 33% bracket and 10% state. That just isn't the way the tax code works.

countofmc
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Re: Anyone else agree with my logic on silicon valley housing?

Post by countofmc » Mon May 15, 2017 11:25 pm

Watty wrote:
visualguy wrote:
imperio wrote:Do you mean you think property in SV will appreciate at a faster rate than other locations? I worry that it might be a bubble of sorts, which is why I get nervous thinking about buying at current prices.


It's a supply/demand imbalance, not a bubble. There are enough people with a lot of cash to buy the available inventory without excessive debt.

There's no doubt in my mind that it will continue to be one of the fastest appreciating locations in the country. It keeps attracting large amounts of talent and wealth, and there's no reason for that to change.


A couple of reasons;

1) Low mortgage interest rates end. Buying a house with a 6% mortgage is a lot harder than with a 4% mortgage.

2) People are willing to pay high housing prices there in part because they expect for them to go up even higher. If prices flatten out there will be a lot less people in a hurry to buy.


I'd love to see some data on this, but I haven't really found anything. What I'd like to see is what % of sales are all-cash, what % get a mortgage, what % are going to foreign buyers, etc. If the vast majority of sales are all-cash to some really wealthy people, then interest rates rising shouldn't affect the market too much.

But if the vast majority of buyers are still the "traditional" type that are putting down 10-20% and taking on sizeable mortgages that are a good chunk of their income, then that might indicate prices are starting to get too high, even for the high earners here.

GrandDesigns
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Re: Anyone else agree with my logic on silicon valley housing?

Post by GrandDesigns » Mon May 15, 2017 11:36 pm

randomguy wrote:
twins2012 wrote:
GrandDesigns wrote:
badger42 wrote:Lets see how that works out. Something like
SV: 1 million dollar house, 10k/year taxes
Austin House: 400k house, ~9k/year taxes.

is about right. Call it even. Now it is 30 years later and you are ready to retire
SV: 3 million dollar house, 15k/year in taxes
Austin: 1.200k house, 30k/year in taxes
Which house would you now rather own during your retirement.:) Ok the odds of them having the same appreciation is low but Prop13 really favors buyiing a house and staying forever.


This is a valid point, but it's also what I mean about how you can spin the numbers either way and really need to pick the lifestyle you want. If you just want to own a house or a condo and keep it forever, prop 13 is a great thing, and it can make a lot of sense to just buy a place here and pay it off with RSUs.

But growing up in a LCOL area, I saw how people had the freedom to move as they wanted and increase their housing quality over time. The downside of prop 13 is that it restricts housing liquidity (increasing housing prices), and it makes it a huge proposition to move because just selling your current house and buying another of equal value might double your property tax. If you upgrade, it goes through the roof.

So who is right? Well, I think it depends on what you want in life.

GrandDesigns
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Re: Anyone else agree with my logic on silicon valley housing?

Post by GrandDesigns » Mon May 15, 2017 11:38 pm

imperio wrote:I'd love to see some data on this, but I haven't really found anything. What I'd like to see is what % of sales are all-cash, what % get a mortgage, what % are going to foreign buyers, etc. If the vast majority of sales are all-cash to some really wealthy people, then interest rates rising shouldn't affect the market too much.

But if the vast majority of buyers are still the "traditional" type that are putting down 10-20% and taking on sizeable mortgages that are a good chunk of their income, then that might indicate prices are starting to get too high, even for the high earners here.


If this article is to be believed, cash sales are 18% of current sales in the Bay Area: https://www.propertyradar.com/blog/san- ... -8-percent

itstoomuch
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Re: Anyone else agree with my logic on silicon valley housing?

Post by itstoomuch » Mon May 15, 2017 11:55 pm

I told DS 2010 when he was 25yo to fund Roth and 401k match (not available at these companies #3, #4) and any excess $ fund in taxables . He was able to buy in 2013. he's 32 now.
YMMV
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countofmc
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Re: Anyone else agree with my logic on silicon valley housing?

Post by countofmc » Tue May 16, 2017 12:01 am

GrandDesigns wrote:
imperio wrote:I'd love to see some data on this, but I haven't really found anything. What I'd like to see is what % of sales are all-cash, what % get a mortgage, what % are going to foreign buyers, etc. If the vast majority of sales are all-cash to some really wealthy people, then interest rates rising shouldn't affect the market too much.

But if the vast majority of buyers are still the "traditional" type that are putting down 10-20% and taking on sizeable mortgages that are a good chunk of their income, then that might indicate prices are starting to get too high, even for the high earners here.


If this article is to be believed, cash sales are 18% of current sales in the Bay Area: https://www.propertyradar.com/blog/san- ... -8-percent


Thanks. I guess this goes to show you need to look at data, and not listen to noise. Seems like the recent peak was 26% in 2011, even that is much lower than I expected. If I had to venture a guess I would have told you 50% even now are cash purchases.

So about 80% of home purchases are still made with some kind of bank-financing. If say the median mortgage amount is around $600k-800k, there's probably still enough large-salaried employees in this area able to pull this off. Heck my wife and I are not in tech, and we still have enough income to qualify for $600k mortgage, not too hard at today's interest rates.

I mean if I was interpreting those numbers I'd say short of some kind of major 2000-style tech implosion, home prices are not really in danger of a huge decline, but we might see appreciation slow down.

NoGambleNoFuture
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Re: Anyone else agree with my logic on silicon valley housing?

Post by NoGambleNoFuture » Tue May 16, 2017 12:16 am

runner540 wrote:
twins2012 wrote:For 1mm in the bay area , you are looking at 1.3% to 1.4% in property tax with other assessments. Downtown Austin is fun for young people like you with lot of bars and restaurants. You will like Austin but be prepare for the summer heat.


Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13). Also, housing costs in TX have been rising very quickly so if you're using a 2013 cost of living calculator, it's going to lowball.


I'm in Texas and nowhere close to 3%...

rgs92
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Re: Anyone else agree with my logic on silicon valley housing?

Post by rgs92 » Tue May 16, 2017 12:25 am

I think you may be looking at this all wrong with bad assumptions.
First, is your job secure and at least tolerable? If true, stay where you are and buy place to live that makes you happy and comfortable.
The most important thing is to have a job/home/comfort-level that provides you with a feeling that you can continue with a decent level of sanity and enjoyment out of life.

I can't say for sure, but I have seen that once you stay for a while in a job and get a decent reputation and become a fixture and people start to trust you, you can let your hair down and achieve that 40-hour work goal right where you are. Just give it time.
You start working from home and do other things to de-stress yourself on the job.

Stop crunching numbers and using that as a guide.

In I.T., it is a big gamble to go to some other job in some other place (or even nearby) and assume that it will work out. It's a minefield.
So just relax and enjoy your high income and maybe a nice place to live and don't be a rolling stone and gather some nice moss.

You could end up in Texas having to prove yourself all over again for a lot less money and have the worst of both worlds.
And then there is the horror-show moment of the "What have I done?" realization. That's a nightmare.
Buy a house, get the loan, and chill.

If it's not broken, don't fix it.
I am speaking from experience.

I know you come here for some out-of-the-box wisdom (some that comes with lots of years and mistakes) so here it is. My 2 cents.
Good luck.

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kramer
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Re: Anyone else agree with my logic on silicon valley housing?

Post by kramer » Tue May 16, 2017 12:38 am

I was in a similar situation about 13 years ago, albeit a bit older than you at the time. I am OK with living in an apartment in a walkable neighborhood. But I was never a big Bay Area fan.

I just sucked it up and saved big dollars and retired early. I got an apartment in an area I enjoyed and always kept my commute short -- I worked at 3 different locales in Silicon Valley over a decade and moved each time.

However, my other plan, which I didn't act on, was to move to Austin after I had saved a lot of money in Silicon Valley, and get a (probably) lower paying job there. But I was close enough to retirement that I just decided to work what turned out to be 3 more years in Silicon Valley and retire. If my goal was not retirement or if a house and acreage were important to me, I probably would have moved at that time.

As a single guy, I was not spending that much so it made some sense to be in a HCOL area and save a lot. For a married person and/or a person with kids, the decision can be much more difficult.

John Doe 123
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Re: Anyone else agree with my logic on silicon valley housing?

Post by John Doe 123 » Tue May 16, 2017 2:02 am

20% downpayment means 4:1 leverage. It is not 5:1 as stated by OP and repeated in this thread.

I have nothing further to contribute. I just needed to get that off my chest.

heybro
Posts: 101
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Re: Anyone else agree with my logic on silicon valley housing?

Post by heybro » Tue May 16, 2017 4:12 am

The coolest and most disturbing thing about this is that your entire problem can be solved for less than one grand.

Go Buy A Grill.

I repeat.

Go Buy A Grill.

You don't need Texas, a new job, a less paying job, different neighbors, different friends, grass to mow, trees to trim, or any moving van.

Depending on where you can set one up, there are many different versions and most state parks allow them. You may even be able to get your street closed for a neighborhood grill night.

:sharebeer

twins2012
Posts: 32
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Re: Anyone else agree with my logic on silicon valley housing?

Post by twins2012 » Tue May 16, 2017 7:03 am

randomguy wrote:
twins2012 wrote:
GrandDesigns wrote:
badger42 wrote:Counterpoint:

Take the lifestyle hit for a while, and enjoy the things that are good in the SFBA (e.g. outdoor activities). Sock away as much $$ as physically possible. Keep riding the gravy train at least until the next bust. Between the insane prices (price/rent ratios that do NOT make sense), Earthquake risk, housing bust risk, etc - just don't buy here.

We're in the greater Bay Area, renting, saving $$ like crazy (be sure to max out your 401k, mega backdoor if your employer does it, etc) and will likely relocate and FIRE sometime in the next 5-7 years.


That's a reasonable strategy, but its what I have been doing for the last four years and that's why I'm going nuts. I just kept telling myself to save and have fun, but a decent lifestyle here gets farther out of reach every year, and at some point, sometime has to give. For example, me leaving the bay area. :-\

Don't know Austin specifically but OP needs to understand that property taxes and insurance in TX are high (3% for prop taxes and no prop 13).


That's a valid point because 3% of $300k is $9,000 a year. However, there's no income tax so it's kind of a wash in my opinion. I won't disagree with the notion that states without income tax make up for that revenue somehow.


But your house is half the price comparing to the bay area so you don't really pay more in property tax.


Lets see how that works out. Something like
SV: 1 million dollar house, 10k/year taxes
Austin House: 400k house, ~9k/year taxes.

is about right. Call it even. Now it is 30 years later and you are ready to retire
SV: 3 million dollar house, 15k/year in taxes
Austin: 1.200k house, 30k/year in taxes
Which house would you now rather own during your retirement.:) Ok the odds of them having the same appreciation is low but Prop13 really favors buyiing a house and staying forever.

Yes buying a 1 million dollar piece of property versus a 150k is going to have higher variance. Both your loses and gains will be bigger. Over the past 30 or so years, pretty much everyone has been happy with their SV housing purchases. Even 2007-2010 was a pretty minor blip (most of the horror stories were in east bay or areas south of the SV). Houses didn't sell but prices sure didn't crash 40%. I am sure some day the rapid appreciation will stop. But they have been saying that for 20 years now.

In the end housing costs should be drive where you live. Job opportunities ( a crappy job versus a fun one is a huge QOL issue) and personal stuff (i.e. where can you do your favorite hobbies) are equally important.

And FWIW, nobody has all their income taxed at the 33% bracket and 10% state. That just isn't the way the tax code works.



Austin county property tax is at 2.05 a year. The maximum increase can not be more than 10% each year. For the bay area, property tax bill increase 2% every year. Texas also has exemption for seniors. My uncle tax bill was about 3k a year. As soon as he turned 65, his annual tax bill went down to 1K a year.
Last edited by twins2012 on Tue May 16, 2017 7:07 am, edited 1 time in total.

twins2012
Posts: 32
Joined: Wed Dec 21, 2016 11:25 am

Re: Anyone else agree with my logic on silicon valley housing?

Post by twins2012 » Tue May 16, 2017 7:05 am

GrandDesigns wrote:
randomguy wrote:
twins2012 wrote:
GrandDesigns wrote:
badger42 wrote:Lets see how that works out. Something like
SV: 1 million dollar house, 10k/year taxes
Austin House: 400k house, ~9k/year taxes.

is about right. Call it even. Now it is 30 years later and you are ready to retire
SV: 3 million dollar house, 15k/year in taxes
Austin: 1.200k house, 30k/year in taxes
Which house would you now rather own during your retirement.:) Ok the odds of them having the same appreciation is low but Prop13 really favors buyiing a house and staying forever.


This is a valid point, but it's also what I mean about how you can spin the numbers either way and really need to pick the lifestyle you want. If you just want to own a house or a condo and keep it forever, prop 13 is a great thing, and it can make a lot of sense to just buy a place here and pay it off with RSUs.

But growing up in a LCOL area, I saw how people had the freedom to move as they wanted and increase their housing quality over time. The downside of prop 13 is that it restricts housing liquidity (increasing housing prices), and it makes it a huge proposition to move because just selling your current house and buying another of equal value might double your property tax. If you upgrade, it goes through the roof.

So who is right? Well, I think it depends on what you want in life.



No, your tax bill will go down because Texas has property tax exemption for seniors.

United2008
Posts: 113
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Re: Anyone else agree with my logic on silicon valley housing?

Post by United2008 » Tue May 16, 2017 11:21 am

countofmc wrote:
GrandDesigns wrote:
imperio wrote:I'd love to see some data on this, but I haven't really found anything. What I'd like to see is what % of sales are all-cash, what % get a mortgage, what % are going to foreign buyers, etc. If the vast majority of sales are all-cash to some really wealthy people, then interest rates rising shouldn't affect the market too much.

But if the vast majority of buyers are still the "traditional" type that are putting down 10-20% and taking on sizeable mortgages that are a good chunk of their income, then that might indicate prices are starting to get too high, even for the high earners here.


If this article is to be believed, cash sales are 18% of current sales in the Bay Area: https://www.propertyradar.com/blog/san- ... -8-percent


Thanks. I guess this goes to show you need to look at data, and not listen to noise. Seems like the recent peak was 26% in 2011, even that is much lower than I expected. If I had to venture a guess I would have told you 50% even now are cash purchases.

So about 80% of home purchases are still made with some kind of bank-financing. If say the median mortgage amount is around $600k-800k, there's probably still enough large-salaried employees in this area able to pull this off. Heck my wife and I are not in tech, and we still have enough income to qualify for $600k mortgage, not too hard at today's interest rates.

I mean if I was interpreting those numbers I'd say short of some kind of major 2000-style tech implosion, home prices are not really in danger of a huge decline, but we might see appreciation slow down.


I think the 18% statistic misrepresents the key point--a much higher percentage of offers are presented as "all cash" offers, even if the buyer intends to finance. The buyer demonstrates the ability to pay cash if needed, thus making any finance contingency irrelevant.

randomguy
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Re: Anyone else agree with my logic on silicon valley housing?

Post by randomguy » Tue May 16, 2017 11:51 am

twins2012 wrote:

Austin county property tax is at 2.05 a year. The maximum increase can not be more than 10% each year. For the bay area, property tax bill increase 2% every year. Texas also has exemption for seniors. My uncle tax bill was about 3k a year. As soon as he turned 65, his annual tax bill went down to 1K a year.


It has been 15 years since I last checked but I was getting 2.75% when you added everything up. Can't remember if it it was or a surrounding county.

The real benefit of costal real estate is if you sell it and retire somewhere cheap. But it can be hard to leave any area where you have made your life.

feh
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Re: Anyone else agree with my logic on silicon valley housing?

Post by feh » Tue May 16, 2017 12:01 pm

GrandDesigns wrote:
TL;DR: Thoughts on the perils of justifying huge amounts of debt based on having a large income.


15 years ago I considered moving from WI to SF. After evaluating the increase in both wages and cost of living, it made sense to stay put. I think that is even more true today.
Last edited by feh on Tue May 16, 2017 12:16 pm, edited 1 time in total.

yearzero
Posts: 88
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Re: Anyone else agree with my logic on silicon valley housing?

Post by yearzero » Tue May 16, 2017 12:11 pm

My advice is to save a fat, comfortable cash cushion and get out of SV.

If you buy the condo you reference, and keep paying 10% CA state tax, your shelling out nearly $3,500 a month in just state/real estate taxes and HOA fees. For life.

If you have a tech skill set, you could buy a house for cash someplace in a LCOL area, telecommute, and see you monthly expenses come in at less than $3,500. You would have won the game.

The best thing we ever did from a financial perspective is move from a high tax, HCOL area to a LCOL area. If your educated and have a strong skill set, you’ll be able to find work (if you even need to once you bank a nice cushion) and have much more time to enjoy what really matters in life. You will see you net worth grow with less stress via this route.

Good luck.
"Don't waste your time, or time will waste you"- Muse-Knights of Cydonia

bigred77
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Re: Anyone else agree with my logic on silicon valley housing?

Post by bigred77 » Tue May 16, 2017 12:21 pm

OP,

In the Bay Area and other global cities, it's incredibly hard to buy property as a single 27 year old unless you have deep pocketed family willing to help. That's just a fact of life. If you move to Austin, do you want to immediately buy a house on an acre with a 15-20 mile commute? Why? There's a time and place for all that but why not wait until your ready to settle down or at least more established?

If you stay in the Bay Area and partner with someone who makes a comparable salary, then you have no issues buying a single family home. If you stay single, just wait and keep saving for 5 years and then you can buy a 2 bedroom condo when you're making 350k a year and have doubled your available down payment. Is it so bad to have to wait until your early 30s to buy property when your living in place with as much to offer as where you are (especially with the best job market in the world for your chosen line of work)?

And I live in Texas!! I think Texas is great. But all of my family is here, most of my friends are here, and most importantly, I work in Oil and Gas.

Now if you decide that you don't like your situation because you don't like the fast paced, career focused lifestyle than that's a different story. If you want to be able to clock out at 5:01 and work only 40 hrs a week than you're probably right, a LCOL city would probably be a better fit. But if you make that decision, I would advise you not expect to keep making the same money you do now in perpetuity.

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