New(ish) attending physicians in the Bay Area: Housing

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Pawpatrol
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Pawpatrol » Sun May 13, 2018 5:23 pm

Afty wrote:
Sun May 13, 2018 1:57 pm
If you are committed to staying here long term, I would not rent and "wait for the crash." I don't think the strategy of waiting for a crash is any more applicable to housing than it is to the stock market, for the same reasons -- what if the crash never comes? And how will you know when the crash is done and we're at the bottom?

FWIW, we tried this "wait it out" strategy. We moved here in 2011 and rented a SFH (with small kids) from 2011-2017, and finally bought in 2017. We ended up paying 2x what we would have if we had bought when we first moved here. Remember: "The market can stay irrational longer than you can stay solvent."
This is just not true. Go to portfolio visualizer and hand pick the dates even. Your cash flow difference of buying the same house you rent is 5-6k less a month in ~2m range. Given that they probably rent in a place that is less than 2m it is likely a cash flow difference close 7k/mo. Also, with SALT changes only 750k can be deducted so itemizing will get them only ~40k vs standard of 24k.

They come out ahead using 3 fund portfolio 80/20 during this run-up from my breif glance at the numbers. Plus they are diversified, have liquidity and not cash poor. This is not even taking into account the lifestyle creep that comes with wanting to make your home nice/upgrades etc.

At these prices you are investing in an asset that pays assuming owned outright 3% best case pre tax and then you get to pay 1.33% property tax, maintainance and insurance. You have to hope for capital appreciation and even if that happens you pay a 6% commision when you sell. What BH would invest in this? The math works for those who need the large monthly obligations to force savings and wouldnt save the difference in cash flows.

md&pharmacist
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by md&pharmacist » Sun May 13, 2018 7:47 pm

PFInterest wrote:
Sat May 12, 2018 8:28 pm
Rent. Wait for the next crash. Swoop in.
+1. No good reason to buy at those prices. Rent while you have family there.

When it's time, move out of the Area. For physicians, crowded northern cities = lower pay, high COL, high taxes (including state income tax). Expensive private education and babysitting for children, expensive meals and entertainment, parking garages and meters, pricey retailers and services all conspire against you. I grew up in NYC.

Now I'm in the South. Built a 7,500 sq ft home age 32 for $1.5 mil. Built a 15,000 sq ft office building that can ultimately generate $10-!2 mil/year as I fully populate it with employed providers/ancillaries.

Unfortunately, your location is going to be one of your biggest obstacles to FI. However, if I had family there I would stay as you are (just would rent). I am at my location because of family, just happens to be a very LCOL area.

Wish you well!

I agree with wait for the next crash. Swoop in...not into a home purchase, but into the more liquid equities markets.

viz
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by viz » Sun May 13, 2018 8:54 pm

I am a SF Bay Area resident. I am in tech and spouse is a PCP so have some insights into both side.
1. there is small minority in tech who make 200k+ as base salary. For anyone making 200k+, a substantial pay would be variable (bonus, RSU, etc).
2. physician salary (primary care) is higher than average tech person but variable is not so much (Bay Area still has a draw of desirable places to live)
3. I don't know where you work but looks like you want a reasonable commute. Bay Area reasonable is ~ 1 hour and very stressful (http://rh-us.mediaroom.com/2017-10-23-A ... l-Commutes). Personally, I know many people whose commute is 2 hr. Mine is 2.5 hr, DW is 50 min (all round trips)

I wanted to highlight these and join the chorus of ppl stating SF Bay Area is HCOL and Peninsula & Silicon Valley is the worst of the lot.

We did buy a house 3 years ago in east bay and prices have gone up ~20%. At that point, we our mortgage was same as rent we were paying for 3 bed/3bath apt in east bay. Today, it is not the case but it is quite similar. South Bay didn't make sense as we would be paying too much.

Prop 13 helps longer you stay so it comes down to how long do you plan to stay in the area.

Good luck with whatever you decide. It is a hard call and I don't envy you.

random_walker_77
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by random_walker_77 » Sun May 13, 2018 9:47 pm

somekevinguy wrote:
Sat May 12, 2018 6:34 pm
Understood- we have two young kids so schools also come into play. It seems that as 2 high income professionals who have delayed gratification for 10+year’s post-college and save 40+% of gross income we’d be able to afford a not that fancy 4/2 2000 sq ft home but perhaps not...?
Keep in mind that, in the bay area, a 4bd/2ba 2000 sq ft *is fancy*. You're not going to see many 3000 sq ft homes, period. (Hmm, might also want to keep in mind the home's age, b/c of asbestos and lead paint, which is what we had in our starter home...)

If renting, how much would you need to spend to get the kind of house you want, in the location you want? If your kids aren't in school yet, you don't have to be in a great school district yet, and just need to find something that's convenient for commutes, right?

For example, it looks like 3/2 1300 sq ft in Daly City are all just under $4K/mo. Good commutes north and south via 280.
https://www.trulia.com/p/ca/daly-city/1 ... 2082641599

So that's $45K/yr in rent. But if you bought it for, let's conservatively say $1M, the cost of funds is $40K/yr (either mortgage or opportunity cost at 4%), and the property tax is $10K/yr. So $50K, and honestly, do you think you'd be able to buy it for just $1M?

Renting it for $45K sounds like a deal to me. Yes, rent will go up. No, you won't benefit from leveraged gains on appreciation. No, you don't lock in your property taxes. But you also don't face leveraged losses, and you preserve the flexibility to move anytime you want.

Need good schools now? A modest abode in Palo Alto w/ some of the best schools in the country for $64K/yr:
https://www.trulia.com/p/ca/palo-alto/4 ... 1057982307

Renting isn't the end of the world...

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goodenyou
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by goodenyou » Sun May 13, 2018 9:52 pm

I read this post in disbelief. I live in Texas. We are inundated with California transplant physicians who realize, after several years, that they were playing a loser's game. Your work will continued to be devalued as a physician, and at the rate you are going, the finish line will continue to get farther and farther away. The community you will work in in California will thank you for servicing them, but you will not be able to afford to live amongst them. If you continue to follow BH philosophy and follow threads here, you will realize your savings rate and quality of life as a physician in the Bay Area may not be all that. If you and your wife want to work for a long, long time through raising kids and into your later years, then it may be a good fit for you. Most physicians crave financial independence by the time they have practiced 20 years. Nowadays, many much sooner. Best of luck.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Sun May 13, 2018 10:54 pm

goodenyou wrote:
Sun May 13, 2018 9:52 pm
I read this post in disbelief. I live in Texas. We are inundated with California transplant physicians who realize, after several years, that they were playing a loser's game. Your work will continued to be devalued as a physician, and at the rate you are going, the finish line will continue to get farther and farther away. The community you will work in in California will thank you for servicing them, but you will not be able to afford to live amongst them. If you continue to follow BH philosophy and follow threads here, you will realize your savings rate and quality of life as a physician in the Bay Area may not be all that. If you and your wife want to work for a long, long time through raising kids and into your later years, then it may be a good fit for you. Most physicians crave financial independence by the time they have practiced 20 years. Nowadays, many much sooner. Best of luck.
I hear you. Alas, that is the draw of family (and although expensive, the weather, food, outdoor opportunities etc does have its perks as well). I have no doubt that if we lived in almost any other location (including relatively expensive places like Seattle, San Diego, Denver etc), heck, even the east bay of the bay area, we would have little to no problem being FI in 5-10 years (we really just aren't big spenders except for on the few things we care about)

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Sun May 13, 2018 10:58 pm

random_walker_77 wrote:
Sun May 13, 2018 9:47 pm
somekevinguy wrote:
Sat May 12, 2018 6:34 pm
Understood- we have two young kids so schools also come into play. It seems that as 2 high income professionals who have delayed gratification for 10+year’s post-college and save 40+% of gross income we’d be able to afford a not that fancy 4/2 2000 sq ft home but perhaps not...?
Keep in mind that, in the bay area, a 4bd/2ba 2000 sq ft *is fancy*. You're not going to see many 3000 sq ft homes, period. (Hmm, might also want to keep in mind the home's age, b/c of asbestos and lead paint, which is what we had in our starter home...)

If renting, how much would you need to spend to get the kind of house you want, in the location you want? If your kids aren't in school yet, you don't have to be in a great school district yet, and just need to find something that's convenient for commutes, right?

For example, it looks like 3/2 1300 sq ft in Daly City are all just under $4K/mo. Good commutes north and south via 280.
https://www.trulia.com/p/ca/daly-city/1 ... 2082641599

So that's $45K/yr in rent. But if you bought it for, let's conservatively say $1M, the cost of funds is $40K/yr (either mortgage or opportunity cost at 4%), and the property tax is $10K/yr. So $50K, and honestly, do you think you'd be able to buy it for just $1M?

Renting it for $45K sounds like a deal to me. Yes, rent will go up. No, you won't benefit from leveraged gains on appreciation. No, you don't lock in your property taxes. But you also don't face leveraged losses, and you preserve the flexibility to move anytime you want.

Need good schools now? A modest abode in Palo Alto w/ some of the best schools in the country for $64K/yr:
https://www.trulia.com/p/ca/palo-alto/4 ... 1057982307

Renting isn't the end of the world...
Yes. The home we rent (which is quite nice) has a price/annual rent ratio of over 38 (being conservative)- more realistically about 45. That is the benefit of these home owners who literally pay property taxes of only a few thousand dollars a year due to prop 13 whereas if I were to buy the same home, the property taxes would jump by about 25K. There definitely is a premium on owning but with our plans to stay 20+ years and with the housing supplement from both of our employers factored in, the math becomes a little bit less clear. I highly doubt any home will fail to keep up with inflation and with interest free loans and straight salary supplement, if it is within budget and still allows us to save for retirement/other goals, can't help but thinking it still may be worth it.

MedSaver
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by MedSaver » Sun May 13, 2018 11:39 pm

I am an MD in CA and know several dual health professional couples in the bay area who have purchased homes between $1-2MM within the past 2 years. They either purchased new "starter" homes (you know the type - standard layout, narrow, but 3 stories tall and connected to other similar units) close to work or older detached single family units far (1-2 hour commute) from their work. I suggest just renting close to work until house prices drop in the next giant earthquake/recession/whatever or until you can move.

kacang
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by kacang » Mon May 14, 2018 12:36 am

If you really want to buy.

Look for a starter SFH (2/1 or 2/2) that is within your means, has sane commute and good public schools (location first!). Save & invest, then add another bedroom or bath later on down the road. Lots of homes in Bay Area started out smaller.

About the interest-free loans from your employer, is there a time limit to when you must use it or lose it? If so, don't let that rush your decision, you may be able to negotiate with them to extend the time limit.

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goodenyou
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by goodenyou » Mon May 14, 2018 8:48 am

Just out of curiosity, those that have or advocate a “1-2 hour” commute, how exactly do you take emergency call? My patient would be dead by the time I got there in 1-2 hours.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

Glockenspiel
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Glockenspiel » Mon May 14, 2018 9:39 am

bi0hazard wrote:
Sun May 13, 2018 10:56 am
Instead of buying a little house for 2-3 million, you can move to a very nice reasonably priced area and buy a mansion for you and a mansion for the parents. Or buy a mansion for you, and use the other 1-2mil to buy a jet and fly your parents from the bay area to your reasonably priced mansion. These are jokes of course. I'm not sure what other answer there is to your question except that you will be in insane amount of debt, like the others living in your area. There's no magic on how your peers handle unreasonable real estate.
Haha. Seriously though. I read this thread from the Twin Cities and I cannot even fathom not being able to buy a 2,000 square foot home for $2-$3 million.

For $2 million dollars, you could buy a 4,000 square foot 5 bedroom, 4 bathroom, mini Mansion with a half to 3/4 acre yard in the best public school district in the state, in the best suburb for commuting to your jobs at one of the best research hospitals in the country for yourselves, AND buy a 2 bedroom condo nearby for your parents to live in and take care of your kids, while having some money left over to invest.

toomuchRE
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by toomuchRE » Mon May 14, 2018 10:28 am

Most of my tech guys who are in bay area for past 15+ years make less than 200k single and 300k when both working.. I see more $$ in tri-state compared to bay area.

Something is really up there.. The job market and salaries just didn't double since 2013.. But house prices did.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 10:32 am

toomuchRE wrote:
Mon May 14, 2018 10:28 am
Most of my tech guys who are in bay area for past 15+ years make less than 200 single and 300 when both working..
Something is really up there.. The job market and salaries just didn't double since 2013.. But house prices did.
Yeah- I am not sure what it is, making it more difficult to make decisions regarding jumping in or saving first and then diving in (saving at a rate that would exceed projected home appreciation). I have a hard time understanding how THAT many people can afford 2–3M dollar homes...

toomuchRE
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by toomuchRE » Mon May 14, 2018 10:40 am

Absolutely no idea.. I see the same trend in 2003-4-5.. Absolutely crazy.. SFO is one of those areas I have seen where landlords have reduced rents big time during slowdown. I haven't seen any rents going down in other states for few years and then raise again..

All that I can tell you is, all of my tech friends, can't afford half the house if they wanted to buy today.. Their salaries didn't double for the past 6-7 years. Mostly 10-15% increase. Thatz all.

Did the population increase double??, the chinese ??, the indians ??, was there a major tech revolution like launching google and apple??.. None of these..

Now if a Physician can't afford a house in SFO, I donno what to say.. trust me, most techies can't afford 1M house today. So I suspect this is hype..
I can understand prices shooting up crazy in a Citi but bay area is not a city like Newyork..

EnjoyIt
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by EnjoyIt » Mon May 14, 2018 11:12 am

visualguy wrote:
Sun May 13, 2018 4:19 pm
somekevinguy wrote:
Sun May 13, 2018 3:37 pm
This has crossed my mind too although the counter is that at least for now, our cash flow is very healthy renting and while that may one day eventually change, we’ll be well prepared to buy or move at that point (saving maybe 200k/year currently).
Much of that annual savings is wiped out by the annual appreciation of the house that you would eventually buy in the area... As mentioned by a few above, waiting to buy doesn't make sense if there's a high probability that you will stay in the area in the long run. You fall further and further behind due to missed appreciation plus rent.

Betting against the Bay Area economy didn't prove to be a smart strategy in the past, and all indications are that it won't be a smart strategy in the future either.
Are you sure the tech industry is here to stay? Will any of them be moving elsewhere? Here is a an article in Redfin that talks about people moving out
https://www.redfin.com/blog/2018/02/q4- ... eport.html

And another older article talking about the same topic:
https://thenextweb.com/contributors/201 ... sco-going/

No one can predict what will happen to housing prices in that area, but I for one would not be interested in taking a chance loosing $1+ million to the whims of just a handful of companies that may choose to leave and take the housing prices with them.

To the OP. I know it is nice to have family nearby, but as someone alluded above, they are holding you hostage in a city that is unaffordable to have "the good life." You read WCI and he has influenced many of your decisions in the positive direction. Take one more piece of advise and move to a lower cost of living area. There your income will likely be 25% higher, taxes lower, and you will end up with a lot of extra money that you can use to hire day care and fly your parents to visit whenever they want.

In addition, although you have a dream job now, medicine changes. I had a dream job just a few years ago and the markets and work demands have changed. The job is still nice but no where near what it used to be. In response I work a few days less a month. It was very easy to do since we saved a bunch of money and working more is not necessary to make ends meet. Living in the Bay Area will force you into servitude until the mortgage is paid off. Don't be forced to work. Work because you love what you do and enjoy it.

BTW, we moved from NYC to a lower cost of living area. After a few years of having "the good life" our parents followed us. The good life is contagious.

MedSaver
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by MedSaver » Mon May 14, 2018 11:21 am

goodenyou wrote:
Mon May 14, 2018 8:48 am
Just out of curiosity, those that have or advocate a “1-2 hour” commute, how exactly do you take emergency call? My patient would be dead by the time I got there in 1-2 hours.
Those physicians I know with that commute have positions either without call, can "remote" in, have residents/fellows who can cover until they arrive or have call requirements which make this possible (e.g. from call to in-house time of 1 hour or less). Also, commuting is easier after hours/weekends when there is little to no traffic.

Lynx310650
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Lynx310650 » Mon May 14, 2018 11:50 am

toomuchRE wrote:
Mon May 14, 2018 10:28 am
Most of my tech guys who are in bay area for past 15+ years make less than 200k single and 300k when both working.. I see more $$ in tri-state compared to bay area.

Something is really up there.. The job market and salaries just didn't double since 2013.. But house prices did.
Constrained supply has a lot to do with it. When you only have a handful of SFHs in the "desirable" areas (near major tech employment and good schools) popping up for sale, you don't need a city full of millionaires to drive up prices. You just need 20-30 of them to bid on the same home and drive up the price. Rinse, repeat.

So a historic lack of supply, tech money, AND foreign money. Just 1 of those 3 may be enough to inflate housing prices. The Bay Area has all 3 happening.

As far as OP's issues, that's why I'm not necessarily sure that a physician couple with very stable employment, good incomes, and most importantly a desire to live here, should wait for a "crash". Especially if they are looking in the more desirable areas. If supply is addressed, it's likely to come in the form of higher density in places like DT San Jose, San Francisco, and more far flung places in the East Bay and such. SFHs in the Peninsula will probably always go for a premium. Again, considering there isn't much will to build SFHs anymore and there are geographic restraints to building on the Peninsula.

If OP is working at Kaiser in Dublin or something and is okay buying out there, then MAYBE there's a case for waiting, since the last crash hit the further flung areas harder. And there seems to be more construction and new homes out in that area. But when looking in the Peninsula area, again, I don't think waiting is a good idea for someone like OP.

As far as tech employment "moving", a lot of these tech companies already do have some operations in other cities. Google is expanding out to DT San Jose. But en masse moving headquarters to other cities? I don't see it. And they would just be taking their problems with them. Look at what housing prices are doing in other tech hub cities. Or what just the possibility of Amazon opening HQ2 in a city does to home prices. A company like Apple just deciding to pack up and move HQ to a "cheaper" city would just drive up prices there, so I don't see it happening. Tech is huge and growing, and Silicon Valley is the capital of the world for it. There are other tech hubs that will emerge, but that doesn't mean they will usurp SV, if anything tech companies will probably just expand operations out to these cities. Much like how major banks headquartered in NYC have operations in other financial capitals like London, Hong Kong, Singapore, etc. So I agree with the above poster who said it's a bad idea to bet against the Bay Area economy.

And my goodness, after this spiel, I haven't even mentioned that BTW, the Bay Area has really nice weather, tourism, world class universities, etc. The type of stuff that draws people and will continue to do so.

And I say this as a person with no real skin in the game. I live in the Bay Area but don't own a home, and plan on moving out eventually.

toomuchRE
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by toomuchRE » Mon May 14, 2018 11:59 am

So a historic lack of supply, tech money, AND foreign money. Just 1 of those 3 may be enough to inflate housing prices. The Bay Area has all 3 happening"

As far as I know, all these factors existed for the past 18 years.

Having said that, 2X appreciation is nothing compared to 5-15X property prices appreciation in places in some Indian cities.. ( which I did invest most of $$ in.. luckily) The drivers were mostly huge urban migration, IT and opening up of economy in a 3rd world country.. What is happening in bay area is not one of these...

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Re: New(ish) attending physicians in the Bay Area: Housing

Post by mervinj7 » Mon May 14, 2018 1:58 pm

EnjoyIt wrote:
Mon May 14, 2018 11:12 am

Are you sure the tech industry is here to stay? Will any of them be moving elsewhere? Here is a an article in Redfin that talks about people moving out
https://www.redfin.com/blog/2018/02/q4- ... eport.html

And another older article talking about the same topic:
https://thenextweb.com/contributors/201 ... sco-going/

No one can predict what will happen to housing prices in that area, but I for one would not be interested in taking a chance loosing $1+ million to the whims of just a handful of companies that may choose to leave and take the housing prices with them.
Neither of those articles actually cite any data that show techies have actually moved out and left the Bay Area. The Redfin one is especially laughable since its based on folks searching for houses and not actually buying them.

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Re: New(ish) attending physicians in the Bay Area: Housing

Post by likashing » Mon May 14, 2018 4:40 pm

I know quite a few couples in your situation. It is quite a tough pill to swallow because anywhere else except the Bay Area, you would be the king and queen of the area living in nicest mansion in the most prestigious area.

My advice is hold off on your *dream house* and buy something you can easily afford but not *perfect*. Something you can easily afford while saving a lot of cash from your combined income (~$100k-$200k a year based on your $500k income).
Trade off neighborhood or size. It is still better to get a "not as nice" house in a good area closer to your work.

What will go your family's way is you will keep generating cash (and savings) while the tech industry is cyclical. Save up and wait for the next downturn, and when that happens, you will have another big down payment to either trade up, or buy your dream house and rent out the first home.
Last edited by likashing on Mon May 14, 2018 4:52 pm, edited 2 times in total.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 4:44 pm

likashing wrote:
Mon May 14, 2018 4:40 pm
I know quite a few couples in your situation. It is quite a tough pill to swallow because anywhere else except the Bay Area, you would be the king and queen of the area living in nicest mansion in the most prestigious area.

My advice is hold off on your *dream house* and buy something you can easily afford but not *perfect*. Trade off neighbor or size. It is still better to get a "not as nice" house in a good area closer to your work.

What will go your family's way is you will keep generating cash (and savings) while the tech industry is cyclical. Save up and wait for the next downturn, and when that happens, you will have another big down payment to either trade up, or buy your dream house and rent out the first home.
LKS, any idea how these couples are handling housing? Buying small, buying overextending, renting?

likashing
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by likashing » Mon May 14, 2018 4:49 pm

somekevinguy wrote:
Mon May 14, 2018 4:44 pm
likashing wrote:
Mon May 14, 2018 4:40 pm
I know quite a few couples in your situation. It is quite a tough pill to swallow because anywhere else except the Bay Area, you would be the king and queen of the area living in nicest mansion in the most prestigious area.

My advice is hold off on your *dream house* and buy something you can easily afford but not *perfect*. Trade off neighbor or size. It is still better to get a "not as nice" house in a good area closer to your work.

What will go your family's way is you will keep generating cash (and savings) while the tech industry is cyclical. Save up and wait for the next downturn, and when that happens, you will have another big down payment to either trade up, or buy your dream house and rent out the first home.
LKS, any idea how these couples are handling housing? Buying small, buying overextending, renting?
Rent or bought small and they kept saving cash.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 4:51 pm

likashing wrote:
Mon May 14, 2018 4:49 pm
somekevinguy wrote:
Mon May 14, 2018 4:44 pm
likashing wrote:
Mon May 14, 2018 4:40 pm
I know quite a few couples in your situation. It is quite a tough pill to swallow because anywhere else except the Bay Area, you would be the king and queen of the area living in nicest mansion in the most prestigious area.

My advice is hold off on your *dream house* and buy something you can easily afford but not *perfect*. Trade off neighbor or size. It is still better to get a "not as nice" house in a good area closer to your work.

What will go your family's way is you will keep generating cash (and savings) while the tech industry is cyclical. Save up and wait for the next downturn, and when that happens, you will have another big down payment to either trade up, or buy your dream house and rent out the first home.
LKS, any idea how these couples are handling housing? Buying small, buying overextending, renting?
Rent or bought small and they kept saving cash.
Yeah, that is what we're currently doing. I suppose it is a drop in the bucket and a good problem to have, but at some point, my AA becomes tilted significantly towards cash/cash equivalents as I hoard cash to prepare for an eventual purchase, despite maxing out 403/401k/457/backdoor Roth's/Mega Backdoor Roth/contributing to 529s.

likashing
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by likashing » Mon May 14, 2018 4:58 pm

somekevinguy wrote:
Mon May 14, 2018 4:51 pm
likashing wrote:
Mon May 14, 2018 4:49 pm
somekevinguy wrote:
Mon May 14, 2018 4:44 pm
likashing wrote:
Mon May 14, 2018 4:40 pm
I know quite a few couples in your situation. It is quite a tough pill to swallow because anywhere else except the Bay Area, you would be the king and queen of the area living in nicest mansion in the most prestigious area.

My advice is hold off on your *dream house* and buy something you can easily afford but not *perfect*. Trade off neighbor or size. It is still better to get a "not as nice" house in a good area closer to your work.

What will go your family's way is you will keep generating cash (and savings) while the tech industry is cyclical. Save up and wait for the next downturn, and when that happens, you will have another big down payment to either trade up, or buy your dream house and rent out the first home.
LKS, any idea how these couples are handling housing? Buying small, buying overextending, renting?
Rent or bought small and they kept saving cash.
Yeah, that is what we're currently doing. I suppose it is a drop in the bucket and a good problem to have, but at some point, my AA becomes tilted significantly towards cash/cash equivalents as I hoard cash to prepare for an eventual purchase, despite maxing out 403/401k/457/backdoor Roth's/Mega Backdoor Roth/contributing to 529s.
That is why I personally think it is smarter to buy something smaller/not perfect for people in your situation. That will work as a hedge if the bubble keeps blowing up further too. If it goes up more, you can trade up later (your 1st house increases in value too). If the market tanks, you can buy your dream house at a discount later. With the amount of savings you can generate, it is a "head you win/tail they lose" scenario for you.

Emotionally you will feel better too no matter if the market keeps going up, or down. Don't underestimate the psychological stress on you, if you decide to not buy now, but then it keeps going up 10%/year the next 3-5 years.

Don't trade off on the commute though - i.e. don't buy a mansion 2 hours away because it looks nice either.

Your profession generates a lot of income, and the best way is to keep yourself stress free and focus on the profession - the money part and houses will take care of themselves.

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Hyperborea
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Hyperborea » Mon May 14, 2018 5:05 pm

visualguy wrote:
Sun May 13, 2018 4:19 pm
somekevinguy wrote:
Sun May 13, 2018 3:37 pm
This has crossed my mind too although the counter is that at least for now, our cash flow is very healthy renting and while that may one day eventually change, we’ll be well prepared to buy or move at that point (saving maybe 200k/year currently).
Much of that annual savings is wiped out by the annual appreciation of the house that you would eventually buy in the area... As mentioned by a few above, waiting to buy doesn't make sense if there's a high probability that you will stay in the area in the long run. You fall further and further behind due to missed appreciation plus rent.

Betting against the Bay Area economy didn't prove to be a smart strategy in the past, and all indications are that it won't be a smart strategy in the future either.
I'll mention the same story that I've trotted out before too. I was able to buy in 1999 but didn't because "the prices were too high". Well, we bought in 2002 after the dot com bubble burst. We paid more for less than if we had bought in 1999. The housing prices in the core of the Bay Area, which includes San Francisco/south San Francisco where you want to buy, don't really drop that much during the last few declines. The number of units for sale just dried up and prices remained mostly stable. Outside of that core (which has been growing over the years) then housing prices can drop quite a bit. If you are really on the fringe then they can plunge.
"Plans are worthless, but planning is everything." - Dwight D. Eisenhower

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 5:15 pm

likashing wrote:
Mon May 14, 2018 4:58 pm
somekevinguy wrote:
Mon May 14, 2018 4:51 pm
likashing wrote:
Mon May 14, 2018 4:49 pm
somekevinguy wrote:
Mon May 14, 2018 4:44 pm
likashing wrote:
Mon May 14, 2018 4:40 pm
I know quite a few couples in your situation. It is quite a tough pill to swallow because anywhere else except the Bay Area, you would be the king and queen of the area living in nicest mansion in the most prestigious area.

My advice is hold off on your *dream house* and buy something you can easily afford but not *perfect*. Trade off neighbor or size. It is still better to get a "not as nice" house in a good area closer to your work.

What will go your family's way is you will keep generating cash (and savings) while the tech industry is cyclical. Save up and wait for the next downturn, and when that happens, you will have another big down payment to either trade up, or buy your dream house and rent out the first home.
LKS, any idea how these couples are handling housing? Buying small, buying overextending, renting?
Rent or bought small and they kept saving cash.
Yeah, that is what we're currently doing. I suppose it is a drop in the bucket and a good problem to have, but at some point, my AA becomes tilted significantly towards cash/cash equivalents as I hoard cash to prepare for an eventual purchase, despite maxing out 403/401k/457/backdoor Roth's/Mega Backdoor Roth/contributing to 529s.
That is why I personally think it is smarter to buy something smaller/not perfect for people in your situation. That will work as a hedge if the bubble keeps blowing up further too. If it goes up more, you can trade up later (your 1st house increases in value too). If the market tanks, you can buy your dream house at a discount later. With the amount of savings you can generate, it is a "head you win/tail they lose" scenario for you.

Emotionally you will feel better too no matter if the market keeps going up, or down. Don't underestimate the psychological stress on you, if you decide to not buy now, but then it keeps going up 10%/year the next 3-5 years.

Don't trade off on the commute though - i.e. don't buy a mansion 2 hours away because it looks nice either.

Your profession generates a lot of income, and the best way is to keep yourself stress free and focus on the profession - the money part and houses will take care of themselves.
Yeah- admittedly, we've been looking at a 8-9/10 type home on our gut rating scale given the huge expense it represents but it may be worth going for a 6-7/10 type home, something we could trade in later on to move up but that we'd be fine in for 5-10 years, take advantage of the housing supplements, get in on the housing as a hedge if the "bubble" keeps going, and not dedicate 60+% of our net income to housing.

visualguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by visualguy » Mon May 14, 2018 5:29 pm

Not sure what "bubble" people are talking about. High house prices don't signify a bubble. There's a chronic supply/demand problem in the area, not a bubble.

The typical approach in the Bay Area for people in stable high-paying jobs is to stretch to buy a place where they would be ok in the long run. Climbing the equity ladder isn't a good strategy in the Bay Area. In other words, you don't want to buy something insufficient with the expectation of upgrading in the future. It just becomes harder and more expensive - prices keep going up, the property taxes will be higher, etc. You get trapped. Instead, stretch to buy what you need, and stay there.

Carefreeap
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Carefreeap » Mon May 14, 2018 5:32 pm

somekevinguy wrote:
Mon May 14, 2018 5:15 pm
likashing wrote:
Mon May 14, 2018 4:58 pm
somekevinguy wrote:
Mon May 14, 2018 4:51 pm
likashing wrote:
Mon May 14, 2018 4:49 pm
somekevinguy wrote:
Mon May 14, 2018 4:44 pm


LKS, any idea how these couples are handling housing? Buying small, buying overextending, renting?
Rent or bought small and they kept saving cash.
Yeah, that is what we're currently doing. I suppose it is a drop in the bucket and a good problem to have, but at some point, my AA becomes tilted significantly towards cash/cash equivalents as I hoard cash to prepare for an eventual purchase, despite maxing out 403/401k/457/backdoor Roth's/Mega Backdoor Roth/contributing to 529s.
That is why I personally think it is smarter to buy something smaller/not perfect for people in your situation. That will work as a hedge if the bubble keeps blowing up further too. If it goes up more, you can trade up later (your 1st house increases in value too). If the market tanks, you can buy your dream house at a discount later. With the amount of savings you can generate, it is a "head you win/tail they lose" scenario for you.

Emotionally you will feel better too no matter if the market keeps going up, or down. Don't underestimate the psychological stress on you, if you decide to not buy now, but then it keeps going up 10%/year the next 3-5 years.

Don't trade off on the commute though - i.e. don't buy a mansion 2 hours away because it looks nice either.

Your profession generates a lot of income, and the best way is to keep yourself stress free and focus on the profession - the money part and houses will take care of themselves.
Yeah- admittedly, we've been looking at a 8-9/10 type home on our gut rating scale given the huge expense it represents but it may be worth going for a 6-7/10 type home, something we could trade in later on to move up but that we'd be fine in for 5-10 years, take advantage of the housing supplements, get in on the housing as a hedge if the "bubble" keeps going, and not dedicate 60+% of our net income to housing.
Or maybe you decide not to go for the "prestigious" house. I have several friends who are happy as clams in their remodeled "starter" houses. They are debt free, FIRE or working part-time (founder in a law firm) and enjoying the heck out of traveling (while spending $300k on putting their daughter through vet school on St. Kitts!). Those bigger houses are going to cost you more in the long run. Add in the designer neighborhood and KWTJ is a real thing. And you will pay through the nose for home services because 1) they can and 2) Service people are driving in from the East Bay and far South Bay and time costs money.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 5:37 pm

visualguy wrote:
Mon May 14, 2018 5:29 pm
Not sure what "bubble" people are talking about. High house prices don't signify a bubble. There's a chronic supply/demand problem in the area, not a bubble.

The typical approach in the Bay Area for people in stable high-paying jobs is to stretch to buy a place where they would be ok in the long run. Climbing the equity ladder isn't a good strategy in the Bay Area. In other words, you don't want to buy something insufficient with the expectation of upgrading in the future. It just becomes harder and more expensive - prices keep going up, the property taxes will be higher, etc. You get trapped. Instead, stretch to buy what you need, and stay there.
I agree with your bubble thoughts. Hence the quotes around my use of it at least. In terms of stretching, I think trying to figure out what a reasonable "stretch" is, while still being financially responsible and adhering to BH philosophy, is the challenging part. Typical rules of thumb like 3x your income or what not simply don't apply. Our preapproval is for a ridiculous amount that would literally take up 80+% of our take-home pay on housing. If we can still do all our tax deferred/backdoor Roth/megabackdoor Roth/529 contributions (a requirement in my mind), cover our typical expenses with some accounting for the increase that goes along with home ownership, and still have a buffer of X/month, then it seems reasonable. What is "x"- 2k/month? 20% of non-housing expenditures? I really have no good idea.

ofckrupke
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by ofckrupke » Mon May 14, 2018 5:41 pm

somekevinguy wrote:
Mon May 14, 2018 5:37 pm
Our preapproval is for a ridiculous amount that would literally take up 80+% of our take-home pay on housing.
Who did that? FSH?

somekevinguy
Posts: 105
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 5:42 pm

Carefreeap wrote:
Mon May 14, 2018 5:32 pm
somekevinguy wrote:
Mon May 14, 2018 5:15 pm
likashing wrote:
Mon May 14, 2018 4:58 pm
somekevinguy wrote:
Mon May 14, 2018 4:51 pm
likashing wrote:
Mon May 14, 2018 4:49 pm


Rent or bought small and they kept saving cash.
Yeah, that is what we're currently doing. I suppose it is a drop in the bucket and a good problem to have, but at some point, my AA becomes tilted significantly towards cash/cash equivalents as I hoard cash to prepare for an eventual purchase, despite maxing out 403/401k/457/backdoor Roth's/Mega Backdoor Roth/contributing to 529s.
That is why I personally think it is smarter to buy something smaller/not perfect for people in your situation. That will work as a hedge if the bubble keeps blowing up further too. If it goes up more, you can trade up later (your 1st house increases in value too). If the market tanks, you can buy your dream house at a discount later. With the amount of savings you can generate, it is a "head you win/tail they lose" scenario for you.

Emotionally you will feel better too no matter if the market keeps going up, or down. Don't underestimate the psychological stress on you, if you decide to not buy now, but then it keeps going up 10%/year the next 3-5 years.

Don't trade off on the commute though - i.e. don't buy a mansion 2 hours away because it looks nice either.

Your profession generates a lot of income, and the best way is to keep yourself stress free and focus on the profession - the money part and houses will take care of themselves.
Yeah- admittedly, we've been looking at a 8-9/10 type home on our gut rating scale given the huge expense it represents but it may be worth going for a 6-7/10 type home, something we could trade in later on to move up but that we'd be fine in for 5-10 years, take advantage of the housing supplements, get in on the housing as a hedge if the "bubble" keeps going, and not dedicate 60+% of our net income to housing.
Or maybe you decide not to go for the "prestigious" house. I have several friends who are happy as clams in their remodeled "starter" houses. They are debt free, FIRE or working part-time (founder in a law firm) and enjoying the heck out of traveling (while spending $300k on putting their daughter through vet school on St. Kitts!). Those bigger houses are going to cost you more in the long run. Add in the designer neighborhood and KWTJ is a real thing. And you will pay through the nose for home services because 1) they can and 2) Service people are driving in from the East Bay and far South Bay and time costs money.
We are definitely not going for the prestigious house. If you knew me, you'd know that that is way down on our list. I still drive the same car I have from med school (>10 years ago with >100K miles), consider pants >$20 expensive, cut the cord, pay $25/month for unlimited phone/data on an iphone 3 generations behind, etc etc etc. The hope is just to get something with room for 2-3 kids to grow up, decent schools (ie ratings 7-9 preferable), and with roundtrip commute times less than 90 minutes. Maybe I'm asking for too much but can't help but thinking that when household income is for all intents and purposes stupidly high and we otherwise are more than content essentially "living as residents" the rest of our lives, that isn't too big of an ask in terms of housing.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 5:43 pm

ofckrupke wrote:
Mon May 14, 2018 5:41 pm
somekevinguy wrote:
Mon May 14, 2018 5:37 pm
Our preapproval is for a ridiculous amount that would literally take up 80+% of our take-home pay on housing.
Who did that? FSH?
FSH + a bank from their approved lender list.

Ok- so clearly you have some insights- what did you do for housing?

ofckrupke
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by ofckrupke » Mon May 14, 2018 6:33 pm

somekevinguy wrote:
Mon May 14, 2018 5:43 pm
what did you do for housing?
Been waiting (in "company" housing), a couple of years now, with dawning awareness that we may not be able to afford waiting Godot out; but meanwhile accumulating, observing what changes and what doesn't in the department, getting older.
I have not seen any evidence of price-trend- or fever-disruption post-TCJA, and this disturbs. It's like being a value factor investor (lately), or Linus, writ large.

I don't have much to offer you. It sounds like your shelter-in-place approach is to live on the north end of the axis separating the two workplaces, so she gets the reverse commute; for sure this the way to go if at least one half must commute by car. Have you ruled out an intermediate home location and Caltrain for you/Light Rail for her with folding bikes for the first and last miles in good weather or campus-bus in bad? It may be a while before Tesla autopilot is ready to liberate your attention for essential journal study or self-admin stuff on that commute. Unfortunately Caltrain does not stop at the station nearest her workplace SB in AM or NB in PM - otherwise just about anywhere on its corridor would do.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 6:49 pm

ofckrupke wrote:
Mon May 14, 2018 6:33 pm
somekevinguy wrote:
Mon May 14, 2018 5:43 pm
what did you do for housing?
Been waiting (in "company" housing), a couple of years now, with dawning awareness that we may not be able to afford waiting Godot out; but meanwhile accumulating, observing what changes and what doesn't in the department, getting older.
I have not seen any evidence of price-trend- or fever-disruption post-TCJA, and this disturbs. It's like being a value factor investor (lately), or Linus, writ large.

I don't have much to offer you. It sounds like your shelter-in-place approach is to live on the north end of the axis separating the two workplaces, so she gets the reverse commute; for sure this the way to go if at least one half must commute by car. Have you ruled out an intermediate home location and Caltrain for you/Light Rail for her with folding bikes for the first and last miles in good weather or campus-bus in bad? It may be a while before Tesla autopilot is ready to liberate your attention for essential journal study or self-admin stuff on that commute. Unfortunately Caltrain does not stop at the station nearest her workplace SB in AM or NB in PM - otherwise just about anywhere on its corridor would do.
My hours are such that we could probably live further South but given her reverse commute, moving further South produces only modest gains in her commute but can significantly affect my commute at peak times. Haven't looked much at Caltrain as there is enough variability in our schedules that it doesn't seem ideal. But yes, targeting the northern end of the axis also puts us smack dab in the most expensive areas of the bay area, itself one of the most expensive areas in the country.

Do you anticipate a purchase anytime in the next 1-3 years or likely to continue waiting?

kacang
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by kacang » Mon May 14, 2018 7:38 pm

Have you considered Foster City? Good schools, 3/2 and 4/2 between 1-2m, or townhomes for slightly under 1m.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Mon May 14, 2018 7:51 pm

kacang wrote:
Mon May 14, 2018 7:38 pm
Have you considered Foster City? Good schools, 3/2 and 4/2 between 1-2m, or townhomes for slightly under 1m.
Thanks but too far for dw’s commute (south San Jose)

ofckrupke
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by ofckrupke » Mon May 14, 2018 8:03 pm

somekevinguy wrote:
Mon May 14, 2018 6:49 pm
Do you anticipate a purchase anytime in the next 1-3 years or likely to continue waiting?
Anticipation doesn't seem like the right word.
But yeah, that's probably the right time frame...though I suspect I thought the same a year ago.

toomuchRE
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by toomuchRE » Mon May 14, 2018 8:10 pm

The 100% appreciation in bay area is not a big deal but the rate at it happened is suspect.. I'm 90% convinced that this bubble will burst in 2 years..
Bay area ain't Manhattan where you are constrained by lack of space... 80% of space is empty land.. which is opposite of Manhattan

Leemiller
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Leemiller » Tue May 15, 2018 7:54 am

It seems to me this is also setting up your kids for hard choices later. They can stay in an extremely high HCOL where they grew up with family and friends or move to a lower COL. I’ve noticed that young adults in high HCOLs seem to put off marriage and having kids until later given student loan debt + high rent or barriers to home ownership. A friend of mine from CA has kids well into their 30s, none of whom are married or own property.

For my husband and I (again not in CA), thinking about a very big mortgage with 30 years of payments was simply not attractive. Math is math, Bay Area or not. At a high income you are paying an extremely high tax rate and paying off a large mortgage is not easy going. We have a sub $1m mortgage, and it still feels like a lot most of the time. Also, I don’t know about you but I’d like the options of early retirement or one spouse cutting back on the table.

Frisco Kid
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Frisco Kid » Tue May 15, 2018 9:14 am

OP, as others have said, you CAN afford to buy on the SF Peninsula. Perception is reality, take a look at smaller homes to get you started. Born and raised here we can say from experience that it has never been easy going back to our first home purchase in 1979. A PLUS for you is that your income is above many of those that HAVE made it work here and that is a good thing.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Tue May 15, 2018 10:42 am

Frisco Kid wrote:
Tue May 15, 2018 9:14 am
OP, as others have said, you CAN afford to buy on the SF Peninsula. Perception is reality, take a look at smaller homes to get you started. Born and raised here we can say from experience that it has never been easy going back to our first home purchase in 1979. A PLUS for you is that your income is above many of those that HAVE made it work here and that is a good thing.
Yes, with even minimal perspective, we are obviously very fortunate. My major question was for others in a similar position (although other perspectives are also valued) as to how others handled it and how much they extended themselves to buy (relatively speaking). I have no doubts we could buy something-how much house and where is less obviously clear and there are some reasonable considerations in either direction (buying more or less house). Ie prices, and thereby property taxes are only likely to increase. Our housing supplement can only be used once and taking advantage of 30 year’s of zero interest is probably preferable to cashing out in 5 years to purchase a more expensive home without the benefit of that free money etc

Carefreeap
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Location: SF Bay Area

Re: New(ish) attending physicians in the Bay Area: Housing

Post by Carefreeap » Tue May 15, 2018 10:49 am

somekevinguy wrote:
Tue May 15, 2018 10:42 am
Frisco Kid wrote:
Tue May 15, 2018 9:14 am
OP, as others have said, you CAN afford to buy on the SF Peninsula. Perception is reality, take a look at smaller homes to get you started. Born and raised here we can say from experience that it has never been easy going back to our first home purchase in 1979. A PLUS for you is that your income is above many of those that HAVE made it work here and that is a good thing.
Yes, with even minimal perspective, we are obviously very fortunate. My major question was for others in a similar position (although other perspectives are also valued) as to how others handled it and how much they extended themselves to buy (relatively speaking). I have no doubts we could buy something-how much house and where is less obviously clear and there are some reasonable considerations in either direction (buying more or less house). Ie prices, and thereby property taxes are only likely to increase. Our housing supplement can only be used once and taking advantage of 30 year’s of zero interest is probably preferable to cashing out in 5 years to purchase a more expensive home without the benefit of that free money etc
Right, but you can maximize the leverage of the 0% loan and set aside money to do an addition later on if that's the way you want to go. We paid 1/2 cash 1/2 HELOC several years ago to do a 500 sq.ft. addition. Then we paid off everything 8 years ago anticipating an early retirement.

Carefreeap
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Carefreeap » Tue May 15, 2018 10:56 am

Hyperborea wrote:
Mon May 14, 2018 5:05 pm
visualguy wrote:
Sun May 13, 2018 4:19 pm
somekevinguy wrote:
Sun May 13, 2018 3:37 pm
This has crossed my mind too although the counter is that at least for now, our cash flow is very healthy renting and while that may one day eventually change, we’ll be well prepared to buy or move at that point (saving maybe 200k/year currently).
Much of that annual savings is wiped out by the annual appreciation of the house that you would eventually buy in the area... As mentioned by a few above, waiting to buy doesn't make sense if there's a high probability that you will stay in the area in the long run. You fall further and further behind due to missed appreciation plus rent.

Betting against the Bay Area economy didn't prove to be a smart strategy in the past, and all indications are that it won't be a smart strategy in the future either.
I'll mention the same story that I've trotted out before too. I was able to buy in 1999 but didn't because "the prices were too high". Well, we bought in 2002 after the dot com bubble burst. We paid more for less than if we had bought in 1999. The housing prices in the core of the Bay Area, which includes San Francisco/south San Francisco where you want to buy, don't really drop that much during the last few declines. The number of units for sale just dried up and prices remained mostly stable. Outside of that core (which has been growing over the years) then housing prices can drop quite a bit. If you are really on the fringe then they can plunge.
I agree with your observation. I didn't see a dip in residential prices during the dot-bomb. Commercial was hit hard and there was a blink between 9/11 and December 2001 but things keep climbing after that. Unlike 2007 I'm not seeing a lot of investor speculation in multiple house purchases (by unqualified borrowers). I see flipping but only by experienced investors who are only doing one or two at a time. Therefore I don't see a "crash" in desirable areas. There's just not enough inventory as you point out.

Afty
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by Afty » Tue May 15, 2018 12:57 pm

Leemiller wrote:
Tue May 15, 2018 7:54 am
It seems to me this is also setting up your kids for hard choices later. They can stay in an extremely high HCOL where they grew up with family and friends or move to a lower COL. I’ve noticed that young adults in high HCOLs seem to put off marriage and having kids until later given student loan debt + high rent or barriers to home ownership. A friend of mine from CA has kids well into their 30s, none of whom are married or own property.
Alternatively, if you choose to live in a LCOL area, your kids may not be interested in living there when they grow up. I've observed this among my friends who grew up with me in Memphis. Many of us never returned home after college. In fact, there is a large contingent of us in the Bay Area.

somekevinguy
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Tue May 15, 2018 1:12 pm

Afty wrote:
Tue May 15, 2018 12:57 pm
Leemiller wrote:
Tue May 15, 2018 7:54 am
It seems to me this is also setting up your kids for hard choices later. They can stay in an extremely high HCOL where they grew up with family and friends or move to a lower COL. I’ve noticed that young adults in high HCOLs seem to put off marriage and having kids until later given student loan debt + high rent or barriers to home ownership. A friend of mine from CA has kids well into their 30s, none of whom are married or own property.
Alternatively, if you choose to live in a LCOL area, your kids may not be interested in living there when they grow up. I've observed this among my friends who grew up with me in Memphis. Many of us never returned home after college. In fact, there is a large contingent of us in the Bay Area.
Yep- grew up in a lower COL area in California and essentially all of my friends that went to university etc have left as have many of their families. Like your experience, many of them are actually in the Bay Area as well.

mac808
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Re: New(ish) attending physicians in the Bay Area: Housing

Post by mac808 » Tue May 15, 2018 1:19 pm

mrsbetsy wrote:
Sat May 12, 2018 6:03 pm
You might get lucky like we did and experience a steady rise in the market.
I'll acknowledge that anything is possible, but I just don't see how there's much appreciation potential left. The median house is already priced for two working professionals with extremely high incomes, no job loss, rock bottom interest rates, and low personal savings rates. It might make sense to buy anyway, but whereas the trends in the past forecast price appreciation (falling interest rates, growing population) the current trends are mixed (some bullish trends, but also stagnant population, likely prop 13 modification, slower job creation, higher income taxes, and growing pro-development anti-NIMBYism). As physicians, the main advantage you have is job security. You could buy something "modest" now - maybe a condo - and then if or when the tech market corrects, upgrade to a house since you would be relatively less impacted.

Poppy1234
Posts: 28
Joined: Mon Aug 21, 2017 7:42 pm

Re: New(ish) attending physicians in the Bay Area: Housing

Post by Poppy1234 » Tue May 15, 2018 1:22 pm

Unfortunately your finances are pretty middle of the road right now which means your predicaments are shared by non physicians as well in the area. We’re a physician and techie household too. In my opinion, medicine people financials are way behind techie financials at the same age. We have debt, lost income/investment return during this huge stock market run up, and salaries that are not that much higher. It’s a nice relief to hear techie salaries below 200 but it’s simply not what I see from my experience. Plus, many companies with hundreds of employees have IPO’d in the past few years which floods young people with hundreds of thousands of dollars, something we will not experience in medicine. I would suggest opening the question up to everyone within your salary and savings range rather than just physicians. I can’t tell you how many techie families I know or some other variation that make 500+ and have been doing so starting at much younger ages.

somekevinguy
Posts: 105
Joined: Mon Jan 16, 2017 9:23 pm

Re: New(ish) attending physicians in the Bay Area: Housing

Post by somekevinguy » Tue May 15, 2018 1:32 pm

Poppy1234 wrote:
Tue May 15, 2018 1:22 pm
Unfortunately your finances are pretty middle of the road right now which means your predicaments are shared by non physicians as well in the area. We’re a physician and techie household too. In my opinion, medicine people financials are way behind techie financials at the same age. We have debt, lost income/investment return during this huge stock market run up, and salaries that are not that much higher. It’s a nice relief to hear techie salaries below 200 but it’s simply not what I see from my experience. Plus, many companies with hundreds of employees have IPO’d in the past few years which floods young people with hundreds of thousands of dollars, something we will not experience in medicine. I would suggest opening the question up to everyone within your salary and savings range rather than just physicians. I can’t tell you how many techie families I know or some other variation that make 500+ and have been doing so starting at much younger ages.
500+ for 10+ years would be news to me. I had always suspected RSU's with rapidly increasing stock prices were the main culprit of techies being able to put a lot down even though their incomes may be more "modest" (I say this recognizing how ridiculous it is) at 300-400K/yr. (ie 300-400K/yr in no way allows you to buy a 3M home while still maintaining any semblance of reasonable finances).

Alas, it is tough to have our finances called "middle of the road" with a stupidly high income, no debts, and a net worth that puts us in the top 3% for age amongst physicians but maybe that is the reality in the Bay Area (medscape physician wealth report)
Last edited by somekevinguy on Tue May 15, 2018 2:54 pm, edited 1 time in total.

visualguy
Posts: 737
Joined: Thu Jan 30, 2014 1:32 am

Re: New(ish) attending physicians in the Bay Area: Housing

Post by visualguy » Tue May 15, 2018 2:42 pm

somekevinguy wrote:
Tue May 15, 2018 1:32 pm
Alas, it is tough to have our finances called "middle of the road" with a stupidly high income, no debts, and a net worth that puts us in the top 3% for age amongst physicians but maybe that is the reality in the Bay Area.
Yes, that's the reality in the SF Bay Area, but not just there - it's like that pretty much in all the top economic centers around the world. Not sure why people are surprised that it's like that in the Bay Area, but not surprised about other places.

mrsbetsy
Posts: 126
Joined: Mon Jun 26, 2017 12:16 am

Re: New(ish) attending physicians in the Bay Area: Housing

Post by mrsbetsy » Tue May 15, 2018 4:24 pm

[
[/quote]
I'll acknowledge that anything is possible, but I just don't see how there's much appreciation potential left.


That's what we said...twice. We were wrong both times.

This whole thread is starting to sound more like a tantrum about "being a two-physician family" and not being able to buy the house you want. Seriously. It doesn't matter what your profession is, it matters how much you earn and how much you keep and how far you are willing to stretch.

You can find a house to buy on the peninsula if you are willing to buy something that is a starter home. You aren't any more deserving of your dream house than anyone else just because you went to med school.

There really is no magic here....

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