Bay Area Real Estate

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
curi0usAndCuri0user
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Bay Area Real Estate

Post by curi0usAndCuri0user » Mon Sep 25, 2017 10:27 pm

Any recommendations on making it out here in this crazy market? I'm doing various buy vs. rent analyses and can't seem to make sense of buying (am I missing something obvious?)

I understand salaries tend to be higher here, but how does a family come out ahead when similar homes in other areas of the country (e.g., the midwest) go for < 25% of the asking price out here? Not to mention the all cash offers that go an additional 10-20% above asking in parts of the Bay...

If I was to come up with a down payment and have my offer accepted with financing, it looks like I'd run up some massive debt and the majority of my compensation would go into housing for the next 30 years? Doesn't seem very Boglehead-like to me given we tend to shy away from leverage?

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Cycle
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Re: Bay Area Real Estate

Post by Cycle » Mon Sep 25, 2017 11:21 pm

Rent until you can buy with cash, then decide what you want to do

TheAncientOne
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Re: Bay Area Real Estate

Post by TheAncientOne » Mon Sep 25, 2017 11:27 pm

It's very hard to make the numbers work for buying in the Bay Area. Where do you live and where do you work? Are you likely to be working in the same general area indefinitely? Even if you can make the numbers work, the last thing you want to do is to buy a place that's inconvenient to a large part of the job market, given the awful traffic here.

curi0usAndCuri0user
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Re: Bay Area Real Estate

Post by curi0usAndCuri0user » Mon Sep 25, 2017 11:54 pm

I currently live and work in Cupertino, and pay $2500 / month in rent for a 1 bedroom / 1 bathroom.

From what I can tell, most people are banking on appreciation to continue. Given interest rates are relatively low compared to historical averages, and YoY appreciation here being > 5%, I can see why getting a 5x levered position w/ 20% down and 4% interest rate is so attractive (not to mention the further tax write-off on the interest portion of one's payment)

Let's pretend I'll live here for a while (> 10 years) with a stable job. Is it then financially better to divert my savings for a 20% down payment and take advantage of this leveraged and tax-advantaged instrument, or is it better to continue indexing my savings (VTSAX)?

Lastly, if you theoretically had the option of borrowing money at 4% to invest in VTSAX, would you do it? Curious why folks here in the Bay justify borrowing money to invest in housing, but seem to fall short of finding creative financing for investing in the stock market?

aaronl
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Re: Bay Area Real Estate

Post by aaronl » Tue Sep 26, 2017 12:04 am

I have been doing some buy vs. rent analyses and my sense is that renting looks like a better deal, and also carries much lower financial risks. People are apparently betting on continued appreciation, but that's not a bet I'm eager to take.

Speculating on future policy is against forum rules, but I would caution you to take a look at what changes to the federal tax code are being discussed. It seems to me that they would weigh very negatively on the "buy" side of the rent vs. buy calculation in California. Also, if the real estate market is rational (and I'm not saying it is), I'd expect prices to go down if/when tax law becomes less favorable to buying relative to renting. That would be a double whammy for anyone buying a home right now in the Bay Area.

visualguy
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Re: Bay Area Real Estate

Post by visualguy » Tue Sep 26, 2017 12:59 am

There's a tremendous supply/demand disparity in the Bay Area. Prices will stay strong. There are enough people with means to bid up any inventory that becomes available. If you can afford it and you think you'll stay for at least a few years, definitely buy.

ryman554
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Re: Bay Area Real Estate

Post by ryman554 » Tue Sep 26, 2017 9:00 am

gloss151 wrote:
Mon Sep 25, 2017 11:21 pm
Rent until you can buy with cash, then decide what you want to do
In the bay area that pretty much means renting forever. You are paying the equivalent of a very expensive mortgage anywhere else in the country for *rent*. Hoping in the meanwhile to amass 1M+ in cash to buy a house. Good luck with that.

A mortgage of $625k or so is doable, even on a single income, at these interest rates, for median salaries (120-150k-ish total $ comp). Still, that means an down payment north of $500k, which is still really hard to come by.

It was a lot easier in 2010 to get in, but that ship has sailed. I doubt the growth will continue at this rate, but like the housing dips before it, those that got in did well. It's a losers game to wait for the next dip, since rent erodes your purchasing power. I don't see a whole lot of good options in the bay area right now.

DrGoogle2017
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Re: Bay Area Real Estate

Post by DrGoogle2017 » Tue Sep 26, 2017 9:36 am

ryman554 wrote:
Tue Sep 26, 2017 9:00 am
gloss151 wrote:
Mon Sep 25, 2017 11:21 pm
Rent until you can buy with cash, then decide what you want to do
In the bay area that pretty much means renting forever. You are paying the equivalent of a very expensive mortgage anywhere else in the country for *rent*. Hoping in the meanwhile to amass 1M+ in cash to buy a house. Good luck with that.

A mortgage of $625k or so is doable, even on a single income, at these interest rates, for median salaries (120-150k-ish total $ comp). Still, that means an down payment north of $500k, which is still really hard to come by.

It was a lot easier in 2010 to get in, but that ship has sailed. I doubt the growth will continue at this rate, but like the housing dips before it, those that got in did well. It's a losers game to wait for the next dip, since rent erodes your purchasing power. I don't see a whole lot of good options in the bay area right now.
+1

My friends in the Bay Area was debating about buying a small home in the Campbell area for about $400k around early 2000s, at that time they had high paying jobs. They never did purchase, too picky I think. Fast forward, wife lost her high paying job, despite having a Master degree from Stanford, husband went back to school for an MBA degree after was admitted to Phd in Engineering from Stanford. They are still renting. Almost in their 40s and early 50s now.

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Cycle
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Re: Bay Area Real Estate

Post by Cycle » Tue Sep 26, 2017 10:04 am

ryman554 wrote:
Tue Sep 26, 2017 9:00 am
gloss151 wrote:
Mon Sep 25, 2017 11:21 pm
Rent until you can buy with cash, then decide what you want to do
In the bay area that pretty much means renting forever. You are paying the equivalent of a very expensive mortgage anywhere else in the country for *rent*. Hoping in the meanwhile to amass 1M+ in cash to buy a house. Good luck with that.
I guess so long as you meet the following net worth metric after buying you can afford to buy.

Expected Net Worth = Age(years) * total_income * 10%

curi0usAndCuri0user
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Re: Bay Area Real Estate

Post by curi0usAndCuri0user » Tue Sep 26, 2017 10:09 am

In terms of net worth, do you think your friends would have been ahead had they bought that $400k house in Campbell, vs investing in a total stock market index along the way and renting?

Valuethinker
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Re: Bay Area Real Estate

Post by Valuethinker » Tue Sep 26, 2017 10:30 am

visualguy wrote:
Tue Sep 26, 2017 12:59 am
There's a tremendous supply/demand disparity in the Bay Area. Prices will stay strong. There are enough people with means to bid up any inventory that becomes available. If you can afford it and you think you'll stay for at least a few years, definitely buy.
I sort of buy that argument (because I make the same argument about London) and I do not.

I've seen tech sector recessions before. Just because we haven't had one since say around 2003 does not mean there will not be another.

"When something cannot go on forever, it stops". Is I believe the aphorism.

It may just be (see London) that the supply-demand situation is too crazily far out of balance to ever be fixed. It may also be that the new Apple HQ, costing $5bn, which the engineers hate and which probably scores a negative number on sustainability (it has a car park for over 10,000 cars), marks "peak hubris" for the tech sector.

I say that because I have seen something similar in financial services*. Silicon Valley to the internet age is what Detroit was to the age of the automobile. Or London and New York to the age of financialization that we have been in since about 1980. Those latter examples are all looking long in the tooth.

Wouldn't it be ironic if the industry whose strategic goal is to disrupt every other industry is, itself, disrupted?

* and I actually saw it in tech in the 1980s, but it was a different tech industry, then. There was this long IPO fallow from the early 80s to the 90s. Only a few companies managed it, one was Apple (which then had a near death experience in the 1990s) and another was Microsoft. And there was a similar tech recession in the late 60s-early 70s.
Last edited by Valuethinker on Tue Sep 26, 2017 10:31 am, edited 1 time in total.

Valuethinker
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Re: Bay Area Real Estate

Post by Valuethinker » Tue Sep 26, 2017 10:30 am

curi0usAndCuri0user wrote:
Tue Sep 26, 2017 10:09 am
In terms of net worth, do you think your friends would have been ahead had they bought that $400k house in Campbell, vs investing in a total stock market index along the way and renting?
One could track the data. If they bought in 2000, they almost certainly did worse in stocks.

DrGoogle2017
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Re: Bay Area Real Estate

Post by DrGoogle2017 » Tue Sep 26, 2017 10:41 am

curi0usAndCuri0user wrote:
Tue Sep 26, 2017 10:09 am
In terms of net worth, do you think your friends would have been ahead had they bought that $400k house in Campbell, vs investing in a total stock market index along the way and renting?
I have no idea how much she and her husband has, this was 2001-2002 time frame. Not 2000, that was the peak for housing. But they are still renting in Cupertino. The house in Campbell could be worth around $1 million. She's no longer has high income, most likely low income like $36k a year, it's low for the Bay Area anyway, but she has flexibility. It's a sad situation. Last time I talked to her, I mentioned we were going to retire, she told me her husband and her will never retire. That's all I know.

mervinj7
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Re: Bay Area Real Estate

Post by mervinj7 » Tue Sep 26, 2017 10:55 am

DrGoogle2017 wrote:
Tue Sep 26, 2017 10:41 am
curi0usAndCuri0user wrote:
Tue Sep 26, 2017 10:09 am
In terms of net worth, do you think your friends would have been ahead had they bought that $400k house in Campbell, vs investing in a total stock market index along the way and renting?
I have no idea how much she and her husband has, this was 2001-2002 time frame. Not 2000, that was the peak for housing. But they are still renting in Cupertino. The house in Campbell could be worth around $1 million. She's no longer has high income, most likely low income like $36k a year, it's low for the Bay Area anyway, but she has flexibility. It's a sad situation. Last time I talked to her, I mentioned we were going to retire, she told me her husband and her will never retire. That's all I know.
If this were an average Bay Area home, we can use the data in the following article:
https://www.paragon-re.com/trend/3-rece ... and-a-baby

Let's assume the house was worth $400k at its peak in early 2001. After the dot-com crash, it dips 10% to $360k, then from 2002-2007, it increases 59% to $572k, then after great recession, it dips 27% to $417k, and then from 2012-2017 increases 74% to $727k.
In reality, however, the median home price in Campbell is $1.25M, so I definitely believe that $400k home is worth well north of $1M now.

Here's a sample listing of a house that was worth ~$400k in 2000 but is currently listed for $1.2M now and will likely sell for over $1.3M: https://www.redfin.com/CA/Campbell/605- ... me/1472602

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ray.james
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Re: Bay Area Real Estate

Post by ray.james » Tue Sep 26, 2017 12:10 pm

I live in Bay area and we have contemplated this question quite a bit. We have enough down payment to buy in 800-900k range in east bay. However 3 factors weigh against it for us.

1) Commute is getting increasingly worse. Some areas across peninsula and east bay take 30 mins to get on the ramp. Given all the zero lot townhouses being built, this will get worse, way worse.

2) We live in a cheap unit 10 minutes to work. Our landlady did not increase rent in 2 years but also the building is just OK. If I have to guess, we are 15-20% discount on our rent.

3) Daycare. We have a young child for whom daycare starts soon. It is an increasing cost and commute/time strain adds up if we buy a house.

I think the price changes are sustainable for a while. Its not because lot of people make a lot of money but there are enough with stock options to bid up the price. We will still buy when we see it fit out needs long term but not rushing the decision.
Last edited by ray.james on Tue Sep 26, 2017 12:27 pm, edited 1 time in total.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

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randomizer
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Re: Bay Area Real Estate

Post by randomizer » Tue Sep 26, 2017 12:25 pm

Don't buy, run. I mean rent.

RosieQ
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Re: Bay Area Real Estate

Post by RosieQ » Tue Sep 26, 2017 12:42 pm

I feel like current Bay Area housing prices require 2 well educated professionals both work and contribute to the mortgage. It's harder to get ahead, but it can be done. 2 people in tech, 2 in medicine etc. However, I'm not sure that the current growth trends can continue. The past growth in housing has been driven by increasing salaries supported by the tech sector but have gone from 1 income earner being able to pay the mortgage now up to 2. For a typical family you can't get much beyond two active earners that which will slow growth substantially and likely keep pace with inflation. Things are so wildly unsustainable that I can't see if continuing more. My wife and I left the Bay Area earlier this year. Too much traffic, and even with a family income of over 400k per year we didn't feel comfortable with the housing economics. So much of the rent vs buy calculation depends on projected future appreciation, that leaves a lot of uncertainty.

Personally I would put a lot of money into cash right now and start saving for a large down payment, since you'll likely need one. I think we are due for a downturn so you'll be ready if/when one happens. And if it doesn't, you'll be even more prepared with a good downpayment to afford an expensive house.

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Hyperborea
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Re: Bay Area Real Estate

Post by Hyperborea » Tue Sep 26, 2017 1:32 pm

RosieQ wrote:
Tue Sep 26, 2017 12:42 pm
Personally I would put a lot of money into cash right now and start saving for a large down payment, since you'll likely need one. I think we are due for a downturn so you'll be ready if/when one happens. And if it doesn't, you'll be even more prepared with a good downpayment to afford an expensive house.
It's going to depend on what kind of downturn we have next time. Will it be as deep with as slow a recovery as 2008? Or will it be a short sharp shock like 2001? It will also depend on when that downturn occurs. Next year or three years from now. You may or may not be better off by waiting and even if waiting makes sense the window to take advantage may be small.

My cautionary tale is that I came to the Bay Area in 1997 and couldn't believe the housing prices. I was ready and able to buy in 1999. I waited because the prices were crazy. I did buy in 2002 but despite the dot com bubble bursting the prices were higher than 1999. They were lower than in 2000 but higher than in 1999.

I will caution about buying a place far out of the core of the Bay Area though. In both of the most recent downturns they took the biggest hits %age-wise and took longer to recover. In the 2008 downturn many of those places were seriously hit and some of the towns out there went bankrupt. Sure, you will get a bigger house for the same money but you will pay for it in commute time.

The Bay Area has certainly got to change its transportation options. You can see glimmers of this but it will take time. There is more talk about improving public transportation. It is coming (though far too belatedly) and the high density housing along some of the major roads in the region, El Camino and the various expressways, will make it more economical to do. It won't solve the problem next year though.

fortunefavored
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Re: Bay Area Real Estate

Post by fortunefavored » Tue Sep 26, 2017 1:49 pm

Mercurynews article on "Making sense of Silicon Valley's crazy housing" contains this terrifying statement:

"A growing number of people employed in the Bay Area have RSU plans; lending officers say an increasing majority (of buyers) are qualifying by including these plans as income. The borrower qualifies based on an average of 24-month prior receipt of RSUs in addition to their vesting schedule going forward."

For those familiar with RSUs, they know they evaporate when you leave the job, and are inextricably linked to the general stock market movements. Some extrinsic event could completely knock the legs out from under this "increasing majority" of buyers.

My observation through a few bubbles is lenders really want to keep the party going beyond all reason. So they will continue to loosen standards and become more generous until the music stops. Of course, no one can predict when or what will stop the music.

RosieQ
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Re: Bay Area Real Estate

Post by RosieQ » Tue Sep 26, 2017 1:50 pm

Hyperborea wrote:
Tue Sep 26, 2017 1:32 pm
RosieQ wrote:
Tue Sep 26, 2017 12:42 pm
Personally I would put a lot of money into cash right now and start saving for a large down payment, since you'll likely need one. I think we are due for a downturn so you'll be ready if/when one happens. And if it doesn't, you'll be even more prepared with a good downpayment to afford an expensive house.
It's going to depend on what kind of downturn we have next time. Will it be as deep with as slow a recovery as 2008? Or will it be a short sharp shock like 2001? It will also depend on when that downturn occurs. Next year or three years from now. You may or may not be better off by waiting and even if waiting makes sense the window to take advantage may be small.

My cautionary tale is that I came to the Bay Area in 1997 and couldn't believe the housing prices. I was ready and able to buy in 1999. I waited because the prices were crazy. I did buy in 2002 but despite the dot com bubble bursting the prices were higher than 1999. They were lower than in 2000 but higher than in 1999.

I will caution about buying a place far out of the core of the Bay Area though. In both of the most recent downturns they took the biggest hits %age-wise and took longer to recover. In the 2008 downturn many of those places were seriously hit and some of the towns out there went bankrupt. Sure, you will get a bigger house for the same money but you will pay for it in commute time.

The Bay Area has certainly got to change its transportation options. You can see glimmers of this but it will take time. There is more talk about improving public transportation. It is coming (though far too belatedly) and the high density housing along some of the major roads in the region, El Camino and the various expressways, will make it more economical to do. It won't solve the problem next year though.
All those infrastructure projects will likely be paid for with increased taxes on existing homeowners too. Catch 22. You're right though, if prices rise for the next few years before another downturn it will have to be an even larger downturn to make up for the lost time. I would at least wait until congress finishes with their tax plan this year in case mortgage interest, state tax deductions like for those in CA get altered. That would radically change the buying landscape in a month or two as well as the OPs take home income to buy with.

fetching
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Re: Bay Area Real Estate

Post by fetching » Tue Sep 26, 2017 2:10 pm

We left the Bay Area because it's impossible to get ahead.

Our last rental house there, it took six weeks of sleeping on a friend's air mattress to find. I would show up to open houses or meetings with landlords to find I was competing with 20 other people for the same crappy place that they wanted way too much for. People will offer over asking price, in cash, and that's the rental housing market. We spent two years in Oakland, but crime was ridiculous, so we got tired of it and left.

We live in Los Angeles right now. It's marginally better. But we are leaving here when our lease is up.

It seems that all west coast cities are like this now. I lived in Vancouver and Seattle as well and neither of those are affordable at all. Vancouver is more insane that SF, which is shocking.

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Cycle
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Re: Bay Area Real Estate

Post by Cycle » Tue Sep 26, 2017 2:25 pm

RosieQ wrote:
Tue Sep 26, 2017 12:42 pm
I feel like current Bay Area housing prices require 2 well educated professionals both work and contribute to the mortgage. It's harder to get ahead, but it can be done. 2 people in tech, 2 in medicine etc. However, I'm not sure that the current growth trends can continue. The past growth in housing has been driven by increasing salaries supported by the tech sector but have gone from 1 income earner being able to pay the mortgage now up to 2. For a typical family you can't get much beyond two active earners that which will slow growth substantially and likely keep pace with inflation. Things are so wildly unsustainable that I can't see if continuing more. My wife and I left the Bay Area earlier this year. Too much traffic, and even with a family income of over 400k per year we didn't feel comfortable with the housing economics. So much of the rent vs buy calculation depends on projected future appreciation, that leaves a lot of uncertainty.

Personally I would put a lot of money into cash right now and start saving for a large down payment, since you'll likely need one. I think we are due for a downturn so you'll be ready if/when one happens. And if it doesn't, you'll be even more prepared with a good downpayment to afford an expensive house.
Or two hard working janitors
http://abc7news.com/society/bart-janito ... y/1584858/

Augmented reality will obviate the need for colocation in tech, especially for developers. I work in a lab, so I'm stuck commuting for the near future.

We're saving to move out of our investment property. Im currently putting those funds in Vanguard Total International. I could save in cash but that would be a lot of money under the mattress losing value. Perhaps I'm misguided, but I try to make sure only 6 months of expenses are in cash and put the rest in the 3-fund.

I do not envy the OPs dilemma. One wants to maximize their savings, but both renting and a jumbo mortgage are both killers on savings rates.

LarryAllen
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Re: Bay Area Real Estate

Post by LarryAllen » Tue Sep 26, 2017 2:33 pm

It's why people move to places like the suburbs of Sacramento, Brentwood, etc.... Can get a beautiful house, great schools, huge parks, great family areas, and often Bay Area salaries. Yes, some people do end up driving back and forth a couple times a week but many find it to be a worthwhile choice.

rbaldini
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Re: Bay Area Real Estate

Post by rbaldini » Tue Sep 26, 2017 2:33 pm

curi0usAndCuri0user wrote:
Mon Sep 25, 2017 10:27 pm
Any recommendations on making it out here in this crazy market? I'm doing various buy vs. rent analyses and can't seem to make sense of buying (am I missing something obvious?)
No, you are probably not missing anything. I left silicon valley partly because I wanted to be able to buy a house (also sick of pop density, traffic). Very hard to do that there. Don't force it: sometimes renting really is the better decision.

I always recommend this tool for making this decision. Play with the settings to best fit your area and situation.
https://www.nytimes.com/interactive/201 ... lator.html

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Hyperborea
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Re: Bay Area Real Estate

Post by Hyperborea » Tue Sep 26, 2017 2:35 pm

fortunefavored wrote:
Tue Sep 26, 2017 1:49 pm
Mercurynews article on "Making sense of Silicon Valley's crazy housing" contains this terrifying statement:

"A growing number of people employed in the Bay Area have RSU plans; lending officers say an increasing majority (of buyers) are qualifying by including these plans as income. The borrower qualifies based on an average of 24-month prior receipt of RSUs in addition to their vesting schedule going forward."

For those familiar with RSUs, they know they evaporate when you leave the job, and are inextricably linked to the general stock market movements. Some extrinsic event could completely knock the legs out from under this "increasing majority" of buyers.

My observation through a few bubbles is lenders really want to keep the party going beyond all reason. So they will continue to loosen standards and become more generous until the music stops. Of course, no one can predict when or what will stop the music.
They're really no different than salary in many ways though. If you lose the job then the salary will "evaporate when you leave the job" just as RSUs do. However, they are less guaranteed than salary because you can keep the job and not get RSUs or get fewer because of personal or corporate performance. If the markets turn down enough then people will also lose their jobs and be unable to pay their mortgage too. If the markets haven't turned down and a company drops the RSUs they will lose a lot of their best employees.

For those who don't know, an RSU is a Restricted Stock Unit - essentially a grant of stock (not an option on stock) that vests on a certain date and becomes yours with no payment unlike an option. They are deferred compensation tied to the stock price. They are the way that many, many companies pay to keep valued employees. You will often get them with a longish vesting schedule of 3-5 years and maybe with vesting monthly or quarterly to avoid vesting cliffs that give employees a good time to leave. They also encourage employees to remain because with the yearly refresh they build up over time until you are receiving slices of 3 to 5 years worth every year. For an average employee these can be 25-50% of their yearly salary and for an exceptional employee they can be multiples of their yearly salary in RSUs every year.

limeyx
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Re: Bay Area Real Estate

Post by limeyx » Tue Sep 26, 2017 2:47 pm

randomizer wrote:
Tue Sep 26, 2017 12:25 pm
Don't buy, run. I mean rent.
Runt?

junetree
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Re: Bay Area Real Estate

Post by junetree » Tue Sep 26, 2017 3:36 pm

If you are not a "handy" person, then hiring handymen, plumbers and other contractors and service agents to fix, repair and maintain your property (unless you're on a HOA) will cost you a bit. Bay Area rates for home contractors are also in the stratosphere along with everything else. Also, there's this overlooked risk of the "Big One" hitting one day but most people don't buy expensive earthquake insurance to cover their homes.

That's something else to consider, given what's happened to our neighbors to the South.

cheapskate
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Re: Bay Area Real Estate

Post by cheapskate » Tue Sep 26, 2017 5:04 pm

junetree wrote:
Tue Sep 26, 2017 3:36 pm
If you are not a "handy" person, then hiring handymen, plumbers and other contractors and service agents to fix, repair and maintain your property (unless you're on a HOA) will cost you a bit.
+1

For a single family home, house cleaning services (once a week) will run between $400-$600/month. Gardening services $100-$150/month, und so weiter. I hadn't cleaned my windows in over 4.5 years, the screens and panes were DIRTY. I called around window cleaning services recently. Most would not return my calls. I got one quote for $550 (our house isn't THAT big), another for $460, finally got a quote for $360. All of these are booked solid 2 months out. I saw a guy in a van repairing window screens on my street. I asked him if could swing by and take a look at a couple of my windows that needed re-screening. He said I'd need to wait 2+ months. And don't even get me started on plumbing costs.

Point being, good people are booked solid (and likely won't take on new customers). And once you hire them, they are expensive - they have to live here too.

You better become a DIY'er as a Bay Area home owner, really hard to do when you consider all of the other stuff you battle every day like heavy traffic/long commutes/stressful jobs etc. Renting an apartment close to work isn't that bad an idea after all.

FloRidaRocky
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Re: Bay Area Real Estate

Post by FloRidaRocky » Wed Sep 27, 2017 1:47 am

If you're considering buying a house in the bay area and you have the 20% down payment saved up, consider moving to a cheaper part of the country and buying a house with cash. With no mortgage, your after housing income will probably be about the same in a lower cost of living area compared to living in the bay area with a huge mortgage.

Valuethinker
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Re: Bay Area Real Estate

Post by Valuethinker » Wed Sep 27, 2017 4:43 am

fetching wrote:
Tue Sep 26, 2017 2:10 pm


It seems that all west coast cities are like this now. I lived in Vancouver and Seattle as well and neither of those are affordable at all. Vancouver is more insane that SF, which is shocking.
I know more about the Toronto market than I do the Vancouver one. But I believe Toronto will be down 50% sometime in the next 5 years (which would only take it to 2012 prices in core areas). More is possible.

I do not think Vancouver will be immune. $1.7m average price in Vancouver for a single family detached home. And people are not paid anything like what they are in SF. In fact, they are not paid what they are paid in Seattle. Yes, there is the East Asian buyer thing, but I also don't believe that can run on forever-- among the Economist magazine's most overvalued housing markets in the world you find Auckland, Vancouver, Sydney, Melbourne, Toronto, Hong Kong -- they will all go down at some point, and probably go down together.

Seattle not affordable? I guess it is perspective but from what I have seen of prices it is affordable (but my benchmark is London, Toronto, Vancouver) and there are a lot of tech employers in Seattle. However commuting can be a real pain because of the geography.

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Re: Bay Area Real Estate

Post by asmith » Wed Sep 27, 2017 11:19 am

my wife and i live in Burlingame. we moved out here about two years ago from a really low cost of living area in the midwest. housing costs aside we love the house we rent and the neighborhood. we both work and will likely continue to rent for the next few years. we're turning 30 this year and just had our second child.

these posts are always interesting to me. it's difficult to know whether the high costs to live here are worth it. in my experience/field there are more opportunities here and we've been able to save a lot more money since moving. i've read a lot of threads like this and decided for now to just enjoy life here and continue to try and save. i'd like to make it work in the long term, but it's too early to say i think.

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Re: Bay Area Real Estate

Post by random_walker_77 » Wed Sep 27, 2017 12:06 pm

FloRidaRocky wrote:
Wed Sep 27, 2017 1:47 am
If you're considering buying a house in the bay area and you have the 20% down payment saved up, consider moving to a cheaper part of the country and buying a house with cash. With no mortgage, your after housing income will probably be about the same in a lower cost of living area compared to living in the bay area with a huge mortgage.
Nevermind after-housing income, your absolute after-tax income might well be the same. For computer hardware, tech salaries in Texas seem to be about 90% of bay area rates. When you adjust for no state income tax, your take-home is roughly the same. If you're early career, then as your career progresses you'll eventually be making more even though houses are less than 1/3 the price.

That said, career progression would be expected to be slower away from headquarters, and if you need to change jobs, there's much less opportunity to do so without moving.

For the OP, my recommendation regarding buy vs rent is to rent. Yes, it's expensive, but less so than buying a house, and it allows you to easily move around the bay area to follow jobs. The biggest advantage of the bay area is the robust labor market, and the experience and sizeable raises you can get when job hopping. Renting makes it easier to take advantage of that...

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Re: Bay Area Real Estate

Post by Hyperborea » Wed Sep 27, 2017 2:01 pm

random_walker_77 wrote:
Wed Sep 27, 2017 12:06 pm
FloRidaRocky wrote:
Wed Sep 27, 2017 1:47 am
If you're considering buying a house in the bay area and you have the 20% down payment saved up, consider moving to a cheaper part of the country and buying a house with cash. With no mortgage, your after housing income will probably be about the same in a lower cost of living area compared to living in the bay area with a huge mortgage.
Ah yes, the move somewhere cheaper posts that always show up in any Bay Area housing thread. I wondered why it had taken so long this time. Why live in high cost Florida? Why not move to rural Montana and buy multiple houses?
random_walker_77 wrote:
Wed Sep 27, 2017 12:06 pm
Nevermind after-housing income, your absolute after-tax income might well be the same. For computer hardware, tech salaries in Texas seem to be about 90% of bay area rates. When you adjust for no state income tax, your take-home is roughly the same. If you're early career, then as your career progresses you'll eventually be making more even though houses are less than 1/3 the price.

That said, career progression would be expected to be slower away from headquarters, and if you need to change jobs, there's much less opportunity to do so without moving.

For the OP, my recommendation regarding buy vs rent is to rent. Yes, it's expensive, but less so than buying a house, and it allows you to easily move around the bay area to follow jobs. The biggest advantage of the bay area is the robust labor market, and the experience and sizeable raises you can get when job hopping. Renting makes it easier to take advantage of that...
I'm not so sure that the 2-3 year job hopping plan works as well as it has in the past. Companies have wised up and changed compensation to try to reduce this. If it is worth it to job hop then you aren't being valued by the company you work for enough and you should go.

If you are being valued by the company you work for then you should be seeing RSUs (see discussion above) of 1-2x your salary every year with a vesting over maybe 4 years (paying out 1/48 every month). You start to get 1/4 to 1/2 of your salary in RSUs in year one and once you are 4 years into that system you are getting 1 to 2x your salary every year in RSUs. That could mean that good senior engineer or first line manager is making maybe mid six figures per year. An intermediate engineer should be seeing the high end of low six figures. If you leave that job and start over then you start the whole RSU train all over again too. Hop every 2-3 years and you never get the full benefits of the RSUs.

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Re: Bay Area Real Estate

Post by random_walker_77 » Wed Sep 27, 2017 3:44 pm

Hyperborea wrote:
Wed Sep 27, 2017 2:01 pm

If you are being valued by the company you work for then you should be seeing RSUs (see discussion above) of 1-2x your salary every year with a vesting over maybe 4 years (paying out 1/48 every month). You start to get 1/4 to 1/2 of your salary in RSUs in year one and once you are 4 years into that system you are getting 1 to 2x your salary every year in RSUs. That could mean that good senior engineer or first line manager is making maybe mid six figures per year. An intermediate engineer should be seeing the high end of low six figures. If you leave that job and start over then you start the whole RSU train all over again too. Hop every 2-3 years and you never get the full benefits of the RSUs.
True. Companies have been known to buy out your RSU's to make it worth your while to join their team. These kinds of incomes go even farther in lower COL areas, but honestly, if you're making 500k / yr, silicon valley homes are affordable at a reasonable ratio. Rent is affordable too. Might as well rent, save up enough equity, and then decide if you'd rather have a deed or an investment portfolio. Conversely, if you're only at poverty level (120K/yr, is it?), leveraging up to buy real estate strikes me as... speculative.

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Re: Bay Area Real Estate

Post by 2m2037 » Wed Sep 27, 2017 4:59 pm

asmith wrote:
Wed Sep 27, 2017 11:19 am
my wife and i live in Burlingame. we moved out here about two years ago from a really low cost of living area in the midwest. housing costs aside we love the house we rent and the neighborhood. we both work and will likely continue to rent for the next few years. we're turning 30 this year and just had our second child.

these posts are always interesting to me. it's difficult to know whether the high costs to live here are worth it. in my experience/field there are more opportunities here and we've been able to save a lot more money since moving. i've read a lot of threads like this and decided for now to just enjoy life here and continue to try and save. i'd like to make it work in the long term, but it's too early to say i think.
Would mind sharing how much you pay for rent, for what kind of housing e.g. 2ba/2br 1000 sqft condo?

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Re: Bay Area Real Estate

Post by randomguy » Wed Sep 27, 2017 5:07 pm

TheAncientOne wrote:
Mon Sep 25, 2017 11:27 pm
It's very hard to make the numbers work for buying in the Bay Area.
It is easy to make bay area numbers work. You just need to assume 5 or 6% appreciation and similar rent increases.....

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Re: Bay Area Real Estate

Post by visualguy » Wed Sep 27, 2017 5:19 pm

There's one thing that I don't understand about the Bay Area... How do people in most professions survive there?

Many in tech, real estate, medicine, and maybe one or two other areas do fine, so I understand that part. I don't get the rest of it... The extraordinary thing about the Bay Area is that housing is not affordable pretty much anywhere that isn't crime infested (and even crime-infested areas are ridiculously expensive). You can't escape extremely high costs unless you get out of the area. Housing is the biggest factor, but other costs are high as well (taxes, etc.) You would think that there wouldn't be people to do most jobs there, yet somehow they are found. I guess some are old-timers, but many are not. I don't fully understand how the Bay Area functions and finds the workers it needs for most jobs which don't pay a fortune.

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Re: Bay Area Real Estate

Post by Hyperborea » Wed Sep 27, 2017 5:26 pm

random_walker_77 wrote:
Wed Sep 27, 2017 3:44 pm
Hyperborea wrote:
Wed Sep 27, 2017 2:01 pm

If you are being valued by the company you work for then you should be seeing RSUs (see discussion above) of 1-2x your salary every year with a vesting over maybe 4 years (paying out 1/48 every month). You start to get 1/4 to 1/2 of your salary in RSUs in year one and once you are 4 years into that system you are getting 1 to 2x your salary every year in RSUs. That could mean that good senior engineer or first line manager is making maybe mid six figures per year. An intermediate engineer should be seeing the high end of low six figures. If you leave that job and start over then you start the whole RSU train all over again too. Hop every 2-3 years and you never get the full benefits of the RSUs.
True. Companies have been known to buy out your RSU's to make it worth your while to join their team. These kinds of incomes go even farther in lower COL areas, but honestly, if you're making 500k / yr, silicon valley homes are affordable at a reasonable ratio. Rent is affordable too. Might as well rent, save up enough equity, and then decide if you'd rather have a deed or an investment portfolio. Conversely, if you're only at poverty level (120K/yr, is it?), leveraging up to buy real estate strikes me as... speculative.
That does happen but you don't often see full value on them and they want to make sure that you stay around for a while and those buyouts will vest over a few years. If you jump again in another 2-3 years you may not see much from them. At some point you are going to have to stand still for a while. Find a place that values you correctly and stay there. That's the way to make it in the current market.

Yeah, if you make $500K / year you can afford a place in the Bay Area pretty easily. However, for a lot of folks they aren't at that income level when they want to make that choice even if they are on the path to get there. If you want to get there you need to hang around the Bay Area for a while or come in as already experienced (and that's harder because you have fewer connections and need to have a reputation). If you are hanging around you need to buy or rent and over the longer term buying works out cheaper. I agree it is somewhat of a speculation but not as much on the house but on you and your career.
Last edited by Hyperborea on Wed Sep 27, 2017 5:27 pm, edited 1 time in total.

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Re: Bay Area Real Estate

Post by visualguy » Wed Sep 27, 2017 5:27 pm

randomguy wrote:
Wed Sep 27, 2017 5:07 pm
It is easy to make bay area numbers work. You just need to assume 5 or 6% appreciation and similar rent increases.....
Home prices have indeed appreciated in the Bay Area at those rates on average, at least over the last 25 years.

Rents grow slower than prices, though.

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Re: Bay Area Real Estate

Post by visualguy » Wed Sep 27, 2017 6:06 pm

Hyperborea wrote:
Wed Sep 27, 2017 5:26 pm
That does happen but you don't often see full value on them and they want to make sure that you stay around for a while and those buyouts will vest over a few years. If you jump again in another 2-3 years you may not see much from them. At some point you are going to have to stand still for a while. Find a place that values you correctly and stay there. That's the way to make it in the current market.

Yeah, if you make $500K / year you can afford a place in the Bay Area pretty easily. However, for a lot of folks they aren't at that income level when they want to make that choice even if they are on the path to get there. If you want to get there you need to hang around the Bay Area for a while or come in as already experienced (and that's harder because you have fewer connections and need to have a reputation). If you are hanging around you need to buy or rent and over the longer term buying works out cheaper. I agree it is somewhat of a speculation but not as much on the house but on you and your career.
Absolutely correct - the bet is mostly on your career and income trajectory.

One thing I would add is that it's not just the early stages of the tech career which are problematic. There are the late stages as well which tend to start in your late 40s, early 50s. There's this pattern where people don't make all that much early on (unless they happen to be in a startup with a great exit), and then they do much better mid-career (largely thanks to RSUs given to valuable experienced people), but then something happens... Reorgs, M&A, project cancellations, new management, whatever... Something almost always happens, and then it's often not easy or even possible to bounce back to the same income level.

One reason to move around through your own initiative is simply to develop skills in the latest technologies, and to have more connections. You want to avoid stagnation which forces many in this industry to retire rather early (involuntarily). This is not an easy game to play by any means. Anyway, it's important to realize that even if you reach a very nice income at some point in your career, this may be (and often is) rather short-lived, and career longevity is limited for many.

Dual incomes help a lot with all of this, and many in the Bay Area have that. Moreover, there seems to be an unusually large number of DINKs in the area, although I haven't seen statistics.

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Re: Bay Area Real Estate

Post by DrGoogle2017 » Wed Sep 27, 2017 6:15 pm

visualguy wrote:
Wed Sep 27, 2017 5:19 pm
There's one thing that I don't understand about the Bay Area... How do people in most professions survive there?

Many in tech, real estate, medicine, and maybe one or two other areas do fine, so I understand that part. I don't get the rest of it... The extraordinary thing about the Bay Area is that housing is not affordable pretty much anywhere that isn't crime infested (and even crime-infested areas are ridiculously expensive). You can't escape extremely high costs unless you get out of the area. Housing is the biggest factor, but other costs are high as well (taxes, etc.) You would think that there wouldn't be people to do most jobs there, yet somehow they are found. I guess some are old-timers, but many are not. I don't fully understand how the Bay Area functions and finds the workers it needs for most jobs which don't pay a fortune.
It's not as expensive as most people project here. My kid spends less than 15% on housing. Free food, drinks, and a lot of free stuff. Partying in downtown SF every weekend. She probably can't get that salary and opportunities anywhere else, not even in SoCal. Maybe Seattle. I did hear a complain that her friend in Seattle got 2br apartment by himself.

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Re: Bay Area Real Estate

Post by fouroheight68 » Wed Sep 27, 2017 6:19 pm

LarryAllen wrote:
Tue Sep 26, 2017 2:33 pm
It's why people move to places like the suburbs of Sacramento, Brentwood, etc.... Can get a beautiful house, great schools, huge parks, great family areas, and often Bay Area salaries. Yes, some people do end up driving back and forth a couple times a week but many find it to be a worthwhile choice.
Thats me. Born and raised in the South Bay. Left in 2003 for college. When I graduated in the depths of the recession, I had to work in the Bay for a couple years since that was where the work was, bought I bought my house in the Sacramento area. I now live in Folsom, and have appreciated handsome gains in real estate since 2010 while my friends have been stuck renting in the Bay Area. My salary will only pay 15% more in the Bay Area, which doesn't justify the HCOL. Plus, I like Folsom much better than anywhere in the Bay anyways.

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Re: Bay Area Real Estate

Post by Watty » Wed Sep 27, 2017 7:42 pm

curi0usAndCuri0user wrote:
Mon Sep 25, 2017 10:27 pm
I understand salaries tend to be higher here, but how does a family come out ahead when similar homes in other areas of the country (e.g., the midwest) go for < 25% of the asking price out here?
Coming out ahead is easy, you get paid so much that you can save up a few years and pay cash for the expensive housing in the Bay Area. I don't mean that to sound snarky but people do make that much and that is how people are able to make cash offers for houses there.

If you are not pretty much getting paid that much then over the long term you may be in a no win situation if you want to settle down there for the long term.

I lived in the Bay Area, which has always been expensive, a very long time ago. The people I knew who made out the best were the people who saved like crazy then managed to transfer to a lower cost of living area with their same employer. Often they would be able to keep many of the perks like stock options when they moved. I never heard the details of if they had to take a pay reduction or not but if they did I suspect that it was not a large reduction.

I saved up a down payment then moved to an area where housing was maybe a fifth of the cost of the Bay Area, but I changed employers. I was able to find a software development job with the same salary, but if I had stayed in the Bay Area I would have likely gotten a modest bump in pay if I had changed jobs there. I rented for a while just to make sure that I liked the area and I ended up buying a house there about a year after I moved. In addition to housing in the lower cost area most things were a lot less expensive so my disposable income went way up.

Two things to keep in mind about the Bay Area housing;

1) Not only is the average house pretty expensive, but you don't get a lot for your money either.

2) It sounds like you have kids. When I lived in the Bay Area some of my older coworkers had grown up kids that were well into their 20's that were still living with them because the kids could not afford to move into an apartment even with roommates. Often this was not a great situation. If you settle down in the Bay Area then consider what it will be like for them when they are older. It may mean that they will have to move away if they don't have high paying careers.

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Re: Bay Area Real Estate

Post by TravelGeek » Wed Sep 27, 2017 8:06 pm

Hyperborea wrote:
Wed Sep 27, 2017 2:01 pm

Ah yes, the move somewhere cheaper posts that always show up in any Bay Area housing thread. I wondered why it had taken so long this time. Why live in high cost Florida? Why not move to rural Montana and buy multiple houses?
I don't quite understand why you (seemingly) mock those who make that suggestion. It is a valid option that many choose. I know that because I lived in the Bay Area for many years and have many friends and coworkers who moved away because they determined it was the right choice for their circumstances.

I, too, left the Bay Area for greener pastures a few years ago (though we did own a home for a dozen years, which we sold for a nice profit, and moved for quality of life reasons). Believe it or not, there are good jobs available outside the Bay Area. I kept my job and work remotely now. So did many of my friends/coworkers.

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Re: Bay Area Real Estate

Post by Hyperborea » Thu Sep 28, 2017 12:27 am

TravelGeek wrote:
Wed Sep 27, 2017 8:06 pm
Hyperborea wrote:
Wed Sep 27, 2017 2:01 pm

Ah yes, the move somewhere cheaper posts that always show up in any Bay Area housing thread. I wondered why it had taken so long this time. Why live in high cost Florida? Why not move to rural Montana and buy multiple houses?
I don't quite understand why you (seemingly) mock those who make that suggestion. It is a valid option that many choose. I know that because I lived in the Bay Area for many years and have many friends and coworkers who moved away because they determined it was the right choice for their circumstances.

I, too, left the Bay Area for greener pastures a few years ago (though we did own a home for a dozen years, which we sold for a nice profit, and moved for quality of life reasons). Believe it or not, there are good jobs available outside the Bay Area. I kept my job and work remotely now. So did many of my friends/coworkers.
Because it's pointless advice. And it's incredibly predictable on any thread (on this board and on others) that mention Bay Area housing.

How helpful is it to hear:

Q: I want to buy a house in New York. How do I make it work with my finances? I'm just starting out in banking.
A: You're crazy to live in New York. Move to rural Georgia and buy a house. I know somebody who works at a bank there and has a big house.

Q: I want to retire at 55. How do I make that work with my finances?
A: You don't want to retire. My grandfather and father both worked until they were 75. I plan to as well. So should you.

Why is it that the only time people suggest moving somewhere else to buy is on Bay Area housing threads but never other locations?

I don't think one should never move from the Bay Area. For some it's a good choice. If you think you can't cut it, if you've made it, if the work life balance isn't working for you, if you really, really want the big house with a picket fence, if there is somewhere else that you'd rather be, then sure move on from the Bay Area. If somebody does want to stay in the Bay Area then posting about how the monthly rent of a 1 BR apartment in San Francisco would buy them a mansion in Tennessee isn't helpful.

I'm actually in the process of emptying out the belongings and getting ready to sell and move on from the Bay Area myself because I retired last year and there are other places that I want to go. But just because I am moving it doesn't immediately mean that my answer to somebody asking about how to make it in the Bay Area should be - retire and move elsewhere.

Good luck with the remote option. I hope it works out for you. I have some friends/ex-coworkers who've done that. Most it doesn't work out long term. When there is change in departments, projects, management, or a downturn then the remote guy that nobody really knows is often the first on the block.

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Re: Bay Area Real Estate

Post by Ron Ronnerson » Thu Sep 28, 2017 8:45 am

curi0usAndCuri0user wrote:
Mon Sep 25, 2017 10:27 pm
Any recommendations on making it out here in this crazy market? I'm doing various buy vs. rent analyses and can't seem to make sense of buying (am I missing something obvious?)
We bought in the Bay Area on a combined income of a little over $100k in 2010. It's a 4 bedroom/4 bathroom home in a great neighborhood with excellent schools. However, to make it work, we did the following: Put down only 3% (no PMI due to the teacher loan program we used), bought a townhouse with no yard to maintain, rented out a room for a while, and purchased in an area close to my in-laws so we could largely offset daycare costs. We bought in the East Bay and commute to our jobs in Silicon Valley. My wife works from home 80% of the time so only deals with the commute about once a week. My commute is about 45 minutes each way. I'm a teacher and often leave shortly after 3 p.m. and I carpool and also have summers off so the commute isn't as bad in my case either.

We have a 30 year mortgage at 3.25%. The payments are affordable as we keep other expenses moderate. Property taxes have barely changed since we purchased due to Prop 13. Inflation is about 3% in the area and the effective mortgage rate after interest deduction is close to 2%. Inflation pays part of the bill. We have over 50% equity now due to prices going up. We don't plan to move for a long time so transaction costs can be minimized.

We love our home and stress is relatively low. We're able to put $42k year in retirement accounts on our income of $150k. I'm expecting a pension that should be close to six figures. The pension and social security should largely cover our retirement expenses.

It's no longer 2010, though, and prices are a lot higher these days. However, we didn't go about things in the most conventional way. We tried to think outside the box a bit and it's worked out nicely. I do share a wall with my neighbor, for example. However, on the other side of the wall is my sister and her family.

We also pay relatively low taxes and are in the 15% bracket. There's more than one way to skin a cat.

Best of luck!

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Re: Bay Area Real Estate

Post by Valuethinker » Thu Sep 28, 2017 9:19 am

visualguy wrote:
Wed Sep 27, 2017 6:06 pm
Hyperborea wrote:
Wed Sep 27, 2017 5:26 pm
That does happen but you don't often see full value on them and they want to make sure that you stay around for a while and those buyouts will vest over a few years. If you jump again in another 2-3 years you may not see much from them. At some point you are going to have to stand still for a while. Find a place that values you correctly and stay there. That's the way to make it in the current market.

Yeah, if you make $500K / year you can afford a place in the Bay Area pretty easily. However, for a lot of folks they aren't at that income level when they want to make that choice even if they are on the path to get there. If you want to get there you need to hang around the Bay Area for a while or come in as already experienced (and that's harder because you have fewer connections and need to have a reputation). If you are hanging around you need to buy or rent and over the longer term buying works out cheaper. I agree it is somewhat of a speculation but not as much on the house but on you and your career.
Absolutely correct - the bet is mostly on your career and income trajectory.

One thing I would add is that it's not just the early stages of the tech career which are problematic. There are the late stages as well which tend to start in your late 40s, early 50s. There's this pattern where people don't make all that much early on (unless they happen to be in a startup with a great exit), and then they do much better mid-career (largely thanks to RSUs given to valuable experienced people), but then something happens... Reorgs, M&A, project cancellations, new management, whatever... Something almost always happens, and then it's often not easy or even possible to bounce back to the same income level.
This sounds so very much like finance. I have highlighted this, because everyone working in tech needs to know this.
One reason to move around through your own initiative is simply to develop skills in the latest technologies, and to have more connections. You want to avoid stagnation which forces many in this industry to retire rather early (involuntarily). This is not an easy game to play by any means. Anyway, it's important to realize that even if you reach a very nice income at some point in your career, this may be (and often is) rather short-lived, and career longevity is limited for many.

Dual incomes help a lot with all of this, and many in the Bay Area have that. Moreover, there seems to be an unusually large number of DINKs in the area, although I haven't seen statistics.

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Re: Bay Area Real Estate

Post by Valuethinker » Thu Sep 28, 2017 9:27 am

Hyperborea wrote:
Thu Sep 28, 2017 12:27 am


Good luck with the remote option. I hope it works out for you. I have some friends/ex-coworkers who've done that. Most it doesn't work out long term. When there is change in departments, projects, management, or a downturn then the remote guy that nobody really knows is often the first on the block.
There's actually academic research which substantiates that. Your survival in a downturn is often about political connections and being seen to be "on side" -- I do mean seen. The best most people can hope for is 1-2 days a week at home.

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Re: Bay Area Real Estate

Post by random_walker_77 » Thu Sep 28, 2017 10:25 am

Hyperborea wrote:
Thu Sep 28, 2017 12:27 am

Because it's pointless advice. And it's incredibly predictable on any thread (on this board and on others) that mention Bay Area housing.
.
.
I don't think one should never move from the Bay Area. For some it's a good choice. If you think you can't cut it, if you've made it, if the work life balance isn't working for you, if you really, really want the big house with a picket fence, if there is somewhere else that you'd rather be, then sure move on from the Bay Area. If somebody does want to stay in the Bay Area then posting about how the monthly rent of a 1 BR apartment in San Francisco would buy them a mansion in Tennessee isn't helpful.
.
.
Good luck with the remote option. I hope it works out for you. I have some friends/ex-coworkers who've done that. Most it doesn't work out long term. When there is change in departments, projects, management, or a downturn then the remote guy that nobody really knows is often the first on the block.
I think you raise excellent and useful points here. I also suspect that a non-trivial percentage of people looking at buying in the bay area haven't thought through the alternative of leaving the bay area, which rightly has pros and cons, and is definitely not for everyone.

Some of the posters here stating they're allocating 100% of their portfolio to stocks and asking for advice on whether to go for individual stocks, active stocks, or broad ETFs are, I'm sure, annoyed by the people asking if they really want to be 100% in stocks...

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Re: Bay Area Real Estate

Post by Valuethinker » Thu Sep 28, 2017 11:47 am

random_walker_77 wrote:
Thu Sep 28, 2017 10:25 am
Hyperborea wrote:
Thu Sep 28, 2017 12:27 am

Because it's pointless advice. And it's incredibly predictable on any thread (on this board and on others) that mention Bay Area housing.
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I don't think one should never move from the Bay Area. For some it's a good choice. If you think you can't cut it, if you've made it, if the work life balance isn't working for you, if you really, really want the big house with a picket fence, if there is somewhere else that you'd rather be, then sure move on from the Bay Area. If somebody does want to stay in the Bay Area then posting about how the monthly rent of a 1 BR apartment in San Francisco would buy them a mansion in Tennessee isn't helpful.
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Good luck with the remote option. I hope it works out for you. I have some friends/ex-coworkers who've done that. Most it doesn't work out long term. When there is change in departments, projects, management, or a downturn then the remote guy that nobody really knows is often the first on the block.
I think you raise excellent and useful points here. I also suspect that a non-trivial percentage of people looking at buying in the bay area haven't thought through the alternative of leaving the bay area, which rightly has pros and cons, and is definitely not for everyone.

Some of the posters here stating they're allocating 100% of their portfolio to stocks and asking for advice on whether to go for individual stocks, active stocks, or broad ETFs are, I'm sure, annoyed by the people asking if they really want to be 100% in stocks...
I do wonder at the assumption that people get much choice on where they work?

I am sure there are tech jobs all over the USA, but the biggest concentration must be in northern California? And for certain specialities, that would be the major location. And then there's another cluster in New York... which is hardly affordable housing. Even Washington DC is pretty expensive, and so is Seattle and southern California.

My job is computer related, but also finance related. In the USA, that would be NYC. Some jobs in Boston, perhaps.

A major risk is that you move to the perfect city, and lose your job. Then there is not the concentration of employers that there is in greater SF and you have to move. And you can't easily move back to the Bay Area?

So of major metropolitan areas there is also Atlanta and Houston (and perhaps Chicago). The rest are pretty expensive, if not quite Bay Area.

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