[Ciaran]

It's pretty bad down here in So Cal, especially San Diego. I am planning on buying next year and am just freaked out about it. About the only thing I can afford is in the ghetto. Well, maybe not a ghetto but not in an area that is my 1st choice. I will likely end up moving out of my beloved Pasadena and into the smelly 909.

People say that the bubble will burst. But it never seems to.

 

[narlus]

the last big market correction in this area was in the mid 80s i think, and there was a minor one in the early 90s. since '92 or so, it's been a long, steady march upwards. salaries haven't been commensurate. a lot of people turned the tech boom stock into equity, but that bubble burst. where's the wealth generation coming from now to sustain the prices?

i am no economist by any stretch, but i will bet someone a steak dinner that housing prices (in hot markets) will be lower in the next 12-18 months.

make this a sticky.

 

[narlus]

No kidding that location sucks!! that is in between the Orange line and MGH !

actually, gentrification has moved farther down the south end, in towards roxbury. i remember when we 1st looked at condos, we looked at one down between harrison and washington, which was on the very edge of "safeness", maybe even below it. now it's totally gentrified and the housing costs are at least triple of what they were.

 

[Brian HCM#1]

if i were you, i'd DEFINTELY wait a year or two for the bubble to pop. because it's got to. salaries are far being outstripped by housing prices, in terms of yearly increases, and have done so for a long time. a correction is overdue.

just my 2 pennies.

We've been looking for over a year and prices keep going up. A house we liked (Julie thought the yard was too small so we passed on it) was only $939K in Oct, now houses in that area are going for 1.1M +. I wish we bought then. The Bay Area is not like most in the country so its hard to compare, it's one of the most expensive places to live in the country. The bottom won't fall out and if it does it will be just temporary. The beauty of property here, besides being a shelter over your head its an investment. Once we sell our current house we should profit between $500-550K and thats within 7 years. Not a bad return.

 

[Ridemonkey]

We've been looking for over a year and prices keep going up. A house we liked (Julie thought the yard was too small so we passed on it) was only $939K in Oct, now houses in that area are going for 1.1M +. I wish we bought then. The Bay Area is not like most in the country so its hard to compare, it's one of the most expensive places to live in the country. The bottom won't fall out and if it does it will be just temporary. The beauty of property here, besides being a shelter over your head its an investment. Once we sell our current house we should profit between $500-550K and thats within 7 years. Not a bad return.

Yes it will because there aren't enough people that make enough money to pay those prices. The money will simply run out, it's inevitable.

 

[Brian HCM#1]

Move to someplace cheaper and spend the savings on visiting SanFran as often as you want.

Here is what a home priced at $1M and built about the same time looks like here: http://www.c21winners.com/Property/listing.php?mls=61093

Nah, I'll pass.

 

[Brian HCM#1]

Yes it will because there aren't enough people that make enough money to pay those prices. The money will simply run out, it's inevitable.

I don't know about the specific area we're trying to move to. It's one of the most desirable places to live in the East Bay.

 

[narlus]

A house we liked (Julie thought the yard was too small so we passed on it) was only $939K in Oct, now houses in that area are going for 1.1M +. I wish we bought then.

question for you. in the 7 months period, according to your figures, that house went up 17%. how many people do you know are getting 29% annual raises? their stock portofolio is definitely not appreciating that fast either.

so, people are either sitting on a TON of internet-or-similar big stock cash-out stuff, or they are mortgaging their future up to their eyeballs. or, san francisco is filled w/ CEOs or inside stock traders, and no one who makes under 300K actually lives in the area.

which one is it?

if you think you will make 500K on the sale of your current house, i'll speculate and guess that you paid 400K for your house originally. so, for you, it's not a huge difference in the monthly payments (additional capital of 200K or so). assuming you will do 1-2 points, it's gonna be another $1,000 in monthly payments. still sizeable. if someone doesn't have this built in equity, what could they possibly afford? doesn't sound like there are many <400K houses in the area.

that groaning sound you hear in the distance is the bubble, about to release...

please refute my thesis.

 

[mack]

Yes it will because there aren't enough people that make enough money to pay those prices. The money will simply run out, it's inevitable.

They just cannot sustain themselves. Just wait, the POP will come for sure.

 

[Brian HCM#1]

question for you. in the 7 months period, according to your figures, that house went up 17%. how many people do you know are getting 29% annual raises? their stock portofolio is definitely not appreciating that fast either.

so, people are either sitting on a TON of internet-or-similar big stock cash-out stuff, or they are mortgaging their future up to their eyeballs. or, san francisco is filled w/ CEOs or inside stock traders, and no one who makes under 300K actually lives in the area.

which one is it?

if you think you will make 500K on the sale of your current house, i'll speculate and guess that you paid 400K for your house originally. so, for you, it's not a huge difference in the monthly payments (additional capital of 200K or so). assuming you will do 1-2 points, it's gonna be another $1,000 in monthly payments. still sizeable. if someone doesn't have this built in equity, what could they possibly afford? doesn't sound like there are many <400K houses in the area.

that groaning sound you hear in the distance is the bubble, about to release...

please refute my thesis.

Actually we bought our place for $275K refinanced a few times and owe about $219K, our house now is worth between $750K-$800K right now. I'm fully aware of the costs, the property taxes are going to be the killer approx 1K a month. The high tech industry flopped here, but this area was never effected since most aren't in that field. Most invest in real estate and keep moving up the chain evey few years. It's a big nut to crack, but we're going for it. A first time home buyer in this area almost doesn't exhist right now, your basic single family home probably goes for around $700K thats for a 45 year old 3 bed 2 bath 1500sq, not a lot for your buck.

 

[Ridemonkey]

Actually we bought our place for $275K refinanced a few times and owe about $219K, our house now is worth between $750K-$800K right now. I'm fully aware of the costs, the property taxes are going to be the killer approx 1K a month. The high tech industry flopped here, but this area was never effected since most aren't in that field. Most invest in real estate and keep moving up the chain evey few years. It's a big nut to crack, but we're going for it. A first time home buyer in this area almost doesn't exhist right now, your basic single family home probably goes for around $700K thats for a 45 year old 3 bed 2 bath 1500sq, not a lot for your buck.

I could retire on 500k. I could make that amount of $$ work for me for a long time. Not in Cali though. I'd take that to Montana and live the peaceful life.

 

[Brian HCM#1]

I could retire on 500k. I could make that amount of $$ work for me for a long time. Not in Cali though. I'd take that to Montana and live the peaceful life.

We also have a place in Tahoe for investment.

 

[splat]

A first time home buyer in this area almost doesn't exhist right now, your basic single family home probably goes for around $700K thats for a 45 year old 3 bed 2 bath 1500sq, not a lot for your buck.

Thats an awful lot of House to be calling it first time buyer ( I mean size not price) My first house was 2 BD, 1 Bath , 700 SQ feet , 100 Years old , ( with No Maint in the prvieous 30 Years ) , with a Tiny yard on a Busy street. and it just sold a couple years ago for about $350K

 

[narlus]

The high tech industry flopped here, but this area was never effected since most aren't in that field. Most invest in real estate and keep moving up the chain evey few years.

if not many people are in the high tech industry, where does all the cash come from to buy these houses, not to mention affording the mortgage payments and real estate taxes (on top of all we've heard about the Bay Area being one of the most expensive places to live regardless of housing costs)? if it's internal re-investment into the real estate market, that sounds like 1929 all over again.

i don't wanna play armchair accountant, but yr gonna need a very large nutcracker to crack it (esp considering yr carrying costs on yr 2nd home already). good luck.

 

[Brian HCM#1]

Thats an awful lot of House to be calling it first time buyer ( I mean size not price) My first house was 2 BD, 1 Bath , 700 SQ feet , 100 Years old , ( with No Maint in the prvieous 30 Years ) , with a Tiny yard on a Busy street. and it just sold a couple years ago for about $350K

On the west coast a 100 year old house is concidered "very old" your avarge old house is about 45-65 years old.

 

[Brian HCM#1]

if not many people are in the high tech industry, where does all the cash come from to buy these houses, not to mention affording the mortgage payments and real estate taxes (on top of all we've heard about the Bay Area being one of the most expensive places to live regardless of housing costs)? if it's internal re-investment into the real estate market, that sounds like 1929 all over again.

i don't wanna play armchair accountant, but yr gonna need a very large nutcracker to crack it (esp considering yr carrying costs on yr 2nd home already). good luck.

People are making the $, I have sat down with both my mortgage broker & accountant to see if this will fly and it will, according to them.

 

[Andyman_1970]

Yes it will because there aren't enough people that make enough money to pay those prices. The money will simply run out, it's inevitable.

I agree, and I think Narlus is on to something - last night on the news (NBC) they did a bit on the real estate "bubble" and quoted that places like San Diego the housing costs have risen like 130% in the last 6 months - how in the world is that sustainable?

I look at places like Bend where my brother lives, I think Ridemonkey said that housing costs have gone up 17% in the last 6 months there - with the average salary there being below the national average (I know I was offered a job there) and housing prices rising at such a rate how is that sustainable - and Bend is pretty tame compared to places like the Bay area.

Anyway, it's quite a phenomenon it will be interesting to see what happens.

 

[luken8r]

On the west coast a 100 year old house is concidered "very old" your avarge old house is about 45-65 years old.

thats funny. a 100 year old house in CA is a mining camp, while a 100 year old house in MA or CT is quite common. my parents house in CT is pushing 200 years old, built in 1820-30s or so

 

[narlus]

People are making the $, I have sat down with both my mortgage broker & accountant to see if this will fly and it will, according to them.

it is quite clear that salaries (and the stock market) are not increasing at the same rate as housing costs. therefore, we can conclude that:

1 - people have socked large sums of money away previously, and are now using this to put into equity, as well as potentially siphoning off to cover larger monthly housing expenses

2 - people have lived below their means wrt to housing costs, and are now spending more of their money on housing (which is inflating the market)

or

3 - people are speculating that prices will rise continually, and are going into debt to finance this bet.

my hunch is #3.

here's some info on danville, CA (source is http://www.city-data.com/city/Danville-California.html):

Median resident age: 39.9 years
Median household income: $114,064 (year 2000)
Median house value: $541,400 (year 2000)

anecdotally, you are telling me that median housing prices are now in the 800K or better range. that 30% per year increase has to be made up in real money by one of my three scenarios, because no one i know is getting a 30% year raise.

 

[SkaredShtles]

I could retire on 500k. I could make that amount of $$ work for me for a long time. Not in Cali though. I'd take that to Montana and live the peaceful life.

If I could net $500k I'd quit my job, retire, and live modestly. And never work again, God willing.

-S.S.-

 

[N8 v2.0]

thats funny. a 100 year old house in CA is a mining camp, while a 100 year old house in MA or CT is quite common. my parents house in CT is pushing 200 years old, built in 1820-30s or so

Haha! The little community out side of Alb NM where I went to high school is 310 years old this year.

 

[Brian HCM#1]

thats funny. a 100 year old house in CA is a mining camp, while a 100 year old house in MA or CT is quite common. my parents house in CT is pushing 200 years old, built in 1820-30s or so

Our state really didn't start to populate untill the gold rush in the mid 1800's

 

[dh girlie]

Our state really didn't start to populate untill the gold rush in the mid 1800's

Thanks for that interesting tidbit of historical information, Brian!

 

[Brian HCM#1]

If I could net $500k I'd quit my job, retire, and live modestly. And never work again, God willing.

-S.S.-

Dude, 1/2 a mil is not a lot of $ anymore, especially here in CA.

 

[Brian HCM#1]

Thanks for that interesting tidbit of historical information, Brian!

I'm full of useless knowledge.

 

[SkaredShtles]

Dude, 1/2 a mil is not a lot of $ anymore, especially here in CA.

I'm just telling you that I'd retire if I had 1/2 mil and never work again.

-S.S.-

 

[narlus]

can we sticky this thread next time brian complains about how he doesn't have any money?

 

[SkaredShtles]

can we sticky this thread next time brian complains about how he doesn't have any money?

Did you see the one where he said "1/2 mil isn't that much money"? WTF?

-S.S.-

 

[narlus]

well if everyone in the region can make that kind of money in 7 years (pretty much doubling yr initial investment), maybe he's right.

i'm curious to hear what other bay area monkeys think. a good friend of mine who moved to menlo park 1.5 years ago thinks the whole thing is a deck of cards, waiting for a small gust to come along. he didn't bother getting into the real estate market after selling his house out here, and decided to rent instead. he's moving to LA in a few months anyway.

 

[SCTreeHugger]

I live in the Santa Cruz area. Soon to be working in Sunnyvale. I rent a shack for $625 a month and plan to keep living below my means for a long time. Like Brian said, its nice here. Why do I need a huge house or a house even at that? Infact, I think I might live out of an RV for a couple of years. But, then again I do like getting laid.

 

[Ridemonkey]

I live in the Santa Cruz area. Soon to be working in Sunnyvale. I rent a shack for $625 a month and plan to keep living below my means for a long time. Like Brian said, its nice here. Why do I need a huge house or a house even at that? Infact, I think I might live out of an RV for a couple of years. But, then again I do like getting laid.

If you have mad game, you'll just be going to her place instead.

 

[Brian HCM#1]

Did you see the one where he said "1/2 mil isn't that much money"? WTF?

-S.S.-

Sorry dude, in todays world it's not anymore. At least where I'm from.

 

[Brian HCM#1]

well if everyone in the region can make that kind of money in 7 years (pretty much doubling yr initial investment), maybe he's right.

i'm curious to hear what other bay area monkeys think. a good friend of mine who moved to menlo park 1.5 years ago thinks the whole thing is a deck of cards, waiting for a small gust to come along. he didn't bother getting into the real estate market after selling his house out here, and decided to rent instead. he's moving to LA in a few months anyway.

It's a gamble, but it's been proven in my family you'll make more $ in real estate than investing in stocks and other goods. Like I said here in CA you buy for an investment on top of a shelter over your head.

 

[stevew]

It's a gamble, but it's been proven in my family you'll make more $ in real estate than investing in stocks and other goods. Like I said here in CA you buy for an investment on top of a shelter over your head.

They had a story on CBS Sunday Morning last sunday on how much people are paying for lots and glorified double wides with a view in the hills of California.

Monopoly money.

 

[Toshi]

They had a story on CBS Sunday Morning last sunday on how much people are paying for lots and glorified double wides with a view in the hills of California.

Monopoly money.

and at some point -- maybe not in the next 10 years but down the road -- enough people won't be able to buy into the game and the upward trend will come to a crashing end. you can't simply buy and sell within a fixed group and create money out of thin air.

 

[narlus]

thank you toshi. i've yet to see a response to my 1/2/3 scenario layout.

 

[narlus]

It's a gamble, but it's been proven in my family you'll make more $ in real estate than investing in stocks and other goods. Like I said here in CA you buy for an investment on top of a shelter over your head.

even if you've invested in real estate the whole time, what's going to get you to jump to the next level (300-400K on top of your purported sale price)? has yr family salary really kept commensurate growth w/ the housing market? and even if your answer is YES, how many others in the area can say the same thing.

the thing is gonna crash. take cover while you can.

 

[shocktower]

My suspicion is that most of them move to Bend, OR.

-S.S.-

Portland too I see about 5 or 6 Cal plates a day ,also you can spot them by their driving style

 

[Serial Midget]

Our state really didn't start to populate untill the gold rush in the mid 1800's

Great Depression and then postwar migration.

 

[Ridemonkey]

even if you've invested in real estate the whole time, what's going to get you to jump to the next level (300-400K on top of your purported sale price)? has yr family salary really kept commensurate growth w/ the housing market? and even if your answer is YES, how many others in the area can say the same thing.

the thing is gonna crash. take cover while you can.

Agreed. You should sell your house now, rent, and sit on the cash you make. In a few years you may be buying your dream house with no loan and having plenty of cash left over.