[Serial Midget]

In 1973 my parents built a house outside of Denver in the suburbs for something like 29,000.00 (I don't know what the land cost). They sold that house in one day for $79,500 in 1979 and bought a tract house for around $95,000.00. A few years ago they bought a home near Castlerock for $350,000.00 - today all three of these houses are worth around $500,000.00 so... over the long haul all where good investments.

In the early 80s we lived in a developement south of Cherry Creek called the Pinery. Our house was pretty average but was on a greenbelt with a golf course view, it changed hand many times since my parents owned it but the last time it changed hand the new owners leveled the house and built from the ground up!!! That baffled me, my home cost me $85,000.00 five years ago and is now worth about $105,000.00. Those are numbers that I'm comfortable with.

 

[Brian HCM#1]

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.

If and when interest rates go through the roof. I'm aware everything will run through it's cycle. Bottom line is we can afford to do this so we are. I guess you need to live here to get a full grasp on what's going on here in the Bay Area.

 

[Brian HCM#1]

my home cost me $85,000.00 five years ago and is now worth about $105,000.00. Those are numbers that I'm comfortable with.

Like I said here it's more of an investment. You made about 20K in 5 years. I should make about $500K in 7 years, I gambled on our area back then figuring it should pay off well. I didn't imagine this much I figured more in the realm of $200K-$300K over that period. Believe me these house's aren't anything special at all either, like they say......Location, location, location.

 

[Brian HCM#1]

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.

You could be right or you could be wrong it's just that gamble. Do you sit on the sidelines waiting for a huge drop that may never happen then try to get in and end up paying way more? It's hard to say. I remember having this discussion with IAB & MtnBikerChk last year when they wanted to wait for prices to drop. I said jump in now because they may not. I don't think they've regretted their home purchase, and I'm sure they've made some $ too within the year they've owned it.

 

[narlus]

I guess you need to live here to get a full grasp on what's going on here in the Bay Area.

so i guess everyone in that area is getting 30% annual raises then.

what part of my hypothesis is wrong with respect to the bay area?

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.

 

[Brian HCM#1]

so i guess everyone in that area is getting 30% annual raises then.

what part of my hypothesis is wrong with respect to the bay area?

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.

It's all relitive, people here make more money than people in other parts of the country. Some parts of the country making $50K-$60K a year is great $, out here it's concidered avarage. I would bet the avarage household income in Danville nowadays is between $125K-$175K a year. You make more but the cost of living is higher.

 

[SkaredShtles]

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

You don't have to be sorry. It's just that you must live in some alternate reality..... at least IME.

-S.S.-

 

[narlus]

It's all relitive, people here make more money than people in other parts of the country. Some parts of the country making $50K-$60K a year is great $, out here it's concidered avarage. I would bet the avarage household income in Danville nowadays is between $125K-$175K a year. You make more but the cost of living is higher.

from that city-data site:

Danville compared to California state average:
Median household income above state average.
Median house value significantly above state average

there's a difference between the two, and it's growing wider. that's my point. even if the average salary is 200K per family, not everyone is going to afford a million dollar house.

using the well-worn guideline of housing costs not to exceed 32% of gross income, a salary of 150K can support a monthly payment of 4K. this translates to a principal of 600K borrowed.

so, i'll eat a bit of my words. it's not outside the realm of possibility to think that people can scrape up 400K in equity for a down payment, esp if they bought into the market at the right time, are diligent savers, and/or got lucky w/ stock options.

but for people who are either 1st time buyers, or coming from a less wealthy region of the nation, it's a pretty insurmountable obstacle.

i'll be watching from the sidelines.

 

[Brian HCM#1]

but for people who are either 1st time buyers, or coming from a less wealthy region of the nation, it's a pretty insurmountable obstacle.

i'll be watching from the sidelines.

Especially for first time home buyers it's almost impossible to get in this area unless you find a little condo, but thats still around $400K.

 

[SkaredShtles]

Especially for first time home buyers it's almost impossible to get in this area unless you find a little condo, but thats still around $400K.

So who is buying the houses on the low end of the market?

-S.S.-

 

[Brian HCM#1]

So who is buying the houses on the low end of the market?

-S.S.-

First timers primarily.

 

[spincrazy]

good luck brian. I don't know how many times this has to happen to California before people stop getting hosed. I suppose it won't until the state breaks off and meets and greets Hawaii. NFW

 

[Anders]

ill take 1 foot