Bay area home, buy now or wait?

New okon
May 16 376 Comments

I’ve been house-shopping in South Bay at Zillow and see that they forecast home prices to go down until at least mid-2020.
But my guts tell me prices will only go up with a lot of companies going IPO this year.
I have $540k in savings and looking to do down payment of $500k on a $900k 2bd, and rent out one bedroom.
TC is $215k and base is $160k.
Should I buy now, or keep renting till next year and see what happens next?

comments

Want to comment? LOG IN or SIGN UP
TOP 376 Comments
  • Google hioki
    1. How the hell you have that much savings with your tc?
    2. Why not just a 1bdrm?
    3. Do what you want. Renting will almost always be the better option in the Bay area unless your considering the very long term
    May 16 38
    • Twitch / Biz Dev OWL#1Deal
      Wait so... Buy in deep south states? Like Alabama?
      May 21
    • Microsoft mistermiss
      I own three homes and have a high net worth as a result. The question should be list your net worth and you homeownership status. NW: $2M Age:38
      May 21
    • Cruise Automation LidarDoome
      What we are talking about is not if you are in the positive with your houses but if you could have done better using an alternative investment. Every fucking body is in positive given the economy of the last 8 years .

      Does any of you know the concept of opportunity cost ??? The whole point here is that by buying a house you lost vs the opportunity cost of investing in stocks
      May 21
    • Drift UOSN85
      NW: $10m+, conservatively, and money in two private funds (Artemis and Crescat). Per above post, RISK ADJUSTED, ETF Fantasy Land did not outperform Bay Area SFH real estate.
      May 21
    • Microsoft mistermiss
      It just depends on whether the person is actually investing it. I wonder where OPs 500k is actually sitting right now
      May 21
  • Intel rewt
    Seriously.. how the hell did you make 540k in savings...
    May 16 17
    • Uber f7d83fju
      @obfta has the math right. I’ve avg under 200k (not an engineer) for 15 yrs and have saved $1m. Including profit on buying and selling a condo in SF. Even paid for my MBA in savings. Lived and worked in SF and NYC (Manhattan)
      May 19
    • Apple / Eng Applez
      Living within my means with a wife and child. Wife stays at home. Started with 30k in savings. 4 years at Apple ... 450k savings.
      May 19
    • New / Eng JexD77
      @Applez, do you mind to give more details?
      May 20
    • Apple fadedead
      Well, if you make over 350TC, it is not that hard to save 100k a year. That means, 420k in 4 years is possible for most people.
      May 21
    • New / Eng JexD77
      I see thanks, where you save?
      May 21
  • Nvidia figifaf
    If anyone knew they’d be making millions in housing futures instead of posting it here
    May 16 0
  • Google FetaCheese
    With the TCs on here, it’s insane that people are acting like they don’t have $500k in savings. What do you all do with your money? I save $100k/year and live well.
    May 19 8
    • VMware / Product brewston
      Yoe good sir? ^
      May 19
    • eBay kdooeldd
      18
      May 19
    • eBay eyxitsjtj
      When I started in Bay Area in 2013 non-tech role, I was making $85K base (25k savings from previous 4 years of 2 jobs - 53k and 67K no bonus no rsus, just base). Fast forward today, networth $950+ assisted by job hopping, RSUs tripling in value, and some profitable real estate deals. Never worked at Fang. Yoe 10. Current household income about $250k.

      Its just appalling to see people with $500k tc complaining that they barely go by. But I also learnt about human behavior where people with sudden wealth develop upscale lifestyles right from the beginning and when they (or one spouse) lose a job they aren’t able to cope with downgrading their life and end up losing everything. Same is with a large number of lottery winners, nfl and nba players. People who have budgeted from the beginning with hourly or low salary have turned out to be better at managing money long-term.
      May 19
    • Ooyala / Other jgy65d
      Hah such BS from @ebay .. ya you bought you two properties for pennies on the dollar if ur here 18 years... First comer advantage... what else are you gonna tell us.. probably have no kids or wife and work 12h a day ... Fantastic SV life
      May 19
    • Aon Hewitt sfstreets
      Doesn't matter when eBay bought it looks like they are responsible with money and made a lot less. Their point is everyone else makes so much more and they aren't budgeting/saving properly
      May 20
  • Juniper / Eng sixpack
    If it is for investment purpose, wait till recession hits. You can buy that $900k house with your current savings. All cash. If it is going to be your primary residence, it doesn’t make sense to wait especially when you are ready.
    May 16 3
    • Facebook / Ops ATraveller
      Recession? 😂🤣 prices are only going up. There might be a slight correction but look at the housing data over the past decades. Companies here continue to hire and build new offices, market is fine, housing builds are not anywhere near workforce growth.
      May 16
    • Amazon .,.,.,.,
      I guess you have been in this industry less than a decade. Optimistic is good but do not over confidence. At the end, do whatever you think it sounds.
      May 19
    • Cruise Automation slwpquxle
      If we could predict a coming recession and believe we’d weather it employed, we would all be saving our TC to buy the bottom.
      May 19
  • New okon
    OP
    I have 4 yoe. Not sure about people saying it’s impossible to have 540k of savings. I earn 120k net anually. Rent a decent 3bed in prime location and share it among 5 people for $800. Buy groceries in cheap asian markets to cook for weekdays, and eat like a king every other weekend. I buy new (cheap) clothing once a month or two to stay sharp. My primary source of entertainment is the internet, and I almost never go to the cinema. I like hiking, trailing, etc (they are free). I only go to club once in a year for special occassions if invited by friends. Total spent per month is $1500 or $2k top if I decide to take a little trip. Every year I save $100k+, invest a bit in stock and wealthfront for additional 2k-10k per year. And guess what, I have a grilfriend too, but we always pay for ourselves except for special occassions like birthday or valentines.

    Think about all fresh grads who work in non-tech. If they can survive with $50k annual gross, we can too. Of course this is assuming you don’t have dependants.
    May 19 12
    • New $€£
      I think he meant he is left with $120k after taxes and retirement contributions. And from that leftover he is saving around a $100k.
      May 20
    • Google blah🤯
      Oh that would make sense
      May 20
    • Google
      EIon Musk

      Google

      PRE
      Amazon
      BIO
      TesIa CEO
      EIon Muskmore
      If your current TC is 200k, how did you managed to make 120k net on your first year as a new grad 4 years ago? I remember I had 40k in my pocket after my first year.
      May 21
    • Western Digital SanDisk
      In your case, rent and not buy.

      The flexibility is better and to be honest right now as a single dude thats what you need.

      You also can live anywhere with bad school, but you don’t want to lock into a bad home for years.
      May 23
    • Fake .. doesn’t add up
      May 25
  • Facebook public2
    If you plan to own for a long time and continue to rent a room yes, buy yesterday. Also no reason to do more than 20%. Invest the rest.
    May 16 4
    • New okon
      OP
      How long is long?
      May 16
    • Facebook public2
      Let's say 7+ years
      May 16
    • Amazon saywha
      Agree with the advice. Minimum is 5years.
      May 19
    • Nvidia JenSon
      Totally agree, if it is your primary residence, buy asap.
      May 19
  • Facebook Pascality
    Housing is consumption, not investment - decide accordingly.
    And no-one (not Zillow, not your realtor, certainly not people on Blind) really knows what will happen to the housing market.
    May 19 12
    • Google Mr. Glass
      ^ says a noob who doesn’t know about leverage. Come back when you find a bank that’s willing to lend you money to invest in stocks before you ignorantly compare the two assets directly. Oh and another thing you forgot: a house can often cash-flow through rents at much higher rates than dividends given out by stocks. Appreciation is not the only metric to compare.
      May 20
    • Oracle / Product
      dbiA46

      Oracle Product

      PRE
      F5 Networks
      dbiA46more
      +1 ^^^
      May 20
    • Google Ilyas 🦆
      Sure nobody knows but there are some common sense things you can look at — big tech hiring. It’s not slowing down, they’re all building buildings and hiring. Compare that to how fast new housing is being developed. If demand is growing faster than supply, then you’ll be fine buying a house regardless. Big tech are very cash rich, during a recession I don’t think they’ll do lay offs much other than using it as an excuse to lay off low performers. They’ll keep hiring, and pick up talent with lower offers, give smaller refreshers and bonuses, etc, but the demand for housing will remain relatively high. If housing prices drop by as much as 10% for like 3-5 years, who cares, it won’t really hurt you if you don’t sell. On the other hand if housing prices come up as the stock market recovers, you’ll have missed out bigly.
      May 20
    • Facebook HMjq67
      Pascality talks some sense. That dude who called him a noob, good luck with your net worth.
      May 20
    • Facebook Pascality
      Ad-hominem attacks (calling someone a 'noob') aren't useful to discussion. So I will ignore it.

      Rent-producing properties are obviously an investment, but that's not what we're talking about here. We're talking about a home you live in.

      Leverage is one important advantage in favor of housing. Margin accounts are way more expensive than 30 year mortgages. Another argument is the lack of taxes on the first 500k of appreciation.

      Tech may grow a lot, or may not. Who knows? If your argument is something like "Bay area house prices will go up 10% annually in the next few years", then assuming you're right, of course buying a house is a good investment.
      May 20
  • Zillow Group smigol
    I recommend buying. You are setting yourself up to accumulate equity that way, even if it is only ~$500/ month or so, it adds up. Also, owning gives you the flexibility to do what you want with your space. It seems like your down payment is rather high, I would seriously consider going with 20% down payment at these interest rates.
    May 16 18
    • Nvidia ilrk01
      You mean new mortgages larger than 750k. That is one of the reasons housing prices depressed.

      Anyway, first world problems.
      May 19
    • Nimble Collective / Eng
      hirorir

      Nimble Collective Eng

      PRE
      Nimble Collective
      hirorirmore
      The property tax deduction is considered a local tax, inclusive in SALT.
      May 19
    • Google azhkys
      Yep property tax is part of SALT
      May 19
    • Medallia lourhsbsbs
      Is 750k cap overall mortgage cap or for each home ?
      May 19
    • Google azhkys
      Investment home interest isn't deductible. The cap applies to the total from primary and secondary home.
      May 19
  • Amazon / Eng
    bbserver

    Amazon Eng

    PRE
    Microsoft
    bbservermore
    You can buy in Seattle and rent it out and make much more in rent for same price home. Use the rental income to rent in Bay area.
    May 16 3
    • Amazon / Eng Vijay anna
      The numbers won’t add up
      1. Rent in Seattle is cheaper than Bay Area. So you have to pay the difference.
      2. Your place may have a HOA that will eat a big part of your monthly rent
      3. If you are remote, property manager will take a 10% cut of your rental income. Else be prepared to do “bathroom is leaking” kind of issue from your tenant.
      4. Pay taxes on your rental income.

      After all this, do you think there will still be enough to pay your Bay Area rent?
      May 19
    • Tableau PulledPork
      Please fucking don't
      May 19
    • Autolist eFks14
      So people not know you can deduct deprecations from rental properties? It's almost like free money when you file your taxes properly. "Own what you rent and rent where you live"!
      May 19
  • Asurion IQJf80
    View from my porch. That is moon btw :-)
    You should definitely buy. Pay minimum down payment for a fixed rate. Inflation counters interest rate within few years. Invest rest of you savings.
    May 19 6
    • Intuit ttcvv
      What is exciting about viewing moon from porch? 🤔
      May 19
    • Google Mr. Glass
      He owns the porch and his home. The view is that much sweeter. You don’t see the merit in it coz you’re a renter 😉🤔😂
      May 19
    • Unless he bought the home full cash or has paid off the loan, the bank owns the home. 😂 In US, because of healthcare, you are always one step away from bankruptcy.
      May 20
    • Intuit ttcvv
      Mr.Glass, You Bay Area guys have low expectations of what a beautiful home is about, go elsewhere and buy a home way more beautiful for half the price!
      May 20
    • New Nobi
      I like the view of the moon from my tent.
      May 22
  • Roku kkUA10
    Why 500k downpayment ?
    May 16 17
    • eBay eyxitsjtj
      You clearly have no idea that you can do it. My heloc that I got issued last july is 4.125%. You can get heloc plus cash out with certain lenders upto 90% loan-to-value. Just don’t go with Chase or Bank Of America and you’ll find galore of financing options. Also staying with same lender generally helps build more credibility and qualification becomes easy.
      May 20
    • Walmart.com taxhole
      Alright eBay tell me the name of your lender and I will test it today
      May 20
    • eBay eyxitsjtj
      The process is called Heloc subordination. It works well when the lien holders are the same companies generally otherwise it is very hard.

      How subordination works - when you refi your primary mortgage while you have heloc, then your primary mortgage is being paid off, in that case heloc moves up and becomes primary lien holder. But the refi provider would not like to be secondary so you have to make a request to Heloc lien holder to stay where they are (subordinate) while refi provider becomes the primary lien holder. Why would heloc lien holder stay subordinate? one incentive is if you are moving your primary mortgage to the same company as heloc then they can figure out internally whether they’ll agree to do it.

      My primary lender and heloc is meriwest mortgage. I learnt about refi + heloc after I got my Heloc from my primary lien holder. Ideally, leverage that you want to refinance and also apply for heloc with a new lender and do one step at a time - heloc first then refi. I don’t know if my lender does it but there are many private brokers out there who would consider this to just get multiple lines of business.

      If you call meriwest do let me know if they can do heloc subordination. I’ve missed the boat but I’ll let others know who to specifically go to in this situation.
      May 20
    • Walmart.com taxhole
      Thanks for the detailed answer. Will update this thread on how it goes
      May 20
    • Walmart.com taxhole
      Checked with meriwest. For 90 percent LTV the rate is around 7.5 percent . For 80 percent LTV is around 5.5 percent and for first 12 months there is a promotion for around 3 percent. I think you are still paying promotion rates, if so, your mortgage will go up 😁. They only do California and Arizona
      May 20
  • New / Eng
    TechLeed

    New Eng

    PRE
    Amazon
    TechLeedmore
    Proof that the dumbest people can make money. Who in their right mind would spend their own money buying a house in San Francisco
    May 19 9
    • New / Eng
      TechLeed

      New Eng

      PRE
      Amazon
      TechLeedmore
      It's winning right now but all I see is homeless, traffic, and shit on the streets. Not exactly a long term plus.
      May 19
    • eBay letsFixIt
      When u talk only about SF then it's got plenty of issues. If it's anywhere south or east then there r plenty of good neighborhoods.
      May 19
    • Workday mrmouse123
      My mistake. I'm referring to entire bay area
      May 19
    • Uber / Other thEI07
      Born and raised in SF. Homeless and shit on the streets always existed here....homes still appreciated 5x+ so yeah
      May 21
    • eBay letsFixIt
      SF sounds more like India.. 😂
      May 21
  • Adobe VFne54
    That’s a lot of savings. Are you if of those guys wearing costco shoes and eating ramen for lunch? Joke aside, if you plan on living here for awhile (+10 years) you should buy.
    There’s more to owning a house than paper numbers. Eg no landlord bullying, predictability etc. Stay away from Hoa if you can
    Good luck
    May 16 2
    • Magic Leap Leaper2020
      You’re probably right 😉
      May 19
    • Microsoft Hyad70
      Not everyone spends every nickel earned...
      May 19
  • eBay kdooeldd
    I wouldn't put more than 20% down if possible, and keep the rest invested in cash/stock. Now is a decent time to buy. Buy the most expensive house you can in the best neighborhood you can and plan to keep it forever. Get a 30 yr fixed mortgage. Buying and selling real estate in the bay area is expensive, mainly due to prop 13. People buy, planning to sell, but find it is better investment to keep property and rent it out
    May 19 0
  • Uber wwTKd
    homes are a expensive hobby. higher taxes. tons of time and money on upkeep, gardening, maintenance or HOA. cant move to better job opportunity or upgrade house without 8% selling cost or forced to deal with tenants. rent near your work and focus on your career. if your income is good you will always be able to buy a home.

    better yet just leave the bay area, calufornia is a trap. myself, sold my house moved to rental
    May 19 4
    • Workday mrmouse123
      Facts.
      May 19
    • Nvidia dynosight
      Or just WFH
      May 19
    • Zillow Group smigol
      Unless you can cover your entire housing expense by renting out your home or part of your home.
      May 21
    • New / Eng
      griesrt1

      New Eng

      PRE
      Flipboard
      griesrt1more
      Price to rent ratios are high. If you buy a house and then immediately rent it you won’t be able to cover the mortgage, taxes & insurance. Unless you get a killer deal then it’s a huge liability.
      Jun 2
  • Cerner pfdP78
    Why do you have $500k in savings. Why isn’t it invested in something that actually makes you money?

    I call bullshit on this entire post.
    May 19 6
    • Gap / Strategy
      loanni

      Gap Strategy

      PRE
      McKesson, Accenture, Morgan Stanley, Gilead Sciences
      loannimore
      I think it'd be more reasonable to assume he has it invested (otherwise he wouldnt have 500k)
      May 20
    • Google HegYGql26u
      Huh. I know plenty of perma-bears with piles of cash who believe the next crash is around the corner.
      May 20
    • Cerner pfdP78
      He phrased it as “savings” indicating, to me, that it’s liquid. I don’t call my 401k, IRAs, and other investments as “savings.” If it is liquid and sitting in a bank account, it’s silly to have that balance not earning anything.
      May 20
    • Uber momo9
      Once you go past retirement limits, you put it in a liquid brokerage account. 500k in VTI is not that different from a savings account
      May 20
    • Cerner pfdP78
      Doesn’t seem likely with a TC of 215k.
      May 20
  • Facebook whodattt
    Pretty sure zillow said prices would go up 20% a year ago. They didnt.

    Dont trust zillow.

    Buying a house is a life choice. Do you want to live here long term? If so the dont try to time the market but just buy a damn house
    May 19 0
  • Tableau erri
    Buy crypto! You will be able to buy 3 apartments in 2 years.
    May 19 4
    • Uber Yol0$
      Naa
      May 19
    • Intuit ttcvv
      That’s crypto 🤣
      May 19
    • Google Mr. Glass
      ^ shoulda bought the dip eh?
      May 19
    • Nvidia JimTheTuna
      Eh, eh? Nyeaaah eh.
      May 22
  • Nvidia figifaf
    That being said buy when your professional and social life are stable enough so that you stay long enough that buying outweighs renting in expectation
    May 16 0