I have $230k in savings and around $130k in stocks. I live in SF bay area. My apartment lease is running out in a couple months. I have been here for over 4 years. Should I buy or Rent? My budget is 1-1.2 million but the falling median prices, price drops, piling up of inventory, etc news articles are spoiling my "let's buy a house right now" mood. I have waited for two months now and I only see prices falling more and more. Should I rent/wait?
Have a Green card. Will apply for citizenship next year. So, no visa issues.
Would like to know your thoughts.
- Google possibleFalling median prices, price drops and piling up of inventory should actually increase your “let’s buy a house mood” because you’ll get a better deal. Buy low and sell high :)
- Look at housing prices over time. They regularly do roughly what they did the previous month. For example they went up every single month from 2000-2006. They then went down every month from 2006-2011... I have no idea where they will go in the l long term, but in the short term they will likely follow the trend they are on.
- I would not recommend it. You will be stripped of savings and stuck with a large mortgage bill, house maintenance bill, tax bill, etc. Unless you can increase your take home monthly cash, you will be stuck to living paycheck to paycheck. Yes, your house might appreciate, but you will be under stress and it will be difficult to perform at work as good as you would without stress. Consider opportunity loss.
- Think about this... You want to jump ship to go from 250k to what? 400k? Difficult, but possible. Yet, what about growing internally either at your old or the new job. Smart companies pay unfairly. The best performers migh get paid enough to buy your 1.2mil house for cash after a good year. To be the best, you will need to have laser focus. You can't afford to lose focus and spend half a day looking for plumber to fix leaking toilet. Yeah, your 1.2 million house migh become 2.4 million in 10 years. Would not it be better if your 250k TC become 1.25 in 5? Do the math.
Lose the stress. Focus on the prise.
- Walmart i have no intention of changing your mind. Enjoy your strategy and I will enjoy mine. In 10 years I will have a nice fat package, 3 homes, a management service taking care of my properties and 3 tenants like u paying my mortgages. So I will make money when I am at work and will make money when I am home. In 15, I will retire with a fat 401k and shit load of rents coming in from 4 properties.
- Walmart I don’t think u will be spending half a day looking for plumber I mean with if you spend that time for such a small task you should be earning that high TC. Also can you explain how to make 1.25 million salary in next 5 years ? ( just said that getting 400k is difficult ) and best people can do multitasking more efficiently and don’t get scared with responsibilities though don’t feel buying house is a lot of stress have 3 homes already and managing 2. Just be smart how u choose tenants
- Just accept that there’s always a divide on the stance. I think the math comes down to these factors:
1 - is ur rent significantly higher than mortgage/HOA?
2 - will you stay at least 7 years? (Or maybe 5)
3 - are you comfortable with dedicating all of your asset into housing at one single point in time? And are you comfortable with the risks (losing your job and being locked in with a long and high mortgage) Are you at least aware of REITs, cap ratio in other parts of the country, and other potential alternatives?
If you answered yes to most/all these questions, go for it.
Don’t try to time it. You’ve already lost the timing - the best time to buy houses was 2012-2017. Those people truly made bank. You will not get what they got. The same could be said of stocks and many other investments (cryptocurrency)
Also don’t listen to all the speculation - “people around the world will come and tech will keep the Bay Area housing highest...etc”. Those are just speculations (... tech companies could just start moving to other parts of the country)
Personally, I would hold off a big life decision for one month, think it through and why u want/need this house, and THEN if you really want to, go get one! Good luck!Jan 62
- Medtronic / EngSnakeDrBuy...owning in nearly always better than renting, as its investing rather than paying someone else
- This is a myth. Primary homes should not be treated as investments. Longer term you may break even and even lose $$ value for owning vs renting because of property tax/house maintenance costs and commissions/fees wrt selling..if the house appreciates like crazy for ex. Bay area in last 4-5 yrs, then yes it will turn out to be a good investment..
- Do you need a house? If you are a couple then living in a 1bed/1bath might be the best option for you. You have saved a lot of money by doing just that! You would never buy a 1bed/1bath so account for this when you run the numbers. You will be paying for a luxury (bigger house) you do not need. Rent is wasted money, but so is mortgage interest, property taxes and house maintenance. The new tax law with higher standard deductions is beneficial to renters! I do not think you should not buy, but make sure you understand what it is costing you. Search for “collins buy vs rent” articles to get a better idea of why a house should not be thought of as an investment.
- Past performance is not indicative of future performance. The same applies even to the Bay Area. If what you said is always true, why have house prices been dropping?
Buy because u need that place to live in for the next 7 years. If you like to speculate, I suggest go buy some REITs. In housing, your returns are based on leveraging. That leverage works VERY quickly against you when prices drop.
Also , the other guy’s part about tax is very important. Trump fucked you a little on taxes for not supporting him.
- Think about how many new grads all over the world join companies in Bay Area every year. Now these folks will start family and would have to rent/buy houses ( people with family prefer houses rather than condos ). This cycle is every year, so buying houses in bay year should be a no brainer. Also think of all the automation happening around you (driving, robots, voice recognition) this is going to take away jobs from 3rd world countries and put more money in hands of tech companies. If you have money then buy and hold and repeat 😊. Also time in market is better than timing the market
- Agreed that’s what I said u can’t time the market. How much do you think the house prices would drop, 1million house no one will be selling for 500k ( if that’s the case, people with cash would be buying them in dozen, bit of a exaggeration but true ) . Also only reason it would drop so much is if h1b visa is revoked or something along that line which won’t happen. Prices have dropped and are back to dec 2017 price level might drop a bit but next year is ipo season lot of people will have good amount of money to make down payment. So jump in before they outbid you.
- Oracle PearmanU shd but I don’t see issues ... no visa issues and good time to invest the money in real estate ... even if it goes down and you plan to keep it for the next 5 years or so you should be in profit
- Box Box- You're right. But you're talking about "after" buying the house when all the 200k will be my loss. I was talking about waiting and "before" buying when that 200k decrease can help me with 40k in cash savings that didn't go in for down payment (I plan to do a 20%). We're both right, just talking about before and after buying. :)
- Facebook GbGE75Stay as you are. Homes are not investment vehicles. They are how you choose to rent/buy a certain lifestyle (mainly schools for children). The finances involved usually require staying 5-8 years for the math to even work.
You’d be better off continuing to rent and maximize cash flow to investment vehicles (max 401k, ira, brokerage account). If you REALLY want to own real estate invest in a REIT.
- Oracle wJnl24After the tax reform it is better to keep renting. You will lose standard deduction and no benefit from property taxes. But you can think about buying and rent it out. You can deduct all expenses from investment property. Buy where you would like to live sometime in future. Consult your CPA on this.
- Micro Focus / ProductGWOz11Not a resident of the bay area, but if you decide to buy, just make sure that you purchase something that you're comfortable to afford. Just an opinion of mine, at least consider about 500-1000 in annual home expenses. This is just something I do. It may be Overkill but at least you'll have a buffer.