Housing costs here in the Bay Area!

Slack Jkty1999
Jul 5, 2018 78 Comments

Okay. How do you honestly buy a home here in the Bay Area? I make 195k TC but don’t have the 300-400k to make a down payment on a $1.3 million dollar home without depleting my retirement (I’m 38 yrs old so I’d rather keep my retirement savings). I also have two kids.

How the hell do people do this? If you have a home, what sacrifices have you made to afford payments and still save for retirement? Do you have wealthy parents that fronted you the money? Are you parking your overseas money here since you are a wealthy foreigner? Are you all married and making over $400k per year as a household? Is this all just fake and the media making me feel like everyone is buying? Please be honest.

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TOP 78 Comments
  • Amazon dadadang
    Move to texas. You get good schools, nice house and peace of mind
    Jul 5, 2018 4
    • Uber (Admin)
      Good schools? Do they teach evolution? If so, do they "teach the controversy"?
      Jul 5, 2018
    • Amazon dadadang
      Huh?
      Jul 5, 2018
    • Uber (Admin)
      From what I've read, school boards in that part of the country can be pretty religious, which affects science teaching.
      Jul 5, 2018
    • Homeaway Rzyyle
      I'm from Texas. Can confirm this mentality exists. If you go to Austin or any of the major cities it's not like that though ¯\_(ツ)_/¯
      Jul 5, 2018
  • Gap / Mgmt bae-area
    Live in an extremely cheap place for couple
    Of years, save up down payment and resume great life in your new home. You can also buy without putting down 20% and pay extra PMI for a few years then refinance with additional money down for lower payment. When doing so, buy a house that’s functional in a way that you could rent a bedroom out. That way it’s your primary residence and tax deductible mortgage payment for you plus your tenant helps pay a portion of the mortgage.
    Jul 5, 2018 7
    • Watch out for the "all tax deductible" thing. That's not really the case after the recent tax low reform. Agree on everything else tho, mortgage you're paying roughly the same as rent in SF but you actually own an asset at the end...
      Jul 5, 2018
    • Qualtrics huuciciv
      Only 10k for state and local taxes is deductible under the new tax law, have fun doing taxes next year
      Jul 5, 2018
    • Gap / Mgmt bae-area
      That’s still tax deductible vs rent is not tax deductible or paying towards equity at all
      Jul 5, 2018
    • Qualtrics huuciciv
      Uhhh no, most if not all of your 10k state and local tax deduction will be used up just from your salary.
      Jul 5, 2018
    • Apple / Other
      Checkmat

      Apple Other

      PRE
      Intel
      Checkmatmore
      Look for <$1M duplexes in Santa Clara or San Jose that requires some TLC.. update it and rent it out one unit.. you can build equity while paying an amount equal to your current rent (assuming you are renting)
      Jul 5, 2018
  • Twitch DaddysGirl
    You need to look at 900k homes.
    You put 10% down.
    You empty some of your retirement savings.
    Jul 5, 2018 1
    • VMware bububu
      I think it's crazy. With family / kids, and 10% down, I don't see how he can pay mortgage on 900k home.
      Jul 6, 2018
  • VMware BobbleHat
    Just wait for the next crash and gobble up real estate with your pile of cash.
    Jul 6, 2018 11
    • VMware BobbleHat
      For the 1/3 cheapest homes
      Jul 6, 2018
    • VMware BobbleHat
      And when you throw in adjustment for inflation and the fact that Bay Area economy is the prime benefactor of both the fed pumping cash into the economy and overseas investment, it is easy to see writing in the wall. There is yet another massive crash coming and the typical 7 year cycle indicates the time is soon.
      Jul 6, 2018
    • Facebook public
      It's not cherry picking. No one on blind is buying low tier real estate lol. I wish there would be a crash but seems super unlikely unfortunately.
      Jul 7, 2018
    • Facebook / Eng fbigwa
      What's considered lower tier in the Bay area? Houses in UC, Fremont, Milbrae, SJ, Santa Clara?
      Jul 8, 2018
    • VMware BobbleHat
      They just split it on transaction price, 1/3 low, 1/3 mid, 1/3 top. These mentioned cities have a mix, with more falling into lower tier, vs somewhere like Los Altos which mostly will have higher tier homes.

      It is not really the city that makes the difference. It is the fact that cheaper homes are bought by people with a mortgage and 20% drop means they lost everything, so at that point they are much better foreclosing than paying into a black hole. Once this cliff is hit, mortgage based houses really fall.

      Another thing to know is that cash buyers don’t care as much about things like fed policy. If you are using mortgage to pay 80% than you can afford a dramatically more expensive house when rates are low. When rates are high, buyers can no longer afford.

      E.g. if you have income to pay 5k mortgage: at 4% you can afford $1,050,000 loan. At 10% you can afford $570,000 loan. At 18% it is only $335,000. These houses prices follow mortgage*income almost exactly.

      TC is peaking now because stock market rally, and fed rates have already turned and will go up. That is why we are at the peak pricing on houses. Unless you think stock market will again triple in next few years , and fed will also drop rates, houses prices will not go up like they did in past few years.

      https://www.valuepenguin.com/mortgages/historical-mortgage-rates
      Jul 8, 2018
  • Square
    MicMackMuk

    Square

    PRE
    Facebook, Google
    MicMackMukmore
    It doesn’t take > $300k to buy a $1.3M home...
    Jul 5, 2018 4
    • Google Mickey
      Is it realistic to get an offer accepted if you aren't paying all cash? I keep hearing about people getting massively outbid with cash offers.
      Jul 5, 2018
    • Square
      MicMackMuk

      Square

      PRE
      Facebook, Google
      MicMackMukmore
      Yes. I know 6+ people who have all had an offer accepted this year at list with 15-20% down
      Jul 5, 2018
    • Cisco IQVm25
      Same @square
      Jul 5, 2018
    • Autodesk omni
      Find a good agent and get your loan underwritten before making an offer. It’s better than some cash offers.
      Jul 6, 2018
  • Microsoft etOA87
    You move to a less ridiculous city
    Jul 5, 2018 3
    • Slack Jkty1999
      OP
      You Missed the point.
      Jul 5, 2018
    • Microsoft etOA87
      That IS the point. If you want a comfortable lifestyle and not have to stretch your money tight, the Bay Area is not the place to live, unless you are making the really big bucks.
      Jul 5, 2018
    • Facebook depac
      Seond that This is the point. If you're a single parent with 2 kids and "only" making 200k in SF, you're fucked if you choose to buy in the city. But otherwise you'll deal with a long commute.

      All the things you mentioned are happening. That's your competition for housing. And it's going to get worse when liquidity hits Uber, Lyft, and maybe Airbnb all in the same year (next year). That's thousands more eligible home buyers entering the market that doesn't want to build more homes.

      Most people that are single or dual income with no kids are saving up more money (in absolute dollars) than they could elsewhere, then getting the fuck out of here to settle down, if settling down is the plan.
      Jul 5, 2018
  • Salesforce Rincon
    Sorry to say, but trying to just answer your curiosity. 195K won't cut it to get your dream house. You are competing with software engineer couples who at the very least make 400 as a household. No media is not trying to fool ya. Dude you work for slack..you'll be a millionaire pretty soon. Cheer up.
    Jul 5, 2018 1
    • Slack Jkty1999
      OP
      Lol. I wish. I joined too late
      Jul 5, 2018
  • Microsoft Nyuf02
    Move to Seattle, similar money but cheaper housing
    Jul 5, 2018 1
    • Facebook Mexico!
      Gap is quickly closing
      Jul 5, 2018
  • Salesforce UfMg36
    We got ours by watching houses with recent price reduction and got lucky on one of them that fit right under a million for 2 bed. It took however an year of disappointment of loosing houses left and right. We mostly got down payment by waiting like a 3-4 years and selling Espp and rsu. Hope it helps.
    Jul 5, 2018 0
  • Amazon FoodFirst
    You need to find a higher paying job..meaning significantly higher..going by your age you are significantly under paid if you are a software developer or in product development/management roles. Software engineers with 5 yr experience average your pay in the bay.
    Jul 5, 2018 2
    • Slack Jkty1999
      OP
      Not SWE. But even if I make $300TC I would still say you are having to stretch.
      Jul 5, 2018
    • Google Mickey
      Not everyone is at a FAANG. The majority of companies don't pay anywhere near what we expect.
      Jul 5, 2018
  • Fitbit cdUr66
    Buy a cheaper house
    Jul 5, 2018 1
  • LinkedIn Wbxiwq
    Save enough for down payment. And have a base salary high enough to cover fixed expenses like mortgage, car, food, etc. And then rely on RSU's for savings.

    If you make 150k, that's at least 100k after tax, especially with dependents. 100k is 8.4k a month. Say half of that goes to mortgage, 4200 a month. Plus car and gas and utilities is probably another 1000. Leaves $3200 left for other expenses. The key here is that you can afford to make the mortgage payments, but getting the down payment is the hard part. People buying houses here though either bought when it was cheaper or they just make way more money than you do and were able to save up for a down payment faster. Or they're fine with moving a significant amount of their net worth into their house.
    Jul 6, 2018 0
  • Zynga jvho
    I bought a townhouse in 2000, before I had kids. Sold it with the 400k profit and 100k principle paid off after 6 years. Used that as a down for a family house that was 1.3 mil in 2006. Now it’s worth maybe 1.9 mil. I know some houses in the South SF that sold for 425k in 2012 and are now going for 950k. You basically shouldn’t rent. Just get something even though it’s not perfect. It’s better than throwing it away on rent.
    Jul 6, 2018 0
  • Xero XbwF01
    East Bay, bruh.

    Walnut Creek, Concord, Dublin if you have kids.

    Hayward and San Leandro if you can tolerate some riff raff.

    Ghetto parts of Richmond and East Oakland for the "must own a house now" crowd. Just don't have kids.
    Jul 5, 2018 0
  • Google / Eng ;O 𓂺
    I just bought an $800k investment property in San Jose. Cheaper homes exist. It’s your standards vs. the region that are the problem.

    The $800k place is a SFH and has bars on the windows. Lol
    Jul 5, 2018 8
    • Google / Eng ;O 𓂺
      Near Happy Hollow / little Saigon
      Jul 6, 2018
    • Workday summerfunn
      Is cash flow from rental positive?
      Jul 11, 2018
    • Google / Eng ;O 𓂺
      Slightly negative. But I haven’t even finished renovating and it’s gone up $30k in value on Redfin. I’ll dump it back on the market in a year.
      Jul 11, 2018
    • Workday summerfunn
      You mean sell next year?
      Jul 11, 2018
    • Google / Eng ;O 𓂺
      Maybe. Depends on how I feel about the economy. Feels like Trump will DUI this shit into a light pole, so probably.
      Jul 11, 2018
  • Oath / Eng DEADBEEFAF
    Buy a mobile home
    Jul 5, 2018 2
    • Dell MikeDan
      Not sure why desis shy away from mobile homes ?
      Jul 5, 2018
    • Oath / Eng DEADBEEFAF
      It’s harder to get a loan for them. You need lenders that specialize on these.
      Jul 5, 2018
  • Autodesk omni
    I think people generally did not have kids before they can afford to buy a place...
    Jul 6, 2018 0
  • Def following this thread
    Jul 5, 2018 0
  • Intel JJ85
    To afford house in bayarea , your household income needs to increase to at least 300k. Without that you have to sacrifice some retirement now and put it in house. Later when you retire sell home and move to states like Florida and enjoy the money you made in bayarea.
    Jul 5, 2018 0
  • This comment was deleted by original commenter.

    • Slack Jkty1999
      OP
      I’m hearing a lot about buying multi unit homes and the economics of this but don’t want to be a landlord in SF. Plus I would feel terrible kicking out tenants.
      Jul 5, 2018