Housing

Should I buy a 2M house?

Intuit / EngjiYq80
Feb 9

Household TC is ~700K , savings ~500K , currently own a townhouse and want to upgrade to single family + better location close to work (Sunnyvale/Cupertino) Planning to stay long term at least 7-8 years. We both are on H-1B , 1 Kid. After the sell of townhouse will have some emergency reserves. Not much concerned about the returns on this house we are thinking to buy. We feel moving to new place will improve quality of life ( commute, community, schools, day care etc)

All the SFH in the desired location are being listed 2M+. Psychologically feeling like a burden and big responsibility owning such an expensive house and making a huge investment (mortgage + property tax would be around 11k monthly) We put offers on couple of them , but got cold feet immediately and both wished that the offer get rejected. After it’s rejected, we feel bad about the fact that we missed it.

Also worried about the current market situation, no one knows how 2019 will play out. Some say recession is on the way, others say it’s just correction. Housing picked up again in Bay Area.

Anyone in similar situation? What’s your thought process? Would you consider it as a huge risk?

Thanks!

comments

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  • PayPal wcg25gy
    How the hell did you get to 700k combined income with you working at intuit? Spouse works at fang?
    Feb 95
    • Intuit / EngjiYq80
      OP
      Yes, spouse works at fang
      Feb 9
    • Microsoft 🚊🎱⚾️
      OP is a she and Indian
      Feb 9
    • Google / EngMr Glass
      How can you tell? 😮
      Feb 10
    • Microsoft 🚊🎱⚾️
      There is a pattern of SV Indian couples: both working, husband works at FANG, H1B, having just 1 kid very late in life, and also from the type of question asked here.
      Feb 10
    • New LTEB14
      Microsoft.. They might very well be an Indian couple, but how does it matter? And why do people like you look at blind posts through racial angles?
      Feb 10
  • Netflix
    Tom Hanks

    Netflix

    PRE
    Google, Amazon
    Tom Hanks more
    I would never do it on H1B, considering how shitty the immigration has been.
    Feb 93
  • eBay lyawo
    H1b is a no go for me. Buy a GC with 500k and then go for this
    Feb 91
  • Facebook public2
    11k a month expense when you take home 35k/month. Sure why not. Happiness is priceless.
    Feb 90
  • Apple
    rsusfallin

    Apple

    PRE
    Amazon
    rsusfallinmore
    You should be traveling with your kid and seeing the world. a 2m house is a gigantic waste of money.
    Feb 100
  • What's wrong with living in townhome? Show-off भी करना है और गांड़ भी फट रही है
    Feb 92
    • Google / EngMr Glass
      Comparing with peers and feeling jealous lol
      Feb 10
    • Oath / MgmtAtinlay
      Always in search of “Prestige”
      Feb 10
  • Square / EngxYz!
    How many kids. What would mortgage look like
    Feb 94
    • Intuit / EngjiYq80
      OP
      Updated post. 1 kid, mortgage+ property tax would come out ~11k monthly
      Feb 9
    • Square / EngxYz!
      We’re in a similar situation. Definitely feel your pain - Hard to take the plunge on a house that expensive. Have you considered the private school route?
      Feb 9
    • New ktFx33
      lol my mortgage is 1k 3 br 2 bath
      Feb 9
    • LinkedIn Weiner
      What a great pain to have
      Feb 10
  • Veeva CPdY77
    From a metrics, KPIs and quantitative perspective stop reading, otherwise:

    Will that make you happy? Will your life improve? Will you feel more significant after you do so? Will you wake up everyday feeling good and a happier person? If so... then yes, go ahead and buy whatever you can afford.

    The upside of a $2M house is that if you fight with your spouse you should have plenty of rooms and bathrooms to use without crossing paths with your SO
    Feb 93
    • Facebook
      commet

      Facebook

      PRE
      Apple
      commetmore
      Cupertino gives you a regular 3 bed for 2M
      Feb 9
    • Veeva CPdY77
      *the upside of $2M house an hour away (inland) from core SV.
      Feb 9
    • Veeva CPdY77
      Facebook, you are right. I have tunnel vision because I’ve been looking at $2M houses in Sunol, Hayward, Castro Valley and such. $2M in SF gets you a shack from 1920 that is
      Falling apart and has bad piping and common walls.
      Feb 9
  • Adobe Hayden1
    Rich people problems...
    Feb 92
    • Facebook public2
      Entry level housing isn't exactly rich
      ..at least not for the area. The rich earn more than 2m a year here.
      Feb 9
    • Airo Health eooB85
      Lol no. Reread the post but cut the numbers by 60%.
      Feb 9
  • Oracle / Eng
    dynamic_pr

    OracleEng

    PRE
    Apple
    dynamic_prmore
    We are in a very similar boat. We decided to wait for 3-4 years before purchasing the single family, as prices might go down. We currently live in a big townhouse with Cupertino schools, so we can afford to wait. For the private school, for a kid it would be around 6 ( elementary ) * 15 + 3 ( middle ) * 30 + 3 ( high ) * 40 = 300K . Of course 600K for two kids !
    Feb 104
    • Google / EngMr Glass
      What's the definition of a big townhouse?
      Feb 10
    • Oracle / Eng
      dynamic_pr

      OracleEng

      PRE
      Apple
      dynamic_prmore
      ~2000 ft built area + decent backyard
      Feb 10
    • Google / EngMr Glass
      2000 sqft includes 2nd floor?
      Feb 10
    • Oracle / Eng
      dynamic_pr

      OracleEng

      PRE
      Apple
      dynamic_prmore
      Yes. All 3 bedrooms are in the second floor.
      Feb 10
  • New pyvtek
    How do you save 500k when 40% tax takes away 280k already?
    Feb 93
    • Microsoft absgrsv
      Re-read the post. OP’s total savings so far is 500K. It’s not annual savings.
      Feb 9
    • Workday / Engefficient
      Also you appear don’t know how to calculate tax
      Feb 9
    • Microsoft absgrsv
      Enlighten me pls. Would you?
      Feb 9
  • Pinterest agqoo
    Save another $500K. $2M in that are is not buying you much either way...
    Feb 92
    • Uber choocgo
      Bad idea. Better to buy as early as you can
      Feb 10
    • Pinterest agqoo
      They already did, so they’re taking advantage of their first home tax benefits.
      Feb 10
  • Amazon / Otherchatka
    My rule of thumb: No spending more than 15% of your pre tax income. You may consider increasing house prices as a investment thesis. You may also consider potential earning increases down the line through promotion etc. Those things are hard to predict so probably shouldn’t factor them.
    Feb 92
    • Intuit / EngjiYq80
      OP
      Would you consider 15% of monthly you get or the total TC ( bonus+rsu that you get annually)?
      Feb 9
    • Amazon / Otherchatka
      15% of TC but only value RSU at the levels that your company is regularly paying you and not consider temporary upswings.
      Feb 10
  • Uber bagpack
    Yes, YOLO.
    Feb 101
    • Exactly the reason you should spend that money doing other things than buying a termite ridden 45 years old wooden box, so you can have more space to accumulate more junk.
      Feb 10
  • Uber choocgo
    Replace the time stamp of this post with any time in last 25 years and people like yourself have had the same concerns. Each time, in the long run, it’s turned out to one of the best financial and personal decisions to buy in the Bay Area. So I would say go for it, think about all the high income earners on the sidelines waiting to jump in. Barring a tech downturn, this should keep the prices stable. To further hedge yourself, buy the smallest house with good sized land (6k+) that you can afford in the best location in South Bay.
    Feb 103
    • Google / EngMr Glass
      So buy a dump in Palo Alto?
      Feb 10
    • Uber kclm
      As long as not EPA, yep! A dump in PA has probably gone up the most in last 10 years
      6d
    • Google / EngMr Glass
      lol ok
      6d
  • Yahoo The Wolf!
    How did you come to 11K/month? Assuming you are putting in 20% down, even at 5% interest rate, the monthly instalments including property tax would not exceed 9K.
    Feb 92
    • Apple RbmK68
      Might not be exactly 2M and there might be other costs involved!
      Feb 9
    • Intuit / EngjiYq80
      OP
      Yeah it would be between 9.5k to 11k based on some rough calculations
      Feb 9
  • Salesforce gghg
    Why don't you rent in that neighbourhood? Your expenses for the house are easily going to be 40k per year, not including the mortgage
    Feb 106
    • Salesforce heroku
      Why would expenses by like 40k per year ??
      Feb 10
    • Salesforce gghg
      Add prop taxes, hoa, insurance and maintenance
      Feb 10
    • Salesforce heroku
      I think his 11k includes ( taxes n insurance) there is no hoa for sfh. So we are left with only maintenance any idea what’s the average for maintenance?
      Feb 11
    • Google 1234-/:;(
      Maintenance will depend largely on the house you purchase
      Feb 11
    • Salesforce gghg
      Maintenance can easily be 5k to 10k per year including things like gardening, cleaning etc. Also OP mentioned 11k is expense per month including mortgage
      Feb 11
    • Google 1234-/:;(
      What I mean is depending on the year of the house it might need more maintenance if it is older.
      Feb 11
  • LinkedIn bored🐷
    If I make 700k...🤔
    Feb 91
  • New / Product
    ʕ•ٹ•ʔ

    NewProduct

    PRE
    Amazon
    ʕ•ٹ•ʔmore
    BTW, outdated home over $2.0mil don't sell quickly. It is not uncommon to see +45 DOM. But anything under $2.0mil goes immediately. If you can snatch $1.9mil one, you can sell it within 2 weeks whenever you want. Don't overthink too much.
    Feb 100
  • Uber yRkQ56
    If you can afford go for it, it’s worth the commute. 2M is totally fine considering your tc is 700k . Your kid will have free education till high school . Remember some of the 11K you can claim back in tax. Also remember your growth
    Feb 100
  • Nvidia forcef1
    You will have to shell out at least 1.6M if u want to have reasonable commute and lot size though schools will be crappy, why not spend 400K more, you can certainly afford this with your income. You are overthinking it..2M is a starter home in many good neighborhoods of South Bay.. What is the worst case scenario? H1B gets revoked and you lose your down payment? I am sure you must be sitting on a nice profit on your town home
    Feb 100
  • Twitter talkerdef
    Go for it. Logically it makes sense, with your income level you can afford it. If you don’t use the money for your own happiness then what’s the point of money. Don’t see much risk.
    Feb 100
  • Asurion ardbeg
    The risk on H1B is minimized when you have two earners and both on H1B. Buying a $2M house will remain a burden on your head in the other hand.
    Think again and assess the private school route. That way you don’t have to buy a $2M liability.
    Feb 90
  • Intel KKML10
    TC = 700.
    Have you considered EB5?
    Feb 90
  • New 🌟 1
    Things we desire are almost always little out of reach. That's life. :)
    Feb 90
  • Salesforce Real Trump
    Not until I am president
    Feb 90
  • Microsoft *cW2x91p
    No.
    Feb 90
  • Apple parking
    Why not rent that unit for less than half the cost?
    Feb 91
    • Intuit / EngjiYq80
      OP
      Yes, we are also considering renting as an option, just it’s hard to go back to rent now that we are living in owned house for over 5 years now
      Feb 9
  • New
    cipher

    New

    PRE
    Splunk
    ciphermore
    OP what’s your + wife’s YOE?
    Go for it. Downside risk is low because you can always sell and recoup capital.
    Feb 110
  • Apple Dlmsq7
    We are on the same boat. I also feel that unfortunately housing has picked up again in Bay Area. Open houses are more crowded than last year and prices seem to be higher...
    Feb 100
  • New / Product
    ʕ•ٹ•ʔ

    NewProduct

    PRE
    Amazon
    ʕ•ٹ•ʔmore
    I would save more money for future downpayment. You will be much better off with more downpayment.
    Feb 90
  • Netflix
    Tom Hanks

    Netflix

    PRE
    Google, Amazon
    Tom Hanks more
    OP,
    Does you kid need a good school district right now or you can wait on that? If the latter, waiting might be a better alternative.
    Feb 90
  • Nintendo wood
    Buying a home 5x income is fine!
    Feb 90
  • AppDynamics jobhunt1ng
    If your tc is 700k every yr, u should be buying a 5m house since u r saving at least 140k (20%) every yr.
    Feb 90

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