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?
- PayPal wcg25gyHow the hell did you get to 700k combined income with you working at intuit? Spouse works at fang?
- I would never do it on H1B, considering how shitty the immigration has been.
- 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
- 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 !
- 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.
- 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.
- 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.
- 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
- Nvidia forcef1You 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