Should I buy a 2M house?

Intuit / Eng jiYq80
Feb 9 76 Comments

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!

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TOP 76 Comments
  • PayPal wcg25gy
    How the hell did you get to 700k combined income with you working at intuit? Spouse works at fang?
    Feb 9 5
    • Intuit / Eng jiYq80
      OP
      Yes, spouse works at fang
      Feb 9
    • Microsoft 🚊🎱⚾️
      OP is a she and Indian
      Feb 9
    • Google / Eng Mr 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 9 3
  • eBay lyawo
    H1b is a no go for me. Buy a GC with 500k and then go for this
    Feb 9 1
  • Facebook public2
    11k a month expense when you take home 35k/month. Sure why not. Happiness is priceless.
    Feb 9 0
  • 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 10 0
  • What's wrong with living in townhome? Show-off भी करना है और गांड़ भी फट रही है
    Feb 10 2
    • Google / Eng Mr Glass
      Comparing with peers and feeling jealous lol
      Feb 10
    • Oath / Mgmt Atinlay
      Always in search of “Prestige”
      Feb 10
  • Square / Eng xYz!
    How many kids. What would mortgage look like
    Feb 9 4
    • Intuit / Eng jiYq80
      OP
      Updated post. 1 kid, mortgage+ property tax would come out ~11k monthly
      Feb 9
    • Square / Eng xYz!
      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 9 3
    • 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 9 1
    • 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
  • Oracle / Eng
    dynamic_pr

    Oracle Eng

    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 10 4
    • Google / Eng Mr Glass
      What's the definition of a big townhouse?
      Feb 10
    • Oracle / Eng
      dynamic_pr

      Oracle Eng

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

      Oracle Eng

      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 9 3
    • Microsoft absgrsv
      Re-read the post. OP’s total savings so far is 500K. It’s not annual savings.
      Feb 9
    • Workday / Eng efficient
      Also you appear don’t know how to calculate tax
      Feb 9
    • Microsoft absgrsv
      Enlighten me pls. Would you?
      Feb 10
  • This comment was deleted by original commenter.

    • Uber choocgo
      Bad idea. Better to buy as early as you can
      Feb 10
  • Amazon / Other chatka
    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 9 2
    • Intuit / Eng jiYq80
      OP
      Would you consider 15% of monthly you get or the total TC ( bonus+rsu that you get annually)?
      Feb 9
    • Amazon / Other chatka
      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 10 1
    • 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 10 3
    • Google / Eng Mr 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
      Feb 16
    • Google / Eng Mr Glass
      lol ok
      Feb 16
  • 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 9 2
    • Apple RbmK68
      Might not be exactly 2M and there might be other costs involved!
      Feb 9
    • Intuit / Eng jiYq80
      OP
      Yeah it would be between 9.5k to 11k based on some rough calculations
      Feb 9
  • 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 10 0
  • 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 10 6
    • 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 9 1
    • LinkedIn bored🐷
      I’d buy a 3M house.
      Feb 9
  • New / Product
    ʕ•ٹ•ʔ

    New Product

    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 10 0