I'm very likely to move to bay area (San Mateo/mountain view) for next job. Currently in LA, Santa Monica. I looked at the rent prices and anything decent is $2100+/mo for a studio, but there are also a few studios for sale in the area. When I do the math owning actually comes out cheaper, similar for 1B1B (absolutely not the case in West LA areas), sure you're putting a down payment but you'll also be building equity every month, and even if you move on the property will still at least break even when being rented out. So it seems like the housing prices in bay area really isn't that bad for single/yong couples without kids with decent income. Why is the sentiment that you have to make crazy money to own a property there? Or am I missing something? #bayarea #housing #rent
World Conflicts
1h
329
Will Israel still exist after 10 years?
India
9h
603
How to invest in India as an NRI?
Tech Industry
5h
1138
Amidst mass layoffs the US govt allows companies to hire Visa Workers without proving they first tried hiring US workers
India
18h
506
Why Modi not asking for votes based on work?
India
14h
660
Dhruv Rathee speaks lies about Ch. Shivaji Maharaj
Downpayment is still quite high. You have to pay an HOA. I would also bet that 1bed or studio condos have less resale value and appreciate more slowly compared to other real estate categories.
Yeah everything included the monthly payment is still very similar. They don't increase in value as fast as single family homes but still have on average 40% in past 5 yrs. Housing in East bay are also a lot cheaper, you can get 1B1B for 400K or less not far from Fremont.
I just checked condos <$400k on realtor.com and it seems like most inventory is in less desirable locations in the East Bay. Your commute would be very bad to job centers and these areas are always the first to lose value in a recession.
I felt like all my Bay Area friends who own a place bought a single family house. There might be a preference here to buy a house instead of a condo, and that drives up the demand for SFH and drives down the demand - and correspondingly the price - for owning apartments. My sample size is potentially biased and represents South Bay only.
Sfh is the smart choice. Property price is mostly from land. The building depreciates and land appreciates. Sfh has large piece of land. Condo you are sharing the land. Over time, condo won’t be worth nearly as much when it’s old.
I think given the choice most ppl would buy sfh, but if I'm paying the same amount in rent compared to paying to build equity in a condo/apt (which still appreciate), what's the harm in that?
A 400K studio with 20% down will cost ~$2200/mo including everything (assuming$400/mo HOA) and excluding tax write-off. When you're paying for rent 100% of that money is going towards.... NOTHING. Sure single family homes appreciate more, but condo/apartments still do. Plus, you can just let it rent out and possibly make passive income. The only question is if you can get a higher return of investment from that 80K down payment Or is my math wrong somewhere, really trying to learn here.
So here’s the issue with your math: 1. When you borrow money for mortgage. Interest is front loaded. Eg right now I pay 3k a month for mortgage, for the first 10 years or so, every month only 1k goes to paying principle. Rest is just interest, gone. So your yearly principle paid is only about 7-8k instead of 26k. About 18k is paid to interest which is down the drain like rent. That’s 1.5k a month. 400k condo is another 6k a year in property tax, that’s 500 a month Hoa is usually at least 3-400 a month for condo. There’s also special assessments once a few years for big repairs that could be 10-20k in one go. 80k of 5% return is 333 a month. Don’t think I need to go on, it’s already much cheaper to rent. Only make sense if you expect big growth in real estate prices.
*principal
Owning you have to do your own maintenance, which adds up since Bay Area housing tend to be older, and because of Trump's JOBS Act, typical bay area tech worker will not be able to deduct property tax on their tax return, leading to owning being "cheaper" in upfront price... but not all in costs.
Why can't tech workers deduct property tax? Sorry didn't know this before. But my math doesn't account for property tax or property value increase too. Maintenance is a factor but LA houses aren't any younger for that matter...
You have only 10K itemized deduction across state and local income tax and property tax. chances are, your tech comp alone will cause you 20K in state income tax which takes the full quota.
Yeah, I am wondering too. I am on the market for the condo and I didn't find yet my "home", but what I read in this thread, really confused me. Buying is kind of giving you certainty that nobody will kick you off, when you are not a owner of your own house
Buying is always better than renting in long run. Most reach people are landlords. Also nothing better than living in your OWN place.
Lol we are at top of market right now, why the fuck would you want to buy a condo that requires a big down payment but on a cashflow is the same or more than renting? Unless you are trying to lose part of your down payment.
Buying is one of the best things you can do financially. Rent is just money down the drain. Monthly payment is fixed but your income and rent goes up with market and inflation. Buy if you have the down payment and upgrade to bigger/better houses as you go. 400k condo sounds too good to be true though. Maybe something wrong with it or realtor intentionally listed very low.
400K condo is a thing in Oakland and Pennisula. And buying a house in this day and age is not that different from buying stock: going in at top of market and you waste $$$. At the end of day, buying is converted to owner-equivalent rent in inflation calculation and the data exist to show that cost of housing (buy or rent) goes up over time. There is no free lunch just because you dropped a load of money. In fact, rent control is probably closer to arbitraging housing cost than anything else.
Did you consider property tax + maintenance + hoa? Also when you get a 30 year loan. 60-70% of the money you put in goes to interest for the first 10+ years or so. Also consider the time value of the downpayment which could give investment returns instead.
Yes, yes, and yes. A 400K studio will cost ~$2200/mo including everything and excluding tax write-off. When you're paying for rent 100% of that money is going towards.... NOTHING. So paying 2200/mo * 12 = $26K/yr building equity on a $80K down payment. Tell me you can greentree this kind of return on stocks. Or is my math wrong somewhere, really trying to learn here.
Where do you find 400k studio in Bay Area? You are not paying 26k per year to building equity. 60-70% of that goes to interest which you won’t get back when you sell. Also, 80k downpayment assuming conservative 5% a year return is about $300 per month as well.