Buy a house logic in bay area
House: $2,000,000 Annual property tax: ~$20k to $25k 30% downpayment: $600k Annual interest today at 6%: $84k Excluding closing cost, maintenance cost, tax break from mortgage interest for now. Total annual out of pocket is: $109k. I exclude principal to pay monthly in this calculation, just interest payment. For folks who bought a place at $1.5m+ in 2022-2023, am I missing something? Did you buy mainly for a permanent place to call home? For the school? I am moving to bay area, can either pay monthly rent at $4,300 (landlord bought it for $1.5m) or consider buying a house. Rent vs buy annual cost is: $51,600 vs $109,000, but the latter is a nicer house worth $2m. TC: 1.1m on paper. #mortgage #housing #apple #google #meta #netflix
People don’t usually buy their houses as investments
You are right but two places I bought to live became my rental properties.
@MS they do in the Bay Area
Prop 13 is basically rent control for homeowners— if you want to stay for 20+ years the math becomes a lot better as your taxes basically never go up ( we bought in 2015; now paying taxes on 60% of market value
That was the case. With these interest rates and current values. Looks like it’ll be cheaper to rent for next 20 years
Tough to say — if anything high inflation increases the delta between X% and the 2% max
You say all that and put that sweet TC towards the end. Now I am fucking confused as to why this is even a discussion (unless that TC is from a pre ipo company)
You can buy multiple investment properties elsewhere(eg San Diego) and rent home in bay. $2m house rent in San Diego is much higher than in bay. So if you are going to leave bay in 5-10 years maybe it’s better to rent
Ya I mean if OP make 1M per year does it really matter if they rent or not
My household TC is 700-900k and we rent a penthouse apartment in a building with great amenities and zero risk/headaches. Buying elsewhere to hedge.
Apartment where?
Peninsula
Agree it doesn’t make much financial sense to take a mortgage here with higher interest rates. You can find plenty of inventory of nice homes to rent for 4-6k/mo. Also tax deductions are not as great as they once were: - mortgage interest deduction caps at 750k - SALT limit of 10k means property taxes don’t really contribute to any deduction
I would never put 600k down. Holy shit.
Did you just say that?
This guy loves Becky G. Must be mayores
The numbers OP presenting are so ridiculous. It is funny when people making quarter of that are also in the market to buy 2 mil houses. This market makes no sense, renter for life
Yeah, I hear you. I have seen worse in Canada and Australia though.
numbers are the same in Australia only people don’t make that much lol. like a good house in Sydney Melbourne is around 2-3 mil AUD but people maybe make a half or a third of what they make in the US. I have no idea who’s buying the houses. the only thing I like and the US doesn’t have is mortgage offset accounts tho in the US you get the tax breaks for a first home
House price is like Stocks, the current value is based on future potential. Even if you don't have any kids, a potential family with 5 kids will find it a bargain in the future thanks to the school district.
5 kids? You need a $5 mil home for that in Bay Area. $1 million per kid is the going rate for homes.
If you can rent a good house no point buying in bay area. My only reason to buy was that I want to live here long term and make changes to the house.
If you buy house for 1.5M. Do you think someone else will come pay 3M for that house in 5 years? I doubt it. Ppl don’t realize that most ppl don’t make tech salaries and RSUs won’t go up forever.
There were no tech salaries in 1970s still bay area housing went up by a lot. So keep this to yourself. If nothing is getting built and there is demand it will go up.