Who rents the pricy housing in bay area?
I see so many families working in tech and making good money renting 1/2 br condos for 3500 or even 4000+ dollars. They can easily pay the downpayment and buy a ~1m sfh in the bay. Not that they are in bay temporarily, they are here for long run. Why do they pay the sunk cost of rent every month and pay someone else’s mortgage? How can people be so dumb?
A 1M home is ~5k/mo and under 1500 of that goes toward equity. Plenty of good reasons not to pay an extra 1500/mo to own.
10 years from now the rents could become 8k, then what?
Revolution.
True, but in Bay Area $5k/mo gets you nice 2 BR apartment in a high rise or $1M home, which is trash. Not exactly apples to apples.
Financial industry is good at brainwashing people into believing that renting is better, and that the only place to invest is in the stock market. And yet they call it 'diversification' 🤣
You can’t buy a descent house with 1M here. It will be a tear down or has to be very far from work or in a very bad neighborhood. You need at least 1.5 that means you need at least 300K cash to put down for down payment. Even with a high salary it takes some time to save that much post tax and don’t forgot the property tax. On a 1.5 house that’s about 22K a year or 30-35K pre tax from your income. You will no longer have that money that you can otherwise save when renting. You get some deduction but with the new tax law it reduced significantly
The new tax law has made that meaningless.
Yes the new tax law was designed to punish home owners in CA and NY.
+Upkeep on a house cost $$$$ And for an apartment at $4K you get a brand new place with a modern interior and many amenities.
The reality is that a $2M house rents for about $5k-6k/mo. $2M house costs $2k/mo in property taxes and about $5k/mo in interest expenses plus a $400K down payment. So buying is more expensive and you are just betting on the next bag-holder willing to pay more when you sell.
Arent stocks exactly the same? Buying at X and hoping another shmuck will buy it for X+Y at a later date? At least you can live in a home.
Over long time periods (10+ years) stocks are guaranteed to go up. Housing is not (see Bay Area now). Stocks are up. Housing is down 👎
Stocks can quickly be sold and diversified. Homes cannot. Unless you are confident in the quality of an area, the economy and the employment opportunities in a location, buying just doesn't make sense. I have owned and I have rented. I have always come out on top when I rent and invest.
But people buying homes already have enough stock investements and enough of a rainy day fund. So fast sellability isnt really required. Who do you think buys these $1.5M+ homes? It isnt new college grads with a small amount of cash for a downpayment. Most people arlready have other investments, home is usually the last ibvestmwnt they make, not first. Stocks vs real estate is not an either-or choice. Why not have both?
Kid Stock is definitely much worse investment than property in long run because it is not tied to any tangible asset. I guess you are too young to have seen the 2000s dotcom bust. Companies and their stock wiped out and gone. Same time a 4BDR house in PA was 400K-500K in 99. Today it’s 4-5 mil. It’s basic supply and demand. Land is scarce in desirable areas. Stock is based on hype and BS. There is no scarcity factor. Of course some areas don’t appreciate as much They key is location location location.
Unrelated: does anyone know of a good source for charting home prices over several years/5+/10+?
Chart means nothing, look at individual transaction cost on redfin.
That's not what I am looking for. I wouldn't ask for something that obvious. I'm looking for long term trend data based on any unit of area like a city or a county or a zip code.
Well early in after buying your monthly payment is heavily going to interest so if you don’t plan on staying beyond several years then it’s not that significantly better to buy then rent financially (depending on valuation changes as well). More so though is the flexibility it provides to rent and often people will take the short term slight financial hit to have the freedom of avoiding being tied down and also the headaches of home owning.
This^ I've been thinking of buying, but don't like the fact that if I wanna leave, I need to deal with selling them etc. Plus, I'm not even sure whether I wanna stay in my current area. Renting, I could leave easily anytime. I could even break the contract and pay for it, and be done with it. Can't do that with buying. You can, if you want, sell it at a much lower price. Though that is probably not worth at all.