patrick.net

Closet space is very important.

T.I.C.? Tenants in Common???

Came to this country in 1998. Moved to the bay area in 2000. Still renting.

We've been renting since Jan 2006, after selling our Boston brownstone and moving back to the Bay Area. There is more or less constant pressure from the wife and both sets of parents to buy, especially now that we have a kid. However, my wife and I refuse to buy in a "top" school district with the hypercompetitive academic types (Cupertino, Saratoga, etc). We have a soft spot for Palo Alto having both gone to school here, but the school system thing is a downside. We are still tentatively looking at buying 2008 or 2009, depending on how things look aroud here by then.

We are renting and trying to enjoy all the positives it brings:

- being subsidized by our landlord, our rent (which includes taxes and HOA fees) is about half of what would be our mortgage payment alone
- partitipating in our landlord's Prop 13 protection - he pays less taxes, therefore we pay low rent :-)
- flexibility of a month to month contract
- excellent elementary school, no need to pay extra for a private school, no need to pay a huge mortgage just to get into good school district
- no headakes with repairs, or reconstructions
- no debt, no stretched cash flow
- kids enjoy the house like we "owned" it, they don't see the difference if we rent or own
- no worries that an eartquake would destroy my american dream
- no worries of a bubble, crash etc.

It's very convenient to rent the house right now.

We are ready to enter the market when at least one of these happens:

- prices crash 50% from their peak in 2005-06

- 70% or borrowers in Bay Area use the conventional 30-year fixed mortgages with at least 10% down, not IO ARMs with 0% down and 5% cashback

- rents in Bay Area double and catch up the morgage payments

Renting here in SF (SOMA/South Beach specifically). Single and live well below my means. Enough cash on hand to buy on the spot when the time is right.

I've owned before. I've bought low and sold high. I've bought high and sold low. The former is a lot more fun. You only have to do the latter once -- you WILL become an informed buyer.

Renting vs buying is a trade-off as we all know. Right now, in this market (especially in SOMA/South Beach with lots of inventory on the market), renting is best, IMHO.

OpinionsPlease, there are tons of folks out there that would love to be bored with a sense of security. ENJOY YOUR BOREDOM!

Why not take 6 mos or a year off work and enjoy sleeping in every day? Kick around, read books, volunteer, do whatever. I did it and enjoyed every minute of it.

Another suggestion, just put your head on your pillow at night and enjoy a good night's sleep free from financial headaches.

Celebrate freedom.

:)

I saw some of this in the last bubble deflation in the early 1990’s, but unfortunately soon after that Netscape brought on the “next big thing” in the second half of the decade, and a lot of obnoxious “beautiful people” came here for the internet bubble.

I think that's one of the biggest surprises about moving to Silicon Valley. I grew up reading about Steve Wozniak - those fun and wacky hacker days of Silicon Valley.

Then when I got here, I found it was like New York City with an outdoor twist and without the "culture". And now it's even gotten worse with all those FooCamp/BarCamp/BlogCon/etc etc etc.

I really thought it would be about what you knew, what you could do, but in the end, it's about who you know.

In the meantime, my 401k is maxed, and I put away at least 2k every month into other investments, as well as buying anything I want, and vacationing wherever I want, whenever I want.

Um... so you're saving $39.5k a year?

Cripes - how much are you getting paid? And is your company hiring too?

Am I that underpaid? :(

I'm one of the board's OINKs. Have had the same rental flat for more than ten years. It's spacious, inexpensive, handsome, gets ample morning light especially in Winter - SSE exposure, floor-to-ceiling glass - is at treetops level, and has a large open terrace/roof garden. Library, boutique grocery, good cafés and restaurants, art house cinema and midtown retail/office are all within about ten blocks.

So I'm a JBR.

I've been planning to build a small country place, but am now waiting to see how the next year or two (or more) looks for us all. I'd like to put up a small pavilion or folly, something tucked well out of sight, but if the country has fallen on hard times it wouldn't do.

Bought a duplex at the outer edge of Noe Valley in early 2003 with my girlfriend (now wife). Back then our PITI was 38% of gross. I tried to buy as a single guy back in 2000, but couldn't get what I wanted on a single salary so I tried again with her in 2003. Got outbid on a bunch of places in Rockridge in Oakland (where she wanted to live) before we got this place (where I wanted to live).

Both of us have been doing pretty well careerwise, so now our PITI is more like 21%. Our tenants are old roommates of my wife, who we have dinner with a couple of times a month and have the keys to our place. We both lived in the Berkeley Co-Ops, and so did our tenants, so it is nice having people you like and trust living with you.

We had a baby a year ago and the extra cost has eaten up a fair bit of our raises and promotions, but she is well worth it. We are still maxing out our 401(k)s, but not putting aside too much more than that. We don't own a car, or spend money travelling or buying stuff, but eat good food and drink good wine and feel okay with that. We usually entertain in our home. With a one year old, it is really the only way.

PITI minus rental income from the bottom unit is more than what it would cost to rent a place similar to what we have, so I guess we are doing okay with that. We have spent a fair bit fixing it up the way we like, with central heating and double pained windows and new paint and all.

I am not sure what we are going to do when Ava turns five: my wife is convinced that SF public schools are not good enough for her. I think she is wrong and kind of snobby about this, but will probably roll over to keep the family peace. If prices stay in the Bay Area the way they have, we may end up renting this place out and renting another place in a good school district on The Peninsula. Either that, or possibly send her to a private school.

If prices come down, we would probably buy a single family home in a suburb that has good schools, probably Berkeley or Piedmont or Palo Alto. We will keep this place as I plan on retiring here. We are only a block from the Senior Citizen's Center on 30th Street and close to transit.

As to the driver thing, I hire one every day: it is called Muni! I hate driving in the Bay Area and really appreciate that I can pay $45/month to get someone else to do it for me.

51yo single JBR some distance away from most on this blog (Canberra, Australia).

Sold 2 investment properties in 1991 ($A100K proceeds - paid off mortgage and kept the rest in cash for several years; BAD move). Advised several work associates to buy here 1997/98/99; and a couple of them even remember with gratitude. :shock:

Sold own home mid-2004, and now rent half of it back with separate utilities. In effect, a very run-down 1500sf 3/1 apartment plus 30x10 lockup garage. OK for an untidy IT slob like me, especially at $A700/month.

Local house prices stayed flat for 2 years after I sold and now, I regret to say, have probably risen 5-10%. Buy/rent cost ratio on a normal rent is about 2/1, and on my rent about 3/1.

I am overall probably a little bit in front since selling, despite a recent government-induced (change to tax laws) 6-figure hit to my direct share portfolio. I expect to get back over the next year provided the companies involved can maintain their dividends (which they should unless they've been seriously lying ;)).

If I sold up completely I could just buy a reasonable ($A500K approx.) local SFH for cash, but I don't intend to do so as long as my current rent stays close to current levels. One reason for this, as I have posted before, is that I am likely to in 2010, for rather arcane pension reasons. (The really curious can Google "CSS Superannuation 54 11"; I am one of the people that will get a bigger pension at 55 than 65 unless the overall market absolutely craters. :))

The double quotes indicated the Google search terms, not a specific phrase.

*lurks*

On-topic:

Year 2 in our "owned" house in Toronto...thanks to sticking to a strict price limit and with a pay increase our purchase price is now LESS than 3X annual combined income. Yay! Of course, that was deliberately cautious because people lose their job all their time...can you still get by on just one income? We can...though it is very hard to *save* unless *both* of us work. (We are saving like mad before another layoff or a kid comes!)

Referring to Eric's post way back yeah, I like being able to fix up, paint, and maintain the place PROPERLY instead of waiting for the landlord to do so...but other times it is a pain (like when my bathroom sink plugged up this weekend) and I think "dang, I feel like selling and renting downtown!"
Someone laid out the plumbing poorly when they renovated the basement into an apartment and eventually I must address it.....

There are still people who can buy crappy 100 y.o. downtown Toronto houses for $400K, $500K (yeah, cheap by Bay Area standards) and I don't know how they find another $100K or $200K to do a proper renovation. I just don't know. Our 50 y.o. midtown house is in good shape but it still has problems!

Off topic: There was a discussion about Erlend Oye about 2 threads ago. If you like Erlend Oye, or you're just curious about more Norwegian music you must check out Royksopp. It's electronic music, to be sure, but warmer and more original than any other electronica I've heard. Royksopp is huge in Europe but practically unknown in North America. Astrid in particular if you haven't got their two CDs it is highly recommended...and while you're surfing the net for Royksopp, drop me an email because I want to ask about amending my crappy garden soil.

Even more off-topic: Surfer-X (or anyone) will there be another blog party maybe late in the year? I have a planeload of points and want to go to LA....maybe with a sidetrip to the Bay Area. Besides visiting my best friend I think a driving-tour of BubbleHoods is in order.

*Relurks!*

10-year renter never owned. DINK. 230K saved. Today will serve to keep all you fence-sitters firmly rooted. Stock market bloodshed begins just in time to pre-empt any spring bounces. Moved 100K in 401K funds to money market on Friday in anticipation of the big drops ahead. Your patience will be rewarded.

PAR,

There do seem to be more minor quakes. From what I've read though we have been in a very seismically quiet period since 1906. There used to be constant earthquakes felt throughout the Bay Area in Victorian times.

Did you get the hail last night? We had about 2" of hail on our street (It was pea sized, so didn't damage anything).

Hope nobody lives close to the landslide in SF......everybody OK?

RE: the latest earthquakes (PAR),

I felt 3 or the last 4 that the USGS reported on (or very close) to the Hayward fault. Mag has been in the mid-3.x (3.4 - 3.75). It has been my experience that even though the scientific community knows a lot, it is just the tip of the tip of the ice berg. Go back to the stories of the Paso Robles (aka, Paso Rubbles). That one completely caught them off guard...at least it appeared that way when the scientest were interviewed.

There's a lot of hoopla about activity (or lack of) on the Hayward fault. The truth is they just don't know. It could blow big tomorrow, or it could continue with a number of 3.x jolts. They just don't know. Kinda like the dreaded 2006 hurricane season. (I was living on the Gulf of Mexico, up till the end of 2005). The new media (in typical fashion) tried to hyped everyone up and nothing happened.

While not a BA resident I suppose our situation most closely resembles Randy H's. Although we have the aging parents issues our children are well.... actually adults themselves. We too are in our third year of renting after many years of owning and while we are ramping up our retirement accounts to the max we are not in the market for a chauffeur. :(

Moved to cash but really just short term. It's frustrating as a bubble observer b/c the whole subprime issue is something we should have addressed in 2005, 2006 at the latest. Now that we're on the verge of unhitching RE as the primary growth engine they are doing their best to put a turd in the punchbowl. Go away little man.

A refugee from So Cal who thought the run up in housing prices was long term and I had no hope of every owning there. Add to that six years ago a bad divorce where I was left with half the income and I was single. Came out with a little money enough for maybe 10% down but I decided to save it in CD's and a MM. Being single I thought it prudent to have reserves so I didn't rush into buying a condo or invest in the market too risky...

I took a job in the south fall of 05 and hate it here. These folks are behind the times by about twenty years and they don't like non- southerners. My cost of living is low here I have a new 1350 sq. ft. condo in a decent area for $695 a month and most things are cheap. There is not much here to do and nothing like the great amenities I was use to in L.A. I am currently in active job search looking to return to So Cal. This was a bad experiment and I know it will cost me about 5k to return but I really don't care. I also miss my family and friends who live there.

I hope the market will return to reasonable levels in Southern California it may or may not. I plan on being back by this Spring job offer or not thank god I didn't buy and am able to afford to move back. I learned that despite all of it's drawbacks, high cost of living, home prices, gas, traffic, illegals ect. it's where I feel comfortable. The whole time I've been here it's that fish out of water feeling. I know one thing owning or not owning does not define my life. I will live to enjoy life, friends, good dining, and always survive no matter what the economy says. I've always lived below my means especially since my divorce. My credit is great and I have a little money in the bank and I don't overextend.

http://www.lifamilies.com/chat/topic-130627-1.html

We've been thinking of selling our townhouse and buying a house, but we haven't really gotten serious yet. Anyway, we went to an open house and fell in love with a house. It's absolutely perfect for us! The thing is we haven't put our townhouse on the market yet. We could probably manage a down payment and closing costs without the sale of our townhouse, but I don't think we could swing 2 mortgage payments. The sellers have already moved out and have even lowered their asking price so I know they're eager to close ASAP. WWYD?

I don't really know much about bridge loans. Do you have to have a lot of equity in your home to get a bridge loan? We only bought our townhouse a little over 2 years ago so it hasn't gone up in value too much and we only put 5% down when we bought.

This couple wants to buy a house BEFORE selling their townhouse which they bought in or around 2005 with only 5% down! Don't they have at least a clue that it may very well be underwater and NOT able to sell it?

WOW guys! A market meltdown today. The shrills on CNBC can't even fake the optimism today... I guess the indicators of recession are becoming apparent to the MSM and the cheerleading is quiet today. I guess What Greenspan said the other day plus this sell off in China's SM is spooking everyone. Isn't amazing how the market ignores what is clearly in front of them until it's right in their face. I have this theory about Greed clouding visual perception.... Goldilocks has wrinkles.

BigDogSS,

Yeah, I was stationed in LB at the time and everything was so overpriced it kind of spelled the end to my naval career. We used to go see the ChiSox, BoSox and Yankees at Anaheim. I have a client in Whittier that bought around the same time and he only has a few years left on his mortgage. But why would you feel compelled to do ANYTHING?

Hell, I'd just go ahead and have a pool put in? It's snowing here in OR, great time for that pool party fantasy 'eh? :)

It is a fallicy Southerners don't like Non Southerners.......

Southerners don't like arrogant, self righteous Non Southerners.

Let's not forget this little gem today. The screws are tightening on lending. Freddie Mac says it isn't buying pure crap anymore, which means people trying to LEND crap have fewer options on getting rid of that crap and a much higher chance of being stuck holding the crap with no money to left to lend.

Addendum... I think it's a shame they put a deadline on the "No liar loans and you have to qualify for the non-teaser rate part of the ARM" in September. Leaving wiggle room like that will just encourage a flurry of crap mortgages. Cold Turkey is what the lending industry needs.

Doug H,

Nah, southerners don't like non-southerners. Just as northerners don't like Southerners. Hell, I spent 4 years in California deploring the airheaded and insubstantial locals. We all like people who enforce our prejudices and dislike people who irk our sensibility.

Long time reader, infrequent poster.

We're currently renting and big-time DINKS

Our story:
My wife and I bought a 1000 sqft starter home in 2002. At the time I thought we might be in a bubble. Little did I know that the ride was just beginning!

In the summer of 2005 we started looking for the "trade-up" house. We found several houses we liked but it just didn't feel right. I started doing research on sites like this one and realized that housing was severely overpriced.

We sold our starter home in January 2007 for about a 100% gain. We have always been good savers and now have several hundred thousand dollars in FDIC insured CD's paying 5.50%. We max our 401k's at $15,000 a year per person. Our rent is $2300 per month for a 1400 sqft home in a nice neighborhood. The landlord bought the home in September 2006 for $625,000. The math reveals we are saving roughly $1900 per month by renting versus the PITI on a 625k loan.

Although our houshold income is nearly $300,000 per year I would be very uncomfortable buying something in this market. We are hoping that prices come back down to the trendline.

**Gentleman, start your engines**

I won't be buying in BA anytime soon, if ever. I can't afford it right now and if I could afford it, I'd prefer to rent and put the money into a weekend home. On weekdays, a home is just a place to microwave food, hang cloth, sleep, and eat on the sofa while watching TV/surfing - usually simultaneously because there's not that much free time on a weekday.

"I'm happy spending 6% of my gross on rent"

Well I must say, you've got me beat there! I'm a solid 33% above that!

OT (but only slightly) Poor Nigel is laboring under the delusion that "the re-set" will translate into instant profitability for him! Wrong. Major lenders are already offering "NO FEE RE-FI's" to clean up their own mess!

I'LL BUY when MB's no longer see the buyer/owner as nothing more than sheep to be sheared at every uptick. So long as "ownership" is defined and structured to be "re-purchased" every 2 to 3 years.... I guess I'll be on the sidelines. Sorry.

I like your swipe agains the hypercompetitiveness at certain schools. Alfie Kohn wrote a book on how a competitive environment hampers children’s (and adults’) healthy growth. You may be interested in this one.

I love competitive schools because they teach other people that being competitive is the only way to survive.

Yes, yes we do, goober.

I’LL BUY when MB’s no longer see the buyer/owner as nothing more than sheep to be sheared at every uptick.

You may have a veeeery long wait, my friend ;-).

With so many upper-middle classers in the area does anyone actually think prices are going to fall very far?

Er... 300K is not upper-middle class.

HARM,

No sooner had I hit the "Submit" button than I thought about that! With so many people in the arena the pressure to "get paid on both ends of the loan" and load 'em up w/ b/c we can fees has got to be tremendous.

When the avg. American talks w/their MB more than their tax guy, something is way off kilter.

We do not make that much. No donations from us. ;)

To all $300k income households

Why are you people making so much money? $300K per annum is almost $1000 per day.

Is your company hiring? What field are you in?

How the heck am I supposed to afford to buy something when the competition makes so much dramatically more than I do.

Cripes.

How the heck am I supposed to afford to buy something when the competition makes so much dramatically more than I do.

Do you even want the same type of houses?

Do you even want the same type of houses?

Does it matter? The support is really high.