patrick.net

33, married 6 months, no kids. Been in CA for 10 years now. Have rented in Sunnyvale, South SJ, and now RWC. Re-signed a year lease in January for our 3/2 on the edge of a sketchy neighborhood on the wrong side of El Camino for $2150. It's a lot, but its got a huge garage, they take dogs and we've got the room for a nursery if prices don't reach sane levels in the next couple years.

Sick of friends telling me I should buy now or be priced out forever, I found Patrick.net four years ago as I was trying to figure out how to put into words what I had come to believe: prices were completely unsustainable and bound for a collapse.

Over the last decade, I've lived with roommates, saved money, and still had a lot of fun. We own our three cars outright (late-model Honda, my beater of a commuter and a SUV for Tahoe trips and pulling boats) and have zero credit card or student load debt.

I'm still prodded by friends and acquaintances to 'buy, buy, buy!' but from stuff I see them dealing with, I think that's partly b/c misery loves company. I'm worried about California's looming fiscal crisis and would be happy to ride this out for a few years, but my wife has some serious nesting instincts right now. She'd rather browse US Weekly and look at house listings on Craigslist than try to understand the forces at work in today's economy, so I fear its a battle I'll eventually tire of.

millerdoggy says

I’m still prodded by friends and acquaintances to ‘buy, buy, buy!’ but from stuff I see them dealing with, I think that’s partly b/c misery loves company. I’m worried about California’s looming fiscal crisis and would be happy to ride this out for a few years, but my wife has some serious nesting instincts right now. She’d rather browse US Weekly and look at house listings on Craigslist than try to understand the forces at work in today’s economy, so I fear its a battle I’ll eventually tire of.

Your right, prices are unstainable. The best way for your wife or your friends is to understand this is a comparison of historical prices pre-bubble and current prices. Its no different that the stock bubble back in the late 90s. Good Luck!

http://www.housingbubblebust.com/OFHEO/Major/NorCal.html

33, 3 kids, renting for 3 years since coming to CA, single income HH.

Currently in escrow for a 3/2.5 townhouse in the complex I'm renting in. Wife loves the area, we like the schools, it's close to family. With 20% down my PITI + HOA will be 200 lower than what I pay for rent. Prices here are 45% off peak.

I could have gone FHA, but couldn't take paying PMI. Besides I wouldn't know where to invest the dp and beat the interest rate. But the next two years will be tough as I build back the savings. Worse case scenario I can rent the place and come out even.

We're buying directly from the owner and that motivated me to buy because I didn't want to get into a bidding war a place. Did I mention my wife hates moving. We have lived in 4 places in the 7yrs we've been married. She is happy here - she didn't want me to over leverage to get a SFH when I said I could afford to get a house for 80k more. I appreciate that.

I've been reading patrick.net since jan. I decided my annual rent/price value of 9% - 10% means I'm not crazy for wanting to buy here.

millerdoggy, I'm in a similar boat. Wife and I had some huge battles throughout 06-08 as the prices just kept getting crazier and crazier. She wanted a house (many of her coworkers were buying, etc.) but I was steadfastly against it as I knew the prices were out of control. Finally, late last year and into this year she's been able to browse redfin and actually see the price drops. She's also been hearing her coworkers complain that they're underwater, struggling, etc. So now she's glad that we waited but she wishes it would hurry up (like many here, myself included) so we can buy. She's been browsing redfin pretty seriously lately and now that homes that used to list for $1.2M are $800k she's getting antsy. I'm not trying to catch the absolute bottom so at some point we'll jump in. We're planning to live here for awhile so I'll just be glad I avoided the really big knife.

As for us, renters (as you could have guessed) in the SF Bay Area Peninsula, rent is 9% of gross income. Moved out from Oklahoma in 2000 just to catch the dot-com crash. Toughed it out w/ 6 months of unemployment in 03/04 (luckily wife has a biotech job so kept the bills paid and provided health insurance) and been working ever since. Work is going well for both of us but I expect it to come crashing down at any moment. So we're hoarding cash and waiting to see what's going to happen.

When the rest of California was crashing I was looking actively, especially early 2009. Now I'm not even bothering. It's now clear to me this will take much longer to play out than I thought.

Congrats, grywlfbg, on winning the tug of war with your wife. I have a few male friends that lost that conversation, bought in 2006 and 2008, and are now firmly in the denial stage.

I hear you on the stress it adds to a relationship. I'll never forget the time a few years ago (pre-engagement) that we sat in a corner booth in very crowded Campbell bar as I made an impassioned argument against even considering a purchase by either "us" or "her". I borrowed a pen from our waitress to draw various graphs and charts (that I probably stumbled across from this site) depicting everything that house prices had going against them. In a brilliant finish, I rested my case by giving her something she should actually latch onto (because the concept of a declining real estate market was beyond insane to her) which was maybe, just maybe if all these signs were wrong and I was wrong and nothing was going to collapse - it at least couldn't keep going up. I told her that at the very absolute least, we'd be looking at a flat market and our purchasing power would only be going up.

I knew I'd won the battle a week later. I spent a full third of the drive from LA to Aptos listening to her debate the future of housing with her realtor mother (literally one day out of one of those bullshit realtor seminars). She articulated fairly well many of the points I'd brought up and finished with my same closing argument. I sat in the back of the car smiling, mostly silent aside from the occasional aid, relishing that the fact that her mother arguing strenuously against her (frequently parroting some inane sound bite from the seminar) only strengthened my case.

Fast forward three years and while that memory is still fresh in my mind, she'd probably have no idea what I was talking about if I brought it up. Luckily I've been right about macro things a lot more than I've been wrong (ok, it's not luck), so I've got a while before I need to pull another speech out of my arse. In the meantime, I'll just have to keep pointing out flaws in every house listing she forwards my way.

Grywlfbg, keep fighting the good fight.

Status: Owner
Purchased: 2007
Downpayment: 15%
Upside Down? Yes
By What percentage? Not much perhaps 5 to 10%
What percentage of
Income is mortgage? 36%
(includes taxes and homeowners)
Current Age? 42
Married? Yes

status: Owner
Purchased: 2009
Down Payment: 20%
Upside Down?: No
% of income is mortgage: 22% (includes taxes/insurance)
Current age: 40
Married: Y

I'm not in the BA though, so housing is a little different here...

Renter since 1999. Married. No kid, no pet, no debt and no I am not a cop.

Do I like being a renter? Hell, Freakin NO.
Been ok for several years, then this once perfectly peaceful place became more like a unlicenced mexican daycare right next to the clubhouse at party school. A sob nicked my car again in two weeks, bug's everywhere and I see red-eyed kids that smell funny more often. Gotta leave this rathole soon or later.

Been monitoring local housing market for years.
The housing market in the area is doing suprisingly well considering the crisis. Yup, this is relatively stable area and sellers still want 2006 price. I am seeing foreclosures coming into the market in this year, and ready to snap in when the moment is right. I need small backyard for the wife to grow tomatos, and I need little basement to hide from her when she got mad. :)

Renter since 2005. Married. Hubby & I in our early thirties. First child due in June. Single income HH. Husband works in technology. Live in East Bay (Berkeley, El Cerrito area).

My husband and I sold our house in Northern CA (near Sacramento) in 2005. Took profit and have kept it in liquid investments to use as another down payment for when things "cooled down." Guess we have a long ways to go. We pay $2,050 for a SFH on a busy street. Our rental is semi-updated (decent kitchen, nice paint, hardwood floors). Downside, especially in our area, mold, mildew & dry-rot prevail in our house. I am freaked out about it since getting pregnant and I really don't want to expose our kid to this. We've been looking at moving to other rentals in our area but haven't been able to find anything decent (no mold) for under $2,100 (our budget cap). Our landlords really want us to stay and offered to reduce our rent 20%. We're not sure what to do.

We've also been looking at homes to purchase in the El Sobrante/Pinole area where prices are back down to around 1999-2000 levels. We made an offer on a nice home in El Sobrante for 5% under asking price, 20% down payment, PITI & taxes $400 under what we pay for rent, last week. Found out there were 6 other offers (according to our realtor...who knows?) and we weren't even countered. Home has been taken off the MLS and is in contract with someone else. We've heard from neighbors in this area that folks from Lafayette/Orinda, who sold their homes and have been renting, are buying in the area for all cash. An interesting turn of events...and something we've noticed on homes we've bid on in the Richmond Hills area too (folks from El Cerrito/Berkeley Hills are also buying in the area for all cash). I know because I researched property records after the sale was recorded.

It is very frustrating to have been waiting this long for things to get back down to normal levels and get continually outbid on homes. Additionally, we can't find any decent rentals in our area for a sane price. My husband has had it and doesn't even want to move to another rental. We're trying to be level-headed and unemotional about house hunting but its getting to us. We may try to rent in the El Sobrante/Pinole area to at least solve the mold/mildew & lower rental price equation. It really sucks being a thirty-something in the SF Bay Area.

Just me, my husband and our 4 kitties. I stay at home and take care of the finances. We live in Lake Elsinore and have only "ONE" more payment on our house, will be paid off this month. I bought the home in 1987 for $105,000, five years later my husband moved in, five years after that we finally got married. Lots of times I have to hit him upside the head and tell him he is making bad financial decisions and for the most part he listens to me. His degree is in engineering and my MBA is in finance, that is why he listens to me.

After several years of my nagging and his job hopping he finally managed to get into a strong industry - medical device design. He is really smart and has found the perfect company fit for him. He works 12 to 14 hours a day at a job he absolutey loves. We spend our weekends out doors hiking and doing other activities most of the time.

We have $36,000 dollars in the bank for emergencies. We contribute regularly to our retirement accounts. The only debt we have is my husband's 2007 Tacoma - we are making payments of $400 a month - we have two years left on the payments. I drive a 1986 Toyota pickup truck - will have to buy a new one in a few years after I have saved the money for the purchase.

My husband always looks great because he is the person working and in the public eye. I have nice clothes for when we go out but I usually run around in shorts and a T-shirt - even in the winter, the neighbors think I'm crazy. I make 99.9% of the food and coffee we eat and drink, this includes our food for lunches.

It took 17 years of counting every penny but finally, we are seeing the light at the end of the tunnel and will be able to start enjoying life a bit more now. Turning 40 this year looks pretty good for us. We use to envy our friends that were living on the appreciation of their homes. The bought new cars, furniture, clothes and trips and are now losing their homes. I'm so gald we didn't drink the Kool Aid. It wasn't always easy to convince my husband we shouldn't but he agrees with me now.

just so that I could post

My second post

lisyb, I live in El Sob, I absolutely love it. I have lived in SF, Berkeley, Orinda. El Sob #1

I am nearly 40, married, 2 dogs, one horse. We bought from a family member for about 2001 price in 2004. Serious fixers in our neighborhood are selling for about 20% less than we owe, but our house was a serious fixer when we bought it, and now is like new (new roof, gutters, landscaping, windows, ceilings, floors, kitchen, bathroom, all new energy star appliances, central heating, all good quality). Our mortgage payment is about what we would pay for rent (although for not nearly as nice a house as far as condition and updating). We are locked in to a 30 year fixed at 5.3%. Our payment is less than 20% of our gross earnings.

We have no debt outside the mortgage, have 6 months+ savings and at least some retirement savings. I was laid off in 2008 but found work quickly since I was an early lay off when there were still jobs, I now have a much more stable job in IT with a public university system. My husband is a mechanic and a steady job with regular job offers at other shops.

We still cannot realize our dream of a farm or ranch up in the foothills as a weekend/vacation/retirement property as everything up there is still pretty inflated, so we continue to work, save, enjoy life in the Bay Area, and be patient.

Status: Owner
Purchased: 2003
Downpayment: about 15%
Upside Down? not in Palo Alto
Home equity - about $600,000
Income is mortgage? 10% of gross income
Current Age? 38
Married? no

I didn't mention my age (late 40's), and that I have animals large & small. Or, they have me.

Renter. We had no need to own a house until 2004 or so, at which point it would have been insane to buy. In terms of lifestyle, I would like to own, set down roots and feel settled, but I am really very glad that we did not buy in 2004 or thereafter. I don't really have a good feeling about California or the Bay Area long-term, and we are looking elsewhere to buy.

Mid 30s, single, renting a small apt, half a mil net worth and no debt... lived with roommates for 10 years and had some crazy parties but now living with GF. I've been financially "ready" to buy a house for years, but never felt the need to put myself into that situation. Never thought the housing (and stock market) boom was sustainable and cashed out of all stock market investments in late 2006/early 2007.

Still think housing prices have a ways to fall, I don't feel the immediate need to buy anything since material objects really don't make me happy. I may or may never buy a house in the Bay Area... but I love the area.

Good thread, nice to see the other side of the people who usually put only housing related opinions.

About me, I am early 30s with 2 kids, married, single income HH, dont own a home, was looking seriously last year, but figured I would wait, as the area I am looking is still at 2004/2005 price range at least the list prices, dont want to get in bidding war.

Early 40's, single, and currently renting. Had a house from the from around 2000 and sold it in 2006 when things were getting bad and friends called me crazy that I should rent it out. I bought under my means so I had an emergency fund. Upon selling, made 32% gain (before Realtor commission (5% (3%/2%)) and other fees/taxes to close). Saw the market and thought it might be bad so I held out since then and glad I did. Told my CPA in 2006 and 2007 I didn't want to buy and the CPA thought I was a dreamer that a fall was coming, and told me I need to buy for the tax write offs. But now I'm glad I didn't listen to that person and followed my gut. Sometimes I get lucky! It's not often though if you look at my stocks and other investments. I just hope I make a smart decision next time as well as I'm getting close to investing in some of the lower priced areas if I can get an 8% cap rate or more. The place I want to live is still too high in price so contemplating if I want to invest in the interim.

39, married and bought in SF in 2001, sold in August 2008 just before the s**t hit the fan (not becuase of any great financial acumen but more just because we wanted more space, were sick of our neighbors and were unsure if we'd be staying in SF). We were lucky to make a decent profit on our house which has been sitting in a savings account ever since earning a paltry 1% but since I'm bearish on the economy in general I'm fine with that.

We've been renting since and it's been a nice break from owning. I'm not a homeowner basher, but it's just nice to not have to worry about repairs, property taxes, etc. for a while. We also have a 3 year old who will be going to school soon and due to CA's sorry state it will probably be private school. I have a problem paying $10k in property taxes and then get assigned to a bottom of the barrel public school and have to pay for private school anyway.

I bought in 04,07,08 used profits to put towards downpayment.

I like owning and would never go back to renting anywhere in the bay area.
If I moved to an area I didn't know I might rent.
Not sure if I'm underwater.

I've lived in an historic victorian built in 1913 in Oakland since June of 2002. My rent has only gone up $100 per month since I've lived there and that's because I chose to move across the hall to live in a 1 bedroom apartment (much better apartment) than the studio I was living in when I moved in. That was 4+ish years ago and my rent has been the same since. The owner of the building appreciates tenants who stay long term and who pay rent on time by not raising rents even though he could raise my rent according to the dictates of the Rent Adjustment Board.

I came here to go to grad school. I got into major debt with both student and credit card loans even though I worked full time while going to grad school full time. Expenses here in the Bay Area are insane as we all know. I dug myself out of credit card debt on my meagre salary as an intern by negotiating with my credit card companies, cancelling all cards. I live without credit cards now and no credit card debt. I pay everything with cash (I use my debit card).

My income doesn't allow for any extravagance, really. Yet I'm proud to say that I'll be making the last payment on a 60 month car loan in the beginning of April. That will free up some money so I can start building a cash reserve and start paying my student loans which are all federal. I wisely avoided any "private" student loans and I have very reasonable payback conditions.

I'm closing in on being licensed in my profession which will free me to earn more income within the next year. It's been a long, hard, struggle.

I like to rent. I hate doing any maintenance or arranging for maintenance. Having a land lord who fixes anything (almost) within 24 hours makes me very happy. My neighborhood is safe, friendly, and clean. I have a drug store, grocery store, bakery, restaurants, hair stylists, movie theater, coffee shop, sushi place, 2 banks, chiropractor, doctor, dentist, lawyer, driving school, auto parts place, car repair shops, and more all within a 4 block radius. If I'm home and I need just about anything I can walk to it if I wanted. I have a large, beautiful, estuary called a "lake" only two blocks from my apartment that is this country's first wildlife sanctuary. The entire park is being renovated with completion set for 2013 or so. There are endless varieties of birds that come through our neighborhood since our estuary is a major stop on migratory paths. I hella love Oakland. People are friendlier than in Berkeley or San Francisco. And most people are quite tolerant of differences and share whatever "The Town" has to offer. I love it that people on the peninsula, Marin, Lamorinda, Walnut Crack, Unpleasanton, Berkeley, etc. believe that Oakland is so scary and dangerous. It keeps the snobs out. We Oaklanders mostly live in peace. And we know which neighborhoods to avoid. And we love our "Town."

My utility costs are minimal since I'm single and I work a lot.

I won't buy anything here until it makes financial sense. Right now, it doesn't make sense to own and I can't afford to do it anyway right now.

My job is stable for now. I work with homeless 18-25 year olds in Berkeley. Believe it or not, 97% of the people with whom I work come from Berkeley, Oakland, Richmond, El Cerrito, or other Bay Area locations. The young adults of the Bay Area today cannot make enough to afford to live where they grew up anymore. Our program tries to help them get through school, find work, save money, and get started in life so they can be responsible tax-paying citizens. We have a 70-80% success rate. We are Federally funded with very little coming in from the State through MediCal and a bit coming from the City of Berkeley. We also have other grants that we have won through hard work and a proven track record.

I love what I do. I love who I've become. Money does not buy happiness. I know. I used to be a corporate whore who was trapped by "golden handcuffs." I make much less than I used to make, but making a difference gives me so much more satisfaction than making someone else rich doing work that doesn't matter in the grand scheme of things. I'd say that at 40 years old, I do OK. *smile/wink*

Located in the Antelope Valley. Have been perusing the market since December of 2002. Saw the market values increase through the following year and though that things were overheated. Have been claiming that the market was overpriced here in the desert since January 2003. There is still plenty of room for prices to drop here due to the stabilizing effect of the many military families who cannot simply walk away from their toxic mortgage. Once they have a way to move on from their underwater mortgages, the prices will continue to drop here another 20-30%, maybe more.

I'm 35, still renting and have seen my rent go from $455/month in 2001 to $800/month in 2009. We are putting away cash in order to buy, but still haven't found the location plus price point that we are looking for. It's there, we are just a couple of months ahead of the game at the moment.

Your initial question is how are people doing in the recession. It appears that posters here are still employed. That makes all the difference.

I am employed, but crossing fingers it will stay that way. I know far too many people who have lost jobs or have reduced income. Hubby and I went through that several years ago, our own 3+ year personal recession. We know what it's like. That's why we live below our income now. But then, we're in the conservative midwest, so it seems normal to us.

This is our third SFH. Borrowed no more than we could afford, did not live on HELOCs, refi'd 3x to reduce rate or term. We will be mortgage free next year.

BTW, during that tough financial time, we had the option of refinancing our home to a longer term for probably half the payment. I'm glad we didn't have to do that. I did not want to extend the term when we are so close to payoff. But we did have the choice. Renters cannot choose to cut their rent in half when their income is cut.

Been checking this site out for years :-( as I realized long ago that the prices were out of whack - only now starting to see the cracks appear in my area - Mountain View/Los Altos.

Renting for 7 years now - same house, rent increase only once in all that time. Rollercoaster ride with my husbands work - 8 year old start-up - still waiting for them to go public. Once they do, then we might finally be able to afford a home around here - if we still want to stick around then. In the meantime, I have been watching the creep of foreclosures from across the other side of San Jose move closer to where we want to buy.

Unfortunately, the government's interventions has lengthened the amount of time it will all take to crumble - I am really fed up of waiting. And then, you have to wonder whether by the time you can afford to buy a house where you want - will you still have the job to be able to do so?

I go by Mnt. View every day I've been watching this house go into foreclosure

and finally put back on the market. It looks like a dumpy ugly house on a busy street
so I was hoping I could maybe snag it for a good price

it just went on the market for nearly a million $.

http://www.redfin.com/CA/Mountain-View/1533-Miramonte-Ave-94040/home/646516

toothfairy says

I go by Mnt. View every day I’ve been watching this house go into foreclosure
and finally put back on the market. It looks like a dumpy ugly house on a busy street

so I was hoping I could maybe snag it for a good price
it just went on the market for nearly a million $.
http://www.redfin.com/CA/Mountain-View/1533-Miramonte-Ave-94040/home/646516

That is insane. How about $249,900? That sounds more like it.

That house is near where I live, it was bought for +/-$675,000 and refinaced to over a $1,000,000 and eventually given back to the bank. The brand new 3beds on that same road are selling for the same price they want for this house now - hmmm, I wonder how long it will languish on the market - unfortunately there are a lot of people that still want in in this area though.

Another thing about that house - I noticed that it's listed as a sold comp for that area for the amount the bank is on the hook for - so it sets a comp that is way over what it should be worth for that location - how about that as a complaint?

30's. have lived a variety of places along the East Coast over the past 10 years. Still renting. looking for the elsive concept of "value". Have been close to buying a couple of times, but never quite was able to get the deal done. Job situation has bee stable, thanks be to God.

Long Beach, California
Renter
Married
Dink household
33
Been wanting to buy since 2005, couldn't afford to buy in 2005. We put out 4 offers for houses and were beat by all-cash investors every time -- really disappointed every time too and shocked at what some people were offering. Then, the housing crash.
Now have good-sized down payment, excellent credit, 2 stable jobs, waiting for government housing incentives to stop, and for housing prices to stabilize for a couple of years. I have a husband who wants to buy immediately, but I am holding him back until the market is stable. I want to see 2 years of stable prices before I'll believe that the crash is over. I suspect we will buy between 2012 and 2015. We are having a baby this year, and its been hard for my husband because he wanted to own a house when we have kids, but owning is not a necessity to live. Its a want not a need and we try to do what makes good financial sense for us. The majority of

The majority of

Sorry, Having my text cut off.
The majority of

JJ says

Sorry, Having my text cut off.
The majority of

...not your day, huh?

Claire,

I'm not following you. . Are you saying that the 1M+ refinance "value" is being claimed as a valid comp?

The house was sold to the bank at auction for the outstanding loan balance (that's what happens when they foreclose right?) and that is listed as a sale and shows up on Redfin under a title "nearby similar sales" when looking at houses in that area. Here is what's listed for the property.

Date Event Price Appreciation Source
Mar 03, 2010 Listed $964,900 -- MLSListings #81010104
Nov 09, 2009 Sold (Public Records) $1,050,358 8.6%/yr Public Records
Jun 30, 2004 Sold (Public Records) $675,000 2.2%/yr Public Records
Jan 05, 2001 Sold (Public Records) $625,000 -- Public Records

It never occurred to me before that that then sets the comps higher - now having said that - yes, some can argue that houses in this area are selling for that kind of money anyway - but that house, in that condition shouldn't have.

Maybe an appraiser would look deeper and not use it as a comp - but for us laymen looking on redfin - we would look at that and think it was a comp. If anyone has more insight - let me know.

just pull a title report and it will show the whole story. I get them for free, but I would pay for them if I had too.

i lost my house in a divorce three years ago. since then i have been waiting waiting waiting for a some housing correction in marin. not happening, i have lost faith that there will be any significant reductions here. it's looking like if i ever want to buy again i will need to move completely out of the area away from friends, family, my business etc. makes me sad, i've called sausalito home for the past 14 years. i would love to buy again. i have had two very difficult landloards in the past three years. honestly, i hate renting an apartment due to the lack of privacy, personal space and defered maintenence of rentals in general. yes, it is nice to know i need not worry about values dropping but i'd rather be renting a home from a bank on a 15 year fixed. at least at i will own a a place to live at the end of my term

I'm 29, single, living with family (no rent), and employed. I've been in the market for a home since late 2008. I've made several offers all with 40%++ downpayment. The properties keep getting snagged by all cash offers even when I overbid. It appears the only way I will be able to get in on a decent home is if I overbid even more to a ridiculous 2006/2007 price. This will not happen. I'm waiting for the right time to purchase still. The area I am focusing on currently has a 5.1% rent:price ratio. I know it's a little steep but I expect positive cash flow if I rent it out due to the large downpayment.

Claire says

Maybe an appraiser would look deeper and not use it as a comp - but for us laymen looking on redfin - we would look at that and think it was a comp. If anyone has more insight - let me know.

I've noticed that too and I generally am able to spot those out because they are the ones with no pictures of the home.