patrick.net

should be 500K premium in terms of interest + principal

Rentals. Anyone have a family "in transition"?

http://sfbay.craigslist.org/pen/apa/177988365.html

Despite this, the spring peak in patrick's renting stats appears to be subsiding .

25K/kid/yr is manageable for a household earning $150K and above, even with 2 kids.

But the true problem with average earners sending their kids to private schools is that their kids will be surrounded and possibly looked down by far richer peers. Well, kids of the more successful in a rat race looking down on kids of the less successful.

Elite schools these days are no longer blue-blood. They're filled with top achievers from families like yours. You know, in some circles, people are suspicious of those who earn straight A's and are presidents of this club and that club.

50K a year post-tax tuition fee is actually not manageable for a 150K household income if they got into a home in the last few years.

Even after mortgage deduction, tax alone will take away 1/3 of the income in BA, mortgage plus home maintenance will easily take another 50K, leaving 50K for the family of 4. 150K household income is unlikely to qualify for any private school tuition concession.

That's why for a 150-200K household income family, their best bet is to pay a premium to get into a good school district and "lock in" the education cost for their kids.

i wonder if it's possible to get the blog archives of 'overvalued' or whether the owner signed a lengthy 'non-use' contract so that it never sees the light of day again. i think we should just start another blog exactly like it in google blogger to replace it, and start sourcing those wonderful places again... call it www.$hitbox.blogspot.com or something...

it will mean cruising the online ads for R/E a lot, which could become a bit depressing, on the other hand...

OO,

Is renting not an option in those areas. I remember that you mentioned some families live in crappy apartments for the sake of their kids, wouldn't that be better than spreading themselves too thin financially. There are other alternatives: deferring having kids or moving out of the state. A financially stressed young couple with more than two kids is asking to be in a world of hurt.

astrid,

renting is always an option, but remember, these are the self-proclaimed middle upper class with 200K household income who think renting is beneath them due to social stigma.

Those who are most financially stretched may not be the true poor. People who don't know how to swim seldom drown themselves because they stay away from water. The half-assed swimmers are most likely to get drowned due to a false sense of confidence with water. Same thing applies for the "middle class" and "middle upper class" who consider many things in life god-given entitlements, including a house in the "right" neighborhood, good schools for kids, nice cars, vacation in exotic locations...

Middle class Americans will be screwed the most in the upcoming recession of the century. The true poor have nothing to lose, the rich won't lose anything substantial enough to impact their material life, the middle class has everything to lose.

Red Whine,

That's true. Also, the best private schools often aren't really that much better than the best public schools. Here in LA, for example, the top private schools, like Harvard Westlake, are quite good, but they really aren't that much better than, say, San Marino High School, the top public school.

In LA, there doesn't appear to be any real counterpart to the top east coast private schools, like Exeter, Andover, and St. Paul's. There is plenty of money here, and there are plenty of educated people, so you'd think that there would be some really first rate private schools, but there aren't, not really. The private schools here are good, don't get me wrong, but they're not as good as they could be

I don't know what the situation is like in San Francisco, but I suspect that it has more in common with the East Coast.

Interestingly, in some areas of the country, there are no private schools at all. For example, the kids in the wealthy suburbs of Chicago ALL go to public school. There is no tradition of sending the kids to private school, none whatsoever. The local public schools are excellent, and there is really no need for private schools.

At least here in LA, I tend to think that both the public and private schools are fairly mediocre. There is no good private school (Exeter) or truly first rate public magnet school (Boston Latin) here. There are plenty of places where kids can get a good education, but you'd think that there would be one or two really, really good schools, and the fact that there isn't strikes me as somewhat odd.

Astrid,

Well, at least here in LA, the rental situation is sort of hard to tie down. The absolute best public school district in LA County is the San Marino USD. San Marino is a super-wealthy LA suburb where a generic 1800 square foot SFH will run you $1.5mm. There are no apartment buildings in San Marino; nor are there any condominiums. If you want to rent there, you have to rent an SFH, and that'll run you around $4,000-$5,000 per month, if you are lucky enough to find a house for rent. So renting in San Marino isn't really an option; if you can afford to pay $5,000 per month in rent you can pretty much afford to buy. At least you can buy one of the low-end houses in San Marino.

Now, there are other public school districts that are almost as good as San Marino's where it is possible to rent an apartment. South Pasadena has a good public school district, and there are apartments there. The schools in Beverly Hills are quite good, and there are plenty of apartments there. Then there are school systems, like Santa Monica, which appear to be mediocre but are really excellent. Santa Monica has a a student body that is about 2/3 children of affulent professionals and 1/3 children of welfare ghetto parents. The ghetto kids drag the averages way down, but the professional kids do quite well.

The problem I have with the public schools in LA is that they really aren't as good as I personally think they should be. I mean, South Pasadena has a good school system. But it's not excellent, really and truly excellent. I could rent an apartment in South Pasadena, but I would rather just pay for private school. Of course, the private schools out here are no great shakes either, but at least they seem slightly less mediocre.

So it is possible to rent a place and send your kids to good public schools, at least if you are an upper middle class proefssional -- if you are a blue collar person it's much, much harder, because the rent in those neighborhoods, even though far less than the cost of ownership, may still be prohibitively expensive to you -- but it varies from area to area.

To give you an idea of numbers, I have seen crummy 2BR apartments in Beverly Hills for as little as $1,700/month. A 2BR in South Pasadena starts at around $1,300-$1,400/month.

Joe Schmoe,

In addition to Texas, you might want to consider DC. The pay there for lawyers is fairly good, and you're able to do fairly high level work. My parents rent a nice townhouse in one of the best school districts in Montgomery County, MD for $1550 a month. Non-whites are very mainstream, so your kids won't be alienated. Low crime rate and excellent schools, with a lot of magnet schools. There's lots of good ethnic food and the overall cost of living is still pretty low compared to NYC and West Coast.

Joe Schmoe,

I would like to get to understand how private schools are stacked against each other too. It seems to me that the common evaluation is by looking at their college placement data.

West coast private schools here tend to send more to Stanford and UCB than East Coast counterparts. I was looking at some data published by Harker, a decent private school here, and it seems that they send a respectable portion of graduates to good private schools, although at a slightly lower percentage than Andover, Exetor etc. but not material enough to justify the extra boarding fee. One may argue that you make far more powerful friends at Andover, but as someone mentioned before, if my kids end up being the poorest among their classmates from zillionaire families, that won't do any good to my kids' development either.

I am not too much into touchy-feely claims of "all-rounder" developments with more "music talents", "literature programs", I need some objective yardstick to measure these schools against each other. I find the private school system in this country equally disappointing, because the evaluation system is not very transparent. In Hong Kong where I came from, schools, private or public, are stacked against each other in all kinds of statistics possible, test scores in public exams (distribution of scores as well), music awards, sports awards, debate team championships, literature awards, etc. Parents are much better informed.

OO,

I would argue that the Asian system place way too much emphasis on getting into "the" school and often not enough emphasis on developing the kids as decent human beings. Maybe Hong Kong does a good job, but my cousins went through the PRC system and there is an incredible amount of cheating at top schools.

*unlurks*

Haven't got a handy photo of a Toronto $hitbox going for big bucks just yet but here's an article on the national newspaper admitting that things aren't so hot in the eastern half of Canada....

http://www.theglobeandmail.com/servlet/story/RTGAM.20060705.whousingg0705/BNStory/Business/home

"After a string of record years characterized by heated bidding wars and double-digit gains in prices, major markets such as Toronto, Ottawa and Montreal are taking a breather. Price increases are moving closer to the rate of inflation, multiple offers are less frequent and the number of homes for sale is increasing, industry sources say.

“Sure, the heat has come off,” said Don Lawby, president of Century 21 Canada. “It's a good market. It's not a spectacular market like it was.”

...yeah, 'cause now you buggers have to wait 30 or 60 days for a signed contract from day-of-listing rather than the 2 or 3 days it would normally take for an offer to show up (usually in a bidding war).

Of course, if those Hummer-driving soccer moms keep filling those gas tanks of theirs, there is one real estate market in the world that will continue to levitate....Calgary (and Edmonton) where lots of oil money has been sloshing around lately.

"West of Ontario it is a different story, with price increases in the hot Calgary market hitting levels never before seen in close to three decades of record keeping by the Canada Real Estate Association.

“What's been happening in Calgary in the last few months is mind-boggling,” said Gregory Klump, CREA's chief economist.

The average price of a two-storey home in Calgary is up more than 54 per cent in the first half of this year compared with a year earlier, figures released Wednesday by Royal LePage show."

.....sure glad I'm not shopping for a house in Calgary! Or even trying to rent a place, it's like the dot-com boom all over again!

*relurks*

*unlurks*

Ah, found my Toronto $hitbox. Well! Tsusiat DID say this became an International housing bubble thread!!

http://www.mls.ca/PropertyDetails.aspx?vd=&SearchURL=%3fMode%3d0%26Page%3d1%26vs%3d1%26rlt%3d%26cp%3d%26pt%3d1%252c57%252c99%26mp%3d100000-850000-0%26mrt%3d-1-0-0%26Beds%3d0-0%26Baths%3d0-0%26f%3d%26ft%3dall%26o%3dA%26of%3d1%26ps%3d50%26ptgid%3d1%26aid%3d3339%26MapURL%3d%253fAreaID%253d6367&Mode=0&PropertyID=4665989

Yeah yeah, I know it looks cheap by Kalifornica standards, but $379,000 is still a lot of money for a deep downstore core semi-detached on a busy aterial street. I haven't checked how far south on Parliament Street this place is, but south of College it gets very ratty very fast. $380's is the median price for a home in Toronto but I"d hardly consider this a median house! (never figured out the $380K median did, or did not include numerous Toronto high rise condos which would tend to drag down the median or average. 'Course, we have plenty of $400K two bedroom condos too).

And there used to be a fish and chip store in this house! The grease! The smell! Damn right they're selling "as-is"! The only benefit is that being in this place is that it is deep in the city core and you'd never notice gas prices since you'd never want to drive in downtown Toronto. (At least our public transit doesn't suck).

Love reading the threads but still catching up from the last week's worth. I didn't get to "Whack the Author". Would have liked to!

*relurks*

joe schmoe,

i heard of a 28 year old lawyer in DC who makes $500K a year doing corporate defence work or similar...

i don't know if he has to sell his soul, tho...

I will start a private school and give them true education. But please think twice before sending your daughters here if they are pretty. Boys are safe with me although I may corrupt them (oops, set them straight) with a refreshing and authentic look at this world.

Meritocracy in education necessitates cheating. Elite schools in the old days were finishing schools for the upper-class children.

Real education is outside schooling. Whoever places undue emphasis on schooling is a drone, a machine, a slave to the syste.

Do not let the society corrupt you.

I second Astrid's view that the true aim of education should be to teach the children proper values.

No, PARENTS teach kids values. Not schools. And it’s not what the parents SAY…it’s what they DO and DON’T DO.

Very true. The school is not important at all, so long as it is relatively free of bad elements. The simple and cheap way to fix schools is to expell the wrong students.

But please think twice before sending your daughters here if they are pretty. Boys are safe with me although I may corrupt them (oops, set them straight) with a refreshing and authentic look at this world.

Huh?

I second Astrid’s view that the true aim of education should be to teach the children proper values.

Value is a very difficult concept. What is the right moral system? Is there even one?

Let me ask you guys. What makes action A in context C moral or immoral?

How many top-notch hospitals are there in CA? Only three - UCLA, UCSF, and maybe Stanford.

What makes you think that top-notch hospitals are necessarily teaching hospitals? Do you really want to be treated by a student?

To me, culture is 98% food. I hate to say this but CA is winning by a margin. :) (True, Boston has better chowdah.)

Stanford is by no means a world class hospital, not even close. It is a teaching hospital, more often than not, you get an intern operating on you.

You don’t really get treated by students there. Clearly, you need to be treated by the right doctors even in the top places.

Make sure you get that point across. People DO get treated by interns.

Say you had a serious medical problem (cancer, heart, etc.). Where would you go in CA? Kaiser??? There are maybe a couple of places where I would go in this state, and no more than a dozen in the whole country. You may do ok in other places, but it’s riskier.

Just make sure you get operated at the right time in the right place.

There’s some good food in SF, but where else in CA? I’d take Manhattan any time for food…

The San Gabriel Valley has really good Chinese food. Much better than most restaurants in SF.

Manhattan does not have good Chinese food. Sushi is way overpriced. However, Italian food is excellent.

The Las Vegas Strip has the highest concentration of good food.

Wouldn't it be smarter to buy in a bad school district, save themselves a half million, and send their kids to the best private school in the country with their savings?

Wouldn’t it be smarter to buy in a bad school district, save themselves a half million, and send their kids to the best private school in the country with their savings?

Also, good school districts can be redistricted away. Houses in bad school districts do not have this potential downside.

When I was going to school in the 70's and 80's, public school was meant for the lower class people. I grew up middle class, so I went to private school. Are wealthy people today not affluent enough to send their kids to private school, or did they just lower their standard of living?

Mike,

The difference in price of comparable homes between Cupertino (considered to be a great school district) and say Santa Clara is not enough to sponsor private education for 2 kids for 12 years. Cupertino is insanely expensive, but if you add the costs of at least 20K per kid per year to houses in other areas, then Cupertino makes sense.

I rent in Cupertino. I throw away my money on rent in a nice apartment, to get the same education for my kids as those living in 1M+ crappy houses, with no liability, no loan, no angst. I am not even insy winsy tiny bit jealous of Cupertino home debtors. I thank them for paying horrendous amount of property tax to give my kids a good school district.

The irony is, which I had already mentioned, these same people - who are willing to be mortgage slaves for their kids primary education - may find it hard to pay for their kids' college tuition - UNLESS their homes keep appreciating.

I am willing to rent forever if the equations remain as is. And when my kids are ready to go to college, I will be out of Cupertino and peacefully move to a cheaper area.

To BA Or Not To BA ,

I'm not talking about renters who send their kids to a fairly good public school to get a fairly good public education for free. I'm talking about the people who can afford to pay 1/2 - 1 million+ for a home, but can't afford to send their kids to a world class school, like The George School, because their too poor. Just shows me their true status in society by sending their precious children to public school, even though they live in a Mc' Mansion.

Mike,

my wife grew up in the BA in the 80s, and the way I understand it is, the gap between the good school and bad school was not as huge as it is today. All schools were pretty much the same, some better than others (Palo Alto and Cupertino were always the blue-ribbon school districts in BA), but you could manage being stuck in East San Jose. Private schools were a lot cheaper back then, and since public school system was decent, there was no burning desire from parents to send kids to private schools, which also put a pricing pressure on these schools.

Recently private school tuition has been advancing at around 10% a year, no chump change for a 20K tuition to begin with. Since the overall quality of public school goes down so much, if you are not in a good school district, your only other option is a private school, which obviously creates more demand for private school, and hence comes the hefty tuition.

The problem with bad school districts is, they are usually located in bad areas. Do you want to live in East Palo Alto, Oakland or East San Jose? With the disappearing middle class in BA, we only have two districts, the safe districts, or the unsafe districts, and two classes, aka, the rich and the poor. There are increasing number of neighborhoods in BA that I will conider dangerous to live in. As people flee these dangerous neighborhoods, better neighborhoods tend to charge more in terms of housing price and rent.

It is just a symptom of a much bigger social problem this country is going through.

Actually Australia is sort of like what BA was in 70s and 80s. My cousin lives down under, and the notion of a "good school district" is very foreign to him. There are some better schools, but the quality is quite even so parents don't move around based on the schools, it is a non-issue.

Therefore, private school in Australia is extremely cheap (1/3 - 1/4 of our tuition) compared to us, for the same quality of output (I checked out their curriculum online and in general they are every bit as competitive as the private schools here). The Aussie government even offers rebate to parents who send their kids to private schools, but most Aussies, even the middle upper and upper class, choose to send kids through the public system since the difference in quality doesn't justify the extra out-of-pocket expense for private schools.

Therefore, private school tuition in itself is a manifestation of how effective the public school system is. A broken public school system is a breeding ground for outrageous private school tuition, and that is what we see today.

OO,

20k for tuition for family income of 200k is only 10%. My kids are worth it. I know what goes on in public schools. The masses and dregs of society peddle their influence. That is not the environment I want my kids to grow up in.

Our public school system has the lowest achievement standards compared with the rest of the industrialized world. This is why private is better, along with becoming a product of your environment.

Mike,

If 200K is pre-tax, then the take-home post-tax post 401K net income is roughly 120K. With 2 kids, private school expenses are 40K per year. Which 30% of the actual income. Very rough calculations. Add mortgage of 40K (post tax benifits) to it. That is 80K of 120K. A couple will be financially stretched at that level.

Renting at 25K (vs the 80K above) in a good school district is hence a no-brainer.

Well, it should never have come to this. For our kids sake.

Previous comment for To BA Or Not To BA .

LILLL,

When I went to school, half of us kids went to the same private schools. Hung out together and had lots of activities together. We didn't bring home the swear words as our first language, and disrespect that the children from public school bring home today. I don't mind hard language from time to time, in order to get a point across, but not loosely out of a child's mouth, who learns no respect.

The western analogues are “intellectuals” [...]. They disdain money, usually because they don’t have very much, and instead they rate themselves based upon publications, degrees, notoriety and reputation among one’s peers, etc. They too miss the big picture.

Those tend to be pseudo intellectuals. The real ones do not care too much about publications and degrees. They do, however, care about their reputations amongst a very select group of people.

You also have to understand that modern academia is a business, not an intellectual haven. Professors are generally speaking better compensated than most middle-class folks and do not perform supervised work. Many IBs who pull in a million bucks a year are supervised in some way. The professors enjoy certain prestige, which means a lot to a lot of people.

Not that I want to be one of them. Having spent a good chunk of my youth there, I have great disdain for the academia.

You can always send your kids away to a different country with higher education standards. Australia seems to be a good place. They speak English.