patrick.net

Homeboy says

Do you have an intelligent explanation for why a 3/1 interest only ARM is a
better choice than a 30-year fixed rate right now?

As soon as you give an intelligent explanation for your belief that rising rates will make your homes value increase, and don't just link somebody elses chart.....

Homeboy says

You must be looking at a different chart. Now I know why your mom kept saying
you were "special".

I see your fathers sodomy went straight to your head. LOL.

yup1 says

I see your fathers sodomy went straight to your head.

Thanks for the chuckle.

robertoaribas says

well, in fairness, the spike of interest rates in the 80's, together with a recession in the defense contractor industry did toss a pretty big housing price drop at southern California.

It probably was the recession that did it. Home prices didn't fall until 1990, years after interest rates had already come down.

SFace says

To me 30 year fixed rate is expensive insurance which may benefit some people and useless for others.

Explain how a 30 year fixed is "expensive insurance"? If you have an ARM with an introductory interest-only teaser rate, when the payment resets, you have to start paying down the ENTIRE principal of the loan. That's MUCH more expensive than a fixed rate loan.

Maybe, I have to question a Wellsfargo banker that recently pre-approved a non-conforming loan for 3.72% 30-year fixed ...

SFace says

Everyone who borrows above 625K are on floating rate (5 year fixed perhaps). I repeat, no one uses a fixed rate mortgage so need to talk about a 30 year mortgage in silicon Valley. It doesn't exist.

The type of loan Porky described is the norm. (80%)

My wife and I just got pre-approved for a $625k 30yr fixed 3.75% loan (w/ $1600 origination fee) by WF (so, purchase price of up to $800k based on how much of our cash we are willing to use). No documentation submitted whatsoever, although the fact that we have hundreds of thousands of dollars in cash at WF probably registered in their system somewhere. We didn't provide any account # or statements, but I assume that they could use our SSN to see that. Anyway, all we gave was SSNs for a credit check (and we are both flawless there) and stated income. We could have been approved for up to an $800k loan at 3.875%, but we wanted to avoid the jumbo complications, and we don't want to spend that much anyway.

I spent a fair amount of time talking to the WF rep about the state of things and asked about what he sees going on in the SFBA. He said that 80-90% of WF mortgage activity in the SFBA is refi's by existing homeowners trying to lock in low rates, and HELOCs by existing owners to try to buy investment properties and boats/cars/shit. The remaining 10-20% is first time buyers, many of which are trying to buy sub-$600k properties. My wife and I are apparently exceedingly rare animals around here in that we make good money and live conservatively (per Mr. WF). His take on the economy is that the entire thing is a giant hollow shell with little more than speculative asset bubbles keeping things afloat, and that the SFBA is a fairly lousy place for anyone trying to live a peaceful middle class life: it's a neurotic mix of workaholics and desperate foreign money laundering that is, and will probably continue, driving the cost of living into the stratosphere. His candid advice to me was, IF we buy a house here soon, to be prepared to unload it before the end of 2015 and either sit tight or leave thereafter. That was, of course, "NOT" investing advice lol. And of course, it is all taken with a grain of salt. Nobody really knows the future, but his commentary seemed to be in reasonable alignment with current reality.

I am seriously thinking of moving out and this time for good. My last stint in the midwest I shared a two bedroom with a room mate and my share including all utilities/cable/internet never went over $ 480 a month . Here-dear lord. My colleague in Houston was paying $705 a month for a 2 br apt with pool and gated and they raised the rent by 5 bucks a month and he was complaining.

The midwest is too extreme in weather, but Texas is looking extremely attractive. A 200-300k house in a very nice neigbourhood or low rents and it gives you a lot of cushion in assets and money and you can take a nice vacation to other places.

Check out Seattle. I spent the entire month of March up there for work, and have been up there ~40 times in the last 14 months for work. It is better than the SFBA in more ways than it is worse. The people there are so much better, cost of living is less, it has VASTLY more beautiful scenery (when the weather is good, which is actually fairly often outside of Nov-Feb) and there are plenty of good jobs. Yeah, winter time sort of sucks and people up there drive slow as hell, but the quality of life for a middle class family is genuinely higher there, period.

My wife and I are going to make some offers on the few properties here that seem to be worthwhile, and if/when we are outbid we are packing up and leaving for Seattle. My employer will let me keep my CA salary (14% higher than WA employees due to cost of living) and I bet I can work something in about them finding a position for my wife. We'll rent there for a couple of years and see how things play out. If we do settle up there, it'll be because we love it. If we want to come back, we'll be sitting on an enormous pile of cash since we were making "CA money" and renting for a hell of a lot less than we currently do here.

EDIT: I keep hitting the damn "Dislike" link instead of "Edit" lol. Patrick, can you move the Dislike link away from the Edit link?

Florida looks good to me as well. Plus I love to scuba dive and the Caribbean is close by for weekend trips. California is ok but still far away from Hawaii and nice beaches far south in Mexico.

SFace says

If your goal is to minimize interest expense, you pay off the principal a lot faster @2.75% than 3.75%.

It's more like 3.25%. And it's a teaser rate. It doesn't stay there for the life of the loan. The only "trade off" is that you only have to pay the interest for the introductory period, whereas with a fixed-rate loan you DO have to pay the principal right away, but get a better deal overall.

upisdown says

yup1 says

I see your fathers sodomy went straight to your head.

Thanks for the chuckle.

Anytime ;)

bmwman91 says

No documentation submitted whatsoever, although the fact that we have hundreds of thousands of dollars in cash at WF probably registered in their system somewhere.

I'm curious as to why you have this much in cash parked at Wells Fargo?

bmwman91 says

Check out Seattle.

Also remember no state income tax in Washington, so your California salary is boosted even further.

I'm pretty much in the same boat (although I'm single) in that I could afford to buy a $900k - $1M place in the SFBA, but emulating my co-workers who pay $1800/month in property taxes doesn't really appeal to me. You have to wonder whether even high wage earners will have to leave the area in retirement due to the high tax burdens - - - of course excluding Baby Boomers whose 1970's property tax bills are subsidized by new Gen-X and Gen-Y buyers.

I would definitely make a move to Seattle if somebody offered me a job there at close to my current pay.

yup1 says

upisdown says

yup1 says

I see your fathers sodomy went straight to your head.

Thanks for the chuckle.

Anytime ;)

Still talking to yourself?

ducsingle5313 says

I'm pretty much in the same boat (although I'm single) in that I could afford to buy a $900k - $1M place in the SFBA, but emulating my co-workers who pay $1800/month in property taxes doesn't really appeal to me.

Your property tax on a 900-1M property would probably be more like ~1000/month.

Buster says

Your property tax on a 900-1M property would probably be more like ~1000/month.

True, but my co-workers have dual income and bought more expensive places. $1000/month in property taxes is still pretty nutty, especially when your neighbors with identical houses who bought in the early 70's are only paying $100/month.

bmwman91 says

Check out Seattle.

BTW, the home prices have started going up in Seattle as well. Bidding wars are back on the eastside.

Seattle vs. San Francisco
Comparing Living in Seattle/Tacoma and the San Francisco Bay Area

http://seattle.about.com/od/familylifestyles/a/Seattle-Vs-San-Francisco.htm

Homeboy says

Still talking to yourself?

Still getting skull fucked by your father?

ducsingle5313 says

bmwman91 says

No documentation submitted whatsoever, although the fact that we have hundreds of thousands of dollars in cash at WF probably registered in their system somewhere.

I'm curious as to why you have this much in cash parked at Wells Fargo?

Various reasons, many of which are my wife's personal ones. I keep mine at ING where I at least get a 0.75% APR. I have been working on convincing her that there are better places for it, but at the end of the day we don't really care. Actually living life and having zero financial worries takes precedence over constantly "managing our money." Yeah inflation nibbles away at it, but there are worse problems to have, like not having the money in the first place.

I moved to Seattle from SF. After 2 years I moved back. Don't underestimate how depressing the cloudy weather gets.

Tim Aurora says

Come to Atlanta, one of the most affordable cities in the world, along with Dallas

my former employer did just that, they shipped part of companies operations out to Georgia. others moved to Austin, Nebraska and other states.

http://www.pressheretv.com/ep-137-advice-for-zuckerberg/

Scott McNealy says "get out of California"

Tim Aurora says

Come to Atlanta, one of the most affordable cities in the world, along with
Dallas

Hmmm California or Hotlanta? Might as go rent one of Robertos slums in the frying pan that is Phoenix ;)

robertoaribas says

Also, not sure you'd pass my background check.

Well I guess you wouldn't pass it either because I make way more than a junior college teacher........

yup1 says

Well I guess you wouldn't pass it either because I make way more than a junior college teacher........

I know your mom used to make a lot as a hooker, but her tits are pretty saggy now. Being able to take out her teeth is an advantage, though.

Homeboy says

I know your mom used to make a lot as a hooker, but her tits are pretty saggy
now. Being able to take out her teeth is an advantage, though.

I see your dad skull fucked your brains out.

yup1 says

I see your dad skull fucked your brains out

Duh, thanks for the laugh.

Signed,

yup1's sock puppet

Homeboy says

Duh, thanks for the laugh.

Signed,

yup1's sock puppet

Dude your dad will be coming down to the basement soon, open wide!

That's some funny shit. You should do stand-up.

wave9x says

I moved to Seattle from SF. After 2 years I moved back. Don't underestimate how depressing the cloudy weather gets.

Ten years in the NW, most in eastern Washington state, then the last four in Portland. The only chance of me living there again is a Summer home. I just don't deal well with not seeing the sun at least every week. Preferably daily.

wave9x says

I moved to Seattle from SF. After 2 years I moved back. Don't underestimate how depressing the cloudy weather gets.

Cloudy weather doesn't bother me. Wikipedia says the Seattle metro population is about 3.5 million, so others must feel the same way.

bmwman91 says

His candid advice to me was, IF we buy a house here soon, to be prepared to
unload it before the end of 2015 and either sit tight or leave thereafter. That
was, of course, "NOT" investing advice lol. And of course, it is all taken with
a grain of salt. Nobody really knows the future, but his commentary seemed to be
in reasonable alignment with current reality.

LOL!

Tell him not to give that advice to anybody else. We don't need everybody unloading the properties at the same time in 2015.

We bought in the BA last year after having stayed out of the bubble from 2003-2006,7, and I suppose that must have been the 'good' time to do it. Interesting how the conversation of simply moving away from here has come up again as the apparent bubble seems to be rearing its ugly head already.

My 2 cents. The idea of moving to Seattle/Portland/Austin/Raleigh/Atlanta or some other typical relo-city isn't exactly a new idea. For years all throughout the last boom we toyed with that very idea, visited many of those aforementioned places, and scoped out the job situation and so on.

My take was that the 'smart' people did exactly that in the 90's. Back then you could buy a nice house in Austin for well under 100k, and in some cases as little as 50k. Back then there was a HUGE delta in prices between Cali and other places. In the time since then scads and scads of Californians and East Coasters from states like NJ, NY, MA, and then a lot of the Midwestern states have moved to those places either because its too cold, too expensive, or whatever. Moving away from whatever overpriced, overly nasty weather hell-hole seems to be the latest cool thing to do and a LOT of people have and are doing it.

The big shocker for me at least in my experiences was that even though a lot of those cities seemed to clamor for the title as some young hip city with TONS of tech jobs or whatever, in reality I found there to be a teeny fraction of any kind of even remotely similar job in my field and what's more, since all those smart Californians were all deciding to move there, the competition for jobs was intense. I seriously recall applying for a job that paid maybe $35,000 a year, was willing to accept that just to get my foot in the door, and still not getting it despite being grossly overqualified for it.

Lastly, I'd recommend at least doing some serious travel to those places first. I think its easy to sometimes forget some of the things that the Bay Area has which other places lack. Good example: we went to Austin which is supposed to be the coolest city since sliced bread. Guess what? There's a whole lotta' nuttin, the downtown was sort of small, and the rest was made up of cookie cutter subdivisions with most of the nicer older areas near the city already being hopelessly overpriced with some houses just as much as the same in the Bay Area. I'm not saying there's anything wrong with those cities. I'd probably have been perfectly happy in any of them. But if you do go, put anything and everything you know about the Bay Area behind because those other cities aren't going to be close even of some claim they're " Just like the Bay Area".

In the end we stayed here.

Make sure to spend a week in winter in the new area. If you grew up in LA like I did you really don't know what the winter really means. Living daily in cold is different than a ski trip which is fun and games. It feels like a prison where they dont let you outside, you never see the sun for weeks on end. Once you are ready to kill yourself there will be one nice day which reminds you of california and you will wish you had not moved.

At this is how I felt moving to Austin TX.
I think some people are couch potato family homebodies and they dont care so much as they are not active jogging, hiking, etc.

edvard2 says

I seriously recall applying for a job that paid maybe $35,000 a year, was willing to accept that just to get my foot in the door, and still not getting it despite being grossly overqualified for it

This is not a good example. It wouldn't be in the best interest of the company to hire someone who is overqualified for a given position. You won't be happy and you won't stay very long. It's a complete waste of time for them.

edvard2 says

Good example: we went to Austin which is supposed to be the coolest city since sliced bread. Guess what? There's a whole lotta' nuttin, the downtown was sort of small, and the rest was made up of cookie cutter subdivisions with most of the nicer older areas near the city already being hopelessly overpriced with some houses just as much as the same in the Bay Area.

Are you trying to say that comparable houses in the highest priced parts of Austin and the highest priced parts of the Bay Area (Palo Alto, Atherton, Los Altos, etc.) are the same price? Or are you saying that houses in the highest priced parts of Austin cost as much as an average house in San Jose? There's a big difference between the two.

My company has engineering groups in both the SFBA and Austin. The pay differential is about 12-13% between the two locales.

I still like San Diego a lot better than the RBA and it is cheaper place to live. Only if more jobs were there or had chance to work remote to move back in a heartbeat.

ducsingle5313 says

Are you trying to say that comparable houses in the highest priced parts of Austin and the highest priced parts of the Bay Area (Palo Alto, Atherton, Los Altos, etc.) are the same price? Or are you saying that houses in the highest priced parts of Austin cost as much as an average house in San Jose? There's a big difference between the two.

Let me clarify a bit. I think there is a sort of misconception about Austin by many in California that its going to be drastically cheaper than the Bay Area. To be certain, in dollar terms, it is to an extent.

But from my experience of spending not only a lot of time there but also looking for a job there as well ( granted this was around 3 years ago) was that at least as far as I could tell, any of the places I'd personally want to live- aka- areas that weren't some suburban sprawl hell in some new-ish subdivision surrounded by strip malls in some suburb like Round Rock or whatever were actually pretty pricey. As in if you wanted to live in say- the Circle C area, or one of the older neighborhoods within the city up on the surrounding hills, then you could expect to pay anywhere from 400k-600k for a house, and a smaller one at that.

Now... perhaps many Californians would say: " Gee wizz! 400k! is that all?" Well not so fast. Unlike California, TX has not only high real estate taxes, but progressive ones at that and additionally, if your area has more amenities like schools, libraries, and whatnot, your taxes could be higher. So the tax rates were usually pushing 3% in some of the nicer areas.

Translation: a 400k house would have a $12,000 annual tax bill. That $400k house suddenly becomes very expensive indeed.

On top of that, the taxes are re-accessed and if your house goes up in value... so too do your taxes.

But the single biggest problem I had with Austin was that the jobs simply weren't there. Sure- its a 'major' tech city. But there was a BIG difference between my job search in the Bay Area where every other day yielded dozens and dozens of positions versus Austin where in my field there were maybe a handful and of those, there was a LOT of competition. One recruiter told me that every position she dealt with had at least 100 responses within the first day alone.

I looked in Raleigh, Atlanta, and a few other cities that seem to come up routinely as this new area for tech and when it came time to search for jobs there were a surprisingly small number and for the most part fairly low entry level type stuff anyway.

That was 3 years ago. Whether things have changed I don't know. But as for now it seems that the tech biz in the BA is fairly strong and there's a lot of demand for talent, which probably explains some of the bubbly in the housing market as we speak.

edvard2 says

Translation: a 400k house would have a $12,000 annual tax bill. That $400k house suddenly becomes very expensive indeed.

But it sounds like that $400k Austin house (smaller house, highly desirable neighborhood) would correlate to a $1M+ house in the SFBA. So in terms of property taxes, maybe a wash. Plus there are much cheaper alternatives in the Austin 'burbs, whereas $400k in the SFBA gets you a 3BR/1BA in East San Jose with Nortenos neighbors.

edvard2 says

But the single biggest problem I had with Austin was that the jobs simply weren't there.

That's pretty much a deal breaker. One of the reasons I'm considering leaving the SFBA is because the job growth in my field is transitioning to other (cheaper) locales. I have confirmed this with recruiters who have been watching this trend for the past few years.