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San Francisco Bay Area Rent/Buy Ratios

By Patrick   2010 Mar 22, 8:09am   6 links   41,912 views   144 comments   watch (2)   quote      

San Francisco Bay Area rent/buy ratios from the housing calcualtor at patrick.net show that housing is still greatly overpriced in most zip codes.

The following average rent vs buy ratios were calculated by considering 97,537 rents and 58,171 asking prices throughout the Bay Area from January to March 2010, comparing properties with the same number of bedrooms and same single-family vs multi-family status. The results generally show that more expensive neighborhoods remain very overpriced, since annual rents are running at 2% or 3% of asking prices for the same size and type of house in the same location. Such low rents are not much more than property tax and maintenance. This means that in wealthy neighborhoods, the use of more than a million dollars in housing capital can be had essentially for free by renters.

Conversely, cheaper Bay Area neighborhoods now show some real bargains for sale, with annual rents running at 9% or 10% of the purchase price. Landlords are buying these places because they are clearly profitable as rentals as long as rents hold up.

A few zip codes such as Menlo Park are split, having both a poorer area and a richer area with very different rent/buy ratios. The average in this case masks large local differences. Zip codes with fewer than 10 rentals for each housing size category were ignored.

The hightest ratio was 14.8%, in Vallejo, making this area the most promising for new house buyers and for landlords. The lowest ratio was 2.1%, in the Berkeley hills neighborhood with zip code 94705, making this real estate the worst deal for buyers in the Bay Area, on average.

City Zip Ratio
Alameda 94501 3.5%
Alamo 94507 3.8%
Albany 94706 4.6%
Antioch 94509 11.6%
Antioch 94531 9.1%
Aptos 95003 3.9%
Belmont 94002 4.0%
Belvedere Tiburon 94920 2.8%
Benicia 94510 4.7%
Berkeley 94702 5.2%
Berkeley 94705 2.1%
Berkeley 94709 4.4%
Berkeley 94710 4.2%
Boulder Creek 95006 5.4%
Brentwood 94513 4.9%
Brisbane 94005 4.3%
Burlingame 94010 3.3%
Campbell 95008 3.5%
Capitola 95010 2.7%
Castro Valley 94546 5.1%
Castro Valley 94552 4.1%
Cloverdale 95425 5.1%
Concord 94518 6.7%
Concord 94519 5.9%
Concord 94520 9.1%
Concord 94521 7.2%
Cupertino 95014 2.9%
Daly City 94014 5.1%
Daly City 94015 5.4%
Danville 94506 3.4%
Danville 94526 3.1%
Dublin 94568 5.4%
El Cerrito 94530 4.0%
El Sobrante 94803 5.9%
Emeryville 94608 5.3%
Fairfax 94930 2.8%
Fairfield 94533 7.8%
Fairfield 94534 4.4%
Fremont 94536 4.5%
Fremont 94538 4.7%
Fremont 94539 3.2%
Fremont 94555 3.9%
Gilroy 95020 3.8%
Greenbrae 94904 5.9%
Half Moon Bay 94019 4.1%
Hayward 94541 6.5%
Hayward 94542 4.4%
Hayward 94544 7.2%
Hayward 94545 5.3%
Healdsburg 95448 3.0%
Hercules 94547 6.2%
Hollister 95023 8.5%
Lafayette 94549 3.5%
Livermore 94550 6.2%
Livermore 94551 4.7%
Los Altos 94022 2.7%
Los Altos 94024 2.7%
Los Gatos 95030 2.4%
Los Gatos 95032 3.4%
Martinez 94553 5.9%
Menlo Park 94025 5.3%
Mill Valley 94941 3.4%
Millbrae 94030 3.2%
Milpitas 95035 4.8%
Morgan Hill 95037 3.7%
Mountain House 95391 5.9%
Mountain View 94040 3.5%
Mountain View 94043 4.7%
Napa 94558 3.6%
Napa 94559 4.6%
Newark 94560 5.3%
Novato 94945 3.1%
Novato 94947 6.0%
Novato 94949 3.6%
Oakland 94601 10.1%
Oakland 94602 4.8%
Oakland 94603 10.6%
Oakland 94605 6.7%
Oakland 94606 6.4%
Oakland 94607 5.2%
Oakland 94609 7.1%
Oakland 94610 5.7%
Oakland 94611 4.8%
Oakland 94612 4.0%
Oakland 94618 3.2%
Oakland 94619 5.9%
Oakland 94621 13.8%
Oakley 94561 7.9%
Pacifica 94044 4.7%
Palo Alto 94301 2.9%
Palo Alto 94303 3.6%
Palo Alto 94306 2.7%
Petaluma 94952 2.2%
Petaluma 94954 3.6%
Pinole 94564 4.0%
Pittsburg 94565 7.4%
Pleasant Hill 94523 5.4%
Pleasanton 94566 4.5%
Pleasanton 94588 5.0%
Redwood City 94061 3.5%
Redwood City 94062 2.7%
Redwood City 94063 6.4%
Redwood City 94065 3.9%
Richmond 94801 12.9%
Richmond 94804 8.4%
Richmond 94805 10.4%
Rodeo 94572 6.6%
Rohnert Park 94928 6.1%
San Anselmo 94960 3.7%
San Bruno 94066 5.0%
San Carlos 94070 3.3%
San Francisco 94102 5.4%
San Francisco 94103 4.4%
San Francisco 94105 6.1%
San Francisco 94107 4.4%
San Francisco 94109 4.5%
San Francisco 94110 3.9%
San Francisco 94112 4.0%
San Francisco 94114 4.2%
San Francisco 94115 4.1%
San Francisco 94116 3.7%
San Francisco 94117 3.9%
San Francisco 94118 3.7%
San Francisco 94121 3.2%
San Francisco 94122 3.6%
San Francisco 94123 3.7%
San Francisco 94124 5.5%
San Francisco 94127 3.1%
San Francisco 94131 4.0%
San Francisco 94133 4.2%
San Francisco 94134 4.5%
San Jose 95110 4.9%
San Jose 95111 9.6%
San Jose 95112 5.2%
San Jose 95116 6.5%
San Jose 95117 3.7%
San Jose 95118 6.5%
San Jose 95121 6.3%
San Jose 95122 6.5%
San Jose 95123 5.8%
San Jose 95124 3.8%
San Jose 95125 3.9%
San Jose 95126 4.0%
San Jose 95127 4.7%
San Jose 95128 4.5%
San Jose 95129 3.3%
San Jose 95130 4.1%
San Jose 95131 4.3%
San Jose 95132 4.6%
San Jose 95134 10.4%
San Jose 95135 4.0%
San Jose 95136 5.2%
San Jose 95138 5.9%
San Jose 95148 4.3%
San Leandro 94577 5.9%
San Leandro 94578 6.8%
San Leandro 94579 5.6%
San Lorenzo 94580 7.1%
San Mateo 94401 4.3%
San Mateo 94402 3.3%
San Mateo 94403 4.1%
San Mateo 94404 4.4%
San Pablo 94806 8.8%
San Rafael 94901 4.0%
San Rafael 94903 4.7%
San Ramon 94583 4.5%
Santa Clara 95050 4.5%
Santa Clara 95051 4.6%
Santa Clara 95054 3.2%
Santa Cruz 95060 3.6%
Santa Cruz 95062 3.1%
Santa Rosa 95401 8.0%
Santa Rosa 95403 4.4%
Santa Rosa 95404 3.1%
Santa Rosa 95405 4.2%
Santa Rosa 95407 6.5%
Santa Rosa 95409 7.6%
Saratoga 95070 2.1%
Sausalito 94965 3.5%
Sebastopol 95472 3.3%
Sonoma 95476 3.1%
South San Francisco 94080 5.1%
Suisun City 94585 8.1%
Sunnyvale 94085 4.4%
Sunnyvale 94086 3.9%
Sunnyvale 94087 3.3%
Sunnyvale 94089 9.1%
Tracy 95376 8.5%
Tracy 95377 7.5%
Union City 94587 6.0%
Vacaville 95687 9.7%
Vacaville 95688 4.5%
Vallejo 94589 14.8%
Vallejo 94590 11.0%
Vallejo 94591 7.5%
Walnut Creek 94595 4.5%
Walnut Creek 94596 5.4%
Walnut Creek 94598 4.7%
Watsonville 95076 3.7%
Windsor 95492 5.4%

Permission is granted to the public to copy this article verbatim.

#housing

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105   thomas.wong1986     2011 Mar 31, 8:07am  ↑ like   ↓ dislike   quote    

SanMateoRenter says

Nailed it - Pleasanton. Can commute to Silicon Valley from there. You know, I can drive a little more to save some $90k/year in mortgage/tax expenses!!

You may find your employer also moving to Pleasanton. It does happen.

Patelco moves HQ to Pleasanton
Clorox to move hundreds of workers to Pleasanton
Software firm Callidus moves from San Jose to Pleasanton
Aggressor Moves Headquarters to Pleasanton, CA
Concord's Xradia is just the latest company planning to make the move to Pleasanton
SynchroNet Marine, Inc. Moves Corporate Headquarters to Pleasanton
Alloptic Completes $3.7 Million First Round and Moves to Pleasanton
Ross Stores to Move Corporate Headquarters to Pleasanton
Law Offices of Leon Mezzetti Moves to New Office Space in San Jose and Pleasanton

106   leo707     2011 Mar 31, 8:25am  ↑ like   ↓ dislike   quote    

SF ace says

1% of 100,000 is not the same as 1% of 1M, especially when the roof area is the same, one kitchen 2-3 bathrooms. There’s more to maintain in a Sacramento mansion than a Palo Alto SFH.

True, true I stand corrected, but I still don't think that the maintenance is an insignificant cost. Especially when it occasionally can hit you with large one time bills.

107   Rented through the downturn     2011 Mar 31, 8:54am  ↑ like   ↓ dislike   quote    

thomas.wong1986 says

You may find your employer also moving to Pleasanton. It does happen.

Funny you should mention that... I'm expecting it too, and will probably work in the area for my next job. Employers are starting to realize that they get access to the same Bay Area quality of employee at a better cost out there. Cheaper land/office expenses and lower wages (since people out there are very likely to take a little less pay than the same job in Cupertino if they don't have to drive out there... all things equal, I would.

And then you have the impending flooding of the bay front... if just one of the two massive glaciers that are starting to break off into the ocean were to do so, they say sea levels could rise some 10-12 feet. That would take out a lot of the sea-level homes and business in the area. Check out this simulation: http://geology.com/sea-level-rise/san-francisco.shtml

The tri-valley area is at about 400-450 feet ASL. :-) That's where all the south bay companies will re-locate when their offices are under water.

108   leo707     2011 Mar 31, 9:01am  ↑ like   ↓ dislike   quote    

SanMateoRenter says

And then you have the impending flooding of the bay front… if just one of the two massive glaciers that are starting to break off into the ocean were to do so, they say sea levels could rise some 10-12 feet. That would take out a lot of the sea-level homes and business in the area. Check out this simulation: http://geology.com/sea-level-rise/san-francisco.shtml

The tri-valley area is at about 400-450 feet ASL. :-) That’s where all the south bay companies will re-locate when their offices are under water.

Nah, no worries, they will just build a massive lock at the Golden Gate to save all the land lost with sea level rise.

109   tatupu70     2011 Mar 31, 10:12am  ↑ like   ↓ dislike   quote    

uni6jon2 says

Unfortunately, buying a home with debt(mortgage) means that you’ll be, instead, paying that interest over time to someone else.
By saving your own money, there can be a time in your future where you’re the one loaning money to other people.

Sure--mortgagees pay interest to the bank. Just as renters pay rent to the homeowner.

Saving money is good whether you rent or own. Not sure where you are going with this--unless you are assuming that it is much cheaper to rent than own. If that is the case, then I agree, one should rent. I would never argue otherwise.

110   tatupu70     2011 Mar 31, 10:14am  ↑ like   ↓ dislike   quote    

leoj707 says

I can buy into what you are saying if your monthly outlay for buying and renting was the same, but if you are paying 2, or 3 times more (not unusual at the current house prices) for housing each month renting is a much better option.

Yep--no argument from me. I rented during the bubble years for that exact reason.

111   tatupu70     2011 Mar 31, 10:17am  ↑ like   ↓ dislike   quote    

leoj707 says

Correct me if I am wrong, but I think the rule of thumb is planning on an average of 1% a year to maintain a house.
You could get several years of nothing then *boom* $20K for a new roof.

That sounds a little high--but as others say, it depends on the value of your home. I just put on a new roof with 50 yr architectural shingles for $5K.. Maybe if you include insurance then it's closer to 1%.

112   BayArea   311/311 = 100% civil   2012 Apr 9, 7:20am  ↑ like (1)   ↓ dislike   quote    

Patrick, I'm wondering if you've had a chance to re calculate those ratios, say from Jan 1st, 2012 to March 31st, 2012?

It would be very interesting to put the two time columns next to eachother to see how things have changed in the past two years.

BayArea

113   BoomAndBustCycle   19/19 = 100% civil   2012 Apr 9, 7:52am  ↑ like   ↓ dislike   quote    

pkowen says

Oh for God sake. That 30 year timeline again. It just sounds desperate, really. I have yet to see a "bear" here ever advocate for renting "forever" or for 30 years.

Well most of the bears on this site claim we are in a bubble since early 90s.. or before. The most conservative bears say 1997 was the start of the bubble in SF/LA areas.

In that case, tatu, makes a VERY valid statement in comparing 30 year fixed mortgage to lifetime rent payments. If someone bought a house in 1997 they are 15 years into paying off their mortgage. They could have EASILY refinanced into a 15 year fixed or less at 3% interest rate by now also.

Anyone that bought between 1997-2002 is doing JUST FINE.. Their mortgage is halfway paid off or BETTER.. and they are set! Real estate was a fine investment for them...

Ask any of them if they wished they would have rented back in 1997-2002? They would all say no.. Sure, some probably wish they would have sold in 2005-2006 I'm sure!

In another 15 years... I think 2012-2017 could easily resemble the 1997-2002 years... (definitely not as DRAMATIC of a boom.. but i don't think either buyer will be regretting their purchase in the long run).

114   CrazyMan     2012 Apr 9, 8:12am  ↑ like   ↓ dislike   quote    

You realize your post reinforces the fact that the BA is still in a bubble right?

No, you probably don't.

Oh and 12-17 resemble 97-02? lol. This failing economy isn't going to support that in the slightest.

115   CrazyMan     2012 Apr 9, 8:44am  ↑ like   ↓ dislike   quote    

ugh, the same tired arguments.

116   1sfrenter     2012 Apr 9, 3:06pm  ↑ like   ↓ dislike   quote    

FunTime says

Rent can go up, but almost never has during the time I've rented apartments and houses in Portland, OR and San Francisco.

That's crazy talk. I've lived in SF for 25 years, rented the whole time, and lived in 6 different places.

My rent has gone up, significantly, every time I've moved.

117   1sfrenter     2012 Apr 9, 3:07pm  ↑ like   ↓ dislike   quote    

pkowen says

I have yet to see a "bear" here ever advocate for renting "forever" or for 30 years.

Some of us have been renting this long and we are getting old. And still renting. And kind of bitter about it, actually.

118   RentingForHalfTheCost     2012 Apr 9, 3:22pm  ↑ like (1)   ↓ dislike   quote    

SanMateoRenter says

Now I won't be living in the iwog world, and will still sneer at the 2.5% ratios in places like P.A., but I will have joined the owner side of the world... :-)

Traitor! ;) Good luck to you though. May the wind be on your sails. Hope the realtard just bent you over once and you don't have any permanent damage.

119   CrazyMan     2012 Apr 9, 4:38pm  ↑ like   ↓ dislike   quote    

orbitron says

You're right, housing is going to zero...

Yes that's exactly what I was saying.

Just stop posting.

120   delete this account     2012 Apr 9, 11:28pm  ↑ like   ↓ dislike   quote    

It should probably be noted that the assumptions that Patrick has baked in to the rent vs buy calculator are subject to considerable debate.

For instance, the default assumption is that house prices will decline 1% per year over the long term future. Note that this is not an inflation adjusted decline but rather an assumption that if you wait another year, you will be able to buy the same house for a price 1% less. Wait 10 years, and it will be 10% less.

Personally, I don't think that is realistic. Overall, I don't see any reason to believe that house prices should not mostly track an inflation index such as the CPI or PPI, which would mean that one might expect prices to go up (along with your salary) at 2-3% per year.

And I would argue that the same should be anticipated for rent inflation.

If you recalculate with these (reasonable, imho) assumptions then you end up with wildly different results.

121   RentingForHalfTheCost     2012 Apr 10, 12:31am  ↑ like   ↓ dislike   quote    

fizbin says

It should probably be noted that the assumptions that Patrick has baked in to the rent vs buy calculator are subject to considerable debate.

For instance, the default assumption is that house prices will decline 1% per year over the long term future. Note that this is not an inflation adjusted decline but rather an assumption that if you wait another year, you will be able to buy the same house for a price 1% less. Wait 10 years, and it will be 10% less.

Personally, I don't think that is realistic.

I think he is too conservative. I put in at least 2% depreciation each year. That would be a change from the 4-6% we have been experiencing. My rent cost right now is less than in 1997, so I don't see the rent inflation. If anything, my landlord is afraid I will be buying soon. The last thing he wants is try is increase my rent.

You can get different results with different assumptions, but you would then be fooling yourself. House prices in California have a downward momentum. There needs to be reasons for it to stay flat or start going upwards and there is not even one. Then there are many reasons to see it continue down.

122   RentingForHalfTheCost     2012 Apr 10, 12:35am  ↑ like   ↓ dislike   quote    

orbitron says

You're right, housing is going to zero...

Wow, great counter argument. So, you are saying BUY NOW because house prices cannot go to zero. Haven't heard that one before. It is great to see the Realtards senseless chants become obvious to all now. Most people used to believe them before.

I figured out when I was old enough to think that smoking was a bad idea for your health. It took a while for the smokers to believe it, but they finally did. I never believed the realtards stories and it is great to finally see the rest of the population recognize the wolf in sheep's clothing. Realtards are not good for your health.

123   RentingForHalfTheCost     2012 Apr 10, 12:41am  ↑ like   ↓ dislike   quote    

orbitron says

they are not building anymore SF homes

They are also not making anymore good paying jobs and the current ones are disappearing. There is actually less money out there than you think. And the people that have the money, the last thing they are doing is putting it into overpriced houses. Down we go. If you already have a house and are trying to pump it up, good for you. However, keep that job of yours cause things are going to get a lot worse in SF before they get better IMHO.

124   RentingForHalfTheCost     2012 Apr 10, 12:45am  ↑ like   ↓ dislike   quote    

1sfrenter says

pkowen says

I have yet to see a "bear" here ever advocate for renting "forever" or for 30 years.

Some of us have been renting this long and we are getting old. And still renting. And kind of bitter about it, actually.

Just like the support beams in the house you could have bought a long time ago. Consider yourself lucky you don't have to rebuild the place you are renting. I love it when I move around renting and go into a newer home. Instant upgrade. I drive by some of my previous rentals and can see the deterioration over time. Roofs, siding, property shifting, etc. They felt fine when I was there, but time does do a number on crappy building materials and practices.

125   RentingForHalfTheCost     2012 Apr 10, 1:28am  ↑ like   ↓ dislike   quote    

orbitron says

It is VERY hard to buy now because the banks have really clamped down. They check everything and question every movement of money. This means that the current prices are supported by only the most qualified borrowers (and investors/cash buyers). When things loosen up again (and they will, they always do) there will be more demand.

Things loosen up? So, you are recommending that we start the next wave of people getting houses that can't really afford them. Credit is not hard right now. What is hard is finding qualified people. You have it backwards. In my mind if you don't have 20% down already then you are not qualified. If you play anywhere away from that line then you are creating the demand, it doesn't already exist. We are paying the price now in terms of our economy. There is no loosening up, unless you want to continue to go further in the abyss. Pretty soon even China will not buy US notes and then what is your plan? Make all the banks become national landlords? That'll be nice. Here is the service fee structure

- $2 charge each time you open your front door
- $10 charge if you forget your wallet and have to return to the house
- $50 charge if you host a party but realize you are short on food
- $15 charge for parking your car inside the garage

etc. etc.

Screw the no more houses can be build argument. We already have more houses than we need. 22% of the people living in the existing houses have negative equity. They really don't even own them, they own the debt. If anything, we need to tear down some of these horrible houses. We either do it now, or the next quake will do it for us. Just like the housing correction, we let it right itself or if we drag it on with nonsense then it will right itself anyway and the suffering will be much worse. Yah, accountability and math sucks.

Also, historic p/e of 24 is in normal times when people behave normally. We have created an abnormal situation and kept pumping, pumping, pumping. Nothing is normal here. People making 250k/yr are foreclosing on their homes. Crazy stuff...

126   FunTime     2012 Apr 10, 3:27am  ↑ like   ↓ dislike   quote    

1sfrenter says

That's crazy talk. I've lived in SF for 25 years, rented the whole time, and lived in 6 different places.
My rent has gone up, significantly, every time I've moved.

I didn't write clearly. What I was trying to write was that it's been unusual for a landlord to raise my rent. Tiny amounts a couple fo times and thankfully I was living so far below my means and getting big raises to the extent I barely noticed.

I've also had significant rent increases when I move, but I've also had signficant space/amenity increases. For less than twice the cost of what my one-bedroom rented for at market rate after I moved, I'm now renting a three bedroom/1.5ba house with a yard, incredible neighbors, and in a neighborhood I love.

127   FunTime     2012 Apr 10, 3:36am  ↑ like   ↓ dislike   quote    

RentingForHalfTheCost says

There needs to be reasons for it to stay flat or start going upwards and there is not even one.

RentingForHalfTheCost says

We have created an abnormal situation and kept pumping, pumping, pumping.

This is also your one reason why the housing market could go up or stay flat. Markets are faith-based, so susceptible to all means of influence outside reason. A lot of lessons have been learned the last ten years, though, and it wil take time for people to forget them.

128   RentingForHalfTheCost     2012 Apr 10, 4:29am  ↑ like   ↓ dislike   quote    

FunTime says

RentingForHalfTheCost says

There needs to be reasons for it to stay flat or start going upwards and there is not even one.

RentingForHalfTheCost says

We have created an abnormal situation and kept pumping, pumping, pumping.

This is also your one reason why the housing market could go up or stay flat. Markets are faith-based, so susceptible to all means of influence outside reason. A lot of lessons have been learned the last ten years, though, and it wil take time for people to forget them.

To me that explains why we haven't sunk to 1996 pricing yet. The pumping has done nothing but slow down the decent. Just imagine what would have happened if the tax payers hadn't graciously thrown trillions at the unfortunate greedy victims. Just imagine. Oh, wait, we would have been saved by the Asian and Indian buyers. Right, forgot about that.

129   dublin hillz   14/14 = 100% civil   2012 Apr 10, 4:42am  ↑ like   ↓ dislike   quote    

I would believe that housing would continue to plunge if the rents plunged as well. However, that did not happen in bay area. The luxury apartment market has surged by 25%-30% in the last 2 years, so there's definitely money here in this area. If the buy/rent ratios become more reasonable, it will be because of landlords jacking up rents as opposed to house valuing collapsing.

130   delete this account     2012 Apr 10, 5:06am  ↑ like   ↓ dislike   quote    

RentingForHalfTheCost says

I think he is too conservative. I put in at least 2% depreciation each year. That would be a change from the 4-6% we have been experiencing.

Maybe. I'm just not convinced that if I wait another 10 years that a potential house in my locale (Menlo Park) is going to be 20% cheaper, but it would certainly make me happy to see prices slack off this year. Over the past nine years, I've seen 3% raises in my personal salary (except 2009 which was flat). So if we wait a decade overall under a 2% depreciation scheme, MP will be twice as affordable to me, which would be nice.

But I worry that it will also be twice as affordable to all of the other folks that are out shopping right now. When I was looking in 2009, a huge majority of the closings were at prices that were below their 2006-7 price (for those same home sales). The same was true in 2010. Last year, not so many. Right now comparing same home sales in my price range (900K-1.2M) only 3 houses have sold in the last 6 months for less than their 2008 price and many have sold for over 2008. Overall, if the house last sold in 2004-5, the most common result is that it has resold now for $50K over what it sold then.

Maybe I'm just in the new bubble. OTOH, interest rates have strongly favored me, and I'd love to lock in at current rates for 30 years.

131   dublin hillz   14/14 = 100% civil   2012 Apr 10, 5:47am  ↑ like   ↓ dislike   quote    

orbitron says

Let me ask you this: What do you expect a 700K house in Santa Clara today to cost 10 years from now? What exactly are you betting on? I'll be making 34% more (or more) in nominal-dollar salary 10 years from now and so will most other people. What do you think that will do to house prices and rents?

Exactly - renters face the most "inflation risk" and that risk cannot be avoided unlike say healthcare and university education where people have options to a certain extent in regards to health management and education financing.

132   FunTime     2012 Apr 10, 5:51am  ↑ like   ↓ dislike   quote    

RentingForHalfTheCost says

To me that explains why we haven't sunk to 1996 pricing yet.

Ahh, I see, so that upward pressure is only countering the downward to the point that we're here instead of 1996-like prices. Makes sense. I honestly don't think much about that because what matters to me is affordability, which is only based on my income. I can see it being helpful, though, to be able to say, "This is as low or close to as low as prices can reasonably go."
Although, if prices got in line with income, that would be really bad news for a big number of people. The big number is a smaller percentage of the whole population in SF than other places, since the split of renters/owners is more fifty/fifty according to some census data I looked at yesterday(which I could have horribly misinterpreted because I took very little time to mine through tons of data)

http://www.bayareacensus.ca.gov/bayarea.htm

133   RentingForHalfTheCost     2012 Apr 10, 6:06am  ↑ like   ↓ dislike   quote    

orbitron says

There is no theoretical limit to how much the Fed/banks can buy.

If you believe that then I can't help. There are limits and we are at one now. The fed has already stepped over many of their limits and they know it. Now it becomes a bluffing game. Hopefully, no one asks American to show their hand.

"Um, I have 10 high, what do you have? I do have 3 suited though and eights are wild right? "

:)

134   RentingForHalfTheCost     2012 Apr 10, 6:09am  ↑ like   ↓ dislike   quote    

dublin hillz says

orbitron says

Let me ask you this: What do you expect a 700K house in Santa Clara today to cost 10 years from now? What exactly are you betting on? I'll be making 34% more (or more) in nominal-dollar salary 10 years from now and so will most other people. What do you think that will do to house prices and rents?

Exactly - renters face the most "inflation risk" and that risk cannot be avoided unlike say healthcare and university education where people have options to a certain extent in regards to health management and education financing.

The one thing renters have in the case of the big bad inflation risk is they can always downsize. Owners have no recourse against house depreciation except stay put and stop thinking about the equity drain. You pick a side and you takes your chances. Owners have been winning for the last 15 years and now that high pitch sound you hear around here is the owners whining, not winning. Time for you lumps.

135   RentingForHalfTheCost     2012 Apr 10, 6:20am  ↑ like   ↓ dislike   quote    

orbitron says

Let me ask you this: What do you expect a 700K house in Santa Clara today to cost 10 years from now? What exactly are you betting on? I'll be making 34% more (or more) in nominal-dollar salary 10 years from now and so will most other people. What do you think that will do to house prices and rents?

400-500K would not be surprising. Your a bit overly optimistic in your job security. I've been through a few downturns in high tech, and when they happen forget about job security. I have never been on the cutting side, but have seen some of the smartest engineers I knew struggling. It happens and it will happen again. Today's high tech craze is not permanent. Pretty soon, and I don't think it is that far off, all these gadgets people buy are going to be commodities.

When you get the feeling of instant on, instant response from your computer with life-like graphics, no wait flash transfers, etc. your upgrade cycle will be stretched like never before. Right now the reason to upgrade is already stretching and we are not at the point I described.

Now, bandwidth. Companies pay to upgrade gear because the current gear is not good enough. It shares common pipes, common choke points. What happens when we remove these choke points. When complex networking protocols to guarantee different traffic priority is not needed. It will happen. Then the network is a commodity.

I think about it in terms of a scientific calculator. There was a point where calculators improved. There was a craze when I took my engineering where everyone was buying the latest and greated. HP48SX was the final point. It had everything. It had apps before we even called them apps. I wrote a lot of apps that were shared by many students at the time. Then it all died. No one cared about the next calculator. The craze died, because we had everything we needed.

The mobile, the network, the whole hardware ecosystem will one day be a commodity. Then all that is left is software and service high tech companies. I don't know when this will happen, but it will happen. If you are asking about what Santa Clara will be like in 15 years, then you better worry about what I am saying here. Things will not be like you expect.

136   bubblesitter     2012 Apr 10, 6:21am  ↑ like   ↓ dislike   quote    

RentingForHalfTheCost says

The one thing renters have in the case of the big bad inflation risk is they can always downsize.

I'd keep my 20% DP with me for now. I have a freedom to invest and get as much as my investment strategies pays off. Now,talking about 20% or whatever DP is put on a home purchase is like tying that money making no returns,plus you owe the bank the $ you borrowed - risky strategy,if home values don't go up. Not risky if you are counting on home value to inflate considerably in the next 5-7 years,if not more then that. I'm in for the renters side!

137   BoomAndBustCycle   19/19 = 100% civil   2012 Apr 10, 6:33am  ↑ like   ↓ dislike   quote    

RentingForHalfTheCost says

The one thing renters have in the case of the big bad inflation risk is they can always downsize.

True, you can sell all your furniture and downsize from a 2 bedroom to a studio apartment and save a few hundred bucks a month. But there comes a point where the rental price difference between a studio apartment and a 2 bedroom isn't wide enough to really do you any good financially. If your making $75K a year.. it's probably worth it to upgrade your life a bit and get a 2 bedroom vs. a studio.. even though you might lose out on $300-$500 a month of possible savings.

I know when i rented a small 1 bedroom we saved money, but we also went out to eat more.. left the apartment more often to spend money then we do now that we have a house with a backyard and pool. Sure our costs have gone up in monthly nut, but we do different things with our free time that cost a lot less money now. Like gardening, relaxing in the backyard, grilling out back... less driving on weekends to get away from our small cramped apartment.

138   edvard2     2012 Apr 10, 6:44am  ↑ like   ↓ dislike   quote    

thomas.wong1986 says

You may find your employer also moving to Pleasanton. It does happen.

I like Pleasanton but its surprisingly expensive- as in 500-600k houses simply because its apparently got good schools.

139   RentingForHalfTheCost     2012 Apr 10, 8:17am  ↑ like   ↓ dislike   quote    

edvard2 says

thomas.wong1986 says

You may find your employer also moving to Pleasanton. It does happen.

I like Pleasanton but its surprisingly expensive- as in 500-600k houses simply because its apparently got good schools.

I think what people are forgetting is that sometimes it pays to be the top dog in a medium of the line school. Being pack fodder in a top school really doesn't help the ego.

140   bdrasin     2012 Apr 10, 8:31am  ↑ like   ↓ dislike   quote    

RentingForHalfTheCost says

edvard2 says

thomas.wong1986 says

You may find your employer also moving to Pleasanton. It does happen.

I like Pleasanton but its surprisingly expensive- as in 500-600k houses simply because its apparently got good schools.

I think what people are forgetting is that sometimes it pays to be the top dog in a medium of the line school. Being pack fodder in a top school really doesn't help the ego.

That was my excuse for going to Purdue

141   FunTime     2012 Apr 10, 8:46am  ↑ like   ↓ dislike   quote    

RentingForHalfTheCost says

HP48SX was the final point. It had everything. It had apps before we even called them apps.

Ha, I had that one too, but you're forgetting the 'G!' I got my 'SX" cheap because everyone was buying the G, which had better graphics/graphing. Maybe you're discounting it for a reason I don't know.

142   CrazyMan     2012 Apr 10, 9:22am  ↑ like   ↓ dislike   quote    

orbitron says

I'll be making 34% more (or more) in nominal-dollar salary 10 years from now and so will most other people.

That's the rub though isn't it. This is extremely unlikely to happen.

Are you making 34% more now than you were 10 years ago? Are most people making 34% more now than they were 10 years ago?

yeah, I didn't think so either.

143   CrazyMan     2012 Apr 10, 11:13am  ↑ like   ↓ dislike   quote    

Well, when you're at my income level it becomes difficult to increase it by 50% (though I'm not an executive).

As you stated, nominal increases from the past 10 years was 18%, I'm not seeing how "most people" will get 34% higher nominal wages over the next 10 years. As a matter of fact I don't see it being even close to 18% unless there's another bubble coming along that I don't know about.

Real wages will continue to go down for "most people" as long as commodities continue to go up at their current rate.

144   RentingForHalfTheCost     2012 Apr 10, 11:41am  ↑ like   ↓ dislike   quote    

FunTime says

RentingForHalfTheCost says

HP48SX was the final point. It had everything. It had apps before we even called them apps.

Ha, I had that one too, but you're forgetting the 'G!' I got my 'SX" cheap because everyone was buying the G, which had better graphics/graphing. Maybe you're discounting it for a reason I don't know.

Right, they came out with the HP49G (2MB upgradable) also. I stopped at the 48SX. That Saturn processor was awesome. Miles ahead of its time. I once finished a 2.5hr exam in 15 minutes. ;) It took me 3 days of programming transmission line theories into my calculator to have that advantage. The prof was all pissed and asked me how I did it. When I showed him the code it took, he gladly gave me the A. I probably worked 5 times harder than anyone, but enjoyed the challenge.

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