patrick.net

"Who is buying" - well, could be the heir of a deceased parent's estate or life insurance policy.

The life insurance policy benefit could give the buyer enough for a 20 percent down, depending.

Could also be a person whose parents or relatives live in a country where its easier to hide income from taxation and so the family is able to come up with the $$$$ to buy outright or with a substantial down.

~Misstrial

Ahem, see the other thread

SJ says

http://patrick.net/?p=1080674#comment-770423

I'm not sure who is buying them, but I know how they can do it:

With new jumbo limit of $625,500, they just need to save up $174.5K:

800000-625500 = 174500

They push the risk of default onto taxpayers for the $625.5K, and it puts them nicely over 20% for their downpayment:

174500 / 800000 = .218

So they get a 30-year at 4% and pay $25K in interest per year, which is only a little higher than monthly rent for the same thing. Quite do-able on $100K year, and probably seems reasonable if you ignore all the other costs of owning. But it's those other costs that make buying financially stupid:

property tax
insurance
house value loss
purchase costs
sale costs (a whopper, at 6% or so)

True well those Asians must have tons of $$$ after most of the good jobs have been offshored to China and India with none left in the USA.

APOCALYPSEFUCK is Tony Manero says

Well, it comes with a view of Page and Brin's 747 taking off from Moffett. You get to wave as they fly over and empty the onboard loo in your back yard, or take pot shots at your pets from an open door.

Google uses the runway at Moffett Field? Why? That is a military installation. At least some of it still is. (I'm on base from time to time)

Same people who will go belly on their home purchase.

Well my game plan is to eventually leave bay area so I can afford a home in a place like Texas, Arizona, or Florida. If I can keep my job or work remote thats the goal. I lived in southern California for six years and never wanted to leave but the economy tanked there so will see what happens here in bay area. I do see more jobs here though in the tech sector than when I lived in San Diego and Orange County and salaries are way higher as well.

jvolstad says

Google uses the runway at Moffett Field? Why? That is a military installation.

The US military now does whatever the corporate billionaires tell them to do.

Don't you forget who is really in charge here, or they will "bring democracy" to you too.

jvolstad says

Google uses the runway at Moffett Field? Why? That is a military installation. At least some of it still is. (I'm on base from time to time)

Goog struck a deal with NASA AMES where, IIRC, they get to store their aircraft at Moffet and use the runway, and in return they pay some rent and NASA gets to mount scientific instruments on their planes and use them from time to time for data collection.

I almost bought a $900k home in MV last summer. I had about 30 per cent down, but even with the low interest rates, it was going to cost about $1300 per month more than my current rent (not quite as nice a place, but fine for me). The deal came to near-parity with renting if I figured in a $1000 per month income tax savings. But what spooked me was the realization of how much I would be relying on that mortgage interest deduction. It could well be that for "higher income people" (folks working in silicon valley) that could be phased out. I'm glad I didn't buy. :)

My guess is that this house was bought by a dual-income family making 200K+ a year and 20%+ down payment saved up. Not that uncommon here in silicon valley.

Los Altos Renter says

But what spooked me was the realization of how much I would be relying on that mortgage interest deduction.

Congratulations on understanding what millions will never understand.

Married couple making 100K+ each can easily do it. The rule is,be a debt slave even after making that much.

Indeed- all of the open houses that I went to in Silicon Valley were two parent double income (DINK) folks attending. So, that tells me as a single guy I would need to make almost 300-400k to buy a place here. Unless I become a VP thats impossible to make this much as an engineer.

SJ says

ndeed- all of the open houses that I went to in Silicon Valley were two parent double income (DINK) folks attending. So, that tells me as a single guy I would need to make almost 300-400k to buy a place here. Unless I become a VP thats impossible to make this much as an engineer.

Well... my wife and I are DINKS and we make good Silicon Valley incomes but there's no way that I'd ever spend that kind of bank on a house- ever. Its just outright stupid in my opinion. 800k... for a house? I even scoff at the 500k being asked for houses in the area we live in the east bay. We too are likely leaving the Bay Area, but only after we've saved enough to semi-retire elsewhere.

That said, I don't deny that there are loads of folks like us-DINKS and with good incomes- who could probably barely squeeze into one of those houses and they're just desperate to do just that if only they could qualify. hence the mantra of the Bay Area- its special here and burying yourself in debt is absolutely worth it to be a part of the party.

There are houses in every price range; don't think that the rich aren't debt slaves themselves. It's an unwritten rule that the majority of people feel compelled to buy a house that forces them to live paycheck to paycheck.

edvard2 says

hence the mantra of the Bay Area- its special here and burying yourself in debt is absolutely worth it to be a part of the party.

Good way to summarize.

edvard2 says

That said, I don't deny that there are loads of folks like us-DINKS and with good incomes- who could probably barely squeeze into one of those houses and they're just desperate to do just that if only they could qualify.

We certainly had DINKS back in the 80s and early 90s BUT home prices never inflated to these levels. Many infact made reasonable purchases...

It is difficult to get a 3BR/2Bath accommodation with a decent floor plan in these areas for rent at reasonable prices. If somebody who can afford the down payment and sick of landlords decides to buy for 800K, it is not surprising.

Not familiar with the fortress area market but the question that always arose for me when looking at houses a few years ago in Marin was this: Would a person or couple that could actually afford the 600,000 2 bed room near tear down want to live in it. If I am making 200K a year do I see myself living in such a house? The answer was typically no so they bought a house they couldn't afford leaving the 600K POS to someone with a 100K or less income who couldn't afford it but with the lending practices of the time could get the loan. Marin has floated a bit down to earth, particularly the condo market, doesn't sound like the fortress area has moved much.

dellman says

It is difficult to get a 3BR/2Bath accommodation with a decent floor plan in these areas for rent at reasonable prices.

But its not that hard to travel 20 minutes down the freeway and find a 3 BR house for a much cheaper rental cost. In my opinion renting in the fortress area is just about as bad as buying: Both options are costly. Again- its not like there are cheaper alternatives.

edvard2 says

But its not that hard to travel 20 minutes down the freeway and find a 3 BR house for a much cheaper rental cost. In my opinion renting in the fortress area is just about as bad as buying: Both options are costly. Again- its not like there are cheaper alternatives.

Well.. it is an option. When you move out of fortress areas, you need to consider the time spent on traffic on daily basis.