patrick.net

figalito says

I live in Fairfax, Marin CA and rents are going up pretty quickly around here. It is next to impossible to pick up a 2 bedroom house that is not a run down shack for less than $2,500 per month. And I am not talking about some modern state of the art house, I mean your basic 2 Bd 1 Ba.

crazy talk! unless there is a maid that comes with the place no man should pay over a buck a sq ft. and i say this as a property manager

you got jockeys racing each other to be millionaires jacking up the market is what it is. Renters will pay whatever the landlords demand because they do not want to move a bunch if they have children in schools or close to work. if you can stay lose and move arond the board you are not gonna get rooked as easy. best bet is to move to the desert and sit this inning out. i have a 1870 sq ft home coming up for lease. its built in 2002 with a new granite top counter stainless steel fridge ans ceiling fans for less than fifty cent a sq ft.

figalito says

Yes I have avoided Debt Slavery (thank you Patrick :)) but I am not about to give up living in a community of like minded, well educated, psychologically minded people.

that is another problem there. too many people need positive re-inforcement. it;s as expensive as a tithe! it is good to be a member of the community but do not get to attached. it is expansive!

Being trendy does have its drawbacks hahaha. From the East Village in NY. To Palm Beach in Fla. (I never really cared about S. Fla beaches are much nicer anyway) So the message is intown, trendy meeting spots. These places are made in many ways. Not so much by residential developers (houses are older in many cases) But by near location commercial developers. Condo's, Lofts (my personal favorite. Not new build however ancient, simple large space lofts.)

The mansions to me are like concert halls or train stations. Grand Central, Broadway play houses. People are impressed. I would rather say what a nice conference center and hotel. When does the convention get here?

So trendy appears to be made by the locals. Sometimes it is in many cases it is not. Trendy can cost out the ass. However it is really, really nice to have a champagne breakfast with your date in a quiet breakfast spot. Investors of course come in like the invasion of Normandy beach by the allies. There are even ways of discouraging others. You can't make trend only expand on it (laughs). Just don't hit the wrong street hahaha.

Now if the locals did make the trend where would the commercial shops, condos, retail businesses be. See it goes hand in hand. How do you price bust? Thats the question. Would you even want that to occur? The other question might be did the commercial people see a good thing in many California towns. Decided they wanted in way back when. MAKE the market in the trendy.

Thereby exacting more out of its people. Makes one wonder a little bit. Possibly a more free spirited people. I guess I'm one of that Ilk though not. However more of a people person.

I like my little greenhouse Icon. I look at that and wonder about infrustructure. I'm not communal AT ALL. However I think of things like oh, S. Fla open air bars and eating places. A vegetarians delight! Communities that revolve around co-op food exchanges or a co-op where food is brought and sent to the co-op food stores. Slaughterhouses etc. After all my thought is America is a co-op anyway by the people for the people. Complete with night life. Swimming pools. Recreation centers. All done without the puppy liner you have to put on your wooden floors so they aren't ruined. Singular or co-op. Its just a thought. Then again it might not work as most think all the land up and down the coasts must certainly be taken. Thing is it's not. Oh I forgot fishing. Have a good New Year.

Aquifer:

http://en.wikipedia.org/wiki/Aquifer

Thanks for the discussion folks. I have been anti-owning since I started working 4 yrs ago thus just maxed out 401k each yr and paid off student/car loans. Feels good to be debt free in early 30s so I am very cautious about getting into the big debt needed for this. Its just that the thin walls, callous management, parking for friends coming over, hard to have parties... is making me think about moving to the dark side.

edvard2, Dan: its been tough finding a good 3br, 2ba without going to the 2500 level. Probably possible in Milpitas, East San Jose, Very South San Jose but schools may be an issue there. Rentals are in high demand in south bay and pen with the large immigrant population and swarms of interns. All our interns this year were given apartments in upscale communities in the south bay.

clambo: for 2011, I think this would leave 3/4 after tax income for chicks, cars and booze. But who know what happens next year. In fact, one of my concerns is if bonuses go down next year then fun will be limited by the mortgage payment.

Maybe if I can find something like bmwman, its worth remaining a renter. Its crazy how everyone in my workplace (mostly tech PHDs) gets sucked into this and are all getting homes around 4X-5X income. I know several people with salaries in $120k range using FHA loans and going to 4X income mortgages. Then they have to stress out and make sure they get good bonuses. I hit a high number for the first time this year but dont want to rely on that happening every year to make the mortgage payment.

I also wonder what will happen to demand and prices in the Fortresses with all the IPOs hitting and FBook expected to come through in 2012

justwantaniceplacetostay says

have been anti-owning since I started working 4 yrs ago

well here is the problem yall. four years in the working world and ready to put it all on red! and you wonder why prices are screwed up. I WANT EVERYTHING NOW. My two daughters are no diffrent. The one hit 6 figures and decides she can not live with her pop no more and goes and gets herself a 350 thousand dollar condo. Ok. Two years later a five guys opens up in the retail space underneath her place and no all her clothes smell like hamburgers!

JodyChunder says

i have a 1870 sq ft home coming up for lease. its built in 2002 with a new granite top counter stainless steel fridge ans ceiling fans for less than fifty cent a sq ft.

Was that sarcasm? Every time I hear "granite counter tops" and/or "stainless steel appliances" as the main selling point of a house I throw up in my mouth a little.

robynfrog says

When we first started renting in the 1980's, our rent was $700. (small 3 bedroom, 1 bath, SF Bay Area)

When I started renting in SF about 20yrs ago, an individuals share of rent was about $400 a month ($800 for a 2 bed apt, for example). That individual's share now seems to be in the $1000 - $1250 range?

justwantaniceplacetostay says

edvard2, Dan: its been tough finding a good 3br, 2ba without going to the 2500 level. Probably possible in Milpitas, East San Jose, Very South San Jose but schools may be an issue there. Rentals are in high demand in south bay and pen with the large immigrant population and swarms of interns. All our interns this year were given apartments in upscale communities in the south bay.

But then again you seem to only be looking in areas that are also some of the highest-priced rental markets in the Bay Area. Like I said- we rent in the East Bay and pay a lot less. What does that translate to in regards to commuting? Well, I work in the Peninsula. I leave the house a bit early and also get off work a bit early too. On a typical day in the morning the commute is about 35-40 minutes. In the afternoons its about the same or a bit longer. An hour at most. To me its totally worth it because not only do I pay a lot less in rent, but I rent a nice house with a big yard and a garage to work on my stuff. Sure- if we lived closer to work we would maybe have a 10-15 minute commute. Then again we would be paying probably 35-50% more, and for that get a smaller place. To me the extra commute is worth it. For others its not. Everyone has their own requirements and targets they feel is important and worthwhile and thus worth the added expense/commute/compromise. So its your call. Good luck.

"Is there a good calculator that can take into account tax savings from MI+PT deduction..."

The deduction for MI expires tomorrow...........

Jonny Angel says

"Is there a good calculator that can take into account tax savings from MI+PT deduction..."

The deduction for MI expires tomorrow...........

I think you are referring to the mortgage insurance deduction, which was set to expire this year but was extended.

The poster is referring to the mortgage interest deduction which was never set to expire.

In any event, neither is expiring.

I left California back in 2007. Sold my house for 700K. Here is what I bought outside of Madison, WI for $150K. Bigger, better, no crime, smog, gangs. Only smelly cows. I now have the home up for sale at $159K. 14home.com

tatupu70 says

Jonny Angel says

"Is there a good calculator that can take into account tax savings from MI+PT deduction..."

The deduction for MI expires tomorrow...........

I think you are referring to the mortgage insurance deduction, which was set to expire this year but was extended.

The poster is referring to the mortgage interest deduction which was never set to expire.

In any event, neither is expiring.

Could you please provide a reference to the extension....IRS.gov still clearly states that it expires tomorrow.

Jonny Angel says

Could you please provide a reference to the extension....IRS.gov still clearly states that it expires tomorrow.

You are correct. I read an old link. The insurance deduction does expire. The interest deduction, of course, remains in effect.

There really isn't a price, as an expense it should be kept as low as possible like any expense sheet without putting yourself financially at risk.

justwantaniceplacetostay says

How do decide a reasonable home price for income level

Historically the PRICE is 3.5-4x your Annual income.

Forget the monthly payment nonsense.. start with the basics.
Didnt all the defaulting buyers also use the same monthly payment nonsense to justify their home purchase, It didnt work out as they planned... so they are now asking in principle mortgage reductions.... which basically means adusting to 3.5x annual incomes.

Do you want to make the same mistake ?

thomas.wong1986 says

Historically the PRICE is 3.5-4x your Annual income.

It should really be 2-3x your annual income. I understand that doesn't work for certain areas (San Francisco), but then again, I don't understand why people would want to live somewhere where the housing market is so overpriced.

StoutFiles says

It should really be 2-3x your annual income.

My number is on the high side based on historical context, but even 2-3x was common even in the heart of San Francisco and parts of South Bay.

I posted a SF Gate acticle showing Loft Condos going for some $150-160K with SFH going for some 235K. This was back in 1996-97 before the bubble began. So you are correct as well.
It was very reasonable after the correction of 1989-94..to find prices 2-3x your income.

It really shouldn't be any number, but about quality of housing. If the masses in SF or where-ever can "afford" a 30-year loan etc etc for $500k but that $500k only purchases a tiny studio apartment or run-down tenement, that's not a very desirable housing market to participate in.

What's interesting is that I make an ok wage (about $130k) a year but I still find it difficult to consider paying more than about 300K for any house in the south bay. I would suppose that I just don't want to get stuck with an albatross around my neck as I've seen so many others do. On the other hand, it might have to do with the fact that I perceive the homes as being a bad value proposition as they are so overpriced.

For example, I recently walked by a house in the rose garden area of San Jose that had an asking price of $2 million. The house is a disaster and in need of a total and complete gut. The roof has several holes that animals are using, the floors are warped and covered with animal droppings, the foundation looks to e badly cracked, the whole front porch has partially sucken into the ground and the windows are the original single panes. And yet they still want $2 million for a house I would't pay more than $100k for.

And yet, for low end homes you are still seeing postage stamp condos and town homes with $300k asking prices. It just boggles the mind that they are still wanting that kind of money.

thomas.wong1986 says

Historically the PRICE is 3.5-4x your Annual income.

Thomas, I think you mean, historically the price was/has been. Historically history already happened, so history is but the price was.

Price is one way to look at it, I suppose. Another way is the ongoing cost, like 28% of income. It means, higher borrowing cost or higher property taxes would be lower price to maintain the 28% ratio.

Then of course, there's some hipsters who add a second income in the household to the 28%, with rationalizations. That is what Professor Elizabeth Warren called the Two Income Trap, in her book by the same name.

Gragorin says

It just boggles the mind that they are still wanting that kind of money.

I am not too boggled by the asking prices. What REALLY boggles my mind is the hordes of people that will borrow every penny they possibly can, whether they can pay it back or not, to actually PAY these asking prices! To some extent, the asking prices are what they are because there are enough suckers in the area that they have some expectation of selling a that price. Gotta love the Bay Area!

StoutFiles says

Was that sarcasm? Every time I hear "granite counter tops" and/or "stainless steel appliances" as the main selling point of a house I throw up in my mouth a little.

rule #1: give the people what they want and what they want is all that crap. they gobble it up faster an a fat clown at a hotdog rally. my place is all hide and wood and bone and antler.

also: best to get that acid reflux looked at. it can some times mean a ulcer

Funny they persist in their horseshit in the face of all of this. I hope the United States stablizes the mess they have made in the middle east with their horseshit. I know the Iranians don't want to loose the pipeline from Iraq that goes right into their refinery. Of course just like Afganistan a captive people has their puppet. Iraq a captive puppet has theirs. We have our international puppet and pacification in Obama. Plays really well in Iraq and Afganistan. Not to mention the people all over the world that have fucking had it with these bastards. And well we are pretty much captive too. Its called national debt and indvidual debt.

A majority of one people has never fucking elected a minority of another. Check your stats on govenors and senators. The two that are I would be really fucking suspicious of. Not to mention its never happened in the fucking world to date: except in a puppet friendly land. Better yet don't check with the debt merchant media. Check with your friends. Ask them who they voted for. Your in for a fucking shock.

Not to mention, Joy to the world. An American NBA owner running for Russian president.

Time for the muslims to get behind something else besides trying to have their own governments. I suppose. Its so fucking transparent.

China drilling oil in Iraq
http://online.wsj.com/article/SB124293064819744203.html

Russia drilling oil in Iraq
http://www.upi.com/Business_News/Energy-Resources/2011/10/26/Russias-Lukoil-starts-drilling-in-Iraq/UPI-35841319628832/

Iran building or to build oil refinery in Iraq
http://www.iraq-businessnews.com/2010/10/29/iranian-company-to-build-oil-refinery-in-babil/

Actually in some reports 5 refineries

Iran Iraq sign oil pipeline deal (hey weren't these the guys blowing each others heads off not to long ago)

http://www.irannewsdaily.com/view_news.asp?id=148994

We have successfully established Democracy in Iraq. That is clear. Now I would not call this the spiders sucking the juice out of a fly as some might think. Some not all mind you of them OWS people think this was a war for oil.

So my question here might be is BP and China, Russia, Iran are they all going to send their oil through the Iranian pipeline in Iraq. That goes to the refinery in Iran? Makes sense to me. After all its expensive to ship heavy crude.

After all it was clear to us WHY we invaded. It's nice to have friends along for the ride and oohhhhhh grrrrr those nasty Iranians we have so much trouble with. WHY FUCK DORIS ITS THAT IRAN AND RUSSIA CHINA AXIS AFTER US AGAIN. Iraqi's might just be thinking with friends like this who needs enemies

Hey nuclear garbage adds even more stablity. So the oil concerns can operate without worrying about rebellion. Covers their assets. Keeps the Iraqi people in line.

Truth of it all: Iraq is just not cooperating.

What this really is. Your fucking with stuff thats not yours. So you can shuffle around the deck chairs on a sinking ship. You can play street mime or whatever else kind of game you want. Truth is you want what does not belong to you. I am the nicest guy you could ever meet. I sit here and watch the show. I may be a nice guy. But I just am not that generous. The day of taking what you want is OVER.

Happy New Year to all of my friends here. Not being accepted. Leaves you to think for yourself. Be a free thinker. People that understand victimazation. Tend to understand one another and sympathize. I stopped being a victim over 18 years ago. I suggest others do the same.

There are ways to take. Without having to grovel and play the game. Your not accepted in all places? Screw them.

Man of the year: Patrick. You have had the strength. To stand toe to toe with oppression. Not give into it. Nor be a part of it. In the New Year, Patrick, have a lot of enjoyment. Because you have many friends. Friends that enjoy honesty.

ArtimusMaxtor says

Happy New Year to all of my friends here. Not being accepted. Leaves you to think for yourself. Be a free thinker. People that understand victimazation. Tend to understand one another and sympathize. I stopped being a victim over 18 years ago. I suggest others do the same.

There are ways to take. Without having to grovel and play the game. Your not accepted in all places? Screw them.

Man of the year: Patrick. You have had the strength. To stand toe to toe with oppression. Not give into it. Nor be a part of it. In the New Year, Patrick, have a lot of enjoyment. Because you have many friends. Friends that enjoy honesty.

Patrick has an interesting and helpful website about real estate, but fighting oppression? What is it about the internet and hyperbole?

It's about stupidity

Gragorin says

And yet they still want $2 million for a house I would't pay more than $100k for.

Yes, I have seen homes like this. You have to be blunt with these idiots...

Response:
"Are you that much of a greedy bastard ?"

And here is the stupidity, the greed, and mental disorder(retards) all wrapped up in one.

bmwman91 says

whether they can pay it back or not, to actually PAY these asking prices!

They are thinking the BA economy is booming as we saw back in 80s-90s. But we are not even close. So eventually, they will miss their payments and will foreclose, screwing up their financial well being for many years.

To answer the original question... if you are paying $2500/mo in the bay area, have a good job and like the area, I say go ahead and buy. And to respond to those who say rising rents is no reason to buy, I respectfully disagree. It is a great reason to buy a house.
In 1996 my wife and I bought a small 3/1 in the south bay primarily because I tired of receiving a rent increase every few months (dot com mania). A couple of kids later and I recently gave in and remodeled the place (tired of sharing a bathroom mostly). Looking back, I beat the start of the rising market by a year or so, but it was moving pretty quickly even in 96.
Point is, pencil it out all you want, but I would not want to be a renter when there is even the slightest uptick in the employment numbers and 4% mortgages are a distant memory.
You are not going to time the market at the lowest point. If it works out to be a good deal for you, swim against the tide and jump in. 15 years down the road, you may be sitting in your comfortable house wondering why all those crazy people are willing to pay twice what you paid for your house. I realize this is not the forum for BUY NOW, but it is worth considering if you are in the right situation. Best.

B.A.C.A.H. says

rofessor Elizabeth Warren called the Two Income Trap

Can you say more about that book. I will go googling it. I am curious.

BG

clambo says

1/4 your income for the mortgage. That leaves 3/4 of your dough for:
1. chicks, cars, booze, travel, guns
2. savings/investments
3. goodwill/target for clothes, ross/payless for shoes, netflix/roku for entertainment, cheap vietnamese food and in-n-out burger fixes.
Did I leave anything out?

Yes, where you got these numbers from - just your personal opinion, or...? (Whether or not it's a good idea, I would bet the average is more than 1/4th to housing costs for renters and homebuyers alike.) And whether those are pre- or post-tax numbers. I.e., gross income after taxes, or gross income before taxes?

JG1 says

I would bet the average is more than 1/4th to housing costs for renters and homebuyers alike.) And whether those are pre- or post-tax numbers.

It was the norm before the bubble that 1/4 of gross (pre-tax) income went to the mortgage. Rental ? no, because rental costs and alternative choices were all over the the place. So rentals could be much cheaper.

It seems many are unaware what it was before the bubble... It all went to hell after 1997-1998...

StoutFiles says

thomas.wong1986 says

Historically the PRICE is 3.5-4x your Annual income.

It should really be 2-3x your annual income. I understand that doesn't work for certain areas (San Francisco), but then again, I don't understand why people would want to live somewhere where the housing market is so overpriced.

Cities like NYC And SF have it higher because you don't need a car in many situations, and can walk. Now if you still need a car, well -- yes, I don't agree with it being 4-5x and it needs to come down. That said -- there's a lot of wealthy people that when buying a home there -- so those home prices may not be 4-5x their income, but rather 1-2x.

I'm in the process of buying a home right now here in Scottsdale -- but I'm only spending 1.25x my annual income to get it. Far cheaper for me to buy than rent, and I'm doing a 15 year loan with 20% down and planning on being there at LEAST the full life of the loan (at which point if I leave I would rent it out). Pretty safe? I believe so.

B.A.C.A.H. says

thomas.wong1986 says

Historically the PRICE is 3.5-4x your Annual income.

Thomas, I think you mean, historically the price was/has been. Historically history already happened, so history is but the price was.

Price is one way to look at it, I suppose. Another way is the ongoing cost, like 28% of income. It means, higher borrowing cost or higher property taxes would be lower price to maintain the 28% ratio.

Then of course, there's some hipsters who add a second income in the household to the 28%, with rationalizations. That is what Professor Elizabeth Warren called the Two Income Trap, in her book by the same name.

100% agree on the two income trap. It's risky, and a lot of people have gotten bit by it.

That's why for my home, my wife could pay the mortgage and all of our bills if I just sat on my ass all day at home :) My salary is literally 100% savings, and she still would be saving even after all the bills are paid and food is on the table.

Below is a great spreadsheet calculator for renting vs. buying (it includes mort deduction savings vs. investment of downpayment, etc.):

https://spreadsheets.google.com/pub?key=pM4Gw0s2zSeAnOTnop5I7Lg

from:
http://www.submedian.blogspot.com

thomas.wong1986 says

Gragorin says

And yet they still want $2 million for a house I would't pay more than $100k for.

Yes, I have seen homes like this. You have to be blunt with these idiots...

Response:

"Are you that much of a greedy bastard ?"

And here is the stupidity, the greed, and mental disorder(retards) all wrapped up in one.

How much would the land sell for if there was no home on it?

Katy Perry says

The GOP says

What in the hell is so goddamn important about having to live in "the Bay" or Calicornholia for that matter?

It's 70 degrees today in my town( Temecula Murrieta CA) and 63 degrees in SF Bay Area Today oh and in SF This week the lowest Night temp is 48 degrees.

That's what we have this for:

bmwman91 says

I am not too boggled by the asking prices. What REALLY boggles my mind is the hordes of people that will borrow every penny they possibly can, whether they can pay it back or not, to actually PAY these asking prices! To some extent, the asking prices are what they are because there are enough suckers in the area that they have some expectation of selling a that price. Gotta love the Bay Area!

I agree, except this happens everywhere.

thomas.wong1986 says

JG1 says

I would bet the average is more than 1/4th to housing costs for renters and homebuyers alike.) And whether those are pre- or post-tax numbers.

It was the norm before the bubble that 1/4 of gross (pre-tax) income went to the mortgage. Rental ? no, because rental costs and alternative choices were all over the the place. So rentals could be much cheaper.

It seems many are unaware what it was before the bubble... It all went to hell after 1997-1998...

I recall hearing a conservative number of price at two times gross annual income back in the 80s and 90s.

For rental, not really talking about what is ideal, but rather what is the norm/average, and for renters, I assume some of them are scraping by and therefore rent is a large percentage of their income, not necessarily because they are renting an expensive place, but because their incomes are relatively low.

Jimbo in SF says

Would be about $500k of a mortgage balance for approx $2500 a month payment.

This is the worse advise I ever heard on Patrick.com. This would leave with NOTHING left to pay taxes and insurance. I would not exceed $1,700 max for a mortgage, that gives you a good $800 for property taxes, Insurance and other maintenance expenses. So you looking in the 345k range, assume no down payment.