patrick.net

RentingForHalfTheCost says

Why am I not surprised you would invent a new answer. ;)

I know, I'm the first person ever not to be boxed in when given 2 choices. So creative of me...

I need to lend money to creative people...

wthrfrk80 says

I need to lend money to creative people...

Well, we are close. We have money being lent to people who know how to use creative income reporting.

tiny tina says

RentingForHalfTheCost says

Why am I not surprised you would invent a new answer. ;)

I know, I'm the first person ever not to be boxed in when given 2 choices. So creative of me...

It is called winning every argument you ever entered into. I have lost many and I use it as a sign of my ability to learn. If someone poses new data then I try my best (I'm sure I fail sometimes) to read it, analyze, and then form an opinion. Not an easy skill to stick to, but we all should at least try. The inability to answer yes/no is a sign that you might be slipping on that virtue. Just an observation from a stranger.

RentingForHalfTheCost says

Well, we are close. We have money being lent to people who know how to use creative income reporting.

True that. That's the downside of lending to "creative" people. From what I can see of the whole housing bubble fiasco out there, there are a lot of "creative" people in the Bay Area. And they caused plenty of "collateral damage" to the rest of the economy.

wthrfrk80 says

RentingForHalfTheCost says

Well, we are close. We have money being lent to people who know how to use creative income reporting.

True that. That's the downside of lending to "creative" people. From what I can see of the whole housing bubble fiasco out there, there are a lot of "creative" people in the Bay Area. And they caused plenty of "collateral damage" to the rest of the economy.

Do you honestly believe we've never seen any of this before?

You should talk to some people who were around during the Great Depression (aren't many left, admittedly) who bought stocks on margin and lost everything.

We've seen all this before. Japan is slowly coming out of its lost decade. A lot of people think China may be next.

The Bay Area is a bubble. We all know that. It's a place where a lot of people want to live but can't...which also has plenty of opportunity for people with either too much education or money and with strong personalities who've been told all their lives that they're better than everyone else and can therefore change the world.

If you know all that, it's easy to avoid making their mistakes. Period, paragraph.

RentingForHalfTheCost says

The inability to answer yes/no is a sign that you might be slipping on that virtue. Just an observation from a stranger.

Ok. Here's one for you:
Did you stop beating your significant other?
1) Yes
2) No

Please stick to your requirement of only selecting Yes or No because there is no possibility of it being anything else.

tiny tina says

Ok. Here's one for you:
Did you stop beating your significant other?
1) Yes
2) No
Please stick to your requirement of only selecting Yes or No because there is no possibility of it being anything else.

So you're saying there really is a third or fourth option on the "rent vs. buy" question?

I suppose you could "occupy" the house without paying rent or a mortgage. Not sure how long that would last...

wthrfrk80 says

So you're saying there really is a third or fourth option on the "rent vs. buy" question?

Well, considering I gave a 3rd option of "it depends," yes, I'm saying there was a 3rd option. His question was which is a better "deal." If I'm a wealthy guy with a family of two kids and really, really want my kids to go to Monta Vista high school, with the expectation that prices will rise in the future in that school district, then buying for $1M is a better deal than renting which brings the possibility of not being able to send my kids to that school. If you leave everything out and just go by the current numbers and ignore the possibility of rising rents, etc., then renting is a better deal. Thus, "it depends."

If I go into Cupertino with the idea to send two kids through K-12, I would buy instead of rent for the very reason Tina stated.

I disagree Cupertino buying in Cupertino will come out on the losing end fianancially as well. The downside of buying prime property is miniscule compared to the upside.

No, it's not necessarily a better deal than renting. Even if you have the cash to buy the house, you might be better off investing the cash in stocks and bonds, rather than sinking the $ into an overpriced house.

$3300/month = $39600/year

$39600/$1,000,000 = 3.96% annual return on investment (in the form of saved rent). And maitenance, property taxes, and insurance are included in the rent, but not in the purchase price. And that doesn't include transaction costs and realtor fees.

3 to 4% is a pretty crappy return on investment, especially when the investment asset is very non-liquid, very non-diversified, and very risky (prices swing up and down at the mercy of the Fed's interest rates, thanks to the howmuchamonthers).

That's one outcome based on a 1M home in 2012 will be 1M in 2022 and the rents does not escalate one penny. Not a good result for sure. Something like 10K a year wasted compared to buying.

What if the home is 2M dollars in 10 years and/or the rent is now 6K? The risk and reward looks a lot different. Risk 10K for 50K? What If I roll over the 1M cash into a 2.5% interest deductable ARM?

SFace says

What if the home is 2M dollars in 10 years and that rent is now 6K? The risk and reward looks a lot different.

Sure, anything is possible. What if the house is 500k in 10 years and the rent is $4k?

Nobody knows what will happen. What are the risks of each scenario?

Mr. Wong keeps bringing up Silver Creek as a comparison to Cupertino. It's true that the houses in Silver Creek are nicer, for the same $. But:
- HOA
- middle and high school there is not as good. I know several people living in Silver Creek, they all send their kids to private school. Evergreen High is good, but Silver Creek country club is not in that area. Plus there's the risk that the district moves the boundaries- you were in Evergreen High, but not any more. This is not important for everyone, but it's important for the people buying in Cupertino
- commute time. Some people enjoy longer commutes, which is good for them. Most people don't. There's more jobs from Santa Clara to NW than the other way. Grinding up and down 101 every day is not so fun unless you enjoy a lot of time in the car.
- A lot of these communities are designed with no local retail. so if you want to buy something, you have to drive a few miles. Again, ok for some people, not good for others. Cupertino was described as "horrid" for its relatively boring surroundings; but Cupertino's got more going on than Silver Creek.
so, for the same money, some pros, some cons. But it's not as straightforward as looking at the pics of a newer 3000 sq ft house vs a 1960 1500 sq ft house.

Buying a sh** house for 1M with land under, worth 900K and with assumption that this land will keep grow in value, is a very risky proposition IMO.

SiO2 says

middle and high school there is not as good. I know several people living in Silver Creek, they all send their kids to private school. Evergreen High is good, but Silver Creek country club is not in that area. Plus there's the risk that the district moves the boundaries- you were in Evergreen High, but not any more. This is not important for everyone, but it's important for the people buying in Cupertino

I would much rather buy a 3000 sq ft house in Silver Creek than a 1960 1500 sq ft in Cupertino:

1. Silver Creek schools are better than Cupertino schools. Cupertino schools district only spends $6000/student, where San Jose spends over $10000/student. Cupertino schools are riding on the laurels of the parents, not the teachers. This makes the teachers worse than in other school districts. You child will actually learn less going to a Cupertino school, than he would in San Jose.

2. If you are working anywhere in San Jose or Santa Clara, your commute will be shorter from Silver Creek.

3. Cupertino was never as overpriced, in its history, relative to Stevens Creek as it is right now. There was absolutely nothing there, which changed in the last 5 years, which made is so much better than other parts of Bay Area.

So buying a house in cupertino, or anywhere in the fortress, is just buying into the hype, not unlike buying back in Las Vegas back in 2006.

tiny tina says

RentingForHalfTheCost says

The inability to answer yes/no is a sign that you might be slipping on that virtue. Just an observation from a stranger.

Ok. Here's one for you:

Did you stop beating your significant other?

1) Yes

2) No

Please stick to your requirement of only selecting Yes or No because there is no possibility of it being anything else.

My answer (and it is of the Yes or No form) is the opposite of your answer to the following question.

The last time you cheated on your spouse did you feel any guilt?
1) Yes
2) No

There, you have my answer and it met your requirement. ;)

SiO2 says

Mr. Wong keeps bringing up Silver Creek as a comparison to Cupertino. It's true that the houses in Silver Creek are nicer, for the same $. But:

If your gonna buy a $1M home than buy a $1M home that feels like $1M home.. and not some cottage that feels like a $200K home.

thomas.wong1986 says

If your gonna buy a $1M home than buy a $1M home that feels like $1M home.. and not some cottage that feels like a $200K home.

Exactly. Why spend $1M on a house just to be shame of it. LOL

bob2356 says

So what is your point? Don't move places you won't be accepted, that's not rocket science.

This land is your land/This land is my land...

RentingForHalfTheCost says

My answer (and it is of the Yes or No form) is the opposite of your answer to the following question.

The last time you cheated on your spouse did you feel any guilt?
1) Yes
2) No

There, you have my answer and it met your requirement. ;)

Your answer did not meet the requirement. And it's not my requirement, it's your stupid requirement.

The requirement was selecting only yes or no, not merely having yes and/or no in the answer. Learn how to comprehend. Your attempt to be clever backfired.

Anyway, if you ever have some cash and want me to represent you for your purchase in Monta Vista, let me know and I'll go take the test. Otherwise, keep hoping for prices to drop to $300k when they are currently selling for $1M+. What's the saying...put hope in one hand and crap in the other and see which fills up first.

tiny tina says

Anyway, if you ever have some cash and want me to represent you for your purchase in Monta Vista, let me know and I'll go take the test.

Don't really need any representation. The cash in hand is representation enough. Soon 600K cash will get me that Saratoga/Monte Vista house that can be lived in. I'll wait. If the gov't keeps pumping up the market it will only mean the inevitable will happen even harder. This country is on a one way road. The only plan we can develop right now is how to pick ourselves up after we fall. The time it took me to write this note, we just went another 10 million in the hole. That is about 1000 houses in Stockton right now. Kapput! Gone! Never to return.

http://www.usdebtclock.org/

RentingForHalfTheCost says

Soon 600K cash will get me that Saratoga/Monte Vista house that can be lived in. I'll wait. If the gov't keeps pumping up the market it will only mean the inevitable will happen even harder.

Except that the scumbags at the Fed are printing money to keep nominal house prices from correcting. Got to protect the Big Banks from their own mistakes.

That's the problem. The Fed holds the cards in this sucker's game. Will the Fed keep printing money for a decade? If so, maybe you should get into debt and "buy" a house. Will the Fed opt for sound money and low inflaction? Then rent until prices correct.

We're at the mercy of the Fed.

RentingForHalfTheCost says

tiny tina says

Anyway, if you ever have some cash and want me to represent you for your purchase in Monta Vista, let me know and I'll go take the test.

Don't really need any representation. The cash in hand is representation enough. Soon 600K cash will get me that Saratoga/Monte Vista house that can be lived in. I'll wait. If the gov't keeps pumping up the market it will only mean the inevitable will happen even harder. This country is on a one way road. The only plan we can develop right now is how to pick ourselves up after we fall. The time it took me to write this note, we just went another 10 million in the hole. That is about 1000 houses in Stockton right now. Kapput! Gone! Never to return.

http://www.usdebtclock.org/

If they put us on the Amero, those Dollars may not go as far as you planned.

Keep in mind what Lou Rukeyser always said. People have been betting against us since 1776 and they're always wrong. Talk to people who were around during the Great Depression. Talk to people who were in World War II, a war in which the Germans almost beat us and didn't only because of our natural resources. They're all gonna tell you the same thing.

My realtor got a call on Friday from a friend of hers, demanding to know why the house we bought sold as cheaply as it did. I guess there's a foreclosure at the other end of the street, that smells like mold inside and they're asking $799K for it. We got ours for almost two hundred thousand less.

If you're actually waiting on Saratoga to come down to the $600K range, you're gonna wait a long time. Bernanke would never allow it to happen and the next Fed chief (coming sooner than you think) won't either. People would be standing outside their offices with pitchforks.

And don't bother with the snide, silly comments. I was raised in this business and in the financial services business, remember? I thought everyone's dad owned three pairs of wing tips, a suit for each day of the week and got rid of his cars every three years. No one told me different.

tiny tina says

Patrick: Is there any city in the US where the upper tier of housing is in line with rents? I checked into San Antonio (very little bubble if any) and Asheville, NC (not sure if there was a bubble there) and they have plenty of million dollar houses with rents around $3k.

Edit: A list of cities would be better than just finding one.

Yes, pretty much everything in the middle of the country is reasonable even at the high end. It's the coasts that are bad deals for high-end buyers (compared to renting the same thing there).

I should definitely do an analysis and publish a list of cities.

tiny tina says

Patrick: Is there any city in the US where the upper tier of housing is in line with rents? I checked into San Antonio (very little bubble if any) and Asheville, NC (not sure if there was a bubble there) and they have plenty of million dollar houses with rents around $3k.

Edit: A list of cities would be better than just finding one.

Yes, pretty much everything in the middle of the country is reasonable even at the high end. It's the coasts that are bad deals for high-end buyers (compared to renting the same thing there).

I should definitely do an analysis and publish a list of cities.

That doesn't tell you anything?

Where I went to college, they would tell us it's about supply and demand and it's also about attracting talent for the jobs that exist in those regions which DO NOT exist in flyover country. That's precisely why my wife and I ended up here. This is one of the issues no one's talking about that's hurting Ohio right now. All the talent is gone or planning on leaving due to the demographic death spiral that's going on there. Upper and upper middle class Ohioans retire to Arizona and Florida leaving behind legions of half blind diabetic retired autoworkers and their families who never saved a dime. Forty percent of Ohio's state budget goes for indigent health care...and the aspiring young professionals fleeing those conditions are being sucked up into the maelstrom of housing markets like San Francisco, Los Angeles and Seattle.

It also means the situation isn't likely to change. This is why Danville, Alamo, Lafayette, San Ramon (to a lesser extent because it's bigger and newer) and Saratoga haven't come down a whole lot. Yeah...you can go live in Fremont or Hayward but who the fuck wants to do that unless you have to? Who wants to do that if you worked your ass off for four years of college only to end up living in the United Colors of Benetton?

rootvg says

Bernanke would never allow it to happen and the next Fed chief (coming sooner than you think) won't either. People would be standing outside their offices with pitchforks.

Yep. The Fed holds the cards in this game.

rootvg says

Upper and upper middle class Ohioans retire to Arizona and Florida leaving behind legions of half blind diabetic retired autoworkers and their families who never saved a dime.

Thats' the best description of the Rust Belt I've seen so far.

wthrfrk80 says

rootvg says

Upper and upper middle class Ohioans retire to Arizona and Florida leaving behind legions of half blind diabetic retired autoworkers and their families who never saved a dime.

Thats' the best description of the Rust Belt I've seen so far.

I can describe it because I've seen it up close.

wthrfrk80 says

RentingForHalfTheCost says

Well, we are close. We have money being lent to people who know how to use creative income reporting.

True that. That's the downside of lending to "creative" people. From what I can see of the whole housing bubble fiasco out there, there are a lot of "creative" people in the Bay Area. And they caused plenty of "collateral damage" to the rest of the economy.

There are a lot of "creative" people in the Bay Area who don't have a lick of common sense and have been raised in upper middle class circumstances which they take for granted.

That IS the issue here, and it's everywhere. When you hire a general contractor, you see it. When you go to a restaurant, you see it. When you go to work and look at people in the other cubes, you see it. When I come back from a few hours with a flight instructor and see a Baby Boomer wench in the expensive jogging outfit who's paying her bill at the FBO, I see it.

I guess the point I want to make is, what we see here is NOT NORMAL. People do not carry on like this in other parts of the country. People do not have money like this in other parts of the country. This is an economic and cultural BUBBLE. It's Disneyland...but if you're gonna live in Disneyland, you have to make some adjustments. You need to make good money. You need to have a solid moral foundation. You need to have some discipline.

You also need to be realist...and if that means you want to live a certain way or if you don't want your wife to work or if she can't for whatever reason, you might have to leave the area. A lot of the issues I see posted here about cost of living and housing, etc in the various parts of the Bay Area could be easily interchanged with Arlington (northern Virginia) or Brookline (Boston suburbs) or Chevy Chase (southern MD burbs of DC) or even Plano (far north Dallas suburbs) or a dozen other places. It costs money to live in a desirable area especially when the Chinese are flooding in here with Dollars we gave them, looking to invest.

Here again, is there some important point I've missed?

rootvg says

is there some important point I've missed?

rootvg, It sounds like the point you are missing is that you don't belong here. Your opinions about many of your neighbors proves it:
rootvg says

the Bay Area IS irrational behavior and the sick part of it is, it pays.

rootvg says

Did you also know SF was at one time a Republican town? Yes! Before the military started discharging faggots here

rootvg says

I'm not phobic at all. I don't like them. I think they're subhuman. They're chronically angry at the world, perpetually unstable emotionally and aspire to corrupt everything they touch. They hate middle America and everything it stands for.

They also just about own the Democratic party.

It used to be a faggot couldn't get a security clearance to do defense work because someone could blackmail them

What that tells me is you're one of them, looking to score points.

Take your best shot, but remember I'll look upon that as a license to chew on you like a rabid dog. I've been doing this for VERY long time.

I stand behind everything I've said...and there's NOTHING you can do about it.

Aren't there laws against such hate-filled bollocks? Rootvg, it's not gay people who are the problem, it's people like you.

Bigsby says

Aren't there laws against such hate-filled bollocks? Rootvg, it's not gay people who are the problem, it's people like you.

You've been in California too long.

I haven't committed any crime and I won't. Being an perpetually unstable drama queen accustomed to people genuflecting in your presence is YOUR problem, not mine. Where I'm from, you shut up and behave like an adult. You're not royalty there because you don't control the political process. You don't have a mob to do your bidding.

rootvg says

Bigsby says

Aren't there laws against such hate-filled bollocks? Rootvg, it's not gay people who are the problem, it's people like you.

You've been in California too long.

I haven't committed any crime and I won't. Being an perpetually unstable drama queen accustomed to people genuflecting in your presence is YOUR problem, not mine. Where I'm from, you shut up and behave like an adult. You're not royalty there because you don't control the political process. You don't have a mob to do your bidding.

I don't live in California. And hell, why don't you follow your own bloody advice - "Where I'm from, you shut up and behave like an adult." That would be preferable to your frothing-at-the-mouth, bulging-eyed bigotry.

Bigsby says

rootvg says

Bigsby says

Aren't there laws against such hate-filled bollocks? Rootvg, it's not gay people who are the problem, it's people like you.

You've been in California too long.

I haven't committed any crime and I won't. Being an perpetually unstable drama queen accustomed to people genuflecting in your presence is YOUR problem, not mine. Where I'm from, you shut up and behave like an adult. You're not royalty there because you don't control the political process. You don't have a mob to do your bidding.

I don't live in California. And hell, why don't you follow your own bloody advice - "Where I'm from, you shut up and behave like an adult." That would be preferable to your frothing-at-the-mouth, bulging-eyed bigotry.

Here again, I'm not the type who's easily intimidated.

I'm not a drama queen. I'm not unstable. I'm not a flake.

You'll just have to deal with me another way.

Remember: wings level, nose down, flaps up.

Think, don't feel. Feeling is destructive. If you're flying an airplane, feeling will get you and whoever is with you killed. Thinking and acting accordingly will probably save your life.

Hey rootvg,

where do you work?

B.A.C.A.H. says

Hey rootvg,

where do you work?

Wouldn't you like to know!

Hey rootvg, are you telling some of your coworkers and some of your management what you think about them?

Most of the people I work with are in another state and the ones I do interact with on a daily basis think as I do.

I'm not giving you any information. You may as well stop digging.