patrick.net

800k = debt slave.

$4,000 PITI for 30 years seems massive. I hope you're young, and have high hopes that your income won't be interrupted in that time.

Can you rent it out for near $3940? I'm thinking no.

$500/sqft is slightly high for belmont. you can probably get a better price (if you are willing to 1) wait and 2) sacrifice a bedroom - 4 beds in 1600 sqft must make for tiny rooms) without the market dropping.

How much can you rent this beast for? Is that rent enough to give you at least $500 +ve cash flow on that amount of debt? Yeah,first find that out. Doing this without running the math several times is a financial suicide,unless you are one of those guys feeling okay to walk away.

You should check out comparable sales and make sure you're getting a deal.

Despite crunching the mortgage vs. rent numbers, also ask yourself if having your own place that you are allowed to customize and remodel to your liking is worth the extra money.

I think sometimes we all forget that that is one of the benefits of "owning" a property vs renting.

Oh, and I don't think the market will take off for years and years. In fact I think it will continue to drop, and once interest rates go up it will drop some more.

joshuatrio says

800k = debt slave.

My God, that's a lot of money. What we did is bad enough.

You could buy in Alamo. That's old money.

I KNOW you can buy very well in Walnut Creek or Lafayette.

Where do you work? What do you do?

nw888 says

Oh, and I don't think the market will take off for years and years. In fact I think it will continue to drop, and once interest rates go up it will drop some more.

(sigh)

It depends upon where you buy and what you buy and how you buy.

If you buy in Livermore, where the traffic is unbearable and the schools are so-so and there's a lot of housing? Sure, you could get hurt.

If you buy in Lafayette or Orinda and it's close to BART and there's a limited amount of housing available? You could do well. You probably would do well.

800K is too damn much money.

nw888 says

once interest rates go up it will drop some more.

Hasn't growing up taught you that life is not fair? That life lesson makes me believe that I will never see interest rates go up significantly for the rest of my life.

Interest rates will always be at whatever level is in the best interests of the big banks.

Right now the big banks have a lot of bad debt on their books. So we'll have negative real interest rates (interest rates lower than the inflation rate) for a long time.

Not to mention the huge government debts.

0.8 million dollars for a 1600 sqft shack? If you are going to bring that many Ben Franklins to the table it would be prudent to think about where this housing market is going. Make sure you can handle the market continuing to drop. If you can't then that 3/2 condo is perfect. Good luck and if you do end up buying here I would at the minimum setup an alternative investment that shorts the housing market. Bet against builders, banks, etc. It'll be a good hedge for you. Buy some out of the money puts for cheap.

RentingForHalfTheCost says

If you are going to bring that many Ben Franklins to the table it would be prudent to think about where this housing market is going. Make sure you can handle the market continuing to drop.

Exactly. I just can't understand how these housing bulls, who, you would think have at least half a brain, can talk about any kind of a bottom, where they are still selling 1600 sqft shacks in blue-collar Belmont for close to $1M. These sellers must still think it's f*n 2007 out there. Somebody, should smack them.

Notice how all of that "Dont buy a house!" stuff mysteriously disappeared from the front page? That should be a clue.

toothfairy says

Notice how all of that "Dont buy a house!" stuff mysteriously disappeared from the front page? That should be a clue.

Remember, the object of the bubble is to suck in as many suckers as possible, both on the way and on the way down. So, just because more housing bears are getting off the fence, doesn't mean that we are anywhere close to the bottom.

Usually the bottom is the point of maximum bearishness just like the top is maximum bullishness

toothfairy says

Usually the bottom is the point of maximum bearishness just like the top is maximum bullishness

Exactly, so if people are maximum bearish, they wouldn't be selling a 1600 sqft shack, without any land, for close to $1M in a blue-collar neighborhood. Bottom means blood is flowing, while some of the sellers around here, have yet to have their blood drawn.

Nationally, the bubble is mostly deflated. At least according to Shiller. The Bay Area is still crazy. Maybe the Bay Area (along with Vancouver, BC) is importing the China RE bubble?

http://www.multpl.com/case-shiller-home-price-index-inflation-adjusted/

wthrfrk80 says

Nationally, the bubble is mostly deflated. At least according to Shiller. The Bay Area is still crazy. Maybe the Bay Area (along with Vancouver, BC) is importing the China RE bubble?

We had our bubble start in 1998.. for all the wrong reasons.
so we were the first and may well be the last...
We may have lost the race to the bottom!

BUY THaT MOther...

There's a stranger in my bed,
There's a pounding my head
Glitter all over the room
Pink flamingos in the pool
I smell like a minibar
DJ's passed out in the yard
There's a mortgage on my desk

And my banker owns the rest

Some places never had a bubble given that the unemployment rate was 5%.

Now the unemployment rate is 8%, shouldn't price goes below normal a little bit.
Of course, the government and Fed print trillions of dollars to keep the price up helped.

wthrfrk80 says

There's a stranger in my bed,
There's a pounding my head
Glitter all over the room
Pink flamingos in the pool
I smell like a minibar
DJ's passed out in the yard
There's a mortgage on my desk

And my banker owns the rest

Nice.

toothfairy says

Usually the bottom is the point of maximum bearishness just like the top is maximum bullishness

You ain't seen nothing yet. Here are the bearish signs I need to see before even looking int the general fence direction, let alone getting back up on top.

1) No more "coming soon" signs on front yards. This is so obnoxious to me. Either you are selling or you are not. No one cares if you are thinking about selling but not ready. You don't see signs saying "Thinking of being a buyer soon". Keep it to yourself and save a tree.

2) Realtors starting to use valid arguments for attracting buyers, rather than the same fear tactics. People need to buy for house value (Price to rent, price to wages, etc.) and because the purchase will improve their life, not because they simply can.

3) More transparency in the whole real estate transaction process. Realtors need to push this as well rather than just saying they can be trusted. If you can truly be trusted then you would be more than willing to show it. Guilty until proven innocent to me.

4) The growth of FSBO, ebay real estate, craiglists and equivalent sites for selling land/houses. This has not nearly grown like I would expect considering the savings and transparency. Houses are just like autos. I don't see any difference. I can find a used auto, test drive it, bring it to an expert for an appraisal, find out where the title lives (owner or bank), check with the state to see if taxes are outstanding, etc. all without paying hardly anything. Then I can decide to buy or not buy without some agent spewing real estate vomit into my ear.

I guess it all comes down to whether or not you can afford to buy the house. Nobody can guess what the housing market can or will do thus what could happen should not be a part of the decision to begin with anyway.

edvard2 says

I guess it all comes down to whether or not you can afford to buy the house. Nobody can guess what the housing market can or will do thus what could happen should not be a part of the decision to begin with anyway.

Just because you can afford doesn't mean you should. In 2005-2006 anyone with a pulse could afford. However, making $15/hr and looking at 500-600K houses while a realtor is telling you how much money you can make on owning this home is not right in my book. Affordability is way over-rated. Buy because there is value in the asset and it will improve your quality of life.

wthrfrk80 says

There's a stranger in my bed,

There's a pounding my head

Glitter all over the room

Pink flamingos in the pool

I smell like a minibar

DJ's passed out in the yard

There's a mortgage on my desk

And my banker owns the rest

And the correct answer is "Ding ding ding - Stockton!"

RentingForHalfTheCost says

And the correct answer is "Ding ding ding - Stockton!"

I don't get it.

I know that Stockton is (or was) #1 in the USA for forclosures. I've never actually been there myself.

RentingForHalfTheCost says

Just because you can afford doesn't mean you should. In 2005-2006 anyone with a pulse could afford. However, making $15/hr and looking at 500-600K houses while a realtor is telling you how much money you can make on owning this home is not right in my book. Affordability is way over-rated. Buy because there is value in the asset and it will improve your quality of life.

I was speaking in broad generalities. We're all going to have our own ideas of what 'affordable' is. To me 800k sounds really, really high. For others, and I assume the OP, its reasonable. Again- if you can afford it, as in you have the means to pay for it, a stable job, savings, a good retirement plan in action, and are not concerned about the home's future value ( because again- nobody knows what is going to happen) then why not?

wthrfrk80 says

RentingForHalfTheCost says

And the correct answer is "Ding ding ding - Stockton!"

I don't get it.

I know that Stockton is (or was) #1 in the USA for forclosures. I've never actually been there myself.

Mini bar, pink flamingos, underwater mortgage, etc. Just sounded like you were describing Stockton. I have only driven threw there on my way to Kirkwood or Angles Camp. One time I stopped for gas off of the freeway and had to run in to pay because the pump wasn't working properly. Well, my wife was pretty freaked out when I returned because there was purple running lights, chrome, reverse spinning wheels, 808 bass, all around us. I felt okay, but to my wife the situation was pretty unnerving. Lets just say we fill up long before Stockton now. ;)

Ah ok. Makes sense now ;-)

I've been to the Bay Area a few times but never went to Stockton. I heard it was #1 for forclosures in the USA at one point.

Ignore comments from people that don't live on the peninsula. Avg Incomes of "buyers" here are $200k-400k annually. Avg incomes in the town/area mean nothing, because many buyers have stock, inheiritance, etc. The avg incomes of people that are not possible buyers just don't matter. Apple stock just rose from $500 to $600 a share recently. How many people just made $100k+ on that rise recently? Lots. It's not paper earnings if you sell :)

800k sounds cheap to me! Not saying buy, just saying that you can probably rent it out for $3500-4500, depending on school district and quality.

What $800k will buy outside of the SF Bay Area:

Netreality says

Ignore comments from people that don't live on the peninsula. Avg Incomes of "buyers" here are $200k-400k annually. Avg incomes in the town/area mean nothing, because many buyers have stock, inheiritance, etc. The avg incomes of people that are not possible buyers just don't matter. Apple stock just rose from $500 to $600 a share recently. How many people just made $100k+ on that rise recently? Lots. It's not paper earnings if you sell :)

800k sounds cheap to me! Not saying buy, just saying that you can probably rent it out for $3500-4500, depending on school district and quality.

Right you are. How foolish of us to question the value of a 800K pile of rubble. I guess all these people in Belmont and surrounding area are not paying their mortgage because they are stuffing their mattress when their 200-400K salaries. Now that is a good saving technique. If you can rent a 800K house on the peninsula for $4500 then I haven't seen it yet. For 4500 I can rent a place in Hillsborough and we all know what 800k gets you up there.

wthrfrk80 says

What $800k will buy outside of the SF Bay Area:

Sure, but then I wouldn't have a job to pay for it.

Prices are high because there are jobs and then there are people here with money they've made or inherited and it's a hell of a nice place to live.

The BA is too expensive for most people. We almost moved but found something we could afford. We got lucky. Most people do not.

Having said all that, you don't have to spend eight tenths of a million bucks to live here. We didn't.

RentingForHalfTheCost says

stuffing their mattress when their 200-400K salaries.

State income tax with higher rates is kicking in if Brown gets his way...

http://www.mercurynews.com/california-budget/ci_20171655/brown-teachers-union-negotiating-deal-rewrite-november-tax

Brown's revised plan would put a larger burden on individuals who earn $500,000 or more a year, raising their income tax rate by 3 percentage points instead of his earlier plan for a 2 percentage point increase, while reducing his sales tax hike proposal from a half-cent to a quarter-cent. Those earning $300,000 to $500,000 would also see more of a tax hike: a 2 percentage point increase, rather than a 1.5 percentage point hike.

The new proposal also is expected to extend the period of the income tax hike from five years to seven.

Netreality says

Apple stock just rose from $500 to $600 a share recently. How many people just made $100k+ on that rise recently? Lots. It's not paper earnings if you sell :)

Not the people who bought during the bubble! their cash burn is eaten up by their mortgage payments. The "Forced Savings" RE agents were talking about didnt work well for these owners.

rootvg says

It depends upon where you buy and what you buy and how you buy.

(sigh)

This has nothing to do with the MARKET does it?

rootvg says

Sure, but then I wouldn't have a job to pay for it.

So then a high paying job in the Bay Area gets you nothing more than a shitty job outside of the Bay Area. In both places, people are living paycheck to paycheck. What's the point of going to school for a high-tech career then? Yikes.

nw888 says

rootvg says

It depends upon where you buy and what you buy and how you buy.

(sigh)

This has nothing to do with the MARKET does it?

Sure it does. If you end up over your head, it's YOUR fault. You didn't do the math. You don't know the market.

We were told over and over and over that we'd never get into Danville for what we paid. Guess what? They were WRONG, all of them.

How can it be any different anywhere else?