patrick.net

I've been waiting and saving since 1998. From 97-98 I noticed prices doubled in many areas (literally 100% in 1 year) while others just a measly 30-70%. I said to myself, this has got to be a bubble, I'll wait it out.

2012 and I'm still waiting. Looking back, I should have bought, but those are the breaks. I've had a good career so far and have saved a significant down.

I'll give it one more year (unless I come across something I like and can afford) and then I'll probably just relocate to another state.

Personally, I would wait until after the election & inauguration. There will be all sorts of pie-in-the-sky promises made to loan-owners to buy their votes. These promises will come from both candidates during their campaigns. Most underwater folks know this, and they are holding-out to see what sort of free bribes they will be offered. That is one component of the Bay Area's super low RE supply. Once the elections are over, those promises will probably be largely forgotten, and people will be left with a choice between selling at a loss, walking away or continuing to pay money for nothing.

Second, it is highly likely that all this FB IPO jazz will be largely done & over with by then. From talking to a friend that works there, they have to have their IPO in the next month or so, since employees can't sell until 6 months later. Well, the top tax bracket's tax cuts expire on 12/31/12, anf FB wants its employees to be able to sell off their vested RSUs before the rate goes up. So, the market will get a few hundred, or thousand perhaps, new-monied folks looking for houses right around election time, and I am willing to bet that they will have spent it on housing by the time the inauguration rolls around. There are surely a number of would-be sellers along the peninsula that are holding-out for the FB IPO because they know that they will have an opportunity to get these folks bidding against each other for the short commute.

I admire your perseverance in waiting since 2001. That is a long time to want to get out of a rental, so I commend your self-control (and your partner's). The hard truth is that nobody here knows what is coming. Prices seem nonsensical, but they may just stay that way. There is more than enough dumb money out there to ensure that. Then again, maybe there will be some sort of implosion if web-based ad revenue dries up and causes our Web Services 2.0 economy to blow up. It's anyone's guess. I have seen a couple of articles now about how various celebrities are "investing in and doing high-tech start-ups." I see that and think, "oh boy......the writing is on the wall now!"

We are looking at houses now. But that was after 12+ years of renting and saving. I do not care about whether the market is going up or down. Its what we can afford. We watched the bubble inflate and pop and in that time we lived very frugally, and saved up a lot of cash. Yes- its expensive where we live. I think we've finally come to accept that to a degree. Had we not saved what we have there's no way we would buy now.

I have never once had the thought that we were throwing money away on rent. If anything, renting during the last decade or so was the best financial decision we ever made. I'm not "Sick of throwing money away" now either.

Waiting since 2003. First time I should have been able to buy. I was still in college until 1996 and then made too little for the next five years.

At this point, I have to work 15-20 more years. If I have to rent that whole time, so be it. Backup plan is retire in Vegas with a cash purchase.

I see nothing worth worrying over on the horizon. Rent, buy, it's all the same really. If you are fretting that much over mortgaging a home you shouldn't tralistically be able to afford, maybe you ought to change your life focus.

1sfrenter says

I know none of us have a RE crystal ball, but the group wisdom saved me from being a sucker 6 years ago when everyone else was behaving like lemmings.

So True, thanks.

Whenever I see a great deal on a property I want to live in and is a good investment to the point I can get my money out if needed.

When is this? Next Month? Next Year? Next Few Years?
I do not know.

I do see cracks. This property, in my opinion, could work for someone, Mulholland Drive, 2.000 square feet, gorgeous, and 297K. (Down from 589k just 3 months ago)

http://www.redfin.com/CA/Woodland-Hls/23171-Mulholland-Dr-91364/unit-2/home/3549607

If you find a house you love and can afford, then... I waited for many years in Monterey, saw many, many houses, and finally bought recently. I've seen some absolute crap over those years (and expensive crap at that), but my wife and I love the house we purchased. I think that fact alone will cushion any (potential) future price declines. That and the fact we intend to be in it for 20+ years.

David9 says

I do see cracks. This property, in my opinion, could work for someone, Mulholland Drive, 2.000 square feet, gorgeous, and 297K. (Down from 589k just 3 months ago)

http://www.redfin.com/CA/Woodland-Hls/23171-Mulholland-Dr-91364/unit-2/home/3549607

That was a rather optimistic initial listing price. $100k higher than its 2004 price...

Bigsby says

That was a rather optimistic initial listing price. $100k higher than its 2004 price...

It sure was. The asking price now is just a bit higher than 1999. Which is what I think we all are expecting. This property has a $650 a month HOA.

dodgerfanjohn says

If you are fretting that much over mortgaging a home you shouldn't tralistically be able to afford, maybe you ought to change your life focus

We're public school teachers. We are the middle class. Rent is expensive and owning is expensive.

Like most folks in America these days, we are fretting over the cost of shelter.

I'm not talking high class problems like where should we invest our piles of cash and what will give us the best rate of return. It's about where should we lay our heads each night and do we want to buy a home before we retire...

i'll probably buy a few years after prices stop dropping; or maybe after a couple of years of consistent price increases.

i don't want to be one of these losers that buys and posts on housing forums after the fact trying to convince themselves and everyone else they didn't make a retarded decision.

1sfrenter says

We're public school teachers. We are the middle class. Rent is expensive and owning is expensive.

I come from a family of teachers so you have my respect. One of the most important professions in the country. .

1sfrenter says

We need to move and are sick of renting, but worried that the market has another leg down. We've been waiting for this bubble to play itself out since 2001, are getting older, and don't plan on being lifelong renters.

You might get just as sick of renting money as you are sick of renting your house/apt. Renting money (i.e. paying interest on a loan) is also "throwing money away."

If house prices are extremly high, you might actually throw less money away renting vs. renting money to "buy" a place to live. If being lifelong renters allows you to retire early, what's the problem?

1sfrenter says

Like most folks in America these days, we are fretting over the cost of shelter.

Most of the folks in America aren't fretting over the cost of shelter. It's just the folks living in overpriced areas like coastal CA, Boston, DC, and NYC that are fretting.

APOCALYPSEFUCK is Tony Manero says

Best to wait until the last Realtor® suicides.

Good luck with that! They breed like bunnies and God help you if you get bitten by one!

Uhhhh, must buy NOW.... Else be locked out forever....

wthrfrk80 says

Most of the folks in America aren't fretting over the cost of shelter. It's just the folks living in overpriced areas like coastal CA, Boston, DC, and NYC that are fretting.

Given the number of people in this country who are unemployed, on food stamps, or underwater on their houses, I have to disagree with you. Whether you call this thing a recession or a depression makes no matter.

The statistics alone about the average savings for Americans are scary.

From a recent article: Just 54% of consumers have more emergency savings than credit card debt (http://articles.latimes.com/2012/feb/21/business/la-fi-mo-consumers-insecurity-20120221)

wthrfrk80 says

If being lifelong renters allows you to retire early, what's the problem?

1. Dogs and cats (we seem to collect animals, and we love them all)
2. Irritating landlords
3. Rising rents
4. Stability (facing possible 2nd owner occupied eviction/landlord selling our rental)

1sfrenter says

From a recent article: Just 54% of consumers have more emergency savings than credit card debt (http://articles.latimes.com/2012/feb/21/business/la-fi-mo-consumers-insecurity-20120221)

That is indeed terrifying. As if there wasn't enough "systemic risk" in the global economy already.

1sfrenter says

From a recent article: Just 54% of consumers have more emergency savings than credit card debt

I hate to say this, but that is actually better than I would have guessed. It is still pretty bad, though.

My time horizon is forever because I'll probably be a bum spending money on airfare to visit people in the summer. My residence might end up being where I lived before coming to N. California, where the property tax is about $70/year. I don't wanna be down there in July and August.

1sfrenter says

We're public school teachers. We are the middle class. Rent is expensive and owning is expensive.

No I am afraid that among those who wanna buy in a place in The Fortress, you are not middle class (I'm not either). Fortress priced seem like dirt cheap to the middle ranks of Fortress buyer folks like your fellow San Franciscan described in his post:

/?p=1210933&c=815880#comment-815880

I am in a similar boat. Renting with pets and kids in school makes ownership very attractive. That's an intangible that can't be measured by rent/buy calculators. However, where I am now, half of my rent covers prop taxes and my LL (who does not have a mortgage) is using the balance for maintenance reserves... It's a big, old house

I do think that rent buy calcs are useful if it's an investment decision (as opposed to a consumption one). I bought my first house in PDX and promptly got a too good to refuse job offer. That house rented for it's PITI for 2 yes then sold for a tiny net profit. Another house bought pre-bubble had a PITI of 75% of rent value. That one I sold at a big profit.

When I succumbed to the temptation to pay more than rental value due to appreciation and aforementioned pets and kids, I got burned.

So buy if the rental calcs make sense, or if you just don't care whether it's a good investment or not. In a perfect world, we would sign a 10 year lease at which point our kids would be thru schoollease on a SFH

Would be interested if anyone has obtained such a lease on a SFH

B.A.C.A.H. says

1sfrenter says

We're public school teachers. We are the middle class. Rent is expensive and owning is expensive.

No I am afraid that among those who wanna buy in a place in The Fortress, you are not middle class (I'm not either). Fortress priced seem like dirt cheap to the middle ranks of Fortress buyer folks like your fellow San Franciscan described in his post:

/?p=1210933&c=815880#comment-815880

What's amusing is you actually believe it.

If all that were true, "Fortress" homes wouldn't have dropped from their peak prices in the 1st place. Nothing about his post is any different than it has been for the past 10 years (just replace Facebook with Google).

Clearly there's not enough money to support the prices.

CrazyMan says

What's amusing is you actually believe it.

It would be amusing if it weren't true. I think SFAce has written about his relatives in some crowded expensive Asian place, about how much real estate costs there versus here. I think to what he wrote, here is a bargain. It certainly seems like a bargain compared to what I observed in areas around Taipei while commuting to there in the previous decade. Here is some of what he wrote in /?p=1210933&c=815880#comment-815880

SFace says

There is no sticker shock for most foreignors

SFace says

It doesn’t take a million dollar home to buy, just 250K and a good job,

SFace says

People Like Edvard see’s very little step-down moving from say BA to North Carolina. For the Asians, Indians, etc. it is a huge step-down

SFace says

Outside money is significant. Most foreign students who attended a university here/Canada are generally wealthy or moderately wealthy and most can place a phone call to mom and dad at home to wire 200K-300K easily

Which is the part that you do not believe?

None of it. You nor him ever have any data, at all. Just anecdotal heresay.

It's all garbage unless you can post data.

Yes my observations are all anecdotal. But SFAce did post data, that's why I referred to it. You just did not like his data so you lumped it in with the anecdotal heresy.

I agree with your attitude about the reasonable prices, etc., and like you I am not drinking the Cool Aid, that is why my partner and I never did buy in The Fortress and have no desire to do so. But for someone to bash my anecdotes and SFAce's data, well a Mandarin PhD engineer colleague who recently bought her Cupertino Schools Fortress Residence explained it to me, the ones who bash them are jealous.

Um there is not one single piece of data in his post, in which even he states are his observations. Please highlight actual verifiable data in his post (hint: you won't find any).

He may or may not be correct, but without any actual facts to backup the claims it's meaningless and disregarded.

And yes it's because I'm jealous (lol) and actually has nothing to do with the fact THAT THERE'S NO ACTUAL DATA TO BACKUP ANY OF THESE CLAIMS.

I'd like to add that the company I contract for is ~80% EE PHDs and quite frankly the majority of them have the common sense of a turnip.

Of course some of them are absolutely brilliant, but it stands for paid high dumbass for a reason.

CrazyMan...it IS true that housing here is a bargain for anyone that lives in HK and has any money. $1M will barely get you a 400SF condo in the desirable parts of that place. You can have all the cash in the universe and still not be able to get a house because there are so few of them in HK and they almost never go up for sale. Now, whether those people actually want to come here in any large number is another story entirely, but it is absolutely true that a Chinese person with money would see Bay Area RE as a deal.

I am not really sure WHY, but buying a house is even more dogmatic in Chinese culture. They are a pretty group-think society (not saying it is good or bad, just that it is what it is). You do well by conforming and not rocking the boat. So, there are a billion people over there convinced that buying a house is the only way that one can ever appear successful and (for males) attract a mate. Buying a house equates to safety & stability, and demonstrates that one is serious about making money & investing. Much of this mindless dogma carries right over here, and I see it a little among some of her family, and among some of her first-gen friends (spread by their zero-gen parents). Once they have been here a couple of generations, it usually subsides slightly to match the still idiotic fervor of white Americans.

My fiancee's father is worried, like REALLY worried, that we still rent. In his mind, not having a house prior to marriage just doesn't compute, and I imagine that he is embarrassed to tell friends/family in China (where he lives & works) that his daughter is marrying some American guy with no house. Over there, marrying a guy with no house is probably a social statement like, "well she's a nasty hag and that's probably the only option she'd ever have anyway, although you'd think she'd at least try find an UGLY guy with money!" Money & appearances are huge...it's an odd bastardization of eastern culture mixed with most of the worst parts of western capitalism. Sad, really.

With that said, not everyone there is like that. Most people are decent, hard working folks. It is the ones that have come upon a lot of money that generally seem to be the piles of crap. That's probably because you get rich by breaking rules and screwing over anyone and everyone, including family, to get the money. I have seen real life examples of this in my fiancee's family, and a number of my Chinese coworkers families. Anyway, most people there are good & hard working just like us. But, with a population of well over 1 billion, even if only 1% are bad apples, that is still over 25% of the US population worth of bad apples!

CrazyMan says

None of it. You nor him ever have any data, at all. Just anecdotal heresay.

It's all garbage unless you can post data.

+1111111111111111

sf ace is so full of shit and the sheeple just eat it up like crack. no data ever.

CrazyMan says

And yes it's because I'm jealous (lol) and actually has nothing to do with the fact THAT THERE'S NO ACTUAL DATA TO BACKUP ANY OF THESE CLAIMS.

I think that BACAH's point is that people of that culture assume that everyone aspires to live in a coveted place like cupertino. They would talk shit on someone that did if they didn't because they are jealous, and assume that anyone else that does has the same myopic view of life. He wasn't necessarily saying that YOU, or any culturally-American person is jealous.

CrazyMan says

I'd like to add that the company I contract for is ~80% EE PHDs and quite frankly the majority of them have the common sense of a turnip.

Of course some of them are absolutely brilliant, but it stands for paid high dumbass for a reason.

This is precisely why the BA is so ridiculously expensive. As I have been saying for a long time, you don't have to have any financial sense to make a lot of money. Start handing 6-figure salaries to people that find a way to live paycheck-to-paycheck, BEFORE buying a house, add 3.5% FHA loans & other creative instruments, and voila, you have stupid high RE prices!

Crazy,
Like bmwman bimmerman says, I am office mates with those folks but i don't drink their Cool Aid. I am more like you than like them but like bimmerman says it is what it is and many of them will diss you off inside of their minds as being jealous.
It's sad really when you think of it. In the extreme, we wind up with things happening like what happened at Siport or on the train tracks near a local high school.

When you guys say buy, you really mean borrow, right? I mean you don't actually have the money for the house... and if you did,.. then you would just borrow for a bigger house , right?

E-man says

You guys like to rent and save money. We like to buy real estate and save it. It's just a different form of saving.

Sure. I have no problem with anyone buying a house to LIVE in it, and to pass it on to children. That's what houses are supposed to be for. My gripe is with all the dummies that saw houses as ATM machines and quick money makers (and many that still do). Doling out loans to people that can barely save 2 months worth of income to buy $700k houses is also a big problem.

I wish to have a house someday for my own reasons (garage for woodworking & car projects, no attached walls so that I can fully enjoy my speaker-building hobbies). I rent apartments (relatively) cheaply to save money faster so that I can eventually buy what I want to live in. I could rent a house now, but that is prohibitively expensive!

bimmerman, your comments about your inlaws' values speak volumes about the outlook for your intended union.

Good luck.

B.A.C.A.H. says

bimmerman, your comments about your inlaws' values speak volumes about the outlook for your intended union.

Good luck.

I didn't mean to imply that my in-laws are the folks that I have a "cultural disagreement" with. Her dad is slowly understanding the whole idea that here, a house is just a house. Her family is mostly all here anyway, and has been since the 1980's, so they are about as American as anyone (except they seem to eat healthier lol). We all get along fine, and I never get hassled about the house thing personally (her dad nags her about it). Perhaps there was a little exaggeration on my part about her dad's outlook. The segment of her family that I have met is a bunch of nice good people. There is another segment that I have never met, and nobody talks to because they sort of put money before family in the past...and they live 6500 miles away so it isn't really an issue anyway. I wouldn't be marrying her if her family wasn't solid since you marry more than just the individual!

bmwman91 says

it IS true that housing here is a bargain for anyone that lives in HK and has any money.

RE prices in major cities of Asia is very expensive. For example, the price/rent ratio in Sentosa of Singapore is 764. S$17.6 mil (US$14.1 mil) for a house on a 8000 sqft lot size.

Source: http://www.propertyguru.com.sg/listing/5447781/for-sale-warm-welcoming-balinese-style-bungalow.

Helloeeze says

... why do white guys marry Asian women so often?

And yet hardly any white gals marry Asian men?

bmwman91 says

Second, it is highly likely that all this FB IPO jazz will be largely done & over with by then. From talking to a friend that works there, they have to have their IPO in the next month or so, since employees can't sell until 6 months later. Well, the top tax bracket's tax cuts expire on 12/31/12, anf FB wants its employees to be able to sell off their vested RSUs before the rate goes up. So, the market will get a few hundred, or thousand perhaps, new-monied folks looking for houses right around election time, and I am willing to bet that they will have spent it on housing by the time the inauguration rolls around.

I don't know...in the IPO-rich 90's, I don't remember housing shooting up that much -- maybe the upper upper end will see a little thrust, but I think this is mostly an overplayed scenario.

For the original poster -- I'm in your boat. I just renewed the lease on my baby-shit green hovel, as I see nothing worth a damn out there, and no good lots to build on. I've been saving for the last four years. I had been saving and looking to buy in 2003-4, but backed away from that plan for obvious reasons. Spent the money on other stuff, and then started saving more seriously in mid-2008. Most of our salaries, plus every bonus, every ebay sale, every freaking onesy-twosy surplus. The biggest expense this year was paying my income taxes and replacing the transmission in my '89 Volvo. My savings habits have gone beyond frugality and well into abstemiousness. If most of Americans enjoy wealth effect, I enjoy something like poverty effect! The crisis I am encountering right now is that longer I defer gratification and live beneath my means in this way, the more my expectations rise in tandem. I find myself thinking, "is this really the dump it's all been for?" about places I would have readily considered even two or three years ago. I know I can't be alone in this.

E-man says

We're more than happy to work two jobs so we can pay-off our mortgage early

Most bay area real estate results in a 625k loan. No amount of multiple jobs will ever pay that off. In fact, the people I see with the most money do nothing, its unearned, massive bonuses or massive capital gains. Working like a dog is not going to pay off a house.