patrick.net

Intrest rates are about 25% lower than 2010.

Thus prices are that much higher.

Simple math.

Anecdote: there is a "white elephant" house near me. Built on spec, never sold, finally foreclosed on, still empty. While it was listed for sale, the price varied from $2.9 mil to $3.9 mil. It's called fishing. Sellers around the bay area always seem to be looking for suckers. Don't be one.

I would still like to buy if the numbers pencil out for me. But what I won't do is get caught up in hype either way - I won't go to outrageous lengths to buy something that doesn't make fiscal sense, and I won't wait forever for a price that is 'cheap' and just won't come around here. It has to be an acceptable place to live for a price I am willing to pay - i.e. somewhere in the same universe as the lifestyle I enjoy and numbers I pay for rent.

leo9 says

There is VERY BIG bubble forming again.

Forming again? California is still a massive bubble. $550k for 1500 sq. ft townhouse is insane. You could buy that same place in a nice neighborhood for 1/4 that price anywhere else.

I feel bad for anyone trying to scrap by in California. You pay a fortune for housing, and because the state is epically broke, they will eventually start taxing you to death. I hope a couple extra sunny days a year is worth fighting to keep your head above water.

Facebook man Facebook.
It was the third shoe.

DON'T BUY IN FOSTER CITY. THE PLACE IS UNDER SEA-LEVEL AND HAS A BIKE PATH FOR PROTECTION!!!

Listing price does not mean anything. How about analyzing comp sales to see where the market is heading compared to 2010.

Wife and I were in the same boat. Whether this is a bubble or not, I have no clue. But at least here in the east bay it seemed that things changed really quick. Over the winter houses were just sitting. By the time we started looking in the Spring suddenly houses started selling and inventory totally dried up.

Inventory now is the biggest problem. There's a few guesses as to why. One is that those who bought in the boom and had to sell already sold or foreclosed. The rest can afford to keep their homes but they're also heavily underwater. So they don't sell and thus there's less supply, which means there are less homes to bid on and so the resulting competition makes it feel like a bubble.

We got sort of lucky and won the house we wanted, but it was definitely not an easy situation.

As far as the areas around Silicon Valley, well the situation there sounds like a whole different story- as too is SF...

RentingForHalfTheCost says

DON'T BUY IN FOSTER CITY. THE PLACE IS UNDER SEA-LEVEL AND HAS A BIKE PATH FOR PROTECTION!!!

I heard they don't even have a high school and students must be bussed into mateo.

I'm sort of unsympathetic. There's a unit for sale in Foster City for $699,000 that sold for $430k back in 2011. The question is why you didn't buy last year. You tried to time the market and failed.

Delurking says

This does not deny the possibility that rents will keep going up regardless.

unlike 1997-99 there isnt a shortage of rentals... the last time rents went up, renters picked up and moved. And your correct neither higher incomes nor new hiring are supporting higher rents...

RentingForHalfTheCost says

DON'T BUY IN FOSTER CITY. THE PLACE IS UNDER SEA-LEVEL AND HAS A BIKE PATH FOR PROTECTION!!!

I'm not kidding at all with my comment. Even 499K is a joke in Foster City. You are living in a swamp and at any time there could be a traffic jam trying to get across the lagoons and out of town. You really want to park your hard earned money in a swamp? Seriously.

http://earthquake.usgs.gov/regional/nca/qmap/

And I thought a rent increase was bad enough.

No, rents also go up when a critical mass of the population receives larger paychecks or more cash from Mommy and Daddy -- or Ben Bernanke.

StoutFiles says

leo9 says

There is VERY BIG bubble forming again.

Forming again? California is still a massive bubble. $550k for 1500 sq. ft townhouse is insane. You could buy that same place in a nice neighborhood for 1/4 that price anywhere else.

I feel bad for anyone trying to scrap by in California. You pay a fortune for housing, and because the state is epically broke, they will eventually start taxing you to death. I hope a couple extra sunny days a year is worth fighting to keep your head above water.

It's a rat race here, and most of the good people are on the Oregon trial now. The Bay Area is getting worse and worse, since all the sane people are moving to Portland or somewhere affordable and safe. Tempted to do the same, but a lot of my elderly family members still live here, and I feel I need to be close by in case they need me.

Thomas, I usually agree with you, but it is an easily verifiable fact that rental units are in short supply in the Silicon Valley and that rents are going up. Palo Alto/Mountain View/Sunnyvale/Santa Clara all have much fewer listings than 2-4 years ago, and most listings are taken within 3-4 days. This was the exact case last summer when I was trying to find a new apartment and all of my friends and relatives that are looking to move are having a hell of a time finding anything decent in the SV for a price anywhere near what they were paying 18 months ago. The East Bay is a little better, but even that has less available inventory than a couple of years ago.

Rents in Mountain View have increased almost 30% from 18 months ago. They shot up close to 40% last summer and then backed-off ~10% since then. I know this because I live here and had to move last summer. All of the areas surrounding the high-paying job centers are fucking insane right now. At least around here, wages easily support the rents, which sucks because they can probably go up a lot more before there are serious vacancy issues. The 3BR unit I used to rent with roommates was $2312 a year. They tried to crank it up to $2560 last summer and I left to get a place with my fiancee. New leases on my old unit were $3400 and it filled instantly, along with much of the rest of the complex. I couldn't believe it, but if you are a Googler pulling $130k+ base salary (which anyone technical at Google probably will per ex-coworkers that went there), even the $2400 a month the place is now asking for a 1BR seems like no big deal. It is ludicrous, but there are more than enough willing and able tenants at that price point.

BMWman,

Wow. I'm in the wrong business. I'm making like $10/hour now. Is anyone willing to offer E-man a $50/hour job? :0)

I'm looking into the "Equity Buyout" business model right now. It's a little cut throat under some circumstances, but it does make sense under some circumstances especially on properties that have encumbrances. We'll see how that works out. Live only once. Might as well try it. Haha.

E-man,

What you are doing may pay less now, but it is probably something that you don't need to "retire" from since it resembles self-employment, and you can live off of it later. Hire a property manager and live with paying some of the rental income for that, or just sell the properties and you'll be set until you die.

Us tech slaves, on the other hand, are replaceable by college-grads for 1/2 to 2/3 the pay by the time we hit 45 because college grads will work harder and longer. You have to really be on your game, or make your way into upper management, if you want to have job security to even age 65. The techies that aren't stashing 50%+ of their pay into 401k's and savings are going to be flipping burgers or just plain fucked when "retirement" comes along. Working in high tech is a sucker's game unless your long term strategy includes self employment of some fashion. I've only been out of school for 5 years and in this industry, but that's the impression I get. So, maybe I am way off.

bmwman91 says

So, maybe I am way off.

Take a look at the age mix of your coworkers and that will tell you your future, assuming things don't get any worse from here.

http://research.stlouisfed.org/fred2/graph/?g=953

What would the annual property taxes be on a $680,000 property in this city?

American in Japan says

What would the annual property taxes be on a $680,000 property in this city?

Times it by 1.25% & you should be in the ball park. Yep, $8,500/year. :)

leo9 says

We saw a townhouse in a foster city - 2bd 2 bath 1500 sqft which was selling for $550K in 2010. Now in the same community similar houses are getting listed for $680 plus. Few weeks ago in the same community there was listing for 2db 2 bath same floor plan. I do not remember the listing price but it got sold for $628k. Seriously ??

You shouldn't have tried to "time" the market. Instead your timing should have been determined by finding a house you love and can afford. (are comfortable with the mortgage payment).

But of course when you listen to the doomers here that guarantee you 1975 prices coming soon, I don't blame you for not pulling the trigger. I guess a big part of life is to figure out who to listen to.

As of right now it does not look like 1975 prices are on the horizon. If you want to buy a house, figure out what you can afford and go and get one. You missed the absolute bottom but so what? Do you want to wait another 10 years and keep wasting money on rent?

BTW, we recently had our home appraised for refi and it came back $125k more than what we paid for in Jan 2011. Quite frankly, we "cleaned" (paint, new floors), updated a bunch of stuff but maybe $20k worth of things. Pretty nuts!

SubOink says

BTW, we recently had our home appraised for refi and it came back $125k more than what we paid for in Jan 2011. Quite frankly, we "cleaned" (paint, new floors), updated a bunch of stuff but maybe $20k worth of things. Pretty nuts!

You said it wrong. You should have said "pretty nice." After all, it feels good when you make the right decision.