patrick.net

It really depends on each person's situation but I did too @nuttboxer.

In 2007 I'd been renting cheaply in the bay area for 10 years. Single with no kids and had paid down debt and made modest gains in the stock market with savings. I had about 150K in savings/etrade and maybe 200-250K in company stock I could sell. I could have bought something on the peninsula after the crash but if I had I'd still be in debt paying down a mortgage in a town I haven't lived in for the past 5 years - assuming I kept the place.

Instead I made over $2 million in the market (mostly from the startup I worked at - didn't take off until 2014) and now have 3 "homes" I rent out of state. Mortgages on 2 of them but I could pay those off with pocket change if I wanted to.

I still have a plenty of cash on the sideline for the market, making loans, buying more rentals, ... whatever other revenue I may find my way to ... and I continue to rent cheaply.

So yeah, there are smart reasons not to buy if you're in certain situations. Glad I held my cards and didn't sell that company stock just to buy a crap shack in the bay area.

just_passing_through says

So yeah, there are smart reasons not to buy if you're in certain situations. Glad I held my cards and didn't sell that company stock just to buy a crap shack in the bay area.

From my point of view I'd never advocate selling off an investment to buy a primary residence. Ever. So hopefully what I'm saying is not coming across that way. If I had it my way and there was a litmus test for being allowed to own a home, you'd have to have saved 20% down payment all while maxing out a 401k every year in the process. That's an over exaggeration, but if you can't save the 20% down while saving for at least something for retirement, you need to rethink your plan.

If I were king I'd implement your litmus test.

Everyone's situation is different. Some people are crappy savers and it's a good way to at least 'get them to save'. Others have wives that might leave if they don't buy. On and on...

I've been pretty lucky but also was very certain that company would take off and do extremely well. I had plenty of co-workers who sold too soon.

Yes, everyone should consider avoiding acquisition of an asset that has consistently increased in value over time. Especially in very desirable markets. It makes no sense whatsoever to purchase a home for your family. And no, you are not being overly paranoid about losing your job. Everyone is getting laid off these days. The labor market is absolutely terrible. Unemployment is rising very fast. The new presidential administration does not want to focus on economic nationalism, jobs, growth, or any of that. This admin wants to ship all of the jobs to China, who they have claimed is a very fair trade partner.

just any guy says

I feel like I should be living a better lifestyle given where I'm at in my career, but CA just squashes that.

As a rule of thumb, I tend to think that CA = higher cost of living (mostly housing costs), but also usually higher salary. Depending on a person's job, I have this gut feeling that a person who makes decent money (not struggling) might actually accumulate net worth faster in CA than in other states due to the typically higher wages, and that a good portion of the higher living costs go into your home equity, which is still your money if you choose to unlock it one day. CA RE seems to appreciate faster too. I haven't run any numbers to back that up, though. And, I think it's clear that if you currently have a much higher paying job offer there, that it makes sense to take it and at least rent for now.

says

Yes, everyone should consider avoiding acquisition of an asset that has consistently increased in value over time. Especially in very desirable markets. It makes no sense whatsoever to purchase a home for your family. And no, you are not being overly paranoid about losing your job. Everyone is getting laid off these days. The labor market is absolutely terrible. Unemployment is rising very fast. The new presidential administration does not want to focus on economic nationalism, jobs, growth, or any of that. This admin wants to ship all of the jobs to China, who they have claimed is a very fair trade partner.

Life Sucks!
What do we do guys? What do we do?

ThreeBays says

However, in a rising property environment, which is the majority of the time in CA, you are in a race to save 20%. When prices are rising $100k a year, it makes sense to prioritize buying asap, then focus on your other goals.

That's a hard one. Best case you can get mommy and daddy money for help with the down payment. If you're in the price point where it's rising $100k a year, you're going to be chasing for a while unless you've got low cap gain income. If you're a W-2 employee with high wages it makes this even more difficult. Or put another way, are you going to pay the federal government 28, 33, 35 or 39.5 percent to get after tax dollars for the down payment?

If you can't get your 20% down and still max out a 401K, you're chasing the wrong dream then most likely. Just keep saving and renting. Or you could very likely get a comparable salary, likely less of course, in flyover country where you can get way more for your money. Or at least the down payment is affordable. At some point the cap gains on a house gets maxed out. My guess would be a $600k purchase price at age 32 and you sell at 59 with close to $500k in gains, tax free. Once you get over that amount of cap gains for real estate, you can get similar tax rates with stocks or other investments. And I always go back to a house not being a burden on you. The lower the payment the better in my book. So after a certain point, trying for a high appreciating house gets risky.

Most people won't see it the way I do. They want to own a home. I don't have a problem with this to be honest. It's just not that logical in most circumstances. I didn't do it logically to start with myself, so I don't have much of a pulpit to preach from.

ThreeBays says

After buying I built a more aggressive portfolio. Also got a lot more money into Roth retirement accounts and HSA.

That's the way to do it. Forgot about HSA's as well, good point.