patrick.net

we should get a house right now due to the 4.5% rate

Thing is, low rates mean high prices unless and until the macro economy turns and actual wage inflation returns.

If and when that happens, rates will start moving up, quite likely negating the wage earners' additional home purchasing power, so prices will stay at current levels. The 4.5% interest rates are nice but it's better to buy when rates are high and refi when they go low.

I'd put only 3.5% down and just pay off the loan faster to save on the interest, but unfortunately the FHA will only want to see a total mortgage debt burden of around $1500/mo on your current salary. No $400,000 loans for that!

I'd continue renting and saving and wait to buy when you get married and have the second income to boost your ability to qualify for a bigger and better place.

If you've got $110,000 at age 26 you should have double that at age 30, no?

The system is in the process of adjusting from the go-go boom-bust of the previous decade. People in your situation 5 years ago could walk into WaMu, Countrywide, or Wachovia and walk out with a $700,000 loan no problem.

You'll note that these storefront lenders are no longer present in our communities, they all BLEW UP.

Unfortunately, in the process of blowing themselves up they enabled speculators to push real estate values well above previous lending limits. The safe & sane lending limits have returned but it takes time for the market to adjust to the new realities.

Complicating matters is Prop 13 and the Peninsula's lack of buildable new land. Everyone who bought from 1849 through 1999 or so is still sitting pretty and can rent out their place for much more than their mortgage payment. This limits supply, as does the lack of new building, meaning there are deeper wallets looking to buy nice houses than you and will outcompete you for the limited supply of family-friendly housing.

I live in Mt. View, am 20 years older than you, and make more than twice as much after taxes. I'm not buying anything yet. I'm moderately sure that there will be significant declines in Peninsula/SV housing coming, quite confident there is much more economic pain for CA coming, and don't want to live in a crappy house in one of the less pleasant areas. Yeah, the neighbors in my apt. building and esp. their screaming kids are annoying, but I'm paying only 7% more than I did 13 years ago when I moved out here.

I’m 26 years old, I live on the Peninsula in the Bay Area. Houses around here cost about 550 to 700k.

Right now, focus on your career. Watch as prices continue to decline. The same homes you are seeing actually were a fraction 10 years ago. The reason behind the 2-3x inflation is slowly reversing. It will take some time. Over the long run even in SF Bay Area, prices only went up at the rate of inflation.

When looking up property on Redfin or Zillow factor in inflation (30-35%) from prebubble historical prices (1997) to guage a bottom. The mediams were much lower then vs today.
$100K you saved will go a long way toward a deposit and savings.