patrick.net

StoutFiles says

That said, hardly anyone can actually afford a house, that’s why almost everyone gets a loan. A loan, by definition, means you’re borrowing money because you can’t afford something. You should word it:
“I do know a lot of people that are simply buying because they now can get a loan for a home that they love and assume that they’ll keep their current income flow in order to pay their loan”

So, what would you call renting then?

"I know a lot of people who are paying a lot of money to someone else becaue they can't afford to buy a home. They assume that they'll keep their current income flow in order to pay their landlord"

tatupu70 says

StoutFiles says

That said, hardly anyone can actually afford a house, that’s why almost everyone gets a loan. A loan, by definition, means you’re borrowing money because you can’t afford something. You should word it:

“I do know a lot of people that are simply buying because they now can get a loan for a home that they love and assume that they’ll keep their current income flow in order to pay their loan”

So, what would you call renting then?
“I know a lot of people who are paying a lot of money to someone else becaue they can’t afford to buy a home. They assume that they’ll keep their current income flow in order to pay their landlord”

Intelligent? If they can't afford to pay their landlord, just imagine how much worse they'd be off if they had a huge house loan they couldn't pay.

All I'm saying is we shouldn't ever use the phrase "afford to buy a house" because hardly anyone is buying it outright. It's "afford to get a loan". Thank god the loan requirements are getting stricter to save people from themselves.

StoutFiles says

All I’m saying is we shouldn’t ever use the phrase “afford to buy a house” because hardly anyone is buying it outright. It’s “afford to get a loan”. Thank god the loan requirements are getting stricter to save people from themselves.

Why the change of language now? People have been "buying" homes for the past 50 years using 30 year mortgages. No one had a problem with the language in the past. I'll agree with you if you limit it to when people only pay interest or less than interest; they should not say they bought a home until they start paying some principal.

StoutFiles says

Intelligent? If they can’t afford to pay their landlord, just imagine how much worse they’d be off if they had a huge house loan they couldn’t pay.

OK--clearly you are in the "all debt is bad" group. I just don't understand that thinking at all.

tatupu70 says

I just don’t understand that thinking at all.

Well, I've heard that all debt contributes to excessive flatulence and bad breath... so there's that.

ch_tah says

Klarek, you must be one hell of a buzzkill at a party.

I'm a buzzkill to anybody that's trying to project fantasy into reality.

SubOink says

Figuring out what you can afford, is not emotional. It’s very rational. You’re the retard here.

I can afford a Lamborghini. If I test drive one and love it, should I buy it?

There's nothing rational about making the biggest purchase in your life based on a) if it feels good, and b) whether you can.

The latter is the barrier to market purchase. It's fucking asinine to say "well you can so just do". That's all your argument comes down to. Hence, it's retarded. That you're standing by such a statement (after home many months of home ownership, two?) is a testament to who is acting retarded (note: I didn't say you ARE retarded, but you obviously don't know the difference).

tatupu70 says

So, what would you call renting then?

“I know a lot of people who are paying a lot of money to someone else becaue they can’t afford to buy a home. They assume that they’ll keep their current income flow in order to pay their landlord”

It's deferring the risk and the responsibility to the owner. TA DA, there's your difference.

Congrats, Wagamama! It must be exciting to finally own a house. Yes, I think there is risk to owning, but there is with renting as well (as me how i know, lol). And if you happen to lose your job, or become disabled in an accident that prevents you from working, hopefully you will have disability insurance. At the very worst, you could sell and rent again. Yes, that would be expensive (closing costs and such), but it shouldn't ruin you. Actually, at the very worst, you could lose your house, and your down payment, AND the closing costs via foreclosure. But you seem intelligent and savvy enough to avoid this. So, at worst, maybe just a short-sale? That would still be bad, but it wouldn't be enough to ruin you, probably.

Don't dwell on the negatives too much, esp now that you have jumped into the fire of home ownership. Take care of your home and your family, and you won't go wrong. Unless something terrible happens, which is always possible. But if they're going to get you, they're going to get you. No point in losing sleep over it (don't ask me how I know this, lol!).

Best wishes.

klarek says

tatupu70 says

So, what would you call renting then?
“I know a lot of people who are paying a lot of money to someone else becaue they can’t afford to buy a home. They assume that they’ll keep their current income flow in order to pay their landlord”

It’s deferring the risk and the responsibility to the owner. TA DA, there’s your difference.

That's not a shock that you see only the negatives...

tatupu70 says

That’s not a shock that you see only the negatives…

Let's talk about equity and home value appreciation then. Looking good these days?

klarek says

tatupu70 says

That’s not a shock that you see only the negatives…

Let’s talk about equity and home value appreciation then. Looking good these days?

Depends on the area. Right now, things are selling pretty well around here so we'll see where prices go this summer. But in any event, a house is not a short term investment. Let's look at nominal home prices over the last hundred years and see how often they go down versus go up.

After I bought, 2 of my frineds have jumped into the bandwagon.

Actively looking and making offers now.

SubOink says

have done a cross country trip and I have to say…well, Ohio is…just Ohio. Very plain and very simple. You can’t compare it. If CA was as cheap as Ohio, why would anybody live in Ohio?

This is not true. Overall there are many places just as nice or nicer than San Francisco for different reasons than the weather. Plus the weather in San Francisco isn't so great that it justifies such high prices. The city is very provincial. There are no world class theaters, music halls or museums that you can find in cities like New York, Chicago or Madrid. The people are very rude and obnoxious. The cultural diversity that this city boasts is mostly limited to people from south-east Asia. You will say that people are willing to pay this much money, so it must be justified, but that was true back in 2006 at the peak of the bubble, as well.

dunnross says

The cultural diversity that this city boasts is mostly limited to people from south-east Asia. You will say that people are willing to pay this much money, so it must be justified

For the amount of living space, SF and the Bay Area are Bargain Prices, and The Wide Open Spaces, compared to where they came from.

That is all that matters.

sybrib says

dunnross says

The cultural diversity that this city boasts is mostly limited to people from south-east Asia. You will say that people are willing to pay this much money, so it must be justified

For the amount of living space, SF and the Bay Area are Bargain Prices, and The Wide Open Spaces, compared to where they came from.
That is all that matters.

Chinese and Indian cities are only more expensive than SF relative to their salaries, but, in nominal terms, SF is still more expensive. But, housing in those countries currently is only affordable to the oligarchs. Eventually, when they run out of the last oligarch to buy, there will be a housing crash the likes of which hasn't been witnessed in the modern world.

Can't agree more with dunross. Money is limited and every one wants to be rich? Not possible. Economics 101!

dunnross says

SubOink says

have done a cross country trip and I have to say…well, Ohio is…just Ohio. Very plain and very simple. You can’t compare it. If CA was as cheap as Ohio, why would anybody live in Ohio?

This is not true. Overall there are many places just as nice or nicer than San Francisco for different reasons than the weather. Plus the weather in San Francisco isn’t so great that it justifies such high prices. The city is very provincial. There are no world class theaters, music halls or museums that you can find in cities like New York, Chicago or Madrid. The people are very rude and obnoxious. The cultural diversity that this city boasts is mostly limited to people from south-east Asia. You will say that people are willing to pay this much money, so it must be justified, but that was true back in 2006 at the peak of the bubble, as well.

I was talking about CA as a whole. I have pictures of OHIO, they look like this...cornfields...cornfields...cornfields. Then there were also cornfields. Los Angeles has EVERYTHING world class. Including the worlds best orchestra. I don't know much about SF, I only visited it once. But wine country, Napa Valley...worldclass!! ...Don't find that in Ohio. I am not sure what you would find in Ohio that is better than CA = > Prices reflect it. It's very simple.

And the weather is superb. Period! The only place that is better is Hawaii. That is, when you do nothing and hang on the beach, sip on a cocktail. Otherwise, too humid for me. Florida has very nice parts. But, its also not cheap there. Love the warm, green water there. Once again, not a fan of the humidity. Cali is the best!! :) (I wasn't born in CA so I really appreciate it)

SubOink says

And the weather is superb. Period!

Well... except when it gets so dry that the earth itself catches on fire...

SubOink says

The only place that is better is Hawaii.

Because even though gas is more expensive there, at least they have poi...

SubOink says

That is, when you do nothing and hang on the beach, sip on a cocktail. [...] Cali is the best!!

AND because no matter what, at the end of the day you can still get your drunk on and hang out with horny old sluts like this!

No offense meant to you suboink... I just couldn't help myself!

terrideaner, you should clearly move to Ohio then. It will solve all your problems :)

also, I am disappointed - no mentioning of earthquakes?? Come on, that would have been a much better shocker, given the recent events in japan.

SubOink says

terrideaner, you should clearly move to Ohio then. It will solve all your problems :)

Eh... there's good and bad anywhere you live. I just surprises me that Californians place this state on such a high pedestal when there are many obvious disadvantages to living here.

SubOink says

also, I am disappointed - no mentioning of earthquakes?? Come on, that would have been a much better shocker,

Aw, C'mon now, that angle is played out, even in the sticks... That said, that housewives garbage is beamed out-of-state such that no one is truly safe anywhere.

terriDeaner says

Eh… there’s good and bad anywhere you live. I just surprises me that Californians place this state on such a high pedestal when there are many obvious disadvantages to living here.

The way Californians vote, nothing surprises me.

terriDeaner says

Eh… there’s good and bad anywhere you live. I just surprises me that Californians place this state on such a high pedestal when there are many obvious disadvantages to living here.

My thinking here often gets to very basic facts. Facts like humans are mammals, which means we regulate our own temperature at 98F against the ambient temperature. I can live in San Francisco year round without heating or air conditioning. All it takes is a good blanket. That's pretty cool! There's a lot of comfort in knowing you could just turn off all your electricity and survive fine in just the shelter of the wood/stone/drywall around you any time of year. Obviously, there are threats against that in California, but they are almost all big disaster threats, that are arguably everywhere. Meteors hit less often, but can hit anywhere.

Anyway, weather addresses very basic human needs, which is why it is so prominent people's view of the world.

Add to that the way San Francisco is organized. I walk to the grocery store(there are two in my neighborhood, three if I'm willing to walk a mile round trip to Whole Foods). I walk to the park. I walk to baseball games, I walk to museums. I walk to work. I walk to live concerts and music. The neighborood nearest me, two blocks(about 1/4 mile), includes two cafes, a Vietnamese restaurant, two Japanese restaurants, a pizzaria(where they have an all-you-can eat $10 neighborhood night and piano player), an Italian/Californian restaurant, a Turkish/Mediterranean restaurant, two French restaurants, a bakery, a branch of the city library, two parks, one rec center where I've played basketball for over ten years, and amazing views of the city skyline, bay, and bridges.

Admittedly, some of these things just have inexplainable connections for me and cause me to smile deeply, but there are also some very basic reaons why California living is highly valued. Walking(maybe unique to San Francisco and SoCal/SilVal are still strong car driving cultures), eating, music, learning, and temperature are really enjoyable parts of living.

wagamama says

We made out by selling at the peak of the market and had 250K to put down, leaving us with a max’ed out conventional mortgage.

I'm just really confused by the post that started this thread. You're seeking "permanence" but your own experience of house owning suggests significant impermanence. I'm understanding what you wrote to mean you were owning a house and sold it in the last three years or so, moved into an apartment, and now are moving again into a house you bought for $650k.

I think money is driving your decisions and with so much of it on the line in owning a house, I think your decisions will definitely derive from your ownership. That is certainly "permanence" in that much of your thinking will now be based on the money you've spent on the house. That condition of thinking, though, has so far seemed very precarious to me.

I'm basing my comments on the idea that $650k is a large amount of money relative net worth. If someone's net worth is many millions, then maybe $650k is not that much to spend.

Isn't it strange to others that we are so willing to spend so much borrowed money on houses? I think it has reached a point of abstraction that few comprehend. This is why Patrick provides so much information here around the disparity between the very rich and the rest in the U.S. Most of us can't even comprehend what it's like to be the very rich. Our comprehension is so low, we willingly spend all the money we have plus a multiple of that amount borrowed from the very rich just to say/think we own our place of shelter. For this reason, I completely agree with someone from Ohio saying there's much to be desired in California. The condition of home ownership here is onerous, at best.

Still, we all have the potential to spend less and live more like the very rich.

uni6jon2 says

Admittedly, some of these things just have inexplainable connections for me and cause me to smile deeply, but there are also some very basic reaons why California living is highly valued.

Don't get me wrong, I do understand that many Californians (over)value things like temperature relative to other equally/more important factors that determine overall quality of life... I just surprises me that they do. After all, there is this new invention called the 'coat' that is all the rage out east!

Plus, SF weather is not all that great all the time. Unless blustery, 50ish('F) mid-June days are your idea of great summertime weather.

uni6jon2 says

Walking(maybe unique to San Francisco and SoCal/SilVal are still strong car driving cultures), eating, music, learning, and temperature are really enjoyable parts of living.

You can enjoy these things in many US cities and in cities elsewhere in the world. San Francisco, while a fun place to be, is not the only place on earth that is worth living in.

uni6jon2 says

For this reason, I completely agree with someone from Ohio saying there’s much to be desired in California.

?

The only someone here who identified themselves as being from Ohio said something quite the opposite:

StoutFiles says

It’s insane how different most of California is from the rest of the country. Here in Ohio, 675k would buy you a mega mansion…you’d have the nicest house in the county! I just can’t fathom spending that much money on a house, and as an engineer I make decent money.

The thought of putting myself in a situation where I could have almost half a million dollars of debt makes me woozy. You all should just leave CA and live like kings elsewhere if you have so much money to throw away on, as Patrick said, a big box that rots in the rain.

terriDeaner says

The only someone here who identified themselves as being from Ohio said something quite the opposite:

Yes, I'm not supporting buying a standard house at a incredibly inflated price. I've been to CA, it's nice! Yosemite was very impressive (the real jewel of CA)...but CA wasn't world's better than any of the states I've been to (around 35). Every state has its pro's and con's...but not many put you in a mountain of debt to live in a quality house in a good town.

I find it humorous that people think California is this magical place that is irreplaceable anywhere else, and all other states are basically the boonies. Restaurants and entertainment are not exclusive to California. Culture is not exclusive to California. Technology like movies, music, the internet...it's the same everywhere. Many states have good weather year round.

All it is is an overpriced, overcrowded, incredibly bankrupt state. If just some of you looking for these half mil houses would venture out of there, you could buy something equally nice for half the price and then use the extra money to vacation to places that are really worth being in. Having no debt...what a crazy thought!

StoutFiles says

If just some of you looking for these half mil houses would venture out of there, you could buy something equally nice for half the price

the problem is in Ohio they wouldn't have the job to support a half mil dollar mortgage.

toothfairy says

StoutFiles says

If just some of you looking for these half mil houses would venture out of there, you could buy something equally nice for half the price

the problem is in Ohio they wouldn’t have the job to support a half mil dollar mortgage.

Neither does CA. That is the problem. Avg. salary in CA = $68K. Avg. salary in OH = $53K.

And for the record, there are plenty of high paying jobs in OH...

toothfairy says

the problem is in Ohio they wouldn’t have the job to support a half mil dollar mortgage.

Well at least ~12% or so of Californians definitely don't have the job to support a half-mil mortgage(calculatedriskblog):

tatupu70 says

Neither does CA. That is the problem. Avg. salary in CA = $68K. Avg. salary in OH = $53K.

And for the record, there are plenty of high paying jobs in OH…

Zing!

tatupu70 says

Neither does CA. That is the problem. Avg. salary in CA = $68K. Avg. salary in OH = $53K.

actually for the area we're talking about the average salary is more like $100k

toothfairy says

tatupu70 says

Neither does CA. That is the problem. Avg. salary in CA = $68K. Avg. salary in OH = $53K.

actually for the area we’re talking about the average salary is more like $100k

OK--I thought we were talking about CA. What area of OH are we talking about then? Let's keep it apples to apples.

tatupu70 says

What area of OH are we talking about then? Let’s keep it apples to apples.

if it's apples to apples then show me which part of Ohio has an average salary of 100k
and what are the house prices like there.

toothfairy says

if it’s apples to apples then show me which part of Ohio has an average salary of 100k
and what are the house prices like there.

That's part of what I'm talking about! If you make 100k/year, why must everyone live in the designated "100k" area where houses are too expensive? Do people love debt? It's as if everyone needs to push their money as far as it'll go for a house.

I can find areas of Ohio around the big cities (Cincy, Columbus, Cleveland) where houses are overpriced...what does that prove? Every state has those areas. What I'm saying is while Cali's average salary is a little higher, the average home price is A LOT higher. You aren't getting close to good value there.

StoutFiles says

All it is is an overpriced, overcrowded, incredibly bankrupt state. If just some of you looking for these half mil houses would venture out of there, you could buy something equally nice for half the price and then use the extra money to vacation to places that are really worth being in. Having no debt…what a crazy thought!

CA has 50% better weather. :-)

StoutFiles says

What I’m saying is while Cali’s average salary is a little higher, the average home price is A LOT higher. You aren’t getting close to good value there.

When you say "A LOT," you do realize it's $54k higher versus national:

CA's median price is $249k
http://www.dqnews.com/Articles/2011/News/California/RRCA110414.aspx

Nationally, it is $195k
http://www.dqnews.com/Articles/2011/News/US/RRUS110404.aspx

For the same sq ft? The same lot size?

StoutFiles says

For the same sq ft? The same lot size?

If those questions are directed to me, you are asking for specifics of a very broad generalization. Even though I put numbers up there with a comparison of CA versus the US, it's a pretty silly comparison. CA includes Modesto where you could get a large house on a large lot for $200k and Palo Alto where you get a small house on a small lot for $1M+. You can't realistically compare averages or medians of a state the size and population of CA. Pick a section and compare that. Even SF is too broad to really compare. If you buy in the area where you're gonna get shot, the price isn't that bad. If you buy with a view of the GG Bridge, the price is very high.