patrick.net

Dear Phuong,

First, about your saying that buying a condo has its tax and equity advantages over renting, I agree. You would have had such clear advantages right now if you had bought your favorite condo three years ago. But it was all about luck, wasn't it? It's just almost the same as you hitting the jackpot in your favorite Vegas casino. Now the chance has passed, and a new opportunity emerges. I think it's better for you to look forward to it (price adjustment) rather than lamenting on things you can't do anything about at this point of time.

Never say never. I don't believe we (the losers, in your word) will never be able to buy a house in the Bay Area. Home prices here have been so far disconnected from fundamentals. How can a 5-year-old 650-sq-ft condo be worth more than half a million dollars? I just don't see it, and the people with financial and economic backgrounds don't see it. I could be wrong, but when I see a large number of people familiar with these matters concuring with me, I know I'm onto something. This market will adjust itself to the normal condition, so just take it easy, be patient, and work hard to get the money you need at the right time to buy.

About the Google prospects, there are a few things I can say about it. First, they're hiring like crazy, but they're very selective. If you're a math/cs major at Stanford with a solid 4.0 GPA, you will be paid well. Otherwise, an app developer, a system analyst (admin), or a secretary will likely be paid a low salary just like at any other company. Second, Googlers could expect to make money by a rising stock price. But GOOG is over $300 right now, with the majority of its revenue is through web ads. How much more can it squeeze out to at to the bottom line? I'm seeing an overpriced stock, and unhappy people, working for low salaries for quite some time. Third, they're hiring Microsoft people, who are not our beloved Bay Area locals. How can it help (or harm) us? Is that number large enough to make an impact, especially when Googlers are paid a nominal salary range, and can only expect to strike rich when the stock goes to $350-$400 a share? How likely can that be? At least, with "innovations" like Google Talk and free Wi-Fi for San Francisco, I don't see a chance making lots of money out of those.

You can say, well, the Redmondians could buy houses here, thus proping up the prices even higher. But how many of them can afford buying right now? Even so, if I had a nice house in Redmond, I would just take a 2-hour fly to visit my house every two weeks, instead of buying overpriced properties. Microsoft people are not dumb, you know.

In short, I wouldn't count on Google as the rescuer of the Bay Area just yet.

Finally, regarding being Vietnamese. I didn't vote for either Madison or Linda Nguyen because I'm simply not living in District 7. You could say that I've been whitewashed (is that a legitimate word?) but I'm not. I can still speak and write Vietnamese fluently. I used to live in the 'hood of Milwaukee, Wisconsin for seven years. I just understood that I had to emerge into the mainstream American, but only to the best of it. Rap music, baggy pants, and graffiti, and the "bro" and "sis" "gangster" culture, I avoid them like the plague. Not that I hate anyone, but I don't believe it's not the right way to rise up in America. You probably believe differently, and that's OK. It's just that Vietnamese Americans like us have lots of work to do to strive. Having a job inside Adobe is not everything. We've got to work harder to become top of the food chain, and to do well in any economic conditions and markets. Let's stop lamenting and look forward to the next opportunity.

Phuong,

In 20 years, lots of things will change. You may get lucky, marrying to a girl (or just to be Bay-Area-PC, a partner) who's a millionaire (working in biotech maybe), or win a lottery, or win the jackpot in Vegas, etc. It's pretty pointless to argue whether it's better to rent or to own (or to do anything) for the next 20 years. The point should be whether we should buy a house now, and the answer is it's not.

The folks here advocate an imminent bubble burst. I'm one of them. You're welcome not to believe us and provide counter-arguments. But worrying that you will never be able to buy a house in the future, so you should buy now, it's totally up to you. In my opinion, I wouldn't worry because it's something I can't control anyway. I'm just doing my best -- working hard, learning new skills just in case Adobe can't make anymore use out of me, and saving up money to buy my dreamhouse at the right time.

I understand your getting mad when someone asks you where you're from, even though you were born here. It's very easy to make mistake like that in America. The person that asks you that may be just ignorant, but that happens to anybody. You can just explain your circumstance, and by doing so, you'll help stem out another ignorance for the next time. Doing yourself good and doing some good for others. One stone killing two birds :-)

I once had a colleague who was born in America, but his heritage was Filipinos. First time I met him, I noticed that he spoke English just fluently, making me wonder how an Asian could speak English that well. I've also once sent a Christmas card to a Jewish person. I didn't really mean to do all that, so I hope you woudn't take these awkward moments too hard. People, like me, will learn over time.

I was proud of the two Nguyen candidates. I wasn't surprised of the negative campaigns. Sadly, it's become the norm in the American political system. Business and personal matters should be separated. I hope those two ladies will work together for the common good, after the bitterness has subsided.

First time I hear of of the term "rotten banana" (yellow outside yet black inside). I think individuals shouldn't pay much attention to such derogatory terms, but just find for themselves an identity (doctor, engineer, student, hippie, liberal arts hungry artist...) and go with it. As long as it's not a poser or ganster wanna be, it'll be perfectly fine.

I used to work for HP. The rule to determine what a contractor's rate should be is to double the hourly rate of a full-time employee. So, if the full-time salary is $60k/year, the contractor doing the same job should ask for $58/hr. This is supposed to compensate for the lacks of paid vacation, 401(k) matching, profit sharing, insurance coverage, and employee stock purchase plan.

However, in these hard times, the ratio between full-time rate and contractor rate is no longer 1:2. There are people who get laid off just to be re-hired as a contractor, with the same salary (1:1 ratio), or even worse, 1:0.9 or 1:0.8.

So, if you want to be a contractor, you must factor in lots of other expenses that are otherwise covered by the employer. The picture is not as rosy as it seems.

The point is that it takes years to learn the BUSINESS behind the programming.

Wow. Programming has business behind it now? When did engineers invade the domain of product management?

I see, why pay the realtors, why pay the product manager, why pay the executives. All we need is the engineer who will close his house, call the customer, test his software, run the business!

Correction... and build his own house too!

Yes, I am. Do you plan to rent for next 20 years? OMG! After 20 years, you would’ve spent 384000 just in rent and you would’ve built up no equity and you would have nothing for that money. That’s assuming the rent hasn’t gone up from my current 1600.

Let's see... a place that can be rented for $1500 a month can easily cost $3000+ a month in PITI. If I rent and invest the $18000 I save at just 6%, by the end of 20 years I will have 660K! If I invest it at 12%, I will have nearly 1.3M!

What does this show? Nothing. It is flawed because it does not account for rent increases. However, it is no more flawed than your calculation, which assumes that rent is a waste but interest payment is okay.

Look, I’m with you. I hate the fact that the home prices are so high.

This is why I am still talking. (Also, I really want 700+ comments in this thread)

But that doesn’t mean that we have to be stupid and say that renting is better than owning. It simply isn’t. If you can afford it, it’s ludicrous not to buy. I simply can’t afford it.

It also doesn't mean that we have to be stupid and say that working is better than bumming. It simply isn't. If you can afford it, it's ludicrous not to bum. I simply can't afford it.

I would put a sizeable down payment and go for 5/1 ARM for a 600K house.

5/1 ARM is a good choice, if it is still available. I fully expect the extinction of many financing options.

Possible timeframe is late 2007…..

Beware of a false bottom in 2007, before tons of ARMs get adjusted, without hope of refinancing. That said, it is not necessary to time the absolute bottom.

OK… since I prefer quality of life over owning a house …. I can wait till late 2008. I do not mind paying TOP rent for good school district … I refuse to buy house just for the sake of SOCIAL STATUS….

What social status? I heard that in Hong Kong and Japan they have names for people whose mortgage is upside-down. ;)

There is a discussion on Santana Row on Ben's blog:

http://tinyurl.com/74scr

San Jose downtown is bad enough. But that is a proverbial crime.

Fear corrupts.

Where did you make that up? After your write off the interest, your “$3000+” a month in PITI comes out to no more than $1500 a month. But more importantly, you’re building up equity. After 15 to 20 years, you should have your home outright. Once that happens, you shouldn’t really care what the housing prices are because we all need a place to stay and whatever the prevailing market rate it, it will always be considered “too expensive” to the general population. But you don’t care, because you OWN your house now and nobody can kick you out.

Convince me of your calculations and I will buy a house next weekend.

How can the PITI be around 1500 for a place that is being rented for 1500 if you intent to pay off the mortgage in 15 to 20 years? I am in!

Come, show me your calculations.

Hey “Pete”, you really need a reality check. The engineers/programmers writing an accounting program cannot program if he/she does not understand accounting. A engineers/programmers cannot program an insurance program if he/she does not understand the insurance rating system, … The hardest part of being an engineer/programmer is to understand the domain, the business, … The technology aspect is something an 18 year old college freshmen can understand.

True. But one does not need to know everything about the business. One toilet reading session can probably give half of what is needed.

PN, you really should have argued that engineers here are more exposed to the media and they have a better perspective of the world. This "intangible" advantage would be more difficult to refute.

Now, let’s get a 5% loan for $400K, assuming that you can put $100K down. There are loans out there that will allow you to do this. 5/1, 3/1 or pay enough points and get 30 year or 15 year fixed. Remember, I am assuming that you ARE able to buy the property with the best interest rate, you’re just CHOOSING not to. Therefore, it is a fair assumption that you have 20% down and excellent credit rating. Average home owner refinances within first 5 years of owning a home so to get a 30 years fixed does not make any sense to me… anyway… lets make some assumptions.

Too bad a $400K cannot be rented for $1500, more like $1200 a month.

Why don't you put $400K down and have 0 monthly payment instead?

Again, if you look to move in 5 years, you need to worry about price fluctuations because real estate prices can be down quite a bit in 5 years.

If you were to keep the loan for 30 years, that’s approximately 2,100 a month, add in the property tax, insurance, and make it around 2500 a month.

You forgot the $300 to $450 HOA dues that are quite typical for a downtown condo. This will bring it all the way up to around $3000 again.

$400K loan, a $500K condo… Very few people rarely get 100% loan.

I bet there are more first-time home buyers put 0% down than those who put 20% down.

If you want to take HOA into account, you can subtract the insurance, water, and maintenance cost. HOA covers all that.

It does not always include earthquake insurance. You better check. It is essential here.

I believe HOA ranges from $300 to $450 in SJ. It is more like $500 in PA.

There isn’t a man or a woman out there who made a real estate investment in Silicon Valley in the 50’s, 60’s, 70’s, 80’s, 90s, 2001, 2002, 2003, 2004 and is willing to take back that investment.

Many people who bought in late 1980's did lose money if they sell for whatever reasons before the late 1990's. You need to study history.

The Silly Valley is in decline now and we have a falling real rent environment.

We don’t buy because we can’t afford to.

Too bad if you think that way. Many in this blog can still afford even using traditional financing. Some just sold their homes and have taken profits.

Also, are you saying that somebody that bought a house in Silicon Valley in 1985 and sold it in 1995 lost money? What have you been smoking? I dare you to support that data.

No, but someone who bought in 1989 and sell in 1995 would probably have lost money.

If Silly Valley is in decline, why did San Jose’ just break into top 10 in total population and average housing price in the country?

Just more evidence to show the housing bubble problem. Silly Valley may become another Detroit, albeit with better climate. Regarding population... does it count illegal immigrants?

This is our culture. It is irreplaceable. If you took that attitude anywhere else in the world, they’ll call you crazy.

This culture is being duplicated elsewhere at 1/3 the cost. Nothing in this world is irreplaceble. Nothing. No one.

Remember, you were saying that it is better to rent for 20 years and instead of paying interest on the mortgage, invest that money in something else.

I merely illustrated that property investment must be supported by solid cashflow. Negative cashflow is horrible even if there is extraordinary appreciation, because the net gain is not so impressive in comparison.

>> No, but someone who bought in 1989 and sell in 1995 would probably have lost money.

I seriously, seriously doubt it. Not in Silicon Valley.

Go do some research. Prime locations like Marin county did weather the downturn pretty well. San Jose did not fare so well.

Why do Indians, Chinese, Eastern Europeans come here and become billionaires by starting companies but don’t do the same thing where they’re from?

Because they want to duplicate the environment in their home countries. They will suceed eventually.

Over 700 comments! Holy cow.

>

I know people who were upside-down in their peninsula condo (desirable location) for years before they could finally sell. They bought in the 80s during a price peak, wanted to sell in the 90s because the place was too small once they had a child, but they were stuck there for way longer than they wanted while they waited for their place to appreciate. Finally sold in the late 90s.

"No, but someone who bought in 1989 and sell in 1995 would probably have lost money.

I seriously, seriously doubt it. Not in Silicon Valley."

Oops, sorry, above is what I was responding to in my last message with:

I know people who were upside-down in their peninsula condo (desirable location) for years before they could finally sell. They bought in the 80s during a price peak, wanted to sell in the 90s because the place was too small once they had a child, but they were stuck there for way longer than they wanted while they waited for their place to appreciate. Finally sold in the late 90s.

Over 700 comments! Holy cow.

This thread was your idea, so I guess the most popular thread award should go to you.

BTW, how is your finger?

Don’t tell me that a programmer with domain knowledge can’t do algebra.

Perhaps a programmer with real estate business knowledge sees new math that we mere mortals cannot.

"This thread was your idea, so I guess the most popular thread award should go to you."

LOL. If we're handing out awards, then you get the Most Diplomatic Guy On the Internet Award, hands down. :-)

"BTW, how is your finger?"

It's a strange color but much better, thanks.

I still content that there are only 2 to 4 posters on this board.

SactoQT
Peter P
Randy H
Jack
tsusiat
KurtS
Stanman
Prat
H.Z.
Ptiemann
Owneroccupier
ScottC
Schmend Rick
and ....... Surfer-X

Wow, paranoia, nice. Back to your cubicle and the angry chair.

Yes, but as an admin for this site I can assure you that each persons comments come from different IP addresses.

And do you really think that I post only under “Phong nuygen”?

Dude, just plain not cool, good thing you live in San Jose, you belong there. Enjoy your angry chair.

Phong nuygen, odd I didn't know that Adobes IP's were managed by the D.O.D.

So I guess that would make you just a plain liar all around. As stated prior you have yet another badge of pride to parade around in asshole filled San Jose. You Sir are a shining example of your city, were your "SJAHOLE" badge with pride!

I still content that there are only 2 to 4 posters on this board.

You can content anything. Do you really think that I care. :)

Do you really think that I care

The pain Peter P, the pain. Here I go thinking you cared. Yet another blow in this cruel cruel world. ;) Is your heart black Sir?

I wonder if I should find in amusing to see Phuong destroying himself, but that may be too mean (if he's actually one of my colleagues at Adobe). However, now I'm starting to doubt if he's actually one of my colleagues.

If that's still the case, I hope that Adobe will be even more selective in hiring. In most cases, companies are very selective when hiring people out of state, but for locals, they tend to relax their standards.

Just an out-of-topic comment...

The pain Peter P, the pain. Here I go thinking you cared. Yet another blow in this cruel cruel world. Is your heart black Sir?

I care about you. I just do not care too much about people like PN and MP.

My heart is purple. (Disclaimer: I do not have a Purple Heart)

brightc, you indeed work for Adobe, Phuong (poo-hong?) does not, he works for a .mil organization, DOD paycheck. He is a liartroll, LT?

Adobe makes great products and I'm sure it's a great company.

Adobe makes great products and I’m sure it’s a great company.

It has great employees too. My ex-neighbor works for Adobe and he is one of the nicest guy one can meet.

Peter P, it you're on the console view, check out the spammers hitting the site. Nice.

One thing I've never liked is a liar. Good fucking by asshole, enjoy your Pho, dickhead.

Peter P. Can you delete delete delete?

I am comfortably retired at relatively young age and I do independent contract work for many companies in the bay area because I get bored sitting around the house all day.

Wrong again Troll, your IP is always the same, a DOD contractor, likely Boeing or Lockheed if you're in San Hosebag. You're just another fucking liar who has nothing better to fill their shallow fucking life with. Oh, BTW here's your IP 214.3.118.1 . Perhaps I should send an email to the admin of the site with all your bullshit comments. Dick.

Ok Mr. Estein I paid off all my homes by refinancing ONE of my house in west san jose last year. My ONE mortgage is $2133 a month

One question, $2100 buys about a 200K mortgage, how did you pay off over 2mil worth of property with 200K? Nice, dude, you're not even a good troll Mr. Estein.