Buying a house In the Bay Area California

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Hello all,

I know this may not apply to those that don't live in the bay area but maybe some insight on todays housing market. What are your thoughts of purchasing a home in the bay area? My Rent is currently $1600 (my wife and I live with in laws). We saw a 3 bedroom condo the other day that was just built in San Jose that would cost about $780k after closing/upgrades/ and all that jazz. That seems like a lot of money for a condo... We took a step back and realized maybe we should get a single family house but as many of you know the single family homes here are just as expensive and much older. It seems like if we want new everything, it will have to be a condo. IF we want a single family, its going to be a house that's 30 years old + .

Question is, thoughts housing prices? A few years ago, I wish I bought in 2014 as I would be sitting pretty good. Now in 2017, I just don't want to buy a house at 780k and be stuck with a mortgage payment of about $4500 with taxes and insurance. pretty nuts. Some say that my rent is low enough to not have to worry about buying for now but eventually im going to have to buy...

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$1600 for a room. Perhaps sfchris will chime in, but I don't think market is double that

rufflesinc (Apr. 16, 2017 @ 5:59p) |

If you eventually have to buy, there is a good chance that prices will be higher in the future. You can wait for a drop ... (more)

sredni (Apr. 18, 2017 @ 6:47p) |

OP should negotiate with his wife's parents to live there for free.

rufflesinc (Apr. 18, 2017 @ 6:56p) |

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Do you have kids or plan on having kids?
How long would you stay in the house?

Are you more interested in owning a home of your own or just getting out of the inlaws?

Nothing wrong with a 30 year old home. Get a good inspection if you're concerned. My house is about 50 years old and I guarantee it is in better shape than many newly built places with all the updates and maintenance its gotten over the years.

Homes need maintenance. Period. A good rule of thumb is 1% of the home's cost per year-- some years more, some less (e.g. new roof is a lot, new shower head isn't). If you get a condo you'll pay for the maintenance through your monthly association fees for the structure, and be responsible for maintenance inside the home.

What you worry about with older homes is when the plumbing and electrical are extremely outdated and you wind up needing very expensive retrofitting. 30 years is not old for a home. Main concern with that generation home is the electrical panel might be needing updating, roof could nominally be original and needing replacement soon, that type of thing.

What is your actual goal?

Are you worried about repair costs is that why you are focusing on new construction? While repairs certainly cost more in HCOL areas, when you are paying vast sums for small houses because of their location, the repair costs are likely to be smaller on percentage bases then other areas. So, I wouldn't be so focused on new construction especially if you are trying to get more space for your money. 

if you can live with the inlaws for 1600...just stock pile the cash and buy a house later on down the road when you have a kid

no kids
In current situation we can be here a few more years.

We are just looking for a new condo because it just feels nice to live in a place with new appliances and all. We are not set on it but they stage them so well during open house. hhaha.

You don't seem to have a strong, compelling reason or need to buy. Housing is ridiculously expensive in the Bay area and your rent is reasonable.

Stay put and save your cash.

flyalexair said:   no kids
In current situation we can be here a few more years.

We are just looking for a new condo because it just feels nice to live in a place with new appliances and all. We are not set on it but they stage them so well during open house. hhaha.

  You can put new appliances in an old home.

flyalexair said:   no kids
In current situation we can be here a few more years.

We are just looking for a new condo because it just feels nice to live in a place with new appliances and all. We are not set on it but they stage them so well during open house. hhaha.

  
If you want new appliances, just buy your in-laws a new set.

Question, will your in-law raise rent in the future base on market value?

You can use the NY times rent vs buy calc and put in the actual property taxes and other home ownership costs. Unless you are going to live in the same home for 10+ years renting will be cheaper, if you are comparing similar rental homes to the one you will buy. San Jose in particular is the worst place in the US to buy a home compared to the price to rent it, so it can be more like 15+ years. If you do not have 20% down renting will always be cheaper. If you can rent a place that is smaller than what you would buy you can save a lot more than either renting a larger home or buying. Housing is really expensive in the whole bay area. If you can save some on housing you will come out ahead long term. Financially it comes down to how much rent it saves you to buy a home. With renting you do not have control over your rent increases but otherwise your costs are predictable. When buying a home your mortgage payment is the least you will ever spend. Repairs are unpredictable. If you have shitty neighbors you are paying much more money to move than when renting.

Make sure you checkout the condo financials before buying and that they are close to 100% funded. If you buy a condo your upstairs neighbors will be unreasonably noisy. Your other neighbors will want to waste the HOA's money on things that are unimportant. There will be an "unexpected" special assessment because money was wasted. Your neighbors plumbing will leak into your home. They will pass a new rule that you cannot park your car how you have always parked.

+1 for staying put.
But sock away the money that you "save" by living with in-laws (difference between rent and what a typical mortgage would cost).
Buy new appliance if that makes you feel happy. Should cost at most 1-2 mortgage payments for a typical mortgage were you to buy.

But have you considered what it takes to "retire" in the Bay Area?

qcumber98 said:   But have you considered what it takes to "retire" in the Bay Area?
 Californians have Prop 13. If they paid off their mortgage before they retire being taxed out of their homes is not one of their worries.

gnopgnip said:   You can use the NY times rent vs buy calc and put in the actual property taxes and other home ownership costs. Unless you are going to live in the same home for 10+ years renting will be cheaper, if you are comparing similar rental homes to the one you will buy. San Jose in particular is the worst place in the US to buy a home compared to the price to rent it, so it can be more like 15+ years. If you do not have 20% down renting will always be cheaper. If you can rent a place that is smaller than what you would buy you can save a lot more than either renting a larger home or buying. Housing is really expensive in the whole bay area. If you can save some on housing you will come out ahead long term. Financially it comes down to how much rent it saves you to buy a home. With renting you do not have control over your rent increases but otherwise your costs are predictable. When buying a home your mortgage payment is the least you will ever spend. Repairs are unpredictable. If you have shitty neighbors you are paying much more money to move than when renting.

Make sure you checkout the condo financials before buying and that they are close to 100% funded. If you buy a condo your upstairs neighbors will be unreasonably noisy. Your other neighbors will want to waste the HOA's money on things that are unimportant. There will be an "unexpected" special assessment because money was wasted. Your neighbors plumbing will leak into your home. They will pass a new rule that you cannot park your car how you have always parked.

  
Thanks for your input. This is very informative and I appreciate the write up. Based on what others have said in here and this information, we will stick to renting for now.

Thank you all. we can close thread.

I agree rent.

But if you want to buy, be READY. DTI, immediate pre-approval etc. etc. Experts know exactly what is needed to be immediately ready. I do not.

On the rare occasions in a normal market SF or immediately adjacent any bargain will be gone in a NY minute.

Other than a 2007 type crash. Look at long term & short term valuations of where you would want to live. Also reference how they did in the 2007 devaluations.

Around me while state wide there was 30-35% devaluations during the shrink. Some areas still went up 11-12% a year. So it's important to know your proposed area. If your area still did well during the crash it's probably best to buy as soon as you can.

flyalexair said:   My Rent is currently $1600 (my wife and I live with in laws). 
Your wife's parents seem like real d*cks for charging $1600 to live in a spare bedroom ( as opposed to a second home or rental they own).  Even for SF bay that has to be more than market price

rufflesinc said:   
flyalexair said:   My Rent is currently $1600 (my wife and I live with in laws). 
Your wife's parents seem like real d*cks for charging $1600 to live in a spare bedroom ( as opposed to a second home or rental they own).  Even for SF bay that has to be more than market price

  Nah, that is pretty close to market rate for a room in a decent house.

you are throwing money away with rent.

bay area housing will definitely go up in the long run.

every house is ridiculously expensive in bay area but if you look back, every house is a steal.  buy one as soon as you are able.

sunspotzsz said:   every house is ridiculously expensive in bay area 
  But if you can wait until the big one hits, you'll be able to pick one up cheap. Might be a fixer upper though. 

atikovi said:   
sunspotzsz said:   every house is ridiculously expensive in bay area 
  But if you can wait until the big one hits, you'll be able to pick one up cheap.
 

  
Earthquake or tech bubble? A colleague paid $3M for his SJ place just before the last bubble burst, and it was suddenly a $2M place just like that *snaps fingers*. Back up again now, but still...

Earthquake. What's a tech bubble? Technology always advances, so short of something apocalyptic that's not a concern.

As someone who just bought a house in San Jose, I would think I know something about this topic.

I paid $880k for a 1000 sqft home from 1912 (with a huge backyard, admittedly). It was in ok shape and I could have moved in as-is, but I decided to renovate. Taking the house down to the studs and completely redoing it (new windows, doors, floors, HVAC, electrical, plumbing, new kitchen, adding a bathroom, etc.) will cost me another $170k in cash. The total will be way over $1m and I seriously regret buying the house. My mortage is $3400 and tax another $1000 or so on top.

I should have stayed put in my condo that I was perfectly happy in, was paying $2700 per month for that.

On the other hand, rent was going up about $200 every year. In about 5 years my rent would have caught up with the mortage. I can deduct the mortage interest and (hopefully) tax. And the renovation has obviously added to the value of my new home.

But still, it is an expensive gamble that I'm not really sure will pay off.

fannypack said:   As someone who just bought a house in San Jose, I would think I know something about this topic.

I paid $880k for a 1000 sqft home from 1912 (with a huge backyard, admittedly). It was in ok shape and I could have moved in as-is, but I decided to renovate. Taking the house down to the studs and completely redoing it (new windows, doors, floors, HVAC, electrical, plumbing, new kitchen, adding a bathroom, etc.) will cost me another $170k in cash. The total will be way over $1m and I seriously regret buying the house. My mortage is $3400 and tax another $1000 or so on top.

I should have stayed put in my condo that I was perfectly happy in, was paying $2700 per month for that.

On the other hand, rent was going up about $200 every year. In about 5 years my rent would have caught up with the mortage. I can deduct the mortage interest and (hopefully) tax. And the renovation has obviously added to the value of my new home.

But still, it is an expensive gamble that I'm not really sure will pay off.

  
Where I am from I could build 2 1000 sq ft houses with $170K in cash.   That was some expensive land you have thereabouts.

ganda said:   
atikovi said:   
sunspotzsz said:   every house is ridiculously expensive in bay area 
  But if you can wait until the big one hits, you'll be able to pick one up cheap.

  
Earthquake or tech bubble? A colleague paid $3M for his SJ place just before the last bubble burst, and it was suddenly a $2M place just like that *snaps fingers*. Back up again now, but still...
 

  If he didn't sell, the $3M house is worth $5M easily today

fannypack said:   As someone who just bought a house in San Jose, I would think I know something about this topic.

I paid $880k for a 1000 sqft home from 1912 (with a huge backyard, admittedly). 

 

  I was reading an article about a house for sale in bay area somewhere and it noted that while it was priced high, it was on a larger than average lot for the city . The lot was about 1/4 acre 

rufflesinc said:   fannypack said:   As someone who just bought a house in San Jose, I would think I know something about this topic.

I paid $880k for a 1000 sqft home from 1912 (with a huge backyard, admittedly). 

 

  I was reading an article about a house for sale in bay area somewhere and it noted that while it was priced high, it was on a larger than average lot for the city . The lot was about 1/4 acre 


Median lot size in cities is 1/5 acre. So yeah 1/4 is larger than most. Especially in an expensive city you get smaller lots down to 1/10 or less if they can.

You're paying only $1600 a month? You practically hit the lotto! That's like 50% of the going rent rate in that area.

jerosen said:   
rufflesinc said:   
fannypack said:   As someone who just bought a house in San Jose, I would think I know something about this topic.

I paid $880k for a 1000 sqft home from 1912 (with a huge backyard, admittedly). 

 

  I was reading an article about a house for sale in bay area somewhere and it noted that while it was priced high, it was on a larger than average lot for the city . The lot was about 1/4 acre 


Median lot size in cities is 1/5 acre. So yeah 1/4 is larger than most. Especially in an expensive city you get smaller lots down to 1/10 or less if they can.

  
I'm curious, can you cite any sources for your numbers? Just walking through a typical Bay Area town (say Palo Alto), I don't recall seeing any lots that would even remotely come close to 1/5 acre (that's around 8200 sqft if I'm not mistaken).

When house hunting in the South Bay Area, most of the 1100 sqft houses I saw were sitting on a 1500-1600 sqft lot. Seeing anything larger than that (with that size of house) was extremely rare. My 1000 sqft house sits on a 6500 sqft lot, which is comparatively huge.

Of course it is all relative. In some locales, lots like this would be considered tiny.

fannypack said:   jerosen said:   
rufflesinc said:   
fannypack said:   As someone who just bought a house in San Jose, I would think I know something about this topic.

I paid $880k for a 1000 sqft home from 1912 (with a huge backyard, admittedly). 

 

  I was reading an article about a house for sale in bay area somewhere and it noted that while it was priced high, it was on a larger than average lot for the city . The lot was about 1/4 acre 


Median lot size in cities is 1/5 acre. So yeah 1/4 is larger than most. Especially in an expensive city you get smaller lots down to 1/10 or less if they can.

  
I'm curious, can you cite any sources for your numbers? Just walking through a typical Bay Area town (say Palo Alto), I don't recall seeing any lots that would even remotely come close to 1/5 acre (that's around 8200 sqft if I'm not mistaken).

When house hunting in the South Bay Area, most of the 1100 sqft houses I saw were sitting on a 1500-1600 sqft lot. Seeing anything larger than that (with that size of house) was extremely rare. My 1000 sqft house sits on a 6500 sqft lot, which is comparatively huge.

Of course it is all relative. In some locales, lots like this would be considered tiny.



https://www.census.gov/const/C25Ann/malotsizesold.pdf

I was talking nation wide.

Chargum85 said:   You're paying only $1600 a month? You practically hit the lotto! That's like 50% of the going rent rate in that area.
  $1600 for a room. Perhaps sfchris will chime in, but I don't think market is double that

If you eventually have to buy, there is a good chance that prices will be higher in the future. You can wait for a drop in prices but timing that is very difficult. You said you wished you had bought in 2014. Could you be saying that about 2017 three years from now?

OP should negotiate with his wife's parents to live there for free.



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