Where are the youth of the Bay Area going to move? (San Jose: renting, townhomes)

[Yermum]

Originally Posted by BodegaHead

Even at 10-15% interest rates prices were so much lower that the cost of housing was still way lower than what it is now.

Example: Early to mid 80s Bay Area 1,500 sq ft ranch house house bought in nice middle class neighborhood $75,000 @ 15% interest rate
Total payment for 15% interest mortgage, property taxes and insurance around $900
20% down payment $15,000
Adjusted for inflation would be in today's dollar :
20% down payment $34,000
$900 monthly mortgage, taxes and insurance = around $2,000 monthly
$75k home value = $180k

Today 2016 Bay Area 1,500 sq ft ranch house in decent neighborhood $850k @ 3.5% interest rate
20% down payment $173,000
Monthly mortgage, property taxes & insurance around $4,000 monthly


So even with today's low interest rates the equivalent house now costs 2 times as much in monthly cost, 5 times the down payment amount, 5-10 times more expensive property tax based on value not to mention the ever rising utility and water rates and other expenses. Job wages then weren't really different than now based with inflation. The double whammy is to rent that 1,500 sq ft house in a nice part of the Bay Area is going to cost you $3-4000 a month which is the same cost as owning it and making saving for the down payment near impossible so you're screwed over either way.

75k for a 1500 sf ranch in a good area of SF? What type of nonsense is this. Even in the mid 80s that was buying you a pretty dumpy house in a pretty dumpy area of LA. And I assume SF was pricier.

[theoaks]

Originally Posted by Ultrarunner

What do you propose to solve this?

I don't know how you legislate morality. In this case, it is Democrat run property management companies in California and Illinois who are unethical. Don't get me wrong, I'm liberal on the social issues. But I recognize that price gouging of rents from Democrats is unethical.

One way is for individual jurisdictions to pass a law that newly built apartments cannot rent at artificially inflated rates using computer programs, rather, that they can only rent at the market rate.

For the California Coast between Santa Barbara and San Diego, that's about $1200 a month.

[Ultrarunner]

Originally Posted by BodegaHead

Even at 10-15% interest rates prices were so much lower that the cost of housing was still way lower than what it is now.

Example: Early to mid 80s Bay Area 1,500 sq ft ranch house house bought in nice middle class neighborhood $75,000 @ 15% interest rate
Total payment for 15% interest mortgage, property taxes and insurance around $900
20% down payment $15,000
Adjusted for inflation would be in today's dollar :
20% down payment $34,000
$900 monthly mortgage, taxes and insurance = around $2,000 monthly
$75k home value = $180k

Today 2016 Bay Area 1,500 sq ft ranch house in decent neighborhood $850k @ 3.5% interest rate
20% down payment $173,000
Monthly mortgage, property taxes & insurance around $4,000 monthly


So even with today's low interest rates the equivalent house now costs 2 times as much in monthly cost, 5 times the down payment amount, 5-10 times more expensive property tax based on value not to mention the ever rising utility and water rates and other expenses. Job wages then weren't really different than now based with inflation. The double whammy is to rent that 1,500 sq ft house in a nice part of the Bay Area is going to cost you $3-4000 a month which is the same cost as owning it and making saving for the down payment near impossible so you're screwed over either way.

I'm Bay Area born and raised... when I bought my first home minimum wage was $3.10 in Oakland and now it is $12.55

With every increase in mortgage rates potential buyers no longer qualify.

One only need to look back 4 years to find very affordable Bay Area homes...

[Ultrarunner]

Originally Posted by theoaks

I don't know how you legislate morality. In this case, it is Democrat run property management companies in California and Illinois who are unethical. Don't get me wrong, I'm liberal on the social issues. But I recognize that price gouging of rents from Democrats is unethical.

One way is for individual jurisdictions to pass a law that newly built apartments cannot rent at artificially inflated rates using computer programs, rather, that they can only rent at the market rate.

For the California Coast between Santa Barbara and San Diego, that's about $1200 a month.

No more apartments will be built... the cost of building materials and labor wouldn't pencil out and this does not include permits and utility fees that can be 80k per unit.

[Perma Bear]

Originally Posted by Ultrarunner

I'm Bay Area born and raised... when I bought my first home minimum wage was $3.10 in Oakland and now it is $12.55

With every increase in mortgage rates potential buyers no longer qualify.

One only need to look back 4 years to find very affordable Bay Area homes...

Why aren't you an Oakland realtor? You can sell hipsters nice homes
Near the coliseum

[Ultrarunner]

Originally Posted by Perma Bear

Why aren't you an Oakland realtor? You can sell hipsters nice homes
Near the coliseum

Years ago I took the test and passed... never sent in the money... still have letter congratulating me

The more I thought about it the more I realized it would not help me at all for what I was doing... I do have two siblings that are career Real Estate and do quite well... taught them everything I know

I've bought and sold a lot of property as a principal... no brokerage involved.

I still write my own offers for presentation only... old time Realtors are fine with this... newbies go into panic mode and I do admit to having little patience with them...

[Zambon]

If the state passed legislation that the more you rent out your property for, the more taxes you pay, would that help? It might provide incentive for landlords to charge reasonable rents to avoid the higher tax bracket. Or something along those lines. Thoughts?

Buying a house would still be very difficult in the Bay Area. Unless the government will provide grants for first time buyers, I'm not sure what can be done.

[Ultrarunner]

The city of Oakland already does this... it is called a Gross Receipts Tax and due even if you don't have a penny of profit... in other words working for nothing.

Plus we have rent control and have since the 1980's.

Plus we have a moratorium on rent increases across the board.

Plus, any income that results is taxed by the State and Feds.

I'm so glad I started to transition from residential to commercial... maybe all housing should be State owned... wait a minute it has been tried and the projects were an abysmal failure by many accounts.

[expatCA]

Originally Posted by Ultrarunner

The city of Oakland already does this... it is called a Gross Receipts Tax and due even if you don't have a penny of profit... in other words working for nothing.

Plus we have rent control and have since the 1980's.

Plus we have a moratorium on rent increases across the board.

Plus, any income that results is taxed by the State and Feds.

I'm so glad I started to transition from residential to commercial... maybe all housing should be State owned... wait a minute it has been tried and the projects were an abysmal failure by many accounts.

And people wonder why there is not enough cheap housing with all the demand.

Wait, the more that want housing the higher the cost to rent will be, supply and demand. Now if it were REAL profitable and the bureaucratic costs and problems were done away with, not safety, more would be built.

[Ultrarunner]

Things that are regulated tend to be overpriced over the long haul.

Rent Control was supposed to be the answer for Oakland and yet no one is satisfied...

Homes were begging... I remember walking past boarded up homes on the way to school... no one wanted them and the city picked them up and sold them for $1 if the person buying agreed to move in and spend some money on repairs... a new roof, fixed the windows and paint the outside just about covered the requirement... in five years you bought the home for $1

Guess it is hard for some to understand that Real Estate is cyclical... property that no one wanted would later have value...

No reason to go way back...

I sold a home for 255k and a year later in 2007 it sold for 350k...

In 2009 it sold as a foreclosure for 70k

Every city block in Oakland had at least one foreclosure... they were everywhere and cheap.