Frugal living for a family in California? (Santa Cruz: rent, mortgage)

[yakker]

Some folks here have mentioned waiting until the real estate market hits bottom to buy. If anyone knows when that will be could you please let me know?

I used to post on these forums quite a bit because my wife and I were planning on retiring, selling our home in Seaside, and moving to Oregon in the beginning of 2008. Now our plans have changed because selling is out of the question. We will now be staying and trying to pay off the house with a new 10 year loan.

I can't believe that the prices in Seaside will go much lower than they are right now. The appraisal for our house on the new loan was $325,000 less than it was "worth" in 2005. Nothing has been selling except forclosures, of which there are many to choose from. That process drives down the estimated value of existing homes, but temporarily in my opinion, at least in Seaside because there are not large tracts of homes that are empty. Once the supply dries up the values will start to rise again, although they will probably never reach the crazy levels of the boom again.

What I see now are parents trying to help their adult children to buy at these bargain prices, and others taking the opportunity to buy while the prices are down. The area will always have the great weather and the beauty, so that should allow for solid value in the long run. I am hearing stories from my friends of amazing deals on houses that used to sell in the mid $600,000 range that are now selling in the mid $200,000 range.

I would simply caution anyone waiting for the bottom of the market to arrive to take a hard look around. If you can qualify for the loan this would seem like a good time to buy. It's too bad that so many of these opportunities come at the expense of someone else's dream. Bankers and lending organizations which have been stuck with bad debt are actively looking to get rid of the liability.

Unfortunately, some of the policies of rewarding poor decision making by lenders and borrowers are slowing the process of recovery in my opinion. When I applied for my new loan I was told that the 5.3% fixed loan I was getting could have been 2.5% if only I had been late with my mortgage payments. I'm afraid that doesn't send a very good message.

[MtnSurfer]

Wow,

That is nuts. It is like rewarding ppl for not paying their mortgages on time. Obviously the intention is to avoid more foreclosures. But why not offer the best rates to ppl with the best credit as well?

Thanks for posting this information specifically about Seaside. This is an area we will be seriously looking at within the next 6 months when our lease expires here in PG. Although we love PG I don't see the prices ever coming down to more realistic levels. It is just too popular an area with the best schools and proximity to the one of the nicest sections of coast. So demand will remain high for these tiny, little, 'Old', beach cottages.

Since you live in Seaside can you recommend a few neighborhoods? I have heard upper Seaside is nice. And there are supposed to be other nicer neighborhoods or pockets in other parts. But some of the bad areas are more in the middle where the streets are one-way and old cars are out on the lawns and the streets. With three young children we are looking for a safe neighborhood without a lot of noise such as loud rap music blasting from cars, etc...

We have some friends who live in Seaside Highlands which is the newest part of Seaside and probably the nicest in terms of modern, beautiful homes. But prices there seem as high as Monterey. Although the homes are a lot newer and larger.

Derek

[mysticaltyger]

Originally Posted by ndfmnlf

If you paid cash for a house in California, would you say that the cost of living is pretty much equivalent to the rest of the US? Most cost of living calculators I've used puts the cost of housing as the leading cause of high overall cost. Perhaps if you could buy a house outright, that eliminates the need for a mortgage. In the Sacramento area, you could probably buy a decent house for $300K.

No. The cost of living is still higher. Gas, grocieries, and sales tax, property tax (rate is low but tax is high because of sky high home prices), income tax, etc.

However, housing costs are the worst part of it. If your house is paid for the high COL is merely annoying instead of oppressive.

[mysticaltyger]

Originally Posted by dweej

I think it might be more financially savvy though, if someone has $300K cash to use for a house, to buy a nicer home elsewhere for only $200K (or even less!), and use the rest of the money to pay off other debts (if you have any) or purchase other smaller properties as rentals for some additional income. $300K cash could go a long way toward earlier retirement if you choose not to spend it all on a modest house just to live in CA. I guess it's about priorities .

Yes, good point.

[mysticaltyger]

Originally Posted by jaynetarzana

I keep reading articles about how rents are coming down all over the country because of the increase in inventory. People are moving in with each other to save money (frugal living!) We're looking at rentals in Scotts Valley right now and I am not seeing this downward trend (perhaps it will never happen since there is limited housing anyway). In fact, I am not seeing much of anything and it is quite discouraging. We are making our move back to California in 23 days so I am really trying hard to figure out where we are going to live. Our options are limited because we are looking for something less than $2K a month so that we can save money to buy a home again one day.

As a renter in San Jose, I can tell you that all that has happened is that rents have stopped going up or are coming down slowly. That's the market over the hill in San Jose. Since you're very specific about where you want to be (Scotts Valley), then you have more limited options. Scotts Valley probably just doesn't have many rental units, which may keep rents high there.

[yakker]

Derek,

The best areas to live in Seaside surround the center of town like a giant horseshoe. Seaside, much to its credit, provides subsidized housing, and these are the areas that suffer the most from depressed housing prices and blight. If the other cities on the Peninsula would make more than a token effort to do the same it would be less noticeable in Seaside. That being said, the section of town that is the poorest in housing quality is constantly improving.

The most desireable sections are in upper Seaside from Yosemite Street east to the Fort Ord fence, west of LaSalle Street from Del Monte to Seaside Highlands, and south of Sonoma Avenue to Del Rey Oaks. Some of the views of the Monterey Bay from the hills of Seaside are unrivaled. I live on the end of a cul de sac near the top of LaSalle and have a park on one side of the house with a view of the ocean from my living room.

Seaside has been maligned mostly through long held prejudice, both blatant and subtle. The truth is that the city has better crime statistics than the other cities in the area, and is by and large friendly and quiet. There are a lot of real estate buying opportunities here that don't exist in cities other than Marina, and they won't last indefinately. The foreclosures have hit Seaside harder, because in part, people were trying to cash in on the boom and were taking out ridiculous loans and using their houses like ATM machines. Many more sunk hundreds of thousands of dollars into remodels only to have their accounts frozen when the values of homes dropped, and finding themselves faced with an unforseen debt load with no way to sell or break even.

Everyone says that greed got us into this mess, and they are correct. Without getting political I would have to say that most of that greed rests on the shoulders of the lenders who have been paid handsomely over long periods of time. The rest of us planned diligently for our one shot at greed, using our homes as our nest egg, and planning on the equity we were building. For those of us who didn't flip houses, our chance at greed never came. Now we get to bail out the lenders and borrowers too when all we did was follow the rules.

I sound bitter, but in reality I feel very fortunate to live where I do. I think a lot of it depends on who your neighbors are. Maybe it would be a good idea for this site to add a jerk-o-meter to their statistics, giving us a per capita snapshot of bad attitude for each city. On a scale from 1 to 10, with 10 being the worst, I would have to say that Seaside scores about 3 on the jerk-o-meter graph (unless my neighbor's dog is barking, and then it's closer to a 5).

The hardest thing to deal with about living in Seaside is putting up with thoughtless replies when someone from another city asks you where you live. The "Aren't you afraid to go out at night?" or "I would never live in Seaside!" comments come from a position of ignorance. The local paper is guilty of fostering these beliefs as well. Not only are their editorials and articles slanted toward the more affluent communities, but once a year they publish a magazine entitled "Living here". All the other cities have glowing comments and beautiful scenic pictures displayed, with arts and crafts and clever promotion. Seaside is mentioned as having a "diverse culture" and there is usually an article written by a local minority person, expounding on how "Things are a lot better than they used to be". This person is usually pictured in a rocking chair and looks like the character Blind Melon Chitlin. I've lived in every city on the Peninsula and they all have their good and bad points.

Those who can conquer their preconceptions will find the city welcoming and peaceful. The police and fire departments are of the highest quality and the city is responsive to complaints in my experience. My wife and I once felt that selling our house and moving away was the only path forward. Now we will be staying and enjoying our children and grandchildren where we were raised. I guess there's a reason for everything.

Dave

[eddyjoe]

Originally Posted by jaynetarzana

Our story: We bought a modest house (720 sq ft) in Santa Cruz for a family of four. The market crashed, we lost everything, moved to Chicago for cheaper cost of living, we've missed California every minute , we're planning a move back in 34 days (yay!), we are determined to live within our means this time (including putting $ away each month so we can one day buy a home again). We need public schools so we have chosen Scotts Valley. Looking at rentals online, there isn't anything decent for under $2K and even those are in the section 8 areas. We don't mind living frugally (other than housing, we do already), but we don't want our pride to hurt either. We want to have a nice place to live that we aren't embarrassed of. I was wondering if anyone has had a similar experience with wanting to "go frugal" and if you wouldn't mind sharing your story. Thanks in advance!

Hello I used to sleep in a grave top for two years before being rescued off the streets twenty five years ago. I now own my own detached house set in a 1 acre garden and although the house is run down a little I remember peering into peoples homes at night longing to have a place of my own. You have to make the most out of what you have and don't let pride blind you to what might otherwise be decent property. Cheap can be cheerful it's what you make of things. Pride can come later once you have gotten back on your feet.

[mysticaltyger]

Originally Posted by ndfmnlf

If you paid cash for a house in California, would you say that the cost of living is pretty much equivalent to the rest of the US? Most cost of living calculators I've used puts the cost of housing as the leading cause of high overall cost. Perhaps if you could buy a house outright, that eliminates the need for a mortgage. In the Sacramento area, you could probably buy a decent house for $300K.

No. The cost of living here is still higher.

The state sales tax is 8.25%. The counties tack on more, so it's usually 9% to 9.5% depending on the county. Then there are income taxes.

Gas is usually the highest in the country.

Property tax rates are low, but since they are based on sky high home values, the dollar amounts are pretty high unless you've been in your house 10+ years or more. A friend of mine has lived in his house in 1990 and pays around $3500 per year. I'm sure it would be double that if a new owner bought the same house today.

Groceries and the cost of services (like getting your car fixed or your hair cut) are also higher.

But yes, if you own your home outright, the cost of living here is a lot more manageable...merely annoying instead of super stressful. Of course, very few people can do what you propose.

Then there is what I would call the "California lifestyle tax". This applies more to singles than families, I think (but I could be wrong). It seems there are lots of things to do in the popular areas (SF Bay Area, Los Angeles, San Diego, Sacramento). And that usually involves driving around from one expensive entertainment venue to another (weekends in Tahoe, trips to the Wine Country, concerts, eating out, etc), as things are spread out. A lot of people here don't know just how to hang out with each other without spending money.

[nmnita]

Originally Posted by mysticaltyger

No. The cost of living here is still higher.

The state sales tax is 8.25%. The counties tack on more, so it's usually 9% to 9.5% depending on the county. Then there are income taxes.

Gas is usually the highest in the country.

Property tax rates are low, but since they are based on sky high home values, the dollar amounts are pretty high unless you've been in your house 10+ years or more. A friend of mine has lived in his house in 1990 and pays around $3500 per year. I'm sure it would be double that if a new owner bought the same house today.

Groceries and the cost of services (like getting your car fixed or your hair cut) are also higher.

But yes, if you own your home outright, the cost of living here is a lot more manageable...merely annoying instead of super stressful. Of course, very few people can do what you propose.

Then there is what I would call the "California lifestyle tax". This applies more to singles than families, I think (but I could be wrong). It seems there are lots of things to do in the popular areas (SF Bay Area, Los Angeles, San Diego, Sacramento). And that usually involves driving around from one expensive entertainment venue to another (weekends in Tahoe, trips to the Wine Country, concerts, eating out, etc), as things are spread out. A lot of people here don't know just how to hang out with each other without spending money.

Great points, thanks for the break down on the cost of living in the state. I think it will help many others.

Nita

[robertjohnson]

[quote=jaynetarzana;7336289]Our story: We bought a modest house (720 sq ft) in Santa Cruz for a family of four. The market crashed, we lost everything, moved to Chicago for cheaper cost of living, we've missed California every minute , we're planning a move back in 34 days (yay!), we are determined to live within our means this time (including putting $ away each month so we can one day buy a home again). We need public schools so we have chosen Scotts Valley. Looking at rentals online, there isn't anything decent for under $2K and even those are in the section 8 areas. We don't mind living frugally (other than housing, we do already), but we don't want our pride to hurt either. We want to have a nice place to live that we aren't embarrassed of. I was wondering if anyone has had a similar experience with wanting to "go frugal" and if you wouldn't mind sharing your story. Thanks in advance![/quote

As a family of 5 we can't get by on less than $ 3500 per month here in n. Calif. That's living in a modest home in a border line area. 95838. That does not include health care insurance. Having given it much thought
over the last 3 years were leaving. We hate to go. But hate to stay
even more. Good luck. If you discover some magic way to live here please let us know.