Instructions to my son on how to buy a house in the SF Bay Area (San Jose: 2014, credit)

[CA4Now]

Originally Posted by TR95

Go back to 1989, when my class graduated college. We were at the top of a housing bubble. Homes cost $300k+, interest rates were 11-12%. Starting salaries average $24k. Ok, you follow me or have I lost everyone yet? PITI monthly payment is about $3,100/month. Comprehend? Do you get this scenario? Monthly income of $2,000 can't afford to buy a house. So what does one do? Wait until the mid to late 90s. Income has grown to $80k. Voila! Someone can afford a house. Not in the ideal area where one wants to live, but a good enough area until kids arrive.

Does everyone understand or are there still whiners on here?

They're either not old enough to remember that or they don't want to hear that we walked backward in the snow with no shoes on to school, unfortunately. <sigh>

[TR95]

Originally Posted by WithDisp

Not as relevant today.

You bought and sold at all the right times, which is great- however your entry level home in 1995 is likely no longer available with 'entry level' funds.

The 'sacrifice' needed today- means next to no quality of life, and is only worth it if one's job will matriculate within 5-10 years to something livable. Most careers will not.
The high paying industries pay decent to begin with.
The lower paying sectors at this point do not appear to be catching up.

But it is relevant. Sure, he bought at the right times, but the same phenomenon was occurring in 1989-1990. I already explained that in a prior post. If you can't understand then you're beyond help.

[Chuck5000]

Originally Posted by WithDisp

Not as relevant today.

You bought and sold at all the right times, which is great- however your entry level home in 1995 is likely no longer available with 'entry level' funds.

The 'sacrifice' needed today- means next to no quality of life, and is only worth it if one's job will matriculate within 5-10 years to something livable. Most careers will not.
The high paying industries pay decent to begin with.
The lower paying sectors at this point do not appear to be catching up.

Excellent observations, all true. Higher paying industries here can have great pay trajectories, but non high paying ones do not. It's getting harder for those people.

This thread is basically a conversation, but it would be a lot more clear if somebody made up an example or 2 or three, pick an age, a career path or job, a salary (which you can then extrapolate a couple of realistic promotions from over, say 15 years) then look at actual locations of actual houses. And do some math.

Which has been done in many other threads. E.g. "I am an engineer, my partner does not work, I earn 200k, we want a 3 bed room 2 bath house or condo, can be 1500 sq feet, with 7 out of 10 schools that are easily commutable to either SF or the SV area. And we want to save money responsibly and not spend every last dollar on mortgage." And guess what, oops, this imaginary person cannot not have less than an 80 minute commute unless he wants to spend TOO MUCH on mortgage. "Too much" by accepted standards or responsibility. And that is a crap quality of life. And he makes 200k.

But suuure, he can just squeeze his family into a 1200 sq foot 2/1 wreck in SJ or Oakland with 3/10 schools. That's always possible. Or maybe a little better than that. But my point is pretty clear.

Once you do specifics, it becomes clearer how hard it is to buy here except in far-flung or poor locations, and that penny pinching over household goods is just helpful at the margins.

But if one helps one's son with a downpayment, that makes a big difference.

I live in Palo Alto, rent in a top area, and children of most of the old neighbors on this block do not live in the bay area.

[WizardOfRadical]

Instructions for your son:

Wait till your dad dies.

Inherit house.

The end.

[bodyforlife99]

Originally Posted by TR95

But it is relevant. Sure, he bought at the right times, but the same phenomenon was occurring in 1989-1990. I already explained that in a prior post. If you can't understand then you're beyond help.

TR, my friend. What was that advice you were giving me a few posts back.

Now you're seeing what I'm dealing with. And yes, the same phenomenon has been going on for decades.



There are ebbs and flows. Interest rates changes, etc. But as they say in New York...fugget about it. As I stated earlier on, there will always be those that just say everything is impossible (one guy claims your household income needs to be $300K, lol). It simply can't be done. They will tell you that no one has ever had to experience what they went through (and yet, I don't see soup kitchens or bread lines). Yep, times are just way tougher for them as opposed to you, me, our parents, and our grand parents. The people that come here now couldn't possibly afford to buy a home (yep, never heard that one before). And twenty years from not, I'm guessing we'll be hearing about how lucky the people in the 2010s were to have been able to buy houses at such a low cost, but the people in 2030, they couldn't possibly buy a house. Blah, blah, blah, blah, blah.

We're just not young enough to know everything. And we're surely foolish for trying to teach our children how to gain wealth. My father was really dumb to have those talks with me. And all those naysayers, they were so right. I should have never sacrificed and been house poor for years, because owning property in the Bay Area never pays dividends. TR, we're just going to have to ride out into the sunset with our tail between our legs. Let's just sell our homes and we can call each other every day and remind each other how dumb we are. What in the world were we thinking?!

[bodyforlife99]

Originally Posted by WizardOfRadical

Instructions for your son:

Wait till your dad dies.

Inherit house.

The end.

Nah, he'd have to fight his sister for it. Plus, maybe Dad decides to have a little too much fun in retirement. Better go back to plan A.

[TR95]

Yep, Body, people here will never get it. Trouble with these people is they are like the people I hire now. It's not in there. Yes the answer is. No it's not. Did you read through everything. No I just did a ctrl F and searched the PDF. Well you missed it. If it's not readily available it just must not be possible that the answer is in there.

Your graph just proved everything I said and remember over the last 25-30 years. Looks like we have another possible 30% increase even. Will we, who knows? But all these naysayers will say it's a terrible time to buy. They said the same thing when we moved here over a year ago. Well, prices are up a good 10-15% since then.

Let's even go back to when my parents bought their first house. It was 1974. I was 8 years old. They paid $50k. My dad made about $9-$11k/yr as a teacher. Interest rates were high. Again, they encountered the same problem as you and I did 20+ years later. Sure they benefited far more over 40 years than we may, but hey you just never know.

[WithDisp]

Originally Posted by TR95

But it is relevant. Sure, he bought at the right times, but the same phenomenon was occurring in 1989-1990. I already explained that in a prior post. If you can't understand then you're beyond help.

You're either saying that time is a factor- or that it isn't.

I'm quite familiar with markets. Right now, the majority of households earning less than median wage cannot afford to buy. No amount of being frugal will change that.

[WithDisp]

Originally Posted by TR95

Let's even go back to when my parents bought their first house. It was 1974. I was 8 years old. They paid $50k. My dad made about $9-$11k/yr as a teacher. Interest rates were high. Again, they encountered the same problem as you and I did 20+ years later. Sure they benefited far more over 40 years than we may, but hey you just never know.

10K a year x 5 = 50K. Cost of a house.
Today's teacher salary 50K x 5 = 250K. Not the cost of the house.

Also compare the cost a 4 year teaching degree then, to a 5 year teaching degree now.

Hope your dad wasn't a math or a history teacher- you certainly didn't get much from him out of it.

[TR95]

Originally Posted by WithDisp

10K a year x 5 = 50K. Cost of a house.
Today's teacher salary 50K x 5 = 250K. Not the cost of the house.

Also compare the cost a 4 year teaching degree then, to a 5 year teaching degree now.

Hope your dad wasn't a math or a history teacher- you certainly didn't get much from him out of it.

Once again you oversimplify. What were interest rates back then. About 16%. I already did the math in a prior post and proved my point. Good day. You have to learn to think.