Is the housing in CA as bad as we hear? (San Diego: mortgage, credit)

[gizmo980]

Originally Posted by pragmachi

Hello all,

This is a great forum, and I find it really informative, thanks to all. My family (including my wife and 6 month old son) will be moving soon from NY to Northern Cali. I would be working in Palo Alto (stanford) and my wife has to commute to UCSF hospital and briefly (about 3 months out of the year) to Oakland (children's hospital). What do you recommend for a place to live given we both will be commuting keeping in mind the traffic patterns (towards SF vs towards palo alto) which is also safe. Thanks a million for your input, this would be of great help.

You might want to start a new thread, on the San Jose or San Francisco forum... that way you'll get more answers, and we won't be yelled at for going off-topic!

But to give you an answer, I'd look into the cities of San Mateo (certain parts), San Carlos, Belmont, Burlingame, Foster City and Millbrae. These would be considered mid-Peninsula, and have convenient options near highways 101, 280 & 92. They're also pretty safe, especially Burlingame & Foster City! When your wife is working in Oakland, she could get there via the San Mateo bridge, or take BART from the Millbrae station. In terms of the driving commute, I think it's best to be closer to Palo Alto, since that's a worse direction (north to south). It would help to know your budget, since they have a wide range of prices - all quite expensive, though. Anyway, good luck in your move!

P.S. I currently commute from Palo Alto to San Francisco every day (moving to SF this month!)... it takes about 50 minutes in the morning, leaving at 8am, and anywhere from 40-60 minutes in the evening, when I leave at 6:15-ish. I take hwy 101, and the bad spots are from San Mateo to Millbrae, the entrance of the city (Silver ave-downtown; luckily I exit at Silver ), and from Redwood City to Palo Alto in the evening.

[gizmo980]

Originally Posted by Need_affordable_home

I know I wouldnt be able to afford a $2.5m house unless I won the lottery a few times! How rich are those people? 10 million? 20? 50? 100? You need to be "worth" much more than what your spending on a house if you dont wanna go broke. I have heard many stories of lottery winners going broke because they spent a large percentage of their winnings on a house among other things.

You know, there are ways to make millions without winning the lottery!! Neither of my parents won anything, aside from my mother's occasional poker & bingo winnings - LOL. But you also don't need $100 million to afford a $2.5M house, if things are financed & invested in a smart way. I don't know anything about that stuff, so I can't really say how... just know it can be done, based on the many people I know in expensive homes. I'd guess the average "worth" of someone in a $2.5M house is around $5-15M, which isn't that unusual in this area.

$120k household salary......interest only mortgage......900k house? Do they plan on "flipping" the house in a few years, pay back the mortgage and pocket the profit? How much are houses like those types appreciating? Maybe the market in their city is still robust unlike here in south FL where this guy spent $440k and no one will pay the $350k asking price. The realtor and my dad believe he was a "speculator" looking for a quick, easy flip. If he cant sell the house, he might just walk away and the bank will foreclose it.

Yes, the market is still quite healthy here, no matter what part of the Bay Area you're in... I told you how much our homes increased, and I also have a friend who bought a $299K condo 4 years ago, which is now worth over $500K. And she doesn't even live in a "desireable" area! There's really no chance of LOSING money in real estate, as far as I can tell. I'm not sure if my friends are planning to flip the house, but I don't think that's their intention... they just got sick of throwing away money on rent, and owning a home is really a great investment here. Besides, the overall price is really irrelevant, since it's just the mortgage payments that mean anything. But regardless, they will end up selling it for more than they paid.

[ozradio]

I wouldn't want to live in SF per se, but I'd be interested to know how "civil servant" types (teachers, police, firefighters, state employees) manage, especially those just starting their careers; who didn't buy before prices skyrocketed. Judging by salaries I've seen my spouse and I might be able to pull in 75-80K or so combined. Once you start talking about a 3, 4, or even 5,000$ mortagage that doesn't go too far. With three kids a little one or two bedroom place wouldn't cut it.

[Need_affordable_home]

Whats the forecast for appreciation? Almost everywhere saw appreciation till 2005-2006 when the "bubble" started deflating. Im sure theres still some bubble pockets, one being in the bay area or parts of it. Ive seen plenty of articles that say the bay area was 50% overpriced and that prices were dropping. Has the trend been temporary and reversed starting in 2007? What are the experts predicting for the bay area and what reason? Lots of rich people? Lots of people taking out creative financing? Lots of foreign investors?

From $300k to $500k+ in 4 years is a 14% increase annually. No chance of losing in real estate? You should see whats happening in south FL, I have a thread about this speculator guy who paid $440k and cant sell it for his $350k asking price, no one will pay that much!

As for making millions, I have some ideas how to but its 1000 times harder than it looks to actually get that done. They involve business ideas but how well will it pan out in reality?

How much are you looking to spend on a condo seeing you are tired of renting even at that low, low price, wonder how much loss the landlord is taking whats the prop. taxes, insurance and HOA?

[achtungpv]

Originally Posted by gizmo980

There's really no chance of LOSING money in real estate, as far as I can tell.

Were you in CA back in the early 90s? Housing tanked horribly. It took over 10 years to recover those values. People have a short term memory when it comes to real estate appreciation. RE is cyclical it goes up and it goes down. It'll go down harder than ever this go round since ARMs and No Down Payment Loans didn't exist 15 years ago. There's no way anyone making less that $250K a year should be able to buy a $750K+ house. Wait until late '08 after the ARMs adjust. Sellers will try and hold out until their credit & HELOCs run out but there'll be a fire sale on real estate all over CA.

www.thehousingbubbleblog.com makes for good read.

[tallrick]

I wonder how prices were in these areas, like 50 years ago when compared to incomes. If people back then purchased real estate at reasonable prices, why are today's buyers acting irrationally? All for property which will one day be "shaken out".

[gizmo980]

Originally Posted by ozradio

I wouldn't want to live in SF per se, but I'd be interested to know how "civil servant" types (teachers, police, firefighters, state employees) manage, especially those just starting their careers; who didn't buy before prices skyrocketed. Judging by salaries I've seen my spouse and I might be able to pull in 75-80K or so combined. Once you start talking about a 3, 4, or even 5,000$ mortagage that doesn't go too far. With three kids a little one or two bedroom place wouldn't cut it.

It's tough, but people manage somehow... many of them will live in cheaper areas, like Tracy, Livermore, and parts of the East Bay, and will commute to their jobs. Others just rent, share housing, or become "house poor". They also have some special deals for civil servants, especially those who are first-time home buyers... my sister used to lead seminars/meetings on this, since she was a real-estate lawyer.

[gizmo980]

Originally Posted by achtungpv

Were you in CA back in the early 90s? Housing tanked horribly. It took over 10 years to recover those values. People have a short term memory when it comes to real estate appreciation. RE is cyclical it goes up and it goes down. It'll go down harder than ever this go round since ARMs and No Down Payment Loans didn't exist 15 years ago. There's no way anyone making less that $250K a year should be able to buy a $750K+ house. Wait until late '08 after the ARMs adjust. Sellers will try and hold out until their credit & HELOCs run out but there'll be a fire sale on real estate all over CA.

www.thehousingbubbleblog.com makes for good read.

Yes, I was here in the early '90s, but still in high school. I take back saying it "never" goes down, since I do realize there are bubbles & such... but if you hang on long enough, it eventually goes back up - right?

[gizmo980]

Originally Posted by Need_affordable_home

Whats the forecast for appreciation? Almost everywhere saw appreciation till 2005-2006 when the "bubble" started deflating. Im sure theres still some bubble pockets, one being in the bay area or parts of it. Ive seen plenty of articles that say the bay area was 50% overpriced and that prices were dropping. Has the trend been temporary and reversed starting in 2007? What are the experts predicting for the bay area and what reason? Lots of rich people? Lots of people taking out creative financing? Lots of foreign investors?

Sorry, but I have no idea!! I'm not as well-informed as you are about real estate, so wouldn't even know how to answer those questions... at least not without a few hours of research.

As for making millions, I have some ideas how to but its 1000 times harder than it looks to actually get that done. They involve business ideas but how well will it pan out in reality?

I'm not talking about "get-rich-quick" or risky business ventures... I mean good old-fashioned hard work, education, and big business or high-paying careers. That's what my father did, and it's served him extremely well in life.

How much are you looking to spend on a condo seeing you are tired of renting even at that low, low price, wonder how much loss the landlord is taking whats the prop. taxes, insurance and HOA?

I'm not looking to buy anytime soon, so I don't know where you got that! I am moving to San Francisco this month, and just signed a lease on a rental house. With a roommate, my share will only be about $300 more than I pay currently, and I get a LOT more... only 5 minutes from work (rather than an hour commute each way), twice the space, backyard, garage, washer/dryer, safer neighborhood, and so forth. Definitely worth the money. I would like to buy something in about 2-3 years, and will probably look in the $500-650K range... on my salary + down-payment I've already saved, that should be do-able with good financing.

[Tallysmom]

Originally Posted by achtungpv

Were you in CA back in the early 90s? Housing tanked horribly. It took over 10 years to recover those values. People have a short term memory when it comes to real estate appreciation. RE is cyclical it goes up and it goes down. It'll go down harder than ever this go round since ARMs and No Down Payment Loans didn't exist 15 years ago. There's no way anyone making less that $250K a year should be able to buy a $750K+ house. Wait until late '08 after the ARMs adjust. Sellers will try and hold out until their credit & HELOCs run out but there'll be a fire sale on real estate all over CA.

www.thehousingbubbleblog.com makes for good read.

The bubble has popped -- and so far in the Bay Area our values are holding. Some zip codes are down and some zip codes are up... The ARMS adjusting doomsday scenario has been something that's upposed to happen for a while and yet... still no doomsday.

Granted, at the hieght of the frenzy, a lot of subprime loans were handed out, and those are expected to tank, and they are -- foreclosures are up -- but the foreclosure rate in Northern California is still WAY lower than in lots of other places, including places that have cheap land. I think Texas leads in foreclosures right now.

The other thing that the San Francisco Bay Area has going for it is it isn't just Americans coming here to live. We have lots of foreigners from all over the world coming here to live for work, for second homes, for retirement.... and to us, the prices are high, but compared to lots of other places, our prices are cheap.