Is the housing in CA as bad as we hear? (Oakland: foreclosed, HOA fees)

[Need_affordable_home]

Originally Posted by gizmo980

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?

Oh those memories! I remember real estate here starting to shoot up when I was in high school and college. Now its going to be a long down cycle. Yes prices will go back up, but dont buy yet, prices have a long way to go down yet, at least where I live.

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.

Maybe I need new glasses Hope you enjoy your new rental house, how big is it, assume 4 bedrooms and you each get two bedrooms to enjoy? Thatll be more space than your tiny 2 bedroom apartment. How is the landlord making money renting out a big house for only $2200 a month in a desirable area close to your job? $500-650k? Wow are you getting a big promotion to 6 figure income? Wont it cost like 3 times more than rent?

[gizmo980]

Originally Posted by Need_affordable_home

Maybe I need new glasses Hope you enjoy your new rental house, how big is it, assume 4 bedrooms and you each get two bedrooms to enjoy? Thatll be more space than your tiny 2 bedroom apartment. How is the landlord making money renting out a big house for only $2200 a month in a desirable area close to your job?

My new house is 3 bedrooms, and I'm only planning to rent one... so essentially, we will each get 1.5 bedrooms & our own full bathrooms. But overall it's much bigger than my current place, and has more amenities - like a garage & washer/dryer, for instance. It's also only 8 years old (my apartment is about 40 yrs.), and has all very high-quality construction & materials. As for the landlord, I'm not sure how much he's making off this house, but that doesn't matter to me! It's a good deal mainly because of the neighborhood, which isn't considered a desirable one... I'm fine with that, since it's only 1/2 mile from work, right off the freeway, and still safer than where I live now.

$500-650k? Wow are you getting a big promotion to 6 figure income? Wont it cost like 3 times more than rent?

How do you know I don't already make six-figures? I actually don't, but my salary is very decent... and around here, what I make is considered acceptable for a house in that price range. $500-650K is not really a high amount in the Bay Area, so we're talking a 2-bedroom townhouse in an "okay" neighborhood, if I'm lucky. And yes, it will cost more than rent, but probably not 3 times... regardless, it's a better investment than throwing away rent money!! Plus, like I said, I already have a good down-payment secured.

[shannon94]

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.

Exactly!! It wasn't that long ago that a house that is currently selling in a crap neighborhood in SD for over 300k was selling for 115k!! What? Did Cali ornia all of a sudden become soooo desirable?? It is nothing more than lax lending standards (which are changing by the way) and risky financing.

Yes California is desirable...(San Diego is my home town) but for people to keep saying "You get what you pay for" is just silly at this point!!

[Need_affordable_home]

You could have a third roomate if you dont need the extra bedroom to store your stuff and split the rent 3 ways. But then theres the problem of sharing bathrooms How big is the house in living square feet? I wonder if the landlord is actually losing money. How much would that house cost to sell or what is the landlord trying to sell it for? How much would the property taxes, insurance and HOA be?

You mentioned your income a while ago and I agreed its decent
Do banks/lenders not use the 25% of people's income rule in the Bay area? I would be curious to know what their criteria is. A $500k house would be cheap for the bay area, probably get you an older 2 bedroom condo or townhouse in a so-so neighboorhood. How much property taxes, insurance, HOA and other expenses would you incur on a half million dollar home? Here in south Florida, I would be looking at $9k taxes, $6k insurance, $3k HOA, another $5k in other expenses on top of a normal fixed 30 year mortgage thatll cost about $2500 a month or $30k a year. 9+6+3+5+30=53! And you need 20% down here, thats $100k down, $400k mortgage for $2500/month.
Someone making a gross(before IRS income taxes) annual income of $150k(would be net about $110k) would be spending a huge percentage of his income!

Not only that, if the landlord were to rent the house out, he is still paying $23k a year if he owns it "free and clear" He would need to rent it out for almost $2k a month just to break even on the expenses. His chance of profit is whatever the house will appreciate and trust me, house prices are going down here in south FL!

Your property taxes is like 1% or was it 1.4%? Your insurance is also lower(Florida insurance is a ripoff) but you do have a high state income tax to make up for the low property taxes, we have no state income tax but our property taxes is high!

[gizmo980]

Originally Posted by Need_affordable_home

You could have a third roomate if you dont need the extra bedroom to store your stuff and split the rent 3 ways. But then theres the problem of sharing bathrooms How big is the house in living square feet? I wonder if the landlord is actually losing money. How much would that house cost to sell or what is the landlord trying to sell it for? How much would the property taxes, insurance and HOA be?

Eek... there you go with the real-estate jargon! I don't know anything about the taxes/insurance/etc., but I'd guess that house would sell for around $650-700K. The landlord owns a number of properties, and I'm sure he's making good money on them. I don't want to get a third roommate, simply because that's too crowded & annoying. I can afford to pay more than half, so there's no reason to put myself in that position. I'm planning to use that room for my treadmill, desktop computer, and possibly a futon/sofabed for when people visit.

I'm not sure about the square footage, but I think he said it's around 1600 or so. My current apartment is less than 900, so that's a good deal bigger! It's also just sooo much nicer, which you'd know if you could see the two places & compare. Plus I won't have to deal with shootings, drug dealers, police sirens, and panhandlers every step. And I'll no longer have a 50-60 minute commute every day, which is the most important factor in this move.

You mentioned your income a while ago and I agreed its decent

Did I?? Well, yes it is a decent income, which is what you get for finishing a master's degree. Not to mention, I'll automatically get a raise in six months, and regular pay-increases about every 1-2 years after that. I also get FULL medical, dental & vision benefits, great retirement package, and so forth. Government jobs rule!! LOL

Do banks/lenders not use the 25% of people's income rule in the Bay area? I would be curious to know what their criteria is. A $500k house would be cheap for the bay area, probably get you an older 2 bedroom condo or townhouse in a so-so neighboorhood. How much property taxes, insurance, HOA and other expenses would you incur on a half million dollar home? Here in south Florida, I would be looking at $9k taxes, $6k insurance, $3k HOA, another $5k in other expenses on top of a normal fixed 30 year mortgage thatll cost about $2500 a month or $30k a year. 9+6+3+5+30=53! And you need 20% down here, thats $100k down, $400k mortgage for $2500/month.
Someone making a gross(before IRS income taxes) annual income of $150k(would be net about $110k) would be spending a huge percentage of his income!

You're losing me again with the numbers, but I don't think rules are the same in California... you must not have to earn a certain percentage, considering what my friends just bought!

[ozradio]

If the landlord bought the property several years ago, before a lot of the price inflation, then the rent may be reasonable. You only have to cover your monthly mortgage when you rent, which in this case may be significantly lower than the properties current value.

[Need_affordable_home]

Originally Posted by gizmo980

Eek... there you go with the real-estate jargon! I don't know anything about the taxes/insurance/etc., but I'd guess that house would sell for around $650-700K. The landlord owns a number of properties, and I'm sure he's making good money on them. I don't want to get a third roommate, simply because that's too crowded & annoying. I can afford to pay more than half, so there's no reason to put myself in that position. I'm planning to use that room for my treadmill, desktop computer, and possibly a futon/sofabed for when people visit.

I believe the taxes is 1% of purchase price or 1.2% of assessed value. Still cant find any info on HOI, but heard its pretty expensive to have earthquake insurance Your landlord wants $2200 a month(or how much?) rent for a house at like $660k value, thats a 1:300 ratio. Here in south FL the ratio is about 1:200, probably due to the higher property taxes and hurricane insurance that gets passed to you. How is the rent being split, are you going to pay 2/3 and your roomate 1/3 or like 60-40?

I'm not sure about the square footage, but I think he said it's around 1600 or so. My current apartment is less than 900, so that's a good deal bigger! It's also just sooo much nicer, which you'd know if you could see the two places & compare. Plus I won't have to deal with shootings, drug dealers, police sirens, and panhandlers every step. And I'll no longer have a 50-60 minute commute every day, which is the most important factor in this move.

1600 total or 1600 living? If that is in SF proper, its a good deal id say. When are you moving in? Definately a better location for you. Crime must be scary!

Did I?? Well, yes it is a decent income, which is what you get for finishing a master's degree. Not to mention, I'll automatically get a raise in six months, and regular pay-increases about every 1-2 years after that. I also get FULL medical, dental & vision benefits, great retirement package, and so forth. Government jobs rule!! LOL

Im self employed and of course done with college. I applied for a government computer job that offers $38k to $55k a year(that same job would pay like 1.5x more in CA) and they require 2 year college(which I have) and "recommend" some experience(which I have from my computer hobby) but I have not heard from them. Dont really care as im self employed and not staying in south FL anyway. Government jobs do rule and their salaries are usually decent

You're losing me again with the numbers, but I don't think rules are the same in California... you must not have to earn a certain percentage, considering what my friends just bought!

I guess theres very generous lending rules and practices where you live. Where im planning to move, I probably wont be able to get any mortgage at all but it doesnt matter because I will have saved enough by then for a 100% downpayment then when I save more money, ill sell the house and "upgrade" to a bigger house. Houses are so cheap that almost anyone can afford a starter house, stay there a few years then sell that house and move up to a bigger house with cash. No mortgage needed=save on the interest

Originally Posted by ozradio

If the landlord bought the property several years ago, before a lot of the price inflation, then the rent may be reasonable. You only have to cover your monthly mortgage when you rent, which in this case may be significantly lower than the properties current value.

The property taxes, insurance and HOA would probably take a very big bite out of the rent. I dont know what she and her roomate are going to pay. $2200 is my estimate. That house has a value of about 2/3 million so probably like $8k a year in taxes. Could be another $4k for earthquake insurance and $2k more for HOA and for repairs like $4k a year. Total costs incurred would be $18k a year and if the landlord asks $2000/month thats $24k a year for $500 a month profit. My math tells me that investing in funds which appreciate 10% a year would be far, far, far more profitable

[gizmo980]

Originally Posted by Need_affordable_home

I believe the taxes is 1% of purchase price or 1.2% of assessed value. Still cant find any info on HOI, but heard its pretty expensive to have earthquake insurance Your landlord wants $2200 a month(or how much?) rent for a house at like $660k value, thats a 1:300 ratio. Here in south FL the ratio is about 1:200, probably due to the higher property taxes and hurricane insurance that gets passed to you. How is the rent being split, are you going to pay 2/3 and your roomate 1/3 or like 60-40?

Okay... the rent is $2195, and I'm asking $900 for the room, which leaves me with $1295. So that would be about a 60/40 split, right? Sorry, math is not my strong subject, LOL. I have to ask less than half for a few reasons - I'm the original leaseholder (which makes you more responsible & in control), I'll be using the 1-car garage, and my bedroom is much larger & has yard access. Plus, it would be hard to find someone willing to pay $1000+ for a room rental.

1600 total or 1600 living? If that is in SF proper, its a good deal id say. When are you moving in? Definately a better location for you. Crime must be scary!

Ummm, what's the difference between living & total space? Do you mean lot size? The HOUSE is around 1600, so I guess that counts as living space... so it's quite a deal for San Francisco (it is SF "proper", but not downtown), which is why I snagged it! There were a few other people interested, but luckily the landlord liked me & my credit/salary/etc. I've already gotten the keys, but will be moving probably the weekend of the 17th... wish I could move sooner, but it'll take a while to pack & organize my crap. It will be a better location for me, and yes the crime gets a bit scary! I have enjoyed my years in East Palo Alto, but it's time to move on now.

[Ownahome]

Wow! Thank you all for the comments. It is just hard to imaging not being able to own at least a little home. It makes such a difference to have your own place. So, I guess there still a lot of people moving up to Oregon for this reason?

[pragmachi]

Hi Gizmo, thx for your input. My budget would be upto 17-1800/m. What is the best way to start looking for places, do you recommend calling apartment offices or are there any other resources. If we live in SM, would it be a decent commute for both of us (to PA and SF), thanks again for your input.

Originally Posted by gizmo980

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.