Housing Costs - How do people afford it (San Jose, Oakland: mortgage, loan)

[Trailing Spouse]

Dear Hubby was approached by his company about a move to Northern Calif. Work would be either in downtown Oakland or San Carlos. We are trying to take a look at various cities to see if move would work out financially. Have a few questions:

Housing cost is very HIGH and you get very little in the way of square footage compared to where we live. How do people afford it? What keeps the market so high on resales?

Given office locations (downtown Oakland and San Carlos) where would be the best place to search for homes. He DEFINITELY wants to use public transportation (BART or train?) rather than commute by car.

We want a place where infrastructure is in place (schools (not that we need them, but great for resale), banks, hospitals, etc.)

All help is greatly appreciated, I am going "nuts" trying to figure things out.

[Need_affordable_home]

most people just rent, its much, much cheaper. I actually wonder if the landlords even make money considering how cheap some of the rent is, I mean a $600k condo for just $1600 a month? Those landlords must get a break on the property tax and insurance to afford to rent them so cheap.
Youll probably will just want to rent and wait for buy prices to go down alot.

[Trailing Spouse]

If we rent, we will be hit hard by "Uncle Sam." DH makes a decent living and we need the mortgage payments as a write-off for taxes.

We are older, and really don't want to invest a large sum of money in a new house that we may never see any profit out of.

[Need_affordable_home]

The mortgage interest is only tax deductable off the *gross* not net! You will save a small percentage in taxes. Rent is still going to be far cheaper and you can invest in funds like my dad does which go up an average of 10% a year.

[Trailing Spouse]

Originally Posted by Need_affordable_home

The mortgage interest is only tax deductable off the *gross* not net! You will save a small percentage in taxes. Rent is still going to be far cheaper and you can invest in funds like my dad does which go up an average of 10% a year.

I realize that. We live in a 3200 sq. ft. house now. We wouldn't be able to rent something cheap with that sq. footage. Also, can't downsize too much because we have all this furniture. Don't want to pay for storage. We do invest in funds that give us a VERY good rate of return. Hubby has also maxed out what he can contribute to his 401K on an annual basis.

Thanks for your suggestion, appreciate the response.

Also forgot to mention that we need the property tax write-off, here it is about $9,000

[gizmo980]

As NAH said, many people just rent (like myself), but there are still plenty of buyers! I can't personally give advice, since I'm not looking to buy yet, but I know they have some deals... like the interest-only loan my friend & her husband got, for an $890K home in San Mateo. Luckily our salaries are good here, so that sorta makes up for it. Take my profession (librarian) for example, which averages about 35-40% higher than what other states pay. If I'm smart with my money, I should be able to afford a small home/condo in the next 1-3 years! As a single person, it's even harder to afford, so consider yourself lucky in that respect.

To answer the rest of your question, San Carlos is a great little town - safe, pretty, halfway between SF & SJ, "affordable", great weather, etc... but the downside is public transportation, since your only option would be CalTrain. If your husband's actually working in/near San Carlos, this won't be a problem except when visiting the city... but if he has to commute, the train is really slow & tedious. Plus it only runs along El Camino Real, so he'd have to schlep to/from the station, depending on where you live & work.

BART is MUCH better for commuting, but it only goes through SF, East Bay (Richmond, Oakland, Walnut Creek, Hayward, etc), and the North Peninsula to SFO (airport). If he takes a job in Oakland, you should look into living in Walnut Creek, Dublin, Pleasanton, Concord or Pleasant Hill... all pretty nice suburbs, which have BART access & lower prices than other areas. For the San Carlos job, also consider Belmont, west Redwood City, San Mateo hills, Menlo Park, and maybe Burlingame. The last two are fairly expensive, but some good "deals" do exist in certain parts of town. Hope this essay helps, and feel free to ask more questions!

[gizmo980]

Oh, and if your husband doesn't mind a longer train ride (to San Carlos), there are some cheaper towns in the South Bay... Mountain View, Sunnyvale, Santa Clara & San Jose, for example.

Here are system maps for BART & CalTrain, to get a better idea of how everything's laid-out...
http://www.bart.gov/stations/map/systemMap.asp
http://www.caltrain.com/caltrain_map.html
http://www.511.org/ (general info on public transportation)

[Trailing Spouse]

Many thanks for your response. If, we buy a house, we would probably go interest only (as we do now) so we can have the write-off. If this relocation comes about, we will definitely have to look at all angles of the move (rent vs. buy).

I appreaciate you giving me perspective on the San Carlos and Oakland issue. We spent the weekend researching cities and housing prices and were very depressed. We have a beautiful and large home here and I don't relish the fact that I may have to downsize drastically for a much smaller home (1/3the side of present home) at twice the price we paid for ours. I am familiar with the California real estate market because we lived there for many years and then relocated back there again before another corporate move to another state.

I just found this forum yesterday and was glad I did. From the many posts on this board, I see that I am not alone in my relocation quest. Your information is a big help in narrowing down my search.

Again, thanks and have a nice day.

[Tallysmom]

Originally Posted by Need_affordable_home

most people just rent, its much, much cheaper. I actually wonder if the landlords even make money considering how cheap some of the rent is, I mean a $600k condo for just $1600 a month? Those landlords must get a break on the property tax and insurance to afford to rent them so cheap.
Youll probably will just want to rent and wait for buy prices to go down alot.

Most rentals have been owned for a long period of time -- not purchased and then rented. If you bought property to use as a rental 10 or 15 years ago, your mortgage on the property would be far less than the rent you can charge.

Also the few people that I know in the rental business recently haven't leveraged themselves to the hilt to buy several properties -- they have tons of money and these are investments they are willing to hold onto.

[gizmo980]

Originally Posted by Trailing Spouse

Many thanks for your response. If, we buy a house, we would probably go interest only (as we do now) so we can have the write-off. If this relocation comes about, we will definitely have to look at all angles of the move (rent vs. buy).

I appreaciate you giving me perspective on the San Carlos and Oakland issue. We spent the weekend researching cities and housing prices and were very depressed. We have a beautiful and large home here and I don't relish the fact that I may have to downsize drastically for a much smaller home (1/3the side of present home) at twice the price we paid for ours. I am familiar with the California real estate market because we lived there for many years and then relocated back there again before another corporate move to another state.

I just found this forum yesterday and was glad I did. From the many posts on this board, I see that I am not alone in my relocation quest. Your information is a big help in narrowing down my search.

Again, thanks and have a nice day.

You're very welcome, and good luck! While I don't know from personal experience, it is definitely possible to buy a house... but you will have to downsize, which is the trade-off for living in such a great area.