Any chance real estate market will crash? (San Jose, Vista: best neighborhoods, rentals)

[Azmordean]

Originally Posted by mysticaltyger

I agree with all of this. School is important. The problem is what it takes to be successful in school is usually not the same as what it takes to be successful in the work world.

It's been well documented that most people who go to Ivy League schools don't do as well as expected. Not that they do badly, but the elite schools tend to be overrated in terms of cost and how well their graduates do in the work world.
Even people from the Ivy League schools are admitting such:

Ivy League Schools Are Overrated. Send Your Kids Elsewhere. | New Republic

At college level and above, I'm convinced as long as you go to a good school (good, not top 10 or top 100 -- just solid), what you get out of it is mostly what you put into it. Not too many college kids are "maxing out" the potential of the schools they are attending. I'm not saying top schools are useless - far from it. If you've got a kid who's super smart, super motivated, and set on a specific field, than a top end school might make sense. Somewhere like MIT for engineering. But for most kids, I think the cost is seldom worthwhile as compared to a very good state schools.

This is even more the case if the student is thinking of grad school. Once you get a grad degree, very few people care where you got your undergrad degree. So if you are planning a grad or professional degree -- again -- save some bucks, go to the best state school you can get into, and then if you're so inclined, go to a top grad school.

I did all of my education in-state back home in Virginia. Virginia Tech for undergrad (Economics with Comp Sci minor) and William & Mary for law school. I was blessed, of course, to live in Virginia where there are several top schools in-state.

[nagleepark]

You know what's really interesting?

The screwup from my high school got kicked out multiple times and is now a famous actor (but still kind of screwup). Every single person on this board has probably seen at least of one of his movies and he's in several blockbusters. He's a great actor, in my opinion, so I don't begrudge him and hope that he overcomes his problems.

One of the 4.0 GPA students from my high school got a PhD from MIT, achieved minor fame for an open source project and now works as an anonymous grunt at Google. I'm sure that he does OK but, in almost any category, the actor has got him beat.

[HockeyMac18]

Why did this thread turn into a discussion about private schools?

[jk88cal]

Originally Posted by wsugrad03

No worries. I won't judge. I ask because it's a hotly contested debate I have with my wife. We want to buy in the "nice" areas of 94040, Los Altos, Saratoga, Cupertino, Los Gatos, and the surrounding Sunnyvale/SJ areas near these towns. But the price is just absurdly high. However, I tend to have the opinion that we should buy where it's more affordable (which isn't much in this area), because it'll grow into a "good" area in the future. The problem of course is schools. We want out kids to be in a competitive school district, which in many cases is not viable. Sunnyvale today seems like it's already unaffordable, even though the schools is generally a bit iffy (with exceptions of course).

Whether you should buy in area with potential for growing into "good" area in the future. You should do so if:
- You cannot afford or do not want to pay the premium to buy into good established area.
- You understand why there is a discount. For instance, schools are 2nd or 3rd tier, but not top tier.
- You do not care about the reason for the discount and it does not affect you personally. For instance, you do not have kids or you plan to send your kids to private school.
- The impact on property price if the potential never materializes.

You should not buy into an area hoping that it will grow into a good area. That is is just wishful thinking. And odds are low the demographics will actually change in a few years.

We made this mistake years ago. We didn't have kids, but we knew how important schools are to the property price. We could have purchased in SFH in Cupertino (Monta Vista HS) and West San Jose (Lynbrook HS). We decided on Evergreen, because the homes are newer and much larger for the same price. And we thought that Evergreen schools were up and coming, which was true but that didn't cause RE value to appreciate at same rate as top tier schools. Fast forward 12 years, homes in Monta Vista HS went up 60-80%, whereas Evergreen went up 20%. That was last time we checked several years back. Not sure about today.

We did have a chance to correct our mistake. And I believe we made the right choice 2nd time around. Only time will tell.

[wsugrad03]

Originally Posted by sonarrat

The result is that while cities have been able to enjoy growth in residential property tax income, the growth in commercial property tax revenue has been extremely slow. This is a lot of money we're talking about; it drags on the whole state.

It seems to me that Prop 13 was trying to cure a symptom of a different problem. That same problem may or may not exist today, but can otherwise be mitigated by other methods (i.e. setting maximum property tax increases per year). It's actually very usual to treat property transfers like a sales tax (at sales price during time of transfer) when you compare how most other states handle property taxes. Most states have both annual property tax assessments as well as an excise tax on sales. It seems fundamentally unfair to live in the same home as your neighbor, but pay 4-5x different tax rates on the exactly same home. If your home equity is rising rapidly because of the hard work of the people and commerce around you, it's a good thing for you and you should pay the piper. Likewise, when a recession his and your home value plummets 30%, you shouldn't be paying peak value taxes on land/structure that's not worth what it's being taxed at.

Maybe I'm the odd man out because I'm viewing this as an outsider. But from what I've read, it seems like Prop 13 has caused a lot of economic problems for this state as well.

Thanks for the quick background on this.

[Radical347]

Originally Posted by nagleepark

Yes, school is important. It's a useful ingredient but not the magic ingredient, I think. But I know how desperately parents want the equation to be: highly rated high school -> elite university -> highly successful adult.

This. I was convinced by my well-meaning parents that if I graduated from an Ivy League school then I'd be set for life. So I went to one, did well, and then got rejected for job after job in many cases by people who had never even heard of the school. My parents and others told me, "if they've never heard of your school then you don't want to work for them anyway", but that line seemed more and more like grasping at straws...not to mention, self righteous rationalization is not effective when you have bills to pay but no source of income.

I finally found my footing, but the more I think about it, the more I realize that my successes have been in spite of, rather than because of, my ivy league degree.

[Ultrarunner]

I was too young to have voted for Prop 13 and yet thankful those that came before did...

I live in Oakland... my Property Tax rate is 1.6% and under Prop 13 the maximum yearly increase is mitigated at 2%

I also must pay a county transfer tax of $1.10 per thousand and a city transfer tax of $15 per thousand... so a median home of 500k would be $8,050 dollars.

Prop 13 adds predictability to property tax by establishing a minimum Statewide rate with additional taxes subject to voter approval... so if 55% of the voters approve a school construction or repair measure it's a done deal and last I check there were over 20 approved additional voter measures.

It would have been so simple to have avoided Prop 13 if only the legislature would have indexed the Homeowner Exemption for inflation... end of story.

Important to remember that none of the neighboring States have all 3 big taxes like California does... Sales Tax, Property Tax, Income Tax...

[cardinal2007]

Originally Posted by nagleepark

I've never bought earthquake insurance. I've gotten 3 quotes over the years. Last time, I was quoted $2,000 for earthquake coverage for my 2000 sq ft home. I declined to buy.

If a major earthquake hit and my home was severely damaged, paying to $200K-$300K to rebuild my house would significantly impact my cash savings and retirement but wouldn't wipe me out. So, I'm content to self-insure and save the premium cost.

I've heard people quote $300/sqft to build a house or do a renovation in Silicon Valley, so while I'm sure your quotes are valid for rebuilding, most people haven't been able to get such low numbers. I would also not count on standard pricing to rebuild after an earthquake, in order to get all the labor here to rebuild it seem like people would have to offer above market to get companies from other states to move here just for a rebuild. I would also expect the rents to go up, so temporary housing may be expensive, as so many people are out of a home. I think it is prudent to expect to pay more when resources become tight.

[Ultrarunner]

Originally Posted by Radical347

This. I was convinced by my well-meaning parents that if I graduated from an Ivy League school then I'd be set for life. So I went to one, did well, and then got rejected for job after job in many cases by people who had never even heard of the school. My parents and others told me, "if they've never heard of your school then you don't want to work for them anyway", but that line seemed more and more like grasping at straws...not to mention, self righteous rationalization is not effective when you have bills to pay but no source of income.

I finally found my footing, but the more I think about it, the more I realize that my successes have been in spite of, rather than because of, my ivy league degree.

I've always found it interesting some of the top business people were college dropouts... also just a lot of successful local guys in their own right... like shop owners, contractors, builders... etc.

For many I think the expense of college is overrated with the best reason for graduating is so not having a degree cannot be used against you.

Now if you want to be an MD, Lawyer, CPA etc... college is very much a given... I think in California only a single person successfully read for the BAR in the last 50 years...

[mateo45]

With California real estate notoriously being a cyclical boom-and-bust market, of course it will 'crash'… sooner or later. But not these days, when we're at the beginning of a new cycle.

One important clue is the average discrepancy between the initial asking price and the final sale price, which usually ends up being at least 15% lower. Although now we're also seeing the tail end of the repos that depressed prices for so long, which combined with the continuing low inventory, should also create a much more realistic seller's market next season. Plus lenders are also finally loosening up as well. And one thing's fer sure, it ain't gonna get any cheaper!