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Old 05-18-2008, 01:03 PM
 
17 posts, read 45,499 times
Reputation: 14

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So I'm a recent grad - went to college in the Bay Area and moved to Texas for a job so that I can save money in hopes of moving back to California in the near future, because I miss it, but I'm weighing out the pros and cons. The pros of moving are quite obvious (diverse, beautiful, plethora of jobs, etc), but I have some concerns. Obviously there's nothing particularly horrendous about Texas or anything like that, but I grew up here, and well, it's fine for now, but honestly I can't imagine myself living here for the rest of my life.

But is it a good idea for a young person to even ponder moving to California now, even given that scientists have made it quite clear that there is a >98% chance that a large quake the magnitude of which we have not seen before will hit by the year 2037 (evil San Andreas!), and given the many home foreclosures, skyrocketing housing prices, and general high cost of living? I wonder if I were to move there if I would ever have the hope of owning a home, particularly if I moved to SoCal (because honestly the Bay Area gets tiresome for me after a while). I have family members in Sunnyvale and Cupertino who rent and rent and all of this hard-earned money gets sucked into a black hole of sorts really, with no potential for ownership in the future. Yet they continue to bear it. I'd like to hear from Californians on whether they worry about these issues or if it's actually a feasible idea for someone to move there now. None of the Californians I know seem to mind, and it's always curious to me. Am I imagining it to be worse than it actually is, or perhaps, because they are already there, they have learned to cope in a way better than I could as a newcomer? Or maybe they moved there 10 or 20 years ago, the value of their homes has since gone up tremendously, and they are now able to live there comfortably? Anyway, yeah, it's a lot to consider, thanks buds!

Last edited by scoutfinch87; 05-18-2008 at 01:15 PM..
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Old 05-18-2008, 02:12 PM
 
11,715 posts, read 40,261,893 times
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The cost of housing is driving young people out of this state. When you're done with the parties and roommates stage of your life and start thinking about marriage and kids, that's when it really hits you. Do the math and figure out how much you'll have to earn to afford even a very basic 40 year old house in the Bay Area or SoCal and it just doesn't add up unless you make $150k/yr or more. Of course, making that kind of money usually requires two full-time incomes so who's going to raise the kids? If you don't have family willing to do it for free, you're going to be paying strangers large amounts of money every month to do it.

Even with the housing crash, prices in desirable areas haven't come down enough to make it affordable. California is for the old who got it when it was cheap, the rich who can afford it, the poor who have low standards, and a shrinking middle class stuck renting forever. Which one are you?
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Old 05-18-2008, 04:45 PM
 
Location: Los Angeles Area
3,306 posts, read 4,121,881 times
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Quote:
d given the many home foreclosures, skyrocketing housing prices, and general high cost of living?
Just to note renting in the area isn't too bad, and home prices will come down a lot over the next 2-3 years. In fact "many foreclosures" is inconsistent with "skyrocketing housing prices", the foreclosures drive prices down. California now has around 1,000 foreclosures a day.

Quote:
I have family members in Sunnyvale and Cupertino who rent and rent and all of this hard-earned money gets sucked into a black hole of sorts really, with no potential for ownership in the future.
The whole "renting is throwing away money" idea is very popular, but also very wrong. The average "home owner" never sees 1.) interest on loan, 2.) property tax, 3.) HAO fees, 4.) maintenance costs come back to them.

As for earthquakes some areas are worse than others, SF is the city that has the biggest fault under it. The San Andreas in the South is pretty far from where most people live, so even if there is a "big one" its not going to be huge by the coasts.
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Old 05-18-2008, 05:32 PM
 
Location: Northern California
3,719 posts, read 14,651,995 times
Reputation: 1962
Quote:
Originally Posted by Humanoid View Post
The whole "renting is throwing away money" idea is very popular, but also very wrong. The average "home owner" never sees 1.) interest on loan, 2.) property tax, 3.) HAO fees, 4.) maintenance costs come back to them.
Wrong Humanoid ! After 30 years, a renter has nothing to show except a 30 year pile of rent receipts. After 30 years, a homeowner has a home that should be paid off by then. A house is a bigger asset than a pile of rent receipts .

Property taxes are deductable on federal tax returns for property owners, but not for renters. Just ask your landlord. And where do you think the landlord gets the money to pay property tax, the mortgage and building maintenance on his apartment building? The renters indirectly pay that.

(And some people would say that it isn't fair that renters indirectly pay off the mortgage and property taxes on a building they don't own while the owner gets the tax deductions, but that's the way it is.)

I have nothing against renting if that's what people like. Many don't want the worry of maintaining a place and others only want a place to live in for a short term. I also understand many people just don't have the $700K or whatever to buy a house.
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Old 05-18-2008, 07:26 PM
 
Location: San Jose, CA
7,688 posts, read 29,012,164 times
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You have to be able to accept one of the above if you want to live here:

- Eye-poppingly high rents
- The 'hood
- A 2 hour commute

I picked the 'hood, though I've seen lots worse.
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Old 05-18-2008, 09:30 PM
 
Location: Las Flores, Orange County, CA
26,338 posts, read 93,292,295 times
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Quote:
Originally Posted by EscapeCalifornia View Post
California is for the old who got it when it was cheap, the rich who can afford it, the poor who have low standards, and a shrinking middle class stuck renting forever. Which one are you?
Quote of the month.
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Old 05-18-2008, 10:16 PM
 
93 posts, read 233,280 times
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Quote:
Originally Posted by humboldtrat View Post
Wrong Humanoid ! After 30 years, a renter has nothing to show except a 30 year pile of rent receipts. After 30 years, a homeowner has a home that should be paid off by then. A house is a bigger asset than a pile of rent receipts .
That depends on the cost of the house and the cost of the mortgage. If the monthly expense of owning a house is much higher than renting then one is better off renting and invests the money saved in the stock market. After 30 years the investment is probably worth enough to buy the same house in cash, and you save 30 years of maintenance cost, insurance, and property tax, which is not deductible if your income triggers the alternative minimum tax.
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Old 05-19-2008, 03:47 AM
 
Location: Los Angeles Area
3,306 posts, read 4,121,881 times
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Quote:
Wrong Humanoid ! After 30 years, a renter has nothing to show except a 30 year pile of rent receipts. After 30 years, a homeowner has a home that should be paid off by then. A house is a bigger asset than a pile of rent receipts
Firstly you are assuming the renter did nothing with the money that didn't go into their house. But this is exactly the sort of reasoning that bugs me. Which is more advantageous depends largely on 1.) Rent to Buy ratios, 2.) Rate of appreciation, 3.) How long you are going to stay in the home. One needs to do the calculation for their area to see which is the better solution financially. Over the last 5 years its been much cheaper to rent in California than buy, the left over money you can put into real investments. This is not to mention the often ignored risk of ownership, in California areas can change rather fast. The changes to the area can often dramatically reduce your property value.

In a normal housing market it generally makes sense to buy so long as you're going to live in the house at least 4-5 years. On average people move every 7 years, so even in normal housing markets most owners only marginally benefit from ownership.

Quote:
The renters indirectly pay that.
What is your point exactly? If you look at the amortization table for a 30-year loan you'll see that the majority of the payment goes to interest for the first half of the loan, so the majority of funds you put into your house you never get back just like the renter.

Quote:
I also understand many people just don't have the $700K or whatever to buy a house.
Only a small percentage of people buy houses in cash, so technically the vast majority of people can't afford a house. The question is whether you want to rent from a landlord or the bank.


Anyhow, my general point is don't look at current housing prices. They are historically very abnormal for the California area and will correct to more historic norms.
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Old 05-19-2008, 12:36 PM
 
Location: Northern California
3,719 posts, read 14,651,995 times
Reputation: 1962
Quote:
Originally Posted by Humanoid View Post
Only a small percentage of people buy houses in cash, so technically the vast majority of people can't afford a house. The question is whether you want to rent from a landlord or the bank.
I don't get your point about people buying a house with cash. Most people don't. They take out a loan - so what. After the loan is paid off, the homeowner is not beholden to the bank or a landlord. And the homeowner has been deducting the interest on the loan and property taxes from his income taxes over the life of the loan - a break that renters don't enjoy.

I agree that buying a house is not a good idea if you're only going to live there for a couple of years and plan to move on. But for people who want to live here for decades or for the rest of their lives, a house is a good investment.

The SF Bay Area is a desireable place to live and there isn't much buildable land left. Because of that, Bay Area home prices will stay strong for a long time to come. Supply of housing + demand to live in the Bay Area = escalating housing prices.
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Old 05-19-2008, 12:53 PM
 
1,687 posts, read 6,040,811 times
Reputation: 830
Quote:
Originally Posted by EscapeCalifornia View Post
The cost of housing is driving young people out of this state. When you're done with the parties and roommates stage of your life and start thinking about marriage and kids, that's when it really hits you. Do the math and figure out how much you'll have to earn to afford even a very basic 40 year old house in the Bay Area or SoCal and it just doesn't add up unless you make $150k/yr or more.
An Executive Recruiter told me a few years ago that it was hard to recruit a 20-something out of the Bay Area or Southern California to jobs in Sacramento, Fresno, the Inland Empire, etc. UNTIL they started a family.

Then they would call the recruiter asking/begging for a job somewhere that they could afford to buy a house without commuting 2 hours each way. All of a sudden those Central Valley and inland cities didn't look so bad to them.
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