How do people afford to buy a house on the peninsula? (Daly City: for sale, rentals)

[jnish]

Originally Posted by gone down south

So...... you want your first place out of school to be a 4-bedroom house, in the most desirable part of the most expensive region in the country, plus you want the best weather and in a good school district. Do I have that right?

First off, we expect to be bringing in around $150k/yr and I don't think this is low for thinking about buying a house in the 5 year time frame. Most of my college buddies making half of what I'll be earning already own homes in the metro Atlanta area. But yes, Atlanta and SF are apples and oranges. Around here, maybe $150k is low, I don't know?

What gets me is looking around and seeing the type of people that live here. Obviously most of these people aren't tech rich guys, but they somehow manage to afford to live here. My guess is maybe there's a higher-than-average portion of families that have lived in the same house for 20-30 years with multi-generational households, or they inherited the house.

I guess the short of my question is (1) how do non-tech rich guys buy homes in the area because obviously the entire peninsula isn't wealthy and (2) is it possible for someone at my income level to be able to afford to buy a house in the peninsula in about 5 years in a decent place like Burlingame or San Carlos while keeping in mind we'll have to rent a 2BR place in the meantime.

In Atlanta, that's an easy thing to do. Here, it seems like I need to get a financial planner to figure all of this out.

[ssmaster]

Originally Posted by jnish

First off, we expect to be bringing in around $150k/yr and I don't think this is low for thinking about buying a house in the 5 year time frame. Most of my college buddies making half of what I'll be earning already own homes in the metro Atlanta area. But yes, Atlanta and SF are apples and oranges. Around here, maybe $150k is low, I don't know?

What gets me is looking around and seeing the type of people that live here. Obviously most of these people aren't tech rich guys, but they somehow manage to afford to live here. My guess is maybe there's a higher-than-average portion of families that have lived in the same house for 20-30 years with multi-generational households, or they inherited the house.

I guess the short of my question is (1) how do non-tech rich guys buy homes in the area because obviously the entire peninsula isn't wealthy and (2) is it possible for someone at my income level to be able to afford to buy a house in the peninsula in about 5 years in a decent place like Burlingame or San Carlos while keeping in mind we'll have to rent a 2BR place in the meantime.

In Atlanta, that's an easy thing to do. Here, it seems like I need to get a financial planner to figure all of this out.

you are right often the responses to questions like yours indicate that Everyone is involved in IT/tech etc. but looking at the demographic inforeveals this is far from true. secrateries ,chefs ,teachers,waitresses,mechanics retail sales people all live on the peninsula.
the sad reality is that to live the upper middle class lifestyle on the desirable parts of the penisula you need to make $450,000+

a 2 bed 1 bath house 1200sq foot home on a postage stamp lot is not an upper middle class lifestyle but that is what you will get in a not so desirable area of the penisula

[clongirl]

Originally Posted by jnish

First off, we expect to be bringing in around $150k/yr and I don't think this is low for thinking about buying a house in the 5 year time frame. Most of my college buddies making half of what I'll be earning already own homes in the metro Atlanta area. But yes, Atlanta and SF are apples and oranges. Around here, maybe $150k is low, I don't know?

What gets me is looking around and seeing the type of people that live here. Obviously most of these people aren't tech rich guys, but they somehow manage to afford to live here. My guess is maybe there's a higher-than-average portion of families that have lived in the same house for 20-30 years with multi-generational households, or they inherited the house.

I guess the short of my question is (1) how do non-tech rich guys buy homes in the area because obviously the entire peninsula isn't wealthy and (2) is it possible for someone at my income level to be able to afford to buy a house in the peninsula in about 5 years in a decent place like Burlingame or San Carlos while keeping in mind we'll have to rent a 2BR place in the meantime.

In Atlanta, that's an easy thing to do. Here, it seems like I need to get a financial planner to figure all of this out.

No, 150k isn't low at all, but there are plenty of couples making that EACH and have been making this income for many years.

I know it's absolutely crazy here! 150k over in these parts is a 7 series BMW (and there are TONS of those) ...not a price for a house!

The areas you're looking at are very desirable and houses go for a premium in nice towns. You could look into a "less desirable" city (like Daly City,Pacifica, Brisbane, South San Francisco, etc) and work your way up the property ladder over time. I suspect however, that you've currently hit the real estate market on an upswing...add in the low inventory, low interest rates, and buyers that have been saving/waiting for a long time and you may realize that the competition is going to be pretty fierce for a while. Also, there are a lot of cash buyers and foreign investors (I have no idea how this happens!) so sellers tend to go for the cash. Good luck!

[beb0p]

Originally Posted by jnish

My guess is maybe there's a higher-than-average portion of families that have lived in the same house for 20-30 years with multi-generational households, or they inherited the house.

For people who bought real estate way back when, they don't necessary have to stay in the same house to reap the benefit - appreciation enables them to keep upgrading. Case in point, a friend of mine bought in the Oceanview neighborhood in the 80s. He was an immigrant, a day laborer and his wife works odd jobs. As you probably know, there is massive real estate appreciation from the 80s to now. This enables them to sell their residence every few years, make a good profit, and use it towards their next house in a better neighborhood. Eventually they bought a duplex in the Richmond Dist in the early 90s for around $400k. Today, it is worth around $1.3 million. They put an in-law in every house that they bought, without the rent money they wouldn't be able to afford the mortgage. He told me that after he retires in a few years, he will sell the house, keep a million for himself and give the rest to his son as a down payment on his house in the Bay Area.

[shooting4life]

I was in the same boat as you last year. My wife and I make around 160k a year combined. We were looking for our first house as well. We both work in Redwood City and wanted to find a place as close to work as possible. We both decided that we did not want to spend the money to live on the peninsula because we would really be living pay check to pay check. So we ended up buying a 3/2 1600 sq ft home in San Lorenzo for 370,000, just across the San Mateo bridge. The same house on the peninsual would have been more than twice as wuch. It works for us and we are now pretty comfortable and not struggling to make ends meet all the time.
Just remember exactly how much of your waking life you actually spend at home, during the week I am awake at home maybe 5 hours a day. You have to decide if that 5 hours every day is worth the stretch money wise.

[loloroj]

Big inheritance. And the fact that public schools are closing in The City because families simply can't live in the area should tell you how out of control RE prices are. Also driving the price is out of state/foreign money trying to find some landing spot.....

[mdwstrnkid]

Originally Posted by beb0p

Let's say a couple decides to get married and buy a house. Typically that someone graduated from college at age 22 and, say, get married ten years later at age 32, that's ten years of saving which should give him/her about $100k worth of savings - same for the other spouse; so combined they should have about $200k in savings and dual income north of $150k/yr. That's enough for a $750k home with 20% down and a monthly mortgage around $2,800. Mortgage + property tax + insurance is about 35% of their take home pay. I'd say having $200k in savings and $150k/yr in household income is pretty typical of married couples, so the typical couples can afford a $750k home.

I think that this isn't an uncommon scenario. My wife and I got married ten years after she graduated from college (at age 32) and eight years after I finished grad school. By the time we got married, we were able to achieve that level of savings (and more) while still being able to maintain a decent lifestyle. Both of us work in technology so that definitely helps on the income side, but we are both good savers, which helped us accumulate a decent nest egg. I think that it's definitely possible to buy a house, though it may take longer to accumulate enough for the down payment as compared to other parts of the country.

[AngusHsu]

Originally Posted by jnish

First off, we expect to be bringing in around $150k/yr and I don't think this is low for thinking about buying a house in the 5 year time frame. Most of my college buddies making half of what I'll be earning already own homes in the metro Atlanta area. But yes, Atlanta and SF are apples and oranges. Around here, maybe $150k is low, I don't know?

What gets me is looking around and seeing the type of people that live here. Obviously most of these people aren't tech rich guys, but they somehow manage to afford to live here. My guess is maybe there's a higher-than-average portion of families that have lived in the same house for 20-30 years with multi-generational households, or they inherited the house.

I guess the short of my question is (1) how do non-tech rich guys buy homes in the area because obviously the entire peninsula isn't wealthy and (2) is it possible for someone at my income level to be able to afford to buy a house in the peninsula in about 5 years in a decent place like Burlingame or San Carlos while keeping in mind we'll have to rent a 2BR place in the meantime.

In Atlanta, that's an easy thing to do. Here, it seems like I need to get a financial planner to figure all of this out.

I am a non-tech guy. It's simple and sometimes painful- live a simple lifestyle. Save a lot. I do not buy expensive gadgets nor travel very much. Downgrade your standard of living to sacrifice for a better house you want in an area you and your family enjoy. I am not comfortable sharing my revenue side in public. You will find a lot of financial freedom when you live on less. And it's not a popular mantra in this keeping up with the jones consumer-oriented culture.

I would wait until the housing bubble deflates. Prices have gone up a lot since mid-2011.

[sonarrat]

I'd like to buy a house on the peninsula too. I don't worry about it. Someday, I'll have enough money to take that next step. I'm 29 and I've already seen multiple major bubbles and crashes. I figure the next time the world ends, I'll know what to look for and will be ready to take advantage of it. Until then, I'll rent and save.

[wave9x]

If you really want to miminize fog then Burlingame and south is safe (Millbrae is less foggy than Daly City but still gets a fair amount). If you don't care much about neighborhood and are open to a smallish 3 bedroom then you may be able to find something for $750k (parts of RWC, Shoreview, EPA) but you will be looking at the low end stuff.

Though here is one glaring exception:
1312 PALM Ave, San Mateo, CA 94402 | MLS# 81300998 | Redfin
It's a really cute house in a great neighborhood priced at $750k. I imagine it is priced for a bidding war though.