Need home buying advice (Exeter: renting, loan, buying a home)

[Mack Knife]

Originally Posted by ongzo42

Wow, so you suggest we spend over 40% of our take home pay towards a mortgage? Seems a bit high no?? We were thinking more like $1.1 million.

You've pigeon holed yourself based on self-imposed criteria. You want to be close to SF and the Silicon Valley and you do know they are not a bicycle ride away from each other correct?

You say you might get a job in SF in the future. Well, you might not too so why try to squeeze yourself for something that might happen when the chances are probably just as good it might not happen?

Spend a few commute days trying out the commuting situation from various areas. It is easy enough to do when the kids are on break, you rent a hotel room in various places and drive the typical commutes in the morning and evening. You explore the areas you like.

Asking others what a good place to live is like asking them who you should marry.

[calicoastal]

I have several married friends who have kids, making under $300k/yr and with less than $450k down, who have bought houses in excellent school districts on the Peninsula. Thus to me this is a problem of expectation for the OP. A $1m mortgage at 4.5% would put them at low 20's debt-to-income ratio, which is considered low risk. Add on the 450k down, and the budget is $1.45m. There are a lot of options with that budget.

[ExeterMedia]

lol at anyone taking on a $1m super jumbo mortgage.

[jade408]

Originally Posted by calicoastal

I have several married friends who have kids, making under $300k/yr and with less than $450k down, who have bought houses in excellent school districts on the Peninsula. Thus to me this is a problem of expectation for the OP. A $1m mortgage at 4.5% would put them at low 20's debt-to-income ratio, which is considered low risk. Add on the 450k down, and the budget is $1.45m. There are a lot of options with that budget.

What happened to sticking with a home price 3x your income.

I take it your friends bought a while ago. My friends aren't finding anything reasonable in Peninsula/South Bay under $1M.

[smashystyle]

Originally Posted by jade408

What happened to sticking with a home price 3x your income.

I take it your friends bought a while ago. My friends aren't finding anything reasonable in Peninsula/South Bay under $1M.

The 3x-income rule of thumb is more or less accurate depending on interest rates. With low interest rates (like now), people can generally afford to pay more than this, because your corresponding monthly payment will be lower for the same price house. E.g., a $500,000 house will cost less per month at 4% interest rates than at 8%. What you really need to look at is your debt/income ratio, including the mortgage within the debt.

So, people may be able to pay more than 3X income these days with the low interest rates. But that said, the peninsula is really expensive and there's not much under $1mm. There are a few places in Redwood City and Foster City. That said, there are lots and lots of nice cities to live in that are affordable on a $1mm budget in the greater bay area.

[shooting4life]

Originally Posted by wooliemonster

One reason housing prices are insane here because of local's power to "maintain the character of the neighborhoods". This is usually code for keeping out people who aren't like the current residents. Say, like myself, or you, or the OP who may bring in $300k/yr but can't afford to buy because current owner's have restricted supply to increase the value of their own holdings, likely far beyond their own income levels. It's using the power of law to improve the returns of your own investments.

Blame Overbearing Government for Gentrification, Not Just Neo-Liberalism - Daniel Hertz - The Atlantic Cities

I agree. The Bay Area is the most true definition of nimby'sm I have ever seen. This is also reinforced through prop 13.

[jade408]

Originally Posted by smashystyle

So, people may be able to pay more than 3X income these days with the low interest rates. But that said, the peninsula is really expensive and there's not much under $1mm. There are a few places in Redwood City and Foster City. That said, there are lots and lots of nice cities to live in that are affordable on a $1mm budget in the greater bay area.

Not especially convenient if you need to commute to Cupertino/Mountain View/Santa Clara (and you want a good school district). You have limited options unless you want a <45 minute commute. It is pretty sad.

Sure you can live in Castro Valley with a sucky commute. Or Hayward and have mediocre schools.....

Maybe that leaves you with Newark.....

[skyao]

Here is a simplfied chart of SF Housing Market Cycles since 1982.

Obviously this is aggregate information but very enlightenining:

http://www.paragon-re.com/Market_Updates/

Three down cycles since 1982 but a definitely trend upwards. I wouldnt say the data supports the Bay Area real estate is very cyclical..

Originally Posted by wooliemonster

That's probably the best plan. The Bay Area is very cyclical.

[Ultrarunner]

Originally Posted by shooting4life

I agree. The Bay Area is the most true definition of nimby'sm I have ever seen. This is also reinforced through prop 13.

Prop 13 is Statewide and covers all of California... voters approved it in 1978

[shooting4life]

Originally Posted by Ultrarunner

Prop 13 is Statewide and covers all of California... voters approved it in 1978

I know that, prop 13 encourages people who would normally down size or move away from job centers because of retirement to stay in their homes that are close to the job centers, which drives up the costs of the few houses available. The people who benifit from prop 13 are also the ones who do not want to see another home built in their town.

Prop 13 is rent control for homeowners and I say this as a homeowners.