Has there ever been a worse time to buy in the East Bay than right now? (Walnut Creek: real estate, 2014)

[Lockdev]

With housing prices almost doubling in 4 years, it's hard to believe people continue to buy property.

I have a friend that just purchased a house in Walnut Creek for $900,000. The same house sold for $400,000 in 2012. He and his wife pull in nearly 250k/year between the two of them, and he said "it's going to be a struggle."

Is there a "stupid bug" going around in the East Bay? What is possessing people to pay astronomical prices for mediocre homes?

With the house prices far outpacing everything else(inflation, income, etc), it's amazing to me that people are still buying.

I will never understand why so many people here will spend 40% of their income every month on their houses.

[dandylion84]

When the startup economy tanks (any day now) and those jobs are lost in SF, the East Bay will get hit the hardest because it is far from the jobs in Silicon Valley that will still remain. This happened last time, East Bay prices really plummeted while other areas went down but not as much. So that would be the time to buy.

[smashystyle]

Sure, 2006.

[atler8]

Originally Posted by Lockdev

With housing prices almost doubling in 4 years, it's hard to believe people continue to buy property.

I have a friend that just purchased a house in Walnut Creek for $900,000. The same house sold for $400,000 in 2012. He and his wife pull in nearly 250k/year between the two of them, and he said "it's going to be a struggle."

Is there a "stupid bug" going around in the East Bay? What is possessing people to pay astronomical prices for mediocre homes?

With the house prices far outpacing everything else(inflation, income, etc), it's amazing to me that people are still buying.

I will never understand why so many people here will spend 40% of their income every month on their houses.

You may have several valid points there but what do you propose as a solution or an alternative?

[NoMoreSnowForMe]

Well, the crash brought prices lower than they had been for many, many years. They're actually back where they were, plus expected appreciation. The people who were lucky enough to buy during the crash experienced a miracle, basically.

[sav858]

Originally Posted by smashystyle

Sure, 2006.

Agreed, there are areas of the East Bay still well below 2006 peak home prices. Home prices could be worse believe it or not...

[clongirl]

I wouldn't say it's just the East Bay though. This is just about everywhere in Bay Area. People tend to operate on fear (that the prices will still go up-- running away from them) and they react accordingly.

[Chuck5000]

Easy to explain. There are a ton of high income earners (like your friend, although 250k is not that high here) and buying right now is actually cheaper than renting - if one can come up with a downpayment.

A ton of these people want to stop renting. I think your friend's struggle is probably about not being able to save much. He/she will be fine with payments if they don't overspend on dumb stuff. 250k is a good "bottom level" income. (Yes, that's crazy.)

Plus, if you have children, there are strong incentives to get stability (not worrying about losing your lease, wanting to make improvements, wanting to stay in one school district, etc)

So given that buying is cheaper, even one loses a bit on home value, as long as one will be staying in the area for 10 years+, buying makes sense. So a lot of people earn enough and want to do it. And there's not nearly enough supply, for 20 different reasons.

[JohnS_15]

Originally Posted by Lockdev

With housing prices almost doubling in 4 years, it's hard to believe people continue to buy property.

I have a friend that just purchased a house in Walnut Creek for $900,000. The same house sold for $400,000 in 2012. He and his wife pull in nearly 250k/year between the two of them, and he said "it's going to be a struggle."

Is there a "stupid bug" going around in the East Bay? What is possessing people to pay astronomical prices for mediocre homes?

With the house prices far outpacing everything else(inflation, income, etc), it's amazing to me that people are still buying.

I will never understand why so many people here will spend 40% of their income every month on their houses.

As others have said. I think if you were in a position to buy a home in 2012 then your timing was amazing!! Who knows if prices will drop like that again? Many people were saying in 2013 and 2014 that the market was too crazy as houses went for 20%+ over asking price and they would wait it out. I bet they wished they'd bought that house back then. Don't forget that rentals are astronomical also right now...and those prices can keep getting raised on you.

I know it's tough to remember now that everywhere is booming again, but those years we experienced those big drops in housing prices were also coupled with devastating economic consequences for many families. Huge layoffs, CA state budget in a mess, stocks had bottomed out.

If housing prices do drop like that again then it is likely that many people will be back in survival mode and not able to buy a home. If you are sitting flush with cash and waiting for a great deal then maybe one day you will be rewarded. But if you depend on a paycheck, stock investments, or a healthy economy to keep your small business afloat then you will be greatly effected by the environment that causes a real estate crash.

[justinbro2002]

2006-2007 was a worse time to buy from today's perspective perhaps from tomorrows perspective today will be a worse time. But we can't say that now. I was only of the fortune ones who missed out on the fever pitched buying frenzy of the early to mid 2000's. While friends and coworkers were not so lucky. I bought my house in 2011 for $310k it's probably worth $600k now. Giving serious thought to cashing in my chips and moving out of the bay area.