Instructions to my son on how to buy a house in the SF Bay Area (San Jose: foreclosure, how much)

[WithDisp]

Originally Posted by TR95

My reply was to someone that said you needed over $300k to do this. Don't care that they are top earners or not. My scenario is $200k. If you have a problem with my math and budget let me know. Otherwise, these people can save up for 5-10 years to buy their house, just like the majority of people that own houses do. I was 32 and considered myself luck to do it back then and it was only 10% down.

No one is denying that top earners who make 200K can buy a home, at least I sure am not contesting that.

I'm contesting the MEDIAN, even slightly above median and below- can't possibly do so.

The average annual wage in 2014 was
$75,773 in Santa Clara County,
$69,347 in San Francisco-San Mateo
60,682 in the East Bay
$47,236 in the United States.

You'd need to nearly triple those to buy in.

[ccm123]

No market timing involved. It was sheer luck. The home we purchased in 2001 nearly doubled in value in 2006/2007, but we did not sell, as we had no plans to move. We did not sell that home until 2011, which was not as good as a time as 2006/2007 to sell, as we made a decision to move after 10 years. Had we sold in 2006/2007, we likely could have probably sold for a 15-20% higher selling price.

Our current home, purchased in 2012, could likely be sold today for probably a 60% higher sales price. But, we are not interested in selling at the moment. We will likely sell in 5-10 years, depending on where life takes us next.

Originally Posted by NapaCab

No, you have just timed the market exceptionally well, probably due to when you were born rather than your own good decisions. If you were born 10 years later and trying to buy in 2005-7 at the peak of the last bubble you would not have done so well. Just the luck of the draw.

[Cimbomlu89]

Being a cop is actually one of the best jobs you can hold in San Francisco. 90k starting salary, decent vacation plan, amazing healthcare plan. Your pension is 90% of your last salary, what more could a man want? Imagine your wife is a cop too, that means 200k household income at minimum, and lets say you move up the ranks, lieutenants etc make around 140-150k with overtime pay.

And guess what the best thing of all is, you can retire at 55 years old. If you make wise investments with your income, you can easily afford a boat and travel the world once you retire. Those cops have it better off than the engineers in bay area when you take the whole package into account.

Unfortunately I was not an American citizen 10 years ago, but If I was one, I wouldnt bust my ass and instead would of became a cop.

Seriously cops, I envy you. Respect.

[boulder2015]

Generally agree, but tech workers don't have to clean up brains after a shooting or go to a parents house and tell them at 3am that you found their kid dead...

[Cimbomlu89]

Pros definitely outweigh the cons. Tech workers are f...d if they dont score a managerial position by the time they are 40. Once they are laid off, its game over, good luck with finding a similar paying job. There is definitely much more stress involved. Their field is way more competitive too, they could lose their job to a h1b visa holder from bangladesh in the bring of an eye. As a cop you dont have foreign competition, no foreiginer from a 3rd world country can take your job, because you have to be an american citizen to become a cop.

[TR95]

Originally Posted by Hangul313

Save up for 5 - 10 years is not enough to come up with a 20% down payment for the overwhelming Majority of people making $200K here in the Bay Area. Most people who are currently buying homes here are already well off or are inheriting a house. I don't know anybody who makes good money not in a massive amount of debt. Student Loans, Child Care, Car Notes, Other Bills. It add's up fast. Most peoples "Savings" are put into their 401K anything left over is hardly enough to get you a down payment on a house here. Also when I say home I'm not talking about a small Condo, I'm talking about a detached house that an actual family can live in.

You know what, you're right, you're all right. It can't be done....that's great news for us on here that believe it can be done....more houses for us to buy with less competition. Keep thinking this. No one has proved my budget incorrect. Please do. I'll be the first to admit that I missed an expense or two. All I hear is you can't do it on the median salary, you can't do it unless you make $300k. That's great, no need for those people to buy. More for all of us that want to.

[Cimbomlu89]

^
More houses with less competition? LOL

A good portion of your competition are trust fund babies, tech execs with stock options, chinese investors. They buy 4-5 houses at once all cash while you live like a bum in the best years of your life just to come up with the downpayment. It only makes sense to buy a 1m $ house if you make 500-600k.

People think like they will live forever, we are all going to die someday, we are actually renting a life so to speak. No need to live like a bum in the best years of your life just to buy a home in bay area. Hey if the market collapse and you have cash, sure go ahead.

[CA4Now]

Originally Posted by boulder2015

homilies along the lines of "you can do it, just believe!"

And there are a lot of people who can't do it.

Why Gen Y Can’t Afford Prime Real Estate Any Longer
https://blog.personalcapital.com/inv...e-real-estate/

How Soaring Housing Costs Impoverish a Whole Generation and Maul the Real Economy | Wolf Street

Soaring home prices and stagnant wages combine to make home-buying in some cities a pipe dream for young adults
These Are the 13 Cities Where Millennials Can't Afford a Home - Bloomberg Business

You can’t afford to live in California:You can

[Cimbomlu89]

In the 70s and 80s the market was way different. There were no tech execs with stock options, China was a communist country and they didnt even allow their citizens to travel abroad. It was your average joe who set the trends and priced the market, not the 1%.

What happened in 90s? China liberalised, tech stocks soared, people became millionares overnight. For them, prices in bay area were indeed dirt cheap, so they started buying buying buying thus driving the prices up. People who invested in Bay Area indeed made amazing gains.

But right now I think we are near the peak, because a real estate investment is valued by how much rental income it brings in. And the rental market is priced by the average joe, not the 1%. The people who are wage earners make up the majority of this market, and rents will have a hard time increasing faster than the wage growth.

[WithDisp]

Never realized SFPD was so well paid.

While I respect the job they do, that seems WELL above market value.
Equally pricey, far more dangerous cities like New York and Miami don't pay close to that to start.