Does anyone want to move out of the Bay Area (Oakland: sale, insurance)

[sliverbox]

I'm sure most of these people fleeing these area's will end up back in them after realizing the places they think are cheaper are cheap for a reason. Not to mention you're salary will go down dramatically in another area because the cost of living is lower. I'd rather pay more and enjoy what california has to offer than be able to buy a huge house and be bored to death.

That's a purely person-by-person statement. If you feel the need to be entertained and use the metropolitan experience as the primary stimulus in your life, then ure- Atlanta will not be as exciting as LA or SF.

I grew up in the sticks. I actually enjoy being home, working in the garage, raking leaves, swimming at the lake, camping on the weekends, growing vegetables, and going to music festivals. So I have absolutely no need to have a big city in my back yard.I bet you find those things BOOOORING. I can entertain myself. So again- different people have different requirements.


As far as salaries go... nope can't agree with you there. The BLS.gov site shows that job per job pared to the cost of living, many places in the Southeast actually pay more per cost of living than California. In other words, a teacher in CA might make 65k- but this isn't enough to buy a home, and it will get you a so-so lifestyle versus in NC where the avg 45-50k teacher salary will allow you to buy a home and live a fairly comfortable lifestyle. Dollar per dollar comparisons don't work in this argument at all simply because the cost differentiation between these 2 regions is so severe.

[City Boy]

I guess it is about where you grew up because I grew up in a city. I like fast paced life. I'm also 28 and lucky enough to make enough money to have lived all over at a young age. My age and upbringing probably has some to do with me not wanting to live out in a suburb or rural area.

I do not like going out to social events every night of the week but Occasionally I do. I also like running up to the mountains Reno/Tahoe. Going to Vegas, 1 hour plane ride. Hawaii 4.5 our plane ride. The Beach (Not available in Atlanta and land locked cities). No humidity. There is only so much personal entertaining I can do for myself. That is why I love NYC and most of the east coast as well. It reminds me alot of the Bay area.

As for the salary comparison, you can get a house out here making 65k a year. I know plenty of people who have. You may have to sacrafice more out here but there are more "Free" things to do here than most places. Like I've said, I would rather live in a 1000 sq foot condo here than a 3000 sq foot house in Atlanta or anywhere down south.

[sliverbox]

You're absolutely right about upbringing. It has a LOT to do with personal preference. I'd also be curious to know where in the South you lived because just like the Northwest, there are some really crappy places to live, and some really great places to live. Huge difference between say the Blue Ridge Parkway NC and Atlanta GA. So I'd pare your judgment down to Atlanta... we Southerners hardly consider Atlanta to be part of the south anymore since it has gotten so enormous and bloated.

[i]As for the salary comparison, you can get a house out here making 65k a year. I know plenty of people who have. You may have to sacrafice more out here but there are more "Free" things to do here than most places."

I know plenty of people who bought with smaller salaries too... Most took out IO, ARM, or a combination of both, or they had wealthy parents.As the news reports these days show, quite a few of those people who used those loans are now upside down or about to be foreclosed upon. I make way more than that and there is absolutely no way that a home in SF can be bought on a 65k salary. I wouldn't consider buying anything here unless I topped $250k a year.

Let's break it down:
Median price of a home in SF: $720,000
30 year fixed monthly payment @ 5.75%: $4,201.72= $50,400/yr
Property tax annual fee: $7,200

So as you can see, the BARE minimum payment would equal $58,000 a year. This of course assumes that you don't have a car or car payments, no property insurance ( which in SF is a must) and that things like food, utility bills, clothes, vacations, health insurance, and the occasional "luxury" like an Ipod or perhaps a nice dinner somewhere.

But if we were to include such necessities to the final tab,it would go like this:
Car payments: $300
Car Insurance: $150
Gas: $50
Electric: $50
Property Insurance: ? not sure. let's say $1500 yr
Food: $200
"luxuries"-food, clothes, other: $200

Final "additional" charges amount: $11,400+ insurance= $12,900

$12,900+ property tax( $7200) + annual mortgage ($50,400)= $70,500

So in order to get into the median price home, you would need a bare minimum of a $71,000 a year salary. The amounts I listed above were VERY conservative and less than what I pay. But who knows? maybe some people are less frugal than me, which is hard to imagine. This would also mean you would have NOTHING leftover to save. for what? A house?

Even if you get a loft, these lofts even in crappy parts of Oakland are easily $500,000 and up. We're still talking over $50,000 a year going just to bare minimum payments. Most people I know are pretty wasteful with money, so honestly, I wonder just how many people here are either in serious debt or just barely making it.

This in my opinion is no way to live and all the little quips of SF aren't enough to warrant the prices. The prices are only high because of restrictive growth measures that artificially limit the supplies anyway.

[Ultrarunner]

Very thoughtful explanation...

I can only add that I always buy below the median price and later sell the same home for more than the median price.

Every home I've bought has had problems, ranging from cosmetic, a drug lab next door, and/or boarded up houses on the block. It is amazing how much home appreciation you realize once the drug dealers move out and families move in.

On property taxes... 1% is the base tax rate... but... the effective tax rate is pushing 1.5% in Oakland.

Case in point... 2 years ago I paid $600k for my Oakland home and my property tax is $8,823 (due to the additional fees, assessments and bonds)

Lastly, I'm from the Old School and always put down at least 20%. It makes the payments manageable, the interest rate slightly lower and I avoid PMI charges.

[Diamond51]

I have wanted to move out of the Bay Area for quite a while now. I have lived in Hayward now since 1992. Moved from El Sobrante, Vallejo, Oakland, in that order. I was born in Oakland and my husband was born in San Francisco. I'm very frustrated with the Bay Area (high cost of living, traffice, violence, etc.) and want to move. But my husband's family is here as well as mine, including my daughter who lives in Oakland. But I don't like living here any more but the thought of moving away from immediate family would be quite challenging. I took an early retirement and have be doing some consulting but the cost of living is extremely high. Moving to the Southeast is out of the question. Thought about relocating out of the Bay Area, maybe Fairfield...but then we'll face the commute and higher gas prices. Perhaps that would not be such a problem...we would own our home at least and maybe pay less in property taxes.

[sliverbox]

Every home I've bought has had problems, ranging from cosmetic, a drug lab next door, and/or boarded up houses on the block. It is amazing how much home appreciation you realize once the drug dealers move out and families move in.

Many people flipped homes during the bubble. This form of investment is not exactly a wise thing these days with the deterioration in the market. I expect the " transitioning" neighborhoods to have some of the higher rates of depreciation. I assume that you have wisely exited this strategy already.

[heartsstillinsf]

You seriously don't want to leave. I did that.
The longer you have been gone from the east coast the harder it is for you to live there again. Someone told me that before I left and I didn't believe him. But its true. I lived in the Bay for 15 years and decided to move to buy a home, and educate my kids in a private school. All I have to say is umm....the kids are happy. Going back to the east coast life isn't that easy. There is a rawness to the people here that after being in SF for so long seems just wrong.

Whats missed the most- the restaurants, the shopping, the theatre all the things that were taken for granted. It is a big decision and if I had to do it again.I think I'd rather be broke. Selfish for sure. the other big thing to look at is the culture, and what you want or your kids to be exposed to.
the bay is a pretty open minded city and when you move you relieze how backwards this part of the country is.

Southern Jersey is south of the mason dixon line.
But hey I finally got a house.

[Ultrarunner]

Yes and No.

I still own the first home, a home I bought in East Oakland for $11,500 cash back in 1983. Family thought I was nuts and said so. Two years and 20k in improvements later, I made it a rental. The present family I rent to has been there since 1997.

(As a side note, the home was listed on the MLS for several months prior to my offer. Twenty-Five years later, I am still friends with my former neighbors. They were very enthusiastic and could not have been more helpful when I bought the "Neighborhood Eyesore" and immediately started making my improvements)

My plan, after college, was to buy 1 property a year and spend my time and money renovating during the time I lived there. I continued actively doing this until 1995. Since 1995, I've slowed down and now I only occasionally pick-up a property that happens to come my way. More to life then spending all your weekends and evenings managing rentals and making repairs.

On some, I was able to refinance, never more than 75% loan to value, after I made my improvements... on others that I kept as rentals, I was able to 1031 exchange into other properties.

Looking back, I guess my "Secret" was never buying a home for more than I could afford, making all the repairs myself, including plumbing, roofing, etc. and buying homes that no one else wanted.

Several friends from my High School Days have done the same thing. One was newly married with a baby, working part time behind a auto parts counter and going to college nights to get a teaching degree. He quickly tired of renting and found an East Oakland home that had been so neglected, you could stand in the bedroom and see the sky.

It took him over 20 years and 4 homes to finally buy in his dream neighborhood in the Montclair District of Oakland. He is an Oakland inner city public school teacher and his neighbors can't understand how a public school teacher can afford to live in a million dollar neighborhood... he just laughs and said hard work.

So it can be done, it really matters how much you are willing to sacrifice now in hopes of a future return.

[sliverbox]

Ultrarunner,
I totally agree with your methodical and carefully planned home buying pattern in order to move up over time. But both examples you've mentioned took place 20+ years ago. The cost of real estate has gone up some 600% in some of those sketchy areas.

I have friends who live in East Oakland. Several months ago there was a shooting 3 blocks up. Their home has been broken into. It isn't a safe place to live. Are the homes cheap? No. They're more like 500k or more. A "cheap" one might set you back say 400k, but for what you get you would be way better off to rent for 1/3rd the price in a safe neighborhood. The fact of the matter is that 20 years ago the story was totally different than it is today.

The entire Bay Area is rampantly overpriced. Speculators, investors, and the general mania for housing here has driven the prices far beyond the level that people can even buy a starter home as you did to get on their feet.

In essence, there no longer exists a first time home buyer market. Of course the market can't survive without first time buyers for long, hence the start of what looks like a downward cycle of depreciation. Perhaps once prices come back to a level that is acceptable,people can do as you did and buy up over time.

Is it worth it? Depends on who you ask. I grew up where people can still have decent living standards with respectable middle class jobs whereas that same amount just allows you to scrape by here. The middle class is dead here. Something about that bothers me because it doesn't seem right that a teacher here can't afford a home for their family while a teacher just about anywhere else can and then some( as my parents did). I'd much rather live in a community that has a healthier social structure.

What I'm saying to you is that the same opportunities do not exist for people who were in your same shoes 20 years ago today. If they did, many of these issues wouldn't be such hot topics. I'm not scared of hard work myself as me and my parents also fixed up a number of rental homes back home. But buying a "fixer upper" today means taking a severe financial risk, and these risks are simply not worth it.

[movingfromseattle]

backwards this part of the country is.

Southern Jersey is south of the mason dixon line.
But hey I finally got a house.[/quote]

I understand how you feel. I have been all over the world and the US. Living in Seattle has been my first trek out west, other than Phoenix. Phoenix I hated. Seattle, it is open minded and liberal. Now I have outgrown Seattle and the only other place for me to live, would be SF.
I did not fair well in the bible belt. That was being a female and married to a male. I still cannot abide the backward philosophies. However, there are some good people. Not enough to make me feel at home though. Now I am single and extremely happy with the west coast. I am originally a farmers kid from Ill. Must have city and open minded folks around me.