Rent or Buy Bay Area?? (San Francisco, Pleasanton: sales, real estate market, to rent)

[aussiefamily]

Relocated from Australia ( Queensland) to san Ramon for work - 9 months in and considering options to buy or continue to rent.
Concerned after seeing so many worrying trends in last 9 months that bubble has burst and housing prices continue to downturn. Can only afford a condo around 750K ( seems average for size we need) but buy new or pre owned, buy now or later in the year?? Any suggestions????
PS. We are not enjoying San Ramon.....prices very high for everything and not sure how to "get into the whole California Groove" thing.

[dd94595]

It depends on how long you are planning on staying in San Ramon. If you plan to stay for a while say 3-5 years or more than I would say that you should buy. CA Bay Area Real Estate will appreciate. We are running out of places to build homes so in an area like San Ramon you should have no problem with a condo appreciating in the future.

If you are planning on moving soon then I would continue to rent. There are a lot of homes in the area that you can rent for much cheaper than buying. I work for a Real Estate Office in Pleasanton (not as an agent though) We are starting to see business pick up again and my employer swears that the market is going to start going up again soon. Personally, I think that it will level out for a while so wages can catch up to prices, historically that is what has happened int he past. I do not think San Ramon real estate will depreciate at all though.

If you are not enjoying San Ramon, what is it you are looking for. San Ramon is a highly desirable area for many people I have met.

If you have any more questions let me know and I can even try asking our broker his opinion. If you do end up needing a Real Estate Agent I personally know many that I could recommend. I do not get any commission either so I would just recommend them because they are good.

[Ray B]

I have actually heard that the housing market in San Francisco has picked up and there are now bidding wars again. As far as the media hype is concerned, there is no bubble and there never was. If you can afford to buy, I would. It's always better to pay your own mortgage than someone else's. I believe the housing market in the Bay area is in the upswing so this makes it a very good time to buy.

[achtungpv]

http://thehousingbubbleblog.com

[Tallysmom]

Originally Posted by achtungpv

http://thehousingbubbleblog.com

I've read his Chicken Little blog (Ack! The sky is falling the sky is falling!)... and this blog has been around since WAY before the air started coming out of the market.

Here's the thing -- you're always going to have Pollyanna's who say everything is fine, and Arthur Dent's who say "So this is it, we're going to die"...

And the truth is somewhere in between. ALWAYS.

We had a great deal expansion in the Bay Area real estate market, and at the end of the expansion there was a lot of speculation, and a few bad mortgages. Now, you have a few places where, thanks to developers slashing prices to get rid of inventory, prices are dropping. Thanks to some home sellers understanding that just because the house down the street sold for mega mega bucks at the height of the market after spending lots of money fixing it up, doesn't mean your run down, out of date lived in home should sell for that, too.

However... if a person looking to buy isn't going to stay in a house for around three to five years now, I wouldn't buy. We're now in a normal stabile time in real estate... and normally you expect to buy a house and hold on to it for a few years and then resell to get a little something out of it. Unless the market fires up (and it may -- who knows) the days of one year 36% gains are OVER.... and it's time to get used to it.

[dd94595]

What about buying a home to live in. I hear all the time about buying your home as an investment and when the right time to buy is and when to sell etc. Is it juts in CA that people think of their homes as an investment and not a home. What if you buy your home and live there for the rest of your life, will it matter that you purchased in an area that was going to be a good investment or would it be better to purchase a home in an area that you loved.

[sliverbox]

Let me give you a real-life example. Me and my wife make well into a 6-figure income. We rent a large 4 bedroom home with a back yard, garage, garden, and in a safe neighborhood. We pay $1,400 a month in rent. Basically, we save close to 70% of our income every month. If we were to buy the house, it would be cclose to $730,000, or approximately $6,000 a month including tax, insurance, and so forth. That payment is only for the house and not for anything like new cars, food, vacations, or anything else. If you want a home here-fine. But realize that if you do, you will likely be paying most of your income for it. The end game is how much you have leftover. For now, renting wins hands down and by a long shot.

Here are some simple facts:

Over 60% off all homes bought in CA- Bay Area and environs in particular were "bought" with exotic loans: IO, ARM etc. So basically over half of all buyers in the last few years really couldn't afford the homes in the first place.

Congress and many states are making motions to make lending practices much tighter. In some states, California included, Loans such as IO and ARM loans will either be harder to get or banned from residential Real estate. That means there will suddenly be 50% less "buyers" available in California. Translation: Less qualified buyers means less sales, which means lower prices.

CA Real Estate has been stagnate and even slightly declining for 7 months. Declining sales are still being reported for all counties and major cities.

CA has a history of dramatic booms and busts. the 1950's. 1970's, 1980's, and now late 90's-mid 2005 have all seen dramatic runups in prices. These have also been preceded by sometimes equally dramatic declines, the last taking place over the course of 7 years in which prices declined 15% in the BA excluding inflationary measures.


There are now over 500,000 real estate agents in California. An estimated 30% of the CA economy is now tied to real estate and lending agencies. Many are now going belly-up. A souring economy doesn't bode well for the housing market.

2006 marked the first time in over 12 years that more people left California than actually moved in. The major reason- housing prices. A diminishing population doesn't bode well for housing markets either.


Lastly- do the math. 750k is A LOT of freakin' money. If you can afford to pay this using a 30 year loan... then your financial situation might be better than most and perhaps taking the plunge is less of a big deal to you. But if you are basing this off of using an IO, ARM, or 50 year mortgage.... back away. You will lose your shirt.

My opinion? No. It will not be a good time to buy in California for perhaps another 2-5 years and even then, it will still be expensive. Just be aware that there are many other parts of the US that are equally pleasant, if not nicer than California that offer more at a fraction of the cost.

[shannon94]

Originally Posted by wilkermoo

What about buying a home to live in. I hear all the time about buying your home as an investment and when the right time to buy is and when to sell etc. Is it juts in CA that people think of their homes as an investment and not a home. What if you buy your home and live there for the rest of your life, will it matter that you purchased in an area that was going to be a good investment or would it be better to purchase a home in an area that you loved.

Exactly!! People (especially Californians ) seem to think the only reason to buy a house these days is to turn around and sell it. Before things got crazy...homes were never really seen as an investment. Even California had modest appreciation before this last boom. That's why I have to laugh when I hear "California is so expensive because it's more desirable" well...yeah it is...but it didn't become more desirable than it was 10 years ago......yet prices have quadrupled. Man...I'm so glad I'm not living with a 600k mortgage...lol.

[dgoforit]

it is better to rent, even if you can afford to buy a house. so if you pay rent say for $1000 and you make $3000-5000 take home, you would save maybe $1000-3000 a month and in ten years you would have close to $150,000 -500,000 in savings, oppose to paying a few hundred in princpal a month on a couple hundred thousand dollar home. and still wouldnt be close to paying that much principal on the house. I think home prices will fall 10-20 percent in the next year or 2 or more. If you think prices will continue to rise your all crazy. if the house prices continue to rise then in ten or twenty years you are saying the average price in the bay area will be miilion or more then only millionaires would be able to by a house in the bay area. The housing prices went up drastically the past few years from 1998 because of the dot com boom, then because of the of the quick increase in price/equity people wanted to get in to the hot housing market to make quick money, now is not the case if you buy a house with overpice properties that some people think they can get now. you will be losing. In the 70's and 80's most people have over 50% of the mortgage payed off on a 100,00-200,000 dollar loan, now people have 5, 6, 700,000 dollar or more mortgages and have ony 20% payed on their loans. So rent, dont buy unless you want to have 0 savings.

[artichoke63]

If you don't even like the area, why would you want to buy here? And you're only going to be here for how long? Nine months? Sounds like you're ready to head back to Queensland tomorrow. Why would you even consider buying a home here. That just sounds like crazy thinking. Australia is a great place. Lived there for a year and loved it. Wish I had citizenship as I'd return in a heartbeat.

Artie