Who are the ones buying and selling in SJ?

[bigdumbgod]

Originally Posted by jaypee

I think anything that's nuclear should be highly regulated .. especially if it involves foreign Chinese.

Hey! We'uns don't do no regerlations 'round heah! Dats iz Un'Mericun!

[silverkris]

Originally Posted by bigdumbgod

Whoa! You can do that?! Is it more profitable to sell them separately, or altogether? Nuclear or extended? How much per child?
Geez, there's a veritable goldmine at hand!

Human trafficking??

[SportyandMisty]

Originally Posted by ccm123

One advantage of owning is the relative stability in your mortgage payments. In a rental market such as what we have now, I would not want to be a renter, with the rising rental prices I have been seeing and hearing about.

The true benefit when you own your own home, and you live in that home, is that you in effect "pay yourself rent" in the amount of the fair-market rental. That phantom income is tax free.

To understand this, let's play a thought experiment. Sorry - it is a bit long - but hang in there & you'll see at the end.

Let's imagine two people, and I'll call them Tom and Sue. Each of them own a house, and they are next door neighbors. In fact, their houses are IDENTICAL in every detail. Tom and Sue purchased their houses on the same day, for the same $$$, with identical down payments & financing. In fact, Tom and Sue work for the same company, in the same job type, and they have identical income. Everything about them from a financial perspective is identical.

Now - imagine what Tom's and Sue's respective tax returns look like (their IRS 1040s and CA 540s).

Each of them has a variety of income sources that are identical (wages, interest, dividends). Each of them have a variety of deductions that also are identical (mortgage interest, etc). Their adjusted gross incomes are the same, their tax obligations are the same - everything is the same from a $$$ perspective.

NOW - let's do the thought experiment where Tom rents his house to Sue, and Sue rents her house to Tom. Absurd, I know, but bear with me. Tom is now a renter, living in Sue's house. Sue is a renter living in Tom's house. They each pay the other the fair market rental rate. Since the houses are identical, the dollar amount Sue pays to Tom in rent is the same dollar amount that Tom pays to Sue.

NOW - imagine their tax returns. Each of them has income just as before (wages, interest, dividends) but this time, each also has new income - the rent the other paid to him/her. Let's say, for example, the fair market rent is $3000/month, and this was paid all year long (12 months).

In this hypothetical, Tom has an extra $3000 * 12 = $36,000 in income compared to the base case where he lived in his own home. Sue has the same extra $36,000 in income.

Each also has some extra deductions (depreciation, some landlord related expenses).

BUT - at the end of the day, their AGI is $36,000 higher, and their total tax obligation is higher. EACH would end up PAYING MORE IN INCOME TAX to the IRS & the CA Franchise Tax Board because of the rental income. In the absurd case, each is worse off because their after-tax income is lower.

So, when you own the home you live in, you "pay yourself rent" and that rent is tax-free because it is not declared on the tax forms. That is the true benefit of owning a home & living in it.

[m0m21]

I am a single family mother who can afford up to 850,000 with 20 percent down, and nearly perfect credit which neighborhoods should I look into for a good investment and a realistic chance of not getting priced out with all cash offers? I was thinking 95118, 95124, 95123, 95112(naglee park, hyde park), and 95125(obviously the lower end-but I've seen a few in my price range and sell in my price range)

[vrhunski]

I think prices will going up again early next year (March- May 2015)

And if this trend continue for next 5 years we will have 1br/1ba in SJ close to 1 million $$.

[ggcd951]

Originally Posted by David A.R.C.

Moving to San Jose Bay Area to get semi-close to family and after much driving around, attending churches, going to shopping malls, I have a few questions as to just who it is here that's creating this hot market.

1. Who are the buyers?

It seems there are a lot of workers in the tech industry, but are they the bulk of the ones buying? Am I wrong in the assumption that they are transient, coming for a few years and then leave with "start-up" or "S.V." on their resumes and due to the high COL?
Do many come just to work or attend a school and then return to home countries?

I think I read somewhere on here that many/most of the tech crowd employees get housed at their home base or bus in from SF? Is it only the upper-upper management that are buying homes?


2. And who are these sellers?

At the churches we went to I saw an overwhelming amount of grey hair. Are these folks who have lived here since before it boomed?

I am excited about this. I really enjoy being around professionals, engineers, accountants, start-up people, it makes the hours in the car pleasant and interesting (always something to learn from those smarter than me.)

This in contrast to my old city down south where conversation, (outside discussions on their RE needs) always revolved around pretty superficial things, like why I'm not driving a Mercedes or Jag

The draw down south will always be there with the weather and in SF for it's beauty (though I've found SJ to be pretty great in both regards, wonderful tree lined streets and tucked away neighborhoods plus great weather thus far) but here in SJ it's industry and jobs driven I think.

Buyers are tech people. But being tech does not necessarily mean they can buy. Home prices are so high even high-salaried tech guys can not afford. i have couple of friend working in tech industry and they lament i wont be able to buy with my salary. Many of the buyers seem to be from foreign country such as China to buy them as investment.

Sellers are the anyone who just seem to be fortunate to have home at this time.

[wsugrad03]

I realize this is an old thread, but I've asked myself this question many times this year since moving to SJ. I can only speak for the properties that are in my budget, which is around a million and below. The cash buyers appear to mostly be rich Chinese investors. Next fortunate group of buyers are the 500k down crowd that consists of dual income high earners (engineers, lawyers/doctors, managers/directors, etc..) who have owned properties in the past and moved here with some equity and spent a several more years saving up. This is the group of buyers that expect to bid up 100k+ over asking and have the income and the desire enough to drive up the 110% list to sell ratio. Then there's the 20% down crowd that will probably have to make 7-20+ attempts at buying before getting a property. These people are commonly dual income high earners that have saved for several years but didn't previously own homes and have the equity to carry over. Or they are newcomers with equity in for a rude awakening on the home buying process.

Prices are driven by supply and demand as they always are. No room to build more homes. Can't build up because of costs and code. Infrastructure isn't built to handle more dense housing either. That's why a crappy 1300 sq/ft rancher that's never been upgraded in 20 years can sell for a million+ if it's in a good school district. Cheap interest rates and the epic stock bull run has built up a lot of wealth and enabled people to purchase more. I don't see prices going down or tabling until either rates go up or the stock market go bear. No idea what's going to happen, but with the feds out of QE, it now has an economy that is completely addicted to cheap money. The only way to safely go back to normal is by very slowly raising interest rates as long as inflation remains under control.