What is life like for the "middle class" in San Jose? (San Diego: sales, real estate market)

[Sigequinox]

Howdy all,

The wife and I currently live in CT. We are looking to move when I finish grad school. We both work. Shes in pharma sales and I'm in biotech (specifically genomics). The number one place on our list to move in terms of all quality of life variables (for us) is the greater Nashville area of TN. However, the bay area is BY FAR the best move professionally.

We are 26 and 27 years old, and combined make a little over 120K. We have a house, we have cars, we enjoy going out to eat and we want to have kids after we move/I graduate.

The problem is, from what I can gather on the interwebs, it appears that we would have to give up everything we have and want in exchange for a piece of junk 1 bedroom condo in cali--esp bay area. Does that sound right? is there no such thing as a home (that isn't in disrepair) in the 300-500k range?

From what I could tell, entry level homes are selling in the 900-1mil range which is laughable. There's no way the pay difference will compensate. I would need to go from making 60k to making about 200k--not gonna happen for me or the wife.

Ultimately, my question is, is that just what the culture is like in cali? Are middle class folks comfortable making a respectable wage while living in a glorified $550,000 apartment and don't think much of it? What do you do? What's your situation?

[humboldtrat]

Originally Posted by Sigequinox

Howdy all,

is there no such thing as a home (that isn't in disrepair) in the 300-500k range?

From what I could tell, entry level homes are selling in the 900-1mil range which is laughable. There's no way the pay difference will compensate. I would need to go from making 60k to making about 200k--not gonna happen for me or the wife.

Ultimately, my question is, is that just what the culture is like in cali? Are middle class folks comfortable making a respectable wage while living in a glorified $550,000 apartment and don't think much of it? What do you do? What's your situation?

No such thing as a home in the $300K-$500K range, but you can get a condo for that!

[mstnghu2]

My wife and I make a combined income of around $130k and we have an almost four year old son. We are pretty much living paycheck to paycheck these days...and we RENT a modest 3 bedroom home in a very modest neighborhood. I live in Newark, a little bit north of San Jose and it's actually slightly cheaper where I live than in any decent SJ neighborhood.

When I grew up in the South Bay, most of my friends and I grew up in solidly middle class households. There's no way my parents or most of my friends' parents would be able to afford the homes they live in if they were to purchase in today's real estate market...even compensating for inflation. My dad was a Payless drug store manager when he and my mom bought their Milpitas house for $25k back in 1976. I assure you no drug store manager is going to be buying a single family home in the Bay Area these days unless they've scrimped and saved money for many years.

When I think of middle class in the Bay Area, I think of a household income of at least $150k (depending on how many kids) to live comfortably in a decent neighborhood and that may not even mean owning a home.
The reality is that if you want to live in a reasonably good San Jose neighborhood (low-moderate amount of crime, well-kept homes, decent schools, etc.), you'll be looking to pay for a home starting out around $750k and there will probably be multiple offers, many of which are cash.

I've lived in the Bay Area my whole life and the real estate market here still blows my mind. A good friend of mine is about to list his very modest 3bed/2bath Fremont home for $720k and it needs a fair amount of work done to it. His realtor expects it to sell for over $760k based on recent comps in the neighborhood.

[vadaseri]

I expect your household income to be $200+K which is above average household income in the bay area. With that income, you may not able to buy a home in the core bay area, but definitely in exhurbs under $500K if you are willing to commute. You have to compromise on house or on commute.

[roadwarrior101]

Originally Posted by vadaseri

I expect your household income to be $200+K which is above average household income in the bay area. With that income, you may not able to buy a home in the core bay area, but definitely in exhurbs under $500K if you are willing to commute. You have to compromise on house or on commute.

Even if you're living in the exhurbs, that money will only get you a home in a so-so community with questionable schools. If you want to live in a great community, with top schools and a nice home, you either need to be prepared to raise your budget considerably or seriously broaden your commute horizon (think 2 hours each way). If you're in San Jose and want to live in one of the nicer communities in the Bay Area in a decent sized house, be prepared to pay $1M+.

There is no getting around it here in the Bay Area, you need to sacrifice one or more of the following:

1. Neighborhood - How safe is it? How well kept are the homes? How good are the schools?
2. Home - Is the house large or is it a shack? Is it well kept and/or remodeled or is it a total fixer upper?
3. Location - Do you need to live close to work or are you willing to commute a long distance?
4. Price - If you are not willing to sacrifice any of the above, how much can you bring your budget up

Unless you are independently wealthy or have owned a place here for 10+ years and cashing in on equity appreciation, we all have to make this difficult choice to live in the Bay Area.

Just for some frame of reference, my wife and I make a lot more than you, have 2 young kids and bought a townhouse in Mountain View in 2010. We were fortunate to have had our place appreciate by $300k. Still, when we were looking around to trade up last year, it was daunting. We could not afford to buy a nice home in a nice area of the Silicon Valley. We ended up moving to Danville and paying over $1M for a new 4 bedroom house, to be in a nice community with great schools and a nice house. While not cheap, this is an outright bargain compared to what you get in the Silicon Valley.

[cardinal2007]

Originally Posted by Sigequinox

The problem is, from what I can gather on the interwebs, it appears that we would have to give up everything we have and want in exchange for a piece of junk 1 bedroom condo in cali--esp bay area. Does that sound right? is there no such thing as a home (that isn't in disrepair) in the 300-500k range?

There are 2 bedroom condos in that price range, and they are not really in piece of junk status, unless you're looking at around $300k. The 2bds built about 10-20yrs ago are just crossing that boundary of $500k around now, at around $420/sqft downtown and vicinity, you're probably looking at < 1200sqft at this point. If you look for older condos they will be cheaper. Good school districts will cost more, but since you don't have kids that doesn't sound like a good investment, west and north are more expensive as well. If you want land, then yes, that will cost you dearly, even when houses are close to teardown there is so much value in the land that it is hard to find houses in that range.

If you move further north or west to towns like Mountain View or Sunnyvale, then yeah, you will have to look at older or smaller inventory (usually both) to get into that price range. Eventually you do get down to nothing if you move that way. The opposite does get more affordable going south and east, at the cost of either a long commute, or limiting your job prospects.

If you do think job prospects are better here and your career can go up faster, then it is entirely possible that you could be making over $200K/yr by the time you have kids that are ready to go to kindergarden, though I know a lot of people figure once their career gets to that point they will go to another place that is a tier below the Bay Area in terms of jobs, but still pays well, and real estate is usually 1/2 the price per sqft.

[mysticaltyger]

Originally Posted by Sigequinox

The problem is, from what I can gather on the interwebs, it appears that we would have to give up everything we have and want in exchange for a piece of junk 1 bedroom condo in cali--esp bay area. Does that sound right?

The short answer: Yes.

If you want kids and to live in a modest single family home that isn't in a bad area, then yes, you are going to be easily priced out of that with a $120K income. Mstnghu2's and roadwarrior101's answers are spot on with the details.

[jbunniii]

Get a good job with a generous stock plan, rent, save aggressively for a downpayment, and wait until the next downturn/crash to buy. Today's $900k-$1M houses in modest San Jose neighborhoods were $600-700k just a couple of years ago, and may be again when the market cools. If not, your downpayment will be enough to buy a house for cash in many parts of the country, so you win either way.

[Lanienguyen]

San Jose or Bay area is not a good place for the Biotech field if you are moving from somewhere unless you are both software engineers. My wife currently working for Bristol Myers Squibb and has been in the biotech for 20yrs. Her salary now is only mid 80K. I work in the hospital and I have a licences, so my salary is little higher. Our combine income is closed to 200K, but believe me that after taxes and 401K, I don't see much saving at all. We have one kid and mortgage ( bought old home for 600k few yrs ago.) Biotech don't pay much in the bay area.
However, San Diego is also a good place to think about it for your career. House is much cheaper in the south of CA. My brother in law is also Grad from the East, after 10yrs working in New Jersey, his family was sick of snow and they just moved to the south of CA last year. He was surprised that there was more biotech jobs in San Diego or the South.. and cost of living is much cheaper. He bought 3700 sq newly home on the hill at Corona,CA for only 550K.. If you use Realtor.com, search for 92883, Eagle Glen district. All the home in 500K with 3,000 sq and so beautiful..

[roadwarrior101]

Originally Posted by Lanienguyen

San Jose or Bay area is not a good place for the Biotech field if you are moving from somewhere unless you are both software engineers. My wife currently working for Bristol Myers Squibb and has been in the biotech for 20yrs. Her salary now is only mid 80K. I work in the hospital and I have a licences, so my salary is little higher. Our combine income is closed to 200K, but believe me that after taxes and 401K, I don't see much saving at all. We have one kid and mortgage ( bought old home for 600k few yrs ago.) Biotech don't pay much in the bay area.
However, San Diego is also a good place to think about it for your career. House is much cheaper in the south of CA. My brother in law is also Grad from the East, after 10yrs working in New Jersey, his family was sick of snow and they just moved to the south of CA last year. He was surprised that there was more biotech jobs in San Diego or the South.. and cost of living is much cheaper. He bought 3700 sq newly home on the hill at Corona,CA for only 550K.. If you use Realtor.com, search for 92883, Eagle Glen district. All the home in 500K with 3,000 sq and so beautiful..

That is a lot cheaper, but Corona is not near San Diego. It is in the inland empire, near San Bernardino. Personally, I would not live near there. Maybe its a nice neighborhood, but the smog and the crime of the IE....wow.

You can though find nicer places in SD in that budget, if you're willing to be a little inland.