California Homebuying Insanity

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av111
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Re: California Homebuying Insanity

Post by av111 »

OP

Please post a link to a house that you love and could buy this weekend meaning it is in your range . I will give you a price that it will most likely sell for
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lindsayinsf
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Re: California Homebuying Insanity

Post by lindsayinsf »

tj wrote: Fri May 07, 2021 6:07 pm
lindsayinsf wrote: Fri May 07, 2021 5:57 pm
willthrill81 wrote: Fri May 07, 2021 2:40 pm
lindsayinsf wrote: Fri May 07, 2021 11:44 am
willthrill81 wrote: Fri May 07, 2021 11:32 am

Only if your landlord is willing to 'eat' the cost. Most are not and have their tenants pay for property taxes via rent. It's just not a separate line item.
If we're looking at it that way...then isn't everyone paying property taxes, regardless of income level? The cost of housing, or the year against which the property is being assessed at, is more determining of how much property taxes will be than one's income level.
willthrill81 wrote: Fri May 07, 2021 11:32 am

CA taxes contributions on HSAs. New Jersey is the only other state that does that.
I wasn't aware of this, thank you. I haven't been eligible for an HSA in a long time. I need more coverage than what a HDHP provides. We're talking about tax on $3,600/individual or $7,600/family. This doesn't seem like an obscenely high amount of taxes for someone with a $600k or $1M income.
willthrill81 wrote: Fri May 07, 2021 11:32 am CA also has much higher fuel tax than most other states.
Sounds like another a tax that applies to everyone, and affects people with lower incomes proportionally more than people with higher incomes.
Yes, virtually everyone is paying property taxes in one form or another.

I didn't say that any one tax was obscenely high; rather, the combination of all of the taxes for some individuals can. If you disagree, that's fine.
Adding property taxes of 2% to 3% on a $2M home puts someone making $600k at around a 48% to 51% combined total effective tax rate. Sales tax, HSA taxes, fuel tax…those seem likely to be under 2% combined I think. So approx 53% combined total effective tax rate before any deductions or exemptions are applied. Leaving them with $282k.

P&I for one year on a $1.6M mortgage with a 3.00% rate is $81k. Leaving $201k for everything else. The OP can afford a $2M home.
California doesn't have a 2%-3% property tax rate.
I realize that; I was rounding up to be on the safe side. I was mistakenly thinking it was 1.8% where I live but it's 1.08%. Seems closer to 1% than 2% or 3% for most places in CA. Really struggling to find a combined tax rate that is "well over 50%" unless one's property is valued at multiple++ millions and it was purchased recently paying current tax rates. Some counties do have their own additional taxes or Mello Roos. But 1% in property taxes would have been more accurate.
Bungo
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Re: California Homebuying Insanity

Post by Bungo »

Tingting1013 wrote: Fri May 07, 2021 9:01 pm
Bungo wrote: Fri May 07, 2021 8:56 pm
poppy42 wrote: Thu May 06, 2021 10:27 pm
Yesterdaysnews wrote: Thu May 06, 2021 10:23 pm Who are these people showing up with $3M cash to buy a house on the spot? Where is this money coming from, the tech industry? I don’t see that kind of liquid folks around where I live.
It’s tech, but it’s also people who bought a while ago and are trading up. They have seen their home values increase by a ton in the last decade. Homes in my current neighborhood were selling for about 400k 10 years ago. Those same houses will now go for 2M. Not an exaggeration.
What neighborhood is this? I bought 9 years ago in San Jose at around 650k, and my house is currently worth roughly 1.6M, which is a 2.5x multiple. Where in the Bay Area is there a 5x multiple vs. 10 years ago? I'm not saying it's false, but if it's true it's not on my radar!
OP is in SoCal
Ah sorry, that was mentioned in the OP but I forgot/lost track. I'd still be very interested to know which neighborhood(s) in SoCal had a 5x increase over the past decade! I lived in LA (near Canter's Deli) from 1995-2005 when prices went from fairly cheap (median price around $250k for a modest house in a decent neighborhood) to what seemed insane at the time (double to triple the 1995 price). But the Bay Area was always even crazier. Sounds like maybe that has been reversed in recent years?
Tingting1013
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Re: California Homebuying Insanity

Post by Tingting1013 »

Bungo wrote: Fri May 07, 2021 9:30 pm
Tingting1013 wrote: Fri May 07, 2021 9:01 pm
Bungo wrote: Fri May 07, 2021 8:56 pm
poppy42 wrote: Thu May 06, 2021 10:27 pm
Yesterdaysnews wrote: Thu May 06, 2021 10:23 pm Who are these people showing up with $3M cash to buy a house on the spot? Where is this money coming from, the tech industry? I don’t see that kind of liquid folks around where I live.
It’s tech, but it’s also people who bought a while ago and are trading up. They have seen their home values increase by a ton in the last decade. Homes in my current neighborhood were selling for about 400k 10 years ago. Those same houses will now go for 2M. Not an exaggeration.
What neighborhood is this? I bought 9 years ago in San Jose at around 650k, and my house is currently worth roughly 1.6M, which is a 2.5x multiple. Where in the Bay Area is there a 5x multiple vs. 10 years ago? I'm not saying it's false, but if it's true it's not on my radar!
OP is in SoCal
Ah sorry, that was mentioned in the OP but I forgot/lost track. I'd still be very interested to know which neighborhood(s) in SoCal had a 5x increase over the past decade! I lived in LA (near Canter's Deli) from 1995-2005 when prices went from fairly cheap (median price around $250k for a house in a decent neighborhood) to what seemed insane at the time (double to triple the 1995 price). But the Bay Area was always even crazier. Sounds like maybe that has been reversed in recent years?
Maybe $2M is the going rate for post-Renovation houses? That would not surprise me
Ependytis
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Re: California Homebuying Insanity

Post by Ependytis »

Looking at the prices of California real estate at the peak more than 14 years ago, it seems like inflation adjusted housing prices are almost as high. As we all know, due to poor lending standards there was a lot of speculation in the market back then. This makes me think that there is a high degree of speculation in the market and that it’s not sustainable. With that said, I’m looking to sell my house so I can cash in. Even the average price house at around 800K is out of reach for most buyers.
Last edited by Ependytis on Sat May 08, 2021 6:58 am, edited 1 time in total.
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poppy42
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Re: California Homebuying Insanity

Post by poppy42 »

Bungo wrote: Fri May 07, 2021 8:56 pm
poppy42 wrote: Thu May 06, 2021 10:27 pm
Yesterdaysnews wrote: Thu May 06, 2021 10:23 pm Who are these people showing up with $3M cash to buy a house on the spot? Where is this money coming from, the tech industry? I don’t see that kind of liquid folks around where I live.
It’s tech, but it’s also people who bought a while ago and are trading up. They have seen their home values increase by a ton in the last decade. Homes in my current neighborhood were selling for about 400k 10 years ago. Those same houses will now go for 2M. Not an exaggeration.
What neighborhood is this? I bought 9 years ago in San Jose at around 650k, and my house is currently worth roughly 1.6M, which is a 2.5x multiple. Where in the Bay Area is there a 5x multiple vs. 10 years ago? I'm not saying it's false, but if it's true it's not on my radar!
OP here. I’m in the LA metro, have been for 15 years, moved here young and broke. There has been A LOT of gentrification here in the last decade. Those numbers above for my neighborhood are actual real numbers. They aren’t the norm, but it’s happened. A 1950s fixer in my area on a 5000 sqft lot goes for $1.5m. Anything renovated goes for more. The X factor is that I live in an area with good public schools. This is not the norm in LA and carries a high premium. If you cross that school zoning line from a good to a not-good school you see housing prices drop by $200k+
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poppy42
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Re: California Homebuying Insanity

Post by poppy42 »

:sharebeer
ram wrote: Fri May 07, 2021 9:10 pm
poppy42 wrote: Thu May 06, 2021 1:15 pm Hello everyone,
Under usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move. We also don't want to switch schools (and we can't afford to buy in the area where we currently rent - decent houses run about $2M here).
Most kids handle school change quite well. Our daughter was the state AP scholar and son had a perfect score of 36 on ACT. We moved 4 times and they attended 5 schools in 3 different countries by the time they reached high school.
OP again. I moved around as a kid and hated it. Don’t want to do it to my kid. I might be the exception as I didn’t handle school change particularly well :(
gideon trumpet
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Re: California Homebuying Insanity

Post by gideon trumpet »

poppy42 wrote: Thu May 06, 2021 1:15 pm Hello everyone,

I'm trying to buy a house in a VHCOL area of Southern California, and I'm trying to figure out how I can do this while still respecting Boglehead principles. Everything in this market feels like a ripoff.

The market here is INSANE right now. We're looking at homes in the $1M - $1.6M range, and these homes are routinely going for $100-600K over asking. We were in escrow on a home previously, but pulled out during inspection due to unforeseen major issues (the house ended up getting torn down). Since then, we have been outbid on several homes, mostly by all-cash bidders. There's also very little inventory. Looking in other areas that are cheaper and farther away are not an option with our jobs - we are already considering a wide swath of our metro area of up to a 1-hour commute.

Under usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move. We also don't want to switch schools (and we can't afford to buy in the area where we currently rent - decent houses run about $2M here).

We have $400K in savings dedicated towards down payment, closing, and making up an appraisal shortfall (you pretty much have to waive appraisal contingency to compete in this market). We make $600K a year combined.

It seems freaking ridiculous that a couple making $600K cannot buy a house, but that's been the situation so far. I also fear we will be majorly overpaying for whatever we buy, which will just be disappointing. Is there a way of looking at this that I haven't considered? I'm so frustrated and sad.
You could bite the bullet, pay more than planned, pay PMI if necessary, and make a $2m purchase happen. That is an option. If you find a home that you love, I'm not sure what it means to "overpay." Affordability is all that matters, assuming you value the house more than the cash. But along the same lines, I would caution against buying because you feel that renting a similar property would be throwing money away. If you can rent a $1.5m home in California for $6K/mo, I'd consider that a very good deal for the renter. The difference between that cost and the net cost of ownership is too small to make a dent in your financial picture. So my advice is to buy only if you find a home you love and to view your decision on where to live as a lifestyle choice, not an investment.
rockstar
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Re: California Homebuying Insanity

Post by rockstar »

Back in 2005 my apartment was converted to a condo. I was forced to look for a place. Instead of renting again, I bought a home. My biggest financial mistake I ever made. I'll never pay more than 20x rent for a home again.
manatee2005
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Re: California Homebuying Insanity

Post by manatee2005 »

investingfan wrote: Thu May 06, 2021 3:10 pm
Somethingwitty92912 wrote: Thu May 06, 2021 2:26 pm
poppy42 wrote: Thu May 06, 2021 1:15 pm Hello everyone,

I'm trying to buy a house in a VHCOL area of Southern California, and I'm trying to figure out how I can do this while still respecting Boglehead principles. Everything in this market feels like a ripoff.

The market here is INSANE right now. We're looking at homes in the $1M - $1.6M range, and these homes are routinely going for $100-600K over asking. We were in escrow on a home previously, but pulled out during inspection due to unforeseen major issues (the house ended up getting torn down). Since then, we have been outbid on several homes, mostly by all-cash bidders. There's also very little inventory. Looking in other areas that are cheaper and farther away are not an option with our jobs - we are already considering a wide swath of our metro area of up to a 1-hour commute.

Under usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move. We also don't want to switch schools (and we can't afford to buy in the area where we currently rent - decent houses run about $2M here).

We have $400K in savings dedicated towards down payment, closing, and making up an appraisal shortfall (you pretty much have to waive appraisal contingency to compete in this market). We make $600K a year combined.

It seems freaking ridiculous that a couple making $600K cannot buy a house, but that's been the situation so far. I also fear we will be majorly overpaying for whatever we buy, which will just be disappointing. Is there a way of looking at this that I haven't considered? I'm so frustrated and sad.
Hello! After reading your post an majority of the responses, here is what I am thinking. Consider shopping around your resume out of state.

I know this is brutal to even consider for a lot of people, but in my own personal journey of wealth acquisition, I can’t tel you how much better my life got when I choose to bow out of this sort of location based thinking.

The reality is 9/10 times you can find the same amenities, weather, living conditions, an more often than not better ones— with little effort when you become willing to move.

Better schools, smaller communities, more fresh air, less food deserts…the living becomes more sustainable. Seriously the list goes on an on.

Disconnect yourself from the location an watch the opportunity open up for yourself. Your family seems gainfully employed, a slightly lower pay, in a medium COL area goes ALOT farther, I bet once you get over the shock of moving you’ll be happier too.
Why the advice always out of state? There are many nice towns in California where home aren't $1,000,000 or even $700,000 and schools are 10/10.
Which towns?
manatee2005
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Re: California Homebuying Insanity

Post by manatee2005 »

poppy42 wrote: Fri May 07, 2021 10:14 pm
Bungo wrote: Fri May 07, 2021 8:56 pm
poppy42 wrote: Thu May 06, 2021 10:27 pm
Yesterdaysnews wrote: Thu May 06, 2021 10:23 pm Who are these people showing up with $3M cash to buy a house on the spot? Where is this money coming from, the tech industry? I don’t see that kind of liquid folks around where I live.
It’s tech, but it’s also people who bought a while ago and are trading up. They have seen their home values increase by a ton in the last decade. Homes in my current neighborhood were selling for about 400k 10 years ago. Those same houses will now go for 2M. Not an exaggeration.
What neighborhood is this? I bought 9 years ago in San Jose at around 650k, and my house is currently worth roughly 1.6M, which is a 2.5x multiple. Where in the Bay Area is there a 5x multiple vs. 10 years ago? I'm not saying it's false, but if it's true it's not on my radar!
OP here. I’m in the LA metro, have been for 15 years, moved here young and broke. There has been A LOT of gentrification here in the last decade. Those numbers above for my neighborhood are actual real numbers. They aren’t the norm, but it’s happened. A 1950s fixer in my area on a 5000 sqft lot goes for $1.5m. Anything renovated goes for more. The X factor is that I live in an area with good public schools. This is not the norm in LA and carries a high premium. If you cross that school zoning line from a good to a not-good school you see housing prices drop by $200k+
Then do that and pay for private school.
manatee2005
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Re: California Homebuying Insanity

Post by manatee2005 »

Firemenot wrote: Fri May 07, 2021 9:41 am
investingfan wrote: Fri May 07, 2021 9:12 am
Somethingwitty92912 wrote: Thu May 06, 2021 4:21 pm
investingfan wrote: Thu May 06, 2021 3:10 pm
Somethingwitty92912 wrote: Thu May 06, 2021 2:26 pm

Hello! After reading your post an majority of the responses, here is what I am thinking. Consider shopping around your resume out of state.

I know this is brutal to even consider for a lot of people, but in my own personal journey of wealth acquisition, I can’t tel you how much better my life got when I choose to bow out of this sort of location based thinking.

The reality is 9/10 times you can find the same amenities, weather, living conditions, an more often than not better ones— with little effort when you become willing to move.

Better schools, smaller communities, more fresh air, less food deserts…the living becomes more sustainable. Seriously the list goes on an on.

Disconnect yourself from the location an watch the opportunity open up for yourself. Your family seems gainfully employed, a slightly lower pay, in a medium COL area goes ALOT farther, I bet once you get over the shock of moving you’ll be happier too.
Why the advice always out of state? There are many nice towns in California where home aren't $1,000,000 or even $700,000 and schools are 10/10.
Why not? It’s as applicable as staying within the state, but has many bonuses. Avoiding Cali taxes, pollution, traffic, I mean the list goes on. I am sure there are nice places outside of the city, but they will be as hard to find as ones closer to work centers, essentially for all the same reasons. Then we need to talk about the commute to and from work.

Where’s they could shop around out of state get all the bonuses an have a 10-20 minute drive in low traffic, an you know not get car jacked on the way to boot!

OP didn’t ask if he/she should move out of state, but this is a financial forum yada yada. There are pros and cons living in every state. The pros widely outweigh the cons for the 40 million or so Californians. Ever think of that?
Every thread on real estate choices in California has a major percentage of people saying just move out of state. Kind of a broken record and not helpful.
California recorded population loss for the first time since population numbers have been tracked. So it's a solution that many people are taking.
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LilyFleur
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Re: California Homebuying Insanity

Post by LilyFleur »

manatee2005 wrote: Fri May 07, 2021 11:40 pm
Firemenot wrote: Fri May 07, 2021 9:41 am
investingfan wrote: Fri May 07, 2021 9:12 am
Somethingwitty92912 wrote: Thu May 06, 2021 4:21 pm
investingfan wrote: Thu May 06, 2021 3:10 pm

Why the advice always out of state? There are many nice towns in California where home aren't $1,000,000 or even $700,000 and schools are 10/10.
Why not? It’s as applicable as staying within the state, but has many bonuses. Avoiding Cali taxes, pollution, traffic, I mean the list goes on. I am sure there are nice places outside of the city, but they will be as hard to find as ones closer to work centers, essentially for all the same reasons. Then we need to talk about the commute to and from work.

Where’s they could shop around out of state get all the bonuses an have a 10-20 minute drive in low traffic, an you know not get car jacked on the way to boot!

OP didn’t ask if he/she should move out of state, but this is a financial forum yada yada. There are pros and cons living in every state. The pros widely outweigh the cons for the 40 million or so Californians. Ever think of that?
Every thread on real estate choices in California has a major percentage of people saying just move out of state. Kind of a broken record and not helpful.
California recorded population loss for the first time since population numbers have been tracked. So it's a solution that many people are taking.
It's true. And, at the same time, there is a huge housing shortage, and house prices are sky high. What gives?
Bungo
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Re: California Homebuying Insanity

Post by Bungo »

LilyFleur wrote: Sat May 08, 2021 12:16 am
manatee2005 wrote: Fri May 07, 2021 11:40 pm
Firemenot wrote: Fri May 07, 2021 9:41 am
investingfan wrote: Fri May 07, 2021 9:12 am
Somethingwitty92912 wrote: Thu May 06, 2021 4:21 pm

Why not? It’s as applicable as staying within the state, but has many bonuses. Avoiding Cali taxes, pollution, traffic, I mean the list goes on. I am sure there are nice places outside of the city, but they will be as hard to find as ones closer to work centers, essentially for all the same reasons. Then we need to talk about the commute to and from work.

Where’s they could shop around out of state get all the bonuses an have a 10-20 minute drive in low traffic, an you know not get car jacked on the way to boot!

OP didn’t ask if he/she should move out of state, but this is a financial forum yada yada. There are pros and cons living in every state. The pros widely outweigh the cons for the 40 million or so Californians. Ever think of that?
Every thread on real estate choices in California has a major percentage of people saying just move out of state. Kind of a broken record and not helpful.
California recorded population loss for the first time since population numbers have been tracked. So it's a solution that many people are taking.
It's true. And, at the same time, there is a huge housing shortage, and house prices are sky high. What gives?
I don't have any statistics, but anecdotally I've heard that the rental market is very slack right now (at least in Silicon Valley): rents are down, and renters are able to demand concessions from landlords, e.g. one of my co-workers persuaded his landlord to install central A/C, which would have been extremely unlikely in the pre-Covid era. So maybe most of those moving out are renters?
gips
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Re: California Homebuying Insanity

Post by gips »

ram wrote: Fri May 07, 2021 9:10 pm
poppy42 wrote: Thu May 06, 2021 1:15 pm Hello everyone,
Under usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move. We also don't want to switch schools (and we can't afford to buy in the area where we currently rent - decent houses run about $2M here).
Most kids handle school change quite well. Our daughter was the state AP scholar and son had a perfect score of 36 on ACT. We moved 4 times and they attended 5 schools in 3 different countries by the time they reached high school.
funny, my dad used to say the same thing to his friends about me. your problem, like my father’s, is that you measure the success of moving by your children’s academic achievements. and when you say “most kids”, do you have objective studies to back that up or are you simply talking about your own kids?

op, i live in a vhcol area in ny and a friend, who was a retired ex-coo helped me with bidding strategies in a hot market. his general advice was to get $25k (in our market) over the highest anticipated bid because overpaying $25k on a $1.5mm property is, on a percentage basis, noise. hard to swallow as a BH, but it worked.

good luck!
vfinx
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Re: California Homebuying Insanity

Post by vfinx »

gips wrote: Sat May 08, 2021 2:29 am op, i live in a vhcol area in ny and a friend, who was a retired ex-coo helped me with bidding strategies in a hot market. his general advice was to get $25k (in our market) over the highest anticipated bid because overpaying $25k on a $1.5mm property is, on a percentage basis, noise. hard to swallow as a BH, but it worked.
I agree with this, and experienced this as both a seller and buyer recently. For both transactions, the accepted offer was the highest initial bid, with no counter. It runs counter to my intuition for how these things should work, but my experience matches yours.
1rl9DS5gl2
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Re: California Homebuying Insanity

Post by 1rl9DS5gl2 »

I hate to say it, but in the current market, with only $400K for a down payment, you may very well be out of luck. An all cash no contingency offer will always trump you.
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Cheez-It Guy
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Re: California Homebuying Insanity

Post by Cheez-It Guy »

As someone who lives in a rural area in a county that's had shrinking population for four consecutive decades, these threads are almost comically unrelatable. It's like a totally different world. Especially the unspoken suggestion that there are no other viable options. I don't take joy in anyone else's plight, but making $600,000 with expected increases and apparently not being able to purchase a house is so outlandish. Seems like the only way this stops is if enough people get fed up and stop supporting this system as if it's normal. As long as people keep paying the prices asked, they are justifying them.
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ResearchMed
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Re: California Homebuying Insanity

Post by ResearchMed »

1rl9DS5gl2 wrote: Sat May 08, 2021 7:19 am I hate to say it, but in the current market, with only $400K for a down payment, you may very well be out of luck. An all cash no contingency offer will always trump you.
Almost always...

There might be some considerations that a seller wants that the other best offer(s) wouldn't agree to, such as an unusual time to closing, renting back for a while, etc.
However, in a hot market, with relatively high end properties, most buyers may be willing and able to meet such requests, too.

But it might be worth mentioning if there is some flexibility that might be attractive to the seller and make sure that is communicated in/with the offer to the seller.

RM
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quantAndHold
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Re: California Homebuying Insanity

Post by quantAndHold »

Tingting1013 wrote: Fri May 07, 2021 9:01 pm
Bungo wrote: Fri May 07, 2021 8:56 pm
poppy42 wrote: Thu May 06, 2021 10:27 pm
Yesterdaysnews wrote: Thu May 06, 2021 10:23 pm Who are these people showing up with $3M cash to buy a house on the spot? Where is this money coming from, the tech industry? I don’t see that kind of liquid folks around where I live.
It’s tech, but it’s also people who bought a while ago and are trading up. They have seen their home values increase by a ton in the last decade. Homes in my current neighborhood were selling for about 400k 10 years ago. Those same houses will now go for 2M. Not an exaggeration.
What neighborhood is this? I bought 9 years ago in San Jose at around 650k, and my house is currently worth roughly 1.6M, which is a 2.5x multiple. Where in the Bay Area is there a 5x multiple vs. 10 years ago? I'm not saying it's false, but if it's true it's not on my radar!
OP is in SoCal
My house in Southern California house has gone up 2x since 2007 ($700k to $1.4m). I live in one of the fastest rising zip codes in the nation. Where is this 5x place, pray tell?
Last edited by quantAndHold on Sat May 08, 2021 8:21 am, edited 1 time in total.
Yes, I’m really that pedantic.
stoptothink
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Re: California Homebuying Insanity

Post by stoptothink »

stan1 wrote: Fri May 07, 2021 8:47 pm
Somethingwitty92912 wrote: Fri May 07, 2021 8:23 pm Your dogmatic view of living in that state is more representative of a reason to not stay there than my polite suggestion to consider somewhere else.
Haha, I've been to the other places, they aren't as nice but a few do come close. Boulder and Incline sure aren't cheap. This whole "I like the four seasons" and "the bugs aren't that bad" thing? Ridiculous when it is sunny and 75 at the beach with no flying or stinging insects anywhere in sight. It's called a sunshine tax for a reason.
Your view certainly is not shared by everybody, just look at the polarization in every California thread. I had to be talked into giving other states a chance and figured I'd be back in California in a year or two; that was 15yrs ago and there is no way you could get me or the wife to move our family back now. OP doesn't seem to mention that other areas are not an option, so it is worth bringing up.
protagonist
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Re: California Homebuying Insanity

Post by protagonist »

willthrill81 wrote: Thu May 06, 2021 1:33 pm I strongly urge you to look at renting a home similar to what you consider buying. In VHCOL areas, renting is nearly always financially superior to owning. Unless you're earning at least $400k-$500k, buying a home in that area is very likely to result in you being house poor. And if the market does turn the other way, you could be upside down very easily. Granted, CA is a non-recourse state, but seeing your home equity vanish and then having your credit destroyed from 'walking away', as some here advocate if that were to happen, is not something you want to experience.
I agree, Will. Unless this couple has a huge amount of savings. A $600K income can vanish instantly if one loses a job, but mortgages do not vanish.
Paying those kinds of premiums above asking price (which I am sure is already way above what it would have been a year ago) seems insane. We are looking for a (much more modest) condo in FL in a MCOL area and everything desirable is going over asking price...but not like that!
Unless they have a huge amount saved and they love the house...then there would be little or no risk involved and if they love the house so much perhaps the money would not matter to them.

And folks (not you, Will), please don't waste the OP's time (as well as everybody else's) by arguing that CA is a bad place to live. Arguments like that are ridiculous. Everybody has a different idea of paradise. To a New Yorker, a small walk-up apartment on a bus line is probably paradise compared with your mansion in the rural Dakotas (which would be hell on Earth to them), and vice versa.
Last edited by protagonist on Sat May 08, 2021 8:16 am, edited 1 time in total.
quantAndHold
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Re: California Homebuying Insanity

Post by quantAndHold »

Cheez-It Guy wrote: Sat May 08, 2021 7:48 am As someone who lives in a rural area in a county that's had shrinking population for four consecutive decades, these threads are almost comically unrelatable. It's like a totally different world. Especially the unspoken suggestion that there are no other viable options. I don't take joy in anyone else's plight, but making $600,000 with expected increases and apparently not being able to purchase a house is so outlandish. Seems like the only way this stops is if enough people get fed up and stop supporting this system as if it's normal. As long as people keep paying the prices asked, they are justifying them.
The issue is not OP’s income, it’s that there is, actually, a housing shortage. Remember the toilet paper shortage? It’s like that. There’s maybe one house for sale in a zip code, and scores of people with pots of money they made in the stock market or from selling another house, all racing around trying to buy a new house before interest rates go up. OP’s big problem is that they don’t have the 40 or 50% down payment they need to comfortably waive the financing contingency and compete.

$600k tech jobs tend to require working, in person, in one of a small number of zip codes, mostly on the west coast. OP could probably make $250k somewhere else, but someone upthread did the math and showed that even with the cost of housing, they still come out ahead.
Yes, I’m really that pedantic.
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Re: California Homebuying Insanity

Post by Firemenot »

quantAndHold wrote: Sat May 08, 2021 8:14 am
Cheez-It Guy wrote: Sat May 08, 2021 7:48 am As someone who lives in a rural area in a county that's had shrinking population for four consecutive decades, these threads are almost comically unrelatable. It's like a totally different world. Especially the unspoken suggestion that there are no other viable options. I don't take joy in anyone else's plight, but making $600,000 with expected increases and apparently not being able to purchase a house is so outlandish. Seems like the only way this stops is if enough people get fed up and stop supporting this system as if it's normal. As long as people keep paying the prices asked, they are justifying them.
The issue is not OP’s income, it’s that there is, actually, a housing shortage. Remember the toilet paper shortage? It’s like that. There’s maybe one house for sale in a zip code, and scores of people with pots of money they made in the stock market or from selling another house, all racing around trying to buy a new house before interest rates go up. OP’s big problem is that they don’t have the 40 or 50% down payment they need to comfortably waive the financing contingency and compete.

$600k tech jobs tend to require working, in person, in one of a small number of zip codes, mostly on the west coast. OP could probably make $250k somewhere else, but someone upthread did the math and showed that even with the cost of housing, they still come out ahead.
As an aside, the toilet paper thing is actually quite different than most people think. There was a completely different supply chain for office/restaraunt/etc toilet paper as compared to residential, with basically no crossover. There was going to be a shortage when huge share of the population stopped spending 8-10 hours a day outside the house. Would have happened regardless. But hoarding was the narrative of the day.
fortunefavored
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Re: California Homebuying Insanity

Post by fortunefavored »

Bungo wrote: Sat May 08, 2021 1:05 am
LilyFleur wrote: Sat May 08, 2021 12:16 am
manatee2005 wrote: Fri May 07, 2021 11:40 pm
Firemenot wrote: Fri May 07, 2021 9:41 am
investingfan wrote: Fri May 07, 2021 9:12 am


OP didn’t ask if he/she should move out of state, but this is a financial forum yada yada. There are pros and cons living in every state. The pros widely outweigh the cons for the 40 million or so Californians. Ever think of that?
Every thread on real estate choices in California has a major percentage of people saying just move out of state. Kind of a broken record and not helpful.
California recorded population loss for the first time since population numbers have been tracked. So it's a solution that many people are taking.
It's true. And, at the same time, there is a huge housing shortage, and house prices are sky high. What gives?
I don't have any statistics, but anecdotally I've heard that the rental market is very slack right now (at least in Silicon Valley): rents are down, and renters are able to demand concessions from landlords, e.g. one of my co-workers persuaded his landlord to install central A/C, which would have been extremely unlikely in the pre-Covid era. So maybe most of those moving out are renters?
Post-2008 bust, huge companies were formed to buy up SFH and turn them into rentals. I expect that is part of the inventory pressure as well. Those companies are thinking long term, so they're in no rush to sell off those rentals, even if that means leaving them empty (much like why you see tons of empty commercial real estate in strip malls, downtowns, etc.. they never significantly lower the rents either.)
Dave55
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Re: California Homebuying Insanity

Post by Dave55 »

We have the same insanity with house prices here in the suburbs of Denver.

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
fortunefavored
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Re: California Homebuying Insanity

Post by fortunefavored »

As someone who recently purchased 1 hour out of a city core on coastal CA and contributed to this insanity:

1) I was planning to quit my career and was circling a generous package (I was actually on my 2nd one-more-year due to COVID) I wanted to buy with a cheap W2 loan
2) My 2 OMY netted me an extra $500K in savings, so "over spending" was painful but not harmful
3) I could have paid cash, but the math said that was unwise
4) My previous home doubled in value since 2007 (admittedly the new house was 50% more, but on 5 acres a few miles from the coast.)
5) My offer was 6% over list, no contingencies, 30 day close. plus the home required $100K of work to get it where we wanted (sellers do not have to fix ANYTHING in the current market and most of the available homes are older and run down.)

So my advice potential coastal-CA-buyers is:
1) I you don't REALLY need to buy, don't buy!
2) If you can't compete without cutting your nose off your face, don't buy!

In this context, the OP should not buy. Save for another couple years and revisit. The money piles up REAL fast with a high income if you keep the lifestyle in check.
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unclescrooge
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Re: California Homebuying Insanity

Post by unclescrooge »

Firemenot wrote: Fri May 07, 2021 11:14 am
lindsayinsf wrote: Fri May 07, 2021 11:05 am
bluebolt wrote: Fri May 07, 2021 10:14 am
Firemenot wrote: Fri May 07, 2021 8:47 am I assumed he was talking tax rates on the margin. The tax rates on the margin are brutal. I’m a CA resident and I pack as much away into deferred comp plans and am hesitant to exercise any options. Someday I’ll take the hit though but it’s just so unappealing.
Yes, paying a large tax bill on even larger gains is totally unappealing. Please gift me your options and I'll be happy to take that burden away from you. :D
+1
Sign me up! :D
Don’t want to hijack thread but I do think about moving to a no income tax state while I exercise my options. Go live in Wyoming or Nevada ski county for awhile and learn to ski on a daily basis. Saved state income taxes would pay for the adventure.
I thought CA FTB was coming after people like that who "earned their options/RSUs" in CA?
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Re: California Homebuying Insanity

Post by Jeepergeo »

Some of the insane home buying in So Cal is being driven by corporate purchases. There are a few former home building investor companies that have found that building new homes is much riskier and less rewarding than owning and renting properties. One of my companies former home building clients went from building 500 to 1000 homes per year to building zero, and in turn directing their capital to buying, fixing, and then renting out properties. Our intel tells us they now have over 30,000 properties across 5 states. They need owned property density for the best success via reduced cost. So 20 properties in a small city is better than 20 spread out, and 20 in a single neighborhood us better than 20 spread out. As they acquire island properties, they hire a local property management company until they acquire enough properties in an area to staff their own PM company.

Bottom line, this sort of company can bid very hard, in cash, especially in areas where they already own some rental homes. And they buy middle to middle high homes...no low end for them.

I suspect they cash buyers you are competing with are the corporate type.
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Re: California Homebuying Insanity

Post by Firemenot »

unclescrooge wrote: Sat May 08, 2021 10:08 am
Firemenot wrote: Fri May 07, 2021 11:14 am
lindsayinsf wrote: Fri May 07, 2021 11:05 am
bluebolt wrote: Fri May 07, 2021 10:14 am
Firemenot wrote: Fri May 07, 2021 8:47 am I assumed he was talking tax rates on the margin. The tax rates on the margin are brutal. I’m a CA resident and I pack as much away into deferred comp plans and am hesitant to exercise any options. Someday I’ll take the hit though but it’s just so unappealing.
Yes, paying a large tax bill on even larger gains is totally unappealing. Please gift me your options and I'll be happy to take that burden away from you. :D
+1
Sign me up! :D
Don’t want to hijack thread but I do think about moving to a no income tax state while I exercise my options. Go live in Wyoming or Nevada ski county for awhile and learn to ski on a daily basis. Saved state income taxes would pay for the adventure.
I thought CA FTB was coming after people like that who "earned their options/RSUs" in CA?
I’m sure they are. To make it work a person would probably need to sell or put a renter in their house and truly locate out of state. And be prepared to pay some lawyers to beat back.

I personally know someone who moved to Jackson Hole a year before a large wealth event to save 10 million in state taxes. He didn’t sell his house in the high tax state but was paranoid about tracking his whereabouts and had a team of advisors. To my knowledge he was fine.
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Re: California Homebuying Insanity

Post by GreendaleCC »

Get a realtor with access to off-market homes that won’t have as much crazy bidding.
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unclescrooge
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Re: California Homebuying Insanity

Post by unclescrooge »

gideon trumpet wrote: Fri May 07, 2021 10:41 pm
poppy42 wrote: Thu May 06, 2021 1:15 pm Hello everyone,

I'm trying to buy a house in a VHCOL area of Southern California, and I'm trying to figure out how I can do this while still respecting Boglehead principles. Everything in this market feels like a ripoff.

The market here is INSANE right now. We're looking at homes in the $1M - $1.6M range, and these homes are routinely going for $100-600K over asking. We were in escrow on a home previously, but pulled out during inspection due to unforeseen major issues (the house ended up getting torn down). Since then, we have been outbid on several homes, mostly by all-cash bidders. There's also very little inventory. Looking in other areas that are cheaper and farther away are not an option with our jobs - we are already considering a wide swath of our metro area of up to a 1-hour commute.

Under usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move. We also don't want to switch schools (and we can't afford to buy in the area where we currently rent - decent houses run about $2M here).

We have $400K in savings dedicated towards down payment, closing, and making up an appraisal shortfall (you pretty much have to waive appraisal contingency to compete in this market). We make $600K a year combined.

It seems freaking ridiculous that a couple making $600K cannot buy a house, but that's been the situation so far. I also fear we will be majorly overpaying for whatever we buy, which will just be disappointing. Is there a way of looking at this that I haven't considered? I'm so frustrated and sad.
You could bite the bullet, pay more than planned, pay PMI if necessary, and make a $2m purchase happen. That is an option. If you find a home that you love, I'm not sure what it means to "overpay." Affordability is all that matters, assuming you value the house more than the cash. But along the same lines, I would caution against buying because you feel that renting a similar property would be throwing money away. If you can rent a $1.5m home in California for $6K/mo, I'd consider that a very good deal for the renter. The difference between that cost and the net cost of ownership is too small to make a dent in your financial picture. So my advice is to buy only if you find a home you love and to view your decision on where to live as a lifestyle choice, not an investment.
If someone is subsiding the rent I would rent. There are times when renting is cheaper than buying, and times when buying is cheaper than renting.

I've been fortunately able to buy whenever buying was cheaper and sell was renting was cheaper.

But home ownership in CA becomes cheaper over time. You can refinance and by extending the term of the loan pay a lower monthly payment. Also prop 13 caps your property tax increases to an affordable 2%.

Personally, my motto has been to buy as soon as possible, and overpay. In 20 years it won't matter.
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unclescrooge
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Re: California Homebuying Insanity

Post by unclescrooge »

Bungo wrote: Sat May 08, 2021 1:05 am
LilyFleur wrote: Sat May 08, 2021 12:16 am
manatee2005 wrote: Fri May 07, 2021 11:40 pm
Firemenot wrote: Fri May 07, 2021 9:41 am
investingfan wrote: Fri May 07, 2021 9:12 am


OP didn’t ask if he/she should move out of state, but this is a financial forum yada yada. There are pros and cons living in every state. The pros widely outweigh the cons for the 40 million or so Californians. Ever think of that?
Every thread on real estate choices in California has a major percentage of people saying just move out of state. Kind of a broken record and not helpful.
California recorded population loss for the first time since population numbers have been tracked. So it's a solution that many people are taking.
It's true. And, at the same time, there is a huge housing shortage, and house prices are sky high. What gives?
I don't have any statistics, but anecdotally I've heard that the rental market is very slack right now (at least in Silicon Valley): rents are down, and renters are able to demand concessions from landlords, e.g. one of my co-workers persuaded his landlord to install central A/C, which would have been extremely unlikely in the pre-Covid era. So maybe most of those moving out are renters?
Innovation homes and American homes 4 rent just announced an 11% increase in rents for vacant properties yesterday.

The rental market between apartments and homes is very different.
d0gerz
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Re: California Homebuying Insanity

Post by d0gerz »

I recently heard of a company that will help homebuyers make a 'cash' offer when they actually don't have the cash for it. For a fee, they will front the cash and give you time to get a mortgage. Could be an option where the competition is all cash offers.

https://www.fastcompany.com/90626724/th ... n-the-bank
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Re: California Homebuying Insanity

Post by willthrill81 »

unclescrooge wrote: Sat May 08, 2021 10:29 am
gideon trumpet wrote: Fri May 07, 2021 10:41 pm
poppy42 wrote: Thu May 06, 2021 1:15 pm Hello everyone,

I'm trying to buy a house in a VHCOL area of Southern California, and I'm trying to figure out how I can do this while still respecting Boglehead principles. Everything in this market feels like a ripoff.

The market here is INSANE right now. We're looking at homes in the $1M - $1.6M range, and these homes are routinely going for $100-600K over asking. We were in escrow on a home previously, but pulled out during inspection due to unforeseen major issues (the house ended up getting torn down). Since then, we have been outbid on several homes, mostly by all-cash bidders. There's also very little inventory. Looking in other areas that are cheaper and farther away are not an option with our jobs - we are already considering a wide swath of our metro area of up to a 1-hour commute.

Under usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move. We also don't want to switch schools (and we can't afford to buy in the area where we currently rent - decent houses run about $2M here).

We have $400K in savings dedicated towards down payment, closing, and making up an appraisal shortfall (you pretty much have to waive appraisal contingency to compete in this market). We make $600K a year combined.

It seems freaking ridiculous that a couple making $600K cannot buy a house, but that's been the situation so far. I also fear we will be majorly overpaying for whatever we buy, which will just be disappointing. Is there a way of looking at this that I haven't considered? I'm so frustrated and sad.
You could bite the bullet, pay more than planned, pay PMI if necessary, and make a $2m purchase happen. That is an option. If you find a home that you love, I'm not sure what it means to "overpay." Affordability is all that matters, assuming you value the house more than the cash. But along the same lines, I would caution against buying because you feel that renting a similar property would be throwing money away. If you can rent a $1.5m home in California for $6K/mo, I'd consider that a very good deal for the renter. The difference between that cost and the net cost of ownership is too small to make a dent in your financial picture. So my advice is to buy only if you find a home you love and to view your decision on where to live as a lifestyle choice, not an investment.
If someone is subsiding the rent I would rent. There are times when renting is cheaper than buying, and times when buying is cheaper than renting.

I've been fortunately able to buy whenever buying was cheaper and sell was renting was cheaper.

But home ownership in CA becomes cheaper over time. You can refinance and by extending the term of the loan pay a lower monthly payment. Also prop 13 caps your property tax increases to an affordable 2%.

Personally, my motto has been to buy as soon as possible, and overpay. In 20 years it won't matter.
I and many others worry about those have to really stretch their finances very thinly in order to be able to buy a home. Many have grown accustomed over the last several decades to seeing prices in the highly populated areas of CA increase by stratospheric levels and believe that this will continue indefinitely or at least for the next decade or two. However, that's not at all certain. CA's population growth rate has now become negative, a first in the state's history. A declining population certainly doesn't mean that prices will ever fall from their current levels or that they won't continue to grow, but a flat or declining population can put downward pressure on real estate prices.

Personally, I'm of the view that what happens to the market value of one's residence shouldn't have much, if any, impact on whether one is able to meet one's long-term financial goals. For yourself and some others in this thread, that is certainly the case, but I really doubt that would be true of the OP nor a large proportion of current buyers in VHCOL areas like SoCal.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
Marseille07
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Re: California Homebuying Insanity

Post by Marseille07 »

willthrill81 wrote: Sat May 08, 2021 10:39 am I and many others worry about those have to really stretch their finances very thinly in order to be able to buy a home. Many have grown accustomed over the last several decades to seeing prices in the highly populated areas of CA increase by stratospheric levels and believe that this will continue indefinitely or at least for the next decade or two. However, that's not at all certain. CA's population growth rate has now become negative, a first in the state's history. A declining population certainly doesn't mean that prices will ever fall from their current levels or that they won't continue to grow, but a flat or declining population can put downward pressure on real estate prices.
I think we need to wait for more granular data (if it ever becomes available) to see which parts of California lost population. It's a big state. Just because CA lost population doesn't mean the Bay Area / SoCal did. Could be mostly from the Central Valley.
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Re: California Homebuying Insanity

Post by willthrill81 »

Marseille07 wrote: Sat May 08, 2021 10:44 am
willthrill81 wrote: Sat May 08, 2021 10:39 am I and many others worry about those have to really stretch their finances very thinly in order to be able to buy a home. Many have grown accustomed over the last several decades to seeing prices in the highly populated areas of CA increase by stratospheric levels and believe that this will continue indefinitely or at least for the next decade or two. However, that's not at all certain. CA's population growth rate has now become negative, a first in the state's history. A declining population certainly doesn't mean that prices will ever fall from their current levels or that they won't continue to grow, but a flat or declining population can put downward pressure on real estate prices.
I think we need to wait for more granular data (if it ever becomes available) to see which parts of California lost population. It's a big state. Just because CA lost population doesn't mean the Bay Area / SoCal did. Could be mostly from the Central Valley.
True. My bigger point was that prices in any area are not destined to indefinitely rise faster than inflation, as some appear to believe, and there is some evidence to suggest that prices at least somewhere in CA may have already peaked.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
shell921
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Re: California Homebuying Insanity

Post by shell921 »

Custom house below me went on the market for $1.9 million in Feb. 2 weeks later it sold for
$2.1 million. I am in a suburb a little northeast of San Diego. A nice planned community in a
great school district.
d0gerz
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Re: California Homebuying Insanity

Post by d0gerz »

Re: CA population loss, it's not about people leaving. As per the news article below, more people leaving CA than moving in from other states has been the case for the last three decades. The decline in 2020 is due to not enough immigration, fewer births, and more deaths, all somewhat related to COVID-19 and not indicative of any long-term trend.

https://abc7.com/california-population- ... /10594297/
State officials say California has seen more people leave than move in from other states for much of the last three decades. However, that had been offset by international immigration and births so that California continued to grow.

That changed in 2020. State officials say a declining birth rate, plus reductions in international immigration and an increase in deaths because of the coronavirus, led to the state's first ever year-over-year population loss.
Last edited by d0gerz on Sat May 08, 2021 10:58 am, edited 1 time in total.
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Re: California Homebuying Insanity

Post by abuss368 »

Read some of the Financial Samurai threads. Sam lives in San Francisco and loves investing in real estate.

https://www.financialsamurai.com/

Tony
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unclescrooge
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Re: California Homebuying Insanity

Post by unclescrooge »

willthrill81 wrote: Sat May 08, 2021 10:39 am
I and many others worry about those have to really stretch their finances very thinly in order to be able to buy a home. Many have grown accustomed over the last several decades to seeing prices in the highly populated areas of CA increase by stratospheric levels and believe that this will continue indefinitely or at least for the next decade or two. However, that's not at all certain. CA's population growth rate has now become negative, a first in the state's history. A declining population certainly doesn't mean that prices will ever fall from their current levels or that they won't continue to grow, but a flat or declining population can put downward pressure on real estate prices.

Personally, I'm of the view that what happens to the market value of one's residence shouldn't have much, if any, impact on whether one is able to meet one's long-term financial goals. For yourself and some others in this thread, that is certainly the case, but I really doubt that would be true of the OP nor a large proportion of current buyers in VHCOL areas like SoCal.
While I know two couples who moved out of state last year (HHI was $350k and $650k), I don't know if this trend will continue. I feel it will not, but if it does you are right. Real estate prices will decline. That would make my incredibly happy. Because otherwise my kids will have to move out of state in 20-25 years or I will have to help buy them homes.

Stretching yourself thin to buy a house is always a bad idea.

As I said before, renting when the rent is subsided is always a good move. Right now renting in CA is most likely a much better deal than buying, even at these low interest rates.

The point I was making about buying as soon as possible was not framed properly. I did not mean that one should buy ASAP in the current market, but rather I meant I bought a home as soon as I could financially. Sorry if this was unclear.
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Re: California Homebuying Insanity

Post by willthrill81 »

unclescrooge wrote: Sat May 08, 2021 10:59 am
willthrill81 wrote: Sat May 08, 2021 10:39 am
I and many others worry about those have to really stretch their finances very thinly in order to be able to buy a home. Many have grown accustomed over the last several decades to seeing prices in the highly populated areas of CA increase by stratospheric levels and believe that this will continue indefinitely or at least for the next decade or two. However, that's not at all certain. CA's population growth rate has now become negative, a first in the state's history. A declining population certainly doesn't mean that prices will ever fall from their current levels or that they won't continue to grow, but a flat or declining population can put downward pressure on real estate prices.

Personally, I'm of the view that what happens to the market value of one's residence shouldn't have much, if any, impact on whether one is able to meet one's long-term financial goals. For yourself and some others in this thread, that is certainly the case, but I really doubt that would be true of the OP nor a large proportion of current buyers in VHCOL areas like SoCal.
While I know two couples who moved out of state last year (HHI was $350k and $650k), I don't know if this trend will continue. I feel it will not, but if it does you are right. Real estate prices will decline. That would make my incredibly happy. Because otherwise my kids will have to move out of state in 20-25 years or I will have to help buy them homes.

Stretching yourself thin to buy a house is always a bad idea.

As I said before, renting when the rent is subsided is always a good move. Right now renting in CA is most likely a much better deal than buying, even at these low interest rates.

The point I was making about buying as soon as possible was not framed properly. I did not mean that one should buy ASAP in the current market, but rather I meant I bought a home as soon as I could financially. Sorry if this was unclear.
100% agree. :beer
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
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Re: California Homebuying Insanity

Post by abuss368 »

unclescrooge wrote: Sat May 08, 2021 10:59 am While I know two couples who moved out of state last year (HHI was $350k and $650k), I don't know if this trend will continue. I feel it will not, but if it does you are right. Real estate prices will decline. That would make my incredibly happy. Because otherwise my kids will have to move out of state in 20-25 years or I will have to help buy them homes.

Stretching yourself thin to buy a house is always a bad idea.

As I said before, renting when the rent is subsided is always a good move. Right now renting in CA is most likely a much better deal than buying, even at these low interest rates.

The point I was making about buying as soon as possible was not framed properly. I did not mean that one should buy ASAP in the current market, but rather I meant I bought a home as soon as I could financially. Sorry if this was unclear.
Very reasonable!
Tony
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stoptothink
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Re: California Homebuying Insanity

Post by stoptothink »

d0gerz wrote: Sat May 08, 2021 10:57 am Re: CA population loss, it's not about people leaving. As per the news article below, more people leaving CA than moving in from other states has been the case for the last three decades. The decline in 2020 is due to not enough immigration, fewer births, and more deaths, all somewhat related to COVID-19 and not indicative of any long-term trend.

https://abc7.com/california-population- ... /10594297/
State officials say California has seen more people leave than move in from other states for much of the last three decades. However, that had been offset by international immigration and births so that California continued to grow.

That changed in 2020. State officials say a declining birth rate, plus reductions in international immigration and an increase in deaths because of the coronavirus, led to the state's first ever year-over-year population loss.
Than wouldn't population have been stagnant all over the west for 2020? That certainly isn't the case, as the 5 states with the greatest population growth in 2020 were Utah, Texas, Idaho, Nevada, and Arizona. Pretty difficult to explain how birth rates, immigration, and the pandemic miraculously only affected California. "State officials" are probably the last people I'd trust to provide an objective opinion on this topic.
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CyclingDuo
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Re: California Homebuying Insanity

Post by CyclingDuo »

poppy42 wrote: Thu May 06, 2021 1:15 pmUnder usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move.
How many square feet and bedrooms does your current super small apartment have?

Think of all the millions that live in major cities (and even smaller cities and towns) throughout the world who spend their entire lives in small apartments with no yard. :beer

We lived in NYC in a one bedroom small apartment, a major European city in a 2 bedroom apartment with 2 kids, and a few other apartment rentals throughout the US (including San Francisco Bay area). After leaving home for college, 24 years of my life was spent living in a small apartment. 28 years for my spouse. Our kids spent their first 10 years, and 8 years of life living in a small apartment - then we bought a house which they enjoyed until they went away to college - now they are grown and back to apartment living life (one in a studio, the other in a 2 bedroom - neither with a yard). Now we are left with this big house with only two of us which involves weekly if not twice a week lawn mowing during the growing season, gardening, snow removal, repairs, non stop maintenance, etc... .

I understand the feeling of living in a super small apartment compared to living in a house with a yard, but just saying the option to wait it out in the apartment until conditions improve (more money saved, housing market supply/demand issues improves, etc....) may be worth any perceived shorter term suffering of small apartment living.

After 18 years of living in and maintaining our house, we are firmly in the camp that a home is not an investment. It's an expense. We wouldn't suggest worrying too much about not getting in one at the moment. :mrgreen:

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
supalong52
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Re: California Homebuying Insanity

Post by supalong52 »

ram wrote: Fri May 07, 2021 9:10 pm
poppy42 wrote: Thu May 06, 2021 1:15 pm Hello everyone,
Under usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move. We also don't want to switch schools (and we can't afford to buy in the area where we currently rent - decent houses run about $2M here).
Most kids handle school change quite well. Our daughter was the state AP scholar and son had a perfect score of 36 on ACT. We moved 4 times and they attended 5 schools in 3 different countries by the time they reached high school.
I went to five different elementary schools, 2 middle schools, and 2 high schools. I did not enjoy the change. That said I still did well academically and in my career. I would have preferred to stay put.
shell921
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Re: California Homebuying Insanity

Post by shell921 »

supalong52 wrote: Sat May 08, 2021 12:29 pm
ram wrote: Fri May 07, 2021 9:10 pm
poppy42 wrote: Thu May 06, 2021 1:15 pm Hello everyone,
Under usual circumstances, I would wait to buy. However, we have a young child who will be starting kindergarten next year, so getting settled soon is a priority. We rent a place that is inexpensive by CA standards, but it's super small with no yard, we've really grown out of it, and we are eager to move. We also don't want to switch schools (and we can't afford to buy in the area where we currently rent - decent houses run about $2M here).
Most kids handle school change quite well. Our daughter was the state AP scholar and son had a perfect score of 36 on ACT. We moved 4 times and they attended 5 schools in 3 different countries by the time they reached high school.
I went to five different elementary schools, 2 middle schools, and 2 high schools. I did not enjoy the change. That said I still did well academically and in my career. I would have preferred to stay put.
My father was in the air force and I went to 4 different schools by the time I was 12! I think the changes enabled me to adapt and adjust but i sure did not like always being the new kid in school while I was doing all that moving.
stan1
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Re: California Homebuying Insanity

Post by stan1 »

GreendaleCC wrote: Sat May 08, 2021 10:20 am Get a realtor with access to off-market homes that won’t have as much crazy bidding.
That may not help for pricing but it may help lower the number of offerors and get yours to the top. You'll have to bid well above what the seller thinks the house would list for in order to convince them to do a private sale without listing. There are a few people who don't want the hassle of listing and showing the house, but in a sellers market you just pre-qualify people before they walk in the door to keep out looky-loos.
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ram
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Re: California Homebuying Insanity

Post by ram »

Most kids handle school change quite well. Our daughter was the state AP scholar and son had a perfect score of 36 on ACT. We moved 4 times and they attended 5 schools in 3 different countries by the time they reached high school.

when you say “most kids”, do you have objective studies to back that up No

or are you simply talking about your own kids? Yes. And about 20 more.

[/quote]
Ram
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ram
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Re: California Homebuying Insanity

Post by ram »

A year or two ago I recall reading a report stating that "The cost of south California housing" had gone down when the currency of payment was a "basket of FAANG stock"
In other words a FAANG stock basket price was climbing up faster than the housing price.

It is not surprising that people not getting paid in FAANG stock are having trouble buying in that area.
Ram
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