3 ms·

"Exceptions include the Silicon Valley area in California, where homeowners and renters each devote 42 percent of income to housing costs." Single engineers an

by smoyer 11y ago

"Exceptions include the Silicon Valley area in California, where homeowners and renters each devote 42 percent of income to housing costs." Single engineers and DINKs in the SF area should be buying if they're expecting to stay any real length of time. Price corrections when the housing market collapsed may not have helped SF like it did in other areas of the country but mortgage rates are dirt cheap and rent versus own pricing is at parity.

drewg123 11y ago
My family and I lived in Mountain view for 2 years. We knew we'd only be there for a year or two, and decided to rent, not buy. After two years, we'd sunk $120K into our rental. Meanwhile, a friend bought a house at the same time for $1.3M and sold it just before we left for $1.6M. Even after real estate commissions, taxes, mortgage interest (which is tax deductible) and upkeep, I'm sure he came out well ahead of us.
- mlpinit 11y ago
  The market doesn't always move in that direction. Your friend could have been in a much different position if he invested at a different point in time. If you take into account the real estate commission + recordation fees, your friend probably payed about 120k-130k. Also take into account the mortgage interest and the opportunity cost of the money he could have otherwise invested in this crazy bull market and your friend probably just barely broke even. This is in a great market, imagine what would have happened in a bad market to him...
- abalashov 11y ago
  Your friend just got lucky. I bought in May of 2007 and ended up $50k underwater with a 6.5%/8.25% mortgage.
hkarthik 11y ago
I totally agree. I just moved my family of 4 to the Bay Area and we chose to just buy outright, despite the huge sticker shock and more limited availability. To meet our needs (space + good schools + public transit commutes to SF) we were looking at upwards of $4K/month to rent a dilapidated shack where we'd likely have to give up our family dog to qualify as renters. And then be subject to 4-5% increases per year from the landlords. Paying an extra $1K/month and getting both the mortgage interest deduction + property tax deduction made far more financial sense. And we actually got more choices in terms of better quality housing for our family.
twright0 11y ago
> mortgage rates are dirt cheap and rent versus own pricing is at parity. I think you're discounting the down payment factor. As a single engineer in SF, I could afford the monthly payment on a mortgage, but putting down 20% of a $1m house is beyond me and probably will be for a while (a few years). The other trick is concern about this being the peak or close to the peak of the housing bubble in SF - so if I drop that kind of cash into a house, the market might collapse leaving me with property worth substantially less than what I'm paying.

by smoyer 11y ago

drewg123 11y ago

My family and I lived in Mountain view for 2 years. We knew we'd only be there for a year or two, and decided to rent, not buy. After two years, we'd sunk $120K into our rental. Meanwhile, a friend bought a house at the same time for $1.3M and sold it just before we left for $1.6M. Even after real estate commissions, taxes, mortgage interest (which is tax deductible) and upkeep, I'm sure he came out well ahead of us.

mlpinit 11y ago
The market doesn't always move in that direction. Your friend could have been in a much different position if he invested at a different point in time. If you take into account the real estate commission + recordation fees, your friend probably payed about 120k-130k. Also take into account the mortgage interest and the opportunity cost of the money he could have otherwise invested in this crazy bull market and your friend probably just barely broke even. This is in a great market, imagine what would have happened in a bad market to him...
abalashov 11y ago
Your friend just got lucky. I bought in May of 2007 and ended up $50k underwater with a 6.5%/8.25% mortgage.

hkarthik 11y ago

I totally agree. I just moved my family of 4 to the Bay Area and we chose to just buy outright, despite the huge sticker shock and more limited availability. To meet our needs (space + good schools + public transit commutes to SF) we were looking at upwards of $4K/month to rent a dilapidated shack where we'd likely have to give up our family dog to qualify as renters. And then be subject to 4-5% increases per year from the landlords. Paying an extra $1K/month and getting both the mortgage interest deduction + property tax deduction made far more financial sense. And we actually got more choices in terms of better quality housing for our family.

twright0 11y ago

> mortgage rates are dirt cheap and rent versus own pricing is at parity. I think you're discounting the down payment factor. As a single engineer in SF, I could afford the monthly payment on a mortgage, but putting down 20% of a $1m house is beyond me and probably will be for a while (a few years). The other trick is concern about this being the peak or close to the peak of the housing bubble in SF - so if I drop that kind of cash into a house, the market might collapse leaving me with property worth substantially less than what I'm paying.