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I realize this headline is meant to be inflammatory (look at those entitled people who get it all!), but this practice already exists for medical doctors: http:

I realize this headline is meant to be inflammatory (look at those entitled people who get it all!), but this practice already exists for medical doctors: http://whitecoatinvestor.com/personal-finance/the-doctor-mortgage-loan/ http://whitecoatinvestor.com/personal-finance/the-doctor-mor... Basically: "you're about to have a high income and—as a class—have a very low default rate. We'll let you put 0% down and not count your student debt against you". Usually before you get your first paycheck (just need to show them the contract). FWIW I'd argue that tech workers are—financially speaking—much more varied than doctors, who generally exit residency, get a position (sometimes in a new city) and see their income skyrocket. So I can't say this is perhaps as justifiable an idea as it is for new doctors, but I can buy the rationale for certain workers. If you're in the boat of "I could afford a mortgage around here, but would take years to save a huge downpayment on these prices", the doctor mortgage can be a great thing. Not least of all because it's not always savvy to make a big downpayment: http://themortgagereports.com/18520/20-percent-downpayment-risk-mortgage-interest-rate http://themortgagereports.com/18520/20-percent-downpayment-r...

patcheudor 10y ago
I found it to be a particularly interesting headline because I thought such things were normal. When I bought my home in 2004 it was not only zero down but on a 7/1 interest only arm at just 1 point above the basis rate with a maximum increase over the life of just 4 points. As a bonus I got $50K out to pay off the boat. Needless to say when the housing market crashed I wasn't freaked out because I had effectively nothing to loose. Sometimes not having any money invested, especially for the first decade or so can be a relief if one must consider a strategic default of the mortage.
- refurb 10y ago
  When I bought my home in 2004 I think the "2004" in your reply is key. Crazy things were happening back then and as you called out, the housing market crashed. I think what freaks people out is that only ~8 years out from the crash, you can already see lending standards getting more relaxed. Didn't we learn anything last time? Not to mention the number of people I've talked to that said "housing always goes up, it's a great investment!". In less than a decade people have gone from "housing sucks" to "it will never go down". Amazing.
  - patcheudor 10y ago
    Yeah, in my case I was far from a sub prime borrower. When everyone's rates adjusted up in the 2007-2009 timeframe mine went down. I was using a responsible mortgage tool. The problem was, people without an 850 credit rating were getting these same loans without great terms upon adjustment.
  - freyir 10y ago
    > Not to mention the number of people I've talked to that said "housing always goes up, it's a great investment!". "One inflation-adjusted value index between 1928 and 2012 placed the annual rate of appreciation for real estate prices at just 0.2%." [1] Overall, real estate has historically been a bad investment. That said, it does seem like there have been obvious indicators when an particular area is becoming a more desirable place to live, and when home prices are likely to go up significantly in the future. Although I imagine people have been hard at work modeling and forecasting this, and current prices will better reflect future appreciation (if this hasn't already happened). [1] http://www.investopedia.com/ask/answers/052015/which-has-performed-better-historically-stock-market-or-real-estate.asp http://www.investopedia.com/ask/answers/052015/which-has-per...
    - refurb 10y ago
      Housing looks like a bad investment overall, but housing is local. I have no doubt you can make good money off of a house in a "up and coming" city. The challenge is, how do you identify an "up and coming" city? Is it the same way you identify and "up and coming" stock? It's all just attempting to time the market.
- liveoneggs 10y ago
  I also bought a house around 2004 with $0 down and actually received a $5000 check when I closed!
freyir 10y ago
Generalist doctors have a median salary of ~$200k, with specialists earning a median salary of ~$300k. The lenders will have an easier time vetting doctors since almost all of them make a high income with good job security. By contrast, developers have a median salary of ~$95k nationwide and ~$110k in San Francisco according to Glassdoor (or $65k nationwide and $103k in San Francisco according to Payscale). Of course, some make much more, typically through stock options. So lenders are probably filtering by occupation and employer (e.g. Google, Facebook, etc.). I'll trust that the lenders are competent to determine whether someone with with a ~$150k salary is a strong candidate to buy a $2M house with no downpayment. Housing lenders haven't shown poor judgement in the past (edit: /s).
- Throwaway23412 10y ago
  >Housing lenders haven't shown poor judgement in the past. I'm going to assume that this is sarcasm. (If it's not sarcasm, keep in mind all the nonsensical loans that were being given out pre-2008.)
  - deleted 10y ago
    [deleted]
eli_gottlieb 10y ago
I don't find the headline inflammatory, nor think the tech-workers are being entitled. I think this practice is a sign of how far the Bay Area housing market has blown up, and how close the Area is to a debt crisis when the unrealistic mortgages can't be paid.

patcheudor 10y ago

I found it to be a particularly interesting headline because I thought such things were normal. When I bought my home in 2004 it was not only zero down but on a 7/1 interest only arm at just 1 point above the basis rate with a maximum increase over the life of just 4 points. As a bonus I got $50K out to pay off the boat. Needless to say when the housing market crashed I wasn't freaked out because I had effectively nothing to loose. Sometimes not having any money invested, especially for the first decade or so can be a relief if one must consider a strategic default of the mortage.

refurb 10y ago
When I bought my home in 2004 I think the "2004" in your reply is key. Crazy things were happening back then and as you called out, the housing market crashed. I think what freaks people out is that only ~8 years out from the crash, you can already see lending standards getting more relaxed. Didn't we learn anything last time? Not to mention the number of people I've talked to that said "housing always goes up, it's a great investment!". In less than a decade people have gone from "housing sucks" to "it will never go down". Amazing.
- patcheudor 10y ago
  Yeah, in my case I was far from a sub prime borrower. When everyone's rates adjusted up in the 2007-2009 timeframe mine went down. I was using a responsible mortgage tool. The problem was, people without an 850 credit rating were getting these same loans without great terms upon adjustment.
- freyir 10y ago
  > Not to mention the number of people I've talked to that said "housing always goes up, it's a great investment!". "One inflation-adjusted value index between 1928 and 2012 placed the annual rate of appreciation for real estate prices at just 0.2%." [1] Overall, real estate has historically been a bad investment. That said, it does seem like there have been obvious indicators when an particular area is becoming a more desirable place to live, and when home prices are likely to go up significantly in the future. Although I imagine people have been hard at work modeling and forecasting this, and current prices will better reflect future appreciation (if this hasn't already happened). [1] http://www.investopedia.com/ask/answers/052015/which-has-performed-better-historically-stock-market-or-real-estate.asp http://www.investopedia.com/ask/answers/052015/which-has-per...
  - refurb 10y ago
    Housing looks like a bad investment overall, but housing is local. I have no doubt you can make good money off of a house in a "up and coming" city. The challenge is, how do you identify an "up and coming" city? Is it the same way you identify and "up and coming" stock? It's all just attempting to time the market.
liveoneggs 10y ago
I also bought a house around 2004 with $0 down and actually received a $5000 check when I closed!

freyir 10y ago

Generalist doctors have a median salary of ~$200k, with specialists earning a median salary of ~$300k. The lenders will have an easier time vetting doctors since almost all of them make a high income with good job security. By contrast, developers have a median salary of ~$95k nationwide and ~$110k in San Francisco according to Glassdoor (or $65k nationwide and $103k in San Francisco according to Payscale). Of course, some make much more, typically through stock options. So lenders are probably filtering by occupation and employer (e.g. Google, Facebook, etc.). I'll trust that the lenders are competent to determine whether someone with with a ~$150k salary is a strong candidate to buy a $2M house with no downpayment. Housing lenders haven't shown poor judgement in the past (edit: /s).

Throwaway23412 10y ago
>Housing lenders haven't shown poor judgement in the past. I'm going to assume that this is sarcasm. (If it's not sarcasm, keep in mind all the nonsensical loans that were being given out pre-2008.)
- deleted 10y ago
  [deleted]

eli_gottlieb 10y ago

I don't find the headline inflammatory, nor think the tech-workers are being entitled. I think this practice is a sign of how far the Bay Area housing market has blown up, and how close the Area is to a debt crisis when the unrealistic mortgages can't be paid.