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Which is the more likely way to end up owning a house in the Bay Area? 1) Work in Silicon Valley. You earn 30% more but pay 200% more in rent. It takes you 10

Which is the more likely way to end up owning a house in the Bay Area? 1) Work in Silicon Valley. You earn 30% more but pay 200% more in rent. It takes you 10 years to save a $200k down payment, and in the meantime you have lost 100s of 1000s of dollars on rent. 2) Work in the Midwest. You earn less but pay a third for rent. It takes you 5 years to save a $200k down payment. You then lateral to SV. Ok, I'm biasing the question. But personally I'd prefer to delay gratification rather than delay homeownership.

deleted 10y ago
[deleted]
mahyarm 10y ago
Your math is off. And you can do commute time subsitutes by living in the cheaper areas. You can save that down payment in 5 years probably. With higher incomes come higher saving margins.
- vonmoltke 10y ago
  That is not what I have been seeing. My absolute living expenses would go up about as much as my absolute after-tax income, based on what I could actually get out there (i.e. not a plum Google senior engineering unicorn job).
armenarmen 10y ago
not having to pay california income tax is also a total plus
runT1ME 10y ago
If you're living in Silicon Valley and only making 30% more you're doing it wrong. I'd guess you can make more than 100% more in SV if you're very talented. There's always the regression of the mean if you take everyone. But if you're a rock star, SV is the place to be, otherwise you're leaving a ton of money on the table.
mklim 10y ago
I'm saving much more month to month after moving out to SV than I was making in the Midwest, even though my rent doubled. My compensation is >2x what it was, and all my other expenses outside of rent stayed around the same (my auto insurance actually got cut in half). Granted I did get a job at Google, so the comp is very good.
toast0 10y ago
If you want to own a house in the Bay Area, the best time to buy is during one of the periodic recessions; but it'll be harder to get a relocation package to move to the Bay Area during a recession. With lower house prices, you also need a lower percentage down. My credit union says you can do 3% down on up to $625k of loan. 3% down may not be the best idea, but waiting until you have 20% down can be a lot of waiting if you'd like to buy a house here. Putting a small amount down, means you do have to pay mortgage insurance (which wasn't very expensive in 2009 when I put 10% down), but it gives you a lot of flexibility. If the recession deepens, and you lose your job and the housing market tanks, you can stop paying your mortgage, foreclosure is slower than eviction for not paying rent, and most California foreclosures are nonjudicial where the lender can take the house, but has no claim against any of your other assets. If you resume employment during the foreclosure process, you may be able to cure the default. If you stay employed, you will hopefully at least get cost of living raises, while everyone else's housing costs are going up, yours will be flat -- you can put some of the raises into paying down your mortgage to get a more comfortable equity situation (and get the mortgage insurance removed). When the economy starts to recover and bring housing prices with it, you'll get some equity that way too.
inferiorhuman 10y ago
Ok, why do you want to buy a house? To settle down and start a family? Great. As dysfunctional as California schools are, take a look at the abject horror that Brownback has unleashed on the Kansas educational system. Or Walker on Wisconsin. Or Pence on Indiana. In life, there's more than home ownership.
- epalmer 10y ago
  Living in the far west end of Richmond VA. Public school my kids went to are fantastic. Life does not suck everywhere but SV.
  - inferiorhuman 10y ago
    Sure, but Virginia isn't really the midwest. Once you get closer to the coast you're also looking at areas like the Research Triangle. While wars have been fought over less, you can still get some damn good BBQ in North Carolina. And, yeah, as much trouble as I have with NC politics, I would take North Carolina in a heartbeat over pretty much anywhere in Kansas.
    - epalmer 10y ago
      Of course it is not the midwest but Richmond is also not SV. The point I was making is that there is life outside of SV on many fronts. BTW I make my own BBQ so I have all I need.
- epalmer 10y ago
  Living in the far west end of Richmond VA. Public school my kids went to are fantastic. Life does not suck everywhere but SV.

deleted 10y ago

[deleted]

mahyarm 10y ago

Your math is off. And you can do commute time subsitutes by living in the cheaper areas. You can save that down payment in 5 years probably. With higher incomes come higher saving margins.

vonmoltke 10y ago
That is not what I have been seeing. My absolute living expenses would go up about as much as my absolute after-tax income, based on what I could actually get out there (i.e. not a plum Google senior engineering unicorn job).

armenarmen 10y ago

not having to pay california income tax is also a total plus

runT1ME 10y ago

If you're living in Silicon Valley and only making 30% more you're doing it wrong. I'd guess you can make more than 100% more in SV if you're very talented. There's always the regression of the mean if you take everyone. But if you're a rock star, SV is the place to be, otherwise you're leaving a ton of money on the table.

mklim 10y ago

I'm saving much more month to month after moving out to SV than I was making in the Midwest, even though my rent doubled. My compensation is >2x what it was, and all my other expenses outside of rent stayed around the same (my auto insurance actually got cut in half). Granted I did get a job at Google, so the comp is very good.

toast0 10y ago

If you want to own a house in the Bay Area, the best time to buy is during one of the periodic recessions; but it'll be harder to get a relocation package to move to the Bay Area during a recession. With lower house prices, you also need a lower percentage down. My credit union says you can do 3% down on up to $625k of loan. 3% down may not be the best idea, but waiting until you have 20% down can be a lot of waiting if you'd like to buy a house here. Putting a small amount down, means you do have to pay mortgage insurance (which wasn't very expensive in 2009 when I put 10% down), but it gives you a lot of flexibility. If the recession deepens, and you lose your job and the housing market tanks, you can stop paying your mortgage, foreclosure is slower than eviction for not paying rent, and most California foreclosures are nonjudicial where the lender can take the house, but has no claim against any of your other assets. If you resume employment during the foreclosure process, you may be able to cure the default. If you stay employed, you will hopefully at least get cost of living raises, while everyone else's housing costs are going up, yours will be flat -- you can put some of the raises into paying down your mortgage to get a more comfortable equity situation (and get the mortgage insurance removed). When the economy starts to recover and bring housing prices with it, you'll get some equity that way too.

inferiorhuman 10y ago

Ok, why do you want to buy a house? To settle down and start a family? Great. As dysfunctional as California schools are, take a look at the abject horror that Brownback has unleashed on the Kansas educational system. Or Walker on Wisconsin. Or Pence on Indiana. In life, there's more than home ownership.

epalmer 10y ago
Living in the far west end of Richmond VA. Public school my kids went to are fantastic. Life does not suck everywhere but SV.
- inferiorhuman 10y ago
  Sure, but Virginia isn't really the midwest. Once you get closer to the coast you're also looking at areas like the Research Triangle. While wars have been fought over less, you can still get some damn good BBQ in North Carolina. And, yeah, as much trouble as I have with NC politics, I would take North Carolina in a heartbeat over pretty much anywhere in Kansas.
  - epalmer 10y ago
    Of course it is not the midwest but Richmond is also not SV. The point I was making is that there is life outside of SV on many fronts. BTW I make my own BBQ so I have all I need.
epalmer 10y ago
Living in the far west end of Richmond VA. Public school my kids went to are fantastic. Life does not suck everywhere but SV.