4 ms·

I just bought in the Bay Area, and the primary motivator was to basically ensure I was not going to be priced out of the rental market and be forced to move, pu

by gfodor 8y ago

I just bought in the Bay Area, and the primary motivator was to basically ensure I was not going to be priced out of the rental market and be forced to move, pull kids out of school, leave behind friends or career, etc. Or, in the case where the home market increased further, being priced out of being able to buy if/when it made sense. A mortgage is (typically) a fixed monthly payment for 30 or 15 years. The fact the mortgage is a fixed payment provides protection from rental market volatility and also inflation. The main forward risk you have (beyond actually being able to pay the bill) is deflationary risk and changes in property tax policy that would increase your monthly costs to maintaining your ownership. It's an investment only if you plan to sell (of course everyone would sell at the right price, so perhaps its an academic point.) But it's also a way to control risk.

tehlike 8y ago
Alternatively you could find a rent-controlled apartment/condo/whatever, and use its benefits while you invest in real estate elsewhere.
- electriclove 8y ago
  Rent-controlled apartment in the Bay Area?
  - laurencerowe 8y ago
    May be found in: * Berkeley * East Palo Alto * Hayward * Los Gatos * Mountain View * Oakland * Richmond * San Francisco * San Jose https://www.sfchronicle.com/business/article/Bay-Area-rent-control-movement-continues-to-spread-11084978.php https://www.sfchronicle.com/business/article/Bay-Area-rent-c...
    - tehlike 8y ago
      Expect wider scope and more cities if prop 10 passes. Bandaid to the actual problem.
  - tehlike 8y ago
    The sibling comment si right, but expect more cities and wider scope if prop 10 passes (that is, if costa hawkins is repealed).
- scarface74 8y ago
  That’s a great idea if you want to live in one of the four states that have some cities with rent control. http://www.landlord.com/rent_control_laws_by_state.htm http://www.landlord.com/rent_control_laws_by_state.htm As opposed to the entire United States where you can get a fixed rate mortgage and only have to worry about slight fluctuations in property taxes and insurance.
  - dragonwriter 8y ago
    > That’s a great idea if you want to live in one of the four states that have some cities with rent control. Since we're talking about California, and it's one of them, that seems to be a given.
- closeparen 8y ago
  I won’t be shocked if rent control becomes means tested at some point.
  - tehlike 8y ago
    Prop 10 has a chance of passing. It might get worse before it gets better. Rent control is a bandaid to the actual problem of very low inventory and zoning.
ironjunkie 8y ago
you insured yourself against the risk of being priced out, but you now face another huge risk: If there is a big tech crash in the coming years, you might lose your job and still be liable on a Mortgage for a home that lost half of its value.
- scarface74 8y ago
  If the day comes where I can’t find any software development jobs - including contract work anywhere in my large metropolitan area (not Silicon Valley) and cant find remote work, I’ve got bigger issues. Major corporations that still needed development were still hiring here both in 2000 and during the recession. They could be a lot pickier between 2008-2011 and a lot were hiring contractors. My house (brand new build 2 years ago) has a mortgage that’s less than a quarter of my take home pay. I could get a job paying $30K less and still be okay - and my salary is just about the median for my skill level, nothing special.
- gfodor 8y ago
  Your post sure assumes a lot! It would be pretty foolish to take on a mortgage, in general, if a job loss could jeopardize making the monthly payments on time for any reasonable period. Being priced out doesn't necessarily mean "cannot afford" but can also mean "cannot justify paying."
- wahern 8y ago
  Home mortgages are usually nonrecourse loans. You can just walk away.
  - dragonwriter 8y ago
    > Home mortgages are usually nonrecourse loans. In California this is true, plenty of other jurisdictions do allow collection of mortgage deficiencies. But, yeah, you can do that and pay taxes on the forgiven amount. Which, if you're walking away for financial hardship reasons is an extra kick in the teeth, but better than being saddled with the loan.
    - 8y ago

by gfodor 8y ago

tehlike 8y ago

Alternatively you could find a rent-controlled apartment/condo/whatever, and use its benefits while you invest in real estate elsewhere.

electriclove 8y ago
Rent-controlled apartment in the Bay Area?
- laurencerowe 8y ago
  May be found in: * Berkeley * East Palo Alto * Hayward * Los Gatos * Mountain View * Oakland * Richmond * San Francisco * San Jose https://www.sfchronicle.com/business/article/Bay-Area-rent-control-movement-continues-to-spread-11084978.php https://www.sfchronicle.com/business/article/Bay-Area-rent-c...
  - tehlike 8y ago
    Expect wider scope and more cities if prop 10 passes. Bandaid to the actual problem.
- tehlike 8y ago
  The sibling comment si right, but expect more cities and wider scope if prop 10 passes (that is, if costa hawkins is repealed).
scarface74 8y ago
That’s a great idea if you want to live in one of the four states that have some cities with rent control. http://www.landlord.com/rent_control_laws_by_state.htm http://www.landlord.com/rent_control_laws_by_state.htm As opposed to the entire United States where you can get a fixed rate mortgage and only have to worry about slight fluctuations in property taxes and insurance.
- dragonwriter 8y ago
  > That’s a great idea if you want to live in one of the four states that have some cities with rent control. Since we're talking about California, and it's one of them, that seems to be a given.
closeparen 8y ago
I won’t be shocked if rent control becomes means tested at some point.
- tehlike 8y ago
  Prop 10 has a chance of passing. It might get worse before it gets better. Rent control is a bandaid to the actual problem of very low inventory and zoning.

ironjunkie 8y ago

you insured yourself against the risk of being priced out, but you now face another huge risk: If there is a big tech crash in the coming years, you might lose your job and still be liable on a Mortgage for a home that lost half of its value.

scarface74 8y ago
If the day comes where I can’t find any software development jobs - including contract work anywhere in my large metropolitan area (not Silicon Valley) and cant find remote work, I’ve got bigger issues. Major corporations that still needed development were still hiring here both in 2000 and during the recession. They could be a lot pickier between 2008-2011 and a lot were hiring contractors. My house (brand new build 2 years ago) has a mortgage that’s less than a quarter of my take home pay. I could get a job paying $30K less and still be okay - and my salary is just about the median for my skill level, nothing special.
gfodor 8y ago
Your post sure assumes a lot! It would be pretty foolish to take on a mortgage, in general, if a job loss could jeopardize making the monthly payments on time for any reasonable period. Being priced out doesn't necessarily mean "cannot afford" but can also mean "cannot justify paying."
wahern 8y ago
Home mortgages are usually nonrecourse loans. You can just walk away.
- dragonwriter 8y ago
  > Home mortgages are usually nonrecourse loans. In California this is true, plenty of other jurisdictions do allow collection of mortgage deficiencies. But, yeah, you can do that and pay taxes on the forgiven amount. Which, if you're walking away for financial hardship reasons is an extra kick in the teeth, but better than being saddled with the loan.
  - 8y ago