October 9, 2008

Silicon Valley full of patriots – not house-poor

In Silicon Valley, more homeowners are spending more than half their income on housing – San Jose Mercury News
Over the last four years, the number of Santa Clara County homeowners who spend over half their income on housing climbed by 26 percent, to more than one in five households with a mortgage, a Mercury News analysis of newly released census data shows.

Devoting a majority of your income to housing is one definition of “house-poor”; people are often advised to figure on 30 percent as the right proportion. Despite the Bay Area’s affluence, economists say the growing mortgage burden is a cause for concern as the economy teeters and credit markets lock up. While having large numbers of households that spend so much on housing doesn’t necessarily increase the risks of a recession, it could worsen the consequences of one.

How dare the MSM (Main Street Media) refer to these people as being house-poor. These people are keeping our economy going. They are the true patriots of America.

Figures the elitist out of touch media would dump on them.

Frankly, it seems to me we should have a parade for these folks!

Comments (67) -- Posted by: burbed @ 5:15 am

67 Responses to “Silicon Valley full of patriots – not house-poor”

  1. vfsv Says:

    On the other hand, flippers are still out there trying to make big bucks at our expense. You can read the latest chapter of their travails in our negihborhood at:
    http://www.viewfromsiliconvalley.com/id451.html

    Thanks!

  2. Herve Says:

    > They are the true patriots of America.

    And yet most of them are foreigners!

    > we should have a parade for these folks!

    How about a Homeowner Pride?

  3. bob Says:

    “And yet most of them are foreigners!”

    Not anymore. Iceland is bankrupt. Ireland now has a nationalized banking system. Germany, France, the UK, Spain, Italy, and Japan all have major problems on par with our banking system and are also tailoring bailout plans. So… if them there foreigners aren’t going to save the day… who will?

    Spending 50% of your income on a house is stupid. It shows that too many people bought the lie that a house is the best investment you can make. These folks will retire dirt-poor.

  4. zanon Says:

    But this is for Santa Clara, not the RBA. It remains unknown how levered the 26,000 housing unit in Palo Alto, for example, are

    -zanon

  5. sonarrat Says:

    Interesting tidbit reported by the WSJ yesterday: the San Francisco metro area only has to drop another 3.9% before it reaches its historical affordability level. That’s a wash. So you’d only be as crazy to buy now as you would have been at any point in the past half-century or so, though I can easily see prices dropping to the point where they’re more affordable than the historical average.

  6. bob Says:

    I totally agree Sonarret. I have a friend who for some reason is desperate to buy a house in SF. Most of the homes he’s looking at are around 800k-1.5 million, and these are sort of shabby looking homes in my opinion. The WSJ piece is probably pulling stats from historical data from when the economy was actually functioning. The economy in the Bay Area has been strong for the better part of over 30 years. The economy that appears to be coming upon us should call all bets off on affordability.

    I also agree that right now is a totally stupid time to be buying a house. I’d much rather wait to see if the economy is going to slide into a depression or recession first before I think about luxuries such as houses, and especially houses that are still priced for a totally different economy than exists now. There is now far more pressure for prices to fall.

  7. anon Says:

    ” These folks will retire dirt-poor.”

    Lol – hopefully. We may be on the brink of seeing the social contract (myth) of ever-escalating home prices go out the window. Irvine housing blog has a nice article on this subject: http://www.irvinehousingblog.com/blog/comments/the-california-social-contract/

    “I’d much rather wait to see if the economy is going to slide into a depression or recession first before I think about luxuries such as houses, and especially houses that are still priced for a totally different economy than exists now.”

    Bob, I don’t know if a house is considered a luxury. Some are, but generally, its something people need like food.

    What we have in the bay area is a bunch of junkers at luxury home prices. Why people keep buying them, I don’t know. Especially since guaranteed appreciation has gone out the window. No matter. As the great Real Estater said, don’t concern yourself with the market. The really is no information to be gleaned from the “RBA.” As I said before, its the exception to the rule, and its absolutely the minority.

  8. nomadic Says:

    ” These folks will retire dirt-poor.”

    Lol – hopefully.

    I didn’t realize you were such a fan of schadenfreude.

  9. anon Says:

    Lol I thought that would be assumed from what I write. It’s not entirely accurate, however. It’s not pleasure, its just … nothing.

    The closest thing would be disappointment. Disappointment from watching a country that was once great be run into the ground by overindulgence.

    Anyway, in the aggregate, these are the same people who live overindulgent lives and expect the next generation to foot the bill.

    Why should they get to overindulge during their working lives, and then continue this when they retire? Their excesses are what priced out working, educated people like Bob. A software engineer has to drive 80 miles a day just to work. That’s garbage.

    Please tell me what I’m missing…

  10. nomadic Says:

    You’re missing the millions of people who don’t live lives of avarice and greed yet are being devastated by this turn of events. But I’m sure you know that part.

    More locally, there are many, many people just like Bob except they are/were willing to make the sacrifices to buy houses. Does that make them overindulgent? I don’t think so.

  11. DreamT Says:

    anon – “A software engineer has to drive 80 miles a day just to work.”
    Now THAT is garbage. If bob is truly a skilled engineer, he certainly can afford to rent nearby his work.
    Woops what just happened to the DOW?

  12. nomadic Says:

    yeah, saw that too – the closing bell crash.

    Just when I thought (no, hoped) it couldn’t drop any more…

  13. bob Says:

    Buying homes right now seems like a luxury because if the market has another month of 200-500 drops, we won’t have a market period. This thing is blowing up to monumental proportions to where its actually sort of scary.Buying a home this minute seems to be a choice that misplaces priorities. In times like these, it pays to be flexible and not have a house you have to sell to an increasingly less qualified and confident consumer base.

    It makes me angry in a way. I’m not alone in saying that me and many other people thought the housing bubble was dangerous, ignorant, and counterproductive. Its the tip to an enormous mountain of debt we’ve accumulated as a nation over the last 25 years. Now that the piper has come to collect his dues, the bill is becoming gigantic. So now that I remember all those people who were hyping and cheering housing, especially in places like SF where the prices grossly outpaced real incomes, it makes me even more angry because We are all going to pay DEARLY for these mistakes for years to come. I will be paying for the greed and ignorance of people I greatly disagreed with years ago.

    So for everyone who thought that home prices in regards to income wasn’t important,It is DAMNED important and YES it DOES matter! Its PAYBACK time in a huge way. That’s what you get when you have a population that’s totally economically retarded.

  14. RealEstater Says:

    Bob,

    If everything comes crashing down, how will you pay dearly? If anything you will profit dearly, since you may be able to buy a house at a discount. In other words, what’s the complaint if you get what you wished for?

  15. DreamT Says:

    bob was angry when the bubble was building up, now he’s “even more angry” as the bubble deflates. Soon he’ll go postal.

  16. bob Says:

    RE,
    Seriously, even if everything comes crashing down, what sort of environment will the US be in? That’s an extreme that I seriously doubt will come close to occurring. There have been many steps made over the last week that will probably create positive traction in the coming weeks. Basically, the banking system might ultimately become more nationalized. If that be the case, then confidence will be restored.

    But right now is not the time to be buying houses. For one, the direct effect on housing prices will not be immediate. If this thing gets nasty, prices will likely fall heavily over the next year or so. As prices are set now, they’re at more “healthy” economy levels. The economy has dramatically fallen in just a week.

    Another way to look at it is this. The big story today was that GM, Ford, and Chrysler are in deep trouble because for one, nobody can qualify at the moment for the credit needed to buy their products. That should tell you something. If people can’t afford 20,000 cars, then they’re likely not going to qualify for houses. The credit market is entirely locked up.

    So the only way to buy if that be the outcome would be with cash and to buy the majority of the house, which I don’t intend to do.

    And yes- we will ALL pay for this. Inflation is going to go through the roof. Job will get cut, and wages will go down.

  17. anon Says:

    “anon – “A software engineer has to drive 80 miles a day just to work.”
    Now THAT is garbage. If bob is truly a skilled engineer, he certainly can afford to rent nearby his work.
    Woops what just happened to the DOW?”

    Lol. Agreed. It’s his choice and I have no idea why one would subject themselves to a commute like that. That’s just me. This all comes back to the median price vs. median income discussion. The quality of life afforded to a young professional here is quite low. Wouldn’t you agree?

    “You’re missing the millions of people who don’t live lives of avarice and greed yet are being devastated by this turn of events. But I’m sure you know that part.

    I know, but in the aggregate, the majority did exhibit the behaviors I am talking about. If they hadn’t, we wouldn’t be having this “crisis” right now.

    More locally, there are many, many people just like Bob except they are/were willing to make the sacrifices to buy houses. Does that make them overindulgent? I don’t think so.”

    No, it doesn’t. The priced-in people are the ones that I feel sorry for. They were ‘forced’ to pay ridiculous prices because of other people’s excesses.

  18. anon Says:

    “And yes- we will ALL pay for this. Inflation is going to go through the roof. Job will get cut, and wages will go down.”

    I get a warm fuzzy feeling watching Bob destroy RE. Go bob.

  19. RealEstater Says:

    Bob,

    The greatest opportunities exist during times of the greatest turmoil. I believe one can prosper more during these times than during the bad times. The key idea is that you need to think about the bad times during the good times, and vice versa. If you follow this mode of opearation, you’d not panic during a crash, and not get too excited during a bubble.

    Earlier in the year, I told everyone I sold all my stocks and held cash. I’m not saying I predicted the current events, but I certainly prepared for it. Back in 2003, people were saying the same thing you’re saying. “Home prices are too high! Economy is weak, why do you want to buy a house?” Those people are priced out now.

  20. anon Says:

    “More locally, there are many, many people just like Bob except they are/were willing to make the sacrifices to buy houses. Does that make them overindulgent? I don’t think so.”

    More on this, the flippant response I have is: “No, it makes them suckers.” 😉

    In all seriousness, timing the market is nearly impossible, so there is no way to know. Myself – I thought something like this would happen years ago. I really do feel for these people who just wanted homes.

    It’s very interesting how, if our buddy RE had bought his ‘starter home’ more recently, he’d be speaking a different tune. Certainly he wouldn’t be touting his success to good financial decisions rather than luck. We all know that if he were just starting out, he’d buy property as soon as he can – even in this market. After all, “Real Estate doubles every 10 years. This is a fact.” In 15 years when he’s still underwater on his first home, I’m sure he’ll state that luck had nothing to do with it…

  21. DreamT Says:

    “The quality of life afforded to a young professional here is quite low. Wouldn’t you agree?”
    That may surprise you, but I don’t really have an opinion on that. We are happy with reading, watching movies and series, hiking, going to the beach, walking around the neighborhood’s park, bringing our son to the library for story time or to the SJ children museum, etc. All of which is pretty much free. If we decide to watch a symphony, an opera or go to a restaurant, to a bookstore or to a mall, we have ample choice. As long as our neighborhood is safe (which it is), I have difficulty complaining about quality of life.

  22. cardinal2007 Says:


    Back in 2003, people were saying the same thing you’re saying. “Home prices are too high! Economy is weak, why do you want to buy a house?” Those people are priced out now.

    Seriously prices on average in Bay Area now are at most 10.6% higher than they were in 2003 (5+ years ago), if you haven’t been prudent in saving money in the meantime I guess you deserved to be priced out. Note the Dow even today is higher than in 2003. You really have to have screwed up to be priced out now and not in 2003. Jobs are still more abundant, and incomes higher than in 2003.

  23. anon Says:

    I don’t complain either, but imagine if you were a fresh grad making 65-70k. If you are looking for a VP level position, you’re well beyond a fresh college grad stage.

    Here’s an example: A friend of mine’s son graduated in 2003 as a Computer Engineer. Graduated UC School with a 3.9 GPA. It took him 6 months to find a job as a programmer where he was making $35,000 a year. His rent was $1,150. Now, I don’t know exactly what paychecks would be for that, but I would guess he was spending around 50% of his take home pay on rent. Is that not crazy?

    I don’t believe people should lives of excess, but I do believe that a college educated person shouldn’t face the choice of either renting or living in the ghetto.

  24. DreamT Says:

    anon – When I just graduated (1998), we lived in a studio for one year in Daly City ($895 rent). We slept on the carpet at first and got a TV+VCR after five months, our first year’s major purchase.
    It never came to our mind to complain about quality of life – you just start small and save. I disagree with you that just because you have a Master’s degree you’re somehow entitled to less hardship when you start working. The only difference is you may upgrade more quickly than folks with less diplomas if you save wisely.

  25. anon Says:

    So, that studio you were in is probably comparable to what was renting in 2003 for 1150.

    Now, you say ‘we.’ So I figure there is a significant other involved. Imagine if you were doing it on your own. If it took you 5 months to save for a tv with two incomes…extrapolate that for this guy.

    Let’s play with some numbers: $35,000/12 = 2916.6 $/month. Assume tax rate of 40%. Monthly take home pay: 2916.6*.6=1749.96/2 = $874 per paycheck.

    1700 bucks a month and his rent was 1150. Let’s say there’s 300 for food, and you’ve got 250 for utilities, car, etc. He’s certainly not going to land a trophy wife on that salary 😉

    I guess it comes down to the fact that I believe in rewarding delayed gratification. The four years spent learning and not earning should be rewarded with something more than barely scraping by. This is why I have no idea why young people are staying here.

  26. anon Says:

    I guess it all comes back to weather and tech opportunities…

  27. DreamT Says:

    anon – Wife was going to city college towards an ESL teaching degree. Consider it one income supporting two people. In any case we settled in the bay area simply because her family is here.

  28. RealEstater Says:

    >>Let’s play with some numbers: $35,000/12 = 2916.6 $/month. Assume tax rate of 40%.

    Wait a second. Who pays 40% tax rate for $35K annual income?

  29. anon Says:

    “Wait a second. Who pays 40% tax rate for $35K annual income?”

    Beats me – what is the tax rate for that income?

  30. DreamT Says:

    anon – We had $500/month food but $70/month utilities. We had a $289 car payment as well. After one year we had saved 23% of our net income. You talk about rewarding delayed gratification but don’t seem to have much patience for, say, a 5-year delay.

  31. cardinal2007 Says:

    This is why I have no idea why young people are staying here.

    Seriously, where else do 25yr-olds make almost 6 figures straight out of school?

    Rent is also not that much higher in comparison to other major areas with this kind of job market.

  32. RealEstater Says:

    anon,

    No such thing as 40% tax rate:

    http://www.moneychimp.com/features/tax_brackets.htm

  33. anon Says:

    “We had $500/month food but $70/month utilities. We had a $289 car payment as well. After one year we had saved 23% of our net income. You talk about rewarding delayed gratification but don’t seem to have much patience for, say, a 5-year delay.”

    So, you had 968 in rent, 500 food and 70 utilities. That would leave someone making 35k a year with $150 for everything else. A flat tire that month means nothing is saved.

    I do talk about delayed gratification. 4 years of college leaves one more to make 5. After one year, what is a person who starts at 35k making? 40 if they’re lucky? Another 5k a year increase his take home pay…$200?

    Compare this to what a real estate broker makes…

    “Seriously, where else do 25yr-olds make almost 6 figures straight out of school?”

    I wasn’t aware this was commonplace anymore. Maybe I am wrong.

  34. cardinal2007 Says:

    For fresh CS grads:
    The median salary offer with a MS is 85k, with a BS is 75k. So 35k is way low.

    With regards to the rent when I compared the $1300 I paid for a 1 bd last year vs my friend in Reston, VA paying $1200 they are about the same. The $1200/yr is not that large a difference.
    If buying though there is a huge difference. Over there a 2bd condo built late 1980s will cost you $220-240k. Here a 2bd condo built late 1960s will cost you $380-440k most likely.

  35. cardinal2007 Says:

    I need to qualify again, For fresh CS grads from a top school. Cornell, CMU, Cal, Stanford, MIT, …

  36. anon Says:

    “If buying though there is a huge difference. Over there a 2bd condo built late 1980s will cost you $220-240k. Here a 2bd condo built late 1960s will cost you $380-440k most likely.”

    This brings me back to my original point.

    A fresh grad’s options are: Rent or buy in the ghetto.

  37. crossroads Says:

    my cousin just graduated from a so cal UC. he just started last month at a major tech company with just a bs degree. very average kid. i’m surprised he graduated actually.

    starting salary? $85k.

    i kid you not.

  38. DreamT Says:

    anon – I was in the 50k-60k range, so halfway between your 35k and crossroads’s 85k. Expect salary to increase about 5% – 7% a year in average if you invest yourself in your company and keep up with technology. Lower qualification jobs have a lower average % increase. I did mean 5 years after graduation. Your hurry has more than a little sense of entitlement to it.

  39. DreamT Says:

    As for what a real estate broker makes, I suspect in average across the industry in the bay area and over the past ten years, it is WAY less than the average software engineer. Plus it’s a SALES job. How many people have the skills to do either software development or sales?

  40. anon Says:

    Interesting. “My” sense of hurry?

    Strange that the median salary appears to be about what fresh grads are making. The income/home price ratio is still out of wack. Are you disputing this?

  41. anon Says:

    ” How many people have the skills to do either software development or sales?”

    I don’t know what this means. An engineer should make more than a salesman, no?

  42. DreamT Says:

    “A fresh grad’s options are: Rent or buy in the ghetto.”
    I just can’t understand why you think a fresh grad should be able to buy a house, anywhere. We bought a condo after five years of saving and renting and consider ourselves unusually lucky. It typically takes more like 7 to 10 years of work to afford anything back where I’m from, and the job market is nothing to clamor about.

  43. DreamT Says:

    “An engineer should make more than a salesman, no?”
    No way. A skilled engineer should make more than an unskilled sales man. A skilled salesman should make more than an unskilled engineer. Same with engineers and managers – would you be shocked if you make more than your manager, if he’s somewhat green and you’re senior at your respective positions? Different job, different skills, different job markets.

  44. anon Says:

    Point taken. Now, I’m out of my element here, but look at this:

    Where does the irvinehousing blog guy get his numbers? He’s got a home up today and he breaks it down like this:

    Asking Price: $689,000
    Income Requirement: $172,250
    Downpayment Needed: $137,800

    I guess this is pretty consistent with what you’re saying. 10 years to save $140k?

  45. DreamT Says:

    “Strange that the median salary appears to be about what fresh grads are making.”
    I have my doubts about the median fresh grads income.

    “The income/home price ratio is still out of wack. Are you disputing this?””
    I wrote my opinion at length about this. Home price is a function of wealth, income, mortgage rates and access to credit, not income alone. Income drives loan amount approval, wealth drives the down-payment. Local incomes are 100% relevant only when local residents buy local homes, but most folks who purchase a house in the bay area were previously living in another city, so local income as a measure of affordability isn’t very relevant.

  46. anon Says:

    Well, the money’s got to come from somewhere, and we’re watching a lot of people’s vaporize right now.

  47. DreamT Says:

    anon – Well if you gamble your downpayment in stocks instead of parking it in CDs, don’t be surprised if it vanishes. 😀

  48. anon Says:

    Hence the porsche.

  49. DreamT Says:

    Just hope an uninsured illegal immigrant doesn’t rear-end your Porsche a week after you get it – as happened to us in Sunnyvale’s Fremont exit.

  50. cardinal2007 Says:


    “Strange that the median salary appears to be about what fresh grads are making.”
    I have my doubts about the median fresh grads income.

    Not everyone is a engineer or programmer.

    Local incomes are 100% relevant only when local residents buy local homes, but most folks who purchase a house in the bay area were previously living in another city, so local income as a measure of affordability isn’t very relevant.

    That would mean that prices would be higher if people were bringing in more cash, and lower if they were bringing in little cash. Move up buyers usually bring in more cash, people coming from areas with higher housing prices bring in more cash (like the complaint about Californians in Austin), the other way around from say from outside the Bay Are they bring little cash in comparison to move up buyers, since their houses were (and perhaps in now still are) worth less than the move up buyers house.

    I don’t think it is true that most people who buy a house were living outside the Bay Area, they were probably living in another city I would agree with that.

    I don’t really have that much of a complaint with housing prices now-a-days, 2006 came and went, and now it is almost 3 years away. The entry level back then was out of reach of median incomes back then. I think that in the long term the housing stock pricing has to correspond to the wealth available to the top 70% of the population in the area, not medians, but the lower end wealth at entry level and higher end at the top. I don’t think you can have 90% of housing units cost 300k or more, when 50% of the population earn an income of 75k or less. I mean this overall for the entirety of the Bay Area. The 20% of people that are supposedly not renters have to to live somewhere, as all units are eventually sold the buyer must afford the unit. You can’t have 5M units at 500k and above, and only 3M people that can afford it at any one time. Eventually prices will settle to where it makes sense.

  51. anon Says:

    “Just hope an uninsured illegal immigrant doesn’t rear-end your Porsche a week after you get it – as happened to us in Sunnyvale’s Fremont exit.”

    Lol. Don’t you just love the diversity?

    I’ve got uninsured motorist insurance… Remember, I’m reckless, not stupid! 😉

  52. DreamT Says:

    “You can’t have 5M units at 500k and above, and only 3M people that can afford it at any one time. ”
    Depends how many of the 5M are for sale at any given time vs the pool of interested buyers. What would tilt the balance is an exodus from the cities close to the job centers.

  53. cardinal2007 Says:

    “You can’t have 5M units at 500k and above, and only 3M people that can afford it at any one time. ”

    Eventually all units are sold (no one lives forever) and every owner at that point can afford 500k, so there are 5M owners that afford 500k, but only 3M families that can afford 500k.

    Either the number of buyers that can afford 500k will increase over time, or prices will fall. But at any one time there are only 3M families that can buy at 500k. So only the 2nd case would hold in that case. (This is supposed to be adjusting for inflation/wage increases, since clearly the 3M wouldn’t be constant in nominal terms.)

    The increase from 3M can occur if people amass wealth in some way, inheritance, stocks, options, …. This is supposed to account for the fact that incomes only support certain size mortgages, if interest rates fall then the 3M would increase as well. But in the long term either the entire metro area gets wealthier, or prices fall in line with incomes.

  54. madhaus Says:

    Oh, but the uninsured foreigners have cash at the sidelines and will buy up all those oppurtunity properties if you don’t! Just you watch!

    Unlock that instant equity and buy a dozen houses today!

    You know that dropping 401K plan of yours? Well, soon that’s going to be the median home price around here: $401K.

  55. DreamT Says:

    cardinal2007 – That was some really weird thinking. I know several older folks who bought multiple properties during their lifetime and rent them out. Your logic assumes that every one of the 5M (including wives and children – although you changed “people” to “families” in your latter post) will buy one and exactly one property during their lifetime. Not to mention that the bay area housing market isn’t a closed one (buyers from other states or countries, such as I, or folks leaving to live elsewhere). If you’re going to speculate affordability over an extended period of time, you won’t get away with simplistic calculations. Inflation, loan rates, new laws, natural disasters, new industries and economies, trade regulations, etc. have a real effect if you look beyond 10 years.

  56. nomadic Says:

    cardinal, overall I think your logic is sound, but this piece is shaky at best:
    …the other way around from say from outside the Bay Are they bring little cash in comparison to move up buyers.

    I say that because people moving from other parts of the country will have an advantage over local entry level buyers, making them similar to local move up buyers. Why? Because these new people could have bought much sooner in a cheaper area and built up equity to bring here. In fact, that’s how I moved from flyover land and bought a house in 94087 when I came to CA. I don’t think my example is very unusual.

  57. cardinal2007 Says:

    nomadic, DreamT, so you’re theorizing that there are plenty of people from outside the Bay Area that bring their wealth over here and that they compete for the entry level units?
    Like the 1 bd condos, in San Bruno, 2 bd condos in Fremont, and townhouses in Hayward, houses in Pittsburg, that sort of market?

    I sort of figured people wouldn’t trade a nice house elsewhere for something in that market. But perhaps I’m wrong in that regard, it does seem like quite a step down to me.

  58. Herve Says:

    > Just hope an uninsured illegal immigrant doesn’t rear-end your Porsche a week after you get it – as happened to us in Sunnyvale’s Fremont exit.

    Ok, that’s already 3 people driving a Porsche. Which begs the question: who in here does NOT drive a Porsche?!?

    I was reading the other thread where RealEstater talks about his Cayenne. I just don’t get it: why would one buy what is essentially nothing more than a VW Touareg with a different body?

  59. buckborden Says:

    Will somebody PLEASE tell me what I am missing by refusing to buy into the (what by now should be obvious to EVERYONE) lie that a house will just appreciate forever? From where I sit, the schadenfreude of this (well deserved) economic meltdown for the financially challenged is quite entertaining. No tears for anybody. None. Let the empire crumble. Life goes on without a house.

  60. RealEstater Says:

    >>I was reading the other thread where RealEstater talks about his Cayenne. I just don’t get it: why would one buy what is essentially nothing more than a VW Touareg with a different body?

    I think you meant anon?

  61. nomadic Says:

    buckborden, at least half (if not 75%+) of the people here do NOT believe houses will appreciate at well above the inflation rate forever. (To say they won’t appreciate at all over time is probably not what you really meant, was it?) Many also believe prices will remain flat, and probably fall, in the near term.

    cardinal, I said the people coming from elsewhere would more likely compete with (mid-range) move up buyers. I thought you were saying earlier they would only be entry level because of a lack of cash.

  62. anon Says:

    “Will somebody PLEASE tell me what I am missing by refusing to buy into the (what by now should be obvious to EVERYONE) lie that a house will just appreciate forever?”

    You are missing monthly equity burn!

  63. Rocket Says:

    I have a friend who just completed her BSRN and started with a base pay of $90K and gets to add shift differential and overtime to that.

  64. DreamT Says:

    cardinal2007 – After the initial sticker shock, yes many people who’d get a mansion where they’re coming from end up buying entry-level in the peninsula or south bay rather than a large house in the BA’s outskirts – for commute purposes. How many? No idea. But it’s an additional variable to consider.

  65. sonarrat Says:

    My dad told me early on, before I even started high school, that my best bet, if I wanted property here, would be to buy a house somewhere else – not in California – and then come back once I had the cash to do so. It’s a valid point, because I could make good money as a piano teacher almost anywhere. But I like the mild-mannered and intelligent East Asian kids here, my family is here.. my heart is very much in San Jose in particular. I love it, even the ‘hoods I sometimes badmouth on this site. I used to spend a lot of my time in the BAD parts of the south and east sides. I would ride the 22 or 68 bus during peak hours. I would shop at Story & King or eat at a hole in the wall at Monterey & Senter. I dug it.

    Of course, then I would go home to a nice split-level house in the hills, so I don’t really have a concept of what it would be like to live in an area like that.

  66. Haggie Says:

    I still refer to the “house poor” by the old-fashioned term for them: Morons.

  67. anon Says:

    “I still refer to the “house poor” by the old-fashioned term for them: Morons.”

    LOL


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