It’s Search Engine Tuesday!
Recently someone found this site by searching Google for “low income housing mountain view ca.” How trashy! If you’re going to search Mountain View for low-income housing, then use a low-income search engine, preferentially one that isn’t located in Mountain View.
Here’s just one result the lucky looker found! Affordable housing’ bad for quality of life – Mountain View. That sounds like a NIMBY worldview, absolutely perfect for a Real Bay Area (RBA) city like Mountain View! It’s much better quality of life to spend half your income on rent, or even better, 2/3 of it on buying a house!
It turns out that there are enough results for “affordable housing” and “mountain view” on burbed that this is a starred site for that search term!
Well. We had better do something about that. Everyone knows there is no affordable housing in the RBA. If it were affordable, anyone could move in.
August 10th, 2010 at 11:10 am
I think they may mean “affordable for DINKs”. But it even shouldn’t be affordable for them. It should only be affordable for post IPO CEOs–not even the CFOs should have a real shot at the RBA.
We should do our best to get bid up truly great, but underpriced houses like 2058 Menalto off the market. Won’t someone bid this sucker up and put it out of our misery?
http://www.redfin.com/search#lat=37.46333799524935&long=-122.17835449053251&market=sanfrancisco®ion_id=11961®ion_type=6&sf=1,2&uipt=1&v=5&zoomLevel=13
August 10th, 2010 at 11:31 am
With prices doubling every 10 years, or sooner, in the RBA, interest rate reductions are just not keeping up, and thus, affordability is going down (less affordable). That just makes people want to live in the RBA even more, which adds demand, so as prices go up, demand goes up, and that pushes prices higher, so the housing price doubling is likely to happen sooner than 10 years, for example.
How can someone on the outside keep up with the 7%+ increases in housing prices, yet interest rates only go down from ~5% to ~4%?
Also take note that those who have that ~4% money on an asset that’s appreciating by 7%+ will recover all of the interest paid when they go to sell.
Example:
Buy $1M home with 5% IO money.
Pay $500,000 over 10 years (5% IO, so $50k times 10 years, $400k at 4% IO)
Sell for $2M+ in 10 years (or sooner).
Over the years you paid:
$500k in interest
$120k in selling expenses (at the end, 6% of selling price)
Property taxes
Light bulbs and Drano
All of this totals to less than $1M, so in the end you walk away with all of your cash paid, including the interest paid.
Obviously it really is cheaper to buy.
(For those of you who do not like my use of interest only loans, note that all principal paid is also recovered, and the principal doubles every 10 years, so if you pay the note down, then your discount rate must be lower than the 4-5%. While this may be the case, it should be noted that your returns are still above your discount rate. If you discount rate is above 5%, then you would never pay this cheap money off, as a rational player seeks to delay paying cheap money as long as possible. The use of interest only loans does not change the outcome in this case, but it makes the math a bit simpler. It should also be noted that this is a very simplistic presentation, and some rather strong assumptions have been made, such as selling in the RBA. Also the taxes paid have not been discounted. Certainly if you paid taxes 10 years ago and recover the amount paid on the sale that’s not nearly as good as paying taxes a year ago and recovering the amount paid on sale–in one case you’re without the use of the cash for nearly 10 years, but in the later case, you’re out the use of the cash for only a year. If someone has a very high discount rate, the FV of the cash paid on interest and taxes might overshadow the housing returns, but then we get back to the whole idea that “renting is tossing money away,” since we are really substituting one option for the other.)
It’s really too bad that America is not like the RBA. Oh well, those suckers purchased in the wrong location. And we all know it’s about location, location, location. So sad.
August 10th, 2010 at 1:30 pm
While the gist of your post is in keeping with the RBA spirit, there’s one point to argue:
With prices doubling every 10 years, or sooner, in the RBA, interest rate reductions are just not keeping up, and thus, affordability is going down…
Certain people here would say “who the hell cares? I already bought my house and therefore affordability for new buyers doesn’t matter.”
August 10th, 2010 at 3:56 pm
“Certain people here would say “who the hell cares? I already bought my house and therefore affordability for new buyers doesn’t matter.”
While they might not care that they will expire, those people on the waiting list to get in worry about the price that must be paid. I guess, since RBA homes are only offered for sale on expiration of the last member of the household, some people on the waiting list are probably hoping that the expiration comes sooner, rather than later. Suspicious death? Nope, just the next person on the RBA list trying to get in before they are priced out.
“PLEASE SHOW & SELL. THANKS”
http://www.redfin.com/CA/San-Jose/2151-Oakland-Rd-95131/unit-440/home/1295152
Near Owner, and $26k more. Rather than reduce your price, get your neighbors to list higher.
August 10th, 2010 at 8:18 pm
What’s going on? burbed is not featuring houses anymore?
August 10th, 2010 at 8:28 pm
#5: There aren’t any houses for sale. Sellers are terrified of over bidding. Plus brochures flying through windows.
August 10th, 2010 at 11:58 pm
Too many homes are going “soon pending” status to “sold” status. Probably Burbed is not getting opportunity to copy listing information before listing goes offline.
August 11th, 2010 at 10:46 pm
nomadic says,
>>Certain people here would say “who the hell cares? I already bought my house and therefore affordability for new buyers doesn’t matter.”
You left out the most important point: Affordability is increasing for millions of home owners because interest rate has been going down.
August 11th, 2010 at 11:22 pm
Real Estater- Can you read all the messages? I pointed out that interest rates are not going down as fast as RBA prices are going up. Let me clue you in–if interest rates do not fall fast enough, affordability is decreasing (less affordable). Alternatively, since prices are going up so much faster than interest rates are going down, affordability is decreasing (less affordable).
I guess, however, a further look at your claim is in order:
“Affordability is increasing for millions of home owners because interest rate has been going down.”
The RBA does have ‘millions of home owners,’ so maybe you are really talking about non-RBA, in which case, who the hell cares if interest rates are going down, since prices are going down even faster than interest rates.
So we have:
Case 1: RBA – prices are going up too fast.
Case 2: non-RBA – prices are going down, so who cares about interest rates.
I hope it’s amply clear that those people who owe twice as much as the home would bring at market, well these people have at least two problems:
1. They cannot refinance.
2. Even if they could refinance at zero percent, the market loss is what’s important.
August 12th, 2010 at 1:41 am
You’re both wrong! It isn’t a floor wax OR a dessert topping!
Affordability isn’t an issue to millions of people who don’t have jobs or down payments
Price isn’t an issue in the RBA. It’s a feature.
Value isn’t an issue to one who knows nothing.
August 12th, 2010 at 9:53 am
“But I got zero percent financing…”
It is painful to watch people make bad purchases with cheap money.
August 12th, 2010 at 10:29 am
Let me preempt Real Estater’s message today:
Mortgage rate lowest in 30 years. Affordability just got better. Now wait for “sudden and furious” buyers start buying homes in RBA. And that means expect 10% annual home value appreciation soon.