Someone posted an interesting topic in reddit, sharing here for discussion
He says “I grew up in Menlo Park and have always dreamed of settling down in the Peninsula when I buy a home. My parents bought a nice 2000 sq ft home back in the 80s before the tech booms started. I finished grad school recently and am earning a little below 200k before tax, save for retirement, and put ~3000 away each month in savings (I would put more, but I have student loans to pay off), but it still doesn’t seem like I would ever be able to afford a normal 3 BR home in a nice area in one of the Peninsula towns because they’re all listing for somewhere above 2 million. My GF does not have a high-earning job, but she loves her career, so we will always need to work around those parameters.
Assuming that by the time I’m in my mid-30s I’m earning in the mid 300,000s (such is the pay scale for my field), is there a strategy for people like me to buy a home in one of these communities? Or have they truly been pushed beyond reach for all but those earning 1m+? I realize I am fortunate and that I have a lot of options; I’m just wondering if those options realistically include home ownership in my native region without foregoing going out a couple of times a month, owning a car, and 10 days of vacation per year. My girlfriend and I live very sensibly, but indulge in those ways. Apologies if this is an asinine question. I learned very little about budgeting and saving from my parents and now that I am in my mid-20s, I am trying to make up for what I don’t know.”"
Very unlikely if he continues to enjoy life so early. Me, eating out not more than 3 times (Birthdays and new year). Drive the same small car for more than 10 years. Wear the same clothes for more than 10 years. With just above $100k household income, own a SFH in 5 years. Is not how much you earn, how willing are you to save and live within your means, and don’t keep up with jones.
Dear Lord, you sound like my biggest mentor, my big bro when it comes to his habits. He used to have a beat up old commuter car that he loved to put in his drive up driveway of his nice home in the SV JUST TO PISS OFF HIS SNOTTY NEIGHBORS. Loved it. I tell all salespeople that. Never ever judge someone by their appearance. They could be quite rich…
Could be a culture thing. In Singapore, even Cabinet Ministers (equivalent to America’s Secretaries of … State, Defense,…) and military generals wear no-brand singlets (round neck t-shirts), shorts and sandals eating in HDB (subsidized housing) coffee shops. Some of them stay in HDBs.
I am typing this in Denny’s, so nothing wrong with eating out. I don’t think his indulgence is at all out of line. Of course he can own a nice house in the peninsula.
The error in his thinking is that he is thinking how he can get there in one single step. Wrong. Instead get into a townhouse or condo first, build equity and move up gradually to that 2000 ft house in Palo Alto.
See what he missed by hanging out in the wrong forum? Literally millions of dollars!!
By the way what I just said is universally understood in Hong Kong. We said those starter condos are 上車盤 which means “get on the train” houses. You need to get on the train before It leaves the station without you. Once you are on you can look for a nice seat. But you gotta get on even if half your body is hanging outside and you are hanging on by a thread.
We Hong Kong people are crazy about properties. That’s like our national sport.
Get on the program and work your way up. That’s the way to go.
There is NEVER a good reason to be eating in that place. Ever. Ok, maaaaaybe if you are in Hawaii with the family and you need a quick breakfast to get y’all going. But, that’s it. God, I am pretty down to earth but you did not work so hard in life to be eating at a Denny’s. I am so sorry for you. Please set up that Paypal account advice I gave you in the infancy of this wonderful site (thanks again) so that you can eat better, ok? I didn’t realize you were literally scrapping by, due to the maintenance of this website. We won’t tell the IRS that this money is taxable income for you, ok???
At least, make some excuse, Dear Leader, why you are there. Maybe, having coffee with a realtor. Something, promising for us little people to chew on for sustanance for the rest of the day…
(Sweetie, never mind on that San Jose chinese restaurant visit this weekend that Yoda gave the thumbs up to…)
I don’t know very much, Great Leader, but please refrain from eating there. Cook at home, much more healthier and cheaper. Stop blogging on here and cook for your damn family!!! At this rate, this website will not last too much longer and we do want you to be healthy enough to lead us all to the promise land, the Palo Alto 1/2 acre home that is exclusively marketed to us alone and at whatever price we can afford (just provide documentation)…
“Barring a crash in home prices or a very significant increase in salary it’ll be a long time before he can buy. I think people here dramatically underestimate the sacrifices in quality of life they are making by living here.”
I wonder about this sometimes. Why don’t more people relocate to other tech cities…Austin, Denver, Seattle?
So I took a look at that reddit thread. One person did mention the trade up program. In one sentence only. Most other responses are quite useless IMO.
I actually disagree with the tax savings angle one poster went into great details about. The savings most likely will even out with the property tax you have to pay. So net net there is no savings. It’s not a very compelling reason to buy real estate.
Just a rumor… but I hear we have the best Denny’s BAR NONE…(SMH)
Come on, we live in the greatest area on this planet!!! Yes, it is dog gone expensive. But in no particular order, the reasons:
weather - very mild year round
jobs - we got 'em
too many things to do here
tolerance and freedom to express yourself
excellent restaurants, not named Denny’s
great schools (UCB and Stanford - cheap to expensive)
Probably forgot a few more, but you get it. Again, if you really, really want to be here in the Bay Area you CAN do it. There are plenty of areas close enough and safe enough for you to consider and not be scrapping the barrel to survive. It is just that everyone wants that pristine school district neighborhood in some fancy smancy city.
In another thread people say 150K is kind of the starting salary for software people these days? I still don’t quite believe it. But if that’s true we have a ton of money chasing very few houses here. This just reminds us that there are also the old world professionals like lawyers, dentists and doctors in the mix.