How would you respond to this article, in particular if it’s being sent to a young person who is buying in SF?
I base everything on income. If you are in a field that is hot and your income outlook looks steady if not stellar, then you should buy. Rates are still semi decent, so lock it in.
People said you shouldn’t buy in 2010-2012 too. That turned out to be one of the best times to buy. For a primary, buy when you can afford. Don’t wait to buy your dream home. Buy and get in the game.
Did you read the article? What do you think of the appreciation numbers?
Frankly, when it come to RE and especially your primary, appreciation rates are not on the front burner for me. It is all about settling down and starting your life with perhaps someone and maybe even expanding your family. Life is not always about ROI…
Amateurish analysis. Send us an Ivy educated research instead, better an Ivy tenured research.
When Prop 10 pasess, there will be no houses for rent. This analysis will be irrelevant.
Also the inventory of for sale houses and for rent housing are different. Median home price and median rent are not for the comparable housing.
Who cares? Why should anyone pay attention to the author? He’s just repeating the perma bear mantra from 2010.
Also, do you know anyone that’ll save the different, invest it, and never touch it? That’s a joke when over half of Americans have less than $1,000 saved. Everyone thinks they’ll be the exception. If someone is really that exceptionally, they’ll earn enough money in their lifetime they won’t sweat the difference in rent vs. buy.
"My own hypothesis is that the last few years of appreciation are being driven by a combination of low inventory (for whatever reason) "
Idiot. Is low inventory going to change? California isn’t going to suddenly change zoning or create more land to build a ton of homes.
“Not only does housing have poorer returns than stocks, but under leverage, it’s also riskier. The S&P 500 might have fallen 50% in the Great Recession, but a home that falls 25% (typical numbers then) with a 20% down payment is a 125% (!) loss on the down payment.”
How can anyone take this guy seriously?
My observation is that the analysis doesn’t consider the rent-free point after the 30 year mortgage is being paid off. Since the article was apparently sent to a young tech worker who wants to buy in SF, I think that it’s a significant. since SF is 1% rent control, rent increases are not so much of a consideration, but she’d probably get kicked out at some point in the, say, 50 years of life, and have an upped rent-basis.
Politicians and lawyers will save her
"Rent and invest your savings in tech companies; "
It is a bias article assuming everyone are as smart as @manch in picking stocks.
I have to admit picking 10x stock is a once (or twice) a life time thing, then you still need to deal with the “when and how to sell them” with lot of consequences in taxes and values. For rentals, the locked rate, the locked property tax, the depreciation and 1031 all works for my benefits for very long term…
Ha ha, I would respond by sending this to all the young people I know
I am happy to have less competition in buying while having more high income renters.
Predictions of the future are risky. But people that didn’t buy in 2010- 2012 were ill served by perma bears.
I always those guys are actually landlords loading up at everyone else’s expense. I personally think that the exburbs are a better bet today. But renting has drawbacks also. For renters and bears where do you put your money. Bitcoin Stocks Gold ?
An universal truth in any part of the world, may be not in certain nations but is 100% true in SV.
Rent in rent controlled, buy rentals in non-rent controlled
This will turn the state to 100% tenant occupied. You rent my house and I rent yours. That’ll be a happy ever after event, everyone will be a tenant.
No private enterprise would want to be landlords in rent controlled. So government has to take up the role Public housing in rent controlled Hmm… we should support nationalization of housing in rent controlled neighborhoods!
I don’t think one should spend more than 2M on a primary. So in certain parts of SV it may make more sense to rent than buy.
That’ll turn Palo Alto to rent control’s reach