I always see Bay area a lot of things is around 10 yrs behind HK and shanghai. especially Real estate. Now only rich people will able to live in these Main City . I believe bay area just beginnning to be like that, like wuqijun said, survival of the fittest. A lot of people especially young ppl are protesting real estate expensive this and that, but you know what they spend money to go on trips 2-4 times a year rather than saving and investing, they want to purchase 7 mil small new apt rather than 4 mil old bigger apt. Here i’m sure most working couple should be able to afford a 5-600k 2 bedroom entry level condo, but nope, they want to live in cupertino, main SF , and complaint shit is too high for them. Sounds great.
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The stupid thing is real estate doesn’t need to be so expensive. $150k for permits and utility hookups is insane. A decade plus of studies before land can be developed or rezoned is wasteful. BMR requirements drive up the price of market priced units. It all adds to he cost of doing business thus the cost of housing. A huge percent of home/land value is due to idiotic housing policies. If those policies were every removed, home/land values would plummet.
Even stupid stuff like unemployment is bad for business. In most states, the state fund all employers pay into pay the claims. In CA, the former employer pays the claim plus $200/wk which goes to the state and BofA for administering the plan. The state fund only covers instances where the company goes out-of-business and can’t pay the claims. Just think about that. Unemployment is $450/wk and the state + BofA take $200/wk to administer it. That’s an insane 31% administration fee.
Most people need to change their mind set. Instead of complaining about not being able to afford a home, why don’t they think about how they can make more money to fund the purchase.
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You sounds like you are single without kids.
Like each person working an extra 60 hour job? Or donating a kidney?
I agree that complaining isn’t a good thing. Instead of complaining, act. They acted and did so decisively, and I absolutely respect that. The fact that these articles are news at all comes from the fact that there are many who can’t get over the situation and don’t act.
I would rather stay in a one bedroom condo in the Coast with 2 kids than moving to a 4 bedroom home in the middle of a desert.
No, like make good investment decisions or try to find a higher paying job. A house will not just fall on anyone’s lap without work.
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I think that works for people that are close to affording it. There’s a whole group that aren’t even close though. They’d have to make 4x+ more than they currently make.
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Actually, there’s no need to own real estate in order to stay in the Bay Area. Many people are perfectly happy as renters. And they can always buy a condo for less than $150k in the east or north bay as investment property if they wanted exposure to real assets.
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I think this strategy is under-utilized. Many people have the misconception that one has to first buy primary, and only after that can they buy investment properties. But in fact there is no such a rule.
I know people who rent in PA to take care of the schools, but bought investment properties in deep East Bay. One can argue it’s actually financially smart to rent in PA instead of buy.
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I did a calculation before, for the same cash outlay and total mortgage, rent in South Bay and bought two rentals in East bay is profitable. The collected rent is more than the rent of the South Bay house.
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If that’s the case then maybe they should consider other more affordable places. If you don’t have a big head then don’t wear such a big hat. Also, BMR is available for the lower income population.
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Yes this is very under-utilized. It produces rental income and doesn’t deplete the DTI reserve as much. This option actually accelerates the path to obtaining landlord status.
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Its weird but people would rather settle as renters than buyers…For all those buyers in 2009-2012 who refused to settle for the wrong house in the wrong school district, they didn’t understand RE 101…don’t wait to buy RE, buy and wait…I was at the court house in 2009 when the pros were buying in EPA for $100-$150k…Those houses are now worth over $600k…and they paid a 10 cap on rents from day one…Of course many us were afraid to even drive through that city in 2009…
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Ok so let’s not look backward and try to look forward. Where can we buy today for 4x the return 8 years down in road? 
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Where to buy those 1% rule houses?
This was over-utilized in 2005-2006 when many California renters bought multiple rentals in Phoenix and Vegas. That did not end pretty.
When too many renters buy rentals elsewhere, we should start selling quickly.
It only became a problem when they paid prices where the fully amortized mortgage was not supported by the net rental income.
As long as net rent (after repairs, vacancy, tax and insurance) is 1.3 x the loan payment, you should be in good shape.
Something like $5k loan and $10k rent. Yeah, I know, for the peninsula, even an all-cash purchase won’t fit that criteria
Rule of thumb is that in low end areas, always buy with positive cash flow in mind.
In high end areas, you can buy with negative cash flow as long as you have other income elsewhere to offset it.
In the Bay Area, high end areas constitute any neighborhood whose average home value exceeds $1M.
Everywhere else is low end and people should proceed with caution in those neighborhoods.
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Ok, people kept bringing up the fact that East Palo Alto home value increased 3 fold since 2011, and those who bottom fished won big. However this is no different from the opportunists who bought at the bottom of the stock market back in 2009. Didn’t the stock market also jumped more than 3 fold since?
Keep in mind that East Palo Alto also crashed hard during the great recession. It’s peak back in 2007 was 650k. It bottomed to about 300k and has now bounced back to 750k. So from that perspective, it really hasn’t moved much since 2007. But if you look at the average San Francisco home, the peak back in 07 was 850k, now at 1.15M. The scale of increase has by far exceeded that of EPA.
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