The Overinflated Fear of Being Priced Out of Housing

[Cochon]

Robert Shiller wrote this piece in the nytimes that may be interesting for readers here:
http://www.nytimes.com/2016/06/12/upshot/the-overinflated-fear-of-being-priced-out-of-housing.html

Being finally able to start considering a purchase, I share this (irrational?) fear too.

[mixxalot]

Desperate house horny buyers will get slaughtered. I figure that I can save 500K in five years then retire overseas to a nice place like Thailand or Chile rather than pay over 1MM for a crapshack and be debt for 30 years.

[spdrun]

Nothing wrong /w being outside the US, but…

$500k cash buys you a very nice triplex or quad in many parts of the US. Live in one unit, take income off the other two. No mortgage, positive cash flow. If you live frugally (used car, etc) you could afford to basically do what you want, work part-time, travel a lot, and enjoy the shit out of life.

Interestingly, you could also pick up a duplex or triplex for $500k in the less nice parts of San Diego County and do the same thing. Or 3 condos, which would amount to similar/better cash flow.

e.g.
http://www.realtor.com/realestateandhomes-detail/1811-E-Grand-Ave-Unit-166_Escondido_CA_92027_M29610-44812

[FlyerInHi]

There a very few affordable multiplexes in SD.
Buying several condos in an HOA is not the same. But I do get your point.

I have a friend who owns a multiplex by the beach in St Pete, FL. It’s like OB. Always fully rented.

The problem with minimalist living in USA is property taxes and maintenance. That alone is a nice upper middle class budget in many parts of the world. Minimalist living is USA makes you lower class. When abroad, you get more of an expat upscale lifestyle for the same amount.

[spdrun]

Condo bought for $160k in SD = $160/mo tax, $250/mo HOA, liability insurance $10/mo. Maintenance is chump change if you do the work yourself — you can buy appliances off of CL or from Habitat for next to nothing and the HOA deals with the outside.

Rents for $1100/mo. About 5% net return. 5% return on $320k is $16,000/yr or $1333/mo. Doesn’t seem like much, but it’s taxed pretty low due to depreciation, deductions, etc.

If you live in another condo which costs you ~$420/mo to upkeep, pay $500/mo for health insurance, you still have something left over, enough for food if you cook for yourself.

Any job that you work at is basically going towards your car, clothes, recreation, travel, savings, etc. Pretty nice. If you really come to San Diego with $500k cash, you can be very happy for the rest of your life if you throw what’s expected of you out the window.

EDIT: speaking of abroad, what are return rates on rental properties (condos, I guess, for non-citizens) in Mexico, in areas that are relatively safe and easily accessible from SD?

[FlyerInHi]

$160k condo in SD is kinda ghetto.
And 1/1 in Mira Mesa or North Park is hitting 300k now.

What’s the point of living a working class life in an ugly apartment in SD? Abroad, you’d be a high status American

[spdrun]

Who cares about ghetto if you’re renting it out? Tenants are just ATMs on the hoof. The only consideration in buying a rental are expenses, rent, and ease of finding tenants. No need for it to be a palace.

I don’t see any 1/1 condos in 92126 over $225k, by the way. Anything approaching $300k is a 2/2.

Even 92104/92116 has some 1/1 inventory in the low 200s.

[FlyerInHi]

wasn’t the point to live in a condo for minimal expenses, and rent out other condo?

If you live in a condo, you want a decent building. Those are indeed over $300 for 1/1. Very low inventory now.

[spdrun]

There are no 1/1 condos in 92126 even approaching $300k. Decent building or not. None above $225k.

92116 has plenty below $300k. 92104 is closest to $300k, but even there, $300k is more like 2/2 territory.

For $250k, you can live in OB…
http://www.sdlookup.com/MLS-160030522-4344_Montalvo_St_1_San_Diego_CA_92107

Of course my definition of decent building is likely different from yours. It basically consists of low HOA and well-maintained.

[scaredyclassic]

a nice van is pretty cheap. poop at Starbucks.

[FlyerInHi]

[quote=scaredyclassic]a nice van is pretty cheap. poop at Starbucks.[/quote]

Haha. Is the San Diego weather worth it?

[joec]

[quote=mixxalot]Desperate house horny buyers will get slaughtered. I figure that I can save 500K in five years then retire overseas to a nice place like Thailand or Chile rather than pay over 1MM for a crapshack and be debt for 30 years.[/quote]

This only works for single people with no kids…

I agree that if you can “fit in” in another lower cost, foreign country, that will certainly make your dollars last much much longer than here.

Some of my relatives left the US back to Asia since healthcare alone was a concern which can pretty much bankrupt anyone here.

If I was single/no kids, I’d probably try to move, but trying to find high paid work in a foreign country might not be that easy for most folks.

[mixxalot]

True. Well, as a single dude, I can do it. Really enjoyed my time in Chile and Uruguay. Safe, clean, modern and less expensive versions of San Diego.

[spdrun]

(1) Date/marry someone who’s “internationally flexible” and who’d consider moving around the world with you. Or try to meet someone locally — there.
(2) I’d assume $500k would go a long way in purchasing investment property in certain non-US places (depending on local rules), making the “high paying job” less needed.

[moneymaker]

The op’s title gave me a little deja vu

[Author]

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