[bearishgurl]

[quote=flu][quote=bearishgurl]
But, there you have it. Your “peers” in SV have the potential to eventually make 2-3 times your salary but they have to make certain sacrifices to do so. [/quote]

This is the worst idea to live in the Bay area. Most average people don’t gothere for the salary. The salary is only pays the bills, barely. Most people that just goes there for the salary cannot afford to own the homes there, since affordability is even less than here.

The only reason one would go there is to work for stock options with the hope that one can hit the big one or if you are going there a C-level or higher executive.

My salary up there was about 25% higher when I was there during peak bubble. That’s squat and that’s before tax. Especially these days, if you break $200k up there as an enginerd (which isn’t hard to do), you’re also subject to additional “wealth” tax at both the federal and state level, so your effective take home pay in proportion to real estate prices up there is considerably worse versus here if you are below that threshold.

It’s not possible on one salary alone for the majority of worker bees to afford living in most of the places in the bay area that is ok..The rent also will eat into most of your salary since, again, you pay rent with after tax dollars and rent is so high there.

What the bay area does illustrate is that salary is the worst way to accumulate wealth for most people (unless you are an exec). Up there, if you can’t even afford to own your own primary, good luck being able to own investment properties that generate income.

So this is where I sort of chuckle. Some of my colleagues up there that weren’t so lucky with the stock option roulette might have pretty large salaried base packages (I’d say maybe 25% more), but they have no real estate investments, limited stock they purchased themselves, the same 401k (since everyone maxes out the same), and they still rent.

Salaries pays bills. That’s it. Most people will never get ahead on salary alone.[/quote]

flu, I agree that passive investments generate more “wealth” than salary alone. But do company stock options and opportunities to get in on the ground floor of a successful startup exist in SD? What is the difference in the level of venture capital swarming around SV as opposed to SD?

Let’s say you stayed in your position in SV and never moved down to SD. You would have been there during the RE downtown of ’08-12 instead of here. You bought condo(s) in SD cheaply during the downturn (in MM?). Weren’t there any similar RE investment buying opportunities during that time in the bay area? Sure, maybe your 1/1 rental unit(s) would have been across the bridge … in a less expensive city (comparable to MM SD). It is also possible that you would have been able to get more rent per month than you get in MM.

What would the difference in your salary be now between SV and SD had you stayed with your employer up there?

And did you keep your residence there as a rental? If not, what is the difference in sales price between when you sold it and now?

There is much to think about when deciding to relocate to an area with lesser opportunities in your field. It’s possible that opportunities would have been offered to you in your field by now which are not feasible in SD or even possible, had you stayed.

[bearishgurl]

Gawd, I’m failing to comprehend why we are now comparing MM and CV (SD) to San Mateo County cities here.

There IS NO comparison. They are apples and oranges.

[bearishgurl]

[quote=AN]BG, you’re hilarious. Comparing a place that would take you 40-60 minutes commute to a place that’s 10-15 minutes from high paying job centers? You should be comparing those bay area places to Temecula if you what to compare apple to apple (i.e. commute time).
I would pick MM over Mt. View any day, purely because of the schools. I’m not sure if $300k is even enough for me to maintain my life style in the bay area. It might end up having to be $400-500k. I expect to have the same living standard when I compare different cities. I don’t care how old an area is. I don’t care if there are a billion jobs in the bay. It doesn’t do me any good if I have to downgrade my living standard. That is what I mean when I expect to be paid $x in order to make me move. Which is why I’m still in SD instead of moving to the bay. I’m sure if I really wanted to, I could find a job up there pretty easily. But why would I want to, when I get better weather here and a much better living standard? I would only want to sacrifice my weather if I can get a better living standard. If I have to sacrifice both weather and living standard, why would I would to another nondescript suburb? I would shoot myself after 1 month if I have to commute 30+ minutes to work. My limit for a sane commute is 20 minutes with no traffic or 10 minutes with traffic. Life is way too short to put yourself through hell. Especially when the working life span of a tech worker is pretty short.
I would also pick Carmel Valley/La Jolla/Del Mar/RSF over Cupertino too. For $3M, I rather have an enclave in RSF or a house with ocean view in La Jolla/Del Mar over a nondescript tract home in Cupertino. But that’s just me.[/quote]

You wouldn’t have a 40-60 min commute if you bought a WWII box in Northern SM County (San Bruno Millbrae, Belmont, Redwood City …. even East Palo Alto) for $700-$900K and moved in, enabling you to eventually position yourself for that $300K salary level you were posting about.

It ain’t going to happen in SD, AN.

I understand all the reasons you cited for wanting to remain in SD earning a (forever) lowered salary. You even forgot to mention your nearby family members to help you with your kid(s). That’s huge!

But, there you have it. Your “peers” in SV have the potential to eventually make 2-3 times your salary but they have to make certain sacrifices to do so. (Namely, remain in smaller, older living quarters and live with relatively high winds for years if they want to be relatively close to work.) You’ve made the choice to stay in your hometown which happens to be in a region with the best climate in America and are willing to pay the price to do so. The price you’re paying is giving up a big portion of your lifetime salary and upward mobility. Fair enough?

I told my kids to NEVER move back to SD for a job and to strive to get themselves established/entrenched where they are (elsewhere in CA where the job opportunities are more plentiful and much higher paying). They know where to find me on TK and X-mas 🙂 I already know and fully understand exactly what SD is and is not and paid the price myself in spades to remain here (and continue to pay the price). Those days are numbered, though.

I don’t want that for them.

[bearishgurl]

[quote=AN][quote=bearishgurl]IMO, there really is no fundamental reason why the residential RE in “close in” (=<45 miles from SF) bay area cities will "crash" for any reason.

Firstly, there are MANY industries up there besides the tech industry which are large employers.[/quote]It's not about the amount of industries and jobs but how well does the workers get paid. When you're talking about $1.6M for a crappy 1700 sq-ft tract house in an area with bad schools. I think it starts to get ridiculous. But my crystal ball is broken, so I can't say when it will crash. My gut feeling is that it will. Never say never.[/quote]

AN, I looked over the "low quality tract home" thread again today and clicked on the links. You and flu were comparing the most expensive homes in the most expensive cities in SV to prices of SD homes situated close to tech jobs. You weren’t comparing SV “worker-bee” homes at all! What about that ~1100 sf WW box in MV (or San Bruno/Millbrae) with a one-car garage? SV worker-bees live there! Or that ~1900 sf 1970’s era home in Fremont, just across the Dumbarton Bridge? SV worker bees live there also. It’s only an extra ~20-30 mins each way to cross the Dumbarton Bridge (assuming the worker lives close to the other side of the bridge). The same is true of the SM bridge and Hayward/San Leandro on the other side. The homes in these East-Bay cities are even cheaper than Fremont homes but tend to be older and smaller (but not as small as the WWII boxes in northern SM County cities). Hayward, in particular, has a LOT to offer by way of public secondary schools, their great extra-curricular programs and CC, as well as a BART stn and CSUEB practically within walking distance (not sure about Elem school quality). San Leandro and Fremont also have BART stations. And the Fremont school district is one of the best in the bay area! If you live in Fremont and work in Santa Clara southward, you can take the Nimitz Fwy around the bottom of the bay to work and back and thus avoid the bridge altogether!

You guys were only posting links to homes where a worker could walk or ride a bike to Google or Apple. You must know that it is wholly unrealistic for a worker from out of the area who accepts a job up there to be able to qualify to buy something in those areas immediately upon accepting employment in SV.

And btw, a very similar property to the ($5.6M?) 100+ year-old Palo Alto estate property (situated right in the middle of town) which you posted on that thread, joking, “As least it has ‘character,'” (or something to that effect) was “good enough” for Steve Job’s family to be raised in and for all we know, they probably still live there!

You and flu were essentially bantering back and forth about how the 1-5%-ers live in SV. That has nothing to do with the typical SV worker-bee commuting to/from work daily on company-paid shuttles.

It was just laughable to me that you live in MM (of all places) in SD yet you posted that you expect to be paid $300K upwards in SV upon accepting employment there so you can qualify to buy into an area which is far more valuable than MM! If you weren’t actually joking here, then your expectations are totally unrealistic and thru the roof, imho.

It isn’t about “how much workers are paid” at all. I don’t believe local salaries affect housing prices at all in the close-in Bay Area cities. It is all a matter of supply and demand. The reality is that the hundreds of thousands (millions?) of established residents who have resided there for decades have far deeper pockets than you and me.

This population had a lot more exposure to opportunity throughout their lives than did long-time San-Diegans. It is what it is. None of us can fix this now. It is partly due to the “sunshine tax” that we all paid to make SD County our home.

[bearishgurl]

[quote=The-Shoveler][quote=spdrun]bearishgurl — Because many buyers wouldn’t be able to afford the payments at 7-8%. They can make the 7% loans, but the principal amount will be lower.

Better to keep the loan on their books, paying something, than have to resort to the bureaucracy of a short sale or foreclosure.[/quote]

So we are on average going to be making the same (pay) amount 10-15 years. good lord people there will be wage inflation.[/quote]

Maybe, Shoveler. But if the mtg rates go up significantly, the biggest impact for buyers taking out mortgages is that they won’t be able to buy newer econoboxes and mcmansions in close-in areas for their first and second homes … as they are doing today and have been for a decade.

The FTB and STB will have to “settle” for older, smaller homes situated between (gasp!) a hairdresser-heir and an HVAC specialist in SD County’s more established areas . . . OR high-tail it out to the IE (Temecula, Murrieta and points beyond) and drive into SD County everyday.

This is what we boomers had to do when we were in the family-forming stage …. except there was NOTHING in the (southern) IE back then (except for ONE gas/fast food pit stop on the Rancho CA Rd exit of I-15, lol). We as young parents were stuck with what was present in SD County at the time, which didn’t have the square footage (inside the house) as today’s newer construction does. We had to buy it, move in and worry about how to update it later …. room by room.

A more likely scenario if mtg rates go up significantly in the coming years is that SD Gen Y/millenial would-be buyers will have to drastically lower their housing expectations….or take a job in KS City or OKC instead.

1st and 2nd time buyers in CA coastal counties have traditionally always bought their first home in the lower price rungs and that is as it should be. They’re only able to buy in the higher price rungs today because of the artificially low mortgage rates.

[bearishgurl]

[quote=spdrun]You speak as if high prices (and normal people being priced out of close-in markets) are a good thing, when in reality, they’re just welfare for boomers.[/quote]

It’s not the prices, spdrun. It’s Props 13, 58 and 193 which are essentially “welfare” for boomers and beyond.

Sadly, I don’t have any of those benefits. I’m paying market-rate taxes on my home, as opposed to most of my neighbors. It really galls me.

The CA Legislature still won’t touch this body of law … even at this late date, what with the all the state budget shortfalls combined with CA’s unfunded mandates. Our state representatives are deathly afraid of losing the over-55 vote (the group with the highest percentage of voters within their overall numbers).

[bearishgurl]

I would have loved to buy a cosmetic-fixer ranch home in Saratoga (SC Co) for my last “forever” home. Alas, those fixers are, for the most part, all gone now, and, in any case, I have been forever priced out. It’s a jewel of a town where the “mid-century ranch” is well-represented.

If I lived anywhere near Saratoga, I would immediately join the Mountain Winery:

http://www.mountainwinery.com/concerts

…where hundreds of my “brethren” boomers can be found milling about on any summer or fall weekend 🙂

I absolutely love it up on the peninsula (western portion) … it takes my breath away!

[bearishgurl]

IMO, there really is no fundamental reason why the residential RE in “close in” (=<45 miles from SF) bay area cities will "crash" for any reason.

Firstly, there are MANY industries up there besides the tech industry which are large employers. Secondly (and most importantly) is that that the close-in bay area cities never had the HUGE amount of new construction in the last 15 years that SD County and Southern OC did. It was never built because much of the open space situated close in was set aside for just that .... permanent use for public recreational enjoyment. Thus, there are very few (a handful) of CFD’s close-in and a couple of these CFD’s (the largest ones) are primarily commercial (situated within the old Naval Weapons Surface Center in Vallejo).

Because there was very little newer residential tract construction built close in, the close-in SF bay area cities never had entire subdivisions of homeowners who “paid too much” during the “lending spree” of 2004 – 2007 (as did SD Co and So OC).

And any homeowner in the close-in bay area who still owns their property today (after ATM’ing it to death from 2004-2007) has likely more than recovered by now thru appreciation. As we all know, scarcity of housing alone in a particular locale creates stabilization and appreciation in home values.

If any part of the bay area falls in value due to a “tech crash,” it will be the areas in which tech worker bees bought into which are a long commute from SV (Parts of Dublin and Livermore, Tracy, Morgan Hill down to Gilroy and Patterson, Modesto and Turlock, etc). These cities could only marginally be considered “close-in” bay area cities (Dublin, Livermore & Morgan Hill) or not at all (Tracy, Patterson, Modesto, Turlock and Gilroy) but some tech workers with jobs in SV may have been stupid enough to buy into them, even given the arduous daily commute to work to/from these locations.

Dublin and Livermore residents still have Lawrence Livermore Labs, a Federal prison (Pleasanton) and a few other big employers out there (incl Big Oil) who pay well. So these cities may not be as hard hit if the tech bubble bursts.

Contra Costa and Marin Counties are essentially immune from any downturns in RE values (as is SF, mentioned above) for a variety of reasons unrelated to the tech industry … mostly to do with entrenched land-use and zoning laws which will never be repealed. As it should be.

Essentially, what causes falling RE values in CA coastal counties is the proliferation of CFDs which ended up creating 50-250% more housing available in a particular county. Resdiential RE will continue to trend stable to increasing in value in those cities and counties which didn’t permit the rampant creation of CFDs.

I haven’t even touched upon the proliferation of those (millions?) residing in the close-in bay area cities and SF who “retired in place” in their long-owned home and aren’t going anywhere. Just like in SD County, the vast majority of these people bought their current residences in the 60’s, 70’s and 80’s and either have a very small mortgage or none at all. Many “inherited” their homes. So, I don’t see any potential “distress” in this demographic of homeowners even if the tech industry falls through the floor. If members of this group decide they want to “retire” in their vacation homes in the wine country or Tahoe, they’ll just rent out their current homes in the city for income. This group doesn’t need to sell and they would be fools to sell due to their ultra-low tax assessments pursuant to Prop 13.

[bearishgurl]

[quote=spdrun][quote=bearishgurl][quote=spdrun]Or banks will quietly make existing loans assumable, as was done in the 1980s.[/quote]

spdrun, lenders cannot do anything other than what is already written in the original note, nor can their successors (other lenders down the line who purchased these notes). Virtually zero conventional loans made since about 2002 had any assumability provisions in them. [/quote]

Sure they can. It’s called a loan modification. Principal modifications are frowned upon. But any other term is fair game with the consent of the mortgagee.[/quote]

What’s in it for a lender to do this when their loan will be paid off upon sale? Why would a lender want to keep a 3-4% mortgage on their books when they can make a new 7% and up loan on the open market?

If you’re speaking of a “loan modification” to a new buyer in a “short sale,” these beleaguered tech workers would have to sacrifice their good credit in order to exit their property in the bay area. Most of them would ostensibly have way too many “assets” to qualify for a short sale. Lenders want and need to be “cashed out” in a short sale, however little that may turn out to be.

[bearishgurl]

[quote=flu]I do think home prices in the bay area will correct though once tech goes into decline.[/quote]

I saw your thread thread this morning which turned into a “bay area” discussion.

http://piggington.com/damn_these_low_quality_tract_homes

I see only certain parts of the bay area eventually falling in price but it will NOT be the uber-established, desirable areas such as SF and Palo Alto, Los Altos, Atherton, etc. It will primarily be the areas where the tech “worker bees” bought into since about 2000 or so.

Since the areas listed above have a preponderance or “old money” and all-cash buyers, I just don’t see them falling in value because these types of buyers will never be desperate to sell. The worker-bees who are laid off will be desperate to sell.

And SF isn’t going to get any cheaper. There is only ONE in the world and its economy is tied to many other industries besides tech. It is also self-contained separate and aside from SM and SC counties.

[bearishgurl]

My monthly PITI outlay is currently about 68% of what I could get for monthly rent and over half of it is applied to the principle.

[bearishgurl]

[quote=spdrun]Or banks will quietly make existing loans assumable, as was done in the 1980s.[/quote]

spdrun, lenders cannot do anything other than what is already written in the original note, nor can their successors (other lenders down the line who purchased these notes). Virtually zero conventional loans made since about 2002 had any assumability provisions in them.

In the era you are referring to, mortgage loans already had assumability provisions and instructions written into them. Virtually all mortgage loans made in the last 14-15 years have alienation clauses built into them (due on sale/refinance clauses).

If interest rates rose, lenders could begin to OFFER assumable loans again (to keep within their portfolios), but those would be new (purchase-money or refinance) loans. However, I don’t see this taking place unless fixed mortgage rates soar past 10%.

And I don’t see mortgages with assumability provisions offered except to the most worthy borrowers. It is far easier and less headache for a Big Bank, mortgage bank or servicer to (immediately or within a year or two of origination) sell a mortgage they originated than to keep it in their portfolio.

[bearishgurl]

[quote=ltsdd][quote=flu]If this was a thread about cars, it would be about how some folks would call a Ferrari a piece of shit because it has a $200k price tag and surprising it doesn’t have a “higher quality” 4 cylinder engine from a 1989 Toyota Camry…

ltsdd.

Thank you for stepping up and allowing me to pass the olympic torch to you.

I’m going to get my nice bag of popcorn and just watch it from the sideline.

May the force be with you….[/quote]

interesting…I am just throwing random stuff out there. Doesn’t take much to get a response.

I think Rich should buy you, BG and masayako a beer or two. I think you guys have single handedly generated more posts during the last fews days than the entire forum has for the whole year.[/quote]

You just happened to catch me on a couple of days where I had a lot of grunt work at my desk to do. I don’t drink beer, unfortunately. masayako didn’t contribute much except for starting a snarky thread about the overpriced econobox.

Glad I could assist in keeping everyone entertained. [img_assist|nid=13925|title=|desc=|link=node|align=left|width=46|height=46]

[bearishgurl]

[quote=ltsdd][quote=bearishgurl][quote=spdrun]Who wants to be in a gated prison with an HOA, cameras, and security guards? I wonder if the gates are to keep the riff-raff out or the residents in.

I’d sooner move to San Quentin. At least room and board are free and it has great views of San Francisco Bay.[/quote]

LOL … Alcatraz has an even better view. You could get a job there as a museum docent and hob-nob with tourists from all over the world five days per week, spdrun! Job includes unlimited free ferry rides to/from SF![/quote]

Why go anywhere far? La Mesa is a perfect place for you. It even has a state prison that has called La Mesa home for the last 30 years or so.[/quote]

wtf? Are you referring to La Mesa (San Diego County), CA??

[bearishgurl]

[quote=spdrun]Get a room, you two![/quote]

Yikes, where did that come from …. eew …

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