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earlyretirement
ParticipantBG,
I agree with your point I would NOT want to head into retirement being a “perma renter “. Rental prices in desirable areas will only go up. I don’t see that trend changing. Just as there were permabulls that thought prices would keep going up. There are still many permabears that still incorrectly think prices will fall again.
Participant[quote=CA renter]
Once again, people with cash will NOT overpay for something when the purchasing power of all their competition has been diminished by higher rates. Not only that, but people with cash will want to preserve as much of it as possible when rates are high (and cash is dearest) so that they can earn a return on it.
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+1! I totally agree. I can’t wait for the higher rates to come. But it looks like it’s going to be a while. 🙁
[quote=flyer]Agree CAR and SK, that with the ever-changing dynamics, people, especially those who have purchased in recent years, should be extremely wary of considering real estate a “sure thing,” when it comes to their long-term financial solvency.
As a lifetime real estate investor, it’s clear to me that, some elements point to a continuing escalation, many do not, and only time will tell.
In the meantime, I think it’s very important to have diverse financial resources accumulated for retirement (and lots of them–if you want to survive) other than property. At least, that’s been my plan.[/quote]
As usual I totally agree with you flyer. It’s going to be increasingly important to be very well diversified heading into the future. Of course people with guaranteed pensions that they can’t lose including medical care are really fortunate but most people heading into the future won’t have that luxury.
I totally agree with you flyer it’s essential to be very well diversified and not have all your “eggs” in one basket. I’ve seen too many people in the past that were too concentrated in real estate, the stock market, or other assets and got crushed at one time or another.
For me, the issue hasn’t just been making money but as important is keeping it and also making it grow into a bigger pot. That’s not always so easy for today’s investor…especially if they aren’t diversifying properly and interest rates stay manipulated at extremely low rates.
Lately I’ve seen people being kind of forced to “chase” returns. Some are good calculated investments. Others I’ve seen is a total “gamble”.
Participant[quote=CA renter][quote=The-Shoveler]Yep that particular area is really bad from Santa Monica to downtown and LAX, yep the 10 and 405, really really bad.
Most the rest is not nearly so bad.
Very few people actually work downtown, that’s mostly the city workers,
In L.A. most people work in the burbs,
So you end up driving from say Simi Valley to Agoura hills, or from westlake to Valencia, and visa versa
Maybe Pasadena to Encino, these are the typical commutes that people end up with when they first started out 15 minutes away,[/quote]Agree with this. We’re native Angelinos and most of the people we know up there don’t commute on the freeways — maybe 20-30% of our friends/relatives commute by freeway. In LA, you tend to live and work in a 5-10 mile radius from home, and many, many people stay within 5 miles from home. Things are laid out in a nice grid pattern, so there are multiple ways to get around, too, unlike here in SD…and the traffic lights function a lot better in LA. Additionally, the locals know all the “secret” ways to get from one place to another, as The-Shoveler pointed out, so it’s not nearly as bad as it looks from the freeways when passing through or spending time as a tourist.[/quote]
Ah ok got it. Yeah, I don’t know all the short cuts up there. I don’t know the city nearly good enough to know all the secret ways to get around. (I wish I did). GPS doesn’t always work so good when it comes to that. LOL.
I just know every time we go up there traffic is chaotic, even during the middle of the day. We’re heading up to Beverly Hills here next month for my wife’s birthday and looks like I need to take you along CAR. 😉
ParticipantAh ok..got it. I go up a few times a year plus 2 weeks for vacation a year and it always seems bad. It always is really really bad like you said.
You’d definitely agree overall the traffic there in LA is much worse than SD wouldn’t you? It isn’t just the Santa Monica to downtown that seemed to be horrible. I’d constantly run into it. Maybe I just have bad luck when I’m there.
But it always seemed like a nightmare.
Participant[quote=The-Shoveler]HA!!
Another urban legend (well there are some places it really really bad),
But there are a lot of wide side streets and secret by-passes that can really save you time.
It’s not as bad as the legend portrays.
I think around the CV area and down the I5 from north county in the morning it’s just as bad if not worse (but I have only driven there a few times during traffic I will admit).That’s why I never go to San Diego airport from North county in the morning, it’s really bad every time I tried it.[/quote]
Actually I don’t think it’s so much urban legend. Every time I go up there for meetings, vacations, you name it..the traffic is horrible! Even during the middle of the day sometimes.
We typically stay in Santa Monica and heading downtown we’ve ran into massive traffic many times.
Here actually I don’t think it’s anywhere near as bad. I-5 IS a nightmare during rush hour. But highways like I-15 are so wide with so many lanes. I don’t find it bad at all and almost have NEVER ran into traffic during the middle of the day like LA.
Participant[quote=The-Shoveler]
L.A. is not a bad place to live actually (most won’t admit that) but most of my friends I grew up with moved out only to move back and plan to retire there.
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There ARE some nice areas but how in the world do you put up with the traffic there??? It’s horrendous! I guess if you work from home it would be different but man the traffic would be a killer for me.
Seems like “rush hour” keeps expanding and there isn’t really an off-peak time now except late at night or super early in the morning. I could never get used to that there.
Any advice on that front Shoveler?
Participant[quote=bearishgurl]ER, your assumptions about me are incorrect but I do like reading your posts 🙂 However, I will pm you so as not to hijack this thread any further.[/quote]
Sorry BG. Thanks for the PM. I’ll take a look at it tonight and respond via PM. Also, I didn’t want to give the wrong idea about people commuting. I’m NOT trying to justify it at all and it’s not even like I mean it’s normal or there are a lot of people doing it.
I just mentioned it to give an idea how bad the job market is here for some. I only know 3 people doing it so I didn’t want to give anyone the wrong idea about that or that I justify it at all. I mentioned the few people I know doing it because I wanted it to indicate how tough of a time they are finding a job here in SD.
BG I also enjoy your posts.
Participant[quote=CA renter]ER,
I spent some time reading those threads you’d linked and totally agree with what you’ve said there. Yes, people can live in SD on $80K/year (gross), even with 2-3 kids, but they will not be able to adequately save for retirement, kids college expenses, emergency savings, etc., AND live in a clean, safe neighborhood with good schools, take vacations and/or go to amusement parks every year, eat out once or twice a week, have kids in extra activities and classes, etc.
Some people are willing to make more sacrifices by squeezing a family of five in a very small apartment or condo, never/rarely eat out, never take vacations outside of a tent camping trip, not have their kids attend any extra classes/activities, etc…and I think they can actually make it; but very few Americans are able or willing to live this way over the long run.
And if you want to live the good life in sunny San Diego, you can forget about keeping the A/C on at night in the summer. 😉 (We like it very cold as well.)[/quote]
Hi CAR. Thanks for taking the time to read them. Oh absolutely one could “survive” as you mentioned. But it’s EXACTLY as you just mentioned. It’s absolutely impossible to really “live” (by most people’s definition) and save for retirement and do vacations, etc. here in San Diego on that salary with several kids.
I always get a kick out of the ‘eternal bachelors’ that don’t have kids trying to give advice to parents with 2 or 3 kids pointing out the median incomes in San Diego and how they can make it. LOL. These type of people have NO clue what it’s like raising a family in San Diego or having to worry about living in a good school district, etc.
Even forgetting the fact that many of these people with the median income figures bought real estate LONG ago that is totally paid off. Or that many of them are living paycheck to paycheck and barely surviving.
Yep. Short term that might work but longer term most parents figure out that it’s not sustainable here in San Diego and move out before it’s too late and they can at least recover and start to save for their retirement, kids college fund, etc.
It’s funny because now and again there will be someone that says it’s totally doable. I’ll ask them to detail on a spreadsheet (and I even put in all the categories below for them so all they have to do is fill in the blanks). And NO ONE does it. People say it can be done and when I challenge them to post their spreadsheet. No one does. It’s really telling.
-Mortgage or Rent
– Property taxes if you own
-Phone (Land line and Cell phone, blackberry, etc)
– Utilities (gas, water, electricity, cable, internet, etc)
– HOA fees (if you own vs. rent)
– Maintenance and repairs (if you own a property)
– Car payments
– Car insurance
– Auto Fuel each month for each car
– Registration fees for your car each year
– Maintenance on your car to include car washes and oil changes
– Home/rental insurance for your property
– Life insurance
– Health insurance premiums
– Dental insurance premiums
– Medical/Dental expenses (what insurance won’t cover)
– Prescription medications
– School expenses for kids (tuition, stuff for school, ballet classes, etc)
– Babysitter expenses
– Annual fee for Credit Cards
– Clothes for kids and yourself
– Toys for kids
– Dry Cleaning
– Health club / gym
– Beauty (hair salon for hair cuts, color, nails, make up, etc)
– Extracurricular activities dues/fees
– Entertainment (movies, theatre, plays, Seaworld, Zoo, concerts, sporting events, etc — TONS of stuff to do with kids here)
– Magazine/newspaper/Ipad subscriptions
– Dining out at restaurants
– Grocery budget
– Retirement savings contributions
– Kids college fund savings contributions
– Charity/donations
– Travel / vacation expenses
– Federal/State/local income taxes
– Any revolving debt payments you might have
– Bad habit type stuff (alcohol, smoking, etc — this doesn’t apply to me but it does for many people)
– Emergency savings fund for any major health issues
– Non reimbursed office/work expenses and suppliesParticipant[quote=bearishgurl][quote=earlyretirement]…Yep. Me too. Goes the same lines of the job market here in San Diego being poor compared to other areas. I don’t think it’s so much a case of “willing” to commute an hour as it is “forced” to commute that distance.[/quote]
ER, you must bear in mind that no one … and I mean NO ONE is FORCED to commute for work from one coastal county in SoCal to another, unless they CHOOSE TO do so! As soon as an adversely affected commuting family feels they are no longer “underwater,” they should immediately list their home in attempt to “get out from under” and move to a more convenient location for themselves.
In the current market, there is no excuse for this travesty unless the family is so underwater that they should have handed in the keys to their house in long ago, IMHO.
The reality is that all workers in CA coastal counties can live reasonably close to their employer if they wish to do so. They are CHOOSING to do otherwise.
The issue of CHOICE is the “elephant in the room,” here.[/quote]
Well, I say “forced” in a broad sense of the word. It sounds like you aren’t married or have kids. And moving to another area isn’t always easy or easily feasible when you have young kids.
At least in the cases that I’ve seen where people are doing wicked commutes, I say “forced” because they need to work to live and pay bills. Like many locals in the SD area, they don’t have a big emergency savings fund to fall back on. Some of them made poor financial decisions. Others lost houses in the last bubble to foreclosures. So their options are more limited and in the shorter term they need to work and bring in cash flow from paycheck to paycheck.
So the only option for them is commuting to areas as far away as Los Angeles. For them it’s not easy to uproot kids out of schools. Or their spouse might be working and they depend on their income as well. All their friends are here, etc.
Also, even if they aren’t severely underwater. Some are barely above water (positive equity). And some are in between jobs. So it’s not like with these stringent requirements it always means they can go out and buy a new house now. When you have kids (or several young kids) things aren’t so cut and dry.
So when I use “forced” I use it in that sense of the word. Maybe I’m wrong and you are married with kids… but it doesn’t sound like it. And when you are married with young kids, life isn’t quite as simple or easy as when you live alone.
Participant[quote=The-Shoveler]Really I think all of this applies to anywhere in Coastal in SoCal in good school districts (even some not so good).
Even in L.A.
It’s expensive to live along the SoCal coast!![/quote]
No doubt Shoveler…. the biggest difference is the job market seems to be better in LA vs. San Diego with a bigger diversity of industries as mentioned on this thread.
No way I’d want to live in LA. Traffic is horrendous. I do agree with you it’s not cheap there either…but the job market seems to be head and shoulders better.
I have some friends or friends of friends that lost their jobs in San Diego and can’t find another job to replace it in San Diego. Yet they can find jobs in LA and are forced to commute. That really speaks volumes to be how poor the market is here.
But I do agree with you about SoCal being expensive to live.[quote=The-Shoveler]All this said, I do know several people who work in Irvine, and live in San Marco’s and Carlsbad area’s
(it’s about an hour commute most days).Some people are willing to drive (especially if work at home at least part time is possible).[/quote]
Yep. Me too. Goes along the same lines of the job market here in San Diego being poor compared to other areas. I don’t think it’s so much a case of “willing” to commute an hour as it is “forced” to commute that distance.
Participant[quote=flyer]Everything you mentioned is so true, ER. Even going back in time–pre-Qualcomm, Biotech, etc., etc.–the job market here was always dicey. As a native, it’s been interesting to see how things have not really changed that much over time.
Other than real estate investments, made over a long period of time, no one in our family or extended family has ever been dependent upon this economy for creating wealth–(jobs and businesses were not restricted to San Diego)–and that is perhaps why just about everyone in our families have been able to stay and enjoy great lifestyles here for so many years.
It truly is a wonderful place to live–if you can afford it–and that is the key factor many should consider when moving here.[/quote]
Flyer,
Thanks for confirming it’s always been like that. I’m just an outsider looking in. I’ve been coming to San Diego on vacations since I was a kid and always loved it. I remember being in college and upon graduation many of my college buddies moved out here. (Some without jobs).
I remember being envious at the time that they got to enjoy the great weather, beautiful beaches and gorgeous landscape. I decided to move to Dallas instead. NOT a glamorous city but I reasoned the job market was much better, no State income taxes and the cost of living was really low there. TONS of high paying jobs. I figured it would be the perfect place to climb the corporate ladder, make tons of business contacts, build up my resume and most importantly build up net worth.
Admittedly, for many years I’d be envious of my friends that lived in San Diego. I’d come out and visit them and they SEEMED like they had the perfect life, especially during the real estate bubble. They drove the BMW’s/Audi’s/Mercedes, they had the big house in North County.
We never really talked about how much money they were making. I just assumed they were doing pretty well for themselves because I’d come out here to visit, they had really nice (and expensive houses), both they and their wives were driving nice fancy cars (typically new one every few years). It wasn’t until the real estate market crashed did I figure out they were using their homes as ‘ATM machines’.
Most of them ended up losing their homes. All of a sudden the “San Diego is INCREDIBLE” comments started becoming, “San Diego is overrated…it’s too expensive, the schools suck unless you spend a fortune on a house…. I can go to X city and buy a house for a fraction of the cost, etc”.
During the BOOM years things were great. After it crashed…not so much. When all was said and done, they were all leveraging to live the lifestyle they wanted to live. Now most of them are in cities like Dallas, Atlanta, Charlotte, etc.
[quote=CA renter]So true, ER! I’m one of those people who moved here on a Friday and thought I’d have a job on Monday. Up in L.A., I had headhunters calling me all the time and at least one or two good job offers a month, even during the early 90s recession, and I wasn’t in the market for a new job. Down here, after trying for a month or two with no luck, I decided I could get in at a lower level and quickly work my way back up (always worked before!), so started applying for lower-level jobs at ~1/3 less than my previous salary…and STILL couldn’t find anything! Some interviewers would actually say, “that’s a pretty high salary, isn’t it?” (referring to the lower salary). It was unreal.
I’ve met a lot of other people who’ve moved here from L.A. and other large cities who’ve had exactly the same experience. It’s crazy to see how much people are willing to pay for housing given the job market down here.[/quote]
CAR. Thanks for sharing that. It seems like not many here want to admit things are like that here. I’m still fairly new here but I’m a very quick learner and caught on to the market fairly quickly. Many here still seem to be in denial.
I decided early on that I wouldn’t move to San Diego until I was pretty much done climbing the corporate ladder and already built up a decent amount of net worth and cash flow via other investments.
On another board I post quite a bit on there are people that are totally out of touch with reality. MANY people daily post about wanting to move out here and they THINK they can move out here with 2 or 3 kids and survive on a salary of only $80,000 to $100,000 here. I tell them it’s impossible to save for retirement, save for their kids college funds, live in a nice house in a good school district, etc.
Some of the answers are comical. Yes, San Diego is a GREAT city but it’s not for everyone. It’s amazing how many people will really live here that can’t really afford to live here. I guess that’s why there is a high turn over of people that move here moving out.
When we make friends with people that have lived here forever and will always live here they typically ask us….”are you just passing through or are you here for the long haul?”. We’re here for the long haul but they say they’ve invested so much time in friendships only to have the people move away as they can’t afford to live the kind of life they want to live here.
Read some of them. Some people are in denial big time:
http://www.city-data.com/blogs/blog34881-helpful-threads-about-cost-living.html
Some of them are comical. Look at this one: http://www.city-data.com/forum/san-diego/1831982-yet-another-potential-moving-san-diego.html
A poster actually tells another poster all you really need to live is “food shelter and clothing”. LOL.
ParticipantThanks CAR and The-Shoveler.
Yep. I totally agree with you. I specifically mentioned the “funkiness” of the job market here in San Diego because a LOT of people have big misconceptions about the market here.
Back in THEIR city they lived before they moved here they might have been something special. But many find here there is such a pent up demand from all the people that want to live here. San Diego is such a desirable place to live and everyone and their brother wants to move here.
I can’t tell you how many “hot shots” that moved here to San Diego expecting that they would easily find a great job get disappointed here. Some end up taking something totally NOT in their field or something that they wouldn’t consider in another city but they are forced to here in San Diego.
CAR, as you mentioned, in many major metropolitan cities, a good track record, experience, history of achievement and a decent network base will almost assure you a good job. But that isn’t always the case in San Diego. Or if they do get a job in the field they want, it’s a fraction of the price they could make in a less desirable city.
I know some people that work in HR and they tell me they routinely get people with a Master’s degree applying for fairly low level jobs. Also, just go around to retail and restaurant places and see how many people are working these type of low pay jobs with a college degree. LOTS.
Very few people come to San Diego and are pleasantly surprised with the job market. Most are negatively surprised how difficult it is here.
Again, I’m not saying that will be the case for everyone. As mentioned, Engineers, Biotech, and some C-Suite people probably won’t have too difficult of a time finding jobs but salary levels are much lower than other cities for the most part.
It’s amazing how much better the LA market is vs. San Diego but that will always be the case.
I just think people buying that don’t have a VERY stable job or lots of savings have to be a bit careful in this kind of market. San Diego is a wonderful place to live but not the best place to climb the corporate ladder and make a lot of money, at least how I see it compared to other cities.
I often joke with my friends that if I moved out here after college like many of my college buddies did… I’d probably have a fairly mediocre net worth (like they do). Most of them moved out for the great weather, sun, beach but then they woke up one day… 40 something year olds with kids and figured out that there is no way they can retire someday, live in a good school district, save up for their kids college fund and live the type of lifestyle they want to live in San Diego and almost all of them have moved out.
Such is San Diego for many people.
Participant[quote=sdresident]Thanks ER for very good insights.
Yes, this itself is a stretch for us.
Wondering if we might be over paying (high ppsf) for this house. Yes, checked out delsur. It is also priced in the 760s (base price) & high melo roos (300 per month more than lennar home), but ppsf is 250.[/quote]You’re certainly welcome.
Well, just be careful “stretching” more than you can comfortably stretch. As mentioned, I have a few college classmates that moved out to San Diego many years ago and they were all doing great when they could use their homes as virtual ATM machines and the values of their houses kept going up….. but once the recession came they all moved out of the area.
I’d just say have some savings aside AFTER the down payment. It seems like so many people in this market are really stretching to buy and what they can afford under the “perfect scenario” of stable job situation with them and their spouses and no one losing a job, etc.
San Diego is a funky market for being such a big city. It has a small town feel to it. Add in the “sunshine tax” factor of nothing special salaries and poor economy and job market (other than if you’re in Biotech or Engineer that could work at Qualcomm type situation, or other possible C-Suite type jobs) the job market here isn’t that great. In fact, you could argue it’s fairly mediocre for being a large metropolitan area.
In other major cities you lose a job and it’s not too tough to find a replacement job where you can earn the same or more. Whereas here in San Diego from what I can see from people I know losing jobs..it takes them a while to find another…or they can’t find a job where they made as much. I even met some people that couldn’t find a job and are commuting to Los Angeles daily/weekly!!
So be honest with yourself to make sure you can comfortably afford the property. I give you BIG kudos for mentioning “this itself is a stretch for us”. Many people in San Diego even when that’s the case won’t admit something like that. Either from pride or more aptly severe DENIAL or many times BOTH.
I guess different people will have different opinions on if it’s worth it to pay the higher price per sq. foot in Carmel Valley vs. Del Sur. It seems like in both areas, there aren’t a shortage of people that will snap up these properties.
Probably the decision for me would come down to how big of a property you need, do you plan on having more kids in the future and need a bigger property (i.e. more bedrooms), where do you work and is the Carmel Valley location much closer to your work, do you already have kids going to school in Carmel Valley and want to keep them in the same school district type of thing?
Wherever you decide to buy…. don’t make the mistake of just planning on what you can afford under the ‘best case’ scenario. People almost always plan on the maximum they can afford on ‘best case’ scenarios. Also, factor in what would happen in a not so best case or even a worst case scenario.
I’ve purchased MANY properties for myself and on behalf of clients of mine and the biggest problem I’ve seen is people that go into a real estate purchase only thinking of the ‘best case’ scenario. Unfortunately in life things happen. So my advice would be to think about that kind of thing as well.
Best of luck to you whatever you decide.
Participant[quote=sdresident]Double checked. Yes school district is important to us.
It is san dieguito school district. Yes CV schools. Following are assigned schools.
Sycamore Ridge School
Torrey Pines High
Carmel Valley Middle[/quote]Yeah, that’s something really important to look at if you have to be in the San Dieguito School District. Just down the road turns into Poway Unified. Both are really great school districts.
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