Housing

Discussion in 'General Discussion' started by Solayce, Jan 27, 2019.

  1. vaedaen

    vaedaen TZT Veteran

    Post Count:
    1,422
    yeah we bought in berkeley (hills area). we weren't even actively looking and wanted to save a couple more years but got super lucky in several different ways and purchased off market.

    only added 6ish minutes to my commute (takes me about 28 mins door to door).
     
    Utumno and Solayce like this.
  2. Utumno

    Utumno Administrator Staff Member

    Post Count:
    39,945
    Just reading through this thread, I don't think anyone can give you any useful advice in terms of commute/location tradeoff due to the kid needing special services factor. When my niece needed to be near emergency + was in and out of the hospital all the time, basically any expense was insignificant compared to the hassle/impossibility of living far away (thankfully my sister in law and husband were able to afford a place right in SF where they could be near the specialist hospital she needed).

    I'll definitely second Sear's opinion though on not underestimating repairs (and headache) of homeownership. If you want to stay in that area, are there small condos available you could rent for a few years while saving up for a ranch-style house? I have no useful input on manufactured homes - people have already mentioned the potential depreciation and importance of quality neighbors (and I'm sure you're already taking that into consideration).

    Only other thing I'll add is, people who haven't lived in the same area (and understand the local salaries) can't really comment usefully on property values. By the measure of most of the US, about 70% of people in SF Bay Area should be clinically insane for paying what they do for rent/mortgage, but salaries are also inflated here (in certain sectors/industries anyway).

    The one useful thing I can speak to is commute distance. My general commute distance for a couple decades now has been around 35 miles (not too bad), though that's about an hour and a half if you go during peak commute hours (fucking awful). When I've had management gigs that demanded I be in the office by a certain time, life flat out sucked. When I worked in SF - career wise that was the best experience I've ever had: rewarding, amazing colleagues, learned tons, good prestige, paid well - but I burned the fuck out within a year. That commute basically destroyed me (minimum 1hr 20 mins usually each way).

    I *love* the city I live in now, despite commute distance, but if I had to work in SF again, I'd probably pay whatever it took to shorten my commute, even if I had to live in a fucking box w/plastic windows. Fortunately, I've finally found some good work/life balance moving to individual contributor role which lets me work from home once or twice a week (makes a really big difference for me mentally).

    Good luck to you, whatever you decide. I'm w/ @vaedaen that the process can be mega-fucking-stressful.
     
  3. Samassi Abou

    Samassi Abou TZT Abuser

    Post Count:
    5,477
    I agree with Velox that I’m not convinced that we won’t have another recession and house price collapse in the next few years, so there’s an option of holding on to your money, waiting for a decline in house prices and then purchasing in a buyer’s market.

    San Diego seems to have had a lot of price growth since 2013. Usually after a lot of fast price growth, property prices will level off for a decade or so. If you’ve bought near the peak, then there’s no guarantee that there will be much price growth in the next few years.

    Anyway, take any advice about the future with a grain of salt. At best it’s educated guessing.
     
  4. Utumno

    Utumno Administrator Staff Member

    Post Count:
    39,945
    p.s. You must've scored big time landing a home in Berkley Hills vae! Even on a doc's salary that could not have been easy - competition in that area is fucking ferocious. Damn azn's be coming in and dropping literal suitcases of money on good deals and outbidding everybody.
     
  5. vaedaen

    vaedaen TZT Veteran

    Post Count:
    1,422
    i mean i still can't believe we are here to be honest. if the house would have gone to market there is no way we would have been able to afford it at this point in our lives -- could have easily gone for 300-400k more than we spent.

    our appraiser asked our realtor if the house was gifted to us hah.
     
    Utumno likes this.
  6. Holystrife

    Holystrife What the fuck did you just try to put in my ass?

    Post Count:
    6,834
    This thread is really providing perspective to me on areas I didn't know much about. 12k a year in property taxes for a non-mansion not on 20 acres? H-O-L-Y B-A-L-L-S, but I assume that's probably pretty normal for the area. Our house is valued at 500 something thousand and our property taxes are 2.7k a year.

    This is a massive understatement. Our house was built in the 60's, we gutted it, put 120k into it and every two years we are still dumping thousands into it. New furnaces/heatpump/air handlers - $12k. New roof? $7k. Granted, California has a great climate so it might not be as bad.
     
  7. Samassi Abou

    Samassi Abou TZT Abuser

    Post Count:
    5,477
    A lot of it is just down to how well a house was built. My mother has an art deco cottage from the 1920s and it never really has any problems. My house is about 20 years old and I've had to replace a huge balcony and a retaining wall in the last 12 months because they were built badly. Naturally I'm trying to sell it before the whole thing falls down.

    Getting a good builder's report is hugely important.
     
  8. Sear

    Sear TZT Neckbeard Lord

    Post Count:
    31,066
    That's for two houses, but yeah. Still a better tradeoff to eating shit on mortgage interest in a state with high housing costs but lower property taxes. https://www.mortgagecalculatorplus.com/500000-mortgage/

    Let's all agree here that paying double your loan amount in interest (front-loaded) is insane. I feel like a 30Y mortgage is the college loan debt of later adult life.

    Our rent house was built in 1942. It is well-built with no foundation issues, but there are some "materials/design used in [every house before 19XX]" perks that bite you in the ass. Like sewer/water lines that explode because they used a shitty material back in the day (8k repair) or electrical wiring that is corroding. Then there are quirks to the design that don't require repairs but just aren't ideal (like the stucco/asbestos crap that used in the walls before it was considered a health & fire hazard).

    This was my mentality in LA. I was willing to pay more to shorten commute time, and I'm sure that with having a family it puts an even bigger premium on your free time. Owning an old ass house is probably the last thing you want for that situation.
     
  9. Velox

    Velox TZT Abuser

    Post Count:
    5,585
    Long commutes are hell. Cali really really needs fully autonomous cars to happen. That, or better public transport.
     
    Solayce likes this.
  10. Kanmuk_Sealclubber

    Kanmuk_Sealclubber Yes

    Post Count:
    8,535
    I don’t know (legitimately, not arguing).

    With mortgage rates so low (3.5% in Canada), the math seems to favour lower down payments and lower monthly payments, and then taking the upfront + monthly money saved and throwing it in a REIT or index funds. I’ve actually been thinking about this a lot lately, so if anyone that is familiar with real estate markets wants to weigh in, please do. I feel like I may be missing things in my math.

    (I have a very high risk tolerance because I am a white guy and everything always works out for me always).
     
    Utumno likes this.
  11. Velox

    Velox TZT Abuser

    Post Count:
    5,585
    Kanmuk: Yes, you can make money that way, but besides the obvious risk of investing in the stock market, you may have to pay more interest due to lower down payment. More specifically, if the FED keeps raising the interest rates, or the Trump trade-wars accelerate, or we get some silly war somewhere, then your investment(s) will at best go side-ways while you just pay higher interest. If the FED is the cause, this will be a double-whammy.

    If you can get away with smaller down payment without paying higher interest rates though, it's usually a smart thing to do, generally speaking. Paying off on your 3% house loan is like putting it into a savings account with 3% interest (barring tax quirks). Weigh this against higher-risk stock market returns. 3 years ago this seemed like a very good idea.

    Now it's less clear, FED seems determined to hike rates and the world is rather unstable. There is a very real risk that we are at the peak of another tech/financial bubble. If you can live with this risk (e.g. your expenses are low w.r.t. your income), go ahead.
     
    Last edited: Jan 28, 2019
    Kanmuk_Sealclubber likes this.
  12. Octavionn

    Octavionn Mind Blowing!

    Post Count:
    2,119
    I'm not sure if my advice is worth anything..... but the Banking sector believes a heavy recession is already beginning. So the price of homes might drop over the next few years.

    My best friend bought a giant ass property last month walking distance next to SDSU, literally the largest plot of land in the neighborhood where the original owners died and the kids were dumping the property. Old shitty ass house but the land was more valued to him than the house that sat on it. Anyways long story short the owners tried soo hard to get more for it but with signs of being in a recession and no one offering more after a month of waiting... they finally caved and let him take it for $700k. With upgrades to that house (Built in the 70's) and repairs the place should have been worth over $1mill. He's doing a complete transformation to the property and it will end up being worth between $1-2mill.

    Anyways saving money now might be good and as the market pulls back you might be able to get a nicer home with the same amount of $$$. Or buy the same home for cheaper and use the extra cash for upgrades/repairs.
     
  13. Sear

    Sear TZT Neckbeard Lord

    Post Count:
    31,066
    This isn't what I was commenting on, but it is interesting to me too.

    The luxury of "should I buy a house outright or take a mortgage & invest $475k?" isn't on the table for 99% of the population. Most people can barely scrape together 5-10% of a down payment, in which case they are simply stuck paying off a 30Y mortgage (i.e., >900k for their 500k home) and not investing anything.

    But in that scenario, I do think you outgain mortgage interest even with a conservative investment (low-risk index fund or w/e). I personally opted for a huge down payment for a few reasons: 1.) it allowed me to close on the house quickly and with leverage (I ended up buying for 15% under the appraised value) and 2.) taking a small mortgage still afforded me the flexibility of reinvesting with medium-high risk in the stock market. There are times where I regret not putting more into the latter, but I'm mostly content with the decision.

    One downside to a mortgage is in the event that you choose to sell your house in the next 10-15 years, which is a likely scenario for a lot of people. Because the interest is front-loaded and mortgage agreements require you to pay that off in full upon sale, you'll be paying closer to the initial value since most of your monthly payments were going to interest rather than principal. You could still outgain that hit over the short-term with a traditional investment, but I think it's less of a sure thing (2017 to 2018 market performance being a prime example).
     
    Last edited: Jan 29, 2019
    Kanmuk_Sealclubber likes this.
  14. Sear

    Sear TZT Neckbeard Lord

    Post Count:
    31,066
    Forgot to mention that you're paying for private mortgage insurance unless you put >20% down, which tacks on an additional 0.5-1.5% to the interest rate until you pay off a certain amount in principal. You also save some in fees/closing by paying in cash, which will factor in if reselling in the next few years is a possibility.

    Not arguing that this is a better option. I think it really depends on your situation. A buyer who plans to keep a property over the long-term would be better off reinvesting.

    Edit: I'm gonna walk that back a little bit because I don't know if it makes sense all of the time. Looking at common low-risk index funds, some don't even break 3.5% (e.g., VIPSX over the past 10 years). It's easy to cite the historical return rate but I think that's a bit of a mirage especially with the current state of the market & economy. You can't time the market, but I know I wouldn't want to be placing a long-term investment right now unless it had substantial international exposure.
     
    Last edited: Jan 29, 2019
  15. Jackpanel

    Jackpanel TZT Abuser

    Post Count:
    6,744
    I’m putting my house in the burbs up for sale on Thursday. I bought a condo last week that has amazing views of the city and 70 feet of floor to ceiling windows wrapping around 3 sides.

    Going from a 4 bedroom house with a basement to a condo with almost no storage is a huge transition. I’m definitely not a pack rat, but going through the basement to de-clutter made me see all the shit I don’t really need. My commute wasn’t too bad at 20-30 minutes, but I’ll be able to walk to work from the condo.

    Selling is stressful, especially with the prospect of needing to carry both mortgages if it doesn’t sell by April 1. My neighborhood is extremely popular though, and i’ll be the only house this size in the area for sale, so I’m expecting a bidding war with offers presented next week. Still hard to avoid worrying about what-if scenarios though.
     

    Attached Files:

    Last edited: Jan 29, 2019
    Utumno likes this.
  16. Red

    Red TZT Neckbeard

    Post Count:
    15,226
    How does one sleep with all of that light
     
  17. Sear

    Sear TZT Neckbeard Lord

    Post Count:
    31,066
    That condo looks awesome. I've been strongly tempted to go back to that life (sell house at a profit and just rent) if I wasn't in this existential crisis of whether I want to live in a big city or not. Do you guys ever have issues with noise in that environment? Trying to sleep through neighbors and street noise was hell for me.

    Between my girlfriend and I, we are minimalist as it gets. Even with a kid in the picture it seems like a waste to have so much space.
     
  18. Jackpanel

    Jackpanel TZT Abuser

    Post Count:
    6,744
    Its high enough up at 22 floors that the light from below doesn’t seem too bad. The direction those bedroom windows are facing is the historic market area of town, so everything is only a few floors high. Next highest building in that 180 degre view is 12 floors or so. That should also keep the noise level to a minimum. Condo is recent, so has good concrete walls and I’m top floor, so no noise from upstairs neighbors.

    Also, I’m definitely getting some automated blinds, mainly because I love this home automation shit. Condo comes with good quality pull down blinds already, so just need a retrofit. Looking at trying these: https://www.helloaxis.com/
     
  19. Velox

    Velox TZT Abuser

    Post Count:
    5,585
    I don't think you can generalize about noise level in cities. It depends a lot on location (busy streets, nightlife etc), building type and building standards (e.g. walls, insulation, new/old). In a given city there are plenty of condos that are very low noise if you pick them carefully. Obviously, if you want to live right next to the night life, you are likely going to have to accept some noise.

    Personally, I find most US cities to be pretty terrible places. However, long commutes isn't very appealing either.
     
  20. Kanmuk_Sealclubber

    Kanmuk_Sealclubber Yes

    Post Count:
    8,535
    Yeah, the noise levels are really variable. I once lived next to a club + construction, and that was a nightmare. The last several years I've had zero problems and my condo is only one block away from the old one. If noise is a concern, you really need to do your research about adjacent buildings and any construction projects that may be forthcoming (which doesn't take much time).

    Neighbor noise is random. People are mostly decent and.or afraid of confrontation, so so noise issues can be dealt with. But it you get a problem neighbour, man does it suck.

    I would rather die than have to drive places. Having to factor driving into every little things you may want to do is hell on earth, and I could never tolerate it just to have a more "space".

    I will say, though, one thing people often overlook is elevator "commutes". One of the reasons I moved is because he difference between a building with good elevator wait times and bad elevator wait times was about 4-8 minutes vs about 1-2 minutes, and that adds up real fast when you are making 6,8, 10, or more, trips a day (work + social life + dog).
     
    Velox likes this.