Affordable housing in California????

Old Nov 1st, 2004, 02:44 PM
Join Date: Mar 2004
Posts: 133
Moved to the Bay Area 3 years ago. Even with an advanced degree and a great job at a biotech company, there is no way we could afford to buy a house here (just need four walls and a yard for the dogs). The first thing the bank asks when you call for a loan is, "Do you have a family member that can loan you the money for a down payment?" Duh, that is why I am calling the bank! Almost all of my young DINK coworkers that have bought homes have had help from their parents or families to pay part of the mortgage or down payment.

We finally gave up and bought three 4Br brand new homes out of state that are rented out by a property management company. Almost made me cry to see the 2500sq.ft. homes for $180K or less that I wouldn't get to live in! We also bought a house in Tracy in the Central Valley (70 miles one way for my commute to the peninsula) and for two years I spent anywhere from 3 to 4 hours in the car everyday--even leaving the house at 4:30am to work slightly off-commute hours--you still hit traffic. After two years, we sold that house and avoided paying capital gains tax, and now we're trying to invest that money wisely (I'll admit the 50% return on our investment there was nice!). Still can't afford to buy a reasonable place on the peninsula without being totally house-poor with high mortgage payments. Now we're looking at homes in the older, up-and-coming part of Oakland, but they still start at $350K for a 2Br shack if you want to get a fixer, but not get shot at while living there.

The bottom line for me...I agree with the above just isn't affordable for young people that are just moving to the state if you don't want to eat just bread and water and don't want to live in a condo!
AZWildcat is offline  
Old Nov 1st, 2004, 02:45 PM
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If your real question is how deos anyone afford this - the answer is really simple - not easy but simple:

Get a good education

Get a good job - at least one (I worked two jobs for the frist few years after I finished school)

Work til it hurts, get promotions and make a lot of money

Save most of the money

Do this for 6/7 years and buy into a starter apartment (but be sure you get a lot for your money - preferably in a neighborhood that is gentrifying)

Let the normal increase in home values - and the extra increases due to gentirification - quadruple/quintuple your value

Move on up from there

nytraveler is offline  
Old Nov 1st, 2004, 05:25 PM
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AZWildcat, it isn't just the young people moving to CA that cannot afford the prices. It is young (and not so young sometimes) that are 2nd,3rd or 4th generation Californians that cannot afford to buy a house.

And even in areas that are high crime rates, bad schools etc. the prices are insane.

And condo's are cheaper yes, but also have high monthly association fees along with a "threat" of being suddenly charged with thousand of dollars that must be paid usually within 90 days due to HO Association Boards that allow deferred maintenance. There was a recent article about condo's in Vallejo CA. A city that has had the State of CA take over their school district due to many problems. These condo's owned by seniors, young families, singles etc.
They had been given written notice by the HO Association that they will have to come up with something like $40,000.00 by Jan 2005. This is due as I recall to sinking foundations that obviously the board ignored in the past.

These condo's cannot be sold. Who would buy them? The residents cannot come up with the money. They do not qualify for more loans from lenders. And association can put leins agains the condo's. They live there because of tight budgets. So what do they do. A sad story. The outcome will be interesting. Made me cringe when I read it.

AZWildcats post about buying property out of state, hiring a management co. and so forth just turned on a lightbulb!! That one I am going to research. It is always interesting to me how Fodorites not only give good travel advice but also some good day to day advise.

Regarding the comment about high prices keeping out the undesirables. May I respectably state that the comment made me both sad and angry. Yes, keep out the undesirable by all means!!! Like our teachers, our police, our firefighters, our nurses etc. Oh yes, sure don't want them in the neighborhood do we?

And the most expensive develpments have the most elite citizens. Sure, sometimes. But not unusual to read about big time drug dealers, investment "advisors" and so forth being arrested. They surely have added to society.

So, I will get off my soapbox. Sorry to ramble on. But having family come to SF right after the civil war, knowing real estate all of my life, having owned lots of properties, houses, office buildings, rental houses, fourplexes etc., I just am stunned at prices today.

And, as I am still on my soapbox
I would like to comment on something that can affect many.

I am concerned that we will get like Italy. Young people getting married later in life. At the most having only one child. And than guess what the problem is. Suddenly lots of retired people. And not enough workers to pay into the system. Current workers pay into the pension system, pensions paid to the retired. Over period of time not enough money paid into the system. So pension paid out become a problem. And workers today worry there will be no pension, or pension will be much lower (as cost of living continues to climb) when they retire.

I have lived in CA all my life, so am only speaking of CA not the rest of the USA. But I have noticed for about the last 20 years many couples only have one child. Some none. I know, immigrants have more children. But I am talking about the long term California residents and their offsprings. Have seen it in my own fammily. Good for the earth? Am sure it is. But also a problem when there is less workers in relationship to retired persons.

So dear ones, nothing has been solved for sure.

And November 2nd is here tomorrow. Oh sigh!!

Wishing all a good week and wish evryone could have decent housing, good food, adequate health care and loved ones that care about them.

LoveItaly is offline  
Old Nov 1st, 2004, 07:11 PM
Join Date: Jan 2003
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Just bought a great house in LA, our first. It is not huge. For the price we paid, we could have gotten a mansion on a golf course/lake/beach somewhere else.

But, it's LA! And I love it.
You got to pay to play here, but I think it's worth it.

I agree with J_Correa, it can be done. People are buying homes, which is why the prices are so high. If no one could afford it, the $$$$$ would drop.
Alisa is offline  
Old Nov 1st, 2004, 08:52 PM
Join Date: Oct 2004
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Ahhhhhhhhhh, LoveItaly, Let me restate. I was simply quoting the famous (who said it first matters not, I'm saying it now) quote regarding civil engineering. I'm not suggesting this is a wise or fair or agreeable notion. My earlier post should have noted the sarcasm I was quoting. I think it's BS. We barely make it here, ourselves. I meant no offense to anyone - and for this, I apologize. Many cities don't require that developers build with accurate portions of housing to meet the low, medium, high levels of disposable income earmarked by families for housing costs.

Regarding the lightbulb...Again, I referenced Bob Hope. There's a big difference btwn buying "in the middle of nowhere" and buyin "at the edge of nowhere". My suggestion is that a person look at the hottest R/E markets (I mentioned a few) and aim there. Whatever is growing and is forecast to sustain growth (Vegas, baby, Vegas). Also, Bentonville, Arkansas, where a large retailer's HQ is located. Guess which one? The area is finally seeing million dollar homes there. Great place to buy? Take a look for yourselves.

East Palo Alto was the hottest area for a number of months. Yes, EPA! A city in which no bank would operate. Where the city had no police force and had to "borrow" (can't remember correct legal terms) a police force from a neighboring city. A place where check cashing and liquor stores were the only businesses - for a time. Now, some parts have been built up. IKEA and Home Cheapo moved in and everything took a sharp uprising. It has plateaued for a while.
In some neighborhoods of the SF Bay Area, Condos and Townhomes are earning equity faster than SFRs. This is why I pointed this out earlier.

I wouldn't suggest that anyone rely upon the info gleaned from a travel site concerning R/E and their financial futures. Dig deeper elsewhere.
rex_skidmore is offline  
Old Nov 1st, 2004, 09:19 PM
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rex_skidmore : you sound like you know the area well...where are you from? I have family in the Bay Area in five cities. I've seen many changes in real estate. There was a peak in 1989 and in 2001, and as was mentioned by somebody else above, the area is almost due for another peak.

TO : People moving here from out of the area : Our first house was nothing special, but think of this: your first car and your first job were probably nothing special, either. Buy something and flip it for the next home and continue doing so as long as the tax laws and your finances provide. Only Donald Trump was born Donald Trump. Don't compare yourself to some guy on TV. Even Trump files for BK protection now and again.

TripleSecDelay is offline  
Old Nov 1st, 2004, 10:48 PM
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I'd keep my eyes open for a fixer upper. We lucked out before the dot com boom - buying in a nice neighborhood for $407,000. Of course it was one of the ugliest houses on the block - and it stayed that way for quite awhile as we took care of things like the kitchens and bathrooms inside. Eventually we got to the outside and took the facade down to the studs.

Now we live in our dream home - and after three refinances - we're finally at the point where we've stopped borrowing and started making extra payments to see the light at the end of the tunnel.

Now in the time since we bought I thought our property value had risen to about $1K (Yay! We're millionaires!). Imagine my surprise last week when two houses went up for sale on our block. The cheapest was $1.5K and the highest was $1.9K.

Keep your eyes peeled for the unusual house. Ours was a 2bedroom/2bath when we started and now it's a 3 bedroom/4 bath. Ya gotta keep your eyes peeled for the extra space that can be converted. There are plenty of diamonds in the rough - it just takes some imagination and hard work to find them.
SFImporter is offline  
Old Nov 2nd, 2004, 08:44 AM
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As Alisa said - people are definitely buying homes around here. When we were househunting, every place we looked at ended up with multiple offers. Plenty of people are buying homes.

Regarding family members gifting downpayments - I don't know many people whose parents have that kind of money to give away, but people still manage to buy homes. As long as people have good credit scores and a high enough income to make the mortgage payments, there are plenty of 100% financing loan programs availible to them. Do a piggy back loan to avoid PMI and you are set.
J_Correa is offline  
Old Nov 2nd, 2004, 09:06 AM
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Just remember also when looking at homes multiple offers are the main way things get done out here. We lost out on two houses due to multiple offers. Our first house we bid 14K over the asking price. We were the fifth of 9 bids! The multiple bid thing does mean you have to factor that in when considering what price range you are looking at. The second house we had considered was in a neighborhood where 100K over the asking price was the "norm".

We were the third in bids on our present home. That being said, we wrote a letter(shameless but it worked) and were given the opportunity to be the match the highest bid which also gave us some idea of what it had been.
It's a 2 br/1 bath condo in a four unit building(1912 great shape) in a "destination" neighborhood. Six months later another unit in our building went for 89K over the asking price and had 11 bids.
PamSF is offline  
Old Nov 2nd, 2004, 09:10 AM
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Isn't that just bizarre, Pam? I sold a house in San Jose in June for over the asking price. I don't know why realtors don't just adjust their asking prices. It makes it really difficult to buy something if you're from out of the area and not accustomed to this phenomonon.
Grasshopper is offline  
Old Nov 2nd, 2004, 09:36 AM
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Ah, the multiple bidding...don't even get me started!

When we sold our house this summer, we had two offers that were within 1K of each other. I refused out of principle to create a bidding war, because I resent that as a home buyer, so we simply took the offer that put the most cash down (more likely to close the deal in our minds.)

As a buyer, I've put in more than 5 offers in the last year for fixers in the Bay Area (DH is a real estate broker, so its an easy thing for us to do.) We figure eventually we'll win one of the wars, but so far we haven't. Fixers especially have multiple offers because you're competing against contractors who want to fix-n-flip and home buyers who just want a shack to fix up themselves. DH always says if a fixer is listed on the MLS then its not really a fixer because it will sell for more than the offered price. The true fixers are found long before they go on the MLS or involve realtors, and the above posters are right--it takes some creativity to find them.

Here are a few examples for you. House offered at $295K. We offered $295K. They countered at $345K. We bowed out because their piece of crap fixer just wasn't worth $345K to us (we would have to sink 50K cash into it over two years and then it would have to sell for >400K after two years, and the area was not all that great.)

Another example. Fixer offered at $290K. We got into contract at $280K and opened escrow. Seller agreed to pay for Pest Section I repairs. Pest report came back at 40K, we offered to make the purchase price $260K (thereby saving the seller $20K and they wouldn't have to shell out cash to make the repairs prior to close of escrow.) Seller refused and stalled escrow, even though they were in contract to pay for the 40K repairs. Two lawyers later, we found out it would cost us >10K to sue her to "perform" or honor the contract, with no guarantee of a win in our favor. Six months and $1500 later (paid for inspections, rent for two months when we thought we would be living there), we decided to walk away.

Sometimes I think buyers should all get together and decide what they're going to do, instead of bidding up the price of homes so much. Problem is that somebody would always stab the others in the back. I feel too young to be this cynical, but being involved in the Bay Area real estate market makes you that way.

Bitter? You bet. They tell you if you get an education and you work hard and save money, you'll get the American Dream, but it is nearly impossible to have that here and live below your means. Sure, I could go out and get mortgaged up to my ears, but I would rather live below my means.

AZWildcat is offline  
Old Nov 2nd, 2004, 10:25 AM
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I'll tell you one thing that helps if you're planning to buy in the Bay Area. First, pick the right parents. Pretty much everybody I know who's bought recently around here, if they're not trading up or extremely high-paid, is getting money from the folks. Sadly, I neglected to pick affluent parents and can only watch.
KT is offline  
Old Nov 2nd, 2004, 10:33 AM
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They set the asking prices low on purpose, to start a bidding war. If you get the buzz going on your house...everyone thinking it's the hot one on the market....then people (dummies) end up bidding the price up.

In other words, see a house for 500,000, pass it by, overpriced. See the same house for $460,000 and put in an offer. Then a bidding war ensues and you end up getting it for $510,000 and think your'e a winner. The seller never intended to sell for 460 but wanted to generate lots of interest in the property. Psychological real estate warfare.
clarkgriswold is offline  
Old Nov 2nd, 2004, 10:52 AM
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oh pianogirl, it's true the lovliest places are expensive. i was wandering through downtown mill valley with a pastry in my hand wearing a short sleeved shirt and sandals just yesterday. everything is green and shiny in the autumn sun. the shopping was fab, lunch was delish. now, i'm not saying that there aren't other places just as lovely or lovely in other ways but california is particularly wonderful.
i am a real estate agent and my husband and i often talk of selling our home for way too much money and moving out of state. each time we begin to explore we find that the places that we would love are just as expensive.
while it's true that it's difficult to get into the market it can be done. it can be done with little money down even. many opt for an interest only arm and then refi in a few years when values have increased. two years ago values were increasing 2-4% a month, now they are slower but still moving upward. you may fall over from sticker shock coming from tennessee but you'll recover and enjoy your little nest egg. property values increase here at an alarming rate compared to most of the country. california is a great investment and, did i mention?, a pretty wonderful place to live. check out areas further from san francisco or los angeles if you can. you can still buy a home in sonoma county for 500 or even a home in the central valley for 200. try a little road trip.
trishiad is offline  
Old Nov 2nd, 2004, 11:02 AM
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I disagree with you Clark. My price was set at the top edge of the comps. I think realtors count on the "you better overbid" psyche. And the whole secrecy thing just enables it.
Grasshopper is offline  
Old Nov 2nd, 2004, 11:07 AM
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If the OP is still reading this thread, I truly hope they log on to or find a local realtor before deciding whether to move to this area.

When we sold our home in Tracy (the closest central valley commuting town to the Bay Area), there were only five homes listed at less than $350K, and ours was one of them (1400sq.ft. 3Br/1Ba older home). Sure, you can pay $200K for a condo or small home in Modesto, but now you're talking a 90-mile one-way commute to SF or Oakland. People do it though, and I did it for two years, but its not for the faint of heart and I can't imagine having spent four hours in the car everyday if I had kids in daycare or that I was rushing home to.

Of course, the Bay Area is indeed a wonderful place to live. I just didn't wish a few million other people didn't agree with me.

AZWildcat is offline  
Old Nov 2nd, 2004, 11:41 AM
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Rex, that's OK. Not too worry. We all have posted a humorous comment to have it taken the wrong way. And I always enjoy reading your post.

I just had a talk with a 30 year old man (college grad) who was a bag boy at Safeway. Not sure what his degree is but he has 3 jobs and his wife has 2. The economy does not allow a lot of people to get the jobs they hoped to when they went to university. This young couple (with a total of 5 jobs between) are renting an apartment, trying to buy a house. They are not looing for anything special. They have been outbid on every property they have attempted to buy. Typical story as others have related here. He sounds as though he has a good real estate agent though. My husband was a RealEstate Broker so real estate is something I really do understand. Now if I could just clever about computers, sigh.

And the town next to me has been trying for ages to build units for low income working families and seniors but a large group of "NIMBY" thinkers have been fighting this like mad. I just shake my head and wonder where their thinking is.

I really do wonder what the future holds for the next generation.

And yes,way out in the outskirts houses are cheaper (but I understand that those prices are going way up also). Have many friends whose married children now live 3 plus hours away and so they do not have the comfort of having children and grandchildren in a close vicinity. Think this is putting stress on all ages too. How nice it was when Grandma or Auntie could help when a young family needed it. I sure did and felt very blessed.

There are people that commute from way north of Sacramento everyday into SF. I just can't even imagine.

A good day to everyone.
LoveItaly is offline  
Old Nov 2nd, 2004, 11:54 AM
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When we were househunting, it was frustrating - we were outbid 4 times before we were successful. We had a good agent and were persistent. After a few months, things worked out in our favor and I am very happy with the house we bought.
J_Correa is offline  
Old Nov 2nd, 2004, 12:09 PM
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We just left San Diego. We witnessed lots of "variable pricing" on the market there. A house would have a range, say $400,000-460,000. I never quite understood all the logic behind it.

By the way, our last house in San Diego (actually between SD and nowhereland) sold for 40% higher than we bought it 20 months earlier. Insane.
Jocelyn_P is offline  
Old Nov 2nd, 2004, 12:40 PM
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Jocelyn, regarding the pricing of houses, depends somewhat on the agent. So list low, some list high. That it is important for sellers to talk to 3 agents. And have them bring comps regarding recent sales.

Also, as my husband over said, the price a house sells for can also include the situation of the buyer. For example, someone being transferred job wise that desperatly needs to relocate in a short amount of time.
LoveItaly is offline  

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