crefloors

The other thing is keep an eye on interest rates. They ARE starting to creep up and just one additonal point can make or break the deal on a particular house. There have been a lost of creative ways to finance in the last year or so but be careful of some of them..for example, interest only. That can sometimes get a person into a house but you either need to refi in a couple of years or bank that the market will go every higher. Also, perhaps your income will be higher in the Bay Area than it is in Minnesota. You will need to do a lot of checking things out while you are in SF this summer.

MNGirl2

Thanks everybody for your feedback. It definitely gives me some different perspectives to consider this summer. Life is all about tradeoffs, huh? Family, housing, careers, travel, money...it's enough to make your head spin!

LoveItaly

Hi MNGirl, yes life sure is about tradeoffs. Especially once you own a house! What was the name of that movie, "The Money Pit" I believe.

But every change in life is a bit scary and nervewracking isn't it. And what a shame at the end of one's life to say "if I had only"

You have been given some good advice here. Hook up with a good Realtor when you get to the SF/Bay Area. Check www.realtor.com to get an idea of what is available and the listing prices. And don't even think about offerring less then the listed price. That doesn't work here unfortunatly for buyers.

And the best of wishes to you two while you investigate the ins and outs of your new venture in life!

curmudgeon

It is definitely easy to be "house poor" in CA. You can end up with house payments that don't let you afford the travel, new cars, etc that you might expect and want, though the fact that home loan interest and property taxes are deductible against income tax helps a bit (it is effectively against your marginal rate, not average rate). If you are looking at putting down roots - buying a house, raising a family, you should only make the move if you have a clear understanding of why you want to be here. Given real estate transaction costs, it could be an expensive year or two if you decide you don't like it.

Figure half the house for twice the price compared to Minn. On the other hand, you may not need as much house, because you don't have to spend long winters cooped up in it.

We faced similar conditions years ago, and managed to buy a place on a single income with three kids, but it wasn't easy, and that first house here wasn't much (1000 sq ft and pretty beat up). In our case we had several factors that brought us here and kept us contented despite the housing costs: being close to family, being in the center of industry where I work, and lastly - enjoying the outdoors and CA life. If it had just been one of those factors, I don't think it would have been worth it for us.

J_Correa

curmudgeon - good point about not needing as much square-footage because the outdoors is additional living space for most of the year. We are in the process of fixing up the courtyard on the back of our townhouse. It's an extra 200-250 sq ft of living space that we will be able to use basically any time it's not raining.

PamSF

Check out front page story in today's SF Chronicle. Home prices increased by 36% February to March of this year in the Bay Area.I think you can access it by going to www.sfgate.com

LoveItaly

Hi PamSF, that article in the SF Chronical was something wasn't it. It is scary what is happening in CA regarding realestate.

crefloors

Because of the housing costs in Calif., people from the Bay Area and LA have been fleeing to Nevada in droves and that in turn is having a ripple effect on OUR real estate. In Reno, you can't find a house other than mobile home or manufactured house under 200,000. Now you guys in the Bay Area will laugh at 200,000 being considered expensive, but only a couple of years ago, entry level tract houses were readily available at 125,000. There are so many areas being developed here with houses starting at 700,000 and the million dollar range is common as dirt anymore. The demand and available land is driving the market and it's not going to be very long before people from California will be moving laterally rather than being able to come to Nevada, pay cash for a wonderful house and pocket the rest. People still like coming here because there is no state income tax, but other taxes are beginging to make up for that now. The gaming simply does not pay for everything anymore like it did 30 years ago.

RBCal

In the Chronicle article it says that over 60% of new mortgages are interest only. In my opinion, anyone getting one of these loans has a screw loose. I would be surprised when interest rates increase if real estate prices don't decrease and then you would be stuck owing money if you sold the house.
You can lose money in bay area real estate. Prices dropped after 1989 and didn't recover until the mid 90s.

Grasshopper

This mornings news said the median house in the Bay Area is $566k. The average mortgage is $2600/mo. (does not include property taxes or insurance)

If you're going to do it, do it before you get accustomed to your income and way of life. As a long time recruiter, I can tell you that I've given up on relocating any good candidates from outside of the Bay Area. I always end up losing them when they try to find a house to buy.

good luck!

J_Correa

With the interest-only mortgages, you have to be really careful. It can be a good choice under the right circumstances, but I highly doubt that 60% of the people buying in the Bay Area have those specific circumstances.

When people buy fixers that they are only planning to hold for a few years, interest-only can be a good move. Instead of paying principle, people put the money into improvements on the home. They gain more equity through the improvements than they would by paying down the principle on the mortgage.

If people are planning to stay in their homes longer than say 5 years and/or they aren't going to make any improvements that would significantly increase the value of their home, then an interest-only mortgage doesn't make any sense.

LoveItaly

Also on the sfgate.com site today is the article "Surreal Real Eastate". Another unbelievable fact of buying property here.

johnthedorf

MNGirl,
When I was 27 and lived in SF I loved it. It is the most beautiful city in the USA and within 4 1/2 hours doorway to the magnificent Sierra's. I moved to Seattle and enjoyed that area as well but it in no way compares. I now live in Florida spending my retirement affordably. If your main concern is $$$ then forget it, but if you want then experience of a lifetime then go for it. No doubt what you spend will be well spent and the experience will be magnified beyond comprehension. Like the Nike tag line....just do it and be prepared for the time of your life.

Fodorite018

Pam and LoveItaly--I guess that is good news for my dad. He is hoping to put his home on the market in the east bay and move back to OR soon. I still remember when he moved from WA to CA and the sticker shock lasted for several years.

LoveItaly

Hi mms, I haven't kept track of the housing cost in Oregon but anyone that wants to sell their house in SF & the surronding Bay Area and plans to move to a less expensive area will do just fine.

Hope your weekend is going alright.
Take good care.

Fodorite018

LoveItaly--Yes, he figures he will do pretty well, lol! The costs here in OR have risen a lot, but still are reasonable by comparison. He is looking at Bend, our favorite area. I told him we will be doing weekend house swapping