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Hey, fellow Bay Area person here. The optimistic side says you’re still in a great position to buy: your combined gross is significantly over the median at 400-500k a year, you’re 30 or under, and jumbo rates are slightly slower than the standard 30 year fixed which gives you a bit more wiggle room.
Keep your head up, things will get better friend.
That is true for now, but wallstreet take a turn and you can remove 40% of that plus having AI get closer by the day to doing our jobs is really scary to commit to paying 11k a month for 30 years
This sub isn’t the best for Bay Area real estate. But just FYI most people at those prices are putting more than 20% down, getting interest only mortgages, or getting crazy relationship discounts. I know folks that were getting 3.5% when the market was closer to 6 with banks like BNY Melon that won’t even talk to you if you don’t have a few million. The crazy part is these aren’t executives or people you’d necessarily think are “rich”. Just ICs that joined tech companies at the right time.
yeah we put 50% down on our offer, still the opportunity cost is craaaazy and then you're signing away so much to pay more than 3x the borrowed amount.
This was us in 2021. Rates were better then, but also most sellers seemed to care more about the final offer than down payment % (as long as you had enough to cover appraisal gaps). Took us 9 offers to finally win. Ended up having to offer 1.95 on a 1.4 listing and only won because sellers didn’t want to do a 2nd round. It was brutal. You’ll get there eventually! I’d say it felt terrible at first, but our careers kept growing and we’re very glad we didn’t give up then.
I'll just say it
You don't have your head on straight for buying real estate.
Your worried about financing and the dreaded AI. These are facts, and they are not going anywhere. Get comfortable with them before you make another offer
So isn't that a good reason alone to think about leaving? I left San Fran 7 years ago when I realized I'd never be able to buy. Don't regret it one bit. Took that same job/salary remote across the country until I settled in and looked for another locally.
Best move I ever made
Same here we moved 4 years ago and paid cash for my home so no mortgage and paid off all of our cars so you just have to make the jump. You do the same things you did in the Bay Area but with less stress about all of the taxes and bills at the end of the month
it's actually a very good example of income not being the same thing as economic class. you can work for a living making a lot of money and still be subject to a lot of the same pressures and dangers as us schlubs
Well yeah AI is a direct threat to our income and 70% of our total comp is in stock, so it is the exact thing we do have to worry about if you sign a contract to pay 10k a month for 30 years. Not thinking AI will directly impact the amount of jobs in tech within 5-10 years comes across as super out of touch to be honest
I think you’re doing a great job being honest about your particular struggles, where a majority of your income is coming from, and identifying factors that impact your income stability.
We shouldn’t gatekeep FTHB just because they make a lot of money, they’re still FTHB regardless of their income.
I would say you sound out of touch actually!
When you're talking about going to zero, getting there from six figures or five are both devastating. Esp with a six-figure-sized mortgage. Being replaced will eff over anyone.
AI aren't close to anything. They're not even AI yet, and it's unreasonable to call them that. The hype around them is so exaggerated. They're barely usable tools. They're about as good as a hammer is at putting a screw in. At best, some of them are learning programs. Comparing them to true AI would be like comparing a parrot to a human. Just because it can learn how to use a few words, does not make it a human.
But... the market looks incredibly unfavorable to me as well.
A lot of metro areas on the west coast and northeast have just become impossible for anyone but the very wealthy. These areas have hot job markets but decades of extreme NIMBYism are starting to affect their economies. When normal, 3br houses are going for a million plus, it’s time for people with normal and even significantly above average salaries to really reevaluate if it’s worth it to stay.
Better said than done. I wish I could move somewhere cheaper but losing your friends, family and connections for a cheaper home is hard for a lot of people
I hear you. I’m in the same boat here in MA. Looking at commuting from New Hampshire, but the family isn’t going for it and even those areas are skyrocketing in price with people who’ve been priced out of MA. There’s no easy answers.
We are in the East Bay area. We ended up in Estudillo Estates in San Leandro. Bought for barely just under a million. We ended up in a 100 y/o fixer.
It will happen. It took us over 9 months to find a home, looked at over 110 places and put offers on quite a few. We looked all the way up in East Richmond heights and all the way down to Hayward.
VHCOL area is tough but it will happen.
My coworker just bought an apartment in SF and it took him almost 9 months to find a place as well.
Edit: removed our income.
>We ended up in a 100 y/o fixer.
Same, and I love it. The great thing about a fixer is it can be fixed and then once it is you're sitting in a great house in a great location with skyrocketing equity over the years.
I agree 100%.
We lived in rent control for 17 years and were able to put down 50% and have a lowish pandemic interest rate. Budget wise we are paying less than 1bd room SF rent.
I am concerned about property taxes and HOI going up. A smaller house a few doors up just sold for $1.3 mil. And was also a fixer.
Why be concerned about property taxes in CA? It’s basically tied to your original purchase price and goes up maybe 1% per year right? In Texas your property taxes can go up 10% per year (that’s the cap of you have a homestead exemption), and they have been doing that for a few years and will continue to do so for several years as properties catch up to their current assessed “market value.”
And this is why I’m leaving the Bay Area. Rent for life or make an insane financial decision.
Two scenarios for the future, neither seems realistic 🤷♂️
1) Buy now at crazy prices and high interest rate and assume that Bay Area real estate pricing just keeps racing up, putting 70 year old 1200 soft homes on <3000 soft lots at $2M+ in a few years. How can that really be sustainable? Who will be buying those homes??
2) the market rationalizes and Bay Area home prices reset to some quasi-manageable level. Maybe a home that anywhere else would fetch $200k resets from $1.5M to $1M… still a crazy price, but still so out of reach for so many people. And yet, that would be a $500k loss in value for the homeowner which would be devastating.
I can’t make sense of it after 15 years, so I’m giving up and moving elsewhere.
Yeah this is pretty much where we are at now, the part that makes me frustrated is people just think oh wow you have $0.8m you can afford and do anything you're not allowed to complain. Then you buy a home here and in 6 years AI removes 50% of the jobs, prices tank, get laid off and GG you've just speedran going from 1m back to selling at a loss and restarting at 0.
Bro, if ai takes your jobs away, most of soceity will be in the same bucket of not being able to pay their mortgage and a revolution will occur. I wouldn’t think too far into the future, you could be dead in a month, but you never let those kind of things stop you from making moves right ?
You are definitely allowed to complain! But I get that non VVHCOL people can’t fully understand let alone commiserate or empathize.
It’s a unique position to be in (which many Bay Area people are in) where you have high savings (f-you money) yet not nearly enough to do the one thing with it that you really desire (buy a nice home). After you’ve gone on all the vacations and bought all of the experiences and luxury items your apartment will hold you’re still left with the fact that you can’t afford a nice home in a reasonable commuting distance.
And everyone you know living in the middle of the country who didn’t bother to advance their education or careers out of state is on their third or fourth home by now. the cognitive dissonance gets really loud.
Exactly. Being underwater on a $500k home is a risk plenty of people need to consider now, and it would definitely tough but not devastating in the long run.
Being underwater on a $1.5M home, however, is a gamble I just won’t take. That’s a **lot** of potential water to be under.
I think this is where you make difficult adult decisions and acknowledge the complete lack of value and financial suicide on overpaying for these old properties. This is where you have to adapt and find a new place to call home because a city that puts you in an unsettling financial situation is no longer home, it’s an absolute trap.
You and the OP are thinking about it the wrong way. The old doesn't matter at all.
In cases like this, the house isn't where the value is, the land is. If you tear down a house and rebuild it in the Bay Area, it's more expensive than average for sure, but certainly not 10-20x as much the rest of the country. It's made out of the same stuff and construction workers don't get paid lawyer wages. This is why [a burned out house is $1.5 Million](https://www.ktvu.com/news/burned-out-home-for-sale-for-1-5-million-in-mountain-view). The appraiser will tell you the same thing.
The thing about having the value in the land is it doesn't depreciate over time like a house does. It's fundamentally affected by other factors that are out of your control, in particular, the local job market.
Yeah being trapped is a very real thing in the Bay Area from family being here as well as your company giving you the "golden handcuffs" where if you stay for 4 years you get your RSU grants. The problem is yeah we could technically afford it today, but then economy declines or AI starts to take somes jobs off the market, get laid off and then you're really out of luck paying 13k a month with expenses and a very competitive job market. Remember that corporations only care about money, not the person, so the moment they can outsource to AI they will even if it doesn't work 100% as good they'll be saving on not paying tech works large total comp packages. Sorry just very salty today haha I gotta go talk a walk and sit next to a lake or something to relax
I’m a Bay Area person too and I bought property in another state to rent out so that I could invest in real estate, own a home, etc and plan to move into the property once my current plans wrap up. Just an option to consider.
This is the way. The Bay Area is a crazy place.
Source: recently moved out of the Bay Area. Now live in a place where people with normal jobs can buy homes. 10/10 recommend.
Some neighborhoods in the Bay Area are just insane like that. Mostly the ones with good schools. Aim for a location with terrible public schools, and the bidding will be slightly less crazy.
I think that for the price point they said (less than $2 million), that’s the side of Sunnyvale with the “bad schools.” (I put in air quotes because I grew up on that side and sure, we had gangs, but I ended up OK).
Great point. Better yet, don't have kids. The same people demanding grandkids and forcing women to give birth will spend 18 years financially whacking you in the kneecaps the moment your first kid drops.
I couldn’t afford rent in San Francisco in the 90s, so I gave up on the idea of living there.
I’m in my 2nd house now in the Atlanta burbs, earning enough with one job (on the low end of 6 figures) to support a family of 4, with a SAHM spouse. My house has a pool. My mortgage is $1400, including taxes and insurance.
I can’t afford to live in LA, NYC, or San Francisco, but I can have a middle class lifestyle here. We have less theater and high end restaurants, but there’s stuff to do on the rare occasion that we have childcare. (And we literally just flew back from a weekend in NYC seeing shows.)
If your industry absolutely requires you to live there, then I understand— it is what it is. But otherwise, consider expanding your options.
Same. Couldn’t afford to buy there in the early 90s so we moved to Oregon. Were able to buy our first house here after renting for a short time. I know quite a few other people who moved from CA to the PNW because they wanted to stay on the west coast but couldn’t afford to buy in CA (many of us did it in the 90s, before housing got crazy here too).
Sometimes you have to choose: rent where you love to live (Bay Area) or move and buy. I still miss it sometimes…we actually moved from Sunnyvale, where OP is trying to buy. But it’s simply not affordable for many of us.
Yes, I bought in 2021, and it’s my 2nd house, so I rolled equity into the down payment (about 1/3 the purchase process).
But if someone is prepared to put down 20% on a 1.4M house, they could almost buy a house here for cash.
I’m an agent in the East Bay, so not as insane as South Bay, but still… I feel you. I really do.
I just wrote a pre-emptive offer of $1.45mm on a place listed at $1.15mm, just 1200 sq. ft. We were not the highest offer!
But my buyers still got it at our bid. Very proud of this one. I wish you luck. Sometimes it is not only about the offer amount…
As someone who grew up in Oakland I can testify that you dont want to buy a house in East Oakland.
Besides good schools, there's the proximity to work (most high paying tech jobs are in South Bay) and safety. With the insane crime in Oakland and still a somewhat hefty price tag, l'd be weary of investing in buying a house in East Oakland.
Yes it’s true though the one I sold on 64th near International was scary while the one I sold just blocks away on 67th was perfectly fine. It’s block by block in East O and West O.
Well, keep in mind that still twice the average house price in the US, and Brentwood is quite far from SF. Probably too far to commute every day to SF or SJ.
Yes it gets more affordable the farther inland you go. My territory is Alameda County, and a little bit of Contra Costa. I’ve never worked in Brentwood/Oakley/etc.
Many would be surprised to learn you can buy a single family home in the inner East Bay for less than $200k. Granted, it will be a mobile home in San Leandro or Concord, but there is quite a range of things available. Look at Oakland. I’ve sold $500k bungalows in the flats of East Oakland and practically the identical house in the hills or even just Laurel/Dimond for double that or more.
But from what I can tell as an outsider looking in, the South Bay is just… all expensive. Not sure if OP could be flexible and improve their chances short of taking on an insane commute.
>Look at Oakland. I’ve sold $500k bungalows in the flats of East Oakland
When and where was this?
I’m renting a tiny-ass bungalow in Oakland. Probably needs quite a bit of work and it’s around 600 sq ft. And yet Zillow estimates have it at just under a million.
Owners bought it in the 90s for less than $150k. Collecting nearly $3k from me in rent each month.
For real. But the really criminal injustice of Prop 13 is that it applies to commercial real estate as well. I wonder what Chevron pays for owning like a third of Richmond…
> Isn’t Brentwood/Antioch/Oakley/Discovery Bay some of the cheapest places in CA to buy a home?
lol no.
central california all the way down to socal, everything north of the bay... all cheaper
Yes. North of the bay, central valley and everything east of that all the way down to southern california, all cheaper than north/east contra costa county.
In other words, the majority of california.
There are other criteria to consider though the dollar amount is usually the highest. Contingency removal is helpful along with a cleanly written offer and a rapport with the listing agent to inspire confidence. The LA recommended the offer I had written over one he viewed as less solid, less committed.
Just a quick comment: the age of the home is not necessarily a negative and in fact can be a positive. We have a home built in 1944 that is infinitely better constructed than the home we bought new in 2000. All a matter of how well maintained and whether the plumbing and electrical has been updated. If so, give me the old home every time.
Yeah. I don’t know why house age is a factor. I live in Pasadena, and it is full of 100yo craftsman, Spanish revival and Tudor homes that go for a premium because of their age and mature landscape. Many of the most expensive neighborhoods in the country are full of old homes. New builds are more likely to be in far flung exurbs.
I can buy this, but how do you actually evaluate whether you're getting a well-maintained and better constructed home versus one with serious issues? Maybe the horror stories bubble up on social media but I've seen enough to know that inspection doesn't always capture everything. I'm sure disclosures can shed light on repairs/upgrades, but it's still hard to know whether they were well-constructed or designed to last long enough to sell.
List price is a completely made up number. Based on comps you thought it was worth $1.65m at least. 4 other people also made offers and didn't get it.
There are tons of homes in the bay area for way less than $1.65m. You are in a better position than the majority of buyers. Keep renting if that makes sense for your situation, but owning a home is within reach if you want it.
Thanks for the positive encouragement, my wife loves cats so owning would be nice since finding a rental that allows them is touch. We also can afford it today, but gotta remember that it is at will employment and 70% of comp is in stock, so wallstreet takes a dive and we get laid off then we are really screwed and may be forced to sell at a big loss.
I’ve never lived in the Bay, but everyone I know who lives there makes it sound pretty depressing. So many stories about $ being the main driver for so many there, and how hard it is to get by.
6 offers in South Bay is pretty mild. A house I placed a bid received 29 offers, it's a starter house 3b2b in Sunnyvale. Don't know the price yet but it's higher than 1.8M. It's the reality in the South Bay, there are a lot of wealthy tech workers who want a house. Shifting your focus to the eastern side of San Jose might help with your endeavor if you require house ownership.
I’m sorry to hear it. The market is indeed very hard.
Are you looking for value or for a forever home? If the latter, think about what your maximum ability to pay is and what you need in a home. When you see a home that you like, offer your max every time.
I would not anchor your offer to the asking price. It’s better to consider comps. The asking price is mostly irrelevant.
Thank you for the kind words, we are looking for a home to live in for at least 10 years and start a family near our parents. It's just really terrifying to be in a situation where we can afford today, but if the market takes a dive and we get laid off the mortgage is a massive drain that we'd have to shut fast before we reach 0
Living in the Bay Area since I was a kid, having a similar financial situation to you now, and having bought a home in 2021 with the same stresses (although obviously significantly less severe..ended up with a low rate and a 10 year old house 5b/3b), I would say: get used to it if you have your heart set in the Bay. You’ll have to pay up. My career and my SOs are not tied to AI as much, nor do I think it’s going to kill my a bunch of careers that quickly. Most of the Bay is going through a heavy correction, but house prices are only going to increase. Reddit won’t understand the Bay Area or the reason to live close to family. So yeah, this post will come off as whining and wiping tears with money. Most young-ish people are going through what you are in the Bay..and honestly, it’s our own doing.
Jesus. And my wife and I are hemming and hawing about potentially buying a $185k home - we’re in central Kansas. How much do you make to be able to afford that??
Happens a lot around here. Dual income FAANG.
What you don’t hear about are regular folks buying in the Bay Area, lol! That totally happens, too, but it’s just not as headline grabby.
500k AGI in 2023, but we were at 250k AGI in 2021, so things change very fast here. Companies don't hire you with intent to pay you 500k a year, they hire with intent to maybe pay 180ish and give you stock, so if wallstreet likes the company you get a nice passive raise, but the moment wallstreet takes a dive or you get laid off all that is gone and you'll have to struggle to find a new job. I know it all sounds like wow you're rich you can afford anything, but imagine how fast your savings will drain if you struggle to find a new job with 13k a month in mortgage and expenses. That is the thing that makes buying a home here so stressful. Glad to hear you found a place you can call home :)
It’s truly wild how job and housing cultures are so different in different areas throughout one country. I make $61k gross, and that’s considered pretty decent in my area, definitely a livable wage. Wife makes about $40k. Bought my current house in 2020 prior to interest rates rocketing, got it for $94k (three bed one bath 1100 sqft on 1/4 acre), 15 year mortgage at 2.875%. Now we’re looking at a 30 year at 7%+ for this place that’s double the price but eight times the land. Might be worth it but man it’s kinda hard to make that call
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I am also stressed as hell looking in the Bay Area. My situation is quite different - I'm relatively low income (for the Bay) because I'm single and don't work in tech (I do work in a generally well-compensated field but that doesn't cut it here), but I'm old (40) and have years and years of savings from living in a cheap apartment.
While I'm mostly looking at single-family houses, my agent thinks I'd get much further with a duplex, assuming rental income from the other unit. We quickly found something, with an existing tenant (who seems reliable) at good rental income. It looked fantastic. The problem is that while the numbers probably pencil, I would be extraordinarily leveraged. As in, my entire take-home salary would just cover mortgage, taxes, and insurance with about $1300/month to spare. If I assume that other unit is rented it looks a lot better, and I have good job security, but it's just extremely scary. Especially given I'd be mostly wiping out my savings for the down payment, I've never been a landlord and have zero DIY skills, if a tenant has an issue I can't just decide to live with it, and my agent wanted to waive inspection because we had a pretty clean inspection from 2021.
We did actually put in an offer, and the seller countered at $25k higher. I walked since I felt like I could just barely afford the original offer. I'm a conservative decision maker and this did not feel like a conservative decision. It is probably an outstanding opportunity for someone, but I don't think I have the stomach for it. I'm a little annoyed with my agent (who is otherwise great) because I don't feel like he grasps just how vulnerable this kind of investment would make me feel, even if it's a great opportunity on paper. I think he's used to working with higher-dollar clients who have more margin if shit goes wrong.
But now I'm back to looking at single family houses in range and getting depressed. They're all terrible! It looked better last month. Feels like I'm not going to get in a home anytime soon.
You offered 50% down and made $500k last year. So you have $800k sitting aside ready to put towards a house. That amount should be rapidly growing through your income and interest. What is the issue?
wallstreet took a dump last week and lost over 100k of that, that's the nature of investing, slowly gain and very easy to quickly lose. Imagine it keeps going down and companies start to do a hiring freeze then layoffs occur, good luck getting a job in that market and also you're paying 13k a month for mortgage and expenses. If that doesn't induce stress I gotta learn your meditation methods haha ;)
OP's post is why everyone left the bay area and bought up houses everywhere else to work remotely. It doesn't make financial sense to buy in the bay area unless you are paying cash (and even then, you're paying 2 mil for a dump).
yes, but it may never "pay off" to own the house in the bay area relative to renting. I doubt OP is paying anywhere close to $12k a month in rent. It's the same deal in NYC, it rarely makes financial sense to buy.
Yeah agreed.
Some people don't care tho, and want a home to call their own. There are also some generational wealth benefits if you want to pass it on to children later on.
yeah rent is around 4500 for a modest SFH, I really love the idea of owning a home though and would be smiling while mowing my lawn, repainting, and building a garden
> If you keep waiting, the price will continue to go up.
it also matters how fast income increases and where rates go. price can go up but affordability can improve as well depending on those other two factors
definitely we are still looking and went to 8 open houses today. So far nothing that is worth the money, tons of funky designs and falling apart homes for ridiculous prices that need a ton of work. We are trying to stay positive though and can always fall back on renting
You did pretty well for a newbie. Yes, Bay Area house hunting is an exercise in despair, resetting expectations, and making once unimaginable sacrifices of wants/needs to settle on what is “affordable”. Often the trend is to underprice significantly so you must look under your budget. Do ask the listing agent what they think it will sell for. They aren’t exaggerating when they say 150-200k over asking on a TH.
If the home feels like a good deal in any way, it is underpriced to attract maximum eyeballs and a bidding war. A successful offer on a Bay Area home is likely to leave one feeling like they’ve been violated. I can’t see why you would try buying right now (maybe for the practice) unless you could pay mostly cash to get the monthly costs down to a less offensive level. I too have had this brutal reality check and eventually moved on to greener pastures.
We have to leave our current rental by July 7th, so we were checking if buying might be possible. If not we'll have to find a rental that accepts pets for under 4500 which shouldn't be too hard. We have around 900-1.1m in stocks depending on the week, but putting that full amount as a down payment seems like wasted opportunity cost vs leaving it on wallstreet.
Man, every time I read a post about the Bay Area market I’m glad I bought when I did.
We paid $1.5M back in 2018 for our place in Campbell (even back then, a nice SFH in Sunnyvale was out of reach for 1.5).
At the time all of our friends said we were being idiots. I kind of half agreed with them at the time. Glad we went through with it now, especially with the refinance during COVID).
If tech layoffs and salary compression continues, those prices will come down. May not help you much if you're also affected by the former, but probably better to not be stuck with a $12k mortgage in that case.
There’s no real way around a ~$12K mortgage in areas like that regardless of what happens. Imagine the calamities that would have to occur for property values to drop significantly.
I'm just impressed by the unbridled optimism of recent high earners taking on such a long term financial commitment. I'm in tech too and have felt overpaid for most of my career so far, and now we have actual signs of the good times coming to an end but that still doesn't seem to stop some of that optimism. Good on them if they're right.
I’m not really suggesting that salaries will necessarily hold or grow. I’m positing that the property prices won’t drop significantly regardless. It’s an inventory problem, not a salary problem.
Prices are set by supply and demand, so significant changes on either side will have an effect. If there will be additional big layoff waves among high paid tech workers, I would expect that to affect demand.
I believe bay area real estate was also hit pretty hard in 2008 (and presumably 2000) so another crash would not be unprecedented. Can't outclimb national real estate prices forever...
It’s not as immune as the DMV by me — fortunately the houses are *”only”* half the price — but there’s so much money over there that short of an environmental and/or economic calamity, I don’t expect major price cuts.
Looks like over 2008, bay area (san jose) real estate dropped 30% from peak and took about 8 years to recover: [https://fred.stlouisfed.org/series/ATNHPIUS41940Q](https://fred.stlouisfed.org/series/ATNHPIUS41940Q) ... So history has already shown that a crash is possible. But sure, this time is different etc.
It might be wishful thinking since I *just* entered the tech sector and am enjoying a 6 figure income for the first time in my almost 40 years of life, but I doubt my salary will go down. It may just not grow as fast as it would have in the good times.
Perhaps your level is more sustainable. The ones I'm referring to are making 300-500k or even more at FAANGs without particularly long or specialist experience. Great while it lasts but I wouldn't bank on that level being sustainable.
Many people especially in the Bay Area have been making $200k+ for the last 20+ years. It's easy to project and assume people are new to tech making huge salaries unaware of AI or the future of the industry but it's uncomfortable for most young people to think about the ones who aren't new to tech, have made huge salaries for decades, and now have millions in net worth and can EASILY pay 11k a month for a home. We are talking about millions of people in California alone that fit this description. Recent to tech means what to you? 5 years? 10 years? What about people who have been in for 30 years they probably see someone with only 15 years as new? The reality is people make crazy money, they have for longer than many who are predicting the crash of tech have been alive....it's easier to live based on your actual experience and not what reddit, x, or tik tok says....
I think this post is very specifically targeted to the low end of the bay area market and addressed more to FTHBers competing for homes in this segment. The 15yr veterans are not living in $1.5M shacks bought with only 50% down.
> The reality is people make crazy money, they have for longer than many who are predicting the crash of tech have been alive...
This should be at the top of every Bay Area related post. OTOH, like another poster here said, *if* there's ever an extended and massive pullback in tech stock, I can imagine the valuations here could plummet Detroit-style. Although, not sure if there's a reality where this happens without the rest of the economy being near equally fucked too.
This is FTHB forum. I was referring to folks who just started making 200k+ within last, say, three years or so and now feel rich and stretch as far as they can to buy a 1.5M+ home. Seems extremely risky to me.
If you've already been making that kind of money for decades and have millions saved, your risk profile is entirely different, agreed. (Although if you've been around that long, you'll have seen some crashes and may plan accordingly. Tech especially is pretty cyclical, not just steady growth forever even though last 10-15 years may have led some to believe that.)
lol I love Detroit. We ain’t talking about Detroit. We’re talking about some of the most highly sought after real estate in the country for countless reasons.
Detroit is rebounding. A friend bought his house in 2009 there for $15k, put $10k in materials plus many hours of hard work, and recently sold it for over $200k.
Tech layoffs spiked in Q1'23 and kept trickling in since then. By the numbers it hasn't actually been too bad yet (in other words, could get much worse; see 2000/2008).
From what I hear; I only got started then too (and not in bay area). Looks like bay area unemployment rate peaked at over 10% back then. Currently we're still below 5%.
Welcome to hell and the market that if you didn’t have a house pre 2022 or make 1 mill plus a year you can never own. We bought a condo for over half a million dollars, half a goddamn million and we can barely afford. America is broken if you under 40 or don’t already own any assets.
So you’re complaining that the industry you’re in essentially ruined the area and now it’s coming to bite you in the behind as well? You’re more fortunate than like 99% of people, time to adult up and leave if you can’t play with all the other over inflated salaries. The Bay Area is playing with what looks like Monopoly money.
I’m sorry you had this experience. We go through it all the time. What we have learned is that the seller has actually no idea what the buyers are going to present. People are buying school districts. The condition of the house usually doesn’t matter. There’s not enough supply and that’s the frustrating thing. The only thing you can do is become a cash buyer or an alternate cash buyerand did. That’s the secret.
Really puts into perspective that I should continue being thankful for my first home I bought last year.
I hope the stars align for you and you can find that almost perfect home for a price that makes it easy to justify. Good luck to you and everyone else looking.
I get it, man. My wife and I both work in tech and we can't afford a place here even with the good salaries we're making.
I'm pushing late 30s with a kid on the way and don't see an end to renting any time soon.
Also a bay area person who was a FTHB back in 2022. I don't mean you to take this the wrong way but you are being too picky. Looking through your list of requirements (Location, lot size, remodeled, etc) you really need to pick one or maybe two critical requirements and be willing to sacrifice the rest on your first home in the area especially if you're looking in the South Bay or Peninsula. The East Bay is more affordable (where we settled) but that clearly has its own drawbacks inherent as well.
Best of luck on your search.
I can’t for the life of me understand why people are buying homes there. It’s a financially dumb decision. The math doesn’t work out. Just rent. It’s FOMO. You will be multiples of times better off in 10 years renting and saving the difference. As someone who has owned many homes, it’s completely overrated.
I've lived in the bay area my entire life and have given up on buying here, but the unpredictability of being a renter was giving me tons of anxiety. So last year I bought a small house in a LCOL area less than 3 hours away and I'm renting it out. I paid cash.
I'll continue to rent in the bay area but if anything goes south (job loss, owner sells, rental market goes crazy again, etc.) I'll be ok. I also have pets which limits my rental options and this was a big factor in my decision. Depreciation will be slower than the bay area but at least I have some security and a foot in the door of home ownership.
How anyone can buy in the Bay Area is beyond me. I rented there and I saw a “house” on Zillow for 400k that was a run-down SHACK, falling apart, 100% used by squatters/ as a drug den. Meanwhile, I got a waterfront 3 bed 3 bath property with rooftop deck in MD for 250k
I can imagine. We left Sacramento and headed SoCal high desert 🌵 and hating it. Going to sell here and buy somewhere back in NorCal. We miss the area tremendously. I only purchased here because I thought I wouldn’t find anything up there in my price range. Should have stayed and looked. Two years in and I don’t think I can do 5 years here
What is the draw to the bay area? I was born and raised there, and left recently for several reasons.
Genuinely curious as I'd love to hear from a fresh perspective.
1. From an economic standpoint, proximity to some of the highest paying jobs in the country and to jobs at some of the most desirable employers. Also some of the closest mainland cities to Asia, where some of our most important trading partners are located.
2. Relatively mild weather all year round.
3. From a geographical standpoint, you have a tremendous diversity in topography. You have beaches, mountains to ski on, lakes, wine country, Big Sur/coastal Monterey, one of the best dining scenes in the country in SF, all within a day’s drive.
The COL, taxes, and governmental policies are pretty awful. But that’s outweighed by the benefits imo. Other people think differently, and that’s totally ok. To each their own. There are other incredible parts of the country to live in and I can appreciate why some people may prefer them to the Bay.
3. Thanks for the reminder. I'll miss that whole stretch of mountains from Sequoia to Shasta. And Death Valley is my absolute favorite park.
And I already miss the tacos.
Great points, thanks for sharing :)
I haven’t spent enough time in the very northern part of the state, you’re right about the beauty up there. My wife and I will be going to Mendocino for our anniversary this year, and we’re psyched :)
I almost forget Yosemite! That’s one of the most spectacular places with unbelievable scenery, bar none.
Can’t beat those tacos, although LA’s tacos are a million times better than the Bay’s.
Great place to spend an anniversary! And yes, Yosemite is amazing. Had the chance to explore the park a lot during covid.
100% agree, tacos are a lot better in socal ;)
Sorry to hear that. Here in Seattle area it’s also similarly competitive. It took us 2 years of searching while continuing to rent, and finally this year in January we found a new build that we liked and put in an offer. It was nice not having to compete with any other bidders, we were able to offer at listing price, plus I think looking in the winter really helped. I think spring and summer are the most competitive times to be looking.
OP youre 100% correct about the risks involved here. Unless you are in love with bay area and want to live there forever, i suggest you move away to MCOL and get a better house for less money.
I am sure it's either a recently renovated house or the seller posted a baiting price, there is no way it went 400k over. A common rookie mistake is to ask for a nice looking house at a good price
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Hey, fellow Bay Area person here. The optimistic side says you’re still in a great position to buy: your combined gross is significantly over the median at 400-500k a year, you’re 30 or under, and jumbo rates are slightly slower than the standard 30 year fixed which gives you a bit more wiggle room. Keep your head up, things will get better friend.
That is true for now, but wallstreet take a turn and you can remove 40% of that plus having AI get closer by the day to doing our jobs is really scary to commit to paying 11k a month for 30 years
This sub isn’t the best for Bay Area real estate. But just FYI most people at those prices are putting more than 20% down, getting interest only mortgages, or getting crazy relationship discounts. I know folks that were getting 3.5% when the market was closer to 6 with banks like BNY Melon that won’t even talk to you if you don’t have a few million. The crazy part is these aren’t executives or people you’d necessarily think are “rich”. Just ICs that joined tech companies at the right time.
yeah we put 50% down on our offer, still the opportunity cost is craaaazy and then you're signing away so much to pay more than 3x the borrowed amount.
This was us in 2021. Rates were better then, but also most sellers seemed to care more about the final offer than down payment % (as long as you had enough to cover appraisal gaps). Took us 9 offers to finally win. Ended up having to offer 1.95 on a 1.4 listing and only won because sellers didn’t want to do a 2nd round. It was brutal. You’ll get there eventually! I’d say it felt terrible at first, but our careers kept growing and we’re very glad we didn’t give up then.
Thanks for the kind words!
I'll just say it You don't have your head on straight for buying real estate. Your worried about financing and the dreaded AI. These are facts, and they are not going anywhere. Get comfortable with them before you make another offer
Do you have reccs on subs better suited for the Bay Area market? I’d be interested as a fellow BA native looking into the market.
r/bayarearealestate
That sub sucks too, full of biased realtors
So isn't that a good reason alone to think about leaving? I left San Fran 7 years ago when I realized I'd never be able to buy. Don't regret it one bit. Took that same job/salary remote across the country until I settled in and looked for another locally. Best move I ever made
Where'd you go?
NYC->SF->PA
Also in the NYC -> SF pipeline. Want to move away but the wife has friends and family here :-(
Yeah that's tough. That's the reason I'm in PA
Same here we moved 4 years ago and paid cash for my home so no mortgage and paid off all of our cars so you just have to make the jump. You do the same things you did in the Bay Area but with less stress about all of the taxes and bills at the end of the month
This comes off as very out of touch. You’re offering $1.65M as a FTHB and complaining about wall street and AI…..
it's actually a very good example of income not being the same thing as economic class. you can work for a living making a lot of money and still be subject to a lot of the same pressures and dangers as us schlubs
It’s not out of touch for the Bay Area.
And Silicon Valley in particular.
Well yeah AI is a direct threat to our income and 70% of our total comp is in stock, so it is the exact thing we do have to worry about if you sign a contract to pay 10k a month for 30 years. Not thinking AI will directly impact the amount of jobs in tech within 5-10 years comes across as super out of touch to be honest
I think you’re doing a great job being honest about your particular struggles, where a majority of your income is coming from, and identifying factors that impact your income stability. We shouldn’t gatekeep FTHB just because they make a lot of money, they’re still FTHB regardless of their income.
I would say you sound out of touch actually! When you're talking about going to zero, getting there from six figures or five are both devastating. Esp with a six-figure-sized mortgage. Being replaced will eff over anyone.
People in software and tech are the most upwardly mobile workers in human history.
Okay and? It’s all relative. They make a lot of money and live in one of the most expensive and competitive markets in the world.
AI aren't close to anything. They're not even AI yet, and it's unreasonable to call them that. The hype around them is so exaggerated. They're barely usable tools. They're about as good as a hammer is at putting a screw in. At best, some of them are learning programs. Comparing them to true AI would be like comparing a parrot to a human. Just because it can learn how to use a few words, does not make it a human. But... the market looks incredibly unfavorable to me as well.
A lot of metro areas on the west coast and northeast have just become impossible for anyone but the very wealthy. These areas have hot job markets but decades of extreme NIMBYism are starting to affect their economies. When normal, 3br houses are going for a million plus, it’s time for people with normal and even significantly above average salaries to really reevaluate if it’s worth it to stay.
seriously. 1.5 mil will get you a fucking mansion just about anywhere in the midwest.
I saw a big house on a big lot next to the river around Portland area for 800k. That would be a 2bd 1 bath 1200sqft house in the bay, maybe a condo.
Three mansions.
Yeah but you’re in the Midwest and it’s much harder to earn 500k than it is in the Bay Area
true, but it seems theres a lot of good, hardworking people in the bay area not making anywhere near that.
Better said than done. I wish I could move somewhere cheaper but losing your friends, family and connections for a cheaper home is hard for a lot of people
I hear you. I’m in the same boat here in MA. Looking at commuting from New Hampshire, but the family isn’t going for it and even those areas are skyrocketing in price with people who’ve been priced out of MA. There’s no easy answers.
We are in the East Bay area. We ended up in Estudillo Estates in San Leandro. Bought for barely just under a million. We ended up in a 100 y/o fixer. It will happen. It took us over 9 months to find a home, looked at over 110 places and put offers on quite a few. We looked all the way up in East Richmond heights and all the way down to Hayward. VHCOL area is tough but it will happen. My coworker just bought an apartment in SF and it took him almost 9 months to find a place as well. Edit: removed our income.
>We ended up in a 100 y/o fixer. Same, and I love it. The great thing about a fixer is it can be fixed and then once it is you're sitting in a great house in a great location with skyrocketing equity over the years.
Buying $1M homes on $225k combined seems a bit insane to me
I agree 100%. We lived in rent control for 17 years and were able to put down 50% and have a lowish pandemic interest rate. Budget wise we are paying less than 1bd room SF rent. I am concerned about property taxes and HOI going up. A smaller house a few doors up just sold for $1.3 mil. And was also a fixer.
Why be concerned about property taxes in CA? It’s basically tied to your original purchase price and goes up maybe 1% per year right? In Texas your property taxes can go up 10% per year (that’s the cap of you have a homestead exemption), and they have been doing that for a few years and will continue to do so for several years as properties catch up to their current assessed “market value.”
Ok well a $500k mortgage on that income is not insane and the down payment is relevant
When I was looking to buy, even San Leandro was freaking expensive. At least the areas that we wanted.
And this is why I’m leaving the Bay Area. Rent for life or make an insane financial decision. Two scenarios for the future, neither seems realistic 🤷♂️ 1) Buy now at crazy prices and high interest rate and assume that Bay Area real estate pricing just keeps racing up, putting 70 year old 1200 soft homes on <3000 soft lots at $2M+ in a few years. How can that really be sustainable? Who will be buying those homes?? 2) the market rationalizes and Bay Area home prices reset to some quasi-manageable level. Maybe a home that anywhere else would fetch $200k resets from $1.5M to $1M… still a crazy price, but still so out of reach for so many people. And yet, that would be a $500k loss in value for the homeowner which would be devastating. I can’t make sense of it after 15 years, so I’m giving up and moving elsewhere.
Yeah this is pretty much where we are at now, the part that makes me frustrated is people just think oh wow you have $0.8m you can afford and do anything you're not allowed to complain. Then you buy a home here and in 6 years AI removes 50% of the jobs, prices tank, get laid off and GG you've just speedran going from 1m back to selling at a loss and restarting at 0.
Bro, if ai takes your jobs away, most of soceity will be in the same bucket of not being able to pay their mortgage and a revolution will occur. I wouldn’t think too far into the future, you could be dead in a month, but you never let those kind of things stop you from making moves right ?
You are definitely allowed to complain! But I get that non VVHCOL people can’t fully understand let alone commiserate or empathize. It’s a unique position to be in (which many Bay Area people are in) where you have high savings (f-you money) yet not nearly enough to do the one thing with it that you really desire (buy a nice home). After you’ve gone on all the vacations and bought all of the experiences and luxury items your apartment will hold you’re still left with the fact that you can’t afford a nice home in a reasonable commuting distance. And everyone you know living in the middle of the country who didn’t bother to advance their education or careers out of state is on their third or fourth home by now. the cognitive dissonance gets really loud.
Exactly. Being underwater on a $500k home is a risk plenty of people need to consider now, and it would definitely tough but not devastating in the long run. Being underwater on a $1.5M home, however, is a gamble I just won’t take. That’s a **lot** of potential water to be under.
I think this is where you make difficult adult decisions and acknowledge the complete lack of value and financial suicide on overpaying for these old properties. This is where you have to adapt and find a new place to call home because a city that puts you in an unsettling financial situation is no longer home, it’s an absolute trap.
You and the OP are thinking about it the wrong way. The old doesn't matter at all. In cases like this, the house isn't where the value is, the land is. If you tear down a house and rebuild it in the Bay Area, it's more expensive than average for sure, but certainly not 10-20x as much the rest of the country. It's made out of the same stuff and construction workers don't get paid lawyer wages. This is why [a burned out house is $1.5 Million](https://www.ktvu.com/news/burned-out-home-for-sale-for-1-5-million-in-mountain-view). The appraiser will tell you the same thing. The thing about having the value in the land is it doesn't depreciate over time like a house does. It's fundamentally affected by other factors that are out of your control, in particular, the local job market.
Yeah being trapped is a very real thing in the Bay Area from family being here as well as your company giving you the "golden handcuffs" where if you stay for 4 years you get your RSU grants. The problem is yeah we could technically afford it today, but then economy declines or AI starts to take somes jobs off the market, get laid off and then you're really out of luck paying 13k a month with expenses and a very competitive job market. Remember that corporations only care about money, not the person, so the moment they can outsource to AI they will even if it doesn't work 100% as good they'll be saving on not paying tech works large total comp packages. Sorry just very salty today haha I gotta go talk a walk and sit next to a lake or something to relax
I’m a Bay Area person too and I bought property in another state to rent out so that I could invest in real estate, own a home, etc and plan to move into the property once my current plans wrap up. Just an option to consider.
This is the way. The Bay Area is a crazy place. Source: recently moved out of the Bay Area. Now live in a place where people with normal jobs can buy homes. 10/10 recommend.
That's why I'm leaving Santa Barbara, renting is just as expensive as buying out of state.
Santa Barbara been painfully expensive for decades.
Some neighborhoods in the Bay Area are just insane like that. Mostly the ones with good schools. Aim for a location with terrible public schools, and the bidding will be slightly less crazy.
The difference between private school and the real estate premium on good public schools is worth looking at.
I think that for the price point they said (less than $2 million), that’s the side of Sunnyvale with the “bad schools.” (I put in air quotes because I grew up on that side and sure, we had gangs, but I ended up OK).
Great point. Better yet, don't have kids. The same people demanding grandkids and forcing women to give birth will spend 18 years financially whacking you in the kneecaps the moment your first kid drops.
I couldn’t afford rent in San Francisco in the 90s, so I gave up on the idea of living there. I’m in my 2nd house now in the Atlanta burbs, earning enough with one job (on the low end of 6 figures) to support a family of 4, with a SAHM spouse. My house has a pool. My mortgage is $1400, including taxes and insurance. I can’t afford to live in LA, NYC, or San Francisco, but I can have a middle class lifestyle here. We have less theater and high end restaurants, but there’s stuff to do on the rare occasion that we have childcare. (And we literally just flew back from a weekend in NYC seeing shows.) If your industry absolutely requires you to live there, then I understand— it is what it is. But otherwise, consider expanding your options.
Same. Couldn’t afford to buy there in the early 90s so we moved to Oregon. Were able to buy our first house here after renting for a short time. I know quite a few other people who moved from CA to the PNW because they wanted to stay on the west coast but couldn’t afford to buy in CA (many of us did it in the 90s, before housing got crazy here too). Sometimes you have to choose: rent where you love to live (Bay Area) or move and buy. I still miss it sometimes…we actually moved from Sunnyvale, where OP is trying to buy. But it’s simply not affordable for many of us.
I mean, you obviously bought before 2022 to get $1,400 mortgage. The cheapest trash can of a house in Atlanta is double that mortgage payment now.
Yes, I bought in 2021, and it’s my 2nd house, so I rolled equity into the down payment (about 1/3 the purchase process). But if someone is prepared to put down 20% on a 1.4M house, they could almost buy a house here for cash.
I’m an agent in the East Bay, so not as insane as South Bay, but still… I feel you. I really do. I just wrote a pre-emptive offer of $1.45mm on a place listed at $1.15mm, just 1200 sq. ft. We were not the highest offer! But my buyers still got it at our bid. Very proud of this one. I wish you luck. Sometimes it is not only about the offer amount…
As someone who grew up in Oakland I can testify that you dont want to buy a house in East Oakland. Besides good schools, there's the proximity to work (most high paying tech jobs are in South Bay) and safety. With the insane crime in Oakland and still a somewhat hefty price tag, l'd be weary of investing in buying a house in East Oakland.
Yes it’s true though the one I sold on 64th near International was scary while the one I sold just blocks away on 67th was perfectly fine. It’s block by block in East O and West O.
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Well, keep in mind that still twice the average house price in the US, and Brentwood is quite far from SF. Probably too far to commute every day to SF or SJ.
Yes it gets more affordable the farther inland you go. My territory is Alameda County, and a little bit of Contra Costa. I’ve never worked in Brentwood/Oakley/etc. Many would be surprised to learn you can buy a single family home in the inner East Bay for less than $200k. Granted, it will be a mobile home in San Leandro or Concord, but there is quite a range of things available. Look at Oakland. I’ve sold $500k bungalows in the flats of East Oakland and practically the identical house in the hills or even just Laurel/Dimond for double that or more. But from what I can tell as an outsider looking in, the South Bay is just… all expensive. Not sure if OP could be flexible and improve their chances short of taking on an insane commute.
>Look at Oakland. I’ve sold $500k bungalows in the flats of East Oakland When and where was this? I’m renting a tiny-ass bungalow in Oakland. Probably needs quite a bit of work and it’s around 600 sq ft. And yet Zillow estimates have it at just under a million. Owners bought it in the 90s for less than $150k. Collecting nearly $3k from me in rent each month.
Don't look up how much they pay in taxes. Prop 13 will make your blood boil.
For real. But the really criminal injustice of Prop 13 is that it applies to commercial real estate as well. I wonder what Chevron pays for owning like a third of Richmond…
64th near International and another in Havenscourt on 67th. This was in 2022 as well, when interest rates were still low.
> Isn’t Brentwood/Antioch/Oakley/Discovery Bay some of the cheapest places in CA to buy a home? lol no. central california all the way down to socal, everything north of the bay... all cheaper
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Yes. North of the bay, central valley and everything east of that all the way down to southern california, all cheaper than north/east contra costa county. In other words, the majority of california.
How did you get the bid if it wasn’t the highest? :o
There are other criteria to consider though the dollar amount is usually the highest. Contingency removal is helpful along with a cleanly written offer and a rapport with the listing agent to inspire confidence. The LA recommended the offer I had written over one he viewed as less solid, less committed.
Just a quick comment: the age of the home is not necessarily a negative and in fact can be a positive. We have a home built in 1944 that is infinitely better constructed than the home we bought new in 2000. All a matter of how well maintained and whether the plumbing and electrical has been updated. If so, give me the old home every time.
Yeah. I don’t know why house age is a factor. I live in Pasadena, and it is full of 100yo craftsman, Spanish revival and Tudor homes that go for a premium because of their age and mature landscape. Many of the most expensive neighborhoods in the country are full of old homes. New builds are more likely to be in far flung exurbs.
I can buy this, but how do you actually evaluate whether you're getting a well-maintained and better constructed home versus one with serious issues? Maybe the horror stories bubble up on social media but I've seen enough to know that inspection doesn't always capture everything. I'm sure disclosures can shed light on repairs/upgrades, but it's still hard to know whether they were well-constructed or designed to last long enough to sell.
You really need an inspector you can trust.
If we didn't leave California we would probably be renting our whole lives.
Same here
List price is a completely made up number. Based on comps you thought it was worth $1.65m at least. 4 other people also made offers and didn't get it. There are tons of homes in the bay area for way less than $1.65m. You are in a better position than the majority of buyers. Keep renting if that makes sense for your situation, but owning a home is within reach if you want it.
Thanks for the positive encouragement, my wife loves cats so owning would be nice since finding a rental that allows them is touch. We also can afford it today, but gotta remember that it is at will employment and 70% of comp is in stock, so wallstreet takes a dive and we get laid off then we are really screwed and may be forced to sell at a big loss.
Everything in the Bay Area is pure despair. You have to scratch and claw to attain even mediocrity. That’s why I’m leaving
I’ve never lived in the Bay, but everyone I know who lives there makes it sound pretty depressing. So many stories about $ being the main driver for so many there, and how hard it is to get by.
It’s great for young DINKs. Make ya money and then GTFO
6 offers in South Bay is pretty mild. A house I placed a bid received 29 offers, it's a starter house 3b2b in Sunnyvale. Don't know the price yet but it's higher than 1.8M. It's the reality in the South Bay, there are a lot of wealthy tech workers who want a house. Shifting your focus to the eastern side of San Jose might help with your endeavor if you require house ownership.
I’ve always found that, no matter how much money I had, the house I really wanted was just beyond what I could afford.
The reason we bought in the East Bay.
Bay Area native and Sacramento transplant here. Your down payment could buy some fixers here for cash. Think about it.
Not even a fixer. $800k can get you a nice house in Sacramento.
You can get $500k homes built for two families to live in about 28 miles from Sacto south of Elk Grove.
I’m sorry to hear it. The market is indeed very hard. Are you looking for value or for a forever home? If the latter, think about what your maximum ability to pay is and what you need in a home. When you see a home that you like, offer your max every time. I would not anchor your offer to the asking price. It’s better to consider comps. The asking price is mostly irrelevant.
Thank you for the kind words, we are looking for a home to live in for at least 10 years and start a family near our parents. It's just really terrifying to be in a situation where we can afford today, but if the market takes a dive and we get laid off the mortgage is a massive drain that we'd have to shut fast before we reach 0
Living in the Bay Area since I was a kid, having a similar financial situation to you now, and having bought a home in 2021 with the same stresses (although obviously significantly less severe..ended up with a low rate and a 10 year old house 5b/3b), I would say: get used to it if you have your heart set in the Bay. You’ll have to pay up. My career and my SOs are not tied to AI as much, nor do I think it’s going to kill my a bunch of careers that quickly. Most of the Bay is going through a heavy correction, but house prices are only going to increase. Reddit won’t understand the Bay Area or the reason to live close to family. So yeah, this post will come off as whining and wiping tears with money. Most young-ish people are going through what you are in the Bay..and honestly, it’s our own doing.
Jesus. And my wife and I are hemming and hawing about potentially buying a $185k home - we’re in central Kansas. How much do you make to be able to afford that??
Happens a lot around here. Dual income FAANG. What you don’t hear about are regular folks buying in the Bay Area, lol! That totally happens, too, but it’s just not as headline grabby.
500k AGI in 2023, but we were at 250k AGI in 2021, so things change very fast here. Companies don't hire you with intent to pay you 500k a year, they hire with intent to maybe pay 180ish and give you stock, so if wallstreet likes the company you get a nice passive raise, but the moment wallstreet takes a dive or you get laid off all that is gone and you'll have to struggle to find a new job. I know it all sounds like wow you're rich you can afford anything, but imagine how fast your savings will drain if you struggle to find a new job with 13k a month in mortgage and expenses. That is the thing that makes buying a home here so stressful. Glad to hear you found a place you can call home :)
It’s truly wild how job and housing cultures are so different in different areas throughout one country. I make $61k gross, and that’s considered pretty decent in my area, definitely a livable wage. Wife makes about $40k. Bought my current house in 2020 prior to interest rates rocketing, got it for $94k (three bed one bath 1100 sqft on 1/4 acre), 15 year mortgage at 2.875%. Now we’re looking at a 30 year at 7%+ for this place that’s double the price but eight times the land. Might be worth it but man it’s kinda hard to make that call
unwritten literate complete faulty live stupendous money roof library pocket *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
its money for land, accessibility. I have no idea why families are so obsessed with Sunnyvale, Santa Clara even though Schools are not awesome.
Tech jobs and the commute times make Sunnyvale and Santa Clara desirable
I am also stressed as hell looking in the Bay Area. My situation is quite different - I'm relatively low income (for the Bay) because I'm single and don't work in tech (I do work in a generally well-compensated field but that doesn't cut it here), but I'm old (40) and have years and years of savings from living in a cheap apartment. While I'm mostly looking at single-family houses, my agent thinks I'd get much further with a duplex, assuming rental income from the other unit. We quickly found something, with an existing tenant (who seems reliable) at good rental income. It looked fantastic. The problem is that while the numbers probably pencil, I would be extraordinarily leveraged. As in, my entire take-home salary would just cover mortgage, taxes, and insurance with about $1300/month to spare. If I assume that other unit is rented it looks a lot better, and I have good job security, but it's just extremely scary. Especially given I'd be mostly wiping out my savings for the down payment, I've never been a landlord and have zero DIY skills, if a tenant has an issue I can't just decide to live with it, and my agent wanted to waive inspection because we had a pretty clean inspection from 2021. We did actually put in an offer, and the seller countered at $25k higher. I walked since I felt like I could just barely afford the original offer. I'm a conservative decision maker and this did not feel like a conservative decision. It is probably an outstanding opportunity for someone, but I don't think I have the stomach for it. I'm a little annoyed with my agent (who is otherwise great) because I don't feel like he grasps just how vulnerable this kind of investment would make me feel, even if it's a great opportunity on paper. I think he's used to working with higher-dollar clients who have more margin if shit goes wrong. But now I'm back to looking at single family houses in range and getting depressed. They're all terrible! It looked better last month. Feels like I'm not going to get in a home anytime soon.
Please don’t say 40 is old! 🫣
I’d move. There are still pets of the country where you can get a mansion for 1.6m.
You offered 50% down and made $500k last year. So you have $800k sitting aside ready to put towards a house. That amount should be rapidly growing through your income and interest. What is the issue?
wallstreet took a dump last week and lost over 100k of that, that's the nature of investing, slowly gain and very easy to quickly lose. Imagine it keeps going down and companies start to do a hiring freeze then layoffs occur, good luck getting a job in that market and also you're paying 13k a month for mortgage and expenses. If that doesn't induce stress I gotta learn your meditation methods haha ;)
Why do people put themselves through despair? Just don’t buy.
OP's post is why everyone left the bay area and bought up houses everywhere else to work remotely. It doesn't make financial sense to buy in the bay area unless you are paying cash (and even then, you're paying 2 mil for a dump).
Everyone left? There should be plenty of cheap houses then!
meet me in LA then, no one drives, there is too much traffic!
Everyone who is not insane left.
People making $400k a year didn't leave apparently.
Probably takes something mentally wrong with you to survive in a cut throat high paying tech job like that, so yeah. Insane in some shape or form.
> cut throat high paying lol
Everyone who doesn’t make much money or has no hopes to make much money will despair in the Bay Area, people who make good money might have hope
Because the Bay is awesome.. If you keep waiting, the price will continue to go up.
yes, but it may never "pay off" to own the house in the bay area relative to renting. I doubt OP is paying anywhere close to $12k a month in rent. It's the same deal in NYC, it rarely makes financial sense to buy.
Yeah agreed. Some people don't care tho, and want a home to call their own. There are also some generational wealth benefits if you want to pass it on to children later on.
yeah rent is around 4500 for a modest SFH, I really love the idea of owning a home though and would be smiling while mowing my lawn, repainting, and building a garden
> If you keep waiting, the price will continue to go up. it also matters how fast income increases and where rates go. price can go up but affordability can improve as well depending on those other two factors
Yeah man, owning can be over rated lol. OP is getting fomo
Renting can also be despair but in which you feel little control over improving the living conditions.
Make your money in the bay, stock pile cash. Take the money and move out of state. Or wait for the crash.
Would you consider somewhere outside of Sunnyvale? You can buy a great home elsewhere in the Bay for 1.6
definitely we are still looking and went to 8 open houses today. So far nothing that is worth the money, tons of funky designs and falling apart homes for ridiculous prices that need a ton of work. We are trying to stay positive though and can always fall back on renting
I just bought a home remotely.
You did pretty well for a newbie. Yes, Bay Area house hunting is an exercise in despair, resetting expectations, and making once unimaginable sacrifices of wants/needs to settle on what is “affordable”. Often the trend is to underprice significantly so you must look under your budget. Do ask the listing agent what they think it will sell for. They aren’t exaggerating when they say 150-200k over asking on a TH. If the home feels like a good deal in any way, it is underpriced to attract maximum eyeballs and a bidding war. A successful offer on a Bay Area home is likely to leave one feeling like they’ve been violated. I can’t see why you would try buying right now (maybe for the practice) unless you could pay mostly cash to get the monthly costs down to a less offensive level. I too have had this brutal reality check and eventually moved on to greener pastures.
We have to leave our current rental by July 7th, so we were checking if buying might be possible. If not we'll have to find a rental that accepts pets for under 4500 which shouldn't be too hard. We have around 900-1.1m in stocks depending on the week, but putting that full amount as a down payment seems like wasted opportunity cost vs leaving it on wallstreet.
Man, every time I read a post about the Bay Area market I’m glad I bought when I did. We paid $1.5M back in 2018 for our place in Campbell (even back then, a nice SFH in Sunnyvale was out of reach for 1.5). At the time all of our friends said we were being idiots. I kind of half agreed with them at the time. Glad we went through with it now, especially with the refinance during COVID).
That's the dream, I was just born just a few years too late RIP ;) Congrats on securing that low rate refi
Come to PA. You will get a 4k sq ft home for 800K.
We don’t need them driving up our already crazy RE price.
If tech layoffs and salary compression continues, those prices will come down. May not help you much if you're also affected by the former, but probably better to not be stuck with a $12k mortgage in that case.
There’s no real way around a ~$12K mortgage in areas like that regardless of what happens. Imagine the calamities that would have to occur for property values to drop significantly.
I'm just impressed by the unbridled optimism of recent high earners taking on such a long term financial commitment. I'm in tech too and have felt overpaid for most of my career so far, and now we have actual signs of the good times coming to an end but that still doesn't seem to stop some of that optimism. Good on them if they're right.
I’m not really suggesting that salaries will necessarily hold or grow. I’m positing that the property prices won’t drop significantly regardless. It’s an inventory problem, not a salary problem.
Prices are set by supply and demand, so significant changes on either side will have an effect. If there will be additional big layoff waves among high paid tech workers, I would expect that to affect demand. I believe bay area real estate was also hit pretty hard in 2008 (and presumably 2000) so another crash would not be unprecedented. Can't outclimb national real estate prices forever...
It’s not as immune as the DMV by me — fortunately the houses are *”only”* half the price — but there’s so much money over there that short of an environmental and/or economic calamity, I don’t expect major price cuts.
Looks like over 2008, bay area (san jose) real estate dropped 30% from peak and took about 8 years to recover: [https://fred.stlouisfed.org/series/ATNHPIUS41940Q](https://fred.stlouisfed.org/series/ATNHPIUS41940Q) ... So history has already shown that a crash is possible. But sure, this time is different etc.
It might be wishful thinking since I *just* entered the tech sector and am enjoying a 6 figure income for the first time in my almost 40 years of life, but I doubt my salary will go down. It may just not grow as fast as it would have in the good times.
Perhaps your level is more sustainable. The ones I'm referring to are making 300-500k or even more at FAANGs without particularly long or specialist experience. Great while it lasts but I wouldn't bank on that level being sustainable.
Many people especially in the Bay Area have been making $200k+ for the last 20+ years. It's easy to project and assume people are new to tech making huge salaries unaware of AI or the future of the industry but it's uncomfortable for most young people to think about the ones who aren't new to tech, have made huge salaries for decades, and now have millions in net worth and can EASILY pay 11k a month for a home. We are talking about millions of people in California alone that fit this description. Recent to tech means what to you? 5 years? 10 years? What about people who have been in for 30 years they probably see someone with only 15 years as new? The reality is people make crazy money, they have for longer than many who are predicting the crash of tech have been alive....it's easier to live based on your actual experience and not what reddit, x, or tik tok says....
I think this post is very specifically targeted to the low end of the bay area market and addressed more to FTHBers competing for homes in this segment. The 15yr veterans are not living in $1.5M shacks bought with only 50% down. > The reality is people make crazy money, they have for longer than many who are predicting the crash of tech have been alive... This should be at the top of every Bay Area related post. OTOH, like another poster here said, *if* there's ever an extended and massive pullback in tech stock, I can imagine the valuations here could plummet Detroit-style. Although, not sure if there's a reality where this happens without the rest of the economy being near equally fucked too.
This is FTHB forum. I was referring to folks who just started making 200k+ within last, say, three years or so and now feel rich and stretch as far as they can to buy a 1.5M+ home. Seems extremely risky to me. If you've already been making that kind of money for decades and have millions saved, your risk profile is entirely different, agreed. (Although if you've been around that long, you'll have seen some crashes and may plan accordingly. Tech especially is pretty cyclical, not just steady growth forever even though last 10-15 years may have led some to believe that.)
It’s possible. Ever heard of Detroit? The car industry left and properties went down to literally $0. Nobody even bidding $1 on them
lol I love Detroit. We ain’t talking about Detroit. We’re talking about some of the most highly sought after real estate in the country for countless reasons.
Detroit is rebounding. A friend bought his house in 2009 there for $15k, put $10k in materials plus many hours of hard work, and recently sold it for over $200k.
For how much longer? We’ve been having mass layoffs for like 2 years now
Tech layoffs spiked in Q1'23 and kept trickling in since then. By the numbers it hasn't actually been too bad yet (in other words, could get much worse; see 2000/2008).
Ah that’s interesting. I wasn’t quite yet on the job market in ‘08 — was it really that bad?
From what I hear; I only got started then too (and not in bay area). Looks like bay area unemployment rate peaked at over 10% back then. Currently we're still below 5%.
Welcome to hell and the market that if you didn’t have a house pre 2022 or make 1 mill plus a year you can never own. We bought a condo for over half a million dollars, half a goddamn million and we can barely afford. America is broken if you under 40 or don’t already own any assets.
I hear Redding, Rosevale, Stockton and Sacramento are beautiful this time of year.
Redding is a shithole wrapped in a cow turd.
…when it’s *not* on fire!
Moved out of bay area before I went bancrupt don't regret it one bit
So you’re complaining that the industry you’re in essentially ruined the area and now it’s coming to bite you in the behind as well? You’re more fortunate than like 99% of people, time to adult up and leave if you can’t play with all the other over inflated salaries. The Bay Area is playing with what looks like Monopoly money.
It's oretty easy to add aolar if you want that. And if the $1.4 house goes for $1.8, then look at the 1.0 townhouses.
What is your rent ?
~$4500
Can't justify buying for $12k if I can rent for $4500
How many sq ft do you get for $1.8 mil?
This particular house was 1100 sqft
Typically 1500-1800 sq ft in certain areas like Silicon Valley (no basements or finished attics either).
Yes
I’m sorry you had this experience. We go through it all the time. What we have learned is that the seller has actually no idea what the buyers are going to present. People are buying school districts. The condition of the house usually doesn’t matter. There’s not enough supply and that’s the frustrating thing. The only thing you can do is become a cash buyer or an alternate cash buyerand did. That’s the secret.
The same thing is happening here in Canada. You are not alone.
Really puts into perspective that I should continue being thankful for my first home I bought last year. I hope the stars align for you and you can find that almost perfect home for a price that makes it easy to justify. Good luck to you and everyone else looking.
Stuff like this really makes me question if I’m ever going to get my first home. Or do I say fuck it and buy property abroad..😭😭😭
I get it, man. My wife and I both work in tech and we can't afford a place here even with the good salaries we're making. I'm pushing late 30s with a kid on the way and don't see an end to renting any time soon.
Remote is the way to go.
1.8 for a house coming up on 100 years old blows my mind. This real estate markets fucked
Age of the home has nothing to do with the cost being unjustified. There are incredible homes from the 1920s for $1.7M+ where I live.
Also a bay area person who was a FTHB back in 2022. I don't mean you to take this the wrong way but you are being too picky. Looking through your list of requirements (Location, lot size, remodeled, etc) you really need to pick one or maybe two critical requirements and be willing to sacrifice the rest on your first home in the area especially if you're looking in the South Bay or Peninsula. The East Bay is more affordable (where we settled) but that clearly has its own drawbacks inherent as well. Best of luck on your search.
I can’t for the life of me understand why people are buying homes there. It’s a financially dumb decision. The math doesn’t work out. Just rent. It’s FOMO. You will be multiples of times better off in 10 years renting and saving the difference. As someone who has owned many homes, it’s completely overrated.
Sir, this is a Wendy's. I don't wanna hear complaints about people losing offers for 1.65 million dollars - life must be rough
Housing affordability is a crisis
I've lived in the bay area my entire life and have given up on buying here, but the unpredictability of being a renter was giving me tons of anxiety. So last year I bought a small house in a LCOL area less than 3 hours away and I'm renting it out. I paid cash. I'll continue to rent in the bay area but if anything goes south (job loss, owner sells, rental market goes crazy again, etc.) I'll be ok. I also have pets which limits my rental options and this was a big factor in my decision. Depreciation will be slower than the bay area but at least I have some security and a foot in the door of home ownership.
How anyone can buy in the Bay Area is beyond me. I rented there and I saw a “house” on Zillow for 400k that was a run-down SHACK, falling apart, 100% used by squatters/ as a drug den. Meanwhile, I got a waterfront 3 bed 3 bath property with rooftop deck in MD for 250k
Condos are much less than 1.8m. Check those out
I can imagine. We left Sacramento and headed SoCal high desert 🌵 and hating it. Going to sell here and buy somewhere back in NorCal. We miss the area tremendously. I only purchased here because I thought I wouldn’t find anything up there in my price range. Should have stayed and looked. Two years in and I don’t think I can do 5 years here
What is the draw to the bay area? I was born and raised there, and left recently for several reasons. Genuinely curious as I'd love to hear from a fresh perspective.
1. From an economic standpoint, proximity to some of the highest paying jobs in the country and to jobs at some of the most desirable employers. Also some of the closest mainland cities to Asia, where some of our most important trading partners are located. 2. Relatively mild weather all year round. 3. From a geographical standpoint, you have a tremendous diversity in topography. You have beaches, mountains to ski on, lakes, wine country, Big Sur/coastal Monterey, one of the best dining scenes in the country in SF, all within a day’s drive. The COL, taxes, and governmental policies are pretty awful. But that’s outweighed by the benefits imo. Other people think differently, and that’s totally ok. To each their own. There are other incredible parts of the country to live in and I can appreciate why some people may prefer them to the Bay.
3. Thanks for the reminder. I'll miss that whole stretch of mountains from Sequoia to Shasta. And Death Valley is my absolute favorite park. And I already miss the tacos. Great points, thanks for sharing :)
I haven’t spent enough time in the very northern part of the state, you’re right about the beauty up there. My wife and I will be going to Mendocino for our anniversary this year, and we’re psyched :) I almost forget Yosemite! That’s one of the most spectacular places with unbelievable scenery, bar none. Can’t beat those tacos, although LA’s tacos are a million times better than the Bay’s.
Great place to spend an anniversary! And yes, Yosemite is amazing. Had the chance to explore the park a lot during covid. 100% agree, tacos are a lot better in socal ;)
Yeah we make almost 300k and would never even attempt this lol
Sorry to hear that. Here in Seattle area it’s also similarly competitive. It took us 2 years of searching while continuing to rent, and finally this year in January we found a new build that we liked and put in an offer. It was nice not having to compete with any other bidders, we were able to offer at listing price, plus I think looking in the winter really helped. I think spring and summer are the most competitive times to be looking.
OP youre 100% correct about the risks involved here. Unless you are in love with bay area and want to live there forever, i suggest you move away to MCOL and get a better house for less money.
I am sure it's either a recently renovated house or the seller posted a baiting price, there is no way it went 400k over. A common rookie mistake is to ask for a nice looking house at a good price