Perhaps it is the fact that i live in the bay area, but it seems that without winning the lottery i will never be able to afford to own a home as long as i continue to persue architecture as my career. i find this extremely frustrating as well as ironic. does anyone else share this plight, if so how do you rationalize this odd situation. does anyone have any good schemes to steal or otherwize obtain a home through fraud that they would like to share with me.
I feel your pain- I am living in a small town resort community in Colorado that is currently blowing up with out me.... My only current option seems to be deed restricted affordable housing (a joke, really- nothing is affordable anymore) which seems ridiculous when open market values are doubling every time you blink.
I'm in San Diego and feeling the same thing. I think that it's just a catch-22. The good projects to work on are usually in places you can't afford to own a home. I think the best thing to do is to save up and buy a real shithole - then fix it up over several years as a hobby. Of course that all takes money I dont have.
anonymouse, one word. move. i know that the bay area is a wonderful place to live. i lived there for 6 years. sf in particular. i left during the dot com boom. my wife and i tried to buy a house for over a year. we put in 11 offers. not one was taken seriously. at that time prices were escalating out of control. 30 people would show up to see the same house. 30 people would put in offers. all made offers above and beyond the asking price. 20% over asking was the minumum you could consider at that time. i hope things have gotten better since then.
the thing that brought us to the decision to move was our reflection on what we wanted our lives to be about. did we want to spend our lives paying our mortgage and thus being slaves to our jobs? even if we could buy a house, how in the world could we ever afford to do anything else? renovate? out of the question. go out and socialize? only if it was for free. vacation? ha ha ha ha. we loved the city but was that it? did we want to be a slave to it?
we looked at other places and knew what things we wanted in our lives. we liked city life. we wanted to enjoy that life. we wanted to start our own business and own a home. how would both of those be possible in a place like sf? how could one of us afford to leave our job and the steady income that comes from it to start a business where income is less that steady at first? we liked the temperate climate of sf so we needed to find a similar place. we liked the outdoors. well, you get the point.
we finally moved. relocated. inhabited our new city for almost a year to see if we liked it. we did, and we bought a house within 6 months and love our new home.
close, seattle. ;] cost of living is still expensive, but not nearly as bad though. my wife actually got a slight raise at her new job, and i now work for myself. no state income tax either so you have an extra couple hundred in your pocket every month.
Interesting, dialogue, I live in a village that has gone through the exact same thing however I was fortunate to have a mother in law who spotted us 50 k for a down payment to help with our own 80k deposit ( my wife's a teacher and mine was just from my Arch. salary ) The extra 50 k just helped with lowering our morgage. That was 9 yrs ago the price of the house has gone quadripled in price and I bought two other homes on the equity alone. I have been very fortunate. If you feel you need to live in a high priced area you just have to jump in and make it work, I had suites, did all the fix it work myself ( a great education itself ) or move a choose not to be "house poor". I am at a point where we are choosing to divest some of the real estate to be in a position to not have a morgage and have more time and money for fun and play but I am glad I dived in when I did. I sort of equate it to buying your first computer. You know you need to get one, and things keep getting more expensive but better so it just gets to a point when you say okay let's go.
I would encourage to you act creatively re extra suites and roomates, think like a developer in some regards. Make your money worth, it is a situation that as an architect you have to work through. It won't be your last house so don't worry about it being the perfect home, I have found the process very liberating and tested my skills and abilities as an Architect. Ultimately I am a better businessman and Architect because of it.
Fro9k, I have a suspision we live in the same community. My wife and I made the decision to buy deed restricted housing for many reasons including lifestyle-we can't imagine raising our son anywhere else-and we couldn't afford anything else. Even if the restrictions keep us from gaining at the market rate, we are still better off than we would be renting.
Anonymouse, I would suggest buying any real estate you can scrape up enough money for. Sacricife for a while. Maybe you don't like the location, the size, the view, whatever. If you can stay there for a while you at least have the money you put into it, unlike rent. If you're lucky, you may come out even better. Then you move up a rung on the residential ladder and repeat. Sounds old fashioned but that's how I did it. I'm a long way from building my dream house but I'm comfortable.
And if that doesn't work, I hear there's lots of money to be made appearing on reality TV shows.
good words whistler and chirigringo. i think the obvious thing here is, if you have some equity, you can make it grow into something more so start with whatever you can start with.
the thing that i found that complicated our issue in sf was rent control. it'a a blessing and a curse. when we first rented a one br in sf, we paid $975/mo. 5 years later we were only paying $1050/mo. unfortunately, the owner wants you out so that they can charge more a month. our apartment was literally falling down around us. it was very difficult to get the landlord to do anything. yet we couldn't move because rent prices had doubled in those 5 years we were there. when we finally moved out, the owner patched a couple of holes that they had made and applied a fresh coat of paint and got $2200/mo for the unit. renting sucks.
does everyone have a f...ing wife? My gawd what happened to the architect as the single loaner? I recognised that I wouldn't be able to own a house because on my salary it just wouldn't work. But I do understand - I'm looking at the end of my contract to purchase some land and put my talents to use. Use being that I won't be able to build on it for another 40 years but its a start I guess....sadness
jam, i know plenty of architects with and without sig others. some that are with have horrible relationships. better to be without than with someone who isn't a good match. my brother was married and then divorced just 3 years later. he told me a few months ago, he wished he had someone to share things with, but that he'd rather be alone then enter into another bad relationship. certainly having another income makes owning a hell of a lot easier. patience, my friend. if that's what you are looking for.
well its at the point here, where the cheapest, i mean cheapest thing, (searching though all mls listings in the area) is actually twice what i can afford. and that is using both me and my wifes income (both overly educated) in the ghettoest area of bayview.
and unfortunately i have no rich parents to aid in my survival. frankly, i get a little frustrated hearing all these stories about the value of peoples houses "quadriple"-ing. people always seem to pose that as the solution rather than the problem it really is. i have no desire for my home to be an investment, merely a place to create a home, a place to modify at will.
at this point im hoping the bubble bursts, or the next earthquake scares some of the midwestern transplants away.
or as said before - move. it seems ridiculous to be a native californian and getting chased out though
Very interesting thread. As a recent M ARCH graduate I have been wondering the same thing. I have been searching for jobs in both the SF Bay area and Seattle and have found the cost of housing to be my biggest deterrent from the bay area. It seems that with out the ability to build up equity, you are just stepping on your own feet in hopes to obtain any kind of financial security. I have even heard of people who live in such area purchasing small "vacation homes" in other areas of the country just so they can build up equity.
I guess that I am not really making any real point here. just that I think this is a good thread, these are the kind of real world issues that we are not always taught to deal with, or learn about in any kind of formal education.
Although I agree with whistler's post, I would question the computer analogy. Unlike housing, the price of an entry level pc has gone down significantly in the past 20 years. Not only that, the features provided on an entry level machine keep getting better as time goes on. Anytime I've held out on making a computer purchase it was a result of promises of better features and or lower prices to come. The same definitely cannot be said for housing.
anonymouse- I think you nailed it with what you said about a home vs. an investment.
Where I live, people are basically building spec houses and living in them for two years to avoid the capital gains tax. Rinse. Repeat. People speak of not making their home too 'personalized' because it will be less marketable. Maybe once the soul of this town has been completely sold I will be able to see leaving, but until then it remains quite frustrating.
this seems to have a very important tie in to the production of architecture as well. how much different do you think the profession would be if everyone owned their own home. what would the impact be on our cities. i dont mean to sound like a socialist here, but after travelling extensively and seeing which places had which problems, i would be stupid to not conclude that the bigger the wealth gap becomes, the worse our culture will continue to become. and just by looking around our own cities we can all see that ownership neigborhoods are usually well taken care of and rental neigborhoods are often trashed
My husband and I own a home. We bought a fixer upper 4 years ago and we have remodeled it ourselves during these years.
Bing bing...we are in our 20, we are still in school and we own a great house in Boston area. When we came in USA 6 years ago, we had enough money to pay the rent of two months that was all. So how did we do it?
Our strategy was this:
We made sure to pay everything on time, so we had a great credit history.
We saved, and saved and saved for 2 years.
We knew that by paying rent and waiting for the time to be rich wasn't a solution so we made the jump.
We have done all the remodeling ourselves since then.
I love our house. I can post some pictures if anyone is interested.
My greatest concern is that I couldn't call the first houses we owned as "homes' they were truly investments until we could build our home. Anonymouse you are correct that house needs to be home but given my circumstance we needed to view our early years as a developer until we could afford to build our dream home, its still an effort as clearly material costs and labour have increased so its always an effort. As much as I would like to retire from hanging drywall and being my own finishing carpenter it still looks as though I may still require my tool belt.
Might as well make a project out of making yourself a house. cardboard tubes recycled from work and tarps work great as home building do-it-yourself materials.
whistler- How did you go about selecting the properties you chose to purchase? I'm planning on getting into developing/renovating in the city I'm moving to in the summer and have no real grasp at the moment as to what to really look for.
location location location. and then a simple plan that has the space and lot to allow it to expand with some flexibility. Know who your appealing to as a developer (a hint, its not other architects ) I started small and each new home we spent more and I ventured futher with my skills and efforts.
Most had to do with a market place that would have seen my house increase in value without me doing a thing. Therefore the whole experience is not in praise of my carpentry skills or efforts as a designer? Go figure!
If you're looking for a first home purchase, put your desire to be architectural on hold and buy ANYTHING you can find with a zero interest loan. You aren't making any payments towards the principal on the loan but any appreciation in the house is yours. I'm in the DC area and housing prices have been increasing by more than 20% per year. If you can afford a down payment and just the interest payments you can start buying some equity in an escalating market. I think some interest only's are zero down. I could be wrong - you might check with a lender about this.
This BUY BUY BUY advice is crazy - doesn't anyone remember the 80s. . .or the early 90s for that matter - while the potential appreciation on your house is yours to keep once you close, the potential depreciation is as well - and given that this is 2005 and not 2000, there seems to be good reason to believe you're not going to be up 20%/year over the next five years. Congrats to all those who've made bank investing since '95, but it is important to keep in mind that soaring real estate values are directly tied to the availability of low interest financing - as those ARMs expire and interest rates continue to rise, mortgage payments will too. a half million dollar house with a 5% fixed rate 30 yr mortgage today quickly slips down to a $400k house if interest rates increase by only 2% over the next 2-3 years (to 7% -still very reasonable)! That's just considering purchases - if you're signing on for an ARM now, get ready to loose your shirt. My advice: move into a smaller apt if possible, start aggressively saving, and in two years check into the booming foreclosure market. Given that real estate has come to be treated like the stock market in the absence of compelling results there since 2001 (consistent returns over time, how can you go wrong?), it bears noting that past success is no indication of future results.
I agree with h1. While it is true that you should jump in and invest instead of being a bystander, real estate requires extensive research especially in this market. No one knows if the bubble is going to burst or not, but we DO know that double digit annual gains have stalled out, homes are on the market longer and prices in some areas are actually falling. Nationally the hourse price are still going up... but only at about a 5.61% annual clip (source: MSN Money). In California, metro areas like San Jose and Santa Crutz have only posted less than 1% growth in the last quarter. That's not very good in my opinion.
Common sense says, buy low sell high. Personally I think its a good time to invest in stocks since the market is down. I save religiously and research hard, and my portfolio (financial) has rewarded me at about 15% growth a year. All you have to do is find a good financial advisor and find a good fund.
h1 and greengoblin - what you say is true. But anyone in the DC area knows that our housing prices are levelling off somewhat but will never go down. There's just no more land left. I'm sure there are other areas where the same is true. I know that San Diego is similar and it sounds like the original poster's Bay Area is the same.
If you know you're in this type of housing market, it's naive not to buy. But I agree that probably 99% of the country hasn't had great gains in housing prices.
has everyone missed the core sentiment of the orignial sentiment. what to do when entry level real estate prices are double the amount of money able to be leveraged.
i heard one usefull statement - move - still undesirable, but at least it acknowledged the issue at hand.
about all the rest, regarding buy buy buy quick quick quick, is sort of senseless. regardless of how good of an investment it is i want to buy now for personal reasons. the problem is not motivation, simply economics. so my questions remains in general - wtf to do?
i too believe that when the arm's expire it will hopefully instigate a massive real estate value tumble and whistler will be forced to sell off his second and third house at a reduced price to people like me.
who knows the scoop on purchasing forclosures, do you have to have the money in cash, or is bank financing ok? whats the process like?
i did not want to move at first either. my wife hated the idea. it takes her a while to embrace change. she now loves it here now it's no sf, but our new place has offered us things that sf never could.
anonymous, have you looked into auctions? a friend of mine just closed on a house monday and got it through an auction. don't know much about the process or the savings he reaped. he said that he would have never been able to buy a house in the city without going through the auction process. i know they didn't have much money to put down.
I really was trying to address your situation. The link below is a pretty good overview of what an interest only loan can do for you, along with all the pitfalls. I've been a homeowner for over 20 years and have purchased 4 houses. I haven't had an interest only loan myself, but I know people who have. Interest only loans were created for people in your situation who are priced out of a market.
I would find a realtor who can recommend a lender to talk to. Someone local who's office you can actually walk into. Stay away from online lenders. You should be able get advice on what your options are from a reputable mortgage lender. Good luck!
I would also add consider buying in with someone else and condos in addition to the forclosure/probate route. The latter can save you money but in hot markets such as it is in LA right now you're not going to get an incredible deal. I personally am afraid of the interest only mortgages, even ARMs - what if the prices drop right after you buy, or you lose your job, or you have other expenses such as medical? With that type of loan it seems you are assuming either your house will increase a lot in value or your income will go up - not unlikely scenarios if you are young but still risky... We got lucky and bought 4-1/2 years ago - a tiny shitheap that we have fixed up - however we also thought our income would go up and it has actually gone down - our house is worth more but we can't move anywhere else in the area because we can't afford a larger payment. And we would have been in trouble if we had gotten an adjustable rate or interest-only loan.
I think if we were looking now, we would either look into a multi-unit property with friends, or move to another state....
Another thing to consider is really being willing to live in an area which is not particularly desirable to you, at least for a while... in LA for example there are affordable houses and condos in areas like altadena, arcadia, far out in the valley... also east LA, Long Beach. It still may be too expensive but if you go for a one bedroom condo or duplex with a friend and fix it up it might work. I think you need to have lived in a city for at least a few years to know where the neighborhoods are that may not be the hottest but you could still live with, and have a lower risk of depreciation.
interest only and ARM loans are really for people who want to buy but can't get the standard down payments together. 20% (min. for PMI) is a butt load of money to get together if you can't depend on family to loan or give to you.
I think this talk about value exploding over night after you buy your house is a little extreme. you should still do your research though because you can lose your shirt if you get out too soon. the trick in a recession economy is to not sell until the economy gets better (different if you have a varible interst loan). that's what my parents did in the late 70's and early 80's though. they had a standard mortgage structure. they sold in the late 80's and made some because they held on. variable interests are different, you can really get screwed if the rates go up. if you go the interest-only or ARM, look to when you can refinance to a standard mortgage. mine is three years. i also know the value of my house has gone up about 10% in a year, if not more, but i live in Portland, OR. property goes up here because of several factors. the urban growth boundary has something to do with it because of the availability of developable land but so does the high cost of real estate and cost of living in the bay area and seattle. when the economy goes bad in california, they move to oregon and drive up the price. they're able to buy twice what they had there and probably have money left over.
i'd also suggest looking at 'for sale by owner' (FSBO). i did that and couldn't imagine why a realtor can demand 3-6% of the price of our house for the amount of work we did. be careful though, you have to have a good feeling about the seller. being an architect and knwoing to look for rot and water damage and differential settlement will help you. there are also necessary steps to help protect the buyer. we had to do an inspection through a third party. if we didn't like the results of the inspection, we could back out and retain our earnest money.
there's a lot to think about when buying property. ask friends, research. jump in as soon as you can though. that's my advice.
anonymouse, kqed's forum by micheal krasny is running a show on the bay area housing market right now. sorry for the late notice, but i just heard about it. part of the dicsussion regards what to do if you don't have enough money to buy. hope you catch it.
i lived in kansas city for two long years, all the rumors of backwards ignorant racist republicans are true. on the plus side there are actually two weeks a year where its comfortable to be outside, dont forget your bug repellant though!
My honest opinion - don't buy now - the real estate market is fixing for a crash of epic porportions. Frighteningly low intrest rates have fueled an absolute massive rise in prices over the past 4-5 years. Things are way way out of whack and there will be a correction sometime. The median home prices in most major metro areas have risen above what most entry level people can afford. To keep prices rising you always need that constant influx of new buyers at the bottom pushing up. Meanwhile - as real estate has grown wages have not. Greenspan has set us up for something really big and very very bad in my opinion.
People who think real-estate is safe and foolproof are idiots. Growing up in Houston I saw a real estate crash in the late 80's. Right now I'm told there is one starting in the Bay Area : http://patrick.net/housing/crash.html
Take a look at how many times the fed has been raising intrest rates lately. It's not a sign that you need to get in now. It tells me that everyone on those ARM mortgages are going to soon default and eventually a huge fire sale of defaulted mortgages.
in that link abra posted...the wife of the guy says that hes doing a job as a long haul trucker, which is less stressful than sitting in front of the computer...hahhaha
i knew a friend who took up a job for a year driving fedex trucks, i should forward this article to him.
keep saving people and wait for the bubble to burst and then sweep in for a sweet deal. also, in countries like argentina you can get great deals on your european style flat, wineries, haciendas etc... if you got cash money. back to the garrett. peace
i'm having a hard time accepting the doosmday advice. from my experience i've see property values only go up for the last 15 years! i do agree that ARM loans are a bad idea at this time because of the uncertainty in rates. interest only might be the only way to go. hopefully a person isn't so naive as to leverage themselves bankrupt. there are plenty of sharks out there who wouldn't even advise against only to make a quick buck. obviously a traditional principal paying mortgage is the way to go.
I'd like to hear about how those of you who have property learned about real estate. Newspaper? Word of mouth? Seminar? An indispensible book? Once I'm done with the ARE I plan to educate myself on this subject.
First, there is no question the grave concerns of homeownership in this country, much less in SF. I live here as well. And the politics around housing here are strictly divided. There are the pro-tenant Gullicksen/Shaw/Daly types, and then people like Janan New (SF Apt.Assoc.), supe Alioto-Pier as a more pro-homeownership by-whatever-means possible contingency. “Homeownership†has become so divisive here, to be pro-tenant is to be labeled anti-homeownership, and to be pro-homeownership is to be anti-renter/tenant. In my view, the major issue with the affordable housing crisis in SF is merely the lack of newly built housing. According to the city’s Housing Element, (which is already somewhat outdated) on existing available land already currently zoned SF could accommodate 29,000 new housing units through out the city. The lack of new housing being built, combined with the severe imbalance in the type of housing being built (mostly market rate) is what is driving a speculator’s market here. The result is increased pressure on the middle class, a desperation to buy at any cost, and the landlord contingency knows how to appeal to these needy middle class first-time-homebuyers by sabotaging rent control and affordability laws which protect people like you and me as renters for the time being. SF is extremely pro-tenant for an extremely real reason: the wealthy landlords wield massive power throughout this little city.
But without rambling on too much about SF housing politics, which I am only really now taking a critical interest in the last year or so, I wonder how involved you are or aware of the politics that are fighting for and against affordability here in the SF. And given your situation, which side of the fence you may fall on. I ask, b/c I don’t advocate moving out as others suggest, that is what the major developers are hoping you do, in order to make room for higher rents, more pressure on the pro-tenancy crews to cave in and turn over control to these ever-powerful landlords creating their versions of homeownership on the backs of the poor, through Ellis Act evictions, TIC conversions, etc. You need to stick it out; you need to join the fight for what really is trying to help affordability here. Alioto-Pier and Dufty’s recent TIC grandfathering proposal is not the way to let all those stuck in a limbomaniacal TIC-conversion lottery become homeowners. WE NEED TO BUILD MORE AFFORDABLE HOUSING plain and simple, not bastardize the rental stock. We need to find a better way of getting these developers to provide more affordable housing, as our non-prof’s are drying up, especially without Prop A money. The city’s Inclusionary Act is a small chip on the table for affordability, but so much more advocacy needs to be done.
If you really want to live here, you can wait, like a lot of people I know, to get in wherever an opportunity presents itself, and whatever the cost (should you achieve that financial capability), but I feel even that route is only in the long run ratcheting up the lack of affordability here, by playing into the hands of the ways this speculative market is eroding both rental stock and new affordability options by simply not providing any. Or you can get more involved in the affordability fight that is taking place by advocating for more housing to be built, and by examining ways of preserving affordability, either through limited equity models, landtrust, better first time buyer assistance programs. etc. When the city’s current low income and rental stock housing is less threatened, we can focus on building better housing options for first time homeowners. Right now the middle class has no choice but to cannibalize the rental stock for condo conversions because developers wont build more affordable housing and because they want to do away with rent control entirely. But think of what that would do to affordability here in SF.
Anyway, sorry for the rant, but its not just a matter of having the money to buy given current options, but really about the types of options we are creating and promoting.
architecture and home ownership
Perhaps it is the fact that i live in the bay area, but it seems that without winning the lottery i will never be able to afford to own a home as long as i continue to persue architecture as my career. i find this extremely frustrating as well as ironic. does anyone else share this plight, if so how do you rationalize this odd situation. does anyone have any good schemes to steal or otherwize obtain a home through fraud that they would like to share with me.
I feel your pain- I am living in a small town resort community in Colorado that is currently blowing up with out me.... My only current option seems to be deed restricted affordable housing (a joke, really- nothing is affordable anymore) which seems ridiculous when open market values are doubling every time you blink.
How do I rationalize staying? LIFESTYLE.
I'm in San Diego and feeling the same thing. I think that it's just a catch-22. The good projects to work on are usually in places you can't afford to own a home. I think the best thing to do is to save up and buy a real shithole - then fix it up over several years as a hobby. Of course that all takes money I dont have.
anonymouse, one word. move. i know that the bay area is a wonderful place to live. i lived there for 6 years. sf in particular. i left during the dot com boom. my wife and i tried to buy a house for over a year. we put in 11 offers. not one was taken seriously. at that time prices were escalating out of control. 30 people would show up to see the same house. 30 people would put in offers. all made offers above and beyond the asking price. 20% over asking was the minumum you could consider at that time. i hope things have gotten better since then.
the thing that brought us to the decision to move was our reflection on what we wanted our lives to be about. did we want to spend our lives paying our mortgage and thus being slaves to our jobs? even if we could buy a house, how in the world could we ever afford to do anything else? renovate? out of the question. go out and socialize? only if it was for free. vacation? ha ha ha ha. we loved the city but was that it? did we want to be a slave to it?
we looked at other places and knew what things we wanted in our lives. we liked city life. we wanted to enjoy that life. we wanted to start our own business and own a home. how would both of those be possible in a place like sf? how could one of us afford to leave our job and the steady income that comes from it to start a business where income is less that steady at first? we liked the temperate climate of sf so we needed to find a similar place. we liked the outdoors. well, you get the point.
we finally moved. relocated. inhabited our new city for almost a year to see if we liked it. we did, and we bought a house within 6 months and love our new home.
let me guess.... portland?
close, seattle. ;] cost of living is still expensive, but not nearly as bad though. my wife actually got a slight raise at her new job, and i now work for myself. no state income tax either so you have an extra couple hundred in your pocket every month.
Interesting, dialogue, I live in a village that has gone through the exact same thing however I was fortunate to have a mother in law who spotted us 50 k for a down payment to help with our own 80k deposit ( my wife's a teacher and mine was just from my Arch. salary ) The extra 50 k just helped with lowering our morgage. That was 9 yrs ago the price of the house has gone quadripled in price and I bought two other homes on the equity alone. I have been very fortunate. If you feel you need to live in a high priced area you just have to jump in and make it work, I had suites, did all the fix it work myself ( a great education itself ) or move a choose not to be "house poor". I am at a point where we are choosing to divest some of the real estate to be in a position to not have a morgage and have more time and money for fun and play but I am glad I dived in when I did. I sort of equate it to buying your first computer. You know you need to get one, and things keep getting more expensive but better so it just gets to a point when you say okay let's go.
I would encourage to you act creatively re extra suites and roomates, think like a developer in some regards. Make your money worth, it is a situation that as an architect you have to work through. It won't be your last house so don't worry about it being the perfect home, I have found the process very liberating and tested my skills and abilities as an Architect. Ultimately I am a better businessman and Architect because of it.
Fro9k, I have a suspision we live in the same community. My wife and I made the decision to buy deed restricted housing for many reasons including lifestyle-we can't imagine raising our son anywhere else-and we couldn't afford anything else. Even if the restrictions keep us from gaining at the market rate, we are still better off than we would be renting.
Anonymouse, I would suggest buying any real estate you can scrape up enough money for. Sacricife for a while. Maybe you don't like the location, the size, the view, whatever. If you can stay there for a while you at least have the money you put into it, unlike rent. If you're lucky, you may come out even better. Then you move up a rung on the residential ladder and repeat. Sounds old fashioned but that's how I did it. I'm a long way from building my dream house but I'm comfortable.
And if that doesn't work, I hear there's lots of money to be made appearing on reality TV shows.
good words whistler and chirigringo. i think the obvious thing here is, if you have some equity, you can make it grow into something more so start with whatever you can start with.
the thing that i found that complicated our issue in sf was rent control. it'a a blessing and a curse. when we first rented a one br in sf, we paid $975/mo. 5 years later we were only paying $1050/mo. unfortunately, the owner wants you out so that they can charge more a month. our apartment was literally falling down around us. it was very difficult to get the landlord to do anything. yet we couldn't move because rent prices had doubled in those 5 years we were there. when we finally moved out, the owner patched a couple of holes that they had made and applied a fresh coat of paint and got $2200/mo for the unit. renting sucks.
does everyone have a f...ing wife? My gawd what happened to the architect as the single loaner? I recognised that I wouldn't be able to own a house because on my salary it just wouldn't work. But I do understand - I'm looking at the end of my contract to purchase some land and put my talents to use. Use being that I won't be able to build on it for another 40 years but its a start I guess....sadness
either a wife or a bunch of lazy trust fund poseurs
jam, i know plenty of architects with and without sig others. some that are with have horrible relationships. better to be without than with someone who isn't a good match. my brother was married and then divorced just 3 years later. he told me a few months ago, he wished he had someone to share things with, but that he'd rather be alone then enter into another bad relationship. certainly having another income makes owning a hell of a lot easier. patience, my friend. if that's what you are looking for.
?
well its at the point here, where the cheapest, i mean cheapest thing, (searching though all mls listings in the area) is actually twice what i can afford. and that is using both me and my wifes income (both overly educated) in the ghettoest area of bayview.
and unfortunately i have no rich parents to aid in my survival. frankly, i get a little frustrated hearing all these stories about the value of peoples houses "quadriple"-ing. people always seem to pose that as the solution rather than the problem it really is. i have no desire for my home to be an investment, merely a place to create a home, a place to modify at will.
at this point im hoping the bubble bursts, or the next earthquake scares some of the midwestern transplants away.
or as said before - move. it seems ridiculous to be a native californian and getting chased out though
Very interesting thread. As a recent M ARCH graduate I have been wondering the same thing. I have been searching for jobs in both the SF Bay area and Seattle and have found the cost of housing to be my biggest deterrent from the bay area. It seems that with out the ability to build up equity, you are just stepping on your own feet in hopes to obtain any kind of financial security. I have even heard of people who live in such area purchasing small "vacation homes" in other areas of the country just so they can build up equity.
I guess that I am not really making any real point here. just that I think this is a good thread, these are the kind of real world issues that we are not always taught to deal with, or learn about in any kind of formal education.
PGB
Although I agree with whistler's post, I would question the computer analogy. Unlike housing, the price of an entry level pc has gone down significantly in the past 20 years. Not only that, the features provided on an entry level machine keep getting better as time goes on. Anytime I've held out on making a computer purchase it was a result of promises of better features and or lower prices to come. The same definitely cannot be said for housing.
anonymouse- I think you nailed it with what you said about a home vs. an investment.
Where I live, people are basically building spec houses and living in them for two years to avoid the capital gains tax. Rinse. Repeat. People speak of not making their home too 'personalized' because it will be less marketable. Maybe once the soul of this town has been completely sold I will be able to see leaving, but until then it remains quite frustrating.
this seems to have a very important tie in to the production of architecture as well. how much different do you think the profession would be if everyone owned their own home. what would the impact be on our cities. i dont mean to sound like a socialist here, but after travelling extensively and seeing which places had which problems, i would be stupid to not conclude that the bigger the wealth gap becomes, the worse our culture will continue to become. and just by looking around our own cities we can all see that ownership neigborhoods are usually well taken care of and rental neigborhoods are often trashed
My husband and I own a home. We bought a fixer upper 4 years ago and we have remodeled it ourselves during these years.
Bing bing...we are in our 20, we are still in school and we own a great house in Boston area. When we came in USA 6 years ago, we had enough money to pay the rent of two months that was all. So how did we do it?
Our strategy was this:
We made sure to pay everything on time, so we had a great credit history.
We saved, and saved and saved for 2 years.
We knew that by paying rent and waiting for the time to be rich wasn't a solution so we made the jump.
We have done all the remodeling ourselves since then.
I love our house. I can post some pictures if anyone is interested.
bragging is not allowed!
sorry if this sounded bragging to you!
i was just kidding.
My greatest concern is that I couldn't call the first houses we owned as "homes' they were truly investments until we could build our home. Anonymouse you are correct that house needs to be home but given my circumstance we needed to view our early years as a developer until we could afford to build our dream home, its still an effort as clearly material costs and labour have increased so its always an effort. As much as I would like to retire from hanging drywall and being my own finishing carpenter it still looks as though I may still require my tool belt.
Might as well make a project out of making yourself a house. cardboard tubes recycled from work and tarps work great as home building do-it-yourself materials.
whistler- How did you go about selecting the properties you chose to purchase? I'm planning on getting into developing/renovating in the city I'm moving to in the summer and have no real grasp at the moment as to what to really look for.
maybe you can get yerself a prefab for 200k from dwell
location location location. and then a simple plan that has the space and lot to allow it to expand with some flexibility. Know who your appealing to as a developer (a hint, its not other architects ) I started small and each new home we spent more and I ventured futher with my skills and efforts.
Most had to do with a market place that would have seen my house increase in value without me doing a thing. Therefore the whole experience is not in praise of my carpentry skills or efforts as a designer? Go figure!
If you're looking for a first home purchase, put your desire to be architectural on hold and buy ANYTHING you can find with a zero interest loan. You aren't making any payments towards the principal on the loan but any appreciation in the house is yours. I'm in the DC area and housing prices have been increasing by more than 20% per year. If you can afford a down payment and just the interest payments you can start buying some equity in an escalating market. I think some interest only's are zero down. I could be wrong - you might check with a lender about this.
Spend half your money on a little car that fits underneath an SUV but gets 60 mpg - and the other half on some little shack by the windmill farms?
This BUY BUY BUY advice is crazy - doesn't anyone remember the 80s. . .or the early 90s for that matter - while the potential appreciation on your house is yours to keep once you close, the potential depreciation is as well - and given that this is 2005 and not 2000, there seems to be good reason to believe you're not going to be up 20%/year over the next five years. Congrats to all those who've made bank investing since '95, but it is important to keep in mind that soaring real estate values are directly tied to the availability of low interest financing - as those ARMs expire and interest rates continue to rise, mortgage payments will too. a half million dollar house with a 5% fixed rate 30 yr mortgage today quickly slips down to a $400k house if interest rates increase by only 2% over the next 2-3 years (to 7% -still very reasonable)! That's just considering purchases - if you're signing on for an ARM now, get ready to loose your shirt. My advice: move into a smaller apt if possible, start aggressively saving, and in two years check into the booming foreclosure market. Given that real estate has come to be treated like the stock market in the absence of compelling results there since 2001 (consistent returns over time, how can you go wrong?), it bears noting that past success is no indication of future results.
I agree with h1. While it is true that you should jump in and invest instead of being a bystander, real estate requires extensive research especially in this market. No one knows if the bubble is going to burst or not, but we DO know that double digit annual gains have stalled out, homes are on the market longer and prices in some areas are actually falling. Nationally the hourse price are still going up... but only at about a 5.61% annual clip (source: MSN Money). In California, metro areas like San Jose and Santa Crutz have only posted less than 1% growth in the last quarter. That's not very good in my opinion.
Common sense says, buy low sell high. Personally I think its a good time to invest in stocks since the market is down. I save religiously and research hard, and my portfolio (financial) has rewarded me at about 15% growth a year. All you have to do is find a good financial advisor and find a good fund.
h1 and greengoblin - what you say is true. But anyone in the DC area knows that our housing prices are levelling off somewhat but will never go down. There's just no more land left. I'm sure there are other areas where the same is true. I know that San Diego is similar and it sounds like the original poster's Bay Area is the same.
If you know you're in this type of housing market, it's naive not to buy. But I agree that probably 99% of the country hasn't had great gains in housing prices.
has everyone missed the core sentiment of the orignial sentiment. what to do when entry level real estate prices are double the amount of money able to be leveraged.
i heard one usefull statement - move - still undesirable, but at least it acknowledged the issue at hand.
about all the rest, regarding buy buy buy quick quick quick, is sort of senseless. regardless of how good of an investment it is i want to buy now for personal reasons. the problem is not motivation, simply economics. so my questions remains in general - wtf to do?
i too believe that when the arm's expire it will hopefully instigate a massive real estate value tumble and whistler will be forced to sell off his second and third house at a reduced price to people like me.
who knows the scoop on purchasing forclosures, do you have to have the money in cash, or is bank financing ok? whats the process like?
i did not want to move at first either. my wife hated the idea. it takes her a while to embrace change. she now loves it here now it's no sf, but our new place has offered us things that sf never could.
anonymous, have you looked into auctions? a friend of mine just closed on a house monday and got it through an auction. don't know much about the process or the savings he reaped. he said that he would have never been able to buy a house in the city without going through the auction process. i know they didn't have much money to put down.
I really was trying to address your situation. The link below is a pretty good overview of what an interest only loan can do for you, along with all the pitfalls. I've been a homeowner for over 20 years and have purchased 4 houses. I haven't had an interest only loan myself, but I know people who have. Interest only loans were created for people in your situation who are priced out of a market.
I would find a realtor who can recommend a lender to talk to. Someone local who's office you can actually walk into. Stay away from online lenders. You should be able get advice on what your options are from a reputable mortgage lender. Good luck!
http://www.hsh.com/interest-only.html
I would also add consider buying in with someone else and condos in addition to the forclosure/probate route. The latter can save you money but in hot markets such as it is in LA right now you're not going to get an incredible deal. I personally am afraid of the interest only mortgages, even ARMs - what if the prices drop right after you buy, or you lose your job, or you have other expenses such as medical? With that type of loan it seems you are assuming either your house will increase a lot in value or your income will go up - not unlikely scenarios if you are young but still risky... We got lucky and bought 4-1/2 years ago - a tiny shitheap that we have fixed up - however we also thought our income would go up and it has actually gone down - our house is worth more but we can't move anywhere else in the area because we can't afford a larger payment. And we would have been in trouble if we had gotten an adjustable rate or interest-only loan.
I think if we were looking now, we would either look into a multi-unit property with friends, or move to another state....
Another thing to consider is really being willing to live in an area which is not particularly desirable to you, at least for a while... in LA for example there are affordable houses and condos in areas like altadena, arcadia, far out in the valley... also east LA, Long Beach. It still may be too expensive but if you go for a one bedroom condo or duplex with a friend and fix it up it might work. I think you need to have lived in a city for at least a few years to know where the neighborhoods are that may not be the hottest but you could still live with, and have a lower risk of depreciation.
interest only and ARM loans are really for people who want to buy but can't get the standard down payments together. 20% (min. for PMI) is a butt load of money to get together if you can't depend on family to loan or give to you.
I think this talk about value exploding over night after you buy your house is a little extreme. you should still do your research though because you can lose your shirt if you get out too soon. the trick in a recession economy is to not sell until the economy gets better (different if you have a varible interst loan). that's what my parents did in the late 70's and early 80's though. they had a standard mortgage structure. they sold in the late 80's and made some because they held on. variable interests are different, you can really get screwed if the rates go up. if you go the interest-only or ARM, look to when you can refinance to a standard mortgage. mine is three years. i also know the value of my house has gone up about 10% in a year, if not more, but i live in Portland, OR. property goes up here because of several factors. the urban growth boundary has something to do with it because of the availability of developable land but so does the high cost of real estate and cost of living in the bay area and seattle. when the economy goes bad in california, they move to oregon and drive up the price. they're able to buy twice what they had there and probably have money left over.
i'd also suggest looking at 'for sale by owner' (FSBO). i did that and couldn't imagine why a realtor can demand 3-6% of the price of our house for the amount of work we did. be careful though, you have to have a good feeling about the seller. being an architect and knwoing to look for rot and water damage and differential settlement will help you. there are also necessary steps to help protect the buyer. we had to do an inspection through a third party. if we didn't like the results of the inspection, we could back out and retain our earnest money.
there's a lot to think about when buying property. ask friends, research. jump in as soon as you can though. that's my advice.
anonymouse, kqed's forum by micheal krasny is running a show on the bay area housing market right now. sorry for the late notice, but i just heard about it. part of the dicsussion regards what to do if you don't have enough money to buy. hope you catch it.
i lived in kansas city for two long years, all the rumors of backwards ignorant racist republicans are true. on the plus side there are actually two weeks a year where its comfortable to be outside, dont forget your bug repellant though!
sounds pleasant.
My honest opinion - don't buy now - the real estate market is fixing for a crash of epic porportions. Frighteningly low intrest rates have fueled an absolute massive rise in prices over the past 4-5 years. Things are way way out of whack and there will be a correction sometime. The median home prices in most major metro areas have risen above what most entry level people can afford. To keep prices rising you always need that constant influx of new buyers at the bottom pushing up. Meanwhile - as real estate has grown wages have not. Greenspan has set us up for something really big and very very bad in my opinion.
People who think real-estate is safe and foolproof are idiots. Growing up in Houston I saw a real estate crash in the late 80's. Right now I'm told there is one starting in the Bay Area :
http://patrick.net/housing/crash.html
Take a look at how many times the fed has been raising intrest rates lately. It's not a sign that you need to get in now. It tells me that everyone on those ARM mortgages are going to soon default and eventually a huge fire sale of defaulted mortgages.
i think you'd have to be a fool to take on an ARM right now.
in that link abra posted...the wife of the guy says that hes doing a job as a long haul trucker, which is less stressful than sitting in front of the computer...hahhaha
i knew a friend who took up a job for a year driving fedex trucks, i should forward this article to him.
Reasons to not even consider buying now.
http://www.chronwatch.com/content/contentDisplay.asp?aid=12147
keep saving people and wait for the bubble to burst and then sweep in for a sweet deal. also, in countries like argentina you can get great deals on your european style flat, wineries, haciendas etc... if you got cash money. back to the garrett. peace
i'm having a hard time accepting the doosmday advice. from my experience i've see property values only go up for the last 15 years! i do agree that ARM loans are a bad idea at this time because of the uncertainty in rates. interest only might be the only way to go. hopefully a person isn't so naive as to leverage themselves bankrupt. there are plenty of sharks out there who wouldn't even advise against only to make a quick buck. obviously a traditional principal paying mortgage is the way to go.
I'd like to hear about how those of you who have property learned about real estate. Newspaper? Word of mouth? Seminar? An indispensible book? Once I'm done with the ARE I plan to educate myself on this subject.
I bought A duplex. I can pay my mortgage and then some regardless.
Anon,
First, there is no question the grave concerns of homeownership in this country, much less in SF. I live here as well. And the politics around housing here are strictly divided. There are the pro-tenant Gullicksen/Shaw/Daly types, and then people like Janan New (SF Apt.Assoc.), supe Alioto-Pier as a more pro-homeownership by-whatever-means possible contingency. “Homeownership†has become so divisive here, to be pro-tenant is to be labeled anti-homeownership, and to be pro-homeownership is to be anti-renter/tenant. In my view, the major issue with the affordable housing crisis in SF is merely the lack of newly built housing. According to the city’s Housing Element, (which is already somewhat outdated) on existing available land already currently zoned SF could accommodate 29,000 new housing units through out the city. The lack of new housing being built, combined with the severe imbalance in the type of housing being built (mostly market rate) is what is driving a speculator’s market here. The result is increased pressure on the middle class, a desperation to buy at any cost, and the landlord contingency knows how to appeal to these needy middle class first-time-homebuyers by sabotaging rent control and affordability laws which protect people like you and me as renters for the time being. SF is extremely pro-tenant for an extremely real reason: the wealthy landlords wield massive power throughout this little city.
But without rambling on too much about SF housing politics, which I am only really now taking a critical interest in the last year or so, I wonder how involved you are or aware of the politics that are fighting for and against affordability here in the SF. And given your situation, which side of the fence you may fall on. I ask, b/c I don’t advocate moving out as others suggest, that is what the major developers are hoping you do, in order to make room for higher rents, more pressure on the pro-tenancy crews to cave in and turn over control to these ever-powerful landlords creating their versions of homeownership on the backs of the poor, through Ellis Act evictions, TIC conversions, etc. You need to stick it out; you need to join the fight for what really is trying to help affordability here. Alioto-Pier and Dufty’s recent TIC grandfathering proposal is not the way to let all those stuck in a limbomaniacal TIC-conversion lottery become homeowners. WE NEED TO BUILD MORE AFFORDABLE HOUSING plain and simple, not bastardize the rental stock. We need to find a better way of getting these developers to provide more affordable housing, as our non-prof’s are drying up, especially without Prop A money. The city’s Inclusionary Act is a small chip on the table for affordability, but so much more advocacy needs to be done.
If you really want to live here, you can wait, like a lot of people I know, to get in wherever an opportunity presents itself, and whatever the cost (should you achieve that financial capability), but I feel even that route is only in the long run ratcheting up the lack of affordability here, by playing into the hands of the ways this speculative market is eroding both rental stock and new affordability options by simply not providing any. Or you can get more involved in the affordability fight that is taking place by advocating for more housing to be built, and by examining ways of preserving affordability, either through limited equity models, landtrust, better first time buyer assistance programs. etc. When the city’s current low income and rental stock housing is less threatened, we can focus on building better housing options for first time homeowners. Right now the middle class has no choice but to cannibalize the rental stock for condo conversions because developers wont build more affordable housing and because they want to do away with rent control entirely. But think of what that would do to affordability here in SF.
Anyway, sorry for the rant, but its not just a matter of having the money to buy given current options, but really about the types of options we are creating and promoting.
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