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If the bubble returns to the BA, what will you do?
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2012 Apr 2, 1:35am 98,376 views 255 comments
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1sfrenter
2012 Apr 5, 3:50am
I'm guessing being kicked out of a rental is less common than the loss of a home due to financial stress.
If you have to "guess" about this, can I guess that you are not a renter?
I have been renting for about 30 years (my entire adult life) and since most of my friends are teachers, artists, etc.they are also renters. I can assure you that renting has not provided us the kind of stability you speak of. And that's in a city that has strong rent control and tenant's rights.
I have found that some of the biggest housing bears are people who already own houses and like to suggest that the rest of us become life-long renters.
The value is housing is not purely financial.
What a lot are saying is that the value of housing is helfpul when even a little financially considered. Look at how people make any other purchase. Look at how they buy a house. Why are they so different!
If you have to "guess" about this, can I guess that you are not a renter?
I'm also an artist, although not for money. I've never figured out a way that works for me to be an artist without a job. I grew up in a very poor family, so I've never lived in any residence which was owned by me or my guardians. I'm a lifelong renter.
At this point, it looks like staying in the Bay Area means staying a renter. I could have gotten mortgages, but I'm planning for a time when my job/art time is more even.
When you are rich, you have enough money and look at a house as a shelter and a bit of show-boating your wealth.
Makes no sense. Why would showing off "the worst investment possible" be even considered showing off then?
All rich people could just rent, multiple homes. After all, they are rich. They can afford it. No need to buy.
I am just playing devils advocate here.
Because there is a value/benefit to owning your own home that is more than just economic:
Stability, aesthetics, pets, gardening, sense of "place/home", family. etc.
Absolutely. But the renters here will argue that. It's weird when we rented for all those years I was never feeling like I am in MY home. I always liked being on month to month after the initial 2 year or 1 year lease, to be flexible as in possibly finding a better house or maybe even buying. But after getting kicked out a few times due to them selling, I hated the insecurity of every month could be the month of the famous phonecall and then the nightmare search for another house begins all in the middle of full time work etc etc...sucks!! And nobody in LA signs a 4-5 year lease. Landlords don't do that.
We spent so much money on moving each time. $2-3k BAM!
You get to the point where you don't even want to put anything in the house because you never know when you may move. And on top of it you spend money like a mortgage, so your saving is not increasing any faster than paying a mortgage.
We just did our taxes this year. Massive refund. First time. Amazing. Prop tax was paid by tax refund and there is money left over.
Absolutely. But the renters here will argue that. It's weird when we rented for all those years I was never feeling like I am in MY home.
Its a case-by-case situation. I've never been kicked out of a house I've rented and the house we rent now we've been in for 9 years. It also "feels" like our home. Live anywhere that long and that will happen. We re-did the back yard, painted the living room, etc etc. Big deal.
The fear of being "kicked out" is every bit as much of a concern-or should be- for a homeowner. In this day in age no job is secure and if you lose one and own a house, well too bad- the payment comes do at the first of the month and you can't simply move to a cheaper situation unless you sell. Unlike a renter that has that ability to move somwhere cheaper. I definitely know my fair share of homeowners who lost jobs and lost their house as a result.
freak80
2012 Apr 5, 8:45am
Makes no sense. Why would showing off "the worst investment possible" be even considered showing off then?
Because they don't think of it an an investment. They think of it as a luxury good. Like a Ferrari. Or a yacht. Or a glass of fine wine. Or a jet. They don't expect a return on those purchases. They buy them because they're nice to have and they can afford it. They're investments are in stocks and bonds. And maybe real estate if they're collecting rents.
Because they don't think of it an an investment. They think of it as a luxury good. Like a Ferrari. Or a yacht. Or a glass of fine wine. Or a jet.
I'll use myself as a real-life example to further this notion. In my "other life" prior to getting my current career going I worked at retail stores making $8-$10 an hour. I did this from the time I was around 16, all the way through college, and the first 2-3 years after graduating college. I can recall taking out a loan for a computer. It took me over 2 years to pay it off. It cost $1,500 which at the time to me with my financial situation was a HUGE amount of money. In fact, most anything like a TV, CDs, cell phones, and a nice dinner all seemed impossibly expensive. I was just barely scraping by.
Fast-forward to now after 10+ years in my career and I make a lot more. I'm not rich, but I can go out and buy a computer, a flatscreen TV, or even a econo-car no problem. Not to say I do this all that often as I'm a cheap-ass who still drives the car I had in high school. But when I go out to a nice dinner I no longer worry about how much it is or what it'll do to my monthly expenditure or what sort of dent it will make in my savings account. Not that I take this for granted, but these are all things that at one time were very big deals to me since they were outside the realm of what I could really afford. Now I can and that notion has more or less evaporated.
What if I made millions and millions of dollars? A nice house would be the same thing. Not neccesarily an investment per-say, but given that its value in the end would probably be a non-issue since I wouldn't be counting on it for my finanancial well-being unlike most people who do simply because their purchasing power is limited and a house to them is this extremely expensive thing that could very easily ruin them financially if things don't go well.
We just did our taxes this year. Massive refund. First time. Amazing. Prop tax was paid by tax refund and there is money left over.
The government and the people with money in this country thank you. Actually, I thank you too, because your willingness to loan the government money all year takes a little sting out of how much I disagree with where my taxes get spent.
All rich people could just rent, multiple homes. After all, they are rich. They can afford it. No need to buy.
Some do.
Why would showing off "the worst investment possible" be even considered showing off then?
Sociology.
rootvg
2012 Apr 5, 11:23am
If the bubble returns to the BA, what will you do?
I have a better question:
When you figure out that there are a lot of wealthy, successful people in the nice areas and you'll never be able to afford a house on the peninsula, what will you do?
There ARE a lot of wealthy, successful people in the nice areas and for that reason those areas will never be affordable. My understanding is Danville and Alamo were high in the early seventies and they're high now.
It's EXPENSIVE to live here. Some will not be able to afford it. Some who are here, should not be.
What else is there to know?
dunnross
2012 Apr 5, 1:01pm
There ARE a lot of wealthy, successful people in the nice areas and for that reason those areas will never be affordable.
Are you saying that wealthy people like to overpay? How did they become wealthy, then?
There ARE a lot of wealthy, successful people in the nice areas and for that reason those areas will never be affordable. My understanding is Danville and Alamo were high in the early seventies and they're high now.
It's EXPENSIVE to live here. Some will not be able to afford it. Some who are here, should not be.
What else is there to know?
There are a lot of wealthy successful people in Des Moines, Iowa, too. Mountain Brook, Alabama is one of the ten wealthiest communities in the entire country. Bloomfield Hills, Michigan has the second highest median income in the country, just ahead of Beautiful Belle Meade, Tennessee, and just behind Palm Beach, Floriders. It would be interesting to do a comparison of the cost of living in these places and a place like Danville.
rootvg
2012 Apr 5, 1:41pm
There ARE a lot of wealthy, successful people in the nice areas and for that reason those areas will never be affordable. My understanding is Danville and Alamo were high in the early seventies and they're high now.
It's EXPENSIVE to live here. Some will not be able to afford it. Some who are here, should not be.
What else is there to know?
There are a lot of wealthy successful people in Des Moines, Iowa, too. Mountain Brook, Alabama is one of the ten wealthiest communities in the entire country. Bloomfield Hills, Michigan has the second highest median income in the country, just ahead of Beautiful Belle Meade, Tennessee, and just behind Palm Beach, Floriders. It would be interesting to do a comparison of the cost of living in these places and a place like Danville.
Fair enough, but there isn't the demand for those places that we have here. There also isn't so much old money and then you have the California emotional, follow-the-leader high school culture thing to worry about.
When we say the Bay Area is a bubble, we mean it. This is Disneyland. When we try to explain this place to my parents, they look at us like we're nuts.
There's too much money here, too many over credentialed arrogant assholes who can't think straight and too many interlopers from all over the world looking to seek their fortunes at someone else's expense by redefining reality. If you come here not knowing that, you will eventually get hurt. The laws of physics, economics and common sense have not been repealed. Two and two will NEVER equal five no matter how many people say so and no matter how many times they say it.
Bloomfield Hills is a nice place. It snows there, but it's nice. Moreland Hills, Ohio is also nice with similar demographics. Around Columbus, Upper Arlington is nice. I think Jack Nicklaus still lives there. In the Cincinnati area, I like Blue Ash. I'd live there in a second.
Down your way, I like Round Rock. Georgetown is also a good bet although it's further away. Go south and there's San Marcos. I got my hair cut there once, during a day trip to the outlet mall.
rootvg
2012 Apr 5, 1:48pm
Makes no sense. Why would showing off "the worst investment possible" be even considered showing off then?
Because they don't think of it an an investment. They think of it as a luxury good. Like a Ferrari. Or a yacht. Or a glass of fine wine. Or a jet. They don't expect a return on those purchases. They buy them because they're nice to have and they can afford it. They're investments are in stocks and bonds. And maybe real estate if they're collecting rents.
Ross Perot has invested primarily in Treasuries for years and years. He says it's not about return on his money but return OF his money.
rootvg
2012 Apr 5, 1:51pm
Makes no sense. Why would showing off "the worst investment possible" be even considered showing off then?
Because they don't think of it an an investment. They think of it as a luxury good. Like a Ferrari. Or a yacht. Or a glass of fine wine. Or a jet. They don't expect a return on those purchases. They buy them because they're nice to have and they can afford it. They're investments are in stocks and bonds. And maybe real estate if they're collecting rents.
Even in general aviation, most of the big airplanes are owned by paper corporations for tax and liability reasons. I can name several flight schools right off the top of my head where the school doesn't own the planes. One of them is a fairly prestigious operation over at Livermore Muni.
rootvg
2012 Apr 5, 1:52pm
The inevitable depression and morale crushing layoffs that would commence... It would be a hard, chaotic reset button on our financial system.
Bring it ON! Time for us sinners to pay and pay dearly. We can take it. Who is not up for a good round of suffering. I'd vote for this if there was a vote. And I own multiple houses (just not any in the BA). I'd rather get us back on track to eventually be prosperous again, regardless of how long it took. Even if it took longer than I live. At least we would be passing down something worth inheriting. Right now, we are passing on an economy build on junk bonds in all honesty. 61% of the bonds are being bought by the fed. What a joke.
Won't happen. It should but it won't.
rootvg
2012 Apr 5, 1:53pm
There ARE a lot of wealthy, successful people in the nice areas and for that reason those areas will never be affordable.
Are you saying that wealthy people like to overpay? How did they become wealthy, then?
Who cares? It's not my business either way.
dunnross
2012 Apr 5, 3:01pm
Are you saying that wealthy people like to overpay?
Do wealthy people overpay for a Maserati when they could have purchased a Honda Civic?
No, but buying a crappy old house in a place like Palo Alto, is like buying a Honda Civic for the price of Maserati, just because it has Michelin Tires.
Rich people don't buy a 500k house.
Somebody that makes 1Mill a year, buys a house with a mortgage of 20k/month.
The ratio is very similar then the guy that makes 150k having a mortgage of 3000/month.
Complete nonsense. You guys have no clue what rich people do and why they do it. They do things very similar than everybody else - just add a 0 or 00 or 000 to it.
You think the guy that makes 20 million a year buys a house for 3 million in cash? No, he buys a house for 45Million...and that's the second house or the third house. It still takes 4-5 years of his income to pay for those houses.
RentingForHalfTheCost
2012 Apr 6, 1:26am
Are you saying that wealthy people like to overpay?
Do wealthy people overpay for a Maserati when they could have purchased a Honda Civic?
I know many wealthy people that do cause price inflation. They pay retail for vehicles, houses, etc. without even trying to haggle. It is not worth their time. I once went tire kicking with a manager, who, spent about 2 hours to decide to buy a BMW convertible. No where in the discussion was anything about price even discussed. I asked him as we were driving back to the office about this, and he said he was fine paying what they were asking for it. He would rather give them the sticker price and make everyone happy and get great service in the process.
Most of us don't work like that. We know that the above person overpaid because anyone that haggles will do better. I don't want just the middle of the price profile, I want to be the person who pays the least out of all the buyers. That will still stay with me, even if I was rich. I'm sure it has to do with living my first 25 years of life so broke it was even hard to "pay" attention. ;)
RentingForHalfTheCost
2012 Apr 6, 1:31am
Rich people don't buy a 500k house.
Somebody that makes 1Mill a year, buys a house with a mortgage of 20k/month.
The ratio is very similar then the guy that makes 150k having a mortgage of 3000/month.
Complete nonsense. You guys have no clue what rich people do and why they do it. They do things very similar than everybody else - just add a 0 or 00 or 000 to it.
You think the guy that makes 20 million a year buys a house for 3 million in cash? No, he buys a house for 45Million...and that's the second house or the third house. It still takes 4-5 years of his income to pay for those houses.
I completely agree with your argument here. However, I read all the previous posts and I can't figure out what you are arguing about. I didn't see any comment saying anything opposite of what you are saying here. Rich people do buy houses, and they do buy at their comfort level. That level is way above what is comfortable to most of us overpaid pheasants.
rootvg
2012 Apr 6, 1:47am
Are you saying that wealthy people like to overpay?
Do wealthy people overpay for a Maserati when they could have purchased a Honda Civic?
No, but buying a crappy old house in a place like Palo Alto, is like buying a Honda Civic for the price of Maserati, just because it has Michelin Tires.
You don't have to buy in Palo Alto. You don't even have to live in Palo Alto.
Goran_K
2012 Apr 6, 2:05am
Rich people don't buy a 500k house.
Somebody that makes 1Mill a year, buys a house with a mortgage of 20k/month.
The ratio is very similar then the guy that makes 150k having a mortgage of 3000/month.
You think the guy that makes 20 million a year buys a house for 3 million in cash? No, he buys a house for 45Million...and that's the second house or the third house. It still takes 4-5 years of his income to pay for those houses.
Actually no. Thomas Stanley's book titled "The Millionaire Next Door" interviewed about a thousand people with a net worth of over $1,000,000(U.S) on exactly what you're talking about:
Who are the rich in this country?
What do they do?
Where do they shop?
What do they drive?
How do they invest?
Many rich people tend to be fairly conservative and practical in their purchasing decisions. The most popular car for a millionaire? Toyota Camry. Less than 10% actually drove a "Luxury" brand car (Porsche, Ferrari, etc). One person he interviewed had a $10,000,000 net worth but lived in a sub-$800,000 home.
The book was published in 1996, before the dot.com bust, and Real estate bubble, so the millionaires Stanley interviewed were "real" wealthy people, not on-paper millionaires because they held inflated assets like unproven tech stock, or real estate.
Maybe, if the commute time could be make less by more efficient public transportation, location could be less of an issue. For e.g, there's VTA right in front our place that would go to mountain view Caltrain except it takes twice as long as driving, almost twice as much as the monthly caltrain parking permit. Before the gas price skyrockets, think Caltrain pass costs would exceed fuel cost. As much as California is trying to be green, they haven't been that successful in public transportation. How about public transportation connecting east bay with the Caltrain crossing the bridge? Of course, I don't know the difficulty in construction, but there is eurostar crossing English channel, it shouldn't be mission impossible.
freak80
2012 Apr 6, 2:28am
There's too much money here, too many over credentialed arrogant assholes who can't think straight and too many interlopers from all over the world looking to seek their fortunes at someone else's expense by redefining reality. If you come here not knowing that, you will eventually get hurt. The laws of physics, economics and common sense have not been repealed. Two and two will NEVER equal five no matter how many people say so and no matter how many times they say it.
That's probably the best description of the Bay Area I've ever seen. Well said.
RentingForHalfTheCost
2012 Apr 6, 2:30am
Maybe, if the commute time could be make less by more efficient public transportation, location could be less of an issue. For e.g, there's VTA right in front our place that would go to mountain view Caltrain except it takes twice as long as driving, almost twice as much as the monthly caltrain parking permit. Before the gas price skyrockets, think Caltrain pass costs would exceed fuel cost. As much as California is trying to be green, they haven't been that successful in public transportation. How about public transportation connecting east bay with the Caltrain crossing the bridge? Of course, I don't know the difficulty in construction, but there is eurostar crossing English channel, it shouldn't be mission impossible.
I can easily beat the lightrail from Milpitas to Mountain View by biking. Have been doing it for years. The caltrain catches back up to me around Redwood city area. So sad.
freak80
2012 Apr 6, 2:34am
That level is way above what is comfortable to most of us overpaid pheasants.
You mean like this guy? ;)
Many rich people tend to be fairly conservative and practical in their purchasing decisions. The most popular car for a millionaire? Toyota Camry
I work with many very wealthy people. They all have more cars than I can keep track of and there is no toyota camry in sight. Actually, the camry is what the cleaning lady drives.
What nonsense is that. Look around the rich neighborhoods. Here in LA, you can look at miles and miles of neighbordhoods where each house costs 1.5mill and up...who do you think buys those if not the rich??
Look at ferrari and luxury car sales...who do you think buys those?
And look at Richard Branson type characters. You think he drives a Toyota Camry? LOL.
However, I read all the previous posts and I can't figure out what you are arguing about.
You are right. I can't figure it out either. :) ...ah, wait...I guess we got on a tangent about houses being a terrible investment and then blabla and then bla and then more blabla...and now we are talking abut ferrari's and organic beans. LOL.
Happy Easter!!
Actually no. Thomas Stanley's book titled "The Millionaire Next Door" interviewed about a thousand people with a net worth of over $1,000,000(U.S) on exactly what you're talking about:
Many rich people tend to be fairly conservative and practical in their purchasing decisions. The most popular car for a millionaire? Toyota Camry. Less than 10% actually drove a "Luxury" brand car (Porsche, Ferrari, etc). One person he interviewed had a $10,000,000 net worth but lived in a sub-$800,000 home.
this is correct
the data is fairly recent - it's from 2009.
also, stanley has a phd, was a professor for 20 years and his current job is studying and researching wealthy people. he studies the wealthy for a living. he has multiple best selling and widely acclaimed books (with actual data) on his findings on who the wealthy are and profiles them accurate.
these credentials trump anyone's lame "observations" pulled from their ass.
From the book "Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School", Thomas Stanley, wealth researcher and author of "The Millionaire Mind" and "The Millionaire Next Door" conducted a survey and found:
"""Most US homes valued at a million dollars or more (as of 2009) were not owned by millionaires.
Instead, the majority of million-dollar homes were owned by non-millionaires with large mortgages and very expensive tastes.In sharp contrast, 90 percent of those who met the defined criterion to be a millionaire -- having a net worth of more than $1 million -- lived in homes valued at less than a million dollars."""
this is correct
I guess its really all the poor people living in the 30mill+ houses down at the beach...NOT
CrazyMan
2012 Apr 6, 4:23am
Many people on this board wants to buy/own a house in Palo Alto or the Peninsula, and they don't deny it. The only problem is that they want to pay Concord or the Central Valley home prices.
This is one of the dumber things you've ever posted, which is saying a lot.
Not everybody wants to live in PA or MV, most people just want to live in the BA without spending 80% of their income to do so. I don't think anyone expects a PA home to 300K =/
Also, some of us get reasonable deals because we pay rent on time and take care of the properties we live in. Trust me, you aren't doing anyone any favors. My landlord raises my rent, and they'll be over here changing light bulbs. They know this and I treat their place well, so they don't raise my rent.
this is correct
I guess its really all the poor people living in the 30mill+ houses down at the beach...NOT
this is retarded. no one said such a stupid thing. were did you learn to read?
RentingForHalfTheCost
2012 Apr 6, 5:41am
As a landlord, I haven't realized this rent increase. I feel for the renters and haven't increased the rent in the past 3 years. However, I'm so tempted to raise rent on all of my rentals because it seems like the renters on this board don't appreciate that their landlord is giving them a deal. :)
Stick it to them. 25% increase retro back 3 months! Wait, are you my landlord? Crap, ignore what I just said. Nothing to see here, keep moving...
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This might have been posted before but what the heck. Its worth revisiting. How many of you think the bubble will return? Of those of you out there looking- and not just those looking in the fortress areas- what are you seeing? Much of the same or have things changed?
Secondly, if another bubble rears its ugly head, what would you do?
A: panic and buy a house ( or get priced out foreva'!)
B: Say: "Screw it, I'm moving
C: Stay and continue to rent
D: ( for those that already own) brag about how much your house is worth.
E: None of the above.
#bubbles