patrick.net

I'm just amazed that a dwelling can cost $700k in one county and only $200K in the next. Unless the $700k county is some kind of "mecca" for rich folks (like The Hamptons on Long Island).

clambo says

If you saved and invested instead of succumbing to your whims and desires you will be better off in the future.
...
Buy stocks and make a portion of the profit of those companies that are getting rich from the consumers around the world who won't stop consuming.

It sounds like you have it figured out...but you had better hope the rest of the world doesn't catch on.

That's one of the problems I have with the whole "game" -- I don't really believe in it. The society we have, the lifestyles we live, the excess consumption are all part of the "foundation" that enable me to put money into stocks and make more down the road. But I don't really buy into it....it's fake, unsustainable, and repulsive in a lot of ways. I don't have faith that it's going to last. We as a country (as a world?) have too much in the unpaid debts column....Of course these things can develop over long time periods, often longer than a lifetime, so I might just be OK...

wthrfrk80 says

dublin hillz says

In San Jose, for a SFH 3/2 rental in a semi-safe area at least $3200.

My goodness, where do you people get the money to pay for that? And it's only "semi-safe."

I have a "good" job and that would eat up almost my entire paycheck after taxes! I'd have to moonlight at the Kwik-E-Mart just to buy food.

Starting compensation packages for fresh graduates at all the big software companies are over $100K and some of those kids rent houses together. Mid career good people can net over $200K at larger companies without getting into management. There are also couples with both partners working in that industry.

wthrfrk80 says

BayArea says

I don't know what to say to this so I am going to walk away really slowly but I will leave you with this median home price list (not everyone living in the Bay Area lives in SF or Marin County):
County May-12
Alameda County $353,500
Contra Costa County $295,000
Marin County $627,000
San Francisco County $700,000
San Mateo County $576,500
Santa Clara County $529,000
Solano County $190,000

I didn't realize the prices were so much cheaper further out. What are the median rents in those same areas? Your example of $375k is pretty close to Alameda, what's the median rent there?

Most of the tech jobs are somewhere along 101 between San Francisco and San Jose (Santa Clara County) with San Mateo in between.

Parts of that corridor show up on ten-worst traffic reports, people don't want to live farther from work than they have to, and enough people earn salaries which support those prices.

drew_eckhardt says

Starting compensation packages for fresh graduates at all the big software companies are over $100K and some of those kids rent houses together. Mid career good people can net over $200K at larger companies without getting into management.

I guess salaries would have to be generous to support rents like that. Yikes.

I just feel sorry for the folks working at Burger King.

Gardner - you going though a faze is all. Hell I went through it too when my first wife left me. I want to own nothing and to be attaked to nothing. I burned all my clothes and sold my cars and al my rare coins. I slept in a garage apartment what was like a Karate studio. I had a bed. I had a toilet. I had a crossbow. A gong. Two pair of pants. five t-shirts. That was it. I was gonna be the guy who waltzed to a different trumpet and enjoyed only natural delites.

Then I got hungry. I got tired of being a looser. I saw the jerks around me what was slurping up the gravy that should have been on Jody Chunders plate. I heeled up and got busy making a plan. I learned to sew. I started my own headliner replacment biz. Then I taught myself bodywork. I opened up a body shop. Then I learned how to buy houses and rent them out to busted guys that nobody else wnated to rent to. IF they fell behind I asswhooped them was all, and moved on to the next slob. But I took the risk and made the money and figured on how to beat the competition by offering competitive rents. All of it desgustingly lucractive. I am now rich and would not trade the flamingo beef for the hamburger helper or my taylored seersucker for polycotton no matter how you try to style it.

That sadsack my woman run off with is now dying of diabetes. Lost his big toe last year. don't even see good enough to tell one of his sons from the other.

Stick with Jody.

StoutFiles says

I work to live, not live to work.

You are in the totally wrong work then. You got it all turned around dude. You been duped.

What a novel concept!

Maybe you should start a religion... Call it: .. buddhism!

Maybe you could call the state of being free of the world: nirvana and name the followers you convert from this thread: monks.

A sadsack piece of garbage slumlord that reaped the rewards of the biggest financial scam in world history is not someone to look up to in my book!

gardener1 says

What happens then?

As I've said for some time now, "If you want Change, keep it in your pocket."

swebb says

That's one of the problems I have with the whole "game" -- I don't really believe in it. The society we have, the lifestyles we live, the excess consumption are all part of the "foundation" that enable me to put money into stocks and make more down the road. But I don't really buy into it....it's fake, unsustainable, and repulsive in a lot of ways. I don't have faith that it's going to last. We as a country (as a world?) have too much in the unpaid debts column....Of course these things can develop over long time periods, often longer than a lifetime, so I might just be OK...

I know, right?
I think of it in terms of "bullies". Sure, I can be a bully and jump in and take risks and push others out of my way and "get mine while the gettin' is good", but where does that go in the future? It takes the biggest bullies to the top of the pile of dead bodies, and right now, the pile is starting to rot from the inside out. The resources can only support so many bullies.
The hypocrisy of humans is the claim to their special status on the planet because of their "intelligence" and "intentions", but most have some form of blind faith that a magical buddy (the Invisible Hand Job, or the Market, God, Love, Beauty, etc) will somehow make everything work out in the end. There is some truth to that, but it's because we see history through a funnel, looking back we can only see the successes because those are the ones that form our picture of how life works. We don't see all of the failures that made those successes possible, or the actual amount of energy it takes for one person to have the typical luxuries of modern civilization. We only count the absolute minimum costs and project all of the possible benefits onto our goals.
"You should.....because it would.....and can't you see how much good we've done....."
Life begins when we stop living the one imagined for us by the System of systems. Sometimes it turns out to be crap, but it's OUR crap, not homogenized strip mall crap.

Rent4Ever says

People have more money now in this country than we've ever had, yet we find stupid things to spend it on.

Ha! No Shit!
In addition to the stupid things they buy, they don't think about why there are no jobs or prosperous towns near them (rural areas, I mean). We buy all of this stuff because it is cheap and shiny and noisy. Meanwhile, if we spent a few of those bucks on local foods and products, the money would circulate in a local economy and support the infrastructure and sustain better living practices, distribute the logistics over a broader range, and be a more robust arrangement for everyone. Instead, it's all about (as George Carlin would put it) "SENDing aWAY!" to some magical land for the 3D glasses or the Phazer gun in the back of the comic books while our neighbors lose their farms, the town loses its hardware and general stores, and each year, the residents of any particular town have to drive farther and farther to a bigger and bigger (take your pick) grocery store/home 'improvement' store/hospital/auto dealer (to buy a new car to drive to the auto dealer to buy a new car).

I like the article and comments. Interesting insights. I'm in Kingman, AZ and not anywhere in California. I am (gasp) a licensed RE agent and also a licensed civil engineer (un-gasp). I bought a 4 bed, 3 bath home repo-fixer-upper 2 blocks from the golf course, 2,080 s.f. Purchase price of $65,000. 20% down, financed $52k under 4%. My mortgage is amortized for 15 years but only fixed for 10. My monthly payment is $378 which is P&I. I put down enough so there is no mortgage insurance and my property taxes are around $650 yearly.

Indeed, the place was beat when I bought it and now my cost basis is $78,000 now with new roof (lifetime asphalt shingles), new carpet, several repaired windows, new kitchen cabinets and countertop plus lots of other stuff.

So... my take on it is this. I like to buy and not rent when the deal is right. I like to do the sweat equity bit because, to a certain degree, it is like getting paid without being taxed. I work on the house now and when I sell it at a profit, the proceeds are not taxable (within limited time and $$ caps).

I also go with stuff that is nice but inexpensive. For example, I bought stock counter top from home depot. About 20 linear feet of laminate looks nice, holds up great, and cost so much less than alternatives. Same with the kitchen cabinetry. $2,000 total for cabinets with nice door / drawer handles and knobs.

I am in a win-win situation. I can continue to live here for about $475 per month (including taxes and home owners insurance) or I can sell the place for about $130,000 and walk away with $50k extra. But then I am renting again for $700 to $800 a month for inferior accomodations.

This is a real life example outside of California where ordinary people live. Oh, and I have 2 vehicles. 1991 Dodge Ram 1500 that I bought with under 50k miles for $4,000 and my 2005 Kawasaki Nomad motorcycle that I bought for $4,500 with only 1,000 miles on it. I pay $8 a month for netflix (no cable, no dish) and have an antenna for local stations. I do have the high end cell phone plan and internet plan because I need telecommunications for business purposes and I do a lot of international travel.

In conclusion, I must say that for me, it is neither better to rent nor better to buy; it is best to keep my eyes open, recognize a great deal when I see it and act accordingly.

Rent4Ever says

Is having a luxury car, watching cartoon network and having some games on your phone really worth 70k after just 10 years?

Yes.
Yes.
and Yes.

Finally finally finally. Someone who gets it. I am so happy to read that there is someone out there that thinks as I do. I have never and will never buy or own anything!!! I rent everything because all things ,stuff , even our bodies are rented. We all have a lease on life and everything decays, everything.

. Nothingness is true freedom.

You are awesome!!!

Auntiegrav says

We buy all of this stuff because it is cheap and shiny and noisy. Meanwhile, if we spent a few of those bucks on local foods and products, the money would circulate in a local economy and support the infrastructure and sustain better living practices, distribute the logistics over a broader range, and be a more robust arrangement for everyone.

Everyone 'spends a few bucks on local foods'. 'local products' happen to be 'cheap, shiny and noisy'.
The only point here is that there isn't one....

BayArea says

At today's interest rate of 3.5% and 25% down, a $1200 mortgage gets you a $375,000 house. It's not uncommon in parts of the Bay Area to have that level of house rent out for $2500.

That's an 8% annual rent:price ratio...

Why are you so surprised?

Does the math really add up on this? I think I need to go see Patrick's calculator.

Auntiegrav says

Meanwhile, if we spent a few of those bucks on local foods and products, the money would circulate in a local economy and support the infrastructure and sustain better living practices, distribute the logistics over a broader range, and be a more robust arrangement for everyone.

I can kinda agree with that but it also depends as to what area. Every few decades smaller businesses tend to blame something for their ills. In the 50's and60's it was highways, in the 70's and 80's it was the malls, in the 90's it was walmart and now it is the internet.

I know people that don't live in good areas. If you have violence it scares people and hurts businesses pretty bad. That's another reason why the internet tends to work. UPS and Fed Ex deliver..they don't care about how bad it is in the neighborhood. Here's your stuff ma'am.

On the other hand some businesses do well by combining things that would be harder to get otherwise or at least immediately. Tractor Supply has a wide range of goods that are usually by mail order.

There's nothing wrong with buying local products but it also depends in terms of what extent is local? Coffee for example is only made in one state (Hawaii) so is a coffee shop really a local business when it depends on a product that is thousands of miles away? There's only a few tea plantations in the country so that counts as well. Recently I replaced the fan in my laptop. Now the business was local (within 15 miles) and it was cheaper and probably a better service than a box store..but the fan was probably not made here.

The problem with consumption is frankly we have long lasting items that have marginal satisfaction. If you buy a car buying another isn't going to add much to your life - same with a computer - a tv etc. But the stuff we physically use up generally is made by machines - soaps, food etc. Sure we can shop at farmers markets and some craft areas but you aren't going to get a locally made iPhone 6, a cable service plan (for the most part) etc.

I'd argue outside of basics like food and energy you kinda stop buying things like you did when you were say in your early 20's. I have plenty of clothes I don't need anymore even for all four seasons. I need a new belt because it is worn but it lasted me years.

What we have seen in the economy is that anything that was more out there as a luxury or a extra has been hurt the most. How many joke shops do you see these days? How many comic book stores? How many cigar bars? How many sports stores (cards etc).

The baby boomers led the growth in consumption largely because war time production was shifted off and there were incentives to sell to tens and tens of millions of new people. With smaller generations and a concept of less consumption and more open markets it makes it much harder to sell in the same ways as before.

I have gotten rid of most of my stuff, and lived in a three bedroom apartment for 9 years, then inherited a house across the country and had to move. My stuff is still there, and we have replaced everything here. Luckily its a small place, and works, but the work that goes with owning a house is a pain. Anyway I agree with the writer, there is a joy and freedom of not having a ton of stuff around you. After the market recovers maybe we will go back and get our stuff. For you people in CA, listen to this for 350k I can get a completely tricked out center hall colonial from Ryan homes in Pgh. Come here, it's cheap and the people are nice.

mdovell says

With smaller generations and a concept of less consumption and more open markets it makes it much harder to sell in the same ways as before.

last i checked the population was increasing...ever hear of "immigration"??

I stopped buying stuff years ago. All furniture from 1994 until I left the States except a nice bed and Mexican bedroom furniture were hand-me-downs from family. I've had two cars since 1998. From 1998 - 2005 a little Hyundai with manual windows and no air conditioning, and in Argentina I had an 80's Peugeot a couple of years, which I sold in 2008. I haven't driven since. I buy everything I need used at auction and street fairs, including most clothing, although I admit to having endulged on $10 jeans and shirts at Walmart in 2010 on a short trip to the States. Now I buy vegetables at street markets, make my own plain yoghurt, almost never buy prepared foods, and never visit restaurants. I have a phone line for the internet connection with no dial out and ADSL for $20 a month, and a prepaid cell I hardly talk on (just text messages for about 5 cents each).

American consumer culture is deadly, and it's freeing not being a participant. I still can't understand the need some people have to live in certain places like the Bay Area. I lived there in the 80's - very nice while it lasted, but it's over now, and I can adapt to almost anywhere. I like to live where I can live on less than $5000 a year, and can save the rest. I was surprised that on my $1300 salary I can save about $800 a month if I really pinch, as I had to do recently when confronted with an unexpected bill.

rgermano says

I like to live where I can live on less than $5000 a year, and can save the rest. I was surprised that on my $1300 salary I can save about $800 a month if I really pinch, as I had to do recently when confronted with an unexpected bill.

you are not living. you are existing...

xrpb11a says

you are not living. you are existing...

No, xrpb, it's lots of fun if you don't HAVE to do it!

jan says

I have gotten rid of most of my stuff, and lived in a three bedroom apartment for 9 years, then inherited a house across the country and had to move. My stuff is still there, and we have replaced everything here.

I moved from a small apartment to a house 12 years ago and still have stuff in boxes from that move. It very obvious to me that I don't need that "stuff". I am slowly editing all of my stuff(the good thing is in my neighborhood, 1 hour at the curb is all it takes for it to dissapear).

On the other hand, I have a friend that moves every year. He doesn't have more than two pickup trucks of stuff.

Good thread.

wthrfrk80 says

Your example of $375k is pretty close to Alameda, what's the median rent there?

Median rent in in Alameda, CA is $1,498. Here's some nice graphs for you too:

http://patrick.net/housing/trends.php?uaddr=alameda%2C+ca&v=rents

The ops theory about money is flawed. Fiat money is seriously at risk yet op thinks it is the way to go. The idea of living simple is great. The more you have, the more responsibility you have, more work to care for what you have. Having debt is a burden. But what if all that paper money was greatly devalued? Where and what would you do then? Suffer I think.

There are people out there that practice the art of owing And owning nothing, they are called homeless.

Yes just go to the border towns of Mexico and find out why they risk death or despair to get here to work for little bits. They are hungry. It is an idea opposite of yours. They have been to nothing and didn't like it.

Cautious1 says

xrpb11a says

you are not living. you are existing...

No, xrpb, it's lots of fun if you don't HAVE to do it!

what part of it is fun? Eating out of a trashcan??

xrpb11a says

what part of it is fun? Eating out of a trashcan??

"Simple Living" doesn't have to mean living in extreme poverty. It just means having everything you "need" and not just wanting more, more, more, and more.

Median rent in in Alameda, CA is $1,498. Here's some nice graphs for you too:

Ok, so according to Patrick's calculator it's still better to rent a median apartment than buy a median house in Alameda, CA.

After 7 years: cost to rent is about 107k, cost to buy is about 208k

I used the "default" assumptions.

I don't like either extreme. I think many American's have lost their sense of balance. I have many friends that are struggling nonstop with finances, yet every single one of them own an iphone with a very expensive plan. On the other spectrum I have friends so frugal they make their own soap and don't have cable tv. I'm somewhere in the middle and from what I can tell am probably one of the most content. I do however totally agree with getting rid of "stuff". Having been forced to move a couple of times really made me realize how much stuff you have and really don't need and don't even use!

http://www.youtube.com/embed/QzE76nUSjL8

jan says

For you people in CA, listen to this for 350k I can get a completely tricked out center hall colonial from Ryan homes in Pgh. Come here, it's cheap and the people are nice.

I love Pittsburgh! Most of my family is from there. I used to live near Freeport.

The Californians wouldn't be able to handle the winters in Pittsburgh though. Plus I'm sure most of them think it's a polluted hell-hole. That's good. It keeps the house prices reasonable!

Jvolstad, that's one of the best SNL skits ever!

LOL wthrfrk80, it takes a year to acclimate to phg, but the summers are much better than florida. We were slaves to the a/c down there. California was fun to visit, but no we decided against it more than 20 years ago.

But, boy could we spend money in California, the whole society is like that, but here keeping up with the jones is not cool. We had no housing bubble here, yep, flat as a pancake. Doing things right just isn't the same here as it is there, a whole different mindset. Lots of tech and insurance and health here now, all the mills are gone, except a few specialty mills. But no Rolls Royce dealer, or whole foods are here. If you want fresh food there are farmers markets each weekend. You only go to Macy's for a special occasion outfit, mostly blue collar and kids of blue collar who went to college thanks to the unions wages of their parents. And if you were caught selling an exploding arm here, know that your neighbor who owns that arm is armed. Very little crime here because everyone is packing, hunting, or shooting at the range. Well, dinners ready, thanks for the giggle.

@Hey you, that Carlin clip really is priceless, one of the funniest bits ever. Thanks for posting it.

As some famous person somewhere once said "Everything I know I learned the hard way."

I've owned property. Local `authorities` (cough) annexed and rezoned my several properties from what I bought to what they wanted it to be, till I was nothing but a tax serf paying their alms. I sold those properties which cost me a bundle. Lesson learned. Never again.

I still have TWO storage units (full of stuff) in two different states, one of which is full of my grandmother's stuff and dammit she died thirty years ago. Just couldn't part with it and what the hell do I do with it now? Trying to negotiate with my kids to take great grandma's stuff, but what the hell are they going to do with it all? Moving it will cost a fortune.

We now rent an apartment--with a garage which was necessary--because when we moved back to the US from overseas we brought back all this damn interesting and wonderful stuff. What to do with this garage full of fascinating foreign stuff?

AND I have another storage unit with a housefull of stuff that's been in storage for 10 years. I will never live in a house in the US again, what the hell do I do with furnishings and garden fountains and patio furniture when I move to a tiny flat in Monevideo or Ecuador?

I was railroaded by a lifetime American thinking and the fraud of ownership. I'm done with the American thinking and the fraud, but I'm still stuck with with all the stuff.

I just thank god every day that I'm a renter and I don't have a house I need to unload as well.

gardener1 says

I just thank god every day that I'm a renter and I don't have a house I need to unload as well.

As a landlord .. I salute you and encourage your mindset. Own nothing. Sell the valuable bits to me and then use the money I paid you to rent from me. Sounds good!

Jan,

Great description of Pittsburgh vs. California. Love it!

jan says

LOL wthrfrk80, it takes a year to acclimate to phg, but the summers are much better than florida.

Met my third wife in Pittsburgh. Her ex-husband at the time was the number #2 boy in town. deputy mayor. Just to give you some idea of JC's powers of charm! Florida is a strange land. Was stationed on the coast in '78. Lots of good stories from Florida, The things is everyone from Ohio and Jersey moves to Florida so you get a real weird bunch doing real weird things to one another.

gardener1 says

I will never live in a house in the US again, what the hell do I do with furnishings and garden fountains and patio furniture when I move to a tiny flat in Monevideo or Ecuador?

I am leaning towards digitizing everything and only keeping a laptop and an iPad...

JodyChunder says

gardener1 says

I just thank god every day that I'm a renter and I don't have a house I need to unload as well.

As a landlord .. I salute you and encourage your mindset. Own nothing. Sell the valuable bits to me and then use the money I paid you to rent from me. Sounds good!

He he funny guy.