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View Full Version : OT: California House Hunt Demolition Derby of Doom



Matthew Springer
04-15-2005, 12:56 PM
Fellow Silicon Valley Neanders,
Wildly off topic. I'm about to start the home buying process here in scenic Silicon Valley.
I've never bought a house before, but I'm wonering if any other California home owners can give me any helpfull tips for how not to buy a house. I mean other than "Don't do it".

I'm looking at trying to get either a big 2/1 or a small 3/2 in Rosegarden in San Jose.

-Matthew

Hoa Dinh
04-15-2005, 9:07 PM
Don't do it! :p

I can't offer any help. The real estate market in the Bay Area in general defies logic. The economic has not been particular good, but median house prices went up 18% from March 2004 to March 2005. Just over March 2005 alone, prices went up 5% in Santa Clara County. Where does the money come from? :confused:

I read a report yesterday, the current median house price in Santa Clara County is $665,000. :eek:

Crazy, ain't it?

Matt Meiser
04-15-2005, 9:19 PM
I read a report yesterday, the current median house price in Santa Clara County is $665,000. :eek:

For that, you could move here, buy a nice house on 10 acres buy all new tools, and STILL have money left!

John Daugherty
04-15-2005, 9:44 PM
I've often wondered how do salaries compare to house prices in these areas.

Hoa Dinh
04-15-2005, 10:08 PM
I've often wondered how do salaries compare to house prices in these areas.
I don't know much about other industries, but in hi-tech companies, a new grad with a BS in Comp. Sci. or Elec. Eng. can start with $60K - $70K annually. One with an MS can make $10K more.

An EE with 10 yr. experience can make $120K - $160K.

People have been talking about a housing burst for a few years now. But I see nothing in sight. Prices keep going up. It's good for people who already own houses. But it's tough for people who try to become homeoners.

Matt Meiser
04-15-2005, 10:35 PM
I don't know much about other industries, but in hi-tech companies, a new grad with a BS in Comp. Sci. or Elec. Eng. can start with $60K - $70K annually. One with an MS can make $10K more.

An EE with 10 yr. experience can make $120K - $160K.

People have been talking about a housing burst for a few years now. But I see nothing in sight. Prices keep going up. It's good for people who already own houses. But it's tough for people who try to become homeoners.

That's definitely higher. We can hire a new CS grad for about $45-50KK. However, there's a subdivision in a nearby town where you can buy a brand new small 3br house starting at $159. Average size, newer sub houses typically are $200-250K.

Rob Littleton
04-15-2005, 11:22 PM
I bought my house in 95 in San Jose for 270K. Did quiet a bit of work on it but not the major stuff like re-piping (galvonized exists) and rewiring (aluminium wiring exists)......I did things like replace the windows, built a deck, ceiling fans, you know, the usual stuff.

I sold that house in 04 for 619K. It was on the market 3 hours.!!! A young guy from IBM bought it.

Blew me away that 1) someone would pay that money for a house and 2) someone CAN pay that money for a house.

I hear (one year later) he hasnt moved in yet because he wanted the pipes and the electrics done before he moved in.

Moved to Arizona, bought a HUGE house AND had an extension added and still made money.

Looking back, I aint sure what it is that attracts people to the bay area coz it is crowded, expensive and I saw greenery being taken away daily and houses and apartments being built. Kinda scary.

Can I add, I moved there in 95 straight from the UK so I knew no different and have no regrets that the bay area was my first experience of the blessed USA.

thanks

Jon Olson
04-16-2005, 4:34 PM
Housing is amazing in SJ and the bay area in general. We would probably not still be living here if it we're for our extended families all living within 1 hour...Grandparents to our children within 7 minutes. That helps with a two year old and one on the way. Its all realitive though. For now this is home and we make it work. Traffic is down in the SJ, CA area and jobs are available in my field. Plus there are woodworkers and shops around...not to many good hardwood stores, but there are enough to satisfy my cravings.

Good luck with the house hunt...we're trying to figure out the best time to refi.

Jon

Jamie Buxton
04-16-2005, 8:15 PM
Fellow Silicon Valley Neanders,
Wildly off topic. I'm about to start the home buying process here in scenic Silicon Valley.
I've never bought a house before, but I'm wonering if any other California home owners can give me any helpfull tips for how not to buy a house. I mean other than "Don't do it".

I'm looking at trying to get either a big 2/1 or a small 3/2 in Rosegarden in San Jose.

-Matthew

A friend of mine used to own a home there. He regretted not having checked out the neighorhood during heavy-traffic times at the airport. The aircraft noise really bothered him. On the other hand, he had the best vegetable garden I've ever seen; before 4 million people arrived, the Santa Clara valley was the best growing land in the country.

Bart Leetch
04-16-2005, 11:13 PM
I'm not from Calif. & wish that some of the Californians that move up here would stay away.

It seems most people don't know they can go to the court house & find out how much the property they are considering purchasing was assessed for taxes during last tax season. So they come up here & purchase bare property that say was $90000 & drop around $200000 on it because that is what they would pay in Calif. or some other place. This was what is called mid bank height water view property. Doing this they drive the property value up & the neighbors want to kill them next tax season. This happened a about 10 years back when the LOML was working in the tax assessors office & is still going on today.

The figures I quoted are exact & do represent some of the crazy things still happening here today only more so cost wise.

The very first thing I do when looking at property Is call the court house & talk to people in the area with like property & find out how the values compare.

If more people had done this in the past I suspect some of the prices may not be as high as they are today.

But I have been known to be wrong before. :D

Jim DeLaney
04-17-2005, 10:45 AM
The very first thing I do when looking at property Is call the court house & talk to people in the area with like property & find out how the values compare...If more people had done this in the past I suspect some of the prices may not be as high as they are today.

But I have been known to be wrong before. :D

Bart,
That won't work in California because of a tax system known as "Prop. 13." Under Prop 13, the assessed value of a house is stabilized at the previous selling price - whether that be last year, or thirty years ago - with a maximum annual adjustment of 2%. For instance, a house I sold in 1994 for $260,000 was only tax assessed at $37,000. (I'd bought it in 1975)

Further, if the seller/buyer is over 55 years old, they can carry over their Prop 13 tax valuation to a new house rather than having it assessed athe higher purchase price.

Prop 13 was enacted in 1978 to give then-homeowners some relief from rapidly escalating property taxes. It's becoming very controversial now that some counties are having extreme financial difficulty and can't raise property taxes...

John Shuk
04-17-2005, 11:27 AM
Bart,
That won't work in California because of a tax system known as "Prop. 13." Under Prop 13, the assessed value of a house is stabilized at the previous selling price - whether that be last year, or thirty years ago - with a maximum annual adjustment of 2%. For instance, a house I sold in 1994 for $260,000 was only tax assessed at $37,000. (I'd bought it in 1975)

Further, if the seller/buyer is over 55 years old, they can carry over their Prop 13 tax valuation to a new house rather than having it assessed athe higher purchase price.

Prop 13 was enacted in 1978 to give then-homeowners some relief from rapidly escalating property taxes. It's becoming very controversial now that some counties are having extreme financial difficulty and can't raise property taxes...
My father is in San Diego. He and his wife are retired federal employees and that does not make them wealthy by any standards. If it weren't for prop 13 I don't know if they could stay there. It does however place a burden on the other homeowners in the area. It is a vicious cycle. I at least like the idea that in Ca you can figure your taxes based on the purchase price. Here in NY there is NO formula that exists from one municipality to the next for taxes. Even in the same town there are inequities.

Jim DeLaney
04-17-2005, 1:32 PM
My father is in San Diego. He and his wife are retired federal employees and that does not make them wealthy by any standards. If it weren't for prop 13 I don't know if they could stay there. It does however place a burden on the other homeowners in the area. It is a vicious cycle. I at least like the idea that in Ca you can figure your taxes based on the purchase price. Here in NY there is NO formula that exists from one municipality to the next for taxes. Even in the same town there are inequities.

Yeah, it's a real boon to (especially) fixed income folks. It was also nice to know (pretty much) what your taxes are going to be from year-to-year. Now that I'm in Ohio, it's a different situation. The property taxes here, on a $160K property are actually more than I was paying on my (tax assessed) $240K property in California, and Ohio properties can be reassessed (ever upward, of course) each year...

BTW, although tax assessed at $240K for me, the new owner of that California house will now be paying taxes based on a $600K valuation.

Having situations like that, where two identical houses in a neighborhood are paying two widely different property taxes, due only to the fact that one is a new buyer, and the other has been in the neighborhood for many years, is the cause of much dissent at times. It seems like nearly every California election, somebody tries to get a Prop 13 rescinding action onto the ballot. So far, they've not been successful...

Chris Padilla
04-18-2005, 3:43 PM
Yeah, that Prop 13 costs me over $500/month in property tax. If everyone paid their "fair share", I think I could possibly have some of that money back or at least, the county might have a bit more money for the schools/streets/whatever.

My advice to buying a home is to buy a home if you simply want to own your home and benefit from the tax decuctions you get and the REAL equity growth you will see. Don't try to time the market or "wait" for it to burst. You'll got nuts trying to figure all this out and you'll waste time.

Yes, it is crazy here in the Bay Area but real estate is nearly always a good investment.

You HAVE to do your homework on the property you are interested in. I recommend getting a buyer's agent to help you assess homes. If you PM me, I'll send you the guy I used.

Another thing is to FULLY 100% have all your financing ready to go because if you find a good property, odds are good others will, too, and may snatch it up very quickly.

Jon, drop me a PM and I'll put you onto a good place to refi...my neighbor is a Senior Escrow officer and I could probably get you a decent discount.

Me? Bought my home in 8/99 for 489k. Last I saw the weekly postcards often stuffed in my door, my home in my neighborhood would go for the high 600s to low 700s.

Yes, it is completely nuts!

Scott Loven
04-18-2005, 4:19 PM
I heard a guy on the radio the other day say that he expects a HUGE downward price correction (30-40%) in the housing market in the near future. Just thought I would try to help out :eek:
I have about $180 in my place (http://www.vmtw.com/shop/house101500.jpg) 13 acres most of which are hardwoods.:)

Dennis Peacock
04-18-2005, 5:58 PM
Well....I have $114K for a 2,100 Sq Ft brick rancher, 3 acres of land and an 1,800 sq ft shop. :D Purchased March of 2000. Looking at all those California prices....I'd have to be homeless!!!! ;)

Michael Perata
04-18-2005, 6:13 PM
Don't do it! The real estate market in the Bay Area in general defies logic.
Gee, when did they repeal the laws of supply and demand. Last year approximately 9,500 people were added to the residency rolls in the South Bay. Last year approximately 2,500 houses were built in the South Bay.

There is always talk of the market tanking here. It has in the past. I remember buying a house in the toney Almaden Valley (southern San Jose) in 1985 for $325,000, refinancing it a year later for $475,000 and not being able to sell it in 1989 for $375,000.

Of course, very seldom do the doom and gloom folks talk about any recoveries. That very same house (2,475 SF, 3BR/2.5BA, 6,200 SF lot) sold two months ago for $1,150,000.

If there is any way to buy into Silicon Valley Real Estate - DO IT!!! Just be prepared to ride out a bump or two.

BTW: My credentials - real estate broker since 1976, senior executive in the Northern California housing industry, off and on (currently on), since 1975.

Hoa Dinh
04-18-2005, 7:31 PM
Michael in San Jose,

Next time, if you quote me, or someone, don't drop anything, including the smilies. They are an essential part of the message.

This is exactly what I wrote:

-----------------------------------------
Don't do it! :p

I can't offer any help. The real estate market in the Bay Area in general defies logic....
-----------------------------------------

The "Don't do it!" is verbatim from the originating post. I repeated it with tongue in cheek. :p I didn't really say "do it" or "don't do it."

Just want to set the record straight.

-- Hoa

Matthew Springer
04-19-2005, 1:32 PM
Thanks guys,
I'm headed out for the first weekend of the insanity this Saturday. I figure it's buying a house in funny money dollars (ie. Cali dollars) and paying for it with stock option dollars (also essentially funny money), so maybe it just all evens out.
In the next couple of years, I will hopefully be purchasing some additional acerage someplace else "as in the middle of nowhere as possible" also, so at least one of my investments will be at sane prices. Maybe I'll just farm my own timber.

Fortunately I've had about a year to psych myself up to do this. I told my realtor the only non-negotiable is a two car garge, so at least my shop space will quadruple. Yeah. More space for tools.

-Matthew

Jeff Sudmeier
04-19-2005, 1:57 PM
For that, you could move here, buy a nice house on 10 acres buy all new tools, and STILL have money left!
For that you could buy your 10 acres plus 90 more with a stream if you looked hard enough! Build a nice shop ohh and a house and still have $50,000 to equip the shop!

Chris Padilla
04-19-2005, 5:27 PM
You are guys are missing out on some points here. Yeah, a 500k house in the Bay Area isn't much (likely uner 2000 sq. ft.) and you can buy a 50% larger house on 10 acres in Wisconsin somewhere but you will not make the same kind of money made by folks in the Bay Area.

It is all relative is my simple point: If my wife and I made the same kind of money elsewhere (might as well keep picking on Wisconsin), we would live like a king and a queen...here in the BA, we are just slightly above average. :)

Matthew Springer
04-19-2005, 5:51 PM
<quote>
For that you could buy your 10 acres plus 90 more with a stream if you looked hard enough! Build a nice shop ohh and a house and still have $50,000 to equip the shop!
</quote>

Believe you me; the thought has occurred to me more than once. I grew up way in the boonies on the east side of Cleveland and telecommuting is starting to sound like a sweet deal. Central PA, here I come. I'm 31. I'm not married and I am not dating. (there's no one to date anyway where I live). No kids, no mortgage. No debts. It's not like I've got lots of things holding me down. My housemate is great, but not really exactly employed.

One of the things you discover about adulthood in teh home buying process is that almost nothing turns out like you were planning. Kinda like woodworking.

Tough to explain without sounding like a kook, but the gist of why I'm still here for (which will hopefully make sense to the religiously inclined among us), is I feel God told me to stay here.

But it's not like that alters the numbers. Also it's tough to explain that on a home loan application. Reason for purchase ==> "Divine leading". I guess that falls under "Other".

Rob Littleton
04-19-2005, 7:24 PM
I was called to move from the bay area to Arizona (spiritually) and it truly was a leap of faith. He has provided for me since we got here and continues to. Hang on to that bud, if you do it without His blessing (as you know) things can go belly up.

I admire you for that and divine leading is certainly acceptable reason :-)

Bless you

Jon Olson
04-20-2005, 9:16 AM
Chris....Currently $500K will barely buy you 1100sqft let alone 2000....My house (826sqft) is moving up to that range now b/c it would still be a house and not a condo or townhouse.

Living here has its ups and downs...weather is great..houses are expensive...pay checks are larger....not a lot of free time

Rob...I'm waiting for my "spiritual" move but currently the BA is where He's called me. Glad you found yours!!!

Michael...what your thoughts on loans and interests rates??? I really think if interests rates climb...people will be hurting in a few years...lots of interest only loans out there.
Just my two cents this early morning (PST)
Jon

Michael Perata
04-20-2005, 2:05 PM
Jon

If we can stave off disintermediation from the likes of China and Japan then I think mortgage rates will hold their own within 100 to 200 basis points over the next year and one half. (In other words, I would go for a 5 year ARM)

Interest only loans are good ONLY if you are CERTAIN in your economic outlook, and have other liquid assets available. Remember, if we have a downturn in the future and you have to bail on your house, you may be upside down by up to 10-15% of the purchase price of the house.

$500k for 1,100 SF - no way. I just brokered a house in Campbell, adjacent to Hwy 17, 1,150 SF for $630,000, and that was a countered offer over listing price.