OT: California House Hunt Demolition Derby of Doom

[Dennis Peacock]

Well....I have $114K for a 2,100 Sq Ft brick rancher, 3 acres of land and an 1,800 sq ft shop. Purchased March of 2000. Looking at all those California prices....I'd have to be homeless!!!!

[Michael Perata]

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]

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:

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Don't do it!

I can't offer any help. The real estate market in the Bay Area in general defies logic....
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The "Don't do it!" is verbatim from the originating post. I repeated it with tongue in cheek. I didn't really say "do it" or "don't do it."

Just want to set the record straight.

-- Hoa

[Matthew Springer]

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]

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]

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]

<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]

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]

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]

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.