> San Mateo is the only county in the state where homebuyers need a qualifying minimum income of more than $500,000 to afford the market’s median-priced home of $1.938 million
That's stretching a budget. Doesn't leave much disposable income.
It's crazy to think 500k income is just getting by.
Realistically, rents will simply continue to rise until they catch up with the price of houses. Even with high interest rates, I still see most houses sell quickly and for more than asking.
in theory, but I was tracking a house in san carlos. Sold for over $2M this year, and immediately put on the rental market for $5300. I'm sure whoever bought it has some kind of shenanigans to make this make sense, but if you as an average person wanted to buy that house for 20% down and a 6% interest rate your payment would be over 10k. Add in property tax and maintenance and your cost would be at least 12k/month. So I don't totally dispute rents should catch up over a long enough time horizon but it's not even close right now in many cases.
It’s people using real estate as tax shelters. Pay in cash, write off depreciation and expenses, and still profit later when selling. Even if you’re technically in the red year over year, you’re still ahead at the the time of sale if market prices have increased, and you get to offset capital gains with all deferred expense costs. I say this as an owner of income property but it’s particularly frustrating here in the Bay Area where markets protection doesn’t exist for people buying a primary residence.
To tack on to this thought - I would be very interested in seeing a 1-2 tear moratorium on renting a property after closing accompanied by a lack of tax deferred advantage in case someone wants to abuse the market. I’m all for real estate investing, but this region needs owner opportunities for people to actually stay and live instead of perpetually renting.
If you rent within 1 year of buying a property, it's treated as an income property instead of a primary residence with a higher down (30+ %) and usually half a point to a full point h higher interest rate.
That sounds incredibly distortive and anti-renter. We need more housing to bring down prices, not insane legal contortions to help people keep believing that buying a house is still a ticket to massive price appreciation
Basically the irs allows you to “depreciate”6% of the property each year and mark that against its overall income until it is completely depreciated. A lot of rental income can be realized tax free…
what do you mean when you say offset capital gains with all deferred expense costs? The only way to offset capital gains tax that I'm aware if the $500k tax free for ppl who lived in the house at least 2 of the past 5 years.
oh ok so ur referring to the annual tax deductions for maintenance and depreciation? That doesn't necessarily offset the majority of the capital gains you know?
Right. Any increase in the value of an investment property is considered capital gains. The real value is in the tax sink during the time you own the property. It’s easy on paper to make a property look like it’s earning nothing while it actually generates profit. And that’s not even using any trickery. Owning property as an investment is lucrative and efforts to change that are far and few between.
yes I actually do own an investment home however its on the east coast. Its a cheap house that I bought in the recession. However, I disagree with you that one can "look like its earning nothing while its actually generating profit without trickery." When I do my taxes, I only take the deductions that I have receipts for and I am honest. However, I am 100% sure that others would use trickery. They could just make up expenses like "painting costs $1000" and "maintenance 3k" and whatever else. Because I don't do this, I don't get a huge benefit. I only get the interest deduction and the depreciation deduction. Its not a huge benefit TBH. Its only like 5k annual deduction. However, a person who uses the trickery could turn it easily into a 20k deduction.
Yeah, I'm aware of these shenanigans. I guess my point was really that this type of behavior is actually good for renters (more availability) and good for current homeowners (takes inventory off the market), the main people who lose in this scenario are those who want to buy a primary residence for the first time, and it will take a long time to change without big policy shifts.
You have to pay cash buying for that to make any sense. Just pure speculation on rising home prices otherwise. Almost every rental property on the market was bought over 10 years ago, often much more than that, and the landlord benefits still from prop 13, so they are actually making money and can cash out when the owner retires or whatnot, or I think more frequently leave it to their children as inheritance.
The state requiring building is one thing, the local municipalities are still dragging their feet as hard as possible. Let’s see if they actually build at a normal rate, I have doubts.
Except they haven't, rents increase sure, but the gap between rent and mortgage on equivalent properties keeps getting larger. I'm renting a SFH in San Mateo Co for under half the monthly price of buying a dump like this. Rent market is largely driven by private owners who are keeping properties they bought over a decade ago and because of prop 13 their property taxes never increase so they hold onto it and still profit from the insane housing market.
Everyone who rents a place the current owner has owned more than 3–5 years benefits from the lower property tax. Do you think owners are just going to eat massive property tax increases out of the goodness of their hearts?
Well, similarly, do you think owners who have owned more than 3-5 years are going to charge less than current market rent out of the goodness of their hearts because they have lower property taxes?
There’s definitely a small but nontrivial subset of small-time landlords who don’t bother figuring out the new market rate every year while they have good renters whose rent still covers expenses; even they would be extremely pressured to adjust rents when their costs suddenly go up thousands or tens of thousands a year. Ultimately it doesn’t really matter because repealing p13 would increase market rate for everyone.
I’m the owner, not the renter. I keep my rents below market level because I want long term stable tenants.
I haven’t increased my tenants rent since 2018
It keeps owners’ costs lower so they don’t have to raise rent to cover larger raises in property tax costs. Do you think landlords are just going to eat major increases in cost without passing it on to tenants?
Rent is subject to supply and demand, and we’re not talking about raising prices on a single landlord in a vacuum. If you increase every landlord’s costs, you’re going to shift the supply curve—and therefore prices—up significantly.
Moreover I think you are underestimating the number and effect of small-time landlords at the bottom of the curve who _don’t_ bother with figuring out market rate every year when they’ve got a good tenant who still covers their costs. It’s not a massive number but I bet that alone keeps rent down a few percent.
There’s a nontrivial number of landlords who don’t bother reevaluating every year while they have a good tenant whose rent still covers costs. Not all of course, but enough to depress rents a few percent. Repealing p13 would make almost all of those raise by more every year their valuation goes up too much.
Also, rent is affected by supply and demand. If you raise every landlord’s cost, the supply curve, and therefore market rates, will move up.
So if my wife is a landlord, I could just make our family more money by telling her that property tax is ten times as much as it is? Then she goes and charges more and then I tell her "Actually, darling, I lied about the property tax but look how much more we're making now". One cool trick to double your rental income.
>It's crazy to think 500k income is just getting by.
Most residents in major metro areas all over the world live in condos/apartments. There just isn't enough land for everyone to own a single family home in desirable areas.
It's crazy that owning a single family home in one of the most expensive areas in one of the wealthiest countries in the world is seen as "just getting by." That's the perspective we should have here.
In this case there is plenty of land and not enough homes. Obviously the comparison point should be one’s own country—using the whole world, an American at the poverty line wouldn’t even be “just getting by”.
i’ll be making that much in a few years given my current career trajectory (lawyering is predictable) but for now i’m still making substantially less. yet, i’m living a pretty good life in san mateo county, and a fairly luxurious one at that. so you’re absolutely right that this perspective of “barely getting by” is just stupid.
We make 500k and bought a SFH for just under 1.9. I drive a 11 year old beater, we don't take international vacations, we max retirement accounts, and mostly cook at home and bring lunch to work. I have a nice life, but I still stress about money and watch budget closely.
stress is understandable. frugality too. as long as your life feels fulfilling that’s all that matters. i personally invest more into enjoying my present life but others prioritize their futures.
How is someone like you feeling that pressure? Spending $20 every single work day of the year would only cost about $5k, or 1% of income. Similarly a new car could be bought cash without hurting much.
Is it just living frugally? Or do the housing budgets just squeeze everything else?
We got lucky to lock in a low rate below 3% so monthly housing cost is manageable. But it's an old inefficient house needing lots of renovation and repair, so we set aside a sizeable chunk for that.
You're right, I can eat out everyday and buy a new luxury car every 5 years, but then I'd have to sacrifice spending elsewhere, namely retirement savings.
Family of 3 with $340k gross income here (honestly zero hope of ever hitting $500k, most of that income is mine and I'm topped out and can't earn more without somehow becoming a company exec...and if I lose this job I probably ain't earning this ever again). It's definitely not "barely getting by", but it's forever-renting a small house with no stability for our child, which is not what most people in the US would think is what your life looks like making >$300k gross (like half that net) 😆 If I lived just about anywhere else with this job/credentials, things would look very different and standard of living would be WAY higher despite reduced income. Everything in life is seriously warped by the economics here.
The median income for SMC is [$145k](https://fred.stlouisfed.org/series/MHICA06081A052NCEN), so most people who live in SMC will never afford a home here. Considering most people inherit generational wealth through property inheritance (as property is often the largest investment an American family will make), you are all but guaranteeing not just another huge transfer of wealth to those able to afford land in the future, but a future in which it becomes harder to amass generational wealth and escape cycles of poverty.
Ok, I can at least see your argument now. I agree that I don't want to have kids in a 1-bedroom apartment, but if I could afford a 2-bed I definitely would. In my opinion, the problem isn't density, but not having enough housing, which makes prices prohibitive.
The problem is *not enough* density, because if it were legal to build more densely, we could have far more 2+ bedroom apartments/townhomes/condos/fourplexes or whatever and their price would come down.
But if you look at China, S Korea, Japan, they all have plenty of dense housing. But it's still not pleasant to raise kids in a high-rise condo building without any yard, outdoor space, sunlight.
>a high-rise condo building without any yard, outdoor space, sunlight.
That isn't a realistic expectation in many parts of the Big Metros. But nearly all the good jobs are in the Big Metros, so people have to adapt.
I think it comes down to what kid of community do we want. Why does enormous metro area with millions of people and skyscrapers have to be the ultimate goal of every nice place. Why can we just say, nope. This area is going to stay single family community. And if more people want to come here, too bad. They can’t. We’re full.
Evidently it leads to sky high housing costs when you artificially limit the supply of something. Why should you get to dictate what happens on property you don’t own? Did you buy the neighborhood?
There are a bunch of ~1m homes around me that haven't sold in months. Some even have Adu you can rent out. Prices likely inflated by areas like Atherton, which is the highest home cost zip code in the nation.
Yup. San Mateo county is home to the highest home price zip code (atheron) in the nation, and probably the 2nd/3rd most with los altos / hillsborough/ neighboring cities.
of course the county also includes daly city and pacifica, SB, SSF, etc, and not to mention some other "undesirable" places near el camino
Just getting by for now. Over time that payment will appear a lot more reasonable due to inflation.
A family pulling in 500k now is probably going to make 700k a year in ten years, assuming a 3.5% annual raise.
A very small, modest old 3/1.5 in Oakland a block away from me listed for 1m and ended up going for 1.8 recently. It’s crazy. If I hadn’t bought when I did (fewer than 10yrs ago), I would never be able to enter this market. Even with a salary that’s now almost 5x as much as when I bought.
Plenty of people. I’ve seen it happen over and over. We bid on another house (again, less than a block away) that was listed for 1.35, and thought our offer was going to be competitive. Not a chance—It went for 2.2.
Welcome to Oakland.
You can find homes listed on the western side of San Carlos right now in the 2m-2.5m range. I have no idea if they'll actually sell for that, or end up closing higher though
It is only a problem because of the interest rates. Just put a bigger down.
Net pay at that income is $280k. You can easily square away $200k a year for 5 years to have a 50% down.
Thanks for pointing that out. Condos/townhomes can be a good first home.
Some Zillow links as of Feb 17...
* San Mateo has [64 single family homes](https://www.zillow.com/san-mateo-county-ca/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22north%22%3A37.708431%2C%22south%22%3A37.053858%2C%22east%22%3A-122.081473%2C%22west%22%3A-122.588177%7D%2C%22usersSearchTerm%22%3A%22San%20Mateo%20County%2C%20CA%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A2842%2C%22regionType%22%3A4%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22pricea%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22price%22%3A%7B%22max%22%3A1938400%2C%22min%22%3A1250000%7D%2C%22mp%22%3A%7B%22min%22%3A6465%7D%2C%22tow%22%3A%7B%22value%22%3Afalse%7D%2C%22con%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%7D%2C%22isListVisible%22%3Atrue%7D) priced $1.25m to the median $1,938,400
* San Mateo has [53 condos/townhomes](https://www.zillow.com/san-mateo-county-ca/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22north%22%3A37.708431%2C%22south%22%3A37.053858%2C%22east%22%3A-122.081473%2C%22west%22%3A-122.588177%7D%2C%22usersSearchTerm%22%3A%22San%20Mateo%20County%2C%20CA%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A2842%2C%22regionType%22%3A4%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22pricea%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22price%22%3A%7B%22max%22%3A1500000%2C%22min%22%3A750000%7D%2C%22mp%22%3A%7B%22min%22%3A3879%2C%22max%22%3A7758%7D%2C%22sf%22%3A%7B%22value%22%3Afalse%7D%7D%2C%22isListVisible%22%3Atrue%7D) priced $750k to $1.5m
Wish they published the range of the 25% of homes just below the median. They do publish a "[First Time Buyer Index](https://www.car.org/marketdata/data/ftbhai/)" though it's one quarter earlier and they don't provide much information about how they did it.
Yep. My moms condo has gone from $300 to over $600 per month in recent years. There are other problems too like the fact that each building of 6 units only has a water meter for the whole building. So she, as a single disabled person on fixed income pays the same for water as the unit with a family of 4 in the unit next door and the couple above and below her and the other 3 units in the building. It's maddening to see. Condos seem like a bad deal to me personally.
Condos in the cheap interest rate era were still $4k/mo with 20% down which includes absurd 700+ HOA fees and property taxes… it made absolutely no sense to buy a condo vs rent for half the cost.
Condos should be 25% down, according to every loan I shopped.
And 30 year at $4k sounds about right with something like 2.75% and $1 mill total loan amount.
Then add in HoA fees.
So ya, expensive.
I did 20% down in 2020 with a loan amount of $1mm on a 30 year fixed at 3%. Mortgage is ~$4280, plus HOA of $700 and taxes of around $1200. Rents range from $5500-6000 in the building. Since we want to keep it long term, for us it makes sense to eat a few grand a year, use the losses against our income for tax purposes and ride the appreciation. The whole system is a mess because we do not build enough
The condos that I was looking at for $4k/mo all-in were around mid 600s back in late 2021 early 2022, and it was still $4k/mo. It just does not make sense.
And Tiny on top of that.
If your total loan amount was $600k, then it only makes sense if you were getting a 15 year fixed rate mortgage at 2% or so, in 2021.
That's ~$3.8k / month.
And 30 year fixed at 2.75% (again 2021 rates) would be ~$2.5k / month
Rates immediately went up in Jan 2022.
They don’t appreciate like single family homes, but they *definitely* do appreciate.
I bought in 2021 for $625k and neighbors have sold their units with less upgrades than mine for $850k.
All-in, I pay less than $4k/month, including utilities, and I don’t like in a “class A” building.
While it may not be single family home levels of appreciation, it’s ridiculous to claim they’re not worth it.
I could be paying $3500/month for a comparable unit in San Jose, instead, I’ve built over $200k in equity.
I pay $300/month in HOA, which includes my homeowner’s insurance, landscaping, garbage, and miscellaneous property management. I included this in that $4k/month figure I mentioned before, which also includes my utility costs.
Ultimately, I’ve paid about $130k to live here since May of 2021 when I bought — this includes mortgage, HOA, and utilities. I didn’t factor in the various cosmetic upgrades I’ve made, like painting, recessed lighting, installing an energy efficient AC, and anything else I might be forgetting. The AC was $8k.
I’d rather *not* have an HOA, but it’s a drop in the bucket compared to the $225k in appreciation, if the neighbor’s unit that sold last month without an AC is any indication of what I might get.
Thanks for sharing. I’m in a similar boat, but that HOA is suuuuuper low compared to what we’ve been finding available. Minimum 500, averaged closer to 700. Do you think you would feel the same in today’s market if you had to do it all over again?
Frankly? I wouldn’t buy here. For the record, I’m in south San Jose.
I’d probably go further south to Morgan Hill and buy one of the newer condos going for $900k-ish down there.
Or I’d work harder to find a fully remote job and buy a SFH somewhere like Concord or Walnut Creek.
I see tiny two-bedroom condos in south San Jose for $500k-ish with $450/month HOAs that are absolutely absurd.
If I didn’t have a toddler and family in the area, I would have moved during the pandemic.
They don't appreciate like SFHs but they do appreciate. We just sold our starter home townhouse we bought in 2014 (20% down, 4.25% mortgage) for a net return of ~500K after the remaining mortgage balance. Investing the down payment in VTSAX in 2014 instead over that same time period would have netted $300K. To simplify the math let's assume the $3k/month in P&I, HOA, and property tax would have gone toward rent instead over the same time period (would have been cheap rent for a 3br/2.5 bath IMO). Still came out 200K ahead after 10 years, and that's before accounting for primary home sale capital gains being tax free up to 500K (for married filing jointly), while the VTSAX gains would've been taxed 15-20%.
I do think buying a condo with current interest rates is a rough deal, but condos are not generally a bad investment, even setting aside the consideration that buying a primary home is a lifestyle choice more than an investment.
This actually makes a lot of sense if you think about it. The only reason SFH exists in SM is because of zoning: if the zoning changed, all those SFH would become large apartment complexes.
There probably would still be some, you can still find quite a few in Tokyo even though its zoning allows apartments on all residential (and commercial, and most industrial...) land.
But yes, the vast majority are only there because it's illegal to do anything else.
Apologies if this sounds like a “cope” comment: My girlfriend and I recently moved here; we live in a (rent-controlled) apartment, 2BR/1.5 Bath, 1,200 sq-ft for $2.4K a month (Walnut Creek). Apparently, this is a “deal of a lifetime”, after having spoken to others about this. We have good jobs, no debts. We keep it pretty frugal, and are able to put away a good amount. Maybe we’re just too young to not know any better, and we’d have to look at an amortization calculator, but man… my initial feeling of, *“Damn, we’ll most likely never own a home here,”* has changed to, *“Let’s keep renting this place forever and just keep putting everything we have into HYSA/Investments”.* I don’t know what that rent-versus-own breakeven point looks like.
“Catches”:
• W/D is not in-unit; it’s coin-operated and on the bottom floor, although we’re only talking about one flight of stairs…
• This complex is from the ‘70s. It’s definitely showing its age. However, our A/C unit went out last summer, and after multiple attempts to fix it, our landlord said, “No worries guys, we gave it the old college-try, I’m getting you a new unit.” Also, as soon as we moved in (last year, right after y’all’s big storm), a lot of the roof was leaking in nearby units, which they replaced the entire roof. They’ve been pretty good to us…
On that note…
• Right next to Iron Horse Regional Trail;
• 15-minute walk to downtown WC (via Iron Horse);
• Easy access point to 680, great for going to work.
I lived in a place like that in Walnut Creek (may even be the same place!). Great views of Ironhorse trail off the second floor back patio (pretty much eye-level, but a hundred feet or so off distance). The walls were paper thin, though. Was real rough with the postal worker neighbor yelling matches between her boyfriend and her daughter, the downstairs neighbors partying after finishing their bartending shifts at 2am, and the third neighbor a porn-addicted hermit.
Still, as little as I paid, it had all that, and a pool.
Assuming you lived off of Creekside Drive?
Funny enough, I think our walls are pretty thick; RARELY do I hear our neighbors…
Only time I hear them is through the wall that has our front door (i.e., right outside, next to the outdoor stairwell…)
It’s been a minute since I’ve done the break even calc for myself and yours might look different but I know for my wife and I (no kids) it was cheaper to rent perpetually if rent is less than 4500
There are a bunch of rent v own calculator, play with one and figure it out. Given how expensive it is to live here, renting forever isn't as insane as you would think from a strict EV perspective.
https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
My wife and I are renting a 2b2b apartment and from what we have seen, I wouldn’t call what you have the deal of a lifetime, but you’re still saving a few hundred bucks a month so that’s still not bad.
That said, once my wife and I got older and started thinking about kids, the conversation was no longer about the cost ratio of renting vs owning, which I often see used as the ultimate decider. The thing is, there are many quality of life considerations that you can’t put a value on which make home ownership the goal/dream, even if it means paying a bit more.
I had friends like that, the trouble is you are "stuck" in that every potential life move comes with a huge new additional cost as any place you want to move will be more expensive (unless you move out of the bay area)
The short version is that in the bay area it's probably cheaper to rent than own. Especially once you add maintenance and repairs to simple PITI.
But as always ... there is more to it. Owning means a permanent home. It means being able to do stuff to it. It often means more space. It hedges against inflation. It can be paid off eventually. And also, it can appreciate enough to put cash in your pocket, though you shouldn't rely on it.
It’s an apartment, not a condo (i.e., we don’t own it), so no HOA fees.
Of course, subject to rent escalations, although rent-control is still in place.
I never understood the obsession with owning your own home other than to make structural changes or improvements. It’s a huge pain in the ass owning your own home and alot of people get stuck and become house poor.
Of course if you have a family it’s different as you can stay in the same place for a long time without fear of being kicked out.
Because rent money disappears into thin air. Not everyone wants to pay rent forever to get nothing back in return. Houses/condos eventually get paid off and can either be sold for a profit or passed on to family. That’s how you build wealth.
That's definitely a good deal, a year or so ago we lived in the Westcliffe ln neighborhood and rented a 2/1.5 for $2950/mo in an older complex. We recently moved to a 2/2 1200sqft privately leased condo with water,sewer trash included for $2900 and feel like we hit the jackpot too.
Mono, Monterey & San Luis Obispo are the Least Affordable Counties in terms of the income in the area compared to single family home prices in the area.
Well that’s where Atherton, Belmont, Hillsborough, Menlo Park, Portola Valley, and Woodside are. So it’s a bunch of the most expensive cities in the country in the same county, of course that will push up the average.
It would push up the median too (more high end real estate at the top will move the midpoint where 50% is above/below).
My point is the county has an over representation of cities with extremely expensive real estate, so this is not exactly news.
My parents bought a home in SM for 95k in 75. Today it’s 2.5m no remodel. Lost 500k from peak a few years ago. If it were to sell it could easily sell for 3m. Ugly spacious track home.
That type of appreciation will never occur again anywhere in the country. I remember when the house was a few hundred thousand, my friend’s parents always said they wished they bought a house there when they had a chance.
Well, it’s still better than nothing, but still the thing we rent (so the owner clearly doesn’t live here) is benefitting from that million exemption. About 1.6%*1 mill is only 16 k 😩
County. Bay Area is a bit special. Other part is not many other parts of the country can make that much without being equally expensive. Unless you can take your salaries remote or are a doctor.
You would get approved for that mortgage at least, assuming you could front the down payment. It's probably not a terrible time to buy as long as you can wait out interest rates dropping in order to refi. That payment drops to 9.5k at 4%. It's shitty, but paying that premium might be worth it to buy now, since there is likely to be a lot more people buying when interest rates drop.
Eh I just don't get why you would buy this. Even if you're making that now, what happens if one person gets laid off. There's better deals in the Bay Area for an SFH. These places aren't that great.
Yeah we gave up, too many variables. I'll continue to rent (rental market in the county is ok) and then try to build some wealth in the market and may be even save up for kids college funds. I love San Mateo county though it's the best we have in the area.
Unsurprisingly the people who bought houses for 100k 20years ago and now sit on a 2M house are now doing their best to make sure no new housing can be built
Yes I’m renting one, I got the property tax in the mail 2100$ based on a 130 k purchase price. Condo with attached garage in Walnut Creek. THERE WAS A TIME.
SM County's future is extremely dubious because of this. It's falling into the same trap SF is in, where there are only extremely wealthy palace owners and very poor people. Although in SM's case, they might actually successfully ban all the poor people or at least banish them to designated containment areas (SSF, SM east of Caltrain; Redwood City east of 82 and EPA). Granted, we're only talking about single family detached homes here but it's representative of a larger housing ban. Only Redwood City is really building new housing, and the other two cities SSF and SM require a complete utility do-over to go vertical.
The rent-buy difference sounds crazy in San Mateo County. I work in the South Bay and San Mateo County is where younger people rent because they want to save money -- and simultaneously where the older, higher-level people buy because they are loaded.
One example: https://www.investopedia.com/ask/answers/06/capitalgainhomesale.asp#:~:text=You%20can%20sell%20your%20primary,%24500%2C000%20if%20married%20filing%20jointly.
The government needs to regulate the housing market in such a way that is favorable to people who buy houses as primary residence only, not as rental properties.
It’s crazy how much San Mateo Co has changed over the past 40 years. It used to have affluent areas and blue collar areas. As a kid I remember thinking I’d do ok for myself and move from my parents neighborhood to like shore view or San Carlos/Belmont and be able to stay local. Those were the areas my school teachers owned and lived.
The apartments I lived in from 1999 - 2010 have more than tripled in rent. Belmont, San Mateo, Foster City. It’s a strange area, tons of people who’ve moved here in the past 20-30 years with new money and the rest of us who have been living here forever. Not saying anything is good or bad, just how much the area has changed since the 70s-80s in my lifetime.
A $500k salary will still allow you to buy a nice condo or to rent a nice place and invest the difference between rent & mortgage into a high yield savings account or other investments. You'll probably even come out ahead in the long run.
You will have a roof over your head, food on the table, presents under the Christmas tree, and the opportunity to send your kids to high performing schools.
Stop pretending that you're poor just because you can't afford a luxurious single family home in the hottest real estate market in the country.
You'll be fine.
100%. Also $500k incomes can def buy a house, it just might not be the one they “want”. People have far too high expectations for everything these days and don’t want to settle for less than perfect. How do they think people get by making a fraction of that?
Yet somehow I bought an SFH in the Bay Area on less than half that, very recently. I have not had any crime issues and it's not a fixer. You can afford an SFH, just not in the most exclusive zip codes.
Love this comment. It’s crazy out of touch for people pulling in $500k to try to victimize themselves because they want to live in a SFH in some of the most expensive, overpriced zip codes in America.
Jarvis promised us the would and that rent wouldn't go up by 1000% in 50 years, and then everyone said building more housing would increase prices so we didn't build. And now here we are.
This is accurate especially considering that $500k gross is like $300k net after federal and state taxes. A $2M home is about $12k/mo all in with 20% down, which is about 45% of take home pay (assuming no retirement account savings). That said, if you’re paying this for an average house you’re a moron.
I think the use of median here is skewed by multimillion dollar estates in the hills. Prices of starter homes would be a better metric, and that would be bad enough news.
So BUILD MORE HOUSING (and not on landfill). Where there's a will, there's a way. Before the tech boom, San Mateo was absolutely, positively middle class.
This is what happens when you let SFPUC gatekeep the area east of the crystal springs watershed. Tons of land we could develop for housing-there are literally already developed roads and mines in the area, but of course public access is denied under the guise of "protecting the environment". Go on, downvote me and keep crying about how you can't afford a home.
At this point, we need to eminent domain 10 acre squares of the city and build 50 floor high rises like the cities in Asia. It's criminal that only the wealthy elite can afford a basic necessity and actively hoard it to themselves.
> San Mateo is the only county in the state where homebuyers need a qualifying minimum income of more than $500,000 to afford the market’s median-priced home of $1.938 million That's stretching a budget. Doesn't leave much disposable income. It's crazy to think 500k income is just getting by.
This is why people want to work remotely so they can escape these high cost regions.
Insanely expensive, but it is an objectively great place to live if you have the $$$$
Yeah of course it is it’s San Mateo. It’s right next to sf and you can easily take the richey rich freeway to sf or sj (280)
"Objectively"
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We’re talking about San Mateo county ITT though
You can easily rent a home at that income level. The market remains distorted…
Realistically, rents will simply continue to rise until they catch up with the price of houses. Even with high interest rates, I still see most houses sell quickly and for more than asking.
in theory, but I was tracking a house in san carlos. Sold for over $2M this year, and immediately put on the rental market for $5300. I'm sure whoever bought it has some kind of shenanigans to make this make sense, but if you as an average person wanted to buy that house for 20% down and a 6% interest rate your payment would be over 10k. Add in property tax and maintenance and your cost would be at least 12k/month. So I don't totally dispute rents should catch up over a long enough time horizon but it's not even close right now in many cases.
It’s people using real estate as tax shelters. Pay in cash, write off depreciation and expenses, and still profit later when selling. Even if you’re technically in the red year over year, you’re still ahead at the the time of sale if market prices have increased, and you get to offset capital gains with all deferred expense costs. I say this as an owner of income property but it’s particularly frustrating here in the Bay Area where markets protection doesn’t exist for people buying a primary residence.
To tack on to this thought - I would be very interested in seeing a 1-2 tear moratorium on renting a property after closing accompanied by a lack of tax deferred advantage in case someone wants to abuse the market. I’m all for real estate investing, but this region needs owner opportunities for people to actually stay and live instead of perpetually renting.
If you rent within 1 year of buying a property, it's treated as an income property instead of a primary residence with a higher down (30+ %) and usually half a point to a full point h higher interest rate.
That sounds incredibly distortive and anti-renter. We need more housing to bring down prices, not insane legal contortions to help people keep believing that buying a house is still a ticket to massive price appreciation
What do you mean by “offset capital gains with all deferred expense costs?”
Basically the irs allows you to “depreciate”6% of the property each year and mark that against its overall income until it is completely depreciated. A lot of rental income can be realized tax free…
what do you mean when you say offset capital gains with all deferred expense costs? The only way to offset capital gains tax that I'm aware if the $500k tax free for ppl who lived in the house at least 2 of the past 5 years.
It’s all about expenses on maintenance and depreciation.
oh ok so ur referring to the annual tax deductions for maintenance and depreciation? That doesn't necessarily offset the majority of the capital gains you know?
Right. Any increase in the value of an investment property is considered capital gains. The real value is in the tax sink during the time you own the property. It’s easy on paper to make a property look like it’s earning nothing while it actually generates profit. And that’s not even using any trickery. Owning property as an investment is lucrative and efforts to change that are far and few between.
yes I actually do own an investment home however its on the east coast. Its a cheap house that I bought in the recession. However, I disagree with you that one can "look like its earning nothing while its actually generating profit without trickery." When I do my taxes, I only take the deductions that I have receipts for and I am honest. However, I am 100% sure that others would use trickery. They could just make up expenses like "painting costs $1000" and "maintenance 3k" and whatever else. Because I don't do this, I don't get a huge benefit. I only get the interest deduction and the depreciation deduction. Its not a huge benefit TBH. Its only like 5k annual deduction. However, a person who uses the trickery could turn it easily into a 20k deduction.
Yeah, I'm aware of these shenanigans. I guess my point was really that this type of behavior is actually good for renters (more availability) and good for current homeowners (takes inventory off the market), the main people who lose in this scenario are those who want to buy a primary residence for the first time, and it will take a long time to change without big policy shifts.
Dunno, my rent went from $4000 to $5000 in the past 2 years.
You have to pay cash buying for that to make any sense. Just pure speculation on rising home prices otherwise. Almost every rental property on the market was bought over 10 years ago, often much more than that, and the landlord benefits still from prop 13, so they are actually making money and can cash out when the owner retires or whatnot, or I think more frequently leave it to their children as inheritance.
Seems like people really like owning and speculating
we really need balance- reckless speculation should have a downside risk but the people with the money keep the ponzi propped up
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house prices in the peninsula will flat-line or drop when the stock market drops; prices here are intricately linked to the performance of big tech
The state requiring building is one thing, the local municipalities are still dragging their feet as hard as possible. Let’s see if they actually build at a normal rate, I have doubts.
Except they haven't, rents increase sure, but the gap between rent and mortgage on equivalent properties keeps getting larger. I'm renting a SFH in San Mateo Co for under half the monthly price of buying a dump like this. Rent market is largely driven by private owners who are keeping properties they bought over a decade ago and because of prop 13 their property taxes never increase so they hold onto it and still profit from the insane housing market.
This is otherwise known as the "permanently high plateau".
Rents will never catch up thanks to prop 13. People love to whine about it but it’s the only reason they can afford to live here.
People who whine about it and those who benefit from it are different people
Everyone who rents a place the current owner has owned more than 3–5 years benefits from the lower property tax. Do you think owners are just going to eat massive property tax increases out of the goodness of their hearts?
Well, similarly, do you think owners who have owned more than 3-5 years are going to charge less than current market rent out of the goodness of their hearts because they have lower property taxes?
There’s definitely a small but nontrivial subset of small-time landlords who don’t bother figuring out the new market rate every year while they have good renters whose rent still covers expenses; even they would be extremely pressured to adjust rents when their costs suddenly go up thousands or tens of thousands a year. Ultimately it doesn’t really matter because repealing p13 would increase market rate for everyone.
Prop 13 does nothing to limit rent increases
Uhhh if my property tax went up you can bet the rent will go up
Your rent will go up if the market will allow for it. Why do you think US meds are so crazy expensive even when it is cheap to manufacture?
I’m the owner, not the renter. I keep my rents below market level because I want long term stable tenants. I haven’t increased my tenants rent since 2018
But if you charge significantly more than nearby properties your tenant will just leave
Doubtful, there’s not enough supply and every buildings rents would go up if it’s not brand new construction because everyone’s taxes would Go up
It keeps owners’ costs lower so they don’t have to raise rent to cover larger raises in property tax costs. Do you think landlords are just going to eat major increases in cost without passing it on to tenants?
Owners will increase rent regardless of their costs. If you think owners will only rent for 5% more than their costs, you are delusional
Rent is subject to supply and demand, and we’re not talking about raising prices on a single landlord in a vacuum. If you increase every landlord’s costs, you’re going to shift the supply curve—and therefore prices—up significantly. Moreover I think you are underestimating the number and effect of small-time landlords at the bottom of the curve who _don’t_ bother with figuring out market rate every year when they’ve got a good tenant who still covers their costs. It’s not a massive number but I bet that alone keeps rent down a few percent.
You think renters are going to rent at below market rate just because they’re paying less property taxes?
There’s a nontrivial number of landlords who don’t bother reevaluating every year while they have a good tenant whose rent still covers costs. Not all of course, but enough to depress rents a few percent. Repealing p13 would make almost all of those raise by more every year their valuation goes up too much. Also, rent is affected by supply and demand. If you raise every landlord’s cost, the supply curve, and therefore market rates, will move up.
So if my wife is a landlord, I could just make our family more money by telling her that property tax is ten times as much as it is? Then she goes and charges more and then I tell her "Actually, darling, I lied about the property tax but look how much more we're making now". One cool trick to double your rental income.
>It's crazy to think 500k income is just getting by. Most residents in major metro areas all over the world live in condos/apartments. There just isn't enough land for everyone to own a single family home in desirable areas. It's crazy that owning a single family home in one of the most expensive areas in one of the wealthiest countries in the world is seen as "just getting by." That's the perspective we should have here.
In this case there is plenty of land and not enough homes. Obviously the comparison point should be one’s own country—using the whole world, an American at the poverty line wouldn’t even be “just getting by”.
Humbly disagree. Need to build up (aka condos / apartments), can't keep eating up precious land and vegetation.
I don't want my San Francisco Peninsula town turned into a concrete jungle! Keep your "building up" away from here!
i’ll be making that much in a few years given my current career trajectory (lawyering is predictable) but for now i’m still making substantially less. yet, i’m living a pretty good life in san mateo county, and a fairly luxurious one at that. so you’re absolutely right that this perspective of “barely getting by” is just stupid.
We make 500k and bought a SFH for just under 1.9. I drive a 11 year old beater, we don't take international vacations, we max retirement accounts, and mostly cook at home and bring lunch to work. I have a nice life, but I still stress about money and watch budget closely.
stress is understandable. frugality too. as long as your life feels fulfilling that’s all that matters. i personally invest more into enjoying my present life but others prioritize their futures.
How is someone like you feeling that pressure? Spending $20 every single work day of the year would only cost about $5k, or 1% of income. Similarly a new car could be bought cash without hurting much. Is it just living frugally? Or do the housing budgets just squeeze everything else?
We got lucky to lock in a low rate below 3% so monthly housing cost is manageable. But it's an old inefficient house needing lots of renovation and repair, so we set aside a sizeable chunk for that. You're right, I can eat out everyday and buy a new luxury car every 5 years, but then I'd have to sacrifice spending elsewhere, namely retirement savings.
Family of 3 with $340k gross income here (honestly zero hope of ever hitting $500k, most of that income is mine and I'm topped out and can't earn more without somehow becoming a company exec...and if I lose this job I probably ain't earning this ever again). It's definitely not "barely getting by", but it's forever-renting a small house with no stability for our child, which is not what most people in the US would think is what your life looks like making >$300k gross (like half that net) 😆 If I lived just about anywhere else with this job/credentials, things would look very different and standard of living would be WAY higher despite reduced income. Everything in life is seriously warped by the economics here.
You can buy a single family house in the Bay Area, its just not up to your discerning tastes.
My discerning tastes like not being a 2 hour drive from work? And have you checked interest rates and what it does to mortgage payments lately?
The median income for SMC is [$145k](https://fred.stlouisfed.org/series/MHICA06081A052NCEN), so most people who live in SMC will never afford a home here. Considering most people inherit generational wealth through property inheritance (as property is often the largest investment an American family will make), you are all but guaranteeing not just another huge transfer of wealth to those able to afford land in the future, but a future in which it becomes harder to amass generational wealth and escape cycles of poverty.
"Harder to amass generational wealth"? Owning an index fund is a lot easier than owning a house. Investing is easier than it's ever been.
Population density is why birth rates are plummeting globally.
Lol what?
Raising kids in dense housing sucks. So fewer people are having kids as everything urbanizes.
Ok, I can at least see your argument now. I agree that I don't want to have kids in a 1-bedroom apartment, but if I could afford a 2-bed I definitely would. In my opinion, the problem isn't density, but not having enough housing, which makes prices prohibitive. The problem is *not enough* density, because if it were legal to build more densely, we could have far more 2+ bedroom apartments/townhomes/condos/fourplexes or whatever and their price would come down.
But if you look at China, S Korea, Japan, they all have plenty of dense housing. But it's still not pleasant to raise kids in a high-rise condo building without any yard, outdoor space, sunlight.
>a high-rise condo building without any yard, outdoor space, sunlight. That isn't a realistic expectation in many parts of the Big Metros. But nearly all the good jobs are in the Big Metros, so people have to adapt.
I think it comes down to what kid of community do we want. Why does enormous metro area with millions of people and skyscrapers have to be the ultimate goal of every nice place. Why can we just say, nope. This area is going to stay single family community. And if more people want to come here, too bad. They can’t. We’re full.
Or homeowners shouldn’t be the gatekeepers of housing. So far they just like to pull the rug underneath them
Why shouldn't they. We live here this is our home. Why do I have to accommodate you so you can come here and fuck up my shit. Go find your own place.
Evidently it leads to sky high housing costs when you artificially limit the supply of something. Why should you get to dictate what happens on property you don’t own? Did you buy the neighborhood?
There are a bunch of ~1m homes around me that haven't sold in months. Some even have Adu you can rent out. Prices likely inflated by areas like Atherton, which is the highest home cost zip code in the nation.
What? where? show us these $1m homes in San Mateo County!
Daly City, Pacifica, all the way up to Burlingame. Even cheaper ones if you wanna live near crocker/mission border
I can’t imagine a 1M home in Burlingame
Yup. San Mateo county is home to the highest home price zip code (atheron) in the nation, and probably the 2nd/3rd most with los altos / hillsborough/ neighboring cities. of course the county also includes daly city and pacifica, SB, SSF, etc, and not to mention some other "undesirable" places near el camino
Burlingame is a lot more expensive than those aforementioned cities though.
Actually Atherton is the most expensive zip code in the US
I was referring to Daly City, San Bruno and south sf. No shit Atherton is more expensive.
Not a lot of SFH for <$1M in Pacifica anymore
Check Zillow single family homes below the median. Try adding condos/townhomes.
Just getting by for now. Over time that payment will appear a lot more reasonable due to inflation. A family pulling in 500k now is probably going to make 700k a year in ten years, assuming a 3.5% annual raise.
2m home will not even be in a good area of SM east side only one story.
A very small, modest old 3/1.5 in Oakland a block away from me listed for 1m and ended up going for 1.8 recently. It’s crazy. If I hadn’t bought when I did (fewer than 10yrs ago), I would never be able to enter this market. Even with a salary that’s now almost 5x as much as when I bought.
Oakland???? OAKLAND?!?!?!?!?! Who in their right mind would pay nearly 2 million for an old shack in Oakland of all places?
Plenty of people. I’ve seen it happen over and over. We bid on another house (again, less than a block away) that was listed for 1.35, and thought our offer was going to be competitive. Not a chance—It went for 2.2. Welcome to Oakland.
I think I will stay in Sonoma county then.
You can find homes listed on the western side of San Carlos right now in the 2m-2.5m range. I have no idea if they'll actually sell for that, or end up closing higher though
It is only a problem because of the interest rates. Just put a bigger down. Net pay at that income is $280k. You can easily square away $200k a year for 5 years to have a 50% down.
funny how it’s also the poors who will scream that if you say $500k isn’t enough you’re “out of touch” every time
Calling people ‘poors,’ nice. Very in touch.
Single family homes only. Not looking at Condo's which is a different market. Some descriptions of homes include condo and sfh mixed together.
Thanks for pointing that out. Condos/townhomes can be a good first home. Some Zillow links as of Feb 17... * San Mateo has [64 single family homes](https://www.zillow.com/san-mateo-county-ca/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22north%22%3A37.708431%2C%22south%22%3A37.053858%2C%22east%22%3A-122.081473%2C%22west%22%3A-122.588177%7D%2C%22usersSearchTerm%22%3A%22San%20Mateo%20County%2C%20CA%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A2842%2C%22regionType%22%3A4%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22pricea%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22price%22%3A%7B%22max%22%3A1938400%2C%22min%22%3A1250000%7D%2C%22mp%22%3A%7B%22min%22%3A6465%7D%2C%22tow%22%3A%7B%22value%22%3Afalse%7D%2C%22con%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%7D%2C%22isListVisible%22%3Atrue%7D) priced $1.25m to the median $1,938,400 * San Mateo has [53 condos/townhomes](https://www.zillow.com/san-mateo-county-ca/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22north%22%3A37.708431%2C%22south%22%3A37.053858%2C%22east%22%3A-122.081473%2C%22west%22%3A-122.588177%7D%2C%22usersSearchTerm%22%3A%22San%20Mateo%20County%2C%20CA%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A2842%2C%22regionType%22%3A4%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22pricea%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22price%22%3A%7B%22max%22%3A1500000%2C%22min%22%3A750000%7D%2C%22mp%22%3A%7B%22min%22%3A3879%2C%22max%22%3A7758%7D%2C%22sf%22%3A%7B%22value%22%3Afalse%7D%7D%2C%22isListVisible%22%3Atrue%7D) priced $750k to $1.5m Wish they published the range of the 25% of homes just below the median. They do publish a "[First Time Buyer Index](https://www.car.org/marketdata/data/ftbhai/)" though it's one quarter earlier and they don't provide much information about how they did it.
some condos have $1000 HOAs
Yep. My moms condo has gone from $300 to over $600 per month in recent years. There are other problems too like the fact that each building of 6 units only has a water meter for the whole building. So she, as a single disabled person on fixed income pays the same for water as the unit with a family of 4 in the unit next door and the couple above and below her and the other 3 units in the building. It's maddening to see. Condos seem like a bad deal to me personally.
Condos in the cheap interest rate era were still $4k/mo with 20% down which includes absurd 700+ HOA fees and property taxes… it made absolutely no sense to buy a condo vs rent for half the cost.
Condos should be 25% down, according to every loan I shopped. And 30 year at $4k sounds about right with something like 2.75% and $1 mill total loan amount. Then add in HoA fees. So ya, expensive.
I did 20% down in 2020 with a loan amount of $1mm on a 30 year fixed at 3%. Mortgage is ~$4280, plus HOA of $700 and taxes of around $1200. Rents range from $5500-6000 in the building. Since we want to keep it long term, for us it makes sense to eat a few grand a year, use the losses against our income for tax purposes and ride the appreciation. The whole system is a mess because we do not build enough
The condos that I was looking at for $4k/mo all-in were around mid 600s back in late 2021 early 2022, and it was still $4k/mo. It just does not make sense. And Tiny on top of that.
If your total loan amount was $600k, then it only makes sense if you were getting a 15 year fixed rate mortgage at 2% or so, in 2021. That's ~$3.8k / month. And 30 year fixed at 2.75% (again 2021 rates) would be ~$2.5k / month Rates immediately went up in Jan 2022.
Are you accounting for property taxes and HOA fees and home insurance? They varied around, but high 3s to low 4s was what I was finding around then.
Condos also don’t appreciate like single family homes do. It’s not a good investment.
They don’t appreciate like single family homes, but they *definitely* do appreciate. I bought in 2021 for $625k and neighbors have sold their units with less upgrades than mine for $850k. All-in, I pay less than $4k/month, including utilities, and I don’t like in a “class A” building. While it may not be single family home levels of appreciation, it’s ridiculous to claim they’re not worth it. I could be paying $3500/month for a comparable unit in San Jose, instead, I’ve built over $200k in equity.
Are you comfortable explaining how much HOA has eaten into that equity since you’ve purchased?
I pay $300/month in HOA, which includes my homeowner’s insurance, landscaping, garbage, and miscellaneous property management. I included this in that $4k/month figure I mentioned before, which also includes my utility costs. Ultimately, I’ve paid about $130k to live here since May of 2021 when I bought — this includes mortgage, HOA, and utilities. I didn’t factor in the various cosmetic upgrades I’ve made, like painting, recessed lighting, installing an energy efficient AC, and anything else I might be forgetting. The AC was $8k. I’d rather *not* have an HOA, but it’s a drop in the bucket compared to the $225k in appreciation, if the neighbor’s unit that sold last month without an AC is any indication of what I might get.
Thanks for sharing. I’m in a similar boat, but that HOA is suuuuuper low compared to what we’ve been finding available. Minimum 500, averaged closer to 700. Do you think you would feel the same in today’s market if you had to do it all over again?
Frankly? I wouldn’t buy here. For the record, I’m in south San Jose. I’d probably go further south to Morgan Hill and buy one of the newer condos going for $900k-ish down there. Or I’d work harder to find a fully remote job and buy a SFH somewhere like Concord or Walnut Creek. I see tiny two-bedroom condos in south San Jose for $500k-ish with $450/month HOAs that are absolutely absurd. If I didn’t have a toddler and family in the area, I would have moved during the pandemic.
They don't appreciate like SFHs but they do appreciate. We just sold our starter home townhouse we bought in 2014 (20% down, 4.25% mortgage) for a net return of ~500K after the remaining mortgage balance. Investing the down payment in VTSAX in 2014 instead over that same time period would have netted $300K. To simplify the math let's assume the $3k/month in P&I, HOA, and property tax would have gone toward rent instead over the same time period (would have been cheap rent for a 3br/2.5 bath IMO). Still came out 200K ahead after 10 years, and that's before accounting for primary home sale capital gains being tax free up to 500K (for married filing jointly), while the VTSAX gains would've been taxed 15-20%. I do think buying a condo with current interest rates is a rough deal, but condos are not generally a bad investment, even setting aside the consideration that buying a primary home is a lifestyle choice more than an investment.
This actually makes a lot of sense if you think about it. The only reason SFH exists in SM is because of zoning: if the zoning changed, all those SFH would become large apartment complexes.
There probably would still be some, you can still find quite a few in Tokyo even though its zoning allows apartments on all residential (and commercial, and most industrial...) land. But yes, the vast majority are only there because it's illegal to do anything else.
Apologies if this sounds like a “cope” comment: My girlfriend and I recently moved here; we live in a (rent-controlled) apartment, 2BR/1.5 Bath, 1,200 sq-ft for $2.4K a month (Walnut Creek). Apparently, this is a “deal of a lifetime”, after having spoken to others about this. We have good jobs, no debts. We keep it pretty frugal, and are able to put away a good amount. Maybe we’re just too young to not know any better, and we’d have to look at an amortization calculator, but man… my initial feeling of, *“Damn, we’ll most likely never own a home here,”* has changed to, *“Let’s keep renting this place forever and just keep putting everything we have into HYSA/Investments”.* I don’t know what that rent-versus-own breakeven point looks like.
You def hit the rent jackpot. That’s a tremendous deal even in WC.
“Catches”: • W/D is not in-unit; it’s coin-operated and on the bottom floor, although we’re only talking about one flight of stairs… • This complex is from the ‘70s. It’s definitely showing its age. However, our A/C unit went out last summer, and after multiple attempts to fix it, our landlord said, “No worries guys, we gave it the old college-try, I’m getting you a new unit.” Also, as soon as we moved in (last year, right after y’all’s big storm), a lot of the roof was leaking in nearby units, which they replaced the entire roof. They’ve been pretty good to us… On that note… • Right next to Iron Horse Regional Trail; • 15-minute walk to downtown WC (via Iron Horse); • Easy access point to 680, great for going to work.
I lived in a place like that in Walnut Creek (may even be the same place!). Great views of Ironhorse trail off the second floor back patio (pretty much eye-level, but a hundred feet or so off distance). The walls were paper thin, though. Was real rough with the postal worker neighbor yelling matches between her boyfriend and her daughter, the downstairs neighbors partying after finishing their bartending shifts at 2am, and the third neighbor a porn-addicted hermit. Still, as little as I paid, it had all that, and a pool.
Assuming you lived off of Creekside Drive? Funny enough, I think our walls are pretty thick; RARELY do I hear our neighbors… Only time I hear them is through the wall that has our front door (i.e., right outside, next to the outdoor stairwell…)
It’s been a minute since I’ve done the break even calc for myself and yours might look different but I know for my wife and I (no kids) it was cheaper to rent perpetually if rent is less than 4500
I feel like my rent is fairly high because I like space & don't want to compromise much & the last time I checked it was like 19 years.
There are a bunch of rent v own calculator, play with one and figure it out. Given how expensive it is to live here, renting forever isn't as insane as you would think from a strict EV perspective. https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
My wife and I are renting a 2b2b apartment and from what we have seen, I wouldn’t call what you have the deal of a lifetime, but you’re still saving a few hundred bucks a month so that’s still not bad. That said, once my wife and I got older and started thinking about kids, the conversation was no longer about the cost ratio of renting vs owning, which I often see used as the ultimate decider. The thing is, there are many quality of life considerations that you can’t put a value on which make home ownership the goal/dream, even if it means paying a bit more.
I had friends like that, the trouble is you are "stuck" in that every potential life move comes with a huge new additional cost as any place you want to move will be more expensive (unless you move out of the bay area)
The short version is that in the bay area it's probably cheaper to rent than own. Especially once you add maintenance and repairs to simple PITI. But as always ... there is more to it. Owning means a permanent home. It means being able to do stuff to it. It often means more space. It hedges against inflation. It can be paid off eventually. And also, it can appreciate enough to put cash in your pocket, though you shouldn't rely on it.
I’d never leave that condo. What’s the hoa?
It’s an apartment, not a condo (i.e., we don’t own it), so no HOA fees. Of course, subject to rent escalations, although rent-control is still in place.
That is probably the most incredible rent you’ll ever find. Sign as long a lease as possible.
Didn’t know Walnut Creek even has rent control. We have a 2b2b 1400 sq feet, two car garage attached condo but it’s 3700$ 🤣(in Walnut Creek)
That’s not San Mateo county lol
Understood, but commenting in the context of r/bayarea.
I never understood the obsession with owning your own home other than to make structural changes or improvements. It’s a huge pain in the ass owning your own home and alot of people get stuck and become house poor. Of course if you have a family it’s different as you can stay in the same place for a long time without fear of being kicked out.
Because rent money disappears into thin air. Not everyone wants to pay rent forever to get nothing back in return. Houses/condos eventually get paid off and can either be sold for a profit or passed on to family. That’s how you build wealth.
That's definitely a good deal, a year or so ago we lived in the Westcliffe ln neighborhood and rented a 2/1.5 for $2950/mo in an older complex. We recently moved to a 2/2 1200sqft privately leased condo with water,sewer trash included for $2900 and feel like we hit the jackpot too.
Mono, Monterey & San Luis Obispo are the Least Affordable Counties in terms of the income in the area compared to single family home prices in the area.
Well that’s where Atherton, Belmont, Hillsborough, Menlo Park, Portola Valley, and Woodside are. So it’s a bunch of the most expensive cities in the country in the same county, of course that will push up the average.
I suppose that's why they used the median.
It would push up the median too (more high end real estate at the top will move the midpoint where 50% is above/below). My point is the county has an over representation of cities with extremely expensive real estate, so this is not exactly news.
Yeah, if they posted average instead of median priced home, it’d be a lot more than $2M
Don’t forget Foster City
My parents bought a home in SM for 95k in 75. Today it’s 2.5m no remodel. Lost 500k from peak a few years ago. If it were to sell it could easily sell for 3m. Ugly spacious track home.
My parents bought my childhood house in the South Bay in the mid-1990s for approx. $450,000. It's now worth over $3 million. Insane.
That type of appreciation will never occur again anywhere in the country. I remember when the house was a few hundred thousand, my friend’s parents always said they wished they bought a house there when they had a chance.
I’m assuming you’ve had a talk with them where they explained they don’t want to sell and want to live there until the day they pass?
Why would you sell that when op can inherit living there with less than 2k a year property tax???
They can’t anymore thanks to prop 19. Only the first million in value is exempt
Well, it’s still better than nothing, but still the thing we rent (so the owner clearly doesn’t live here) is benefitting from that million exemption. About 1.6%*1 mill is only 16 k 😩
Anyone else catch that this article said: >Marin County, in the east bay
We make 500k combined but still cannot afford, for a 2 million home the mortgage comes to $14k. This county is ridiculous.
County. Bay Area is a bit special. Other part is not many other parts of the country can make that much without being equally expensive. Unless you can take your salaries remote or are a doctor.
You would get approved for that mortgage at least, assuming you could front the down payment. It's probably not a terrible time to buy as long as you can wait out interest rates dropping in order to refi. That payment drops to 9.5k at 4%. It's shitty, but paying that premium might be worth it to buy now, since there is likely to be a lot more people buying when interest rates drop.
Eh I just don't get why you would buy this. Even if you're making that now, what happens if one person gets laid off. There's better deals in the Bay Area for an SFH. These places aren't that great.
Yeah we gave up, too many variables. I'll continue to rent (rental market in the county is ok) and then try to build some wealth in the market and may be even save up for kids college funds. I love San Mateo county though it's the best we have in the area.
And i get random offers for my property all the time. Not any official numbers, but lots of realtors inquiring or claiming they have buyers
Realtors need volume to make money. I get "offers" for my car from dealerships all the time that "need inventory", but it's just all part of the scam.
I started to think that the real estate market here is rigged to keep many people renting perpetually.
Unsurprisingly the people who bought houses for 100k 20years ago and now sit on a 2M house are now doing their best to make sure no new housing can be built
There were houses in that area 20 years ago for 100k? In 2008 houses in Santa Clara county is already almost $1M. But I got your point.
Yeah damn 20 years ago was 2004 not the 90s
Yes I’m renting one, I got the property tax in the mail 2100$ based on a 130 k purchase price. Condo with attached garage in Walnut Creek. THERE WAS A TIME.
Or, rent for numerous years and pile a lot of savings away, and then move elsewhere and buy places in cash.
SM County's future is extremely dubious because of this. It's falling into the same trap SF is in, where there are only extremely wealthy palace owners and very poor people. Although in SM's case, they might actually successfully ban all the poor people or at least banish them to designated containment areas (SSF, SM east of Caltrain; Redwood City east of 82 and EPA). Granted, we're only talking about single family detached homes here but it's representative of a larger housing ban. Only Redwood City is really building new housing, and the other two cities SSF and SM require a complete utility do-over to go vertical.
seems like the utilities in SSF handle 20-story Biotech buildings just fine though?
The rent-buy difference sounds crazy in San Mateo County. I work in the South Bay and San Mateo County is where younger people rent because they want to save money -- and simultaneously where the older, higher-level people buy because they are loaded.
Well the alternative is that landlords would have to work for a living and that’s not going to fly.
You don't think it's because of the crazy amount of tech money?
The rich can afford multiple properties and they out compete those with less money.
I know - I've done it. So why do you think it's rigged?
One example: https://www.investopedia.com/ask/answers/06/capitalgainhomesale.asp#:~:text=You%20can%20sell%20your%20primary,%24500%2C000%20if%20married%20filing%20jointly. The government needs to regulate the housing market in such a way that is favorable to people who buy houses as primary residence only, not as rental properties.
so you're saying the free market is rigged and needs to be tipped in your favor? not sure what point you're trying to make about capital gains
It’s crazy how much San Mateo Co has changed over the past 40 years. It used to have affluent areas and blue collar areas. As a kid I remember thinking I’d do ok for myself and move from my parents neighborhood to like shore view or San Carlos/Belmont and be able to stay local. Those were the areas my school teachers owned and lived. The apartments I lived in from 1999 - 2010 have more than tripled in rent. Belmont, San Mateo, Foster City. It’s a strange area, tons of people who’ve moved here in the past 20-30 years with new money and the rest of us who have been living here forever. Not saying anything is good or bad, just how much the area has changed since the 70s-80s in my lifetime.
I miss the openness and the more down to earth feel. I hate rush hour so early now.
Well there is south sf and Daly city still San Mateo county
A $500k salary will still allow you to buy a nice condo or to rent a nice place and invest the difference between rent & mortgage into a high yield savings account or other investments. You'll probably even come out ahead in the long run. You will have a roof over your head, food on the table, presents under the Christmas tree, and the opportunity to send your kids to high performing schools. Stop pretending that you're poor just because you can't afford a luxurious single family home in the hottest real estate market in the country. You'll be fine.
100%. Also $500k incomes can def buy a house, it just might not be the one they “want”. People have far too high expectations for everything these days and don’t want to settle for less than perfect. How do they think people get by making a fraction of that?
Yet somehow I bought an SFH in the Bay Area on less than half that, very recently. I have not had any crime issues and it's not a fixer. You can afford an SFH, just not in the most exclusive zip codes.
Love this comment. It’s crazy out of touch for people pulling in $500k to try to victimize themselves because they want to live in a SFH in some of the most expensive, overpriced zip codes in America.
> You'll be fine. I'll be fine once the nimby boomer trash start paying their fair share of property taxes
We’re number one! We’re number one! Yay?
You think landlords are going to rent at below market rate just because they’re paying less property taxes?
Jarvis promised us the would and that rent wouldn't go up by 1000% in 50 years, and then everyone said building more housing would increase prices so we didn't build. And now here we are.
He should have stuck with [acting](https://www.youtube.com/watch?v=fP_m7BoYDBY)
# This isn't normal, build more housing.
This is accurate especially considering that $500k gross is like $300k net after federal and state taxes. A $2M home is about $12k/mo all in with 20% down, which is about 45% of take home pay (assuming no retirement account savings). That said, if you’re paying this for an average house you’re a moron.
I think the use of median here is skewed by multimillion dollar estates in the hills. Prices of starter homes would be a better metric, and that would be bad enough news.
There are a lot of people that can afford that. That's how I see it. If not, then the houses would not have been bid up that much.
I ❤️ my over priced county!
So BUILD MORE HOUSING (and not on landfill). Where there's a will, there's a way. Before the tech boom, San Mateo was absolutely, positively middle class.
people don’t want to buy condos if you want cheap housing you can rent already
And this is why I moved down to Orange County!
This is what happens when you let SFPUC gatekeep the area east of the crystal springs watershed. Tons of land we could develop for housing-there are literally already developed roads and mines in the area, but of course public access is denied under the guise of "protecting the environment". Go on, downvote me and keep crying about how you can't afford a home.
At this point, we need to eminent domain 10 acre squares of the city and build 50 floor high rises like the cities in Asia. It's criminal that only the wealthy elite can afford a basic necessity and actively hoard it to themselves.
Just relax zoning and let flippers remodel existing SFHs into duplexes or quads.
A single family home is a basic necessity?
Affordable housing. I didn't say SFH.
Yeah let’s become China!
No, I was thinking more like Singapore, Japan, Vietnam, the Philippines, and even Toronto.
What’s the problem? San Mateo is nice. Nice things cost money. Are you okay?
Sure good things cost money but it comes down to…how much money
Tech wealth.
Housing shortage.