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Some Silicon Valley Tech Workers Get Home Loans with No Money Down

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Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#171

Post by Noted »

hibikir wrote: post #95
calgoo wrote: post #32

Earlier quoted context omitted.

Reminds me of the banks here in Spain in the early 2000s: "Why do you want the loan to only cover your house? Add a car and some vacations in there as well!".... Ummm sure, Ill add a car and vacations... to my house loan? Yea, then people wondered why the country crashed (apart from other issues such as corruption).

To be fair, in Spain, failing to pay a mortgage will mean not just losing the house, but pretty much anything else you own. A cousin of mine, very well off, bought a summer house, which quickly lost a lot of its value. In the US, she could have said screw it! and let the bank have the house, but Spain being Spain, she'd have to pay the difference between the house's market value and the remainder of the mortgage. Tha…

I believe that is the case in some states as well (but not California). They get to repo the house, sell it and then can sue you for the rest you owe.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#172

Post by dragonwriter »

Noted wrote: post #171
hibikir wrote: post #95

Earlier quoted context omitted.

To be fair, in Spain, failing to pay a mortgage will mean not just losing the house, but pretty much anything else you own. A cousin of mine, very well off, bought a summer house, which quickly lost a lot of its value. In the US, she could have said screw it! and let the bank have the house, but Spain being Spain, she'd have to pay the difference between the house's market value and the remainder of the mortgage. Tha…

I believe that is the case in some states as well (but not California). They get to repo the house, sell it and then can sue you for the rest you owe.

> I believe that is the case in some states as well (but not California). They get to repo the house, sell it and then can sue you for the rest you owe.

Even where allowed in the US, they tend (not always, it varies by state) to increase the judicial oversight of (and thus extend timelines for) the foreclosure sale, and often reduce the finality of a foreclosure sale by providing a post-sale redemption period. Both of these things are things that lenders might prefer to avoid in many cases where a deficiency would, in theory, be available.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#173

Post by mmanfrin »

mason240 wrote: post #164
mmanfrin wrote: post #134

Earlier quoted context omitted.

I think the market is over-exuberant right now for sure, but I also feel that people like the Bay Area because the Bay Area is an exceedingly pleasant place to live . This market has hit a little perfect storm of pricing and may correct, but I think the longview is that Bay Area housing prices will just keep marching up. A lot of the price of homes is the land, which means that (barring local regulation) homes will b…

>but I also feel that people like the Bay Area because the Bay Area has exceedingly become a status symbol .

Right, because that's a new thing.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#174

Post by mmanfrin »

superuser2 wrote: post #135
mmanfrin wrote: post #134

Earlier quoted context omitted.

I think the market is over-exuberant right now for sure, but I also feel that people like the Bay Area because the Bay Area is an exceedingly pleasant place to live . This market has hit a little perfect storm of pricing and may correct, but I think the longview is that Bay Area housing prices will just keep marching up. A lot of the price of homes is the land, which means that (barring local regulation) homes will b…

It won't be an exceedingly pleasant place to live when there's no salary left over for food after taxes and rent.

  after taxes and rent
If you have no money left over for food after rent, do not live here -- full stop.

If you have no money left over after taxes, then you are doing your witholding wrong. And the Bay Area isn't some zone-of-enormous-taxation. We've got like 2% more sales tax and maybe 4% for restaurants who are passing on the medical buck.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#175

Post by anewcolor »

czep wrote: post #143

Any advice on where to look for a house in the bay area right now? Like I'm sure a million others, I'm sick of renting in a market where landlords sell and evict every day (happening to me right now, again). Got a kid, need good schools. Other than that, anything goes. I just want to live without constant fear of being upended every 6 months. Is that so much to ask?

We just bought a place in Pacifica for similar reasons

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#176

Post by dasil003 »

twblalock wrote: post #166
dasil003 wrote: post #71

Earlier quoted context omitted.

I'd be super careful with this. When I make 4x the median American income and have almost zero hope of ever being able to afford a home (until I get my FU money that is), that ought to tell you something about the sustainability of the current market.

As long as there are a lot of people with enough money to afford homes at the market-rate price, the market will remain sustainable. You may make 4X the median income, but there is no shortage of people who make a whole lot more than that. I see no reason to believe that will change anytime soon.

Given the number of homes in the Bay Area, yes there is a shortage of people making more than that. What there isn't a shortage of is wealthy speculators, a significant percentage of whom don't even live here.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#177

Post by twblalock »

dasil003 wrote: post #176
twblalock wrote: post #166

Earlier quoted context omitted.

As long as there are a lot of people with enough money to afford homes at the market-rate price, the market will remain sustainable. You may make 4X the median income, but there is no shortage of people who make a whole lot more than that. I see no reason to believe that will change anytime soon.

Given the number of homes in the Bay Area, yes there is a shortage of people making more than that. What there isn't a shortage of is wealthy speculators, a significant percentage of whom don't even live here.

They still count, because they buy homes here. They are consumers in the market, and they make the market sustainable.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#178

Post by dasil003 »

twblalock wrote: post #177
dasil003 wrote: post #176

Earlier quoted context omitted.

Given the number of homes in the Bay Area, yes there is a shortage of people making more than that. What there isn't a shortage of is wealthy speculators, a significant percentage of whom don't even live here.

They still count, because they buy homes here. They are consumers in the market, and they make the market sustainable.

Speculators make bubbles, not sustainable markets. The problem is too many people are vested in property values, so when 2008 happened, everyone bent over backwards to prevent prices to come down to what their true sustainable value was. Bailouts, properties taken off the market, presidential speeches, all to prop up the status quo. Banks didn't pay the price, and so it continues.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#179

Post by freyir »

jasonmp85 wrote: post #146

I realize this headline is meant to be inflammatory (look at those entitled people who get it all!), but this practice already exists for medical doctors: http://whitecoatinvestor.com/personal-finance/the-doctor-mor... Basically: "you're about to have a high income and—as a class—have a very low default rate. We'll let you put 0% down and not count your student debt against you". Usually before you get your first pay…

Generalist doctors have a median salary of ~$200k, with specialists earning a median salary of ~$300k. The lenders will have an easier time vetting doctors since almost all of them make a high income with good job security.

By contrast, developers have a median salary of ~$95k nationwide and ~$110k in San Francisco according to Glassdoor (or $65k nationwide and $103k in San Francisco according to Payscale). Of course, some make much more, typically through stock options. So lenders are probably filtering by occupation and employer (e.g. Google, Facebook, etc.).

I'll trust that the lenders are competent to determine whether someone with with a ~$150k salary is a strong candidate to buy a $2M house with no downpayment. Housing lenders haven't shown poor judgement in the past (edit: /s).

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#180

Post by freyir »

refurb wrote: post #156
patcheudor wrote: post #150

Earlier quoted context omitted.

I found it to be a particularly interesting headline because I thought such things were normal. When I bought my home in 2004 it was not only zero down but on a 7/1 interest only arm at just 1 point above the basis rate with a maximum increase over the life of just 4 points. As a bonus I got $50K out to pay off the boat. Needless to say when the housing market crashed I wasn't freaked out because I had effectively no…

When I bought my home in 2004 I think the "2004" in your reply is key. Crazy things were happening back then and as you called out, the housing market crashed. I think what freaks people out is that only ~8 years out from the crash, you can already see lending standards getting more relaxed. Didn't we learn anything last time? Not to mention the number of people I've talked to that said "housing always goes up, it's…

> Not to mention the number of people I've talked to that said "housing always goes up, it's a great investment!".

"One inflation-adjusted value index between 1928 and 2012 placed the annual rate of appreciation for real estate prices at just 0.2%." [1]

Overall, real estate has historically been a bad investment. That said, it does seem like there have been obvious indicators when an particular area is becoming a more desirable place to live, and when home prices are likely to go up significantly in the future. Although I imagine people have been hard at work modeling and forecasting this, and current prices will better reflect future appreciation (if this hasn't already happened).

[1] http://www.investopedia.com/ask/answers/052015/which-has-per...

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