It's A Terrible Time To Buy An Expensive House • Hacker News Board

Re: It's A Terrible Time To Buy An Expensive House

#141

Post by efnx » Tue, Sep 17, 2013, 4:53 PM UTC

equalarrow wrote: post #50

jonnathanson wrote: post #10

Some very solid points about the market in general, but I wonder how several of these points (particularly the points about oversupply, baby boomers, etc.) apply to places like SF or Manhattan. SF, in particular, seems to be extremely young (though that could be observational bias on my part), well-monied, in sharp undersupply of housing, with rent matching or in some cases exceeding the cost of a mortgage. Historica…

> But it's conceivable that SF basically becomes the Mahattan of the Bay Area, a playground for the rich, while everyone else gets pushed into the outlying boroughs and beyond. In such a scenario, where money is little object to the buyers determined to own in SF, what happens to pricing? I lived in Manhattan and in SF now and I would say, yah, I can see that. Already though, the 'boroughs' are being pushed further o…

> Add to that the homeless problem that never seems to get any better...

I was amazed when I learned that Orange County busses its homeless to SF. I often wonder how many other affluent areas sweep their troubled people under their neighbor's rug?

Re: It's A Terrible Time To Buy An Expensive House

#142

Post by VLM » Tue, Sep 17, 2013, 4:57 PM UTC

snowwrestler wrote: post #129

rtpg wrote: post #118

Earlier quoted context omitted.

I've always been confused about the housing as investment idea. We don't consider cars to be an investment either do we? I feel like the idea can only help to drive the prices up further.

Cars are not an investment because, unless we are talking about collectible antiques, cars always depreciate. That's why it's more accurate to think of cars as expenses. Real estate can appreciate. It's not guaranteed to do so, but it can, and with significant leverage. That's why it's considered an investment.

Thats a pretty good definition of speculation not investment.

Its investment if you can oil the wheels as a landlord such that you can rent money from a bank cheaper than renting the land from the landlord. That of course is a mathematical impossibility at this time in most areas.

Re: It's A Terrible Time To Buy An Expensive House

#143

Post by bmelton » Tue, Sep 17, 2013, 4:58 PM UTC

efnx wrote: post #141

equalarrow wrote: post #50

Earlier quoted context omitted.

> But it's conceivable that SF basically becomes the Mahattan of the Bay Area, a playground for the rich, while everyone else gets pushed into the outlying boroughs and beyond. In such a scenario, where money is little object to the buyers determined to own in SF, what happens to pricing? I lived in Manhattan and in SF now and I would say, yah, I can see that. Already though, the 'boroughs' are being pushed further o…

> Add to that the homeless problem that never seems to get any better... I was amazed when I learned that Orange County busses its homeless to SF. I often wonder how many other affluent areas sweep their troubled people under their neighbor's rug?

Hawaii will actually spring for a one-way flight to the continental US to reduce (relocate) their homeless population.

Re: It's A Terrible Time To Buy An Expensive House

#144

Post by sliverstorm » Tue, Sep 17, 2013, 5:00 PM UTC

rtpg wrote: post #118

toddmorey wrote: post #68

I think the madness won't end until we stop looking at housing as an investment vehicle. Housing is an expense. We're all renters to some extent. Even when I own my home "in the clear," I'll continue to have tax and maintenance obligations forever. There's also a very real lifestyle component. If it's a purely fiscal decision, we should all be renting in Dayton, Ohio. That's why these sorts of articles drive me nuts.…

I've always been confused about the housing as investment idea. We don't consider cars to be an investment either do we? I feel like the idea can only help to drive the prices up further.

houses are depreciating assets. The land they sit on can often be appreciating assets. Why is this? Because there are only so many acres of land within walking distance of downtown, or the major office complex.

Re: It's A Terrible Time To Buy An Expensive House

#145

Post by simonebrunozzi » Tue, Sep 17, 2013, 5:01 PM UTC

laurent123456 wrote: post #106

Shouldn't the post be renamed "10 Reasons it is a Terrible Time to Buy an Expensive House, in the US "? It sounds like a general article but it's really only about the US.

This is true for most things on HN.

Re: It's A Terrible Time To Buy An Expensive House

#146

Post by mikeyouse » Tue, Sep 17, 2013, 5:02 PM UTC

efnx wrote: post #141

equalarrow wrote: post #50

Earlier quoted context omitted.

> But it's conceivable that SF basically becomes the Mahattan of the Bay Area, a playground for the rich, while everyone else gets pushed into the outlying boroughs and beyond. In such a scenario, where money is little object to the buyers determined to own in SF, what happens to pricing? I lived in Manhattan and in SF now and I would say, yah, I can see that. Already though, the 'boroughs' are being pushed further o…

> Add to that the homeless problem that never seems to get any better... I was amazed when I learned that Orange County busses its homeless to SF. I often wonder how many other affluent areas sweep their troubled people under their neighbor's rug?

You may have already seen, but add Reno and Las Vegas to the mix:

http://www.mercurynews.com/ci_23087181/san-francisco-probes-...

http://www.nbclosangeles.com/news/local/SF-City-Attorney-Loo...

Re: It's A Terrible Time To Buy An Expensive House

#147

Post by snowwrestler » Tue, Sep 17, 2013, 5:03 PM UTC

VLM wrote: post #142

snowwrestler wrote: post #129

Earlier quoted context omitted.

Cars are not an investment because, unless we are talking about collectible antiques, cars always depreciate. That's why it's more accurate to think of cars as expenses. Real estate can appreciate. It's not guaranteed to do so, but it can, and with significant leverage. That's why it's considered an investment.

Thats a pretty good definition of speculation not investment. Its investment if you can oil the wheels as a landlord such that you can rent money from a bank cheaper than renting the land from the landlord. That of course is a mathematical impossibility at this time in most areas.

It is possible to speculate in real estate, but most homeowners don't. Speculation is typical high-risk and short term. Most residential real estate transactions are neither.

Re: It's A Terrible Time To Buy An Expensive House

#148

Post by umsm » Tue, Sep 17, 2013, 5:03 PM UTC

fluidcruft wrote: post #84

vermontdevil wrote: post #40

I now do not consider buying a house a good investment due to property taxes. The bill is coming soon for a lot of school districts (especially those with strong unions) with the rapid costs of health care for retirees. This is going to be our next crisis as we can see it playing out in Detroit.

Rent pays property tax, too. It's indirect, but it gets paid.

The problem is that it's a bit disproportionate. A 1000 sq ft apartment will not have the same amount of taxes as a 1000 sq ft home.

Re: It's A Terrible Time To Buy An Expensive House

#149

Post by nbuggia » Tue, Sep 17, 2013, 5:05 PM UTC

Most people don't buy a house for investment, they buy it because they have reached a point in their lives where they want to settle down and live someplace with their kids for 10+ years.

In that world, I think you can simplify things quite a bit. First, buying a house is more of a hedge against inflation than an investment. The market goes up? You've got more equity to move somewhere else. The market goes down? Well, you lose money, but everything else is cheaper too.

For the average person, I think the real lesson here is to make sure you can afford the house, put 20% down and it is within x2-3 your annual income. If you live in low-supply/high-demand markets like Seattle, SF, then you might end up paying more, and it is just a trade off you need to make.

Re: It's A Terrible Time To Buy An Expensive House

#150

Post by efnx » Tue, Sep 17, 2013, 5:05 PM UTC

snide wrote: post #123

equalarrow wrote: post #50

Earlier quoted context omitted.

> But it's conceivable that SF basically becomes the Mahattan of the Bay Area, a playground for the rich, while everyone else gets pushed into the outlying boroughs and beyond. In such a scenario, where money is little object to the buyers determined to own in SF, what happens to pricing? I lived in Manhattan and in SF now and I would say, yah, I can see that. Already though, the 'boroughs' are being pushed further o…

I know this is going to sound nuts to you, but if you're a tech worker that can do a day a week at home you really should check out north of San Rafael. Last year I bought a house in Petaluma that was way beyond what I thought I could own. More important to me is that the schools and community are great. 3 parks and a historic downtown all within walking distance. I feel like I live in a town from the 1950s. Granted,…

Petaluma is an awesome place and it has a fair share of tech culture. Bias, TwitVid and a number of agencies are all westside downtown locals. Housing on the westside is getting more competitive though. Nothing like SF I'm sure but difficult to get into unless you make 150k+.

Petaluma has that nice old-world vibe because it sits on a slab of granite. During the big earthquakes of the past century the neighboring cities' buildings collapsed but that slab of granite provided a buffer for Petaluma, keeping its turn of the century downtown. It also ended up being the default relief center during those disasters :) Way to go, slab.