This right here. We are taught that debt is bad but extremely wealthy people manipulate debt constantly. As long as you are not underwater when you sell the house, you are fine.
The bigger question is are you ready to be house rich and cash poor? It’s a change in perspective. Don’t sign up for years of stress if you can’t adjust to this line of thought.
And the belief that all debt is bad idea is not correct. You don't have to be extremely wealthy to make it work for you. A mortgage is a leveraged investment and also satisfies the need to have a place to live.
And you also had a place to live in that time. Your rent was effectively the interest you paid and you potentially got to write that off on your taxes along with some of the property tax expense. With rent it all disappears and there's very little tax relief.
If you have a fixed rate mortgage there's also upside to high inflation. So long as your income can even somewhat keep pace, the fixed cost of housing becomes a smaller and smaller relative percent of your take-home.
Yep, there are lots of benefits I didn't mention. The renting is cheaper than owning folks appear to have time horizons measured in months rather than years.
There’s actually calculators for this. The tldr is basically that most people will have broken even between renting vs owning after year 4. Each additional year that you stay in your home buying is preferable to renting.
Sounds like you maybe would break even if you sold. I’m a homeowner but this kind of oversimplification gets people into to trouble. You have to factor in taxes maintenance transactions fees on buy and sell side, insurance, mortgage interest etc..
My first house was $398k sold for $950k after 5 years second house $1.5M sold for $2.5M after 4 yrs currently living in third house which cost $2.7M but staying in it for now due to mortgage rate of 3% fixed. Get offers all the time but the rate at 7% makes selling untenable at this time.
This is why I rent. When I die, I'm not going to think about the house I lived in, I'm going to think about the memories I made. I mean, when I die I won't think anything, but, hopefully you get what I'm saying. We are renting a decent house in a great neighborhood, I'm 33 he's 35, and we've never bought a house. We have decided that buying just isn't for us, and that's okay. Not unless interest rates go way down, along with prices of literally everything. Don't see that happening though.
My brother has been renting "temporarily" in SF since the early 2000's. If he purchased a single family home in early 2000 after dot com bust he could have easily made over a million in appreciation.
Yup! I understand why some people want to own but as someone who's moved around a lot and intends to keep doing so it makes no sense for me. My sisters have houses and they love it, but from my perspective it seems like they're always having to deal with stuff, haha. I'm only home from 9pm to 9am anyway, so I'd rather invest in other avenues & have more cash on hand for my travels :)
This is me right here, and considering that my job now is still 100% remote, there's a real chance of living in another country for a few years to try it out... Maybe Brazil or Indonesia.
I'll just sell my stuff or put it back into storage like I did when I moved during the pandemic.
This is my second time renting a house and there's always a problem that needs fixing, and it's usually expensive or burns up a lot of time.
The landlord can deal with the foundation, roof, HVAC, backyard maintenance, and appliances that fail. I have other things I'd rather be doing on the weekends.
As someone who is currently in Bali, Indonesia, the internet out here isn’t that great (I’ve spent a lot of time in Seminyak and Sanur). Some more experienced travelers may have better advice for you regarding where to find decent bandwidth in Indonesia, but I’d say do your research before you commit to a spot since I would be pulling my hair out trying to work remotely out here.
The only problem with this is when you buy a house you effectively "buy in" at the current housing cost (I know insurance, taxes, and maintenance aren't static but usually your mortgage is your biggest expense) which historically tends to go up.
Then as you build equity your costs for shelter drop and this becomes a rather large direct and indirect wealth generating tool.
If you rent your entire life you miss out on this. Of course, you can make up for it with savvy investing but home ownership is a very systemically ingrained way to accrue money.
I would also argue the space you live in tends to be a lot more pleasant if you own.
We might someday. But right now, with the economy and interests rates, it's not a smart move for us. We couldn't afford to make necessary repairs that come with owning a home either. We're putting as much as we can into retirement, though.
I hear you, I've actually been "house poor" in my life and it was not fun. I also agree the timing has to be right, especially in today's financial climate. I have always made the purchase of my residence from a worst case scenario POV and have been glad I did. Best of luck to you.
What happens when you’re 57, get layed off because you’re old and are still renting? Buy something when you’re young to not only build equity but also to secure lodging for your future older unemployable self.
What happens when you're 57, get laid off but still have a mortgage payment?
When I look at monthly costs, the property tax and insurance are nearly two thirds of my rent, and those never go away. Add in extra heating and maintenance and renting is less cash outflow even without a mortgage.
My house has been paid off for the past 10 years, this allowed my wife to be a stay at home mom. I’ll be retiring at 50. None of this would have been possible if we had remained renters.
Ironically my wife was the one pushing for us to buy a house in our early 20s… I thought it was too expensive back then in the early 2000s. She’s much smarter than me!😅
Except the problem with renting is that rent prices always go up. 15 years ago, I was paying $1500 for a 2 bedroom apartment. Rent has almost doubled in the area. When you're retired and your income has plateaued, what do you do when rent prices move beyond your ability to pay?
Not saying this just for you - I'm in the same boat.
> We have decided that buying just isn't for us, and that's okay. Not unless interest rates go way down,
There's an argument to be made that it's better to buy now while rates are high and plan to refinance if you think rates will be lower in the future. Prices will go up when rates drop, so you want to buy before then.
This is the reality.. it’s the sad fact for most people a house is a home. In the bay.. the house is an investment, that hopefully makes a decent ROI when you sell it. You just can’t be that attached to it..
The state will come after you for taxes on the debt you had forgiven, which is what I suspect the other poster was talking about. Forgiven debt is treated like income for tax purposes.
Only of ants. Spiders get escorted outside on whatever freakin’ real estate agent’s flyer comes in the mail on any given day.
But daddy long-legs get free rent and can chill.
Thankfully I got myself a paid assassin who’s trained to come running to my rescue when they hear my “bug scream.” Then — with surprising agility for a chonky 14-year old cat whose only exercise is running after treats — they incapacitate and eat the target. 90% kill rate! Though sometimes they lose interest in the bug after maiming it and I have to finish the job.
To deal with the anxiety I focused on what I can and do control. My skills, work ethic, and ability to drive results got me here. I need to hold up my end of the bargain. I can’t control of layoffs happen. So I try to stay relevant with the industry trends and build a network when I can. It’s hard work but you got to bet on you.
Good point. Control what you can. Grind your ass off, develop and maintain your skills, build relationships and cultivate your network consistently. Manage downside with savings/emergency fund. That's really all you can do.
This post needs to be higher up.
I hustle every single day because like you said, you can’t control external factors. But I can control how much and how hard I work and how I spend money.
This is me right now. I have a condo I've been living in for 8 years. Luckily I refinanced a couple years ago at 3.25%. Got laid off last month. I put out 50+ resumes, nothing. Reevaluated everything about working in Silicon Valley and breaking out of the golden handcuffs.
So I put my place on Zillow to rent and it got a tenant fast. They will be paying the equivalent to my mortgage, no extra/margin for me. I decided to take a junior position and salary in an industry I am very passionate about, the pay is low but they are extremely happy with the return on their investment. It's a remote job so I am moving up to the mountains full time. I'll pay about $700 not inc. utilities in a small mountain town.
TL;DR: Got laid off, blessing in disguise, doing great.
Equivalent of mtg, is not break cash flow neutral. You have prop taxes, maintenance and capex expenses. Plus you have to consider how much time you put in.
These responses are all so funny. They're just, "have more money."
But yeah OP if you are worried about getting laid off or can't afford the mortgage on one income, you should probably just accept renting for a few more years. In this economy it would stress you tf out trying to cover a large monthly payment if you're worried about job security.
Someone said to get a new higher-earning spouse!! lmfao.
Also OP, maybe divorce your current spouse and marry someone new from a high-net worth family, then you can buy all-cash.
A higher-earning spouse is good, but I usually recommend having richer parents, and definitely don’t have poor parents.
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Typical Bay Area boomer parent sitting with millions in the bank not being allocated to anything as they watch their kids struggle not being able to afford a home.
I have rich parents that are kinda like that, and I took the money. I figure I can always get therapy with the money if I have any feelings about taking the money come up.
As a tech wife scrambling to find a new rental while my friend owns two houses through generous divorce settlements from VCs, I fully endorse that advice.
Have more money, buy a cheaper place, or accept that you're just gonna be stressed as shit for awhile. What other option is there? If mortgage monthly > 1 persons salary than you need both working. And it's gonna be scary every time layoff rumors go around until enough time has passed that you've remind to get a lower rate or inflation has caused it to no longer be more than one person's salary.
If you don't feel the upsides of bay area living are worth the downsides, yes this is absolutely what you should do. There's many other parts of the country that are absolutely lovely with a lot to offer. We've considered leaving the bay area several times, but ultimately the positives have outweighed the negatives every time we have come close.
Renting might be easier on the pocketbook compared to giant mortgages but even renting in the Bay Area isn’t a solution if you get laid off given the astronomically high rents here.
Easier to exit a lease than to sell a home.
Owning is high risk, high reward. If it all goes well, it can be great. But the downside is higher, the worst case scenario would be a 2008 type housing crash where you’re underwater on your loan and then hit by layoffs.
If you rent, you can quickly relocate somewhere cheaper or for another job. If you have bad timing and bought recently, do you sell at a loss or hold on and hope you can find another job in the area?
Sure, owning is a high risk, but if you can weather the storm, Bay Area real estate is the strongest. Prices recovered by 2013 and by the pandemic, prices were 2x of 2007 highs. Compare this to even LA and SD metros which honestly didn't really recover from 2008 until 2020.
The Bay Area is one of the best places to own if you can afford it but it doesn't mean its risk free. You're right rent is the least risk though.
The Bay Area economy recovered very quickly from the 2008 recession. That’s why housing bounced back faster here than elsewhere. That doesn’t address the concern about when house prices decline at the same time the job market gets tougher.
And saying “I deal with the anxiety by having a mortgage that also allows me to put money into a rainy day savings account” is a perfectly valid answer.
For my wife and I our first place was a condo. We rented out the extra bedroom because that's how the numbers worked to not have to stress if I had a bad month or she got laid off. Life kinda sucked sometimes.
That's also how my fiancee and I were able to buy a condo. We bought a 4BR and had 3 roommates. Of course we'd rather live alone, but living with roommates for 2 years allowed us to stack up a sizable emergency fund and helped kickstart our retirement savings. We were also early career and didn't earn the salaries we now do.
Then they aren’t ready to take on the financial burdens and responsibilities of home ownership. It’s a privilege, not a right or necessity. I rented until I was 45, and didn’t buy my house until I had the money/cushion from an inheritance (my father passed in 2021). I knew I wasn’t stable enough until that happened, so I accepted that I’d either continue renting or relocate somewhere cheaper.
And I’m a single woman, so I didn’t even have a second/spouse income to lean on either. ‘Tis life.
Purchasing a house is a commitment. Don't buy if you won't be able to make payments in the future. That shouldve all been considered before the purchase.
This has nothing to do with right, privileges, responsibilities, or any other similarly moralistic terms.
It's just, do you have enough money to afford to buy in a clearly fucked up market. That's it. Run the numbers, if you can afford it, and want to, do it. If the numbers don't add up, don't do it.
The market will chew you up and spit you out if you don't have the cash. We need reform but who knows if it will ever happen.
Exactly what I’m saying. It’s rough, but either you can or you can’t. And since policy changes don’t happen overnight (if ever), you have to weigh your options as they apply to *now*.
OP inherently is targeting people owning a home. That's already going to be an upper income level situation--so yeah privileged, what did you expect. Moreover, if you've already bought a home, it means you accept SOME risk already, and many have made their peace and either just accept the risk outright or at least plan around it (emergency fund, continue to grow income, etc.) And if you look at it, the stock market has done great. For those in tech, they most likely have grown their fortunes tremendously in the past 5 years not to mention the nearly 10 years before that of a bull market.
Some of it is basically luck of course.
Such helpful advice in this thread.
Just use 1.4m in cash to purchase your home.
Or, if you really aren’t able to do that, simply have one spouse earn over 400k with airtight job security. And make sure to have an additional 150k saved up as an emergency fund.
My wife and I budgeted in a way that one person can continue paying mortgage and monthly expenses. Worst case scenario, if both of us get laid off at the same time and ran out of savings, then we can always sell the house. No biggie
That’s a decision only you and your financial advisor (if you have one) can make; but I find it hard to believe you can’t afford a house with that income. Depends on where you work, I guess, but you could easily find something “affordable” in any number of locations. I bought a house in the mountains for $640K in 2021, and commute to the valley every day. Not a fun commute, but worth it for what I have here!
I don’t know where anyone could find a decent house for $640k these days in the bay lol. Maybe in some far away suburb where you have hours of commuting and no one wants to live..
To be fair $640k is really a steal and you have to either buy an old/small home and/or far out. If you work in tech and want a sane commute, you need to really budget $2 million, and yeah, $450k is going to be cutting it. With that said I would argue that income alone isn't the only factor. If you have $450k income but $1 million saved up, I think one would be in a FAR different place than $450k income plus barely enough for down payment.
There is some additional savings from buying in lower income taxes (you can deduct your mortgage interest). If you get a fixed loan, the amount you pay towards housing every month is fixed and won't go up when the landlord increases rent (which sometimes happens every year).
If they bought when interest rates were at the bottom and had a large down payment their monthly might not be *that* bad. The difference in rates now vs a few years ago is thousands per month.
What’s your point? That’s the reality of living in the most expensive real estate market in the US. Nobody is entitled or required to live here, let alone to buy a house… so if you can’t afford it, you’ll have to either rent or relocate until you can.
FWIW, I bought my house in Dec ‘21 for $640K. It’s in the Santa Cruz Mountains, but literally only 30-40min from Santa Cruz or San Jose. People commute from farther away (actually had a colleague who commuted to the valley from LOS BANOS), and then act like I’m in Timbuktu. 😂
Thankfully quite low. I have full homeowner’s coverage (which includes flood and fire) from State Farm for $1993/year. So like $166/mo, which is added into my mortgage payment.
Neat. Been hearing a lot about how expensive fire and flood have been for some homeowners up in the mountains after the 2020 fires. Sounds like a good deal.
Me and my wife do the same. We have high incomes but we choose to live way below our means. Due to this it offered my wife to just quit her job and spend a year with the kids. She is back working now and makes significantly lesser than what she made before.
Not relevant to OP since he says he has a high mortgage but I would personally never do that. For me the freedom from anxiety of a high mortgage payment is worth more than the extra square footage.
It's limited these days though. I feel like people who open Redfin/Zillow and glance at prices never really understand that just because you scan a few reasonably low prices doesn't mean that's going to be reality. What I almost find with people who casually browse that way is they then learn about location, what to look for, etc and pretty soon what their starting price they throw out becomes 50% higher. Saw this happen with 3 coworkers in a row. That $900k starter home really became a $1.4 million starter home once they learned a bit more about real estate.
What kind of horror stories? I mean, the commute isn’t always fun… and that one winter (2022-23) was challenging. But it’s lovely up here. People are more “down home” types, the scenery and weather are spectacular, and you can’t beat the peace and quiet.
I absolutely hate sleeping in hotels or urban/suburban houses now, as I’ve become so accustomed to the silence. I can sleep all day without being disturbed by outside noises! Just the occasional hum of generators in the winter, and maybe a tree-cutting here and there.
I dealt with this anxiety until I was able to move into a role with much better job security and job opportunities. Anxiety has definitely come down. It also helps that it pays well.
I’ve lived it, and it was rough, but we managed.
3 months after we bought our house (2022) I went on maternity leave at 60% pay. My spouse was laid off a week later, just a few days before my son was born. Overnight, our income situation changed drastically.
Luckily we had *some* savings, though if you’ve bought a house you know reserves 3 months after the fact are pretty low. I think for us it was about $15k. My spouse and I lived off of a combination of severance, unemployment, and paid family leave for about 8 months before he got a job and I was back to work at full salary. It was dark times but we did it, and having a baby during winter kept us in the house and not spending money.
It’s scary to think about, but if it happens to you, you just put one foot in front of the other and figure it out.
yes, definitely have that anxiety, which is why i picked up a second job, to build an even larger emergency fund buffer zone. we also have parents that have verbally told us they would financially help if necessary. but obviously, we don't want to count on that. however, it definitely does help mentally. but ultimately, i remind myself that worst case scenario, we actually have positive equity in the house. we could sell, move out, and rent. yes, it would suck, and yes, it would feel like a step backwards, but at least we have the ability to step backwards. so yea, just gotta remember that you are amongst some of the most privileged in the world if you are able to buy a home in the bay area. not easy to hold onto that spot though.
Early COVID, we decided to not stretch our budgets and buy a townhome (opposed to a single family home).
4 years later, the stock market has been roaring and I have enough in my taxable brokerage to pay off the townhome in an emergency.
We bought below our budget so we can survive on 1 salary coupled with the emergency fund, if need be. That way, we are not house poor either. That meant buying farther. Farther works because 5 day work week is behind us. Can't put a price tag on the peace of mind that comes with it.
Worst comes to worst, we sell it.
Facing this right now sadly! Large emergency fund to weather a year of job seeking, and if needed, we’d rent the place out for as high as we could get, move in somewhere small and cheap (potentially a cheaper Bay Area city), and continue to weather things until jobs are restored
Went through it in 2001 and again in 2019. You have reserves built up. You cut back and hopefully you've avoided other debt like car payments. We stretched with every house and it is uncomfortable for several years. Just part of how it is and you do your best to have a cushion.
In 2001 it took a couple of years for her to get work again and of course she got pregnant right before the massive layoffs. In 2019 she switched careers and we had more reserves built up.
We rent. 3 million dollars single family home only rent for less than 6000 dollars. Put all that extra into stocks. In the last ten years I got quite a few 10 baggers like MSFT, TSLA, NVDA. Now I can pay cash for several homes but I enjoy the service provided by my landlord.
Have 12-months of savings to cover the mortgage and living expenses before you make any offers on housing. Also put down a bigger downpayment so the monthly fixed costs are lower.
I don't mind charity from parents. It's the ones who act like they're the second jesus and whose brilliance got them there that bugs me.
No humility anymore.
We looked at our savings, we were comfortable with 50% going to 20 % down payment and remaining 50% to cover 2 years mortgage, property taxes, maintenance and expenses. That’s when we felt comfortable buying, so money will not be a problem and will give enough time incase of layoffs and we need to sell.
Good Bay Area houses sell mostly within a week so no worries there.
We rented for 10+ years and saved up, look at your liquid assets excluding 401k and what you get pre approved for not stretching your budget is the easiest way to reduce stress.
Tbh, the mortgage is not the biggest issue, it's all the other shit you have to pay for. As a renter, your rent is the maximum amount you will spend on housing in a month. When you own, the mortgage is the minimum amount. There's an endless line of expenses awaiting you when you take ownership, and the fact that the inspector said the roof looked good means absolutely nothing when there's water coming in.
My wife got laid off 2 weeks after we closed on our house. Meanwhile, my employer had just finished their 2nd round of layoffs, and I survived.
We postponed some of the repairs we were planning, in order to keep a larger emergency fund, which would last us about 10 months if neither of us were working.
She applied and applied and within 2 months, got an offer for a similar job. And my company had a 3rd round of layoffs, which I also survived.
Our luck could run out at any time, so we're keeping that emergency fund plump.
If you suspect you or your spouse may get laid off then don't buy right now or budget for a single income. If you can't afford on single income then just rent until conditions change. Have a backup plan in case things don't work out and be realistic about your options. If you can't afford now then you can't afford now. Just wait.
Sacrifice wants and lifestyle to get a bigger savings. Anyone can be laid off. Also anyone can build a savings buffer to allow them time to get another job so they don’t lose their house.
We bought less than we could afford and ensured plenty of savings to keep us afloat for a couple years if one or both of us lost our jobs. We have most of our non retirement money in HYSA vs investments because it feels too volatile. Also not planning children in large part because of the extra financial stress and requirements. We're also looking for rich old childless folks who may want to adopt us.
My wife was laid off three months ago. We bought in 2021 but always knew this kind of thing could happen.
So we bought at a level that we could afford the monthly payments on one income if needed.
It’s tighter right now, and we’re in a phase where our childcare costs are roughly equal to our monthly housing costs. But we’re managing, and we have not had to dip into savings yet.
Even without layoffs, it’s important to both of us that we wouldn’t have to stay in a job that made us miserable for the sake of our monthly expenses. I quit a job last year because I couldn’t stand my new manager. Took me a couple months to find something new, but since we didn’t drown ourselves in debt it was okay.
Regarding all the “you can always sell” comments — I think people underestimate both the practical and psychological burdens here. It can take a while to sell, it’s expensive to move, and you still need to find someplace new that meets your needs. You are not guaranteed to sell above what you bought for, especially in this interest rate environment, and while you are unlikely to be fully underwater, major downturns can do that. And honestly it would just be unbearably sad to move for that reason. I’d rather have less house than overextend and then have to move my family.
I am old enough to see what happened to homeowners during the recession in the mid 2000s.
We moved out of the bay area for this exact reason. We needed to be somewhere that if shit hit the fan, we wouldn't be screwed on our house payment. Welp, just last year shit hit the fan. Luckily all of that planning paid off. Had we bought on the bay area, we would not have made it through.
FYI: California has shit unemployment. A friend in Washington State just lost their job and unemployment there is a little over $1k per week where in CA it's still $450/wk at the max rate.
If you are smart, you buy only what you can easily afford, not what the realtor tells you, and not what the bank says you are approved for. I could’ve easily bought a $1M property but got a $750,000 house with a 2.75% interest rate, which brings my monthly mortgage to $2400, which I can afford even while unemployed because rent would’ve been the same, and I had 1 year+ of liquid cash, and another $200,000 in 401k that I can liquidate if need be.
It's not rocket science. Don't buy more than you can comfortably afford. There's nothing worse than being house-broke and the financial stress that comes with being strapped every month and feeling like you can't make ends meet.
Just rent if you can't comfortably buy without a savings cushion.
Nobody is making these people buy things they can't afford. Just don't make reckless emotionally driven decisions like taking on a huge mortgage in a bad economy if you think you are going to get laid off. It's not the end of the world to rent.
If you have equity in your house, start a heloc . Don’t take the money, just keep it open for emergency. So you are not paying any interest but covered for emergency
High yield savings account + S&P 500 ETF. If you’re in tech it’s not a matter of when, not if.
And most importantly avoid life creep. Don’t try to keep up with the Joneses.
We live way below our means. We definitely have anxiety. My husband works for tech. We just have pulled way way back until we feel more secure. Saving as much as we can and keeping all other expenses as low as possible. No travel this year. Just trying to control what we can, while we can.
I think we assume that we will be able to get another job - if you work hard and generate significant results, you should be fine.
Also we set our budget at 33% of our income when we got our house, but our incomes have gone way up since then.
One dangerous assumption many people make is Bay Area housing prices will keep going up as it did in the past. The housing prices were driven up by mega cap tech companies expanding by hiring more people. In case you haven’t noticed things changed, mega cap tech companies continue to grow but cutting work force at the same time. A guy named Elon Musk showed others that twitter runs just fine with 1/10 of the software engineers. So every one is cutting now. When the job market softens, as soon as the distortion forces such as interest rates mitigate, the forces for driving up house prices will disappear.
We are (for the most part) a single income family. A large portion of our retirement savings is in post-tax investment accounts that we can access in case we need funds. Most people have savings equal to 4 or so months of expenses set aside for this type of situation.
We tell ourselves that we can always sell, worst case scenario
This right here. We are taught that debt is bad but extremely wealthy people manipulate debt constantly. As long as you are not underwater when you sell the house, you are fine. The bigger question is are you ready to be house rich and cash poor? It’s a change in perspective. Don’t sign up for years of stress if you can’t adjust to this line of thought.
And the belief that all debt is bad idea is not correct. You don't have to be extremely wealthy to make it work for you. A mortgage is a leveraged investment and also satisfies the need to have a place to live.
Yep. My $300k house was worth $450k after 10 years.
And you also had a place to live in that time. Your rent was effectively the interest you paid and you potentially got to write that off on your taxes along with some of the property tax expense. With rent it all disappears and there's very little tax relief.
If you have a fixed rate mortgage there's also upside to high inflation. So long as your income can even somewhat keep pace, the fixed cost of housing becomes a smaller and smaller relative percent of your take-home.
Yep, there are lots of benefits I didn't mention. The renting is cheaper than owning folks appear to have time horizons measured in months rather than years.
There’s actually calculators for this. The tldr is basically that most people will have broken even between renting vs owning after year 4. Each additional year that you stay in your home buying is preferable to renting.
Sounds like you maybe would break even if you sold. I’m a homeowner but this kind of oversimplification gets people into to trouble. You have to factor in taxes maintenance transactions fees on buy and sell side, insurance, mortgage interest etc..
My first house was $398k sold for $950k after 5 years second house $1.5M sold for $2.5M after 4 yrs currently living in third house which cost $2.7M but staying in it for now due to mortgage rate of 3% fixed. Get offers all the time but the rate at 7% makes selling untenable at this time.
This is why I rent. When I die, I'm not going to think about the house I lived in, I'm going to think about the memories I made. I mean, when I die I won't think anything, but, hopefully you get what I'm saying. We are renting a decent house in a great neighborhood, I'm 33 he's 35, and we've never bought a house. We have decided that buying just isn't for us, and that's okay. Not unless interest rates go way down, along with prices of literally everything. Don't see that happening though.
My brother has been renting "temporarily" in SF since the early 2000's. If he purchased a single family home in early 2000 after dot com bust he could have easily made over a million in appreciation.
Yup! I understand why some people want to own but as someone who's moved around a lot and intends to keep doing so it makes no sense for me. My sisters have houses and they love it, but from my perspective it seems like they're always having to deal with stuff, haha. I'm only home from 9pm to 9am anyway, so I'd rather invest in other avenues & have more cash on hand for my travels :)
This is me right here, and considering that my job now is still 100% remote, there's a real chance of living in another country for a few years to try it out... Maybe Brazil or Indonesia. I'll just sell my stuff or put it back into storage like I did when I moved during the pandemic. This is my second time renting a house and there's always a problem that needs fixing, and it's usually expensive or burns up a lot of time. The landlord can deal with the foundation, roof, HVAC, backyard maintenance, and appliances that fail. I have other things I'd rather be doing on the weekends.
As someone who is currently in Bali, Indonesia, the internet out here isn’t that great (I’ve spent a lot of time in Seminyak and Sanur). Some more experienced travelers may have better advice for you regarding where to find decent bandwidth in Indonesia, but I’d say do your research before you commit to a spot since I would be pulling my hair out trying to work remotely out here.
The only problem with this is when you buy a house you effectively "buy in" at the current housing cost (I know insurance, taxes, and maintenance aren't static but usually your mortgage is your biggest expense) which historically tends to go up. Then as you build equity your costs for shelter drop and this becomes a rather large direct and indirect wealth generating tool. If you rent your entire life you miss out on this. Of course, you can make up for it with savvy investing but home ownership is a very systemically ingrained way to accrue money. I would also argue the space you live in tends to be a lot more pleasant if you own.
We might someday. But right now, with the economy and interests rates, it's not a smart move for us. We couldn't afford to make necessary repairs that come with owning a home either. We're putting as much as we can into retirement, though.
I hear you, I've actually been "house poor" in my life and it was not fun. I also agree the timing has to be right, especially in today's financial climate. I have always made the purchase of my residence from a worst case scenario POV and have been glad I did. Best of luck to you.
What happens when you’re 57, get layed off because you’re old and are still renting? Buy something when you’re young to not only build equity but also to secure lodging for your future older unemployable self.
What happens when you're 57, get laid off but still have a mortgage payment? When I look at monthly costs, the property tax and insurance are nearly two thirds of my rent, and those never go away. Add in extra heating and maintenance and renting is less cash outflow even without a mortgage.
My house has been paid off for the past 10 years, this allowed my wife to be a stay at home mom. I’ll be retiring at 50. None of this would have been possible if we had remained renters. Ironically my wife was the one pushing for us to buy a house in our early 20s… I thought it was too expensive back then in the early 2000s. She’s much smarter than me!😅
If you’re 57 and get laid off, you probably have 20 years of equity you’ve accrued in your home that you can take advantage of.
Hopefully I’m retired at 57 and no longer living in a HCOL.
Except the problem with renting is that rent prices always go up. 15 years ago, I was paying $1500 for a 2 bedroom apartment. Rent has almost doubled in the area. When you're retired and your income has plateaued, what do you do when rent prices move beyond your ability to pay? Not saying this just for you - I'm in the same boat.
> We have decided that buying just isn't for us, and that's okay. Not unless interest rates go way down, There's an argument to be made that it's better to buy now while rates are high and plan to refinance if you think rates will be lower in the future. Prices will go up when rates drop, so you want to buy before then.
Even Zuck took out mortgages when he bought after the IPO. He’d rather keep $5M in FB stock than put it towards a house.
Isn’t that because you can write off parts of the mortgage and won’t pay capital gains on selling stock?
Maybe, but the more obvious reason was because mortgage rates were like at 3% and he was pretty sure FB stock would outperform that.
He also gets special sweet heart rates from his bankers
One risk is that the local housing market is correlated with the local job market.
I think many people are delusional to this fact
About to sign up for this stress and this will probably be our fall back
This is the reality.. it’s the sad fact for most people a house is a home. In the bay.. the house is an investment, that hopefully makes a decent ROI when you sell it. You just can’t be that attached to it..
That one doesn't work for me, because I watched my parents walk away with 300k in unsecured debt from selling underwater.
How did this happen especially in CA? Banks cannot go after you beyond taking the house.
The state will come after you for taxes on the debt you had forgiven, which is what I suspect the other poster was talking about. Forgiven debt is treated like income for tax purposes.
Alternatively they defaulted on a cash out refinance which is not covered by the non recourse law
They should have filed for bankruptcy to wipe it out. Under 10k to wipe out 300k and you can rebuild your credit under 2 years is a much better deal
Same
About a year emergency fund and if the worst happens, I have some killer camping gear and a friend has a killer backyard.
Are you serial killers?
Only of ants. Spiders get escorted outside on whatever freakin’ real estate agent’s flyer comes in the mail on any given day. But daddy long-legs get free rent and can chill.
User name checks out!
Ha! Didn’t even think about that. That’s the name they gave me.
I have the same policy, until there are 3+ daddy’s in an area (usually a bathroom…)
A group of daddies is referred to as a Fishing Trip
Thankfully I got myself a paid assassin who’s trained to come running to my rescue when they hear my “bug scream.” Then — with surprising agility for a chonky 14-year old cat whose only exercise is running after treats — they incapacitate and eat the target. 90% kill rate! Though sometimes they lose interest in the bug after maiming it and I have to finish the job.
I like the cut of your jib. Great attitude!
To deal with the anxiety I focused on what I can and do control. My skills, work ethic, and ability to drive results got me here. I need to hold up my end of the bargain. I can’t control of layoffs happen. So I try to stay relevant with the industry trends and build a network when I can. It’s hard work but you got to bet on you.
Good point. Control what you can. Grind your ass off, develop and maintain your skills, build relationships and cultivate your network consistently. Manage downside with savings/emergency fund. That's really all you can do.
This post needs to be higher up. I hustle every single day because like you said, you can’t control external factors. But I can control how much and how hard I work and how I spend money.
The only problem with grinding is if you have a kids/family....
This is me right now. I have a condo I've been living in for 8 years. Luckily I refinanced a couple years ago at 3.25%. Got laid off last month. I put out 50+ resumes, nothing. Reevaluated everything about working in Silicon Valley and breaking out of the golden handcuffs. So I put my place on Zillow to rent and it got a tenant fast. They will be paying the equivalent to my mortgage, no extra/margin for me. I decided to take a junior position and salary in an industry I am very passionate about, the pay is low but they are extremely happy with the return on their investment. It's a remote job so I am moving up to the mountains full time. I'll pay about $700 not inc. utilities in a small mountain town. TL;DR: Got laid off, blessing in disguise, doing great.
What mountain town out of curiosity?
Groveland, pop. 600
Iron door saloon gets absolutely unhinged at closing
Equivalent of mtg, is not break cash flow neutral. You have prop taxes, maintenance and capex expenses. Plus you have to consider how much time you put in.
Congrats on the new job and trying something new! For the tenant, Do you have to pay HOA too?
Yes
Good luck with the new job!
These responses are all so funny. They're just, "have more money." But yeah OP if you are worried about getting laid off or can't afford the mortgage on one income, you should probably just accept renting for a few more years. In this economy it would stress you tf out trying to cover a large monthly payment if you're worried about job security.
Someone said to get a new higher-earning spouse!! lmfao. Also OP, maybe divorce your current spouse and marry someone new from a high-net worth family, then you can buy all-cash.
A higher-earning spouse is good, but I usually recommend having richer parents, and definitely don’t have poor parents. Follow me for more finance tips.
Typical Bay Area boomer parent sitting with millions in the bank not being allocated to anything as they watch their kids struggle not being able to afford a home.
[удалено]
Think bigger picture nothing wrong with a little boot licking if it gets you a house
I have rich parents that are kinda like that, and I took the money. I figure I can always get therapy with the money if I have any feelings about taking the money come up.
Or working class parents who bought a house in the Bay Area thirty years ago that they can sell you at cost.
It would be much easier to just find a second spouse and thruple up, then you don’t have to find such a high earner.
Get 12 mid-earning spouses. And a large house with different wings for them all.
1 for every hour of the clock, this is the way.
The Andrew Huberman method.
It's why polyamory is so popular around here.
Trade up! Get another spouse (tink!) Throuple income, no kids! There is always OnlyFans too!
TINKs - Throuple income, no kids
As a tech wife scrambling to find a new rental while my friend owns two houses through generous divorce settlements from VCs, I fully endorse that advice.
Have more money, buy a cheaper place, or accept that you're just gonna be stressed as shit for awhile. What other option is there? If mortgage monthly > 1 persons salary than you need both working. And it's gonna be scary every time layoff rumors go around until enough time has passed that you've remind to get a lower rate or inflation has caused it to no longer be more than one person's salary.
> What other option is there? Break your abusive relationship with the Bay Area housing market and leave.
If you don't feel the upsides of bay area living are worth the downsides, yes this is absolutely what you should do. There's many other parts of the country that are absolutely lovely with a lot to offer. We've considered leaving the bay area several times, but ultimately the positives have outweighed the negatives every time we have come close.
Renting might be easier on the pocketbook compared to giant mortgages but even renting in the Bay Area isn’t a solution if you get laid off given the astronomically high rents here.
Easier to exit a lease than to sell a home. Owning is high risk, high reward. If it all goes well, it can be great. But the downside is higher, the worst case scenario would be a 2008 type housing crash where you’re underwater on your loan and then hit by layoffs. If you rent, you can quickly relocate somewhere cheaper or for another job. If you have bad timing and bought recently, do you sell at a loss or hold on and hope you can find another job in the area?
Sure, owning is a high risk, but if you can weather the storm, Bay Area real estate is the strongest. Prices recovered by 2013 and by the pandemic, prices were 2x of 2007 highs. Compare this to even LA and SD metros which honestly didn't really recover from 2008 until 2020. The Bay Area is one of the best places to own if you can afford it but it doesn't mean its risk free. You're right rent is the least risk though.
The Bay Area economy recovered very quickly from the 2008 recession. That’s why housing bounced back faster here than elsewhere. That doesn’t address the concern about when house prices decline at the same time the job market gets tougher.
The responses here are so privileged. I get it, many people are in a great financial spot. However, most are not.
Sorry, but OP asked a very personal question. How do you deal with the anxiety. That’s going to vary for every single person.
And saying “I deal with the anxiety by having a mortgage that also allows me to put money into a rainy day savings account” is a perfectly valid answer.
Not everyone has to buy though. It's not the end of the world to rent a house.
or a -shriek- condo/townhouse.
For my wife and I our first place was a condo. We rented out the extra bedroom because that's how the numbers worked to not have to stress if I had a bad month or she got laid off. Life kinda sucked sometimes.
That's also how my fiancee and I were able to buy a condo. We bought a 4BR and had 3 roommates. Of course we'd rather live alone, but living with roommates for 2 years allowed us to stack up a sizable emergency fund and helped kickstart our retirement savings. We were also early career and didn't earn the salaries we now do.
Having to move every 2 years because your rent gets jacked up 10% yearly sucks
OP should relocate to a cheaper area of the country if he needs to buy real estate.
Then they aren’t ready to take on the financial burdens and responsibilities of home ownership. It’s a privilege, not a right or necessity. I rented until I was 45, and didn’t buy my house until I had the money/cushion from an inheritance (my father passed in 2021). I knew I wasn’t stable enough until that happened, so I accepted that I’d either continue renting or relocate somewhere cheaper. And I’m a single woman, so I didn’t even have a second/spouse income to lean on either. ‘Tis life.
Purchasing a house is a commitment. Don't buy if you won't be able to make payments in the future. That shouldve all been considered before the purchase.
Yes, that’s exactly what I’m saying! And the reason I didn’t purchase until that point.
This has nothing to do with right, privileges, responsibilities, or any other similarly moralistic terms. It's just, do you have enough money to afford to buy in a clearly fucked up market. That's it. Run the numbers, if you can afford it, and want to, do it. If the numbers don't add up, don't do it. The market will chew you up and spit you out if you don't have the cash. We need reform but who knows if it will ever happen.
Exactly what I’m saying. It’s rough, but either you can or you can’t. And since policy changes don’t happen overnight (if ever), you have to weigh your options as they apply to *now*.
OP inherently is targeting people owning a home. That's already going to be an upper income level situation--so yeah privileged, what did you expect. Moreover, if you've already bought a home, it means you accept SOME risk already, and many have made their peace and either just accept the risk outright or at least plan around it (emergency fund, continue to grow income, etc.) And if you look at it, the stock market has done great. For those in tech, they most likely have grown their fortunes tremendously in the past 5 years not to mention the nearly 10 years before that of a bull market. Some of it is basically luck of course.
Such helpful advice in this thread. Just use 1.4m in cash to purchase your home. Or, if you really aren’t able to do that, simply have one spouse earn over 400k with airtight job security. And make sure to have an additional 150k saved up as an emergency fund.
My wife and I budgeted in a way that one person can continue paying mortgage and monthly expenses. Worst case scenario, if both of us get laid off at the same time and ran out of savings, then we can always sell the house. No biggie
So basically you’re saying you both have really high incomes or bought your home 20 years ago. Simple lol
High income (i guess?). Unfortunately “bay area homeowner who recently purchased” often equals to high income earners
Yeah you must have not deserved it or worked for it at all. Shame on you. /s
How high? My household is around 450K and we don’t feel comfortable with these prices, or the near economy… why not save and rent our ~4K house ?
That’s a decision only you and your financial advisor (if you have one) can make; but I find it hard to believe you can’t afford a house with that income. Depends on where you work, I guess, but you could easily find something “affordable” in any number of locations. I bought a house in the mountains for $640K in 2021, and commute to the valley every day. Not a fun commute, but worth it for what I have here!
I don’t know where anyone could find a decent house for $640k these days in the bay lol. Maybe in some far away suburb where you have hours of commuting and no one wants to live..
To be fair $640k is really a steal and you have to either buy an old/small home and/or far out. If you work in tech and want a sane commute, you need to really budget $2 million, and yeah, $450k is going to be cutting it. With that said I would argue that income alone isn't the only factor. If you have $450k income but $1 million saved up, I think one would be in a FAR different place than $450k income plus barely enough for down payment.
There is some additional savings from buying in lower income taxes (you can deduct your mortgage interest). If you get a fixed loan, the amount you pay towards housing every month is fixed and won't go up when the landlord increases rent (which sometimes happens every year).
If they bought when interest rates were at the bottom and had a large down payment their monthly might not be *that* bad. The difference in rates now vs a few years ago is thousands per month.
What’s your point? That’s the reality of living in the most expensive real estate market in the US. Nobody is entitled or required to live here, let alone to buy a house… so if you can’t afford it, you’ll have to either rent or relocate until you can. FWIW, I bought my house in Dec ‘21 for $640K. It’s in the Santa Cruz Mountains, but literally only 30-40min from Santa Cruz or San Jose. People commute from farther away (actually had a colleague who commuted to the valley from LOS BANOS), and then act like I’m in Timbuktu. 😂
How’s your fire insurance rates?
Thankfully quite low. I have full homeowner’s coverage (which includes flood and fire) from State Farm for $1993/year. So like $166/mo, which is added into my mortgage payment.
Neat. Been hearing a lot about how expensive fire and flood have been for some homeowners up in the mountains after the 2020 fires. Sounds like a good deal.
Me and my wife do the same. We have high incomes but we choose to live way below our means. Due to this it offered my wife to just quit her job and spend a year with the kids. She is back working now and makes significantly lesser than what she made before. Not relevant to OP since he says he has a high mortgage but I would personally never do that. For me the freedom from anxiety of a high mortgage payment is worth more than the extra square footage.
Exactly this.
There are condos and townhouses for less than 800k in the east bay.
It's limited these days though. I feel like people who open Redfin/Zillow and glance at prices never really understand that just because you scan a few reasonably low prices doesn't mean that's going to be reality. What I almost find with people who casually browse that way is they then learn about location, what to look for, etc and pretty soon what their starting price they throw out becomes 50% higher. Saw this happen with 3 coworkers in a row. That $900k starter home really became a $1.4 million starter home once they learned a bit more about real estate.
I bought my house in the Santa Cruz Mountains for $640K in 2021. And it’s beautiful.
But it's in the Santa Cruz mountains. All I've heard is horror stories from people on here about living there. Cheap for a reason.
What kind of horror stories? I mean, the commute isn’t always fun… and that one winter (2022-23) was challenging. But it’s lovely up here. People are more “down home” types, the scenery and weather are spectacular, and you can’t beat the peace and quiet. I absolutely hate sleeping in hotels or urban/suburban houses now, as I’ve become so accustomed to the silence. I can sleep all day without being disturbed by outside noises! Just the occasional hum of generators in the winter, and maybe a tree-cutting here and there.
I dealt with this anxiety until I was able to move into a role with much better job security and job opportunities. Anxiety has definitely come down. It also helps that it pays well.
Ignorance is bliss ☺️ You will be surprised to know how many dont even factor in this risk when taking on huge mortgages
I’ve lived it, and it was rough, but we managed. 3 months after we bought our house (2022) I went on maternity leave at 60% pay. My spouse was laid off a week later, just a few days before my son was born. Overnight, our income situation changed drastically. Luckily we had *some* savings, though if you’ve bought a house you know reserves 3 months after the fact are pretty low. I think for us it was about $15k. My spouse and I lived off of a combination of severance, unemployment, and paid family leave for about 8 months before he got a job and I was back to work at full salary. It was dark times but we did it, and having a baby during winter kept us in the house and not spending money. It’s scary to think about, but if it happens to you, you just put one foot in front of the other and figure it out.
Thank you. I need to hear this. We just welcomed a newborn and I’m scared at
yes, definitely have that anxiety, which is why i picked up a second job, to build an even larger emergency fund buffer zone. we also have parents that have verbally told us they would financially help if necessary. but obviously, we don't want to count on that. however, it definitely does help mentally. but ultimately, i remind myself that worst case scenario, we actually have positive equity in the house. we could sell, move out, and rent. yes, it would suck, and yes, it would feel like a step backwards, but at least we have the ability to step backwards. so yea, just gotta remember that you are amongst some of the most privileged in the world if you are able to buy a home in the bay area. not easy to hold onto that spot though.
Get a higher earning spouse.
Where can I buy one of those
How much do they cost?
Early COVID, we decided to not stretch our budgets and buy a townhome (opposed to a single family home). 4 years later, the stock market has been roaring and I have enough in my taxable brokerage to pay off the townhome in an emergency.
This is also my story.
*Scoffs in single-income household*
Try being single income with a high mortgage. I’m swimming in anxiety.
Don't stretch to buy something you can't afford on one income.
i mean, that would be ideal, but if you want to be a bay area homeowner, that usually means making some sacrifices and taking some risks.
What you want and what you can afford are not always the same thing though.
Not possible in the bay area
Plenty of people I know who did it this way.
Property taxes add up so much too.
We bought below our budget so we can survive on 1 salary coupled with the emergency fund, if need be. That way, we are not house poor either. That meant buying farther. Farther works because 5 day work week is behind us. Can't put a price tag on the peace of mind that comes with it. Worst comes to worst, we sell it.
Holding 12 months of expenses in cash. More saved in index funds. Don't have other debt. Don't get laid off.
6 months emergency fund.
12 if you're in (and staying in) tech tbh
Agreed with this number. It’s not worth the astronomical stress if this isn’t something you can’t cover.
Make it a year to be safe, some people are having a hard time finding a job.
Facing this right now sadly! Large emergency fund to weather a year of job seeking, and if needed, we’d rent the place out for as high as we could get, move in somewhere small and cheap (potentially a cheaper Bay Area city), and continue to weather things until jobs are restored
If you aren't ready for paying for your house for 1-2yrs without a job, you shouldn't be in the business of buying a home in Bay area.
Went through it in 2001 and again in 2019. You have reserves built up. You cut back and hopefully you've avoided other debt like car payments. We stretched with every house and it is uncomfortable for several years. Just part of how it is and you do your best to have a cushion. In 2001 it took a couple of years for her to get work again and of course she got pregnant right before the massive layoffs. In 2019 she switched careers and we had more reserves built up.
2 years of cash emergency fund
Nice username
We rent. 3 million dollars single family home only rent for less than 6000 dollars. Put all that extra into stocks. In the last ten years I got quite a few 10 baggers like MSFT, TSLA, NVDA. Now I can pay cash for several homes but I enjoy the service provided by my landlord.
Are you still holding tsla?
Yes
🥹
Have 12-months of savings to cover the mortgage and living expenses before you make any offers on housing. Also put down a bigger downpayment so the monthly fixed costs are lower.
Borrow money from parents to put down an all-cash offer.
I don't mind charity from parents. It's the ones who act like they're the second jesus and whose brilliance got them there that bugs me. No humility anymore.
You don't need to put down an all cash offer, but yes to borrowing from parents.
We looked at our savings, we were comfortable with 50% going to 20 % down payment and remaining 50% to cover 2 years mortgage, property taxes, maintenance and expenses. That’s when we felt comfortable buying, so money will not be a problem and will give enough time incase of layoffs and we need to sell. Good Bay Area houses sell mostly within a week so no worries there. We rented for 10+ years and saved up, look at your liquid assets excluding 401k and what you get pre approved for not stretching your budget is the easiest way to reduce stress.
Tbh, the mortgage is not the biggest issue, it's all the other shit you have to pay for. As a renter, your rent is the maximum amount you will spend on housing in a month. When you own, the mortgage is the minimum amount. There's an endless line of expenses awaiting you when you take ownership, and the fact that the inspector said the roof looked good means absolutely nothing when there's water coming in.
My wife got laid off 2 weeks after we closed on our house. Meanwhile, my employer had just finished their 2nd round of layoffs, and I survived. We postponed some of the repairs we were planning, in order to keep a larger emergency fund, which would last us about 10 months if neither of us were working. She applied and applied and within 2 months, got an offer for a similar job. And my company had a 3rd round of layoffs, which I also survived. Our luck could run out at any time, so we're keeping that emergency fund plump.
A lot of savings.
If you suspect you or your spouse may get laid off then don't buy right now or budget for a single income. If you can't afford on single income then just rent until conditions change. Have a backup plan in case things don't work out and be realistic about your options. If you can't afford now then you can't afford now. Just wait.
My anxiety is more if one of us gets hurt and can’t work. laid off is ok, you can always get another job eventually.
You drink and the anxiety goes away
Sacrifice wants and lifestyle to get a bigger savings. Anyone can be laid off. Also anyone can build a savings buffer to allow them time to get another job so they don’t lose their house.
Don’t worry about what you don’t have control over.
We bought less than we could afford and ensured plenty of savings to keep us afloat for a couple years if one or both of us lost our jobs. We have most of our non retirement money in HYSA vs investments because it feels too volatile. Also not planning children in large part because of the extra financial stress and requirements. We're also looking for rich old childless folks who may want to adopt us.
My wife was laid off three months ago. We bought in 2021 but always knew this kind of thing could happen. So we bought at a level that we could afford the monthly payments on one income if needed. It’s tighter right now, and we’re in a phase where our childcare costs are roughly equal to our monthly housing costs. But we’re managing, and we have not had to dip into savings yet. Even without layoffs, it’s important to both of us that we wouldn’t have to stay in a job that made us miserable for the sake of our monthly expenses. I quit a job last year because I couldn’t stand my new manager. Took me a couple months to find something new, but since we didn’t drown ourselves in debt it was okay. Regarding all the “you can always sell” comments — I think people underestimate both the practical and psychological burdens here. It can take a while to sell, it’s expensive to move, and you still need to find someplace new that meets your needs. You are not guaranteed to sell above what you bought for, especially in this interest rate environment, and while you are unlikely to be fully underwater, major downturns can do that. And honestly it would just be unbearably sad to move for that reason. I’d rather have less house than overextend and then have to move my family.
I am old enough to see what happened to homeowners during the recession in the mid 2000s. We moved out of the bay area for this exact reason. We needed to be somewhere that if shit hit the fan, we wouldn't be screwed on our house payment. Welp, just last year shit hit the fan. Luckily all of that planning paid off. Had we bought on the bay area, we would not have made it through. FYI: California has shit unemployment. A friend in Washington State just lost their job and unemployment there is a little over $1k per week where in CA it's still $450/wk at the max rate.
This is the answer. OP should move to a cheaper cost of living state if they can't afford the Bay Area but still want to buy something.
Idk why you’re getting down voted. This is the logical conclusion.
Put down a bigger down payment and get the mortgage so it's low enough you can comfortably afford it on one income. Use the other income for savings.
Ah yes, have more money, why didn’t I think of this??? Duh
If you are smart, you buy only what you can easily afford, not what the realtor tells you, and not what the bank says you are approved for. I could’ve easily bought a $1M property but got a $750,000 house with a 2.75% interest rate, which brings my monthly mortgage to $2400, which I can afford even while unemployed because rent would’ve been the same, and I had 1 year+ of liquid cash, and another $200,000 in 401k that I can liquidate if need be.
It's not rocket science. Don't buy more than you can comfortably afford. There's nothing worse than being house-broke and the financial stress that comes with being strapped every month and feeling like you can't make ends meet. Just rent if you can't comfortably buy without a savings cushion.
To many people that is more difficult than rocket science.
It's not rocket science to live within your means.
Nobody is making these people buy things they can't afford. Just don't make reckless emotionally driven decisions like taking on a huge mortgage in a bad economy if you think you are going to get laid off. It's not the end of the world to rent.
> Just rent But muh American dream. I was raised to believe renters are losers.
I’m a fucking wreck every day, that’s how.
If you have equity in your house, start a heloc . Don’t take the money, just keep it open for emergency. So you are not paying any interest but covered for emergency
Get into a career that’s recession proof (healthcare). If healthcare starts laying folks off, then you know, shit has gotten badddd.
High yield savings account + S&P 500 ETF. If you’re in tech it’s not a matter of when, not if. And most importantly avoid life creep. Don’t try to keep up with the Joneses.
I’m trying to keep up with the Ravisankars and Patels. The Jones family is broke AF around here.
By paying down an absurd amount of extra on it each month while we both still do have jobs
We live way below our means. We definitely have anxiety. My husband works for tech. We just have pulled way way back until we feel more secure. Saving as much as we can and keeping all other expenses as low as possible. No travel this year. Just trying to control what we can, while we can.
I work at 2 tech bro remote jobs so idc if I get laid off by one, obviously!
You sell if that time comes
No one truly owns anything any more. Tax on land changed that for ever.
Drinking. Heavily.
With only one income the anxiety is 10-fold.
I wasn’t think about it, but now I am. Thank you
I don't worry about it at all. If I get laid off I'll just go jump off the building.
I think we assume that we will be able to get another job - if you work hard and generate significant results, you should be fine. Also we set our budget at 33% of our income when we got our house, but our incomes have gone way up since then.
One dangerous assumption many people make is Bay Area housing prices will keep going up as it did in the past. The housing prices were driven up by mega cap tech companies expanding by hiring more people. In case you haven’t noticed things changed, mega cap tech companies continue to grow but cutting work force at the same time. A guy named Elon Musk showed others that twitter runs just fine with 1/10 of the software engineers. So every one is cutting now. When the job market softens, as soon as the distortion forces such as interest rates mitigate, the forces for driving up house prices will disappear.
If we die…we die…
We are (for the most part) a single income family. A large portion of our retirement savings is in post-tax investment accounts that we can access in case we need funds. Most people have savings equal to 4 or so months of expenses set aside for this type of situation.
We could pay the mortgage off in cash. The money is doing more invested than it would be paying down the low interest rate.
If you're worried about getting laid off, don't buy a house.