At least it is significantly more affordable than in Honolulu even though the prices are more expensive. This is because pay is low in Honolulu, one of the costs of paradise I guess.
Also, if you work in San Fran, you can take your high wage and go spend it on a cheaper house out outside the city. You've got BART and caltrain and lots of roads to take you to work. Here in Hawaii there's no such escape.
Well that and the fact that BART doesn't run 24/7 like New York's MTA. I have despised situations where I had to sprint to the BART station near closing time, lest I spend a ridiculous amount for a cab.
Absolutely. It's actually a terrible situation compared to the flexibility of NY, which had great livable areas in Queens and Brooklyn that still had fantastic access to public transit.
Or you can ride Caltrain. The downside is the accidents on Caltrain tracks. It will literally take 2 hours to get to Mountain View from SF when there is an accident.
...or when (like the weekend of the first AngelHack event) you are delayed because your train hits a pedestrian (a horrendous sound by the way - you know exactly what's just happened immediately) then the replacement train is delayed because the next train in front hit a second pedestrian. They need to sort out the grade separation, it's just ridiculous, not to mention tragic.
Totally agree.I wonder why Caltrain is inefficient at times.
What prevents Caltrain to do better in terms of keeping up with schedule? Also, there must be a way to keep fare reasonably cheaper than cost of driving a car to work.
It's a lack of willingness to invest in the infrastructure. Which is a chicken/egg thing - legislators won't vote for investment as voters don't support something that doesn't deliver value.
I live in Sydney Australia, so to me these prices look fairly reasonable in comparison.
To give some of you non-aussies an example...
The average price for 2 bedroom victorian era terraces (hundred year old plus buildings) with next to no real land except the land the property sits on in sydney can be anywhere from 800k (AU) to millions of dollars.
I live in a block of flats in a suburb near North Sydney and one of the 2 bedroom flats like mine was sold for $695,000 AUD. It's completely ridiculous. (The flats are pretty bad quality)
Meanwhile a friend of mine just south of Newcastle bought a 3 Bedroom house with double garage & front and back yards for just around $400K... It's tempting to just start doing the commute with a difference like that
According to [1], apartments in the Sydney City Center are $11K/sq m. If my math is correct, that is around $1000/sq ft.
Outside the city center the prices are roughly half that (so a little more that San Francisco). According to the same data source, average weekly pay is around $1064.
Its definitely not a 1 to 1 comparison because of the crazy cost of living here.
Theres also the jump in the amount you get taxed (disregarding additional things we have to pay for such as private health care/medicare levy, superannuation, etc), so even if you were earning say 100k a year, you automatically lose a quarter of it before you ever see any of it.
Most people I know that live in the city do not have a salary that exceeds 50k a year, so all of this plus the cost of housing is leading to several generations of renters instead of home buyers. I dont actually know a single person in the city that has a mortgage, everybody seems to be renting because few people can afford to have a mortgage in the city.
I can only speak from my experiences knowing the people I know, but I know many people from all walks of life, so i doubt my view is that biast.
I pay as much in rent for a 1 bedroom apartment in the sydney than I would with a mortgage for a 3 bedroom home well outside of the city.
Heres another example of how expensive things are here that always makes my blood boil - a bottle of coke is going to cost you 4-6 dollars at your typical convenience store.
When i was last in San Fransisco 4-5 years ago, It cost around a $1.50 including tax.
Speaking from a team bootstrapping our company out of Houston, we wouldn't have stood a chance anywhere else, especially anywhere near the Valley. We were running off savings for the longest time, and so a month's worth of expenditures in most places lasted 2-3 months here, easily (the company and team's cost of living all combined, primarily rent). It gave us the time to figure out which way was up with our business. And the times one or two of us had to get some income on the side, employment was readily accessible.
Buying a house might even be in the near future for one of our founders, and that's only possible at the prices around here.
Slightly unrelated: I'm surprised to see the average weekly wage out in Detroit so high ($1,015), given all the tales of woe you hear about it.
I'm wondering if anyone else bootstrapping a (solo) company moved to a cheaper location in the U.S. to extend your runway? If so, how did it work out for you? Which places do you recommend?
What's strange about the current recession is that unemployment is high (especially for low skilled workers) but productivity (for the employed) is hasn't gone down[1]. This might explain the Detroit number.
In Indian cities (especially metros), housing prices have risen beyond the reach of the average wage earner. Despite several projects still languishing unsold, the prices have been artificially kept high by greedy builders. This puts tremendous pressure on single income families even if they earn well above median salary.
I think Indian cities are suffering from a serious real estate bubble. The value that you get out of a property is really questionable. I'm just talking about services (electricity/water/sewage), road networks, air quality, water quality, public transport, surrounding neighborhoods, etc. Not to mention build quality, finish quality, and other factors. A nice property in New Delhi can cost close to $1M USD. That's say a 3 bedroom apartment in an upscale area. Land, of-course costs a phenomenal amount more. Mumbai prices are even higher.
At that kind of rate, I'd rather put my money elsewhere (you can buy great property pretty much anywhere on the planet for those prices..), especially somewhere that can offer a better quality of life.
Los Angeles. You buy a house and its a trade off between commute and cost per square foot. I HATE LIVING HERE. Often.
I spend 90 minutes in a car every day, and while I love my house, my commute, gas cost, lack of public transportation, etc sucks. It also forces everyone to be so insular. No one socializes outside of work because we have to drive forever to get home.
I had a glorious three years where I lived .75 miles from work and it made the town better.
Some of my friends ended up joining community groups in their respective neighbourhood because driving outside of a certain area is a pain in the ass, putting greater emphasis on what's nearby. Granted, I know most people probably don't do that.
Surveys like these always highlight how Chicago is underrated:
New York: $275
Los Angles: $236
Chicago: $112
San Francisco: $459
Washington, DC: $164
Housing here is comparable to places like Richmond or Raleigh, except it's got the public infrastructure of a world-class city with 10 million people. Even if you live in the suburbs, you can take the extensive commuter rail system straight to downtown.
People estimates weather as a major concern in their daily life when considering moving to another city, but that's not really true.
It's like buying a brand new car. Sure it's nice and cool looking, but eventually it becomes just a transportation option to get you from point a to point b. Or it could be like that you're going to buy a house with a pool. However, you'll rarely actually use the swimming pool.
Yeah, I'm gonna second that. Once I moved from the UK to Silicon Valley - no matter how much I love "back home" and the fact that London truly is one of the great world cities in which to live - there's no way I'm moving back to that weather. It is very hard to leave.
After a decade of scraping ice off my windshield in the dark in the morning California looked like nirvana. It would take a lot to get me to move back to a city with a real winter again.
Yes, but I bet that you choose to drive a bike for all sorts of non-practical reasons, which makes it a luxury issue.
Anecdotally, my impression is that lots of people wear suits in both India and Southeast Asia. Maybe even more so than we tend to do in "the West". For lots of people it's not a choice, but a requirement to keep a job.
At the time I rode my motorcycle through a midwestern winter, it was because I was living off $5-6k a year and living on my own. I was profoundly impoverished.
But your assumptions about my status in being a yuppie like you are noted.
>Anecdotally, my impression is that lots of people wear suits in both India and Southeast Asia.
That wasn't my impression at all. Most people wore nice, cool button-down shirts with slacks.
Unfortunately, Chicago is amazing for less than only half the year: spring and fall. Winter and summer are a miserable experience. And winter usually lasts quite long.
> As the table below shows, in San Francisco you’ll need to work 20.6 years at the local average wage of $1,478 per week in order to save enough for a 20 percent down payment on a typical 2,000 square-foot home.
Well, it's a good thing that most homes are much smaller than 2,000 sq feet in SF. It's also a good thing that if you are buying a house you probably have a 2nd income.
Those two factors alone should reduce time to save to 7 years or less.
I really don't understand the obsession with owning a home. So many people I know expend their entire savings on buying a town home or a condo or some other place where you might as well rent an apartment. But the dream of "being a homeowner" is somehow worth it. It's always struck me as something of a con. Any tax benefits you might see are offset by the much higher monthly mortgage payment.
* note my experience is based on living primarily in SF and LA, so if you are willing to put up with Middle America I'm sure you can find much better value
My reasoning behind wanting to own my own home is that i am tired of renting and having to do exit cleans and paranoid about any damage that may occur. Its also a sense of security for me, to know that i own this piece of earth and this is my base. Although i don't own a home yet but would love to. Another reason is that i could pass on the property as an asset to future generations. But i suppose everyone wants different things in life :)
You have to run the numbers. Right now because a lot of people with bad credit got forced out of homes and into the rental market, historic low interest rates, and a large volume of homes for sale, here in the east bay you'll pay less if you buy than if you rent. Five years ago the opposite was true (in spades).
Mostly it depends on your circumstances. If you're single and you change jobs relatively often, it doesn't make sense to buy a house. If you have children it's cheaper to buy a house in a good school district than to send your kids to private schools.
Can someone more worldly than I speak to any possible cultural factor here? By that I mean, is the desire to own property as deeply-rooted elsewhere in the world as it is, or at least seems to be, in America? Are people in Japan breaking their backs to own a home? How about Europe? Brazil?
I'm genuinely fascinated by this, because it really does seem like American society frowns upon people who don't own a home by a certain age, especially when children are involved, almost as if a backyard is absolutely fundamental to the child-rearing process.
In the UK owning your own home is definitely "the dream", but in France, owning your own home is much less of a desirable thing, though it is increasing.
I don't know about the USA, but with current interest rates and the end of the housing boom a couple of years ago, in the UK it's often cheaper to buy than to rent, assuming you can get the deposit together.
Say you take out a $400,000 loan for a $500,000 place (this will buy you a 3BR high-rise condo in downtown Chicago). At today's rates, your mortgage payment will be ~$2,000/month. Your first payment on that house will be $600 principal and $1,400 interest. In a condo, your HOA fee will be maybe $800-1000/month. Depending on your tax bracket, your tax savings will be ~$400/month, which will cancel out your property taxes. So your total cost is $1,400 + $1,000 = $2,400. Market rent for the same 3BR high-rise condo is probably $2,500 to $3,000. Moreover, while your rent will go up 2-5% each year, the interest component of your mortgage payment will actually go down (2-3%/year over the first decade). Finally, when house values appreciate, you'll capture that increase rather than your landlord.
I see how you're doing the math, but I think you're presenting it misleadingly to say your monthly cost is $1400+$1000. First of all you left off the $600 principal; you may recoup that in a sale but you still gotta pony it up every month. Second, your $2000 a month mortgage payment seems low on a $500k home. Talking to realtors and friends that have bought, the rule I've been told to go by is plan $700-$800 per $100k for mortgage and property taxes (not including any HOA). So that means a cost of $3500-4000 PLUS HOA dues every month. Even if you are offsetting $1000 of that with tax benefits, renting for $3k still looks attractive, especially if you factor in the cost of maintenance of a period of 10 years or more. Between two homes I've rented I've not had my rent increased once by a landlord in the past 6 years.
It's not misleading, it's accurate. Your principal payment is money you'll get back on sale (or can borrow from if you need liquidity). It's qualitatively different than interest or a rent payment that you'll never get back.
My number is roughly in line with the $700/100k figure. I'm assuming 20% down, so the loan is for $400k. If your credit is excellent, and you don't live in one of the high-tax areas, $2000 loan payment + $500 taxes is doable.
As for rent increases, I've never not had a rent increase in 8 years of renting in Chicago and Atlanta. It's standard practice in the city.
Well it does matter from a practical sense in that you'll need to write checks for $2500 a month (plus HOA). You may recoup $5000 or so in tax relief at the end of the year, but you still had to come up with that money in the first place (let alone save up $100,000 which is no mean feat, even if you're making a low six figure salary like a lot of professionals in their late 20s/early-mid 30s).
I guess my bottom line with my original comment was, I can think of a lot better uses for the money, time, and effort it takes to buy a $500,000 condo, and to me the returns in my quality of life vastly outweigh any sort of long-term security you might feel from owning a home
Don't forget the cost of improvements and remodeling for a home you own? Home owners will probably need to update at least the bathrooms and kitchens before they sell, which can be an investment of >$20k. Not to mention the costs of repair, which you don't take on in a rental...
My girlfriend and I bought a house together a year after we finished university. We're now married. We found a beautiful 100-year old brick house in a village in the UK an hour from my work, 30 minutes from hers. It's just big enough for the family that we want in the future so we're not planning on moving.
We bought it because we wanted to have our own space to live and raise a family in. Every penny that we pay off is ours in equity. The interest base rate is so insanely low (0.5% in the UK) that we hardly pay any interest on the mortgage. We've worked hard to pay off as much of the mortgage as possible, forgoing holidays for a couple of years, so it's now more ours than the banks. In a decade or two it will be ours entirely. If we rented (and some of the houses in the village can be rented) we would pay twice as much each month and having nothing to show for it after decades.
We're close to two major UK cities, so we are not out in the sticks. We're both young academics, so we are certainly not rich.
As a couple we have a lot of fun decorating, remodelling and maintaining it. The previous owners had windows that weren't in keeping with the style so together we replaced them with hand crafted sash windows. Every summer we spend a glorious weekend having fun painting all the woodwork together.
When we die we will be able to pass on our house and its value to our children. It will be the house they grew up in, in the village they grew up in. They will either be able to sell it to get our life savings, meaning they or their children can buy their dream home, or perhaps they'll build a family in it as well.
Having your own house is about having your own space - your own castle.
From what I can tell, the wage data doesn't capture unemployment and is tied to the place of employment. It includes unemployment benefits, but it doesn't factor in people that are not working and not receiving benefits. So it doesn't really do much to capture the overall economic situation of the people living in the reporting areas.
Wanna really have a laugh (or cry if you're Norwegian)?
Oslo $ 970 / sqft
In Norway you have a 28% tax decuction on interest paid, but it seems more likely to be a case of tulip fever. Still 85% own their own homes in Norway.
I think the author could have chosen better data for this calculation. There are a few unusual factors:
* Why use average income? Why not median family income?
* Why use median $/square foot, and then assume a 2000 square foot house? Why not just rely on median sale price?
I looked up the data for San Francisco, where median family income is $81,136 and median home sale price is $705,000.
Using the same methodology but with these income/price numbers, saving up for the down payment on a home in San Francisco takes ~14.5 years instead of 20.6. I'm not sure how this compares to other cities, but I think it's a bit more reasonable of an estimate of how long it takes to "save up for a house" in San Francisco.
FHA loans require 3.5%, and a typical conventional loan requires 5%. There are also housing programs in some areas that will help with a down payment. For example, the House Charlotte program recently contributed $7500 towards a home for a friend of mine.
20% is only required if you don't want to pay private mortgage insurance.
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[ 1.9 ms ] story [ 145 ms ] threadNYC was way...way better in this respect.
What prevents Caltrain to do better in terms of keeping up with schedule? Also, there must be a way to keep fare reasonably cheaper than cost of driving a car to work.
Me, I live near SOMA so I can stumble home when essentially everything but taxis is shut down.
To give some of you non-aussies an example...
The average price for 2 bedroom victorian era terraces (hundred year old plus buildings) with next to no real land except the land the property sits on in sydney can be anywhere from 800k (AU) to millions of dollars.
Our interest rates are also higher then US.
Meanwhile a friend of mine just south of Newcastle bought a 3 Bedroom house with double garage & front and back yards for just around $400K... It's tempting to just start doing the commute with a difference like that
Now i'm thinking I just need to move to a country that isn't so ridiculous when it comes to living costs.
Outside the city center the prices are roughly half that (so a little more that San Francisco). According to the same data source, average weekly pay is around $1064.
[1] http://www.numbeo.com/cost-of-living/city_result.jsp?country...
You'll see that prices for just about everything are higher in Sydney. Except apples, oranges and tennis court hire.
Salaries are slightly higher in Sydney (according to that site), but not enough to make up for the increase in costs.
Its definitely not a 1 to 1 comparison because of the crazy cost of living here.
Theres also the jump in the amount you get taxed (disregarding additional things we have to pay for such as private health care/medicare levy, superannuation, etc), so even if you were earning say 100k a year, you automatically lose a quarter of it before you ever see any of it.
Most people I know that live in the city do not have a salary that exceeds 50k a year, so all of this plus the cost of housing is leading to several generations of renters instead of home buyers. I dont actually know a single person in the city that has a mortgage, everybody seems to be renting because few people can afford to have a mortgage in the city.
I can only speak from my experiences knowing the people I know, but I know many people from all walks of life, so i doubt my view is that biast.
I pay as much in rent for a 1 bedroom apartment in the sydney than I would with a mortgage for a 3 bedroom home well outside of the city.
Heres another example of how expensive things are here that always makes my blood boil - a bottle of coke is going to cost you 4-6 dollars at your typical convenience store.
When i was last in San Fransisco 4-5 years ago, It cost around a $1.50 including tax.
Buying a house might even be in the near future for one of our founders, and that's only possible at the prices around here.
Slightly unrelated: I'm surprised to see the average weekly wage out in Detroit so high ($1,015), given all the tales of woe you hear about it.
[1] http://www.econtalk.org/archives/2012/08/ohanian_on_the.html
At that kind of rate, I'd rather put my money elsewhere (you can buy great property pretty much anywhere on the planet for those prices..), especially somewhere that can offer a better quality of life.
.. waiting for it to pop .. if it ever will sigh
I spend 90 minutes in a car every day, and while I love my house, my commute, gas cost, lack of public transportation, etc sucks. It also forces everyone to be so insular. No one socializes outside of work because we have to drive forever to get home.
I had a glorious three years where I lived .75 miles from work and it made the town better.
I also did live closer to work but changed jobs.
New York: $275 Los Angles: $236 Chicago: $112 San Francisco: $459 Washington, DC: $164
Housing here is comparable to places like Richmond or Raleigh, except it's got the public infrastructure of a world-class city with 10 million people. Even if you live in the suburbs, you can take the extensive commuter rail system straight to downtown.
It's like buying a brand new car. Sure it's nice and cool looking, but eventually it becomes just a transportation option to get you from point a to point b. Or it could be like that you're going to buy a house with a pool. However, you'll rarely actually use the swimming pool.
It is dangerous in ways you cannot possibly comprehend.
Sweating in a suit is a first world problem. Try riding on a two-wheeled motor vehicle on ice in the presence of traffic.
I'll stick to California, thanks.
So no, it's not a first-world problem to ride a two-wheeled vehicle in bad weather because you can't afford a car.
Try visiting Southeast Asia or India sometime.
Anecdotally, my impression is that lots of people wear suits in both India and Southeast Asia. Maybe even more so than we tend to do in "the West". For lots of people it's not a choice, but a requirement to keep a job.
But your assumptions about my status in being a yuppie like you are noted.
>Anecdotally, my impression is that lots of people wear suits in both India and Southeast Asia.
That wasn't my impression at all. Most people wore nice, cool button-down shirts with slacks.
Well, it's a good thing that most homes are much smaller than 2,000 sq feet in SF. It's also a good thing that if you are buying a house you probably have a 2nd income.
Those two factors alone should reduce time to save to 7 years or less.
Medical science will have to make strides in prolonging life if the average person wishes to ever to buy their own home here.
Average Weekly wage = $860.57 Median Price = ~$700/sqft
* note my experience is based on living primarily in SF and LA, so if you are willing to put up with Middle America I'm sure you can find much better value
Mostly it depends on your circumstances. If you're single and you change jobs relatively often, it doesn't make sense to buy a house. If you have children it's cheaper to buy a house in a good school district than to send your kids to private schools.
I'm genuinely fascinated by this, because it really does seem like American society frowns upon people who don't own a home by a certain age, especially when children are involved, almost as if a backyard is absolutely fundamental to the child-rearing process.
I don't know about the USA, but with current interest rates and the end of the housing boom a couple of years ago, in the UK it's often cheaper to buy than to rent, assuming you can get the deposit together.
My number is roughly in line with the $700/100k figure. I'm assuming 20% down, so the loan is for $400k. If your credit is excellent, and you don't live in one of the high-tax areas, $2000 loan payment + $500 taxes is doable.
As for rent increases, I've never not had a rent increase in 8 years of renting in Chicago and Atlanta. It's standard practice in the city.
I guess my bottom line with my original comment was, I can think of a lot better uses for the money, time, and effort it takes to buy a $500,000 condo, and to me the returns in my quality of life vastly outweigh any sort of long-term security you might feel from owning a home
My girlfriend and I bought a house together a year after we finished university. We're now married. We found a beautiful 100-year old brick house in a village in the UK an hour from my work, 30 minutes from hers. It's just big enough for the family that we want in the future so we're not planning on moving.
We bought it because we wanted to have our own space to live and raise a family in. Every penny that we pay off is ours in equity. The interest base rate is so insanely low (0.5% in the UK) that we hardly pay any interest on the mortgage. We've worked hard to pay off as much of the mortgage as possible, forgoing holidays for a couple of years, so it's now more ours than the banks. In a decade or two it will be ours entirely. If we rented (and some of the houses in the village can be rented) we would pay twice as much each month and having nothing to show for it after decades.
We're close to two major UK cities, so we are not out in the sticks. We're both young academics, so we are certainly not rich.
As a couple we have a lot of fun decorating, remodelling and maintaining it. The previous owners had windows that weren't in keeping with the style so together we replaced them with hand crafted sash windows. Every summer we spend a glorious weekend having fun painting all the woodwork together.
When we die we will be able to pass on our house and its value to our children. It will be the house they grew up in, in the village they grew up in. They will either be able to sell it to get our life savings, meaning they or their children can buy their dream home, or perhaps they'll build a family in it as well.
Having your own house is about having your own space - your own castle.
Buying a home means, paying a bank to live in what will eventually, hopefully, be 'yours' to do as you wish. Such as, rent it out to someone.
Shouldn't it be median household income?
São Paulo $ 969 / sqft
With an average income of $ 783. And the land tax is probably a lot higher, too. Rio is even higher.
Oslo $ 970 / sqft
In Norway you have a 28% tax decuction on interest paid, but it seems more likely to be a case of tulip fever. Still 85% own their own homes in Norway.
* Why use average income? Why not median family income?
* Why use median $/square foot, and then assume a 2000 square foot house? Why not just rely on median sale price?
I looked up the data for San Francisco, where median family income is $81,136 and median home sale price is $705,000.
Using the same methodology but with these income/price numbers, saving up for the down payment on a home in San Francisco takes ~14.5 years instead of 20.6. I'm not sure how this compares to other cities, but I think it's a bit more reasonable of an estimate of how long it takes to "save up for a house" in San Francisco.
20% is only required if you don't want to pay private mortgage insurance.