Any prediction on Bay Area Housing costs?
happened last time (2007-2009). some houses doubled at the peak (going from 300K to 750K) then
crashed back down to 350K. other houses continued their steady climb. the stats say that many houses
in the bay area haven't recovered from their high water mark. others have gone way beyond.
I think they will continue climbing but slowly until there's a correction. many keep their high prices
and the rest fall away. has to do with the quality, age, desirability of the house. there are houses
I won't drive-by let alone look at or, horrors, rent/buy - namely any house older than 1972.
I have a very good friend with a tiny house and a big family. he extended his house and
added a second floor. he tripled the footage, using built-in equity as a loan for the
re-construction, and he became his own general contractor.
he farmed out what he couldn't do (concrete pours, additional framing, etc) but he, himself,
did the floors, the walls, the roof, the electricals, the (sunk in, LED, floods, etc) lighting.
not to mention the initial demolition, final paint, etc. he had advice (but not labor) from
his BIL who is a high-end contractor himself. the labor savings, even with occasional
help, was the major savings and it did take longer than normal. you can imagine what
labor costs in the hottest housing market in the US are.
not bad for a high tech marketing guy and he has other God-given skills that I consider
awesome. I told him he has a Plan B in case the silicon valley high tech sector
crashes. my idea of house renovation is replacing burned out lamps.
so yes, housing is just one of many ways to build wealth, and like stocks - can
be tricky in terms of what you pick and when you get in and when you get out.
I, myself, am not comfortable with a single investment (like a house) and I love
the 500K profit exclusion (Thank you President Clinton) for each house -
you can pocket 1 million with NO taxes in about 10 years with two houses.
from personal experience (of others I am friends with) and in my opinion
only in blue states. Relatives in NY tell me the same.
to answer your question directly, look at Apple's new HQ. buy a house nearby
and renovate it like its the holy grail, and your 6 figure tax free retirement
fund all rolled into one. If you think million dollar houses are expensive, the
bay area has just rendered it the price of entry.
interesting but different viewpoints. Rentals are BIG problems in the blue states in the big cities for a different reason
called rent control. if you have ever lived in one of these cities you face (1980s NYC) 300 for rent-controlled
Village Apartment if you find one - not possible if newly transplanted, or 3500 upper east side (singles population).
Seinfeld deals with some of this. there's an entire Underground business with following the obits and pre-bribes
to supers for the former.
second I find it interesting that your parents bought/sold 50 properties in the largest city of a blue state. you indirectly
confirmed my conjecture. I doubt this was doable in a red state like Nebraska or Kansas - even though I love Omaha and Lenexa.
you're probably right about the property laws but the reverse is true. Since Prop 13, California has dumbed down its
educational K-12 system so it battles the bottom 10 states for supremacy. NY on the other hand, again back in the
day, had 3 public high schools in the US top 10. You may even have attended Brooklyn Tech, Stuyvesant, or Bronx HS Science.
if there are population losses, it's from the upper middle classes buying their 6 figure houses in the suburbs. In SF and LA, there
are now Asian RE brokers speaking Mandarin (mainland Chinese), Cantonese (Hong Kong folks), Korean, and Vietnamese.
there are stories of cash offers of 250K over appraisal values. teardown and gound-up McMansions (two and three stories) in the middle
of Los Altos (already million dollar minimums). so net population losses are an independent variable and can be used on
both sides of the revenue tax base advocates. Besides, taxes in different areas go up when revenues in other areas go down.
But to get to my original points, Housing (as in ownership, not rental or speculation (LTD master partnerships or REITs are better))
is, again a good investment, based on my knowledge of friends and family that have done this - and I am not using third party anecdotes
to prove a different point. NYC and SF are my reference points. las Vegas could be the challenging winner and Houston
seems to be on the verge of evilly tripling pre-Harvey house prices.
and I did not have the 20K in the 1960s for that wonderful tenement that sold for 7 figures. so my holy grail is stocks.
it was a China-wide epiphany to look into what a Bitcoin was and how to use that to move
money out of china (they have laws against repatriating money out of china and hundreds
of businesses that help you do so).
Back in 1997 a good friend of mine, with no college degree, asked me to go into business with him. This is one of those friends who comes up with business ideas on the fly and is a wheeler/dealer. The amount was $400, which I didn't have, had a kid on the way, and was joining the military. For some odd reason I had a feeling about this business idea of his, it was opening a wholesale car sale locator (something like that, but there wasn't any examples back then). Years later I was at a dealership shopping around and I saw this friend. He came up, said hi, looked to the sales man I was dealing with and said "I'll take this Subaru WRX (new) for 18.5K. He went, paid, and drove off in 10 minutes.
I later found out his business had exploded to 2 stores and was basically CarMax before CarMax existed. I also found out he lives in a million dollar home in Castle Rock, Colorado with an Olympic size indoor pool. Man doesn't that $400 sound good now!
I don't see Coca-Cola mentioned. We all missed this one. 1919 IPO $40/share is now worth about $345k.
My personal missed opportunity was not getting out soon enough when the tech boom went bust overnight. On the front end I started with $350k I netted from AirTouch employees stock option grants. I paid $200k off the top in taxes. I found a good broker and 2 years later I was at $1.3 on paper. When the shit hit the fan I was at $250k when all was said and done.
The lesson I learned was - don't trust large institutional holders of stocks. They would have a buy rating on a stock right until they dumped it a market close. In the morning the company would be bankrupt, their stock at $0. The next day it wouldn't be listed.
fast and slow closing is somewhat related to whether you need a lawyer (I think you do in NY - and no lawyer needed in CA)
CA used to close houses in about 4 weeks at the fastest. a great broker in Ca tells me the speed is directly
related to government rules.
Chinese limitation on cash is a joke. My friends in HK tell me there's a steady stream of cars going to Macau
with trunks loaded with Chinese cash. How shall I say it, but it's "easier" moving cash through Macau than
HK. and Macau's money is useless outside macau and with macau's larger than Vegas gambling it
is a fat pipe of money being laundered into US/HK dollars.
SF gets more than its fair share of cash offers for houses in the million dollar class - so there are
ways (Hogan's Heroes) to move massive amounts electronically. on this side of the pond
(apologies to the Brits) there are lawyers who help Chinese millionaires get their residence
visas for investing 500K in a new business. they set one up for 6 months, pull the money out and
voila - free residence in the US. and ocassionally use the purchase of a house against the 500K bogey.
I think we agree on most points and differ in degree. your property is probably worth a million bucks.
Back in the day, you would have used a lawyer from Prince st. or Mulberry st. however, no matter
how NYC governments help/screw you, the price of NYC RE is never going down. you may not
have great cash flow but you are still a millionaire, at least on paper.
Probably another reason why I like the liquidity of stocks. with limits set or expiration dates.
you can get out as fast as you want to.
If you had bought Apple stock everytime they came out with a new product, instead of buying that product, you would be sitting on a beach with an umbrella in your drink.
Thinking you have to hit a home run to succeed in investing in stock is what causes this... a successful investment strategy does not require you to hit home runs, nor does it require bravery. It takes a commitment to actually go to the plate NOW and swing the bat and put things in play, and keep doing that. And, doing that consistently - even if all you ever hit is singles - will win the game.
Here's some of Warren Buffet's words of wisdom: http://www.marketwatch.com/story/th...-talked-about-index-fund-investing-2017-04-28
One that hit home for me recently was #2 - the perfect way to get in the game and start hitting singles w/o having to work up your nerve.
John
During the last meltdown, Apple was $99. It went up to $600 and then split 10 to 1. There are lots of others I looked at. I don't really think about it because I am happy where I am at and with what I have.