oh, one more thing. despite fears of a RE market bubble, CA has not experienced it thus far. sure, there's speculation that it will come to our state, but my take on this is that CA continues to grow population-wise & land is limited. land value will continue to grow out of increasing demand in a fixed supply market.

 

 

i sold my car 4 1/2 months ago to get rid of the payment to get a condo (well, actually, I sold it and WANNTED to get an STi at first . That never happened ). Since I am on my own, I can't afford a house in SJ. At least not the ones I want. I ended up with a 2bd, 2bath, 1 car garage at 375k with zero down. It's doable, and I say it's always better now than later. I am only 24, and I was thinking what you are thinking now. Save up 20% or more and buy one when I am 27 or 28. But when I did the math, it's not worth it to do the saving thing.

20% of 400k is 80k
80k/12 months = 6.66 years to save
saved 84k after 7 years
Mean while say a house appreciate 3% a year
492 after 7 years

But 3% is a little low (correct me if I am wrong). I was able to see how much tax my seller was paying. With that I was able to figure out how much she got the place for 8 years ago. The difference was ~162k after 8 years not counting the amount of principal she paid over the 8 years. Let say she paid ~600 towards principal every month. After 8 years it's like $57600. So when so sold the house after 8 years, she got 162+57.6 = ~220k.

can you save 200k (not even 220k) in 8 years? So I said to myself. Yes, it's going to be hard to pay the condo myself. But it'll pay off after few years. Hope this helps!

Leo

 

500/month savings * 12 = $6,000 a year * 20 years = $120,000 that I could be investing and getting a decent return on. (This is not to mention the fact that in 20 years, the homeowner probably had to reroof, re-wire, replumb their house )

I don't know, there is a lot of psychology/human nature behind wanting to own a home. I invest all the cash I'd be spending on a house.

Who knows...I do want a damn garage though.

 

Heck, I'm just praying for earthquakes.

 

Where are you going to live?

 

ASSUMING r=10% compounded annually...

YR| K Const| K| INT| TOTAL
1 6000 $6,000.00 600.00 $6,600.00
2 6000 $6,600.00 1260.00 $13,860.00
3 6000 $13,860.00 1986.00 $21,846.00
4 6000 $21,846.00 2784.60 $30,630.60
5 6000 $30,630.60 3663.06 $40,293.66
6 6000 $40,293.66 4629.37 $50,923.03
7 6000 $50,923.03 5692.30 $62,615.33
8 6000 $62,615.33 6861.53 $75,476.86
9 6000 $75,476.86 8147.69 $89,624.55
10 6000 $89,624.55 9562.45 $105,187.00
11 6000 $105,187.00 11118.70 $122,305.70
12 6000 $122,305.70 12830.57 $141,136.27
13 6000 $141,136.27 14713.63 $161,849.90
14 6000 $161,849.90 16784.99 $184,634.89
15 6000 $184,634.89 19063.49 $209,698.38
16 6000 $209,698.38 21569.84 $237,268.22
17 6000 $237,268.22 24326.82 $267,595.04
18 6000 $267,595.04 27359.50 $300,954.54
19 6000 $300,954.54 30695.45 $337,650.00
20 6000 $337,650.00 34365.00 $378,015.00

the beauty of r compounded!!! by the end of 20years, you will have a sizeable return. this is assuming that you get a year to year growth of 10%, no market downturns, no capital extraction, no employment surprises.

db

 

oh, one more assumption -- the $6k is deposited at the beginning of each and every year -- so that your ROR is 10%. this is just to keep things simple.

anyway, the compounding shown in the #'s just goes to show you how powerful the 401k can be if we put enough into it rather than into our cars.

 

thanks for all of the advice.

time to think about this until my head explodes.

 

Unless the bubble bursts, it is idiocy to wait. My POS beater house in Fremont appreciated 100k in one year. Don't move to bum *** egypt, either. Get a house where you won't have to commute 10 gazillion miles to work. There are parts of the east bay that are dirt cheap and commute friendly, and aren't anything ghetto like EPA.

Again, unless the bubble bursts, you won't regret it.

By the way, don't sell your car. YOU NEED RELIABLE TRANSPORTATION to keep your job.

 

The bubble is popping in LA/Ventura county as we speak.

Two months ago, houses in my parents neighborhood had offers over asking within a week.

Now there are 10 houses just sitting on the market.

The idiocy around here can't last forever.

 

I hope that comes sooner than later.

 

Yep... there is bound to be a correction... but it will undoubtedly hurt the people with the longest commutes the most. I just talked with a realtor this weekend and said there were only 200 or so houses on the market in the bay area. The bay area market will always be stronger than the outlying areas, especially if/when the bubble bursts.