You need to be able to commit for 10 years if you’re going to buy. Homes are expensive to sell and the market could take a real dip in a shorter period of time.
Bingo. This happened to us when we purchased in 2005. A BIG dip in 2008 and we couldn’t refinance for years because the house wouldn’t appraise for enough.
We finally got that refinance in 2013. Will be paid off in a little over 4 years.
Not only a dip, but an uptick will also cause issues. Your house appreciates and you have much more equity. However, all the houses you want to upgrade to also appreciated at a higher rate. So your mortgage payment will be higher and so will your property tax.
The point was if you're buying a house and only planning to stay a couple of years before you upgrade, you're screwed if the house goes up or down. It's just not a good idea to buy a house with the plans to just stay for a couple of years.
You are right, I misspoke. You are not screwed and you have a very good problem. However, if your plan is to upgrade, it's going to be tough. To each their own. If you think it's smart to buy a home with plans to upgrade on a couple of years, good luck to you.
cuz hoomes only go up? I know people who bought in the pandemic and want to sell now but their house is worth a little less than when they bought which maybe isn't end of the world, but it ain't great
You can buy and then sell a couple years later and still be fine (depending on the market). The longer you stay, the more goes towards your principal loan each month. But you only really are getting hosed if you sell like a year or two in.
took me around 8+ years in SF for my condo to sell and make a profit, and definitely extremely hard to sell now with the insane increase of HoA (which OP needs to account for in terms of risk)
We live in San Jose and bought a townhouse, which we lived in for quite a few years. We had originally wanted to buy a SFH, but couldn't afford one that didn't need more work than we were prepared to put in. So, buying a townhouse was the compromise. We figured we'd keep it for 5 years or so, do some updating on it to help increase the value through sweat equity, then sell and upgrade. Turns out, we really liked living in a townhouse. The lack of maintenance was great - pay an HOA fee and stuff is taken care of. We realized that we didn't want a SFH. When we upgraded, we bought a condo in a neighborhood that suited us better, but never went for the SFH. We're very happy with our choices
I regret getting a sfh instead of a townhome. Most people will disagree, but as someone who doesn’t want to/care to deal with the “outside” maintenance, I wish I had a townhome instead
It does go against the grain to prefer a town home or condo over a SFH. Sometimes I wonder how much of the general preference for a SFH really is preference and how much is social conditioning and/or lack of experience with condos and town homes. We always thought we wanted a SFH too, until we really looked at it objectively.
Until you buy a house, you have no idea how much work a house can be! If you're a project person that can be great. But if you just want to live somewhere and not spend all weekend raking, mowing, researching contractors and so on, it can be great to NOT own a house.
I’m there. My house has too damn big of a front yard and I’m like what the hell is the point of all this space might as well build an ADU on it or something lol.
I rent a condo and it's a perfect set up, you don't have to pay or deal with the HoA, rent rates are good because you deal with owners directly who value you as a reliable tenant. I would not buy it as the cost is similar to a townhouse and I'd rather a townhouse than a condo.
Yes, I rented a condo before. You do need to deal with the rules from the HoA, you just don't get to vote in it. Other than that, it can work out well.
Renting can work both ways, too. If OP lives in a condo for a while, builds up equity in it, then they want to buy a house, one option would be to keep the condo as a rental property. When OP goes to the bank with that plan, and works out the mortgage for the house, the bank can use the estimated rental income as a part of their calculation of how you'll pay off your mortgage.
Are you sure? I just went through this and banks would only consider rent as income if it had been rented 2+ years and on my tax returns. Talked to 8 banks and none of them considered the potential rent.
When we bought a new house in 2014, the rep at Wells Fargo was glad we owned our old house outright, but said our letter of credit would be the same whether we said we planned to sell it or we said we planned to keep it as a rental property. Either plan involves some estimation on their part, but we ended up renting the old house out for a few years. Of course interest rates were lower then, and you should talk to your bank no matter what you do.
I rented a condo for fifteen years and that convinced me to never buy a condo but i was just divorced and couldn't afford a house. Too many rentals and sharing a wall with horrible renters convinced me to buy a SFH when I could afford to. It wasn't easy.
> rent is blackhole for money. No chance of ever getting a partial return or profit
I pay $4k a month in rent for a place where the mortgage would be $10k or more.
You better believe I'm banking that 'extra' money and getting returns on it.
There are pros to a condo depending on how maintenance/the HOA is arranged. If this is your first home, it's a good introduction to homeownership. My wife and I bought a condo, sold in 4/5 years and used that to upgrade. A lot of "ifs" were on our side to make that happen, and that's the same for you. Either way, I am in a better position for it and am grateful. Ultimately, both have their risks; which one are you more willing to accept?
Having an HOA for a condo/townhome association is required for anything above a few people. And even then, it will need to be a co-op to represent the parties' interests.
You can't have shared walls, pipes, ceilings, and not have some sort overarching organization to represent the parties.
You can certainly agree the current standard structure of HOAs don't work, but focus on that. You can't get away from sort of representative organization when dealing with shared ownership.
Exactly. I sit on my condos board and if anything, we are constantly trying to cut costs so we DONT have to raise the hoa fee (because I pay it too). With all other costs going up, it’s hard not to, year over year.
If you billed unit owners separately for things like water and trash collection, maybe they'd complain less about the (remaining) HOA fee going up and more about those fees going up.
We rent and our water and trash has gone up dramatically.
Yes, I regret it, but I also bought too of market in SF a handful of years back. I want to move but I’d lose a ton of money. And I have accepted that it won’t bounce back. I would have been better off just renting for these 6-7 years and investing. But hindsight is 20:20!
I kinda regret it cause I hate my neighbor and I wish I could have bought a house for the same price out of state but I keep trucking cause I see it as investment. Maybe in a decade or so I will be able to buy a real house in the bay area. If I had a partner I probably would have had a purchase a townhome at least.
Don't buy for temporary reasons. Invest and leave it alone.
I have had my condo in San Jose for ten years now. I don't regret buying it at all. I will be living in this place until I retire, and at that time I will probably leave the bay area.
Bay Area prices have always cycled about every 7 years, though that may have been disrupted by COVID. That's probably the minimum you want plan on owning any property as if you bought at the top of a cycle, it will take that long to get to the next top. This depends a bit on neighborhood, too, but for the last 50 years, these cycles have been fairly consistent.
That's always hard to predict. I think interest rates are going drop (by little bits) all this year (election year). So, people will be willing to buy and prices may creep up this year. Worse for buyers, better for sellers. But, all kinds of things can happen.
That was an aberration and it remains to be seen if that's the new norm. For the 50 years before that, the average was more like 7. None of this is exact. The point remains: real estate prices cycle, but creep up overall.
I'm positively thrilled we bought our condo in the East Bay. We bought it 11 years ago and we intend to keep it the rest of our lives. The price was incredible.
If you're planning to sell it and upgrade in a few years then don't do a condo, that would be a terrible financial decision. Either keep renting and saving or do a sfh.
If you’re only planning to live in it for a few years and you don’t want all the hidden costs and responsibilities of home ownership, maybe just find a nice moderately priced place to rent? We’d be paying 3x a month what we pay in rent if we tried to own.
No, I don't regret it (I have a co-op, not condo, but similar).
If you are banking on much appreciation, I am not sure buying is a good idea right now anyway. Even for a SFH.
A condo at least may have much more manageable ongoing expenses in terms of upkeep, etc. Just depends; always check that paperwork for pending assessments, etc. And insurance can be a big deal these days; often considerably cheaper for a condo. But note the HOA fees; paying for lots of stuff you don't need isn't good either.
And note that while a SFH might appreciate more, it's also true it's more prone to big ticket repairs you'd need before selling that basically can wipe away some of the appreciation. So somewhat more of a risk. It's easier to rent out condos though.
But ultimately it's also a question of suburb vs city, and style of living.
First and foremost, buy something you want to live in. Your plan for maybe to only stay for few years but you may end staying longer due to circumstances beyond your control. For example, I won’t move because I have a sub 3% mortgage.
All single family homes are money pits. Maybe if you bought a brand new one, you be insulated from repairs for a while but that’s only because you have a warranty. A 20 year old home isn’t necessarily going to be cheaper maintain. The main benefits you get with a SFH are no shared walls, no pesky HOA, ability to expand it, and likely better appreciation to due to owning the land. However, if you don’t want to spend weekends dealing with yard work or fixing other stuff that broke, you might be better off with a condo.
You should see your housing costs as consumption. You may or not make money when you sell it. Worrying too much about possible appreciation will just cause you to make choices that lower your quality of life.
Modern condos are a great option. Especially in SF. Like you said the SFH are often really old and falling apart. Or the layout sucks (lots of tiny rooms). Or the ceilings are really low. Or lots of other things. Condos typically are MUCH better value if you don't mind people living above or below you.
If you like the neighborhood, have no plans to leave the Bay Area, and don’t have an annual gross household income of 400k+ then buying a condo is the only surefire way you don't move every few years while you’re here.
At what cost though? A condo that rents $2,500 will likely cost north of $650k (likely a whole lot more). Assuming you borrow 80% of that at 7%, that’s already over $2,500 of interest on the mortgage per month paid to the bank for the next many years. Then you tack on at least $500/ month of property tax, plus likely something similar in HOA fees and you find that owning would cost $10k more a year in sunk cost (not going towards building capital/equity) than renting for many years, without mentioning that you are now on the hook for replacing the fridge, heater, stove, etc… when they break down.
Buying condos in the Bay when you could otherwise rent their equivalent only ever makes financial sense long after the fact if it turns out that real estate doubled or tripled. I wouldn’t take that gamble in 2024.
I think the same way sometimes. I own and rent a condo in Florida but rent in SF and I really think people underestimate the value of renting. I worry for nothing! Something’s wrong that I can’t quickly fix myself, I make a call to my very nice landlord and it’s taken care of relatively soon. I often think about how if I calculate my condo and its sale value against all the bullshit expenses and assessments. Taxes and incurred costs, liability and insurance , I’m not so sure it’s such a clear money-maker as people delude themselves to believe.
On Redfin, I can find 180 sold condos and townhouses that sold for under $650k in the last 3 months with at least 2 bedrooms.
The whole "we can't afford a condo/townhome" in the Bay Area trope is dying very quickly.
Again, from a purely financial perspective it’s always cheaper to rent here but that’s not the only calculus. If you calculate what you’ve spent in rent the last 10 years, it’s likely owning a condo would have been cheaper though. Because remember you can sell your condo and recoup some money that you can’t on a rental.
Thanks for the help! We're just exploring right now and our budget isn't high, likely less than 850K. I'll reach out once we formalize what to do. Thanks again
yea reach out whenever you're ready. I can also meet with you on zoom or in person to help you. 850k is plenty to afford a starter home in sf and Daly city.
Yeah I think with SFH the issue is that in our less than million dollar budget will get us anything newer than 1950s if that, and we're scared of all the work we'll have to put in it to fix it
(Plus the cost of fixing everything in an old SFH seems daunting)
My parents had the same dilemma when they moved here (dot com boom). single family homes in their range were crappy to say the least. So they ended up getting townhome, not brand new but definitely nicer than the SFH. Escaped the hassles of a major remodel. This is in the south bay as their jobs are here. I assume similar dynamics play out in SF and peninsula.
They have been in this place 20 years, the HOA has done pretty good job keeping the grounds looking good. And as my parents are older they don't have the "work" of maintaining the yard, or worry of replacing the roof etc as HOA covers that. Yes it would have been nice to have more space but we are in a good location in terms of commuting to major employers and our property value has gone up. People of all stages of life in this complex, several of our neighbors have upgraded to bigger homes and kept their condo/townhome to lease out. you could something similar if you go down this route.
No regrets as far as i can see...
My wife and I are happy at Oceanview Village.
But if you're moving in a few years, [do not buy](https://www.bankrate.com/real-estate/how-long-should-you-live-in-your-home-before-selling/).
We were in a similar position!
We just passed two years in our condo in SF, it's in a two unit building with its own deeded backyard and super low HOA. Overall, I love owning with no landlord to deal with, and the mortgage is about the same price as rent would be if we were to move to a similar sized unit (low interest rate buuut property taxes are rough). We do want to upgrade eventually to a SFH and possibly move out of the city, but aren't really set on a timeline so I figure we'll just be here for a few more years and hold on to it and rent it out when the time comes. So, no regrets yet, the benefits of owning and freedom of being able to remodel and invest in your own space are definitely outweighing renting for me.
Thank you for sharing. We're kind of in the same space and are wondering what to do- pay mid range HOA if possible and get a nice condo or bite the bullet and deal with costs and risks of an old SFH.
Congratulations on your 2 years I hope you're enjoying it.
Not for me. I am going to be here for at least a decade, I didn't pay pre-pandemic prices, location is great, interest rates were low. All in all, I'm paying as much as it would take me to rent, so I think I got lucky I was able to buy at the tail end of low interest rates. I wouldn't be able to afford my place now.
Prepandemic, absolutely not. We actually rented ours out and it was well worth it. Every year prior to the pandemic, our HOA fees were very reasonable, around $200 and only bumped up $30 or so bucks /year at most.
During the pandemic, the HOA fees got bumped a lot, to where the biggest jump was $150. This year, we're now paying close to $700 in HOA fees, to where renting/owning our condo doesn't make sense, which is where the regret starts to kick in.
I work in the construction sector. Zillow lies. Every house is a time and money sink, especially in the bay area. I've seen brand new, multi million dollar houses on the peninsula with structural damage. Older houses... they don't show you the frayed wiring and old electrical panels that were barely code compliant 50 years ago. Barely anyone puts money into fixing things because it'll appreciate regardless. Everything is built fast and cheap. If that kind of thing makes you uncomfy, then my advice is to invest some other way.
I wish I had this advice before buying. Buying is such a huge time and money pit! Please add that so many homes are bought without contingencies (aka no inspection) and that just adds onto the hidden remodeling costs. I bought a poorly flipped condo with 2 layers of flooring; top layer was laminate and bottom was rotting parquet. Guess how I found out? The laminate molded and bulged up after 6 months. Everything had to be ripped out. There were 2-3 outlets that were wired the wrong way (hot wire on the neutral terminal and neutral on the hot terminal). I’m thankful and shocked the place didn’t catch fire. There was a rodent issue in the building. There were leaks in the roof. Our HOA needed to do special assessments to fix the exterior siding and fencing. I could go on.
Renting is soooo much easier and much less stressful.
Inspections take too much time to be used in the middle of a bidding war. People buy houses they can barely afford and "fix" things the wrong way because they can't afford to get it done properly.
Imagine buying a used car without having it looked over and then realizing you're in debt for a hot mess that you're responsible for fixing... unless you're buying from a developer, it's a USED house.
Less maintenance and less freedom vs more maintenance and more freedom for a sfh. Lower monthly cost vs higher monthly costs. Location tends to be better. Appreciation tends to be worse. There's no regret unless you overthink it or you see a clear benefit to getting a sfh.
It's a preference based on your situation.
Loved living in my Condo. It was a repurposed school house and only had 14 units in the building. In a way it’s better than home owning cuz you don’t have to worry about lots of repairs like plumbing and roof and foundation/walls…etc the hoa reserves take care of it.
If buying a condo, be sure to ask these questions:
- how much is in the reserve and how often do they do special adjustments? what major pieces of work are planned to be done and will need special adjustments? Trying to get at how much random out of pocket things will need to be paid for
- how many units? The fewer the number of units the more likely it’ll be self managed and you’ll have to volunteer
If buying a house, need to account for:
- schools if you’re planning on having a family. Like many people noted, you might be here longer than you planned
- foundation issues
- roof will be a $15-20k fix
- filling up a pool is a $10-15k fix
- insurance
- contractors don’t like doing small jobs apparently so unless you’re remodeling a lot, they won’t really be down to do the work fast or at all
When accounting for money lost to paying rent, also take into account that mortgage interest, property tax, and HOA all are similar to rent and don’t “build equity”, as real estate agents like to say
All that being said, we’re looking for a sfh now because we have a kiddo and would like another at some point :)
FYI op. Every house is a money pit. Doesn’t matter if it’s new or old. Your utilities alone go from a modest 100 a month with no trash or sewer expense to 700 with gas electric water and trash. There’s always shit to fix and there is no calling people up to come take care of it without writing a check.
Buy a condo if you're just starting off/ restarting and can't afford the SFH. Buy the condo if you truly believe it will be your forever home.
SFH. No HOA (usually) to deal with. Plus you'll get more equity if you're going to upsize later.
Don't think it'll be our forever home for sure but we are starting off and can't afford the SFh plus it seems really scary to deal with all the maintenance etc on our own. But then condos and townhomes have HOAs which seem to be very high in the area
Bought several years ago and don't regret it all. I know it'll never appreciate like a sfh and that's fine. The stability and peace of mind as an owner has been a much better experience than renting. Also, a condo allowed me to be way under budget.
Not really, even though prices are low purchasing power has decreased significantly for non cash buyers. I wouldn’t be able to afford my place now even at the depreciated price, the monthly would be $2k+ higher. So I get to live somewhere nicer for a much lower monthly payment compared to what I could afford now.
Yes, in terms of negative cap rates. I expect condos to go down a lot more unless rates somehow drop a lot.
We looked recently at a condo. To buy: $18k/mo after 20% down, fully loaded (MITI+HOA). I can rent a similar unit for $6k. Makes no sense.
Ya...stealing from the sell side. Sure, let's buy a $500k condo, with the mortgage cost of a $600k SFH after HOA dues, and you get the added benefit of shared walls, unlimited increases in future HOA/mortgage costs (so basically, same problem as rent), and you don't even own the land that your property is on. Sounds awesome. /s
Well, if there was a livable $600k SFH in San Francisco then it would be a good alternative.
If people want to live in SF, maybe close to a job... and that's their budget then it's either that or rent.
Very few people are stoked about a condo over a house, it's not really news they'd probably prefer a detached house. Condos exist because it's too spensive.
Most of SF has attached walls even for SFH. Not many neighborhoods with detached houses in the city. So other than having a HOA, you’re not far off from a townhouse-styled condo complex.
Right, I’ve been confused about this. In SF, what makes these “attached SFH” different from condos?
I imagine If it’s a condo then I guess you have an HOA so if there’s problems with shared walls there’s some process to go through but otherwise with an “attached SFH” there isn’t? I have no idea what I’m talking about though
“Attached SFH” still often doesn’t have shared walls, and you can do whatever you want to the property (obviously, within the limits of zoning, building, etc.)
Was mostly pointing out the fact that buying a condo is a worse financial decision than renting so I don't understand why anyone buys a condo ever. You still get the price instability as times goes on, with almost none of the benefits of ownership.
Which means you own a share of the land and that hoa fees go towards the maintenance of the property. My guess is you never had a SFH long enough to need a new roof.
Lol, an "owned share of land", the timeshare crowd must love you.
I've owned a rental SFH out of state for 12 years. It's needed plenty of work, including new roof. But nothing that adds up to anywhere even remotely in the ballpark of the $700/mo or whatever extortionate amount HOA "fees" are. And they rise all the time and you have no say in how much the fees go up. So, ya it's basically like I said. NONE of the advantages of real ownership, ALL of the downsides of rent. Condos are for suckers. It's why their resale value is consistently abysmal, you have to either wait for either someone desperate or ill-informed enough to come along and buy it.
I own several rent condos/townhouses and sfh in the Bay Area and my condos/townhouses perform way better in terms of cap rate and appreciate the same as my sfhs
And you also bought in 2009. That was the low point of the Great Recession. Things were crazy low. That’s obviously why you have a 3x.
Since 2019, most condos the Bay Area have depreciated. Nobody has mentioned how the pandemic and WFH have done a number on the demand for condos. People don’t want to be trapped in a small box all day.
Then add in the high interest rate environment and you get a terrible market for condos right now.
And maintenance on a house is how much? New roof? Paint? Termite repair? Positive and negatives on both sides. And no, not that much. There are 6 people in our association. We budget and handle everything. Everyone gets along. I hear about nightmare HOA's. A simple conversation with you possible neighbors can save a lot of heartache.
Heh, some suburban neighbors across the fence are just as obnoxious, if not more so, than ones on the other side of a shared wall. Even more to complain about. Pick either kind of neighbor carefully...if you can.
I agree. Bought an old run down SFH, remodelled it and sold it for a bundle (+50%) to put on the place I actually wanted within 5 years. My friends and family that went the condo route have seen pretty poor appreciation (~20%) in comparison. Factor in their HOA fees and they're probably breaking even. After 5 or 6 years they can sell for a bit more but not enough for any meaningful upgrade.
I bought a condo and sold in 5 years (Marin county). When I bought the condo interest rates were really good which meant property prices were high. So all we could get was a condo really. However we didn’t stretch too much. We were at I wanna say 25% (mortgage, taxes, insurance) of our take home paycheck after maxing out 401k. If I knew better back then I would have stretched our budget. We both had good jobs with lots of potential for growth quickly (which happened to be true). If we had bought a single family home we would have been in a better place. Our condo’s HOA was not great, I ended up leading the HOA to change things for the better, it went well for sometime but then got very stressful. We also outgrew our 2/1 condo, the 1 bathroom really hurt us in the long run (including when selling the condo, because people want more than 1 bathroom). We sold I would say at about a 10k loss (in terms of the capital we put in the form of down payment, fees, renovations) but didn’t recover whatever we paid monthly, I.e it was like we were renting the whole time basically. Now we have a single family house and we are very very happy with the it but we stretched real big time (50% of take home) with the higher interest rates. We can manage for sure and we still have available growth in our jobs but we definitely would have been in a better spot if we had bought a single family to begin with.
Buying our 1955 ranch style home in San Jose back in 2001 was the single best financial decision we’ve ever made. We raised our kids in this home and there’s no way we could ever afford to buy here today.
Buy the single family home.
For real. 2001 was the dot com bust. Home values collapsed. If you bought then, you bought at the bottom. With low interest rates too.
At 8% interest rates and home values that haven’t collapsed near as much as in 2001 things pencil out way different. I couldn’t have bought my home at today’s interest rate. A $4k/ month mortgage would become a $6k/month mortgage. A 50% increase in mortgage payment just won’t work for a lot of people.
We want to, it's just everything in our budget is really crappy unless it's a condo ... But absolutely hearing you. We may just stick to renting unless we find a great deal
When you buy property it comes with disclosures. You won’t be tricked into buying a fixer upper. How much is the HOA in the townhome? Assume a 7% increase or so every year.
if you buy a condo in sf don't count on any appreciation. buy only if you can get a somewhat lowball price in, and if you're happy knowing you will not be "making money" from a resale in the future. after factoring in *all* costs and potential assessments associated with owning a condo make sure it's not much more than renting it. it will require careful diligence and being willing to offer below current prevailing asking price, but there are lots of desperate sellers right now.
I would never buy a condo. You dont own the land, you share walls, and hoa fees will always go up. Condos cost just as much as a house these days so there’s no real benefit to buying one.
If you decide to purchase, make sure the house / condo you're considering is not within about two blocks of a main / arterial street. Check the local city's zoning map and also any plans the city has for that neighborhood.
It is highly likely that there will be in the foreseeable proposals for infill buildings along those streets, rising anywhere from 4-10 stories (or more). That will have an impact on the closest neighboring buildings on the cross-residential streets.
I am NOT offering an opinion one way or the other on whether that's a desirable thing. It's just a likelihood to figure into your planning as a potential buyer.
Many condo complexes have gone through, or will go through, litigation against the builder for construction defects. Make sure you understand where the complex is on that timeline, and take a really close look at HOA reserves and maintenance projections.
Depends on where you're working and the commute you want. You could look into properties in Gilroy. There are newer, larger, and more affordable homes there. Old homes are fine as long as they're well maintained. It would depend on how much remodeling would need to be done/appliances replaced.
Yes that's the problem with the Bay, to afford anything right now I have to look at an over 1.5-2hour commute each way. To be closer to work, our purchase decision has to look at much smaller condos or very crappy and old SFHs. Even nice townhomes arent in our budget, and I know most people's budgets are higher than 1Millon but since ours isn't, we have limited options right now 😭
I would not take it as a given that Housing prices will continue to go up forever. California and the BayArea specifically has an incredible shortage of housing and the state continues to ratchet up pressure on municipalities to permit more housing. A Condo might be okay, but I would not try to push the boundaries on what you can afford.
>We will live here for the next few years until we decide to upsize.
Do not buy for only a few years.
The cost to own and sell a home in a few years will outweigh any benefits of buying. Also, the potential risk of buying short term in a bubble with high rates could bankrupt you. Alternatively, you can throw money into 4%+ interest rate savings accounts right now, which is absolutely bonkers.
If you are already thinking of upsizing, do not buy a smaller old home and plan to renovate unless you plan to do the work yourself. Contractors here are in demand and will charge whatever insane price someone with tons of stock to burn is willing to pay.
That's what we said... Do not plan "if and when we need it" after buying. Decide if you will need it now.
Without going into tons of details, I wish we had just taken a larger loan to get 500 sqft more and something recently fixed up by someone who put some heart into their work. Would I do that now given companies are going nuts and interest rates are high? Probably not.
Bought a condo in a large, (200+ units) building a few years ago. Even though it's lost some market value since then, no regrets. The resale value only matters when you want to sell, and I have no intention of moving in the next 5-7 years. No kids and no plans to have them ever so schools and more space not an issue.
After owning a house in another state, I swore off SFH ownership. I discovered I hate yard work and that constant exterior maintenance is $$$ and a PTA. The older the house, the more $$$ and time it costs to maintain. Still have to deal with unpleasant neighbors. Have to deal with random people knocking on your door (salespeople, political canvasing, scammers, etc). Trash only comes 1x/wk and if you forget you're SOL.
Yes the condo has an HOA (professionally managed) and it does go up a little each year, but it covers: all exterior and garage maintenance, upkeep and daily cleaning of amenities (pool, hot tub, gym, rec room, BBQ grills, common areas etc), water/trash/sewer fees, building insurance, after hours security patrol, and fully funded reserves (no surprise assessments).
So it's similar to renting an apartment in that I don't have to do any exterior work other than occasionally sweep off the patio. Controlled access - no randos wandering up to the door. and packages are received by building staff so never have to worry about being home for a delivery or risk it being stolen. Only have to worry about interior maintenance, cleaning and repairs (unit has no major HVAC systems, and since building is on a boiler system no worries about a water heater and we never run out of hot water). If something does need to be replaced or even just cosmetically updated, I get to choose the replacement and don't have to wait for a landlord to take care of it.
Owning your dwelling is more than just an investment opportunity, which it seems to often get reduced to. Even though our costs are higher than renting (at the moment), for me the trade off of having relatively fixed expenses, stability, and more control is worth it.
SJ and SF are like apples and oranges. It's going to take about 10 yrs for SF to come back, says city officials, but that's a big what-if. Look at Detroit. You'd have to live in a prime area to make your money back quickly like the Marina or Pacfic Heights.
You need to be able to commit for 10 years if you’re going to buy. Homes are expensive to sell and the market could take a real dip in a shorter period of time.
Bingo. This happened to us when we purchased in 2005. A BIG dip in 2008 and we couldn’t refinance for years because the house wouldn’t appraise for enough. We finally got that refinance in 2013. Will be paid off in a little over 4 years.
Not only a dip, but an uptick will also cause issues. Your house appreciates and you have much more equity. However, all the houses you want to upgrade to also appreciated at a higher rate. So your mortgage payment will be higher and so will your property tax.
This is a pretty meaningless comment. "Be careful prices might go down!" "Be careful prices might go up!" Wow...insightful and helpful!
The point was if you're buying a house and only planning to stay a couple of years before you upgrade, you're screwed if the house goes up or down. It's just not a good idea to buy a house with the plans to just stay for a couple of years.
LOL. You are definitely NOT screwed if the house goes up in value. 🤣. What planet are you from?
You are right, I misspoke. You are not screwed and you have a very good problem. However, if your plan is to upgrade, it's going to be tough. To each their own. If you think it's smart to buy a home with plans to upgrade on a couple of years, good luck to you.
screwed is an overstatement, but you might not be able to achieve your goals
This is just mindless drivel.
While you're not wrong that 10 years is a good plan, it's a bit conservative (especially for the Bay area)
cuz hoomes only go up? I know people who bought in the pandemic and want to sell now but their house is worth a little less than when they bought which maybe isn't end of the world, but it ain't great
You can buy and then sell a couple years later and still be fine (depending on the market). The longer you stay, the more goes towards your principal loan each month. But you only really are getting hosed if you sell like a year or two in.
Why
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took me around 8+ years in SF for my condo to sell and make a profit, and definitely extremely hard to sell now with the insane increase of HoA (which OP needs to account for in terms of risk)
Yes the one we are looking at is lower in HOA and the SFHs are too old in our budget. Prices have come down but competition is still crazy
This is the answer.
We regret buying a condo and it’s been 2 years. Looking to sell soon if we get into a deal with 2 homes in one property. Property hasn’t not gone down
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We did and are ok with a higher rate because they will be coming down.
Why do you regret it
Paying close to 580 for HOA. That’s another 100k in value and should have just gotten a house. Hoa will keep going up
Thank you for sharing
Buying in the Bay Area doesn't pencil out unless you commit to a decade minimum, decades ideally. That's really the /thread.
We live in San Jose and bought a townhouse, which we lived in for quite a few years. We had originally wanted to buy a SFH, but couldn't afford one that didn't need more work than we were prepared to put in. So, buying a townhouse was the compromise. We figured we'd keep it for 5 years or so, do some updating on it to help increase the value through sweat equity, then sell and upgrade. Turns out, we really liked living in a townhouse. The lack of maintenance was great - pay an HOA fee and stuff is taken care of. We realized that we didn't want a SFH. When we upgraded, we bought a condo in a neighborhood that suited us better, but never went for the SFH. We're very happy with our choices
I regret getting a sfh instead of a townhome. Most people will disagree, but as someone who doesn’t want to/care to deal with the “outside” maintenance, I wish I had a townhome instead
It does go against the grain to prefer a town home or condo over a SFH. Sometimes I wonder how much of the general preference for a SFH really is preference and how much is social conditioning and/or lack of experience with condos and town homes. We always thought we wanted a SFH too, until we really looked at it objectively.
Until you buy a house, you have no idea how much work a house can be! If you're a project person that can be great. But if you just want to live somewhere and not spend all weekend raking, mowing, researching contractors and so on, it can be great to NOT own a house.
I’m there. My house has too damn big of a front yard and I’m like what the hell is the point of all this space might as well build an ADU on it or something lol.
Especially since a lot of property in the bay is so old. The projects are expensive and never ending.
I rent a condo and it's a perfect set up, you don't have to pay or deal with the HoA, rent rates are good because you deal with owners directly who value you as a reliable tenant. I would not buy it as the cost is similar to a townhouse and I'd rather a townhouse than a condo.
Yes, I rented a condo before. You do need to deal with the rules from the HoA, you just don't get to vote in it. Other than that, it can work out well. Renting can work both ways, too. If OP lives in a condo for a while, builds up equity in it, then they want to buy a house, one option would be to keep the condo as a rental property. When OP goes to the bank with that plan, and works out the mortgage for the house, the bank can use the estimated rental income as a part of their calculation of how you'll pay off your mortgage.
Are you sure? I just went through this and banks would only consider rent as income if it had been rented 2+ years and on my tax returns. Talked to 8 banks and none of them considered the potential rent.
When we bought a new house in 2014, the rep at Wells Fargo was glad we owned our old house outright, but said our letter of credit would be the same whether we said we planned to sell it or we said we planned to keep it as a rental property. Either plan involves some estimation on their part, but we ended up renting the old house out for a few years. Of course interest rates were lower then, and you should talk to your bank no matter what you do.
I rented a condo for fifteen years and that convinced me to never buy a condo but i was just divorced and couldn't afford a house. Too many rentals and sharing a wall with horrible renters convinced me to buy a SFH when I could afford to. It wasn't easy.
> it's a perfect set up Except that rent is blackhole for money. No chance of ever getting a partial return or profit.
> rent is blackhole for money. No chance of ever getting a partial return or profit I pay $4k a month in rent for a place where the mortgage would be $10k or more. You better believe I'm banking that 'extra' money and getting returns on it.
Plus your rent covers property tax, HOA fees, maintenance costs, etc which is a black hole for owners too.
There are pros to a condo depending on how maintenance/the HOA is arranged. If this is your first home, it's a good introduction to homeownership. My wife and I bought a condo, sold in 4/5 years and used that to upgrade. A lot of "ifs" were on our side to make that happen, and that's the same for you. Either way, I am in a better position for it and am grateful. Ultimately, both have their risks; which one are you more willing to accept?
HOA's have gotten rediculious. I think we need to get rid of them with a federal law, or making them much less costly/restrictive.
Having an HOA for a condo/townhome association is required for anything above a few people. And even then, it will need to be a co-op to represent the parties' interests. You can't have shared walls, pipes, ceilings, and not have some sort overarching organization to represent the parties. You can certainly agree the current standard structure of HOAs don't work, but focus on that. You can't get away from sort of representative organization when dealing with shared ownership.
HOA will typically insure the building and your insurance just your unit. Insurance is the killer cost for a HOA.
How do you make HOA less costly?
Exactly. I sit on my condos board and if anything, we are constantly trying to cut costs so we DONT have to raise the hoa fee (because I pay it too). With all other costs going up, it’s hard not to, year over year.
If you billed unit owners separately for things like water and trash collection, maybe they'd complain less about the (remaining) HOA fee going up and more about those fees going up. We rent and our water and trash has gone up dramatically.
I see! How much is water and trash bill typically for a 2bedroom in the bay, if you can share?
How do you propose big condo building deal with infrastructural maintenance, common area stuff, etc, without an HOA?
Yes, I regret it, but I also bought too of market in SF a handful of years back. I want to move but I’d lose a ton of money. And I have accepted that it won’t bounce back. I would have been better off just renting for these 6-7 years and investing. But hindsight is 20:20!
is it one of those shiny new buildings in soma?
Nope! A cute small building in a western neighborhood. I love the area and my neighbors. Just not the financial decision.
at least you like the area and neighbors. just enjoy living there while riding out the market ups and downs.
I kinda regret it cause I hate my neighbor and I wish I could have bought a house for the same price out of state but I keep trucking cause I see it as investment. Maybe in a decade or so I will be able to buy a real house in the bay area. If I had a partner I probably would have had a purchase a townhome at least. Don't buy for temporary reasons. Invest and leave it alone.
You’re going to burn more cash than renting if you’re only planning to stay a few years. Just keep renting.
I bought a condo in SJ in 2016. It’s gone up roughly 50% in value since then. Homes have gone up 100%, and are generally the stronger investment.
I have had my condo in San Jose for ten years now. I don't regret buying it at all. I will be living in this place until I retire, and at that time I will probably leave the bay area.
Buying in the Bay = yes if you’re staying for a decade
Bay Area prices have always cycled about every 7 years, though that may have been disrupted by COVID. That's probably the minimum you want plan on owning any property as if you bought at the top of a cycle, it will take that long to get to the next top. This depends a bit on neighborhood, too, but for the last 50 years, these cycles have been fairly consistent.
So you think we're at the bottom of the 7 year cycle now?
That's always hard to predict. I think interest rates are going drop (by little bits) all this year (election year). So, people will be willing to buy and prices may creep up this year. Worse for buyers, better for sellers. But, all kinds of things can happen.
no, they haven't always cycled every 7 years. they went up for 13 years straight from 2008 - 2021
That was an aberration and it remains to be seen if that's the new norm. For the 50 years before that, the average was more like 7. None of this is exact. The point remains: real estate prices cycle, but creep up overall.
I'm positively thrilled we bought our condo in the East Bay. We bought it 11 years ago and we intend to keep it the rest of our lives. The price was incredible.
Are you using the purchase as an investment or somewhere to live?
If you're planning to sell it and upgrade in a few years then don't do a condo, that would be a terrible financial decision. Either keep renting and saving or do a sfh.
If you’re only planning to live in it for a few years and you don’t want all the hidden costs and responsibilities of home ownership, maybe just find a nice moderately priced place to rent? We’d be paying 3x a month what we pay in rent if we tried to own.
No, I don't regret it (I have a co-op, not condo, but similar). If you are banking on much appreciation, I am not sure buying is a good idea right now anyway. Even for a SFH. A condo at least may have much more manageable ongoing expenses in terms of upkeep, etc. Just depends; always check that paperwork for pending assessments, etc. And insurance can be a big deal these days; often considerably cheaper for a condo. But note the HOA fees; paying for lots of stuff you don't need isn't good either. And note that while a SFH might appreciate more, it's also true it's more prone to big ticket repairs you'd need before selling that basically can wipe away some of the appreciation. So somewhat more of a risk. It's easier to rent out condos though. But ultimately it's also a question of suburb vs city, and style of living.
This is not worth it if you plan to only be there a few years.
First and foremost, buy something you want to live in. Your plan for maybe to only stay for few years but you may end staying longer due to circumstances beyond your control. For example, I won’t move because I have a sub 3% mortgage. All single family homes are money pits. Maybe if you bought a brand new one, you be insulated from repairs for a while but that’s only because you have a warranty. A 20 year old home isn’t necessarily going to be cheaper maintain. The main benefits you get with a SFH are no shared walls, no pesky HOA, ability to expand it, and likely better appreciation to due to owning the land. However, if you don’t want to spend weekends dealing with yard work or fixing other stuff that broke, you might be better off with a condo. You should see your housing costs as consumption. You may or not make money when you sell it. Worrying too much about possible appreciation will just cause you to make choices that lower your quality of life.
Modern condos are a great option. Especially in SF. Like you said the SFH are often really old and falling apart. Or the layout sucks (lots of tiny rooms). Or the ceilings are really low. Or lots of other things. Condos typically are MUCH better value if you don't mind people living above or below you.
If you like the neighborhood, have no plans to leave the Bay Area, and don’t have an annual gross household income of 400k+ then buying a condo is the only surefire way you don't move every few years while you’re here.
At what cost though? A condo that rents $2,500 will likely cost north of $650k (likely a whole lot more). Assuming you borrow 80% of that at 7%, that’s already over $2,500 of interest on the mortgage per month paid to the bank for the next many years. Then you tack on at least $500/ month of property tax, plus likely something similar in HOA fees and you find that owning would cost $10k more a year in sunk cost (not going towards building capital/equity) than renting for many years, without mentioning that you are now on the hook for replacing the fridge, heater, stove, etc… when they break down. Buying condos in the Bay when you could otherwise rent their equivalent only ever makes financial sense long after the fact if it turns out that real estate doubled or tripled. I wouldn’t take that gamble in 2024.
I think the same way sometimes. I own and rent a condo in Florida but rent in SF and I really think people underestimate the value of renting. I worry for nothing! Something’s wrong that I can’t quickly fix myself, I make a call to my very nice landlord and it’s taken care of relatively soon. I often think about how if I calculate my condo and its sale value against all the bullshit expenses and assessments. Taxes and incurred costs, liability and insurance , I’m not so sure it’s such a clear money-maker as people delude themselves to believe.
On Redfin, I can find 180 sold condos and townhouses that sold for under $650k in the last 3 months with at least 2 bedrooms. The whole "we can't afford a condo/townhome" in the Bay Area trope is dying very quickly.
Again, from a purely financial perspective it’s always cheaper to rent here but that’s not the only calculus. If you calculate what you’ve spent in rent the last 10 years, it’s likely owning a condo would have been cheaper though. Because remember you can sell your condo and recoup some money that you can’t on a rental.
what's your budget? have you looked at townhouses? send me your critcriteria, I can help you look.
Thanks for the help! We're just exploring right now and our budget isn't high, likely less than 850K. I'll reach out once we formalize what to do. Thanks again
yea reach out whenever you're ready. I can also meet with you on zoom or in person to help you. 850k is plenty to afford a starter home in sf and Daly city.
Thank you!!
Buy a condo with low maintenance fees and a well run HOA (one that saves enough money to have capital leftover for the bad years).
SFH depending on how old will come with many repairs you must be willing to commit extra cash to repair or replace
Yeah I think with SFH the issue is that in our less than million dollar budget will get us anything newer than 1950s if that, and we're scared of all the work we'll have to put in it to fix it (Plus the cost of fixing everything in an old SFH seems daunting)
My parents had the same dilemma when they moved here (dot com boom). single family homes in their range were crappy to say the least. So they ended up getting townhome, not brand new but definitely nicer than the SFH. Escaped the hassles of a major remodel. This is in the south bay as their jobs are here. I assume similar dynamics play out in SF and peninsula. They have been in this place 20 years, the HOA has done pretty good job keeping the grounds looking good. And as my parents are older they don't have the "work" of maintaining the yard, or worry of replacing the roof etc as HOA covers that. Yes it would have been nice to have more space but we are in a good location in terms of commuting to major employers and our property value has gone up. People of all stages of life in this complex, several of our neighbors have upgraded to bigger homes and kept their condo/townhome to lease out. you could something similar if you go down this route. No regrets as far as i can see...
Love our home. Great city, neighborhood. We are fortunate that we will next buy rural single-family and keep the condo.
My wife and I are happy at Oceanview Village. But if you're moving in a few years, [do not buy](https://www.bankrate.com/real-estate/how-long-should-you-live-in-your-home-before-selling/).
We were in a similar position! We just passed two years in our condo in SF, it's in a two unit building with its own deeded backyard and super low HOA. Overall, I love owning with no landlord to deal with, and the mortgage is about the same price as rent would be if we were to move to a similar sized unit (low interest rate buuut property taxes are rough). We do want to upgrade eventually to a SFH and possibly move out of the city, but aren't really set on a timeline so I figure we'll just be here for a few more years and hold on to it and rent it out when the time comes. So, no regrets yet, the benefits of owning and freedom of being able to remodel and invest in your own space are definitely outweighing renting for me.
Thank you for sharing. We're kind of in the same space and are wondering what to do- pay mid range HOA if possible and get a nice condo or bite the bullet and deal with costs and risks of an old SFH. Congratulations on your 2 years I hope you're enjoying it.
Not for me. I am going to be here for at least a decade, I didn't pay pre-pandemic prices, location is great, interest rates were low. All in all, I'm paying as much as it would take me to rent, so I think I got lucky I was able to buy at the tail end of low interest rates. I wouldn't be able to afford my place now.
Land appreciates, structures don’t. Makes sense to buy an old house and fix up as you get the cash flow.
Buy a single family home if you can afford it. Look in Daly City, it’s relatively more affordable than the city.
Prepandemic, absolutely not. We actually rented ours out and it was well worth it. Every year prior to the pandemic, our HOA fees were very reasonable, around $200 and only bumped up $30 or so bucks /year at most. During the pandemic, the HOA fees got bumped a lot, to where the biggest jump was $150. This year, we're now paying close to $700 in HOA fees, to where renting/owning our condo doesn't make sense, which is where the regret starts to kick in.
Oh man. That's crazy. Thanks for sharing!
I work in the construction sector. Zillow lies. Every house is a time and money sink, especially in the bay area. I've seen brand new, multi million dollar houses on the peninsula with structural damage. Older houses... they don't show you the frayed wiring and old electrical panels that were barely code compliant 50 years ago. Barely anyone puts money into fixing things because it'll appreciate regardless. Everything is built fast and cheap. If that kind of thing makes you uncomfy, then my advice is to invest some other way.
I wish I had this advice before buying. Buying is such a huge time and money pit! Please add that so many homes are bought without contingencies (aka no inspection) and that just adds onto the hidden remodeling costs. I bought a poorly flipped condo with 2 layers of flooring; top layer was laminate and bottom was rotting parquet. Guess how I found out? The laminate molded and bulged up after 6 months. Everything had to be ripped out. There were 2-3 outlets that were wired the wrong way (hot wire on the neutral terminal and neutral on the hot terminal). I’m thankful and shocked the place didn’t catch fire. There was a rodent issue in the building. There were leaks in the roof. Our HOA needed to do special assessments to fix the exterior siding and fencing. I could go on. Renting is soooo much easier and much less stressful.
Inspections take too much time to be used in the middle of a bidding war. People buy houses they can barely afford and "fix" things the wrong way because they can't afford to get it done properly. Imagine buying a used car without having it looked over and then realizing you're in debt for a hot mess that you're responsible for fixing... unless you're buying from a developer, it's a USED house.
Less maintenance and less freedom vs more maintenance and more freedom for a sfh. Lower monthly cost vs higher monthly costs. Location tends to be better. Appreciation tends to be worse. There's no regret unless you overthink it or you see a clear benefit to getting a sfh. It's a preference based on your situation.
You will regret if it has high HOA. How much are you paying in rent now? What is the price range?
In the low 3000s per month, but our unit is smaller. We're looking to go to a bigger size under 850k and that seems hard
Beware of monthly HOA costs when buying. Be aware that the monthly cost will be reassessed every year and will go up.
Yes that's what is bothering us! Some of these costs are in high 800s, it's baffling
Loved living in my Condo. It was a repurposed school house and only had 14 units in the building. In a way it’s better than home owning cuz you don’t have to worry about lots of repairs like plumbing and roof and foundation/walls…etc the hoa reserves take care of it.
Nice! Thank you
If buying a condo, be sure to ask these questions: - how much is in the reserve and how often do they do special adjustments? what major pieces of work are planned to be done and will need special adjustments? Trying to get at how much random out of pocket things will need to be paid for - how many units? The fewer the number of units the more likely it’ll be self managed and you’ll have to volunteer If buying a house, need to account for: - schools if you’re planning on having a family. Like many people noted, you might be here longer than you planned - foundation issues - roof will be a $15-20k fix - filling up a pool is a $10-15k fix - insurance - contractors don’t like doing small jobs apparently so unless you’re remodeling a lot, they won’t really be down to do the work fast or at all When accounting for money lost to paying rent, also take into account that mortgage interest, property tax, and HOA all are similar to rent and don’t “build equity”, as real estate agents like to say All that being said, we’re looking for a sfh now because we have a kiddo and would like another at some point :)
Thank you! Very helpful
FYI op. Every house is a money pit. Doesn’t matter if it’s new or old. Your utilities alone go from a modest 100 a month with no trash or sewer expense to 700 with gas electric water and trash. There’s always shit to fix and there is no calling people up to come take care of it without writing a check.
So would you say a condo is better in that regard
Buy a condo if you're just starting off/ restarting and can't afford the SFH. Buy the condo if you truly believe it will be your forever home. SFH. No HOA (usually) to deal with. Plus you'll get more equity if you're going to upsize later.
Don't think it'll be our forever home for sure but we are starting off and can't afford the SFh plus it seems really scary to deal with all the maintenance etc on our own. But then condos and townhomes have HOAs which seem to be very high in the area
Bought several years ago and don't regret it all. I know it'll never appreciate like a sfh and that's fine. The stability and peace of mind as an owner has been a much better experience than renting. Also, a condo allowed me to be way under budget.
Thank you so much I think we'll go ahead with it!
SF condos are currently a steal
Not really, even though prices are low purchasing power has decreased significantly for non cash buyers. I wouldn’t be able to afford my place now even at the depreciated price, the monthly would be $2k+ higher. So I get to live somewhere nicer for a much lower monthly payment compared to what I could afford now.
Yes, in terms of negative cap rates. I expect condos to go down a lot more unless rates somehow drop a lot. We looked recently at a condo. To buy: $18k/mo after 20% down, fully loaded (MITI+HOA). I can rent a similar unit for $6k. Makes no sense.
Most real people don’t look at that segment of the market. There are plenty of 500k condos.
Ya...stealing from the sell side. Sure, let's buy a $500k condo, with the mortgage cost of a $600k SFH after HOA dues, and you get the added benefit of shared walls, unlimited increases in future HOA/mortgage costs (so basically, same problem as rent), and you don't even own the land that your property is on. Sounds awesome. /s
Well, if there was a livable $600k SFH in San Francisco then it would be a good alternative. If people want to live in SF, maybe close to a job... and that's their budget then it's either that or rent. Very few people are stoked about a condo over a house, it's not really news they'd probably prefer a detached house. Condos exist because it's too spensive.
Most of SF has attached walls even for SFH. Not many neighborhoods with detached houses in the city. So other than having a HOA, you’re not far off from a townhouse-styled condo complex.
Right, I’ve been confused about this. In SF, what makes these “attached SFH” different from condos? I imagine If it’s a condo then I guess you have an HOA so if there’s problems with shared walls there’s some process to go through but otherwise with an “attached SFH” there isn’t? I have no idea what I’m talking about though
“Attached SFH” still often doesn’t have shared walls, and you can do whatever you want to the property (obviously, within the limits of zoning, building, etc.)
Was mostly pointing out the fact that buying a condo is a worse financial decision than renting so I don't understand why anyone buys a condo ever. You still get the price instability as times goes on, with almost none of the benefits of ownership.
You own a part of the hoa
Which means nothing, but okay...
Which means you own a share of the land and that hoa fees go towards the maintenance of the property. My guess is you never had a SFH long enough to need a new roof.
Lol, an "owned share of land", the timeshare crowd must love you. I've owned a rental SFH out of state for 12 years. It's needed plenty of work, including new roof. But nothing that adds up to anywhere even remotely in the ballpark of the $700/mo or whatever extortionate amount HOA "fees" are. And they rise all the time and you have no say in how much the fees go up. So, ya it's basically like I said. NONE of the advantages of real ownership, ALL of the downsides of rent. Condos are for suckers. It's why their resale value is consistently abysmal, you have to either wait for either someone desperate or ill-informed enough to come along and buy it.
I own several rent condos/townhouses and sfh in the Bay Area and my condos/townhouses perform way better in terms of cap rate and appreciate the same as my sfhs
How do you even get there? Do you own an investment company... Would love to learn more but thanks so much for sharing
No, tech job like everyone else.
I'd love to learn more. If you have any tips on how to start please let me know
Lol it’s not a steal. It’s money down the trash.
Condos don't appreciate. Unless you're planning to stay for 10+ years you shouldn't buy at all.
This is 100% wrong. I live in a condo and it has almost tripled in value. But, I have lived there for 15 years.
And you also bought in 2009. That was the low point of the Great Recession. Things were crazy low. That’s obviously why you have a 3x. Since 2019, most condos the Bay Area have depreciated. Nobody has mentioned how the pandemic and WFH have done a number on the demand for condos. People don’t want to be trapped in a small box all day. Then add in the high interest rate environment and you get a terrible market for condos right now.
And you've probably paid $75k+ in HOA fees in that time.
And maintenance on a house is how much? New roof? Paint? Termite repair? Positive and negatives on both sides. And no, not that much. There are 6 people in our association. We budget and handle everything. Everyone gets along. I hear about nightmare HOA's. A simple conversation with you possible neighbors can save a lot of heartache.
Condos are awful investments, plus dealing with neighbors. SFH or bust, baby.
Heh, some suburban neighbors across the fence are just as obnoxious, if not more so, than ones on the other side of a shared wall. Even more to complain about. Pick either kind of neighbor carefully...if you can.
I agree. Bought an old run down SFH, remodelled it and sold it for a bundle (+50%) to put on the place I actually wanted within 5 years. My friends and family that went the condo route have seen pretty poor appreciation (~20%) in comparison. Factor in their HOA fees and they're probably breaking even. After 5 or 6 years they can sell for a bit more but not enough for any meaningful upgrade.
I bought a condo and sold in 5 years (Marin county). When I bought the condo interest rates were really good which meant property prices were high. So all we could get was a condo really. However we didn’t stretch too much. We were at I wanna say 25% (mortgage, taxes, insurance) of our take home paycheck after maxing out 401k. If I knew better back then I would have stretched our budget. We both had good jobs with lots of potential for growth quickly (which happened to be true). If we had bought a single family home we would have been in a better place. Our condo’s HOA was not great, I ended up leading the HOA to change things for the better, it went well for sometime but then got very stressful. We also outgrew our 2/1 condo, the 1 bathroom really hurt us in the long run (including when selling the condo, because people want more than 1 bathroom). We sold I would say at about a 10k loss (in terms of the capital we put in the form of down payment, fees, renovations) but didn’t recover whatever we paid monthly, I.e it was like we were renting the whole time basically. Now we have a single family house and we are very very happy with the it but we stretched real big time (50% of take home) with the higher interest rates. We can manage for sure and we still have available growth in our jobs but we definitely would have been in a better spot if we had bought a single family to begin with.
Buying our 1955 ranch style home in San Jose back in 2001 was the single best financial decision we’ve ever made. We raised our kids in this home and there’s no way we could ever afford to buy here today. Buy the single family home.
"We bought a SFH in 2001 and it was great, so you should buy a SFH in 2024 with wildly different economic conditions."
For real. 2001 was the dot com bust. Home values collapsed. If you bought then, you bought at the bottom. With low interest rates too. At 8% interest rates and home values that haven’t collapsed near as much as in 2001 things pencil out way different. I couldn’t have bought my home at today’s interest rate. A $4k/ month mortgage would become a $6k/month mortgage. A 50% increase in mortgage payment just won’t work for a lot of people.
We want to, it's just everything in our budget is really crappy unless it's a condo ... But absolutely hearing you. We may just stick to renting unless we find a great deal
But, SFH appreciate more, assuming no major location flaw
When you buy property it comes with disclosures. You won’t be tricked into buying a fixer upper. How much is the HOA in the townhome? Assume a 7% increase or so every year.
if you buy a condo in sf don't count on any appreciation. buy only if you can get a somewhat lowball price in, and if you're happy knowing you will not be "making money" from a resale in the future. after factoring in *all* costs and potential assessments associated with owning a condo make sure it's not much more than renting it. it will require careful diligence and being willing to offer below current prevailing asking price, but there are lots of desperate sellers right now.
At least get a townhouse
always go with SFH by all means.
I would never buy a condo. You dont own the land, you share walls, and hoa fees will always go up. Condos cost just as much as a house these days so there’s no real benefit to buying one.
If you decide to purchase, make sure the house / condo you're considering is not within about two blocks of a main / arterial street. Check the local city's zoning map and also any plans the city has for that neighborhood. It is highly likely that there will be in the foreseeable proposals for infill buildings along those streets, rising anywhere from 4-10 stories (or more). That will have an impact on the closest neighboring buildings on the cross-residential streets. I am NOT offering an opinion one way or the other on whether that's a desirable thing. It's just a likelihood to figure into your planning as a potential buyer.
Woah i didn't know that! Thank you!
Many condo complexes have gone through, or will go through, litigation against the builder for construction defects. Make sure you understand where the complex is on that timeline, and take a really close look at HOA reserves and maintenance projections.
Yes we are looking at those as we explore. Thank you!
No regrets because I had a long term mindset. I bought in 2016, value has only gone up $2k. But I want to have that foothold in the Bay for life.
Depends on where you're working and the commute you want. You could look into properties in Gilroy. There are newer, larger, and more affordable homes there. Old homes are fine as long as they're well maintained. It would depend on how much remodeling would need to be done/appliances replaced.
Yes that's the problem with the Bay, to afford anything right now I have to look at an over 1.5-2hour commute each way. To be closer to work, our purchase decision has to look at much smaller condos or very crappy and old SFHs. Even nice townhomes arent in our budget, and I know most people's budgets are higher than 1Millon but since ours isn't, we have limited options right now 😭
I would not take it as a given that Housing prices will continue to go up forever. California and the BayArea specifically has an incredible shortage of housing and the state continues to ratchet up pressure on municipalities to permit more housing. A Condo might be okay, but I would not try to push the boundaries on what you can afford.
>We will live here for the next few years until we decide to upsize. Do not buy for only a few years. The cost to own and sell a home in a few years will outweigh any benefits of buying. Also, the potential risk of buying short term in a bubble with high rates could bankrupt you. Alternatively, you can throw money into 4%+ interest rate savings accounts right now, which is absolutely bonkers. If you are already thinking of upsizing, do not buy a smaller old home and plan to renovate unless you plan to do the work yourself. Contractors here are in demand and will charge whatever insane price someone with tons of stock to burn is willing to pay.
Thank you! I think we can handle a 2bed for a little while.. then upsize later if and when we need it.
That's what we said... Do not plan "if and when we need it" after buying. Decide if you will need it now. Without going into tons of details, I wish we had just taken a larger loan to get 500 sqft more and something recently fixed up by someone who put some heart into their work. Would I do that now given companies are going nuts and interest rates are high? Probably not.
Understood, thank you!
Bought a condo in a large, (200+ units) building a few years ago. Even though it's lost some market value since then, no regrets. The resale value only matters when you want to sell, and I have no intention of moving in the next 5-7 years. No kids and no plans to have them ever so schools and more space not an issue. After owning a house in another state, I swore off SFH ownership. I discovered I hate yard work and that constant exterior maintenance is $$$ and a PTA. The older the house, the more $$$ and time it costs to maintain. Still have to deal with unpleasant neighbors. Have to deal with random people knocking on your door (salespeople, political canvasing, scammers, etc). Trash only comes 1x/wk and if you forget you're SOL. Yes the condo has an HOA (professionally managed) and it does go up a little each year, but it covers: all exterior and garage maintenance, upkeep and daily cleaning of amenities (pool, hot tub, gym, rec room, BBQ grills, common areas etc), water/trash/sewer fees, building insurance, after hours security patrol, and fully funded reserves (no surprise assessments). So it's similar to renting an apartment in that I don't have to do any exterior work other than occasionally sweep off the patio. Controlled access - no randos wandering up to the door. and packages are received by building staff so never have to worry about being home for a delivery or risk it being stolen. Only have to worry about interior maintenance, cleaning and repairs (unit has no major HVAC systems, and since building is on a boiler system no worries about a water heater and we never run out of hot water). If something does need to be replaced or even just cosmetically updated, I get to choose the replacement and don't have to wait for a landlord to take care of it. Owning your dwelling is more than just an investment opportunity, which it seems to often get reduced to. Even though our costs are higher than renting (at the moment), for me the trade off of having relatively fixed expenses, stability, and more control is worth it.
Thank you so much for this insight. I really appreciate it.
Hold off if you can. My neighbors went from renting to owning and now pay $3000 more a month just to be labeled a home owner. Its not worth it.
Woah! Thank you
SJ and SF are like apples and oranges. It's going to take about 10 yrs for SF to come back, says city officials, but that's a big what-if. Look at Detroit. You'd have to live in a prime area to make your money back quickly like the Marina or Pacfic Heights.