Real Estate

It was reported today that nearly 1 in 4 people, or roughly 10.7 Million people, with a mortgage are underwater and that 7.5 Million people were 30 days or more behind on their mortgage payments.

I’m sure there are some tragic stories in this crowd - probably involving unforeseen medical expenses, but for the most part I think it’s mostly the result of people being greedy and trying to buy too much home or getting refinancing and using their home as an ATM machine. Lets get real, if the average person makes $50k a year they can’t afford a $500,000 house – no matter what the agent might tell them.

When I first got to San Francisco the real estate party was in full swing and I had no job and few assets to buy property so I was priced out of the market. After getting a job I still had no assets for a down payment so I went into super saver mode trying to build up enough to perhaps make a purchase. While I was building up my down payment I watched as prices went higher and higher and higher still. Eventually I started to think that there was just no way I’d ever be able to buy a home in or around SF.

Then came the great unraveling and prices started their slow decline. I patiently watched prices decline and waited, reminding myself not to get a mortgage more than 3x my income. I can now afford a home in the exurbs – if I’m willing to deal with an hour long bart ride and uncertain water rights, or I could buy a small condo in SF and be stuck paying HOA fees. Neither are options I like very much. Prices are still high for real estate in San Francisco and haven’t dropped as much as they have in other parts of the country and perhaps they never will, but with the unemployment in the city around 10% I’m guessing prices will continue to decline for at least a little while longer. This gives me hope that maybe one day I’ll be able to be a homeowner in the Bay Area.