Still suffering from Bay Area housing price sticker shock


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A fixer-upper in Burlingame, CA priced at $1.1M

According to its description, 'needs work...but great value!' in Burlingame, CA, priced at $1.05M

We’re a few weeks into seriously starting to look at the Bay Area housing market (as in actually going to open houses and going on trips with our real estate agent to get to know neighborhoods).

Although we’re starting to get a bit more accustomed to prices of houses in the area, I still can’t get my head around the idea that a basic 3bd/2ba house will likely cost nearly $1M. These are houses that would run in the low hundred thousands anywhere else, let alone in Tennessee, where I spent most of my childhood.

We’re basically looking for a solid house that will retain (or possibly even appreciate) in value over time and that doesn’t involve an unreasonable commute time to my work; nothing fancy, and we don’t even care if it’s new, although not having to cross the Bay every day would be nice.

Here’s what I’ve been able to pick up so far from our trips:

  1. Now that we have a little one, school districts are a factor, but from what I’ve been able to tell, people around here pay either a few $100K extra for a house in a good public school district or the same amount for a private school education in exchange for a lower cost house located in a worse public school district. This trade-off happens in other places in the US too, I suppose, but the amounts involved here are just incredible.
  2. In some areas, one house that’s priced at $600K (a fixer-upper, as in unlivable condition at move-in) could literally be next to others that are north of $2M.
  3. There are these things called “” that appear to be good deals but whose sales (at least in this area) are seldom completed or completed in any reasonable amount of time. It seems like every time we find a decently priced house on Redfin, it’s listed as a short sale. In short sales, the seller still owns the house, but owes more on the mortgage than he or she can get from selling the property. In many instances, more than one bank holds a mortgage on the house and each one must approve the sale in order for it to go through. Moreover, there are usually multiple bids on the property (including some with all-cash offers). The advice I’ve heard is that should we find a house we like on a short-sale, we ought to make a bid and then continue seeing houses because the likelihood we would get the house is next to nil.
  4. Then there’s the mortgage….the various flavors of mortgage loans are an area we’re still learning about. We’ve been talking to a loan broker and asking all sorts of questions. I never realized how complex mortgages could get (jumbo loans, FHAs, points, you name it).

Because of where we live (close to Silicon Valley), there are probably more people willing to forego the use of an agent or a loan broker and instead head straight to Redfin. We are content with the agent we have so far, but it’s interesting to see how many different ways there are to go about finding a house to buy.

Despite the sticker shock, I have to say that it’s been somewhat fun looking around and seeing if we can picture ourselves and our family living in the houses we’ve seen. We’re currently renting a house and have until next March, so at least we aren’t on a tight deadline. Still, I sometimes wonder if we will ever get to the point where we find something we like enough to pull the trigger on signing a HUGE mortgage. Our agent claims that the day we find our house, we’ll know it even before we walk in. I personally find that hard to believe, having never had that feeling about anything I’ve purchased, let alone a house.

What’s been your experience, and what advice do you have for a first-time home buyer? I’d be interested in hearing people’s advice, whether you’re in the Bay Area or not!


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11 Feedbacks on "Still suffering from Bay Area housing price sticker shock"

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[…] Still suffering from Bay Area housing price sticker shock … […]


Congrats on looking for a house! My hubby and I are seriously considering it now too. For first time buyers, there really isn’t a better time to buy, so even though the San Fran market is staggeringly high, you’re probably getting a good deal. For the two of us, we feel that if we don’t move on buying a place in the relatively near future, we might be priced out of the neighborhoods we love when the market picks up again. It can all be so overwhelming, but I picked up a great book that I keep going back to called the Power of Small that reassures me that I can achieve my biggest goals by taking it one small step at a time. You can do it too!! :)

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[…] Still suffering from Bay Area housing price sticker shock … […]

The Baglady

My husband moved to the Bay Area 5 years ago, and I have lived here for 12 years now. It really depends on which part of the Bay you want to live. Right now San Mateo is still pretty overpriced, but some areas in East Bay and South Bay are pretty reasonable I think. I don’t think it is worth it to overpay for a good public school district because a lot of the times the public schools accept out of district students. Also, if you have kids already you could rent in a good school district now and then file a continuing student petition for your kids when you move. Usually if your kid is not a problem child the schools are pretty understanding and will not kick your kid out. This is what my parents did and I stayed in the good public school district all throughout highschool and they bought a home close by in the next town and saved at least 100k. My house was seriously half a block from my school, but it was in a different county.

Paul in Hong Kong

Be prudent. If you can not afford the house should your work/life/market turn sour, then do not make the purchase, and continue renting. There’s no shame that. This instrument is long-term, leveraged, and illiquid; such an investment requires authorization from your family’s hard-nose Risk Officer, whomever/whatever that may be! =)

Rajeev Singh

House is a long term investment and an asset for life… great to read your account ..

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[…] We’re a few weeks into seriously starting to look at the Bay Area housing market… […]


Many districts in the Bay Area have “Open Enrollment” where you can apply to a different/better school. That can help a bit with the school district issue.

The short sale advice is good. I have a few friends that visit short sale houses with their handy man. Assess the state of the property and how much repairs would be and then make an offer immediately based on the house price plus estimated repair/upgrade costs.

Although having said that, the Bay Area is also one of the places in the US where rentals are often cheaper than mortgages. We decided on a long-term rental rather than a housing purchase. We just didn’t want to deal with paying that much for a house. The down side of that is that you tend to get hammered on taxes here since wages are so high. But we’re sticking with the renting + investing strategy.

Good luck with your search!


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We are in the market too, how did it go for you? Any learning you would like to share?


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