That's absolutely by design. Homeownership is a concept that's been pushed on Americans since WWII... and it makes sense when you consider that housing is the only appreciating asset most people will ever own. However, as the only appreciating asset most people will ever own, there's a lot of pressure from the lampreys to get you into a 2nd mortgage, a HELOC, a payment greater than you can afford, etc. Combine that with derivatives - whereby investors aren't trading your mortgaged assets, they're trading on your ability to retain your mortgaged assets - and all of a sudden, people with lots of money are getting still more of it by putting your assets in jeopardy. My wife has owned our house since 2000. We're in a good place. And for the past seven years, we've rented it out. It's been a net win... but that's only because she purchased back when prices were more in line with fundamentals. In other words, we could rent it for right about what the mortgage was. We've been profiting only for the past couple years. Wanna see a scary graph? I mean, the San Fran thing is batshit but even the national curve is crazy. http://wolfstreet.com/2015/06/21/housing-bubble-2-san-francisco-vs-america/
SF is such a pigfuck, blood orgy of money that I'm not sure it's really even meaningful to compare it to the rest of the country. I wonder what CA looks like when the Bay Area is removed from the data. I'm sure it's still wacky, but not nearly as bad. I also wonder what's going to happen when everyone's boner finally subsides and we all realize that Uber really isn't a $40 billion company, and that FB doesn't really command 20% of all internet users' screen time. SF is a bubble that needs some good old fashion popping. Mostly I feel bad for the work-a-day types who live there. WTF does a server do when a one bedroom postage stamp puts you back $2500/mo?
Dude. Dude. 1100sf 2br condo with $400/mo HOA fees? $550k. That's my neighborhood. That's my building. That's the unit I lived in until 2013. Literally. That's in the cheapest neighborhood in the westside. Everybody I know is moving to the Valley, where a similar setup is only $450k. I know people talking about moving to Palmdale. San Fran is a leading indicator. Ain't nothing so batshit as the tech sector right now, and ain't no housing prices so batshit as tech housing prices. It's not like Uber's cratering isn't going to impact the rest of the economy. Wanna see $5 BILLION dollars in market cap go away in two sentences? “We haven’t done a great job at aligning the entire company around our total audience strategy. We’re in the process of implementing a stronger discipline of direct ownership and accountability.” It's lame - I'm about to take my money out of my ratcheting index funds and start to play the ponies with it. Nothing stupid - just better index funds and some diversification. But the more I look at things these days, the more I realize that if it were 2007 I'd be even more eager to hide my money in my bomb shelter. I may just leave things where they are and wait for this shit to settle itself out.
I have a friend working for Google who is paying $4900/month for a two bedroom apartment over the hill from Mountain View. That is close to $60K a year JUST TO PAY RENT. I've lived in that insanity and my mind still has a trouble thinking about this. To put the cost of living in perspective, his rent every year is about what my house COST. My mortgage including escrow is less than his HOA fee. There is a lot to say about how living in the Ohio Valley sucks; the cost of living is not one of them.
Yeah, there was an... okay house in my neighborhood. 2800sqft, no view of the ocean, built in the '70s. $1.6m. I decided what the hell, let's see what $1.6m will buy where I want to live. Yeah. That was pretty much when I started going "since I don't want to live in LA, and since I don't have to live in LA, why do I live in LA? 60 more days.
Wow. For that money you could get a 500+ acre farm and the stuff to do something with it about 40 minutes out of the city. With the Internet, the stuff I want to buy is all online and can ship right to me. And the community of people I want to hang out with is smaller, more dedicated and honestly more involved in my hobbies. I'd not mind moving back to San Diego, but the price of living out there can go fuck itself.