I made ~300K selling my first home. And have already accrued ~500K in home equity for my current home. This is bad financial advice. I have seen people posting in this forum over many years how buying in SV is a bad financial move. When , I believe, it is actually a very prudent financial move.
- You can currently rent a house in SF for less than 50% of what the ownership costs would be. That offsets equity gains significantly. To the tune of $60,000 per year on a $1M home. If you make $250,000 in equity gains in 5 years, you've basically broken even with renting (the $50,000 accounting for paying down principle).
- What you said is what everyone was saying in the early 2000's before the housing crash. "You'd be stupid not to jump in when prices are going up so fast!" That said, I don't think SF is the same situation.
- Until you lock in that 500K in home equity on your current home by selling it, I wouldn't assume it's given.
Past returns don't guarantee future returns. The day before the peak of the bubble always looks like an attractive time to buy. I don't think SV housing is a pure "bubble" per se since it's single family housing in a region with strict supply caps, very high wages, and close proximity to millionaires, but its continuing rise is contingent on those conditions continuing.
Yes. But that's essentially a platitude that doesn't help making a rational decision. You can apply the same slogan to the stock market.
Here's how I look at it: for the real estate market, how many periods were there were you'd end up having to sell lower than what you paid for it when you bought?
