Buying SF Peninsula primary residence in 2018?

5 Replies | San Francisco, California

Hi BP,

I would love to connect with BP members about buying near Palo Alto/SF Peninsula in late 2018 - Jan 2019.  What is your take on the near term, and 2-4 years out?  

A bit of background:  My wife works at Stanford Hospital and recently became a Clinical Assistant Professor.  She now is eligible for a great housing assistance program, https://fsh.stanford.edu/CE/index.shtml.  Academic medicine doesn't pay great (top software engineers make more), but at least Stanford offers this affordability program to help ease the pain of buying.

To qualify we need 10% down.  As we've both had student loans, 2 kids, and for me some job instability, we would need to borrow from family/friends to get to 10%.  I just started a new stable position so we now are on solid footing.  Perhaps my wife and I could scratch together $75-$100k (with savings, 401k loans, etc.) though looking at $200-$250k for a 10% to cover down payment/points/closing.

Even if I could borrow the money, would you recommend a primary residence purchase in 2018?   I have watched the market from the sidelines.  My personal call is that it feels like we are in year 10 of a 20-year long tech boom.  Disruptors continue to emerge (i.e. AI is on fire w many autonomous vehicle startup acquisitions), and big tech is still growing, which provides a floor on house prices.  Facebook expanding to that new tower at Willow and 101, and gobbling up all nearby buildings near HQ is front and center in my decision process.  Uber, Airbnb, Palantir have huge potential exits.  Some may have an IPO or liquidity carve-outs (Softbank).  http://fortune.com/2018/01/18/softbank-uber-deal-c...

Target:

within 5-10 mi of Stanford:

4 BR, 2BA

$2M or less

@Scott Stover - Historically Bay Area housing values only go up in the long run. Even if the market drops 10% over 2-3 years, you’ll be in good shape over 7-8+ years. Given the housing support program, I say go for it. I own a primary home (bought 15 years ago) and investment property in SF. If I were to do it again, I would find a home with an in-law unit to rent out—probably on AirBnB, which has been great even as an occasional thing. Within 8-10 years, your little In-law will cover most of your mortgage!

@Scott Stover , if you are in it for long term (10 years+) then  go for it, but be mindful that the bay area housing is at it's peak - lot of BPers are predicting/hoping a bay area housing market correction for far too long now. For 2M, there's probably few areas where you might be able to find a decent 3/2 but if you are looking for good school districts in Palo alto or Cupertino, then you might have to shell out bit more for a shack.  Buying a primary residence is very personal  & emotional decision so I think most investors/BPers will advice against it. You have to ask yourself if economics of buying a house vs renting for few more years until the housing market softens make sense.

@Scott Stover , I'm definitely biased since it's where I invest, but I'm a big fan of Redwood City. They've done a total 180 over the last 10 years with their specific plan, and you can likely find a good home in your price range. The city is still continuing to develop, since they've only completed about 50% of the approved construction projects. I also think the school system gets a bad rap, because people only talk about Menlo, Paly, and San Mateo if you're not going private. The new stanford campus is going to launch soon, too! I'm certainly banking on the idea that Redwood City still has a lot of positive change coming its way that will out -perform any potential worries about the greater bay area market.

@Scott Stover listen to @Jay Hinrichs he knows his REI. Also a little bird told me that there are some serious discussions within FB about building their own housing. If they do that it will definitely improve the area even faster. Also @Robert C. makes a good case for RC, tons of change going on in that area.  @Anthony Addessi has also been very bullish on that city for a long time and seems to be killing it in that market.