San Francisco real estate is cheap

21 Replies

Everything is relative

Financial Samurai is one of my favorite bloggers. Here he shows that San Francisco real estate is cheap.  

Maybe not cheap but cheaper.   I think he missed the point that you can live in Honolulu in a much smaller place than SF and NY because of the year round outdoor living.

Much more expensive than the Midwest!

Everything is relative.  When you open up to a global context especially.  I was driving around Los Angeles early one relatively cold December morning a few years ago, and there were a bunch of Central American guys bundled up about to start some construction work.  To these guys, it was absolutely freezing, and they probably didn't even own a sweatshirt until coming up Norte.  To any other American, it wasn't even a real winter morning.

Real estate has the same implications.  It is all relative to your context.

Maybe cheap compared to Hawaii & NY, England, etc, etc., however SF is far from cheap. I remember in the late 80's when some friends I knew in Phoenix moved there, and they were working 2 jobs to afford to live in a place that was not much bigger than a closet. Its a nice place to visit, though I have no desire to live there...

Because it's so Dirty!  Oh wait...

Very interesting article. Thank you for sharing, @Jon Klaus . I subscribed to the blog as well.

Originally posted by @Dawn A. :

Much more expensive than the Midwest!

 SF property is MUCH cheaper than anything in the midwest.  I have less than $200, 000 total in my Bay Area home and could walk with $600, 000+ I've also gotten the use for almost 30 years.   $5, 000 down!  I don't see that happening in the midwest.   Here you get PAID to buy a house.

Originally posted by @Tatyana S. :

Very interesting article. Thank you for sharing, @Jon Klaus . I subscribed to the blog as well.

 Tatyana!  You are in Los Gatos!  Welcome to BP!  You should set up some keywords for San Jose and Santa Cruz, and connect with us at some of our great Meetups in the area!

Originally posted by @Bob Bowling:
Originally posted by @Dawn Anastasi:

Much more expensive than the Midwest!

 SF property is MUCH cheaper than anything in the midwest.  I have less than $200, 000 total in my Bay Area home and could walk with $600, 000+ I've also gotten the use for almost 30 years.   $5, 000 down!  I don't see that happening in the midwest.   Here you get PAID to buy a house.

 You are right. Let me hop in my time machine, go back 30 years in the past and buy a home in SF.....lol

Oddly enough I have a similar story from my parents, and it is from the midwest. My father bought a home in Kansas City in 1990 for $49,000. It was a foreclosure. Anyway this year houses in that same area are selling for $150,000. So just like you, he made 3X his initial investment, and he did it in the midwest. Oh and it took only 24 years. 

Here is another story. My father bought the first house my family ever lived in back in 1978 for $5000. It also was located in Kansas City in the inner city area. He sold the house less than 10 years later for $15,000. The current value of the home is $40,000. The house is worth 8X what he paid for it 36 years later.

Originally posted by @Anthony Gayden :
Originally posted by @Bob Bowling:
Originally posted by @Dawn Anastasi:

Much more expensive than the Midwest!

 SF property is MUCH cheaper than anything in the midwest.  I have less than $200, 000 total in my Bay Area home and could walk with $600, 000+ I've also gotten the use for almost 30 years.   $5, 000 down!  I don't see that happening in the midwest.   Here you get PAID to buy a house.

 You are right. Let me hop in my time machine, go back 30 years in the past and buy a home in SF.....lol

Oddly enough I have a similar story from my parents, and it is from the midwest. My father bought a home in Kansas City in 1990 for $49,000. It was a foreclosure. Anyway this year houses in that same area are selling for $150,000. So just like you, he made 3X his initial investment, and he did it in the midwest. Oh and it took only 24 years. 

 I didn't buy for $200, 000.  That's all expenses over almost 30 years.  And this has replicated in each decade since.  No time machine needed.

@Jon Klaus  ,

Thanks for sharing. Great article.

SF is really dirt cheap compared to other major international metropolitan cities. @Amit M.  , @Account Closed  , time to back up the truck!!

Interesting...  I lived in the Bay Area for about 10 years and may be going back for a few months to help a friend build a commune...  :-)

Seriously, he sold his company, has more cash than he knows what to do with, and wants to build a set of condos for he and all his friends to live in (the "Urban Cul-de-Sac" as he calls it).  So, I may soon own a condo in SF...in which case, I'll probably start investing there as well...

I actually agree with this. The very fact that you can buy a single family home in the Bay at ANY price is amazing.  If you think of it, the Bay Area is not too different from Manhattan to Hong Kong or Singapore in that it is limited land, all fully built out.  Most other cities like that have gone to very high density housing but for some reason the Bay Area has not.  

I have to do more research on this topic but this is a good start. San Francisco real estate may still be a great long term investment. @Minh Le I bet this applies to your area too.

Originally posted by @J Scott:

Interesting...  I lived in the Bay Area for about 10 years and may be going back for a few months to help a friend build a commune...  :-)

Seriously, he sold his company, has more cash than he knows what to do with, and wants to build a set of condos for he and all his friends to live in (the "Urban Cul-de-Sac" as he calls it).  So, I may soon own a condo in SF...in which case, I'll probably start investing there as well...

 @J Scott , you should stop in to SF before in Nov if the house build progresses well!  Congrats to your friend, and his generosity. That's awesome he's building a commune for friends.

Originally posted by @J. Martin :
Originally posted by @J Scott:

Interesting...  I lived in the Bay Area for about 10 years and may be going back for a few months to help a friend build a commune...  :-)

Seriously, he sold his company, has more cash than he knows what to do with, and wants to build a set of condos for he and all his friends to live in (the "Urban Cul-de-Sac" as he calls it).  So, I may soon own a condo in SF...in which case, I'll probably start investing there as well...

 J Scott, you should stop in to SF before in Nov if the house build progresses well!  Congrats to your friend, and his generosity. That's awesome he's building a commune for friends.

 Hey J - Sorry I didn't get back to you on that!  Looks like we're tracking to finish the build the week of November 16, and the goal is to have a BIG Thanksgiving dinner there, so we can't afford to lose even a single day...so unfortunately, I won't be able to make SF before Thanksgiving.  Sorry to miss the conference!

Originally posted by @J Scott:
Originally posted by @J Martin:
Originally posted by @J Scott:

Interesting...  I lived in the Bay Area for about 10 years and may be going back for a few months to help a friend build a commune...  :-)

Seriously, he sold his company, has more cash than he knows what to do with, and wants to build a set of condos for he and all his friends to live in (the "Urban Cul-de-Sac" as he calls it).  So, I may soon own a condo in SF...in which case, I'll probably start investing there as well...

 @J Scott , you should stop in to SF before in Nov if the house build progresses well!  Congrats to your friend, and his generosity. That's awesome he's building a commune for friends.

 Hey J - Sorry I didn't get back to you on that!  Looks like we're tracking to finish the build the week of November 16, and the goal is to have a BIG Thanksgiving dinner there, so we can't afford to lose even a single day...so unfortunately, I won't be able to make SF before Thanksgiving.  Sorry to miss the conference!

 No worries. Congrats on the upcoming house finish. The big Tday dinner will be a great way to celebrate and give thanks for all the good things we're able to enjoy ;)

that financial samurai post had little value IMO. 

If you compare SF to HK, London, NYC, etc., APPLES TO APPLES, SF is not much cheaper!  Sure, the heart of London is expensive, most of Manhattan is expensive (not way uptown)...but other areas of London, and other NYC Burroughs are nowhere near $1000+ PSF. 

Also, SF is much smaller, so most of it is prime, and expensive. You really need to compare the Bay Area to NYC inc. all the Burroughs. Same for greater London. 

Originally posted by @Johnson H. :

I have to do more research on this topic but this is a good start. San Francisco real estate may still be a great long term investment. @Minh Le I bet this applies to your area too.

Yes.  I'm getting much more bang for my bucks focusing in Downtown SJ.  The price/sq.ft. is almost double the moment I move up to the Peninsula.  Also, I'm banking on the 7M sq.ft. office space for Amazon campus at Bay 101, and Bart is coming to Berryessa.  I'm trying to load up as much as I can, but I don't want to get into speculation given where we are with property prices. 

I still like the Bay and don't intend to invest anywhere else. 6% - 8% CCR is good for me after stabilized. I'll even settle for 4% - 5% CCR if the building is in a nice tree-lined neighborhood. Given we can borrow at 3%, it's not a very tall order, but it's still difficult to find deals. That just tells you how competitive our market is.

@Jon Klaus  

I'm new to BP, but am in the Bay Area and found the Financial Samurai article about San Francisco very encouraging and interesting. Thanks for sharing!

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