Raising the Roof

Once upon a time I was too poor to even dream of owning a house. Then I met my husband, and together we managed to buy one. And then we moved to California. Now we are too poor to buy a house.

My father sent an article from the Wall Street Journal (3/2/05) which identified the riskiest housing markets in the U.S. Of the ten metropolitan areas on the list, various locations in California occupy six of the slots. Where I live — San Jose-Sunnyvale-Santa Clara — has the second-highest risk index. What all does that mean, you ask?

The risk index identifies markets in which housing prices will probably decline significantly due to “continued housing price increases that are making the average home increasingly less affordable to the average buyer.”

On my daily walks I wander past houses for sale, and I pick up the fliers. When I saw the first one, I gasped. The house in the photo below started at $960,000+, and it sold for certainly more than a million. I call it “the million dollar baby.”

I mean, sure, it’s a nice enough house. But it’s no mansion. And then there’s the house around the corner that just went on the market:

Would you pay $860,000 for that house? Oh, it does have three bedrooms (probably very small) and two baths (it’s a “shotgun” house, one long building). But it’s nothing special, in my view, and it’s located on a heavily trafficked street. Then there’s a ramshackle, dilapidated house a few doors down from our house, complete with a wildly overgrown yard, that sold for around $680,000. It’s probably 1000 to 1200 square feet.

When we looked for housing, we practically cried over the prices. We are paying 30% more to occupy 40% less space than our Texas house — and this is just as renters. Despite this, renting is significantly cheaper for us at right now. Current prices being what they are, we have approached the idea of purchasing with caution. This article my father sent confirms my hunch — that prices simply cannot continue to rise, and purchasing in the next two years would be folly. We’re not even committed to staying here long-term.

Something else that the WSJ article pointed out was that San Diego has the nation’s most unaffordable housing based on annual income. To quote: “Based on a per capital income of $36,815 in the area, a 30-year mortgage on the median-priced home — valued at more than $578,000 — would consume about 90% of the average resident’s income.” There’s something wrong with a world in which this is the case.

Explore posts in the same categories: Journal, Regional

4 Comments on “Raising the Roof”

  1. katherine Turner Says:

    oh my god – that is outrageous . . . it reminds me of living in new york city where a hovel of a studio rents for $1200 a month. I guess Life is asking you guys not to Buy right now . . . but relax into the whole Renting experience right now 🙂

  2. Pat Says:

    At risk of saying the wrong thing, I wonder whether it is almost worth it to relocate elsewhere.

    Did you check out Bismark, ND? This is one of the two or three states with a population that is actually FALLING. It is really beautiful there. For the rest of ND that I have seen, no way. But for that one place– I did really find it beautiful. I have a fantasy about moving there some day. I don’t know the housing prices, but would guess they are much lower.

  3. Chad Says:

    Eh, yeah. When I lived in Oceanside thirteen years ago, I lived in a two bedroom house appraised at $1.2m. Somehow the San Diegans do it.

  4. Kathryn Says:

    Ah, Pat. Alas, we need to live where the job opportunties are, or else change careers. That’s why we relocated from TX. At this point, my husband loves what he does, it’s in the tech industry, and it’s highly specialized. So this is what we do, where we live, for now. We’ll have to work on this long-term!