Th3 Core

Somewhat related and worth a read

https://www.zillow.com/research/hourly-home-equity-earnings-19356/

...if earning a six-figure annual salary represents a certain amount of privilege, homeowners in San Francisco, San Jose and Seattle all made comfortably more than that simply by virtue of owning a local home.

...if earning a six-figure annual salary represents a certain amount of privilege, homeowners in San Francisco, San Jose and Seattle all made comfortably more than that simply by virtue of owning a local home.

This, to me, is part of why the real estate market is so whacked. That equity only becomes a meaningful number when you cash out.

I think of a friend of mine who, just a few years out from his PhD was a multi-millionaire based on his stock options. The bottom fell out of the biotech market just before the options vested and within two days he had become a multi-thousandaire.

Real estate is not so volatile, of course, but if you sell your home in San Jose and because of your job need to replace it with a house in Mountain View, you haven't actually "made" anything. You only "make" the money when you cash out and move to Detroit.

I've seen two booms and busts in our area. One year everyone is rich and there's a short selling frenzy. Then everyone feels poor and decides to hang onto their houses (most are investment properties, not homes, so there's a lot more market timing than most places).

Still the appreciation was off the charts.

Yeah, it's great for those who can cash out. And I don't see the bottom ever fully falling out in the Bay Area over more than a relatively short run.

I was thinking of all the people who think they're rich because the bank wants to give them 100s of thousand of dollars of home equity loans... which becomes a problem when their equity falls. Or who get into the trap of "trading up" when they should be focused on "paying down"

I know that Rich Dad, Poor Dad is kind of controversial and there evidence that it was all made up, but when I read that, the concept that a house is a cost and, at least early on, a liability (and shelter, of course), rather than a source and store of wealth, has stuck with me.

This is true about everything.  I know several people who lost big on stocks

Absolutely. That's why I equated this to my friend in a startup who started counting his money before his options vested.

At the end of the day, it's also true of cash and gold and Picaso paintings. They could all have a crisis that destroys value (boy I'm in a pessimistic mood!).

The one difference is that most average people are not buying stocks, gold and art on margin. But the vast majority of those Bay Area householders are heavily margined. So if they need to move during a correction, that's effectively a margin call during a market crash.

If your house is paid off, then it becomes more like a non-margined stock that has lost value. It sucks, but you still exit with cash.

But I have known plenty of people in hot housing markets who have some good equity, but their loan is still so high (i.e. they are so heavily margined), that a good-sized correction puts them underwater. If that happens at the same time as a job loss, they are in trouble. I don't know *any* regular people who buy stocks and commodities (i.e. gold, silver) on 80% or 90% margin.

So yes, it's not inherent in the nature of the asset, but more a cultural problem.

>I'm a native Californian.

We met years ago.  East bay?

Okay... everything I've said in this thread is obviously irrelevant, bullshit and wrong

http://www.foxnews.com/real-estate/2018/04/19/condemned-california-home-with-holes-in-roof-mildew-sells-for-1-23-million.html

Most likely those properties in EPA are going to 3-5x on their value in 10 years.