A Tale of Two Hillsides

30 thoughts on “A Tale of Two Hillsides”

  1. I’d actually feel relatively comfortable buying in Richmond with a $400k budget. Maybe in ye olden days living up against the refineries was the ‘ make most of Richmond the housing destination of last resort for people with few alternatives.’ but when houses start pushing $400k, the people start having relative money and power. First thing to go will be train horns. After that decorative fencing, then the land area will start to shrink as those areas are replaced by underground pipes and infrastructure moves farther out. Unless those companies are super-powerful, then they will be buying out those $400k owners. That’s win!

    And then in a generation, all that will be gone. Does your friend have that kind of timeframe?

  2. There are folks who argue strenuously that “weather/climate doesn’t matter” in location decisions.

    I think it does, as your story points out: one could find a city with most of the attributes your friend seeks with more reasonably priced real estate. But folks clearly pay a premium for the parts of the US with Mediterranean coastal climates.

    I realize anecdote =/= data, but I have never seriously considered living north of the 40th parallel (roughly I-70/76 across the Midwest and eastern US) again, having spent a couple of winters in Minnesota.

    1. Funny. I avoid places that are too hot and humid. Houston is out of the question. I’d prefer Montreal in February. Culture also takes precedence over weather. I’m more emotionally comfortable in the North East, Upper Midwest, and West. Basically – no slave states. But that’s just me…

      1. I didn’t specify my southern limit, but it is also “no slave states” so I have a really narrow band. But the line gets farther south past Texas 🙂

      2. It’s wonderful, Johnny, to see your refreshing response to the seemingly universal belief in the superior livability of the the south and west. For family reasons, I have recently relocated to Texas from Boston, temporarily, I hope. I’ve left a fascinating, albeit expensive city, for the sprawl of generic suburbia. Summer here is hell on earth with suffocating humidity. I’m missing the beautiful crisp New England autumns and neighborhoods filled with places you can actually walk to. I’m told I’ll develop an appreciation of the local climate come December. I’m sure, but I hope never to turn into one of these sunbelt lemmings who start shivering once the temperature drops to sixty degrees. That’s just pathetic.
        I’m also, missing Montreal, a place where I spent a summer semester as a student, and a city to which I’ve returned many times since. I’ve been there on a sweltering hot day in July, as well as a frigid cold day in March with clouds of vapor rising off the Saint Lawrence. If it weren’t for the issue of an international border, I’d advise your friend to give up the Bay area, learn to embrace winter, parlez francais, and head north. Housing in Montreal is cheap relative to San Francisco, but beware, the city has been discovered, there’s a condo boom, prices are rising, and a serious shortage has developed for bargains. Oh, never mind.

  3. It’s wild how unaffordable the entire bay area is. It makes me wonder how the place doesn’t just grind entirely to a halt. For example, Manhattan is very expensive but there’s a wide ring of places within a 30-45 minute transit trip that are somewhat affordable for workers. So a plumber probably lives in a nice split level in Yonkers, not 54th street on Manhattan Island.

    But in the bay area, there’s next to nothing under 400K within 30 miles of San Jose or SF. How can that even function?

        1. The things he likes about San Francisco are the culture, weather, access to good jobs, having an international airport next door… Stockton is three plus hours away from all that in miserable traffic. That’s why Stockton is cheap. Could my friend find a nice house in a cute neighborhood there? Yes. Would it give him what he wants? Probably not.

          1. Yes, I looked at the map but forgot about the traffic. I rented in the Mission in 1970 and San Rafael in 1976 . . . enough to see how beautiful Cali must have been, before white people arrived.

  4. Hi Johnny,

    Fascinating post. (What could go wrong?!?!)

    A brief search on zillow.com shows me many small condos in your friend’s price range in SF. That’s the thing, forget a house (that’s actually sort of hilarious that he thought he could find a house in that price range). In your friend’s place, with that budget, if I had to live in SF, I would go minimalista with a tiny condo, maximizing the quality of the location and the light. (Also, importantly, focussing on buildings with structural integrity and a history of good governance.) For an actual house, bah, other coast.


    1. Yes and no. A small number of micro condo units in less desirable buildings and locations are listed for under $420,000 even in San Francisco. However, these tend to sell for above the asking price. The “low” price tag is a lure that’s used to induce multiple competitive offers. Then you have to add in HOA fees in addition to mortgage, taxes, insurance, etc. The real affordability of these small “cheap” condos doesn’t always add up for a lot of people. And if you believe (as I do) that we’re in another bubble these are the first units to lose value and the hardest to sell in a market correction. That makes them prime candidates for negative equity and a trap for the people who buy them. Only people who have personal auxiliary reserves can ride out the next recession under those circumstances. And what happens to them when too many of their neighbors in the building fail and no longer contribute to the HOA?

      1. Hi Johnny,

        Indeed. Ceteris paribus, a single family house is always a better investment. In a downturn, or with any unexpectedly large assessments, I wouldn’t want to be sitting on a condo.


    2. Lots of houses on hills in El Dorado and Placer County with fantastic views. Or maybe Sacramento’s leafy older streets. Bay Area- Forgettaboutit…

  5. My sister has lived in Richmond for a good while, having moved there when Berkeley got too pricey. She bought a small house up on the hill, hard against one of the local parks. It’s a nice spot, but the land is slowly sliding out from under the house – in the last couple of years, the distance from her back door the drop off into the ravine was cut in half, and a crack has appeared across her kitchen floor. She wouldn’t send her children to the local public schools. She’s had some sketchy neighbors and she’s in the nicest part of town. One earthquake and she’s probably going to be homeless. All in all, too risky for me, but she’s still there and shrugs at the risks.

  6. How about a boat slip? Stayed in a nice boat on Airbnb right by the stadium last year in SF. Although there is probably going to be a waiting list at every marina. It just seems like one has to get really creative to be able to afford SF.

    Kudos on your blog Johnny. I was inspired by your Hawaii build. I am currently building my own tiny house/cabin in TN and it’s nice to see like minded people sharing ideas.

    Any advice for the big island? Looking to start a small build there next year.

    1. Advice for the Big Island? The local economy has a long history of boom and bust. Real estate values rise and fall sharply. So pay attention to the rhythms of the place and buy low, sell high. Materials are more expensive on the island than the mainland. Lots of people on the island are always looking for work, yet reliable skilled labor is hard to find. It might make sense to build a Tiny House (whole or in parts) and ship it over. For me there was a love/hate thing with the island with periods of happiness and times of distress over how long everything takes and how unresponsive things and people tend to be. It took years for me to eventually make peace with the island. Then life was pretty good. Good luck.

      1. Uh. I haven’t thought of that at all. I will take a look at costs. And yes I’ve noticed the land price fluctuations, especially with the volcano in the news recently.
        Thanks a lot for the advice! I’m excited about it.

  7. I presume after you stopped laughing at his budget, you told him not to buy right now but if you insist, maybe check out the East Bay. If/when the housing bubble pops, the places I’d look for value are those that have zero name recognition even among locals, but rate OK on the crime/schools metric. Transit access is also key if he hopes to maintain a life in the city. A final consideration is the city government: are they all about the outlet centers and the McMansions? Or is the downtown pedestrian plan proudly displayed on their website? By those criteria, El Cerrito, Union City, Hercules, Concord & Martinez are some places I’d check out.

    1. I told him this is a terrible time to buy property anywhere since we’re in a bubble. But I’ve been saying that for years and prices just keep going up… Is this current market based on genuine value or financial shenanigans? We’ll all find out sooner or later.

      1. Just read this article today… late. But had to comment. It is a definite possibility that the USD is going down the drain. If that happens, the prices of everything goes up. Everything. But the rate of increases will eventually lag behind real inflation. Many people don’t know that stock markets or real estate or etc can go up 1000x but yet lag behind actual inflation rates (the real rates, not the published rates).

        It is a difficult spot right now. Things could go either way. I wouldn’t be surprised if things crash, tho. If it happens it will be short-lived because I think voters will demand their entitlements to be paid so they will get it… albeit with a worthless USD. There are zero financial sense these days with most people and events will prove it bigly.

  8. I happen to be selling an adorable little cottage that would be perfect for your friend. Unfortunately for him, it’s in Palo Alto. Sales here are rather slow this year, contrary to popular expectations, but nevertheless my place is probably outside his budget by a factor of about 6x, give or take. Honestly, in his shoes, I’d give up on the SF Bay Area. And Seattle. If one can work remotely, there are many beautiful little towns up and down the West Coast that are still affordable. But if you need local employment, ugh. Portland OR might still offer employment and $500K houses. Or give up on ocean views, go inland to e.g. Boise or Spokane or Reno.

  9. “Like everyone else in his position he trawled the internet real estate listings inquiring about alternative locations. What’s this place like? How about this one? Could I live there? This house looks good and it’s in my budget…”

    Something I do every February. And then I look at the City-Data forums and find out that I couldn’t live there. It’s a good resource.

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