Blogging Bayport Alameda

April 28, 2017

It’s for sale, the American dream

Filed under: Alameda — Lauren Do @ 6:07 am

The other day I got into a, not a fight really, but a Twitter disagreement with a local realtor.  The realtor suggested in response to an article about a San Franciscan making $160K who said that he couldn’t afford to purchase a home that he should simply move in order to find affordability.  Also there was the implication that people who remark about the lack of affordability simply don’t know how to save properly.

Putting aside the whole “kids these days just don’t know how to x, y, or z” and also putting aside the whole “go forth and gentrify” message being pushed by this realtor there is a real problem with young people simply not being able to afford “the American Dream.”

Trulia has a good report that shows that millennials aren’t lazy or slovenly, they’re more likely than previous generations to actually be employed:

[T]hey were also only 29.5% more likely to be unemployed than those 33-55 in 2016. That compares with 41.7% to 51.7% more likely in the late 70s and early 80s and in 1990, periods which cover both older and younger members of the baby boom generation, respectively.

However the homeownership gap has widened despite the higher likelihood of being gainfully employed compared to previous generations:

Screen Shot 2017-04-26 at 2.39.42 PM

This was a point brought up by a speaker at Monday’s Planning Board meeting.  That the younger generation is less likely to be able to own their own home than previous generations.  Preserving view corridors in lieu of building certainly will not make that reality any better.

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20 Comments »

  1. There’s all kind of ways to buy a house – but it takes thinking creatively.

    1. If you’re a married couple – one person’s salary goes into savings to buy a house, the other pays the bills. It probably
    means no vacations or new cars while you’re saving up.
    2. Consider purchasing duplex with another couple – you both will own your apartment.
    3. Instead of purchasing a house, consider purchasing three or four units – live in one unit and rent out the other units to
    help pay the mortgage. Or pool your funds with other like-minded friends and purchase a triplex or fourplex – each of
    you will own your own unit. Split the taxes, insurance and maintenance costs.
    4. Buy a fixer upper, and over time – as your income improves, make improvements to the home.
    5. Purchase a condo to build up some equity, and after 3-5 years sale it and take the equity to purchase something larger.

    It’s never easy – but it’s achievable if you’re willing to be creative.

    Comment by Karen Bey — April 28, 2017 @ 7:36 am

    • This probably worked out fine in prior generations, but it really is not so easy now. Have you looked at the median income data and the average rent? Even with 10 year old cars, you can’t save enough for a down payment, especially if you are paying for day-care and/or after care. If I’m lucky, I’ll buy I home when I’m retired. Even fixer-uppers in Alameda are out of reach right now.

      Comment by AK — April 28, 2017 @ 10:09 am

    • Congratulations Karen! You hit the trifecta. The rare comment that makes me want to laugh, cry, and scream all at the same time. Of course, how could I have been so blind? Just don’t use one of your incomes to survive until you have $200k for a down payment in order to make an offer on a home that you won’t get because there were 11 all cash offers. Brilliant.

      Comment by BMac — April 28, 2017 @ 6:33 pm

      • FHA is a great way to go for first time home buyers. The down payment requirements are as low as 3.5% to 10% depending on your FICO score.

        Here are the loan limits for Alameda County:

        ALAMEDA County:
        SAN FRANCISCO-OAKLAND-HAYWARD, CA
        Single: $636,150
        Duplex: $814,500
        Tri-plex: $984,525
        Four-plex: $1,223,475

        I took this information from this website:
        https://www.fha.com/lending_limits_state?state=CALIFORNIA

        Comment by Karen Bey — April 29, 2017 @ 7:16 am

  2. Realtor’s right, so called “American dream” doesn’t have to be in California…which is becoming more like a nightmare each passing year.

    Comment by Jack — April 28, 2017 @ 9:13 am

    • Once you buy a house, you’re not done. The cost of living must be considered. California has the highest personal income and sales taxes in the USA http://www.caltax.org/resources/cataxfacts.html

      This year, San Francisco is the 2nd most expensive place to live in North America. https://www.expatistan.com/cost-of-living/index/north-america

      California is a big state. If you really want to live here, you can lower your costs by moving away from the urban center. Move north of the 9 Bay Area counties.

      It is just stupid to come to THE most expensive place to live in the country and then whine about how you cannot afford it. What did you THINK was going to happen?

      Comment by vigi — April 28, 2017 @ 10:46 am

      • To state the blindingly obvious, no one is saying Alameda should be as cheap as Central Valley Trumplandia. This isn’t binary. The Bay Area need not be as expensive as it is.

        Maybe these young folks should quit complaining and just suck it up and inherit a house and enjoy Prop 13 subsidies.

        Comment by BC — April 28, 2017 @ 1:33 pm

        • You nailed it. We saved our whole lives, more than half, but couldn’t have moved here without an inheritance. Ah, who needs teachers or journalists anyway? And we have 5 degrees between us and no kids. It’s impossible now for most people.

          Comment by Retiredteacher — April 29, 2017 @ 7:43 am

        • Yes, I wish I could benefit from the fictional relationship between Prop 13 & inheritance. Unfortunately my parent died unexpectedly at a young age. It had never occurred to him to put his children’s name on the house. The house was reassessed at a much higher value upon disposition of the estate. When I was executor of his will, there was no automatic special benefit to inheriting property under Prop 13. Maybe you know something I don’t? If not, stop snarking about what you don’t understand.

          I’ll bet you think the disabled don’t have to pay parcel taxes on their property either. Another myth I’d be happy to bust for you.

          Comment by vigi — April 29, 2017 @ 11:51 am

        • As I understand and was to my benefit, my neither my name nor my brother was on the title to my moms house and we retained the full prop 13 tax beneft. I jointly own the home now with my brother and as a rental, it still caries the prop 13 savings.

          California homes passed down from parents to their children carry potential property tax savings worth thousands of dollars a year.

          Thanks to a state proposition that took effect in 1986, known as the “parent-child reassessment exclusion,” a child can inherit a parent’s principal residence, whether modest or worth millions, without triggering a reassessment for property taxes.

          In general, a transfer of ownership — except from one spouse to another — leads to a reassessment and, given the tremendous appreciation of real estate in recent years, a hike in property taxes.

          With the reassessment exclusion, a child who inherits a home in which a parent has lived for 35 years, for example, would also inherit the low tax assessment and annual tax bill. The home could have a market value of $800,000 but an assessed value of $85,000, kept low by limits on increases established by Prop. 13 in 1978. The inheritor would have an annual tax bill of about $850 with the parent-child reassessment exclusion, rather than about $8,000 with a reassessment.

          However, the prop 13 savings applies as a whole, a percent for each child. If I sell to my brother for example. 1/2 of the prop 13 of the propery is reasessed to current market.

          Comment by lifelong alamedan — April 29, 2017 @ 2:37 pm

  3. I agree with Peggy Noonan that the American Dream is not about houses and cars and material prosperity. Identity politics have damaged that aspirational culture. As Noonan writes, the American Dream in Grandpa’s eyes was ” I started with nothing and this place let me and mine rise”. Lauren and many others measure this through home ownership. The American Dream is that “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement” regardless of social class or circumstances of birth.” This dream is what made America great. The best way to revive the dream is not by building more housing, but to create an aspirational culture. http://www.peggynoonan.com/whats-become-of-the-american-dream/

    Comment by Alameda Landlord — April 28, 2017 @ 9:30 am

    • That’s nice and all, but the facts are clear. The ratio of house-prices to incomes is higher than it was, making buying a house more difficult. Objectively. And some of this increase is due to restrictions on development. One can debate the amount that’s attributable to supply-constriction, and whether the harm done to the younger generation is a price worth paying in order to allow old people to drive without delay from, say, Peet’s to the Marketplace (and to enjoy the inflated price of their home equity). But not the facts.

      Identity politics and aspirational culture are different questions. But be clear that, if you are a property owner, the increase in your wealth is due in part to these public policies as well as being full of noble aspiration. It’s easy to dismiss the importance of a house when you already own one (or more).

      Comment by BC — April 28, 2017 @ 10:15 am

    • Except for the fact that wealth is typically passed on to the next generation through property ownership. It’s all fine and good for Peggy Noonan and her grandpa to talk about rising from nothing but their bootstraps, but let’s not forget that barriers for people of color have long existed that didn’t allow for the same “bootstrapping” revered by people with the comfort of owning their own homes.

      I should only need to say one word that supports that: redlining.

      But redlining doesn’t even measure the numerous other opportunity killers for people of color that scar the history of the United States. To ignore that and say that the American Dream, even using the Peggy Noonan definition is achievable if you just want it hard enough is to ignore systemic and historic oppression.

      Comment by Lauren Do — April 28, 2017 @ 10:33 am

  4. Yeah… with home ownership at its lowest point since the 1940’s the problem lies with the lack of creativity for the Millenials (NOT!)… Maybe it’s that our population has grown, our economy has boomed and we haven’t built anywhere near the amount of housing we’ve needed for the last 40 years. Our state stands to lose 140-240 BILLION in economic growth if we don’t build the housing our region needs.

    http://www.hcd.ca.gov/policy-research/plans-reports/docs/California's-Housing-Future-Full-Public-Draft.pdf

    http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.aspx

    http://www.mckinsey.com/global-themes/urbanization/closing-californias-housing-gap

    Comment by Angela — April 28, 2017 @ 10:29 am

  5. There are a lot of people of all ages looking for creative housing solutions. Yes, we need to build more housing and in the meantime, some are doing just what I described above – it’s called co-housing or shared housing, very similar to what was recently approved on Webster Street but smaller size buildings.

    Comment by Karen Bey — April 28, 2017 @ 12:56 pm

    • And all colors & ethnic groups.

      Comment by vigi — April 29, 2017 @ 12:04 pm

    • I believe the proposal on Webster is for a boarding house. No ownership. Just a bedroom. Reminds me of the old hotels in Oakland. And for profit. I’d like to see co-op shared housing at a reasonable price. With ownership.

      Comment by Retiredteacher — April 29, 2017 @ 12:13 pm

  6. Is no one looking at what it costs to rent living here and how so little of that money can go towards saving for a home? Yes, I know…if you can’t afford to rent here, move somewhere else…even if that means quitting your job, uprooting your kids, leaving your community.

    For context, I am the owner of a home with an affordable mortgage, we bought 20 years ago.

    I’d also like to add that the additional housing being built are far from affordable and will help too few to make a difference.

    Gotta love those Bootstrappers.

    Comment by mydogsarebarkin — April 28, 2017 @ 1:02 pm

    • “Granny flats” are a good step towards living here affordably. If you’re single, of course. A structure on your property with a “rent to buy” program is a great idea, I think Portland is starting a program like that. The State recently relaxed rules on building structures, and with some requirements being met (like being built within a mile of public transportation; Alameda easily does that), no off-street parking is required.

      Comment by mydogsarebarkin — April 28, 2017 @ 1:10 pm

  7. The ease with which the landlords and established homeowners commenting here dismiss or minimize the structural barriers to finding affordable and accessible housing (either rentals or to buy) astounds me.

    Redlining, NIMBYism, the racism and classism behind Alameda’s 1973 “Measure A” (Charter Section XXVI), greed on the part of builders, the decades of bassackwards land-use and transportation planning that created urban sprawl (and the 2007-8 housing crisis), the 1995 Costa-Hawkins bill, and Proposition 13 (or, as I call it, the Jarvis-Gann greed initiative), and many other factors have created the current “closed-door” housing crisis throughout California over more than 40 years. And it will probably take about 40 years of implementing a broad spectrum of “progressive” initiatives to provide a better jobs-housing balance and “green” our transportation system. Some strategies include: emphasizing compact growth, urban infill, and higher-density housing; supporting, improving, and moving towards far greater reliance on mass transit and non-automobile means of locomotion; expanding co-housing and other “alternative” forms of home ownership; subsidizing lower-income buyers and renters; tax reform, including reforms to Proposition 13; various forms of rent stabilization, including the reform of Costa-Hawkins, etc.

    I may be dead and gone before Linda and I can take advantage of any of these changes and become home owners again, but, at 65, I will certainly work to see the next generations of hard-working Californians have fairer access to affordable housing and a more sustainable world, including a far greener system of moving people from A to B.

    Comment by Jon Spangler — May 1, 2017 @ 10:59 am


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