After 5 Years sailing the seas Wife says we need to buy a house again

[daylatedollarshort]

We have seen people move to our location for the adult kids and then the kids move. As others have mentioned, it seems easier, cheaper and more in line with your budget to just rent a nice townhouse or condo for a few years and then decide it you really want to buy. Many of the posters here, myself included, are thinking about downsizing as we get older and no longer have kids at home. Do you really need a $1M home in retirement?

 

[Brat]

In the urban areas of the Pacific NW $1M won't get you much. If I knew where they want to settle I could be more helpful.

FYI my son and his wife operate one of the largest boatyards in the Columbia River Basin. The state of Washington will tax their sailing yacht big time. There are ways to finesse this but the easy way is to manage the number of days the vessel spends in Washington waters.

 

[Gallaher]

Where you want to live in PNW will seriously impact your housing cost.



DH & I lived on Bainbridge Island for several years, returned back to Portland.



In Seattle metro consider Bremerton and surrounding communities. Decent health care, convenient to a ferry.



As much as I love Bellingham I would avoid communities that will be devastated by the eventual Cascadia earthquake.



Further south Ridgefield and Battleground are good choices.



If you are looking at Oregon let me know.

You are concerned about Cascadia but live in Portland?

 

[JustCurious]

Happy wife happy life! Whatever you do, just keep the DW happy.

Happy husband happy life! The wife should do whatever is necessary to keep the husband happy.

 

[Koolau]

So many potentially viable suggestions. Let me at least partially summarize but FIRST:

Do we all think this insane rise in prices of late (dull places like where I used to live in the midwest have DOUBLED in the past year. Is that sustainable? I personally think not, but YMMV.

1) Stay on the boat and wait for the insanity to cool a bit - downside, of course, maybe it's NOT insanity and will get worse. What are the chances that insane will become psychotically insane in a year or two?

2) OP wants to stay close to kids. Let's see how much kids want parents to stay close to them. Rent space from the kids - hopefully the one with the couple of extra rooms and fewest kids you have to babysit. After all, how much smaller will a couple of rooms be than a boat Rent should be dirt cheap - again, assuming kids REALLY want you close. If NOT, I see that as a "release of responsibility" to live "close." You can "go east middle-aged man, go east" until you find less insane prices. SO, you have to drive 250 miles to see the kids/GK on every other weekend. It will have been your KIDS' decision.

3) Rent. Yes, if the market turns out to be psychotic, not just crazy? Well, I guess you lose - temporarily. What goes up, must come down - hopefully in your life time. If NOT, rents are almost always the BEST bargain when housing purchase prices are insane. Rents rarely ratchet up as fast as housing costs though there are exceptions.

4) Move to a LCOL area - I mean, think Mississippi - maybe even rent, though the "bargain" effect won't be as great where housing is cheap. Fill your coffers on the savings and bide your time to move back. Remember, the planes do fly both directions and you have lots of time to get bargain flights on Tuesdays - 45 days ahead of travel (well, once Covid shakes out.)

5) You're already used to living in quarters most would consider a good sized walk-in closet (aka your boat.) Buy a decent sized "parkable" motor home or 5th wheel to live in for 2 years - or when house prices restabilize. Gotta be lots of campgrounds in the NW with all the hook ups. Not cheap rent for what you get, but WAY cheaper than mortgage. If you buy a nice used RV, you might even make money on it when you sell. Oh, and you an "See the USA" while you wait for the insanity to subside. Heh, heh, not sure what you consider good "sailing" but IMO, once you're out 20 miles, it all looks the same. Even corn fields would look good to me after a month at sea, but that's just me.

All of this is somewhat contingent on whether you think ridiculous prices will stay that way. I recall trying to save for my first house as prices took off. Mom and Dad helped us out. Just about the time we thought we were "house rich", the first housing-bubble-pop took place. We were one of 14 people in our entire county that managed to sell our "overpriced" house - but we had to take a contract to do it. Worked out well for us, but it could have been a disaster. POINT: Housing bubbles always end - hopefully sooner than later in your case. Good luck and keep us posted as YMMV.

 

[chassis]

@FireCat how is the decision coming along? What do you make of the feedback on this thread? Generally agree? Or disagree?

 

[Global Wizzo]

Housing options

Hi. Welcome back.
Spent the afternoon talking with a new neighbor he bought a condo did some renovations and lived in it a year before buying a house. Pointed at a stack of flooring that was quoted at $3K in planning. Delivered came to10K.

You might want to consider getting a condo or even renting for a year and see if the craziness stops. Or dock the boat live aboard getting a small place in town.

If you have to buy now the market may correct in a year and should be some good buys then.

Good luck.

 

[ychuck46]

Go Vols!

That's tough then, but I DO envy you! I used to live in Seattle and still love Pac10 country!

If one really wants to save money they will come to SEC country!

 

[ychuck46]

I am considering a 40% downpayment and a mortgage for the rest. Any advice is greatly appreciated.

We have been living well off my cola Govt. pension, but depending on size of mortgage will be needing to draw up to $70k per year from retirement accounts which we can easily adjust annually by forgoing international travel and other stuff we don't need to do in down markets. Depending on which spending models used in Firecalc I get good results.

You have $1.6M. Let's assume you use 40% of that for a downpayment. With your range of home price we'll pick $400K as a downpayment, leaving you with $1.2M. Since it sounds like you are spending all of your pension on a yearly basis, meaning nothing gets added to the $1.2M, that possible $70K per year withdrawal equals an approximate withdrawal rate of 6% (won't go into approximate increase to your holdings since that could vary year to year). That is way too uncomfortable for yours truly. The wife and I have a larger piggybank, two SS checks and her modest pension coming in, and our withdrawal rate averages 2% of less per year. And I am a much more aggressive investor than yourself meaning our returns have likely been much higher the last couple of years.

You can make this happen but I would seriously look at no tapping of your assets beyond the downpayment for awhile until you get a feel for your real costs per year. And if buying an expensive house means you have to tap those savings heavily for your mortgage payments, I would look to rent as well as many others have suggested (or stay on that sailboat nearer the kids).

 

[Music Lover]

Happy husband happy life! The wife should do whatever is necessary to keep the husband happy.

She just spent 5 years on a boat to make him happy...maybe it's time for him to consider her feelings.

 

[euro]

If one really wants to save money they will come to SEC country!

True that!

 

[zippy2020]

I don't know how the PNW market is, but here in the San Francisco Bay Area, the pandemic rearranged the market quite a bit.

Tech workers allowed to work remotely took the opportunity to buy SFH in suburban cities and exurbs (or even move out of state, since some tech companies located in other areas of the country offered cash bonuses to move).

Condo and apt prices dropped. This being the SFBA, they didn't drop that far - about 15-20% - but the meteoric regular price increases came to a screeching halt. Mgmt companies are still offering various "bonuses" for signing a rental lease. I believe rental prices have started to move up again, but more slowly.

In a lot of suburbs here, there were major condo developments going up. The pandemic/lockdown/'work from home' new buyers is crushing them. Why pay $2500/mo for an 800 sq. ft. condo when you could pay that (or less, as our friends have done) for a house with twice that square footage?

New construction has slowed, but the developments that have opened over the past year aren't being filled up as fast as once forecasted.

IOW, the deals in the SFBA are for new apt. or condo rentals, right now. It won't last forever - never does, especially since the supply of SFHs is very limited so latecomers will get stuck with continuing to rent.

Hopefully someone more familiar with the Oregon market - where is the OP looking at, exactly, in OR? - can speak up.

And I will second or third that point about your kids having to move. My sister was all set to move to Boston to be with her son and his family. He had moved there four yrs prior.

She was within 3 days of listing her home for sale, when his company was bought and he was given the opportunity to return to the SFBA - which he did!

 

[figuy1]

I don't know how the PNW market is, but here in the San Francisco Bay Area, the pandemic rearranged the market quite a bit.

Seattle was spared of the max exodus that other expensive cities had last year and was actually one of the faster-growing cities.

I think 2020 will just be a blip in the radar and SF will continue to do draw people as long as the salaries stay high. There are plenty of people (SINKs and DINKs in particular) who are still willing to give up the big suburban houses for all of the amenities that SF has to offer such as beautiful weather, natural surroundings, job opportunities, high energy downtown area, etc. I think the only major longer-term shift will be among those with children who will choose to work remotely to live in the less expensive parts of the country where they can afford a bigger house to raise their kids.

 

[daylatedollarshort]

I think the only major longer-term shift will be among those with children who will choose to work remotely to live in the less expensive parts of the country where they can afford a bigger house to raise their kids.

Just curious if those are your thoughts or you have any research to support those statements? From what I have read most of the people who moved out of San Francisco just moved to the suburbs, not out of state - San Francisco's Exodus Was to Suburbs, Not Out of State, Data Shows (businessinsider.com)

Most of the households moving to other states are lower income, not the SF tech workers. Lower income households are moving out, higher income households are moving into the state. "A new analysis from the Public Policy Institute of California says the state remains as attractive as ever for the well-off. It’s people in the working and middle classes who are leaving, largely due to high housing and other costs."

 

[JustCurious]

She just spent 5 years on a boat to make him happy...maybe it's time for him to consider her feelings.

Where are you getting that from? I don't see where the OP said she spent 5 years on a boat to make him happy, maybe he did it to make her happy? Maybe they both were happy? I don't understand why you jumped to the conclusion that she did it for him.

 

[ivinsfan]

I notice the OP didn't ask if he should buy, he asked how he should pay for it.


The first thing he needs to do is figure out exactly what this house will cost...then the carrying cost total of the house. Then come back here with those numbers.


Do they spend the entire pension, if they do how did they get so much cash on hand.


I also don't see a line item in the NW for the boat, OP are you keeping the boat and what will that cost you per year.

 

[figuy1]

Just curious if those are your thoughts or you have any research to support those statements? From what I have read most of the people who moved out of San Francisco just moved to the suburbs, not out of state

Here's an article from your same source: https://www.businessinsider.com/population-change-net-domestic-migration-metro-areas-2021-6
The population of the SF/Oak/Berkley metro area declined by 0.6% from July 2019-July 2020. Though apparently, the slowdown in population growth was already happening before the pandemic given just a year before, it had no net population growth.

It looks like last year, the only county near SF with population growth was in Contra Costa County, the rest of the growth came from more inland places like Sacramento:
https://www.sacbee.com/news/politics-government/capitol-alert/article251242824.html

I think the Bay area will continue to be an attractive place to live for high-income tech workers (I even have a friend that moved there this last week) but not so much for lower/middle class folks looking for affordable housing.

 

[daylatedollarshort]

Here's an article from your same source: https://www.businessinsider.com/population-change-net-domestic-migration-metro-areas-2021-6
The population of the SF/Oak/Berkley metro area declined by 0.6% from July 2019-July 2020. Though apparently, the slowdown in population growth was already happening before the pandemic given just a year before, it had no net population growth.

It looks like last year, the only county near SF with population growth was in Contra Costa County, the rest of the growth came from more inland places like Sacramento:
https://www.sacbee.com/news/politics-government/capitol-alert/article251242824.html

You posted previously that "I think 2020 will just be a blip in the radar and SF will continue to do draw people as long as the salaries stay high... I think the only major longer-term shift will be among those with children who will choose to work remotely to live in the less expensive parts of the country where they can afford a bigger house to raise their kids."

Your latest post didn't address the point I asked about. Contrary to common media mythology, studies show that in general the white collar workers in SF are not moving to lower cost parts of the country for bigger houses. They aren't even moving out of the Bay Area. In general, they are moving to the suburbs. The people moving out of California are less educated and lower income households, which aren't the type of jobs that can work from home. Only 14% of blue collar workers can work from home. Working from home isn't the reason most people are leaving the state. It is the high housing costs for people who are low income and can't afford to stay.

 

[figuy1]

They aren't even moving out of the Bay Area. In general, they are moving to the suburbs.

Again, 8 of the 9 counties which make up the bay area had population declines and the area as a whole declined by 0.6% last year. CA as a whole lost over 180k residents, of which most came from the SF and LA metro areas.

If most SF proper residents moved to the suburbs, it would mean that an even higher proportion of previous suburban bay area residents would have had to move out of state for those numbers to work out.

I have not come across a data point that breaks down the shift by family size and would love to see it if you happen to find it. My perception is that most of the people moving in are white-collar SINKs and DINKs and the people moving out are lower-income white-collar workers, blue-caller workers, and to a lesser extent higher-income workers who are starting families and retirees. Is that not the case?

 

[daylatedollarshort]

Again, 8 of the 9 counties which make up the bay area had population declines and the area as a whole declined by 0.6% last year. CA as a whole lost over 180k residents, of which most came from the SF and LA metro areas.

If most SF proper residents moved to the suburbs, it would mean that an even higher proportion of previous suburban bay area residents would have had to move out of state for those numbers to work out.

I have not come across a data point that breaks down the shift by family size and would love to see it if you happen to find it. My perception is that most of the people moving in are white-collar SINKs and DINKs and the people moving out are lower-income white-collar workers, blue-caller workers, and to a lesser extent higher-income workers who are starting families and retirees. Is that not the case?

I don't want to pull this thread off track more than it is, so I won't comment any more on your perceptions. The hard data on who is moving in and who is moving out of both SF and California has been well studied and is in the links I provided, plus related articles.

 

[Koolau]

Where are you getting that from? I don't see where the OP said she spent 5 years on a boat to make him happy, maybe he did it to make her happy? Maybe they both were happy? I don't understand why you jumped to the conclusion that she did it for him.

Heh, heh, probably they BOTH did it for the other, thinking the other wanted it. 5 years later they accidentally let it slip that they BOTH hated every minute of the 5 years. So much for good communication.


(note: The previous "story" is speculative and apocryphal so YMMV.)

 

[Brat]

You are concerned about Cascadia but live in Portland?

The Cascadia earthquake will not generate a tsunami that impacts Portland. Maybe if it generates an earthquake of 9+ magnitude but such an earthquake will shake all of the cities from Ashland to Victoria. There are some excellent YouTube videos, look for those by Nick Zentner such as

or lectures by Chris Goldfinger

 

[ychuck46]

You know it

True that!

Absolutely. Oh, and go VOLS!