Hacker News Reader

Comment by thesmallestcat | Hacker News Reader

> Heather Lile, a nurse who makes $180,000 a year, commutes two hours from her home in Manteca to the San Francisco hospital where she works, 80 miles away. “I make really good money and it’s frustrating to me that I can’t afford to live close to my job,” said Ms. Lile.

OK, that's a load of crap. I don't know what you're doing with your money, but you can definitely live in SF on $180k. And if you can't, well, name your destination that's within two hours, it'll be cheaper than most of SF. I'm guessing she needed/found the perfect home.

View on HN

It's not a load of crap. I think what she meant was she can't afford to _buy_ close to SF. The closest you can buy a decent home (not apartment) close to SF in that pay (~800Kish home) is Walnut Creek or thereabouts, which is about 45mins away by Bart.

She probably could buy south of 280 in the excelsior or portola. You can still get in for less than a mil, though it's pretty tight.

With a salary of $180K you can definitely afford to buy near SF. Banks will sign off on an $900,000 mortgage no problem on that salary. You have to put maybe $100-200K down payment for your million dollar 2BR.

Guess what? You need to save for a few years to get that, which is easy when you're making $15K pre tax a month and living in Manteca.

Have you purchased housing in any of the more desirable areas of California recently? If you have, please tell me where this fantasy of your played out and I will buy there.

What happens to someone with a $100K-200K down payment and a bank willing to cover another $900K on top of that is that they put in a $1.1M offer with the required bank contingencies and then someone puts in a $1.1M offer with no contingencies and the cash offer wins.

Having a bank willing to lend you money has not been sufficient to purchase a home in most areas since the housing collapse because there's so much speculation in cash.

I guess most of you have never purchased housing in any of the major cities in China.

$180,000 is over RMB 1mm, which is way above what an average Chinese white collar can earn in a year. And an apartment can cost much more than $500,000, with a 30%~60% down payment.

People do afford the apartments, with life's saving from parents. I am not saying it's a good thing, but it is possible that people afford housing even with a ridiculous price.

The way housing and society works is significantly different in the USA and China. It's not really fair to compare the two. I don't know anyone in USA that has used their parent's life savings to purchase a house, because that kind of way of doing things isn't nearly as common there compared to China.

What is this required bank contingencies you speak of?

Just because you are getting a mortgage doesn't mean you need a mortgage contingency in your offer. You are taking on the added risk of actually closing on the loan, but that doesn't mean it had to be in the offer letter. If you know what the house is worth and what your credit score is and how the underwriting works, just make a "cash" offer like everyone else. It's not like you literally show up with a briefcase of cash in any case.

I get the feeling that you have not purchased a home either.

Required banking contingencies usually fall around home inspection and other verification efforts that the bank undertakes to validate the value of the security being offered for the loan (the house).

The bank doesn't just give you a check and say "go for it," they have a set of contingencies (incl. inspections) in order for them to shell out the money. Otherwise people could readily defraud the loan process by borrowing more than the security (the house) is worth.

Typically both parties enter into escrow with the expectation that the contingencies will be met during that period and for that period the money is held in trust along with the deed while all of the contingencies are validated.

A cash offer is a check, it requires no escrow period. Frequently home deals fall apart during escrow for a wide variety of reasons, this is a time-value risk on the appreciation of a million-dollar asset. Any sensible home seller would take the offer with no escrow period and equivalent dollar value.

The house I purchased (in a much less desirable region of California) would've been a lot nicer if it wasn't for this phenomenon.

I've purchased several houses both with and without mortgages. If you are getting a mortgage, the underwriter will need an appraisal in order to calculate your loan-to-value ratio. They will need title insurance (for which you probably want to get Owners coverage anyway) which requires a title search.

I've never had an underwriter ask for a home inspection report.

But in any case that doesn't mean you need to write a contingency into an offer that the house will appraise for a certain amount or else the deal is off.

Even in "cash" offers there is the offer letter with a check with a deposit amount, but there's still a time period for you execute a purchase and sale agreement and make the final payment. This is where you do things like title search, prepare the P&S agreement, prepare other documents like fire certificate, septic certificate, etc. This always takes at least 30 days anyway, so if there's an appraiser ready to go on Day #2 there's time to get your loan closed before closing day even on a "cash" offer with a quick close.

I'm not quite sure what you mean "no escrow period" but in no case does anyone simply show up at Open House day with a check for the full offer amount and expect to close on the house that day... that's simply not what "cash offer" means.

A "cash" offer with no contingencies simply means your offer amount will not change even if the house appraises for less (requiring a larger down payment to achieve the same LTV) or if there are issues discovered by a home inspector (e.g. roof needs to be replaced).

Note even in a "cash" offer there's still plenty of room to negotiate if non-obvious things are discovered about the house because the seller is still providing a property condition statement (at least in any state I've done business in) where they attest to the overall condition and any adverse issues like septic failing certification or prior insurance claim for flooding or things like that which you discover after making a "cash" offer -- all of it the seller had a duty to disclose and frees you from the offer if you decide to walk away before signing the Purchase and Sale and accepting the quitclaim deed.

Clearly you don't live here and I'm sorry to say this but I'm not sure you know what you're talking about. Please do the actual math on this, factor in contingencies, other expenses, kids, etc and what you're saying doesn't hold true from a affordability perspective. You can of course find something and buy...but you don't want to be pulling teeth to do it.

The example in the article may be a bit extreme but the article is not much off base.

The thing is you are absolutely correct, but the OP you respond to are the people you are competing with for housing.

I've watched astonished as friends of mine buy homes that end up eating 60%+ of their post-tax income. That is what is being called "affordable" these days.

Renting: 180K isn't enough to survive in SF with just 1 kid. If it is supporting 1 kid: 4k 2 bedroom (run down) + (2k) child care. 15k gross = 10k after tax. Just removing 2 things makes your post tax: 4k monthly pay check left. 4k a month rent let's you walk around at night and let's you do public school. (180k no private). A car with a kid is a must and that is expensive in SF, then add utils + phone + clothes. If you want to eat, or go outside, then you start dipping into savings.

Buying: in SF at 180k? Not a hope. A decent place not TIC, and where you safely put your kid in public school - is low 1.3million. Step one: come up with 260k cash + now your 4k rent is 5200 morgage with nutty property taxes. Plus play the lottery of schools because you can't afford private.

Come on, even if I accept that an apartment and child care is $6000/month in SF (its not, but it is pretty expensive), are you really arguing that $4000 a month "left over" (for non-rent, non-child related expenses) isn't doable? I've lived in the Bay Area for three-and-a-half decades and never made anywhere close to $4000 a month post-tax, much less $10000.

If you're serious, show your math.

Yup. And choosing to live in Manteca is utterly insane. It's FAR more than 2 hours at rush hour. Barely 2 hours with no traffic. That is 100% a choice. I don't know why she chooses that, but it's a choice.

> And choosing to live in Manteca is utterly insane. It's FAR more than 2 hours at rush hour.

It's rush hour now. Google Maps, which tends to be pretty accurate, says 2:15, right now.

And rush hour may or may not be actual commute hours for a nurse; not everyone works typical hours and commute decisions based on your actual work patterns rather than average work patterns that aren't actually yours are quite sensible.

With a family as a single parent?

Depends on childcare costs, but probably. My budget for SF requires about $150k and includes unusually high retirement savings.

My understanding is that childcare costs run about $20-30K per year per child. Is this incorrect?

Sounds a little high, depending on age, but SF is likely more expensive.

The sensationalism and missing facts/context of this story is truly precious. I'd love to hear the specs on Ms Lile's Manteca house. I'm guessing it's significantly bigger than the median house size in SF or neighboring towns, where she could surely afford to live in a 2BR bungalow or condo.

Reply on news.ycombinator.com