Still flummoxed by the Bay Area housing market

Housing, Personal finance

I wrote in the Bay Area. Believe it or not, we’re still looking, casually I suppose, and have come near to bidding on two or three houses since then, but not close enough to pull the trigger. The one thing that’s changed is that we’ve narrowed down our needs to being in a “good school district” since our son has been attending speech therapy, and the therapist has advised that we live in a school district with good support in this area in case he would need to continue using these services in school.

Up until now, we were considering semi-fixer-uppers. A few weeks ago, we looked at this house, a trust sale, and even though we were fairly convinced we could probably get it for under $925K asking, after having some contractors take a look, they came out with estimates that were far from figures we were comfortable with. Our thought was that with some add’l money, we might be able to make it look somewhat like the since it has the exact same floor plan (this house sold for $1.27M, another outlier in our opinion). Then we got the estimates:

  1. $120K to remodel the kitchen (keep in mind this is a 1920s house, so small kitchen)
  2. $75K to redo the basement
  3. $60K to put in a bathroom
  4. $100K if we wanted to tilt the roof to make it not a flat-top house

These figures were so far out-of-line with what we were considering that it’s made us reconsider whether we really ought to be looking at only “fixed-up” houses. In fact, now that the house has been delisted, it could well mean that someone bought it. It seems a popular thing to do is just to demolish the old house and build a new, larger one in its place (assuming you have the resources and know-how to do so!) — this happened to the house across the street from the one we were considering.

For those who have been shopping or have recently bought a house in the Bay Area, I’d love to get your thoughts.If you’ve bought a house recently, what’s your personal experience been? For example, anyone have any thoughts or experiences to share on using Redfin and their “agents” instead of going with a traditional realtor?

It doesn’t help that I keep hearing about these amazing deals in other parts of the country. I’m told (and have started to believe somewhat) that the housing market here is unlike those in other parts of the country due to limited land and the presence of Silicon Valley.

Still, perhaps being a Finance person at heart, I have a hard time believing that I will ever walk into a house and just feel “this is the one!”, as my realtor and many others have told me. Either I haven’t been looking enough or my upbringing pretty much ensures that I will never feel like that about anything at these price points. Renting is also still an option to be considered given the discrepancy in costs.

Maybe we’ll have a better idea within a year’s time, once we have our second kid and have a better idea of what we’re willing to pay for and sacrifice?


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