The Bay area, as usually is HOT! No one can project market swings but I’d bet you in 5 or 6 years, you’d be making money from your condo sale. As long as demand exceeds supply (and the Bay area isn't making any more land) it will be a sellers market.

I don't know much about the Bay Area with respect to real estate, other than the costs of living are high. I can relate to obscenely high real estate prices and condo living, at least -- the average condo price per square foot here is about $1000. I don't know what the future holds for resale value, though (does anyone?), but I decided to take that gamble rather than renting. As you (sort of) said, the quality/size of apartment I would want to rent really isn't easily available.

Whether you should value your emotional happiness over your financial security really depends on the current health of both those things (emotions, and finances)........if you were to lose some money on the sale 6 years from now, how much of an impact would it make? Are you looking at your home as your primary investment vehicle against inflation for your retirement? Generally, I say value emotional health over the financial risk, but I already have my retirement funds set in other investments (other than my home), so it's easier for me to say that......you might be in a different situation.

I am a huge fan of apartment living, though, whether you rent or own the apartment. So much less stress about structural and property maintenance, particularly for someone living on her own.

You have a hard choice to make and it appears to come down to avoiding a financial loss. In six years a lot can change and isn't a long time in a housing bubble or bust scenario. I seriously don't believe the appreciation of housing will continue for six more years without a correction at some point, and if you find one's self wanting to sell during the correction you could take a loss so it's a risk.

When do you need to make a decision? I ask because of the choices others need to make right now, and may have a major impact on the housing market so you should see what they do before making your choice. The federal reserve board meets today and tomorrow with a some hard choices of their own.

They are stuck on letting inflation run hot or tightening liquidity by raising interest rates, slowing or stopping asset purchases, (mortgages and treasuries) and they have a reverse Repo (Repurchasing agreement with banks) problem. This is where they loan banks money at nearly zero interest in return for other assets with the understanding the banks will buy back the assets at a later time.

The problem is many big banks have stopped taking the money and reversing the agreement by repurchasing back assets from the feds. This defeats the purpose or the repo's, The cheap liquidity is meant for banks to loan out resulting in an increase in money velocity and to stimulate the economy. Big banks aren't doing this and are hoarding cash and I've been trying to find out why. What do they need the money for when they can loan it out and generate revenue? I think it's china.

China has a real estate market problem of it's own. It's a bubble and accounts for 30% of china's GDP. The Chinese government has forbidden developers to sell real estate at below market values to generate revenue to pay bond obligations. The only thing the real estate development companies can do now is default on their bonds, and estimates suggest U.S. banks and pension funds hold $200 to $300 billion in these bonds.

This black swan which flew in from china has the potential to do some damage to our stock markets with many looking for cash to cover margin calls. A sell off of assets may come in play as they always do when markets tanks and could creep into housing markets.

The last thing to watch is the U.S. budget dead line (October 1st) and raising the debt ceiling. So If you have the time wait and see what the Federal reserve does, See what China does and finally what our government does with the budget and debt ceiling.

Any one of these problems with maybe exception to china could make borrowing more expensive and also cause a correction in housing prices. Tough call.

.

Rhonda, I've lived in the Bay Area for many decades. I've owned single family houses, not condos, but I'll share a bit of what I know . Much of which, if you've lived here before, may not be new for you to hear about.

A condo or an apartment or a house is a choice about where and how you want to live your life. So too the location option. Weigh those preferences, make those choices, and then with time in the market you'll find what you want that you can afford. That's the process. See what's available, make your decisions.

If you are overly burdened by thinking that buying a condo is primarily an investment decision, then stay where you are. Or find an apartment or condo to rent, not to buy. It's a personal decision, a lifestyle decision, not an investment decision.

Sure, real estate in the Bay Area is expensive. The market is hot and often irrational. What else is new? It's been like that for as long as I've been here. There have been no extended periods of price declines but rather, the opposite. But so what - if owning real estate were an investment, I could sell mine as with other investments and do something else with the money. But if I sold my home, I'd have nowhere to live. The money is stuck where it is, short of doing a cash-out refi but that would be pointless. It may be an investment as far as my heirs are concerned but I don't care about that and they don't either.

Two comments immediately preceding mine appear to be from people commenting from thousands of miles away. One includes a random and I believe irrelevant assemblage of macroeconomic buzz words that the writer apparently doesn't understand the meanings or significance of. In any event, even with someone who understands what was mentioned, they're far afield of the situation and your questions.

Talk to a few bank mortgage department managers who know the area you're interested in and can tell you what they've been seeing. Talk to real estate agents - can you contact the one who sold your property when you left? Pick the lifestyle and setting you want, pick the location you want. Find what fills the bill that you can afford and then jump in. Good luck.

Rhonda, My post was a summary on why you should wait. Since you're afraid you may sell at a loss later you are also taking a big loss from the start depending on where you live now moving to the bay area now.

Look at this cost of living calculator to see what I mean. If you move from Dallas to San Francisco the cost of living is 140% higher without including any tax liability into the equation. A 100K salary would need an increase to $283K to have the same standard of living, will you get a raise to move to the bay area? You'll need to consider your new tax burden also.

"WASHINGTON, Sept 22 (Reuters) - U.S. home sales fell slightly more than expected in August as supply remained tight, but there are signs that the sharp acceleration in house prices and the COVID-19 pandemic-fueled demand have probably run their course."

I personally think you're buying at the top with a price correction coming, and without a long time frame odds are against you breaking even in 6 years selling a condo bought now in the bay area. Buying a home in July of 2007 took 9 years to rebound to the original purchase price, and adjusting for inflation it took 12 year to break even. Looking at a Bay area real estate market cycle chart prices took the same amount of time to rebound just as the national average did, the bay area isn't isolated.

"All the major recessions in the bay area in recent decades have been tied to national or international economic crises". To say the bay area is immune from economic cycles from the last bias poster is incorrect, and to say "prices did the opposite" comes down to an outright lie. When someone talks about their own personal experience to validate his opinion other opinions should be sourced. You can win 10,000 dollars on the lottery, I did it and won so you'll win too! Sure you will. My personal opinion of the bay area is negative and happy to be 1000's of miles away. It's in decline and may not be the same as you remembered when living there.

"My personal opinion of the bay area is negative and happy to be 1000's of miles away."

Your knowledge and insights are also thousands of miles off target and you prove that insights can't come from internet searches. I've been here more than 40 years and there has yet to be a market price correction of significant effect or duration. Earthquakes are more frequent and they're rare.

After typing this, I remembered that you're the person who likes to assume you understand more than you do. I won't reply again, you'd rather guess than have real information.

Thank you all for taking time to provide me with your thoughts and experiences. I truly appreciate the insights.
I moved from the Bay Area almost 5 years ago so I could afford a single family home (by myself) because it was an experience I wanted at that time. I was thinking of it as an investment then, but really haven’t been factoring it in my retirement plans. But since I don’t plan to retire here, I will probably be using the equity I have in this home for my new residence. So I guess that makes it part of my retirement plan.
I bought outside of Nashville and it looks like it has been a good choice in a financial way, but personally I have yet to embrace it here.
I probably have to make a decision in a few days but all of your input will hopefully help guide me to the right decision for me.
Thanks again and take care!

I've been to Nashville a few times. I know several people who live there and they would not be in that region at all if they had the geographic flexibility it sounds like you're fortunate to have. Good luck with your decision making and hopefully you'll be able to get yourself situated somewhere, whether here or elsewhere, that offers you the lifestyle and living arrangements you want and miss.

With a condo you have to remember that whatever you are paying in fees you don't get back unless the market increase outstrips those fees. Of course those fees may be a quality of life thing depending upon what you get for them, but if they are high, you may still be putting money into the unit for which you get very little to no return in the long run.

palimpset, yes and no. I have two homes (that aren't condos) in HOA neighborhoods and I'm very pleased with the conduct of both Boards and the value for money we get As you say, it depends upon what's done and how well the HOAs are run. Members get all financial data regularly, it's required by law.

HOA neighborhoods are democracies. I always tell those who complain about this or that Board action that a way to have their input considered is to run for the next empty Board seat, Board seat terms last only 2 years in my state. Few ever do, I think they just prefer to gripe.

I’ve lived in the Bay Area for most of my life. I’m not a financial expert by any means, so I’ll leave that to others, but as a homeowner here (Oakland), it’s difficult to imagine that you’ll lose money by buying here. Even after the downturn in the aughts I recall that prices recovered quite quickly in parts of the area closest to SF. I’m sure information more accurate than my memory is easily available online:)
FWIW I have several friends and family members originally from Oakland and Berkeley who now live in Rossmoor, a large over-55 community in Walnut Creek, and absolutely love it. I imagine you’re familiar with it. My sister purchased a one bedroom apartment a few years ago that was very reasonably priced.

"you may still be putting money into the unit for which you get very little to no return in the long run."

Well, yes and no.......you do get maintenance, security, and cleaning (and sometimes the use of shared amenities), and those things do pay off in the long run with respect to property values. I hope I never have to worry about roof repairs again, or shovel snow from another driveway - but I also know that driveway will be repaired as needed, carpeting will be kept clean, and the walls will be repainted periodically.

I will just give an example though, where I lived in a high fee building for which there were not a lot of amenities like a doorman. I paid about $65,000 in fees and a couple specific assessments over the 7 years I lived there for which there was no return. The fees were high because it was an aging complex, it had older elevators and it had a pool that I stopped using after the first few years. And the carrying costs tended to suppress the market price of the units compared to buildings with lower fees. Another example I can think of is Gloria Vanderbilt's coop. For the location and size, I thought it was pretty cheap at $1.3M but the monthly carrying fees added up to $59,000 odd a year. Granted, it is a full service building and she could probably call someone at 2 am to go out and get her something to eat or change a lightbulb, it just depends on what you want. And I can think of another high fee building where I live that was hit with an average $40K per unit assessment for new windows and exterior repairs, despite the relatively high amount going into the capital reserves on a monthly basis. It just depends on what you want and how tied you want to be to other people's finances.

@chinacatpeekin- It is Rossmoor I was referring to in my original post. They do have an HOA fee of almost $900 a month in the units I have liked. But as you know it offers alot of amenities. But that is steep for someone who may or may not use them. They also have financials you can look at, showing the loss or gain of recent unit sales etc.

Just my 2 cents...

It is really impossible to give advice to someone approaching retirement without a complete financial picture. Generally, there is a concern with transaction fees and short-term home purchases. Between realtor fees, loan origination fees, moving expenses, and expenses to settle into a new home, you can quickly eat up a lot of equity.

However, the actual impact of these things and your ability to mitigate or tolerate them depend on the specifics of your situation. I would advise consulting with a financial planner or accountant who can look over your finances and give you some real numbers. Over the last couple of years options for remote consultations have improved significantly, so you may be able to find someone in the Bay Area to consult with.

Personally, I would be slightly more cautious about wading into the condo market right now. After the Surfside collapse it is possible condos will become more aggressive with their capital expenditures, this is not to say I wouldn't buy a condo, I would be a bit more selective.

Yes I have been considering consulting a financial planner. Just not sure I have the time, they may be looking for an answer in a few days. They are also going to let me know if they can give me more money and how far outside my territory I am allowed to live.

Elmer Fudd- Like your friends I have wanted to leave for awhile, but it wasn’t until it truly became an option did I realize that my heart and mind are at odds🙃

"After the Surfside collapse it is possible condos will become more aggressive with their capital expenditures,"

Oh heavens, these are not in Florida but in California. Not on the sand of a beach in a state lacking governance but in an inland suburb in the Bay Area. Not a high rise but the condos in that particular community are low rise.

Another [pseudo) expert from a distance who knows nothing about the area with little to add.

Oh and please, let's keep going because I have started posting Elmer gems of financial wisdom on reddit for entertainment.

@Rhonda Coote, if you are pressed for time head over to the personal finance subreddit and give them some numbers anonymously and get some opinions over there. You will find some posts from people who are knowledgeable and will actually walk through some math with you.

Rhonda- everyone I know at Rossmoor is very happy with the decision to move there. They have so many activities, and it seems to be easy to meet others. It seems like a great community, especially if you are moving here from another area.
I’m not ready for it yet, but if and when the time comes, I’ll seriously consider it as an age-in-place option for myself.
My (admittedly simplistic) thinking is that it will always cost more later to move here.
The suggestion to consult a financial planner is sound.

"After the Surfside collapse it is possible condos will become more aggressive with their capital expenditures,"

Seriously? One building in the entire country makes the news because it did something wrong, and you'd avoid the entire segment of the real estate market? Besides, we want condos to be more aggressive with their capital expenditures - that's how it maintains it's market value in the future. We don't want condo boards that are afraid to spend money on upkeep.

"One building in the entire country makes the news because it did something wrong, and you'd avoid the entire segment of the real estate market?"

@Toronto Veterinarian, You seem to be struggling with reading comprehension. How did you get from what I said, "this is not to say I wouldn't buy a condo, I would be a bit more selective," to what you wrote?

Moreover, you are objectively incorrect. The OP notes, "I probably cant afford to stay there after retirement so I would be in it for next 6 years and then sell and move." You don't want your condo catching up or even looking forward on capital expenditures when you are selling in six years. Feel free to check my math on that but I guarantee you that it is right.

Moreover, my wife's board insurance just doubled this year (and I mean quite literally doubled), insurance rates are a leading indivator of legal issues. In the last month I have seen several articles on board responsibility for negligent conditions and I bet half of law reviews will have some study on it this year. The problem isn't maintenance or one board it is ambulance chasing lawyers monetizing reactionary publics and boards reacting in fear.

By the way, there was originally one lawsuit over asbestos, talc, and Roundup, but one win opens the door for others and now television is filled with commercials for attorneys wanting to sue them.

ETA: Just for those who think a single incident can't lead to overreaction... I give you black mold. People very rarely have severe allergies to black mold and it is a completely typical irritant for asthma, but one study found a connection between black mold and serious disease, some attorneys sued and won, and we now have an entire industry doing what your grandmother did with vinegar and elbow grease. The study was later retracted, there has never been a single case in the U.S. or Canada of that serious illness from residential mold, but people will pay thousands of dollars for someone else to apply vinegar to their home out of fear.

But maybe I should clarify my position a bit for the next person who is going to get their undies bunched up...

If I were looking at buying a condo for only six years I would pick one that had little deferred maintenance and has no major capital expenditures in 10-12 years as there is some chance those expenditures get moved up.

"If I were looking at buying a condo for only six years I would pick one that had little deferred maintenance and has no major capital expenditures in 10-12 years as there is some chance those expenditures get moved up."

For the OP thinking of a return to the Bay Area, this comment is complete baloney.

This person likes to argue and does not seem to find the need to know what he's talking about when he does so.

I'd mentioned to him previously in a discussion thread at the time of the Florida tragedy that California condo/common area association law REQUIRES each association to have a plan of maintenance and rebuilding for all significant common area assets based on competent assessments done every few years of what will be needed and when. And then, as the second step, to create and maintain adequate reserve cash balances so that money is available to spend as and when needed. It's a law that is closely adhered to, in my experience with two HOAs that I'm currently in. In the neighborhood of my primary residence, one of largish single family detached homes, an old pool was the subject of a recent project lasting several months. The pool was resurfaced, all plumbing lines (besides the one at the bottom) were replaced, the deck was removed, replaced and expanded, the pool equipment was replaced and upgraded, the area was re-landscaped and the changing room structures were taken down to the studs and rebuilt and re-roofed. It was an expensive project but there was no extra assessment to pay for it. Because it had been identified in the inventory of future large repair and maintenance items as something that would be needed to be done and reserves were set aside to pay for it. At my other home, the neighborhood's roads were recently repaved. A sizeable and expensive project. Same story, no supplemental assessment was needed, the cost was covered by reserve balances accumulated over a number of years.

I'd expect there may be similar laws and required practices in some other states but I don't know.

This intended caution is N/A, a properly run HOA in California will rarely if ever, maybe never, face such a need to spend money not previously budgeted and saved for.

I'd forgotten my choice to not engage with him, it's not time well spent. I remember that now.

Over the years I’ve purchased 8 pieces of residential property, including one condo. I live in So Cal, high demand area similar in prices to the Bay Area. i’ve yet to lose a dime, actually made lots of equity, on every piece of property I’ve purchased. Even on the ones I puchased during the bubble eras. The last home I sold was purchased less than 20 years ago for $390k, sold it a few months ago to the first person who looked at it for $1.5 mil.

I’m familiar with your area, had relatives there, I sincerely doubt you will lose any $, but thats for you to decide. Good luck!

"If I were looking at buying a condo for only six years I would pick one that had little deferred maintenance and has no major capital expenditures"

Very good point. I've seen many old condo's cost the owners a small fortune in special assessments over the years. Something to consider.

"After the Surfside collapse it is possible condos will become more aggressive with their capital expenditures" This is relevant to SF because it's not IF but when.

The surfside collapse has brought attention to SF's own earth quake retrofit mandates with some calling the actions, or lack of actions taken by code enforcement a scandal. Encasing gas pipes in concrete has found to be big problem in retrofits, and allowing questionable engineering designs from out of state companies who never visited the sites to get permits as part of the scandal. Officials can't even guess how many retrofit problems were allowed and now many code enforcement officials have resigned or accused of bribery. Something to look at when selecting a building with potential expenditures looming if the retrofit is deemed to be questionable.

"The last home I sold was purchased less than 20 years ago for $390k, sold it a few months ago to the first person who looked at it for $1.5 mil."

Nice, but what was the net after subtracting 20 years of property taxes, HOA fees, and capital gain taxes you paid? I believe the tax exclusion is $500K for a couple and must be your primary residence. It's true prices have risen since 1890 and so has inflation along the same lines or vice versa. I'll go out on a limb here and say after deducting all the expenses (everything) and adjusting for inflation you made about 10K a year.

$390K in 2000 is equivalent to $586K today after inflation.

You didn't profit 1.1 million. After taxes, expenses, commissions and inflation adjusted you made shy of 500K. Congratulations! You beat inflation and sold on the highs of a housing bubble. What if you sold in 2009? Did you have a mortgage? The cost of interest over 20 years at an average of 5% cost you $280K. Real profit just dropped in half, but you still beat inflation. Not everyone can time the market or has 20 years to wait but congratulations anyway. I just had a birthday on the 10th and each year my age reduces my chance of riding out a market correction, but happy it worked out for you.

Kevin…

No HOA’s, 15 year fixed mortgage ( paid off early @8 ), interest deductible, as was real estate taxes, no capital gains since I purchased another PRIMARY residence. Also, no commissions since I sold it myself ( as I stated, a high demand , coastal area). Your calculations are off. Lesson learned: I always buy for location.

"I'd forgotten my choice to not engage with him, it's not time well spent. I remember that now"

How could you forget all the times bry911 crushed you like a prize boxer taking on a cub scout and sent you running? I do.

Or is it like a chicken trying to convince the fox not to eat you? You don't have a chance.

Your latest response was like a mouse flipping off a hawk in the last act of defiance. Either way you lost.

To much fun, "this person likes to argue and does not seem to find the need to know what he's talking about when he does so." This shows a clear admission you've lost the argument with nothing else worthwhile to say, and have resorted to babbling using me, myself and I as the authority.

Ronda, I've reversed my opinion and believe you should go, even if you buy high and are forced to sell low. Follow your heart if it means moving back to the bay, It's not the end and you don't have to say. It's full of risk but may fill the void, so abandon all fears you'll still be employed.

Good luck.

Another uninformed/misinformed commenter from the Midwest/South.

The comment about a price decline is funny but the earthquake retrofit comment was especially amusing and wrong like everything else noted. Other than mostly commercial properties particularly at risk in a limited number of areas, including ones with the so called soft-first floors, aka carport parking being a good example, there are no retrofit mandates for single family dwellings. With a few minor and low cost exceptions (like smoke alarms), houses are sold as is without any requirement to conform to the standards of the day. As is the case almost everywhere else. If you want a house that conforms to all of today's rules, build it yourself or buy a new one.

Another on the ignore list.

It's funny. The "expert because I am local" here is saying one thing. Meanwhile experts on real estate development, attorneys who specialize in boards and associations (several in the Bay Area), a dozen recent magazine articles, and... I kid you not... the Community Associations Institute (which is quite literally the lobbying association for condos) all agree with my take.

So feel free to believe someone talking out of their lower, but local, lump... or use your upper lump and do a bit of research to see if the person relaying information from knowledgeable experts is right. Choose wisely.

"Moreover, you are objectively incorrect. The OP notes, "I probably cant afford to stay there after retirement so I would be in it for next 6 years and then sell and move.""

Not objectively incorrect, but talking about apples while you were talking about oranges. When I made that comment, it looked like the conversation was about buying a condo in general, not specifically for the OPs situation.

Real knowledge from decades of business and personal experiences doesn't come from internet searches. But the internet search source is all some have.

A quote from Neil deG Tyson, something like this - ""One of the great challenges in life is knowing enough about a subject to think you're right, but not enough about the subject to know you're wrong."

The Dunning Kruger Effect describes an aspect of this thought. .

This is comedy gold. Would you like to call down to LA and let them know this story is just Dunning Kruger?

https://www.ocregister.com/2021/07/16/california-lawmakers-eye-legislation-based-on-lessons-learned-from-surfside-condo-collapse

Also in that thread Elmer mentioned above, I was literally quoting the person who wrote the law!

If you are new here this is how this goes... I find some information, usually through research or reading, process it and relay some abbreviated non-technical version here, Elmer comes in with an ad hominem and claims he is a real expert, I then link some sources to make him look a fool, he ignores them and claims to win the argument or gets real quiet about his previous expertise.

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ETA: https://www.bizjournals.com/bizjournals/news/2021/08/16/surfside-condo-building-aftermath-questions.html

https://www.washingtonpost.com/national/condo-repair-funding-crisis/2021/07/10/712b62de-e0bd-11eb-ae31-6b7c5c34f0d6_story.html

From above, "Across the country, residents and board members are discovering that they haven’t set aside enough money to pay for major repairs, like aging roofs. This funding crunch is rattling property developers and owners, and could increase housing costs for millions of Americans, who often view condominiums as a low-stress, lower-cost alternative to single-family homes."

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Next on this station: Elmer will claim that this is mitigated by California's reserve study requirements, I will then link information from the legislator who authored the law who says it doesn't (he happens to practice law in California and specializes in condos).

God how I hate these schoolboy pi**ing contests.

@Toronto Veterinarian - I should have made it more clear that I was talking about transitional owners, I agree that condos becoming more proactive in both funding and maintenance is a good thing for long-term owners. I do think that will come at the expense of people who own for a shorter period.

God how I hate these schoolboy p**ing contests.

I too hate these p***ing contests. I think it is ridiculous that I can't make this completely reasonable and tame comment, "Personally, I would be slightly more cautious about wading into the condo market right now. After the Surfside collapse it is possible condos will become more aggressive with their capital expenditures, this is not to say I wouldn't buy a condo, I would be a bit more selective." without getting this aggressive and ridiculous response, "Another [pseudo) expert from a distance who knows nothing about the area with little to add."

There was absolutely no claim of expertise there, there is nothing in my comment that hasn't been written in news articles in a dozen cities since late June, including some in California, and nothing that even approaches a need for that kind of response. My only sin was relaying information I have read, so...

Do you believe that my tame advice, which was largely to see a financial planner needed that kind of response?

ETA: I didn't want to comment on this thread, (I hate getting into a thread that Elmer has "claimed" I know there is a fight coming and I don't actually enjoy them), I only did so because I felt the OP was getting questionable advice. A former CPA should know that you can't give someone who is six years from retirement advice without a comprehensive financial picture. That type of thing can do real damage.

I questioned the statement, did some googling and indeed found Bry911 was right.

7' 3" by the way.

You're right, sushipup, sorry. I'm done anyway.

@sushipup1 - Would you like to answer my question above? Or did you just plan to just drop a like on another Elmer dodge?

If you say that you are done, I'll like your post, too.