buying real estate in the Bay Area just makes literally zero sense right now

@shmemmmy

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Why it worked

The video effectively uses a relatable personal anecdote about the struggles of buying real estate in a high-cost area to provide valuable financial information. The creator breaks down complex mortgage calculations into understandable terms, making the content engaging and shareable for others in similar situations.

Summary

The creator discusses the high cost of buying real estate in the Bay Area, comparing their current rent of $4400/month to a condo listing with a monthly cost of $7818. They highlight that the interest alone on the mortgage for the first few years exceeds their rent, making buying seem less appealing than renting, especially with high interest rates.

Structure

1Introduction to the high cost of Bay Area real estate
2Comparison of current rent vs. condo purchase price and monthly costs
3Analysis of mortgage payments, interest, and property taxes
4Discussion on the long-term financial implications of buying vs. renting
5Concluding thoughts on the current market and personal plans

Product placement

The video shows a condo listing from Zillow (implied by the calculator interface and address format) and discusses the financial implications of buying it versus renting. The Zillow interface is visible on screen.

On-screen text

Condo for sale Look Around Est. $7,571/mo $1,100,000 2 beds 1 bath -- sqft 764 Cole St APT 4, San Francisco, CA 94117 Request a tour as early as tomorrow at 11:00 am Contact Estimated cost $7,818/month Principal & interest $5,961 Home price $ 1,100,000 Down payment $ 220,000 Percentage 20.00 % Mortgage type 30-year fixed Interest rate 7.180 % See current rates Mortgage insurance $0 Property taxes $1,082 Home insurance $385 HOA fees $390 Utilities Not included All calculations are estimates and provided by Zillow, Inc. for informational purposes only. Actual amounts may vary. Total of 360 Payments $2,146,113.55 Total Interest $1,266,113.55 59% 41% Principal Interest Amortization schedule $2M $1.5M $1M $500K 0 0 5 10 15 20 25 Year Balance Interest Payment Annual Schedule Monthly Year Interest Principal Ending Balance 1 $62,903.56 $8,633.56 $871,366.44 2 $62,262.85 $9,274.26 $862,092.17 3 $61,574.61 $9,962.51 $852,129.66 4 $60,835.28 $10,701.84 $841,427.82 5 $60,041.09 $11,496.03 $829,931.80 6 $59,187.97 $12,349.15 $817,582.65 7 $58,271.53 $13,265.59 $804,317.05 AA calculator.net

Original caption

Not to mention maintenance, upgrades, lost opportunity cost of down payment/monthly savings, NAR drama… just a pretty bad deal rn 😬 #greenscreen #realestate #bayarea #bayarearealestate #bayareacondo #sfrealestate #sftok #financetok #moneytok

More from @shmemmmy

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Transcript

buying real estate in the Bay Area just makes literally zero sense right now. My husband and I have been trying for a few years to find a place in San Francisco or surrounding areas. And we finally have just given up decided to rent and let me show you the numbers on why. We currently rent a two bedroom, one bath that's about seven or eight hundred square feet. Uh, it's pretty central, has a garage, it has backyard access, although it's not entirely ours. Um, and I think it's about market rate. So it's $4400 a month and not including utilities. Here's a condo somewhat near us. So I was trying to find like a fairly equivalent place. Doesn't even list the square footage, but I'm assuming pretty small. So maybe 7 or 800 like ours does have parking, does have a shared backyard and it's a 2-1. So again, if we were looking to buy our exact situation that we have, which we would be not really looking to do, we wanna upgrade a bit if we're gonna buy and settle down. Um, but this is about what we have. So let's jump into the payments. Sorry, you can see it's cute. It's nothing special. It probably needs a little bit of upgrading if you wanna live, you know, in a nice place. If you buy this at list price, which it has been sitting for a while, but it is San Francisco, so who knows you're going to pay over $7,000 a month, almost $8,000 a month not including utilities. So mine wasn't including utilities either. Um, but you'll put 20% down, 30 year. The average interest rate today was 7.18, uh, property taxes, I'm not even sure it's fully accurate. I think it's usually a little bit low for San Francisco. Uh, HOA fees of $390 a month. So it adds up to $7,818 a month. So you saw the amortization schedule. We are paying less in rent than we pay an interest for like the first X years of the loan. And yes, you can refinance, but the question is when, how long are you going to pay that high amount of interest? And is it really worth it? Because I don't think that prices are really going to continue to go up as long as the interest rates are so high. So I just don't really feel like I'll be in a worse position in a couple years. I don't know, is anyone else trying to buy here? What are what are your plans?