Reply to How do People in the Bay Area buy 2-3 million houses

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[quote=Anonymous]People stretch more but it pays off because the appreciation is so high. People get cash from stock options or from selling their smaller home.

Its also popular for people to buy tiny houses below 2M and just remodel. If you don't tear down, your taxes stay closer to your purchase price. In CA your property tax doesn't change until the house is sold again or completely torn down/rebuilt. If you buy a tiny 9000 sq ft house that has never been upgraded for 1.5 M and wait a year, you will have 150-300K in equity. Wait two years, you have300-600K in equity. You also have more stock to sell so you can remodel your house and increase the size. If you go sell in a few years, you now have a 2-3M house.

Rents are astronomical here. In some areas, they can double in a year. If you have a family and are renting a house, you run into the owner wanting to sell or their relatives moving in so its even harder to find long term rentals. People renting see the skyrocketing appreciation and see that they keep getting farther away from owning so they pull everything together to get a house. [/quote]

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