How will you escape the pit (the ER)?

[thegenius]

@thegenius mortgage actually only puts the house worth slightly north of 1 mill which would be totally respectable and affordable with our kind of salary. It's that health insurance. Yikes! It just goes to show that 100K can go pretty quickly with our kinds of expenses as 1099 docs even before we start spending on any vacations or leisure stuff... Disability, health insurance, professional fees, business expenses can put a serious dent in the piggy bank.

Yea mortgage is like 1.1M (30 yr @2.875%), bought for 1.35. Today, 2 years later it's worth about 2M, although that is falling as rates are going up.

The health insurance is another story. I'm a 1099 and buy it on the open market. 6 years ago it cost $1100/month for family of 4, now it's $1900/month for the same family. And our out of pocket expenses / deductible is like 8k or something. I just had my blood drawn and a CXR and that cost $130.

Thank god my wife just got a great job and she gets Aetna platnium PPO insurance for free. Her company pays 100% of the premium. So we all moved over this year except me...I'll move next year in Jan 2023 so I can fully fund my 2023 HSA for 7.2K.

It is incredible how our health care premiums have skyrocketed!!! it's totally unsustainable. It one of the reasons why there hasn't been great wage growth. Companies entire compensation packages have increased over time...but it's going more and more to things like health insurance.

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[thegenius]

Some of yall have some nice houses.

You know...I have a nice house. Its not huge, it's not fancy. It was build in 1962. My house looks similar to this one:

301 Greenbrook Dr, Danville, CA 94526 | Zillow

301 Greenbrook Dr, Danville CA, is a Single Family home that contains 2453 sq ft and was built in 1966.It contains 4 bedrooms and 3 bathrooms.This home last sold for $1,700,000 in July 2022. The Zestimate for this Single Family is $2,083,800, which has increased by $150,023 in the last 30...

www.zillow.com

I do live in the Bay Area but nowhere near Danville. My house sq ft, #bedrooms, #bathrooms, lot size, amenities, and cost are all about the same as the one above.

I think most would say house I posted is "nice". It's not amazing or special, nor is it extravagant. Out of the 80 million single family homes in the US...I would say mine is in the 60-70 percentile of "niceness".

I'm always told by my Uncle who lives in the boonies of IL that 1.5M buys an outright extravagant mansion where he lives. I don't want to live in the boonies though.

 

[VA Hopeful Dr]

Some of yall have some nice houses.

Some of us are anti-social homebodies

 

[RustedFox]

You know...I have a nice house. Its not huge, it's not fancy. It was build in 1962. My house looks similar to this one:

301 Greenbrook Dr, Danville, CA 94526 | Zillow

301 Greenbrook Dr, Danville CA, is a Single Family home that contains 2453 sq ft and was built in 1966.It contains 4 bedrooms and 3 bathrooms.This home last sold for $1,700,000 in July 2022. The Zestimate for this Single Family is $2,083,800, which has increased by $150,023 in the last 30...

www.zillow.com

I do live in the Bay Area but nowhere near Danville. My house sq ft, #bedrooms, #bathrooms, lot size, amenities, and cost are all about the same as the one above.

I think most would say house I posted is "nice". It's not amazing or special, nor is it extravagant. Out of the 80 million single family homes in the US...I would say mine is in the 60-70 percentile of "niceness".

I'm always told by my Uncle who lives in the boonies of IL that 1.5M buys an outright extravagant mansion where he lives. I don't want to live in the boonies though.

The thought of ever.. EV-ER.. paying 2M for a house is insane to me.

 

[thegenius]

The thought of ever.. EV-ER.. paying 2M for a house is insane to me.

It's totally insane. I paid 1.35 for mine and it's now worth about 2M. It's just insane.

 

[RustedFox]

It's totally insane. I paid 1.35 for mine and it's now worth about 2M. It's just insane.

Yeah, you know - I need to watch my mouth.
The things that I say are "insane" and "I'll never do" are precisely the things that I find myself having done and considering them "reasonable at the time".

So, seeing as how I have sworn up, down, left, and right that I'll never live in CA... it probably means that we'll be neighbors in a few years.

 

[cyanide12345678]

$54,720 = mortgage
$3,500 = home insurance
$17,500 = property tax
$22,600 = health insurance (next year will be $6000)
$9,800 = disability insurance

at 106K

The benefit of living in the mid west:

Mortgage: 30k.
Home insurance: $1000
Property taxes: $6000
Health insurance: $3600
Disability insurance: $2400

43k.

 

[sylvanthus]

It's totally insane. I paid 1.35 for mine and it's now worth about 2M. It's just insane.

Bought mine for 750k 3 years ago, its 1.4 mill now on zillow and they dont even know about the solar panels battery backup greenhouse wired for electric etc etc. Housing market is cray.

 

[BoardingDoc]

Bought mine for 750k 3 years ago, its 1.4 mill now on zillow and they dont even know about the solar panels battery backup greenhouse wired for electric etc etc. Housing market is cray.

It definitely is. I similarly bought at a lucky time ~2 yrs ago and am at a little over 150% of what I paid for it then... also not taking into account the home upgrades we put in plus the solar panels/batteries.

I don't feel quite the same way about it as I do about seeing my stock portfolio going up though. At the end of the day, even if I sell the house, I still need somewhere to live. If I sell stock, it's presumably because I've begun my retirement drawdown. I guess I see the crazy value increase as allowing me to at least buy a different similar home if I want to whenever I move, or maybe bank some money if I move to a low COL area.

 

[WilcoWorld]

You know...I have a nice house. Its not huge, it's not fancy. It was build in 1962. My house looks similar to this one:

301 Greenbrook Dr, Danville, CA 94526 | Zillow

301 Greenbrook Dr, Danville CA, is a Single Family home that contains 2453 sq ft and was built in 1966.It contains 4 bedrooms and 3 bathrooms.This home last sold for $1,700,000 in July 2022. The Zestimate for this Single Family is $2,083,800, which has increased by $150,023 in the last 30...

www.zillow.com

I do live in the Bay Area but nowhere near Danville. My house sq ft, #bedrooms, #bathrooms, lot size, amenities, and cost are all about the same as the one above.

I think most would say house I posted is "nice". It's not amazing or special, nor is it extravagant. Out of the 80 million single family homes in the US...I would say mine is in the 60-70 percentile of "niceness".

I'm always told by my Uncle who lives in the boonies of IL that 1.5M buys an outright extravagant mansion where he lives. I don't want to live in the boonies though.

Now, that's a lovely home that I would be happy to live in...but $1.99M!!!???!!!

 

[Apollyon]

Now, that's a lovely home that I would be happy to live in...but $1.99M!!!???!!!

Real estate, like politics, is all local. A friend told me of, over 20 years ago, when there was a scout for a business that came to South Carolina to look at homes for executives, with a $300k ballpark. He goes back to the home office, and shows them what he found. They say, "we said $300,000, not $3 million", and he says, "those WERE the $300,000 homes".

Back in 2006, in S Carolina, I looked at a home for $500k. This place was a legit 3 stories, and had it's own, regular sized, elevator. IIRC, it was 5500 sq ft.

 

[VA Hopeful Dr]

Real estate, like politics, is all local. A friend told me of, over 20 years ago, when there was a scout for a business that came to South Carolina to look at homes for executives, with a $300k ballpark. He goes back to the home office, and shows them what he found. They say, "we said $300,000, not $3 million", and he says, "those WERE the $300,000 homes".

Back in 2006, in S Carolina, I looked at a home for $500k. This place was a legit 3 stories, and had it's own, regular sized, elevator. IIRC, it was 5500 sq ft.

Ha, Greenville is up to around $300/ sq ft currently.

 

[miacomet]

Now, that's a lovely home that I would be happy to live in...but $1.99M!!!???!!!

Bargain compared to where I live, which is not on a coast!

 

[emergentmd]

Not wanting to every pay 2M for a home I can understand. But to say, a house for 2M is crazy is not grounded in reality.

Almost no one would buy a 4ksqft 2M home in El Paso Texas. But we all would be running to our bankers to buy a 4Ksqft home Next to Central Park.

 

[WilcoWorld]

I understand that real estate prices depend on location, location, location. I'm just lamenting that some people have to pay 2M to live in a decent home.

It's hard out there for a...doc

 

[cyanide12345678]

I understand that real estate prices depend on location, location, location. I'm just lamenting that some people have to pay 2M to live in a decent home.

It's hard out there for a...doc

Nobody has to pay 2M to live in a decent house. They choose to live in a place where they have to pay that. It’s a choice.

 

[WilcoWorld]

Nobody has to pay 2M to live in a decent house. They choose to live in a place where they have to pay that. It’s a choice.

I mostly agree.

Some people's choices are less freely made than others though. The divorcee who can choose between either living in a high-COL area or seeing their kids regularly is in a very different situation from the new grad with few roots.

 

[DoctwoB]

Keep in mind housing is both consumption and investment. Yes you're better off buying a 500k house and investing the rest then a 2.5m house. But paying that mortgage is a type of forced investment (and a highly leveraged one at that)

But if you live in Manhattan or SF or LA or Silicon Valley and you buy that 2.5 million dollar house (probably a modest one), work for 20-30 years, it'll probably be worth 8 when you retire. You could have a 0$ in a retirement account, sell you house, and retire in 99% of the country in luxury. Or keep your house and live off a cash-out refinance or reverse mortgage. Or keep it as the inheritance for your kids. Our house (per Redfin) has appreciated 700k in 1 year. Obviously that rate isn't sustainable, and it doesn't help me on a day to day basis unless we decide to move, retire, access the equity, or die, but if a VHCOL is where you want to be, the housing prices can be a blessing and not just a curse.

Now you are absolutely taking on risk that the doctor who bought the 500k house is not. Trees don't grow to the sky. Unless they do.

 

[Dred Pirate]

Yea mortgage is like 1.1M (30 yr @2.875%), bought for 1.35. Today, 2 years later it's worth about 2M, although that is falling as rates are going up.

The health insurance is another story. I'm a 1099 and buy it on the open market. 6 years ago it cost $1100/month for family of 4, now it's $1900/month for the same family. And our out of pocket expenses / deductible is like 8k or something. I just had my blood drawn and a CXR and that cost $130.

Thank god my wife just got a great job and she gets Aetna platnium PPO insurance for free. Her company pays 100% of the premium. So we all moved over this year except me...I'll move next year in Jan 2023 so I can fully fund my 2023 HSA for 7.2K.

It is incredible how our health care premiums have skyrocketed!!! it's totally unsustainable. It one of the reasons why there hasn't been great wage growth. Companies entire compensation packages have increased over time...but it's going more and more to things like health insurance.

it always just seems wrong that docs tend to have the worse health insurance

 

[Pudortu]

Keep in mind housing is both consumption and investment. Yes you're better off buying a 500k house and investing the rest then a 2.5m house. But paying that mortgage is a type of forced investment (and a highly leveraged one at that)

But if you live in Manhattan or SF or LA or Silicon Valley and you buy that 2.5 million dollar house (probably a modest one), work for 20-30 years, it'll probably be worth 8 when you retire. You could have a 0$ in a retirement account, sell you house, and retire in 99% of the country in luxury. Or keep your house and live off a cash-out refinance or reverse mortgage. Or keep it as the inheritance for your kids. Our house (per Redfin) has appreciated 700k in 1 year. Obviously that rate isn't sustainable, and it doesn't help me on a day to day basis unless we decide to move, retire, access the equity, or die, but if a VHCOL is where you want to be, the housing prices can be a blessing and not just a curse.

Now you are absolutely taking on risk that the doctor who bought the 500k house is not. Trees don't grow to the sky. Unless they do.

Do you truly think a house will appreciate that much in 20-30 year? My BIL actually bought a 3.5 mill house in SF and I think it's bonkers. How can people afford homes like that in the future? $8 mill is just too much for the tech workers. I just don't see the market appreciating THAT much. I realize you gave a conservative 4% compounding rate over 30 years, but there has to be a limit where supply/demand/what people can afford reach an equilibrium (it's not there yet). Maybe I'm a simple minded idiot.

 

[DoctwoB]

Do you truly think a house will appreciate that much in 20-30 year? My BIL actually bought a 3.5 mill house in SF and I think it's bonkers. How can people afford homes like that in the future? $8 mill is just too much for the tech workers. I just don't see the market appreciating THAT much. I realize you gave a conservative 4% compounding rate over 30 years, but there has to be a limit where supply/demand/what people can afford reach an equilibrium (it's not there yet). Maybe I'm a simple minded idiot.

Bay Area housing prices have roughly doubled every 10 years for the last 40 years. Of course past performance is no guarantee of future performance, trees don’t grow to the sky, etc etc etc.

But Bay Area real estate will always be desirable due to ideal weather and geographically and zoning limited supply. If anything a lot of the other hot metro areas have started to close the gap, which puts upward pressure over here.

But no, I’m not counting on prices continuing to rise as they have. If they do, great. If they slow to national average rates that’s fine and I still make out like a bandit due to leverage. If they stagnate or fall that’s a bummer but I can afford my mortgage and it likely just means a less valuable asset left to my heirs.

 

[thegenius]

Do you truly think a house will appreciate that much in 20-30 year? My BIL actually bought a 3.5 mill house in SF and I think it's bonkers. How can people afford homes like that in the future? $8 mill is just too much for the tech workers. I just don't see the market appreciating THAT much. I realize you gave a conservative 4% compounding rate over 30 years, but there has to be a limit where supply/demand/what people can afford reach an equilibrium (it's not there yet). Maybe I'm a simple minded idiot.

It's possible if there is commensurate wage growth and low interest rates. Ain't no way housing will appreciate over the next 3-5 years though given how we are going into a recession. That being said...I would rather own a house in the Bay Area than just about anywhere else. Provided we still have drinking water.

 

[The Knife & Gun Club]

It's possible if there is commensurate wage growth and low interest rates. Ain't no way housing will appreciate over the next 3-5 years though given how we are going into a recession. That being said...I would rather own a house in the Bay Area than just about anywhere else. Provided we still have drinking water.

What’s particularly interesting is that remote work has turned the whole housing market on its head. For most middle-upper class Americans you can now live anywhere and remote work - so living in a desirable metro has become a luxury not teathered to job opportunities in the immediate geographic area.

So in the future rather than people living in SF because that’s where the high paying tech jobs are, they’ll be living in SF purely based on the amenities (culture and stuff). Similarly my home town of Miami has seen prices soar as people realize they can live in a beach city for the right price and continue their NYC financial job.

 

[Apollyon]

Provided we still have drinking water.

People think I'm kidding, but, really, I'm not. I live in western NY (next to Lake Erie), so, if "push comes to shove", Michigan, Ohio, Pennsylvania, and New York will have a stranglehold on the rest of the nation. That's provided that the fed gov doesn't exert some "national interest".

Or the Canadians don't put a hose in the lakes and drain them dry!

 

[qwerty89]

Keep in mind housing is both consumption and investment. Yes you're better off buying a 500k house and investing the rest then a 2.5m house. But paying that mortgage is a type of forced investment (and a highly leveraged one at that)

But if you live in Manhattan or SF or LA or Silicon Valley and you buy that 2.5 million dollar house (probably a modest one), work for 20-30 years, it'll probably be worth 8 when you retire. You could have a 0$ in a retirement account, sell you house, and retire in 99% of the country in luxury. Or keep your house and live off a cash-out refinance or reverse mortgage. Or keep it as the inheritance for your kids. Our house (per Redfin) has appreciated 700k in 1 year. Obviously that rate isn't sustainable, and it doesn't help me on a day to day basis unless we decide to move, retire, access the equity, or die, but if a VHCOL is where you want to be, the housing prices can be a blessing and not just a curse.

Now you are absolutely taking on risk that the doctor who bought the 500k house is not. Trees don't grow to the sky. Unless they do.

Up until recently California allowed property to be transferred from parent to child while keeping the same property tax rate. Because of Prop 13 they could have been paying a miniscule amount of property tax in places like Newport Beach.

 

[EctopicFetus]

Keep in mind housing is both consumption and investment. Yes you're better off buying a 500k house and investing the rest then a 2.5m house. But paying that mortgage is a type of forced investment (and a highly leveraged one at that)

But if you live in Manhattan or SF or LA or Silicon Valley and you buy that 2.5 million dollar house (probably a modest one), work for 20-30 years, it'll probably be worth 8 when you retire. You could have a 0$ in a retirement account, sell you house, and retire in 99% of the country in luxury. Or keep your house and live off a cash-out refinance or reverse mortgage. Or keep it as the inheritance for your kids. Our house (per Redfin) has appreciated 700k in 1 year. Obviously that rate isn't sustainable, and it doesn't help me on a day to day basis unless we decide to move, retire, access the equity, or die, but if a VHCOL is where you want to be, the housing prices can be a blessing and not just a curse.

Now you are absolutely taking on risk that the doctor who bought the 500k house is not. Trees don't grow to the sky. Unless they do.

I’m not sure this is true historically. Keep in mind leverage. Have to work out the numbers but in many places the top end of the market has appreciated faster than the bottom. Regardless of what the market does if a doctor loan on a $1m house and u put nothing down and it is now $1.5M which is not crazy you made an infinite return on your investment.
friend of mind just bought a place in San Diego in the past 2-3 years for 2.4m. Now is selling and has contract for 3.7m. Even if he put 20% down that’s 500k (to make the math easy) he is gonna make $1.3M before transaction costs. Tripled + his money assuming he put down exactly 20%.
leverage in real estate is essentially why real estate investing exists. Without it your returns are similar to the sp500 with way more headache.

 

[GassYous]

Bay Area housing prices have roughly doubled every 10 years for the last 40 years. Of course past performance is no guarantee of future performance, trees don’t grow to the sky, etc etc etc.

But Bay Area real estate will always be desirable due to ideal weather and geographically and zoning limited supply. If anything a lot of the other hot metro areas have started to close the gap, which puts upward pressure over here.

But no, I’m not counting on prices continuing to rise as they have. If they do, great. If they slow to national average rates that’s fine and I still make out like a bandit due to leverage. If they stagnate or fall that’s a bummer but I can afford my mortgage and it likely just means a less valuable asset left to my heirs.

Ideal weather? You mean the fog and the cold?

 

[emergentmd]

I doubt many houses will go from $2M to 8M in 20-30 yrs. Yes, in places that are unique like lake, beach, unique locations but that is why you leverage.

A 2M home is $400k down. if it goes up to $4M in 20 yrs, then you have 10x your investment.

Lower to medium priced homes relative to the area will typically appreciate more given they are much farther from the ceiling.

If I had $2M and home range for an area is 300K-2M, I would rather buy 10 homes for 500K with leverage than a $2M home. yes, there is risk but real estate almost always goes up in the long run.

 

[bravotwozero]

Ideal weather? You mean the fog and the cold?

I’d take that over 90-100 degree weather for 6+ months out of the year ANY day. To each their own.

I could bike year round in SF - not saying I’m going to live there.

Can’t do that here.

 

[Mbekweni]

For all the crap that exists in EM during times of economic turmoil having a high paying and stable job is a blessing. Buying stocks when they are down only works when you have a job and ability to save some of what you earn.

 

[Kryptocoin]

B

For all the crap that exists in EM during times of economic turmoil having a high paying and stable job is a blessing. Buying stocks when they are down only works when you have a job and ability to save some of what you earn.

True. As long as you didn't YOLO into ARKK stocks and now sitting at an 70% loss.

 

[miacomet]

Waiting for the crash. Waiting. Want to buy a house near the CA coast.

 

[thegenius]

Waiting for the crash. Waiting. Want to buy a house near the CA coast.

Unfortunately the CA coast is so desirable you may not get the crash you want.

What you might get is -25% nationwide, and maybe -5 to 0% down only in a select few places and one might be the CA coast depending on where you want to buy. That's kind of what happened between 2008-2012

 

[Old_Mil]

I think the biggest thing is that people will spend money (sometimes a lot of it) if they find value in it. Think about all the patients on Medicaid we see who have $200+ sneakers on. There is no shortage of money in the world and people want to spend it on things they desire.

...and that's the truth. The reason there is no future in EM is that - aside of allowing an army of managers and bureaucrats to eat at our trough - people don't want to spend money on it. Sports med, there is a lot of money in sports if you don't mind being the tick on the back of a successful ortho practice. In all seriousness, get out. Life outside of medicine is glorious if you find the right gig. Understand that if you must stay, you are going to have to start your own practice somehow.

There is no future in working for an MBA who is constantly trying to increase your workload to increase his quarterly bonus.

 

[Dr. Rude]

Waiting for the crash. Waiting. Want to buy a house near the CA coast.

The problem is that the world where the housing market crashes is often the world where your portfolio is down and job/income security is low and one is often unwilling to commit to a big ticket house.