@David Faulkner, @Chris Mason, @Chris Larsson, @Saikat Bhadra, @Arlen Chou, @Carolina Solorzano - thanks for the feedback and insights! Here's an update and more clarity on my question :)
Update: We put in an offer for the house, but we were not the winning offer... The property ended up going into contract for $1.6M +
Clarity: Thanks for all the replies... the feedback is valid and some of the points ones I have also thought of before. More specifically, here are the thoughts/concerns I have:
1. Market Cycle: It's difficult if not impossible to time investments... however, it does feel like the market in Oakland/San Francisco is quite expensive (affordability, total cost of home, etc). With the anticipated rise in interest rates and slowing growth in the tech sector, is right now a good time to buy? On the flip side, I totally appreciate that the Bay Area is a desirable place for families to move and we are land and development constrained. So, the debate in my mind has been... is it worth it to wait a few months, few years.. or do I buy now?
Which leads to concern #2
2. Rent vs buy: My wife and I don't have kids currently...but anticipate starting a family in the next 1-2 years. If we buy, we were planning to buy our "forever home"-- a 3/2 house that would comfortable fit a family of 4. However, if we rent in the short term, my thought would be to rent a 2/1.
At current rates, a mortgage for a 3/2, ~$1.5M house is around $7.5k/month. A smaller 2/1 rental rents for $4,500-6,000/month... so given the timing and space requirements, what's the best move?
3. Buy vs. Invest: I am a big believer of value investing-- specifically, I subscribe to the idea that protecting your principal investment is critical. As you guys pointed out, buying in the bay area does take a large principal investment (in the form of a down payment). If I were to buy a $1.5M property, 20% down payment would mean a principal investment of $300,000. There are a lot of ways to invest $300,000. I struggle with deciding whether investing the $300,000 in a primary residence is the best investment or if there are better ways to protect and grow the money (eg. rental properties, stocks, bonds, etc). --- This $300,000 investment also ties back to my concern whether bay area prices are in "bubble territory" and if there is a chance that I lose parts of my principal or if the $300,000 would grow faster and less risky in other asset forms.
About Me:
I forgot to mention a bit about my background and finances... My wife and I earn enough money to qualify for the mortgage. And, my wife and I purchased a condo in 2009 (in San Francisco) which we sold in 2016. We were blessed with a significant profit from the condo sale... which we are now deciding where to spend (to buy a primary residence or invest elsewhere)
Given this new information, would love to get your insights!
