How will a house make sense? The median price of a house in San Francisco is now several times what the projected LIFETIME earnings for a high school graduate was projected to be in 1962, the year I finished high school. Bear in mind that studies now say that a current bachelor degree is worth considerably LESS in real terms in the labor market than a high school diploma was worth in the sixties. Just to rent a home in San Francisco costs what used to be a high level executive salary in my youth.
For perspective let me add that I spent almost a year on the old Navy training base on Treasure Island in San Francisco bay in 1962 and 1963 going to electronics school. My pay then was less than one hundred dollars a MONTH, let that soak in, that is NOT a typo. On that pay I had many a good time in the city. Mixed drinks at Lefty’s were fifty cents each. A ride on the cable car was maybe a quarter, I am not sure it even cost that much. Two of my schoolmates who earned only slightly more than I did (because they had more time in grade) rented a two bedroom apartment in Frisco to have a place to party with girlfriends on the weekend. You could have lived a year in Frisco back then on what a couple of months rent would be now. At some point this absurd California real estate bubble has to burst, it is as certain as the sunrise. If drought conditions persist long term there WILL BE a massive exodus from the state. In that case houses will be available for free to snakes and scorpions.
When the babies arrive and marriages start settling in either they will purchase some how some way or the generation below them will start scooping them up as eventually all the boomers will be dead and my Gen. X crew might actually sell to them ;). We Gen Xers are the beneficiaries of the millennials' inability to purchase.
We are more patient and strategic at knowing how to get into these expensive CA homes.
I saw the formula the day I moved to the state in 2000. Buy nice neighborhood at a barely affordable price but still affordable, live in long enough to get value back and then some, buy higher priced home, sit on it and enjoy life, sell and move up. Now I am in my dream home 4 times the value of my first new home in CA. It only took three homes to do it.
Patience, wise investment, and timing, works here. Also doing the right sort of updates that inspire millennials to buy help such as major tech revamps of the home (Sonos systems, stealth speakers, pools, cool spaces indoor and out) and making a home a relaxation, group friendly place as well makes these kids want to buy their own space one day. We all get old eventually.