I did a similar analysis with more relevant (for me) numbers for BA recruiters that wanted me to move.

Their responses were ... well ... sad. I don't blame them. Or the companies.

I was amused by the offered salaries, after I explained the basic economics to them. Pointing out that the net income after taxes/expenses is so low as to effectively put me and my family into poverty.

The smart ones responded positively to "keep me where I am, have me hop a plane N times per month."

The dumb ones said "but BA real estate only goes up." Which, is a large part (but not the root cause) of the problem. If this were true, then BA real estate would be little more than a barely concealed Ponzi scheme. Which, maybe, it is. I dunno.

What is interesting to me is that the rest of the country has been wising up for a while. So now you can get the benefits of BA salary/comps working locally. This is a welcome development, though rent seeking behavior seems to follow this, so it is only good for a while.

> Ponzi scheme

nitpick: Ponzi scheme = fraud, giving people fake investment accounts, like Bernie Madoff's operation.

It's more akin to a pyramid scheme, greater fool theory, speculative bubble, etc.

I stand ... er ... sit ... corrected ...

Where did you get 3k a month for housing?? Remember, this is an 80-10-10 loan which means you have two loans. I have a 80-10-10 loan for a roughly $900k house and the first mortgage is $3400/mth (30 year fixed at 4.15%) and the second loan is $600/mth (same but around 6% interest). $4000/mth just for the mortgages, property tax is about 12k for the year, which means you pay $5000/mth on housing. For reference, this is San Jose.

So with your estimate, you're actually left with $4k saved for the year..

After interest deductions on mortgage & property taxes a 1 mil home is ~4000$/month in `rent`. Yes you'd be paying more than 4k but you'd also be taking home more money as well.

I just described a home that is $100k less than the $1MM example. The property tax rate in San Jose is roughly 1.3% of the price of the home you bought it at. So for $1MM, you're looking at $13k in property taxes, not to mention a higher mortgage overall from my example. A quick mortgage calculator tells me that we're adding another $400/mth for the $1MM example. This doesn't include the second mortgage which will roughly be $100,000 loan at about 6.5% interest.

So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions (in order to meet your ~$4000/mth)?? Effectively making your property taxes free for you? You're either delusional or I am going to have a very exciting tax season come next April...

> So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions

Something like that.

Federally, local property taxes and mortgage interest on the first $1 million of principle for first and second mortgages for your primary residence are deductible from your income. For California, the rules are slightly different, but I think that they are close enough to use the same rules for estimation purposes.

Using the interest rates from your example that would be a deduction of 4.5% * $800k + 6.5% * $100k = $39.7k for the mortgage interest deduction and roughly $12.5k for the property tax deduction for a total deduction of $52.2k. If you can afford a million dollar house, you are probably in either the 28% bracket or the 33% bracket for federal taxes and in the 9.3% bracket for California taxes so that will save you $14.6k-$17.2k on federal taxes and $4.9k on California taxes.

Your combined interest on both roughly tracks 4.1-4.7% overall.

See my comment below.

“so 900k mortgage at 4.1% interest is ~3k of interest and 1.2k of principal for first month. Now you have 1k/month of property tax, 0 HOA (i was not talking about a condo), and 180$/month of insurance. I've been quoted 80-10-10 which have 0 PMI fees. Let's be safe and assume that you're taxed at 30% at your highest level. Its likely you're being taxed at 40% though. Now doing some math.... 3k*0.7 + 1.2k + 1k+0.7+.180k = 4180$/month. Obviously there's maintenance and other costs but that's how much its actually costing you.”

You also have to factor in the astronomical rent. How are you supposed to save that 100k when so much is going to rent?

I know a non-tech dual-earner couple who managed to save a down payment like that in the Bay Area, but they were living rent-free in a house owned by one of their parents well into their 30s.

You can be like me and live cheaply. I lived in a coop for my 1st year in the bay rea (1.5k/month total). Then I rented in a 2 bed 2 bath with 3 ppl. Once I had a girlfriend rent became 50% off.

Basically I've never personally paid more than 2k/month in rent in the bay area.

Its not quite 40%, and 3k buys you ample space. I had a studio for 1800 in hayes valley ,which is one of the nice areas of SF.

And even in your calculation, means that after 4 years you can do the downpayment. Its not unreasonable for house prices to be where they are in that calculation.

18k for retirement, and that leaves 10k per year saved towards a down payment / kids’ college, create-your-own-startup, etc.