Looking to buy a home but worried about buying at our max

Darn it! I just typed a long response and then got an error message. The gust: You are almost guaranteed to lose lots of money if you buy now, as we are either at the top of the market or within 95% of it. The crash is almost certain to come within the next 5ish years, so even if you stay for 10 it won’t have returned to these heights. I’m in a similar situation and would love to move but I’m waiting it out and/or plan to move into another rental in the meantime. Hope this helps!

We bought in Mill Valley two years ago at our absolute max because we were in a similar situation - two kids in private school in SF, living in a super cheap rent-controlled flat. The only difference is ours were entering middle and high school at the time. After bidding on six houses, we had to bite the bullet and pay an insane amount for our house. Crazily, it's gone up in value since then, but that doesn't take away the fact that the mortgage and property taxes are very high for us (about $5k a month before deductions) and the house is old, so we've had to sink more money into it. The monthly nut is a lot of pressure, but still less than our rent and private school fees in SF, which worked out to over $6k a month. Private school fees go up about 5% a year, so it just kept getting more expensive. Overall, we're very glad we did it. The schools in Mill Valley are excellent; we were pleasantly surprised after so long in private school. However, since property/parcel taxes to support the schools are high, we don't envision staying in Marin after they're both done with high school. If you're planning to stay 10+ years, I would say it's worth it to buy. I think it would be a good idea to rent for a year in the Marin town you want to live in. That would give you some time to get your kids settled into school and then find a house. Inventory is low and most houses get multiple bids, so it took us a year to get a house! Good luck - I grew up in Fairfax and it's a lovely town.

I don't know whether you should buy or not, but I do know that no one knows or can know if we are at the top of the market, and you shouldn't listen to anyone who says they know one way or the other. The only question that matters is, can you afford the house, taking into account your income and other expenses. When you say "crushing mortgage" it makes me think maybe you wouldn't be able to afford the house, or that there's a high degree of risk that you might end up in a situation where you can't afford the house (job instability is one of the greatest risks). It's hard not to risk everything and stretch beyond your limits in the crazy Bay Area real estate market, but it is unwise. Maybe not the answer you're looking for, but it's tough out there in this very expensive place to live. 

A few points to consider:

How secure is your income?  Can you access savings if you need to?  A house is a great investment, but you don't want to wind up in bankruptcy.  Give yourself a little cushion.

If you plan to stay in your house 10+ years, I think a house in Marin is probably a safe bet.  That probably goes for almost any desirable neighborhood in the Bay Area.  Yes, the market may tank, but historically the Bay Area rebounds.  If the schools are good (and the public schools here have a great reputation), IMHO it's a relatively safe bet.  But of course there are no guarantees in this world.

Rents in Marin have skyrocketed, and most places don't have rent control, so that's another argument for buying.  The fires in Sonoma County have also increased housing demand, mostly for rentals. 

Things to consider in purchasing:  How much will property taxes add to your expenses, what about utilities, upkeep and mortgage insurance (if you have to have it.)  Plus the cost of living: we shop mostly at Trader Joe's and Grocery Outlet because food costs are so high here, and the farmer's market isn't cheap either.  Fairfax and San Anselmo are pricey and the major corridors are slow and traffic clogged during commute hours, so do some driving during the busiest traffic times before you buy.  Traffic here generally has gotten quite dense in the last few years, although another lane on the Richmond/San Rafael bridge is due to open soon, which will help.  But there's basically no public transit to the East Bay, so factor that in if work/school/friendships mean you need to be in the East Bay a lot.

There are things for kids to do in Marin, but overall it's more of a suburban community than the East Bay, which is generally more urban, hip, and educated.  Here kids join the swimming teams (good pools) and camp with the Boy Scouts.  It's more provincial overall, and there are a lot of long-term residents, plus generally an older demographic.  However, there's been an influx of parents with young kids in the past 5 years, and I expect the community will change. There are many pockets of long-time residents who offer a sense of community.

And while a house is nice, if you can't afford one, look at a condo/townhouse.  Personally, I would look at San Rafael/Terra Linda or Novato, where we've lived and had good experiences and made friends; a few people have said that San Anselmo and Fairfax are kind of clique-y and cold (but that's just a few random opinions and not gospel, you need to feel it out for yourself).  The schools don't have the elevated reputation of the Fairfax/San Anselmo area, but they are very good and parents are extremely involved.  Marin families support school extras, like orchestra. 

I wish you good luck in finding a great home!

No one knows what the future holds. No one knows if prices will be going up or down. Buying a home is a leap of faith. I can say that prices are usually a little lower in winter. So move to the community you want to be in and try to buy after the school year starts. I know it is more of a hassle to move during the school year, but you might be able to save some money. 

If you are happy in your rent controlled apartment, why not try to get your kids into a charter school or a catholic school, instead of a private school, if the public school doesn't pass muster?  San Anselmo is pretty expensive, maybe look in Corde Madera or San Rafael?  I'd assume we are at the top of the market or close to it but that's what I thought four years ago!

We bit the bullet and bought last summer at a price point that is several hundred thousands higher than what we were comfortable paying. We started our house search at $850k and didn't find anything and saw prices skyrocket each season. We decided we needed to stretch our budget, so we went up to $1 mil. after a year of looking and not finding anything in our price range. The problem was the $850k houses we didn't like had become $1 mil. We spoke with a financial planner and decided to make certain sacrifices and went up to $1.25 mil. The price tag was so hefty that I couldn't believe we were doing this. I called the financial advisor and asked her to triple confirm that we could afford this because I couldn't believe that we could. We did it. We bought at this price tag and what the financial planner or anyone else failed to mention/anticipate is how freaking expensive the upkeep is and how much bigger the PGE bill is because the house is old and leaks from top to bottom and all the way around. (100 year old windows, loose floor boards, not whole lot of insulation, odd shaped/sized doors and windows.) Our monthly housing cost doubled as a result. We are now on a pretty tight budget and no longer shop at whole foods or eat out regularly. I used to buy everything organic. Not anymore. We pack our lunches and stop buying clothes and things we don't need for ourselves. We can't go on a nice vacation this year. Another thing we overlooked is how expensive moving is. We are furnishing the new house with free or low cost Craiglist finds. We have resigned to the fact that for the next year or 2, we'll be in a deep financial hole, but we hope to crawl out of this hole and in 5 - 10 years, things will begin to stabilize.  Of course, by then, there will inevitabily be another big house projects - new roof, new plumbing and god knows what else. We have no money left if something major goes wrong with the house now, so we're hoping and praying that the old roof holds for a couple of years. 

I share this because we feel that we bought at the height, as we don't see prices jumping up as aggressively as when we were looking to buy but we feel stable in our little bungalow. We have entered the period of austerity and we don't buy new things much anymore but at least no one can increase rent on us. (Our friends' landlord just increased their rent by 30%.)

On the flip side, my spouse and I feel a tremendous pressure to hold onto our jobs now more than ever, and we aren't 100% happy with our jobs but we're afraid to make any changes.

I am going to add a spin on this. Again, this is related to OUR situation but my intention is to help to provide as much information as possible so you can make your decision . 

We bought a home in Park Slope Brooklyn in 2010, as prices were climbing. I won’t go into cost per square foot, HOA fees (for what?), the upkeep and unforeseen expenses. At the time, we were in medical residency and had a newborn. We had financial help from my family at the time, as our residency salaries would never have covered part of the mortgage. We also had to pay our family back the money (no interest). Without any repairs or upgrades to a very old and cold 2 bedroom (that sold as a 3 bedroom), we paid $1.35 million, which seemed like a bargain. It wasn’t. It was a pure money pit (even without upgrades). We couldn’t wait to move out, rent it out and get on with our lives. We still own and rent it out. We won’t make money it for another seven years, minimum. From 2014-2016, we moved to NOLA for fellowships. We bought another home. Far less expensive, the same money pit situation (adding two more kids to our family and private schools due to not so great public schools). Our heads were never above water. At the end of 2016, we moved to the area and are renting. We downsized, simplified our life, our wants and we couldn’t be happier. We are two doctors paying off old bills. Our salaries are great but when you are paying off old debt, your pot of money is always small. No one knows what the market is going to do; I can tell you that my sister is a realtor in the area and even though inventory is low, many foreign investors who were driving up the market have left or are on their way out. 

I believe we made a mistake out of thinking we needed to own. Owning a home can be a wonderful achievement, but it’s not necessary. We have saved money by renting. Does it feel bad to throw money away? Yes but we had to change our view on it. Way more money in our pocket and we can pay off old debt and invest the rest. Generally real estate is a great investment. Consider duration, taxes, really think about the expenses that are involved and if you can sleep at night with the monetary price you will pay. For us, we sleep at night knowing we are paying off old debt and saving money. Good luck. This is not an easy decision.