The Day Has Finally Come: We're Home Rentowners!
Executive summary: After many years of waiting for the right time, we have purchased our first home (which is more like a glorified rental TBH) through Stanford’s extensive faculty housing programs.
It’s happened: we’ve closed on our first home! We bought it straight from Stanford (more on how that works below). As someone who’s spent literally decades drawing floorplans for fun, touring model homes in my spare time, and imagining furniture placement as a hobby, it’s been a little surreal to finally get to this point. You might think that someone as house-obsessed as me would’ve purchased a place sooner than their mid-30s (given the average age of a first-time homebuyer is 38 in this country, so we barely beat it), but hubby and I never felt “settled down” enough to buy a home, given that we’ve been moving every 2.5 years on average for almost two decades now, to pursue our educations and careers from coast to coast. But with hubby starting a professorship at Stanford this summer, we’ve decided that this is it. Plus, Stanford puts a ton of resources into their extensive faculty housing programs, so we’d be leaving money on the table if we didn’t buy. One caveat (among others) is that with all the rules that Stanford imposes on their properties, it feels more like renting than buying, which is why I say we’re proud home rentowners now!
An empty canvas for me to play with … kind of … we aren’t allowed to change most things in here, which is why it still feels like a rental when it comes to home decor and decisions.
Stanford has stepped up their game in faculty housing assistance in the past decades as the cost of homes has skyrocketed out of control in the area. If Stanford didn’t subsidize housing, they’d lose faculty to other schools with less astronomical costs of living. (Case in point: when hubby was considering his Caltech offer, we looked at homes in the Pasadena area and they cost half as much.) Stanford may be unique among universities in that they own a ton of land, so they’ve built up a sizable inventory of faculty homes. Some of the housing stock belongs to the faculty (they “lease” only the land from Stanford) while others are controlled entirely by the university. Our condo falls in the latter category. Stanford does this in order to make housing more affordable — the 2-3br Stanford-controlled condos sell for “only” $1-$1.5M, while the single family homes on “leased land” are generally in the $3-$4M range. And that’s considered almost half off market value! Crazy. So we’re getting our condo at a steep discount, but there’s no such thing as a free lunch. We “pay” for this discount in 3 ways:
We’re not allowed to make any changes beyond basically paint, so we have to treat our home the way we would a rental.
We buy and sell directly to the university, which on the one hand is super easy (no negotiating or realtors required), but on the other hand Stanford dictates the sale price and caps appreciation, so our home will never rise much (if at all) in price. We hope this home will at least keep up with inflation so we don’t lose our investment in it, but there’s no guarantee if inflation goes wild.
If anything happens to hubby and he stops working at Stanford, we have to sell back to Stanford within a year (at whatever price they determine). Even after retirement, there is a 10 year grace period before we get booted. So this cannot be a “forever home,” it’s a “while working at Stanford” home.
Stanford has these rules to control housing supply and prices so that faculty housing will be (more) affordable in an area dominated by tech multi-millionaires. Professor salaries can’t compete with the private sector. Good thing I’m a minimalist and happy with 2 bedrooms. Between the cash we’re putting in and Stanford’s special loans (another piece of their housing programs), we’ll be paying less for this condo than for our current 1br apartment (which is >$4k/month), so it looks like a great deal in comparison.
A quick search of Palo Alto on realtor.com shows the sheer unaffordability of this place. If you take all the prices of the homes for sale within the city boundaries (which matters because these are also the school district boundaries), the average price is $4M. The average person or professor cannot sustain that, hence why Stanford has to provide housing assistance to its faculty.
This was obviously not a design post, but an introduction to our home rentownership journey that has just commenced. Faculty housing is a strange beast and every school does it differently. I wonder if there is any university in the world that runs a bigger faculty housing operation than Stanford, and I am fully aware of how fortunate we are to have this option open to us. Universities and their home towns seem locked in perennial battle over questions of growth and “fair” payment. Having lived up the street for 4 years in non-university affiliated housing, it did feel like Stanford is gobbling up all the real estate around here and creating a mini empire to the exclusion of anyone not lucky enough to land a coveted faculty position. We’ve worked (and saved) diligently since college to get to where we are today, but we are also grateful for the privilege of being able to live in this extremely affluent neighborhood, glorified rental or not.