Uberized Home Buying

Buying a house as an Uber driver and/or a teacher.

I started driving for Uber because my salary as a teacher wasn't enough to get me into the housing market. Here is what I've found:

What is the dream house?

2 bedroom, 1 bath, less than 1000 square feet. According to Trulia the average in Oakland is about $500,000.

What do purchases require?

Down payment on the average 2br, 1bath is $100,000.* Driving 10 hours a day, 7 days a week for Uber would net around $1,400 per month or $72,800 per year. Subtract taxes ($18,000 federal, $5000 state**) and you get $49,000.

What is the bottom line?

Drive for Uber every single day of the year, 10 hours a day and it will take 2 years to get the down payment for an average Oakland home. Of course, homes are appreciating at 15-20% in Oakland, so even after two years a Super-Uber driver can’t buy a house.

Don't forget, this fictional super Uber driver can’t spend a penny on anything but the car and gas, which means the driver needs to have another income to pay for life.***

What about teachers?

As a teacher I’m lucky because I can save a fair amount of my regular salary each month. Saving this money requires penny pinching (digital TV antenna instead of cable, eating out at "restaurants" like McDonald's, etc.) but I’m lucky. A lot of saving plus five years of driving 14 hours per week and I'll be close to the down payment needed. Therefore, it is possible to get in the housing market with some time and luck.**** As a practical matter, driving, teaching and spending time with my 11-year old cannot all be done well. So I won’t be buying a house in 5 years, maybe 10. Economists will say that theoretically I can do it with some positive thinking but you know, "Theoretically, practice and theory are the same but in practice, they aren't."

Uber Notes

* Federal Housing Administration has subsidized loans, which allow for less than 20% down. However, those loans add over $15,000 to the cost of houses, have limited loan amounts and restrict buyers from purchasing most condominiums (which are the low cost housing alternative in the Bay Area).

**  There are probably tax deductions for Uber drivers but the deductions are in limbo because the government isn’t sure whether drivers are employees or independent contractors.

*** A recent Economist article said that people are coping with this housing market by finding “alternative housing arrangements” where up to 6 families live in 2 bedroom residences. Of course, these “housing arrangements” have not been legal (for good reason) in the U.S. for over 100 years.
**** Home-prices in Oakland have risen 89% over the past 5 years. So it is hard to tell whether buying will be easier or harder in 5 years.