How do people buy homes in California? (San Diego, San Jose: for sale, renting)

[rayray5200]

From 600-700K, how do people afford these homes? All these houses in LA/San Diego are full of families, what do they do?? HOW do they do it?

[EscapeCalifornia]

Assuming they didn't buy 5+ years ago when prices were 1/2 or less, some options include:

1) Making $150k+/yr
2) Getting a negative amortization loan hoping the house will appreciate before the music stops
3) Getting a stated income loan you can't really afford, then renting out the garage, living room, dining room, tool shed to pay the mortgage
4) Sharing the house with your brother, sister in law, their 3 kids, and her cousin
5) being eternally house poor

[Sassberto]

Originally Posted by EscapeCalifornia

Assuming they didn't buy 5+ years ago when prices were 1/2 or less, some options include:

1) Making $150k+/yr
2) Getting a negative amortization loan hoping the house will appreciate before the music stops
3) Getting a stated income loan you can't really afford, then renting out the garage, living room, dining room, tool shed to pay the mortgage
4) Sharing the house with your brother, sister in law, their 3 kids, and her cousin
5) being eternally house poor

You forgot inheriting your parents house and living in it, it is extremely common in my 'hood.

[EscapeCalifornia]

Originally Posted by Sassberto

You forgot inheriting your parents house and living in it, it is extremely common in my 'hood.

Right. Does that include living with them until they die and you get their house?

[Sassberto]

Originally Posted by EscapeCalifornia

Right. Does that include living with them until they die and you get their house?

you got it. Ideally you have a wife and a couple of kids by then.

[CLQ]

Only 5% of residents can afford a median priced home in LA for $500K. So those that bought their first home recently may have over extended themselves and are living paycheck to paycheck. Appreciation isn't coming for awhile until inflation increases wages and people can afford to buy. Lenders tightened up their qualifications since all the default loans so the 95%of the population may not be able to get a house until prices drop. The lenders should not have given out the loans in the first place which drove up the market since people were able to afford a low introductory interest rate per month. It sucks for first-time home buyers with little equity. $600K barely gets you in a decent neighborhood, 1000sf house, 3 bedroom, 1 bath house. As long as people stop buying the market will drop and is expected to drop 7-8% in 2008.

[aslowdodge]

Originally Posted by EscapeCalifornia

Assuming they didn't buy 5+ years ago when prices were 1/2 or less, some options include:

1) Making $150k+/yr
2) Getting a negative amortization loan hoping the house will appreciate before the music stops
3) Getting a stated income loan you can't really afford, then renting out the garage, living room, dining room, tool shed to pay the mortgage
4) Sharing the house with your brother, sister in law, their 3 kids, and her cousin
5) being eternally house poor

You forgot 6) All of the above!

[IdaClaire]

I have relatives who live in San Jose. Sadly, all of their children have chosen to leave California because they just don't think it's worth it to live hand to mouth in California when they can go elsewhere and have a decent lifestyle. These kids have chosen careers such as teaching, police work, and financial planning and are very happy living in places like the South or Midwest now.

I think California is a gorgeous state. I have visited many times and have had a wonderful time. I just don't understand why anyone would voluntarily choose to struggle so much to have a roof over one's head when there are other lovely places one could live relatively well. If I were very wealthy, I'd consider living in CA, but I guess I'm trying to figure out why a middle class family would choose to struggle so much. When I meet people who make great money in the IT industry who are sharing a small house with another family just to survive, I'm just befuddled.

[davidt1]

Things are bad for the RE industry. I am getting these post cards from the local realtors asking "We have such and such house for sale. Do you know anybody who wants to buy this house?" I have never seen this before.

[novaman]

Originally Posted by IdaClaire

I have relatives who live in San Jose. Sadly, all of their children have chosen to leave California because they just don't think it's worth it to live hand to mouth in California when they can go elsewhere and have a decent lifestyle. These kids have chosen careers such as teaching, police work, and financial planning and are very happy living in places like the South or Midwest now.

I think California is a gorgeous state. I have visited many times and have had a wonderful time. I just don't understand why anyone would voluntarily choose to struggle so much to have a roof over one's head when there are other lovely places one could live relatively well. If I were very wealthy, I'd consider living in CA, but I guess I'm trying to figure out why a middle class family would choose to struggle so much. When I meet people who make great money in the IT industry who are sharing a small house with another family just to survive, I'm just befuddled.

I think for many people, the weather, outdoor living, proximity to coast are too much to pass up. My brother inlaw delayed his medical career by 3 years just so he could stay in CA.