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Old 12-23-2011, 12:57 PM
 
Location: Santa Monica, CA
490 posts, read 422,804 times
Reputation: 380
Default How can so many people in California afford multi million dollar homes?

i understand that there are a lot of artists and stuff living there but seriously, every other house you see is 1kk............

what the hell do these people do.....
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Old 12-23-2011, 01:07 PM
 
Location: California
25,125 posts, read 15,788,154 times
Reputation: 17479
Many bought their homes before the housing boom and enjoyed the ride. Others are a combination of trade-ups, inheritances, high paying jobs, couples with 2 incomes, etc.

I don't know where you are looking but most of the state isn't like that.
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Old 12-23-2011, 01:10 PM
 
Location: Santa Cruz, CA
2,192 posts, read 3,076,163 times
Reputation: 1935
and many are "land rich, cash poor".
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Old 12-23-2011, 01:17 PM
 
Location: Newark, Ca
1,281 posts, read 1,941,488 times
Reputation: 1720
Many people rent million dollar+ houses. The owners often bought them before they were anywhere near that amount. My brother rents a house that would sell for slightly over a million dollars, but could not afford to own the same house.

And, as Ceece said, there are many more houses that aren't worth anywhere near a million dollars throughout CA.
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Old 12-23-2011, 02:47 PM
 
Location: A bit further north than before
1,522 posts, read 1,707,314 times
Reputation: 1194
With interest rates so low and prices depressed, it's not that much more expensive to own a home than to rent an average apartment around here. The mortgage interest deduction offsets the property taxes for the first decade or so, it's really not that much of a stretch.

The hard part is getting the 20% downpayment, but if you've focused on savings for a few years and have two incomes it's eminently doable. We close on a place in January under just those terms!
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Old 12-23-2011, 03:11 PM
 
Location: Paranoid State
2,791 posts, read 2,270,734 times
Reputation: 2243
Interest rates are largely irrelevant. Most people who buy $1MM to $10MM homes just pay cash. I did - why bother with a mortgage when the opportunity cost of money is so low.
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Old 12-23-2011, 03:37 PM
 
Location: In them thar hills
7,835 posts, read 9,371,779 times
Reputation: 3966
It's called, the banking system still gives loans that are risky. Maybe the no doc and really fishy ones are gone. But if a person is working and has a good credit record, they can still get themselves into lots of trouble.
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Old 12-23-2011, 03:38 PM
 
Location: Texas
27,802 posts, read 22,309,657 times
Reputation: 32934
Quote:
Originally Posted by YoungTraveler2011 View Post
i understand that there are a lot of artists and stuff living there but seriously, every other house you see is 1kk............

what the hell do these people do.....
50 year interest only mortgage.
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Old 12-23-2011, 07:00 PM
 
2,312 posts, read 1,539,743 times
Reputation: 1202
Some
> save for about 10 years ... to get a 20% down payment..and dump it all in a home .. then sign up for a ball and chain 30 year mortgage that $3,xxx - $4,xxx mortgage for which they grind their faces on the ground for
> ARM loans/interest only .. I know a co-worker who makes good cash and his wife who took this route
> Rent
> bought way before this craziness ...
> Very few are workers at companies that go IPO .. instantly dump all their riches into a home.. $800k - $1 million+...

Yeah it's insane and given that i want to buy a home soon, I opted to just leave and go where its affordable.. Skip 30 years of misery and have enough to pay for one cash out of California.

From there, I intend to diversify and grab up some duplex's etc to start building a cash flow positive stream for later on in life .. Build my own business/etc...

Funny when you look back at history.. Steve Job's dad was a mechanic and his wife had a regular job.. Bought a house in los altos .. Try that now-a-days...

As for renting one of these homes.. you're looking at rent of about $3-4k .. That's $1 million - $1.4 million over 30 years.. Beyond stupid to do this your whole life and at $3/4k a month it is going to be dam hard to save a penny.

Whatever, people choose to do what they want. Given what you see, make your choice and enjoy life.
MERRY CHRISTMAS !!!
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Old 12-23-2011, 08:33 PM
 
Location: A bit further north than before
1,522 posts, read 1,707,314 times
Reputation: 1194
Quote:
Originally Posted by BayAreaHillbilly View Post
It's called, the banking system still gives loans that are risky. Maybe the no doc and really fishy ones are gone. But if a person is working and has a good credit record, they can still get themselves into lots of trouble.

Have you applied for a mortgage lately? They're putting us through the wringer for a house that we can clearly afford - there's been more crosschecking and verifying of our accounts than you can imagine. If you get a mortgage today, you earned it!
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