How in the Heck does Anyone Afford to Live in California? (Chula Vista: foreclose, loan)

[Ultrarunner]

Originally Posted by Charles

I deliberately left that out.

My ratio (going on memory) was somewhere between 3.5 and 3.8.

Strange how that works...

People with excellent credit are denied purchase money loans... even with 25% down...

In one instance the property had too much land to meet underwriting standards that they just happened to mention 3 days before closing

Another time, about 2 weeks before closing, Wells Fargo wouldn't approve at their preferred fixed rate because they figured the purchase ratio was 5 to 1... WF discounted income because it is derived from rentals BUT... WF could offer a Adjustable Rate with 6 months at 3% or something ridiculous like that...

Anyway... properties closed both times by writing a check and then later a First Deed of Trust at 50% Loan to Value was taken out for long term financing.

I've learned that anyone that does not fit a typical "Profile" will have problems when it comes to Underwriters

So even having money in the bank doesn't necessarily make one a good loan candidate

[ILikeSmartHippies]

Originally Posted by Charles

I deliberately left that out.

My ratio (going on memory) was somewhere between 3.5 and 3.8.

Ok.
It's rather ridiculous for you to "leave out" the most important part of "How the heck does anyone afford to live in california". It means you were (I assume) making over $85K in 1997 by yourself which is not average and is not even close to average. It's not even average for a dual income household in 1997. (It was probably average for upper middle class.) Isn't that the whole point? Why not state your occupation, you should be proud of making a good income. Joe the Plumber? Business owner? Doctor? Salesman or agent? Property manager? Engineer? Lawyer? That's all part of the discussion regarding "how the heck does anyone afford to live in california." If people want to live in california then they need to get into whatever category you made your own way into (or at least see if the same 1997 way exists today).

[Charles]

Originally Posted by ILikeSmartHippies

Ok.
It's rather ridiculous for you to "leave out" the most important part of "How the heck does anyone afford to live in california". It means you were (I assume) making over $85K in 1997 by yourself which is not average and is not even close to average. It's not even average for a dual income household in 1997. (It was probably average for upper middle class.) Isn't that the whole point? Why not state your occupation, you should be proud of making a good income. Joe the Plumber? Business owner? Doctor? Salesman or agent? Property manager? Engineer? Lawyer? That's all part of the discussion regarding "how the heck does anyone afford to live in california." If people want to live in california then they need to get into whatever category you made your own way into (or at least see if the same 1997 way exists today).

The only point I was trying to make was post 94 didn't seem to mention that back in 1997 houses were more in line with incomes. That's it.

[sholomar]

don't buy in california now! The housing meltdown is only going into the second quarter right now. Don't expect a bottom until 2012, and at prices that are about three times the income of an average working person. There is a huge supply surplus of houses that could drive prices down to the lowest inflation adjusted prices in recorded history in the next few years, across the board. Those that went up the most, will come down the hardest.

Interest rates may be higher by then though... stockpiling cash or gold now so that you can afford to pay more up front will get you more for your money when we do bottom, then financing a large amount. No guarantee of higher rates though... it depends on what those who run things decide to do.. crash the dollar and have high rates, or crash the stock market and keep the dollar steady and rates lower.. those are their two choices right now.... one choice is inflationary, the other deflationary.

I just bought a place, but got it for under 1x my annual income, a good deal to be sure. Very clean 2003 double wide mobile home, 2 car garage built in 2007, on it's own 140x200 foot lot for $38k, under 1x my annual income. I took advantage of the masses negative perception on mobile homes and got a place for about 40% of the price that the new modulars in a newby town were selling for... throw in a little bit of luck too, as I could flip it immediately for a modest profit... it pays to live cheap now and downsize, downsize, downsize.

[ILikeSmartHippies]

Originally Posted by stockwiz

don't buy in california now! The housing meltdown is only going into the second quarter right now. Don't expect a bottom until 2012, and at prices that are about three times the income of an average working person. There is a huge supply surplus of houses that could drive prices down to the lowest inflation adjusted prices in recorded history in the next few years, across the board. Those that went up the most, will come down the hardest.

Keep in mind Charles' point. Prices will decrease to be in-line with California's levels. And that's around 3.5x to 3.8x leverage to income ratio. They may undershoot of course for some time before coming back to be in-line.

[Roccaluma]

I have a working class attitude to this place. Yes this place is terrible for rent and home prices. I am planning on getting out in 2-3 years. It depends on what you want. There is a decent mobile home park on Santa Rosa Ave. that has a space rent of $250 a month, you have to buy a trailer for at least $13,000 to $30,000. Save your money and if you like the area buy a house.

[otisca]

Depending on what kind of RN you are, surgical, emergency, office, ect.. I think you can work 4 10's and earn 80K + with benefits. If you work for a prison or state hospital you can earn $90K +.
Also, not all areas are super expensive. San Luis Obispo County is north of Santa Barara County and you can purchase a modest but nice home in a good safe community for under $500,000. Tenant is a medical group that has two hospitals in this area and are hiring nurses.

Goodluck.

[EmilyD1970]

We were told nothing but bad things when we decided to move to California.
We've lived in Texas all our lives and decided we wanted to see other places.
We sold our house and rented a beautiful 4 bedroom house in Palm Springs for the same amount as what we paid for our mortgage in Texas.
We soon realized we didn't see any difference in prices at retail stores.
We were told how expensive things are in California. Not true.
Houses out here are double what they are in Texas, but we have no plans on buying a house again. We want to be able to move if we need to. Owning a house for 13 years was enough.
California is beautiful, you just have to do your research.

[City Boy]

Originally Posted by EmilyD1970

We were told nothing but bad things when we decided to move to California.
We've lived in Texas all our lives and decided we wanted to see other places.
We sold our house and rented a beautiful 4 bedroom house in Palm Springs for the same amount as what we paid for our mortgage in Texas.
We soon realized we didn't see any difference in prices at retail stores.
We were told how expensive things are in California. Not true.
Houses out here are double what they are in Texas, but we have no plans on buying a house again. We want to be able to move if we need to. Owning a house for 13 years was enough.
California is beautiful, you just have to do your research.

Wow somebody FROM Texas that is not bashing California on here?

[MissNM]

Originally Posted by ILikeSmartHippies

Prices will decrease to be in-line with California's levels. And that's around 3.5x to 3.8x leverage to income ratio.

In-line with California levels . . . are Californians really that stupid? Who in their right mind would pay that much for a home? Most people I have met here seem to have a level head - so I just can't imagine a "keeping up with the Jones's" mentality that would have people paying 3.5 times their income for a house, unless they have enough equity from the sale of a previous home (and even then it seems pretty stupid).

If people just stuck to what they could afford, the country and state would not be in the mess they are in.

We went for a home (total price) less than 2x our income - a modest condo in Chula Vista. Good construction, nice amenities, etc.

We got an FHA loan at a great rate. Rate are going up, REOs for the condo are selling as fast as they go on the market and for 15% more than we paid. I think we bought the right place at the right time.