How do average people afford houses in California? (rental, mortgage)

[Ultrarunner]

For starters, buy the least expensive, (I mean the lowest price home listed on the MLS). Live there for 2 years sprucing the place up.... move and repeat as necessary until you are in the home you are satisfied with.

The beauty is that the Federal Tax laws actually encourage this... where else can you legally make up to $250k tax free per person every two years?

This is my story, with my variation that I decided to develop a couple of homes as rental properties. People do it all the time.

What amazes me is that I personally know a family from Fiji that immigrated with absolutely nothing and in 10 years have accumulated 3 homes and a duplex. The family of 5 started out in a one bedroom apartment in the worst area of town. Now each of the 3 children have there own home!

Another American sucess story.

[Norma Gan]

Your Credit Score Is Very Important When It Comes To Buying A Home. The Higher Your Score The Lower The Interest Rate Will Be On Your Loan. It's A Buyers Market And Sellers Are Now Willing To Help With Closing Cost Which Is 3% Of The Sale Price Of The Home. Banks Now Are Also Offering To Help With Closing Costs. The Banks Own So Many Properties Now That They Need To Get Rid Of Them Since They Are Lenders, Not Realtors. There Are Still Many People Buying Homes In Los Angeles. The First Step Of Course Is To Get Your Credit Checked And Find Out Your Fico Scores Then You Can Decide If You Can Make The Next Move. Seek The Assistance Of A Professional. We Know The Banks Would Not Pre-approve You If They Didn't Trust You With Their Money. It Only Takes About 45 Minutes And It's Well Worth It.

[EscapeCalifornia]

Originally Posted by Sassberto

You forgot a couple:

- bust your ass for years and years gaining the education and experience you need to have a high paying career.

- marry someone who busted their ass for years and years to gain the experience and education you need to have a high-paying career.

The idea that everyone who owns a home is either on a trust fund or up to their eyeballs in debt is insulting to those of us who worked hard and make enough money to afford a home here.

So in other words, if you're not in the top 5% of income earners, don't bother with SoCal. And if it takes two high incomes to buy a house here, who's going to raise the kids?

[Starrynight227]

I really don't understand why so many people complain. Like someone earlier said, the market is not externally dictated. The reason houses cost so much is because people are willing to pay for them. More people want to live in California than in Atlanta that's why it costs more. Trust me, I have never met a millionaire that lived in 2/1 house in suburbia, so those are not the only people able to afford to live here.

[EscapeCalifornia]

Originally Posted by Starrynight227

I really don't understand why so many people complain. Like someone earlier said, the market is not externally dictated. The reason houses cost so much is because people are willing to pay for them. More people want to live in California than in Atlanta that's why it costs more. Trust me, I have never met a millionaire that lived in 2/1 house in suburbia, so those are not the only people able to afford to live here.

You're forgetting that a lot of the people pushing up the price of housing have been homeowners for a long time and have been rolling their equity into their new properties. A first time buyer with $20k in the bank can't compete with someone with $250k in equity in their current house. Then you have the stated income people making up stories to get the loan, then renting out 3/4 of the house to make the payment. Other people are willing to take huge risks and spend insane percentages of their income on the roof over their heads. The massive run-up in prices in the last 5-7 years has simply priced most people out of the market. Most people who did buy before the run-up couldn't buy their houses back today if you put a gun to their heads. That's how you get a situation where the average family makes $80k but their house is worth $600k. They didn't pay $600k and couldn't do it today. If you got in the market years ago, great. If not, tough luck.

[logybogy]

You forgot a couple:

- bust your ass for years and years gaining the education and experience you need to have a high paying career.

- marry someone who busted their ass for years and years to gain the experience and education you need to have a high-paying career.

The idea that everyone who owns a home is either on a trust fund or up to their eyeballs in debt is insulting to those of us who worked hard and make enough money to afford a home here.

People like this aren't "average" people which is the question I asked in starting the thread. How does the firefighter or teacher or policeman making $40,000 or 50,000 a year afford a $500,000 home?

According to census statistics, these are the median incomes in California for famalies in 2005.

Now with median, 50% of people make BELOW these amounts. So I ask how does a family afford a $500,000 house on $60,000 grand combined income? Cause that's what the "average" person makes in California.

California Estimate Margin of Error
Total: 61,476
2-person families 57,237
3-person families 62,112
4-person families 70,712
5-person families 61,008
6-person families 56,374
7-or-more-person families 62,510

[NewToCA]

Let me flip this around logybogy, don't you agree that market forces are setting the home prices? Do you not agree that we still hire firefighters, teachers and police in California? Are we hitting a point where something is failing to happen?

If housing is unaffordable to sufficient quantities of folks, assuming folks will still be moving, doesn't the price adjust to the appropriate level via market forces?

[shannon94]

Originally Posted by NewToCA

Let me flip this around logybogy, don't you agree that market forces are setting the home prices? Do you not agree that we still hire firefighters, teachers and police in California? Are we hitting a point where something is failing to happen?

If housing is unaffordable to sufficient quantities of folks, assuming folks will still be moving, doesn't the price adjust to the appropriate level via market forces?

That's what it''s SUPPOSED to do!!

[shannon94]

Originally Posted by EscapeCalifornia

So in other words, if you're not in the top 5% of income earners, don't bother with SoCal. And if it takes two high incomes to buy a house here, who's going to raise the kids?

Who cares about the kids as long as people can put the facade on a xmas card for a couple years!! (Before the N.O.D gets filed)

By the way...some people bust their ass and have good careers and choose to spend it differently. If you currently have a mortgage attained near the height of the market where prices are falling your either in debt or losing money!!

Gee, I wonder why forecosures are up 700% in Cal? Oh that's ok...the S&P is at an all new high!!

[az2ohguy]

I was born and raised in costa mesa (1956-1979).(third generation from orange county). OC is NOT the same orange county that I was brought up in, and I doubt if anyone younger than fifty could identify with that statement...My parents, who are 79 & 82, are second generation (city of) Orange, graduated orange high....
Orange, Costa Mesa, and Newport Beach were great places back then...(to each their own), but I wouldn't live in "the OC" on a bet...