How do people afford to buy a house here? (Los Angeles: renters, HOA)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Society has changed , government has gotten bigger and more corrupt , and the rich are getting richer. When the people in this country can't afford to live a healthy life based off the average national household income , then we have a serious problem. Wish you the best outcome !
Why? why should this be an acceptable way for society to function? Why should anyone find it normal that someone with an income in the top 15% should not be able to live comfortably. Do we really want it set up so that in order to not be homeless one needs a masters degree to get a $40,000/yr job & live in a shack with 10 other "losers", and the only way to have a nice house is to "earn" great wealth by "working hard" shuffling stocks around?
the situation is insane & something needs to change. Having an attitude that "noone has the right to live anywhere" (AKA only the rich should live (comfortably)) is really not doing anyone any good.
Oh, I happen to agree with your rage and frustration, and, I don't know how to change the big picture. I try to keep informed, but, my voting hasn't seemed to change things.
What I do know is that I work in the same general area as the OP and have about the same approx income and I've managed to buy a single family house in South LA. South LA isn't so bad, and, for better or worse, it is what I can afford.
Why? why should this be an acceptable way for society to function? Why should anyone find it normal that someone with an income in the top 15% should not be able to live comfortably. Do we really want it set up so that in order to not be homeless one needs a masters degree to get a $40,000/yr job & live in a shack with 10 other "losers"....
I believe that poster suggested multiple families living in the same home as an option IF the OP didn't want to live in a less expensive area of southern California.
Quote:
Originally Posted by Mike121
according to realtor.com, there are about 9,000 properties in LA County for sale for under $350k, of which 1,400 are in the City of LA. Those are the houses you can afford. I'm sure that most of them will be undesirable by some criterion: distance, neighborhood, dilapidation. If none of them are to your liking, then perhaps LA County isn't going to be a place where you can buy according to the old rules and strategies.
If none of them are to your liking, you must move to the new rules and strategies....
A friend of mine in his early thirties just bought a house in Silver Lake for ~$700,000 and him and his wife have a combined income of ~$100,000 iirc. I think they put down $70,000 and their mortgage is less than $2,000/month. And I know he doesn't have a great credit score or anything.
I want one of those.
Quote:
Originally Posted by Mr_Geek
That math is way off unless they have some balloon flex rate mortgage. Mortgage only at todays rates would be at least 3k I think and that doesn't include insurance, pmi, taxes etc...
There were IO loans even a couple of years ago.
Quote:
Originally Posted by jm1982
I also bought 4 1/2 years ago in the valley area. Prices seem to have increased quite a bit, but of course you don't know what you will get for something until it is time to sell.
I've considered selling and investing in a market that has more potential for appreciation...or maybe even just a different part of L.A
Where are you thinking area that will have higher appreciation?
Quote:
Originally Posted by Chowhound
That's why I'm leaving this area in a few yrs, I've bought a condo about 15 yrs ago and have a little bit of equity in it and I'm gonna sell in a few yrs and probably can clear enough to buy outright in a lot of other places.
House rich, cash poor.
That's how a lot of people here are......
Your example actually supports the prices. Buy, hold for 15 years, build a lot of equity, sell and buy something out right in a lot of other places. What too many people leave out is, rates have constantly be dropping, when people bought at 12%, their payments and borrowing cost have gone down considerably when rate have dropped to 4%. Their payments have dropped, the values have sky rocketed. Unless rates go from 4% down to 0%, how is anyone going to save any money on a refinance over the next 30 years?
Quote:
Originally Posted by Mike121
The old rule of thumb was that you buy a house 3x what you make. With low interest rates, you can probably stretch to 3.5x.
So, according to realtor.com, there are about 9,000 properties in LA County for sale for under $350k, of which 1,400 are in the City of LA. Those are the houses you can afford. I'm sure that most of them will be undesirable by some criterion: distance, neighborhood, dilapidation. If none of them are to your liking, then perhaps LA County isn't going to be a place where you can buy according to the old rules and strategies.
If none of them are to your liking, you must move to the new rules and strategies: multiple families in a home, multi-family homes, renting out rooms, more risky financial instruments, or other such things.
The rule of thumb was created when no one knew how to figure out a mortgage payment other than a loan guy/girl with their Texas Instrument pocket computer and rates were double digits closer to 12%. Now there is a free app for that. what use to be 2.5X years ago is closer to 5 or 6 times due to the drop of interest rate. Those failing to understand that complain they can't afford anything and sit on the sidelines. Most parts of the country where people still buy at 2.5x their salary will build and save money much faster and have a nice nest egg. But too many people here will stretch to the max and raise the prices on a limited supply of homes.
People buying those $350,000 aren't posting or complaining they can't afford a home in LA, they just do it, no one talks about them, they don't make news and some actually will live close to work. It is about life choices.
Quote:
Originally Posted by BayAreaHillbilly
Until the market tanks.
I once dated the daughter of a seemingly wealthy immigrant who had all these residential and commercial properties, that he'd used leverage to get into. Leverage ... listen to the real estate and investment shows on main stream radio and they all tout it. Of course, most of the hosts are mortgage brokers and realtors, follow the money ... I digress.
In any case, when the early 00s crash hit he had to BK some of the businesses associated with specific commercial property tranches. Then when '08 hit is was over. Total BK of his entire estate.
Even for a short time they were living large, living a life and vacationing that most will never get to do. You got to know when to fold them and walk away.
Quote:
Originally Posted by kcimos
... the only way to have a nice house is to "earn" great wealth by "working hard" shuffling stocks around?
the situation is insane & something needs to change. Having an attitude that "noone has the right to live anywhere" (AKA only the rich should live (comfortably)) is really not doing anyone any good.
Income and property value is relative only to the local markets. Let than 10 miles from these $900,000 homes these people talk about are $350,000 homes.
In your ideal society how else can someone obtain great wealth without "working hard" shuffling stocks around. I actually don't understand the stocks comment, did I miss something that stocks were the solution to buy a house?
The poor should live comfortably too, but the lifestyle and neighborhood of a poor person would be in conflict of the Lifestyles of the Rich and famous, there is no one size fits all.
Quote:
Originally Posted by iama30something
Great, I'd love to do it. How do I get started when things are $900k - $1.2mill for a 2 bedroom dump off Sawtelle and Pico?
How do they do it, by not sitting around and making excuses, or dual incomes. Last year I suggested that you buy with PMI. Last year homes south of Venice were under $680,000 now there is nothing under $720,000. You could have bought and sold, lived for free for a year and save the $20,000 that would have gone to rent. Hindsight is always 20/20.
With all of the business construction in Playa and Inglewood and potential jobs, I don't see prices dropping or supply for SFR increasing. The other option is find a new job near an affordable neighborhood.
Advice commonly given on this forum is find a job, then find a place close to work but you need to do something different to get ahead of everyone else.
30 year fixed rate iirc. I'm not sure on the exacts. I bought my house all cash and it was my first home purchase so I'm not an expert on the details of mortgages and financing and all that.
Your friends were lying to you. This is assuming they got a really low interest rate (which they won't if they have bad credit):
Estimated payment $3,967 /mo
LOAN AMOUNT $630,000
DOWN PAYMENT $70,000
INTEREST RATE 3.673%
LOAN TERM 360 months
TAXES & INSURANCE INCLUDED? Yes
PROPERTY TAXES 1.2 %/yr
HOMEOWNER'S INSURANCE $800/yr
MORTGAGE INSURANCE $310/mo
HOA DUES $0/mo
I'm guessing it wouldn't be easy to afford $4K per month on a $100k/year income.
I once dated the daughter of a seemingly wealthy immigrant who had all these residential and commercial properties, that he'd used leverage to get into. Leverage ... listen to the real estate and investment shows on main stream radio and they all tout it. Of course, most of the hosts are mortgage brokers and realtors, follow the money ... I digress.
In any case, when the early 00s crash hit he had to BK some of the businesses associated with specific commercial property tranches. Then when '08 hit is was over. Total BK of his entire estate.
One key is to buy properties that can 'support themselves' from the cash flow.
A big part of the problem was that people didn't run the numbers and only bet on appreciation.
If the guy you mentioned had enough to pay all his expenses he could of ridden out the bad times, there would of been no reason to have to BK everything, and prices would of likely gone back to or above what he paid.
True leverage is a down edged sword but it has also made many people very rich.
Pretty much every rich person has used some kind of leverage .
Even people with a lot of cash don't want to use their own money if they can borrow cheap money.
People buying those $350,000 aren't posting or complaining they can't afford a home in LA, they just do it, no one talks about them, they don't make news and some actually will live close to work. It is about life choices.
Seattle is not quite as expensive as LA but we found ourselves similarly frustrated when we were house shopping last summer. It was very common for houses in the 450k-750k range to be old, worn out, and selling way over asking price the day they were listed after a cash-only bidding war. I don't know how many times I asked my wife where in god's name all these ultra rich people were coming from. I considered us to be substantially more well-off than most people our age with a combined income into 6-figure territory and plenty in the bank (my wife was fortunate enough to be able to amass lots of savings when she was growing up, I wasn't so lucky).
I felt like we had done everything right and that we were more fortunate than many, and it wasn't nearly enough to compete. It still baffles me to this day. Are there really that many people out there making 200k+ with a million in the bank? Confusing and frustrating.
Don't get me started on the "desirable" neighborhoods where people buy a $2mil house as a tear-down.
I bought my home in 2010 , it wasn't that close to work but the price was in the low 200s .
This was for a 3bedroom house. It did need work and still needs some.
Home prices have gone up quite a bit since then , but you can still get a place around $400k or so and probably less if you look at smaller homes .
It's not the Westside, but it's also not $1million either.
It would be easier to find a job closer to the cheaper housing versus trying to find a cheaper house in an area where they start at 900k for a "dump" .
I used to work in Brentwood and hardly anyone seemed to live around there because it was so expensive, especially if they owned a home. Many lived in the valley and there were some that lived in Lancaster,Palmdale area and even Fontana .
In L.A and similar priced cities sadly for many people it's a luxury to live close to work.
I wouldn't hold your breath on housing prices to come down drastically to where you might need/want them to be. It did happen during the 'crash' of 2009-2013 (or so) but the likely hood of it happening again soon is not too likely. The reason being that credit is harder to get and you can't buy with 0% down like before.
I can't even afford a house in Culver City, Mar Vista, West LA, Playa Del Ray, El Segundo... no where! I'm really looking for a house
Nowhere? You said within an hour of SM. I guess you forgot about the Valley. Get a grip and lose the search for the cool factor, and embrace commuting.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
