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Old 08-05-2008, 04:02 PM
 
Location: Los Angeles Area
3,306 posts, read 3,324,969 times
Reputation: 592

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Quote:
hat's one way to know for sure how much a house is worth
How? How do you know that you didn't over pay for land?

Quote:
Thank the boneheads for taking the dollar off the gold standard.
This has nothing to do with it, people's standard of living was much different in 1950. Today its not possible to have a single income earner and buy all the junk people buy, but many can still do it if they are more modest. That is if you live like they did in 1950.
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Old 08-05-2008, 05:53 PM
 
Location: Dallas, TX
243 posts, read 1,038,836 times
Reputation: 103
Just wanted to say I appreciate this thread being started! I am in the market for a new home and have been thinking the same thing daily, and am almost scared to buy.
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Old 08-05-2008, 08:09 PM
 
2,639 posts, read 5,057,601 times
Reputation: 2346
Quote:
Originally Posted by Humanoid View Post
A married couple even if they don't have kids will not pay that much tax. "Dunno where you got that figure". The math is simple, assume they have no extra deductions their taxable income will be around $30k for a total federal tax of about $3,700. Social security is around $3,480 and state tax in California would be around $1,000 for a total of $8,180. So the estimate given of $40k is accurate, $32k is out of the ball park. $32k is even too high if you are single with no kids, in that case it would be around $37,500.
Thank you sir for blatantly ignoring SDI and sales taxes.

Bottom line - people need stop ignoring those adhoc necessities like bath needs, food, gas, the various types of insurance, babysitting, pets, schooling, utilities, auto maintenance, etc etc etc. By the time you add it all up, that $14grand you thought you had turns into $2grand.
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Old 08-05-2008, 09:27 PM
 
472 posts, read 771,798 times
Reputation: 153
Quote:
Originally Posted by Jaded View Post
37% DTI - did that include your new mortgage? I'll assume yes. If this is the case, then your taxes are what's "sabotaging" your income. Why are your taxes 7K/year for your community?? Your home only cost 320K. Is there a private guard at your door - LOL! Just teasing! With a down payment of 5%, that means your mortgage is based on a loan of $304K. Your interest rate is awesome, so your monthly payment with PMI should be less than $1,600. If you and your spouse bring in 7K after taxes, then this leaves you with a little over 5K a month. Your taxes however, are eating up close to $600 a month of your income...this leaves you and your wife with $4,400 a month. It's your taxes...people often ignore to factor in their home taxes when buying a home.

So I'm left to assume you have long commutes, two car payments, credit card debt and other loan debt (such as student loans), or that you are aggressive savers?? Otherwise, even with food costs, there is plenty left over to "live" on and "make it." Throw in two kids, in public schools, and a couple should still be fine earning over $100K annually.

It's the excessive living standard that many have become accustomed to that makes it seem so "hard" to live/get by nowadays. I don't know how you and your wife live, I'm just saying many young professionals confuse "needs" with "wants."

Anywho...there is still affordability in housing, what's so hard for many to now accept is that their fabulous lifestyles will need to be sacrificed in order to become a homeowner.
I'm not crying poor... I'm crying awknowledgement. This economy and the rising costs of food energy and running a home have been killing the dreams of home ownership for many Americans. Many have found out that fact after they foreclosed. Sure extravagant living and poor finacial decisions have led to record foreclosures in this county. Also contributing the cost of food, energy, job loss and medical costs.

I like your math... my PITI is $2550. That's $1850 for principle and interest... and $700 for everything else. We own both cars outright and have low credit card debt. Yes some student loans are still being paid off but in the end I factored we could save $1500-$2000 per month before we even made our offer. That's when gas was $3.30 a gallon and heating fuel was right behind it. So now we're saving $500-600 per month with additional costs. What happens if I lose my job... or my wife. In the short term we'll survive, however our mortgage is dependent on two salaries.

Again, I'm not crying poor... I'm crying acknowledgement. remember my wife and I earn 30-40% more than the average median household for our county. I can easily see how job loss, or an auto repair, or large medical bills can easily put anyone behind in this market. Now factor these conditions in and try to buy in. that's why there is a phenomenon happeneing around NY where young professionals with good credit and decent jobs are being turned down for mortgages.

Just consider in my market...

In 1998 average home price in my county was $145K
In 2008 it's $310K (but sliding downward)

In 1998 average property tax was $3300
In 2008 it's over $7000

In 1998 average price of gas was $1.19 per gallon
Last month in July 08 it hit $4.47 a gallon.

In 1998 it cost $350 to fill a 250 gallon heating oil tank
In 2008 it cost $1200 to fill a 250 gallon heating oil tank

In 2000 estimated median household income is $52K
In 2005 average median household income is $59K

Yes, wages went up some... but not nearly keeping pace with the rising cost of living.
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Old 08-05-2008, 10:11 PM
 
Location: Los Angeles Area
3,306 posts, read 3,324,969 times
Reputation: 592
Quote:
Thank you sir for blatantly ignoring SDI and sales taxes.
Firstly, I didn't ignore SDI it is included in the figure for California taxes. Secondly there is no reason to include sales taxes. If you aren't buying a bunch of junk you will pay very little sales tax each year. Someone making $48k isn't going to pay that much sales tax, but if makes you happy add a few hundred to the calculations. You are still no where near an after tax income of $32k even if you are single and making $48k a year.

Regardless, the estimate of $40k give or take a thousand is accurate for a couple with no kids in any state in the union.
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Old 08-05-2008, 10:45 PM
 
2,639 posts, read 5,057,601 times
Reputation: 2346
Quote:
Originally Posted by Humanoid View Post
Firstly, I didn't ignore SDI it is included in the figure for California taxes. Secondly there is no reason to include sales taxes. If you aren't buying a bunch of junk you will pay very little sales tax each year. Someone making $48k isn't going to pay that much sales tax, but if makes you happy add a few hundred to the calculations. You are still no where near an after tax income of $32k even if you are single and making $48k a year.

Regardless, the estimate of $40k give or take a thousand is accurate for a couple with no kids in any state in the union.
Dude...stop ignoring the basic necessities of life. They're not a "bunch of junk" and you will pay sales tax on all of it unless you're military.

Stop ignoring those adhoc necessities. You will pay sales tax on all of it and it adds up, not to mention the price of the items themselves. At 7.75% per item, "a few hundred" is not what you're dealing with. Try a couple thousand. Maybe you don't know, but if you figure $100/month groceries (which is low for a couple), the sales tax on that stuff adds up.
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Old 08-06-2008, 02:21 AM
 
Location: Los Angeles Area
3,306 posts, read 3,324,969 times
Reputation: 592
Quote:
Dude...stop ignoring the basic necessities of life. They're not a "bunch of junk" and you will pay sales tax on all of it unless you're military.
What are you talking about? I'm talking about tax here, not the "basic necessities of life". A couple making $48k without kids will come out with at least $40k after tax, that is a fact and has nothing to do with "the basic necessities of life". Before you start your budget you need to know your after tax income.

Quote:
Try a couple thousand. Maybe you don't know, but if you figure $100/month groceries (which is low for a couple), the sales tax on that stuff adds up.
Perhaps you haven't noticed but the state of California does not charge sales tax on food (Only food at restaurants etc is taxed) Other states work the same way, in fact many other states with sales tax actual exclude more things (like clothes) than California. You would have to spend approximately $27,000 on non-food items to pay $2,000 in sales tax. That is pretty hard to do with an after tax income of $40k. A couple making $40k after tax is unlikely to spend much more than about $5,000 a year on items subject to sales tax, that is they are unlikely to spend much more than $370/year in sales tax.
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Old 08-06-2008, 07:50 AM
 
2,639 posts, read 5,057,601 times
Reputation: 2346
Quote:
Originally Posted by Humanoid View Post
What are you talking about? I'm talking about tax here, not the "basic necessities of life". A couple making $48k without kids will come out with at least $40k after tax, that is a fact and has nothing to do with "the basic necessities of life". Before you start your budget you need to know your after tax income.


Perhaps you haven't noticed but the state of California does not charge sales tax on food (Only food at restaurants etc is taxed) Other states work the same way, in fact many other states with sales tax actual exclude more things (like clothes) than California. You would have to spend approximately $27,000 on non-food items to pay $2,000 in sales tax. That is pretty hard to do with an after tax income of $40k. A couple making $40k after tax is unlikely to spend much more than about $5,000 a year on items subject to sales tax, that is they are unlikely to spend much more than $370/year in sales tax.
Not keeping up with the news?

Schwarzenegger proposes temporary California sales-tax hike to close budget gap - Los Angeles Times

I guarantee you. In LA county, it'll be terribly easy to accumulate that much sales tax. All one has to do is buy a Prius, thinking they're saving on gas, and you've forked over nearly $2grand. That's in addition to the money you spend, using your quote of nearly $5grand.
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Old 08-06-2008, 05:21 PM
 
Location: Los Angeles Area
3,306 posts, read 3,324,969 times
Reputation: 592
Quote:
Not keeping up with the news?
The sales-tax hike will only add about $50/year to the case in question. Not a big deal. Just give it up, the earlier estimate of $40k after tax was accurate your claim of $32k was way too low.
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Old 08-06-2008, 05:44 PM
 
Location: Wilkes-Barre, PA
1,693 posts, read 3,106,847 times
Reputation: 1233
Quote:
Originally Posted by Humanoid View Post
The sales-tax hike will only add about $50/year to the case in question. Not a big deal. Just give it up, the earlier estimate of $40k after tax was accurate your claim of $32k was way too low.
Agreed, just take a calculator with your paystub. Off the top of my head I'm gonna say $40,000 gross will be around $27,000 after ALL expenses before getting your pay.
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