How much income required for a nice SFR in OC (Orange: credit card, loans)
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The mortgage calculator indicates that with a $45K down(10%), the mortgage is $1900/mo.
If a family of 4 making $125K a year gross cannot afford this home(3.6x income...California's home price factor), then this family is so fiscally irresponsible that they should not be buying a house in So Cal at all. Even with the very modest HOA.
That said, inventory is mostly garbage right now and if it were smart, this family would wait until the fall to buy.
I would love to be able to see actual financial profiles of people buying up homes in OC...who knows, maybe there ARE infact businessmen in black suits and suitcases full of $100 bills.
That suitcase is full of your $100 bills! (..and mine)
Almost the entire U.S. RE market of 'buyers' consists solely of FHA-sponsored deadbeats who can barely manage to scrape together the 3.5% downpayment necessary to get their sorry butts into a $600K house, where once installed they'll promptly be underwater and even more promptly default and live payment free for the next 3-5 years thanks to Mr U.S. Taxpayer and Barack Hussein Obankster. These Zombie Buyers use the free Monopoly Money to bid-up properties way beyond their true value based on actual salaries because they have FHA instead! Whoopee! Bottomless pockets!
Who in their right mind would want to put down $90 or 100K of real money in order to compete against an overleveraged penniless slob who can barely manage to scrounge together $10K yet 'bids' on the same property?
Anyone who buys a property now and actually puts down a real 20% downpayment is a big-time sucker.
The mortgage calculator indicates that with a $45K down(10%), the mortgage is $1900/mo.
If a family of 4 making $125K a year gross cannot afford this home(3.6x income...California's home price factor), then this family is so fiscally irresponsible that they should not be buying a house in So Cal at all. Even with the very modest HOA.
That said, inventory is mostly garbage right now and if it were smart, this family would wait until the fall to buy.
Point #1
You picked yet another short sale.
The standard sale just down the street, which is 59 sq ft smaller but sits on a slightly larger postage stamp size lot, is listed at $610,000
I've seen short sale prices that were relatively attractive, but none of the houses actually sold at those prices, often nowhere near as a matter of fact.
Point #2
Mission Viejo
Estimated median household income:
$95,878 as per census bureau as of 2010
$95,552 as per City Data as of 2009
Your hypothetical family is pulling in almost $30,000 a year more than median. But if we're being realistic, at their $450,000 target price you've got them looking at attached units. They might score a SFR if they're lucky, but I bet it won't be in a nice middle class neighborhood... unless it's a major fixer-upper.
Something just doesn't seem right there.
I agree with HarleyGuyOC that FHA is the new subprime, and funny thing about repeating the same behavior, it generally leads to the same outcome. Definitely not a good thing in this case.
The mortgage calculator indicates that with a $45K down(10%), the mortgage is $1900/mo.
If a family of 4 making $125K a year gross cannot afford this home(3.6x income...California's home price factor), then this family is so fiscally irresponsible that they should not be buying a house in So Cal at all. Even with the very modest HOA.
That said, inventory is mostly garbage right now and if it were smart, this family would wait until the fall to buy.
No property tax in your world? No PMI(you're putting down less than 20%)? No homeowners insurance? HOA(not sure if that area of MV does or doesn't)?
PITI puts that house at $2700+ with 1.5% property tax(assuming that's somewhere close for MV), 500/yr homeowners, and principle at 5%(not going to get the best loan with that non-conforming loan). Even if you cut down the property taxes and interest rate by a point you're still at 2400/mo. And that's not counting PMI
And 3.6 might be the California number, but it's still a bad number. 2.5 is the universal number, and it's a good one. Housepoor is a bad way to be.
You picked yet another short sale.
The standard sale just down the street, which is 59 sq ft smaller but sits on a slightly larger postage stamp size lot, is listed at $610,000
I've seen short sale prices that were relatively attractive, but none of the houses actually sold at those prices, often nowhere near as a matter of fact.
Point #2
Mission Viejo
Estimated median household income:
$95,878 as per census bureau as of 2010
$95,552 as per City Data as of 2009
Your hypothetical family is pulling in almost $30,000 a year more than median. But if we're being realistic, at their $450,000 target price you've got them looking at attached units. They might score a SFR if they're lucky, but I bet it won't be in a nice middle class neighborhood... unless it's a major fixer-upper.
Something just doesn't seem right there.
I agree with HarleyGuyOC that FHA is the new subprime, and funny thing about repeating the same behavior, it generally leads to the same outcome. Definitely not a good thing in this case.
#1. I posted an actual sold property. That WAS the sales price...it did in fact sell for that. You cite a listed property and list prices are utterly meaningless.
#2. I don't understand how this pertains to what I posted.
No property tax in your world? No PMI(you're putting down less than 20%)? No homeowners insurance? HOA(not sure if that area of MV does or doesn't)?
PITI puts that house at $2700+ with 1.5% property tax(assuming that's somewhere close for MV), 500/yr homeowners, and principle at 5%(not going to get the best loan with that non-conforming loan). Even if you cut down the property taxes and interest rate by a point you're still at 2400/mo. And that's not counting PMI
And 3.6 might be the California number, but it's still a bad number. 2.5 is the universal number, and it's a good one. Housepoor is a bad way to be.
I stated a small HOA. Property tax is a wash as you'd be able to increase your deductions on your take home due to writeoffs on your federal tax return for 1.) State tax paid, 2.) Property tax paid, 3.) Mortgage interest paid. I think your interest rate number is quite high as well. So I think yes, we are looking at around 2400/mo in total. But I also believe thats more than covered by the deductions I stated.
I don't make anywhere near $100K and I'm quite comfortable paying $1640/mo rent. It comes out to about 35% of my takehome. And I can't even itemize on my federal tax return. Pretty sure that $2400/mo falls very within the definition of affordability for a family of four grossing $125K/year.
And yes, 2.5x income would be lovely, wouldn't it? But it hasn't been that low in OC in the past several decades.
I stated a small HOA. Property tax is a wash as you'd be able to increase your deductions on your take home due to writeoffs on your federal tax return for 1.) State tax paid, 2.) Property tax paid, 3.) Mortgage interest paid. I think your interest rate number is quite high as well. So I think yes, we are looking at around 2400/mo in total. But I also believe thats more than covered by the deductions I stated.
I don't make anywhere near $100K and I'm quite comfortable paying $1640/mo rent. It comes out to about 35% of my takehome. And I can't even itemize on my federal tax return. Pretty sure that $2400/mo falls very within the definition of affordability for a family of four grossing $125K/year.
And yes, 2.5x income would be lovely, wouldn't it? But it hasn't been that low in OC in the past several decades.
People generally buy houses in OC because they have kids or want kids. I could easily afford my rent if I was alone. I cannot without a second income seeing as I support other human beings.
#1. I posted an actual sold property. That WAS the sales price...it did in fact sell for that. You cite a listed property and list prices are utterly meaningless.
#2. I don't understand how this pertains to what I posted.
I agree that asking prices are not necessarily reflective of market value, but I'd say short sale asking prices are even less so.
Your link takes me to 26296 Buscador Mission Viejo.
As of today that property is an active short sale listing on the MLS with an asking price of $450,000 that has been listed, delisted, relisted, etc. since December 2011 with no recent record of a sale that I can find.
When exactly did it sell for $450k and where are you getting that information?
I don't know that neighborhood, but from what I've seen in the general area chances of finding a decent ~ 2000 sq ft SFR much under 1/2 million are slim.
You said:
Quote:
Originally Posted by JohnG72
If a family of 4 making $125K a year gross cannot afford this home(3.6x income...California's home price factor), then this family is so fiscally irresponsible that they should not be buying a house in So Cal at all. Even with the very modest HOA.
I just found it interesting that your numbers put a family making above median income into $450k housing, which I still say is probably going to be an attached unit of some sort.
I'm wondering where we're going to find enough fiscally responsible people to buy all the SFR's then?
all you people are calculating like income is going to be stable and guaranteed for a long period of time, I don't blame you because most people still think this way but the reality is that we do not live in that kind of era anymore! One should take into account potentially long periods of unemployment also into the equation... jobs are here today, gone tomorrow, that is the reality of today.
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