Young Professional - Housing Issue (Torrance, Thousand Oaks: apartment, to rent, mortgage)

[yougotfitched]

Hey everybody. Although this is my first post, I have been researching this forum for a few weeks now. Here's my situation:

I lived in HB for the last 6 months while I interned for Toyota in Torrance (Crappy commute...I know!) But it was worth it. I grew up in upstate NY, and plan to graduate with my degree in marketing/advertising Spring 08 from RIT. I want nothing more than to move back and live somewhere in OC. I have an excellent resume, great work experience, and am on my way to a 100k income within 3-5 years of work exprience holding my degree.

I researched the avg. home price in OC, and found something like 500-700k. I also found that to afford a house like that, you need to make 125k or so annually. My question is this: I see a majority of homes for 1.5-2million dollars. Where do people work in OC/what kind of jobs do people have to afford those kinds of houses? I always considered myself to be going down the right tract, but what are others doing that I'm not to make that kind of living? Are there really THAT many celebrites/sports professionals?
Who are the highest paying employers for the OC area?

Sorry for the long post! Any responses are greatly appreciated!

[DanBosCalTex]

Honestly not many make that kind of money. Many of these people either bought homes when they were much less expensive(say 10-15 years ago) or they got sub prime loans(I heard something like 27% of mortgage in OC are subprime). If you can wait I think the prices will fall...dramatically unless congress bails everyone out. median income for an individual is 60K for a family its 75K, clearly half what it takes to buy a house even a bad one. Keep an eye out for deals I have seen a couple in the 300K price range but I think they are going to drop.

[ysr_racer]

Originally Posted by yougotfitched

Where do people work in OC/what kind of jobs do people have to afford those kinds of houses...

I live in OC and ask myslef that everyday

bg

[DanBosCalTex]

LOL I do the same thing. I must have asked the same question in conversation to at least 20 different people.

[Axiom]

Here's what I think:

1. Most people bought before the unprecedented price run-ups of the past 10 years or so; thus while OC has always demanded a premium compared to many other parts of the country, there was some relationship to basic economic fundamentals. ie: price to income ratios made at least some sense way back in the 90's.

2. In more recent years many others were able to buy up after their $350,000 homes suddenly became $800,000 homes in a matter of just a few years. You don't necessarily need the big income if you have a huge chunk of change to use as a down payment.

3. There are more areas in OC than you may think where starter homes vacated by the move-up buyers mentioned above are purchased not by nuclear families, but by much larger extended family groups.
Also I just read about one program, sponsored by a RE group, where 1st time home buyers making under $90,000 a year can qualify for grants of up to $15,000 to use toward their downpayment.
Both help keep prices up and the whole process going.

4. When prices were spiraling up and up and up it was easy for folks to get caught up in the buying frenzy. ie: you've got to get in while you can and by using any means necessary... it was no big deal for folks to buy waaay more house than they could legitimately afford since in a matter of months they would have instant equity just due to price increases.
OC has been a hot bed for creative financing in recent years.

5. Yes, there are lots of folks with big bucks in OC, so not everyone has to be in debt up to their eyeballs just to get into a house in OC.

That said, IMO those with incomes of $200,000+ a year are still in the minority, even in OC, so the multitude of million+ dollar middle class tract homes makes no sense.

[EscapeCalifornia]

Welcome to the reason people like myself are leaving. I can't comfortably afford even a $600k "stater" house and I refuse to rent an apartment for the rest of my life.

[DanBosCalTex]

Amen Brother. I headed out to Texas myself where you going?

[EscapeCalifornia]

Originally Posted by DanBosCalTex

Amen Brother. I headed out to Texas myself where you going?

Most likely Denver. I'd go to Austin (have family there) but the heat and humidity would get to me.

[SALUKI_LOVER]

We got the heck out of CA 4 months ago and couldn't be happier.
We were natives but housing is the big issue that is pushing people out of the state.
We were realtors and could afford it but got tired of a $3000 a month mortgage/property taxes/tired of those coming in to our great state and not wanting to assimilate/traffic..need I mention more?
It saddens me to no end what is happening to California . . .
We're in the south and couldn't be happier.
We sold our homes and were renting a studio apt in LOVELY Buena Park for $1100 a month.
We're getting ready to buy but in the meantime we're in a 2 bedroom apt for $750....

[Charles]

Originally Posted by yougotfitched

I see a majority of homes for 1.5-2million dollars. Where do people work in OC/what kind of jobs do people have to afford those kinds of houses? I always considered myself to be going down the right tract, but what are others doing that I'm not to make that kind of living?

Not everyone who owns a 2000 sqft home with a market value of $800K owned it ten years ago with a market value then of $350K. People are still buying these homes at $350-$400/sqft now. Who? Many are foreigners (India, China, Europe) and people from other high end markets (BOS, NY, NOVA, etc.). I owned I a 2200 sqft home (Thousand Oaks, CA) I paid $330K for in 1997. Sold it (to some Chinese lady) for $920K in 2006, at the peak, at d(price)/dt = 0. People around that time buying in my neighborhood were not locals. I'd go to the park and either I couldn't understand what they were talking about or they had a red sox (spit) or yankees (spit) hat on.

Also, I assume you are young. You won't have a hard time renting. It would probably be in your best interests. Have fun. Enjoy SoCal if you stay for awhile. Get it out of your system. Then when you decide to get married and have kids - bail to somewhere more affordable with good schools and less traffic.

By the way, your post has been addressed many times on these forums. Consider using the advanced search tool.