Millennials simply can't afford to live in OC (Riverside, Temecula: renter, homeowners insurance)

[payutenyodagimas]

Originally Posted by Electrician4you

Yes but the subject was living in OC. Yes you're right, if two people got married or lived together they could get a higher price house. That's just mathematics.
BUT it all depends
You're now bringing in two people's debt. What sort of savings/debt are these people servicing?

You can make 160k a year but if you got 60/70% of it going out in servicing debt it's pointless. Hey FYI we saved for YEARS to get the 20% down, closing moving and associated costs in buying a house. We waited until we were financially READY and WILING to take a mortgage on. Too many feel that they must buy now now now.

80+80 = 160k


you assumed that the partner has no income? did I get it right?

[crabtrees]

Originally Posted by man4857

Most people in SoCal don't seem to see it the way I do so, I know some people who bailed, but most are staying (or at least trying to). It's only a matter of time before the whole thing crashes.

If there's one skill going through engineering school has taught me that I'd thank my life for, is the ability to look at the big picture, analyze a situation, find and compare alternatives, and make the appropriate trade-offs to accomplish an objective.

I completely agree with your comments throughout this post, Man4857. I never thought I'd ever leave OC, and there was a point in my younger days where you couldn't even pay me to leave, but getting older and wiser I can see the big picture in OC just as many others in this post can. The sh*t is going to hit the fan at some point in the next 5-10 years, if that long.

Living in OC in 2016 is a challenge, but anyone who sees the big picture will also consider long term cost. Think about people buying houses around here right now. The property tax alone is going to run $8000 a year. If someone is lucky enough to still be here in 30 years when they finally pay the house off, they then have the honor of paying $8000 a year from their retirement budget just on the property tax. If they're retired for 20 years before death they will have paid $160,000 just in property tax. If they live off $1000 a month (good luck) 30 years from now, and sustain that for the 20 years they're retired, they need a minimum of $240,000. Combined with the property tax, a person can scrape by during retirement in OC for around $500,000. Let's see how many current OC residence have that much in their 401k when it comes time to retire.

[payutenyodagimas]

our last rent was $1,700.00 2 years ago. our house payment + tax + hoa + ins = $2,300


our neighbor in the apartment is now paying $1,900.00


2 more years and we will be paying the same amount of house expense although mine will be tax deductible and remains the same

[man4857]

Originally Posted by crabtrees

I'm part of the middle class that is bouncing out of OC and I can't wait. I'm in my late 30's and lived here my entire life. Great place to grow up when you're a kid and don't have to have a job or responsibilities, but growing old here just isn't worth it. Housing prices are simply stupid and there are way too many damn people. It shouldn't take me an hour to drive 16 miles to work, and that's not even that bad!

I think one poster hit the nail on the head...it's all about quality of life. Living in SoCal has a premium and if you don't have a family income over $200k/yr you are going to have to sacrifice either quality of life or location. You cannot live in a nice safe neighborhood, in a modest house with good schools and expect to pay less than $700k for the house. My wife and I both have college degrees and make around $150k together a year...we've been looking for a house for 6 months and nothing we want is under $700k, and the idea of paying that amount for a 1200sqft home is ludicrous. OC is just not worth it. At least for me, you can't even enjoy the things that used to make SoCal so great...going to the mountains takes forever, going to the beach is a freakin nightmare, the amusement parks cost two paychecks for entry, driving to work takes 2 hours of my life each day, going south to San Diego or something on the weekend is easily a 3 hour trip each way. The cost of living is through the roof. We finally said screw it, decided to sell our insanely overpriced condos and head for the suburbs of Vegas in a few months. We'll have a 3000sq ft home built in the past 10 yrs, 3 car garage, completely updated interior in a terrific neighborhood that looks like Irvine for less than $400k. We'll be able to pay 20% in cash and still have over $100k leftover from selling our condos and we're not even 40 years old yet. Traffic out there is nothing compared to here, the taxes out there are significantly lower, the COL is about 30% lower out there, and we're a 60 minute flight away at all times. Thank god for John Wayne Airport! Basically we are choosing to have the best quality of life that our money will provide, as opposed to just getting by in one of the most desirable locations in the country. It's no longer desirable to us. See ya'll in Vegas!

There's someone who obviously gets it.

[beachie123]

don't forget crazy expensive health care costs. that is a huge chunk out of every month. oy...

[pacific2]

Originally Posted by man4857

I don't think it's the correct assumption that if owning = renting, then own, because owning almost always is more expensive than renting once you factor everything. It's a mistake most people make.

I have seen the calculators that sometimes say it is now better to rent than own, but, that seems to fluctuate. Specifically, with the example I gave, how would owning be more expensive than renting?

What's more, crazy rent increases are motivating a lot of people to buy:

Rising rent the top reason people buy homes, survey says - The Orange County Register

[LuvSouthOC]

Rent In Southern California Skyrockets, Especially In Orange County

From the article:

“If you’re a millennial you’re looking at a minimum-wage job, it’s nearly impossible to get by and live, let alone eat and survive,” Orozco says.

[expatCA]

Originally Posted by Finper

your comparing Orange County to London, Manhattan and Paris??? I guess we should be flattered??? I never said anyone should expect to buy here I said it was sad that it's so hard to. It is what it is I get that. I'd even be lying to say I hope the housing figures go down because I want to sell my place and get cash out with some good equity. Because I'm one of the middle class that's leaving...

And I am one who left already, except for 3 businesses and I hope to close 1 next year.

[Electrician4you]

Originally Posted by payutenyodagimas

80+80 = 160k


you assumed that the partner has no income? did I get it right?

No, i did not assume a single income. I stated 160k as a dual income. I didn't think I had to expand on it. I just doubled the initial stated 80k income. And I'm being VERY generous with dual 80k incomes.
Either way if both people bring in debt along with the income it still impedes affordability.

Originally Posted by payutenyodagimas

our last rent was $1,700.00 2 years ago. our house payment + tax + hoa + ins = $2,300


our neighbor in the apartment is now paying $1,900.00


2 more years and we will be paying the same amount of house expense although mine will be tax deductible and remains the same

That's where we were years ago. Eventually I will be leaving California. I'll cash out and move to Montana Wyoming Idaho etc.

[man4857]

Originally Posted by pacific2

I have seen the calculators that sometimes say it is now better to rent than own, but, that seems to fluctuate. Specifically, with the example I gave, how would owning be more expensive than renting?

What's more, crazy rent increases are motivating a lot of people to buy:

Rising rent the top reason people buy homes, survey says - The Orange County Register

Two sides of the coin here, it's more expensive because right away you'd have to eat the cost of closing and maintenance. Maintenance is of course dependent on the property itself and how well it was maintained prior to closing. The cost of closing well, that's a big one, estimates I think are anywhere between 3-7% (if I remember correctly of the purchase price). So right at the beginning, on that 365K condo you're already in the hole 18,250 assuming 5% closing cost. The way that owning becomes actually cheaper is when you stay put for a very long time 10-15+ years, only then do you break even and save compared with renting because the cost of the property still is the same for a fixed rate mortgage but rent will keep rising and by that time you've already made back the savings of closing and maintenance. (This is assuming in your example, the two properties are exactly identical and nothing crazy big breaks in the house). Ironically too, statistically speaking, most people stay in their home on average I think 7 years before moving. That defeats the whole purpose of owning at that point. People are more motivated to buy when rent increases because mortgages are fixed rate and monthly payments stays the same, but most fail to consider the other aspects like closing and maintenance. In essence people look at the short term monthly cost rather than long term total cost.

On the side also realistically speaking, no two properties are alike. Most of the time owning will get you more space than renting. Coming with that bigger space is higher cost in insurance, utilities, and maintenance. Assuming purchase price is the same.

There's other factors to consider too like taxes and insurance but homeowners insurance is always more expensive than renters insurance. If in the OC/SoCal for example, not only do you need homeowners insurance but also earthquake insurance which adds more cost whereas renters insurance already covers your belongings due to natural disasters, theft, etc. With taxes, the biggest gain from owning is interest deduction, which helps with breaking even quicker, this is assuming you are paying enough taxes from your income to get some back to begin with.