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I turn 30 in a few months, and it got me thinking that I should probably try to grow up, be responsible, and "settle down" somewhere.
I've been living in Los Angeles for the past 3 years and love it. However, the real estate market is… um... quite a bit different than what I’m used to in the Midwest.
Is this a smart idea in a expensive real estate market? Or should I just continue to rent until I either get a promotion or save up some more cash? (I continually save $1500/month in non-retirement funds). I have a net worth around $170k.
I have $100k in liquid assets that I could use for a down payment. I’m looking at a condo in the area I want, instead of a house in a area that I don’t want. I’m thinking my budget is somewhere around $450k (trust me, that is nothing luxury in West Hollywood).
I’m looking at a 2bed/2ba, so I could rent the other room out to someone to cover some of my mortgage.
Any suggestions, advice, or ideas would be more than appreciated.
I've been living in Los Angeles for the past 3 years and love it.
Do you anticipate being able to remain there indefinitely?
Good solid job in a career you like with likelihood of advancement?
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However, the real estate market is… um... quite a bit different...
It's freaking insane compared to almost everywhere else in the US
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I have $100k in liquid assets that I could use for a down payment.
I’m looking at a condo in the area I want, instead of a house in a area that I don’t want.
I’m thinking my budget is somewhere around $450k
At 3:1 (the limit in the rest of the world) you're gross income should be $150k to afford a $450k property.
Even in LA... you really shouldn't go over the 4:1
In case you're wondering...
down payments, loan rates, terms and all the rest are NOT a part of that conversation.
At 3:1 (the limit in the rest of the world) you're gross income should be $150k to afford a $450k property.
Even in LA... you really shouldn't go over the 4:1
Ugh, I'm not even close. I make $65k/year.
However, my mortgage calulator says that my monthly payment will be around $2400 which, is close to what my roommate and I are paying per month for rent for a 2bed/2ba in the same area.
On top of my rent, I'm saving an ADDITIONAL $1500/month.
You're better off renting as long as you can save $1500 per month.
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Originally Posted by yoyoma02
Ugh, I'm not even close. I make $65k/year.
However, my mortgage calulator says that my monthly payment will be around $2400 which, is close to what my roommate and I are paying per month for rent for a 2bed/2ba in the same area.
On top of my rent, I'm saving an ADDITIONAL $1500/month.
The bank won't allow you to factor your roommates contribution unless you decide to buy together (a generally horrific idea.) You must qualify all by yourself.
HOA fees can be prohibitively expensive as well.
It is an excellent time to buy with low interest rates, and prices will likely continue to rise.
You could afford a SFH in a reasonable commuting distance like Santa Clarita if you're willing to commute.
Have you run the numbers through some of those online calculators? The NYT has a good one. With a condo I'd be especially wary about HOA fees, though. When we lived in LA it was a better deal to rent than to buy. Our house was valued at something like 650k (which seemed reasonable, given sale prices in our area), but we paid only $1900 for rent (I would have loved to own that house; I could never have afforded the money to do so, let alone cover taxes, insurance, maintenance, etc.). I don't know what our Hollywood apartment would have gone for as a condo, but our rent was likewise a bargain compared to what I imagine it was worth if we had owned it.
I'd also consider just how stable your life is as it is now. What happens if you end up meeting someone and getting married in the next five years? Have kids? (although at least with a 2-BR you have room to adapt) Your 30s can potentially be a time of major changes. If you have a good deal on a place now (and especially if you are covered by rent control) and don't have a burning urge to become a home owner, it doesn't seem like there needs to be a rush to buy. Especially given how much money you are able to save every month.
Then again, I admit we lived in LA first when times were good and housing prices were skyrocketing, followed by the economy imploding and everyone around us losing their jobs and unable to sell (those who wanted to), so I am probably extra paranoid. You have a lot of money saved, but I'd be worried about taking on a house that expensive (and I know it's not expensive for LA) on that income, especially if you're only in your early 30s, as that's potentially a decade where a lot of major life changes can potentially happen. (or even, for that matter, maybe major job changes)
I don't know how this works for condos, but also check (if you haven't already) costs of earthquake insurance and add that into your monthly bills. It can be pretty expensive and is above-and-beyond your regular insurance costs.
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