Annual Salary Needed To Buy Home in San Diego: $108K (Los Angeles: 2015, mortgage)

[RosieSD]

According to a new report from the Calif. Board of Realtors, the median price of a single family home in San Diego is now $548,000 and the minimum annual household salary needed to buy a home is $108K. (Note the article doesn't say how much downpayment is required to afford the mortgage at this salary)

Make less but want to buy a house? Try Sacramento, Merced, or Fresno, where you can still buy a house in the mid-200's with a salary of less than $60,000.

For comparison's sake, the average qualifying salary for the U.S. is $45,390.

Full data:

2nd Qtr 2015 Housing Affordability report

[TristramShandy]

What would be the salary needed to afford that median house and what are you purchasing (and where) if you make $108K a year?

[NYSD1995]

Originally Posted by TristramShandy

What would be the salary needed to afford that median house and what are you purchasing (and where) if you make $108K a year?

Figures about 10-30% pre tax

This must assume someone is putting 100k down on the 500k house, the real question is how long would it take to save up 100k, for a lot of people that is going to be the tough part.

[someguy10]

Originally Posted by Sassberto

Figures about 10-30% pre tax

This must assume someone is putting 100k down on the 500k house, the real question is how long would it take to save up 100k, for a lot of people that is going to be the tough part.

Especially if you're making $108K and already living in SD.

[RosieSD]

Originally Posted by Sassberto

Figures about 10-30% pre tax

This must assume someone is putting 100k down on the 500k house, the real question is how long would it take to save up 100k, for a lot of people that is going to be the tough part.

Thanks for doing the math, Sassberto. I agree: if you're making $108k and living in San Diego, it's probably tough to save up $100K for the down payment, or at least it's going to be a lengthy process, especially if you aren't willing to make deep cuts in discretionary spending.

[someguy10]

To ensure one doesn't become house poor or a rat-race slave, I think a good rule of thumb is to limit your mortgage to around 2x gross income. I realize I'll get shouted down, but I think more like $200K is a good target income for someone who hopes to buy a typical home. That also makes it a lot more realistic to come up with $100-200K to put down.

[USDefault]

Originally Posted by someguy10

I realize I'll get shouted down, but I think more like $200K is a good target income for someone who hopes to buy a typical home.

Only by those who cannot do simple math, or those who cannot read a simple amortization table. Given the astronomical cost-of-living Southern California imposes on the populace, no doubt about it, 2x annual salary is a prudent housing cost limit. I think even 2.5x is pushing it, given the high taxes and ancillary costs attendant to residing in this state.

And once you undertake even a rudimentary analysis of the numbers, anyone with a modicum of mathematical ability will understand how hellishly expensive Southern California is, especially when compared with the rest of the country (excluding the Bay Area, Los Angeles, and Manhattan, which are the three most expensive in the nation right now, and San Diego arguably is fourth).

[oddstray]

And, as always, the fly in the ointment is the possibility of recession and layoffs. How does one mitigate that risk?

[RosieSD]

Originally Posted by oddstray

And, as always, the fly in the ointment is the possibility of recession and layoffs. How does one mitigate that risk?

Have more than just the down payment in savings/other assets, or a generous benefactor.

[someguy10]

Originally Posted by oddstray

And, as always, the fly in the ointment is the possibility of recession and layoffs. How does one mitigate that risk?

By having 6 months or more of all expenses saved in cash or near-cash--this over and above the down payment cash. Of course people cutting their budget super close to begin with are probably going to find it hard to grow/keep the cushion.

Also, by being realistic about the future. Having two earners each making $100K obviously provides more job loss protection than a single $200K earner (some of the benefit is lost if both are in the same industry/same employer/etc.). But I believe at least several DINKS have posted here about moving to CA with kids on the near horizon. At a minimum, there is going to be the high expense of daycare coming in. Plus the whopper of the possibility that one of the two may want or need to stop working.