SD housing market nightmare (San Diego, Escondido: townhome, wage, tax)

[LuvSouthOC]

Originally Posted by sdlife619

If the real estate market ever did come back to "Reality" in CA, a majority of those $500,000-1 million dollar homes in so so neighborhoods, should be priced in the 100,000-300,000 range nothing more nothing less.

But no, the people buying the extremely over inflated 2 bedroom shack houses for a million bucks has to be high on something good, to consciously make such a stupid decision on such a waste of precious hard earned money. It comes down to value, and the for what the people are asking for their houses that are for sale, you're not getting your money's worth. Sunny weather or not, it's ludicrous. Especially in area's where the beach is an hour away.

CA is great in all, and has all the amenities anyone could ever want, but not to the point where you're a slave to your own home.

There is some truth to this (slave to one's house idea) but I just want to remind you that people buy the million dollar shacks because there are others who are willing to bid up prices. Things are only worth what people are willing to pay for them.

[NYSD1995]

If you can roll 3-400k in equity and cash into a 900k property, the mortgage is < 4k/mo, a lot of 2 income couples can afford that. Schoolteacher's salary can pay the mortgage, and husband is taking home 5-6k that they live on. It's the cash that holds people back, it's harder to come by than credit, if you don't have equity or assets to convert to cash you have to start at the bottom...

[LuvSouthOC]

Originally Posted by Sassberto

If you can roll 3-400k in equity and cash into a 900k property, the mortgage is < 4k/mo, a lot of 2 income couples can afford that. Schoolteacher's salary can pay the mortgage, and husband is taking home 5-6k that they live on. It's the cash that holds people back, it's harder to come by than credit, if you don't have equity or assets to convert to cash you have to start at the bottom...

Very true, 4k is very easy to swing for many couples, but a 900k home generally requires a down payment of 180k plus other closing costs, i.e. 200k. Many couples may not have saved that. Plus this amount means a jumbo loan, which has a little less favorable terms.

[helluvaengineer]

Originally Posted by LuvSouthOC

Very true, 4k is very easy to swing for many couples, but a 900k home generally requires a down payment of 180k plus other closing costs, i.e. 200k. Many couples may not have saved that. Plus this amount means a jumbo loan, which has a little less favorable terms.

And not only that but people likely have to pay high rent at the same time that they're saving up for a decent house to buy. Saving 180K can take a long time for a lot of people.

[someguy10]

Originally Posted by Sassberto

If you can roll 3-400k in equity and cash into a 900k property, the mortgage is < 4k/mo, a lot of 2 income couples can afford that. Schoolteacher's salary can pay the mortgage, and husband is taking home 5-6k that they live on. It's the cash that holds people back, it's harder to come by than credit, if you don't have equity or assets to convert to cash you have to start at the bottom...

Originally Posted by LuvSouthOC

Very true, 4k is very easy to swing for many couples, but a 900k home generally requires a down payment of 180k plus other closing costs, i.e. 200k. Many couples may not have saved that. Plus this amount means a jumbo loan, which has a little less favorable terms.

Originally Posted by helluvaengineer

And not only that but people likely have to pay high rent at the same time that they're saving up for a decent house to buy. Saving 180K can take a long time for a lot of people.

Buying a home should involve a logical "AND" between each condition. In other words, you should be able to handle the mortgage payment AND be able to reasonably save an appropriate down payment AND be able to afford RE taxes/HOA/mello roos/maintenance. If all aren't true, IMO you're trying to buy too much house.

[expatCA]

Originally Posted by someguy10

Buying a home should involve a logical "AND" between each condition. In other words, you should be able to handle the mortgage payment AND be able to reasonably save an appropriate down payment AND be able to afford RE taxes/HOA/mello roos/maintenance. If all aren't true, IMO you're trying to buy too much house.

"And" you should also have about 6 months savings left after all expenses to buy and move.

[someguy10]

Originally Posted by expatCA

"And" you should also have about 6 months savings left after all expenses to buy and move.

I left that off so I didn't seem too negative! Personally I would also add:

1) "and" so that total bare-bones budget (i.e., housing + minimum living expenses) would be covered by one of the two salaries, ideally the smaller one;

2) "and" so that total value of home (I'm assuming it's the primary and sole residence) does not exceed 33% of total net worth

[1AngryTaxPayer]

After setting aside some for a 401K, paying rent and all other bills I can imagine it would take two pretty fat incomes to pull off a jumbo mortgage.

[pgrdr]

Originally Posted by Cardiff Kook

Really not trying to start a fight, but isn't market value whatever someone is willing to pay? So if the homes sold, then that is in fact the market value? Or maybe my econ knowledge stinks..

Anyways, sorry to hear you are having a tough go at it Sass. Hang in there, you'll find a gem I'm sure.

It is a distorted market. Markets aren't all intended to be treated the same way -they weren't all designed to be treated the same way. The housing market (home ownership) was created to provide American families family homes. It wasn't designed for speculation and flipping, but like with all other markets in this country, rampant savage capitalism has taken hold and ruined it.

It is the same with Wall Street. Initially, the stock market represented growing sustainable, long-term, productive companies that would provide jobs and goods or services to the public. It, too, has been distorted by unregulated growth and speculation, with far more people invested in it and moving their money continuously than it was designed for.

When only 28% of San Diego County residents can afford a median-priced home in San Diego County, something is very wrong. Ultimately, such a market is unsustainable for a healthy extended community.

[msgsing]

You just don't see starter home construction anymore in SoCal or the kind of job market that allowed people to buy such homes. One of my relatives bought a 1,000 sq ft one story new home in a suburb of LA back in the 70's for 25k. Veterans loan. No down payment. Wife didn't work and he made near minimum wages running cable for the local phone company.


Over the years he added a couple of small bedrooms and enlarged the kitchen. He had a union job with contractual wage increases and many years later doing the same job he retired making over 100k. Pension with 50% of highest yearly salary. House today is worth about 500k. Prop 13 property taxes of about 1200.00. He and many of his original neighbors are still there. Nothing like this would happen today.