Californians making below $50,000 keep leaving (Los Angeles, Oakland: real estate market, 2014, foreclosures)

[JohnSoCal]

Originally Posted by skygazer1

High earners don't pay any taxes

Now I know for sure that you are nothing but a troll.

[payutenyodagimas]

Originally Posted by So FL Guy 1289

I'm not sure what high earners in CA do, but in other uber expensive states, like Connecticut and New York, many wealthy residents buy second homes in places like Palm Beach/Miami or Vermont and establish residency there. I'd imagine many CA high earners do the same.

they can do that but there are so many ways to skin a cat as they say. you claim to live in Nevada but send your kids to a private school in CA? that's prima facie that you don't live in Nevada


hard to game the Franchise Tax Board

[skygazer1]

Originally Posted by JohnSoCal

You just blew any credibility you might have. You obviously are totally ignorant about property taxes in California.

Property taxes are 1% of assessed value by state law PLUS fees which can add anywhere from 0.1 - 1.5%. The assessed value is equal to purchase price of the home. Again, this is the state law per prop 13. After the first year, the assessed value is adjusted each year but cannot exceed 2% annual increase. When the house sells then The assessed value is fixed again at The new purchase price. This is why property taxes can vary a great deal within the same neighborhood based on when The homes were purchased. The tax history of a home is meaningless to a buyer because it will be reassessed to The purchase price.

The property tax on the $450k home would be between $4500 to $10,000 and would probably be some where around $5,000 assuming no Mello-Roos or similar fees.

Ok, you are correct for a general case. I didn't bother to look up the rates for the specific city within LAC either. I got the 0.79% by quickly calculating it from my own tax bill, which is reduced due to the prop 60. Assuming the $50k purchaser cannot apply this, it would be 1.095% in this Lawndale example. So, I need to add $114 to my prior estimate, total PITI+PMI would run approx $2400, so his ratio is 57.6% Getting pretty high, but you could still try to find/wait for a better loan rate, shop around for a better PMI and homeowner ins rate.

Keep in mind, we are determining if someone or family with around $50k income could buy a house around $450k in LAC. Any such effort will be only an estimate, because the exact values of all the parameters will vary. He may have to go for a $400k house.

This exercise was not designed to initiate a loan for someone, rather to provide a ballpark estimate of what could be purchased in LA for someone making around $50k, and that shows it is possible, given the right combination of factors.

[CaliRestoration]

Originally Posted by skygazer1

High earners don't pay any taxes

[ndindy]

Originally Posted by skygazer1

How am I wrong? $50k is $4166/mo. and with the best credit you could get the loan for $1990/mo. with a 10% down. Thats a 48% DTI before taxes & insurance, but some lenders like FHA go up to 55% or even more with automated underwriting and compensating factors. So, it is possible.

I admire your optimism, but this won't work in 2018. It would have worked in the mid 2000's with option arm mortgages and stated only income and assets, but it would be nearly impossible to underwrite a loan with a $4200/monthly income and a $400k mortgage. You would need to take home about everything you earn. If you could get approved for such a mortgage, you would be able to write of a substantial amount of the interest and property taxes on your end of year filings, but it would be almost miserable trying to save almost all of your take home income to pay a mortgage.



I am pro California, but if you are making sub 6 figures, you need a mortgage that is consistent with that income, or rent a place you can afford. For all those that over spend on their housing, do so sacrificing retirement, savings and a future safety net.

[JJonesIII]

Originally Posted by ndindy

I admire your optimism, but this won't work in 2018. It would have worked in the mid 2000's with option arm mortgages and stated only income and assets, but it would be nearly impossible to underwrite a loan with a $4200/monthly income and a $400k mortgage. You would need to take home about everything you earn. If you could get approved for such a mortgage, you would be able to write of a substantial amount of the interest and property taxes on your end of year filings, but it would be almost miserable trying to save almost all of your take home income to pay a mortgage.



I am pro California, but if you are making sub 6 figures, you need a mortgage that is consistent with that income, or rent a place you can afford. For all those that over spend on their housing, do so sacrificing retirement, savings and a future safety net.

Oh, this is a little beyond optimism. This is one of those tin foiled hats, theatre of the absurd situations. I'd love to see the underwriter who approves loans like this (and I'm guessing they wouldn't be an underwriter for long). I'm simply chalking this up to a troll who made a ridiculous comment and then continues to try and justify it with ridiculous scenarios such as free health care, being a part time farmer, ignoring costs, and the like. My comments can stand of their merits and any logical person reading this are probably getting a laugh over her Pollyanna scenarios. Ironically, this same poster talks about a financial crisis occurring and then sits there and tries to justify giving a loan in a scenario which is the same recipe for a disaster to those that were the heart of the last crisis.

[skygazer1]

Originally Posted by ndindy

I admire your optimism, but this won't work in 2018. It would have worked in the mid 2000's with option arm mortgages and stated only income and assets, but it would be nearly impossible to underwrite a loan with a $4200/monthly income and a $400k mortgage. You would need to take home about everything you earn. If you could get approved for such a mortgage, you would be able to write of a substantial amount of the interest and property taxes on your end of year filings, but it would be almost miserable trying to save almost all of your take home income to pay a mortgage.

I am pro California, but if you are making sub 6 figures, you need a mortgage that is consistent with that income, or rent a place you can afford. For all those that over spend on their housing, do so sacrificing retirement, savings and a future safety net.

Renting is a total waste of your money, and in many places will cost more than the purchase. Every dollar you pay into your home purchase will be recovered and more, in the long run. Being in the RE business you should know all that. There is no better deal than home ownership, even if you have to suffer initially. If prices continue to rise in short term, you can rid of the PMI, even refinance if rates drop, and that will help a bit for your other expenses. You can always tell your employer your exempt from withholdings to take home all your pay, if that is in fact what would be.

Changing the down payment a little, or a slightly lower sales price, a dip in rates, would make a "nearly impossible" quite possible. I'm pretty disappointed in these replies I have been getting, that suggest lower income people should forget about home ownership and run away to sweltering Arizona or Texas.

P.S. I resent name calling, and will not respond to any such "low blows"

[cttransplant85]

Why do you guys keep electing these people? Your middle class has shrunk by like 10% over the past few years, you went from having the top quality of life to the worst quality of life within like a generation, homeless drug addicts all over the place, excessively unaffordable, massive income inequality and uncontrolled migration. You have to much green mail and corruption and insanity in your capital. Just doesn't make sense, this thing is going to collapse.

[skygazer1]

Originally Posted by cttransplant85

Why do you guys keep electing these people? Your middle class has shrunk by like 10% over the past few years, you went from having the top quality of life to the worst quality of life within like a generation, homeless drug addicts all over the place, excessively unaffordable, massive income inequality and uncontrolled migration. You have to much green mail and corruption and insanity in your capital. Just doesn't make sense, this thing is going to collapse.

Ever heard of the term 'hyperbole'? Quality of life is still the tops in coastal CA, its just more people can't afford it anymore. Homeless are everywhere and politicians are just as worthless as anywhere else

[Ultrarunner]

Sometimes you can overcome by thinking outside the box...

I have always worked... started paying into Social Security at age 12 and paid my way through school working.

At 22 I wanted to buy a home... simply could not see any benefit paying rent... I also paid my parents rent at age 12... that summer job paid minimum wage and every Friday my $50 was $20 to my parents, $20 to my Savings and $4 witholding leaving my with about $5 and change.

I looked into getting a mortgage and was told my work history of part time jobs was a non-starter... even though I had saved enough for a 20% down payment.

Not getting discouraged I made it my business to know the minute a home the lowest MLS homes hit the market.

Took several months and I found my fixer.

It was listed but needed too much work so two sales fell through because property didn't qualify due to condition.

I made my As-Is offer with 20% cash down and split all closing costs... did a 30 year note due in 7 and paid 1% over market rate... the owners were moving to a retirement community and needed income.

It was a win/win... and still own the home today.

I made the repairs and had the opportunity to refi the balance at a better rate 3 years later...

Let my sellers know and they were very happy getting my monthly mortgage payment... they said do what I have to but asked if I would keep paying them if they dropped the rate to 5% and made it 15 years... I said yes... some of their friends were a little envious... they were getting 2% on CD money and my sellers were getting 5%.

Not only was I able to own my own SF Bay Area home in Deep East Oakland at age 22 but due to Prop 13 my taxes were quite reasonable going forward based on the value at the time I purchased.