is the 1/4 to shelter rule-of-thumb still applicable? (San Luis Obispo, Pacific Grove: for sale, real estate)

[agguy805]

I've been living in the Central Coast of California since late '03 and since then I have been just in awed by how medicore the salaries are and how whenever I see homes for sale in the paper and rentals per month, I automatically think "Cha-Ching!!!" Having lived in North Texas the house prices and rents were afforable for just about everyone with relative ease. And the wages were the same and sometimes a little bit higher than California. Especially in among the San Luis Obispo/AG/Nipomo area there aren't many industrial careers available, and it's mostly fast food, retail, agriculture. I don't see how almost half the population affords a rent payment of more than $1100/mo. (If the 25-30% of income to shelter guideline is still applicable) A good portion of the Hispanic population make between $8-$14 a hour with more than 2 children to support. Even non-hispanic families who with careers, I still don't know how they afford the massive mortgages of today's markets. I highly doubt many people in the Central Coast area have a household income of more than $110,000/year, as there aren't many industries that can pay that much. So yeah, how do average people afford to live in this area?

[Steve97415]

Originally Posted by agguy805

So yeah, how do average people afford to live in this area?

1. People spend well over a third of their income on housing. When you hear people say "my house is (was) my 401k," they're not kidding.

2. Many people are retired on hefty pensions and don't need to work in the local market.

3. Many people have roots in the area that go way back in the region and are able to stand on the shoulders of previous economic investments. They're living in a house that their parents lived in before them, or at least sold family-owned real estate to buy up to where they are now.

4. In some cases, there may be multiple families living in a single family dwelling.

[Huckleberry3911948]

1/4 rule only applies if you sleep on the beach otherwise most of your money goes to rent.
the condos were designed to be lived in by people with a 60k w-2.

[Charles]

2007 City-Data data

Estimated median household income in 2007: $42,855 (it was $31,926 in 2000)
San Luis Obispo: $42,855California: $59,948

Estimated median house or condo value in 2007: $669,734 (it was $252,900 in 2000) San Luis Obispo: $669,734California: $532,300

[dweej]

Originally Posted by agguy805

I've been living in the Central Coast of California since late '03 and since then I have been just in awed by how medicore the salaries are and how whenever I see homes for sale in the paper and rentals per month, I automatically think "Cha-Ching!!!" Having lived in North Texas the house prices and rents were afforable for just about everyone with relative ease. And the wages were the same and sometimes a little bit higher than California. Especially in among the San Luis Obispo/AG/Nipomo area there aren't many industrial careers available, and it's mostly fast food, retail, agriculture. I don't see how almost half the population affords a rent payment of more than $1100/mo. (If the 25-30% of income to shelter guideline is still applicable) A good portion of the Hispanic population make between $8-$14 a hour with more than 2 children to support. Even non-hispanic families who with careers, I still don't know how they afford the massive mortgages of today's markets. I highly doubt many people in the Central Coast area have a household income of more than $110,000/year, as there aren't many industries that can pay that much. So yeah, how do average people afford to live in this area?

I'm from Dallas, and get irritated too that so much of our income goes to housing expenses, especially when I find out what my friends back home are paying . Here, average people have to spend very little on anything else (travel, going out, clothing) and most put little to nothing away every month for emergencies and retirement. Back in Dallas, it seems like my various friends are always doing some new thing, traveling somewhere, renovating a room in their house, going to Mavs or Cowboys games, playing golf....you see where I'm going with this. These are people in their late 20's and early 30's who own their homes even though they still have student loan debt to pay off- married, with kids, and only a single income. Ugh, I'm so jealous!!!

[EscapeCalifornia]

It's called the sunshine tax. California is full of people who will pay anything to avoid weather. If that means spending 50% of their income on housing, that's what they do while telling themselves it's worth it.

[BayAreaHillbilly]

Weather, redwoods, surfing at Pacific Grove ... LOL!

[SOON2BNSURPRISE]

I hear the complaints and understand them. What is the solution? I am not planning on moving to Texas anytime soon. Housing has declined in value to a more affordable amount and with the 3rd wave of forclosures about to hit during June, July, and August I am sure it will deline even further. I read we still have a 4th and 5th wave of forclosures to get over. Can't imagine what prices will be like in a year. maybe then we can all stay in here in California.

Thoughts for a solution are to find a career path that will pay the kind of money it takes to live here. Start a business that will pay you the money that it takes to live here. Work a second job if you can find one and save the money needed over time for a downpayment of a home. In fact work as much overtime as you can and over time you should be able to save the money for a down payment on something. All of those things do take time to accomplish. Many would rather sit here typing out their grieviances on the inabillity for the average person to own a home and have an ideal lifestyle. We all want the gold ring but few are willing to put the effort to capture it. Some mentioned how many families live together in a single home. I have seen many imigrant families that have worked to save the cash to get a down payment for their own home. Then they all live in it untill they can save for a second home and a third home. Eventually over time all of them have a home.

What I am saying is that chances are the average person can do little to change the price of housing or change the economic impact of living in California. We can come to terms with it and decide that if we are going to have the life we want then we are going to have to find a way to increase our incomes and savings. As far as I know I can only cut so much out of the budget. After that we need to raise money somehow.

[sonarrat]

I spend about 1/4 of my income on housing, but I work my butt off to earn that income. 60 hour weeks are nothing unusual.

[SOON2BNSURPRISE]

Originally Posted by sonarrat

I spend about 1/4 of my income on housing, but I work my butt off to earn that income. 60 hour weeks are nothing unusual.

Why are you doing that? Wouldn't it be easier to complain about the fact that you can not make it on a 40 hour pay check?