Household Income to Make It In Hawaii... (Honolulu, Waipahu: mortgage, refinance)

[whtviper1]

Originally Posted by winkosmosis

Which means the vast majority of those $750k houses must have been bought when values were much lower. How do young families afford to buy houses now?

Young families buy houses in a variety of ways:

1. Parents lend or give them the money for the down payment
2. They start in a lower housing price area - perhaps Ewa Beach or Kapolei
3. They may start with a cheap condo
4. Inheritance
5. They have sufficient income
6. They saved money
7. etc, etc

Given housing prices are continuing to rise on Oahu combined with low inventory is an indicator that despite the paltry median income here, demand outstrips supply and there isn't a lack of eager buyers here on the island.

[Pyramidsurf]

Originally Posted by winkosmosis

Which means the vast majority of those $750k houses must have been bought when values were much lower. How do young families afford to buy houses now?

Housing has always been very expensive.

My parents paid about 400K for their home in 1991. That's about $687,662.26 in today's dollars.

The majority of young families that live in Hawaii either leave and come back with a big down payment and experience gaining them a big income. Or, they live at home with their parents for years. I know at least five couples living with their parents because of how much a house cost.

Originally Posted by whtviper1

Young families buy houses in a variety of ways:

1. Parents lend or give them the money for the down payment
2. They start in a lower housing price area - perhaps Ewa Beach or Kapolei
3. They may start with a cheap condo
4. Inheritance
5. They have sufficient income
6. They saved money
7. etc, etc

Given housing prices are continuing to rise on Oahu combined with low inventory is an indicator that despite the paltry median income here, demand outstrips supply and there isn't a lack of eager buyers here on the island.

Are you realtor by chance?

But what viper1 says is true. My parents were able to afford their house by first buying a condo and living in it for 8 years before selling. Lots of my friends have generous parents who invest in the house with their kids. The list goes on. Some people are willing to buy a beat down house for less money and slowly work towards fixing it up.

[whtviper1]

Originally Posted by Pyramidsurf

Are you realtor by chance?

I'm not.

Although a lot of twenty and thirty something's work for me and they mostly fall in the categories I mentioned.

[winkosmosis]

Originally Posted by Pyramidsurf

Housing has always been very expensive.

My parents paid about 400K for their home in 1991. That's about $687,662.26 in today's dollars.

The majority of young families that live in Hawaii either leave and come back with a big down payment and experience gaining them a big income. Or, they live at home with their parents for years. I know at least five couples living with their parents because of how much a house cost.


Are you realtor by chance?

But what viper1 says is true. My parents were able to afford their house by first buying a condo and living in it for 8 years before selling. Lots of my friends have generous parents who invest in the house with their kids. The list goes on. Some people are willing to buy a beat down house for less money and slowly work towards fixing it up.

But condos and beat down houses are expensive. Plus condos have insane monthly fees that eat up any appreciation

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[UHgrad]

Originally Posted by Pyramidsurf

CD Hawaii Forum. Let me hear your guys opinion on this.

My brother and I were both born and raised in Hawaii. We had it good growing up. Big home in Kailua, private highschool, etc...We were not rich by any means but we were comfortable and my parents worked hard to provide.

Now that were starting to have families of our own, we were discussing how much you would need to make it in Hawaii. This figure includes a single family home, private HS for your kids, and saving for retirement.

We came up with 150K per year at the minimum. This won't make you rich, but you'll be ok and not hurting too severely. Obviously, you wouldn't be driving brand new cars or owning a boat, but you'll be comfortable and able to live without cutting huge corners.

What's your guys figure?

Note: This is not meant to be offensive. Just the reality of living in Hawaii. A SFH now averages 750k and Kailua was voted as one of the top 20 most expensive towns.

I think, based on your assumptions, this is a fair number. You could probably do it on $120k but it would be tight. Now to be sure, there are many different ways to live, and you do not need to own a house, send your kids to private HS, or have a large retirement savings... but I think most middle/upper middle class folks do aspire have those things for their families (since public schools have such a poor reputation on Oahu).

I look at it this way. Even if you have $50,000 - $100,000 to put down (which most don't)... a mortgage on a single family home is gonna run you $3500+ on Oahu in any decent area close enough to town so that your commute isn't hell. Private schools, lets assume 2 kids, are gonna run you $2000 a month minimum as well. A lot more if you send them to Iolani, Punahou, etc... but that is a decent baseline. So right there you are out $5500 a month before you even get to food, transportation, insurance, retirement, or fun.

A take home pay calculator like this one Net Pay Calculator will tell you that $100k annual income for a married couple brings home about $6000 a month (can vary with deductions slightly) and $150k income gets you about $8500 a month. So you do the math... At $150k you would have roughly $3000 a month for food, transportation, insurance, emergency savings, retirement savings, medical bills, fun, etc... which I think is more than enough. At $100k you will have about $500 a month which clearly isn't gonna fly.

Also, we haven't even talked about saving for college yet... I got my masters at UH and it has done me well, but it is not a great school for undergrad in a lot of ways and many folks want to send their kids to the "mainland" for college.

[Pyramidsurf]

Originally Posted by UHgrad

Also, we haven't even talked about saving for college yet... I got my masters at UH and it has done me well, but it is not a great school for undergrad in a lot of ways and many folks want to send their kids to the "mainland" for college.

That's one thing I didn't account for.

I'd venture that I could make it on 150K with 10% going to retirement. It'd be tight, but I know many who got by on a lot less.

I went to UH for undergrad and it has served me well. A few friends went to UH with me because they got a full ride. It's not a terrible school, but it doesn't even come close to the prestige of some mainland schools.

And let's face it, unless your parents were very well off or you take out massive debt, most parents can't afford to send kids to mainland college after paying for private school.

[Jonah K]

Originally Posted by Pyramidsurf

In this scenario, a family moves out of their parent's house and purchases a single family home. They have 2 kids and wish to live in a nicer area on Oahu. They also want to send their children to private school from middle school to high school graduation.

I came up with 150K simply based on housing, 10% of income to retirement, and living a normal middle class lifestyle comfortably. Maybe they use a HELOC loan or cash out refinance to finance their kids private schools (I knew many that did).

Of course you can be fine on much less. When I was in college at UH Manoa I lived on 2K a month and was doing ok. I paid 300 a month in rent to my parents but was still able to save a good chunk of my income.

I wouldn't pay to send my kids to a private school. If they can't manage to get a scholarship to the private school of their choice, they'll have to make do with public schools.

[Pyramidsurf]

Originally Posted by Jonah K

I wouldn't pay to send my kids to a private school. If they can't manage to get a scholarship to the private school of their choice, they'll have to make do with public schools.

Meh.

Not going to argue the merits of public vs private because there are plenty of successful public high school grads.

I will say that attending certain private schools in Hawaii opens a ton of doors to graduates that wouldn't otherwise exist.

[Jonah K]

Originally Posted by Pyramidsurf

Meh.

Not going to argue the merits of public vs private because there are plenty of successful public high school grads.

I will say that attending certain private schools in Hawaii opens a ton of doors to graduates that wouldn't otherwise exist.

That's true. However, there are plenty of ne'er-do-well private school grads in Hawaiʻi that don't know the value of hard work and had things given to them on "silver platters." I'll show my kids where the "keys to the doors" in Hawaiʻi are, but they'll have to muster the wherewithal to obtain the keys and open those doors for themselves. Punahou has plenty of scholarships and endowments for its students, while ʻIolani and other private schools offer "need-based" financial aid and tuition assistance via the NAIS at the very least.

Thus, when it comes to household income to "make it" on Oʻahu, the income guidelines established by HUD are adequate. For a family of four on Oʻahu, $97,900/year is enough to maintain a "middle-class" lifestyle. Here's a link to a PDF that has some of the rough income and housing price numbers that Hawaiʻi government officials use...
http://files.hawaii.gov/dbedt/hhfdc/...20Honolulu.pdf

[UHgrad]

Originally Posted by Jonah K

That's true. However, there are plenty of ne'er-do-well private school grads in Hawaiʻi that don't know the value of hard work and had things given to them on "silver platters." I'll show my kids where the "keys to the doors" in Hawaiʻi are, but they'll have to muster the wherewithal to obtain the keys and open those doors for themselves. Punahou has plenty of scholarships and endowments for its students, while ʻIolani and other private schools offer "need-based" financial aid and tuition assistance via the NAIS at the very least.

Thus, when it comes to household income to "make it" on Oʻahu, the income guidelines established by HUD are adequate. For a family of four on Oʻahu, $97,900/year is enough to maintain a "middle-class" lifestyle. Here's a link to a PDF that has some of the rough income and housing price numbers that Hawaiʻi government officials use...
http://files.hawaii.gov/dbedt/hhfdc/...20Honolulu.pdf

If you are not paying for school I think $100k is fine to get by on. My wife and I lived on much less than that when I was going through grad school although we didn't have kids yet at the time.

I agree that public school kids can do fine, a lot of my friends went to Kalani and then to UH and now have good jobs. It is just that places like Iolani and Punahou open up tremendous networking opportunities on top of the superior facilities and advanced curriculums. It is a huge advantage if you can give that to your kid, especially if they want to stay in Hawaii when they grow up. I was actually shocked how much of a network there is out there in terms of "what high school you went". You hear about good ole boy networks in the south, they have nothing on the Japanese community coming from some of the private high schools in Honolulu. LOL