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Old 08-31-2007, 10:56 AM
 
2 posts, read 9,176 times
Reputation: 11

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I'm writing this post to possibly try to understand why people choose to live in California when the avg. person can't afford and average house without having to take out 40yr mortgage with an ARM that would require at least two incomes.

I have been to California and it is very nice and scenic and the weather is great, but it would be cheaper to live in a more affordable state like Texas and vacation in Califonia, 2 to 4 times a year, than live in California.

Example, using my current status:

I bought a new, all brick, 2000sqft, 4 bedroom, 2bath, 2 car gargage house in the Dallas-Fort Worth (DFW) area back in 2006 for $140,000. I put 20% down @6.75% for 30yr fixed. My monthly payments without insurance and taxes is $730; with taxes and insurance $1100.

I currenty make $50,000 a year which is equal to about $80,000 a year in california, from what I found on a cost of living website.

With just my salary I am able to pay the morgtage, a car payment, and all of the typical bills a person would have, including contribute genuslousy to a 401K.

If I bought a similar 2000sqft house in the suburbs of a major Califonia city it would probably cost about $600,000 and it may or may not be new.
From my calculations a person would be making payments of at least $3600 a month, including taxes and insurance, and that is with 20% down, or $120,000, and with a 30yr fixed mortgage at 6.75%.

That means for a person to afford the house they would have to have an income of at least $215,000 to $225,000. Which even with califonians higher wages, I seriously doubt that the majority of the population has that kind of an income; whether it be from one person or two.

I do understand that California is nicer than Texas but if you can't afford to live there then whats it worth staying. You could live in the most beautiful place in the world and it wouldn't matter if you have to struggle to make ends meet.

Please help me understand.
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Old 08-31-2007, 11:32 AM
 
Location: Las Flores, Orange County, CA
26,342 posts, read 90,534,195 times
Reputation: 17788
Quote:
Originally Posted by net5014 View Post
I'm writing this post to possibly try to understand why people choose to live in California when the avg. person can't afford and average house without having to take out 40yr mortgage with an ARM that would require at least two incomes.

I have been to California and it is very nice and scenic and the weather is great, but it would be cheaper to live in a more affordable state like Texas and vacation in Califonia, 2 to 4 times a year, than live in California.

Example, using my current status:

I bought a new, all brick, 2000sqft, 4 bedroom, 2bath, 2 car gargage house in the Dallas-Fort Worth (DFW) area back in 2006 for $140,000. I put 20% down @6.75% for 30yr fixed. My monthly payments without insurance and taxes is $730; with taxes and insurance $1100.

I currenty make $50,000 a year which is equal to about $80,000 a year in california, from what I found on a cost of living website.

With just my salary I am able to pay the morgtage, a car payment, and all of the typical bills a person would have, including contribute genuslousy to a 401K.

If I bought a similar 2000sqft house in the suburbs of a major Califonia city it would probably cost about $600,000 and it may or may not be new.
From my calculations a person would be making payments of at least $3600 a month, including taxes and insurance, and that is with 20% down, or $120,000, and with a 30yr fixed mortgage at 6.75%.

That means for a person to afford the house they would have to have an income of at least $215,000 to $225,000. Which even with califonians higher wages, I seriously doubt that the majority of the population has that kind of an income; whether it be from one person or two.

I do understand that California is nicer than Texas but if you can't afford to live there then whats it worth staying. You could live in the most beautiful place in the world and it wouldn't matter if you have to struggle to make ends meet.

Please help me understand.
You are about the sixth or seventh person to start a thread with similar questions. Consider checking out Advanced Search tool to check these out.

Some professions pay more in California, some pay a lot more. I doubt very many pay proportional to the cost real estate, but I am not sure.
A lot of people that own in California bought before the run up.
A lot of people are renting.
A lot of people don't want or need 2000 sqft with a two or three car garage.
A lot of people bought with the recently infamous ARMs.
A lot of people transferred wealth from other high run up areas like the east coast and the bay area.
Compared to Houston, (I think) SoCal is more international. Seems like there is lots of international money buying the expensive real estate. I sense a lot of foreigners in the wealthy areas of town.
Some people don't budget 401(K) and Roth IRAs into their cost of living. Heck, some people don't budget auto insurance either. Or health insurance for that matter.

If someone is making $50K, they're 22, have a good job, not interested in buying a home, not interested in school districts then they can live in an apartment or an inexpensive condo, have fun, go to the beach, parties, etc. Makes sense. Fast forward ten years later, 32, making $100K, now they want four bedrooms, kids, school districts, and a commutable drive. Texas or somewhere other than the east and west coast start to look a little better.


Are you single, married, kids, what line of work are you in?
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Old 08-31-2007, 11:53 AM
 
2 posts, read 9,176 times
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I'm currently engaged with no kids. I work in the construction industry, on the management side.

Thanks for the input.
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Old 08-31-2007, 12:15 PM
 
67 posts, read 200,789 times
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Great points Charles. The number one reason people are still living in California? They already had a home here when it was only $400,000 to acquire something nice back in 2001. Heck, you could have had a nice little pad in Santa Monica in the late 90's for that much. I knew people who were buying homes with ocean views in Newport Beach in the mid 90's for $500,000 (over $2 million today).

The OP is correct in that at today's prices, the average upper-middle income family can not afford to buy a home in an upper-middle income neighborhood, - sadly enough, they would be moving into a lower income neighborhood. Until the price correction is complete and lenders lower interest on jumbo loans, the average middle income to upper middle income ($80,000-$150,000) family is priced out of the decent neighborhoods.

The above affordability issue is why many families have left the state - they want to buy a house now and simply can't afford to in SoCal. On the other hand, few other places offer the variety of jobs and wide open business opportunities of SoCal.
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Old 08-31-2007, 06:30 PM
 
Location: Pomona, CA
11 posts, read 107,041 times
Reputation: 14
Also, some people are willing to pay a premium on not living in Texas. There is a reason why real estate is cheaper in places that no one wants to be in: no one wants to live there. I for one would rather work a lot more and make enough to afford to be near people who can spell generously, don't execute people constantly, etc.
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Old 08-31-2007, 06:39 PM
NDA
 
84 posts, read 419,363 times
Reputation: 44
You could live in the most beautiful place in the world and it wouldn't matter if you have to struggle to make ends meet.

People enjoy life differently. For some pleasure is living in a barren flat lands but having extra money to vacation on. Everyone doesn't find struggle in the same things.

For me the struggle would be having to plan trips to visit my family. Struggle would be trying to enjoy the outdoors in a humid climate.

People should live where they like and not concern themselves with why other people like where they live. If you find the joy where you are I bet you won't need to ponder on how others could enjoy where they are.
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Old 08-31-2007, 08:17 PM
 
Location: in a house
5,835 posts, read 4,808,153 times
Reputation: 4890
Every day that I have lived here (temporarily) in Bakersfield, I wonder why anyone would CHOSE to live here? I know it is more affordable than most of SoCa. but at what cost? To have a bigger home near a golf course because it is $600k instead of the $2mill you would pay in SoCal? This place has the worst pollution and highest amount of kids with asthma than anywhere in the country. It is hotter than blazes from May to October and cost around $600 to use the a/c for one month. I could go on and bore all of you so I'll stop, but having a large house that is cheap does not make for good quality of life. End of story.
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Old 08-31-2007, 08:21 PM
 
11,715 posts, read 39,031,547 times
Reputation: 7578
Quote:
Originally Posted by puffle View Post
Every day that I have lived here (temporarily) in Bakersfield, I wonder why anyone would CHOSE to live here? I know it is more affordable than most of SoCa. but at what cost? To have a bigger home near a golf course because it is $600k instead of the $2mill you would pay in SoCal? This place has the worst pollution and highest amount of kids with asthma than anywhere in the country. It is hotter than blazes from May to October and cost around $600 to use the a/c for one month. I could go on and bore all of you so I'll stop, but having a large house that is cheap does not make for good quality of life. End of story.
I've often thought the same thing. The really desirable parts of California (climate, jobs, etc) are the SF Bay area and SoCal. If you can't afford that, why would you stay in California at all? Go to Texas or Arizona and have the same crappy weather but pay $200k for it. Or is a California mailing address REALLY that important to some people?
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Old 08-31-2007, 08:45 PM
 
Location: in a house
5,835 posts, read 4,808,153 times
Reputation: 4890
Quote:
Originally Posted by EscapeCalifornia View Post
I've often thought the same thing. The really desirable parts of California (climate, jobs, etc) are the SF Bay area and SoCal. If you can't afford that, why would you stay in California at all? Go to Texas or Arizona and have the same crappy weather but pay $200k for it. Or is a California mailing address REALLY that important to some people?
Well, other than more decent weather than most areas, I personally see nothing prestigious to living here. In fact, in other parts of the country California is a state that is not taken seriously and not thought of very highly in comparison to how other states are run and the quality of education being better elsewhere in the country. I will take long cold winters in order to have better education, better health care and lower housing costs than to have none of those things here and get a tan.
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Old 09-01-2007, 01:03 AM
NDA
 
84 posts, read 419,363 times
Reputation: 44
Are there really people who think having a California address or an addy in any particular state is special? Wow!! Those people must be very isolated. It's all one country. Most of the people I know also live here or used to live here, so no one is impressed by the state on my address. Now perhaps if I had a sexy city or zip code to list, my friends might ooh or ahh.
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