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Old 06-06-2012, 11:36 PM
 
18 posts, read 31,809 times
Reputation: 10

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I'm a renter living in the Cal State area of Long Beach and am wanting to buy a home for some time now. Problem is, homes south of la/north OC are so ridiculously priced even now that home prices are supposedly low.
My husband and I make $120k/yr before taxes. We can only afford to put around 70k downpayment. We will be using a VA loan. I spoke with a loan officer who did computations. For a home under $400k, monthly payments would approximately be $2200 or less (inculding property tax and insurance). For our average monthly net income of at least $7400 monthly, I still think that is too much for people who want to travel and buy things they want. We are planning to start a family and that would mean more expenses.

So my question to middle class people in la/oc, how do you do it? Be poor just to have a roof over your heads?
Are home prices starting to go up or should i wait another year?
I'm even considering moving to Vegas so i can have a nice, new house and have a life.
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Old 06-07-2012, 10:19 AM
 
Location: South Bay
7,141 posts, read 19,549,014 times
Reputation: 3402
as you allude to, many people make compromises when buying houses in southern california. my wife and i make a bit more than you and your husband and spent a bit more on a house last summer. while having our monthly housing obligation nearly double has added some pressure to our finances, we've been just fine really and have been able to lead a comfortable lifestyle. we're not really doing the world traveling we had done before, but we still eat well and take many weekend trips while at the same time continuing to contribute to our retirement accounts and saving a bit as well. leaving the region never really crossed our minds either since both of our jobs are entertainment related and we were both born here and have our families here as well. with that said, we make it work and are very happy with our decision to buy in the LA area.
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Old 06-07-2012, 12:54 PM
 
17 posts, read 32,522 times
Reputation: 11
I don't think 30% of your net income going to housing is that high but i guess it depends on what your other major expenses are (do you make monthly car payments? insurance? school loans, child support/alimony, etc?). if you had bought the same home five years ago that % could be at over 50.

If you're left with a couple thousand a month after all expenses, you're doing okay. I would save up some of that and use the rest with discretion on quality of life things. If you plan on having children in the near future, definitely save as much as you can now.
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Old 06-07-2012, 02:08 PM
 
Location: San Gabriel Valley, CA
3 posts, read 5,547 times
Reputation: 14
Quote:
Originally Posted by TinkerBelle_81 View Post
I'm a renter living in the Cal State area of Long Beach and am wanting to buy a home for some time now. Problem is, homes south of la/north OC are so ridiculously priced even now that home prices are supposedly low.
My husband and I make $120k/yr before taxes. We can only afford to put around 70k downpayment. We will be using a VA loan. I spoke with a loan officer who did computations. For a home under $400k, monthly payments would approximately be $2200 or less (inculding property tax and insurance). For our average monthly net income of at least $7400 monthly, I still think that is too much for people who want to travel and buy things they want. We are planning to start a family and that would mean more expenses.

So my question to middle class people in la/oc, how do you do it? Be poor just to have a roof over your heads?
Are home prices starting to go up or should i wait another year?
I'm even considering moving to Vegas so i can have a nice, new house and have a life.
People I know have had help from their family or they buy something small and then in a few years use the equity they earned and move into a bigger home.

OR people buy out of their means to have an expensive home and deal with not having extra money to spend.

For your situation, you practically have 20% for a $400,000 conventional loan AND can qualify for VA financing which requires 0% down and no PMI.

Sounds to me like you are in a better situation than you think.
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Old 06-07-2012, 02:09 PM
 
Location: Placentia, OC
1,454 posts, read 1,482,528 times
Reputation: 649
I'm pretty much in the same situation as you...depressing isn't it?
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Old 06-07-2012, 02:32 PM
 
362 posts, read 724,026 times
Reputation: 160
Run up your credit cards and buy a house you can't afford. Then walk away when things pile up. It's the Cali way...
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Old 06-07-2012, 02:59 PM
 
Location: Seattle
1,368 posts, read 2,992,827 times
Reputation: 1476
The real world answer is: most people here don't save much. They buy as much house as they can afford, maybe slightly under the preapproval amount, and probably more than 400k at your income level for most people.

Assuming you have a pretty healthy balance sheet, you should still be able to save plenty of money at 120k a year and a 400k housing expense, especially with 30 year rates around 3.7%. After kids? Different story I'm sure. But Southern California is really not a place for the middle class to raise children and right there is the reason why: housing is expensive, and the premium is even higher in a good school district.
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Old 06-07-2012, 03:00 PM
 
Location: South Korea
5,242 posts, read 11,721,138 times
Reputation: 2945
Many people bought their houses 20 or 30 years ago when they were much more in line with incomes.

What I don't get is how rents here are pretty high, but wages are so low. You see lots of supposedly white collar jobs paying hardly anything, like $8 to $10 for desk work. I saw an $8 an hour paralegal position the other day, what the hell kind of candidate does that employer hope to get? Meanwhile just renting a room with roommates is like $500 a month at least, which requires income of more like $14 an hour to live comfortably. No wonder there's so much poverty here, and when you walk into an office all the employees are slouches with only a high school education.
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Old 06-07-2012, 04:44 PM
 
1,714 posts, read 3,262,828 times
Reputation: 1137
Quote:
Originally Posted by TinkerBelle_81 View Post
I still think that is too much for people who want to travel and buy things they want. We are planning to start a family and that would mean more expenses.

So my question to middle class people in la/oc, how do you do it? Be poor just to have a roof over your heads?
Are home prices starting to go up or should i wait another year?
I'm even considering moving to Vegas so i can have a nice, new house and have a life.
I don't see how a middle-class person can mortgage a house and NOT make compromises/sacrifices.

If a person has to pay $2000-$4000 per month for 20-30 years, there's no way life can be the same as before.
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Old 06-07-2012, 09:18 PM
 
491 posts, read 2,092,184 times
Reputation: 535
Market is still coming down - don't pay attention to the recent low inventories - this is banks putting a hold on lots of foreclosures. They will need to open the foreclosure spigot sooner or later, in dribs and drabs. They need to unload millions of distressed homes in the coming years, and prices will come down, down, down. Read DrHousingBubble and do Google searches for distressed inventory and shadow inventory.

For now, rent and wait. Buying now you will be immediately underwater.
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