How much house can you afford? (Irvine, Orange: sales, real estate, insurance)

[MzZactuary]

I recently came across this housing affordability calculator on CNNmoney and I was wondering if it's applicable to OC's housing market.

Affordable Home Calculator from CNNMoney


My partner recently got a job offer at a private practice in Irvine and according to the calculator if we have 400K down, the conservative minimum house price would be 1,904,652. However, from reading some of the previous posts, people suggest a family that makes 160K a year to purchase a 400K house. Our annual net income would be close to 450K, does this mean a 1.1mil purchase is more reasonable in OC?

[EscapeCalifornia]

No, the laws of finance don't apply here. You should be able to buy a $5M house easily. This is California. They aren't making any more land. Get in now or be left behind. You can't lose.

[CAVA1990]

That's only a payment of about $12K a month. With a monthly income of just under $40K a month that's well within the guidelines of no more than 31%. Go for the $2MM house.

[k374]

There are tried and tested formulas for this that have been in use for decades prior to this super low downpayment, high ratio nonsense that started in the last 10 years. It's 28% front ratio, 36% back ratio, with 20% downpayment PERIOD! If you can't do that you should not be buying a house...simple as that. Buying a house is more expensive than people realize, way too often they scrape up the very bare minimum and then they are house poor and hanging by a thread and crying for help and god forbid they lose their job the house is gone because of course they didn't account for any emergencies...

...even in this terrible economy I am amazed at how people are taking super low downpayment FHA loans with high ratios without a care in the world thinking they will NEVER lose their jobs, yeah, only the other guy loses his job they will NEVER lose their job..rriiiight And Santa Claus is going to buy me a Ferrari next Christmas

[leonard]

Originally Posted by MzZactuary

I recently came across this housing affordability calculator on CNNmoney and I was wondering if it's applicable to OC's housing market.

Affordable Home Calculator from CNNMoney


My partner recently got a job offer at a private practice in Irvine and according to the calculator if we have 400K down, the conservative minimum house price would be 1,904,652. However, from reading some of the previous posts, people suggest a family that makes 160K a year to purchase a 400K house. Our annual net income would be close to 450K, does this mean a 1.1mil purchase is more reasonable in OC?

Don't forget the property taxes and insurance. On a home that expensive they will be very HIGH.

[Axxlrod]

You bring in $450K/year, and you're asking an internet forum how much you can afford? You can't figure that out yourself?

[Charles]

Originally Posted by Axxlrod

You bring in $450K/year, and you're asking an internet forum how much you can afford? You can't figure that out yourself?

It's like Neil Armstrong asking for directions to the grocery store.

[MzZactuary]

obviously from what I've read CA is different from the rest of the country. I just want to hear what people who are CURRENTLY living in OC have to say about the CNN Calculator.

[Charles]

Originally Posted by MzZactuary

obviously from what I've read CA is different from the rest of the country. I just want to hear what people who are CURRENTLY living in OC has to say.

Here's what they have to say (note these survey results are from a realtors association, a group which normally puts a positive spin on things):

"Most California homesellers — a whopping 67% – who sold their homes last year couldn’t pay their mortgages, a survey by the California Association of Realtors shows.

“For the most part, the bottom line was, ‘I’m being squeezed out of my home because I couldn’t make my mortgage payments,’ ” said Leslie Appleton-Young, the association’s chief economist.

63% of homes fell out of escrow prior to closing.

In response to another question on specific financial woes, sellers cited difficulty meeting monthly mortgage obligations (30%); loss of a job (18%); and mortgage payment increases(15%) as among their primary motivations to sell, according to the 2009-2010 Survey of California Home Sellers."

from


Mortgage woes lead to most home sales - Lansner on Real Estate : The Orange County Register

[CAVA1990]

Isn't housing affordability a personal issue that's the same wherever you live? If you can afford a $2MM home in East Squeedunk, you can afford one in Orange County. The income/payment guidelines are the same no matter where you are with just minor variation for utility, fuel, and food cost differentials (inconsequential at your income level). As to the type of house you can buy for that amount in different places, that's a different question.