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Old 06-24-2013, 02:06 PM
 
Location: Cleveland
246 posts, read 441,203 times
Reputation: 156

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My nephew has been offered a position with a company in Costa Mesa, CA for a decent pay raise and is contemplating moving himself and his family (wife and 3 daughters) to the area from Ohio. He has a 2,400 sq ft house here that he could sell for probably $190K to $200K and would like something similar in size. He will probably walk with $40K in equity from the sale. I'm fairly certain he will be making under $90K and his wife currently is not working with the young children. He has a $1,200 mortgage now and ($450 of which is property taxes and insurance) and doesn't want to go over $2,000 in mortgage payment all-in (Tax/insuranse/P&I) if possible.

I did some preliminary searches around Costa Mesa and the price ranges of homes there is a complete shock to me (only 5 single family properties currently listed under $500,000). How does anyone afford that out there? There can't be that many individuals making over $100K. Do most people rent?

After reading the comments about Costa Mesa it sounds like a city transitioning for the worse. What's an area close to Costa Mesa with similar size homes that is safe and appreciating in value to make the uprooting of his family worth the move and the increased housing cost?

How are property taxes out there? Are there any?

What's the typical mortgage note on a $500,000 house? This will be a big factor in his price range as property taxes in the Cleveland area can be around 25% of the mortgage payment in some municipalities. (He pays $4,440 in annual property taxes on a $190,000 house).

Public Schools are very important as well, obviously.

Any advice would be great.
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Old 06-24-2013, 02:26 PM
 
Location: Declezville, CA
16,801 posts, read 37,519,940 times
Reputation: 17529
Quote:
Originally Posted by ECBeastor View Post
I'm fairly certain he will be making under $90K
Stay in Ohio, nephew.

You can get a feel for the taxes and payments from Zillow.com.
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Old 06-24-2013, 02:48 PM
 
Location: Orange, California
1,575 posts, read 6,075,164 times
Reputation: 746
Housing market-wise, OC is a different universe from Ohio. Definitely recommend getting boots on the ground out here before committing to the new job.
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Old 06-24-2013, 03:05 PM
 
Location: Las Flores, Orange County, CA
26,342 posts, read 89,760,542 times
Reputation: 17746
Quote:
Originally Posted by ECBeastor View Post
My nephew has been offered a position with a company in Costa Mesa, CA for a decent pay raise and is contemplating moving himself and his family (wife and 3 daughters) to the area from Ohio. He has a 2,400 sq ft house here that he could sell for probably $190K to $200K and would like something similar in size. He will probably walk with $40K in equity from the sale. I'm fairly certain he will be making under $90K and his wife currently is not working with the young children. He has a $1,200 mortgage now and ($450 of which is property taxes and insurance) and doesn't want to go over $2,000 in mortgage payment all-in (Tax/insuranse/P&I) if possible.

I did some preliminary searches around Costa Mesa and the price ranges of homes there is a complete shock to me (only 5 single family properties currently listed under $500,000). How does anyone afford that out there? There can't be that many individuals making over $100K. Do most people rent?

After reading the comments about Costa Mesa it sounds like a city transitioning for the worse. What's an area close to Costa Mesa with similar size homes that is safe and appreciating in value to make the uprooting of his family worth the move and the increased housing cost?

How are property taxes out there? Are there any?

What's the typical mortgage note on a $500,000 house? This will be a big factor in his price range as property taxes in the Cleveland area can be around 25% of the mortgage payment in some municipalities. (He pays $4,440 in annual property taxes on a $190,000 house).

Public Schools are very important as well, obviously.

Any advice would be great.
It would be easier for us if you were to only provide his estimated housing budget (for example $450K) rather than all the pieces of the equation.

(One of the reasons) Costa Mesa is sort of valued because it is so close to the beach. The schools in it aren't stellar though. You can get equivalent homes with better schools inland.

He should check out Lake Forest and Mission Viejo.

Here are several recent sales, single family homes with four bedrooms which sold below $500K:

Redfin
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Old 06-24-2013, 09:05 PM
 
Location: LA/OC
1,083 posts, read 2,038,319 times
Reputation: 605
With a 20% down payment and interest rates on the rise, he would have to buy something under $375K to stay close to $2000/mo PITI. In that price range, he won't find anything like what he has in Ohio in OC.
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Old 06-24-2013, 10:09 PM
 
Location: Keizer, OR
1,376 posts, read 2,862,519 times
Reputation: 1178
Expect a lot of sticker shock, the average house price in the county is about $600K, which will porbably get you a 3 br 2 bth house in a somewhat decent area. I live in La Habra, one of the lower income cities, and our average house price is $480K if that should say anything.
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Old 06-24-2013, 10:31 PM
 
Location: Rust'n in Tustin
2,815 posts, read 3,280,979 times
Reputation: 6291
At 4% I used the "cut it in 1/2" method to figure out what my payment will be.

On a $500,000 loan, the payment is somewhere near $2500. On $600,000 the payment would be near $3000.

Plus taxes and insurance of course.

"How does anyone afford that out there?" Beats me, if I didn't already own my home, I couldn't afford it now.

I also own a 700sf condo in Rancho Santa Margarita, that I rent out for $1200 a month if that gives you any idea what stuff costs.
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Old 06-25-2013, 11:23 AM
 
Location: Cleveland
246 posts, read 441,203 times
Reputation: 156
Thanks everyone. I think he's going to have to fight the internal battle of either staying in Ohio for less salary but substantially cheaper cost of living vs. moving to California for nicer weather, a bigger salary and being "house poor" while living in a smaller home with the hope that his home equity will build much faster there than in Ohio.

The more I think about it, it's an intriguing prospect to possibly be able to sell a $500K-$600K house in 10-15 years for $700K to $900K with the way California real estate seems to keep going up in value. It would leave him with a fortune in Cleveland dollars should he want to move back.

I'm sure he's researching all this already on his own though. I can't help but be nosy and try to have some info at the ready should he not have done his homework.
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