how much of your salary do you spend on home (Orange: renters, condo)

[ocGuy714]

My wife and I have been looking to purchase a home for a while now but hard to swallow spending 3.5-5x our salaries. For example our combined salary is $130k, with small increases each year and a decent sfh is at least 500k, that's about 4x.

I've been seeing people say "spend 2-3x" but that doesn't seem possible in Orange county unless you have a doctor's salary or live in less desirable areas.

Just wondering what orange county homeowners spend on their homes? 2x, 3x, 4x etc..

[payutenyodagimas]

I don't really care what others spend on housing but I stick to the recommended ratio of no more than 30% of your take home pay should be spent on housing. with that budget, that means we could only afford a condo/townhomes worth up to 500k.

I believe the stock market gives a better return than investing in a house

[goozer]

For the most part, that 2-3x rule of thumb is ignored in SoCal. It's a good rule, but one that has been discarded by many who figure they need to spend more than 3x to afford a reasonable SFH in a place that has one of the highest median home prices in the country.

[Electrician4you]

Yeah I don't think I would ever want to spend 35-50% of my income as a house payment. Right now out of my personal income from my job we're at 25%. That's not counting any other income stream.

35-50% is just way too much for a house payment. It really leaves you in a very risky situation with no room for error.

[ysr_racer]

As a landlord I can tell you most renters spend 30%-40% of their take-home pay on rent.

[payutenyodagimas]

for us, we take into consideration if one gets unemployed so the lone bread winner must be able to continue paying all the bills.

the reason there is a boom and bust economy or for a household is that people just get too excited sometimes that they don't want to take into consideration worst possible scenarios like death, divorce or unemployment.

businessmen know such thing as "secret reserve" or akin to understating your income or assets and inflating your liabilities or expenses. these practices are not bad to emulate

[ocGuy714]

Thanks everyone for your comments.

My plan is to save a bit more and see what the market does. My gut is telling me there will be a slight drop in prices in the next year or two. If it does the opposite, then I guess average income millenial families will never be able to afford homes in oc.

[thelopez2]

Originally Posted by ocGuy714

Thanks everyone for your comments.

My plan is to save a bit more and see what the market does. My gut is telling me there will be a slight drop in prices in the next year or two. If it does the opposite, then I guess average income millenial families will never be able to afford homes in oc.

Just save more for a larger down payment.

[russlancea]

$130k is a good salary and should be enough to buy, no? I think it depends on savings, interest rates and debt load.

Don't spend any more than 30%, regardless of what other people may be doing. My husband and I saved up quite a bit by living in the ghetto (according to him) of Westminster (it was just an ugly neighborhood) and managing the apt complex. It was killer on my schedule, but I did it for as long as I could.

By the time my body was feeling the toll, he and I had enough saved for 20% down, with a year's worth of salary saved up after the down was used.

He budgeted for me possibly losing my job or quitting. We ended up buying 1.5 years ago in your price range ($510k) and just love it.

With all the savings I have, I am still concerned about emergencies...and house repairs. We budgeted for a new roof to replace the old wood roof ($11,000). Insulating the add-on family room (extra $2k to roof replacement). Roof work will start soon.

Already paid $600 in plumbing to hydrojet normal clogged kitchen sink and $200 for replacement part on my newer, but cheap Whirlpool water heater.

I'm waiting for termites and who knows what else...

Yes, homeownership can cost a lot , but it's worth it if the numbers are right. Just save and know what you're getting yourself into.

Don't feel rushed and pressured because "everyone" has a house. Good luck.

[pacific2]

Originally Posted by ocGuy714

My wife and I have been looking to purchase a home for a while now but hard to swallow spending 3.5-5x our salaries. For example our combined salary is $130k, with small increases each year and a decent sfh is at least 500k, that's about 4x.

I've been seeing people say "spend 2-3x" but that doesn't seem possible in Orange county unless you have a doctor's salary or live in less desirable areas.

Just wondering what orange county homeowners spend on their homes? 2x, 3x, 4x etc..

There's also the option, of course, of buying a large townhouse , or maybe a detached condo, instead of a SFR in order to stay within budget.