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People in affluent areas do put down at least 10%. You gotta remember to qualify for a $600k home with 10% down. That means the buyers are making about 150--180k a year which is not unheard of in Orange County and other similar areas.
Look at the Wash DC area for instance. Two federal workers can easily make 80k per person x 2 incomes. That's $160k "middle class" income to afford a $600k home with about 10% down.
And most people buying 600k homes are usually on their 2nd or 3rd homes.
People in affluent areas do put down at least 10%. You gotta remember to qualify for a $600k home with 10% down. That means the buyers are making about 150--180k a year which is not unheard of in Orange County and other similar areas.
Look at the Wash DC area for instance. Two federal workers can easily make 80k per person x 2 incomes. That's $160k "middle class" income to afford a $600k home with about 10% down.
And most people buying 600k homes are usually on their 2nd or 3rd homes.
Look at the Wash DC area for instance. Two federal workers can easily make 80k per person x 2 incomes.
That's $160k "middle class" income to afford a $600k home with about 10% down.
$600K -10% = $540,000 mortgage vs $160,000 income = 3.375:1
That is a high ratio.
It's better than the 5:1 done too often in LA ...
but PLEASE don't describe anything above 3:1 as afford
Assuming this couple have ANY of the other common uses for their income...
(you know, things like cars, student debt, retirement plans, travel)
then their home mortgage debt really shouldn't be more than 2.5:1 (as a maximum!)
What is the typical downpayment these days percentage wise? The median price for a home here in Orange County is $613,000 so 20% down + 3% closing costs would be $141,000 cash to the table......................
..................how the average buyer who seems to be broke when I look around me (people financially struggling) and people who just a decade ago were struggling to buy $300,000 homes are suddenly able to afford homes twice as expensive with 10-20% downpayments.
I bought in San Diego County, but it was 1970 and I rode the price up.
I know two working families that bought houses in San Diego county. Both of them bought considerably out of town. Long commute, lower purchase price. I don't know where the down payment came for one. The down payment for the other was equity from a condo that was sold plus the profit from a piece of property bought up here in Central Oregon.
Moving up, is what most people have to do a couple of different times before they get the house of their dreams.
"Average income" for an area is going to include the income of gas station workers, part time burger flippers, welfare queens, and undocumented aliens. Those people are not buying houses. The average income of home buyers is going to be higher than the average income of everybody living in the area.
By the way, that payment on the $600,000 house at 3.5% fixed will be lower than the payment on that $300,000 house when mortgages were 8%. That's a big reason that people can afford a more expensive house. It's the payment, not the purchase price.
Location: Chapel Hill, NC, formerly NoVA and Phila
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We just sold our house in the DC area (Northern Virginia). We had 4 offers on the house in the $550K-$600K range. One offer was 5% down VA loan, one was 10% down conventional, and two were 20% down conventional.
What is the typical downpayment these days percentage wise? The median price for a home here in Orange County is $613,000 so 20% down + 3% closing costs would be $141,000 cash to the table.
I SERIOUSLY doubt the median buyer here has that much cash just lying around. The median household income here countywide is $78,000/yr and even in affluent parts of the county does not exceed around $120,000/yr gross.
The median income includes a lot of lower income people who are not in the market to buy houses. I don't know about OC specifically, but nationally less than 65% of households own, so you need to look at the median income of homebuyers to make a comparison. The median income OF HOMEBUYERS is likely to be much more in line with prices.
Quote:
Originally Posted by redrocket2
Are people going FHA with it's 3.5% down? If so are they paying the exorbitant fees associated with FHA loans?.
Some are, but if I had to guess the people buying those houses mostly fall in to these groups based on what I have seen in similar areas:
1. Two income, no kids families with high combined incomes. May or may not have 20% down.
2. People who are established in their careers and have a good income plus a decent downpayment from selling a previous home and savings.
3. Older buyers who are paying all or mostly cash from selling a previous home.
4. Foreign buyers, investors, etc paying mostly cash
Quote:
Originally Posted by redrocket2
I'm just trying to wrap my head around how the average buyer who seems to be broke when I look around me (people financially struggling) and people who just a decade ago were struggling to buy $300,000 homes are suddenly able to afford homes twice as expensive with 10-20% downpayments.
It's all about interest rates. A $300k 30-year loan at 9% (common around 2000) was about $2400/mo principal and interest. For the same monthly payment you could get a loan for about $506k at 4% now. If you had bought a few months ago a 3.25% you would have paid the same for a $555k loan.
I recently look into buying a property... I already have a mortgage on three other properties... I told the bank I will put zero down... they said okay and would give me a 4.5% interest loan for 100% of the purchase price... my situation isn't typical... from what I understand, most banks are willing to go 10-15% if you can't do 20% down... provided you have good assets...
if you cant come up with that money you probably shouldn't be living in that area or buying a price in that price range.i bought my first place and had the money to put down. was it my dream house? no. Was it my dream area? no but i could afford it
What is the typical downpayment these days percentage wise? The median price for a home here in Orange County is $613,000 so 20% down + 3% closing costs would be $141,000 cash to the table.
I SERIOUSLY doubt the median buyer here has that much cash just lying around. The median household income here countywide is $78,000/yr and even in affluent parts of the county does not exceed around $120,000/yr gross.
Are people going FHA with it's 3.5% down? If so are they paying the exorbitant fees associated with FHA loans?
I'm just trying to wrap my head around how the average buyer who seems to be broke when I look around me (people financially struggling) and people who just a decade ago were struggling to buy $300,000 homes are suddenly able to afford homes twice as expensive with 10-20% downpayments.
We sold our house in Miami for the asking price of $449,000.00 The buyer put a downpayment of 20%, or $90,000. The remainder of the payment was financed by a traditional mortgage. We didn't ask her where she got the money. But it was obvious that she really really wanted that house. We had two other offers in case that one fell through.
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