More on Cost of Buying A Home in San Diego (Los Angeles: for rent, health insurance)

[1AngryTaxPayer]

There is a home on my Mom's block in CM across the street from a mall that is 880 sqf and listed for 550. It is soooooo small.

Also take into consideration most of the lower end "condos" are actually converted apartments that don't have room for a washer and dryer and many don't have assigned parking. What a deal. You are buying a room in a large building.

[NYSD1995]

Condos are fine for couples or a small baby but with 2 school aged kids it gets claustrophobic really fast. Ultimately most families will want a decent sized house and that's where it gets unaffordable really fast. A 400k detached home is going to be a dump or tiny or both pretty much anywhere in SD county

[snpdragr]

My wife is from a small university town in Iowa. Nothing around but corn fields. The only thing the town has going for it is the university. The median list price for SFH in zillow is 300k. San Diego seems like a bargain in comparison (I admit that the university is pretty nice though).

I think people have unrealistic expectations for housing. Everyone has to compromise when buying a home in California. A $400k home is not going to be in the best area or be completely updated. It will probably be on the small side too and maybe need some TLC. In return for the higher house cost, you get to live in CA, enjoy the weather, jobs, diverse culture, and prop 13.

However, a $400k house is affordable. The average salary in San Diego MSA is $54k (see San Diego-Carlsbad, CA - May 2015 OES Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates). That means a two income family making mean wages will bring in $108k. This is sufficient to afford the home assuming they put down a reasonable downpayment.

If instead of a detached home, they purchase a townhouse they can get a little more living space or a better area in trade.

[NYSD1995]

400k is over 20% below the median, I think it is a false data point. We should be talking about 500k. Also, most people making 108k/yr are not putting 100k down either. So their payments are in the 3k range. On an income that nets 7500. So people are putting 50% or more of their net income to housing. That's the affordability issue. There is a big difference between buying a 300k house as a first timer than a 500k house.

Yes there are tradeoffs and the condo is a good one. But many of the tradeoffs are big, like being in a high crime area, far out in the suburbs, or an area with bad schools. I think for 2 income, no-kid couples, SD truly can be paradise. All you have to sacrifice is your expectations. But for families it is just brutal, you really do need space and you have no choice but to pay a big chunk of your income to childcare since Mom is working full time to pay the mortgage. So you take another 1500-2k/mo off the top and you are living paycheck to paycheck AND you made huge tradeoffs on the house and location.

[snpdragr]

I agree san diego is expensive for housing. There's no question about. But I think it's a manageable drawback to the city.

I picked a 400k home, even though it's less than the median, because there are still nice homes that can bought for that amount in the more affordable areas.

In terms of medians, this link
Median Home Price and Salary Required in 27 Major Cities - dshort - Advisor Perspectives
suggests that a household in san diego making $104k per year can afford a $550k median house. This is based on "a standard 28 percent front-end debt ratio and a 20 percent down payment". It's also based on a 4% mortgage rate (article from sept 2015) and rates are lower now.

An income of $104k is well above the median household income, but if we look at wages of people who are actually employed it's right at 2x the median salary and hence should be doable for a dual income couple.

Originally Posted by Sassberto

Also, most people making 108k/yr are not putting 100k down either.

Why not? Save 10k a year for a downpayment and buy your home at age 30. Or save 20k/year for 5 years. These are not insane savings rates, although I admit most people don't save anything and just spend whatever they have.

Also in the OP post we see that:

Originally Posted by RosieSD

- In the comments, Bauder also notes San Diego median family incomes are 20 percent higher than the nation's, but the cost of living is about 45 percent higher.

so basically a 20% "surcharge" for living in San Diego. Nobody likes paying a "tax" and 20% isn't small but it's not big enough to drive people away (on net).

[oside57]

Do you live in SD?

[someguy10]

Originally Posted by snpdragr

In terms of medians, this link
Median Home Price and Salary Required in 27 Major Cities - dshort - Advisor Perspectives
suggests that a household in san diego making $104k per year can afford a $550k median house. This is based on "a standard 28 percent front-end debt ratio and a 20 percent down payment". It's also based on a 4% mortgage rate (article from sept 2015) and rates are lower now.

An income of $104k is well above the median household income, but if we look at wages of people who are actually employed it's right at 2x the median salary and hence should be doable for a dual income couple.



Why not? Save 10k a year for a downpayment and buy your home at age 30. Or save 20k/year for 5 years. These are not insane savings rates, although I admit most people don't save anything and just spend whatever they have.

See my previous post. The post is for a single person making $50K so basically multiply mortgage/rent numbers by 1.67 (500k/300k) and double everything else (single to two-person household) and you'll see it's quite tight. Numbers don't include emergency savings, retirement savings, kids, etc.

//www.city-data.com/forum/san-d...l#post44211190

[hitman619]

Originally Posted by snpdragr

I agree san diego is expensive for housing. There's no question about. But I think it's a manageable drawback to the city.

I picked a 400k home, even though it's less than the median, because there are still nice homes that can bought for that amount in the more affordable areas.

In terms of medians, this link
Median Home Price and Salary Required in 27 Major Cities - dshort - Advisor Perspectives
suggests that a household in san diego making $104k per year can afford a $550k median house. This is based on "a standard 28 percent front-end debt ratio and a 20 percent down payment". It's also based on a 4% mortgage rate (article from sept 2015) and rates are lower now.

An income of $104k is well above the median household income, but if we look at wages of people who are actually employed it's right at 2x the median salary and hence should be doable for a dual income couple.



Why not? Save 10k a year for a downpayment and buy your home at age 30. Or save 20k/year for 5 years. These are not insane savings rates, although I admit most people don't save anything and just spend whatever they have.

Also in the OP post we see that:

so basically a 20% "surcharge" for living in San Diego. Nobody likes paying a "tax" and 20% isn't small but it's not big enough to drive people away (on net).

Not to pile on you but
"Better to remain silent and be thought a fool than to speak and to remove all doubt."
You forgot Property Taxes, home owner insurance, oh never mind

[snpdragr]

Originally Posted by someguy10

See my previous post. The post is for a single person making $50K so basically multiply mortgage/rent numbers by 1.67 (500k/300k) and double everything else (single to two-person household) and you'll see it's quite tight. Numbers don't include emergency savings, retirement savings, kids, etc.

//www.city-data.com/forum/san-d...l#post44211190

Your numbers for housing costs are pretty much the same (except based on a 35% front end debt load instead of 28% and I've assumed about 10% more income).

However, I think doubling other expenses is going to result in an over-estimate -- e.g. you listed $304 for utilities x12 x2 = 7k/year. No way utilities for a house in CA should be this much (when I look at my personal numbers I'm well under half that). Also not every couple needs 2 cars -- I know many that get by with 1 car just fine.

Overall, I agree it's going to be tight but I still think it's feasible. If it's too tight, one can always go for a less than median house.

[snpdragr]

Originally Posted by hitman619

Not to pile on you but
"Better to remain silent and be thought a fool than to speak and to remove all doubt."
You forgot Property Taxes, home owner insurance, oh never mind

Hey now. No need to throw insults.

If you look at the study I linked, the analysis included PITI so your items are covered.