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Old 06-08-2017, 11:36 AM
 
351 posts, read 342,549 times
Reputation: 764

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Quote:
Originally Posted by Larry Siegel View Post
The 2.5-to-1 ratio may be out of style, but it's borrowing 4-to-1 or 5-to-1 that caused the housing crisis.

Go ahead and borrow $2M on a $300K income if you want, but please don't look to the taxpayers for another bailout.
You're pretty out of it. 300k income is getting approved for 1.5-2m apartments easily these days.
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Old 06-08-2017, 06:04 PM
 
6,438 posts, read 6,924,520 times
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Quote:
Originally Posted by Commonproject View Post
You're pretty out of it. 300k income is getting approved for 1.5-2m apartments easily these days.
What I said. If you can get the money, I hope you can pay it back because I won't be there to help you.
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Old 06-08-2017, 08:56 PM
 
6,438 posts, read 6,924,520 times
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Quote:
Originally Posted by Larry Siegel View Post
What I said. If you can get the money, I hope you can pay it back because I won't be there to help you. Bailouts used to be a thing, now try getting one from the Trumpster
Let me fill in a little.

A $1,600,000 mortgage ($2 million house) at typical interest and tax rates has a monthly payment of $11,255. If you make $300K that's $25,000 a month before taxes, or about $14,500 a month after taxes (in CA) but before the mortgage interest deduction, which helps a little.

So I guess it's doable if you eat Chef Boyardee, drive an old Hyundai, don't save, don't send your kids to college, don't take vacations, don't have to pay for any health care, and don't have to replace the boiler, the central air, the roof, the garage, or the old Hyundai. And it's not clear where you're getting the $400K down payment.

Who in the hell wants to live like that.
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Old 06-08-2017, 09:37 PM
 
108 posts, read 143,515 times
Reputation: 108
Quote:
Originally Posted by Larry Siegel View Post
Let me fill in a little.

A $1,600,000 mortgage ($2 million house) at typical interest and tax rates has a monthly payment of $11,255. If you make $300K that's $25,000 a month before taxes, or about $14,500 a month after taxes (in CA) but before the mortgage interest deduction, which helps a little.

So I guess it's doable if you eat Chef Boyardee, drive an old Hyundai, don't save, don't send your kids to college, don't take vacations, don't have to pay for any health care, and don't have to replace the boiler, the central air, the roof, the garage, or the old Hyundai. And it's not clear where you're getting the $400K down payment.

Who in the hell wants to live like that.
So what does the average person do in the Bay Area? Most of the Bay Area is over a million dollar. I'm genuinely curious as to how all these people are getting by considering even 300k is too little.
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Old 06-08-2017, 09:48 PM
 
Location: Silicon Valley, CA
13,561 posts, read 10,364,797 times
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Well, it's safe to say that many of the residents in Hillsborough have been there for many years and may have bought a home when it wasn't as stratospheric in price (though it's never been a cheap place to be).
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Old 06-09-2017, 03:01 AM
 
1,195 posts, read 1,627,276 times
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Quote:
Originally Posted by Jadedfadedisbae View Post
I am assuming so. There are probably many houses between 2.5-3 million. Anyone making 250k can do that.
That is nonsense. Even with a 20% down payment, you'd be lucky to get approved for a $1.3-1.4 million home with 250k in household income.

As has been stated, a lot of people in Hillsborough have been living there for 20-30 years. It was comparatively cheap back then, though still one of the most expensive Bay Area towns. A single doctor or lawyer family could easily have bought there.

A lot of the people paying the current prices are foreign kingpins and bigwigs storing cash (Russian and Chinese buyers), but there's one other category. There have been a lot of people who bought nice homes in the peninsula at the bottom of the market around 2011 and have made out hugely. I know some people who have bought in San Mateo Park (bordering Hillsborough) and the part of Burlingame bordering Hillsborough, and they have made over $1 million in value gain (maybe +60% value) on their homes since buying around then. Both are looking to move up into Hillsborough with a huge down payment. Timing and luck, plus good jobs on top of that.
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Old 06-09-2017, 10:50 AM
 
24,409 posts, read 26,986,736 times
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The VP of the regional mortgage brokerage I worked at had a big house in Hillsborough. We had our superbowl party there. I imagine he must make around $500k
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Old 06-09-2017, 04:49 PM
 
6,438 posts, read 6,924,520 times
Reputation: 8743
Quote:
Originally Posted by Jadedfadedisbae View Post
So what does the average person do in the Bay Area? Most of the Bay Area is over a million dollar. I'm genuinely curious as to how all these people are getting by considering even 300k is too little.
The average person either rents or owns an average house/townhouse/condo, which is over $1 million in SF but under $1 million in Oakland, Hayward, etc., and that is very different from $2 million. And $300K is not all that high an income for two-earner family in the Bay Area, although I think it is above average.

Also, a lot of people bought their houses a long time ago.
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Old 06-09-2017, 05:04 PM
 
10,920 posts, read 6,917,076 times
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Quote:
Originally Posted by Jadedfadedisbae View Post
So what does the average person do in the Bay Area? Most of the Bay Area is over a million dollar. I'm genuinely curious as to how all these people are getting by considering even 300k is too little.
Look at the quantity of houses being sold these days - there are not that many houses being sold/bought. The ones that are, are going to the people at the higher ends of the income spectrum.

Most people in the Bay Area either bought long ago (some VERY long ago), or they rent (and many far below market rate rent because of rent control or a stable rental situation (not all landlords raise rent "because they can")).


Current prices are just current market rate. Not everyone pays current market rate to live in the region. That single fact explains why the median incomes don't seem to make sense when juxtaposed against regional house prices to buy/rent today. This is a VERY important point.
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Old 06-10-2017, 06:24 AM
 
4,369 posts, read 3,726,103 times
Reputation: 2479
Quote:
Originally Posted by Jadedfadedisbae View Post
So what does the average person do in the Bay Area? Most of the Bay Area is over a million dollar. I'm genuinely curious as to how all these people are getting by considering even 300k is too little.
They bought decades ago when that million dollar home was 100k or less
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