Instructions to my son on how to buy a house in the SF Bay Area (Oakland: appliances, credit score)

[CA4Now]

Originally Posted by MountainHi

(no rent is part of the formula, remember, along with employed spouse). So the couple could be banking 40-50K annually. Boom--200K in 4-5 years. That's a nice down-payment on a 600 or 800K place. Student loans to pay off, first? Fine, so it takes them closer to 6-8 years. If they graduate at 22, they'll be in a home by the time they're 30, even with student loans to pay off. Sounds pretty sweet. If they marry at 25 and start the plan then, they'll be in a home by 33. Still a dream come true at a young age.

So this couple is living with mom and dad for 8 years? And mom and dad apparently don't require a couple of this age to pay any rent?

There's a lot about this dream that doesn't add up IRL.

[bodyforlife99]

Hi Ruth. What do you think? Post #276. But they loved the way you reworded it, lol. Hope you're having a great weekend.

[bodyforlife99]

Hmmmmm.....

Originally Posted by WithDisp

I read the list.

Originally Posted by bodyforlife99

1. Marry a woman than understands that buying a home here requires both partners to work - This has been the case for years so any lists talking about a family with a single income earner not being able to afford here are just stupid (virtually no profession on its own could buy a house here). The average household income in SF is roughly $105K. You and your wife will need to earn at least 1 1/3 of that amount. Shoot for that goal. If that means picking up an extra 8 hours on a weekend for a side job, so be it. Keep in mind, even if your debt ratio on the mortgage ends up being in the low 40% range, that remaining amount is still much higher than most areas of the country. You'll survive (we did and we started off at roughly 42%).
   

Minimum starting point. Read the list.

[WithDisp]

Originally Posted by MountainHi

If they're earning 40K and their spouse is making the same, they'll be able to bank 40K annually, if not more (no rent is part of the formula, remember, along with employed spouse). The plan depends on meeting all or most of the conditions of the plan, which includes the suggestion to get a part-time job on the side, if necessary. So the couple could be banking 40-50K annually. Boom--200K in 4-5 years. That's a nice down-payment on a 600 or 800K place. Student loans to pay off, first? Fine, so it takes them closer to 6-8 years. If they graduate at 22, they'll be in a home by the time they're 30, even with student loans to pay off. Sounds pretty sweet. If they marry at 25 and start the plan then, they'll be in a home by 33. Still a dream come true at a young age.

90K Salary, with 200K down on a 700K place is still not enough to meet the income requirement for the mortgage. At 3.5 % interest you'd require a income of 96K- if by that point all student loans are paid off.

EDIT - 128K with Taxes and Insurance.

[MountainHi]

Originally Posted by likealady

I think the main issue is that the OP is spouting this belief that anyone can save for a house here if they are diligent enough. No. If you're living at home and can bank half of your salary or more that is not a common scenario for many people living here.

To buy here you need exorbitant amount of money or family roots that will allow you to save an exorbitant amont of money. That's what anyone whose been disagreeing with the OP has been trying to say. If you can't save for a house when paying no rent, then you have serious money issues, period.

That's not what the OP is saying, in my understanding. But that seems to be what some people are reading into it. That would explain all the protest.

[MountainHi]

Originally Posted by WithDisp

90K Salary, with 200K down on a 700K place is still not enough to meet the income requirement for the mortgage. At 3.5 % interest you'd require a income of 96K- if by that point all student loans are paid off.

Starting out at 40K, saving for 6-8 years, by then they'd be making at least 100K combined, without any part-time jobs, if they get periodic pay raises and start moving up in their field. Even with no promotion or moving up, pay increases would put then at that 96K.

[WithDisp]

Originally Posted by MountainHi

Starting out at 40K, saving for 6-8 years, by then they'd be making at least 100K combined, without any part-time jobs, if they get periodic pay raises and start moving up in their field. Even with no promotion or moving up, pay increases would put then at that 96K.

... if that's the case you can also assume given the same factors the 700K house may be 800K.
Of course, it could be 500K by then... only time will tell.

I gave them 5K raises each in 6 years. If they're store assistant managers, receptionists, or starting out as teachers- they wouldn't even see 5K in 6 years without promotions.

Sadly, I screwed up too and didn't factor in taxes or insurance.

The income calculator reads 128K annual income given 1% tax rate on a 700K purchase, and 2K annually for hazard/housing insurance with 200K down. So, they still can't get the mortgage.

[MountainHi]

Originally Posted by WithDisp

... if that's the case you can also assume given the same factors the 700K house may be 800K.
Of course, it could be 500K by then... only time will tell.

I gave them 5K raises each in 6 years. If they're store assistant managers, receptionists, or starting out as teachers- they wouldn't even see 5K in 6 years without promotions.

Sadly, I screwed up too and didn't factor in taxes or insurance.

The income calculator reads 128K annual income given 1% tax rate on a 700K purchase, and 2K annually for hazard/housing insurance with 200K down. So, they still can't get the mortgage.

So they'd have to look farther out, say, Concord, as the OP recommended as well, to find a place they could afford. The OP never said it would be easy. He's saying it would be tough, and college grads starting out today would have to be prepared for it to be tough, otherwise not do it at all.

[CA4Now]

Originally Posted by MountainHi

Starting out at 40K, saving for 6-8 years, by then they'd be making at least 100K combined, without any part-time jobs, if they get periodic pay raises and start moving up in their field. Even with no promotion or moving up, pay increases would put then at that 96K.

What person, much less couple, works for 6-8 years straight without a major expense? Car breaks down, a pregnancy, a health issue, the company of one of them cuts back on its staff, a major appliance or two needing to be replaced, etc?

And how are they able to live RENT FREE for 6-8 years? This is a completely unrealistic scenario.

[Ultrarunner]

Health is really the wildcard... accident/illness are unforeseen and can be devastating.

There are other things that can be very devastating such as a bad divorce... many have had to start over and only if they have not been emotionally scarred for life.

Unfortunately, I know several couples that seem to have it all... great jobs, health, kids and it all was lost over years of fighting...

Put two super-savers together and amazing things can be accomplished.

A lot of my friends would go out and buy a nice car the first thing when they started making money... nice car and nice apartment doesn't leave much for savings... especially starting out.

As mentioned... I drove my $800 car I bought in school for 20 years and still have it...

Going out, cell phones, data plans, cable, travel all cost...