Instructions to my son on how to buy a house in the SF Bay Area (Oakland: unemployment, minimum wage)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Again, the math has already been worked out for this using current interest rates (versus the much higher rates of the past), in addition to the fact that people are already paying 47% of their income on rent. Yes, it make sense to me to buy. If you believe renting is better over the long term, I suggest you rent
Don't know what that website is and don't care. I run a scenario based on interest rates and this location
That's because you're not capable of realizing your wrong, as so many other posters on here have brought up. Because you had it different, as everyone does, and you're too stuck in the past to realize this.
If you're purchasing today, you're living in TODAY's economy. 41% DtI will not get you approved for the majority of loan products on the martket.
Quote:
Originally Posted by bodyforlife99
Shy of Arizona and parts of Nevada (Las Vegas in particular), the foreclosure rate was approximate 2.5% during the last recession. In other words, 97.5% of homes did not go into foreclosure
I picked the highest forclosures in the country for a reason. Just as SF had the highest increases, those cities had the highest decreases in price. It pays to see both sides of the spectrum. You should try it sometime.
Quote:
Originally Posted by bodyforlife99
Enjoy your investing. I'd rather leverage out 20% on property I believe will substantially appreciate in 20-30 years. We'll see who has more net worth at that point.
[/quote]
Both situations one owns the home in 20-30 years. One merely has more liquid capital at the start, for a slightly higher payment over 30 years. Any banker worth his salt will borrow as much money under 4% as they can. Though, as I've said, I don't think you're particularly a wise person. I think you've lived in an area that's appreciated well in value. I say the same thing to my uneducated boomer parents- that with no college education, they wouldn't have been able to live the lifestyle they lived in today's age.
You're telling your kids they just have to work harder, and not have an Internet-enabled phone.
I think my advice to your son would be. "Kid, I'm not the best person to ask about this, talk to someone who has done it today."
use borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.
"a leveraged takeover bid"
2.
use (something) to maximum advantage.
"the organization needs to leverage its key resources"
This thread is retarded for the average person or Bay Area local millenial. It is wishful thinking but the truth is owning anything here now requires $$$. It is largely impossible for younger people to buy even a condo anymore unless they are from a family with money or unless they have a lucrative career and/or 2 solid incomes. Add the soul crushing rent costs and cost of living and good luck saving the down payment for anything in the next 50 years. Latest data says only 40% of doctors can afford to buy in SF. Most average people I know with decent jobs and college degrees can't really afford to pay more than $2500 a month for rent and utilities. All arguments and opinions aside here is the basic facts in numbers.
Let's just figure that anything decent in the Bay Area will cost you around $800k as an average price, that will be a tiny yard with an okay house in an average area, nothing fancy in a lot of areas here it won't buy anything except a fixer upper. Some way far out areas like Petaluma are more affordable around $500-650k for a small house and others over a million on average like SF and the peninsula.
$800k house
20% down payment $160,000 cash plus closing costs of $10-15k =$175k
Mortgage,1.25% property tax, insurance monthly average $4,100
All home utilities & home maintenance monthly average $400-600
Total monthly average cost of house, taxes, utilities and maintenance $4500-4800
Required salary to keep housing costs around 33% of total pre-taxed monthly income $13,500
So required funds to keep up with this debt would be $175k cash down payment plus money in the bank to live on and for repairs or appliances at least $50k to be safe. Minimum $225k "in the bank" not retirement money or vacation money and with such a huge loan is say better to have more $$$ in the bank.
Steady 100% secure income salary of $165k a year give or take.
Even a $500k house an hour from SF is unaffordable to most people. You should have $110k down payment/closing costs, $50k in the bank and $125k minimum salary to buy a house for $500k.
And then the million plus dollar homes, well good luck. Hope you're in tech with a trust fund and a wife that is a lawyer or something.
How many young 21-40 year old normal working middle class people do you know with a salary of $160-180 a year with $250k in the bank ready to throw down $175k into an average house just to buy it? Best case scenario a married couple with great corporate careers and big savings but for a single individual with no inherited equity from a dead relative pretty much impossible to just not even worth it when you look at what houses sell for most other places.
I sure didn't... that is why I bought a dump in a bad area with high crime...
It was what I could afford to buy... my friends rented and lived well... I spent my free time at Home Depot buying sheetrock and kitchen cabinets...
You said decent... my homes were anything but decent... all needed work or were in a bad area or both.
Nothing special about me... a lot of my friends did the same... we tended to move every couple of years and each move improved our situation.
I live in a decent home in a decent Oakland neighborhood... yet, many of my co-workers wouldn't live in Oakland if the house was free... their loss.
Oakland has the best climate and is in the heart of the SF Bay Area... served by BART, AC Transit, International Airport, Ferry Service and Rail... so no getting around that.
Full Time Offer Check - Works in Technology, infused by investment monies.
No one is denying that field pays very well. Outside of that field, college grads are NOT making that kind of money. The other industries have no possibly way of keeping on par with salaries.
The people are whining, but the OP themselves laments that their house has appreciated from 60K to more than 10X that in 20 years. It's not even feasable to think such could happen today without SF becoming like Moscow.
I neither live in Texas nor California. I was merely bringing up the fact that the largest sprawled metro, which is a far far far bigger city than SF, with a far larger amount of SFH has a much much cheaper cost of living.
Most managerial jobs outside of Technology in Houston may may 10-20% less than SF, yet cost of living is more than 5x lower.
You keep going on about 41% debt-to-income. That's a MAX. If your loan is FHA backed... Fannie Mae, Freddie Mac, or ANY condo that's building is less than 50% owner occupied. Your max is 31%.
It's not just tech. All accounting, finance, consulting, business, science majors are making $60k+ out of undergrad. Teachers make $50k. In a few years, most college majors that are not sociology, psych, etc majors are making $80-$90k. Outside of the oil industry, positions in Houston pay at least 20% less than the Bay Area while many pay 30% less. That's a fact.
There's a reason Houston real estate is 5x lower than the Bay Area. If you can't figure that out, can't help you. Of course, go drive around River Oaks and many places inside the Loop and see what you might be paying. You'll find very, very average houses that are close to $1M. Add 3.3%+ property taxes to almost any city in the Houston area and you don't have as much affordability as one would think. In addition, add another percent for MUD taxes similar to California's Mello Roos, and do the math on a $700k house there. Sure, you can live out in the far suburbs in Houston, but you are still paying close to $400-$500k, plus the 3-4%+ property taxes.
But again, I guess you know all this since you don't live in California or Texas, but keep acting like you know all when you don't.
I won't even address your comment about an FHA loan, but please why would anyone get an FHA loan when they can qualify for a conventional. Oh maybe because of a terrible credit score? Yes, like I've been saying all along that credit score matters on the rate And terms instead of DTI. There are a plethora of loan programs for someone with a 720+ credit score and a DTI of 43%. If you fail to know that, then yes you will never own a house here.
but the OP themselves laments that their house has appreciated from 60K to more than 10X that in 20 years. .
I never said anything of the sort. Once again, simply someone that doesn't read a post and then misquotes the poster. And it goes on and on and on. Hard to imagine anyone arguing about something when they haven't actually read the comment they're arguing about. It is amusing how you don't think I'm particularly a wise person. And yet, I would never in my wildest dreams think that homes have appreciated 10x their value in the last 20 years in the Bay Area. In addition, I understand what leverage is. I did try to explain it to you in layman's terms. I'm happy to give you a more thorough explanation if you believe it would help. I really think posts that can educate people are valuable to this forum (especially when it comes to home ownership which clearly is a touchy subject for some). Please let me know.
Last edited by bodyforlife99; 03-13-2016 at 04:10 AM..
How many young 21-40 year old normal working middle class people do you know with a salary of $160-180 a year with $250k in the bank ready to throw down $175k into an average house just to buy it? Best case scenario a married couple with great corporate careers and big savings but for a single individual with no inherited equity from a dead relative pretty much impossible...
But wait! You just know that you wanted to live with your parents--and your spouse, to boot--for 6-8 years so that you could save up for that $175,000 down payment. And somehow, never pay your parents a dime of rent during all that time...
This thread is retarded for the average person or Bay Area local millenial. It is wishful thinking but the truth is owning anything here now requires $$$. It is largely impossible for younger people to buy even a condo anymore unless they are from a family with money or unless they have a lucrative career and/or 2 solid incomes. Add the soul crushing rent costs and cost of living and good luck saving the down payment for anything in the next 50 years. Latest data says only 40% of doctors can afford to buy in SF. Most average people I know with decent jobs and college degrees can't really afford to pay more than $2500 a month for rent and utilities. All arguments and opinions aside here is the basic facts in numbers.
Let's just figure that anything decent in the Bay Area will cost you around $800k as an average price, that will be a tiny yard with an okay house in an average area, nothing fancy in a lot of areas here it won't buy anything except a fixer upper. Some way far out areas like Petaluma are more affordable around $500-650k for a small house and others over a million on average like SF and the peninsula.
$800k house
20% down payment $160,000 cash plus closing costs of $10-15k =$175k
Mortgage,1.25% property tax, insurance monthly average $4,100
All home utilities & home maintenance monthly average $400-600
Total monthly average cost of house, taxes, utilities and maintenance $4500-4800
Required salary to keep housing costs around 33% of total pre-taxed monthly income $13,500
So required funds to keep up with this debt would be $175k cash down payment plus money in the bank to live on and for repairs or appliances at least $50k to be safe. Minimum $225k "in the bank" not retirement money or vacation money and with such a huge loan is say better to have more $$$ in the bank.
Steady 100% secure income salary of $165k a year give or take.
Even a $500k house an hour from SF is unaffordable to most people. You should have $110k down payment/closing costs, $50k in the bank and $125k minimum salary to buy a house for $500k.
And then the million plus dollar homes, well good luck. Hope you're in tech with a trust fund and a wife that is a lawyer or something.
How many young 21-40 year old normal working middle class people do you know with a salary of $160-180 a year with $250k in the bank ready to throw down $175k into an average house just to buy it? Best case scenario a married couple with great corporate careers and big savings but for a single individual with no inherited equity from a dead relative pretty much impossible to just not even worth it when you look at what houses sell for most other places.
Natives who inherited can use the income from rent to buy another house lol. The rich get richer.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
