Median home prices in San Jose metro are 628K. How do people afford it? (Santa Clara: transplants, sales)

[mysticaltyger]

This article mentions home prices for the San Jose metro area are 628K. How can people afford this with unemployment over 11% ? Are people taking out crazy loans again?



Home sales plunged after tax credit ended - Nov. 11, 2010

[telecomprovisioner]

No, they don't offer those crazy loans anymore. 600k is pretty affordable for a working couple, esp if one is an engineer/works in high tech. My husband works for a major semiconductor company, which employs thousands here in BA, they also still offer stock options & depending on what level you are -they give pretty good annual bonuses too.

Yeah, unemployment is kind of bad...not much land to build houses on though!!

[18Montclair]

It was nearly 900K in 2007 so now is actually sort of a bargain.

[Ceece]

The 89% who are working and buying homes make good money.

[StandingRoomOnly]

If you make over 110k, have saved 20% down, no other debts or crazy spending habits, you can afford a 600k house comfortably... With so many engineers in SV, 110k is probably pretty average for a salary

[sonarrat]

We don't. Transplants come here and buy houses for our crazy prices thinking it's normal, and those of us who actually grew up in the Silicon Valley try their best to pay rent until we inherit our parents' homes.

[james011]

Originally Posted by StandingRoomOnly

If you make over 110k, have saved 20% down, no other debts or crazy spending habits, you can afford a 600k house comfortably... With so many engineers in SV, 110k is probably pretty average for a salary

Except the $600k is only the median home price, not upper middle class housing as the profession or salary would suggest. A median home in San Jose is a $150k shack in most other parts of the country.

Even on $110k income (way above San Jose's median), $600k is 6 times income, which is well over recommended borrowing amounts. All for a shack.

[Snort]

Originally Posted by mysticaltyger

This article mentions home prices for the San Jose metro area are 628K. How can people afford this with unemployment over 11% ? Are people taking out crazy loans again?



Home sales plunged after tax credit ended - Nov. 11, 2010

I just picked up The Millionaire Next Door and that may have been from one of your recommendations in the Finance forum. If I remember right, the suggestion is that one shouldn't spend more than twice one's gross annual income on a home. Well, for most of us, that just ends the dream of owning a home. I'm actually okay with that because I'd rather live on a nice comfortable boat. There are several downsides to this plan, but you can find decent boats for under 100K with most home comforts aboard and live in a great location with great sunsets.

[krudmonk]

Mine was not even 40% of that in mid-2009. That's how.

[mysticaltyger]

Originally Posted by james011

Except the $600k is only the median home price, not upper middle class housing as the profession or salary would suggest. A median home in San Jose is a $150k shack in most other parts of the country.

Even on $110k income (way above San Jose's median), $600k is 6 times income, which is well over recommended borrowing amounts. All for a shack.

^^^^This is what I"m thinking^^^^. People have really warped ideas about what is 'affordable'.

The median income in Santa Clara county would need to be around 200K for a 628K home to be affordable for most people. There's no way the median income in SV is anywhere near 200K.