Buying a house in southern Ca....HOW?

thrown_hammer · 02-13-2006, 09:00 AM

Just doing a little math. If I punch my salary into one of those “relocation salary calculators” My wages would basically have to double to live in southern CA, but the home prices go up six times for a much smaller house. If I compare apples to apples it is over ten times! So how does a normal person afford even an average house? Fuzzy Math?

jkarolyi · 02-13-2006, 09:05 AM

Right now, nobody can afford to buy a house here who didn't buy their house five years ago. If you want to live here, just wait a couple of years for the RE market to crash. I live here on a $45K salary without a problem, but I moved here and bought back in 2001. Houses in my area (Riverside) have tripled since then. Total insanity.

stevepaa · 02-13-2006, 09:09 AM

Get your dad to help, my daughter did.

pbs911 · pbs911's Garage

Quote:

Originally posted by thrown_hammer
Buying a house in southern Ca....HOW?

Easy, make $171,000 a year and you can afford a median priced home. Off course, you will be no where near the ocean and plan on at least an hour commute traveling 5 mph.

widebody911 · widebody911's Garage

Quote:

Originally posted by thrown_hammer
So how does a normal person afford even an average house? Fuzzy Math?

Creative financing and selling off organs for a down payment.

EdT82SC · 02-13-2006, 09:34 AM

Why would you want to live here? It's going to be in the 90's here today. Winter now is the season that is hot and dry, but cools down at night. Summer is hot and humid, and doesn't cool down at night.

I can afford to live here (bought first home in '93), but I want to leave because the weather has gotten so much warmer. I guess it's gotten warmer everywhere else too, but further north is cooler then here.

singpilot · 02-13-2006, 09:36 AM

Three words.

MEGABUCKS LOTTO Winner!

thrown_hammer · 02-13-2006, 09:43 AM

So I guess all those cost of “living” calculators are seriously flawed since a home is kind of a big part “living”.

motion · 02-13-2006, 10:18 AM

People here will do anything to buy a place, believing the'll be set for life from the appreciation. I like this quote from CNNMoney:

"With that in mind, FORTUNE decided to check up on two areas at opposite sides of the country that have seen spectacular run-ups in home prices.

Let's start in Orange County, which has caught a case of real estate fever as acute as that of any region in the nation. Yale's Shiller surveyed Orange County residents last year on what they expected home prices to do over the next ten years. The average expectation was a 23 percent return -- per year! That kind of unbridled optimism has caused buyers to stretch beyond their limits. Southern California has become a hotbed for "exotic" mortgages, such as interest-only loans."

thrown_hammer · 02-13-2006, 10:54 AM

How far away from Orange County would you have to be for a normal person to get into a 1300 SF or so home?

mikester · 02-13-2006, 11:00 AM

Arizona.

EdT82SC · 02-13-2006, 11:00 AM

Shawn,

"Normal" means different things to different people. How much can you afford to spend on a home?

thrown_hammer · 02-13-2006, 11:18 AM

Ed,
You have a PM.

Jared at Pelican Parts · 02-13-2006, 11:18 AM

Quote:

Originally posted by jkarolyi
Right now, nobody can afford to buy a house here who didn't buy their house five years ago. If you want to live here, just wait a couple of years for the RE market to crash. I live here on a $45K salary without a problem, but I moved here and bought back in 2001. Houses in my area (Riverside) have tripled since then. Total insanity.

Yeah really. Who wants to spend $500K to live in the 909.

motion · 02-13-2006, 11:19 AM

There are plenty of "affordable" communities in "Southern" California. You just wouldn't want to live in them, trust me.

Jared at Pelican Parts · 02-13-2006, 11:20 AM

Quote:

Originally posted by motion
There are plenty of "affordable" communities in "Southern" California. You just wouldn't want to live in them, trust me.

See the post above

pbs911 · pbs911's Garage

Quote:

Originally posted by motion
There are plenty of "affordable" communities in "Southern" California. You just wouldn't want to live in them, trust me.

Sounds like the 2bd, 1b 1100 sf home I saw last week in downtown Santa Ana. Comes complete with freeway access the next driveway over, chain link fencing, home security system of steel grids over the windows and doors, and new linoleum throughout! All that for only only $589k! You may be ok during the day-light hours, just don't go out at night.

Rick Lee · Rick Lee's Garage

A safe rule of thumb for figuring out what you can afford is to use the old school, convetional financing debt-income ratios. Of course, nowadays these probably mean nothing, thanks to all the "exotic" loans out there and people betting their futures on crazy appreciation.

But the way it was done not to long ago was this: Figure out the total monthly payment of the place you want (after you know how much you can put down and what your loan amount will be). This is your PITI - principle, interest, taxes and insurance. Divide that amount by your gross monthly income and if it's much above 28%-30%, then you may have reason to worry. The real factor is when you add the housing debt to your total revolving monthly debt like if you have car payments, credit card debt, student loans, etc. Divide that total monthly debt by your gross monthly income and if it's much above 36%, then it's probably too much house for you. These are called front and back ratios and Fannie/Freddie used to set them at 28% for the front and 36% for the back as how to determine if a house was aoffordable for someone. I've seen plenty of folks with crazy high ratios get by, but there have to be a lot of offsetting factors like huge bonus or commission checks, tons of cash reserves, etc.

motion · 02-13-2006, 11:41 AM

This one looks good and its in Southern California! The dream is alive!

http://www.realtor.com/Prop/1055384477

fastpat · 02-13-2006, 01:02 PM

Quote:

Originally posted by thrown_hammer
Just doing a little math. If I punch my salary into one of those “relocation salary calculators” My wages would basically have to double to live in southern CA, but the home prices go up six times for a much smaller house. If I compare apples to apples it is over ten times! So how does a normal person afford even an average house? Fuzzy Math?

You don't move to California unless one of the following conditions are met:

1. You just won a lottery, a large lottery.
2. You just inherited a house already located in California, which is good since you'll inherit the low tax rate too.
3. You work for a company that will buy down your mortgage as a perk for you moving there.

There could be others, but that's a start.

There are very good reasons to move FROM California; which my wife and I did last fall. When we sold our house, we cashed that check and ran as fast as possible.