Average income for $1 million home?

NEW -> Contingent Buyer Assistance Program
[quote author="lendingmaestro" date=1211288212]A 600k down payment towards a non-performing asset is just insane, unless you have much more assets left over in reserves. It is thinking like yours that puts people into properties well beyond their means. I am sure you could afford the monthly payment on a 400k mortgage with your income over 200k a year, but that doesn't mean purchasing and over-priced 1 Million dollar house is a wise decision. Now if you have 1 million left over in cash and securities AFTER your 600k down payment, be my guest.</blockquote>


A good long rant Maestro with some excellent points. Everyone should consider their individual situations when purchasing a home, which was my point, given you made the broad generalization that people needed to limit purchases to less than 3X income IRREGARDLESS of the rest of their financial situation. Not really sure of your point... First you say people should never by at more than 3X income but now you say should ask themselves some hard questions and consider the specifics of their situation. Which is it?



Why do you automatically assume a $1M house is a an NPA? A $1M house could be the wisest investment of your lifetime if you buy it at the right time... Just because it is expensive doesn't make it a bad choice inherently. By your logic, picking up a house that was $2.5M at bubble peak for $1M today would be a bad idea for almost all concerned. Sorry, but no matter what your income level is or how much you have to finance, snagging a premium property at 60% off peak would probably be a slam dunk super investment choice assuming you could carry it for even a short amount of time.



My point, to which you appear to actually half agree with but don't realize it maybe, is that purchase decisions and purchase prices should be influenced by a variety of variables, not just income. If someone inherented $5M, I wouldn't think it unwise of them at all to spend $1M on a house even if they made $100K per year... Heck, I'd call that frugal. Apparently you would call it risky and stupid because they were buying at 10X income.
 
$200K/yr is very common for a single wage earner in the Bay area. The average weekly wage (average, not median) for Santa Clara County is ~$1600/week. OC is ~$900. CNN website did a piece on the wealthiest zips in the country. Tons in the Bay area and CT, none in OC. Check it out.





This goes back to a thread I started a few months back titled 'What jobs are in OC?". The bottom line is that OC is a mid-market economy without the large corporate entities requried to create thousands and thousands of $100K+ jobs in things like HR, Product Mgt, Engineering mgt, Office of the Treasurer, sales etc. OC had RE - now it is gone.



I had a chat this weekend with a friend about a common friend who is a BIG hitter in SoCal Commercial RE. He said the Commercial RE bubble has just started bursting and it is getting ugly very fast. He's somewhat concerned about how he'll be able to match the income he's enjoyed the last 15+ years in the future. The friend I was speaking to is a bigwig in the institutional investment biz. He just lost a major piece of biz. For anyone in RE or fin services, really interesting times are ahead for the next few years.



It's a great time to be in technology.
 
[quote author="Masterofdamoney" date=1211330091]3 CC's with a total balance of $2000 and monthly payments of $70 combined. </blockquote>


ugh... why do people do that? even with their income, just cut back for a while and just pay that off! they only consider the $70 pymt. that isn't too bad, yeah? spend another grand -- balance of $3000 makes the pymt around $100. hey, not that bad either. maybe i'll spend a wee bit more... $4000.... $5000...

before you know it they have 5-figure cc debt.
 
[quote author="acpme" date=1211334782][quote author="Masterofdamoney" date=1211330091]3 CC's with a total balance of $2000 and monthly payments of $70 combined. </blockquote>


ugh... why do people do that? even with their income, just cut back for a while and just pay that off! they only consider the $70 pymt. that isn't too bad, yeah? spend another grand -- balance of $3000 makes the pymt around $100. hey, not that bad either. maybe i'll spend a wee bit more... $4000.... $5000...

before you know it they have 5-figure cc debt.</blockquote>


Not to seem mean... but that amount of total debt is absolutely unheard-of low. If I look at 100 credit reports, I would bet everything I own that all 100 would contain more than $3000 total debt with $70 in payments. This is on a national level.



If I was looking at California - it's almost unheard of to see debt under $10K. I am pleasantly surprised when I see debt under $25K, in all honesty.



Hell, in OC, $25K is less than the balance on 1 of their car loans. And they will probably have 2 of those. In addition to the $20-50K in revolving debt.



Bottom line - it is low in the EXTREME.
 
[quote author="freedomCM" date=1211334828][quote author="Masterofdamoney" date=1211330091]



I think the median OC income is $75,000? Something to think about. :)</blockquote>






Actually, worse than that. 2006 census estimates for whole household, not individuals:



Median household income (dollars)

OC: $70232

Costa Mesa: $61535

Irvine: $84720

Hunt. Bch: $75896



http://www.ocregister.com/ocregister/money/article_1834748.php</blockquote>


Your numbers do not bode well, sir.



How can the median home price be more than $250K if those are the median household incomes?



They HAVE to mimic each other... it is illogical to think otherwise.



As Mr. Reeves would say.... WHOA!
 
[quote author="Masterofdamoney" date=1211335612][quote author="acpme" date=1211334782][quote author="Masterofdamoney" date=1211330091]3 CC's with a total balance of $2000 and monthly payments of $70 combined. </blockquote>


ugh... why do people do that? even with their income, just cut back for a while and just pay that off! they only consider the $70 pymt. that isn't too bad, yeah? spend another grand -- balance of $3000 makes the pymt around $100. hey, not that bad either. maybe i'll spend a wee bit more... $4000.... $5000...

before you know it they have 5-figure cc debt.</blockquote>


Not to seem mean... but that amount of total debt is absolutely unheard-of low. If I look at 100 credit reports, I would bet everything I own that all 100 would contain more than $3000 total debt with $70 in payments. This is on a national level.



If I was looking at California - it's almost unheard of to see debt under $10K. I am pleasantly surprised when I see debt under $25K, in all honesty.



Hell, in OC, $25K is less than the balance on 1 of their car loans. And they will probably have 2 of those. In addition to the $20-50K in revolving debt.



Bottom line - it is low in the EXTREME.</blockquote>


yeah i understand that $2000 in cc debt is nothing (compared to the national level). but when that low, just pay the damn thing off! the shame is society has let debt become acceptable. they're comfortable with $2000, what's next? oh yeah, the home with 97% financing.
 
[quote author="acpme" date=1211334782][quote author="Masterofdamoney" date=1211330091]3 CC's with a total balance of $2000 and monthly payments of $70 combined. </blockquote>


ugh... why do people do that? even with their income, just cut back for a while and just pay that off! they only consider the $70 pymt. that isn't too bad, yeah? spend another grand -- balance of $3000 makes the pymt around $100. hey, not that bad either. maybe i'll spend a wee bit more... $4000.... $5000...

before you know it they have 5-figure cc debt.</blockquote>


They probably pay their cards off every month vs. carry debt... My credit report as of today says I have $12K in revolving debt with $141 of min. payments. Nowhere does it indicate I pay off my revolving credit card balances in full each month. I just charge everything so I can get the rewards.
 
[quote author="Masterofdamoney" date=1211335612]



Not to seem mean... but that amount of total debt is absolutely unheard-of low. If I look at 100 credit reports, I would bet everything I own that all 100 would contain more than $3000 total debt with $70 in payments. This is on a national level.



If I was looking at California - it's almost unheard of to see debt under $10K. I am pleasantly surprised when I see debt under $25K, in all honesty.



Hell, in OC, $25K is less than the balance on 1 of their car loans. And they will probably have 2 of those. In addition to the $20-50K in revolving debt.



Bottom line - it is low in the EXTREME.</blockquote>


:long: That is so sad to me. I have no student loans, I paid off my car as soon as I possibly could, and always pay off my credit cards. Paying interest is usually wasted money.
 
good point, ipo. i hope thats the case. although i fear its not -- 65k/yr is like 4k/mo of take-home. spending 50% of that, even with bills thrown in there because housing costs are unlikely to be included in the 2k, is an awful lot of discretionary spending for them.
 
Boston2theBay --- Not that too many people here probably care, but I have to call BS on your "It's very common for a single wage earner to make $200k in the Bay Area". How does that reconcile with this story from your own newspaper last month, which puts the median household income in Santa Clara County (Silicon Valley - where the tech jobs are) at $95K?



<a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/29/BU6J10D6J9.DTL">SF Gate</a>



Same article puts OC at $75k. Now, personally I think both of these numbers are pretty bunk --- I am sure we both can think of hunderds of people we know that are well beyond these numbers. IMO, you need to look at the incomes of likely homebuyers when analyzing home prices in relation to income. Rolled up into those numbers are people who would never be considered homebuyers.



That said, to say it is *easy* to make $200k in the Bay Area is a little reckless. I lived in Santa Clara (Rivermark) for almost 4 years, and yeah --- there are some people doing pretty well --- but it is FAR from *most*. And even if you paid me $200k, I still would never move back to the Bay Area. There is nothing to do there. Life is about more than the buck.



[quote author="Boston2theBay" date=1211332759]$200K/yr is very common for a single wage earner in the Bay area. The average weekly wage (average, not median) for Santa Clara County is ~$1600/week. OC is ~$900. CNN website did a piece on the wealthiest zips in the country. Tons in the Bay area and CT, none in OC. Check it out.





This goes back to a thread I started a few months back titled 'What jobs are in OC?". The bottom line is that OC is a mid-market economy without the large corporate entities requried to create thousands and thousands of $100K+ jobs in things like HR, Product Mgt, Engineering mgt, Office of the Treasurer, sales etc. OC had RE - now it is gone.



I had a chat this weekend with a friend about a common friend who is a BIG hitter in SoCal Commercial RE. He said the Commercial RE bubble has just started bursting and it is getting ugly very fast. He's somewhat concerned about how he'll be able to match the income he's enjoyed the last 15+ years in the future. The friend I was speaking to is a bigwig in the institutional investment biz. He just lost a major piece of biz. For anyone in RE or fin services, really interesting times are ahead for the next few years.



It's a great time to be in technology.</blockquote>
 
[quote author="CK" date=1211339955]Boston2theBay --- Not that too many people here probably care, but I have to call BS on your "It's very common for a single wage earner to make $200k in the Bay Area". How does that reconcile with this story from your own newspaper last month, which puts the median household income in Santa Clara County (Silicon Valley - where the tech jobs are) at $95K?



<a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/29/BU6J10D6J9.DTL">SF Gate</a>



Same article puts OC at $75k. Now, personally I think both of these numbers are pretty bunk --- I am sure we both can think of hunderds of people we know that are well beyond these numbers. IMO, you need to look at the incomes of likely homebuyers when analyzing home prices in relation to income. Rolled up into those numbers are people who would never be considered homebuyers.



That said, to say it is *easy* to make $200k in the Bay Area is a little reckless. I lived in Santa Clara (Rivermark) for almost 4 years, and yeah --- there are some people doing pretty well --- but it is FAR from *most*. And even if you paid me $200k, I still would never move back to the Bay Area. There is nothing to do there. Life is about more than the buck.



[quote author="Boston2theBay" date=1211332759]$200K/yr is very common for a single wage earner in the Bay area. The average weekly wage (average, not median) for Santa Clara County is ~$1600/week. OC is ~$900. CNN website did a piece on the wealthiest zips in the country. Tons in the Bay area and CT, none in OC. Check it out.





This goes back to a thread I started a few months back titled 'What jobs are in OC?". The bottom line is that OC is a mid-market economy without the large corporate entities requried to create thousands and thousands of $100K+ jobs in things like HR, Product Mgt, Engineering mgt, Office of the Treasurer, sales etc. OC had RE - now it is gone.



I had a chat this weekend with a friend about a common friend who is a BIG hitter in SoCal Commercial RE. He said the Commercial RE bubble has just started bursting and it is getting ugly very fast. He's somewhat concerned about how he'll be able to match the income he's enjoyed the last 15+ years in the future. The friend I was speaking to is a bigwig in the institutional investment biz. He just lost a major piece of biz. For anyone in RE or fin services, really interesting times are ahead for the next few years.



It's a great time to be in technology.</blockquote></blockquote>


Some anecdotal evidence on that topic - My brother and his wife live and work in the SV, both in their early 40's, and neither makes $200K individually in a normal year. My bro is a VP of Sales with the requisite MBA and 20+ years of experience and he hits right around $180-190K per year on a normal, i.e. he makes his numbers, year. Whe he beats his numbers, his comp gets into the low $200K range. His wife is a Senior Executive Assistant, near the top of the food chain in that line of work, and she grosses around $90K. She was the administrative right-hand of the CEO of Placeware for years... These are two very smart, experienced and well-educated people living in the Valley and they gross shy of $300K between the two of them. They have friends that out-earn them significantly of course but many that don't.
 
"That said, to say it is *easy* to make $200k in the Bay Area is a little reckless. I lived in Santa Clara (Rivermark) for almost 4 years, and yeah --- there are some people doing pretty well --- but it is FAR from *most*. And even if you paid me $200k, I still would never move back to the Bay Area. There is nothing to do there. Life is about more than the buck. "



I wouldn't say $200k/yr is "very common" in the Bay Area, but there are quite a few people at that level due to tech companies etc.



Not sure why you're dissing the Bay Area Ipo, the four years I spent up there I found plenty to do and the area is beyond beautiful.
 
Correct me if I'm wrong, but I think your credit score goes up if you run your balance WAY up and pay it off immediately. Somewhere in the formula you are rewarded for actually using your credit, and more credit for not abusing it.



Anybody do credit repair, out there? I'd like to know where I can find the real scoop on how the three bureaus spit out their numbers.
 
[quote author="Irvine Allergy Dr" date=1211342802] It?s possible that the $2000 is just what they spend a month on their credit card and that they pay it off each month (although, given their income, that?s probably not true, and, if it is, perhaps they shouldn?t be spending that much each month if it?s discretionary).



I for one usually ?carry a balance? of over $4000 on credit cards but it is paid off every month. However, if you run my credit report at any one time, there will be that balance. Doesn?t prevent me from having a credit score over 800, but perhaps I could get another 10-20 points if I didn?t use my cards for a month or two.

</blockquote>


I agree, I have balances of over 10K in some months due to business travel expenses but they are reimbursed back to me and I pay off all the cards every month. Not only that we put as many bills on recurring credit card charges as possible, satellite, cox cable, telephones, cellphones, etc, so there will always be a balance of some sort.
 
[quote author="IrvineRealtor" date=1211343461]Anybody do credit repair, out there? I'd like to know where I can find the real scoop on how the three bureaus spit out their numbers.</blockquote>


IR, here's a forums with tons of info <a href="http://ficoforums.myfico.com/fico/board?board.id=ficoscoring">myFICO</a>
 
<blockquote>If you are a hard working associate at a top law firm (about 5-10 such firms in OC), you can be 1-5 years out of law school and make $200k. If you are married to another attorney, you can push half a million in household income by your late 20s. </blockquote>


I work at a top law firm in OC. As a third year associate I should make about $220k this year. My wife should make about $110k at her nonlaw job. We were penniless and in school when the housing bubble was growing. We are now in our very early thirties and have only been making six figures for two years so we don?t have enough liquid funds to plop down on an expensive (depreciating) home. Even if we did, and after considering the tax savings, I think an $800k + mortgage is quite a bit out of our price range. I don?t think we would be able to save much cash on a monthly basis. We could probably do it, but it wouldn?t be comfortable. I think a $700K (with 20% down) home is reasonable for us.



Many of my coworkers are saddled with $200k + of educational debt. Big law firm lawyers make a lot of money but typically are not extremely wealthy. The only associates I know that live in $1m + houses, bought before the bubble.
 
[quote author="Irvine Allergy Dr" date=1211342802]Not sure why you're dissing the Bay Area Ipo, the four years I spent up there I found plenty to do and the area is beyond beautiful.</blockquote>


I didn't diss the Bay Area at all doc. I think you are referring to CK's comment. Personally I rather like the SV and the Bay Area... If I could afford to live anywhere I wanted in CA, it would probably be Marin county.
 
[quote author="three sheets" date=1211345812]<blockquote>If you are a hard working associate at a top law firm (about 5-10 such firms in OC), you can be 1-5 years out of law school and make $200k. If you are married to another attorney, you can push half a million in household income by your late 20s. </blockquote>


I work at a top law firm in OC. As a third year associate I should make about $220k this year. My wife should make about $110k at her nonlaw job. We were penniless and in school when the housing bubble was growing. We are now in our very early thirties and have only been making six figures for two years so we don?t have enough liquid funds to plop down on an expensive (depreciating) home. Even if we did, and after considering the tax savings, I think an $800k + mortgage is quite a bit out of our price range. I don?t think we would be able to save much cash on a monthly basis. We could probably do it, but it wouldn?t be comfortable. I think a $700K (with 20% down) home is reasonable for us.



Many of my coworkers are saddled with $200k + of educational debt. Big law firm lawyers make a lot of money but typically are not extremely wealthy. The only associates I know that live in $1m + houses, bought before the bubble.</blockquote>


Three sheets, unless you have huge school loans, I think you can comfortably "afford" an 800k mortgage on your salary as long as you save up for the 20% down. Caveat is that you feel fairly secure in your job.



330K at 40% tax is 16.5K/month. Carry cost on an 800k loan less deductions(should be significant for you) will be around 4-5K roughly. I think some people are intimidated by the absolute "size" of prices these days, but when you crunch the numbers, a mill house isn't a big deal for someone with your income. Not only that, remember that your carry costs will be relatively fixed while your income should continue to increase. In 5-10 years, your carry costs will be nothing compared to your income.
 
Yeah, that was me dissin it up there. Don't get me wrong, its a nice place --- and if for some reason I could not live in So Cal, the Bay would be my 2nd choice.



That said, IMO (and opinions are like a$$holes, everyone's got one) The City is definitely an adult playground --- kind of like living in a Sex in the City episode. Not for family people. The South Bay is more family oriented, but there is not that much for families to do, besides go out to eat (there are a lot of good Asian resturants) and go shopping at Valley Fair Mall. Great America was the only amusement park, and that was <em>nothing</em> like having a season pass to all the options down here. The beach is very far and when you get there you have to deal with the Santa Cruz crowd. The weather is marginal for a good part of the year. And I didn't vibe real well with all those engineering types, being a Finance guy. And those H1B Visa guys drive like sh*t.



But like I said, just my opinion. Mostly I was just looking to get a dig in at somebody who seems to think all us cultureless OC dwellers are one step off the bread and cheese line.
 
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