What the HECK?! But...but...how?!

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kawakonohirukun_IHB

kawakonohirukun_IHB

New member
Okay...this may be an old topic...but I am just dumbfounded by this and was hoping to get some insight from knowledgeable people here.



I have a gross household income of about $130,000. I cannot afford a home...that is obvious.



What is NOT obvious, is how people who look like they can't afford homes...AFFORD HOMES! I have been mulling this over and over in my mind...and everytime I drive by these homes filled with what I can only guess is 2 sets of families (or 3-4 people of the same age), with 3-4 cars...I just wanna know what and how they were able to buy so nicely into these homes?



Unless...is there a loan out there that will accept Borrower, Co-borrower, 2nd Co-borrower, 3rd Co-borrower, etc? Or maybe they are just renting and I am envious over nothing. Oddly, if that were the case I would feel much better.
 
Most of them have probably defaulted on their loans and are squatting in the house since the banks are taking forever to foreclose. I don't want to be too mean, but these irresponsible people should be kicked to the street. Then I can see Irvine SFRs drop to $250/sq ft and I'll be able to buy. :)
 
With a household income of $130,000, you can afford a pretty decent home... or are you trying to 'reach for the stars' and get something in the $700K+ range? :)
 
[quote author="Masterofdamoney" date=1214589300]With a household income of $130,000, you can afford a pretty decent home... or are you trying to 'reach for the stars' and get something in the $700K+ range? :)</blockquote>


I second that. On that income you should also be able to sock away a decent downpayment.
 
I disagree, you should be only making 85k... and you cannot afford a home. [takes off facious demeanor]

(*its an inside joke from another thread...*)



Just how much home are you looking for? I bet with 100k down you could afford a starter home or very nice condo. If you're going for a SFR. you might need to do some shopping. I'm not too far off from ya, my only issue is I have to afford it on my own (as the wife can't help right now).

Oh well, good luck

-bix
 
Its not magic. A lot of people in Irvine CAN'T afford the house they are living in. Not because they overbought, but because of appreciation. They simply bought 10 years ago in 1998 when things were around 200 a sqft. for *nice* construction.



That, and believe it or not some people are really good at saving money. I'm going to be able to afford a bigger home (err, condo) then some of my friends who pull down more cash then I do because they spend it on 60'' tvs, 1000 dollar car payments etc. I have a 500 dollar car payment and stash thousands into investments. *shrug*



I say find a few things you can afford to splurge on, and then live the rest of your life on a budget and save.
 
I think maybe I should add more detail. My household consists of two 25 yr olds.



Only within the last year have we come into this $130,000 range. Only now am I able to think of even looking, because I will have only 1 car payment, plus just utility bills etc. In the last year I have been aggressively paying everything off (I have heard both sides, you don't want to pay everything off because it will look good to have some debt below 20% balance and you do because it will look good to have as much income to debt ratio (?) but I guess that's a topic for another thread), so that I have money to put towards a savings account for a down payment. Also, to be able to afford my home monthly payments when the time comes. So basically what I think makes me unable to afford a home is my current lack of a down payment. :/ I feel like I am a step behind, because by the time I will have a good sized down payment, they might be out of my range again (I like the downward trend the blogs speak of...but I am afraid I will miss the boat while trying to build up my down payment). Does that make sense?



Then again, I could just be a whiner complainer from seeing people still buy in this market, when I'm just even beginning to think about possibly even able to maybe might accomplish it.



P.S. Does anyone have any hints on how to successfully upload an Avatar? My avatar meets the criteria (under 50KB is .jpg, and I have a .gif and I have a .png but it keeps saying it doesn't meet the criteria). I'll try it again now. Yep...same result:

The form you submitted contained the following errors

The filetype you are attempting to upload is not allowed

Images must be one of the following image types: jpg, jpeg, gif, png



File is .png and 76x95
 
[quote author="kawakonohirukun" date=1214633465]I think maybe I should add more detail. My household consists of two 25 yr olds.



Only within the last year have we come into this $130,000 range. Only now am I able to think of even looking, because I will have only 1 car payment, plus just utility bills etc. In the last year I have been aggressively paying everything off (I have heard both sides, you don't want to pay everything off because it will look good to have some debt below 20% balance and you do because it will look good to have as much income to debt ratio (?) but I guess that's a topic for another thread), so that I have money to put towards a savings account for a down payment. Also, to be able to afford my home monthly payments when the time comes. So basically what I think makes me unable to afford a home is my current lack of a down payment. :/ I feel like I am a step behind, because by the time I will have a good sized down payment, they might be out of my range again (I like the downward trend the blogs speak of...but I am afraid I will miss the boat while trying to build up my down payment). Does that make sense?



</blockquote>


When I read your post its almost as if you read my thoughts. My wife and I are 3 years older so our household income is slightly larger than yours. We are renting a 1 bedroom from the Irvine Company so our rent overhead is not that much. Needles to say our disposable or saved income is pretty big. Right now we are basically debt free with the exception of one car payment (400 a month with a 10k balance). Our FICO are 740+ and we've been itching to own since last year preferably at North Park.



Since last year we've saved enough money for a 5% down on a 600K FHA loan and some money left for appliances, closing cost and 1st month's mortgage. If we purchased a 600K house/condo right now the payment with taxes, HOA and fully amortized comes out to $4,500 a month. I have accepted the fact that we can't save 20% down by next year when the supposed to be housing market bottom comes around. So what are exactly are people like me and Mr. K (above) supposed to do?



Yes I know we should wait and buy next year but what about the big issue regarding down payment? I'm just afraid that if we wait too long and the housing market finally crashes, the people that's been waiting on the sideline with more cash reserves will get the best pick of the the available houses for sale. A big dilemma for a 1st time home buyer.



Btw, I just realized that if my wife and I make the same money now as we did back at 2002 we can probably afford a 3000sqft home at North Park and that just bugs the hell out of me - 6 years and we were priced out.
 
arctichaze: It feels good to know someone else out there is encountering some of the same frustrations and thoughts we have - yet at the same time it doesn't feel good. :/
 
[quote author="kawakonohirukun" date=1214633465]I think maybe I should add more detail. My household consists of two 25 yr olds.



Only within the last year have we come into this $130,000 range. Only now am I able to think of even looking, because I will have only 1 car payment, plus just utility bills etc. In the last year I have been aggressively paying everything off (I have heard both sides, you don't want to pay everything off because it will look good to have some debt below 20% balance and you do because it will look good to have as much income to debt ratio (?) but I guess that's a topic for another thread), so that I have money to put towards a savings account for a down payment. Also, to be able to afford my home monthly payments when the time comes. So basically what I think makes me unable to afford a home is my current lack of a down payment. :/ I feel like I am a step behind, because by the time I will have a good sized down payment, they might be out of my range again (I like the downward trend the blogs speak of...but I am afraid I will miss the boat while trying to build up my down payment). Does that make sense?



Then again, I could just be a whiner complainer from seeing people still buy in this market, when I'm just even beginning to think about possibly even able to maybe might accomplish it.



P.S. Does anyone have any hints on how to successfully upload an Avatar? My avatar meets the criteria (under 50KB is .jpg, and I have a .gif and I have a .png but it keeps saying it doesn't meet the criteria). I'll try it again now. Yep...same result:

The form you submitted contained the following errors

The filetype you are attempting to upload is not allowed

Images must be one of the following image types: jpg, jpeg, gif, png





Well now I envy you... two people only 3 years out of college with healthy careers, saving and putting off debt. When I was your age I was in a career far below my capabilities and didn't know it, nor did I have a clue about money, saving or investing. The expectation that 3 years out of college that you are supposed to be able to easily waltz into an SFR in a highly desirable neighborhood is only for the elite. That being said, you are in a truly excellent position.



It sounds as though your biggest concern is the downpayment. This was mine for a long time as well because I thought you couldn't buy a home without 20% down, so I feverishly saved and sacrificed to get $100K together over the years. This was during the ultra boom and it all felt like it was in vain because the houses kept getting further and further out of reach. You can get an FHA loan with as little as 3% down. This doesn't mean you want to only put 3% down, but know that you don't have to put 20% down. The biggest thing in your favor right now is timing. The market is only getting better and better for first time buyers. If you keep saving and wait it out, you'll be in such a great position. You, unlike most Americans, will be able to step into an SFR or decent town home in a good area without having to step stone there from a crappy condo in a so so neighborhood and at a very nice young age. You've got it made if you just keep up the paying down debt and finding more and more dollars to sock away into savings. You're only 25, not 35.





File is .png and 76x95</blockquote>
 
[quote author="arctichaze" date=1214637939]I have accepted the fact that we can't save 20% down by next year when the supposed to be housing market bottom comes around. So what are exactly are people like me and Mr. K (above) supposed to do?</blockquote>


It is debatable if you will ned 20%, but you will need at least 10% and the morr the better. You said you saved 5% already in 1 year, so you should get 10% by same time next year, which should give you a chance to buy. Add salary increase, interest, etc. you might be at 12%. Add depreciation on homes, you are at 15%, 20% who knows?



[quote author="arctichaze" date=1214637939]Yes I know we should wait and buy next year but what about the big issue regarding down payment? I'm just afraid that if we wait too long and the housing market finally crashes, the people that's been waiting on the sideline with more cash reserves will get the best pick of the the available houses for sale. A big dilemma for a 1st time home buyer. </blockquote>


Couple things here: First if the market is at its bottom in 1 year (which I doubt, it will probably 18-24 months...maybe more) there's no way homes will start appreciating then. It will be a long bottom before the system cleans itself. Don't worry, you could wait 3 years and you would be better off. However, you will want your home ASAP, you would want it today if you could get next year's price. Keep things in perspective and when ready make your decision of quality of life vs money.



[quote author="arctichaze" date=1214637939]Btw, I just realized that if my wife and I make the same money now as we did back at 2002 we can probably afford a 3000sqft home at North Park and that just bugs the hell out of me - 6 years and we were priced out.</blockquote>


Hmmm...What about people who bought in 2002, think about what they could have bought in 1996...what about those in 1990? In 25 years, you will probably make 3 times as much money as today, yet you wouldn't be able to afford a home three time as expensive.



My advice: Make a goal (have X$ saved in Y months), look at what you need to change to reach it and go for it.
 
[quote author="stepping_up" date=1214638925]It sounds as though your biggest concern is the downpayment. This was mine for a long time as well because I thought you couldn't buy a home without 20% down, so I feverishly saved and sacrificed to get $100K together over the years. This was during the ultra boom and it all felt like it was in vain because the houses kept getting further and further out of reach. You can get an FHA loan with as little as 3% down. This doesn't mean you want to only put 3% down, but know that you don't have to put 20% down. The biggest thing in your favor right now is timing. The market is only getting better and better for first time buyers. If you keep saving and wait it out, you'll be in such a great position. You, unlike most Americans, will be able to step into an SFR or decent town home in a good area without having to step stone there from a crappy condo in a so so neighborhood and at a very nice young age. You've got it made if you just keep up the paying down debt and finding more and more dollars to sock away into savings. You're only 25, not 35.

quote]



*blush* Apparently...I am not too financially savvy after all (except for the fact I am cheap :D which always pays off), my frustration lies in the fact that I thought you could ONLY get a home if you have 20% down minimum. :) I feel a little, tiny bit, better now. Phew! Now if I get to 10% and find a good opportunity, I know there are still options for us! 10% is still not chump change, not to me anyway, but it feels good to know that it wasn't the "must have 20% or nothing" situation I thought was the only way to go.



Thank you stepping_up for the eye opening insight!
 
[quote author="25w100k+" date=1214615167]That, and believe it or not some people are really good at saving money. I'm going to be able to afford a bigger home (err, condo) then some of my friends who pull down more cash then I do because they spend it on 60'' tvs, 1000 dollar car payments etc. I have a 500 dollar car payment and stash thousands into investments. *shrug*



I say find a few things you can afford to splurge on, and then live the rest of your life on a budget and save.</blockquote>


I know a lot of people who would rather spend money somewhere else than on a mortgage. Some people would rather have the latest gadgets, TVs, cars or they might prefer traveling, eating out, drinking good wine.



Live ona budget if it makes you happy to, but you have to consider the pros and cons of saving vs spending money. Neither one is good unless there's a reason for doing so. Don't save money that would give you greather benefit today than it will tomorrow, but don't spend it if it will have more value tomorrow than today.



Saving money for a downpayment is great, but if that prevents you from living a reasonable lifestyle, what good does it do?
 
[quote author="Roo" date=1214639663][quote author="25w100k+" date=1214615167]That, and believe it or not some people are really good at saving money. I'm going to be able to afford a bigger home (err, condo) then some of my friends who pull down more cash then I do because they spend it on 60'' tvs, 1000 dollar car payments etc. I have a 500 dollar car payment and stash thousands into investments. *shrug*



I say find a few things you can afford to splurge on, and then live the rest of your life on a budget and save.</blockquote>


I know a lot of people who would rather spend money somewhere else than on a mortgage. Some people would rather have the latest gadgets, TVs, cars or they might prefer traveling, eating out, drinking good wine.



Live ona budget if it makes you happy to, but you have to consider the pros and cons of saving vs spending money. Neither one is good unless there's a reason for doing so. Don't save money that would give you greather benefit today than it will tomorrow, but don't spend it if it will have more value tomorrow than today.



Saving money for a downpayment is great, but if that prevents you from living a reasonable lifestyle, what good does it do?</blockquote>


It depends... if you have a goal then sometimes it's better to make some sacrfices in order to get where you need to be. I'll be the first to say that I wouldn't make the sacrifices we did forever to just have more money in the bank. We did what others wouldn't want to in order to get to the point of having a mortgage that allows for decent wine and good wine at times, travel and funding the retirement adequately. In the big scheme of things, it wasn't a long period of time, but along the way we realized what was important to us, our lifestyle and happiness.
 
Sometime, timing and luck play pretty big roles in our life. Don't we all we wish we had bought something in 2000? But then again, aren't we all glad we didn't buy anything in 2005?

That's just the way it goes, I guess. I think prices will bottom out by 2010.



But then again, as long as you like where you live, whether you own or buy, it should be fine.



I have a friend who's planning to buy by the end of this year. He doesn't like where he's living. And he doesn't want to rent then rent again. Or rent then buy. So... he's ready to settle somewhere.
 
[quote author="hs_teacher" date=1214642234]Sometime, timing and luck play pretty big roles in our life. Don't we all we wish we had bought something in 2000? But then again, aren't we all glad we didn't buy anything in 2005?

That's just the way it goes, I guess. I think prices will bottom out by 2010.



But then again, as long as you like where you live, whether you own or buy, it should be fine.



I have a friend who's planning to buy by the end of this year. He doesn't like where he's living. And he doesn't want to rent then rent again. Or rent then buy. So... he's ready to settle somewhere.</blockquote>


this is so true. So we're lucky that we're able to buy in the next few years, vs 2005... :) i was considering renting a bigger apt but now after reading everyone's comments i felt better that i didn't have my 20% downpayment. i should be between 10-20% by next year so i think i wont move to another apartment...i will just suck it up for a bit more and then make my move then.
 
[quote author="Roo" date=1214639663]

I know a lot of people who would rather spend money somewhere else than on a mortgage. Some people would rather have the latest gadgets, TVs, cars or they might prefer traveling, eating out, drinking good wine.



Live ona budget if it makes you happy to, but you have to consider the pros and cons of saving vs spending money. Neither one is good unless there's a reason for doing so. Don't save money that would give you greather benefit today than it will tomorrow, but don't spend it if it will have more value tomorrow than today.



Saving money for a downpayment is great, but if that prevents you from living a reasonable lifestyle, what good does it do?</blockquote>


Err, I think I didn't do a good job of articulating my point. I was trying to say that its important to both live below your means and still enjoy life. I definitely live well. I eat out, I drive a new bmw, I love lagavulin, laphroaig, wine from paso robles, and wearing boss. I just don't go out every weekend or buy the most expensive car I could afford or the most expensive clothes I can afford.



Theres no point in budgeting if it makes life so miserable its not fun. But spending money just to have the 'latest and greatest' is, imo, a futile and ultimately self-defeating hobby.
 
[quote author="25w100k+" date=1214653802][quote author="Roo" date=1214639663]

I know a lot of people who would rather spend money somewhere else than on a mortgage. Some people would rather have the latest gadgets, TVs, cars or they might prefer traveling, eating out, drinking good wine.



Live ona budget if it makes you happy to, but you have to consider the pros and cons of saving vs spending money. Neither one is good unless there's a reason for doing so. Don't save money that would give you greather benefit today than it will tomorrow, but don't spend it if it will have more value tomorrow than today.



Saving money for a downpayment is great, but if that prevents you from living a reasonable lifestyle, what good does it do?</blockquote>


Err, I think I didn't do a good job of articulating my point. I was trying to say that its important to both live below your means and still enjoy life. I definitely live well. I eat out, I drive a new bmw, I love lagavulin, laphroaig, wine from paso robles, and wearing boss. I just don't go out every weekend or buy the most expensive car I could afford or the most expensive clothes I can afford.



Theres no point in budgeting if it makes life so miserable its not fun. But spending money just to have the 'latest and greatest' is, imo, a futile and ultimately self-defeating hobby.</blockquote>


Are you a zinfandel or rhone style fan?
 
[quote author="kawakonohirukun" date=1214560598]Okay...this may be an old topic...but I am just dumbfounded by this and was hoping to get some insight from knowledgeable people here.



I have a gross household income of about $130,000. I cannot afford a home...that is obvious.



What is NOT obvious, is how people who look like they can't afford homes...AFFORD HOMES! I have been mulling this over and over in my mind...and everytime I drive by these homes filled with what I can only guess is 2 sets of families (or 3-4 people of the same age), with 3-4 cars...I just wanna know what and how they were able to buy so nicely into these homes?



Unless...is there a loan out there that will accept Borrower, Co-borrower, 2nd Co-borrower, 3rd Co-borrower, etc? Or maybe they are just renting and I am envious over nothing. Oddly, if that were the case I would feel much better.</blockquote>e t



You're in a good spot, so be thankful you're better off than most. I was in your position at your age, 10 years ago, but am still in the same spot tens years later. I live and work in N. CA and am still looking to buy. I bought in 1999 but the internet bubble burst took most of my net worth so I moved to FL to find a better life. I found out while RE is cheaper there, the weather sucks. I moved back to N. CA and am saving money. I too wondered why everyone around me had Beamers, a boat, toys and a nice phat house. Well, if you read the papers and internet in the past 18 month you'll see most of these people were living a lie. They live above their means and now its time to pay the pipper. Many of the neighbors I see who lived in luxury now are getting kicked out of their homes and now have to move into apartments and sell their assets, if they have any left.



I know it's hard but be patient. You'll be in a better position than I am when you reach your mid 30s but save, research and invest in a home when the time is right. You'll be glad you waited.
 
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