Who can truly afford a home in Irvine?

[IndieDev]

I've always wondered about the median household income for Irvine.  $107,546
http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL0636770.html

This figure seems extremely low.  Do they count all the UCI students who make next to nothing?  Business owners lying about income?  Even if both husband and wife made $107,546 each, that is still very low relative to home prices.  When you consider other costs such as daycare, cars, Lululemon, etc.  I wonder how any household making under 300k per year can live the "Irvine" lifestyle?

Irvine has a lot of pretenders. The term "Staycation" was created out of the Irvine lifestyle. A lot of people living in Woodbury, Northpark, and Quail Hill are barely making ends meet, living paycheck to paycheck, with an enormous amount of debt hanging over their heads.

How do I know? I've seen their "numbers", but perhaps I've said too much.

please share more indie.  is your profession something that gives you access to that information? 

Not my profession but there are individuals in my circle of friends who have access to that information, and deal with it on a daily basis. To protect their privacy, I'll just leave it at that.

I too used to believe Irvine was made up of wealthy, and well-to-do, until I saw how many are living at the absolute limit of their credit worthiness.

i never thought irvine was a pool of well to do or wealthy people as irvine has such wide range of products.  tons of apartments, condos, and smaller units to crazy expensive in shady canyon.  its really very interesting that one small suburbian city can have so much but i guess its due to irvine's sheer area size

in any case, i dont disagree that there are a lot of people who live paycheck to paycheck but i also think there are many people who can afford it.  again i point to the buying data that is published.  most of the DPs are very high so maybe these people arent the ones who use your friend's services

my brother in law was a teller at an irvine branch and tells me how he constantly would see large checking accounts.  people with 50k+ in a checking who looked like they were in their mid 20s. 

i know we spoke about the published data and i dont disagree with it.  however i ask you to think about the incomes interested in irvine today vs those living in irvine for 20+ years.

Checking accounts don't tell you that someone has a $75,000 car note, $30,000 in credit card debt, or a $650,000 mortgage. Wealth is more than a checking account. I've seen numbers from all sorts of Irvine neighborhoods. This city is a pretender paradise for the most part.

 

[IndieDev]

I think you made an excellent decision for your financial situation, and you've got a lot of disposable income to spare.

My father retired at 56, and he and my mother have been having the time of their lives for the past 12 years.  My singular career goal is to beat him by 1 year --- and retire at 55.  I'm still on track for that.  If I had went balls out and paid $900k to get in Irvine the same home I own now, I'd have probably had to work until I was 6 feet deep.  That's my motivator.  Others may be more motivated by proximity to 85C?

But here is the rub --- since we all own cars, 85C is always only 20 minutes away.  Everything is 20 minutes in So Cal, right?

I live South of the 405, so 85 degrees is already a 10-15 minute drive for me depending on the stoplights. Even when I'm at DJ Plaza, I don't go to 85 anymore. Full of UCI kids, teenagers, out of towners waiting in a 50 yard, wrap around line, and smokers spitting from the balcony onto the top of your head, no thanks. I only go to DJ Plaza to get some stuff from H-Mart, and meet with my financial adviser (who loves Bon Epi). The rest of DJ Plaza is asian kid daycare.

 

[akim997]

Many of our friends have advanced degress (and the loans to go with it) as do we...  as such, I'm convinced that you cannot reasonably purchase newer SFRs in Irvine without making at least $300K-400K per year combined.  Not even sure about that.  Some of our friends are in the medical industry (includes pharmacists, optometrists, etc.)  A pharmacist or optometrist making $120-150K per year is screwed if they have school debt of $240K+.   

 

[usctrojancpa]

Many of our friends have advanced degress (and the loans to go with it) as do we...  as such, I'm convinced that you cannot reasonably purchase newer SFRs in Irvine without making at least $300K-400K per year combined.  Not even sure about that.  Some of our friends are in the medical industry (includes pharmacists, optometrists, etc.)  A pharmacist or optometrist making $120-150K per year is screwed if they have school debt of $240K+.   

Depends on the interest rate too.  I have $45k in stafford loans fixed at 1.50% and another $50k in private MBA loans at 2.75% (Prime - 0.50%).

 

[homer_simpson]

Many of our friends have advanced degress (and the loans to go with it) as do we...  as such, I'm convinced that you cannot reasonably purchase newer SFRs in Irvine without making at least $300K-400K per year combined.  Not even sure about that.  Some of our friends are in the medical industry (includes pharmacists, optometrists, etc.)  A pharmacist or optometrist making $120-150K per year is screwed if they have school debt of $240K+. 

I agree with you. But even with $300k/year a SFR is still out of reach with an advanced degree and the loans that come with it.

My wife is an optometrist and I'm glad her loans aren't over $100k..

 

[panda]

Great post PatStar....

Seriously if I had Rich Asian Pappa Panda who is going to buy me $1M I would move to Irvine in a heartbeat! Unfortunately... if I fail, i am on my own with no wealthy Asian parents to pick me up. Being financially independent is very important to me and high cost of living in Irvine just seemed to take me much longer to reach my financial goals.

If you are working as a salary man in your 30s... Irvine, in my opinion, is a really tough place to build wealth and get ahead financially. If you are already very wealthy (networth of $3 - $5 million +) Irvine is the place to live

Disclaimer: Panda's opinion does not hold true for guys like Trojanman who runs his operation with practically 0 overhead. No Wife and no kids = fast track for financial freedom for  the T-man.

Trojanman, you should be saving atleast 50% of your income while living in Irvine. No excuse.

I too used to believe Irvine was made up of wealthy, and well-to-do, until I saw how many are living at the absolute limit of their credit worthiness.

Now that I'm gone and most people don't know me (since I regularly sanitize my posts here), I'll say that would have been us if we had decided to purchase anything *suitable* for a family in Irvine.  With a 2010 household income almost dead on $200k, we don't feel at all well off --- but certainly above the level where we felt it acceptable to settle for a condo on a motorcourt in our payment comfort range....which was $600k - $700k.  With the investment we have made in our lives, and the number of hours we work --- we felt we owed ourselves better than that.  Dammit, I wanted at least a driveway and to be able to walk all the way around my house for my efforts.  If we had tried to achieve that not-so-lofty goal in Irvine, we would have ended up exactly what Indie describes above.  Not worth it, not worth it at all.

So we moved to an area where equiv homes are priced at least $200k less, and yet the reported median income is $124k --- $20k higher than Irvine.  Huh?  I bet the TI poster who moved to Laguna Niguel could probably post very similar numbers.  Yeah, Irvine is a fine place --- but wow, if you are putting yourself in a financial hole for that address, think about your strategy.  Only do it if you can truly afford it, or are truly ok with the massive compromise.

Preaching the choir brother. I think you made an excellent decision for your financial situation, and you've got a lot of disposable income to spare. Like I said, I live on a street where a family "owns" a $1m+ home, but the father is desperately trying to unload the home now so they can move to Utah and downsize their expenses.

People can talk about FCBs, and wealthy $500k dual earners all day, I know it's not the norm in Irvine. There are a lot of pretenders, or a lot of people willing to sacrifice their quality of life to live in this crowded, cramped, tuscan stucco, paradise. Maybe it's the 85 degrees.

 

[rkp]

Many of our friends have advanced degress (and the loans to go with it) as do we...  as such, I'm convinced that you cannot reasonably purchase newer SFRs in Irvine without making at least $300K-400K per year combined.  Not even sure about that.  Some of our friends are in the medical industry (includes pharmacists, optometrists, etc.)  A pharmacist or optometrist making $120-150K per year is screwed if they have school debt of $240K+. 

i disagree completely.  the theme of current irvine buyers seems to be savings used for large DPs in their purchase.  yes people with large school debts might be in a bad spot but a married couple with just a bachelors each should be making $75K each after 5 years of college.  with $150K combined income, they should be able to set aside $50K year at least and more if they are aggressive.  5 years of that and they have over $250K towards that SFR.  if they make more, are more aggressive, and hold off on that home for a couple more years, they are well over half the purchase price.  also, remember a lot of the indian and chinese people pay for their kids undergrads so thats one less loan.

 

[freedomcm]

but what if your twin 75k earners decide to have a kid, and one of them stops earning?

even though they put down 250k on their 700k condo, how are they going to support the nut on a single, say 85k salary?

 

[rkp]

thats a good point.  i guess its just assumed that 2 people need to work these days unless one person gets significant income boost in my model

 

[ch]

but what if your twin 75k earners decide to have a kid, and one of them stops earning?

even though they put down 250k on their 700k condo, how are they going to support the nut on a single, say 85k salary?

That would hold true regardless of where you buy in OC - at least in an acceptable part of town.

 

[IndieDev]

but what if your twin 75k earners decide to have a kid, and one of them stops earning?

even though they put down 250k on their 700k condo, how are they going to support the nut on a single, say 85k salary?

And that's why a lot of people get into trouble. They buy based on a dual income, and then one person gets laid off, and now they are on short sale road.

Muppets buy as much house as they can finance, intelligent people buy as much house as they can afford.

 

[Irvinecommuter]

I hate to bring politics into this but I find it laughable how Obama wants to raise taxes on households making over 250k.  In a place like Omaha, 250k is a lot.  In Irvine, 250k is almost poverty (slight exaggeration but you get my drift).

yeah, their should be an adjustment for high cost of living areas where they raise the amount to say 300 to 350K, they can use the same information they use to determine the jumbo conforming loan of 625K

We're talking about 3% of your income that exceeds $250,000.  Also, the SSI tax ends at $106K so people making more than $106K get a break.    The average tax rate for a family making $250K or more (not counting deductions) is about 24%

Not to mention, people making $250K will likely benefit from biggest tax deduction:  Mortgage Interest Deduction.  So while a family may make $250K...that is not your taxable income...especially if you have a house.

 

[irvinehomeowner]

Not to mention, people making $250K will likely benefit from biggest tax deduction:  Mortgage Interest Deduction.  So while a family may make $250K...that is not your taxable income...especially if you have a house.

Doesn't AMT kick in at these levels?

That counters the Mortgage Interest Deduction depending on your situation.

 

[usctrojancpa]

Not to mention, people making $250K will likely benefit from biggest tax deduction:  Mortgage Interest Deduction.  So while a family may make $250K...that is not your taxable income...especially if you have a house.

Doesn't AMT kick in at these levels?

That counters the Mortgage Interest Deduction depending on your situation.

Somewhere in that area, but you have to go much higher in order to start losing the mortgage interest deduction.  What AMT will start taking away around that $250k level of AGI is the property tax deduction.

 

[qwerty]

We're talking about 3% of your income that exceeds $250,000. 

if you were already over the 250K threshold and got a 100K raise, right now they would take 33K, under the new rules i think it would be 36K, you say its only another 3K, but its another 3K on top of the 33K they just took.  i think last year we paid about 60K of federal taxes (just federal income taxes, not FICA, medicare, etc). if you told me this is the final tax increase i would see on rates then maybe i would buy in, the problem is the way we are heading the govt is going to want a bigger and bigger pie.  not being taxed on the amount over 106K right now is a reprieve, i always look forward to that time of the year when i cross that threshold so i get to save more for that elusive irvine home, before you know it, they are going to remove the cap on social security wages and tax all wages, then maybe ill quit working and use your taxes to pay for my unemployment.

 

[so_scared]

Not to mention, people making $250K will likely benefit from biggest tax deduction:  Mortgage Interest Deduction.  So while a family may make $250K...that is not your taxable income...especially if you have a house.

Doesn't AMT kick in at these levels?

That counters the Mortgage Interest Deduction depending on your situation.

Amt reverses at some point and it is better for the IRS to calculate using the normal tax code. If you make enough, even after allowing for interest deductions and alike, they still take more than the amt calc.

 

[rkp]

We're talking about 3% of your income that exceeds $250,000. 

if you were already over the 250K threshold and got a 100K raise, right now they would take 33K, under the new rules i think it would be 36K, you say its only another 3K, but its another 3K on top of the 33K they just took.  i think last year we paid about 60K of federal taxes (just federal income taxes, not FICA, medicare, etc). if you told me this is the final tax increase i would see on rates then maybe i would buy in, the problem is the way we are heading the govt is going to want a bigger and bigger pie.  not being taxed on the amount over 106K right now is a reprieve, i always look forward to that time of the year when i cross that threshold so i get to save more for that elusive irvine home, before you know it, they are going to remove the cap on social security wages and tax all wages, then maybe ill quit working and use your taxes to pay for my unemployment.

My HS history teacher used to say: if its equally unfair, then its fair.  People look at how much they are taxed and get depressed by that amount but at the end of the day, its all relative to what others are getting or doing.  Your spending power and cost of goods is in part based on what people can support so its all relative.  Whether you are taxed 90% or 0%, its applied equally to your income bracket and it really wouldnt change much for society.  The $250K earners are still better off than the $50K earners.

 

[akim997]

Effective rate for AMT payers when you start loosing your AMTI exclusion is ridiculous (+40%).  just the way the math works. 

don't be surprised if the ss limit increases in coming years. 

dont expect tax rates to drop soon.  we all bitch and moan about tax rates, but also about our country's fiscal condition.  yes, we were in better shape under clinton, but rates were also higher.. pick your poison. 

 

[Irvinecommuter]

For those who think taxes are high now:

http://politics.gather.com/viewArticle.action?articleId=281474977623449

 

[Liar Loan]

Irvine has the highest proportion of homes with a mortgage at 83%.

http://mortgage.ocregister.com/2011/09/23/1-in-3-westminster-homes-is-mortgage-free/47813/

The city with the lowest proportion of homeowners without a mortgage: Irvine, where fewer than 17% of the homes are owned free and clear, leaving the other 83% stuck paying off home loans for decades to come.

I'm all verklempt.  Talk amongst yourselves.