You waited too long, now you’re priced out forever.

Actually, you’re basically thinking right. The only way the prices work is if you look at your payment based on the teaser rate of the ARM and assume you’ll be able to refi easily when the term runs out.

Wow, an American thats thinking logically, what a shock. You have laid out one of many reasons why housing IS currently NOT worth close to what it should be.

If you want a McMansion, you need to change a few bad habits that you have. First, stop saving your money. It is common knowledge that this will get you nowhere. All the successful, McMansion and Hummer owners use loans. They’re easy to get, and you don’t even need to prove your income or credit worthiness. The bad part is that you don’t even pay of your house, but you shouldn’t worry about this petty fact. You will own a home. Second, don’t worry about that down payment either, you can finance it all baby!! And finally, you need to get all emotional about buying a house, and stop doing math, that won’t help either. Make sure you find a nice high tax area too! Good luck.

You are not alone csr_sd. I am pretty much in the same boat. I have a career and a small business, my wife has two small businesses, we save as much as we can, yet we still have not been able to buy the home we want due to pricing. We are also saving as much as we can but it still seems like we are just as far behind the market as we were last year and it is super frustrating. I have submitted some lowball offers over the past year, and one very recently but none of them were accepted. All I can say is try to hang in there. I don’t think anyone will provide the spreadsheet you want because the numbers do not play out given the income you have stated above. There are however families that have two wage earners, where each of them pulls in 6 figure incomes AND they have money saved up for a nice downpayment. So for those families, it does pencil out much better.

SD Realtor

I was duped into thinking it couldn’t go much higher. We may all be fooled again this time around if rates dip under 5 percent…and stay there!

Like csr_sd, I am making low six figures and 500K is about as much as I can afford. If at some point I am able to get a house that I like for that money, I will buy it. If not, I’ll just keep renting and save the extra money for something fun. After all, happiness is not measured in square feet.

Chris Johnston

Cashman – It is unfortunate the your exit timing was not too good, but it is water under the bridge. If you study the cycles, the 10 yr cycle in RE has been the most reliable over time. It is very unlikely that a huge ramp up in price will occur now, regardless of what rates do. My studies of rates over time have not shown a dead on relationship to RE pricing, other things have been much more closely correlated, like existing home sales to name one.

Just by being in here it is clear you are doing your due diligence as far as your next buying decision goes. Keep the emotion out of it, and never do anything that does not fit your own financial comfort zone. Chasing a momentum move in any asset class is a dangerous game. Once the music stops, there are never enough chairs, so do not rely on the music like so many people have in recent years.

San Diego has always been expensive, and always will be. I bought in May 1998 in Carlsbad, and we thought prices were crazy then, even though prices were barely off the low in hindsight. Perhaps prices will continue to decline from here — the UT reports today we are now down to 2004 levels…factor in inflation and in many areas I think we are off the highs already by 20% — but don’t be surprised if you feel queasy about SD prices no matter when you get in. good luck

I feel your pain, csr_sd.

My husband and I (no kids yet), at 24, don’t have terribly well paying jobs (perhaps because we live in the Inland Empire?), but we still have a $90k household income, which I think is probably a little better than a lot of other couples our age.

I feel like we would only be able to comfortably afford a house around $300K, and even that would be stretching it. $300k will get you a tiny, run down house in a crime and gang ridden area. If you want to even live anywhere without living in fear of the roof collapsing or having drive-bys, it’ll run you at least $375-$400k.

Yet I see other young people buying these $400K homes, with a Land Rover and BMW in the driveway, and wonder how in the world they are doing it?

Is there something I’m missing? Is wanting to have a down payment, 80% LTV, 30-yr traditional mortgage with a payment that I can comfortably afford the “chump’s” way of doing things?