I know a guy who made 90k last year, wife didn’t work, has 2 kids and had a 7 year ARM interest only on a 400k balance and the market value was 675. He was able to make mortgage payments, but saved nothing else beyond a 5% 401k contribution every month. He faced rising rates down the road, a coming glut of potential sellers in his neighborhood (everyone on the street said they were ‘thinking’ of selling), and he decided to sell the end of last year.
90k is the break even point for that house and salary unless you are in his situation and you are super thrifty. Then again, he had a 7 year ARM at 5.3% which is unheard of these days.
Realistically, I would say that for someone with little (meaning even 20-30k) to put down and no previous equity, a salary of at least 100k is needed to afford an entry level house in San Diego, and that would be stretching it. I’m talking about a 15 year old, 1300 sqft. home in Vista or a condo in Sal Elijo etc.
And you’d be stretching it for the opportunity to see your property value plummet, your payments rise, and your self worth deteriorate as you realize that you are a working professional, perhaps a mid level engineering manager, making more in salary than 95% of the people out here, and yet you are broke because you are paying 700/month in mello roos to cover for the taxes that long time residents are not paying for fire departments and the right to have community lighting. Meanwhile, down the street there is a middle aged guy who bought a 2 arce spread 20 years ago for 100k, pays no taxes whatsoever, and he surfs all day long. On the rare occasion that you are home from 70 hour work weeks and you actually see him he calls you ‘dude’ and can’t stop talking about what a financial whiz he is for having the foresight to buy when he did.
