How many people do you think have cash saved up?

[kev374]

Say that by the end of 2008 prices have dipped such that a 3bd/2ba 1500sqft house can be had in South OC for $400k. The amount of cash needed to reasonably afford the house would be at the very least, assuming tighter lending standards in the future:

10% down – $40,000
3 months reserves – $10,000
Furnishings/moving in expenses – $10,000
maintainence fund – $3,000
closing costs – $5,000

total cash required for $400k home: $68,000

How many first time buyers in their late 20s/early 30s, either singles or couples, do you think have $70,000 or more cash saved up? This is if prices fall 40% by 2008 (taking current for existing SFRs as $670k).

When we look at the above picture do you think even a $400k price point is sustainable?

[blahblahblah]

On this website? Probably everyone has at least this much. In the general population, a lot less. Maybe 10%? Just a guess, I have nothing to substantiate this.

[blahblahblah]

On this website? Probably everyone has at least this much. In the general population, a lot less. Maybe 10%? Just a guess, I have nothing to substantiate this.

[cr]

I agree, and tend to think that as a % more people on these boards have enough cash on hand than most consumers.

I’m in LA and can’t understand how people can spend $700,000 on a 1500sq’ house, tear it down and build a 4000sq’ one, while buying a yellow H2, BMWs for the kids, and a new Mercedes for the wife who just got new boobs and a 4ct ring, and don’t forget the granite countertops, Ethan Allen furnishings in every room, and brand new swimming pool.

Then it hits me: minimum credit card payments – Buy now pay the rest of your life.

I just don’t think most people feel cash on hand is a necessity. As down payments become a requirement again, demand will probably continue to decline.

Then there is the dynamic of college grads, arguably the prime market for first time home buyers, delaying their purcahses until they are into their 30’s or later.

Demand is going to go down for quite some time IMO. Particularly if rates go up again, and the number people that can truly a afford a house continues to dwindle.

[cr]

I agree, and tend to think that as a % more people on these boards have enough cash on hand than most consumers.

I’m in LA and can’t understand how people can spend $700,000 on a 1500sq’ house, tear it down and build a 4000sq’ one, while buying a yellow H2, BMWs for the kids, and a new Mercedes for the wife who just got new boobs and a 4ct ring, and don’t forget the granite countertops, Ethan Allen furnishings in every room, and brand new swimming pool.

Then it hits me: minimum credit card payments – Buy now pay the rest of your life.

I just don’t think most people feel cash on hand is a necessity. As down payments become a requirement again, demand will probably continue to decline.

Then there is the dynamic of college grads, arguably the prime market for first time home buyers, delaying their purcahses until they are into their 30’s or later.

Demand is going to go down for quite some time IMO. Particularly if rates go up again, and the number people that can truly a afford a house continues to dwindle.

[(former)FormerSanDiegan]

When we were first-time buyers in SD 1996, we did not have a maintenance fund (nor 5K allocated thereto), nor did we spend 10K on moving expenses and furnishings. We borrowed some friends and their pick-ups to do the moving. Net cost: about $30 in pizza and Beer.

My point is that you should ignore those two items, because (rightly or wrongly) the typical first-time buyer will ignore these as well.

[(former)FormerSanDiegan]

When we were first-time buyers in SD 1996, we did not have a maintenance fund (nor 5K allocated thereto), nor did we spend 10K on moving expenses and furnishings. We borrowed some friends and their pick-ups to do the moving. Net cost: about $30 in pizza and Beer.

My point is that you should ignore those two items, because (rightly or wrongly) the typical first-time buyer will ignore these as well.

[betting on fall]

Good point. If 95%-100% financing dries up even for people with good credit, then the pool of first time home buyers will shrink to almost zero. It will be people who can get big down payments made by Dad and Mom, or people with great jobs who have also been renting for several years.

Of course, if comps are based on prices of closed sales from 3-6 months ago, and the current sales price is 5-10% less, then there might be the illusion of less than 100% financing. That might let these no-cash down first timers buy for a little while longer.

[betting on fall]

Good point. If 95%-100% financing dries up even for people with good credit, then the pool of first time home buyers will shrink to almost zero. It will be people who can get big down payments made by Dad and Mom, or people with great jobs who have also been renting for several years.

Of course, if comps are based on prices of closed sales from 3-6 months ago, and the current sales price is 5-10% less, then there might be the illusion of less than 100% financing. That might let these no-cash down first timers buy for a little while longer.

[PD]

I bet there aren’t that many 20-somethings who have money saved up, even if they have a good job. I was shocked to discover that that a single man (no kids) I knew who was in his thirties and had been making close to 100k for at least 5 years had debt and no savings. Crazy! He should have had a ton saved up, particularly since Dad paid for his education and living expenses. His salary all went down the tubes maintaining a lifestyle beyond his means. He is not alone….

[PD]

I bet there aren’t that many 20-somethings who have money saved up, even if they have a good job. I was shocked to discover that that a single man (no kids) I knew who was in his thirties and had been making close to 100k for at least 5 years had debt and no savings. Crazy! He should have had a ton saved up, particularly since Dad paid for his education and living expenses. His salary all went down the tubes maintaining a lifestyle beyond his means. He is not alone….

[CAwireman]

Kev, isn’t this is where JG chimes in with a chart that shows Savings on the Y axis and Age along the X. Or some better way to represent it….

Sincerely yours, HiggyBaby

[CAwireman]

Kev, isn’t this is where JG chimes in with a chart that shows Savings on the Y axis and Age along the X. Or some better way to represent it….

Sincerely yours, HiggyBaby

[Anonymous]

There are very few young people in San Diego who have any cash. The only way they would have any significant amount of cash (i.e. over 100k) would be:

1. inheritance
2. bought real esate prior to 2003 and cashed out

[Anonymous]

There are very few young people in San Diego who have any cash. The only way they would have any significant amount of cash (i.e. over 100k) would be:

1. inheritance
2. bought real esate prior to 2003 and cashed out

[Author]

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