Most of you that read/post on this site live in the San Diego market, I do not – however enjoy reading the post.
In the OC register this Sunday section- Marketplace – a columist once again addressed the position of the media in reporting the housing market – and ownership. The article – Owners Divided – compared census data showing 28% of all homeowners pay 35% or more of income on housing cost- up 23% from 2000.
DUH! It went on to state that home owners earning less than 75k were paying a big share of their income for home ownership.and in the same breath – that most home owners earn more and pay a smaller share for housing – talk about Flip-flop.
What burns me to the core – is the fact that unless you can slap down a BIG down payment (and try to save that kind of money today) in this market – there is no way a family earning 75k can afford a 600k home -at less than 35% of their income – that my friends is FUZZY MATH. The article went on to state that 15% of ownership by age – was 15 to 24? Must be a typo – How can 15 year old own a 600k home and earn 75k. Now thats quality news.
Lets all get real, most homeowners who have purchased in the last 3 years – unless they put down a BIG down payment – are at 35% to 50% of income. Now if the household is a 2 or 3 income household – diffenent story. What really gets me,later in the article – they admit they stopped tracking the census at 35% – so we will never really know the REAL story.
So back to the message – I guess they (media) will continue to preach it’s “ok to pay”, and I guess we (average joes’) will just have to listen longer.
After all I guess we just don’t get it….
Remember when VALUE was what the person who is the BUYER considered it WORTHY.
Maybe you could ‘afford’ that home if you made 75k and then did your taxes like Richard Hatch and kept it all.
Just the interest alone on $600,000 at 5% would be $30,000 a year, and the most you could take home from $75,000 in CA would be maybe $50,000 (I think I’m being generous there). That only leaves you with $20,000 or $1600 a month. So that’s paying about 60% of your income to the house and leaving you $1600 a month for:
Principal payments (if you have any yet, they’d be $1600 a month if spread out over 30 years), utilities, home insurance, car insurance, gas, food, savings (don’t really need savings though since the house will appreciate), etc.
O.K. so with my very rough interest and principal calculations alone, you’re using 100% of the after tax of $75,000.
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