[blahblahblah]

The progressive income tax has only a very slight effect on how “hard” it is to save for those making over $200K.

No argument there, but there is a lot more at play here than just federal income tax. State tax, SS/medicare, AMT, and sales taxes all eat into the income of high earners. I’m not one of those that says that high earners should pay less tax, but I just want to point out that the numbers are quite shocking when they’re added all together. As a business owner I am perhaps more sensitive to this than others since I pay double SS/medicare as well as CA corporation tax, SD city business tax, state disability, and probably several others that I’m unable to think of at the moment.

Also, people in this group usually max out their 401Ks, so that’s another big chunk of money that’s not available for saving as a down payment.

I still stand by my point that saving a $100K down payment will be difficult for many high earners here in SD, especially those with their own businesses. Yes they can easily do it by driving older cars, living in crappy apartments, and eating top ramen. However, how many $200K/yr attorneys or salespeople are going to do that? Very few will give up their fancy apartments and Mercedes cars.

[blahblahblah]

The progressive income tax has only a very slight effect on how “hard” it is to save for those making over $200K.

No argument there, but there is a lot more at play here than just federal income tax. State tax, SS/medicare, AMT, and sales taxes all eat into the income of high earners. I’m not one of those that says that high earners should pay less tax, but I just want to point out that the numbers are quite shocking when they’re added all together. As a business owner I am perhaps more sensitive to this than others since I pay double SS/medicare as well as CA corporation tax, SD city business tax, state disability, and probably several others that I’m unable to think of at the moment.

Also, people in this group usually max out their 401Ks, so that’s another big chunk of money that’s not available for saving as a down payment.

I still stand by my point that saving a $100K down payment will be difficult for many high earners here in SD, especially those with their own businesses. Yes they can easily do it by driving older cars, living in crappy apartments, and eating top ramen. However, how many $200K/yr attorneys or salespeople are going to do that? Very few will give up their fancy apartments and Mercedes cars.

[blahblahblah]

I think relatively few people have $100K to put down on a $500K home. I suspect the ones that are doing it currently are mostly:

1) Those that have sold and are using equity from the sale.
2) Those with access to funds from the Bank of Mommy and Daddy

There are two much smaller groups that also have $100K downpayments:

1) Very frugal savers
2) Very high earners (>$200K/year)

Even those in group #2 will have a hard time saving $100K, because they pay so much in taxes. And if they have their own business they pay even more in tax (double SS/medicare) than everyone else. Plus, these folks hang out with other high earners and are likely to feel pressure to drive Mercedes and pay for country club memberships, which of course makes it harder to save up that $100K downpayment.

Ask yourself how many people are really frugal savers here in Southern California. My guess is not that many. And how many are very high earners that are able to eschew all of the trappings of the Southern California high earner lifestyle long enough to save up $100K, in spite of the heavy tax yoke around their necks? Again, I don’t think there are that many.

Now, ask yourself this — when the news is bad almost every day and unemployment is rising, for those who have saved up that $100K, do they really want to spend it all to purchase a home? Or would they feel more secure having that money in the bank. Realistically they would need more like $150K in the bank to comfortably purchase that $500K home with 20% down and make sure they still have a good emergency savings fund.

I’m sure everyone on this board will tell me that there are hundreds of thousands of people here in San Diego with these $100K downpayments just waiting to throw them down on CV homes once they drop to $550K or so. Maybe you guys are all correct and I’m mistaken.

[blahblahblah]

I think relatively few people have $100K to put down on a $500K home. I suspect the ones that are doing it currently are mostly:

1) Those that have sold and are using equity from the sale.
2) Those with access to funds from the Bank of Mommy and Daddy

There are two much smaller groups that also have $100K downpayments:

1) Very frugal savers
2) Very high earners (>$200K/year)

Even those in group #2 will have a hard time saving $100K, because they pay so much in taxes. And if they have their own business they pay even more in tax (double SS/medicare) than everyone else. Plus, these folks hang out with other high earners and are likely to feel pressure to drive Mercedes and pay for country club memberships, which of course makes it harder to save up that $100K downpayment.

Ask yourself how many people are really frugal savers here in Southern California. My guess is not that many. And how many are very high earners that are able to eschew all of the trappings of the Southern California high earner lifestyle long enough to save up $100K, in spite of the heavy tax yoke around their necks? Again, I don’t think there are that many.

Now, ask yourself this — when the news is bad almost every day and unemployment is rising, for those who have saved up that $100K, do they really want to spend it all to purchase a home? Or would they feel more secure having that money in the bank. Realistically they would need more like $150K in the bank to comfortably purchase that $500K home with 20% down and make sure they still have a good emergency savings fund.

I’m sure everyone on this board will tell me that there are hundreds of thousands of people here in San Diego with these $100K downpayments just waiting to throw them down on CV homes once they drop to $550K or so. Maybe you guys are all correct and I’m mistaken.

[blahblahblah]

I think relatively few people have $100K to put down on a $500K home. I suspect the ones that are doing it currently are mostly:

1) Those that have sold and are using equity from the sale.
2) Those with access to funds from the Bank of Mommy and Daddy

There are two much smaller groups that also have $100K downpayments:

1) Very frugal savers
2) Very high earners (>$200K/year)

Even those in group #2 will have a hard time saving $100K, because they pay so much in taxes. And if they have their own business they pay even more in tax (double SS/medicare) than everyone else. Plus, these folks hang out with other high earners and are likely to feel pressure to drive Mercedes and pay for country club memberships, which of course makes it harder to save up that $100K downpayment.

Ask yourself how many people are really frugal savers here in Southern California. My guess is not that many. And how many are very high earners that are able to eschew all of the trappings of the Southern California high earner lifestyle long enough to save up $100K, in spite of the heavy tax yoke around their necks? Again, I don’t think there are that many.

Now, ask yourself this — when the news is bad almost every day and unemployment is rising, for those who have saved up that $100K, do they really want to spend it all to purchase a home? Or would they feel more secure having that money in the bank. Realistically they would need more like $150K in the bank to comfortably purchase that $500K home with 20% down and make sure they still have a good emergency savings fund.

I’m sure everyone on this board will tell me that there are hundreds of thousands of people here in San Diego with these $100K downpayments just waiting to throw them down on CV homes once they drop to $550K or so. Maybe you guys are all correct and I’m mistaken.

[blahblahblah]

I think relatively few people have $100K to put down on a $500K home. I suspect the ones that are doing it currently are mostly:

1) Those that have sold and are using equity from the sale.
2) Those with access to funds from the Bank of Mommy and Daddy

There are two much smaller groups that also have $100K downpayments:

1) Very frugal savers
2) Very high earners (>$200K/year)

Even those in group #2 will have a hard time saving $100K, because they pay so much in taxes. And if they have their own business they pay even more in tax (double SS/medicare) than everyone else. Plus, these folks hang out with other high earners and are likely to feel pressure to drive Mercedes and pay for country club memberships, which of course makes it harder to save up that $100K downpayment.

Ask yourself how many people are really frugal savers here in Southern California. My guess is not that many. And how many are very high earners that are able to eschew all of the trappings of the Southern California high earner lifestyle long enough to save up $100K, in spite of the heavy tax yoke around their necks? Again, I don’t think there are that many.

Now, ask yourself this — when the news is bad almost every day and unemployment is rising, for those who have saved up that $100K, do they really want to spend it all to purchase a home? Or would they feel more secure having that money in the bank. Realistically they would need more like $150K in the bank to comfortably purchase that $500K home with 20% down and make sure they still have a good emergency savings fund.

I’m sure everyone on this board will tell me that there are hundreds of thousands of people here in San Diego with these $100K downpayments just waiting to throw them down on CV homes once they drop to $550K or so. Maybe you guys are all correct and I’m mistaken.

[blahblahblah]

I think relatively few people have $100K to put down on a $500K home. I suspect the ones that are doing it currently are mostly:

1) Those that have sold and are using equity from the sale.
2) Those with access to funds from the Bank of Mommy and Daddy

There are two much smaller groups that also have $100K downpayments:

1) Very frugal savers
2) Very high earners (>$200K/year)

Even those in group #2 will have a hard time saving $100K, because they pay so much in taxes. And if they have their own business they pay even more in tax (double SS/medicare) than everyone else. Plus, these folks hang out with other high earners and are likely to feel pressure to drive Mercedes and pay for country club memberships, which of course makes it harder to save up that $100K downpayment.

Ask yourself how many people are really frugal savers here in Southern California. My guess is not that many. And how many are very high earners that are able to eschew all of the trappings of the Southern California high earner lifestyle long enough to save up $100K, in spite of the heavy tax yoke around their necks? Again, I don’t think there are that many.

Now, ask yourself this — when the news is bad almost every day and unemployment is rising, for those who have saved up that $100K, do they really want to spend it all to purchase a home? Or would they feel more secure having that money in the bank. Realistically they would need more like $150K in the bank to comfortably purchase that $500K home with 20% down and make sure they still have a good emergency savings fund.

I’m sure everyone on this board will tell me that there are hundreds of thousands of people here in San Diego with these $100K downpayments just waiting to throw them down on CV homes once they drop to $550K or so. Maybe you guys are all correct and I’m mistaken.

[blahblahblah]

Since you asked there are plenty of cases where renting is cheaper than buying. Here are some examples :

1. Renting a seat on an airplane is much cheaper than buying the aircraft for all my trips.

2. Renting a car when I travel is cheaper than buying one. (Same with the hotel room, etc)

3. My tux for my Junior prom.

4. Rent for the hall where we had our wedding reception was cheaper than buying it.

5. My company’s lease (so far after 5 years) is much less expensive than purchasing a similar building.

6. I rented an RV several times. Cheaper than buying.

7. We take a boat to Catalina at least a couple times a year. Renting one is cheaper than buying.

8. U-haul truck.

9. Internet access.

10. Movies on DVD.

All of these things (with the exceptions of #8 and #5) are one-time or rare-use cases. A house is used every single day. If you wore your tux every day, would it be cheaper to rent it or buy it? What about your boat to Catalina if you sailed it every day? As for #8, there is no way to “buy” internet access forever, so that comparison doesn’t really work. And as for #5, there will be a time (after 10, 15, 20 years) where it would become cheaper to purchase that building than rent.

I’m not sure that purchasing a home should be cheaper than renting the equivalent in a nice place like SD, but I don’t think it should be significantly more expensive. I would be willing to pay $100/200 more a month for the privilege of owning an equivalent place to the one I currently rent, but unfortunately that’s still not possible.

[blahblahblah]

Since you asked there are plenty of cases where renting is cheaper than buying. Here are some examples :

1. Renting a seat on an airplane is much cheaper than buying the aircraft for all my trips.

2. Renting a car when I travel is cheaper than buying one. (Same with the hotel room, etc)

3. My tux for my Junior prom.

4. Rent for the hall where we had our wedding reception was cheaper than buying it.

5. My company’s lease (so far after 5 years) is much less expensive than purchasing a similar building.

6. I rented an RV several times. Cheaper than buying.

7. We take a boat to Catalina at least a couple times a year. Renting one is cheaper than buying.

8. U-haul truck.

9. Internet access.

10. Movies on DVD.

All of these things (with the exceptions of #8 and #5) are one-time or rare-use cases. A house is used every single day. If you wore your tux every day, would it be cheaper to rent it or buy it? What about your boat to Catalina if you sailed it every day? As for #8, there is no way to “buy” internet access forever, so that comparison doesn’t really work. And as for #5, there will be a time (after 10, 15, 20 years) where it would become cheaper to purchase that building than rent.

I’m not sure that purchasing a home should be cheaper than renting the equivalent in a nice place like SD, but I don’t think it should be significantly more expensive. I would be willing to pay $100/200 more a month for the privilege of owning an equivalent place to the one I currently rent, but unfortunately that’s still not possible.

[blahblahblah]

Since you asked there are plenty of cases where renting is cheaper than buying. Here are some examples :

1. Renting a seat on an airplane is much cheaper than buying the aircraft for all my trips.

2. Renting a car when I travel is cheaper than buying one. (Same with the hotel room, etc)

3. My tux for my Junior prom.

4. Rent for the hall where we had our wedding reception was cheaper than buying it.

5. My company’s lease (so far after 5 years) is much less expensive than purchasing a similar building.

6. I rented an RV several times. Cheaper than buying.

7. We take a boat to Catalina at least a couple times a year. Renting one is cheaper than buying.

8. U-haul truck.

9. Internet access.

10. Movies on DVD.

All of these things (with the exceptions of #8 and #5) are one-time or rare-use cases. A house is used every single day. If you wore your tux every day, would it be cheaper to rent it or buy it? What about your boat to Catalina if you sailed it every day? As for #8, there is no way to “buy” internet access forever, so that comparison doesn’t really work. And as for #5, there will be a time (after 10, 15, 20 years) where it would become cheaper to purchase that building than rent.

I’m not sure that purchasing a home should be cheaper than renting the equivalent in a nice place like SD, but I don’t think it should be significantly more expensive. I would be willing to pay $100/200 more a month for the privilege of owning an equivalent place to the one I currently rent, but unfortunately that’s still not possible.

[blahblahblah]

Since you asked there are plenty of cases where renting is cheaper than buying. Here are some examples :

1. Renting a seat on an airplane is much cheaper than buying the aircraft for all my trips.

2. Renting a car when I travel is cheaper than buying one. (Same with the hotel room, etc)

3. My tux for my Junior prom.

4. Rent for the hall where we had our wedding reception was cheaper than buying it.

5. My company’s lease (so far after 5 years) is much less expensive than purchasing a similar building.

6. I rented an RV several times. Cheaper than buying.

7. We take a boat to Catalina at least a couple times a year. Renting one is cheaper than buying.

8. U-haul truck.

9. Internet access.

10. Movies on DVD.

All of these things (with the exceptions of #8 and #5) are one-time or rare-use cases. A house is used every single day. If you wore your tux every day, would it be cheaper to rent it or buy it? What about your boat to Catalina if you sailed it every day? As for #8, there is no way to “buy” internet access forever, so that comparison doesn’t really work. And as for #5, there will be a time (after 10, 15, 20 years) where it would become cheaper to purchase that building than rent.

I’m not sure that purchasing a home should be cheaper than renting the equivalent in a nice place like SD, but I don’t think it should be significantly more expensive. I would be willing to pay $100/200 more a month for the privilege of owning an equivalent place to the one I currently rent, but unfortunately that’s still not possible.

[blahblahblah]

Since you asked there are plenty of cases where renting is cheaper than buying. Here are some examples :

1. Renting a seat on an airplane is much cheaper than buying the aircraft for all my trips.

2. Renting a car when I travel is cheaper than buying one. (Same with the hotel room, etc)

3. My tux for my Junior prom.

4. Rent for the hall where we had our wedding reception was cheaper than buying it.

5. My company’s lease (so far after 5 years) is much less expensive than purchasing a similar building.

6. I rented an RV several times. Cheaper than buying.

7. We take a boat to Catalina at least a couple times a year. Renting one is cheaper than buying.

8. U-haul truck.

9. Internet access.

10. Movies on DVD.

All of these things (with the exceptions of #8 and #5) are one-time or rare-use cases. A house is used every single day. If you wore your tux every day, would it be cheaper to rent it or buy it? What about your boat to Catalina if you sailed it every day? As for #8, there is no way to “buy” internet access forever, so that comparison doesn’t really work. And as for #5, there will be a time (after 10, 15, 20 years) where it would become cheaper to purchase that building than rent.

I’m not sure that purchasing a home should be cheaper than renting the equivalent in a nice place like SD, but I don’t think it should be significantly more expensive. I would be willing to pay $100/200 more a month for the privilege of owning an equivalent place to the one I currently rent, but unfortunately that’s still not possible.

[blahblahblah]

The listing agent said she had held 2 open houses and had the sign out there for a few weeks, nothing. If I had got to her last week I could have had it at the asking price. As soon as it hit the MLS it exploded.

Interesting. So the realtor wasted several weeks putting up signs and holding open houses rather than just listing it on the MLS the first day and getting a bunch of offers?

Just another one of those things that make you go “hmmmmm”.

The best deals are likely to go to those with inside connections. It is probably always this way in good and bad markets both.

[blahblahblah]

The listing agent said she had held 2 open houses and had the sign out there for a few weeks, nothing. If I had got to her last week I could have had it at the asking price. As soon as it hit the MLS it exploded.

Interesting. So the realtor wasted several weeks putting up signs and holding open houses rather than just listing it on the MLS the first day and getting a bunch of offers?

Just another one of those things that make you go “hmmmmm”.

The best deals are likely to go to those with inside connections. It is probably always this way in good and bad markets both.

[blahblahblah]

The listing agent said she had held 2 open houses and had the sign out there for a few weeks, nothing. If I had got to her last week I could have had it at the asking price. As soon as it hit the MLS it exploded.

Interesting. So the realtor wasted several weeks putting up signs and holding open houses rather than just listing it on the MLS the first day and getting a bunch of offers?

Just another one of those things that make you go “hmmmmm”.

The best deals are likely to go to those with inside connections. It is probably always this way in good and bad markets both.

[Author]

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