Posted on 11/29/2006 11:52:14 AM PST by RockinRight
Low crime, reasonable commute, and good schools—who says you can't find a nice house in a suburb without paying a fortune? Buying your first house? Fleeing the city for a life within your means? Here's a novel idea: Move to a suburb where you won't break the bank or get your car broken into. A community with reasonable home prices and decent schools. A suburb close to your city job, with a lively downtown of its own. For hedge-fund managers, plastic surgeons, corporate lawyers, and other people who earn millions a year, choosing a suburb is not about affordability but convenience and, frankly, prestige. These folks don't balk at high prices or look for fixer-uppers. They can pay for prime real estate on the most exclusive streets in the fanciest towns with the best schools. If they want to live in Greenwich or Brookline or Lake Forest or Malibu, they can. Unfortunately, most people aren't so lucky. Most people have to balance their real estate aspirations with reality—compromising on acreage or culture in exchange for better schools or lower property taxes.
(Excerpt) Read more at businessweek.com ...
Eh? They included suburbs for Denver, Chicago, Cincinnati, St. Louis, Omaha, Indianapolis, and several others... How are you defining "flyover country"?
I live in a far NW suburb of Minneapolis and our new house I just had built came to 300k. And its 4bdr 2300sq. ft. A comparable house somewhere else in the country I have been told would edge close to a million. crazy :-o
"You can still get a nice row for $150,000 in some parts of south Jersey."
Right near all those $100K+ jobs too, I bet...
That would be good if you could find the land to put it on for free.
How much should we spend for a car...or groceries nanny?
You nailed it. "First home"? Fugeddaboudit!!
I'll paint a "real life" picture for you, here.
After taxes, 401k, and my portion of my medical and dental I knock down a shade over $60K. I bought a house 15 years ago in the low-end part of Concord, CA. 3br, 1 ba, 960sqares, built in 1955. Paid $132K. Today, it appraises at about $500K-$525K, but it's been as high as $560K. I owe around $160K on it (re-fi'd and put $80K into a 500sq. ft. addition about five years ago), so I've got plenty of equity. Probably too much, actually, but let's just call it an even $350K.
Anyway, I've looked seriously at relocating to chop my commute by at least 50%, so that puts me into areas where "average" homes run $650K to $750K. So, say I buy a $650K house. I get a $300K loan and decide to go with a 15 year term, so my payments are about $3200 a month. My current tax basis is about $180K, so I'm in for $2,400 a year. My new tax basis of $650K puts me in for over $8,600 a year in property taxes! That's over $700 a month. Throw in $300 a month for PG&E and I'm in for another grand.
Well, just that, right there, adds up to over $4,200 and I'm only walking in the door every month with $5,200. That leaves $1,000 for EVERYTHING else for a family of six, and I'm supposedly one of the guys that's doin' alright.
I just don't see how anyone without $250K in equity (or cash) and a net income of at least $4K a month could get into a house and remain financially solvent. Tragicaly, I think a large number have, over the last several years, taken advantage of crazy loans with terms like "five years at 1.00%" and those five years have begun to run out. I'm afraid we're going to see MANY people discovering that they cannot afford a REAL house payment, and MANY of them discovering that they need to get out from under houses that are now appraising for 5%-15% less than what they paid for them, and that's going to precipitate a considerable financal disaster for many of them.
Best of luck to you.
Have you considered leaving Kaliforniastan because of this? Or would you probably just stay in your current home instead?
Sounds to me like it's a good rule. I don't think that's unreasonable at all in most of the US. Of course this depends on income and family size, etc.
You are absolutely right. I make good money and a mortgage payment of over $600 is too much in my opinion. That puts me in a $120,000 house with some equity.
This is a real heartbreak for much of the country. I see that you have, no doubt, elected to upgrade your vehicle so that you may better ~ahem~ "enjoy" that long commute.
BTW - that's what I just did. Bought a Highlander Hybrid.
;o)
We can easily afford Northern Virginia on our two incomes.... because we bought our house 17 years ago! I do remember thinking what an adventure it was going to be to meet the mortgage on a $190,000 house.
That depends entirely on where you live. Here in the DC area, that amount would get you only a medium-size cardboard box to put on top of a steam grate, not the large size.
Herndon to Dulles airport is a tough commute? It's practically walking distance!
Perhaps he's suggesting DON'T live in the DC area unless you plan to rent...
Here's the question though:
Could you afford to buy your own house today at market price?
Heh! That name is going to stick in my mind, now. ;)
Hey, neighbor! I'm in Walnut Creek, and chose not to buy a house in the Bay Area - property taxes being one of the major factors. I bought in Las Vegas instead, where the taxes are about a quarter of what they are here. I'll only get to use my house part-time as long as I'm working in San Francisco, but I've been able to rent a condo in Walnut Creek at a rate far lower than my mortgage payments on it would be.
I just don't see how anyone without $250K in equity (or cash) and a net income of at least $4K a month could get into a house and remain financially solvent.
Yes, those are reasonable minimums for entry into the Bay Area market. As you point out, lenders have bent the rules beyond all reason, and a lot of folks are going to get trapped.
Well, yes, we could, because our incomes have kept up well; in fact, through refinancing, the mortgage payment is cheaper than when we moved in. I said to my husband, I don't know how we managed in the beginning, and he reminded me that we also had a lot of credit card debt then - since we didn't have much in savings!
Thankfully that has changed over the years through good money management. Could I buy my house today at its market value of $600,000 or so? Yes. Am I glad I don't have to? You bet.
Sounds to me like it's a good rule. I don't think that's unreasonable at all in most of the US. Of course this depends on income and family size, etc.and location. Not everyone wants to live in Ohio and no one is going to, nor can they, provide a house on the beach, a chalet in Tahoe or even a decent tract in the Central Valley for $200,000.
Fortunately (unfortunately for her/him) s/he doesn't make the rules...s/he has to learn to live by them.
In most of America, that rule works. In about 5 or 6 states it does not. For me, personally, I'll more than likely choose not to live there.
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