6 ms·

Honest question. I just looked at Redfin and the average house costs around $1.2mm. How would anyone making $130k with 4 dependents buy a house? You seem to fit

Honest question. I just looked at Redfin and the average house costs around $1.2mm. How would anyone making $130k with 4 dependents buy a house? You seem to fit that criteria so I'll ask you. How on earth did you afford that? Because based on my simple math there just isn't enough money for it to be possible.

geggam 10y ago
You are right. You dont buy a house there. I left
grumblestumble 10y ago
My wife and I work full time, combined income is just below $400k. With a mortgage on a 3 bedroom in Oakland, daycare and after-school care costs, student loans, et al, we have never been more broke in our lives. I was living large when I was making $75k and not living in the Bay Area... now, it's beans and rice most nights, and hoping the early 2000's honda doesn't break down on the way to school.
- xaa 10y ago
  Coming from a state where even $50K/hh is quite comfortable (maybe slightly less so with a family of 4, but still beyond "rice and beans" level), I have to ask: how is this even possible? It strains credulity. OK, sure, rents/real estate are higher. A LOT higher. But other than that, you're not going to pay substantially more for a car, computer, or any other consumer good in CA than anywhere else. Gas and food are somewhat higher, although some of that, based on my visits to and relatives in CA, seems to be based on more picky eating preferences than inherent logistical problems (but you say you don't do that). It seems outlandish on its face: you know that a $400K household has to be way above the median, even in Oakland. So how is everyone else surviving?
- refurb 10y ago
  Wait a second. You and your wife pulled in ~$30K per month pre-tax, so I'll be generous and say $15K per month after tax. Any you have never been more broke? Even with kids I'd be hard pressed to call that broke unless you had ridiculous student loans. And in that case, you're screwed where ever you live.
  - gdix 10y ago
    That's what I was thinking too. If your mortgage on your 3br in Oakland is $1MM, your payment is $4,728/mo (interest portion is tax deductible but let's ignore that). Let's say your place is $1.5MM, that's another $1500 in property tax (also tax deductible but again, let's ignore). If you're bringing home $15K/mo, then you're still left with ~9K per month. That's a lot of rice and beans.
  - grumblestumble 10y ago
    yeah, ridiculous student loans (med school), and some of it is definitely unrelated to being in the bay - a lot of debt related to the substandard paid maternity/paternity leave when having a kid in the USA (shoulda got that job @ netflix in retrospect...). but kid-related costs here are also out of control, accredited infant daycare is insane, and you pretty much have to take what you can get into. same with after school care. this alone is >$3k/mo. CA self-employment tax is nothing to sneeze at either, especially if you're a contractor in an industry that makes having an s-corp unfeasible.
tezzer 10y ago
Not the OP, but based on living here for 15 years- you bought a house 8 years ago, when prices were half what they are now. Or you had an IPO/acquisition/bonus that netted you a downpayment large enough to bring the mortgage into affordable range.
thescriptkiddie 10y ago
Simple, you don't buy a house. At least, not unless you can afford to pay cash. For most people, buying a house on a mortgage is financial suicide. It only makes sense to buy a house on a mortgage if the price-to-rent ratio is under 25. Anything over that and you could rent the same house and invest the money you save and come out ahead. The price-to-rent ratio in San Francisco is 45.88, meaning that a house that rents for $1000/month costs $550,560 to buy. Your monthly payment on a $550,560 mortgage would be $2,603. Conservatively investing $1603/month in an index fund for 30 years would yield $1,122,003 after inflation. https://smartasset.com/mortgage/price-to-rent-ratio-in-us-cities https://smartasset.com/mortgage/price-to-rent-ratio-in-us-ci...
- vonmoltke 10y ago
  Something seems way off on those SmartAsset numbers. There is no way you are renting a $600k place in Manhattan or a $195k place in Dallas for only $1000/month. Ante for renting a standalone place in Manhattan right now is around $2500/month, but I can buy places for as little as $500k (if I don't care about space). Some condos in Manhattan don't even allow rentals. We just sold our house in Dallas for $220k, and I guarantee we would have been renting it out for a hell of a lot more than $1100/month if it came to that.
  - thescriptkiddie 10y ago
    I believe that their number is an mean of all properties weighted equally. So if you're only looking at single-family homes you could be paying much more, and if you're only looking at apartments you could be paying a lot less. They're also not considering factors like brokerage fees, property taxes, insurance, maintenance, or depreciation.

geggam 10y ago

You are right. You dont buy a house there. I left

grumblestumble 10y ago

My wife and I work full time, combined income is just below $400k. With a mortgage on a 3 bedroom in Oakland, daycare and after-school care costs, student loans, et al, we have never been more broke in our lives. I was living large when I was making $75k and not living in the Bay Area... now, it's beans and rice most nights, and hoping the early 2000's honda doesn't break down on the way to school.

xaa 10y ago
Coming from a state where even $50K/hh is quite comfortable (maybe slightly less so with a family of 4, but still beyond "rice and beans" level), I have to ask: how is this even possible? It strains credulity. OK, sure, rents/real estate are higher. A LOT higher. But other than that, you're not going to pay substantially more for a car, computer, or any other consumer good in CA than anywhere else. Gas and food are somewhat higher, although some of that, based on my visits to and relatives in CA, seems to be based on more picky eating preferences than inherent logistical problems (but you say you don't do that). It seems outlandish on its face: you know that a $400K household has to be way above the median, even in Oakland. So how is everyone else surviving?
refurb 10y ago
Wait a second. You and your wife pulled in ~$30K per month pre-tax, so I'll be generous and say $15K per month after tax. Any you have never been more broke? Even with kids I'd be hard pressed to call that broke unless you had ridiculous student loans. And in that case, you're screwed where ever you live.
- gdix 10y ago
  That's what I was thinking too. If your mortgage on your 3br in Oakland is $1MM, your payment is $4,728/mo (interest portion is tax deductible but let's ignore that). Let's say your place is $1.5MM, that's another $1500 in property tax (also tax deductible but again, let's ignore). If you're bringing home $15K/mo, then you're still left with ~9K per month. That's a lot of rice and beans.
- grumblestumble 10y ago
  yeah, ridiculous student loans (med school), and some of it is definitely unrelated to being in the bay - a lot of debt related to the substandard paid maternity/paternity leave when having a kid in the USA (shoulda got that job @ netflix in retrospect...). but kid-related costs here are also out of control, accredited infant daycare is insane, and you pretty much have to take what you can get into. same with after school care. this alone is >$3k/mo. CA self-employment tax is nothing to sneeze at either, especially if you're a contractor in an industry that makes having an s-corp unfeasible.

tezzer 10y ago

Not the OP, but based on living here for 15 years- you bought a house 8 years ago, when prices were half what they are now. Or you had an IPO/acquisition/bonus that netted you a downpayment large enough to bring the mortgage into affordable range.

thescriptkiddie 10y ago

Simple, you don't buy a house. At least, not unless you can afford to pay cash. For most people, buying a house on a mortgage is financial suicide. It only makes sense to buy a house on a mortgage if the price-to-rent ratio is under 25. Anything over that and you could rent the same house and invest the money you save and come out ahead. The price-to-rent ratio in San Francisco is 45.88, meaning that a house that rents for $1000/month costs $550,560 to buy. Your monthly payment on a $550,560 mortgage would be $2,603. Conservatively investing $1603/month in an index fund for 30 years would yield $1,122,003 after inflation. https://smartasset.com/mortgage/price-to-rent-ratio-in-us-cities https://smartasset.com/mortgage/price-to-rent-ratio-in-us-ci...

vonmoltke 10y ago
Something seems way off on those SmartAsset numbers. There is no way you are renting a $600k place in Manhattan or a $195k place in Dallas for only $1000/month. Ante for renting a standalone place in Manhattan right now is around $2500/month, but I can buy places for as little as $500k (if I don't care about space). Some condos in Manhattan don't even allow rentals. We just sold our house in Dallas for $220k, and I guarantee we would have been renting it out for a hell of a lot more than $1100/month if it came to that.
- thescriptkiddie 10y ago
  I believe that their number is an mean of all properties weighted equally. So if you're only looking at single-family homes you could be paying much more, and if you're only looking at apartments you could be paying a lot less. They're also not considering factors like brokerage fees, property taxes, insurance, maintenance, or depreciation.