7 ms·

I'm fairly early in my career at a company (< 30 years old). I'm currently able to afford a house in the bay area. Its not as crazy as it sounds. 80-10-10 mort

I'm fairly early in my career at a company (< 30 years old). I'm currently able to afford a house in the bay area. Its not as crazy as it sounds. 80-10-10 mortgage on a 1mil home is only 100k down. And the monthly payments split by 2 people (aka a couple) is ~2k / person / month. That's 4k/month all in once you include the tax rebates.

optimuspaul 9y ago
100k down is probably out of reach for the vast majority of people.
- s0rce 9y ago
  Seems reasonable, the vast majority of people in cities can live in more affordable higher density housing like apartments, condos and townhouses. Everyone won't be able to afford a house in dense cities, there simply isn't enough space so they become more expensive.
danvasquez29 9y ago
saving 50k while paying student loans off is often a very daunting task. I would imagine one would generally need to have a bay-area type salary to begin with to pull off such a thing in a timeframe less than a decade, which leads to a bit of a chicken and egg problem. Or find a way to make a decent engineering level salary while having little to no housing costs. This means having parents willing to support you who also live close enough to a job that pays well, and in your scenario having a significant other who is also in the same or similar enough situation; this is not extremely rare, but it's not the norm either.
jorblumesea 9y ago
Jesus, 2k / person a month is insane. This is what people are talking about. This is not acceptable or normal. I pay $900 / person a month for a large house in Seattle that's a 15 minute commute from downtown. Even with the bay's high salaries you're not doing very well. Throw in bills and other expenses and you're looking at ~40% of your monthly income, assuming a salary of 130k. That's ~50k per person, per year, in addition to 100k down. I'm good on that, thanks.
- tytytytytytytyt 9y ago
  It's hardly insane for a house in a large metropolitan area! That's actually pretty reasonable, and lots of apartments in SF are 50% to 100% more in rent. If you look at current, or anything within maybe 5 years, house prices in Seattle I doubt you'll find much if anything within a 15 minute commute to downtown Seattle for a 900/month mortgage.
  - jorblumesea 9y ago
    Other than NYC that's close to 50% more than what you can expect in any large American city. That is not reasonable in any sense of the word. 4k / month mortgage is around a $1 mil home value.
    - PeterisP 9y ago
      Is a 50% variation in housing costs between large American cities not reasonable in any sense of the word? The per-capita GDP variation between large American cities is larger than that, and there's no good reason to expect housing to cost the same in very different cities. Some cities having housing cost at least 50% more (or double) the national average seems like something that would be the case in pretty much any country in any period of history.
    - tytytytytytytyt 9y ago
      So you're now moving the goalposts from 2k / month up to 4k / month? Nice.
  - wil421 9y ago
    Absolutely insane. Going to buy a house with a 15 minute commute by train downtown. I’m looking to spend less than ~350k for a house with around 1500sq feet and fenced in yard. I will be spending less than $2k total a month. West coast is crazy.
    - NonEUCitizen 9y ago
      Where are you buying?
turc1656 9y ago
You honestly think that paying 100k out of pocket in addition to a recurring 4k a month (48k a year!) just on housing is reasonable?
- TuringNYC 9y ago
  I lived through the 2000 tech implosion and in 1999, people though things like this were reasonable. Amongst people who think this is reasonable are probably - Dual earners hoping to bite the bullet before it gets crazier - Those with <8yrs experience who have never seen a downturn or jobs go dry - Lawyers, VCs, etc to whom this is nothing.
  - gnicholas 9y ago
    As a former lawyer, I can say that prices these days are high for lawyers and other service providers. Associates/employees are paid hourly so there's limited upside. You can buy a house on a single legal salary, but you won't have much cushion. Law firm partners are in a much better position, but you can't make equity partner (not just "income partner", which is basically a glorified title they give so you can go get more clients) until you're about 40. And nobody wants to wait that long to buy a home. Basically, "law firm partners" can be clumped together with VCs, since they both hold stakes in (hopefully) profitable businesses. But most lawyers are not partners.
- scruple 9y ago
  Reasonable? Absolutely not. Reality? Yes, unfortunately.
- gnicholas 9y ago
  The SF area is a desirable part of the country because of weather and cultural reasons (for some). So people who live here are basically buying access to good climate and desirable activities/amenities. It's also worth noting that these figures are for a mortgage, which is in part an investment. When the trend of SF area real estate is factored in, it doesn't look as crazy. If you purchase in very popular areas (Palo/Menlo/north MV, on the Peninsula), you're pretty well insulated from downside market risk. Even during the '08 recession, things mostly just flattened out for a couple years (and have since gone on a tear). People used to joke about million-dollar-fixer-uppers. Now even the fixer-uppers are well over a million...
StreamBright 9y ago
You kidding right? 100k down? 2K mortgage? These are insane numbers that very few people can afford even in the tech community.
- adventured 9y ago
  A $2,000 mortgage is not insane. A lot of people in the US can in fact afford a $2k mortgage. The median full-time job in the US pays near $45,000. The median household income is near $60,000 today. There are 127 million full-time employees in the US. Or put another way, approximately 39% of all people in the labor force (~161 million) are earning at least $45,000 per year. If you're in the top 1/3 of all full-time earners (40+ million people), you can afford a $2,000 mortgage by yourself. If 40+ million people in the US can afford something, it's not insane. Two people with a full-time job, earning only the median, can very safely afford that $2,000 mortgage. The typical full-time median income person in the US will commonly not even have a four year degree, so this isn't a stretch premise in terms of requirements. If you want to hit $4k per month (the parent's scenario), the top 1/3 of households can manage that (tens of millions of people fall under that umbrella). If you want to get into insane mortgage territory as it pertains to the median income, you're talking much higher. $8k-$10k+ style mortgages.
  - taysic 9y ago
    I’ve heard housing should ideally not cost more than 1/3 of your income to live comfortably. That would mean you’d have to make 72k after taxes a year to afford such a mortgage. I think it is crazy that two high earning people would be spending possibly 50% or more of what they make on housing.
  - alistairSH 9y ago
    The problem isn't that a $1 million home is insane (or not). Or, even a $2000/month mortgage. Yes, a well compensated professional can afford those numbers. The problem in the Bay, and increasingly in other popular areas, is there are few options for less. Especially in places like the south bay, where it isn't really urban - it's a giant suburb that lacks dense, affordable housing options. An average employee shouldn't have to live hours away from their job. Or spend 50% of their income on housing.
anonacct37 9y ago
> only 100k down I'm going to need a minute to let that sink in.
- adventured 9y ago
  The median new home sale in the US is around $310,000 for 2017 so far (the average is closer to $360,000). 20% * $310,000 = $62,000 Emphasis that that's just the median down payment for a new home in the US today. The median existing home sale is closer to $250,000 for 2017. So you're looking at a $50,000 down payment just at the median.
  - FireBeyond 9y ago
    Yeah, not so much any more. Most mortgages being underwritten today are with downpayments in the 3% to 5% region, trending down from under 10%.
spatley 9y ago
In any other city in the country, including Chicago, Seattle, Boston or others, the idea the it takes 2 earners making more than 6 figures to afford a house is madness. Couple that with requiring 100k down and I don't see any way anybody can count on raising a family anywhere near there.
hpcjoe 9y ago
What are the parameters of that $1M home? For example, I looked at comparables for my current home in a recent job hunt. My reasonable sized (1700 sq ft) house in a good area of Michigan (western Wayne county, bordering Washtenaw and Ann Arbor) is about $250k if we sold today. As far as I could tell, this would not be the down payment on a roughly similar house in comparable neighborhoods in the Bay Area. [added] When I was looking up the mortgage costs to help in my negotiations, it was looking close to $100k/year in payments (6500-8500/month). Which meant, when I looked at that in terms of after tax income, we didn't have much money for things like food, sending kid to college, cheap clothing .... stuff we might like to do like going to movies ... So, yeah ... there's that ...
- gnicholas 9y ago
  Yeah not great. The biggest issue is that for $1M you're looking at a long commute. Maybe you have a short commute to your current employer, but once you get married or change jobs, someone has to drive from SJ to SF or Pleasanton to Palo Alto.
aantix 9y ago
100K down but the average salaried offer appears to be 140K? 140K, 40% for taxes, leaves with 84K, 3K a month for housing (assuming you don't want to shack up with some rando Craigslist'er), leaves 48K. Another 20K for food and booze, and you're left with 28K.
- conanbatt 9y ago
  Its not quite 40%, and 3k buys you ample space. I had a studio for 1800 in hayes valley ,which is one of the nice areas of SF. And even in your calculation, means that after 4 years you can do the downpayment. Its not unreasonable for house prices to be where they are in that calculation.
- slezakattack 9y ago
  Where did you get 3k a month for housing?? Remember, this is an 80-10-10 loan which means you have two loans. I have a 80-10-10 loan for a roughly $900k house and the first mortgage is $3400/mth (30 year fixed at 4.15%) and the second loan is $600/mth (same but around 6% interest). $4000/mth just for the mortgages, property tax is about 12k for the year, which means you pay $5000/mth on housing. For reference, this is San Jose. So with your estimate, you're actually left with $4k saved for the year..
  - cobookman 9y ago
    After interest deductions on mortgage & property taxes a 1 mil home is ~4000$/month in `rent`. Yes you'd be paying more than 4k but you'd also be taking home more money as well.
    - slezakattack 9y ago
      I just described a home that is $100k less than the $1MM example. The property tax rate in San Jose is roughly 1.3% of the price of the home you bought it at. So for $1MM, you're looking at $13k in property taxes, not to mention a higher mortgage overall from my example. A quick mortgage calculator tells me that we're adding another $400/mth for the $1MM example. This doesn't include the second mortgage which will roughly be $100,000 loan at about 6.5% interest. So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions (in order to meet your ~$4000/mth)?? Effectively making your property taxes free for you? You're either delusional or I am going to have a very exciting tax season come next April...
0x445442 9y ago
And as long as the after tax take home pay of the 2 people is no less than 16K/month and it's a 15-20 year fixed rate mortgage then things should be fine. The back of the napkin numbers on those parameters; each of those people need to have a salary of 130-150K/year. Certainly not crazy for the well placed Apple, Google and Facebook employees but pretty much a pipe dream for the unwashed masses.
- TuringNYC 9y ago
  >> 15-20 year fixed rate mortgage forgetting property taxes?
  - 0x445442 9y ago
    The historical rule of thumb is mortage + taxes <= %25 of take home pay.
zcdziura 9y ago
How much land and house does that $1M buy you? In New Hampshire where I live, $1M buys you quite a bit: several thousand square feet of house, several acres of land, an excellent local public school system, great views... Heck, I even imagine that in the greater Boston metro area you'll get a similar bang for your buck. Your normal family property (approx 1500 - 2000 ft/sq, ~1 acre land) goes for $200k - $250k. Still expensive, but doable, especially if both parents are making decent money (>= $50k/year is what I count as decent money). Less than $30k down payment brings your monthly expenses to less than $2k/mo. Exactly half price for what I'd imagine to be similar living conditions in SF Bay (albeit Bay Area public schools are probably better than NH's, though New England has very good schools). It's clear that you're making a lot more money than I am for similar experience -- I too am less than 30 years old -- but I wonder the difference in percentage our savable income is, given the difference in costs we both pay for housing. I too wonder for others in our age and job demographic what they're able to save when living in SF Bay vs. elsewhere. The cost of living there doesn't seem worth it to me. Heck, NE I think is too expensive! Been looking to move down to Raleigh, NC after I get married, but that's neither here nor there.
- apendleton 9y ago
  I don't live in the Bay area, but I live in DC and still pay a lot for housing by national standards, and at least for me, looking at it in terms of land and square footage misses the point. Obviously people optimizing for those things won't live in SF or DC (or Manhattan or Boston, etc.). Those things will clearly be more cheaply attainable in places where land is plentiful. You pay to live in a dense urban area because you value the amenities of the city, the economic opportunities it affords, the walkable or bikable lifestyle it facilitates, etc. My commute is ten minutes on a bike, I live alone so I don't need a big house, and I have no use for a lawn. Your values are clearly different, so New Hampshire is the right call for you (or NC, or whatever). But they're not apples-to-apples comparisons.
- bunfunton 9y ago
  I grew up in New Hampshire, incredibly boring. I would never move back after moving to an exciting city. Good places to live are expensive for a reason.
irrational 9y ago
Holy cow! I thought my $1400/month mortgage was steep, that's insane.
ssully 9y ago
That is as crazy as it sounds. I am also early in my career and no one in my social circles could scrounge up 100k for a down payment or dish out 4k a month just for house payments. For reference I live in Chicago.
swendoog 9y ago
I'm really, really curious how you got your numbers. I just 'did the math' in Redfin's mortgage calculator on a $990,000 home. The total monthly cost came out to $6,495 or $3,247 per person (in a couple). That's almost exactly 1/2 of the take-home (after tax) pay of someone making $120,000 a year in California. -- Monthly expenses on a $990k house in SF -- Principal and Interest: $4,185 Property Taxes: $1,015 HOA Dues: $551 Homeowners' Insurance: $183 Mortgage Insurance: $561 1) That's far more than your $2,000 per person number 2) I'm no expert but, throwing 50% of your income at a mortgage seems foolish. So whether or not you can afford it, depends on your definition of "afford"
- dmode 9y ago
  I have a similar priced home. My mortgage payment is around $4200. Doesn't include property taxes (around $12k/yr) and Home insurance ($1200/year). Some numbers above are way too high - HOA is $551 is generally for condos. My HOA is $60/month and in my previous neighborhood, didn't even have HOA. If can do 80-10-10, many banks won't charge mortgage insurance. So the OP's numbers are actually quite close.
- cobookman 9y ago
  You are forgetting interest deduction & property tax deduction. so 900k mortgage at 4.1% interest is ~3k of interest and 1.2k of principal for first month. Now you have 1k/month of property tax, 0 HOA (i was not talking about a condo), and 180$/month of insurance. I've been quoted 80-10-10 which have 0 PMI fees. Let's be safe and assume that you're taxed at 30% at your highest level. Its likely you're being taxed at 40% though. Now doing some math.... 3k*0.7 + 1.2k + 1k+0.7+.180k = 4180$/month. Obviously there's maintenance and other costs but that's how much its actually costing you.
  - swendoog 9y ago
    Ah, fair enough. I appreciate the breakdown.
bitshiffed 9y ago
That puts you in the "out of touch" category. 100k down is unimaginable for the vast majority.
- cobookman 9y ago
  FANG will offer > 100k in RSUs over 4 years. And some people are getting 100k+ sign on bonuses. FANG companies often pay 200k+ / year total comp. Getting 100k of capital between 2 people in the bay area is doable.
jartelt 9y ago
Yes, many people in your position can indeed get that mortgage and buy your house. But, it's a really big mortgage and a lot of people don't want to take that big of a financial risk for what is likely a small, average looking home on a small lot in the Bay Area. If you really, really want that house, then sure you can make it work (and more power to you, I hope you love it)! If you value financial freedom and not being tied down by debt, then the deal is not so good.
seangrogg 9y ago
I think we just have different definitions of what constitutes "crazy".
shmerl 9y ago
That is a lot. Not everyone has that kind of income per family.
deleted 9y ago
[deleted]
matt_wulfeck 9y ago
Remember to include property taxes, roughly $800-month for a 1mil home.
- cobookman 9y ago
  That was with property tax. Unless trump gets his way, property tax is deductible from income tax.

optimuspaul 9y ago

100k down is probably out of reach for the vast majority of people.

s0rce 9y ago
Seems reasonable, the vast majority of people in cities can live in more affordable higher density housing like apartments, condos and townhouses. Everyone won't be able to afford a house in dense cities, there simply isn't enough space so they become more expensive.

danvasquez29 9y ago

saving 50k while paying student loans off is often a very daunting task. I would imagine one would generally need to have a bay-area type salary to begin with to pull off such a thing in a timeframe less than a decade, which leads to a bit of a chicken and egg problem. Or find a way to make a decent engineering level salary while having little to no housing costs. This means having parents willing to support you who also live close enough to a job that pays well, and in your scenario having a significant other who is also in the same or similar enough situation; this is not extremely rare, but it's not the norm either.

jorblumesea 9y ago

Jesus, 2k / person a month is insane. This is what people are talking about. This is not acceptable or normal. I pay $900 / person a month for a large house in Seattle that's a 15 minute commute from downtown. Even with the bay's high salaries you're not doing very well. Throw in bills and other expenses and you're looking at ~40% of your monthly income, assuming a salary of 130k. That's ~50k per person, per year, in addition to 100k down. I'm good on that, thanks.

tytytytytytytyt 9y ago
It's hardly insane for a house in a large metropolitan area! That's actually pretty reasonable, and lots of apartments in SF are 50% to 100% more in rent. If you look at current, or anything within maybe 5 years, house prices in Seattle I doubt you'll find much if anything within a 15 minute commute to downtown Seattle for a 900/month mortgage.
- jorblumesea 9y ago
  Other than NYC that's close to 50% more than what you can expect in any large American city. That is not reasonable in any sense of the word. 4k / month mortgage is around a $1 mil home value.
  - PeterisP 9y ago
    Is a 50% variation in housing costs between large American cities not reasonable in any sense of the word? The per-capita GDP variation between large American cities is larger than that, and there's no good reason to expect housing to cost the same in very different cities. Some cities having housing cost at least 50% more (or double) the national average seems like something that would be the case in pretty much any country in any period of history.
  - tytytytytytytyt 9y ago
    So you're now moving the goalposts from 2k / month up to 4k / month? Nice.
- wil421 9y ago
  Absolutely insane. Going to buy a house with a 15 minute commute by train downtown. I’m looking to spend less than ~350k for a house with around 1500sq feet and fenced in yard. I will be spending less than $2k total a month. West coast is crazy.
  - NonEUCitizen 9y ago
    Where are you buying?

turc1656 9y ago

You honestly think that paying 100k out of pocket in addition to a recurring 4k a month (48k a year!) just on housing is reasonable?

TuringNYC 9y ago
I lived through the 2000 tech implosion and in 1999, people though things like this were reasonable. Amongst people who think this is reasonable are probably - Dual earners hoping to bite the bullet before it gets crazier - Those with <8yrs experience who have never seen a downturn or jobs go dry - Lawyers, VCs, etc to whom this is nothing.
- gnicholas 9y ago
  As a former lawyer, I can say that prices these days are high for lawyers and other service providers. Associates/employees are paid hourly so there's limited upside. You can buy a house on a single legal salary, but you won't have much cushion. Law firm partners are in a much better position, but you can't make equity partner (not just "income partner", which is basically a glorified title they give so you can go get more clients) until you're about 40. And nobody wants to wait that long to buy a home. Basically, "law firm partners" can be clumped together with VCs, since they both hold stakes in (hopefully) profitable businesses. But most lawyers are not partners.
scruple 9y ago
Reasonable? Absolutely not. Reality? Yes, unfortunately.
gnicholas 9y ago
The SF area is a desirable part of the country because of weather and cultural reasons (for some). So people who live here are basically buying access to good climate and desirable activities/amenities. It's also worth noting that these figures are for a mortgage, which is in part an investment. When the trend of SF area real estate is factored in, it doesn't look as crazy. If you purchase in very popular areas (Palo/Menlo/north MV, on the Peninsula), you're pretty well insulated from downside market risk. Even during the '08 recession, things mostly just flattened out for a couple years (and have since gone on a tear). People used to joke about million-dollar-fixer-uppers. Now even the fixer-uppers are well over a million...

StreamBright 9y ago

You kidding right? 100k down? 2K mortgage? These are insane numbers that very few people can afford even in the tech community.

adventured 9y ago
A $2,000 mortgage is not insane. A lot of people in the US can in fact afford a $2k mortgage. The median full-time job in the US pays near $45,000. The median household income is near $60,000 today. There are 127 million full-time employees in the US. Or put another way, approximately 39% of all people in the labor force (~161 million) are earning at least $45,000 per year. If you're in the top 1/3 of all full-time earners (40+ million people), you can afford a $2,000 mortgage by yourself. If 40+ million people in the US can afford something, it's not insane. Two people with a full-time job, earning only the median, can very safely afford that $2,000 mortgage. The typical full-time median income person in the US will commonly not even have a four year degree, so this isn't a stretch premise in terms of requirements. If you want to hit $4k per month (the parent's scenario), the top 1/3 of households can manage that (tens of millions of people fall under that umbrella). If you want to get into insane mortgage territory as it pertains to the median income, you're talking much higher. $8k-$10k+ style mortgages.
- taysic 9y ago
  I’ve heard housing should ideally not cost more than 1/3 of your income to live comfortably. That would mean you’d have to make 72k after taxes a year to afford such a mortgage. I think it is crazy that two high earning people would be spending possibly 50% or more of what they make on housing.
- alistairSH 9y ago
  The problem isn't that a $1 million home is insane (or not). Or, even a $2000/month mortgage. Yes, a well compensated professional can afford those numbers. The problem in the Bay, and increasingly in other popular areas, is there are few options for less. Especially in places like the south bay, where it isn't really urban - it's a giant suburb that lacks dense, affordable housing options. An average employee shouldn't have to live hours away from their job. Or spend 50% of their income on housing.

anonacct37 9y ago

> only 100k down I'm going to need a minute to let that sink in.

adventured 9y ago
The median new home sale in the US is around $310,000 for 2017 so far (the average is closer to $360,000). 20% * $310,000 = $62,000 Emphasis that that's just the median down payment for a new home in the US today. The median existing home sale is closer to $250,000 for 2017. So you're looking at a $50,000 down payment just at the median.
- FireBeyond 9y ago
  Yeah, not so much any more. Most mortgages being underwritten today are with downpayments in the 3% to 5% region, trending down from under 10%.

spatley 9y ago

In any other city in the country, including Chicago, Seattle, Boston or others, the idea the it takes 2 earners making more than 6 figures to afford a house is madness. Couple that with requiring 100k down and I don't see any way anybody can count on raising a family anywhere near there.

hpcjoe 9y ago

What are the parameters of that $1M home? For example, I looked at comparables for my current home in a recent job hunt. My reasonable sized (1700 sq ft) house in a good area of Michigan (western Wayne county, bordering Washtenaw and Ann Arbor) is about $250k if we sold today. As far as I could tell, this would not be the down payment on a roughly similar house in comparable neighborhoods in the Bay Area. [added] When I was looking up the mortgage costs to help in my negotiations, it was looking close to $100k/year in payments (6500-8500/month). Which meant, when I looked at that in terms of after tax income, we didn't have much money for things like food, sending kid to college, cheap clothing .... stuff we might like to do like going to movies ... So, yeah ... there's that ...

gnicholas 9y ago
Yeah not great. The biggest issue is that for $1M you're looking at a long commute. Maybe you have a short commute to your current employer, but once you get married or change jobs, someone has to drive from SJ to SF or Pleasanton to Palo Alto.

aantix 9y ago

100K down but the average salaried offer appears to be 140K? 140K, 40% for taxes, leaves with 84K, 3K a month for housing (assuming you don't want to shack up with some rando Craigslist'er), leaves 48K. Another 20K for food and booze, and you're left with 28K.

conanbatt 9y ago
Its not quite 40%, and 3k buys you ample space. I had a studio for 1800 in hayes valley ,which is one of the nice areas of SF. And even in your calculation, means that after 4 years you can do the downpayment. Its not unreasonable for house prices to be where they are in that calculation.
slezakattack 9y ago
Where did you get 3k a month for housing?? Remember, this is an 80-10-10 loan which means you have two loans. I have a 80-10-10 loan for a roughly $900k house and the first mortgage is $3400/mth (30 year fixed at 4.15%) and the second loan is $600/mth (same but around 6% interest). $4000/mth just for the mortgages, property tax is about 12k for the year, which means you pay $5000/mth on housing. For reference, this is San Jose. So with your estimate, you're actually left with $4k saved for the year..
- cobookman 9y ago
  After interest deductions on mortgage & property taxes a 1 mil home is ~4000$/month in `rent`. Yes you'd be paying more than 4k but you'd also be taking home more money as well.
  - slezakattack 9y ago
    I just described a home that is $100k less than the $1MM example. The property tax rate in San Jose is roughly 1.3% of the price of the home you bought it at. So for $1MM, you're looking at $13k in property taxes, not to mention a higher mortgage overall from my example. A quick mortgage calculator tells me that we're adding another $400/mth for the $1MM example. This doesn't include the second mortgage which will roughly be $100,000 loan at about 6.5% interest. So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions (in order to meet your ~$4000/mth)?? Effectively making your property taxes free for you? You're either delusional or I am going to have a very exciting tax season come next April...

0x445442 9y ago

And as long as the after tax take home pay of the 2 people is no less than 16K/month and it's a 15-20 year fixed rate mortgage then things should be fine. The back of the napkin numbers on those parameters; each of those people need to have a salary of 130-150K/year. Certainly not crazy for the well placed Apple, Google and Facebook employees but pretty much a pipe dream for the unwashed masses.

TuringNYC 9y ago
>> 15-20 year fixed rate mortgage forgetting property taxes?
- 0x445442 9y ago
  The historical rule of thumb is mortage + taxes <= %25 of take home pay.

zcdziura 9y ago

How much land and house does that $1M buy you? In New Hampshire where I live, $1M buys you quite a bit: several thousand square feet of house, several acres of land, an excellent local public school system, great views... Heck, I even imagine that in the greater Boston metro area you'll get a similar bang for your buck. Your normal family property (approx 1500 - 2000 ft/sq, ~1 acre land) goes for $200k - $250k. Still expensive, but doable, especially if both parents are making decent money (>= $50k/year is what I count as decent money). Less than $30k down payment brings your monthly expenses to less than $2k/mo. Exactly half price for what I'd imagine to be similar living conditions in SF Bay (albeit Bay Area public schools are probably better than NH's, though New England has very good schools). It's clear that you're making a lot more money than I am for similar experience -- I too am less than 30 years old -- but I wonder the difference in percentage our savable income is, given the difference in costs we both pay for housing. I too wonder for others in our age and job demographic what they're able to save when living in SF Bay vs. elsewhere. The cost of living there doesn't seem worth it to me. Heck, NE I think is too expensive! Been looking to move down to Raleigh, NC after I get married, but that's neither here nor there.

apendleton 9y ago
I don't live in the Bay area, but I live in DC and still pay a lot for housing by national standards, and at least for me, looking at it in terms of land and square footage misses the point. Obviously people optimizing for those things won't live in SF or DC (or Manhattan or Boston, etc.). Those things will clearly be more cheaply attainable in places where land is plentiful. You pay to live in a dense urban area because you value the amenities of the city, the economic opportunities it affords, the walkable or bikable lifestyle it facilitates, etc. My commute is ten minutes on a bike, I live alone so I don't need a big house, and I have no use for a lawn. Your values are clearly different, so New Hampshire is the right call for you (or NC, or whatever). But they're not apples-to-apples comparisons.
bunfunton 9y ago
I grew up in New Hampshire, incredibly boring. I would never move back after moving to an exciting city. Good places to live are expensive for a reason.

irrational 9y ago

Holy cow! I thought my $1400/month mortgage was steep, that's insane.

ssully 9y ago

That is as crazy as it sounds. I am also early in my career and no one in my social circles could scrounge up 100k for a down payment or dish out 4k a month just for house payments. For reference I live in Chicago.

swendoog 9y ago

I'm really, really curious how you got your numbers. I just 'did the math' in Redfin's mortgage calculator on a $990,000 home. The total monthly cost came out to $6,495 or $3,247 per person (in a couple). That's almost exactly 1/2 of the take-home (after tax) pay of someone making $120,000 a year in California. -- Monthly expenses on a $990k house in SF -- Principal and Interest: $4,185 Property Taxes: $1,015 HOA Dues: $551 Homeowners' Insurance: $183 Mortgage Insurance: $561 1) That's far more than your $2,000 per person number 2) I'm no expert but, throwing 50% of your income at a mortgage seems foolish. So whether or not you can afford it, depends on your definition of "afford"

dmode 9y ago
I have a similar priced home. My mortgage payment is around $4200. Doesn't include property taxes (around $12k/yr) and Home insurance ($1200/year). Some numbers above are way too high - HOA is $551 is generally for condos. My HOA is $60/month and in my previous neighborhood, didn't even have HOA. If can do 80-10-10, many banks won't charge mortgage insurance. So the OP's numbers are actually quite close.
cobookman 9y ago
You are forgetting interest deduction & property tax deduction. so 900k mortgage at 4.1% interest is ~3k of interest and 1.2k of principal for first month. Now you have 1k/month of property tax, 0 HOA (i was not talking about a condo), and 180$/month of insurance. I've been quoted 80-10-10 which have 0 PMI fees. Let's be safe and assume that you're taxed at 30% at your highest level. Its likely you're being taxed at 40% though. Now doing some math.... 3k*0.7 + 1.2k + 1k+0.7+.180k = 4180$/month. Obviously there's maintenance and other costs but that's how much its actually costing you.
- swendoog 9y ago
  Ah, fair enough. I appreciate the breakdown.

bitshiffed 9y ago

That puts you in the "out of touch" category. 100k down is unimaginable for the vast majority.

cobookman 9y ago
FANG will offer > 100k in RSUs over 4 years. And some people are getting 100k+ sign on bonuses. FANG companies often pay 200k+ / year total comp. Getting 100k of capital between 2 people in the bay area is doable.

jartelt 9y ago

Yes, many people in your position can indeed get that mortgage and buy your house. But, it's a really big mortgage and a lot of people don't want to take that big of a financial risk for what is likely a small, average looking home on a small lot in the Bay Area. If you really, really want that house, then sure you can make it work (and more power to you, I hope you love it)! If you value financial freedom and not being tied down by debt, then the deal is not so good.

seangrogg 9y ago

I think we just have different definitions of what constitutes "crazy".

shmerl 9y ago

That is a lot. Not everyone has that kind of income per family.

deleted 9y ago

[deleted]

matt_wulfeck 9y ago

Remember to include property taxes, roughly $800-month for a 1mil home.

cobookman 9y ago
That was with property tax. Unless trump gets his way, property tax is deductible from income tax.