10 ms·

And if they live in California 200k does not seem like a lot.

maccard 7y ago
Assuming 4k/month on rent, your leftover pay after taxes and rent is more than most senior engineers gross in the rest of the US/Western Europe. 200k is a lot.
jstummbillig 7y ago
If the context simply is "median California household income", then it should seem like a lot, because it really still is a lot. https://en.wikipedia.org/wiki/List_of_California_locations_by_income https://en.wikipedia.org/wiki/List_of_California_locations_b...
- ModernMech 7y ago
  $200k in the bay area is like $90k where I'm from. It's a decent living, but if you've got a family it's not exactly upper class.
  - ryanSrich 7y ago
    If you have a family it’s not possible. Home prices average close to $1m. You’d have to save an entire years salary PRE tax to afford the down payment. That will take years and years to save. If you’re raising a family you’ll likely need two $200k incomes to afford a house, and even then, it’ll take at least 2 years to save for the down payment. The Bay Area is for college kids and millionaires. That’s it.
    - toast0 7y ago
      20% down is a rule of thumb, and a requirement to avoid mortgage insurance, but it is not a requirement for lending. My credit union will do loans of up to 95% loan to value for $1.5M to first time homeowners or 90% loan to value up to $1.5M if you don't meet the first time qualifications. [1] I'm sure other volume lenders in the bay area have similar lending standards and programs. [1] https://www.starone.org/first-time-home-buyer/ https://www.starone.org/first-time-home-buyer/
      - ryanSrich 7y ago
        It's a financial mistake to not put 20% down. Not only are you hit with $500+/month in PMI, you have almost negative equity into the house when you buy it. Meaning if you have to sell on short notice you're either completely underwater having to pay back cap gains, or you're just breaking even. That's not an ideal situation and if you don't understand the mechanics going in, you'll find yourself in a world of hurt in an economic downturn.
        opportune 7y ago
        If you truly don't have the money for the down payment, the math of mortgage+insurance+property taxes+pmi+deductions might still work out to be in your favor over renting
        nostrademons 7y ago
        It's pretty unlikely in the Bay Area. There are fairly large distortions in the local market (because of Prop 13, zoning, wealth inequality, and small home supply in general) that usually make renting significantly more affordable than buying in general. See eg. this $1.9M home (estimated payment $9000/month, not including PMI) vs. this $4900/month equivalent: https://www.zillow.com/homedetails/910-San-Marcos-Cir-Mountain-View-CA-94043/19511543_zpid/ https://www.zillow.com/homedetails/910-San-Marcos-Cir-Mounta... https://sfbay.craigslist.org/search/pen/apa?min_bedrooms=3 https://sfbay.craigslist.org/search/pen/apa?min_bedrooms=3 (Also note that the $1.9M home is currently assessed at $170K, so the current owners are paying < 10% the roughly $15K/year in taxes that the buyer would be.)
        opportune 7y ago
        Oh, for the bay area, absolutely. I will say though, might not make the most sense to pick a house in Mountain View as an example. For a couple just starting out in the South Bay that don't have two high earners and want to own a house, Fremont/Union City/Milpitas/San Jose are more realistic. Also because of prop 13, it can make sense to lose money on buying vs. renting in the short term if you anticipate staying somewhere for a long time, because of the potentially huge property tax savings. And for basically the same reason it can make sense to lock in a mortgage payment that doesn't look like a great deal on paper in the short term.
    - nostrademons 7y ago
      It's certainly possible. You just don't own a home, you rent. It's much like NYC in that regard - you don't own a detached home in NYC regardless of how rich you are, you rent a swanky loft or penthouse. At most you might buy a condo, but you can still find plenty of hedge fund managers or Google engineers that rent their permanent residence (and sometimes have over $1M in liquid assets). In my wife's mom's group (which had a number of dual-tech-income couples working for places like Apple, Google, Palantir, Facebook, etc.), not a single parent owned their own home. I live in a small 13-unit townhome complex, and about 8 of the units have families with young kids.
      - aledalgrande 7y ago
        Very interesting how affluent people still rent. I noticed the same in LA in a high end building. What is the reason? Having more money to invest in different asset classes instead of the biggest chunk being in real estate?
        usaar333 7y ago
        Freedom to move, don't want to deal with burdens of ownership, better ROI to rent, etc.
        aledalgrande 7y ago
        Can you describe better ROI to rent more in detail?
        usaar333 7y ago
        Investment opportunity cost. I've written articles about this: https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-the-bay-area-right-now-9eff37da8d6 https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-t... https://medium.com/@usaar33/an-up-to-date-buy-or-rent-calculator-22d0bf9bbbb5 https://medium.com/@usaar33/an-up-to-date-buy-or-rent-calcul...
        nostrademons 7y ago
    - deleted 7y ago
      [deleted]
    - sdan 7y ago
      It’s possible. Family of 5 renting (around 3k) in the bay with 100k salary is certainly possible. Lived like this for over a decade. Now moving onto college.
      - ModernMech 7y ago
        I have no idea how that is possible. I made $100k in the bay area and it was just my wife and I. Here's how it worked out: $100k salary = $74k after tax, so that's about $6k per month take home. $3000 per month for rent leaves $3000 for everything else. My wife and I have $1000 per month on our student loans. So we're down to $2000 per month. Health insurance and medication was $600 a month for the two of us, down to $1400. Groceries worked out to about $600 a month as well, down to $800. We got around via muni, so that takes off $200 per month for passes, down to $600. Electricity, water, internet, and cell came to about $200 per month. That left $400 for entertainment, incidentals, and savings. And that was for 2 of us. I can't imagine 5, but kudos for doing it.
        nostrademons 7y ago
        I think your issue is SF. In most of the Bay Area (including desirable parts of the South Bay like Mountain View & Sunnyvale) you can get 1BRs for $2000/month or 2BRs for about $2600. Less in the East Bay. My family of 3 spends about $300/month on groceries - knowing the local immigrant grocers can shave off a lot on fresh produce, our vegetable bill is usually about $13/week for about 20 lbs. of fresh vegetables. We get meats at Costco for pretty cheap. I would also highly recommend paying off the student loans before having kids. My parents borrowed close to $100K to send my sister and I to college, and 4 years after graduation it was paid off completely, after saving 80% of my income and contributing it back to them. Because of compound interest, a few extra contributions towards the principal shorten the term of the loan dramatically, because it means that the loan balance shrinks, the amount of interest owed each month shrinks, and so a greater percentage of each payment is applied to the principal, which speeds up repayment even more.
        sdan 7y ago
        Haven't gone too much into financials (given that it was my dad who was making the salary). But I know it was right around 100k and rent is exactly 3k(live in Cupertino) a month. Not sure what other strings had to be pulled, but I'm glad I lived a decent life in SV. Kind of ridiculous part is we don't even qualify for financial aid for some colleges/application fees.
  - stochastic_monk 7y ago
    Off-topic: Reminds me of "Half a mil in twenties like a billion where I'm from." On-topic: that's misleading; once you pay fixed costs, you have a lot more latitude for discretionary income. Not everything is the same ratio more expensive in the Bay Area.
    - wil421 7y ago
      What happens when you have a family? A MacBook Pro costs the same but does childcare? How about a home with a reasonable commute, good schools, and is large enough for a single family?

Assuming 4k/month on rent, your leftover pay after taxes and rent is more than most senior engineers gross in the rest of the US/Western Europe. 200k is a lot.

jstummbillig 7y ago

If the context simply is "median California household income", then it should seem like a lot, because it really still is a lot. https://en.wikipedia.org/wiki/List_of_California_locations_by_income https://en.wikipedia.org/wiki/List_of_California_locations_b...

ModernMech 7y ago
$200k in the bay area is like $90k where I'm from. It's a decent living, but if you've got a family it's not exactly upper class.
- ryanSrich 7y ago
  If you have a family it’s not possible. Home prices average close to $1m. You’d have to save an entire years salary PRE tax to afford the down payment. That will take years and years to save. If you’re raising a family you’ll likely need two $200k incomes to afford a house, and even then, it’ll take at least 2 years to save for the down payment. The Bay Area is for college kids and millionaires. That’s it.
  - toast0 7y ago
    20% down is a rule of thumb, and a requirement to avoid mortgage insurance, but it is not a requirement for lending. My credit union will do loans of up to 95% loan to value for $1.5M to first time homeowners or 90% loan to value up to $1.5M if you don't meet the first time qualifications. [1] I'm sure other volume lenders in the bay area have similar lending standards and programs. [1] https://www.starone.org/first-time-home-buyer/ https://www.starone.org/first-time-home-buyer/
    - ryanSrich 7y ago
      It's a financial mistake to not put 20% down. Not only are you hit with $500+/month in PMI, you have almost negative equity into the house when you buy it. Meaning if you have to sell on short notice you're either completely underwater having to pay back cap gains, or you're just breaking even. That's not an ideal situation and if you don't understand the mechanics going in, you'll find yourself in a world of hurt in an economic downturn.
      - opportune 7y ago
        If you truly don't have the money for the down payment, the math of mortgage+insurance+property taxes+pmi+deductions might still work out to be in your favor over renting
        nostrademons 7y ago
        It's pretty unlikely in the Bay Area. There are fairly large distortions in the local market (because of Prop 13, zoning, wealth inequality, and small home supply in general) that usually make renting significantly more affordable than buying in general. See eg. this $1.9M home (estimated payment $9000/month, not including PMI) vs. this $4900/month equivalent: https://www.zillow.com/homedetails/910-San-Marcos-Cir-Mountain-View-CA-94043/19511543_zpid/ https://www.zillow.com/homedetails/910-San-Marcos-Cir-Mounta... https://sfbay.craigslist.org/search/pen/apa?min_bedrooms=3 https://sfbay.craigslist.org/search/pen/apa?min_bedrooms=3 (Also note that the $1.9M home is currently assessed at $170K, so the current owners are paying < 10% the roughly $15K/year in taxes that the buyer would be.)
        opportune 7y ago
        Oh, for the bay area, absolutely. I will say though, might not make the most sense to pick a house in Mountain View as an example. For a couple just starting out in the South Bay that don't have two high earners and want to own a house, Fremont/Union City/Milpitas/San Jose are more realistic. Also because of prop 13, it can make sense to lose money on buying vs. renting in the short term if you anticipate staying somewhere for a long time, because of the potentially huge property tax savings. And for basically the same reason it can make sense to lock in a mortgage payment that doesn't look like a great deal on paper in the short term.
  - nostrademons 7y ago
    It's certainly possible. You just don't own a home, you rent. It's much like NYC in that regard - you don't own a detached home in NYC regardless of how rich you are, you rent a swanky loft or penthouse. At most you might buy a condo, but you can still find plenty of hedge fund managers or Google engineers that rent their permanent residence (and sometimes have over $1M in liquid assets). In my wife's mom's group (which had a number of dual-tech-income couples working for places like Apple, Google, Palantir, Facebook, etc.), not a single parent owned their own home. I live in a small 13-unit townhome complex, and about 8 of the units have families with young kids.
    - aledalgrande 7y ago
      Very interesting how affluent people still rent. I noticed the same in LA in a high end building. What is the reason? Having more money to invest in different asset classes instead of the biggest chunk being in real estate?
      - usaar333 7y ago
        Freedom to move, don't want to deal with burdens of ownership, better ROI to rent, etc.
        aledalgrande 7y ago
        Can you describe better ROI to rent more in detail?
        usaar333 7y ago
        Investment opportunity cost. I've written articles about this: https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-the-bay-area-right-now-9eff37da8d6 https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-t... https://medium.com/@usaar33/an-up-to-date-buy-or-rent-calculator-22d0bf9bbbb5 https://medium.com/@usaar33/an-up-to-date-buy-or-rent-calcul...
      - nostrademons 7y ago
  - deleted 7y ago
    [deleted]
  - sdan 7y ago
    It’s possible. Family of 5 renting (around 3k) in the bay with 100k salary is certainly possible. Lived like this for over a decade. Now moving onto college.
    - ModernMech 7y ago
      I have no idea how that is possible. I made $100k in the bay area and it was just my wife and I. Here's how it worked out: $100k salary = $74k after tax, so that's about $6k per month take home. $3000 per month for rent leaves $3000 for everything else. My wife and I have $1000 per month on our student loans. So we're down to $2000 per month. Health insurance and medication was $600 a month for the two of us, down to $1400. Groceries worked out to about $600 a month as well, down to $800. We got around via muni, so that takes off $200 per month for passes, down to $600. Electricity, water, internet, and cell came to about $200 per month. That left $400 for entertainment, incidentals, and savings. And that was for 2 of us. I can't imagine 5, but kudos for doing it.
      - nostrademons 7y ago
        I think your issue is SF. In most of the Bay Area (including desirable parts of the South Bay like Mountain View & Sunnyvale) you can get 1BRs for $2000/month or 2BRs for about $2600. Less in the East Bay. My family of 3 spends about $300/month on groceries - knowing the local immigrant grocers can shave off a lot on fresh produce, our vegetable bill is usually about $13/week for about 20 lbs. of fresh vegetables. We get meats at Costco for pretty cheap. I would also highly recommend paying off the student loans before having kids. My parents borrowed close to $100K to send my sister and I to college, and 4 years after graduation it was paid off completely, after saving 80% of my income and contributing it back to them. Because of compound interest, a few extra contributions towards the principal shorten the term of the loan dramatically, because it means that the loan balance shrinks, the amount of interest owed each month shrinks, and so a greater percentage of each payment is applied to the principal, which speeds up repayment even more.
      - sdan 7y ago
        Haven't gone too much into financials (given that it was my dad who was making the salary). But I know it was right around 100k and rent is exactly 3k(live in Cupertino) a month. Not sure what other strings had to be pulled, but I'm glad I lived a decent life in SV. Kind of ridiculous part is we don't even qualify for financial aid for some colleges/application fees.
- stochastic_monk 7y ago
  Off-topic: Reminds me of "Half a mil in twenties like a billion where I'm from." On-topic: that's misleading; once you pay fixed costs, you have a lot more latitude for discretionary income. Not everything is the same ratio more expensive in the Bay Area.
  - wil421 7y ago
    What happens when you have a family? A MacBook Pro costs the same but does childcare? How about a home with a reasonable commute, good schools, and is large enough for a single family?