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This is exactly my point though. If you look at averages, a jumbo home owner in the US is considered wealthy — but only if you ignore their local market. Like i

by gdubs 7y ago

This is exactly my point though. If you look at averages, a jumbo home owner in the US is considered wealthy — but only if you ignore their local market. Like in the Bay Area where you could earn $100k a year and still be considered “low income”. These people may be huge earners compared to the average American. It doesn’t mean they’re living the lavish lifestyles of the rich and famous. A lot of them are living paycheck-to-paycheck. Markets are relative. Similarly, the average American making over $40k a year will not consider themselves the 1%, but to the average citizen of the world they are.

codingdave 7y ago
If people are choosing to live in the Bay Area and spend all their money on COL expenses, that does not mean they are not wealthy. It just means they are choosing to spend all their wealth to stay there. Believe me, those of us who live a state or two east of there see plenty of people who have left after a few years of paying on those jumbo loans, and the equity from those homes sets them up quite nicely in another place. People who own homes in the Bay Area do not have massive disposable income. But they do have wealth.
- asdkhadsj 7y ago
  I feel like everyone is talking past each other. Or perhaps the definition of wealth is failing this discussion. Telling a family struggling to make ends meet that they are wealthy seems of little value. Depending on the scenario, they could be one job loss away from having nothing just like one of your families a state or two east. Now that same family, income and house with a paid off mortgage is in an entirely different situation. The difference is the wealth they accrued in paying down their mortgage. They claimed value in doing so. But merely having a massive mortgage in the Bay Area does not _inherently_ equate to wealth.
- nostrademons 7y ago
  As long as they have a supply of buyers for those houses. Article is suggesting that new buyers won't be able to get jumbo mortgages. If people can't borrow $2M for a house anymore the sale price of houses is going to take a big hit.
asdkhadsj 7y ago
To agree with you, It's even more complex than even you outline, too. Wealth is, imo, a relative profit and cost of living expense calculation, regardless of how much you make. Ultimately it doesn't matter where you live or how much you make, you can be living paycheck to paycheck in almost any scenario. There are definitely subtleties, like how feasible it would be for you to reduce expenses while keeping your income the same. Life.. gets complicated.

by gdubs 7y ago

codingdave 7y ago

If people are choosing to live in the Bay Area and spend all their money on COL expenses, that does not mean they are not wealthy. It just means they are choosing to spend all their wealth to stay there. Believe me, those of us who live a state or two east of there see plenty of people who have left after a few years of paying on those jumbo loans, and the equity from those homes sets them up quite nicely in another place. People who own homes in the Bay Area do not have massive disposable income. But they do have wealth.

asdkhadsj 7y ago
I feel like everyone is talking past each other. Or perhaps the definition of wealth is failing this discussion. Telling a family struggling to make ends meet that they are wealthy seems of little value. Depending on the scenario, they could be one job loss away from having nothing just like one of your families a state or two east. Now that same family, income and house with a paid off mortgage is in an entirely different situation. The difference is the wealth they accrued in paying down their mortgage. They claimed value in doing so. But merely having a massive mortgage in the Bay Area does not _inherently_ equate to wealth.
nostrademons 7y ago
As long as they have a supply of buyers for those houses. Article is suggesting that new buyers won't be able to get jumbo mortgages. If people can't borrow $2M for a house anymore the sale price of houses is going to take a big hit.

asdkhadsj 7y ago

To agree with you, It's even more complex than even you outline, too. Wealth is, imo, a relative profit and cost of living expense calculation, regardless of how much you make. Ultimately it doesn't matter where you live or how much you make, you can be living paycheck to paycheck in almost any scenario. There are definitely subtleties, like how feasible it would be for you to reduce expenses while keeping your income the same. Life.. gets complicated.