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And most people spend >40% of their income on rent & mortgage payments in The Bay. The average person with a house in The Bay probably doesn't make as much mon

And most people spend >40% of their income on rent & mortgage payments in The Bay. The average person with a house in The Bay probably doesn't make as much money as you think. They mostly have very high debt to income ratios.

tehwebguy 7y ago
Sure but someone is still running the drive-thru at every McDonald’s in the bay area.
- berbec 7y ago
  And I imagine they take a hellishly long mass transit commute
  - duskwuff 7y ago
    And there's a good chance that they rent, not own.
    - mandelbrotwurst 7y ago
      Or live with family / many roommates.
      - onlyrealcuzzo 7y ago
        And/or in section 8 housing...
  - tehwebguy 7y ago
    Doesn’t basically everyone in the bay area?
alexhutcheson 7y ago
Source? It would be surprising to me if lenders were regularly approving loans where the mortgage payment alone (not including insurance or taxes) was >=48% of monthly income. There are certainly lenders that will approve mortgages with high ratios relative to salary (due to the value of bonuses and equity comp), but the $125,000 figure is all-in income, so this isn't relevant. A 40% ratio for the $125,000 household would give you a maximum purchase price of $830,000, which would be a conforming loan in the Bay Area, not a jumbo one.
- nostrademons 7y ago
  You can check out the actual sale prices of recently-sold homes on Zillow: https://www.zillow.com/homes/recently_sold/house_type/ https://www.zillow.com/homes/recently_sold/house_type/ In the South Bay near Mountain View, there's basically no single-family homes under $1.5M, and the majority of houses go for $2M up. Many are in the $4M+ range. You can get cheaper in San Jose ($800K-ish for a run-down 2BR from the 50s) or Daly City (low millions), but most of the Peninsula and SF has a floor at a million. Most Bay Area residents just don't own homes. They rent permanently or maybe own a condo. But the context for this sub-thread is "people with a house", and basically all mortgages for single-family homes are jumbo if you're not paying in cash or putting >50% down.
  - alexhutcheson 7y ago
    Yeah my argument was that all the people who are buying those homes are significantly wealthier than the Bay Area median household.
    - bananabreakfast 7y ago
      The median Bay Area household cannot afford to buy a house, yes, but that does not mean that those buying houses are significantly wealthier. The Bay is far, far richer than you can imagine. Buying a house for $1M is firmly middle class status. True lower class people simply cannot afford to live in the Bay at all. To be in the top 1% in the Bay Area you have to make close $1M per year.
      - nickv 7y ago
        Top 1% in San Jose is $964,238 (with the average person in the top 1% making $2,732,379), so right on target. https://www.cnbc.com/2017/06/14/how-much-you-have-to-earn-to-be-in-the-top-1-percent-in-the-biggest-us-cities.html https://www.cnbc.com/2017/06/14/how-much-you-have-to-earn-to...
subsubzero 7y ago
Truth.. me and my spouse sold our old house in san jose (2016) to a couple who had < 160k in 401k combined(no other assets) and were in their mid/late 50's, their downpayment was the 90k they got from the sale of their condo, they were in construction/design(unsure of income) and had to get a 2nd loan from the bank to make the downpayment. Their total new mortgage is 5k a month(payment and prop. taxes, guessed this), I was shocked that the bank approved them given they seemed leveraged to the hilt.
- nostrademons 7y ago
  I wonder if this means a foreclosure crisis is coming. I've wondered recently how much of this house price inflation is because of cash buyers from China vs. cash buyers because they sold their stock in a unicorn vs. dual-FAANG-engineers with a mortgage vs. people who leveraged up to the hilt with 3-5% down adjustable mortgages. ChuckMcM posted county property records a couple years ago that suggested the former category isn't actually a big one. The first 3 categories are relatively insensitive to downturns. The last will get hit hard this recession. If most houses are owned by people in the last category, the effect on housing prices will be much more dramatic than if they're folks sitting on houses with no mortgage.
  - pkaye 7y ago
    A few years back I found a website where I could look up big expensive houses on the east bay area hills and it would mention who owned them. When I looked up a few of the big ones, 8 of 10 I looked at were owned by doctors.

tehwebguy 7y ago

Sure but someone is still running the drive-thru at every McDonald’s in the bay area.

berbec 7y ago
And I imagine they take a hellishly long mass transit commute
- duskwuff 7y ago
  And there's a good chance that they rent, not own.
  - mandelbrotwurst 7y ago
    Or live with family / many roommates.
    - onlyrealcuzzo 7y ago
      And/or in section 8 housing...
- tehwebguy 7y ago
  Doesn’t basically everyone in the bay area?

alexhutcheson 7y ago

Source? It would be surprising to me if lenders were regularly approving loans where the mortgage payment alone (not including insurance or taxes) was >=48% of monthly income. There are certainly lenders that will approve mortgages with high ratios relative to salary (due to the value of bonuses and equity comp), but the $125,000 figure is all-in income, so this isn't relevant. A 40% ratio for the $125,000 household would give you a maximum purchase price of $830,000, which would be a conforming loan in the Bay Area, not a jumbo one.

nostrademons 7y ago
You can check out the actual sale prices of recently-sold homes on Zillow: https://www.zillow.com/homes/recently_sold/house_type/ https://www.zillow.com/homes/recently_sold/house_type/ In the South Bay near Mountain View, there's basically no single-family homes under $1.5M, and the majority of houses go for $2M up. Many are in the $4M+ range. You can get cheaper in San Jose ($800K-ish for a run-down 2BR from the 50s) or Daly City (low millions), but most of the Peninsula and SF has a floor at a million. Most Bay Area residents just don't own homes. They rent permanently or maybe own a condo. But the context for this sub-thread is "people with a house", and basically all mortgages for single-family homes are jumbo if you're not paying in cash or putting >50% down.
- alexhutcheson 7y ago
  Yeah my argument was that all the people who are buying those homes are significantly wealthier than the Bay Area median household.
  - bananabreakfast 7y ago
    The median Bay Area household cannot afford to buy a house, yes, but that does not mean that those buying houses are significantly wealthier. The Bay is far, far richer than you can imagine. Buying a house for $1M is firmly middle class status. True lower class people simply cannot afford to live in the Bay at all. To be in the top 1% in the Bay Area you have to make close $1M per year.
    - nickv 7y ago
      Top 1% in San Jose is $964,238 (with the average person in the top 1% making $2,732,379), so right on target. https://www.cnbc.com/2017/06/14/how-much-you-have-to-earn-to-be-in-the-top-1-percent-in-the-biggest-us-cities.html https://www.cnbc.com/2017/06/14/how-much-you-have-to-earn-to...

subsubzero 7y ago

Truth.. me and my spouse sold our old house in san jose (2016) to a couple who had < 160k in 401k combined(no other assets) and were in their mid/late 50's, their downpayment was the 90k they got from the sale of their condo, they were in construction/design(unsure of income) and had to get a 2nd loan from the bank to make the downpayment. Their total new mortgage is 5k a month(payment and prop. taxes, guessed this), I was shocked that the bank approved them given they seemed leveraged to the hilt.

nostrademons 7y ago
I wonder if this means a foreclosure crisis is coming. I've wondered recently how much of this house price inflation is because of cash buyers from China vs. cash buyers because they sold their stock in a unicorn vs. dual-FAANG-engineers with a mortgage vs. people who leveraged up to the hilt with 3-5% down adjustable mortgages. ChuckMcM posted county property records a couple years ago that suggested the former category isn't actually a big one. The first 3 categories are relatively insensitive to downturns. The last will get hit hard this recession. If most houses are owned by people in the last category, the effect on housing prices will be much more dramatic than if they're folks sitting on houses with no mortgage.
- pkaye 7y ago
  A few years back I found a website where I could look up big expensive houses on the east bay area hills and it would mention who owned them. When I looked up a few of the big ones, 8 of 10 I looked at were owned by doctors.