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Having always lived in the Bay Area, I find it hard to imagine it is tough to live on a combined income of $250k. That's at least top 10% of household incomes

Having always lived in the Bay Area, I find it hard to imagine it is tough to live on a combined income of $250k. That's at least top 10% of household incomes in the Bay Area. No, you won't get any neighborhood there is, but 80+% of places are open to you. First, $5900/month is a huge amount to spend on housing. Large houses on the peninsula rent for around the $4500 range; you only hit $5900/month for 4 bedrooms in the hottest neighborhoods of SF. Paying $5900 (after tax deductions, including property taxes) for owning a house implies a $1.3M mortgage, so maybe a $1.5M house(?) which is high-end. Houses that cost over $1000/sq foot are very rare; most are in the $600 range looking at Zillow on mid-peninsula. Also, note that owning a $1.1M house is a form of retirement savings, so you can adjust accordingly. And housing costs differences of $800k over 30 years (your Madison link vs. a $1.1M Bay Area house) is about $3300/month. You need to earn maybe $70k (before taxes) more in the Bay Area to have equal non-house income. I find it hard to believe that earning $180k in Madison combined (top 8%) is struggling. Finally, there's always the Easy Bay: great houses in great neighborhoods for $800k.

nostrademons 12y ago
Not entirely sure that owning a $1.1M home (now) is a form of retirement savings; I wouldn't be surprised if, by the time I retire in 40 years or so, Silicon Valley looks like Detroit. A bunch of parallels are there: single-industry region, large amounts of shoddily-built tract housing, and a mobile, transient worker population chasing the latest hot industry.
- usaar333 12y ago
  If you believe this, you should not buy a house in the Bay Area.
x0x0 12y ago
A home requires: pmi (possibly, often on jumbos) until 80% ltv; insurance, at $300-$350 per month per million dollars; taxes, at roughly $1k per month per million dollars; earthquake insurance, particularly if you're near a fault line; and maintenance, of which I'd budget $5k/year on a million dollar home. Maybe more for CAs housing stock. So that $6k becomes $4k for a mortgage. Using a house for retirement savings is for idiots; that's an enormous gamble on the future of CA 35 years from now. The Madison house, btw, is in a location walkable from many offices; Madison is more competent than the bay area, so while buses aren't great, the roads are very drivable in many directions. Someone with even an hour long round trip commute has a very long commute there (except, perhaps, after snowfall.) So you could probably use one car, or one commuter car and one beater car for a couple. Not two cars as you need on the peninsula or sf for a couple with kids. Not to mention that $70k doesn't capture all the other things significantly cheaper in Madison: food, daycare, and education (many Madison schools are quite good) being the most important. Many peninsula schools are quite good, but not in sf.
- usaar333 12y ago
  Cost wise, I did ignore insurance costs, but yours needs to factor mortgage interest deduction. You might be getting income taxes reduced by $2k/month. If you view it as plausible your house value will collapse, you shouldn't buy a house. If so, you'd rent and you'd be looking at much lower housing costs. With regards to cost of living: some things are much more expensive in Madison; e.g. utilities (no A/C needed in Bay Area; heating rarely needed).

nostrademons 12y ago

Not entirely sure that owning a $1.1M home (now) is a form of retirement savings; I wouldn't be surprised if, by the time I retire in 40 years or so, Silicon Valley looks like Detroit. A bunch of parallels are there: single-industry region, large amounts of shoddily-built tract housing, and a mobile, transient worker population chasing the latest hot industry.

usaar333 12y ago
If you believe this, you should not buy a house in the Bay Area.

x0x0 12y ago

A home requires: pmi (possibly, often on jumbos) until 80% ltv; insurance, at $300-$350 per month per million dollars; taxes, at roughly $1k per month per million dollars; earthquake insurance, particularly if you're near a fault line; and maintenance, of which I'd budget $5k/year on a million dollar home. Maybe more for CAs housing stock. So that $6k becomes $4k for a mortgage. Using a house for retirement savings is for idiots; that's an enormous gamble on the future of CA 35 years from now. The Madison house, btw, is in a location walkable from many offices; Madison is more competent than the bay area, so while buses aren't great, the roads are very drivable in many directions. Someone with even an hour long round trip commute has a very long commute there (except, perhaps, after snowfall.) So you could probably use one car, or one commuter car and one beater car for a couple. Not two cars as you need on the peninsula or sf for a couple with kids. Not to mention that $70k doesn't capture all the other things significantly cheaper in Madison: food, daycare, and education (many Madison schools are quite good) being the most important. Many peninsula schools are quite good, but not in sf.

usaar333 12y ago
Cost wise, I did ignore insurance costs, but yours needs to factor mortgage interest deduction. You might be getting income taxes reduced by $2k/month. If you view it as plausible your house value will collapse, you shouldn't buy a house. If so, you'd rent and you'd be looking at much lower housing costs. With regards to cost of living: some things are much more expensive in Madison; e.g. utilities (no A/C needed in Bay Area; heating rarely needed).