How do people afford houses in places like NY, Cali, and other expensive areas?

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I worked out the numbers, and don’t see how that is possible, unless someone pays 50% downpayment?

Let’s assume a middle class house around $400K, and the person earns between 65K - 80K.

Just mortgage on a $400K house is 2,398.20 a month (30 years @ 6.5%). This is not including insurance, tax (the biggest expense), utilities, etc. So make that $2800/month.

65K - 85K come out to ~$4000/month to 5800/month (assume a 15K/year in income tax)

So a person ends up spending around ~50% just on a house payment? And this is with good credit, people with some spots on their credit probably can’t even think about it.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

Usually there are atleast 2 working people per household so I guess between the two its affordable.

Timepass
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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

I think regardless of wheather the house is in an expensive area or not, spending about 50% of your monthly income (after taxes) on house payment sounds ok to me...well atleast that's how much I've been spending on it for past 10 years. Almost 15% of it is spent on utilities. The remaining 35% is up to you on how you manage all your other expenses.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

they get a good education and make a good living..

doh

~ ~ Bud Tameez, Jahil, Gunwar ~~
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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

we sppend more than 50% on our house payment.. but then again its not all going down the drain like a rental house..

~ ~ Bud Tameez, Jahil, Gunwar ~~
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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

And also, we get a a good amount of what we paid in mortgage interest back on our tax return.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

In California and even in state of Washington, most of the families are dual income families.

Even if it means wife working in StarBucks.

That only pays you back if you ever want to sell your house and move to a place like Texas. Otherwise its a struggle

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

That statement was true in 2001-2002. Its more like $600k now.

And I agree with the 2 income families (in most cases), and 50% being the rule of thumb for rentals and mortgages.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

Isn't it a "tax-break" in your income?

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

It is indeed a tax break to have a mortgage...yet its still very hard to be a homeowner here in NY....I really hate to think about it but I really need to go back to the work force. Hubby has a great job but one income just isnt stretching far enough here.

Ap ko pehlay bhi kaheen daikha hai!
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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

I saw average houses up North (boston, NJ, RI), and I thought there is a huge difference between these and Texas houses Most people cannot afford brand new homes, or even semi brand new. 40 year old houses are the buyer on a budget choice.

The houses seem to be poorly designed. One would think they would try to make use of all space efficiently, but that's not the case. One tiny bedroom there, 2 others over there, throw a kitchen in there and a tiny bathroom, and attach a 1 car garage with a 85% gradient driveway (impossible to climb in snow) and WOOHOO $350K house, YEAH BABY WHERE DO I SIGN!!!!!!!!!!!!!!!!!!!!!!!!11111111

Yeah the newer houses are good, but come on, were they not using their head 40 years ago? And just for comparison, houses in Texas don't even last 40 years. So pros and cons everwhere.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

TDW- supply and demand, availability of area to build.
I mean there is a reason that ppl are willing to pay more for a smaller, older place in NJ versus having a palace in montana :)

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

I noticed that there are so many VERY VERY old houses up in NJ, NY, Massach... but if you goto a old house in Texas they seem like crumbling anytime.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

Compared to paying rent (which are also high in such areas), which has no return, its better to pay mortgage (even tho they might be a bit higher). First you get to deduct mortgage interest, then you're building equity.

To the married lot out here............
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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

I made that point. Homes in Texas are only made to last 25-30 years. After that, they need major work or the residents need to lessen their expectations.

Not trying to say Texas good, and Cali, NY bad.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

Its the cold weather mang, it not only preserves humans but houses too :)

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

I forgot to put the "too" when I said "I noticed that"... so yeah, Texas houses don't last long.

[quote]
Not trying to say Texas good, and Cali, NY bad.
[/quote]
I know what you mean, no worries.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

Yes, it is a tax break. When you file taxes, the interest on mortgage goes towards deduction and you recover some of that money back.

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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

although there has been some talk about abolishing that.

yeh dil darne laga hai ab
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Re: How do people afford houses in places like NY, Cali, and other expensive areas?

This whole topic is my current source of unhappiness (sigh). I mean hubby makes 6 figures so everyone thinks we're rich kwim? Yet we live paycheck to paycheck and each year, the debt (along with interest rate) just increases. Its not even like we have a huge house or anything, I mean, 3 bedrooms and 1.5 baths, older house that needs constant upgrade/repair....So I'm going to have to re-enter the work force sadly unless I can convince hubby to high-tail it outta here...maybe once he sees how much its going to cost for oldest to have drum lessons and middle guy to have guitar on top of the swimming, tapping and horseback riding, he will finally see the lite.