Re: How do people afford houses in places like NY, Cali, and other expensive areas?
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.
we sppend more than 50% on our house payment.. but then again its not all going down the drain like a rental house..