Re: How do people afford houses in places like NY, Cali, and other expensive areas?
well that 50% depends on what you make too right? if someone is making a million dollars a year and spends half of his net on mortgage, its not that he is struggling to make ends meet and pay his other bills or save enough.
yeah, We were assuming somebody making 70-100k and not including spouses income.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
..although sometimes its really not a matter of choice on how much u pay for mortgage. some cities are expensive, and the salaries are not proportionate to house prices and ppl end up spending a larger chunk of their salary on housing.
there are studies on it already on the avg %age of pay going towards mortgage in different parts of the country.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
In those expensive cities where you cannot afford to buy a house, I guess renting would be a better option for a while till you save for the down payment. But the Goldenrule is that if you plan to stay in a city for more than two years, it would be more wise to buy than rent....2 years is the magic number.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
But in those same cities the rents are just as high as a mortgage payments. A friend of mine rents a 1 bedroom condo in downtown NYC (not too far from Federal Plaza) on the 30th floor (really nice view) and he pays $3500 rent.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
But now how do people with lesser incomes afford a house? Not everyone in Cali is a Doctor or Engineer.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
But in those same cities the rents are just as high as a mortgage payments. A friend of mine rents a 1 bedroom condo in downtown NYC (not too far from Federal Plaza) on the 30th floor (really nice view) and he pays $3500 rent.
There again...the magic number is two years, if you plan to live in a city for more than two years........Buying a home is better than renting....otherwise don't even bother to buy.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
well that 50% depends on what you make too right? if someone is making a million dollars a year and spends half of his net on mortgage, its not that he is struggling to make ends meet and pay his other bills or save enough.
Those making millions and living in million $ houses would have other expenses proportionate to thier living standards. So their expense breakdown will be same as lower class people.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
But now how do people with lesser incomes afford a house? Not everyone in Cali is a Doctor or Engineer.
That's the reason, ppl with lesser income spend their entire lives just to afford a decent size house.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
There again...the magic number is two years, if you plan to live in a city for more than two years........Buying a home is better than renting....otherwise don't even bother to buy.
Its all a personal decision. Buying a house/condo is like getting married, requiring commitment. :)
A lot of young people in those cities just wanna have the freedom to fly around. The friend I was talking about is a research analyst (and maybe not that young, and not that poor) but he tells me, "who knows where I'll be tomorrow".
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
Flying around is good, but once you have kids, you got to buy a place and settle down so that your kids can go to a good public school.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
Those making millions and living in million $ houses would have other expenses proportionate to thier living standards. So their expense breakdown will be same as lower class people.
true to some extent, but how much more will you spend on fuel, how much more will you sopend on groceries, how much more will you spend on cable, or phone..
even if we say that as a ratio their expenses keep pace with their income, well so does their savings. someone making $1M and saving 10% is saving a lot more than someone making 100K and saving 10%.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
Flying around is good, but once you have kids, you got to buy a place and settle down so that your kids can go to a good public school.
Firstly living single is more expensive than having kids, what with going out all the time and all. (ok I know i'm going to get burnt on this).
Secondly good (or bad) public schools are all free this side of the pond.
You and I may agree about buying houses, but not everyone may share our thought process.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
Firstly living single is more expensive than having kids, what with going out all the time and all. (ok I know i'm going to get burnt on this).
Are you sure it is? I have seen my saving evaporate once I got married and got kid and the biggest reason was mortgage. As someone mentioned above once you have family and kid its good to buy a home and I did that. Yes..I live in California.. :D
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
true to some extent, but how much more will you spend on fuel, how much more will you sopend on groceries, how much more will you spend on cable, or phone..
even if we say that as a ratio their expenses keep pace with their income, well so does their savings. someone making $1M and saving 10% is saving a lot more than someone making 100K and saving 10%.
I'm not talking about the small andey dabalrotee type kharchey, but rather big expenses like car payments, electricity, house cleaning, maintenance etc etc. If you are living in a million $ house you gotta live like a millionaire too. I guess these fixed expenses add up to quite a bit.
I see where you are coming from and agree that these folks will have a little more leverage to spend on on small stuff like groceries and entertainment.
Similarly, savings of both high income and low income people are proportionate to thier living standards too.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
Firstly living single is more expensive than having kids, what with going out all the time and all. (ok I know i'm going to get burnt on this). Secondly good (or bad) public schools are all free this side of the pond. You and I may agree about buying houses, but not everyone may share our thought process.
you have more discretionary income when you are single :)
when day care, baby stuff, clothing, doc bills and this and that start hitting u, the tax exemptions dont mean much :D
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
Firstly living single is more expensive than having kids, what with going out all the time and all. (ok I know i'm going to get burnt on this). Secondly good (or bad) public schools are all free this side of the pond. You and I may agree about buying houses, but not everyone may share our thought process.
Living single is never expensive, that's the only time when you can save money. When I was single, I never rented an apartment on my own and only had to pay rent/3 ot 4 and that money which I saved there were used up in tafrigiri. Once you hav kids, you expenses skyrocket like anything. Public schools all over the US are free either side of the pond.......I mentioned them because you would prefer to buy a house in a area where public schools are highly rated......believe me no desi would ever want their kids to go to public school were crime rate is high unless you wanted to have ganagsta kids.
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
you have more discretionary income when you are single :) when day care, baby stuff, clothing, doc bills and this and that start hitting u, the tax exemptions dont mean much :D
You bet tax exemption don't mean crap hardly 2-3k..........I have around 60K stuck in my 401k retirement account and still have around 30 yrs to go before I can have a bite at it....: (
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
err how old are u?
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
30
Re: How do people afford houses in places like NY, Cali, and other expensive areas?
btw the thing that makes me nervous about 401K is god knows what the tax rate would be when i retire and what income bracket I will be in if i have my own business.
maybe I should start doing a roth as well..