How many of you have mortgages that are killing you? (1 Viewer)

[Ryan Wright]

I once read in Money magazine that the average San Jose area family, earning a median of $75,000, pays $475,000 for an 1800sq ft home. Is this right?? You'd get laughed out of a mortgage office here with those ratios!!!

I'd love to hear from some Californians about whether this is accurate. If so, !!
My house has gone up by $20k in the past two years alone. That's pretty decent. Of course, it's not "real money" - Sure, I could sell it and get that money in cash, but I'd have to spend it all to buy another house like mine - all houses around here have gone up significantly in price.
The only thing I see it as being good for is this: When I buy a bigger home one of these days, I'll have a nice healthy down payment available.

 

[Andy_Bu]

The only thing I see it as being good for is this: When I buy a bigger home one of these days, I'll have a nice healthy down payment available

I look at it the opposite way.

I intend to significantly downgrade my house when I hit 50 to help fuel early retirement. While the downgraded house will still be expensive, the gap between my house and a smaller house with be enormous in value 15 years from now, assuming a small rate of growth (5% or so per year).

Andy

 

[Colin Dunn]

One potential problem with downgrading ... in some markets, the price spread between small & big houses is not that much. In my neighborhood, the price differential between a 1,800 and 4,000 sq. ft. house is only about $40,000. No one can sell one of those big houses and expect to buy a small one with ca$h.

 

[Colin Dunn]

SteveA -

Denver is in one of those bubbles right now. Housing prices have tripled since about 1996, but income levels have not. You can't get anything decent there under about $400,000 right now.

Where I live right now (Austin), housing prices have quit increasing rapidly. They have been flat for about a year. Unlike Silicon Valley, the market here has reacted to all those tech layoffs...

 

[jeff lam]

quote:

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I once read in Money magazine that the average San Jose area family, earning a median of $75,000, pays $475,000 for an 1800sq ft home. Is this right?? You'd get laughed out of a mortgage office here with those ratios!!!
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I'd love to hear from some Californians about whether this is accurate. If so, !!

Yes, it's true. Here in San Jose. Some people are lucky, some aren't. You can't touch anything larger than 2BR for under $500K, even the old houses. Needless to say, if i ever want to buy a house I'll have to move away from here!

Sometimes I just wonder where all this money is comming from??? They make about $60K but have kids, car payments, insurance, other bills, and still pay that mortgage for that $500K house.

There are also many who have cashed out before the market crash and have millions in this area. However most didn't cash out and they bought as much as they could of startups and lost everything. I imagine the # of millionares in this area got cut in half(or worse) from 2000 to 2001. One year you're a millionare 23 year old, the next you're out of a job, broke and living with your parents again!

 

[Andy_Bu]

One potential problem with downgrading ... in some markets, the price spread between small & big houses is not that much. In my neighborhood, the price differential between a 1,800 and 4,000 sq. ft. house is only about $40,000

I live in a 3500 sq ft house now, and it would go for about $450,000 in my town. In my same town, houses at the 1800 sq ft size sell for around $270,000, of course depending on style and location in the town.

The Boston market may be different than the Texas market I guess..

Andy