patrick.net

always using two incomes to pay your mortgage is risky.

if one or even both of those incomes goes away, or decreases you better hope you have enough savings to cover your mortgage.
there could be any reasons like divorce, wife has a kid and stops working, job loss, new job pays a lot less (those $100k+/year jobs are going away quickly), sickness, injury, death.

too many reasons that one or both incomes will go away or decrease to commit to an overpriced 30 year mortgage.

requiring two incomes reduces your margin of safety. and over a 30 year period there will be periods of unplanned, unexpected hits to your income.

the only reason it's so common in the bay area/peninsula is because prices are too high.

anon says

the only reason it’s so common in the bay area/peninsula is because prices are too high.

That's one way of looking at it. The other is that prices are high because people in the BA are willing to have dual income (or more) households.

ch_tah says

The other is that prices are high because people in the BA are willing to have dual income (or more) households.

Prices jumped right after banks started lending based on both incomes . . . that was the 1970s.

I never wanted to get the max for double income I just thought her income should have counted a little, personally I can wait and catch a smaller knife.

Believe it or not there are many places in the Bay Area one could buy on one income. Well...maybe not the "REAL" Bay Area as defined by the snobs on here (that is, if the average home price isn't 800k, it's isn't really the Bay Area, no matter how close you are to SF or the Actual Bay, lol)

Tude says

Believe it or not there are many places in the Bay Area one could buy on one income. Well…maybe not the “REAL” Bay Area as defined by the snobs on here (that is, if the average home price isn’t 800k, it’s isn’t really the Bay Area, no matter how close you are to SF or the Actual Bay, lol)

Sure, as long as that one income is $200k+.

I'm pretty sure that's not what you were talking about, so why not just list these great places instead of being vague about it?

Mr.Fantastic says

Don’t forget filthy rich “Chindians” who fly from Shanghai and want to buy 2,400 sqft homes on 3,000 sqft lots

Probably not "filthy rich" by your standards, but "wealthy enough" to buy Their American Dream in The Fortress.

ch_tah says

Tude says

Believe it or not there are many places in the Bay Area one could buy on one income. Well…maybe not the “REAL” Bay Area as defined by the snobs on here (that is, if the average home price isn’t 800k, it’s isn’t really the Bay Area, no matter how close you are to SF or the Actual Bay, lol)

Sure, as long as that one income is $200k+.
I’m pretty sure that’s not what you were talking about, so why not just list these great places instead of being vague about it?

Almost anything midsized in Hercules, say.

oddhack says

ch_tah says

Tude says

Believe it or not there are many places in the Bay Area one could buy on one income. Well…maybe not the “REAL” Bay Area as defined by the snobs on here (that is, if the average home price isn’t 800k, it’s isn’t really the Bay Area, no matter how close you are to SF or the Actual Bay, lol)

Sure, as long as that one income is $200k+.

I’m pretty sure that’s not what you were talking about, so why not just list these great places instead of being vague about it?

Almost anything midsized in Hercules, say.

Which Bay are we talking about? San Pablo Bay? I thought we were talking about SF Bay.
I'm sure Hercules is a great area, but it doesn't seem practical for those working in the South Bay or the Peninsula.

Mr.Fantastic says

It doesn’t surprise the only person advocating “two income” mortgages on this board is ch_tah.

Other non-surprises:
1. Mr. Fantastic adds nothing to the conversation.
2. A board full of bears looking for every possible excuse not to buy would argue that you should never use a second person's income to get a mortgage.
3. The list of many nice places to buy in the BA with one income consists entirely of one town that may be a good commuter town to SF but is completely useless to people who work in the South Bay and Peninsula.

Mr.Fantastic says

ch_tah basically just exposed himself as an over leveraged home owner who is trying his best to use Patrick.net as a personal arena for his home owning regret & catharsis. Thank you ch_tah, your tears are like sweet, sweet sugar.

I have no desire to help you hijack another thread with your petty attacks. If you have information that refutes my statements, provide it. Other than that, feel free to believe whatever you want about me in spite of it not being true.

ch_tah says

Other non-surprises:
2. A board full of bears looking for every possible excuse not to buy

no need for excuses.

we're just smart enough to wait for prices to fall.

http://www.housingtracker.net/asking-prices/san-jose-california/
Dec 2010 6,930 $298,225 $438,738 $649,125
Dec 2009 5,056 $332,500 $493,350 $770,972
Dec 2008 8,012 $345,461 $504,905 $767,535
Dec 2007 7,512 $501,390 $619,747 $782,200
Dec 2006 4,733 $579,724 $695,375 $913,944

anon says

ch_tah says

Mr.Fantastic says

It doesn’t surprise the only person advocating “two income” mortgages on this board is ch_tah.

Other non-surprises:
2. A board full of bears looking for every possible excuse not to buy

no need for excuses.
we’re just smart enough to wait for prices to fall.
http://www.housingtracker.net/asking-prices/san-jose-california/

Dec 2010 6,930 $298,225 $438,738 $649,125

Dec 2009 5,056 $332,500 $493,350 $770,972

Dec 2008 8,012 $345,461 $504,905 $767,535

Dec 2007 7,512 $501,390 $619,747 $782,200

Dec 2006 4,733 $579,724 $695,375 $913,944

Since you've been shown to provide false data, I'm skeptical of your website. Your data is for all of SJ. Let's assume the 75th % represents Almaden Valley pretty well. According to that site, the 75th percentile was $1.1M in 2006. Now it is $625k. Can you show me one house in Almaden Valley that actually had a similar drop to what those numbers are showing?

ch_tah,

i agree with mr fantastic.
you're one of the dumbest guys on this board.

everytime i reply to one of your posts, i greatly regret it.
i hope i've learned my lesson.

Any time you guys are challenged, you resort to name calling without defending your position. Nice.

It's been almost a full day, and we're still only up to one city (which is probably debatable) to support Tude's claim that there are "many" nice areas where you can buy with one income.

Almost anything midsized in Hercules, say.
Wow, I hadn't checked out that neighborhood in a while. Short sales are running 50% off the previous sale price (circa 2006). Currently 65 homes for sale; pent up supply (NODS, NOTS, bank owned) stands at 405 homes. Getting more affordable every day. Standard disclosures about noise in the data; information deemed reliable but not guaranteed.

ch_tah says

Any time you guys are challenged, you resort to name calling without defending your position. Nice.

It’s been almost a full day, and we’re still only up to one city (which is probably debatable) to support Tude’s claim that there are “many” nice areas where you can buy with one income.

I think a lot of people are taking the stance that the absurd prices in the Bay Area, while feasible for 2 high paid lawyers or doctor couples.

If you went door to door and did a census of the neighborhoods that are over-priced... You don't see two professional neuro-surgeons co-habitating THAT often. In a lot of the areas you see A) A successful man supporting a stay at home wife... or B) A successful man on the brink of a divorce from his/ equally successful wife... soon to marry a trophy wife... (with zero income).

Your dual income highly successful happily married couples aren't as prevalent as you believe! The census will tell you that!

Los Angeles Renter says

ch_tah says

Any time you guys are challenged, you resort to name calling without defending your position. Nice.
It’s been almost a full day, and we’re still only up to one city (which is probably debatable) to support Tude’s claim that there are “many” nice areas where you can buy with one income.

I think a lot of people are taking the stance that the absurd prices in the Bay Area, while feasible for 2 high paid lawyers or doctor couples.
If you went door to door and did a census of the neighborhoods that are over-priced… You don’t see two professional neuro-surgeons co-habitating THAT often. In a lot of the areas you see A) A successful man supporting a stay at home wife… or B) A successful man on the brink of a divorce from his/ equally successful wife… soon to marry a trophy wife… (with zero income).
Your dual income highly successful happily married couples aren’t as prevalent as you believe! The census will tell you that!

Ok, well Tude said "many" places, so I figure he or someone could back that up by naming more than one.

The census data does show that many of the better areas of the BA have significant numbers of households making $200k+ whether that be one income or dual incomes.

Mr.Fantastic says

And by significant, ch_tah means “That claim means nothing because I didn’t actually have any credible statistics to back that statement up.”

See unlike you, I can actually support my argument when questioned. I don't have to resort to name calling.

http://projects.nytimes.com/census/2010/explorer?hp
Check out Los Altos, MV, PA, etc.
30%-50% above $200k

Los Angeles Renter says

f you went door to door and did a census of the neighborhoods that are over-priced… You don’t see two professional neuro-surgeons co-habitating THAT often. In a lot of the areas you see A) A successful man supporting a stay at home wife… or B) A successful man on the brink of a divorce from his/ equally successful wife… soon to marry a trophy wife… (with zero income).

You nailed it right there!!

ch_tah says

See unlike you, I can actually support my argument when questioned. I don’t have to resort to name calling.

http://projects.nytimes.com/census/2010/explorer?hp
Check out Los Altos, MV, PA, etc.
30%-50% above $200k

So that means the other 30-70% can't afford to buy a home in the area... It only takes a few leaks to take down a sinking ship.

But thanks for the census info... it's eye opening to see how many households over extend themselves....

ch_tah the best areas of MV seem to be in the 20% range earn 200k+ while houses in the same areas go for a cool million. In the same areas 50-60 percent of the households earn 50k-199k. This gives a estimated 6 to 8 times home prices compared to annual income. Similar numbers apply to Los Gatos, parts of Sunnyvale, and Cupertino.

All this means is we are still in the greater fool range of housing prices.

ch_tah says

Mr.Fantastic says

And by significant, ch_tah means “That claim means nothing because I didn’t actually have any credible statistics to back that statement up.”

See unlike you, I can actually support my argument when questioned. I don’t have to resort to name calling.
http://projects.nytimes.com/census/2010/explorer?hp

Check out Los Altos, MV, PA, etc.

30%-50% above $200k

I checked out Mountain View. I don't see a single tract with a median household income above $200K. The highest looks to be about $175K and the average of the MV tracts is probably around $100K or a bit more (which is totally consistent with my subjective take having lived here 13 years). So getting back to that "credible statistics" part...'

(Just to follow up: according to http://www.city-data.com/, median household incomes for 2009 were:

California $58931
Mountain View $92504
Los Altos $158125
Palo Alto $123732
Hercules $83779 (only since I mentioned it upthread - not that I live there or know much about it but I do have a friend who lives there and works in San Francisco. Pretty sure it counts as the "Bay Area" by most people's estimations though I agree I wouldn't want to commute to a Silicon Valley job from there. But, you know, a lot of people around here have much longer commutes than that while still both living and working in the "Bay Area"...)

Note that in none of these cities does the median income come anywhere near $200K. Maybe 30% of Los Altos households are above $200K though I doubt it. Los Altos Hills, now, I'd believe.

200K+ is very hard to earn for a household in the valley. The highest engineers start to top out in the 150k range, most mid level managers also hang around the 150k area, directors can hit the 200k area.

Now the term household implies more than one person. Say you have a young married couple.
Example 1)
Two working engineers in early 30's with about 7 years of experience. Each would earn 110k, so total income 220k.

Example 2)
One engineer, one member in a different field with college degree, early 30's, 7 years of experience. 110k + 70K, Total income 180k

Example 3)

Two non engineers, early 30's, 7 years of experience. 70k each, Total income 140k.

Now the funny thing about the young married couple with two incomes is that they are looking to start a family. Most decent day care services charge 2k a month for a 6 week to 2 year old. Thats 24k a year or about 40k a year pretax. But what if they want two kids maybe three years apart. The cost would be about 1k for the older one, 2k for the younger one, so thats 3k a month unless you want a very good preschool which will run you 2k or so. 36k a year or about 55k pretax

So to break it down a young couple with two kids can expect a significant part of one income to cover day care costs for about 5 years until the kids start going to public school. Unless you have two engineers as in example one it is almost not worth having the second income for it is just covering the daycare cost.

fewy,

I think your math is spot on.

Compared to the overwhelming population of workers in the Bay Area, all the "folks" you described are very wealthy.

Lotsa them choose to "invest" their wealth in The Fortress.

fewy says

200K+ is very hard to earn for a household in the valley. The highest engineers start to top out in the 150k range, most mid level managers also hang around the 150k area, directors can hit the 200k area.

LOL! it takes 15-20 years of experience to scratch $150K/yr today.

Sounds crappy to me. Seems like you mortgage officer could ask underwriters to consider situation?

@fewy
you are spot on!
As a two income, one child family.... I can attest that your numbers are in line.

I often come across statements like "2 income couple each earning 100k for 10 years have easily saved up 500k for down payment", just don't jive with me

permanent_marker says

I often come across statements like “2 income couple each earning 100k for 10 years have easily saved up 500k for down payment”, just don’t jive with me

Seriously, why not? Suppose one of those $100K incomes goes entirely to child-related expenses, which judging by upthread it wouldn't. Still ought to be able to accumulate half a mil in 10 years on the other $100K (ref: speaking from personal experience and despite the incredibly crappy ESPP performance of my former employee who went from $45/share to $0/share over 9 years :-).

I think fewy has a valid point. Daycare... yeah, that's the killer. Giving your kids the best possible environment can cost you a lot.

As for permanent_maker's post, I'd say it depends on the life style of yours.
200K/yr is like 10~11K/mo net, and out of that, the question is can you save 3500/mo?
So the question boils down to your spending.

Renting 2500/mo house + sending 2 kids to daycare, or private school & all sort of afterschool activities would cost that much. Adding other cost of living such as food, cloth, car, vactaion etc on top of that, spending 10K/mo is quite easy.

Living in 1500/mo apartment + granny take care of the kids, or sending them public school etc will give you enough leftover for chunky saving. 500K in 10years is surely possible.

I am not saying one choice is better or worse than the other. Whatever style you choose, there must be a good reason for you to do that. But the result at the end can be quite different.

So if a household relies just on 1 income source (making less than $150k a year), they cannot buy a house unless it is all cash? thus becoming renters for life?

Future Cash Buyer says

So if a household relies just on 1 income source (making less than $150k a year), they cannot buy a house unless it is all cash? thus becoming renters for life?

Drive the leechfuck investors out of single family housing -- taxing rents would be an easy approach -- and home prices would have to fall to whatever households could afford to pay.

Is this not obvious?

Future Cash Buyer says

So if a household relies just on 1 income source (making less than $150k a year), they cannot buy a house unless it is all cash? thus becoming renters for life?

There's a large range of possibilities between borrowing 80% versus borrowing zero %

Sorry I don't come on here very often anymore. I get so bored by all the people on here whining that they are unable to buy a house in the nicest possible area of the Bay Area, therefore it's impossible to live here. Really, many of the people on here are so full of this "entitlement" mentality it's almost unbearable.

Also anywhere in the the East Bay is affordable on one good salary in the 100k range. Starting from Hercules, down through Pinole, El Sob, parts of El Cerrito, Oakland, Castro Valley, Hayward, Union City...on down. Also out into the Concord/Pleasant Hill area. Many of these places are easily accessible to BART or the Ferry. I have known plenty of people who lived East over the San Mateo bridge and worked an earlier or later shift. Many times if you are in IT and GOOD you can negotiate days at home as well.

But let's just keep pretending that the "Real Bay Area" is only a 2500sf house in Palo Alto. And because you go to work everyday you somehow are entitled to just that.

angry home owner is angry

Future Cash Buyer says

So if a household relies just on 1 income source (making less than $150k a year), they cannot buy a house unless it is all cash? thus becoming renters for life?