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Spouse’s income can’t be included for new loan..
invite response
2011 Jan 5, 8:31am 16,181 views 73 comments
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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.
And by significant, ch_tah means “That claim means nothing because I didn’t actually have any credible statistics to back that statement up.â€
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?hpCheck 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.
B.A.C.A.H.
2011 Jan 9, 2:58am
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.
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?
permanent_marker
2011 Jan 10, 3:52am
@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
I often come across statements like “2 income couple each earning 100k for 10 years have easily saved up 500k for down paymentâ€, 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.
Future Cash Buyer
2011 Jan 10, 8:03am
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?
Â¥
2011 Jan 10, 8:08am
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?
B.A.C.A.H.
2011 Jan 10, 11:01am
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.
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?
What's so wrong with renting?
BD
PockyClipsNow
2011 Jan 11, 7:10am
i got an idea - we need special federal loan programs(lots of them!) to make housing 'more affordable' for everyone.
whats the worst that could happen?! lol
Can you show me one house in Almaden Valley that actually had a similar drop to what those numbers are showing?
Down 20%
Property History for 1335 SHELBY CREEK Ln
Date Event Price Appreciation Source
Dec 03, 2010 Relisted (Active) -- -- MLSListings #81027044
Dec 02, 2010 Delisted (Expired) -- -- MLSListings #81027044
Nov 22, 2010 Relisted (Active) -- -- MLSListings #81027044
Jul 24, 2010 Pending (Pending (Do Not Show)) -- -- MLSListings #81027044
Jul 12, 2010 Price Changed $490,000 -- MLSListings #81027044
Jul 08, 2010 Price Changed $510,000 -- MLSListings #81027044
Jun 01, 2010 Listed (Active) $545,000 -- MLSListings #81027044
Oct 06, 2005 Sold (Public Records) $630,000 -- Public Records
Down 26%
Sites Linking to 1088 ALMADEN VILLAGE Ln
Bloggers, have you written about this property? Add your post to this page.
Property History for 1088 ALMADEN VILLAGE Ln
Date Event Price Appreciation Source
Jan 04, 2011 Price Changed $498,000 -- MLSListings #81033471
Nov 08, 2010 Price Changed $599,999 -- MLSListings #81033471
Aug 27, 2010 Price Changed $628,000 -- MLSListings #81033471
Jul 27, 2010 Relisted (Active) -- -- MLSListings #81033471
Jul 14, 2010 Pending (Pending Without Release) -- -- MLSListings #81033471
Jul 07, 2010 Listed (Active) $648,888 -- MLSListings #81033471
Aug 11, 2005 Sold (Public Records) $675,000 -- Public Records
Down 22%
Property History for 6777 NORCOTT Ct
Date Event Price Appreciation Source
Jan 02, 2011 Price Changed $845,000 -- MLSListings #81043605
Jan 02, 2011 Relisted (Active) -- -- MLSListings #81043605
Jan 01, 2011 Delisted (Expired) -- -- MLSListings #81043605
Dec 18, 2010 Price Changed $875,000 -- MLSListings #81043605
Dec 01, 2010 Price Changed $905,000 -- MLSListings #81043605
Nov 14, 2010 Price Changed $935,000 -- MLSListings #81043605
Oct 28, 2010 Price Changed $950,000 -- MLSListings #81043605
Oct 15, 2010 Price Changed $975,000 -- MLSListings #81043605
Sep 30, 2010 Price Changed $990,000 -- MLSListings #81043605
Sep 16, 2010 Price Changed $1,005,000 -- MLSListings #81043605
Sep 03, 2010 Listed (Active) $1,020,000 -- MLSListings #81043605
Jun 13, 2007 Sold (Public Records) $1,085,000 10.0%/yr Public Records
Mar 14, 2003 Sold (Public Records) $725,000 -- Public Records
Down 15%
Property History for 1248 SHELBY CREEK Ln
Date Event Price Appreciation Source
Jan 02, 2011 Price Changed $648,000 -- MLSListings #81051694
Nov 09, 2010 Price Changed $669,000 -- MLSListings #81051694
Nov 09, 2010 Price Changed $639,000 -- MLSListings #81051694
Oct 25, 2010 Listed (Active) $685,000 -- MLSListings #81051694
May 31, 2006 Sold (Public Records) $760,000 7.6%/yr Public Records
Mar 29, 2002 Sold (Public Records) $559,000 12.9%/yr Public Records
Dec 22, 1999 Sold (Public Records) $425,000 -- Public Records
Down 21%
Property History for 1578 VIA CAMPO VERDE
Date Event Price Appreciation Source
Dec 23, 2010 Price Changed $875,000 -- MLSListings #81055669
Nov 24, 2010 Listed (Active) $931,000 -- MLSListings #81055669
Oct 12, 2010 Sold (Public Records) $853,753 -- Public Records
Dec 14, 2006 Sold (Public Records) $1,099,000 -- Public Records
Jun 23, 2006 Sold (Public Records) $1,108,000 9.7%/yr Public Records
Dec 13, 2002 Sold (Public Records) $800,000 6.6%/yr Public Records
Apr 30, 1999 Sold (Public Records) $635,000 19.7%/yr Public Records
And still not yet back to long term trends... how about that...
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
A required dual income in the Bay Area is more of a myth and was not needed before the bubble years. I bought when I was single and was not an engineer... like so many others.
Meanwhile, the non-owner is generally saddled with rent payments that have inflated over the years, which can be a huge burden once the high-income years are in the rear view mirror.
What inflation ?
The average annual inflation rate for the entire period since 1913 has been 3.36% per year
Over the past 10 years we had inflation ranging from 1.5 to 3.7% annually, your point ?
tatupu70
2011 Jan 11, 8:30am
The average annual inflation rate for the entire period since 1913 has been 3.36% per year
3.36% a year adds up pretty quickly..
Just for Kicks...
down 25%
Property History for 1103 PORTO ALEGRE Pl
Date Event Price Appreciation Source
Dec 04, 2010 Listed (Active) $999,000 -- MLSListings #81056562
Nov 17, 2006 Sold (Public Records) $1,335,000 -- Public Records
tatupu70
2011 Jan 11, 8:34am
3.36% a year adds up pretty quickly..
LOL! take up investing as a hobby!
lol--that's how I know....
FortWayne
2011 Jan 11, 12:14pm
The average annual inflation rate for the entire period since 1913 has been 3.36% per year
3.36% a year adds up pretty quickly..
which is why interest rate on the loan is enough to make up the inflation with margin of profit.
Meanwhile, the non-owner is generally saddled with rent payments that have inflated over the years, which can be a huge burden once the high-income years are in the rear view mirror.
What inflation ?
The average annual inflation rate for the entire period since 1913 has been 3.36% per year
Over the past 10 years we had inflation ranging from 1.5 to 3.7% annually, your point ?
3.36% inflation per year will erode your money away, it means that prices should double every 21 years. But if you have debt it will make it easier for you to pay it back. One of the major ways we are trying to get rid of the underwater homeowner problem is by using inflation. For example if someone is 15% underwater within 5 years they should be back to normal.
Now the real kicker is that currently we are trying to prevent deflation with all the QE1, QE2, ect... This huge influx of money is just barely working because of the great economic crisis that happened. A few years from now when things are rosy again we should get a spike in inflation because the FED will be too slow to act when pulling the extra money from the economy.
So there's a cheetah and a lion racing...
...The cheetah ends up winning but the lion tells him "hey you a cheetah!" and the cheetah says back "nah you lion!"
Hope a bad joke will cheer you guys up.
FortWayne
2011 Jan 13, 10:24am
Meanwhile, the non-owner is generally saddled with rent payments that have inflated over the years, which can be a huge burden once the high-income years are in the rear view mirror.
What inflation ?
The average annual inflation rate for the entire period since 1913 has been 3.36% per year
Over the past 10 years we had inflation ranging from 1.5 to 3.7% annually, your point ?
3.36% inflation per year will erode your money away, it means that prices should double every 21 years. But if you have debt it will make it easier for you to pay it back. One of the major ways we are trying to get rid of the underwater homeowner problem is by using inflation. For example if someone is 15% underwater within 5 years they should be back to normal.
Now the real kicker is that currently we are trying to prevent deflation with all the QE1, QE2, ect… This huge influx of money is just barely working because of the great economic crisis that happened. A few years from now when things are rosy again we should get a spike in inflation because the FED will be too slow to act when pulling the extra money from the economy.
So there’s a cheetah and a lion racing…
…The cheetah ends up winning but the lion tells him “hey you a cheetah!†and the cheetah says back “nah you lion!â€
Hope a bad joke will cheer you guys up.
I don't think we'll get that type of inflation. Incomes have been going down and there is a lot of downward pressure there.
When thousand people show up for 40 positions a company isn't going to pay top dollar, they will reduce wages since they can hire cheaper. (This was on abc7 news today when they showed a new hyundai dealership opening and a huge line of applicants for the jobs). Just over a 1000 applicants for 40 positions.
Inflation occurs when people make more money and they can negotiate higher wages due to low unemployment, housing bubble was artificial inflation which basically erode our economy for next 10+ years, it will take a while before we rebound.
Most Americans are competing for wages with China/India. I expect things to get a lot worse. Best thing is not to buy houses or whatever crap, IMO best thing to do now is to open up a sustainable business.
ChrisLosAngeles,
You described the most simplistic case for inflation when in comes to salaries, the real problem has many more variables than just unemployment numbers. First if your general statement was true it would mean we should have had huge salary inflation between 2004 and 2008 when unemployment was between 4 and 6 percent. Second an increase in the general money supply if it is large enough will cause inflation or decrease deflation like it is happening now. Granted that times are bad but so much money has been put into circulation that it should turn the economy around. This is a simple problem of more money chasing the same amount of goods at some point things start to cost more.
Now on to the really crazy stuff of why we didn't get salary inflation between 2004 and 2008, it was the Bush tax cuts. I told you it was going to be crazy but hear me out. A lot of studies have been done in the 1800's to 1900's on taxes and the economy. Everyone of us has a number that we consider a living wage. This is the number that we must earn to live our lives. When inflation occurs this living wage should increase to maintain our standard of living. With the Bush tax cuts people all of a sudden got more money increasing the standard of living, they didn't need to have wage increases because of this. But this is only a temporary change in the system because you usually can't keep the tax cuts or keep increasing them. Back to the studies that were performed, when the government increased taxes people of course took home less money and that didn't meet their own living wage number. For the next few years after a tax hike wages increase to meet peoples expectations of a living wage. The great thing about increases in salaries is that they are sticky, meaning once they go up they tend not come down.
RC2006
2011 Feb 6, 11:58pm
Found a broker that will take my wife’s income into account and preapproved us, he was recommended by 3 different friends. Agent even told us after she found out who our broker was that he put money up to consolidate her debts and refinance house that she was going to loose when her husband unexpectedly died before she got into real-estate. Agent that has been working for us has also been a really good communicator, not pushy, and stays on top of everything unlike some of the lazy ones in the past. Made an offer that was accepted on a foreclosure that was 330k about 30k more than I could have gotten on my own income with my down. Things work so much better when people know what they are doing. Escrow closes end of this month if all goes well.
zzyzzx
2011 Feb 7, 12:11am
from a review on Amazon
The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke
http://www.amazon.com/Two-Income-Trap-Middle-Class-Mothers/dp/0465090826
… Because so many families are now two income dependent they have become trapped and are more financially vulnerable than previous generations. Many families use all of the income they receive from both husband and wife, and barely get by. As a result, any interruption of the income flow can result in disaster. One telling statistic: today’s two-income family earns 75% more money than its single-income counterpart of a generation ago, but actually has less discretionary income once their fixed monthly bills are paid.
Really more of a spending problem than anything else.
Really, many of the people on here are so full of this “entitlement†mentality it’s almost unbearable.
What I want to know is how people can toss around figures like $70-100k for a typical person's income in an economy like this. What kind of jobs pay these exorbitant wages, what skills do they require, and who do I call to get one of them?
sfbubblebuyer
2011 Feb 7, 1:26am
Well, mine requires at least a bachelor's degree in computer science and 5 years experience, preferably in Biotech. I have a M.S. in Biophysics and a B.S. in Comp Sci, and 7 years experience. If you rack that up, I can safely say you could be making that at my company.
My wife's job requires a comp sci degree and probably about 7 years experience. She makes more than me.
My first job out of school with just a CS degree was 45k in 1997.
[i]Really, many of the people on here are so full of this “entitlement†mentality it’s almost unbearable.[/i]
What I want to know is how people can toss around figures like $70-100k for a typical person’s income in an economy like this. What kind of jobs pay these exorbitant wages, what skills do they require, and who do I call to get one of them?
I can only speak to jobs and salaries that are in my daily sphere of personal knowledge and experience. CHP cadets (recruits) in the academy (all food and housing is provided while in Sacramento) make 65K while they're training for 5 months and then their salary goes up from there. With a few years on the job and a little overtime an officer can easily make 90-100K a year (and no, the CalPers pension is only calculated on the base pay - OT doesn't count).
CPA is another job in demand, but it requires at least a BA in tax and many have an MA. My family has many CPA's in it and they all make good money. Granted they have been doing it for 15-20 years, but the least paid is at 187K and the salaries for the others go up from there. The headhunters are calling at least twice a month trying to get them to move so there is demand in the CPA/accounting field. Two weeks ago there were a few 90-100K job openings for CPAs/accountants at the studios down here as well as a few managment positions at the studios that pay more.
There are lots of people hurt by this economy and I have said here on patnet before that it's a rough road for many, but there are also a lot of people working and making good money. Every recession is the same and I have been through several of them.....some hold on and others unfortunately don't. I was lucky enough to always be working in the public sector when they rolled around so I was able to hold on.
bubblesitter
2011 Feb 7, 2:33am
[i]Really, many of the people on here are so full of this “entitlement†mentality it’s almost unbearable.[/i]
What I want to know is how people can toss around figures like $70-100k for a typical person’s income in an economy like this. What kind of jobs pay these exorbitant wages, what skills do they require, and who do I call to get one of them?
People who are calling the bottom should read this.
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Well I guess I’m out of housing game for a while. I went to get a pre-approved and was told that I can’t count my wife’s income. She went back to work in March making same as I do and before that she stayed home for a year when my second son was born, aside from that she has never been unemployed even when she was in college and with first son. She needs to have two years employment with no gaps. I know they are stricter with loans but we both have spotless credit and 30k banked. The most I can get a loan for on my own is 270-300k. I will try another loan guy but I have the feeling nothing will change. Oh well maybe it’s a good thing all of her income is going to savings and I can hope that the market will crash more.
So any couple that had a spouse that stayed home to be with a child for a year is screwed.
#housing