Housing
I’ve been going to this new barber that isn’t raising his rates through the roof or having some type of issue in his personal life. The new barbershop, however, is pretty bare bones. A couple of TVs and a bunch of real estate booklets. Last time I went I saw a FHM or two by the door, but it was as I was leaving.
I flip through these real estate books while waiting. I have nothing else better to do. I noticed that it seemed that housing prices in this area might have gone done some. That’s what Gaylen Young keeps saying, isn’t it? Or maybe it is that sales have slowed down and not that prices have went down. Whatever the case, it seemed that the median price of most homes was around $280,000, according to these booklets.
Today, I was bored at the computer so I went to the Bloomberg mortgage calculator to see how these figures add up. I put in the loan amount of $280,000, found out that my bank charges 6.6% for a 30-year loan, and even added the notional down payment of $10,000. I ran the calculator.
It turns out that my monthly payments under such a situation would be $1,825.00. Holy fuck!
I guess this is one way to make people get married as that seems to be the only way to afford a mortgage like that as a first-time homebuyer. Wasn’t the old adage that housing should be a third of your income? I talked to an old real estate agent, and she said that has changed. It is now half your income. Are you kidding? Actually, $1825/month will eat up more than half my income for a good many years, and that’s with a meat and potatoes stable job. If you make $25/hour, and work a full-time 160 hours/mo, that’s $4000/mo before taxes.
I had a 25-year-old girlfriend a few years ago that bought a house for $109,000 just north of North High School. It wasn’t lavish: three bedrooms, small back yard, garage. Nice little place. Ain’t that ancient history.
After my visit to Oklahoma, I checked out house prices over there. What costs $85,000 over there is exactly what I am talking about with this post. What is that, a 300% difference?
I guess it is just bad timing on my part. Five years ago in Bakersfield would’ve definitely been different. Is it really the greedheads coming from the Los Angeles area, or are we supporting the retirement of baby boomers selling their houses at monstrous rates? A lot of my contemporaries feel the same way. However, when I tell this to an existing homeowner, I just get a blank look in response. I guess I might have to move to some fundamentalist state in order to afford a house in the next ten years.
May 1st, 2006 at 2:04
My Aunt is moving from Sacramento, CA to somewhere in ARKANSAS because of Housing Prices.
May 1st, 2006 at 6:16
This is why I always tell any young people around me to invest in lottery tickets, early and often. Better getting on top of how you’re going to make a down payment then, instead of now.
It’s obscene!
May 1st, 2006 at 9:33
People are still buying houses, but nowadays it is dual income homebuyers.
May 1st, 2006 at 18:17
The half of your income scenario is everywhere..the income levels are lower in say..OK or AL or anywhere in the midwest. Its all relative. It is a fact that you either get staked into your first house by the folks giving you some cash for a decent down payment, or you have two incomes to qualify..its sad and it isn’t going away anytime soon.
There are programs that will help young home buyers by putting together a plan where the montly payment goes up each year, as your income should. My sister and her husband did that about 10 years ago. Of course its a decent plan if you are going to sell it prior to the big monthly payments setting in and your home value goes up the exponentially.
May 1st, 2006 at 20:58
So mortgage payments will go from $1,800/mo to say $2,700 - for a simple three bedroom house. No thanks.
The incomes in a OK or AL aren’t relatively lower. It isn’t like you are only going to get paid $8 in OK what you would get $25 here, just b/c your house is three times cheaper. But who wants to live in a fundamentalist state? I shouldn’t care being a regular guy; the gov’t never fucks me over, but it kind of gives me the heeby jeebies. I shouldn’r be so judgemental.
May 2nd, 2006 at 15:21
Its a combination of many things out of towners, greedheads, inflation blah blah blah.
We pay a crazy amount to live where we live and I got on board just as the train was leaving the station, its a crime. My advice is to get married ASAP dont have any kids ride a motorcycle and save for about 10 years and you can own a piece of the American dream. Or you can move to Arkansas; see ya back in Cali in a few years.
By the way nice picture.
May 2nd, 2006 at 16:26
Sonic, that mortgage price you calculated is my rent right now. And, I don’t get any kind of tax break. I’m betting home prices come down in the next couple of years because of interest rate increases. What many people forget when they buy a new home is that your property tax increases proportionally to your purchase price. So, say here in the Los Angeles area, you buy a $700k house; your monthly property tax is roughly $7,000 a year, which is almost $600 a month on top of your house payment.
May 2nd, 2006 at 17:05
That’s rough Misanthrope.
From what I’ve heard, a couple of years ago rent used to be $1,700/mo…in NEW YORK CITY. Get a rope.
I wonder what they are now.
May 2nd, 2006 at 21:06
The real estate problem could be solved around the northeast with more commuter rails to more places. You scope out a planned added route, finance a property at the destination, and once the thing is up and running, prices in your neighborhood will rise some every year.
Carbon is an issue, gas costs too much…build these things!!! Get them running as fast as you can…Boston to New York in 45 minutes.
May 3rd, 2006 at 0:08
I think commuter rails are needed everywhere, especially California.