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As much as I don't like what I do sometimes, it give me the opportunity (time and money) to do what I enjoy which makes it way more tolerable. We all know how expensive our hobbies can be.
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The kids grow and move on so fast, the tight space is so temporary. Of course I am sure where you are the same money doesn't get you as big of a house as it does here, so I can't guess as to how tight it is.
The best thing we ever did was pay off our modest house, I honestly would never get another mortgage again (barring any major emergency). Greatest feeling in the world to be debt free, wish I had done it sooner.
The average time children live at home till now is also 25, so when you say space is tight for a temporary time I'm looking at the next 25 years. (That's the entire time I've been alive) If a $550k home in CA was in a nice neighborhood that had 4 bed 2 bath I would be happy but it simply is not.
When you think of a million dollar home you're probably thinking of something crazy and lavish where in Orange County CA that home would cost $5 million.
https://www.zillow.com/homes/for_sale/Fullerton-CA/pmf,pf_pt/25357866_z…
https://www.realtor.com/realestateandhomes-detail/3717-Amberwine-Ln_Wak…
Like I said in my original post on this topic, many people are one sickness, injury, or job loss away from bankruptcy.
And I certainly have an idea of what the real estate is like in CA, that's why I don't live in a state like that. I left the NYC area for the same reason, I saw where it was going and didn't like what I was looking at. And the only reason real estate (and everything else) has done what's it has done in the last 20-30 years is because of the ease of financing. Our parents (or your grandparents!!) would never have, or couldn't even, buy a house with only 10% down (or even less or nothing down now, which is insane).
Just be careful man, that's all I'm saying. I'd hate to see a young guy like yourself get over leveraged.
Just my opinion, nothing else.
Financing is a great tool though and you need it. My wife and I bought our first home 3 years ago with 3.5% down and have over $100k in equity now. You can't save money while paying huge rent. If you're one of those people thinking you should put 20% down it's impossible in CA for kids like me. How can I possibly save $100k to put down on a house when you have to pay $2,300/month for a 2 bedroom apartment? Way better to just buy with minimum down and build equity. My only other option was to continue to live at home but my wife and I just got married and that's not great for newlyweds.
Using your numbers and income from your original post you could easily save $100k paying $2,300/month (which is ridiculous I agree) in rent, it's all about priorities and discipline. You said you would pay $5,500 a month on a mortgage, that would mean you could save $3,200 a month if you had $2,300 a month in rent. That's $115,200 in just 3 years, which flies by. So you can't say it's impossible, it's all about choices.
One thing a lot of people forget about when buying a home (and I'm not saying you), is it's more than just the mortgage/taxes. Maintenance on a house is a bitch and will eat up the investment everyone thinks it is quickly.
By the way, I've enjoyed the discussion we've had. I enjoy hearing other people's opinions/views on certain subjects, especially from a different side of the country.
i know about Canada, with it being right next to us.
What are winters like there?
While we could decide to save up as you mentioned we would be foregoing the tax savings from the home and the ability to build equity. One of my co workers and her husband were adamant about saving 20% as you recommended for the last 3 years instead of buying a home when I did and they highly regret it now because in Torrance, CA a home they could of bought 3 years ago for $700k is now $900k-$950k. They have saved up $100,000 to put down on a home finally but they could of just bought 3 years ago and now have been sitting on $200k in equity just from the market rising.(Granted that could evaporate considering a recession). While saving that 20% they have lost out on a lot. It is a great idea to save 20% but that only works well in a stable housing market (which we almost never have). I'm just a big believer of buying a home as quickly as possible if you have a stable career/income due to the building of equity. Unless you're unsure how long you will live somewhere or really can't afford to buy then you should rent.
This conversation has been good. Seriously I'd love to move out of CA but I like the whether too much. The politics put a horrible taste in your mouth though.
Keep in mind buying a $1M home is not for being big and lavish. It's just to have a little bit of space. With two kids having 2 bathrooms and 1 extra bedroom for an office is not extravagant. That is just what the market dictates is the price. That $650k home you live in would cost probably $4M where I live. In a $650k home for your area you're going to be living a way more extravagant life than I will.
In my opinion they should wait and keep saving, they will regret it much more if they buy a house now at $900k and and it goes down to even $800k or much much less. Which is very possible in a volatile market, I don't care what someone said at an "economic forecast event". That's kind of like a weather forecast to me, useless more than a few days out.
We can all kick ourselves for missing out on something we should have bought and we think "we missed out on", hindsight is always 20/20. But I've seen two good downturns in my adult life (the dotcom bust and the housing bust of 08/09) and they were painful for many.
And I never really recommended 20% down, I personally don't even think that is enough. My parents generation had no choice, that was the minimum requirement back then. And when do you think all this craziness started? Coincidence, I think not. And I believe you still have to pay PMI under 20% (not sure, have never done it), what a rip off that is.
I get what you're saying about saving percentage wise but in CA the prices are almost to high to ever hit that. If you're saying 20-30% on a modest home in your area which costs $350k then yea, that's feasible to save for within 2-3 years. If a single family home is costing $700k then saving $140k is really hard. We have differences of opinion but I'm coming from a younger persons point of view. The only way I could eventually buy a $1M home before 30 is by buying the house I live in right now, building equity, and rolling that into the next house.
I've also followed the advice of my parents throughout all of this and they own 7 homes in which 6 are paid off. They may have not given me money for a home but they have definitely blessed me with knowledge and the ability to live at home for free while attending college. (Full disclosure they did pay for my bachelors which was cost in total $20k over 5 years) My MBA I have paid for on my own.
Pit Row
I'd move east to Idaho. If I moved South , it wouldn't be to much further than the border , as I want nothing to do with S. Cali. Nice to visit , but would never live there. OR.......I'd move way North into S. Canada on the Western side , because I dig the people from there. I probably have that order reversed , as I would probably move North before anything else. And if Southern Cali is so great.......WTF is everyone moving out of it? Maybe because it's slowly becoming a 3rd world , Liberal cess pool? You want to live that way?.....Stay there please. My town is already fucked up enough.
https://lao.ca.gov/laoecontax/article/detail/265
And the crowds everyone freaks out about? That noise comes from the mouths of tourist or someone who doesn’t know their way around. I can hop on my bike and have complete solitude in a matter of minutes. From mountains to isolated beaches (yes even here in So Cal you can be on a beach by yourself when you know where to go)
I can deal with the drawbacks people read or watch on the fake news. All I know is life here is paradise to me. And BTW I’m not a Liberal. There are plenty of “normal” people here ?
Even if you had a $ 250 K income 60% Roughly will be eaten by federal and Stare income taxes, the CA sales tax puts you at 60%.
If you marry into big money or you hit the lottery then disregard the above . Lmao!
https://www.sandiegouniontribune.com/opinion/the-conversation/sd-califo…
And even though I am a native So Californian I did try 8 years in the middle of a forest in Oregon. 20 acres and I loved it. However after 8 years of 90” rain totals the women had enough and we came down to the beach. I sure miss the forest/rivers but nobody misses rain from Oct-May. The Northeast is beautiful though but I could never take the winters, or humid summers. I’ll pay for good weather
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