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I've always been curious, but exactly how do people afford homes in California?

12,359 Views | 61 Replies | Last: 7 yr ago by CRE-Ag
FDXAg
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AG
I've wanted to ask this question for years and feel like an idiot asking it, but I just don't understand how so many people are affording the outrageous home prices in places like California. Last night the wife and I were watching a "House Hunters" episode where a single mom was looking for a house in Oakland. Her budget was $800k (which is ANOTHER thing I don't understand), and the 3 home choices she was deciding from were AWFUL. One was a 1600sq 2 bedroom, 1 bath option that wouldn't be more than $100k here. The one she ended up choosing was about 2400sq. and was listed just under her $800k budget, but the show said she ended up in a bidding war for the house with multiple other buyers and had to shell out $920k to secure it!

Any of those homes would have been $130k MAX anywhere in Texas, so the price difference is just ridiculous. I know property taxes are much lower there, but there is no way that makes much of a difference. Incomes can't possibly be 5 times greater on average out in California, so how exactly are people doing it? Or is it actually that only the rich have houses out there?

Again, just curious. I've never lived anywhere but Texas so I have no idea how people do it in these coastal states where I see the average home prices are nearly half a million. All I know is a world here where you can make $60000/year and actually own a modest $150k house.
Premium
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AG
Did you see the Oakland fire? I don't think they are all affording $800K homes. They do make more money though - tech firms, entertainment, etc.

But yeah, when a teacher and a fireman buy those kind of houses. They could have rode the market up. Inheritance. No other expenses (no car, ride public transit). Variety of ways.

And yes, I just read taxes are closer to 1%. But I imagine they gave a high income tax so that really doesn't mean much.
Orlando Ayala Cant Read
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AG
i'm thinking there's much less of a supply out there so a lot more people living in rentals? salaries are higher out there no doubt but they aren't 4Xs higher which is about what the houses seem to be.
unmade bed
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Yeah, some of those people on House Hunters type shows really make me wonder how the **** they get their money. Especially the International House Hunters. Saw one once with some guy that had to be in his 50s. He and his wife were looking for houses in the $1,000,000 range. He was a landscape architect and he and his wife were looking to retire. Wife didn't work and there 3rd child was going off to college, so instead of being empty nesters they were leaving the country to start a "new adventure."

I didn't give a **** about what house they picked, I was hoping they were going to give some financial advice. How do you afford a $1 mil house, retire young and have put 3 kids in college?????
The Original AG 76
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AG
Wife and I also like to watch a lot of those HGTV shows and also marvel at the prices in Calif. he Flip or Flop ( that blonde is HOT) show really drives it home. Those guys are always buying horrible 1500 sq ft DUMPS for $450k in some La Bonita El Burrito burg around LA then flip it for $750k. These are homes that very few of us would live in even after the flip but the prune pickers seem to be completely at ease with those prices.
I hear that a lot of these are 2 income $150-200k yr teacher-fireman couples who own 1 car and get loans that consume 50% of their income. Its a lifestyle that few Texans could understand. But those people think they live in paradise...and ,thank Gawd they do..otherwise they might come here....
schwack schwack
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AG
I've often wondered the same thing - how in the heck can people with "normal jobs" afford these crap houses? I guess they stay out there for family, the weather, etc. but life could be so much easier elsewhere. I did a quick search & found this:

Quote:

What is the average teacher salary in California?

The group found that the average full-time teacher in California made $84,889 last year and about 34,750 teachers were paid more than $100,000 in total compensation. One hundred superintendents made more than $250,000 last year, the data shows.



The Original AG 76
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AG
schwack schwack said:

I've often wondered the same thing - how in the heck can people with "normal jobs" afford these crap houses? I guess they stay out there for family, the weather, etc. but life could be so much easier elsewhere. I did a quick search & found this:

Quote:

What is the average teacher salary in California?

The group found that the average full-time teacher in California made $84,889 last year and about 34,750 teachers were paid more than $100,000 in total compensation. One hundred superintendents made more than $250,000 last year, the data shows.




Yep. That supports the oft mentioned claim that the routine teacher/fireman straw man couple in calif can hit the $200+k income level. Still makes a $750k 1600 sq ft 1968 vintage house a stretch.

And BTW: you do NOT want to know what the educrat cabal upper management makes even here in Texas. A TON of suxperintents make in the $300k+ incomes. One of best gigs around. Completely wasted and useless but....
AggieDruggist89
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AG
This is my 3rd time in CA.

Once as a student..

A decade and half ago..

And now for the past 5 years.

This is what I know...people don't know any better. They get caught up in the weather and CA euphoria and self justify 2 hour commutes.

Sure, some may make a few dollars more but pay more in taxes and fees in CA.

In my opinion, more Californians are stretched thin living in houses they can't afford, driving cars they think they deserve because neighbors do. Their quality of lIfe and quality of real estate are much lower than many other places in the US.

But, their real estate appreciates much faster than Texas RE. 13 years ago, I sold my house at 30% + profit in 12 months. And my current house appreciated significantly past 5 years...

Whereas I lost money on my DFW house..

Of course timing has some to do with it.

But...that's how Californians do it. Buy up.

Now, if you're moving to CA after selling your 3500 sqft MacMansion for $300,000 in Texas and trying to buy a similar house in the Northern Cal Bay Area,

Good Luck.
AggieDruggist89
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AG
Oh, and my parents bought a 1700 sqft dump for $200K in orange county in late 80's for a rental..while I was at A&M.

They are talking about selling... $700K + and it will sell before it lists.

Unbelievable.
jrt336
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People also buy houses much later in life than most people in Texas do. A lot more renting. Property taxes are much lower in CA than TX though.

A lot of people in LA seem to come from money as well. A lot of wealth in the area.
East Dallas Ag
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AG
These may have been outlawed post-market crash and lending reform but there used to be 40 & 50 year amortization loans for high price areas like CA.

They also saw rapid appreciation a long time ago and many road the property ladder up.
AggieDruggist89
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jrt336 said:


A lot of people in LA seem to come from money as well. A lot of wealth in the area.


Not everyone can be the Kardashians..
tamutaylor12
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schwack schwack said:

I've often wondered the same thing - how in the heck can people with "normal jobs" afford these crap houses? I guess they stay out there for family, the weather, etc. but life could be so much easier elsewhere. I did a quick search & found this:

Quote:

What is the average teacher salary in California?

The group found that the average full-time teacher in California made $84,889 last year and about 34,750 teachers were paid more than $100,000 in total compensation. One hundred superintendents made more than $250,000 last year, the data shows.






Looking around at the posted teacher salary schedules, that information seems to be incorrect. Median teacher salary in LA is 59,000. The absolute max is about the number you listed. Possible they are including total cost of employment.

Hell, starting teachers in San Francisco make 48k and won't hit 60k until they work for a decade. Not sure how people can even live on that in the Bay Area.
62strat
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AG
Prop taxes are huge. My first house in tx was a measly $120k.

When we sold, had we bought in tx our budget would maybe be $200-$250k. we instead move to Colorado and can afford almost $400k for same monthly payment as tx budget. Difference is prop tax.

Another big thing in CA, property taxes are based on the last sold price. So the taxes don't increase until the house is sold to a new owner. There are people in million dollar houses that are paying taxes based on the price they paid in 70s or 80s when they bought it.

Doesn't answer a house hunters situation, but it's the case for many home owners in ca for sure.
Matsui
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Last year my wife and Kid moved from ft worth to Los Angeles
Matsui
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In Los Angeles county where we live 55% of people rent. There are people who will rent for the rest of their lives

But remember these housing prices were 1/2 of today in 2008

There are a ton more people moving here than moving away

40% increase in pay is typical but there a lot of high earners based here
Matsui
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but also buying a condo or apartment for 400k and living in it your entire life is normal to

Also giving your house to your kids is normal


But I still don't get the person who is the manager a Hilton or something making $60000 a year. I'd ask for a transfer to Phoenix or something.
Matsui
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AG
Los Angeles and huge density requirements. You can just build a 10 story apartment complex like anywhere else. Most appartment or condo complexes are 2-3 stories only.

There frankly isn't anywhrrr else to go so supply is low and demand is high

There are a ton of people making big money in the entertainment business or in the import business.

You have to compare Los Angeles to international cities. It is still cheaper here than London Paris Hong Kong shanghi berlin Rome etc. that is why you have a huge number of foreigners buying houses here
aggiemike89
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I've heard they take out a 40 and sometimes 50 year mortgage.
Matsui
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There are a lot of potential buyers in Cali hoping for a trump led economic crash that will decrease this housing market 30-40% so people can buy a single family home.

I think people just love being out here and get caught up in the lifestyle and weather. Don't get me wrong there are a ton of poor or people who are struggling.
Matsui
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But who really wants to make $60000 a year and live in a modest house? I think all of us have greater or larger dreams than that.
Matsui
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And one last thing families with multiple generations living together is more normal here.

Check out the link
http://www.realtor.com/realestateandhomes-detail/4647-Willis-Ave-Unit-309_Sherman-Oaks_CA_91403_M23320-27680#photo0

Something like that is very normal to live in and raise your kids

I'm not defending it I'm just saying that is all the average person knows here bc they are from here and all family is here so they don't want to move. Plus for the same job in a diff state they would take a pay cut so they prob don't want to move even though they would be better off.
Matsui
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Sorry we have density restrictions. You can't just knock down a 3 story apartment complex and build a 10 story one. Not allowed. So it creates a supply demand issue which causes high prices and forces people to move further east.
Long Live Sully
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In Newport today. Lyft driver said he pays $4300 for a 2 bedroom apartment rent. And he lives east of 405. Crazy
Matsui
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What i tell people is if your household income is $250k in Texas you probably can live in the best areas in most cities have your kids go to the best private or public schools join the best country club etc

But here in Los Angeles that might get you a 1600 sq foot house in a mid quality school district if you want a single family home
Matsui
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Rent prices you can assume $2-4 per foot. Closer to the water and closer to a hill the more (generalizing)

I don't doubt him on his monthly rent

Believe it or not but there are people here waiting in line to pay $5000 a month for rent. It's nuts. But people do it.
Matsui
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But Los Angeles you have to compare to Seattle New York Chicago Boston San Fran San Diego

But I do agree a lot of folks should look at moving to a cheaper city for a better quality of life and to actually get ahead in life.
uneedastraw
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I moved to southern Orange County a little over a year ago. It is hard to see 25-29 year olds get gifted a brand new home from their parents. In my area it seems prices remain high because people accept it as normal. Houses don't move fast down here due to the Mela Roos taxes are ridiculously high at 1.9%. It's a new area and an 1800 sf home with no yard will get about $690k from about $580k a little over a year ago.

One house next to us was on the market for 7 months at $690k. They would have taken $650k and maybe less....however nobody was buying until a young couple fell in love with it and paid full price because it didn't matter to them as mommy and daddy had given then $200k for a down payment.
Carnwellag2
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62strat said:

JProp taxes are huge. My first house in tx was a measly $120k.

When we sold, had we bought in tx our budget would maybe be $200-$250k. we instead move to Colorado and can afford almost $400k for same monthly payment as tx budget. Difference is prop tax.

Another big thing in CA, property taxes are based on the last sold price. So the taxes don't increase until the house is sold to a new owner. There are people in million dollar houses that are paying taxes based on the price they paid in 70s or 80s when they bought it.

Doesn't answer a house hunters situation, but it's the case for many home owners in ca for sure.
I am a big advocate of this. Texas should implement this for property taxes.
powerbiscuit
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Carnwellag2 said:

62strat said:

JProp taxes are huge. My first house in tx was a measly $120k.

When we sold, had we bought in tx our budget would maybe be $200-$250k. we instead move to Colorado and can afford almost $400k for same monthly payment as tx budget. Difference is prop tax.

Another big thing in CA, property taxes are based on the last sold price. So the taxes don't increase until the house is sold to a new owner. There are people in million dollar houses that are paying taxes based on the price they paid in 70s or 80s when they bought it.

Doesn't answer a house hunters situation, but it's the case for many home owners in ca for sure.
I am a big advocate of this. Texas should implement this for property taxes.
They should find a different way to fund schools. Using property value to assess your school district tax amount is ridiculous. People with kids in school should pay more than people without kids in school.
MemphisAg1
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AG
The Original AG 76 said:

But those people think they live in paradise...and ,thank Gawd they do..otherwise they might come here....
Husky Boy Jr.
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The Original AG 76 said:

schwack schwack said:

I've often wondered the same thing - how in the heck can people with "normal jobs" afford these crap houses? I guess they stay out there for family, the weather, etc. but life could be so much easier elsewhere. I did a quick search & found this:

Quote:

What is the average teacher salary in California?

The group found that the average full-time teacher in California made $84,889 last year and about 34,750 teachers were paid more than $100,000 in total compensation. One hundred superintendents made more than $250,000 last year, the data shows.




Yep. That supports the oft mentioned claim that the routine teacher/fireman straw man couple in calif can hit the $200+k income level. Still makes a $750k 1600 sq ft 1968 vintage house a stretch.

And BTW: you do NOT want to know what the educrat cabal upper management makes even here in Texas. A TON of suxperintents make in the $300k+ incomes. One of best gigs around. Completely wasted and useless but....
School district CEOs are wasted and useless? Are you under the impression that is an easy job anyone could do?
tamutaylor12
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Husky, I have learned over the years that with certain posters anything education related is going to go politics board in a hurry.
The Fife
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The overwhelming majority of the people I know who spend $400-700K over here on the other coast do it with nooooooooo money down. Well, low money. 11% is the most I've seen someone put down on a house out of all that I know about. Most are 3-5%
The Original AG 76
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AG
Husky Boy Jr. said:

The Original AG 76 said:

schwack schwack said:

I've often wondered the same thing - how in the heck can people with "normal jobs" afford these crap houses? I guess they stay out there for family, the weather, etc. but life could be so much easier elsewhere. I did a quick search & found this:

Quote:

What is the average teacher salary in California?

The group found that the average full-time teacher in California made $84,889 last year and about 34,750 teachers were paid more than $100,000 in total compensation. One hundred superintendents made more than $250,000 last year, the data shows.




Yep. That supports the oft mentioned claim that the routine teacher/fireman straw man couple in calif can hit the $200+k income level. Still makes a $750k 1600 sq ft 1968 vintage house a stretch.

And BTW: you do NOT want to know what the educrat cabal upper management makes even here in Texas. A TON of suxperintents make in the $300k+ incomes. One of best gigs around. Completely wasted and useless but....
School district CEOs are wasted and useless? Are you under the impression that is an easy job anyone could do?
I apologize for making the comment ON THIS BOARD and will not respond in hopes of killing the derail.
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