Posted on 05/31/2005 10:33:33 AM PDT by TXBSAFH
Hot California market daunts first-time buyers Median home price passes $500,000; many young workers shut out
Paul Sakuma / AP file A home for sale in Los Altos, Calif. The pace of existing-home sales rose 3 percent last month from the year-earlier level. By Martin Wolk Chief economics correspondent MSNBC Updated: 12:51 a.m. ET May 28, 2005Pity the poor first-time home buyer in California. With the median price of a home in the Golden State crossing $500,000 for the first time, getting into that “starter” home requires perseverance, luck and a willingness to think small.
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Maya Vestal, 25, who works for a biotech company, took the plunge this month with her boyfriend, plunking down $585,000 for a 1,200-square-foot home near San Jose in a neighborhood she describes as “not great.”
Frankly, the three-bedroom, one-bath house doesn’t sound all that great either. Built in 1940, it needs about $50,000 worth of work including new plumbing, new wiring and a new kitchen, she figures. “The only thing we’re keeping are the floors, which are beautiful, original hardwood.”
Together, Vestal and her boyfriend, a 25-year-old city worker, earn more than $100,000 a year, but the new $3,800 monthly mortgage payments will eat up nearly 70 percent of the couple’s take-home pay.
“It’s a lot of money, and it’s really scary,” she said. “We really like to travel, and we probably won’t be able to do that so much.”
But with prices going up so rapidly and long-term interest rates lingering at their lowest levels in four decades, Vestal and her boyfriend didn’t want to risk waiting.
“We felt if prices or interest rates go up, we’ll be priced out of the market,” she said. “Even if rates went up half a percent we wouldn’t be able to afford a house.”
(Excerpt) Read more at msnbc.msn.com ...
A $3,800/mo mortgage? That's gotta be tough to swallow.
PONZI PING!
Not if the house appreciates 4k/month.
All I can say is YIKES!!!
Like that's going to go on forever.
I hate seeing young people continually falling for this line of BS from the mortgage industry. Rent, pay half what your mortgage payment would have been, take advantage of the fact you won't be paying property taxes, enjoy your freedom while you are young, laugh at the silliness of the ad campaigns...and when the market changes and the rent/mortgage payment ratio again gets close to 1:1 (instead of the current 1:2), only then consider buying.
That's a NSS statement if I've ever seen one.
It is total insanity.
Yes I can't imagine a $3800/month mortgage. Those 2 25 year olds make over $100,000 a year. That's pretty good money in any other part of the country. I've been working for close to 35 years and don't make that kind of money. Of course, I live in Indiana.
70-percent of their take home pay? Sounds like some loan officer is either pretty stupid or pretty greedy. But then there's the old saying, to wit: "Just before God makes you greedy he makes you stupid."
And what exactly is the line of BS?
Rent, pay half what your mortgage payment would have been, take advantage of the fact you won't be paying property taxes
Renters pay property taxes. Their included in the rent payment.
My wife and I bought a house (3 Bdrm/1 Bth) in the Long Beach/Lakewood area (nice, middle class kind of place) for $185,000 in 1998. We sold it in 2001 for $259,000. Today, that house goes for $425,000 - go figure!
Insane.
And/Or I've also heard stories where people have to sale to re-locate and they take a big % loss.
Hope that is true. Also, I don't have a $50,000 down payment.
(I just exited Grad school and I'm going on my second job which is really good and a Keeper.)
And the loan officer isn't being "Greedy." If their application gets an Approval/Eligible from either the Fannie Mae or Freddie Mac underwriting engines, and the borrowers provided the required documentation, Fannie Mae/Freddie Mac has to purchase the loan.
"This is your last chance! If you don't buy NOW it could be too late, and you'll NEVER get the chance!" LOL! It's a scam as old as the hills. I know you're in the business, and don't take it personally, but a wise financial advisor would be telling most of your younger potential clients to steer clear of the game at this time.
This lady and her boyfriend could have gotten a brand new 5 bedroom 5 bath home here in Northeast Wisconsin.
Anyone considering buying a home in CA needs to have their head examined.
My house is 4 bedrooms, 2-1/2 baths, and 3140 square feet. Monthly mortgage payment is about $1500/mo, and that includes property tax and insurance.
$3800/mo ? YIKES !!!
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