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 ...
"“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.”"
This is classic crowd behavior near a top of a mania, though there are certainly other factors that drive buying a house besides fear/greed.
So much talk about this "housing bubble" and prices just keep going up. Yet not a word about the SUV bubble. When gas hits 3/gal the market will be flooded with used SUV's, car makers are already seeing demand slump, and anyone wanted to seel their two year old $50,000 SUV will be lucky to get $35,000. Why would people want to drive a truck when all they need is a nice wagon, like a Volvo for example.
massive illegal immigration = massive increase on the demand side of the equation.
Shhhhhhhhhhhhhhhhhhh!!!!!!!!!!!!!!!!!!!!
I have seen lots of very nice houses with no furniture, and the owners can barely afford to mow the lawn, nevermind pay for some nice shrubs for landscaping. It doesn't even sound like they got a real nice house.
House-poor. It must suck!
Just wait until the bills start hitting and unmarried couple splits, one is left holding the bag on a $4K/month note. Scary stuff.
You won't have to clean, just let rooms lie fallow for a bit. :)
Don't worry. Most Californians are not willing to give up the climate, the beach, the mountains, etc. It's all here.
No kidding, Yikes is right. That's about 6 mos of mortgage payments for us (~680/month) and our house is the same size as theirs. And we make about the same as they do, combined (but I'm soon to lose my job, so having a low mortgage is very nice right now).
LQ
Yea, a lot of couple fight over money. These two are very likely candidates for that.
No more romantic dinners when all you can afford is mac & cheese or {{yeck}} hot dogs.
For the 6 months leading upto Memorial Day weekend just about every talking head in America was talking about how gas would be over $3 a gallon for the big travel holiday.
Didn't happen. And I don't see it happening any time soon barring an unforseen disaster such as the Saudis turning off the pumps.
Paranoia may destroya.
I couldn't care less about California. It's going to belong to Mexico soon, anyway.
Of course renters pay property taxes, and usually more per sq ft than owners of homes because they're paying for common areas such as the leasing office and tennis courts they might not use.
Yep. I pay $1150 per month renting a one-bedroom, largely because there are no places within a 20 mile radius of where I work that 1. I can afford or 2. where any sane person would consider living.
Thats nothing, my sister in law in San Jose just bought...they paid a little less than 800k........
As someone on the mortgage side of real estate I am constantly dealing with rate shoppers and those who are trying to time the market for the bottom dip.
I tell every single one of them that those who catch the bottom do so by accident.
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