<p>Unless you live in one of the many citites where the median price is under $150K. Also high appreciation is GOOD for familes and typically it is higher in the highpriced markets. So you sacrifice and spend 50% of you HH income on the mortgage. Then you retire to a lowcost market and are set for life. Hmmmm sounds like a plan.;-)</p>
<p>Families at $49k (the median inside the city of San Francisco proper) do not spend “half their income” on $750k mortgages. To be exact, it works out (at 6%) to 110% of their gross income before taxes. </p>
<p>Of course, there is such a thing as “negative eating”.</p>
<p>(Do you live in an alternative universe?)</p>
<p>No, but take a look at cities like Oklahoma City, Spokane, Indy, Alb, NM, San Antonio, if you earn around $52K you can afford a decent house. Not everyone can afford a Porsche and not everyone can afford to be a homeowner in SF. I don’t live there because it it way too expensive and I make well over $52K and could get a job there with a phonecall. But I don’t want it at that price.</p>
<p>Here’s a list of cities with median SF home prices under $160k
Akron, Amarillo, Appleton, Beaumont, Binghamton, Birmingham, Bismark, Bloomington, Buffalo, Canton, Cedar Rapids, Chambana, Charleston WV, Chattanooga, Cincinnati, Cleveland, Columbia SC, Columbus, Corpus Christi, Dallas, Quad Citites, Dayton, Decatur, Des Moines, Detroit, Elmira, El Paso, Erie, Fargo, Ft Wayne, Grand Rapids, Greensboro, Greenville, Gulfport, Houston, Indy, Jackson, MS, Kansas City, Knoxville, Lansing, Lexington, Lincoln, Little Rock, Louisville, Memphis, Mobile, Montgomery, Okla City, Omaha, Pittsburgh, Rochester, Rockford, St Louis, San Antonio, Shreveport, Sioux falls, Spartenburg, Springfield iL and MO, Syracuse, Toledo, Topeka, Tulsa, Wichita, Yakima, Youngstown.</p>
<p>I forgot about the “Cascade” neighborhood- south of Lake Union
that is a very upand coming neighborhood–lots of businesses going in, nice condos, easy access to the freeway & they are really getting a lot of community spirit going for a neighborhood that until recently hasn’t been known for residences. </p>
<p><a href=“http://en.wikipedia.org/wiki/South_Lake_Union,_Seattle,_Washington[/url]”>http://en.wikipedia.org/wiki/South_Lake_Union,_Seattle,_Washington</a></p>
<p>Thats actually probably where I would move to as it is more community feeling than the area around the waterfront</p>
<p>Spokane, Indy, Alb, NM, San Antonio, if you earn around $52K you can afford a decent house</p>
<p>Well ya- but average household income in Spokane is about $37K isn’t it? so you would still be a bit short.
Its cheaper where there aren’t many employers, but uh, most people need a job to pay their bills.</p>
<p>I’ll be more than happy to sell my NoVA home when it goes up for sale (hopefully) next month for 10-15% less than it was last year. The profit will be somewhat less obscene, but will still buy me something nice here in Madison.</p>
<p>"No, but take a look at cities like Oklahoma City, Spokane, Indy, Alb, NM, San Antonio, if you earn around $52K you can afford a decent house.:</p>
<p>And who will teach the kids, move the garbage, maintain the roads, wash the office windows, serve the food, and stock the shelves in San Francisco? (actually, I know the answer, because it is moving in that direction anyway - undocumented immigrants.)</p>
<p>Yes, Barrons. How many people actually earn a half million dollars who are buying our million dollar regular Joe houses? Well, they are down to about $900K now. A regular steal.</p>
<p>I don’t know–probably people that sold $750,000 houses they bought for $250,000 and put the profit down on the $1,000,000 place.</p>
<p>As to SF–they made their bed as an anti-growth home for the rich (Hi Nancy)–so I don’t really care.</p>
<p>There are these loans. You pay 1/4% a year for 5 years, interest only. Then you owe the accumulated interest at around 6% per annum. </p>
<p>So it works like this. On a million dollar loan, your costs are 2500 a year for the first 5 years. This is much cheaper than renting. Rent would probably be 30-40,000 a year. </p>
<p>Then at the end of 5 years, you owe an additional $350,000 approximately in unpaid interest.</p>
<p>So you refinance the loan. Now your loan is for 1.35 million. At 1/4 % you are paying 3375 a year in interest. </p>
<p>As long as real estate keeps going up in price, and you can refinance, you do this forever. If real estate keeps going up at more than 6% a year you are in good shape. You get to live in a house cheaper than renting with the chance of upside if there is appreciation. You are making a bet.</p>
<p>If real estate doesn’t go up in price, we are going to have big financial problems. People spend the unpaid interest. </p>
<p>I hate these loans on many different levels. They are very inflationary and add a tremendous stress to the financial system. </p>
<p>If these loans and other loans fail, I don’t want to see any bailouts.</p>
<p>People taking these loans are gambling and if they lose, they should lose. And the losers should includes all the mortgage brokers, mortgage originators, people who buy mortages, real estate brokers, title insurers, government entities that rely on property taxes, etc. who have benefitted by higher prices that loans like these help cause.</p>
<p>This is how you buy a house in SF. (Thankfully, not everybody does this).</p>
<p>"If these loans and other loans fail, I don’t want to see any bailouts.</p>
<p>People taking these loans are gambling and if they lose, they should lose. And the losers should includes all the mortgage brokers, mortgage originators, people who buy mortages, real estate brokers, title insurers, government entities that rely on property taxes, etc. who have benefitted by higher prices that loans like these help cause."</p>
<p>Absolutely. I hope that these are not the rule in SF and other highend markets.</p>
<p>If a family of two earners can’t make around $50,000 they should consider getting some further education or training. Most cities need nurses and you can get an RN in just over 2 years. Even in small towns they make at least $40K to start.</p>
<p>In SF, 50 year fixed mortages are starting to be pushed.</p>
<p>so when does the payment start to pay down the principal?
about when you start to collect social security?</p>
<p>They call that the eternal optimist mortgage. Especially when you take one out at age 50.</p>
<p>If these loans have been securitized and resold into the secondary market. the owners of these securitzed loans will obviously take the hit. </p>
<p>If the owners are banks, hedge funds, pension funds, etc. then the impact of default will eventually be passed through to us the consumer. Bubbles bursting affect all of us.</p>
<p>^ I beg to differ. Brokers are the middle man, they don’t lose anything. Likewise for origninators. Who loses are the investors for the mortgages. HSBC announced today their exposure to variable mortgages-not good. I hope that you don’t own stock in HSBC and you have longterm CD’s.</p>
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<p>Who cares? I sure don’t. If they can afford $750k for what amounts to an apartment, they can afford to pay more for services. Or move elsewhere. God didn’t tell me I had an entitlement to live in San Francisco.</p>
<p>Weirdly condos are apparently way up in Westchester County (near NYC) while everything else has softened.</p>
<p>Amen Washdad. They can pass a new $50 an hour minimum wage.</p>
<p>
I agree. Let the residents pay what’s necessary for the services. If no teachers are willing to work for a low wage due to their cost of living, then the residents will simply have to pay more to attract the teachers. Teachers and other services typically cost more in areas that have a higher cost of living. There’s nothing unusual about this. Supply and demand rules.</p>