Future of real estate in irvine

[qwerty]

Interestingly, even switching to an ARM doesn't fully offset the MR and HOAs.

Still not getting it, IC?

By the way, $200k income is hardly upper class in Irvine. That's barely enough for a starter home and not enough for extracurricular activities with a couple kids. AMT and MR/property tax would be meaningful.

Yeah I don't know how you can buy a house in irvine and raise a family on 200k. That alone should be a red flag not to buy in irvine right now.

 

[bones]

=

 

[OpenSky]

8)

 

[Irvinecommuter]

Interestingly, even switching to an ARM doesn't fully offset the MR and HOAs.

Still not getting it, IC?

By the way, $200k income is hardly upper class in Irvine. That's barely enough for a starter home and not enough for extracurricular activities with a couple kids. AMT and MR/property tax would be meaningful.

Yeah I don't know how you can buy a house in irvine and raise a family on 200k. That alone should be a red flag not to buy in irvine right now.

You can and plenty of people do.  The hurdle for ownership in Irvine is not monthly affordability...it's the 20% down payment.

At $200K, one's monthly gross income is $16666.  Net pay is about $11,000

a $850,000 house at 20% down would mean a mortgage of $680,000...which is a payment of about $3,450 a month.  Add in HOA and taxes of about $1,500 a month...you have housing cost at about $5,000 a month.

Thus you have about $6,000 of disposable income after housing payment even assuming no housing related deductions whatsoever.   

 

[Irvinecommuter]

Perfect example of missing the point. You need $650 more per month to qualify, plus upgrades, which is closer to $200k.

Also, a 3 br place easily puts you in range.

No...I'm not missing the point. 

1)  the fact that it's calculated into the mortgage qualification means that it's already accounted for.  It's not a surprise.

2)  AMT isn't all or nothing deal at $200K...the exemptions are phased out at that point.  Complete phase out doesn't happen until $323K for single or $477K for couples.

It's material. Rent vs buy macro analysis leaves it out, and folks often purchase based on that analysis. Hell, even you backed into income required conveniently leaving out the MR/HOA nut.  That's the point.

No..because for most people (like me)...deductions even out with MR/HOA fees.  The offset may not be perfect but it's close.    The rent v. buy calculator also does not factor in tax deductions.

I didn't back into the income requirement...the income I quoted already included the MR/HOA in the 28% (because that's supposed to be in the 28%).  If we're just talking about straight mortgage payments analysis...you can qualify for a $2,700 monthly payment with an income of about $120K.  $150K income contemplates housing costs of $3,500 a month.

The calculator is meant to be a rough analysis of affordability.  But when you are going through the loan qualification process, you do the specific analysis countless times.  I know I did...and so did the lender. 

Also...there are much better calculators out there..

this one for example:
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

I did the calculation based upon that calculator for a $850K house...the rent v. buying tipping point is a little over $3,400.  That's presuming that you intend on selling your house in 10 years and worrying about lost opportunity costs.

 

[irvinehomeowner]

As soon as interest rates rise, sales will fall, and prices will eventually drop.

Over the past ten years, I've seen very little correlation between interest rates and values. It defies all logic.

I've been saying this for years, there is no directly proportional relationship between the two.

Rates took a dive after the bubble burst and where did prices go? Down. Prices have been low for years, and then they bump up a bit in the last year and a half and according to everyone else, prices should drop right? Nope.

 

[thezeb00]

People what is AMT? And how does it impact?

 

[Irvinecommuter]

As soon as interest rates rise, sales will fall, and prices will eventually drop.

Over the past ten years, I've seen very little correlation between interest rates and values. It defies all logic.

I've been saying this for years, there is no directly proportional relationship between the two.

Rates took a dive after the bubble burst and where did prices go? Down. Prices have been low for years, and then they bump up a bit in the last year and a half and according to everyone else, prices should drop right? Nope.

That's probably because there are a lot of FCB in Irvine that do not employ the mortgage industry.  Also, rates are still incredibly low...if you bump the interest rate to 6 or 7%, you are going to see a big effect.

 

[OpenSky]

 

[ps99472]

People what is AMT? And how does it impact?

alternative minimum tax
http://en.wikipedia.org/wiki/Alternative_minimum_tax

 

[OpenSky]

 

[The Motor Court Company]

AMT does not affect FCBs.

People what is AMT? And how does it impact?

 

[gasman]

As soon as one is subject to AMT (which kicks in for various reasons, including excessive deductions -- like mortgage interest or donations), property tax is no longer deductible. That includes Mello Roos.

I want to give a big F-U to the bastards who created AMT for the dozen or so original targets, then decided not to scale it up with inflation.  Middle class...screwed.

 

[OpenSky]

;D

 

[jmoney74]

Interestingly, even switching to an ARM doesn't fully offset the MR and HOAs.

Still not getting it, IC?

By the way, $200k income is hardly upper class in Irvine. That's barely enough for a starter home and not enough for extracurricular activities with a couple kids. AMT and MR/property tax would be meaningful.

Yeah I don't know how you can buy a house in irvine and raise a family on 200k. That alone should be a red flag not to buy in irvine right now.

You can and plenty of people do.  The hurdle for ownership in Irvine is not monthly affordability...it's the 20% down payment.

At $200K, one's monthly gross income is $16666.  Net pay is about $11,000

a $850,000 house at 20% down would mean a mortgage of $680,000...which is a payment of about $3,450 a month.  Add in HOA and taxes of about $1,500 a month...you have housing cost at about $5,000 a month.

Thus you have about $6,000 of disposable income after housing payment even assuming no housing related deductions whatsoever. 

Agree with IC here. The issue is the down payment.

 

[The Motor Court Company]

Exactly. The average downpayment in Irvine is more than 20%. And yes a lot of downpayment was in NT, RMB...etc.

With a house paid off you can work a $15 per hour job like SoCal's husband does and still live comfortably in Irvine.

 

[qwerty]

Interestingly, even switching to an ARM doesn't fully offset the MR and HOAs.

Still not getting it, IC?

By the way, $200k income is hardly upper class in Irvine. That's barely enough for a starter home and not enough for extracurricular activities with a couple kids. AMT and MR/property tax would be meaningful.

Yeah I don't know how you can buy a house in irvine and raise a family on 200k. That alone should be a red flag not to buy in irvine right now.

You can and plenty of people do.  The hurdle for ownership in Irvine is not monthly affordability...it's the 20% down payment.

At $200K, one's monthly gross income is $16666.  Net pay is about $11,000

a $850,000 house at 20% down would mean a mortgage of $680,000...which is a payment of about $3,450 a month.  Add in HOA and taxes of about $1,500 a month...you have housing cost at about $5,000 a month.

Thus you have about $6,000 of disposable income after housing payment even assuming no housing related deductions whatsoever. 

Agree with IC here. The issue is the down payment.

I don't know. If you had two people working each making 100k and if each person maxed out their 401k that is 35k less and now you are down to 165k. And if both people work you have to pay for daycare. I guess u can do it but it can't be comfortable.

 

[OpenSky]

;D

 

[OpenSky]

 

[jmoney74]

Nevermind the obvious - that mortgages and bills are monthly and paychecks are typically bi -weekly, which takes a bite out of liquidity for lots of households, save for 2 months a year.

Add 401k withholdings, healthcare premiums, car payments/expenses, child care expenses, 529 savings for x kids, some student debt, out of pocket healthcare costs, tutors, allowances, vacations now and again, sports and arts for the kids. It doesn't leave much left for savings, eating out and a little play time.

$200k is barely enough even for an $850k starter home with typical expenses. Even with 20% down, assuming someone can scrape it together without borrowing against their 401k, which further eats into monthly cash flow.

Let's just say take home $100K

$8333 per month
- 4000 per month for home mortgages and bills

4333 per month

-2K a month for 2 kids

$2,333

So that's what you're probably left with spending if you took home 100K.  Plus car payments.. probably should be driving a civic or something at that rate.