Is there anything decent I can get with my income and savings in Irvine?

S

ScubaSteve_IHB

New member
I last posted about a year ago when I was thinking about purchasing a townhouse (see this thread <a href="http://www.irvinehousingblog.com/forums/viewthread/2007/P0/">here</a>) and I am thankful for the blog as it kept me from buying.



Fast forward one year (can't believe how time flies), I see that prices have gone down (although the townhouse property posted in the original thread has held its price), but I still feel like I can't afford anything decent in Irvine.



My wife and I make about $140K a year gross and have about $120K saved up in cash and no debt, except 1 car payment to worry about until next year ($370 a month). We also have about 30K saved up in 401Ks and Roth IRA (it was a lot more, but due to the stock market crash, is gone now). I've been looking on Redfin and Ziprealty primarily and still feel that I can't afford anything in Irvine. We prefer a SFR, but it just doesn't seem feasible. Does anyone else feel this way? How much do you think we could realistically afford when you add in HOA, Property Tax, and Mella Roos with our current financial condition?



I'm especially worried now that I have seen the IHB get into the real estate business and have been following Ipoplaya's thread, stating increases in house sales. Do I suck it up and hold out longer? We just recently got married last Jan and are probably looking to start our family by next year. Any feedback would be greatly appreciated. Thanks.
 
[quote author="ScubaSteve" date=1239017855]I last posted about a year ago when I was thinking about purchasing a townhouse (see this thread <a href="http://www.irvinehousingblog.com/forums/viewthread/2007/P0/">here</a>) and I am thankful for the blog as it kept me from buying.



Fast forward one year (can't believe how time flies), I see that prices have gone down (although the townhouse property posted in the original thread has held its price), but I still feel like I can't afford anything decent in Irvine.



My wife and I make about $140K a year gross and have about $120K saved up in cash and no debt, except 1 car payment to worry about until next year ($370) a month We also have about 30K saved up in 401Ks and Roth IRA (was a lot more, due to the stock market crash, is gone now). I've been looking on Redfin and Ziprealty primarily and still feel that I can't afford anything in Irvine. We prefer a SFR, but it just doesn't seem feasible. Does anyone else feel this way? How much do you think we could realistically afford when you add in HOA, Property Tax, and Mella Roos with our current financial condition?



I'm especially worried now that I have seen the IHB get into the real estate business and have been following Ipoplaya's thread, stating increases in house sales. Do I suck it up and hold out longer? We just recently got married last Jan and are probably looking to start our family by next year. Any feedback would be greatly appreciated. Thanks.</blockquote>
Be patient, prices will keep coming down in 2009 even though sales may be on the rise. Have you considered other areas in Orange County to buy a home? There are better values out there where you don't have to pay Mello Roos or HOA so your money goes a lot further.
 
Both my wife and I work in Irvine close to the 73. We prefer to live in Irvine or anything south of that (Aliso Viejo or Ladera Ranch) and prefer to buy a house built in 2000 or later. AFAIK, most houses built after that year has mella roos. Is this correct?
 
[quote author="ScubaSteve" date=1239018490]Both my wife and I work in Irvine close to the 73. We prefer to live in Irvine or anything south of that (Aliso Viejo or Ladera Ranch) and prefer to buy a house built in 2000 or later. AFAIK, most houses built after that year has mella roos. Is this correct?</blockquote>
That is true for the most part. Typically the newer the home, the higher the Mello Roos. Have you considered looking at Laguna Niguel or the eastside of Costa Mesa? I'm working with someone who is currently looking to buy a home in Aliso at the moment and it seems that prices have come down a good bit (more so than prices in Irvine). I'm sure you know that Ladera home prices are getting crushed, but the Mello Roos and HOA fees out there are a killer. How large of a home are you looking for?



In terms of your question about how much you can afford, I would say 3x to no more than 3.5x your annual combined income. That being said, I would definitely not use all of your savings towards your downpayment has having a cash reserve for a rainy day is a must-have in today's economy.
 
[quote author="ScubaSteve" date=1239018490]Both my wife and I work in Irvine close to the 73. We prefer to live in Irvine or anything south of that (Aliso Viejo or Ladera Ranch) and prefer to buy a house built in 2000 or later. AFAIK, most houses built after that year has mella roos. Is this correct?</blockquote>


at 28% of your combined income + your down payment, I saw some SFRs in AV that look like they fit. They were built around 98-99, mello-roos and HOA were relatively low, they were low 2000s in square footage. If you absolutely must buy now...I wouldn't.



I didn't have to look for very long. Here was one example I saw:



<a href="http://www.redfin.com/CA/Aliso-Viejo/37-Monstad-St-92656/home/4885091">http://www.redfin.com/CA/Aliso-Viejo/37-Monstad-St-92656/home/4885091</a>
 
I guess what I'm really trying to ask is if I was a responsible buyer, how much could I afford based on my financial situation. The posts above say 3*140K = $420K property, which isn't much these days and the redfin link shows a 610K house, which seems affordable w/ a low hoa and mellaroos, however, the down payment required on that is about 193K for a conforming loan, which is something I don't have. Is 20% still the norm these days? My parents tell me that I should just put 10% down and save the cash, but I'm not sure if they are up to the times. I know I'm not, which is why I'm posting here.
 
[quote author="ScubaSteve" date=1239020553]I guess what I'm really trying to ask is if I was a responsible buyer, how much could I afford based on my financial situation. <strong>The posts above say 3*140K = $420K property,</strong> which isn't much these days and the redfin link shows a 610K house, which seems affordable w/ a low hoa and mellaroos, however, the down payment required on that is about 193K for a conforming loan, which is something I don't have. Is 20% still the norm these days? My parents tell me that I should just put 10% down and save the cash, but I'm not sure if they are up to the times. I know I'm not, which is why I'm posting here.</blockquote>


Combine your comment with the previous post ("I wouldn't"), and I think you have your answer. Just wait and you'll be much happier. In the meantime, rent something you are happy living in and SAVE, SAVE, SAVE.
 
[quote author="tmare" date=1239020762][quote author="ScubaSteve" date=1239020553]I guess what I'm really trying to ask is if I was a responsible buyer, how much could I afford based on my financial situation. <strong>The posts above say 3*140K = $420K property,</strong> which isn't much these days and the redfin link shows a 610K house, which seems affordable w/ a low hoa and mellaroos, however, the down payment required on that is about 193K for a conforming loan, which is something I don't have. Is 20% still the norm these days? My parents tell me that I should just put 10% down and save the cash, but I'm not sure if they are up to the times. I know I'm not, which is why I'm posting here.</blockquote>


Combine your comment with the previous post ("I wouldn't"), and I think you have your answer. Just wait and you'll be much happier. In the meantime, rent something you are happy living in and SAVE, SAVE, SAVE.</blockquote>


Yea, I guess I've known that I can't really afford anything in Irvine yet (hence the title of the post). This is just depressing! Thanks for the feedback all.
 
[quote author="ScubaSteve" date=1239020553]I guess what I'm really trying to ask is if I was a responsible buyer, how much could I afford based on my financial situation. The posts above say 3*140K = $420K property, which isn't much these days and the redfin link shows a 610K house, which seems affordable w/ a low hoa and mellaroos, however, the down payment required on that is about 193K for a conforming loan, which is something I don't have. Is 20% still the norm these days? My parents tell me that I should just put 10% down and save the cash, but I'm not sure if they are up to the times. I know I'm not, which is why I'm posting here.</blockquote>
Listen to your parents, they know what they are talking about. Cash reserves are a must with what's going on with the economy. I would definitely not looking to buy anything over $500k with your combined income because you are just increasing your financial stress. Like I said, prices aren't going anywhere but down in the next few years so let the market come to you. Meanwhile you wait, keep saving!
 
[quote author="ScubaSteve" date=1239021213][quote author="tmare" date=1239020762][quote author="ScubaSteve" date=1239020553]I guess what I'm really trying to ask is if I was a responsible buyer, how much could I afford based on my financial situation. <strong>The posts above say 3*140K = $420K property,</strong> which isn't much these days and the redfin link shows a 610K house, which seems affordable w/ a low hoa and mellaroos, however, the down payment required on that is about 193K for a conforming loan, which is something I don't have. Is 20% still the norm these days? My parents tell me that I should just put 10% down and save the cash, but I'm not sure if they are up to the times. I know I'm not, which is why I'm posting here.</blockquote>


Combine your comment with the previous post ("I wouldn't"), and I think you have your answer. Just wait and you'll be much happier. In the meantime, rent something you are happy living in and SAVE, SAVE, SAVE.</blockquote>


Yea, I guess I've known that I can't really afford anything in Irvine yet (hence the title of the post). This is just depressing! Thanks for the feedback all.</blockquote>
Nothing to be depressed about, you are 10 steps ahead of most people. I mean, you guys have a high income, a good amount of savings, and probably great credit. Believe me, I know that the hardest thing to be is patient (being an only child) but it will only benefit you guys.
 
[quote author="ScubaSteve" date=1239017855]I'm especially worried now that I have seen the IHB get into the real estate business and have been following Ipoplaya's thread, stating increases in house sales. Do I suck it up and hold out longer? </blockquote>


Steve, I have to focus on the above statement. I would encourage you to not be left with the impression that Irvine has hit bottom due to the birth of IR's new brokerage. I do understand your interpretation but I do not believe that is the message he wants us to take away from it. Be patient, my friend. Many of us are in the same boat as you.
 
I am in the exact same situation. I am getting very frustrated with what I am seeing. I will hold my ground and let the market come to me. I am even downsizing my rental by $1000/month to save more money. Going from Village to Quail Ridge.
 
I just offered to extend my current lease on my Irvine house rental to the end of 2010 in exchange for 200 dollars/off month. Saving some dough every month while our savings and down payment funds grow, and not have to worry about moving or finding another place to rent.



We're happy in our small rental (it's a detached house though), and is plenty big enough for us at the moment even with two small kids. I wouldn't sweat it regarding the inflated Irvine house prices. It's certainly a desirable location for many folks (hence demand even at high prices), but I'll let those who have more money or less sense buy whatever they need for now. No point in me keeping up with the Jones if I don't think prices are reasonable or supportable. Prices may or may not return to good values in Irvine...that's not something I can personally control. What I can control is my own ability to save, living below my means and preparing myself for the day that home ownership may be a better option than my current rental. Until then, I enjoy looking at my bank statements and not caring about April 10th and December 10th each year (that's property tax due date).



Good luck!
 
@Socal, I was pretty urked out to see IHB announce his new brokerage, which was why I thought something had changed, which was one of the main reasons why I made the post originally.



Thanks all for the positive replies. It's guys like you that motivate me to continue to hold out for something reasonable. If you guys have anymore stories, I'd love to hear them or if there is anyone else has other opinions, feel free to chime in.
 
Have you ever lived in Chicago or that vicinity ScubaSteve? I knew a guy that we called ScubaSteve all the time...

Just checking...could be a small world after all.
 
This is a tough situation. Assuming your annal income of $140k is from both husband and wife, and buying an expensive SFR would require spending most, if not all of your savings on down payment, you'd put yourself in an extended position where if one of you lost your job, it'd be really tough to get by with little or no reserves.



Would you be willing to settle for a 3/3 townhome in Aliso Viejo as a starter home? There are several avail in the 300k-400k range, built in 1990s to 2000. If you get something cheap, you could try to pay off the loan early, then move up to a bigger and better place.
 
Why does everybody care about how old a house is? The costs for any additional repairs are far overweighed by higher HOA fees, higher Mello Roos, and the "newness premium".
 
[quote author="Geotpf" date=1239067083]Why does everybody care about how old a house is? The costs for any additional repairs are far overweighed by higher HOA fees, higher Mello Roos, and the "newness premium".</blockquote>


Well, we prefer a more modern floorplan with a big kitchen island and most places built after 2000 have one. We currently rent a house from our friend in Ladera Ranch, but he is looking to move back into it soon after he gets married. We've really fallen in love with the "newness" I guess.
 
[quote author="Geotpf" date=1239067083]Why does everybody care about how old a house is? The costs for any additional repairs are far overweighed by higher HOA fees, higher Mello Roos, and the "newness premium".</blockquote>
I think this is relative.



As for the OP... just like that thread a year ago... I still feel you should rent.



There is no rush to buy now and if you do the math, you can probably rent a nice place in Irvine for the same amount or less than what your mortgage would be... and you still keep your $120k+ in your pocket.
 
[quote author="momopi" date=1239064711]This is a tough situation. Assuming your annal income of $140k is from both husband and wife, and buying an expensive SFR would require spending most, if not all of your savings on down payment, you'd put yourself in an extended position where if one of you lost your job, it'd be really tough to get by with little or no reserves.



Would you be willing to settle for a 3/3 townhome in Aliso Viejo as a starter home? There are several avail in the 300k-400k range, built in 1990s to 2000. If you get something cheap, you could try to pay off the loan early, then move up to a bigger and better place.</blockquote>


I agree with you that it would be tough if one of us lost our jobs.



Its funny because the advice that we received last year when we were looking to buy a townhouse was to wait it out for a sfr. I think thats our current mentality right now, but I guess if the price is right we would be open to a townhouse.
 
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