Who can truly afford a home in Irvine?

[ahbrownell]

@the original poster...

My wife and I have finally gotten to the point where we are saving money every month for our DP, and have just started looking around Irvine for a home (we been residents of the "The Village" TIC apartments for the past 3 years) but we've been confronted by this exact question ourselves. How can you possibly afford a larger than condo sized home in Irvine?

As we continue to save up the required 3.5+%, I'm really struggling to find specific information (or at least information that I want to hear? hehe):

When is it appropriate talk to a real estate agent / realtor?

How much cash do I need before I should bother applying for loan qualification?

I see a lot mentioned about DTI being the major determining factor to the amount I can qualify for, but my DTI is <5%, so I cannot imagine that would affect us much. But then when I use the simple loan calculators online, I usually come up with a number ~500k. I see the 28% / 36% figures tossed out, but how rigid are these limits?

It seems like saving longer just increases our max purchase price by the exact amount we save. So saving 20k more just means we can get a $520k house instead of 500k house - this doesn't make me feel great when I want to buy a $560k place...

I started reading these forums daily, and finally figured I'd chime in (seeing as there are some experts afoot). 

Thanks for any responses in advance.

 

[villiagepeople]

I see a lot mentioned about DTI being the major determining factor to the amount I can qualify for, but my DTI is <5%, so I cannot imagine that would affect us much. But then when I use the simple loan calculators online, I usually come up with a number ~500k. I see the 28% / 36% figures tossed out, but how rigid are these

in my experience, with both a refi of an older home and new home purchase (both within the last 9 months) the dti number the lenders are approving is ~42% (some have said to me that they can approve up to 48%)... no one really talked about or cared about the "front end" dti...

 

[IndieDev]

Any mortgage officer that knowingly approves a 42%-48% DTI, and any debtor that willingly accepts those terms, is a moron. A flat out dumbass. That is all.*

*except in some fairly isolated circumstances

 

[NoSoup4U]

I've always wondered about the median household income for Irvine.  $107,546
http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL0636770.html

This figure seems extremely low.  Do they count all the UCI students who make next to nothing?  Business owners lying about income?  Even if both husband and wife made $107,546 each, that is still very low relative to home prices.  When you consider other costs such as daycare, cars, Lululemon, etc.  I wonder how any household making under 300k per year can live the "Irvine" lifestyle?

 

[IndieDev]

I've always wondered about the median household income for Irvine.  $107,546
http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL0636770.html

This figure seems extremely low.  Do they count all the UCI students who make next to nothing?  Business owners lying about income?  Even if both husband and wife made $107,546 each, that is still very low relative to home prices.  When you consider other costs such as daycare, cars, Lululemon, etc.  I wonder how any household making under 300k per year can live the "Irvine" lifestyle?

Irvine has a lot of pretenders. The term "Staycation" was created out of the Irvine lifestyle. A lot of people living in Woodbury, Northpark, and Quail Hill are barely making ends meet, living paycheck to paycheck, with an enormous amount of debt hanging over their heads.

How do I know? I've seen their "numbers", but perhaps I've said too much.

 

[villiagepeople]

Any mortgage officer that knowingly approves a 42%-48% DTI, and any debtor that willingly accepts those terms, is a moron. A flat out dumbass. That is all.*

*except in some fairly isolated circumstances

i shouldn't really have to defend myself... but the 42% dti i got approved with did not count my wife's income (stay at home mom for 4 years) and she's was back at work for only 5 months... plus my rental income (how can i show 6 months of deposited checks when i haven't moved out?) ... so if you just count 1 of 2 incomes not counted, i'm down to around 36%... if you count both i'm down around 28% dti... (i don't have any other debt so that's back end dti) and the fact that i put 30% down and the LTV of the other house is around 15%...  i didn't feel i was at risk (also, they wanted only 2 months of reserves, i was prepared for them to ask for 6 months. )

 

[LAtoOC]

Irvine has a lot of pretenders. The term "Staycation" was created out of the Irvine lifestyle. A lot of people living in Woodbury, Northpark, and Quail Hill are barely making ends meet, living paycheck to paycheck, with an enormous amount of debt hanging over their heads.

How do I know? I've seen their "numbers", but perhaps I've said too much.

IndieDev is Donald Bren!

 

[rkp]

I've always wondered about the median household income for Irvine.  $107,546
http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL0636770.html

This figure seems extremely low.  Do they count all the UCI students who make next to nothing?  Business owners lying about income?  Even if both husband and wife made $107,546 each, that is still very low relative to home prices.  When you consider other costs such as daycare, cars, Lululemon, etc.  I wonder how any household making under 300k per year can live the "Irvine" lifestyle?

Irvine has a lot of pretenders. The term "Staycation" was created out of the Irvine lifestyle. A lot of people living in Woodbury, Northpark, and Quail Hill are barely making ends meet, living paycheck to paycheck, with an enormous amount of debt hanging over their heads.

How do I know? I've seen their "numbers", but perhaps I've said too much.

please share more indie.  is your profession something that gives you access to that information? 

my thoughts is that irvine has grown significantly in the last 20 years and the new incomes are higher than the previous incomes irvine used to cater too.  look at the reports IrvineRealtor puts out.  downpayments are very high.

i know from my own group of friends and my culture, savings is very important and folks easily have multiple 100K ready for their downpayments by early 30s. 

 

[irvinehomeowner]

I don't believe that $100k median income reflects the true story.

What does an FCB report? Students who live in homes their parents bought them? Retired homeowners who can downsize on equity from their 30 year old home?

 

[villiagepeople]

I don't believe that $100k median income reflects the true story.

What does an FCB report? Students who live in homes their parents bought them? Retired homeowners who can downsize on equity from their 30 year old home?

another thing is this.. when i bought my home, my "primary residence" was somewhere else (it was in L.A. county), so just because the current residents may have a certain income the "buyer pool" may be different/higher (as is with my case).  I'm assuming that my income will be reflected in future censuses, but it is not reflected in the number being used today (although my one income would not move the needle very much).  i'm wondering if there is a median income of "people who've purchased in the last year or people who are actively searching"... i doubt there is, but that would be more telling than including all the people who bought years ago or have paid off their houses and are retired.

 

[usctrojancpa]

I don't believe that $100k median income reflects the true story.

What does an FCB report? Students who live in homes their parents bought them? Retired homeowners who can downsize on equity from their 30 year old home?

another thing is this.. when i bought my home, my "primary residence" was somewhere else (it was in L.A. county), so just because the current residents may have a certain income the "buyer pool" may be different/higher (as is with my case).  I'm assuming that this will be reflected in future censuses, i'm wondering if there is a median income of "people who've purchased in the last year or people who are actively searching"... i doubt there is but that would be more telling then including all the people who bought years ago or have paid off their houses and are retired.

Not a true representation of all the active buyers out there, but most of my buyers household incomes fall between $150k and $250k (with exceptions higher and lower). 

 

[IndieDev]

I've always wondered about the median household income for Irvine.  $107,546
http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL0636770.html

This figure seems extremely low.  Do they count all the UCI students who make next to nothing?  Business owners lying about income?  Even if both husband and wife made $107,546 each, that is still very low relative to home prices.  When you consider other costs such as daycare, cars, Lululemon, etc.  I wonder how any household making under 300k per year can live the "Irvine" lifestyle?

Irvine has a lot of pretenders. The term "Staycation" was created out of the Irvine lifestyle. A lot of people living in Woodbury, Northpark, and Quail Hill are barely making ends meet, living paycheck to paycheck, with an enormous amount of debt hanging over their heads.

How do I know? I've seen their "numbers", but perhaps I've said too much.

please share more indie.  is your profession something that gives you access to that information? 

Not my profession but there are individuals in my circle of friends who have access to that information, and deal with it on a daily basis. To protect their privacy, I'll just leave it at that.

I too used to believe Irvine was made up of wealthy, and well-to-do, until I saw how many are living at the absolute limit of their credit worthiness.

 

[NoSoup4U]

most of my buyers household incomes fall between $150k and $250k (with exceptions higher and lower).

What price range are your 250k buyers looking at?

 

[usctrojancpa]

most of my buyers household incomes fall between $150k and $250k (with exceptions higher and lower).

What price range are your 250k buyers looking at?

$700k to $900k

 

[villiagepeople]

most of my buyers household incomes fall between $150k and $250k (with exceptions higher and lower).

What price range are your 250k buyers looking at?

$700k to $900k

if you don't mind me asking... what price range are your 150k buyers looking at?

 

[usctrojancpa]

most of my buyers household incomes fall between $150k and $250k (with exceptions higher and lower).

What price range are your 250k buyers looking at?

$700k to $900k

if you don't mind me asking... and what price range are your 150k buyers looking at?

$500k to $800k (a few of them have large downpayments (50%+) though hence the higher priced home).

 

[IndieDev]

I too used to believe Irvine was made up of wealthy, and well-to-do, until I saw how many are living at the absolute limit of their credit worthiness.

Now that I'm gone and most people don't know me (since I regularly sanitize my posts here), I'll say that would have been us if we had decided to purchase anything *suitable* for a family in Irvine.  With a 2010 household income almost dead on $200k, we don't feel at all well off --- but certainly above the level where we felt it acceptable to settle for a condo on a motorcourt in our payment comfort range....which was $600k - $700k.  With the investment we have made in our lives, and the number of hours we work --- we felt we owed ourselves better than that.  Dammit, I wanted at least a driveway and to be able to walk all the way around my house for my efforts.  If we had tried to achieve that not-so-lofty goal in Irvine, we would have ended up exactly what Indie describes above.  Not worth it, not worth it at all.

So we moved to an area where equiv homes are priced at least $200k less, and yet the reported median income is $124k --- $20k higher than Irvine.  Huh?  I bet the TI poster who moved to Laguna Niguel could probably post very similar numbers.  Yeah, Irvine is a fine place --- but wow, if you are putting yourself in a financial hole for that address, think about your strategy.  Only do it if you can truly afford it, or are truly ok with the massive compromise.

Preaching the choir brother. I think you made an excellent decision for your financial situation, and you've got a lot of disposable income to spare. Like I said, I live on a street where a family "owns" a $1m+ home, but the father is desperately trying to unload the home now so they can move to Utah and downsize their expenses.

People can talk about FCBs, and wealthy $500k dual earners all day, I know it's not the norm in Irvine. There are a lot of pretenders, or a lot of people willing to sacrifice their quality of life to live in this crowded, cramped, tuscan stucco, paradise. Maybe it's the 85 degrees.

 

[NoSoup4U]

I hate to bring politics into this but I find it laughable how Obama wants to raise taxes on households making over 250k.  In a place like Omaha, 250k is a lot.  In Irvine, 250k is almost poverty (slight exaggeration but you get my drift).

 

[rkp]

I've always wondered about the median household income for Irvine.  $107,546
http://money.cnn.com/magazines/moneymag/bplive/2011/snapshots/PL0636770.html

This figure seems extremely low.  Do they count all the UCI students who make next to nothing?  Business owners lying about income?  Even if both husband and wife made $107,546 each, that is still very low relative to home prices.  When you consider other costs such as daycare, cars, Lululemon, etc.  I wonder how any household making under 300k per year can live the "Irvine" lifestyle?

Irvine has a lot of pretenders. The term "Staycation" was created out of the Irvine lifestyle. A lot of people living in Woodbury, Northpark, and Quail Hill are barely making ends meet, living paycheck to paycheck, with an enormous amount of debt hanging over their heads.

How do I know? I've seen their "numbers", but perhaps I've said too much.

please share more indie.  is your profession something that gives you access to that information? 

Not my profession but there are individuals in my circle of friends who have access to that information, and deal with it on a daily basis. To protect their privacy, I'll just leave it at that.

I too used to believe Irvine was made up of wealthy, and well-to-do, until I saw how many are living at the absolute limit of their credit worthiness.

i never thought irvine was a pool of well to do or wealthy people as irvine has such wide range of products.  tons of apartments, condos, and smaller units to crazy expensive in shady canyon.  its really very interesting that one small suburbian city can have so much but i guess its due to irvine's sheer area size

in any case, i dont disagree that there are a lot of people who live paycheck to paycheck but i also think there are many people who can afford it.  again i point to the buying data that is published.  most of the DPs are very high so maybe these people arent the ones who use your friend's services

my brother in law was a teller at an irvine branch and tells me how he constantly would see large checking accounts.  people with 50k+ in a checking who looked like they were in their mid 20s. 

i know we spoke about the published data and i dont disagree with it.  however i ask you to think about the incomes interested in irvine today vs those living in irvine for 20+ years.

 

[qwerty]

I hate to bring politics into this but I find it laughable how Obama wants to raise taxes on households making over 250k.  In a place like Omaha, 250k is a lot.  In Irvine, 250k is almost poverty (slight exaggeration but you get my drift).

yeah, their should be an adjustment for high cost of living areas where they raise the amount to say 300 to 350K, they can use the same information they use to determine the jumbo conforming loan of 625K