patrick.net

What's sensationalist about it?
The fact is that even high-wage earners are living near the edge.

Over-leveraged into liabilities.

BobbyS says

Sixty-one percent of those surveyed said if they were handed a pink slip, they would not be able to continue to make their mortgage or rent payment longer than five months.

We have the lowest savings rate so it does make sense.

It's not just savings, people who make good salaries buy expensive houses, at least here in the Bay Area. When you are spending $3000++ a month on your housing and you lose your job, that's a lot of money to have to come up with every month.

I don't know how people can handle the stress. My PITI is around $1700 a month and I hate it.

Tude, its the new people who came tp SFBA post 2000, who wrongly believed prices were always much higher in the SFBA.
It may be true it was only $100-200 a month but that was exploited to the max. So now they are stressed out financially.

My neighbor, from New York, paid 5x for his home in 2003 compared to my home I bought 10 years early. Both are similar in size and quality. Today, he is out of work due to a M&A deal. Unlikely to get a job real soon due to the position he held before.

Lol I rent and would survive at least tge period of unemployment plus tge amount of time savings would cover.

If I apples to apples had a mortgage, I wouldn't make it through even all my period of unemployment.

Hi,

I have been a fan of your site.

This survey tells the reality behind the bay area housing bubble.

People bit up the price of houses in here believing;
"We make $250,000 as a family. We CAN AFFORD
4X house = $1,000,000 easily, right?"
"There are plenty of families in bay area who make
more than that. So $1million house price is sustainable,
at least in our neighborhood"
I heard those arguments so many times.

The reality is, they are one pink-slip away from
foreclosure if they defined "affordability" based on that logic.
Because given the high cost of everything else, not that many people can accumulate much surplus.
The famous two-income trap

Back in good old days, they could still say;
"Well, if something happens, we can just sell the house
and still make money thanks to price appreciation."
Not anymore.

I always wonder how come so many of my educated
friends cannot see the simple reality.
They think they know the math,
without doubting "4X" magic number.
To me, that is brainwashing.

But I don't say that at parties because
I am a polite girl.
People love to be in denial. :P

Tude says

When you are spending $3000++ a month on your housing and you lose your job, that's a lot of money to have to come up with every month.

I don't know how people can handle the stress. My PITI is around $1700 a month and I hate it.

Brudda, you left out the other, concomitant expenses that come with The Fortress Life: the expensive models of cars, the private lessons and "summer at Stanford" for the kids, the every-other-year or so jet setting to "back home" during peak (expensive) travel times.

I don't get it either. So it is how I came to the conclusion, they're all loaded. Money from back home. Kind of makes sense anyway, you have to be from elite back home in order to find your way to grad school in the USA.

When people say 2.5-4x income for a house do they mean purchase price of home or mortgage size? Coming to the table with 30% down vs 3.5% down would mean you could buy more than 3x your income somewhat safely. Also if you are married its safer to stretch how much house to buy if your are buying based on one income vs both incomes.

Also interest rates and age should play a part of the equation. If someone bought a $130k home in 1983 at then 13% interest rates. Thats about the same monthly nut as buying a $300k home at 4% today.

Its seems apparent that interest rates are going to be kept around 4% or lower until some new innovation starts spurring the economy forward. If that innovation doesnt come... Then we will all be screwed by a depression or hyperinflation or new world war and civil unrest.

These Asians from China and India must be SUPER RICH to pay the outlandish prices for real estate here. I make six figures and cannot afford a home here.

SJ says

These Asians from China and India must be SUPER RICH to pay the outlandish prices for real estate here. I make six figures and cannot afford a home here.

Yep. It is the only rational and logical conclusion.

Well I did the open houses just out of curiosity and yep, it was 99.99% ASIANS looking to buy- mostly INDIANS and CHINESE. What I have noticed is HERD GROUPTHINK mentality with these groups. Look at Japan and the lost decade and the current property bubble in China and India.