patrick.net

SiO2 says

BTW my example shows why the rule of thumb of “house = 3x income” doesn’t apply in move-up areas. My house is 7x income. Yet it’s easily affordable, due to savings and equity in the previous house. True, those who bought in 2006 won’t have equity for some time. But that’s not most people. Something to consider when comparing median income to median house price in the Fortress, and saying that Palo Alto houses should be 3x the median income of $150k: $450k.

Assets are always a function of income and debt. First home buyers can and do save for their homes as well. First home buyers have lower income and lower savings hence lower priced housing.
Show me a long term major negative correlation between income and housing ratios between different price points and I'll believe you. Otherwise this is just a fancy way of saying "I paid a lot for my house but I can still afford to make the payments".
Paying 8% of your gross income on your property tax should be a clue that the price paid was high. If you enjoy your home who cares but the house fits into luxury spending rather than a rational purchase.

So when folks make it big it always seems to be a big secret of how they got there. Yeah, sure, hard work, but doing what?!?!

My dad worked his bum off as a janitor and farmer...financially wealthy?! Far from it.

I'm sitting around 8-10% gross. We actually downsized our place last year, mostly because rents came down + we didn't need all the extra space and though saving a good extra chunk would be worth it. We're actually saving more than just the rent difference now, because our place is at what I would consider 100% capacity. We had to get rid of a few things to fit into it (slight miscalculation on our part). But now we aren't buying anything, because there simply isn't room for it. By adding something enjoyable, we take away from livable space, which ruins enjoyment. It's worked out pretty well for us! I enjoy being at the perfect size and not worrying about random shoes/outfits/knicknacks showing up :)

@Leigh
People who have figured out a system that works really well, tend to not share that many details. I've seen some amazing businesses that I just didn't expect to print money, that did. Some janitorial work just prints money! If you get the right contracts and you know how to sell.

I've found it pretty hard to find a group of people who are at roughly you're own level (hopefully way above it!) where you can get really useful information from, while providing some back for them. One of the reasons I enjoy this place. There are a number of people here with varying backgrounds who can really help each other out.

16.3% of 2009 Gross (including the bonus and 403k contributions).

But I also pay my daughter's in college rent, so together it's more than 20.8%

pkennedy says

@Leigh

People who have figured out a system that works really well, tend to not share that many details. I’ve seen some amazing businesses that I just didn’t expect to print money, that did. Some janitorial work just prints money! If you get the right contracts and you know how to sell.

The richest people I know have no problems sharing how they did it. And by rich I mean stinkingly, obscenely rich (50-100 million). Most were smart and totally motivated by money and money alone, went to the right schools in order to meet the right people. Another couple were just lucky, made a disposable product I think is silly, that was bought by a major corporation for 50+ million. Others simply started with a crapload of money and well connected families, went to the right schools, met the right people, and had promotions handed to them one after another...

Sorry, but "worked hard from the ground up without any help from friends or relatives" is not the norm, not with the truly ridiculously rich. Unless by worked hard, you mean went to the right schools to meet the right people...

~10.5% of gross for renting. And we pay a lot due to area. Looking to move to something bigger for less in the coming months. I had to look up gross numbers, who ever uses those? haha

About 20%, on rent when we're paying everything from my spouse's income. When I'm bringing in income, it's less than 20%. If buying was only about the monthly payment we could probably find a house for a comparable monthly payment at these interest rates and w/our good credit score...however it's never just about the payment. The other costs of homeownership, plus all the mortgage fraud going on, make it not worth while.

We also enjoy the freedom and mobility of renting. At no time in our lives did it ever really turn out to be advantageous when we owned. Owning was always more burden than joy. When we were in houses we liked and owned it was ok but more expensive than expected. We only learned later that the few joys of owning could be done just as well most of the time in the right rental, and for a lot less money. So now we rent and don't miss owning. I would not say we'll NEVER buy again, but one things for sure--we won't buy NEW again. Shoddy work, Chinese drywall, increased incidences of fraud...all that goes w/new housing. I'd buy an older house and likely not buy til we can pay cash. At this time I'm not sure why we'd ever buy again, but will concede it's possible.

In a way I can thank a crappy builder for the fact we did know what was going on w/the bubble and inevitable bust. We had a construction defect case in 2000 that led to me researching the housing/mortgage industry and reading govt doc's and blogs, etc. I put 2 and 2 together and knew the experts who insisted housing only goes up were lying. Had we not known better, I could see how we could now be trapped in underwater real estate just like many others. "There, but for the grace of God, go I." We settled the construction case and sold the house in 2005. Knew better than to buy again, thanks to our painful education.

Tude says

pkennedy says

@Leigh
People who have figured out a system that works really well, tend to not share that many details. I’ve seen some amazing businesses that I just didn’t expect to print money, that did. Some janitorial work just prints money! If you get the right contracts and you know how to sell.

The richest people I know have no problems sharing how they did it. And by rich I mean stinkingly, obscenely rich (50-100 million). Most were smart and totally motivated by money and money alone, went to the right schools in order to meet the right people. Another couple were just lucky, made a disposable product I think is silly, that was bought by a major corporation for 50+ million. Others simply started with a crapload of money and well connected families, went to the right schools, met the right people, and had promotions handed to them one after another…
Sorry, but “worked hard from the ground up without any help from friends or relatives” is not the norm, not with the truly ridiculously rich. Unless by worked hard, you mean went to the right schools to meet the right people…

Being from small city Iowa (80K pop.) it was definitely who you knew and who your parents are and I see it being played out to this day as the punk kids that barely made it through college are working at their dads' or uncle's businesses. I'm not making excuses as I paid my way through school and make a good living as an RN. Granted it took me ten years to pay off the loans but I paid my way. My spouse works in hi tech and at one interview during the ugly tech bust the manager flat out told him they were looking for engineers with degrees from Cornell, etc. My spouse has his EE from Portland State. I'm sure he got looked over for lots of jobs due to that.

So I guess I know of no one who did it from ground up.

0%, my wife and I run a home for women with developmental disabilities; each client has her own room and we have about 800 square feet to ourselves downstairs.

About 15% of gross on rent in Fremont. Not counting bonus or spouse income (riffed last week)

About 16% on rent in Santa Clara.

jserachus says

About 15% of gross on rent in Fremont. Not counting bonus or spouse income (riffed last week)

Oh. If we aren't counting spouse's income then it's 23% of my gross or 35% of my net.

Landru3000 says

10%

BTW, we rent and my half is 10% of my gross. If we go by household income, it's 13% gross.

I`m in an unusual and rather Kafkaesque situation. I'm stuck here on Long Island (due to the economy) paying about 15-20%(depending on O/T, which varies week to week)) of my *net* income for rent, while I own a home free and clear in SC who's property taxes("rent") would amount to 1/2 of 1 percent(.5%) of the same income, or about 30X cheaper than renting.

middleman says

simchaland says

There must be some wealthy people on this board…

simchaland, Tell me about it. I feel better seeing you have to pay a bit to keep a roof over your head as well.

Tude says

simchaland says

31.7% of net on rent
22.8% of gross on rent
There must be some wealthy people on this board…

Some are wealthy, some have inheritances. My husband and I are middle class but living in a less than desirable area in the East Bay in a TINY 3/1 bungalow.

Well, I kind of asked for it. I made the decision to start a new career at 32. I moved here from Davenport, IA in June 2002 to go to grad school to become a psychotherapist. I was a web developer/designer making a nice corporate income. I was very unhappy and opportunities started to dry up after 9/11. I've worked for the same non-profit since August 2002. I graduated in September 2005. I took an extra year to get a specialization so my degree was 3 years full time while working full time for peanuts. I have massive student loan debt. I finally finished settlement with my credit cards last year. I just made my last payment on my car that was a 60 month loan. At this non-profit where I work, I'm on my 4th job. I'm an Intern. I just completed enough supervised hours of experience to sit for the 2 licensure exams. All of this costs money to get licensed. I figure it'll cost me around $1000 including study materials. And I still won't make close to what I made in real dollars back before I moved here.

So, I'm happy and I live a simple life. My income just covers expenses. I have a very hard time saving because of that, but I manage to put a little away here and there for a rainy day and vacations.

Meh, money isn't everything. It sure helps though.

Oh, and I've done it all as a single man. I've never had anyone else's income to supplement mine. It's all been just me, always. That makes a difference.

For non-metropolitians, don't be suspicious or feel bad about anything.

Lots of partrickers come from western parts of sunny california where almost everyone is getting 100K/yr while they don't know what they're doing. :)
Their 100K is like your 65K because everything there is kinda expensive.

I respect woman's ability. The wife can do small things like paying rent, and I am taking care of bigger things like protecting earth from alien invasion in my dream. I ain't pay a thing and I let her pay them all, even for my smelly underwear. Am I lousy husband or what?

Just kidding. We live off of her income, and my income goes directly to our joint savings and investment accounts. That's the deal b/w us since 2002.

The rent is 17% of her gross income.

Yet it’s easily affordable, due to savings and equity in the previous house.

You might want to give your smug glands a rest -- you had a major housing bubble that likely helped a bit with your equity.

-2%. I have a small mortgage, but two cousins live with me in my 2300 sq ft home here in Tempe. Their contribution is more than the mortgage. 3 dogs and 1 cat live here too, but I haven't figured out how to charge them...

azrob00 says

-2%. I have a small mortgage, but two cousins live with me in my 2300 sq ft home here in Tempe. Their contribution is more than the mortgage. 3 dogs and 1 cat live here too, but I haven’t figured out how to charge them…

At least make 'em do tricks for their food. It builds character.

I rent at less than 1% of my gross annual income.

Misstrial says

I rent at less than 1% of my gross annual income.

1%? Wow, I was like "another 7 figure person?". Then I saw the word annual instead of monthly. That still is quite low for housing cost. Good for you.

I simply don't make enough money. How's about, when I finally get my book done, each of you buys about 10,000 copies? That would help. :)

16% gross Rent

elliemae says

azrob00 says

-2%. I have a small mortgage, but two cousins live with me in my 2300 sq ft home here in Tempe. Their contribution is more than the mortgage. 3 dogs and 1 cat live here too, but I haven’t figured out how to charge them…

At least make ‘em do tricks for their food. It builds character.

Shave them periodically and sell their fur to people who make thread and yarn out of dog and cat fur.

Really? I hadn't thought of that angle. I have enough hair in my rugs and in corners to knit another dog or cat... I'm gonna be rich!

My loan repayment is 29% of net. If building insurance and maintenance fees are added to that, it becomes 39%.

But I actually have enough savings to (barely) pay off the whole thing now, leaving me cash-poor and home-rich. So in a very real sense, my obligations are zero.

Congratulations to all of you folks making huge salaries and living comfortably. No vacation until you make your first million? That would leave me working every day for decades!

OK, finally did the math...14% of gross income goes to rent.

The mortgage is about 20% of gross income from me and my wife (DINK)s, that includes taxes, insurance, pmi, etc. If it was just me it would be 33%.

When I was renting a 1/1 apartment in Irvine, CA next to my work it was about 15% of my gross. Moving about 15 miles a way I am paying 5% more for a 2(+den)/2 with a pool on a good sized lot. We contribute to our retirements, and we still vacation. My wife throws money each check in to savings for our next vacation. We are in no way hurting but we are also not lavish spenders.

31% gross income, about 39% net income, this includes Mortgage, Real estate taxes, Home owners Insurance and PMI. After the PMI is paid off, it will drop to around 35% of net salary (assuming salaries don't increase)

Gross: 20%
Net: 39%

Misstrial says

I rent at less than 1% of my gross annual income.

So you're still living with your parents?

TechGromit says

31% gross income, about 39% net income, this includes Mortgage, Real estate taxes, Home owners Insurance and PMI. After the PMI is paid off, it will drop to around 35% of net salary (assuming salaries don’t increase)

Weren't you in Boston for a while too?

Rent runs about 16% of gross for us. That seems to be a pretty typical percentage on this board.

I stay home with the kids, so in a sense we do have a second potential income in reserve, though of course childcare expenses would take up a lot of a second income for awhile.

Actually these percentages are all over the place really, and probably not too useful. As has been pointed out before, the more you make the more you can buy, and the reverse is also true, the less you need to rent as well. If you're making 200K/year, your disposable income is fairly large, meaning you could easily push this money into housing, savings, lifestyle, etc. If you're making 50K/year, you're more likely to be locked into a solid 20% of income for rent, just because you've got less choices. Trying to drop it to 10% probably means ghetto, while 10% rent at 200K is going to be not as nice, but still pretty decent for your income level.

Jeez when I see that I am paying 39% of my net pay on an apartment it kills me. I new I was probably paying to much of my net in rent, but when I see it right there, 39%, wow.

If only there were cheaper one bedrooms, or I could some how squeeze into a studio...

PITI 14% of gross. Currently paying extra P to be mortgage free next year.
But a cheap mortgage payment doesn't tell the whole story, maintenance costs keep going up. We purchased a 1974 SFH in 1991. Will pay several thousand $ this year to replace overgrown bushes, remove an old willow tree, replace all interior doors, replace back entry door.
That doesn't even count paying for lawn care, leaf removal, gutter cleaning, snow removal.
Houses eat money.

OnTheFence says

Jeez when I see that I am paying 39% of my net pay on an apartment it kills me. I new I was probably paying to much of my net in rent, but when I see it right there, 39%, wow.
If only there were cheaper one bedrooms, or I could some how squeeze into a studio…

I thought mine was high, too, until I calculated it using gross income. Maybe if I'd stop putting so much into retirement the % of net wouldn't look so bad;O)

rent: 17% of gross salary
not counting bonus & investments