Couple earns $225,000 but cannot afford to buy home

[chillyphilly]

From the article:

“We are in the top [percent] of incomes, between what I make and what she makes,” he told Fortune, adding that their earnings amount to around $225,000 per year. But they’re renting, and he doesn’t see that ever changing. “With housing costs being what they are, just the idea of us ever owning a home is absolutely, like it’s funny. It’s like, we might as well own a spaceship.”

https://fortune.com/2023/04/10/housing-market-couple-earning-over-200000-priced-out-housing-costs-real-estate-los-angeles/

[clarkfan1979]

I read it earlier today. The guy is a professor at UC Riverside. They can easily afford to buy a house in Riverside, which is currently around 580K. Cry me a river.   

[Smokystache]

Yahoo version of the story without paywall:
https://finance.yahoo.com/news/professional-couple-over-200-000-115752472.html

[Dicey]

Do ya think he's a friend of Sam D? Clickbait through and through.

[calimom]

I read it earlier today. The guy is a professor at UC Riverside. They can easily afford to buy a house in Riverside, which is currently around 580K. Cry me a river.

He probably thinks he "deserves" a swanky house in the Hollywood Hills, Westwood, or something similar. And likes the poor-me mentality and attention he gets from clickbait articles like this.

[Paper Chaser]

They're better off renting than owning anyway.
Zillow's mortgage calculator shows that a monthly payment on a $580k home with 10% down and 2% property taxes is over $4700/mo with current mortgage rates. It would be $4200/mo if they could scrape together a 20% down payment, which they claim to be "impossible". $2400/mo to rent seems like a steal by comparison.

[sonofsven]

I'm glad someone clicked on that bs. Wait, am I?
Their spending must be hilarious.

[Dicey]

And Yahoo's picked up his sad tale today.

Fun fact: My first house was in Riverside. I paid $100k for it, a loooong time ago. I was earning around $30k at the time. There are still plenty of affordable options in that region. The problem is he wants to live above his means. This is not about affordable housing being unavailable. Asshat.

[ATtiny85]

Yeah, the first thing I did was run down in my head a quick income to house cost ratio over the last 25 years. Then I shook my head, then I went about my day.

The last time I recall a financial article being worth a read was back when I was basically starting out and would closely read the CNN "Millionaires in the Making" articles. This would have been in maybe 2000 or so. I recall them being pretty decent based on my knowledge level at the time. Certainly don't recall any of the "woe is me" nonsense that is like mold growth on a lot of articles these days.

[FINate]

Are we reading the same article, because I think he has a valid gripe.

He works in Riverside but lives in downtown LA. Maybe this is due to where his partner works? Dunno.

In any case, it sounds like he'd like to stay in LA, nor is he just complaining about not affording a mansion:

“We have a desire to own something. It doesn’t need to be a detached single-family home…But it's just been illegal in Los Angeles, and still remains illegal in Los Angeles, in most of the city, to construct these types"

Dude doesn't want to live in the 'burbs, would rather live in multi-family in the city. Seems reasonable to me.

[ATtiny85]

We all normally have conflicting wants. I have a bunch and try to work through them. Becoming the subject of a whiny clickbait article is deserving of ridicule to me.

[clarkfan1979]

Are we reading the same article, because I think he has a valid gripe.

He works in Riverside but lives in downtown LA. Maybe this is due to where his partner works? Dunno.

In any case, it sounds like he'd like to stay in LA, nor is he just complaining about not affording a mansion:

“We have a desire to own something. It doesn’t need to be a detached single-family home…But it's just been illegal in Los Angeles, and still remains illegal in Los Angeles, in most of the city, to construct these types"

Dude doesn't want to live in the 'burbs, would rather live in multi-family in the city. Seems reasonable to me.

Well Riverside is an actual sort-of "city" (12th largest in Calif) so he doesn't have to live in the burbs.  Since most people who work in LA/OC (and who are much lower income then he is) move to Riverside County for affordable housing I'm going he's delusional about his ability to afford a home. That said, I agree that rentingbappears to be in his favor.

Also WTF would anyone want to commute from LA to Riverside? People do it the other way because Riverside IS much more affordable the LA if you want to own a home but with gas at around $5/gal and some serious traffic  why would anyone voluntarily do it? You know, besides c4azy people.

These were my thoughts. He is doing the economically disadvantaged reverse ass-backwards moronic commute. He earned the title of "ass-hat" with ease by Dicey which is normally a difficult title to earn. 

I was a finalist for a job at Moreno Valley Community College about 5 or 6 years ago, which neighbors Riverside. If offered the job, I would have taken it. I really like the location because it was 1 hour to the beach to surf and 1 hour to the mountains to snowboard. New construction houses were around 400K at the time. They have an Aldi grocery store near campus. I don't think the schools were rated very high, but we could have figured something out.   

[Dicey]

Are we reading the same article, because I think he has a valid gripe.

He works in Riverside but lives in downtown LA. Maybe this is due to where his partner works? Dunno.

In any case, it sounds like he'd like to stay in LA, nor is he just complaining about not affording a mansion:

“We have a desire to own something. It doesn’t need to be a detached single-family home…But it's just been illegal in Los Angeles, and still remains illegal in Los Angeles, in most of the city, to construct these types"

Dude doesn't want to live in the 'burbs, would rather live in multi-family in the city. Seems reasonable to me.

Well Riverside is an actual sort-of "city" (12th largest in Calif) so he doesn't have to live in the burbs.  Since most people who work in LA/OC (and who are much lower income then he is) move to Riverside County for affordable housing I'm going he's delusional about his ability to afford a home. That said, I agree that rentingbappears to be in his favor.

Also WTF would anyone want to commute from LA to Riverside? People do it the other way because Riverside IS much more affordable the LA if you want to own a home but with gas at around $5/gal and some serious traffic  why would anyone voluntarily do it? You know, besides c4azy people.

These were my thoughts. He is doing the economically disadvantaged reverse ass-backwards moronic commute. He earned the title of "ass-hat" with ease by Dicey which is normally a difficult title to earn. 

I was a finalist for a job at Moreno Valley Community College about 5 or 6 years ago, which neighbors Riverside. If offered the job, I would have taken it. I really like the location because in theory it was 1 hour to the beach to surf and 1 theoretical, but a tad more likely hour to the mountains to snowboard. New construction houses were around 400K at the time. They have an Aldi grocery store near campus. I don't think the schools were rated very high, but we could have figured something out.

FTFY

[Villanelle]

I was going to comment on the ridiculousness of someone living in LA and working in Riverside.  I didn't read the article because I don't want to give it a click, but unless he has a partner who works in maybe Santa Clarita, or somewhere north or northwest of LA, that's absolutely stupid.  Even if the partner works in LA, the would likely do better living in Riverside, or maybe parts of Orange County.  It's an entirely nonsensical commute.

As for not wanting to live in the bubs, sure.  But he basically works in the burbs.  (Using a broad definition, since Riverside is it's own city--and county-- but tends to be largely bedroom communities, without much of an urban downtown.)  I don't want to live in the burbs either.  But I do because spouse happens to work in the burbs and it is a 10 minute commute, while also being much cheaper than living more urban.  It does mean I can't walk to a grocery store, or much of anything.   But if it is more important for this guy to live in LA (and have an hour+ commute) than to own a home in the burbs, cool.  He needs to own that he's making that choice and stop whinging about it.  It's not impossible for him to buy a home.  It's impossible for him to buy the home he wants in the exact area he wants.  That's a very different situation.

It's entirely disingenuous for him to say he can't afford to buy a home.  That's like me saying I can't buy a home... because I want to live in the heart of Paris and everything there is too expensive.  And I don't even actually work in Paris. 

[obstinate]

It's entirely disingenuous for him to say he can't afford to buy a home.  That's like me saying I can't buy a home... because I want to live in the heart of Paris and everything there is too expensive.  And I don't even actually work in Paris.

If I have to save for more than two days to buy the 7,000 sq ft house on the exact lot I want in Malibu, I'm being oppressed by the capitalists.

[jinga nation]

I was going to comment on the ridiculousness of someone living in LA and working in Riverside.  I didn't read the article because I don't want to give it a click, but unless he has a partner who works in maybe Santa Clarita, or somewhere north or northwest of LA, that's absolutely stupid.  Even if the partner works in LA, the would likely do better living in Riverside, or maybe parts of Orange County.  It's an entirely nonsensical commute.

I don't know what the current commute is like in that area. I worked in the area as a field engineer in 2004, the 60 and 91 commute routes were absolutely hell. I was based in Anaheim but had to travel for weeks to parts of Inland Empire. Worst. Commute. Ever.
Fortunately the commute was on the clock. I'd still not want to do that more than once per month.

[Freedomin5]

I’m still trying to figure out the math.

Even with a 40% tax rate (making this number up but can’t imagine it being much higher than 40%), if their gross salary is $225k, and their rent is $28.8k, they’re still left with $106.2k per year to spend on stuff.

If a house in Riverside is $580k and you need a 20% downpayment, it’s totally possible, and actually pretty easy, to save up $116k in two to three years.

[Dicey]

I was going to comment on the ridiculousness of someone living in LA and working in Riverside.  I didn't read the article because I don't want to give it a click, but unless he has a partner who works in maybe Santa Clarita, or somewhere north or northwest of LA, that's absolutely stupid.  Even if the partner works in LA, the would likely do better living in Riverside, or maybe parts of Orange County.  It's an entirely nonsensical commute.

I don't know what the current commute is like in that area. I worked in the area as a field engineer in 2004, the 60 and 91 commute routes were absolutely hell. I was based in Anaheim but had to travel for weeks to parts of Inland Empire. Worst. Commute. Ever.
Fortunately the commute was on the clock. I'd still not want to do that more than once per month.

My brother commuted for years from the UCR end of Riverside to Inglewood and later to Fullerton. His hours were flexible, but the commute was still grindingly miserable. When offered a position in the PHX area twenty years ago, he jumped on it and never looked back. The commute just about as bad and unpredictable in the "reverse" direction and neither have improved significantly since then. Given where The Whingy Professor lives [Facepunch], he might be using the 10, which is marginally better than the 91. Either way, it's simply a matter of his Wants ruling his Needs. (I know this example is old, but I still have family in SoCal. It just sucks everywhere, all the time.)

I’m still trying to figure out the math.

Even with a 40% tax rate (making this number up but can’t imagine it being much higher than 40%), if their gross salary is $225k, and their rent is $28.8k, they’re still left with $106.2k per year to spend on stuff.

If a house in Riverside is $580k and you need a 20% downpayment, it’s totally possible, and actually pretty easy, to save up $116k in two to three years.

To your point, I posted a comment on that article, using a real-life example of this exact concept, based on the numbers I dug up and crunched from my very first house in Riverside. Some asshat commenter is insisting I got in when the getting was good, saying it just can't be done now blah x 3. They're right, If you can't math, it is impossible. If nothing else, it renews my appreciation for what an incredible space this forum is.

[Villanelle]

I was going to comment on the ridiculousness of someone living in LA and working in Riverside.  I didn't read the article because I don't want to give it a click, but unless he has a partner who works in maybe Santa Clarita, or somewhere north or northwest of LA, that's absolutely stupid.  Even if the partner works in LA, the would likely do better living in Riverside, or maybe parts of Orange County.  It's an entirely nonsensical commute.

I don't know what the current commute is like in that area. I worked in the area as a field engineer in 2004, the 60 and 91 commute routes were absolutely hell. I was based in Anaheim but had to travel for weeks to parts of Inland Empire. Worst. Commute. Ever.
Fortunately the commute was on the clock. I'd still not want to do that more than once per month.

It get worse every year.  I have family in that area.  Now, depending on where in Riverside and where in LA, they might take the 60 up and then go across (I'm Covid-foggy right now and can't think of the other freeway) instead of the 91, but either way, it's a nightmare.  They would technically be going against traffic because no one else who works in Riverside is stupid enough to choose to live in LA, but it would still be very unpleasant. 

[bacchi]

You guys should get on the 10, then switch over to the 405 North, and let it dump you out on Mulholland where you belong!

https://www.youtube.com/watch?v=Tt-tG6ufH90

[zolotiyeruki]

I’m still trying to figure out the math.

Even with a 40% tax rate (making this number up but can’t imagine it being much higher than 40%), if their gross salary is $225k, and their rent is $28.8k, they’re still left with $106.2k per year to spend on stuff.

If a house in Riverside is $580k and you need a 20% downpayment, it’s totally possible, and actually pretty easy, to save up $116k in two to three years.

Well, if they're both maxing out their 401k's, that's another ~$45k, so they'd be down to about $60k for groceries, utilities, gas, car insurance, etc.

[Dicey]

You guys should get on the 10, then switch over to the 405 North, and let it dump you out on Mulholland where you belong!

https://www.youtube.com/watch?v=Tt-tG6ufH90

That was freaking hilarious! As a former Westsider and road warrior in pre-GPS days, I remember all those streets and freeways.

Came back to add this and loop us back to the topic: I lived off Wilshire near the 405 back then. I couldn't afford anything there and I had a sweet rent-controlled apartment I didn't want to give up, so I bought a home in Riverside, where I grew up. Riverside was too brutal a commute for my job, so I rehabbed it on a dime and made it a rental.

[sonofsven]

You guys should get on the 10, then switch over to the 405 North, and let it dump you out on Mulholland where you belong!

https://www.youtube.com/watch?v=Tt-tG6ufH90

I don't even need to click on your link to say: "What are you doing here?"

[Paper Chaser]

$225k income - $45k retirement savings (Being optimistic and hoping they're maxxing 2 401ks) = 180k taxable income.
This calculator estimates a total of $46k in state and fed taxes for a married couple in LA at that income level:

https://smartasset.com/taxes/california-tax-calculator#oCVHWexbLm

That leaves $133k (11k/mo) to live on. If PITI for a typical house in Riverside is $4500/mo, that leaves $6500/mo to pay all other bills. They probably have student loans, which may or may not be justifiable but there's clearly a spending and/or debt problem here. Or as others have said, they just want something more expensive than a typical Riverside home.

[getsorted]

It's entirely disingenuous for him to say he can't afford to buy a home.  That's like me saying I can't buy a home... because I want to live in the heart of Paris and everything there is too expensive.  And I don't even actually work in Paris.

If I have to save for more than two days to buy the 7,000 sq ft house on the exact lot I want in Malibu, I'm being oppressed by the capitalists.

Also, if it's not exactly as easy for me as it was for my parents' generation, I'm not even going to try to reduce my expenses or save.

[halfling]

I keep thinking about this article because my partner and I earn above average together, but also feel like buying a house would be a scary risk. I think for us and for this couple too probably, it comes down to a feeling of income insecurity. The professor has a position with no tenure, and my entire working life I have definitely felt like I could be laid off at any time (I'm only in my late 20s, though). It's more of an emotional problem than a rational one, but it's based in a harsh reality, especially after these last few years of lockdowns and layoffs.

[Dicey]

I keep thinking about this article because my partner and I earn above average together, but also feel like buying a house would be a scary risk. I think for us and for this couple too probably, it comes down to a feeling of income insecurity. The professor has a position with no tenure, and my entire working life I have definitely felt like I could be laid off at any time (I'm only in my late 20s, though). It's more of an emotional problem than a rational one, but it's based in a harsh reality, especially after these last few years of lockdowns and layoffs.

Buying a house is scary as shit, especially your first one. I felt the same insecurities for years. Eventually, your income rises and the value of the property increases and it gets better. We're old now and it's the taxes we piss and moan about. It's always something.

Mitigation: We always believed in and maintained decent emergency funds, which helps alleviate a lot of stress.

[remizidae]

"As a professor of public policy, Oklobdzija’s research tends to focus on housing policy, and before this role he was the research director for California YIMBY..."

So this guy has professional and ideological reasons to believe that no one can buy a house. You're not going to convince him otherwise just with math!