Would you take a mortgage that is 1/2 your net income?

[honeybbq]

If you are in the greater Seattle area that house will probably go for well over 500k.  Average time on the market is currently only 8 days, and most houses have mutliple offers with no contingencies, escalation clauses, and often all cash/quick closing.  It is insane.  Curbed has some good examples (like the house on Phinney Ridge that listed for $900-something and sold in 5 days for $1.3 million a few weeks ago...) Given this is going to be such a big portion of your income, I would wait until your wife actually has a job and you know what your longer-term income/expenses are going to be. 

I do sympathizze -- having to rent for a year while we wait for our apartment in Beijing to sell.  And then we are going to be one of those parties driving the prices up (plan to pay all cash....)

Yep, eastside. Bellevue/Redmond.

We decided to hold off due to all of the above. Market is crazy, even people going way out (Carnation, etc.) are doing the multi offers above asking with escalation clauses, quick closing, etc. I'll continue to just stick my $$ in the market, race the appreciation and wait it out.

Yup. I know purchase prices are insane... but.. rent is insane, too. Sometimes I feel like 3/4rs of the people who call a 600k house face punch worthy don't realize we're talking about an 800 sq ft house that hasn't been updated and was built in 1950. It's really tough, you have to LIVE somewhere....

[sol]

It's really tough, you have to LIVE somewhere....

You sure as hell don't have to live in Seattle.  The facepunches are for failing to look at other options. 

It's no different than the consumer idiot who just HAS to have third row seating in his SUV in case he decides to take up a new hobby that requires lots of cargo space.  Or says he NEEDS the daily Starbucks because he feels so tired without it. 

There are lots of other ways to solve this problem that do not involve blindly spending more money.  The SFR in Seattle, like the Starbucks and the SUV, are purchased status symbols and not necessities. You can do without.

I don't mean to pick on any one person as an individual.  This problem is so widespread precisely because people are easily led into bad decisions by the power of crowds.   But on this forum, expect little sympathy when you whine "it's just so hard" to a thousand people who have it harder than you do and are still somehow making it work.

[honeybbq]

Sure, I don't have to live in Seattle, and you're assuming people aren't looking at other options. I get paid a lot more to work in Seattle than in the midwest (over 50k a year more +spouse had a large raise, too), and the quality of life is a lot higher, too. It's not just a black or white decision. Yes I spend more on housing, but in the long run, it's worth it. Plus, no state income tax, etc. People who spend a lot on housing are not just blind idiots like you are making them out to be.

[cj25]

Yeah but in Seattle you have to opportunity to work a few super awesome companies.  And have all the green, islands, ferries, mountains,Olympic Peninsula, easy access to real food & endless outdoor activities with a fairly mild climate.  The midwest does not offer this.  Doesn't it also come down to quality of life? 

[ender]

Sure, I don't have to live in Seattle, and you're assuming people aren't looking at other options. I get paid a lot more to work in Seattle than in the midwest (over 50k a year more +spouse had a large raise, too), and the quality of life is a lot higher, too. It's not just a black or white decision. Yes I spend more on housing, but in the long run, it's worth it. Plus, no state income tax, etc. People who spend a lot on housing are not just blind idiots like you are making them out to be.

I calculated that I would need almost $50k/more per year to basically break even in a HCOL area, accounting for extra taxes and ~$2k month more in housing costs (post tax). I think that was for the SF area, so it'd be less state tax increases if it was Seattle, but still.

That would be for a lower standard of living, too. If we bought a place that is as nice (and as close to work) as what we can get here in the midwest it'd almost assuredly be far more than $2k/month in extra costs.

*shrug*

I don't mind people wanting to live in Seattle or SF but the pay increase really only matters if you aren't spending so much more on living expenses, such as housing. And I'm fine if people consciously choose those sorts of cities for the lifestyle. But acting as if the only way to make money is to move to a VHCOL area? Meh.

[sol]

Yeah but in Seattle you have to opportunity to work a few super awesome companies.  And have all the green, islands, ferries, mountains,Olympic Peninsula, easy access to real food & endless outdoor activities with a fairly mild climate.  The midwest does not offer this.  Doesn't it also come down to quality of life? 

But you can have all of that at half of Seattle prices of you move just 30 minutes out of the city.  Tons of places under 300k in seatac, kent, renton, des moines, and all before you even reach Tacoma. 

Prices are only ridiculous if you insist on being right in the heart of things.

[A Definite Beta Guy]

You're still making a choice to live in Seattle...which you don't have to do...
I mean, I'm spending 13% gross on housing (total), but I do recognize I have champagne tastes in terms of neighborhood and schools. I probably could've shaved that down to 9.5% for still reasonably good schools and reasonably good neighborhood, if only I weren't such a spoiled brat.

And have all the green, islands, ferries, mountains,Olympic Peninsula, easy access to real food & endless outdoor activities with a fairly mild climate

Green-I have forest preserves within a few miles of my house
Islands-You need your own island?
Mountains-Parts of the Midwest do in fact have small hills. Wisconsin is quite hilly as does northwest Iowa (I believe)
Olympic Peninsula-So champagne-taste it literally has "Olympic" in the name
Real Food-Kitchen
Outdoor Activities-We do have fishing and hiking. You can play football anywhere. If you need to surf everyday, you have champagne tastes.
Mild Climate-If little boys and girls can survive Midwest winters, I assure you, you can too.


The Midwest may not be as nice (and no one says it is), but it's not like we're living in squalor. "Real food"? Come on.
But yes the Midwest probably will not satisfy people with champagne tastes. You can, however, reduce your COL, build up your assets, and then enjoy life to your heart's content.

[undercover]

It's really tough, you have to LIVE somewhere....

You sure as hell don't have to live in Seattle.  The facepunches are for failing to look at other options. 

It only makes sense if the pay difference makes up for living there or the costs of commuting are too high otherwise. Then again, not everyone looks at everything strictly from a financial perspective. Some stay because of family, friends, familiarity, location, etc. If buying is cheaper than renting, and you don't plan on moving, then why the hell not?

[A Definite Beta Guy]

Good god that's expensive. It only has 3 bedrooms!

[LeRainDrop]

If you are in the greater Seattle area that house will probably go for well over 500k.  Average time on the market is currently only 8 days, and most houses have mutliple offers with no contingencies, escalation clauses, and often all cash/quick closing.  It is insane.  Curbed has some good examples (like the house on Phinney Ridge that listed for $900-something and sold in 5 days for $1.3 million a few weeks ago...) Given this is going to be such a big portion of your income, I would wait until your wife actually has a job and you know what your longer-term income/expenses are going to be. 

I do sympathizze -- having to rent for a year while we wait for our apartment in Beijing to sell.  And then we are going to be one of those parties driving the prices up (plan to pay all cash....)

Hah, do you have a link to the house? I live on Phinney Ridge. Yes, have a face punch worthy expensive house, but... what can you do in Seattle? Live under I-5?

Here you go:

http://seattle.curbed.com/2016/5/9/11643550/seattle-housing-market-phinney-ridge-sale-asking-price

[Trigger warning for those susceptible to house porn -- you don't want to get sucked into Curbed unless you have tons of time on your hands....]

Gorgeous home, but WTF pricing!

[MisterTwoForty]

I would never take a mortgage out that was half of my take home pay, no matter how much I am saving in my retirement funds before it hits my bank account.  That leaves way too much risk and not much capacity to save in after tax investments.  It's just a place to live, find somewhere less expensive.

[Helvegen]

I also live around Seattle. It is probably the best place in the country for my husband careerwise (he just accepted a significant, game changing promotion for lots more $$$) and we can't argue against the money we make hand over fist here. We also have the advantage of paying below market rent. Market value is probably $500 or so more a month. So we are able to save pretty well.

That being said, buying a house right now is completely out of the question. It makes zero financial sense. There is no way that we could find something comparable to what we are renting (3bd/2.5ba SFH w/shared garage) that would be anywhere near what our rent is in PITI. I wish it made more sense to buy like it does in so many other parts of the country, but here...math doesn't really shake out that way in our situation.

I would never make my mortgage more than half our take home pay. That is very risky in the event of job loss or disability. If we rented for the same amount, well can always move to somewhere cheaper (both geographically and property wise). If we bought we could always sell, however, I am guessing that when we need to the most is when the market will also take a huge dump and risk foreclosure.

[big_slacker]

I love talking about specifics vs. generalized statements like "Well live somewhere cheaper, duh!" Haha!

If you want to work at a certain level in techiedom for the biggest/best/most challenging/highest paying then you need to choose one of the tech cities. The Seattle area is quite a bit cheaper all in (salary, taxes, house prices, etc.) vs the Bay area, DC, NYC. There are second tier tech cities like Austin, Chicago, Boston, Denver and so on as well as non-tech cities that need tech workers but the companies are smaller, pay tends to be lower and more importantly the market is smaller so you're much more locked in to the company you work for.

There are like Sol mentioned other considerations than pure finance, like most of my family being in the PacNW including aging parents. Also important is that my wife be happy with the environment, that *I* have close access to the mountains so my soul doesn't wither and die, and of course that there be a good environment and schools for the kiddos.

Of course we ran the numbers on salary vs. COL before we moved (it was a net gain vs where we were living at the time) and of course we did comparos between the HCOL tech towns and 2nd tier towns. We also visited some of these places because the map != the terrain. Austin for instance was eliminated that way despite being good on paper.

On Move somewhere cheaper in the area

Sol mentioned as an example Kent, Des Moines, Renton as places half an hour outside the city that have the same quality of life. I wanted to address that statement. Sol either lives here or is familiar with the area but is greatly underestimating commute times. Kent to downtown Seattle or out to Redmond where I work *IS* 30 minutes in the middle of the night. During actual commute times it's more like 50-60 minutes due to horrific traffic.

Also the schools are nowhere near as good, more crime, more noise (the airport is right there) and generally *NOT* the same quality of life. Not saying it's a horrible place to live but you are buying some quality of life with that money.

Yes we've considered moving further out to save on housing, not just south as Sol suggested but also north (Woodinville, Bothell) or my favorite east out i90 to the smaller towns close to the mountains although that will take some work for my other half to accept.

All of this just means that it's a good time to continue renting, stacking cash and waiting for when it makes better sense.

[Mikila]

I was going to suggest that taking out a mortgage amount equal to half of your annual income was something I actually considered prudent.  Say, buying a $75k house with $150k of income, for example.

But it sounds like you meant to say that the annual payments would be half your income?  That's so facepunch worthy my knuckles hurt.

These were my thoughts exactly

I agree 100%.  Just say no to this house.

[honeybbq]

If you are in the greater Seattle area that house will probably go for well over 500k.  Average time on the market is currently only 8 days, and most houses have mutliple offers with no contingencies, escalation clauses, and often all cash/quick closing.  It is insane.  Curbed has some good examples (like the house on Phinney Ridge that listed for $900-something and sold in 5 days for $1.3 million a few weeks ago...) Given this is going to be such a big portion of your income, I would wait until your wife actually has a job and you know what your longer-term income/expenses are going to be. 

I do sympathizze -- having to rent for a year while we wait for our apartment in Beijing to sell.  And then we are going to be one of those parties driving the prices up (plan to pay all cash....)

Hah, do you have a link to the house? I live on Phinney Ridge. Yes, have a face punch worthy expensive house, but... what can you do in Seattle? Live under I-5?

Here you go:

http://seattle.curbed.com/2016/5/9/11643550/seattle-housing-market-phinney-ridge-sale-asking-price

[Trigger warning for those susceptible to house porn -- you don't want to get sucked into Curbed unless you have tons of time on your hands....]

Holy sh*t my house is bigger than that... LOL. Now I want to sell!! :D

[honeybbq]

Sol mentioned as an example Kent, Des Moines, Renton as places half an hour outside the city that have the same quality of life. I wanted to address that statement. Sol either lives here or is familiar with the area but is greatly underestimating commute times. Kent to downtown Seattle or out to Redmond where I work *IS* 30 minutes in the middle of the night. During actual commute times it's more like 50-60 minutes due to horrific traffic.

I drove to Kent once in rush hour from Cap Hill and there were NO accidents, just regular traffic, and it took me an hour and a half. No thank you. I hate hate hate commuting long distances and just won't do it. I work downtown. No options to live in the burb without significant decrease in QoL.

Also, not MMMish to live so far from home amiright? Right now my commute is about 15 min in the morning, 20 in the PM and I can bike when I don't have to drop my child at school.

I actually like Bothell a lot. I'd like to move out there when I'm done working.