Housing

Yet another "Can I afford it" post

Facebook hrwsbmufd
Mar 11

Household TC 400K, Base-only 300K. Planning to have kids in 2 years.
Post-tax monthly income excluding (pre/after-tax 401k): $18.5K/month.
Expenses: $1400/month

Newark CA is our best bet given our work location. Looking at 1.4M homes in Newark. With 20% down, monthly payments are $6.8K (incl prop tax/insurance/HOA). Few questions

1. Most online calculators show I can afford it, but nervous about 1.1M loan. Can I afford it?
2. Market seems to have recovered with interest rates going up. Does it makes sense to wait for 6 more months? Worst case prices can stay flat with interest rates going up. These are new properties with more units being released every few months and I doubt if timing the market is prudent at this point.
3. This area has 400-500 SFHs coming up at >$1.2M. Elementary school is rated 3. How many years does it typically take for a school rating to improve in such rapidly-gentrified area.

comments

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  • Amazon cuda4u
    You can only put 20% down with 400K/yr?
    Mar 111
    • Facebook hrwsbmufd
      OP
      I can but I don’t see any upside in putting more. It can reduce monthly payments a bit but I’d rather invest in the market.
      Mar 11
  • Wells Fargo bandook
    Don’t worry about schools for now , by 7 years the schools will improve
    Mar 118
    • Google YAPTRF
      I wouldnt count on that. However you can. Always move after 7 years
      Mar 11
    • Amazon cuda4u
      Assuming someone buys out your mortgage
      Mar 11
    • Oracle oIXL80
      Not true. Don’t count on schools becoming 8-10 from a 3 in any number of years.
      Not a great idea to move in 7 years either. Might as well rent if you plan to move that soon.
      Move to a place that’s already at a 7 or so.
      Mar 11
    • Google YAPTRF
      Or move to a place with horrid schools that's cheaper and use the cost difference to send your kids to private school
      Mar 11
    • Facebook hrwsbmufd
      OP
      The problem is areas with horrid schools + decent homes + manageable commute still have high prices like Newark
      Mar 11
    • Google YAPTRF
      Look at east Menlo Park / east Palo Alto
      Mar 11
    • Facebook hrwsbmufd
      OP
      Concerned about safety in EPA
      Mar 11
    • Google YAPTRF
      Why EPA is safer than San Jose, Oakland, and SF
      Mar 11
  • Axtria DesiLaunda
    How do you manage expenses with $1400/month?
    Mar 110
  • Uber / EngnYf6sJ
    Take a 2M loan.
    Mar 110
  • Oracle oIXL80
    Not true. Don’t count on schools becoming 8-10 from a 3 in any number of years.
    Not a great idea to move in 7 years either. Might as well rent if you plan to move that soon.
    Move to a place that’s already at a 7 or so.
    Mar 110
  • Activision Blizzard others
    God dam anybody getting a million dollar loan that doesn’t make at least half is nutty
    Mar 110
  • Facebook / Eng
    fb2017

    FacebookEng

    PRE
    Google, Oracle
    BIO
    worked at Oracle, then Google, now Facebook.
    fb2017more
    Renting sfh in good school area like Cupertino costs less than 4k. I would buy a house in Newark and rent out, and rent a house to live in good school area if you are afraid of missing house price going up.
    Mar 115
    • Facebook hrwsbmufd
      OP
      This is my current thought process. If school ratings don’t improve as much but prices do, I can sell the home after 7-8 years. If I cannot sell it due to downturn, I can still rent in good school districts and rent out my place.
      Mar 11
    • Glu Mobile PQSK63
      If Cupertino SFH is less than 4k, why would anyone rent in Newark for more than 4k? You will be paying 3k for someone to live in your 1.5M house while paying rent elsewhere.
      Mar 11
    • Facebook / Eng
      fb2017

      FacebookEng

      PRE
      Google, Oracle
      BIO
      worked at Oracle, then Google, now Facebook.
      fb2017more
      For Newark, it is possible to rent close to 4k for the house he is trying to buy.

      Rent to house price ratio is not same in different areas. In Cupertino it is pretty bad as the rent for a 2 million house is less than 4k.
      Mar 11
    • Glu Mobile PQSK63
      Except he stated his mortgage+ tax is 6.8k. so he will be paying someone to live at the Newark house for ~3k (mortgage - rental income).

      Also he has to report rental income, pay tax, etc. It would be better to not buy.
      Mar 11
    • Facebook / Eng
      fb2017

      FacebookEng

      PRE
      Google, Oracle
      BIO
      worked at Oracle, then Google, now Facebook.
      fb2017more
      My advice is for the case that if he is afraid of housing price keep going up. This way is for you to not be priced out.
      Mar 11
  • Wells Fargo bandook
    Yes u can , it will be little stretch bit don’t forget u will get money back in taxes . Go for it
    Mar 113
    • Facebook hrwsbmufd
      OP
      How much money back are we talking about?
      Mar 11
    • New hHVy73
      Nope you won’t
      Mar 11
    • Intel UGeJ58
      Yeah right, don't count on taxes being stable in 21st century america.
      Mar 11
  • Google / Product4pmCoffee
    I have a similar profile as you and bought a 1.4M home in Newark few
    months ago 😀 Good luck
    Mar 110
  • Microsoft hellohibye
    400k is definitely possible. People with 300k and kids buy 1.4 M house. You don’t even have kids yet and TC will only grow with a safenet of having a spouse.

    For instance, my neighbor bought 1.4 M house and I believe their TC is probably less than $350k because one is SDE 2 at Microsoft and another works at a not high paying tech company. They have two kids so their expanse should be much higher.
    Mar 110
  • Glu Mobile PQSK63
    Go private, public school takes forever to move up due to amount of new resident is tiny vs. existing residence profile. Go with Challenger up 5th grade in Newark.
    Mar 110
  • New hHVy73
    My opinion, go with 50%-60% of what those calculators tel you. They don’t include incidental expenses like a new refrigerator or repairing HVAC...
    Mar 110
  • What about like cost of nanny and kids etc
    Mar 112
    • Facebook hrwsbmufd
      OP
      Hoping rising wages will take care of those
      Mar 11
    • Don’t count your eggs before they hatch 🐣
      Mar 11
  • Wells Fargo bandook
    Newark is upcoming area - also your Salaries will improve in 7 years - who know you might be able to effort Private . Then u don’t have to move or rent .
    Mar 111
    • Calypso Technology xsinc
      Clearly someone who’s trying to sell you. Loan officer?
      Mar 11
  • Google zzzyyxxx
    Newark for 1.4 million. Lol
    Mar 120
  • Visa mr_python
    Don't buy. Bay area real estate is in bubble territory. In case of a slowdown it'll be worst hit.
    Mar 110
  • New / Product
    ʕ•ٹ•ʔ

    NewProduct

    PRE
    Amazon
    ʕ•ٹ•ʔmore
    Yes
    Mar 110
  • Wells Fargo bandook
    Loan officer.. he he . I’m a practical person with 16k disposable income he can afford to take a big loan , Doesn’t make sense for him put in more downpayment . What Risks are you seeing - Market falling - that will impact all areas not just Newark, Ca. Job loss - that will impact his ability for repaying for any house . What else am i missing.
    Mar 110
  • Calypso Technology xsinc
    Have you lost your mind? in Newark for that much? I wouldn’t live there if you paid me
    Mar 110

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