Can I afford a 1.65million home? Cash in hand: 1.1m + 400kin401k total comp: 350k+/yr (single earner) Base pay to allow monthly payment: 240k/ann Age: 41, 2 kids (entering 9th grade/high + 6thgrade/middle school next session....7yrs of schooling pending) No other debt. Current rent 3500 For 1.6m with 1m down still will have 5k/month payment. Feeling the heat now as after putting all savings so far still such huge payment. Spouse is pushing hard to buy to have family time in our own home as kid is entering high school.and other one in middle. We like the bay area and have not lived any other part of country so far. I was thinking to go Texas, Atlanta, Redmond etc to avoid huge debt in housing. Looking for some view points here if it makes sense to stay out
Shit double your rent and park the cash where it makes some money and it probably gets you a better house
Have you looked at affordable east coast cities? NC has a couple charlotte and RDU are nice and you can buy a home in a great neighborhood around 500k.
Thanks, Great suggestion..are you from NC area. One way I thought about moving to RDU area probably will have about 3k/month pay cut post tax. So I was also thinking what if I use this 3k towards the house payments to allow me purchase higher price houses. Just worried due to uncertainty with jobs etc and debt.
We don’t need more liberals in NC. There’s a reason it’s nice here. We’re full
It’s a stretch. If your wife really wants to buy a house, and you cannot relocate to a cheaper place, can she start working and contribute towards mortgage payments? Even if it’s 3-4k per month of additional income, that would make things a lot more comfortable.
Great suggestion..yeah that would be handy to get 3k etc...just it's not-tech and the scene in the bay area is pretty sad for non tech/front line/admin jobs.
There are plenty of non tech jobs that can make you 60-80k a year. It may take a few months to look but it’s really doable
You can easily pay the mortgage. Don’t worry too much
Can you provide more inputs on your monthly expenses? Are the kids going to public or private schools?
Don't understand what you're worried about.. it's literally 1.5k more to own & build equity. Itemized deduction of mortgage interest & property tax might just pay you that back... So monthly cash flow not an issue. Yes it sucks to put all your life savings in it, so noodle on the down-payment to see what's the max your TC, not base pay, will allow you to pay in monthly mortgage. That way you can still squirrel away say 200k in other investment that's not your property. Overtime your TC will go up, monthly payment heat will come down & before you know you'd have built equity in your property. Home ownership in the bay area is a great investment, espcially at the right location with good schools for kids. Don't trade for locations you've never lived in.. Nothing in your finances suggest you need to make such drastic uprooting decision..
1.5K more cash flow with 1M down payment. That's a huge opportunity cost. Salt cap makes the property tax 100% wasted cash. (You hit the Salt cap from state income tax alone)
That is terrible advice to “see what’s the max your TC, not base pay, will allow you to pay in monthly mortgage”. You should always pay your mortgage on your base pay and save your bonuses to build wealth. Relying on RSUs or bonus to pay the bills is taking on unnecessary level of risk. What if the stock price decreases? (Hello google, meta, many others). Then your TC doesn’t look so attractive anymore. Or if you get laid off before it vests, good luck there. Or if the company has a bad year due to recession and bonuses are severely cut.
If you have choice, don’t buy in Bay Area. Not worth the hype. Eventually you will drown in stress of expenses. As you get older you’ll suffer more it is not worth it. Go to GA, NC, TX, VA instead. You can buy more houses and retire early
In bay area houses appreciate more (absolute appreciate, %appreciation elsewhere may be similar), as compared to rest of the country. At least this has been the case for last one decade. They can always sell and relocate elsewhere later.
You are right. I have two houses here but have mortgages. I wish to sell and move to Mid West. But children don’t want to move. You get tied up with something if you start with assumption . I’m not happy here. High property taxes, homelessness, crime, gender politics, too much headache to maintain such expensive property. Have to work harder and keep struggling for promotions. TX home May not appreciate but at least life is stable and less expensive. My $0.02
Are you full remote? If so, probably moving to cities like Atlanta, Chicago where you can get a single family home for $450k within good school district. You'll have a good peace of mind. Probably your spouse can get a non tech job too. I think at the end of the day, peace of mind and happiness matters. They come from how comfortable you are.
Yes, you can afford to buy, but... You will have all your net worth in the house and a single income. What happens if the tech economy collapses (due to AI or whatever reason), you lose your job and the house loses value?
Kids will leave home in just a few years, can’t you just rent until then? You’ll probably downgrade once they leave the house
This. Moving to new city is tough for kids at this age and it’s a weird age to buy a house when your needs will change shortly.
Don’t be stuck with too much house when you empty nest. No point buying now if you haven’t yet. Or maybe buy a cheaper second home where it’s cheaper and you can vacation/retire to. Airbnb-bust is about to happen so might be a better deal than Bay Area.