Here’s a condensed update to our home-buying story. Our discussions about the subject have been going like this:
Should we buy or rent?
- We should just buy if we intend to live in it for a decade.
Do you want a condo or a house?
- A house. 3 bedrooms, 1500 square feet.
Okay, let’s look at houses… They are all well over $500,000.
- Ouch. What about a condo?
If we buy a condo we’ll probably want to move when we have kids.
- Well if we are going to move, we should just rent.
But I want to settle down…
- Okay, let’s keep looking and see what we get.
The only real compromise seems to be to buy a more expensive house than our initial $500,000 target price, one that we can live in indefinitely. But if that’s the case, I want to get a good deal on that perfect house. Prices here are holding pretty steady, so any offers we make are being rejected. So we keep looking, and sometimes her patience wears thin. I feel she wants to settle, she feels I am too picky. I am stubborn about this because it is such a huge commitment.
The fact is that $500,000 buys you a two-bedroom condo in a so-so building with a so-so commute here. If such high prices seem crazy to you, check out this article about affordability in California:
The percentage of households that could afford an entry-level home in California stood at 24 percent in the third quarter, unchanged from the same period a year ago, according to a report released Thursday.
The California Association of Realtors said the minimum household income needed to purchase an entry-level home at $482,910 in California in the third quarter of 2007 was $99,590, based on an adjustable interest rate of 6.56 percent and assuming a 10 percent down payment. [...] The monthly payment including taxes and insurance was $3,320 for the third quarter of 2007.
Yep, crazy sounds about right.