Cost Of Living?

[mingagreen]

Loaf of Oat Nut bread is $2.88
mid grade gas is $2.10
Half gallon of organic whole milk is $2.00
organic eggs are about 2.30 doz...........we are getting 10 hens in 2 weeks, we eat SO many eggs!!!
Housing around here is deffinately going up. when we biult our house a year and a half ago it was appraised at $250,000 we just got it reappraised and it is up to $330,000. Our house is 1,700sq. ft. without the basement and we have 16 acres. Land around here is expensive. People are flocking to this area b/c we are close enough to philly and New york for people to commute. The developments that are going in are crazy. Luckily we live in a township where you must have a minimum of 3 acres to build and you must have 500 ft of roed frontage.
Oh and I live in Barto,Pa!

 

[Mara]

Date: 6/9/2005 5:00:24 AM
Author: Dancing Fire
Mara
i was in your shoes 19 yrs ago.i went with a 30 yr ARM at 10.50% with 20% down. 2 yrs later i refinance into 15 yr 9.25% fix.with a IO loan when the bubble burst and your home value go down 20%,you will owe the bank more than what your house is worth because,you didn't put any money down.yes.....i will look like a jack A** if the market keep going up but,when the bubble burst you will hear me say 'i told you so'

DF you were not in my shoes because we did not do a 30 year or a 15 year, those are long term loans that I feel m most would be foolish to undertake if you plan to keep that house for a long time.

But since we plan to move in 5 years, everyone we spoke to agreed that doing IO was the best way to do based upon how much principal we'd actually have in 5 years paying P+I. It wasn't worth it. Regardless of if we had P+I and the market drops 20%, our piddly little few thousand in principal from the P+I would not matter.

Also, if our house value dropped 20% today, we'd still be ABOVE water because it has appreciated over that in the last 1.5 years. Will it drop 20%? It could, but at this point we are not overextended by any means to worry about that. We also still have 3.5 more years on this particular loan, but if we re-fi this year, it re-sets the clock to 5 years and should the bubble burst this year or next, it should at least be partially recovered in 3-4 years.

The way we looked at it (and we looked at all scenarios, even the bubble bursting)...was that worst case, if we can even break even when we sell this place in 5 years, that we lived in a beautiful place for the same amount as renting something similar and we took a huge tax break that we would not have otherwise been able to have. Best care scenario is we are able to keep this property and buy a house, but I guess we'll see.

websailor, re P+I...we can pay principal towards our loan at any time, we got a non-prepay-penalty so we could if we wanted to AND we can refi anytime...but we'd have to refi into a P+I loan, I believe, in order to have the amount owed re-adjust if we did decide to pay principal.

I fully expect the bubble to burst soon. However, many experts while they agree that the bubble here in the BayArea is reaching it's max capacity due to all the speculative buying and flipping...they also agree that the 'burst' and drop will not be catastrophic in this area, because of all the demand that is being again generated around here. Jobs are so much better than they were 2 years ago and the market around here is stronger than ever.

Whatever happens, it will be interesting. I am so glad we didn't get in now like our friend who just bought 50k over asking, she is already assuming her house will appreciate that much just for her to break even.

 

[AGBF]

I do not know how indicative this is of how people really live-or even if the figures are accurate-but supposedly the median home for our former zip code in Connecticut was $1,348,653 and the median home for our present zip code is a mere $922,500. I know that a small house on a postage stamp yard cost a fortune where we were and that we have more house for the money now. On the other hand, we were in a town with more economic diversity. (There were actually poor people, working people, and renters!) Now we live with people whose incomes are more uniform (except that some are extremely rich). As far as I have seen, no poor people live in my town!

Deborah

 

[AGBF]

Date: 6/9/2005 11:42:12 AM
Author: AGBF
I do not know how indicative this is of how people really live-or even if the figures are accurate-but supposedly the median home for our former zip code in Connecticut was $1,348,653 and the median home for our present zip code is a mere $922,500.

OK. I have a more accurate sense of my town in Connecticut, now. Straight from the First Selectman''s office in June, 2005:

The median home was $1,110,000.
The average home was $1,700,000.

...and I *KNOW* that that is peanuts compared to some California communities!!!

Deborah

 

[ammayernyc]

I just read a cool article that listed some websites that cross reference Google''s satellite maps with housing and cheap gas. Here are the links:

Cheap Gas

Housing

 

[Dancing Fire]

Date: 6/9/2005 6:10:17 AM
Author: Momoftwo
At least where I live in the No VA area, the housing market shows no sign of slowing down. Every real estate analyst and financial planner I''ve heard recently expects no bubble burst,
yeah....they said the same thing about the stock market in feb 2000,right before the bubble burst.

we put 20% down (made off our last home) and now have like 42% equity in 18 months. I have family in Texas and they choked when I told them what real estate cost here. We could buy the same house there for less than 1/2 the cost here.
if you can afford to put 20% down that''s when you could afford to buy a house.

 

[Mara]

careful DF you are showing your age...

requiring 20% down to buy a home is a thing of the past, especially in high areas like the BayArea...you are lucky to come up with 10%. if you wait til you have 20%...you could be entirely priced out of the market by the time that happens.

 

[aljdewey]

Yup - definitely old school thinking on the 20% down.

These days....if you had 10%, in the time it took you to save the other 10%, the housing market would go up 50-60K....so you''d need another $10k on TOP of the 10% to now have 20% of the new number!

Oh, and in all the time you''re saving the other 10%......you''re blowing rent money out the door to the tune of $20k a year.

It was smarter for us to put down 10% and take a 2nd for the other 10%.

 

[Dancing Fire]

Date: 6/9/2005 1:11:00 PM
Author: Mara
careful DF you are showing your age...

requiring 20% down to buy a home is a thing of the past, especially in high areas like the BayArea...you are lucky to come up with 10%. if you wait til you have 20%...you could be entirely priced out of the market by the time that happens.

Mara
that''s why you should listen to old folks like me.

 

[Libster]

EDIT: OOOPPPPPSSSSS....If I'd read every response carefully, I'd realize that this was posted yesterday....sorry!!!


Here is an article that I read yesterday that is relative to your Bay Area housing discussion....enjoy!
http://www.dailyherald.com/business/businessstory.asp?id=58948

 

[Mara]

"Mara, that''s why you should listen to old folks like me."

_____________________

You old curmudgeon, DF...my parents own multiple properties locally...and they tend to give some great advice having done this a few times before.

They wholeheartedly agreed with our decision when we discussed it a year and a half ago with them. Somehow I tend to give their opinions a little more weight.

However, your opinions are duly noted!!

 

[Mara]

That Chris guy is kind of cute...I wonder if he is single? I have lots of girlfriends!!

In the article, this part speaks exactly to what I was saying:

San Francisco accountant Patrick Duffy advises his clients to use interest-only mortgages, unless they plan to live in a home for at least seven years. “If you are only going to have it a short time, why waste your money” on the higher monthly payments required under a conventional 30-year mortgage, reasons Duffy, who financed both his homes with interest-only loans.

 

[njc]

Date: 6/9/2005 1:02:25 PM
Author: Dancing Fire

Date: 6/9/2005 6:10:17 AM
Author: Momoftwo
At least where I live in the No VA area, the housing market shows no sign of slowing down. Every real estate analyst and financial planner I've heard recently expects no bubble burst,
yeah....they said the same thing about the stock market in feb 2000,right before the bubble burst.

I have to agree with momoftwo... the DC area will have a hard time crashing. There are so many people here and more are coming by the day. If BRAC is approved, the military base within 5 miles of my house will get over 18K new jobs. Those people need to live somewhere. The department of Homeland Security is still expanding and those people are coming to the DC area. NO END IN SIGHT!!!

And we did the same as Mara... we knew we werent going to be in our house for more than 5 years, so we have a 5 year ARM, although we pay I&P and can make additional principle payments any time.

And as for "you have to have 20% or else dont buy" DF, its hard to save up that 20% when houses are going up *at least* 10K every week and you have to spend at least $1200 a month in rent. It is the smart thing to do, but not everyone has the super incomes to afford a pricey area. By the time you get 20% for that $400K house, its now $600K....

 

[Momoftwo]

DF, we put $500 down on our first house and 5% on the third one. This 4th home is the first one we've been able to put 20% down on. It's very difficult to save that much while paying rent elsewhere. It was our equity increase that got us to where we are today. I can't think of anyone I know who put 20% down on their first purchase. Also the stock market didn't really burst, it did drop, but the main reason for it was the tech stocks. Stocks on things that didnt' exist except in cyberspace.

 

[fire&ice]

How do you find out the medium housing prices?

I would post what 500k could buy you in either of my residences - but I think I would have an influx of residents.

Nearly everything is moderate in our areas. Gas - paid $1.9499 at the Costco. Don't buy bread. Milk flucuates between $2.19 & 3.69.

Sales tax in VA - 5%
Sales tax in NC - 7%

Income tax rate - VA - 5.75%
" " -NC - 7% I believe w/ some not advantageous tax situations. Edited to add - NC income tax rate is 8.5%

Now, I know why our tax basis is in VA.

 

[Erin]

That is one of the downfalls to living in this small community. The property tax rate is 8.5592. So, your house is only $150,000 but you''ll pay about $4,500 in taxes. Booooo!

 

[aljdewey]

Date: 6/9/2005 2:41:03 PM
Author: njc

Date: 6/9/2005 1:02:25 PM
Author: Dancing Fire

Date: 6/9/2005 6:10:17 AM
Author: Momoftwo
At least where I live in the No VA area, the housing market shows no sign of slowing down. Every real estate analyst and financial planner I''ve heard recently expects no bubble burst,
yeah....they said the same thing about the stock market in feb 2000,right before the bubble burst.

I have to agree with momoftwo... the DC area will have a hard time crashing. There are so many people here and more are coming by the day.

I think NJC''s and MO2''s posts touch on the reason there is no one-size-fits-all answer.....location, location, location, baby!

It seems the market inflation is fairly systemic at this point and happening everywhere. Yes, I''m sure there will be a "bubble-burst", but in those areas where demand is high due to desirability/commutability, etc, there won''t be a *crash*. Maybe a slight depression of the market price, but certainly not a crash. Some hot-demand communities may not even feel a ripple.

In many metro areas (SF bay area, Boston metro, DC/VA metro, etc) there is enough attraction in the area that prices won''t plummet the way they may in other areas which aren''t in the same demand.

 

[Momoftwo]

Date: 6/9/2005 5:26:19 PM
Author: fire&ice
How do you find out the medium housing prices?

I would post what 500k could buy you in either of my residences - but I think I would have an influx of residents.

Nearly everything is moderate in our areas. Gas - paid $1.9499 at the Costco. Don''t buy bread. Milk flucuates between $2.19 & 3.69.

Sales tax in VA - 5%
Sales tax in NC - 7%

Income tax rate - VA - 5.75%
'' '' -NC - 7% I believe w/ some not advantageous tax situations.

I did a google search using my county, state, average income then, median income. That kind of thing. It brought up local info and some census info on charts with other data. Local (real estate agents and county info) was more up to date than census data. Also, you can check local papers. Right now we''re seeing articles every week on real estate and values. Of course our real estate taxes are going up fast too.

 

[Jennifer5973]

What about PMI? If you don't put 20% down, you have to pay PMI, which can be hundreds of dollars a month...we put 10% down on our house, then refinanced to have 80% equity a year later and lost the PMI--saved over $300 a month! And PMI is not tax deductible!

 

[aljdewey]

What about PMI? If you don't put 20% down, you have to pay PMI, which can be hundreds of dollars a month.

Not anymore....not in today's market. Yes, back in the days when all banks would offer is 30-year fixed loans...singles with no 2nd.....that was true.

Today's lenders have found ways to help savvy buyers avoid PMI altogether.

The whole point of PMI is to protect the lender from loss if the house doesn't have at least 20% equity invested. Lenders aren't comfortable when a primary loan exceeds 80% LTV. The solution was to create 80/10/10 and 80/15/5 loan programs.

When we bought our house six months ago, we took an 80% primary mortgage, we took a 2nd mortgage for 10% (which was a HELOC), and we put down 10%. Because our primary doesn't exceed 80% LTV, we don't pay PMI....which saved us about $150-200 per month.

Both of our mortages - primary and second - are 30-yr fixed, which we lucked out on. It was our stellar credit and the fact that we had literally no debt that let us get a 30-yr fixed on the 2nd, too. Most 2nds are balloon loans, which call for low payments in the beginning and increase significantly later in the loan term. People who take those types need to concentrate on paying off that kind of 2nd mortgage early to avoid the hit.

There are tons of ways around PMI; the key is getting a really good mortgage officer who knows the ins/out of those programs and can help buyers navigate them.

 

[Jennifer5973]

Date: 6/9/2005 7:42:25 PM
Author: Jennifer5973
What about PMI? If you don''t put 20% down, you have to pay PMI, which can be hundreds of dollars a month...we put 10% down on our house, then refinanced to have 80% equity a year later and lost the PMI--saved over $300 a month! And PMI is not tax deductible!

Sorry-I wasn''t clear. We know about the 10/10 and other crafty loans and we''re looking into that type of arrangement for a vacation home. Of course, that''s a whole other convo--a 1 BR, 1 BA CONDO in Stone Harbor, NJ is $650,000.

I meant in relation to IO loans...what is the PMI circumstance if you put <20% down?

 

[jenwill]

Jennifer-

The story is the same with IO on loans with less than 20% down. Basically, you finance the 80% IO (no PMI), the 10 or 15% HELOC will have principal plus interest. That is how many, many of us are doing it in the Bay Area.

Mmmm, vacation home sounds niiiiice.

 

[Jennifer5973]

Date: 6/9/2005 9:00:48 PM
Author: jenwill
Jennifer-

The story is the same with IO on loans with less than 20% down. Basically, you finance the 80% IO (no PMI), the 10 or 15% HELOC will have principal plus interest. That is how many, many of us are doing it in the Bay Area.

Mmmm, vacation home sounds niiiiice.

Thanks, jenwill!

Well, we're looking....may have to amass more cash or look South...it's ridiculous.

We were lucky and bought our house whe nwe were very young. We scraped and struggled, and we didn't have as many loan options since we were carrying other debt but it paid off once our careers took off and the market grew so rapidy. Our house is worth $200,000 more now than 4 years ago. 20 min into downtown NYC...it's a beautiful thing!

 

[Kaleigh]

Jennifer,
Looks like you guy''s did very well and am sure you will with your vacation home. The prices are rediculous. A shack in Nantucket goes for over a million.

 

[Jennifer5973]

Date: 6/9/2005 9:11:14 PM
Author: kaleigh
Jennifer,
Looks like you guy''s did very well and am sure you will with your vacation home. The prices are rediculous. A shack in Nantucket goes for over a million.

LOl--maybe I can pitch a tent for $500,000.

 

[cflutist]

Date: 6/9/2005 9:00:48 PM
Author: jenwill
Jennifer-

The story is the same with IO on loans with less than 20% down. Basically, you finance the 80% IO (no PMI), the 10 or 15% HELOC will have principal plus interest. That is how many, many of us are doing it in the Bay Area.

My younger sister must be an "oddball" then. She just bought her second home for $740K and she put down $320K in cash from her savings (43% down) and got a fixed rate loan for the remaining $420K on one income (she is single). She still hasn''t decided whether or not to keep her first home.

My mom did one thing right, she taught us how to save. She also made us work to put ourselves through college.

 

[aljdewey]

The story is the same with IO on loans with less than 20% down. Basically, you finance the 80% IO (no PMI), the 10 or 15% HELOC will have principal plus interest. That is how many, many of us are doing it in the Bay Area.

I know a few couples that have IO loans for both the primary and the HELOC.....and one of them did an 80/20. No money down. They could easily afford to make a house payment, but they didn''t have the down and would have drained out rent for 3-5 years trying to put it together.

Didn''t make sense for them to wait, and they needed the tax break, too.

The only diff between IO loans and 30-yr is how long you plan to stay there. IO loans work for folks who would pay out money in rent (lost money that doesn''t come back to them) and aren''t ready (job-wise, commit to a specific area of the country, etc.) to choose a place to lay down camp for 30 years. Since all you pay is interest initially, it gets them the tax credit and hopefully a little appreciate to pit toward a down-payment when they do want to lay down stakes.

In our case, IO didn''t make sense because we wanted to buy the house we plan to stay in for 30 years, so IO wasn''t the correct choice for us.

 

[aljdewey]

Knowing how to save is one thing; making a living wage high enough so that there is something left over after necessities is another.

Two of my friends work in the electronics industry; both are savers by nature. Both are quite frugal. Truth is, though, after they meet *basic* living expenses, there isn''t a lot left *to* save. At the rate they are able to save, neither of them will be house-hunting anytime soon.

 

[Mara]

Unfortunately a large down payment will not necessarily always get you that house you want! My friend who just bought said a gal came in with $200k down on a $635k place and they overlooked her in favor of someone else with a higher bid and who would allow them to stay as renters for a few months etc. So even saving up for a huge DP (very rare in this area!) doesn't guarantee a positive outcome.

re: Single income, that same gal friend who just bought also did it on a single income for about $500k after about 15% down..I would freak out carrying such a large loan on my own! Her income is average...she is convinced she will be fine, but I think she will be in for a rude awakening, esp around property tax time. What you pre-qualify and the banks say you can afford is not always what you will feel comfortable paying!

 

[tulipcloud]

I''m in the OC here where the median home value is at its high over $500 something and keeps going up. I got really lucky last year when I bought my lil place. Mom and Dad were still in the "you shouldn''t move out til you''re married" phase, but I was itching to be on my own. Other properties in my neighborhood have now sold for about 100K more than what I bought at last year.

Can''t beat my friend''s condo in Irvine where he bought only 3 months ago and now is reselling and made 60K on a small 900 sqft 1Br 1.5Ba at over 430K!!!!

But loaf of bread? not sure since I don''t even have time to make a sandwich but I can tell you that a Filet O'' Fish combo is over 4.50
Premium Gas....2.43-2.69