| I think people are over-extending themselves. This article mentions a single-earner household with $160k income purchasing a $900k+ home. Assuming this is with 20% or less down at current interest rates, this is bonkers. The term "house poor" is cliche, but I think it describes the position most California buyers are putting themselves in. For comparison, our household income with RSU deltas is projected to be 500k this year. Half of that gets taxed away. I do not expect to make this much money forever. I'd be satisfied if we made this much for the next sixteen months, then took 50% paycuts. We bought our home earlier this year, and we set our max price point based on what we could theoretically pool together from all of our liquid holdings and retirement, in a catastrophic situation where we both couldn't find work. There's an obvious flaw here -- if things got really bad, liquid assets would be devalued, to the point where we may not be able to cover. We got around this by cutting our budget in half, and using what would have been a 40% downpayment for a 1.5 million dollar house to put 75% down on a $800,000 house. We now have a house that cannot be reasonably commuted from on a daily basis unless we leave at 4 in the morning, but we also won't be screwed if we lose our jobs. I kind of regret buying. Our house immediately appraised for $30k over sale price, and is nearly $80k over a few months after closing. That would get eaten up by taxed and fees if we sold. I expect housing prices to crash after people run out of money sources to tap. I have no way to prove this, but my impression is that most people with mortgages are buying more house than they can responsibly afford, and they are effectively gambling on not losing their incomes. |