Able to buy but not at all willing
If you make a quarter of a million dollars a year, does it make economic sense to buy a house in L.A. right now? Back-to-back commenters on L.A. Land answered that question on the blog Friday with a resounding “no.”
Common Sense wrote:
“My wife and I earn around $250K per year, are in our mid-30s and have a newborn child. In any other planet, we should be able to own a very nice house. However, in Los Angeles, the only thing we can properly afford would be a starter home at $750K. Maybe that gets you a 2-bed, 1/2-bath crack house, and our combined salary puts us in the top 3% in annual wages in the U.S.
“This just doesn’t make sense and will be a big reason why Los Angeles will experience a BLOODBATH in housing prices falling for the next several years -- that is, unless the entire city is inhabited by multimillionaires.
“In the meantime, we’ll keep renting our excellent 2,000-square-foot apartment, paying nothing, taking awesome vacations, going to excellent restaurants, etc. and saving, saving and saving (A LOT). We’ll enter the market when home prices fall to planet Earth (2-4 years).”
A few minutes later JayC wrote:
” . . . Wife and I make ~$250K/year, live in apartment on Westside, and child is on the way. The problem isn’t that we don’t make enough or that our expectations are too high (as Realtors might say). I’ve been living in L.A. my whole life and I DO know what people who make $250K/yr SHOULD be living in. It may not be Beverly Hills, but it sure is more than a 1,500-sq-ft fixer in Sherman Oaks. . . . I’d rather pay $1800/mo to rent a town house than pay $5000K/mo to rent money from the bank that owns the house I ‘bought.’ ”
I’ll put the question to the readers: If you made $250,000 a year, and could afford a down payment, would you buy a home in L.A. right now? If so, where, and for how much, and what do you think you’d get?
-- Peter Viles
-- Rent vs. own for college students
Many colleges are back in session and the bills are coming due. Wondering if you could have cut some corners?
Home-search website Cyberhomes recently looked at 15 top football schools, including USC, to see whether parents would be ahead buying a house nearby and collecting checks or paying rent to someone else. They found that it made more financial sense to rent in only four of the college towns.
Los Angeles is one of those markets. A monthly mortgage payment on a single-family home in the area, according to Cyberhomes’ research, is $3,163, versus only $2,270 for rent.
After USC, other school markets where renting beats buying include the University of Oregon and Fresno State. So which of the college markets look best for buyers? Penn State, the University of Oklahoma and the University of South Florida.
-- Lauren Beale