Comments on: Is the American Dream Still in Reach?

By: Gary

Gary — Tue, 29 Apr 2008 13:59:22 +0000

Katrina,
I’ll take ‘optimistic’ over ‘unrealistic’ any day of the week. The sad truth is, however that housing for median income wage earners is near to non-existant.

By the way, I should point out that I made an error, and if you have 20% down, you won’t have to pay PIM, but that’s really only about $50 a month. It doesn’t push the amount you can borrow up all that far.

By: Katrina Munsell

Katrina Munsell — Tue, 29 Apr 2008 03:22:20 +0000

Hi Gary, you’re right, taxes and PMI should be included in the housing expenditure calculation, though I prefer to consider my numbers as more “optimistic” as opposed to than “unrealistic.” This absolutely makes the options even more limited, as you mention. Frightening, I think, and I was surprised to see that so many of those surveyed felt differently!

By: Gary

Gary — Mon, 28 Apr 2008 18:55:14 +0000

Katrina,
I was thinking about this a little more, and your numbers are unrealistic. Consider the taxes, at 1%, and a PMI of .25%, which I don’t think you put into your accounting. However, they’ll be there in the monthly mortgage payment.

At 30%, which is AT the ‘cost burdened’ level set by the HUD, for a 30 year loan at the described 5.875%, your loan will be for about $188,000. With your 20%, your maximum house that you’re going to be able to afford is actually closer to $233,000!

None of the properties you listed will be ‘affordable’ to the median income level in Washington state.

Gary

By: Gary

Gary — Mon, 28 Apr 2008 16:12:49 +0000

I’m 50 years old, I’ve not had a tremendous life, but I make just slightly more than the Washington median income, and believe me, that’s not a lot of money in the days of almost $4 a gallon gasoline and skyrocketing food prices.

The assumed 20% downpayment is a lottery ticket away for me, again, that ‘hope.’ I was out of work for over two years, my 401K and my savings gone just to support myself.

Realistically, how many people have $55,000 (at the median income level!!!) stashed away? Some may, and for them, that’s wonderful.

Let’s be a little more realistic. I live in Kitsap County. I am a Veteren. I have an ‘average’ credit score, mid 600′s. I basically still have no savings put away, living paycheck to paycheck. I am single, and I rent. I am looking to purchase a house. I can get a VA loan, no downpayment, and closing costs of about $9,000 for about $150,000! This will put me up near the ‘cost burdened’ limit after I figure in the mortgage payment, taxes, and condo fees. Yes, condo fees, you don’t actually think I can afford to buy a REAL house, do you?

I am budgeting about $1,300 a month for housing costs, not including utilities. I know to some of you that is laughable, you probably pay more in rent, but this is what I can afford on what I make and what I expect to make. This is the median income in the state of Washington. Try putting a cap of $200,000 on your Redfin search, and see what’s available. Try working over your financial calculators with 0, 5 and 10% down. See what *I* can afford, and what most people in Washington can afford.

Hope…yeah, as in, I hope I hit tonight’s Lotto jackpot, because that’s really the only way I’m going to get a house.

Gary