Quoted:
HOLY CHIT Batman that is NUTS. How can the average joe afford 500k for a house?
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Well, there's a couple of factors in play here in this cesspool:
1.) Depending on where they live, many average Joe's can't afford a house. I certainly can't, and I have only myself to support on my entry-level biotech job that pays ~$37k a year. My girlfriend and I are forced to live together (she makes about $45k) because the rent for the modest 3 bedroom home we live in (1500 sq. feet maybe?) is $2100 a month. We live in a house because of our dogs, but even if I were to live by myself I'd be looking at a minimum of $800 a month for a 400 sq. foot studio in a crap part of town.
I've read that something along the lines of only 1/3 of kalifornians can afford to buy a home.
Prices vary drastically depending where one is looking, of course. While high in the major metro areas (I live in Cupertino, which is in the San Jose area), median prices for homes in the big central valley are closer to $200k than the ~500K or so in my neck o'the commies. My parents' house in Bakersfield (1.5 hours north of LA) is 2200 sq. feet on a decent sized suburban corner lot and was just appraised for less than $200K.
2.) Lots of non-average Joes around here. The measuring stick I use to compare relative wealth in the different areas I visit are the types of cars present.
In this region I'm amazed at how many people are riding around in newer BMW's, Mercs, etc. A friend of mine referred to 3-series as the "civic of affluent people" because there are so many around. Even if I drive three blocks to the grocery store, I'd bet money on seeing at least one new BMW 3-series.
Whenever something new and trendy hits the market, I see them rolling around here before anyone else I know in other parts of the state.
Hummer H2's started showing up as soon as anyone learned they were out. I see a new (e46) M3 almost every day either going to or coming from work. I see an M5 at least once a week, and I'd say probably once a month for a Ferrari 360 Modena. In one 3 day stretch a few months ago I saw 4 different 360's during my commute.
What all that means is that there are lots of people who can afford $1k car payments, so plopping for a house is doable for some, especially if you start looking at dual income professional types. This is, afterall, where the dot com boom happened. Even though lots of people lost their shirts there is still an insane amount of money around here.