Here FS tells you why buying a 4.5M house is nuts.
Here’s a good way to look at your down payment:
The $2 million downpayment is guaranteed to earn $62,000 a year in state tax-free income if it was invested entirely in a 10-year government bond. Hence, one could easily argue that the total annual cost of owning this house a year is not $223,254, but actually $223,254 + $62,000 = $285,254.
My bar is lower than FS’. For me anything over 2M is no-no.
Are you going to let your Millbrae / Burlingame dream go away? Or you think they will come under 2M in the future?
Maybe I can stretch it to 2.2 or 2.3…
Most millbrae houses I’ve seen are between 1.6 to 2.4. So under 2 is doable. Burlingame though…
This table is more useful than the absolute price of the house. Some people can buy a $4.5M house, and it’s low percent of gross income. Personally, I think it makes some sense to stay in the under $1.2-1.4M range where homes are the most liquid. Granted, I think that range keeps moving up, but you can usually see based on DOM where the price is that homes start to sell slower.