The typical San Francisco household buyer (not median income earner) now earns between $200,000 – $500,000 a year. As a result, the frenzy price range shifted from $900,000 – $1,400,000 to $1,200,000 – $1,900,000. Even more parents are helping out with the downpayment according to all the real estate agents I’ve spoken to.
But what I’ve discovered today is that once you break the $2,000,000 price point in San Francisco, the value you get skyrockets once again. To comfortably buy a $2,000,000 home requires at least a $400,000 down payment plus a $100,000 liquidity cushion. Having $500,000 to earmark into a single asset isn’t the easiest thing to do, even if you’re making a healthy $300,000 a year middle class income.
Most of peple i know including myself who bought the house over 1.5 million paid way over $400,000 for down payment and have over $300,000 liquid asset. I cannot imagine buying over 2million home with 20% downpayment with $100,000 liquid asset regardless of DTI.
So you are putting even more for a single asset. Might as well buy 10 houses at 200k each.
Or a 25 unit apartment building with no rent control.
But nobody went bankrupt from being conservative
IT’s very possible.
That’s my point.
People are buying over 2million homes not because their salary is high (although it is high enough for 2million mortgage) but because they got 1million from stock selling. That has been my observation so far. Relying on salary alone to buy a luxery house seems very risky to me.
That’s not surprising when so much of the value is the land. You can literally get twice the house for ~25% higher price.