Davison-Ave is not Monta Vista, but Cupertino High School.
School areas are ranked this way. There are very high level generic ranking, but home may sell high or low based on various other associated facts.
Monta Vista,
Lynbrook
Homestead
Cupertino High
Fremont
The above ranking is based on people’s desirability and competition.
Do not argue or fight with me if someone has different opinion.
One more point is that West Sunnyvale bordering Los Altos areas will sell more. May be more beautiful
No doubt, Los Altos absolute value is higher than Cupertino and Sunnyvale and are always premium location, lot sizes are always 10k+
Monta Vista is ranked 11th in CA. Homestead 113rd. Not even close.
http://www.usnews.com/education/best-high-schools/california
I am curious. What’s the income/career profile for people buying 2M houses in that area? Putting 20% down means loan is 1.6M. House payment PITI is around 10K per month or 120K a year. Did Trump say he’s going to get rid of interest deduction? If so most of this 120K is after tax money.
So I guess to comfortably afford a 2M house the family must make at least 300K, preferably 400?
I guess their salaries are probably over 400k range.
Two engineers with 7+ years of experiences in hot SV company can reach that range.
On top of that, i suspect down is more like 50%.
If this is upgrade buy, that is very possible although good investors won’t like that approach.
In addition, they may be expecting (kind of future vesting) big amount of stock options/RSU/Accumulated ESPPs or Old Home sale or rental home holding may be there. There may sell those in future, say RSU vesting sale, and pay off bulk amount.
Based on my review, wherever I was bidding previously, there are startup directors, VPs, Doctors or Lawyers holding better positions between Palo Alto and San Francisco.
What is the typical effective tax rate for a family of 4 making 400K W2 income? Federal + State. Is it something around 30%?
Limit but not eliminate the mortgage interest deduction. The property tax deducation might be on the chopping block. Outside the Bay Area, the increase in standard deduction would mean far fewer people would itemize. If they don’t itemize, then mortgage interest and property tax deductions don’t matter.
I guess 30% is probably good rough number.
It is appx 33% IRS+11.3% CA+SS+Medicare…appx 42%
Income=400000, IRS=113450, CA=36621, SS=7347, Medicare=7600.
This is the main reason MAX DTI is set for 43% as rest of the 15% is for living expenses.
Do not take any NINJA loans as it leads to bankruptcy…
Yeah, after I posted that 30% number I thought it some more and it seems a bit too low.
So going back to my original question, if someone puts down 20% down for a $2M house the PITI payment is around 120K. With an income of 300K that’s doable, but very tight.
I think this is close to reality. I think there is also 3.8% Net investment tax on their RSU / capital gain? On top of that there is AMT, so your mortgage interest deduction is reduced. Maybe with Trump’s change on getting rid of AMT and getting rid of mortgage interest deduction could be a wash for that W2 income range.
I agree. 2M is pushing it for 300K. It will have more buffer with 400K income. As others have said, I doubt that 2M is their first home. Mostly likely upgrade, so higher downpayment or other passive income.
Ha ha !
If you feel 120k PITI is tight for 300k income, how can you take NINJA loans? If this is tight, you are saying 40% DTI (120*100/300=40%) is tight.
NINJA loans like my first original 10x are really scary ! Yes, 40% is tight for anyone when 42% goes to tax, rest 18% is just living expenses.
Safe DTI is 30% and best DTI is 25%. Most of the 2M buyers may likely put down 900k as Mortgage tax deduction is limited to 1.1M only.
3.8% is mainly to cover the Obamacare expenses. Both will go away with Trump coming.
Ninja loans for rental properties. Also business incomes have a lot of deductions. Most of these deductions don’t affect the take home cash but looks though you don’t have much money coming in from the business. 
I may look like a Ninja on paper but I ain’t really.
I think 42% is effective, so it might average to 33% with average deduction. With 400K, it would be 30% DTI now. Also, for W2 earners, 400K could include RSU too, and Wellsfargo is actually willing to take into consideration as part of your income.
Why is this one not selling: https://www.redfin.com/CA/Los-Altos/1730-Holt-Ave-94024/home/1613784? Just reduced the price. I would think with extension, it would be a decent home.
Got it, excellent.
Creek behind it, risk of flooding. No one wants to buy and build Million Dollar home with a high risk of flooding ! Water damage results Mold, health issues and to make it livable costs 100k+ . Every flood likely damage, insurance mandatory too.