A new house on my block went up for sale. The price: $1.9 million.
Most of my life I have lived in Burbank, California. I always enjoyed the city, a nice, middle-class neighborhood.
However, Burbank is not Beverly Hills. Never in my wildest imagination did I think I lived in a wealthy area.
But . . . what middle-class household can afford to buy a $2 million home?
The down payment surpasses the purchase price of my house.
The property tax alone is over $2,000 a month and that amount will never go away but will increase over time. Combined with homeowners’ insurance, the monthly house payment is over $8,600. Whoever buys this house will have to make mortgage payments exceeding $103,000 every year.
Who can afford that?
One would have to gross $150,000 in order to net $103,000. And that is just for the housing expense. Not included: cars, clothing, food, entertainment, etc.
Only 8% of Americans earn between $150,000-200,000 a year. I suppose if a married couple held down two such high-paying jobs, they could manage it. However, how many couples do you know who fit this description?
Over the past few years, all of my surrounding neighbors have either died or moved. All the new homeowners paid well over $1 million for the privilege of living in a nice but not exclusive area. And each of them has late model cars. And have made extensive renovations on what are already decent looking houses.
Since I’ve been home from the start of the pandemic, nearly every day there are multiples of trucks or vans from workers who are employed by my neighbors.
If I were looking to purchase a house today, no way would I be able to buy the house I bought 22 years ago.
Already, my children could not afford my house. How will the affordability differ 22 years from now? How crazy expensive will properties be then?
There is no easy answer to this situation. I know people who have moved out of California to less expensive states. Those ex-Golden Staters enjoy sharing how much more house they can buy at a much lower price in Idaho. For me, though, California is my home. I’d rather stay put in a smaller house that have an estate in West Virginia. The state made its name from the Gold Rush and today keeps reinforcing that label.