home buying

The other day, I was talking with a colleague who is getting transferred, possibly to Bakersfield. We ended up discussing home prices and the generally much higher prices for homes in Bakersfield than in Farmington. After growing up in the Bay Area, home prices in Bakersfield seem downright affordable. Then again, on this list almost everything outside the Bay Area looks affordable.

Nonetheless, I had trouble explaining that to my co-worker. She was using what I felt was an overly conservative criterion of home price being roughly equal to that of combined earnings of her and her husband. Looking at that list again, you can tell that that would be a nearly impossible rule to follow for anyone in the Bay Area or any number of areas. Besides, since I save roughly half my income (counting 401k) then I could purchase a home matching that criterion outright after just two years. That makes buying a home here very feasible. However, for several reasons, I have no desire to buy a home right now, despite a strong desire to own one eventually.

Obviously, how much home you (and your spouse, alternative life partner, disturbingly clingy better half, etc) can afford is a function of income. But a one to one function between income and home price would only make sense with a relatively small income and even then it's still too conservative. It would only make sense with a small income since the less someone makes, then the greater percentage of that person's income is needed for non-housing essentials, reducing what is available for mortgage or rent. If person A makes twice as much as person B, all other things being equal, the cost of living is the same for both of them even if A feels compelled to spend more money simply because it's possible. Basically, A has more than twice as much disposable income than B even after accounting for taxes. As such, the less one makes, the closer the amount of home that can be afforded is to that person's income.

However, it is still too conservative to say that home price and income should be roughly equal. I think most people in my peer group could see how that would be the case. Plus, most people in my peer group who would be reading this live or have lived in the Bay Area and recognize the near impossibility of that guideline. Then again, there is the great variable expense that I cannot fully account for. No, it's not marriage which should actually save two people money principally due to the consolidated housing costs. It's children. I hear that they're expensive. And incredibly aggravating, but that's for another time.