My brother has a 900k house in San Fran and their combined household income is maybe 180k. So i guess you are able to get loans like that. I dont understand how they afford it but they do.
I plugged in a few numbers for a $500,000 house with 20% down not too long ago with a 4.5% adjustable rate over 30 years; it came out $2K/month, $2500 with taxes/insurance.
That works out to $30K/year, most of it tax deductible, under half their net income. Some interests rates were lower; others have a bigger down payment, etc.
Techs is actually the one suggesting a rational process here.
Analogy - take how we got out of the great depression.
A lot of people especially on the right like to suggest that the economy was not too good for a decade with FDR but what really ended the depression and started a strong economy was the changes from WWII, getting all those factories running and people working and so on.
Well, let's look economically at what happened in WWII to stimulate the economy - the government went into MASSSIVE debt for MASSIVE government spending on what was basically complete wate - building things that blew up or were otherwise economically useless. So presumably that same level of spending would have been even better for the economy if they'd built economically productive things instead of military things. After the war were the massive GI bill, education, home subsidies.
So the lesson is, that the government going into MASSIVE debt to stimulate the economy, and provide those kinds of subsidized services for citizens, took the country from depression to prosperity - even while the top tax rate on the rich being 90% didn't seem to drive a lot of the rich out of the country or keep them from wanting to run companies.
So the facts would suggest that - yet suggest those things and you run into people who dispute the facts and base their position on opinion, because they don't like the policy.
Now, maybe someone can argue why the above isn't correct, but that misses the point, that the people who disagree with it are not usually using facts to do so.
Techs is the one saying 'if the facts say this, it might be right'.
We have some econmists saying a much bigger government stimulius is needed - still well below WWII levels - yet we have the Republicans screaming murder and the public getting cold feet. But who is the group acting rationally on the question, those who use the facts or those who just 'don't like' an approach?
Where are all the doomsday predictions about a higher tax rate on the wealthy and a bigger stimulus to a weak economy when looking at the 1940's recovery?
That's the best 'factual test' of the 'theories'; the best in recent times I know of was Clinton's small tax increase in 1993. Every right-wing commentator I can find - I did some reasearch on this - made doomsday predictions if it passed, they put their necks on the line with the predictions, and the opposite of their predictions happened. It was a major discrediting of them. But the lesson was not well learned.
180k household income is not bad. That's fine if you have a dual income engineer system or whatever, but if you got just 1 person working @ 100k/year, you're going to struggle. Try raising children on top of that. But seriously, $500k house is nothing in CA. It's a 1 BR POS.
Anyway, your $30k / year is tax deductable, but still you don't have room for a lot of wiggle there.
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