To Open Door You Need A Wad

Now that I have been a homeowner for nearly nine years the one question I continually ask is: “How can anyone afford a home in Alameda on a modest income?”

With 181 sales in Alameda for the first half of 2009 and average sale price of $555,911 it takes a hefty wad of cash just to open the door to homeownership.

At the average price of $555,911 to finance the deal in today’s market you need to save $111,182 for a twenty percent down payment. And once you beg, borrowed and saved for the down payment, you are looking at nearly $2,600 in monthly payments in just principal and interest plus another $7,000 in taxes and assessments and then home owners insurance.

Based on the above scenario you will need about $42,000 annually or $3,500 a month to cover monthly payments, taxes and insurance. To keep this cost at 30-percent of your take home pay the family income would need to $140,000 after taxes or over $11,000 per month. It looks like you need about $182,000 in earnings to buy the average home.

Your family would need to make over $90 an hour based on 251 work days at eight hours a day.

Boy that was a lot of math to get to “You need to make a lot of coin to buy a house in Alameda”

To see what I could buy based on a monthly payment I went over to the ZipRealty website to use their search tool. The reason is ZipRealty site allows to switch between list price of the home and search by monthly payment. The tool allow you change assumptions, because saving is tough I used 10-pecent down and 6-pecent loan.

So for monthly payment of $2,000 per month or less there were 17 properties. Fifteen of the seventeen were condominiums or townhomes. A three bedroom, two bathroom home at 1918 Chestnut were part of the results. The home is listed for $338,500 and based on the assumptions would be a monthly payment of $1,826.

I did a second search with just single family residences and booted the monthly payment to $2,500. This netted fourteen additional properties. Eight of the properties were 2 bedrooms and one was a 1 bedroom. The range of list prices was from $375,000 to $449,500.

A quick check on Craig’s List shows that based on 100 rentals of two bedrooms or larger Alameda is paying on Average $1,661. In fact I found 12 three bedrooms for under $2,000 per month.

I guess it was another long way to say that it takes a lot of cash to buy in Alameda and if you buy on the Island you are doing it for more than just a place to live.

P.S. If you are looking for homes it appears to be a big open house weekend. The Alameda Sun has 42 properties listed for showing, with several open Saturday and Sunday.