rome

PLUS, you have that hottie in your Avatar up there!!! Who is that?

OCBen

That hottie I believe is his heated seat option.

ELUSIVE

I don't think that there is any set number or percentage of what you should spend on a house, car, etc. In fact, that's rediculous. Everyone's priorities/situations in life are different and you therefore change how you spend money based on those priorities/situations. What would the experts say about someone who makes $30K a year and has a $10K mountain bike? Should that be so wrong?

No matter what your income is, you should buy a porsche. It will make you smile more.

Just my $0.02, which ironically is about all I have left now....

OCBen

A Wealth of $1-Million Homes

California's real estate boom has made the onetime stratospheric price commonplace.

By Annette Haddad, Times Staff Writer

Million-dollar homes were once a sign of real affluence. Now, at least in California, they are getting to be a dime a dozen.

Nearly 49,000 homes in the state sold for at least $1 million last year — a 47% increase from 2004, according to data released Tuesday by DataQuick Information Systems, a La Jolla-based real estate research firm.

Adolph Rangel joined the $1-million-home club thanks to the state's 6-year-old real estate boom.

In 2004, the 30-year-old mortgage bank branch manager sold his Yorba Linda[Orange County] house for $1.05 million, $300,000 more than he paid 12 months earlier. Last year, Rangel bought a new tract home there for $1.3 million and on Sunday he accepted an offer on it for $1.55 million.

His idea of a million-dollar house used to be "what you saw on 'Dynasty,' " Rangel said. "I didn't think it would be a million-dollar tract house."

California ranked first in the survey of homes selling for at least $1 million in 2005, DataQuick said.

In Rancho Santa Fe in San Diego County, one of the wealthiest communities in the U.S., virtually all home sales were in the $1-million-plus category. Malibu and Beverly Hills have always had their share.

The real news is that $1-million homes are becoming more commonplace in areas not known for lifestyles of the rich and famous.

Now it's expensive to be Eagle Rock-adjacent: In the Glassell Park area of Los Angeles, 18 homes sold for $1 million or more last year, versus only one in 2004, according to DataQuick, which collects data on all reported home transactions in California. In Baldwin Hills, the number of seven-figure sales went to 23 from 9. Temple City posted 17. The year before: zero.

"A million dollars isn't what it used to be," said James Joseph, owner of Century 21 Grisham-Joseph brokerage in Whittier.

Indeed, if you sold a home in California last year, there was a 1 in 13 chance that it went for at least $1 million, according to DataQuick.

Your chances in 2004: 1 in 20.

The total of homes fetching $1 million or more last year was nearly four times the number in 2002, according to DataQuick.

Only a few years ago, $1 million bought you an "estate" property, one with ample square footage on a large lot in an exclusive neighborhood.

Not anymore. The median-sized million-dollar home last year was 2,480 square feet with four bedrooms and three bathrooms, DataQuick found.....

rome

I attribute this to Kristin and L.C. being so damn hott.

jonquiljo

This is the heart of the problem. I remember just back in the early 80's when my co-workers would talk about a house, they talked around $200,000. And they had to make decent money to afford even that. That was in Palo Alto (South Bay - SF). Now its probably $1.5M --- for a tiny tract home. It really sucks.

What matters more for a "target buyer" is not how much he or she earns, but rather how much he or she has to spend on other things - house, mortgage, kids, college for the kids, and yes - retirement (something my fellow baby boomers are now realizing they screwed up on). So you can earn even 1/2 M a year and still be broke - if you have a house and kids and retirement to pay for. Now thats if youre lucky.

One thing I've also seen in the past 20 or 30 years is how many of my "colleagues" went broke, lost a job, contract, practice, etc - and ended up really badly. These things happen to the best of us, and to more of us than you'd think. Unforseen expenses, especially medical expenses can break even the best of us.

So what do we do? Well - get that Porsche, have fun, and don't look back. Next year we may not be so lucky.

DrDrilZ

the "3 months gross income" figure is talking about the price of the car itself. that would be crazy to say 28% goes to house and 33% to car.
in other words, he is saying that if u make 120k/yr, go get yourself a $30k car. not realistic however as the average car is almost $30k these days and the avg household income is nowhere near $120k

rome

I hear you. Even so, I can't believe that the "target" (or typical) P-Car customers are buying vehicles at a cost equal to nearly one half of their annual incomes.

Soulteacher

Whether you make $80,000 a year or $1,000,000 a year, buying a Porsche is not a rational decision. Consumer psychologists would classify it as an experiential decision (driven by the affective responses associated with the purchase). So, really, we are satisfying our hedonistic needs and the only decision we have to make is: how much are we willing to pay to satisfy these needs (buying a Porsche is one way, going skydiving another, spending a lot of money on cute little girls, uhm, is a third...).

Therefore, my opinion is that all this looking at the opportunity costs of buying a Porsche (I could do this with my money, I could do that with my money) will not be very convincing because opportunity costs are a rational concept and - again - we are not engaging in a rational decision.

OCBen

Well said, Teach. And if we were making a rational decision in buying something to just drive - to get us from Point A to Point B - we'd be looking at the least expensive and most economical car for the long haul.

fast1

What matters more for a "target buyer" is not how much he or she earns, but rather how much he or she has to spend on other things - house, mortgage, kids, college for the kids, and yes - retirement (something my fellow baby boomers are now realizing they screwed up on). So you can earn even 1/2 M a year and still be broke - if you have a house and kids and retirement to pay for. Now thats if youre lucky.

Granted that if a marketer could get access to that type of information, it would be ideal. The only information that is readily available, I would guess because of information derived from financing and leasing transactions, is total household income. So the information is purely empirical, and it certainly doesn't suggest that you shouldn't buy a 997 if you don't fall within the average average household income. I'm certain that Porsche would be delighted to take orders on its 997 from buyers regardless of their incomes, provided of course that they could either pay cash or get a bank to finance the purchase.

Actually I'm not certain why Porsche would spend the effort to collect the data. The data states that buyers of its $100K+ cars are on the average in the top 3% of household incomes in the US. Wow, what a surprise.

ultimate

I have dealt with this "rational thinking" in the context of riding motorcyles, as I have for 38 years - is it rational to put oneself at that risk? However, I have come to realize we are not entirely rational beings, and that is just the way it is.

boolala

Correct. Except for one small point: 33% for a car corresponds to 4 not 3 months gross income. So the means test would suggest that if you make 120 K a year a "reasonable" amount to allocate for your car would be 40 K. This would buy you a nicely equipped Acura e.g. which is probably what most of these people drive.

Now remember these are averages. If you are outside the norm as, e.g., having substantial assets but relatively little income then sure you can spend more for a car. Few people are in this category however. If you do then you know who you are.

For the rest of us these are probably good guidelines to follow.

And, finally, I agree that buying cars, especially at these prices, is not a rational decision. It comes closer to being a burnt offering for most of us.

boolala

Really sad.

Those of us who have owned homes for many years have been somewhat shielded because our properties have increased in value quite a bit as well making it less painful to "trade up". Think of first time home buyers, however, who have no equity and have to pay astronomical prices from the get go.

That one is getting so little (real estate) for so much (money) represents a real decline in the standard of living in America.

///Mous3

OC is not like Manhattan; there are plenty of empty land. But the real estate is CRAZY here... And most, if not all, homes in OC have no character.