Another Lemming Takes a Drop

1516 Missouri St Unit 4
San Diego, CA. 92109

3 bdrm, 3 bath, 1265 sqft condo
1 tandem parking spot (bleh)
Year Built: 1987
HOA: $225

Purchase Price (01/06): $675,000
Asking Price: $625,000


I have to admire this flipper for actually trying to sell his place for a significant amount less rather than the typical 5k discounts everyone else just tries to put up. If only it was worth that much. I was doing some thinking lately as I was checking out a new complex that has 3bdrm 2 bath condos in PB that they have "discounted" the price on to about $650k. A place like this is exactly what a middle class income earner should be able to purchase. It's a condo, it's not big, but it's just big enough to have small family. A middle class individual should be able to afford it. Now if the median salary in San Diego is 65k (last number that I heard, might be off), and you have two working adults pulling in that much. Your takehome after taxes is going to be about $6,000 a month combined. Now if you somehow had immaculate credit and 5% down (over 30k + closing mind you), your HOA fees + mortgage + property tax is going to come to just over $5,000 a month. Granted you get to write off the interest portion of all that, but that is still only going to leave your median family with about $1500-$2000 a month for everything else.

That's car payments, home improvements, any entertainment, child care expenses (day care because you both work), food, and anything else that might come up. Have we just evolved into a family unfriendly place? Scratch that, has every single major metropolitan area evolved into a family unfriendly place because it wasn't just San Diego that had this boom. I don't buy it. We're still far from the bottom. I believe that anyone who thinks we may have bottomed just hasn't taken an objective look at the real estate market.

Purchase Price	$675,000.00
Sale Price	$625,000.00
Association Dues	$225.00
Holding Period(mo)	12
Mortgage Paid	$43,875.00	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$8,437.50
Estimated Monthly Rent	$2,000.00
Estimated Monthly Loss	$1,560.63	(if rented)
Estimated Monthly Tax Savings	$1,023.75	(using 28% tax rate)
Sales Commission	$37,500.00
Total Loss	$110,227.50

On a side note, I'm thinking about improving my rent vs own calculator. Any ideas on what I could add to it? Oh I've also gotten some feedback that 28% tax rate is a little too conservative. I'm going to be revisiting my spreadsheet to try to make some improvements. If you have any other feedback, please write in with it.