140K, 40% for taxes, leaves with 84K, 3K a month for housing (assuming you don't want to shack up with some rando Craigslist'er), leaves 48K.
Another 20K for food and booze, and you're left with 28K.
Their responses were ... well ... sad. I don't blame them. Or the companies.
I was amused by the offered salaries, after I explained the basic economics to them. Pointing out that the net income after taxes/expenses is so low as to effectively put me and my family into poverty.
The smart ones responded positively to "keep me where I am, have me hop a plane N times per month."
The dumb ones said "but BA real estate only goes up." Which, is a large part (but not the root cause) of the problem. If this were true, then BA real estate would be little more than a barely concealed Ponzi scheme. Which, maybe, it is. I dunno.
What is interesting to me is that the rest of the country has been wising up for a while. So now you can get the benefits of BA salary/comps working locally. This is a welcome development, though rent seeking behavior seems to follow this, so it is only good for a while.
nitpick: Ponzi scheme = fraud, giving people fake investment accounts, like Bernie Madoff's operation.
It's more akin to a pyramid scheme, greater fool theory, speculative bubble, etc.
So with your estimate, you're actually left with $4k saved for the year..
So, you're telling me that the $1MM home (which will be roughly $5600/mth) will give you nearly $20k in tax deductions (in order to meet your ~$4000/mth)?? Effectively making your property taxes free for you? You're either delusional or I am going to have a very exciting tax season come next April...
Something like that.
Federally, local property taxes and mortgage interest on the first $1 million of principle for first and second mortgages for your primary residence are deductible from your income. For California, the rules are slightly different, but I think that they are close enough to use the same rules for estimation purposes.
Using the interest rates from your example that would be a deduction of 4.5% * $800k + 6.5% * $100k = $39.7k for the mortgage interest deduction and roughly $12.5k for the property tax deduction for a total deduction of $52.2k. If you can afford a million dollar house, you are probably in either the 28% bracket or the 33% bracket for federal taxes and in the 9.3% bracket for California taxes so that will save you $14.6k-$17.2k on federal taxes and $4.9k on California taxes.
See my comment below.
“so 900k mortgage at 4.1% interest is ~3k of interest and 1.2k of principal for first month. Now you have 1k/month of property tax, 0 HOA (i was not talking about a condo), and 180$/month of insurance. I've been quoted 80-10-10 which have 0 PMI fees. Let's be safe and assume that you're taxed at 30% at your highest level. Its likely you're being taxed at 40% though. Now doing some math.... 3k*0.7 + 1.2k + 1k+0.7+.180k = 4180$/month. Obviously there's maintenance and other costs but that's how much its actually costing you.”
I know a non-tech dual-earner couple who managed to save a down payment like that in the Bay Area, but they were living rent-free in a house owned by one of their parents well into their 30s.
Basically I've never personally paid more than 2k/month in rent in the bay area.
And even in your calculation, means that after 4 years you can do the downpayment. Its not unreasonable for house prices to be where they are in that calculation.