Non NYC Banker Home Ownership

According to the Litquidity comp survey, average ASO3 pay is north of $400k. 
 

This doesn’t really apply to NYC - I live in Los Angeles - but I feel like it is relatively rare for my peers in banking to be owning versus renting, even going into the senior associate years. Assuming rates go back to a more normal ~5% with ~$400k of income and a ~$250k down payment, online home affordability calculators are showing me that a senior associate could reasonably afford a ~$2M home.
 

Even in my VHCOL area, $1.5M - $2.0M buys you something pretty nice. I’m curious then why it doesn’t seem like more people are buying vs. renting. The obvious reasons to me are not knowing you are going to stay in the same spot for long enough, lack of comfort due to variability of bonus driven comp, etc. 

How are you thinking about making the jump and purchasing something? Curious to hear everyone’s thoughts here. 

 

I'm thinking of buying my first place in LA too, not for a few years though. 

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee
 

Just curious - what areas of LA are you looking at and how many BD / BA for $1.5 - $2M?

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee
 
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Those affordability calculators are really maxing it out. $400k income in LA is $19,538 per month after taxes (before accounting for 401k, insurance, etc.). Your example of a $2M house with $250k down means a $1.75M loan which even at 5% is $9,400 per month plus taxes, insurance, upkeep. Property taxes in LA on a $2M house are $2,100 a month alone. With upkeep, insurance, utilities you're likely talking an all-in cost in the ballpark of $14k per month. 

So you make $19,538 per month (a big chunk of which is probably a bonus at the end of the year) and to have a $2M home you need $250k down and budget for $14k per month.  That should give you your answer right there, but in addition to that take into account how toast you would be if you get let go if you're doing this as a senior associate (so before you've had 5 - 10 years to load up the emergency fund) and the fact that most in banking eventually plan to leave for a lower paying role which may involve having to move cities and it becomes pretty clear why this is the case. 

 

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