Today I'm off to look at a new condo in my neighborhood. The asking price is $569,000. Ouch. That got me thinking about how to gauge whether or not I can afford an apartment. I'd love to be conservative and spend 2x my annual income. I remember reading that that's a trait that rich people have in common. At 569, this place would be a little more than 3.5x annual income (not including bonus). However, I will most likely have to put 20% down, so the monthly payments seem doable. I calculated that if I pay an extra $10,000 a year on the mortgage I could pay it down in 17 years. That would be awesome. Of course paying $329,000 for a 2 bedroom apartment in a less desirable neighborhood that's farther away would allow me to pay down the apartment really fast. However that place is a Co-op and there are definite disadvantages to living in a coop versus a condo.
I loved this post about the Paradox of Choice on Get Rich Slowly this week. It's exactly how I feel about real estate -- paralyzed by too many choices.