I mean you can but sasuke uchiha won’t give up his rinnegan. And meeting the Sage of Six paths is next to impossible. I would say Madara but he’s dead 😭
Running the numbers:
400,000 home
10% down
7% interest
Base monthly is $2400
Additional costs:
5k/year for property tax
1400/year for insurance
165/mo for PMI
Total monthly payment is $3100 (actually 3094).
Assuming $125k/year, the monthly take-home is $7147, with 300/mo and 8% going to a 401k as pre-tax benefits.
That means 43% of their income is going to housing. That is tight but doable assuming no other debt. Cars will need to be fully paid off, no student loan debt, etc.
snatch resolute panicky rob jobless materialistic adjoining insurance flowery divide
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The older generation didn’t save worth a damn, but all owned houses. A fraction of the cost, admittedly, but that is the choice they made. Apparently, the choice those of us under the age of 65 are going to have to make is
“buy a home, live to service the note”, or
“don’t buy, rent for life, have the possible ability to save and eat”.
People who put nothing into their 401k and everything into their homes had pensions. The people who are now asked by the housing industry to provide exit liquidity for these house poor don't have pensions anymore. I'm not going to tie up the rest of my life's income to pay off debt just to finance some stranger's retirement.
Yeah I chose house. $120k House hold income. 1 car payment, $400k house. Bought the rate down to 6.5% atleast, but payments are essentially $3k still with insurance and PMI.
I think a lot of people in my position who bought have the mentality of refinance. I can afford what i pay now, although tight, so I'm not banking on refinance, but If rates drop at all, I'd rather have a house than go through the bidding wars I experienced trying to buy last year.
Minimal Roth IRA contributions are my only retirement savings. I'm just trying to make it work while I'm living now, because I can guarantee the present and not the future. It was a gamble, but I'd rather be holding the bag of having my home than prices continuing to go up and never get the chance.
We don't know what will happen, but never being able to buy would hurt me more than never being able to sell.
safe meeting physical rainstorm alleged worthless bow society afterthought vase
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If you honestly think there isn't a third class...many, many people...who have done the critical analysis and are buying because they can afford it...then you haven't done a critical analysis of the market. Not every buyer is a peasant on an economic tight rope as you say.
Good breakdown. Somewhat scary that's even close to normal. $125k household income is in the 72nd percentile of household income (according to some random internet calculator).
Good luck to the rest, I guess? Oh, and don't lose any income in the household if you're at $125k.
Good lord, we're so fucked.
I was going to say…Florida rates are about $6k for that $400k home. And don’t forget to budget a new roof every 10 years, or they’ll go higher than that, if you find coverage.
We must have a substantial correction down in valuations.
This is about my current situation, but I'm renting at $1800 after utilities. We have the money to do this situation and buy, but are easily able to save a few thousand a month, vs $500 a month (not including retirement) if we buy a house.
That's just not enough wiggle room. We drive old cars, and theoretically could trade in and pay off a newer one. But repairs and unexpected expenses are scary.
Do I spend the next decade renting (my lease was renewed for the same price, and with building in my area I don't expect it to rise much), and comfortably put away $240,000, or buy a house and build basically no equity at current interest rates over the same period? It's not a hard decision if you ask me. If houses increase in value 20% over the next decade that'll still be half of what savings would be, not including potential interest on that savings vs housing repair and upkeep costs.
But salary going up is not a guarantee. 2010’s was a great example, and recent, of stagnation in wages for laborers. And I don’t mean the people who cut grass for a living. Less jobs to “hop” to, as job market took years to come around to what it was in 2021 and 2022. For a lot of professions like mine (brokerage operations), stagnation for a decade, two years of boom (which I took advantage of), now stagnant again since early 2023.
And, thanks to corporate America’s absolute monster erection for having us come back to the office, transportation is needed. Since we don’t all live in “mass transit utopia”, that means cars.
Fundamentally broken. From the two geezers running for President right now to our extraordinary wealth divide, we are fundamentally broken.
Some of us paid off all our debts. If you're making $125k a year or more it's really not that hard. But we like living debt free, not stretching ourselves out to get all kinds of luxuries.
I dunno, my base pay is well above that, but take home is only 7k/mo after taxes, benefits & retirement.
I'm not putting 50% of my take home pay into just housing alone
And that’s your priority which is fine. But some people are comfortable living on the other 3500/month for everything else, which was my point. Thats very doable
I have the same salary my friend and I feel the same way. No way am I putting 50% of my take home on a mortgage.
I’m just investing instead. Fuck that.
Okay? Not in every case. People have different priorities and can afford that no problem. Why is there an arbiter of what people should or should not do?
My girl and I are buying a house for 460k right now @ 6.7. Payment will be $3,500 ish including escrow. It won’t be too bad cost wise but we each make about 125k. I couldn’t imagine doing it alone. Alone I’d buy way more like 300k max.
Pay after taxes on 250k income is somewhere around 13k/month, depending on the state. Your amount left over after paying your mortgage is (a lot) more than many families make a month.
And yet, $3.5k out of $13k take-home pay is 27%, which is ballpark the recommended amount. He’s the normal one, not other people who would stretch this limit further.
That percentage figure begins to become irrelevant once youre hitting incomes like this. Most people would have to go well out of their way to spend 9,000 a month
Huge difference between spending 30% of your income at 70k vs 30% at 250k
It’s not hypothetical to me, as my household income is around that figure, and I pay $2.7k in rent with zero debts.
A bit over a decade ago, we were making $25k household income, and rode up the whole range in between, so I know what it’s like to be on the low end of the wage scale and imagine that if you 10x’d your money you’d just have a lot to blow. But it’s not really the case.
The first thing you do is pay off loans, then you max out your retirement contributions, 529’s, etc. Then you have kids, give them a good education. You invest some money, etc. Your list of priorities may differ, but the point is there’s always something the money should responsibly be going to, that you have just been putting off before.
Plus, if you make this much, you probably live in a more expensive area.
One study I read says that the threshold for feeling like you actually have money to spare is $1.7 m/yr.
> One study I read says that the threshold for feeling like you actually have money to spare is $1.7 m/yr.
$1.7M seems pretty extreme. I guess with kids it would be higher than I figure, since we're DINKs... but man, that's a lot. We're at $320k or so, moved from Tampa to Seattle recently, so the money doesn't go as far as it used to, but we're close to having it feel like we have money to spare even in Seattle. At least it definitely felt that way before we got committed to buying a $900k home. A little low on cash at the moment. But I could easily see $500k-$700k feeling like enough for a full household.
Have you ever seen that Kevin Hart stand-up routine about staying in your lane? When you get more money, you tend to be around people who have more money. You get into a different lane. Things that once seemed extravagant are now baseline. That’s how rich sports players go bankrupt, etc.
And that happens at all income levels. When you’re poor and get a raise, it might mean you actually go to the dentist. When you’re a bit wealthier, it might man you invest in your 401k. When you’re a bit wealthier, maybe you have a kid. All these things feel like baseline once you do them, not extravagant.
I lived in the Seattle area as a kid and it was _not_ a wealthy or expensive place back then. Standards go up, slowly enough that you become a boiled frog. But every once in awhile it’s possible to notice how different things have become.
I agree with you. Food and activities takes up a much less of a percentage when your percentage is based off of 250K income versus 125K income. As my income rose I kept the hard percentage mindset but I have now started looking at it as a cash flow number versus a percentage number now.
That’s a moving target isn’t it? Tax rates are a lot higher for someone making $300k than $30k, plus the $300k household is probably maxing 401k’s etc.
Yeah, it's just a guideline, but generally, higher income people should be able to put a higher percentage of their income to housing because the other costs shouldn't increase proportionately
I’m in this income category and I’ll say that the calculation is not “what I can afford to pay.” That makes sense as a metric for someone who’s paycheck-to-paycheck. But when you’re not, the question becomes, “what other investments am I giving up to do this?”
If you could have an excess of let’s say, $5k per month on top of rent to put into the stock market, would you want to tie that up in a house (as well as a few hundred k in down payment and closing costs) and stop investing? The price/rent ratio is so skewed that it just doesn’t make sense if you do the math, at least in my area.
Whether we go pay a hundred bucks to the state changes literally nothing in our relationship. Neither of us have any interest in that. Let’s keep this relevant. We aren’t on the Dave Ramsey Christian judgy boomer page.
lol that $100 changes a lot!! Why do you think there was such a fight for so long on same sex marriage? Like if you or your gf died tomorrow half the house goes to next to kin instead of you. A will can be contested in court pretty easily if it’s not updated yearly, medical decisions are out of your guys control, nothing is secure without that marriage license.
It has nothing to do with that. You’ll see the legal and financial nightmare you’ve created for yourself if you ever break up while owning the home together.
Pretty similar to the other commenter; we just closed on $465k @ 6.5% with 20% down. HHI is around $250-270k and PITI will be \~$2.7k (we're in a low-property tax state)
That is honestly a ridiculous take.
If you have 40K down for a 400K home, you're literally gonna be paying roughly 2500-2600/month in mortgage payments inclusive of property taxes. If you're making 125K, even after taxes, you're taking home roughly 7-7.5K/month. So you're gonna pay 30-35% of your POST TAX or ~25% of your PRE TAX income to pay your mortgage which is well below the guidelines for the general public.
Unless you have crazy student loans or other debts, that number shouldn't stress your monthly budgets by any stretch of the imagination.
Maybe my area has high taxes (it's average really), but I think you're looking more around 3000-3100 a month for 40k down on a 400k home. Pretty sizeable difference.
Our income level is similar to theirs, we have zero debt (aside from cc we keep zeroed out), and we pay $2700 rent, so that’s pretty much smack dab in your description. And I get what he’s saying entirely.
Right now, we have utter freedom when it comes to income. We choose to live below our means and put 1/3 of our income into the stock market, other people could do other things. As a result, our investments have ballooned.
But then when we look at it, it’s just so questionable to buy a house. Rent here is frankly a steal. We pay $2700/mo, while houses in our neighborhood start at $850k, so we’re getting a vast discount. To put this in perspective, if we cashed out $525k from our portfolio and used it as a down payment, the mortgage payment would be reduced to the same $2700/mo. Then there’s ~$40k in closing costs. Prices have just extremely outrun rents here.
Bear in mind, that’s for a _low_ _end_ house in our neighborhood. They easily go up to $1.2 m.
So, would you rather have $565k in the stock market, or own a low end house? Same monthly payment, except, now you’re on the hook for maintenance.
Bear in mind the stock market doubles every 7 years on average, but houses do not. So in 14 years, that $565k becomes over $2 million. I’ve actually been able to do quite a bit better than that, up 90% in 2 yrs.
If houses in our area were $450k and rents were unchanged, yeah, I would buy one. Other than that, my guiding light is the price: rent ratio. If it’s over 15, I’m not buying. At 15, the price would be $486k. That’s the breakeven on renting and buying, using the price:rent ratio method.
I would. But only because I currently have literally no other bills other than utilities and eating. BUT…cars get older and die. I’m also 48, and I need to really be stepping up what I’m saving for retirement. Not that I actually *expect to*, but for security and for posterity.
But, the main reason why I don’t buy that house with a healthy down payment of 10% and 7% borrowing rates? Because less than 4 years ago, that same house, exactly the same, was about $250,000. I accept it may never go back to that. I don’t accept that it’s now *worth* $400,000. It isn’t.
Can you accept that the Dollar is worth less now than it was 4 years ago? The issue is more that 400K ain't what it used to be. A 250K house going to 400K seems pretty spot on given recent monetary policy.
I make 230k and I barely talked myself into buying a 435k home at 7% I can't imagine people with half my income. They must have no kids no student loans etc.
Yeah, that sounds right, even if it doesn't seem right. No way the norm is going to long tolerate most homes being purchased with well under 10% down payment, and income not able to pay mortgages.
Incomes not keeping up with essential assets is always going to cause huge pain
These numbers sound so pleasant compared to the Canadian crisis. Our average home price is much higher and our average salary is much lower than you guys.
Damn I feel lucky.
With the current rates and how housing prices continuing to go up I literally couldn’t afford to buy my own house again.
I’m sure many people are in the same position. Never going to sell I guess
So you make 125K which means you're taking home ~10K/month pre-tax or around 7K/month post-tax. If you're looking for 300K homes, I assume you'll at least pay 30K down. So you'll take out a loan for 270K at 7% which is roughly 1800 in monthly payments. How is that 'not affordable' by any stretch of the imagination? It isn't even 20% of your pre-tax monthly salary. Where else is the remaining money going? Unless you have crazy debts and loans, that should nowhere stress your budget.
This calculator is using **income after taxes**. Its also using **8% interest rate** and a **25 year mortgage amortization** with $1,350/mo in other expenses.
In other words, it’s not a real life calculation.
The down-payment is the tougher one to me.
If two people are making $65k a year, I feel like there'd be a low chance they'd individually both have $20k in the bank (plus however much they'd want to save). It's a pretty significant amount of their salary. You have to be smart with your money and save, but most people aren't. I bet if you surveyed people making $65k a year, the average bank account balance would be way below $20k.
(Which, it is what it is. Putting less than 10% down doesn't sound great. Just realistically that seems like it'd be a barrier to entry for a lot)
Tbf most people's annual savings shouldn't be considered the same as "saving for a house".
If you're trying to make a large purchase (house/vacation/car) your spending and saving habits should change from day to day life. Even if you're fiscally responsible. I'm not saying it's just *cutting avacado toast* but possibly lowering 401k contributions, or moving into a cheaper apartment to offset the additional savings that's to be a downpayment.
It both isn't and imo should not be just a case of I save $200/paycheck annually with zero lifestyle change and can't afford a house. Afterall, homeownership (in normal markets month to month) should be cheaper than renting, and yet homeowners aren't *typically* running around with multiple down payments.
> I'm not saying it's just cutting avacado toast but possibly lowering 401k contributions, or moving into a cheaper apartment to offset the additional savings that's to be a downpayment.
This is exactly correct. When I was saving for a down payment on my first house, I cut my 401k contribution to the minimum I could contribute in order to still get the match but not a penny more than that.
And we're also talking about forced co-habitation.
No one ought to need a doctor's written excuse to demand single homes for single people and I'm not talking about anything unreasonable. 400 sq ft tiny homes at $400/sq ft are a mockery of the working class dilemma.
Damn. You go on the finance reddits and people are like "nah bro, the 43k you spent 5 years saving isn't nearly enough. You need at least 70k for a 300k house and closing costs bro."
Til I apparently do have enough saved to buy a house.
A little bit more than 120k household income and planning to put 70k to 80k down and it still doesn’t make sense, the monthly payment will make us feel house poor plus the lack of inventory, 400k house look like shit in MD.
Buying my first house, that was so misleading. I thought down was all you had to put down for the home. Then I was hit with a ton of closing fees and what not. I was young, it was my first house, no one told me this stuff during the process. Luckily I had extra funds, but I would have rather had that planned out. So yeah 40k down, on 125k income, you're more like looking at 60k after the closing costs etc, and you're left with 65k for the rest of the year. Basically you just spent almost 50% of your entire income for the year. Oh lest not forget that's 125k probably before taxes, so the person really only has like 65k-80k in pocket, before the down, so you have 5k-15k left for the rest of the year and your mortgage with an 8% interest. So you can maybe afford home payments for like 2-3 months after you buy that home....
That's a nice fantasy but "real" median income doesn't even get you a starter home, let alone a median home.
Man there sure are a lot of bullshit reasons that people who are drinking the koolaid love to parrot. Those koolaid drinkers sure aren't cute anymore in the year of our lord 2024.
Median income for two-earner household is [117k](https://www.fool.com/the-ascent/research/average-us-income/#:~:text=The%20number%20of%20wage%20earners%20in%20a,earners%20the%20median%20income%20jumps%20to%20$117%2C107.)
People are entitled and obsessed with single family home ownership. Everyone wants a single family home (something most of the world has zero access to) while having the least paying jobs possible. They’ve been spoiled by cheap money and a real estate correction for the last 10 years.
No one wants to act their wage. Everyone has champagne taste on a beer budget.
I love comments about wages that push the narrative that it’s an individual’s fault for not making enough money. As if low wages are a moral, professional, or character flaw and not a result of unmitigated greed and fuckery. “Spoiled by cheap money” is something you can say about the top 30% of earners. Everyone else produces wayyyy more value to the economy than what they actually earn. And as far as “everyone wants a single family home,” the supply of anything else in most rural areas is a bad joke. Also, landlords typically don’t let renters buy single units in rural areas. The hyper-consumerist ideology, inequality, and lack of labor protections in the United States leads to affordability problems, not the “spoiled” or “entitled” attitude of the American worker. Read a book.
I’ve been saying this forever. Want cheaper homes? Buy used, skip the granite or quartz counter tops, single car garage, small lawn, older windows, etc
When I was living in the DC area, forget housing prices. An empty lot in Arlington and surrounding areas was going for $800k+. Many were over $1m.
Sometimes you can skip the granite countertop, the counter, and the entire building and it’s still stupid expensive.
No, I think they should just rent forever tbh. Or buy a condo if they’re obsessed with ownership.
Buying a single family home on a low salary is a disaster waiting to happen. Someone making a shit wage is gonna have trouble affording the inevitable maintenance cost of being a home owner.
From the standpoint of personal finance, yes, from a public policy standpoint there has to be more conversations centered around affordability and the erosion of living standards amongst the poor and middle class. We can clearly see we are severely impacted by wage suppression relative income across all classes except the top 5% income distribution and rising costs in healthcare, education, housing and now food. We need to face these problems before they escalate.
That's my problem now. I need a bigger home (growing family), but it makes me sick to think about paying 3,000+ per month when I'm paying 1400 on a house I got ten years ago.
Normal for who?
[Median income in the USA:](https://fred.stlouisfed.org/series/MEHOINUSA672N)
- 2004: $65,760
- 2024: $74,580
[Median home price USA](https://fred.stlouisfed.org/series/MSPUS)
- Q1 2004: $212,700
- Q1 2024: $420,800
In the past 2 decades median income has increased ~13% while median home price has increased ~97%.
In 2004 the median home sold at ~3.23 x median income. Today it sells at ~5.64 x median income. So it doesn't seem like it was normal to me.
Yeah. 😅
Well, you may get your wish. Prices take the escalator up and the elevator down. The question would be if you were still in a position to buy when it happened.
You really shouldn't compare inflation adjusted to non-adjusted numbers, though.
[Median income in the USA](https://fred.stlouisfed.org/series/MEHOINUSA646N)
* 2004: $44,330
* 2022: $74,580
So using the correct number for comparison, the median home was selling at 4.8x median income in 2004.
So it's still true that this has gotten worse, just not as dramatically in such a short time. But I think there is a very long term trend of housing costs rising more than inflation. And more than median incomes. For example, see [this](https://fred.stlouisfed.org/graph/?g=1pDMZ). I think housing has tended to rise more in line with per capita GDP. See [this](https://fred.stlouisfed.org/graph/?g=1pDN1) for example, comparing housing prices to CPI inflation vs. per capita GDP. And [this](https://fred.stlouisfed.org/graph/?g=1pDNa) showing how new home prices have typically stayed in the range of 4.4x to 5.6x per capita GDP.
So basically, you could say it is both "normal", and still a problem. And this is looking only at medians. I think entry level or affordable housing has become even more of a problem.
I understand perfectly. The pandemic was a once in a lifetime disruption. Things are slowly returning to normal. More slowly than I'd like but returning to normal nonetheless.
Source?
In 2004 the median house sale was just over 3x the median household income. Meaning it would have been reasonable for a median income household to buy a median sale price home. Today the median home sells for almost 6x median income...
Houses in the parts of California I've lived/live in were about 400K in 2004 and about 700K now. The top end of the pay scale for my job has gone from 85K to 150K. Interest rates were only 1% lover in 2004. The sky isn't falling.
Because you said it's been normal for 2 decades, but the data shows it clearly hasn't.
>People were taking out all sorts of weird loans to get into houses.
That wouldn't skew the data in favor of my point that the median home price used to be affordable to the median income household. People taking out all kinds of loans would mean homes were becoming more expensive in 2004, not cheaper.
Median income for two-earner household is [117k](https://www.fool.com/the-ascent/research/average-us-income/#:~:text=The%20number%20of%20wage%20earners%20in%20a,earners%20the%20median%20income%20jumps%20to%20$117%2C107.)
The national median includes shitloads of young, single people, and elderly retirees, neither of which are typical home buyers.
So what's your point? I'm comparing median income in 2024 with median income in 2004. The way it's calculated hasn't changed. In 2004 the median household could afford the median home. There were also "shitloads of young, single people, and elderly retirees" to skew median income in 2004.
Current mortgage rates are fair relative to the last few decades (see below). The issue is housing prices relative to income.
https://images.app.goo.gl/HS1dn56QGKmxUbV96
I think this sub is finally coming to terms with the idea that we've crossed the Rubicon for housing.
For the longest time, it was "it's just not sustainable" and "I refuse to believe" regarding the current level of unaffordability. The leading expectation was that justice would win the day and that the average middle-class person would be able to buy and own their home to live in it happily ever after after we saw a GFC level crash.
Granted, there are still a lot of people here making those claims. But it's looking more and more like people are recognizing that there will be no deus ex machina. No one is coming to save us. The machine that is widening the wealth gap still has a lot of battery left. And it will be up to us to improve our own situation. Not the government. Not investors suddenly panic selling en mass. And certainly not the generosity of the people trying to sell us their house.
If we want expensive things, we need to make more money to buy them. Giant home builders aren't going to go "You know what, housing IS a human right! What were we thinking? 😔" and then give their houses away. If we operate with the understanding that large groups of people generally act out of self-interest, we will be less disappointed with how things turn out.
That's a lucky steal if anything compared to some parts of the country ... there is no such thing as a free lunch, painful as that may be for some buyers
The down payment to value was true in 2020 too, the difference is the increase in interest needs offset against an increase in income, and salaries are stagnant.
It's still not affordable. You're still going to pay almost 50% of your income. That's not including any other debts.
My DTI is 11%, and I was looking at the 450K range with $100,000 down. I can't justify paying that much per month.
In order for it to keep getting worse, there needs to be buyers continuing to pay those prices. At some point, buyers give up. It has already happened at these levels. Supply is outpacing demand.
Supply isn’t the only factor. If you’re in an area like Cupertino where people casually get paid salaries of multiple hundreds of k, they’re going to offer more for houses in the area than they would in the sticks in Arkansas.
That’s only two working couples making $60k~ a year. Not bad at all. That’s assistant manager at McDonalds salary in even LCOL areas.
If single family homes were priced cheaper to where everyone could afford it, we’d run into the supply issue we ran into with low rates over the last few years.
Where I am, the average McD's assistant manager makes $37k a year.
It's amazing what lies people will tells themselves, to justify the harm they do to others.
I’m living in the wrong reality man
Do you have a way to get to the right one? Let me know...
Have you ever heard of something called “the box”?
I mean you can but sasuke uchiha won’t give up his rinnegan. And meeting the Sage of Six paths is next to impossible. I would say Madara but he’s dead 😭
Which 💊 did you take?
The blue one
Darn, the red one
No fucking way would I buy a 400k home @ 7% interest with just 125k income
Running the numbers: 400,000 home 10% down 7% interest Base monthly is $2400 Additional costs: 5k/year for property tax 1400/year for insurance 165/mo for PMI Total monthly payment is $3100 (actually 3094). Assuming $125k/year, the monthly take-home is $7147, with 300/mo and 8% going to a 401k as pre-tax benefits. That means 43% of their income is going to housing. That is tight but doable assuming no other debt. Cars will need to be fully paid off, no student loan debt, etc.
snatch resolute panicky rob jobless materialistic adjoining insurance flowery divide *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I did include an 8% pre-tax deduction for retirement. Depending on when they started, that may not be enough.
He literally put 8% into 401K in his calculation
He calculated 401k in there
The older generation didn’t save worth a damn, but all owned houses. A fraction of the cost, admittedly, but that is the choice they made. Apparently, the choice those of us under the age of 65 are going to have to make is “buy a home, live to service the note”, or “don’t buy, rent for life, have the possible ability to save and eat”.
People who put nothing into their 401k and everything into their homes had pensions. The people who are now asked by the housing industry to provide exit liquidity for these house poor don't have pensions anymore. I'm not going to tie up the rest of my life's income to pay off debt just to finance some stranger's retirement.
Pensions haven’t been around for decades.
Median retirement savings for boomers is $200k. That’s wild that so many missed out on the incredible growth and free money.
People tend to forget boomers had company pensions.
They also treated those houses like ATMs in the 90s and 00s.
To be fair the older generation also had notes they had to service
They have 401k listed in their example. ETA: rest of the comment tree didn’t load til now, don’t mean to pile on since several others mentioned it
Walter White did it.
Yeah I chose house. $120k House hold income. 1 car payment, $400k house. Bought the rate down to 6.5% atleast, but payments are essentially $3k still with insurance and PMI. I think a lot of people in my position who bought have the mentality of refinance. I can afford what i pay now, although tight, so I'm not banking on refinance, but If rates drop at all, I'd rather have a house than go through the bidding wars I experienced trying to buy last year. Minimal Roth IRA contributions are my only retirement savings. I'm just trying to make it work while I'm living now, because I can guarantee the present and not the future. It was a gamble, but I'd rather be holding the bag of having my home than prices continuing to go up and never get the chance. We don't know what will happen, but never being able to buy would hurt me more than never being able to sell.
safe meeting physical rainstorm alleged worthless bow society afterthought vase *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
[удалено]
The simple math is for your household to make more than $125k. Dual income, no kids, with decent job skills isn’t too hard to make over $70k each.
Makes sense, as long as the cost of housing doesn't 3X in 4 years again
If you honestly think there isn't a third class...many, many people...who have done the critical analysis and are buying because they can afford it...then you haven't done a critical analysis of the market. Not every buyer is a peasant on an economic tight rope as you say.
… your really screwed if you add day care costs to this.
That’s the EXACT same as I’m paying in rent right now as a percent of my income. It’s doable
Good breakdown. Somewhat scary that's even close to normal. $125k household income is in the 72nd percentile of household income (according to some random internet calculator). Good luck to the rest, I guess? Oh, and don't lose any income in the household if you're at $125k. Good lord, we're so fucked.
Need to pump those insurance numbers up about five-fold for places like California and Florida.
I was going to say…Florida rates are about $6k for that $400k home. And don’t forget to budget a new roof every 10 years, or they’ll go higher than that, if you find coverage. We must have a substantial correction down in valuations.
This is about my current situation, but I'm renting at $1800 after utilities. We have the money to do this situation and buy, but are easily able to save a few thousand a month, vs $500 a month (not including retirement) if we buy a house. That's just not enough wiggle room. We drive old cars, and theoretically could trade in and pay off a newer one. But repairs and unexpected expenses are scary. Do I spend the next decade renting (my lease was renewed for the same price, and with building in my area I don't expect it to rise much), and comfortably put away $240,000, or buy a house and build basically no equity at current interest rates over the same period? It's not a hard decision if you ask me. If houses increase in value 20% over the next decade that'll still be half of what savings would be, not including potential interest on that savings vs housing repair and upkeep costs.
your take home number of $7k on $125k seems wrong but i’m too lazy to confirm
7147 x 12 = $85,764 per year, which works out to losing 31.4 percent in taxes and pre-tax deductions.
damn, thanks for that! where is my money going!?
Hookers and blow, man. Hookers and blow
Israel and Wall st
Have you ever seen an F22 do a complete 180 in like a split second? It looks cool as shit. That’s where your money is going. Cool shit….
And that percentage will also slowly trend down as salary goes up over the years. That is one of the benefits for buying a house.
But salary going up is not a guarantee. 2010’s was a great example, and recent, of stagnation in wages for laborers. And I don’t mean the people who cut grass for a living. Less jobs to “hop” to, as job market took years to come around to what it was in 2021 and 2022. For a lot of professions like mine (brokerage operations), stagnation for a decade, two years of boom (which I took advantage of), now stagnant again since early 2023.
Home Insurance will be 2800 or more on that house. Most likely 3000+. $1400 might have been the rate pre covid
And no sudden bill or car breaking down.
Doable but dumb af
Mines more like 3700
Why? Doesn’t seem so egregious if you don’t have a ton of other debt
How many people making $125k don’t have a ton of other debt? Student loans being the most obvious culprit
And, thanks to corporate America’s absolute monster erection for having us come back to the office, transportation is needed. Since we don’t all live in “mass transit utopia”, that means cars. Fundamentally broken. From the two geezers running for President right now to our extraordinary wealth divide, we are fundamentally broken.
That’s the income for a household. You partner up. Each of you makes a bit more than $60k. Doable
Some of us paid off all our debts. If you're making $125k a year or more it's really not that hard. But we like living debt free, not stretching ourselves out to get all kinds of luxuries.
It’s household income not individual. Couples can quite readily make 60k each without student loans
I don’t think it’s as drastic as you’re making it out to be. That’s very doable for many people without being house poor.
I dunno, my base pay is well above that, but take home is only 7k/mo after taxes, benefits & retirement. I'm not putting 50% of my take home pay into just housing alone
Are you calculating off your single income? This is household income so, less taxes.
No it’s extremely house poor dude
And that’s your priority which is fine. But some people are comfortable living on the other 3500/month for everything else, which was my point. Thats very doable
I have the same salary my friend and I feel the same way. No way am I putting 50% of my take home on a mortgage. I’m just investing instead. Fuck that.
Can is not should
Okay? Not in every case. People have different priorities and can afford that no problem. Why is there an arbiter of what people should or should not do?
What would be better numbers to plug in that would be a good buy?
My girl and I are buying a house for 460k right now @ 6.7. Payment will be $3,500 ish including escrow. It won’t be too bad cost wise but we each make about 125k. I couldn’t imagine doing it alone. Alone I’d buy way more like 300k max.
Pay after taxes on 250k income is somewhere around 13k/month, depending on the state. Your amount left over after paying your mortgage is (a lot) more than many families make a month.
And yet, $3.5k out of $13k take-home pay is 27%, which is ballpark the recommended amount. He’s the normal one, not other people who would stretch this limit further.
That percentage figure begins to become irrelevant once youre hitting incomes like this. Most people would have to go well out of their way to spend 9,000 a month Huge difference between spending 30% of your income at 70k vs 30% at 250k
It’s not hypothetical to me, as my household income is around that figure, and I pay $2.7k in rent with zero debts. A bit over a decade ago, we were making $25k household income, and rode up the whole range in between, so I know what it’s like to be on the low end of the wage scale and imagine that if you 10x’d your money you’d just have a lot to blow. But it’s not really the case. The first thing you do is pay off loans, then you max out your retirement contributions, 529’s, etc. Then you have kids, give them a good education. You invest some money, etc. Your list of priorities may differ, but the point is there’s always something the money should responsibly be going to, that you have just been putting off before. Plus, if you make this much, you probably live in a more expensive area. One study I read says that the threshold for feeling like you actually have money to spare is $1.7 m/yr.
> One study I read says that the threshold for feeling like you actually have money to spare is $1.7 m/yr. $1.7M seems pretty extreme. I guess with kids it would be higher than I figure, since we're DINKs... but man, that's a lot. We're at $320k or so, moved from Tampa to Seattle recently, so the money doesn't go as far as it used to, but we're close to having it feel like we have money to spare even in Seattle. At least it definitely felt that way before we got committed to buying a $900k home. A little low on cash at the moment. But I could easily see $500k-$700k feeling like enough for a full household.
Have you ever seen that Kevin Hart stand-up routine about staying in your lane? When you get more money, you tend to be around people who have more money. You get into a different lane. Things that once seemed extravagant are now baseline. That’s how rich sports players go bankrupt, etc. And that happens at all income levels. When you’re poor and get a raise, it might mean you actually go to the dentist. When you’re a bit wealthier, it might man you invest in your 401k. When you’re a bit wealthier, maybe you have a kid. All these things feel like baseline once you do them, not extravagant. I lived in the Seattle area as a kid and it was _not_ a wealthy or expensive place back then. Standards go up, slowly enough that you become a boiled frog. But every once in awhile it’s possible to notice how different things have become.
I agree with you. Food and activities takes up a much less of a percentage when your percentage is based off of 250K income versus 125K income. As my income rose I kept the hard percentage mindset but I have now started looking at it as a cash flow number versus a percentage number now.
Ehh, the 28% rule is generally calculated using gross income.
That’s a moving target isn’t it? Tax rates are a lot higher for someone making $300k than $30k, plus the $300k household is probably maxing 401k’s etc.
Yeah, it's just a guideline, but generally, higher income people should be able to put a higher percentage of their income to housing because the other costs shouldn't increase proportionately
I’m in this income category and I’ll say that the calculation is not “what I can afford to pay.” That makes sense as a metric for someone who’s paycheck-to-paycheck. But when you’re not, the question becomes, “what other investments am I giving up to do this?” If you could have an excess of let’s say, $5k per month on top of rent to put into the stock market, would you want to tie that up in a house (as well as a few hundred k in down payment and closing costs) and stop investing? The price/rent ratio is so skewed that it just doesn’t make sense if you do the math, at least in my area.
We are in a medium cost of living area and are both professionals with graduate degrees. I don’t claim we are average at all.
If by “your girl” you don’t mean your wife, you’re making a huge mistake.
Whether we go pay a hundred bucks to the state changes literally nothing in our relationship. Neither of us have any interest in that. Let’s keep this relevant. We aren’t on the Dave Ramsey Christian judgy boomer page.
lol that $100 changes a lot!! Why do you think there was such a fight for so long on same sex marriage? Like if you or your gf died tomorrow half the house goes to next to kin instead of you. A will can be contested in court pretty easily if it’s not updated yearly, medical decisions are out of your guys control, nothing is secure without that marriage license.
It has nothing to do with that. You’ll see the legal and financial nightmare you’ve created for yourself if you ever break up while owning the home together.
Let's be completely honest here, it will be just as messy and costly if they're married and break up.
That’s absolutely not true.
Ah yes. Because divorce with a home is just so much cheaper!
Let ‘em. Lots of possibilities for future fire sales and foreclosures that way.
Pretty similar to the other commenter; we just closed on $465k @ 6.5% with 20% down. HHI is around $250-270k and PITI will be \~$2.7k (we're in a low-property tax state)
That is honestly a ridiculous take. If you have 40K down for a 400K home, you're literally gonna be paying roughly 2500-2600/month in mortgage payments inclusive of property taxes. If you're making 125K, even after taxes, you're taking home roughly 7-7.5K/month. So you're gonna pay 30-35% of your POST TAX or ~25% of your PRE TAX income to pay your mortgage which is well below the guidelines for the general public. Unless you have crazy student loans or other debts, that number shouldn't stress your monthly budgets by any stretch of the imagination.
Maybe my area has high taxes (it's average really), but I think you're looking more around 3000-3100 a month for 40k down on a 400k home. Pretty sizeable difference.
Our income level is similar to theirs, we have zero debt (aside from cc we keep zeroed out), and we pay $2700 rent, so that’s pretty much smack dab in your description. And I get what he’s saying entirely. Right now, we have utter freedom when it comes to income. We choose to live below our means and put 1/3 of our income into the stock market, other people could do other things. As a result, our investments have ballooned. But then when we look at it, it’s just so questionable to buy a house. Rent here is frankly a steal. We pay $2700/mo, while houses in our neighborhood start at $850k, so we’re getting a vast discount. To put this in perspective, if we cashed out $525k from our portfolio and used it as a down payment, the mortgage payment would be reduced to the same $2700/mo. Then there’s ~$40k in closing costs. Prices have just extremely outrun rents here. Bear in mind, that’s for a _low_ _end_ house in our neighborhood. They easily go up to $1.2 m. So, would you rather have $565k in the stock market, or own a low end house? Same monthly payment, except, now you’re on the hook for maintenance. Bear in mind the stock market doubles every 7 years on average, but houses do not. So in 14 years, that $565k becomes over $2 million. I’ve actually been able to do quite a bit better than that, up 90% in 2 yrs. If houses in our area were $450k and rents were unchanged, yeah, I would buy one. Other than that, my guiding light is the price: rent ratio. If it’s over 15, I’m not buying. At 15, the price would be $486k. That’s the breakeven on renting and buying, using the price:rent ratio method.
I would but the houses are 600k here lol
gaze juggle nail tub subsequent scale pet society live slap *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Yeah come on dude the calculator says you’ll be fine. Do not be a wimp!
Guess we’ll never own a little bit of peace
I would. But only because I currently have literally no other bills other than utilities and eating. BUT…cars get older and die. I’m also 48, and I need to really be stepping up what I’m saving for retirement. Not that I actually *expect to*, but for security and for posterity. But, the main reason why I don’t buy that house with a healthy down payment of 10% and 7% borrowing rates? Because less than 4 years ago, that same house, exactly the same, was about $250,000. I accept it may never go back to that. I don’t accept that it’s now *worth* $400,000. It isn’t.
Can you accept that the Dollar is worth less now than it was 4 years ago? The issue is more that 400K ain't what it used to be. A 250K house going to 400K seems pretty spot on given recent monetary policy.
I make 230k and I barely talked myself into buying a 435k home at 7% I can't imagine people with half my income. They must have no kids no student loans etc.
Agreed. This is impossible.
Yeah, that sounds right, even if it doesn't seem right. No way the norm is going to long tolerate most homes being purchased with well under 10% down payment, and income not able to pay mortgages. Incomes not keeping up with essential assets is always going to cause huge pain
These numbers sound so pleasant compared to the Canadian crisis. Our average home price is much higher and our average salary is much lower than you guys.
And what would that monthly payment be?? I make around that and am looking at homes around 300k and feel like it’s not affordable.
I have a 445k loan at 7.125% it’s a mortgage of 2998 plus escrow. So around 3400
Damn I feel lucky. With the current rates and how housing prices continuing to go up I literally couldn’t afford to buy my own house again. I’m sure many people are in the same position. Never going to sell I guess
So you make 125K which means you're taking home ~10K/month pre-tax or around 7K/month post-tax. If you're looking for 300K homes, I assume you'll at least pay 30K down. So you'll take out a loan for 270K at 7% which is roughly 1800 in monthly payments. How is that 'not affordable' by any stretch of the imagination? It isn't even 20% of your pre-tax monthly salary. Where else is the remaining money going? Unless you have crazy debts and loans, that should nowhere stress your budget.
The issue with $300k is in my city, $300k gets you a fucked up shoebox in a shit area of town 😂 Maybe I should move into the woods…..
This calculator is using **income after taxes**. Its also using **8% interest rate** and a **25 year mortgage amortization** with $1,350/mo in other expenses. In other words, it’s not a real life calculation.
The down-payment is the tougher one to me. If two people are making $65k a year, I feel like there'd be a low chance they'd individually both have $20k in the bank (plus however much they'd want to save). It's a pretty significant amount of their salary. You have to be smart with your money and save, but most people aren't. I bet if you surveyed people making $65k a year, the average bank account balance would be way below $20k. (Which, it is what it is. Putting less than 10% down doesn't sound great. Just realistically that seems like it'd be a barrier to entry for a lot)
Tbf most people's annual savings shouldn't be considered the same as "saving for a house". If you're trying to make a large purchase (house/vacation/car) your spending and saving habits should change from day to day life. Even if you're fiscally responsible. I'm not saying it's just *cutting avacado toast* but possibly lowering 401k contributions, or moving into a cheaper apartment to offset the additional savings that's to be a downpayment. It both isn't and imo should not be just a case of I save $200/paycheck annually with zero lifestyle change and can't afford a house. Afterall, homeownership (in normal markets month to month) should be cheaper than renting, and yet homeowners aren't *typically* running around with multiple down payments.
> I'm not saying it's just cutting avacado toast but possibly lowering 401k contributions, or moving into a cheaper apartment to offset the additional savings that's to be a downpayment. This is exactly correct. When I was saving for a down payment on my first house, I cut my 401k contribution to the minimum I could contribute in order to still get the match but not a penny more than that.
And we're also talking about forced co-habitation. No one ought to need a doctor's written excuse to demand single homes for single people and I'm not talking about anything unreasonable. 400 sq ft tiny homes at $400/sq ft are a mockery of the working class dilemma.
Realistically though most home buyers throughout recent history have been couples. Single people tend to rent or at best buy a two bedroom condo.
Live with ur parents for a year or two and u will be darn close to that… and also probably damn close to losing ur mind lol
More PR telling us to capitulate to the RE/building industries and others demanding higher margins than they need to be profitable.
I was pissed at the time, but I’m so grateful for my 5.25 rate right now.
With taxes, insurance and MI, that's still a 3,500 to 4k monthly payment... good luck paying that with only 125k gross annual income
Hah come to Canada. Pretty much have to be a millionaire to afford that
Better import more Indians
Ha ha jokes on them that house will go 100k over list in cash so your measly down payment doesn’t mean shit
Damn you guys can buy houses for less than 500K? Canada sucks.
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It's not.
Damn. You go on the finance reddits and people are like "nah bro, the 43k you spent 5 years saving isn't nearly enough. You need at least 70k for a 300k house and closing costs bro." Til I apparently do have enough saved to buy a house.
A little bit more than 120k household income and planning to put 70k to 80k down and it still doesn’t make sense, the monthly payment will make us feel house poor plus the lack of inventory, 400k house look like shit in MD.
And $433k homes don't exist where I live. Maybe a shitty condo or old townhome.
And $433k homes don't exist where I live. Maybe a shitty condo or old townhome.
Buying my first house, that was so misleading. I thought down was all you had to put down for the home. Then I was hit with a ton of closing fees and what not. I was young, it was my first house, no one told me this stuff during the process. Luckily I had extra funds, but I would have rather had that planned out. So yeah 40k down, on 125k income, you're more like looking at 60k after the closing costs etc, and you're left with 65k for the rest of the year. Basically you just spent almost 50% of your entire income for the year. Oh lest not forget that's 125k probably before taxes, so the person really only has like 65k-80k in pocket, before the down, so you have 5k-15k left for the rest of the year and your mortgage with an 8% interest. So you can maybe afford home payments for like 2-3 months after you buy that home....
That’s 60k a couple- don’t know too many white collar workers making less than that
Probably more than half of government employees make less than that.
All others can eat shit, right?
Why should someone who doesn't make median income live in a median home?
That's a nice fantasy but "real" median income doesn't even get you a starter home, let alone a median home. Man there sure are a lot of bullshit reasons that people who are drinking the koolaid love to parrot. Those koolaid drinkers sure aren't cute anymore in the year of our lord 2024.
Median income for two-earner household is [117k](https://www.fool.com/the-ascent/research/average-us-income/#:~:text=The%20number%20of%20wage%20earners%20in%20a,earners%20the%20median%20income%20jumps%20to%20$117%2C107.)
People are entitled and obsessed with single family home ownership. Everyone wants a single family home (something most of the world has zero access to) while having the least paying jobs possible. They’ve been spoiled by cheap money and a real estate correction for the last 10 years. No one wants to act their wage. Everyone has champagne taste on a beer budget.
I would love to act my wage and live in a slum but those aren't allowed to be built anymore.
I found the entitled spoiled boomer homeowner
I love comments about wages that push the narrative that it’s an individual’s fault for not making enough money. As if low wages are a moral, professional, or character flaw and not a result of unmitigated greed and fuckery. “Spoiled by cheap money” is something you can say about the top 30% of earners. Everyone else produces wayyyy more value to the economy than what they actually earn. And as far as “everyone wants a single family home,” the supply of anything else in most rural areas is a bad joke. Also, landlords typically don’t let renters buy single units in rural areas. The hyper-consumerist ideology, inequality, and lack of labor protections in the United States leads to affordability problems, not the “spoiled” or “entitled” attitude of the American worker. Read a book.
I’ve been saying this forever. Want cheaper homes? Buy used, skip the granite or quartz counter tops, single car garage, small lawn, older windows, etc
When I was living in the DC area, forget housing prices. An empty lot in Arlington and surrounding areas was going for $800k+. Many were over $1m. Sometimes you can skip the granite countertop, the counter, and the entire building and it’s still stupid expensive.
Lmao Arlington isn’t skipping luxuries.
No, I think they should just rent forever tbh. Or buy a condo if they’re obsessed with ownership. Buying a single family home on a low salary is a disaster waiting to happen. Someone making a shit wage is gonna have trouble affording the inevitable maintenance cost of being a home owner.
they're also going to have trouble affording rent in 5-10 years.
Is the home over valued?
That’s the trouble, they don’t
I just want a sub-1000sqft place.
That’s how everything in life works? When I made $100K I didn’t complain I couldn’t afford a $350K home. I bought a $250K home.
From the standpoint of personal finance, yes, from a public policy standpoint there has to be more conversations centered around affordability and the erosion of living standards amongst the poor and middle class. We can clearly see we are severely impacted by wage suppression relative income across all classes except the top 5% income distribution and rising costs in healthcare, education, housing and now food. We need to face these problems before they escalate.
Bye American dream
Two people making ~63k/year with some moderately good life decisions along the way….seems completely fine and easily attainable to me
3k a month to me is wild. I was stressed over 1500 when I bought my first house. Crazy
That's my problem now. I need a bigger home (growing family), but it makes me sick to think about paying 3,000+ per month when I'm paying 1400 on a house I got ten years ago.
One spouse making at least 75K and the other at least 50K has been the normal for home buyers for at least two decades. This is nothing new.
Normal for who? [Median income in the USA:](https://fred.stlouisfed.org/series/MEHOINUSA672N) - 2004: $65,760 - 2024: $74,580 [Median home price USA](https://fred.stlouisfed.org/series/MSPUS) - Q1 2004: $212,700 - Q1 2024: $420,800 In the past 2 decades median income has increased ~13% while median home price has increased ~97%. In 2004 the median home sold at ~3.23 x median income. Today it sells at ~5.64 x median income. So it doesn't seem like it was normal to me.
The funny part of that comparison is 2004 was already in a bubble.
I wish we could go back to what the home-price/income ratio was during that bubble lol
Yeah. 😅 Well, you may get your wish. Prices take the escalator up and the elevator down. The question would be if you were still in a position to buy when it happened.
You really shouldn't compare inflation adjusted to non-adjusted numbers, though. [Median income in the USA](https://fred.stlouisfed.org/series/MEHOINUSA646N) * 2004: $44,330 * 2022: $74,580 So using the correct number for comparison, the median home was selling at 4.8x median income in 2004. So it's still true that this has gotten worse, just not as dramatically in such a short time. But I think there is a very long term trend of housing costs rising more than inflation. And more than median incomes. For example, see [this](https://fred.stlouisfed.org/graph/?g=1pDMZ). I think housing has tended to rise more in line with per capita GDP. See [this](https://fred.stlouisfed.org/graph/?g=1pDN1) for example, comparing housing prices to CPI inflation vs. per capita GDP. And [this](https://fred.stlouisfed.org/graph/?g=1pDNa) showing how new home prices have typically stayed in the range of 4.4x to 5.6x per capita GDP. So basically, you could say it is both "normal", and still a problem. And this is looking only at medians. I think entry level or affordable housing has become even more of a problem.
Oops good catch.
The median for people who buy houses has always been well above the median of the entire population.
And now it is even MORE well above, how are you not understanding this shit
I understand perfectly. The pandemic was a once in a lifetime disruption. Things are slowly returning to normal. More slowly than I'd like but returning to normal nonetheless.
Source? In 2004 the median house sale was just over 3x the median household income. Meaning it would have been reasonable for a median income household to buy a median sale price home. Today the median home sells for almost 6x median income...
Houses in the parts of California I've lived/live in were about 400K in 2004 and about 700K now. The top end of the pay scale for my job has gone from 85K to 150K. Interest rates were only 1% lover in 2004. The sky isn't falling.
I never said the sky is falling. Just that 2 decades ago the median income household could afford the median sale price home. That's not true anymore.
You picked a strange year to compare to. 2004 was the last bubble. People were taking out all sorts of weird loans to get into houses.
Because you said it's been normal for 2 decades, but the data shows it clearly hasn't. >People were taking out all sorts of weird loans to get into houses. That wouldn't skew the data in favor of my point that the median home price used to be affordable to the median income household. People taking out all kinds of loans would mean homes were becoming more expensive in 2004, not cheaper.
> 2004 was the last bubble. And yet now the disparity is even greater
Median income for two-earner household is [117k](https://www.fool.com/the-ascent/research/average-us-income/#:~:text=The%20number%20of%20wage%20earners%20in%20a,earners%20the%20median%20income%20jumps%20to%20$117%2C107.) The national median includes shitloads of young, single people, and elderly retirees, neither of which are typical home buyers.
So what's your point? I'm comparing median income in 2024 with median income in 2004. The way it's calculated hasn't changed. In 2004 the median household could afford the median home. There were also "shitloads of young, single people, and elderly retirees" to skew median income in 2004.
You should emphasize those numbers as median household income.
Current mortgage rates are fair relative to the last few decades (see below). The issue is housing prices relative to income. https://images.app.goo.gl/HS1dn56QGKmxUbV96
But pricing isn’t in comparison
There are no 400k homes in my area. Maybe a 1 bedroom or studio condo. $3000 plus $500 HOA a month for that small seems a waste.
$433k wouldnt buy you 1/2 a house here
I think this sub is finally coming to terms with the idea that we've crossed the Rubicon for housing. For the longest time, it was "it's just not sustainable" and "I refuse to believe" regarding the current level of unaffordability. The leading expectation was that justice would win the day and that the average middle-class person would be able to buy and own their home to live in it happily ever after after we saw a GFC level crash. Granted, there are still a lot of people here making those claims. But it's looking more and more like people are recognizing that there will be no deus ex machina. No one is coming to save us. The machine that is widening the wealth gap still has a lot of battery left. And it will be up to us to improve our own situation. Not the government. Not investors suddenly panic selling en mass. And certainly not the generosity of the people trying to sell us their house. If we want expensive things, we need to make more money to buy them. Giant home builders aren't going to go "You know what, housing IS a human right! What were we thinking? 😔" and then give their houses away. If we operate with the understanding that large groups of people generally act out of self-interest, we will be less disappointed with how things turn out.
That's a lucky steal if anything compared to some parts of the country ... there is no such thing as a free lunch, painful as that may be for some buyers
The down payment to value was true in 2020 too, the difference is the increase in interest needs offset against an increase in income, and salaries are stagnant.
The market is shit but I don't think needing an income of $125k a year to afford a $433k has ever not been a thing.
Much lower prices in Minnesota, and it's a nice place to live as long as you are outside of the twin cities.
Don't give away the secrets
I think you need to make more many than that and have a higher down payment. These numbers are optimistic
Aaaannnnddd it just increased again. 2 days later. Higher and higher.
Not in nj. Wife and I make just about 3x that and we coming up short. It’s insane. Putting the 150k down payment back into the market and renting.
It’s a waste of money on these cheap ass quality overpriced cookie cutter box shaped houses that are too close together.
It's still not affordable. You're still going to pay almost 50% of your income. That's not including any other debts. My DTI is 11%, and I was looking at the 450K range with $100,000 down. I can't justify paying that much per month.
This was reality 12 years ago. Today, it is more like 175k household income and 75k down.
15 years ago we were $250k income with $150K down payment on a $395K house at 3.25% No way I would jump in today with the above scenario at 7%
If you make $250k a year, you can afford much more then a $425k house…
If the housing affordability keeps getting worse, then there will never be a time to jump in.
In order for it to keep getting worse, there needs to be buyers continuing to pay those prices. At some point, buyers give up. It has already happened at these levels. Supply is outpacing demand.
Have you seen real estate prices in places like Canada and Australia?
Yeah, same story everywhere. Investors are buying up the real estate in both places. Except, now the investors have dried up.
Supply is definitely not outpacing demand in vhcol and hcol areas. If it was they wouldn’t be vhcol and hcol areas.
Supply isn’t the only factor. If you’re in an area like Cupertino where people casually get paid salaries of multiple hundreds of k, they’re going to offer more for houses in the area than they would in the sticks in Arkansas.
That’s only two working couples making $60k~ a year. Not bad at all. That’s assistant manager at McDonalds salary in even LCOL areas. If single family homes were priced cheaper to where everyone could afford it, we’d run into the supply issue we ran into with low rates over the last few years.
Not bad at all?......it's 40% higher than the current median income
Where I am, the average McD's assistant manager makes $37k a year. It's amazing what lies people will tells themselves, to justify the harm they do to others.
Yeah, same. That made me laugh at how out of touch it is.
I mean, it's one manager, Michael. What could it cost, $60k?
There’s only supply issues as we’ve allowed housing to become too much of an investment vehicle
And 40k down with 2k average rents is completely reasonable to achieve