How do people afford $800k - $1.2 million homes? (Austin: sales, insurance)

[mimimomx3]

1. Trust Fund
2. Equity from previous homes
3. Stock windfall
4. ARMS/creative financing
5. Cash businesses

[kiacook]

Stock options

[lemonlime22]

Plenty lived in these houses before they were valued as much as they are now.

A couple examples; my husband said that when he moved here in the mid 80s those fabulous old houses in Hyde Park were 30K.

I also know a man who has a house on Lake Austin in Tarrytown who often remarks that he could never afford the house he now owns--he got in before Austin was discovered.

[hoffdano]

It is interesting that with today's interest rates, your PI payment on a $800K home with 20% down is in the range of $3400/month. It isn't a crazy amount I suppose for lots of people. Annual property taxes would add $20K per year or $1333/month for a total monthly payment of $4733.

It's a big obligation though and to me would feel like leg irons.

[supadad33]

Originally Posted by hoffdano

It is interesting that with today's interest rates, your PI payment on a $800K home with 20% down is in the range of $3400/month. It isn't a crazy amount I suppose for lots of people. Annual property taxes would add $20K per year or $1333/month for a total monthly payment of $4733.

It's a big obligation though and to me would feel like leg irons.

And don't forget homeowners insurance and maintenance.

[rickc007]

Originally Posted by hoffdano

It is interesting that with today's interest rates, your PI payment on a $800K home with 20% down is in the range of $3400/month. It isn't a crazy amount I suppose for lots of people. Annual property taxes would add $20K per year or $1333/month for a total monthly payment of $4733.

It's a big obligation though and to me would feel like leg irons.

Used to be ... rule of thumb ... you spent between 30-40% of
your income on housing

Many double that these days

Some very smart people, live very much "under" their means
(you get rich this way). You can get VERY nice houses here in the 200k range. Nothing like banking/investing your extra money

[WoodyTX]

I have a friend who makes in excess of $300k a year, and lives in a $350k home.

He says he'd rather live comfortably and invest the rest, than live at the limit and worry about the economy.

[gdu]

I wonder the same thing, but I think the mortgage crisis goes a long way to show how they can afford it...they can't. People are spending more than they have.

[centralaustinite]

Originally Posted by gdu

I wonder the same thing, but I think the mortgage crisis goes a long way to show how they can afford it...they can't. People are spending more than they have.

But there wasn't much of a "mortgage crisis" in Austin or even Texas at all!

People may have stretched to get into a 400K or 500K house in Austin or folks who went for $250K instead of 150K but most folks in the truly high end have the money to spare.

[rickc007]

Many Californians came here and overspent because they were used to high prices.

Just cuz they spent it, doesn't mean they have it.
I was shocked to see the kind of money people threw at housing,
and condos in South California. And how many hundreds of thousands they
are now in the hole. Literally. Staggering