How do people afford $800k - $1.2 million homes? (Dallas, Austin: foreclosure, neighborhoods)

[riaelise]

Am I in the minority who do not care what other people make or what dollar value their home is? We all have our joys and tribulations, and a roof over our head that we hopefully enjoy...we all work and hopefully earn, so seriously, who cares?

[kiacook]

Yes, you're the only good, non-materialistic person here.

[achtungpv]

Originally Posted by texastrigirl

her dad bought her the house and paid cash for it with his Dell gazillions from the early days.

I see a lot of our peers that are being helped out significantly by their parents. Literally, to the tune of thousands per month. Almost all of these are no more than upper middle class parents at best. But, interestingly enough, the richest guy I know in Austin whose guest house is 8,000 sq ft and could pretty much stroke a check to buy Guatemala, doesn't believe in dishing out welfare to his kids. They are expected to manage their own money responsibly and make their own way. His daughter is one of the most grounded people I know. Much more so than our friends that are still on momma's teat.

[jobert]

It's a trade-off. Many of these people are self-made and have earned their trappings by sacrificing most other aspects of their lives: family, friends, children, free-time, and sometimes morals. It's a steep road to acquire wealth and maintain it, and one that never ends once you arrive. There is no need to be jealous of these people but instead ask yourself "would I trade places with them"? It's easy to look at what they have, but if you knew what it took to get there, and what it took to maintain that station, you'd think twice about the offer.

This applies to the self-made types only.. the kids are another story. They usually end up less successful than the parents, and slowly leach the family fortune if left unchecked.

[jobert]

Originally Posted by achtungpv

But, interestingly enough, the richest guy I know in Austin whose guest house is 8,000 sq ft and could pretty much stroke a check to buy Guatemala, doesn't believe in dishing out welfare to his kids. They are expected to manage their own money responsibly and make their own way.

Shrewd. Recreate the conditions that led the parents to success.

I remember when Roberto Benigni won best director for Life is Beautiful, and during his acceptance speech he thanked his parents for "giving him the greatest gift of all: poverty". It illicited laughter for it's unexpectedness, but it was one of the most brutally honest things I've ever heard.

[motherofthree]

Originally Posted by achtungpv

I see a lot of our peers that are being helped out significantly by their parents. Literally, to the tune of thousands per month. Almost all of these are no more than upper middle class parents at best.

Many, many of my friends - who are in their 40's and well established in their careers, still get thousands of $ from their parents for b-days, Christmas and even their vacations paid for. I must be in the minority b/c I send money to my parents every month to help them out.

[gdu]

Originally Posted by kbchitown

Some people simply can afford to live in multi-million dollar homes, whether it be old or new money. Sometimes we fail to see outside our own situations...such as "I can afford X amount when it comes to a house...but considering down payment, property taxes...I can't understand how "other" people can afford more! You are purchasing your home based on your means...and that "mean" is proportionately larger when your annual income is 1 million +. It's all a matter of scale.

I don't dispute that some can. I am talking about the rest. There aren't enough high paying jobs, trust funds or investment profits in the area to explain all of those houses. Period.

It isn't really a question to me though. Just because people are living there doesn't mean they can afford it.

We have some good friends who live in Davenport Ranch. We bought groceries and they got locked out of the house so we went to the neighbors to put the cold stuff in the frig. They didn't have any furniture besides a bed and a couch, but had lived there 4-5 years. It was more important to them to live in Davenport Ranch than it was to buy a house they could afford.

That same thing is going on in all home price ranges (which, again, goes a long way in explaining the mortgage crisis). People today are spending everything they bring in and not saving any of it which is a large part of why there are more expensive homes being lived in than people who can really afford them in the area.

[TurtleCreek80]

Originally Posted by Jennibc

There it is.

I didn't mention high paying jobs, because I thought that kind of went without saying since the original post was talking about having a high paying job and not being able to fathom how people did it. So, at least in my response, I was pointing out that in ADDITION to the high paying jobs you would likely have to have one of those additional asset components.

In our case, our dp on the next home is about 50/50 cash savings (which I did mention in earlier post, see below) & equity from selling. We still have a 6-figure liquid savings/ CD account and would not be able to purchse a home in the $900k+ range without having saved a ton of money from our good jobs. Equity alone does not permit that size a home purchase.

Originally Posted by TurtleCreek80

With a 20-25% down payment (proceeds from selling homes and additional cash savings), our PITI will end up being a good bit less combined than it was to maintain our former separate households.

[TurtleCreek80]

Originally Posted by riaelise

Am I in the minority who do not care what other people make or what dollar value their home is? We all have our joys and tribulations, and a roof over our head that we hopefully enjoy...we all work and hopefully earn, so seriously, who cares?

This forum attracts a wide cross-section of backgrounds and incomes. I am sure it is difficult for someone - perhaps someone who grew up in a home where college wasn't a "given" or whose parents worked blue collar jobs or service industry jobs- to imagine how so many people are out looking for a $1M+ home when they've always rented or lived in a $100k home. I think it's natural to wonder about what kind of jobs or financial/family situations allow for people to have so much money to spend on a home, especially if that person has never been exposed to the world of big law attorneys, corporate executives, entrepreneurs/small business owners, etc.

[jobert]

Originally Posted by gdu

It isn't really a question to me though. Just because people are living there doesn't mean they can afford it.

A lot of those people probably didn't pay what the houses are now "worth".

It's one thing to buy a house for 400K and say it's worth 800K, but until you actually find someone who will pay 800K for your house, you're blowing hot air.

I have friends whose parents live in $1MM+ houses in the Park Cities, but they paid only 400-500K for them back in the 90's. They may be a in rude awakening when they try to downsize for retirement, because a lot of them have modest jobs, make less than 200K household salaries and I suspect have borrowed against the equity to cover the property taxes. They may owe more now than when they originally bought the house, but have relied on rising property values to cover their gamble.