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Old 10-09-2015, 08:03 AM
 
459 posts, read 671,984 times
Reputation: 726

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Quote:
Originally Posted by AmFest View Post
At that income, to buy that expensive a house purely by leveraging and trading up, you'd have to change houses every few years for 50 years.
No not really, I know a handful of locals (parents of some of my friends I grew up with) who did it in 3-4 houses over 2-3 decades. It's just a matter of timing, and appreciation which obviously involved a lot of luck. (Like I said exception not the rule)
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Old 10-09-2015, 08:16 AM
 
Location: Colorado Springs
3,042 posts, read 2,076,221 times
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They relocate from other areas of the country and roll over the sale of their $800k house there into a $600k house here. The equity allows them to put enough money down to effectively lower the mortgage to a level where it is affordable on less salary.

Additionally, average salary is just that, average. For everyone one making $30k, there is someone making $80k to achieve the offset.

If you try to come here from an area where you have a $200k house in a great neighborhood and you try to get in a comparable neighborhood in the Denver area and find it will now take $600k, that's the flip side of the appearance of success equation.
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Old 10-09-2015, 08:25 AM
 
Location: Denver CO
20,950 posts, read 11,615,689 times
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Quote:
Originally Posted by willc86 View Post
as for me, im at the 100k range and only can afford 220k home (no debt, no cars) to live kind of freely. So I am a bit curious how families are jumping into 600k homes.
What exactly does "live kind of freely" mean?

I'd say that with a 100K income, and interest rates these days, you are choosing to have a lot more disposable income than some people choose.

Not sure if the numbers will show up, but using this calculator, and no debts, with a 4% interest rate and 40K down, it suggests you could qualify for a 486K house. It's fine if you would prefer to spend less than half of that, but many people are ok with putting more money towards housing costs and less towards other things.

New House Calculator - How Much House Can I Afford?
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Old 10-09-2015, 08:30 AM
 
5,444 posts, read 4,811,646 times
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I'm willing to bet that the people buying 500K+ homes are not first time home buyers. Chances are, they have bought/sold many houses in the past and accumulated plenty of money to put down on the house. I also wouldn't be surprised if they are putting more than just the 20% down. If you bought a 100K home in the 90s, it could be worth close to 300K by now. Sell this and that is 200K sitting in your bank account. Now, your 500K mortgage is only 300K and well within the means of someone making 100K a year.
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Old 10-09-2015, 08:45 AM
 
Location: Denver, Colorado U.S.A.
14,174 posts, read 23,211,765 times
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Our house would sell for around $600K today. We paid around $420K 10 years ago. And we had a good down payment because we had just sold a condo in California for about $400K that we had only paid $125K for. So that was sort of a real estate lottery win... buying low and selling just before the market crashed in California. Plus our household income is around $200K.

So there's one way to do it.
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Old 10-09-2015, 08:51 AM
 
2,409 posts, read 2,627,228 times
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Quote:
Originally Posted by denverian View Post
Our house would sell for around $600K today. We paid around $420K 10 years ago. And we had a good down payment because we had just sold a condo in California for about $400K that we had only paid $125K for. So that was sort of a real estate lottery win... buying low and selling just before the market crashed in California. Plus our household income is around $200K.

So there's one way to do it.
This thread supposedly asks how people with average income do it. $200k household income is not really the average.
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Old 10-09-2015, 08:57 AM
 
Location: Denver, Colorado U.S.A.
14,174 posts, read 23,211,765 times
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Quote:
Originally Posted by AmFest View Post
This thread supposedly asks how people with average income do it. $200k household income is not really the average.
Just two middle management jobs... It's not like we're Directors/VPs/CEOs.

The sad thing is, it still doesn't afford us some lavish lifestyle. When you're socking away $1000 a month for 539s, $1000 a month for kid tutoring and activities, and maxing out 401Ks, we still watch our spending. And I drive an 8 year old paid off car.
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Old 10-09-2015, 09:09 AM
 
2,514 posts, read 3,486,397 times
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It starts back in high school when you start thinking about a career and applying to colleges. First you pick something that pays well like an engineer, Dr., lawyer etc. Something that needs education and training so that not anyone off the street can do your job. Then you apply to good schools. At school you study and get good grades so that you do will on the GRE and get into a good graduate school. After that you find a good paying job. Right away it is smart to start saving by socking money into your 401K so don't go out and buy a bunch of furniture for your first apartment (which btw should be a cheap studio). Don't buy a new car on credit. Go for serviceable and used.

As soon as you have a down payment get into a low cost starter home/condo/townhome. This locks in your payment so that as your receive raises, promotions and bonuses you can invest or save that money. Wait 10-15 years. During this time find a spouse who has done the same.

After marriage sell both houses and roll the money into one $500K-$600K home. Age should be about early 30s. Keep payments low so that you can pay off your new $500K-$600K home before you retire. Probably will easily have it paid for by mid 40s with this plan.

Alternatively live cheap and start a business in your early 20s. Continue to live cheap until the business takes off or is sold. Maybe buy starter home to build equity and control housing costs. Buy more expensive after getting financially solid enough to afford it.

Basically no one with any financial sense buys a $500k-$600K home as their starter home. They are all move up buyers who have made good choices on spending their money in the past such as locking in a fix rated mortgage (not buying above their means with an adjustable rate or balloon payment), choosing cars they can live with for a decade or more, keeping expenses down so they can fund their retirement etc.

Living below your means is key.
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Old 10-09-2015, 09:13 AM
 
2,409 posts, read 2,627,228 times
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Quote:
Originally Posted by denverian View Post
Just two middle management jobs... It's not like we're Directors/VPs/CEOs.

The sad thing is, it still doesn't afford us some lavish lifestyle. When you're socking away $1000 a month for 539s, $1000 a month for kid tutoring and activities, and maxing out 401Ks, we still watch our spending. And I drive an 8 year old paid off car.
After subtracting that 60k, you guys still have 140k of annual income which leaves about 100k after tax. You must really mean lavish when you say it. Not sure how many kids you have and how old they are though.
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Old 10-09-2015, 09:21 AM
 
2,980 posts, read 3,712,820 times
Reputation: 1650
Quote:
Originally Posted by AmFest View Post
Can you explain how falling prices lead to bankruptcy?
I was wondering this too
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