U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > Colorado > Denver
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 10-09-2015, 09:24 AM
 
Location: Whittier
3,007 posts, read 5,082,927 times
Reputation: 3033

Advertisements

Investors, inheritance, or equity from previous home sale. Granted I'm from CA and this is what I'm seeing.

I'm not an expert, just someone who has been around since before the bubble and according to my calculations:

IF you purchase a 600k house (comfortably) You need to make 100k/yr w/ NO DEBT, and put 120k down (20%). Your payment including taxes and insurance would be around $2900 @ 4%.

So it's doable, but like other people have noticed, this probably isn't your (young) first time home buyer, saddled in debt, and saving little by little each month. I would guess that first time buyers that have no help, but are able to be debt free and have that much down are rare.

Most likely those buyers making around 100k are purchasing 300-400k homes, with FHA or smaller 3, 5 10% downs/or smaller inheritances, borrowing from 401ks etc.

We might not be in a national RE bubble but we still are in Los Angeles, and some of the other metros. Like I said I'm not an expert and I know nothing about CO RE, but I think some of the same things apply.
Reply With Quote Quick reply to this message

 
Old 10-09-2015, 10:40 AM
 
Location: Gilbert, AZ
3,140 posts, read 1,929,830 times
Reputation: 3259
Well, people with $30K salaries are not buying $600K homes. Maybe in 2006 when the sol-called "liar loans" were rampant, but not today.

I bought my first house with 20% down, so never paid PMI. Mortgage was 2x my gross income. With roommates I paid that off in about five years, and that was when interest rates were much higher than today. So with some home appreciation, after five years I owned a house, free and clear, that was worth close to 3x my income.

Do this two more times, rolling the money from the prior house into a bigger house, and you can own a home with no mortgage, worth maybe 6-8x your income (depends how much your paycheck grows, compared to home appreciation). It will take 15-20 years, but then you will own a very nice home with no loan. The downside to owning an expensive house, however, is that the carrying costs are high. We own our current house outright, but the HOA, taxes, and insurance are about the same $$/month as the PITI on my first house!

Last edited by hikernut; 10-09-2015 at 10:54 AM..
Reply With Quote Quick reply to this message
 
Old 10-09-2015, 10:52 AM
 
Location: The Springs
1,770 posts, read 2,124,109 times
Reputation: 1845
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.
Certainly one way to do it. Some, like myself, bought their first home 40 years ago and traded up over the years.

If I tried to purchase the home I have today without having done that, I probably could not qualify with the traditional 20% down.
Reply With Quote Quick reply to this message
 
Old 10-09-2015, 11:04 AM
 
Location: Washington State
18,189 posts, read 9,435,921 times
Reputation: 15503
Quote:
Originally Posted by AmFest View Post
Can you explain how falling prices lead to bankruptcy?
What I mean is under normal circumstances of rising prices, if 1 or both couple loses their job or gets divorce, they just sell the house at a profit and distribute the proceeds. However, if the value is less than what is owed and a couple finds themselves in the same situation, they often declare bankruptcy....this often occurs in conjunction with poor economic conditions.
Reply With Quote Quick reply to this message
 
Old 10-09-2015, 11:13 AM
 
1,246 posts, read 918,928 times
Reputation: 1433
You can have 2 ppl making $80k+ living together and its possible and not that rare TBH. A combined income of $160 makes that doable. Generally if you put 20% down you can afford a home 4x your income.

Or if you move from CA. Another scenario is buying a $200k home in your early 20's, pay it off in 20 years, make $50k over that time then dump that into a new home.

Either way, if you plan on renting for a long time, you will never be able to dump that into a home and its money lost. Building equity has value.

ALso, 2 professionals in areas like CN, CA, WA, NJ even CO can easily make $250 combined. And in a lot of those areas they are not that far ahead due to COL
Reply With Quote Quick reply to this message
 
Old 10-09-2015, 11:15 AM
 
Location: Denver, Colorado U.S.A.
14,174 posts, read 23,211,765 times
Reputation: 10428
Quote:
Originally Posted by Kar54 View Post
Certainly one way to do it. Some, like myself, bought their first home 40 years ago and traded up over the years.

If I tried to purchase the home I have today without having done that, I probably could not qualify with the traditional 20% down.
Yeah, our way was just luck. Job offer brought us to Denver, although I'd never planned to leave California

We could sell today and move to a cheaper market (again) and probably pay cash for a house. But I don't like cheaper markets! (there's usually a reason why they're cheap!)
Reply With Quote Quick reply to this message
 
Old 10-09-2015, 12:51 PM
 
2,409 posts, read 2,627,228 times
Reputation: 1807
Quote:
Originally Posted by sammy87 View Post
You can have 2 ppl making $80k+ living together and its possible and not that rare TBH. A combined income of $160 makes that doable. Generally if you put 20% down you can afford a home 4x your income.

Or if you move from CA. Another scenario is buying a $200k home in your early 20's, pay it off in 20 years, make $50k over that time then dump that into a new home.

Either way, if you plan on renting for a long time, you will never be able to dump that into a home and its money lost. Building equity has value.

ALso, 2 professionals in areas like CN, CA, WA, NJ even CO can easily make $250 combined. And in a lot of those areas they are not that far ahead due to COL
$80k+ is very different from the median household income of 60k. That extra 20k/year can take you a long way.

Let alone $160k, or $250k.
Reply With Quote Quick reply to this message
 
Old 10-09-2015, 12:57 PM
 
Location: Seattle
1,366 posts, read 2,921,707 times
Reputation: 1468
$600,000 house - 10% down = $540,000 note.

Assume 4% rate 30 year fixed, 1.25% prop tax and no pmi (possible with 10% down). Assume about $600 per year in homeowners insurance.

All in PITI is ~$3,250 per month.

$100,000 yearly income is $8,333 per month. A mortgage payment of $3,250 per month gives you a 39% DTI ratio. Most banks will loan up to 43 or 45% DTI. Gives you room to even have some other debt.

Not saying it's smart, or wise, but you could buy a 600k house if you had the down payment. If you added another $40,000 income from a spouse you would have $3,250 / $11,666 per month which would give you a 27% DTI. That's not even a stretch based on a conservative calculation.

The 3x income thing is a relic from when interest rates were like 8-12%. Doesn't really apply at these rates. If the rate were 10% your payment would be ~$5,400 per month on the same 600k house. Ouch. Really 3x income at 10% rate is around 5-5.5x at a 4% rate. Basically a 600k house @ 10% rate has the same payment as a 1M house does @ 4% rate.
Reply With Quote Quick reply to this message
 
Old 10-09-2015, 12:58 PM
 
2,409 posts, read 2,627,228 times
Reputation: 1807
Quote:
Originally Posted by Tall Traveler View Post
What I mean is under normal circumstances of rising prices, if 1 or both couple loses their job or gets divorce, they just sell the house at a profit and distribute the proceeds. However, if the value is less than what is owed and a couple finds themselves in the same situation, they often declare bankruptcy....this often occurs in conjunction with poor economic conditions.
You're assuming that falling prices somehow lead to someone losing their jobs, which is a huge logical jump.

And when a house is under water and the owner is forced to sell it, the most common solution is default, not bankruptcy.
Reply With Quote Quick reply to this message
 
Old 10-09-2015, 01:02 PM
 
2,409 posts, read 2,627,228 times
Reputation: 1807
Quote:
Originally Posted by drshang View Post
$600,000 house - 10% down = $540,000 note.

Assume 4% rate 30 year fixed, 1.25% prop tax and no pmi (possible with 10% down). Assume about $600 per year in homeowners insurance.

All in PITI is ~$3,250 per month.

$100,000 yearly income is $8,333 per month. A mortgage payment of $3,250 per month gives you a 39% DTI ratio. Most banks will loan up to 43 or 45% DTI. Gives you room to even have some other debt.

Not saying it's smart, or wise, but you could buy a 600k house if you had the down payment. If you added another $40,000 income from a spouse you would have $3,250 / $11,666 per month which would give you a 27% DTI. That's not even a stretch based on a conservative calculation.

The 3x income thing is a relic from when interest rates were like 8-12%. Doesn't really apply at these rates.
Where in Denver is property tax 1.25%?
How do you get 10% down payment with no PMI?
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Options
X
Data:
Loading data...
Based on 2000-2016 data
Loading data...

123
Hide US histogram


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > Colorado > Denver
Similar Threads
View detailed profiles of:
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top