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Old 02-06-2018, 10:52 AM
 
1,162 posts, read 1,267,651 times
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Quote:
Originally Posted by GeoffD View Post
Why do you ďneedĒ a 3 bedroom house? I own a 2 bedroom house. It cost 1.25 x my gross pay in 2009. 28% of your gross for mortgage, taxes, and insurance might be ok if youíre on the raise & promotion ramp of your career. I did that in my 20s. 4 or 5 years later, the mortgage was chump change.
Kids.

Ok I guess I donít need three bedrooms, but itís the suburbs, and i canít have more than a 20 minute commute, so the vast majority of homes in the area are 3+ bedrooms and north of 600k.
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Old 02-06-2018, 10:53 AM
 
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Quote:
Originally Posted by MDrenter223 View Post
I looked up the median income data after spending a few weeks going through zillow and trulia seeing nothing but expensive homes, meanwhile the local schools were still reporting high percentages of students in poverty.
I used LA County in my example because that's where I live. California is unique, as property taxes are tied to purchase price (factoring a 2% increase in value of the home per year due to Prop 13), so your taxes don't go up much per year. This means if your home skyrockets in value, you don't get priced out by taxes. As a result, very few homes go for sale in my neighborhood. Most of my old timer neighbors have middle class jobs, but live in homes that would fetch $1.5 million, because they bought in 30 years when the neighborhood was somewhat sketchy and home costed $250K. Most of the elderly folks live with an adult child and the child's spouse/kids. In most cases, the child will inherit a home they couldn't afford otherwise. New people moving in to the neighborhood tend to be two professional households, for example, a surgeon and a lawyer, or mid level entertainment exec and a dentist.

As for schools, the public schools are ok, not great. If you look at the elementary in my neighborhood, it's 60% poverty. Why is this? First of all, most people who can afford to send their kid to the much higher rated private and parochial schools do, as most wealthy and upper middle class people strongly value education. Since this decreases enrollment, the school district expands the attendance boundaries into poorer neighboring areas to fully utilize the school. This decreases standardized test scores, so more people who were on the fence send their kids to private school instead. At some point it stabilizes. Still, those in the wealthy part of the attendance zone are only having 1-2 kids. Those in the poorer part are 3-4. Even if the attendance zone is mostly wealthy, there still ends up being a disproportionate share of the public school kids being in poverty, because the wealthy have less kids and send many of their kids to private school.
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Old 02-06-2018, 11:13 AM
 
Location: The Triad (NC)
26,864 posts, read 57,900,981 times
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Quote:
Originally Posted by MDrenter223 View Post
and i canít have more than a 20 minute commute...
I passed over this point before, but...

I'm a long time advocate for short commutes but just how far from your ideal radius
would you have to travel to find a home you can afford?
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Old 02-06-2018, 11:48 AM
 
Location: North Idaho
21,003 posts, read 25,781,024 times
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Quote:
Originally Posted by MDrenter223 View Post
I’m looking at moving to an area where the median household income is only $60k/yr, but the median three bedroom home is $600k...............
Median means half the residents make more than $60, 000.

I am currently in a neighborhood of houses that start at $600,000 and nobody, and I mean not a single person, in this neighborhood is a first time home buyer. The people buying these $600,000 houses have worked all of their lives and kept trading up until they end up with the nice house. Many of my neighbors are business owners. They have worked hard to end up with the nice house in the nice neighborhood.

About 5 miles from here a nice enough house, much smaller, much older, neighborhood not nearly as nice can be had for half the price. If you want to buy something really small and older, you can find one for 1/3 the price.

But if you have to have the really nice house in the nice clean quiet neighbirhoid, I guess you have to bite the bullet and take out the mortgage. Just be aware, most people don't start out at that level.

I just looked it up. Median income in this area is $41,000.
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Old 02-06-2018, 12:01 PM
 
1,162 posts, read 1,267,651 times
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Quote:
Originally Posted by MrRational View Post
I passed over this point before, but...

I'm a long time advocate for short commutes but just how far from your ideal radius
would you have to travel to find a home you can afford?
Itís not an ideal radius, itís a contract stipulation.

Even if it werenít, Iíd be better off going with a spare shift once a week than sitting in an extra 40 hours of traffic a month just to afford a house in the sticks with really bad schools.

My family will be ok, renting is no big deal, I just thought it was really interesting that there are areas like this where median home prices are 10x median incomes, and wondered who really could afford such areas?

I did think it would be nice to finally buy something, have some stability, build the kids a tree house in the yard, build my spouse the amazing kitchen theyíve always wanted, ya know the American Dream.

But Iím priced out, and if the family making $180k/yr is priced out of the suburbs, what does that say for everyone else?
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Old 02-06-2018, 12:12 PM
 
Location: Alexander Archipelago
2,803 posts, read 1,501,076 times
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Quote:
Originally Posted by MDrenter223 View Post
But Iím priced out, and if the family making $180k/yr is priced out of the suburbs, what does that say for everyone else?
It says that without substantial cash reserves, or perhaps financial backing from wealthier family members, they're SOL.
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Old 02-06-2018, 12:24 PM
 
1,162 posts, read 1,267,651 times
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Quote:
Originally Posted by Blind Cleric View Post
It says that without substantial cash reserves, or perhaps financial backing from wealthier family members, they're SOL.
Iím guessing the market might be sol.
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Old 02-06-2018, 01:19 PM
 
Location: Johns Creek, GA
1,957 posts, read 1,997,044 times
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Quote:
Originally Posted by MDrenter223 View Post
Iím looking at moving to an area where the median household income is only $60k/yr, but the median three bedroom home is $600k.

How does that even work?

My household income will finally be more than sustenance level, but even grossing more than 3x the median I canít afford a freaking $600,000 home (well not without a down payment and sticking to the rule of 28).

This is a crazy world we live in.
DINKs with equity, dual income, and good credit.
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Old 02-06-2018, 01:26 PM
 
1,016 posts, read 739,663 times
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Quote:
Originally Posted by MDrenter223 View Post
Iím guessing the market might be sol.
Without knowing what area you are looking in, it's hard to say what the local market factors are. But it sounds suspiciously like a market with a land/housing shortage, in which case median income doesn't matter, because people with median incomes can't afford houses there.
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Old 02-06-2018, 02:53 PM
 
Location: Sydney Australia
597 posts, read 302,858 times
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Quote:
Originally Posted by Tarzanman View Post
DINKs with equity, dual income, and good credit.
I thought that, as it is in most of the western world, American women with children generally are in the workforce? Certainly the families in Sydney who are paying a couple of million dollars for a family home would usually be trading up from an apartment, be both working, often will have had some financial help from their parents and in some cases will have sold other assets such as an investment property.

Many people here have to accept a three hour a day commute as well. As our population is small many people simply do not have an option of living in a cheaper place. A country town may be cheaper but eg they may have a small hospital with a few local GPS, but specialists fly in from Sydney and specialist cases are moved out. The local government departments are small, there will be a high school but usually not a university. So work is very limited.

Many people simply have to live in the capital cities and they have to work out a way to afford it.
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