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Old 02-07-2018, 07:44 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
4,112 posts, read 3,404,360 times
Reputation: 5638

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Okay, I see what is happening. You claim to make 3x the median income, but the truth is you do not.
In the future you will so let's say you are making this income and 3 or 4 years have passed.
If you save aggressively you should have a good down payment and buying a $600k house should be no problem.
Most people don't start out a career and buy a house right away. In a high price area they scrimp and save for a while. Maybe even sacrifice a few years of putting money away for retirement. Many times they don't lose too much ground this early if they go back to saving once they get the house plus the house often appreciates quite a bit by the time they retire.
Of course we don't know all your finances. You might have spending habits that aren't very good. Relying on a formula isn't practical, especially in a higher col area. Some ratios have to be adjusted.
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Old 02-07-2018, 08:41 AM
 
Location: Paranoid State
12,685 posts, read 9,432,561 times
Reputation: 14942
Quote:
Originally Posted by MarisaAnna View Post
That 28% rule is not really applicable for high income earners. They can afford a much higher percentage on a loan as they do not need to spend a great deal more on the basics than average people. They may choose to, but they do not need to.
In Sydney the median house price has hit 13 times the median family income. Yet people are still buying. It is incredibly difficult in some parts to find anything to buy. They go in off market sales or in a week on the market. Enough people are prepared to make a big commitment and I think often pay 50 % of income.
What are the typical tax consequences & implications of purchasing a house in Sydney?
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Old 02-07-2018, 08:46 AM
 
Location: Paranoid State
12,685 posts, read 9,432,561 times
Reputation: 14942
Quote:
Originally Posted by MDrenter223 View Post
Compared to my cohort Iím just lucky to not have a negative net worth.
What is your cohort?
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Old 02-07-2018, 08:48 AM
 
Location: annandale, va & slidell, la
6,376 posts, read 2,584,120 times
Reputation: 5372
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.
You don't have the "mystery" income yet. Why the games with the dollar amount?

You are getting into a real jam by buying that much house by yourself. Come down to earth and stay within your means. Having a large home with no furniture and sheets for window coverings isn't a plan.

When you actually get a high-paying job, be smart and save your money!
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Old 02-07-2018, 09:14 AM
 
Location: Paranoid State
12,685 posts, read 9,432,561 times
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Quote:
Originally Posted by MDrenter223 View Post
... 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?

...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 isn't just your area. All real estate is local, of course, but there are many areas across the country with similar attributes of the housing market.
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Old 02-07-2018, 10:05 AM
 
Location: NJ
304 posts, read 91,811 times
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No idea, a family income of 60K in my area would never be able to have 3 bedrooms without being in an area without frequent shootings. It's that old location, location, location, thing. You might want to ask this in a local forum for your state to get the real nitty gritty. Just saying the average income is 60 K is meaningless without knowing where we are talking about.
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Old 02-07-2018, 10:40 AM
 
Location: midvalley Oregon and Eastside seattle area
2,921 posts, read 1,348,540 times
Reputation: 2437
When we bought our 1st, we lived very cheaply before and after purchase. 1970's. Hindsight said that we made a mistake in the purchase location.

When son bought his current home 2014, he lived 5 years in a shared housing arrangement with 4 others.
He did not do 401k (no matching anyway) for 2 years prior and 1 year after purchase. He did do some Roth. He bought some individual stock in the hopes of juicing the downpayment, that was a big bet.
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Old 02-07-2018, 11:00 AM
 
1,162 posts, read 1,267,138 times
Reputation: 1629
Quote:
Originally Posted by MrRational View Post
And what of the pretax contributions (401K, IRA, etc) ?

These are both MORE important than buying or where you live
but also affect how much tax is applied to the reduced amount.
MAX out these contributions when young.

Re-do your estimating.
In my overall budget I max out a Roth 401(k) accounts.

Ultra conservative.

And was told thatís why Iím having trouble seeing who can afford to live in the median home, most people donít Max their retirement.

Again. Iím not buying. Itís out of reach at best.
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Old 02-07-2018, 11:15 AM
DKM
 
Location: Thousand Oaks, CA
2,060 posts, read 672,700 times
Reputation: 2215
It takes time to save that money up. Took me several years to get to the point where I could buy my first cheap townhome. Many years of paying it down and a slow price appreciation later and I could move up again. Repeat, 7 years later and viola, sell it for a quarter million down on nearly a million dollar house with income in the 120 to 150 range before age 40. Its about budget first. I don't try to impress anyone, my class is in my behavior. Raising a family on single income living the dream... again takes TIME and SAVINGS. Mortgage, insurance and tax is at 40% of gross income, no problemo. People making more than me whining they can't live in my wonderful neighborhood...
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Old 02-07-2018, 11:57 AM
 
1,162 posts, read 1,267,138 times
Reputation: 1629
Quote:
Originally Posted by aslowdodge View Post
Okay, I see what is happening. You claim to make 3x the median income, but the truth is you do not.
In the future you will so let's say you are making this income and 3 or 4 years have passed.
If you save aggressively you should have a good down payment and buying a $600k house should be no problem.
Most people don't start out a career and buy a house right away. In a high price area they scrimp and save for a while. Maybe even sacrifice a few years of putting money away for retirement. Many times they don't lose too much ground this early if they go back to saving once they get the house plus the house often appreciates quite a bit by the time they retire.
Of course we don't know all your finances. You might have spending habits that aren't very good. Relying on a formula isn't practical, especially in a higher col area. Some ratios have to be adjusted.
Sorry if it even seemed implied. I thought it was clear in the OP that the 180k, the 600k, and the 60k were all numbers for where I was going to end up.

I was looking between buy and rent, noticed the homes were all super expensive, but the schools werenít great. Looking deeper into the schools I noticed they had a surprisingly high amount of students in poverty (I assumed people had to make good money to afford expensive homes), so I looked up wages and saw they were only 60k.

I was amazed at the disparity between the cost of housing and the wages for this town. Doubly so since I didnít think I could really afford to buy a home there even though I will be making 3x the median income when I get there.

Quote:
Originally Posted by finalmove View Post
You don't have the "mystery" income yet. Why the games with the dollar amount?

You are getting into a real jam by buying that much house by yourself. Come down to earth and stay within your means. Having a large home with no furniture and sheets for window coverings isn't a plan.

When you actually get a high-paying job, be smart and save your money!
Games? Itís planning. I have a job offer from a region, so I am looking into that area when I get time. Do you not research before moving cross country?

Itís not a lot of house. For the most part they are small lot, small home, nothing special. And I know I canít afford it, thatís the whole point of the thread. How crazy it is that despite the fact thatíll Iíll be making 3x the median income, I still canít afford a 30 year note on a median home. Something is very wrong with that picture.

Quote:
Originally Posted by Harrrvy View Post
Medical school graduates with 200K of debt. This guy is putting the cart before the horse though. He isn't even done with residency yet and has saved no $ for a down payment and doesn't understand why with his future salary he is having difficulty finding a house he can afford. Not very surprising for an MD though. Their financial acumen is usually not their strong point. Learning/categorizing massive amount of information and an insane work ethic is.
I understand that I canít afford a home. I donít understand how median homes can cost 3x the median salary. Thatís just not a sustainable model. I mean I have no clue where a 180k salary falls on a bell curve for the town, but Iím guessing itís pretty far to the right, and still I canít buy. And as I understand it from watching Zillow and talking with a realtor homes arenít staying on the market long.
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