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It's amazing how much home prices have gone up since this thread started in 2013. Our home, for example was worth about $500k then, now $850k. When we bought our first house in 1978 it was $50k, and our income was about $25k, so just 50%. We bought this one in 1993 for $190k....
Quote:
Originally Posted by k374
Let's take an example - Los Angeles:
Year 2000:
- Median Home price = $227,000
Year 2018:
- Median Home price = $631,000
It's amazing how these trends vary from locale to locale. I lived in Los Angeles in the mid-late 1990s, and had acquaintances who bought residential property after the early-90s slump. Their houses were bought at prices not substantially higher than those of comparable neighborhoods in my current part of the Midwest. LA prices remained subdued throughout most of the 90s... then commenced a staggering climb.
Seattle is evidently similar. If Hemlock had bought a house in my area for $190K in 1993 - which would have a been a large-ish but not extravagant McMansion - it would have risen in price to maybe $230 by the end of the millennium, and since then, remained stagnant at best - or likely even fallen in price.
As of this writing, it's possible for a mid-career engineer to gross annually what a 4 bedroom 3-bath house costs in a better neighborhood, on a half-acre lot. Live frugally for 3-4 years, saving one's money, and enough is accumulated to pay cash for such a house. Or, one could buy a more modest 3-bedroom 1-bath house in a less desirable neighborhood, and use the remaining money to buy (also for cash) a second house as a rental.
Now imagine relocating from the typical Midwestern town to Los Angeles. Suppose that such a person/couple/family has a paid-off house in the Midwest. The sales-proceeds wouldn't even be enough for a 20% downpayment in Los Angeles.
Using the rule of thumb that buyers should expect to spend two and a half times their income on a home purchase, the properties in Manhattan that could be said to be middle class would run between $200,000 and $588,000.
On the low end, the pickings are slim. The least expensive properties are mostly uptown, in neighborhoods like Yorkville, Washington Heights and Inwood. they are not really up there on the desirable list .
The nicest options in this range , however, are one-bedroom apartments not designed for children or families.
so 2.5x income really won't work here in nyc for most .
That 2.5 would be unheard of here. In Sydney the median household income is $90,000 pa, about $US63,000. The median house price is around $A 1million, apartment about $700,000. It seems to service a loan for a median dwelling, 55% of median household income is required.
Save, save, save....maybe by early 30s a husband and wife could have $100k for a downpayment. If the couple makes 70k combined, a $300k home would almost meet this “rule”.
$300k buys a nice house in most of the US. Another option is moving - people that make ~$70k combined should easily be able to find work just about anywhere (skills/income may be on the low side compared to other home owners in their area).
The house the wife and I bought cost barely more than our annual income. And it's a nice house, by my standards anyway. Far nicer than anywhere I've lived before.
Housing is not overpriced. Housing in *trendy areas* is what's overpriced.
The house the wife and I bought cost barely more than our annual income. And it's a nice house, by my standards anyway. Far nicer than anywhere I've lived before.
Housing is not overpriced. Housing in *trendy areas* is what's overpriced.
Seems true to me. Even in my low COL area there are trendy areas closer to the city where one might pay $500k for a house that in other perfectly liveable/safe/good school areas 15 miles away they would pay $150k. Sure the home 15 miles away isn’t in the hipster/snobby/trendy neighborhood with little breweries/restaurants/bars/parks within walking distance, but with the money saved one could easily drive to the trendy areas on the weekend or do A LOT of other things...maybe even retire 10 years earlier.
The house the wife and I bought cost barely more than our annual income. And it's a nice house, by my standards anyway. Far nicer than anywhere I've lived before.
Housing is not overpriced. Housing in *trendy areas* is what's overpriced.
Americans seem to be very fortunate to have relatively cheap housing options compared to many other countries. Here you find cheap housing in rural areas where there is little employment. A half hour commute from the centre of Sydney sees detached house prices often starting at $2million.
I hear this rule of thumb all over. Use 2.5x your HH salary as a rule of thumb. If you are a single person in this economy, making $50,000 per year, then the maximum house you could afford is $125,000. That doesn't buy much. How do couples do it when one parent stays home? I really don't understand how we can have so many houses priced $250,000+ in the US? That would be an income of $100,000. That's doable for a couple in their mid to late 30's, but anything younger than that you're probably not going to break $100,000 take home pay as a couple unless you're either a lawyer, doctor, or engineer.
That's not a real rule, it's a loose guideline. the thing that matters to banks is that your debt to income ratio makes you qualify to buy the house.
Mine was an auction house and I paid 2x my annual income in late 2016 with a 3% interest rate. I could pay it off but I'd rather stay invested in the market. As a male I'm shy and introverted so women tend to ignore me, which means I'll retire that much earlier. House is 1400 square feet main level and 1400 square foot basement with 900 of that finished. 5 bedrooms 2 baths.
Upsides... Live 5 miles from work... Job is easy for what it pays. No state income tax.
Downsides...its cold here. A bit of a drive to do anything interesting that doesn't involve bars which I dont go to.
Save, save, save....maybe by early 30s a husband and wife could have $100k for a downpayment. If the couple makes 70k combined, a $300k home would almost meet this “rule”.
$300k buys a nice house in most of the US. Another option is moving - people that make ~$70k combined should easily be able to find work just about anywhere (skills/income may be on the low side compared to other home owners in their area).
If you save $100K for a downpayment there are a lot of place in the country where you can buy a decent home for $100 to $150K. If you want to move away from the bigger cities there is a place in Florida where you can buy a new 3/2 modest home for
$150K and it's only about 30 miles from a major interstate so it's not in the middle of nowhere.
It won't kink to the home but it's the one that costs $142,990
Last edited by LifeIsGood01; 01-01-2019 at 08:13 AM..
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