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Old 12-06-2013, 04:21 PM
 
1,420 posts, read 2,557,011 times
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Back in the early 1980s interest rates were in the mid to high TEENS for a while. Imagine that. I wonder if some people then thought interest rates might stay that high forever (just like some people today might think sub 4% rates might stay forever).

But I think the high rates would drive housing prices down. Low rates like now probably affect the buoyancy of today's real estate prices.
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Old 12-06-2013, 05:01 PM
 
Location: Portal to the Pacific
4,801 posts, read 4,728,141 times
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We had substantial help from a relative... otherwise it would have taken us 2-3 years to come up with a decent downpayment.
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Old 12-06-2013, 05:19 PM
 
Location: Carmel, Indiana
31 posts, read 55,610 times
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In Indiana, you could get a nice house for $250,000. And the secret is to stay in it long enough to build equity in it. Moving a lot (and thus paying the real estate commission) really cuts into any profit you might make.

We were lucky when we lived in a suburb of Chicago. We bought a house for $100,000 and then, within 3 years, sold it for $190,000. The reason was that the area was becoming "gentrified" and so lots of houses were purchased, torn down, and a new house built on that land. We went back a few years later and found that was what happened to ours. I miss the old Victorian turret we had.
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Old 12-08-2013, 10:57 PM
 
Location: Floyd Co, VA
3,349 posts, read 4,922,143 times
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The rule of thumb about 2.5 times your income applies to the amount that you borrow for your mortgage, not the total cost of the house. The place I am in now I was able to put down 2 times my annual gross income due to the sale of my second house which I had been in for 16 years and it had appreciated a great deal. In addition I took a mortgage of 2.75 times my income.

I also knew that my income would increase by about 25% when I began collecting social security.
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Old 12-09-2013, 12:16 AM
 
Location: Brawndo-Thirst-Mutilator-Nation
15,662 posts, read 15,598,991 times
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Good luck, you will buy a junky house and/or have to live in a nightmarish area.

Thank Big Brother for continually attempting to artificially hyper-inflate the cost of housing......thank many citizens because they think housing price inflation is a great thing.
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Old 12-09-2013, 07:50 AM
 
Location: Chapel Hill, NC, formerly DC and Phila
8,417 posts, read 12,232,559 times
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The key is to save and sacrifice for several years before buying so you can save up a good down payment. I didn't buy my first house until I was was 33 years old. I was out of college and working for 11 years at that point. For eight of those years I lived with roommates and finally the last two I rented an apartment by myself. So I was able to stash away a decent amount of money. In that time I saved approximately 6K per year for the down payment on a home (that number includes investment returns). I bought a home for $290K putting down $70K. My husband and my salaries were each in the $50K range at that point (the downpayment was all my money, though). Neither one of us is a doctor, lawyer, accountant or engineer. He is an insurance underwriter and I worked in the educational field.

The bottom line is that I sacrificed in the earlier years in order to get that house. I could have lived in an apartment on my own fresh out of college for $600 per month, but I moved into a 3-bedroom with 2 friends and paid $250 per month. And I gradually increased my standard of living. We then moved into a townhouse in a better neighborhood and I paid about $350 per month for a few years. And then I moved to condo with just one friend and paid her $500 per month (she owned it). Finally I moved on my own for a couple of years and paid $800 per month.

So that's how we did it - bought a $290K house with a combined $100K salary with a $70K downpayment (saved over 11 years when making a salary between $20K and $50K).
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Old 12-09-2013, 01:41 PM
 
12,428 posts, read 9,402,921 times
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Quote:
Originally Posted by Cheektowaga_Chester View Post
Back in the early 1980s interest rates were in the mid to high TEENS for a while. Imagine that. I wonder if some people then thought interest rates might stay that high forever (just like some people today might think sub 4% rates might stay forever).

But I think the high rates would drive housing prices down. Low rates like now probably affect the buoyancy of today's real estate prices.
If interest rates were 19% why not just save up and pay cash for your house? Your savings would double every ~4 yrs on top of what you add every month...
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Old 12-10-2013, 12:39 AM
 
1,614 posts, read 1,702,987 times
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Quote:
Originally Posted by pete6032 View Post
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.
I think it's very feasible in many areas, especially since most people buying a house as opposed to a condo are married, so it's dual income.

However, here in the bay area, it's ridiculous. 2.5 times for a house means your income would have to be about 250-300k.
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Old 12-12-2013, 11:53 AM
 
Location: The analog world
16,556 posts, read 9,155,716 times
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Savings & investments, inheritances, profits rolled over from previous sales. And some professionals earn generous salaries.
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Old 12-12-2013, 01:38 PM
 
5,239 posts, read 6,584,076 times
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How do people do it on one salary? The couple doesn't have huge payments on 2 new vehicles, or high credit card bills and payments on stuff they don't really need anyway. They are not buying 5 buck cups of coffee everyday and overpriced lunches at some trendy but mediocre chain restaurant. People don't need a high priced huge Mcmansion type house. Very few baby boomers grew up in giant houses and some how most got along just fine. 125k will buy a decent house in midwest cities such as Omaha, Des Moines or Wichita. In small towns outside the metro of say Omaha, one could get a house for much less. For some, the small town schools and commute is worth it. Geez I hate this sheep like materialistic obsession people have.
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