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The reality is housing can not stay at these levels with these interest rates. There simply wont be any demand regardless of the supply.
I bought in 2015 with 10% down ($40k) PMI was eliminated the following year and the home all in with taxes and insurance costs me $2,500 a month. To buy my house today with 10% down I'd have to come up with $65k and the monthly payment would be around $4,600.
People got caught up in the buying frenzy. It has to come back down to earth.
I bought my first home when interest rates were 13% and that was because my wife worked in a bank and we got 2% discount.
Reality = housing affordability. Price vs earnings still applies. I would never buy a property as a new home owner if I had to pay a mortgage+insurance+taxes more than 33% of my NET income.
I bought my first home when interest rates were 13% and that was because my wife worked in a bank and we got 2% discount.
Reality = housing affordability. Price vs earnings still applies. I would never buy a property as a new home owner if I had to pay a mortgage+insurance+taxes more than 33% of my NET income.
So, if your house payment is $5,000, then you have to clear $15k per month. Cool.
What cha gonna do with the other $10,000 per month? Buy cars? Travel to Europe a coupla times a month? Buy a Lear? Have cable? (LOL!) Hookers? Blow?
Fact is, month after month after month, eventually, you'll likely run out of stuff to buy/get. (I was just kidding about the "hookers & blow", btw.)
So, if your house payment is $5,000, then you have to clear $15k per month. Cool.
What cha gonna do with the other $10,000 per month? Buy cars? Travel to Europe a coupla times a month? Buy a Lear? Have cable? (LOL!) Hookers? Blow?
Fact is, month after month after month, eventually, you'll likely run out of stuff to buy/get. (I was just kidding about the "hookers & blow", btw.)
This has been the gold standard for buying a home that's affordable... and you're not using real numbers.
Assumption 20% down and this maybe the hardest thing to achieve in todays world.
Combined salary $60K minus taxes = $48K divided by 3 (33%)= $16K divided by 12 months = $1334 for mortgage, taxes and insurance, that doesn't by much of a house these days and as a result young people rent.
This has been the gold standard for buying a home that's affordable... and you're not using real numbers.
Actually, yes. I am using real numbers. There's tons of people making $15k per month. Heck, some people make A LOT more than that in a day. And yes, they're everywhere. [QOUTE]
Assumption 20% down and this maybe the hardest thing to achieve in todays world. [/quote] Yup, that's why I bought my kid a house, back in 2011. (I bought it for $315, she sold in Feb for $830.) Now lives mortgage free in a new house in Ideeho. And yes, she's a millennial. Glad I don't have 6 kids! LOL! (But, if I did, I'd hook them all up.)
Quote:
Combined salary $60K minus taxes = $48K divided by 3 (33%)= $16K divided by 12 months = $1334 for mortgage, taxes and insurance, that doesn't by much of a house these days and as a result young people rent.
Ok, I see the problem now. I'm seeing millennials as people that can achieve great prosperity.
Pulling down $60K is poverty level income, btw.
$60k barely covers the property tax and insurance (especially in Tenn!)
Actually, yes. I am using real numbers. There's tons of people making $15k per month. Heck, some people make A LOT more than that in a day. And yes, they're everywhere. [QOUTE]
Assumption 20% down and this maybe the hardest thing to achieve in todays world.
Yup, that's why I bought my kid a house, back in 2011. (I bought it for $315, she sold in Feb for $830.) Now lives mortgage free in a new house in Ideeho. And yes, she's a millennial. Glad I don't have 6 kids! LOL! (But, if I did, I'd hook them all up.) Ok, I see the problem now. I'm seeing millennials as people that can achieve great prosperity.
Pulling down $60K is poverty level income, btw.
$60k barely covers the property tax and insurance (especially in Tenn!) [/quote]
Tons of people = <15%
Medium income for a couple is $70K and average is lower.
I don't live in TN, but have a second home there. I also have 4 adult children and one who makes the highest wage, will never be able to buy a home where she lives... California so she rents.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,376 posts, read 8,619,613 times
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Quote:
Originally Posted by Dave_n_Tenn
I bought my first home when interest rates were 13% and that was because my wife worked in a bank and we got 2% discount.
Reality = housing affordability. Price vs earnings still applies. I would never buy a property as a new home owner if I had to pay a mortgage+insurance+taxes more than 33% of my NET income.
In parts of California you would be a renter the rest of your life.
The reality of having the home be well beyond 33% is real. It’s been like that for so long people there think it’s normal.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,376 posts, read 8,619,613 times
Reputation: 16736
Quote:
Originally Posted by Fedupwiththis
The reality is housing can not stay at these levels with these interest rates. There simply wont be any demand regardless of the supply.
I bought in 2015 with 10% down ($40k) PMI was eliminated the following year and the home all in with taxes and insurance costs me $2,500 a month. To buy my house today with 10% down I'd have to come up with $65k and the monthly payment would be around $4,600.
People got caught up in the buying frenzy. It has to come back down to earth.
Last time someone told me it has to come back down they advised that I wait.
I could have bought at 300k
I waited years for it to come back down. Never did. Eventually I said you guys don’t know anything and bought at 600k
Today even with the price drops it’s over 1,400,000.
It may come down some, but not back down to earth.
So, if your house payment is $5,000, then you have to clear $15k per month. Cool.
What cha gonna do with the other $10,000 per month? ...
It's called saving and investing. That after all is the principal reason (pun intended) for why we have rent vs. buy debate in the first place!
If the entirety of income that didn't go to housing or to other essential-expenses, went instead to frills, then for purposes of long-term wealth accumulation, it would doubtless be better to buy than to rent. It would also be better to buy, the priciest thing for which one could qualify.
If instead the available cash goes into investment - not necessarily stocks, but maybe even commercial real-estate or rentals - then the ideal is to lower one's own cost of housing. Sometimes this is via owner-occupied real estate. Other times it's by renting a small apartment.
A situation that one encounters in the "early retirement" community is the 4-4-2 system:
* 40% of one's gross income goes to income-taxes.
* 40% of the gross goes to savings.
* 20% remains for ALL spending.
So if you earn $15K/month gross, $6000 you never see because it goes into taxes. Another $6000 monthly you save. And the final $3000/month is your spending allowance (rent, food, car, health insurance, phone, Starbucks, tattoos, beer, piercings and pot).
In parts of California you would be a renter the rest of your life.
The reality of having the home be well beyond 33% is real. It’s been like that for so long people there think it’s normal.
My daughter lives in CA (San Ramon)...and makes well into six figures and rents.
Medium income for a couple is $70K and average is lower.
$70 is poverty level.
Quote:
I don't live in TN, but have a second home there. I also have 4 adult children and one who makes the highest wage, will never be able to buy a home where she lives... California so she rents.
Silly me, I looked at your name.
Help your kids to buy their homes, Dave!
C'mon, bust open that wallet of yours!
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