Humanly possible for a mid 20s couple to afford to buy? (New York: for sale, real estate market)

[woLF2078]

I live in fleetwood close to the train station which is a great neigborhood and you guys should be able to get a condo for decent price... Dont forget about mothly tickets if you work in Manhattan.. Transportation runs me about 250 a month since I use the metro cards too

[znycgirl]

I have mixed feelings on the subject.

First: I don't really believe that everyone necessarily should be able to BUY a house/condo. I highly believe in renting & saving....and I think that many (including myself) have forgotten how to save. To be able to afford to make mortgage payments, my parents turned to washable diapers when I was a baby...those stories were fun. BTW: we were "upper" middle class: my defn: middle class salaries with 2 parents working.

However, now that we are in our young 30s, and have great salaries (similar to those discussed previously), we are looking for our first home. And yes...with property taxes, it's going to be hard to make payments on that "starter house" (also a concept I don't like). We qualify for more mortgage than we want. Our goal: find the right one for the right amount that we can live in beyond "starter" & save more money so that we don't end up paying quite so much interest.

My advice: if you buy a condo (a coop is cheaper, but the maintenance fees are astronomical), get one in an area like White Plains that is young & convenient (walkable) to the express train. You can always rent it out if you move up or have kids. Think of things as a 10 yr time period...

[woLF2078]

Originally Posted by znycgirl

I have mixed feelings on the subject.

First: I don't really believe that everyone necessarily should be able to BUY a house/condo. I highly believe in renting & saving....and I think that many (including myself) have forgotten how to save. To be able to afford to make mortgage payments, my parents turned to washable diapers when I was a baby...those stories were fun. BTW: we were "upper" middle class: my defn: middle class salaries with 2 parents working.

However, now that we are in our young 30s, and have great salaries (similar to those discussed previously), we are looking for our first home. And yes...with property taxes, it's going to be hard to make payments on that "starter house" (also a concept I don't like). We qualify for more mortgage than we want. Our goal: find the right one for the right amount that we can live in beyond "starter" & save more money so that we don't end up paying quite so much interest.

My advice: if you buy a condo (a coop is cheaper, but the maintenance fees are astronomical), get one in an area like White Plains that is young & convenient (walkable) to the express train. You can always rent it out if you move up or have kids. Think of things as a 10 yr time period...

you are right about maintenance fees.. its like paying rent... But Coops are the best way to go

[BonoBD93]

My first post was obviously way too dramatic. It was intended to be that way just to make a point. The sarcasm was just to make people realize how absurd it is in this area. Yes, I aspire to someday have a 750k home. However, I don't feel that I should be forced into a position where I feel that I would be overextending myself to get into a starter home.

To be fair, I can live in a 2 bedroom condo in White Plains for 600k and be ok. However, my wife and I have an office at home and also want children. When I say work from home I am talking about more than just a desk and computer. I have lots of equipment I need for work and have to keep it in my bedroom currently. It is fundamentally wrong that with making so much money, and yes greater than 200k is so much money, that you can't hope to have 2 children if you earn less.


I admit that the political ripping was probably uncalled for in this forum. However, it was to illustrate the point that young people looking to get in this market are having to think about crazy scenarios that may put them over the edge in combination with the high taxes and property values. I do think it is disgusting that I would have to pay my neighbor who got into their current 1.2 million dollar home, that was only 500k 7 years ago, my tax money. But the Rep vs Dem conversation is for another day.

Spread the wealth my ass. Everyone of my dollars earned already gets taxed at 42%. If you want anymore of my $ you better give me one and a half of your bedrooms and also split your land in half so we can both have 2.5 bedrooms. I work greater than 70 hours a week and closer to 85 just to get a STARTER home. Redistribute that!

[SLP247]

Originally Posted by BonoBD93

My first post was obviously way too dramatic. It was intended to be that way just to make a point. The sarcasm was just to make people realize how absurd it is in this area. Yes, I aspire to someday have a 750k home. However, I don't feel that I should be forced into a position where I feel that I would be overextending myself to get into a starter home.

Who is forcing you?

Originally Posted by BonoBD93

To be fair, I can live in a 2 bedroom condo in White Plains for 600k and be ok. However, my wife and I have an office at home and also want children. When I say work from home I am talking about more than just a desk and computer. I have lots of equipment I need for work and have to keep it in my bedroom currently. It is fundamentally wrong that with making so much money, and yes greater than 200k is so much money, that you can't hope to have 2 children if you earn less.

I know plenty of people that make far less and have more than 2 children

Originally Posted by BonoBD93

I admit that the political ripping was probably uncalled for in this forum. However, it was to illustrate the point that young people looking to get in this market are having to think about crazy scenarios that may put them over the edge in combination with the high taxes and property values. I do think it is disgusting that I would have to pay my neighbor who got into their current 1.2 million dollar home, that was only 500k 7 years ago, my tax money. But the Rep vs Dem conversation is for another day.

Stop looking at the negative. First off: Homes are at a record 4 year low! Why do you think there are so many Short Sales right now? People who bought their homes just two years ago have seen their homes value deprecate.

Go back to circa 1900 and run the numbers all the way up till today. Real Estate is cyclical! It goes up and comes down, then goes up some more and back down a bit. We just finished a HUGE run up in real estate prices and we are seeing some of that trimmed off. For the record: My parents bought their home, currently valued at $370k for $17k back in 1964! My last car cost $30k. That is Inflation! Your neighbors who bought their homes for $500k, they probable took out equity loans on them and currently owe 1.1 mil!

Listen, I am not sure who, and it was not in this thread, told you that Young People have to pay their dues, but EVERYONE pays their dues. No One is responsible for the housing market getting so hot. Buyers were fighting for homes and would out bid each other, banks wanted in and did anything to make a loan, sellers capitalized on the market and sold high, then also turned around and had to buy high!

This is the way of the market. Buy a house when you are financially ready to, not before and not because the market is hot or cold. Sell when you need to. Only investors should be riding the housing waves.

Originally Posted by BonoBD93

Spread the wealth my ass. Everyone of my dollars earned already gets taxed at 42%. If you want anymore of my $ you better give me one and a half of your bedrooms and also split your land in half so we can both have 2.5 bedrooms. I work greater than 70 hours a week and closer to 85 just to get a STARTER home. Redistribute that!

You will not be spending as much on taxes if you own a home. I know this remark is toward some political statement, but in all honestly, politics did not put us here. We were under both Republican and then Democratic and then Republican leadership during the majority of the housing boom. If you look back to the 80's and a short period in the 90's and even a blip after 9-11, there were some fall outs. A number of huge developments went belly up in the 80's! Smart investors jumped in and made a nice fortune in the early 90's picking up the mess.

I understand you work long hours, but that is your choice. There are any number of Affordable places to live including in Manhattan that someone making $40k a year could buy. All I can tell you is to stop looking at Zip Codes and start looking at Value. You might have to commute a bit further to get the house you want or you can commute less and get the zip code you want.

I had to move North so I can afford the property I want. I know many people that commute 2 hours EACH WAY to and from work just so they can afford a house. Thats 4 hours per day they are not getting paid for! It is what we do to make it work.

So find out what you can afford and then get yourself a good agent to research areas that will meet the criteria of what you are looking for. No Starter Home needs to cost $700k! I do know people who have bought first homes in that price range and all I can say is Good for Them! I can't afford that and I know many others who will never afford that.

[SLP247]

Originally Posted by wolfgang1

Bono-

I like your jaded attitude. Although you two make about 50k more a year than we do, 150k a year should be enough to live comfortably - not scrape by in a 1 bedroom apartment.

I think as baby boomers retire and take their money to florida, these areas are in for a very rude awakening. When the wealth (read: people that got in early) is gone, who's going to buy these artificially inflated homes? Personally, i will not buy a 750k house where the house itself is worth 150k. Is the property really that valuable? Or the better question is, what happened in the past 10 years that made the property 2-3x as valuable? Did they pave the streets with gold?

You are looking at short term. 10 years is a typical Real Estate Cycle. Historically, since the Great Depression, homes have always appreciated in value over a 10 year period. This is not Artificially Inflated Prices. There is a famous quote " Buy Land, they are not making any more of that stuff" Its true and because of such, land, especially improved land, does increase in value. What made a property (house) appreciate $50k or more per year? DEMAND! Had nothing to do with the people who lived there, had nothing to do with the banks. BUYERS were fighting over properties and started to Out Bid each other. This and THIS alone pushed home prices North faster than Appraisers could keep up with it. Once demand was filled and inventory levels began to increase, prices started to stabilize and then drop.

There are still many areas in NY where homes are continuing to appreciate and demand is out pacing inventory.

It is hard to believe, but 10 years ago, salaries being offered to college graduates were unheard of. 10 years before that and no one could imagine that anyone coming out of college could earn that much money.

Same applies to housing.

Yes, 10 years from now, todays buyers will have positive equity in their homes. even people who bought 5 years ago still have equity if they did not already pull it out.

Originally Posted by wolfgang1

If 25-26 year olds making 150-200k a year can't do it, the ones making half as much certainly can't.

I couldnt agree more about our elders saying we need to pay our dues. I started mowing lawns at 13. By 16, I was working 60+ hours a week BACK THEN (only during the summer of course), making 500-600 a week sometimes... big bucks for a 10th grader. I worked hard through college to land a descent job. I'm working hard for my professional certs. I work hard after I got the job to get promoted--- well, you get the point.

We're not looking for a handout. We just want a roof over our heads to call home without going into bankruptcy.

Glad i'm not alone. I don't think enough people our age voice an opinion on this topic.

I think this is called Entitlement and its a very dangerous attitude to take as there is no satisfying it. Never before in history of our country have so many young people lived so well. Our parents and our parents parents struggled just the same as many are struggling now. It is not an age issue.

Many of the housing laws on the books today were put in place to stop over crowding that occurred when our grandparents or their grandparents would live 4 to 5 and even more in a one bedroom apartment because thats all they can afford.

If you really want to buy a house, regardless of the type, it is possible and now is a great time to buy because of the housing prices coming down to levels not seen in a few years.

[BonoBD93]

Hahah. All this quality info from a real estate agent. The same person who profits more when prices are ... what's the word... Hyper-inflated or Artificially inflated. The clinton administration had a bright idea... everyone deserves a home no matter how little money they have. Banks rolled with this while it was profitable and now tax payer money is bailing them out. So what is the whole idea about paying your dues and everyone struggles. The only people that are paying anything are the responsible ones. Not that you care because the more people buy, whether they can afford it or not, the more money you make.

Also your entire example of your parents house in relation to the car is very weak. One cars depreciate unless rare collectables. Secondly, if compared to the housing market your 30k car that you bought in 2000 that cost 30k would have appreciated 470% by 2005. All it would be is older and in worse condition. That car would be 141k.

As for the laws for overcrowding that your grandparents saw being put in to place, you should have considered our predicament as 20somethings. We are in the same position. If we reproduced like your grandparents we would be that many to a one bedroom now. So we are being FORCED if we want children.

Nothing has changed because the market is so high. Also, most people that would be in your grandparents generation probably did not have college educations and may have been 1st generation immigrants. I came from the number 3 universty in the nation so yeah, I think i should be able to earn more money than most college grads. However, everyone has the chance to become ultra wealthy no matter what education level someone is at. So your point again is irrelevant. Also, realestate agents dont need any degree at all and they still can make more than 250k.

Finally, political intervention did allow for this bubble to inflate to such high levels. Obviously they did not single handedly do this but they stuck their noses into free enterprise and limited the risk, the ultimate gut-check which eliminates some bad decision making.(cant completely eliminate it).

To the point of neighbors and their equity and money. Statistical public data shows that the median income of the town I am looking to buy in is 161k and the median home price is 1.4M. I am making over 200k and really can only afford a 750k house. I wouldn't even come close to qualifying for a 1.4M home even though I have greater than 20% down and in the top 3% of all credit scores. With the new taxation plan that obama has presented it would mean that my income would be taxed because I am at his level that qualifies for the "grab your ankles and hold your breath" tax. Those neighbors who earn under 200k qualify for the tax breaks and/or possible goverment bailouts would be recieving my money even though their homes exceed the value of mine by a multiple of 2. So yeah this is a political problem that can be made even worse.

Finally, it is NOT and ENTITLEMENT issue. Most of us don't mind working the long hours or even the commute. I actually love what I do which I feel very fortunate for having my position. I am the last person you can ever call lazy. I don't feel like I deserve the $1.4M home. I don't think that it is wrong that people can afford 4 of those homes throughout the country. I believe that everyone should be given the chance to realize the same dream if they are able to make it. I just want to work hard and keep what I earn. I do feel entitled to keep my own money and not give it to the person with the lower income that lives in the bigger, nicer, more expensive home on the hill.

You are the older people I was referencing earlier. I probably have a better education and came from less. My mom was a single parent with 3 children who earned less than 25k a year. You have to remember that a large amount of 20 year old employees are very educated,very driven, work harder, and work smarter than the generation before us. We just want the same opportunity that was afforded to other generations while not having to put ourselves at risk at over extending ourselves like your generation did.

Please note: you may be smarter, harder working, better educated, and earn more money personally. Much of this was directed in general to people who complain about 20 somethings wanting a house, yard, and schools for their families. Don't worry when all the older people who think they are high and mighty with their over inflated home values need our help we can give you the same response. You have too much of a sense of ENTITLEMENT. Deal with government funded nursing homes.

[bmwguydc]

One thing to remember is that many parts of Westchester with good schools have always outpaced other areas in terms of price. This spans generations and is nothing new, just the numbers are higher. Now, what has happened is that formerly less expensive areas have seen inflated prices as well, but they don't have the school districts and/or town services to warrant the higher prices. The Village of Bronxville, Scarsdale, Katonah, Rye, etc., for example, have never been bastions of inexpensive starter homes that were suddenly inflated as there was always a premium for houses in these areas, even the quaint starter homes on in-town lots.

It's true that there were places where one could buy an affordable starter home not that long ago, but at the same time, a similar house in one of the more desired school districts would have been significantly more expensive. As an example, someone who has done a good deal of work for various members of my family relocated to Lewisboro from Yonkers in the 1980s, leaving a house twice the size and 2/3 the price of what they bought, precisely for the Katonah-Lewisboro School district.

Add to that the stringent land use regulations in certain towns that border the reservoirs, and you have a recipe for much higher prices that can be sustained by a lack of development opportunity. This is especially true in many parts of Northern Westchester and Putnam, where land use is regulated by its environmental impact so that it is difficult to have new larger scale residential developments to increase the supply of houses in a given municipality.

[SLP247]

@bmwguydc,

You are very correct in all your statements. People, mostly people who moved up here from the city, fought to preserve Open Space. They fought and in most cases They Won. Westchester, most of Putnam and some of Dutchess is SO Convenient to a NYC job, especially those on Wall St that Buyers have always fought for homes in this area. That is why there have been Building Boom after Building Boom, even if some of those Booms went BUST. Think 80's and Today.

@BonoBD93 So while Wall Street tycoons (most in their 20's & 30's) made Millions per year and flocked to Pricey Westchester neighborhoods. Is was these and others like them that caused prices to Skyrocket. I nor any other Realtor, do not set asking prices, we do not dictate to a Buyer what they should offer. We simply negotiate, facilitate and execute a transaction. We provide Sellers and Buyers with up to the minute, statistical information. This same information is available to Appraisers and ultimately the public in time.

If you have not been taught this in your college education, Price and Demand are two fundamentals in our economy. Works for Stocks, Works for Housing, Works for Cars and everything else. Why are prices SO HIGH in CERTAIN parts ( not all) of Westchester? DEMAND IS HIGH. Same as certain neighborhoods in Manhattan, Long Island and areas in NJ, Ct, Mass, etc.

Visit e-bay. The more people want something, the higher the price that will be paid.

I can not disagree with you that some of those 1.4 million dollar homes are outrageous and I would be a fool to say that I would not want to sell one of them, which I never have. But, by the same reasons I can not generalize and say ALL 20 somethings are lazy and demanding (personally I commend you on your early success, I know far too many 20 somethings that are not applying their selves even 1/4 of what you are doing) You can not generalize and lump all Realtors into the same category and possibly blame us as a group for the unbelievable actions of buyers. I never suggested one buyer to pay Over Asking for a home, but they did. I never told a single buyer to buy out of their price range (even though I would have made more) THANK GOD, my clients didn't! I do not have a single client loosing a home today! Even as recent as this past week, I took a buyer that would have been buying a higher priced home (we had an A/O on it) and convinced him to look at a less expensive house! Thats a $2,000 hit on my Income! Why did I do that, because I represent HIM! Not the buyer, not the Bank, who told him he was approved for $400k when in reality he can only afford $300k. That my friend is what a Responsible Real Estate Agent does.

So please, I don't know what you do for a living, but if you want to Buy a Home, speak to a good Realtor, Speak to your CPA and speak to your bank and TOGETHER we can help you achieve this dream of yours. I can promise you that in 10 years, the home prices today will seem like huge bargains. Even home prices of just 3 years ago will seem like a bargain. Homes have ALWAYS appreciated over a 10 year period.

IT IS a Great Time to buy because prices are very low and there are bargains galore out there. There are also Sellers who must be living under a rock and do not realize that its a Buyers Market right now.

[BonoBD93]

2 things... you got the point. What I was asking is that 20 somethings not be generalized like you were doing. It has nothing to do with if we have to serve our time or pay our dues. It disgusts me as much as you when I see young westchester people wearing $200 jeans, $2000 purses, $500 shoes, $3000 watches, etc complaining. However, I do want people to recognize that there are young deserving people who have sacraficed, saved, and made wise decisions to promote their future and do not deserve to be treated unfairly like I have been experiencing. I have asked for advice and help on several occasions where I was told that I didn't deserve it.

I get the sense that you feel the same way about being generalized as I do based upon the expample that you gave about being a realator who was different from the rest because you didn't practice the same suspect tactics as those that were preying on people in denial (not unsuspecting because I believe these people really knew what they could and could not afford)

I comend bmwguy because he has been very helpful and unbiased in all his responses on a variety of posts. I wish more people came to this site without bias.

Also, thanks for the econ 101 lesson on the law of supply and demand but I already have a BS where it was one of my majors. From my perspective the supply of homes is quite high right now but the price stays fixed in the area. In this economy with inflation trending upward that means the cost is even higher than it previously was 8 months ago. If the prices stay at this fixed point for much longer that would be stagflation. If there is a sense of entitlement it is still stuck with the sellers.

PS: this was all in good fun just to let off some steam. Also, I do plan on using a realestate agent when purchasing my next home. Also it was fun because you afforded me the opportunity to excercise the art of hyperbole.