How do people afford $800k - $1.2 million homes? (Houston, Dallas: neighborhood, to buy)

[G Grasshopper]

Yes. When my son was in high school there was a small poster some student (apparently) had put up that said "Live simply, that others may simply live." Nice thought, but I used to smile at the naivete of whoever put it up. American culture is nothing but messages of consumption and having more, and the messages of simplicity are few and far between. I respect people who hold down their consumption and who live with awareness but most people don't even think about the long term effects of Americans having - and wanting - so much. (Should we all take another look at "The Story of Stuff?)

[austin-steve]

Conspicuous consumption is an insidious thing. I think the best combination for building wealth is the ability to earn beyond one's means, and to have a genuine love of frugality while still allowing some occasional splurges.

I just bought a new car. I'll have two driving teenagers home this summer and we have a minivan and my truck. We need a 3rd and I wanted something nice for driving clients in.

I wanted an Audi or BMW and I can afford one. I allowed myself to salivate over that idea for about a day. Then sensibility kicked in and I started looking at Honda Acoord, Toyota, etc. I ended up with a Hyundai Sonata Limited. Honest to god I felt a bit of buyer's remorse at first, like I'm denying myself the better things in life that I've earned, but the Sonata is an excellent vehicle with luxury features you wouldn't expect in a car that was $29K out the door.

My wife had to tell me to stop bragging about my $7 Levis that I use to score regularly at the Oak Hill Goodwill. I was, and still am, genuinely proud of purchases like that though. As well as the Hyundai.

We live in Westlake but in a modest, practical home. Many of my friends have high end places, and we once did also, but I don't envy that or want it anymore. It is in fact a headache and we love our small home now that we've acclimated to functioning in the smaller space.

I think an $800K home is fine for those for whom the ownership cost is a proper proportion of income (25% or less), and who has all other investment and savings in proper order.

Steve

[ognend]

Originally Posted by austin-steve

I think an $800K home is fine for those for whom the ownership cost is a proper proportion of income (25% or less), and who has all other investment and savings in proper order.

I don't - but it's not like I can do anything about it and finally, who the hell cares what I think anyways?

[stan4]

Then again, while the most precious things in life aren't things you can buy, there is nothing wrong with deriving joy from comfort or convenience or excitement.

[ScoPro]

I recall in the '60s & '70s that the "rule of thumb" ratio for purchasing a house was 2.5X one's gross annual income.

If you grossed $10,000 annually, then restrict your house purchase to $25,000 or less.

Of course any credit payments, usually a car loan, would be factored in. But I think there was very little credit card debt in those days compared to present times. Personally, we didn't get a Master Card until the early '90s.

[austin-steve]

Originally Posted by ognend

I don't - but it's not like I can do anything about it and finally, who the hell cares what I think anyways?

But why don't you? Suppose a talented developer, working for a series of startups, has amassed a high net worth (multi-millions) from stocks and IPOs and earns a solid $250K annual salary while still in mid-30s?

And let's say she can pay 50% down (or all cash if she wanted) on a $1M home and has no problem with the monthly ownership costs. At some level, a $1M home for this individual is actually frugal. And let's say because of all the moving around the past 15 years, she's never even owned a home and always lived in apartments.

Why should this hypothetical individual feel guilty and reluctant to enjoy the fruits of her talents and contributions?

Steve

[ognend]

Originally Posted by austin-steve

But why don't you? Suppose a talented developer, working for a series of startups, has amassed a high net worth (multi-millions) from stocks and IPOs and earns a solid $250K annual salary while still in mid-30s?

And let's say she can pay 50% down (or all cash if she wanted) on a $1M home and has no problem with the monthly ownership costs. At some level, a $1M home for this individual is actually frugal. And let's say because of all the moving around the past 15 years, she's never even owned a home and always lived in apartments.

Why should this hypothetical individual feel guilty and reluctant to enjoy the fruits of her talents and contributions?

Steve

'Cause there are bigger things than "YOU" (or "me")

[curious1111]

Seems this thread has gone a little into new territory, deeper topic now, but I will play.

My father had an "outhouse" on his farm (no bathroom inside the house) until he went to college, the first in our family to do so. Then 30 yr military career, never made much money. Mother teacher for 40 yrs. Again, not much money. But so much richness in our family and in our lives. My first job with a post graduate degree was $35,760. I remember that number very well. First house was $145,000. Remember that number well also. We have had 3 houses, have paid off each along the way, and have rolled that equity into something more expensive each time. Not just for the sake of spending more. For location reasons, school reasons, space reasons, etc. Today, we are in a $1MM house. It is a conservative purchase for us. We put a lot down, and plan to have our home paid off in 10 yrs or less. It's actually nothing fancy. But it is on an acre in Rollingwood in the Eanes ISD walkable to Zilker and 10 minutes from anything downtown, so we paid for location, size of lot, school, etc.

Should we be criticized? If so, please tell me why. And by the way, I dont think our story is unusual. If each generation works hard, does a little better, lives below their means, stays focused most on what really matters (not money) gives freely to charity, saves appropriately, etc. then why does it matter if they buy a $1MM or $2MM house, if they can afford it.

[austin-steve]

Originally Posted by curious1111

...
Should we be criticized?...

No, not at all. It use to be that a story like yours is one that would inspire others to work harder and achieve for themselves whatever is possible. You are the example of the American Dream.

Today, you're held up by some (not meaning to veer into politics, but it's the reality of it) as "rich" people who don't pay your "fair share" and have more than you deserve.

Something happened along the way, to how we view success and the people who achieve it. I'm very concerned about this and the mindset that is infecting those who might otherwise be motivated to start climbing there own ladder. Instead, they are focused on how to knock you down from yours by criticizing and complaining and making value judgments.

Thanks for sharing your story. Mine is similar. Military father (32 years in Navy), frugal lower middle class upbringing in a small 900 sqft home in San diego. Same home from 1965 till 1981. Scratched my way up from dirt poor broke with nothing at all starting in the late 1980s (after I got all my partying out of my system and returned to college). Entrepreneurial minded, my wife and I, we work for ourselves, pay 100% of all our taxes (no emplloyer sharing, helping as we are self-employed), self-employment health insurance, etc.

Still, because of our income bracket and accrued wealth through real estate, the "not paying their fair share" finger is pointed at us as well. And I don't feel "rich" at all. Just careful with money and focused on building a safe, comfortable retirement and hopefully leaving something to pass on to kids and grandkids.

Should we be criticized?

Steve

[ognend]

Originally Posted by curious1111

Seems this thread has gone a little into new territory, deeper topic now, but I will play.

My father had an "outhouse" on his farm (no bathroom inside the house) until he went to college, the first in our family to do so. Then 30 yr military career, never made much money. Mother teacher for 40 yrs. Again, not much money. But so much richness in our family and in our lives. My first job with a post graduate degree was $35,760. I remember that number very well. First house was $145,000. Remember that number well also. We have had 3 houses, have paid off each along the way, and have rolled that equity into something more expensive each time. Not just for the sake of spending more. For location reasons, school reasons, space reasons, etc. Today, we are in a $1MM house. It is a conservative purchase for us. We put a lot down, and plan to have our home paid off in 10 yrs or less. It's actually nothing fancy. But it is on an acre in Rollingwood in the Eanes ISD walkable to Zilker and 10 minutes from anything downtown, so we paid for location, size of lot, school, etc.

Should we be criticized? If so, please tell me why. And by the way, I dont think our story is unusual. If each generation works hard, does a little better, lives below their means, stays focused most on what really matters (not money) gives freely to charity, saves appropriately, etc. then why does it matter if they buy a $1MM or $2MM house, if they can afford it.

That all depends on the agenda of the person doing the criticizing.

Just being "rich" is not a bad or a good thing, it just "is". What you do with the money depends on the angle. If I were rich and you were rich and I used my money to feed the poor every day and you used yours to buy a $1M home - am I a better "rich" person than you?

In any case, you worked hard and you bought a nice house, good for you!

I worked hard too, I used to make tons of money and I decided that was not for me. I left the job (everyone thought I was crazy, including family) but it was my decision. I decided that I don't like what the majority of rich people do with their money and what effect that has on the planet, resources etc.

I have travelled extensively across the country and there are many beautiful areas where virgin land had been destroyed by the rich to build homes they will visit twice a year (heck, it happens right here in Wimberley!). So, you being rich with only one home and person X being rich with two homes, maybe you can criticize him but, he is not doing anything wrong according to HIS standards.

So, it is really in the eye of the beholder

OD