What's more expensive? Your home or your car? (Dallas, Mercedes: low income, real estate)

[DallasG]

I was reading about some love triangle in Princeton which raised a general question, why would some one live in a $120K house and drive a $200K Lamborghini? I'm not saying wether it's wrong or right but wondering how do you justify it if you have other obligations as well? Everyone likes fancy cars but even ones who can, hardly ever justify it to the voice of reason in our heads. Of course, I'm talking about us 99%, not top 1% who can and do buy expensive toys.

[dirtydan57]

Because after buying the Lambo all they can afford is a $120k house? Just sayin'...

[MckinneyOwnr]

Generally speaking, it's poorer people who have cars worth more than the home they own, and in a lot cases, they are renting and don't own a home at all.

It used to be a thing here in Dallas for a lot of low income people on welfare assistance to lease Escalades. I used to have a condo downtown, and next to it was an apartment complex that was horribly run down and cheap to live in, but you'd see quite a few new Escalades, Hummer H2/3's, Excursions, etc. $50k+ vehicles being driven by people on food stamps.

I'm a car guy and for myself, the most equity I've had in cars vs my house value was probably about 50%... but that was split among 3 cars. Although if you count actual equity, the cars were paid off, and the equity in our house was probably about the same as the value of the three cars.

Now though, I think we're at about 20% of the value of our home.

[Pagusas]

oh wow, I never really thought about it but alot of employees I see in the parking lot who are working entry level positions drive BMW's, Audis and such. I know the vast majority of them rent. Both my wife and I make decent money and still drive 25k cars (Sonata for me, Escape for her) both 2013 models. I couldn't imagine owning a car worth more than my house, but it does seem to be a trend around Dallas. Honestly, even as our incomes increase I dont think I'll ever leave the 20-30k bracket of cars, I just have never seen a need for anything fancier in that regard. To many other places to put my money.

[taroberts]

Our 2 cars together are like a 1/5th of our home value. The most expensive car I would ever own would prob be the price of a entry level basic mobile home.

[bencronin04]

I'm a car guy, and one day I will probably own something stupid and exotic, but I'm going to echo what others have said. I've said it before, Dallas (especially the younger crowd), is full of a coined phrase "30K Millionaires". You see these young guys fresh out of school, or beginning in IT making 35K a year and driving new 328 BMWS, A4 Audis, C Class Mercedes, etc. It's just a way to peacock and show off. Fake it to you make it right? The vast majority of people, and we're talking probably 99.999% of people do not have vehicles worth more than their homes. I have heard of car payments being at or close to mortgage payments, but remember that's a 5 year note vs a 30 year note.

[TheOverdog]

I grew up in a small town, and plenty of people had vehicles that cost more than their house, because houses were $30k and real estate was less variable than in DFW and thought of more as an expense than an investment. Productive land or a useful vehicle was an investment, not your house.


Lots of places used to be that way.

[BigDGeek]

My car was worth about 10% of my home's value when I bought it (the car) last year. I'm sure with depreciation it's worth far less than that now.

(I drive a Prius.)

[froglipz]

People with all show and no go!

[EDS_]

Much like taroberts I'd peg the aggregate cost of our 5 cars, yea I know, at around 1/5 of our home's value.

My investment guy advices most people to keep the total cost of all cars at less than 6 mos. salary and better yet 3 mos. He tells guys with serious car hobbies, who aren't uber-millionaires, to keep the car costs to less than 1 year's salary.

Back to Lamborghinis one day a couple of years ago I was having an afternoon cocktail at a local joint......a lady maybe 70yo pulled up in a super beautiful convertible blue Lamborghini Gallardo. A few days later I saw her drive up in the Lambo followed by a guy - presumably I thought her husband - in a totally nondescript Chrysler. I asked the bartender about them........she drives the Lambo almost every day good weather, rain, slush etc. He refuses to ride in the Lambo under any circumstances so he drives the Chrysler.

I'm sure the grandkid conversations are awesome......."GRANDMA I have a date tonight can I borrow your Gallardo".