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Share your opinions in the poll. I for one consider expensive starting at $150k, this is 6 figures and a price point where middle class starts to have trouble affording. Explain your reasons. I know youll need about $60k gross annual salary to afford a $150k house without being house poor or needing "creative financing" The median salary here in Florida is $36k gross annual, that kind of salary is enough for a $75k house, maybe $100k if you have saved a big downpayment and/or have no other debts or payments. Some people are forced to share the house with another person and need two incomes in order to afford a house! Whatever happened to one "breadwinner" paying?
In a related thread, I had made a poll asking how much house you could afford and the majority of people voted for $50k, $75k or $100k with a smaller number of rich people voting for $200k, $250k and up. Therefore I believe most people would consider a house costing $100k or $150k and especially higher to be "expensive" since its not affordable for them.
Last edited by Need_affordable_home; 12-30-2006 at 05:26 AM..
Share your opinions in the poll. I for one consider expensive starting at $150k, this is 6 figures and a price point where middle class starts to have trouble affording. Explain your reasons. I know youll need about $60k gross annual salary to afford a $150k house without being house poor or needing "creative financing" The median salary here in Florida is $36k gross annual, that kind of salary is enough for a $75k house, maybe $100k if you have saved a big downpayment and/or have no other debts or payments. Some people are forced to share the house with another person and need two incomes in order to afford a house! Whatever happened to one "breadwinner" paying?
In a related thread, I had made a poll asking how much house you could afford and the majority of people voted for $50k, $75k or $100k with a smaller number of rich people voting for $200k, $250k and up. Therefore I believe most people would consider a house costing $100k or $150k and especially higher to be "expensive" since its not affordable for them.
Considering i sold my little 1.250 sq.ft home in Calif. for $650k, bought here for $304k @2,450 sq.ft on 3/4 of an acre i think thats cheap!
Last edited by Marka; 12-30-2006 at 07:46 AM..
Reason: repaired code
It's all relative, not just based on your income but also how much you have saved for a down payment, and/or how much you'll be selling your current home for. My grandparents sold their home a few years back. It was completely paid off. They bought a smaller home at a sheriff's sale, paid cash for 100% of the cost, and had money left over. It was cheap to them...but still expensive to me, because I'm a whole lot younger, don't have as much saved up as they do, and don't have a house to sell!
I think a house over $350k is expensive, and it's way more than my husband and I can afford. In a year or so, when we start house shopping, we'll be looking in the $125k-$175k range. I think for under $350k you can get a very nice house almost anywhere in the country. Probably metro CA and NY areas are the only exceptions.
I hear what you are saying about needing 2 incomes to afford a home. There's a couple good books out there on this very topic. For my husband and I, we are buying a home based on his income only (plus what we have saved). We plan to start a family in the next couple of years, and there is no way of knowing how much I'll be earning at that point, and whatever I might earn will probably go towards new expenses for the kids. Also, the risk with depending on 2 incomes is that if one person gets laid off, fired, etc., and doesn't find a new, equally paying job soon after, your financial stability is at risk. When you depend on only 1 income, if the main breadwinner loses his job, then you have 2 adults that can start job hunting right away. Plus ideally when the time comes that the kids are older and I can return to work full time and earn what I am worth, our income will far exceed our expenses, allowing us to save up more money for retirement (we're saving for retirement now but not as much as I'd like), college for the kids, and leisure.
You will want to spend no more than 2x what your husband makes because of all the other expenses. Assuming he makes $50k a year, dont spend more than $100k on a house. If you cant get a good house in a safe low crime neighboorhood at a price you can afford, consider relocating like I am. Lots of affordable houses in PA, WV and OH states.
You are right about it being all relative. If I win the lottery, I wouldnt even consider any house less than like half a million to be expensive. But with the little money I have, I consider even a $150k house expensive as all I can afford is about a third of that!
It's relative to the area general income level and price point. Also, every area has levels of housing quality, like older starter homes, then typical 3/2 homes about 1700sq. ft. from the 70's/early 80's, then more luxurious homes with long driveways, more exclusivity, more bedrooms, other architectural features that make it more custom or higher end. And, an old starter home in some cities that's 1200 sq. ft. can cost twice as much as a luxurious custom home on an acre of land in a cheaper area. The perception of the homes is probably not much different to an onlooker, but the prices are so drastically different that it makes where you are extremely important. And, if you live in a 'cheap' area, you don't see the advantage if you are native to that region as the affordability and prices are relative. It's only when you sell a home in an expensive area and then take that money into a cheaper area that you see the advantages, and they can be extreme.
I consider over $300,000 to be a more expensive home. I sold my Las Vegas home (here're pics):
for $410K in June of 05. I owed a bit more than $100K on the mortgage as I had made double payments and sent in bonus earnings on the principal over the years, plus, I'd put $42,000 down when I bought it originally. So my mortgage was low and the value had skyrocketed. That house in the San Francisco Bay Area or part of LA would have cost a million plus. In Missouri it would have been probably around $200/250K in town.
If I had purchased my next home here with a mortgage, I'd have been comfortable putting down a substantial amount and then buying a home in the $400K's here. That would be a luxurious McMansion with all the granite counters, stainless appliances, 1 acre or a 1/2 lot, gated neighborhood and 4000sq. ft., etc. and I wouldn't have considered that too much.
But, I wanted to pay cash and I wanted money left in the bank, so I considered anything above $230,000 expensive. It's a big difference buying a house with a mortgage and buying a house with cash in how you perceive affordability and cost. When I found it, my home cost $227,000. Getting that withdrawn from the bank in the form of a Cashiers Check, looking at the number, realizing that you're holding nearly a quarter million $ in your hot little hands and putting that into perspective in your head...well let me tell you..it makes an impact. I went to the closing and when I handed that check over, I gulped.
But, I own the house free and clear. I could have used a portion of it and then taken a mortgage and bought an ultra fancy home in a prestigious neighborhood. But, that wasn't my goal or desire. I didn't move to Missouri from Las Vegas just to get a bigger house with the same debt and worries that go with it. I wanted to buy a beautiful home and own it outright and have zero debt. I accomplished that.
So, affordability and perception of the expensiveness of a home really has to do with circumstances, location, what your intent is, whether you're buying the house with a mortgage, how much you have to put down, whether you're paying cash, what your plans are and how you've outlined your finances and financial future, etc.
Still.. even in expensive areas, it's hard for me to imagine paying $410,000 for the house I sold in Vegas. I would never have believed it would cost so much. I paid nowhere near that for it.
I have cousins in the Bay Area. One paid 1.7 million $ for her house in Alamo. It's now worth about $2.3 million. It's a 5 bed/5.5 bath 4600sq. ft house on an acre built in 2003 and she pays $20,000 a year in property taxes. My other cousin bought his house in the early 90's in Saratoga, CA. and paid around $400K. His house is valued now at $2.2 million. My other cousin (their brother), bought a 1700 sq. ft. house in San Ramon, CA. (these are all south bay and east bay areas near SF) and paid $300K and it's now worth $800K. The first house, the 4,600 sq. ft. home, would sell in an upscale neighborhood here in the Springfield, MO. area for $500K. Location is everything.
Good on you MoMark, I like that you were able to buy a house outright.
As for Needs question, like anything else, buying a new house, pen, dress, or an evening out, can you afford it, and is it what you value in life, are important considerations.
I like pens, the fountain pen kind. I pay more for them then most people pay for a pair of shoes, or a dinner out, but it is my choice and I value pens. More importantly I only buy them when I am flush!
If I was looking for a house, I'd ask myself what is my annual income, how much of that net income do I want to put out for a mortgage, plus related expenses, and give myself a top dollar--then look for houses within that price range. If I found one a little above that range, I might haggle or adjust my budget. But not too much so because in the end it is not worth going into debt for anything. And I know
Well I'd consider anything over $400,000-$500,000 expensive. I bought my townhome for a little less than $300,000 and it's worth right around $720,000-$730,000 at the moment. I guess I'm not too worried about the value since I don't plan on selling it. My mortgage is nearly paid off (and I'm 26 so I'm proud) and I have plenty of equity if I need it.
The doctor I go to has a beautiful home worth $4,000,000+ but he doesn't consider it expensive! Anything over $500,000 seems expensive ....but my home is perfect for me. Life is funny isn't it?
Speedy, way to go for you! You deserve to be proud of yourself.
We sold our last house in SoCal for 1.4 million. Then we bought a house for 600k free and clear in Ashland, Oregon.
When we had a Big Mortgage, 900k seemed to be in the lower ranges. For that money in Ventura County you get a large house that may be twenty years old or so and in need of updating. For 600k, you get a house that needs bulldozing.
It makes an enormous difference when you go from having a mortgage to buying with cash. Paying 600k in cash was expensive! 1.3 million with a mortgage would have been in our price range (with a salary). Crazy world.
Keep the posts comming! Wow some of you have gotten rich off sweet equity in CA! Doctor with a $4m house? He must have gotten it long ago for under a million, I seriously wonder who can afford one now. Even if I won the lotto(one guy did for $20m) I wouldnt be able to afford it. That $20m lotto becomes $7m after lump sum and taxes and I would run out of money in 10-20 years if I spend 4 of 7 million on a house. The property taxes, insurance, HOA, maintainence would eat me alive!
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) and I have plenty of equity if I need it.
! Anything over $500,000 seems expensive ....but my home is perfect for me
