Quote:
Originally Posted by markjames68
Putting down 30% worked out well when you could buy a house that cost around 2.5x the average annual salary. That ratio is now 4:1 or higher.
Unless you are able to live at home for an extended period or get gifted the down payment it's become increasingly difficult to save even 20% for new homebuyers.
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Absolutely, no argument there, but the current state of affairs is why so many people end up with their finances balanced on the proverbial head of a pin via overextension. And/or why they find themselves in a perpetual cycle of debt.
For example my son was able to put 40% down on his house about a decade ago when he came out of college which means he's recently started to make serious inroads on the principal of his 20-year mortgage. In ten years he'd have owned it free and clear before age 50, a very good place to be in financially. But he and DIL are now looking to upgrade to a waterfront house that will knock them back down to probably 25% equity and saddle them with a large 30- or 35-year note. To me that's foolish (esp now that they have a child who will need college in 18 years) but hey it's their life/their money, not mine.