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After graduating college, and looking to get a family started, it is totally beyond me how people manage to actually buy a house.
After calculating things out, it seems a family would have to be making in the neighborhood of $75,000 to afford a barebones house at around $150k. So once you deduct your basic living expenses, you're left with next to nothing to try to buy a house. Just to crunch a few numbers, would this seem like a reasonable (rough) estimate?
Home Ownership expenses
--------------------------
$4000/yr - Property Taxes - Rochester, NY area
$ 800/yr - Homeowners Insurance - NY average
Subtotal = $ 400/mo
Total before mortgage = $2120/mo
$150,000 30yr 6.0% fixed mortgage = $900/mo
So post-income tax, you'd have to be making in the neighborhood of $3000/mo just to EXIST (or around $50,000/yr pre-tax). And that's not even including 'extras' like emergency money (car trouble, appliances breaking, job loss), kids college, clothing, vacations, or whatever other expenses might crop up. Ugh.
Location: Mableton, GA USA (NW Atlanta suburb, 4 miles OTP)
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Quote:
Originally Posted by RowingMunkeyCU
After graduating college, and looking to get a family started, it is totally beyond me how people manage to actually buy a house.
Even though I got a decent-paying job as a programmer fairly quickly out of college, I didn't buy a house until I was 38. Before that, I lived in a 1-bedroom apartment, saved for my retirement, and also saved enough money in Roth IRAs and such for a future down payment on a house.
When I was finally ready to buy, I had the money I required, as well as a substantially larger income to help maintain things.
Getting married early (or living with someone else) can sometimes help because you often get two incomes to work with, but the additional person(s) also can result in additional expenses.
I don't know that many people in large metro areas who can actually afford to own a house just after getting out of college. Some can, but it's not the norm as far as I know.
I keep thinking... how the heck are my kids ever going to be able to afford a home ... especially in our area.
a lousy townhome averages around 250k or higher ... and as you put all the other expenses together .... I dont know how the "average" joe can afford anything really nice without major help from parents.
We are trying to get them off to a good start, no college bills, car paid for, but when you look at insurance, taxes, fuel costs ... etc ... then the mortgage.... hopefully they learn to live within their means... but it is scary.
We did it with help on the downpayment from the in-laws and cutting back on a lot of the extras (going out to dinner, expensive vacations, etc.). We both work making good money, but it's tight sometimes. However, we went into knowing that we spent the first 6 years of our marriage doing "fun" stuff and when we bought our house, we knew the fun stuff would be scaled back, but we really wanted to own our own home, so it's not really a sacrifice. We love our house so staying there instead of going out is nice.
After graduating college, and looking to get a family started, it is totally beyond me how people manage to actually buy a house.
Every gropu of new graduates sees the same issues. They all think it looks impossible, and they all go ahead & get it done. We cut corners, we do without some things for a while, we work a few hours a week at a second job. We eat Ramen noodles & Mac& cheese. Of course it's not easy. But it is worth doing. Besides, $50k a year is no longer the out of reach salary it was back in the late '80s when I finished school.
I did it by following a budget, and by working hard. It's really not as difficult as everyone makes it out to be. Do you buy lunch at work every day? Stop doing that, and you save at least $100/mo if not more. Don't buy expensive prepackaged food at the grocery store, and you save another chunk of money. Limit your dining out to no more than once a week -- more money saved. Smoker? Quit, and see just how much you save.
There are tons and TONS of ways to cut back that won't "hurt" you, and it will add up quick.
It can be done. I saved up for three years because I didn't want to deal with PMI. And the mortgage is not nearly as bad of a "cash drain" as it was when I moved into my house over 5 years ago. The key is to be disciplined enough to save the down payment $$ and realistic enough not to buy more house than you can afford.
I'm from Chicago suburbs and home prices are crazy expensive around here. (Not as bad as places like CA, but really high all the same.) I wonder all the time how people afford the housing prices. In most of the burbs within a reasonable commuting distance to the city, $400K+ will get you a modest home that probably needs some updates. Its crazy. We wanted a single family home but our budget of $250K bought us next to nothing as far as single family homes go, and we didn't want a condo. So we moved to the outlying suburbs where things get considerably less expensive. It was really our only choice if we wanted a single family home in a safe area with decent schools. And then people complain about suburban sprawl. Seriously, if the more established areas closer to the city were not so outrageously expensive, we happily would have moved there.
Save, save, save. No fancy vacations, no expensive clothes, no fancy dinners out, brown bag it for lunch. Just like sbd, in order for us to buy a home we went further out. yes it meant a longer commute to work but our No. 1 priority was owning a home rather than rent so it was worth it to us. also over time both hubby and i ended up taking jobs closer to home for equal or higher pay so while the first 3 years was a struggle we're much better off now. Just like Bill said $50K a year for the most part is not completely out of reach for most grads. When hubby and I bought our first home (for around the same price you're looking at now) we were only making $50K COMBINED.
Just like surfingatwork said: save, save, save. College is often four years of enforced poverty that sort of gets you ready for the struggle ahead, i.e. making it through your 20s financially sound and ready for the very adult responsibilities of your 30s, usually including home ownership and parenthood.
When most of us first got out of college, we didn't get to have the same luxuries that we'd grown accustomed to when we were living at home with mom and dad. Budget budget budget, clip coupons, get a roommate; learn how to live cheap and save, save, save. It's not easy, but what do you expect...to have life handed to you on a silver platter?
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So once you deduct your basic living expenses, you're left with next to nothing to try to buy a house. Just to crunch a few numbers, would this seem like a reasonable (rough) estimate?
