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A lot of people are house poor. It astounds me the amount of people today who don't consider a mortgage in their overall debt equation. They will say they have $50K in student loan debt and credit card debt, and omit they have a $300K mortgage. They don't think of it as "debt."
Also, some people see student loans as "good debt". Because it's an investment in their future. According to them.
According to Dave Ramsey, if someone can't put down 20% on a house, they can't afford it.
I used to listen to his show often. Over time, I found his advice so impractical for the average wage earner that it bordered on damn near useless. Dave is good for mindset change on excessive consumer spending, but beyond that, it's not that helpful.
I'm single with a well above average local income. Even then, it would take at least a couple of years to save for 20% down on the average local home. Meanwhile, rents rise and you're on that "can't save for a downpayment because rent increases are outpacing income growth" treadmill.
Median HHI in my area is between $30k-$40k depending on the town. How much can you possibly save on that?
I think for most of the middle class your home is your status symbol, so most people buy about as much as they can afford. I have plenty of friends that in the past 3-4 years have bought their "dream house" but turn around and in the same breathe say money is tight and they can't afford to go on friends trips for the next couple of years.
Meanwhile, we bought our home when I had the only income and even then the yearly payment(PITI) was only ~20% of our gross. Since then my wife has gotten a good job and I've over doubled my salary. Sure we could move to a much nicer house, but I like the freedom to be able to travel whenever we want, do things for our kids, etc. and frankly...I still really like our house
I don’t think the “ middle class” folks live in status symbol homes.
I know plenty of people making $90-$100k buying $400k homes in the midwest. Sure they might not be status symbol suitable to millionaires, but they are for people who work as linesmen and electricians. You're talking 3.5k sq ft homes with a pool, etc. They're much nicer and larger homes than I grew up in or than they grew up in and they all are in their early-mid 30s.
I don’t think the “middle class†folks live in status symbol homes.
Neither do most people in HCOL areas. When my family came to NNJ in 2003 before second DH and I married, we had the rehearsal dinner at my house. It was a nice little 3-BR postwar Cape Cod on a small lot, although it did have an in-ground pool. Furnishings were a cheerful mix of whatever The Ex hadn't taken after the divorce and what I'd managed to buy in the meantime. DS and I lived without couches for a few months after we moved in! When I told my family, who lived in Ohio and the Carolinas, that it was on the market at $550K they were stunned.
I ended up with multiple bids and the winning offer was over the asking price.
I know plenty of people making $90-$100k buying $400k homes in the midwest. Sure they might not be status symbol suitable to millionaires, but they are for people who work as linesmen and electricians. You're talking 3.5k sq ft homes with a pool, etc. They're much nicer and larger homes than I grew up in or than they grew up in and they all are in their early-mid 30s.
That would not get approved today or since 2008 IMO.
That would not get approved today or since 2008 IMO.
Well it did. He bought $100k in land and then had a $325k home built on it. He had equity in another home and has been working since he was 18, so I'm sure he put down at least $50k+.
When we moved in 2012 we were making $75k/yr had no home equity, and had little in cash and we were pre-qualified up over $300k.
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Quote:
Originally Posted by ocnjgirl
That would not get approved today or since 2008 IMO.
I would disagree. Those are better numbers than what I had when I bought my house. I was under 100k and bought 465k house two years ago.
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