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So if the median income in Cary is $90K but you live in a neighborhood where incomes are $100-150K++ then your experience is not really representative of the whole picture.
Let's do a simple math here:
Assume $100K salary
Taxes + insurance premiums + life ins + 401K = 25% of that if not higher
So, $75K net or $6250 per month
Now savings = roth maxed out is $10K/year for two = $5417
Two college funds @$300 per piece = $4800
2 Car payments = $1000 leaves $3800
Groceries = $800 leaves $3000
So, how do you afford that $400K house again? Your payment even if you put 20% down will be $2000-$2200.
You gonna live on $800 for everything else? LOL!
Something has to give....which means most have no savings and are house poor. Even if you make $150K you are pretty screwed if you buy in that range. I have not even taken into account childcare, which is a big expense for young homeowners.
Banks will qualify you because they want you to borrow more and the real estate agents will encourage you because they want larger commission checks. This is the reality in Cary.
BS.
Just because you may have no financial discipline doesn't mean that everyone has no financial discipline.
The $100,000 households who behave better do very well.
No one NEEDS a $400,000 house to live in Cary.
There are far too many lower priced homes available to support that point.
No one has a car payment forever, unless they choose to do so.
No one has to have $600 in college loan payments, unless they choose to do so.
And, that should be a business decision with a calculable ROI.
And, some pay them off ASAP, so they go away.
Yes, some people make terrible business choices, like borrowing money to go to school for unprofitable pursuits, some even not finishing, and many so they can go to spring break in Cancun or wherever, but that is always a choice.
I do fault culture and the educational system for not preparing folks for financial success, but that certainly doesn't mean that everyone behaves as dully as you propose.
$1000 in car payments at the expense of owning the home you'd like to own, this person must be from Long Island. That's absurd, but not uncommon, I guess.
I'm not really seeing any bubble here, at least not overall.
I've owned 3 homes in this area in my 25 years as a homeowner. If I look at the price I paid and adjust for inflation and compare to what the estimate is for those homes values today, two gained almost exactly with inflation. The third beat inflation by a bit. It was a starter home that at the time was on the edge of the Triangle at a time when interest rates were 7.5%. Now it is considered a great location, and low interest rates would keep the monthly payments about the same (inflation adjusted).
That all said, our consumer culture has lots of people wanting bigger homes, fancier kitchens, etc. Low interest rates are getting people into more home for the same payments.
Now, there's areas where the location has gotten popular, but that seems normal. Who wanted to live downtown in the mid-80s when it was a ghost town? Now it is thriving and people like that and want to be part of it.
Quote:
Originally Posted by Funky Chicken
The idea that the $300-$500K housing price range is the domain of the rich is pretty inaccurate IMO. It doesn't take a $200K plus household income to afford a $500K house unless you are a very poor manager of your money. A smart move for a household with a $200K income would be to stay at or below that $500K price point and save/invest instead of keeping up with the Joneses, and I think there is a pretty equal mix of people that subscribe to that theory and those who just buy as much house as they can get approved for.
We recently decided to downsize from one of those $500k homes (was not 500K when we bought, but, again, inflation) into a cheaper, paid off home in Wake County. Once you got outside the beltline, there was lots in the $250-350K range. You don't *have* to spend $500k or more, even if your combined household income is $200k+. I'm planning to retire soon, in my early 50s, while everyone else is still paying off their large homes.
More anecdotal info: I know people very well in my sister’s neighborhood since I’m there all the time in west Cary along Green level church rd. I also have an idea of income levels and also there are quite a few employees at UNC here and their salary info is public on the iinternet (all state salaries are).
The houses here start at 400k and range all the way up to 600-700k if you go “fully loaded.” Most are dual income earners who make 80-100k each, so you would have a household income of 160-200k. Now of course there are 1 income persons in the house but they are probably physicians who make 200k by themselves and the other person does not work. I don’t know anyone here who makes close to 300k though, so that salary level is the exception. There’s no way everyone in her neighborhood makes close to 300k, so people are buying houses this expensive probably at a 200k or slightly less level. Many of them have said that they put a down payment more than the usual 20% so this helps greatly.
Many Honda’s and Toyota’s here but even those bought new are not cheap. Plenty of BMWs, Audi’s, etc. Who knows how much they save for their retirement or kids colleges? I know many of these neighbors say they have no college or grad school loans.
Houses above 400k are selling quicker than I thought. Ridgefield Farms has already sold many lots even though that place looks like a mess with all the digging!
When I see what townhomes are selling for now in the neighborhood in South Durham where I almost purchased summer of 2016.....I have to admit to some remorse. Would have been by far the best investment I could have done in Triangle real estate in my price-range at the time. South Durham is white hot.
I didn't too shabby in the area I ended up in Chapel Hill by any means....but it's sort of that "oh man ...what if...I would be in even better shape" kind of things.
I find it interesting how people act like others with bad financial judgement happen to be in the younger population. As if it is a societal problem that has come about because HGTV. There have been people making bad financial decisions for 100's of years and they are not always those just coming into adulthood. I know plenty of older people that make bad financial decisions. The percentage of bad money managers probably has remained a constant since the time that money came into existence.
Also, the judgement from those that think that everyone should live in the same type of home, drive the same type of car, and spend in the same manner as they themselves do. It is beyond ridiculous!
I find it interesting how people act like others with bad financial judgement happen to be in the younger population. As if it is a societal problem that has come about because HGTV. There have been people making bad financial decisions for 100's of years and they are not always those just coming into adulthood. I know plenty of older people that make bad financial decisions. The percentage of bad money managers probably has remained a constant since the time that money came into existence.
Also, the judgement from those that think that everyone should live in the same type of home, drive the same type of car, and spend in the same manner as they themselves do. It is beyond ridiculous!
Just skimmed through the thread real quick again, couldn't find any posts where anyone said this was isolated to the younger population.
Also didn't see any posts where people said others should live in the same type of home, own the same type of car, etc. I did however see lots of posts with some solid and helpful financial advice.
I'm not sure what's ridiculous - people are spending more than ever and there's a lot of entitlement around what people think they "deserve" while sacrificing their savings. Not many people save anymore - people have big nice houses, nice new cars, and just expect that all will be good later in life when they can't work anymore. It's all about instant gratification - me me me, now now now. Gotta show off that nice new house and car on Facebook to give the illusion that my life is amazing.
There is absolutely nothing wrong with owning a nice car or a big, new house. But savings should come first so that you aren't relying on others later in life to support you.
Just skimmed through the thread real quick again, couldn't find any posts where anyone said this was isolated to the younger population.
Also didn't see any posts where people said others should live in the same type of home, own the same type of car, etc. I did however see lots of posts with some solid and helpful financial advice.
I'm not sure what's ridiculous - people are spending more than ever and there's a lot of entitlement around what people think they "deserve" while sacrificing their savings. Not many people save anymore - people have big nice houses, nice new cars, and just expect that all will be good later in life when they can't work anymore. It's all about instant gratification - me me me, now now now. Gotta show off that nice new house and car on Facebook to give the illusion that my life is amazing.
There is absolutely nothing wrong with owning a nice car or a big, new house. But savings should come first so that you aren't relying on others later in life to support you.
Quick sidebar: Not everyone saved “back in the day,” either. Plenty of Boomers and Silents live/lived off SS during retirement.
Yes, saving is smart. But, it’s not like not saving is a new trend.
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