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That is a matter of timing and benefiting from the boom of real estate.
Exactly... the question is no one has a crystal ball and unless you are in the market you will always be on the outside looking in.
As to the example commented on... back in the early 80's people were paying as much as 17% mortgage interest... some would say now with lowest in a lifetime interest is a great time... I just refied at 2.75%. Never would I ever have believed I would have a rate like this... EVER!
I bought my first home in East Oakland the same year I got my engineering degree.
The home was scheduled for condemnation hearing... it did have the utilities still on.
Every person tried to talk me out of it... even my step grandfathered told my grandmother he didn't have the heart to tell me I would be better to simply walk away.
Over the years the home increased many many times and then the bubble burst... it is still worth about 4x times what I paid and double what I have in it...
2 people working full-time at 50K a year with good credit would qualify without being independently wealthy.
Anyone in that situation would be house-broke. My wife and I make more that that and would not want to be carrying a $350,000 mortgage, never mind one at $400K+.
Quote:
Originally Posted by beb0p
Why can't someone buy a home built in the 70s and 80s today? In fact, in San Francisco, most homes are built in the early 1900s. The houses that are bought in the 70s, 80s, 90s, 00s, and 10s are the same houses - early 1900s Victorian/Edwardian/Arts and Craft.
Real estate has always been a desirable commodity, a few things have changed since the 70s but the underlying fundamentals haven't changed at all. In fact, it has remained the same since the 1800s - save money, buy a house, live in it for a long time, don't worry about the appreciation, reap the profit when it's time to sell; and of course "location, location, location." The examples given were possible mostly because the people bought at the right location (San Francisco). If they had bought in say, Detroit, then the endings would have been different.
Applying the same strategy today, someone may have to venture further out to find similarly cheap (relatively speaking) house in less desirable area compare to someone in the 70s or 80s, but there are always such areas. Of course, the market is really crazy right now so it's a bad example to use but if someone had bought between say, 2009 to early 2012, the housing would have appreciated a lot by now.
My wife and I bought out house in a very desirable neighborhood and sub-market value. It was an estate sale and the kids just wanted quick money. It was listed the Monday we saw it, and we had a purchase agreement by Thursday. Our realtor told us it would have ended up in a bidding war had we waited until after the weekend to make a move. The house was build in 1959 and the house inspector gave it an "above average" rating. The previous owners replaced the doors and windows, renovated the kitchen, upgraded the furnace and central air, and spray-foam insulated the entire basement prior to selling it, and we still got it for $50,000 less than the market rate. It made us joke that maybe it was haunted or something.
Of course, our home has one bathroom, a small kitchen, is not open concept, does not have granite counter tops, stainless steel appliances or any of the other trendy baubles most people want in homes these days. However, I was far more interested in having a well-insulated home with a solid structure and HE rating that make it fairly inexpensive to maintain. It is more than big enough for my wife, my dog and I and is a solid investment given the neighborhood location. It also has a 60x105' lot which was very important to us. We're not "McMansion" kind of people.
Just a general question but I often watch shows like House Hunters, My First Home and Property Virgins and the buyers had budgets of $400k and up.
I always wonder how do people (in general) afford such high price homes and where do they get the down payment money?
Is it equity from a previous home? Yes.
Savings? Yes.
Inheritances? No.
Are these people just highly paid? Some would say so, yes.
Cashing out 401K? No.
How do people do it? Can anyone share some experiences?
I don't really know how other people do it for certain, but I would assume that, like us, it's some combination of the above.
The buyers on Property Virgins do not have equity from a previous sale, as the show focuses on first-time buyers (hence the name).
The OP also cited "House Hunters" which is not limited to first-time buyers. In any case, perhaps they're just highly paid. A couple of $75k incomes will support that kind of mortgage. Of course, it's also possible that they're just in debt up to their eyebrows.
With 25% down, the mortgage would be $300k = $1,500 mortgage. Someone making $50k + part of the potential rental income; can qualify for a mortgage. I've done it.
It's not like hitting a lottery at all. It's tight budgetting and planning ahead.
Put in Dec 2009 and it is a whopping 4%. I bought in 2009 and mine is up 10% based in a recent appraisal. I'm not going to act like that is the case on average though.
Last edited by Gatornation; 06-25-2013 at 08:31 PM..
Exactly... the question is no one has a crystal ball and unless you are in the market you will always be on the outside looking in.
As to the example commented on... back in the early 80's people were paying as much as 17% mortgage interest... some would say now with lowest in a lifetime interest is a great time... I just refied at 2.75%. Never would I ever have believed I would have a rate like this... EVER!
I bought my first home in East Oakland the same year I got my engineering degree.
The home was scheduled for condemnation hearing... it did have the utilities still on.
Every person tried to talk me out of it... even my step grandfathered told my grandmother he didn't have the heart to tell me I would be better to simply walk away.
Over the years the home increased many many times and then the bubble burst... it is still worth about 4x times what I paid and double what I have in it...
The poster is just living in his SF bubble with little knowledge of the rest of the US.
Put in Dec 2009 and it is a whopping 4%. I bought in 2009 and mine is up 10% based in a recent appraisal. I'm not going to act like that is the case on average though.
Right, that's why I said - "location, location, location." Or did you missed that after I repeated it about five times? Obviously, the appreciating is going to be much less twenty years from now for someone buying today in Mobile, AL vs someone buying in NY, NY. That's why in real estate they say the three most important things are: location, location, location. Did you not know that?
All real estate is local, there is no such thing as a common denominator that applies across the country.
Quote:
Originally Posted by Gatornation
The poster is just living in his SF bubble with little knowledge of the rest of the US.
If you think San Francisco is the only place where the market raised substantially, you should check out the following:
Quote:
Average home prices rose 12.1 percent in the 12 months that ended in April, according to Standard & Poor’s Case-Shiller index of sales activity in 20 major US cities. That’s a stunning rise of essentially 1 percent per month.
That's a 12% rise in just the last year for 20 major American cities.
Just because your local market lags behind the national curve, doesn't mean that millions of people didn't get the type of appreciation that I mentioned.
Right, that's why I said - "location, location, location." Or did you missed that after I repeated it about five times? Obviously, the appreciating is going to be much less twenty years from now for someone buying today in Mobile, AL vs someone buying in NY, NY. That's why in real estate they say the three most important things are: location, location, location. Did you not know that?
All real estate is local, there is no such thing as a common denominator that applies across the country.
If you think San Francisco is the only place where the market raised substantially, you should check out the following:
That's a 12% rise in just the last year for 20 major American cities.
Just because your local market lags behind the national curve, doesn't mean that millions of people didn't get the type of appreciation that I mentioned.
.
You keep altering your point to attempt to be correct. You I really said 2009-2012 which for the most part has only seen moderate increases. Your first post was very general and only after people pointed out examples of just SF can't be applied broadly you've then since become more specific.
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