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The whole income inequality argument has to do with like the top fraction of the 1%, who are mega rich. You don't have to be rich to afford a 500k home. Typically in high cost of living places where people have to spend that much wages are also significantly higher than places where homes are dirt cheap.
Actually income inequality shows up just by comparing the upper income quintile to the median. It is not only the top 1%.
And that's what makes home values significantly more. If these houses were located in an area of min wage only jobs, the prices wouldn't be what they are.
But usually in HCOL areas, salaries are higher as well. You get a couple earning $70-100K each and now you have a HHI approaching $200K/year. At that point, a $500K home is affordable provided the couple has good financial practices.
Relying on two incomes for the mortgage is unwise if they have, or will have, kids. Day care cost is not accounted for and though no one wants to think about it, divorce is never completely ruled out.
We qualified for our $400k house based on two incomes and we have no shame in that. We also have two kids. If divorce happens (I've been married going on 13 years, but I'm also someone who always considers "what ifs"), we'll just sell the house and whatever portion we each get from the sale will go towards the purchase of a smaller, less expensive home. In the meantime though, we'd prefer to live where we are now.
Relying on two incomes for the mortgage is unwise if they have, or will have, kids. Day care cost is not accounted for and though no one wants to think about it, divorce is never completely ruled out.
True, but in this area people rely on two incomes to cover rent, let alone a mortgage.
I don't disagree with you at all. Those sort of things need to be planned out and budgeted accordingly. When we bought, we sat down and did a conservative budget. We factored in future car purchases, day care, daily living expenses, etc etc. We came up with a mortgage we could afford while still saving money and contributing to retirement and such.
If we were to split (never rule it out...but in our case I think it's for the long haul) we'd just sell the house. We put plenty down so the equity is there, and we could just get our own places...which we both had before selling and buying a house together.
True, but in this area people rely on two incomes to cover rent, let alone a mortgage.
I don't disagree with you at all. Those sort of things need to be planned out and budgeted accordingly. When we bought, we sat down and did a conservative budget. We factored in future car purchases, day care, daily living expenses, etc etc. We came up with a mortgage we could afford while still saving money and contributing to retirement and such.
If we were to split (never rule it out...but in our case I think it's for the long haul) we'd just sell the house. We put plenty down so the equity is there, and we could just get our own places...which we both had before selling and buying a house together.
I only buy homes I can afford off investment income. I don't count salaries as that is too iffy.
Actually income inequality shows up just by comparing the upper income quintile to the median. It is not only the top 1%.
I don't want to get into it because this is the real estate section, not political. But inequality is subjective. The real argument should only be vs the super rich(upper 1%) getting richer while poverty levels increase. If you're complaining because your CEO neighbor makes 500k a year while you only make 50k then you're just whining.
I don't want to get into it because this is the real estate section, not political. But inequality is subjective. The real argument should only be vs the super rich(upper 1%) getting richer while poverty levels increase. If you're complaining because your CEO neighbor makes 500k a year while you only make 50k then you're just whining.
Not the point. The point is that the gap between the upper quintile and the median is now large enough that those earning near the median, such as OP, find it puzzling how so many people are buying $400k houses.
2.5 is rule of thumb on a conservative purchase and 4.0 is fairly normal in high cost areas.
Ha ha ha. Oh so THIS explains it. That is what they are telling these dumb-asses now? FOUR TIMES annual salary.
That is ridiculous. Of course they won't have much savings etc. paying that much for a house. FOUR TIMES LOL no effing way. How do you save money, go on trips, pay for healthcare and SAVE MONEY for emergencies? LOL no way. Ok that explains what they paid LOL OMG. Is everyone doing this?
What if they lose their jobs? It won't be pretty.
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