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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? Savings? Inheritances? Are these people just highly paid? Cashing out 401K?
How do people do it? Can anyone share some experiences?
Depends on where they are. In general if home prices are in the neighborhood of $400K or higher then income for professionals and trades is usually quite good to support those prices. In say Iowa, average home prices will be far less but so will average income levels. Many of these shows are filmed in Canada where home prices are outrageous and I would assume income goes along with it because if it didn't then the homes wouldn't sell and the prices would tumble. There are also those who live above their means regardless of income level.
Also, I think you would easily be considered rich or wealthy where I live.
Considering something like 80% of people live check to check and most people can't sustain a $500 emergency that is considered wealthy among most people. That said I have 6 figures liquid in the bank and I don't feel rich, wealthy or any other word for having a lot of money.
But when the buyer is your kid's favorite teacher and her spouse the NGO staffer... then there is probably substantial family money being used to if not pay off the whole purchase
then at least bring the mortgage down to the $100,000 or so they can actually afford.
and so forth...
your kid's favorite teacher - $80,000
and her spouse the NGO staffer - $50,000
total $130,000 x 3 = they can borrow $390,000
geez, not everyone is dirt poor. Some of us go to work, get promotions and bonuses, etc.
I think this thread is here because life is frankly much tougher for younger people today. When some of us were starting our careers back in the early ‘70s, we could expect double-digit raises and bonuses (yes, and sometimes double-digit inflation) and it seemed the sky was the limit for career progress. As a result, we felt comfortable putting every dollar of our savings into the first house. From there, we made a profit each time we moved to a better home and our incomes rose accordingly. I knew no one who carried any student loans (we could still work off our tuition), and me and my friends and acquaintances were not rich. We were either middle- or working-class.
Today’s wages are simply too low for many people to afford the normal amenities of life. For fun, I sometimes go to an inflation calculator (you can find it simply by Googling “inflation calculatorâ€; the BLS has a good one) to see how much purchasing power I would have today, using my earlier income. The results are shocking.
Someone hired today in my very first full-time job (in an industry where you didn’t get rich) can expect to earn one-third less than I did in the early ‘70s. And that person would have to have more skills and produce more during the course of the day. But he/she would have to pay more than triple what I did for my first house. The same goes for other big purchases, such as cars, and especially healthcare costs. I recall paying negligible amounts for health insurance or medical care in those early days.
America today simply isn’t as affordable as it once was. We can thank the employers, who began to reduce wage increases beginning in the early ‘80s to the point where many people’s incomes today barely keep pace with inflation.
I think a lot of people afford the homes they do because they live paycheck-to-paycheck and put away little or no savings. Of course, this will catch up with them at retirement. And there doesn’t seem to be any indication that their children will be any better off financially. My generation may be the last one to do better than our parents. That’s really a shame in the world’s richest country.
I think this thread is here because life is frankly much tougher for younger people today. When some of us were starting our careers back in the early ‘70s, we could expect double-digit raises and bonuses (yes, and sometimes double-digit inflation) and it seemed the sky was the limit for career progress. As a result, we felt comfortable putting every dollar of our savings into the first house. From there, we made a profit each time we moved to a better home and our incomes rose accordingly. I knew no one who carried any student loans (we could still work off our tuition), and me and my friends and acquaintances were not rich. We were either middle- or working-class.
Today’s wages are simply too low for many people to afford the normal amenities of life.
Millennials held the highest share of home buying activity out of all other generations for the fifth consecutive year...Just over one-third of all home purchases were made by Millennials, who held a market share of 36% over the past year,
Over the past year, the typical Millennial homebuyer had a higher household income at $88,200, compared to $82,000 last year
it's not necessarily an accurate way to divine jobs/raises/etc .... that $88K to $82K is like a 7%+ raise.
I've lived for a significant amount of time in three different states - Indiana, Iowa, and Tennessee. I lived in the suburbs of Des Moines, an affluent suburb of Indianapolis, and I live in a small college town in Tennessee.
The taxes where I live in TN are lower than where I was in Indianapolis and definitely Des Moines, so the budget does stretch further. With that said, about the lowest you can get inside the city limits for the good schools, with a modern, updated, "middle American suburban home" is about $250,000. New construction for basic builder's grade is around $150 sq./ft here. $400,000 opens the doors to a lot of new construction or existing upscale homes, but it will not be a mansion like what you may think.
There are cheaper options in nearby towns, but those towns have other faults that make them less appealing. The problem here in my neck of the woods is that median household income is just under $40,000. The job market for anything over $15/hr sucks. If you have a good job here, and lose it, you're basically having to move again. Personally, I could have gone much higher than I bought for, but I'm very nervous about the local labor market. Tennessee is, by far, the most difficult place I've ever lived to find or even maintain decent employment.
Below is an example of the $400,000 market in my town.
I used to live in one of the most affluent suburbs of Indianapolis. You have a much, much better job market, so less fear of needing to move and more options to "settle down." Property taxes are more than TN, but lower than IA. IA has a good job market, but smaller and higher taxes.
Below is an example of what $400,000 can get you in the Indianapolis suburbs.
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? Savings? Inheritances? Are these people just highly paid? Cashing out 401K?
How do people do it? Can anyone share some experiences?
And she is always an elementary school teacher and he is a stay at home dad working to become an "artist" or something.... I think I've seen that show.
OK. How many of you that earn six figures did it right out of school or with less than 5-10 experience. The American dream is dead in many areas. Two people working to get to 6 figures sure. But what job actually starts out with a 50-60k entry level salary? Talking degreed jobs here so assume 50-60 a piece in student loan debt.
In my generation even (I am a gen xer), people bought homes in their early 20s and raised kids
Starter homes seem to be dead. I have no doubt rich people who bought low and lucked out making tons of money off their appreciating asset can do it
Even with that. Two people would need to make 100k a piece to buy in the bay area.
I think people who tout emergency funds and talk about 20 percent down payments are out of touch with the average person and spend most of their time around the well off. This country is a nation of haves and have nots. Is it any wonder millenials live with their parents until they are 35?
I do agree in small places its more possible. IF you can get a good job there. Also what about people who used to have kids?
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