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Please show me where can you find a very nice house in a very good area near DC for $250K?
Are in in the DC area an just ignorant of the housing inventory in various areas? Or not in the area and not aware?
Well, lets see Realtor.com had 116 properties in Silver Spring a very large unincorporated are listed for under 250K, some SFHs. Rockville had 16. Fairfax had 6, all condos. Alexandria had 90 -- including a SFH.
Upper Marlboro had 150, Laurel had 104, Greenbelt had 24, La Plata had 17, College Park had 18, Cheverly had 100, Largo had 55.
There's also the idea of it not only being "just a home" - rather than an investment - but also the benefit of paying very little for housing. If someone can "snowball" the income over their living expenses toward their mortgage and, even better, if there's a second income to throw at it, they'll be out from under that mortgage in several years. Maybe 5-7, at most? If they lived on half their income - and purchase is around 2.5 times the income - paying off the house quickly and "spending" the rest on savings/investments (into traditional investments and/or into self-sustainability) would be well within reach.
If a "traditional" household - we'll say a wage earner ($50K) to qualify for a $150K mortgage and then a spouse who begins working after the children are all in school (maybe $30K)- work on paying it down, the mortgage will be paid off in that time period. If the spouse doesn't go to work, it would be a little longer... but not much. They'll have a long period where they pay only a few hundred/month for the home they want.
This is assuming they are careful/frugal and they want to pay down the mortgage. So many are married to the idea that having/paying a housing payment (and often, a car payment or two) is just what is done... living to the edge of the household's means and it being okay.
I don't see a home as an investment but as "four walls" and a great good to stability/morale. And once paid off, a source to fund wherever life takes you... in all or at least to some large degree.
A decent house in this area is $250k minimum. Unless you are making $100k you are renting if you follow that rule.
Median home price in my area is $259k, median income is $59k. It's definitely possible to buy what I would consider a decent home in this area for $150k. A bit of a challenge, yes, but easily doable. Perhaps your standards are just too high for your income?
I do agree, however, that it's a stupid arbitrary rule. Going up to ~$200k would make more sense. That'd keep the mortgage/property taxes right around what I pay for rent, assuming 20% down, and $1,000/month isn't tough making $60k/year.
We set out to do exactly that when we put our old house up for sale last fall.
The median house price in my current city is $249,900. We got into a house here in January for $152,000, which just so happens to be less than 2.5X my yearly salary.
Of course there was some "give and take"... the house is a seriously boring late 70's rambler that needed a fair amount of mostly cosmetic work (I'm finally getting close to finishing!) and is on a busy road, but it has 1/2 an acre (twice as big as the average lot here), has a fairly recent remodeled kitchen and bathrooms and is 2100 sq feet... plenty big for my family.
I'm probably the dumbest person here and I did it, so it's possible.
I know rules get outdated but since we are talking about "rules," isn't the rule supposed to be the MORTGAGE is supposed to be 3x income? Not necessarily the house price. So those with a larger down payment can afford a larger house. This is important because people these days still think just like during the housing crisis, that a large down payment isnt necessary. I witnessed an accountant friend of mine tell a couple that they could afford a larger house with a bigger down payment and they just stared at him dumbfounded.
the rule supposed to be the MORTGAGE is supposed to be 3x income?
Nope, the rule is, I'm going to create a budget and see what loan amount that equates to, then bridge the gap with a down payment to match the sale price.
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House - 2.5X your salary, how is that possible?
