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Yep. But they just gotta have the latest and greatest iPhones, drive a new car, have a full-boat cable TV package and finance a lifestyle on credit cards.
Many are not educated in real-life economics such as amortization, the effects of compound interest and the true cost of 'credit'. They have been inundated with decades of consumerism that has taught them to look at economics as 'how much can I afford to spend each month?' The concept of 'delayed gratification' is foreign to them.
Even buying a house, I think that the 'average' people don't understand that a 30-year note is not the only option...but is the 'best' for the bank because the way the payments are calculated they have *all* of their money back at about the 1/3 mark of the payment schedule and the rest is gravy.
They don't understand that if they 'did without' all of the 'extras', scrimped, saved and invested for 10 years they could buy a house with a huge down-payment and only a 5, 10, or 15 year note, or even buy outright with cash by keeping their eyes open for the right opportunity.
You left out the cost of their daily Starbucks Lattes.
On zillow, there are small houses or condos for sale in metro areas like Cleveland, Columbus or Indianapolis that go for less than $100k. If a person is patient enough, they can even find a house for under $30k that needs a bit of a makeover.
Personally though, I wouldn't buy those houses because it appears they are unlikely to appreciate much in price. But you never know, it's possible to get lucky with such properties.
On zillow, there are small houses or condos for sale in metro areas like Cleveland, Columbus or Indianapolis that go for less than $100k. If a person is patient enough, they can even find a house for under $30k that needs a bit of a makeover.
Personally though, I wouldn't buy those houses because it appears they are unlikely to appreciate much in price. But you never know, it's possible to get lucky with such properties.
Yes. But the wages there are also low, you know, what I mentioned earlier about parts of the US.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by BigCityDreamer
On zillow, there are small houses or condos for sale in metro areas like Cleveland, Columbus or Indianapolis that go for less than $100k. If a person is patient enough, they can even find a house for under $30k that needs a bit of a makeover.
Personally though, I wouldn't buy those houses because it appears they are unlikely to appreciate much in price. But you never know, it's possible to get lucky with such properties.
But as an investment, though it builds wealth, it's secondary to having a place to live. When you rent you can expect to pay more every year or two. With a fixed rate mortgage it stays the same for 30 years. Of course, with $100k homes comes a lot of crime and poverty that you have to live with, and for a $30k fixer you still need money to do the fixinng.
Quote:
Originally Posted by North Beach Person
Yes. But the wages there are also low, you know, what I mentioned earlier about parts of the US.
To afford a $100k house with a down payment of $20,000, you'd only need to earn $14,921/year before taxes to get the loan. That's basically $7.80/hour full-time. The problem may be coming up with the $20,000 down payment. If managing a loan with nothing down one would have to make $19,000, that's still only $9.89/hour.
Last edited by Hemlock140; 07-08-2021 at 04:05 PM..
Majority of Americans do not have 4 figures of savings to put down on a house because their income is too low and their expenses are too high.
Add to it many don't have above 700 credit scores. It's not hard to get good credit score if you simply pay on time. You can easily set your bank to pay bills automatically yet we have people with $1000 iPhone with sub 600 credit scores.
But investment, though it builds wealth, is secondary to having a place to live. When you rent you can expect to pay more every year or two. With a fixed rate mortgage it stays the same for 30 years. Of course, with $100k homes comes a lot of crime and poverty that you have to live with, and for a $30k fixer you still need money to do the fixinng.
To afford a $100k house with a down payment of $20,000, you'd only need to earn $14,921/year before taxes to get the loan. That's basically $7.80/hour full-time. The problem may be coming up with the $20,000 down payment. If managing a loan with nothing down one would have to make $19,000, that's still only $9.89/hour.
I've lived in my house for 16 years. In that time, my property taxes have tripled. The amount I pay every month for property taxes is more than my mortgage. So, yes, my mortgage payment is static, but that's not the only cost of home ownership.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by CarnivalGal
I've lived in my house for 16 years. In that time, my property taxes have tripled. The amount I pay every month for property taxes is more than my mortgage. So, yes, my mortgage payment is static, but that's not the only cost of home ownership.
Very true, we have been here 27 years and our taxes have gone up from $1,900/year to almost $8,000/year.
There is also insurance, which in our case went from $300/year to now $2,100, and maintenance costs. Still, rent here for a house when we bought was about $400/month, now it's $4,000, that's an increase of 10 times, while our tax & insurance increased only by 4 times. When a renter moves there is nothing to show for it, and their rent includes the landlord's taxes and insurance, plus they have to pay renter's insurance. We currently have about $1 million in equity, hopefully you are doing well in equity too after 16 years.
To afford a $100k house with a down payment of $20,000, you'd only need to earn $14,921/year before taxes to get the loan. That's basically $7.80/hour full-time. The problem may be coming up with the $20,000 down payment. If managing a loan with nothing down one would have to make $19,000, that's still only $9.89/hour.
Even assuming that someone making $8.00/hour could accumulate a 20% down payment you still have to remember that while the house price may be low gasoline is still $2.99/gallon, a new, or even used, car has the same price as everywhere (a Ford F150 XL is $27K no matter where you buy it), food is the same or more, etc.
Where houses are cheap, there are usually not good jobs or not enough for two white collar professionals to add up to 80k.
When I was on the job market I made a concerted point to target moderate and low housing cost areas. Guess what... they don't hire very much. The economies of those places are stagnant, that's why their housing markets are low.
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