Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
My 5 direct reports are all younger millennials or older Gen z. Of those the highest paid are in the $90-100k range, all are living in Seattle apartments. With good credit they could afford about a $500k mortgage, but there are no $500k homes in a decent area of Seattle. The median home is $850k, condo is $610.
When you say home, do you mean all types? Sometimes people use that as a euphamism for house.
That varies dramatically depending on interest rates. The same loan at 7% instead of 2.5% is about half again the monthly cost.
When rates were low it was easy to argue for 4x income.
Today you could say 2.5x, but you can make a bet that rates will come down and you can refinance someday, and say well over 3x.
Of course any bet is far easier if you have some investments or savings to pull from if necessary.
It actually varies most dramatically when comparing housing in LCOL, MCOL, HCOL and VHCOL areas. The 2.5X rule might make sense in a LCOL area where land values are near zero. But virtually nobody follows this rule in VHCOL areas where land values usually far exceed the value of the structures that sit on them. Real estate "rules" have very little value other than making for great debates and arguments on forums.
The problem is housing prices have not dropped significantly since interest rates went up. They’re 10-15% below the 2021 peak, but due to higher rates the carrying costs of the mortgage are way up. A $500k condo will cost like $3000/month and likely a cheaper condo will have way higher condo fees which brings it close to $3500-3800/month. That’s almost your entire net income if you make like $80k which is above average. No way any lender is going to approve your mortgage for that.
Any drop in rates, prices will go up even more. Even if we see 2% mortgages again, if that same condo costs $750k no one will be able to afford it still except people who already own homes to borrow against
those who thought there was some see saw action between rates and prices were mistaken in many desirable areas.
supply tightened as many who would have sold didn’t since they didn’t want higher mortgages.
we saw bidding wars here if a home was desirable…all cash transactions usually won since banks have been deeming these homes overvalued but in actuality their value is what markets take them to , not what banks decide
those who thought there was some see saw action between rates and prices were mistaken in many desirable areas.
supply tightened as many who would have sold didn’t since they didn’t want higher mortgages.
we saw bidding wars here if a home was desirable…all cash transactions usually won since banks have been deeming these homes overvalued but in actuality their value is what markets take them to , not what banks decide
It still might be true (the see-saw) but it could take months and months and years to play out. Real Estate moves at a snails pace to recalibrate... Prices dropped about 10% here; but, it's hard to know if it's just seasonality.
My psychic said (yesterday) my home value is going to go way up (with the 80 houses being built on the vacant land a stone's throw from my house). She said she sees me moving and I may get an offer I cannot refuse. It's scary because she is right much of the time. However, I told her no, not going to happen with my 2.99% loan. Unless it's like that woman in Idaho where the Californian's not only gave her way over asking price, but, also bought her next home for her (and that was at the peak of bubble mania).
we haven’t even seen a drop either in long island or westchester as well as most of the city.
many of the homes that reduced price are not very desirable and been on the market a while .
nice homes sell before even hitting the market
The house next to me the guy bought it and rented it for 9 years and never did one thing to it outside of having a maid come in between renters. A lot of deferred maintenance. He started asking $595. He sold 4 months later closer to $535. We are in the lower end of one of the nicest zip codes in the whole state. Prices have softened in all categories. I guess people are leaving for Texas
The beautiful thing is a house has so much utility no matter what the market price is. It's an investment you can live in.
Many people who already own delude themselves they would be able to also own in the current market is the problem. Somehow the insane housing insecurity experienced by new immigrants and the younger generation is entirely the fact that they didn’t work as hard as current homeowners. Yet add up all the money these homeowners put into their mortgage over 10, 15, 20 years and oftentimes it’s still less than the down payment they would need to get approved for the mortgage on the same first property they bought at current market value.
Based on how many people are holding onto their houses backed by low interest rate mortgages, I'm not so sure that I agree. Granted, you have more than a few folks who don't have a mortgage to be sure, but one look at the properties for sale around them is enough to tell many of them that they couldn't afford to buy today.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
