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Each making $300k - no problem. each making $150k - dream on.
Quote:
Originally Posted by notghinsaw
Of course you can. But then the question will be if you can afford Aldi and Costco.
A household doesn't need to bring in anything close to $600k to be able to afford a $1 million home. Here in Hawaii, for instance, a married couple earning a combined $300k is bringing home $210k a year after taxes: https://smartasset.com/taxes/hawaii-...tor#dRjlotg3Ot
Such a HHI putting 20% down on a $1 million property on a 7% interest loan is paying not even $5,800 a month in PITI. That leaves them with $140k a year to work with after taxes. That's still a monthly payment of $6,860 or an annual total of 82,300, leaving them with roughly $128k a year to after taxes to work with. HI is expensive, but it's not that expensive to live. Let's say the couple only puts down 10%.
Again, you underestimate the types of jobs that pay well.
Freshly minted engineers fresh out of university with zero work experience.
Freshly minted MBAs from top-20 schools with minimal work experience.
Freshly minted lawyers straight out of law school with zero work experience -- NALP’s 2023 Associate Salary Survey report notes that as of January 1, 2023, the median base salary for first-year associates was $200,000, which is up $35,000 from 2021, the last time this survey came out.
While your point that there are plenty of people who can afford these homes is well taken, I do want to note that many of those fields have median salaries significantly less than $150k a year (just to add some perspective).
For instance, the $200k starting associate attorney salaries are for the so-called "big law" jobs, which represent a small fraction of the attorney jobs out there and are only found in a handful of cities (LA, Houston, DC, NYC, Chicago, etc.): https://abovethelaw.com/2023/05/the-...20and%20states.. Attorney median salary nationwide is closer to $128k, with the average closer to $150k: https://www.biglawinvestor.com/lawyer-salary/
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.
It benefits bankers who then make homeowners indebted to them on 30 year loans.
Considering that working men used to be able to afford a home and raise a family on just one income in the past, we've seriously gone BACKWARDS...
It benefits bankers who then make homeowners indebted to them on 30 year loans.
Considering that working men used to be able to afford a home and raise a family on just one income in the past, we've seriously gone BACKWARDS...
You say your first point like it's a bad thing? Mortgages allow people to own homes that don't have the cash to buy one outright. I don't know how you can consider that bad? And if someone doesn't want a mortgage they don't have to take one out.
Yes, cost is problematic. Advancements cost money. Ironic that with all the technology and conveniences we've developed that cost has increased, isn't it? Or is it not really that much of a surprise at all? It costs me much more to be in real estate now and be competetive than even when I started in 2005. If someone wanted to be basic and not pay for tech and convenience you could save quite a bit. No cell phones, 1 car per family, a modest home you lived in for a long time, no internet, no video games, cook at home. 1 person in the family stays home with the kids. They're all choices.
Again, you underestimate the types of jobs that pay well.
Freshly minted engineers fresh out of university with zero work experience.
Freshly minted MBAs from top-20 schools with minimal work experience.
Freshly minted lawyers straight out of law school with zero work experience -- NALP’s 2023 Associate Salary Survey report notes that as of January 1, 2023, the median base salary for first-year associates was $200,000, which is up $35,000 from 2021, the last time this survey came out.
I'd like to know where you are seeing these $150k salaries, or if "freshly minted" actually means a graduate degree.
My daughter graduated last year with a BS in an engineering field and was offered $80k by the company she had been interning at. She turned it down in favor of grad school because she did not foresee an opportunity to earn a more liveable salary without an advanced degree. (We live in California where $80k is barely livable for one person.)
Virtually all young people in their 20s in this area are worried about whether they can afford to stay, either right now when they set out on their own, or in the future when they hope to have families. Of course one of the major causes of the ridiculous prices is that no one who already has a house is selling.
Another reason is that this area was mostly "built out" a decade ago. My own city is bounded by mountains (national forest) on two sides and other cities on the other two. There's nowhere to spread to. Like other California cities, we have been mandated by the governor to provide X amount of new housing to help ease the crisis, but where would we put it? In zoned commercial areas?
In my city of 44,000, there are currently only 9 SFHs for sale. So of course those few people who are actually willing to sell can basically name their price. Prices aren't going down under these conditions.
This is a problem for some areas when it comes to inventory - for instance, in Flagstaff, the city is bounded by National Forest lands, making expansion impossible. As much as the City and others want to work on housing affordability, it’s near impossible when the area is built out, as there’s a finite amount of land available for building.
This has been the case for decades, so inventory has always been an issue in this market.
I’m probably misinterpreting people’s intent in some of the comments but it really feels like some homeowners attitude is “Can’t afford the house 70 mins outside the city I bought in ‘02 cutting hair? Tough luck, go to law school, get employed by a major law firm and earn a $200k salary, marry a heart surgeon and combine your incomes together and you can. Quit whining!”
If this is really the end game here, like it or not tent cities are going to turn into shantytowns, favelas and third world style slums if the majority of workers can’t afford to buy or even rent a roof over their heads. There’s going to be hundreds of thousands of people living like that in every major city, including people you know and care about. Something’s gotta break.
I’m probably misinterpreting people’s intent in some of the comments but it really feels like some homeowners attitude is “Can’t afford the house 70 mins outside the city I bought in ‘02 cutting hair? Tough luck, go to law school, get employed by a major law firm and earn a $200k salary, marry a heart surgeon and combine your incomes together and you can. Quit whining!”
If this is really the end game here, like it or not tent cities are going to turn into shantytowns, favelas and third world style slums if the majority of workers can’t afford to buy or even rent a roof over their heads. There’s going to be hundreds of thousands of people living like that in every major city, including people you know and care about. Something’s gotta break.
The United States has always been a country with socioeconomic segregation.
This is not a phenomenon we are only seeing in our time.
The United States has always been a country with socioeconomic segregation.
This is not a phenomenon we are only seeing in our time.
This is worse than that. People literally can’t afford shelter through legally renting or buying it, so there will be illegal squatters settlements popping up everywhere. Contrary to popular belief, land isn’t cheap in Lagos, Nigeria or Delhi, India. The slums don’t pop up because land is cheap. The higher home prices go, the more the third world style of living will appear in developed countries in the West
This is worse than that. People literally can’t afford shelter through legally renting or buying it, so there will be illegal squatters settlements popping up everywhere. Contrary to popular belief, land isn’t cheap in Lagos, Nigeria or Delhi, India. The slums don’t pop up because land is cheap. The higher home prices go, the more the third world style of living will appear in developed countries in the West
WTF are you even talking about? You are describing your situation. People in the US know you cannot expect to live on Nob Hill in San Francisco as your first starter home.
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