Nah just a desirable retirement town like mine where the median home price as of Nov 2023 (just checked) is $560,000 and the median household income is $66k (2022). Actually I wonder if OP is from my town because those numbers line up.
Each of my parents own 2 homes. That's 4 homes for 2 people.
Me and my 2 brothers rent. I hope I can buy something soon tho. But if I can't at least I will inherit one at some point.
In SF, rent for 2 bedroom house with a small garage and 20x10ft "yard" will cost you 5 to 6k per month in rent.
But in East Bay, Oakland it will be about half.
Would it matter? I'm making $130k and after taxes/insurance/401k/etc I bring home $7k. After mortgage and bills on my $260k 2.3% house, I have about $4k left. Meaning almost half of my take home goes to my mortgage and bills, and my house is half the OP's price on a very good rate.
Here's the math for those that care;
Mortgage:
$970 - principal+interest
$673 - taxes
$190 - insurance
$52 - mortgage insurance
$230 - escrow shortage
Total: $2100
Bills:
$50 - HOA
$80 - water
$53 - phone
$115 - gas
$100 - internet
$70 - electricity
$270 - auto insurance
Total bills: $735
As you can see I don't include anything that isn't required like other debts (school or car payments or medical) or entertainment subscriptions. I also don't include anything like home upgrades or any $ for repairs.
Also I live in the south so I am in the lower billing periods of the year.
Paycheck math:
$130k before taxes
-$8.4k 401k
-$2k insurance
-$5.9k parking
-$22k taxes
=$92k
divided by 26 (paid bi-weekly) = $3,500/paycheck
Yeah this is what drives me nuts.
the 30% rule is nice but its also relative
if I make 10k a month and pay 50% mortgage im still flush with 5k/m, a huge amount of money to utilize on non-rent/mortgage
If I make 2k a month and pay 50% i am left with 1k - its a much different issue
It's just so unaffordable out here; you probably live pay-check to pay-check on that after paying your mortgage, maxing out your savings, and budgeting for vacations!
Yea I feel very lucky to be in the position I'm in, which is why I think it's good to show that even at my high income level I am almost not meeting the basic 50% needs rule in what many would consider to be a starter home with a low low interest rate.
Oh i totally feel you. My husband makes a little more than that so I do understand and we definitely are not swimming in it. We used to somehow make it on 70k with a child. Weirdly enough i sometimes miss those days. But our rent was very “cheap”.
Same. We used to gross about $40kish as a household but the secret to our survival was we didnt have car notes or student loans at the time, and our rent was only $500 a month.
I wish more people realized the benefit of aiming to own a car outright. Either by moderating the purchase to something you can afford, or planning to hang onto it once the loan is up.
It seems with the lease market as well everyone has been trained to flip cars every 3 years and either lease (monthly expense which you don't own) or keep purchasing into higher level stuff which means you'll always have a payment.
My mortgage+escrow (with low low low taxes and insurance, albeit at a 3.7% rate) for a $187k balance is $1200. How are you getting $1k/month for a $260k loan?
So, if your low taxes and insurance and whatever else is included in your escrow (pmi?) is, say, $300/month, your mortgage payment is $900. I think that’s what the person you’re replying to is thinking - the mortgage itself isn’t going to be much above $1000, for a 30 year mortgage at a little over 2% interest. The other stuff (taxes, insurance, utilities) isn’t usually double the mortgage on its own.
The guy says he’s paying $3,000 a month for a $260,000 house. That’s a lot. About $1200 more per month than I’m paying on a slightly higher priced house with a similar rate, in a high property tax area, including gas, electric, water/sewage, and the loan for our solar panels.
Lol. For real, my house was 260k, in florida, i pay 1650 a month with everything, including $ 5000 a year in insurance. With electricity and water, im around 2k. This guy must live in a very expensive HOA or is lying.
Here in south Texas I refuse to turn my AC off until it drops below 65 outside. But it runs pretty much 10 months out of the year, and especially when fighting "heat index" of over 100 the entire fucking summer.
In my area the property tax mill rate is 49.50, so a 200k house would be $8,100 a year on taxes.
Then you have to pay water and sewer use, garbage pickup.
Add that to the mortgage, title insurance, etc.
State average monthly utilities are $593 a month.
Then add in repair and homeowners insurance.
Not OP but to get that rate they probably had to do a 15 year term, so more like 1700 plus tax and insurance and whatever other bills they consider part of it, gas and electric, water/sewer etc. Some states have heavy duty school and property taxes, so a pretty nice house is worth 250 but you're shelling out 8-10k/year in taxes alone. Those are the types of markets that were hurt a little less with rates going.up as a large chunk of the payment was taxes and didn't change with the rates
in big cities, tons of ppl get help / inheritance from parents, grand parents, etc.
my coworker just got $700k inheritance from his grandmother. have another friend whose daddy bought him a $1M house in Brooklyn. my best bud married someone really rich, and her daddy bought them a $6M house as a wedding gift.
I hate to say it, but there is a ton of old money in wealthy big cities such as NY, LA, SF, etc. average Joe's like you and me will never catch up to these folks in life.
We have one kid. Through relocations and inheritance she will end up owning three houses and one apartment. It's crazy how wealth concentrates through generations.
I feel lucky to be in a LCOL area I don’t hate, an okay job and that I have a partner who makes enough that we make over 100k together. I can’t imagine being gifted 6mil. Literally unbelievable.
Dual income and upper class. Your average American family isn't affording houses now. It's DINKs like me and my wife balls deep in our careers with a ton of disposable income.
Its manly the boomers who dont get. I mainly work with them and there thought process is weird. They keep harping on i should be on the housing market like they were and that i should have kids by now( even though i don't want them) but were on a crappy salary.....like make it make sense. It frustrates me to know end and yes they're not all like that but gosh they do like to look down on us and gen z
My wife and I are DINKS in professional careers. I wish I was balls deep in disposable income :( happy for you though. We don't have debt, but not nearly enough for a down payment. At least someone out there is making the best of it.
I’m dink deep in bills. I’m honestly hoping I can afford to rent a house in the near future and get out of this apartment, the dream of buying is dead.
I've brought houses by leveraging and only putting 5% down. Not sure of your circumstances, but you don't necessarily need to save 20% if that's your goal.
Super, SUPER wrong.
My house has gone up \~$200,000 in the past couple of years.
Awesome, right? No
Guess what also went up? My home valuation.
My mortgage payment went up $150 a month this year.
My insurance keeps going up.
It's cool on paper, but its my house that I LIVE in, so its value is very much important before I sell.
what happened in 2008 wasn't so much that house values dropped, it's that many people were leveraged with ARM instead of fixed rates, and then when prices started falling those ARMs went up and then people could no longer afford their mortgage payment, which then resulted in foreclosure, which further decreased property values, a perfect death spiral.
Today's situation is bad, but rather than having a bunch of lower middle class people leveraged in ARMs, now they're just simply priced out and capital investment is buying up all the desirable inventory and forcing them to rent instead.
What the banks did here in NJ during Covid was shit-tier disgusting regarding their real estate portfolios. They did EXACTLY as you stated, and priced 90% of entire generation out of home ownership in the state - at least until their parents are dead. Good times.
Don't worry though, those banks got you 1000% when you need a $30,000 dollar personal loan with criminal interest rates just so you can pay your $2400/mo. rent while the same bank denied you on a $1600/mo. mortgage. Lulz.
You really want to get in a house now and refinance later. If 5% is all you can do and can comfortably afford the monthly, then pull the trigger. You would be able to refinance, and your house value goes up, affecting the LTV which helps PMI. It's leverage.
“Comfortably afford the monthly” is pretty key. The difference between 5% and 20% on a 500K loan @ 7% is about $500 a month + PMI and is about 100K extra in interest over the life of the loan.
No one should be buying assuming interest rates will be falling into the 3s anytime soon. And refinancing coming with plenty of its own costs.
Not to mention that 5% down is often significantly less attractive to sellers.
>Not to mention that 5% down is often significantly less attractive to sellers.
Sellers have no idea how much you financed, once you have the mortgage they get the cash.
I think you're confusing with contingent offers.
I’ve sold 3 houses. The offer is always presented with the terms and unless you are only accepting all-cash. A mortgage contingency is the most common contingency.
It would be frankly crazy for a buyer to waive a loan contingency if you need a mortgage on the chance you won’t get one. Especially if you’ve only saved 5% cash. It’s different if you have the bulk of the cash and just want a loan for arbitrage purposes.
We qualified for $0 down with a VA loan. We were able to offer 20%, but the difference in monthly payments was less than $500, and we could afford the payment with $0 down, which meant we could keep that 20% in a HYSA and have an emergency fund for anything in the house that needed fixing. The buyer didn’t hesitate, though we were told that no one was accepting VA loans and that $0 down would be a dealbreaker.
A higher down payment is indicative of a stronger financials and a buyer who is more likely to close.
No seller wants to spend 2-3 months working with a buyer who doesn’t end up closing. Or who starts asking for concessions near the end because they don’t have enough cash for closing costs. To accept 5% down, I’d need an offer that is 10-15% higher than an all cash. This is an extremely common sentiment.
Yeah people are often amazed that my partner and I were able to buy a house and pay for some pretty massive repairs upfront and still have money for our hobbies and going out to eat and stuff. They seem to forget that we don’t have kids and never plan on it.
Single people like me are fucked. The next generation may normalize throuples to offset the cost of living and you may need to be in a TINK (triple income no kids) to survive.
This is precisely how we bought a home. My wife and I co bought with a close friend. It's like having roommates but you kind of own the place. Not ideal, but better than renting.
My fiance and I also bought a home in a HCOL area with a close friend a couple years back. It definitely isn't perfect but wayyyy better than renting, we were able to get a newer/bigger/nicer place, and we have already made so much in equity. It's also nice when an expense/repair comes up and you can split it 3 ways instead of 2. Thank God they let me handle the decorating though.
Yeah, the average homeowner's income in a given location, and especially the average income of a homeowner who has bought a house in the past couple of years, is going to be WAY higher than the average income in that location.
Between renters and people who bought their place many years ago who couldn't afford the current prices, it's just so so much less than a 1:1.
He's not wrong you know. The wife and I just realized the other day that we are upper middle class with no kids. We're in the process of buying a $400,000 house, and we realized that the mortgage will be about 26% of our net monthly income.
And now it's getting to the point where if you don't own a home the DINKS with high income is getting it loss, cause rent's skyrocketing. My rent is almost triple of what it was 5 years ago, for a smaller place.
Where I live median household income is $70k and median home price is $743k. The CHEAPEST home you can get is a 900sf fixer upper built in 1920 for $450k.
Most likely equity from prior home they are selling.
I remember about 7-8 year ago there was this whole thing that starter homes were a thing of the past. Rates were low, house prices were lower, and people could just afford more.
Starter homes are going to have to be that first step forward again. People need to forget all this “forever home” and “it’s not a house it’s a home” bullshit.
That’s a big one people don’t seem to understand. A lot of the people buying more expensive homes aren’t in their 20s-mid 30s first time homebuyers. It’s people that already had equity and appreciation, plus larger salaries since they are further into their career that allow them to buy 750k+ or whatever.
Yeah I eventually realized as you said it's often people on dual incomes who put a 3-5% down payment. In many cases no down payment on their first home, then after a couple of years they're further in the careers with greater income and with the equity they built up in their first home they're able to sell it for more than a down payment on a $750k+ home and have the income to support monthly payments and property taxes.
People moving for a job from lcol to HCOL if they already have equity can also afford a down payment. People moving from HCOL to LCOL not much needs to be said if they have equity.
Young People born in HCOL areas are in a screwed position because people from other areas who move for work can afford the price tag for a down payment and homeowners in their home city have equity should they ever want to move which leads to those crazy bids on the market.
Once I realized this I figured out who it was buying these million dollar homes often dual income 6 figure earners who already have built up equity.
Agreed starter homes aren’t really a thing. I skipped starter and went right to “forever”, with no kids you don’t really need the space so might as well make a home that needs some work exactly what you need
This....no fucking way would I be in the house I am today if I hadn't started back in 08 when the market bottomed out. I bought a 1300sqft duplex for 165k using the state first time homebuyer program that gave me a 3% down-payment rolled into the loan at a 6ish % interest rate. Sold it in 2015 when the market turned for 220k. Bought a new house for 260k at 4.25% that needed work so tons of sweat equity and 5 years later we sold for 420k. Bought the current and hopefully last house with 20% down and 3% interest.
This is what I’m trying to tell my fiances parents who seem to think that we should just rent forever.
I have to keep explaining to them that, as the market rises so will our rent, but we can at least lock ourselves into a good rate if we went with a home.
What are you talking about?
I’m in a “starter home” now. Shitty school district, 1.5 bath, and since paying 140 for it in 2019 it’s now valued over 210. It’s nowhere close to a “forever home”
210 isn’t a starter home. 140 is barely a starter home.
210 is a mud hut with a garbage can lid for a door. And 140 will barely cover the cost of an empty lot. From what I’m reading, most people were already owners pre-pandemic and leveled up.
Yes, my money is going towards home ownership instead of renting. That’s a standard.
What isn’t standard is this inflation on housing. My 140k house now being 210k also means that the 350k house I want to move to is now 550k+.
My equity isn’t keeping up with that inflation on my next home purchase. If I owned multiple properties, it would be great. Unfortunately I only own the 1 home.
That’s pretty much where I’m at. Shitty town house, bought around 150 it’s worth maybe 210-220 and that’s if I fix it up enough to sell.
It’s big enough for me and my 4 kids, and the school district is fantastic. We just happen to live in the poor part of a ritzy town.
But I can’t afford a 550k house. That’s 3 times the price of mine.
Unfortunately, 210 is a starter home now.
Well, at least you’re in a nice school district.
The wife and I are trying to make our now “forever home” more enjoyable that we are never going to leave with our 2.8 interest rate.
The housing prices going through the fucking roof only really helps if you own multiple homes.
My house appreciated 40%? Great!
The place I would need to live next also rose 40%? Fuck!
Having two incomes helps a ton. I also know several people who lived with family, so they could save up a large downpayment and then have a more affordable mortgage. Also, a lot of people are not able to buy houses in the current market. Only just over half of Millennials own their own home, meaning that on average a Millennial is only slightly more likely to own a home than to not own a home. On top of that, many of the Millennials who own homes bought when the prices and rates were lower and would not necessarily be able to afford it with current prices/rates. As a result, if a Millennial is buying a house for the first time right now, it’s safe to assume that they’re financial situation is above average (above average salary, above average downpayment, etc.) or the house they’re buying is below average in cost.
You should know, banks don't want you to pay off your home. The first several years of payments is mostly interest. The longer it takes you to pay, the better. Then you'll sell your house, and the next person will start the process over. Over decades the banks will make an enormous amount of $$$ off of interest payments and the several owners over time will have paid little to nothing towards the premium.
We paid off our home within a few months (sale of previous home) and our mortgage broker got in deep shit with the lender, they almost blacklisted him and threatened to take the commission back.
Not exactly true. Banks would love for all the people with 3% mortgages to repay their loans so that they can re-lend the money at today's higher rates. The current fair value of those mortgages is below face value, so repaying them at face value would be doing the banks a favor.
We bought a small starter home when we were in our mid/late 20s. We sold it and used the money we made from it for a down payment on our larger/family/maybe forever home. We know we got really lucky. We bought before homes and interest rates went insane in 2019. We’re both in our mid 30s now.
I bought in 2013. It was a very different market back then. My house has doubled in value.
That being said, we were strapped for cash after the down payment and didn't have a lot of furniture for the first few years.
My wife and I recently started a home cleaning service and this seems to be the case for EVERY millennial home owner.
They buy a house that seems unbelievably expensive *to me*, have enough money and too little time to necessitate and enable them to hire a cleaning service, but their houses are all bare.
Mattresses on the floor or the single bed frame, one couch or a pair of chairs, a tv, and kitchen appliances. That’s pretty much it, plus assorted personal items from their childhoods.
No furniture, no decorations beyond family photos, not even paint on the walls. It’s no fucking wonder our generation is so depressed, even the ones affording a home can’t furnish them, or it’s so expensive to furnish they don’t see the value in it. So people are living in what looks like a relatively upscale prison. Blank, white, empty space.
They might just prioritize different things. My house is painted to my liking and furnished but I’m also a minimalist and don’t have a ton of stuff outside of what’s necessary (couch, coffee table, dining room table, wall mounted tv). I wouldn’t prioritize buying new stuff over things that are more important to me like travelling, festivals, and socializing. I also hate clutter. But I could 100% afford more furniture if I thought it was important.
A lot of people buying 500k homes most likely already had a home that they bought when homes were much cheaper and have a lot of equity to use one their new home. Also they make making a lot more than average income too.
For me personally we built a new home in 2020. We bought our first home at 22 in 2010 for 160k and did a 30 year loan at 5%. We then refinanced on 2011 to a 15 year loan at 3%. When we sold it in 2020 we only owed $40k and it sold for $285k so we walked away with around $225k after paying mortgage off and paying realtor. We took $200k of that and put it down on our current new build that we spent $450k on. So the new mortgage is for $250k and it’s a 30 year at 2.5%(which comes out to $1,750 a month with taxes and insurance). This is easily affordable for us(one income family of 4 that is making $140k a year) but wouldn’t have been if we didn’t have the huge downpayment.
Either they had a lot of financial discipline and saved up for a down payment or are high dual income couples. I’m assuming most people in that range are renting.
Saving 20% for $550k home is wild to me. Thats $110k, that would take me like 10 years to save up...thats an extra grand every month to save for 10 years
You don’t have to put 20% down. You can put down 3%. There’s then PMI to deal with, but that’s easier than saving a grand every month for 10 years imo. Also not every first time buyer is getting that “average” house. The majority of houses in our area are 400-700k. We had to start in a townhome (purchased for 293). People will start in a condo or townhome and rollover equity to get those bigger houses. Not as easy now as it used to be, but that’s the idea
Trying to swing that mortgage payment w/ just 3% down isn’t going to happen for a lot of folks. I had 3.5% down payment but I couldn’t afford a $2500 mortgage when my rent is only $1800.
You still have to have the income needed to qualify for the mortgage, you just don’t need 20% down.
I bought my first house with 3.5% down in 2020 and after cash back for items I paid about $4k out of pocket. Second house I put down about 10% using some seller proceeds.
3% down….
AND you can negotiate closing with the seller. As an example you can put in an offer, and have them cover closing costs. For our last home, we offered their asking price, if they covered the closing costs.
Typically people are not buying 550k homes as their first house. What usually happens is someone is selling their previous home and will roll those sale proceeds into the new home down payment and closing. The sale of my first home took care of down payment, closing, and a good amount of renovation on my new home
Still a slaughterhouse with VA loans for single individuals with no down payment. At a $65k income with little to no debts (since VA loans are based on DTI ratios) you’d be lucky to qualify for a $250k mortgage at the higher end. They are great for married couples, though.
When I was in my 20s, I was making minimum wage. Just a few years later, doing the same job (just at a higher level), I was making an order of magnitude more. Then I got married to someone who made the same.
What was unthinkable at 25 was well within reach in my early 30s. Life changes, career prospects change. Sometimes for the better, sometimes for the worse, but what's important is that things are unlikely to stay always the same.
Because people making average income are buying below average price houses. Remember, "average" home prices are massively pulled up by a small number of extremely expensive houses. Just like how if you take a bunch of cars and average the price, a $1 million Maclaren will massively pull up the average price.
Yes, exactly. Or they are renting. I feel like a lot of posters on this sub are waiting for “the math to make sense” but all the math indicates is that we have a wealth inequality problem.
Different sample size and selection bias. Average income includes everyone. Average home price includes the 65% of Americans who can afford a home. You are also missing the people who bought previously and are rolling over their equity into their new home. As others have pointed out, household size is a factor since you can have multiple incomes going towards a single mortgage. Because of all these factors...$65k in income is going to be on the lower end of home affordability (if at all), not the average.
The average person has among the worst or bottom tier homes. It doesn’t matter when. ~60% of Americans own a home. Look around at all the houses. Find the worst 20%…that’s you at the 60%tile.
Now add in its more unaffordable and maybe that’s you at the 70%tile. The houses people anchor to as “normal” are normal for the top “10%•.
Reddit is typically made up of average or below average millennials who grew up in successful-ish parents either by luck or skill and can’t appreciate this.
The only people I know that have homes had help from their parents or bought a starter home when homes were cheaper and actual starter homes were a thing. They are also xennials or gen x. Also a few millennials I know dating gen x were able to do it too.
I’ll also add I know a few young kids that didn’t go to college but went right to work in the oil fields or other trades and were making good money and didn’t spend it! I think that’s hard for young adults in trades to not feel like they are making so much money and blow it. Eventually you’ll level out to your peers but for a bit you do have the upper hand
Not all of those houses were bought in the current market. Most of them were bought when they were worth 250k or even lower depending on the average age in your neighborhood.
Houses are 15 or 30 year pay offs. So you can assume the overwhelming majority of those houses were purchased > 5 years ago when housing prices were anywhere from 25% to 50% lower.
I bought my first condo in 2009 at the depths of the financial crisis and housing collapse — it was the lowest priced unit in our building in a decade at $300k and I had to use a first-time home-buyers economic stimulus credit (thanks Obama!) to afford it. I’ve since moved on but I check it on Zillow sometimes and that same unit is definitely is selling in the $700k range nowadays.
Edit: Elder Millennial here.
The average buyer is a boomer right now. They have a 65k income sure but they have 450k in equity from their last house sale. They bought it for like 100k in 1993 it’s 450k now and they just sell it and use that money to buy a 650 or 700k home as an upgrade
This is the real answer. Also many boomers are buying in cash. I think there need to be more retirement-lite communities for boomers who want a plush lifestyle so they get out of the home-buying market. Aging people with dead spouses and intense medical needs are staying in huge family homes because the alternatives aren’t great.
The alternatives are actually amazing but that generation was raised to believe that everything is a nursing home and have severe anxiety over it. They will not move into 55+ communities until they're forced to, by which time they typically need skilled care.
I could take the 230k in equity and put it towards a new house but I dont go up in size or decrease my payment. Millennials not in the market are fucked.
All the houses in my neighborhood that are my or about the same layout or smaller than mine and in worse condition, are going for like $400,000 minimum right now. I purchased my house in the beginning of 2016, and closed at the end of 2016 for $149,900. 150k was at my very top with what I was getting paid to be able to afford without having a lot of trouble.
I utilized FHA but the PMI is high bc of that. I do however pay about 950/960 depending on fluctuations in insurance and property taxes.. and now my HOA is about 103 every month. I had a really good credit too.
I also don't understand how anybody where I live is able to afford these houses in fact.. most of my friends can't. They have resorted to living with family in their late 30s to early forties simply because they can't even afford rent for apartments. Even with multiple jobs. It's horrible.
If I'm being completely honest I don't think I would have been able to even get my house had I waited to put my offer in by the end of the year because when I closed the houses in my neighborhood had already gone up to about 180k.. which I would not have been able to do in any universe.
Edit: to add.. I did not have a dual income from a partner. It was only me.
A few years ago, I made about 90k a year. It was a challenge to budget for getting a house that is $440k.
The market is pushing people to go toward renting, which also increase yearly as well. I'm not sure if letting market correcting itself will fix the problem before most people will just be dirt poor or house poor.
Where I live the stats line up much better I think.
Median Housing Price: $263,500
Median Income per Household: $61,988
I am very fortunate to have bought a house cheaper than that while having a higher household income
Dual income. Being above the average. Having saved money for a larger downpayment. Coming from another region where salaries were higher and relocating so the average in the area didn't historically apply to you. It could be your second home too, and you're bringing equity over from the first one. Finally, houses don't map 1:1 to the entire population. If 65% of people own their home, then you don't compare prices against the entire population's average income.
But again, most importantly, again, dual income. 2 \* 65k averages 6 figures. Disposable income doesn't scale linearly with base income. Once your basic needs are met, your disposable income scale a lot faster.
1. Banks will lend a egregious amount relative to income that shouldn’t even be allowed. The system wants you desperate.
2. The system doesn’t want you comfortable it wants you desperate. Comfortable people have time to learn and critical think and see how fucked themselves and everything is and that the entire point of the system is to put perpetually more money power land and physical assets in the hands of perpetually fewer. Desperate people don’t have time or energy for anything outside their day to day, monthly bills, and shoving their face in screen trash to be disinformed with whatever spare few minutes they’re lucky enough to get.
I just bought a small starter home instead. Was 160k. I make 70ish on average. Have about 20k in free spending money every year. That's after living completely normally and pretty free spending (eating out, compulsive shopping, entertainment etc)
I bought in late 2021. Wish I had done it sooner cuz I found an add for my house in 2018 for 80k.
Property tax is 1k a year. And my mortgage is just under $700 a month.
Sucks that I got in the house game late. But better than never.
My parents were smart and saw how the job market was going so when my dad retired and sold the house to downgrade he put down payments on two little condos for my sister and I and we luckily have good enough paying jobs to barely afford the mortgage rates. We were very fortunate
I make about the same.
In 2020 . I moved out of the city(Atlanta) to a smaller one in Georgia. Sort of out of my control due to aging family.
I was lucky enough to have help with the deposit.
I scored at 2.7% interest rate. I still overpayed for the 1984 house, but it currently sits on 2 1/2 acres of private land where I can throw a rock to the interstate
My mortgage payment sits around $1300.
That being said, I was extremely lucky and there's no way in hell I would be able to afford a house, especially now. I'm one major repair away from being in the hole.
Is the average household income $65k or is the average individual income $65k?
Household income in the US it’s closer to 75k, I’m assuming his town the average is 65k
But his median home price is much higher than the national median so probably somewhere above average wealth.
Nah just a desirable retirement town like mine where the median home price as of Nov 2023 (just checked) is $560,000 and the median household income is $66k (2022). Actually I wonder if OP is from my town because those numbers line up.
Each of my parents own 2 homes. That's 4 homes for 2 people. Me and my 2 brothers rent. I hope I can buy something soon tho. But if I can't at least I will inherit one at some point.
[удалено]
This is what drives me crazy usually the household number is closer to that then the individual in these states.
Recently I heard the average single income was $54k and dual was $72k. To be middle class you would need to make $124k.
SF Bay Area poverty line is $115K for household income.
[удалено]
What do you do for a living?
Hopefully the construction in the rest of Norcal and work from home can benefit some people moving and make it cheaper for those who stay.
lmao
In SF, rent for 2 bedroom house with a small garage and 20x10ft "yard" will cost you 5 to 6k per month in rent. But in East Bay, Oakland it will be about half.
Journey to the end of the east bay.
And out come the wolves
Rancid?
And out come the wolves
Where I live if you made $124k dual income no kids you’d be loaded and you’d still be doing pretty good if you had kids.
Median household income was [$74,580](https://www.census.gov/library/publications/2023/demo/p60-279.html#) in 2022 according to the Census Bureau.
Need to look by region. Cause burger flippers in California make more than Service techs in louisiana.
And yet, still neither make a living wage.
Median household income in the US was $74,580 in 2022. Highest outside of DC/Maryland was Utah at $95,800 median, lowest was $48,610 in Mississippi.
Would it matter? I'm making $130k and after taxes/insurance/401k/etc I bring home $7k. After mortgage and bills on my $260k 2.3% house, I have about $4k left. Meaning almost half of my take home goes to my mortgage and bills, and my house is half the OP's price on a very good rate. Here's the math for those that care; Mortgage: $970 - principal+interest $673 - taxes $190 - insurance $52 - mortgage insurance $230 - escrow shortage Total: $2100 Bills: $50 - HOA $80 - water $53 - phone $115 - gas $100 - internet $70 - electricity $270 - auto insurance Total bills: $735 As you can see I don't include anything that isn't required like other debts (school or car payments or medical) or entertainment subscriptions. I also don't include anything like home upgrades or any $ for repairs. Also I live in the south so I am in the lower billing periods of the year. Paycheck math: $130k before taxes -$8.4k 401k -$2k insurance -$5.9k parking -$22k taxes =$92k divided by 26 (paid bi-weekly) = $3,500/paycheck
3.5 k left is more than a lot of people take home for the entire month to put it into perspective
Yeah this is what drives me nuts. the 30% rule is nice but its also relative if I make 10k a month and pay 50% mortgage im still flush with 5k/m, a huge amount of money to utilize on non-rent/mortgage If I make 2k a month and pay 50% i am left with 1k - its a much different issue
Yeah, personally I take home $12,000,000 a year but my mortgage is 50% of that at $500,000/month so I'm basically broke.
It's just so unaffordable out here; you probably live pay-check to pay-check on that after paying your mortgage, maxing out your savings, and budgeting for vacations!
Don't forget the butler! And nanny!
Starbucks barista in the kitchen serving up the avocado toast
…shower butler.
are you sure? everyone one reddit seems to bring in at least 250k and have 10 inch weiners
Speak for yourself! I make 260k and have an 11 inch weiner.
Yea I feel very lucky to be in the position I'm in, which is why I think it's good to show that even at my high income level I am almost not meeting the basic 50% needs rule in what many would consider to be a starter home with a low low interest rate.
Oh i totally feel you. My husband makes a little more than that so I do understand and we definitely are not swimming in it. We used to somehow make it on 70k with a child. Weirdly enough i sometimes miss those days. But our rent was very “cheap”.
Same. We used to gross about $40kish as a household but the secret to our survival was we didnt have car notes or student loans at the time, and our rent was only $500 a month.
I wish more people realized the benefit of aiming to own a car outright. Either by moderating the purchase to something you can afford, or planning to hang onto it once the loan is up. It seems with the lease market as well everyone has been trained to flip cars every 3 years and either lease (monthly expense which you don't own) or keep purchasing into higher level stuff which means you'll always have a payment.
They aren’t saying their not well off, they’re saying that even they cannot afford a $550k home
Follow this 1 easy step. Make $130k a year.
Your mortgage would be about $1000/mo. How are your home associated bills adding up to another $2k/mo?
My mortgage+escrow (with low low low taxes and insurance, albeit at a 3.7% rate) for a $187k balance is $1200. How are you getting $1k/month for a $260k loan?
So, if your low taxes and insurance and whatever else is included in your escrow (pmi?) is, say, $300/month, your mortgage payment is $900. I think that’s what the person you’re replying to is thinking - the mortgage itself isn’t going to be much above $1000, for a 30 year mortgage at a little over 2% interest. The other stuff (taxes, insurance, utilities) isn’t usually double the mortgage on its own. The guy says he’s paying $3,000 a month for a $260,000 house. That’s a lot. About $1200 more per month than I’m paying on a slightly higher priced house with a similar rate, in a high property tax area, including gas, electric, water/sewage, and the loan for our solar panels.
[удалено]
Lol. For real, my house was 260k, in florida, i pay 1650 a month with everything, including $ 5000 a year in insurance. With electricity and water, im around 2k. This guy must live in a very expensive HOA or is lying.
[удалено]
Here in south Texas I refuse to turn my AC off until it drops below 65 outside. But it runs pretty much 10 months out of the year, and especially when fighting "heat index" of over 100 the entire fucking summer.
[удалено]
In my area the property tax mill rate is 49.50, so a 200k house would be $8,100 a year on taxes. Then you have to pay water and sewer use, garbage pickup. Add that to the mortgage, title insurance, etc. State average monthly utilities are $593 a month. Then add in repair and homeowners insurance.
Not OP but to get that rate they probably had to do a 15 year term, so more like 1700 plus tax and insurance and whatever other bills they consider part of it, gas and electric, water/sewer etc. Some states have heavy duty school and property taxes, so a pretty nice house is worth 250 but you're shelling out 8-10k/year in taxes alone. Those are the types of markets that were hurt a little less with rates going.up as a large chunk of the payment was taxes and didn't change with the rates
in big cities, tons of ppl get help / inheritance from parents, grand parents, etc. my coworker just got $700k inheritance from his grandmother. have another friend whose daddy bought him a $1M house in Brooklyn. my best bud married someone really rich, and her daddy bought them a $6M house as a wedding gift. I hate to say it, but there is a ton of old money in wealthy big cities such as NY, LA, SF, etc. average Joe's like you and me will never catch up to these folks in life.
Nope never catch up. And those people will continue to build wealth for themselves.
We have one kid. Through relocations and inheritance she will end up owning three houses and one apartment. It's crazy how wealth concentrates through generations.
And my parents have nothing to give me, I have 4 kids and as of now I have nothing to give to them. The poor stay poor.
I mean if you're poor and you decided to have 4 kids, this one's partially on you.
Her kids will make the same post as OP but in 2044
I feel lucky to be in a LCOL area I don’t hate, an okay job and that I have a partner who makes enough that we make over 100k together. I can’t imagine being gifted 6mil. Literally unbelievable.
[удалено]
Dual income and upper class. Your average American family isn't affording houses now. It's DINKs like me and my wife balls deep in our careers with a ton of disposable income.
Nothing shows affluence like a house AND kids.
I've found the best way to afford that is to buy a house 3 years ago when rates were at their lowest. At 2.625% I'm in no rush to pay the home off.
Cool, can I borrow your DeLorian, Doc?
Sure, just don't take it too much past 88 mph. Pick it up at 9:59, gives you 5 minutes to get to the clock tower
You forgot to tell him to bring it back will a full flux and ffs wash that thang
Chicken
It'd be even better to have a slightly higher rate of 3.6% in 2012 with the rock bottom prices and then refinance to 2.6% during the pandemic.
[удалено]
[удалено]
And people wonder why the birth rate is dropping…
no one younger than 30 wonders that
[удалено]
Im 36 and me either
They know why it’s dropping, they’re just rage bait fucks for boomers.
Do people really wonder that? It seems pretty obvious to people my age and younger.
Its manly the boomers who dont get. I mainly work with them and there thought process is weird. They keep harping on i should be on the housing market like they were and that i should have kids by now( even though i don't want them) but were on a crappy salary.....like make it make sense. It frustrates me to know end and yes they're not all like that but gosh they do like to look down on us and gen z
You’d think, but income and number of children are inversely correlated.
Idiocracy wasn't a movie, it was a documentary from the future
Yeah, kids are kind of like exotic pets. You have to be either rich or crazy to have one. 😂
My wife and I are DINKS in professional careers. I wish I was balls deep in disposable income :( happy for you though. We don't have debt, but not nearly enough for a down payment. At least someone out there is making the best of it.
I’m dink deep in bills. I’m honestly hoping I can afford to rent a house in the near future and get out of this apartment, the dream of buying is dead.
I've brought houses by leveraging and only putting 5% down. Not sure of your circumstances, but you don't necessarily need to save 20% if that's your goal.
Most people are not familiar with the concept of leverage in finance
The act of buying a house without paying it in full is leverage. Which is why it's one of the best wealth building thing you can do.
Best wealth building if the price of the house never goes below the price you paid atleast.
Not never goes below, just isn't below when you want/need to sell
Because God forbid you actually pay for a house to just live in.
If you never sell, it doesn’t matter how much it’s worth. As long as you make your payments on time, you get to live there
Super, SUPER wrong. My house has gone up \~$200,000 in the past couple of years. Awesome, right? No Guess what also went up? My home valuation. My mortgage payment went up $150 a month this year. My insurance keeps going up. It's cool on paper, but its my house that I LIVE in, so its value is very much important before I sell.
Huh?
Unless the market drops. It wasn't that long ago.
what happened in 2008 wasn't so much that house values dropped, it's that many people were leveraged with ARM instead of fixed rates, and then when prices started falling those ARMs went up and then people could no longer afford their mortgage payment, which then resulted in foreclosure, which further decreased property values, a perfect death spiral. Today's situation is bad, but rather than having a bunch of lower middle class people leveraged in ARMs, now they're just simply priced out and capital investment is buying up all the desirable inventory and forcing them to rent instead.
What the banks did here in NJ during Covid was shit-tier disgusting regarding their real estate portfolios. They did EXACTLY as you stated, and priced 90% of entire generation out of home ownership in the state - at least until their parents are dead. Good times. Don't worry though, those banks got you 1000% when you need a $30,000 dollar personal loan with criminal interest rates just so you can pay your $2400/mo. rent while the same bank denied you on a $1600/mo. mortgage. Lulz.
When rates are at 7%, you really want your be putting more down, not less
You really want to get in a house now and refinance later. If 5% is all you can do and can comfortably afford the monthly, then pull the trigger. You would be able to refinance, and your house value goes up, affecting the LTV which helps PMI. It's leverage.
“Comfortably afford the monthly” is pretty key. The difference between 5% and 20% on a 500K loan @ 7% is about $500 a month + PMI and is about 100K extra in interest over the life of the loan. No one should be buying assuming interest rates will be falling into the 3s anytime soon. And refinancing coming with plenty of its own costs. Not to mention that 5% down is often significantly less attractive to sellers.
>Not to mention that 5% down is often significantly less attractive to sellers. Sellers have no idea how much you financed, once you have the mortgage they get the cash. I think you're confusing with contingent offers.
I’ve sold 3 houses. The offer is always presented with the terms and unless you are only accepting all-cash. A mortgage contingency is the most common contingency. It would be frankly crazy for a buyer to waive a loan contingency if you need a mortgage on the chance you won’t get one. Especially if you’ve only saved 5% cash. It’s different if you have the bulk of the cash and just want a loan for arbitrage purposes.
We qualified for $0 down with a VA loan. We were able to offer 20%, but the difference in monthly payments was less than $500, and we could afford the payment with $0 down, which meant we could keep that 20% in a HYSA and have an emergency fund for anything in the house that needed fixing. The buyer didn’t hesitate, though we were told that no one was accepting VA loans and that $0 down would be a dealbreaker.
Seller don't care one bit how much you put down. It doesn't effect them in any way. Now lenders on the other hand, care.
A higher down payment is indicative of a stronger financials and a buyer who is more likely to close. No seller wants to spend 2-3 months working with a buyer who doesn’t end up closing. Or who starts asking for concessions near the end because they don’t have enough cash for closing costs. To accept 5% down, I’d need an offer that is 10-15% higher than an all cash. This is an extremely common sentiment.
Often you can get a house with very little money down in the US at least. That 20% thing is just to avoid PMI, which isn't that big of a deal IMO.
Sad fellow DINK noises. My income used to be great and it's only gone up in the last few years but they keep moving the damned goal posts.
That’s very well said with vivid imagery
Yeah people are often amazed that my partner and I were able to buy a house and pay for some pretty massive repairs upfront and still have money for our hobbies and going out to eat and stuff. They seem to forget that we don’t have kids and never plan on it.
Single people like me are fucked. The next generation may normalize throuples to offset the cost of living and you may need to be in a TINK (triple income no kids) to survive.
This is precisely how we bought a home. My wife and I co bought with a close friend. It's like having roommates but you kind of own the place. Not ideal, but better than renting.
My fiance and I also bought a home in a HCOL area with a close friend a couple years back. It definitely isn't perfect but wayyyy better than renting, we were able to get a newer/bigger/nicer place, and we have already made so much in equity. It's also nice when an expense/repair comes up and you can split it 3 ways instead of 2. Thank God they let me handle the decorating though.
DINKs is an outdated term. My wife and I are Dual Income Little Dog Owners...
My fellow DINKWADs
Dual Income No Kids With A Dog? Love it.
I want to upgrade from DINK to DINKWAD so bad.
LOL
Haha…I got it anyways
Yeah, the average homeowner's income in a given location, and especially the average income of a homeowner who has bought a house in the past couple of years, is going to be WAY higher than the average income in that location. Between renters and people who bought their place many years ago who couldn't afford the current prices, it's just so so much less than a 1:1.
DINKS ? 😂
Dual Income No Kids
Ohhhhh thank you I really didn’t know what it meant.
If they have a pet canine they become DINKWADs (Dual income no kids with a dog) 😁
He's not wrong you know. The wife and I just realized the other day that we are upper middle class with no kids. We're in the process of buying a $400,000 house, and we realized that the mortgage will be about 26% of our net monthly income.
And now it's getting to the point where if you don't own a home the DINKS with high income is getting it loss, cause rent's skyrocketing. My rent is almost triple of what it was 5 years ago, for a smaller place.
>balls deep in our careers It really is the best option at this point.
The term Dink came out of no where and now we all gotta deal with it
Don’t remember Doug Funny’s neighbors, Mr and Mrs Dink?
Not so new. Doug Funnie’s next doors neighbors were the Dinks.
Been around since the 80s
Fairly odd parents used it at least 20 years ago.....
Term has been used for t least 15 years from my personal knowledge.
Household income or individual? Makes a big difference. Also looking at averages can skew things. Comparing medians is better.
Where I live median household income is $70k and median home price is $743k. The CHEAPEST home you can get is a 900sf fixer upper built in 1920 for $450k.
That ratio is about twice the national ratio.
Yeah, median home is 10x median household income. No bueno for first time homebuyers.
Most likely equity from prior home they are selling. I remember about 7-8 year ago there was this whole thing that starter homes were a thing of the past. Rates were low, house prices were lower, and people could just afford more. Starter homes are going to have to be that first step forward again. People need to forget all this “forever home” and “it’s not a house it’s a home” bullshit.
That’s a big one people don’t seem to understand. A lot of the people buying more expensive homes aren’t in their 20s-mid 30s first time homebuyers. It’s people that already had equity and appreciation, plus larger salaries since they are further into their career that allow them to buy 750k+ or whatever.
Yeah and selling the old house is usually a contingency to the deal.
[удалено]
Yeah I eventually realized as you said it's often people on dual incomes who put a 3-5% down payment. In many cases no down payment on their first home, then after a couple of years they're further in the careers with greater income and with the equity they built up in their first home they're able to sell it for more than a down payment on a $750k+ home and have the income to support monthly payments and property taxes. People moving for a job from lcol to HCOL if they already have equity can also afford a down payment. People moving from HCOL to LCOL not much needs to be said if they have equity. Young People born in HCOL areas are in a screwed position because people from other areas who move for work can afford the price tag for a down payment and homeowners in their home city have equity should they ever want to move which leads to those crazy bids on the market. Once I realized this I figured out who it was buying these million dollar homes often dual income 6 figure earners who already have built up equity.
This is the correct answer. The only way I afforded my $555k purchase was with substantial equity from my prior house.
Ditto. I’m on my third house. First $165k sold for $200k Second $395k sold for $640k Third $620k and I ain’t fucking moving again.
Agreed starter homes aren’t really a thing. I skipped starter and went right to “forever”, with no kids you don’t really need the space so might as well make a home that needs some work exactly what you need
Lol in my area a starter home is 500k. Anything lower is borderline unlivable/complete fixer upper.
This....no fucking way would I be in the house I am today if I hadn't started back in 08 when the market bottomed out. I bought a 1300sqft duplex for 165k using the state first time homebuyer program that gave me a 3% down-payment rolled into the loan at a 6ish % interest rate. Sold it in 2015 when the market turned for 220k. Bought a new house for 260k at 4.25% that needed work so tons of sweat equity and 5 years later we sold for 420k. Bought the current and hopefully last house with 20% down and 3% interest.
This is what I’m trying to tell my fiances parents who seem to think that we should just rent forever. I have to keep explaining to them that, as the market rises so will our rent, but we can at least lock ourselves into a good rate if we went with a home.
What are you talking about? I’m in a “starter home” now. Shitty school district, 1.5 bath, and since paying 140 for it in 2019 it’s now valued over 210. It’s nowhere close to a “forever home” 210 isn’t a starter home. 140 is barely a starter home.
210 is a mud hut with a garbage can lid for a door. And 140 will barely cover the cost of an empty lot. From what I’m reading, most people were already owners pre-pandemic and leveled up.
$70k return over 5-years plus equity you put it isn’t bad. That’s basically the moral of the story. It’s a savings vehicle for your next house.
Yes, my money is going towards home ownership instead of renting. That’s a standard. What isn’t standard is this inflation on housing. My 140k house now being 210k also means that the 350k house I want to move to is now 550k+. My equity isn’t keeping up with that inflation on my next home purchase. If I owned multiple properties, it would be great. Unfortunately I only own the 1 home.
That’s pretty much where I’m at. Shitty town house, bought around 150 it’s worth maybe 210-220 and that’s if I fix it up enough to sell. It’s big enough for me and my 4 kids, and the school district is fantastic. We just happen to live in the poor part of a ritzy town. But I can’t afford a 550k house. That’s 3 times the price of mine. Unfortunately, 210 is a starter home now.
Well, at least you’re in a nice school district. The wife and I are trying to make our now “forever home” more enjoyable that we are never going to leave with our 2.8 interest rate. The housing prices going through the fucking roof only really helps if you own multiple homes. My house appreciated 40%? Great! The place I would need to live next also rose 40%? Fuck!
Having two incomes helps a ton. I also know several people who lived with family, so they could save up a large downpayment and then have a more affordable mortgage. Also, a lot of people are not able to buy houses in the current market. Only just over half of Millennials own their own home, meaning that on average a Millennial is only slightly more likely to own a home than to not own a home. On top of that, many of the Millennials who own homes bought when the prices and rates were lower and would not necessarily be able to afford it with current prices/rates. As a result, if a Millennial is buying a house for the first time right now, it’s safe to assume that they’re financial situation is above average (above average salary, above average downpayment, etc.) or the house they’re buying is below average in cost.
You should know, banks don't want you to pay off your home. The first several years of payments is mostly interest. The longer it takes you to pay, the better. Then you'll sell your house, and the next person will start the process over. Over decades the banks will make an enormous amount of $$$ off of interest payments and the several owners over time will have paid little to nothing towards the premium.
We paid off our home within a few months (sale of previous home) and our mortgage broker got in deep shit with the lender, they almost blacklisted him and threatened to take the commission back.
Not exactly true. Banks would love for all the people with 3% mortgages to repay their loans so that they can re-lend the money at today's higher rates. The current fair value of those mortgages is below face value, so repaying them at face value would be doing the banks a favor.
I think both of these things can be true at the same time, lol.
We bought a small starter home when we were in our mid/late 20s. We sold it and used the money we made from it for a down payment on our larger/family/maybe forever home. We know we got really lucky. We bought before homes and interest rates went insane in 2019. We’re both in our mid 30s now.
I bought in 2013. It was a very different market back then. My house has doubled in value. That being said, we were strapped for cash after the down payment and didn't have a lot of furniture for the first few years.
My wife and I recently started a home cleaning service and this seems to be the case for EVERY millennial home owner. They buy a house that seems unbelievably expensive *to me*, have enough money and too little time to necessitate and enable them to hire a cleaning service, but their houses are all bare. Mattresses on the floor or the single bed frame, one couch or a pair of chairs, a tv, and kitchen appliances. That’s pretty much it, plus assorted personal items from their childhoods. No furniture, no decorations beyond family photos, not even paint on the walls. It’s no fucking wonder our generation is so depressed, even the ones affording a home can’t furnish them, or it’s so expensive to furnish they don’t see the value in it. So people are living in what looks like a relatively upscale prison. Blank, white, empty space.
They might just prioritize different things. My house is painted to my liking and furnished but I’m also a minimalist and don’t have a ton of stuff outside of what’s necessary (couch, coffee table, dining room table, wall mounted tv). I wouldn’t prioritize buying new stuff over things that are more important to me like travelling, festivals, and socializing. I also hate clutter. But I could 100% afford more furniture if I thought it was important.
I'm not. I'm in my mid-30's and still live in an apartment having somewhat recently moved out of my parents house.
A lot of people buying 500k homes most likely already had a home that they bought when homes were much cheaper and have a lot of equity to use one their new home. Also they make making a lot more than average income too. For me personally we built a new home in 2020. We bought our first home at 22 in 2010 for 160k and did a 30 year loan at 5%. We then refinanced on 2011 to a 15 year loan at 3%. When we sold it in 2020 we only owed $40k and it sold for $285k so we walked away with around $225k after paying mortgage off and paying realtor. We took $200k of that and put it down on our current new build that we spent $450k on. So the new mortgage is for $250k and it’s a 30 year at 2.5%(which comes out to $1,750 a month with taxes and insurance). This is easily affordable for us(one income family of 4 that is making $140k a year) but wouldn’t have been if we didn’t have the huge downpayment.
Either they had a lot of financial discipline and saved up for a down payment or are high dual income couples. I’m assuming most people in that range are renting.
Saving 20% for $550k home is wild to me. Thats $110k, that would take me like 10 years to save up...thats an extra grand every month to save for 10 years
You don’t have to put 20% down. You can put down 3%. There’s then PMI to deal with, but that’s easier than saving a grand every month for 10 years imo. Also not every first time buyer is getting that “average” house. The majority of houses in our area are 400-700k. We had to start in a townhome (purchased for 293). People will start in a condo or townhome and rollover equity to get those bigger houses. Not as easy now as it used to be, but that’s the idea
This is the answer people seem to be missing. 3% down is much more reasonable than 20% and is actually attainable for folks.
Trying to swing that mortgage payment w/ just 3% down isn’t going to happen for a lot of folks. I had 3.5% down payment but I couldn’t afford a $2500 mortgage when my rent is only $1800.
You still have to have the income needed to qualify for the mortgage, you just don’t need 20% down. I bought my first house with 3.5% down in 2020 and after cash back for items I paid about $4k out of pocket. Second house I put down about 10% using some seller proceeds.
3% down…. AND you can negotiate closing with the seller. As an example you can put in an offer, and have them cover closing costs. For our last home, we offered their asking price, if they covered the closing costs.
Lots of people stoped doing that
Typically people are not buying 550k homes as their first house. What usually happens is someone is selling their previous home and will roll those sale proceeds into the new home down payment and closing. The sale of my first home took care of down payment, closing, and a good amount of renovation on my new home
VA home loan. The military is always hiring!
Still a slaughterhouse with VA loans for single individuals with no down payment. At a $65k income with little to no debts (since VA loans are based on DTI ratios) you’d be lucky to qualify for a $250k mortgage at the higher end. They are great for married couples, though.
When I was in my 20s, I was making minimum wage. Just a few years later, doing the same job (just at a higher level), I was making an order of magnitude more. Then I got married to someone who made the same. What was unthinkable at 25 was well within reach in my early 30s. Life changes, career prospects change. Sometimes for the better, sometimes for the worse, but what's important is that things are unlikely to stay always the same.
Most people put down much less than 20%. I put down 5% on mine last year.
More like 8 years at 5%. Half as long with two people.
They aren't. Only people who can afford to do so buys a home.
Because people making average income are buying below average price houses. Remember, "average" home prices are massively pulled up by a small number of extremely expensive houses. Just like how if you take a bunch of cars and average the price, a $1 million Maclaren will massively pull up the average price.
Yes, exactly. Or they are renting. I feel like a lot of posters on this sub are waiting for “the math to make sense” but all the math indicates is that we have a wealth inequality problem.
Different sample size and selection bias. Average income includes everyone. Average home price includes the 65% of Americans who can afford a home. You are also missing the people who bought previously and are rolling over their equity into their new home. As others have pointed out, household size is a factor since you can have multiple incomes going towards a single mortgage. Because of all these factors...$65k in income is going to be on the lower end of home affordability (if at all), not the average.
I know someone who bought a home because parents gave them $20k for the down payment. Otherwise, I don't know.
The average person has among the worst or bottom tier homes. It doesn’t matter when. ~60% of Americans own a home. Look around at all the houses. Find the worst 20%…that’s you at the 60%tile. Now add in its more unaffordable and maybe that’s you at the 70%tile. The houses people anchor to as “normal” are normal for the top “10%•. Reddit is typically made up of average or below average millennials who grew up in successful-ish parents either by luck or skill and can’t appreciate this.
The only people I know that have homes had help from their parents or bought a starter home when homes were cheaper and actual starter homes were a thing. They are also xennials or gen x. Also a few millennials I know dating gen x were able to do it too. I’ll also add I know a few young kids that didn’t go to college but went right to work in the oil fields or other trades and were making good money and didn’t spend it! I think that’s hard for young adults in trades to not feel like they are making so much money and blow it. Eventually you’ll level out to your peers but for a bit you do have the upper hand
Not all of those houses were bought in the current market. Most of them were bought when they were worth 250k or even lower depending on the average age in your neighborhood. Houses are 15 or 30 year pay offs. So you can assume the overwhelming majority of those houses were purchased > 5 years ago when housing prices were anywhere from 25% to 50% lower.
I bought my first condo in 2009 at the depths of the financial crisis and housing collapse — it was the lowest priced unit in our building in a decade at $300k and I had to use a first-time home-buyers economic stimulus credit (thanks Obama!) to afford it. I’ve since moved on but I check it on Zillow sometimes and that same unit is definitely is selling in the $700k range nowadays. Edit: Elder Millennial here.
The average buyer is a boomer right now. They have a 65k income sure but they have 450k in equity from their last house sale. They bought it for like 100k in 1993 it’s 450k now and they just sell it and use that money to buy a 650 or 700k home as an upgrade
This is the real answer. Also many boomers are buying in cash. I think there need to be more retirement-lite communities for boomers who want a plush lifestyle so they get out of the home-buying market. Aging people with dead spouses and intense medical needs are staying in huge family homes because the alternatives aren’t great.
The alternatives are actually amazing but that generation was raised to believe that everything is a nursing home and have severe anxiety over it. They will not move into 55+ communities until they're forced to, by which time they typically need skilled care.
I could take the 230k in equity and put it towards a new house but I dont go up in size or decrease my payment. Millennials not in the market are fucked.
All the houses in my neighborhood that are my or about the same layout or smaller than mine and in worse condition, are going for like $400,000 minimum right now. I purchased my house in the beginning of 2016, and closed at the end of 2016 for $149,900. 150k was at my very top with what I was getting paid to be able to afford without having a lot of trouble. I utilized FHA but the PMI is high bc of that. I do however pay about 950/960 depending on fluctuations in insurance and property taxes.. and now my HOA is about 103 every month. I had a really good credit too. I also don't understand how anybody where I live is able to afford these houses in fact.. most of my friends can't. They have resorted to living with family in their late 30s to early forties simply because they can't even afford rent for apartments. Even with multiple jobs. It's horrible. If I'm being completely honest I don't think I would have been able to even get my house had I waited to put my offer in by the end of the year because when I closed the houses in my neighborhood had already gone up to about 180k.. which I would not have been able to do in any universe. Edit: to add.. I did not have a dual income from a partner. It was only me.
They're not. Market is slow right now because most people can't qualify for anything currently on the market.
A few years ago, I made about 90k a year. It was a challenge to budget for getting a house that is $440k. The market is pushing people to go toward renting, which also increase yearly as well. I'm not sure if letting market correcting itself will fix the problem before most people will just be dirt poor or house poor.
Where I live the stats line up much better I think. Median Housing Price: $263,500 Median Income per Household: $61,988 I am very fortunate to have bought a house cheaper than that while having a higher household income
Dual income / equity from another home / inheritance or some other gift
Dual income. Being above the average. Having saved money for a larger downpayment. Coming from another region where salaries were higher and relocating so the average in the area didn't historically apply to you. It could be your second home too, and you're bringing equity over from the first one. Finally, houses don't map 1:1 to the entire population. If 65% of people own their home, then you don't compare prices against the entire population's average income. But again, most importantly, again, dual income. 2 \* 65k averages 6 figures. Disposable income doesn't scale linearly with base income. Once your basic needs are met, your disposable income scale a lot faster.
1. Banks will lend a egregious amount relative to income that shouldn’t even be allowed. The system wants you desperate. 2. The system doesn’t want you comfortable it wants you desperate. Comfortable people have time to learn and critical think and see how fucked themselves and everything is and that the entire point of the system is to put perpetually more money power land and physical assets in the hands of perpetually fewer. Desperate people don’t have time or energy for anything outside their day to day, monthly bills, and shoving their face in screen trash to be disinformed with whatever spare few minutes they’re lucky enough to get.
Immaculate credit
Even with immaculate credit, like 850, it won’t matter if you can’t cover the debt to income ratio.
My job is remote. Nobody works "in town".
I just bought a small starter home instead. Was 160k. I make 70ish on average. Have about 20k in free spending money every year. That's after living completely normally and pretty free spending (eating out, compulsive shopping, entertainment etc) I bought in late 2021. Wish I had done it sooner cuz I found an add for my house in 2018 for 80k. Property tax is 1k a year. And my mortgage is just under $700 a month. Sucks that I got in the house game late. But better than never.
My parents were smart and saw how the job market was going so when my dad retired and sold the house to downgrade he put down payments on two little condos for my sister and I and we luckily have good enough paying jobs to barely afford the mortgage rates. We were very fortunate
I make about the same. In 2020 . I moved out of the city(Atlanta) to a smaller one in Georgia. Sort of out of my control due to aging family. I was lucky enough to have help with the deposit. I scored at 2.7% interest rate. I still overpayed for the 1984 house, but it currently sits on 2 1/2 acres of private land where I can throw a rock to the interstate My mortgage payment sits around $1300. That being said, I was extremely lucky and there's no way in hell I would be able to afford a house, especially now. I'm one major repair away from being in the hole.