How are people affording these crazy home prices?

[Rob5589]

What city/state do you live in with those wages?

That's typical for CA, which I believe he lives in So California.

Don't forget comp time. A cop I know comp'd 25 years worth of ot, holiday, etc, and cashed out at retirement. It was a 260k check that he used to buy a cabin on the Rogue in Oregon.
Public employee pensions are killing cities in California.

 

[Poser]

https://www.reddit.com/r/awfuleverything/comments/pwxuip

 

[Stikbrandon]

Has the wage you made as a 25 yo gone up much?


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It has doubled, but not because the position I was in when I bought my house received a pay increase, it’s because of hard work and promotion.

 

[NDGuy]

I have no other debt, keep spending in check, have a good paying job and took advantage of buying my forever home for 2.6% interest.

 

[TheGDog]

It's a struggle you must commit to if you want the possibility of a better financial trajectory for your offspring.

They way I figure it... if I can juuust manage to pay this place off ($549K at the worst time of buying in 2007 with Mama pregnant and me wanting that boy born into a home.) and be able to hand it off to the boy.... figure maybe we can do a remodel when he's old enough to take on the loan. So we can have like the downstairs floor and he can have an upstairs floor with it's own separate access , so I'm not cramping his style searching for a mate.

But we'll have to see. If it gets crazy bad... I may revisit the idea of moving out of state.

And dig this... when we first got into the home and loan.. then.. the govt... these @holes go and change the rules on us. All this talk of providing help to those who need it and don't over extend themselves.. yeah... he was talking about me.. but.... you only GET that help if your loan is backed by Fanie Mae or Freddie Mac. My credit was great so I didn't need to be backed by them... thus..screwed out of getting that kind of help.

Checked with my loan provider and now you have to have better than a 90 loan-to-value ratio before you can get a refi. But.. since these @holes go and change the rules out from underneath me... THEY created conditions whereby my homes value went under there for a bit. So... I committed toward paying down the small 2nd mortgage they tacked on to the deal so that I wouldn't need to do PMI insurance. Cause it was the highest APR. Loan provider fully concurred with my strategy. After paid that 2nd down enough... then could finally refi at a great rate commensurate with my credit rating. But until I could break that loan-to-value ratio that got all screwed up by THEIR actions... there was nothing I could do except possibly not pay my debts and then apply for help THAT way... but doing so runs the risk of 7+ years of bad credit, so I shined on doing that. As my credit has always been immaculate since 19yo.

It ends up working out though. Because if you hold on long enough the loan to value ratio bounces back, then you do a refi at a nice low rate. But there was definitely a period where you hold your breath and try not to do anything too risky there for a bit.

All this BS of the property values inflating.. that's just the politicos using that as a means by which to increase THEIR income they can play with! Since the taxation for properties is expressed as 1% of a controlled purchase-price-based value that's increased slightly each year (Proposition 13 values). It prevents them from upping the taxing to oust elderly folks when they wanna turn-over ownerships as part of their master plans. They're only way to get around that and for them to exert financial pressure again so they can help gentrify areas in order to reach end goal of higher income revenue stream... you create conditions whereby existing owners rejoice thinking Oh great! I've got more asset now! Which encourages people to take out loans for redo projects, etc. And also the skyrocketed values lock in new buyers into a higher taxation rate based on that higher purchase price to begin with.

 

[Bobbyboe]

That's typical for CA, which I believe he lives in So California.

Don't forget comp time. A cop I know comp'd 25 years worth of ot, holiday, etc, and cashed out at retirement. It was a 260k check that he used to buy a cabin on the Rogue in Oregon.
Public employee pensions are killing cities in California.

Not going too dive deep into politics, but that’s not surprising. California is not the only state with pensions that are crushing community’s. In my opinion, those cities financial problems are not solely caused by pensions, but rather piss poor city management as a whole. Guess my point is, not all public pensions are like that.

That comp time rule is interesting. My comp is capped at 120 hours. I use it for additional time off. When my final 3 years come I’ll bank it and use it to my advantage to increase my pension. With the 120 hour cap it’s not a substantial boost.

 

[Savage99]

It has doubled, but not because the position I was in when I bought my house received a pay increase, it’s because of hard work and promotion.

Sorry, I meant the wage of that position.


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[jlh42581]

The problem is that in most areas housing shot up 30 percent but wages havent moved.

Yep and in the past year the Govt has cooked the books so much that they told everyone inflation didnt exist. Big shocker to come out this summer, its more like 6%. MANY employers used "inflation doesnt exist right now" with the fact people did their jobs from home with covid to justify not giving pay increases. So, yep, housing prices, regular inflation, shortages and stagnant wages.

Exactly why people are question who the hell is biting into a house thats 200k over its value. If this market crashes this country is gonna feel it BAD.

 

[DavyCrockett]

To be the contrarian here, I believe housing has turned the corner and will start to go down over the next several months. If you look at housing supply numbers we are actually back to the 6 months supply from a low of 3 months. You can google this from the Fed by searching "US housing supply chart". Oddly, there are articles on cnbc and other financial sites within the last week claiming housing is still at a 40 year low which is outright wrong. Reuters is the only news org that is pointing out that the housing supply is actually back to 2017 and 2018 levels over the last couple months and headed to 2019 where housing was starting to stall.

Illiquid assets take a while to follow fundamentals because you have to change people's psychological state around the market dynamics. Also, it is in the realtors association's best interest to continue to pump scarcity themes even as supply increases as they will have increases in sales but at the still inflated prices.

Even looking at some markets in Spokane and Montana, over the last couple weeks there has been 2-5x more new listings than home sales over the same period.

Another less concrete data point, I own a second home as an Airbnb and know some of my neighbors in the area are being quite greedy and will panic sell when they see the paper value of their property go down. I actually offered to buy one of their's a few months ago and was denied because they think this market dynamic will go on forever. This is just my theory, but I think there will be some reverse FOMO from sellers with second homes when the market starts to correct which will further increase supply. A lot of people mentally spend that equity before it has been realized and will struggle mentally to see it go away.

 

[CorbLand]

Yep and in the past year the Govt has cooked the books so much that they told everyone inflation didnt exist. Big shocker to come out this summer, its more like 6%. MANY employers used "inflation doesnt exist right now" with the fact people did their jobs from home with covid to justify not giving pay increases. So, yep, housing prices, regular inflation, shortages and stagnant wages.

Exactly why people are question who the hell is biting into a house thats 200k over its value. If this market crashes this country is gonna feel it BAD.

If you have the equity to roll its a great time to buy. Plus the super low interest rates make it very appealing. Most people I know are getting 2.5-2.7% interest rates. That's pretty much free money at that point. The people this is really killing is first time home buyers like myself.

The end of 2020 and beginning of 2021 were really good to my wife and I as far as income goes. We basically saw a 50% increase with both of us getting new jobs. The problem was as soon as we got that, everything else sky rocketed. I make 50K a year before taxes. After taxes and insurance my take home is ~2900. For most homes in my area we are looking at 420,000. I have 50,000 to put down which puts us at 2000.00 a month for a payment. The only debt I have is 13,000 in student loans. Pretty hard to live off of 900 bucks a month. With my wifes income, we can swing it but then you add in the having kids and day care back to square one. Even take out the prices, just trying to get a house right now is insane. We have put in 7 offers since March. In no way shape or form am I complaining. We all have to play the cards we have been dealt but there is no way of denying that the people that are just starting are getting the short end of the stick at the moment.

 

[TheGDog]

F'Real Do! on the daycare scenario. With that that right there, I knew I couldn't afford to do another kid. Especially since we started late. Couldn't afford to have TWO of them mofos in daycare at the same time. No way. So cut things very thin during his daycare years running way leaner on funds than I would ever like to do. Sucked majorly. And stressful as all getout when you know that you have no buffer zone. Walking around crossing your fngers the house just doesn't up and EFF you over with another costly repair. Thankfully we were able to get to around the refi era before I started having to cough up major loot towards house fixing repairing stuff. Like exterior paint and stucco. Pool redo. New energy efficient windows throughout.

That pretty much sums up the new era. It's an era of "No buffer zone". Meaning ya might be able to pull off doing that house.. but you'll be a slave to it. Trapped in that home unable to afford doing anything frivolously fun for yourself.

Some are ok with that if they've had enough years under their belt. They shift their thinking into gotta get it paid off before retirement, because there is no other option. And it's all just part of a long term change where we're all gonna have to take change our thinking in terms of NEEDS vs WANTS. I already know my retirement is gonna just be "meh" and not what it should be like. But... a couple marriage do-overs will do that to ya. I'm just shooting for not being a burden on anyone. We'll see if I can remain in CA though after retirement years. Guess it all depends on how aggresively the boy starts getting thru schooling I imagine. Figure most likely he'll have a chance to go to a 4yr brick and mortar, backed by the home equity. Figure if I can hold down the fort until he's mid 20's on up. Then things can shift and more of the plan may rely upon his taking over running with the ball by then. If we remain here in CA. After retirement hunting will go way down and likely I'll have to shift over to fishing since I'm near the coast. It's just not the same, but oh well. I've bee enjoying it while it lasts.

 

[BuckHunter24]

To be the contrarian here, I believe housing has turned the corner and will start to go down over the next several months. If you look at housing supply numbers we are actually back to the 6 months supply from a low of 3 months. You can google this from the Fed by searching "US housing supply chart". Oddly, there are articles on cnbc and other financial sites within the last week claiming housing is still at a 40 year low which is outright wrong. Reuters is the only news org that is pointing out that the housing supply is actually back to 2017 and 2018 levels over the last couple months and headed to 2019 where housing was starting to stall.

Illiquid assets take a while to follow fundamentals because you have to change people's psychological state around the market dynamics. Also, it is in the realtors association's best interest to continue to pump scarcity themes even as supply increases as they will have increases in sales but at the still inflated prices.

Even looking at some markets in Spokane and Montana, over the last couple weeks there has been 2-5x more new listings than home sales over the same period.

Another less concrete data point, I own a second home as an Airbnb and know some of my neighbors in the area are being quite greedy and will panic sale when they see the paper value of their property go down. I actually offered to buy one of their's a few months ago and was denied because they think this market dynamic will go on forever. This is just my theory, but I think there will be some reverse FOMO from sellers with second homes when the market starts to correct which will further increase supply. A lot of people mentally spend that equity before it has been realized and will struggle mentally to see it go away.

I hope you're right but a 35 year old single wide in my neighborhood just listed for 390k

 

[FLATHEAD]

I hope you're right but a 35 year old single wide in my neighborhood just listed for 390k

Thats for people with money.!!

 

[ranchhand02]

I think it is like that all over the US. I am seeing housing prices higher now than they ever have been.

 

[Savage99]

If you have the equity to roll its a great time to buy. Plus the super low interest rates make it very appealing. Most people I know are getting 2.5-2.7% interest rates. That's pretty much free money at that point. The people this is really killing is first time home buyers like myself.

The end of 2020 and beginning of 2021 were really good to my wife and I as far as income goes. We basically saw a 50% increase with both of us getting new jobs. The problem was as soon as we got that, everything else sky rocketed. I make 50K a year before taxes. After taxes and insurance my take home is ~2900. For most homes in my area we are looking at 420,000. I have 50,000 to put down which puts us at 2000.00 a month for a payment. The only debt I have is 13,000 in student loans. Pretty hard to live off of 900 bucks a month. With my wifes income, we can swing it but then you add in the having kids and day care back to square one. Even take out the prices, just trying to get a house right now is insane. We have put in 7 offers since March. In no way shape or form am I complaining. We all have to play the cards we have been dealt but there is no way of denying that the people that are just starting are getting the short end of the stick at the moment.

Corb you nailed it. I hear what Stik is saying and most of us here I assume are the hardworking variety. My wife worked for about a six months while our youngest was a baby. It was just too much and zero quality of life. We have about that saved, drive a 21 yo truck and a ten yo car, but we just can’t afford to do it here and now. Since we made the move and the plan in 2016, home prices have almost doubled. Neighbors where we rent one bought in 2014 for $277k, one in 2019 for 436k, and now homes are going for $550k+.

I do feel blessed to be able to save money now, even “throwing money away on rent”.

Before she’d gone back to work every time we’d get the emergency fund up we’d get whacked by Murphy. I don’t complain much (although I have in this thread ), but it stings a little bit hear older generations (or people with lucky timing) talk like we just aren’t disciplined enough or this or that. Someone else talked about cooking the books on inflation, it’s probably worse than 6%. Wages just haven’t gone up even close to the cost of living.

My dad built our family home growing up, $11k for the lot 1.25ac, and I believe about $60k const. loan back in ‘87.


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[william schmaltz]

I feel like some of you guys need to give yourself some grace for renting. It's not as much "throwing money away" as you think. An example above was looking at 420K home with 50K down.

Even being really generous with a 2.75% rate, that's still 10K a year in interest. Gone. That 2.75 rate isn't exactly free money when you pencil it out. Tack on another $300-$400 a month in taxes and another $100 a month for home insurance. Plus another $100 or so for PMI. You're looking at basically $1300-$1400 a month that's not going towards principal. Throw away money to the bank, government, and insurance companies. That doesn't cover upgrades and things that just always break. So if you're renting for around $2K, you're only "throwing away" about maybe $500. That's with no liabilities and no risk. Seems like a good deal to me.

It was hard for us to justify not renting until we bought our house at 32 years old. And when we did, our realtor and mortgage company laughed at what we put our max loan amount at. I just can't stand paying huge chunks of interest to the bank. I hope it all works out for guys looking to buy, and I know everyone wants something that's theirs, but I personally wouldn't chase something. So you could over pay $50K for a house now to save that $500 a month; Or wait a year or so and "throw away" that $6K worth of rent money and potentially save $50K on your house (probably save that 6k in interest payments). Just giving an example to hopefully ease some stress. And obviously that assumes the market comes down. But I have little faith in our economy right now.

There are a lot of big money guys that look at a house as a trap the bank has set on the middle class and a huge liability. They will never own a house. They would rather have that $500K in an investment and have it pay their rent with no liability. Some of them have a very good argument. Grant Cardone and Robert Kiyosaki are a couple guys worth listening to their thoughts on home ownership.

 

[CoStick]

If you have the equity to roll its a great time to buy. Plus the super low interest rates make it very appealing. Most people I know are getting 2.5-2.7% interest rates. That's pretty much free money at that point. The people this is really killing is first time home buyers like myself.

The end of 2020 and beginning of 2021 were really good to my wife and I as far as income goes. We basically saw a 50% increase with both of us getting new jobs. The problem was as soon as we got that, everything else sky rocketed. I make 50K a year before taxes. After taxes and insurance my take home is ~2900. For most homes in my area we are looking at 420,000. I have 50,000 to put down which puts us at 2000.00 a month for a payment. The only debt I have is 13,000 in student loans. Pretty hard to live off of 900 bucks a month. With my wifes income, we can swing it but then you add in the having kids and day care back to square one. Even take out the prices, just trying to get a house right now is insane. We have put in 7 offers since March. In no way shape or form am I complaining. We all have to play the cards we have been dealt but there is no way of denying that the people that are just starting are getting the short end of the stick at the moment.

Our first house we had to purchase in a less than desirable area than we would have liked. East colfax in Denver. It was what we could afford, in a few years we needed more space, our income had increased, and the home had appreciate. We then moved up to our next and I think long term home. Would rather add land in the mountains vs bigger house. It is a process. I also miss our old neighborhood and neighbors. Was a real community feel. At any rate I would share home ownership is possible, just depends on how bad you want it.

 

[Savage99]

Our first house we had to purchase in a less than desirable area than we would have liked. East colfax in Denver. It was what we could afford, in a few years we needed more space, our income had increased, and the home had appreciate. We then moved up to our next and I think long term home. Would rather add land in the mountains vs bigger house. It is a process. I also miss our old neighborhood and neighbors. Was a real community feel. At any rate I would share home ownership is possible, just depends on how bad you want it.

Well said.


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[Beendare]

Yeah, its typically the same story for every homeowner I know;

Scrape and save for years…then buy a dump/ cheaper fixer or something in a less desirable area to get started. Its easy for renters to point fingers and say, “ Look at you now” They never saw the years where my wife and I didn’t go out, 20 yr old vehicles, never ordered drinks in bars, used furniture, etc- just to save money,

Once you turn the corner on equity and keep building it….you can breath a little.

.

 

[CoStick]

Yeah, its typically the same story for every homeowner I know;

Scrape and save for years…then buy a dump/ cheaper fixer or something in a less desirable area to get started. Its easy for renters to point fingers and say, “ Look at you now” They never saw the years where my wife and I didn’t go out, 20 yr old vehicles, never ordered drinks in bars, used furniture, etc- just to save money,

Once you turn the corner on equity and keep building it….you can breath a little.

.

Yes, the early days were lean, but some amazing memories. We ate a lot of meatloaf, cheap and provided numerous meals