How are people affording these crazy home prices?

[11boo]

A well-designed city (e.g. Amsterdam, Vienna, Copenhagen…) is a beautiful, lively and efficient place that can provide a very high quality of life in a compact area.

The European model may work there. Never here.

 

[scattergun]

The European model may work there. Never here.

Why not?

 

[Banded_spooney]

My wife and I are trying to prepare to sell our home in the next 1-2 years to "cash" in on our equity and buys some land. I did the math the other day on "equity" that we have in our home. We have owned our home for 10 years. I looked at our interest that we have paid, I will say we refinanced to a 15 year mortgage so it is slightly skewed. We bought our house for around $230K, house is worth around $400k now. After all the upgrades, maintenance and interest we will make around $40k. If we would have stuck with a 30 year mortgage, that number would go down. Long story, I think owning land is worth it but if I had to live in a city, I would probably just rent.

You'll make 40k and you'll have been refunded all of your housing expenses for 10+ years. Don't discount that you basically just got paid 40k to live in a place for 10 years.

 

[11boo]

Why not?

You may think packing everyone into small flats in a small area is great, but I don‘t know anyone else who does. I don’t know any homeowners who would go back to apartment life.

 

[aftriathlete]

Some aspects of this thread remind me of a half-ton towing thread. "My half-ton pulled this 16,000 lb trailer just fine" = "We bought our house in 20XX, we made out ok." Congrats to both, you made it, though it doesn't necessarily mean it makes sense for everyone or that it couldn't have gone very wrong or may still go wrong in the future. We move frequently (every 1-3 years for the last 18 years) for the job, so I'm one example of someone with particular circumstances that definitely changes the calculus in a big way with regards to whether it makes sense to buy or rent compared to say someone who plans to remain in a house for the next 10-30 years. I'm sure there are a lot of those kinds of individual circumstances, one for every person, not the least of which is timing. Anyone trying to buy right now is in for a world of pain.

I will add though that my home ownership philosophy is definitely more aligned with the Robert Kiyosaki take that if you live in the home you're making mortgage payments on, it's a liability, not an asset. Just in the year I've been renting our house's owners have footed the bill for a new AC unit (~$15K) and a new oven/stove ($2K). It's an asset to them when they aren't paying out money that they're on the hook for, but they're always on the hook if something breaks. Yes, we're paying down their mortgage though, but it's not a clear, one size fits all win either way. I will say it's important to me to have the flexibility inherent to not having a mortgage on a house in a place we don't intend to remain when we're approaching active duty retirement time.

 

[CJohnson]

I mean... if you don't pay taxes on anything it won't be yours.. Food, vehicles, fuel, toilet paper, the list goes on... Taxes, unfortunately, are a part of life.

I pay taxes on all of those things one time when I purchase them, not annually forever at a rate that is arbitrary set by unelected government officials in some cases. Kind of a silly comparison.

 

[NRA4LIFE]

Why not?

I would have to guess Socialism.

 

[Dos Perros]

You may think packing everyone into small flats in a small area is great, but I don‘t know anyone else who does. I don’t know any homeowners who would go back to apartment life.

One time my Danish boss invited me to his house. Director level guy, very modest home. It was a few minutes walk to the ocean, so that was cool, but I'd guess maybe 1800 square feet, maybe smaller. Sparsely and modestly decorated. Two tiny vehicles. Wife didn't work. I could totally see how someone could be happy, even happier than my situation, but it's just different. I could never see middle class America feeling satisfied with something like that. We're just not wired that way.

 

[PNW bow hunter]

Some aspects of this thread remind me of a half-ton towing thread. "My half-ton pulled this 16,000 lb trailer just fine" = "We bought our house in 20XX, we made out ok." Congrats to both, you made it, though it doesn't necessarily mean it makes sense for everyone or that it couldn't have gone very wrong or may still go wrong in the future. We move frequently (every 1-3 years for the last 18 years) for the job, so I'm one example of someone with particular circumstances that definitely changes the calculus in a big way with regards to whether it makes sense to buy or rent compared to say someone who plans to remain in a house for the next 10-30 years. I'm sure there are a lot of those kinds of individual circumstances, one for every person, not the least of which is timing. Anyone trying to buy right now is in for a world of pain.

I will add though that my home ownership philosophy is definitely more aligned with the Robert Kiyosaki take that if you live in the home you're making mortgage payments on, it's a liability, not an asset. Just in the year I've been renting our house's owners have footed the bill for a new AC unit (~$15K) and a new oven/stove ($2K). It's an asset to them when they aren't paying out money that they're on the hook for, but they're always on the hook if something breaks. Yes, we're paying down their mortgage though, but it's not a clear, one size fits all win either way. I will say it's important to me to have the flexibility inherent to not having a mortgage on a house in a place we don't intend to remain when we're approaching active duty retirement time.

You have some very valid points for sure.

Any of my comments were only directed at the guys claiming nowadays you can come out ahead renting over your entire lifetime versus buying. Who knows, they may be right, But I don't see it working out that way.

If I was in your shoes I would for sure be a renter!

Just closing costs on the loan, and then real-estate fees to sell could easily be $40k-$60k. I wouldn’t want all that if I may have to move in a year or two.

A home purchase is expensive, selling is expensive.

Buying the wrong/bad home can be very expensive

Selling a home is expensive

Ive always figured its a good time to buy if:
1. I can comfortably afford the mortgage
2. I can see myself living there 10 years MINIMUM
3. I like the house, it is in an area where I want to be longterm, and I don't care about fluctiuations in value.

If I can’t check all three of those boxes, I’m definitely adding some risk into the equation

 

[z987k]

One time my Danish boss invited me to his house. Director level guy, very modest home. It was a few minutes walk to the ocean, so that was cool, but I'd guess maybe 1800 square feet, maybe smaller. Sparsely and modestly decorated. Two tiny vehicles. Wife didn't work. I could totally see how someone could be happy, even happier than my situation, but it's just different. I could never see middle class America feeling satisfied with something like that. We're just not wired that way.

That's literally the American dream from 1950.

1800sqft is more than enough to raise 2 kids in. 2 cars, a wife that doesn't have to work in a house you could afford. You should go look at the average size of a house in 1955.

If we NEED 4000sq ft and complain we can't afford anything on a middle class income, that's because affording a house that big isn't a reality on a middle class income.

 

[Dos Perros]

That's literally the American dream from 1950.

1800sqft is more than enough to raise 2 kids in. 2 cars, a wife that doesn't have to work in a house you could afford. You should go look at the average size of a house in 1955.

If we NEED 4000sq ft and complain we can't afford anything on a middle class income, that's because affording a house that big isn't a reality on a middle class income.

Well aware of all that. This dude didn't have kids in the house. My point remains, most people don't want the American dream of 1955.

 

[ODB]

Well aware of all that. This dude didn't have kids in the house. My point remains, most people don't want the American dream of 1955.

Which is really a shame. We seem to have been programmed that if we don’t buy big houses and fancy cars we aren’t a success.

What has replaced the 1955 dream?

in my mind it’s pure envy and materialism.

 

[z987k]

Well aware of all that. This dude didn't have kids in the house. My point remains, most people don't want the American dream of 1955.

Ok, how about the American dream in 1990 then. When maybe both adults had to work, but not if one had a good job, and the average home size was only 2000sqft and that was easily affordable on a single middle class salary.

 

[z987k]

Which is really a shame. We seem to have been programmed that if we don’t buy big houses and fancy cars we aren’t a success.

What has replaced the 1955 dream?

in my mind it’s pure envy and materialism.

I think that's what some of the disconnect in this thread has been in the rent vs buy. Builders don't build reasonable sized homes anymore. If you call a local builder and want a 1500sqft house, they'll just hang up on you. So no new stock of houses for the middle class exists. You are limited to whatever exists older than about 1980.
The opposite of materialism with the new generation is freedom of their time. They don't want jobs that require 60hrs a week. Or even 40 if possible. Also maximum vacation/PTO is more highly valued than money. I know I fall into that latter part. Company wanted to buy back all vacation this summer because we're short staffed. Their offer was 1.5x, I told them each week is worth 80k to me and I'd be happy to sell it for that. That's how I value MY time.
This all puts younger people in a position where they cannot afford the McMansion all the 50+ year old people want and have been building the last 25 years. Which means they cannot or can barely afford a house and maintain a lifestyle they want.

I'm hoping that with prices skyrocketing, eventually we'll run out of people building monstrosity houses and get back to building what the average person can actually afford. I bought some land last month, with a note because I'm paying cash for the build. Talking to my loan officer, he says around 25% of loan applications right now are people asking for a mortgage that is a full 50% of their monthly net income. They're local and turning those down, but I bet there's some bank somewhere approving a bunch of those. That is being enslaved by your house. They probably won't be able to afford to put furniture in it.

 

[Rich M]

Try not paying taxes and see what happens to “your” home.

Try selling a rental place and getting $x$ in equity.

I'm just playing.

I'm not an engineer but m pretty close and my mom was an accountant. So, pretty deep on the numbers side of things. It's not for everyone but those who do it usually benefit in the long run.

I've rented and owned and been a roommate and even slept in a tent for 1 night at a temp job before a coworker invited me over her house. Nice girl, taught her how to budget and save.

Why not?

Property ownership. I believe that the US is one of the few places on the globe that you can own land and basically do what you want with it - the rights are given to the people and not to the government.

I might be completely wrong but there is a reason the govt could design the city - it highly favors the govt.

I'm not in favor of the govt controlling more stuff so favor the urban sprawl that allows folks to determine their own destiny. Socialism sucks.

One time my Danish boss invited me to his house. Director level guy, very modest home. It was a few minutes walk to the ocean, so that was cool, but I'd guess maybe 1800 square feet, maybe smaller. Sparsely and modestly decorated. Two tiny vehicles. Wife didn't work. I could totally see how someone could be happy, even happier than my situation, but it's just different. I could never see middle class America feeling satisfied with something like that. We're just not wired that way.

I live in a 1,200 sf house. Folks can be totally happy in any situation they allow themselves to be happy in. Maybe you aren't as in touch with middle class America as you are the wanna look like upper class America. I'm likewise amazed at the size of current houses.

Johnny wants to compete with the neighbors and his online social network, Jimmy doesn't care what anyone thinks, makes the same as Johnny and saves $50K a year instead of continually updating the house. Two diff mindsets, neither is wrong or right. All depends on what is important to you.

 

[aftriathlete]

A home purchase is expensive, selling is expensive.

Truth.

 

[Erussell01]

My wife and I just bought a little house on 25 acres. Honest to God I don't know how we got it for what we did in the light of all the absolute craziness. If it wasn't in the middle of nowhere I'm certain we could have never afforded it. We did something crazy and bought it in the winter time when we couldn't even see the property. Luckily for us, it's gold. Oak trees everywhere. Tons of deer grouse and turkeys.

The price compared to 3 years prior when it was bought had gone up, but the owner had Also built a shed, put in a new septic and well and a roof.

We got so lucky


I pay about 250$ more a month for the house and utilities than what we were paying for rent before. I'm so damn thankful to be done renting.


We have a 5 mile dirt road leading to the house. The drive in is full of deer in the fields, ducks in the ponds and beautiful sunsets on my way home from work.


We bought less house than the bank would give us a loan for and less house than the realtor was pushing us to go for. We saved our pennies for years for a down payement and honestly we got lucky. I wish we had bought it in 2018 when we started renting.

I'm not sure where some of these people get there money but I suspect many will be selling the new truck, boat and camper if they want to keep the house once the student loans kick back in.

 

[fngTony]

My wife and I just bought a little house on 25 acres. Honest to God I don't know how we got it for what we did in the light of all the absolute craziness. If it wasn't in the middle of nowhere I'm certain we could have never afforded it. We did something crazy and bought it in the winter time when we couldn't even see the property. Luckily for us, it's gold. Oak trees everywhere. Tons of deer grouse and turkeys.

The price compared to 3 years prior when it was bought had gone up, but the owner had Also built a shed, put in a new septic and well and a roof.

We got so lucky


I pay about 250$ more a month for the house and utilities than what we were paying for rent before. I'm so damn thankful to be done renting.


We have a 5 mile dirt road leading to the house. The drive in is full of deer in the fields, ducks in the ponds and beautiful sunsets on my way home from work.


We bought less house than the bank would give us a loan for and less house than the realtor was pushing us to go for. We saved our pennies for years for a down payement and honestly we got lucky. I wish we had bought it in 2018 when we started renting.

I'm not sure where some of these people get there money but I suspect many will be selling the new truck, boat and camper if they want to keep the house once the student loans kick back in.

Sounds like a great place! How far out are you and do have to commute every day?

 

[11boo]

Congrats Erussell!

 

[NRA4LIFE]

Try selling a rental place and getting $x$ in equity.

I'm just playing.

I'm not an engineer but m pretty close and my mom was an accountant. So, pretty deep on the numbers side of things. It's not for everyone but those who do it usually benefit in the long run.

I've rented and owned and been a roommate and even slept in a tent for 1 night at a temp job before a coworker invited me over her house. Nice girl, taught her how to budget and save.


Property ownership. I believe that the US is one of the few places on the globe that you can own land and basically do what you want with it - the rights are given to the people and not to the government.

I might be completely wrong but there is a reason the govt could design the city - it highly favors the govt.

I'm not in favor of the govt controlling more stuff so favor the urban sprawl that allows folks to determine their own destiny. Socialism sucks.



I live in a 1,200 sf house. Folks can be totally happy in any situation they allow themselves to be happy in. Maybe you aren't as in touch with middle class America as you are the wanna look like upper class America. I'm likewise amazed at the size of current houses.

Johnny wants to compete with the neighbors and his online social network, Jimmy doesn't care what anyone thinks, makes the same as Johnny and saves $50K a year instead of continually updating the house. Two diff mindsets, neither is wrong or right. All depends on what is important to you.

If you think you can do what you want with you're property, try moving to King County in WA. I would need a permit to mow some of my yard if I wanted.