How are people affording these crazy home prices?

[Maki35]

Guilty as charged.

Former city dweller here. Hesitant to post as with all the negativity towards city dwellers here, ha.

During early pandemic days, i saw a zillow listing, liked what i saw, called the agent and offered 20k more than asking price without setting foot on the property. sold my city home and moved into sticks.

Old house (Sold over asking price) - Close to NYC, Worked from office - 1350 sq ft - 0.15 acres - 3800 monthly mortgage (5% rate) - (congested area, suburban, unfriendly neighbors, list goes on)

New House - In the Sticks, Work from Home - 2400 sq ft - 9 acres - 1800 monthly mortgage (2.75% rate) - hunting, skiing, hiking, 50 yard range, good neighbors etc etc. House is backed to 3000 acres of public land hunting grounds, no one can build anything.

PS: I am NOT mr. money bags, i was broke and living out of car with bag of clothes 8 years ago. Simply made better life choices.

Sounds like Westchester or Nassau moved upstate?

 

[thinhorn_AK]

I have been asking this for about 10 years. How does everyone my age have a house with at least 1000 sf more than me and a brand new f150 in their 3 car garage? And I am a surgeon! My guess is dual income family and living on credit. But what do I know?


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I ask myself the same thing all the time. The boats I see being trailered around with brand new trucks…huge houses. Me and my wife have a pretty good dual income and don’t have a 100k boat being pulled around with an 80k truck. Lol I have a 20k boat I pull around with a 20 year old truck.

 

[HuntingIndian]

Sounds like Westchester or Nassau moved upstate?

yep to PA

 

[hodgeman]

I ask myself the same thing all the time. The boats I see being trailered around with brand new trucks…huge houses. Me and my wife have a pretty good dual income and don’t have a 100k boat being pulled around with an 80k truck. Lol I have a 20k boat I pull around with a 20 year old truck.

If folks had to display their net worth on the stern of their boat, they'd sell a lot fewer boats.

 

[DangerRanger]

I ask myself the same thing all the time. The boats I see being trailered around with brand new trucks…huge houses. Me and my wife have a pretty good dual income and don’t have a 100k boat being pulled around with an 80k truck. Lol I have a 20k boat I pull around with a 20 year old truck.

Guarantee you can get financed for 15+ years on a boat if you wanted

 

[Maki35]

yep to PA

Nice. Do you enter in the PA elk drawing?
I left NYC a long time ago for L.I. I might retire to my property in Fla. or some place else.

 

[Hoyt tee toy tee]

I’m that guy that was an idiot and sold my house in 2019 when the market was at an all time high where I live in Southern Utah and had decided that it was a good time to sell. We had a 4900sq/ft custom built home and our 2 oldest had just moved out so it left us with 1 kid at home. I talked my wife into selling because it seemed like we were due for a correction in my mind since it had been over 10 years since the last dip and we never planned on retiring in this home. Also with only 1 son at hike we didn’t need a hike the size of what we were living in. We had planned on buying property after we rented for a year or so and building our next home that would take us into retirement and live in until we die. So we ended up selling for $570k which at that time seemed like a ton since we had bought it 9 years earlier for $350k. Used some of the equity to pay off all our debt so we were debt free and kept a nice chunk of money in the bank. Now we have literally priced ourselves out of the market where we live and this is we’re we want to retire. Our house would have easily sold for a million right now. That’s over $400k that we have lost by selling. I’m so sick about how this has all worked out and not even sure what to think or do anymore. I make a great 6 figure salary but can’t imagine what people do to afford these $700k + mortgages. Are people in serious debt or is the rest of the country just making more money than I can even imagine. Talking to the realtors around here they are saying that many of the people buying the homes where we live in St. George are buying them as second homes and many paying cash. That’s just crazy. Also they say these are well qualified loans and have income to pay the mortgages unlike the 2008 housing crisis where they gave anyone a loan even without income verification.

What’s the end game here. Are these high prices here to stay (new normal) or is something catastrophic gonna happen or will there just be a small dip in real estate? I don’t know what or who to believe anymore. All I know is I’m always second guessing myself for selling but on the other hand happy I’m 100% debt free. My biggest concern is I had planned on retiring in 5 years. (Age 55). Now not owning a home I know that’s most likely a pipe dream and not gonna happen. I can’t go into retirement with a $3k a month mortgage. What are your thoughts. Should I buy now or wait it out at this point? My next home will be my forever home more than likely.


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I'm in the same boat. I'm holding out. All these people moving out of the city and moving to rural areas are going to miss the city and move back in a few years. At least that's what I'm hoping

 

[Az wildcat]

It's going to be interesting to see what happens when all these people who work from home are forced to take paycuts. Already starting to see and hear it a bit where companies are adjusting wages for people who moved. It's going to make it a lot harder for those people who overshot the budget.

Wish AZ would go back to what it was 4 years ago. Too many Cali and Washington plates.

 

[HuntingIndian]

Nice. Do you enter in the PA elk drawing?
I left NYC a long time ago for L.I. I might retire to my property in Fla. or some place else.

Nice. i worked in LI (Bohemia) for a brief period, ages ago
I did enter elk drawing, no luck.

 

[landman650]

Unless I am misunderstanding, I either don't get or couldn't disagree more with everything you said.. 30 year mortgages are key to home ownership which is a key part of man people's financial future/retirement. There is no relationship between the financing rate and the value of a given home. In these inflationary times, low 30 year rates makes for essentially free money while home values are increasing at an unprecedented rate which equals more equity.

If people couldnt afford $500k homes(thanks to financing structures in 30 yr term) there would be less $500k homes being built and sold. The SAME home which sold for X 20 years ago and doubles in price in that timeframe is not incfreasing at the rate of inflation.

 

[landman650]

What?
Locking in a 3% mortgage will be one of the best things a person can do and going forward it will look like a no brainer.

In many cases, folks that mortgage a house will be effectively paying less than if renting due to the writeoff.

Folks with a 30yr mortgage can always add a little to the payment to pay it off sooner…but if they get in a situation where they need the cash flow they can opt for the lower payment.

Mortgages have helped many folks leverage and build massive amounts of assets (wealth) due to inflation of RE prices.


Debt is only bad if you are 1)over leveraged or 2) are paying high interest and not reaping the benefits. Credit card interest would be an example of this.

it’s ridiculous to say a guy that mortgaged a home 30 yrs ago for $425,000 that is now worth almost $3,000,000 made a bad choice getting a mortgage.
.

.

And thus goes back to the basis of my post which is the resulting effects of how people can afford these homes. Let me then ask you...WHY is the home now worth $3,000,000 instead of $425k?

 

[CoStick]

And thus goes back to the basis of my post which is the resulting effects of how people can afford these homes. Let me then ask you...WHY is the home now worth $3,000,000 instead of $425k?

4 generations of people fighting over 2 generations of inventory.

 

[JakeSCH]

Sorry about your situation but I've learned to never try to time the market. It's always relative to each other.

I don't see the market going down for 2 to 3 years and even then it won't be drastic. Our govt likes printing money to much.

 

[AZ8]

I'm in the same boat. I'm holding out. All these people moving out of the city and moving to rural areas are going to miss the city and move back in a few years. At least that's what I'm hoping

You just described my sister. Haha. She and my BIL bought a nice 5 acre property out in the country after living in the city all their lives. He liked it, but she made it only 3 years! Sold the property for a huge profit and moved back to the city.

 

[AZ8]

Wish AZ would go back to what it was 4 years ago. Too many Cali and Washington plates.

Man, you and me both!

 

[FLATHEAD]

Just checked my house on Zillow. DANG!!! 25% increase in 3 years.

 

[polarkraft]

Mass exodus of Californians into the red states, that they will subsequently ruin.

Middle Tennessee has been overrun with Californians that “can’t believe how cheap houses are”


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[z987k]

I have been asking this for about 10 years. How does everyone my age have a house with at least 1000 sf more than me and a brand new f150 in their 3 car garage? And I am a surgeon! My guess is dual income family and living on credit. But what do I know?


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All I can guess is crippling debt and not a penny in retirement. According to the IRS my W2 is in the top 5% of the US. I'm still driving my 03 F150 and most people live in a house 1500+ sq ft bigger than me.

It might just be priorities to. Those people are slaves to those houses. Ask one of them to go on a 3 week camp/hunt/dive/anything fun trip and they can't come close to affording it or have the time to. Have to work some OT to service that debt.

Can I afford the payment on that $1mil lakehouse that looks pretty sweet. Yup. But why would I chain myself to it? I'd much rather be doing fun things.

 

[Tradchef]

I have been asking this for about 10 years. How does everyone my age have a house with at least 1000 sf more than me and a brand new f150 in their 3 car garage? And I am a surgeon! My guess is dual income family and living on credit. But what do I know?
but

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That's kind of what i am thinking man. I do the same thing. I mean i live pretty simply, no kids, debt free, just my dogs and my lady and thats it. Do the homesteading thing but i work a shit ton. Like you, putting in stupid hours with little to no time off. Im almost 50 now and im in the 6 figure range salary wise but its taken me 30 years of grinding it out to get there and covid has destroyed my industry at the moment so we are in the rebuilding phase which is super hard just like everyone else. I make decent cash but theres no way in hell i would want to be paying on the toys i see people with. i know what i can afford and most of that stuff with the big house i cannot. Im ok with that but it's scary to think what happens if things go really bad like we all keep thinking and talking about. I mean it's just stuff overall. Why do that to ones self just for stuff? I never could understand that.

 

[Baddog]

All I can guess is crippling debt and not a penny in retirement. According to the IRS my W2 is in the top 5% of the US. I'm still driving my 03 F150 and most people live in a house 1500+ sq ft bigger than me.

It might just be priorities to. Those people are slaves to those houses. Ask one of them to go on a 3 week camp/hunt/dive/anything fun trip and they can't come close to affording it or have the time to. Have to work some OT to service that debt.

Can I afford the payment on that $1mil lakehouse that looks pretty sweet. Yup. But why would I chain myself to it? I'd much rather be doing fun things.

I’m right with you. Having fun isn’t a big fancy house to me…