How are people affording these crazy home prices?

most people I know buying right now are either rolling equity into bigger homes or down sizing. My buddy bought a house about 10 years ago. 4 bed, 1 bath, 1600 square feet on half an acre for 145,000. He sold it for 370,000 and bought a 2600 square foot, 4 bed, 3 bath on .33 acre for 460,000.

My wife and I have been trying to buy our first home since March. It sucks and we are all but priced out. We can afford the monthly payment but that’s about it. Housing prices have gone up about 40 percent in a year here and aren’t showing signs of stopping.
 
I’m confused at the fact that all of us outdoors people feel the need to be confined to a big city to earn a higher income to live in a more expensive house. I’d much rather own a house that costs less in a more rural area, less crime, enjoy no traffic jams Know my neighbors/community, let kids know there classmates, have accountability for your actions and just enjoy simple life. Not a lazy non motivated person by any means of the word. Actually own and operate my own business and seem to always have to be working the way it is. Not in the market for a move. Not trying to capitalize on fluctuating markets. My common sense tells me I shouldn’t be buying a house for $800k. Living within my means.
 
I worry about my kids being able to afford a home.

case study for the guys saying “ mortgage debt is bad”;

2 of my nephews were complaining about not being able to afford homes and prices skyrocketing …2 years ago.
Both make good money; A fireman and an HVAC guy.

FFWD, with some family help on part of the downpayment they both bought homes 1 1/2 years ago- small fixer homes in good areas. Myself and my bro in laws helped them do the remodel improvements. Now they both have a pile of equity in their homes and are saving so they can buy another and convert the first one into a rental for income.

Not bad for a couple of 30yr olds.

My 3D shooting buddy Dave ( a painter) took my advice 10 ys ago and did the same thing with fixers…now he lives in a nice house with 2 rentals netting him $2,000 a month in rental income.

Its not just free money…. it takes a lot of work at nights and on weekends, sweat equity, but its building assets that will pay them in the future.
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I’m confused at the fact that all of us outdoors people feel the need to be confined to a big city to earn a higher income to live in a more expensive house. I’d much rather own a house that costs less in a more rural area, less crime, enjoy no traffic jams Know my neighbors/community, let kids know there classmates, have accountability for your actions and just enjoy simple life. Not a lazy non motivated person by any means of the word. Actually own and operate my own business and seem to always have to be working the way it is. Not in the market for a move. Not trying to capitalize on fluctuating markets. My common sense tells me I shouldn’t be buying a house for $800k. Living within my means.

It’s obviously not that simple, but I hear you.


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I’m confused at the fact that all of us outdoors people feel the need to be confined to a big city to earn a higher income to live in a more expensive house. I’d much rather own a house that costs less in a more rural area, less crime, enjoy no traffic jams Know my neighbors/community, let kids know there classmates, have accountability for your actions and just enjoy simple life. Not a lazy non motivated person by any means of the word. Actually own and operate my own business and seem to always have to be working the way it is. Not in the market for a move. Not trying to capitalize on fluctuating markets. My common sense tells me I shouldn’t be buying a house for $800k. Living within my means.

Many jobs require a certain population to support them. That’s why many people live in the burbs. To get as far from the crime and be in a good school district but close enough to the job.


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The base price house in the suburbs of Austin, Tx was around 150-200 just 8 years ago when we bought. I don’t know about any other profession other than public service so I can only speak to those salaries but they have gone up around 10-12% since then. When we looked my wife and I both worked and 250k was way too much house at the time. We were making approximately 100k combined. The same house now is 450k and often going 50-100k cash over asking. New guys on the job are buying these houses which is why I echo the concern of many others here. Maybe I’m dumb to the reward over risk but it seem like simple math ending in very poor outcomes. I understand the desire to own a home but when the AC goes and the car gets totaled there isn’t money to eat.
 
This article suggest US real estate is not even that expensive right now.


It doesn’t take that many people from California or other big markets moving after selling their million dollar homes that grew over half a million in value this decade to blow up a bunch of smaller markets. I feel for young folks looking for a home in coming years. Also feel for people who bought the “a home is not an investment” line and have been renting instead.
 
The base price house in the suburbs of Austin, Tx was around 150-200 just 8 years ago when we bought. I don’t know about any other profession other than public service so I can only speak to those salaries but they have gone up around 10-12% since then. When we looked my wife and I both worked and 250k was way too much house at the time. We were making approximately 100k combined. The same house now is 450k and often going 50-100k cash over asking. New guys on the job are buying these houses which is why I echo the concern of many others here. Maybe I’m dumb to the reward over risk but it seem like simple math ending in very poor outcomes. I understand the desire to own a home but when the AC goes and the car gets totaled there isn’t money to eat.

What are their rental alternatives? Even with prices climbing, it seems like renting a decent place costs more than a mortgage anyway. If you have a 3/2 and can rent a bedroom, it’s way cheaper than renting your own place and you’re getting equity out of the deal.
 
I’m confused at the fact that all of us outdoors people feel the need to be confined to a big city to earn a higher income to live in a more expensive house. I’d much rather own a house that costs less in a more rural area, less crime, enjoy no traffic jams Know my neighbors/community, let kids know there classmates, have accountability for your actions and just enjoy simple life. Not a lazy non motivated person by any means of the word. Actually own and operate my own business and seem to always have to be working the way it is. Not in the market for a move. Not trying to capitalize on fluctuating markets. My common sense tells me I shouldn’t be buying a house for $800k. Living within my means.
For some a $1m or $800k house is well within their means.
 
Many jobs require a certain population to support them. That’s why many people live in the burbs. To get as far from the crime and be in a good school district but close enough to the job.


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This is changing as employers realize their workforce can work from home and reduce their overhead, now people with high paying jobs can live where historically they couldnt’t, heck I have a coworker that now lives in England supporting nothing in England business wise, times are changing and covid accelerated it.
 
For some a $1m or $800k house is well within their means.
Most definitely it is. I could make the payment also and be house broke. Hope I like the paint color in my living room. I’d say the majority of people who can easily swing a million dollar house shouldn’t have much to complain about either. Unless it stretches them to upper limits then maybe buy something that doesn’t limit themselves
 
All this hinges on job markets staying strong, period.
Jobs go away, if there is ever an over abundance of employees and employers can pull back on pay a little, that's when the problem starts.

I'll pretty much repeat what's been said a couple hundred times on here, I wouldn't be able to live where I live making what I make today if I moved here today, in 9 years or house has almost triple in value. But it means nothing really in the end, everything pretty much everywhere is like that right now.
 
This similar to why buy a nice rifle when a cheap one can get it done.
Truthfully it goes for anything, why buy anything nice when we can make cheap stuff work, this forum is pretty big on expensive quality gear, why not cheap get by gear, although even that is increasing in price.
 
What are their rental alternatives? Even with prices climbing, it seems like renting a decent place costs more than a mortgage anyway. If you have a 3/2 and can rent a bedroom, it’s way cheaper than renting your own place and you’re getting equity out of the deal.
This is not the case in some markets. Looking at Zillow, the rental estimate for our house is ~1/2 the the suggested monthly payment for purchase (not sure the assumptions). The biggest difference is that, by renting, you don't have to come up with a down payment.
 
I think people can afford expensive houses because a lot of people are selling with a ton of equity right now. I bought my house 6 years ago for 300k and it's sitting close to 1M right now. The temptation to sell and move out of state is huge but I bought this house to live the rest of my life in so it's a hard desicion to make.
 
I kept my home in Flagstaff AZ when we moved to Taxachusetts last year, the value has gone up about 30% this past year. Now I’m looking to buy on Cape Cod, but prices are insane for crap salt box houses. $500K for anything, and something nice is $800K and up. If I sold my home in AZ and walked with $400K, then I’m using fake money to buy in the current market. I decided to keep the AZ home as an investment, so we’re looking at having to drop 20% cash and spend a ton of money.
 
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