How are people affording these crazy home prices?

[lacofdfireman]

All I need is a roof over my head a solid marriage and my kids to be positive
contributors to society. That’s what makes me happy. Oh ya and my bass boat and guns etc.


Sent from my iPhone using Tapatalk Pro

 

[z987k]

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.

Well the good news is that when stuff does go bad, you can be there to take all that stuff they over leveraged on for 20 cents on the dollar.

The amount of money you can make in a crash, if you have money, is more than you'll make in 20 years of boom.
08 was inclredible. The short crash last year was a stupid money making event.

 

[NYyotekiller]

Things are crazy right now.

Everyone in my area has brand new $80k trucks pulling $80k fifth wheel campers and has AT LEAST a $250k home. Don’t know how people can afford all these things that don’t have high paying jobs.

We could profit at crazy high levels if we were to sell our home that I built myself, but we would have to buy a home that cost $500k and I just don’t think I want to do that.

My wife and I make higher than average incomes and we both are part business owners. She is a Veterinarian and I’m a Professional Land Surveyor. Maybe we’re just more fiscally responsible but we don’t own any of these things I listed above. Going to be a lot of these items for sale at good prices in the near future if I had to guess. Hopefully it’s not a crash like some have said.

We are planning on retiring early and selling both our business. Then we will be living half of the year in Either Wyoming, or Montana, and the other half in Florida.

 

[Finch]

When you buy a bigger house, another luxury car, or a fancy boat, you are showing people that you used to have money.

Don't worry about trying to keep up with the Joneses. They're flat out trying to keep up with their repayments.

 

[CoStick]

Many people actually have the money to buy these things and are not leveraged.

 

[colersu22]

I wonder the same thing, where I’m at in Wa the average home price is 780-800k. Me and my wife built our house almost 3 years ago with a huge help from my in-laws or it probably would not have happened. My father in law works for a builder and they are selling houses as fast as they list the lot before the foundation is even poured now and they are priced 850-950k. One development he is working on now people who bought the first couple lots paid 700k and already have 200-250k in equity.

 

[Marble]

I see people I pressume who are in huge debt when I go launch my boat at the lake. New truck, new wake board boat, all the attachments, sometimes a jet ski to go along with it. The combination of it all is really close to 200k. There are those that can pay cash and not have 10 years of payments. But that's rare.

My wife and are probably considered top 2% income earners. No debt except house, retirements are fully funded.

In my area my guess is a lot of them with these big expensive toys are weed growers.

It's funny to travel through some of these areas and see just a run down shack or really cheap house and a boat over 100k...silly silly silly IMO!

Sent from my SM-G986U using Tapatalk

 

[BuckHunter24]

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.


Sent from my iPad using Tapatalk Pro

We sold our house and bought a new one over this last year. My experience was the real estate agent had no idea what we could afford or the details of our loan approval. The mortgage company pushed us for an 800k approval which was insane.

We actually placed a bid of 600k on a house listed For 550k. That number made us sick to our stomach and we make solid money and had a sizeable chunk from the recent sale of our other home. There was 14 bids and it ended up going for 765k. We decided to buy a small house for 425k. I have no idea how people are paying this amount but I do know they are passing out crazy high mortgage approvals.

 

[Beendare]

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?

Its simple; (the numero uno reason in any RE purchase)

Location….…..Along with the other factors like easy money and inflation in my previous post. Its always worth buying in a more desirable or up and coming area, thats RE 101.

.

 

[jlh42581]

If I wanted to retire any time soon id buy a camper, hook it to my truck and just travel. Would cost less than living in a home.

 

[MattB]

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.

If the value of a home is not keeping up with inflation, it is much more likely due to local market dynamics and not due to an artificial suppression of value due to the availability of 30 year financing as you suggest. Looking at a couple of markets with which I am familiar (Chandler, AZ and Reno, NV), both have doubled in price since 2015. Our home in San Jose, CA has doubled in price since 2014 - all well outpacing inflation.

 

[qwerksc]

It’s only just begun…
We live in the the middle of the chaos here in CA. My neighbor, under 30 google employee, keeps telling me of such good deals around the area, average home price $1.3 million. We hear of million dollar tear downs. Neighbor guy says the future is gonna be awesome, with real estate doubling, there is still time to get in.
I’m floored…

 

[MattB]

It’s only just begun…
We live in the the middle of the chaos here in CA. My neighbor, under 30 google employee, keeps telling me of such good deals around the area, average home price $1.3 million. We hear of million dollar tear downs. Neighbor guy says the future is gonna be awesome, with real estate doubling, there is still time to get in.
I’m floored…

My in-laws just sold their home in west LA for a tad below $2M. The buyer was a contractor who is going to tear it down, build a McMansion on the lot, and sell it for ~$3.5M.

 

[AZ8]

My in-laws just sold their home in west LA for a tad below $2M. The buyer was a contractor who is going to tear it down, build a McMansion on the lot, and sell it for ~$3.5M.

That contractor will have some tight margins. 1M for permits to tear down, prepare lot and rebuild a mansion. Plus the 2M he already paid for the property.

 

[tdhanses]

That contractor will have some tight margins. 1M for permits to tear down, prepare lot and rebuild a mansion. Plus the 2M he already paid for the property.

A McMansion is a 3000sqft home in CA, I highly doubt material costs are much more then the rest of the country in CA as land is the main value anyway.

Builders are doing the same here in KC, buy a $300k home, tear it down and build a new farm house style home that is twice the size and takes up most of the lot, sell it for $800-$900k.

 

[P Carter]

Good thread, I like reading the wisdom in here. Here’s my two cents. I’m 38, good job, nothing crazy. Live in a house now valued over $1 million. My wife and I bought in 2011, a nice 2,000 square foot for $248k. Thought that was a lot, but we got a good mortgage rate and it was really quite affordable. Was looking for more space as our third child is growing up and we’re working remotely some of the time. Bought a house around the corner for $689k last year, simultaneously sold our other house for $499.9k, rolled all the equity into the new one. Again, it was way more than I thought we’d ever buy, it with the low mortgage rates it was affordable. Now we’re valued at over $1million. I agree that it’s crazy, but perhaps you can view it as a bit self-perpuating: I could afford the crazy high $695k because I sold my other house at a crazy high $499k.

love the thoughts on not being so busy so as to not have time to enjoy anything, good thing to watch out for as the treadmill of day to day can start moving pretty fast.

 

[2531usmc]

Good thread, I like reading the wisdom in here. Here’s my two cents. I’m 38, good job, nothing crazy. Live in a house now valued over $1 million. My wife and I bought in 2011, a nice 2,000 square foot for $248k. Thought that was a lot, but we got a good mortgage rate and it was really quite affordable. Was looking for more space as our third child is growing up and we’re working remotely some of the time. Bought a house around the corner for $689k last year, simultaneously sold our other house for $499.9k, rolled all the equity into the new one. Again, it was way more than I thought we’d ever buy, it with the low mortgage rates it was affordable. Now we’re valued at over $1million. I agree that it’s crazy, but perhaps you can view it as a bit self-perpuating: I could afford the crazy high $695k because I sold my other house at a crazy high $499k.

love the thoughts on not being so busy so as to not have time to enjoy anything, good thing to watch out for as the treadmill of day to day can start moving pretty fast.

What you just described is the household version of musical chairs. Someday, the music will end and a lot of good people will be financially ruined.

 

[BLEE]

I'm in NW Louisiana. People here, are selling and buying up, taking advantage of low interest rates, for 30 more years. Personally, I'm too to old for 30 more years. I'll stay in my modest, paid for home.

 

[CoStick]

What you just described is the household version of musical chairs. Someday, the music will end and a lot of good people will be financially ruined.

Please break down the scenario that people end up ruined?

 

[Savage99]

I’m confused on this: the equity carried forward, so we slotted up into a higher value home with no increase in debt. If the value decreases, we still won’t be underwater. I do feel very bad for the folks trying to buy a first home now, as I see it they are the ones getting hosed.

That’s my only point, people trying to enter market are effed. We relocated 5 years ago and timed our home buying and savings to this year. I could stomach (barely) the $400k it took a few years ago to get into an area with decent schools and a commute, but now those homes are $600k-650k. And that’s for nothing special 3/2 1500-1800 sf. We are just going to keep saving and plan for an eventual relo. It just sucks.


Sent from my iPhone using Tapatalk