How are people affording these crazy home prices?

[Broomd]

... With regard to St. George, we go to the Parade of Homes most years there and we ask them who the hell is buying these incredible houses. More often than not they are actually 2nd homes if you can believe that.

...

East and West coast teachers, tenured professors, lawyers, government workers drawing huge pensions. People that have received generation wealth from passed parents. Cracker box homes worth a million dollars in California, sold and exchanged for mini mansions and ranches across the West where money still has real value.

 

[eye_zick]

The boomers are retiring, realizing gains on investments, and have money to spend on second homes.

AZ, CO, ID, MT, & UT are taking the brunt of it.

 

[jlh42581]

East and West coast teachers, tenured professors, lawyers, government workers drawing huge pensions.

You arent kidding about some of that. I know of people who have gamed the system so in their final years of deciding income they send their annual salary screaming through the roof. Some are then drawing more in pension than they ever made working. Thats not even the tip of the iceberg, they then still have 401s and IRAs they made massive contributions too all those years. I know of a family member when he retires his annual income without doing anything stupid will easily be 4x his current annual salary.

My wifes aunts vacation home is nicer than my primary... school teachers.

 

[wind gypsy]

Debt is a funny thing. With a lot of the Dave Ramsey discussion on here it seems like some are too focused at avoiding debt. I feel like that attitude prevents a lot of people from being the ones who can afford these crazy high home prices. As long as debt is strategic and not over leveraged, it's extremely valuable. Keeping up with the joneses debt is different.

Trump has over $1 billion in debt, I imagine his finances are fine.

 

[browtinebull]

Remember interest is cheap. People will loose their minds if it goes back to 10% (like my first loan). Working from home fad will really turn things upside down when companies figure out they don't need them.

 

[Clarkdale17]

As a member of the younger generation looking at rent prices that are almost the same as a monthly mortgage it makes absolutely no sense to rent at the moment. Buying a fixer upper and taking advantage of some sweat equity so you can sell for a good profit seems like the logical route to go. Just looking around Denver the housing market doesn't seem to be slowing one bit.

I would assume most people in their 20's are doing the same thing I am and renting out to friends that won't F them over and splitting the mortgage. Cheap rent for them and cheap mortgage for me. How the younger generation is buying houses without doing this is beyond me. I could make the mortgage payment without renting but how some younger folks buy 500k houses and are making payments makes me scratch my head.

Add in the debt most people have from college, and/or new car it would amaze me if we didn't see a ton of foreclosures in the future.

 

[CJohnson]

Second question. Who is buying all of the houses in California that these people are selling?

 

[Poser]

Second question. Who is buying all of the houses in California that these people are selling?

Real estate investment firms. There’s even a startup buying multi million dollar estates in Malibu and similar and the time sharing them out.

 

[MattB]

Second question. Who is buying all of the houses in California that these people are selling?

Anecdotally, in our area (San Jose) it seems to be a pretty broad mix: first time home owners who previously rented in the area, people fleeing urbanity (SF) which became really inhospitable during the COVID shutdown as well as the current political climate (homelessness, crime) for suburbia, and domestic and foreign investors. While the clip is way down from the mid-2010's, there is still a lot of Chinese money being deployed here. Historically high equity markets have allowed some tech workers with big equity comp components to join the party as well.

The state is still pretty supply constrained (as are most places these days).

 

[S.Clancy]

I feel like in 10-15 yrs we will be referring to present times as "The COVID Bubble" across multiple, if not all, industries.

 

[S.Clancy]

How is it that no one sees all this consumer spending as the problem with the environment. Blame it all on shit like diesel or gasoline.

100%

 

[FLATHEAD]

Cause they're "important people"....like John Kerry.

 

[Actual_Cryptid]

Some are then drawing more in pension than they ever made working. Thats not even the tip of the iceberg, they then still have 401s and IRAs they made massive contributions too all those years. I know of a family member when he retires his annual income without doing anything stupid will easily be 4x his current annual salary.

How does that work?

 

[Fatcamp]

East and West coast teachers, tenured professors, lawyers, government workers drawing huge pensions. People that have received generation wealth from passed parents. Cracker box homes worth a million dollars in California, sold and exchanged for mini mansions and ranches across the West where money still has real value.

Yup. Massive wealth redistribution. On a bunch of levels.

 

[Fatcamp]

How does that work?

Pensions are often based on hours worked during the last few years of employment. Add in a disability claim and you are sailing high.

 

[Actual_Cryptid]

Pensions are often based on hours worked during the last few years of employment. Add in a disability claim and you are sailing high.

Not for the feds. It's calculated as years worked as a percentage of your average high-3 consecutive, same as when I was working in a hospital. Is there a state government I should be going to work for? Or is there a private industry employer you're thinking of?

A disability claim isn't a pension. If you were military, you paid into it with blood sweat and tears. If you were private or government, you would have paid into the insurance program, usually getting paid less than your private sectors peers all along. Only one of those is government money, though, but if you want to crusade against military disability be my guest.

I'm an accountant, not a CPA (yet) but I am familiar with accounting for pensions. Maybe you can elaborate a little more specifically, might make a good paper for my state board of accountancy.

 

[wind gypsy]

You guys got me curious on just how lucrative these pensions are. Making more on a pension than working doesn’t seem to add up..

 

[Beendare]

How is it that no one sees all this consumer spending as the problem with the environment. Blame it all on shit like diesel or gasoline.

Insightful comment^.........IMO you are right on the money

>

 

[orionthehunter1]

I think he was stating that a pension plus a 401k equals more then when they were working. Also if you add in social security if that's applicable and you have three streams of income that should pay more than working especially if you played your 401k right.

 

[Fatcamp]

Not for the feds. It's calculated as years worked as a percentage of your average high-3 consecutive, same as when I was working in a hospital. Is there a state government I should be going to work for? Or is there a private industry employer you're thinking of?

A disability claim isn't a pension. If you were military, you paid into it with blood sweat and tears. If you were private or government, you would have paid into the insurance program, usually getting paid less than your private sectors peers all along. Only one of those is government money, though, but if you want to crusade against military disability be my guest.

I'm an accountant, not a CPA (yet) but I am familiar with accounting for pensions. Maybe you can elaborate a little more specifically, might make a good paper for my state board of accountancy.

In short I am referring to union jobs.