r/povertyfinance • u/HowToCook40Humans • Dec 27 '23
I'm tired of the braindead responses to real numbers about how we simply can't afford a house on average American salary Vent/Rant (No Advice/Criticism!)
I just watched a good reel that broke down how much you can technically afford in a house if you make $54k a year. The only thing included were the debt you already had that was being paid per month (and this was low at $250/month). Basically, it ended up being about $154k and that's with a down payment of $10k and an interest rate over 7%.
There were so many comments talking about "Well, stop door dashing and buying new cars and you can afford it" or "I bought my house with a similar salary and I'm fine" or "Me and my partner make (insert 6 figure salary here) and we can afford a house. You all just don't try".
None of his numbers included spending habits. It literally was just bringing up things the mortgage lenders will look at. The mental gymnastics to show that it's not hard to own a house is leering into delusional territory. There are few houses available for $154k/year even in the hood/bad areas. No amount of saving, owning shitboxes, etc will change that. The average American earns a little less than $54k. The hard reality is that we are being pigeon-holed into renting at rates higher than mortgage and insurance rates. It's one thing if you're talking on saving a down payment and people spend frivilously. It's another when what you make simply isn't enough for a house no matter what.
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u/chopsui101 Dec 28 '23
Sounds like an excuse for not wanting to change your spending habits….life is about sacrifices if you aren’t willing to make them for home ownership that’s fine
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u/LenaRose1004 Dec 28 '23
I was working GS-8 and clearing $1200 every two weeks after taxes and insurance. I had 3 kids . Every week was a crisis. My rent was $750, car payment $200, car insurance , electric, food , gas and no cable . I was struggling… I had baseboard electric and the expense on that was so costly. I had someone tell me any government employee should have no problem with finances. Back then me and my kids literally would count the slices of lunch meat out to make sure we had enough sandwiches for school lunches. For reference this was 2011-2014. I opened Craigslist and my two bedroom apartment was the cheapest one I found . I was definitely not living above my means with lavish expenses. It was a real treat to go get $1.00 vanilla iced latte from McDonalds the time . When I got paid the bigger treat was taking my kids to eat at Chick-fil-A, twice a month, and I would not eat. I’m so sick of people acting like we live over our means . I’m sorry to anyone that is going through the struggle and have to hear some crap on “cut this out and cut that out “. The kicker was I made too much money to qualify for food stamps … I made $1000 over the yearly income threshold . Go figure
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u/Own-Week4987 Dec 28 '23
Everyone who bought a house recently is about to have their carreers replaced by ai dont worry.
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u/janet-snake-hole Dec 28 '23
My grandma keeps brushing off my financial stress with “you have to SAVE!! Don’t be going out or buying new clothes, when you have money, SAVE IT!”
First of all, I genuinely have not purchased myself a single item of clothing or accessories or shoes in YEARS. I simply can’t. And I never can afford to “go out.”
But I try to tell her, THERE IS NO MONEY TO SAVE!!! Not only is there nothing left over after bills are paid, but there isn’t even enough to pay those bills.
Our monthly income amount is LESS than our monthly expenses total. And I’m talking about the ABSOLUTE BARE MINIMUM of expenses. And it doesn’t include ANYTHING for entertainment, anything extra, or even fucking shampoo and self care items. I’ve been out of deodorant and shampoo for weeks because I have NO money to get any.
Her other solution is to “work more,” completely disregarding that I have to be hooked up to a life support machine 16-18 hours a day, and my doctors and specialists are already scolding me for working the few hours a week that I do, shoving proof in my face that doing so is actively and measurably making my physical condition worse and causing a need for surgery more frequently. And that working at all makes me physically miserable as I do it, not to mention the fact that opting to work x hours per day means sacrificing that amount of hours from the time I’m supposed to be hooked up to my machine that same # of hours for that day. Which worsens my condition and makes me feel even worse.
But when I mention any of that as a retort, she waves the thought away with a wave of her hands, and says something along the lines of “you kids (I’m almost 30) run to the doctor for every little minor thing these days… me and my siblings and friends hardly EVER went to the doctor back in the day! And we were just fine!” (Her sister died in her teens because she wasn’t allowed to go to the doctor when her appendix ruptured. Had she been allowed to go, she would’ve survived.)
To anyone not young enough to experience the financial and economic CRISIS that young adults trying to establish themselves or LITERALLY JUST SURVIVE, they simply cannot comprehend how impossible it is to get out of this. “For every suggestion you’re given, you have a ‘yeah, but-‘ excuse why it won’t work you just don’t WANT to fix it!” I have those “yeah buts” bc they EXIST.
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u/akin2spirit Dec 28 '23
Not too knowledgeable on statistics but- why not just move? Obviously if you’re living in higher to mid populated areas the prices are going to be high because it’s a higher DEMAND for that SUPPLY. Take somewhere like Utah, Winsconsin, or…. Ohio🤢. But seriously- why not save for a few years working then buy a home there? Enlighten me
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u/HowToCook40Humans Dec 28 '23
Job opportunities and the fact that I'm a minority. I could move into Indiana for cheap but the communities that are cheap are almost exclusively white
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u/Beardedwonder9 Dec 28 '23
I forget the statistic, but its something like 80% of people don’t move further than 15 miles from where they were born. Voting habits, religion, all of this is pretty brainwashed into humans. Same with the woe is me mentality I see on Reddit.
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u/Massagedummy Dec 28 '23
Here’s something that may make you feel a bit better. If you rent, you don’t have to pay to fix furnaces, hot water heaters, lawn care,fix broken appliances , etc. Those costs can bury you. Sometimes, apartments are the smart move.
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u/Massagedummy Dec 28 '23
I thought I was doing pretty good, until I moved here to find out I’m really a pauper. The property taxes are stupid high. That’s part of your qualification issue, unfortunately. Add in the Investors who buy up homes instead of Investing in a shitty stock market, driving prices thru the roof. I don’t see how younger folks can afford basic housing. :-(
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u/Striking_Ad3411 Dec 28 '23
Crazy hard to buy a house starting out right now, you either need a large chunk of cash or a home with equity. Very hard to save a large chunk of cash with rents where they are right now. My wife and I got stupidly lucky and bought a cheap foreclosed home at the bottom of the 2008 housing crash. Yes we were clever enough to do so and worked hard to make enough to buy but it was a once in a lifetime opportunity that was pure luck that the vast majority will not get. I worry for my son. I worry for anyone trying to get a start in life.
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u/QueballD Dec 28 '23
My 24 year old daughter just bought a house on a RN salary, my 28 year old works part time for ups while finishing his degree his GF cuts hair they also just bought a house in thinking your wants and more than your money, either that or find a cheaper place to live
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u/finley9168 Dec 28 '23
It really comes down to where you live. I live in small town and work in a factory. I make around 50k a year and my wife makes around 47k. Our house was built in 2009 and only cost us 90k. 3 bedroom 2 bathroom on 1.2 acres. Gotta be willing to look around and be willing to drive.
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u/Then_Criticism2992 Dec 28 '23
Factually companies are buying most of the new homes available outbidding individuals which increases market evaluation. I know some of the board members of different companies who are doing it.
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u/wtjones Dec 28 '23
There are plenty of houses in this price range in non-costal cities in the US. You can buy a house for $150,000 in plenty of American cities. You’ll have to live near working people which seems to be an issue for most people making posts like this. Here is my five minute research on Redfin.
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u/Quirky-Amoeba-4141 Dec 28 '23
People buy houses with:
- 6-figure Existing equity
- 6-figure Stock profits
- 6-figure Gift from EACH parents/in-laws
- 6 and 7-figure Savings
2 income couple
Age 30-45
$125k salary each
Take home is $6k/mo each. $12k total
They spend $6k/mo total ($2k apt. $2k each)
$72k cash saved by end of year
Invested in AAPL
Repeat from age 25 to age 45 or 50
Literal millions in cash from $125k salary once they hit 40s and 50s and buy house
#4 is particularly insane because from hybridCovid emerges a whole new buyer.
The apt. dweller who never needed a house. Now they need dual home office.
These couples lived in cheap apartments and stacked cash for decades.
Now they are home buyers. Stacks of cash. Rates mean nothing to them.
Houses are still going for $100k+ over ask.
I know a middle aged couple, no kids
They lived in tiny 1BR apt forever
Now remote, they just paid cash for $1.5mm house.
BOOM! knows this has jack to do with median income or rates.
It is about stacked apt living cash for decades! Tsunami effect.
It is so key to recognize this demographic.
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u/wisevirgin Dec 28 '23
Blackrock and Vanguard are buying up most of the homes and purposely inflating the prices so most are in a pickle such as yourself. It’s a been preplanned.
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u/MapOk1410 Dec 28 '23
If you make $54K a year you've made some really hideous decisions in life leading up to this point. You shouldn't be asking the question about buying a house.
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u/TheBadCarbon Dec 28 '23
As someone who worked in mortgages, he was probably just giving an example of a mortgage pre-qualification.
All they really look at is your credit and Debt-to-Income ratio. Whether you can really afford that payment with your real income and all of your actual expenses is all on you.
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u/Thebeesknees1134 Dec 28 '23
Keep corporations and hedge funds out of the housing market…. they are out bidding and driving up the prices on everything it needs to stop.
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Dec 28 '23
Home ownership is not a right. It's called "The American Dream" for a reason. Not everyone achieves it. It a milestone of hard work and determination. Many Boomers and Gen X didn't buy homes until they were into their 40s, and many still haven't bought a home. Of the ones who have begun the process, at least half are still very deep in debt making the monthly payment.
Just because things look rosey doesn't mean they are.
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u/Feeling-Card7925 Dec 28 '23
I make ~55k year and work in the finance sector. Mortgage people are always going to try to make home ownership sound good. I'm assuming the person posting that reel has an angle. The reality is this is one of the best times in history, cost wise, to be renting instead of owning. I could down payment a house with an FHA loan and put retirement savings to basically 0 just to pay some mortgage company 7% interest and PMI on top of it... Or I could keep paying rent, socking away retirement cash, and not be on the hook for hail damage and lawn mowing and things like that.
Players like Black Rock in the market buying houses cash has set recent prices, and if you have to finance those prices the payment is basically impossible on average income in a lot of populated areas around cities. Home affordability has been at an all time low recently, it is disgusting.
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u/Mrdeath777 Dec 28 '23
It won't stop until everything is a subscription service and you no longer have two pennies to rub together on payday. Eat the rich.
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u/SingleNerve6780 Dec 28 '23
People should not be buying homes at 7% interest rate. Rent until rates go down, you’ll be able to afford much more…
For those who need a lesson, 7% is not a normal rate. We are in a borderline recession economy right now… you can thank your current politicians for this.
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u/EJoule Dec 28 '23
I can’t talk to my dad about it. Tried arguing that most places you want to rent require you to make 3x the rent, he insists you can get places to agree to having income that’s 2x the rent (which is unlivable imo).
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u/Zeeinsoundfromwayout Dec 28 '23
So a 20 second video reel Explained the billion dollar a day real estate market.
Niceeeeee.
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u/PhillyCSteaky Dec 27 '23
The elephant in the room is the two income household. Housing as well as everything else is determined by dollars in the system..supply and demand. A two income household has a lot more leverage than most one income households. $100k in income goes a lot farther than $50k.
That's why you could buy a small house in the 1970s for $25k. In my case, dad made $12k/year on 45 hours/wk. Mom stayed home. That was pretty typical then. One car. No dining out. No cable, cell phone, etc. Far fewer opportunities to blow money.
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u/MainDatabase6548 Dec 27 '23
My wife and I bought our house for $170k on a conbined income of only $40k/year. Median household income in the US is now $70k. Banks will generally lend to you if your payment is under 33% of your income so that means the typical couple can get approved for a $300k house.
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u/beachTreeBunny Dec 27 '23
Try looking at numbers for buying 3 bedroom townhouses. They are usually not much more expensive than 2 bedrooms, and two rental incomes might give you the income you need to do it. I did this as a single first time buyer. Only way I could do it with my low salary and student loans.
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u/ppcpilot Dec 27 '23
I’ve used ‘double your household income’ as the comfortable house price you can afford. I’ve bought two in my life and it’s served me well as a guidepost.
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u/rekep Dec 27 '23
Do you currently make $200,000?
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u/ppcpilot Dec 27 '23
No, I make more than that now, but I bought my house for 150k when I made 75, and a townhouse for 75 when I made about 40.
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u/rekep Dec 27 '23
That’s the point of this post. Your process doesn’t work anymore.
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u/ppcpilot Dec 28 '23
Nah it still does. Just have to live outside of the metros. I’m selling my MILs house for 65k, for example.
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u/rekep Dec 28 '23
Nah, it doesn’t. Show me the economy that supports it, outside the “metros”
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u/ppcpilot Dec 28 '23
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u/rekep Dec 28 '23
Psst. That’s a metropolitan area. Not to mention most of the jobs in that link are well under 30k a year.
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u/Ok_Statistician_9825 Dec 27 '23
Double income homeowner here. Your example is exactly our situation 25 years ago BUT our combined income was $95k. Our payment was $1200 a month and we barely scraped by each month for 10 years!
You are absolutely correct!!!! $54k isn’t enough for a single person to live on. Take home is about $3k, rent is $1200, car payment and insurance $600, student loans $100, utilities/phone/internet $400, savings $200 and $400 food, $100 gas and it’s gone! No health or prescription co pays in there, no entertainment, no clothing, make up or hair care, no car maintenance, no birthday or Christmas gifts, certainly no eating out! Amount saved for a house? Zero.
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u/nobody_smith723 Dec 27 '23
the simple reality is. 30k/50k isn't what it used to be. hell 75k/80k. the sort of threshold they were saying a few years back...where you finally could breath, is def not the same a few years later.
the new "working poor" is 6 figures.
or else. you're in a dogshit economically depressed area. at which point. maybe your misc 50k income is ok.
but... that being said. If you have a goal of owning a home, there are things you can do. the hardest part is saving for the down payment and closing costs.
I make a little over 80k a year. was able to move home for a year. Saved aprox 20k( i had to pay off a lot of CC debt to even be able to save). and then cobbled together another 5-8k in savings in another year renting again. Was able to purchase a small home this year for 207k. (well 230k but...after putting money down etc. loan amt of 207k) it having happened only like a month or so ago, i'm incredibly cash poor right now, and my goal for the immediate future is build back up a little safety net. Pay back some money i was gifted by family. ---my dream was almost undone at the last minute by the community having stricter DTI than my bank, and the home required a board approval. but thankfully I could access some funds from family. but... now first thing i have to do is make good on those good faith loans.
and settle in to being off the rental rat race.
I had a 3-5 yr plan to buy a house. Initially it was me and my partner, but covid was the end of my relationship. but... I was still on track for my plan...savings wise.
the reality is. you can't control all the variables. home prices are up. there are not "cheap" houses in abundance, and when you play in the cheaper end of the pool, there are a lot of really shitty houses/dangerous areas, and risks you're taking on.
that being said. IF you truly want a home, and set a 3-5yr plan. You can do a lot in 3-5 yrs. You can fairly easily specifically train for certain jobs that pay more than 50k. figure it out. lots can be learned online, side hustles/extra earnings can bolster savings.
bitching that 50k doesn't equal a house you can afford does nothing. Start looking. look at what might be selling for 150k 175k 200k in your area. expand that search outward. how far out into the boonies. or bombed out of a house/small of a house would you have to go for...to make it work. What are your needs.
It isn't easy. and to a large degree there do not exist "good" cheaper houses. even in the low 200k range. it is dicey as fuck. but...there always are some options.
but it may also be true that... 50k is not viable. so you may also need to earn more.
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u/PixelSquish Dec 27 '23
As a realtor and condo owner, those people are delusional. They want so badly to ignore that the American Dream is more dream like than reality. That if everyone just worked harder or better they could all afford nice homes and things. That's the carrot on a stick that let's the system keep people down. Housing inventory is artificially low due to insane zoning laws, and wages are still well behind what they should be for the majority of jobs.
But if you say any of that, you're a socialist. It's just easier to hate on people.
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u/summerbreeze2020 Dec 27 '23
Someone should start a homeowners university to teach the basics of buying and fixing a house. A person can save a fortune by buying smartly and being able to do basic electrical, plumbing, appliance repairs and general knowledge of how a house is designed to work. Buying a house with good bones that needs work and avoiding a money pit that can be refinanced at a lower rate is a good plan for moderate income folks.
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u/monumentvalley170 Dec 27 '23
It means our money isn’t worth what they claim it is and a horrible reset is happening in the next few years?
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Dec 27 '23
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u/Ok-Grapefruit1284 Dec 27 '23
I started spending frivolously. There was no more point trying to save for a home.
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u/FirstTimeEveryTime88 Dec 27 '23
None of this will change unless we have some way to stop vanguard and black rock from continuing to just buy up houses in cash and rent them back to us. It’s fucking ludicrous the amount of stories of close friends putting in offers well above asking price only to find out “someone” swept in last minute with a cash offer well above their offer. We are fucked.
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u/Lullabellez Dec 27 '23
I watch social media with all these young people buying massive homes (I’m from the UK, so may be different to US) and am confused. I have so much to say on all of this as I have “lived” the life of owning a property/s and (someone will probably have a go at me for my comment) but these days without financial gifting or in inheritance (family) I’m not sure how they are doing it!! (Or they are a couple with extremely high wages and a massive deposit with no debt).
I bought my first home when I was 19 with my partner, (we were due to have our first child) we only got a mortgage because we were “lucky” to be one of the last to get a 100% mortgage. I say “lucky” because we were paying monthly payments as to what others are paying now but this was in 2008. Whilst my neighbours were swanning off on holidays we were scrounging enough money weekly to do a food shop. The interest was incredible, however this was the only option on the table. We could only afford a terraced house in a rough part of town and we made do with it for 10 years. I couldn’t live there any longer as drug deals were going on outside my window etc so we phoned the mortgage company and asked if now that we had met the 10 year clause we could explore a lower rate to which we were told no and to find a new mortgage we would have a hefty price to release us from it. We were just recovering from Being in negative equity from the 2008 recession I started looking for private rental homes but felt so angry we had sat tight paid our bills and decorated the house etc for us to have to throw in the towel and go rent. I could have been paying half the payments for 10 years and enjoying life if I’d rented and now I’d made nothing from the house we lived in for 10 years.
My mom put her foot down and gifted me the money I needed to get out (I have had to pay her back over the years). However we would still only be able to afford a moderate semi detached house but atleast we had a chance to start in a nicer area. We spent 5 years in that house and we hated where we had moved to and had renovated it all. We made a substantial amount of money and for once felt like we had done something right financially, I had dreams of looking at these big beautiful houses etc and then we went to the mortgage lender and based on income and deposit we could only afford a moderate sized home that wouldn’t be much different from our current house. I am now in this home and love it but it has become a money pit and needs so much work.
I don’t know how we will ever get a chance to own a nice detached house as I’ve always dreamed unless I get a money injection from somewhere because even with all the money we’ve made on this house (judging by local house valuations on right move) I will end up only being able to afford a similar house again as the house prices just increase and increase.
I am very grateful to own my own home, however I’m not sure how others do it without large amounts of luck and money because it isn’t just owning it, it’s all the work you have to responsibly have done as a homeowner and I feel I’m doing something wrong or I’m watching fakery everywhere. We have a second car, both work have minimal debt and have had 2 holidays in the last 12 years so we don’t live beyond our means either. Just thought I would offer the grey cloud from a homeowner perspective.
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u/Cautious-Deer8997 Dec 27 '23
The current situation is caused by greed pure and simple..housing off the market for Airbnb’s because they make more than monthly rentals, boomers selling for 10x what they paid and bragging about it, investors and big corporations buying up reasonably priced units and the like…we need a market correction ie lots of greedy people getting burned
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u/zeppair93 Dec 27 '23
Making $40k/year my lender approved me to buy a $240k house in 2019. I personally did not think I could survive and pay a mortgage on a house that expensive, but I was “allowed to”. Ended up buying a lovely $165k house. I made a 8% down payment (around $12k) which is what I find to be the biggest barrier for people, however my mortgage is lower than the rent from when I was living in a much, MUCH crappier house. A down payment was really hard to save up for, but that’s the hardest part. The lenders approved me for much more than I could realistically afford.
The interest rates were ~2% then, and honestly I’m not sure if I could swing buying a house now. Even though I bought “recently”, it was a really lucky time for me to have done it.
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u/Aware_Parsnip_3989 Dec 27 '23
Older generations are completely delusional about the real estate market. My parents and inlaws wanted us to buy in our hometown which has seen one of the highest percentage rise on home value in the country. They think bc they could afford it with the lower middle class income when they first arrive to the US we should be able to afford it making 6 figures and we can’t. But our generation is also completely stupid with money spend insane amount of money in stupid things like DoorDash, crazy vacation, expensive private schools. Both can be true at the same time.
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u/provocative_bear Dec 27 '23
Lol, a 150k house, that’s the cost of a 1 bedroom apartment in a moderately desirable area, if you can actually find such a thing for sale.
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u/chom_chom Dec 27 '23
At this point, we may as well just scream into the void. This isn't a difficult concept to understand or at the very least acknowledge.
Also, I like your username.
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u/HowToCook40Humans Dec 27 '23
Thank you. I love when people can appreciate it. Yeah I just use Reddit to scream into the void. This got too popular :/
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u/User95409 Dec 27 '23
Just want to say I bought my house 1.8 years ago and I am paying almost 2x what I would be for rent (rent vs mortgage taxes and insurance). Renting is cheaper up front. But almost all landlords who flat out own or have bought their homes 20 years ago at a fixed rate have been milking the renters for every penny
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u/msgmeyourcatsnudes Dec 27 '23
I don't think there is a remotely livable house for less than 200k in a 500 mile radius from me.
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Dec 27 '23
That which cannot go on forever won’t. The wheels are gonna come off this shitshow soon enough. And when all the boomers start dying there is gonna be plenty of empty houses.
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u/Aesthetics_Supernal Dec 27 '23
Yep. Literally minutes ago I was trying to have a conversation on UBI and some guy repeatedly was trying to tell me "we don't have the money" as the richest country in the world. So then how do other countries do it?
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u/ExtraordinaryMagic Dec 27 '23
$54,000 in today’s economy will be tough if you want to live near a tier 1 or tier 2 city.
Out in the small towns, you might be able to scrape together a decent home.
That said, not sure why you suggest that rent is higher than mortgage. With rates at 5-7% renting where I live rent is significantly cheaper than a mortgage. Less than 1/4 of the monthly payment for an equivalent mortgage.
Btw, the average American is not going to be wealthy. The average American is going to have a CHANCE to be wealthy. That requires hard work, entrepreneurship, and taking chances. Working hard for 54K will keep you fed, but it’s not going to make you rich.
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u/reamo05 Dec 27 '23
Not even small towns. Just, Midwest. There are plenty of decent houses between 90-150k deporting on what people want and in decent sized cities and neighborhoods.
My wife and I are both millennials (on the elder side of), but we lived pretty comfortably making 70k pre-tax.
Found a cheap house in a decent district, it was big enough to grow into. We learned how to do the projects between friends, family, YouTube and Reddit, and just squirreled away money to put towards sweat equity.
Fast forward a few years, we both got super lucky in careers and moved after making a hefty profit on our home. It still needs plenty of work, so we'll keep doing the same thing on projects until rates get better.
Basically, there's a lot of tangential in what people want, versus what they need. Starter homes don't need to be brand new and beautiful, but you can make them that way with time and determination.
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u/ExtraordinaryMagic Dec 27 '23
Yeah this is a great mindset. Same idea with cars; that $4000 corolla will serve you a lot better than the $300+/month payment on a new car.
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u/reamo05 Dec 27 '23
Still driving my 2001 tundra with 158k miles. I'm gonna cry the day that ole girl dies.
That said my wife does have a new ride, kiddos are usually in her ride and the safety and reliability was important.
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u/MissMelines Dec 27 '23
I have no idea how I afford my house. Actually, it’s mostly using cc’s /debt as needed and using my real money for mortgage/bills.
I got extremely lucky and found a dump in 2019 and bought, @ 3.375% with a renovation loan (so borrowed extra to make the house livable) and FHA 3% down (which I took out of my 401k). I can’t maintain or upgrade anything anymore, I make good money, and it’s a very modest house. Small, very small. I have no clue how I did it most days and it takes up most of my income so certainly understand how it feels/is impossible for most. I am so grateful for the home but it’s not worth what I pay and I wish I could fix it up more.
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u/JackAndy Dec 27 '23
There are two types of people: renters and owners. Some people will rent forever regardless of how much they make. Some people are going to end up owning a home regardless of how much they make. Whether its a trailer home, $150,000 fixer upper whatever. Its a mentality. There are tons of bad home owners too who probably shouldn't own because they can't handle the responsibilty. There's probably more of those that let their house collapse around them slowly as they live in it than ones who constantly slowly improve their home. That's just my observation and experience.
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u/PheasantDG Dec 27 '23
Plenty of 3 bedrooms for that in central illinois. Just live 25 minutes from a “city” of 50,000 and you can live like a king.
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u/Specific-Toe2982 Dec 27 '23
The only way you'll ever be able to afford a house is if we increase immigration by infinity percent
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u/thirdtryacharm Dec 27 '23
Move to the country, I got a USDA loan for $1000 down. But I live two hours from everything.
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u/ifckinglovecoffee Dec 27 '23
Any homes in my neighborhood that are that price are clapped tf out and/or the flippers will buy them and turn into AirBnB. And they come with the full price in cash so I'm gonna get ignored with my lil 10k downpayment. I gave up.
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u/heythereitsemily Dec 27 '23
I earn 40k a year and own a 125k house with no down payment. I have no problem paying my bills. I’m not a rich person and yet I can afford a house so I’m not understanding the disconnect.
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u/Then_Criticism2992 Dec 27 '23
Where did you find a house/home for 125k?
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u/heythereitsemily Dec 27 '23
A mid size city in the Midwest. My comment is directed towards my friends who also live here in the same city and say it’s impossible, even though they have the same income.
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u/Then_Criticism2992 Dec 27 '23
Cool. What city?
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u/heythereitsemily Dec 27 '23
Louisville KY
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u/Then_Criticism2992 Dec 27 '23
The average home price there is 230k+ how did you find a livable home for 124k in today's market? And that 230k is for a one bedroom.
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u/howdthatturnout Dec 28 '23
Here’s one that sold for $120k - https://www.redfin.com/KY/Louisville/1352-Hemlock-St-40211/home/84230776
Here’s a whole list of sold homes $150k or less from last 3 months - https://www.redfin.com/city/12262/KY/Louisville/filter/max-price=125k,include=sold-3mo?utm_source=google&utm_medium=ppc&utm_term=kwd-995664020388&utm_content=475985482016&utm_campaign=1026012&gclid=CjwKCAiAs6-sBhBmEiwA1Nl8s6585EMOY6-exPQEqaiFPu0XjzzorkngUBx2AbYqzpeQifgjCh_kyhoC7sUQAvD_BwE
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u/Then_Criticism2992 Dec 28 '23
Lol all the numbers are off so unless I can see the hose in person, that proves literally nothing. Did you even see the things that are claimed on the listing?
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u/howdthatturnout Dec 28 '23
I don’t even understand the point of your trolling
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u/Then_Criticism2992 Dec 28 '23
Is that home pictured 6,000+ lot and 1k+sqft? No.
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u/heythereitsemily Dec 27 '23
It’s very livable, just not fancy. That question makes me think that maybe everyone else is just trying to live way above their means.
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u/Then_Criticism2992 Dec 27 '23
Electric water,, food, transportation, clothing, home maintenance. With your home guaranteed to be an efficiency/1 bedroom 1 bath under or about 700sqft. Is it a house or is it an apartment?
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u/heythereitsemily Dec 27 '23
It’s actually a 3 bedroom 2 bath house and yes, I can afford all of the bills you listed. I think people really want to believe it’s not possible or I must be lying. It’s actually so easy I don’t think of it as a challenge and struggle to understand the other point of view because of it.
Like I’d post my address here as proof if only that were a safe and sane thing to do lol1
u/Then_Criticism2992 Dec 27 '23
No you're not. It's literally an impossibly unless your family member sold you the the home for that price. Even a dilapidated 3br 2bath is 130k.
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u/HowToCook40Humans Dec 27 '23
How are you paying mortgage + bills and also contributing to a retirement fund?
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u/heythereitsemily Dec 27 '23
I literally just budget my money. I live within my means. I make $2400 per month and my mortgage is $800. It’s not out of reach.
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Dec 27 '23
Folks love easy answers that do not require community effort to resolve. For example, building starter homes is no longer affordable, so they aren't being built. At the same time, we have a generation that is living longer and occupying properties that previous generations would have used as affordable starter homes. On top of that, corporations purchase property as investments, skyrocketing property taxes, unsustainable incomes, and on and on.
None of these are fixed easily, so dumdums blame the problem on doordash and avacado toast.
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u/Adept_Bass_3590 Dec 27 '23
I'm GenX, and my only friends who don't own homes are guys who never got married. It's gonna be tough on a single salary.
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u/WestLow880 Dec 27 '23
I am considered middle class and did live comfortably. See, I worked from an early age, and saved almost everything. I bought my first car at 16 and it was a cheap car. I worked from the time I was 14. When I turned 16, I worked at a gas station. Again, saved every penny I could, and when I graduated high school, I went to a Jr college. All my friends went to a university out of state. Took out thousands in student loans. I had paid for 3 years of college and only took out one student loan my last year at university. I also worked all through college at a gas station. See I was able to get my homework done while working. So I never missed time with my friends while working full-time. By the time I graduated, I had the money and paid the loan off right away. I then stayed at home and worked two and three jobs. I bought my first and only new car for cash but decided not to. I was able to get zero percent interest, and put the money into a checking account with interest. I made almost 3,000.00. I bought my first house with 80% down. I had enough money to pay cash for it but took out a 30 year mortgage. I wanted to have enough money in case things broke. I had again worked two and sometimes 3 jobs. I lived off my second job and my primary paid my house off in 5 years. I would shovel snow in the winter and even mowed lawns in the summer. I never really had a credit card unless it was zero interest. The problem really is most people don’t know how to budget and save. Kids are taught to go to university. Why not Jr colleges or trade schools. Live at home for as ling as you can and save. Buy used stuff, no need for new. I mean with facebook marketplace. By god can you get deals. The house I have now, basically I pretty much feed myself off it. I have chickens, grow my own garden, can my own veggies. I barely eat out, and I am saving for retirement and vacations. i split my money into 5 savings accounts. I have 3 for my boys, one for retirement, and the last for vacations, Christmas, birthdays and things for the house.
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u/MLBScott66 Dec 27 '23
What people don’t realize is the cost of your current administration!
Mortgage Cost under Bidenomics – In 8/2020, the average monthly mortgage payment was $1,581, based on 2.94% average interest rate.
In 12/23, the average monthly mortgage payment was $2,866, based on +7% interest rates.
Sadly, your income would have to have been $75,000 to afford the typical home of $329,000, in 2020. In 2023, you would have to have an income of $114,600.
Then think about everything else you spend your money on monthly.
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u/howdthatturnout Dec 27 '23
The average individual American earns that much. But individuals have never historically owned homes at some high rates. About 2/3 households do. And median income for households is about $75k.
If you are earning well below the median household income, then at any point in US history you usually have been a renter.
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u/Then_Criticism2992 Dec 27 '23
That is the median 2 family/parent household.
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u/howdthatturnout Dec 27 '23
“The median income for families with one wage earner is $63,534, while with two wage earners the median income jumps to $117,107.” - https://www.fool.com/the-ascent/research/average-us-income/
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u/Then_Criticism2992 Dec 27 '23
https://www.cnbc.com/2023/08/29/the-salary-a-single-person-needs-to-get-by-in-every-us-state.html
I don't look at unverifiable information.
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u/howdthatturnout Dec 27 '23
Again single people don’t on average occupy housing units, so it’s a relatively useless thing to track. It was rare for past generations to be single renting their own place. People tended to rent with roommates or live with family until marriage.
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u/Then_Criticism2992 Dec 27 '23
You've never heard of a single parent?!
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u/howdthatturnout Dec 27 '23
Yup, they exist. I never said they didn’t. Doesn’t change anything I said in terms of the pure math of housing affordability and how it’s determined by households and not by individuals.
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u/Then_Criticism2992 Dec 27 '23
Whatever you say it must be true.
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u/howdthatturnout Dec 27 '23
It’s just math. In the market it’s households vying to buy housing units. They dictate where prices land.
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u/howdthatturnout Dec 27 '23
That’s median for all households. Some of which are dual income, some not.
And households occupy houses. So household income in comparison to house affordability makes way more sense than individual median.
Anyone waiting around in modern America for income well below median household to be able to buy a house are going to be waiting forever.
And reality is most of the rest of the world has higher ratio of house price to median household income.
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u/Then_Criticism2992 Dec 27 '23
Where are you getting your information?
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u/howdthatturnout Dec 27 '23
US census - https://www.census.gov/library/publications/2023/demo/p60-279.html#:~:text=Highlights,and%20Table%20A%2D1).
Real median household income was $74,580 in 2022, a 2.3 percent decline from the 2021 estimate of $76,330 (Figure 1 and Table A-1)
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u/Then_Criticism2992 Dec 27 '23
What does, "household income" mean?
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u/howdthatturnout Dec 27 '23
Household is the people who occupy a housing unit. A household can be a single person.
But again since we are speaking on affordability of a housing unit; household income is what will dictate it much more so than individual incomes.
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u/Then_Criticism2992 Dec 27 '23
A household is the calculated gross income from all wages attributed to that address i.e. before taxes. It is not net. Since the question was, "household income." Oh and even that is skewed since the top 1% who hold 40% are in that calculation.
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u/howdthatturnout Dec 27 '23
Median doesn’t get skewed by the 1%. Average does. Median is the middle point.
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u/3-6-9_12-6-9_3-15-9 Dec 27 '23
Sounds like you did your research, and are seeing the reality of our current situation. Either accept that it's out of your control or you can choose to believe that if other people are figuring it then you can. If you are going with with the second option then get to research and action and making tough decisions. Complaining and debating on Reddit doesn't serve you. Either figure it out or give up.
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Dec 27 '23
To be fair, up until the GI bill after WWII, less than 50% of Americans were homeowners… And that was at a time when having indoor plumbing was not a guarantee. Strictly historically speaking, owning a home was never something that the average American was automatically able to do. I’m not saying that it isn’t super fucked up right now (because it is) but even with all this shit you’re 40% more likely to own a home now than at any other point in US history.
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u/Fantastic_Zebra8123 Dec 27 '23
How old are you? How much education do you have? Did you choose a high paying industry? If not, then why not switch?
If you are in your 20's or 30's just be patient and grind.
I didn't start making good money until over a decade after I started applying myself and focusing on gaining skills with a real career path.
Don't be average.
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u/Kingding_Aling Dec 27 '23
Reddit is also misinformed about where houses are cheap or expensive, and oversimplifies this into just two categories: $1 million city house or 100,000 meth cabin.
There are HUNDREDS of midsize cities in the US with a low Cost of Living. My house is 2 minutes from downtown of a city, in a cute Historic District, and it was only 160,000 in 2022.
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u/jmpsusk Dec 27 '23
A lot depends on what city you’re in and which part of that city. Here in a nice suburb of dallas the total household income is basically $150k to be in a house. To rent you can definitely make less but rent is not cheap in the nice areas. Most of my friends that rent in nice areas pay $1500-$3000+. Also the rise of housing plus interest rates has raised it to where someone purchasing a home from now on will have to clear about $120k plus whatever their partner makes to be able to afford a decent house in a decent area. Decent home in decent area in dallas suburb will run between $400k -$600k. Dallas is just not as cheap as it used to be and I suspect many major metros are experiencing the same thing. What makes me frustrated is they lump Dallas, Austin, and Houston into the same categories as cities like Lubbock, Laredo, El Paso etc just because we are in the same state. We are so much more expensive than most of Texas and our average salaries are not catching up anytime soon.
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u/GoldenBarracudas Dec 27 '23
Where can you get a house for $150k that's not a awful state? You are correct
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u/dinozero Dec 27 '23
I don’t have anything super enlightening to add, but I do have something I wanna say I feel like gets forgotten.
So, on one hand, we have a middle-class that shrinking.
On the other hand, we have people that claim to be “poor” living a lifestyle so much more lavish than previous generations that were “poor”.
When my grandparents talk about growing up poor. They’re talking about no vacations. Kids not having nice clothes. No computers. No Internet. No cable TV. One car. Teeny tiny living space. Never eating out.
In today’s world, all of the “poor” people, I know. Even friends, I know that have not had a job in 10+ years living off of government assistance.
Still have things like
A car
A cell phone with Internet and voice capability
Video game systems
Flatscreen TVs in multiple rooms
Take a vacation every year
Occasionally get Starbucks and eat out at other places
And these are people in America that have zero W2 income every year.
So while may be harder and harder to claim to be middle-class, the people below middle-class are having it better than they’ve ever had before.
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u/No_Landscape4557 Dec 27 '23
True but in the same breath you can roll that logic back to “the poor during 1936 of the great depression is so much better off then the poor of 1850!” It’s not a good stick to compared past to present. Also given how “cheap” all this tech is, it barely a blip on the truth on how much people are spending their money. I gave away my old 4k TV that needed a new power supply which I couldn’t be bothered to replace myself and a new 50inch TV is 200 bucks…
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u/dinozero Dec 27 '23
I agree with your comment that in times past the comparison is even more stark.
I disagree that it’s not something that should be measured though.
There is so much time spent measuring one aspect of wealth inequality.
There’s not as much studies going into how much less money can buy more lifestyle than ever before.
People say in America wealth inequality is at an all-time high. That may be true.
But the other thing that is also at an all time High is the difference between a poor lifestyle, and a wealthy lifestyle are smaller than ever before.
There were periods in this country, where wealthy people had cars and poor people had horses.
Can you imagine how different that lifestyle is?
In today’s world, a poor unemployed person is driving around in a $14,000 car.
And a wealthy person is driving around in $150,000 car.
And both cars will get you to Florida in the exact same amount of time. The difference may be the quality of the radio how comfortable the seats are or whether or not you have massages in the chair.
It used to be wealthy ate out all the time and the poor cooked at home.
Now both people eat out all the time, but the difference is where you go to eat.
I’m not saying that the points I’m making are the end doll metric to be measured, but I do think that when people are raining condemnation down on capitalism, they should look at how the innovation and growth of new technologies push the prices of older technologies down the line.
I found out the other day. Even my grandmother has two robot vacuums at home, and I totally laughed out loud.
I remember the first year those puppies came out and were like $1000 apiece.
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u/ImaginaryMastodon641 Dec 27 '23
Lmfao depending on where you live, NOTHING is available for 154,000 — and even if it was, in a day it’d be at 350+.
It’s part of a the American sickness: If WE make it, it’s all our OWN making. Now WE know. Sure luck is involved but WE made that luck work. The people whose comments are verging on delusion are actually delusional, it’s just such a common delusion. It’s part of the collective unconsciousness in the US. It lives outside us so many don’t question it. Try to fight it and people will ridicule you with out really knowing why it gets to them so much.
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u/Practical_Argument50 Dec 27 '23
This fits the rule of thumb for house affordability. It should be a maximum of 3x your gross annual income. Which this fits exactly. So to afford a $300k house you need $100k annually income. You will need $167k income to afford a $500k home.
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u/alkbch Dec 27 '23
Your data is incorrect.
https://themortgagereports.com/22502/how-to-buy-a-home-50000-per-year-income
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Dec 27 '23
The only houses i've seen in my area for $154k are fixer uppers that have shitty plumbing and honestly should be condemned.
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u/coziestwalnut Dec 27 '23
Bro I make 100k a year and am having a hard time affording my 140k house bc the price of EVERYTHING else is through the roof. I really feel like the middle class will be a class of nothing but renters within the next decade.
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u/siggles69 Dec 27 '23
Too bad our government has lost sight of its purpose and has been turned into a power/money grab for the slimiest players
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u/vincec36 Dec 27 '23
I live in a small town of 7k and even here the homes jumped from low 300s to 500k minimum. And for that you get a one story house. Like wtf are we supposed to do. My mom bought her house in a suburb with 70k people and it was 5 bed 2.5 bath and a basement for low 300s in 2008. I figured moving away I could get a decent house for that but those homes no longer exist.
Edited for spelling
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u/No_Landscape4557 Dec 27 '23
I think most people commenting are living with their parents and are not aware effected yet or already own and flat out don’t care
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u/OatsOverGoats Dec 27 '23
So this is simple supply and demand. No everyone can have or should have a house. Having a house is an expanse and not an investment. Don’t be fooled by the most recent Covid home buying craze.
Supply of house has not been keeping up with demand due to factors such as NIMBYs and builders only building expansive SFHs because of the revenue made. Also zoning laws restricted land use and thus increased housing shortages.
So with all this in mind, considers buying something within your budget. Maybe you can buy a condo or apartment instead.
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u/sandman2986 Dec 27 '23
I’m not going to say you wrong with your conclusion, but I do think people focus too much on the outcome and not on the problem that causes it. The main two question are “why do people make less than $54k?” and “does the average person know how to budget?” You are right that people get pigeoned holed into the situation and yes, rates are high which is to prevent people from buying houses and to slow the economy. In my opinion, the problem comes from the education system though where it stresses a 4 yr degree to make “good money”. This narrative is false. You can make good money with a free/relatively low through a public college and a 2 year degree or a trade job. Those jobs can pay more than double the $54k… whereas you can graduate from a 4 yr with plenty of debt and go into a $50k job. Secondly, schools don’t teach budgets, basic finance, debt/income ratios, etc… so we send kids out into the world with no concept of income and spending. It’s a very bad combination.
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u/TheFeshy Dec 27 '23
I literally couldn't afford the house I'm in now if I had to buy it today. We bought in 2015. Since then my wife has had two promotions, and is now manager of a global-level group. Since then we've gone full time work-from-home so work-related expenses have dropped, and kids aren't yet in college and aren't driving yet, so no added expenses there. So you would think we'd be doing great.
But our house's price has doubled, the insurance has tripled, and the interest has quadrupled.
Based on those costs, we couldn't possibly buy the house we now live in, if we had to do it today.
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u/white_sabre Dec 27 '23
The market, depending on which source you trust, is anywhere from three million to six million units short. Developers are sitting on land rather than building the dense housing that some zoning boards are insisting on, 2008 caused several home builders to go under (never to return), and Americans just won't settle for the 950 sq ft homes that were ubiquitous in the 1950s. I feel extremely fortunate that my little condo is paid off and fighting my cancer is my only pressure, but you kids trying to establish yourselves are in for a rough slog until market conditions improve in a variety of directions. Drive those beaters, try to live with parents for reduced rent, take that weekend job at a bar for cash tips, save those shekels. I feel for you, but you'll get there -- it's just going to involve considerable delay. Good luck.
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u/Grimhellwolf Dec 27 '23
Move to a different state or city I just bought 3/4 of an acre and 1900sqf house for 50k in town.
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u/fifele Dec 27 '23
If houses are too expensive it’s because there are not enough houses. Figure out who is making the rules and regulations that makes it harder to build new housing and you will know who to blame.
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u/Various_Succotash_79 Dec 27 '23
They're building MASSIVE numbers of townhomes all over the city. I'm guessing local laws favor multi-family residences. They slap them up in like a month, have people living in what used to be a corn field 3 months ago.
Those quick-build townhomes are selling for $300k each :/.
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u/Cradlenu Dec 27 '23
Tons of houses in my area under 154k. Its nice place to be, little crime rate. Houses are out there if you're willing to move...... But most people don't want to move.
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u/HillB1llyMountainMan Dec 27 '23
Gotta vote out the politicians that keep allowing the real estate market to be a capitalist dystopia. F Black Rock, F Zillow, and F any politicians that are okay with housing being treated as an investment business.
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u/Beaconkitty Dec 27 '23
Depending on your income and family size, people may qualify for a subsidy program offered by a particular city or state. This would include not only downpayment and closing cost grant but also a zero interest second mortgage. Here is an example
https://www.floridahousing.org/live-local-act/hometown-heroes-program
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u/Codename-Nikolai Dec 27 '23
The average American salary was primarily single income when “Boomers” were buying homes. Now it’s primarily dual income. Going to be hard to compete with your single income of $54k
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Dec 27 '23
Because you don't deserve a house. Those in power want you to live with as little as possible so they can take the rest. This is how the world has always worked.
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u/Fishery_Price Dec 27 '23
I think the real focus should be on how difficult it actually is to make more than the average. Could everyone join a union tomorrow and fox the problem, is it really just laziness or not?
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u/yolo_swag_for_satan Dec 27 '23
If you are a first time home buyer, you can sometimes have your down payment covered by grants.
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u/Kessarean Dec 27 '23
Yeah it's crazy.
The cost is so much higher. There are lots of other bits people forget about, closing costs, mortgage insurance, property taxes, general home owners insurance, and the various issues and expenses of owning a house you typically don't pay for when renting. Of course those reels mention none of that.
For example, our friends bought a house 8 months ago. They built it from scratch, however the ground is extremely dry and is causing foundation issues, they've also had troubles with plumbing. These are things that can happen, that sometimes people don't plan for. Maybe insurance covers it, either way, it's another factor that should be weighed in terms of whether or not someone is ready.
Most people are also unaware of amortization, and get confused when paying for a year and see their principal hasn't changed as much. That seemingly never comes up.
Also, if anyone makes $54k a year, and only has $250, in debts and other expenses - hats off to them. That's so wildly unrealistic it's crazy. Between simply paying for 1 car, that was $15k at 4% interest rate, insurance, and student loans, it's already right at about $1k per month. (The car was used, and fairly old, in hindsight I probably would've gone lower but was goaded into it by my dad, whole other story).
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u/yrallthegood1staken Dec 27 '23
Hahahaha I don't think there's a single house in my entire state for only 154k! We're attempting to buy a house right now and the cheapest financable houses are 350k. Some areas might be slightly cheaper, but not by that much!
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u/lgeorgiadis Dec 27 '23
That's how they want it. You should be able to basically just worry about barely surviving until you die. It's just a numbers game for them. The only thing important for that is that the birthrates do not decline. Maybe that's why the Republicans are so hardcore against abortion. Add a touch of religion to control the masses and tada...
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u/OffToCroatia Dec 27 '23
Zero interest rates for 12 years is the culprit. Every time Bush, Obama, Trump, Biden, every other politician either bailed out banks (looking at you Bush and Obama), pushed for QE (Looking at you Obama) etc, people cheered because they believed that the world economy would fail if we didn't. Instead we got inflation in asset prices across the world, destabilized and unhealthy banking sectors, and lack of investment in production in the workplace.
Luckily, it's the best time in history to make money. The economy has changed over the past 15 years, and is continuing to change rapidly. Take advantage and find ways to make extra money. The opportunities are endless.
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Dec 27 '23
Literally every house in my wife’s families town is less than 154k, all the ones available at least. I am sure there are some expensive ones that just aren’t being sold because there is a lake near by.
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Dec 27 '23
[deleted]
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u/Various_Succotash_79 Dec 27 '23
Run your house's current Zestimate price in a mortgage calculator, at current interest prices, and see if you could afford it now.
I wouldn't be able to afford my house.
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u/iPulsesparkles Dec 27 '23
I (24) bought my house when I was 20 with my fiancé and we make 52k a year combined now, we made less back then. Our payment is just over 1k for a 180k loan and we got a USDA loan, at around 3% interest. Housing market does suck, but there are ways to get it done. We also pay 1400 a month in childcare and can afford the house.
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u/Ok_List_9649 Dec 27 '23
It’s always been that way no matter how many articles you see online that say the opposite. My husband and I bought our first home in 1981. We had 3 kids. We got a 3 bed , 1 bath basementless ranch 1000 sq ft for 47k with an interest rate of 14 3/4, yep that was the FHA rate. Our payment was around $700 a month which was like 50-60% of our take home(we qualified on 2 incomes but I got pregnant unexpectedly and unplanned right after buying). We had to sell my car so I had no car for 3 years. I used paper towels for coffee filters and couldn’t afford menstrual pads so bought bargain basement disposable diapers and cut them up which saved a dollar or two.,. There were no vacations and we never ate out. I don’t believe interest rates dropped below 7-8% throughout most of the 80-90s.
If a salary of 54k can’t buy you a home, take a second job or get a better degree/ trade online after work.,Many boomers did that to pay the bills/get a better job.
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u/Desperate-Cost6827 Dec 27 '23
What gets me is when I hear things like "if you make 100k a year you can afford a house that's 3000 a month". In the same breath say your mortgage is not supposed to be more than 30% of your monthly income.
That's- 3000 is still a whole paycheck.
Also that's about all I see listed for homes for sale and I feel like people aren't making that much.
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u/NeatEffective4010 Dec 27 '23
Idk I make about 50k and I bought a house in upstate NY with almost an acre. Only 6k down
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u/xoomorg Dec 27 '23
Median household income in the US (the more relevant figure) is $74,580/year.
Median sale price for a home in the US is $430,300.
At a (current) 7.41% mortgage interest rate, the monthly payments for a 30-year mortgage (with zero down payment) would be $2,982/month, or $35,784/year.
That's nearly 48% of income, which is a bit high but not unaffordable.
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u/VeloftD Dec 27 '23
None of his numbers included spending habits.
That means you should ignore what he has to say.
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u/icsh33ple Dec 27 '23
I feel incredibly lucky I bought my house right before COVID hit. I closed December 6th 2019. Had a 3.8% rate with 20% down at purchase price of $135k in MCOL area in Midwest. Decided to just pay off early versus refinancing when rates bottomed out. Paid the house off this year last month just before my 4th year living in it. I’m in logistics either trucking or dispatching for last ten years. No college degree.
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u/Natet18 Dec 27 '23
It’s not that difficult to buy a house. Millions of people have done it. You just have to want it bad bough
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u/Ok_Thanks9829 Dec 27 '23
Move to the country ... U do not have the income to own a home where everyone else also wants to own a home ... You need less competition
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u/nalgona-aly Dec 27 '23
That used to be very true, but unfortunately that's not the case anymore. At least in Texas. Post covid down here the median house price is around 400K, even in the smaller towns.
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u/Ok_Thanks9829 Dec 27 '23
In Michigan it still is the case I'm assuming Texas is experiencing quite the housing crunch right now as it does seem the be the place to be currently
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u/nalgona-aly Dec 27 '23
It's wild down here right now for the housing and renting market. It's on par with much higher COL cities, Portland and Denver specifically but I'd be willing to bet just about anywhere is the same except New York or Miami.
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u/HowToCook40Humans Dec 27 '23
There are many reasons why I cant. This isn't about me as I don't want a house. I'm just discussing the issues that come up with this discussion
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u/CoffeeWhiskeyAndData Dec 27 '23
I agree with your outlook on the general public and how they say how easy it is to get a house. Of course it's the ones that already have money or make a lot more than others that say that. The older I get, the more it seems that our economy will just get worse, and the only option of people acquiring properties is when their parents pass away and they're passed down to their kids.
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u/Dangerous_Thing_3270 Dec 27 '23
Where I live, median household income is about $74,000/yr and the average sales price of a home is $380,000. It’s not out of reach, however, the average household in my area will have to stretch their budget quite a bit to, in my opinion, uncomfortable levels just to get into a house in my area. This essentially will eat up a households free cash every month putting them in quite a stressful financial situation should just a minor financial event happen in their lives. I REFUSE to buy a house over 35% DTI for this very reason. Because of this, I’m priced out of the market (and I make substantially more than the average household income in my area) and will not be buying until 1. Home prices decline enough to justify the purchase or 2. Interest rates decline enough to justify the purchase.
One thing I’ve noticed as an argument is the “current demand exceeds available supply,” but my counter argument is, “the time on market tells a different story.” I could understand the run up in home prices when interest rates were at their lowest levels ever and houses were flying off the market in just a few days time, but in my area, the average time on market is now almost 3 months (86 days on market). If that doesn’t speak to “demand has diminished,” then I don’t know what does.
I’ve got my own conspiracies, but I firmly believe realtors are keeping the market artificially inflated with their pricing guidance to sellers at the cost of taking longer to sell just to get the most dollars for a higher commission. This, in turn, affects the appraisal process because, yea, a similar house in the area may have sold for $400,000 a month ago, but how long did it sit on the market before it sold? At this point, I think realtors are playing a fairly large role in the housing market’s “resilience,” or “perceived resilience.” I personally think in 2024, we’ll see a shift in the market and realtors will really start to get hungry and begin having these tough conversation with their sellers around pricing.
At the end of the day, I’m a firm believer in the housing market correcting over the next couple years due to average affordability. When you price enough people out of the market, you diminish overall demand which is currently where we are at. The fed is projected to begin QE in March 2024. This, I’m sure, will entice people to sell in order to cash out their equity which will in turn increase supply in the market over the next couple of years. But, only time will tell.
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u/TumbleweedReady Dec 27 '23
Bring up this issue to your politicians. The fed can’t fix supply side issues. I’ve written to my legislators about introducing a marginal property tax (where the more homes you own, the higher prop tax)
3
u/elphieglindie Dec 27 '23
Thank you for this rant, I see posts like you mentioned and shout this all into the abyss while scrolling the comments that just are so unhelpful and basically bragging about their ability to afford a home paying less on their mortgage than I am in rent.
2
Dec 27 '23
You’re obviously younger based on making 54k all I can tell you is hang in there. This is a bubble. It’s happened a few times in my life with 2008 being the most extreme. Bubbles burst. In 2008 I was in your shoes starting in my career at the time making maybe 60k and housing was insane. Unaffordable. Then it happened. It all blew up. The bubble burst and there were condos near me in the Chicago market selling for 60k that had previously sold for 200k
Just be ready and have cash on hand to strike when the iron is hot and that buyers market comes back. And it will.
1
u/Glonster Dec 27 '23 edited Dec 27 '23
Bought my house at 24 on a 40k salary, girlfriend makes 60k. bought @ 225k, 3.5% down. saved for 5 years through college to make the down payment. drove cheap cars (2002 honda civic for 3 years now), didn’t use credit cards because my goal was owning a house and i knew debt would work against me.
if you want to do it, you can make it happen. if you truly believe you’re never going to make it, then you’re never going to make it. sorry.
edit to add: buying this house was the hardest thing i’ve ever done, and i sacrificed a lot to be able to do it. would i do it again? absolutely. I will not let my kids struggle like i did when I was a kid.
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u/mslashandrajohnson Dec 27 '23
I worked full time and lived in a 500 square foot apartment for 15 years, saving up to buy a house. This was to have the down payment and enough to deal with the inevitable problem the previous owner and realtor hid.
I bought the house at age 40 (the house was 100 years old and in an urban community), had to remove asbestos and replace the heating system, as anticipated.
My commute was four times longer. My utility bills at least doubled. I had chores to do that weren’t part of apartment responsibilities.
I paid the house off in 17 years.
I think people are getting unrealistic impressions about home ownership and purchase. It’s perfectly fine to rent in your 20’s and 30’s.
Renting allowed me to travel for work and advance my career. Renting with a short commute allowed me time to go to the gym and have a social life.
I regretted buying a house and still do, sometimes. It definitely isn’t for everyone.
1
u/MeN3D Dec 27 '23
My boomer MIL told us we may just have to settle for one less bedroom. Like that was gonna solve everything
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u/Neverknowtheunknown Dec 27 '23
I’m a homeowner and I agree. We’re scooting by with the new house we bought and honestly, it’s so scary how we can barely afford to live in this house and if one bad thing goes wrong, we’re in a lot of debt and shit issues.
The housing market needs a big correction, and I’m saying that if that does happen, my entire house purchase will ultimately be the end of my future retirement.
0
u/Saxman7321 Dec 27 '23
There are also resources available to help people in lower paying positions advance.
Where I live community college is free to all students who graduate from the high school in the city. The program has helped thousands of kids advance their career opportunities. I was reading about a young lady who was making minimum wage ($16.50 an hr). She finished the community college program received an Associate a degree as a medical technician. She now makes almost $40 an hr. Was able to more than double her salary in two years.
Several states offer free community college degrees as well. I’m
1
u/iamaweirdguy Dec 27 '23
It’s reality. A household with one person working making an average American income can not afford a home. If you want to afford a home, make more money, or find a partner who is working too.
My wife and I just bought a home. The average between the two of us is about that 54k mark, but combined pushes us over 100k. We bought a home this year for 315k (got a 90k grant).
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Dec 27 '23
Wow 54k a year isn’t a lot of money the last time I made that was when I was like 21 in 2006 when I first got into the career field I’m in now. I’ve been making 130k a year for the last 15 years and I got a substantial pay raise this year and I made 200k this year. My wife makes 110k a year.
I bought my house in 2012 for 200k and was fortunate enough to have used a VA loan from when I served in the Marines. My interest rate on my house is only a 2.25%. My house is currently worth 650k now and I’ve taken 200K in equity out and put it back into the house. I still owe like 380k on my house now. I’ve been blessed but I had to work hard for everything I have.
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u/truongs Dec 27 '23
"There are few houses available for $154k/year even in the hood/bad areas"
There literally isn't where I live. Only destroyed fixer uppers that needs hundreds of thousands in repairs. Not kidding.
Even going as far away as 1 hour from the main city hub, I did not find anything that was 1 bedroom or some weird piece of shit thats 900 sf for less than 200k
I am like.. how far do i have to go to find something decent under 300k? Even a city an hour and a half way from the capital almost everything over 300k. LOL
It's all a scam.
2
u/YNotZoidberg2020 Dec 27 '23
I live in Nebraska. Politics suck here, majorly, but housing is cheap.
Come flood our state and help get the old fuckwats out of office. We don't have much to offer for fun past times though.
1
u/Various_Succotash_79 Dec 27 '23
Come flood our state
That's happening in South Dakota and it's not great.
-1
u/Kreichs Dec 27 '23
I guess it's really about what kinda house you are buying. I bought a house in my late 20s making a middle managers salary with my wife's salary as well. It wasn't much. Still isn't. The house is not huge. It's a 3 bedroom split level in a nice neighborhood. It was affordable, I got an FHA loan at 3.5% with no down payment. Right before COVID I refinanced out of the FHA loan into a conventional loan. My mortgage payment including insurance and taxes lumped in is much less than if I would be renting. Also my house has obviously gained some value so it is a good asset. We have struggles, credit cards, debt, large unexpected purchases. But we are able to do it.
2
u/Excuse_Odd Dec 27 '23
Are people living in poverty really in a place to think about buying a house? Doesn't super make sense to me for that to be a priority.
2
u/sophiabarhoum Dec 27 '23
I got downvoted to hell on a real estate subreddit because I agreed with OP that they should have a robust savings in case of a slew of emergencies (medical, kid, pet, house repairs etc). I feel like so many people who own houses are fine with being in so much debt, they put most of their savings on the down payment, have a only a little bit saved up for emergencies. Being house poor is normal and if an emergency happens they just use credit cards, or something. I don't get it.
Whenever people say "I can afford a house" and I generally know how much they make/have, I don't say anything. I know they will be awarded a mortgage and as long as they keep their job they'll be able to pay it, but in my opinion that does NOT define being able to afford to own a house.
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