You are scaling everything to Texas.

DC property taxes are basically nothing and I've competed for MBA's to join my team in NY and leave DC... even 100k is low end comp for a 25 year old educated professional in DC.

According to google the median income in DC is $75K while median housing cost of $556K.

Bocephus said:

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ATM9000 said:

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You are scaling everything to Texas.

DC property taxes are basically nothing and I've competed for MBA's to join my team in NY and leave DC... even 100k is low end comp for a 25 year old educated professional in DC.

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At $150K you're making that payment?

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Again scale out of Texas. Property taxes are like half a percent in DC. Consider that vs the 2.5 to 3% you pay in Texas. Then do the math on home payment relative to salary. At 150k, if I have 20% to put down, even with local income tax rates I don't know that I'm sweating the house payment too much.

There are plenty of 25-30 year olds buying $350k houses in Houston, Austin, and Dallas too

A 25 year old with a good job in DC buying a $500,000 house has rich parents who have given them money their entire lives. That's the way DC go.

ryanhnc10 said:

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There are plenty of 25-30 year olds buying $350k houses in Houston, Austin, and Dallas too

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Which makes no sense to me either

Bocephus said:

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ryanhnc10 said:

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There are plenty of 25-30 year olds buying $350k houses in Houston, Austin, and Dallas too

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Which makes no sense to me either

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Your numbers are way off. On a $450k house and putting 20% down, that leaves a loan of $360k. Assuming decent credit you can get a 30 year mortgage rate under 4.5%, but let's assume 5% to make it easy.

The loan payment on the above scenario is less than $2k a month, much less than the 1% you are referencing.

Bocephus said:

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ryanhnc10 said:

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There are plenty of 25-30 year olds buying $350k houses in Houston, Austin, and Dallas too

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Which makes no sense to me either

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There are a lot of high paying jobs in big cities these days. Depending on what you do, a DINK couple ~28 years old can easily be clearing $200k a year in Salary.

Not a humble brag but we're 30yr old DINKs and went to state schools with parents who are middle class (made less than $140k combined). As of July, we'll be >$250k combined W2 Salary.

Some jobs just pay better than others.

ATM9000 said:

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There's that but the property tax effect is real. A home that carries a .5% property tax in one place can price roughly 1.4 times the price of a place that carries let's say a 2.75% property tax and the cash flow effect will be the same.

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correctamundo.

$450k house with 20% down at 5% interest.

P&I is ~$2k... with taxes and insurance? $3,100.

Debt, and lots of it! That, plus low interest rates, equals sky high prices. Especially in areas where property taxes are low in comparison to Texas.

Take somebody we know for example, they sold their home of ~10 years and rolled the equity (about $80K) into a house that cost $700K. 3,000 square feet of all the decor our grandparents would have wanted in the late '90s plus a mildew problem in the crawlspace. The fun part is that only one of them work and shortly after they had a kid.

I have no clue what their payment is, but if interest rates weren't as low as they are now there's no way they'd be able to swing that one. The way I see it that's a big part of our current housing bubble.

I've learned, as with everything, everybody spends their money differently.

In some cases, people choose to buy a very nice house even if that means they have less to invest, driver older cars, etc.

The Fife said:

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Debt, and lots of it! That, plus low interest rates, equals sky high prices. Especially in areas where property taxes are low in comparison to Texas.

Take somebody we know for example, they sold their home of ~10 years and rolled the equity (about $80K) into a house that cost $700K. 3,000 square feet of all the decor our grandparents would have wanted in the late '90s plus a mildew problem in the crawlspace. The fun part is that only one of them work and shortly after they had a kid.

I have no clue what their payment is, but if interest rates weren't as low as they are now there's no way they'd be able to swing that one. The way I see it that's a big part of our current housing bubble.

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I think this is happening a lot

Don't even get me started on Los Angeles. Median income $56k median home price $765k last year!

Mr.Diesel and I have this conversation constantly. We drive paid for cars and have a modest home we've been in a decade. We want to upgrade but don't want the debt that comes with it. Right now I don't work so that is definitely a limiting factor but what amazes us is driving to preschool drop off they are all as well SAHM living in $450k plus homes and driving brand new suburbans. It baffles our minds bc we make a very decent salary but couldn't swing that. We have also had the pleasure of experiencing both losing our jobs simultaneously early on in our marriage so I know that plays a huge role in us being very debt adverse.

Beckdiesel03 said:

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Mr.Diesel and I have this conversation constantly. We drive paid for cars and have a modest home we've been in a decade. We want to upgrade but don't want the debt that comes with it. Right now I don't work so that is definitely a limiting factor but what amazes us is driving to preschool drop off they are all as well SAHM living in $450k plus homes and driving brand new suburbans. It baffles our minds bc we make a very decent salary but couldn't swing that. We have also had the pleasure of experiencing both losing our jobs simultaneously early on in our marriage so I know that plays a huge role in us being very debt adverse.

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10 years ago, Texans were defaulting on their houses valued at 120K-200K in record numbers. We have seen a 1 percent annual increase in income, and now everyone is buying $200,000-$300,000 houses. It does not make sense.

agfan2013 said:

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Just as a point of reference, I'm getting married next spring and just started to look at getting finances lined up for buying a first house in the fall. Even with putting down 15-18% and having some PMI for a year or two, our payments including property tax, PMI, etc. would only be about $1700 a month on a 250k house, so your 1% number is a bit high.

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Be patient. The market is going to see a correction and your $250,000 houses will soon be available for $170,000.

Bocephus said:

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agfan2013 said:

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Just as a point of reference, I'm getting married next spring and just started to look at getting finances lined up for buying a first house in the fall. Even with putting down 15-18% and having some PMI for a year or two, our payments including property tax, PMI, etc. would only be about $1700 a month on a 250k house, so your 1% number is a bit high.

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Be patient. The market is going to see a correction and your $250,000 houses will soon be available for $170,000.

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Considering you don't even know what market agfan is talking about, this is terrible advice

The poster above who said debt.. that's your answer.

The people buying these houses almost instantly go into significant debt after they buy. They think the LTV doesn't matter anymore and everything starts going on credit.

People don't k kw how to live within their means, and if the market were to take a hit again, a lot of these people would find themselves with a bunch of debt they can't reasonably pay off, especially if they lose their cushy job that they've pinned their lifestyle to.

ryanhnc10 said:

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Bocephus said:

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agfan2013 said:

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Just as a point of reference, I'm getting married next spring and just started to look at getting finances lined up for buying a first house in the fall. Even with putting down 15-18% and having some PMI for a year or two, our payments including property tax, PMI, etc. would only be about $1700 a month on a 250k house, so your 1% number is a bit high.

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Be patient. The market is going to see a correction and your $250,000 houses will soon be available for $170,000.

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Considering you don't even know what market agfan is talking about, this is terrible advice

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Unless he is buying in Hawaii, I stand buy it. Housing prices cannot continue to increase at this rate when salaries are increasing at 1 percent. You do you though.