In a HCOL area your standards just have to be different. I'd love the disposable income of making 150k but only having a 200k mortgage - sounds like a luxurious life.
We make well less than 150k but were considering buying up to 325k based on our current rent. That would get us a crappy 2 bedroom in a neighborhood where I have some concerns about being shot. We're going to continue renting instead, but I guarantee that our rent is more than many on this post would be comfortable with. I choose not to live in a cardboard box.
you know roughly where I live, and we're not at risk of being shot for our 200k mortgage and have 4 tiny bedrooms. but our house is far, far from turnkey (and the money we've "saved" we've dumped into repairs. but a "finished" house in our neighborhood would be 400k+ which just isn't feasible for us). and we're easily an hour commute from the city with hurry up and wait. i think the train is 40 min or so.
We both work in outer boroughs of the city, not Manhattan. Our commutes would be 90+ mins from where you live I suspect.
We make about $140K. We are looking at houses in the $400K-$450K range. We would love to have it at less than that, but it's just not logistically possible for us.
For the past month, we have seen:
1. A tiny house for $399K, on a very busy street, 2/1, no lot, one car garage which backs up to the said street. Newly renovated, within a cab ride from the center of the town. 2. A house for $460K, on a nice street, next to a park, but with a 7K yard which will drive H batty, 2/1, newly renovated, about 5 miles (40+ blocks out) from the center of the town. 3. A house for $420K, refinished hardwood and new paint, decent sized and fully manicured yard, 3/2, but it's in the burbs which means DH will still need to take the train or do a 40-mile commute one way. 4. A condo for $460K, on not so good neighborhood, but it's a cab ride to the center of town. 3/2.5, no maintenance, but no yard. $250 HOA. 5. A tiny house for $460K, 2/1, with a converted garage which will serve an additional 1/1, but our lender will likely ask to reconvert back to garage. There's really no living room/dining room to speak of. No back yard, front yard will need to be fenced up for the large dog, which will take away from the curb appeal of the nice craftsman home. Great bones otherwise. Cab ride away.
Post by themoneytree on Oct 12, 2013 13:37:40 GMT -5
I am impressed that people are making so much money in areas where it is even possible to spend $200,000 on a house. Our first tiny 1 bedroom apartment was $250,000 11 years ago when we were making $40,000/ year.
I am impressed that people are making so much money in areas where it is even possible to spend $200,000 on a house. Our first tiny 1 bedroom apartment was $250,000 11 years ago when we were making $40,000/ year.
This is kind of an odd statement.
It's possible to buy buy a decent home in a good neighborhood in many areas of the US for under $200k. And there are lots of people in some of these areas who make higher salaries. Many smaller cities in the US offer a LCOL and a number of good companies willing to pay good salaries.
I am impressed that people are making so much money in areas where it is even possible to spend $200,000 on a house. Our first tiny 1 bedroom apartment was $250,000 11 years ago when we were making $40,000/ year.
Lol.
You realize this is as weird of a statement if I say I cant believe that a couple could make only $40k combined in an area where a tiny 1 bdr apartment costs $250k, right?
When people talk about "only buying based on 1 income" do you mean the lower income and the higher income each have to cover the mortgage on its own? What I'm trying to figure out is if people look at both incomes and make sure the lowest one can cover the mortgage alone or if they just say "the higher income is more than enough to pay for this mortgage even if lower income goes away."
We have built our lives around the assumption that we will both be working. Since DH's income is so variable, we could afford our fixed costs on my salary. However, if I was making zero dollars for an extended period of time, I have no idea if he could cover our obligations with his take-home every single month. This is not something I am very worried about (as I would plan to find a new job), but I hear so many people say they only used one income to buy/make decisions. Hard to do that in an entrepreneurial setting.
The question we asked ourselves is "can we afford this if the higher wage earner loses their job?" because that's a scenario that is likely to happen (has happened to us before) and might happen again if one of us decides to start our own business. For us, "afford" means that we can keep up our lifestyle without making any drastic changes if the high earner is out of a job for a year. I am willing to think about cutting back on travel, Starbucks, savings, etc. when that happens, but I don't want to have to even think about selling my home or a car or dipping into savings.
It's definitely harder to do this in a HCOL area or when there's a great disparity between each spouse's salary, but I also think it depends on how people think of their home. I feel like a lot of people buy a home thinking it's going to be a 'forever home' & I think that mindset sometimes drives people to buy more home than they reasonably should. We buy homes that are acceptable for our lifestyles at the time & can be lived in for years if need be, but they haven't been our dream homes by far, and then we trade up once our incomes are higher and/or we've save up more for a DP. I suspect that the end result might be the same, but I'd much rather have a lower fixed payment for part of that time and less stress along the way.
I am impressed that people are making so much money in areas where it is even possible to spend $200,000 on a house. Our first tiny 1 bedroom apartment was $250,000 11 years ago when we were making $40,000/ year.
Lol.
You realize this is as weird of a statement if I say I cant believe that a couple could make only $40k combined in an area where a tiny 1 bdr apartment costs $250k, right?
Well apart from your statement sounds like an insult and mine doesn't, but ok. I think it's great that there are areas where you can make a lot and housing is inexpensive. Everywhere I have lived has either been low housing expense = low wage possibilities, or higher wages and extremely high cost of living.
The reason I gave the example was to show that we were able to afford a $250,000 home making $40,000. In stark contrast to those saying they can only afford $200,000 when they make $190,000. I don't really see why it is a statement worthy of an insult. It's simply another example.
I said 'we' because it was household income, but only 1 of us was working at the time. But thanks for the dig.
Our combined income went up to over $200,000 after a few years, but we upgraded our housing as we went.
You realize this is as weird of a statement if I say I cant believe that a couple could make only $40k combined in an area where a tiny 1 bdr apartment costs $250k, right?
Well apart from your statement sounds like an insult and mine doesn't, but ok. I think it's great that there are areas where you can make a lot and housing is inexpensive. Everywhere I have lived has either been low housing expense = low wage possibilities, or higher wages and extremely high cost of living.
The reason I gave the example was to show that we were able to afford a $250,000 home making $40,000. In stark contrast to those saying they can only afford $200,000 when they make $190,000. I don't really see why it is a statement worthy of an insult. It's simply another example.
I said 'we' because it was household income, but only 1 of us was working at the time. But thanks for the dig.
Our combined income went up to over $200,000 after a few years, but we upgraded our housing as we went.
'Our' income is now lower again because I SAH.
I didn't mean for what I said to be an insult or a dig, so I apologize for that. I just literally meant the inverse of what you said.
I don't think it's odd that there are people in HCOL areas that don't make a lot, so I just think its weird that you would think that. There are a lot of places in the country that are not HCOL. Do you think there are no doctors or other professionals that live there? Heck, where I live, two teachers who have been teaching for about 7 years will clear $150k.
You realize this is as weird of a statement if I say I cant believe that a couple could make only $40k combined in an area where a tiny 1 bdr apartment costs $250k, right?
Well apart from your statement sounds like an insult and mine doesn't, but ok. I think it's great that there are areas where you can make a lot and housing is inexpensive. Everywhere I have lived has either been low housing expense = low wage possibilities, or higher wages and extremely high cost of living.
The reason I gave the example was to show that we were able to afford a $250,000 home making $40,000. In stark contrast to those saying they can only afford $200,000 when they make $190,000. I don't really see why it is a statement worthy of an insult. It's simply another example.
I said 'we' because it was household income, but only 1 of us was working at the time. But thanks for the dig.
Our combined income went up to over $200,000 after a few years, but we upgraded our housing as we went.
'Our' income is now lower again because I SAH.
No one said they couldn't afford a $200k home on $190k.
They, including myself, said it's above their personal comfort level for a number of reasons.
Also, it's a large misconception that higher COL directly correlates to higher income.
I definitely agree it's a misconception in a lot of fields that HCOL = higher income. In my company, we live all over the country but there is no COL adjustment. My colleagues in Boston and SF are on same scale as me in Indianapolis and others in the rural south.
I also think a lot of it has to do with the type of house you can get for the money. If the difference between $250k and $350k a 1/1 apartment versus a 2/1.5 townhouse, people may feel more comfortable spending more of their take home pay on housing. If the difference between the two is a 2200 sq ft 3/2 versus a 3000 sq ft 4/2.5 it may not make sense to spend the extra money on housing.
We make just over 160k and our house cost us 380k. We are more than comfortable (although when one of us is off for parenting leave for a year things will be tight). In our area 380k is below the average cost of a house (The average sale price of houses (any housing, be it condo or freehold) in our city in August was 488k, so over 100k above what we bought for 14 months prior. The average for freehold was 567k, so we bought WELL below that). We wanted detached and some lot but it meant we had to go older and smaller.
ETA: There is no housing to buy in our area for less than 200k, period. My old condo, a 2 bedroom stacked condo, sold for 245 over a year ago. The same units are now going for 260k. So living in a place less than 200k, even 300k, with 3-bedrooms, is virtually impossible. But we are HCOL here.
Post by sillygoosegirl on Oct 13, 2013 13:53:39 GMT -5
It depends on what your other goals are for the next 30 years, but I would expect that a $600K+ house would be perfectly fine on that income so long as you were okay with being house poor. When we started house hunting we were looking at homes up to around $250K on a $60K/year income, which I think would have been fine if we could have found a move-in-ready house we really loved for that price (which actually we did find after almost 2 years looking, but by then our income had increased dramatically and we were able to easily afford a more expensive house that we loved even more).
I am seriously blown away by the tax costs people are mentioning. I cannot imagine $500-$1000/month on property taxes.
Our income is around there and our house was $170s. I would be comfortable going as high as maybe $300 or $350, but we just didn't need to to get what we wanted.
If taxes were as high as others are mentioning I wouldn't be comfortable going much higher than $200 or $250.
I am seriously blown away by the tax costs people are mentioning. I cannot imagine $500-$1000/month on property taxes.
Our income is around there and our house was $170s. I would be comfortable going as high as maybe $300 or $350, but we just didn't need to to get what we wanted.
If taxes were as high as others are mentioning I wouldn't be comfortable going much higher than $200 or $250.
Yes, but many places with high taxes wouldn't have inventory at the $200-250k price point. While it may not always be true - high taxes, high COL, higher priced "starter homes" all go hand in hand where I live.