You know person X is buying a house listed at $__. You don't know the nitty gritty of their finances but you know they have a stay at home spouse, a couple kids, some (vague) student loans, and no special snowflake situation (big inheritance etc, gift money, etc).
What do you assume about their salary (and/or salary expectations) if the home price is the following:
$350,000? $500,000? $650,000? $800,000?
FWIW - I'm not the person making the assumptions in this scenario.
Some people on house hunters last week were a navy lieutenant and a SAHM buying a $550,000 house. I assumed several of their parents were killed at different times, leading to several legal settlements and possibly some inheritance.
In know the assumptions could be way off, but I am wondering what the normal person would assume about house prices correlating to salary.
Let's say that the person making the assumptions is making assumptions about whether X is going to stay at their current employer and plans/is counting on advancing or may consider a pay cut or staying at the same pay grade with less opportunity for advancement but less responsibility somewhere else.
In know the assumptions could be way off, but I am wondering what the normal person would assume about house prices correlating to salary.
Let's say that the person making the assumptions is making assumptions about whether X is going to stay at their current employer and plans/is counting on advancing or may consider a pay cut or staying at the same pay grade with less opportunity for advancement but less responsibility somewhere else.
Huh?
Why don't you just tell us the details? What are you looking for here?
Post by maddiepaddy on Oct 22, 2014 18:05:44 GMT -5
This is weird. There is no way to know. There are a ton of factors at play here: COL, downpayment size, type of loan, their other expenses. Why does it matter?
Ok here are the specifics - X is buying a house for somewhere between $600k-$650k. X currently makes $250k. Could go for promotions and make a lot more at the same company or could go somewhere else probably making comparable to what X is making now and work less hours / less stress. What do you assume about X's plans for the future, if anything?
This is weird. There is no way to know. There are a ton of factors at play here: COL, downpayment size, type of loan, their other expenses. Why does it matter?
Whether it's a first house purchase is another factor. People often trade up for a more expensive house without a large increase in salary because they can capitalize on the equity in their previous house.
Ok here are the specifics - X is buying a house for somewhere between $600k-$650k. X currently makes $250k. Could go for promotions and make a lot more at the same company or could go somewhere else probably making comparable to what X is making now and work less hours / less stress. What do you assume about X's plans for the future, if anything?
I assume that his/her financial choices are none of my business.
You've posted about working at biglaw before -- are you asking this because someone is (you are?) buying a $600-$650k home and you want to know if that would make other people think they're either planning on gunning for partner or looking to go in-house?
At the beginning of the post I noted that I'm not the one making assumptions, this has to do with something I overheard someone else saying, without getting into the exact specifics I was trying to figure out if that was a reasonable thing to say or not.
Ok here are the specifics - X is buying a house for somewhere between $600k-$650k. X currently makes $250k. Could go for promotions and make a lot more at the same company or could go somewhere else probably making comparable to what X is making now and work less hours / less stress. What do you assume about X's plans for the future, if anything?
Still no assumptions here. I live in HCOL and that home price seems perfectly reasonable, if a bit low for the salary. Since I don't know anything about their current finances or future goals or lifestyle, I wouldn't assume this had any connection with career plans.
I personally would go with less stress, but X might be more ambitious.
Ok here are the specifics - X is buying a house for somewhere between $600k-$650k. X currently makes $250k. Could go for promotions and make a lot more at the same company or could go somewhere else probably making comparable to what X is making now and work less hours / less stress. What do you assume about X's plans for the future, if anything?
I don't generally assume someone has life changes planned based on the price of their house, but I suppose in this specific scenario, if I were forced to choose, I would assume the person is leaning toward the latter option of maintaining salary but decreasing hours and stress.
Ok here are the specifics - X is buying a house for somewhere between $600k-$650k. X currently makes $250k. Could go for promotions and make a lot more at the same company or could go somewhere else probably making comparable to what X is making now and work less hours / less stress. What do you assume about X's plans for the future, if anything?
I wouldn't make any assumptions about their future plans. The housing to income percentage seems fine so I wouldn't bat an eye.
Okay, it is clear that x is you. Why don't you just tell us what someone said about your house purchase and we can tell you whether it is reasonable, rather than beating around the bush?
FWIW, I have purchased two houses in or around that range with a somewhat similar HHI, and it never occurred to me that those purchases indicated anything at all about our future career plans. Though now I am curious to hear .
I think in that scenerio I'd assume either is possible. $250k is fine for a $650k IMO. We've bought a house that had a mortgage over twice our first mortgage (kept that house too) with no big promotion/income increase involved...with lots of kids & a SAHP.
As an addendum, we have mortgaged the same amount on all three homes we have purchased. Yet our monthly payments have been dramatically different thanks to differences in property taxes and interest rates (as in we have had monthly payments of $1800, $3200, and $2300, all on $300k mortgages). Knowing that, I am not sure how one could make assumptions about income even based on mortgage amount, let alone based on purchase price.
Post by sillygoosegirl on Oct 22, 2014 19:32:24 GMT -5
I was surprised when a guy told me that he and his wife could only afford a house costing up to X on Y income, when we were also looking at houses that cost up to X and earned 3x more than they did and had a ton of money available for a down payment. Which just goes to show, any assumption I might make would probably be way off base.
Granted, he lived in SF and I live in Portland, so his options for moderately priced homes were much more limited than mine, which certainly makes a difference in how much most people are willing to stretch things.
LOL. If someone knew my salary and my mortgage amount and wanted to make assumptions, I'd guess their first assumption would be that I planned on quitting my job and taking a huge pay cut soon.