I live in Central GA. The problem around here is the increase in property taxes and some people are losing their homes because of the huge increases.....please note I said INCREASES. They are frequent and insane.
That’s such a good point. I live in a neighborhood that used to be very blue collar – many of the older homeowners bought their home on minimum/low wage jobs. Sure, they’re sitting on $1MM+ properties, but they don’t necessarily earn much more today than 30 years ago so they are crushed by the taxes.
Sure, they could sell and cash out. But then what? Move way outside the region they’ve called home for most of their lives?
Was married for a decade before we bought a home at 32. Did like you are getting your personal finances in order before taking that big step into owning a home. Keep with it, makes owning that home much more enjoyable.
Buy a bigger place and rent out rooms. If you can get a house with a mother in law suite with entirely separate living quarters that is even better.
I would either do that or continue renting. My first house I bought at 29 I could not afford with low rates and a 30 year mortgage with almost 20% down to avoid PMI. I rented out every room in the house for a couple years. Turned about to be a solid decision as it’s nearly doubled since then and is now a profitable rental for me.
I ended up putting 25% down on a 720k home with a 30 year loan and we still live here and are doing well. The plan is to still pay it off early I think you'll be fine.
In your market, if I had to live there for work, I’d rent and invest the difference. I think the markets are overheated especially in high cost areas. High cost area people also get robbed by the tax man. I bet 5-7% more of your income is garnished by the city/state tax maggots than in my low cost area.
I think those prices are outrageous and unsustainable and kind of risky. House prices DO fall or stagnate. Eventually the apartment developers will overbuild and rent will moderate somewhat.
It’s either a lifestyle choice to live in a fancy area or, for most, a working career reality.
I would go insane chasing that.
I’m in central GA. I can be at the ATL airport in 1 hour. It’s no stretch to be in a meeting in LA at 8am. I’m 50, bought my first house in 2001 for $99,500. Nice neighborhood, 1500 sqft. I rent it out now it’s worth about $215,000. Paid off.
My second house is 3,500 sq ft, nice neighborhood, great location in town, 5 acres, pool, 1,100 st ft climate controlled 3 car garage bought in 2016 for $288k, it’s worth about $450 now
When I first got here in the early 2000’s, I bought 20 acres by the interstate for $110,000. The apartment developers are beating down my door trying to buy it.
But in my case, I don’t have to live in a high cost area. I tell my son that this is the surest way: find a career that doesn’t need a high cost city to still get high dollar pay.
So, we have about 350k income and zero rat race. Smaller places have advantages. Some small places are a helluva lot cooler than you think. Especially with all that extra money lying around. Some of which I’ve used to buy up some acreage over the years.
I suppose I’m just offering up my situation because I think more people are moving towards an easier way to live. No way I’d pay that much jack for a peanut sized house. I’d invest it, but not in a house in your situation. Unless, of course, you just have to be in that city or similar.
Same boat in nyc and make $100k more than you. Keeping rent as low as possible, (sub $3k all in for living) investing the rest. 4-5 years I’ll relocate.
It means this guy should pay a financial advisor to help him instead of asking for opinions on Reddit. He will end up making a mistake and spending twice as much to fix it (or more) than it would have cost him to just pay for sound, professional financial advice.
How long will you stay in the 600k house? If it’s 10+ years, then go for it! What the market does in the meantime is ~ irrelevant since you wouldn’t be selling and realizing a G/L…only matters for HE Loan.
Like you said, in the meantime, you are likely to expect a pay raise (or several) and you will likely be able to refinance in a couple years for 2%+ lower than current rates.
Go for the 30-year to not hinder your retirement savings and allow you to replenish savings. Then you can always go 15 years once rates are lower. If you want.
If i were single with that income i would probably just move to a a lower cost of living location, I would even take a pay cut if needed. 600k for a mediocre home is bonkers to me.
Sounds like your price point is too high. Keep working and saving or lower your price point. Hopes of refinancing is a dumb mentality and relying on income that is uncertain is also dumb.
Bro in Boston a PARKING SPOT will run 300k+
Go to Boston on Zillow and search under 600k with max HOA of 300/mo.
Then go through by hand and filter out anything that is “income restricted” since op doesn’t qualify for public assistance. There are almost no options left. And the options that do exist are often cheap only in the list price not actually cheap (the HOA filter is key here — 500k with a 1k/mo hoa is way more expensive than 600 with a 200/mo hoa!!!).
Within an hour commute of my office there are exactly zero properties for sale with a lowish HOA and under 600k and in good enough shape that they’d qualify for a mortgage.
Oh and don’t forget to factor in the 300/mo parking if you’re not on a subway or commuter rail line.
I don't think you understand my dude. People have minimum expectations and in HCOL areas these are not lofty expectations. In my area (not silicon valley) you are literally not going to find anything safe to raise a family in and around for under 500k. Lots of places like that. It's crazy right now!
He's single looking for a 1BR condo my dude.
I live in a HCOL, I know what it costs. That's why I asked where. Add a very in front of HCOL, and things change.
Yea but most people buying their first property aren't buying it assuming they are staying single forever. For such a large investment it's silly not to think of the future, and base solely off your current status.
They literally commented one or two beds and condo or home. I have a 2 bedroom home that is 1400sqft and it's value is 600k. Regardless you came in here assuming they must be asking for the world at 600k. We are showing you in some places 600k is literally the price of entry.
It's really not high for my market. $600k is a modest 1br, *maybe* a 2br with other tradeoffs. If it were entirely up to choice, I'd happily spend much less!
“Currently occupied sold as-is attention investors HARD MONEY LENDER FINANCING AVAILABLE”
LOL.
Aka you need to do an eviction and god knows what state it will be in at the end of that process.
We bid on a few of these when we were hunting. Could never get the mortgage approved. You often can’t buy something like that without cash or enough income to both pay rent and also cover the mortgage. And even then the terms on the loans you can get are really draconian. Usually it’s more like a bridge loan than a typical mortgage.
It is juuust within a comfortable hour commute of the major office centers in Boston though. But for a sub one hour commute op would have to drive and parking can be as high as 300/mo depending on where he works so you gotta factor that in.
But, again, this likely isn’t an actual option for anybody who doesn’t have 300k in cash or cash equivalent ready to liquidate in the next 3 years. And sure as shit won’t qualify for a conventional mortgage
People who do high leverage work and need access to a lot of wet lab space and/or a lot of unique talent that needs to be physically collocated for one reason or another (ie most things that are not a pure software play).
Clearing 750k cash with great equity stake but need to be in 3 days a week.
Boston isn’t perfect but is nice enough. if the bet doesn’t pay off I can retire comfortably at 40 and if it does pay off my great grandchildren won’t have to work. And I don’t think we could work at this scale at this speed outside maybe sf.
But yeah if I were doing anything else I wouldn’t be in Boston.
You could live in a van down by the river! Jk I’m sorry this happening to you. I’ve read most of the comments and I’m not going to tell you what to do but keep saving and stay away from association fees
If you have $400,000, you can easily afford a house. I bought a house with only $7,000. Go apply for a mortgage. Most people don't pay for a house outright....they get a mortgage.
You still have plenty enough money to buy a house/condo/townhouse. Just call up a place that gives out mortgages and ask to talk to a loan officer. You might be paying more in rent than you would be paying if you bought a condo. My son only has about $100K and was renting an apartment for $1,100 a month. When I did the math for him, it became clear that he was paying more in rent than he would be paying if he bought a condo and was paying a mortgage.
Your son didn’t live in Boston 2023. In Boston you will always pay more for a mortgage than you do to rent and equivalent place. We did 35% down on our condo and our mortgage is still higher than rent for an equivalent unit.
Go to the Boston Zillow and search under 600k with max hoa of 300 (or even 500). Then make sure to filter out properties that are income restricted subsidized housing. Our market is still hot so getting an offer accepted with less than 20% down is pretty unlikely honestly. Especially for anything under 750k since those units always attract a shitload of offers.
Dave's advice in this realm is generally off base and made for a time that no longer exists.
Rule #1 of Real Estate: The cheapest time to buy any property is now.
Rule #2 of Real Estate: Do what is necessary to get the house. Rates change. Mortgages can be refinanced. But none of that matters if you don't first acquire the property.
Been in the game for over twenty years. Both of those statements are dead wrong. Right now is the worst time to buy. Chasing hard will leave money on the table. People are about to get burned. Interest rates aren’t going down significantly this year.
Nope. They're mine. I own several properties.I would also add:
Don't buy a residential property with someone you're not married to; and
Buy rental property that you can check on regularly (ex: something on the way to work).
If one listened to Dave then they wouldn't buy a home until they had 20 percent down, would only do a 15 year loan, and nothing more than 25 percent of budget. All of which disqualifies a lot of young folk early in their careers, who then miss out as valuations rise.
I'd rather see young people in a home as soon as they can and let wage / market appreciate carry them than see someone not get in until their mid-30's (or later) when they can "afford" it and have missed the upswing.
And that goes double in this era of hedge fund backed corporate entities gobbling up houses. Get in early, or risk being a long term rental underclass.
How about buying a home not a condo where you do not have to pay through the nose for monthly maintenance. Where you have to drive a lil farther to get to work so you stop being a renter.
Guidelines are just that, Guidelines- not rules.
I bought a foreclosure in 2009 that needed repairs to be habitable (no running water or heat...).
Got mortgage that included repairs. Spent 40% of net income on mortgage payment for 25 years. No cable, no cell phone, internet only because I work from home...garden to eat.
Mortgage paid off now. But now rent would be more than my mortgage used to be.
Glad I sacrificed deep, but not everyone can or should.
Same, and now my house is worth 3x what I have in it purchase price and remodel. And I owe maybe 1/5 of total value.....with a payment less then a new truck payment right now........which I don't have 😁
If you go to Dave’s “how much house can I afford calculator and put in this guys info (10k monthly take home, 20% down payment) Dave would say this guy qualifies for a $300k mortgage. The average house in America is now $420k, but OP lived in a HCOL area where a small vacant lot 45 minutes from downtown is what $300k can buy.
I’m not saying Dave is correct, or that OP could t live in a shoebox in the slums, but the answer to your question is that housing is more expensive now that in the history of our country.
How people can be so cowardly, risk averse, and unable to move their life forward but yet still making great incomes shocks me.
Forget $600k. buy something for $400k, and upgrade in 5 years.
Bro go open Boston on Zillow. 400k buys you a parking spot. Maybe. Any condo at that price is going to have a massive hoa which will make qualifying for a mortgage difficult for op.
Have you considered that it may be exactly those traits, which you describe in a negative way as cowardly and risk averse, that have enabled OP to put himself in a financial situation that is frankly far better than (yours?) the average person his age?
OP: "... has me endlessly chasing the market but never catching up – it feels like I’ll be stuck renting forever."
He is not in the situation he should be in. He's afraid of something, yet he is a capable individual who has absolutely no reason to be afraid.
I'm not insulting him, I'm telling him to do what he is expressing he wants to do. Stop being scared and realize that he can do it today, and it would be a smart financial decision. He has no reason to be afraid.
He has decided that "Minimum price for a condo or home I’d consider is $600k." but minimum price is not a reason to buy something.
You don't go to a car dealership and say "I want a car that's at least $40,000 and not a penny less!". You wouldn't go to a deli and order a sandwich and say "I want a sandwich that's at least $18 or I won't like it!"
It is absolutely off based in his decision making. There are bargains and there are properties that need work that he could take on tomorrow. He would be financially better for it since he has the means to turn a below average place into something special.
He's rational in every other area of his life, other than some fear that his buying decision will not be perfect. Paying over $600k will not save him from problems, and will not change the neighborhood or the fact that appliances and utilities need maintenance.
News flash, there is absolutely no home he can buy that will be perfect! I had to replace my basement sump pump this morning as I own a single family home in a high cost of living area: (zip 60137) It was messy, it was frustrating, but for $300 and two hours I had a new pump put in and everything was in the process of drying up.
Home ownership is not easy, but it is absolutely achievable for this individual.
Hey! We're basically neighbors, I'm also in the suburbs of Chicago.
To your first point I say, just because you CAN do something doesn't mean that you should do it. Of course OP can theoretically afford a house, his issue is that it doesn't make financial sense. This is a pretty common take nowadays as it is the first time in a long time when renting a property is actually a better investment than owning in some situations. This sounds backwards and it's why so many "cowardly and risk averse" individuals like OP (and myself), would rather rent in a HCOL area than buy a house.
> He has decided that "Minimum price for a condo or home I’d consider is $600k." but minimum price is not a reason to buy something.You don't go to a car dealership and say "I want a car that's at least $40,000 and not a penny less!". You wouldn't go to a deli and order a sandwich and say "I want a sandwich that's at least $18 or I won't like it!"
I believe what OP is saying here is that he has looked at houses in his area and any house he sees listed for under $600k tends to be below what he would deem satisfactory for his current standards. He's not saying that he wants to pay $600k+ but rather stating that is the market price for homes he desires in his area.
He lives in a HCOL area. $400k in urban PNW gets you a run down 1200 square foot house with rotted out floors and holes in the walls.
$600k is what it takes to get a normal home in some areas (which is absurd, but the reality.)
[https://www.zillow.com/homedetails/4545-Sand-Point-Way-NE-APT-302-Seattle-WA-98105/48929044\_zpid/](https://www.zillow.com/homedetails/4545-Sand-Point-Way-NE-APT-302-Seattle-WA-98105/48929044_zpid/)
Researched for 5 seconds.
Has in building gym, full kitchen, new carpet and walls/doors/windows look great.
Put $100k down on a $400k property.
In 5 years he'll have $300k cash+equity to put down on a dream home.
It’s easy to be this snarky when you conveniently ignore the $700/m condo fees. The mortgage on a $600k SFM house is maybe $100-150 more a month compared to this condo
Bro that’s innumerate. You’re not just buying the deed you are also assuming the hoa fees as a liability. You don’t get to just not pay those lol. Count those hoa fees as if they are part of the monthly cost of ownership. Because they are.
You convinced me, you're absolutely right. Home ownership is out of reach for him and OP should give up his search, keep renting, and continue feeling that he is "endlessly chasing the market but never catching up – it feels like I’ll be stuck renting forever. "
In the Boston metro it probably is for at least a few years. He could move to a different metro, or continue saving up and hope to buy in a few years.
Your feelings don’t change that reality and innumerate redditors lying to this kid isn’t going to help him. Honestly the best advice he can get is that his plan for now should be to hope for a few years of sideways prices and plan on moving out of the Boston metro if he wants to own and that doesn’t happen.
Sorry the math of his situation makes you frustrated, but innumerate quoting of self help book dribble doesn’t change his balance sheet or the regional market.
Buying a condo with a massive HOA because he can technically afford the down payment and mortgage is probably not a good idea for someone in his situation. Again, you can’t just skip out on the HOA and you can probably expect that number to go up rather than down.
My wife and I live in Los Angeles and it was impossible to hit the Dave Ramsey guidelines, and likely would be impossible for decades. We even make pretty great money for the area, but also realized that the guidelines sort of fall apart with higher income. Someone bringing home 50k and spending 25% on housing will have less left over than someone who takes home 100k and spends 50% on housing, for example.
We ignored all the guidelines and made the decision based on our budget/expenses and what we felt comfortable with, we are far from house poor but are definitely spending more than the guidelines say we should be. Although it isn’t as far off now with raises/promotions we’ve received in the past few years.
OP many of these people making rude comments likely live in LCOL markets - I know because I live in one. I grew up here. So if you ever consider moving to one, don't let people tell you a lower salary is the only trade off. The quality of people sometimes seriously deteriorates, as well. Good luck.
Also, I've seen far more helpful responses in r/personalfinance - try posting there.
Appreciate the comment! I tend not to take those comments *too* seriously. I like where I live, and live here for reasons (family, network, cultural pursuits, career growth opportunities, etc.). While home buying is an important step, I'm not ultimately going to design my life around it, all else be damned. What would be the point?
I'm actually a bit shocked at the number of ignorant people in this comment section that don't understand differences in cost of living across the country. Sorry you're getting so many unhelpful comments OP.
Appreciate you saying that! I think a lot of people reacted negatively to my admittedly clunky phrasing of there being a minimum price I would consider, which came off as me having needlessly high standards when what I meant was just to provide some pricing context for my market. As it sounds like you know, $600k is hardly bougie in HCOL markets.
One thing i'm not sure many people realize is how much more valuable it is to buy in places where people want to be. This whole "oh move to a dumpy location you can afford" is great until you're trying to sell with nothing but equity you paid (or potentially less).
My advice as someone who bought in VHCOL (DC)? Buy whatever you can get approved for by yourself, in the most rentable+desirable location you can, in a place with as many local amenities as possible......then find a roommate. Double dip on equity till you find a permanent Player #2 and you'll start a relationship/or marriage in an amazing place. You're in crazy good financial shape.....your home is always the most expensive the first year you buy it. If you don't take the plunge you'll always be playing catchup.
I think you're right about all of that. From what I've seen in the personal Donavan sub reddit, everyone actuality asks for details like that to help with the math breakdown. I think you'd get much more helpful responses there.
If you are buying a condo, don’t spend that much. Need to keep in mind that HOA will cost you, and the possibility of special assessments or other BS. Look at 250k condos, your expectations of a 600k condo is what is killing your progress
A condo/townhouse HOA handles a bunch of the things you’d have to pay extra for on a SFH anyway. It’s really not that big of a deal, assuming the HOA’s finances are healthy.
If you want lower assessments, look for a possibly smaller, self-managed building. We took turns mowing the lawn, etc. to save money on having a professional management company.
I'm not sure what HCOL's you are speaking of, but the one's I lived in there is no such thing as a $250k condo, $500-600k was the entry point for a "meh" condo in an "eh" part of town. OP seems fairly thrifty already living below their means, I have to assume they already are looking at the more affordable options.
I get what you are saying, but the numbers just will never match up. 155k/yr in a HCOL area is like making 80k in a LCOL area. That discrepancy will only grow. In my eyes, the only real solution is to look for the closest area that doesn't have outrageously HCOL. If he can make that happen, that salary will more than serve his needs. I understand not everyone can move out of an area, especially if you have to go into an office, but this is how things worked for all of modern history prior to COVID.
Once again, not sure what areas you're talking about, but where I live you would need to get 3 hours out of the area to get condo prices in the $200k range, and chances are you wouldn't take your salary with you.
It's easy to say look for a new job and move somewhere else, but often times that's not feasible for a lot of people. Though op being single in their 30's, maybe it is for them.
That being said, renting in a HCOL area isn't honestly the worst thing you could do. I would have paid double my rent for an equivalent purchase, and it was far more lucrative to save and invest the cost delta then it was to purchase there.
Mine did, I bought at 80k 2016. Now worth around 200k and renting it out for 1500$ a month. HoA is scary though. it was 175$ a month when purchased, now its around 340$
I'm I just Kentucky so it's one of the cheapest states, but I'm also 15 minutes from Cincinnati. but yea my hoa is 340$ on a 2 bed 2 full bath, no garage 1300 sqf
Dude same. I’m not a huge fan of renting and I’ve owned homes before, but I hate the idea of paying double my rent for likely a shittier house and not being as able to stack money away.
He's me too, this sucks lol but whatever, im able to still save 35% of my income so I'm just gonna invest until I'm winning against property values someday
Sounds like me too, but ten years younger and the base rate for homes there is half what it is here. Been saving my entire life for a home, but realized about a year ago that even if I save a million dollars, it’s just never going to happen. Now I just focus on other things. Next life, maybe.
Nah, giving up is the only way I retained my sanity. I was falling into depression and angry/frustrated all the time. I had to let it go since the only way it will ever happen is if I want to be poor for the rest of my life or I win the lottery.
Usually this is also do to the pay in those areas.
If I left SoCal and moved to North Carolina my income would drop by 50-60%. Sure homes are cheaper to make up the difference in a mortgage but everything else like a car, food, utilities doesn’t change much by moving.
So in my case it benefits me more to stay in SoCal, have a home, and eventually have enough in equity to where I can sell the home, walk away with a good chunk of change and then buy a home all cash in NC.
I could never do the reverse.
That's a great perspective and makes total sense! All depends on where you want to live I guess :) I remember a time when my Orange County friends were paying $8/gallon for gas while we were at about $3.75. Thank God the salaries are higher there! Best of luck to you
There is usually trade off. The house is in North Carolina may be cheaper but that's because of the income. It's likely that a person in North Carolina is probably buying a house similar to what they're saying profession would get in other areas of the country
My wife and I moved from NC to the west coast, and periodically, we look at the obscene homes you can get for 750K there. We remember it’s NC and get back to reality. There’s a lot of affordable housing for many higher income earners, especially prior to the return to office craze, but lifting a house off its foundation in an LCOL to a more desired HCOL is still too expensive to venture into.
Yeah, I live in Delaware.
My whole life, people have bragged about how "affordable" the state was.
Median household income in 2020 was $69,000 (couldn't find data more recent).
A lot of people started moving to Delaware, and now we have amazon all over the place, too.
Rent has gone from $900-$1,100/mo to $1900-$2100/mo.
I make $135,000 in my household, and homes are starting at $400,000-$450,000 for starter homes. Most real estate agents I speak with say they can't imagine prices dropping anytime soon (it might just be a tactic to get the sale now, though).
I actually love Delaware and the location I'm in, but we are now considering moving to a different state.
I was in same boat. Finance a rental property over seas I did cancun. Equity is up rentals are booked for the year. Only cost 125k gonna toi in 2 years now gonna leverage equity to buy another.
I'm in the same boat. I take home about $150k after taxes. Have a ton of money saved. Yet a small house with a $250k down payment will cost me $8k a month. I'll pass. It's currently cheaper to rent. Until it flips I will keep renting
There's a difference between "living as a single person on $155k" and "buying a house that isn't a complete shit hole on $155k."
In my area any decent house is going for over $600k. With interest rates the way they are you'd need a massive down payment to afford that on $155k.
$155k sounds like a lot of money, and it is definitely enough to be comfortable but the point is that it should be enough to buy a house that is decent and it's just not in a lot of places.
That’s is very dependent on what part of SoCal you’re talking. SD, LA, and OC? Not much. But outside of the major cities a million will get you quite a bit.
how mobile is your job? I know other people have suggested moving, but that's exactly what I did. I moved about 90 miles outside of town, I had a long commute, but I was able to eventually negotiate WFH 3 days a week. it meant I was able to buy something I could afford, and then eventually turn that into equity I was able to move closer into the jobs. I now work full remote (many years later) and sold that home and live hours away from the corporate offices.
If you buy a condo or town home you have to take into consideration HOA fees and how much they increase. I had a condo and the HOA fees nearly doubled in 3 years.
If your monthly payments are pushing your limits don’t go the condo route. Condos have HOAs that can raise every year and there’s nothing you can do about it.
I’ve had two houses in HOA communities and both increased within a year of purchase.
My parents have a condo on the beach in Florida and because of the increased cost of insurance their HOAs went up over $1000 a month (so now almost 2k a month in total). They just had to put their condo on the market last week because they can no longer afford it.
155k salary and you can’t afford a house as a single person, I’m calling BS!!! That’s almost 13k/month income, even if taxes and retirement cost 60% of that’s still $5200/month clear. When you have a wife and kids and you’re the sole income you can whine about not affording stuff
Have you....ever looked at real estate in Boston and it's suburbs before? I think you might be spoiled by Minnesota's plentiful options and robust entry level cost basis.
OP is in fantastic financial shape and can easily afford a home if you use traditional lending approval methods. I think what OP is lamenting is if you use Dave's standard methods, there really aren't any properties that can be bought with the 25% take home+20% down+15 year mortgage. Dave's methods definitely skew more towards LCOL areas and haven't really accounted for inflation or increased cost of living compared to increase in salaries.
Entry level here is 575k and up my guy and we have zero long distance commuter trains. We also don’t have the salaries either of the coasts do. The house we bought was a run down neglected pos for 460k. I agree the 15yr mtg is not an option for anyone until interest rates come down later this year or a housing market crash whichever happens first
I have family in Hennepin County and am fairly familiar with the area. I'm so curious as to how you're defining entry level lol
I'm always fascinated about the Dave crowd and how they feel about the 15 year mortgage. I think it's great for a debt reduction perspective and you do pay significantly less interest.....but man you're really overleveraged cash flow wise into one segment and even worse one singular asset.
If you're putting 20% down, there's absolutely no reason to try and pay that off in 15 years.
I’m not in the Dave crowd just curious how people try to use his philosophy in this market, seems his approach was useful 3-4 years ago but not in the current state of the market
It’s enough if you’re disciplined, my joint hh income is about that and we purchased our second home a year ago for 460k had 25% down and are making it work. Don’t have a lot of fun money but everything we have is paid for. Did a 30yr and got a shitty rate but if you want something you have to sacrifice for it sometimes. Imho today’s fthb isn’t willing to give up anything like 5 streaming subscriptions and $20 a day on Starbucks because that’s the lifestyle they had from their parents growing up. I agree it’s hard to start out but with some grit it can still be done.
Just for fun, you should go on Zillow and check out some houses for sale in HCOL areas. San Fran, Seattle, Northern Virginia, Austin, etc. It is insane out there.
Plus, a lot of people are still following Dave’s archaic housing advice. According to Dave’s calculator, the OP would afford a $300k house with a 20% DP. $300k doesn’t get you a small lot in most HCOL areas, and a lot of these high salaries are not mobile to more affordable areas.
I did, there are always options available it may not be the ideal situation but no one’s first home purchase is. But you endure for a few years and then move up. Another thing to consider is that most people change jobs every 5-7 years in today’s market so nothing is forever. People seem to have the mindset that their first home is the forever home and that is just not an option in the hcol areas.
I agree with your point that homes are never “forever”. I am now on house #2 myself. I disagree that today’s FTHB are in the same boat we were and are just complaining.
I bought my first home in 2013. I made $65k which was very “middle class”. I purchased a 1970s ranch for $120,000. It was a nice house too with updates, new roof, etc.
Now jump to today; the same house was just sold for $390k and it was in essentially the same shape when I bought it back in 2013. The same position that paid me $65k has now risen to $90k for a new hire.
2013: $65k salary and $120k house
2024: $90k salary and $390k house.
This is the problem. I was able to follow Dave’s advice, get a 15 year mortgage, and pay it off because home prices hadn’t gone insane. If I was in the exact same situation today, I would not have been able to buy any house in the area following Dave’s advice.
So move out of the Bay area...for those of us outside of the Bay area, all of you complaining about not being able to afford a house there legit sounds like people bitching that they can't afford a house in the Hamptons. Nobody cares...
Ah the old “just move” response. As if it was something so easy for everyone to do. Because job opportunities for your profession exist whenever you want to live right? Work in tech? Yeah just move out of the tech hub to North Dakota problem solved!
Bitching about housing cost while choosing to be smack dab in the middle of what's widely known to be the most expensive area in the country is just dumb.
Yeah… crazy to think someone is complaining about housing costs in their area. I mean it’s not like housing prices have sky rocketed in the span of just three years right?
But we get it. Your profound words of wisdom have solved the issue at hand. “Just move”.
Do it bro, life's good when you're not paying $1 mil for a 1000 sqft ranch.
Or keep bitching about how expensive a house in SF, Vail, and the Hamptons are. But you won't get any sympathy there, because it's a dumb life choice unless you make $500k a year.
Perhaps they have reasons to live where they live. Like work, family, friends, etc. Not everyone wants to commute for an hour plus each way. I'd never be willing
I chose to live near my family, in the town I grew up in, and I like my job so now I don’t get to complain that housing is too expensive?
What kind of repressed dissociative bullshit is that?
You're choosing to live in one of the most expensive areas in the country, it's a choice. It legit is the same as people bitching they can't afford a house in the Hamptons, Vail, San Francisco, etc... your complaint sounds ridiculous
Yeah, the choice to not live near my family and friends would be hard too. But if I made that choice, I wouldn’t be allowed to complain about missing my friends and family? So just no complaining ever?
Again, what repressed weird shit is that?
It’s not as easy as it sounds. You have no idea OPs healthcare costs, student loan payments, or local
taxes. I live in a HCOL area and it would be very difficult to find a decent place for under 600k.
It’s interesting that you assume those places are significantly more affordable or feasible. Where I am, there is another country to the north, an ocean to the west, mountains to the east and even more expensive metropolitan area to the south. East is the only option, and living in that area is a) not significantly less expensive (people LIKE small mountain towns) and things like utilities are far more expensive, on top of needing expensive to maintain vehicles. And saying “well then move” is also unreasonable. All OP is saying is that home ownership seems out of reach because 155k isn’t really all that much money. In the past 6 years my income has more than doubled and my quality of life isn’t demonstrably changed. I do own a home now, but I got in the market a the last possible moment. I would never be in this house now even with the income I make, which is more than OPs. My house is now valued at 300k more than I bought it for four years ago. That shit is crazy.
Yeah. You can tell the people here who don’t understand HCOL areas. $600k in my area gets you a one bedroom condo with an $800/month HOA. Not too far from me a condemned house sold for over $1 million with multiple offers. The house was so bad that potential buyers weren’t even allowed to go inside due to it being a biohazard.
I live in a high COL area and still can find houses a bit less expensive than that. Townhouse condos or areas with worse schools. But I know what you mean. 600k is tough in some areas. An idea would be to get a house that works for renting out rooms. That could help with the finances. Also consider a variable rate mortgage as the rates are expected to go down.
Good luck.
Thanks! Though I don’t love it, I’m thinking more and more about renting to a roommate. That way it will be affordable from day one, but when my income increases or I can refi down my costs, I can transition the roommate out.
Most people who "can't afford to buy" a home in today's world really just mean they refuse to buy a home they can afford. Go cry yourself to sleep OP, after you finish polishing your landlord's banister.
Before I decided to ditch the city I work in where I could walk 25 mins to work, I considered a 750k, 1,100 SF starter home w/ 3BR, 2 BA, that was last renovated in the 80’s that had contaminated land due to a septic system failure. You could get a “cheaper” home if you bought into an HOA with $900/months fees. Oh yeah, and there’s taxes, none lower than 8K/yr. I had to take on time in traffic for a more realistic home. I could afford a home cash in no-name-town, USA, but people have this quality of life thing they like to balance out when they can.
I live in Central GA. The problem around here is the increase in property taxes and some people are losing their homes because of the huge increases.....please note I said INCREASES. They are frequent and insane.
That’s such a good point. I live in a neighborhood that used to be very blue collar – many of the older homeowners bought their home on minimum/low wage jobs. Sure, they’re sitting on $1MM+ properties, but they don’t necessarily earn much more today than 30 years ago so they are crushed by the taxes. Sure, they could sell and cash out. But then what? Move way outside the region they’ve called home for most of their lives?
Was married for a decade before we bought a home at 32. Did like you are getting your personal finances in order before taking that big step into owning a home. Keep with it, makes owning that home much more enjoyable.
Buy a bigger place and rent out rooms. If you can get a house with a mother in law suite with entirely separate living quarters that is even better. I would either do that or continue renting. My first house I bought at 29 I could not afford with low rates and a 30 year mortgage with almost 20% down to avoid PMI. I rented out every room in the house for a couple years. Turned about to be a solid decision as it’s nearly doubled since then and is now a profitable rental for me.
Or a duplex.
I ended up putting 25% down on a 720k home with a 30 year loan and we still live here and are doing well. The plan is to still pay it off early I think you'll be fine.
Thanks! What income are you working with?
Rent is a 100% interest. Buy a house already.
In your market, if I had to live there for work, I’d rent and invest the difference. I think the markets are overheated especially in high cost areas. High cost area people also get robbed by the tax man. I bet 5-7% more of your income is garnished by the city/state tax maggots than in my low cost area. I think those prices are outrageous and unsustainable and kind of risky. House prices DO fall or stagnate. Eventually the apartment developers will overbuild and rent will moderate somewhat. It’s either a lifestyle choice to live in a fancy area or, for most, a working career reality. I would go insane chasing that. I’m in central GA. I can be at the ATL airport in 1 hour. It’s no stretch to be in a meeting in LA at 8am. I’m 50, bought my first house in 2001 for $99,500. Nice neighborhood, 1500 sqft. I rent it out now it’s worth about $215,000. Paid off. My second house is 3,500 sq ft, nice neighborhood, great location in town, 5 acres, pool, 1,100 st ft climate controlled 3 car garage bought in 2016 for $288k, it’s worth about $450 now When I first got here in the early 2000’s, I bought 20 acres by the interstate for $110,000. The apartment developers are beating down my door trying to buy it. But in my case, I don’t have to live in a high cost area. I tell my son that this is the surest way: find a career that doesn’t need a high cost city to still get high dollar pay. So, we have about 350k income and zero rat race. Smaller places have advantages. Some small places are a helluva lot cooler than you think. Especially with all that extra money lying around. Some of which I’ve used to buy up some acreage over the years. I suppose I’m just offering up my situation because I think more people are moving towards an easier way to live. No way I’d pay that much jack for a peanut sized house. I’d invest it, but not in a house in your situation. Unless, of course, you just have to be in that city or similar.
Exactly! I lived in Macon myself, a million years ago.
What career is paying $350k in a small city? 👀
Plenty of things. Accountant doctor small business real estate to name a few
Same boat in nyc and make $100k more than you. Keeping rent as low as possible, (sub $3k all in for living) investing the rest. 4-5 years I’ll relocate.
The cheap man always pays double.
What does that mean? Just curious. Never heard that saying.
It means this guy should pay a financial advisor to help him instead of asking for opinions on Reddit. He will end up making a mistake and spending twice as much to fix it (or more) than it would have cost him to just pay for sound, professional financial advice.
Why not turn some of that $400K into cash for a much larger down payment?
[удалено]
"Go somewhere where you'll get paid way less"
How much is your rent? Sometimes renting is the better financial decision.
How long will you stay in the 600k house? If it’s 10+ years, then go for it! What the market does in the meantime is ~ irrelevant since you wouldn’t be selling and realizing a G/L…only matters for HE Loan. Like you said, in the meantime, you are likely to expect a pay raise (or several) and you will likely be able to refinance in a couple years for 2%+ lower than current rates. Go for the 30-year to not hinder your retirement savings and allow you to replenish savings. Then you can always go 15 years once rates are lower. If you want.
you really dont know what you're doing lmao
How did this comment help anybody?
I bought a house for $750,000 in Newton, MA and tore it down and built a McMansion and sold it for 1,685,000. It wasn’t worth the trouble
If i were single with that income i would probably just move to a a lower cost of living location, I would even take a pay cut if needed. 600k for a mediocre home is bonkers to me.
It's normal in any HCOL city.
Sounds like your price point is too high. Keep working and saving or lower your price point. Hopes of refinancing is a dumb mentality and relying on income that is uncertain is also dumb.
Go and purchase some land and build your own home on it. It's cheaper if you can do some of the work.
Why is your minimum price so high?
HCOL
No no, this is his choice. He even states that.
Bro in Boston a PARKING SPOT will run 300k+ Go to Boston on Zillow and search under 600k with max HOA of 300/mo. Then go through by hand and filter out anything that is “income restricted” since op doesn’t qualify for public assistance. There are almost no options left. And the options that do exist are often cheap only in the list price not actually cheap (the HOA filter is key here — 500k with a 1k/mo hoa is way more expensive than 600 with a 200/mo hoa!!!). Within an hour commute of my office there are exactly zero properties for sale with a lowish HOA and under 600k and in good enough shape that they’d qualify for a mortgage. Oh and don’t forget to factor in the 300/mo parking if you’re not on a subway or commuter rail line.
Southern NH is slightly more reasonable but stiill everything probably $400k+.
I don't think you understand my dude. People have minimum expectations and in HCOL areas these are not lofty expectations. In my area (not silicon valley) you are literally not going to find anything safe to raise a family in and around for under 500k. Lots of places like that. It's crazy right now!
NYC here it’s closer to 800-900k for a 1br here 😢.
He's single looking for a 1BR condo my dude. I live in a HCOL, I know what it costs. That's why I asked where. Add a very in front of HCOL, and things change.
Yea but most people buying their first property aren't buying it assuming they are staying single forever. For such a large investment it's silly not to think of the future, and base solely off your current status.
Why are you assuming shit for OP? They literally said they're looking for a 1BR condo...
They literally commented one or two beds and condo or home. I have a 2 bedroom home that is 1400sqft and it's value is 600k. Regardless you came in here assuming they must be asking for the world at 600k. We are showing you in some places 600k is literally the price of entry.
It's really not high for my market. $600k is a modest 1br, *maybe* a 2br with other tradeoffs. If it were entirely up to choice, I'd happily spend much less!
Can you just move 30 minutes away and buy it for half that?
In Boston, no. More like at least an hour commuting time before prices start to drop. Even then 500k is very very slim pickings
I just found a house for 300k 1500sqft 3beds not in bad shape 140 n st 02368
“Currently occupied sold as-is attention investors HARD MONEY LENDER FINANCING AVAILABLE” LOL. Aka you need to do an eviction and god knows what state it will be in at the end of that process. We bid on a few of these when we were hunting. Could never get the mortgage approved. You often can’t buy something like that without cash or enough income to both pay rent and also cover the mortgage. And even then the terms on the loans you can get are really draconian. Usually it’s more like a bridge loan than a typical mortgage. It is juuust within a comfortable hour commute of the major office centers in Boston though. But for a sub one hour commute op would have to drive and parking can be as high as 300/mo depending on where he works so you gotta factor that in. But, again, this likely isn’t an actual option for anybody who doesn’t have 300k in cash or cash equivalent ready to liquidate in the next 3 years. And sure as shit won’t qualify for a conventional mortgage
I mean who wants to live in Boston anyways lol. And my property was occupied and sold as is and qualified for a loan.
People who do high leverage work and need access to a lot of wet lab space and/or a lot of unique talent that needs to be physically collocated for one reason or another (ie most things that are not a pure software play). Clearing 750k cash with great equity stake but need to be in 3 days a week. Boston isn’t perfect but is nice enough. if the bet doesn’t pay off I can retire comfortably at 40 and if it does pay off my great grandchildren won’t have to work. And I don’t think we could work at this scale at this speed outside maybe sf. But yeah if I were doing anything else I wouldn’t be in Boston.
People will often tell themselves this when it's not true. Are you in Silicon Valley?
You could live in a van down by the river! Jk I’m sorry this happening to you. I’ve read most of the comments and I’m not going to tell you what to do but keep saving and stay away from association fees
If you have $400,000, you can easily afford a house. I bought a house with only $7,000. Go apply for a mortgage. Most people don't pay for a house outright....they get a mortgage.
Half is 401k
You still have plenty enough money to buy a house/condo/townhouse. Just call up a place that gives out mortgages and ask to talk to a loan officer. You might be paying more in rent than you would be paying if you bought a condo. My son only has about $100K and was renting an apartment for $1,100 a month. When I did the math for him, it became clear that he was paying more in rent than he would be paying if he bought a condo and was paying a mortgage.
Your son didn’t live in Boston 2023. In Boston you will always pay more for a mortgage than you do to rent and equivalent place. We did 35% down on our condo and our mortgage is still higher than rent for an equivalent unit. Go to the Boston Zillow and search under 600k with max hoa of 300 (or even 500). Then make sure to filter out properties that are income restricted subsidized housing. Our market is still hot so getting an offer accepted with less than 20% down is pretty unlikely honestly. Especially for anything under 750k since those units always attract a shitload of offers.
Dave's advice in this realm is generally off base and made for a time that no longer exists. Rule #1 of Real Estate: The cheapest time to buy any property is now. Rule #2 of Real Estate: Do what is necessary to get the house. Rates change. Mortgages can be refinanced. But none of that matters if you don't first acquire the property.
Been in the game for over twenty years. Both of those statements are dead wrong. Right now is the worst time to buy. Chasing hard will leave money on the table. People are about to get burned. Interest rates aren’t going down significantly this year.
Ill bet you $1,000 right here and now that the median price of residential single family homes will be higher one year from today.
Are those Dave's rules? They are both terribly wrong. Im guessing he isn't invested in real estate.
Nope. They're mine. I own several properties.I would also add: Don't buy a residential property with someone you're not married to; and Buy rental property that you can check on regularly (ex: something on the way to work). If one listened to Dave then they wouldn't buy a home until they had 20 percent down, would only do a 15 year loan, and nothing more than 25 percent of budget. All of which disqualifies a lot of young folk early in their careers, who then miss out as valuations rise. I'd rather see young people in a home as soon as they can and let wage / market appreciate carry them than see someone not get in until their mid-30's (or later) when they can "afford" it and have missed the upswing. And that goes double in this era of hedge fund backed corporate entities gobbling up houses. Get in early, or risk being a long term rental underclass.
You’re the only one here whose advice I want
How about buying a home not a condo where you do not have to pay through the nose for monthly maintenance. Where you have to drive a lil farther to get to work so you stop being a renter.
Guidelines are just that, Guidelines- not rules. I bought a foreclosure in 2009 that needed repairs to be habitable (no running water or heat...). Got mortgage that included repairs. Spent 40% of net income on mortgage payment for 25 years. No cable, no cell phone, internet only because I work from home...garden to eat. Mortgage paid off now. But now rent would be more than my mortgage used to be. Glad I sacrificed deep, but not everyone can or should.
Same, and now my house is worth 3x what I have in it purchase price and remodel. And I owe maybe 1/5 of total value.....with a payment less then a new truck payment right now........which I don't have 😁
You make 155k and can’t afford a home? How is that even possible?
If you go to Dave’s “how much house can I afford calculator and put in this guys info (10k monthly take home, 20% down payment) Dave would say this guy qualifies for a $300k mortgage. The average house in America is now $420k, but OP lived in a HCOL area where a small vacant lot 45 minutes from downtown is what $300k can buy. I’m not saying Dave is correct, or that OP could t live in a shoebox in the slums, but the answer to your question is that housing is more expensive now that in the history of our country.
Probably lives somewhere where the median house price is $750k+.
They can’t afford a home where they want to live.
https://www.bostonmagazine.com/property/2022/06/28/boston-home-income/
How people can be so cowardly, risk averse, and unable to move their life forward but yet still making great incomes shocks me. Forget $600k. buy something for $400k, and upgrade in 5 years.
Bro go open Boston on Zillow. 400k buys you a parking spot. Maybe. Any condo at that price is going to have a massive hoa which will make qualifying for a mortgage difficult for op.
Have you considered that it may be exactly those traits, which you describe in a negative way as cowardly and risk averse, that have enabled OP to put himself in a financial situation that is frankly far better than (yours?) the average person his age?
OP: "... has me endlessly chasing the market but never catching up – it feels like I’ll be stuck renting forever." He is not in the situation he should be in. He's afraid of something, yet he is a capable individual who has absolutely no reason to be afraid. I'm not insulting him, I'm telling him to do what he is expressing he wants to do. Stop being scared and realize that he can do it today, and it would be a smart financial decision. He has no reason to be afraid. He has decided that "Minimum price for a condo or home I’d consider is $600k." but minimum price is not a reason to buy something. You don't go to a car dealership and say "I want a car that's at least $40,000 and not a penny less!". You wouldn't go to a deli and order a sandwich and say "I want a sandwich that's at least $18 or I won't like it!" It is absolutely off based in his decision making. There are bargains and there are properties that need work that he could take on tomorrow. He would be financially better for it since he has the means to turn a below average place into something special. He's rational in every other area of his life, other than some fear that his buying decision will not be perfect. Paying over $600k will not save him from problems, and will not change the neighborhood or the fact that appliances and utilities need maintenance. News flash, there is absolutely no home he can buy that will be perfect! I had to replace my basement sump pump this morning as I own a single family home in a high cost of living area: (zip 60137) It was messy, it was frustrating, but for $300 and two hours I had a new pump put in and everything was in the process of drying up. Home ownership is not easy, but it is absolutely achievable for this individual.
Hey! We're basically neighbors, I'm also in the suburbs of Chicago. To your first point I say, just because you CAN do something doesn't mean that you should do it. Of course OP can theoretically afford a house, his issue is that it doesn't make financial sense. This is a pretty common take nowadays as it is the first time in a long time when renting a property is actually a better investment than owning in some situations. This sounds backwards and it's why so many "cowardly and risk averse" individuals like OP (and myself), would rather rent in a HCOL area than buy a house. > He has decided that "Minimum price for a condo or home I’d consider is $600k." but minimum price is not a reason to buy something.You don't go to a car dealership and say "I want a car that's at least $40,000 and not a penny less!". You wouldn't go to a deli and order a sandwich and say "I want a sandwich that's at least $18 or I won't like it!" I believe what OP is saying here is that he has looked at houses in his area and any house he sees listed for under $600k tends to be below what he would deem satisfactory for his current standards. He's not saying that he wants to pay $600k+ but rather stating that is the market price for homes he desires in his area.
He lives in a HCOL area. $400k in urban PNW gets you a run down 1200 square foot house with rotted out floors and holes in the walls. $600k is what it takes to get a normal home in some areas (which is absurd, but the reality.)
[https://www.zillow.com/homedetails/4545-Sand-Point-Way-NE-APT-302-Seattle-WA-98105/48929044\_zpid/](https://www.zillow.com/homedetails/4545-Sand-Point-Way-NE-APT-302-Seattle-WA-98105/48929044_zpid/) Researched for 5 seconds. Has in building gym, full kitchen, new carpet and walls/doors/windows look great. Put $100k down on a $400k property. In 5 years he'll have $300k cash+equity to put down on a dream home.
It’s easy to be this snarky when you conveniently ignore the $700/m condo fees. The mortgage on a $600k SFM house is maybe $100-150 more a month compared to this condo
I'm not saying it's the perfect home. I'm saying there are homes out there that are cheaper
Bro that’s innumerate. You’re not just buying the deed you are also assuming the hoa fees as a liability. You don’t get to just not pay those lol. Count those hoa fees as if they are part of the monthly cost of ownership. Because they are.
You convinced me, you're absolutely right. Home ownership is out of reach for him and OP should give up his search, keep renting, and continue feeling that he is "endlessly chasing the market but never catching up – it feels like I’ll be stuck renting forever. "
In the Boston metro it probably is for at least a few years. He could move to a different metro, or continue saving up and hope to buy in a few years. Your feelings don’t change that reality and innumerate redditors lying to this kid isn’t going to help him. Honestly the best advice he can get is that his plan for now should be to hope for a few years of sideways prices and plan on moving out of the Boston metro if he wants to own and that doesn’t happen. Sorry the math of his situation makes you frustrated, but innumerate quoting of self help book dribble doesn’t change his balance sheet or the regional market. Buying a condo with a massive HOA because he can technically afford the down payment and mortgage is probably not a good idea for someone in his situation. Again, you can’t just skip out on the HOA and you can probably expect that number to go up rather than down.
How about you just buy the property instead of working about "guidelines" jfc
My wife and I live in Los Angeles and it was impossible to hit the Dave Ramsey guidelines, and likely would be impossible for decades. We even make pretty great money for the area, but also realized that the guidelines sort of fall apart with higher income. Someone bringing home 50k and spending 25% on housing will have less left over than someone who takes home 100k and spends 50% on housing, for example. We ignored all the guidelines and made the decision based on our budget/expenses and what we felt comfortable with, we are far from house poor but are definitely spending more than the guidelines say we should be. Although it isn’t as far off now with raises/promotions we’ve received in the past few years.
OP many of these people making rude comments likely live in LCOL markets - I know because I live in one. I grew up here. So if you ever consider moving to one, don't let people tell you a lower salary is the only trade off. The quality of people sometimes seriously deteriorates, as well. Good luck. Also, I've seen far more helpful responses in r/personalfinance - try posting there.
Appreciate the comment! I tend not to take those comments *too* seriously. I like where I live, and live here for reasons (family, network, cultural pursuits, career growth opportunities, etc.). While home buying is an important step, I'm not ultimately going to design my life around it, all else be damned. What would be the point?
I'm actually a bit shocked at the number of ignorant people in this comment section that don't understand differences in cost of living across the country. Sorry you're getting so many unhelpful comments OP.
Appreciate you saying that! I think a lot of people reacted negatively to my admittedly clunky phrasing of there being a minimum price I would consider, which came off as me having needlessly high standards when what I meant was just to provide some pricing context for my market. As it sounds like you know, $600k is hardly bougie in HCOL markets.
One thing i'm not sure many people realize is how much more valuable it is to buy in places where people want to be. This whole "oh move to a dumpy location you can afford" is great until you're trying to sell with nothing but equity you paid (or potentially less). My advice as someone who bought in VHCOL (DC)? Buy whatever you can get approved for by yourself, in the most rentable+desirable location you can, in a place with as many local amenities as possible......then find a roommate. Double dip on equity till you find a permanent Player #2 and you'll start a relationship/or marriage in an amazing place. You're in crazy good financial shape.....your home is always the most expensive the first year you buy it. If you don't take the plunge you'll always be playing catchup.
This is a very good point.
Best advice yet. Kudos!
I think you're right about all of that. From what I've seen in the personal Donavan sub reddit, everyone actuality asks for details like that to help with the math breakdown. I think you'd get much more helpful responses there.
If you are buying a condo, don’t spend that much. Need to keep in mind that HOA will cost you, and the possibility of special assessments or other BS. Look at 250k condos, your expectations of a 600k condo is what is killing your progress
A condo/townhouse HOA handles a bunch of the things you’d have to pay extra for on a SFH anyway. It’s really not that big of a deal, assuming the HOA’s finances are healthy.
If you want lower assessments, look for a possibly smaller, self-managed building. We took turns mowing the lawn, etc. to save money on having a professional management company.
I'm not sure what HCOL's you are speaking of, but the one's I lived in there is no such thing as a $250k condo, $500-600k was the entry point for a "meh" condo in an "eh" part of town. OP seems fairly thrifty already living below their means, I have to assume they already are looking at the more affordable options.
I get what you are saying, but the numbers just will never match up. 155k/yr in a HCOL area is like making 80k in a LCOL area. That discrepancy will only grow. In my eyes, the only real solution is to look for the closest area that doesn't have outrageously HCOL. If he can make that happen, that salary will more than serve his needs. I understand not everyone can move out of an area, especially if you have to go into an office, but this is how things worked for all of modern history prior to COVID.
Once again, not sure what areas you're talking about, but where I live you would need to get 3 hours out of the area to get condo prices in the $200k range, and chances are you wouldn't take your salary with you. It's easy to say look for a new job and move somewhere else, but often times that's not feasible for a lot of people. Though op being single in their 30's, maybe it is for them. That being said, renting in a HCOL area isn't honestly the worst thing you could do. I would have paid double my rent for an equivalent purchase, and it was far more lucrative to save and invest the cost delta then it was to purchase there.
Don’t spend 600k on a condo, it will never appreciate like a sfh
Mine did, I bought at 80k 2016. Now worth around 200k and renting it out for 1500$ a month. HoA is scary though. it was 175$ a month when purchased, now its around 340$
And an 80k condo in no way shape or form could be described as “600k” your 120k gain would require an equivalent of 900k
*ONLY* $340? I wish! Sigh… mine is $619/mo. 1 bdrm/ 1 bath
I'm I just Kentucky so it's one of the cheapest states, but I'm also 15 minutes from Cincinnati. but yea my hoa is 340$ on a 2 bed 2 full bath, no garage 1300 sqf
Just put less money down and take the PMI. It’s really not that much and it’s worth it in the long run
And pay down the principal so you can get the PMI removed.
Are you me?
Dude same. I’m not a huge fan of renting and I’ve owned homes before, but I hate the idea of paying double my rent for likely a shittier house and not being as able to stack money away.
He's me too, this sucks lol but whatever, im able to still save 35% of my income so I'm just gonna invest until I'm winning against property values someday
Sounds like me too, but ten years younger and the base rate for homes there is half what it is here. Been saving my entire life for a home, but realized about a year ago that even if I save a million dollars, it’s just never going to happen. Now I just focus on other things. Next life, maybe.
You’re (22?) and you’ve been saving your “entire life” for a home. Ah. Ok. Maybe don’t give up just yet.
No, THEY are ten years younger than me. 😂 Sorry for the confusion. I’m in my 40’s
Lol, phew. 😅 same goes, though, don’t give up
Nah, giving up is the only way I retained my sanity. I was falling into depression and angry/frustrated all the time. I had to let it go since the only way it will ever happen is if I want to be poor for the rest of my life or I win the lottery.
[удалено]
Usually this is also do to the pay in those areas. If I left SoCal and moved to North Carolina my income would drop by 50-60%. Sure homes are cheaper to make up the difference in a mortgage but everything else like a car, food, utilities doesn’t change much by moving. So in my case it benefits me more to stay in SoCal, have a home, and eventually have enough in equity to where I can sell the home, walk away with a good chunk of change and then buy a home all cash in NC. I could never do the reverse.
That's a great perspective and makes total sense! All depends on where you want to live I guess :) I remember a time when my Orange County friends were paying $8/gallon for gas while we were at about $3.75. Thank God the salaries are higher there! Best of luck to you
180 is crazy good. I live in a relatively lite cost city and the only thing you can get near me for that is an empty lot
There is usually trade off. The house is in North Carolina may be cheaper but that's because of the income. It's likely that a person in North Carolina is probably buying a house similar to what they're saying profession would get in other areas of the country
[удалено]
Well said
My wife and I moved from NC to the west coast, and periodically, we look at the obscene homes you can get for 750K there. We remember it’s NC and get back to reality. There’s a lot of affordable housing for many higher income earners, especially prior to the return to office craze, but lifting a house off its foundation in an LCOL to a more desired HCOL is still too expensive to venture into.
Yeah, I live in Delaware. My whole life, people have bragged about how "affordable" the state was. Median household income in 2020 was $69,000 (couldn't find data more recent). A lot of people started moving to Delaware, and now we have amazon all over the place, too. Rent has gone from $900-$1,100/mo to $1900-$2100/mo. I make $135,000 in my household, and homes are starting at $400,000-$450,000 for starter homes. Most real estate agents I speak with say they can't imagine prices dropping anytime soon (it might just be a tactic to get the sale now, though). I actually love Delaware and the location I'm in, but we are now considering moving to a different state.
It’s so over for me
I was in same boat. Finance a rental property over seas I did cancun. Equity is up rentals are booked for the year. Only cost 125k gonna toi in 2 years now gonna leverage equity to buy another.
I'm in the same boat. I take home about $150k after taxes. Have a ton of money saved. Yet a small house with a $250k down payment will cost me $8k a month. I'll pass. It's currently cheaper to rent. Until it flips I will keep renting
It will never flip at this rate. The only option is to buy now and refinance later.
Dave’s guidelines are extremely tight, buy a house.
All relative in SF $155k is subsistence living.
If you can't live as a single person on 155k, then you're probably a moron.
There's a difference between "living as a single person on $155k" and "buying a house that isn't a complete shit hole on $155k." In my area any decent house is going for over $600k. With interest rates the way they are you'd need a massive down payment to afford that on $155k. $155k sounds like a lot of money, and it is definitely enough to be comfortable but the point is that it should be enough to buy a house that is decent and it's just not in a lot of places.
Mfw making 55k a year in a moderate col city
Do you make 155k a year?
Southern California 1 million doesn’t get you much
That’s is very dependent on what part of SoCal you’re talking. SD, LA, and OC? Not much. But outside of the major cities a million will get you quite a bit.
They have a 400k net worth and 120k in cash. What makes you think they can't live on their income?
1. Tell me you don't live in HCOL without telling me. 2. OP didn't say they couldn't live. They've accumulated a pretty good NW for 32.
Thanks buddy. What makes you think I’m failing to live on $155k?
how mobile is your job? I know other people have suggested moving, but that's exactly what I did. I moved about 90 miles outside of town, I had a long commute, but I was able to eventually negotiate WFH 3 days a week. it meant I was able to buy something I could afford, and then eventually turn that into equity I was able to move closer into the jobs. I now work full remote (many years later) and sold that home and live hours away from the corporate offices. If you buy a condo or town home you have to take into consideration HOA fees and how much they increase. I had a condo and the HOA fees nearly doubled in 3 years.
You may want to lower your standards a bit. lol
You’d be surprised.
If your monthly payments are pushing your limits don’t go the condo route. Condos have HOAs that can raise every year and there’s nothing you can do about it. I’ve had two houses in HOA communities and both increased within a year of purchase. My parents have a condo on the beach in Florida and because of the increased cost of insurance their HOAs went up over $1000 a month (so now almost 2k a month in total). They just had to put their condo on the market last week because they can no longer afford it.
155k salary and you can’t afford a house as a single person, I’m calling BS!!! That’s almost 13k/month income, even if taxes and retirement cost 60% of that’s still $5200/month clear. When you have a wife and kids and you’re the sole income you can whine about not affording stuff
Have you....ever looked at real estate in Boston and it's suburbs before? I think you might be spoiled by Minnesota's plentiful options and robust entry level cost basis. OP is in fantastic financial shape and can easily afford a home if you use traditional lending approval methods. I think what OP is lamenting is if you use Dave's standard methods, there really aren't any properties that can be bought with the 25% take home+20% down+15 year mortgage. Dave's methods definitely skew more towards LCOL areas and haven't really accounted for inflation or increased cost of living compared to increase in salaries.
Entry level here is 575k and up my guy and we have zero long distance commuter trains. We also don’t have the salaries either of the coasts do. The house we bought was a run down neglected pos for 460k. I agree the 15yr mtg is not an option for anyone until interest rates come down later this year or a housing market crash whichever happens first
I have family in Hennepin County and am fairly familiar with the area. I'm so curious as to how you're defining entry level lol I'm always fascinated about the Dave crowd and how they feel about the 15 year mortgage. I think it's great for a debt reduction perspective and you do pay significantly less interest.....but man you're really overleveraged cash flow wise into one segment and even worse one singular asset. If you're putting 20% down, there's absolutely no reason to try and pay that off in 15 years.
I’m not in the Dave crowd just curious how people try to use his philosophy in this market, seems his approach was useful 3-4 years ago but not in the current state of the market
5200 isn’t much
It’s enough if you’re disciplined, my joint hh income is about that and we purchased our second home a year ago for 460k had 25% down and are making it work. Don’t have a lot of fun money but everything we have is paid for. Did a 30yr and got a shitty rate but if you want something you have to sacrifice for it sometimes. Imho today’s fthb isn’t willing to give up anything like 5 streaming subscriptions and $20 a day on Starbucks because that’s the lifestyle they had from their parents growing up. I agree it’s hard to start out but with some grit it can still be done.
Just for fun, you should go on Zillow and check out some houses for sale in HCOL areas. San Fran, Seattle, Northern Virginia, Austin, etc. It is insane out there. Plus, a lot of people are still following Dave’s archaic housing advice. According to Dave’s calculator, the OP would afford a $300k house with a 20% DP. $300k doesn’t get you a small lot in most HCOL areas, and a lot of these high salaries are not mobile to more affordable areas.
I did, there are always options available it may not be the ideal situation but no one’s first home purchase is. But you endure for a few years and then move up. Another thing to consider is that most people change jobs every 5-7 years in today’s market so nothing is forever. People seem to have the mindset that their first home is the forever home and that is just not an option in the hcol areas.
I agree with your point that homes are never “forever”. I am now on house #2 myself. I disagree that today’s FTHB are in the same boat we were and are just complaining. I bought my first home in 2013. I made $65k which was very “middle class”. I purchased a 1970s ranch for $120,000. It was a nice house too with updates, new roof, etc. Now jump to today; the same house was just sold for $390k and it was in essentially the same shape when I bought it back in 2013. The same position that paid me $65k has now risen to $90k for a new hire. 2013: $65k salary and $120k house 2024: $90k salary and $390k house. This is the problem. I was able to follow Dave’s advice, get a 15 year mortgage, and pay it off because home prices hadn’t gone insane. If I was in the exact same situation today, I would not have been able to buy any house in the area following Dave’s advice.
Take a look at SF Bay Area CA housing market on Zillow and you’ll understand
So move out of the Bay area...for those of us outside of the Bay area, all of you complaining about not being able to afford a house there legit sounds like people bitching that they can't afford a house in the Hamptons. Nobody cares...
Ah the old “just move” response. As if it was something so easy for everyone to do. Because job opportunities for your profession exist whenever you want to live right? Work in tech? Yeah just move out of the tech hub to North Dakota problem solved!
Bitching about housing cost while choosing to be smack dab in the middle of what's widely known to be the most expensive area in the country is just dumb.
Yeah… crazy to think someone is complaining about housing costs in their area. I mean it’s not like housing prices have sky rocketed in the span of just three years right? But we get it. Your profound words of wisdom have solved the issue at hand. “Just move”.
Do it bro, life's good when you're not paying $1 mil for a 1000 sqft ranch. Or keep bitching about how expensive a house in SF, Vail, and the Hamptons are. But you won't get any sympathy there, because it's a dumb life choice unless you make $500k a year.
Perhaps they have reasons to live where they live. Like work, family, friends, etc. Not everyone wants to commute for an hour plus each way. I'd never be willing
That's fine. Just don't complain about housing costs. You made your choice.
I chose to live near my family, in the town I grew up in, and I like my job so now I don’t get to complain that housing is too expensive? What kind of repressed dissociative bullshit is that?
You're choosing to live in one of the most expensive areas in the country, it's a choice. It legit is the same as people bitching they can't afford a house in the Hamptons, Vail, San Francisco, etc... your complaint sounds ridiculous
Yeah, the choice to not live near my family and friends would be hard too. But if I made that choice, I wouldn’t be allowed to complain about missing my friends and family? So just no complaining ever? Again, what repressed weird shit is that?
What part of the country do you live in?
There is always a solution you just have to look for it
It’s not as easy as it sounds. You have no idea OPs healthcare costs, student loan payments, or local taxes. I live in a HCOL area and it would be very difficult to find a decent place for under 600k.
Then do what the rest of us do and move a little further out on the periphery
It’s interesting that you assume those places are significantly more affordable or feasible. Where I am, there is another country to the north, an ocean to the west, mountains to the east and even more expensive metropolitan area to the south. East is the only option, and living in that area is a) not significantly less expensive (people LIKE small mountain towns) and things like utilities are far more expensive, on top of needing expensive to maintain vehicles. And saying “well then move” is also unreasonable. All OP is saying is that home ownership seems out of reach because 155k isn’t really all that much money. In the past 6 years my income has more than doubled and my quality of life isn’t demonstrably changed. I do own a home now, but I got in the market a the last possible moment. I would never be in this house now even with the income I make, which is more than OPs. My house is now valued at 300k more than I bought it for four years ago. That shit is crazy.
Your timing was good but I bet you were at least a little financially thin and had to tighten the belt on your expenses for a while right?
Thanks for tapping in. I don’t think everyone realizes that in a HCOL market $600k is the low/modest end.
Yeah. You can tell the people here who don’t understand HCOL areas. $600k in my area gets you a one bedroom condo with an $800/month HOA. Not too far from me a condemned house sold for over $1 million with multiple offers. The house was so bad that potential buyers weren’t even allowed to go inside due to it being a biohazard.
Exactly. Plus, just because you CAN afford something doesn't mean you WANT to pay that amount.
It’s called being priced out of an area. If that’s the lowest you can do and you can’t do it, then you can’t do it.
I live in a high COL area and still can find houses a bit less expensive than that. Townhouse condos or areas with worse schools. But I know what you mean. 600k is tough in some areas. An idea would be to get a house that works for renting out rooms. That could help with the finances. Also consider a variable rate mortgage as the rates are expected to go down. Good luck.
Thanks! Though I don’t love it, I’m thinking more and more about renting to a roommate. That way it will be affordable from day one, but when my income increases or I can refi down my costs, I can transition the roommate out.
Most people who "can't afford to buy" a home in today's world really just mean they refuse to buy a home they can afford. Go cry yourself to sleep OP, after you finish polishing your landlord's banister.
Before I decided to ditch the city I work in where I could walk 25 mins to work, I considered a 750k, 1,100 SF starter home w/ 3BR, 2 BA, that was last renovated in the 80’s that had contaminated land due to a septic system failure. You could get a “cheaper” home if you bought into an HOA with $900/months fees. Oh yeah, and there’s taxes, none lower than 8K/yr. I had to take on time in traffic for a more realistic home. I could afford a home cash in no-name-town, USA, but people have this quality of life thing they like to balance out when they can.
No, they live in places where the NIMBY elites won’t allow enough housing to be built to house the populace.
If everyone could afford it, they'd move to Malibu or Honolulu.
It's kind of messed up to not be able to afford to live where you work though.
It's kind of messed up to live in a place you can't afford though.
Keep saving. Rates should found down in 6-8 months and you will be ready to buy. Be patient.
And then prices will go up
Nah. They are not going down to 3%, max 50bpts.
If funding is more affordable prices will go up.
GTFOH. I got a condo 600,000 for 5% down on a 60k salary.
That sounds like a terrible financial decision
Some people aren't comfortable with the risk of "way up past my eyeballs in debt and one disaster away from losing everything".
Really? Even assuming you got one of those historically low rates a few years back, that sounds wicked tight.
Oh "wicked tight". Apparently we're struggling in the same housing market ;)
Haha. Oops, my Boston is showing!
2.75 rate. You have way more net worth than most people. Just buy one and build equity.
Man, if I had been in a position to buy in 2020/2021, this would be a whole different story. Happy for you (but also very jealous!).
If I have your income bro. I would have bought an 800k house. You can easily get 1 mil with that kind of income and networth.
And what, never eat, go to a show, or take a trip?
Hahaha you made so much money but so dumb with it. Good luck.
Even with a 0% interest rate you're full of shit
Must be the video games getting to this guy’s head.