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  #21  
Old Posted Jan 15, 2019, 2:44 PM
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These are typically 30 year notes. What is miami in 30 years?
Pay no attention to the Chinese propaganda ....

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  #22  
Old Posted Jan 15, 2019, 2:55 PM
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*The cost of your house should equal roughly 2.6 years of income.*
is that true?

AGI or take-home?

if the former, then we freaking nailed it!

the home we purchased last year is 2.625 of our AGI.
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  #23  
Old Posted Jan 15, 2019, 3:03 PM
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Originally Posted by Steely Dan View Post
is that true?

AGI or take-home?

if the former, then we freaking nailed it! the home we purchased last year is 2.625 of our AGI.
i feel like a lot of people are living a lie in this respect. i don't understand how this actually works in california or say toronto? i can only imagine that some of it at least is fueled by younger people being helped out by parents, otherwise it's a giant financial lie. people don't make THAT much more in toronto than st. louis in my profession at my age, yet they are in $850,000 + houses.
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  #24  
Old Posted Jan 15, 2019, 3:08 PM
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Thats daddy money, or chinese daddy money.

Its like on hgtv where she is a basket weaver, and he makes collages out of moss. Looking for a house starting at 1.5 MM.
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  #25  
Old Posted Jan 15, 2019, 3:14 PM
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Originally Posted by Centropolis View Post
i feel like a lot of people are living a lie in this respect. i don't understand how this actually works in california or say toronto? i can only imagine that some of it at least is fueled by younger people being helped out by parents, otherwise it's a giant financial lie. people don't make THAT much more in toronto than st. louis in my profession at my age, yet they are in $850,000 + houses.
Yeah I don't know where that 2.6 figure comes from. I thought the rule of thumb was 1/3 of gross income for housing. If you make $100k that would be about $3k a month, which equates to a mortgage on a $700-800k home with 20% down. So the ratio should be closer to 8:1.
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  #26  
Old Posted Jan 15, 2019, 3:19 PM
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Young people buying expensive properties are generally cash buyers, and incomes are besides the point.

They have liquid assets (or Mom and Dad are helping). I have a friend who's an architect and mom is stay-at-home. They have three kids and just bought a $2 million residence, cash.
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  #27  
Old Posted Jan 15, 2019, 3:57 PM
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This site has some interesting information.

https://www.numbeo.com/property-inve...by_country.jsp

2019: U.S. price to income ratio is 3.58 [China 29.09]
2009: U.S. - 8.9. China - 15.01
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  #28  
Old Posted Jan 15, 2019, 3:59 PM
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Young people buying expensive properties are generally cash buyers, and incomes are besides the point.

They have liquid assets (or Mom and Dad are helping). I have a friend who's an architect and mom is stay-at-home. They have three kids and just bought a $2 million residence, cash.
that's not really what i'm talking about, though. i'm talking about people with 100K household incomes (or something) buying nearly 1 million dollar properties (or much less) without substantial 'liquid assets' in outrageous markets. not really talking about the "thanks dad!" crowd.
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  #29  
Old Posted Jan 15, 2019, 4:07 PM
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i feel like a lot of people are living a lie in this respect. i don't understand how this actually works in california or say toronto? i can only imagine that some of it at least is fueled by younger people being helped out by parents, otherwise it's a giant financial lie. people don't make THAT much more in toronto than st. louis in my profession at my age, yet they are in $850,000 + houses.
Median household income in CA is around $66,000 while the median home price is around $550,000 = lots of people living at their parents house well into their 30s to be able to buy a home of their own.

It's a new/common reality in many cities. Social impact: It delays 'adulthood' for many.
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  #30  
Old Posted Jan 15, 2019, 4:09 PM
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that's not really what i'm talking about, though. i'm talking about people with 100K household incomes (or something) buying nearly 1 million dollar properties (or much less) without substantial 'liquid assets' in outrageous markets. not really talking about the "thanks dad!" crowd.
Are you sure there are people like that? Who makes 100k, has no liquid assets, and buys a $1M property?

How is that even done? 100 year mortgage or something?
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  #31  
Old Posted Jan 15, 2019, 4:12 PM
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Are you sure there are people like that? Who makes 100k, has no liquid assets, and buys a $1M property?

How is that even done? 100 year mortgage or something?
i said without "substantial" liquid assets, and i'm talking $500-850k prices. in my opinion, if you only have 100k household and you spend over 200k you're pushing it...

but i see this a lot on (say) canadian househunters or something. "she's a stay at home mom and he works for the city..." and they are looking at 800k real estate.

i know doctors and people from my wifes law school class who are buying 400k houses, and considering that about their limit...(then again it's the midwest and housing may not be your best investment option...my wifes family heavily invests in seattle).
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  #32  
Old Posted Jan 15, 2019, 4:15 PM
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Are you sure there are people like that? Who makes 100k, has no liquid assets, and buys a $1M property?

How is that even done? 100 year mortgage or something?
I'm not sure about that big of a gap, but many people DEFFINITELY buy way more house than they should. Its done by not having any savings and living paycheck to paycheck. Presumably these people see their house AS their 401k? Or more likely they just don't think that far ahead.
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  #33  
Old Posted Jan 15, 2019, 4:20 PM
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Where does Chicago fall on that list ?
I believe Chicago is the mid 3s.
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  #34  
Old Posted Jan 15, 2019, 4:21 PM
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i said without "substantial" liquid assets, and i'm talking $500-850k prices. in my opinion, if you only have 100k household and you spend over 200k you're pushing it...
$200k? You must be living in a depressed housing market where real estate is a depreciating asset. In California and other high cost markets a lot of people buy houses in the $500-850k range on incomes around $100k. They do it by spending upwards of 1/3 or even 1/2 their income on housing. It might sound stupid at first until you realize that it's basically the safest place to park your money in your prime earning years.
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  #35  
Old Posted Jan 15, 2019, 4:29 PM
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$200k? You must be living in a depressed housing market where real estate is a depreciating asset. In California and other high cost markets a lot of people buy houses in the $500-850k range on incomes around $100k. They do it by spending upwards of 1/3 or even 1/2 their income on housing. It might sound stupid at first until you realize that it's basically the safest place to park your money in your prime earning years.
depressed relative to california, of course. my property still has seen a good 27-30% appreciation in two years.

but more to the point, i don't actually understand how someone could (or should) buy a house in that range on 100k, and certainly not at this point in the cycle, without a substantial amount of cash not typical of that kind of household income.
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  #36  
Old Posted Jan 15, 2019, 4:33 PM
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midwestern conservatism i guess.
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  #37  
Old Posted Jan 15, 2019, 4:37 PM
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depressed relative to california, of course. my property still has seen a good 27-30% appreciation in two years.

but more to the point, i don't actually understand how someone could buy a house in that range on 100k, and certainly not at this point in the cycle, without a substantial amount of cash not typical of that kind of household income.
See my other post above. The mortgage on a $500k house is about $2k with $100k down. You don't see how someone can swing that on $100k income? Couple years to save for the down payment then only 1/4 of income for housing... It's not that hard. And it's not money disappearing into the ether. It's basically forced savings with an excellent return (in good housing markets) - think of it as a free market solution to social security.
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  #38  
Old Posted Jan 15, 2019, 4:42 PM
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See my other post above. The mortgage on a $500k house is about $2k with $100k down. You don't see how someone can swing that on $100k income? Couple years to save for the down payment then only 1/4 of income for housing... It's not that hard. And it's not money disappearing into the ether. It's basically forced savings with an excellent return (in good housing markets) - think of it as a free market solution to social security.
that sounds outrageous to me but i suppose there are people that do not contribute much (or anything) to a 401k and dump everything into the house, and don't take real vacations. i suppose if i lived in california i'd look more like that. i'd be more concerned stretching myself in florida or something than california. i will say that the chicken has to come home to roost at some point on the insurance situation in california...
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  #39  
Old Posted Jan 15, 2019, 4:58 PM
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What interest rate is that "2.6 x income" based upon? If it doesn't move with interest rates, it's too simplistic to be useful.

And yes, in much of the country, you have to spend much more to buy anything. The good news is that a growing city with sprawl controls, values tend to rise. West coasters often put themselves in some risk, but those who've held on through the downturns have done very well.
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  #40  
Old Posted Jan 15, 2019, 5:00 PM
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that sounds outrageous to me but i suppose there are people that do not contribute much (or anything) to a 401k and dump everything into the house, and don't take real vacations. i suppose if i lived in california i'd look more like that. i'd be more concerned stretching myself in florida or something than california. i will say that the chicken has to come home to roost at some point on the insurance situation in california...
With a car, college debt, and two kids, sure it would be tough. But without those things -- often the scenario in urban districts -- it can be easy.

I used to spend 60% on housing and it was easy.
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