How do people afford...

[Anonymous]

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

Are you sure they didn’t buy them before the hike? Most existing mortgages today are still in the 2-3% range.

[Anonymous]

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

They don’t have children and are not saving for retirement. I used to live large when I was in my early 30s. Fast cars, an amazing house, parties, etc. I had a great time and would not want to miss it. Now fast forward 15 years, and my house is more modest, and my life is much less glamorous. I love my kids to pieces and again would not want it any other way, but between private school tuitions, various activities, camps, and saving for college and retirement, my day-to-day life does not reflect that my salary has trippled.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

They don’t have children and are not saving for retirement. I used to live large when I was in my early 30s. Fast cars, an amazing house, parties, etc. I had a great time and would not want to miss it. Now fast forward 15 years, and my house is more modest, and my life is much less glamorous. I love my kids to pieces and again would not want it any other way, but between private school tuitions, various activities, camps, and saving for college and retirement, my day-to-day life does not reflect that my salary has trippled.

I can totally relate to this! We had so much more disposable income before kids, even with a much lower HHI.

[Anonymous]

Debt.
Inheritance.
I used to puzzle over this, but now realize a lot of people in my very wealthy area have inherited wealth.
We a live modestly on our $300k HHI and feel poor!

A friend who spends like crazy on designer bags, clothes, nice cars revealed to me that she doesn’t have $6K to do some needed repairs to her house.
She has no idea how to cut back on her wasteful spending. It’s an ingrained lifestyle.

[Anonymous]

Anonymous wrote:I could be this, minus the cars. When I was single, 25, and making probably $70k I inherited $100k which I put towards a down payment on a $400k condo with a very low mortgage rate. I sold it 8 years later for more than $1m. That was pure dumb luck. But it allowed me to put $1m down on a $1.5m condo, where I now live with my family. Our HHI is $300k but we're living within our means.

I suspect there are plenty who did this....their downpayment came from selling a house purchased 8-10+ years ago. You could even get there without that inheritance---Imagine if you were married at 25 or a couple---a couple each making 70K could have $100K saved in 2-3 years for the downpayment. And boom, 8 years later worth $1M due to the house.

[Anonymous]

Another thing to keep in mind is the singles penalty versus married. A professional couple who started dating in college or grad school, moved in together at 25, got married at 27, can build up a significant financial advantage over a single with the same jobs. 150k HHI versus 300k HHI. Couples who get together sooner also tend to buy a property sooner, meaning they're on the property ladder faster and can benefit from appreciation over 10 years to leverage that first 350k condo into a 1M+ property 10 years later. DC has a lot of these young professional couples.

I'm a single who did buy a property and in four years it's definitely appreciated nicely. But my peers who are married and were able to buy a more expensive property at the same time have done even better for the obvious reason - more value generates even more value.

[Anonymous]

Anonymous wrote:2 tech people might be clearing 600K per year.

According to the BLS, the median income of a software engineer in the US is $120K. Sure, if you both work for FAANG, then $600K is doable for two people, but those jobs represent a tiny fraction of all tech jobs and are by no means the norm in tech.

Let’s debunk the notion that there are all of these jobs with super high salaries and with benefits like WFH, etc. Sure, some exist but they’re few and far between.

[Anonymous]

Anonymous wrote:Another thing to keep in mind is the singles penalty versus married. A professional couple who started dating in college or grad school, moved in together at 25, got married at 27, can build up a significant financial advantage over a single with the same jobs. 150k HHI versus 300k HHI. Couples who get together sooner also tend to buy a property sooner, meaning they're on the property ladder faster and can benefit from appreciation over 10 years to leverage that first 350k condo into a 1M+ property 10 years later. DC has a lot of these young professional couples.

I'm a single who did buy a property and in four years it's definitely appreciated nicely. But my peers who are married and were able to buy a more expensive property at the same time have done even better for the obvious reason - more value generates even more value.

This. My sister got married at 21 and they bought a condo using some inherited money as a down payment. Later they upgraded to a SFH, then another SFH which with renovation and appreciation is now worth $2M in their 40’s.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Another thing to keep in mind is the singles penalty versus married. A professional couple who started dating in college or grad school, moved in together at 25, got married at 27, can build up a significant financial advantage over a single with the same jobs. 150k HHI versus 300k HHI. Couples who get together sooner also tend to buy a property sooner, meaning they're on the property ladder faster and can benefit from appreciation over 10 years to leverage that first 350k condo into a 1M+ property 10 years later. DC has a lot of these young professional couples.

I'm a single who did buy a property and in four years it's definitely appreciated nicely. But my peers who are married and were able to buy a more expensive property at the same time have done even better for the obvious reason - more value generates even more value.

This. My sister got married at 21 and they bought a condo using some inherited money as a down payment. Later they upgraded to a SFH, then another SFH which with renovation and appreciation is now worth $2M in their 40’s.

Same. We got married at 25/28 and basically flipped every real estate purchase—7 in 10 years, we now live in a $2 mil home and have a 2nd home. No family money and neither one of us are handy, we just flipped homes as the military transferred us. We also lived off one salary for 5 years before having kids and still lived well as DINKS.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

They don’t have children and are not saving for retirement. I used to live large when I was in my early 30s. Fast cars, an amazing house, parties, etc. I had a great time and would not want to miss it. Now fast forward 15 years, and my house is more modest, and my life is much less glamorous. I love my kids to pieces and again would not want it any other way, but between private school tuitions, various activities, camps, and saving for college and retirement, my day-to-day life does not reflect that my salary has trippled.

I can totally relate to this! We had so much more disposable income before kids, even with a much lower HHI.

Me too! In my early 20s as a single professional I used to fly to Europe and the Caribbean for vacations, eat out regularly, and love a very carefree fun life. I could kick myself for not starting real retirement savings back then. Now in my late 40s all of my extra cash goes to 529s, 401k, private school, and the kids’ latest needs. I have a much higher income but personally live much more frugally.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Another thing to keep in mind is the singles penalty versus married. A professional couple who started dating in college or grad school, moved in together at 25, got married at 27, can build up a significant financial advantage over a single with the same jobs. 150k HHI versus 300k HHI. Couples who get together sooner also tend to buy a property sooner, meaning they're on the property ladder faster and can benefit from appreciation over 10 years to leverage that first 350k condo into a 1M+ property 10 years later. DC has a lot of these young professional couples.

I'm a single who did buy a property and in four years it's definitely appreciated nicely. But my peers who are married and were able to buy a more expensive property at the same time have done even better for the obvious reason - more value generates even more value.

This. My sister got married at 21 and they bought a condo using some inherited money as a down payment. Later they upgraded to a SFH, then another SFH which with renovation and appreciation is now worth $2M in their 40’s.

Same. We got married at 25/28 and basically flipped every real estate purchase—7 in 10 years, we now live in a $2 mil home and have a 2nd home. No family money and neither one of us are handy, we just flipped homes as the military transferred us. We also lived off one salary for 5 years before having kids and still lived well as DINKS.

The key is living off of one salary. Saving the other is a huge deal and give you a great start financially. It also sets you up in mindset of living within your means and not overspending. Do that and it's easy to get ahead.

[Anonymous]

Anonymous wrote:One of three things:

- they’re bringing money from a previous house sale
- family money (this one is the biggest imo)
- incomes for the highest earners have gone up way more than you realize. I don’t think ppl realize how much extra money the high end service workers, small business owners, contractors etc are making compared to 5 years ago. DH and I work in unrelated industries and both of us have doubled our very high incomes from five years ago. Based on the cars in our kids school, I’m guessing others have the same. But this kind of income increase wasn’t shared with ppl making, like, $120k. Who probably got around $20k of boost and that’s it.

+1 My income has more than doubled over the past 5 years. Will hit 7 figures for the first time this year. Small business owner. Didn’t upgrade my house, though.

[Anonymous]

OP here. I get all the responses above, but the folks I am seeing are in the 'burbs and exurbs (Herndon, Chantilly, Ashburn, etc.) and they are mostly freshly immigrant population. Most of them work for software shops in the area. I don't think it is generational money. Still scratching my head to understand this.

[Anonymous]

We have millions just sitting around that we can use to buy stuff in cash. The federal government has been good to our business.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Another thing to keep in mind is the singles penalty versus married. A professional couple who started dating in college or grad school, moved in together at 25, got married at 27, can build up a significant financial advantage over a single with the same jobs. 150k HHI versus 300k HHI. Couples who get together sooner also tend to buy a property sooner, meaning they're on the property ladder faster and can benefit from appreciation over 10 years to leverage that first 350k condo into a 1M+ property 10 years later. DC has a lot of these young professional couples.

I'm a single who did buy a property and in four years it's definitely appreciated nicely. But my peers who are married and were able to buy a more expensive property at the same time have done even better for the obvious reason - more value generates even more value.

This. My sister got married at 21 and they bought a condo using some inherited money as a down payment. Later they upgraded to a SFH, then another SFH which with renovation and appreciation is now worth $2M in their 40’s.

Same. We got married at 25/28 and basically flipped every real estate purchase—7 in 10 years, we now live in a $2 mil home and have a 2nd home. No family money and neither one of us are handy, we just flipped homes as the military transferred us. We also lived off one salary for 5 years before having kids and still lived well as DINKS.

+2

Those who buy the big/expensive house as their first house absolutely have familymoeny/parental contribution.