SERIOUSLY - how are people affording these $1Mil+ homes with $8,000+ monthly mortgages!?

[Anonymous]

I’m in this situation, we bought recently and mortgage is $8500/mo but HHi is 620k

[Anonymous]

This is why our starter home is now our forever home. We got in with much lower mortgage rates and now can’t really upgrade.

[Anonymous]

Anonymous wrote:We have a lower HHI. We bought later in life have a mortgage right around what you're saying. Like a PP we rented way below our means for a long time to save.

We don't live lavishly otherwise. Old car, limited vacations, limited extracurriculars, but we are happy.

If rates go down we will refi and get some of our equity out of the property and our cash flow will modify in a life altering way.

Housing prices aren't going down. Limited inventory and zoning rules that keep the nice areas nice.

Make it work.

Please explain how pulling equity out of a property, and thereby increasing your indebtedness, will improve your cash flow.

[Anonymous]

OP, You’re poor, it’s that simple.

I bought a 1.1M house in 2022, got a 6k PITI. We were making 300k then. Make 400k now, feels easier. Now imagine I’m 10 years in with some equity. You roll that equity into a 2M house and can keep mortgage payments a similar percentage of your income as before

[Anonymous]

Anonymous wrote:Do you have $400k to put down? I do. $100k grew into this $400k in 5 years in some individual stocks and crypto. I got the money from my condo sale. It didn't appreciate. I just my equity back after paying it for 11 years.
$2k month invested into VOO the last 10 years would have given you $450k. Had you or your spouse also owned property, you'd have some more money from it.
Consider renting. I did the math. If I rented my home instead and invest the extra, I could by my home and the one next door cash in 30 years, and have some money left over.
And rents went down in my area. I have extra $200 a month to invest and buy up shares on discount.

I owed two condos…have $150k to put down and just recently increased my investing. You have me thinking about a 5 year plan to increase my down payment pot.

[Anonymous]

Anonymous wrote:We have a lower HHI. We bought later in life have a mortgage right around what you're saying. Like a PP we rented way below our means for a long time to save.

We don't live lavishly otherwise. Old car, limited vacations, limited extracurriculars, but we are happy.

If rates go down we will refi and get some of our equity out of the property and our cash flow will modify in a life altering way.

Housing prices aren't going down. Limited inventory and zoning rules that keep the nice areas nice.

Make it work.

This! You are happy. It’s easy to forget that happiness is the true success.

[Anonymous]

Bought when i was older, 38, so i had a good income for years and savings and investments

[Anonymous]

Anonymous wrote:This is why our starter home is now our forever home. We got in with much lower mortgage rates and now can’t really upgrade.

We were in our mid-30s when we bought our first home, so we purchased knowing it would be our forever home. We stretched our budge and lived lean for while, and grew into it as our wealth increased.

[Anonymous]

Anonymous wrote:I must be doing something wrong. My household income is $300K and with two small kids, I want to live in a good public school zone. It feels impossible! My mortgage budget is $4k…which is maybe a $600K home. My research says if I want a good school with that budget, I’m buying an outdated 1500sq ft home with 7.5 foot ceilings. I need to leave Montgomery county!

Yes, you can afford a normal house. You can learn to do DIY improvements as you can afford them like the rest of us.

We are elder millennials who bought our first home (with no family help) in 2009. It was only a 2 bedroom that needed work. We sold that and bought a bigger home that also needed lots of work in 2015, climbing the equity ladder.

We've put in lots and lots of sweat equity to improve our home and it is still a normal house with 8' ceilings and only 2400 sq ft. We love our home--it's been a great place to raise our family. We are considering upgrading, but now we have about $1.5m in equity, so paying $2.2m doesn't feel like such a stretch.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A lot of people bought when interest rates and prices were lower. People move up the property ladder.

+1 most people buy starter homes and keep rolling their equity forward. I started with a condo, then a fixer upper, which allowed me to cash out ~$250k for my current home.

Condos are terrible idea. It worked during housing bubble when sanity left the market but have been a bad deal ever since.

[Anonymous]

Anonymous wrote:Do you have $400k to put down? I do. $100k grew into this $400k in 5 years in some individual stocks and crypto. I got the money from my condo sale. It didn't appreciate. I just my equity back after paying it for 11 years.
$2k month invested into VOO the last 10 years would have given you $450k. Had you or your spouse also owned property, you'd have some more money from it.
Consider renting. I did the math. If I rented my home instead and invest the extra, I could by my home and the one next door cash in 30 years, and have some money left over.
And rents went down in my area. I have extra $200 a month to invest and buy up shares on discount.

The first few years you are paying interest and always have condo fees. Curious how this played out?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A lot of people bought when interest rates and prices were lower. People move up the property ladder.

+1 most people buy starter homes and keep rolling their equity forward. I started with a condo, then a fixer upper, which allowed me to cash out ~$250k for my current home.

Condos are terrible idea. It worked during housing bubble when sanity left the market but have been a bad deal ever since.

Agreed and add townhomes to the list. We bought one as our starter home thinking we'd upgrade someday. The townhome has appreciated by about 1/3 in the time that SFHs have by 50-100%. Now consider current interest rates...I wish we hadn't tried so hard to be responsible, and had stretched our budget when we first bought.

[Anonymous]

If it makes you feel any better, I'll never make anywhere close enough to even afford a condo. Even when my mom dies and leaves everything to me, I still won't have enough.

[Anonymous]

Anonymous wrote:I must be doing something wrong. My household income is $300K and with two small kids, I want to live in a good public school zone. It feels impossible! My mortgage budget is $4k…which is maybe a $600K home. My research says if I want a good school with that budget, I’m buying an outdated 1500sq ft home with 7.5 foot ceilings. I need to leave Montgomery county!

Wait, wait. You are looking and interpreting data all wrong. I see more average sfh, townhomes, apartments etc in DMV. The huge big homes or homes upwards of $1 million do not make the bulk of real estate. The problem may be your interpretation.

We have lived in an average home that currently is priced at $600K. Kids went to MCPS public schools. I had to also supplement at home a lot. My kids have gone to all flavors of MCPS schools - our assigned public schools with high FARMS and ESOL rates, and highly competitive magnet schools. Did not matter which school they went to - we were enriching, supplementing and expanding their curriculum heavily. You do understand that curriculum in K-12 education in both public and private schools in USA is the bottom of the heap? Not at all comparable with other rich countries around the world.

So, if you discard the criteria of the best public schools (because it does not get you the best education anyways) - then you will have no problem in finding beautiful neighborhoods and beautiful homes at acceptable prices.

[Anonymous]

We have a lower HHI, but lived with a small house payment for many years on our first house, enabling us to save and invest— in apple and other great stocks. Made a ton in cap gains, which hurt on taxes (ouch), but enabled us to put a large down payment on second house, which we bought at $1.5 but a high interest rate. We are renting out the first house where we have a low interest rate.. the cash flow from rent has made this doable, if still tight, for us. We will refi when raise come down significantly.