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

[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.

Ditto. Cramped for space but even with the equity in our home and a 30 percent downpayment the interest rates don't make sense. We are basically cutting our borrowing by 2/3 because of the interest rates now.

[Anonymous]

Consider looking into a 10-year interest-only loan with lower interest rates. This option allows you to invest extra money over time to reduce the principal, which can help lower your monthly payments—something you can't do with a traditional 30-year fixed mortgage. Plus, as your home appreciates in value, you have the flexibility to refinance or sell, using the equity you've built up to make a down payment on a better home in the future.

[Anonymous]

Anonymous wrote:Bunch of millenials moaning they can't suddenly afford luxe housing the second they want one after 15 years of renting in trendy areas. There's plenty of affordable starter places on the market. Sorry you think life owes you a mansion.

I posted above that I know too many people who are just as you describe, but I also wonder if your generation had quite as much developer activity, exacerbated by private equity getting in on the game and wanting to divide the whole country up into serfdoms. Was it really the norm for your generation to spend years looking for houses, placing bids on 20+ properties, and often getting outbid by developers waiving all contingencies and offering 50% over list in cash?

[Anonymous]

We bought our first home in our mid-30s after saving, saving, saving. It was a townhouse. We made a lot of money on it 10 years later and were able to buy our million dollar home in our mid-40s.

[Anonymous]

I bought my million dollar home 30 years ago when it was 350K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Bunch of millenials moaning they can't suddenly afford luxe housing the second they want one after 15 years of renting in trendy areas. There's plenty of affordable starter places on the market. Sorry you think life owes you a mansion.

I posted above that I know too many people who are just as you describe, but I also wonder if your generation had quite as much developer activity, exacerbated by private equity getting in on the game and wanting to divide the whole country up into serfdoms. Was it really the norm for your generation to spend years looking for houses, placing bids on 20+ properties, and often getting outbid by developers waiving all contingencies and offering 50% over list in cash?

I'm a millennial and none of this sounds right. We followed the market for a few years while we saved up a deposit and then purchased when we were ready.

In periods when houses were going above asking and there were bidding wars, you had to account for the hot market and look at houses with list prices below your max. Then you could bid up too and win the bidding war and get the house. There's no point in going into bidding war after bidding war and losing. That shows that you don't understand the market. People will lament "overpaying" but that's what the market demanded and looking back we got good deals on our homes. We looked for homes with flaws that we thought we could fix, but that turned off other buyers, and that helped.

I will say that when my parents bought their first house in the late 70s-early 80s they had a 17% interest rate, and thought that was a good rate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Bunch of millenials moaning they can't suddenly afford luxe housing the second they want one after 15 years of renting in trendy areas. There's plenty of affordable starter places on the market. Sorry you think life owes you a mansion.

I posted above that I know too many people who are just as you describe, but I also wonder if your generation had quite as much developer activity, exacerbated by private equity getting in on the game and wanting to divide the whole country up into serfdoms. Was it really the norm for your generation to spend years looking for houses, placing bids on 20+ properties, and often getting outbid by developers waiving all contingencies and offering 50% over list in cash?

DP here: Yes, we had to keep making offers and got outbid multiple times over 20 years ago. Homes were under contract within a few days. Finally ended up buying a complete fixer upper that was in such bad shape that there wasn't serious competition (before having kids). Put in a lot of sweat equity and made a large profit when we sold.

I saved to buy a home for over a decade and DH did the same before we met each other. Being a saver was a requirement for a mate for me.

The poster you're responding to has a good point. You can't spend all your money instead of saving, then turn around and want to buy a $1M house as your starter home.

[Anonymous]

Similar to PPs - Best advice we got when looking for a SFH in N Arlington around $1M is to find the things you can live with that nobody else can, and then renovate/fix those once you move in (or at least before you sell!)

[Anonymous]

Anonymous wrote:

Anonymous wrote:Bunch of millenials moaning they can't suddenly afford luxe housing the second they want one after 15 years of renting in trendy areas. There's plenty of affordable starter places on the market. Sorry you think life owes you a mansion.

I posted above that I know too many people who are just as you describe, but I also wonder if your generation had quite as much developer activity, exacerbated by private equity getting in on the game and wanting to divide the whole country up into serfdoms. Was it really the norm for your generation to spend years looking for houses, placing bids on 20+ properties, and often getting outbid by developers waiving all contingencies and offering 50% over list in cash?

Yes.

We bought our first house in 2005. It was a shitshow of a market, with all sorts of multiple offers, escalation clauses, etc. All without the advantages of redfin and zillow, so you needed to use a realtor. The process was intense. We bought a fixer-upper in a further out suburb, put in sweat equity, and moved closer in 5 years later.

That's not to say that today's market doesn't suck, too, but you're not unique in your suffering.

[Anonymous]

OP: The answer is mostly that people have family help by giving them money for the down payment. Yes, there are some outliers of people that make a lot of money, but I fully believe that the people affording these houses you mention are able to do so primarily because they have family help.

I have to say that I feel for you, OP, as we're in a similar situation. We're in a TH in MoCo that we're rapidly outgrowing, and are looking at SFHs in the better school clusters, and they are all expensive.

[Anonymous]

Anonymous wrote:

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.

Ditto. Cramped for space but even with the equity in our home and a 30 percent downpayment the interest rates don't make sense. We are basically cutting our borrowing by 2/3 because of the interest rates now.

I feel the pain too. I have the equity and funds for a 50% down on the next house but with rates nearly triple what I currently have it simply means the mortgage payment triples. I can't stomach that. So staying in my small, cramped house that is still in a very nice area, so I'm thankful for the last part. Still feels like I'm trapped.

[Anonymous]

Slightly related point here: it is hard to stomach a $8K monthly payment for the $1M home, when you could rent that same home for less. It really depends what neighborhood you are looking at. "Building equity" is great - but you need to typically stay in a home for 5+ years before you can sell without a loss. And people tend to forget how expensive maintenance can be.

[Anonymous]

Anonymous wrote:OP: The answer is mostly that people have family help by giving them money for the down payment. Yes, there are some outliers of people that make a lot of money, but I fully believe that the people affording these houses you mention are able to do so primarily because they have family help.

I have to say that I feel for you, OP, as we're in a similar situation. We're in a TH in MoCo that we're rapidly outgrowing, and are looking at SFHs in the better school clusters, and they are all expensive.

I really think this is something that people who don't know how to live frugally tell themselves. Meanwhile they spend their 20s going to bachelor(ette) parties in Mexico and the Caribbean, spending tons at brunches, happy hours and going out, living in expensive luxury apartments, buying fancy tech, etc. It's easy to fritter away the money as a single person, but then you hit your 30s with little to nothing in the bank and panic. And you don't know who to live frugally because you're so used to spending freely.

[Anonymous]

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Anonymous wrote:How old are you that you have two small children, but no home equity? Do you have other assets at least?

My DH and I are 37/38 and have two kids ages 3 and 5. We spend our 20s and early 30s paying on our student loans and now we are paying for daycare. By the time we are done with that, we might be able to start saving for a downpayment. The only people in our boat I know who bought a home have family money. We don't.

You waited a long time. We bought right after we were married in our early 30s when we had more disposable income. It was definitely tight when the kids were in daycare, but we were then able to trade up when they were in middle elementary school which wasn't too disruptive.

I wish we had too but we’ve never had any disposable income due to student loan payments. Student loan payments turned into daycare plus student loan payments. I suppose saving for our kids’ college comes next so maybe home ownership will never happen.

Big student loans for a low paying career is a life choice.

Someone has to teach your kids.

I’d say the lack of empathy is astounding but we live in MAGA times so I guess not.

I agree, this thread is full of people saying ‘you’re doing it wrong’. I am grateful for the educators. The real problem isn’t perfectly threading the needle on timing kids vs buying a house vs finding the right partner.

We as a country could prioritize increasing housing supply, or giving tax breaks/student loan forgiveness for teachers or paying people more. But no, let’s turn on each other for what are actually system failures.

And we wonder why there’s a critical shortage of teachers and/or people choosing not to have kids. Sheesh.

OP isn't an educator given their $300k income, so that's not really what this thread is about. People also aren't wrong to say you need to minimize loans, that it's important to save a down payment before starting daycare payments, and that many buy a starter property, build equity and then trade up. The other option is to make a very high income or have family money. That's all true. That's how people do it

I can also support changes to support teachers and others with low-modest incomes while acknowledging the current reality. No one should go into teaching and be surprised by the salary. It's posted on the Internet. Aspiring teachers need to plan for it, including by doing the things mentioned above (e.g., saving before kids, minimizing loans, etc).

Do they still exist lol? We have been looking for one and the ones that are considered "starter" are selling for what used to "premium"

Yes, my friend who teaches in N Arlington public schools just bought in Arlington. It's a condo, but she loves the walkable location, short commute and its outdoor space. No family help.

You just can't start with a 6k sq ft new build. Adjust your expectations.

This is the problem with people with young children - whether they are in their 20s or their 30s. They auto want that huge move in ready million dollar house, they blame people older than them for staying in houses "too long" or claim that people their age had family help. Nope, we just made better choices when we were young. I'm in my 40s, we had student debt, too. We just worked diligently to pay them off quickly - we both paid off our 30-year loans in 15 years - before we were married, I had two roommates and DH lived in a studio. When we got married, we moved into a small apartment with basement coin-operated laundry and when we had our first child, we moved into a tiny 2 br rental house. We bought our first house (small, crappy, but decent location) in our mid-30s and 10 years later we traded up to a larger house, but it still needs work. We opted for a house with an unfinished basement, older windows, and carpet in our ideal location, knowing that we can update those things over the next 10 years. You just have to be willing to compromise, OP. You claim that everyone else had it soooo easy, but we really didn't.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP: The answer is mostly that people have family help by giving them money for the down payment. Yes, there are some outliers of people that make a lot of money, but I fully believe that the people affording these houses you mention are able to do so primarily because they have family help.

I have to say that I feel for you, OP, as we're in a similar situation. We're in a TH in MoCo that we're rapidly outgrowing, and are looking at SFHs in the better school clusters, and they are all expensive.

I really think this is something that people who don't know how to live frugally tell themselves. Meanwhile they spend their 20s going to bachelor(ette) parties in Mexico and the Caribbean, spending tons at brunches, happy hours and going out, living in expensive luxury apartments, buying fancy tech, etc. It's easy to fritter away the money as a single person, but then you hit your 30s with little to nothing in the bank and panic. And you don't know who to live frugally because you're so used to spending freely.

+1 Don't just brush off everyone who saved their money by assuming they were handed money on a silver platter. I saved my money instead of spending on those exact things you listed. That enabled me to buy my first place in my early 30's, then use that equity to buy the next place.

It's better to live frugally in your 20's when others are doing it too. It's mind boggling how OP and their spouse went through so many milestones without saving to buy a house. Almost everyone I knew who was getting married either owned a home or was saving for it. How on earth do you get married and have kids without this being a priority?