Why do people buy houses on the basis of 2 salaries instead of 1?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Spouse with the lower salary? What about families with a stay at home parent, or one parent who has a much lower paying job or a job that pays low but they truly believe in (academic researchers saving lives, social workers, etc.) Should they all live in shacks even if the other parent has a good salary?

I know, right? Big law is really a scourge on this area.

The majority of biglaw lawyers in this area are not going to stay in biglaw unless they win the partnership game and are going to have a significant salary drop when they leave biglaw. Many will either go to government, in-house (though this really only applies to lawyers with the right skillset to go in-house, and many DC lawyers don't have that skillset), government adjacent, or small firms.

Well I worked for one of the biggest firms for 10 years and most of the lawyers I worked with are still there. Maybe 20% left.

[Anonymous]

Because many people struggle to provide housing for their families even with two salaries.

Why did housing prices rise precipitously just as two -salaries became the norm for white, formerly middle class families?

[Anonymous]

Anonymous wrote:

Anonymous wrote:We bought on the basis of one salary but each of our salaries was more than double the median HHI in the US. It would be easy to pat ourselves on the back for being so frugal and farsighted but the truth is we were just well off.

And since we have been fortunate enough not to have suffered a job loss, we have certainly wondered since then if we were too conservative because we now have to wonder if we're in the right school pyramid, if we have enough room for our growing family, if interest rates will ever be that low again, etc. So it's not like there's one right answer and OP and OP alone has found it.

Same. We were WAY too conservative. Now navigating if we renovate, teardown + rebuild, or take the loss and buy a larger house (bought at peak prices so we likely can't get what we paid). There's a balance between being extremely conservative on one end and really pushing the DTI / HHI multiple on the other end.

We were also WAY too conservative. My DH is in sales and I'm in tech and we bought on the basis of our absolute base salaries, which accounted for well under half of our income even at the time.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Spouse with the lower salary? What about families with a stay at home parent, or one parent who has a much lower paying job or a job that pays low but they truly believe in (academic researchers saving lives, social workers, etc.) Should they all live in shacks even if the other parent has a good salary?

I know, right? Big law is really a scourge on this area.

The majority of biglaw lawyers in this area are not going to stay in biglaw unless they win the partnership game and are going to have a significant salary drop when they leave biglaw. Many will either go to government, in-house (though this really only applies to lawyers with the right skillset to go in-house, and many DC lawyers don't have that skillset), government adjacent, or small firms.

Well I worked for one of the biggest firms for 10 years and most of the lawyers I worked with are still there. Maybe 20% left.

Did you only work with senior attorneys who are partners and of counsel? Because most associates definitely leave.

[Anonymous]

Anonymous wrote:Spouse with the lower salary? What about families with a stay at home parent, or one parent who has a much lower paying job or a job that pays low but they truly believe in (academic researchers saving lives, social workers, etc.) Should they all live in shacks even if the other parent has a good salary?

There's a hedge there which is the spouse with the salary that's low can step it up if the main breadwinner loses their job if needed. That's not there if you've bought based on two salaries.

It's called "The Two Income Trap." Elizabeth Warren wrote a whole book about it. It's a great book. We've based our whole family economy on it and it's been a great guide.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Spouse with the lower salary? What about families with a stay at home parent, or one parent who has a much lower paying job or a job that pays low but they truly believe in (academic researchers saving lives, social workers, etc.) Should they all live in shacks even if the other parent has a good salary?

I know, right? Big law is really a scourge on this area.

The majority of biglaw lawyers in this area are not going to stay in biglaw unless they win the partnership game and are going to have a significant salary drop when they leave biglaw. Many will either go to government, in-house (though this really only applies to lawyers with the right skillset to go in-house, and many DC lawyers don't have that skillset), government adjacent, or small firms.

Well I worked for one of the biggest firms for 10 years and most of the lawyers I worked with are still there. Maybe 20% left.

Did you only work with senior attorneys who are partners and of counsel? Because most associates definitely leave.

Have you ever worked at big law? A Google search will tell you what the attrition rate is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Spouse with the lower salary? What about families with a stay at home parent, or one parent who has a much lower paying job or a job that pays low but they truly believe in (academic researchers saving lives, social workers, etc.) Should they all live in shacks even if the other parent has a good salary?

There's a hedge there which is the spouse with the salary that's low can step it up if the main breadwinner loses their job if needed. That's not there if you've bought based on two salaries.

It's called "The Two Income Trap." Elizabeth Warren wrote a whole book about it. It's a great book. We've based our whole family economy on it and it's been a great guide.

Yes this. We also bought based on one salary (14 years ago, when that was possible in DC) and it has given us so much flexibility over the years. The "two income trap" is an amazing concept -- once you learn about it, you can't unsee it. (that people who base their lives on two salaries end up without any flex space. But if you base it on one, you can always flex up when you need to.)

[Anonymous]

You’ve really missed out on a massive amount of home appreciation equity if you were too conservative in the past when buying a house.

We stretched on two incomes and bought a house in a neighborhood with good schools so we didn’t need to pay for private schools. Now 15 years later our incomes have doubled and our house has more than doubled in price. We bought at 750k (which I thought was over our price range but the house was too good to pass up). It’s worth at least in paper 2 million now.

Friends bought a house in an area with not so great schools for 450k. Their house has probably doubled to 900k but they also ended up eventually having to pay for junior high.

So just looking at home equity based on the increase in value, they have made 450k while we have made 1.25 million. And now we could pay the mortgage on one income.

[Anonymous]

No one would ever be able to own a home then now that starter homes are going for over $400 and $500k+.

So many Boomers still living in the 1960s when you could own home on the husband's GM factory job alone while the wife stayed home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Also, why do people even *have* two salaries in the first place? Don't they know it's less stressful for everyone in the household if only one parent works? Someone should tell people this.

I mean, you jest, but women entering the work force en masse drove up prices on everything. This is not a matter of opinion. The rise of two-income families is actually the reason most families now need two incomes. It’s kind of ironic.

The percentage of men making equal to or more than their spouses is shrinking. For women who are holding out for a man who can cover all the living expenses with a single income are going to be fighting over a relative few number of men. This leaves more women with a mate because they can’t find that match. There are more women looking for this than there are men who can meet it.

Even if you aren’t looking for a SAHM situation, many women are looking for at least their equal. This makes the pool even smaller.

While I agree that the dual income increase in part led to the housing cost increase, it is an impossible choice for women overall.

[Anonymous]

as others have said, check your privilege

for the "average" American couple, when 1 spouse earn $40,000 and the other earns $50,000, they need both to afford a $250,000 starter home.

[Anonymous]

Anonymous wrote:No one would ever be able to own a home then now that starter homes are going for over $400 and $500k+.

So many Boomers still living in the 1960s when you could own home on the husband's GM factory job alone while the wife stayed home.

Right? The median individual income in DC is $70K. Assuming you're spending 30% of the gross of that one income that's $1,750 a month. At current interest rates a $1,750 PITI would mean around a $220,000 home.

OP, care to show me a house you'd be willing to live, raise a family in, and commute to DC from that's $220,000 or less?

[Anonymous]

Anonymous wrote:You’ve really missed out on a massive amount of home appreciation equity if you were too conservative in the past when buying a house.

We stretched on two incomes and bought a house in a neighborhood with good schools so we didn’t need to pay for private schools. Now 15 years later our incomes have doubled and our house has more than doubled in price. We bought at 750k (which I thought was over our price range but the house was too good to pass up). It’s worth at least in paper 2 million now.

Friends bought a house in an area with not so great schools for 450k. Their house has probably doubled to 900k but they also ended up eventually having to pay for junior high.

So just looking at home equity based on the increase in value, they have made 450k while we have made 1.25 million. And now we could pay the mortgage on one income.

I was one of the PPs who mentioned being way too conservative. I will add the one thing we didn’t compromise on is location (including schools). We paid about $1M and most of that value is in the land/lot (bought an old bungalow). Mortgage was originally $700K which was a little over 1x our HHI then (has gone up significantly since, which also doesn’t help the whole too conservative thing).

[Anonymous]

Anonymous wrote:You’ve really missed out on a massive amount of home appreciation equity if you were too conservative in the past when buying a house.

We stretched on two incomes and bought a house in a neighborhood with good schools so we didn’t need to pay for private schools. Now 15 years later our incomes have doubled and our house has more than doubled in price. We bought at 750k (which I thought was over our price range but the house was too good to pass up). It’s worth at least in paper 2 million now.

Friends bought a house in an area with not so great schools for 450k. Their house has probably doubled to 900k but they also ended up eventually having to pay for junior high.

So just looking at home equity based on the increase in value, they have made 450k while we have made 1.25 million. And now we could pay the mortgage on one income.

It frequently is worth the stretch to buy into (at lowest level) a neighborhood with good schools. You will save tons over the 13 years per kid.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Also, why do people even *have* two salaries in the first place? Don't they know it's less stressful for everyone in the household if only one parent works? Someone should tell people this.

I mean, you jest, but women entering the work force en masse drove up prices on everything. This is not a matter of opinion. The rise of two-income families is actually the reason most families now need two incomes. It’s kind of ironic.

Not true but if it makes you feel good to post this bs correlation to help you explain your misogyny to yourself, go for it.