How do people afford 5 million + homes?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I love watching realtor shows like Million Dollar Listings, and it's mind blowing to me how so many people can afford those homes. If you can afford that, how did you get there?

Where do you get the idea that "so many people" can afford a $5 million home? Perhaps not even 0.1% of the population can.

Probably around the top 2-3% of households in the US.

https://www.bankrate.com/investing/income-wealth-top-1-percent/

According to this article, I’m in the top 3% (approximately), and there is no way I can afford a 5M home.

In our area, lots of foreign governments and well connected people with 1%er incomes (think headliner names in business, tech, lobbyist CEOs, etc.) own these homes. Some older white shoe law firm partners. Drive through the neighborhoods once in a while and you’ll see what I mean.

Yep. HHI $1.2M here so solidly 1% and would not feel comfortable buying a $5M home. Just wouldn't want that much of our NW or income in such an expensive property.

[Anonymous]

Well this article gives some insight into what these people do: https://www.washingtonian.com/2024/08/16/luxury-home-sales-in-the-washington-area-and-who-bought-and-sold-them-august-2024/

[Anonymous]

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Anonymous wrote:Own 2 homes, combined worth about $5.5M. How did we get there? Living below our means for many years, bought first home as one we could afford on only 1 salary (either of ours), and continued to save for retirement and life. Did not upgrade that home for 7+ years, until we relocated. Then bought a home for 50% of what "we could have".
Had that $500K+ home fully paid off by time we were 40.
But made the jump to $5M+ once we were able to cash in stock options. But without that we would still be at the $2M+ as affordable to us. Thru savings and living below our means and having a good salary to start with.

How much is that though?

Salary of $300-400K, with bonus possible up to 100% of salary (which typically is only 50% on average).

Key was in our 20s, we made 200K combined, and chose to buy a home of only $200K. Then we worked to save as much as possible. Soon after the combined salary went to $275K. We didn't take over the top fancy vacations, we drove a Nissan Sentra and a Honda Civic for 10+ years, when we could have easily afforded something newer, larger and much nicer.
So while that alone didn't get us to $5M homes, it was a strong start.
We also didn't have a dining room set or living room furniture in that $200K home (4 bed/2.5 bath typical family home). We didn't see the need to spend $4-5K to furnish those rooms that would hardly be used. so it was a mindset of not wasting $$$ and living comfortably but well below what you could easily afford.

Whereas, everyone else I knew bought a house based on both salaries (not 1) and then had to furnish it all with new stuff in first 3-4 months. They drove newer/bigger cars and everything else so many do to "keep up with the joneses".

So the answer is you earned a lot of money very young, that makes sense! Nothing to do with keeping up with the joneses really, more like living normally on a HUGE salary.

Yes, we had good salaries. But a large part of the key is we DID NOT spend everything we made. We SAVED and invested. Just stated that we had similar friends who did spend and save very little in their 20s and early 30s. I know because we had similar jobs and I can compare our lifestyles.

I think you’re downplaying the criticality of your incredibly high salaries here. You were able to save only because you earned so much. $200K/yr in your 20s?? I worked very hard in academia and was very frugal because I earned under $200K during that WHOLE DECADE! If I’d had your income I bet I would have saved more than you did.

High salaries are how you buy a 5 million dollar house. That or family money, stock awards, lucky investments etc. Not earning $300k and saving.

Almost every wealthy person I know got there with family money, starting a business or large stock awards for a decade+.

In laws are third gen real estate family. They purchased multi million dollar homes for each of their children outright. They paid for us to renovate, update and we made another million on the sale. Now we own a 5m+ home and our story is similar to most of the family friends we know. Family money.

[Anonymous]

Anonymous wrote:I live in Mclean, and eye-balling Mclean and NW DC I see maybe 50 houses for sale above $5M. And half of those are $15M+ which is kind of a different level (government buyers, etc).

Around me, a good number of the more expensive houses go to pro athletes.

We live in McLean in one of these neighborhoods. There are politicians, professional athletes, law partners, surgeons, tech executives and business owners. Very rich Chinese people seem to also be buying these homes in cash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Own 2 homes, combined worth about $5.5M. How did we get there? Living below our means for many years, bought first home as one we could afford on only 1 salary (either of ours), and continued to save for retirement and life. Did not upgrade that home for 7+ years, until we relocated. Then bought a home for 50% of what "we could have".
Had that $500K+ home fully paid off by time we were 40.
But made the jump to $5M+ once we were able to cash in stock options. But without that we would still be at the $2M+ as affordable to us. Thru savings and living below our means and having a good salary to start with.

How much is that though?

Salary of $300-400K, with bonus possible up to 100% of salary (which typically is only 50% on average).

Key was in our 20s, we made 200K combined, and chose to buy a home of only $200K. Then we worked to save as much as possible. Soon after the combined salary went to $275K. We didn't take over the top fancy vacations, we drove a Nissan Sentra and a Honda Civic for 10+ years, when we could have easily afforded something newer, larger and much nicer.
So while that alone didn't get us to $5M homes, it was a strong start.
We also didn't have a dining room set or living room furniture in that $200K home (4 bed/2.5 bath typical family home). We didn't see the need to spend $4-5K to furnish those rooms that would hardly be used. so it was a mindset of not wasting $$$ and living comfortably but well below what you could easily afford.

Whereas, everyone else I knew bought a house based on both salaries (not 1) and then had to furnish it all with new stuff in first 3-4 months. They drove newer/bigger cars and everything else so many do to "keep up with the joneses".

LOL. Frugality doesn't get you a $5 million house; millions in stocks options/grants does. This post is so out of touch and so arrogant.

hahaha +1000 and a salary of 300-400K is absolutely not able to afford a 5mil home.

[Anonymous]

Anonymous wrote:We have a $5 mil house because it was $1.8 mil when we bought it 20+ years ago in a desirable area. We could not have afforded that today. It seems like the younger people in our neighborhood that do, have family help, an HHI of $1 mil+, or a windfall like cashing in stock options or an inheritance, or a combination of several these.

You were still able to buy a 1.8 million house 20 years ago. That was a huge amount back then (and is still more than most people can afford now).

[Anonymous]

[twitter]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Own 2 homes, combined worth about $5.5M. How did we get there? Living below our means for many years, bought first home as one we could afford on only 1 salary (either of ours), and continued to save for retirement and life. Did not upgrade that home for 7+ years, until we relocated. Then bought a home for 50% of what "we could have".
Had that $500K+ home fully paid off by time we were 40.
But made the jump to $5M+ once we were able to cash in stock options. But without that we would still be at the $2M+ as affordable to us. Thru savings and living below our means and having a good salary to start with.

How much is that though?

Salary of $300-400K, with bonus possible up to 100% of salary (which typically is only 50% on average).

Key was in our 20s, we made 200K combined, and chose to buy a home of only $200K. Then we worked to save as much as possible. Soon after the combined salary went to $275K. We didn't take over the top fancy vacations, we drove a Nissan Sentra and a Honda Civic for 10+ years, when we could have easily afforded something newer, larger and much nicer.
So while that alone didn't get us to $5M homes, it was a strong start.
We also didn't have a dining room set or living room furniture in that $200K home (4 bed/2.5 bath typical family home). We didn't see the need to spend $4-5K to furnish those rooms that would hardly be used. so it was a mindset of not wasting $$$ and living comfortably but well below what you could easily afford.

Whereas, everyone else I knew bought a house based on both salaries (not 1) and then had to furnish it all with new stuff in first 3-4 months. They drove newer/bigger cars and everything else so many do to "keep up with the joneses".

So the answer is you earned a lot of money very young, that makes sense! Nothing to do with keeping up with the joneses really, more like living normally on a HUGE salary.

Yes, we had good salaries. But a large part of the key is we DID NOT spend everything we made. We SAVED and invested. Just stated that we had similar friends who did spend and save very little in their 20s and early 30s. I know because we had similar jobs and I can compare our lifestyles.

I think you’re downplaying the criticality of your incredibly high salaries here. You were able to save only because you earned so much. $200K/yr in your 20s?? I worked very hard in academia and was very frugal because I earned under $200K during that WHOLE DECADE! If I’d had your income I bet I would have saved more than you did.

Ofcourse it's easier to save/invest when one makes a high salary. I made under $40k the two decades I worked.
I invested some of the money and it just went parabolic.

That’s great! At $40K you were able to save a bit and build up that wealth. In my 20s I made under $20K so couldn’t save anything.

Go back and look at the stock movements and even some funds. Where in the world did you invest?

I was working full-time as a researcher on a stipend so had no savings of any kind, not even SS. I started my 30s with literally zero. I don’t mean to make this a sob story, I’m just reacting to the wealthy poster up thread who asserted that you just had to spend less than you earned, like buying a cheap house. When you’re at $200K a year I’m sure that this is reasonable. When you’re at $14K a year (yes, really) it just isn’t. For every person in their 20s with the high income of PP there were lots of us with low incomes struggling just to get by.

[Anonymous]

Family money, debt, or extraordinary luck. There are no other paths.

[Anonymous]

“My parents paid for my Ivy League education, but I did it all through my hard work and so can you!”

[Anonymous]

Anonymous wrote:

Anonymous wrote:Those shows are fake - I have learned from people who have been on them.

Tell me more!!

when it looks like they’re house hunting - they’ve already bought the one they selected. The other ones shown aren’t even ones they considered at the time of purchase.