Why is DCUM SO conservative with housing?

[Anonymous]

Anonymous wrote:

Anonymous wrote:DCUM wants others to think that even if the poster lives in universally acknowledged crappy home, they secretly have millions in the bank because they are just “conservative.” Except that isn’t true… home price is usually a pretty accurate reflection of the wealth a family has.

Bingo. Same for car discussions where they act like every "smart" multi-millionaire drives a Toyota Rav4 or a crappy old Subaru. It's pathetic coping.

Better that than stretching to buy a house the super desirable zip code and mulitple leases on Range Rovers and Mercedes in an effort to *look* rich.

[Anonymous]

Anonymous wrote:I just get confused by the pearl clutching at buying a 1m house on 300k income say, while at the same time everyone seems to have 2 to 3M in retirement accounts by 40 on even more modest income. Something doesn't add up. How can it be super scary to buy a 1M house at 3 to 4 times income and also a given we all need to save way more than that for retirement or starve. Honestly asking

Can we afford a $1M house on 500K HHI? Have not put the 2 children through college yet but saving for it. We have 20% down and about 300K in equity.

[Anonymous]

People in DC are cash poor. Don’t work in jobs that give big bonuses or stock. Many have large student loans from grad schools. Many have rented and haven’t built wealth from equity. Appreciation has only gotten high fast recently compared to areas that really skyrocket.

[Anonymous]

We have a HHI of $800k and our PITI is $2700 (and not because of a massive down payment). I sleep really well knowing a lot of disasters could hit us before we faced foreclosure. I’m an older millennial and that’s just something I will always fear I guess. Also, we bought the house when our incomes were less stable (biglaw associates) but now that they are somewhat more stable, I see no reason to move.

[Anonymous]

In general, it is wise advice to live well within your means. Likely someone asking "can I afford..." is already worried about whether they will be overextended. You can't put a price on stress-free living. Live conservatively, plan for the unexpected, and you will save yourself a lot of stress and be much happier than if you bought whatever luxury you were considering.

[Anonymous]

Anonymous wrote:On another thread, someone asked how much house they can afford with a $300-$400,000 HHI. Some posters gave reasonable answers but others responded by saying their home cost less than they earn in a year!

https://www.longtermtrends.net/home-price-median-annual-income-ratio/

As shown in this chart, for most of this century, home prices have been more than 5x the median household income (and are currently at a staggering 7x income!). So yes, if your HHI is a relatively secure 400K, you can get that $1.7 million house. You don’t have to stick to 800K. More expensive homes are more expensive for a reason, either location/commute, large enough to accommodate everyone, good school districts, beauty/renovations, etc. Why do so many on DCUM insist on lowering their standard of living by being so unreasonably stingy with housing?

Let's be real here. DCUM is full of rich kids that got a huge downpayment from mommy and daddy and didn't have to struggle through life. Their idea of struggle is having to go to a second Starbucks because the first one was out of chai tea. They don't understand how someone would need to move to the exurbs to afford their first home or why someone would buy a house more than 3x times their home income. I would just ignore them. They don't give good advice. Advice on 3x income is even worse if we are truly in a time of moderate to high inflation because it's better to be locked into a lower rate and a more expensive house that you're paying back with inflated dollars than buying a cheap house.

[Anonymous]

This area has the highest median HHI income and wealth in the country. Clearly people in this area are doing something right.

What I think is unhealthy is people spending 4-6x their annual income in places like SF, San Diego, Vegas, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm a millennial. I watched the housing crisis in 2008 eat up my parents' neighborhood (my parents were fine). The crash also resulted in me losing my post graduation job when I was a senior (I had done co op with them) and they also laid off a huge number of engineers, so the market was flooded with more experienced workers. I ended up doing a masters to delay entry into the job market which worked out for me, but it was a gamble.

So I guess experience taught me to be cautious.

Very smart move.

It's smart to act like a once in a 100 year crash is always around the corner? No, it's not. It's foolish paranoia. Meanwhile the peers the young PP graduated college with who bought expensive houses they "couldn't afford" ( ) in 2009 to 2019 are laughing to the bank. Making big bucks and living large while the PP lives in fear in some modest home.

Not really if PP invested in the stock market with the surplus funds instead. Stocks have appreciated far more than house prices.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t get why you wouldn’t *want* to be conservative about it, ideally.

Don’t you like to take vacations, have (possibly expensive) hobbies, go out to dinner, concerts, theater, bars with friends, have kids? Plus, you know, save.

All of that takes money.

OP here. I’ve always worked from home so a huge portion of my life is spent in my house. I would much rather spend discretionary income on a nice house than on nights on the town or hobbies which occupy a relatively small portion of my life.

Also, barring financial catastrophes that force you to sell at inopportune times, you get back much of your housing expense due to appreciation. A $1.6 million house that appreciates 4% per year is earning you $64,000/year at first (more later on as compounding takes over). That might roughly cover your interest, taxes and insurance (all but the “principal” in PITI). Of course, you do still have maintenance expenses. But assuming you put 20% down ($320,000), where else are you consistently earning 64K on a 320K investment?? And you get the higher quality of life thrown in there!

Bingo. All the nonsense on here or where ever where people spin how smart it is to buy a "conservative" or "modest" home is a cope. I know a lot of rich people, none of them live in a modest house. That's not to say they live in tacky homes, but you know what I mean. Always go big and always go for the most premier hot zip code you can. Life is short and those who swing for the fences get rewarded the most in America.

The problem with these convos is that we’re all talking past each other because none of us have pictures. We live near Boston in a “modest” house for our income at 2500 sqft (4 bec, 2.5 bath) but it’s in a great neighborhood in a close in suburb with excellent public schools. At the time that we bought it, we were childless and dog-less and we went for “charm” and curb appeal over space. There were points over the years as we added our 3 children and a big dog to our family that we wondered if we should move.

Are there things I’d like to have that I can’t in our small house? You bet. I’d love a huge yard for our dog to run around in, a dedicated mud room, and another bedroom for a dedicated home office. But, whenever we talk about it, we keep coming back to the same things and deciding that the positives outweigh the negatives: the neighborhood itself is lovely, our kids have a bunch of same age friends who they play with for hours outside like it’s still the 70s (this is priceless), I can take our dog to a nearby dog park, we live close enough to be able to walk to the schools, library, playground, some cafes, etc. and we are mortgage free which allows us to redirect our old debt repayments to the kids’ college funds. We also have enough money left over after bills and savings goals to travel 4-5x a year and do expensive hobbies like tennis, golf, and skiing. We could afford to move to a bigger house but we don’t want to give up the positives that we have here.

I don’t think we are fooling ourselves or trying to cope.

[Anonymous]

Meh.
We live in a house that is 1.3x our income. We could obviously upgrade but are very happy.
My dh owns a business that could go south depending on whether key staff leave or we go into a financial slump. I have had health issues in the past which forced me to take a stretch of disability. I didn't expect to be out of work for a year at 40 due to a significant illness. No one does.
We didn't expect covid to pop up and severely impact our business.

However, because we didn't stretch to 4x our income, we felt secure and could still send our child to private school, take vacations, I was able to take time to heal, my husband could still pay his employees 100% during covid.

Nothing is guaranteed - I would rather have security than a huge house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DCUM wants others to think that even if the poster lives in universally acknowledged crappy home, they secretly have millions in the bank because they are just “conservative.” Except that isn’t true… home price is usually a pretty accurate reflection of the wealth a family has.

Bingo. Same for car discussions where they act like every "smart" multi-millionaire drives a Toyota Rav4 or a crappy old Subaru. It's pathetic coping.

Better that than stretching to buy a house the super desirable zip code and mulitple leases on Range Rovers and Mercedes in an effort to *look* rich.

Exactly. The people who think wealth is dictated by the size of the house are the same group that think that stock options in their trendy start-up position also equal wealth. Good luck with all of that, kiddos.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s not just DCUM, it’s the people in this area! I know people whose HHIs are likely double ours but they live in old, crappy homes. We are very comfortably able to afford our home, and I’m sure they could too! Perhaps they value passing that money on, or putting it into luxury items

We fall in this category. We plan to retire early so it’s well worth it to us to live in an older, smaller home. I know you disagree right now, but talk to me again when you’re 52 and still looking at another decade plus of working. We’ll be retired and comfortable by then.

We also plan to retire early (mid 40s) and will move out of this area when we do. We bought a very expensive house and it’s appreciated hundreds of thousands of dollars since we bought it just a few years ago. When we retire we will move back to the Midwest to be close to family, but a house with cash and still have plenty of money left from the sale. And we got to live in a great home with great schools in the meantime. Wanting to retire early doesn’t necessarily mean you need to or should live in a crappy house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm a millennial. I watched the housing crisis in 2008 eat up my parents' neighborhood (my parents were fine). The crash also resulted in me losing my post graduation job when I was a senior (I had done co op with them) and they also laid off a huge number of engineers, so the market was flooded with more experienced workers. I ended up doing a masters to delay entry into the job market which worked out for me, but it was a gamble.

So I guess experience taught me to be cautious.

Very smart move.

It's smart to act like a once in a 100 year crash is always around the corner? No, it's not. It's foolish paranoia. Meanwhile the peers the young PP graduated college with who bought expensive houses they "couldn't afford" ( ) in 2009 to 2019 are laughing to the bank. Making big bucks and living large while the PP lives in fear in some modest home.

What's wrong with a modest home though, as long as the neighborhood is decent? My time is precious and I don't want to have a big house to clean/upkeep or to have to manage house cleaners.

Scared money doesn't make money. The peers of PP's who swung for the fences on a bigger home in a premier/hot zip code saw far more appreciation than PP who lives in some "conservative/modest" s***shack or condo. So not only did they make more money, they got to live lavishly. How is that difficult to comprehend? Being "conservative" on a home is ignorant. Actually, it more often than not is just a cope for being too poor and not having the income, credit score, or down payment to go bigger.

The best way to make money on a home, actually, is to buy a cheap one that appreciates way more than the expensive ones will. Signed, someone who bought a short sale in Petworth in 2009 and sold it for more than twice what we paid for it nine years later.

[Anonymous]

most likely old people that bought cheap and want to poo poo the millennials who are reaching 40, selfish

[Anonymous]

They are bragging, got lucky, for family help or don’t live around here.

I honestly think a number don’t live around here (the number of suggestions for not spending more than $400k is pretty indicative of that).

I also think also number got lucky. Bought 10-12 years ago, income rose significantly and the metrics worked out so they have a decent home that they could refinance 10 years later for a nice low payment and income doubled in the meantime. I haven’t gotten quite that lucky, but I definitely road the real estate market rise, and I have a great home that I refinanced for a low payment that I definitely could not afford today. The difference is that my home is awesome and affordable for me because I entered the real estate market in 2007, not because I was super conservative. My mortgage payment is less now than on my second home, purely by luck.