How do people afford...

[Anonymous]

Anonymous wrote:

Anonymous wrote:Family money. Everyone I know who lives in a 7 figure house under the age of 35 came from a wealthy family and only makes 1/4
- 1/2 of what they would need to support their lifestyle. Family makes up the difference.

No one I know….
Lots of stock though from their companies that have vastly/crazily appreciated over time.

Listen you can never have this life if even one of you works for the government.

Nope. Two GS-14s or 15s have an HHI of $250K+ (MUCH more than that if they get cyber pay, if they are lawyers or physicians, or SES)

[Anonymous]

The people I know doing this have family money. Without exception.

[Anonymous]

Anonymous wrote:The people I know doing this have family money. Without exception.

I think it’s hard to do this without that and also a high paying career.

[Anonymous]

I learned that many people with high incomes, who look and seem very responsible at work, are very leveraged in their personal lives.

About a decade ago I was a VP at a company that went bankrupt (various reasons including some bad luck). The company was bought out by a small group of private investors. There was a long transition, almost 6 months, tons of layoffs. These investors were horrible and unethical, it was very clear. They absolutely were in some shady, illegal business. Many of the people one level above me, c-suite and EVPs, and I had the option to stay on. Everyone wanted to leave but about half stayed on and all gave me a similar story that they couldn’t afford to be unemployed for any significant amount of time. All had been there years, and were making from 400-900k for many years. I was much younger, making 300k (and much less just a few years earlier). I wasn’t worried at all, I had savings and knew I would find a job fairly quick. They were making on average double what I made, and for many more years. They had little to no savings! All of them also had much nicer houses than I did….leveraged! I couldn’t believe it for most of them, even the super conservative CFO told me he made some bad financial decisions in his life. People leverage…lots of people, not just a few outliers.

[Anonymous]

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

There was a time recently where a 800k mortgage, on a 1M home, was $3,300 a month. If it’s a smaller home or townhome with minimal maintenance then you could have afforded that with like a $120k income (2 60k earners). Crazy, but that was reality. Make 150k and you could have had those nice cars as well!

[Anonymous]

Anonymous wrote:One of three things:

- they’re bringing money from a previous house sale
- family money (this one is the biggest imo)
- incomes for the highest earners have gone up way more than you realize. I don’t think ppl realize how much extra money the high end service workers, small business owners, contractors etc are making compared to 5 years ago. DH and I work in unrelated industries and both of us have doubled our very high incomes from five years ago. Based on the cars in our kids school, I’m guessing others have the same. But this kind of income increase wasn’t shared with ppl making, like, $120k. Who probably got around $20k of boost and that’s it.

I agree with this. Incomes have gone up wildly

[Anonymous]

Anonymous wrote:

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

There was a time recently where a 800k mortgage, on a 1M home, was $3,300 a month. If it’s a smaller home or townhome with minimal maintenance then you could have afforded that with like a $120k income (2 60k earners). Crazy, but that was reality. Make 150k and you could have had those nice cars as well!

We have earned that income and no way we could afford a million dollar house. Be real. You have ultiiles, property taxes, upkeep, furnishing it and more.

[Anonymous]

Anonymous wrote:I always assume family money when the incomes don't add up. Sometimes it's a timely inheritance that can allow people to buy a home for cash or close to it, and that frees up a lot of their income for consumption.

One thing you have to realize is that people tend not to be very up front about those sorts of cash infusions, or will downplay them. I don't really know why, but they do. But if you know people in similar fields with similar incomes, who are similar ages with similar family structures, but their spending makes no sense, they must be getting extra money somewhere. Or, I suppose, running up massive debt.

That type of massive disproportionate debt is hard to secure even with a good income.

It’s almost always an inheritance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

I see these questions on here all the time and I don’t mean to be disrespectful but truthfully you are all doing this wrong.

Figure out what your goals are.

Is it to make a lot of money? Or is it to have an easy work life - govt pension, 9-5. They don’t go hand-in-hand. And these decisions often start when you are 18. Not 30 or 40.

If you can’t change your life now (by moving jobs every year or two in the private sector, and continuing to climb that ladder), make sure you point your kids in the right direction.

Not all jobs are created equal. Not all colleges are created equal. And being saddled with student loan debt is horrible for some professions and careers where you max out your salary.

There is real strategy to career planning And net worth building, and it begins before you leave the house for college.

This!!! And don’t work for the government if you want to be “wealthy”….

[Anonymous]

Anonymous wrote:2 tech people might be clearing 600K per year.

Yes with each cheating and doing two jobs remotely. Know a few. Not easy for two to clear (steal) $600k as you say.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

There was a time recently where a 800k mortgage, on a 1M home, was $3,300 a month. If it’s a smaller home or townhome with minimal maintenance then you could have afforded that with like a $120k income (2 60k earners). Crazy, but that was reality. Make 150k and you could have had those nice cars as well!

We have earned that income and no way we could afford a million dollar house. Be real. You have ultiiles, property taxes, upkeep, furnishing it and more.

If it’s a townhouse or small home with minimal maintenance, then I don’t see why that can’t carry a $3,300 mortgage. Also property taxes are lower on those, and utilities are cheap especially on a townhouse. If you are a little handy most people can do all but the most complex repairs.

My house is a money pit, but before that I had a condo which cost me literally nothing to maintain. 8 years and I hired a handyman once! I miss it, but spouse likes having a big yard. And utilities were so cheap, the benefits of shared walls for heat.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

There was a time recently where a 800k mortgage, on a 1M home, was $3,300 a month. If it’s a smaller home or townhome with minimal maintenance then you could have afforded that with like a $120k income (2 60k earners). Crazy, but that was reality. Make 150k and you could have had those nice cars as well!

We have earned that income and no way we could afford a million dollar house. Be real. You have ultiiles, property taxes, upkeep, furnishing it and more.

+1
We could afford a $400k mortgage on that income. Barely.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

There was a time recently where a 800k mortgage, on a 1M home, was $3,300 a month. If it’s a smaller home or townhome with minimal maintenance then you could have afforded that with like a $120k income (2 60k earners). Crazy, but that was reality. Make 150k and you could have had those nice cars as well!

We have earned that income and no way we could afford a million dollar house. Be real. You have ultiiles, property taxes, upkeep, furnishing it and more.

+1
We could afford a $400k mortgage on that income. Barely.

Ok. So an 800k mortgage would have cost you about 1600 more. Add some extra tax/maintenance and let’s say 2k. About 35k extra income should cover that. So you could have done it for a $155k salary. That days of 2.5% interest rates made it doable, and many did!

[Anonymous]

None of you are rich. Or even wealthy.

Stop pretending.

[Anonymous]

Anonymous wrote:

Anonymous wrote:One of three things:

- they’re bringing money from a previous house sale
- family money (this one is the biggest imo)
- incomes for the highest earners have gone up way more than you realize. I don’t think ppl realize how much extra money the high end service workers, small business owners, contractors etc are making compared to 5 years ago. DH and I work in unrelated industries and both of us have doubled our very high incomes from five years ago. Based on the cars in our kids school, I’m guessing others have the same. But this kind of income increase wasn’t shared with ppl making, like, $120k. Who probably got around $20k of boost and that’s it.

I agree with this. Incomes have gone up wildly

I read the M&F dcum forum pretty regularly, and I don't think people on this forum realize how many very wealthy people there are, and how many more there are now compared to 5 years ago. I'm not saying it's normal or it's everyone. But people in their 30s, 40s and early 50s, if they were in good private sector jobs pre-covid (like, $150k+), they've likely doubled their salaries in the last five years. So in a city like DC, of the people in those age brackets, easily 10-20% of those people in the DC area are making mad, mad money these days. Now, if you take into account people outside those age brackets, and students, and sahms, and part time workers, the number ends up being just 5% of the region. Which tracks with the general idea that incomes over $200k are "wildly rich" and not the norm. But when you narrow in on the relevant demographic - people in their highest earning years who actually work - then we're talking about a sizable chunk of the region. Still less than half, sure. But lots of bodies to pay for $1m+ mortgages.

Let's use the example of big law lawyers. As a very, very conservative estimate, there are 100 "big law" firms with offices in DC, and they probably have an average of 100 lawyers each. (Some have way more: like covington and burling, hogan etc with 500+, and others are more branch offices with 50 - so i think 100 is actually really conservative). So my conservative number means 10,000 big law lawyers in DC working at big firms. The starting salaries one year out of law school at big law is $210k. So every one of those lawyers is making at least $210k. And there are 10,000+ of them in the DC area.

That's a lot of bodies who can buy $1m homes without even blinking an eye. I think a lot of people making $150k can't fathom how many bodies in cities like DC are making really high salaries in their 30s-50s.