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

[Anonymous]

Anonymous wrote:

Anonymous wrote:All these people talking about the property ladder....I guess that makes sense if you owned from 2002-2007 and from 2020-2025. But DC real estate is not going to have appreciation like those two periods for a loooong time. A house can be a forced savings account, but I wouldn't rely on it actually appreciating in value.

The DMV housing market has had pretty solid appreciation outside of 2008/09. It's not just in narrow sets of years.

Our timeline:
2009: purchased 2 bedroom SFH for $425k
2015: Sold for $875k
2015: Purchased 5 bedroom SFH for $930k
2025: Likely would sell for ~$1.6m

Both houses were fixers and we did a ton of work on them, but a lot of that was also market appreciation.

Just to be clear, the normal appreciation from 2009 to 2015 was about 10% total for Northern Virginia:

https://fred.stlouisfed.org/series/ATNHPIUS47894Q

So you got sweat equity, not normal appreciation.

[Anonymous]

Plenty of people bring home 30k a month, Like, everyone on my block does.

[Anonymous]

Anonymous wrote:Plenty of people bring home 30k a month, Like, everyone on my block does.

Tech? Law? What do they do here? I'm so confuse by the salaries in this area.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Plenty of people bring home 30k a month, Like, everyone on my block does.

Tech? Law? What do they do here? I'm so confuse by the salaries in this area.

Tech, Law, Medicine, Pharma sales and Defense Contractors on my block.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:All these people talking about the property ladder....I guess that makes sense if you owned from 2002-2007 and from 2020-2025. But DC real estate is not going to have appreciation like those two periods for a loooong time. A house can be a forced savings account, but I wouldn't rely on it actually appreciating in value.

The DMV housing market has had pretty solid appreciation outside of 2008/09. It's not just in narrow sets of years.

Our timeline:
2009: purchased 2 bedroom SFH for $425k
2015: Sold for $875k
2015: Purchased 5 bedroom SFH for $930k
2025: Likely would sell for ~$1.6m

Both houses were fixers and we did a ton of work on them, but a lot of that was also market appreciation.

Just to be clear, the normal appreciation from 2009 to 2015 was about 10% total for Northern Virginia:

https://fred.stlouisfed.org/series/ATNHPIUS47894Q

So you got sweat equity, not normal appreciation.

That first house was near H Street NE. We benefited from a lot of local development, including the streetcar and a Whole Foods. Plus when we bought there was a drug house next door full of junkies. That turned over and it was redone as a 2m luxury rowhouse.

It was a lot of market appreciation too.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:All these people talking about the property ladder....I guess that makes sense if you owned from 2002-2007 and from 2020-2025. But DC real estate is not going to have appreciation like those two periods for a loooong time. A house can be a forced savings account, but I wouldn't rely on it actually appreciating in value.

The DMV housing market has had pretty solid appreciation outside of 2008/09. It's not just in narrow sets of years.

Our timeline:
2009: purchased 2 bedroom SFH for $425k
2015: Sold for $875k
2015: Purchased 5 bedroom SFH for $930k
2025: Likely would sell for ~$1.6m

Both houses were fixers and we did a ton of work on them, but a lot of that was also market appreciation.

Just to be clear, the normal appreciation from 2009 to 2015 was about 10% total for Northern Virginia:

https://fred.stlouisfed.org/series/ATNHPIUS47894Q

So you got sweat equity, not normal appreciation.

That data includes all transactions (so condos and co-ops included) from the entire DC MSA which includes plenty of places most people would never consider the DC area, like West Virginia, and plenty of places that got hit much harder by 2008 and recovered much slower, like EOTR DC and close-in PG County.

What the PP described is absolutely normal appreciation for a SFH in NOVA during that time period.

[Anonymous]

Anonymous wrote:Plenty of people bring home 30k a month, Like, everyone on my block does.

You must live in the poor ppls neighborhood

[Anonymous]

For me personally, it's been equity. Started at a condo, sold for 2X the amount I bought it for, bought a townhouse, sold that for a nice profit (and great market), then used that on a SFH. So throughout the entire time we've been able to put down a healthy down payment, and when things settle down in a few years, we'll probably sell this and move onto something else.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Plenty of people bring home 30k a month, Like, everyone on my block does.

Tech? Law? What do they do here? I'm so confuse by the salaries in this area.

I would think everyone in my block dues too. A few finance , a few lawyers, a few consultants, a few business owners. I would guess many bring home much more than $30k a month. I know we do.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A lot of people bought when interest rates and prices were lower. People move up the property ladder.

+1 most people buy starter homes and keep rolling their equity forward. I started with a condo, then a fixer upper, which allowed me to cash out ~$250k for my current home.

Condos are terrible idea. It worked during housing bubble when sanity left the market but have been a bad deal ever since.

I agree, condos are a terrible idea. They are currently just sitting on the market, there are SO. MANY. that nobody wants. Priorities have changed. Young people aren't buying condos anymore, they are like OP, they want big and expensive NOW.

NP. I disagree. I bought my condo when I was 23. I paid the same as I would have if I had rented, but instead paid down my mortgage. Plus I had good roommates. It did appreciate by the time I moved out.

But yeah, when we sold the condo I was then married and didn't want to buy a townhouse. I wanted a forever home so that I didn't have to move again. So we bought top of our price range and we're very very very glad that we did. Other friends got stuck in a 2 bedroom townhouse (I have 3 kids now so it wouldn't have been easy)

When was this? I’m guessing 20 years ago, which was the housing bubble.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A lot of people bought when interest rates and prices were lower. People move up the property ladder.

+1 most people buy starter homes and keep rolling their equity forward. I started with a condo, then a fixer upper, which allowed me to cash out ~$250k for my current home.

Condos are terrible idea. It worked during housing bubble when sanity left the market but have been a bad deal ever since.

Agreed and add townhomes to the list. We bought one as our starter home thinking we'd upgrade someday. The townhome has appreciated by about 1/3 in the time that SFHs have by 50-100%. Now consider current interest rates...I wish we hadn't tried so hard to be responsible, and had stretched our budget when we first bought.

You must live in a really crappy area. We bought our townhouse for $500K in 2014 and sold it last year for $800K. We didn't make any improvements in that 10 years except paint, new appliances, and light fixtures.

Our North Arlington TH also was flat. I’ve discovered that only new townhouses in up and coming areas appreciate; established townhouses are a bad deal because they look run down and no HOA is willing to invest to make them look nice again. In fact, probably about half the original owners have moved out and rent out their townhouse, further depressing the appeal to new buyers who don’t want a community of transients.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A lot of people bought when interest rates and prices were lower. People move up the property ladder.

+1 most people buy starter homes and keep rolling their equity forward. I started with a condo, then a fixer upper, which allowed me to cash out ~$250k for my current home.

Yup. I know so many people who are genuinely too vain to be seen living in a crappy starter home. Dont be like them OP

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have a lower HHI. We bought later in life have a mortgage right around what you're saying. Like a PP we rented way below our means for a long time to save.

We don't live lavishly otherwise. Old car, limited vacations, limited extracurriculars, but we are happy.

If rates go down we will refi and get some of our equity out of the property and our cash flow will modify in a life altering way.

Housing prices aren't going down. Limited inventory and zoning rules that keep the nice areas nice.

Make it work.

Please explain how pulling equity out of a property, and thereby increasing your indebtedness, will improve your cash flow.

Pull out home equity. Invest in stock market. And make huge profits.
Also, pull from credit cards. Invest in stock market. And make huge profits.
Then pay off the money.

FFS

Yes. Too risky but we know people who made it rich doing that.

[Anonymous]

Buy the neighborhood not the house. Find the smallest cheapest house in the best neighborhood for your need. This way you can even buy cash or put 60-70% down. Then I'm a few years you can tear down and build your custom home. That's what we did. Strangely enough people still want to buy a big house from the start.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Plenty of people bring home 30k a month, Like, everyone on my block does.

Tech? Law? What do they do here? I'm so confuse by the salaries in this area.

Assuming the 30k refers to monthly HHI, then yes, plenty of HHIs in DC make 360k a year. I'm a manager at a professional services firm and make 160k including bonus. VPs are 200k, senior VPs 250k and it goes up from there.

You can see how a manager married to a VP can have a 360k HHI. My coworker is married to a lawyer who is not in BIGLAW but even then they must still have 400k+ in HHI.

Marrying smartly goes a very long way.