Curious: where do the $$ come from??

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Looking at DC metro real estate and can't figure it out. How does an economy that is primarily supported by the federal government (losing jobs every year, no pay raises, etc.) manage to sustain housing that is so outrageously expensive. Putting aside that it's mostly ugly and poorly constructed, I genuinely don't understand how the area keeps it all afloat. Understand that there are some lobbyists/lawyers that are financed by the private sector and some lavish foreign governments, but are there really that many? Enough to sustain oodles of houses at $1.5 and up? And my inexpert, anecdotal searching shows that even $1.5 has become modest in many, many metro areas. Even if the average joint fed household brings in a 180-200K pre-tax and has saved like crazy to make the downpayment, how can they keep up with that huge a mortgage? And if it's not fed households, what industry are the people who buy these homes in?

Actually in DC Fed households tend to be dual GS15s making more like 310,000 a year combined....

But to afford a 1.2M house you need $400k a year and when it is reached by dual earner you really should discount 40k for daycare camps etc.

Honestly most people buying expensive homes bought before the bubble; they sold to folks making not enough so took risky loans from bank, banks failed and were bailed out by US govt.

So you could say a lot of those homes were paid by taxpayers via the bank bailouts.

People just starting out at, how much can you affords

I dunno. MY next door neighbour is a $250,000 associate at law firm with a stay at home wife who lives in a 1.2M. The other is two GS-15s (probably 300K+) -- same thing.

A home 5x their income? Take home about 13k with a PITI of 6k (almost 50%), and a downpayment of a full years gross salary.

That seems like they are stretching themselves, but I guess folks are used to pouring 50% into housing nowadays?

[Anonymous]

That seems like they are stretching themselves, but I guess folks are used to pouring 50% into housing nowadays?

I'm in my 20s, and still a renter, but this is pretty much it, at least in high COL cities like DC/SF/NYC. It's what happens when wages stay stagnant and real estate costs rise.

[Anonymous]

Lawyers who start out at a large DC law firm are making at least $165K a year-- more with bonus-- and that salary rises by about $10K a year. If you do that for 5 or 6 years while single and childless and living in a group house in DC, you can save a lot of money for a house downpayment. If you marry another law firm associate (which is common), you can multiple that savings times two. Also, I suspect there are quite a few dual income couples who bumped up their timing for buying a bigger house in order to lock in lower interest rates. While they may be spending a larger portion of their income on housing now, it is likely under the assumption that their incomes will continue to rise over the next two decades while their mortgage will remain the same. There are many on this board that may see that kind of decision as crazy, but some professions have more job/income security than others and everyone figures out what gamble they are willing to take.

[Anonymous]

Anonymous wrote:Lawyers who start out at a large DC law firm are making at least $165K a year-- more with bonus-- and that salary rises by about $10K a year.

Plus starting bonuses of $125K-300K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Lawyers who start out at a large DC law firm are making at least $165K a year-- more with bonus-- and that salary rises by about $10K a year.

Plus starting bonuses of $125K-300K.

But are there that many more lawyers in the last 15 years; DC has always had white shore firms so where money to buy huge swaths inside beltway.

[Anonymous]

Low unemployment and stable jobs allow you to stretch further without issues.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Lawyers who start out at a large DC law firm are making at least $165K a year-- more with bonus-- and that salary rises by about $10K a year.

Plus starting bonuses of $125K-300K.

But are there that many more lawyers in the last 15 years; DC has always had white shore firms so where money to buy huge swaths inside beltway.

Big law firm salaries have had some dips but for the most part have gone up at a pretty steep rate over the past 15 years-- probably from around $95K to $165K base, not including bonuses. That, combined with historically low interest rates, are putting $1M homes within reach for more lawyers at least. Can't speak to the other industries, although there was a Washington Post article a few weeks ago about the crazy salaries that many government relations types are getting paid now.

[Anonymous]

Anonymous wrote:Close to 50% of the DC area is living in poverty. There is a great disparity of wealth in the area.

No, it just seems like it to people who make a wrong turn out of Valhalla and end driving through South Arlington or Silver Spring.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Close to 50% of the DC area is living in poverty. There is a great disparity of wealth in the area.

No, it just seems like it to people who make a wrong turn out of Valhalla and end driving through South Arlington or Silver Spring.

Disparity isn't some myth:
http://www.washingtoncitypaper.com/blogs/housingcomplex/2014/03/13/d-c-has-fourth-highest-income-inequality-of-large-american-cities/

[Anonymous]

Financially conservatives DCUMers might be surprised but I would venture that plenty of the $1-1.2m homes are occupied by those with HHIs more in the $300-400k range. Yes, many people elect to spend 30-50% of their take-home pay on housing costs in a high COL area; why is that a surprise...the poor have no choice but to do this, and many of the more affluent choose the benefits of a more expensive neighborhood (preferred schools, commutes, amenities etc) and do this too.

Also mortgage monthly estimates are off for many too...not everyone is taking out a 30-year fixed, plenty of folks take out 5-7 year ARMs which have lower rates, and lower monthly payments. You just bear some risk on changing interest rates (though are protected on most instruments by a defined range of max increase)

The monthly on a 7-year ARM (3.005%) with 20% down on a $1.2m home, the PITI would be as low as $5150.

[Anonymous]

Haven't you noticed that many people that live in expensive neighborhoods are house poor. They are spending their entire imcome on housing and feeding their kids WHOLE FOODS boxed mac and cheese.

[Anonymous]

Anonymous wrote:Close to 50% of the DC area is living in poverty. There is a great disparity of wealth in the area.

Do you bother to research anything before forming an opinion?

https://www.census.gov/newsroom/releases/archives/american_community_survey_acs/cb13-r89.html

If the median is over 88k, then it stands to reason that no where near 50% of the people in the DC area are living in poverty. From the same article:

"the poverty rate remained at 15.5 percent"

[Anonymous]

Anonymous wrote:Haven't you noticed that many people that live in expensive neighborhoods are house poor. They are spending their entire imcome on housing and feeding their kids WHOLE FOODS boxed mac and cheese.

I wouldnt say many, but a decent chunk of new buyers are house poor. They are the ones complaining on the money forum about finances being tight on 250-300k HHIs

[Anonymous]

Anonymous wrote:Haven't you noticed that many people that live in expensive neighborhoods are house poor. They are spending their entire imcome on housing and feeding their kids WHOLE FOODS boxed mac and cheese.

You have some weird ideas. I consider myself fairly average by the standards of this board at least -- GS-15, 150K. My wife is a 14, 130K. On our measley 280,000 a year, we live (comfortably I might add) in a 1.2 Million house in Arlington. Not the biggest or best house, but not bad either.

We are both in our 30s, saved enough to put 20% down, and even continue to hold our initial property, a small townhouse in Bethesda.

We make it work. And we're not "house poor" either. But our expectations for what we want are decidedly middle class.

A lot of our neighbors are Feds, 250K to 320K households as well as private sector Lawyers and two doctors who may (or in some cases may not) make more. They all seem to still be able to take vacations and not eat mac and cheese.

[Anonymous]

i see a lot of boomers in this thread who bought 15 - 20 years ago looking down their noses at the gen x-ers for purchasing expensive houses post RE boom. How dare we enjoy what you enjoyed in your thirties. suck it.