Why is DCUM SO conservative with housing?

[Anonymous]

Anonymous wrote:

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.

But don’t you think you should provide that information if responding to posts about what home a young person can afford? I rarely see the super conservative posters providing those caveats. Retiring early isn’t some people plan or even want to do. If I am giving financial advice on a board, I try to look at things through the lens of the poster and the question asked, not my own, very limiting circumstances.

[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.

Warren Buffet lives in a home that most of us could afford.

https://www.businessinsider.com/warren-buffett-modest-home-bought-31500-looks-2017-6

Warren Buffet is the exception that proves the rule.

That house would be 3M + in DC or close in burbs..it's 6,700 sq feet.

If I lived in Omaha I wouldn't spend millions just to spend it..unfortunately, you need to here. Most of us can afford a mansion in the midwest, most can't afford nearly 7k square feet in the DC area. Even with our high incomes..

[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.

[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.

This is so dumb - it presumes the extra money not spent on a house was what, put under the mattress? Invested in standard index funds, it appreciated far more than a house would have, and it's accessible.

[Anonymous]

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!

That's not what you're earning here, either, because you're ignoring the ~$68k you have to pay each yer for the mortgage. FFS, OP.

[Anonymous]

It is a change of generation. The younger generations don't believe in saving as much as their parents, grandparents, etc. They also haven't lived long enough to see the bottom fall out so they have never been scared senseless. Personally, I think society has gone sideways with the constant upselling on bigger, badder, better houses. It's not sustainable. I have no idea how these 6,000 sq ft homes are going to be maintained over the next 10-20 years. What will we do with them when our young kids and their kids want to bash and build?

Personally, I think we need to stop the perpetually supersizing mentality. But, alas, that is very un-American.

[Anonymous]

Anonymous wrote:It is a change of generation. The younger generations don't believe in saving as much as their parents, grandparents, etc. They also haven't lived long enough to see the bottom fall out so they have never been scared senseless. Personally, I think society has gone sideways with the constant upselling on bigger, badder, better houses. It's not sustainable. I have no idea how these 6,000 sq ft homes are going to be maintained over the next 10-20 years. What will we do with them when our young kids and their kids want to bash and build?

Personally, I think we need to stop the perpetually supersizing mentality. But, alas, that is very un-American.

Wait, you don’t think young adults the worked between 2008 and today haven’t seen the bottom fall out TWICE??

If anything, this generation understands that much better than the previous. My parent’s generation was super lucky overall, and their wealth was a lot more luck and lot less hard work than my generation or my son’s.

[Anonymous]

Anonymous wrote:It is a change of generation. The younger generations don't believe in saving as much as their parents, grandparents, etc. They also haven't lived long enough to see the bottom fall out so they have never been scared senseless. Personally, I think society has gone sideways with the constant upselling on bigger, badder, better houses. It's not sustainable. I have no idea how these 6,000 sq ft homes are going to be maintained over the next 10-20 years. What will we do with them when our young kids and their kids want to bash and build?

Personally, I think we need to stop the perpetually supersizing mentality. But, alas, that is very un-American.

Yes. And I think being conservative with housing is a wise choice. We make $375K and purchased a $750K house with a 25% down payment. The idea of buying anything much more than that was not palatable to us. Here is why it is smart:

1. Home upkeep is expensive. Each year, even outside of major systems (roof, HVAC), you can easily spend thousands on repairs and updates. In the past month, I spent $500 to fix a toilet and $2500 to cut down and trim trees.
2. Bad things can and do happen to people in life, including job loss. The number of people I know in their 50s that lost jobs paying $150K+/year and could never find a similar one and work as "independent consults" or in jobs that pay a fraction of that is scary.
3. The most important reason to us is that more money spent on a house = less money saved = more time stuck working and less time enjoying freedom, which is what is most important.

Everyone is different. Having a mortgage payment we can afford, a big fat taxable account, and knowing the loan will be paid off sooner rather than later helps us sleep at night.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It is a change of generation. The younger generations don't believe in saving as much as their parents, grandparents, etc. They also haven't lived long enough to see the bottom fall out so they have never been scared senseless. Personally, I think society has gone sideways with the constant upselling on bigger, badder, better houses. It's not sustainable. I have no idea how these 6,000 sq ft homes are going to be maintained over the next 10-20 years. What will we do with them when our young kids and their kids want to bash and build?

Personally, I think we need to stop the perpetually supersizing mentality. But, alas, that is very un-American.

Wait, you don’t think young adults the worked between 2008 and today haven’t seen the bottom fall out TWICE??

If anything, this generation understands that much better than the previous. My parent’s generation was super lucky overall, and their wealth was a lot more luck and lot less hard work than my generation or my son’s.

1. People people in their 30s/40s did not have a lot of money invested in 2008, so the drop was not as scary.
2. What happened to the stock market in March 2020 COVID was nothing as it is quickly recovered.
3. Think when the tech bubble burst, or the lost decade in investing, earning no money for a decade.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It is a change of generation. The younger generations don't believe in saving as much as their parents, grandparents, etc. They also haven't lived long enough to see the bottom fall out so they have never been scared senseless. Personally, I think society has gone sideways with the constant upselling on bigger, badder, better houses. It's not sustainable. I have no idea how these 6,000 sq ft homes are going to be maintained over the next 10-20 years. What will we do with them when our young kids and their kids want to bash and build?

Personally, I think we need to stop the perpetually supersizing mentality. But, alas, that is very un-American.

Wait, you don’t think young adults the worked between 2008 and today haven’t seen the bottom fall out TWICE??

If anything, this generation understands that much better than the previous. My parent’s generation was super lucky overall, and their wealth was a lot more luck and lot less hard work than my generation or my son’s.

1. People people in their 30s/40s did not have a lot of money invested in 2008, so the drop was not as scary.
2. What happened to the stock market in March 2020 COVID was nothing as it is quickly recovered.
3. Think when the tech bubble burst, or the lost decade in investing, earning no money for a decade.

I’m in my 30s. I graduated college into the 2008 recession. It was plenty scary for me. And I live in a house worth 1x my HHI now as a result.

[Anonymous]

1. We don't make as much as the salaries posted here. HHI around 180k.

2. Bought a house for 400k, seven years ago. Could have went higher, but we already survived the 2008 collapse in San Diego county. We held on to that house for ten years after we moved so that we could make a profit. We didn't buy in the bubble, but housing prices dropped there so drastically, it didn't matter.

3. Now we have two in college. We are able to pay for their tuition. It's tight, but we couldn't save 200k on our salaries at the time for future college expenses. So now we pay each semester as we go.

That's how many of us donut hole families are able to pay. We couldn't save a full amount the last 18 years due to lower incomes, student loans, daycare, health care, etc. So once we started making more, we bought less. Right now we have no car payments, no student loans, and an affordable house payment.

[Anonymous]

Anonymous wrote:

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.

This is so dumb - it presumes the extra money not spent on a house was what, put under the mattress? Invested in standard index funds, it appreciated far more than a house would have, and it's accessible.

+1111111

[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.

Except those who "swung for the fences" had to pay mortgages, property taxes and transaction fees when selling while those who didn't were able to invest for record gains in the stock market during the same period.

[Anonymous]

Anonymous wrote:1. We don't make as much as the salaries posted here. HHI around 180k.

2. Bought a house for 400k, seven years ago. Could have went higher, but we already survived the 2008 collapse in San Diego county. We held on to that house for ten years after we moved so that we could make a profit. We didn't buy in the bubble, but housing prices dropped there so drastically, it didn't matter.

3. Now we have two in college. We are able to pay for their tuition. It's tight, but we couldn't save 200k on our salaries at the time for future college expenses. So now we pay each semester as we go.

That's how many of us donut hole families are able to pay. We couldn't save a full amount the last 18 years due to lower incomes, student loans, daycare, health care, etc. So once we started making more, we bought less. Right now we have no car payments, no student loans, and an affordable house payment.

How do you figure you’re a “donut hole family” if you can pay cash each semester??

[Anonymous]

Anonymous wrote:

Anonymous wrote:It is a change of generation. The younger generations don't believe in saving as much as their parents, grandparents, etc. They also haven't lived long enough to see the bottom fall out so they have never been scared senseless. Personally, I think society has gone sideways with the constant upselling on bigger, badder, better houses. It's not sustainable. I have no idea how these 6,000 sq ft homes are going to be maintained over the next 10-20 years. What will we do with them when our young kids and their kids want to bash and build?

Personally, I think we need to stop the perpetually supersizing mentality. But, alas, that is very un-American.

Wait, you don’t think young adults the worked between 2008 and today haven’t seen the bottom fall out TWICE??

If anything, this generation understands that much better than the previous. My parent’s generation was super lucky overall, and their wealth was a lot more luck and lot less hard work than my generation or my son’s.

I don't know how old you are so I would say that depends. Generations before us had real scares and hardships. If your parents are boomers then maybe they lived through the recessions in the 60s, 70s, 80s and 90s. Perhaps they also went to war in Vietnam and/or Iraq, and/or felt the effects of the Cold War. If they were the Greatest Generation then they lived through some serious warfare via WW2 and maybe Korea. My point is that the current generations haven't really felt threatened in the same way as Boomers or their parents. We've been relatively stable and nothing has scared us into putting our money into our mattresses like in the last century. Because we've been so pampered, relatively, we overspend like the world will always stay the same, peace will remain and life will go on. Maybe COVID will change that. I thought it would but I was floored to see how much people were spending during a time when we were in a worldwide pandemic.

Also, if you are younger, you may not have had any health setbacks. I have. I know that your life can change at the drop of a hat so I like to keep expenses low. The young folks think that they are invincible. So they spend accordingly. At least that's how I see it.

I can invest that savings. I don't rely on the appreciation of a supersized home.