Reply to s/o - feeling "poor" at these ludicrously high incomes. what are they actually missing?

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Reply to "s/o - feeling "poor" at these ludicrously high incomes. what are they actually missing?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]PP here who bought house in 99.   When I started out, 20+ years ago, I noticed that my senior colleagues were much much better off than me.  They made more than me, sure, but the big difference was that they were paying the same in mortgage payments as I was for my one bedroom appt.

I realized that buying a house is insurance against rent increases.  So, I bought what I could afford -- on my income.  Money was tight for the first few years.  But in time, my income increased -- from 60K when I bought the house (1999) to 170K now.  Some of that was inflation, but most was career growth.  Now, my mortgage was at 8%, not 3.7%.  So, with the same monthly mortgage payment as a fraction of income, I  would be able to borrow 480K with an inflation adjusted salary to 85K. (same Loan to debt ratio).

That means a 600K house, which is basically what I live in.

More to the point, when we hire someone out of grad school, after a few years (same place in life), they are making about 100K.  At 100K, with current interest rates, they could buy my house today.

In 20 years, assuming modest inflation, they will be comfortable/
[/quote]

Just stop it. Someone making 100K cannot afford a 600K house.

I bought a condo in Arlington in 1997 for $60K, when I was making, I think, $54K a year. Those condos now sell for about $250K--four times what I paid. But people in the job I had then are not making $200K a year. They are making about $90K. There is no way they can afford to buy what I could on my salary 20 years ago. And they are not getting the appreciation either to get started on the property ladder. [/quote]

But interest rates are lower so you can afford more house. [/quote]

I guess your PhD is not in math. The rate may be half as much but that doesn't mean the payments are half as much, even if the principal is the same. You could get an $85,000 condo at 4% for the same payment as my $60,000 condo at 7%. That's pretty far from $200,000.

There's a big difference between spending about 15% of your takehome on housing, which is why I was doing 20 years ago, and spending more like 30%. Housing costs are why people around here with high incomes don't feel rich. It's irrelevant to say you bought a house almost 20 years ago and are doing fine.  [/quote]

That was not the PhD poster. I posted that. You could buy a 250k condo on a 100k salary.

Math actually is my forte. We have a 7 figure HHI and our house is paid off. I think the easiest solution is to get a higher paid job.[/quote]

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