Reply to How does your family survive making under 200k hhi

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[quote=Anonymous][quote=Anonymous][quote][quote]
Let me break down the math for you.
In real dollars 3.6x vs 4.4x is 160k more today.  A 30 year mortgage would mean shelling out extra 1000 dollars a month.  Maybe that's not a lot to you.[/quote]

Not really.  Interest rates were a lot higher when we first bought, in 1996.  I think our first mortgage had a rate well over 6%, maybe 7%.[/quote]

Well in rough terms, you took on a mortgage 2.5x your salary earlier.  Today you would be taking on a mortgage 3.5x your salary.  Real estate prices have outpaced income increases.[/quote]

Yes, but you're missing is that in the mid-90s, the mortgage worth 2.5x your salary cost you not much less, on a monthly basis, than the mortgage worth 3.5x your salary, because interest rates were that much higher. If your HHI is $100,000, and you take out a mortgage at 2.5x your income ($250,000) at 6.5% for 30 years, your monthly payment is $1580. If you take out a mortgage at 3.5x your income ($350,000), but the interest rate is 3.5% for 30 years, your monthly payment is $1572.

Note, too, that historically as interest rates have risen, real estate prices have dropped and vice versa.[/quote]

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