You never know - maybe they are in debt or not saving any money.

Stock market money. Money can be made even when market goes up and when it goes down.

I could be this, minus the cars. When I was single, 25, and making probably $70k I inherited $100k which I put towards a down payment on a $400k condo with a very low mortgage rate. I sold it 8 years later for more than $1m. That was pure dumb luck. But it allowed me to put $1m down on a $1.5m condo, where I now live with my family. Our HHI is $300k but we're living within our means.

One of three things:

- they’re bringing money from a previous house sale
- family money (this one is the biggest imo)
- incomes for the highest earners have gone up way more than you realize. I don’t think ppl realize how much extra money the high end service workers, small business owners, contractors etc are making compared to 5 years ago. DH and I work in unrelated industries and both of us have doubled our very high incomes from five years ago. Based on the cars in our kids school, I’m guessing others have the same. But this kind of income increase wasn’t shared with ppl making, like, $120k. Who probably got around $20k of boost and that’s it.

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

Inheritance, investment, lottery or neck deep in loans.

Anonymous wrote:Many people live on the edge, pay check to paycheck and have no savings. That's how they can support their lifestyles and afford the homes and cars that they have.

Yep, I know two people like this. One has hundreds of thousands of dollars of credit card debt and each month he only pays the bare minimum. The other has a ton of school loans and CC debt and is always on vacation, going to concerts, getting tattoos, etc. One time we were talking about trips we want to take and I mentioned a place and then said I couldn't really afford it and she said, "Treat yourself - you deserve it!" and I had this realization that she says that to herself to justify all her expenditures.

Many people live on the edge, pay check to paycheck and have no savings. That's how they can support their lifestyles and afford the homes and cars that they have.

2 tech people might be clearing 600K per year.

True. Also some people or their parents have land or houses in other countries which they sell and use the money to buy property here.

You assume they are starting from $0. They probably had a previous house that they sold and made money on.

We put $600k down when buying our house.

DH has a close friend who fits the profile you're asking about. They had moved houses about every 2 years (they plan to stay at their current house for much longer) and made a killing each time they sold. When he sold his first house about a decade ago, he walked away with a 200K profit. He bought the house for less than 100K and fixed it up a lot and when he sold, it was a very desirable area. And he kind of kept with that plan for the next decade and then was able to afford a 1.5 mil house with no issues. He didn't set out to do this, he kind of just lucked into it all.

I always assume family money when the incomes don't add up. Sometimes it's a timely inheritance that can allow people to buy a home for cash or close to it, and that frees up a lot of their income for consumption.

One thing you have to realize is that people tend not to be very up front about those sorts of cash infusions, or will downplay them. I don't really know why, but they do. But if you know people in similar fields with similar incomes, who are similar ages with similar family structures, but their spending makes no sense, they must be getting extra money somewhere. Or, I suppose, running up massive debt.

They might have stock or family money.

Anonymous wrote:Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?

DC has a mix of population. There are many who can afford $1M+ houses but there many more who cannot. Lawyers, doctors, some really big federal contractors who have multiple people employed on long term contracts can easily afford high end houses. Professionals who work 2-3 jobs including moonlighting can also afford. I don't think you are missing anything - you belong to the normal kind of population. The best solution to owning high end houses with a normal, steady income is to move out of DC into a LCOL city.

Seeing house prices as they are today, how do people afford the $1M+ houses/townhomes that will amount to nearly $9K-$10K/month mortgage? Plus I see them switching to newer cars every so often. These are two income software professionals in the household, and I don't understand the math. What am I missing?