Massive leverage. I am seeing it amongst my friends all the time.

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Mar 28, 2024
12:21:55pm

rad dawg Truly Addicted User

Massive leverage. I am seeing it amongst my friends all the time.

I am mid 30's and many of my close friends are as well. THey are taking on loan amounts that I would consider very uncomfortable.

One example from December: young couple. She makes $65k he makes $50k. No kids. They closed on a $400k home and their payment is $3200 per month all in. Just looking at that math, I would be so stressed with that kind of DTI ratio but so many people are doing it.

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rad dawg

Bio page: rad dawg
Joined: Nov 7, 2010
Last login: May 8, 2024
Total posts: 12,701 (47 FO)

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Messages

Author

Time

I genuinely worry about how my kids are going to be able to afford homes.

Ungoy

Mar 28, 9:00am

My wife and I bought 30 years ago with 7.5% interest. But our home costed

Brigham

Mar 28, 9:02am

*cost

Greg Kite's 'stache

Mar 28, 9:05am

*Cost Ed...Ed bought the home

RH84025

Mar 28, 9:15am

**Accosted

WhyaskY?

Mar 28, 2:40pm

35 years ago for me with a 10% mortgage on a $100k home

Hoopster

Mar 28, 9:05am

What was the percentage of your household income then vs now?

gmj81

Mar 28, 9:31am

I literally could not afford it today.

Brigham

Mar 28, 10:20am

My prediction:

Ragnar Danneskjold

Mar 28, 9:04am

Explain. I surmise there is no bubble. Inflation has affected everything. Wages

Idacoug

Mar 28, 9:18am

RE: Explain. I surmise there is no bubble. Inflation has affected everything.

Mises

Mar 28, 9:21am

Is anyone seeing this? I am not. I have not see a housing price drop, nor have

Idacoug

Mar 28, 9:24am

RE: Is anyone seeing this? I am not. I have not see a housing price drop, nor

Mises

Mar 28, 9:30am

My home is down 10% from his peak on Zillow

Skeptical Optimist

Mar 28, 9:32am

What location?

Idacoug

Mar 28, 9:35am

Austin TX area

Skeptical Optimist

Mar 28, 9:40am

I just checked 5 houses that either my parents or I have owned

Mar 28, 4:00pm

10-15% sure. But interest rates doubled and so the monthly mortgage is up

JuicyJam

Mar 28, 9:36am

That’s a huge deal right now. Home insurance gone up very significantly

Idacoug

Mar 28, 9:40am

I am in Texas and am seeing it.

rad dawg

Mar 28, 9:43am

Interesting. What is causing this?

Idacoug

Mar 28, 9:44am

Same old story. Median incomes are not high enough to support prices.

rad dawg

Mar 28, 9:47am

Then why isn’t this happening in most other places outside Austin/san antonio?

Idacoug

Mar 28, 9:53am

Because nothing is inducing forced selling right now in most markets

rad dawg

Mar 28, 10:00am

I've talked with 2 people in the last week who bought in Austin at the peak.

Skeptical Optimist

Mar 28, 9:55am

When you say sky high, do you mean 6%?

WDaddy

Mar 28, 11:05am

Lol yeah, it's all relative I guess.

Skeptical Optimist

Mar 28, 11:09am

I wonder if that's true looking at it more micro than macro

cougarfann888

Mar 28, 9:25am

100%. We just built a 1500 sq. Ft home because that is all we could afford.

Idacoug

Mar 28, 9:27am

Not seeing it at all. Except for this one scenario that I am seeing:

monteburns

Mar 28, 9:31am

I don't understand how sales are picking up and how people are affording it.

Ungoy

Mar 28, 9:34am

Spring time is usually the hottest time to buy, and interest rates decreasing?

Idacoug

Mar 28, 9:36am

Interest rates are still up from last year, and home prices are still going up

Ungoy

Mar 28, 10:29am

Massive leverage. I am seeing it amongst my friends all the time.

rad dawg

Mar 28, 12:21pm

Makes sense. My wife and I want to move out family elsewhere,

Ungoy

Mar 28, 12:29pm

My siblings have hoped for that for the last 4 years now they’re priced out of

Magneto

Mar 28, 5:40pm

It’s brutal. Mortgage payments on townhomes are about $2,500/month & decent middle class homes are about $4,000/month.

RdF3

Mar 28, 9:04am

our middle class home is $2400/month. it helps that our interest rate is 2.75%

reagan21

Mar 28, 9:05am

I’m talking about people buying a home right now.

RdF3

Mar 28, 9:06am

For first time in my life i was on the right side of a real estate purchase.

reagan21

Mar 28, 9:13am

I'm confident buying your same home right now at its current price and interest rates would have a mortgage around $6k.

RdF3

Mar 28, 9:17am

like i said, for the first time in my life i was on the right side of a real

reagan21

Mar 28, 9:21am

"middle class"

Mar 28, 9:10am

i’m firmly in the middle class. i could make a lot more money but lifestyle

reagan21

Mar 28, 9:12am

30 year or 15?

Mar 28, 9:17am

30 but we make extra payments when we can. Usually 15-17 payments over a year’s

reagan21

Mar 28, 9:20am

So you borrowed roughly 600k for your home?

Mar 28, 9:23am

Borrowed $385k. we had saved and lived frugally for 9 years

reagan21

Mar 28, 9:27am

Your payment seems really high for that loan amount at that interest

Mar 28, 9:30am

with taxes, PMI, and HOA it’s like 2391 or something.

reagan21

Mar 28, 9:31am

ahhh okay. That makes sense now. NM I change my comment about the $6k. I was thinking $600k loan in 2020

RdF3

Mar 28, 9:36am

if i wanted to buy my house now i’d have to borrow more than $600k.

reagan21

Mar 28, 9:40am

PMI and HOA could be adding a lot to get you into that zone.

Mar 28, 10:36am

That’s exactly where I’m at.

Spindash

Mar 28, 11:31pm

The first home my wife and I had was a condo we were fortunate to purchase

Ungoy

Mar 28, 9:07am

my wife and i bought a condo in 2005 for $217k. that same condo today is about

reagan21

Mar 28, 9:17am

Rates will go down.

kimdaddy35

Mar 28, 9:13am

It always seems to work out. I agree though that cost seem out of control.

orrin7

Mar 28, 9:05am

Prices won't get better until supply is fixed.

maYbe

Mar 28, 9:06am

100% true. Supply is way too low in most places.

BlooCoug

Mar 28, 10:17am

Remember they're called "starter home" for a reason. Get the best location you can afford as soon as possible.

Soupie

Mar 28, 9:06am

My first home was 1,600 sqft and I was there 16 years. I was perfectly happy.

maYbe

Mar 28, 9:12am

Lotta younger people today are simply too arrogant for this. 😕

BleedCougarBlue2

Mar 28, 9:12am

Condo’s aren’t affordable either. They are going for 300s in Saratoga Springs.

wildlandfireguy

Mar 28, 9:28am

The only problem is that a lot of these starter homes are still $400k+

ballen

Mar 28, 11:32am

Yes. And many kids coming out of college are starting at $70k+ when some of us who bought our first home

Soupie

Mar 28, 12:17pm

I do agree that the only way to buy a house in any generation is to save, budget

ballen

Mar 28, 2:25pm

Daughter bought house last fall on one income w/ very little from husband who's in grad program.

Soupie

Mar 28, 2:28pm

That’s been generally good advice in recent history.

Spindash

Mar 28, 11:40am

Things will balance out. Mortgage rates when our parents were buying their first

Skeptical Optimist

Mar 28, 9:06am

I don't think they will. Builders aren't Building starter homes any more.

fbguru

Mar 28, 9:09am

I think there will always be a market need for starter homes

Skeptical Optimist

Mar 28, 9:14am

I hope so, but I don't see it. Big apartment complexes make more money and are

fbguru

Mar 28, 9:28am

Son is buying a home for $780k with a 2-1 interest buy down starting around 7%.

Hoopster

Mar 28, 9:08am

What is a “2-1” interest buy down? Never heard that term.

BleedCougarBlue2

Mar 28, 9:16am

Pay extra to lower interest rate 2% in first year and 1% in second year. Back to

Hoopster

Mar 28, 9:18am

Yeesh! Basically an ARM. That IS a gamble. How much extra for the 2% and 1%?

BleedCougarBlue2

Mar 28, 9:22am

Don’t know the financial details of buy down but he thinks it is worth gamble

Hoopster

Mar 28, 9:29am

An ARM is different.

BlooCoug

Mar 28, 9:33am

Not how that works. They are NOT an ARM and not risky at all.

monteburns

Mar 28, 9:35am

But, an ARM may be a great option in a high rate environment where rates are

monteburns

Mar 28, 9:36am

Daughter did that just last fall. They're watching rate closely.

Soupie

Mar 28, 9:49am

I have been thinking a lot about this prophecy by Isaiah:

2FarGone

Mar 28, 9:09am

Barring changes home ownership will require abandoning traditional family.

rad dawg

Mar 28, 9:10am

This scenario has already been happening for some time. Cost of living in the US

BlooCoug

Mar 28, 9:34am

I assume that we will start to see more mutli-generational families.

ballen

Mar 29, 11:47am

What is really pathetic are the people that are so selfish they want to hold

chismoso

Mar 28, 9:17am

They will worry their kids won’t be able too as well.

Mar 28, 9:21am

doubtful.

rad dawg

Mar 28, 9:32am

I tell my kids all the time they will always have a place to stay…in my barn.

DwigtA2RM

Mar 28, 9:26am

My wife and I bought a condo in Saratoga Springs for $125k in 2014. That same

wildlandfireguy

Mar 28, 9:27am

The constant worry of parents. My parents bought their Calif. home for $33,000

O Gaucho

Mar 28, 9:29am

This is a constant worry of mine as well.

gangbusters

Mar 28, 9:30am

the future generation is going to afford housing when their parents/grandparents

LeonMarek

Mar 28, 9:31am

Biggest problem is salaries aren't going up

WJCougar

Mar 28, 9:31am

They are rising a little. But not enough to track with inflation.

BlooCoug

Mar 28, 9:36am

Here is what the data says. Wages are moving much faster than

The Chief

Mar 28, 10:01am

Not true in my case. Those numbers are averages and the data set may have some

BlooCoug

Mar 28, 10:20am

I'm sure many people are not seeing it...everyone is in different places.

The Chief

Mar 28, 12:31pm

You aren't wrong, but housing appreciated so quickly since 2019.

Ungoy

Mar 28, 9:36am

It called the Cantillon Effect (or Cantillon effects).

Mises

Mar 28, 11:44am

kids just need to get out of UT and move someplace you can buy decent homes on normal salaries

byujag

Mar 28, 9:39am

This. Much of the midwest is still very affordable also.

Mar 28, 9:47am

A fear often expressed by a boomer who just purchased their 5th rental home...

seacougar

Mar 28, 10:29am

Get a job where they can work from home and move to Kansas or Nebraska or Magna

BYU Grounds

Mar 28, 10:34am

Boomers all die in the next 20 yrs and leave their houses & money to GenX & Millenials. Doesn't that pretty much fix

BlooGeek

Mar 28, 11:32am

Most people are between 50-65 when their last parent dies

STL

Mar 28, 11:52am

But the Boomers will most likely vacate their homes upon death...that was my main point. Many homes empty and on market.

BlooGeek

Mar 28, 11:54am

The missing piece to that is boomers are not that wealthy.

rad dawg

Mar 28, 12:02pm

For me (little kids still) my only thinking is I should try to acquire multiple

Brute66

Mar 28, 11:40am

High density housing will be the new normal

botticus

Mar 28, 12:18pm

Even high density housing is no longer affordable for many young couples.

Ungoy

Mar 28, 12:31pm

WWIII should even things out. If not get a useful degree and marry smart.

EDthoracotomy

Mar 28, 4:34pm

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