But seriously. Those housing prices! How do you do it?

[atrib]

I was talking to a friend in California who recently "upgraded" his home. He bought his last house 10 years ago for about $500K and he still owes $330K on it. He is renting that out now to cover the mortgage. His new home costs $2.6M, he put 5% down, and it comes with monthly mortgage payments over $10K (not counting taxes and insurance). Total family income is $280K per year. His annual mortgage payment on the two properties is over $150K. And he doesn't have any significant cash savings (less than $20K). Right now he can just about cover the payments and put food on the table, but if something happens, he is fucked. And he is not saving for retirement despite being 49 years old. That is the kind of stupid behavior that keeps people broke all their lives.

Oh, and he just took a HELOC loan from the equity on his first property for $90K to improve the kitchen and bathroom!!!!

 

[gmbteach]

I was talking to a friend in California who recently "upgraded" his home. He bought his last house 10 years ago for about $500K and he still owes $330K on it. He is renting that out now to cover the mortgage. His new home costs $2.6M, he put 5% down, and it comes with monthly mortgage payments over $10K (not counting taxes and insurance). Total family income is $280K per year. His annual mortgage payment on the two properties is over $150K. And he doesn't have any significant cash savings (less than $20K). Right now he can just about cover the payments and put food on the table, but if something happens, he is fucked. And he is not saving for retirement despite being 49 years old. That is the kind of stupid behavior that keeps people broke all their lives.

Oh, and he just took a HELOC loan from the equity on his first property for $90K to improve the kitchen and bathroom!!!!

My brother and his wife used property to fund their retirement. They have bought and flipped a few properties and have one that Provides an income way that covers the mort on that property and on another one they just finished. The first property has a total of 5 bedrooms, rented out individually, with a couple of bathrooms, and a common living and cooking area. There is also a studio flat that used to be a garage. The second property is a similar, but each bedroom has its own bathroom, has a live in person, and is for women only. Rent on both properties include electricity, water, internet, cleaning supplies, toilet paper and other communal essentials…he says it to avoid arguments and seems to work. He was mowing both properties as well. Not a bad set up.

They recently sold their Salisbury property, three bedrooms, two bathrooms, with a 1 bedroom ground floor flat and a 2 bedroom cottage, for about $1 million, and this has funded their ‘forever’ home on nearly an acre further out of town, pretty much mortgage free.

 

[Jimmy Higgins]

I was talking to a friend in California who recently "upgraded" his home. He bought his last house 10 years ago for about $500K and he still owes $330K on it. He is renting that out now to cover the mortgage. His new home costs $2.6M, he put 5% down, and it comes with monthly mortgage payments over $10K (not counting taxes and insurance). Total family income is $280K per year. His annual mortgage payment on the two properties is over $150K. And he doesn't have any significant cash savings (less than $20K). Right now he can just about cover the payments and put food on the table, but if something happens, he is fucked. And he is not saving for retirement despite being 49 years old. That is the kind of stupid behavior that keeps people broke all their lives.

Well, in his defense, if he hasn't started by the age of 49...

Oh, and he just took a HELOC loan from the equity on his first property for $90K to improve the kitchen and bathroom!!!!

When I need to get my mom to an eye doctors appt (a lot of them recently), home improvement shows are on...

Designer: And how much are you willing to spend?
Homeowner: Oh, about $150k.
Me:

 

[crazyfingers]

Prices here in the suburbs of Boston are pretty crazy. Glad I'm not in the market and will be selling at least one home in a few years.

My parents bought the house I grew up in in 1964 for $26K. 3 bedroom. 2.5 baths, 2 acres of land next to conservation land. Good schools. Next to no crime. The town has been a magnet for the executive types. Once the trust paperwork clears it will be mine. Would sell for close to $1million today.

My house we got in 1997 for $270K. We started with a 30 year mortgage with 40% down. Refinanced several times and changed to a 15 year mortgage. Paid off faster than we had to. I think an extra $1000/month. Otherwise almost the same story. 4 bedrooms, 2.5 baths, 2 acres of land surrounded by conservation land. Nicer insides than my parents. Larger. AC. Good schools on paper at least. Next to no crime. Some cows escaped from a local dairy several years ago and 5 police cruisers showed up as if cows obey cops. The cops have nothing else to do I'm sure. It would also sell for around $1Million.

Right now we are keeping both. It's nice to have a spare house in case of Covid. They are 35-40 minutes away.

I like the property better at my parent's house. Flat. I like my house better but the land is more hilly. I wish I could transplant my house onto the other land. In the long run we may bulldoze the house on my parent's land and build a one story retirement house. Sell this one. But whatever. Right now we can afford to keep both houses.

I don't know what the kids will do unless we help them, which we probably will.

My daughter is our first to move out. She's been living with her boyfriend and his parents. They pay rent. But my daughter found a great deal. She's like manager of a high end horse stable. Pay is great. The owners have an apartment on the property and they want an employee to rent it. Only $500/month split between her and her boyfriend. I think it's sort of like being on-call 24 hours a day but not a lot happens. And she loves horses so at the moment it's good.

 

[Toni]

Prices here in the suburbs of Boston are pretty crazy. Glad I'm not in the market and will be selling at least one home in a few years.

My parents bought the house I grew up in in 1964 for $26K. 3 bedroom. 2.5 baths, 2 acres of land next to conservation land. Good schools. Next to no crime. The town has been a magnet for the executive types. Once the trust paperwork clears it will be mine. Would sell for close to $1million today.

My house we got in 1997 for $270K. We started with a 30 year mortgage with 40% down. Refinanced several times and changed to a 15 year mortgage. Paid off faster than we had to. I think an extra $1000/month. Otherwise almost the same story. 4 bedrooms, 2.5 baths, 2 acres of land surrounded by conservation land. Nicer insides than my parents. Larger. AC. Good schools on paper at least. Next to no crime. Some cows escaped from a local dairy several years ago and 5 police cruisers showed up as if cows obey cops. The cops have nothing else to do I'm sure. It would also sell for around $1Million.

Right now we are keeping both. It's nice to have a spare house in case of Covid. They are 35-40 minutes away.

I like the property better at my parent's house. Flat. I like my house better but the land is more hilly. I wish I could transplant my house onto the other land. In the long run we may bulldoze the house on my parent's land and build a one story retirement house. Sell this one. But whatever. Right now we can afford to keep both houses.

I don't know what the kids will do unless we help them, which we probably will.

My daughter is our first to move out. She's been living with her boyfriend and his parents. They pay rent. But my daughter found a great deal. She's like manager of a high end horse stable. Pay is great. The owners have an apartment on the property and they want an employee to rent it. Only $500/month split between her and her boyfriend. I think it's sort of like being on-call 24 hours a day but not a lot happens. And she loves horses so at the moment it's good.

The deal for your daughter: employment she likes with good pay and a bonus of what must be far below market rate accommodations is wonderful. Really happy for her. Hope she follows your example and socks away as much of the cash as she can, in case her circumstances change. And that the money is protected from the boyfriend, who may be a nice guy but does not sound as though he has good examples to draw from with regards to his family.

I've always wanted to live in a more rural setting; hubby is a city boy. We compromise by renting a place on a lake for a week or two every summer. I had always imagined once I retired, I'd manage to rent a lake place for the entire summer. I knew hubby wouldn't want to be up there all summer but I sure did. I told myself we'd never be able to afford our own place but secretly, I thought we might be able to do it. Hubby has always been far less keen than I am and so it seemed unlikely that we'd ever make that jump. With COVID, a LOT of people seem to have latched onto my idea, or rather, have grabbed up as much of any lake property as possible and are renting it out by the week, driving up weekly rental prices quite considerably and resulting in zero property for sale where there used to be 40-80 at any one time alone a hundred mile stretch of lakeshore. So: dream dashed AND hubby is now talking about how great it would be if we had our own place and oldest kid is talking about how we really NEED our own lake place and that's where everybody will be moving in the coming apocalypse.

Also, we are almost certainly stuck in this town until we die because it's quite affordable compared with living in the metro area near most of the kids. I'm finally getting the house the way I want it but it's 2 stories plus basement plus attic and I just think in 20 years, it will be highly impractical.

I wish I had been more ruthless 5 years ago.

Oh, and I do know:#Firstworldproblems

 

[crazyfingers]

The deal for your daughter: employment she likes with good pay and a bonus of what must be far below market rate accommodations is wonderful. Really happy for her. Hope she follows your example and socks away as much of the cash as she can, in case her circumstances change. And that the money is protected from the boyfriend, who may be a nice guy but does not sound as though he has good examples to draw from with regards to his family.

Ya there is too much going on at his parent's house. The siblings are toxic. I sure hope she keeps this job for a while and saves money. It's a great opportunity to save. The two of them spend a lot on stuff that they don't really have a need for yet. Or no need at all.

I've always wanted to live in a more rural setting; hubby is a city boy.

We like where we are. The outer suburbs of Boston. The shopping center is about a 5 minute drive but I can walk though my back woods and connect to about 3 hours worth of hiking trails. There is far more woods and conservation land in this town than development.

But back to the topic, ya the house prices have been going way up around here. They will probably go down but for now there are still a lot of people looking for a place where there is some isolation due to Covid. I'd go even more nuts if I lived in an apartment building in the city during Covid.

 

[bilby]

Most modern political parties agree that excessive inflation is a bad thing, and that it's a central role of a government to keep it under control (though they frequently disagree on how to achieve this).

Most modern political parties like to tell voters that they will prevent excessive inflation, and that they will work hard to ensure that specific commodities and services remain 'affordable'; Politicians love to tell us how hard they work to keep gas, food, and cost of living expenses down.

Yet as soon as the conversation turns to real estate, they flip the entire narrative on its head, and gush about how they will keep the housing market bouyant (ie., subject to as much inflation as they can sustain).

It's a total mystery to me how the same people for whom high gasoline prices are a disastrous vote losing scenario, also have high real estate prices as a wonderful vote winning scenario.

Do the voters like high prices for stuff, or not??

 

[Harry Bosch]

Most modern political parties agree that excessive inflation is a bad thing, and that it's a central role of a government to keep it under control (though they frequently disagree on how to achieve this).

Most modern political parties like to tell voters that they will prevent excessive inflation, and that they will work hard to ensure that specific commodities and services remain 'affordable'; Politicians love to tell us how hard they work to keep gas, food, and cost of living expenses down.

Yet as soon as the conversation turns to real estate, they flip the entire narrative on its head, and gush about how they will keep the housing market bouyant (ie., subject to as much inflation as they can sustain).

It's a total mystery to me how the same people for whom high gasoline prices are a disastrous vote losing scenario, also have high real estate prices as a wonderful vote winning scenario.

Do the voters like high prices for stuff, or not??

It's not that I disagree with you. But owning real estate is the one asset that can hedge the cost of inflation. I don't trust gold. You want to own as much real estate as you can during inflationary periods.

 

[bilby]

Most modern political parties agree that excessive inflation is a bad thing, and that it's a central role of a government to keep it under control (though they frequently disagree on how to achieve this).

Most modern political parties like to tell voters that they will prevent excessive inflation, and that they will work hard to ensure that specific commodities and services remain 'affordable'; Politicians love to tell us how hard they work to keep gas, food, and cost of living expenses down.

Yet as soon as the conversation turns to real estate, they flip the entire narrative on its head, and gush about how they will keep the housing market bouyant (ie., subject to as much inflation as they can sustain).

It's a total mystery to me how the same people for whom high gasoline prices are a disastrous vote losing scenario, also have high real estate prices as a wonderful vote winning scenario.

Do the voters like high prices for stuff, or not??

It's not that I disagree with you. But owning real estate is the one asset that can hedge the cost of inflation. I don't trust gold. You want to own as much real estate as you can during inflationary periods.

You want to own as much of everything as you can during inflationary periods.

Except cash, obviously.

 

[Harry Bosch]

Most modern political parties agree that excessive inflation is a bad thing, and that it's a central role of a government to keep it under control (though they frequently disagree on how to achieve this).

Most modern political parties like to tell voters that they will prevent excessive inflation, and that they will work hard to ensure that specific commodities and services remain 'affordable'; Politicians love to tell us how hard they work to keep gas, food, and cost of living expenses down.

Yet as soon as the conversation turns to real estate, they flip the entire narrative on its head, and gush about how they will keep the housing market bouyant (ie., subject to as much inflation as they can sustain).

It's a total mystery to me how the same people for whom high gasoline prices are a disastrous vote losing scenario, also have high real estate prices as a wonderful vote winning scenario.

Do the voters like high prices for stuff, or not??

It's not that I disagree with you. But owning real estate is the one asset that can hedge the cost of inflation. I don't trust gold. You want to own as much real estate as you can during inflationary periods.

You want to own as much of everything as you can during inflationary periods.

Except cash, obviously.

Well, real estate goes up in value during inflationary period. Stocks generally go down. You don't want to sell in a down market though if you have diversified funds. But for many families, their number one monthly expense is their mortgage. If you own your house, the payments won't be affected by inflation.

 

[Playball40]

I chat with my friends who live in high price housing markets and I am stumped on how this works.
Do y’all mind sharing your stories?

I can't afford to live in my own neighborhood.

Moved into this house a little over 23 years ago when I was still married. Got divorced a couple years later and I got the house. Refinanced it two years after to get the ex completely off the note, and did another refi 10 years ago under the HARP. Thanks Obama!

Of course the price cratered during the housing crisis. Looked into a HELOC in 2008 or so and the bank was like "actually, the value of your home is less than what you paid for it, and the answer is no." Ouch.

Things have changed a bit since then, to put it mildly. My modest house in a suburb of Phoenix is - on paper - a mountain of money. I have turned off the ringer on my phone because I get calls from 8am to 8pm from investors/flippers/assholes wanting to make a "cash offer" on my house. For guano's and grins, I checked the rental market in the neighborhood, and have decided that if the people living next door and across the street ask how much I'm paying per month, I will change the subject immediately.

Same here in Tampa. I've had my house since 98. Refinanced a couple times for capital replacements, but overall it needs upgrading. I'm so tires of the calls and texts begging me to sell. Grrrr...... I'm not going anywhere but with insurance now over $6,700 a year, it's definitely more tight financially.
I just want to pay it off and retire one day. That's all. All my dreams of selling and relocating to retire somewhere quiet just isn't affordable anymore.

 

[Ford]

I chat with my friends who live in high price housing markets and I am stumped on how this works.
Do y’all mind sharing your stories?

I can't afford to live in my own neighborhood.

Moved into this house a little over 23 years ago when I was still married. Got divorced a couple years later and I got the house. Refinanced it two years after to get the ex completely off the note, and did another refi 10 years ago under the HARP. Thanks Obama!

Of course the price cratered during the housing crisis. Looked into a HELOC in 2008 or so and the bank was like "actually, the value of your home is less than what you paid for it, and the answer is no." Ouch.

Things have changed a bit since then, to put it mildly. My modest house in a suburb of Phoenix is - on paper - a mountain of money. I have turned off the ringer on my phone because I get calls from 8am to 8pm from investors/flippers/assholes wanting to make a "cash offer" on my house. For guano's and grins, I checked the rental market in the neighborhood, and have decided that if the people living next door and across the street ask how much I'm paying per month, I will change the subject immediately.

Same here in Tampa. I've had my house since 98. Refinanced a couple times for capital replacements, but overall it needs upgrading. I'm so tires of the calls and texts begging me to sell. Grrrr...... I'm not going anywhere but with insurance now over $6,700 a year, it's definitely more tight financially.
I just want to pay it off and retire one day. That's all. All my dreams of selling and relocating to retire somewhere quiet just isn't affordable anymore.

I actually did answer one of the calls awhile back. Not that I was interested (I have multiple friends who are real estate agents and I'd use them if I needed to move for some reason), but I wanted to hear them out.

After the initial pitch, I asked the caller "have you looked at the listing? You know the property has been off the market since 1999, right?" I guess the tone of my voice tipped him off to the fact that I wasn't happy, because he sighed and said "no, sir, I don't see the listing" and explained that he was just working a call center job...going down lists of numbers and reading a script in case he stumbled across someone interested in making a quick sale.

My friends who are traditional agents are competing with big companies that are using call centers to relentlessly badger homeowners until they get someone they can "transfer to their customer success department," with employees probably lured into the job with promises of "working in the fast-paced and exciting world of real estate," only to find out they're grinding through "leads" on an auto-dialer.

I actually felt kinda sorry for the guy. But only just kinda...

 

[crazyfingers]

I chat with my friends who live in high price housing markets and I am stumped on how this works.
Do y’all mind sharing your stories?

I can't afford to live in my own neighborhood.

Moved into this house a little over 23 years ago when I was still married. Got divorced a couple years later and I got the house. Refinanced it two years after to get the ex completely off the note, and did another refi 10 years ago under the HARP. Thanks Obama!

Of course the price cratered during the housing crisis. Looked into a HELOC in 2008 or so and the bank was like "actually, the value of your home is less than what you paid for it, and the answer is no." Ouch.

Things have changed a bit since then, to put it mildly. My modest house in a suburb of Phoenix is - on paper - a mountain of money. I have turned off the ringer on my phone because I get calls from 8am to 8pm from investors/flippers/assholes wanting to make a "cash offer" on my house. For guano's and grins, I checked the rental market in the neighborhood, and have decided that if the people living next door and across the street ask how much I'm paying per month, I will change the subject immediately.

Same here in Tampa. I've had my house since 98. Refinanced a couple times for capital replacements, but overall it needs upgrading. I'm so tires of the calls and texts begging me to sell. Grrrr...... I'm not going anywhere but with insurance now over $6,700 a year, it's definitely more tight financially.
I just want to pay it off and retire one day. That's all. All my dreams of selling and relocating to retire somewhere quiet just isn't affordable anymore.

I actually did answer one of the calls awhile back. Not that I was interested (I have multiple friends who are real estate agents and I'd use them if I needed to move for some reason), but I wanted to hear them out.

After the initial pitch, I asked the caller "have you looked at the listing? You know the property has been off the market since 1999, right?" I guess the tone of my voice tipped him off to the fact that I wasn't happy, because he sighed and said "no, sir, I don't see the listing" and explained that he was just working a call center job...going down lists of numbers and reading a script in case he stumbled across someone interested in making a quick sale.

My friends who are traditional agents are competing with big companies that are using call centers to relentlessly badger homeowners until they get someone they can "transfer to their customer success department," with employees probably lured into the job with promises of "working in the fast-paced and exciting world of real estate," only to find out they're grinding through "leads" on an auto-dialer.

I actually felt kinda sorry for the guy. But only just kinda...

Ya I'm getting calls all the time for my parent's house. I don't know how they learned that I am the person in charge of the house and how they got my phone number. It's usually Indian or Chinese accent people calling me. The house is in a different town and it's not yet deeded to me. It's in my mother's trust.

I've stopped being civil to these people. And they don't care what a Do Not Call Registry is.

 

[atrib]

You want to own as much real estate as you can during inflationary periods.

Real estate can be a good investment in the long term (better than investing in an index fund), provided you have the financial means to pay for it comfortably (i.e. are not leveraged to your eyeballs), and you are willing to put in the effort to take care of your property. My primary gripe is with people who buy too much house for their income, or buy a second property as an investment that they cannot really afford, and then live on the edge for the next 30 years while they pay it off. I personally know a bunch of people like this, and the financial and emotional harm they do to themselves because they thought they could "swing the payments" and live month to month, paycheck to paycheck, even while making 6-figure incomes. Same thing goes for those making 5-year lease payments for their $80,000 BMW while they can't afford to put in the minimum contribution to get the full employer match on their 401K at work.

I'm not smart enough or motivated enough to play in the stock market or the real estate market, so I put our savings in index funds. And we make a budget and follow it diligently. amazing what you can accomplish with a little planning and discipline.

 

[crazyfingers]

My primary gripe is with people who buy too much house for their income,

Ya. I remember when my wife to be and I were house shopping. The mortgage company wanted to lend us 3x what we were willing to take on. It was scary enough borrowing only 1/3 what they wanted us to borrow. We started off with a 30 year and refinanced several times to get better rates an finally switched to a 15 year. Then we paid that off faster than we needed to. Being in debt is not anything I want to do again.

I'm not smart enough or motivated enough to play in the stock market or the real estate market, so I put our savings in index funds. And we make a budget and follow it diligently. amazing what you can accomplish with a little planning and discipline.

My wife plays around with some stocks but we mostly have various funds too. If you're diligent about budgeting to add more each month it can add up very nicely after 30 years.

 

[Tigers!]

Most modern political parties agree that excessive inflation is a bad thing, and that it's a central role of a government to keep it under control (though they frequently disagree on how to achieve this).

Most modern political parties like to tell voters that they will prevent excessive inflation, and that they will work hard to ensure that specific commodities and services remain 'affordable'; Politicians love to tell us how hard they work to keep gas, food, and cost of living expenses down.

Yet as soon as the conversation turns to real estate, they flip the entire narrative on its head, and gush about how they will keep the housing market bouyant (ie., subject to as much inflation as they can sustain).

It's a total mystery to me how the same people for whom high gasoline prices are a disastrous vote losing scenario, also have high real estate prices as a wonderful vote winning scenario.

Do the voters like high prices for stuff, or not??

Cognitive dissonance

 

[Tigers!]

In Australia we have started to see house building firms collapse, not just small ones either. All were characterised by being mainly fixed price construction. Even the largest in Australia, Metricon Homes, had to fend off rumours of possible collapse (I worked for Metricon years ago as their IT Co-ordinator).
My daughter and her fiance has signed a fixed price contract with a small (thank goodness) initial deposit with a company. The next payment is not due till Oct. I have warned her that if they suddenly want earlier payement or more money it could be a sign of call flow problems.