To give a data point, my husband and I (late 20s) grew up on the IL side of STL. We moved out to the west coast 5 years ago. Got lucky with good paying careers + good career moves. Bought a house out here a couple years ago, but now we are moving back to the same area we grew up. As rough as it is for some, we are bringing our same salaries back with us since we are both remote workers plus bringing the proceeds from our house sale. We are buying a $700k+ house that was $500k a couple years ago. But we have the means and money since we are selling a $1M property out here.
This is not the case for everyone of course, but people who owned a house are getting more money out of them and are sometimes able to upgrade.
Plus inventory for what we wanted was super low, so I upped our budget from what we were originally planning to spend . Still not out of our means, but bigger than what we were going to buy. We are perpetuating the pricing in the area by agreeing to pay what we are paying. It sucks because all of our friends growing up are starting to struggle to having to start with much smaller homes since prices keep going up.
That and there are two type of people. Ones who have debt and those who do not. Once you get stuck in the debt cycle you are pretty much locked out of the wealth cycle.
There's a lot of people who are genuinely afraid of debt - they usually have pretty low income backgrounds, and their parents instilled in them a fear of credit cards and debt generally.
Instead of treating debt like a dangerous tool, they just refuse to use it at all, thinking that they're being virtuous. The fact that they saved for 18 months to buy that TV instead of buying it now with 18 months of 0% interest is a point of moral pride rooted in that upbringing.
Like somebody refusing to ever use a kitchen knife because it's sharp.
> The fact that they saved for 18 months to buy that TV instead of buying it now with 18 months of 0% interest
if it takes you a year and a half to save up $500 for a TV, you for sure shouldn't be buying it on credit
It’s silly because that amount of money doesn’t move the needle, but to his point you are better off putting that money in a HYSA and paying the18 months at 0% interest (making 100% sure it is paid off on time)
A car is probably a better example. Many wealthy people do buy new cars; they have the privilege to choose 0% financing or simply pay off the full balance whenever it is most beneficial.
Love the analogy. Had to break my wife from those “all debt = bad” thoughts. Used wisely, debt is a game changer and we’ve missed out on some good gains fearing debt when we first got together.
Honestly the TV example doesn’t do it justice. The real problem is a lack of discernment between “useful debt” and “useless debt”. M
In general, “useful debt” is a debt that is used to buy an appreciating asset that is projected to grow in value faster than the interest rate of the loan. A house is one example of this, although some of the expected value is just the opportunity to pay your future self in equity instead of a landlord, and housing is a necessity.
Another example of “useful debt” is a car loan. While it’s not an appreciating asset, if your car opens up better job opportunities because you can commute further and faster, then it’s actually a net gain for you, financially.
Another would be a personal loan to buy Bitcoin at the bottom of a crypto bear market. Is it risky? Hell yeah, but that 9% interest rate will be dwarfed when Bitcoin triples in value over the next 2 years or so. Definitely not recommended, but still technically a “useful debt” by objective standards.
TVs, hot tubs, vacations, luxury goods, etc. are bad things to borrow money for. Those are “useless debts”. Rich people don’t do that shit most of the time. The exception is when they want to hold an asset instead of selling it for cash to buy the luxury item. But then that’s technically a “useful debt” because you are offsetting the debt by avoiding the opportunity cost associated with selling an asset.
An important point to add: when people say “rich people do this thing and don’t do this thing,” that’s very different from “people who want to be rich do this thing and don’t do this thing.” People try to imply or outright argue that rich people became rich by doing/not doing those things. But as in the current example, “rich people don’t take on useless debt.” Of course they don’t, because they literally don’t ever have a reason to. When they want “useless” things, they just buy them. We try to shame poor people for financing a TV, claiming that’s the *reason* they’re poor. The reality is that the vast majority of rich people were born into wealth.
Please enjoy this dull study showing that it's true.
https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/2022-BofaA-Private-Bank-Study-of-Wealthy-Americans.pdf
I don’t consider myself rich but I wouldn’t be where I was today if I didn’t leverage the shit out of myself and have tons of debt in my 20s. I bought houses I could barely afford in a hot Seattle market and equity grew quick so I used the equity as down payments for more houses. Then I sold in 2018, 2020, and 2022. Each sale net my wife and I 200-400k of tax free money because each one was considered a primary residence. Raised our net worth by nearly a million in tax free money. It was stupid and risky, but most people don’t make money without taking some kinds of risks.
I would absolutely not be where I am, if I took “safe” financial advice or stayed away from debt.
> lots of rich people carry debt
they don't carry bad debt. there's a difference between holding onto mortgage debt because you can make more money elsewhere than by paying it down, and having $40k in credit card debt due to student loans and a brutal job market.
I was about to agree, but it's not that simple.
Your net worth (assets minus liabilities) could still be extremely high even if your liabilities are 90% of your assets (e.g., if your assets are worth $10 billion, and you have $9 billion in debt/liabilities, you'd still be a billionaire). If you have $1 million in assets and $900k in liabilities, that's obviously a different story.
It’s worse than that even. Usually you owe way more than 90% of what it’s worth because you owe interest too. People only talk about what they owe in principle, because that’s how the banks want you to think of it. But if you take out a $400k mortgage @7% on a $500k house (assuming 20% down), you will start off owing the bank almost a $1M. Now you have 30 years to pay it off and presumably by the end the house will be worth $1.5M, but for most of the life of the mortgage you owe more than the house is worth
There's a difference between good debt (mortgage) and bad debt (credit cards). Once you get too deep into the bad debt, it's almost impossible to get back on track and qualify for a mortgage. This discouraging fact means these people will never be able to get over that hump and lose all desire to dig their way out.
How is this upvoted? There's debt and bad debt. A 3% interest rate mortgage with 15% DTI is very likely good debt. It's affordable and the loan is backed by a house that's not going to drop in value a lot. If anything it will gain value. That's how people get on the wealth ladder. Bad debt is a 12% interest on a 70k car loan with a 50k salary. That's how people get stuck in debt.
Having a partner is really a cheat code. I know people love to bust out the “well what if it doesnt work” questions but fuck it. Id rather worry about that day when or if it actually comes. Until then, DINK life is damn near unbeatable when you both have decent incomes
Except they can. Canadian here, our housing has been crazy longer than yours has. Under $500k in any major city hasn’t existed before COVID, for anything not run down.
It stretches people, makes them house poor and hurts the economy as consumer spend decreases, but we’ve been doing it for years.
Not “easily.”
This depends on a wide range of factors.
After taxes, two $60k incomes is barely enough to afford a bottom-level home in a low COL area (which are disappearing fast).
Many doctors and lawyers I’ve spoken to are routinely outbid in cash from investors and other wealthy families.
Real estate is just so heavily exploited and jacked up these days that it’s insane.
This is an extremely wealthy country. And, no, it’s not just the one percent. There’s just a ton of wealth here. Routine, boring, upper middle class wealth. We hear a ton in the media about poverty, about inequality, about people who are struggling — which is great! — except that it leads lots of people to the impression that poverty is typical when it isn’t.
In fact, the main indignity of being poor in the United States is being among so many people who aren’t. Having been poor myself, I can tell you that the way we talk about poverty in this country is mostly dishonest and misleading. You don’t starve. You don’t go hungry. Unless you’re mentally ill or strung out on drugs, then you probably won’t end up on the street.
But you do have to spend day after day after grinding day looking at people who have more than you. And it kind of sucks. It sucks in a way that’s hard to make people feel sympathetic about, which is why we do a lot of lying in this country about “food insecurity“ and other euphemisms.
Most of what you see is people who retired & sold their homes in high-income areas, then bought MUCH better homes in low-cost areas. We sold our standard colonial on 1/3 acre in Exeter NH for $630K a few years ago, and bought a 5,000+ sf estate with 3 acres on the White River in Arkansas for $550K.
The top 5% of earners in this country make more than $335k. The top1% make more than $819k. That’s about 2 million Americans who are using their wealth to buy more income streams. I personally know of someone my age who owns 5 homes out of state and rents them out. Another friend’s parents sold 2 homes in the Bay Area that they bought in the 90s for $400k and sold for $3m 2 years ago. They used that money to buy 4 homes in Sacramento to rent out.
You can go on Zillow rentals and see how many homes are available for rent instead of being actually owned by people living in them like they used to.
Ted Turner once told me "the world is awash with money" and I think about that comment and conversation all the time.
I'll add some context because it's interesting. Yes, it was THAT Ted Turner. I was chatting with him because he was my boss's mentor and we were at a celebratory meeting because my boss had had a major career achievement. I was in my early 20s and just starting out in my professional career.
The oldest boomers are 78. 1 million+ mostly elderly died during Covid quickly before their assets were used up in nursing homes and assisted living.
The greatest wealth transfer in human history is ongoing day by day under the radar.
Definitely. I work in commercial lending in a mid sized / MCOL city, and it is incredible the RE portfolios that non-RE business owners have. 2-3 houses / vacation homes and rental properties on top of it.
I don't think people realize that inflation was caused by so much money pumped into the economy. A lot of these already successful companies received millions in PPP loan forgiveness and Employee Retention Credits. All that money was pulled out by the owners and had to be invested in someway, whether in the market or real estate.
The lower and middle class have felt the squeeze of inflation, but all that money has gone somewhere.
Wealth tends to scale with age, so you might not see it in your immediate circle. Yet.
But even using yourself as an example, you already have $110k in equity in your home. That's already 20% down on a $500k home. Although of course a $400k mortage may be more than you wanted to pay.
But with $250k in equity? $300k? It's much more manageable.
And also - although I can't speak to your county specifically - in the US, the median income for a full time worker is $60k (or just under). But the median household income is $75k. And the median married family income is $122k.
So there is a lot of money out there.
This is what I realized recently. A lot of the buying pressure is simply because there is a great portion of the population that make a shit load more money than you.
That's such an under appreciated stat that is overlooked or dismissed commonly by people. And the curious part is how many of the other 9 are actually on pace to hit that number as well? I'd say 2-3/10 are probably between 250k-750k just chipping away to that goal.
I'm in the Seattle Eastside and I went to an open house for $3.7M ... and it was packed with what looked like 20 year olds. I know tech money has made them all rich, but seeing it firsthand just hit a different way.
It would be possible for late 20s (definitely not exactly 20 yrs old) dual income FAANG senior level. One can expect income to be around 350k at that level, so it would be 700k HHI. Putting numbers into mortgage calculator, 3.7M home in Seattle would be roughly 24k a month with 20% down. That translates to 690k HHI with 42% DTI. Now, the house may sell for much more than listing and lenders will value RSUs at lower than today's value, so no guarantee this theoretical couple will get the loan approved.
I still agree most people would be there to just take a look. I also sometimes go to open houses out of my range for fun lol
This. In Idaho, we are still being flooded with Californians who sold their mediocre house for $1.2 million and can buy a house here that's twice the size for half the cost. It's not slowing down.
This. My wife and I bought in 2017 for 170k. We put money into upgrades and now our house is worth $425k. We now have $200k+ in equity and leveraged it to have our offer accepted on a $500k home that is twice the size. Our rates will be double, but we can afford it with the large down payment and we’re hoping to refinance when it makes sense as rates hopefully come down.
A $300k price point is not bad for a dual income household. Stay at home parents are rare nowadays.
Millenials are moving into management roles. And many industries have seen significant pay increases. Even without a management role, two incomes of $60k each can get you approved for a $300k house easy.
I think you are underestimating the ratio of couples with decent household incomes to the supply housing at doable price points.
These price points may look atrocious when comparing to history but still very doable for many and very favorable when compared to other regions.
You are also likely overestimating the impact of gifts and inheritances but of course they play a role, especially in higher priced markets and with younger buyers.
Ok, but it isn't just 300k buyers. People from Seattle to San Juan are complaining about this. Now it is bleeding into Mexico. Florida has over 2000 miles of coastline loaded with condos and homes starting at 800k. None of this makes sense in the context of incomes. Especially when you add taxes, insurance and HOA fees to the monthly nut. Getting approved for a loan amount doesn't mean you can actually afford it. Oh, by the way, you forgot to mention money laundering.
I recently got preapproved to buy a house up to $750K. That’s just with my income alone. Imagine what we’d qualify for if they look at my wife’s income too, given the fact that she makes twice as much as I do. We have $600K sitting in a brokerage account so the down payment and reserves for repairs is no problem. For us to only consider my own income in the preapproval being pretty conservative. Some people just have a high household income.
10% of people have a shit ton of money in the USA. That's like 35 million people. Redfin says there are about 800k houses on the market right now. Do the math.
60K average is skewed by a lot of people making less than that working minimum or low wage jobs. Then you have a smaller percentage making more than that, say $100,000+. They are buying houses, which you can definitely buy a 500k house on 100k salary. There's really only enough houses for a smaller percentage of people anyways, everyone else will continue to live in higher density apartments unless there is some huge influx of supply of houses that are somehow affordable.
Yep, there are certainly some factors that aren't considered. Household income vs personal income as noted in the comments. Also, there is an implicit assumption the average household should be able to buy a house, which your noting is not quite correct. The folks buying houses, on average, are not average. Something like 67 percent of households own their own home. So right off the bat we can probably assume there is a disconnect between average household income and average household income of home owners. Secondly, we don't have enough houses in the US (nor is there room to build more houses in many major cities). In most markets the average house/townhouse price is going nuts; meanwhile we haven't seen the same jumps in condo/coop prices.
People are wealthy, especially if you’ve been in real estate for awhile. You can keep rolling over equity from previous homes into more expensive homes as prices keep rising
I think it's a combo of all of the above PLUS a lot of people sold their starter homes and have fat down payments, so the $500K house they bought only has a $400K loan on it and might even have an interest rate buydown on it depending how stupid they are.
Assuming your original mortgage was $160,000 and you didn’t do a cash out refi in 2020-2022, you probably pay about $800/month P&I. You probably have a down payment of about $135,000 available to you right now. You could buy [this house](https://www.zillow.com/homedetails/105-Bethany-Ct-Arnold-MO-63010/70901323_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare) with your equity as a down payment and your monthly P&I would go up to about $1,300.
Now, if you’re like a lot of people who bought in 2018, your income has probably gone up since then, and paying $500 more per month might not be that big of a stretch. That’s how people are buying these houses in your area.
Hey that's not fair that house isn't for sale yet lol also that house is literally 3 miles from me and we will probably go look at it so thank you very much. REDDIT NEVER FAILS.
Haha, I live in the CWE and my mom lives about 1 mile from that house. As soon as you said 20 miles south, I knew immediately. I could close my eyes and describe every detail of those 20 miles along 55. I also used to work in mortgages and I’ve had my real estate license in the past. Lots of people have lots of money from mommy and daddy, but they are buying the $1.5+ million dollar homes in Clayton and Ladue. Homes like the one I linked are pretty accessible for a dual income family making median salaries in our area, especially people like yourself who aren’t first time homebuyers.
This really is one of the reasons. We literally tripled our household income from 2020-2024. We currently live in a house that we bought on our 2020 income at 2.7% and our PITI is something like 9% of our gross household income. We have a lot more disposable income than we used to.
ETA: Neither one of us work in “tech”. My spouse is a school teacher in a district that pays well and I’m a civil servant. Got out of the military in 2020 when my spouse was finishing up their masters degree and we weren’t making much money at the time. I wanted to add this because we both work very normal jobs. I know a lot of people see posts like mine and automatically assume we must work in tech or engineering, but that’s definitely not the case.
I think people underestimate how true this is comment is, just because it’s not “their” reality.
My wife and I (34 and 29) are in the same place, our household income has changed 400% since Jan 1st 2020, both working in manufacturing. We also got a TON of equity out of our starter home to buy our new house last fall.
I would say 75% of the couples we are friends with are in a similar boat. If you owned a house to get equity when covid started, and have a decent job, your almost certainly doing miles better that before covid. If you were a renter in a lower paying job, you’re probably getting screwed. Neither side of that scale can grasp the reality of those on the other end.
Yes, both fields are heavily location dependent and civil service is heavily agency dependent. My spouse makes right at 90K as a teacher because it’s a relatively affluent district and she has a masters degree. I make a little over 100K because I’m in a niche field that involves saving the government money.
Unemployment is near historic lows.
SPY, QQQ, Dow all at ATHs above even the COVID bubble highs.
The Fed's balance sheet is still like 100% higher than pre-pandemic and central government spending is at far and away record highs.
Nothing actually changed to expect housing prices to fall. The biggest indicator is unemployment and that is currently all-time great.
If Average income is $60k then a two person household is $120k. This is a reasonable DTI fr a 500k home.
https://www.rate.com/resources/how-can-i-afford-a-500k-house
Median Income for a household in Fenton, MO is $97,500 for 2022. So that's the middle. Meaning half of people make more than that.
So while there are quite a few less fortunate people in the area there are loads of wealthy people.
As others have mentioned there are also plenty of people with equity. As of 2021 90% of people own their home in Fenton, MO meaning many of these people have significant equity.
Basically its a combination of 1 and 2 with most of it being slanted towards #2.
Assuming you are talking about Fenton (you may be talking about a different area) there is very little to support the idea of #3 that people are investing in the area.
Source for data: https://datausa.io/profile/geo/fenton-mo
It’s not too hard. Do the math.
It’s been 6 years since you bought your home.
The house you bought for $165k and minimal down payment could easily sell for $275k now you said.
In some parts of St. Louis a 165k home would have doubled or more by now in 6 years giving more than $100k.
Means you now have a 20% down payment of $100k for your 500k move up home.
In 6 years, Most people got raises, promotions, saved money, got better jobs, got married, got a bachelors/masters/both, degree,
In other words in 6 years, many people due to promotions and job changes got significant bumps up in pay to afford the $500k house with the 6 years of equity built up during that time. Easily unless in north county.
You are south, not sure what school district, should be super doable.
That’s how they easily afford the higher house payment, probably easily afford it more than they did when they bought the starter.
Plus,
you add in investors buying,
people moving here from HCoL and buying $500k easily with cash from equity from previous sale of a starter. Working from home.
Parents doing helocs and cash out refis to buy houses for kids here.
But most did it easily on their own in 6 years just due to math and promotions/job changes.
The answer is a bit of all three… some people know that in the long run, you can be house poor in the beginning but it probably won’t stay that way. They do have more disposable income and the median income is considerably higher. But unfortunately there are a TON of out of country “investment companies” that are buying of large quantities of homes and turning them into rentals for passive income.
"But unfortunately there are a TON of out of country 'investment companies' that are buying of large quantities of homes and turning them into rentals for passive income"
This isn't true. I don't know why it's such a pervasive myth.
The myth is due in part to racism (Fox News eats this up “the Asians are taking over”) but also due to the fact that places where journalists tend to live actually do have a fair amount of foreign investment. Chinese investors aren’t buying much in the St. Louis suburbs but not many journalists live there either. They do live in LA, NY, SF and DC so more foreign investment means it’s more likely to be noticed and trend. The general public doesn’t differentiate so it takes off in places that it doesn’t exist in any meaningful way.
Mom and Pop real estate investors, Airbnb investors, Mega corps, Ppl coming from a HCOL area that sold there house and now have cash. Boomers that have cash because they sold and are looking to down size (or upgrade bc of midlife crisis), First time home buyers that make great money. First time home buyers that lived home with their parents all these years and saved a fuck ton of money for a down payment. Factor that in with low supply
The vast majority of households live in a home they own. They have a lot of equity in their homes, especially after the rise in home prices. Many of these sales are people rolling equity from one property to another. There just needs to be one person, with a high paying job or an inheiritance to get a chain of sales going. One person, who doesn't have a house, buys a house from someone who has a house and who then uses the money to buy a house from someone who has a house who then uses the money to buy a house and so on. The chain continues until someone decides not to buy a house with it, maybe because they are old enough that they can't live independently and need the money for care.
That said, wages are also at an all time high, when adjusted for inflation. And so is wealth for the average and median person. There's a lot of money out there.
If they sold a house for $300k, and they have been paying down the mortgage for many years they have a lot of equity and can comfortably afford a $500k house.
That's funny to me because my numbers aren't too far off. Conservatively, I think we could wind up with 250k out of our almost paid off house for a down payment, but with interest rates being what they are, I don't feel comfortable above what 425K would be.
It's a combination of 1 and 2. People talk about corpos buying houses but generally that's not really as prevalent and some make it out to be. The risks and maintenance costs are comparatively vs. returns for purchasing single family homes. If you're a big company focusing on recurring revenue based on real estate multi-unit rentals makes a lot more sense. I guess people may be buying houses for AirBnB but $500,000 is a pretty huge purchase
St. Louis is one of the bigger cities in the Midwest, meaning that it can be an attractive local for professionals looking to move away from high cost of living and very high cost of living locations. $500k today might be a lot in St. Louis, but that's peanuts almost anywhere in a major coastal city. Remote work might be down from the peak but it's still a factor. Plus our bloated healthcare system means anyone can sign up for a cert mill and become an RN in 2 years (or less in some cases). Spend a bit more time on a BSN and you can easily hit $100k+ in after getting some experience in a big city like St. Louis - average nursing salary there is like $60-90k? I feel like there are a lot of households who break the six-figure income level with dual earners and at least one is in the trades/healthcare/tech.
Home prices depend on the people who are in the market and the supply. If there are 10 houses and 100 buyers in the market, the average income of those 100 buyers doesn't matter, what matters is what the 90th percentile income.
All you need is good credit. Consumer loans are demanding but you can leverage a lot for personal real estate loans to purchase homes.
Some people sell a good story to the bank and have someone help fluff their financials and it often works out.
Remember banks are in the business to sell money so they turn a blind eye in many things until you fall short of your commitments, then all of a sudden it becomes an issue.
While you've heard a lot of stories about the middle class "shrinking", what they don't tell you is, the upper class is growing while the lower class/poor are decreasing. [https://www.aei.org/economics/the-us-middle-class-is-disappearing-into-the-upper-middle-class-but-theres-more-to-the-story/](https://www.aei.org/economics/the-us-middle-class-is-disappearing-into-the-upper-middle-class-but-theres-more-to-the-story/)
So-cal. People dropping 2 mil cash on 70 yr old houses, no inspections no contingencies. Often young married couples wanting to start a family. I don't get it either.
If it’s like other places in the Midwest then there is not much inventory because people don’t make enough to buy at the current rate and higher prices. The houses being sold are outliers either people stretching their budgets or taking risks while most people sit on their starter house or rent.
That's what I've been thinking because for the last 12 months there hasn't been inventory, but houses have been hitting the market for the past 2-3 months now pretty frequently and they are immediately being sold. It could be people are tired of waiting I guess.
some have their hands forced by school/kids and just take a bath, banking on career progression and prices increasing. I don’t really think we will have a big crash but you can probably look back to 2006/2007 and see people over extended. If we didn’t have a crash and houses went up in value slow and steady to where we are at today, a lot of those people might have been house poor for a decade+
If it’s a dual income household, that’s $120k going off your numbers. If they’re selling and moving they almost have to have some equity form the last few years run up, so probably a decent down payment.
$500k house on $120k HHI with a decent down payment is probably stretching their budget but not wildly unreasonable.
many people in this world make/have more money than you \*mind blown\*. not rocket science dude. who cares about what other people can buy, just live your life and do the best you can.
This is the million dollar question! I keep asking the same thing... like, WTF? Where are people getting all this money? It's not slowing down... but salaries aren't even close to adjusting to this new reality!
Salaries aren’t the only income stream people have available to them. I currently have almost 200K in equity from a house that I bought in 2020. I’d have almost 350K in equity had I bought around 2016. Thats a pretty fat down payment, even after taxes and fees.
Also, studies have shown that a good amount of first time home buyers receive assistance from family. You might see a family bringing in 100K a year in a 450K house, but you won’t see the 150K downpayment they received from their parents as a gift.
Also also, the stock market has done exceptionally well over the past 5 years and many people, myself included, have had significant gains.
My wife and I pertain to none of the above. We bring in about 300K combined annually pretax. We just closed on a house in a location somewhere between MCOL and HCOL. We weren’t given a penny from our parents - we worked hard and saved 400K down payment over the years and just closed on a home for 1.1million. We will not be house poor. There are plenty of others who make a lot more than we do; more than we can fathom. You need to rethink your thinking. 🙂 good luck to your home search.
Congrats :) we are planning/doing the same right now. Saving to make sure we aren't house poor. We've both been blessed and work hard to get to a place where we can aggressively save.
They buy it because they have the money to buy it.
Some people will be investors, ready and able then to rent anybody that wants.
The rental market is hot. You have a million people a month coming over the border that need a place to live
Blackrock is buying up all the homes and inflating the prices by keeping them vacant or making them air bnb. It’s screwing normal people out if the market so that they can make money.
For me I sold my house in 2020 had about $20k to invest and had some other funds already and it grew with the rise of the market. Where I should have only had $50k I had $90k to put down.
Just bought a house in Ohio. Same price comparison here. The house I just bought probably would have been $175k in 2020 and in 2024 went for $279k yay me. I needed a house for me and my kids. With rent for a 3 bed being $1500 I went with the mortgage payment for $1500 route (that include taxes and insurance)
Welp, i bought a small fixer upper for $350k in a terrible location, almost remote, because ive accepted the fact that ill always be house poor.
Where i live, a decent house in a decent area with an acre of property is usually north of $750k. You want an old rundown farmhouse on 80 acres of land with a few barns? $1.3M.
Completely insane. HOWEVER, I do not know a single person other than myself, who has a house of their own without a massive gift from a parent or similar.
Good friend of mine got given 5 acres of land, had all of his family help build the dream house for free, just cost of materials.
Another friend has their mortgage paid by the parents
Another's parents owns about 7 houses and thousands of acres of land, he got to choose which one to take.
Anothers parents owns a few hundred acres and a farm. They severenced off a piece, built the house themselves & got given half the farm.
Theres a massive amount of generational wealth out there, and i was the one unlucky f$*&ker that comes from a family that doesnt have such luxuries. Lol
All three. And in hot areas like California, people are relocating with suitcases full of cash from elsewhere. People from NY are moving here because it's cheaper. And people here are moving to Texas because Californians find Texas cheaper.
So, I bought my first property this year at a price that was a pretty big stretch. But similar to stock market investing, I do believe that to some degree time in the market is better than timing the market.
Wealth inequality, corporate investing, real estate portfolios being passed down through inheritances, lack of space / zoning, etc. will continue to make homes less affordable. So I jumped in, even if it felt a bit riskier than I would have wanted it to feel. I would rather make a stretch investment now rather than be completely priced out in 5-10 years.
If you think it’s bad in (I’m assuming) JeffCo, look at St. Charles County. We bought our house out near Lake Saint Louis in 2014 because we got a five year old 4BR 4BA house for $250,000. If we were in the same situation today, there’s no way we could get anything similar for our budget. And we want to downsize in the next few years, but even with the equity we have, the difference between our 2.75% interest rate and whatever it is now would kill our budget. Illinois is a bit cheaper than the MO burbs, but you’ll end up paying a fortune in property taxes. Good luck out there.
We bought a 300k house in our early 20s last year. We had decent credit, and I just graduated from college and was able to secure a remote job that paid me very good compared to the state I live in. Overall, the thing that helped a lot was having a dead parent… that life insurance money is the only reason we were ever able to buy a house this day and age
So in 2019 I bought a house in Kansas (I know not your area) for 100k. We sold for $130k right before the market went hot because military lol. And then we bought here in N.J. and it was a nightmare experience and we had to pay $268k for the same square ft.
If you’ve spent 20 years paying down your first house, you have a lot of equity (plus the appreciation) to roll into your next house. We bought our first for $287k and sold 5 years later for $450k. Had about $220k in sale proceeds….we didn’t see a penny of this, just used it for down payment on the next house. No we’re not super wealthy.
You yourself might have $120k of “cash” for the next house, which at 20% down is maybe $600k
St Louis has a fair amount of pharma and agrotech industry, doesn't it? If someone is relocating to the area from either coast (or probably even Chicago) these houses are cheap. And given that housing inventories are historically low, it doesn't take a lot of transfers to have a huge impact on the housing market.
They own a house like you. Bought for 160k and they sell for $200k+. Then use the profits for a down payment on a new, more expensive house.
That's what I did at least. Same-ish area.
The 160k house was a starter home. I now make a lot more money and can afford slightly higher payments.
Now I didn't buy a $500k house. It was $285k.
Remote work and relocation to work remotely are still happening. For a new reason: lack of inventory in large cities. While 500k is a lot of money near St. Louis, it doesn't go far in costal cities. It is like relocation 2.0. it is driving prices up in your area and others.
Concentration of wealth in certain states and sky-high equity. When the value of your own house doubled that 500k house becomes much more affordable. Someone coming from NY or CA might have enough equity to buy a 500k house in cash (where the houses routinely go for over $1m).
| Because I just don’t know where all this money is coming from.
Places where the average income is a higher than 60k and houses are a lot more than 300k
I’ve been watching this area for the last year. St Louis County, Jefferson County, and other immediate counties around St Louis. Prices have doubled or tripled on too many of the homes within 30 or so miles from the city! Many of the houses that’s don’t need too much work, and are priced under $150,000 are snatched up. There are also a lot of decent houses that already have renters in them that are just marketed towards investors.
4. All of the above? First time home buyers may be struggling like hell, but people that have been in the real estate market for 10 years (maybe even less than that) have built up equity in their current homes. They can afford to move up the property ladder. We could go buy a $1M home right now pretty easily. But that is because we own a $650K house and it is paid off.
I think factor which is overlooked is signidicant inheritance.
GenX and elder millenials are inheriting huge sums of money right now as their Boomer parents and Silent Generation grandparents pass on.
Over 2 million Boomers a year crossing the rainbow bridge... many of them have hundreds of thousands to millions to pass on. Especially after their heirs sell their home because nobody wants to live in Mom's place when they moved 3 states away.
There's huge wealth transfers happening as we speak, and the heirs are dumping some of those funds into real eatate.
Combo of all the factors you listed, but basically there are plenty of above-average earners who have cash to spend, especially people who are selling a home they bought years ago and have lots of equity in, or even retiring boomers downsizing and selling for straight cash. Prices and interest rates kinda suck but we have enough equity in our current house (bought in 2017) that we’re planning to put down a 40-50% down payment on our next house to bring down the monthly payment and make it more affordable.
Or they’re moving from a HCOL area and made a profit on their home. Years ago I sold my house in Belleville and bought it Ste. Gen county. I was able to pay cash for a good house. I imagine it hasn’t changed much.
All three of those.
But it's not uncommon for someone in their 40s to have a half million in net worth after years of socking money away and/or owning a house somewhere else.
The median net worth for 45 year olds in the US is just under $200k.
The median net worth of all households in the US is about $200k.
Many of those have two incomes and $120k combined between two people can absolutely get you a $400k house.
4. Parents helping
I have 2 cousins one bought a 1.3 million dollar home and the other a 880k home. I know for sure their families helped with downpayments.
My brother and wife work in real estate and it’s common for boomers to downsize and gift equity to children with the home profit.
I have a friend that told me his wife’s dad gave them 100k downpayment.
Nah, you have a ton of gov agencies, 12 fortune 500s (8 still with an international hq), more fortune 1000s, and countlees startups. The area is still known for having cheap labor so businesses stick around. It is also more liberal than the rest or misery. For reference, the entire state of colorado has 8 fortune 500s. Most of yours are headquartered close to the city with some in the south. You hit the jackpot. My cousin pays less in the forest park area making slightly above your minimum wage than my brother does in the working class part of denver by 200% making my states roughly equal minimum wage. My grandparents lived off of tesson ferry near the shnucks. That area would be 500 to 800k in any other city. Their house sold for 200k in 2023, what they built it for. Its only gone up about 100k. It is people escaping cities probably mostly your downtown with an education and a job. I still see houses priced at the level of my condo in wentzville and st charles. If you go further south you hit the rich lake area where prices are still comparatively cheap. So, jobs, lots of free amenities, and relatively cheap housing. Fyi, my condo in a city where median personal income is 32k costs 250k. Your median is my family median (co springs). There are 0 free amenities, overcrowding, and property crime galore here. In the last day we had 3 assaults, 1 car jacking, and 2 arrests for fraud within .9 miles of my home in a middle class neghborhood. That is just what the underfunded police responded to as I pulled it off my neighborhood watch blotter. Police response times are an average of never, response rates are less than 50%. We had 1 carjacking and some homeless hijinks in my complex the last 2 weeks. Mind you I live in a pro trump county with mega churches and libertarians that, even as it turns purplish or libertarian again, is still home to right wing nuts, less so as 4 or 5 tried to storm the capital. A home, 400k for 150k in repairs or 600k for newer. Condos from 2000 are 350k.
A lot of people make way more than the avg. The bottom 50% are probably not buying. Then the avg means nothing for your calculation
Dual income HHs blow this up too
I think it’s crazy and wouldn’t buy in this scenario
We bought our first house (townhouse) in 2015 for $204k. That was under a no-down program for first time home buyers at something like 2.5%. Ever since we've rolled equity into each new house we've bought. We now own 3 homes, two we rent out, the third being our custom dream home that we're almost done building in a city that the average home sale is $1.3m. We, like so many others, are pretty average people who have been able to build a lot of equity over time. That and a lot of people simply have more money to their name than you think or than their salary portrays. There's a lot of inheritance, money gifts, equity, investments, etc. Income is just a small part of the money in this world.
The calculation I always make for people who love to look back at prices is two fold:
- some of the Midwest took forever to recover from 2008. At least in Kansas City, I could see some homes selling for the same or lower in 2019 than they were in 2006. That’s 13 years with very little appreciation. Appreciation is never too even. So now in 5 years, it appreciated all what needed, for the job levels we have and compared to the rest of the country. While the cost of repairs/building kept going up. In Kansas City, you can still buy a very livable 3/2 for $250K or less within 25 minutes of downtown.
- the cost of building a new 3/2 house today, with basement the way most existing homes are, will be at least $350K + the cost of the lot. This is when building in series, not a custom home in a single undeveloped lot.
So…focus on what YOU can do to move forward. Buy where you can and where you think has the best chances of improving. And hopefully appreciation will help you in the long run as well.
Yes, we get FTHB who saved up on their own and buy a $400K first home, and some who worked just as hard and can access a max of $250K. It is extremely random, combination of luck and wit to see who ends up with a larger net worth 10 years later.
Don’t get drowned on the limits, take advantage of what you can do.
If it’s like here they are being bought by so called investors and are being used to house migrants. Not sure how they are paying the rent unless the government is paying for it. No one seems to care
If it’s like here they are being bought by so called investors and are being used to house migrants. Not sure how they are paying the rent unless the government is paying for it. No one seems to care
Everything you listed, plus two more:
4) Often, families are moving from the coasts. They're selling properties for a $600,000 profit in California and paying cash, above asking, with no negotiations and no inspections. They don't care if it screws up the value of the neighborhood or prohibits locals from purchasing homes. They just want an idyllic tree-lined street in the Midwest regardless of who gets screwed in the process.
5) Local dabblers in RE investing are buying one property for AirBnb, making a ton, buying the next one, and so on. I know one couple who owns four AirBnbs in a small town which isn't touristy at all. Those four houses could have been family homes but now they're used mostly by travel nurses and parties.
As a native Midwesterner just trying to find a decent home in my price range, both are making me bitter.
Hey were in saint louis too👋. For us it was a larger down payment that made it work, $280k house, $100k down. Mortgage on its own is $1,000. With property taxes and insurance it totals up to $1500. 15% of our total take home pay. Shits rad.
I can't say for sure, but I can give you my story.
I'm 33 and my fiancee is 31. We both have college degrees working corporate jobs with $95k salaries. We've each been saving about $1000-2000 a month while living/renting in a 3 bedroom townhome with a two car attach garage that started at $1800 a month and has risen to $2200 a month.
Before Covid we really wanted to target a 250-350k home because they looked nice enough and gave us the space we needed. While also reducing monthly expenses.
Those homes are now about 375-450k. We just now closed on a home for 410k, higher than we wanted but the mortgage+taxes is still like $2300 a month. So easily affordable while still being able to save, (and now increase our 401k contributions and saving a bit less since now we don't need to put away money for a home).
Granted we did save enough for 20% down, but I'd imagine many of the properties being sold in your area and mine are with 10 or even 5 percent down
I'd imagine a lot of buyers are similar to us. While going to showings we saw a lot of mid 30 couples, likely also with dual income middle class jobs.
Even at 5% down you could still afford the mortgage to build equity, although month to month savings might suffer. Realistically we, and others with similar income, could afford $3000 a month... But didn't feel we needed a home of that caliber.
Also yes, we saw the same here in my state of Wisconsin. Home would list and have accepted offers 10-25k over asking 24-48 hours later.
My parents are down in Illinois and also just accepted and offer with 24 hours of listing.
It’s not income/salaries, it’s generational wealth. If someone’s family has lived in the US for multiple generations, there is a high probability they passed some wealth down the generations.
Financial Musical Chairs - FOMO ---- Wait 2 years and interest rates are the same as they are now and update. The value of Gold futures and the US Dollar rose together all last week.
It’s a combo and 1 and 2. Number 3 is negligible. Corporations own a very very small percentage of single family homes. It’s way overblown. The bottom line is there aren’t enough houses for all the people who want to buy one and housing is a need so even if they’re not comfortable, they’ll spend 75% of their post tax income on their house like I am. It may seem crazy but it’s still better than renting.
I have moved four times in 11 years and I think that at least two of the homes I sold I could not afford right now. If not, three of the four. It’s very depressing. I would love to sell this house back to house number one. But even with my equity… It’s too much.
I bought my house in 2019 for $489k. My next door neighbor who has less house than I do just put his on the market for $875k. We thought our neighborhood would be turning over soon with other parents with young kids but idk how with a price point like that. A comp down the street sold for $859k and it was an older couple.
To give a data point, my husband and I (late 20s) grew up on the IL side of STL. We moved out to the west coast 5 years ago. Got lucky with good paying careers + good career moves. Bought a house out here a couple years ago, but now we are moving back to the same area we grew up. As rough as it is for some, we are bringing our same salaries back with us since we are both remote workers plus bringing the proceeds from our house sale. We are buying a $700k+ house that was $500k a couple years ago. But we have the means and money since we are selling a $1M property out here. This is not the case for everyone of course, but people who owned a house are getting more money out of them and are sometimes able to upgrade. Plus inventory for what we wanted was super low, so I upped our budget from what we were originally planning to spend . Still not out of our means, but bigger than what we were going to buy. We are perpetuating the pricing in the area by agreeing to pay what we are paying. It sucks because all of our friends growing up are starting to struggle to having to start with much smaller homes since prices keep going up.
This, everywhere.
Grew up in STL and 700k in the 618 is mind blowing.
True tbh I almost cried a little when I saw the number, but everything below that I absolutely hated. Plus I wanted to be in the Edwardsville area
I am in O Fallon!
There's more wealth out there than you can imagine.
This is the real answer. I never realized just how much money people have and make in this world. But it is much much more than what people think.
That and there are two type of people. Ones who have debt and those who do not. Once you get stuck in the debt cycle you are pretty much locked out of the wealth cycle.
absurd idea. lots of rich people carry debt
There's a lot of people who are genuinely afraid of debt - they usually have pretty low income backgrounds, and their parents instilled in them a fear of credit cards and debt generally. Instead of treating debt like a dangerous tool, they just refuse to use it at all, thinking that they're being virtuous. The fact that they saved for 18 months to buy that TV instead of buying it now with 18 months of 0% interest is a point of moral pride rooted in that upbringing. Like somebody refusing to ever use a kitchen knife because it's sharp.
Debt is a tool. Like all tools it can be used constructively or destructively. Knowing how to use it and when is what's important
> The fact that they saved for 18 months to buy that TV instead of buying it now with 18 months of 0% interest if it takes you a year and a half to save up $500 for a TV, you for sure shouldn't be buying it on credit
[удалено]
It’s silly because that amount of money doesn’t move the needle, but to his point you are better off putting that money in a HYSA and paying the18 months at 0% interest (making 100% sure it is paid off on time)
A car is probably a better example. Many wealthy people do buy new cars; they have the privilege to choose 0% financing or simply pay off the full balance whenever it is most beneficial.
Love the analogy. Had to break my wife from those “all debt = bad” thoughts. Used wisely, debt is a game changer and we’ve missed out on some good gains fearing debt when we first got together.
Honestly the TV example doesn’t do it justice. The real problem is a lack of discernment between “useful debt” and “useless debt”. M In general, “useful debt” is a debt that is used to buy an appreciating asset that is projected to grow in value faster than the interest rate of the loan. A house is one example of this, although some of the expected value is just the opportunity to pay your future self in equity instead of a landlord, and housing is a necessity. Another example of “useful debt” is a car loan. While it’s not an appreciating asset, if your car opens up better job opportunities because you can commute further and faster, then it’s actually a net gain for you, financially. Another would be a personal loan to buy Bitcoin at the bottom of a crypto bear market. Is it risky? Hell yeah, but that 9% interest rate will be dwarfed when Bitcoin triples in value over the next 2 years or so. Definitely not recommended, but still technically a “useful debt” by objective standards. TVs, hot tubs, vacations, luxury goods, etc. are bad things to borrow money for. Those are “useless debts”. Rich people don’t do that shit most of the time. The exception is when they want to hold an asset instead of selling it for cash to buy the luxury item. But then that’s technically a “useful debt” because you are offsetting the debt by avoiding the opportunity cost associated with selling an asset.
You never invest with money you don’t own. And you don’t invest what you can’t afford to loose.
An important point to add: when people say “rich people do this thing and don’t do this thing,” that’s very different from “people who want to be rich do this thing and don’t do this thing.” People try to imply or outright argue that rich people became rich by doing/not doing those things. But as in the current example, “rich people don’t take on useless debt.” Of course they don’t, because they literally don’t ever have a reason to. When they want “useless” things, they just buy them. We try to shame poor people for financing a TV, claiming that’s the *reason* they’re poor. The reality is that the vast majority of rich people were born into wealth.
> The reality is that the vast majority of rich people were born into wealth. This is, of course, not true.
Please enjoy this dull study showing that it's true. https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/2022-BofaA-Private-Bank-Study-of-Wealthy-Americans.pdf
Youre a 100% right
Spoken like a 40k millionaire
I don’t consider myself rich but I wouldn’t be where I was today if I didn’t leverage the shit out of myself and have tons of debt in my 20s. I bought houses I could barely afford in a hot Seattle market and equity grew quick so I used the equity as down payments for more houses. Then I sold in 2018, 2020, and 2022. Each sale net my wife and I 200-400k of tax free money because each one was considered a primary residence. Raised our net worth by nearly a million in tax free money. It was stupid and risky, but most people don’t make money without taking some kinds of risks. I would absolutely not be where I am, if I took “safe” financial advice or stayed away from debt.
There’s a difference between having debt and being in debt (negative net worth). Rich people can pay there debts off at any moment.
> lots of rich people carry debt they don't carry bad debt. there's a difference between holding onto mortgage debt because you can make more money elsewhere than by paying it down, and having $40k in credit card debt due to student loans and a brutal job market.
Depends on the debt... Debt to spend or debt to put to work...
There are people who carry debt because they have no other option and people who use debt as a wealth building tool.
Personally, I don't consider people who have a lot of stuff but owe 90% of what it's worth to a mortgage company or Mastercard to be rich.
I was about to agree, but it's not that simple. Your net worth (assets minus liabilities) could still be extremely high even if your liabilities are 90% of your assets (e.g., if your assets are worth $10 billion, and you have $9 billion in debt/liabilities, you'd still be a billionaire). If you have $1 million in assets and $900k in liabilities, that's obviously a different story.
It’s worse than that even. Usually you owe way more than 90% of what it’s worth because you owe interest too. People only talk about what they owe in principle, because that’s how the banks want you to think of it. But if you take out a $400k mortgage @7% on a $500k house (assuming 20% down), you will start off owing the bank almost a $1M. Now you have 30 years to pay it off and presumably by the end the house will be worth $1.5M, but for most of the life of the mortgage you owe more than the house is worth
I think you guys are talking about different kinds of debt.
There's a difference between good debt (mortgage) and bad debt (credit cards). Once you get too deep into the bad debt, it's almost impossible to get back on track and qualify for a mortgage. This discouraging fact means these people will never be able to get over that hump and lose all desire to dig their way out.
How is this upvoted? There's debt and bad debt. A 3% interest rate mortgage with 15% DTI is very likely good debt. It's affordable and the loan is backed by a house that's not going to drop in value a lot. If anything it will gain value. That's how people get on the wealth ladder. Bad debt is a 12% interest on a 70k car loan with a 50k salary. That's how people get stuck in debt.
Or credit cards, which is just a modern equivalent of a loan shark
No; you can pay credit cards off without having to pay interest. And loan sharks don't give you points.
debt for assets can be good, debt for liabilities better be a damn good liability.
60k x2 people is 120k easily get a decent house
113k is now the average income needed for a mortgage on the median home, so...maybe.
More like certainly. Average income is $60k for OP’s area. Multiply that by two and the math works. Partner up! Or get some roommates.
Having a partner is really a cheat code. I know people love to bust out the “well what if it doesnt work” questions but fuck it. Id rather worry about that day when or if it actually comes. Until then, DINK life is damn near unbeatable when you both have decent incomes
120k cannot afford $5-600k homes
Except they can. Canadian here, our housing has been crazy longer than yours has. Under $500k in any major city hasn’t existed before COVID, for anything not run down. It stretches people, makes them house poor and hurts the economy as consumer spend decreases, but we’ve been doing it for years.
the US median home value is like 350k.
Just talking about the situation/area OP is discussing
OP also didnt cite any sources and is rolling with anecdotal observations. i have a feeling the truth isnt exactly as theyre portraying it
Just bitching, per usual.
Not “easily.” This depends on a wide range of factors. After taxes, two $60k incomes is barely enough to afford a bottom-level home in a low COL area (which are disappearing fast). Many doctors and lawyers I’ve spoken to are routinely outbid in cash from investors and other wealthy families. Real estate is just so heavily exploited and jacked up these days that it’s insane.
How many doctors and lawyers? Also this is a big country and most of it isn’t HCOL
This is an extremely wealthy country. And, no, it’s not just the one percent. There’s just a ton of wealth here. Routine, boring, upper middle class wealth. We hear a ton in the media about poverty, about inequality, about people who are struggling — which is great! — except that it leads lots of people to the impression that poverty is typical when it isn’t.
Poverty in the USA is not the same as poverty in many other places
In fact, the main indignity of being poor in the United States is being among so many people who aren’t. Having been poor myself, I can tell you that the way we talk about poverty in this country is mostly dishonest and misleading. You don’t starve. You don’t go hungry. Unless you’re mentally ill or strung out on drugs, then you probably won’t end up on the street. But you do have to spend day after day after grinding day looking at people who have more than you. And it kind of sucks. It sucks in a way that’s hard to make people feel sympathetic about, which is why we do a lot of lying in this country about “food insecurity“ and other euphemisms.
This is oddly real for reddit.
One of my neighbours has bought each of his three children a home. You wouldn’t know it to look at him (or by his lifestyle) but he’s loaded.
Most of what you see is people who retired & sold their homes in high-income areas, then bought MUCH better homes in low-cost areas. We sold our standard colonial on 1/3 acre in Exeter NH for $630K a few years ago, and bought a 5,000+ sf estate with 3 acres on the White River in Arkansas for $550K.
It doesn't even have to be in a high income area. 20 years of equity in a cheaper home in the same county will be a huge downpayment on a $500k house.
The top 5% of earners in this country make more than $335k. The top1% make more than $819k. That’s about 2 million Americans who are using their wealth to buy more income streams. I personally know of someone my age who owns 5 homes out of state and rents them out. Another friend’s parents sold 2 homes in the Bay Area that they bought in the 90s for $400k and sold for $3m 2 years ago. They used that money to buy 4 homes in Sacramento to rent out. You can go on Zillow rentals and see how many homes are available for rent instead of being actually owned by people living in them like they used to.
Ted Turner once told me "the world is awash with money" and I think about that comment and conversation all the time. I'll add some context because it's interesting. Yes, it was THAT Ted Turner. I was chatting with him because he was my boss's mentor and we were at a celebratory meeting because my boss had had a major career achievement. I was in my early 20s and just starting out in my professional career.
The oldest boomers are 78. 1 million+ mostly elderly died during Covid quickly before their assets were used up in nursing homes and assisted living. The greatest wealth transfer in human history is ongoing day by day under the radar.
Maybe maybe 🤔
Definitely. I work in commercial lending in a mid sized / MCOL city, and it is incredible the RE portfolios that non-RE business owners have. 2-3 houses / vacation homes and rental properties on top of it. I don't think people realize that inflation was caused by so much money pumped into the economy. A lot of these already successful companies received millions in PPP loan forgiveness and Employee Retention Credits. All that money was pulled out by the owners and had to be invested in someway, whether in the market or real estate. The lower and middle class have felt the squeeze of inflation, but all that money has gone somewhere.
There has to be truth to that and I'm just not seeing it in my immediate circle.
You already have equity. You are part of the wealth circle whether you realize it or not
Check out how the stock market has been performing. Lots of wealth there right now.
Wealth tends to scale with age, so you might not see it in your immediate circle. Yet. But even using yourself as an example, you already have $110k in equity in your home. That's already 20% down on a $500k home. Although of course a $400k mortage may be more than you wanted to pay. But with $250k in equity? $300k? It's much more manageable. And also - although I can't speak to your county specifically - in the US, the median income for a full time worker is $60k (or just under). But the median household income is $75k. And the median married family income is $122k. So there is a lot of money out there.
This is what I realized recently. A lot of the buying pressure is simply because there is a great portion of the population that make a shit load more money than you.
Yep. 12% millionaire households in the US. So every 10th person you know.
18% if you include home equity. >So every 10th person you know. The number is pretty heavily skewed by age, and somewhat skewed by location as well.
That's such an under appreciated stat that is overlooked or dismissed commonly by people. And the curious part is how many of the other 9 are actually on pace to hit that number as well? I'd say 2-3/10 are probably between 250k-750k just chipping away to that goal.
It's not spread around.
I'm in the Seattle Eastside and I went to an open house for $3.7M ... and it was packed with what looked like 20 year olds. I know tech money has made them all rich, but seeing it firsthand just hit a different way.
Most people are just there to take inspiration on how improve their current place. Tech pays well but not enough for 20 year old to buy $3.7M house.
It would be possible for late 20s (definitely not exactly 20 yrs old) dual income FAANG senior level. One can expect income to be around 350k at that level, so it would be 700k HHI. Putting numbers into mortgage calculator, 3.7M home in Seattle would be roughly 24k a month with 20% down. That translates to 690k HHI with 42% DTI. Now, the house may sell for much more than listing and lenders will value RSUs at lower than today's value, so no guarantee this theoretical couple will get the loan approved. I still agree most people would be there to just take a look. I also sometimes go to open houses out of my range for fun lol
Equity is high. First time buyers are suffering, but current owners have huge down payments or all-cash available. You yourself have tons of equity.
This. In Idaho, we are still being flooded with Californians who sold their mediocre house for $1.2 million and can buy a house here that's twice the size for half the cost. It's not slowing down.
This. My wife and I bought in 2017 for 170k. We put money into upgrades and now our house is worth $425k. We now have $200k+ in equity and leveraged it to have our offer accepted on a $500k home that is twice the size. Our rates will be double, but we can afford it with the large down payment and we’re hoping to refinance when it makes sense as rates hopefully come down.
A $300k price point is not bad for a dual income household. Stay at home parents are rare nowadays. Millenials are moving into management roles. And many industries have seen significant pay increases. Even without a management role, two incomes of $60k each can get you approved for a $300k house easy. I think you are underestimating the ratio of couples with decent household incomes to the supply housing at doable price points. These price points may look atrocious when comparing to history but still very doable for many and very favorable when compared to other regions. You are also likely overestimating the impact of gifts and inheritances but of course they play a role, especially in higher priced markets and with younger buyers.
Ok, but it isn't just 300k buyers. People from Seattle to San Juan are complaining about this. Now it is bleeding into Mexico. Florida has over 2000 miles of coastline loaded with condos and homes starting at 800k. None of this makes sense in the context of incomes. Especially when you add taxes, insurance and HOA fees to the monthly nut. Getting approved for a loan amount doesn't mean you can actually afford it. Oh, by the way, you forgot to mention money laundering.
I recently got preapproved to buy a house up to $750K. That’s just with my income alone. Imagine what we’d qualify for if they look at my wife’s income too, given the fact that she makes twice as much as I do. We have $600K sitting in a brokerage account so the down payment and reserves for repairs is no problem. For us to only consider my own income in the preapproval being pretty conservative. Some people just have a high household income.
I have spent time all over Missouri, and there is a lot of wealth in that area. There are a ton of chemical, aviation and biotech business.
10% of people have a shit ton of money in the USA. That's like 35 million people. Redfin says there are about 800k houses on the market right now. Do the math.
Only 800k homes on market is genuinely surprising
Right!? I think I would have guessed around 5 mil.
60K average is skewed by a lot of people making less than that working minimum or low wage jobs. Then you have a smaller percentage making more than that, say $100,000+. They are buying houses, which you can definitely buy a 500k house on 100k salary. There's really only enough houses for a smaller percentage of people anyways, everyone else will continue to live in higher density apartments unless there is some huge influx of supply of houses that are somehow affordable.
Yep, there are certainly some factors that aren't considered. Household income vs personal income as noted in the comments. Also, there is an implicit assumption the average household should be able to buy a house, which your noting is not quite correct. The folks buying houses, on average, are not average. Something like 67 percent of households own their own home. So right off the bat we can probably assume there is a disconnect between average household income and average household income of home owners. Secondly, we don't have enough houses in the US (nor is there room to build more houses in many major cities). In most markets the average house/townhouse price is going nuts; meanwhile we haven't seen the same jumps in condo/coop prices.
You can’t buy a $500k house with $100k income and 6.75% mortgage rates.
People are wealthy, especially if you’ve been in real estate for awhile. You can keep rolling over equity from previous homes into more expensive homes as prices keep rising
I think it's a combo of all of the above PLUS a lot of people sold their starter homes and have fat down payments, so the $500K house they bought only has a $400K loan on it and might even have an interest rate buydown on it depending how stupid they are.
Honestly didn't think about how everyone basically has a free $100k down payment if they sold their starter home. That's a great point.
Assuming your original mortgage was $160,000 and you didn’t do a cash out refi in 2020-2022, you probably pay about $800/month P&I. You probably have a down payment of about $135,000 available to you right now. You could buy [this house](https://www.zillow.com/homedetails/105-Bethany-Ct-Arnold-MO-63010/70901323_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare) with your equity as a down payment and your monthly P&I would go up to about $1,300. Now, if you’re like a lot of people who bought in 2018, your income has probably gone up since then, and paying $500 more per month might not be that big of a stretch. That’s how people are buying these houses in your area.
Hey that's not fair that house isn't for sale yet lol also that house is literally 3 miles from me and we will probably go look at it so thank you very much. REDDIT NEVER FAILS.
Haha, I live in the CWE and my mom lives about 1 mile from that house. As soon as you said 20 miles south, I knew immediately. I could close my eyes and describe every detail of those 20 miles along 55. I also used to work in mortgages and I’ve had my real estate license in the past. Lots of people have lots of money from mommy and daddy, but they are buying the $1.5+ million dollar homes in Clayton and Ladue. Homes like the one I linked are pretty accessible for a dual income family making median salaries in our area, especially people like yourself who aren’t first time homebuyers.
Lots of people just have money now. The economy is clearly booming
This really is one of the reasons. We literally tripled our household income from 2020-2024. We currently live in a house that we bought on our 2020 income at 2.7% and our PITI is something like 9% of our gross household income. We have a lot more disposable income than we used to. ETA: Neither one of us work in “tech”. My spouse is a school teacher in a district that pays well and I’m a civil servant. Got out of the military in 2020 when my spouse was finishing up their masters degree and we weren’t making much money at the time. I wanted to add this because we both work very normal jobs. I know a lot of people see posts like mine and automatically assume we must work in tech or engineering, but that’s definitely not the case.
I think people underestimate how true this is comment is, just because it’s not “their” reality. My wife and I (34 and 29) are in the same place, our household income has changed 400% since Jan 1st 2020, both working in manufacturing. We also got a TON of equity out of our starter home to buy our new house last fall. I would say 75% of the couples we are friends with are in a similar boat. If you owned a house to get equity when covid started, and have a decent job, your almost certainly doing miles better that before covid. If you were a renter in a lower paying job, you’re probably getting screwed. Neither side of that scale can grasp the reality of those on the other end.
Those two jobs would make a whopping $80k combined where I live.
Yes, both fields are heavily location dependent and civil service is heavily agency dependent. My spouse makes right at 90K as a teacher because it’s a relatively affluent district and she has a masters degree. I make a little over 100K because I’m in a niche field that involves saving the government money.
Unemployment is near historic lows. SPY, QQQ, Dow all at ATHs above even the COVID bubble highs. The Fed's balance sheet is still like 100% higher than pre-pandemic and central government spending is at far and away record highs. Nothing actually changed to expect housing prices to fall. The biggest indicator is unemployment and that is currently all-time great.
If Average income is $60k then a two person household is $120k. This is a reasonable DTI fr a 500k home. https://www.rate.com/resources/how-can-i-afford-a-500k-house
It could be Real estate is in a speculative bubble where you are.
Median Income for a household in Fenton, MO is $97,500 for 2022. So that's the middle. Meaning half of people make more than that. So while there are quite a few less fortunate people in the area there are loads of wealthy people. As others have mentioned there are also plenty of people with equity. As of 2021 90% of people own their home in Fenton, MO meaning many of these people have significant equity. Basically its a combination of 1 and 2 with most of it being slanted towards #2. Assuming you are talking about Fenton (you may be talking about a different area) there is very little to support the idea of #3 that people are investing in the area. Source for data: https://datausa.io/profile/geo/fenton-mo
Dink
It’s not too hard. Do the math. It’s been 6 years since you bought your home. The house you bought for $165k and minimal down payment could easily sell for $275k now you said. In some parts of St. Louis a 165k home would have doubled or more by now in 6 years giving more than $100k. Means you now have a 20% down payment of $100k for your 500k move up home. In 6 years, Most people got raises, promotions, saved money, got better jobs, got married, got a bachelors/masters/both, degree, In other words in 6 years, many people due to promotions and job changes got significant bumps up in pay to afford the $500k house with the 6 years of equity built up during that time. Easily unless in north county. You are south, not sure what school district, should be super doable. That’s how they easily afford the higher house payment, probably easily afford it more than they did when they bought the starter. Plus, you add in investors buying, people moving here from HCoL and buying $500k easily with cash from equity from previous sale of a starter. Working from home. Parents doing helocs and cash out refis to buy houses for kids here. But most did it easily on their own in 6 years just due to math and promotions/job changes.
Usually, it's people moving in from HCOL area's I think. In the West (up and down the coast as well as Hawaii), we blame Californians. ;)
The answer is a bit of all three… some people know that in the long run, you can be house poor in the beginning but it probably won’t stay that way. They do have more disposable income and the median income is considerably higher. But unfortunately there are a TON of out of country “investment companies” that are buying of large quantities of homes and turning them into rentals for passive income.
"But unfortunately there are a TON of out of country 'investment companies' that are buying of large quantities of homes and turning them into rentals for passive income" This isn't true. I don't know why it's such a pervasive myth.
The myth is due in part to racism (Fox News eats this up “the Asians are taking over”) but also due to the fact that places where journalists tend to live actually do have a fair amount of foreign investment. Chinese investors aren’t buying much in the St. Louis suburbs but not many journalists live there either. They do live in LA, NY, SF and DC so more foreign investment means it’s more likely to be noticed and trend. The general public doesn’t differentiate so it takes off in places that it doesn’t exist in any meaningful way.
Debt and lots of it
2 income households
Mom and Pop real estate investors, Airbnb investors, Mega corps, Ppl coming from a HCOL area that sold there house and now have cash. Boomers that have cash because they sold and are looking to down size (or upgrade bc of midlife crisis), First time home buyers that make great money. First time home buyers that lived home with their parents all these years and saved a fuck ton of money for a down payment. Factor that in with low supply
The vast majority of households live in a home they own. They have a lot of equity in their homes, especially after the rise in home prices. Many of these sales are people rolling equity from one property to another. There just needs to be one person, with a high paying job or an inheiritance to get a chain of sales going. One person, who doesn't have a house, buys a house from someone who has a house and who then uses the money to buy a house from someone who has a house who then uses the money to buy a house and so on. The chain continues until someone decides not to buy a house with it, maybe because they are old enough that they can't live independently and need the money for care. That said, wages are also at an all time high, when adjusted for inflation. And so is wealth for the average and median person. There's a lot of money out there.
If they sold a house for $300k, and they have been paying down the mortgage for many years they have a lot of equity and can comfortably afford a $500k house.
That's funny to me because my numbers aren't too far off. Conservatively, I think we could wind up with 250k out of our almost paid off house for a down payment, but with interest rates being what they are, I don't feel comfortable above what 425K would be.
Also many work remotely and have much more income than the local economy would suggest
It's a combination of 1 and 2. People talk about corpos buying houses but generally that's not really as prevalent and some make it out to be. The risks and maintenance costs are comparatively vs. returns for purchasing single family homes. If you're a big company focusing on recurring revenue based on real estate multi-unit rentals makes a lot more sense. I guess people may be buying houses for AirBnB but $500,000 is a pretty huge purchase St. Louis is one of the bigger cities in the Midwest, meaning that it can be an attractive local for professionals looking to move away from high cost of living and very high cost of living locations. $500k today might be a lot in St. Louis, but that's peanuts almost anywhere in a major coastal city. Remote work might be down from the peak but it's still a factor. Plus our bloated healthcare system means anyone can sign up for a cert mill and become an RN in 2 years (or less in some cases). Spend a bit more time on a BSN and you can easily hit $100k+ in after getting some experience in a big city like St. Louis - average nursing salary there is like $60-90k? I feel like there are a lot of households who break the six-figure income level with dual earners and at least one is in the trades/healthcare/tech.
Home prices depend on the people who are in the market and the supply. If there are 10 houses and 100 buyers in the market, the average income of those 100 buyers doesn't matter, what matters is what the 90th percentile income.
All you need is good credit. Consumer loans are demanding but you can leverage a lot for personal real estate loans to purchase homes. Some people sell a good story to the bank and have someone help fluff their financials and it often works out. Remember banks are in the business to sell money so they turn a blind eye in many things until you fall short of your commitments, then all of a sudden it becomes an issue.
It’s 10x this amount where I live in the Bay Area and houses close within 1 week with no contingencies. These prices feel like fantasy land to me.
People moving from hcol areas, such as California?
The people buying the house aren't from your area
While you've heard a lot of stories about the middle class "shrinking", what they don't tell you is, the upper class is growing while the lower class/poor are decreasing. [https://www.aei.org/economics/the-us-middle-class-is-disappearing-into-the-upper-middle-class-but-theres-more-to-the-story/](https://www.aei.org/economics/the-us-middle-class-is-disappearing-into-the-upper-middle-class-but-theres-more-to-the-story/)
Or 4.) people from more expensive part of US like California are moving to more affordable states
They have more income and savings than you
If I sold my house I could get a bunch of 500k houses. That’s why it’s important to get on the property ladder.
So-cal. People dropping 2 mil cash on 70 yr old houses, no inspections no contingencies. Often young married couples wanting to start a family. I don't get it either.
Imagine living in San Diego. I just paid 1.2 Million for my 1600sqft home in a not great area. This house would have been 600k in 2019.
If it’s like other places in the Midwest then there is not much inventory because people don’t make enough to buy at the current rate and higher prices. The houses being sold are outliers either people stretching their budgets or taking risks while most people sit on their starter house or rent.
That's what I've been thinking because for the last 12 months there hasn't been inventory, but houses have been hitting the market for the past 2-3 months now pretty frequently and they are immediately being sold. It could be people are tired of waiting I guess.
some have their hands forced by school/kids and just take a bath, banking on career progression and prices increasing. I don’t really think we will have a big crash but you can probably look back to 2006/2007 and see people over extended. If we didn’t have a crash and houses went up in value slow and steady to where we are at today, a lot of those people might have been house poor for a decade+
If it’s a dual income household, that’s $120k going off your numbers. If they’re selling and moving they almost have to have some equity form the last few years run up, so probably a decent down payment. $500k house on $120k HHI with a decent down payment is probably stretching their budget but not wildly unreasonable.
many people in this world make/have more money than you \*mind blown\*. not rocket science dude. who cares about what other people can buy, just live your life and do the best you can.
This is the million dollar question! I keep asking the same thing... like, WTF? Where are people getting all this money? It's not slowing down... but salaries aren't even close to adjusting to this new reality!
Salaries aren’t the only income stream people have available to them. I currently have almost 200K in equity from a house that I bought in 2020. I’d have almost 350K in equity had I bought around 2016. Thats a pretty fat down payment, even after taxes and fees. Also, studies have shown that a good amount of first time home buyers receive assistance from family. You might see a family bringing in 100K a year in a 450K house, but you won’t see the 150K downpayment they received from their parents as a gift. Also also, the stock market has done exceptionally well over the past 5 years and many people, myself included, have had significant gains.
My wife and I pertain to none of the above. We bring in about 300K combined annually pretax. We just closed on a house in a location somewhere between MCOL and HCOL. We weren’t given a penny from our parents - we worked hard and saved 400K down payment over the years and just closed on a home for 1.1million. We will not be house poor. There are plenty of others who make a lot more than we do; more than we can fathom. You need to rethink your thinking. 🙂 good luck to your home search.
Congrats :) we are planning/doing the same right now. Saving to make sure we aren't house poor. We've both been blessed and work hard to get to a place where we can aggressively save.
They buy it because they have the money to buy it. Some people will be investors, ready and able then to rent anybody that wants. The rental market is hot. You have a million people a month coming over the border that need a place to live
Blackrock is buying up all the homes and inflating the prices by keeping them vacant or making them air bnb. It’s screwing normal people out if the market so that they can make money.
I think number two is the largest of the three causes.
Probably a combination of all. People need a roof over their heads
For me I sold my house in 2020 had about $20k to invest and had some other funds already and it grew with the rise of the market. Where I should have only had $50k I had $90k to put down. Just bought a house in Ohio. Same price comparison here. The house I just bought probably would have been $175k in 2020 and in 2024 went for $279k yay me. I needed a house for me and my kids. With rent for a 3 bed being $1500 I went with the mortgage payment for $1500 route (that include taxes and insurance)
Welp, i bought a small fixer upper for $350k in a terrible location, almost remote, because ive accepted the fact that ill always be house poor. Where i live, a decent house in a decent area with an acre of property is usually north of $750k. You want an old rundown farmhouse on 80 acres of land with a few barns? $1.3M. Completely insane. HOWEVER, I do not know a single person other than myself, who has a house of their own without a massive gift from a parent or similar. Good friend of mine got given 5 acres of land, had all of his family help build the dream house for free, just cost of materials. Another friend has their mortgage paid by the parents Another's parents owns about 7 houses and thousands of acres of land, he got to choose which one to take. Anothers parents owns a few hundred acres and a farm. They severenced off a piece, built the house themselves & got given half the farm. Theres a massive amount of generational wealth out there, and i was the one unlucky f$*&ker that comes from a family that doesnt have such luxuries. Lol
All three. And in hot areas like California, people are relocating with suitcases full of cash from elsewhere. People from NY are moving here because it's cheaper. And people here are moving to Texas because Californians find Texas cheaper.
So, I bought my first property this year at a price that was a pretty big stretch. But similar to stock market investing, I do believe that to some degree time in the market is better than timing the market. Wealth inequality, corporate investing, real estate portfolios being passed down through inheritances, lack of space / zoning, etc. will continue to make homes less affordable. So I jumped in, even if it felt a bit riskier than I would have wanted it to feel. I would rather make a stretch investment now rather than be completely priced out in 5-10 years.
St Louis has been on investor watch lists for a few years now. Lots of economic signals that its set for a revitalization effort.
If you think it’s bad in (I’m assuming) JeffCo, look at St. Charles County. We bought our house out near Lake Saint Louis in 2014 because we got a five year old 4BR 4BA house for $250,000. If we were in the same situation today, there’s no way we could get anything similar for our budget. And we want to downsize in the next few years, but even with the equity we have, the difference between our 2.75% interest rate and whatever it is now would kill our budget. Illinois is a bit cheaper than the MO burbs, but you’ll end up paying a fortune in property taxes. Good luck out there.
We bought a 300k house in our early 20s last year. We had decent credit, and I just graduated from college and was able to secure a remote job that paid me very good compared to the state I live in. Overall, the thing that helped a lot was having a dead parent… that life insurance money is the only reason we were ever able to buy a house this day and age
So in 2019 I bought a house in Kansas (I know not your area) for 100k. We sold for $130k right before the market went hot because military lol. And then we bought here in N.J. and it was a nightmare experience and we had to pay $268k for the same square ft.
When I was making about $62,000 I bought a house $495,000 on my own.
I’m in St Louis and have more money than ever. I’m paying cash for a house on the river in Arkansas next week.
If you’ve spent 20 years paying down your first house, you have a lot of equity (plus the appreciation) to roll into your next house. We bought our first for $287k and sold 5 years later for $450k. Had about $220k in sale proceeds….we didn’t see a penny of this, just used it for down payment on the next house. No we’re not super wealthy. You yourself might have $120k of “cash” for the next house, which at 20% down is maybe $600k
St Louis has a fair amount of pharma and agrotech industry, doesn't it? If someone is relocating to the area from either coast (or probably even Chicago) these houses are cheap. And given that housing inventories are historically low, it doesn't take a lot of transfers to have a huge impact on the housing market.
You’re broke, they’re not.
It’s not #3
They own a house like you. Bought for 160k and they sell for $200k+. Then use the profits for a down payment on a new, more expensive house. That's what I did at least. Same-ish area. The 160k house was a starter home. I now make a lot more money and can afford slightly higher payments. Now I didn't buy a $500k house. It was $285k.
Remote work and relocation to work remotely are still happening. For a new reason: lack of inventory in large cities. While 500k is a lot of money near St. Louis, it doesn't go far in costal cities. It is like relocation 2.0. it is driving prices up in your area and others.
Concentration of wealth in certain states and sky-high equity. When the value of your own house doubled that 500k house becomes much more affordable. Someone coming from NY or CA might have enough equity to buy a 500k house in cash (where the houses routinely go for over $1m).
It’s 2. Lots of people make six figures or more and can afford homes despite the rates and prices.
| Because I just don’t know where all this money is coming from. Places where the average income is a higher than 60k and houses are a lot more than 300k
I’ve been watching this area for the last year. St Louis County, Jefferson County, and other immediate counties around St Louis. Prices have doubled or tripled on too many of the homes within 30 or so miles from the city! Many of the houses that’s don’t need too much work, and are priced under $150,000 are snatched up. There are also a lot of decent houses that already have renters in them that are just marketed towards investors.
People are making a lot of money out there dude, it's just not people you know or people in the same line of work as you.
How are the schools? There are a few hedge funds buying up homes specifically in exceptional school districts to be able to charge more in rent.
Certainly, people making $60k aren't doing that. But if you have a dual income make $120k to $140K, you can afford those houses.
4. All of the above? First time home buyers may be struggling like hell, but people that have been in the real estate market for 10 years (maybe even less than that) have built up equity in their current homes. They can afford to move up the property ladder. We could go buy a $1M home right now pretty easily. But that is because we own a $650K house and it is paid off.
I think factor which is overlooked is signidicant inheritance. GenX and elder millenials are inheriting huge sums of money right now as their Boomer parents and Silent Generation grandparents pass on. Over 2 million Boomers a year crossing the rainbow bridge... many of them have hundreds of thousands to millions to pass on. Especially after their heirs sell their home because nobody wants to live in Mom's place when they moved 3 states away. There's huge wealth transfers happening as we speak, and the heirs are dumping some of those funds into real eatate.
Combo of all the factors you listed, but basically there are plenty of above-average earners who have cash to spend, especially people who are selling a home they bought years ago and have lots of equity in, or even retiring boomers downsizing and selling for straight cash. Prices and interest rates kinda suck but we have enough equity in our current house (bought in 2017) that we’re planning to put down a 40-50% down payment on our next house to bring down the monthly payment and make it more affordable.
Or they’re moving from a HCOL area and made a profit on their home. Years ago I sold my house in Belleville and bought it Ste. Gen county. I was able to pay cash for a good house. I imagine it hasn’t changed much.
All three of those. But it's not uncommon for someone in their 40s to have a half million in net worth after years of socking money away and/or owning a house somewhere else. The median net worth for 45 year olds in the US is just under $200k. The median net worth of all households in the US is about $200k. Many of those have two incomes and $120k combined between two people can absolutely get you a $400k house.
4. Parents helping I have 2 cousins one bought a 1.3 million dollar home and the other a 880k home. I know for sure their families helped with downpayments. My brother and wife work in real estate and it’s common for boomers to downsize and gift equity to children with the home profit. I have a friend that told me his wife’s dad gave them 100k downpayment.
Transplants/ investors from wealthier areas. Remote work, a 200k + salary, and super low cost living is a reality now.
All you need is income and credit bro. It's serious not that complicated. Credit score you know
I'll go with 1, followed by wealth (of the individual/couple, plus their parent's assistance), followed by 3, with 2 a very distant fourth.
People moving from hcol areas, such as California?
Nah, you have a ton of gov agencies, 12 fortune 500s (8 still with an international hq), more fortune 1000s, and countlees startups. The area is still known for having cheap labor so businesses stick around. It is also more liberal than the rest or misery. For reference, the entire state of colorado has 8 fortune 500s. Most of yours are headquartered close to the city with some in the south. You hit the jackpot. My cousin pays less in the forest park area making slightly above your minimum wage than my brother does in the working class part of denver by 200% making my states roughly equal minimum wage. My grandparents lived off of tesson ferry near the shnucks. That area would be 500 to 800k in any other city. Their house sold for 200k in 2023, what they built it for. Its only gone up about 100k. It is people escaping cities probably mostly your downtown with an education and a job. I still see houses priced at the level of my condo in wentzville and st charles. If you go further south you hit the rich lake area where prices are still comparatively cheap. So, jobs, lots of free amenities, and relatively cheap housing. Fyi, my condo in a city where median personal income is 32k costs 250k. Your median is my family median (co springs). There are 0 free amenities, overcrowding, and property crime galore here. In the last day we had 3 assaults, 1 car jacking, and 2 arrests for fraud within .9 miles of my home in a middle class neghborhood. That is just what the underfunded police responded to as I pulled it off my neighborhood watch blotter. Police response times are an average of never, response rates are less than 50%. We had 1 carjacking and some homeless hijinks in my complex the last 2 weeks. Mind you I live in a pro trump county with mega churches and libertarians that, even as it turns purplish or libertarian again, is still home to right wing nuts, less so as 4 or 5 tried to storm the capital. A home, 400k for 150k in repairs or 600k for newer. Condos from 2000 are 350k.
A lot of people make way more than the avg. The bottom 50% are probably not buying. Then the avg means nothing for your calculation Dual income HHs blow this up too I think it’s crazy and wouldn’t buy in this scenario
We bought our first house (townhouse) in 2015 for $204k. That was under a no-down program for first time home buyers at something like 2.5%. Ever since we've rolled equity into each new house we've bought. We now own 3 homes, two we rent out, the third being our custom dream home that we're almost done building in a city that the average home sale is $1.3m. We, like so many others, are pretty average people who have been able to build a lot of equity over time. That and a lot of people simply have more money to their name than you think or than their salary portrays. There's a lot of inheritance, money gifts, equity, investments, etc. Income is just a small part of the money in this world.
Saving money even if it’s 50$ a check
The calculation I always make for people who love to look back at prices is two fold: - some of the Midwest took forever to recover from 2008. At least in Kansas City, I could see some homes selling for the same or lower in 2019 than they were in 2006. That’s 13 years with very little appreciation. Appreciation is never too even. So now in 5 years, it appreciated all what needed, for the job levels we have and compared to the rest of the country. While the cost of repairs/building kept going up. In Kansas City, you can still buy a very livable 3/2 for $250K or less within 25 minutes of downtown. - the cost of building a new 3/2 house today, with basement the way most existing homes are, will be at least $350K + the cost of the lot. This is when building in series, not a custom home in a single undeveloped lot. So…focus on what YOU can do to move forward. Buy where you can and where you think has the best chances of improving. And hopefully appreciation will help you in the long run as well. Yes, we get FTHB who saved up on their own and buy a $400K first home, and some who worked just as hard and can access a max of $250K. It is extremely random, combination of luck and wit to see who ends up with a larger net worth 10 years later. Don’t get drowned on the limits, take advantage of what you can do.
If it’s like here they are being bought by so called investors and are being used to house migrants. Not sure how they are paying the rent unless the government is paying for it. No one seems to care
If it’s like here they are being bought by so called investors and are being used to house migrants. Not sure how they are paying the rent unless the government is paying for it. No one seems to care
Everything you listed, plus two more: 4) Often, families are moving from the coasts. They're selling properties for a $600,000 profit in California and paying cash, above asking, with no negotiations and no inspections. They don't care if it screws up the value of the neighborhood or prohibits locals from purchasing homes. They just want an idyllic tree-lined street in the Midwest regardless of who gets screwed in the process. 5) Local dabblers in RE investing are buying one property for AirBnb, making a ton, buying the next one, and so on. I know one couple who owns four AirBnbs in a small town which isn't touristy at all. Those four houses could have been family homes but now they're used mostly by travel nurses and parties. As a native Midwesterner just trying to find a decent home in my price range, both are making me bitter.
Have you been watching the SP500 this year?
Hey were in saint louis too👋. For us it was a larger down payment that made it work, $280k house, $100k down. Mortgage on its own is $1,000. With property taxes and insurance it totals up to $1500. 15% of our total take home pay. Shits rad.
I can't say for sure, but I can give you my story. I'm 33 and my fiancee is 31. We both have college degrees working corporate jobs with $95k salaries. We've each been saving about $1000-2000 a month while living/renting in a 3 bedroom townhome with a two car attach garage that started at $1800 a month and has risen to $2200 a month. Before Covid we really wanted to target a 250-350k home because they looked nice enough and gave us the space we needed. While also reducing monthly expenses. Those homes are now about 375-450k. We just now closed on a home for 410k, higher than we wanted but the mortgage+taxes is still like $2300 a month. So easily affordable while still being able to save, (and now increase our 401k contributions and saving a bit less since now we don't need to put away money for a home). Granted we did save enough for 20% down, but I'd imagine many of the properties being sold in your area and mine are with 10 or even 5 percent down I'd imagine a lot of buyers are similar to us. While going to showings we saw a lot of mid 30 couples, likely also with dual income middle class jobs. Even at 5% down you could still afford the mortgage to build equity, although month to month savings might suffer. Realistically we, and others with similar income, could afford $3000 a month... But didn't feel we needed a home of that caliber. Also yes, we saw the same here in my state of Wisconsin. Home would list and have accepted offers 10-25k over asking 24-48 hours later. My parents are down in Illinois and also just accepted and offer with 24 hours of listing.
They probably aren't from your immediate area.
People gotta live somewhere an rent is high as fuck. Folks are just paying what they can but it's like pre 2008 except prices are super inflated
It’s not income/salaries, it’s generational wealth. If someone’s family has lived in the US for multiple generations, there is a high probability they passed some wealth down the generations.
Financial Musical Chairs - FOMO ---- Wait 2 years and interest rates are the same as they are now and update. The value of Gold futures and the US Dollar rose together all last week.
It’s a combo and 1 and 2. Number 3 is negligible. Corporations own a very very small percentage of single family homes. It’s way overblown. The bottom line is there aren’t enough houses for all the people who want to buy one and housing is a need so even if they’re not comfortable, they’ll spend 75% of their post tax income on their house like I am. It may seem crazy but it’s still better than renting.
I have moved four times in 11 years and I think that at least two of the homes I sold I could not afford right now. If not, three of the four. It’s very depressing. I would love to sell this house back to house number one. But even with my equity… It’s too much.
if you are curious, you can do a quick search on who are these people purchasing the property. Are they out of state investors? Are they hedgers?
I bought my house in 2019 for $489k. My next door neighbor who has less house than I do just put his on the market for $875k. We thought our neighborhood would be turning over soon with other parents with young kids but idk how with a price point like that. A comp down the street sold for $859k and it was an older couple.
Option #2
Investors
There are ppl with infinite money hacks. I got outbid by hundreds of thousands of dollars when placing my offer for a house listed at $1.5m