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Started By
Message
re: The math for buying a home no longer works, per WSJ
Posted on 12/20/23 at 3:07 pm to meansonny
Posted on 12/20/23 at 3:07 pm to meansonny
Note: I am writing this as a mid-30s female with two children, working for a Fortune 100 company and living in an $800k home that we bought last year so I have done it. I have bought a home, but I can guarantee you it wasn't by cutting out the items you listed.
This is such an antiquated mentality and shows me you need to get outside and touch some grass. While Starbucks is spendy, it really isn't that much more expensive than comparable coffee shops. A grande iced latte is roughly $5. Assuming you get Starbucks three times a week, that comes out to roughly $60/month. Let's round up and say $75 in case you decide to get a pastry or larger drink 1-2 times a month. Screw it - let's say $100/month because you're a Starbies fan.
So if I cut that out, I am looking at an additional $1,200/yr.
Even with Netflix's recent price increase, the standard plan would cost me about $200/yr. Okay, let's cut it out completely instead of the ad version. With Netflix canceled, we are up to $1,400/yr.
Amazon users are 37 years old on average, so elder millenials and hopefully, most are already homeowners, but sure. Let's cut out the $139/yr subscription to Amazon and cut out the occasional order. I went back and looked at my 2023 Amazon spending, and I spent roughly $3k this year. That includes school supplies and christmas gifts, things that could be cut back on, but not necessarily cut out completely (particularly school supplies)
So all in all, between those three categories, the potential savings for the year would total $4,400.
I live in Colorado so I will use that as my basis for further assumptions.
The median home sales price in Colorado as of June 2022 was $589,000, and this was a 15.2% increase from the same period in the previous year (2021 - roughly that translates to $512k). Additionally, the property prices in Colorado were up by 6.7% YoY in September 2023. Let's assume June numbers were 5% YoY increase, putting the number at about $618k for the median home.
That means the price difference for the SAME home between 2021 and 2023 was $106k.
So assuming I started saving for a home in 2021 by cutting out Starbucks, Netflix and my Amazon consumption, I'd have an additional $9k to put towards my downpayment, yet the cost of the home has outpaced my savings by nearly $100k.
The math don't math.
How did I buy my home then? I GOT LUCKY! We bought our first home in 2018 by moving to a more afforable area and retaining our jobs and thus our California salaries (not at all the norm), then the market swung up and we made $170k profit in 4 years which we used to buy our new home. It had nothing to do with working harder or saving more.
quote:
Starbucks? Don't use them.
Netflix? Don't use them.
Amazon? Don't use them.
This is such an antiquated mentality and shows me you need to get outside and touch some grass. While Starbucks is spendy, it really isn't that much more expensive than comparable coffee shops. A grande iced latte is roughly $5. Assuming you get Starbucks three times a week, that comes out to roughly $60/month. Let's round up and say $75 in case you decide to get a pastry or larger drink 1-2 times a month. Screw it - let's say $100/month because you're a Starbies fan.
So if I cut that out, I am looking at an additional $1,200/yr.
Even with Netflix's recent price increase, the standard plan would cost me about $200/yr. Okay, let's cut it out completely instead of the ad version. With Netflix canceled, we are up to $1,400/yr.
Amazon users are 37 years old on average, so elder millenials and hopefully, most are already homeowners, but sure. Let's cut out the $139/yr subscription to Amazon and cut out the occasional order. I went back and looked at my 2023 Amazon spending, and I spent roughly $3k this year. That includes school supplies and christmas gifts, things that could be cut back on, but not necessarily cut out completely (particularly school supplies)
So all in all, between those three categories, the potential savings for the year would total $4,400.
I live in Colorado so I will use that as my basis for further assumptions.
The median home sales price in Colorado as of June 2022 was $589,000, and this was a 15.2% increase from the same period in the previous year (2021 - roughly that translates to $512k). Additionally, the property prices in Colorado were up by 6.7% YoY in September 2023. Let's assume June numbers were 5% YoY increase, putting the number at about $618k for the median home.
That means the price difference for the SAME home between 2021 and 2023 was $106k.
So assuming I started saving for a home in 2021 by cutting out Starbucks, Netflix and my Amazon consumption, I'd have an additional $9k to put towards my downpayment, yet the cost of the home has outpaced my savings by nearly $100k.
The math don't math.
How did I buy my home then? I GOT LUCKY! We bought our first home in 2018 by moving to a more afforable area and retaining our jobs and thus our California salaries (not at all the norm), then the market swung up and we made $170k profit in 4 years which we used to buy our new home. It had nothing to do with working harder or saving more.
This post was edited on 12/20/23 at 3:16 pm
2
Posted on 12/20/23 at 3:08 pm to 904
quote:
The fact that you think people can save for a $40k down payment by not spending $14/mo on Netflix or $5 on a coffee, or by just not using Amazon tells me all I need to know.
For my first home, I had $15k. And that included retirement assets.
But the retirement assets led to home ownership (tax deductions) and equity.
Equity led to my second home.
The key to saving $40k was simple.
Don't spend more money.
As my income went up, I didn't change my spending.
That leads to more savings.
The principle is so simple, only a moron couldn't follow it.
Don't live on more income than my wife and I could generate in cash waiting tables.
It's a simple fricking discipline.
I'm not living on that right now.
My current home (the second one) is paid off. The discipline worked.
I'm 46 years old.
I have netflix.
I have 4 kids. 1 in college. Another one joining next year.
But you get ahead in life by owning something. Time value of ownership.
The sacrifices I made in my 20s and 30s are a direct result in my current situation.
Posted on 12/20/23 at 3:09 pm to GetCocky11
quote:The funniest part about is that people like him are pushing massive numbers of people to fricked up ideologies like socialism and communism via their “blasé” attitude and they will be some of the first to be impacted.
Just don't pretend like what is happening today isn't actually happening.
Posted on 12/20/23 at 3:11 pm to GreatLakesTiger24
None of that stuff is wholly invalid, it’s just such a drop in the bucket for the average person.
That’s like saying the US could reduce the federal deficit if we didn’t maintain national parks and halt renovations on federal buildings.
That’s like saying the US could reduce the federal deficit if we didn’t maintain national parks and halt renovations on federal buildings.
Posted on 12/20/23 at 3:12 pm to Mo Jeaux
quote:
In what year was this?
Do you think it's that wild to do what he's claiming in the past 10 years or so?
I agree that shite is fricked now, but it wasn't that hard to save money and buy a house even on a non OT-baller income in the years leading up to about 2021.
Posted on 12/20/23 at 3:12 pm to Scruffy
quote:
pushing massive numbers of people to fricked up ideologies like socialism and communism via their “blasé” attitude and they will be some of the first to be impacted.
And there are plenty of examples in history of what happens
Posted on 12/20/23 at 3:14 pm to meansonny
Except that home prices are soaring and the cost of living has increased drastically outpacing people's earnings so there isn't much left over for most people to save every month - if you are fortunate enough to save money every month to put towards your downpayment, in a lot of cases, the market is outpacing your savings.
I know I am in a very fortunate position, but I am also not that out of touch that I think "not spending more" is the only answer.
Yes, you can move to LCOL area, but chances are your wages will also decrease and jobs will be hard to come by (those two things usually go hand in hand). As more companies continue to put pressure on workers to RTO that also means that the remote jobs that made this possible in 2021 and 2022, are quickly dwindling and the competition for those is increasing
I know I am in a very fortunate position, but I am also not that out of touch that I think "not spending more" is the only answer.
Yes, you can move to LCOL area, but chances are your wages will also decrease and jobs will be hard to come by (those two things usually go hand in hand). As more companies continue to put pressure on workers to RTO that also means that the remote jobs that made this possible in 2021 and 2022, are quickly dwindling and the competition for those is increasing
Posted on 12/20/23 at 3:15 pm to Epic Cajun
quote:
but it wasn't that hard to save money and buy a house even on a non OT-baller income in the years leading up to about 2021.
Yeah you could've done what he did pretty easily in the 2010s, especially coming out of the housing crash. Shits gotten so fricked so fast that it is basically a shock.
Posted on 12/20/23 at 3:15 pm to Epic Cajun
quote:
Do you think it's that wild to do what he's claiming in the past 10 years or so?
Kind of, yes. But I think you're missing the point.
Posted on 12/20/23 at 3:17 pm to alexahet
quote:
The math don't math.
My wife and I lived on a budget of about $2300/month.
That includes vacations.
That includes automobiles.
That includes housing.
That includes clothing/things.
That includes the "stupid shite" that you are mocking.
As our pay went up, we didn't change the spending.
I threw more into retirement.
We threw more into savings.
(Paid cash for a car. Cash for trips. Etc..)
The first home was at a "cost" of $10k in interest (which went down because we paid it down quickly).
It is amazing what one can do when they limit actual "costs".
It is amazing how much quicker one can retire when the cost to be alive (i.e
Pay interest to a bank for a mortgage or car or credit card) is at the absolute minimum.
When we had kids, she stayed at home.
But as my pay kept increasing, we didn't change our spending.
When she went back to work (youngest in K), we started spending about $5k/month. The extra income allowed us to maintain the same "savings" level despite the higher monthly expense run.
Posted on 12/20/23 at 3:17 pm to alexahet
quote:for whatever reason, people like to downplay this. like i said earlier, did everyone on TD move to houston after college because houston is so cool, or because that's where the jobs/careers are?
Yes, you can move to LCOL area, but chances are your wages will also decrease and jobs will be hard to come by (those two things usually go hand in hand).
outside of a few metros (boston, dc, la, nyc, probably a few others), i think COL & wages generally reach an equilibrium.
Posted on 12/20/23 at 3:17 pm to nola tiger lsu
quote:
The basis for many bad home buying decisions. Enjoy being underwater, high interest, paying 3x for the house all while probably living in a worse neighborhood and spending more on repairs than if you just waited it out.
I partially agree. Buying shouldn't be a "ah what the hell let's do it" decision. But let's view the market presently. Houses prices may come down some, but they are only going to climb higher long term. We are currently seeing interest rates in line with historical norms. The sub 6% mortgage rates for much of the 2010s up until 2022 were an anomaly. I don't know if that comes back and if they do, congrats you can refinance to a much lower rate! If you have no hurry to buy, I wouldn't. Some people have to though and that's just the reality. And renting is going up every year. It can't be looked as a fixed price every month.
Posted on 12/20/23 at 3:18 pm to Epic Cajun
quote:that was 3 years ago now. as it relates to this thread, who cares?
Do you think it's that wild to do what he's claiming in the past 10 years or so?
I agree that shite is fricked now, but it wasn't that hard to save money and buy a house even on a non OT-baller income in the years leading up to about 2021.
Posted on 12/20/23 at 3:19 pm to meansonny
quote:
Someone is making Starbucks, Amazon, Netflix, and Tesla the kings of their industry. Judging on the facts of how popular they are, I'm guessing that it is a lot of the same people who bitch about rent and housing.
You are just completely out of touch with reality if you think the problem of home affordability can be solved by saving $40 a month in miscellaneous expenses.
You are just totally out of touch with what’s been going on the last couple of years.
I am a millennial and own two homes btw.
This post was edited on 12/20/23 at 3:23 pm
Posted on 12/20/23 at 3:22 pm to Mo Jeaux
quote:
Kind of, yes. But I think you're missing the point.
I guess my point was that he doesn't have to be a boomer to have saved money on a modest salary in order to a buy a house by cutting costs. Hell, I saved 20k for a down payment over a 4 year period while making 75k and paying for my wife's graduate school in cash.
On the other hand. If I made all of the same decisions that I made back then, but I was born 6 years later I would be entering the market attempting to buy a house right now and the note on my current house would be >1k more per month than what I'm currently paying, which would essentially make it a non-option.
Posted on 12/20/23 at 3:22 pm to Upperdecker
quote:
First time home buyers should be buying below their income levels. That allows them to build up equity and stay within an appropriate % of their income.
Unless they’re buying a trailer, there are no decent homes beneath their income level, unless they move to the worst corners of the Hood.
Posted on 12/20/23 at 3:22 pm to 904
quote:
Meanwhile I just passed 180k in my 2011 toyota
I'm 46.
I have a 2007 Honda Accord with 223,000 miles.
Another benefit, it's a lot cheaper to insure with teen drivers.
"That's not fun?"
I paid cash for my Harley road king. I live at the foothills of the Appalachian Mountains (dragons tail).
I make good money.
But good money goes so much further when I don't have to add months or years to my work life paying interest.
Posted on 12/20/23 at 3:23 pm to GreatLakesTiger24
quote:
that was 3 years ago now. as it relates to this thread, who cares?
It just seemed like he was acting like the dude was a boomer who bought his house back in the 1970's, hell look at the first guy who replied to him, he even included the boomer meme. It was a reality until about 3 years ago. I realize it's a fricked market now.
Posted on 12/20/23 at 3:23 pm to meansonny
quote:
What do you do?
You save money and put a larger down-payment on the home.
Smaller loan. Better interest rate/terms.
That equals a more affordable solution.
Is your next question "how do you save money for a downpayment?"
Based on this response, you are very put of touch with the reality of the world we live in today. EVERYTHING costs astronomically more than it did even 5 years ago. Saving money for the average family is nearly impossible.
Posted on 12/20/23 at 3:24 pm to meansonny
quote:You do realize that is impossible now, right?
My wife and I lived on a budget of about $2300/month.
Hell, that is pretty much rent nowadays.
This post was edited on 12/20/23 at 3:25 pm
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