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      05-29-2020, 10:23 AM   #89
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Originally Posted by spazzyfry123 View Post
What’s the “rule?” Don’t buy something more than three times your gross household income?
My house is 2.5x my income. But my BMW however
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      05-29-2020, 10:26 AM   #90
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This is not a debate on who's right or wrong or what but whatever happened to middle America?

Back in 1970, the median wage was $19K and the average price of a home was $24K. Your run of the mill guy was earning 79% of what an average home cost.

Fast forward to 2020, the median wage is now $55K. That's almost 3x of what people earned back then but the average price of a house is now $150K. That's earning only 37% of what an average home cost. There are 30-45+ years loan now too.

There are plenty of empty spaces across the country. Lots of room to grow. So why are houses over 6X what they used to cost?

Are there over an abundance of $10M homes that skewing the statistics. We're relying more on migrant workers and day labors to build homes now as well.

Is it labor cost? The material cost (are plywood and fiberglass that expensive? ) The land cost? (there are plenty of cheap land out there)
Are modern home so extravagant that it costs 6X more than it used to?

I understand why Europe, Japan and Asia have expensive homes. Land is limited and their population has grown tremendously.

But I look at my local real estate listing in middle America and I still can't believe what the houses are selling for. Even in the not-so-nice part of town, people are getting close to $100K for their homes.
I'd really like to know where homes cost $150k that are not in the ghetto. Please advise, thank you.
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      05-29-2020, 10:35 AM   #91
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Originally Posted by Rmtt View Post
Come to upstate SC. I have twisty roads, mountains, and snow 30 minutes north of me, beach 3 hours southeast of me.

Greenville consistently makes the lists of the top ten places to "move" to....and you can buy a very nice house for around $250K.

$400K home puts you in "baller" status here in some areas.
Yeah, I think that most overpriced houses are in reference to Cali, or other overpopulated high tax areas. Here in NC the prices are pretty dang fair. $400k gets you a 3500+ sq ft house on an acre or so, or a more modest 2000 sq ft home on 5+ acres. I just got a brand new house walking distance from the lake that's 1800 sq ft with a 450 sq ft garage on 1/2 an acre for $260k. 2.5 hours from Tennessee border (Deals Gap / Tail of the Dragon), 3 hours from beaches, 3.5 hours from Road Atlanta. It's great.
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      05-29-2020, 11:09 AM   #92
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Quote:
Originally Posted by spazzyfry123 View Post
What’s the “rule?” Don’t buy something more than three times your gross household income?
Quote:
Originally Posted by GenXer View Post
My house is 2.5x my income. But my BMW however
The more refined rule of thumb to measure where you are in purchasing a particular home lies in what's called front end and back end ratios.

Front end ratio is your PITI (principle/interest/taxes/insurance) divided by your gross monthly income. A conservative look at this number says if your front ed ratio is 28% or less, then you can afford the home. More aggressive means anywhere from 32 to 36%.

Back end ratio is your PITI plus your long term monthly expenses (typically measured by expenses you expect to be paying past a few months) divided by your gross monthly. Conservative number for affordability is anything below 36 to 38%. Aggressive would push this out to 42%. Anything above 42% is really pushing it.

Front end and back end ratios are used by loan officers and financial advisors to determine home affordability.
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      05-29-2020, 11:16 AM   #93
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Originally Posted by Savageenterprise View Post
I'd really like to know where homes cost $150k that are not in the ghetto. Please advise, thank you.
There are some nice 15-20 year old homes in that price range in the midwest in decent neighborhood. Unfortunately the median income in the midwest is not $55K.
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      05-29-2020, 11:26 AM   #94
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Originally Posted by zx10guy View Post
The more refined rule of thumb to measure where you are in purchasing a particular home lies in what's called front end and back end ratios.

Front end ratio is your PITI (principle/interest/taxes/insurance) divided by your gross monthly income. A conservative look at this number says if your front ed ratio is 28% or less, then you can afford the home. More aggressive means anywhere from 32 to 36%.

Back end ratio is your PITI plus your long term monthly expenses (typically measured by expenses you expect to be paying past a few months) divided by your gross monthly. Conservative number for affordability is anything below 36 to 38%. Aggressive would push this out to 42%. Anything above 42% is really pushing it.

Front end and back end ratios are used by loan officers and financial advisors to determine home affordability.
My PITI is 21.7% not sure on the long time expense since it's a brand new house and I haven't spend anything except for landscaping, a new garden shed and concrete pad extension. But those were paid in cash and was never part of the mortgage.
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      05-29-2020, 11:34 AM   #95
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Originally Posted by Savageenterprise View Post
I'd really like to know where homes cost $150k that are not in the ghetto. Please advise, thank you.
Everywhere... you just have to look. Honestly this comes across a little closed minded. There is a extraordinary amount of people who live in sub $150,000, or even sub $100,000 homes.

Yeah, we don't have an HOA, or lawn-care service, or whatever other features and benefits come with living in a subdivision. The houses are older, and sometimes not maintained as they should be. It is far from the ghetto though.

I don't know what lens you are viewing this though, or where you live, but I recommend going and experiencing different parts of the country. Especially in the midwest where many families are supported by blue collar manufacturing jobs.

Quote:
Originally Posted by zx10guy View Post
The more refined rule of thumb to measure where you are in purchasing a particular home lies in what's called front end and back end ratios.

Front end ratio is your PITI (principle/interest/taxes/insurance) divided by your gross monthly income. A conservative look at this number says if your front ed ratio is 28% or less, then you can afford the home. More aggressive means anywhere from 32 to 36%.

Back end ratio is your PITI plus your long term monthly expenses (typically measured by expenses you expect to be paying past a few months) divided by your gross monthly. Conservative number for affordability is anything below 36 to 38%. Aggressive would push this out to 42%. Anything above 42% is really pushing it.

Front end and back end ratios are used by loan officers and financial advisors to determine home affordability.
This is an interesting ratio, and I did the same thing when I was budgeting for my first home. Comes out to a little over 10%, so not to shabby! Allows me to save towards the next place and focus towards retirement savings / 401k.
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      05-29-2020, 11:34 AM   #96
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Funny you actually mentioned that, my wife made me watch outer banks.


So.. I was intrigued by the location. Went on realtor.com and saw the beach houses, and houses in general in Carolina. Almost wanted to put a gun to my head and cry. Lol

I could sell my home here, buy a mcmansion over there and a huracan and live mortgage free .

I'm coming!!!!


Waiting for the the opportunity for the CAD peso to strengthen.. USA here I come !!

Cool thing about the upstate as we have an abundance of jobs, BMW is here and all of there suppliers...Boeing near the coast.

Cost of living is cheap, and easy access to the Outer Banks although we love vacationing in Charleston.

But we have 4 distinct seasons with Winter being more like a longer fall and only 1-2 months of it where we may some some small snowfalls.
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      05-29-2020, 11:37 AM   #97
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Originally Posted by Rmtt View Post
Cool thing about the upstate as we have an abundance of jobs, BMW is here and all of there suppliers...Boeing near the coast.

Cost of living is cheap, and easy access to the Outer Banks although we love vacationing in Charleston.

But we have 4 distinct seasons with Winter being more like a longer fall and only 1-2 months of it where we may some some small snowfalls.
You guys are killin' me. I'm from north Georgia and recently moved to north Florida. We knew Florida was going to be a temporary deal with the next "permanent" move being east Tennessee or Greenville type area. Of course the news in the pipeline is that the job I want should be opening up in the Greenville area here soon...
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      05-29-2020, 11:39 AM   #98
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Quote:
Originally Posted by Conissah View Post
Yeah, I think that most overpriced houses are in reference to Cali, or other overpopulated high tax areas. Here in NC the prices are pretty dang fair. $400k gets you a 3500+ sq ft house on an acre or so, or a more modest 2000 sq ft home on 5+ acres. I just got a brand new house walking distance from the lake that's 1800 sq ft with a 450 sq ft garage on 1/2 an acre for $260k. 2.5 hours from Tennessee border (Deals Gap / Tail of the Dragon), 3 hours from beaches, 3.5 hours from Road Atlanta. It's great.
Yeah...my in-laws live in NC and complain about taxes being higher when they see the price of gas here in SC.

And NC tax is nothing compared to the other areas being discussed here

Congrats on the new house. I lived in Rock Hill for awhile back in my late teens and got to see it grow up and Charlotte take off...especially after the Panthers came to town!
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      05-29-2020, 11:47 AM   #99
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Originally Posted by GenXer View Post
My PITI is 21.7% not sure on the long time expense since it's a brand new house and I haven't spend anything except for landscaping, a new garden shed and concrete pad extension. But those were paid in cash and was never part of the mortgage.
When I reference long term expense/debt, this would be something along the lines of a car payment(s), any personal loans/credit card debt, etc.

But 21.7% is very good for a front end ratio.
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      05-29-2020, 11:50 AM   #100
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Originally Posted by C2YT View Post
Everywhere... you just have to look. Honestly this comes across a little closed minded. There is a extraordinary amount of people who live in sub $150,000, or even sub $100,000 homes.

Yeah, we don't have an HOA, or lawn-care service, or whatever other features and benefits come with living in a subdivision. The houses are older, and sometimes not maintained as they should be. It is far from the ghetto though.

I don't know what lens you are viewing this though, or where you live, but I recommend going and experiencing different parts of the country. Especially in the midwest where many families are supported by blue collar manufacturing jobs.



This is an interesting ratio, and I did the same thing when I was budgeting for my first home. Comes out to a little over 10%, so not to shabby! Allows me to save towards the next place and focus towards retirement savings / 401k.
A 10% front end ratio is fantastic. Don't know if I've been smart or just plain lucky. But both of my homes PITI are below 28% for me. This is why I can afford to not have any roommates or a need to rent out my vacation home to help pay for it. The only hiccup that put a wrench into this was my divorce. But I'll be able to dig out of it hopefully in the next few months.
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      05-29-2020, 11:56 AM   #101
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A 10% front end ratio is fantastic. Don't know if I've been smart or just plain lucky. But both of my homes PITI are below 28% for me. This is why I can afford to not have any roommates or a need to rent out my vacation home to help pay for it. The only hiccup that put a wrench into this was my divorce. But I'll be able to dig out of it hopefully in the next few months.
Yeah, I'm very lucky. As mentioned earlier I live below my means and put 20% down on my first house. I didn't include my roommate in there (twin brother), which brings that PITI number from 10.3% to 3%... haha. I was making money living in my own home when my buddy lived with us as well!
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      05-29-2020, 11:58 AM   #102
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I am going to repeat everything is market dependent... i am in South FL... specifically Miami... any single family house below $450k looks like a dump... fwiw median family income is $55k... that is again a near 9 x multiplier... no idea how thats supposed to work.
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      05-29-2020, 12:18 PM   #103
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Originally Posted by Savageenterprise View Post
I'd really like to know where homes cost $150k that are not in the ghetto. Please advise, thank you.
I'd like to know what your interpretation of a ghetto is..

The US is incredibly diverse when looking at $/value
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      05-29-2020, 12:25 PM   #104
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I am going to repeat everything is market dependent... i am in South FL... specifically Miami... any single family house below $450k looks like a dump... fwiw median family income is $55k... that is again a near 9 x multiplier... no idea how thats supposed to work.
You can't use the median income as a basis for a multiplier for nicer home values. Half the people make less than $55K and they are most likely living in the less expensive homes or renting. You need to figure out how to remove them and identify the median income for those buying $450K+ homes to get that multiplier, or use median income and median home value (which is still skewed to me because it doesn't eliminate renters). Not everyone can afford nicer homes. That's true everywhere.
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      05-29-2020, 12:47 PM   #105
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When I reference long term expense/debt, this would be something along the lines of a car payment(s), any personal loans/credit card debt, etc.

But 21.7% is very good for a front end ratio.
Not so good on the back end.

This Bimmer is frankly too much car for me but boy is it fun to drive!
I was driving an affordable and practical X1 just a year ago. I don't know what happened.

I blame this.
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      05-29-2020, 12:49 PM   #106
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Unfortunately many people here don't even make median income. I'm fortunate enough to make above that. Things are cheaper here but we also make a heck of a lot less money. If I vacation within my state, I'm golden but I realize my dollar doesn't stretch very far when I travel.

I went to Cape Cod last spring and realized how poor I was compared to the people there. Multi-million dollars sea side chanties abound.
That's pretty much why I moved back to CA after living in Arizona and Texas though. Cost of living might be higher, but so is the pay, so while my net margin / % of income might be shittier, my raw savings amount / income is more, which allows me to grow my accounts faster.

Aside from family being here, the way I see it is if I can snag a townhouse / home here now, then use it as a long term rental, it'll more than cover a nice mortgage anywhere I decide to retire to along with some nice toys to go along with it.

I mean think about it - if you have a townhouse that's bringing in $4k / month in rental income and your mortgage is paid off, that's a nice chunk of retirement change to supplement investments / dividends.
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      05-29-2020, 01:00 PM   #107
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Rick, what's homestead like?

Seems not too far from Miami, and I'd like to situate my business in that area.

I'd like to be near the keys. My wife and I went to southernmost resort last year in November. omg. Paradise...

I think I'll buy a 5 acre ranch..

https://www.realtor.com/realestatean...-15245?view=qv
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      05-29-2020, 01:22 PM   #108
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Rick, what's homestead like?

Seems not too far from Miami, and I'd like to situate my business in that area.

I'd like to be near the keys. My wife and I went to southernmost resort last year in November. omg. Paradise...

I think I'll buy a 5 acre ranch..

https://www.realtor.com/realestatean...-15245?view=qv
Can't say I've spent much time there other than driving through to / from the Keys. I know it was wiped out in Hurricane Andrew and a long ride to anywhere north, but not much else. What type of business?
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      05-29-2020, 02:08 PM   #109
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Can't say I've spent much time there other than driving through to / from the Keys. I know it was wiped out in Hurricane Andrew and a long ride to anywhere north, but not much else. What type of business?

Financing, sales, wholesale.

Looking to establish a 50 car dealership in southern Florida.

I have looked into all the different finance lenders, and credit unions. Great thing is, I can buy a turn key operation for little, and the leases are pretty decent, as compared to here.

Thing is in Canada, my business would have to be established for a certain amount of years, and do X amount in sales a year in business for the banks to consider me to use their automotive financing branch. Its monopolized by the big 5 banks , and even our sub prime lenders are tight.. I can have the majority of American lenders, credit unions on board right away in the USA... plus, I don't want to stay here anyway.

Last edited by maul3d; 05-29-2020 at 02:14 PM..
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      05-29-2020, 03:37 PM   #110
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Somewhere in TX $150k gets you something nice ish I'm sure
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