We Can’t Afford Our Home Anymore!

[pacergal]

We definitely could not afford our house now. We bought at market price 1990 from my folks, who had been unable to sell.
Even in the housing bust, it maintained a good price.
Ever since we bought in this area, each house bought is generally torn down and new ones built, sad to see. Our neighborhood is one of the last ones where most are remodeled. Although lately, we are seeing the house torn down and two new ones built on our larger than normal lots.

[FANOFJESUS]

Boy that is a tough question. We have been in our home a long time. The area is not like when we moved in not as good. The houses are much higher so it all makes you wonder. It is close to everything so that is nice. The thing to remember about cities is that they are always changing.

[Sunset]

Quote:

Originally Posted by Ronstar I don't know what ours would sell for today (maybe $600k), but my research tells me that I can't find anything similar in many parts of the country for less than $1m. Prices in Illinois are not keeping pace with elsewhere.

+1
I've been dreaming of moving for a few years, but am starting to think we might not as houses in other places are easily twice ours.

Our home finally is worth more than we paid after 20 yrs. Now it's worth $250K

The only consolation is it was cheaper than renting for 20 yrs and we have freedom to do what we want. (Maybe not cheaper than renting if had invested the $215K).

[Montecfo]

Buyers now are shopping amid rising rates. Could cause a spike of activity, but affordability drops. It's Just MathTM.

[MC Rider]

We paid $340k back in 2010. Sunk in another $70k or $80k in updates and upgrades. Last month the house next door which is almost the same size and has a pool that we don't have, sold for $916k. Another across the street is a bit larger with no pool, under contract with list price raised to $929k from $875k when it went pending after 10 days on market.


We would not even think of buying in that price range. We are thinking about selling and leaving the big city behind.

[RobbieB]

Quote:

Originally Posted by Another Reader Gotta love Silly Valley... House is worth 6.3 times what I paid 33 years ago... Most of the original owners or early second owners could not afford to buy here or anywhere else in the area at this point.

Hehe, I live out here in the Central Valley and the house is worth over 5X what I paid 33 years ago.

[Walt34]

There is no way we could buy the house in the D.C. area that we sold at retirement in 2002 and we knew that would happen when we sold it. And it'd be a stretch to buy the house we're in now in WV, to the point that I doubt we'd do it.

[Golden sunsets]

We closed on a new home to us on 12/30/21. We will close on the sale of our current home (of 30 years) next Monday, 1/31/22. We had to buy first (all cash offer) and then sell in order to stand any chance of getting the new home in this crazy market. Our old home is 3000 SF and 30 years old and our new home is 2700 SF but much newer, at 10 years old. So not too much of a downsizing. We essentially bought the new home for the same price that we will sell the old home -$900,000. The way we look at it, we either paid too much for the new and sold the old for too much, or both deals were at a fair price. Either way it's a wash.

[pjigar]

Quote:

Originally Posted by MC Rider We paid $340k back in 2010. Sunk in another $70k or $80k in updates and upgrades. Last month the house next door which is almost the same size and has a pool that we don't have, sold for $916k. Another across the street is a bit larger with no pool, under contract with list price raised to $929k from $875k when it went pending after 10 days on market. We would not even think of buying in that price range. We are thinking about selling and leaving the big city behind.

Do it while greater fools are plentiful! We sold our primary home last year and moved to our vacation home in the country. We left some money on the table but a bird in hand is worth two in the bushes. I am selling one of the rental (which has a low ROE) this year too.

OP,

I always compare the house price to the personal income. We historically bought our houses at 2.2, 2.5, 1.7 and 1.3 times the personal income at the time we bought them. The last one we sold was at 2.4 times income. My income has outpaced the median income but I still would not buy the house at the price we sold. People who bought from us paid over 4 times their income!

[pjigar]

Quote:

Originally Posted by ExFlyBoy5 Eloquently written, W2R! I have to agree 100% on the "not just another investment"...a lot of people live in a house, whereas I much prefer to live in a home. It isn't perfect and there are lots that are better/worse...but for us, it's damn near a 10/10. Although, if we were offered a billion bucks for it....well, we would be out yesterday.

I feel this way for our current home. First of all my brother and I built it with our bare hands. And it has all the land that can support the endless hobbies I have. Quite, beautiful and the city is just 20 minutes away.

[HI Bill]

Quote:

Originally Posted by Midpack Sorta tongue in cheek. The house we bought Summer 2019 was a little more than we wanted to spend, but we’re happy we bought it. Current estimates today are 40% higher than we paid, actual home sales in my neighborhood confirm we could definitely get that much if not more based on actual current comps. [Our old house up north has not appreciated nearly as much, good for us - but speaks to actual affordability] :

The house we bought in Fall of 2021 was a lot more than we wanted to spend $394/sf, and a lot larger (2600 sf vs 1500 sf), but we're happy we bought it.

Current estimates by Redfin show it's up 45% since then. Actual home sales in my community confirm we could get the estimated value or more. We've been receiving letters from realtors wanting us to sell.

We also couldn't afford to buy at this price point. I'm so happy we bought, as we have a small ocean view, great birds, and a pool. More home than I wanted or thought I could ever afford, and it's going up multiples of the mortgage payments each month in value.

[Another Reader]

I will pose the question here that I have asked in other fora - where is the money coming from? Is it the stock market? Increased job income? Generational wealth being passed down? Money flowing to the perceived safe haven from overseas? Millenial demographics combined with record ;ow interest rates?

[tmm99]

The price of my house has more than doubled in the last five years. Insane! Something is not right about this IMO...

[Koolau]

We got lucky on our 2009 "upgrade" when the condo we now own dropped 20% in price while the condo we owned only dropped 10%. The effect was to "trade even." The current condo quickly rebounded the 20% and then some! Heh, heh, I'd hate to have to buy our condo now but YMMV.

[old medic]

Quote:

Originally Posted by aja8888 When did you buy at these prices? 1949?

LMAO... the original house next door that we bought 1st was built in 1949. This one was built by the son in 1974. We bought it as a foreclosure auction for $6500. It sat abandoned almost 10 years.

[Music Lover]

I bought my house in 1997 for $80k. Then a boom hit and 5 years later it was worth $280k. Then gradual small increases over the years until recently when prices have gone up again. It was worth $360 or so 2 years ago, it's now worth $420k - $450k.

I couldn't afford to buy my house if I was looking today. As it stands now, we'll probably sell in 5 years or so and then rent as we have a cabin and I'm getting tired of maintaining 2 places. But if the price keeps going up we might sell earlier to take advantage of the market.

[HawkeyeNFO]

Quote:

Originally Posted by Another Reader I will pose the question here that I have asked in other fora - where is the money coming from?

From da bank! People are more in debt than ever!

Now, in some places, Chinese investors have come in with cash, but most often, da money is from the bank and the loan they provided. Check out how the limits on conforming loans have gone up. In my area, it's $970k now (that's up over $200k from 2020). Easy money, and it has been cheap for the past few years, with low interest rates.

[Chuckanut]

I heard an interesting interview with a professor of city planning (for want of a better description). He talked about the lack of land to build more housing in my area.

Then he mentioned that not far from me the county has zoned literally thousands of acres as agricultural use only. That's a lot of houses that won't be built. Add in the high cost of construction, and a time consuming permitting process, and one has a problem even without the Covid supply issues.

[jkern]

Quote:

Originally Posted by RobbieB Hehe, I live out here in the Central Valley and the house is worth over 5X what I paid 33 years ago.

I live in Castro Valley and I bought my house 33 years ago. It's now worth 5.8 times more.

[ExFlyBoy5]

Quote:

Originally Posted by Chuckanut I heard an interesting interview with a professor of city planning (for want of a better description). He talked about the lack of land to build more housing in my area. Then he mentioned that not far from me the county has zoned literally thousands of acres as agricultural use only. That's a lot of houses that won't be built. Add in the high cost of construction, and a time consuming permitting process, and one has a problem even without the Covid supply issues.

Eventually they will adjust the zoning...seems as they always do. It may not be in the next 5-10-20 years, but it will happen; more tax revenue and all. There is always a LOT of w*rk for lawyers that do land use planning and zoning.