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I can’t even afford a home right now on a tech salary with sky high rent paying off my landlords 2% refi’d mortgage and student loans making it impossible at 6-

• nerdponx 4y ago
  Same here. I wasn't financially prepared to buy a house at insanely inflated Covid prices while interest rates were down in the 2% range, and I'm not excited to to buy a house at 7% while prices are still substantially higher than pre-Covid levels. Meanwhile rentals for anything other than a tiny box are just as expensive as a mortgage at those rates. I don't understand how people who do not have 6-figure tech salaries are expected to have anything other than a poverty lifestyle when housing is so expensive. I also don't understand these well-dressed young families parading around Boston and New York with their expensive baby carriages and $75k SUVs. Did I miss a memo on how to get rich at 30? Are they all going broke living like that? Did they all inherit a lot of money? Do they live in tiny apartments?
  • algog 4y ago
    You and me both. Please share the memo when you it.
  • rayiner 4y ago
    You would be surprised at how much family help those families often have. I’m not talking generational wealth. Often just upper middle class parents who saved prudently and did well in the real estate market who can afford to gift $500,000 for a house.
    • nerdponx 4y ago
      Good point, and I'm not personally so far removed from this same category. But it's extremely disappointing and frustrating to feel like I personally will not be able to do this for my own children, despite having a higher income than most people my age.
  • sidewndr46 4y ago
    I wish people would stop referring to 'pre-Covid levels'. We're never going back to that. At this point, it's been years. The government inflated away everyone's wealth & debt, what we got was rampant inflation. There is no 'undo' button on this.
    • PaulDavisThe1st 4y ago
      All it takes to "undo" it is for inflation to slow down (already happening/happened), and wages to increase a little faster than inflation. A few years of that, and it will effectively be as if never happened (in aggregate, anyway).
      • sidewndr46 4y ago
        No, that simply isn't possible. Slowing inflation means price continuing to rise.
        • PaulDavisThe1st 4y ago
          wages increasing faster than inflation means that effective (sometimes called "real") prices fall. If in year N an item costs $1000 and you earn $10k a year, but in year N+M the item costs $1100 but you earn $12k a year, the real price of the item has gone down.
          • sidewndr46 4y ago
            Yeah, except we're talking about returning to pre-Covid levels. Not whatever you just made up. That would imply prices return to the previous levels. That will never happen with inflation.
            • PaulDavisThe1st 4y ago
              No, it doesn't mean that at all. Real prices are a function of the ratio between the cost and earnings. If earnings rise faster than cost, real prices fall. Now, whether or not that's a likely scenario is a separate question, but it is absolutely not impossible and has happened before.
  • sizzle 4y ago
    Trust funds and “old money” from family fortunes are alive and well in places like New York, how some younger people can afford to live like this without the high paying job or business they run.
• __derek__ 4y ago
  > an inflated mortgage entering at the peak of the housing market We are well past the peak of the housing market.
  • pcorsaro 4y ago
    Houses aren't selling in hours anymore, sure. A ton in my area are sitting for days, but prices haven't come down all that much.
    • sieabahlpark 4y ago
    • __derek__ 4y ago
      Median days on market is up, sale-to-list is back below 100%, price drops are a thing again, etc. Come spring, we should see the first normal housing market since before the pandemic.
• bequanna 4y ago
  The Fed was responsible for low mortgage rates because they were purchasing MBS. Mortgage rates are currently back to something more historically normal. If you’re upset about anything, it should be a about rates being so low for so long, which drove up home prices.
  • standardUser 4y ago
    These are some big facts. The down-voters may lack some historical perspective.
• shitlord 4y ago
  If you're living in a tech hub and really want to own a home in the short term, get a remote job and move somewhere cheaper. It sucks, but these places aren't going to get cheaper anytime soon. Meanwhile there's plenty of property in the rest of the country that's more affordable. When the market recovers, you might be able to sell your home for a profit and move back.
  • kneebonian 4y ago
    Seriously, now that starlink is out there are wide swathes of the country that become a lot more feasible to live and work in. I am in a growing town that is quickly turning into a sprawling suburbia that I wanted to escape from originally and already have my eye on a little town that is a lot more slow paced and remote.
    • PaulDavisThe1st 4y ago
      Pray for starlink then, because the experience in the rural part of NM that I live in seems to be that it/they cannot keep up with the previously promised service level as more people sign up.
• bityard 4y ago
  I don't mean to marginalize your frustration, but I feel like you may have unrealistic expectations. First, you have a tech industry salary, which is probably at least twice as much as the median wage, if not more. Not only is it white-collar work with practically no risk to your physical safety (assuming you exercise, eat right, etc), but monetarily this puts you _way_ ahead of most people right out of the gate. If you literally can't find a home to buy (assuming you want to buy one), then either you live in an HCOL area (in which case, owning property was _always_ a fantasy even among the highly-paid), or you aren't looking hard enough. As a landlord, I can assure you that landlords have never gotten 2% mortgages on their properties, unless landlord==bank or some ridiculously well-connected billionaire. Except for 2008, the housing market has _always_ been at a peak. Prices may flatline if we head into a (worse) recession but they are not going down to where they were again. You only options are to accept that and adjust your budget/income/location appropriately, or opt to rent forever, which is not at all a bad thing since owning a primary residence is never an investment. (Although there is room for nuance here that I won't get into.) In the US, the vast majority of people _never_ pay off their mortgage until late in life, if all at. This is because the "normal" thing to do is to buy a house and "upgrade" two or three times until retirement. When interest rates were low, it didn't even make financial sense to pay off a mortgage because the money could be put to better use buying investments. Even with my high-paying jobs, I didn't manage to get above $0 in net worth until I was about 40. I think that's pretty good in a society where an increasing number of people have to work their whole lives for a number of factors, not all of which have to do with wall street and a broken government. I don't know your age, but it sounds like you're still closer to the beginning of your career. Either way, life has "started" for you already, it's happening right now, and it will be even better if you make a concerted effort to understand the world and your place in it right now, and figure out which decisions you need to make that will benefit you the most in the future. Since you asked for it, my advise is to live well under your means, save aggressively, set goals, and never stop learning. If you want to challenge yourself, look into a concept called "early retirement." Good luck.
  • dvt 4y ago
    > Since you asked for it, my advise is to live well under your means, save aggressively, set goals, and never stop learning. If you want to challenge yourself, look into a concept called "early retirement." Good luck. Ah yes, glamorizing the hustle. You'll surely make it if you just "work hard enough," wink wink. Working a 9-5 career is (and has been) a net negative ROI for at least 2 decades, if not more. To be completely honest, this is why I'm on HN: doing your own startup is one of the few relatively low risk gambles one can take. Thinking that it's okay for an entire generation (millennials), scratch that, two generations, (also gen-Z now)—that literally can't afford housing where they work is beyond societally harmful. Birth rates will continue plummeting, among other things. This is all happening because Obama didn't have the balls to just let the shoddy banks crash and burn, and we continued QE for around a decade to alleviate blowback from 2008. This, combined with other factors (a lax policy w.r.t. foreign investments in real estate), will screw us in the long run.
• rayiner 4y ago
  Figure out some way to opt out of the insanity of American knowledge-work metro areas. My wife and I rage quit DC back in 2016 and bought a house in an exurban county. In part because the mortgage payment on our 3,000 square foot waterfront house begins with a “1” we had two more kids and my wife quit her job to start a business. Hopefully with remote work becoming more accepted that will be a more practical option for more people than it used to be.
• pmarreck 4y ago
  > tech salary with sky high rent literally one of the few jobs you can do from anywhere and you probably picked downtown SF. I'm extra judgmental because due to my ADHD, I basically can't do 100% remote jobs
• mrhands556 4y ago
  I bought my first two houses over the last 10 years and each time I thought we were at the peak, and I was way wrong. First mortgage had over 5% mortgage rate and 2nd was the same. Outside of closing costs mortgage rates are temporary (can always refi). Land is a finite resource. It should continue to go up.
  • sizzle 4y ago
    You really think the people who got a <3.5% interest rate loan will let go of their properties in the next 5 years to purchase a 5%+ mortgage for a more expensive monthly payment? What incentive do they have?
    • ryanianian 4y ago
      "Starter homes" (1-2 bedrooms) see lots of turnover as families outgrow them.
    • ryandrake 4y ago
      I just let go of my 2.25% mortgage to move out to the boonies at 7%. It's painful but still makes sense given the cost of living difference between here and the insane Bay Area. I am admittedly gambling that rates will come back down to something at least in the middle within a few years, but who knows?
• xyzelement 4y ago
  // I can’t even afford a home right now on a tech salary As another poster commented - where have you looked and what have you tried? From recent experience, a nice but modest house in the suburbs of NYC is like 1.5 million. An equivalent house in a nice suburb of Cleveland is like 500k, and a smaller 3 bed/2 bath there can be had for under 300. If you are willing to go further afield (but still be in a town with a decent school etc) you can get that for under 170 [1] What's the thing you can't afford, the 1.5 mil or the 170k house? And if you really can't swing the later on a tech salary, maybe we can talk about what's going on there because you should be able to. Also heuristically, whenever someone talks about stuff like their landlord's mortgage rate rather than factors under their own control, it's a bad sign. [1] https://www.zillow.com/homedetails/9672-E-Idlewood-Dr-Twinsburg-OH-44087/35412135_zpid/ https://www.zillow.com/homedetails/9672-E-Idlewood-Dr-Twinsb... for example.
• bane 4y ago
  I dunno, I "guess" I'm the previous generation. It sucked back when my parents bought their home at 9%, and we thought we got an amazing deal at 6%. Then things happened and interest went down and everybody refinanced a few times as it dropped. Before we bought a house we rented a bedroom in somebody else's house, then a crappy apartment and bought basically nothing else. It sucked, but we lived below our means and saved up. It took a few years, and then we were in. I think that two things are simultaneously true: 1 - The housing situation isn't great today and isn't getting better. 2 - The up and coming generation has unrealistic expectations of what it's taken to get into home ownership based on stories from very out of date economic conditions from before the Vietnam war and some strange ideas that they should be able to buy a single family home in the central business district of a big city for 30% of minimum wage. Here's the tip: Live well under your means, grind hard, commute long distances, rent the cheapest place you can practically live in, and save your money. When you have 20% of a house, buy it, refinance if you can for lower rates, grind hard, commute long distances, and save your money. Turn the growth in equity from that house and the new money you saved to buy either what you want or where you want. This is how it's worked in most medium-big metro areas for at least three generations. Here's how to action this tip (assuming the Bay Area): The average 30-year Mortgage Rate since 1971 is 7.76% -- that's your baseline. 20% down on a $800k is $160k -- if you live around the Bay Area, that's your target. Why? That's around the jumbo loan limit for the Bay Area (check your local limits). This is how you get the lowest rate. I checked, there are plentiful properties under that amount, within commuting distance from San Francisco. Commuting distance should be calibrated at under 90 minutes each way during off-peak traffic conditions. Either travel early or late. I picked both Oakland and Lafayette/Walnut Creek areas. Assuming you make Bay Area pay as an engineer, it's not unreasonable to assume you bring home more than $100k after taxes. We'll use $100k to make it simple. Rent should be around 30% of your income. I found plenty of current listings where you can live by yourself within commuting distance of downtown San Francisco that are under $2000/mo. You can always room with somebody, or look for single room rentals. Looking up some average cost of living indexes let's say it costs about $2500/mo to exist. So we need about $4500/mo. That leaves us with $46k/yr in raw savings towards that down payment. That's 3.5 years of tough disciplined savings. Voila, you can buy a home. You said you have student loans? Okay, looks like you did the math, 5-6 years is not unreasonable. Voila, you can buy a property. Get a roommate, a live in significant other, or a spouse, and you can dramatically reduce these numbers by increasing income and/or lowering living costs. Voila you can buy a property. Over 3-6 years you'll most likely get raises, bonuses, and other opportunities. Voila you can buy a property. This pattern has been remarkably persistent since the 70s at least. It sucks, but it's what it is.
• esoterica 4y ago
  Why do you think your life won't start until you buy a house? It's psychotic how much psychological weight people put on homeownership.
  • uejfiweun 4y ago
    To be fair, it's tough to start accumulating furniture and other big heavy objects until you have a permanent place to put it. Buying tons of these items while renting is a risky gamble - if your landlord decides to gouge you, it's not such an easy thing to just pack it all up and move.
    • ericd 4y ago
      IKEA furniture tends to be quite movable…
  • yellowapple 4y ago
    > It's psychotic how much psychological weight people put on homeownership. When the options are "pay hundreds to a couple thousands of dollars per month for 30 years or less" v. "pay hundreds more than that per month in perpetuity", it should be entirely unsurprising that the former is vastly preferable.
    • esoterica 4y ago
      Renting is not in general more cash flow negative than having a mortgage.
      • yellowapple 4y ago
        It takes all of five minutes clicking around on Zillow to prove without a shred of doubt that yes, it is more cash flow negative than having a mortgage, by a margin on the scale of hundreds of dollars at minimum. This really should not be surprising, considering the number of SFHs owned by landlords using their tenants' rent payments to pay for the mortgage and property taxes and profit on top of that (that being the situation of my now-deceased father and still-living stepmother, whose landlord has on multiple occasions jacked up the rent to cover the new mortgage payments from refinances).
• 29athrowaway 4y ago
  Don't live in a tech hub then. It's not worth it. If you are not attending conferences, going to meetups and participating actively of the tech scene in a way that advances your career, you will be just wasting money in rent.
• dclowd9901 4y ago
  If you're under 30 this is normal.