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It’s not just inflation it’s interest rates that has a massive impact on anyone who does not already own a house. A $1M house with a $800k mortgage at 2.5% rat

by tempsy 3y ago

It’s not just inflation it’s interest rates that has a massive impact on anyone who does not already own a house. A $1M house with a $800k mortgage at 2.5% rates was $3161 a month At 7.5% rates today it’s $5594

andsoitis 3y ago
Is the complaint that many people can’t afford a $1 million house?
- tempsy 3y ago
  Software engineers tend to live in higher cost areas where $1M would be below average. If you live in a median cost of living area $1M would get you a decent, but not amazing, house in a good school district, which is another thing a software engineer parent would probably care about.
dragonwriter 3y ago
> It’s not just inflation it’s interest rates that has a massive impact on anyone who does not already own a house. It has a massive impact on anyone who does have a house with an ARM, and some effect if you own a house and were counting on refinancing or entering getting cash out via a new mortgage/HELOC, but if you don’t own a house, the only effect is via a potential impact on inflation specific to rental housing, not an effect additional to inflation. I mean, it affects whether now is an ideal time from going to owning to not owning, but that's hardly a massive impact generally (massive on that decision, perhaps.)
nonethewiser 3y ago
Irrelevant - that does not substantiate a feast/famine cycle in the engineering profession.
Forgeties79 3y ago
Which is like 35% of one person’s salary. Seems more than reasonable to me for a million dollar home.
- tempsy 3y ago
  not sure what you’re saying is reasonable. a $1M house with a $800k mortgage would mean something like $8k monthly housing cost with property taxes and insurance included. If you made $200k gross and contributed to a retirement account you’d net $10k a month or so. Spending 80% of that on your mortgage and property taxes is definitely not sustainable.
  - Forgeties79 3y ago
    Your property taxes and insurance are over $30k a year? We are also talking about a single salary. We’re not even talking about a dual income household, which is generally the kind of family that would be buying a million dollar home in my experience.
    - tempsy 3y ago
      Depends on which state. Texas, Illinois, NJ have 2%+ property taxes so yes that would be $20k a year plus insurance and any HOA. Dual income is an entirely separate discussion from the financial impact of surging interest rates.
      - deleted 3y ago
        [deleted]
      - Forgeties79 3y ago
        Texas and Illinois are both 1.6%, didn’t bother checking New Jersey. The average insurance rate is $1700/yr in Illinois based on a cursory google search. I live in a state that is 2% and is going through a coverage crisis, and it would cost me ~$10-12k for coverage on a 1mill home if I adjusted the value of my home and current insurance, which I had to acquire during this crisis. Edit: it won’t let me reply. I’m literally making the same argument you are but I found different numbers. I did not say the state set it.
        tempsy 3y ago
thelastgallon 3y ago
Plus ~3% property taxes in states like Texas. For a 1m house, thats 2500/month. Plus repairs and maintenance, there is always something breaking down and labor has become very expensive, materials too. All of this makes housing unaffordable for anyone who doesn't have rich parents.

by tempsy 3y ago

andsoitis 3y ago

Is the complaint that many people can’t afford a $1 million house?

tempsy 3y ago
Software engineers tend to live in higher cost areas where $1M would be below average. If you live in a median cost of living area $1M would get you a decent, but not amazing, house in a good school district, which is another thing a software engineer parent would probably care about.

dragonwriter 3y ago

> It’s not just inflation it’s interest rates that has a massive impact on anyone who does not already own a house. It has a massive impact on anyone who does have a house with an ARM, and some effect if you own a house and were counting on refinancing or entering getting cash out via a new mortgage/HELOC, but if you don’t own a house, the only effect is via a potential impact on inflation specific to rental housing, not an effect additional to inflation. I mean, it affects whether now is an ideal time from going to owning to not owning, but that's hardly a massive impact generally (massive on that decision, perhaps.)

nonethewiser 3y ago

Irrelevant - that does not substantiate a feast/famine cycle in the engineering profession.

Forgeties79 3y ago

Which is like 35% of one person’s salary. Seems more than reasonable to me for a million dollar home.

tempsy 3y ago
not sure what you’re saying is reasonable. a $1M house with a $800k mortgage would mean something like $8k monthly housing cost with property taxes and insurance included. If you made $200k gross and contributed to a retirement account you’d net $10k a month or so. Spending 80% of that on your mortgage and property taxes is definitely not sustainable.
- Forgeties79 3y ago
  Your property taxes and insurance are over $30k a year? We are also talking about a single salary. We’re not even talking about a dual income household, which is generally the kind of family that would be buying a million dollar home in my experience.
  - tempsy 3y ago
    Depends on which state. Texas, Illinois, NJ have 2%+ property taxes so yes that would be $20k a year plus insurance and any HOA. Dual income is an entirely separate discussion from the financial impact of surging interest rates.
    - deleted 3y ago
      [deleted]
    - Forgeties79 3y ago
      Texas and Illinois are both 1.6%, didn’t bother checking New Jersey. The average insurance rate is $1700/yr in Illinois based on a cursory google search. I live in a state that is 2% and is going through a coverage crisis, and it would cost me ~$10-12k for coverage on a 1mill home if I adjusted the value of my home and current insurance, which I had to acquire during this crisis. Edit: it won’t let me reply. I’m literally making the same argument you are but I found different numbers. I did not say the state set it.
      - tempsy 3y ago

thelastgallon 3y ago

Plus ~3% property taxes in states like Texas. For a 1m house, thats 2500/month. Plus repairs and maintenance, there is always something breaking down and labor has become very expensive, materials too. All of this makes housing unaffordable for anyone who doesn't have rich parents.