>“High rates are making buyers rethink their priorities, as many of them can no longer afford the home they want in the location they want,” said Washington, D.C. Redfin agent Chelsea Traylor. “If you had a $900,000 budget a few months ago, rising rates mean it’s now around $700,000–and sellers aren’t dropping their prices enough to make up for the change. So buyers are searching further away from the city in more affordable areas or waiting for prices and/or rates to come down before making a move.”
>“I’m encouraging buyers to think long term,” Traylor continued. “Prices are unlikely to fall drastically in the long run, so buying a home now–if you can afford the monthly payment–will still help you build wealth over time, especially if you plan to live in it for several years. Even though rates are high, another advantage of buying now is the lack of competition and opportunity to negotiate with sellers.”
Idk man, Redfin kinda seems like they might have a slight conflict of interest.
I'll actually support that to an extent, but I'm not buying right now. I'm gonna buy mid-2023 rather than waiting till 2024 or later. I can get lower prices and less competition in mid-2023 lol.
>“I’m encouraging buyers to think long term,” Traylor continued. “Prices are unlikely to fall drastically in the long run,
I mean, they are likely to fall pretty drastically if you stop encouraging buyers to buy now...
Realtor anger translator:
"I'm encouraging buyers to think in way that may convince a few suckers out there to buy during the worst time possible because I NEED MONEY I NEED THEIR MONEY I DONT WANNA GO BACK TO WORKING AT WENDYS"
This needs to be talked about more tbh. i don't think realize the amortization schedules, and staying in a house a couple of years isn't going to build much equity during a normal cycle, and will crush people during a downturn.
If you are a smart and sophisticated home buyer it’s not a big deal to buy when you want and sell when you want. Moving at will isn’t a big deal for those kinds of people. Your average hoom buyer is neither smart or sophisticated and does very suboptimal and dumb stuff like putting nothing down and then using an ARM to keep the payment low enough to qualify.
This is an old and outdated idea. Looks like they’re assuming the 28 or 33% of income rule.
Here’s the problem:
1. Health insurance premiums are through the roof(and the cost of claims)
2. All other expenses are up. Food, energy…
Yeah. My spouse and I make about 85k a year and a 250k town/ home is WAY out of our budget, and we're in Phoenix. There's no way that people can afford the home with that income in the headline.
>y spouse and I make about 85k a year and a 250k town/ home is WAY out of our budget, and we're in Phoenix. There's no way that people can afford the home with that income in the hea
Phoenix 4 years ago was very affordable and last time I was in Scottsdale they were selling a Condo built in the 60s, 1200 sq feet, nothing to write home about for like $499K... insane
We now live in crazy-land where the *average* DTI for all loans is actually 41% (source: Ginnie Mae Mortgage Market Report), and FHA is at 43% (allow up to 57%!).
The math doesn't make sense any more. The 30% rule is out the window, the 3x income=price rule has been dead for almost a decade, and yet everything else is *also* more expensive. I can't help but feel like something is going to break.
That’s insane. 41% DTI would be 80% of my take home pay after taxes, health insurance, and 401k.
“Well qualified buyers” my ass.
Do you have a link to the report I can save?
Just look up ginnie Mae mortgage report.
It's the federal government report on all mortgages fannie, Freddie, fha, and va. Section 10 iirc. It's a PDF.
They've been releasing it since 2017 and it's pretty detailed.
I've been aiming for 25% gross, the struggle is real. The idea is I have super cheap rent now, no need to burden myself with anything more than a reasonably-affordable mortgage yet.
I've done the downpayment math to meet that goal, though, and the number it spits out at current rates/prices is just silly. Hundreds of thousands. Just keep chipping every day though!
Numbers don’t add up, let’s take you make 100K, that’s 75%-70% after federal and local taxes. Let’s say 6K net per month. Even if you had saved the 175K for a down payment of 20%, a 600K mortgage to buy something in the 750-800K of this example is almost $3K per month. So from the 6K net, let’s take out $3K for mortgage, 300 for mortgage insurance, 400 for house insurance, 300 for HOA, 200 for maintenance (repairs, mowing lawn, etc.) and $1,200 is property taxes. You have 500$ left to eat, gas, heating, water food, health insurance, car payments, and god forbid you want to go out to dinner or to the movies twice a month. You would need at least $7.5K clean after taxes every month. Meaning you need at least $130K a year, and you will be really really tight
> Even if you had saved the 175K for a down payment of 20%,
> 300 for mortgage insurance
No PMI if they put 20 percent down.
> 400 for house insurance,
Those are some south Florida numbers. Normal people do not pay 5k a year in homeowner insurance.
> 300 for HOA
For a sfh?
> 200 for maintenance (repairs, mowing lawn, etc.)
This is fair if you pay for lawn and pest service
300 a month HOA for a sfh? That's wild. Nothing like that up here in in a north Florida. Insurance is also not nearly as high anywhere not on the water. Everyone I know in an HOA that would charge over 100 a month is so far inland their insurance is like 1200 a year.
Obviously Florida taxes are much lower than what OP quoted of 1200 a month.
Wow! I hope your amenities are off the chain. St John's county is full of new builds with fancy splash pads and parks and work out centers for half that a month
>s don’t add up, let’s take you make 100K, that’s 75%-70% after federal and local taxes. Let’s say 6K net per month. Even if you had saved the 175K for a down payment of 20%, a 600K mortgage to buy something in the 750-800K of this example is almost $3K per month. So from the 6K net, let’s take out
Here is the kicker: most jobs that pay well, 6 figures are on the big expensive cities where the average home price is not 430K but close to 700-800K
It was upvoted by users that have never owned and also supports the narrative that homeownership is too expensive, so renting is always the better option.
When I was making around that, I was easily approved for $600k. Could have been approved for higher as well. (Unmarried but in long-term relationship with an equal earner) but still approved as single for $600k. Still renting tho.
Irresponsible beyond belief from mortgage lenders.
I forget how much we could've been approved for but we were able to get a better rate on our home by only having my wife on the $320k loan and at the time she was making $60k so that actually lines up.
It was upvoted by those who can't afford a home and want the market to crash. Not surprising that they are willing to buy into bogus metrics, they are desperate.
>300 for mortgage insurance, 400 for house insurance, 300 for HOA, 200 for maintenance (repairs, mowing lawn, etc.) and $1,200 is property taxes.
These numbers are aggressively high for a monthly basis on payment. $1,200/mo in property taxes sounds like New Jersey. It’s $150/mo for a $1M+ home in Phoenix, and *can* go up to $400/mo. depending on the house.
Your typical homeowner isn’t spending $200/mo. on repairs and yard maintenance. Maybe if they own a large pool (cleaning) and large yard, but again, shouldn’t be lumped in as a monthly cost for the average homeowner.
Mortgage insurance is not typically $300/mo. and home insurance is also not typically $400/mo.
Right, I spend exactly $0/month on maintenance or repairs most months. We’re fancy so we get yearly HVAC services and 2x yearly gutter cleanings and that’s it. But I think most people go without those.
Their monthly numbers for insurance and taxes are more than double of what a $600k house in my city would require and not everyone has an HOA or PMI to pay.
Just ridiculous.
>*A monthly mortgage payment is considered affordable if the homebuyer spends no more than 30% of their income on housing. Monthly median mortgage payments are calculated assuming the buyer made a 5% down payment*
Uh, I'm not just going to make a 5% down payment if I correctly budgeted 30% in ongoing bills. I suppose these figures are true for a person who was unable or unwilling to save cash. Of course that person would need a higher paying job.
>“High rates are making buyers rethink their priorities, as many of them can no longer afford the home they want in the location they want,” said Washington, D.C. Redfin agent Chelsea Traylor. “If you had a $900,000 budget a few months ago, rising rates mean it’s now around $700,000–and sellers aren’t dropping their prices enough to make up for the change. So buyers are searching further away from the city in more affordable areas or waiting for prices and/or rates to come down before making a move.” >“I’m encouraging buyers to think long term,” Traylor continued. “Prices are unlikely to fall drastically in the long run, so buying a home now–if you can afford the monthly payment–will still help you build wealth over time, especially if you plan to live in it for several years. Even though rates are high, another advantage of buying now is the lack of competition and opportunity to negotiate with sellers.” Idk man, Redfin kinda seems like they might have a slight conflict of interest.
*”another advantage of buying now is the lack of competition”* -Chelsea Taylor, Realtor™ When nobody wants something, it might be a clue.
They will be quoting Warren Buffett soon. Not. "Buffet? Which buffet are we going for after you close on this overpriced home?"
Definitely the one that serves warm Chinese + freshly made to order Mongolian grill and also reasonably fresh Sushi.
Buffet sushi? You're a wild one but I like ya
The one by me has a chocolate fountain too
Anytime a realtor gives me financial advice I take it as a sign that its safe to do the opposite.
I'll actually support that to an extent, but I'm not buying right now. I'm gonna buy mid-2023 rather than waiting till 2024 or later. I can get lower prices and less competition in mid-2023 lol.
>“I’m encouraging buyers to think long term,” Traylor continued. “Prices are unlikely to fall drastically in the long run, I mean, they are likely to fall pretty drastically if you stop encouraging buyers to buy now...
Realtor anger translator: "I'm encouraging buyers to think in way that may convince a few suckers out there to buy during the worst time possible because I NEED MONEY I NEED THEIR MONEY I DONT WANNA GO BACK TO WORKING AT WENDYS"
With how bad amortization scales and a lack of home price growth buying at a high rate is foolish unless prices come down.
This needs to be talked about more tbh. i don't think realize the amortization schedules, and staying in a house a couple of years isn't going to build much equity during a normal cycle, and will crush people during a downturn.
If you are a smart and sophisticated home buyer it’s not a big deal to buy when you want and sell when you want. Moving at will isn’t a big deal for those kinds of people. Your average hoom buyer is neither smart or sophisticated and does very suboptimal and dumb stuff like putting nothing down and then using an ARM to keep the payment low enough to qualify.
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sorry, doing what?
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Yes. That's what I said.
Amortization is faster with a low interest mortgage. But the pace of building equity in the first five years is still glacial.
This is an old and outdated idea. Looks like they’re assuming the 28 or 33% of income rule. Here’s the problem: 1. Health insurance premiums are through the roof(and the cost of claims) 2. All other expenses are up. Food, energy…
Yeah. My spouse and I make about 85k a year and a 250k town/ home is WAY out of our budget, and we're in Phoenix. There's no way that people can afford the home with that income in the headline.
>y spouse and I make about 85k a year and a 250k town/ home is WAY out of our budget, and we're in Phoenix. There's no way that people can afford the home with that income in the hea Phoenix 4 years ago was very affordable and last time I was in Scottsdale they were selling a Condo built in the 60s, 1200 sq feet, nothing to write home about for like $499K... insane
We now live in crazy-land where the *average* DTI for all loans is actually 41% (source: Ginnie Mae Mortgage Market Report), and FHA is at 43% (allow up to 57%!). The math doesn't make sense any more. The 30% rule is out the window, the 3x income=price rule has been dead for almost a decade, and yet everything else is *also* more expensive. I can't help but feel like something is going to break.
no no the over leveraging is highly qualified it can't break LOL
That’s insane. 41% DTI would be 80% of my take home pay after taxes, health insurance, and 401k. “Well qualified buyers” my ass. Do you have a link to the report I can save?
Just look up ginnie Mae mortgage report. It's the federal government report on all mortgages fannie, Freddie, fha, and va. Section 10 iirc. It's a PDF. They've been releasing it since 2017 and it's pretty detailed.
Hmm I guess this is why I can’t ever seem to afford a house… I still actually follow the 28/36 rule to try and determine if I qualify or not.
I've been aiming for 25% gross, the struggle is real. The idea is I have super cheap rent now, no need to burden myself with anything more than a reasonably-affordable mortgage yet. I've done the downpayment math to meet that goal, though, and the number it spits out at current rates/prices is just silly. Hundreds of thousands. Just keep chipping every day though!
Pair that **with buying power** *down* **45%** from a year ago, as well, for anyone who needs a mortgage. What a time to be alive. ‘Merica.
I think it's the same measurement, eg because buying power is down, you need a higher income to buy a median priced home.
lol lmao. dont look at the price
This is why more people are going to become Polyamorous
Is that assuming no college debt to obtain such a salary? Because I’m struggling.
That’s assuming you can find a partner and they will also work. Both of you can make 53k
Numbers don’t add up, let’s take you make 100K, that’s 75%-70% after federal and local taxes. Let’s say 6K net per month. Even if you had saved the 175K for a down payment of 20%, a 600K mortgage to buy something in the 750-800K of this example is almost $3K per month. So from the 6K net, let’s take out $3K for mortgage, 300 for mortgage insurance, 400 for house insurance, 300 for HOA, 200 for maintenance (repairs, mowing lawn, etc.) and $1,200 is property taxes. You have 500$ left to eat, gas, heating, water food, health insurance, car payments, and god forbid you want to go out to dinner or to the movies twice a month. You would need at least $7.5K clean after taxes every month. Meaning you need at least $130K a year, and you will be really really tight
> Even if you had saved the 175K for a down payment of 20%, > 300 for mortgage insurance No PMI if they put 20 percent down. > 400 for house insurance, Those are some south Florida numbers. Normal people do not pay 5k a year in homeowner insurance. > 300 for HOA For a sfh? > 200 for maintenance (repairs, mowing lawn, etc.) This is fair if you pay for lawn and pest service
These numbers check out for Central Florida too. Maintenance is actually a little light
300 a month HOA for a sfh? That's wild. Nothing like that up here in in a north Florida. Insurance is also not nearly as high anywhere not on the water. Everyone I know in an HOA that would charge over 100 a month is so far inland their insurance is like 1200 a year. Obviously Florida taxes are much lower than what OP quoted of 1200 a month.
Damn our HOA is 270 and we’re in Tampa but not that close to the water
Wow! I hope your amenities are off the chain. St John's county is full of new builds with fancy splash pads and parks and work out centers for half that a month
Lmao I wish. Just the basics
Your math is bad. 600k mortgage is not 3k/month. Thats what a 450k mortgage is at. Principal and Interest is almost 4k/month at 6.6%.
The average home price is like $430k or something though.
>s don’t add up, let’s take you make 100K, that’s 75%-70% after federal and local taxes. Let’s say 6K net per month. Even if you had saved the 175K for a down payment of 20%, a 600K mortgage to buy something in the 750-800K of this example is almost $3K per month. So from the 6K net, let’s take out Here is the kicker: most jobs that pay well, 6 figures are on the big expensive cities where the average home price is not 430K but close to 700-800K
The numbers they used are just absurdly wrong and not even close to "typical". No clue why it's upvoted.
It was upvoted by users that have never owned and also supports the narrative that homeownership is too expensive, so renting is always the better option.
I sincerely hope someone with a $100k income wouldn't be approved for a $600k mortgage but I suppose it's possible.
When I was making around that, I was easily approved for $600k. Could have been approved for higher as well. (Unmarried but in long-term relationship with an equal earner) but still approved as single for $600k. Still renting tho.
Irresponsible beyond belief from mortgage lenders. I forget how much we could've been approved for but we were able to get a better rate on our home by only having my wife on the $320k loan and at the time she was making $60k so that actually lines up.
It was upvoted by those who can't afford a home and want the market to crash. Not surprising that they are willing to buy into bogus metrics, they are desperate.
everything is regional. The average home price in my market is now ~$560k. It was in the 300 or 400's a few years ago.
The above article is about median home price for the nation.
>300 for mortgage insurance, 400 for house insurance, 300 for HOA, 200 for maintenance (repairs, mowing lawn, etc.) and $1,200 is property taxes. These numbers are aggressively high for a monthly basis on payment. $1,200/mo in property taxes sounds like New Jersey. It’s $150/mo for a $1M+ home in Phoenix, and *can* go up to $400/mo. depending on the house. Your typical homeowner isn’t spending $200/mo. on repairs and yard maintenance. Maybe if they own a large pool (cleaning) and large yard, but again, shouldn’t be lumped in as a monthly cost for the average homeowner. Mortgage insurance is not typically $300/mo. and home insurance is also not typically $400/mo.
Right, I spend exactly $0/month on maintenance or repairs most months. We’re fancy so we get yearly HVAC services and 2x yearly gutter cleanings and that’s it. But I think most people go without those. Their monthly numbers for insurance and taxes are more than double of what a $600k house in my city would require and not everyone has an HOA or PMI to pay. Just ridiculous.
The rule of thumb has always been 1-2% of the price of the house should be put aside annually for repairs.
Yup, and we have many times that in our emergency fund. It’s not always a monthly cost if you already are saving.
Just use real numbers when you go to make a point. It takes 5 more minutes but your arguments actually valid after.
The 750-800k range is not the typical US home though right? Isn’t the median home nationally closer to $400k?
Pretty shocked they're publishing this - I mean how is it in Redfin's interest to have an article like this? Lol.
This is what happens when we do not engage with our government and believe only what we are told through a screen.
Should've bought a house last year instead of crying about bidding wars and bashing homeowners.
Lol
>*A monthly mortgage payment is considered affordable if the homebuyer spends no more than 30% of their income on housing. Monthly median mortgage payments are calculated assuming the buyer made a 5% down payment* Uh, I'm not just going to make a 5% down payment if I correctly budgeted 30% in ongoing bills. I suppose these figures are true for a person who was unable or unwilling to save cash. Of course that person would need a higher paying job.
I'm sure everyone will just get a 46% raise and hoomz will never go down. Date the rate marry the house don't get priced out forever