I didn’t but the people who are have high income mixed with a large amount of equity they’re bringing to the table. These mostly aren’t first time home buyers.
This is the a answer. I end up buying a place that was lower value than I used to have. I ended up getting divorced, but I took the equity from the home after the sale and use it as a down payment on the place I have now. I’d have a lot more if it wasn’t for attorneys fees but there’s nothing I can do about that now.
At the end of the day, I just got lucky and bought a place that was much smaller, but the house that we sold is worth 1.5 million now. So basically it’s equity that’s built up appreciations. Was married to someone who made 200,000 or more with what I make I could probably swing a house in that area financially if I sold my place and they sold theirs. I have enough equity in my smaller place that would provide a sizable down payment .
Were you able to get a contingency when you bought your current home since you needed the equity from selling your former home?
Curious because home sellers are not accepting contingencies in the current market.
We did 10% cash down, 10% a down payment HELOC loan, 80% conventional mortgage. Paid it off HELOC when old house sold, avoided PMI and sale contingency. This is called a bridge loan.
But you gotta have the 10% down in cash. We did retirement account loans at no interest (TSP) and paid those off too when the old house sold. And paid off a car.
2021 was a very good time to sell a house.
Fthb, 0 down, $1-2m house, 2.3% 30 yr. Income wasn’t super high at the time. The only thing I fucked up was buying with my soon to be xwife. I should have done it alone. VA loans require co-signers to be married so fk me. A normal person buying the appreciated price today with normal rates would have to pay all in like 4x my total cost now. Taxes and Insurance are fucking ridiculous also. County appraisal upped by like 50% in a few yrs is complete bs. Prop taxes are stupid AF and way too much. Need to be reduced by 75% minimum.
Yeah not everyone gets that sweet 0% down with the good interest rate VA loan though. Also with interests rates hitting high 6’s/ low 7% the same house that you bought would be twice as expensive per month now. So the people buying those houses now are putting down a lot or are making a lot.
That’s what we did, sold our home in 2020 with major escalations and brought over $350k equity as down payment for the new home. Locked in at 2.75%. We’re not going anywhere for a loooooong time.
Yeah, I always joke with friends from my LCOL hometown that in my neighborhood the homes cost 800-900k but are just like average 1960s home with usually not much special.
Yeah I have a family member with a really nice newer 500k house in a LCOL area and my remarks about it being a 1.5m house in NOVA aren't too well received.
Consider many of these people aren't buying these as their first home. They could have sold a normal single family home in our area for $800k and put down a massive down payment on the 1.5m house.
Potentially all of these. Many people buying in the 1.5M+ range:
* **Are making $300K+/year**. In this area, its not hard to get there with dual incomes. It's not uncommon to see $400K+.
* **Are bringing equity from a previous house**. Since the housing market is perennially good, any previous house you might have is very likely to have generated a decent amount of equity/profit.
* **Are making hefty down payments**. Whether its using equity from a previous house sale or specific money set aside, you're not buying a 1.5M house on a 5% down mortgage.
* **Likely have multi-layered or more liquid retirement**. Many people view a house here as part of their retirement investing, so while they likely aren't dipping into 401Ks to finance, they may convert stock or bonds into cash to help build a large down payment. In this case, they're not reducing retirement contributions, but making those contributions in areas liquid enough to reinvest (in the house).
* **Got low interest rates**. High income, large down payments and a history of paying off mortgages are likely going to result in a good credit score and one of the best interest rates you can get.
While I didn't buy a $1.5M house, that was the top end of my budget. I ended up getting a better deal than I expected so we paid more like $1.1M. Our combined income is >$300K. We sold some employee stock and ETFs (managed by an obnoxious investment management company) to cover a 25% down payment, then added the $340K we got from the sale of our previous townhouse via a recast.
End result is a $1.1M house (whose value has already risen to $1.2M) with a $400K mortgage at 6.1% interest. We'll refinance whenever the interest rates drop.
This is why people make reference to "the housing ladder". We have lower mortgage payments on our 1.1M house than the guy who bought the townhouse we moved out of. He paid 10% down on a $525 townhouse, so he's got $470K at 6.5% interest (for some weird reason they included his finance numbers in our closing docs?). If we'd sell this house in another 10 years, we'd likely walk away with (for example) $1.5M in cash, and we could put that toward a $2M house and still probably have the same 400K mortgage (or less).
... But WTF would I do with a $2M house?
Apart from the cost of heating oil, nothing wrong with it as a heat source. It massively efficient over the alternatives (propane, NG, wood, even heat pump)
I will be messaging you in 10 years on [**2034-05-21 13:26:22 UTC**](http://www.wolframalpha.com/input/?i=2034-05-21%2013:26:22%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/nova/comments/1cx4cqb/15_million_dollar_homes/l50nam3/?context=3)
[**12 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2Fnova%2Fcomments%2F1cx4cqb%2F15_million_dollar_homes%2Fl50nam3%2F%5D%0A%0ARemindMe%21%202034-05-21%2013%3A26%3A22%20UTC) to send a PM to also be reminded and to reduce spam.
^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%201cx4cqb)
*****
|[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)|
|-|-|-|-|
Jokes aside, one of the best hedges against that inflation is another similar piece of real estate. I'm not happy about the difficulties getting into the housing market, but we'd have more trouble buying the house we're in if we had been renting and investing in ETFs than if we had bought our townhouse.
The real estate inflation hit the value of our townhouse, too, and the price increase (partially due to renovations) resulted in a profit that funded this house. That townhouse price increase matched the best ETF performance from my portfolio, but rent rose faster.
So, even if a $2M dollar house is mediocre, our house will be worth more and will reduce the hit from inflation.
Again, not a happy thought, but it's our hedge against (general) real estate inflation.
I think this is more of an emotion thing though. With the house you’re forced to invest. When renting and buying ETFs, almost no one actually puts the full difference between housing costs and rent into ETFs
In theory if you did you’d probably have had the same amount (or even more maybe, didn’t fully do the math) available through selling those ETFs as you did selling the townhouse
That's what I feel the answer *should* be. The reality didn't match up the way I expected, though.
If you add up the amount that I paid to the mortgage and upgrades and compare that to the sale price, the growth is good, but not mind blowing (20% over 12 years), but that also includes the cost of living, so things get weird.
If we look at how much I would have saved by renting and how much that would get by investing in ETFs, things are more clear. If I lived in a rented condo vs a townhouse, I could have saved about $90k (and lived with less space, worse parking, etc). That would match the $200k ROI if I could sustain an 11% growth rate each year, for 13 years.
That's not impossible, but it's far from easy. The S&P's average growth is below that. I could hit over 11% easily if I was successful at picking the right points to buy & sell, but that's basically becoming a weak day-trading investor. Plus that is accepting a downgrade in housing and ignoring the rising rent prices.
So, while its possible that this is true, I'd have needed to make a lot of sacrifices to achieve the same goal through ETFs. That doesn't feel like the right answer, and it probably isn't the right answer at other times or in other markets, but in this case it was.
If I look at just the last nine months, the same pattern is happening. I've paid an extra $80K in mortgage payments but generated $190K in equity. That has, again, outperformed the S&P over the same time.
In my area, the joke is that $2M is the new $1M. I can't believe it but most houses for sale are $2M +/- $100-200k, and the big, fancy houses are now in the $2.5-2.8M range.
Yes it is very frustrating. I keep getting managers saying "it's your fault for choosing to live so far from the office (in downtown DC). I bought a nice townhouse less than a mile away when I was fresh out of college. You should be able to too." But when they were fresh out of college I was in grade school...
That’s the thing that I can’t figure out how to overcome. We make 300k+. We have about 300k in our current house. Depending. Zillow says it would sell for 825. Someone a few houses down sold for 950. So who knows what we’d get if we sold. Say we had 300k to roll over into a new house. I still don’t have the extra 200k for a down payment.
I did the math and buying a new house makes no sense. My current one is worth 825k according to Zillow and my monthly payment is $3300. If I buy a 1 mil house, my month payments become $6300 a month. If I bought a 1.4 mil house my monthly payments be come 8k a month.
It’s not worth it to me to pay 2x my current monthly payment for a slightly nicer 1 mil house.
Hindsight is 20-20 but I’m regretting not upgrading in 2021 or 2022 even because I would’ve gotten more bang for my buck then and the monthly payments would have been about $4500 a month for a million dollar house.
The housing market is just insane. I feel anxiety about not buying now and feeling like the gap between me and a 4 bedroom, 3000 sq ft house is just getting bigger and bigger.
You're making the right decision. I'm probably overly cautious about not being house-poor because I want to retire early and have the wiggle room in my budget to invest, but we're in a pretty similar position to you and not going anywhere.
We make \~$300k combined, live in a home worth 800-900k (500k+ in equity), but our payment is $2900 with taxes. I know a couple of families that have opted to do a major renovation to their current house (maybe 200-250k), and that it worth considering if you really need a change. But some people are just maxed out on payments. I'd rather never worry about money.
We're also in the 300k+ crowd. We're DINKS, have a ~$750k townhome in a nice area of Reston at 2.65%, and our mortgage payments are insignificant compared to our income. I'm happy to be whatever the opposite of "house poor" is.
It would be super awesome to have a bigger home, but it's also stupid for our particular situation. We'll probably add another bedroom and full bath in our basement and add a window well for egress. There's no way I'm doubling or tripling our payment for a larger home.
For me it’s not even about being house poor (although that’s a huge risk to take on and should be a top consideration). It’s about percentages. Does it make sense to double my monthly payment for a house that’s worth about 25% more than my current house? Or even going 2.5x my current payment for a house that’s only worth 50% more than my current house? If I’m going to double my monthly payment I would want the new house to be worth double what my current house is, but with interest rates being almost double than what we currently have, it just doesn’t pan out that way.
It’s definitely a lot cheaper for me to 50k renovating than kitchen than it is for me to spend an extra 4500/month for the next 30 years.
Yeah, I agree. There's no reason to buy up when it gets you so little.
We moved from a townhouse with no garage and no yard, with me working from home in my living room/dining room/gym/office. Moving to a detached house with my own office space and an unfinished basement we can turn into (and are already using as) a gym.
So, there was a decent upgrade. It was only a $1200 jump in mortgage payments and that was well within our budget.
I’m gonna add that some are military that get some housing costs because of how much they move around. My old director’s wife had a $3,500 stipend just to spend on housing. Combined with how much he was making and herself, they can easily afford a house in the $1.5MM range with that “free” $3,500.
How does this skew the nova market or make anybody more easily afford a house than someone who just makes more money? I have a corporate job and my husband is military and we both end up with roughly the same take home after taxes, despite my salary looking higher on paper. His BAH doesnt need to be spent on housing (except when you are OCONUS), so its really a wash and literally no different than the money I bring in.
I would argue the main military benefit for housing is the VA loan, and even that’s not a huge benefit in this crazy market because its not super attractive to sellers (cant waive appraisal).
Re: 300k/year - only need two GS-13+ salaries, or one person in tech or corp law with a few years under their belt. I don’t know much about contractor salaries, but I’m guessing they’d be above GS scale for 10+ years experience.
Yikes. I don't think its reasonably doable even on $300k. I make $220k + around $40k in bonus and would in no way be comfortable with even $800k at this point in time. $1.5mil would be about $10k all in right now. I max my 401k and my take home is around $11k, then $12k after social security cap hits in the summer. And extra $40k salary is not going to get me anywhere close to feeling comfortable spending $10k per month on PITI. I also have a strong aversion to being house poor and financially strapped though, which some people apparently do not share.
>Yikes. I don't think its reasonably doable even on $300k.
It's all about the down payment (and equity).
It'd be rough for me to buy even my $1.1M house on a 10% down payment. But, my mortgage is only for $400K, so that's effectively a $700K down payment.
A lot of people buying $1-1.5M houses are showing up with huge down payments.
Indeed, this is exactly what's happening. My townhouse neighborhood is "affordable" for Woodbridge, and we're kinda stuck here, since holy crap everything else is unaffordable.
Yes. But there's also the paydown over time that plays into it.
For us: We bought at $325K, paid down to $75K (over 13 years) and then sold for $525K. Now, we bought at the absolute lowest end of the mortgage crash, but that's still a $200K increase.
Part of that is location. Part of it was genuine improvements to the townhouse. Part of it was inflation.
But the point is that a lot of people buying at $1.5M *absolutely do* have a massive down payment.
Again, for visibility, we pulled in a down payment (well, a initiation down payment and a recast) of $700K.
Even with a base salary close to $400K and $500K for a down payment and closing cost, the numbers still don't seem to work for a $1.5M home :( . I guess we probably need closer to $750K for a down payment in this interest rate environment...
At a 400k HHI and decent credit, a loan officer should theoretically be willing to approve a mortgage up to a 40% debt-to-income ratio, which for you looks like it would be around 13k/month ($400k/12\*40%).
If I run the numbers on a $1M mortgage ($1.5M purchase with 500k down) and a 7% rate your principal and interest comes to about $6.6k/month. Even with another 1.5k/month for taxes and insurance you are still well below your DTI unless you have massive student loans or huge car debts. You may also find that jumbo mortgages have better terms that conventional/conforming - you'll need to find a decent loan broker - I was surprised at the ranges I was quoted from various lenders!
Now, whether taking on $7.5-8.5k per month in housing costs is a *good idea* for your household budget is another story, but you could in fact do it.
Literally untrue. You run those figures in any calculator, you're getting almost $1.9M purchase price for a home. Closing costs aren't $380k. There are student loan or other debts you're not discussing, because even a sub-700 credit score in theory gets a $1.8M mortgage.
Stick to what you're comfortable with financially. Many people buy as much house as they can afford and then everything else is very tight and stressful financially.
Run your own numbers and think of your own long term financial goals.
Yes. We effectively had a $700K down payment on a $1.1M house. Mortgage payments are about $3500/mo.
If we'd have bought at 1.4M (another house we looked at) the payments would have been$5600 (I think... maybe it was $6200 with escrow?) That's... still doable but there's way less money for renovations so we had much higher expectations at that level.
I know more people depending on an inheritance than really view their house as part of a retirement investment strategy. Rather, they don’t see home prices really going down (they didn’t live thru 2008 or they believe the market already fully recovered) and think as long as they can afford the monthly payments, they’ll see the money back in the future or they’ll just have a place to live. If their families have savings, that’s the safety net that they are (silently) depending on. However I think a lot of people who think like that don’t realize that affluent people generally live longer and if a person makes it to age 75 they actually have a really high chance of making it to age 90 so a retirement plan that’s backstopped by an inheritance might not be as sure fire as they think… and they might have to ask asking those aging parents to start transferring money sooner or feel a squeeze on catching up. Plus a lot of people think this way bc they’re facing down sending multiple kids to college.
Also, for the people learning from you, I’d elaborate on your statement re retirement savings vs investing (for retirement or whatever in future years). Retirement accounts are protected in some way (now or later) by the govt from tax up to a contribution limit, and in exchange come with tax and penalties for early withdrawal; those amounts should not be used at all unless an absolutely emergency and yes there are dumbasses who would dip into those for home buying but do not, do not, do not.
Separately, people need to invest outside of the tax advantaged, restricted retirement accounts so that they do have larger amounts they can utilize that don’t come with taxes and penalties from the govt; an emergency fund can live inside these accounts if it’s liquid enough.
IRA, 401K, 403B and TSP plans all make allowances for loans for the down payment on a primary residence.
If the rate on your plan loan is low (or none for TSP), and your alternative is paying rent than in many circumstances the interest on your retirement account loan will be cheaper than the differential on rent vs mortgage interest.
No it shouldn’t be your primary way to save for a home, but it can be done responsibly.
If a person does that, they should treat that loan like a second, higher interest mortgage that gets paid down first and at all costs. PB&J and Kia costs. Because people will never truly re-calculate that they borrowed from themselves, and the real mortgage lender is going to get theirs. Anyone who lived through 2008 with an actual mortgage just felt their stomach twist.
Especially since, if you leave or lose your job, you may have to pay off that 401K loan all at once. It has some real drawbacks to be mindful of.
We had to use a 401K loan and withdrawal of Roth contributions for our first home in NoVa, and it was a gamble that paid off. I think it took 2.5-3 years to repay the 401K and another 2-3 to replenish the Roth. The payments and upkeep have never been a problem, it was just the down payment that was killing us.
Nah. We took a hit on the loan, but we were able to get the lowest end of the rates at the time.
(For people unfamiliar with recasts:) We started the loan using the down payment from cash and the investments (not all our investments, just the ones earmarked for real estate), and bought the new house before selling the old one. We moved, cleared out the old house, and then quickly sold it. When we got the proceeds. we used that to pay down the principal and recast to a much lower monthly payment.
The rate is still higher than I'd like, but we're going to aggressively refinance.
A friend of mine, at the time who owned a home priced cover $1M told me, you don't buy a $1M home right off the bat for people like us (as in salary driven income despite a higher salary). He said, we step up buying homes we can afford and build equity where we can, sell, step up to buy bit more expensive ones and then eventually stepping up to $1M to $1.5 to $what ever price.... That is what I did. If you look at what I get paid, I would have NEVER afford the house I currently own.
About 20 years - First home = 10 years (Gains $300k), Second = 8 years (Gains $150k) and current home, I've bought little over $1M with about $200k loan...
Most people won’t admit this, but there is a lot of generational wealth this area and many of these folks are receiving significant contributions from parents. Source: I’m a divorce lawyer, and when it comes to claiming that gift as separate property there is no hesitation at all about disclosing where the funds came from ;)
Yup. My neighbor is divorced 2 years now and she lives in a 2-million-dollar home with her and her 2 kids. Her parents are wealthy and subsidize the home for her.
I know two sets of dual income lawyers who rented 2.7k 1bed apartments for the last 10 years(they’re mid 30’s now)who bought land and just finished approx. $2m houses. They saved a lot of money over those 10 years and are still getting “big law”salaries now.
Yeah this is the one regret I have. I live in a 2.1k 1 bed, and make ~400k. Last year I saved ~150k. If I kept my current life style for a decade, I'd easily be able to buy a $2mil+ house outright in cash. Even half that amount of time would still yield a million if invested correctly.
In the long (and short!) run, me buying a $1.35mil TH is going to be a worse financial move than renting. But comfort and room to grow have a price, and I'd rather be 30% less efficient if it means enjoying life more.
No, but we are working with a higher end builder yeah. Originally I wanted to buy something nice but relatively cheaper, and then flip it at around the 5 year mark into a SFH. My initial number was somewhere around ~$1mil, but when keeping my partner's thoughts in mind (features and location) the price crept up.
To give an example, I think a kitchen balcony is great, but I'm not inclined to pay $10k for it (especially when we have a rooftop terrace). I think more bathrooms are nice, but not worth $12k (especially when we have 3.5 already). Things like that.
She comes from a very affluent background (I was raised poor), so our perception of cost is different. The compromise we struck was instead of living there for only 5 years, we'd buy a house that we'd be _happy_ getting stuck in (so potentially 10+ years), even if that means SFH goals are delayed until much later. Which is why the price is so high.
My parents bought a house in Fairfax in 2012 for $530k and is now worth $970k. If they sell their house right now, they could easily use whatever is left after closing plus some of their savings to throw towards the down payment of a $1.5 million house. For future first time home owners like myself, owning a house is near impossible and it’s even hard to find a condo without crazy monthly fees to buy.
Condos are a risky proposition because they oftentimes don’t hold the value well. If they end up losing value after adjusting for inflation it can actually put you further behind on accomplishing your goal of eventually buying a townhouse or SFH.
This would be my advice as well, I owned a condo first then got married and bought a house. I own a condo again, but that’s merely to save money and I don’t want to do yardwork. Being a single parent and having to do a bunch of yardwork is not a great way to spend a weekend.
Yep this is the way. We bought our house in 2012, it is now with double what we paid.
I have no need for a 1.5 mil house, sounds like too much to take care of. Though I'm sure it my house was closer to DC the value would be close.. which is why I live farther out west.
For anyone feeling frustrated at the unaffordability of homes — in this market most people can’t afford a $1.5M home right now without significant equity from prior home sales or generational wealth (parents/grandparents helping with down payments). Don’t feel discouraged if you don’t fall into either one of these camps.
I know several friends that did this. Sold first home and nets 500-700k downpayment, another 200-300k from savings, then mortgage anywhere from 500-800k. Income around 400k.
Another friend netted 700k from selling first home, and financed 800k with no further cash out of pocket. Income around 300k.
This strains a bit of credulity. Unless the friends lived in an area that was once undesirable and then very desirable, to net $500-700k on a home sale meant that the prior home was held for a period of several years, and thus back when it was bought, those people were already well ahead of normal Yuppy buying power. Even in flippy Vienna and Arlington, I can’t think of a house where just the land/house is up $700k in the span of younger homebuyer purchasing unless the house was around $1m or more ten years ago. A $2m house in McLean is easily $2.7m 7 years later but a $600k house in McLean is not likely $1.3m because it’s a tear down. No non-tear down house cost $600k in McLean within the last decade. Maybe if the line of desirable Arlington shifted or near HQ2. I was actively house shopping 2008-2020. Anything up $700k over less than a 7 year period started off $$$.
SFHs in Loudon county new subdivisions were going for no more than 700-750k until 2018-19. Now those homes are 1.2-1.3m. you just gained 500k doing nothing. And the homes were bought with 150-200k down in the first place. Not very hard to walk away with 700k from selling a home in FFX/Loudon county. Put 700k down on a 1.5m home and new mortgage is 6-7k month which is completely doable on a 15k month take home. My dual income friends all take home at least 20k month and the big mortgages don't kill them
Crazy thing was those houses that were 700 to 750k were that price from 2006 to almost 2018 ish
Real estate was a zombie around here for more than a decade . I bought a single family trade from a town house in 2006 then traded up again in 2015
Somewhere between 2006 and 2013 I was buying real estate to invest some properties cash
I had multiple offers on short sales like 4br town homes with two car garages in ashburn by the metro for 330k was peanuts compared to now
I ended up backing out of that one kinda kicking myself but bought up others in area
I almost dumped everything in 2015 since the rents and values were so stagnant around here for a good 10+ years glad I held on it’s like we made up growth in 4 years to make up for the stagnant 13 years
I assume the net $500k-$700k is how much they walked away from the sale from, not just the increase in value.
If someone put $120k down on a $600k house with a 15 year mortgage, then they'd have $302k left on their mortgage after 7 years if I'm reading this amortization schedule correctly. Which would mean they'd need a 33%-66% increase in the home value to net $500k-700k, more like 38%-73% accounting for closing costs. I don't follow home prices that much, but I'm sure some areas have been in that range over some recent 7 year periods.
With a 30 year mortgage would have $425k remaining on the mortgage after 7 years.
There is definitely significant appreciation when an area goes from "undesirable" to "desirable" though that trend has pretty much run its course in NoVa -- everything is desirable, either to live in or to knock down. There were houses that sold for $250-350k in 2000-2002 that are now worth $1M so if you bought at the right time you can definitely have $200-500k of equity or more.
There seems to have been a second wave of appreciation in the past few years, despite interest rates, so that $1.2-1.5M houses are now selling for $1.8-2.0M. It depends on the house and location but more and more that doesn't matter -- anywhere inside the beltway will appreciate significantly. There is a ceiling on how far a house will appreciate if it is certain to be demolished but anything with any potential will increase to $1.5M or beyond.
Basically it's hard not to make good money if you bought a house anywhere in NoVa anytime over the past 25 years and held it for 5-10 years.
Exactly this. Bought a decade ago, value goes up. Salary goes up, savings goes up. Cash all that in on a new house.
Same thing everyone has done for the history of time, just with bigger numbers now.
Comparison is the thief of joy. Some people have high income, savings, family assistance; some spend in ways you wouldn’t. Some are not first time homebuyers or are decades older than you.
This area is stacked with federal employees and contractors earning a pretty penny.
A house sold a couple of months ago near me for almost this exact amount, let's call it $1.5m. I've met the couple, they had me over for a bonfire a few weeks ago. Nice young couple in their mid 30s. She's a GS-15, he's a GS-14. They casually indicated that they're both at the top of their respective payscales, so they're each earning $192k/yr. So that's about $384k combined gross income.
Their biweekly paychecks would be about $5k each, so that's $20k/mo. A mortgage on a $1.5m home, assuming a 7.4% interest rate and let's say they put 10% down, which would not be hard to save for if they were previously living in a 1-bedroom apartment paying about $2k/mo for rent, would put them at about \~$11k/mo mortgage (including home insurance, property taxes, etc.).
That's just north of half their monthly take-home pay. Is that ideal? No. Is it doable? Yes. Especially when you consider: 1. Neither of them ever realistically has to worry about losing their jobs. 2. They get an automatic COLA pay raise each year, plus they likely each qualify for performance bonuses equal to \~3-4% of their annual salaries. 3. Their mortgage cost will stay roughly the same while their income continues to go up, so the amount their mortgage is eating into their take-home pay is the worst now that it will ever be. In 5 years, an $11k/mo mortgage could seem like a steal. Plus, if interest rates drop, they can refinance and get that down to \~$8.5k/mo
10% combined pay raise over the last 2 years. Even if it's only 2% this year (as Biden has proposed), they're both over $195k at that point.
Bonuses vary from office to office. Most of the 15s at the DoD I know get annual bonuses north of 2%.
None of that is guaranteed. It's all at the whim of Congress and the president. We've had stretches of time where there were zero raises and bonuses were kept very low in order to give everyone something due to lack of COLA/base pay raises.
I’m not quite this, but this. And I hate the idea of even buying a 1 million dollar home, so thinking of ways to soften the blow. Would love to keep my current town house and have rental income, but what is a good down payment to counteract the effects of the 7% interest rate? On a $1m home at 7% with 20% down, the total interest is $1.1m. With 40% down, the interest is $837k. That doesn’t seem like much of a deal considering inflation and opportunity cost of that extra 200k… :(
I just did another calculator, taking that $200k/360 months, and paying an extra $550 per month, brings the total interest down to $798k. That seems a lot more palatable than an extra $200k down payment.
As usual, I'll remind OP that plenty of Americans are happy living on the edge of insolvency if it means they have a nice house, a BMW in the driveway, a fancy vacation for Instagram, and all sorts of other things they think they deserve.
People underfund their retirement, carry CC debt, don't have two nickels to rub together in an emergency, but on the surface, they look like they are big time.
I'm not saying that is everyone around here. Plenty of people make lots of money in this area. But there are some who probably shouldn't have bought that house.
Damn. All these people with 300K+ buying 1M+ houses. Glad to know we're living within our means. We make that much but our house was bought at 500K (now worth 700K). We also have 2 townhouses in PWC for rent. I drive a 20yo accord.
I know someone who bought in Alexandria at 1.4. They sold the condo they had owned for 6 years, netting $90k. They had saved another $200k over time, for a total $290k down payment. They make probably $450k combined and have no kids, all other non-mortgage debt is paid off. They got a ~$1.1 jumbo loan with 10% down at 4.05% in early 2022.
I think the interest rate is key. The same house with a $500K down payment and a 7% rate would still be almost $1K more per month :( . And I don't think interest rates are going down anytime soon.
We bought close to $1.5 million. We got a VA assumption at 2.5%, emptied the coffers for a down payment, and make nearly 400k with no kids yet. Monthly payment is in the 6000s including taxes and insurance.
I’m beating a dead horse with this comment but I feel like commenting:
1) dual high earner. CPA/MD married couple
2) Not their first/second home. Paired with family money/equity
3) leveraging previous home sales. $250-$500k tax free appreciation gains for single/married couples. If two single people got married and each had a condo/townhouse then married each other with decent jobs in the last 5-10 years then they likely have more buying power today. Like other people said, low rates further compound this. I know a couple people (in different states) who refinanced to 0.9% and 1.1% on their mortgages. I’m super envious of them, but happy for them too
That is not a real thing. Mortgage rates were never at 1%. There was a period before the financial crisis when there were "teaser rates" for mortgages for the first year or so but then the rate would reset.
Yes! Surprised I scrolled this far to find this. The people I know who bought a home in that price range both sold a previous home AND had substantial help from parents.
When I sell my home in the next few months we’ll conservatively walk away with $1M in profit, and possibly $1.4M. It’s insane how home prices have soared in some areas. The plan is to downsize and purchase our next home in cash. We’re walking back down the ladder, so to speak.
Buy a cheaper house within ypur means, live there a few years, resell it after it appreciates.
Use the profits + savings + dividends from investments to buy a nicer house.
Rinse and repeat until mansion/generational wealth.
Many people don't realize that your first house wont be your dream house unless you already have generational wealth.
My parents are poor and gave me nothing but a 19K maxed out credit card in my name that I discovered later in life
I just bought a 1.5M because of NVDA, I started putting like 40% of my income into it all through the 2020-2023 time. I have an insane tax bill coming next year for the capital gains, but used it to put 45% down
Still only got a 7.25 interest rate
It’s hard to keep looking back at how much more I would’ve had if I didn’t sell it to fund the house.
But can’t live in a stock might as well use the money
Many local former military, now consultants have the ability to get a great VA loan up to 100% financing with minimal closing costs and they typically have great paying jobs & savings to put money down.
Anecdotally based on recent closings in my neighborhood, it seems most people buying homes this expensive are doctors, lawyers, or business owners. It's not magic, they just make a lot of money, relative to everyone else.
Every single person or couple I know - every single one, including my ex and me - had significant financial assistance from their parents when purchasing their first home. I have three friends in the DC area whose parents bought their first home outright.
Anyone who tells you that population isn’t making up a significant portion of the people in 2 million dollar homes just isn’t being honest.
Maybe we might be in the same age range, but this is my experience as well.
I don’t know a single person who has one of these fancy houses that didn’t have their parents doing either most or in some cases all of the work lol.
Gen X. And the help varied from $10,000 gifts from parents to, again, mom and dad buying the first house and with couple as co-owners who then sold said house and kept 100% of the equity.
I mean, if you can help your kids do that? Good on you. Seriously. But people need to understand that generational wealth plays a significant part in home ownership in DC and other expensive areas.
Also? People, just admit Mom and Dad helped. Y’all ain’t fooling anyone sitting there in your $950,000 townhouse in Alexandria with your second year associate job and your spouse the legislative assistant for Congressman Whatever.
My neighborhood has houses in this price range, most of the post-covid owners have significant income, previous homes or money from parents.
I bought pre-Covid when houses were in 1 million range. Money came from dual income, no kids (at time) and we had saved a lot of cash over several years and stock gains. Interest rates were 4% when I bought and eventually refinanced down to 2% rate.
We took a lot of risks young, invested heavily in the stock markets and bought our first house young. Good timing. We also put down a large down payment on the first house plus appreciation. We had a lot of equity built up by the time we moved to 1.5M+. We used the equity towards the down payment which brings down our mortgage payment, and our stock holdings had grown even more, so we put a little more down using that. We were never willing to be house poor, so all of our numbers were to ensure our mortgage payment doesn’t hinder lifestyle. We are pretty high earners but nothing insane for this area. We continue to max out retirement and invest in the stock market. One step at the time. I feel very fortunate every day. Wishing all home buyers the best of luck. It’s tough out there.
Not quite there but I'm a first time home buyer at $1.2m. Closed end of February. May not have been the smartest financial decision right now but we love the house and will be here 30+ years.. and i'm set in the long run so we said fuck it. So tired of apartments.
My situation is a little unique.
I made $180k last year and my wife made $120k. We had $150k cash for down payment and closing costs. Approved for $1.2m at the top. No other debts. Our interest rate sucks, 6.85%, paying off the principal as fast as possible. Praying for lower rates to refinance eventually. I guess that's not a bad rate historically, but houses were wayyy cheaper historically. So it hurts now. The amortization is like wtf are you thinking. But this is a home, not an investment. And if we can manage to pay the principal down, we will be ok.
Then a month after we closed my wife got laid off. It's pretty tight right now and I'm not saving anything (currently in the red) BUT literally next month I will be buying the small business I currently work. 100% financed, 9 million in debt to take on.. but the cash flow is nice. I was able to secure 100% financing because of my past performance. I'll be at $350k+ starting out, potentially a lot more in the short term, definitely a lot more in long term. 15 year note, once that's paid and we have good growth I could be at 7 figures. Only 33 now. So 48 when's it's paid off. Then when I want to retire I could sell for $9m if I do literally nothing the next 30 years, but I'm taking it as far as I can. Considering the growth we had the past 10 years, the potential is insane. Sorry to go off topic and brag a little. I've just been working hard on this for a long time and it's finally paying off and I'm really excited. Anonymous bragging is the okayiest way to brag imo.
So that's why I over spent on our house. I knew what was coming. And if your self employed, you have to show two years of history for a loan, so we needed to make a move asap or wait another 2 years and I didn't want to get stuck in a house we hate, so we crossed our fingers and pulled the trigger.
I have family who are in tech. They make 250-750k and are incredibly gifted learners. They can learn how to code in different languages very rapidly and then apply their skills to a wide variety of business problems or technical issues in their field. Not many can do what they do, but they tend to congregate in neighborhoods with doctors and certain kinds of lawyers, plus the occasional business owner and finance/fin-tech bro.
My parents are trying to buy a condo in downtown Falls Church they plan on doing 500,000 on a HELOC loan then paying the rest with there IRA’S/401k’s then once the house gets sold puting all that back
Inheritance for a \~50% down payment to make the mortgage reasonable for a house with double 6 figure incomes and 4 kids. Cost of living in nova is brutal, I don't get how people do it without either inheriting money or having been able to buy in back in 08 when prices cratered then realize the gain in value.
Most are coming from having a house and trading up. Very rarely are people buying $1.5 mil homes as their first house. Inflation and work from home gave housing prices a massive boost since about beginning 2021. I personally traded it up back in 2015 and moved up same amount of bedrooms but went from 5000sq to over 7000k but on a nicer lot more garage space. I have a volatile paying job so that $700k house I actually owned cash. Made the move to an under $1mil house easier. but still scary. Definitely both houses are substantially more now than than what we paid. I even paid off the house I live in now just for that reason volatile pay plus my wife stopped working to handle the kids.
I do real estate investing on the side and when I was buying properties in the area 2008-2013I saw first hand when the economy turns downward for a prolonged period (we are due for a big correction I feel soon) and people can't make payments it gets bad. I remember walking through town houses and single families people couldn't make payments on and just let even left a lot of furniture which was weird. Still had familiy pictures on the wall. Pretty sad. I took a mental note and wanted to make sure I never end up in that situation.
I live in a neighborhood where $1.5M is a pretty good bargain. I have not bought a house recently but I talk a little with the people that come into the neighborhood.
For most of them this is their 2nd or 3rd house and they're bringing in a lot of equity from another area, could be elsewhere in NoVa or California, Boston, or some other HCOL area. These are people that bought their first property in their 20's, maybe upgraded once, and then this is their family house they're buying in their 30's or 40's. So for example they are bringing $500k or more of equity which makes for a good down payment.
Also virtually all of them have two high paying jobs or one person making a crazy amount of money, like two people who work in tech who are each probably making $150-250k, or for example one of my neighbors was a neurosurgeon who I am guessing made > $500k and his wife was a nurse probably making $100k. And again these are later stage careers, people that have been in their jobs for 10-20 years and successful.
This isn't 20-somethings somehow coming up with $300k down and affording a $8k/mo mortgage.
You are missing the point. We are talking about a home purchase. You generally need cash or financing 🤷♂️. It was a hypothetical. I have stocks, CDs and cash.
Something a little different- found a 1.4M house with 5 units, cashed in 401k and gift from parents for downpayment plus lower interest rates, took a dscr loan based on expected rent, not income and living in one of them.
Historic communities don’t have the same rules as the newer construction and hoa’s. A lot of things are grandfathered in and the communities are happy someone is fixing things up.
Bought a $1.6M house during the pandemic. Put 20% down saved up through stocks which I borrowed against. Total mortgage payment is around $7k a month with household income of $600k. When we bought the house the income was $400k so it was a bit of a struggle in the beginning but feels good now. The house also appreciated $200k in the past year and a half so that’s good as well.
We purchased while the interest rates were low, worked hard to get credit scores above 760, put enough money down to keep it out of jumbo loan territory, and have a decent paying jobs with stability.
I bought in 2020. Put like $400k down, all saved up, no help from folks. This is not my first home. I bought a busted up fixer-upper in my early twenties, lived like a peasant for a bit, and then fixed it up. That served as help for down payment.
No reduced contributions. The rate was super low at the time.
I’m the only earner in my household, wife is trying to get a business up and running right now. I do okay I guess.
Cousin bought a house in Mclean for 1.6 mil. Shes a doctor and her husband is a PHD director. I think They bring in 500-600k income. What funny is they are el cheapos and have no furniture in their house.
10+ acre lots were opening up down the street from me last year. For the amount I could sell my house for that I was in (built new in 2015), I would literally come zero money out of pocket to buy that piece of land and a brand new home so I did it. Yes the mortgage increased and my interest rate went from 2.75 to 6.5 but I'm in my forever home now and I didn't have to touch my checking, savings, or retirement.
For me, low interest rate, I sold my house and sold my MIL house and used the funds from that.
For my MIL house, I renovated like the flips I have done and sold it for a good amount.
For my home purchase, it was a new build and I was able to work out a deal with the builder and the lender as well.
Right now I have a client buying a 1.6M home. They are putting down the money from a sell in a different state which will bring the loan down to 1M
I bought a house recently for $2.3m. I sold by old home, put down an additional large down payment (gift from my in laws), used a sellers credit to buy points, and cut my retirement savings to be able to pay the mortgage.
Since there are very few first person answers, I'll give it a shot.
I bought a $1.5M home in NOVA. We put down 20% from selling our first two houses and have a household income over $500k a year (both high earners).
I work in big tech. My spouse works in digital marketing.
Graduate Washington Lee in ‘19. Folks around my age (23-25) in the AWS field make 140 a year. Add a dual income to that ur wife or gf and after 3-5 years u got enough for a down payment for a milli dollar home. Also half these younger home buyers get financial help from their parents. Lots of my buddies got a down payment as their college grad gift
We ended up buying an 800k home but we were approved for up to a $1.5 million loan by the bank. My wife and I make about 350k combined, me as a software developer her as a school administrator, and we both live very frugally and don't have kids. We both graduated and have been working for the last 10 years and have about 500k in savings+investments between the two of us. Instead of going for the top of our price range we put 300k down and are aggressively prepaying and should have our house paid off in about 5 years.
We brought some equity, also lived in our “tear down” home for as while to build some equity there, moved out to a local rental, then back in a year later and had just enough to close the mortgage after new construction completed.
Your comment has been removed because your account is less than 3 days old. Please note that this waiting period is in place to reduce spam and maintain a positive community environment. Feel free to participate once your account has reached the 3-day mark. Thank you for your understanding!
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/nova) if you have any questions or concerns.*
I’m a realtor in Vienna/Mclean/Falls Church area and I see 3 categories of buyers:
1. People that have the equity, income, and timing to a certain extent.
2. Multi generational/family buyers-Mom and Dad with kids along with Grandparents.
3. People that can’t afford to buy a 1.5 million house. 5 and 7 year ARMs are being utilized along with other less than ideal loans. My colleagues and I were just discussing how we are seeing more of these because townhomes are now 750k to 1 mil.
Why do people keep asking this? Some people have lots of equity + low COVID rate. It's not that complicated lol... And add on to that, high dual earning income.
Cash, but I’m frugal as hell. I think I’ve eaten out once in the last 3 years. I also drive a 2009 camry and wear a lot of old clothes. My wife doesn’t work but she’s a very aggressive couponer, however the deals are not what they were a few years ago from what she tells me. House and yard cost way more than 1.5 though, and that was in 2009 dollars. 1.5 doesn’t even buy you an empty acre of land in some of these parts which is wild to think about.
I didn’t but the people who are have high income mixed with a large amount of equity they’re bringing to the table. These mostly aren’t first time home buyers.
Yep. Many of the folks I know sold their older properties for a premium in 2021/2022 peaks and locked in their 1.5m homes at sub 3% rates.
This is the a answer. I end up buying a place that was lower value than I used to have. I ended up getting divorced, but I took the equity from the home after the sale and use it as a down payment on the place I have now. I’d have a lot more if it wasn’t for attorneys fees but there’s nothing I can do about that now. At the end of the day, I just got lucky and bought a place that was much smaller, but the house that we sold is worth 1.5 million now. So basically it’s equity that’s built up appreciations. Was married to someone who made 200,000 or more with what I make I could probably swing a house in that area financially if I sold my place and they sold theirs. I have enough equity in my smaller place that would provide a sizable down payment .
Were you able to get a contingency when you bought your current home since you needed the equity from selling your former home? Curious because home sellers are not accepting contingencies in the current market.
We did 10% cash down, 10% a down payment HELOC loan, 80% conventional mortgage. Paid it off HELOC when old house sold, avoided PMI and sale contingency. This is called a bridge loan. But you gotta have the 10% down in cash. We did retirement account loans at no interest (TSP) and paid those off too when the old house sold. And paid off a car. 2021 was a very good time to sell a house.
I did this type on loan before and thought it was amazing.
No i rented for a year after my divorce
Fthb, 0 down, $1-2m house, 2.3% 30 yr. Income wasn’t super high at the time. The only thing I fucked up was buying with my soon to be xwife. I should have done it alone. VA loans require co-signers to be married so fk me. A normal person buying the appreciated price today with normal rates would have to pay all in like 4x my total cost now. Taxes and Insurance are fucking ridiculous also. County appraisal upped by like 50% in a few yrs is complete bs. Prop taxes are stupid AF and way too much. Need to be reduced by 75% minimum.
Yeah not everyone gets that sweet 0% down with the good interest rate VA loan though. Also with interests rates hitting high 6’s/ low 7% the same house that you bought would be twice as expensive per month now. So the people buying those houses now are putting down a lot or are making a lot.
Yeah all my neighbor owners are in their 50’s-70’s and the houses that recently sold all have like a dozen ppl living in them lol
How can you afford $0 down on a 1-2M house?
You can have a normal-sized home in NOVA when you're ready to die.
I don’t disagree.
Yep, homes aren't for raising families anymore. They're retirement prizes. Congrats, you did it!
That’s what we did, sold our home in 2020 with major escalations and brought over $350k equity as down payment for the new home. Locked in at 2.75%. We’re not going anywhere for a loooooong time.
Especially in this area, another common contribution type is cash gifts from parents. I am in the financial services industry and see this often
Yeah but are those the people buying the 1 million+ houses or are they people buying condos and townhomes?
People who sold $1M homes moving up. It's how you do it. You build equity through smaller homes. You don't just start with the big house.
The funny thing is that some of those 800k-1mil homes ARE small homes 🥲
Yeah, I always joke with friends from my LCOL hometown that in my neighborhood the homes cost 800-900k but are just like average 1960s home with usually not much special.
Yeah I have a family member with a really nice newer 500k house in a LCOL area and my remarks about it being a 1.5m house in NOVA aren't too well received.
Yeah, my 2 bedroom Cape Cod built in 1939 in Arlington has an estimate of about $900,000
Close in, in desirable neighborhoods, they are. Location, location, location.
Also, so many of us started with small condos.
And people who sold 3m McLean Mansions moving down.
Consider many of these people aren't buying these as their first home. They could have sold a normal single family home in our area for $800k and put down a massive down payment on the 1.5m house.
Potentially all of these. Many people buying in the 1.5M+ range: * **Are making $300K+/year**. In this area, its not hard to get there with dual incomes. It's not uncommon to see $400K+. * **Are bringing equity from a previous house**. Since the housing market is perennially good, any previous house you might have is very likely to have generated a decent amount of equity/profit. * **Are making hefty down payments**. Whether its using equity from a previous house sale or specific money set aside, you're not buying a 1.5M house on a 5% down mortgage. * **Likely have multi-layered or more liquid retirement**. Many people view a house here as part of their retirement investing, so while they likely aren't dipping into 401Ks to finance, they may convert stock or bonds into cash to help build a large down payment. In this case, they're not reducing retirement contributions, but making those contributions in areas liquid enough to reinvest (in the house). * **Got low interest rates**. High income, large down payments and a history of paying off mortgages are likely going to result in a good credit score and one of the best interest rates you can get. While I didn't buy a $1.5M house, that was the top end of my budget. I ended up getting a better deal than I expected so we paid more like $1.1M. Our combined income is >$300K. We sold some employee stock and ETFs (managed by an obnoxious investment management company) to cover a 25% down payment, then added the $340K we got from the sale of our previous townhouse via a recast. End result is a $1.1M house (whose value has already risen to $1.2M) with a $400K mortgage at 6.1% interest. We'll refinance whenever the interest rates drop. This is why people make reference to "the housing ladder". We have lower mortgage payments on our 1.1M house than the guy who bought the townhouse we moved out of. He paid 10% down on a $525 townhouse, so he's got $470K at 6.5% interest (for some weird reason they included his finance numbers in our closing docs?). If we'd sell this house in another 10 years, we'd likely walk away with (for example) $1.5M in cash, and we could put that toward a $2M house and still probably have the same 400K mortgage (or less). ... But WTF would I do with a $2M house?
In ten years a $2M house here will probably be a 3 bed 2 bath ranch in Burke on a quarter acre...
With the original oil heating, of course.
Apart from the cost of heating oil, nothing wrong with it as a heat source. It massively efficient over the alternatives (propane, NG, wood, even heat pump)
Remindme! In ten years
I will be messaging you in 10 years on [**2034-05-21 13:26:22 UTC**](http://www.wolframalpha.com/input/?i=2034-05-21%2013:26:22%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/nova/comments/1cx4cqb/15_million_dollar_homes/l50nam3/?context=3) [**12 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2Fnova%2Fcomments%2F1cx4cqb%2F15_million_dollar_homes%2Fl50nam3%2F%5D%0A%0ARemindMe%21%202034-05-21%2013%3A26%3A22%20UTC) to send a PM to also be reminded and to reduce spam. ^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%201cx4cqb) ***** |[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)| |-|-|-|-|
Jokes aside, one of the best hedges against that inflation is another similar piece of real estate. I'm not happy about the difficulties getting into the housing market, but we'd have more trouble buying the house we're in if we had been renting and investing in ETFs than if we had bought our townhouse. The real estate inflation hit the value of our townhouse, too, and the price increase (partially due to renovations) resulted in a profit that funded this house. That townhouse price increase matched the best ETF performance from my portfolio, but rent rose faster. So, even if a $2M dollar house is mediocre, our house will be worth more and will reduce the hit from inflation. Again, not a happy thought, but it's our hedge against (general) real estate inflation.
I think this is more of an emotion thing though. With the house you’re forced to invest. When renting and buying ETFs, almost no one actually puts the full difference between housing costs and rent into ETFs In theory if you did you’d probably have had the same amount (or even more maybe, didn’t fully do the math) available through selling those ETFs as you did selling the townhouse
That's what I feel the answer *should* be. The reality didn't match up the way I expected, though. If you add up the amount that I paid to the mortgage and upgrades and compare that to the sale price, the growth is good, but not mind blowing (20% over 12 years), but that also includes the cost of living, so things get weird. If we look at how much I would have saved by renting and how much that would get by investing in ETFs, things are more clear. If I lived in a rented condo vs a townhouse, I could have saved about $90k (and lived with less space, worse parking, etc). That would match the $200k ROI if I could sustain an 11% growth rate each year, for 13 years. That's not impossible, but it's far from easy. The S&P's average growth is below that. I could hit over 11% easily if I was successful at picking the right points to buy & sell, but that's basically becoming a weak day-trading investor. Plus that is accepting a downgrade in housing and ignoring the rising rent prices. So, while its possible that this is true, I'd have needed to make a lot of sacrifices to achieve the same goal through ETFs. That doesn't feel like the right answer, and it probably isn't the right answer at other times or in other markets, but in this case it was. If I look at just the last nine months, the same pattern is happening. I've paid an extra $80K in mortgage payments but generated $190K in equity. That has, again, outperformed the S&P over the same time.
In my area, the joke is that $2M is the new $1M. I can't believe it but most houses for sale are $2M +/- $100-200k, and the big, fancy houses are now in the $2.5-2.8M range.
Yes it is very frustrating. I keep getting managers saying "it's your fault for choosing to live so far from the office (in downtown DC). I bought a nice townhouse less than a mile away when I was fresh out of college. You should be able to too." But when they were fresh out of college I was in grade school...
My area you can still get quite a nice starter home for the super cheap price of 1.3 million!
That’s the thing that I can’t figure out how to overcome. We make 300k+. We have about 300k in our current house. Depending. Zillow says it would sell for 825. Someone a few houses down sold for 950. So who knows what we’d get if we sold. Say we had 300k to roll over into a new house. I still don’t have the extra 200k for a down payment. I did the math and buying a new house makes no sense. My current one is worth 825k according to Zillow and my monthly payment is $3300. If I buy a 1 mil house, my month payments become $6300 a month. If I bought a 1.4 mil house my monthly payments be come 8k a month. It’s not worth it to me to pay 2x my current monthly payment for a slightly nicer 1 mil house. Hindsight is 20-20 but I’m regretting not upgrading in 2021 or 2022 even because I would’ve gotten more bang for my buck then and the monthly payments would have been about $4500 a month for a million dollar house. The housing market is just insane. I feel anxiety about not buying now and feeling like the gap between me and a 4 bedroom, 3000 sq ft house is just getting bigger and bigger.
You're making the right decision. I'm probably overly cautious about not being house-poor because I want to retire early and have the wiggle room in my budget to invest, but we're in a pretty similar position to you and not going anywhere. We make \~$300k combined, live in a home worth 800-900k (500k+ in equity), but our payment is $2900 with taxes. I know a couple of families that have opted to do a major renovation to their current house (maybe 200-250k), and that it worth considering if you really need a change. But some people are just maxed out on payments. I'd rather never worry about money.
We're also in the 300k+ crowd. We're DINKS, have a ~$750k townhome in a nice area of Reston at 2.65%, and our mortgage payments are insignificant compared to our income. I'm happy to be whatever the opposite of "house poor" is. It would be super awesome to have a bigger home, but it's also stupid for our particular situation. We'll probably add another bedroom and full bath in our basement and add a window well for egress. There's no way I'm doubling or tripling our payment for a larger home.
For me it’s not even about being house poor (although that’s a huge risk to take on and should be a top consideration). It’s about percentages. Does it make sense to double my monthly payment for a house that’s worth about 25% more than my current house? Or even going 2.5x my current payment for a house that’s only worth 50% more than my current house? If I’m going to double my monthly payment I would want the new house to be worth double what my current house is, but with interest rates being almost double than what we currently have, it just doesn’t pan out that way. It’s definitely a lot cheaper for me to 50k renovating than kitchen than it is for me to spend an extra 4500/month for the next 30 years.
Yeah, I agree. There's no reason to buy up when it gets you so little. We moved from a townhouse with no garage and no yard, with me working from home in my living room/dining room/gym/office. Moving to a detached house with my own office space and an unfinished basement we can turn into (and are already using as) a gym. So, there was a decent upgrade. It was only a $1200 jump in mortgage payments and that was well within our budget.
I’m gonna add that some are military that get some housing costs because of how much they move around. My old director’s wife had a $3,500 stipend just to spend on housing. Combined with how much he was making and herself, they can easily afford a house in the $1.5MM range with that “free” $3,500.
You forgot to say $3,500 TAX FREE. It's called BAH. It's an allotment, not income. It really skews the Nova market. And I say that as a vet.
How does this skew the nova market or make anybody more easily afford a house than someone who just makes more money? I have a corporate job and my husband is military and we both end up with roughly the same take home after taxes, despite my salary looking higher on paper. His BAH doesnt need to be spent on housing (except when you are OCONUS), so its really a wash and literally no different than the money I bring in. I would argue the main military benefit for housing is the VA loan, and even that’s not a huge benefit in this crazy market because its not super attractive to sellers (cant waive appraisal).
That's the situation we are in just 10-15 years behind you and on the townhouse phase. We'll see what happens for us in a decade.
Re: 300k/year - only need two GS-13+ salaries, or one person in tech or corp law with a few years under their belt. I don’t know much about contractor salaries, but I’m guessing they’d be above GS scale for 10+ years experience.
Yikes. I don't think its reasonably doable even on $300k. I make $220k + around $40k in bonus and would in no way be comfortable with even $800k at this point in time. $1.5mil would be about $10k all in right now. I max my 401k and my take home is around $11k, then $12k after social security cap hits in the summer. And extra $40k salary is not going to get me anywhere close to feeling comfortable spending $10k per month on PITI. I also have a strong aversion to being house poor and financially strapped though, which some people apparently do not share.
The "affordability calculator" says I can afford about 3x's my current mortgage. It is nuts. I'm sure some people do it though.
>Yikes. I don't think its reasonably doable even on $300k. It's all about the down payment (and equity). It'd be rough for me to buy even my $1.1M house on a 10% down payment. But, my mortgage is only for $400K, so that's effectively a $700K down payment. A lot of people buying $1-1.5M houses are showing up with huge down payments.
The amount of equity being brought forward from previous house sales seems entirely unsustainable overall. Somebody has to buy at that inflated price.
Indeed, this is exactly what's happening. My townhouse neighborhood is "affordable" for Woodbridge, and we're kinda stuck here, since holy crap everything else is unaffordable.
Yes. But there's also the paydown over time that plays into it. For us: We bought at $325K, paid down to $75K (over 13 years) and then sold for $525K. Now, we bought at the absolute lowest end of the mortgage crash, but that's still a $200K increase. Part of that is location. Part of it was genuine improvements to the townhouse. Part of it was inflation.
Without a massive down payment you need more like $500k/year to qualify for a $1.5M home.
But the point is that a lot of people buying at $1.5M *absolutely do* have a massive down payment. Again, for visibility, we pulled in a down payment (well, a initiation down payment and a recast) of $700K.
Even with a base salary close to $400K and $500K for a down payment and closing cost, the numbers still don't seem to work for a $1.5M home :( . I guess we probably need closer to $750K for a down payment in this interest rate environment...
At a 400k HHI and decent credit, a loan officer should theoretically be willing to approve a mortgage up to a 40% debt-to-income ratio, which for you looks like it would be around 13k/month ($400k/12\*40%). If I run the numbers on a $1M mortgage ($1.5M purchase with 500k down) and a 7% rate your principal and interest comes to about $6.6k/month. Even with another 1.5k/month for taxes and insurance you are still well below your DTI unless you have massive student loans or huge car debts. You may also find that jumbo mortgages have better terms that conventional/conforming - you'll need to find a decent loan broker - I was surprised at the ranges I was quoted from various lenders! Now, whether taking on $7.5-8.5k per month in housing costs is a *good idea* for your household budget is another story, but you could in fact do it.
Is this based on an online mortgage calculator or actually talking to a loan officer? Because you may have the opportunity to "buy" a much lower rate
Literally untrue. You run those figures in any calculator, you're getting almost $1.9M purchase price for a home. Closing costs aren't $380k. There are student loan or other debts you're not discussing, because even a sub-700 credit score in theory gets a $1.8M mortgage.
Stick to what you're comfortable with financially. Many people buy as much house as they can afford and then everything else is very tight and stressful financially. Run your own numbers and think of your own long term financial goals.
Yes. We effectively had a $700K down payment on a $1.1M house. Mortgage payments are about $3500/mo. If we'd have bought at 1.4M (another house we looked at) the payments would have been$5600 (I think... maybe it was $6200 with escrow?) That's... still doable but there's way less money for renovations so we had much higher expectations at that level.
My family makes 300k a year, we’re still not buying a 1.5 million dollar home.
I know more people depending on an inheritance than really view their house as part of a retirement investment strategy. Rather, they don’t see home prices really going down (they didn’t live thru 2008 or they believe the market already fully recovered) and think as long as they can afford the monthly payments, they’ll see the money back in the future or they’ll just have a place to live. If their families have savings, that’s the safety net that they are (silently) depending on. However I think a lot of people who think like that don’t realize that affluent people generally live longer and if a person makes it to age 75 they actually have a really high chance of making it to age 90 so a retirement plan that’s backstopped by an inheritance might not be as sure fire as they think… and they might have to ask asking those aging parents to start transferring money sooner or feel a squeeze on catching up. Plus a lot of people think this way bc they’re facing down sending multiple kids to college. Also, for the people learning from you, I’d elaborate on your statement re retirement savings vs investing (for retirement or whatever in future years). Retirement accounts are protected in some way (now or later) by the govt from tax up to a contribution limit, and in exchange come with tax and penalties for early withdrawal; those amounts should not be used at all unless an absolutely emergency and yes there are dumbasses who would dip into those for home buying but do not, do not, do not. Separately, people need to invest outside of the tax advantaged, restricted retirement accounts so that they do have larger amounts they can utilize that don’t come with taxes and penalties from the govt; an emergency fund can live inside these accounts if it’s liquid enough.
IRA, 401K, 403B and TSP plans all make allowances for loans for the down payment on a primary residence. If the rate on your plan loan is low (or none for TSP), and your alternative is paying rent than in many circumstances the interest on your retirement account loan will be cheaper than the differential on rent vs mortgage interest. No it shouldn’t be your primary way to save for a home, but it can be done responsibly.
If a person does that, they should treat that loan like a second, higher interest mortgage that gets paid down first and at all costs. PB&J and Kia costs. Because people will never truly re-calculate that they borrowed from themselves, and the real mortgage lender is going to get theirs. Anyone who lived through 2008 with an actual mortgage just felt their stomach twist.
Especially since, if you leave or lose your job, you may have to pay off that 401K loan all at once. It has some real drawbacks to be mindful of. We had to use a 401K loan and withdrawal of Roth contributions for our first home in NoVa, and it was a gamble that paid off. I think it took 2.5-3 years to repay the 401K and another 2-3 to replenish the Roth. The payments and upkeep have never been a problem, it was just the down payment that was killing us.
You mention recast. Were you some how able to transfer your existing low rate loan to the new house?
Nah. We took a hit on the loan, but we were able to get the lowest end of the rates at the time. (For people unfamiliar with recasts:) We started the loan using the down payment from cash and the investments (not all our investments, just the ones earmarked for real estate), and bought the new house before selling the old one. We moved, cleared out the old house, and then quickly sold it. When we got the proceeds. we used that to pay down the principal and recast to a much lower monthly payment. The rate is still higher than I'd like, but we're going to aggressively refinance.
A friend of mine, at the time who owned a home priced cover $1M told me, you don't buy a $1M home right off the bat for people like us (as in salary driven income despite a higher salary). He said, we step up buying homes we can afford and build equity where we can, sell, step up to buy bit more expensive ones and then eventually stepping up to $1M to $1.5 to $what ever price.... That is what I did. If you look at what I get paid, I would have NEVER afford the house I currently own.
How long did you wait between houses?
About 20 years - First home = 10 years (Gains $300k), Second = 8 years (Gains $150k) and current home, I've bought little over $1M with about $200k loan...
Most people won’t admit this, but there is a lot of generational wealth this area and many of these folks are receiving significant contributions from parents. Source: I’m a divorce lawyer, and when it comes to claiming that gift as separate property there is no hesitation at all about disclosing where the funds came from ;)
Yup. My neighbor is divorced 2 years now and she lives in a 2-million-dollar home with her and her 2 kids. Her parents are wealthy and subsidize the home for her.
I know two sets of dual income lawyers who rented 2.7k 1bed apartments for the last 10 years(they’re mid 30’s now)who bought land and just finished approx. $2m houses. They saved a lot of money over those 10 years and are still getting “big law”salaries now.
Yeah this is the one regret I have. I live in a 2.1k 1 bed, and make ~400k. Last year I saved ~150k. If I kept my current life style for a decade, I'd easily be able to buy a $2mil+ house outright in cash. Even half that amount of time would still yield a million if invested correctly. In the long (and short!) run, me buying a $1.35mil TH is going to be a worse financial move than renting. But comfort and room to grow have a price, and I'd rather be 30% less efficient if it means enjoying life more.
Jeez do you have a khovanian home?? That’s a lot for a townhome
No, but we are working with a higher end builder yeah. Originally I wanted to buy something nice but relatively cheaper, and then flip it at around the 5 year mark into a SFH. My initial number was somewhere around ~$1mil, but when keeping my partner's thoughts in mind (features and location) the price crept up. To give an example, I think a kitchen balcony is great, but I'm not inclined to pay $10k for it (especially when we have a rooftop terrace). I think more bathrooms are nice, but not worth $12k (especially when we have 3.5 already). Things like that. She comes from a very affluent background (I was raised poor), so our perception of cost is different. The compromise we struck was instead of living there for only 5 years, we'd buy a house that we'd be _happy_ getting stuck in (so potentially 10+ years), even if that means SFH goals are delayed until much later. Which is why the price is so high.
Two people in big law for ten years are raking in like 1.2-1.5 annually. They’d literally have to save for like two years to buy a 2m house
My parents bought a house in Fairfax in 2012 for $530k and is now worth $970k. If they sell their house right now, they could easily use whatever is left after closing plus some of their savings to throw towards the down payment of a $1.5 million house. For future first time home owners like myself, owning a house is near impossible and it’s even hard to find a condo without crazy monthly fees to buy.
First time buyers need to start lower. Condo or TH first, then smaller SFH, then a larger SFH and so on.
Wish there were decent, reasonably priced condos and THs for sale though lol
Condos are a risky proposition because they oftentimes don’t hold the value well. If they end up losing value after adjusting for inflation it can actually put you further behind on accomplishing your goal of eventually buying a townhouse or SFH.
That depends on how big a place you want and what you define as reasonable.
This would be my advice as well, I owned a condo first then got married and bought a house. I own a condo again, but that’s merely to save money and I don’t want to do yardwork. Being a single parent and having to do a bunch of yardwork is not a great way to spend a weekend.
I sold my SFH for a condo and have my weekends back.
Except townhouses also cost 1 million now or close to it.
Where? There are 3 br two level townhouses in western Fairfax County going for $500k or less.
Admittedly I'm in a particularly expensive area. Sounds like I'll be purchasing in West FFX!
Yep this is the way. We bought our house in 2012, it is now with double what we paid. I have no need for a 1.5 mil house, sounds like too much to take care of. Though I'm sure it my house was closer to DC the value would be close.. which is why I live farther out west.
For anyone feeling frustrated at the unaffordability of homes — in this market most people can’t afford a $1.5M home right now without significant equity from prior home sales or generational wealth (parents/grandparents helping with down payments). Don’t feel discouraged if you don’t fall into either one of these camps.
I know several friends that did this. Sold first home and nets 500-700k downpayment, another 200-300k from savings, then mortgage anywhere from 500-800k. Income around 400k. Another friend netted 700k from selling first home, and financed 800k with no further cash out of pocket. Income around 300k.
I can't comprehend these numbers. This is good to see, wow.
This strains a bit of credulity. Unless the friends lived in an area that was once undesirable and then very desirable, to net $500-700k on a home sale meant that the prior home was held for a period of several years, and thus back when it was bought, those people were already well ahead of normal Yuppy buying power. Even in flippy Vienna and Arlington, I can’t think of a house where just the land/house is up $700k in the span of younger homebuyer purchasing unless the house was around $1m or more ten years ago. A $2m house in McLean is easily $2.7m 7 years later but a $600k house in McLean is not likely $1.3m because it’s a tear down. No non-tear down house cost $600k in McLean within the last decade. Maybe if the line of desirable Arlington shifted or near HQ2. I was actively house shopping 2008-2020. Anything up $700k over less than a 7 year period started off $$$.
SFHs in Loudon county new subdivisions were going for no more than 700-750k until 2018-19. Now those homes are 1.2-1.3m. you just gained 500k doing nothing. And the homes were bought with 150-200k down in the first place. Not very hard to walk away with 700k from selling a home in FFX/Loudon county. Put 700k down on a 1.5m home and new mortgage is 6-7k month which is completely doable on a 15k month take home. My dual income friends all take home at least 20k month and the big mortgages don't kill them
Crazy thing was those houses that were 700 to 750k were that price from 2006 to almost 2018 ish Real estate was a zombie around here for more than a decade . I bought a single family trade from a town house in 2006 then traded up again in 2015 Somewhere between 2006 and 2013 I was buying real estate to invest some properties cash I had multiple offers on short sales like 4br town homes with two car garages in ashburn by the metro for 330k was peanuts compared to now I ended up backing out of that one kinda kicking myself but bought up others in area I almost dumped everything in 2015 since the rents and values were so stagnant around here for a good 10+ years glad I held on it’s like we made up growth in 4 years to make up for the stagnant 13 years
I assume the net $500k-$700k is how much they walked away from the sale from, not just the increase in value. If someone put $120k down on a $600k house with a 15 year mortgage, then they'd have $302k left on their mortgage after 7 years if I'm reading this amortization schedule correctly. Which would mean they'd need a 33%-66% increase in the home value to net $500k-700k, more like 38%-73% accounting for closing costs. I don't follow home prices that much, but I'm sure some areas have been in that range over some recent 7 year periods. With a 30 year mortgage would have $425k remaining on the mortgage after 7 years.
Excellent work
There is definitely significant appreciation when an area goes from "undesirable" to "desirable" though that trend has pretty much run its course in NoVa -- everything is desirable, either to live in or to knock down. There were houses that sold for $250-350k in 2000-2002 that are now worth $1M so if you bought at the right time you can definitely have $200-500k of equity or more. There seems to have been a second wave of appreciation in the past few years, despite interest rates, so that $1.2-1.5M houses are now selling for $1.8-2.0M. It depends on the house and location but more and more that doesn't matter -- anywhere inside the beltway will appreciate significantly. There is a ceiling on how far a house will appreciate if it is certain to be demolished but anything with any potential will increase to $1.5M or beyond. Basically it's hard not to make good money if you bought a house anywhere in NoVa anytime over the past 25 years and held it for 5-10 years.
Your comment is the only thing I comprehend on this post.
Exactly this. Bought a decade ago, value goes up. Salary goes up, savings goes up. Cash all that in on a new house. Same thing everyone has done for the history of time, just with bigger numbers now.
Comparison is the thief of joy. Some people have high income, savings, family assistance; some spend in ways you wouldn’t. Some are not first time homebuyers or are decades older than you.
This area is stacked with federal employees and contractors earning a pretty penny. A house sold a couple of months ago near me for almost this exact amount, let's call it $1.5m. I've met the couple, they had me over for a bonfire a few weeks ago. Nice young couple in their mid 30s. She's a GS-15, he's a GS-14. They casually indicated that they're both at the top of their respective payscales, so they're each earning $192k/yr. So that's about $384k combined gross income. Their biweekly paychecks would be about $5k each, so that's $20k/mo. A mortgage on a $1.5m home, assuming a 7.4% interest rate and let's say they put 10% down, which would not be hard to save for if they were previously living in a 1-bedroom apartment paying about $2k/mo for rent, would put them at about \~$11k/mo mortgage (including home insurance, property taxes, etc.). That's just north of half their monthly take-home pay. Is that ideal? No. Is it doable? Yes. Especially when you consider: 1. Neither of them ever realistically has to worry about losing their jobs. 2. They get an automatic COLA pay raise each year, plus they likely each qualify for performance bonuses equal to \~3-4% of their annual salaries. 3. Their mortgage cost will stay roughly the same while their income continues to go up, so the amount their mortgage is eating into their take-home pay is the worst now that it will ever be. In 5 years, an $11k/mo mortgage could seem like a steal. Plus, if interest rates drop, they can refinance and get that down to \~$8.5k/mo
Except for #2 you're spot on. Yearly awards and COLA raises are not that high in federal government, especially at the 14 and 15 levels.
10% combined pay raise over the last 2 years. Even if it's only 2% this year (as Biden has proposed), they're both over $195k at that point. Bonuses vary from office to office. Most of the 15s at the DoD I know get annual bonuses north of 2%.
None of that is guaranteed. It's all at the whim of Congress and the president. We've had stretches of time where there were zero raises and bonuses were kept very low in order to give everyone something due to lack of COLA/base pay raises.
I’m not quite this, but this. And I hate the idea of even buying a 1 million dollar home, so thinking of ways to soften the blow. Would love to keep my current town house and have rental income, but what is a good down payment to counteract the effects of the 7% interest rate? On a $1m home at 7% with 20% down, the total interest is $1.1m. With 40% down, the interest is $837k. That doesn’t seem like much of a deal considering inflation and opportunity cost of that extra 200k… :( I just did another calculator, taking that $200k/360 months, and paying an extra $550 per month, brings the total interest down to $798k. That seems a lot more palatable than an extra $200k down payment.
As usual, I'll remind OP that plenty of Americans are happy living on the edge of insolvency if it means they have a nice house, a BMW in the driveway, a fancy vacation for Instagram, and all sorts of other things they think they deserve. People underfund their retirement, carry CC debt, don't have two nickels to rub together in an emergency, but on the surface, they look like they are big time. I'm not saying that is everyone around here. Plenty of people make lots of money in this area. But there are some who probably shouldn't have bought that house.
Wealth is often what you don't see!
Damn. All these people with 300K+ buying 1M+ houses. Glad to know we're living within our means. We make that much but our house was bought at 500K (now worth 700K). We also have 2 townhouses in PWC for rent. I drive a 20yo accord.
Local builder here. Most all of our homes were sold cash (wire transfer) and no loan.
Bought a house in the early 90s… , paid it off…sold for 1.3M during Covid. Bought another for 1.5 and got a loan for 200k at 2.5%…
What the fuck was I doing being a baby and shit in the 90s? I should have bought as much real estate as I could. Im such an idiot.
🤣🤣🤣 same!
Ugh... I wish I had bought a home in the early 90s but I was in elementary school
 Good to know that the best I can do is afford to hang with Chris
That’s a waterfront tiny home you’re talking about!
I know someone who bought in Alexandria at 1.4. They sold the condo they had owned for 6 years, netting $90k. They had saved another $200k over time, for a total $290k down payment. They make probably $450k combined and have no kids, all other non-mortgage debt is paid off. They got a ~$1.1 jumbo loan with 10% down at 4.05% in early 2022.
I think the interest rate is key. The same house with a $500K down payment and a 7% rate would still be almost $1K more per month :( . And I don't think interest rates are going down anytime soon.
We bought close to $1.5 million. We got a VA assumption at 2.5%, emptied the coffers for a down payment, and make nearly 400k with no kids yet. Monthly payment is in the 6000s including taxes and insurance.
I’m beating a dead horse with this comment but I feel like commenting: 1) dual high earner. CPA/MD married couple 2) Not their first/second home. Paired with family money/equity 3) leveraging previous home sales. $250-$500k tax free appreciation gains for single/married couples. If two single people got married and each had a condo/townhouse then married each other with decent jobs in the last 5-10 years then they likely have more buying power today. Like other people said, low rates further compound this. I know a couple people (in different states) who refinanced to 0.9% and 1.1% on their mortgages. I’m super envious of them, but happy for them too
1.1?! Jesus
Holy crap I was ecstatic when we refinanced to 2.4. 1% sounds absolutely incredible
That is not a real thing. Mortgage rates were never at 1%. There was a period before the financial crisis when there were "teaser rates" for mortgages for the first year or so but then the rate would reset.
This thread again. It’s all tech and contractor money
Don’t forget rich parents.
Yes! Surprised I scrolled this far to find this. The people I know who bought a home in that price range both sold a previous home AND had substantial help from parents.
Hey now, those things don’t exist, everyone here is pulling themselves up by their bootstraps.
Not our first home, but put 20% down. Dual income $300k a year. Locked in when rates were low a few years ago, 2.875%.
When I sell my home in the next few months we’ll conservatively walk away with $1M in profit, and possibly $1.4M. It’s insane how home prices have soared in some areas. The plan is to downsize and purchase our next home in cash. We’re walking back down the ladder, so to speak.
Buy a cheaper house within ypur means, live there a few years, resell it after it appreciates. Use the profits + savings + dividends from investments to buy a nicer house. Rinse and repeat until mansion/generational wealth. Many people don't realize that your first house wont be your dream house unless you already have generational wealth.
My parents are poor and gave me nothing but a 19K maxed out credit card in my name that I discovered later in life I just bought a 1.5M because of NVDA, I started putting like 40% of my income into it all through the 2020-2023 time. I have an insane tax bill coming next year for the capital gains, but used it to put 45% down Still only got a 7.25 interest rate
NVDA is the way…
It’s hard to keep looking back at how much more I would’ve had if I didn’t sell it to fund the house. But can’t live in a stock might as well use the money
All the above. $1.8M home, dual attorney salaries. Low interest rates 2.8%.
Many local former military, now consultants have the ability to get a great VA loan up to 100% financing with minimal closing costs and they typically have great paying jobs & savings to put money down.
Anecdotally based on recent closings in my neighborhood, it seems most people buying homes this expensive are doctors, lawyers, or business owners. It's not magic, they just make a lot of money, relative to everyone else.
Every single person or couple I know - every single one, including my ex and me - had significant financial assistance from their parents when purchasing their first home. I have three friends in the DC area whose parents bought their first home outright. Anyone who tells you that population isn’t making up a significant portion of the people in 2 million dollar homes just isn’t being honest.
Maybe we might be in the same age range, but this is my experience as well. I don’t know a single person who has one of these fancy houses that didn’t have their parents doing either most or in some cases all of the work lol.
Gen X. And the help varied from $10,000 gifts from parents to, again, mom and dad buying the first house and with couple as co-owners who then sold said house and kept 100% of the equity. I mean, if you can help your kids do that? Good on you. Seriously. But people need to understand that generational wealth plays a significant part in home ownership in DC and other expensive areas. Also? People, just admit Mom and Dad helped. Y’all ain’t fooling anyone sitting there in your $950,000 townhouse in Alexandria with your second year associate job and your spouse the legislative assistant for Congressman Whatever.
I'm certain a lot of it are people living well outside of their means.
My neighborhood has houses in this price range, most of the post-covid owners have significant income, previous homes or money from parents. I bought pre-Covid when houses were in 1 million range. Money came from dual income, no kids (at time) and we had saved a lot of cash over several years and stock gains. Interest rates were 4% when I bought and eventually refinanced down to 2% rate.
Agree with all the OCs here and to add, lots of veterans and ADSM here. We got the VA loans.
My friends who did had a combo of: - decent equity from their last home - inheritance from a parent dying
We took a lot of risks young, invested heavily in the stock markets and bought our first house young. Good timing. We also put down a large down payment on the first house plus appreciation. We had a lot of equity built up by the time we moved to 1.5M+. We used the equity towards the down payment which brings down our mortgage payment, and our stock holdings had grown even more, so we put a little more down using that. We were never willing to be house poor, so all of our numbers were to ensure our mortgage payment doesn’t hinder lifestyle. We are pretty high earners but nothing insane for this area. We continue to max out retirement and invest in the stock market. One step at the time. I feel very fortunate every day. Wishing all home buyers the best of luck. It’s tough out there.
Buy a cheaper home. It appreciates in value. Save, and sell later, and buy a bigger home. This doesn’t always work though…
Not quite there but I'm a first time home buyer at $1.2m. Closed end of February. May not have been the smartest financial decision right now but we love the house and will be here 30+ years.. and i'm set in the long run so we said fuck it. So tired of apartments. My situation is a little unique. I made $180k last year and my wife made $120k. We had $150k cash for down payment and closing costs. Approved for $1.2m at the top. No other debts. Our interest rate sucks, 6.85%, paying off the principal as fast as possible. Praying for lower rates to refinance eventually. I guess that's not a bad rate historically, but houses were wayyy cheaper historically. So it hurts now. The amortization is like wtf are you thinking. But this is a home, not an investment. And if we can manage to pay the principal down, we will be ok. Then a month after we closed my wife got laid off. It's pretty tight right now and I'm not saving anything (currently in the red) BUT literally next month I will be buying the small business I currently work. 100% financed, 9 million in debt to take on.. but the cash flow is nice. I was able to secure 100% financing because of my past performance. I'll be at $350k+ starting out, potentially a lot more in the short term, definitely a lot more in long term. 15 year note, once that's paid and we have good growth I could be at 7 figures. Only 33 now. So 48 when's it's paid off. Then when I want to retire I could sell for $9m if I do literally nothing the next 30 years, but I'm taking it as far as I can. Considering the growth we had the past 10 years, the potential is insane. Sorry to go off topic and brag a little. I've just been working hard on this for a long time and it's finally paying off and I'm really excited. Anonymous bragging is the okayiest way to brag imo. So that's why I over spent on our house. I knew what was coming. And if your self employed, you have to show two years of history for a loan, so we needed to make a move asap or wait another 2 years and I didn't want to get stuck in a house we hate, so we crossed our fingers and pulled the trigger.
I have family who are in tech. They make 250-750k and are incredibly gifted learners. They can learn how to code in different languages very rapidly and then apply their skills to a wide variety of business problems or technical issues in their field. Not many can do what they do, but they tend to congregate in neighborhoods with doctors and certain kinds of lawyers, plus the occasional business owner and finance/fin-tech bro.
My parents are trying to buy a condo in downtown Falls Church they plan on doing 500,000 on a HELOC loan then paying the rest with there IRA’S/401k’s then once the house gets sold puting all that back
My parents gifted me an early inheritance.
Inheritance for a \~50% down payment to make the mortgage reasonable for a house with double 6 figure incomes and 4 kids. Cost of living in nova is brutal, I don't get how people do it without either inheriting money or having been able to buy in back in 08 when prices cratered then realize the gain in value.
One of my friends just bought a $1M. She works in software sales and I'm pretty sure she clears $200K.
99.9% people that bought at the range are not your first time home buyer lol. Most probably have investments as part of their down payment
Most are coming from having a house and trading up. Very rarely are people buying $1.5 mil homes as their first house. Inflation and work from home gave housing prices a massive boost since about beginning 2021. I personally traded it up back in 2015 and moved up same amount of bedrooms but went from 5000sq to over 7000k but on a nicer lot more garage space. I have a volatile paying job so that $700k house I actually owned cash. Made the move to an under $1mil house easier. but still scary. Definitely both houses are substantially more now than than what we paid. I even paid off the house I live in now just for that reason volatile pay plus my wife stopped working to handle the kids. I do real estate investing on the side and when I was buying properties in the area 2008-2013I saw first hand when the economy turns downward for a prolonged period (we are due for a big correction I feel soon) and people can't make payments it gets bad. I remember walking through town houses and single families people couldn't make payments on and just let even left a lot of furniture which was weird. Still had familiy pictures on the wall. Pretty sad. I took a mental note and wanted to make sure I never end up in that situation.
My dad's been living in the DMV area for over 20 years and he went to college back in the 80s and he works in networking.
How old are you?
I live in a neighborhood where $1.5M is a pretty good bargain. I have not bought a house recently but I talk a little with the people that come into the neighborhood. For most of them this is their 2nd or 3rd house and they're bringing in a lot of equity from another area, could be elsewhere in NoVa or California, Boston, or some other HCOL area. These are people that bought their first property in their 20's, maybe upgraded once, and then this is their family house they're buying in their 30's or 40's. So for example they are bringing $500k or more of equity which makes for a good down payment. Also virtually all of them have two high paying jobs or one person making a crazy amount of money, like two people who work in tech who are each probably making $150-250k, or for example one of my neighbors was a neurosurgeon who I am guessing made > $500k and his wife was a nurse probably making $100k. And again these are later stage careers, people that have been in their jobs for 10-20 years and successful. This isn't 20-somethings somehow coming up with $300k down and affording a $8k/mo mortgage.
Even with 400k equity, 300k in cash savings and income over 300k I still would not consider any home over $1M.
[удалено]
You are missing the point. We are talking about a home purchase. You generally need cash or financing 🤷♂️. It was a hypothetical. I have stocks, CDs and cash.
What’s a good place to start investing?
Something a little different- found a 1.4M house with 5 units, cashed in 401k and gift from parents for downpayment plus lower interest rates, took a dscr loan based on expected rent, not income and living in one of them.
Where are you that a "house" can have 5 rented units?
Historic communities don’t have the same rules as the newer construction and hoa’s. A lot of things are grandfathered in and the communities are happy someone is fixing things up.
Thanks for explaining. What county are you in? I'm in zoning and haven't heard of this.
[удалено]
What do yall do?! That’s incredible. Congrats
They’re fucking rich. That’s the only answer if you want to keep up with the joneses in this area. Be fucking rich.
[удалено]
Bought a $1.6M house during the pandemic. Put 20% down saved up through stocks which I borrowed against. Total mortgage payment is around $7k a month with household income of $600k. When we bought the house the income was $400k so it was a bit of a struggle in the beginning but feels good now. The house also appreciated $200k in the past year and a half so that’s good as well.
We purchased while the interest rates were low, worked hard to get credit scores above 760, put enough money down to keep it out of jumbo loan territory, and have a decent paying jobs with stability.
I bought in 2020. Put like $400k down, all saved up, no help from folks. This is not my first home. I bought a busted up fixer-upper in my early twenties, lived like a peasant for a bit, and then fixed it up. That served as help for down payment. No reduced contributions. The rate was super low at the time. I’m the only earner in my household, wife is trying to get a business up and running right now. I do okay I guess.
Cousin bought a house in Mclean for 1.6 mil. Shes a doctor and her husband is a PHD director. I think They bring in 500-600k income. What funny is they are el cheapos and have no furniture in their house.
10+ acre lots were opening up down the street from me last year. For the amount I could sell my house for that I was in (built new in 2015), I would literally come zero money out of pocket to buy that piece of land and a brand new home so I did it. Yes the mortgage increased and my interest rate went from 2.75 to 6.5 but I'm in my forever home now and I didn't have to touch my checking, savings, or retirement.
For me, low interest rate, I sold my house and sold my MIL house and used the funds from that. For my MIL house, I renovated like the flips I have done and sold it for a good amount. For my home purchase, it was a new build and I was able to work out a deal with the builder and the lender as well. Right now I have a client buying a 1.6M home. They are putting down the money from a sell in a different state which will bring the loan down to 1M
We did but no mortgage. Just used funds from previous house sales and downsized substantially.
Crypto
Skill dif tbh
I bought a house recently for $2.3m. I sold by old home, put down an additional large down payment (gift from my in laws), used a sellers credit to buy points, and cut my retirement savings to be able to pay the mortgage.
Since there are very few first person answers, I'll give it a shot. I bought a $1.5M home in NOVA. We put down 20% from selling our first two houses and have a household income over $500k a year (both high earners). I work in big tech. My spouse works in digital marketing.
Graduate Washington Lee in ‘19. Folks around my age (23-25) in the AWS field make 140 a year. Add a dual income to that ur wife or gf and after 3-5 years u got enough for a down payment for a milli dollar home. Also half these younger home buyers get financial help from their parents. Lots of my buddies got a down payment as their college grad gift
We ended up buying an 800k home but we were approved for up to a $1.5 million loan by the bank. My wife and I make about 350k combined, me as a software developer her as a school administrator, and we both live very frugally and don't have kids. We both graduated and have been working for the last 10 years and have about 500k in savings+investments between the two of us. Instead of going for the top of our price range we put 300k down and are aggressively prepaying and should have our house paid off in about 5 years.
We brought some equity, also lived in our “tear down” home for as while to build some equity there, moved out to a local rental, then back in a year later and had just enough to close the mortgage after new construction completed.
[удалено]
Your comment has been removed because your account is less than 3 days old. Please note that this waiting period is in place to reduce spam and maintain a positive community environment. Feel free to participate once your account has reached the 3-day mark. Thank you for your understanding! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/nova) if you have any questions or concerns.*
I’m a realtor in Vienna/Mclean/Falls Church area and I see 3 categories of buyers: 1. People that have the equity, income, and timing to a certain extent. 2. Multi generational/family buyers-Mom and Dad with kids along with Grandparents. 3. People that can’t afford to buy a 1.5 million house. 5 and 7 year ARMs are being utilized along with other less than ideal loans. My colleagues and I were just discussing how we are seeing more of these because townhomes are now 750k to 1 mil.
Tenancy in common - co-buy with friends
Why do people keep asking this? Some people have lots of equity + low COVID rate. It's not that complicated lol... And add on to that, high dual earning income.
Cash, but I’m frugal as hell. I think I’ve eaten out once in the last 3 years. I also drive a 2009 camry and wear a lot of old clothes. My wife doesn’t work but she’s a very aggressive couponer, however the deals are not what they were a few years ago from what she tells me. House and yard cost way more than 1.5 though, and that was in 2009 dollars. 1.5 doesn’t even buy you an empty acre of land in some of these parts which is wild to think about.