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Comment by yardie | Hacker News Reader

$1M is a $4000/m mortgage requiring a $12000/m income or $140k salary. That seems doable for some professions.

If you are on the fence of buying a home, right now would be a good time to do it. Because they aren't getting cheaper and with this announcement they will almost certainly rise to meet this new, looser qualification.

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I could not downvote this faster.

Ridiculous and wrong. Shameful advice. I be curious know your age, income, and net worth to see how out of touch you are.

Do not take this advice and debt at this ratio.

- take home is gross income not net like taxes or health insurance. It also doesn’t factor in retirement even

- mortgage estimate is wrong

- does not factor property taxes

- Just open an affordability calculator or mortgage estimator. It would put you probably in high 500s

- doesn’t include debts

- If you only make 140k you probably don’t have 200k for a down payment or comment doesn’t include PMI

I've been planning to buy a house in the near future with my partner, and this comment has a great breakdown of information useful to anybody starting the process. I agree with you that the other poster's numbers are wildly unrealistic. Since you seem pretty informed, do you have any resources on how to get well-informed enough to take the plunge and buy a house?

Here’s a good resource https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal..., but a financial advisor who knows your situation and is familiar with local real estate may be better.

This is truly just my personal opinion, YMMV, IANAL, talk to your doctor, etc. But personally I find putting a hard requirement on needing 20% down to buy a house to be a bit extreme in these valuations and this market for a first time homebuyer. I was entering the market wanting to do that, my partner ended up finding a house that I just couldn't say no to. My partner and I ended up buying a house even though we only had a bit over 10% down about a year and a half ago. If we had waited another year of saving up for a down payment, we wouldn't be able to afford the neighborhood we live in now. We paid 1 year of PMI (<$1,000). We refinanced at a lower rate and no longer have PMI as the valuation increased so much that we already hit >30% equity in the home. The P&I, insurance, and taxes after refinancing are less than the rent we were paying for an apartment down the street with less than half the square footage, no garage, no private yard, no EV charging, etc. And rent there has gone up, not down.

Don't get me wrong I'm not saying the 3% or less you can technically get away with are a good idea. I'm just saying, in this market having a hard rule of 20% down doesn't make a lot of sense to me. Do the math on your finances and what seems to make sense in your area. I'm certain the market is different where you are from where I am, there's a lot of nuance.

This. Also factor in:

- Upkeep. Houses require work (example - re-painting every 10-15 years can be >$15-$20k.)

- Special assessments (city, county, special district) that come up because other people vote for them. (example: Seattle can vary $150->$1k some years)

- Homeowners insurance, flood insurance, earthquake insurance, if relevant. (example: Seattle - $800 + $600 + $1400 / yr)

- Hidden costs that are not obvious (example - in King County, WA new homes have a sewer connection charge ~$18k that is paid off over like 15 years.)

>Ridiculous and wrong. Shameful advice. I be curious know your age, income, and net worth to see how out of touch you are.

Chill out with the insults.

This is not really shameful advise. As a Software Engineer in 30s, with occasional side work. I make more than $140k alone. This is not to mention my wife in marketing, who does well, so we are above $200k combined both working remotely now. Now I wouldn't do $1 million because that would just be too big of a house. But we are currently doing half that on our renovation which is feasible even with the increased construction costs. I agree there is more to the costs like property taxes. But I know people in the city who's rent is above $3k a month in rent just for a studio who are now considering buying because it makes more sense now. They also make a lot more than me doing the same thing. But even when all is said and done, factoring in mortgage, utilities, taxes, etc. My wife and I will be paying around an extra $500 a month for an actual house than renting an apartment?

I made no insinuation that you should buy everyone has to decide for themself. Now, based on current lending standards a $1mm home is not as far off as much as you would like to believe and it doesn't take a CEO salary to "afford" it, either.

But you can continue to wait and see if prices come down, which will happen when supply goes up, which will happen when the supply chain returns to normal, which will happen when manufacturing returns to normal.

The point being is there are a lot externalities driving home prices right now, and whether buyers can comfortably afford it isn't one of them.

That depends on having 20% down, or $200,000 in cash. That would take most people quite a while to save up unless they've been working long enough (say decades), and without it you'd have to take on private mortgage insurance which would shoot the price up even more, at least for a few years.

But even assuming one had 20% down, with a rough tax calculation of 30%, that $140k salary comes out to $98,000 annually post-tax and $8,166 monthly. Which means a person would be paying almost 50% of their income on the mortgage.

That's not a situation I would be comfortable with. If it takes a whole 50% of my post-tax income to fund my home, I'd be terrified of any kind of interruption to my employment (like a personal accident, recession, or pandemic; these things aren't as unlikely as we like to believe). If you mean $140k post-tax I'd be more inclined to see a $1M house as doable

> Which means a person would be paying almost 50% of their income on the mortgage.

> That's not a situation I would be comfortable with. If it takes a whole 50% of my post-tax income to fund my home, I'd be terrified of any kind of interruption to my employment (like a personal accident, recession, or pandemic; these things aren't as unlikely as we like to believe). If you mean $140k post-tax I'd be more inclined to see a $1M house as doable

Here in London a significant proportion of the population are doing just that. Hence why it's called a housing crisis.

> Because they aren't getting cheaper

They aren't, until they are. Then people have problems.

Analysts I've been coming across lately are predicting a single digit softening of the housing market in 2022.

FWIW.

Valuations in my neighborhood have gone up 15%-20% yoy. In my parents neighborhood (older homes on larger parcels) it's almost 30% yoy.

I remember thinking the same thing back in 2006 when I bought a home. The house lost 30% of it's value after two years. Turned out 2009 would have been a better time to buy.

(music) time in the market beats market timing (music)

'cept when it doesn't, of course!

And the result of 2009 was a tightening in lending standards. Which helped create a 5 year glut of housing. More housing was built than there were qualified buyers to take possession. Those govt lending standards haven’t abated. If anything they are too strict as buyers have to bring more cash to closing since appraisals aren’t matching sales prices.

We’re headed for a slow down for sure but not a reversal. As much as I’d like that to be the case.

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