Buying at $300k w/ 20% down puts your monthly payment near $2k/mo (7.92%)
Using 35% of your income to go towards housing, that calculates out to ~$65k/yr income.
A 4.5% rate is near $1,500/mo. (~$51k)
Stated another way with that example, a person with $65k income needs to have saved up a year of gross pay for that down payment. What would be the annual income requirements for a 35% DTV loan on a $300k if the down payment is only 40% of annual income?
Granted that buying a home like this on a single income can be a challenge. ( I am single and bought my first home 700 sq ft on 2 ac in Edmond right out of college with a 12 % FHA loan was not the easiest thing. I worked a part time job for many years too. I only kept that place for 2 yrs before selling for 3 x the price. Ok that is not a normal thing, point being buy what you can afford. I could be a 700 sq ft home on a small lot in a decent area for a first home. When you can then move up. A couple with 2 incomes of even $45K a year so total of $90K or even less should be able to save up for the down payment if they watch their spending. No eating out, basic meals of say pork chops, baked potato and a veggie. No fancy coffee drinks, take a lunch of left overs or simple sandwiches for lunch. Buy only needs not wants. Live in a tiny apt. SAve, save save and work a second job and save all that. Heck even rent a room from say an older person. No parties. Just go to work. Live on the cheap. Save save save. Then you have the money for a down payment on a small house. Just dont buy a money pit. Live in the small house. Save up, get promoted or find a better job. Save and then get the better house. It can be done.
Save live below your means and pay off debt then save. Sure not everyone can but if you dont work toward it then what??? If a couple has high debt, high student loans, low paying jobs and then had 4 kids then life will be rough. They would have issues even getting a decent apartments. Ok what would a 3 bed apt cost them a month??High debt then how would they even get approved to be able to rent??
More seriously if they do as you say have high debt and then have kid number one and say live in a one bed, then have kid number 2 and cannot afford a 2 bed and then what?? They might be on the road to being homeless. ie more debt not being allowed to live in a one bed with 4 people. I did not say life is great but work hard, save and do the best you can.
And set your target for what you can afford. I bought my first house in gatewood my first semester in law school (1994). It was a 2 bedroom bungalow that had been a section 8 rental in the less desirable area of gatewood. Wall heater, n a/c. Paid 17k for it which made my payment $200 month which with a roommate was very affordable. There was a duplex with a third garage apartment around the corner that was a better deal but it was $58k and couldn't afford it even though better deal.
Point is.....no one needs a $300k first home if they can't afford it. There are plenty of decent homes in the $120-150k range that would be great first homes but they may not be downtown. My mother in law lives at sw104th and May in a nice safe clean kept neighborhood in a 3 bedroom ranch. The homes in that area run in the 150k range.
The problem is it is not 1994. adjusted for inflation you paid the equivalent of $35,000 in 2023 for the house in Gatewood. Go try to find anything anywhere in the metro for $35,000 today
The house you said you couldn't afford in 1994 is approx. $120k in 2023.You then point to 150k homes as current options.
Everyone knows you don't buy more than you can afford and you don't start out in a half a million dollar house. It's just that these 30 year old examples people are giving are useless as these scenarios simply don't exist today.
Most people don't put 20% down. I think the average is something like 13% now. First time buyers can get into a home for no money in some cases right now as the market is favorable to getting your closing costs paid. At any rate 3 - 3.5% will do the trick so long as you can qualify. When rates were super low you needed a lot of cash to buy, now not so much.
exactly this... i finally got my parents to understand the difference when they now see the house they bought in 1977 for $38k is now $247k when it sold in 2022. it took actually showing them an example of opportunities in their life just don't exist anymore...
EDIT: misstyped 247k as 347k... so corrected it
Join the military and you are eligible for a no down payment VA loan.
I found 108 houses under 120K in okc. Some as cheap as 45k. Most of these are much nicer than the section 8 house I bought. https://www.realtor.com/realestatean...rice-na-120000 This one is just north of my mother in laws house where some friends that are a young couple bought a house. He is on the grounds crew for Mustang school and she is a self employed hair stylist. Neither of these are great paying jobs but they were able to purchase a home albeit not in the cool areas. (gatewood area i was in was run down and marginal when I bought my house also) there are homes in all price ranges out there. Also, the average income in OK in 1994 was approximately 26900 and today it is approx 40.000 depending on which website you look at. I was a law student living on student loans so my income wasn't anything near the average then.
Once again...the whole point was finding something you can afford even if it is a fixer upper.
I will say fixing up is a bit harder today as well. You can DIY if you have the time and skill (or youtube) but materials are sure expensive. Good luck getting someone to do any work at your house for a job that isn't at least 10k.
I remember growing up we hired a company to rip out tile. Took them a day and was 50cents a square foot of tile. I imagine that is a lot higher today.
Your right. It is different. More challenges and more opportunities. Same as it was for us vs our parents.
Some will always be bitter because sometimes life is just friggen hard and not always "fair" (at least from our own self aware perspective). I never thought the challenges and set backs I experienced were ever fair. You either get bitter and quit, live with it as it is, or fight harder and find a way to make it better. It's always been that way.
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