How can everyone afford these ridiculous real estate prices?

Question

I'm in my mid 20's. I have a pretty good paying job. However, i'm stilling living with my parents. In the past couple years, I've been pricing real estate. Bye the way I live in philly. I ghetto, crapy, semi-dirty homes going for ninety , one hundred , one hundred and ten thousand dollars. Not to mention half decent houses for the high hundreds. I'm like "damm i have a good job and i can't affrod the half decent houses. what the f" I figure the mortage (w/ property taxes and homeowners) are over a thousand dollars. how are people paying these prices? I don't want to even imagine a mortgage on a haf decent house. Do i have to make a doctors salary to live in a half decent neiborhood now? wtf.

Also a few years ago you can afford a decent house on one person with a good job. Now you need two people with good jobs to buy a half-decent house? wtf. how is this possible?

I understand the idea behind supply and demand. my big question in why are people paying these ridiculous prices for these dumps. I'm assuming mortgages payments are 1500 ,1600 dollars for these almost ghetto houses.

I understand interest rates attract many people. However, how do these low attract people when people start selling houses at a higher prices when the rates are low. About 14 years the average mortgage was around ten percent. My home that my dad purchased was around 80 thousand. now it's 180 thousand and the average rate is 6 percent. I know there is 2% inflation but that does't make up for the rapid increase . I

Answer 1

I live in Seattle, and you cannot touch a home find a home two bedrooms for under $225,000 in the city even in the bad areas.

The only way one can afford a house is to possibly buy one with a partner, or a duplex or triplex out and then rent those additional units out.

Even the price of Condos' are increasing...and what follows this are the rents for apartments.

I sold my house three years ago and moved into an apartment in downtown close to the market. I was paying $1,800 a month for it, and it only had a small view of the water. Finally with interest rates going low, I decided to buy a condo.

I heard the prices of homes increase about $1,500-3,000 a year. What I see on the horizon would be:

Loans with no money going towards the principle...just paying off the interest.

Loans extending over 30 years to 40-50 year loans.

It is the only way that a family with a modest income could afford a house. Twenty years ago...on Mercer Island, the 150,000 dollar homes are now the One million dollar homes!

Think about that....How will the children ever afford housing?

Answer 2

Interest rates ... loose $$$ ... Inverted relationship between "Interest rates" and "Price".

Once the "Interest rates" start to increase (ooops they already are) you'll see a dramatic drop in prices. This drop will spiral downward because many people didn't purchase the correct mortgage for themselves which will cause "Foreclosures".

So, in a not too distant future, your dad's house should lower its price to about $130,000.00 (from the current $180K) but a home buyer will need to have 20% down to purchase a new mortgage ($26,000.00 for 20%) ::: vs today the 3-7% down on $180,000 ( $9,000.00 for 5% down ).

So, today, you need to save up less money for the down payment but you will be borrowing more money at lower interest rates ... In the future, you will need to come up with lots more money for the down payment and you'll be paying a real high interest rate ... in the end (30 years) it all balances out that home owners pay the same amount weather the price of the house is high or the interest rates are high ...

Also, you might want to check out other areas in the USA ... there is a huge difference in prices accross the states and even within the states.

Answer 3

I sell Real Estate so I'll answer your question.
It;s called SUPPLY and DEMAND. When the Interest rate went down. That was the best time to buy a home. Low monthly interest rates attract everyone. The Goverment needs money so get people spending. The higher the tax rate people tend to save their money. So, when the tax rate went down, people wanted homes, but, not enough on the market...MARKET value goes up...people want it, they'll pay. Then you have builders building a 100 homes On a site...for a few thousand more you can have a new home. The city is more valuable.close to everything.
Market value goes up ....we sell... look for something bigger... you just made more money on your home...interest lower...why not.
I know it a hard thing.... WE (we, two people income)bought our home 4 years ago @ $205,000. now it's worth $310,000. I could sell, but I would just being paying more for another home.....
Hope that helped.....

Answer 4

Everyone can't afford it.Only a few! Some can't afford monthly rent.That's why there are so many homeless. Owning your own home was at one time "the American Dream" but I wonder,was it the American citizen's dream or did the government implant that dream into their minds? because when you think about it,who really benefits from owning a home? In reality the home will never be yours Even if you lived long enough to pay off the mortgage,if you for some reason can't pay the taxes on it,the government will forclose on the tax debt and take it away from you! If the roof leaks,the owner has to fix it, If something breaks,the owner has to fix it. I figure you're better off renting!

Answer 5

One person can't afford a house...even on a decent salary. Two "normal" salaries barely make it. We had to sell our house after my husband retired as we couldn't keep the payments up. Its a shame...cause we pay $400 more a month in rent than we did for the mortage. People ask why we sold it if we have to pay almost double...we didn't have enough for the mortgage...and we are paying our rent from the profit from the house. It will run out in a couple of years..then we are up the creek...hubby's pension is only $1,300 a month and I can't work due to illness. Boy are we going to be in big trouble soon.

Answer 6

Stick to your parents place, there's NO WAY I can afford these prices and I wish I had family I could stay with to be able to save up even a a little bit to be able to "buy" my own place. Though I should have done that 5 years ago. They should teach you right out of high school to buy a house, you should be ale to finish college with everything you need in life, a place to live a good job or your own business Not debt.

The only ones that can afford these prices are those with inhertiance and family help or celebrity.

they said in California you can't even be considered for a mortgage unless you earn 60,000$ a year MINIMUM

Answer 7

I feel you where I live those dumps sell for 250K at least and the highest is about 290 300K.

I think that the industry takes advantage of the people's need for a home along with that they know that population keeps growing and that we need a place to stay. My father bought his first house for $9000.00 in the mid 60's. You believe that!

Answer 8

Find an old fixer up and put everything you have into it... Sell it for double and then you can do it all over again until you have what you want. That is what we did and now have our "Home"
You are waiting to long the past couple of years are gone... get moving.

Answer 9

Where do you live? For the prices that you speak of, you could find fine real estate where I am from.

Answer 10

i hear you, i put in underground electric power lines to new houses for the power company...signs say they start in the 140,s ..i say get further out of town, prices will go down somewhat