How the crap can anyone afford these new $250,000.00 homes and have an average job?

Question

During the past 3 years,I have looked at several dozens homes for sale (probably over a 100) and a lot of these homes I consider "Used Homes" (just like a used car), but people are buying tem at NEW HOME prices. They are forcing the prices up.

These people must live on plastic cards and are in debt like crazy.

Mortgages are a rip-off. Really, if you look at how much interest you pay.

The new houses are actually built from garbage materials.

Location: Western Pennsylvania, NOT in Pittsburgh, but around it.

To me, $250.000 for a house... um ....It better be good and need nothing to fix it up.

For those with RENT questions. My annual rent is equal or less than the annual property taxes. Thus I am saving money renting while looking for an over-priced house.

Property tax is basically "RENT" just to live in the house that you own. Then you have utility fees.

Answer 1

Most of them ARE in debt. A police officer friend in a rich neighborhood told me one time, that the people with NEW RICH HOUSES and NEW RICH CARS have absolutely no furniture in the house. He even said one time they were sitting in lawchairs in the living room, watching a tv that was sitting on a dresser.

Excellent question!

Answer 2

In San Jose, CA the cheapest condo is a 1 BR, 1 BA with 550 square feet of living space and a 1 car garage. It is 22 years old and in a bad part of town. It is going for $282,000.

New home prices are advertised without options and upgrades. You need to add flooring, add curtains, add appliances, add landscaping. Add all of that up and then you will see the gap between the new and used home prices.

Interestingly, home owners typically have far less credit card debt than renters. Home owners tend to be more responsible people and have better jobs. They are investing in their home and benefitting from the growth in equity.

You afford a nicer home buy working your way up. Start with something affordable then move up to a nicer home once you build up enough equity.

If the homes in your area are going up by 10% a year and the mortgage rate is only 6% or 7% (which is tax deductible) then how is that a rip off?

Answer 3

Most people are either getting an "interest-only" loan or a "pay option" ARM.

The interest-only loans mean just that: you only pay interest for a certain period of time (usually 2-5 years). This makes a lower house payment but you're not paying down any principal.

The pay option loans are different: they start you off at a super-low interest rate, like 3% for the first 1-3 months. Then after that, the interest rate goes up but you have the OPTION to pay the lower payment you WERE paying. Of course, this means you are not paying enough to even cover interest, so it's commonly called a "negative amortization" loan.

Hope that answers your question. By the way, you should find much better deals closer to the PA/OH border. You can get a house in great shape for $60k in Youngstown OH.

Answer 4

Dude, I really shouldn't tell you this but I feel bad and I know what this market can do to average people working hard to pay rent and mortages. Here's a tip for you. It doesn't work for everyone but it does work. I live in Florida where anywhere you look there is new communities and subdivisions with hugh ammounts of construction or planned constructs. At the rate of growth, look into a subdivision that is brand new, maybe offering pre-construction prices. If the planned home is in a good area you can expect the price to rise some what rapidly. S this is what you do. You buy one of these homes, brand new, unconstructed. Usually down payment is 3- 5k. As soon as you sign to begin construction, put it on market for sale. By the time that home completes construction, anywhere from 6 mths to a year, the price of that home will rise. By completion that home price is now more then what you locked in with bank to pay and more then likly you have a buyer to buy it from you. Sell it, put the difference in your pocket and do it again. When you feel like you have enough, take your small fortune and down that into your new home. If you do this right you can do several home deals at one time and come out with enough money to turn a 300k home into 200k and cut your mortage in half, or hit it hard and pay off a house!
Another little trick thats simple but wont make you money. Take your mortage payment, say 900 per month. Set up payments to be made twice a month each half the total amount, one in the beginning and one in the end. Since everytime you make a payment its divided towards principle and intrest, doing this you are paying twice towards each per month. Banks usually take more to intrest then principle so when you pay half and half, more ends up in principle then if you sent one payment. This can reduce a 30yr mortgage to 20yr. Even ask your bank to change the higher precentage to principal, just put it on the check, "pay to principle". After a year or two refinace doing this and drop your payments significantly. Home values appreciate so if used home prices are rising in your area, find one below, buy it and sell it like a new home, yu make the money. Thats how its done.
Good luck to you and God Bless all!

Answer 5

a house is the best investment you can make in your life. why pay rent forever and have nothing to show for it? if you can afford to pay rent then you can usually afford to pay a mortgage. if you are in too much debt to begin with then you would usually not qualify for a loan. i would rather have a house then an apartment full of all the newest techno stuff, like 50 inch tvs and a computer in everyroom, and a new car every year. there is no reason to go into debt, you just have to know your priorities.

Answer 6

They are. Trust me, they are.

Realtors will always ask what your annual income is, and then push you to the breaking point on what they believe you can afford. Some will actualy pressure you; I've known it to happen.

The result is folks winding up what they call "house poor": they have a lovely, expensive house, which is a drain for so much of their disposable income that they can't even afford to furnish it (I've seen that, too; it's eerie). These owners have so little equity in the house that they are in a serious financial position; they are only a firing away from living in their cars.

That would scare the hell out of me, but thousands of people live that way.

Answer 7

The American way go in dept up to your eye brows then complain. I don't know how anyone can afford the housing prices these days. But the people how buy the home don't want to pay the taxes on how much they think the house is worth.

Answer 8

Dude, mortgages are not a rip-off, the interest paid on them is the last big tax deduction that we still have. As far as housing prices go, it's supply and demand. People are obviously willing to pay the price or they wouldn't be selling!

Answer 9

If you think that prices are high now just wait because incomes will not rise anywhere near what prices (of EVERYTHING) are going to rise. Life the way the average American knew it is a thing of the past. If you don't buy that $250,000. house now you'll be a renter and a peasant in the future. You can thank our illustrious president.

Answer 10

Homes only gain value. They're actually cheaper new, espicially if it's built for you. To be honest, I have no idea how people do it, but if you live in a house for 10 years making $1500 monthly payment, then you'll own it while you live in it. People say it's better than renting it and wasting your money.