
$100k/year still might not be enough to buy a home - forgingahead
https://www.wsj.com/articles/so-you-make-100-000-it-still-might-not-be-enough-to-buy-a-home-11571149819?mod=rsswn
======
jriot
I am 34 years old working remotely as data scientist, making $107k TC. My wife
who I've been married to for 13 years is a stay-at-home mother as we have two
children in grade school. Since they are in the school she is turning in our
half-acre into a sustainable garden with chickens. We own our home, are
financially comfortable while saving $1500 a month, and travel. We were
planning a 2-month trip to Japan this upcoming summer until we realized the
Olympics are held there in 2020. In the end we will shift dates around to make
it work.

Aside from being active duty for 11 years which allowed me to complete through
two graduate degrees without any student debt, was taking my first role after
the military in a small town one and half hours from the nearest city; a small
city at that. I stayed there for four years to get comfortable enough to work
on my own without any oversight; soaked up all possible learning
opportunities. When switching roles to my current job, I negotiated to work
remotely, now I live 2500 miles from my employer. Cost of living is the same,
but now I don't have to purchase airline tickets to see family.

The number one advantage I see compared to others comes from the military. I
complete all tasks asigned without complaining, and get them down without
bothering those above me. Doesn't matter the task, if it is assigned and needs
to be completed, I do it. Sometimes these are trivial, others would say
beneath them, others are writing patent paperwork with the co-founder. This
mindset has worked two-fold, I touch numerous areas of the business so my
skill-set is well rounded, and my bosses are happy; work gets done without
their involvement.

Live below your means, take advantage of where you live, and maintain a simple
life. Good things come to those who wait.

~~~
MuffinFlavored
How much did you pay for your home?

$100k/yr gross household income would make it rough to own a 3/2 single family
home in South Florida.

~~~
jriot
Our home was $348k - 4 bedrooms, 2 baths in Louisiana.

~~~
MuffinFlavored
20% down on $348k is $70k

At $1,500/mo savings rate, it would take 46 months (3.83 years) to save up for
your down payment (before closing costs/lending fees, but I'm not sure if
those are rolled into your mortgage)

This would leave you with a rough monthly payment (mortgage + interest + takes
+ insurance + HOA fees) of $1.8k-$2k (assuming 30 year mortgage at 4% interest
rate)

$100k gross is roughly $76k net (before any 401k/IRA contributions)

$1.8k/mo for your mortgage * 12 months = $21.6k before any
cable/water/electric/lawn/pool bills/repairs

$4.5k/mo net income remaining after your house for food, cars, insurance, etc.

You said $1.5k/mo savings which means $3k/mo for food, cars, insurance,
travel, 401k contributions, repairs, going out, etc.

I guess it is do-able. $3k/mo for 2 people does not sound terrible in the
slightest.

~~~
jriot
As one of the posters mentioned I have a VA loan.

0% down with a 3.5% interest rate - you don't pay PMI with a VA loan and $0
down ($8k total in closing costs which were mainly taxes). This is the biggest
aid in building wealth as we were able to save everything (minus moving costs)
from the sale of our previous home.

Right now NFCU estimated our property taxes high so our mortgage is $2100.
Next year our property taxes will drop due to LA exemptions that will drop our
mortgage down to $1800 - 1900 range.

I have well water so no costs there, electric and gas are $150 combined a
month, this is the highest we will pay due to A/C in the summer. Also no pool
- lawn is being transformed into a functional space, garden of vegetables and
fruits with chickens.

Plenty of places to locally travel; Japan is a little stretch for us so we
will see. Walking distance from my house is local jazz/blues hall, been here
since 1885. Every other Saturday from 6 - 9pm you can sit and listen to live
music, get a plate of fried chicken/catfish with jambalya, greens, potato
salad/colslaw, cornbread, and cake for $20 a person ($10 entry, $10 for food).
Plenty of festivals which are free offering a range from Festival Acadiens et
Creoles 2 hours away to Blues and BBQ in downtown New Orleans next weekend. So
our costs here are around $150 for weekend family fun, some weekends we stay
at home as we need a break.

All in all $3k a month is spot on which in Lousiana goes far. Plenty of
culture, arts, food, and outdoor activities.

~~~
MuffinFlavored
> Right now NFCU estimated our property taxes high so our mortgage is $2100.
> Next year our property taxes will drop due to LA exemptions that will drop
> our mortgage down to $1800 - 1900 range.

What do you pay in homeowner's insurance?

~~~
jriot
~$1400 a year.

------
justinzollars
$100,000 still a lot of money. You can buy a beer in Vietnam for 20 cents. The
problem in the Bay Area, where I live, is we artificially limit the amount of
housing. So prices move to infinity.

~~~
aledalgrande
I would say that is a problem in any place where it is desirable to live these
days. Locations I've experienced first hand: London, Sydney, Bay area, Los
Angeles, Vancouver... and I'm sure there are many more where you can't buy on
that salary.

~~~
em3rgent0rdr
Not in all desirable players. Only ones that limit construction. Meanwhile in
desirable places which allow more construction, like Tokyo, housing prices
have stabilized [1].

[1] [https://www.forbes.com/sites/scottbeyer/2016/08/12/tokyos-
af...](https://www.forbes.com/sites/scottbeyer/2016/08/12/tokyos-affordable-
housing-strategy-build-build-build/#76e93ff548d5)

~~~
throw0101a
> _Not in all desirable players. Only ones that limit construction._

Toronto has more construction (120) cranes than anyone else in North America
(Seattle & LA second at 50), and prices are still crazy even with a building
boom.

* [https://www.on-sitemag.com/heavy-equipment/toronto-remains-u...](https://www.on-sitemag.com/heavy-equipment/toronto-remains-unrivalled-in-north-american-construction-crane-count/1003964481/)

* [https://canada.constructconnect.com/dcn/news/economic/2019/0...](https://canada.constructconnect.com/dcn/news/economic/2019/08/toronto-tops-crane-count-list)

And that 120 is just in the city proper, the suburbs have more towers as well:

* [https://www.livabl.com/2019/07/246-cranes-toronto-suburban-c...](https://www.livabl.com/2019/07/246-cranes-toronto-suburban-condos.html)

~~~
mixmastamyk
Cranes suggest there is demand, not that it has yet been met.

~~~
brutus1213
Three points. 1) The condos being built in Toronto are "luxury" apartments ..
apart from space (perhaps to justify the lack thereof), many trimmings are
opulent (granite counters seem standard now). 2) Toronto does restrict houses
(not condos) because of the greenbelt put in place about a decade ago. 3) The
transit system in Ontario and the highways are quite horrible for people
living far away (e.g. above the green built).

------
cosmodisk
I live in London. I'm not on 100K, however my salary is higher than 90% of the
UK's population.If I'd compare our family income,we are better off than 75% of
the country's households.These are just the stats. All 3 of us live in a one
bedroom,rented flat in a decent area. We wouldn't even get a mortgage for the
flat we live in (£300K)...The neighbors bought a house next door for £1M. Only
pensioners and businessmen own properties on my street,the rest are renting.
So realistically,unless I start making 50% more than I do now, there's no way
this will ever change. I guess I should start looking at those remote
Salesforce jobs in Bay area...

~~~
IshKebab
90th percentile puts you on around £55k, for which you could absolutely get a
mortgage on a £300k property (assuming you have a 10% deposit and your partner
earns an average salary).

------
Tehchops
There's very few places where there is an overlap of "jobs that pay $100k" and
"homes that can be afforded at $100k salary".

~~~
sjdb77
Remote work is becoming more "real" by the day, so it's certainly possible in
the age of the internet to work remotely in a low cost location while making a
salary competitive with a higher cost of living city like SF/NY/LA.

~~~
aledalgrande
Problem is a lot of companies get smart and "pay by location". I've seen big
cos from the Bay offering half the salary (before currency exchange) for
workers in Vancouver.

~~~
earnubs
Gitlab, for example. You can see the multiples in the json used for the salary
calculator (eg. Vancouver 57.367 % of a SF salary):
[https://about.gitlab.com/salary/data.json](https://about.gitlab.com/salary/data.json)

~~~
glandium
Angola 120.056?!

~~~
aledalgrande
Meanwhile if you live at the Bermuda you can get more than if you lived in
LA... I think they are just messing with us! lol

------
sjdb77
I'm in a mini-retirement right now and living in SF. It was surprising to
learn that below like $50k you basically pay 0 in income tax in California. As
a single person I can very comfortably live off $40k/year in investment income
and pay no taxes right now.

~~~
uwuhn
>It was surprising to learn that below like $50k you basically pay 0 in income
tax in California.

Not if you're a contractor without a full-time employer. In college I did
freelance work, and I lost nearly 30% to taxes despite making less than $5k a
year from my work. Having your social security responsibility doubled is
brutal.

~~~
skybrian
The original post was talking about income tax. There are plenty of other
taxes on making money _by working_.

But, if you're living solely off investments you don't pay those. I was
surprised to see that capital gains tax is zero below a certain income. It
seems rather unfair, since you can choose when to sell.

~~~
sjdb77
Yeah...seems to incentivize day trading.

~~~
icedchai
Not really. It's only zero on _long term_ capital gains if total income is
below a certain threshold.

~~~
sjdb77
Isn't short term cap gains taxed like earned income, which below $50k a year
is 0 in CA? For federal if you make <$52k (w/ standard deduction) you only pay
like a 11% tax rate.

~~~
beefalo
No it has it's own tax bracket and there is no 0% bracket

~~~
sjdb77
Ok got it - yeah looks like it's around 4% with a $4k standard deduction.

------
aidenn0
While housing is an issue (particularly in more prosperous coastal cities), if
I made over $100k per year but couldn't afford a house in the $400k range, I
don't think my response would be to rent a single-family house in Stapleton.
There are more affordable apartments in the Denver area that are still in a
good school district.

Articles like this are starting to annoy me because I see the working poor and
lower-middle class, who have very serious financial issues today lumped in
with young professionals with 2010 levels of student debt trying to live the
lifestyle of young professionals in the 1980s (who were largely free of
student debt) to their own financial detriment.

If you have a household income of $110k and both work in SF, you are screwed.
If you have a household income of $110k and live almost anywhere else in the
country, you have options.

~~~
non-entity
> trying to live the lifestyle of young professionals in the 1980s

I've been interested in the subject for while, but do you know of any
recommended reading material about what being a YP in the 80s was like
(socially, career wise, etc) and the economics of how it was possible?

~~~
aidenn0
I do not have any recommended reading. I had relatives that came of age in the
late 70s and early 80s, so this was personal experience.

[http://www.paulgraham.com/re.html](http://www.paulgraham.com/re.html)
suggests that young professionals being paid more was new around this time. I
don't know if this is true or not. If it is true, then this would suggest that
there was a sudden increase in disposable income among young professionals.
Professionals were already a small fraction of workers, and social change is
usually uneven, so it seems likely that in addition not all professional jobs
experienced this shift at the same time.

If you suddenly give a small fraction of the population more money then they
are likely to live it up because there aren't enough of them to drive the
costs up in lock-step.

------
thrower123
The issue is less about the dollar cost of housing in most places, than the
opportunity cost and closing of flexibility in getting into a long term
mortgage. In all but the most obnoxiously over-priced areas, if you make
$100k, you should be able to buy something on a low down-payment FHA loan, and
your total mortgage payment should be less than you'd pay in rent. PMI sucks,
but it's not terribly difficult to refinance out of it after a handful of
years.

The problem is you're tied down to a location. The market is hot now, but even
so, it is not trivial to list a house, get an offer, close, and decamp from
it, and it's rare that that goes quickly. If you envision moving around from
job to job, rather than settling in for the long haul, a 30-year mortgage is a
ball and chain.

~~~
ed312
Struggling with rent vs buy right now for this very reason. I know financially
it would be better to buy, but then you lose the flexibility to go after a
great opportunity in even another part of a major city.

~~~
aetherson
You know that you can sell houses before you pay off your mortgage, right?

If you aren't in an area with very high housing costs (which, obviously, very
many readers of this site are), it's not even that big a deal to sell your
house when you need to. If your house constitutes 40% of your net worth, and
you take a 5% hit on your sale price, then your net worth has declined... 2%.
A good job is worth that.

Admittedly, it's different when your house is 90% of your net worth and you're
barely able to afford your mortgage.

~~~
ska
Closing costs will kill you if you are doing this too often. If you are pretty
certain you will stay at least 5 years, you should be ok.

------
notfromhere
It's been a long time since $100k was a lot of money

~~~
dragontamer
Median household income in USA is $59,039.

That's both the mother AND father working to bring home $59,039 on the average
(before taxes and other costs).

Its clear you live in a rich area where $100k isn't much. But that's also why
a large chunk of Americans think that "city-folk" are disconnected from
reality. $100k is a lot for many people.

My sister lives in an area (in USA) where a 2-bedroom apartment is just
$500/month, low crime good living conditions.

~~~
baron_harkonnen
Over 80% of Americans live in an urban area[1] so it's pretty absurd to claim
"city-folk" represents some elite minority. Median household income in NYC is
$57,782 [2]. The idea that America is split into some wealth urban minority vs
a near majority of lower income rural population that understands "reality" is
complete fantasy.

It doesn't change the fact that $100k is still a lot of money, but the people
for whom that a lot a money aren't on some farm in the middle of the country,
they're driving your uber, greeting you at the entrance to your apartment and
delivering your instacart.

[1]
[https://en.wikipedia.org/wiki/Urbanization_in_the_United_Sta...](https://en.wikipedia.org/wiki/Urbanization_in_the_United_States)

[2]
[https://www.census.gov/quickfacts/fact/table/newyorkcitynewy...](https://www.census.gov/quickfacts/fact/table/newyorkcitynewyork/PST040218)

~~~
francisofascii
The US definition of "urban" is basically anything that is not rural. Includes
suburbs and small towns. People who don't consider themselves city folk and
have never used Uber or heard of instacart.

------
tathougies
We rented while making good money because it's easier to rent. We're now
buying a house. I genuinely like fixing and maintaining houses, so it makes
sense for us. However, most people don't. For them, it makes a lot more sense
to rent. If you're rich and have a stable source of large income, it's almost
always better to rent all your stuff. Not only is rented stuff of higher
quality (because you can always have new stuff), someone else takes care of it
for you. This is good. My wife and I will soon sell one of our cars, and rent
a car if we need it, because a rental car is certainly going to be newer than
any car we own, and if it breaks, someone else will fix it. Renting is
superior from a user experience perspective. If you can afford it, it is the
best.

And yes, we're planning on renting out a unit in our home. It will be a very
nice unit and the renter there quite lucky (as are all renters) because
someone else -- me -- will take on all the risk if anything breaks.

~~~
Arcaelyx
You don't have to take on any of the risk if anything breaks by forcing them
to have renter's insurance. It's something that a lot of newer apartment
buildings are doing these days.

~~~
tathougies
You seem to be confused as to the purpose of renter's insurance. Renter's
insurance does not cover the cost to repair broken appliances or problems with
the apartment that reduce habitability. Not sure where you got that idea from.
Renter's insurance covers the renter's property if something in the apartment
damages it. For example, if there is a fire that damages your computer,
renter's insurance will pay a replacement cost, but will not pay for the
repair to the apartment. That is up to the homeowner's policy the landlord
pays for.

Source: have rented solely in buildings requiring renter's insurance, and have
_never_ filed a claim for things breaking in the apartment. The landlord
always fixes it.

More information here: [https://www.ipsagency.com/blog/does-renters-insurance-
cover-...](https://www.ipsagency.com/blog/does-renters-insurance-cover-
appliances.aspx)

------
chadlavi
I know millennials with combined household incomes in excess of $200k who
can't afford to buy, because huge student loans are required to get that kind
of income if mommy and daddy aren't rich in the first place.

~~~
rwmurrayVT
You certainly don't need to be drowning in student loan debt to reach that.
You could go to a state school and get an excellent job. That's just poor
financial decision making. Where I live you could go to UVa, VT, or maybe VCU.

~~~
brixon
You also have to factor consumerism and entitlement into the issue. I make
white collar money, but live in a blue collar neighborhood. This makes housing
more affordable and there is no temptation for "Keeping up with the Joneses".

~~~
rhombocombus
It's easy to finger wag at supposed entitlement and consumerism when you
completely ignore all the other factors that lead someone to decide where to
live and work. As the breadwinner in my family I made the decision to live
closer to where I work and pay a larger share of my income towards housing so
I can spend more time with my kids and less in my car. There are plenty of
other considerations far beyond your cynical take that would lead a family to
live in an expensive ares: schools, services, healthcare, ability/desire to
drive, child care, the list goes on. It is difficult to avoid getting rankled
at this kind of imperious mindset, particularly because if you actually took
the time to meet any of these so called materialists you would likely find
that they just want to have a nice life with their families like everyone
else. Calling it consumerism or entitlement is a cheap shot, reductionist, and
in most cases doesn't reflect reality.

------
bwooceli
120 range in KS, 15 year mortgage on a 2,600ft^2 house is $2k on the nose.
Commute is 15 minutes. KS isn't all that bad folks :)

~~~
throwaway981211
I lived in Little Rock for high school and Norman, OK for college. How does KS
compare? Shit you could not pay me enough to go back to Oklahoma or Arkansas.

~~~
bwooceli
I would say those are not comparable cities. Way more to do in KC (but not as
much as like Chicago).

------
notadoc
This is mostly a west coast problem, where housing is hugely inflated in every
west coast state and city. And NYC too of course, but that's less surprising
given its NYC.

Sometimes I think these articles are written as clickbait for people in the
midwest, southeast, northeast, where housing is still very cheap and jobs pay
well.

~~~
notfromhere
every major metro has seen an increase in housing costs. West coast may be
extreme, but this hits every metro across the country.

~~~
notadoc
Sure ok, but over 6 years a starter house going from $19,000 to $30,000 in
Dayton is a lot different on the affordability spectrum than an equivalent
house going from $300,000 to $900,000 in Seattle.

~~~
notfromhere
you're not getting a starter home for 30k in Dayton unless it comes without
walls and was a former meth lab.

~~~
2sk21
Indeed - even cities like Nashville have seen dramatic increases in home
prices in recent years: [https://www.nashvillepublicradio.org/post/after-
years-surgin...](https://www.nashvillepublicradio.org/post/after-years-
surging-nashville-homes-prices-start-plateau#stream/0)

~~~
beefalo
From looking at job markets vs cost recently, Nashville came out near the top
for me on the list of worst job markets with most expensive housing.

------
dfxm12
I'm behind a paywall, so I'm sure they pick up on this, but the biggest
problem I ran into when I thought I could afford a house was the down payment.
You can make $100k (or less!) and quite easily afford a monthly mortgage
payment, but that doesn't necessarily mean you have enough saved up for a down
payment.

~~~
g2ah5z
You only need 3.5% down with an FHA loan. To put that in perspective, a
$300,000 home would only require $10,500 down.

~~~
itsbenweeks
Sort of. You'd be left paying the difference of 3.5% to 20% (16.5% or $49,500)
in a FHA Mortgage Insurance Premium (MIP). This means another loan that you
need a 1.75% down payment for (making your downpayment ≈ 3.8% or $11,400) that
adds another payment (≈ $400) in addition to the mortgage. MIPs last the
entire life of the FHA loan, too.

~~~
g2ah5z
Yes, it's effectively a higher interest rate on the entire loan, but my point
was that you don't need a massive amount of cash up front to close the deal.

~~~
itsbenweeks
And it's still a valid point. It's good to mention that a <20% down payment
has caveats, too.

------
dragonwriter
A more accurate summary would be “People with $100K/yr may be able to rent
homes in sufficiently more desirable neighborhoods than they could buy as to
choose the former over the latter while being able to do either”, but it's too
long and not hyperbolic enough for a headline.

------
djmips
Inflation and the obsession with powers of 10. Back when I was starting out in
1990 a $100K job would have to be a $200K job today. Yes, housing has inflated
as well but what I'm trying to say is that our perception of using $100K as
some kind of benchmark hasn't.

------
jumbopapa
I think there is still a big issue with pegging home ownership as the
quintessential "American dream". In a lot of ways home ownership actually
leads to worse outcomes than renting, but so many people think it's the one
thing everyone should do.

------
gg2488
I'm behind the paywall but I'm wondering if this is because, just maybe,
younger people understand finances better. When I wanted to buy a house, I
waited until I save up the 20%. I know plenty of friends in their late 20s and
early 30s who have the same attitude. Me and my wife also paid for our wedding
in cash, we waited until we could afford it. You have the millennial
generation looking at their parents still working and we're desperately trying
to achieve financial independence so we don't suffer the same fate. I see so
many articles about how bad millennials are burdened with student loan debt,
but that's made us more concerned about finances than any other generation
before us.

So maybe it's less than we can't afford houses with high incomes. It's that
we're less willing than our parents to take on financial risk instead of
renting.

~~~
jandrese
The downside of saving a lot before you buy is that you still have to pay the
rent while trying to save that money. Putting 20% down has advantages when
making the loan (better rates mostly) so it makes sense, but saving beyond
that is making your life more difficult.

I think Student Loan debt is a huge factor in buying houses later. It's really
hard to save if you're paying down debt as well as paying rent. It could
easily delay their entry into the housing market for a decade.

~~~
dinkleberg
Yeah in my area I'm paying probably $200+/month more for my small apartment
than I would for a house that's 2-3 times the sqft. It's frustrating to know
that I'd actually be saving money + building equity of I could just buy a
house today. But saving up is hard when you're also paying off student debt.

My family has told me that you should always save up the 20%, but it seems
like like the FHA 3.5% is the winners choice. If I wait until I have 20% down
it's going to take ages and all that money spent on apartments is going to
waste.

~~~
gg2488
One thing I keep telling people is that buying a house really won't save you
money in the long run. I only bought a house for the space, me and my wife
both work from home in the midwest and need the office space.

You'll spend more than you realize on upkeep, furnishings and the increase
cost of utilities. My opinion is If you really want to save money, find a
cheap cost of living area and rent. Only buy a house if you need the space and
know that you'll be staying in that area for 10ish years.

~~~
dinkleberg
I get where you are coming from, and the cost of upkeep can certainly be high,
especially on older homes.

But surely the cost of (apartment rent + other associated costs) * however
many months is going to be higher than (cost of house + interest from mortgage
+ upkeep + increased utilities) - (eventual price you sell it for)

The apartment situation you will always be negative, whereas even if you only
end up selling your house for the same price you bought it at, you've only
paid for interest + upkeep + utilities. The interest + upkeep are certainly
not insignificant, but when your rent is as high as the mortgage cost, surely
buying has got to be the better option over the longterm.

But maybe I'm just fooling myself.

------
just_myles
In major US west coast cities, definitely yes. 100k is not enough.

------
gourneau
[Laughs In Bay Area]

------
sunstone
Should be plenty for a house in Miami.

------
La-ang
This definitely applies to nyc xD

------
youdontknowtho
Welcome to 10 years ago, WSJ.

------
loourr
live somewhere else.

~~~
downrightmike
In a van down by the river?

------
NTDF9
If only the FED actually measured this in inflation numbers.

~~~
xhgdvjky
too lazy to go around the paywall, but I also wondered how inflation factors
into this. seems normal that "a record number of six figure earners" would
rent

------
dbtqgoat
> “I can’t think of anyone we’ve rented to recently who didn’t make $100,000,”
> said Bruce McNeilage, who owns 148 rental homes around the Southeast and is
> building 118 more.

Well there’s your problem. Quit building unaffordable housing.

~~~
anonuser123456
In most 'unaffordable' locations, land is way more expensive than housing.

My house, to build new, would cost 250k. The land it sits on is another 750k.

The right answer would be to demo my somewhat old house and rebuild 6 units on
it. But you can't; setbacks, height restrictions, parking spot requirements
etc. make that impossible. Why? Because everyone in the neighborhood already
'got theirs'.

But from a usage standpoint, my million dollar/ property neighborhood is at
that price point because of the land use, not because builders don't build
'affordable housing'

~~~
jandrese
You can't build cheap housing, it would drop property values!

That's not too far from the truth either. Comparing "comps" is a lazy man's
game. They don't look that closely at the houses they are comparing.

~~~
anonuser123456
Ugh.. this is so true. When I bought my house I used a rudimentary linear
regression to decouple land price from home price. My realtor thought of that
as unworkable black magic. I was like well, if I know the build quality and
know the cost of construction, why wouldn't this work?

I think the answer was "pride of ownership, location, location, location!"

