What pitfalls do even smart people make when buying a home?

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tioscrooge
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Re: What pitfalls do even smart people make when buying a home?

Post by tioscrooge »

LeftCoastIV wrote: Sun Jun 20, 2021 2:37 am [3] Waiving title contingency. I know it's a hot market, but don't you want to know that you are actually getting a clean title? Or, if there is some easement that lets your neighbor traverse your property that nobody told you about?, etc... At worst, the seller should provide title docs pre-offer if no contingency.
+1

This is often overlooked. Title insurance is cheap, because they don't pay out much. However, when they do, it can easily be 6 digit expense. Read the policy and every exception before you buy. Also, Talk to neighbors before you buy - we found out about the prior lawsuits with the neighbors that the sellers didn't tell us about.
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FlyerJack
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Re: What pitfalls do even smart people make when buying a home?

Post by FlyerJack »

EnjoyIt wrote: Wed Jun 23, 2021 10:55 pm
FlyerJack wrote: Wed Jun 23, 2021 10:43 pm Are there plenty of $200k homes in areas that have jobs paying $100k? I suspect the median income (household income, even) in areas with plenty of those homes is far below that. Therefore, most people in those areas couldn't afford the $200k house if they follow Ramsey's "rule." Without writing an essay on Ramsey's bad advice, I don't think this particular rule is realistic or even helpful for most.
A working family of two can probably come together with $100k income. And yes, if a family is making $50k a year, it is probably not in their best interest to be buying a $200k house. Also, some of those very low income neighborhoods have houses selling for $100k or less. Just for kicks and giggles I did a search for homes for under $100k in Tennessee. I have no idea why I chose Tennessee but here it is.
https://www.propertyshark.com/homes/US/ ... le/TN.html

Point being, there is no need to be house poor.
Disagree that a working family of two can “probably” come up with $100k income, because statistically they don’t. Let’s look at the median household income for Tennessee, the state you chose:

Image

Only one of those 95 counties has a median household income over $100K. And a quick search shows that it has zero houses for sale at $200k. Obviously, people can commute to their jobs, within reason, and so on.
I agree that people should avoid being house poor, but don’t think Ramsey‘s rule is helpful beyond the idea of “spend as little as possible. Here’s an artificially-low number to get you thinking.”
EnjoyIt
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Re: What pitfalls do even smart people make when buying a home?

Post by EnjoyIt »

FlyerJack wrote: Wed Jun 23, 2021 11:53 pm
EnjoyIt wrote: Wed Jun 23, 2021 10:55 pm
FlyerJack wrote: Wed Jun 23, 2021 10:43 pm Are there plenty of $200k homes in areas that have jobs paying $100k? I suspect the median income (household income, even) in areas with plenty of those homes is far below that. Therefore, most people in those areas couldn't afford the $200k house if they follow Ramsey's "rule." Without writing an essay on Ramsey's bad advice, I don't think this particular rule is realistic or even helpful for most.
A working family of two can probably come together with $100k income. And yes, if a family is making $50k a year, it is probably not in their best interest to be buying a $200k house. Also, some of those very low income neighborhoods have houses selling for $100k or less. Just for kicks and giggles I did a search for homes for under $100k in Tennessee. I have no idea why I chose Tennessee but here it is.
https://www.propertyshark.com/homes/US/ ... le/TN.html

Point being, there is no need to be house poor.
Disagree that a working family of two can “probably” come up with $100k income, because statistically they don’t. Let’s look at the median household income for Tennessee, the state you chose:

Image

Only one of those 95 counties has a median household income over $100K. And a quick search shows that it has zero houses for sale at $200k. Obviously, people can commute to their jobs, within reason, and so on.
I agree that people should avoid being house poor, but don’t think Ramsey‘s rule is helpful beyond the idea of “spend as little as possible. Here’s an artificially-low number to get you thinking.”
Not every family should be buying a house, especially one they can’t or shouldn’t afford.

Let’s make it simple. You want to build wealth then don’t buy too much house. You want to be house poor and struggle then buy 3x income or more. This is a generalization and each location and family needs to evaluate their own needs, wants, and capabilities.
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sandan
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Re: What pitfalls do even smart people make when buying a home?

Post by sandan »

Underestimating the value of a good agent and overestimating the integrity of a poor agent.
chazas
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Re: What pitfalls do even smart people make when buying a home?

Post by chazas »

tioscrooge wrote: Wed Jun 23, 2021 11:22 pm
LeftCoastIV wrote: Sun Jun 20, 2021 2:37 am [3] Waiving title contingency. I know it's a hot market, but don't you want to know that you are actually getting a clean title? Or, if there is some easement that lets your neighbor traverse your property that nobody told you about?, etc... At worst, the seller should provide title docs pre-offer if no contingency.
+1

This is often overlooked. Title insurance is cheap, because they don't pay out much. However, when they do, it can easily be 6 digit expense. Read the policy and every exception before you buy. Also, Talk to neighbors before you buy - we found out about the prior lawsuits with the neighbors that the sellers didn't tell us about.
Even more important, get a survey and get the “would be disclosed by a survey” exception removed from the title policy. Also get the title work and read every filed document. My ex and I got out of buying a “teardown” when we realized that the neighbors’ sewer easement went right through the only buildable part of the lot.
Big Worm
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Re: What pitfalls do even smart people make when buying a home?

Post by Big Worm »

invest2bfree wrote: Sun Jun 20, 2021 1:09 pma servant for $2.5k a month.
Explain.
EnjoyIt
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Re: What pitfalls do even smart people make when buying a home?

Post by EnjoyIt »

invest2bfree wrote: Sun Jun 20, 2021 1:39 pm
marcopolo wrote: Sun Jun 20, 2021 1:23 pm
invest2bfree wrote: Sun Jun 20, 2021 1:09 pm
KlangFool wrote: Sun Jun 20, 2021 8:44 am OP,

1) Spend too much on the house. Then, they have to co-sign a student loan for their kids.

2) Spend too much on the house assuming that they will be fully-employed continuously until retirement age. Then, they became permanently unemployed or under-employed in their 40s and 50s.

3) Spend too much on the house. Then, they could not contribute to their tax-advantaged accounts. The additional housing expense carry an additional 20+% to 30+% tax burden. They assume the house appreciation will save them. But, it is obviously false if they know how to calculate. Somehow, they wonder they could never get ahead financially when they are supposedly frugal. Aka, they do not eat out and they packed their lunches.

The house is the #1 factor that destroys my peers financially.

The house is not a home. Home is where your family is. The well being of your family should be more important than a house.

KlangFool

Amazing answer agree with you 100%.

Actually was in a relatives house for a week.

Wife is a Doctor, husband a software Engineer probably making $600k a year.
They live in $1.5 million huge house with high utilities, Kids going to private school for $5k a month , a servant for $2.5k a month.
Include their fancy cars etc , Iam projecting their expenses to be $200k a year. Basically breaking even with very little savings.
Older kid is getting ready for college and wants to be doctor. Now I project $50k just for that kid per year for the next 6 years.
If they are making $600k/yr, $200k in expenses does not seem unreasonable. How is that barely breaking even? Not everyone needs to live like a miser.
Yeh may be was little harsh. I see them saving only 20% of their income.

Also I dont see them retiring any time soon and they are my age around 46.
I think this is pretty good strategy $600k income split 3 ways:
$200k for taxes
$200k for saving
$200k for living
End result is early financial independence.

Buying a $1.5 million house on $600k income is not that bad and at the peak of what I would do. If one puts 20% down that is a $1.2 million mortgage which is 2x income. Again, that is about the peak of mortgages I would recommend taking baring living in some very high cost of living areas which I wouldn't live in anyways unless necessary for work and growth.
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lazynovice
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Re: What pitfalls do even smart people make when buying a home?

Post by lazynovice »

Big Worm wrote: Thu Jun 24, 2021 8:35 am
invest2bfree wrote: Sun Jun 20, 2021 1:09 pma servant for $2.5k a month.
Explain.
Probably a nanny who does light housework and starts dinner. A much better deal than daycare or mom taking off work early for after school shuttling.
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firebirdparts
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Re: What pitfalls do even smart people make when buying a home?

Post by firebirdparts »

You know, one pitfall might be buying one now. I guess we'll find out. I was avoiding this thread, but my wife has been somehow pulled into a neighborhood gossip circle this morning and she has been texting me what houses sold for on our street. We live in Sullivan County where, evidently from the above chart, the median household income is $51K. The houses on our street, 40 years old and what I would call working class, are selling for 6X that.

Lots of people have told me over the years that they were glad they had been house poor because of the financial outcome down the road. I never wanted to be, and I wasn't. Was it a mistake? I don't know. I have lived in my house for 31 years now.

We used to have an old real estate agent here that taught a class on "how to buy a house" in adult Ed. What I recall from that is that it's important to see what you are buying, the house, as a lifestyle. It's gonna cost you some money over what you pay to live in an apartment, and some time too. You can figure out how much you'd pay to have that lifestyle if you want to. He also mentioned that understanding the location on a deeper level is very useful, especially the commuting for those of us who do. The ol' real estate mantra.
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invest2bfree
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Re: What pitfalls do even smart people make when buying a home?

Post by invest2bfree »

Big Worm wrote: Thu Jun 24, 2021 8:35 am
invest2bfree wrote: Sun Jun 20, 2021 1:09 pma servant for $2.5k a month.
Explain.
They have a lady come in to clean the house M-F for 4 hours. They pay her approximately $2500 a month.
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EnjoyIt
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Re: What pitfalls do even smart people make when buying a home?

Post by EnjoyIt »

invest2bfree wrote: Thu Jun 24, 2021 10:29 am
Big Worm wrote: Thu Jun 24, 2021 8:35 am
invest2bfree wrote: Sun Jun 20, 2021 1:09 pma servant for $2.5k a month.
Explain.
They have a lady come in to clean the house M-F for 4 hours. They pay her approximately $2500 a month.
I have a friend who has a similar setup. They do laundry, fold and put away. They do dishes and pretty much all of the household chores. They also hire outdoor help which does all the outdoor upkeep from yard work, pool work and keeping the roof/windows clean.
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stoptothink
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Re: What pitfalls do even smart people make when buying a home?

Post by stoptothink »

EnjoyIt wrote: Thu Jun 24, 2021 10:41 am
invest2bfree wrote: Thu Jun 24, 2021 10:29 am
Big Worm wrote: Thu Jun 24, 2021 8:35 am
invest2bfree wrote: Sun Jun 20, 2021 1:09 pma servant for $2.5k a month.
Explain.
They have a lady come in to clean the house M-F for 4 hours. They pay her approximately $2500 a month.
I have a friend who has a similar setup. They do laundry, fold and put away. They do dishes and pretty much all of the household chores. They also hire outdoor help which does all the outdoor upkeep from yard work, pool work and keeping the roof/windows clean.
I know a few people who do this, all who make a small fraction of invest2bfree's relatives. It seems like a pointless (and absurdly expensive) luxury to a lot of us, but I don't think it is particularly uncommon (even to true middle-class households). My across-the street neighbor teaches history at the local high school and his wife stays home (they just had their 4th kid), they have a full-time nanny. That has got to be 1/3 (or more) of their gross HHI; not my place to judge.
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Re: What pitfalls do even smart people make when buying a home?

Post by Northern Flicker »

FlyerJack wrote: Wed Jun 23, 2021 11:53 pm Disagree that a working family of two can “probably” come up with $100k income, because statistically they don’t. Let’s look at the median household income for Tennessee, the state you chose:

Image

Only one of those 95 counties has a median household income over $100K. And a quick search shows that it has zero houses for sale at $200k.
While I agree with your point about housing affordability, the data you used is not completely representative.

Nationwide, in 2018, 28% of households were a single person.

https://www.census.gov/newsroom/press-r ... ilies.html

So, median household income will differ from median household income of a working couple or family.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
EnjoyIt
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Re: What pitfalls do even smart people make when buying a home?

Post by EnjoyIt »

Listen, we can argue the semantics of 25% of income vs another number. Maybe it is 28%, or maybe it is 30%. I'm sure we can agree that it shouldn't be 75%. Either way, it doesn't matter. The gist that Ramsey is trying to convey is that having a roof over your head costs money. If you want to get rich, then your best bet is to keep your home related expenses low allowing you to save and invest. Sure, some people will get lucky and their area will appreciate dramatically; while others, not so much. I don't think we should rely on luck as an investment strategy.

BTW, one of my friend's parents lived in a very prestigious area in a gorgeous house. They did not have a chance to save that much money and most of their wealth was tied up in their home. They retired and sold their house for significantly more than they bought it over 40 years prior. They toughed how great of an investment it was for them. Without telling them, I did the math on inflation adjusted dollars, and their home only went up slightly over inflation. It really wasn't all that wonderful. The thing is, knowing them, if they didn't overextend themselves on the house, they would have spent that money elsewhere and would have had less in retirement. So I guess there is that.
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dogagility
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Re: What pitfalls do even smart people make when buying a home?

Post by dogagility »

FlyerJack wrote: Wed Jun 23, 2021 11:53 pm
EnjoyIt wrote: Wed Jun 23, 2021 10:55 pm A working family of two can probably come together with $100k income. And yes, if a family is making $50k a year, it is probably not in their best interest to be buying a $200k house. Also, some of those very low income neighborhoods have houses selling for $100k or less. Just for kicks and giggles I did a search for homes for under $100k in Tennessee. I have no idea why I chose Tennessee but here it is.
https://www.propertyshark.com/homes/US/ ... le/TN.html

Point being, there is no need to be house poor.
Disagree that a working family of two can “probably” come up with $100k income, because statistically they don’t. Let’s look at the median household income for Tennessee, the state you chose:
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Re: What pitfalls do even smart people make when buying a home?

Post by alpenglow »

Silverado wrote: Sun Jun 20, 2021 7:28 am What may change in the surrounding area such as the nice woods behind you being houses (or worse)
Yes! Know the abutters and zoning of surrounding land. I love looking over arial photos and tax maps. There is a lot of good information out there if you know where to look. Case in point, I found a very attractive looking lot at a good price. Turns out the abutter was a mining company and they had active projects in the area.
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Re: What pitfalls do even smart people make when buying a home?

Post by alpenglow »

LeftCoastIV wrote: Sun Jun 20, 2021 2:37 am [4] Don't buy a home that is so expensive that it causes ongoing stress in your marriage
Unfortunately, I have a friend with this issue. The husband seems to want a trophy house and they are going for new construction in a HCOL area. Given my understanding of their finances, they are over-reaching and underestimating costs. My friend already said she'd prefer a divorce over the new house. :shock:
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Re: What pitfalls do even smart people make when buying a home?

Post by alpenglow »

Grt2bOutdoors wrote: Sun Jun 20, 2021 11:03 am Big yard = big maintenance (ask me how I know!).
Trees are a lot of work if you are doing the fall cleanup.
Ugh. I'm getting sick of it - mowing, mulching, edging, weeding, fertilizing, irrigating, pruning...such a waste of time and resources. I do want to add the word SUBURBAN though because I feel the need to maintain things in a certain way in keeping with the neighborhood. I'm actually looking forward to retiring to a huge rural "yard" where I can just have forest and a meadow (and yes, I have experience with that so I know what I'm getting into).
Starfish
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Re: What pitfalls do even smart people make when buying a home?

Post by Starfish »

Starfish wrote: Wed Jun 23, 2021 1:12 pm My main mistake was buying too small of a house (especially in the light of WFH). The extension and renovations cost more than the price difference. Add to this the inconvenience of construction. Moving would be even more expensive.

When I wrote this I did not read not the preceding messages. I just want to clarify that.
3000sq ft is not a "normal" house. It's ridiculously large everywhere in the world. It's an excess. One might like it and afford it, but it's still a luxury or worse. I don't even want to comment on larger houses.
When I wrote that my house is too small, I did not really think about the area but the way is divided. The bedrooms are too large and have too much useless space. I would be perfectly fine with the same area but divided in 3 bedrooms instead of 2. There are houses not far away from me with the same area (1600sq ft) but 4 bedrooms. 1600sf ft it's a very spacious house for a standard family.
I do not even understand how people keep up with a large house. Basically you have a large pile of plywood rotting away and being eaten by insects, having to be cleaned and dusted. How do people with jobs handle this? I know people with larges houses but they have somebody helping with the cleaning. That is an additional recurrent expense that also impacts kids education/expectations.
Can you imagine how they get depressed when they go in a shared rooms in the dorms with no servant? Why would anyone punish their kids like that?
quantAndHold
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Re: What pitfalls do even smart people make when buying a home?

Post by quantAndHold »

RickBoglehead wrote: Tue Jun 22, 2021 2:53 pm
Northern Flicker wrote: Tue Jun 22, 2021 11:08 am
RickBoglehead wrote: Tue Jun 22, 2021 5:44 am
Northern Flicker wrote: Tue Jun 22, 2021 1:38 am
RickBoglehead wrote: Sat Jun 19, 2021 10:36 pm Not hiring a real estate lawyer.
That is state-specific.
Really? Are there states where real estate agents are qualified to provide legal advice? No. In some states, realtors have had only 40 hours of class, which can be online.

Does the title company that does the closing provide legal advice? No.

Perhaps if a closing is done by the title company's lawyer, you might get legal advice, but they work on the bank's behalf.

I closed on a house, and the bank providing my mortgage and an home equity line of credit had the terms for the line of credit wrong. My lawyer drafted a paragraph that said that if the call recording reflected my recollection of terms (it did), the line of credit terms would be changed and the bank would refund the home appraisal fee (they did).

When I sold a property recently, my lawyer drafted a Purchase and Sale agreement that was non-standard, including a limit of the period that the buyer could bring suit that is much lower than the default. We made other changes as well.

He who represents himself has a fool for a client.
There are states where attorneys are always involved in closing a residential transaction.

In other states, if you are buying a home in today's market competing with multiple buyers, if yours is a custom contract drafted by a lawyer, you will have the disadvantage that the seller would need to have a lawyer vet the contract. A competing offer using a standard sales agreement (templates drawn up by real estate attorneys) will have an advantage. A buyer's agent from a brokerage with a good risk management competency will manage more risk than legal risk, and will refer a client to a real estate attorney for issues where it is appropriate.
As I said, we, the Seller, provide the Buyer with OUR P&S agreement. They could have had a lawyer get it, but did not.
In my state, there’s a standard contract, and it isn’t customary for people to hire lawyers for standard real estate transactions any more than they do when they’re buying a car or a boat. I’m not going to court, I’m just buying or selling a thing. If a buyer or seller did something that required me to lawyer up before we even started the escrow process, I would take it as a sign that the whole deal was going to be difficult and adversarial, and would probably just walk away.
Yes, I’m really that pedantic.
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Re: What pitfalls do even smart people make when buying a home?

Post by stoptothink »

alpenglow wrote: Thu Jun 24, 2021 5:36 pm
LeftCoastIV wrote: Sun Jun 20, 2021 2:37 am [4] Don't buy a home that is so expensive that it causes ongoing stress in your marriage
Unfortunately, I have a friend with this issue. The husband seems to want a trophy house and they are going for new construction in a HCOL area. Given my understanding of their finances, they are over-reaching and underestimating costs. My friend already said she'd prefer a divorce over the new house. :shock:
This is one of my wife's friends and two of my neighbors, right now. One neighbor bought a plot to build, literally the day after he got a tenure track position early last year. Not only was the land a stretch financially, but they can't get approved for a construction loan now. This is a family with HHI of ~$80k, who just paid $250k for a piece of land and is now facing the reality that it will cost $400k+ to build the most modest home on it. Didn't do any research about the process at all, just bought in exhilaration after he got his first real job. Neighbor's wife has cried on my wife's shoulder several times about how buying that plot has basically bankrupted them.
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Re: What pitfalls do even smart people make when buying a home?

Post by simplesimon »

stoptothink wrote: Thu Jun 24, 2021 7:20 pm This is one of my wife's friends and two of my neighbors, right now. One neighbor bought a plot to build, literally the day after he got a tenure track position early last year. Not only was the land a stretch financially, but they can't get approved for a construction loan now. This is a family with HHI of ~$80k, who just paid $250k for a piece of land and is now facing the reality that it will cost $400k+ to build the most modest home on it. Didn't do any research about the process at all, just bought in exhilaration after he got his first real job. Neighbor's wife has cried on my wife's shoulder several times about how buying that plot has basically bankrupted them.
Can't they sell the land? Or they hanging onto the dream?
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Re: What pitfalls do even smart people make when buying a home?

Post by newyorker »

Buying a lot without research is not the smartest move. Too much headaches and variables for a real estate newbie.
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Re: What pitfalls do even smart people make when buying a home?

Post by stoptothink »

simplesimon wrote: Thu Jun 24, 2021 7:54 pm
stoptothink wrote: Thu Jun 24, 2021 7:20 pm This is one of my wife's friends and two of my neighbors, right now. One neighbor bought a plot to build, literally the day after he got a tenure track position early last year. Not only was the land a stretch financially, but they can't get approved for a construction loan now. This is a family with HHI of ~$80k, who just paid $250k for a piece of land and is now facing the reality that it will cost $400k+ to build the most modest home on it. Didn't do any research about the process at all, just bought in exhilaration after he got his first real job. Neighbor's wife has cried on my wife's shoulder several times about how buying that plot has basically bankrupted them.
Can't they sell the land? Or they hanging onto the dream?
Sure, but it's husband's dream. They've be paying $2500/month in rent plus mortgage on the land for the last year and a half, I don't even know how they are doing that. He thought he was set when he got his new position and is now facing the reality that he probably can't afford a SFH home at all, let alone his custom home on a plot against the mountain in this MCOL area. Brilliant guy (theoretical mathematician) who is incredibly naive about money.
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Re: What pitfalls do even smart people make when buying a home?

Post by FlyerJack »

Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
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Re: What pitfalls do even smart people make when buying a home?

Post by WWJBDo »

Pu239 wrote: Sun Jun 20, 2021 11:22 am Depending on where the house is, forgetting about geological hazards. Though rare, floods, landslides, avalanches, earthquakes, forest fires, etc. do happen.
Being in California, this is a very real risk. We brought in a local map in and met with our experienced insurance agent. He circled the areas with foundation settling issues before we even started looking so we didn't look in those areas. That way, we avoided falling in love with and buying a house that was a mistake.
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Re: What pitfalls do even smart people make when buying a home?

Post by sureshoe »

stoptothink wrote: Thu Jun 24, 2021 7:20 pm
alpenglow wrote: Thu Jun 24, 2021 5:36 pm
LeftCoastIV wrote: Sun Jun 20, 2021 2:37 am [4] Don't buy a home that is so expensive that it causes ongoing stress in your marriage
Unfortunately, I have a friend with this issue. The husband seems to want a trophy house and they are going for new construction in a HCOL area. Given my understanding of their finances, they are over-reaching and underestimating costs. My friend already said she'd prefer a divorce over the new house. :shock:
This is one of my wife's friends and two of my neighbors, right now. One neighbor bought a plot to build, literally the day after he got a tenure track position early last year. Not only was the land a stretch financially, but they can't get approved for a construction loan now. This is a family with HHI of ~$80k, who just paid $250k for a piece of land and is now facing the reality that it will cost $400k+ to build the most modest home on it. Didn't do any research about the process at all, just bought in exhilaration after he got his first real job. Neighbor's wife has cried on my wife's shoulder several times about how buying that plot has basically bankrupted them.
Oof, that's really brutal. There are very few places in the country right now where you can buy a new house for less than $400k, and really this house you described is $650k (ugg if these people are <$250k income).

So add this to the list: Don't buy undeveloped land unless you really know what you're doing. And, avoid custom homes. I know a couple people who have done this. When you buy land and then bring in a contractor, I've seen a lot of people have trouble. I know you get your "dream house", but it's a big risk.

I can also tell you that the last 2 houses I've bought have been custom and the person I have bought them from have taken a bath. The house I'm in right now for example, they basically "got what they paid for" after living in it for 17 years, minus a 6% real estate commission.

There is an old saying: to make money running a golf course, buy it from the guy who went bankrupt building it. I think the same is true for custom homes.
quantAndHold
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Re: What pitfalls do even smart people make when buying a home?

Post by quantAndHold »

FlyerJack wrote: Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
Any rule of thumb metric on how much home someone can afford that doesn’t take interest rates into account is useless. A metric that was developed when rates were 7%, or even 5%, will leave someone unable to buy anything but a hovel when rates are down to 3%, even if they can clearly afford the payments.
Yes, I’m really that pedantic.
lazynovice
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Re: What pitfalls do even smart people make when buying a home?

Post by lazynovice »

quantAndHold wrote: Fri Jun 25, 2021 10:25 am
FlyerJack wrote: Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
Any rule of thumb metric on how much home someone can afford that doesn’t take interest rates into account is useless. A metric that was developed when rates were 7%, or even 5%, will leave someone unable to buy anything but a hovel when rates are down to 3%, even if they can clearly afford the payments.
I have been noticing this regarding the old “buy a house that is 3x your annual income”. Following that rule, my son would be cutting his monthly rent payment down significantly by buying- even counting taxes and insurance, if he could even find a house that cheap.
“I didn’t want my sailboat to be in the driveway when I died.” Nomadland
stoptothink
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Re: What pitfalls do even smart people make when buying a home?

Post by stoptothink »

sureshoe wrote: Fri Jun 25, 2021 10:20 am
stoptothink wrote: Thu Jun 24, 2021 7:20 pm
alpenglow wrote: Thu Jun 24, 2021 5:36 pm
LeftCoastIV wrote: Sun Jun 20, 2021 2:37 am [4] Don't buy a home that is so expensive that it causes ongoing stress in your marriage
Unfortunately, I have a friend with this issue. The husband seems to want a trophy house and they are going for new construction in a HCOL area. Given my understanding of their finances, they are over-reaching and underestimating costs. My friend already said she'd prefer a divorce over the new house. :shock:
This is one of my wife's friends and two of my neighbors, right now. One neighbor bought a plot to build, literally the day after he got a tenure track position early last year. Not only was the land a stretch financially, but they can't get approved for a construction loan now. This is a family with HHI of ~$80k, who just paid $250k for a piece of land and is now facing the reality that it will cost $400k+ to build the most modest home on it. Didn't do any research about the process at all, just bought in exhilaration after he got his first real job. Neighbor's wife has cried on my wife's shoulder several times about how buying that plot has basically bankrupted them.
Oof, that's really brutal. There are very few places in the country right now where you can buy a new house for less than $400k, and really this house you described is $650k (ugg if these people are <$250k income).

So add this to the list: Don't buy undeveloped land unless you really know what you're doing. And, avoid custom homes. I know a couple people who have done this. When you buy land and then bring in a contractor, I've seen a lot of people have trouble. I know you get your "dream house", but it's a big risk.

I can also tell you that the last 2 houses I've bought have been custom and the person I have bought them from have taken a bath. The house I'm in right now for example, they basically "got what they paid for" after living in it for 17 years, minus a 6% real estate commission.

There is an old saying: to make money running a golf course, buy it from the guy who went bankrupt building it. I think the same is true for custom homes.
We're in MCOL area, but it's become very hard to get into an existing SFH in our area <$550k, let alone build one. I believe their HHI is ~$80k. Was so happy about finally getting that tenure-track position that he made a hasty decision without any research whatsoever. I assume they'll have to sell the plot and just continue renting, but they've been stressing and fighting about it for over a year now with each month making it worse. Do not let your emotion be a part of the home-buying process.
av111
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Re: What pitfalls do even smart people make when buying a home?

Post by av111 »

quantAndHold wrote: Fri Jun 25, 2021 10:25 am
FlyerJack wrote: Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
Any rule of thumb metric on how much home someone can afford that doesn’t take interest rates into account is useless. A metric that was developed when rates were 7%, or even 5%, will leave someone unable to buy anything but a hovel when rates are down to 3%, even if they can clearly afford the payments.
Lender approves mortgage based on the ratio of debt to income. Total debt payments including PITI should be below 43% of the income if you are bringing in 20% down. Is there a problem with that approach?
AV111
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Re: What pitfalls do even smart people make when buying a home?

Post by av111 »

stoptothink wrote: Thu Jun 24, 2021 8:05 pm
simplesimon wrote: Thu Jun 24, 2021 7:54 pm
stoptothink wrote: Thu Jun 24, 2021 7:20 pm This is one of my wife's friends and two of my neighbors, right now. One neighbor bought a plot to build, literally the day after he got a tenure track position early last year. Not only was the land a stretch financially, but they can't get approved for a construction loan now. This is a family with HHI of ~$80k, who just paid $250k for a piece of land and is now facing the reality that it will cost $400k+ to build the most modest home on it. Didn't do any research about the process at all, just bought in exhilaration after he got his first real job. Neighbor's wife has cried on my wife's shoulder several times about how buying that plot has basically bankrupted them.
Can't they sell the land? Or they hanging onto the dream?
Sure, but it's husband's dream. They've be paying $2500/month in rent plus mortgage on the land for the last year and a half, I don't even know how they are doing that. He thought he was set when he got his new position and is now facing the reality that he probably can't afford a SFH home at all, let alone his custom home on a plot against the mountain in this MCOL area. Brilliant guy (theoretical mathematician) who is incredibly naive about money.
Strange.. Is there a loan on the land purchase? Didn't 250k cover that?

Usually next step for people who buy a lot is to get a construction loan, architect and contractor. There is no time to cry on someone's shoulder
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whodidntante
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Re: What pitfalls do even smart people make when buying a home?

Post by whodidntante »

There are many.

Blindly believing that a house is a great investment.
Focusing too much on financing and on paying off debt.
Ignoring opportunity costs of owning a house.
Ignoring the impact of being anchored to a patch of dirt on your career and life.
Ignoring transaction costs.
Buying more house than you need.
Incredible spending to fill the house with accumulated stuff that does not improve your quality of life.
Ignoring the cost, time drain, and negative health effects of a long trip to get to work and other places you go frequently. A long commute is stressful and it never gets better.
Underestimating the cost and effort involved in maintenance.
Other than getting a medical degree, buying a house might be largest single cause of lifestyle inflation.
Reduced interactions with neighbors and community.
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TomatoTomahto
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Re: What pitfalls do even smart people make when buying a home?

Post by TomatoTomahto »

Awesome list, @whodidntante. I will give to the kids.
I get the FI part but not the RE part of FIRE.
Ollie123
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Re: What pitfalls do even smart people make when buying a home?

Post by Ollie123 »

I'll let you know in a few weeks. We close mid-July;)

This thread has been helpful as we moved through the process. I do think it may have been a mistake (or perhaps I should say sub-optimal financial decision?) buying in the present market. I'm not expecting a housing market crash, but a modest correction here would not surprise me. Wife talked me into going over my comfort zone, but I'm certainly the conservative one as these things go. Purchase price 2.5x base salary, mortgage 1.9x base (we did 25% down to help cash flow a bit).We're the people who did buy the massive house (4000 sf) so upkeep costs will also be higher too, but I think we can manage to continue a decent savings rate (30%) even with this decision.

Some other suggestions having gone through this process right now:
- Cheaping out on inspection add-ons. An extra $x to scope the sewer main could save you thousands on the back end. Same with some other big ticket items. Totally worth it in the grand scheme of home purchase expenses.
- Getting competitive (especially relevant in the present market). Its easy to focus on "winning" when you are looking at houses you know are going to get multiple bids in the present market. I was pretty firm about NOT bidding up for a house I didn't think was worth it. I have some friends who seemed to get caught up in the competition aspect that is present right now in many locations. If you get the house by paying 20% over asking, you may have won the battle but you are probably going to lose the war.
sureshoe
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Re: What pitfalls do even smart people make when buying a home?

Post by sureshoe »

FlyerJack wrote: Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
And I think Ramsey gives bad advice to certain people. In general, his "get out of debt" is good advice, but for lower income people who aren't investing - buying a house in a low interest rate environment on a 15 year note is bad advice. If someone is making $100k/year, they should be maxing out their 401k and IRAs and HSAs before paying down a home. A $100k household income should result in a millionaire in most states.

Ramsey's advice is targeted to people who have no self-discipline. He is coaching people out of credit card debt. "Financial Peace University" is designed for people who literally can't pay bills and stop themselves from blowing their own toes off.

Why pay off a mortgage at 3% when you can defer taxes at a marginal 22%-24% rate?? Yeah, you have to pay them eventually, but my god... the loss in present value is staggering.

At $100k income, someone should be able to comfortably afford a $250k house, small car payment (or 2), max out IRAs and IRAs. The only exception would be some sort of major expense or personal problem. I wouldn't use that 30 year mortgage to go up to a $400k house (which is what Ramsey is REALLY advising against, but knows most of his audience is too stupid to understand the nuance).
stoptothink
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Re: What pitfalls do even smart people make when buying a home?

Post by stoptothink »

av111 wrote: Fri Jun 25, 2021 11:55 am
stoptothink wrote: Thu Jun 24, 2021 8:05 pm
simplesimon wrote: Thu Jun 24, 2021 7:54 pm
stoptothink wrote: Thu Jun 24, 2021 7:20 pm This is one of my wife's friends and two of my neighbors, right now. One neighbor bought a plot to build, literally the day after he got a tenure track position early last year. Not only was the land a stretch financially, but they can't get approved for a construction loan now. This is a family with HHI of ~$80k, who just paid $250k for a piece of land and is now facing the reality that it will cost $400k+ to build the most modest home on it. Didn't do any research about the process at all, just bought in exhilaration after he got his first real job. Neighbor's wife has cried on my wife's shoulder several times about how buying that plot has basically bankrupted them.
Can't they sell the land? Or they hanging onto the dream?
Sure, but it's husband's dream. They've be paying $2500/month in rent plus mortgage on the land for the last year and a half, I don't even know how they are doing that. He thought he was set when he got his new position and is now facing the reality that he probably can't afford a SFH home at all, let alone his custom home on a plot against the mountain in this MCOL area. Brilliant guy (theoretical mathematician) who is incredibly naive about money.
Strange.. Is there a loan on the land purchase? Didn't 250k cover that?

Usually next step for people who buy a lot is to get a construction loan, architect and contractor. There is no time to cry on someone's shoulder
They didn't have $250k in cash, there is a loan on the land. Because of their terrible income-to-debt, they can't even qualify for a construction loan at this point.
TheBeanCounter
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Re: What pitfalls do even smart people make when buying a home?

Post by TheBeanCounter »

As a 23 year old renter, this is a particularly helpful thread. Thank you to everyone sharing their experience/opinions.
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Matahari
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Re: What pitfalls do even smart people make when buying a home?

Post by Matahari »

WWJBDo wrote: Fri Jun 25, 2021 10:12 am
Pu239 wrote: Sun Jun 20, 2021 11:22 am Depending on where the house is, forgetting about geological hazards. Though rare, floods, landslides, avalanches, earthquakes, forest fires, etc. do happen.
Being in California, this is a very real risk. We brought in a local map in and met with our experienced insurance agent. He circled the areas with foundation settling issues before we even started looking so we didn't look in those areas. That way, we avoided falling in love with and buying a house that was a mistake.
This seems to be an evolving risk, as well. Without engaging in any discussion of its certainty or cause, the fact is that there are many areas in which climatic changes have and will cause changes in site suitability, much less desirability.
slidecreek
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Re: What pitfalls do even smart people make when buying a home?

Post by slidecreek »

Making emotional decisions.

Ultimately all that matters is that you like the house and can find somebody to pay more than you did when you are ready to sell (unless you like it so much you don't mind losing money).
lazynovice
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Re: What pitfalls do even smart people make when buying a home?

Post by lazynovice »

av111 wrote: Fri Jun 25, 2021 11:49 am
quantAndHold wrote: Fri Jun 25, 2021 10:25 am
FlyerJack wrote: Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
Any rule of thumb metric on how much home someone can afford that doesn’t take interest rates into account is useless. A metric that was developed when rates were 7%, or even 5%, will leave someone unable to buy anything but a hovel when rates are down to 3%, even if they can clearly afford the payments.
Lender approves mortgage based on the ratio of debt to income. Total debt payments including PITI should be below 43% of the income if you are bringing in 20% down. Is there a problem with that approach?
No because PITI takes interest rates into account.
“I didn’t want my sailboat to be in the driveway when I died.” Nomadland
quantAndHold
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Re: What pitfalls do even smart people make when buying a home?

Post by quantAndHold »

av111 wrote: Fri Jun 25, 2021 11:49 am
quantAndHold wrote: Fri Jun 25, 2021 10:25 am
FlyerJack wrote: Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
Any rule of thumb metric on how much home someone can afford that doesn’t take interest rates into account is useless. A metric that was developed when rates were 7%, or even 5%, will leave someone unable to buy anything but a hovel when rates are down to 3%, even if they can clearly afford the payments.
Lender approves mortgage based on the ratio of debt to income. Total debt payments including PITI should be below 43% of the income if you are bringing in 20% down. Is there a problem with that approach?
Not at all, PITI takes interest rates into account. 43% of gross is higher than I would go unless I was expecting a big raise soon, but PITI is the right calculation to be using.

I’m talking about the old saw that says “never spend more than 2x (or 3x) your annual salary on a house”. Different interest rates will lead to vastly different monthly payments on the same size mortgage.
Yes, I’m really that pedantic.
valleyrock
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Re: What pitfalls do even smart people make when buying a home?

Post by valleyrock »

UALflyer wrote: Tue Jun 22, 2021 12:57 pm
valleyrock wrote: Tue Jun 22, 2021 6:50 am When running a 24 or 48 hour radon test, have it done at a different time than when the inspectors and agents and you are running in and out of the house. All that door opening and closing over several hours affects the pressures and the results even if the house is closed up as it should be. Learn the significance of the radon results. There's the maximum level and then there's the maximum recommended level. They are different. Radon remediation is not all that difficult nor expensive in most cases.
Radon tests have become very popular in residential transactions, but in most cases actually don't tell you much. Radon levels naturally fluctuate quite a bit and depend on the time of year, the weather, the amount of ventilation, etc...

Hence, in order to be meaningful, radon tests need to be long term, as in continuous testing over at least 90 days and preferably longer. When you are buying a house, running long term tests is obviously not practical, so, instead, people run 48 - 96 hour tests, which, because of the above factors, end up being highly inaccurate and create lots of unnecessary tension between buyers and sellers. If a short term test is very significantly elevated, as in 6.0+ pCi/L or so, that's one thing. In a lot of cases, however, you end up with borderline numbers, like 3.8 pCi/L or 4.2 pCi/L, which in reality tells you absolutely nothing about the radon levels in the residence. In reality, due to the natural radon fluctuations, even low short term results don't really tell you all that much, so just because yours came back at 1.5 pCi/L does not necessarily tell you that a long term test would end up being below 4.0 pCi/L.

Because of the above issues associated with short term radon testing, some of the more sophisticated buyers now offer an addendum that says that if post-closing the seller runs a radon test for a minimum of 91 days using an alpha track device (as opposed to the electronic radon testers) and a lab subsequently reports the radon level of 4.0+ pCi/L, the seller will pay $X towards radon mitigation.
I like this addendum idea. Still, one could run a standard 24-48 hour test and get some piece of mind if the result isn't way high. Also, if the result is above the 4 picocuries/L, then the seller will need to give back the $1500 or $2000 (approximate typical cost) for the remediation. Radon remediation isn't hugely expensive like a roof, so if it's found to be needed after purchasing, it can be considered to be one more maintenance item of many.
Northern Flicker
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Re: What pitfalls do even smart people make when buying a home?

Post by Northern Flicker »

quantAndHold wrote: Fri Jun 25, 2021 10:25 am
FlyerJack wrote: Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
Any rule of thumb metric on how much home someone can afford that doesn’t take interest rates into account is useless. A metric that was developed when rates were 7%, or even 5%, will leave someone unable to buy anything but a hovel when rates are down to 3%, even if they can clearly afford the payments.
Most metrics in use consider size of loan, interest rate, taxes, and insurance, usually abbreviated as PITI.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
TheNightsToCome
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Re: What pitfalls do even smart people make when buying a home?

Post by TheNightsToCome »

whodidntante wrote: Fri Jun 25, 2021 12:11 pm Other than getting a medical degree, buying a house might be largest single cause of lifestyle inflation.
:confused
Finridge
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Re: What pitfalls do even smart people make when buying a home?

Post by Finridge »

BradJ wrote: Sat Jun 19, 2021 10:22 pm Not fully understanding what season of life they are in. Many folks want projects, but forget that when you work 40 hours a week and have little kids, those projects become low priority.
I concur with this comment.
AnEngineer
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Re: What pitfalls do even smart people make when buying a home?

Post by AnEngineer »

UALflyer wrote: Wed Jun 23, 2021 12:55 pm Quite often, larger houses don't necessarily have more rooms...
I think this may be lost of people looking for bigger houses. Most houses I've seen in the 3-6k sq. ft. range have no more rooms than a 2-2.5k sqft house, it's just that every room can fit more people. (And how many rooms in your house need to do that?) However, given the open floor plans and limited sound isolation, for most people this is no more functional than a much smaller house. Room arrangement is a much bigger factor than size (which isn't captured well by a bunch of pictures online).
JackoC
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Re: What pitfalls do even smart people make when buying a home?

Post by JackoC »

quantAndHold wrote: Fri Jun 25, 2021 10:25 am
FlyerJack wrote: Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: Thu Jun 24, 2021 1:16 pm So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.

On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch." :happy Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
Any rule of thumb metric on how much home someone can afford that doesn’t take interest rates into account is useless. A metric that was developed when rates were 7%, or even 5%, will leave someone unable to buy anything but a hovel when rates are down to 3%, even if they can clearly afford the payments.
On median, per the Census Bureau the median income nationally of *families* with *2 earners* was $114k in 2019.
See Table F-12 in this set of spreadsheets:
https://www.census.gov/data/tables/time ... ilies.html

Although I often puzzle at the obsession with median. People scolding those who are 'in an upper income bubble' sometimes get carried away too. It's not really that relevant to a $500k earner what a median earner can afford and vice versa, in terms of *personal finance*. Increasing one's income is a big and sometimes IMO neglected part of personal finance discussions here, but at a given moment income 'is what it is' and it's what you can afford that matters, not what somebody else can. And socio-political pontification about who 'should' be able to afford what is a different topic we in theory at least don't discuss here.

I agree with the obvious point that affordability of houses purchased with big loans must depend importantly on the interest rate. A rule of thumb which only considers income and house price is assuming an interest rate. If the prevailing interest rate is greatly different than that assumption, the rule is worthless.
AnEngineer
Posts: 730
Joined: Sat Jun 27, 2020 4:05 pm

Re: What pitfalls do even smart people make when buying a home?

Post by AnEngineer »

EnjoyIt wrote: Thu Jun 24, 2021 1:39 pmBTW, one of my friend's parents lived in a very prestigious area in a gorgeous house. They did not have a chance to save that much money and most of their wealth was tied up in their home. They retired and sold their house for significantly more than they bought it over 40 years prior. They toughed how great of an investment it was for them. Without telling them, I did the math on inflation adjusted dollars, and their home only went up slightly over inflation. It really wasn't all that wonderful. The thing is, knowing them, if they didn't overextend themselves on the house, they would have spent that money elsewhere and would have had less in retirement. So I guess there is that.
While buying too much house is bad advice for anyone on this forum, it probably is a reasonable plan for many others for the reason above: it forces saving money that would otherwise just be spent (needlessly). It's a sad reality.
lostdog
Posts: 4279
Joined: Thu Feb 04, 2016 2:15 pm

Re: What pitfalls do even smart people make when buying a home?

Post by lostdog »

Not saving for property taxes.

Home ownership in the U.S. is a big scam.

Just rent.
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