How much a family of four needs in annual income to afford a single family home

[Dave Hess]

Best response yet! People who are actually ready to buy a home would do well to control expectations, don't buy more than they need, and save a lot more than 10% for a down-payment.

And for those in hopelessly expensive areas without commensurate income? It happens. Move. There are always options.

There are some breathtaking waterfront properties on Ocean Drive a few miles from our home. As a retiree I can't afford a $1.5M+ home on the Gulf. What I can afford - and what we wanted all along - is a nice 4BR ranch two miles inland. Close enough to smell the saltwater, yet easily affordable.

Data shows foreclosures are on the rise this quarter. That's probably not due to the savvy financial decisions of affected mortgagees.

Yes, foreclosures are rising and lots of people are barely making month to month.

Lots of people living in nice neighborhoods and they are cash poor.

Very little Net Worth with soooo much debt.

 

[Dave Hess]

I am sure there are exceptions somewhere, but I have lived in 3 USA top 20 cities, 2 big towns, and now live in a smaller city (Charleston). There are no older, cheaper fixer uppers zoned in the good schools because if there was someone has already flipped it.

What were the 3 USA top 20 cities you lived in ?

Very few fixer uppers in good school districts, only trashy neighborhoods with high crime, drugs and misery.


We helped our 3 adult children buy single story, 3 bedroom houses in very decent neighborhoods before the age of 30. Zero money spent on silly weddings.

 

[ls1mike]

So, this article assumes that everyone's first home is median priced, as opposed to being lower than median because it's a starter home? Am I missing something?

Part of the problem might be first time home buyer's expectations.

That is simply not the case in Washington state. Especially Western Washington where the jobs are. It is crazy here. I paid 295,000 for my place in 2010. If I sold it now, it would list for 700,000 to 750,000. The house across the street from me sold for 950,000 about 2 years ago, the house behind sold for 1.03 million last summer. They both are on 2.5 acres. I am on an acre and 1/4. My kid makes 27 bucks an hour and works an average of 48 to 54 hours a week. He was just looking at property within a half hour of where he works. You are looking at 100,000 to 150,000 for an acre or less with no power, water or sewer. Add all that plus whatever dwelling you are putting on the land and it is out of reach of for a lot of people.

 

[ls1mike]

And for those in hopelessly expensive areas without commensurate income? It happens. Move. There are always options.

Where? Alligator Mississippi where the median house is something like 54,000 dollars a year? The Median income per capita is 19,000 dollars per year? The poverty rate is over 64 percent. It MIGHT be good if you are retired, but if you are of working age good luck. Problem is if you want a job you live near larger population areas, and it is pricey in those places because that is where the "stuff" is. No way around that.

Cairo, Illinois? Gary, Indian? Donna, Texas? Delight, Arkansas? And scores of other places just like these. You can buy cheap there, but where do you work? How do you get around the high poverty? Lack of grocery stores? Gas stations? You spend whatever extra money you have on transportation. People want a quality of life too.

Most people in the U.S. don't move far from where they grew up, with a large majority living within 100 miles of their childhood home. Nearly 60% of young adults live within 10 miles of their birthplace. The median distance Americans live from their mother is 18 miles. Some statics suggest nearly 80% of adults live about 100 miles from where they grew up with the median being 30 miles.

People like what they know. I live 3000 miles from where I grew up. Have not lived where I grew up since 1993 and I was 18. Moved around in the Army and the Navy. It isn't always that simple. People who move that far away are in the minority and sometimes it sucks not being close to family when they need help or you yourself need support. I know guys who do 20 to 30 years in the military and go home as soon as they retire. Why? They missed what they knew, they missed their family. There is more to it than just move. You can't make it that simple. It isn't just a financial decision. Some people can make it just about that. That is how it is always been for me, but that is not the case for many Americans. I don't disagree with your statement, but it is not reality.

I am looking all over. I make enough to stay in Washington when I retire but I would like to go somewhere else. I have been researching all types of towns and areas. Some of the places I looked at would allow me to move in and buy whole neighborhoods by selling my place here. Is that where I want to live though? I mean those places have nothing to offer even for a retiree and not one thing for young families. Reality is my wife will not leave here because this is where she grew up. She is one of 11 siblings and 8 of them still live in Washington along with the rest of her family. She likes the support system.

 

[GON]

Where? Alligator Mississippi where the median house is something like 54,000 dollars a year? The Median income per capita is 19,000 dollars per year? The poverty rate is over 64 percent. It MIGHT be good if you are retired, but if you are of working age good luck. Problem is if you want a job you live near larger population areas, and it is pricey in those places because that is where the "stuff" is. No way around that.

Cairo, Illinois? Gary, Indian? Donna, Texas? Delight, Arkansas? And scores of other places just like these. You can buy cheap there, but where do you work? How do you get around the high poverty? Lack of grocery stores? Gas stations? You spend whatever extra money you have on transportation. People want a quality of life too.

Most people in the U.S. don't move far from where they grew up, with a large majority living within 100 miles of their childhood home. Nearly 60% of young adults live within 10 miles of their birthplace. The median distance Americans live from their mother is 18 miles. Some statics suggest nearly 80% of adults live about 100 miles from where they grew up with the median being 30 miles.

People like what they know. I live 3000 miles from where I grew up. Have not lived where I grew up since 1993 and I was 18. Moved around in the Army and the Navy. It isn't always that simple. People who move that far away are in the minority and sometimes it sucks not being close to family when they need help or you yourself need support. I know guys who do 20 to 30 years in the military and go home as soon as they retire. Why? They missed what they knew, they missed their family. There is more to it than just move. You can't make it that simple. It isn't just a financial decision. Some people can make it just about that. That is how it is always been for me, but that is not the case for many Americans. I don't disagree with your statement, but it is not reality.

I am looking all over. I make enough to stay in Washington when I retire but I would like to go somewhere else. I have been researching all types of towns and areas. Some of the places I looked at would allow me to move in and buy whole neighborhoods by selling my place here. Is that where I want to live though? I mean those places have nothing to offer even for a retiree and not one thing for young families. Reality is my wife will not leave here because this is where she grew up. She is one of 11 siblings and 8 of them still live in Washington along with the rest of her family. She likes the support system.

Excellent post, I am going to highlight one comment of many oustanding comments:

"People who move that far away are in the minority and sometimes it sucks not being close to family when they need help or you yourself need support."

My Son in law (who we have two younger grandsons with), made a comment over Christmas at his home in Colorado. I threw out "you should move to New Mexico where we would watch the Grandsons all the time". SIL response, I would actually consider it- just to have a support network so close.

My Daughter got wind of this and shut it down on the spot. Daughter loves all the shopping, major airport, etc that the greater Denver area offers. Things that mean nothing to me, mean the world to my Daughter.

I was not expecting the SIL to mention the support network- it was eye opening, but rings true.

 

[skyactiv]

All I know is many of you guys and myself are lucky we were able to buy and afford our first home. Many people here couldn't buy the home they're in now if they were buying it today. How did we get to the point?

 

[johnmyster]

These stories are all politicized clickbait gen z sob stories. If you want to feel sorry for yourself (ie, your generation) then sure, life is tough. It takes work.

Family of four here. Doing quite well. $123k a year salary, three cars in the driveway with under 100k miles on each. Have a camper we take out every third weekend. Refinanced our ~2700 sq ft, 50 year old ranch home in 2021. Have $85k to go on the note and could pay it off tomorrow if I wanted. Invested NW of >$900k towards retirement. Wife brought financially nothing into the marriage. Two littles and a dog. Homeschooling. Savings rate >$35% and 10% to the church. Fired our financial advisors last year because they had nothing to offer.

No, our kitchen doesn't have stone countertops and the bathrooms are outdated, but everything works.

 

[tbm5690]

That is simply not the case in Washington state. Especially Western Washington where the jobs are. It is crazy here. I paid 295,000 for my place in 2010. If I sold it now, it would list for 700,000 to 750,000. The house across the street from me sold for 950,000 about 2 years ago, the house behind sold for 1.03 million last summer. They both are on 2.5 acres. I am on an acre and 1/4. My kid makes 27 bucks an hour and works an average of 48 to 54 hours a week. He was just looking at property within a half hour of where he works. You are looking at 100,000 to 150,000 for an acre or less with no power, water or sewer. Add all that plus whatever dwelling you are putting on the land and it is out of reach of for a lot of people.

Not arguing the case, just genuinely curious: in your son's case, is he not willing to consider a home in town on a small lot as a starter home? Most people don't buy an acre of land and and build new for their first home.

 

[Dave Hess]

All I know is many of you guys and myself are lucky we were able to buy and afford our first home. Many people here couldn't buy the home they're in now if they were buying it today. How did we get to the point?

Husband and wife make $80,000 combined and simply can’t afford to buy a starter home.
Lots people working full-time jobs and stuck in a lower paying career fields.

Laws were passed (no politics) inflate the cost of living for everyone.

Have kids ?
Try raising them without A-Z gov handouts.

 

[JHZR2]

No starter homes in the good end of town. Its a sort of Triffen's dilema.

The place everyone wants to live because it has great schools and infrastructure, have no starter homes.

If you try to force starter homes into that area, you add too many users to too diluted tax base - because low income folks can't collect the same level of benefit and pay 1/3 the taxes. So the infrastructure and tax base fail. Reference the inter city in any major city just about. Doesn't happen overnight, but it happens.

Exactly right. Realtor.com doesn’t care about that, they just care about generating sales, even if it means ugly higher density housing destroying towns, and no practical benefit or improvement to tax base.

 

[4WD]

The Texas number is skewed. Some places are crazy expensive like the Austin - CenTex area, but there are ample, extremely affordable options across most of the State.

Strange things have been going on that you might only notice in small towns like I live in. Apartments had not been built in decades - now left and right - houses being framed in all directions including “projects” etc. The strange part?
No new businesses or jobs have come here. None.

 

[John105]

I'll use my buddy as an example, nobody here knows him. 43 y.o., earns over $200k, never purchased a home for whatever reason (maybe because they had below market rent for 12 years--$1,200 for a 3 bed / 2 bath condo in a nice condo development). Approved for $600k mortgage based on income, has $0 he can contribute for downpay, just as he had $0 5 years ago. He says he's good with never owning a home, wife cries about it, 3 kids. He told me he hopes that none of his kids decide to go to college (when I told him another buddy said $48k after financial aid for a mediocre school). I get we could all say poor him, his income is better than some. But at the same time, he's a real person with a real family and cannot afford a home.

I do feel that if he is sure he's never going to own a home? Then move across the street and see if any of the new condos are for rent. If so my guess is $4000 mo--buy that comfort. Otherwise do the opposite and save for the downpay which has to be six figures I guess.

One of my theories is unfortunately lifestyle fits the gross, not net, income. You know it's bonus time when my buddy has a new car. He got one 2024 and 2025. it's easier said than done to say, save that bonus 100%, and do it 4 years in a row, and there's your downpay, literally.

 

[alarmguy]

Free market, supply and demand. Not cutting it then you have to do something different or move to another area.
Homes are selling, one day there is going to be a vast over supply. Does anyone remember the world shut down less than 4 years ago for Covid.
Problem today for many complaining is immature youth (or old people reading forums/media) have to mature and work for what they want, instead of being gifted to them. They also need to learn to live without luxuries to achieve things. Too spoiled to live without those luxuries, they think it is normal to have them and that they are entitled to.

CERTAINLY NOT ALL young people. I do not know one young family member Nieces, Nephews and my own kids without a house. My nieces and nephews are scattered all over the USA not just in SC and NC and have at least 4 family members. They all work hard and many living far better then we ever did in some amazing homes that no one gifted to them. Amazing stories and strides to better themselves, some from nothing now into the highest income levels.

So what happens based on some of these posts? Many dont give up things they should and work towards a goal to afford a home so they go into high density housing. Actually this is the newest way out for them not to work too hard. I am seeing home rental communities pop up all over now. The entire community, some will never strive for what is/was the American dream.

 

[scoot]

Wow, I cared for my parents for more than 10 years. Gimme my money CA!

You got your reward .

 

[tbm5690]

I get we could all say poor him, his income is better than some. But at the same time, he's a real person with a real family and cannot afford a home.

A real person with a real family that sounds like can't afford a home due to 100% financial choice.

 

[scoot]

Only 1 of my highschool buddies after college did a starter home , the rest had to be as big and new as possible. I'm 55 I think the starter home went out voge with my generation.

 

[Pew]

Only 1 of my highschool buddies after college did a starter home , the rest had to be as big and new as possible. I'm 55 I think the starter home went out voge with my generation.

Starter homes simply have not been made in a long time and the ones that are still around are 50+ years old and need an immense amount of work (that nobody has because full time work and kids) or simply not made because townhouse have been substituted for starter homes.

Then we get to the price of homes and loans where the lender wants you to make 3x your monthly salary of the house. For a basic 350k starter home here with no frills and thrills, that means a family needs to make at least $6k/month. Nearly impossible to ask for while paying for $2k rent on a 1-2 bdrm apartment, childcare, and associated bills.

 

[ls1mike]

Not arguing the case, just genuinely curious: in your son's case, is he not willing to consider a home in town on a small lot as a starter home? Most people don't buy an acre of land and build new for their first home.

Average rent here for a 1-bedroom apartment is 1900 dollars a month.

340,000 gets you this in Silverdale Wa.

.73 acre lot in Silverdale

Cheapest dwelling in the Silverdale Area With lot fees this place is as much as the average rent. All the other mobile homes/double wides are in over 55 communities or greater than 30 minutes out and time is something you can't buy. Commute time is important.

I put the borders out to about an hour from work.

You can this lovely place for 300,000.

Fixer upper

389,000 for this spacious home.

836 square feet

These are the best deals going here. None of them are a deal and they will all sell for more than asking. I left some outliers out because they were not worth even looking at, they needed too much work or they were over an hour away from work.

I was going to give him my travel trailer so he could live on it on a piece of property so he could save up and build later.
He pays his own health care, puts money in his TSP (The governments matching retirement plan up to 5%), no car payment and
no bills, but over half of his paycheck would go to finding any dwelling here.

Where you live is not the same as this place. They are building a large development not far from me (1/2 mile away) 9000 sq/ft lots. with new homes. Starting at 550,000. A set of apartments in the same area. 1 bedroom one bath starting a 2000 a month.

On a side note maybe I should try to go pick up the C4 Corvette in first listing I shared. Worth a shot at this point.

I am 50 and the risk of making some enemies or getting hit the ban hammer for a bit some of you old farts don't realize what is like out there for a young kid who is working hard. Some are actually just not crying. It is a legit problem. My kid's friends are around his age working hard in the trades at the local Navy Shipyards and Submarine bases lots of overtime, but it is still not enough money.

I cleared 180,000 last year 10,000 a month after taxes and savings/investments (and some of the 10,000 gets invested or put away for the kids so the can have a house someday) and this is without the 91,000 my wife makes. I just don't know how some people do it. My mortgage is 1889 a month(taxes and insurance included). All of my cars are paid for (well except for the truck I never drive). I mean you see the cars I drive a Malipoo, an old never in service Caprice of crap, a 2005 Buick and 25-year-old Trans Am. So you know I am not spending money on cars. My TSP is doing very well. I will make in retirement as much as if not more than I do now, but I am not blind to what is going on. I actually had it easier no other way to say it.

 

[JeffKeryk]

You got your reward .

No vacations, 6 or 7 days a week spending at least 2 hours a day. Work and care was my life.
I wouldn't change a thing. I have zero regrets.

 

[gfh77665]

These stories are all politicized clickbait gen z sob stories. If you want to feel sorry for yourself (ie, your generation) then sure, life is tough. It takes work.

Family of four here. Doing quite well. $123k a year salary, three cars in the driveway with under 100k miles on each. Have a camper we take out every third weekend. Refinanced our ~2700 sq ft, 50 year old ranch home in 2021. Have $85k to go on the note and could pay it off tomorrow if I wanted. Invested NW of >$900k towards retirement. Wife brought financially nothing into the marriage. Two littles and a dog. Homeschooling. Savings rate >$35% and 10% to the church. Fired our financial advisors last year because they had nothing to offer.

No, our kitchen doesn't have stone countertops and the bathrooms are outdated, but everything works.

Amen Bro. Many of the 20 and 30-somethings I work with are crybabies. They moan and groan about how expensive and how tough life is, then they "door dash" a single Coke from McDonalds and pay $10 total before getting into their new $65,000 truck and drive home yackking on their new $1000 I-phone.

When I was their age I literally drove $500 cars (some without A/C) over two decades and ate a sandwich sack lunch I packed at home daily for 20+ years. Oh, and I had a 10.5% mortgage rate from the 80's. I never whined about it. I built up from it.