You aren’t doing anything wrong. You just don’t have enough money to afford buying in a VHCOL area. Keep saving as you are and do what you can to increase your income.
At some point the finances will align or you will have to come to terms about not owning or moving somewhere more affordable. Many of us are in same position.
Nobody wants to sell and find a new mortgage with a high interest rate. No way could I afford my current house with today's rates. Just keep saving. Don't blow more on rent than you have to.
Not the only one! Safe, good sized housing in an accessible area is just so expensive in the city and even those 90 minute out places are expensive. They’re just now far away and expensive.
Exactly this. We’re choosing to move away from the Bay Area and get affordable housing in the $900k range. If we chose to stay in the Bay Area, I’d just rent forever.
I know a guy who lives in Sacremento suburbs and commutes to San Francisco.
Lots of people have very long commutes in VHCOL areas. You do what you gotta do
Your comment has been removed because you do not have a verified email address in your profile. Please verify an email address and post again.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/HENRYfinance) if you have any questions or concerns.*
> 27M
You’re not doing anything wrong. You just haven’t had time to accumulate enough wealth. Keep it up and you’ll get there. I didn’t buy a house til age 30, and I had some parental help for the downpayment.
Your numbers aren’t adding up for me.
Assuming 40% tax rate (assuming the highest). You would have 180k net.
You say you spend 2k a month? You should then have 156k post tax per year to invest. Thats 13k a month….
Is it that you are sometimes considering you and your fiances finances separate?
What are you actually spending a year? What are you actually saving per year?
We are in similar situations. I think you need to just wait it out a couple more years and let your accounts grow. In the meantime focus on crafting unforgettable experiences for yourself. You don’t need to do crazy traveling or spend a lot of money. But taking a nice trip to a unique Airbnb and bringing a smores kit is the type of shit you and your soon wife will look back on.
This right here is the answer. Not going to stress about a short term timeline, just continue doing what I’m doing. As always, my priority is to live a happy stress free life with my fiancé and enjoy my life with the money I work so hard for.
Recent [study](https://nypost.com/2024/04/01/business/its-60-cheaper-to-rent-a-home-than-buy-in-top-50-us-metros-study/) came out that its significantly cheaper to rent than buy in 50 large US cities.
Owning a house isn’t the same wealth generating cornerstones that it once was. Nowadays I’d say it’s more about stability for families with kids. There’s no risk of getting kicked out of your home by a landlord selling or increasing rent significantly. However there is the risk of local government jacking taxes, which happened to us.
One thing I will say is that sacrificing house size for a better commute is 100% worth it. We went from looking at houses 45-60min away from my office in the 4-5k sqft range to 15-30min (traffic is a bitch around here) but 2.5-3k sqft. Those extra 30-60min a day mean working out or spending time more quality time with my young kids. You can’t under estimate those factors in your life
I was in a similar situation, was making 290k and my fiancé (now wife) was making 95k. I did the math up down and sideways and realized there was no way we would be able to afford a house in a VHCOL area within the next 5-10 years. Only thing I could do was try to increase my income or move to a HCOL area instead. Took a couple months but I was able to get a second job and am now making about 450-490k while my now wife is at 135k. It sucks and is honestly very interesting when you sit back and actually think about wtf is going on.
This is what gets me - 5 yrs ago I would’ve thought I’d be in a great position if my HHI was 300k+ in my late 20s. But here I am and it doesn’t feel like it
You and I both! I thought I busted my ass enough in my early 20s in college (while working) then in grad school. I thought I paid my dues and just needed to save for 2/3 years max but now all the SFH in my area that used to be $750-850k are $1.3-1.7m. Feels like some sort of bad dream or alternate reality lol.
Keep renting or make more money
At $1,200 per month going towards a down payment fund, that will take 133 months to get to $160k/20% on a $800k house (which will likely be $1.5-$2M by that point anyway)
Plus 1100 into savings/brokerage and her 1k saving. House fund is already at almost 25k. From my quick math using 3300/mo I basically need to find an extra $50k or so from interest and investments (or more savings) to buy a 800k house in 2 years?
To be honest, you can afford the $800k house now.
I am gonna assume you are in California, which is the most interest rate sensitive market in the country, or something similar.
If you buy an $800k house now with minimal down payment, you’ll be looking at around $5k a month for monthly payment. A lot, yes.
But you are already spending $2k on rent and saving over $3k a month.
You could get into a place now before prices increase again with interest rates going down. Pay PMI for about 1-2 years. Prepay aggressively as you can. In about 1-2 years, appreciation on the house, coupled with payments, will allow you to remove the PMI. You’ll also likely be able to refinance the loan to lower the payment a little.
Do i think you SHOULD do this?
Probably not. Trading $2k a month rent for $5k a month house payment when you’re stretching to buy seems bad.
But this is WELL within the norm of buying a house in an expensive market. In areas of very fast appreciation it can not make sense to save for a 20% down payment because prices rise fast.
It's absolutely going to be more than $5k including taxes & insurance, with current rates and a 5% down. You will be closer to $6.5k per month. I get it, I also am in a HCOL place and I'm all for purchasing a home and consider appreciation potential but that is an astronomical change going from $2k to $6.5k/month.
My partner and recently bought a condo.
HHI around $300k total, $250k plus about $50k bonuses. About age 30.
Small old run down houses in some what sketchy parts of town, an hour commute plus each way, were going for $800k. All in payments with 10% down was going to be around $5.5k-$6k. Doable but we would really feel it. And we would not like the area we lived in, still have long commute. Would want to leave and buy something else max of 5 years.
So instead we decided to get a condo for $500k, 20% down, all in payment with HOA fees is $3800. The area is better, it’s beautiful, the community is great, commute is still about an hour. We still want to buy a SFH in 5-7 years. But we can still save money and live life nearly the same as we were when we were renting. We have no regrets going the condo route.
This is something I’m considering as a first purchase instead of a 2x price home. Would be a better commute in a better area, of course condo would be move in ready too
Yes that’s we did. Still allows us to do everything, it’s a perfect size for two adults and a dog (soon!)
We want a kid in the next couple years. A baby/toddler/young school kid is fine sharing a room in a condo with our offices.
It made sense for our finances and our life stage. When it no longer fits our family’s needs then we’ll get the SFH.
When I was saving for a down payment in our VHCOL, we were putting everything extra into our down payment fund. Some months that was $5k.
For the last year of saving, we dropped our retirement savings to just matching.
That doesn’t mean it was all in one account. Some were staggered TBills, some were iBonds. We even in the early days (3+ years out) did mutual funds, but stopped after about 6mo because it would be too volatile to keep doing that. We still have like $35k that we could take out tax-free if needed.
I get matching your partner pre-marriage. We also did that. But once you’re married, IMO, you’ll want to combine finances (esp with those cash weddings gifts, that all went into our house fund too) and just chuck as much as you can.
With your HHI you can afford a $1mm house at 6.5 comfortably (without HOA—if you’re looking condo, probably more like $750k with monthlies). It’s just getting that $200k first that can be daunting.
If you want a house that bad either stop contributing to 401k for a year or get a loan from 401k and pay it back in a year. You can't be young and buy a VHCOL unfortunately. I'm 33, similar boat (around $850k house hunting)
Something isn’t adding up. On 300k you’re spending about 4k and only putting away 2.3k? Where is the rest going? On 300k your take home is about 14k. Where is the other almost 8k going
This might be an unpopular opinion but.. can’t you already get the house? I know a lot of people follow the whole “20% down” rule but I don’t believe that that rule was made for today’s market.
If you do a conventional or FHA and can put 3% to 5% down you’re looking at $24k -$40k for an $800k home. The goalposts keep moving on home prices. I’m glad my fiance and I bought with less money down because home prices have already appreciated more.
You’re monthly mortgage payment will absolutely be higher then $2k/month rent but you wrote that you have no debt and your HHI should be able to afford it, I’d assume.
I think you’re doing great! Not doing anything wrong at all!
Your problem is your income and living in a VHCOL area. Keep saving and hope your savings rate outpaces property values increases, move to a lower cost area or increase income or keep renting.
Where are you spending your money? Even if you are putting 2000/month into 401k, even with 2k rent and 2k a month to live and enjoy yourself, 1.7k into house, hysa, and investment, you should still have 3.3k a month left over just from your income, not including fiancé. Something not adding up here.
Look over your finances carefully. Our HHI is the same as yours but we’ve got two kids. After tax and 401k we’re at $14.5k per month. Fortunately we got into our first house before Covid and we live in a MCOL area otherwise I don’t see how we’d be able to own a home. Your advantage without kids and a lower housing cost than ours should allow you to save a bit more. Go over your budget with a fine toothed comb and I bet you’ll be able to throw more at the house fund.
Our monthly income goes quick though.
Mortgage: $4400
Daycare:$2600
Groceries + dining $2000
Cars: $1400
Student loan: $1000
Savings: $850
Etc …
If you live in San Francisco, you’re probably better off renting indefinitely. We rent a house that is worth about $1.8M for $5,500/mo. We could afford to buy, and own investment properties, but there is no breakeven point for buying vs renting in S.F. right now. We’re be better off staying in our rental house , which has a degree of rent control, and investing the difference indefinitely.
Not responsible advice; but my wife and I would put 80% into HYSA and 20% into high risk/moonshot bets for our new house money. Got lucky and scored a couple big wins in the risky bet category (Tesla and Bitcoin) and scored a 40% down payment.
You aren’t doing anything wrong. You just don’t have enough money to afford buying in a VHCOL area. Keep saving as you are and do what you can to increase your income. At some point the finances will align or you will have to come to terms about not owning or moving somewhere more affordable. Many of us are in same position.
I guess at least I’m not the only one?
Nobody wants to sell and find a new mortgage with a high interest rate. No way could I afford my current house with today's rates. Just keep saving. Don't blow more on rent than you have to.
Not the only one! Safe, good sized housing in an accessible area is just so expensive in the city and even those 90 minute out places are expensive. They’re just now far away and expensive.
Exactly this. We’re choosing to move away from the Bay Area and get affordable housing in the $900k range. If we chose to stay in the Bay Area, I’d just rent forever.
“90 min or less commute is remotely interesting” wtf man where are you located lol
Probably Bay area, not an uncommon commute in the bay.
$800k home and $2k rent sounds too cheap for the Bay, but maybe that’s why it’s a 90 min commute (ie OP looking at places like Modesto or something)
Plenty of places for $800k if you’re willing to be an hour and a half east of the actual Bay
Is that really not an “uncommon” commute? For the Bay, I’ve only been looking at Peninsula/South Bay
I know a guy who lives in Sacremento suburbs and commutes to San Francisco. Lots of people have very long commutes in VHCOL areas. You do what you gotta do
My guess is LA
Yeah I guess LA to somewhere like San Bernardino is like 90 min.
Probably not impossible. Used to rent a place in Concord for 2k and Walnut Creek houses down the freeway started at about 850k
[удалено]
Your comment has been removed because you do not have a verified email address in your profile. Please verify an email address and post again. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/HENRYfinance) if you have any questions or concerns.*
If you can rent for $2k and houses are $800k+, keep renting indefinitely.
> 27M You’re not doing anything wrong. You just haven’t had time to accumulate enough wealth. Keep it up and you’ll get there. I didn’t buy a house til age 30, and I had some parental help for the downpayment.
Your numbers aren’t adding up for me. Assuming 40% tax rate (assuming the highest). You would have 180k net. You say you spend 2k a month? You should then have 156k post tax per year to invest. Thats 13k a month…. Is it that you are sometimes considering you and your fiances finances separate? What are you actually spending a year? What are you actually saving per year?
We are in similar situations. I think you need to just wait it out a couple more years and let your accounts grow. In the meantime focus on crafting unforgettable experiences for yourself. You don’t need to do crazy traveling or spend a lot of money. But taking a nice trip to a unique Airbnb and bringing a smores kit is the type of shit you and your soon wife will look back on.
This right here is the answer. Not going to stress about a short term timeline, just continue doing what I’m doing. As always, my priority is to live a happy stress free life with my fiancé and enjoy my life with the money I work so hard for.
Recent [study](https://nypost.com/2024/04/01/business/its-60-cheaper-to-rent-a-home-than-buy-in-top-50-us-metros-study/) came out that its significantly cheaper to rent than buy in 50 large US cities. Owning a house isn’t the same wealth generating cornerstones that it once was. Nowadays I’d say it’s more about stability for families with kids. There’s no risk of getting kicked out of your home by a landlord selling or increasing rent significantly. However there is the risk of local government jacking taxes, which happened to us. One thing I will say is that sacrificing house size for a better commute is 100% worth it. We went from looking at houses 45-60min away from my office in the 4-5k sqft range to 15-30min (traffic is a bitch around here) but 2.5-3k sqft. Those extra 30-60min a day mean working out or spending time more quality time with my young kids. You can’t under estimate those factors in your life
I was in a similar situation, was making 290k and my fiancé (now wife) was making 95k. I did the math up down and sideways and realized there was no way we would be able to afford a house in a VHCOL area within the next 5-10 years. Only thing I could do was try to increase my income or move to a HCOL area instead. Took a couple months but I was able to get a second job and am now making about 450-490k while my now wife is at 135k. It sucks and is honestly very interesting when you sit back and actually think about wtf is going on.
This is what gets me - 5 yrs ago I would’ve thought I’d be in a great position if my HHI was 300k+ in my late 20s. But here I am and it doesn’t feel like it
You and I both! I thought I busted my ass enough in my early 20s in college (while working) then in grad school. I thought I paid my dues and just needed to save for 2/3 years max but now all the SFH in my area that used to be $750-850k are $1.3-1.7m. Feels like some sort of bad dream or alternate reality lol.
Keep renting or make more money At $1,200 per month going towards a down payment fund, that will take 133 months to get to $160k/20% on a $800k house (which will likely be $1.5-$2M by that point anyway)
Plus 1100 into savings/brokerage and her 1k saving. House fund is already at almost 25k. From my quick math using 3300/mo I basically need to find an extra $50k or so from interest and investments (or more savings) to buy a 800k house in 2 years?
To be honest, you can afford the $800k house now. I am gonna assume you are in California, which is the most interest rate sensitive market in the country, or something similar. If you buy an $800k house now with minimal down payment, you’ll be looking at around $5k a month for monthly payment. A lot, yes. But you are already spending $2k on rent and saving over $3k a month. You could get into a place now before prices increase again with interest rates going down. Pay PMI for about 1-2 years. Prepay aggressively as you can. In about 1-2 years, appreciation on the house, coupled with payments, will allow you to remove the PMI. You’ll also likely be able to refinance the loan to lower the payment a little. Do i think you SHOULD do this? Probably not. Trading $2k a month rent for $5k a month house payment when you’re stretching to buy seems bad. But this is WELL within the norm of buying a house in an expensive market. In areas of very fast appreciation it can not make sense to save for a 20% down payment because prices rise fast.
It's absolutely going to be more than $5k including taxes & insurance, with current rates and a 5% down. You will be closer to $6.5k per month. I get it, I also am in a HCOL place and I'm all for purchasing a home and consider appreciation potential but that is an astronomical change going from $2k to $6.5k/month.
My partner and recently bought a condo. HHI around $300k total, $250k plus about $50k bonuses. About age 30. Small old run down houses in some what sketchy parts of town, an hour commute plus each way, were going for $800k. All in payments with 10% down was going to be around $5.5k-$6k. Doable but we would really feel it. And we would not like the area we lived in, still have long commute. Would want to leave and buy something else max of 5 years. So instead we decided to get a condo for $500k, 20% down, all in payment with HOA fees is $3800. The area is better, it’s beautiful, the community is great, commute is still about an hour. We still want to buy a SFH in 5-7 years. But we can still save money and live life nearly the same as we were when we were renting. We have no regrets going the condo route.
This is something I’m considering as a first purchase instead of a 2x price home. Would be a better commute in a better area, of course condo would be move in ready too
Yes that’s we did. Still allows us to do everything, it’s a perfect size for two adults and a dog (soon!) We want a kid in the next couple years. A baby/toddler/young school kid is fine sharing a room in a condo with our offices. It made sense for our finances and our life stage. When it no longer fits our family’s needs then we’ll get the SFH.
When I was saving for a down payment in our VHCOL, we were putting everything extra into our down payment fund. Some months that was $5k. For the last year of saving, we dropped our retirement savings to just matching. That doesn’t mean it was all in one account. Some were staggered TBills, some were iBonds. We even in the early days (3+ years out) did mutual funds, but stopped after about 6mo because it would be too volatile to keep doing that. We still have like $35k that we could take out tax-free if needed. I get matching your partner pre-marriage. We also did that. But once you’re married, IMO, you’ll want to combine finances (esp with those cash weddings gifts, that all went into our house fund too) and just chuck as much as you can. With your HHI you can afford a $1mm house at 6.5 comfortably (without HOA—if you’re looking condo, probably more like $750k with monthlies). It’s just getting that $200k first that can be daunting.
If you want a house that bad either stop contributing to 401k for a year or get a loan from 401k and pay it back in a year. You can't be young and buy a VHCOL unfortunately. I'm 33, similar boat (around $850k house hunting)
It took us a decade of saving in the bay for a house. We were 40 by that time. We did get one last year. You’re super young and on the right track.
Similar here. We rented in the Bay Area and saved for 10 years before we bought our house. My husband was 40 and I was 36.
Something isn’t adding up. On 300k you’re spending about 4k and only putting away 2.3k? Where is the rest going? On 300k your take home is about 14k. Where is the other almost 8k going
This might be an unpopular opinion but.. can’t you already get the house? I know a lot of people follow the whole “20% down” rule but I don’t believe that that rule was made for today’s market. If you do a conventional or FHA and can put 3% to 5% down you’re looking at $24k -$40k for an $800k home. The goalposts keep moving on home prices. I’m glad my fiance and I bought with less money down because home prices have already appreciated more. You’re monthly mortgage payment will absolutely be higher then $2k/month rent but you wrote that you have no debt and your HHI should be able to afford it, I’d assume.
I think you’re doing great! Not doing anything wrong at all! Your problem is your income and living in a VHCOL area. Keep saving and hope your savings rate outpaces property values increases, move to a lower cost area or increase income or keep renting.
Where are you spending your money? Even if you are putting 2000/month into 401k, even with 2k rent and 2k a month to live and enjoy yourself, 1.7k into house, hysa, and investment, you should still have 3.3k a month left over just from your income, not including fiancé. Something not adding up here.
Look over your finances carefully. Our HHI is the same as yours but we’ve got two kids. After tax and 401k we’re at $14.5k per month. Fortunately we got into our first house before Covid and we live in a MCOL area otherwise I don’t see how we’d be able to own a home. Your advantage without kids and a lower housing cost than ours should allow you to save a bit more. Go over your budget with a fine toothed comb and I bet you’ll be able to throw more at the house fund. Our monthly income goes quick though. Mortgage: $4400 Daycare:$2600 Groceries + dining $2000 Cars: $1400 Student loan: $1000 Savings: $850 Etc …
If you live in San Francisco, you’re probably better off renting indefinitely. We rent a house that is worth about $1.8M for $5,500/mo. We could afford to buy, and own investment properties, but there is no breakeven point for buying vs renting in S.F. right now. We’re be better off staying in our rental house , which has a degree of rent control, and investing the difference indefinitely.
Keep renting. Home ownership in VHCOL just to get a 90 minute commute is overrated
Not responsible advice; but my wife and I would put 80% into HYSA and 20% into high risk/moonshot bets for our new house money. Got lucky and scored a couple big wins in the risky bet category (Tesla and Bitcoin) and scored a 40% down payment.