Could you afford to buy your own home now?

[TipsyTraveler]

Nope. Prices are up 40% over what we paid just under two years ago.

 

[Canadisney Fly]

What list are you looking at?

You are correct, I meant to say "cost of housing", not cost of living. For housing, Vancouver is third in two categories.

This survey compared housing unaffordability by examining median home prices and household incomes in key markets.

https://vancouversun.com/news/local-news/vancouver-third-least-affordable-city-demographia

And a recent survey by Capital on Tap found that Vancouver was also the third most expensive city to build a house:

https://www.bcbusiness.ca/Vancouver...e-city-in-the-world-to-build-a-house-in-great

 

[kdonnel]

Bought for $387,500 back in 2005. In 2009 it would have sold for $180,000. Similar homes in the neighborhood have recently sold for $600k+ so the Zillow Zestimate of $665,000 might actually be realistic.

Our monthly pay is about 180% of what it was in 2005. We would qualify for the mortgage needed but I would not buy a $600k home on our monthly take home.

 

[SirDuff]

You are correct, I meant to say "cost of housing", not cost of living. For housing, Vancouver is third in two categories.

This survey compared housing unaffordability by examining median home prices and household incomes in key markets.
View attachment 664569
https://vancouversun.com/news/local-news/vancouver-third-least-affordable-city-demographia

And a recent survey by Capital on Tap found that Vancouver was also the third most expensive city to build a house:

https://www.bcbusiness.ca/Vancouver...e-city-in-the-world-to-build-a-house-in-great

View attachment 664572

Ah, that makes more sense. I know that my housing is more expensive than my friend’s in Vancouver but a smaller percentage of my salary (I live in Switzerland - very high overall cost of living).

ETA - though the first survey is seriously limited with only 92 cities - none of which are in Europe, Africa, or the Mid-East (places that often have many countries in the most expensive cities lists). And the second was even smaller with only 50 countries (though seems to cover more continents).

 

[EACarlson]

I could afford to buy the home I live in now. I just got Pre-approved for $225 on Friday and the assessed value of the house I've been renting is $89k, comps in the neighborhood are about $180k. There are a couple of things in my current house that I would never have in a house I own.

When did this happen with not being able to remove the PMI? PMI, like GAP insurance, is supposed to protect the bank from losses with higher risk borrowers within a high liability space on 20% loan to value, there is no sound justification for in within that 20% space so it's exploitative and predatory to prevent people from dropping it. If the laws changed to prevent dropping it then it's also really unethical that this went through because dropping it means people need to pay closing costs to exit the system.. WTH?

Almost all loans that are written that include PMI have it written into the life of the loan. In order to not have PMI you have to refinance into a loan that doesn't include it. It's not a law change it's a policy change that the contracts no longer include an automatic mechanism to remove it when the LTV gets below 80%. How much extra money they make from people that forget about it or don't know that they shouldn't be paying for it, I'm sure it's a lot.

 

[Mackenzie Click-Mickelson]

Almost all loans that are written that include PMI have it written into the life of the loan. In order to not have PMI you have to refinance into a loan that doesn't include it. It's not a law change it's a policy change that the contracts no longer include an automatic mechanism to remove it when the LTV gets below 80%.

That's not how our loan was written. Ours was maturation date or refinance not the life of the loan.

ETA: like an FHA loan would have PMI.

 

[aboveH20]

I liked your question and have enjoyed reading the answers.

Unfortunately an increase in house price means increase in taxes, too. Something I always have to remind myself about when I have the urge to move.

But, to answer your question, yes.

 

[Mackenzie Click-Mickelson]

When did this happen with not being able to remove the PMI? PMI, like GAP insurance, is supposed to protect the bank from losses with higher risk borrowers within a high liability space on 20% loan to value, there is no sound justification for in within that 20% space so it's exploitative and predatory to prevent people from dropping it. If the laws changed to prevent dropping it then it's also really unethical that this went through because dropping it means people need to pay closing costs to exit the system.. WTH?

I went through our original paperwork and neither my husband nor I could find it but that was disclosed to us during closing and it could have been disclosed to us incorrectly; we had a conventional loan but honestly we could have just been told incorrectly it's just what we've thought since the original loan was taken out in 2014. We def. didn't have it where it was the life of the loan. We weren't considered high risk borrowers and our loan was not considered high risk but the PMI was assessed due to the low down payment percentage. Our down payment looking at it was just over 5%. At that time our neighborhood the developer and builders were perfectly fine with 5%-10% down payment and assumedly are still at least close to that.

However, we did notice that the interest rate I mentioned was incorrect. It looks like the 4.50% was the first interest rate when the new build was starting and we rate locked at 4.25% within 45 days of our closing date (2014) when the house was scheduled to be complete. When we refinanced the first time in 2017 we got a new rate of 4.125% so hardly much reduction (that part I remember correctly) but the remainder of the PMI was gone.

IDK when I originally made the comment it was just a thought to mention about looking at refinancing due to values of homes. Much in these housing stuff does depend on a person's particular loan admittedly. When the other poster refinanced to get 7% by paying 10K to get that it wasn't mentioned when that happened. My husband was just looking around and said from what he could find it hasn't been 7% until now (and ones are 5-6/7% at the moment) for about 20 years.

 

[disykat]

Of course because I would also own a home that would sell for the same amount.

I actually mentioned that in my OP since we own outright too, but it would cost money (closing costs) so doing that would be ridiculous.

 

[a1tinkfans]

Yes…

 

[Dano the Pirate]

If you are in a home for 20 or more years, no, you could not afford to buy your current home today.
wages have not kept pace with the cost of housing.

 

[JBRB828]

If you are in a home for 20 or more years, no, you could not afford to buy your current home today.
wages have not kept pace with the cost of housing.

That's not true at all for some. We could and we're retired.

 

[Dano the Pirate]

Good for you!

 

[slo]

Yes
Our house is a moderate size house.
We could have afforded bigger and better 18 years ago, but that didn’t interest us. The location of our house and the lot size is what sold us. It’s amazing how much we can sell our house for now, but it would still be affordable for us.

 

[tweetykl]

No, we have owned it for 9 years. It has gone from $335k to $870k. It’s just crazy in the Seattle area.

 

[Pea-n-Me]

I went through our original paperwork and neither my husband nor I could find it but that was disclosed to us during closing and it could have been disclosed to us incorrectly; we had a conventional loan but honestly we could have just been told incorrectly it's just what we've thought since the original loan was taken out in 2014. We def. didn't have it where it was the life of the loan. We weren't considered high risk borrowers and our loan was not considered high risk but the PMI was assessed due to the low down payment percentage. Our down payment looking at it was just over 5%. At that time our neighborhood the developer and builders were perfectly fine with 5%-10% down payment and assumedly are still at least close to that.

However, we did notice that the interest rate I mentioned was incorrect. It looks like the 4.50% was the first interest rate when the new build was starting and we rate locked at 4.25% within 45 days of our closing date (2014) when the house was scheduled to be complete. When we refinanced the first time in 2017 we got a new rate of 4.125% so hardly much reduction (that part I remember correctly) but the remainder of the PMI was gone.

IDK when I originally made the comment it was just a thought to mention about looking at refinancing due to values of homes. Much in these housing stuff does depend on a person's particular loan admittedly. When the other poster refinanced to get 7% by paying 10K to get that it wasn't mentioned when that happened. My husband was just looking around and said from what he could find it hasn't been 7% until now (and ones are 5-6/7% at the moment) for about 20 years.

Interest rates are now up around 5%, so that might increase their payment if they refinance. They could be better off just doing what they’re doing.

We had actually lost value the first time we refinanced, so we had to cough up an additional $10K just to get to a 7% refi.

I am that poster.

We originally bought our home in 1989. Interest rates were ~ 10.5% at that time, but ours was 11.5% because we put less than 20% down. What was happening at that time was that home values had doubled in our area in a relatively short time (several years). We were young and trying hard to get into something affordable before values got beyond our reach. (Friends of ours who were able to buy earlier got into homes that were half the cost of ours.) Even though our mortgage amount was relatively low by today’s standards in our area, we were paying a ton of interest!

We were several years into it when interest rates lowered to around 7.5%, so probably around 1993. Happy to finally get that lowered with a new loan, but we were disappointed to learn that values had dropped (or should I say the crunch had leveled off so to speak), so that we had to cough up that cash in order to refinance, which was tough for us then. (You get a new house you have things to purchase, fix and upgrade, and you want to try to rebuild your savings, etc.) We got it done and we were happy to get rid of the PMI, though. Later we refinanced to 5% and the last time was 3.5%. Taking advantage of lower interest rates is a beautiful thing!

I feel like rates going above 5% from how low they were just a short time ago (2.9-3.9%) will really impact buyers today, especially where home values are already astronomic and inflation has soared. Something will probably have to give in order for people to afford to get in homes. My guess (and take it fwiw) is that home values may have to decrease. Time will tell.

For my kids who are mid-20s this is all very daunting. Despite getting started in careers and trying to save, trying to afford a $600K home is nuts. Likely they will try to find something more affordable and plan on getting busy doing cosmetics themselves or what have you, if they want to stay in this area. Even for us to think about moving or downsizing at some point, it’s, as others have said, sort of a wash. In order to get something decent you still have to pay around the same amount, but it costs a lot in realtor fees and moving, etc.

 

[disykat]

It's interesting to see a West Coast theme for many of us (obviously not all) that wouldn't be able to afford our own homes. I have known several families that have moved away from OR, WA, and CA because they can't get into the housing market.

 

[Kestryl]

I am in Tennessee- I think technically we would be able to afford our current home if we were to buy it now vs three years ago, but it would have really sucked. I probably would have cut down to a much smaller place, or just rented. (Not that renting is cheaper here, necessarily, but I may not have been able to stomach the buy-in cost.)

Our county just did reappraisals, and ours went up 20%. But that’s low for the market value- a nearby home that’s about ours in age and half in size sold for 40% more than we paid three years ago.

 

[DawnM]

Yes, but the house we sold has gone up considerably as well.
Two houses ago we lived in a 1400 sq. ft. house in SoCal. We bought it for $250k and my parents thought we were crazy. It is now Zillow priced at $1.2M. Insane.

 

[GreatLakes]

If you are in a home for 20 or more years, no, you could not afford to buy your current home today.
wages have not kept pace with the cost of housing.

That depends entirely on your job and how many promotions/moves you've had since. My house is worth about 30% more than I paid for it (I bought pre-2008 crash) but I'm making par more than 30% more than I was making then without factoring in my wife who I hasn't yet met when I bought this house.