2022 Real Estate Observations (Billerica, Marlborough: underwater, payment, county)

[porterhouse]

Things have slowed a bit in Camberville. There seems to be more on the market and I am seeing more price reductions (though mostly on things that were not priced appropriately to begin with). While the market is still robust, it is not accelerating as quickly as it was.

What is surprising to me is that people are still waiving inspections in their desperation to secure a property. We have friends who just waived inspection on a 50 year old vacation home in northern New England that they hope is move in ready and have not budgeted to do significant work to (crazy IMO).

[newenglandgal123]

Originally Posted by simplexsimon

If the family isn't going into debt by spending more than is available, what is the problem?

Check out MtPlesantDream's calculations and you'll see what the more accurate math/deductions leaves for take home pay.

[msRB311]

I'm not saying no one making 300k could make it work with a 1M home but I find it hard to believe that's the norm.

I honestly don't think 300k HHI is that great in the Boston area these days. There are certainly people making less but many making more as well. I dont think the majority of people with 300k HHI are buying 1M homes. Maybe some have had no choice lately?

[simplexsimon]

Originally Posted by MtPleasantDream

Withholding
Salary
$300,000
Federal Income Tax
- $74,221
State Income Tax
- $14,900
Social Security
- $9,114
Medicare
- $5,250
FLI (Family Leave Insurance)
- $506
Total tax
- $103,990
Net pay
* $196,010
Marginal tax rate
42.4%
Average tax rate
34.7%

You're right I didn't include FICA, which reduces $102k discretionary cash in my previous scenario to about $80k, or $6,700/month.

There's still levers to pull for this family.

Your example assumes no deductions, correct? And is that for a single filer or married filing jointly?

$45k 401k savings and $24k standard deduction. If this family has two kids it's $4k in child tax credits.

$300,000 income
-$45,000 401K savings
-$6,000 health insurance premiums
-$24,000 standard deduction

$225,000 taxable income, $40k of federal tax, $36k after child tax credits. Far off from your $74k figure.

[simplexsimon]

Originally Posted by newenglandgal123

Check out MtPlesantDream's calculations and you'll see what the more accurate math/deductions leaves for take home pay.

He's assuming single filer on $300k taxable income.

I'm assuming $300k gross income married filing jointly.

Very different.

[msRB311]

Bottom line is that I don't think it's necessarily a good thing if people with 300k HHI are paying for 1M homes. I'm sure plenty of them wished they could have found a better home for less but they most likely couldn't or they were trying to keep up with the Jonses'. They were maybe lured into a town for the schools as well. With normalizing this prices will just keep on going up.

[simplexsimon]

Originally Posted by msRB311

I'm not saying no one making 300k could make it work with a 1M home but I find it hard to believe that's the norm.

I honestly don't think 300k HHI is that great in the Boston area these days. There are certainly people making less but many making more as well. I dont think the majority of people with 300k HHI are buying 1M homes. Maybe some have had no choice lately?

I don't quite understand this. Are you saying the average buyer of $1M homes is a family making more or less than $300k?

If I compare median home price to median household income and how that might extrapolate for different price points in MA, it makes sense but perhaps there is not as linear a relationship in reality and it'd be interesting to see that data.

[msRB311]

Originally Posted by simplexsimon

I don't quite understand this. Are you saying the average buyer of $1M homes is a family making more or less than $300k?

I would think more.

[bricka]

if anything the past couple years made me realize that any rule of thumb for housing affordability that doesn't include monthly total house expense (PITI) is not the best.

a $1m house 9 months ago was literally twice as affordable as it is today.

[robr2]

Originally Posted by msRB311

Bottom line is that I don't think it's necessarily a good thing if people with 300k HHI are paying for 1M homes. I'm sure plenty of them wished they could have found a better home for less but they most likely couldn't or they were trying to keep up with the Jonses'. They were maybe lured into a town for the schools as well. With normalizing this prices will just keep on going up.

Not every million dollar home buyer has an $800K mortgage.