2022 Real Estate Observations (trendy, discount, companies)

[charolastra00]

Most people -even the most frugal - don't have the ability to save 300K off of salary alone, but there are definitely some feasible options for amassing a fair bit of wealth through housing, especially for someone who might have been able to buy from 2009-2015 or so.



For instance, it's common for some people who have family locally to live at home. A dear friend/former coworker was first generation Italian-American (where I commonly see this in my circles) and both he and his brother lived with their parents for years solely with the plan to sock away as much money as possible while also helping around the house for the family. Rather than paying a landlord rent, the family decided to sacrifice to build family wealth. He's not yet 30 and recently bought a condo in Brooklyn after years of working in nonprofits with a nonprofit (read: <60K) salary with 20% down thanks to saving 8 years of rent and utilities, plus any additional savings and a few side gigs. His older brother went into IT and was making 6 figures by 25, so when he got married and moved out at 31, he and his wife were able to afford a house *way* beyond what their salaries should have allowed them to buy thanks to a huge down payment. They're living off of his wife's teacher salary right now while he stays home with their kids, if that's any indication!


Or there are folks like my brother and SIL. They lived rent free for a year and half with their in-laws, used that for a downpayment on a starter home, had a lot of family sweat equity and expertise to renovate, and were in a hot market. When they sold their house, they had 5 years of equity plus sold for 125K over what they bought. It's not "savings" as in money in the bank, but that all went into their next house all while also putting two kids through daycare.

Most people don't have or don't choose those kinds of opportunities so it's not super common (and certainly not something I was ever able to take advantage of!), but I'm sure there are more people out there like this than we think. Most people just don't talk about it - I only know those two vignettes because of my closeness to both parties.

[BostonMike7]

Potentially, if someone started saving by aggressively buying stocks back in 2009-2010, and kept doing that up until late last year, they probably could have saved/earned over $300K by now....assuming they had enough discretionary income to invest in the first place

Of course hindsight is 20/20, but I'm sure there are some folks that did such a thing.


EDIT: I'm making some assumptions on that above statement and trying to not have it come across as a "It's so easy why doesn't everyone do it" sort of statement.

[simplexsimon]

Originally Posted by BostonMike7

I had to go back to look. Fairway Independent Mortgage Corp and Crosscountry Mortgage Inc were the most recent since interest rates exploded. Both were under 8% down on 700-800K homes within the last month.

Interesting, thanks. What's the worst that can happen? Just don't lose your job.

[BostonMike7]

Originally Posted by simplexsimon

Interesting, thanks. What's the worst that can happen? Just don't lose your job.

I actually met the newest neighbor last night. He's a family lawyer with his own practice. I think they will be fine.

[msRB311]

Originally Posted by id77

I would hope that most if not all people saving up $300k for a down payment aren't leaving it in cash in a savings account or even a CD ladder. Those don't even earn enough to offset inflation.

What would you suggest they put them in?

[simplexsimon]

Originally Posted by BostonMike7

I actually met the newest neighbor last night. He's a family lawyer with his own practice. I think they will be fine.

Yeah, I was being serious. There isn't really anything *wrong* with doing small down payments. It just costs the buyer money.

[yesmaybe]

Originally Posted by simplexsimon

Just don't lose your job.

That's the rub.

It's a giant PITA to sell a place that's underwater... and if you get foreclosed on, you get locked out of the mortgage market for 7 years. Which means living in an apartment. Not to mention foreclosure is expensive.

[id77]

Originally Posted by msRB311

What would you suggest they put them in?

Mike touched on it already with stocks. The general rule of thumb is leave enough for emergency/short term (less than one year) needs in cash/CD, invest the rest.

Building up $300k in cash with an effective negative annual return is swimming upstream, but building up $300k through investments that return 7-10% annually is not. Risk is involved of course, but no pain no gain. Even in the current market, the S&P is still up from October 2020 valuations.

[WestieWhitie]

Originally Posted by BostonMike7

Potentially, if someone started saving by aggressively buying stocks back in 2009-2010, and kept doing that up until late last year, they probably could have saved/earned over $300K by now....assuming they had enough discretionary income to invest in the first place

Of course hindsight is 20/20, but I'm sure there are some folks that did such a thing.


EDIT: I'm making some assumptions on that above statement and trying to not have it come across as a "It's so easy why doesn't everyone do it" sort of statement.

I mean, it is easy given the absolutely crazy stock market run-up since the early 2000s, those who didn't blow every last penny partying should be sitting on $300K at the very least by now, and that's not even counting their 401K.

[msRB311]

I think it's hard to know which stocks to put it in