insert teeth-gnashing here

[vsp]

After reviewing my options, my finances and the realities of housing costs in southeastern PA, I have one question remaining:

How the hell can _anyone_ afford to buy a house?

A two-story colonial just popped up in my old neighborhood for $250K -- actually reasonable compared to most housing prices in suburban Philly. I had some interest until I fed the numbers into Freddie Mac's calculator; the end result was a likely mortgage payment + taxes + insurance + PMI combo of $1800 a month. And that's BEFORE figuring in higher utility bills, maintenance costs, school taxes and other facts of life.

That's over DOUBLE what we're paying now as renters. As much as I'd like to stop feeding the rent monster, that's just crazy to consider on a combined $70K income. Then I have to figure in that we're thinking about kids at some point, a whole new bundle of expenses on top of house-ownership costs...

About the only affordable option would be to slice my hopes in half and look into a low-to-mid townhouse... but the problem there is that townhouse life doesn't really present any advantages over apartment life. It has all the problems of apartment living -- limited parking, neighbor problems, noise complaints, privacy issues, increased fire hazards -- but YOU get to pay all the taxes and the maintenance.

I'm struggling with the concept of why I should pay $10K+ up front and a higher monthly bill than I pay now for the _exact same living environment_ we have now, probably worse given what I know of the closest affordable townhouse community, hoping that it'll be worth what we paid for it a few years down the road and that we can pawn it off on some other first-time owner.

Time to start playing Powerball.

[BrianR]

Have you considered moving?

Buy a Levittowner in Bensalem and you pay <>$90k...that figures into a mortgage of around $600...plus PMI and whatever else.

Figure $1200 complete with taxes, insurance, sewer and trash collection included.

That's a lot better than $1800.

My house is only worth about $35k. I can buy it and have a mortgage of around $500 over a 15 year period.

But the commute from here would cost too much and kill your car pretty fast.

Brian

[jdbutler]

Try the real estate foreclosure websites for your area. Try the federal auciton sites. The banks do not like to hold on to property as they produce no income or interest. Pick the worst house in the best area and put a little sweat equity into it. You can find some gems if your willing to do the research. After you fix them up, flip them for a profit and continue the cycle until satisfied.

[glatt]

You are used to having a lot of disposable income. That's why advertisers love your demographic. When you grow up, buy a house, and have kids, the disposable income disappears. It's a fact of life.

Paying $1800 monthly on 70K is not hard. You just need to change your lifestyle a little.

I used to buy my lunch every day, now I bring it in from home. I used to eat out 2-3 times a week. Now I eat out 5-6 times a year. Those are just a couple examples.

You CAN do it.

[elSicomoro]

The buying market here is so over-inflated right now. I see people dropping $200-300K on houses in Fishtown...WTF? I know it's up and coming and all, but it still ain't all that great!

Of course, we have no intention of staying in Philadelphia for good, so no house buying for us for at least 5 years.

I sense that you have no intention of putting 20% down, so you'll definitely have to have PMI...of course, you could get lucky and it could be lender-paid. We give our best lenders special rates, but I would imagine they pocket the money they save with us.

[vsp]

Originally posted by BrianR
Have you considered moving?

Nope, or at least not far. This area is where I grew up and where I'm comfortable. I actually had to look up to see where Bensalem was.

Of course, that means I have to come to terms with not having a lawn of my own to mow until I'm 40, and that's if we don't have kids over that seven-year span.

[elSicomoro]

You don't get around town much, do you Jeff?

[vsp]

Nope. The closest I've come to that part of PA is an every-six-months-or-so trip to Franklin Mills. When I'm travelling, it's usually either to the west or south, or to visit the in-laws in north-central PA.

(Glatt) Paying $1800 monthly on 70K is not hard. You just need to change your lifestyle a little.

That's assuming that the 70K remains stable, which is another consideration, as I don't have a lot of faith in the economy (and, correspondingly, the job market) at the moment. How November goes will play a big role in that, of course... but if I lose my job for whatever reason in the near future, I have considerable doubt that I'd be able to find a job and make what I make now, and I can never rule out some corporate beancounter making me irrelevant with the stroke of a pen. Likewise, if we have kids, that's a period of time where my wife's income will be absent and/or diminished, and that has to be figured in as well.

There are obviously things that we can cut out without going on the total ketchup-soup-for-dinner plan. There are second-job possibilities. There are other ways of raising income and lowering expenses. But the pessimist in me is already recoiling at the notion of a thirty-year-commitment risk to begin with; I can't reasonably go that high on the monthly commitment and gamble that nothing bad will interfere with that over that period.

[jdbutler]

http://www.realtytrac.com/sc_landing.asp?a=b

[Radar]

LOL

A crappy 2 bedroom house which needs repairs out here is $450k

An average home is $500k

Renting a house like you describe would be well over $3,000 per month.

[dar512]

~25 years ago, I bought my first house for 27k. Long commute and a real fixer-upper.

I gutted the place, put in insulation, shimmed the walls (really old house - nothing was square), and put up drywall. Cost me about $1000 in materials. I sold the house for 34.5k. It took all my spare time for a year, but it got my foot in the housing market.

The profit from the first place was my down-payment on a newer home in a better (and closer) suburb.

[hot_pastrami]

Local cost-of-living is a huge issue on the housing question... one of the (very) few nice things about Utah is the housing market. For instance, my first house was a 2400 sq. ft. place on a 1/4 acre plot. Six bedrooms, two-car garage, brick, central air, nice part of town... all for $143k. I spiffied it all up with new paint/carpet/linoleum, and sold it... and those guys got a NICE house for only $155,000.

I feel some mortgage pain now though... I bought another house, a bit of a fixer-upper, on an acre plot so my wife could keep her animals when we got married (horses, etc)... the mortgage on $200k is sometimes tricky to make on a $61k salary, especially with the added expenses of feeding animals, and making home improvements. But we just budget a little more... we don't go out to eat so often, etc... and it we manage OK most of the time. I've been doing a little contract work on the side to get a few extra bucks, so it should help relieve a little more pressure. Of course when we decide to start having kids, we'll have to do something to cover those large expenses.

In some areas, when the average salary is compared to the cost of the average house, it is obvious that buying a home is out of the question for the average person. I suspect PA is one such place.

[glatt]

This economy looks like it's heading for inflation. The best defense against inflation is owning a house. The price of everything else goes up, along with your pay, but your mortgage stays the same.

If you look at all that's written about how much of a pecentage of your income your housing cost should be, you will see that $1800/month is well within reason for a 70K income.

Many people today are spending as much as 50% of their income on housing. That's crazy. You would be spending 30%. That's right on target.

Now, I don't know what your wife's portion of that is, and how long she will be out of the workforce raising kids. But you are in much better shape than most people.

Remember that financial advice from strangers on the internet is the best advice you can get.

[vsp]

Originally posted by hot_pastrami
In some areas, when the average salary is compared to the cost of the average house, it is obvious that buying a home is out of the question for the average person. I suspect PA is one such place.

Southeastern PA more so than the rest of the state, as a general rule. If I went up to Williamsport and looked for a house there, for instance, I could get a nice house on a couple of acres for less than most townhouses cost around here.

Of course, finding a comparable job up there would be just a TAD difficult.

[hot_pastrami]

Originally posted by glatt
Many people today are spending as much as 50% of their income on housing. That's crazy. You would be spending 30%. That's right on target.

After taxes, there's probably only about $50k take-home from his $70k salary... so the $1800/month isn't far from 50% of the income.