I Hate The News...
Especially that on BBC America. They're just like ABC, CBS, NBC, and CNN. They ran a segment called Foreclosure: Credit Victims. Credit Victims? Well, I thought this was a company kidnapping people in extreme low-income neighborhoods and forcing them at gunpoint to buy a house. Or, I was thinking that some company breached the terms of the contracts and charged adjustable rate mortgages instead of fixed rate. Turns out neither was the case. There was a woman in the story who bought a house with a value of 12 times her annual income. Single with two kids. 12 times her annual income! And they're calling her a victim??? This is crazy! She bought the house in 2005. We are in the 21st century now! More information is available than ever before! People can send emails on their cell phones! We have GPS available in cars! You can find virtually anything you need to know on this thing called the internet! A little due diligence on your part before making the biggest investment of your life couldn't have been a bad thing! There is no victim here; you didn't do your homework. And now the rest of us have to pay to bail your ass out. If she had done a little research she would have found...
Real estate people always say the rule of thumb is to never buy a house more than three times your annual income. Or household income if you're married or if your SO is going to be on the title. If you're going in it alone and you make what she made, 39,000 per year, the most house you can afford is $117,000. And in NYC, you aren't going to find anything near that. Nor will you in much of the country.
This is why houses aren't selling right now. The prices are higher than the market can reasonably handle. And it's going to be a long time before they get down to where the market can handle it. It's when 3x the average household income meets or exceeds the average home cost. Right now, Florida is about 5 times. So, unless you live in certain areas that are exempt from this market swing (Detroit or St. Louis, for example), don't buy a house, especially if you're breaking the 3 times rule! Wait a few years.
Real estate people always say the rule of thumb is to never buy a house more than three times your annual income. Or household income if you're married or if your SO is going to be on the title. If you're going in it alone and you make what she made, 39,000 per year, the most house you can afford is $117,000. And in NYC, you aren't going to find anything near that. Nor will you in much of the country.
This is why houses aren't selling right now. The prices are higher than the market can reasonably handle. And it's going to be a long time before they get down to where the market can handle it. It's when 3x the average household income meets or exceeds the average home cost. Right now, Florida is about 5 times. So, unless you live in certain areas that are exempt from this market swing (Detroit or St. Louis, for example), don't buy a house, especially if you're breaking the 3 times rule! Wait a few years.