If so many people have so little in savings then how can so many people afford to buy a house?

[jobaba]

Originally Posted by Mikala43

Maybe they have no savings BECAUSE they bought a house.

This...

Also, not everybody buys a house in the leafy suburbs. Houses in less desirable areas can be pretty cheap.

But I would say the better question is ... how is the median household income from any given town so skewed from home prices. I'm sure there's a thread on it.

[LakeLifePA]

Originally Posted by Mightyqueen801

Exactly. If you want it, you figure out a way. I bought a house (condo/townhouse actually) and I had no savings at all. I borrowed the down payment for a 3.5% FHA from my pension fund, which doesn't show up anywhere as a debt. I just had to pay it back before retirement or my pension would be permanently reduced, which I did (and retired a little less than six years later). Last year I refi'd to a 15-year conventional.

I had the salary by then to make a mortgage payment but never was in a position to save money earlier in life. Doing that enabled me to be able to buy my own place instead of rent, and the mortgage/taxes/insurance payment was less than the rent I'd been paying.

Oh, and now that I am out of all other debt, I have a growing savings account in retirement.

Seems like you did it right! Congrats on getting it all paid down before your retired, and it sounds like you're doing well in retirement.

[Hemlock140]

Originally Posted by jobaba

This...

Also, not everybody buys a house in the leafy suburbs. Houses in less desirable areas can be pretty cheap.

But I would say the better question is ... how is the median household income from any given town so skewed from home prices. I'm sure there's a thread on it.

Yes, it does seem odd that the median family incomes are not enough to buy the median priced home. I think much of it is caused by the home being bought years ago for much less, then appreciating faster than the owner's income. For example, we paid $190k in 1993, now worth $1.1 million. Our income is 3 times as high now, but the house is worth almost 6 times higher.

Where I grew up, Lafayette CA: $138,073 income, $2.11 Million Home

Where we bought our first house, Castro Valley CA: $101,806 income, $899,000 home

Where we live now, Sammamish WA: $165,318 income, $1,141,969 home

Medina, WA where Bill Gates Lives: $192,120 income, $3.3 Million home

[jghorton]

A steady stream of articles about retirees having "no savings" is perhaps similar to articles describing house-buyer's who have no savings(?). Few of these articles qualify their data sources or collection methods --- and many tend to equate "savings" with money reported in bank savings accounts. With the absurdly low savings account interest rate, that's hardly a good place to keep one's savings.

Obviously, people buying first homes must have down payment money from somewhere. Of course, as one buys their second and third home etc., one typically funds that with the equity from the prior home (not savings accounts). -- Certainly, growing equity is one of the few ways Californians can keep-up with spiraling house prices.

[jencam]

I bought with no money down. $500 for escrow.