House prices to income

[ManyMountains]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

[greaper007]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

I've never had a house that cheap, but I think you'll find that once you leave the expensive areas of the coasts things are a lot cheaper.    I'm not sure what she does, but I bet you'll find that the paycut isn't that dramatic either.   

I was able to buy a house twice as nice as the one we were living in for $35,000 more than what we spent in CT.   

[PeteD01]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Some of us are older and farther down the line of rising incomes. Others have actually moved to cut living expenses.
We, for example, moved from Manhattan to the Southeast because of the unreasonably high housing costs in the NYC area.

Peter

[Ambergris]

Mine's about 2.64 times current earnings, and since both earnings and house have gone up a bit since I bought it, the ratio has stayed about the same.  It represents about 36% of my net worth and about 29% of my total assets.

While you can buy houses at less than 100k around here they are in very dodgy neighborhoods and basically burnt out husks.  Where I am living is cheap for a SFH in a decent neighborhood.

[kelly1mm]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

I am a transplant to Maryland from the SF region.  In fact, I was born and raised in Alameda.  Wife and I 'escaped' the bay area in 1998, 2 days after I graduated from CSU Hayward and moved to her home town in ruralish western Maryland.  Our #1 reason? Housing prices.

We bought out first home (3 br 2 bath all brick 2 story american 4 square style house on 1/3 of an acre) in 1998 for 130k.  At the time, we were making about 80k so about 1.75 times earnings.  Same house in Alameda would have been at least 300k then, probably MUCH higher now.

Out retirement house we just bought last year.  It is a small cabin on 4 acres in very far western Maryland.  Basically the middle of the Appalachian mountain range near Deep Creek Lake.  It is 2 br 1 bath, 780 sq ft.  WE LOVE IT.  Bought it for 53K, with cash, current income is just under 100k.

While I understand and in many ways agree with living close to work = lower total costs and higher incomes, you can also do the 'opposite' approach and still become FI very quickly.  By opposite I mean live rural and grow a lot of your own food and heat with wood from your own woodlot.  That coupled with the MASSIVELY lower cost of housing can make up for the lower (in general) income and the need for a vehicle that you may not have in a city.

I know there are a few of us 'rural' MMM cousin's here and on ERE, but sometimes it does not seem so.  One thing that also helps is the increasing ability to work remotely.  Technically, I work for a Silicon Valley tech firm (Intuit) for a good pat of the year (tax season) and make way above average income for this area (still way lower than many MMMers).  Yet I have never even once been to Mountain View (where Intuit is located) or even met with anyone from the company in person.  Wife is a teacher for the local school system.  We both realized pretty early in our marriage that we preferred country living and have thus traded larger salaries for what we consider a better quality of life.  Others I understand prefer city living.  To each his own.  But many MMM principals can be applied to life in both extremes.   

[urbanista]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Where we live, the cheapest house within a few miles from work will cost us 850K. That's a tiny house with 2 bedrooms, 1 bathroom and a kitchen, on a 10 meter x 20 meter land.

The more or less livable 650K houses come with 2 hours daily commute.

[Wolf_Stache]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Where we live, the cheapest house within a few miles from work will cost us 850K. That's a tiny house with 2 bedrooms, 1 bathroom and a kitchen, on a 10 meter x 20 meter land.

The more or less livable 650K houses come with 2 hours daily commute.

Holy cow! How does anyone afford a house in Australia??

[daverobev]

First house was about 5x income to purchase price, 4x mortgage.

Second was a bit more than 5x to purchace, maybe 2.5 to mortgage (downsized and downsized the mortgage too).

Third and current was about 1.5x to purchase (having a partner helps!!), 1x to mort.

As to how you buy at such high multiples? Well, part of the reason the multiples are so high is because the govt/banks let them get that way.. the other is just that people save harder.

Saving is easier when you have a goal,  IMO.

[steveo]

Holy cow! How does anyone afford a house in Australia??

House prices are crazy. Lots of people move far away from the city and commute. Public transport to me is pretty good.

Immigration is fairly high in Sydney and I think some families get a lot of help. My in-laws paid 25% of our house. I'll give a great example of crazy house prices. My in-laws live in Vaucluse (close to Sydney harbour) which is really expensive. Some developer or investor bought 2 houses close together near their house and knocked them down and build a new house. They want I think $60 million and knocked back $55 million. My in-laws who are mustachian had a slip up. They renovated their investment property in the same area and spend $1.5 million. My wife was spewing because we intend to retire on a lot less than that.

I don't think you will find many Australians using their property as part of their assets upon which to retire. To me it has to be own your own house + 25x expenses in other financial assets or rent and have 25x expenses in assets. The yield on property is also terrible - say 5% excluding any outgoings which means that it can be as low as 1-2%.

[bikebum]

Is everyone talking sales price of the house over gross income? I have a mortgage.

My home's sales price was about 2x my gross salary. But I will get some raises and my lady will finish school and start working. So in the future it will probably be 1x combined gross salary.

How about add a pole? It could have ranges like:

less than 0.5x
0.5x to 1x
1x to 1.5x
1.5x to 2x
and so on.

[kiwimm]

Thanks for your replies so far. Very interesting to see the differences between NZ/Australia/Canada/US Coastal/US Central.

To give you an idea of the state of housing in Auckland, New Zealand.

Average household income is US$66,000. City population is 1.45m people. The number of houses available for sale (including those in satellite towns with over an hour's communte each way) for less than 3x household income is 84 out of 5819 available. The 84 includes houses listed for auction which would expect to sell at a higher price than this and homes with building issues that have let damp get in and rot the frame (we call them "leaky homes" and you can add about US$200k onto the price to fix these).

The average price is 9x household income, or US$600k.

Everyone here is obsessed with property and thinks it can only go up. I have a different opinion.

[Primm]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Where we live, the cheapest house within a few miles from work will cost us 850K. That's a tiny house with 2 bedrooms, 1 bathroom and a kitchen, on a 10 meter x 20 meter land.

The more or less livable 650K houses come with 2 hours daily commute.

Holy cow! How does anyone afford a house in Australia??

I'm guessing they're in Sydney. I work in Brisbane, and we just bought a gorgeous old renovator but solid, for $264k, about 45 minutes from the CBD but close to our work which is outside the city. 3 big bedrooms and on a 478sq m block. House prices in Sydney though, are insane.

[nottoolatetostart]

Our current house is .71X at the time we bought it (the home sales price).

We are moving to a new state due to DH's new job and pursuing buying a home there....keeping it to .82X for my efficient, dream home if I continue working. Or, if it is just DH's salary if I become a SAHM someday, it will be 1.48X. I did the math based on our base gross salary, not including the bonuses and such. With bonuses, it is .71X and 1.28X, respectively. 
 

[agent_clone]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Where we live, the cheapest house within a few miles from work will cost us 850K. That's a tiny house with 2 bedrooms, 1 bathroom and a kitchen, on a 10 meter x 20 meter land.

The more or less livable 650K houses come with 2 hours daily commute.

Holy cow! How does anyone afford a house in Australia??

I'm guessing they're in Sydney. I work in Brisbane, and we just bought a gorgeous old renovator but solid, for $264k, about 45 minutes from the CBD but close to our work which is outside the city. 3 big bedrooms and on a 478sq m block. House prices in Sydney though, are insane.

Canberra you can get a house for about 350k as a minimum commute time would really depend on which town centre you are working in... (there are 4 that have employment options).  It looks like there are a few older 1 bedroom units on sale for around 200k.  If you wanted to go over the border to NSW, houses start around the same price in Queanbeyan, but there are some older 1 bedroom units for 165k.  However, if in Queanbeyan and you wanted to commute via the bus its about $14 a day.  From within Canberra its a bit over $5 a day.

Out of Melbourne and Sydney, Melbourne is a lot cheaper than Sydney.  That being said if you are looking at apartments in Sydney you can pick one up for about 400-450k within reasonable distance of the CBD (definately not walking distance and this is probably on the cheaper end).  As to how people afford to buy them, often you need to be a couple both of whom are working.  Statistically average rental prices have been about 20% of the average wage for a long time (I think the last 50 years?).  But house purchase prices have become increasingly unaffordable particularly over the last 20 years.  The costs of rental accomodation for low income earners is also a significant problem in Australia. 

Personally I'm choosing to not purchase at the moment for a number of reasons, a couple of which are cost and whether I'll live where I am for long enough to make it worth it.  My current thoughts are that unless there is a major correction in house prices I'll save for FI, then continue to work and pay off a house.  However FI isn't happening anytime soon, and there have been doomsayers about a major correction for the last 15 years but none has happened (instead prices have kept going up significantly), and I may end up changing my mind in the mean time anyway.

For Australia if you are looking at less than 80k or even to some extent less than 100k you are probably looking at more than a 3 hour drive to any significant town centre (Except maybe in Tasmania but they have a significant unemployment problem).

[CommonCents]

Immigration is fairly high in Sydney and I think some families get a lot of help. My in-laws paid 25% of our house. I'll give a great example of crazy house prices. My in-laws live in Vaucluse (close to Sydney harbour) which is really expensive. Some developer or investor bought 2 houses close together near their house and knocked them down and build a new house. They want I think $60 million and knocked back $55 million. My in-laws who are mustachian had a slip up. They renovated their investment property in the same area and spend $1.5 million. My wife was spewing because we intend to retire on a lot less than that.

Why should your wife be mad?  It's their money to spend how they like.  As long as they can afford the home and don't come later to you for a handout (which seems unlikely given they gave you 25% of your own home), there's no harm, no foul here to get mad about.

[NewStachian]

3.5x

[lady brett ashley]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Being in a smallish Southern city, that sounds completely doable.  Location makes an enormous difference.  We bought our house for $72k, and frankly we didn't really know what we were doing, or we could have gotten a better deal.  Granted, you can easily find a $650k home here as well, but you have to want 4,000sf in a far away from everything subdivision.

As for the original question, at the time we bought it, our house was about 1.4x our income, but in the 5 years we've lived there our income has varied so greatly that i'm not sure the ratio is very reliable.

[ManyMountains]

Thanks for your replies so far. Very interesting to see the differences between NZ/Australia/Canada/US Coastal/US Central.

To give you an idea of the state of housing in Auckland, New Zealand.

Average household income is US$66,000. City population is 1.45m people. The number of houses available for sale (including those in satellite towns with over an hour's communte each way) for less than 3x household income is 84 out of 5819 available. The 84 includes houses listed for auction which would expect to sell at a higher price than this and homes with building issues that have let damp get in and rot the frame (we call them "leaky homes" and you can add about US$200k onto the price to fix these).

The average price is 9x household income, or US$600k.

Everyone here is obsessed with property and thinks it can only go up. I have a different opinion.

THIS sounds likes the San Francisco Bay Area. The Silicon Valley to San Francisco is crazy expensive right now, and that is pushing all accessible housing prices up (ie, <1 hr commute). This is what we're struggling with. Housing prices and rents are both going up quickly.

So, do we keep paying too much for a crappy apartment? Or do we get a house, fix it up over several years, then sell and move (FIRE) to a lower cost-of-living location? I don't want to hi-jack this thread, so I can start my own forum post if need be.

[Meggslynn]

When we bought our house was 3.5 times our gross income now that same house is 2 time our incomes as both were expecting jumps in our salaries in the following year or two. This is pretty stellar for our area. Most people buy houses 3 -5.5 times their gross income.

[steveo]

Immigration is fairly high in Sydney and I think some families get a lot of help. My in-laws paid 25% of our house. I'll give a great example of crazy house prices. My in-laws live in Vaucluse (close to Sydney harbour) which is really expensive. Some developer or investor bought 2 houses close together near their house and knocked them down and build a new house. They want I think $60 million and knocked back $55 million. My in-laws who are mustachian had a slip up. They renovated their investment property in the same area and spend $1.5 million. My wife was spewing because we intend to retire on a lot less than that.

Why should your wife be mad?  It's their money to spend how they like.  As long as they can afford the home and don't come later to you for a handout (which seems unlikely given they gave you 25% of your own home), there's no harm, no foul here to get mad about.

If they gave it to us my wife wouldn't have to work in a crappy job. I wouldn't have to work in my cushy job. She is over it now but I get where she is coming from.

[TomTX]

Bought it at 2.5x annual income. Income has gone up 30%, but if I believe the appraisal district, the house just jumped up to 3x annual income.

[urbanista]

Immigration is fairly high in Sydney and I think some families get a lot of help. My in-laws paid 25% of our house. I'll give a great example of crazy house prices. My in-laws live in Vaucluse (close to Sydney harbour) which is really expensive. Some developer or investor bought 2 houses close together near their house and knocked them down and build a new house. They want I think $60 million and knocked back $55 million. My in-laws who are mustachian had a slip up. They renovated their investment property in the same area and spend $1.5 million. My wife was spewing because we intend to retire on a lot less than that.

Why should your wife be mad?  It's their money to spend how they like.  As long as they can afford the home and don't come later to you for a handout (which seems unlikely given they gave you 25% of your own home), there's no harm, no foul here to get mad about.

If they gave it to us my wife wouldn't have to work in a crappy job. I wouldn't have to work in my cushy job. She is over it now but I get where she is coming from.

That's my sentiment exactly. In Australia, (imho) it's absolutely unfair to leave your children on their own, with no help for buying a property. We plan to leave our family house as an inheritance to kids.

[ToughMother]

U.S. respondent here.
When I bought the house it was 4.5X my (then) income.
~5 years later, the house value is about the same, and my salary has nearly doubled, and the me is a we.
The house is now 1.5X our current income.

[Kierun]

At the time I bought it was just under 4x.  I quit that job and if I were to have bought it with my current salary it'd be almost 15x. 

[sol]

My first house cost about 4x my salary at the time, and I was still able to save about 40% of my gross salary.

My salary then went up and I became half of a dual income household, and now we're buying a new house for 1.75x our combined gross income and saving over 50%.

In both cases I put 20% down and paid the exact same sale price.

[iris lily]

I was making I think around $35,000 and we paid $28,000 for this house. DH was unemployed at the time. Course it had no plumbing, or heat. or electric. The banks wouldn't loan on places like this so we paid cash. We rented for a year while DH put in all of the bare bones necessities to get it habitable. He also built a new addition at the same time, he's a talented guy.

[dragoncar]

Considering a 2-1 ratio, but the problem is -- that's quite a lot of money (but about average in SF).  It would delay my retirement by 2-3 years. 

[Threshkin]

My current house as a little under 2:1.  But my first house was closer to 4:1 and 13% interest, shudder....

Every property after that first one has had a lower ratio and a higher % down.

It may be better to consider loan amount to income ratios rather than home value to income.

[SMP]

House cost was (bought last year) 2x gross income (3,2x net income).

[Squirrel away]

2 x our salary would be £100k and you would be lucky to get a one bed flat (apartment) in London for that price. House prices are crazy here.

[waltworks]

Ours is something like 5.5x, with a few mitigating factors:
-We have to live at high altitude in a resort community in order to avoid the pollution in SLC where it's literally dangerous to breath the air some of the time. Additionally all of our recreation/fun (mountain biking, skiing, hiking, etc) is literally right out the back door living here.
-I run a business from the home that takes up maybe 1200-1500 sq ft and if I had to rent space elsewhere to do that it would cost me ~$1000-1500 a month plus add a bunch of commuting time/cost. So I figure something like 50%+ of our housing cost is really paid by the business.

I would love to spend a lot less on housing but the bottom line is that life is short and if I have to choose between an extra few years of working (I love my job/business) or living somewhere I don't like... well, that's not a hard choice for me. Interestingly I feel like some folks here have actually lost sight of the goal of *happiness* and substituted FIRE, and get obsessed with money to the point that it's a little silly. If an expensive house (for whatever reason) will actually make you happy, it might make sense for you.

-W

[Spork]

First "starter home" house: many years ago was very inexpensive and probably 1.5x income. 
Second house was roughly 1x income.  (I'm sort of guessing here... It was a while back.)

Our current house is expected to be "the place they take me out in a box."  We actually had it built and it is by far the nicest place I've owned.  It was roughly 2.5x income (paid in cash).   This is a very rough number as it sort of guesses at the finished cost.  (It is actually still unfinished.)  We built the downstairs and left the upstairs unfinished.  Two years later, I'm still piddling at it.

[Gerard]

Bought my current house at about 1x income. But it's not a very good house.

[Albert]

Some of you live in very cheap areas… Here the average property price is ca 8k/m^2. A modest apartment like I'm currently renting close to the city centre would go for about half a million dollars. Plus you are never supposed to pay it off. I've decided on other forms of investment for the time being.

[LowER]

#1: 2x
#2: 1x
#3: 1.1x
#4 (future): 0.55, maybe 0.6x

[MustardTiger]

After downpayment we financed an amount similar to our yearly net.  It is a foreclosure, and we have had it only about 11 months.  We have put almost all of our money into it but I have done most of the work myself and it is very liveable now.  (I still want to remodel the kitchen, master bath, and a few more small tasks though.

[deborah]

Why should your wife be mad?  It's their money to spend how they like.  As long as they can afford the home and don't come later to you for a handout (which seems unlikely given they gave you 25% of your own home), there's no harm, no foul here to get mad about.

If they gave it to us my wife wouldn't have to work in a crappy job. I wouldn't have to work in my cushy job. She is over it now but I get where she is coming from.

That's my sentiment exactly. In Australia, (imho) it's absolutely unfair to leave your children on their own, with no help for buying a property. We plan to leave our family house as an inheritance to kids.

Sounds reasonable - but you can think about it from a different perspective. Did the grandparents give the parents a leg-up? The grandparents had a life expectancy of 68. The parents now have a life expectancy of 84 or more (and only expected to live to 68 when they started working, and so were saving for a smaller retirement). Do the children expect to give back some of the money later on? As I am Australian, these are Australian figures.

I have found that giving money is a bad thing. I have two brothers. B and I have not received any money from my parents after secondary school. We put ourselves through uni (both of us had to defer half way through to get enough money to complete). We struggled, but bought houses and lived our lives. A has always received money. He received assistance with his housing. I recently found out that his wife and children still receive half of my parent's income (my parents are in their 80s and have little money, and this is an incredible drain on them). When does the giving stop?

I admit, you have touched a nerve, but to me frugality is independence - doing things off your own bat.

[agent_clone]

Why should your wife be mad?  It's their money to spend how they like.  As long as they can afford the home and don't come later to you for a handout (which seems unlikely given they gave you 25% of your own home), there's no harm, no foul here to get mad about.

If they gave it to us my wife wouldn't have to work in a crappy job. I wouldn't have to work in my cushy job. She is over it now but I get where she is coming from.

That's my sentiment exactly. In Australia, (imho) it's absolutely unfair to leave your children on their own, with no help for buying a property. We plan to leave our family house as an inheritance to kids.

Sounds reasonable - but you can think about it from a different perspective. Did the grandparents give the parents a leg-up? The grandparents had a life expectancy of 68. The parents now have a life expectancy of 84 or more (and only expected to live to 68 when they started working, and so were saving for a smaller retirement). Do the children expect to give back some of the money later on? As I am Australian, these are Australian figures.

I have found that giving money is a bad thing. I have two brothers. B and I have not received any money from my parents after secondary school. We put ourselves through uni (both of us had to defer half way through to get enough money to complete). We struggled, but bought houses and lived our lives. A has always received money. He received assistance with his housing. I recently found out that his wife and children still receive half of my parent's income (my parents are in their 80s and have little money, and this is an incredible drain on them). When does the giving stop?

I admit, you have touched a nerve, but to me frugality is independence - doing things off your own bat.

Deborah, personally I would agree with you on this.  I consider wanting your parents to give you money so that you can buy somewhere or retire earlier somewhat selfish.  My parents earnt their money themselves (neither inherited anything) and they should feel free that they can spend it how they want (in fact they do, on month long trips each year).  I have told them that while inheriting money/property from them would be nice, so long as they don't leave me debts to pay I don't care.  I also know that if necessary, I have somewhere to live (i.e. their house unless they were to move somewhere that can't fit me).

The purchase of a property is possible it all depends on what you want and where you want to buy.  For that matter, if I felt I had longer term job security and wanted to stay in the city I'm in currently I could go buy a house by myself, putting down an offer tomorrow.  It may have taken me about 7 years to save the money for that 20% + stamp duty deposit (i was previously in a low paying job) but I can now do it, I'm just choosing not to.

In addition, as my mother says, you don't need to own property until you retire.

[lexie2000]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Cost of Living Area is the first thing that I thought of when I saw the thread title.  There are just some areas in the country, the SF Bay Area among them, where typical Mustachian ratios have to be thrown out.

[Villanelle]

About 5 times income (gross), for a 1900 sqft attached townhouse that had nothing luxury about it. 

[Milspecstache]

We spent 1x our annual income on our first home, and put about that much into it.

Identical to our situation.  I bought for less than my annual income, and built for an additional cost of about a year's income.

[CommonCents]

Immigration is fairly high in Sydney and I think some families get a lot of help. My in-laws paid 25% of our house. I'll give a great example of crazy house prices. My in-laws live in Vaucluse (close to Sydney harbour) which is really expensive. Some developer or investor bought 2 houses close together near their house and knocked them down and build a new house. They want I think $60 million and knocked back $55 million. My in-laws who are mustachian had a slip up. They renovated their investment property in the same area and spend $1.5 million. My wife was spewing because we intend to retire on a lot less than that.

Why should your wife be mad?  It's their money to spend how they like.  As long as they can afford the home and don't come later to you for a handout (which seems unlikely given they gave you 25% of your own home), there's no harm, no foul here to get mad about.

If they gave it to us my wife wouldn't have to work in a crappy job. I wouldn't have to work in my cushy job. She is over it now but I get where she is coming from.

Well if someone gave me a million dollars, I wouldn't have to work either!

Wanting someone to give you money to which you are entitled to is a good way to carry around a lot of negative emotional baggage.  No one is obligated to give you anything (beyond parents obligated to feed/shelter you until 18 or the age of majority in Australia.)  This lack of personal accountability for yourself seems very unmustachian!  I'd suggest being grateful for the 25% gift instead of begrudging how the rest of the money was spent.  (At least they have a house to show for it - they could have just bought lots of "big kid" toys along the way.)  Who knows, maybe they'll still will the house to you when they die. 

[kkbmustang]

When we bought our current house, it was 2.4x gross income (mine only because The Hubs was a full time grad student making $0). The value of the house has increased, but if you take our current gross income and compare it to the price we paid for our house, it would now be 1.5x.

[Bank]

2.75-3x income.  Although, to be honest, I didn't even examine that figure.  I cared about the monthly hit, and particularly the after-tax portion going to interest, taxes and condo fees.  That's about 10-15% of take our home pay, if I recall correctly, with 75% of the loan value financed.  Thank you Federal Reserve.

[cbgg]

I've never bought a house but this question got me thinking about average house prices here in Vancouver. 

Turns out, if you are looking in the whole Greater Vancouver Area (that means including the suburbs) and are counting condos, townhouses, and detached homes, the average price in the Van area is about $600,000. And according to the census, the median household income in Vancouver is about $70,000. 

So 8.5x the median income in Vancouver = the average cost of a house.


Of course, if you want a single family home within the city limits, you are looking at an average of $1M. 

Source articles:
http://www.theglobeandmail.com/report-on-business/economy/housing/vancouver-house-prices-hit-new-high/article17279408/
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm

Since I'm able to rent a place for only 13% of salary, I'll stick with that for now :D...unfortunately for me I'm moving to the San Fran Bay area, one of the only places in North America with a bleaker housing market than Vancouver.  :/

[steveo]

Well if someone gave me a million dollars, I wouldn't have to work either!

Wanting someone to give you money to which you are entitled to is a good way to carry around a lot of negative emotional baggage.  No one is obligated to give you anything (beyond parents obligated to feed/shelter you until 18 or the age of majority in Australia.)  This lack of personal accountability for yourself seems very unmustachian!  I'd suggest being grateful for the 25% gift instead of begrudging how the rest of the money was spent.  (At least they have a house to show for it - they could have just bought lots of "big kid" toys along the way.)  Who knows, maybe they'll still will the house to you when they die.

Hang on a second. I'm not stating that I or my wife expect to be given a million dollars. Your reaction is way over the top.

I admit, you have touched a nerve, but to me frugality is independence - doing things off your own bat.

I agree with you. My BIL was earning something like $200k per year and still borrowing (which means never repaying) something like $10k per month off my FIL. My SIL doesn't have a job but is travelling to America soon on an extended holiday. Some of the comments from both of them are hilarious. My SIL told me that $80k per year really wasn't a good income when she doesn't have a job. My BIL told me how spoilt the girls were in his family when my wife asked her dad for an ice-cream for dessert.

I'll add one of the best stories I have. My BIL borrowed money for a car and didn't pay the loan so my FIL paid the loan. My BIL then sold the car and kept the money. He has also done this to a house that he bought as an investment.

I'm not a fan of handouts.

[alsoknownasDean]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Where we live, the cheapest house within a few miles from work will cost us 850K. That's a tiny house with 2 bedrooms, 1 bathroom and a kitchen, on a 10 meter x 20 meter land.

The more or less livable 650K houses come with 2 hours daily commute.

Holy cow! How does anyone afford a house in Australia??

By not buying in Sydney. That said, the other cities don't fare that much better.

I'm looking at buying in a couple years, and I'm not even considering houses. I'd rather buy a smaller place a bit closer to the city (and work, and public transport) than a big place in the sticks.

I remember getting a phone call from my bank and I mentioned that I was looking at buying in a couple of years, and said I wanted to spend about $300,000 (which would get me a two bedroom unit about 15km from the city). The girl on the phone basically said 'You won't find anything on that budget!'.

[HappierAtHome]

Wow, I am blown away by what you all are posting. My wife and I, with a 1 year old, live very Mustachian. I am a stay at home dad and she works at a research lab, making $91k a year. We save over half of her salary quite easily.

We currently rent a 2 bedroom place for $1450/month. It is old, poorly made, and we can hear EVERYTHING our neighbors do. However, it is the cheapest place we can find within biking/walking distance of everything.

We are looking at houses within a few miles from her work, and the cheapest we can find is $650k. Or 7x my wife's salary.

We leave in the SF Bay Area (east bay). I can't imagine finding a house for $45k or $70k, which would be the salary/house price ratio some of you are mentioning. Amazing.

Where we live, the cheapest house within a few miles from work will cost us 850K. That's a tiny house with 2 bedrooms, 1 bathroom and a kitchen, on a 10 meter x 20 meter land.

The more or less livable 650K houses come with 2 hours daily commute.

Holy cow! How does anyone afford a house in Australia??

By not buying in Sydney. That said, the other cities don't fare that much better.

I'm looking at buying in a couple years, and I'm not even considering houses. I'd rather buy a smaller place a bit closer to the city (and work, and public transport) than a big place in the sticks.

I remember getting a phone call from my bank and I mentioned that I was looking at buying in a couple of years, and said I wanted to spend about $300,000 (which would get me a two bedroom unit about 15km from the city). The girl on the phone basically said 'You won't find anything on that budget!'.

Perth isn't much better. I haven't bought yet, but our (modest, but centrally located) apartment cost the BF 5.5x his income at the time and it was a real stretch for him. Now it's worth 1.6x our combined income - it's gone up in price, but his income has gone up in leaps and bounds and he's gained a relatively high earning partner (me!).

We'd like our next place to be about 2.5 - 3x, which would mean we could pay in cash if we really wanted to. I think if you're a low income earner and/or terrible with money, houses in Australia are hideously unaffordable. If you have a household income of $200k+ and you save 50% or more of your income, the housing market isn't as bad as it looks.

[Argyle]

In the Midwestern small town I was visiting recently, you can buy a not-bad two-bedroom house for $15,000.  Moving up in price and location, here's a pretty handsome historic 1900-square-foot 3-bedroom for $124,000 --

http://www.trulia.com/property/1086290979-215-S-Wells-St-Buffalo-IL-62515

Same size (1900 sq ft, 3 bedroom) but more utilitarian for $32,000 --

http://www.trulia.com/property/3147820583-816-Prairie-Ave-Mattoon-IL-61938

The McMansions are up in the $135,000 range. 

[steveo]

If you have a household income of $200k+ and you save 50% or more of your income, the housing market isn't as bad as it looks.

Agreed but the average household income is something like $66k.