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Posted over 1 year ago

I'm a bad guy when I buy less house than I can afford. Who knew.

In my last blog I spoke about "Down Renting" and how it has the unintended consequence (takes away) of raising rents.

The same is true in home purchases.

Typically they say you can purchase a house worth 2.5-3 X your annual income 

When you make $200k a year as a household you have the opportunity to buy a $500-600k house.

If you make $300k a year you can buy $750-900k

Buy what if you make $200k and simply want a $400k house because you don't have any kids, or you want to buy a $300k condo so you can be closer to Downtown?  Or you decide to buy a 2 or 3 Family to live in.


Realistically, this is non sensical, but this is a big factor in why housing has become unaffordable.

One of the biggest issues for housing creation is the lack of land.  Since land is expensive, developers want to maximize that by building huge houses they can sell at high prices.  There are bigger profit margins on bigger houses!  Why? 1 Kitchen, maybe still 2.5 Baths and 2 Car garage, but more SF of living space.

The problem here is that there are only so many people in Worcester County who can afford $600k houses.  If all the new housing is $600k and up (and no starter homes at $325k) then what is the $150k income home supposed to do?  Buy older homes.

Now if even a small % of those making $200-300k decide they want to live in $450k  or less homes, they are competing with these $150k buyers and pricing them out. 

Now when you "downsize" your home because you are older, or your kids move out and you want to move back to the City, remember "YOU ARE A JERK"

But as you know the government will come up with a plan to save everything.