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The Price Of A Home
Jules and I rent our house.
We’ve been thinking more and more about buying a place in this neighborhood. It’s our favorite place we’ve ever lived.
But the more I try to work the numbers, the less I see it as a possibility.
The Federal Reserve announced recently that “interest rates will be higher for longer.” So it’s not as though it’s getting easier to borrow money.
There are houses going up for sale in our neighborhood every day, and the average wait time for a home on the market is 10 days. How is that even possible?
The average home in our neighborhood is probably $1,000,000. With interest rates currently being 7.83%, and if you factor in amortization, then the average monthly payment is $7219.24.
For a 30 year loan, you would be paying $1,599,014 of interest. That 1.5+ X more than the loan itself.
Where is the money coming from? Is everyone rich?
The answer to that question is no. Not everyone is rich. In fact, consumer credit card debt is at an all time high. S we know millennials don’t have the cash.
So are boomers buying these houses with cash?
It concerns me.
Look, I’m not in the weeds on the real estate markets. I don’t pay enough attention to it to really know what I’m talking about. But in my perspective, there are three possibilities
Boomers are gobbling up real estate to hoard wealth.
Millennials are taking out loans that they can’t afford.
Everyone is secretly a millionaire.
I don’t understand how this is possible.