PA slowdown

It still makes sense for the retail buyer. 2.5M + 1M building cost + conventional loan (lower carrying cost), it is still cheaper than buying brand new from investor.

1M building cost, if taking a loan, is still significant.
Construction loans, i hear, is about 1-1.25% higher than standard 30yr, they also buyout your mortgage (ie you pay 2M loan + cost as it gets added at 5ish percent.

The issue is home is not in good shape. Rich PA people won’t prefer such tear down and take all the pains associated with it. This home is destined for realtor/builder.

A lot of techies will get qualified for a 2M loan max? The rest of that will be cash. 4M home will need 2M cash. 2.5M rebuild will need around the same in cash. So many people buying in that price range will have good amount of cash so they do not need construction loan.

Two FANG employees can probably go more than 4M.

More than 4M loan? :scream:

Sorry i meant 3.2loan wouldnt be impossible.

Is that currently your budget + 25% for down? :slight_smile:

I wish, already struggling with what i am interested in.

I’ve wondered about that. Life is one long lesson about balancing cooperation and competition. Self vs the group. Maybe in high school kids aren’t ready to compete yet… could you imagine someone saying it’s too competitive at Google, Facebook, Apple, Stanford, Harvard, etc.

I think that’s kind of irresponsible to spend so much on a non-income generating asset. And price appreciation at that level may be quite iffy as well going forward. They better have those good paying jobs forever, the two of them.

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Don’t teach folks smarter than you :rage:

Not irresponsible at all! You’re just jealous that these people get to live in a dream neighborhood that they love while you are stuck living in a lesser neighborhood hating it everyday. Go ahead and penny pinch your “cash flow” if that makes you feel better…

At first, I agreed with you.
Then, I realize that they may be able to pay off in 5 years. Not bad choice.

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Manch concern, investment point of view, is it is not attractive.

It depends how much they earn yearly and continue to earn similar in future as long as it is well within 20% (safer) DTI or max 33% DTI. Remember they need to pay property tax appx $4000/month and their income must support that level, as long as they live.

If they can pay it off in 5 years, all the power to them. But how many people can pay off a 4M house in 5 years?

They’re not going to pay that off in 5 years nor should they.

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Agreed.

5 years is a stretch, but 10 years is a very easy target if they wanted to, but most these people are smarter to figure out to invest in other things yielding more than 3% return.

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What is the income profile for people who can pay off a 4M house in 10 years?

I don’t know.
I recently had a discussion with FB SWE in other blog and she said that FB SWE with 7 years experience makes 500K a year. She also said that 3-4 years experience after college can make 300-400K.
I am not sure this is true or not (since I am not SWE) but if this is the case, double income FB/GOOGL SWE household can make over million easily after 7-10 years of experience.

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